Dear Shareholder Silvergate recently wrote to the Carpentaria...

Dear Shareholder

Silvergate recently wrote to the Carpentaria Board seeking confirmation that Carpentaria will not be voting the 'Treasury Shares' it has on issue at the upcoming extraordinary general meeting (EGM).

The Treasury Shares are, in effect, shares the Company holds in itself.  They were previously held by employees who have left the Company and were transferred to the Company under its employee share plan, instead of the employees repaying the loan that was advanced to acquire the shares.

The Corporations Act is very clear that the Company cannot exercise any voting rights attached to Treasury Shares while it holds them and they must be sold within 12 months.

Yesterday we received confirmation from Carpentaria that Treasury Shares have been held for more than 12 months and 1.3 million Treasury Shares were voted at the 2012 AGM, the 2013 AGM and the 2012 EGM requisitioned by Silvergate. This is a clear breach of the Corporations Act.

The shares were voted in the direction of the Chairman's recommendations for all resolutions at the 3 shareholder meetings held since the Company acquired the Treasury Shares.

Most alarmingly for shareholders, the Treasury Shares were voted in favour of:

(a)   Approval of grant of options to Dr Neil Williams & Mr Paul Cholakos (2012 AGM)
(c)    Approval to increase the total amount payable to non-executive directors (2012 AGM)
(d)   Approval of issue of ordinary shares to Mr Stuart Nicholas Sheard (2013 AGM)
(e)   Adoption of remuneration report (2012 AGM & 2013 AGM)

As a result of Silvergate’s enquiries, the Company has generously volunteered to self-report this breach to ASIC.  The Company has thus far remained silent on the breach in relation to holding Treasury Shares for more than 12 months, and they have not commented on how these shares will be disposed of. We do hope, in light of the very thin market for Carpentaria shares, that one or more of the Directors will purchase these shares from the Company to reduce the impact the disposal has on the market price.

Needless to say, it is difficult to reconcile the illegal voting of the Treasury Shares with the Board’s apparent focus on Corporate Governance. Even putting aside the breach of the Corporations Act, how could your Board think it was appropriate to direct Company-held shares that they controlled to vote for their re-election, their remuneration and the issue of options and shares to themselves?

It is even more difficult to reconcile the voting of these shares on these resolutions with the Chairman's statement that the Board was "demonstrably acting at all times in the interests of all shareholders".

It is apparent, to us, what the Board says and what it does are two very different things.  I encourage you to vote at the upcoming EGM to bring about real change at Carpentaria for the benefit of all shareholders.

Yours Sincerely,
Edward