Ann: Notice of Annual General Meeting/Proxy Form , page-23

re: Ann: Notice of Annual General Meeting/Pro... Hi Guys,

Always keen for a good debate about pigs in the trough:

I think it is important to keep a few points front of mind;

(1) Small companies rely on the quality of their directors and management to realise value for shareholders. Typically the assets held by a small company are not of high enough quality to survive poor management - as opposed to Tier One assets such as Olympic Dam that could be run by monkeys and still hold its value over time.

Thus key people will determine whether us, passive shareholders, make a mint or lose the lot when investing in small companies.

Two dogs come to mind that were killed by crap management ABQ (in recievership) and CMV (suspended for +1year and counting).

Thus retaining key people is vital. In this case, Ian is key. What keeps a key person in the game? The prospect of making lots and lots of money for themselves.

However, this cannot be at the expense of shareholders. Which brings me to the second point;

(2) Relative to what we shareholders will enjoy how much is Ian getting from his 1,000,000 options?

Any number of hypothecial situations can be created, but consider this one:

Assume at time of exercise the share price is $1.00. Assume that at the time of issue of the options that the share price is $0.50.

Thus, Ian pays $650k and recieves shares with $1m in value. A profit of $350k... not bad.

However, he will have added $42m of value for us shareholders (assuming constant number of shares on issue).

Thus, the cost to us shareholders is $350k/$42m = 0.8%

IMO, I do not resent providing Ian with a hypothetical incentive of 0.8% on the value that he may (or may not) create over the coming three years, which if achieved by that time frame would represent an annualised 33% pa return on each of our individual investments from this point.

IMO, the most important thing is to ensure that management are capable, driven and focused on increasing the net value of the company as efficiently and as timely as possible. If it costs 0.8% then I'm okay with that in this scenario.

Cheers
John