Wow. Those oppies are ridiculous, I have to agree.For a start,...

Wow. Those oppies are ridiculous, I have to agree.

For a start, the options vest on the achievement of vaguely defined "performance goals". For instance, the "first shipment of ore" could be anything - a truckload of ore, or a 40,000t Panamax ship from the floating harbour.

Secondly, the timetable means nothing. They could (dare I say it) take a leaf from the Admiralty Resources book and ship a Panamax load out in year one, and then do absolutely nothing for the next year, and the directors would get free shares (nil consideration!) with no escrow period at all. This does not constitute a 'long term performance' goal of the company - where's the requirement to maintain a certain level of capital growth, profitability, or even gross production targets or operating costs? Merely shipping a load of ore out of Wilcherry Hill means absolutely nothing for the share price of the company beyond the next 12 months. On this basis, the EIS is an egregious fat wallet move and should be opposed.

Secondly, the delivery of the BFS is fairly easy to guess when it will fall due. The Directors have set themselves targets they arguably would easily know could be met; this is hardly an arms length independently construed performance goal set by a rigorous remuneration committee which takes into account the individual position of the Company executives.

If you have concerns - and you should - get in touch with the Australian Shareholders Association and get some advice from them. You can also contact Risk Metrics who guague executive remuneration packages and can probably add further comments with regards to these arrangements.

The other issue of related party voting by TRF directors on IFE matters which relate to the personal gain of TRF directors is a lot more murky.

eg A ?related party? for the purposes of the Corporations Act is defined widely. It includes a director of a public company and specified members of the director?s family. It also includes an entity over which a director maintains control or a person who may be seen as acting in concert with the company on the understanding that a financial benefit will be received. Further, a director of an entity that controls a public company is a related party of the company.

One may argue that TRF's board is indeed an entity which maintains control over IFE and may be construed as also having a concern with the remuneration of the persons who have directorships on both companies. Whether this will bear much scrutiny I can't say - again, the ASA will give you guys more concrete advice.

The whole IFE spin-out was a fairly sub-optimal deal for IFE shareholders and IFE in general. Remember TRF maintains a large percentage of the project and was free-carried from the beginning on this project percentage. It then also controls a large percentage of the IFE registry, though this has become mildly diluted since the IPO. The IFE directors were initially the TRF directors, and this hasn't much changed, so questions like these can and should be asked about their impartiality.

In the end, you guys have to weigh this up yourselves for your own objectives and whether or not you believe you may lose money. 1.2M oppies seem basically gifted to the directors from the low and peurile "performance" hurdles, and that is a fairly large percentage of the share registry (roughly 1%).

The most basic question of have they added 1% value to the company by their actions, which seem a fait accompli according to their own schedule, seems moot. Doubtful.