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EVOLUTION MINING LIMITED — Merger & Acquisition 2011
Sep 12, 2011
64885_rns_2011-09-12_d9a0f185-8d40-41eb-9b92-4577b64ea08b.pdf
Merger & Acquisition
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Scheme Booklet For a proposed merger of equals between Conquest Mining Limited and Catalpa Resources Limited by way of scheme of arrangement.
the conquest board unanimously considers the transaction to be in the best interests of conquest Shareholders and recommends that you vote in favour of the Scheme, in the absence of a superior proposal.
This is an imporTanT documenT and requires your immediaTe aTTenTion. you should read This documenT carefully and in iTs enTireTy before deciding how To voTe on The resoluTions. if you are in any doubT as To whaT you should do, you should consulT your legal, invesTmenT or oTher professional advisor.
If, after reading this Scheme Booklet, you have any questions about the Transaction, please call the Conquest transaction information line on 1300 047 569 (within Australia) or +61 3 9415 4242 (outside Australia) at any time between 9.00am and 5.00pm on Monday to Friday.
If you have sold all of your Conquest Shares, please disregard this document.
financial adviser
legal adviser
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Conquest Mining Limited ACN 009 232 277
Important notIceS
PurPose of this scheme Booklet
This Scheme Booklet provides Conquest Shareholders with information about the Transaction and the Resolutions that will be voted on at the Meetings. This Scheme Booklet constitutes:
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the explanatory statement required to be sent to Conquest Shareholders in relation to the Scheme pursuant to section 412(1) of the Corporations Act;
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the explanatory statement required to be sent to Conquest Shareholders in relation to the issue of the Non-dilution Rights Options for the benefit of the Interested Directors pursuant to Chapter 2E of the Corporations Act;
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the notice of meeting required to be sent to Conquest Shareholders in relation to the issue of the Non-dilution Rights Options and the Minority Options Consideration for the benefit of the Interested Directors pursuant to Chapter 10 of the Listing Rules; and
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the notice of meeting required to be sent to Conquest Shareholders in relation to the cancellation of the Majority Options pursuant to Chapter 6 of the Listing Rules.
You should read this Scheme Booklet carefully and in its entirety before making a decision on how to vote on the Resolutions.
scheme Booklet suPPlement
A concise version of the Independent Expert’s Report is set out at Attachment A. The full version of that report, together with the Transaction Implementation Deed (without attachments), is included in the Scheme Booklet Supplement. Conquest Shareholders can view and download the Scheme Booklet Supplement online at www.conquestmining.com.au. They can also obtain a copy of the Scheme Booklet Supplement by contacting the Conquest transaction information line on 1300 047 569 (within Australia) or +61 3 9415 4242 (outside Australia) at any time between 9.00am and 5.00pm on Monday to Friday.
investment decisions
This Scheme Booklet does not take into account the investment objectives, financial situation, tax position or particular needs of any Conquest Shareholder or any other person. Accordingly, this Scheme Booklet should not be relied on as the sole basis for any investment decision in relation to Conquest Shares, Catalpa Shares or any other securities. Independent advice should be sought before any such investment decision is made.
resPonsiBility for information
Conquest has prepared, and is responsible for, the Conquest Information. Catalpa and Newcrest do not assume any responsibility for the accuracy or completeness of any of the Conquest Information, nor do any of their respective directors, officers or advisors.
Catalpa has prepared, and is responsible for, the Catalpa Information. Conquest and Newcrest do not assume any responsibility for the accuracy or completeness of any of the Catalpa Information, nor do any of their respective directors, officers or advisors.
Newcrest has prepared, and is responsible for, the Newcrest Information. Conquest and Catalpa do not assume any responsibility for the accuracy or completeness of any of the Newcrest Information, nor do any of their respective directors, officers or advisors. The Newcrest Information does not include forecasts in relation to the Newcrest Assets beyond the financial year ending 30 June 2012. To the extent that information included elsewhere in this Scheme Booklet refers to or incorporates forecasts in relation to the Newcrest Assets beyond that date, such information has been prepared by Conquest and Catalpa on the basis of their due diligence enquiries and (in the case of Catalpa) prior knowledge of the Cracow Assets, and therefore constitutes Evolution Mining Information. Neither Newcrest nor any of its directors, officers or advisors assumes any responsibility for the accuracy or completeness of any forecast information in relation to the Newcrest Assets beyond the financial year ending 30 June 2012.
The Cracow Information has been prepared by Newcrest. Newcrest and Catalpa take joint responsibility for the Cracow Information. Neither Conquest nor any of its directors, officers or advisors assumes any responsibility for the accuracy or completeness of the Cracow Information. The Evolution Mining Information has been prepared jointly by Conquest and Catalpa and Conquest and Catalpa take joint responsibility for that information. Neither Newcrest nor any of its directors, officers or advisors assumes any responsibility for the accuracy or completeness of the Evolution Mining Information.
Grant Samuel has prepared, and is responsible for, the Independent Expert’s Report (other than the Technical Specialist’s Report). Conquest, Catalpa and Newcrest do not assume any responsibility for the accuracy or completeness of any of the information in the Independent Expert’s Report, nor do any of their respective directors, officers or advisors (other than, in the case of Conquest and Catalpa, Grant Samuel).
AMC Consultants Pty Ltd has prepared, and is responsible for, the Technical Specialist’s Report. Conquest, Catalpa and Newcrest do not assume any responsibility for the accuracy or completeness of any of the information in the Technical Specialist’s Report, nor do any of their respective directors, officers or advisors (other than, in the case of Conquest and Catalpa, AMC Consultants Pty Ltd).
Deloitte has prepared, and is responsible for, the Investigating Accountant’s Report. Conquest, Catalpa and Newcrest do not assume any responsibility for the accuracy or completeness of any of the information in the Investigating Accountant’s Report, nor do any of their respective directors, officers or advisors (other than, in the case of Conquest and Catalpa, Deloitte).
Ernst & Young has prepared, and is responsible for, the information in Section 8. Conquest, Catalpa and Newcrest do not assume any responsibility for the accuracy or completeness of any of the information in Section 8, nor do any of their respective directors, officers or advisors (other than, in the case of Conquest and Newcrest, Ernst & Young). Ernst
& Young’s advice is general in nature and the individual circumstances of each Conquest Shareholder may affect the taxation implications of the investment of that shareholder. Conquest Shareholders should seek appropriate independent professional advice that considers the taxation implications in respect of their own specific circumstances. Ernst & Young disclaims all liability to any Conquest Shareholder or other party for all costs, loss, damages, and liability that the shareholder or other party may suffer or incur arising from or relating to, or in any way connected with, the contents of Section 8 or the provision of this Scheme Booklet to any Conquest Shareholder or other party or the reliance on it by any of them.
role of asic and asX
A copy of this Scheme Booklet has been examined by ASIC pursuant to section 411(2)(b) of the Corporations Act and registered by ASIC under section 412(6) of the Corporations Act. Conquest has asked ASIC to provide a statement, in accordance with section 411(17)(b) of the Corporations Act, that ASIC has no objection to the Scheme. If ASIC provides that statement, it will be produced to the Court on the Second Court Date.
A copy of this Scheme Booklet has also been lodged with ASX pursuant to Chapter 15 of the Listing Rules.
None of ASIC, ASX or their respective officers takes any responsibility for the contents of this Scheme Booklet.
imPortant notice associated with court order under section 411(1) of the corPorations act
The fact that the Court has ordered that the Scheme Meeting be convened under section 411(1) of the Corporations Act and has approved this Scheme Booklet does not mean that the Court:
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has formed any view as to the merits of the Scheme or as to how Conquest Shareholders should vote at the Scheme Meeting (on this matter Conquest Shareholders must reach their own decision); or
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has prepared, or is responsible for, this Scheme Booklet.
foreign shareholders
This Scheme Booklet has been prepared having regard to Australian disclosure requirements. These requirements may be different from those in other jurisdictions. This Scheme Booklet does not constitute an offer to, or a solicitation of an offer from, Conquest Shareholders in any jurisdiction. New Catalpa Shares will not be issued under the Scheme to Conquest Shareholders whose address (as shown in the Conquest Register) is outside Australia and its external territories and New Zealand and any other jurisdiction agreed in writing by Conquest, Catalpa and Newcrest. The manner in which those shareholders will be treated under the Scheme is explained in the Transaction overview – Scheme (see page 10).
united states conquest shareholders
This Scheme Booklet has not been prepared in accordance with United States securities laws and regulations and none of the Securities and Exchange Commission, any US state securities commission or any other US regulatory authority has approved or disapproved the securities issuable in connection with the Scheme nor has any of them commented on or endorsed the merits of the Scheme or the accuracy, adequacy or completeness of this Scheme Booklet. Any representation to the contrary may be a criminal offence.
The New Catalpa Shares to be issued as Scheme Consideration have not been, and will not be, registered under the US Securities Act of 1933, as amended.
forward looking statements
Certain statements in this Scheme Booklet relate to the future. Such forward looking statements, which include all information relating to the performance of Evolution Mining, are not based solely on historical facts but rather reflect the current expectations of Conquest (in relation to the Conquest Information), Catalpa (in relation to the Catalpa Information), Newcrest (in relation to the Newcrest Information), Catalpa and Newcrest jointly (in relation to the Cracow Information) and Conquest and Catalpa jointly (in relation to the Evolution Mining Information) concerning future results and events. Statements that describe Conquest’s, Catalpa’s or Newcrest’s objectives, plans, goals or expectations, estimates of reserves and resources, timelines for development and gold production and future costs may be forward looking statements.
Forward looking statements involve known and unknown risks, uncertainties and assumptions and are subject to a variety of other factors that could cause the actual results or performance of Conquest, Catalpa, the Newcrest Assets or Evolution Mining to be materially different from what is expressed or implied by such statements. Some of the risks that Conquest Shareholders may be exposed to if the Transaction is implemented are set out in Section 7.1.
Forward looking statements are based on numerous assumptions regarding present and future business strategies and the environment in which Conquest, Catalpa, the Newcrest Assets and Evolution Mining will operate in the future, including the price of gold, anticipated costs and ability to achieve goals.
Accordingly, undue reliance should not be placed on forward looking statements.
Conquest Shareholders should note that the historical performance of Conquest, Catalpa and the Newcrest Assets is no assurance of their or Evolution Mining’s future performance. Other than as required by law, none of Conquest, Catalpa, Newcrest or their respective directors, officers or advisors represents that, or gives any assurance or guarantee that, the occurrence of events expressed or implied in any forward looking statements will actually occur.
The forward looking statements in this Scheme Booklet reflect views held only at the date of this Scheme Booklet.
estimates, targets and forecasts
Unless expressly stated otherwise, all references in this Scheme Booklet to estimates, targets and forecasts (and derivations of the same) are references to estimates, targets and forecasts by Conquest, Catalpa or Newcrest management (as applicable). Management estimates, targets and forecasts are based on views held only at the date of this Scheme Booklet. Each of Conquest, Catalpa and Newcrest believes that the estimates, targets and forecasts in this Scheme Booklet that are attributable to it have been made on reasonable grounds and that the assumptions on which those estimates, targets and forecasts are based are reasonable. Having said this, Conquest Shareholders are cautioned that the estimates, targets and forecasts are subject to a variety of factors that are likely to cause actual results to vary from them, and such variations may be material. The Newcrest Information does not include forecasts in relation to the Newcrest Assets beyond the financial year ending 30 June 2012. To the extent that information included elsewhere in this Scheme Booklet refers to or incorporates forecasts in relation to the Newcrest Assets beyond that date, such information has been prepared by Conquest and Catalpa on the basis of their due diligence enquiries and (in the case of Catalpa) prior knowledge of the Cracow Assets, and therefore constitutes Evolution Mining Information. Neither Newcrest nor any of its directors, officers or advisors assumes any responsibility for the accuracy or completeness of any forecast information in relation to the Newcrest Assets beyond the financial year ending 30 June 2012.
Privacy and Personal information
Conquest and Catalpa, and their respective registries and agents, may need to collect personal information to implement the Transaction. The personal information may include the names, contact details, bank account details and other details of Conquest Shareholders, as well as the names and contact details of individuals appointed by Conquest Shareholders as proxies, attorneys or corporate representatives to attend and vote at the Meetings. Conquest Shareholders who are individuals and other individuals in respect of whom personal information is collected have certain rights to access the personal information collected about them. An individual who wishes to exercise any of these rights should contact the Conquest Registry on 1300 554 474 (from within Australia) or +61 2 8280 7761 (from outside Australia). The personal information described above may be disclosed to Conquest’s and Catalpa’s registries and stock transfer agents, securities brokers and third party service providers (including print and mail service providers). Personal information may also be used to contact Conquest Shareholders in relation to the Transaction.
Conquest Shareholders who appoint an individual as their proxy, attorney or corporate representative to attend and vote at a Meeting should inform him or her of the matters outlined above.
maPs and diagrams
Any diagrams, charts, maps, graphs and tables appearing in this Scheme Booklet are illustrative only and may not be drawn to scale. Unless expressly stated otherwise, all data contained in such diagrams, charts, maps, graphs and tables is based on information available at the date of this Scheme Booklet.
references to time
Unless expressly stated otherwise, all references in this Scheme Booklet to time relate to the time in Sydney, New South Wales, Australia.
references to currency
Unless expressly stated otherwise, all references in this Scheme Booklet to “$”, “A$” or “AUD” are references to Australian currency, and all references to “US$” or “USD” are references to United States currency.
references to gold equivalent
Unless expressly stated otherwise, all references in this Scheme Booklet to gold equivalent are based on the following price assumptions: gold US$1100 per ounce, silver US$22 per ounce and copper US$3.50 per pound. Gold equivalence calculations in this Scheme Booklet incorporate relative metal recovery and payability rates and are only applicable to Mt Carlton.
references to evolution mining
In parts of this Scheme Booklet, Catalpa following implementation of the Transaction is referred to as “Evolution Mining” as it is proposed that, post implementation, Catalpa be renamed “Evolution Mining Limited”. This change of company name is subject to approval by Catalpa Shareholders at the Catalpa Meeting.
effect of rounding
A number of figures, amounts, percentages, prices, estimates, calculations of value and fractions in this Scheme Booklet are subject to the effect of rounding. Accordingly, their actual calculation may differ from the calculations set out in this Scheme Booklet. These include calculations in respect of the Scheme Consideration, the Subscription Shares, the Majority Options Consideration, the Minority Options Consideration, Newcrest’s interest in Evolution Mining before and after the Rights Offer and statements of Mineral Resources and Ore Reserves.
defined terms
A number of defined terms are used in this Scheme Booklet, the meanings of which are set out in Section 13.
transaction information line
If you have any questions about the Transaction, you may call the Conquest transaction information line on 1300 047 569 (within Australia) or +61 3 9415 4242 (outside Australia) at any time between 9.00am and 5.00pm on Monday to Friday.
date
This Scheme Booklet is dated 13 September 2011.
1
SCHEME BOOKLET
contentS
| contentS | |
|---|---|
| letter from executive chairman of conquest | 2 |
| letter from managing director of catalpa | 4 |
| structure of this scheme Booklet | 5 |
| introduction | 6 |
| key dates | 6 |
| meeting details and instructions on how to vote | 7 |
| snapshot of the transaction | 9 |
| transaction overview | 10 |
| Part 1 – scheme | 18 |
| 1 reasons to vote in favour of the scheme |
18 |
| 2 reasons to vote against the scheme |
22 |
| 3 Profle of conquest |
23 |
| 4 Profle of catalpa |
35 |
| 5 Profle of the newcrest assets |
45 |
| 6 Profle of evolution mining |
56 |
| 7 other matters relevant to your vote on the scheme |
68 |
| 8 australian tax considerations |
75 |
| 9 additional information |
77 |
| Part 2 – general meeting resolutions | 85 |
| 10 non-dilution rights resolutions | 85 |
| 11 majority options resolution | 90 |
| 12 minority options resolution | 92 |
| Part 3 – glossary | 94 |
| 13 glossary |
94 |
| Part 4 – attachments | 105 |
| attachment a – concise version of independent expert’s report | 106 |
| attachment B – investigating accountant’s report | 173 |
| attachment c – scheme | 176 |
| attachment d – deed Poll | 194 |
| attachment e – notice of scheme meeting | 202 |
| attachment f – notice of general meeting | 204 |
2
Conquest MInInG LIMIteD
letter from executIve chaIrman of conqueSt
13 September 2011
Dear Conquest Shareholder,
On 15 June 2011, Conquest and Catalpa announced that they had entered into a binding agreement to implement a transaction that would result in the creation of a leading growth-focused Australian gold company through an all-scrip merger of equals. In a separate but inter-conditional transaction, the Catalpa Group will purchase Newcrest’s interests in the gold mining and exploration projects at Cracow and Mt Rawdon. It is proposed that the combined entity be called Evolution Mining Limited .
The Transaction is to be implemented through two main steps:
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a scheme of arrangement under which Catalpa will acquire all the Conquest Shares in exchange for 0.3 New Catalpa Shares for each Conquest Share (the Scheme); and
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the acquisition by Catalpa subsidiaries from Newcrest of 100% of the Mt Rawdon gold project and 70% of the Cracow gold project (the Asset Purchase) in exchange for giving Newcrest an initial interest in Evolution Mining of 38%[1] (the Share Issue).
The Asset Purchase and Share Issue will not take place unless the conditions to the Scheme are satisfied or (if applicable) waived. Those conditions are summarised in this Scheme Booklet and include approval of the Scheme by Conquest Shareholders and the Court and approval of the Share Issue by Catalpa Shareholders. They also include a condition requiring Conquest Shareholders to approve the cancellation of certain Conquest Options held by or on behalf of myself and two of my fellow Conquest directors, James Askew and Nicholas Curtis, and to approve the issue of Conquest Shares for our benefit as consideration for such cancellation. The Independent Directors have recommended that Conquest Shareholders vote in favour of the General Meeting Resolution in respect of these approvals.
It is intended that, shortly following completion of the Transaction, Evolution Mining will undertake a pro rata entitlement offer to raise approximately $150 million. If successfully completed, the offer will strengthen Evolution Mining’s balance sheet and increase the company’s financial flexibility. It will also enable Evolution Mining to progress development plans and to pursue additional growth opportunities.
Newcrest has agreed not to participate in the entitlement offer. As announced by Conquest and Catalpa on 19 July 2011, BlackRock and Baker Steel have each committed to subscribe for $25 million of shares under the Rights Offer (in addition to their full pro rata entitlement as shareholders of Evolution Mining), representing most of Newcrest’s entitlements.[2] It is most pleasing to have this early support of Evolution Mining from global resources investors of the calibre of BlackRock and Baker Steel.
Following the entitlement offer, Newcrest is expected to have an interest in Evolution Mining of approximately 33%.[3] Newcrest will have two nominees on the board of Evolution Mining.
Grant Samuel, the independent expert engaged by the Conquest board to opine on the Transaction, has concluded that the Transaction is in the best interests of Conquest Shareholders, in the absence of a superior proposal. Grant Samuel has concluded that the Transaction is not “fair” on the basis that, pursuant to ASIC policy, the Transaction must be assessed as a control transaction (essentially, a takeover by Newcrest) due to the fact that Newcrest will have an interest in Evolution Mining of more than 20% following implementation. Based on market conditions at the time of its valuations, Grant Samuel believes the trading price of shares in Evolution Mining is unlikely to equate to the full underlying value of shares in a stand-alone Conquest. Whilst this has led Grant Samuel to conclude that the Transaction is not “fair”, Grant Samuel is of the view that the underlying value attributable to Conquest Shareholders will increase as a result of the Transaction (from $0.60 to $0.68 per share to $0.64 to $0.71 per share), and Conquest Shareholders will retain the prospect of realising this increased underlying value through a subsequent change of control transaction for Evolution Mining. For this and other reasons, Grant Samuel has concluded that Conquest Shareholders will be better off if the Transaction is implemented than if it is not.
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Calculated on a Fully Diluted Value Basis.
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Newcrest’s entitlements under the Rights Offer will be in respect of approximately $57 million of the total $150 million proposed to be raised, based on Newcrest’s interest in Evolution Mining on a Fully Diluted Value Basis immediately following implementation of the Transaction (being a 38% interest).
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Calculated on a Fully Diluted Value Basis and based on an illustrative Rights Offer price of a 10% discount to TERP, where TERP is calculated based on the VWAP of a Catalpa Share on the Last Trading Day.
3
SCHEME BOOKLET
More information on Grant Samuel’s findings is set out in section 1.6 of this Scheme Booklet, and a concise version of Grant Samuel’s report can be found at Attachment A. A full version of the report is included in the Scheme Booklet Supplement.
the directors of conquest unanimously recommend that you vote in favour of the scheme, in the absence of a superior Proposal, as we believe that the transaction will deliver significant value to conquest shareholders. furthermore, each conquest director intends to vote the conquest shares he holds or controls in favour of the scheme.
the directors of catalpa also unanimously support the transaction, in the absence of a superior Proposal.
The reasons for the unanimous recommendation of the Conquest board are set out in this Scheme Booklet. In summary, the board strongly believes that the Transaction will provide Conquest Shareholders with a number of benefits, as Evolution Mining will have:
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access to a larger and more diversified portfolio of assets combining four gold mines which collectively produced approximately 303,000 ounces of gold in FY2011 and one development asset;
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a stable production platform with organic growth opportunities forecast to increase production to 335,000 to 375,000 ounces of gold in FY2012 and 410,000 to 465,000 ounces of gold equivalent in FY2013;
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an enhanced scale and increased market presence as a top 5 ASX-listed gold producer by production[4] and a top 10 ASX-listed gold producer by market capitalisation;[5]
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a strengthened financial platform allowing resources to be strategically allocated and growth opportunities to be pursued, with an expected cash position following the Rights Offer of approximately $199 million[6] and an expected debt position of approximately $48 million;[7]
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Newcrest, the largest gold producer listed on the ASX, as a supportive major shareholder; and
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a proven entrepreneurial and experienced management team with highly complementary skill sets and a strong mandate to grow Evolution Mining.
As with all transactions of this nature, the Transaction has disadvantages and risks. These are set out in Sections 2 and 7.1 of this Scheme Booklet, respectively, and should be taken into account when considering how to vote on the Scheme. I encourage you to read this Scheme Booklet carefully and in its entirety as it contains important information that will need to be considered before you vote on the Scheme.
It also contains details of resolutions to be voted on at a General Meeting to immediately follow the Scheme Meeting. The Meetings are scheduled to be held on Friday 14 October 2011 at the Hilton Sydney, 488 George Street, Sydney, with the Scheme Meeting scheduled to commence at 10:00 am. Details of how you may vote at the Meetings are set out in this Scheme Booklet.
This is a very significant moment in Conquest’s history and it is important that you vote at the Meetings so that you can have a say on whether or not the Transaction proceeds.
Should you require any further information about the Transaction, please contact the Conquest transaction information line on 1300 047 569 (within Australia) or +61 3 9415 4242 (outside Australia) at any time between 9.00am and 5.00pm on Monday to Friday.
Yours sincerely,
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Jake klein Executive Chairman Conquest Mining Limited
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Based on information publicly released by ASX-listed gold companies regarding production rates for FY2011.
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Based on the share prices of ASX-listed gold companies at the close of trading on the Last Trading Day and assuming $150 million is raised under the Rights Offer. 6. Based on the cash position of each of Catalpa and Conquest as at 30 June 2011 (including gold and silver available for sale), assuming $150 million is raised under the Rights Offer and taking into account the costs associated with the Transaction and the Rights Offer. This figure does not take into account any stamp duty payable by Catalpa in connection with the Transaction or the operating cash flows of Catalpa and Conquest during the period from 1 July 2011 to completion of the Rights Offer. It also does not take into account the Macquarie Facilities. As at the date of this Scheme Booklet, Conquest has not drawn down on any of the Macquarie Facilities.
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Based on the debt position of each of Catalpa and Conquest as at 30 June 2011. This figure does not take into account the Macquarie Facilities. As at the date of this Scheme Booklet, Conquest has not drawn down on any of the Macquarie Facilities.
4
Conquest MInInG LIMIteD
letter from managIng DIrector of catalpa
13 September 2011
Dear Conquest Shareholder,
The Catalpa board is pleased to provide Conquest Shareholders with the opportunity to participate in the merger of equals of Catalpa and Conquest and the concurrent acquisition of Newcrest’s interests in the gold mining and exploration projects at Cracow and Mt Rawdon. The Transaction is expected to create a leading Australian mid-cap, growth focused and asset diversified gold producer.
The Catalpa board believes the Transaction is highly compelling and provides a number of benefits to both Conquest and Catalpa Shareholders that are detailed in this Scheme Booklet, including creating a merged entity, Evolution Mining, with four producing mines and one development project, significant exploration assets, a proven entrepreneurial management team and the financial scale and flexibility to pursue growth opportunities.
Catalpa and Conquest have a history of delivering shareholder value through a combination of operations focused management and successful corporate transactions. The board and management of Evolution Mining will be committed to continuing this history through focused operational management, project development and ongoing exploration.
The Conquest board has unanimously recommended that Conquest Shareholders vote in favour of the Scheme, and the Independent Expert has concluded that both the Scheme and the Transaction are in the best interests of Conquest Shareholders, in each case in the absence of a superior proposal.
The Catalpa board also unanimously supports the Transaction and has unanimously recommended that Catalpa Shareholders vote in favour of the resolutions to be put to them in connection with the Transaction, in the absence of a Superior Proposal.
As a Conquest Shareholder your vote is extremely important in order to ensure that the Transaction is implemented so that the benefits associated with the Transaction can be delivered for both Conquest and Catalpa shareholders.
This Scheme Booklet provides important information in relation to the Transaction and on behalf of the Catalpa board I encourage you to read it carefully and vote in favour of the Scheme at the Scheme Meeting to be held on 14 October 2011.
I look forward to welcoming you as a shareholder of Evolution Mining following the successful implementation of the Transaction.
Yours sincerely,
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Bruce mcfadzean
Managing Director Catalpa Resources Limited
5
SCHEME BOOKLET
Structure of thIS Scheme Booklet
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cross
Part descriPtion reference
INTRODUCTION The introduction sets out:
• key dates in relation to the Transaction Page 6
• details of the Scheme Meeting and General Meeting and instructions on Pages 7–8
how to vote at those meetings
• a brief snapshot of the Transaction Page 9
• a more detailed overview of the various components of the Transaction, Pages 10–17
the Rights Offer and the General Meeting Resolutions
PART 1 – SCHEME Part 1 contains information about the Scheme, including:
• reasons to vote in favour of the Scheme Section 1
• reasons to vote against the Scheme Section 2
• profile of Conquest Section 3
• profile of Catalpa Section 4
• profile of the Newcrest Assets Section 5
• profile of Evolution Mining Section 6
• other matters relevant to your vote on the Scheme Section 7
• Australian tax considerations Section 8
• other additional information Section 9
PART 2 – GENERAL Part 2 contains information about the General Meeting Resolutions,
MEETING including:
RESOLUTIONS • information on the Non-dilution Rights Resolutions Section 10
• information on the Majority Options Resolution Section 11
• information on the Minority Options Resolution Section 12
PART 3 – GLOSSARY Part 3 contains a list of the defined terms used throughout this Scheme Section 13
Booklet
PART 4 – Part 4 contains the attachments to this Scheme Booklet, namely the:
ATTACHMENTS • concise version of the Independent Expert’s Report Attachment A
• Investigating Accountant’s Report Attachment B
• Scheme Attachment C
• Deed Poll Attachment D
• Notice of Scheme Meeting Attachment E
• Notice of General Meeting Attachment F
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6
CONquEST MINING LIMITED
IntroDuctIon
key DateS
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event date
Deadline for submitting Scheme Proxy Forms 10:00 am, 12 October 2011
Deadline for submitting General Proxy Forms 10:30 am, 12 October 2011
Time and date for determining eligibility to vote
at Meetings 7:00 pm, 12 October 2011
Time and date of Meetings scheme meeting – 10:00 am, 14 October 2011
general meeting – 10:30 am, 14 October 2011 (or immediately after
the Scheme Meeting, if later)
Time and date of Catalpa Meeting 1:00 pm, 14 October 2011
the following events will only take place if the scheme is approved at the scheme meeting, the share issue is
approved at the catalpa meeting and the other scheme conditions (except for the condition relating to court
approval of the scheme) are satisfied or waived
Second Court Date – date on which Court
approval of the Scheme will be sought 17 October 2011
Effective Date – date on which the Scheme will
become Effective
Last day of trading in Conquest Shares 18 October 2011
New Catalpa Shares to be issued as Scheme
Consideration commence trading on a deferred
settlement basis 19 October 2011
Scheme Record Date – date for determining
Conquest Shareholders eligible to participate in
the Scheme 25 October 2011
Implementation Date – date on which the
Scheme Shares will be transferred to Catalpa,
the Scheme Consideration will be issued to
Eligible Shareholders and the Asset Purchase
will be completed 2 November 2011
Dispatch of holding statements for New Catalpa
Shares issued as Scheme Consideration 3 November 2011
Commencement of normal T+3 trading in
New Catalpa Shares issued as Scheme
Consideration 4 November 2011
Commencement of Rights Offer Before 16 November 2011
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The above dates are indicative only and are subject to change. Any changes to the above timetable will be announced through ASX and Conquest’s website at www.conquestmining.com.au
7
SCHEME BOOKLET
meetIng DetaIlS anD InStructIonS on how to vote
meeting details
The Meetings will be held at the Hilton Sydney, 488 George St, Sydney on 14 October, 2011 at the following times:
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meeting time
Scheme Meeting 10:00 am
General Meeting 10:30 am (or immediately after the Scheme Meeting, if later)
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approval requirements
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resolution aPProval threshold
Scheme Resolution A majority in number (ie. more than 50%) of Conquest Shareholders present and voting at the
Scheme Meeting (whether in person or by proxy, attorney or, in the case of bodies corporate,
corporate representative), who together hold at least 75% of the votes cast on the Scheme
Resolution
General Meeting More than 50% of the votes cast at the General Meeting by Conquest Shareholders entitled
Resolutions to vote on the relevant General Meeting Resolution
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voting entitlements
Conquest Shareholders registered on the Conquest Register at 7:00 pm on 12 October 2011 will be entitled to vote at the Meetings (provided, in the case of the General Meeting, they are not excluded from voting on the relevant General Meeting Resolution).
Voting will be conducted by poll.
voting in person
To vote in person at a Meeting, Conquest Shareholders must attend the Meeting. A Conquest Shareholder entitled to attend and vote at a Meeting will be admitted to the Meeting upon providing evidence of their name and address at the point of entry to the Meeting.
voting by proxy or attorney
A Scheme Proxy Form and General Proxy Form are enclosed with this Scheme Booklet.
Conquest Shareholders wishing to appoint a proxy to attend and vote at a Meeting must complete and return the relevant Proxy Form in accordance with the instructions on it.
There are a number of ways Proxy Forms may be submitted:
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----- Start of picture text -----
method instructions
Mail Sent to the Conquest Registry (using the reply paid envelope enclosed with this Scheme
Booklet), addressed to Conquest Mining, c/ Link Market Services Limited at Locked Bag
A14, Sydney South, NSW,1235, Australia
Hand delivery Delivered during business hours to the Conquest Registry at Link Market Services Limited,
Level 12, 680 George Street, Sydney, NSW, 2000
Fax Sent to +61 2 9287 0309
Online Lodged at www.investorcentre.linkmarketservices.com.au
----- End of picture text -----
Proxy Forms must be received by the Conquest Registry by no later than 10:00 am on 12 October 2011. If you have an attorney sign a Proxy Form on your behalf, the original or a certified copy of the power of attorney or other evidence of your attorney’s authority must be received by the Conquest Registry at the same time as the Proxy Form (unless previously provided to the Conquest Registry).
A proxy will be admitted to a Meeting upon providing evidence of their name and address at the point of entry to the Meeting. Proxy appointments may be revoked by the delivery of a written revocation to Conquest’s registered office at Suite 7, 282 Oxford Street, Bondi Junction, NSW, 2022.
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meetIng DetaIlS anD InStructIonS on how to vote contInueD
voting by attorney
Conquest Shareholders may have an attorney attend and vote at a Meeting on their behalf. Persons attending a Meeting as an attorney should bring to the Meeting the original or a certified copy of the power of attorney under which they have been authorised to attend and vote at the Meeting.
voting by corporate representative
Conquest Shareholders who are bodies corporate may have a corporate representative attend and vote at a Meeting on their behalf. The appointment must comply with section 250D of the Corporations Act. Persons attending a Meeting as a corporate representative should bring to the Meeting evidence of their appointment, including any authority under which the document appointing them as corporate representative was signed.
further information
Please refer to the Notice of Scheme Meeting (Attachment E) and Notice of General Meeting (Attachment F) for further information on voting procedures and details of the Resolutions to be voted on at the Meetings (including who is entitled to vote on the Resolutions).
9
SCHEME BOOKLET
SnapShot of the tranSactIon
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Step 1 – the Scheme There will be an all-scrip merger of equals between Conquest and Catalpa pursuant to which Catalpa will
acquire Conquest and Conquest Shareholders will be issued New Catalpa Shares that will give them an
interest in Catalpa that is approximately the same as the interest of Catalpa Shareholders.
NEW CATALPA SHARES CONQUEST
CATALPA
SHAREHOLDERS
ACQUIRES
100%
CONQUEST
CONQUEST CATALPA
SHAREHOLDERS SHAREHOLDERS
50% 50%
CATALPA
Step 2 – the Asset Subject to the Scheme becoming Effective, Catalpa subsidiaries will acquire Newcrest’s interests in the gold
Purchase and Share mining and exploration projects at Mt Rawdon (100%) and Cracow (70%) [8] in exchange for Catalpa issuing
Issue New Catalpa Shares to Newcrest (or its nominees) that will give Newcrest an interest in Catalpa of 38% on
a Fully Diluted Value Basis. This will reduce the collective interests of Conquest Shareholders and Catalpa
Shareholders in Catalpa to approximately 31% each on a Fully Diluted Value Basis. It is expected that the
Asset Purchase and Share Issue will take place on the same day as the merger is implemented.
NEW CATALPA SHARES
CATALPA NEWCREST
(38%)
100% 70% (other 30% already
owned by Catalpa)
MT RAWDON CRACOW
ASSETS ASSETS
Step 3 – the Rights Offer It is intended that, within 10 Business Days after completion of step 1 and step 2, Evolution Mining will
undertake a pro rata entitlement offer to raise approximately $150 million. Newcrest will not participate
in the offer. Assuming the offer is successfully completed, it is expected to reduce Newcrest’s interest in
Evolution Mining to approximately 33% (calculated on a Fully Diluted Value Basis). [9]
CATALPA CONQUEST NEW
NEWCREST
SHAREHOLDERS SHAREHOLDERS SHAREHOLDERS
38%
33%
new
shares
MERGED
ENTITY
The end result The creation of a leading, mid-cap Australian gold company with a pro forma market capitalisation of
approximately $1.15 billion [10] and capital resources to deliver financial flexibility and to enable it to pursue
growth opportunities and develop its core assets, which will include:
• four wholly owned producing gold mines at Edna May in Western Australia and Cracow, Mt Rawdon and
Pajingo in queensland; and
• a wholly owned development project at Mt Carlton in queensland.
These assets will comprise part of a combined Mineral Resource base of 6.9 million ounces of gold
equivalent and a combined Ore Reserve of 3.5 million ounces of gold equivalent. [11]
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-
Catalpa already owns the other 30% of the Cracow project.
-
Based on an illustrative Rights Offer price of a 10% discount to TERP, where TERP is calculated based on the VWAP of a Catalpa Share on the Last Trading Day.
-
Based on the Catalpa share price at the close of trading on the Last Trading Day and assuming $150 million is raised under the Rights Offer.
-
Calculated as at 30 June 2011.
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The Transaction has the following components:
-
the Scheme; and
-
the Asset Purchase and Share Issue.
In addition, if the Transaction is implemented, it is intended that the Rights Offer will be undertaken by Evolution Mining within 10 days after the Implementation Date.
Information on each of the components of the Transaction and the Rights Offer, as well as information on the General Meeting Resolutions, is set out below.
| scheme | scheme |
|---|---|
| What is the Scheme? |
The Scheme is a proposed members’ scheme of arrangement between Conquest and Conquest Shareholders under Part 5.1 of the Corporations Act. In order for the Scheme to be implemented, the Scheme Resolution must be passed at the Scheme Meeting. If the Scheme becomes Effective: •Catalpa will acquire all of the Conquest Shares such that Conquest will become a wholly owned subsidiary of Catalpa; •Conquest Shareholders who participate in the Scheme (other than Foreign Shareholders) will become shareholders in Evolution Mining; and •the Scheme will bind all Conquest Shareholders (including those who do not vote at the Scheme Meeting and those who vote against the Scheme at that meeting). |
| What is the Scheme Resolution? |
The Scheme Resolution is a resolution to approve the Scheme. It will be voted on at the Scheme Meeting and is set out in the Notice of Scheme Meeting (Attachment E). |
| Who will participate in the Scheme? |
Conquest Shareholders as at the Scheme Record Date will participate in the Scheme. |
| What will I get in exchange for my Conquest Shares? |
If you are an Eligible Shareholder (ie. not a Foreign Shareholder), you will receive 0.3 New Catalpa Shares for each Conquest Share you hold as at the Scheme Record Date. |
| How was the Scheme Consideration calculated? |
The Scheme Consideration was calculated so that Conquest Shareholders and Catalpa Shareholders would each have collective interests in the merged Conquest/Catalpa entity that were approximately the same (ie. 50/50)12so as to refect the agreed concept of a merger of equals. |
| What will Foreign Shareholders receive under the Scheme? |
Conquest Shareholders whose address (as recorded on the Conquest Register) is a place outside Australia and its external territories and New Zealand will be treated differently under the Scheme to other Scheme Shareholders (unless Conquest, Catalpa and Newcrest agree in writing that they should be treated in the same way). That is, Foreign Shareholders will not receive New Catalpa Shares for their Conquest Shares under the Scheme. Instead, the New Catalpa Shares to which they would have been entitled will be issued to the Sale Agent. The Sale Agent will sell those shares on the ASX and each Foreign Shareholder will be sent the part of the proceeds of such sale that is attributable to the New Catalpa Shares issued to the Sale Agent in respect of that Foreign Shareholder’s Conquest Shares (subject to, and in accordance with, the terms of the Scheme). |
| Is Catalpa bound to provide the Scheme Consideration? |
Yes – under the Deed Poll, Catalpa undertakes in favour of each Scheme Shareholder to, among other things, provide the Scheme Consideration in accordance with the terms of the Scheme (subject to the Scheme becoming Effective). under the Scheme, Scheme Shareholders appoint Conquest and its directors, offcers and secretaries as their agent and attorney to enforce the Deed Poll on their behalf, with such appointment to take effect upon the Scheme becoming Effective. |
CONTINUED ›
- This does not take into account the New Catalpa Shares to be issued by Catalpa to Newcrest (or its nominees) as consideration for the Newcrest Assets, nor does it take into account any shares issued pursuant to the Rights Offer.
SCHEME BOOKLET 11
| scheme continued | scheme continued |
|---|---|
| What happens if the Scheme is approved at the Scheme Meeting? |
If the Scheme Resolution is passed at the Scheme Meeting, Conquest will apply to the Court for orders approving the Scheme. At the hearing on the Second Court Date, each of Conquest, Catalpa and Newcrest will provide a certifcate to the Court confrming whether or not the Scheme Conditions (other than the condition relating to Court approval) have been satisfed or (if applicable) waived in accordance with the Transaction Implementation Deed. |
| What are the Scheme Conditions? |
As is customary for transactions of this nature, the Scheme is subject to a number of conditions which must be satisfed or (if applicable) waived in order for the Scheme to become Effective. A summary of the Scheme Conditions is set out in Section 7.4. The Scheme Conditions are set out in full in clause 3.1 of the Transaction Implementation Deed. A copy of that deed (without attachments) is included in the Scheme Booklet Supplement. |
| Can all the Scheme Conditions be waived? |
No – the conditions relating to Conquest Shareholder and Court approval of the Scheme, and the condition relating to Catalpa Shareholder approval of the Share Issue, cannot be waived. If these conditions are not satisfed, the Scheme will not proceed and the Transaction will not be implemented. The other conditions may be waived by the party for whose beneft the condition operates or where the condition operates for the beneft of more than one party, by each such party. |
| What happens if the Scheme is approved by the Court? |
If the Scheme is approved by the Court, Conquest will lodge the Court orders with ASIC, thereby giving effect to the Scheme. Also, the Asset Sale Agreement and the Subscription Deed will be executed following Court approval of the Scheme. |
| When will the Scheme become Effective? |
It is presently expected that the Effective Date will be 18 October 2011. If the Effective Date has not occurred before 30 November 2011, Conquest, Catalpa and Newcrest will each have a right to terminate the Transaction Implementation Deed if they are unable to agree to extend that date. In this event, the Scheme will not proceed and the Transaction will not be implemented. |
| What happens after the Scheme becomes Effective? |
Conquest will apply to have trading in Conquest Shares on the ASX suspended from the close of trading on the Effective Date. It is expected that the New Catalpa Shares to be issued as Scheme Consideration will commence trading on the ASX on a deferred settlement basis on the trading day after the Scheme becomes Effective (currently expected to be 19 October 2011). For settlement purposes, trades effected during the deferred settlement period will be treated as having been effected on the day normal T+3 trading commences (currently expected to be 4 November 2011). |
| What happens on the Implementation Date? |
On the Implementation Date, Catalpa will become the holder of all the Conquest Shares, Eligible Shareholders will be issued 0.3 New Catalpa Shares for each Conquest Share they hold as at the Scheme Record Date and the Sale Agent will be issued the New Catalpa Shares to which Foreign Shareholders would have been entitled had they been Eligible Shareholders. Also, the Asset Purchase will be completed and the Share Issue will be made on the Implementation Date. It is presently expected that the Implementation Date will be2 November 2011. |
CONTINUED ›
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| scheme continued | scheme continued |
|---|---|
| What happens after the Implementation Date? |
The New Catalpa Shares to be issued as Scheme Consideration will commence normal T+3 trading on the ASX following dispatch of holding statements in respect of those shares. This is currently expected to happen on4 November 2011. It is intended that Evolution Mining will commence the Rights Offer within 10 Business Days after the Implementation Date. More information on the Rights Offer is set out below. |
| Where can I find more information on the Scheme? |
The section of this Scheme Booklet,Meeting details and instructions on how to vote(see pages 7–8), sets out information on who will be entitled to vote at the Scheme Meeting, how they can vote at that meeting and the approval thresholds that must be satisfed in order for the Scheme Resolution to be passed. Section 1 sets out reasons why you may wish, consistent with the unanimous recommendation of the Conquest board, to vote in favour of the Scheme, and Section 2 sets out reasons why you may wish not to follow that recommendation and instead vote against the Scheme. Section 7.1 sets out certain risk factors that Conquest Shareholders should have regard to when considering how to vote on the Scheme. The Scheme, Deed Poll and Notice of Scheme Meeting can be found, respectively, at Attachment C, Attachment D and Attachment E. |
| ASSET PURCHASE | |
| What is the Asset Purchase? |
The Asset Purchase is a transaction pursuant to which Catalpa subsidiaries will acquire Newcrest’s interests in the gold mining and exploration projects at Mt Rawdon (100%) and Cracow (70%)13on the Implementation Date. |
| What is the consideration for the Newcrest Assets? |
As consideration for the Newcrest Assets, Catalpa will issue such number of shares to Newcrest (or its nominees) as will give Newcrest an interest in Evolution Mining of 38% on a Fully Diluted Value Basis. |
| Are there any conditions to the Asset Purchase? |
The Asset Purchase will only take place if all of the Scheme Conditions are satisfed or (if applicable) waived. One of those conditions relates to Catalpa Shareholders approving the issue of shares by Catalpa as consideration for the Newcrest Assets. This condition cannot be waived. |
| Where can I find more information on the Asset Purchase? |
Details of the Newcrest Assets are set out in Section 5. Details of the Share Issue are set out below. |
CONTINUED ›
- Catalpa already owns the other 30% of the Cracow project.
SCHEME BOOKLET 13
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SHARE ISSUE
What is the Share The Share Issue is the issue by Catalpa of shares (ie. the Subscription Shares) to Newcrest (or its
Issue? nominees) as consideration for the Newcrest Assets on the Implementation Date.
What are the The Subscription Shares will be fully paid ordinary shares that will, in aggregate, represent 38% of
Subscription Evolution Mining on a Fully Diluted Value Basis.
Shares?
What is a Fully This is the basis agreed between Conquest, Catalpa and Newcrest for calculating the number
Diluted Value of shares that will be issued to Newcrest (or its nominees) by Catalpa as consideration for the
Basis? Newcrest Assets.
The calculation is a complex one which is aimed at giving Newcrest an interest in Evolution Mining
of 38% based on the pro forma market value of Evolution Mining following implementation of the
Transaction.
To determine that pro forma market value, the shares in Catalpa (including the shares that will be
issued as consideration under the Scheme) and the implied value of Catalpa’s unlisted securities
(including the options to be issued as Majority Options Consideration) are taken into account.
The value ascribed to Catalpa’s unlisted securities for these purposes will depend, in part, on the
volume weighted average price of Catalpa Shares during the five trading day period ending on
(and including) the last trading day before the Implementation Date.
As the VWAP calculation cannot be determined until the Implementation Date, it is not possible
at this point in time to calculate the exact number of shares to be issued to Newcrest (or its
nominees) as consideration for the Newcrest Assets. However, as an example, if the VWAP of
Catalpa Shares for the relevant period was to be $1.59, [14] Newcrest (or its nominees) would be
issued 228,876,328 shares.
Are there any The Share Issue will only take place if all of the Scheme Conditions are satisfied or (if applicable)
conditions to the waived. As noted above, one of those conditions (which cannot be waived) requires that Catalpa
Share Issue? Shareholders approve the Share Issue.
Where can I find Details of Catalpa’s post-implementation capital structure (reflecting the issue of the Subscription
more information on Shares) are set out in Section 6.5.
the Share Issue?
RIGHTS OFFER
What is the Rights The Rights Offer is a proposed offer of new shares by Evolution Mining to raise approximately
Offer? $150 million.
What is the purpose The purpose of the Rights Offer is to capitalise Evolution Mining so as to provide it with financial
of the Rights Offer? flexibility and enable it to pursue growth opportunities and to develop its asset base.
How will the The Rights Offer will be renounceable, meaning that shareholders will be able to elect to have
Rights Offer be some or all of their rights sold, with any proceeds from such sale in excess of the offer price under
structured? the Rights Offer to be remitted to shareholders who make such an election.
The Rights Offer may include an accelerated institutional component. If it does include such a
component, eligible institutional shareholders will be given the opportunity to subscribe for new
shares under the Rights Offer before retail shareholders.
----- End of picture text -----
CONTINUED ›
- This was the VWAP of Catalpa Shares during the five trading day period ending on (and including) the Last Trading Day.
14
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| RIGHTS OFFER continued | RIGHTS OFFER continued |
|---|---|
| What needs to happen for the Rights Offer to be made? |
The Rights Offer is conditional on the Transaction being implemented. Relevantly, a condition to implementation of the Transaction is that Catalpa must execute an underwriting Agreement in respect of the Rights Offer (see Section 7.4). This means that, unless the condition is waived by Newcrest in accordance with the Transaction Implementation Deed15, the Rights Offer will, if undertaken: •be fully underwritten; and •be priced at a price per share that is not less than 80% of TERP, being the theoretical market price for shares in Evolution Mining immediately following the Rights Offer assuming the Rights Offer is fully subscribed (based on the VWAP of an Evolution Mining share on the last day of trading before the launch of the Rights Offer). |
| What price will the Rights Offer be made at? |
The pricing of the Rights Offer has not yet been determined as it is dependent on negotiations between Catalpa and potential underwriters and on other factors that will need to be considered closer to the time at which the offer will be launched, the most notable of which is Catalpa’s share price. |
| When will the Rights Offer be made? |
The Rights Offer will be made as soon as reasonably practicable (and, in any event, not more than 10 Business Days) after the Implementation Date. |
| Who will the Rights Offer be made to? |
The Rights Offer will be made on a pro rata basis to all shareholders in Evolution Mining. Accordingly, if the Scheme is implemented, those Conquest Shareholders who participate in the Scheme and do not dispose of the shares issued to them as Scheme Consideration before the record date for the Rights Offer will have the opportunity to subscribe for more shares under the Rights Offer. However, the Rights Offer will not be made to shareholders with a registered address outside Australia and New Zealand where it is determined that it would be unreasonable to make the offer to them. Those shareholders will be sent details of the Rights Offer and will be treated in a manner similar to that in which Foreign Shareholders are to be treated under the Scheme – that is, a nominee of Evolution Mining will sell their entitlements and remit the net proceeds of such a sale to them. At the request of Conquest and Catalpa, Newcrest has agreed not to participate in the Rights Offer. |
| How will the Rights Offer affect me? |
If you are entitled and wish to participate in the Rights Offer, you will need to pay to Evolution Mining or its agent an amount equal to the number of shares you wish to subscribe for under the offer multiplied by the offer price. The impact of the Rights Offer on your interest in Evolution Mining will depend on whether or not you take up your full pro rata entitlement under the offer: if you do, your interest will not be diluted, but if you do not, it will be (assuming the Rights Offer is fully underwritten). |
| What is the impact of Newcrest not participating in the Rights Offer? |
Newcrest’s non-participation in the Rights Offer is expected to result in its interest in Evolution Mining being reduced to approximately 33% (calculated on a Fully Diluted Value Basis).16 |
CONTINUED ›
-
Newcrest is the only party entitled to waive this condition.
-
Based on an illustrative Rights Offer price of a 10% discount to TERP, where TERP is calculated based on the VWAP of a Catalpa Share on the Last Trading Day.
SCHEME BOOKLET 15
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RIGHTS OFFER continued
What will happen Newcrest’s entitlements will be offered for sale under an institutional bookbuild. As announced
to Newcrest’s by Conquest and Catalpa on 19 July 2011, BlackRock and Baker Steel have each committed
entitlements? to subscribe for $25 million of shares under the institutional bookbuild, representing most of
Newcrest’s entitlements. [17] BlackRock and Baker Steel have also agreed to take up their full pro
rata entitlement as shareholders of Evolution Mining.
The number of shares that will be issued to BlackRock and Baker Steel pursuant to their
commitments will be, in each case, that number of shares equal to $25 million divided by the offer
price under the Rights Offer (rounded down to the nearest whole share).
The commitments of BlackRock and Baker Steel are subject to the following conditions:
• the clearing price under the institutional bookbuild not being more than 15% higher than the
closing price of Evolution Mining’s shares on the ASX on the trading day immediately preceding
the day on which the Rights Offer is launched;
• an underwriting agreement being entered into in relation to the Rights Offer and that agreement
not being terminated;
• shares being issued pursuant to the Rights Offer prior to 31 December 2011; and
• in the case of Baker Steel only, its funds under management not having fallen by more than
33.3% from their level as at 18 July 2011 (on this date, Baker Steel’s funds under management
totalled $1.5 billion).
Evolution Mining will pay each of BlackRock and Baker Steel a commitment fee of $250,000
(subject to the Court approving the Scheme and the Rights Offer being underwritten). Payment will
be made five Business Days after the institutional component of the Rights Offer is completed.
What is the TERP The TERP Shortfall is an amount which, pursuant to the Transaction Implementation Deed, will
Shortfall? be payable by Evolution Mining to Newcrest within two Business Days after completion of the
Rights Offer if the price at which shares are issued under the Rights Offer is less than 85% of TERP
(provided that the Rights Offer is completed).
What is the purpose The TERP Shortfall is intended to compensate Newcrest for any difference between the proceeds
of the TERP it receives from the sale of its entitlements under the Rights Offer and the proceeds it would have
Shortfall? received for those entitlements if the price at which shares were issued under the Rights Offer had
been 85% of TERP.
Will the TERP Whether or not the TERP Shortfall will be payable, and its amount, is subject to a number of
Shortfall be payable variables, including the actual price at which shares are issued under the Rights Offer, the VWAP
and, if so, how of shares in Evolution Mining immediately prior to the launch of the Rights Offer and the proceeds
much will it be? from the sale of Newcrest's entitlements under the Rights Offer.
Accordingly, it is not possible to definitively say at this point in time whether the TERP Shortfall will
be payable or, if so, what amount Newcrest will be entitled to receive.
However, if Evolution Mining is required to pay Newcrest the TERP Shortfall, it is not expected that
this amount would exceed $4 million. [18]
Where can I find If the Transaction is implemented and you hold shares in Evolution Mining at the relevant time, you
more information on will be sent further information about the Rights Offer by Evolution Mining (including an offer to
the Rights Offer? participate in the Rights Offer).
GENERAL MEETING RESOLUTIONS
What are the There are five resolutions that will be voted on at the General Meeting:
General Meeting • a resolution to approve the issue of the Tranche 1 Non-dilution Rights Options for the benefit of
Resolutions? Jake Klein;
• a resolution to approve the issue of the Tranche 2 Non-dilution Rights Options for the benefit of
James Askew;
• a resolution to approve the issue of the Tranche 3 Non-dilution Rights Options for the benefit of
Nicholas Curtis;
• a resolution to approve the cancellation of the Majority Options; and
• a resolution to approve both the cancellation of the Minority Options and the issue of the
Minority Options Consideration for the benefit of Messrs Klein, Askew and Curtis (being the
Interested Directors).
CONTINUED ›
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-
Newcrest’s entitlements under the Rights Offer will be in respect of approximately $57 million of the total $150 million proposed to be raised, based on Newcrest’s interest in Evolution Mining on a Fully Diluted Value Basis immediately following implementation of the Transaction (being a 38% interest).
-
This assumes that the offer price under the Rights Offer is not less than 80% of TERP and that not more than $150 million is raised under the Rights Offer.
16
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| GENERAL MEETING RESOLUTIONS continued | GENERAL MEETING RESOLUTIONS continued |
|---|---|
| Why do the General Meeting Resolutions require Conquest Shareholder approval? |
The General Meeting Resolutions need to be approved by Conquest Shareholders because: •in respect of the Non-dilution Rights Resolutions, they relate to the issue of securities by Conquest for the beneft of related parties (ie. the Interested Directors), which requires Conquest Shareholder approval under Chapter 2E of the Corporations Act and rule 10.11 of the Listing Rules; •in respect of the Majority Options Resolution, this relates to the cancellation of options for consideration, which requires Conquest Shareholder approval under rule 6.23.2 of the Listing Rules; and •in respect of the Minority Options Resolution, this relates to: —the cancellation of options for consideration, which requires Conquest Shareholder approval under rule 6.23.2 of the Listing Rules; and —the issue of securities by Conquest for the beneft of related parties (ie. the Interested Directors), which requires Conquest Shareholder approval under rule 10.11 of the Listing Rules. |
| Why is it proposed that the Non- dilution Rights Options be issued? |
As further explained in Section 10, when Messrs Klein, Askew and Curtis were appointed as directors of Conquest, the company agreed that, in the event that it made certain share issues, these directors would be entitled to Conquest Options. Accordingly, the Non-dilution Rights Resolutions are being put to a vote of Conquest Shareholders pursuant to contractual obligations which Conquest owes to the Interested Directors. |
| Will the Non-dilution Rights survive implementation of the Transaction? |
No – Messrs Klein, Askew and Curtis have each agreed that, if the Scheme becomes Effective, their Non-dilution Rights will be cancelled for nil consideration. |
| Why is it proposed that the Majority Options and Minority Options be cancelled? |
Conquest, Catalpa and Newcrest agreed an approach for dealing with the Conquest Options under the Transaction Implementation Deed with a view to ensuring, to the extent possible, that no Conquest Options would be on issue following implementation of the Transaction. under that approach, Conquest and Catalpa would each make offers in respect of certain Conquest Options (the Minority Options Offers and Majority Options Offers, respectively). If all of those offers are accepted and become unconditional, there will not be any securities convertible into Conquest Shares on issue following cancellation of the Majority Options pursuant to the Majority Options Offers. This would allow Evolution Mining to maintain a corporate structure whereby Conquest is a wholly owned subsidiary, which has benefts for Evolution Mining and, by extension, its shareholders. |
| Why are the Majority Options being treated differently to the Minority Options? |
It was initially contemplated that all Conquest Options would be dealt with in the same manner in connection with the Transaction – that is, all holders of Conquest Options would be made offers by Catalpa which, if accepted, would result in the Conquest Options being cancelled in exchange for Catalpa Options that would be issued on equivalent terms. During negotiation of the Transaction Implementation Deed, concern was expressed about the number of options which Catalpa would have on issue following implementation of the Transaction if all Conquest Options were to be exchanged for Catalpa Options. This concern was addressed by treating certain Conquest Options differently to all other Conquest Options. It was agreed that the Conquest Options that would be treated differently would be the options issued for the beneft of the Interested Directors pursuant to the resolutions passed at the 2010 EGM (ie. the Minority Options). It was agreed that, rather than being exchanged for Catalpa Options, the Minority Options would be exchanged for Conquest Shares that would be acquired by Catalpa under the Scheme, with 50% of the Scheme Consideration in respect these Conquest Shares to be subject to Escrow Restrictions for a period of two years. |
| How was the Minority Options Consideration calculated? |
For the purposes of the Minority Options Offers, a value was ascribed to the Conquest Shares that would be issued as consideration for the cancellation of each tranche of Minority Options: the value ascribed to the Conquest Shares was $6.5 million in respect of the Tranche 1 Minority Options and was $601,852 in respect of each of the Tranche 2 Minority Options and Tranche 3 Minority Options. These values were agreed following arm’s length commercial negotiations between Conquest, Catalpa and Newcrest. In the case of each tranche of Minority Options, the value of the Minority Options Consideration is materially lower than the value of the relevant Minority Options (according to the Black Scholes methodology) as agreed between Conquest, Catalpa and Newcrest. Conquest agreed to this in the interests of securing the opportunity for Conquest Shareholders to consider the Transaction. |
CONTINUED ›
SCHEME BOOKLET 17
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GENERAL MEETING RESOLUTIONS continued
What will the If the General Meeting Resolutions are approved, the Interested Directors will receive:
Interested Directors • pursuant to the Non-dilution Rights Resolutions, Conquest Options in accordance with the
receive if the terms of their existing Non-dilution Rights (see Section 10.7);
General Meeting • pursuant to the Majority Options Resolution, Catalpa Options in accordance with the terms of
Resolutions are
the relevant Majority Options Offers, which would be issued on the same basis as the other
approved?
Catalpa Options to be issued as Majority Options Consideration (see Section 11.4); and
• pursuant to the Minority Options Resolution, Conquest Shares in accordance with the terms of
the Minority Options Offers (see Section 12.4).
Pursuant to the Cancellation Confirmations, if the Scheme becomes Effective, the Non-dilution
Rights held by the Interested Directors will be cancelled for nil consideration.
Do the General A condition to implementation of the Transaction is that Conquest Shareholders approve both
Meeting the cancellation of the Minority Options and the issue of the Minority Options Consideration for
Resolutions need the benefit of the Interested Directors (see Section 7.4). This means that, if the Minority Options
to be approved Resolution is not approved at the General Meeting, the Transaction will not be implemented
in order for the (unless Conquest, Catalpa and Newcrest agree to waive the relevant condition in accordance with
Transaction to be the Transaction Implementation Deed).
implemented? If any of the other General Meeting Resolutions are not approved, this will not prevent
implementation of the Transaction.
Where can I find The section of this Scheme Booklet, Meeting details and instructions on how to vote (see pages
more information on 7–8), sets out information on who will be entitled to vote at the General Meeting, how they can vote
the General Meeting at that meeting and the approval threshold that must be satisfied in order for the General Meeting
Resolutions? Resolutions to be passed.
Part 2 contains further details about the General Meeting Resolutions.
The Notice of General Meeting can be found at Attachment F.
OTHER
What are the risks Like all transactions of this nature, the Transaction has risks. These are set out in Section 7.1
associated with the and include risks relating to the ability of Evolution Mining to achieve forecast production rates and
Transaction? realise its growth strategy. It is important that Conquest Shareholders carefully consider these risks
when deciding how to vote on the Scheme.
What happens if the Section 7.2 sets out some of the key consequences for Conquest Shareholders if the Transaction
Transaction is not is not implemented. These include the Conquest Shares not being acquired by Catalpa and
implemented? Conquest continuing to be listed on the ASX.
If the Transaction is not implemented, Conquest is expected to incur costs in connection with
pursuing the Transaction of approximately $3 million.
Has Conquest Yes – as is customary for transactions of this nature, Conquest has agreed to pay a break fee
agreed to pay a in certain circumstances. The total amount of the break fee is $3.2 million, which would be
break fee? shared equally between Catalpa and Newcrest in the event it became payable by Conquest. The
circumstances in which Conquest would be required to pay the break fee are described in Section
9.1. That section also describes the circumstances in which Catalpa would be required to pay a
break fee of $3.2 million to Conquest and Newcrest (in equal proportions).
Will I give any Yes – you should note that, if you participate in the Scheme, you will be taken to have warranted
warranties under the to Conquest and Catalpa that:
Scheme? • at the date your Conquest Shares are transferred to Catalpa under the Scheme, they are free
from all third party interests (including mortgages, charges, liens, encumbrances, pledges and
security interests) and restrictions on transfer of any kind; and
• you have full power and capacity to transfer your Conquest Shares to Catalpa together with all
rights and entitlements attaching to those Conquest Shares.
----- End of picture text -----
18
CONquEST MINING LIMITED
part 1 – Scheme
1 reaSonS to vote In favour of the Scheme
This Section 1 sets out some of the reasons why Conquest Shareholders may wish, consistent with the unanimous recommendation of the Conquest board, to vote in favour of the Scheme at the Scheme Meeting. These reasons should be considered in light of the other information in this Scheme Booklet, including the reasons why Conquest Shareholders may wish to vote against the Scheme (as set out in Section 2) and the risk factors set out in Section 7.1.
1.1 creation of a leading, growth-focused australian mid-cap gold producer
The Transaction will enable Conquest Shareholders to participate in a leading, growth-focused Australian mid-cap gold producer. Evolution Mining will have enhanced scale and increased market presence, providing access to growth opportunities which are unlikely to otherwise be available to Conquest as a stand-alone entity.
Evolution Mining has a pro forma market capitalisation of approximately $ 1.15 billion.[19] This compares to Conquest’s market capitalisation of approximately $ 303.3 million.[20]
The size of Evolution Mining will make it one of the largest gold companies on the ASX by market capitalisation, ranking seventh at the close of trading on the Last Trading Day.[21] It will also make Evolution Mining one of the largest ASX-listed gold companies by production. In this regard, the assets that will be owned by Evolution Mining produced approximately 303,000 ounces of gold in FY2011, and are forecast to produce 335,000 to 375,000 ounces of gold in FY2012 and 410,000 to 465,000 ounces of gold equivalent in FY2013.[22]
Evolution Mining will have a combined Mineral Resource base of 6.9 million ounces of gold equivalent and a combined Ore Reserve of 3.5 million ounces of gold equivalent.[23]
1.2 evolution mining will have a diversified asset portfolio and a defined growth pathway
Through having an equity interest in Evolution Mining, Conquest Shareholders will benefit from exposure to the following:
(a) a diversified portfolio of assets with four producing mines and an immediate development opportunity
Evolution Mining will wholly own four gold projects in queensland – three producing gold mines at Cracow, Mt Rawdon and Pajingo and a development asset at Mt Carlton – and a producing gold mine at Edna May in Western Australia. This will position Evolution Mining as a prominent Australian gold miner.
Conquest Shareholders will benefit from having a diversified asset portfolio as it will mean that they will not, as is currently the case, be exposed only to the projects at Pajingo and Mt Carlton. In addition, there is potential for substantial earnings growth from the successful exploration and development of the combined asset base, including the development of the Mt Carlton project.
- Based on the Conquest share price at the close of trading on the Last Trading Day.
-
Based on the Catalpa share price at the close of trading on the Last Trading Day and assuming $150 million is raised under the Rights Offer.
-
Based on the share prices of ASX-listed gold companies at the close of trading on the Last Trading Day and assuming $150 million is raised under the Rights Offer.
-
Refer to Section 6.3 for more information on the production forecasts for FY2012 and FY2013.
-
Calculated as at 30 June 2011.
19
SCHEME BOOKLET
==> picture [488 x 298] intentionally omitted <==
----- Start of picture text -----
PAJINGO MT CARLTON
Current Ownership 100% Conquest Current Ownership 100% Conquest
Gold Reserves (Moz) 0.1 Gold Equiv. Reserves (Moz) 1.3
Gold Resources (Moz) 1.1 Gold Equiv. Reserves (Moz) 2.1
FY2011 Gold Production (koz) 46 Project Status Development
Mine Life (Years) 5 Mine Life (Years) 12
Townsville
PAJINGO MT CARLTON MT RAWDON
Mackay Current Ownership 100% Newcrest
Gladstone Gold Reserves (Moz) 0.9
CRACOW
MT RAWDON Gold Resources (Moz) 1.0
Brisbane FY2011 Gold Production (koz) 90
Mine Life (Years) 8
EDNA MAY
Perth
CRACOW
EDNA MAY
Current Ownership 70% Newcrest
Current Ownership 100% Catalpa 30% Catalpa
Gold Reserves (Moz) 0.9 Gold Reserves (Moz) 0.2
Gold Resources (Moz) 1.8 Gold Resources (Moz) 0.9
FY2011 Gold Production (koz) 66 FY2011 Gold Production (koz) 102
Mine Life (Years) 9 Mine Life (Years) 5
----- End of picture text -----
figure 1: Assets that will be owned by Evolution Mining.[24]
Further information on the gold projects that will be owned by Evolution Mining is set out in Sections 3.2, 4.3 and 5.
(b) an enhanced production profile combining stable current production with strong growth prospects
The gold mines that will be owned by Evolution Mining collectively produced approximately 303,000 ounces of gold in FY2011. Development of Mt Carlton and the anticipated increases in production at Edna May and Pajingo are forecast to increase production to 335,000 to 375,000 ounces of gold in FY2012 and 410,000 to 465,000 ounces of gold equivalent in FY2013.[25]
Accordingly, Evolution Mining has a strong growth profile that will place it towards the upper end of mid-tier ASX-listed gold producers[26] in terms of production growth (see Figure 2). Although Conquest enjoys strong growth prospects as a stand-alone entity, Evolution Mining offers an opportunity for growth on a larger scale and with reduced risk given the broader asset portfolio.
==> picture [250 x 150] intentionally omitted <==
----- Start of picture text -----
97.3%
72.5%
35.3 –
53.5%
34.7%
27.1%
17.7%
8.2%
0.4%
KINGSGATE ALACER EVOLUTION MINING CGA MEDUSA OCEANAGOLD RESOLUTE ST BARBARA
----- End of picture text -----
==> picture [104 x 152] intentionally omitted <==
figure 2: Forecast percentage growth of Evolution Mining from FY2011[27] to FY2013 as compared to other mid-tier ASX-listed gold producers.[28]
- The information in this Figure is current as at 30 June 2011.
Refer to Section 6.3 for more information on the FY2012 and FY2013 production forecasts.
This includes companies listed on the ASX who produced between 100,000 ounces and 500,000 ounces of gold in FY2011 and who had a market capitalisation of between $500 million and $3 billion as at the close of trading on the Last Trading Day.
-
Based on the gold produced from the assets that will be owned by Evolution Mining in FY2011.
-
The forecast growth of Evolution Mining is based on the production estimates of Conquest and Catalpa, as described in Section 6.3. The production estimates for the other companies shown in Figure 2 are based on company filings and broker research reports and have not been independently verified.
20
Conquest MInInG LIMIteD
1 reaSonS to vote In favour of the Scheme contInueD
(c) exposure to a significant pipeline of exploration opportunities
Evolution Mining will have an extensive exploration portfolio. In addition to Conquest’s existing exploration projects in queensland, if the Transaction is implemented, Conquest Shareholders will also have exposure to resource and regional exploration opportunities at Edna May, Cracow and Mt Rawdon.
1.3 stronger financial platform for growth
Evolution Mining will have a strong balance sheet and greater financial capacity than Conquest has as a stand-alone entity. It is expected that, following the Rights Offer, Evolution Mining will have cash of approximately $199 million[29] and debt of approximately $48 million.[30] This will put Evolution Mining in a strong position to capitalise on the significant growth opportunities available to it, including the development of the Mt Carlton project.
Evolution Mining’s greater scale and scope are also expected to increase access to additional sources of capital in the equity and debt markets over time.
1.4 combination of highly experienced management teams with complementary skill sets
Evolution Mining will combine two experienced management teams with complementary skill sets.
Catalpa has a motivated and technically accomplished management team that has demonstrated commitment to realising shareholder value from the company’s asset portfolio. Conquest’s management team has an entrepreneurial, growth-oriented approach focused on delivery of the company’s growth plans to build shareholder value.
Further, the operational personnel of Catalpa and Conquest, together with the Newcrest Group employees working at the Mt Rawdon and Cracow projects who join Evolution Mining,[31] will bring a breadth of experience across open pit and underground operations on various scales and at various stages of development.
If the Transaction is implemented, Jake Klein (currently the Executive Chairman of Conquest) will become Executive Chairman of Evolution Mining and Bruce McFadzean, the current Managing Director and Chief Executive Officer of Catalpa, will continue to hold those positions.
1.5 enhanced market presence
Evolution Mining will be in the top 200 companies listed on the ASX by market capitalisation.[32]
It is expected that Evolution Mining will receive more analyst coverage and broker attention than currently received by Conquest, which will enhance the profile of Evolution Mining and make it more visible to the investment community. In this regard, Catalpa is currently covered by five research analysts who, at present, do not include Conquest within their coverage portfolio.
Also, having Newcrest as a major shareholder is expected to further enhance the market presence of Evolution Mining.
Based on the cash position of each of Catalpa and Conquest as at 30 June 2011 (including gold and silver available for sale), assuming $150 million is raised under the Rights Offer and taking into account the costs associated with the Transaction and the Rights Offer. This figure does not take into account any stamp duty payable by Catalpa in connection with the Transaction or the operating cash flows of Catalpa and Conquest during the period from 1 July 2011 to completion of the Rights Offer. It also does not take into account the Macquarie Facilities. As at the date of this Scheme Booklet, Conquest has not drawn down on any of the Macquarie Facilities.
Based on the debt position of each of Catalpa and Conquest as at 30 June 2011. This figure does not take into account the Macquarie Facilities. As at the date of this Scheme Booklet, Conquest has not drawn down on any of the Macquarie Facilities.
under the terms of the Asset Sale Agreement, all such employees will be offered new positions with Evolution Mining. For more information, refer to Sections 6.6(f) and 7.1(g).
Based on share prices of ASX-listed companies at the close of trading on the Last Trading Day and assuming $150 million is raised under the Rights Offer.
SCHEME BOOKLET 21
1.6 the independent expert has concluded that the transaction is in the best interests of conquest shareholders, in the absence of a superior proposal
Grant Samuel was commissioned by the Conquest board to assess the merits of the Scheme and the overall Transaction.
Grant Samuel has concluded that the Transaction is in the best interests of Conquest Shareholders, in the absence of a superior proposal. The reasons why Grant Samuel reached these conclusions are set out in the concise version of the Independent Expert’s Report, which can be found at Attachment A. Those reasons can be summarised as follows:
-
the proposed merger between Conquest and Catalpa under the Scheme is a genuine merger of equals and the terms of the merger are equitable, as Conquest Shareholders will collectively hold a share in Evolution Mining that is consistent with their contribution to the company;
-
the acquisition of the Newcrest Assets is on attractive terms;
-
Evolution Mining will be one of only a few mid-cap Australian gold producers, offering meaningful scale in terms of market capitalisation and gold production, operational diversification across a number of mine sites and short to medium term growth potential;
-
from an investor perspective, Evolution Mining should be a significantly more attractive gold company than Conquest on a stand-alone basis and there is a realistic prospect of a positive re-rating of the company over time;
-
Evolution Mining should be able to access capital (both debt and equity) with more certainty and at lower cost than Conquest;
-
Evolution Mining’s relationship with Newcrest has the potential to deliver growth opportunities not otherwise accessible to Conquest;
-
shares in Evolution Mining should trade at higher prices than shares in Conquest on a stand-alone basis and the Transaction will result in an uplift in the underlying value attributable to Conquest Shareholders, which value may be realised at some time in the future through a takeover of Evolution Mining; and
-
Conquest Shareholders will be better off if the Transaction is implemented than if it is not.
Conquest Shareholders should read the concise version of the Independent Expert’s Report carefully and in its entirety, and should have regard to the disadvantages of the Transaction as set out in that report. In relation to those disadvantages, Grant Samuel has concluded that they are not material by comparison to the benefits of the Transaction. When deciding how to vote on the Scheme, Conquest Shareholders should note that the Independent Expert has concluded that the Transaction is not “fair” (see Section 2.2). The Independent Expert has, however, concluded that the Transaction is reasonable and in the best interests of Conquest Shareholders, in the absence of a superior proposal.
A full version of the Independent Expert’s Report is included in the Scheme Booklet Supplement, which can be viewed and downloaded online at www.conquestmining.com.au. It can also be obtained by calling the Conquest transaction information line on 1300 047 569 (within Australia) or +61 3 9415 4242 (outside Australia) at any time between 9.00am and 5.00pm on Monday to Friday.
1.7 the scheme is unanimously recommended by the conquest board
After carefully considering the advantages and disadvantages of the Transaction for Conquest Shareholders (including the matters set out in Section 2), for the reasons set out above the Conquest directors believe that the Transaction is in the best interests of Conquest Shareholders and unanimously recommend that Conquest Shareholders vote in favour of the Scheme at the Scheme Meeting, in the absence of a Superior Proposal. Furthermore, each Conquest director intends to vote the Conquest Shares he holds or controls in favour of the Scheme.
1.8 the transaction has the unanimous support of the catalpa board
The Transaction is also unanimously supported by the Catalpa board. In this regard, it is noted that, in order for the Transaction to be implemented, Catalpa Shareholders must approve the Share Issue at the Catalpa Meeting, which is scheduled to be held on the same day as the Meetings.
22
Conquest MInInG LIMIteD
2 reaSonS to vote agaInSt the Scheme
This Section 2 sets out some of the reasons why Conquest Shareholders may wish not to follow the unanimous recommendation of the Conquest board and instead vote against the Scheme at the Scheme Meeting.
2.1 you may disagree with the unanimous recommendation of the conquest board and the favourable conclusion of the independent expert
Notwithstanding the unanimous recommendation of the Conquest board and the favourable conclusions of the Independent Expert (as referred to in Sections 1.7 and 1.6 respectively), you may believe that the Transaction is not in your best interests.
2.2 you may be concerned by the independent expert finding that the transaction is not “fair”
The Independent Expert has concluded that the Transaction is not “fair” on the basis that, pursuant to ASIC policy, the Transaction must be assessed as a control transaction (essentially, a takeover by Newcrest) due to the fact that Newcrest will have an interest in Evolution Mining of more than 20% following implementation. Based on market conditions at the time of its valuations, the Independent Expert believes the trading price of shares in Evolution Mining is unlikely to equate to the full underlying value of shares in a stand-alone Conquest. Whilst this has led the Independent Expert to conclude that the Transaction is not “fair”, the Independent Expert is of the view that the underlying value attributable to Conquest Shareholders will increase as a result of the Transaction (from $0.60 to $0.68 per share to $0.64 to $0.71 per share), and Conquest Shareholders will retain the prospect of realising this increased underlying value through a subsequent change of control transaction for Evolution Mining. For this and other reasons (see Section 1.6), the Independent Expert has concluded that Conquest Shareholders will be better off if the Transaction is implemented than if it is not.
2.3 if the transaction is implemented, you will be exposed to new risks
Conquest Shareholders are currently exposed to certain risks by virtue of having an equity interest in Conquest.
If the Transaction is implemented, Conquest Shareholders will maintain a level of exposure to these risks and will become exposed to additional risks associated with having an equity interest in Catalpa’s assets and the Newcrest Assets (all of which will be owned by Evolution Mining) and with the implementation of the Transaction more generally. Some of these risks are set out in Section 7.1. They include the following risks:
-
Evolution Mining may not achieve forecast production targets for FY2012 and FY2013 and the company’s development and exploration projects may prove not to be as successful as anticipated;
-
the Rights Offer may not be successful in raising $150 million, which would increase the likelihood that Evolution Mining would require financing (which may be difficult to obtain on acceptable terms) to support its growth strategy;
-
difficulties may be encountered in integrating the businesses of Conquest, Catalpa and the Newcrest Assets and in securing the employment of employees of the Newcrest Group who currently work at the Newcrest Assets; and
-
Conquest Shareholders will gain exposure to Catalpa’s hedge book.
The above is only a summary of some of the risks described in Section 7.1. Conquest Shareholders should have regard to those risks when deciding how to vote on the Scheme.
2.4 you may believe that your interests are best served by conquest remaining as a stand-alone entity
You may believe that Conquest will deliver greater returns to Conquest Shareholders by remaining as a stand-alone entity and/ or that, having regard to Conquest’s assets and their stage of development, the time is not right for the company to participate in a transaction such as the one proposed.
2.5 your equity interest in conquest’s assets will be diluted
You may also not wish for your equity interest in Conquest’s assets to be diluted, as will be the case if the Transaction is implemented. In this regard, implementation of the Transaction will reduce Conquest Shareholders’ equity interest in Conquest’s assets from 100% to approximately 31% (before the Rights Offer and on a Fully Diluted Value Basis).
2.6 you may want to maintain your investment profile
While Conquest and Catalpa are both gold producers, the operational profile, capital structure, size and geography of Evolution Mining will be different from that of Conquest on a stand-alone basis. Conquest Shareholders may wish to maintain an interest in Conquest as a stand-alone entity because they are seeking an investment in a listed company with the specific characteristics and investment focus of Conquest.
2.7 you may consider that a better proposal may emerge
You may consider that a proposal may emerge in the future that is more attractive for Conquest Shareholders than the Transaction. Implementation of the Transaction will obviously mean that existing Conquest Shareholders will not receive the benefit of any such proposal.
Whilst it is possible that a superior proposal for Conquest Shareholders could emerge in the future, to the knowledge and in the opinion of the Conquest directors, no alternative proposal currently exists that would provide Conquest Shareholders with a better outcome than the Transaction.
23
SCHEME BOOKLET
3 profIle of conqueSt
3.1 conquest’s background and history
(a) Background
Conquest is a junior gold producer with two existing assets located in north queensland: a 100% interest in the Pajingo gold operations and a 100% interest in a development asset at Mt Carlton.
==> picture [98 x 33] intentionally omitted <==
----- Start of picture text -----
Townsville
MT CARLTON
PAJINGO
Mackay
----- End of picture text -----
figure 3: Location of Conquest’s assets.
Conquest is listed on the ASX and is included in the S&P/ASX 300 index, having a market capitalisation of approximately $303.3 million at the close of trading on the Last Trading Day.
Conquest had a combined Mineral Resource of more than 3,200,000 ounces of gold equivalent and a combined Ore Reserve of approximately 1,400,000 ounces of gold equivalent as at 30 June 2011.
Conquest is a growth‐oriented company that has focused on the delivery of an ambitious growth plan to build substantial value for its shareholders and fill a void created by consolidation in Australia’s gold sector. Conquest seeks to deliver this growth through successful development of its Mt Carlton project and by acting on consolidation opportunities.
(b) history
Conquest has been listed on the ASX since 1987.
In 2006, Conquest discovered the Silver Hill gold-silver-copper deposit at its 100% owned Mt Carlton project in north queensland.
In November 2010, Conquest completed its acquisition of the gold mine at Pajingo in north queensland.
(c) conquest board and key management
As at the date of this Scheme Booklet, the Conquest board comprises:
-
Jake Klein – Executive Chairman;
-
James Askew – Non-executive Director;
-
Nicholas Curtis – Non-executive Director;
-
Richard Krasnoff – Non-executive Director;
-
Paul Marks – Non-executive Director; and
-
Doug Stewart – Non-executive Director.
Profiles of Evolution Mining’s directors following the Transaction are set out in Section 6.2.
As at the date of this Scheme Booklet, Conquest’s key executive management comprises:
-
Jake Klein – Executive Chairman;
-
Mark Le Messurier – Chief Operating Officer;
-
Aaron Colleran – General Manager, Corporate; and
-
Evan Elstein – Company Secretary.
24
Conquest MInInG LIMIteD
3 profIle of conqueSt contInueD
3.2 conquest’s activities and assets
(a) group structure
==> picture [475 x 265] intentionally omitted <==
----- Start of picture text -----
CONQUESTCATALPA
NORTH QUEENSLAND CQT GOLD
METALS LIMITED AUSTRALIA PTY LTD
NQM EXPLORATION BAAL GAMMON WALKER RESOURCES NQM GOLD 2
NQM GOLD PTY LTD
PTY LTD OPERATIONS PTY LTD PTY LTD PTY LTD 40%
60%
PAJINGO
(UNINCORPORATED
JOINT VENTURE)
MT CARLTON
PROJECT
PAJINGO GOLD
MINE (OPERATIONS)
----- End of picture text -----
figure 4: Structure of the Conquest Group.[33]
(b) operations and projects overview
All of Conquest’s operations are located in north queensland, as shown below.
==> picture [342 x 291] intentionally omitted <==
figure 5: Closer view of where Conquest’s assets are located in north Queensland.
- All subsidiaries shown in Figure 4 are wholly owned, unless stated otherwise. North queensland Metals Limited is now known as “CqT Holdings Pty Limited”.
25
SCHEME BOOKLET
(i) Pajingo gold operations (100%)
Conquest acquired the Pajingo mine in November 2010 following the successful takeover of North queensland Metals Limited[34] ( nqm ) (which held a 60% interest in the mine) and the acquisition of HSK Gold Australia Pty Ltd (which held the remaining 40%) from Heemskirk Consolidated Limited.
The Pajingo mine is located 53 kilometres south of Charters Towers in north queensland.
Project tenure covers 962 square kilometres consisting of three mining leases (covering 36.6 square kilometres), three exploration permits (covering 572 square kilometres) and six applications for exploration permits (covering 353 square kilometres).
geology
The Pajingo mine’s mineralisation is hosted in structurally controlled epithermal quartz veins within an andesite host rock. In general, veining strikes grid east with tensional jogs producing high grade pods trending grid east-north-east. The main mineralised veins in the Vera Nancy corridor plunge at about 20 degrees to grid east.
Most ore bodies comprise a main vein, which carries the bulk of the precious metals, and splay veins that can contain economic grades but usually only when close to the main vein. The mineralised structures can vary from less than one metre to 15 metres in width, but are generally two metres to three metres wide.
==> picture [488 x 307] intentionally omitted <==
figure 6: Pajingo regional geology plan.
exploration
Exploration at the Pajingo mine in FY2012 will focus on increasing the resource base.
The near mine exploration team will focus on drilling known targets underground, including Bunty, Bell Vein to Cindy trend, Power Line, eastern extensions to Faith, Leaping Dog lower and Vera South hanging wall and foot wall veins. The team also plans to explore whether the Vera-Nancy system may be repeated to the south-west (Vera-Nancy grid south) and at depth.
The regional exploration team will focus on potential resources proximal to the existing operation, in particular the Moonlight prospect and within the Barking Spider Zone which is located directly along strike and extending for about three kilometres to the south-east of the existing workings. Approximately 10 kilometres of drilling is planned, split between the Moonlight prospect (4,500 metres) and the Barking Spider Zone (5,500 metres). A 3D induced polarisation program will test the continuance of veining along strike and to the south-east of the existing workings within the Barking Spider Zone.
- Now known as “CqT Holdings Pty Limited”.
26
Conquest MInInG LIMIteD
3 profIle of conqueSt contInueD
mining, milling, processing and cost profile
Ore is mined by both underground and open pit methods at the Pajingo mine. underground mining is based on longhole open stoping with ore hauled to surface via decline. Conquest owns and operates the underground mining fleet. Open pit mining is carried out by a contractor. It is expected that approximately 250,000 tonnes of ore will be mined from underground and 100,000 tonnes from open pit in FY2012.
The ore from the Pajingo mine is free milling and is treated on site by conventional crush-grind-CIP processing to produce gold-silver doré. The Pajingo processing plant can be operated at a maximum throughput of approximately 650,000 tonnes per annum, however the processing plant is currently operated at 350,000 to 450,000 tonnes per annum. Open pit mining and satellite mining strategies (for example the Twin Hills project) are aimed at increasing ore production to utilise the latent capacity in the processing plant.
In FY2011, the Pajingo mine produced 45,889 ounces of gold at a site cash cost of $950 per ounce (including royalties). Production data is summarised in the following table.
==> picture [489 x 192] intentionally omitted <==
----- Start of picture text -----
3 months to 3 months to 3 months 3 months
30 sePtemBer 31 decemBer to 31 march to 30 June total
2010 2010 2011 2011 fy2011
underground development (metres) 960 1,193 1,170 1,531 4,854
underground ore mined (tonnes) 63,372 59,394 70,194 88,625 281,585
underground grade (g/t gold) 5.3 6.2 6.2 5.5 5.8
– –
Open pit ore mined (tonnes) 8,517 40,117 48,634
Open pit grade (g/t gold) – – 4.1 2.4 2.7
Mill production (dry tonnes) 64,236 55,817 65,101 102,019 287,173
Mill grade (g/t gold) 4.43 5.44 7.11 5.02 5.44
Recovery (%) 95.8 82.4 95.6 95.7 94.0
Gold produced (ounces) 9,092 8,041 14,176 14,580 45,889
Silver produced (ounces) 11,960 7,921 11,510 20,303 51,694
Site cash cost ($/ounce gold) [35] 939 1,211 781 978 950
----- End of picture text -----
outlook
The Pajingo mine is forecast to produce at least 70,000 ounces of gold at a site cash cost of approximately $867 per ounce in FY2012. The forecast increase in production as compared to FY2011 is primarily a result of an expected increase in underground and open pit mining rates and mining from higher grade areas underground. The increased underground mining rates in FY2012 are based on an upgraded underground mining fleet, with two new loaders, three new haul trucks, a twin boom jumbo and other ancillary equipment to be purchased, and are subject to the requisite approvals (including environmental approval) being obtained for the development of open pit deposits. Production rates are expected to remain reasonably constant into FY2013 with production of 70,000 to 75,000 ounces of gold expected.
The development plan for the Pajingo mine includes the following targets:
-
to stabilise at 60,000 ounces of gold per annum production from underground;
-
to build a five year mine life from the underground resources / reserves; and
-
to reduce low grade pit feed to the mill and increase the high grade feed.
(ii) Mt Carlton gold-silver-copper project (100%)
The Mt Carlton gold-silver-copper deposit was discovered by Conquest in 2006.
Conquest completed a definitive feasibility study on the Mt Carlton project as an open pit poly-metallic gold-silver-copper project in late 2009 and an optimisation study in late 2010. The optimisation study incorporated a series of material improvements to the engineering design, metallurgical process and commercial off-take arrangements that significantly enhanced the project’s economics. In December 2010, the Conquest board formally approved development of the project.
The Mt Carlton project is located 150 kilometres south of Townsville in north queensland. Project tenure covers 915 square kilometres consisting of eight exploration permits (covering 860 square kilometres) and one application for an exploration permit (covering 55 square kilometres).
- These costs include the cost of mining, processing and administration, including accounting movements for stockpiles, gold in circuit, royalties and silver credits but excluding costs for exploration, development and capital works.
SCHEME BOOKLET 27
geology
The Mt Carlton project is a high-sulphidation epithermal style deposit with mineralisation occurring within felsic volcanic rocks on the northern margin of the Permian Bowen Basin. The project comprises gold, silver and copper primarily as copper arsenic sulphides (enargite) and silver arsenic sulphides (tetrahedrite/polybasite) and some native gold (within pyrite).
The Mt Carlton deposit comprises two discrete zones: the large gold dominant V2 deposit and the smaller, silver rich A39 zone. The V2 body is flat lying and situated 20 metres to 180 metres below surface and is 70 metres thick with an areal extent of 500 metres by 500 metres. The two deposits are located approximately 200 metres apart.
==> picture [444 x 250] intentionally omitted <==
figure 7: Mt Carlton regional geology plan.
exploration
Conquest is implementing a $5.2 million exploration budget at Mt Carlton in the current exploration season. The key objectives of the exploration program at Mt Carlton are to:
-
locate additional mineralised centres adjacent to the V2 and A39 deposits;
-
convert resources to reserves at V2 East; and
-
locate additional high-grade silver mineralisation similar to the A39 deposit.
mining, milling, processing and cost profile
Mining operations have been planned using a mining contractor with a conventional excavator and haul truck operation, mining 5 metre benches in two passes.
The V2 pit will be mined over approximately nine years. The low-grade ore will be stockpiled and processed after depletion of the high-grade ore. This leaves about 1.8 million tonnes of stockpiled ore, grading approximately 1.5 g/t gold, to be processed post completion of open pit mining.
The A39 pit will be mined out over 16 months.
For overall pit scheduling, it was assumed the mill will be commissioned using V2 ore and then A39 ore will be Campaign treated on a three month cycle.
The Mt Carlton project process flowsheet is based on conventional technology, consisting of crushing, grinding and bulk sulphide flotation to produce a concentrate. The plant has a design capacity of 800,000 tonnes per annum and will provide a project life of at least 12 years based on current Ore Reserves.
28
Conquest MInInG LIMIteD
3 profIle of conqueSt contInueD
The Mt Carlton optimisation study estimated an integrated project capital cost of $126.9 million, of which $6.95 million has already been spent following the purchase in August 2010 of a new SAG mill, the longest lead-time component of the processing facility. The capital cost estimate is summarised in the table below. The estimate is prepared to an accuracy level of ±15% as at 31 December 2010.
==> picture [259 x 31] intentionally omitted <==
----- Start of picture text -----
caPital costs summary
Facility Capital cost ($ million)
----- End of picture text -----
| Mining establishment | 1.9 |
|---|---|
| Mine pre-stripping | 15.6 |
| Process plant | 53.5 |
| Tailings management facility | 5.6 |
| Infrastructure | 15.7 |
| total direct costs | 92.3 |
| EPCM | 10.1 |
| Owner’s costs | 14.0 |
| total indirect costs | 24.1 |
| Estimate accuracy provision | 10.5 |
| total | 126.9 |
When in full production the V2 deposit is expected to produce approximately 70,000 ounces of gold, 650,000 ounces of silver and 2,500 tonnes of copper in concentrate annually, at an average site cash cost of $630 per ounce of gold produced (including smelting charges). In September 2010, Conquest signed a life-of-mine off-take agreement for the sale of goldsilver-copper concentrate from the V2 deposit with Shandong Guoda Gold Co. Limited ( sgg ), one of the largest gold smelters in China.
The A39 deposit will be campaign processed over two or three years. In total, the deposit is expected to produce approximately 7.4 million ounces of silver and 2,800 tonnes of copper in concentrate, at an average site cash cost of $12.50 per ounce of silver (including smelting charges). In July 2011, Conquest signed a life-of-mine off-take agreement for the sale of silver-copper concentrates from the A39 deposit with Shandong Humon Smelting Co. Limited.
outlook
Environmental approval and landholder agreements are pre-conditions to the issue of the mining lease and the commencement of development work at Mt Carlton.
In relation to environmental approval, the queensland Department of Environment and Resource Management has accepted Conquest’s proposed environmental plan and Conquest is currently working with the department to finalise an environmental authority for the project. Once this has been finalised and agreements with the relevant landholders have been entered into, it is expected that the mining lease will be issued.
Assuming the timely receipt of permits, it is expected that a construction management contract will be awarded and site works will commence later this calendar year and that plant commissioning will occur in the second half of CY2012. Successful commissioning and ramp-up is expected to see full scale production achieved in the first half of CY2013. On this basis, initial production of 40,000 to 60,000 ounces of gold equivalent is forecast for FY2013.
Conquest has accepted an offer from Macquarie for $100 million of debt funding for the Mt Carlton project to ensure it has the funding available to develop the project in accordance with the timing outlined in the preceding paragraph. The debt funding is to be made available by Macquarie by way of the following facilities:
-
$50 million project finance facility to fund construction and working capital of the Mt Carlton project, which shall be available until 30 September 2012 provided that the first draw down of the facility must occur before 31 March 2012 (unless otherwise agreed in writing by Macquarie);
-
$40 million bridge finance facility to fund construction of the Mt Carlton project, which shall be available until 31 March 2012 (unless otherwise agreed in writing by Macquarie) but which Conquest may elect to cancel at no cost prior to 31 October 2011; and
-
$10 million performance bond facility for the provision of unconditional performance bonds to satisfy the requirements of the queensland Department of Mines and Energy under the terms and conditions of the tenements for the Mt Carlton project (or as otherwise agreed with Macquarie).
The availability of funding under each of these facilities is subject to satisfaction of certain conditions precedent, including the execution of formal documentation. Conquest’s obligations under the facilities will be secured by charges, mortgages and guarantees given by Conquest and certain of its related bodies corporate.
SCHEME BOOKLET 29
The terms agreed with Macquarie require Conquest to enter into silver and copper hedging arrangements in respect of 2.5 million ounces of silver and 3,420 tonnes of copper between March 2013 and March 2017. No gold hedging is required.
In the event that Conquest draws down on the bridge finance facility, it must issue Conquest Options to Macquarie exercisable at a price that is 25% above the VWAP of Conquest Shares on the ASX on each of the 10 days prior to the date on which the options are granted (provided that the options will not have an exercise price higher than $0.65). The number of Conquest Options that would be issued to Macquarie in connection with the bridge finance facility is to be determined in accordance with the following formula:
$10 million Number of options = Option exercise price
As at the date of this Scheme Booklet, Conquest has not drawn down on any of the Macquarie Facilities. Conquest considers it unlikely that it will do so to a material extent prior to implementation of the Transaction. Conquest and Catalpa intend that, post implementation, the board of Evolution Mining will consider the optimum financing structure for the development of the Mt Carlton project having regard to the cash position, operating cash flows and capital requirements of the company. In this regard, Conquest and Catalpa expect that Evolution Mining will be able to secure more favourable financing terms than they are each able to secure on a stand-alone basis. It is their current intention that Evolution Mining will complete a refinancing following implementation of the Transaction.
If the Transaction is not implemented, Conquest will need to utilise the majority of the funds available under the Macquarie Facilities for the development of the Mt Carlton project.
3.3 conquest mineral resources and ore reserves
(a) Pajingo mineral resources (as at 30 June 2011)
| measured | measured | measured | indicated | indicated | indicated | inferred | inferred | inferred | total measured, indicated & inferred |
total measured, indicated & inferred |
total measured, indicated & inferred |
|
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Tonnes | Gold (g/t) | Gold (ounces) |
Tonnes | Gold (g/t) | Gold (ounces) |
Tonnes | Gold (g/t) | Gold (ounces) |
Tonnes | Gold (g/t) | Gold (ounces) |
|
| Underground | ||||||||||||
| Cindy – – – 69,000 6.5 15,000 46,000 4.4 7,000 115,000 5.7 21,000 |
||||||||||||
| Faith 19,000 4.7 3,000 105,000 6.5 22,000 101,000 4.7 15,000 225,000 5.6 40,000 |
||||||||||||
| Jandam 110,000 5.1 18,000 997,000 4.3 138,000 453,000 2.7 39,000 1,560,000 3.9 195,000 |
||||||||||||
| Sonia 26,000 3.6 3,000 151,000 9.8 47,000 206,000 10.7 71,000 382,000 9.9 121,000 |
||||||||||||
| Venue- VNu – – – 356,000 2.4 28,000 262,000 1.3 11,000 617,000 1.9 39,000 |
||||||||||||
| Veracity 2,000 16.9 1,000 299,000 6.0 58,000 123,000 3.8 15,000 425,000 5.4 74,000 |
||||||||||||
| Zed 43,000 7.1 10,000 526,000 4.0 68,000 1,147,000 3.5 130,000 1,715,000 3.8 208,000 |
||||||||||||
| Subtotal 200,000 5.4 35,000 2,502,000 4.7 375,000 2,377,000 3.8 288,000 5,039,000 4.3 698,000 |
||||||||||||
| Open pit | ||||||||||||
| Vera North upper – – – 102,000 2.5 8,000 7,000 0.9 200 110,000 2.4 8,000 |
||||||||||||
| Venue – – – 203,000 3.3 22,000 1,000 1.7 100 205,000 3.3 22,000 |
||||||||||||
| Subtotal – – – 306,000 3.0 30,000 8,000 1.0 300 314,000 3.0 30,000 |
||||||||||||
| total 200,000 5.4 35,000 2,808,000 4.5 405,000 2,346,000 3.8 288,000 5,354,000 4.2 728,000 |
-
The Pajingo Mineral Resources are inclusive of Ore Reserves.
-
The Pajingo Mineral Resources have been estimated by ordinary kriging and reported using a cut-off grade of 1.0 g/t gold for underground resources and 0.65 g/t gold for open pit resources.
-
The Pajingo Mineral Resource statement has been prepared in accordance with the JORC Code.
-
There are no known environment, permitting, legal, taxation, political or other relevant issues that would materially affect the estimates of the Mineral Resources.
-
Tonnes and grades are stated to a number of significant digits reflecting the confidence of the estimate. Since each number is rounded individually, the columns and rows in the above table may not show exact sums or weighted averages of the reported tonnes and grades.
30
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3 profIle of conqueSt contInueD
(b) twin hills mineral resources (as at 30 June 2011)
| measured | measured | measured | indicated | indicated | indicated | inferred | inferred | inferred | total measured, indicated & inferred |
total measured, indicated & inferred |
total measured, indicated & inferred |
|
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Tonnes | Gold (g/t) | Gold (ounces) |
Tonnes | Gold (g/t) | Gold (ounces) |
Tonnes | Gold (g/t) | Gold (ounces) |
Tonnes | Gold (g/t) | Gold (ounces) |
|
| 309 Deposit – – – 2,450,000 2.20 174,000 1,150,000 2.84 105,000 3,600,000 2.40 278,000 |
||||||||||||
| Lone Sister 540,000 4.10 71,000 280,000 3.40 31,000 200,000 2.80 18,000 1,020,000 3.70 120,000 |
||||||||||||
| total twin hills 540,000 4.10 71,000 2,730,000 2.30 205,000 1,350,000 2.80 123,000 4,620,000 2.70 398,000 |
-
309 Deposit Mineral Resources have been calculated using multiple indicatory kriging. The 309 Deposit Mineral Resources are reported above a cut-off of 0.5 g/t gold within pit shell optimised at $1500 pit to reflect potential open pit extraction and above a cut-off of 2.0 g/t gold outside the $1500 per ounce pit shell to reflect potential extraction by underground mining methods.
-
The Lone Sister Mineral Resource has been interpolated using ordinary kriging in five metres by five metres by five metres blocks. The Lone Sister Mineral Resource is reported at a 2.0 g/t gold cut-off grade.
-
The Twin Hills Mineral Resource statement has been prepared in accordance with the JORC Code.
-
Tonnes and grades are stated to a number of significant digits reflecting the confidence of the estimate. Since each number is rounded individually, the columns and rows in the above table may not show exact sums or weighted averages of the reported tonnes and grades.
(c) mt carlton mineral resources (as at 30 June 2011)
| measured | measured | measured | indicated | indicated | indicated | inferred | inferred | inferred | total measured, indicated & inferred |
total measured, indicated & inferred |
total measured, indicated & inferred |
|
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Tonnes | Grade (g/t gold, g/t silver, % Copper) |
Cont metal (ounces of gold, ounces of silver, tonnes of copper) |
Tonnes | Grade (g/t gold, g/t silver, % copper) |
Cont metal (ounces of gold, ounces of silver, tonnes of copper) |
Tonnes | Grade (g/t gold, g/t silver, % copper) |
Cont metal (ounces of gold, ounces of silver, tonnes of copper) |
Tonnes | Grade (g/t gold, g/t silver, % copper) |
Cont metal (ounces of gold, ounces of silver , tonnes of copper) |
|
| A39 Deposit | ||||||||||||
| Silver 1,900,000 226 13,800,000 440,000 99 1,400,000 330,000 62 700,000 2,660,000 185 15,800,000 |
||||||||||||
| Copper 0.18 3,400 0.06 300 0.03 100 0.14 3,800 |
||||||||||||
| Gold equivalent 1,900,000 4.40 270,000 440,000 1.90 27,000 330,000 1.20 13,000 2,660,000 3.60 310,000 |
||||||||||||
| V2 Deposit | ||||||||||||
| Gold 12,660,000 1.78 700,000 10,900,000 1.41 492,000 1,160,000 0.67 25,000 24,720,000 1.56 1,240,000 |
||||||||||||
| Silver 27 11,000,000 20 7,000,000 29 1,100,000 24 19,100,000 |
||||||||||||
| Copper 0.30 37,700 0.23 24,800 0.17 1,900 0.26 64,400 |
||||||||||||
| Gold equivalent12,660,000 2.60 1,100,000 10,900,000 2.00 700,000 1,160,000 1.30 49,000 24,720,000 2.30 1,849,000 |
||||||||||||
| total gold equivalent 1,370,000 727,000 62,000 2,159,000 |
-
Mt Carlton Mineral Resources have been estimated using multiple indicator kriging. Value and metal grades have been estimated into panels with dimensions 25 metres by 25 metres (east, west) by 5 metres (elevation).
-
Mt Carlton Mineral Resources use a net metal value cut-off of $20 per tonne (calculated using a gold price of uS$1140 per ounce, a silver price of uS$18.30 per ounce, a copper price of uS$3.14 per pound and an uSD:AuD exchange rate of 0.90, and including metal recovery and payability rates).
-
Mt Carlton Mineral Resources are inclusive of Ore Reserves.
-
The Mt Carlton Mineral Resource statement has been prepared in accordance with the JORC Code.
-
The gold equivalence calculation was made by Conquest using a gold price of uS$1100 per ounce, a silver price of uS$22.00 per ounce and a copper price of uS$3.50 per pound. Relative metal recovery and payability rates are also incorporated into the gold equivalence calculation.
-
Tonnes and grades are stated to a number of significant digits reflecting the confidence of the estimate. Since each number is rounded individually, the columns and rows in the above table may not show exact sums or weighted averages of the reported tonnes and grades.
SCHEME BOOKLET 31
(d) Pajingo ore reserves (as at 30 June 2011)
| Proved | Proved | Proved | ProBaBle | ProBaBle | ProBaBle | total Proved & ProBaBle | total Proved & ProBaBle | total Proved & ProBaBle | |
|---|---|---|---|---|---|---|---|---|---|
| Tonnes | Gold (g/t) | Gold (ounces) |
Tonnes | Gold (g/t) | Gold (ounces) |
Tonnes | Gold (g/t) | Gold (ounces) |
|
| Underground | |||||||||
| Cindy – – – 33,000 5.5 6,000 33,000 5.5 6,000 |
|||||||||
| Faith 6,000 5.8 1,000 83,000 6.1 16,000 90,000 6.1 18,000 |
|||||||||
| Jandam – – – 43,000 5.1 7,000 43,000 5.1 7,000 |
|||||||||
| Sonia 7,000 4.4 1,000 116,000 9.3 35,000 123,000 9.0 36,000 |
|||||||||
| Veracity – – – 74,000 5.3 13,000 74,000 5.3 13,000 |
|||||||||
| Zed 41,000 5.9 8,000 122,000 6.0 23,000 163,000 6.0 31,000 |
|||||||||
| Subtotal 54,000 5.7 10,000 471,000 6.6 100,000 525,000 6.5 110,000 |
|||||||||
| Open pit | |||||||||
| Vera North upper – – – 120,000 2.2 8,000 120,000 2.2 8,000 |
|||||||||
| Venue – – – 219,000 3.1 22,000 219,000 3.1 22,000 |
|||||||||
| Subtotal – – – 339,000 2.8 30,000 339,000 2.8 31,000 |
|||||||||
| total 54,000 5.7 10,000 810,000 5.0 130,000 864,000 5.1 140,000 |
-
Pajingo Ore Reserves have been estimated at a stope cut-off grade of 3.9 g/t gold for underground reserves and 0.7 g/t gold for open pit reserves.
-
Pajingo Ore Reserves assume a gold price of $1350 per ounce.
-
Pajingo Ore Reserves were estimated from geological resource models using Vulcan 3D Mine Design software. Potential reserve (resource) mining blocks were generated based upon classification of Measured and Indicated resources only as defined by the JORC Code.
-
Pajingo Ore Reserves were estimated using a stope and pit evaluation spreadsheet to determine the value of each resource mining block, with only those blocks that returned a positive financial result being included in the reserve base. Each resource mining block was valued against costs associated with its extraction, treatment, refining and selling to provide revenue.
-
There are no known environmental, permitting, taxation, political or other relevant issues that would materially affect the estimates of the Pajingo Ore Reserves.
-
Tonnes and grades are stated to a number of significant digits reflecting the confidence of the estimate. Since each number is rounded individually, the columns and rows in the above table may not show exact sums or weighted averages of the reported tonnes and grades.
32
Conquest MInInG LIMIteD
3 profIle of conqueSt contInueD
(e) mt carlton ore reserves (as at 31 december 2010)
| Proved | Proved | Proved | ProBaBle | ProBaBle | ProBaBle | total Proved & ProBaBle | total Proved & ProBaBle | total Proved & ProBaBle | |
|---|---|---|---|---|---|---|---|---|---|
| Tonnes | Grade (g/t gold, g/t silver, % copper) |
Cont metals (ounces of gold, ounces of silver, tonnes of copper) |
Tonnes | Grade (g/t gold, g/t silver, % copper) |
Cont metals (ounces of gold, ounces of silver, tonnes of copper) |
Tonnes | Grade (g/t gold, g/t silver, % copper) |
Cont metals (ounces of gold, ounces of silver, tonnes of copper) |
|
| A39 | |||||||||
| Silver 469,300 553 8,300,000 300 352 4,000 469,600 552 8,300,000 |
|||||||||
| Copper 0.64 3,000 0.41 <1,000 0.64 3,000 |
|||||||||
| Gold equivalent 469,300 11.10 167,000 300 7.10 100 469,600 11.10 167,000 |
|||||||||
| V2 | |||||||||
| Gold 5,148,300 2.90 479,000 4,120,900 2.51 333,000 9,269,200 2.73 812,000 |
|||||||||
| Silver 36 6,000,000 23 3,000,000 30 9,000,000 |
|||||||||
| Copper 0.40 21,000 0.26 11,000 0.34 31,000 |
|||||||||
| Gold equivalent 5,148,300 4.00 661,000 4,120,900 3.20 426,000 9,269,200 3.70 1,088,000 |
|||||||||
| total gold equivalent 828,000 426,000 1,255,000 |
-
The Mt Carlton Ore Reserve estimate was prepared by Australian Mine Design and Development Pty Ltd. All of the Ore Reserves are for extraction by open pit mining.
-
The Mt Carlton Ore Reserve estimate is based on Measured Mineral Resources and Indicated Mineral Resources only. The Ore Reserve estimate is based on the Mineral Resource estimation completed in October 2009 and has not been updated for the more recent estimation as at 30 June 2011. Conquest does not believe that a re-estimate of the Ore Reserve is currently warranted because the change between the October 2009 and June 2011 Mineral Resources has not been material.
-
The cut-off grade is defined as the grade that equals the combined processing and site fixed cost per tonne. If a tonne of material exposed on a mining bench contains enough gold, copper and silver to cover the processing and site fixed cost after allowing for processing recoveries and selling costs (off site transport, smelting, refining and royalties) then that tonne is above cut-off grade and is classed as ore. If the recoverable value is less than the processing and site fixed cost per tonne it is below cut-off grade and is classed as waste. Revenue is calculated using a gold price of uS$1140 per ounce, a silver price of uS$18.30 per ounce, a copper price of uS$3.14 per pound and an uSD:AuD exchange rate of 0.90.
-
The gold equivalence calculation was made by Conquest using a gold price of uS$1100 per ounce, a silver price of uS$22.00 per ounce and a copper price of uS$3.50 per pound. Relative estimated metal recovery and payability rates are also incorporated into the gold equivalence calculation.
-
Tonnes and grades are stated to a number of significant digits reflecting the confidence of the estimate. Since each number is rounded individually, the columns and rows in the above table may not show exact sums or weighted averages of the reported tonnes and grades.
33
SCHEME BOOKLET
3.4 conquest’s recent share price performance
The chart below shows the closing price of Conquest Shares on the ASX over the 12 month period up to (and including) the Last Trading Day.
==> picture [470 x 206] intentionally omitted <==
----- Start of picture text -----
0.80
0.70
0.60
0.52
0.50
0.40
0.30
0.20
0.10
0.00
Closing Price (AUD)
Sep 10 Oct 10 Nov 10 Dec 10 Jan 11 Feb 11 Mar 11 Apr 11 May 11 Jun 11 July 11 Aug 11 Sep 11
----- End of picture text -----
The closing price of Conquest Shares on the ASX as at the close of trading on the Last Trading Day was $0.52.
During the three month period up to (and including) the Last Trading Day:
-
the highest recorded daily closing price for Conquest Shares on the ASX was $0.52 (on 6 September 2011); and
-
the lowest recorded daily closing price for Conquest Shares on the ASX was $0.40 (on 29 June 2011).
-
The last recorded sale price for Conquest Shares on the ASX before the public announcement of the Transaction was $0.45 on 14 June 2011.
3.5 conquest’s capital structure and ownership
As at the date of this Scheme Booklet, Conquest has the following securities on issue:
-
583,241,478 fully paid ordinary shares (quoted on ASX); and
-
67,489,734 Conquest Options (not quoted on ASX) exercisable at various prices and having various expiry dates (being the Majority Options and Minority Options).
If the Minority Options Offers become unconditional, Conquest will issue a further 18,094,801 fully paid ordinary shares for the benefit of the Interested Directors as consideration for the cancellation of the Minority Options.
As at the date of this Scheme Booklet, Conquest has the following substantial shareholders:
==> picture [488 x 17] intentionally omitted <==
----- Start of picture text -----
suBstantial shareholders numBer of conquest shares Percentage shareholding
----- End of picture text -----
| Gold Fields Ltd | 51,783,388 | 8.88% |
|---|---|---|
| Baker Steel Capital Managers LLP | 34,007,860 | 5.83% |
| Lujeta Pty Limited | 33,400,000 | 5.73% |
3.6 conquest financial information
The financial information for the six months ended 31 December 2010 and year ended 30 June 2010 provided below has been extracted from, respectively, the half year and full year financial reports published by Conquest and released on ASX. The financial information is intended to provide a high level overview of Conquest’s historical financial position and is not intended to provide the level of detail or understanding which is available from a review of the published financial reports which are available on ASX or Conquest’s website.
The financial reports from which these extracts have been taken have been audited (in the case of the report for the full year ended 30 June 2010) or reviewed (in the case of the report for the half year ended 31 December 2010) by KPMG and prepared in accordance with section 307C of the Corporations Act. KPMG did not become aware of any matters that made it believe that the reports had not been prepared in accordance with the Corporations Act, including:
-
giving a true and fair view of the consolidated entity’s financial position and performance; and
-
complying with Accounting Standard AASB 134: Interim Financial Reporting and the Corporations Regulations.
34
Conquest MInInG LIMIteD
3 profIle of conqueSt contInueD
The financial statements for the full year ended 30 June 2010 do not incorporate assets and liabilities of NqM, which was acquired by Conquest after that date.[36] These assets and liabilities are, however, reflected in the financial statements for the half year ended 31 December 2010.
The information below is only a summary of the financial statements and has been prepared for the purposes of this Scheme Booklet.
==> picture [489 x 439] intentionally omitted <==
----- Start of picture text -----
reviewed audited
31 decemBer 2010 30 June 2010
condensed consolidated statement of financial Position $ $
Current assets
Cash and cash equivalents 39,515,704 56,087,972
Trade and other receivables 3,491,290 1,232,270
Inventories 5,962,529 –
Held for sale assets 8,500,000 –
Other current assets 1,476,496 414,701
total current assets 58,946,019 57,734,943
Non-current assets
Investments 8,114 265,686
Property, plant and equipment 20,024,108 518,835
Exploration and evaluation expenditure 60,616,020 35,233,774
–
Mine development 18,719,848
–
Intangible assets 60,345,155
Other non-current assets 72,500 86,167
total non-current assets 159,785,745 36,104,462
total assets 218,731,764 93,839,405
Current liabilities
Trade and other payables 8,242,882 1,543,919
Employee benefits 1,135,975 39,479
total current liabilities 9,378,857 1,583,398
Non-current liabilities
–
Restoration provision 6,791,722
total non-current liabilities 6,791,722 –
total liabilities 16,170,579 1,583,398
net assets 202,561,185 92,256,007
Equity
Share capital 230,472,174 121,097,570
Reserves 6,780,856 2,666,544
Accumulated losses (34,691,845) (31,508,107)
total equity 202,561,185 92,256,007
----- End of picture text -----
3.7 continuous disclosing entity
As a company listed on the ASX and a disclosing entity under the Corporations Act, Conquest is subject to regular reporting and disclosure obligations. Copies of documents lodged with ASIC in relation to Conquest may be obtained from, or inspected at, an ASIC office.
Copies of Conquest’s annual report for the year ended 30 June 2010, Conquest’s financial report for the half year ended 31 December 2010 and any continuous disclosure notices given by Conquest after the lodgement of the aforementioned annual report may be obtained from Conquest’s website (www.conquestmining.com.au) or ASX’s website (www.asx.com.au). Conquest will provide a copy free of charge to anyone who requests a copy of any of these documents before the Scheme is approved by the Court.
As at the date of this Scheme Booklet, Conquest is not withholding any information from disclosure on the basis of an exception from disclosure in the Listing Rules.
- Conquest completed the compulsory acquisition of all outstanding shares in NqM on 23 November 2010 following its takeover bid for NqM, which closed on 22 October 2010. NqM is now known as “CqT Holdings Pty Limited”.
35
SCHEME BOOKLET
4 profIle of catalpa
4.1 catalpa’s background and history
(a) Background
Catalpa is a mid-tier gold producer with two existing producing gold assets: a 100% interest in the Edna May gold operations in Western Australia and a 30% interest in the Cracow gold operations in queensland.
==> picture [251 x 61] intentionally omitted <==
----- Start of picture text -----
CRACOW
GOLD OPERATIONS
Brisbane
EDNA MAY
GOLD OPERATIONS
Perth
----- End of picture text -----
figure 8: Location of Catalpa’s operations.
Catalpa has a market capitalisation of approximately $303 million.[37] Catalpa is publicly listed, with its shares traded on the ASX, and is included in the S&P/ASX 300 Index.
With a combined Mineral Resource of more than two million ounces of gold and a combined Ore Reserve of one million ounces of gold, the Cracow (30%) and Edna May (100%) gold operations together provide cash flows to fund Catalpa’s growth strategy and provide shareholder returns.
Both the mine at Edna May and the mine at Cracow offer further Ore Reserve and Mineral Resource growth potential, with ongoing exploration programmes at both operations. Catalpa has had a five year strategic plan to grow to become a 500,000 ounce of gold per annum producer, which has in part led to the Transaction. The successful completion of the Transaction is a key step in delivering on that strategic plan and will position Catalpa for further future growth opportunities.
(b) history
Catalpa has been listed on the ASX since 15 August 2002 (Catalpa traded as Westonia Mines Limited (ASX: WEZ) from 15 August 2002 to 3 September 2008). In mid-2008, as a result of improved gold prices, Catalpa updated its feasibility study and reinvigorated exploration at its Edna May project with a view to recommencing operations at Edna May, a redevelopment of historical gold operations. This was successfully achieved, with the first gold pour by Catalpa at Edna May taking place in April 2010. In late 2009 Catalpa completed a merger with Lion Selection Limited through which Catalpa acquired its 30% interest in the Cracow project.
4.2 catalpa board and key management
As at the date of this Scheme Booklet, the Catalpa board comprises:
-
Peter Maloney – Non-executive Chairman;
-
Bruce McFadzean – Managing Director and Chief Executive Officer;
-
John Rowe – Non-executive Director;
-
Barry Sullivan – Non-executive Director;
-
Murray Pollock – Non-executive Director; and
-
Graham Freestone – Non-executive Director.
Profiles of Evolution Mining’s directors following the Transaction are set out in Section 6.2.
- Based on the Catalpa Share price at the close of trading on the Last Trading Day.
36
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4 profIle of catalpa contInueD
As at the date of this Scheme Booklet, Catalpa’s key executive management comprises:
-
Bruce McFadzean – Managing Director and Chief Executive Officer;
-
Erik Palmbachs – Chief Financial Officer and Company Secretary;
-
Stuart Pether – Chief Operating Officer;
-
John Fraser – General Manager, Edna May;
-
Adrian Pelliccia – Manager, Business Development;
-
John Winterbottom – Manager, Geology; and
-
Raelene Wyatt – Manager, Human Resources.
4.3 catalpa’s activities and assets
(a) group structure
==> picture [350 x 214] intentionally omitted <==
----- Start of picture text -----
CATALPA CATALPA
EDNA MAY WESTONIA MINES LION SELECTION
OPERATIONS PTY LTD MINERALS PTY LTD PTY LTD
100%
AUSELECT PTY LTD
EDNA MAY
LION MINING PTY LTD
20%
5%
CRACOW SEDGOLD PTY LTD
5%
FERNYSIDE PTY LTD
----- End of picture text -----
figure 9: Structure of the Catalpa Group.[38]
(b) operations and projects overview
(i) Edna May gold operations (100%)
Catalpa’s wholly-owned and operated Edna May gold operations are conveniently positioned just two kilometres from the infrastructure of the town of Westonia, on the eastern edge of Western Australia’s wheat-belt region. The mine is approximately half way between Perth and Kalgoorlie and ideally situated to be serviced by either of these major mining centres. The mine is in close proximity to all required infrastructure, and its workforce is approximately 30% local with the balance commuting from Perth by bus on a rostered basis.
The Edna May gold operation is a redevelopment of a historical gold operation. Early underground mining produced approximately 365,000 ounces of gold at a grade of 19.5 g/t gold over 23 years of non-continuous operations between 1911 and 1947. More contemporary open pit mining in the late 1980s produced approximately 274,000 ounces of gold at a grade of 1.7 g/t gold between 1986 and 1991.
Following Catalpa recommencing operations at Edna May, first gold was poured in April 2010 and, based on Catalpa’s current mine and processing schedule, gold production at the Edna May open pit is expected to be in excess of 100,000 ounces of gold recovered on average per annum for a life of mine of more than nine years.
With its robust economics, geologically and metallurgically well defined ore-body, high Ore Reserve confidence and expected recovery rate of 92%, Catalpa’s Edna May gold operations are expected to deliver material cash flows for the medium term.
- All subsidiaries shown in Figure 9 are wholly owned.
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SCHEME BOOKLET
==> picture [430 x 295] intentionally omitted <==
figure 10: Location of Edna May gold operations.
operations update
Wet and dry commissioning of the Edna May gold operation processing plant was completed on 15 May 2010 upon successful performance testing of the plant at its 2.8 million tonnes per annum nameplate design capacity.
Following an extended ramp up to full production, Catalpa remains confident that the operation will continue to achieve bankable feasibility study targets over the coming months with the processing plant at Edna May achieving steady state operations during the June quarter 2011 with a record quarterly production of 20,569 ounces of gold (March 2011 quarter: 14,463 ounces of gold). The grade control model continues to reconcile well with production.
Production for the year ended 30 June 2011 was 65,592 ounces of gold at a net C1 cash cost of $1,121 per ounce. For the six months ended 30 June 2011, production was 35,032 ounces of gold at a net cash cost of $1,203 per ounce.
Studies are in progress to increase processing capacity to 3.2 million tonnes per annum in CY2012 (as per the bankable feasibility study) towards a further increase in gold production.
Catalpa continues to focus on further plant optimisations together with advancing the underground opportunity for potential delivery of high grade ore in 2012. Ongoing resource definition and extension drilling programmes are planned and budgeted through CY2011, and underground mining studies are in progress.
hedging
Catalpa has entered a gold hedging agreement with Macquarie under which Catalpa has forward sold certain quantities of gold production from its Edna May gold operation. under the terms of the hedging agreement, Catalpa has forward sold approximately 286,588 ounces of gold to be delivered on a quarterly basis between 1 July 2011 and 30 September 2015 at a price of A$1,573 per ounce. The hedging in place equates to an average of 67,432 ounces of gold per annum to be delivered on a quarterly basis and the forward sold quantity for FY2012 reflects approximately 67% to 73% of Edna May’s FY2012 forecast production. under the terms of the hedging agreement, Catalpa is required to deliver the following ounces of gold to Macquarie in the following financial years:
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----- Start of picture text -----
financial year ounces of gold
FY2012 62,411
FY2013 66,589
FY2014 71,042
FY2015 69,668
FY2016 16,878
----- End of picture text -----
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Catalpa’s existing hedging was entered into as a requirement of the project finance facility for the development of Edna May that Catalpa has in place with Macquarie. Catalpa has no current intention to enter into any new gold or currency hedging arrangements.
geology
The Edna May gold mineralisation is hosted within three en echelon tonalitic gneiss intrusions, namely Edna May, Greenfinch and Golden Point. The deposits are bound to the north and south by an ultramafic amphibolite.
The central Edna May gneiss forms a continuous but irregular body over a one kilometre strike, with an average thickness of approximately 100 metres. The body of gneiss strikes to the west-north-west and dips at 70 degrees north-north-east.
At 30 June 2011, the Edna May gold operations contained Mineral Resources of 1.7 million ounces of gold at an average grade of 1.1 g/t gold and Ore Reserves of 0.9 million ounces of gold at average grade of 1.1 g/t gold (as detailed in Section 4.4 below).
underground exploration
In May 2011, Catalpa announced a revised underground Indicated Mineral Resource and Inferred Mineral Resource of 700,000 tonnes at 7.4 g/t gold for 166,000 ounces of gold (which is included in the total Mineral Resource of 1.7 million ounces of gold). The underground Mineral Resource is estimated to a relatively shallow depth of 550 metres below surface with significant potential for further growth at depth and along strike. This potential was recently demonstrated by the intersection of high grade mineralisation up to 100 metres below the base of the Mineral Resource.
The recent Mineral Resource upgrade, along with ongoing mining studies, continues to support the feasibility of an underground operation. Catalpa is currently progressing a fully funded CY2011 drilling programme targeting expansion and definition of the underground Mineral Resource with a view to establishing an underground operation concurrent with existing open pit operations in 2012.
A bore field is being constructed off site to allow for the historical Edna May underground decline to be dewatered without impacting process water supply. Early in CY2012 Catalpa expects to commence the rehabilitation of the existing decline, commence trial mining and continue the drilling of the mineral resource from underground. underground mining studies are currently underway, targeting the supply of high grade feed to the Edna May process plant in the March 2012 quarter. The study is expected to be completed in the December 2011 quarter.
Once trial mining and underground development has successfully commenced a decision will be made on whether to progress to full scale underground production. If a decision is taken to proceed with full scale underground production it is expected to commence in CY2012. Catalpa is currently forecasting underground production of 25,000 to 35,000 ounces of gold in FY2013, subject to the decision to proceed to full scale production.
==> picture [382 x 240] intentionally omitted <==
----- Start of picture text -----
Decline
Leucogranite
Resource Model
Pegma�te
New mineralisa�on 100m beneath
Resource Model
----- End of picture text -----
figure 11: Edna May oblique section (facing east) showing underground Mineral Resource location.
SCHEME BOOKLET 39
other exploration
Mineralisation at all three identified deposits (Edna May, Greenfinch and Golden Point) remain open at depth. In addition to the development of the high grade underground Mineral Resource at Edna May, exploration potential exists below Greenfinch and Golden Point to expand Mineral Resources and Ore Reserves with further drilling.
Furthermore, Catalpa has exploration rights in respect of 790 square kilometres of ground, covering virtually the entire Westonia greenstone belt. It extends over 40 kilometres in length and large tracts remain under-explored and untested. The Westonia greenstone belt displays many geological similarities to the adjacent Southern Cross greenstone belt, which is host to several operating and historic gold mines that have produced in excess of 12 million ounces of gold.
mining, milling, processing and cost profile
The Edna May open pit mine has an Ore Reserve in excess of 25 million tonnes at a grade of 1.1 g/t gold which is planned to be mined in four stages over its nine year mine life. It has a low life-of-mine strip ratio which allows the mine to employ a single owner operated mining fleet for most of the mine life.
The process plant consists of a 2.0kW SAG mill and a 3.7kW ball mill along with other components necessary to provide processing capacity of 2.8 million tonnes per annum.
The process plant consists of a conventional carbon in leach process with a typical recovery of approximately 92%. The mine and processing schedule are expected to allow average open pit gold production of more than 100,000 ounces of recovered gold per annum over its nine year mine life.
==> picture [490 x 120] intentionally omitted <==
----- Start of picture text -----
3 months to 3 months to 3 months to 3 months to
30 sePtemBer 2010 31 decemBer 2010 31 march 2011 30 June 2011 total fy2011
Ore mined (tonnes) 301,840 776,387 735,346 743,693 2,557,266
Ore milled (tonnes) 568,224 595,053 544,033 608,263 2,315,573
Grade (g/t) 0.83 1.00 0.93 1.17 0.99
Recovery (%) 88 90 89 91 90
Recovered gold 13,413 17,148 14,463 20,569 65,592
C1 cash cost
(A$/ounce) [39] – 953 1,261 1,163 1,121
----- End of picture text -----
outlook
Gold production for the Edna May gold operations for FY2012 is expected to be within the range of 85,000 to 93,000 ounces of gold at a C1 cash cost between $830 and $940 per ounce. Catalpa publicly disclosed this guidance in its recent ASX release quarterly Activities and Cash Flow Report June 2011 on 28 July 2011. The production estimate is supported by current Ore Reserves.
Gold production for the Edna May gold operations for FY2013 is expected to be within the range of 115,000 to 125,000 ounces of gold based on open pit production of 90,000 to 95,000 ounces of gold and underground production of 25,000 to 30,000 ounces of gold. As discussed above, the Edna May FY2013 production figure is subject to the successful completion of the underground development study and trial mining (which are budgeted from existing cashflows), a decision to commence full scale underground production and expansion of the Edna May process plant (which is also accounted for in the current budget). It also assumes conversion of underground Mineral Resources such that a portion of underground Mineral Resources is mined. The forecast open pit production is supported by current Ore Reserves.
(ii) Cracow gold operations (30% currently)
The Cracow gold mining and exploration joint ventures are owned by Catalpa (which holds a 30% interest)[40] and Newcrest (which holds a 70% interest)[41] . The Cracow mine is located in central queensland, Australia, approximately four kilometres from the township of Cracow and approximately 500 kilometres north-west of the city of Brisbane. Newcrest manages the mining operations and exploration in the district but will cease to do so following implementation of the Transaction. under the terms of the Cracow gold mining and exploration joint ventures, Catalpa holds pre-emptive rights over Newcrest’s 70% interests in the joint ventures.
As at 30 June 2011, the Cracow Goldfield contained Mineral Resources of 0.9 million ounces of gold at an average grade of 6.3 g/t gold and Ore Reserves of 0.24 million ounces of gold at average grade of 7.0 g/t gold (on a 100% basis).
Production for the year ended 30 June 2011 was 30,517 ounces of gold at a net cash cost of $602 (on a 30% attributable basis). For the six months ended 30 June 2011 production was 14,996 ounces of gold at a net cash cost of $684 per ounce (on a 30% attributable basis).
See Section 5.2 for further details on the Cracow gold operations.
-
C1 cash cost represents the cost for mining, processing and administration, including accounting movements for stockpiles and gold-in circuit. It does not include costs for exploration, mine development, royalties or processing mill capital works. It includes net proceeds from by-product credits.
-
The following wholly owned subsidiaries of Catalpa hold interests in the Cracow mining joint venture – Lion Mining Pty Ltd (20%), Sedgold Pty Ltd (5%) and Fernyside Pty Ltd (5%). Lion Mining Pty Ltd also holds Catalpa’s 30% interest in the Cracow exploration joint venture.
-
A wholly owned subsidiary of Newcrest, Newcrest Operations Limited holds Newcrest’s 70% interest in the Cracow joint ventures.
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mining, milling, processing and cost profile (on a 30% attributable basis)
==> picture [489 x 111] intentionally omitted <==
----- Start of picture text -----
3 months to 3 months to 3 months to 3 months to
30 sePtemBer 2010 31 decemBer 2010 31 march 2011 30 June 2011 total fy2011
Ore mined (t) 35,069 36,420 34,828 32,238 138,555
Ore milled (t) 36,613 35,342 37,226 40,891 150,072
Grade (g/t) 7.19 7.40 6.79 6.16 6.86
Recovery (%) 91.2 92.6 92.2 92.6 92.2
Recovered gold 7,727 7,794 7,496 7,500 30,517
C1 cash cost (A$/ounce) [42] 513 533 621 750 602
----- End of picture text -----
outlook
Section 5.2(e) sets out production guidance in relation to Cracow for FY2012. Section 6.3 provides production guidance for FY2013.
4.4 catalpa mineral resources and ore reserves
(a) mineral resources
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----- Start of picture text -----
total measured,
measured indicated inferred indicated & inferred
Million Gold ‘000 Million Gold ‘000 Million Gold ‘000 Million Gold ‘000
tonnes g/t ounces tonnes g/t ounces tonnes g/t ounces tonnes g/t ounces
----- End of picture text -----
| Greenfnch | 0.9 | 1.1 | 30 | 2.5 | 1.0 | 80 | 0.6 | 1.0 | 20 | 4.0 | 1.0 | 130 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Edna May & | ||||||||||||
| Golden Point | 19.7 | 1.0 | 660 | 15.5 | 1.0 | 494 | 10.0 | 0.9 | 276 | 45.2 | 1.0 | 1,430 |
| Edna May | ||||||||||||
| underground | – | – | – | 0.4 | 7.3 | 98 | 0.3 | 7.6 | 69 | 0.7 | 7.4 | 166 |
| Stockpiles | – | – | – | 2.2 | 0.5 | 38 | – | – | – | 2.2 | 0.5 | 38 |
| total edna | ||||||||||||
| may | 20.6 | 1.0 | 690 | 20.6 | 1.1 | 710 | 10.9 | 1.1 | 365 | 52.1 | 1.1 | 1,763 |
| Cracow JV | ||||||||||||
| (30%) | 0.1 | 9.7 | 26 | 0.3 | 7.7 | 77 | 0.9 | 5.5 | 165 | 1.3 | 6.3 | 268 |
| total | ||||||||||||
| catalPa | 20.7 | 1.1 | 716 | 20.9 | 1.2 | 787 | 11.8 | 1.4 | 530 | 53.4 | 1.2 | 2,032 |
(b) information relating to catalpa mineral resource statement
Edna May and Greenfinch
-
Catalpa owns 100% of Edna May Operations Pty Ltd which in turn owns 100% of the Edna May gold operations.
-
The Edna May April 2010 and Greenfinch December 2009 Mineral Resources were estimated using Hellman & Schofield multiple indicator kriging block modeling techniques, based on a 0.4 g/t gold cut-off grade within a geologically and grade defined mineralisation envelopes and in accordance with the JORC Code.
-
The Edna May Mineral Resource estimate of recoverable tonnes and grades used multiple indicator kriging with block support correction into 25 metres (east) by 20 metres (north) by 5 metres (elevation) model blocks and assumed smallest mining unit for ore selection in mine grade control of 5 metres (east) by 5 metres (north) by 2.5 metres (elevation). The Greenfinch Mineral Resource estimate of recoverable tonnes and grades used multiple indicator kriging with block support correction into 20 metres (east) by 15 metres (north) by 5 metres (elevation) model blocks and assumed smallest mining unit for ore selection in mine grade control of 5 metres (east) by 3 metres (north) by 2.5 metres (elevation).
-
Measured Mineral Resources and Indicated Mineral Resources lie in areas where drilling is available at a maximum of 25 metres by 25 metres spacing. Inferred Mineral Resources exist in areas of broader spaced drilling, generally peripheral to the Measured Mineral Resource and Indicated Mineral Resource panels.
-
The Edna May gold operations and Greenfinch Mineral Resource figures are stated at 30 June 2011, with depletion by production where relevant.
-
C1 cash cost represents the cost for mining, processing and administration, including accounting movements for stockpiles and gold-in circuit. It does not include costs for exploration, mine development, royalties or processing mill capital works. It includes net proceeds from by-product credits.
SCHEME BOOKLET 41
-
There are no known environmental, permitting, legal, taxation, political or other relevant issues that would materially affect the estimates of the Mineral Resources.
-
Mineral Resources are inclusive of Ore Reserves. The stated contained Mineral Resource metal ounces are considered in situ; beneficiation recovery factors have not been applied.
-
Due to rounding of figures, small discrepancies may exist.
Edna May underground
-
Catalpa owns 100% of Edna May Operations Pty Ltd which in turn owns 100% of the Edna May gold operations.
-
Edna May underground Mineral Resources, were estimated using ordinary kriging techniques by Catalpa, based on a 3 g/t gold cut-off grade within a geologically and grade defined mineralisation envelopes and in accordance with the JORC Code.
-
Edna May underground Mineral Resources figures are stated as at 15 May 2011, with depletion by production where relevant.
Cracow
-
The Cracow project comprises two unincorporated joint ventures between Catalpa (30%) and Newcrest (70%). Catalpa owns 100% of Lion Mining Pty Ltd (formerly Sedimentary Holdings NL), Sedgold Pty Ltd and Fernyside Pty Ltd which in turn own 20%, 5% and 5% respectively of the Cracow mining joint venture. Lion Mining Pty Ltd holds Catalpa’s 30% interest in the Cracow exploration joint venture.
-
Cracow Mineral Resource figures are stated on a 30% attributable basis, with depletion by production where relevant to 30 June 2011.
-
Due to rounding of figures, small discrepancies may exist.
(c) ore reserves
==> picture [490 x 41] intentionally omitted <==
----- Start of picture text -----
Proved ProBaBle total Proved and ProBaBle
Million Gold ‘000 Million Gold ‘000 Million Gold ‘000
tonnes g/t ounces tonnes g/t ounces tonnes g/t ounces
----- End of picture text -----
| Greenfnch | 0.8 | 1.1 | 28 | 1.7 | 1.0 | 58 | 2.5 | 1.1 | 86 |
|---|---|---|---|---|---|---|---|---|---|
| Edna May & | |||||||||
| Golden Point | 14.4 | 1.1 | 504 | 8.5 | 1.1 | 298 | 22.8 | 1.1 | 803 |
| Stockpiles | – | – | – | 2.2 | 0.5 | 38 | 2.2 | 0.5 | 38 |
| total edna may | 15.2 | 1.1 | 532 | 12.4 | 1.0 | 394 | 27.5 | 1.1 | 927 |
| Cracow JV | |||||||||
| (30%) | 0.1 | 8.1 | 18 | 0.3 | 6.8 | 55 | 0.3 | 7.0 | 73 |
| total | |||||||||
| catalPa | 15.3 | 1.1 | 550 | 12.6 | 1.1 | 449 | 27.8 | 1.1 | 1,000 |
(d) information relating to catalpa ore reserve statement
Edna May and Greenfinch
-
A gold price of A$1,250 per ounce has been assumed in estimating the Greenfinch and Edna May Ore Reserves.
-
The economic cut-off grade applied to the Edna May and Greenfinch Ore Reserve was 0.4 g/t gold.
-
Edna May and Greenfinch Ore Reserve figures are stated at 30 June 2011, with depletion by production where relevant.
-
There are no known environmental, permitting, legal, taxation, political or other relevant issues that would materially affect the estimates of the Ore Reserves.
-
Due to rounding of figures, small discrepancies may exist.
Cracow
-
Cracow Ore Reserve figures are stated on a 30% attributable basis, with depletion by production where relevant to 30 June 2011.
-
Due to rounding of figures, small discrepancies may exist.
-
Metal price assumptions used by Newcrest to convert Mineral Resource to Ore Reserves are uS$1,000 per ounce gold and a 0.8 uSD:AuD exchange rate.
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4.5 catalpa’s recent share price performance
The chart below shows the closing price of Catalpa Shares on the ASX over the 12 month period up to (and including) the Last Trading Day.
==> picture [480 x 300] intentionally omitted <==
----- Start of picture text -----
2.50
2.25
2.00
1.70
1.75
1.50
1.25
1.00
0.75
0.25
0.00
The closing price of Catalpa Shares on the ASX as at the close of trading on the Last Trading Day was $1.70.
During the three month period up to (and including) the Last Trading Day:
• the highest recorded daily closing price for Catalpa Shares on the ASX was $1.73 on 9 June 2011; and
• the lowest recorded daily closing price for Catalpa Shares on the ASX was $1.31 on 29 June 2011.
The last recorded sale price for Catalpa Shares on the ASX before the public announcement of the Transaction was $1.71
on 14 June 2011.
Closing Price (AUD)
Sep 10 Oct 10 Nov 10 Dec 10 Jan 11 Feb 11 Mar 11 Apr 11 May 11 Jun 11 July 11 Aug 11 Sep 11
----- End of picture text -----
4.6 catalpa capital structure and ownership
As at the date of this Scheme Booklet, the total securities of Catalpa on issue were as follows:
-
178,299,049 ordinary shares;
-
4,974,315 listed options exercisable into one Catalpa Share each at $1.10 and expiring in October 2011;
-
8,739,624 unlisted options which are exercisable into one Catalpa Share each at various prices on various dates; and
-
1,119,000 unlisted Catalpa performance rights. These performance rights were issued to key executives of Catalpa as part of Catalpa’s employee options and performance rights plan. These performance rights vest to the holders over various dates and are convertible into one Catalpa Share each.
As at the date of this Scheme Booklet, Catalpa has the following substantial shareholders:
| suBstantial shareholders | numBer of catalPa shares | Percentage shareholding |
|---|---|---|
| Orbis Investment Management (Australia) Pty Ltd 8,964,836 5.03% |
4.7 catalpa financial information
(a) introduction
The financial information for the six months ended 31 December 2010 and year ended 30 June 2010 provided below has been extracted from the full and half year financial reports published by Catalpa and released on ASX. The financial information is intended to provide a high level financial overview of Catalpa’s historical financial position and is not intended to provide the level of detail or understanding which is available from a review of the published financial reports which are available on ASX or Catalpa’s website.
43
SCHEME BOOKLET
The financial reports from which these extracts have been taken have been audited (or reviewed in the case of 31 December 2010) by Deloitte and prepared in accordance with the Corporations Act and upon which Deloitte issued an unqualified opinion (and unqualified conclusion in the case of 31 December 2010).
On 10 December 2009 Catalpa successfully completed a merger with its largest shareholder, Lion Selection Limited, resulting in the Catalpa Group acquiring a 30% stake in the Cracow Assets, and a pre-emptive right over the remaining 70%. The merger was implemented via a scheme of arrangement approved by Lion Selection Limited shareholders, following which Catalpa acquired all of the shares in Lion Selection Limited. under the scheme of arrangement, Lion Selection Limited shareholders received one Catalpa Share for each Lion Selection Limited share they held, following Catalpa’s one for eleven share consolidation. Subsequent to the merger, approximately 50 million Catalpa Shares which Catalpa held in itself were cancelled with Catalpa Shareholder approval.
(b) catalpa historical balance sheet
Set out below are Catalpa’s consolidated balance sheets as at 31 December 2010 and 30 June 2010.
==> picture [490 x 489] intentionally omitted <==
----- Start of picture text -----
consolidated
31 December 2010 30 June 2010
$’000s $’000s
Current assets
Cash and cash equivalents 28,910 35,113
Other receivables 1,681 1,114
– –
Other financial assets
Prepayments 578 244
Inventories 10,461 10,117
Mine development 2,498 1,619
total current assets 44,128 48,207
Non-current assets
Other financial assets 1,260 560
Property, plant and equipment 96,909 85,006
Mine development 59,567 68,919
– –
Borrowing costs
Deferred tax asset 17,752 19,325
total non-current assets 175,488 173,810
total assets 219,616 222,017
Current liabilities
Trade and other payables 14,967 15,697
Income tax payable – 289
Borrowings 24,565 22,566
Provisions 2,242 1,564
total current liabilities 41,774 40,116
Non-current liabilities
Borrowings 31,546 38,612
Provisions 4,807 4,561
total non-current liabilities 36,353 43,173
total liabilities 78,127 83,289
Net assets 141,489 138,728
Equity
Issued capital 162,705 162,613
Reserves 5,272 4,584
Accumulated losses (26,488) (28,469)
total equity 141,489 138,728
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(c) material changes in financial position
Catalpa successfully raised $23.4 million ($22.3 million net of costs) through an institutional share placement in February 2011 to fund projects at Edna May to improve plant reliability and fund ongoing exploration and underground development at the Edna May gold project.
4.8 continuous disclosing entity
As a company listed on the ASX and a disclosing entity under the Corporations Act, Catalpa is subject to regular reporting and disclosure obligations. Copies of documents lodged with ASIC in relation to Catalpa may be obtained from, or inspected at, an ASIC office.
Copies of Catalpa’s annual report for the year ended 30 June 2010, Catalpa’s financial report for the half year ended 31 December 2010 and any continuous disclosure notices given by Catalpa after the lodgement of the aforementioned annual report may be obtained from Catalpa’s website (www.catalparesources.com.au) or ASX’s website (www.asx.com.au). Catalpa will provide a copy free of charge to anyone who requests a copy of any of these documents before the Catalpa Meeting.
As at the date of this Scheme Booklet, Catalpa is not withholding any information from disclosure on the basis of an exception from disclosure in the Listing Rules or otherwise where such information is material to a Catalpa Shareholder’s decision on how to vote on any of the Resolutions.
45
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5 profIle of the newcreSt aSSetS
5.1 overview of newcrest
Newcrest is the largest gold producer listed on the ASX and one of the world’s top 10 gold mining companies by production, reserves and market capitalisation.
Newcrest has a portfolio of predominantly low cost and long life operating mines, a strong pipeline of growth projects and highly prospective brown and greenfield exploration projects. Newcrest has a substantial reserve and resource base combined with a long reserve life. As at 30 June 2011, Newcrest had gold reserves of 80.0 million ounces and copper reserves of 8.36 million tonnes and gold resources of 147.5 million ounces and copper resources of 19.91 million tonnes.
Newcrest is an ASX-listed company with its headquarters located in Melbourne, Australia. As at 30 June 2011, Newcrest was among the top 15 companies listed on the ASX by market capitalisation.
5.2 cracow (newcrest, 70%)
(a) overview
The mining and exploration activities at Cracow are owned by two unincorporated joint ventures, each between Newcrest’s wholly owned subsidiary Newcrest Operations Limited (70%) and subsidiaries of Catalpa[43] (collectively, 30%). Newcrest currently manages the two joint ventures on behalf of the participants, but will cease to do so following implementation of the Transaction.
The Cracow gold mine is an underground mining operation producing gold and silver, located in central queensland, Australia, approximately 500 kilometres north-west of the city of Brisbane.
In 1996, Newcrest and Sedimentary Holdings NL (as it was then called)[44] formed an unincorporated exploration joint venture. The Cracow exploration joint venture holds approximately 550 square kilometres of exploration tenure within a single[45] exploration licence (EPM 15981)[46] (the cracow goldfield ). The Cracow Goldfield is adjacent to the historical Golden Plateau deposit, which was mined commencing in the 1930’s.
Exploration was initially focussed on large tonnage, low grade porphyry style mineralisation, but shifted in 1997 to low tonnage, high grade epithermal vein style mineralisation. Exploration over five years from 1996 delineated the Royal and Crown gold deposits.
The Cracow mining joint venture was formed in September 2003 to develop and operate the Cracow gold mine, commencing with the delineated Royal and Crown deposits. First production of gold at Cracow gold mine occurred in November 2004.
==> picture [434 x 239] intentionally omitted <==
figure 12: Cracow - location and tenements.
- Sedimentary Holdings NL, now called Lion Mining Pty Ltd, is a wholly owned subsidiary of Catalpa.
-
Catalpa subsidiaries holding interests in Cracow mining joint venture – Lion Mining Pty Ltd (20%), Sedgold Pty Ltd (5%) and Fernyside Pty Ltd (5%). Lion Mining Pty Ltd holds Catalpa’s 30% interest in the Cracow exploration joint venture.
-
In 2007, the suite of exploration licences held by the Cracow exploration joint venture were consolidated into the current Cracow exploration licence – EPM 15981.
-
EPM 15981 expires on 25 February 2012. The renewal application for EPM 15981 must be submitted before 25 November 2011.
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The table below highlights the significant milestones in the history and development of Cracow by the joint ventures:
==> picture [490 x 21] intentionally omitted <==
----- Start of picture text -----
date milestone
----- End of picture text -----
| January 1996 | Formation of Cracow exploration unincorporated joint venture |
|---|---|
| January 1998 | Discovery of the Royal deposit |
| March 2001 | Discovery of the Crown deposit |
| November 2001 | Discovery of the Sovereign deposit |
| May 2002 | Discovery of the Empire deposit |
| December 2002 | Discovery of the Phoenix deposit |
| September 2003 | Formation of Cracow gold mine unincorporated joint venture |
| November 2004 | First production by Cracow mining joint venture |
| January 2005 | Discovery of the Kilkenny deposit |
The operating performance of the Cracow gold mine for the five years ended 30 June 2011 is set out in the table below:
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fy2007 fy2008 fy2009 fy2010 fy2011
----- End of picture text -----
| Ore milled (kt) | 386 | 414 | 437 | 480 | 500 |
|---|---|---|---|---|---|
| Average grade (g/t) | 10.11 | 8.70 | 7.58 | 7.24 | 6.86 |
| Recovery (%) | 93.9 | 92.0 | 92.4 | 92.0 | 92.2 |
| Gold production (100%) (ounces) | 116,683 | 107,393 | 99,204 | 102,760 | 101,723 |
| Newcrest share of production (70%) (ounces) | 81,678 | 75,175 | 69,443 | 71,932 | 71,206 |
| Newcrest calculation of Cash costs ($A/ounce) | 342 | 473 | 519 | 542 | 658 |
Notes:
-
Cash costs include costs of mining, processing and administration costs, royalties, refining and transport charges, deferred mine development, ore inventory adjustments and by-product credits for silver production.
-
Catalpa applies a different methodology for the purposes of calculating cash costs in respect of its 30% interest in the Cracow mining joint venture. For an explanation regarding the methodology applied by Catalpa, refer to Section 4.3(b)(ii) of this Scheme Booklet.
(b) geology
The Cracow Goldfield deposits are hosted within a network of steeply dipping quartz veins that extend over an area of four kilometres by two kilometres. The Cracow exploration joint venture has been successful in discovering six major gold bearing veins which are located within an area referred to as the western epithermal field, two kilometres west of the historical Golden Plateau mine workings.
As at 30 June 2011, the Cracow Goldfield contained gold resources of approximately 893,000 ounces and gold reserves of approximately 244,000 ounces (on a 100% basis).
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figure 13: Cracow Goldfield gold deposits and associated vein structures.
SCHEME BOOKLET 47
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cracow – mineral resources (as at 30 June 2011) – 100% Basis
Contained Metal
Dry Tonnes Gold Grade Silver Grade Gold (ounces) Silver (ounces)
Deposit (000’s) (g/t gold) (g/t silver) (000’s) (000’s)
Measured Royal 32 12.5 9.6 13 10
Resource
Crown 77 9.8 7.6 24 19
Klondyke North 1 8.0 4.7 0 0
Sovereign 108 7.0 3.9 24 14
Kilkenny 42 13.1 9.0 18 12
– – – – –
Tipperary
– – – – –
Empire
Roses Pride – – – – –
Phoenix 12 15.5 14.5 6 6
Stockpiles 6 5.0 3.0 1 1
Indicated Royal – – – – –
Resource
Crown – – – – –
Klondyke North 185 5.7 2.9 34 17
Sovereign 120 4.7 2.9 18 11
Kilkenny 213 7.3 4.0 50 27
Tipperary 345 7.5 6.5 84 72
– – – – –
Empire
Roses Pride 51 14.6 5.7 24 9
Phoenix 129 11.8 11.4 49 47
– – – – –
Stockpiles
Inferred Royal 85 6.7 10.2 18 28
Resource
Crown 364 4.8 3.6 56 42
Klondyke North 189 4.2 1.9 26 11
Sovereign 357 3.8 2.0 43 23
Kilkenny 1,056 6.0 3.5 203 119
Tipperary 196 5.0 4.1 32 26
Empire 424 6.5 2.8 89 38
Roses Pride 429 6.0 0.7 82 9
Phoenix 1 4.3 5.7 0 0
– – – – –
Stockpiles
total resources Royal 117 8.3 10.0 31 38
Crown 441 5.7 4.3 81 61
Klondyke North 375 4.9 2.4 60 29
Sovereign 585 4.5 2.6 85 48
Kilkenny 1,311 6.4 3.8 270 158
Tipperary 541 6.6 5.6 115 98
Empire 424 6.5 2.8 89 38
Roses Pride 480 6.9 1.2 106 18
Phoenix 142 12.1 11.7 55 53
Stockpiles 6 5.0 3.0 1 1
total
(100% basis) 4,422 6.3 3.8 893 542
----- End of picture text -----
Note:
Mineral Resources are inclusive of Ore Reserves. Figures expressed to one decimal place and subject to rounding.
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The Cracow Mineral Resources have been reported above a cut-off grade of 2.5 g/t of gold. This is the marginal low grade cut-off that covers all operating costs excluding mining fixed costs and is based on a $1000 per ounce uSD gold price and $0.8 uSD:AuD exchange rate. No economic consideration was attributed to silver. Stockpiles were reported as at 26 June 2011.
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cracow – ore reserves (as at 30 June 2011) – 100% Basis
Contained Metal
Gold Grade Silver Grade Gold (ounces) Silver (ounces)
Deposit Tonnes (000’s) (g/t gold) (g/t silver) (000’s) (000’s)
Proved Reserve Royal 44 10.6 8.3 15 12
Crown 41 7.3 5.4 9 7
– – – – –
Klondyke North
Sovereign 91 6.1 3.5 18 10
Kilkenny 45 9.8 6.8 14 10
– – – – –
Tipperary
– – – – –
Empire
Roses Pride – – – – –
Phoenix 9 13.2 14.4 4 4
Stockpiles 6 5.0 3.0 1 1
Probable Royal – – – – –
Reserve
Crown 3 17.8 10.9 2 1
Klondyke North 30 5.2 2.7 5 3
Sovereign 48 5.0 2.5 8 4
Kilkenny 231 5.9 3.3 44 25
Tipperary 325 5.6 5.2 59 54
– – – – –
Empire
Roses Pride 76 9.0 3.6 22 9
Phoenix 128 10.6 53.0 43 217
– – – – –
Stockpiles
total reserve Royal 44 10.6 8.3 15 12
Crown 44 8.0 5.8 11 8
Klondyke North 30 5.2 2.7 5 3
Sovereign 138 5.7 3.2 25 14
Kilkenny 276 6.5 3.9 58 35
Tipperary 325 5.6 5.2 59 54
– – – – –
Empire
Roses Pride 76 9.0 3.6 22 9
Phoenix 137 10.8 50.4 47 222
Stockpiles 6 5.0 3.0 1 1
total
(100% basis) 1,075 7.0 10.3 244 357
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Note:
Figures expressed to one decimal place and subject to rounding.
The Cracow Ore Reserves[47] have been reported above a cut–off grade of 2.4 g/t of gold. This is the low grade cut off that covers all operating costs, excluding mining fixed costs and is based on a $1000 per ounce uSD gold price and $0.8 uSD:AuD exchange rate. No economic consideration was attributed to silver. Stockpiles were reported as at 26 June 2011.
- The “Ore Reserve” is the economically mineable part of the measured and/or indicated mineral resources and excludes inferred resources.
SCHEME BOOKLET 49
(c) exploration
The exploration activities at Cracow have focused on increasing the gold resource around the Cracow gold mine and/or discovering new deposits in the Cracow Goldfield.
As at 30 June 2011, the joint venture’s primary exploration targets at Cracow include:
-
western epithermal field – The Western epithermal field has been the focus of the majority of the exploration since the commencement of the joint venture. Approximately 1.6 million ounces (in aggregate) of gold has been discovered within the Royal, Crown, Sovereign, Kilkenny, Klondyke, Tipperary, Empire, Roses Pride and Phoenix veins. Potential exists for new discoveries with the main mineralised structures remaining open to north-northwest – south-southeast and to the west.
-
golden Plateau – Within the Golden Plateau area, potential exists to discover smaller size shoots that could provide additional mill feed. As at 30 June 2011, the major targets within the Golden Plateau are the veins and structures located adjacent to the historical Golden Plateau mine workings.
-
regiona l – Past exploration by the joint venture has discovered quartz vein bearing structures to the north and south of the known Cracow Goldfield. The structures to the south are interpreted as extensions of the known mineralised structures of the Cracow Goldfield. Prospects to the north demonstrate the potential for mineralisation at depth.
(d) mining and Processing
figure 14: Cracow deposits – Schematic longsection.
The western side of the Cracow Goldfield is the focus of current mining activities. As at 30 June 2011, current and near term mining is focused on the Sovereign and Kilkenny deposits. Ore is mined from multiple underground quartz vein shoots (hosted in volcanic material) using a reverse-stope blasting mining method, introduced at the site in 2007. The various ore bodies are accessed via a decline from the surface which grades generally at 1:7. Access to the underground mine is via a portal located to the east of the Royal deposit. Primary ventilation is provided by two axial fans located on the surface. The decline acts as the intake airway for the underground mine. Process water for the underground mine is reticulated from bores that pump water from historical workings.
Electrical power used in the mine is supplied through the state grid, via 22 kV lines from the town of Theodore to the mine.
Mining at the Cracow gold mine is performed by Downer EDI Mining Pty Limited under a Mining Alliance Agreement. The agreement is currently scheduled to expire on 30 June 2013. Newcrest and Catalpa are seeking agreement from Downer EDI to the assignment of the agreement to Evolution Mining with effect from the Implementation Date.
The Cracow gold mine treatment plant is a conventional carbon in leach gold processing circuit with associated mill and on site infrastructure. The comminution circuit is comprised of new and refurbished second hand equipment. Ore is treated via a three-stage process which involves tertiary crushing, grinding in a ball mill and a cyanide leach. Activated carbon absorbs gold from the leach liquor and the gold is then stripped using strong caustic cyanide solution. Gold is then electro-won from solution and smelted into gold dorè bars.
For the purposes of commencing operations, the Cracow mining joint venture completed a plant upgrade in 2004, which included a third stage of crushing, a larger single stage grinding facility, a pre-leach thickener, new leach and carbon in leach tanks, a new gold recovery circuit, new reagent storage facilities, new piping and some new electrical reticulation. In FY2011, the treatment plant was further upgraded to a nameplate capacity of 550,000 tonnes per annum which involved recommissioning an existing 460kW ball mill, adding a third leach tank and upsizing some other minor equipment.
For the year ended 30 June 2011, achieved plant recoveries were 92.2% for gold and 70.8% for silver.
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(e) Production
The Cracow gold mine’s production for FY2011 (100%) was 101,723 ounces of gold and 54,529 ounces of silver, achieved through treating 500,000 tonnes of ore with an average grade of 6.86 g/t (gold) and 4.8 g/t (silver). The table below sets out the FY2011 production results for the Cracow gold mine:
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full year
q1 – seP–10 q2 – dec–10 q3 – mar–11 q4 – Jun–11 fy 2011
Ore mined (kt) 117 121 116 107 461
Ore processed (kt) 121 117 124 136 500
Head grade (g/t) 7.19 7.40 6.79 6.16 6.86
Recovery (%) 91.2 92.8 92.2 92.6 92.2
Gold production (100%) (ounces) 25,756 25,980 24,987 25,001 101,723
Newcrest share of production (70%) (ounces) 18,029 18,186 17,491 17,501 71,206
Newcrest calculation of cash costs ($A/ounces) 557 572 697 811 658
----- End of picture text -----
Notes:
-
Cash costs include costs of mining, processing and administration costs, royalties, refining and transport charges, deferred mine development and ore inventory adjustments, and by-product credits for silver production.
-
Catalpa applies a different methodology for the purposes of calculating cash costs in respect of its 30% interest in the Cracow mining joint venture. For an explanation regarding the methodology applied by Catalpa, refer to Section 4.3(b)(ii) of this Scheme Booklet.
In FY2012, head grade is expected to be lower than FY2011 levels, at approximately 6.59 g/t, reflecting the lower grade of ore bodies available for current mining. Cash costs per ounce are consequently expected to increase relative to historical averages. Newcrest’s forecast production for FY2012 (70% basis) is 70,000 to 75,000 ounces of gold[48] with a total site cash cost of approximately $47 – 52 million.[49]
5.3 mt rawdon (newcrest, 100%)
(a) overview
Mt Rawdon is an open pit gold and silver mine and process plant located in South East queensland, approximately 80 kilometres south-west of Bundaberg. Mt Rawdon is wholly owned by Newcrest.[50]
The Mt Rawdon gold deposit is a volcaniclastic hosted, low grade gold deposit. The deposit is mined as a single open pit, using conventional open pit mining methods of drill, blast, load and haul.
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figure 15: Mt Rawdon – Location.
-
The low end of this forecast FY2012 production range for Cracow, being 70,000 ounces of gold (on a 70% basis, which equates to 100,000 ounces of gold on a 100% basis), differs from the low end of the Evolution Mining production guidance for Cracow as set out in Section 6.3, being 90,000 ounces of gold (on a 100% basis). Conquest and Catalpa have taken a slightly more conservative view than Newcrest as to FY2012 production from Cracow.
-
FY2012 forecast total site cash costs exclude deferred mine development and ore inventory adjustments; third party smelting, refining and transportation costs; royalties; and by-product credits.
-
Newcrest’s interests in Mt Rawdon are held by Newcrest’s wholly-owned subsidiary LGL Mount Rawdon Operations Pty Ltd, acquired as a result of Newcrest’s merger with Lihir Gold Limited in September 2010.
SCHEME BOOKLET 51
Mt Rawdon comprises tenements covering approximately 680 square kilometres. The Mt Rawdon tenements include the historical Paradise, Gebangle and Chowey goldfields. A wide range of gold mineralisation styles are present within the Mt Rawdon tenements.
Figure 16 sets out the mining and exploration tenements at Mt Rawdon.[51]
==> picture [471 x 332] intentionally omitted <==
figure 16: Mt Rawdon – Tenements.
Equigold NL commenced mining at the Mt Rawdon gold mine in 2001. In 2008, Lihir Gold Limited acquired Mt Rawdon following its merger with Equigold NL. Subsequently, Newcrest acquired Mt Rawdon through its merger with Lihir Gold Limited in September 2010.
In August 2011, Mt Rawdon gold mine achieved the milestone of one million ounces of gold produced.
The table below highlights the significant milestones in the ownership and production history of Mt Rawdon:
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----- Start of picture text -----
date milestone
1998 Project acquired by Equigold NL
2001 Gold production commences
2002 Crushing circuit upgrade
2008 Equigold NL merger with Lihir Gold Limited
2010 Lihir Gold Limited merger with Newcrest
2011 1,000,000 ounces of gold produced since commencement of mining
----- End of picture text -----
- As set out in Figure 16, exploration licence EPM 10566 covers land surrounding the Mt Rawdon mining leases. EPM 10566 expires on 31 December 2011. The application to renew EPM 10566 is scheduled to be submitted before 30 September 2011.
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The historical performance of Mt Rawdon for the five years ended 30 June 2011 is set out in the table below:
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----- Start of picture text -----
fy2007 fy2008 fy2009 fy2010 fy2011
----- End of picture text -----
| Ore processed (kt) | 3,408 | 3,510 | 3,357 | 3,392 | 3,516 |
|---|---|---|---|---|---|
| Average grade (g/t) | 1.14 | 1.14 | 1.06 | 1.01 | 0.88 |
| Recovery (%) | 88.9 | 89.5 | 90.6 | 91.2 | 90.7 |
| Gold production (ounces) | 110,992 | 115,069 | 103,261 | 100,673 | 89,636 |
| Cash costs ($A/ounce) | 373 | 375 | 380 | 476 | 693 |
Notes:
-
FY2007 – FY2010 figures above are based on results publicly reported by Equigold NL and Lihir Gold Limited being previous owners of the Mt Rawdon operation (as set out in the ‘Milestone table’ above). Lihir Gold Limited reported financials in calendar years 2008, 2009 and first half 2010, whereas Equigold NL and Newcrest reported in financial years.
-
Cash costs include costs of mining, processing and administration costs, royalties, refining and transport charges, deferred waste stripping, ore inventory adjustments and by-product credits for silver production.
-
The decrease in gold production and increase in cash costs per ounce at Mt Rawdon from FY2010 to FY2011 is attributable to the processing of lower grade ore during the current cutback phase in the pit, scheduled for completion in late FY2013, along with the impact of extreme rain and flood conditions in South East queensland in December 2010 and January 2011.
(b) geology
The Mt Rawdon gold deposit is a volcaniclastic hosted low grade deposit.
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figure 17: Mt Rawdon gold deposit.
53
SCHEME BOOKLET
As at 30 June 2011, Mt Rawdon contained gold resources of approximately 1.026 million ounces and gold reserves of approximately 920,000 ounces.
| mt rawdon – mineral resources (as at 30 June 2011) | mt rawdon – mineral resources (as at 30 June 2011) | mt rawdon – mineral resources (as at 30 June 2011) | mt rawdon – mineral resources (as at 30 June 2011) | mt rawdon – mineral resources (as at 30 June 2011) | mt rawdon – mineral resources (as at 30 June 2011) |
|---|---|---|---|---|---|
| Contained Metal | |||||
| Dry Tonnes (millions) |
Gold Grade (g/t gold) |
Silver Grade (g/t silver) |
Gold (ounces) (’000s) |
Silver (ounces) (’000s) |
|
| Measured Resource | 0.22 | 1.1 | 1.9 | 8 | 13 |
| Indicated Resource | 36.3 | 0.87 | 2.4 | 1,015 | 2,835 |
| Inferred Resource | 0.18 | 0.64 | 2.0 | 4 | 11 |
| total resources | 36.7 | 0.87 | 2.4 | 1,026 | 2,859 |
Note: Mineral Resources are inclusive of Ore Reserves. Figures subject to rounding.
Mt Rawdon Mineral Resources have been reported above a cut-off grade of 0.38 g/t of gold. This is the marginal low grade cut-off that covers all operating costs excluding mining fixed costs, and is based on $900 per ounce uSD gold price and $0.75 uSD:AuD exchange rate. No economic consideration was attributed to silver.
| mt rawdon – ore reserves (as at 30 June 2011) | mt rawdon – ore reserves (as at 30 June 2011) | mt rawdon – ore reserves (as at 30 June 2011) | mt rawdon – ore reserves (as at 30 June 2011) | mt rawdon – ore reserves (as at 30 June 2011) | mt rawdon – ore reserves (as at 30 June 2011) |
|---|---|---|---|---|---|
| Contained Metal | |||||
| Dry Tonnes (millions) |
Gold Grade (g/t gold) |
Silver Grade (g/t silver) |
Gold (ounces) (’000s) |
Silver (ounces) (’000s) |
|
| Proved Reserves | 0.22 | 1.1 | 1.9 | 8 | 13 |
| Probable Reserves | 31.8 | 0.89 | 2.5 | 912 | 2,519 |
| total reserves | 32.0 | 0.89 | 2.5 | 920 | 2,533 |
Note: Figures subject to rounding.
The Mt Rawdon Ore Reserve[52] estimate is based on a gold cut-off grade of 0.40 g/t contained within the pit designs revised in June 2011. This is the marginal low grade cut-off that covers all operating costs excluding mining fixed costs, and is based on a $850 per ounce uSD gold price, and $0.75 uSD:AuD exchange rate.
(c) exploration
There may be potential to extend the existing Mt Rawdon resource, with the mineralisation and alteration system presently open to the south at depth. In addition, Newcrest’s exploration has identified a series of conceptual magnetic targets located adjacent to the present resource and could represent potential new zones of mineralisation.
As at 30 June 2011, Newcrest’s primary exploration targets at Mt Rawdon include:
-
depth potential of known mt rawdon mineralisation – The most southern drill section undertaken by Newcrest contains an intercept of 48 metres at 1.07 g/t of gold. The mineralisation is open to the South and at depth and has been the focus of recently completed drilling at Mt Rawdon.
-
This recently completed drilling has further highlighted the potential for an increase in Mt Rawdon Resource, with two high grade intercepts being reported within this drilling.
The two significant intercepts include 44 metres at 4.99 g/t of gold and 32 metres at 2.28 g/t of gold. These significantly “higher than resource grades” returned within these intercepts have the potential to increase the Mt Rawdon Resource.
Both intervals were contained within highly altered, favourable volcaniclastic stratigraphy. Follow-up drilling to assess and define these areas of higher grade mineralisation has been proposed and will be completed during q1 FY2012.
Ongoing interpretation has demonstrated that there is a significant stratigraphic control to the higher grade intervals within the mineralised volcaniclastic stratigraphy at Mt Rawdon. This interpretation is also suggesting that the degree and intensity of alteration appears to be increasing to the south.
To test these conclusions, a “step-out” hole was drilled, targeting the down-plunge potential of this favourable volcaniclastic stratigraphy. The drill hole was drilled approximately 160 meters to the south of the completed resource definition drilling. Although visually the drill hole encountered the targeted stratigraphy, which has shown the degree of alteration expected, the recently returned results have been disappointing, with only sporadic, discrete intervals of low grade gold anomalism returned.
Further assessment will be required to assess this result, with infill Resource Definition drilling planned during September 2011.
- The “Ore Reserve” is the economically mineable part of the measured and/or indicated mineral resources and excludes inferred resources.
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5 profIle of the newcreSt aSSetS contInueD
-
near mine targets (brownfield) – Newcrest’s exploration has identified three conceptual magnetic targets located adjacent to the known Mt Rawdon deposit. The three targets are:
-
Southern Anomaly – located within a favourable structural setting immediately south of the current Mt Rawdon deposit;
-
Western Anomaly – located adjacent to the mine surface infrastructure. Results from drilling in this area include 4 metres at 1.10 g/t, 2 metres at 3.36 g/t and 2 metres at 3.56 g/t; and
-
North Western Anomaly – located under the current Mt Rawdon tailings dam.
-
Newcrest is undertaking drill testing of the Western Anomaly during q1 FY2012.
==> picture [441 x 306] intentionally omitted <==
figure 18: Mt Rawdon exploration targets.
As shown in Figure 16, the Mt Rawdon tenements include a broad area away from the Mt Rawdon mine. Following Newcrest’s acquisition of Mt Rawdon, Newcrest has been undertaking a review of the exploration package and has indentified two targets for further exploration. The two identified targets are:
-
kent’s knob Breccia – The Kent’s Knob Breccia target was originally identified during the 1980s, adjacent to the historic Mt Shamrock mine. Shallow drilling has confirmed the presence of mineralised quartz breccia with a best intercept of 19 metres at 1.24 g/t of gold. The mineralisation and associated breccia has not been tested at depth.
-
mt dell anomaly – Soil sampling at Mt Dell has identified an unexplained surface gold anomaly associated with a magnetic anomaly.
Newcrest has planned to undertake drill testing of Kent’s Knob during FY2012.
55
SCHEME BOOKLET
(d) mining and Processing
Equigold NL commenced open-pit mining at Mt Rawdon in 2001. The open pit is currently entering its final cutback stage, with the current pit design based on modelling undertaken in October 2010, and re-optimised in February 2011. Mining is undertaken by Golding Contractors Pty Ltd under a mining services contract in place since mining operations commenced at Mt Rawdon. The Golding contract is due to expire during the first half of CY2013. Newcrest and Catalpa are seeking agreement from Golding for the contract to be novated to Evolution Mining with effect from the Implementation Date.
Ore is processed at Mt Rawdon using conventional cyanide leaching technology at a rate of approximately 3.5 million tonnes of ore per annum. The ore processing facilities include crushing, two stage grinding, leaching and gold recovery circuits along with associated reagents and tailings storage facility.
Ore is dumped into a primary gyratory crusher, and then fed to the secondary crusher. The secondary crusher discharge together with ore bypassing the secondary crusher is conveyed to an open conical crushed ore stockpile. Material is then ground in a circuit comprising of a SAG mill and a ball mill, in closed circuit with classifying cyclones. Cyclone overflow slurry passes over trash screens with the coarse screen oversize returning to the ball mill feed. A Knelson concentrator is installed to treat a portion of the cyclone underflow. The Knelson concentrate is passed over a Gemini table to produce a gravity concentrate which is then smelted. The leach/adsorption circuit consists of one leach tank followed by five carbon adsorption tanks. Typically, one batch of carbon per day is treated through a stripping circuit to recover gold and silver to the electrowinning circuit. The gold/silver sludge is recovered from the electrowinning cell cathodes and smelted. Slurry discharged from the leach/adsorption circuit is pumped to a tailings storage facility. Water is recovered from the tailings dam together with supplementary fresh water for use in the process plant.
For the year ended 30 June 2011, achieved plant recoveries were 90.7% for gold, and 56.5% for silver.
(e) Production
The Mt Rawdon processing plant produced 89,636 ounces of gold and 125,044 ounces of silver in FY2011, achieved through treating 3,516,000 tonnes of ore with an average gold grade of 0.88 g/t, and an average silver grade of 1.96 g/t. quarterly production figures for FY2011 are set out in the following table:
==> picture [491 x 123] intentionally omitted <==
----- Start of picture text -----
3 months to 3 months to 3 months to 3 months to
30 sePtemBer 31 decemBer 31 march 30 June total
2010 [53] 2010 2011 2011 fy2011
Ore mined (kt) 833 891 785 868 3,377
Ore processed (kt) 913 824 880 898 3,516
Head grade (g/t) 0.88 0.88 0.87 0.87 0.88
Recovery (%) 93.7 90.2 89.7 87.4 90.7
Gold production (100%) (ounces) 23,287 21,908 22,164 22,277 89,636
Cash costs ($A/ounce) [1] 641 651 794 686 693
----- End of picture text -----
Notes:
- Cash costs include costs of mining, processing and administration costs, royalties, refining and transport charges, deferred waste stripping and ore inventory adjustments and by-product credits for silver production.
Forecast production for Mt Rawdon for FY2012 is 100,000 to 105,000 ounces of gold[54] for a total site cash cost of $100 – 105 million[55] before deductions for deferred waste stripping and ore inventory cost of $24 – 29 million. Head grade for the September quarter of FY2012 is expected to be lower than FY2011 levels, at approximately 0.71 g/t, before recovering to approximately 1.1 g/t for the remainder of FY2012.
Production results for Mt Rawdon for the three months ending 30 September 2010 include the period prior to Newcrest’s acquisition of Mt Rawdon (as a result of Newcrest’s merger with Lihir Gold Limited).
The low end of this forecast FY2012 production range for Mt Rawdon, being 100,000 ounces of gold, differs from the low end of the Evolution Mining production guidance for Mt Rawdon as set out in Section 6.3, being 90,000 ounces of gold. Conquest and Catalpa have taken a slightly more conservative view than Newcrest as to FY2012 production from Mt Rawdon.
FY2012 forecast total site cash costs exclude deferred waste stripping and ore inventory adjustments; third party smelting, refining and transportation costs; and by-product credits.
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6 profIle of evolutIon mInIng
6.1 overview of evolution mining
Evolution Mining will be one of Australia’s leading mid-cap, growth focused and asset diversified gold producers and will have:
-
a pro forma market capitalisation of approximately $1.15 billion;[56]
-
a portfolio of four producing mines and one development asset forecast to produce 335,000 to 375,000 ounces of gold in FY2012 and 410,000 to 465,000 ounces of gold equivalent in FY2013;
-
a combined Mineral Resource base of 6.9 million ounces of gold equivalent and a combined Ore Reserve base of 3.5 million ounces of gold equivalent;[57]
-
exposure to a significant and highly prospective pipeline of development opportunities;
-
a strong financial platform to pursue growth with an expected cash position following the Rights Offer of approximately $199 million[58] and an expected debt position of approximately $48 million;[59]
-
a proven entrepreneurial and operational management team with complementary skill sets, focused on maximising shareholder value; and
-
substantial re-rating potential through earnings growth from enhancement and optimisation of the combined asset base.
-
If the Transaction is implemented, Evolution Mining intends to:
-
launch the Rights Offer to raise approximately $150 million within 10 Business Days of the Implementation Date;
-
arrange for Conquest to be removed from the official list of ASX; and
-
commence the transition of all support functions currently being performed by Newcrest in respect of the Cracow and Mt Rawdon gold mining and exploration projects to Evolution Mining.
6.2 Board
As a result of the Transaction, the composition of the Catalpa board will be changed to reflect the new shareholder base of Evolution Mining. Evolution Mining will have a board of eight directors including Jake Klein as Executive Chairman and Bruce McFadzean as Managing Director and Chief Executive Officer.
Of the eight directors, three will be existing directors of Catalpa (including Bruce McFadzean), three will be existing directors of Conquest (including Jake Klein) and two will be nominated by Newcrest. All existing directors of Catalpa who are not continuing will resign immediately prior to the Implementation Date.
The board of directors of Evolution Mining will comprise:
| eXecutive directors | eXecutive directors | eXecutive directors |
|---|---|---|
| Jake klein BCom (Hons), ACA Executive Chairman |
Mr Klein is the current Executive Chairman of Conquest (appointed in May 2010). Mr Klein was previously President and Chief Executive Offcer of Sino Gold Mining Limited where he managed the development of that company into the largest foreign participant in the Chinese gold industry. Prior to joining Sino Gold (and its predecessor) in 1995, Mr Klein was employed at Macquarie Bank and PricewaterhouseCoopers. Mr Klein is also a Non-executive Director of Lynas Corporation Limited and OceanaGold Corporation Limited. Mr Klein is a past President of the NSW Branch of the Australia China Business Council. |
|
| Bruce mcfadzean Dip Mining, FAusIMM Managing Director & Chief Executive Offcer |
Mr McFadzean is the current Chief Executive Offcer and Managing Director of Catalpa Mr McFadzean, a mining engineer, will bring over 30 years of management, mining, processing and project start up experience to Evolution Mining, including 15 years with global resources majors, Rio Tinto and BHP Billiton. Mr McFadzean has broad commodity experience in gold, iron ore, diamonds and nickel/ cobalt and in a wide range of roles including corporate, managerial, technical and operational roles. Mr McFadzean is a Non-executive Director of Venture Minerals Limited. |
-
Based on the Catalpa share price at the close of trading on the Last Trading Day and assuming $150 million is raised under the Rights Offer.
-
Calculated as at 30 June 2011.
-
Based on the cash position of each of Catalpa and Conquest as at 30 June 2011 (including gold and silver available for sale), assuming $150 million is raised under the Rights Offer and taking into account the costs associated with the Transaction and the Rights Offer. This figure does not take into account any stamp duty payable by Catalpa in connection with the Transaction or the operating cash flows of Catalpa and Conquest during the period from 1 July 2011 to completion of the Rights Offer. It also does not take into account the Macquarie Facilities. As at the date of this Scheme Booklet, Conquest has not drawn down on any of the Macquarie Facilities.
-
Based on the debt position of each of Catalpa and Conquest as at 30 June 2011. This figure does not take into account the Macquarie Facilities. As at the date of this Scheme Booklet, Conquest has not drawn down on any of the Macquarie Facilities.
SCHEME BOOKLET 57
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----- Start of picture text -----
eXisting catalPa directors
John rowe Mr Rowe brings a wealth of geological and business development skills to Evolution Mining.
BSc (Hons), ARSM, Mr Rowe has 40 years experience within the nickel and gold industries.
MAusIMM He has held a variety of positions in mine management, exploration and business
Non-executive development and was previously employed as an executive of Lion Ore in Australia.
Director
Mr Rowe is also a Non-executive Director of Panoramic Resources Limited and Southern
Cross Goldfields Ltd.
graham freestone Mr Freestone has over 40 years experience in the natural resources industry.
BEc (Hons) He has a broad based finance, corporate and commercial background obtained in Australia
Non-executive and internationally through senior finance positions with the Shell Group, Acacia Resources
Director Limited and AngloGold.
He had a leading role in the float of the Shell Group’s Australian gold interests through
Acacia Resources Limited and was the Chief Financial Officer and Company Secretary
of Acacia Resources Limited from 1994 until 2001. From 2001 until 2009 he was a
Non-executive Director of Lion Selection Limited and chair of its Audit Committee. He has
been a Non-executive Director of Catalpa and chair of its Audit Committee since 2009.
eXisting conquest directors
James askew Mr Askew is a current Non-executive Director of Conquest (appointed in May 2010).
BMining Eng (Hons), Mr Askew is a mining engineer with over 30 years’ broad international experience as a
MEngSc director/Chief Executive Officer for a wide range of Australian and international publicly
Non-executive listed mining, mining finance and other mining related companies.
Director
Mr Askew currently serves on the boards of OceanaGold Corporation (Chairman) and
Golden Star Resources Ltd and Ivanhoe Australia Ltd and formerly served on the board
of Ausdrill Limited.
Paul marks Mr Marks is a current Non-executive Director of Conquest (appointed in December 2009).
BEng(Chem), Mr Marks has 35 years of experience across a range of industries from foreign exchange
MAppFin and commodities trading to chemical and hydrocarbon processing.
Non-executive Mr Marks worked as a chemical engineer with Dow Chemicals and has previously held the
Director positions of Vice-President of Foreign Exchange with Prudential-Bache Securities, Senior
Strategist Foreign Exchange AEFC (the merchant banking arm of the Commonwealth Bank
of Australia) and Senior Foreign Exchange Strategist with National Australia Bank.
Mr Marks formerly served on the board of Prana Biotechnology Ltd.
Since the mid-1990s Mr Marks has also led a number of private ventures ranging from property
sub-divisions and developments as well as proprietary trading in commodities and derivatives.
newcrest nominees
lawrie conway Mr Conway is the current Newcrest Executive General Manager (Commercial and West
B Bus, CPA Africa).
Non-executive Mr Conway has more than 21 years commercial experience in the resources sector
Director across a diverse range of commercial and financial activities at Newcrest and previously
at BHP Billiton.
Mr Conway has held a mix of corporate and operational commercial roles within Australia,
Papua New Guinea and Chile.
Peter smith Mr Smith is the current Newcrest Executive General Manager Australian Operations
F AusIMM, GAICD, (appointed in September 2010, following Newcrest’s merger with Lihir Gold Limited).
MBA uSq Mr Smith has over 34 years mining experience across a broad spectrum of responsibilities,
Non-executive including a range of senior corporate roles with WMC Resources Ltd, Rio Tinto and Lihir
Director Gold Limited.
Mr Smith has previously held the positions of Chief Operating Officer at Lihir Gold Limited
and, prior to that, Executive Director of Western Metals Ltd.
----- End of picture text -----
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6.3 activities and assets
Following completion of the Transaction, Evolution Mining’s assets will include five wholly owned gold projects at Pajingo, Mt Carlton, Edna May, Cracow and Mt Rawdon (see Figure 1).
Evolution Mining will have a combined Mineral Resource base of 6.9 million ounces of gold equivalent and a combined Ore Reserve base of 3.5 million ounces of gold equivalent.[60]
The assets that will be owned by Evolution Mining are described in more detail in Sections 3.2, 4.3 and 5, with Mineral Resource and Ore Reserve statements in respect of those assets also set out in those sections.
The combined assets that will be owned by Evolution Mining produced approximately 303,000 ounces of gold in FY2011, as outlined below.
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----- Start of picture text -----
CATALPA CONQUEST NEWCREST ASSETS COMBINED: 303
Cracow Mt Rawdon Edna
32% 30% May
22%
Edna Cracow
68%May Pajingo100% 44% Mt Rawdon
56%
Pajingo Cracow
15% 34%
----- End of picture text -----
figure 19: Breakdown of production in FY2011 from each of the assets that will be owned by Evolution Mining which produced gold in FY2011.
Evolution Mining will benefit from an attractive growth profile through its existing organic growth pipeline, including the development of Mt Carlton and the expansion potential at Pajingo and Edna May. Based on the production forecasts provided by Catalpa, Conquest and Newcrest for FY2012, the pro forma production of Evolution Mining for the 12 months to 30 June 2012 is expected to be within the range of 335,000 ounces to 375,000 ounces of gold.
Evolution Mining’s production for FY2013 is forecast to grow to 410,000 to 465,000 ounces of gold equivalent.
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----- Start of picture text -----
410- 465koz
335 - 375koz
303koz
268koz
255koz
FY 2009 FY 2010 FY 2011 FY 2012 FY 2013
MT RAWDON PAJINGO CRACOW EDNA MAY MT CARLTON
35 - 54% growth
----- End of picture text -----
figure 20: Production from assets that will be owned by Evolution Mining from FY2009 to FY2011 and forecast production from those assets from in FY2012 and FY2013.
Evolution Mining’s growth in production in FY2012 and FY2013 is based on the forecast production increases set out below:
| asset | fy2011 Production (ounces of gold) |
forecast fy2012 Production (ounces of gold) |
forecast fy2013 Production (ounces of gold equivalent) |
|---|---|---|---|
| Edna May 65,592 85,000 to 93,000 115,000 to 125,000 |
|||
| Cracow 101,723 90,000 to 107,000 90,000 to 105,000 |
|||
| Mt Rawdon 89,636 90,000 to 105,000 95,000 to 100,000 |
|||
| Pajingo 45,889 70,000 70,000 to 75,000 |
|||
| Mt Carlton 0 0 40,000 to 60,000 |
|||
| total 302,840 335,000 to 375,000 410,000 to 465,000 |
- Calculated as at 30 June 2011.
59
SCHEME BOOKLET
-
Forecast production for Edna May for FY2012 and FY2013 is based on the information in Section 4.3(b)(i).
-
Forecast production for Pajingo for FY2012 and FY2013 and for Mt Carlton for FY2013 is based on the information in Sections 3.2(b)(i) and 3.2(b)(ii) (respectively).
-
Forecast production for Cracow for FY2012 is based on the information in Section 5.2.[61] Forecast production for Cracow for FY2013 is based on Catalpa and Conquest’s production forecast for Cracow for that period, which is based on current Ore Reserves.
-
Forecast production for Mt Rawdon for FY2012 is based on the information in Section 5.3.[62] Forecast production for Mt Rawdon for FY2013 is based on Catalpa and Conquest’s production forecast for Mt Rawdon for that period, which is based on current Ore Reserves.
6.4 market positioning
Following completion of the Rights Offer, Evolution Mining will be positioned amongst the top 5 ASX-listed gold companies by production[63] (see Figure 22) and the top 10 ASX-listed gold companies by market capitalisation (see Figure 21).[64]
==> picture [343 x 398] intentionally omitted <==
----- Start of picture text -----
30.41
NEW PEER GROUP BASED ON MARKET CAPITALISATION
2.94
1.63 1.53
1.25 CURRENT PEER GROUP BASED ON MARKET CAPITALISATION
1.18
1.15
0.96
0.75
0.73
0.61
0.56 0.56 0.52 0.50 0.48 0.47 0.46
0.41
0.31 0.30 0.30 0.29 0.27 0.26
0.17
[[65]]
that are in Conquest’s current peer group by market capitalisation. [[66]]
2.71
NEW PEER GROUP BY PRODUCTION
0.33 0.32
0.30
0.26 0.26 CURRENT PEER GROUP BY PRODUCTION
0.19
0.16
0.14
0.11 0.10 0.10 0.10
0.08 0.08 0.07 0.06
0.05
0.04
0.03
NEWCREST ALACER PERSEUS MEDUSA REGIS KINGSGATE EVOLUTION MINING CGA RESOLUTE ST. BARBARA OCEANAGOLD ALLIED GOLD TERANGA BEADELL GRYPHON RAMELIUS SILVER LAKE INTEGRA AMPELLA ADAMUS CONQUEST CATALPA FOCUS MINERALS TANAMI RED 5 NORTON
NEWCREST RESOLUTE ALACER EVOLUTION MINING OCEANAGOLD ST BARBARA CGA KINGSGATE TERANGA SARACEN MEDUSA RAMELIUS GOLD ONE REGIS ALLIED GOLD TROY SILVERLAKE INTEGRA ADAMUS KINGROSE
----- End of picture text -----
figure 21: Comparison of pro forma market capitalisation of Evolution Mining with market capitalisations of ASX-listed gold companies that are expected to be in Evolution Mining’s peer group by market capitalisation[[65]] and ASX-listed gold companies that are in Conquest’s current peer group by market capitalisation.[[66]]
figure 22: Comparison of production from the assets that will be owned by Evolution Mining in FY2011 with production from the assets owned by ASX-listed gold companies that are expected to be in Evolution Mining’s peer group by production[67] and ASXlisted gold companies that are in Conquest’s current peer group by production in FY2011[68] .
-
The low end of the FY2012 forecast production range for Cracow shown in the above table, being 90,000 ounces of gold, differs from the low end of the range provided by Newcrest as set out in Section 5.2(e), being 70,000 ounces of gold (on a 70% basis, which equates to 100,000 ounces of gold on a 100% basis). Conquest and Catalpa have taken a slightly more conservative view than Newcrest as to FY2012 production from Cracow.
-
The low end of the FY2012 forecast production range for Mt Rawdon shown in the above table, being 90,000 ounces of gold, differs from the low end of the range provided by Newcrest as set out in Section 5.3(e), being 100,000 ounces of gold. Conquest and Catalpa have taken a slightly more conservative view than Newcrest as to FY2012 production from Mt Rawdon.
-
Based on information publicly released by ASX-listed gold companies regarding production rates for FY2011.
-
Based on the share prices of ASX-listed gold companies at the close of trading on the Last Trading Day and assuming $150 million is raised under the Rights Offer.
-
This includes gold companies listed on the ASX who had a market capitalisation of between $500 million and $3 billion as at the close of trading on the Last Trading Day
-
Being gold companies listed on ASX who had a market capitalisation of less than $500 million as at the close of trading on the Last Trading Day.
-
This includes companies listed on the ASX who produced between 100,000 ounces and 500,000 of gold in FY2011.
-
This includes companies listed on the ASX who produced less than 100,000 ounces of gold in FY2011.
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6.5 capital structure and ownership
(a) share capital
If the Transaction is implemented, Catalpa will issue approximately 410.4 million shares (though this number may be marginally more or less depending on the VWAP of Catalpa Shares during the five trading days prior to the Implementation Date).
As a result of the Transaction, the number of Catalpa Shares on issue will increase from approximately 178.30 million (being the number currently on issue) to approximately 587.58 million (not including the shares to be issued under the Rights Offer), as illustrated below.
==> picture [489 x 96] intentionally omitted <==
----- Start of picture text -----
cumulative total of catalPa
catalPa shares to Be issued shares on issue
As at the date of this Scheme Booklet N/A 178,299,049
To be issued as Scheme Consideration 180,400,884 [69] 358,699,933
To be issued pursuant to the Share Issue Approximately 228,876,328 [70] 587,576,261
To be issued upon exercise of Catalpa’s
performance rights [71] 1,119,000 588,695,261
----- End of picture text -----
It is intended that, shortly following implementation of the Transaction, Evolution Mining will conduct a renounceable pro rata entitlement offer to raise approximately $150 million. The number of Catalpa Shares that will be issued pursuant to the Rights Offer will depend on the price at which the Rights Offer is conducted, which is yet to be determined. However, as an example, if the VWAP of an Evolution Mining share on the day before the launch of the Rights Offer was $1.70,[72] and the Rights Offer was conducted at a 10% discount to TERP, then approximately 99.7 million shares would be issued by Evolution Mining pursuant to the Rights Offer.
Based on the Conquest and Catalpa share registers as at the Last Trading Day, Newcrest is expected to be the only shareholder with a substantial holding in Evolution Mining.
(b) options and performance rights
On (and assuming) completion of the Majority Options Offers, Catalpa will have the following options and performance rights on issue:
| listed oPtions | unlisted oPtions | Performance rights |
|
|---|---|---|---|
| As at the date of this Scheme Booklet 4,974,315 8,739,624 1,119,000 |
|||
| Following completion of the Majority Options Offers 4,974,31573 20,064,36274 075 |
-
Based on 583,241,478 Conquest Shares on issue plus a further 18,094,801 Conquest Shares to be issued pursuant to the Minority Options Offers, all multiplied by 0.3 (being the exchange ratio used for the calculation of the Scheme Consideration).
-
Assumes the VWAP of Catalpa Shares in the 5 trading days prior to the Implementation Date is the same as the five trading days ending on (and including) the Last Trading Day. The actual number of Subscription Shares will be determined by the formula for calculating a Fully Diluted Value Basis, as described in the Transaction Overview – Share Issue (see page 13).
-
The Catalpa board has exercised its discretion to waive the performance conditions that apply to the performance rights, subject to the Transaction being implemented. As the performance rights are exercisable for nil consideration, it is expected that they will be exercised following implementation of the Transaction. Each performance right is exercisable into one share.
-
This was the Catalpa share price at the close of trading on the Last Trading Day.
-
This assumes no listed options are exercised between the date of this Scheme Booklet and the Implementation Date. The listed options expire on 31 October 2011.
-
This assumes that all of the Majority Options Offers will be completed and therefore includes all of the Catalpa Options to be issued as Majority Options Consideration.
-
See footnote 71.
SCHEME BOOKLET 61
6.6 intentions of catalpa and conquest in relation to evolution mining
This Section 6.6 sets out the intentions of Catalpa and Conquest in relation to Evolution Mining if the Transaction is implemented. The statements in this Section 6.6 reflect the intentions of Catalpa and Conquest at the date of this Scheme Booklet only.
(a) corporate matters in relation to conquest
If the Transaction is implemented, it is intended that:
-
Conquest will be removed from the official list of ASX; and
-
as Conquest will be a wholly owned subsidiary of Evolution Mining, the Conquest board will be reconstituted so that it comprises persons nominated by the Evolution Mining board.
To the extent that Conquest Options exist post implementation (for example, as a result of Majority Options Offers not being made or as a result of such offers being made but not accepted), Evolution Mining may seek to compulsorily acquire those options (and any shares issued pursuant to their exercise) in accordance with (and subject to) Part 6A.2 of the Corporations Act.
(b) continuation of conquest and catalpa businesses and the newcrest assets
It is the intention of Catalpa and Conquest that Evolution Mining will continue to operate and develop the businesses of Catalpa and Conquest as well as the Newcrest Assets in substantially the same manner as they are currently operated by Catalpa, Conquest and Newcrest (as applicable). No major changes are planned in respect of the operation or development of the assets that will be owned by Evolution Mining.
Following implementation of the Transaction, with expected cash reserves of approximately $199 million[76] , and access to the Macquarie Facilities, Evolution Mining will be well funded to pursue the development of Mt Carlton and Edna May underground. In relation to Mt Carlton, a combination of the Macquarie Facilities and Evolution Mining’s cash reserves may be used to finance the development. Conquest and Catalpa intend that the board of Evolution Mining will decide how the development is to be funded following implementation of the Transaction having regard to the cash position, operating cash flows and capital requirements of the company. It is the present intention of Conquest and Catalpa that Evolution Mining will complete a refinancing following implementation of the Transaction.
It is also expected that, following completion of the Rights Offer, Evolution Mining will have excess capital available to pursue further exploration opportunities across its asset portfolio as well as other potential acquisition opportunities.
(c) dividend policy
The Evolution Mining board will review the amount of any future dividends to be paid by Evolution Mining having regard to the company’s profits, its financial position and the board’s assessment of the capital required to grow Evolution Mining’s businesses.
(d) head office
Evolution Mining’s corporate headquarters will be based at Conquest’s existing headquarters in Sydney, with the existing Catalpa and Conquest offices in Perth and Townsville respectively to also be retained.
- Based on the cash position of each of Catalpa and Conquest as at 30 June 2011 (including gold and silver available for sale), assuming $150 million is raised under the Rights Offer and taking into account the costs associated with the Transaction and the Rights Offer. This figure does not take into account any stamp duty payable by Catalpa in connection with the Transaction or the operating cash flows of Catalpa and Conquest during the period from 1 July 2011 to completion of the Rights Offer. It also does not take into account the Macquarie Facilities. As at the date of this Scheme Booklet, Conquest has not drawn down on any of the Macquarie Facilities.
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(e) Board and governance
The composition of the board of Evolution Mining is discussed in Section 6.2. It is intended that Evolution Mining will adhere to the ASX corporate governance principles consistent with the approach currently adopted by Catalpa and Conquest.
A remuneration advisory committee has been established comprising nominees from each of Conquest, Catalpa and Newcrest. This committee has been charged with responsibility for making recommendations to the Catalpa board regarding:
-
the principles of remuneration to be applied to key management personnel of Evolution Mining, having regard to the ASX corporate governance principles and the remuneration practices of Australian mining companies of a comparable size to Evolution Mining; and
-
the composition and terms of reference or charter of Evolution Mining’s nomination and remuneration committee.
A remuneration consultant has been engaged to prepare a report to assist the remuneration advisory committee in making these recommendations. As at the date of this Scheme Booklet, that report has not yet been received and the remuneration advisory committee has not yet made recommendations to the Catalpa board regarding the above matters.
Catalpa must have regard to the recommendations of the remuneration advisory committee when making offers of employment to key management personnel prior to the Implementation Date.
(f) management and employees
It is the intention of Catalpa and Conquest that Evolution Mining will continue the employment of all existing Conquest and Catalpa employees, as appropriate having regard to the requirements of Evolution Mining.
Further, under the terms of the Asset Sale Agreement, all current Newcrest employees engaged in the operation of the businesses relating to the Newcrest Assets will be offered new positions with the subsidiaries of Evolution Mining that will hold the Newcrest Assets on terms that are no less favourable than their current terms, subject to completion of the Transaction.
As at the date of this Scheme Booklet, Newcrest has identified a small number of operational employees who it will retain. Those employees will likely be replaced by Evolution Mining or their roles will be taken over by existing Conquest or Catalpa employees. It is not envisaged that a material number of employees will not take up the offer of employment with Evolution Mining. In the event some employees do not accept the offer, Evolution Mining will need to hire replacements. under the Asset Sale Agreement, the subsidiaries of Evolution Mining that will hold the Newcrest Assets will agree not to undertake a redundancy programme for two years post the Implementation Date and there is no current intention to do so during or beyond this two year term.
(g) transitional services
A number of support services are currently provided by Newcrest in respect of the businesses relating to the Newcrest Assets such as payroll, accounts payable and IT support. Evolution Mining will be required to replace these functions and integrate them with the existing Conquest and Catalpa management systems and processes. In order to ensure this process occurs smoothly and without disruption, Catalpa and Newcrest have agreed to negotiate a Transitional Services Agreement. That agreement will have a term of not more than six months, during which time (assuming the agreement is executed) Newcrest will provide transitional services at cost (including a reasonable allocation of overheads).
(h) reporting
Catalpa and Conquest intend that Evolution Mining will continue to lodge its annual and half yearly reports in line with Catalpa’s existing timetable and applicable laws (including the Listing Rules).
(i) hedging
Catalpa has an existing gold hedging agreement and a hedging policy in place as described in Section 4.3(b)(i). At this stage, Catalpa has no current intention to enter into any new gold or currency hedging arrangements. However, as noted in Section 3.2(b)(ii), Conquest is required to enter into silver and copper hedging arrangements in connection with the Macquarie Facilities.
Evolution Mining’s hedging policy will be reviewed by the board of Evolution Mining post implementation of the Transaction.
(j) other intentions in relation to conquest (and catalpa)
Other than as set out or referred to in this Section 6.6, it is the present intention of Catalpa and Conquest that Evolution Mining will:
-
generally continue the businesses of Conquest (and Catalpa) in a manner consistent with past practice;
-
not make any major changes to the businesses of Conquest nor deploy any of the fixed assets of Conquest (or those of Catalpa); and
-
continue the employment of Conquest’s present employees (and those of Catalpa).
SCHEME BOOKLET 63
6.7 intentions of newcrest in relation to evolution mining
This section describes Newcrest’s rationale for pursuing the Transaction and its current intentions in relation to the business and affairs of Evolution Mining and Newcrest’s shareholding in Evolution Mining.
Newcrest’s intentions are based on information and circumstances which are known to Newcrest at the time of preparation of this Scheme Booklet. Accordingly, the information in this Section 6.7 relates only to Newcrest’s current intentions, which may change as new information becomes available or circumstances change.
(a) newcrest’s rationale for the transaction
Newcrest pursues a strategy of delivering competitive shareholder returns by:
-
maintaining a focus on gold;
-
building a portfolio of predominantly low-cost, long-life gold assets, through exploration and acquisition in known gold regions (focus on South East Asia);
-
optimising performance at each phase of the gold mining value chain (exploration, projects and operations);
-
utilising its technical expertise across transportation and metallurgical processes;
-
constantly improving environmental performance, community involvement and safety outcomes; and
-
developing its people in technical, commercial and leadership aspects of the industry.
Following Newcrest’s significant growth in recent years and the strategic review undertaken by Newcrest after implementation of the merger with Lihir Gold Limited (September 2010), the Newcrest Assets are considered to be non-core assets in the context of Newcrest’s strategy.
The Transaction provides the opportunity to position the Newcrest Assets within Evolution Mining, to assist to create a new mid-tier Australian gold company with a portfolio of complementary assets which will:
-
combine complementary management teams from Catalpa and Conquest; and
-
be in a position to maximise the potential of Evolution Mining (including the Newcrest Assets).
Newcrest has demonstrated its support for Evolution Mining by agreeing to take shares in Evolution Mining as consideration for the Newcrest Assets. In doing so, Newcrest (as a shareholder in Evolution Mining) has the opportunity to maintain an indirect interest in the Newcrest Assets and to participate in potential upside as Evolution Mining pursues its strategy.
(b) Business and affairs of evolution mining
As set out in Section 6.2, Newcrest will nominate two directors to the board of Evolution Mining (of a total of eight directors on the board of Evolution Mining).[77] Newcrest has no current intention to seek to nominate any further directors to the board of Evolution Mining.
Through a combination of its shareholding in Evolution Mining and its entitlement to nominate directors to the board of Evolution Mining, Newcrest will have the ability to influence Evolution Mining’s business and affairs. To the extent that Newcrest is able to influence the business and affairs of Evolution Mining it currently intends that, following implementation of the Transaction, the business of Evolution Mining would be conducted in substantially the same manner as the businesses of Catalpa and Conquest, and operations at the Newcrest Assets, are presently conducted by Catalpa, Conquest and Newcrest (respectively).
(c)
newcrest shareholding
As described elsewhere in this Scheme Booklet, as a result of the Transaction, Newcrest will have an initial shareholding in Evolution Mining of 38% (on a Fully Diluted Value Basis).[78] Following implementation of the Transaction, it is intended that Evolution Mining will undertake the Rights Offer. At the request of Catalpa and Conquest, Newcrest has agreed not to take up its entitlements under the Rights Offer[79] and, as a result, Newcrest’s interest in Evolution Mining will be diluted to approximately 33% (on the same Fully Diluted Value Basis).[80]
Newcrest does not have a fixed view as to how long it will maintain its shareholding in Evolution Mining following implementation of the Transaction. Newcrest is supportive of Evolution Mining’s strategy and believes the investment in Evolution Mining will maximise the value of the Newcrest Assets for Newcrest Shareholders. As with all investments, Newcrest will continue to review its investment in Evolution Mining so as to maximise value to Newcrest’s shareholders.
-
As described in Section 9.1, Newcrest is entitled to nominate:
-
where Newcrest’s interest in the ordinary shares of Evolution Mining is at least 25%, two directors to the board of Evolution Mining or one quarter of the total number of directors on the board of Evolution Mining (rounded up to the nearest whole number), whichever is greater; and
-
where Newcrest’s interest in the ordinary shares of Evolution Mining is between 15% and 25%, one director to the board of Evolution Mining.
-
Information regarding the calculation of Newcrest’s interest in Evolution Mining following implementation of the Transaction is set out in the Transaction Overview – Share Issue .
-
Information regarding the Rights Offer, including details regarding the dilution of Newcrest shareholding, is set out in the Transaction Overview – Rights Offer.
-
Based on an illustrative Rights Offer price of a 10% discount to TERP, where TERP is calculated based on the VWAP of a Catalpa Share on the Last Trading Day.
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6.8 evolution mining’s pro forma historical financial information
(a) financial profile of evolution mining
The Evolution Mining pro forma historical financial information provided in this Scheme Booklet comprises a pro forma consolidated statement of financial position at 31 December 2010 which is based upon:
-
the Conquest consolidated historical statement of financial position as at 31 December 2010;
-
the Catalpa consolidated historical statement of financial position as at 31 December 2010;
-
the historical statement of financial position relating to the Newcrest Assets as at 31 December 2010; and
-
the relevant acquisition accounting and other adjustments required to present the pro forma consolidated statement of financial position of Evolution Mining.
The directors of Conquest and Catalpa are jointly responsible for the preparation of pro forma historical financial information, including the determination of the pro forma adjustments, except that the directors of Conquest are responsible for the information regarding Conquest, the directors of Catalpa are responsible for the information regarding Catalpa and the directors of Newcrest are responsible for the information regarding the Newcrest Assets provided to Conquest and Catalpa to prepare the pro forma historical financial information.
(b) Basis of preparation
The Evolution Mining pro forma historical financial information is provided for illustrative purposes and is prepared on the assumption that the Transaction was implemented on 31 December 2010 and the proposed Rights Offer is completed. The pro forma consolidated statement of financial position is based on Conquest’s and Catalpa’s respective half year financial statements as at 31 December 2010 which were reviewed by KPMG and Deloitte, respectively, both of which issued unqualified review conclusions. The Newcrest Assets are held by subsidiaries of Newcrest Mining Limited which was reviewed to a group materiality level by Ernst & Young for the half-year ended 31 December 2010. Copies of Conquest’s and Catalpa’s financial statements can be found on their respective websites, being www.conquestmining.com.au and www. catalparesources.com.au.
The historical financial information in respect of Conquest and Catalpa has been prepared in accordance with the recognition and measurement principles of the Australian Accounting Standards, and in accordance with Catalpa’s accounting policies, as set out in the financial report of Catalpa for the year ended 30 June 2010.
The historical financial information in respect of the Newcrest Assets has been prepared using the historical statements of financial position for each of the Newcrest subsidiaries holding these assets and adjusted to:
-
exclude those assets and liabilities that will not transfer in accordance with the Asset Sale Agreement; and
-
reflect the final acquisition accounting adopted by Newcrest in respect of the Mt Rawdon gold project. Newcrest finalised its purchase price allocation exercise at 30 June 2011.[81]
The historical financial information in respect of the Newcrest Assets has been prepared in accordance with the recognition and measurement principles of Australian Accounting Standards, and in accordance with Newcrest’s accounting policies. The Evolution Mining pro forma historical financial information has been presented in an abbreviated form insofar as it does not contain all disclosures required by the Australian Accounting Standards applicable to annual financial reports prepared in accordance with the Corporations Act.
Deloitte has reported on the Evolution Mining pro forma historical financial information in an Investigating Accountant’s Report which is included in this Scheme Booklet as Attachment B. Conquest Shareholders should note the comments made in relation to the scope and limitations of the Investigating Accountant’s Report.
Following a review by Conquest and Catalpa of the accounting policies disclosed in the financial statements for Conquest and Newcrest for the half year ended 31 December 2010, the accounting policies of Catalpa are not considered to be materially different. Therefore, at this time, no adjustments have been made to the Evolution Mining pro forma historical financial information to align accounting policies.
- Newcrest and Lihir Gold Limited entered into a merger implementation agreement on 4 May 2010 to combine the two companies under a scheme of arrangement. The scheme was approved and subsequently became effective on 30 August 2010. Newcrest assumed effective management control of Lihir on 30 August 2010. The Mt Rawdon gold project was acquired by Newcrest through this scheme. The initial accounting for the acquisition of Lihir was provisionally determined at the end of the half year reporting period ended 31 December 2010.
SCHEME BOOKLET 65
(c) evolution mining’s pro forma consolidated statement of financial position
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----- Start of picture text -----
Pro forma
material consolidation Pro forma
Post Balance adJustments consolidation
newcrest sheet date (Pre rights ProPosed (Post rights
catalPa conquest assets events offer) rights offer offer)
31 Dec 2010 31 Dec 2010 31 Dec 2010 31 Dec 2010 31 Dec 2010 31 Dec 2010 31 Dec 2010
($’000) ($’000) ($’000) ($’000) ($’000) ($’000) ($’000)
assets
Current assets
Cash and cash
equivalents 28,910 39,516 – 22,330 (34,686) 143,054 199,124
Trade and other
receivables 1,681 3,491 399 – – – 5,571
Inventory 10,461 5,963 13,056 – – – 29,480
Assets held for sale – 8,500 – – – – 8,500
Mine development assets 2,498 – 3,296 – – – 5,794
Other current assets 578 1,476 1,003 – – – 3,057
total current assets 44,128 58,946 17,754 22,330 (34,686) 143,054 251,526
Non-current assets
Available for sale financial
assets 1,260 8 – – – – 1,268
Property, plant and
equipment 96,909 20,024 49,379 – – – 166,312
Mine development assets 59,567 79,065 250,437 – 209,531 – 598,600
Exploration and
evaluation assets – 60,616 13,077 – – – 73,693
Deferred tax assets 17,752 – – (6,742) – – 11,010
Goodwill – – 51,264 – (51,264) – –
Other non-current assets – 73 – – – – 73
total non-current assets 175,488 159,786 364,157 (6,742) 158,267 – 850,956
total assets 219,616 218,732 381,911 15,588 123,581 143,054 1,102,482
liaBilities
Current liabilities
– – –
Trade and other payables 14,967 8,243 17,229 40,439
– – – – –
Interest bearing liabilities 24,565 24,565
Provisions 2,242 1,136 2,540 – – – 5,918
Total current liabilities 41,774 9,379 19,769 – – – 70,922
Non-current liabilities
– – – – –
Interest bearing liabilities 31,546 31,546
Provisions 4,807 6,792 11,458 – – – 23,057
– – – – –
Deferred tax liability 51,264 (51,264)
Total non-current liabilities 36,353 6,792 62,722 – (51,264) – 54,603
total liabilities 78,127 16,171 82,491 – (51,264) – 125,525
net assets 141,489 202,561 299,420 15,588 174,845 143,054 976,957
equity
Contributed equity /
Net assets of Newcrest
Assets equity interest 162,705 230,472 299,420 22,330 175,068 143,054 1,033,049
Reserves 5,272 6,781 – – (6,781) – 5,272
Accumulated losses (26,488) (34,692) – (6,742) 6,558 – (61,364)
total equity 141,489 202,561 299,420 15,588 174,845 143,054 976,957
----- End of picture text -----
66
Conquest MInInG LIMIteD
6 profIle of evolutIon mInIng contInueD
(d) Pro forma adjustments
The following pro forma adjustments have been made in preparing the Evolution Mining pro forma consolidated statement of financial position as at 31 December 2010.
-
(i) The Transaction was implemented on 31 December 2010 with:
-
Conquest Shareholders receiving 0.3 New Catalpa Shares for each Conquest Share they hold at the Scheme Record Date, with a total of approximately 180.4 million New Catalpa Shares issued as Scheme Consideration;[82]
-
existing Majority Option holders being issued approximately 11.3 million new Catalpa Options valued at $10.24 million as consideration for the cancellation of their Majority Options; and
-
Newcrest receiving approximately 228.9 million New Catalpa Shares as consideration for the Newcrest Assets.[83]
The total consideration to complete the Transaction that is included in the Evolution Mining pro forma consolidated statement of financial position has a value of approximately $704.96 million comprising the issue of approximately 409.25 million New Catalpa Shares and approximately 11.3 million new Catalpa Options which has resulted in an increase in contributed equity of approximately $704.96 million (as discussed in Section 6.8(e) below).
For the purposes of the pro forma adjustments described above, the value of the consideration paid to Conquest Shareholders for their Conquest Shares under the Scheme, and the value of the consideration paid to Newcrest as consideration for the Newcrest Assets, is based on an indicative Catalpa Share price of $1.70 per Catalpa Share (being the closing price of Catalpa Shares on ASX on the Last Trading Day). The actual value of the consideration paid will depend on the actual Catalpa Share price at close of trading on ASX on the Implementation Date (as discussed in Section 6.8(e) below).
-
(ii) A decrease in cash and cash equivalents of $34.686 million comprising an increase in accumulated losses of $28.134 million, representing the expensing of Catalpa’s transaction costs associated with the Transaction (including an estimate for stamp duty payable) and an increase in pre-acquisition accumulated losses of Conquest of $6.552 million representing Conquest’s estimated transaction costs associated with the Transaction.
-
(iii) Catalpa successfully raised $22.3 million net of issue costs through an institutional share placement in February 2011. For the purposes of compiling the Evolution Mining pro forma consolidated statement of financial position it has been assumed the share placement took place on 31 December 2010.
-
(iv) A decrease in deferred tax assets in Catalpa of $6.74 million and an increase in accumulated losses of $6.74 million as a result of certain losses not being available as a result of the Transaction.
-
(v) The elimination of the deferred tax liability and goodwill balance of $51.264 million resulting from Newcrest’s previous acquisition of the Mt Rawdon gold project through its merger with Lihir Gold Limited in September 2010.
-
(vi) The elimination of Conquest’s contributed equity of $230.47 million and elimination of the Newcrest Assets’ equity of $299.42 million, together with the issue of the equity consideration of $704.96 million by Catalpa resulting in additional contributed equity of $175.03 million. In addition, pre-acquisition reserves of $6.78 million and accumulated losses of $34.69 million of Conquest have been eliminated on acquisition and consolidation by Catalpa.
-
(vii) Recognition of additional mine property assets of $209.53 million arising on acquisition of Conquest and the Newcrest Assets (see Section 6.8(e) below relating to acquisition accounting).
-
(viii) The proposed Rights Offer to raise $150 million (or $143.054 million net of estimated issue costs of $6.946 million) has been assumed to have been conducted.
Based on 583,241,478 Conquest Shares on issue plus a further 18,094,801 Conquest Shares to be issued pursuant to the Minority Options Offers, all multiplied by 0.3 (being the exchange ratio used for the calculation of the Scheme Consideration).
Assumes the VWAP of Catalpa Shares in the 5 trading days prior to the Implementation Date is the same as the five trading days ending on (and including) the Last Trading Day. The actual number of Subscription Shares will be determined by the formula for calculating a Fully Diluted Value Basis, as described in the Transaction Overview – Share Issue (see page 13).
SCHEME BOOKLET 67
(e) acquisition accounting
Acquisition accounting will be applied in accordance with AASB3: Business Combinations. The value of the consideration for the acquisition of the Conquest Shares under the Scheme and the Newcrest Assets will be measured based upon the value of Catalpa Shares at close of trading on the Implementation Date. For the purposes of the Evolution Mining pro forma consolidated statement of financial position, a value of $1.70 per Catalpa Share has been assumed, being the closing price of Catalpa Shares on ASX on the Last Trading Day. Consequently, the value of the purchase consideration for accounting purposes may differ from the amount assumed in the Evolution Mining pro forma consolidated statement of financial position.
The financial information has been prepared on the assumption that the book value of assets (excluding mine development assets) and liabilities at 31 December 2010 reflected a reasonable approximation of their fair values. The difference between the fair value of the consideration payable by Catalpa under the Scheme and for the Newcrest Assets (as discussed in the preceding paragraph) and the book value of the assets and liabilities of Conquest and the Newcrest Assets has been treated as an increase in mine development assets and is illustrated in the table below:
| carrying amount of net assets |
equity consideration Paid |
eXcess consideration (recognised in mine develoPment assets) |
|
|---|---|---|---|
| ($'000) ($'000) ($'000) |
|||
| Conquest 196,009* 316,897 120,888 Newcrest Assets 299,420 388,063 88,643 |
|||
| total 495,429 704,960 209,531 |
- Adjusted for Conquest’s estimated transaction costs of $6.5 million
Goodwill is the potential residual amount that may arise after the comparison of the fair value of the purchase consideration with the fair value of the net identifiable assets (including contingent liabilities) acquired. Based on the pro forma values used to prepare the Evolution Mining pro forma consolidated statement of financial position, it is anticipated that no significant goodwill will be attributable to the Newcrest Assets or the Conquest assets as there is not expected to be a material difference between the fair values of those assets and the consideration payable by Catalpa for them. However, this position could change once actual valuations are performed as at the acquisition date.
Following implementation of the Transaction, a detailed valuation of the identifiable assets, liabilities and contingent liabilities of Conquest and the Newcrest Assets will be undertaken to ascertain the appropriate allocation of this difference (if any). The tax carrying values of Conquest’s assets will also be required to be reset which will result in a net increase in the deferred tax liabilities of Evolution Mining. These adjustments will impact depreciation and amortisation charges in future financial periods. For the purposes of compiling the pro forma consolidated statement of financial position an assumption has been made that a full tax step up in the tax cost base is available. As a result no deferred tax liability has been recognised in the pro forma consolidated statement of financial position.
Due to the above, the actual impact of acquisition accounting will vary from that disclosed in the Evolution Mining pro forma consolidated statement of financial position above.
68
Conquest MInInG LIMIteD
7 other matterS relevant to your vote on the Scheme
7.1 risk factors
This Section 7.1 sets out some of the risks that Conquest Shareholders may be exposed to if the Transaction is implemented.
In addition to the risks set out in this Section 7.1, if the Transaction is implemented Conquest Shareholders will continue to be exposed to certain other risks associated with having an equity interest in Conquest (including risks related to Conquest’s projects at Pajingo and Mt Carlton) and to risks associated with holding shares in a publicly listed gold company. The latter kind of risks include risks associated with:
-
market fluctuations;
-
movements in commodity prices and foreign exchange rates;
-
the high cost demands of operating mining projects and undertaking exploration and development activities;
-
obtaining and maintaining:
-
approvals, licences and permits; and
-
adequate insurance coverage at reasonable rates;
-
the accuracy of resource and reserve estimates; and
-
the failure by counterparties to contracts to comply with their contractual obligations or the termination of material contracts.
-
The risks set out in this Section 7.1:
-
are not, and should not be considered to be or relied on as, an exhaustive list of the risks that Conquest Shareholders may face if the Transaction is implemented; and
-
are general in nature in that regard has not been had to the investment objectives, financial situation, tax position or particular needs of any Conquest Shareholder.
(a) anticipated increase in evolution mining production in fy2012 and fy2013
As set out in Section 6.3, the gold projects that will be owned by Evolution Mining are forecast to produce 335,000 to 375,000 ounces of gold in FY2012 and 410,000 to 465,000 ounces of gold equivalent in FY2013. The FY2013 forecast is an increase of between 107,160 and 162,160 ounces on the gold produced from those projects in FY2011.
Whilst Conquest, Catalpa and Newcrest consider there to be a reasonable basis for their respective production forecasts,[84] these forecasts are subject to a number of factors, many of which cannot be foreseen and are beyond the control of Conquest, Catalpa and Newcrest (as applicable). These factors may cause the production forecasts not to be achieved or to be achieved later than expected.
In particular, Conquest Shareholders should note that:
-
in relation to Pajingo – the forecast increase in production in FY2012 and FY2013 is subject to the requisite approvals (including environmental approval) being obtained for the development of open pit deposits. It is possible that difficulties may be encountered in obtaining these approvals, which may result in the forecast production increase not being achieved or being achieved later than expected.
-
in relation to Mt Carlton – successful development of Mt Carlton is subject to the requisite approvals (including environmental authority) being obtained and the mining lease being granted. It is possible that difficulties may be encountered in obtaining the approvals and mining lease, which may prevent or delay the commencement of production at Mt Carlton; and
-
in relation to Edna May – in order for production to commence from Edna May underground, an underground development study and trial mining will need to be completed and the Edna May process plant will need to be expanded. It is possible that difficulties may be encountered in undertaking this work, which may prevent or delay anticipated production from Edna May underground.
(b) development risks
There are a number of risks and uncertainties that are associated with the development of mineral projects. These include increases in costs associated with capital expenditures, changes in commodities prices and the conditions at mine sites and other risks and uncertainties that will be beyond the control of Evolution Mining. If faced by Evolution Mining, these risks and uncertainties could result in Evolution Mining not realising development plans or in such plans costing more than expected or taking longer to realise than expected. Any of these outcomes could have an adverse effect on Evolution Mining’s financial and operational performance.
- As noted in the Important notices section at the front of this Scheme Booklet, production forecasts for the Newcrest Assets beyond 30 June 2012 have been prepared by Conquest and Catalpa, rather than Newcrest.
SCHEME BOOKLET 69
(c) exploration risks
Exploration activities are speculative by nature and therefore are often unsuccessful. Such activities also require substantial expenditure and can take several years before it is known whether they will result in additional mines being developed. Accordingly, if the exploration activities undertaken by Evolution Mining do not result in additional reserves, this may have an adverse effect on the company’s financial performance.
(d) rights offer
A condition of the Transaction is that underwriting is secured for the Rights Offer. Further, if the Transaction is implemented, Evolution Mining will be contractually obliged to commence the Rights Offer within 10 Business Days of the Implementation Date.
It is, however, possible that the Rights Offer may proceed on a non underwritten basis – that is, an underwriting Agreement may not be executed and Newcrest may agree to waive the relevant condition[85] or an underwriting Agreement may be executed but terminated in accordance with its terms prior to completion of the Rights Offer. It is also possible that Conquest, Catalpa and Newcrest could agree to waive the requirement for the Rights Offer to be undertaken. In any of these cases, the cash position of Evolution Mining will not, in the short term, reach the level that it is expected to reach following the Rights Offer[86] unless an alternative capital raising structure is successfully adopted. In this event, Evolution Mining may not be able to realise its growth strategy in accordance with expected timings and may need to obtain equity or debt funding to implement that strategy.
(e) financing requirements
Subject to successful completion of the Rights Offer, it is expected that Evolution Mining will have sufficient funding to support its growth strategy.
However, in the future Evolution Mining may require financing for development and exploration purposes and for other capital expenditure (such as feasibility studies, approvals, permits and licences and other general operational matters). There can be no guarantee that such financing will be able to be obtained on acceptable terms, particularly having regard to the current condition of global financial markets.
If Evolution Mining is unable to obtain debt financing on acceptable terms, this could have an adverse effect on the company’s growth prospects. In these circumstances, Evolution Mining may seek to obtain funding by way of an equity raising, which may be dilutive to existing shareholders.
(f) reliance on a single purchaser of the concentrate from the v2 deposit
As noted in Section 3.2(b)(ii), Conquest has entered into an off-take agreement with SGG for the sale of the gold-silver-copper concentrate from the V2 deposit at Mt Carlton, the largest and most significant of the two currently known deposits at Mt Carlton (the other being the A39 deposit).
Only having one purchaser of the concentrate from the V2 deposit gives rise to the risk that if, for whatever reason, SGG does not purchase the concentrate in accordance with the off-take agreement, one or more other buyers will need to be found. In this event, there is no guarantee that terms as favourable as those that have been agreed with SGG will be able to be secured.
(g) newcrest employees
Pursuant to the Asset Sale Agreement, at least 10 Business Days before the Implementation Date, the Catalpa subsidiaries that will purchase the Newcrest Assets must make or procure an offer of employment to each employee of a Newcrest Group Member engaged in the undertaking of the mining and exploration projects at Cracow or Mt Rawdon. If key employees or a material number of employees do not accept the offer made to them by Catalpa, this may have an adverse effect on operations at the relevant mine site.
(h) investment risks
Conquest and Catalpa intend that Evolution Mining will pursue an aggressive growth strategy that may involve making acquisitions. Such acquisitions may not be as successful as envisaged when made, which may adversely affect the financial performance of Evolution Mining.
-
Newcrest is the only party entitled to waive this condition.
-
Being approximately $199 million based on the cash position of each of Catalpa and Conquest as at 30 June 2011 (including gold and silver available for sale), assuming $150 million is raised under the Rights Offer and taking into account the costs associated with the Transaction and the Rights Offer. This figure does not take into account any stamp duty payable by Catalpa in connection with the Transaction or the operating cash flows of Catalpa and Conquest during the period from 1 July 2011 to completion of the Rights Offer. It also does not take into account the Macquarie Facilities. As at the date of this Scheme Booklet, Conquest has not drawn down on any of the Macquarie Facilities.
70
Conquest MInInG LIMIteD
7 other matterS relevant to your vote on the Scheme contInueD
(i) newcrest shareholding
As noted earlier in this Scheme Booklet, the consideration payable by Catalpa for the Newcrest Assets is New Catalpa Shares. Following implementation of the Transaction and the Rights Offer, Newcrest will have an interest in Evolution Mining of approximately 33% (calculated on a Fully Diluted Value Basis).[87] As a result, while Newcrest will not control Evolution Mining, it will be able to exercise significant influence over all matters requiring shareholder approval, including the election of directors, significant corporate transactions and certain issues of equity securities. In this regard, Newcrest’s interests may not always be aligned with those of other shareholders in Evolution Mining. Newcrest’s intentions in relation to Evolution Mining are set out in Section 6.7.
Newcrest’s interest in Evolution Mining will also mean that Newcrest must support any proposal by a third party to acquire all of the shares in Evolution Mining for that proposal to be successful. The presence of Newcrest as a substantial shareholder in Evolution Mining may be perceived by the market as reducing the likelihood of a takeover of Evolution Mining, thereby removing a portion of the takeover premium in the market for Evolution Mining’s shares. This may cause the shares to trade at a discount to the value at which they would trade if Newcrest did not hold its stake in Evolution Mining. In addition, the sale of shares in Evolution Mining in the future by Newcrest could adversely affect the market price of the shares.
(j) integration risks
A key determinant of the long-term success of Evolution Mining is the successful integration of the businesses of Conquest, Catalpa and the Newcrest Assets. Whilst a committee comprising representatives from each of Conquest, Catalpa and Newcrest has been established for the purpose of overseeing the integration process, difficulties may be encountered in connection with this process which could result in the failure of Evolution Mining to realise some of the anticipated benefits of the Transaction or could result in those benefits being realised later than expected.
The methods adopted by Evolution Mining in respect of operating the projects that will be owned by it may differ from the methods employed prior to implementation of the Transaction. This may result in revisions to reserves and resources, life of mines, methodology for calculating cash costs, production forecasts and exploration and development targets. In this regard, it is noted that responsibility for the management of the operations at Cracow and Mt Rawdon will be transferred from Newcrest to Evolution Mining on implementation of the Transaction.
(k) contractual restrictions on change of control and assignment or novation
Conquest is party to contracts containing change of control provisions that, in the absence of counterparty consent, will be triggered by implementation of the Transaction. If a counterparty’s consent is not obtained, Evolution Mining may lose the benefit of a material contract. This may adversely impact Evolution Mining’s operations and performance.
under the Asset Sale Agreement, Newcrest is required to procure that certain contracts to which Newcrest Group Members are a party and which relate to the Newcrest Assets are assigned or novated to the subsidiaries of Evolution Mining that will purchase the Newcrest Assets. In some cases, the assignment or novation would require the consent of third parties. To the extent that any such consents are not obtained, Newcrest will hold the relevant contracts on trust for the relevant subsidiaries of Evolution Mining pursuant to the terms of the Asset Sale Agreement. In those circumstances, Evolution Mining will have no direct interest in the contracts, which may make it difficult for it to enforce or otherwise deal with the contracts.
(l) mineral title risk
The mineral properties associated with the assets that will be owned by Evolution Mining may be subject to prior unregistered agreements or transfers, and title may be affected by undetected defects. There may be challenges to the title to these mineral properties (including by native title groups), which, if successful, could adversely impact development and operations and could result in Evolution Mining being required to make compensation payments.
(m) tax implications
The tax implications of the Scheme may differ for each Conquest Shareholder. Each Conquest Shareholder should read Section 8 in this regard and should seek professional tax advice about the tax consequences for them of disposing of their Conquest Shares under the Scheme.
(n) short term disposal of shares
Following the issue of the Scheme Consideration, some shareholders in Evolution Mining may decide to sell their shares in the short term. This may have an adverse effect on the share price of Evolution Mining.
- Based on an illustrative Rights Offer price of a 10% discount to TERP, where TERP is calculated based on the VWAP of a Catalpa Share on the Last Trading Day.
SCHEME BOOKLET 71
(o) risk of dilution
As set out in Section 6.5, following implementation of the Transaction, it is expected that Evolution Mining will have approximately 26,157,677 options on issue.
If exercised, these options will represent approximately 4.0% of Evolution Mining’s share capital. As such, their exercise would have a dilutive effect on the interests of shareholders in Evolution Mining.
(p) majority options offer
As discussed in Section 6.6(a), Conquest Options may exist after the Transaction is implemented as a result of Majority Options Offers not being accepted or Catalpa Shareholders not approving the provision of the Majority Options Consideration in respect of the Tranche 1 Non-dilution Rights Options and Tranche 2 Non-dilution Rights Options. In this event, Evolution Mining will not have ownership of all existing securities in Conquest following implementation of the Transaction and may not be able to realise the benefits of Conquest being a wholly owned subsidiary of Evolution Mining. However, as noted in Section 6.6(a), if this circumstance were to occur Evolution Mining may seek to compulsorily acquire any outstanding Conquest Options (and any shares issued pursuant to their exercise) in accordance with (and subject to) Part 6A.2 of the Corporations Act.
(q) hedging risk
As set out in Section 4.3(b)(i), Catalpa has hedging agreements in place for the forward sale of fixed quantities of gold production from its Edna May gold operation between 1 July 2011 and 30 September 2015. There is a risk that Evolution Mining may not be able to deliver the amount of gold required under its hedging arrangements, for example, if there is a production shortage. In this event, Evolution Mining’s financial performance may be adversely affected.
(r) clean energy future Policy
On 10 July 2011, the Australian Government announced the details of its Clean Energy Future Policy proposed to be implemented on 1 July 2012. If that policy is implemented, certain carbon emitters will be required to purchase permits that are equivalent to their emissions volume at an initial price of $23 per tonne of carbon.
until the legislation implementing the Clean Energy Future Policy is finalised, the impact (if any) on Evolution Mining is uncertain. Possible risks to Evolution Mining include increased operating costs to buy permits, increased capital expenditure to introduce greenhouse gas abatement measures and increased costs due to the overall impact of the policy.
(s) key personnel
Evolution Mining will be dependent on a number of key management personnel and executives to manage the day-today requirements of its businesses. Evolution Mining’s ability to manage its mining operations and its exploration and development activities will depend in large part on the efforts of these individuals. Evolution Mining will face competition for qualified personnel, and there can be no assurance that it will be able to attract and retain such personnel. The loss of the services of key management personnel could have an adverse effect on Evolution Mining.
(t) water
The effects of changes in rainfall patterns, water shortages and changing storm patterns and intensities may adversely impact the costs, production levels and financial performance of Evolution Mining’s operations. There is no guarantee that there will be sufficient future rainfall to support Evolution Mining’s future water demands in relation to its sites and operations, and this could adversely affect production and Evolution Mining’s ability to develop or expand projects and operations in the future. In addition, there can be no assurance that Evolution Mining will be able to obtain alternative water sources on commercially reasonable terms or at all in the event of prolonged drought conditions.
Conversely, some of Evolution Mining’s sites and operations may be subject from time to time to severe storms and high rainfall leading to flooding and associated damage which may result in delays to or loss of production and also to delays to development of some of its sites, projects and operations. In this regard, it is noted that extreme rainfall and flood conditions in queensland in late 2010/early 2011 had a material impact on numerous mine sites in queensland, including the operations at Mt Rawdon.
(u) environment
Evolution Mining’s business will be subject to extensive environmental laws and regulations in the various jurisdictions in which it will operate. Failure to comply with environmental laws and regulations could result in monetary penalties or closure of Evolution Mining’s operations, either permanently or temporarily.
72
CONquEST MINING LIMITED
7 other matterS relevant to your vote on the Scheme contInueD
7.2 implications of the outcome of the transaction
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if imPlemented if not imPlemented
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| if imPlemented | if not imPlemented |
|---|---|
| In order for the Transaction to be implemented, the Scheme Conditions need to be satisfed or (if applicable) waived. If the Transaction is implemented: •Catalpa will acquire all of the Conquest Shares; •Catalpa subsidiaries will acquire the Newcrest Assets; •Eligible Shareholders will receive the Scheme Consideration for the Conquest Shares which they hold as at the Scheme Record Date, resulting in them holding shares in Evolution Mining; •Newcrest (or its nominees) will be issued the Subscription Shares such that Newcrest will have an interest in Evolution Mining of 38% on Fully Diluted Value Basis (pre Rights Offer); •Conquest will be removed from the offcial list of ASX; and •it is intended that, within 10 Business Days of the Implementation Date, Evolution Mining will launch the Rights Offer. |
If the Transaction is not implemented because the Scheme Conditions are not satisfed or (if applicable) waived or for any other reason (for example, because Conquest, Catalpa and Newcrest agree in writing to terminate the Transaction Implementation Deed): •Catalpa will not acquire the Conquest Shares; •Catalpa subsidiaries will not acquire the Newcrest Assets; •Conquest Shareholders will not receive the Scheme Consideration; •Newcrest will not be issued the Subscription Shares; •Conquest will remain listed, and Conquest Shares will continue to be quoted, on ASX; and •the Rights Offer will not proceed. In the event that the Transaction is not implemented, the Conquest board presently intends to continue the business of Conquest in accordance with its publicly stated strategy and does not presently intend to make any major changes to that business, whether in respect of the company’s assets or the future employment of the company’s employees or otherwise. |
7.3 rights and liabilities attaching to new catalpa shares issued as scheme consideration
The New Catalpa Shares issued as Scheme Consideration will be fully paid ordinary shares in the capital of Catalpa and will rank equally with existing Catalpa Shares. Set out below is a summary of the rights and liabilities that will attach to these shares.
The summary below is not, and should not be considered or relied on as, an exhaustive list or definitive statement of the rights and liabilities that will attach to the New Catalpa Shares issued as Scheme Consideration. These rights and liabilities will be governed by Catalpa’s constitution, statutory and common law requirements and the Listing Rules. The interaction between these rules and requirements can be complex and dependant on the particular circumstances at issue.
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rights / liaBilities eXPlanation
Issue of further shares Subject to Catalpa’s constitution, the directors of Catalpa may issue further Catalpa Shares
or Catalpa Options and decide to whom, on what terms and subject to what rights and
restrictions those further shares or options are issued.
Variation of class The rights attached to New Catalpa Shares issued as Scheme Consideration may be varied
rights with the written consent of the holders of 75% of the Catalpa Shares or by a special resolution
passed
at a separate meeting of Catalpa Shareholders.
Dividends The directors of Catalpa may pay any interim and final dividend that, in their judgement, the
financial position of the company justifies, and may decide the method of payment (which may
include electronic transfer or cheque).
Holders of New Catalpa Shares issued as Scheme Consideration will be entitled to the same
dividend per share as each other Catalpa Shareholder (subject to any rights or restrictions
attached to their shares).
Transferring shares Subject to Catalpa’s constitution, holders of New Catalpa Shares issued as Scheme
Consideration may transfer any of their shares by a proper ASTC transfer (as defined in the
Corporations Regulations) or by a written transfer in any usual form or any other form approved by
the directors of Catalpa.
Selling non marketable If a holder of New Catalpa Shares issued as Scheme Consideration at any point holds less
parcels than a marketable parcel (as defined in the Listing Rules) of Catalpa Shares, the directors of
Catalpa may send that shareholder a notice that Catalpa intends to sell their shares. If no
response is received from the shareholder by the time specified in the notice (at least six weeks
after the notice is sent), Catalpa may sell the shares and remit the proceeds to the shareholder
in accordance with Catalpa’s constitution.
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CONTINUED ›
73
SCHEME BOOKLET
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rights / liaBilities eXPlanation
Voting rights Subject to Catalpa’s constitution, each holder of New Catalpa Shares issued as Scheme
Consideration will, at a general meeting, be entitled to one vote on a show of hands and, on a
poll, one vote for each share they hold as at the record time for the meeting.
Notices The New Catalpa Shares issued as Scheme Consideration will entitle the holder to be given
notice of general meetings and all other notices, financial statements and other documents
required to be sent to Catalpa Shareholders under Catalpa’s constitution, the Corporations Act or
the Listing Rules.
Winding up Subject to Catalpa’s constitution and the Corporations Act, if Catalpa is wound up and the
property of the company available for distribution among the members is more than sufficient
to pay all the debts and liabilities of the company and the costs, charges and expenses of the
winding up, holders of New Catalpa Shares issued as Scheme Consideration will be entitled to
receive that part of the excess property that is proportionate to the number of shares held by
them relative to the total number of Catalpa Shares.
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There are no material differences between the key provisions of the Conquest constitution and the Catalpa constitution regarding the rights and liabilities attaching to Conquest Shares and New Catalpa Shares issued as Scheme Consideration. Catalpa’s constitution is available for download from its website (www.catalparesources.com.au) or for inspection at Catalpa’s registered office during business hours.
7.4 scheme conditions
Set out below is a summary of the Scheme Conditions. The Scheme Conditions are set out in full in clause 3.1 of the Transaction Implementation Deed, a copy of which is included in the Scheme Booklet Supplement (without attachments).
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scheme condition summary
FIRB approval Before 8.00am on the Second Court Date, Newcrest must receive FIRB approval for the
acquisition of Catalpa Shares pursuant to the Share Issue and Catalpa must receive FIRB
approval for the acquisition of Conquest and the Newcrest Assets.
Ministerial consents and Before 8.00am on the Second Court Date, the minister responsible for administering the
approvals Mineral Resources Act 1989 (qld) must approve the assignment to Catalpa of the tenements
forming part of the Newcrest Assets, and the minister responsible for administering the Land
Act 1994 (qld) must provide all necessary consents and approvals in relation to the transfer
to Catalpa of the Crown leases forming part of the Newcrest Assets, and such consents and
approvals:
• must not be withdrawn or revoked; and
• must either be given unconditionally or subject to conditions satisfactory to Conquest,
Catalpa and Newcrest (acting reasonably and in good faith).
ASIC and ASX consents Before 5.00pm on the Business Day before the Second Court Date, ASIC and ASX must
and approvals provide such consents and approvals, and must do such other acts, as any of Conquest,
Catalpa or Newcrest (acting reasonably and in good faith) considers reasonably necessary
or desirable to implement the Transaction, and such consents, approvals and acts:
• must not be withdrawn or revoked; and
• must either be given or done unconditionally or subject to conditions satisfactory to
Conquest, Catalpa and/or Newcrest (as the case may be) acting reasonably and in good
faith.
Regulatory approvals Before 5.00pm on the Business Day before the Second Court Date, any regulatory
approvals which any of Conquest, Catalpa or Newcrest (acting reasonably and in good
faith) considers reasonably necessary or desirable to implement the Transaction must be
obtained, and such approvals:
• must not be withdrawn or revoked; and
• must either be given unconditionally or subject to conditions satisfactory to Conquest,
Catalpa and/or Newcrest (as the case may be) acting reasonably and in good faith.
Conquest board The Conquest board must, in this Scheme Booklet, unanimously state that it considers the
recommendation Scheme to be in the best interests of Conquest Shareholders and must recommend that
Conquest Shareholders vote in favour of the Scheme, in the absence of a Superior Proposal.
Catalpa board The Catalpa board must, in the Explanatory Memorandum, unanimously state that it
recommendation considers the Transaction to be in the best interests of Catalpa Shareholders and must
recommend that Catalpa Shareholders vote in favour of the Share Issue, in the absence of
a Superior Proposal.
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CONTINUED ›
74
Conquest MInInG LIMIteD
7 other matterS relevant to your vote on the Scheme contInueD
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scheme condition summary
Approval of the Scheme Conquest Shareholders and the Court must approve the Scheme.
Approval of the Share Catalpa Shareholders must approve the Share Issue.
Issue
No restraints As at 8.00am on the Second Court Date, there must not be in effect any material legal restraint
or prohibition preventing any aspect of the Transaction.
New Catalpa Shares Before 8.00am on the Second Court Date, ASX must approve the quotation of the New
Catalpa Shares on ASX.
Macquarie consent Before 5.00pm on the Business Day before the Second Court Date, Macquarie’s consent
to the Transaction must be obtained under certain agreements to which Conquest Group
Members and Catalpa Group Members are, respectively, a party.
No material adverse There must not be a Conquest Material Adverse Change, Catalpa Material Adverse Change or
change Newcrest Material Adverse Change before 8.00am on the Second Court Date, and such
a change must not become known before that time to:
• Conquest – in the case of a Catalpa Material Adverse Change or Newcrest Material Adverse
Change;
• Catalpa – in the case of a Conquest Material Adverse Change or Newcrest Material Adverse
Change; or
• Newcrest – in the case of a Conquest Material Adverse Change or Catalpa Material Adverse
Change.
No prescribed There must not be a Conquest Prescribed Occurrence or Catalpa Prescribed Occurrence
occurrence before 8.00am on the Second Court Date.
Independent Expert’s The Independent Expert must conclude that the Scheme is in the best interests of Conquest
opinion – Conquest Shareholders.
Independent Expert’s The Independent Expert must conclude that the Share Issue is fair and reasonable to Catalpa
opinion – Catalpa Shareholders (other than Newcrest and its associates).
Cancellation of Non- Before 5.00pm on the Business Day before the Second Court Date, the Interested Directors
dilution Rights must agree to the cancellation of their Non-dilution Rights for nil consideration, subject to the
Scheme becoming Effective.
Index decline Before 8.00am on the Second Court Date, the S&P/ASX 300 index must not close below 85%
of its level as at the close of trading on the Announcement Date for a period of five or more
consecutive trading days.
Underwriting Agreement Before 8.00am on the Second Court Date, Catalpa must execute an underwriting Agreement
with one or more underwriters on terms which are acceptable to Conquest and Newcrest
(acting reasonably) and, immediately before 8.00am on the Second Court Date, that
agreement must not have been terminated and there must not be any circumstances in
existence which would entitle an underwriter to terminate that agreement.
Aggregate market Before 8.00am on the Second Court Date, the aggregate market capitalisation of Conquest
capitalisation and Catalpa must not drop below 80% of its level as at the close of trading on the
Announcement Date for a period of three or more consecutive trading days.
Minority Options Before 5.00pm on the Business Day before the Second Court Date, each Interested Director
must:
• procure the acceptance of a Minority Options Offer; and
• Conquest Shareholders must approve the cancellation of the Minority Options and the issue
of the Minority Options Consideration.
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The directors of Conquest are not aware of any reason why any of the Scheme Conditions will not be satisfied by the relevant time, nor are they aware of any reason why any of the Scheme Conditions will be breached. In this regard, pursuant to a deed entered into between Conquest, Catalpa and Newcrest on 12 September 2011 (as referred to in Section 9.1), the parties agreed that, in the event the Independent Expert concludes that the Transaction (or any component of it) is not fair but is reasonable (either in the report prepared by the Independent Expert for Conquest or Catalpa), they will waive any rights they may have in respect of the non-fulfilment of the relevant Scheme Conditions above.
8.1 income tax consequences of participating in the scheme
The comments set out in this Section 8 are based on the Income Tax Assessment Act 1936 (Cth), the Income Tax Assessment Act 1997 (Cth) (Tax Act), applicable case law and published Australian Taxation Office guidance as at the date of this Scheme Booklet. Australian tax law may be amended at any time and therefore, the taxation consequences discussed in this Section 8 may alter if
there is a change in the tax law after the date of this
SCHEME BOOKLET 75
8 auStralIan tax conSIDeratIonS
Scheme Booklet.
These comments are intended as a general guide and apply only to Conquest Shareholders who hold their shares in Conquest on capital account. All Conquest Shareholders are urged to seek their own independent income tax advice prior to participating in the Scheme.
The information contained in this Section 8 does not consider the Australian income tax consequences for Conquest Shareholders who:
-
hold Conquest Shares as trading stock or in the ordinary course of carrying on a business;
-
hold Conquest Shares for the purposes of resale at a profit;
-
are temporary residents of Australia for income tax purposes;
-
are exempt from Australian tax;
-
are subject to the application of the taxation of financial arrangements rules contained in Division 230 of the Tax Act or have made an election such that Division 230 applies to their Conquest Shares; or
• are financial institutions, insurance companies, partnerships, tax exempt organisations, trusts or superannuation funds (except where expressly stated). Conquest Shareholders who do not hold their shares in Conquest on capital account or who are in any of the above categories may be subject to different rules and the summary in this Section 8 does not apply to them. Any Conquest Shareholders for whom this summary does not apply or who are in any doubt about their tax position should consult with their own professional advisers.
Conquest Shareholders who are deemed to have acquired their Conquest Shares before 20 September 1985 may be able to disregard any capital gain or loss they make from participating in the Scheme. Any Conquest Shareholders to whom this applies should consult with their own professional advisers.
This Section 8 is confined to taxation issues which are only one part of the many matters that investors need to consider when making a decision about their investments. under the Corporations Act, this advice is not required to be provided to investors by a holder of an Australian Financial Services Licence. Before making a decision about their investments, investors should consider taking advice from a holder of an Australian Financial Services Licence.
(i) conquest shareholders who are australian tax residents
under the Scheme, Conquest Shareholders will receive New Catalpa Shares as consideration for their disposal of Conquest Shares. The Scheme will trigger a CGT event for Conquest Shareholders who are Australian tax residents and who hold their shares on capital account. This CGT event may result in a:
-
capital gain, if the value of the Catalpa Shares received is greater than the cost base of their Conquest Shares; or
-
capital loss, if the value of the Catalpa Shares received is less than the reduced cost base of their Conquest Shares.
Individual Conquest Shareholders who make a capital loss may be able to offset that capital loss against other capital gains made in the same year or carry forward that loss to offset capital gains arising for them in subsequent years.
Companies and trusts can do the same, provided they also meet the specific loss utilisation rules which apply to these types of shareholders. These Conquest Shareholders should consult with their own professional advisers to determine how the loss utilisation rules apply to them.
Conquest Shareholders who make a capital gain will be subject to tax at the tax rate applying to them. Certain Conquest Shareholders who have held their Conquest Shares for at least 12 months should be eligible to apply the CGT discount rules to reduce their capital gain by the relevant discount percentage. The discount percentage is 50% for individuals and trusts and 33.33% for complying superannuation funds. There is no CGT discount for companies.
Alternatively, Conquest Shareholders who make a capital gain may choose to obtain rollover relief under subdivision 124-M of the Tax Act. To obtain rollover relief, a Conquest Shareholder will need to make a choice prior to lodging their income tax return for the year in which the capital gain arises. The manner in which a Conquest Shareholder prepares their Australian income tax return is sufficient evidence of the making of this choice.
If a Conquest Shareholder chooses to obtain rollover relief, the effect of this choice is as follows:
-
the capital gain the Conquest Shareholder makes from participating in the Scheme is disregarded; and
-
the New Catalpa Shares issued to Conquest Shareholder under the Scheme are treated as having been acquired at the time when their Conquest Shares were acquired.
The cost base each Conquest Shareholder has in their Conquest Shares will become the first element of their cost base in the New Catalpa Shares issued to them under the Scheme and the reduced cost base each Conquest Shareholder has in their Conquest Shares will become the first element of their reduced cost base in the New Catalpa Shares issued to them under the Scheme.
76
Conquest MInInG LIMIteD
8 auStralIan tax conSIDeratIonS contInueD
(ii) conquest shareholders who are not australian tax residents
Conquest Shareholders who are not tax residents in Australia and who, together with their associates, have not held 10% or more of the shares in Conquest throughout a 12 month period in the 24 months before the CGT event, should disregard any capital gain or capital loss which arises to them from the Scheme.
Conquest Shareholders who are not tax residents in Australia and who, together with their associates, have held an interest of 10% or more of the shares in Conquest throughout a 12 month period in the 24 months before the CGT event may trigger a capital gain or a capital loss. Any Conquest Shareholders to whom this applies should consult with their own professional advisers.
Conquest Shareholders who are not tax residents in Australia and who make a capital gain which is not disregarded can also choose to obtain scrip-for-scrip rollover relief under Subdivision 124-M of the Tax Act. In order to obtain rollover relief, eligible Conquest Shareholders must choose to obtain it. The way a Conquest Shareholder prepares its income tax return is sufficient evidence of the making of this choice.
(b) income tax consequences of receiving dividends from catalpa
Conquest Shareholders who are tax residents in Australia should include any dividends and, subject to them meeting certain requirements, any franking credits they receive from Catalpa in their assessable income. A tax offset equal to the amount of the franking credits included in the Conquest Shareholder’s assessable income can be applied to offset their income tax liability. Where a Conquest Shareholder is an individual or a complying superannuation fund, a refund can be claimed for any excess franking credits not applied to offset their tax liability.
Catalpa will be required to withhold dividend withholding tax on any portion of dividends which are not franked and which are payable to a shareholder who has advised Catalpa that their address is outside Australia. The rate of dividend withholding tax applying will depend on the country of the shareholder’s address registered with Catalpa but will not exceed 30%.
(c) stamp duty consequences of participating in the scheme
No Australian stamp duty should be payable by a Conquest Shareholder in respect of the disposal of their Conquest Shares or the acquisition of New Catalpa Shares under the Scheme.
The Catalpa Shares to be received by Conquest Shareholders under the Scheme will be “equity interests” for tax purposes under Division 974 of the Tax Act. Any distributions paid on the Catalpa Shares will be treated as dividends for Australian taxation purposes.
77
SCHEME BOOKLET
9 aDDItIonal InformatIon
9.1 summary of key transaction documents
The three key Transaction Documents are the Transaction Implementation Deed, the Asset Sale Agreement and the Subscription Deed. The table below provides a brief summary of some of the aspects of these Transaction Documents.
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transaction
document summary
Transaction On the Announcement Date, Conquest entered into the Transaction Implementation Deed with
Implementation Catalpa and Newcrest, pursuant to which each party agreed to do (and refrain from doing) certain
Deed things in connection with the implementation of the Transaction.
Execution of Asset The Transaction Implementation Deed imposes an obligation on Catalpa and Newcrest to, as
Sale Agreement and soon as practicable after the Scheme Conditions are satisfied or (if applicable) waived, execute
Subscription Deed (and, in the case of Newcrest, procure the execution of) the Asset Sale Agreement and the
Subscription Deed.
Termination rights Each of Conquest, Catalpa and Newcrest may terminate the Transaction Implementation Deed if:
• the Scheme has not become Effective by 30 November 2011;
• any Scheme Condition is not satisfied or (if applicable) waived;
• an event occurs which would or does prevent a Scheme Condition from being satisfied and that
condition is not waived (if capable of being waived); or
• either of the other parties materially breaches the deed (other than a warranty given under the
deed) and that breach is not remedied within five Business Days of the non-breaching party
giving written notice to the breaching party.
In addition, subject to the terms of the Transaction Implementation Deed, one or more of the
parties will have a termination right in the event that a Conquest or Catalpa director (as the case
may be) publicly changes, withdraws or modifies his support or recommendation of the Scheme
(in the case of a Conquest director) or Transaction (in the case of a Catalpa director) or endorses a
Competing Proposal.
Exclusivity provisions Each of Conquest and Catalpa has agreed that:
• during the Exclusivity Period, it will not participate in discussions in relation to a Competing
Proposal or facilitate, or enter into an agreement in relation to, such a proposal, unless the
board determines that:
—
not taking such action would involve a breach of the statutory or fiduciary duties owed by any
director
or would otherwise be unlawful; and
—
the Competing Proposal is, or may reasonably be expected to lead to, a Superior Proposal
(Fiduciary Exception);
• during the Exclusivity Period, it will not solicit enquiries, discussions or proposals in relation to,
or which are reasonably likely to lead to, a Competing Proposal;
• during the Exclusivity Period, it will notify the other parties within 24 hours of any contact,
discussions or negotiations in connection with a matter that relates to or may lead to a
Competing Proposal, and will provide all material details of the relevant event;
• in the event that a Competing Proposal is received, it will provide the other parties with any
information made available to any third party who is or may be considering that Competing
Proposal (which information may only be made available if the Fiduciary Exception applies); and
• it will not enter into an agreement in relation to a Competing Proposal without:
—
giving the other parties five clear Business Days to submit a written proposal to revise the
Transaction; and
—
considering that proposal in good faith,
and, if the proposed revision would make the Transaction at least as favourable as the
Competing Proposal
to Conquest Shareholders or Catalpa Shareholders (as applicable), will:
—
use best endeavours to agree the necessary amendments to the Transaction Implementation
Deed; and
—
take all necessary steps to give effect to the change to the Transaction.
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CONTINUED ›
78
CONquEST MINING LIMITED
9 aDDItIonal InformatIon contInueD
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transaction
document summary
Break fee Conquest must pay $1.6 million to each of Catalpa and Newcrest if:
• any member of the Conquest board withdraws or adversely modifies their support of the
Scheme or their recommendation that Conquest Shareholders vote in favour of the Scheme (or
makes a public statement inconsistent with their support of the Scheme or indicating that they
support a Competing Proposal),
unless either:
—
the Independent Expert concludes that the Scheme is not in the best interests of Conquest
Shareholders (provided the reasons for that conclusion do not include the existence of a
Competing Proposal); or
—
Conquest is entitled to terminate the Transaction Implementation Deed due to a failure of a
Scheme Condition or a material breach of the Transaction Implementation Deed (other than in
relation to a warranty) by Catalpa or Newcrest;
• a Conquest Fee Trigger Event occurs;
• following the public announcement of a Competing Proposal, Conquest Shareholders do not
approve
the Scheme at the Scheme Meeting;
• a Scheme Condition is not satisfied because of a material non-compliance by Conquest with
any of its obligations under the Transaction Implementation Deed;
• Conquest materially breaches its obligations under the exclusivity provisions outlined above;
• Catalpa or Newcrest is entitled to terminate the Transaction Implementation Deed and gives the
appropriate notice of such information pursuant to the terms of the deed; or
• prior to the expiry of the Minority Options Offers, any Interested Director has not procured the
acceptance of a Minority Options Offer (as noted in Section 12.2, each Minority Options Offer
has been accepted).
Catalpa must pay $1.6 million to each of Conquest and Newcrest in equivalent circumstances
(with the exception of the circumstance referred to in the final bullet point).
Minor amendments On 12 September 2011, Conquest, Catalpa and Newcrest entered into a deed under which
to the Transaction they formalised their agreement to certain matters in relation to the operation of the Transaction
Implementation Deed Implementation Deed. For the most part, these matters are of a technical nature and are not
material in the context of the Transaction (however note the waiver referred to in Section 7.4).
They include changes to the mechanics of the Majority Options Offers and Minority Options
Offers.
Further details of The Transaction Implementation Deed (without attachments) was released to ASX on the
the Transaction Announcement Date and is included in the Scheme Booklet Supplement.
Implementation Deed
Asset Sale The Asset Sale Agreement is the document pursuant to which the Newcrest Assets will be
Agreement acquired by Catalpa subsidiaries on the Implementation Date in exchange for the Subscription
Shares, and contains details of the Newcrest Assets and the terms on which the Asset Purchase
will take place.
Assumed liabilities On and from the Implementation Date, the Catalpa Group will accept and assume responsibility
for all liabilities (whenever arising) of the Asset Vendors in relation to the Newcrest Assets, and will
also accept responsibility for all liabilities (whenever arising) of Newcrest in its capacity as manager
of the Cracow exploration and mining joint ventures.
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SCHEME BOOKLET 79
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transaction
document summary
Guarantee and Catalpa will provide a guarantee and indemnity in favour of Newcrest and the Asset Vendors
indemnity pursuant to which it will:
• guarantee the performance by the relevant Catalpa subsidiaries of their obligations under the
Asset Sale Agreement and related transaction documents; and
• indemnify Newcrest and the Asset Vendors against any liabilities which may be incurred or
sustained by them in connection with any default or delay by the relevant Catalpa subsidiaries
in performing their obligations under the Asset Sale Agreement and related transaction
documents.
Subscription Deed The Subscription Deed is the document pursuant to which Newcrest (or its nominees) will
subscribe for the Subscription Shares, and pursuant to which Catalpa will issue and allot the
Subscription Shares to Newcrest (or its nominees), in each case on the Implementation Date and
subject to the Asset Vendors satisfying their obligations in respect of completion of the Asset
Purchase (as set out in the Asset Sale Agreement).
Nomination of For so long as Newcrest Group Members collectively hold:
directors • at least 25% of the ordinary shares in Evolution Mining, Newcrest may appoint the greater of
two directors and one quarter of the total number of directors to the board of Evolution Mining
(rounded up to the nearest whole number); and
• between 15% and 25% of the ordinary shares in Evolution Mining, Newcrest may nominate one
director to the board of Evolution Mining.
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9.2 conquest option share trust
Conquest has in place a directors and employees share option plan. Pursuant to the plan, Trinity Management Pty Ltd, as trustee of the option share trust established in connection with the plan, holds Conquest Options on behalf of participants in the plan.
The Trustee holds all the Conquest Options on issue at the date of this Scheme Booklet through the option share trust, except for 2,000,000 options exercisable at $0.93 per option and expiring on 26 February 2013 and 5,500,000 options exercisable at $0.60 per option and expiring on 19 October 2012 (as referred to in paragraphs (a) and (b) of the definition of “Majority Options” in Section 13). These options were not issued under Conquest’s directors and employees share option plan and, accordingly, are not subject to the option share trust.
9.3 regulatory relief
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relief descriPtion
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| relief | descriPtion |
|---|---|
| Paragraph 8302(h) of Schedule 8 of the Corporations Regulations |
This paragraph requires this Scheme Booklet to set out whether, within the knowledge of the directors of Conquest, the fnancial position of Conquest has materially changed since the date of the last balance sheet laid before the company in general meeting or sent to Conquest Shareholders in accordance with section 314 or section 317 of the Corporations Act, being the Conquest annual report for the year ended 30 June 2010. ASIC has granted relief in respect of this requirement on the basis that Conquest must state in this Scheme Booklet whether, within the knowledge of the Conquest directors, the fnancial position of Conquest has materially changed since 31 December 2010, being the end date of the half year period the subject of the fnancial report released by Conquest to ASX on 28 February 2011. |
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9 aDDItIonal InformatIon contInueD
9.4 material changes in financial position
Except as disclosed in this Scheme Booklet, no director of Conquest is aware of any material change to the financial position of Conquest since 31 December 2010, being the end date of the half year period the subject of the financial report released by Conquest to ASX on 28 February 2011.
9.5 conquest securities held by or on behalf of conquest directors as at the date of this scheme Booklet
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director conquest conquest oPtions
shares
Jake Klein 2,250,000 Majority Options
1,156,217 exercisable at $0.633 per option and expiring on 25 November 2016
1,515,484 exercisable at $0.592 per option and expiring on 25 November 2016
2,115,572 exercisable at $0.575 per option and expiring on 25 November 2016
50,574 exercisable at $0.569 per option and expiring on 25 November 2016
1,684,302 exercisable at $0.558 per option and expiring on 25 November 2016
5,201,501 exercisable at $0.552 per option and expiring on 25 November 2016
20,968 exercisable at $0.546 per option and expiring on 25 November 2016
1,940,470 exercisable at $0.453 per option and expiring 25 November 2016
2,000,000 exercisable at $0.93 per option and expiring on 26 February 2013
Minority Options
13,500,000 exercisable (subject to vesting conditions) at $0.28 per option and
expiring on 1 June 2015
13,500,000 exercisable (subject to vesting conditions) at $0.32 per option and
expiring on 1 June 2016
Nicholas Curtis 200,000 Majority Options
107,057 exercisable at $0.633 per option and expiring pm 25 November 2015
140,323 exercisable at $0.592 per option and expiring on 25 November 2015
195,886 exercisable at $0.575 per option and expiring on 25 November 2015
4,683 exercisable at $0.569 per option and expiring on 25 November 2015
155,954 exercisable at $0.558 per option and expiring on 25 November 2015
666,806 exercisable at $0.552 per option and expiring on 25 November 2015
1,941 exercisable at $0.546 per option and expiring on 25 November 2015
179,673 exercisable at $0.453 per option and expiring 25 November 2015
Minority Options
1,250,000 exercisable at $0.28 per option and expiring on 1 June 2015
1,250,000 exercisable at $0.32 and expiring on 1 June 2016
James Askew 200,000 Majority Options
107,057 exercisable at $0.633 per option and expiring pm 25 November 2015
140,323 exercisable at $0.592 per option and expiring on 25 November 2015
195,886 exercisable at $0.575 per option and expiring on 25 November 2015
4,683 exercisable at $0.569 per option and expiring on 25 November 2015
155,954 exercisable at $0.558 per option and expiring on 25 November 2015
666,806 exercisable at $0.552 per option and expiring on 25 November 2015
1,941 exercisable at $0.546 per option and expiring on 25 November 2015
179,673 exercisable at $0.453 per option and expiring 25 November 2015
Minority Options
1,250,000 exercisable at $0.28 per option and expiring on 1 June 2015
1,250,000 exercisable at $0.32 and expiring on 1 June 2016
Richard Krasnoff 254,938 Nil
Doug Stewart 204,944 Nil
Paul Marks 22,253,823 Nil
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SCHEME BOOKLET 81
9.6 catalpa securities held by or on behalf of conquest directors
As at the date of this Scheme Booklet, no Catalpa securities are held by or on behalf of a director of Conquest.
9.7 Payments and benefits to directors, secretaries or executive officers of the conquest group
Except as disclosed in this Scheme Booklet, it is not proposed that any payment or other benefit be made to any director, secretary or executive officer of Conquest or a related body corporate of Conquest as compensation for the loss of, or as consideration for or in connection with his or her retirement from, office in Conquest or a related body corporate of Conquest.
In this regard, it is noted that, as part of the Transaction, Jake Klein’s employment contract with Conquest will be terminated and he will enter into a new employment contract with Catalpa. As at the date of this Scheme Booklet, that contract has not been entered into. As discussed in Section 6.6(e), Catalpa must have regard to the recommendations of the remuneration advisory committee when making an employment offer to Mr Klein (who will be part of Evolution Mining’s key management personnel).
9.8 agreements and arrangements entered into by conquest directors
Save for the Minority Options Offers (see Section 12) and the Cancellation Confirmations, there are no agreements or arrangements made between any director of Conquest and any other person in connection with, or conditional upon, the outcome of the Scheme.
In this regard, it is noted that, under the Transaction Implementation Deed, Catalpa must, within five Business Days of dispatch of this Scheme Booklet, make the Majority Options Offers (see Section 11.2). These will include offers in respect of the Majority Options held by (or on behalf of) Jake Klein, Nicholas Curtis and James Askew. If these offers are accepted, the agreements formed by such acceptance will be conditional on (among other things) the Scheme becoming Effective.
9.9 interests of conquest directors in catalpa contracts
Except as disclosed in this Scheme Booklet, no Conquest director has an interest in any contract entered into by Catalpa.
9.10 interests of catalpa and its associates in conquest securities
During the four months before the date of this Scheme Booklet, neither Catalpa nor any of its associates:
-
provided, or agreed to provide, consideration for a Conquest Share under a purchase or agreement; or
-
gave, offered to give or agreed to give a benefit to another person that was not and will not be offered to all Conquest Shareholders where that benefit is likely to induce the other person, or an associate of the other person, to vote in favour of the Scheme Resolution or to dispose of Conquest Shares.
9.11 catalpa’s voting power in conquest
As at the date of this Scheme Booklet, Catalpa does not have any voting power in Conquest.
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9 aDDItIonal InformatIon contInueD
9.12 consents to be named
Each party named below as a consenting party:
-
has given its written consent to be named in this Scheme Booklet in the form and context in which it is named, and has not withdrawn such consent as at the date of this Scheme Booklet;
-
has given its written consent to the inclusion in this Scheme Booklet of statements made by it and statements in this Scheme Booklet based on statements made by it (as set out next to its name below), in each case in the form and context in which those statements appears in this Scheme Booklet, and has not withdrawn such consent as at the date of this Scheme Booklet;
-
does not make, or purport to make, any statement in this Scheme Booklet other than the statements referred to in the table below as statements made by it; and
-
to the maximum extent permitted by law, expressly disclaims and takes no responsibility for any statements in or omissions from this Scheme Booklet.
==> picture [490 x 21] intentionally omitted <==
----- Start of picture text -----
consenting Party role statements
----- End of picture text -----
| Goldman Sachs | Financial advisor | N/A |
|---|---|---|
| Gilbert + Tobin | Legal advisor | N/A |
| Grant Samuel | Independent expert | Independent Expert’s Report and any statements based on information |
| in that report (excluding the Technical Specialist’s Report and | ||
| statements based on information in that report) | ||
| AMC Consultants Pty Ltd | Technical specialist | Technical Specialist’s Report and any statements based on information in |
| that report | ||
| Deloitte | Investigating | Investigating Accountant’s Report and any statements based on |
| accountant | information in that report | |
| Ernst & Young | Tax advisor to | Section 8 and any statements based on information in that section |
| Conquest | ||
| KPMG | N/A | Relevant statements in Sections 3.6 and 8 and any statements based |
| on those statements | ||
| Link Market Services | Conquest share | N/A |
| Limited | registry |
9.13 competent person statement
The information in this report that relates to the Exploration Results, Mineral Resources or Ore Reserves listed in the table below is based on work compiled by the person whose name appears in the same row, who is employed on a full-time basis by the employer named in that row and is a member of the institute named in that row. Each person named in the table below has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he or she has undertaken to qualify as a Competent Person. Each person named in the table below consents to the inclusion in this Scheme Booklet of the matters based on his or her information in the form and context in which they appear. However, none of these persons accepts responsibility for information relating to the aggregate Mineral Resources or Ore Reserves of Catalpa or Evolution Mining (as relevant) following implementation of the Transaction, except to the extent that information is:
-
in the case of the employees of Conquest, Australian Mine Design and Development Pty Limited and AMC Consultants, consistent with the relevant information in Section ;
-
in the case of the employees of Catalpa, Hellman and Schofield Pty Ltd and Coffey Mining, consistent with the relevant information in Section 4; and
-
in the case of the Newcrest employees, consistent with the relevant information in Section 5.
SCHEME BOOKLET 83
==> picture [491 x 30] intentionally omitted <==
----- Start of picture text -----
name of comPetent
result/resource/reserve Person emPloyer institute
----- End of picture text -----
| Mt Carlton Ore Reserves | John Wyche | Australian Mine | Australasian Institute of Mining and |
|---|---|---|---|
| Design and | Metallurgy | ||
| Development Pty | |||
| Limited | |||
| Mt Carlton Mineral Resources | David Hewitt | Conquest | Australian Institute of Geoscientists |
| Mt Carlton Exploration Results | |||
| Pajingo Ore Reserves | Tim Benfeld | Conquest | Australasian Institute of Mining and |
| Metallurgy | |||
| Pajingo Mineral Resources | Sonia Konopa | AMC Consultants Pty | Australasian Institute of Mining and |
| Ltd | Metallurgy | ||
| Twin Hills Mineral Resources | Peter Brown | Conquest | Australian Institute of Geoscientists |
| Pajingo Exploration Results | Brentan Grant | Conquest | Australian Institute of Geoscientists |
| Reported Edna May | John Winterbottom | Catalpa | Australian Institute of Geoscientists |
| underground Mineral Resource | |||
| and Catalpa Mineral Resource | |||
| stockpiles | |||
| Catalpa Mineral Resources | Nicolas Johnson | Hellman and | Australian Institute of Geoscientists |
| (other than Cracow Mineral | Schofeld Pty Ltd | ||
| Resource) | |||
| Catalpa Ore Reserves (other | Harry Warries | Coffey Mining Pty Ltd | Australasian Institute of Mining and |
| than Cracow Ore Reserve) | Metallurgy | ||
| Cracow Mineral Resource | Craig Irvine | Newcrest | Australasian Institute of Mining and |
| Metallurgy | |||
| Cracow Ore Reserve | Justin Woodward | Newcrest | Australasian Institute of Mining and |
| Metallurgy | |||
| Mineral Resources of Mt | Tim Murphy | Newcrest | Australasian Institute of Mining and |
| Rawdon | Metallurgy | ||
| Ore Reserves of Mt Rawdon | Nick Spicer | Newcrest | Australasian Institute of Mining and |
| Metallurgy | |||
| Cracow and Mt Rawdon | Colin Moorhead | Newcrest | Australasian Institute of Mining and |
| Exploration Results | Metallurgy |
The information in this Scheme Booklet that relates to Mineral Resources and Ore Reserves has been prepared in accordance with the JORC Code. There are no known environmental, permitting, legal, taxation, political or other relevant issues that would materially affect the statements of Mineral Resources or Ore Reserves set out in this Scheme Booklet.
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9 aDDItIonal InformatIon contInueD
9.14 other material information
Other than as contained in or referred to in this Scheme Booklet, in the opinion of the Conquest board:
-
there is no other information material to the making of a decision by Conquest Shareholders whether or not to vote in favour of the Scheme, being information that is within the knowledge of a director of a Conquest Group Member and which has not previously been disclosed to Conquest Shareholders; and
-
there is no other information that Conquest Shareholders and their professional advisors would reasonably require to make an informed assessment of the effect of the Scheme on Catalpa or the rights and liabilities attaching to the New Catalpa Shares to be issued as Scheme Consideration (to the extent to which it is reasonable for Conquest Shareholders and their professional advisors to expect to find such information in this Scheme Booklet).
9.15 supplementary information
Conquest will issue a supplementary document to this Scheme Booklet if, between the date of this Scheme Booklet and the Second Court Date, it becomes aware:
-
that a material statement in this Scheme Booklet is false or misleading;
-
of a material omission from this Scheme Booklet;
-
of a significant change affecting a matter in this Scheme Booklet; or
-
of a significant new matter that would have been required to be included in this Scheme Booklet if it had been known at the date of this Scheme Booklet.
Depending on the prevailing circumstances, and subject to obtaining any necessary approvals, Conquest may, in addition to releasing the supplementary information to ASX, circulate and publish any supplementary document by any one or more of the following methods:
-
placing an advertisement in a newspaper which is circulated generally throughout Australia;
-
posting the supplementary document on Conquest’s website at www.conquestmining.com.au; or
-
posting the supplementary document to Conquest Shareholders.
85
SCHEME BOOKLET
part 2 – general meetIng reSolutIonS
10 non-DIlutIon rIghtS reSolutIonS
10.1 introduction
The Non-dilution Rights Resolutions relate to the giving of financial benefits by Conquest to related parties. More specifically:
-
the financial benefits are Conquest Options – namely the Non-dilution Rights Options; and
-
the related parties are Jake Klein, James Askew and Nicholas Curtis (being the Interested Directors), each of whom is a director, and therefore a related party, of Conquest.
Conquest Shareholder approval is required under Chapter 2E of the Corporations Act for the issue of the Non-dilution Rights Options for the benefit of the Interested Directors. It is also required under rule 10.11 of the Listing Rules on the basis that, for the purposes of the Listing Rules, each issue of Non-dilution Rights Options constitutes an issue of equity securities to a related party.
This Section 10 sets out information relevant to Conquest Shareholders’ decision on how to vote on the Non-dilution Rights Resolutions, and includes disclosures required by Chapter 2E of the Corporations Act, Chapter 10 of the Listing Rules and ASIC policy.
The Non-dilution Rights Resolutions are different from the other General Meeting Resolutions in that they are not conditional on the Scheme becoming Effective. This is because they are being put to Conquest Shareholders pursuant to existing contractual obligations of Conquest that are not connected to the Transaction. Accordingly, if the Non-dilution Rights Resolutions are passed at the General Meeting, the Non-dilution Rights Options will be issued for the benefit of the Interested Directors irrespective of whether the Scheme becomes Effective.
Pursuant to the Cancellation Confirmations, the Interested Directors have agreed to the cancellation of their Non-dilution Rights for nil consideration if the Scheme becomes Effective.
10.2 Background to the non-dilution rights
(a) rights given in connection with shareholder approved director appointments
At the 2010 EGM, Conquest Shareholders approved the appointment of the Interested Directors as directors of Conquest. In the case of each of these appointments, a condition of the appointment was that Conquest agree to give the Interested Director a Non-dilution Right.
(b) nature of rights
The Non-dilution Rights give each Interested Director an entitlement to Conquest Options ( additional options ) in the event that Conquest issues shares before the expiry or exercise of all the Minority Options held by (or on behalf of) that director ( relevant shares ), other than where the shares are issued in lieu or in satisfaction of dividends, by way of dividend reinvestment or upon the exercise of Conquest Options.
The issue of Additional Options is subject to satisfaction of all necessary regulatory requirements, including the obtaining of any necessary shareholder approvals.
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10 non-DIlutIon rIghtS reSolutIonS contInueD
(c) calculation of additional options
Additional Options are exercisable at a price 15% above the price at which the Relevant Shares were issued.
The number of Additional Options that will be issued pursuant to a Non-dilution Right is calculated based on the following formula:
- o’ = O x S’/S
where
-
s = total number of Conquest Shares on issue at the date of issue of the Relevant Shares (not including the Relevant Shares)
-
s’ = number of Relevant Shares
-
= total number of Minority Options held by (or on behalf of) the holder of the Non-dilution Right at the date of issue of the Relevant Shares
-
o’ = number of Additional Options, being such number of Conquest Options which, if exercised together with all of the other Conquest Options held by (or on behalf of) the holder of the Non-dilution Right, would result in the holder having the same interest in Conquest’s issued share capital as he would have had if, before the issue of the Relevant Shares (and before the issue of the Additional Options), all of the Conquest Options held by him (or on his behalf) had been exercised
10.3 details of the non-dilution rights options
(a) overview
The Non-dilution Rights Options are options over unissued fully paid ordinary shares in the capital of Conquest.
(b) calculation of non-dilution rights options
The table below sets out details of the issues of Conquest Shares that have given rise to an entitlement on the part of the Interested Directors to the Non-dilution Rights Options. It also shows how many Non-dilution Rights Options each Interested Director is entitled to pursuant to each share issue, and the price at which those options will be exercisable if issued.
The relevant share issues were made by Conquest in connection with either:
-
Conquest’s takeover bid for all the shares in NqM,[88] which closed on 22 October 2010;
-
compulsory acquisition of all outstanding shares in NqM[89] following the close of that bid, which was completed on 23 November 2010; or
-
Conquest’s share purchase plan dated 25 October 2010.
==> picture [490 x 189] intentionally omitted <==
----- Start of picture text -----
non-dilution eXercise
non-dilution non-dilution rights Price of
numBer rights rights oPtions – non-dilution
of shares oPtions – oPtions – nicholas rights
issued date of issue issue Price Jake klein James askew curtis oPtions
NQM bid
4,098,385 22 October 2010 $0.55 313,340 29,013 29,013 $0.633
5,565,089 29 October 2010 $0.55 425,476 39,396 39,396 $0.633
Compulsory acquisition
4,820,013 23 November 2010 $0.64 368,512 34,121 34,121 $0.736
Share purchase plan
10,415,623 23 November 2010 $0.64 796,322 73,733 73,733 $0.736
35,500 24 November 2010 $0.64 2,714 251 251 $0.736
24,934,610 1,906,364 176,514 176,514
----- End of picture text -----
(c) terms of the non-dilution rights options
If the Non-dilution Rights Resolutions are passed at the General Meeting, the Non-dilution Rights Options will be issued to the Trustee, to be held on behalf of the Interested Directors, on the same terms and conditions as applying to the Minority Options exercisable at $0.32 per option (as set out in the explanatory memorandum in respect of the notice of meeting for the 2010 EGM), except that the exercise price (as shown in the table in Section 10.3(b)) will be 15% higher than the price at which the relevant Conquest Shares were issued.
-
Now known as “CqT Holdings Pty Limited”.
-
Now known as “CqT Holdings Pty Limited”.
SCHEME BOOKLET 87
10.4 valuation of the non-dilution rights options
Set out below is a valuation of the Non-dilution Rights Options.
For the purposes of that valuation, the Non-dilution Rights Options proposed to be issued for the benefit of Jake Klein have been valued using a different methodology[90] to that adopted in valuing the Non-dilution Rights Options proposed to be issued for the benefit of James Askew and Nicholas Curtis.[91] This is because the former Non-dilution Rights Options are, unlike the other Non-dilution Rights Options, subject to performance conditions.
(a) valuation of tranche 1 non-dilution rights options
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----- Start of picture text -----
issued in relation to value Per oPtion ($) total value ($)
----- End of picture text -----
| NqM bid | 0.242 | 178,424 |
|---|---|---|
| Compulsory acquisition | 0.222 | 82,375 |
| Share purchase plan | 0.222 | 176,704 |
| total | 437,503 | |
| Weighted average | 0.229 |
(b) valuation of tranche 2 non-dilution rights options and tranche 3 non-dilution rights options
==> picture [490 x 22] intentionally omitted <==
----- Start of picture text -----
issued in relation to value Per oPtion ($) total value ($)
----- End of picture text -----
| NqM bid | 0.219 | 29,905 |
|---|---|---|
| Compulsory acquisition | 0.197 | 13,512 |
| Share purchase plan | 0.197 | 28,984 |
| total | 72,401 | |
| Weighted average | 0.205 |
(c) valuation assumptions
In valuing the Non-dilution Rights Options, the following assumptions were made:
-
the exercise price of each Non-dilution Rights Option is as set out in Section 10.3(b);
-
the Non-dilution Rights Options are granted on the date of the General Meeting;
-
the Tranche 1 Non-dilution Rights Options expire after six years and the Tranche 2 Non-dilution Rights Options and Tranche 3 Non-Dilution Rights Options expire after five years;
-
the Non-dilution Rights Options are exercised on the expiration of their terms;
-
the Conquest closing share price on the date the Non-dilution Rights Options are granted is $0.51;[92]
-
a rate of 4.6% is available on Commonwealth government bonds with a comparable term to the Non-dilution Rights Options;
-
no dividends are paid by Conquest over the term of the Non-dilution Rights Options; and
-
the annualised standard deviation of the rate of return on Conquest Shares is 50%.
Adjustments have not been made for the impact of the Transaction being implemented.
10.5 rationale for issuing the non-dilution rights options
As noted in Section 10.2(a), Conquest agreed to give the Non-dilution Rights to the Interested Directors in connection with their appointment as directors of Conquest. Accordingly, Conquest must propose the Non-dilution Rights Resolutions to Conquest Shareholders in order to comply with the contractual obligations it owes to the Interested Directors.
10.6 impact of granting the non-dilution rights options
The issue of the Non-dilution Rights Options will expand Conquest’s issued capital in that Conquest will have an additional 2,259,392 options on issue.
If the Transaction is not implemented and the Non-dilution Rights Options are exercised, Conquest Shareholders’ interest in Conquest will be slightly diluted. In this regard, based on the number of Conquest Shares currently on issue, if all the Nondilution Rights Options were exercised, the resulting shares would represent approximately 0.39% of Conquest’s share capital. If the Transaction is implemented and the Non-dilution Rights Options are cancelled in exchange for Catalpa Options pursuant to Majority Options Offers, the exercise of these Catalpa Options will have a slight dilutive effect on Conquest Shareholders’ interest in Evolution Mining; the resulting shares would represent approximately 0.12% of Evolution Mining’s share capital (pre Rights Offer).[93]
-
The Monte Carlo simulation methodology was used to value the Tranche 1 Non-dilution Rights Options. This is a well-accepted method for valuing options which vest subject to the satisfaction of performance conditions which depend on an entity’s share price relative to the share price of other entities.
-
The Black-Scholes model was used to value the Tranche 2 Non-dilution Rights Options and the Tranche 3 Non-dilution Rights Options.
-
This was the Conquest share price at the close of trading on 27 July 2011.
-
Based on Evolution Mining having the number of shares on issue specified in Section 6.5(a) (ie. 588,695,261).
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10 non-DIlutIon rIghtS reSolutIonS contInueD
10.7 Practical consequences of approving the non-dilution rights resolutions (a) Jake klein resolution
If the Jake Klein Resolution is passed at the General Meeting, the Trustee will be issued the Tranche 1 Non-dilution Rights Options as soon as practicable after the meeting and, in any event, before the Effective Date, and the Trustee will hold those options on behalf of Jake Klein. In this event:
-
if Mr Klein directs the Trustee to accept the Majority Options Offer made by Catalpa for the Tranche 1 Non-dilution Rights Options:
-
and the conditions of that offer are satisfied or (if applicable) waived, the Tranche 1 Non-dilution Rights Options will be cancelled in exchange for 221,645 Catalpa Options exercisable at $2.11 per option and 350,264 Catalpa Options exercisable at $2.45 per option, all of which will expire 5 years after they are granted (provided that any options which have not vested by 5pm on 8 March 2015 will expire 6 years after these options are granted) and will be issued to the Trustee, to be held on behalf of Mr Klein; or
-
and the conditions of that offer are not satisfied or (if applicable) waived, the Trustee will hold the Non-dilution Rights Options on behalf of Mr Klein and Mr Klein will be able to direct the Trustee to exercise them in accordance with, and subject to, their terms; or
-
if Mr Klein does not direct the Trustee to accept the Majority Options Offer made by Catalpa for the Tranche 1 Non-dilution Rights Options, then, irrespective of whether or not the Scheme becomes Effective, the Trustee will hold the Non-dilution Rights Options on his behalf and Mr Klein will be able to direct the Trustee to exercise them in accordance with, and subject to, their terms.
(b) James askew resolution
If the James Askew Resolution is passed at the General Meeting, the Trustee will be issued the Tranche 2 Non-dilution Rights Options as soon as practicable after the meeting and, in any event, before the Effective Date, and the Trustee will hold those options on behalf of James Askew. In this event:
-
if Mr Askew directs the Trustee to accept the Majority Options Offer made by Catalpa for the Tranche 2 Non-dilution Rights Options:
-
and the conditions of that offer are satisfied or (if applicable) waived, the Tranche 2 Non-dilution Rights Options will be cancelled in exchange for 20,523 Catalpa Options exercisable at $2.11 per option and 32,432 Catalpa Options exercisable at $2.45 per option, all of which will expire 5 years after they are granted and will be issued to the Trustee, to be held on behalf of Mr Askew; or
-
and the conditions of that offer are not satisfied or (if applicable) waived, the Trustee will hold the Non-dilution Rights Options on behalf of Mr Askew and Mr Askew will be able to direct the Trustee to exercise them in accordance with, and subject to, their terms; or
-
if Mr Askew does not direct the Trustee to accept the Majority Options Offer made by Catalpa for the Tranche 2 Nondilution Rights Options, then, irrespective of whether or not the Scheme becomes Effective, the Trustee will hold the Nondilution Rights Options on his behalf and Mr Askew will be able to direct the Trustee to exercise them in accordance with, and subject to, their terms.
(c) nicholas curtis resolution
If the Nicholas Curtis Resolution is passed at the General Meeting, the Trustee will be granted the Tranche 3 Non-dilution Rights Options as soon as practicable after the meeting and, in any event, before the Effective Date, and the Trustee will hold those options on behalf of Nicholas Curtis. In this event:
-
if Mr Curtis directs the Trustee to accept the Majority Options Offer made by Catalpa for the Tranche 3 Non-dilution Rights Options:
-
and the conditions of that offer are satisfied or (if applicable) waived, the Tranche 3 Non-dilution Rights Options will be cancelled in exchange for 20,523 Catalpa Options exercisable at $2.11 per option and 32,432 Catalpa Options exercisable at $2.45 per option, all of which will expire 5 years after they are granted and will be issued to the Trustee, to be held on behalf of Mr Curtis; or
-
and the conditions of that offer are not satisfied or (if applicable) waived, the Trustee will hold the Non-dilution Rights Options on behalf of Mr Curtis and Mr Curtis will be able to direct the Trustee to exercise them in accordance with, and subject to, their terms; or
-
if Mr Curtis does not direct the Trustee to accept the Majority Options Offer made by Catalpa for the Tranche 3 Nondilution Rights Options, then, irrespective of whether or not the Scheme becomes Effective, the Trustee will hold the Non-dilution Rights Options on his behalf and Mr Curtis will be able to direct the Trustee to exercise them in accordance with, and subject to, their terms.
SCHEME BOOKLET 89
10.8 consequences of not approving the non-dilution rights resolutions
(a) Jake klein resolution
If the Jake Klein Resolution is not passed at the General Meeting:
-
the Tranche 1 Non-dilution Rights Options will not be issued to the Trustee for the benefit of Jake Klein;
-
the executive services agreement between Conquest and Mr Klein will terminate and Mr Klein will be entitled to payment of:
-
any part of his total remuneration package of $400,000 per annum that has been accrued but not paid as at the date his contract is terminated;
-
any accrued annual and long service leave as at the date his contract is terminated (subject to any applicable statute); and
-
any other similar entitlements accrued under any legislation (but excluding accrued personal or carer’s leave and compassionate leave); and
-
the Tranche 1 Minority Options, as well as all of the Majority Options held by (or on behalf of) Mr Klein (as set out in Section 9.5), will immediately vest.
(b) James askew resolution
If the James Askew Resolution is not passed at the General Meeting, the Tranche 2 Non-dilution Rights Options will not be issued to the Trustee for the benefit of James Askew.
(c) nicholas curtis resolution
Similarly, if the Nicholas Curtis Resolution is not passed at the General Meeting, the Tranche 3 Non-dilution Rights Options will not be issued to the Trustee for the benefit of Nicholas Curtis.
10.9 alternatives to issuing the non-dilution rights options
Having regard to Conquest’s contractual obligations in respect of the Non-dilution Rights, the Independent Directors do not consider there to be any viable alternatives to putting the Non-dilution Rights Resolutions to a vote at the General Meeting and, if that resolution is passed, issuing the Non-dilution Rights Options for the benefit of the Interested Directors.
10.10 arrangements between conquest and the interested directors
In addition to the arrangements between Conquest and the Interested Directors already disclosed in this Section 10.10, Conquest pays an annual director’s fee to each of James Askew and Nicholas Curtis of $60,000.
Apart from the arrangements referred to in this Section 10.10, there are no other arrangements between Conquest and its related entities, on the one part, and the Interested Directors and their related entities, on the other.
10.11 recommendation of the independent directors
Having regard to Conquest’s contractual obligations in respect of the Non-dilution Rights, the Independent Directors unanimously recommend that Conquest Shareholders vote in favour of the Non-dilution Rights Resolutions.
None of the Independent Directors have an interest in the outcome of the Non-dilution Rights Resolutions.
Apart from the information in this Section 10, there is no other information known to any of the Independent Directors that is reasonably required by Conquest Shareholders in order to decide whether or not it is in Conquest’s interests to pass the Nondilution Rights Resolutions.
10.12 interested directors
The Interested Directors consider that they have a material personal interest in the outcome of the Non-dilution Rights Resolutions for the following reasons:
-
Jake Klein – on the basis the Tranche 1 Non-dilution Rights Options will be issued to the Trustee for his benefit if the Jake Klein Resolution is passed at the General Meeting;
-
James Askew – on the basis that the Tranche 2 Non-dilution Rights Options will be issued to the Trustee for his benefit if the James Askew Resolution is passed at the General Meeting; and
-
Nicholas Curtis – on the basis that the Tranche 3 Non-dilution Rights Options will be issued to the Trustee for his benefit if the Nicholas Curtis Resolution is passed at the General Meeting.
-
Because of these interests:
-
none of the Interested Directors voted or were present at the meeting of the Conquest board at which it was resolved to put the Non-dilution Rights Resolutions to Conquest Shareholders at the General Meeting; and
-
none of the Interested Directors will vote, or cause to be voted, any Conquest Shares held by them or on their behalf on the Non-dilution Rights Resolution that relates to them.
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11 majorIty optIonS reSolutIon
11.1 overview
The Majority Options Resolution relates to the cancellation of the Majority Options pursuant to the Majority Options Offers. Since the Majority Options will, subject to the conditions of the Majority Options Offers being satisfied or (if applicable) waived, be cancelled for consideration, Conquest Shareholder approval is required under rule 6.23.2 of the Listing Rules.
11.2 majority options offers
| What are the Majority Options Offers? |
under the Transaction Implementation Deed, Catalpa has agreed to, on the Business Day after the Implementation Date, make an offer to each Majority Optionholder pursuant to which it will offer to issue Catalpa Options to that optionholder in consideration for the cancellation of the Majority Options held by that optionholder. |
|---|---|
| How has the Majority Options Consideration been calculated? |
The Majority Options Consideration has been calculated based approximately on the same exchange ratio as applies to the Scheme Consideration – that is 0.3 New Catalpa Shares for each Scheme Share. |
| Are the Majority Options Offers subject to any conditions? |
The Majority Options Offers will only be made if: •Conquest Shareholders approve the cancellation of the Majority Options by passing the Majority Options Resolution at the General Meeting; and •the Transaction is implemented. Since, at the time the Majority Options Consideration is to be provided by Catalpa (ie. after the Implementation Date), Jake Klein and James Askew will be directors of Catalpa, Majority Options Offers will only be made by Catalpa in respect of the Majority Options held by them or on their behalf if, at the Catalpa Meeting, Catalpa Shareholders approve the provision of the Majority Options Consideration in respect of those Majority Options (as referred to in Section 11.4). |
| When will the Majority Options Offers expire? |
The Majority Options Offers will expire 5 Business Days after they are made. |
| What happens if a Majority Options Offer is accepted? |
If a Majority Options Offer is accepted by the Majority Optionholder before its expiry date, within 5 Business Days after the scheduled expiry date for the offer: •the Majority Options the subject of the offer will be cancelled; and •the Majority Options Consideration in respect of the Majority Options the subject of the offer will be issued to the Majority Optionholder. |
| What happens if a Majority Options Offer is not accepted? |
If a Majority Options Offer is not accepted, this will not affect implementation of the Transaction. In this event, the Majority Options the subject of the offer will continue to be held by the registered holder of those options and will continue to be exercisable in accordance with, and subject to, their terms. As noted in Section 6.6(a), if Conquest Options exist post implementation of the Transaction (for example, as a result of Majority Options Offers not being made or as a result of such offers being made but not accepted) Evolution Mining may seek to compulsorily acquire those options (and any shares issued pursuant to their exercise) in accordance with, and subject to, Part 6A.2 of the Corporations Act. |
SCHEME BOOKLET 91
11.3 recommendation of the independent directors
It was agreed between Conquest, Catalpa and Newcrest that, as part of the Transaction, the Majority Options would be dealt with in the manner explained in Section 11.2. On this basis, the Independent Directors unanimously recommend that Conquest Shareholders vote in favour of the Majority Options Resolution.
None of the Independent Directors have an interest in the outcome of the Majority Options Resolutions.
11.4 interested directors
The Interested Directors consider that they have a material personal interest in the outcome of the Majority Options Resolution for the following reasons:
-
Jake Klein – on the basis that, if the resolution is passed and the Majority Options held by him or on his behalf are cancelled, Catalpa Options will be issued for his benefit as consideration for such cancellation, being, in total, 5,277,435 options exercisable at prices ranging from $1.51 to $3.10 per option and having expiry dates ranging from 26 February 2013 to 25 November 2016;
-
James Askew – on the basis that if the resolution is passed and the Majority Options held by him or on his behalf are cancelled, Catalpa Options will be issued for his benefit as consideration for such cancellation, being, in total, 488,652 options exercisable at prices ranging from $1.51 to $2.11 per option and expiring on 25 November 2015; and
-
Nicholas Curtis – on the basis that if the resolution is passed and the Majority Options held by him or on his behalf are cancelled, Catalpa Options will be issued for his benefit as consideration for such cancellation, being, in total, 488,652 options exercisable at prices ranging from $1.51 to $2.11 per option and expiring on 25 November 2015.
-
Because of these interests:
-
none of the Interested Directors voted or were present at the meeting of the Conquest board at which it was resolved to put the Majority Options Resolution to Conquest Shareholders at the General Meeting; and
-
none of the Interested Directors will vote, or cause to be voted, any Conquest Shares held by them or on their behalf on the Majority Options Resolution.
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Conquest MInInG LIMIteD
12 mInorIty optIonS reSolutIon
12.1 overview
The Minority Options Resolution relates to the cancellation of the Minority Options and the issue of the Minority Options Consideration to the Trustee for the benefit of the Interested Directors, in each case pursuant to the Minority Options Offers. Conquest Shareholder approval is required because:
-
the Minority Options will be cancelled for consideration, which requires Conquest Shareholder approval under rule 6.23.2 of the Listing Rules; and
-
the Minority Options Consideration will be issued for the benefit of the Interested Directors, which requires Conquest Shareholder approval under rule 10.11 of the Listing Rules.
12.2 minority options offers
| What are the Minority Options Offers? |
In accordance with the Transaction Implementation Deed, Conquest made offers to the Trustee pursuant to which it offered to issue Conquest Shares to the Trustee, to be held on behalf of the Interested Directors, in consideration for the cancellation of the Minority Options. Each Interested Director has directed the Trustee to accept the Minority Options Offer in respect of the Minority Options which the Trustee holds on their behalf, and the Trustee has done so. |
|---|---|
| How was the Minority Options Consideration calculated? |
The Minority Options Consideration was calculated as follows: •in relation to the Tranche 1 Minority Options, the Minority Options Consideration is the number of Conquest Shares having an aggregate value of $6,500,000 where the value of a Conquest Share is based on the VWAP of Conquest Shares during the period from 7 June 2011 to 21 June 2011 (inclusive) (vwaP calculation); and •in relation to each of the Tranche 2 Minority Options and the Tranche 3 Minority Options, the Minority Options Consideration is the number of Conquest Shares having an aggregate value of $601,852 based on the VWAP Calculation. •The values ascribed to the Conquest Shares to be issued as Minority Options Consideration were not determined based on a particular formula or valuation. Rather, they were agreed following arm’s length commercial negotiations between Conquest, Catalpa and Newcrest. In the case of each tranche of Minority Options, the value of the Minority Options Consideration is materially lower than the value of the relevant Minority Options (according to the Black Scholes methodology) as agreed between Conquest, Catalpa and Newcrest. Conquest agreed to this in the interests of securing the opportunity for Conquest Shareholders to consider the Transaction. |
| Are the Minority Options Offers subject to any conditions? |
Yes – the Minority Options Offers are subject to: •Conquest Shareholders approving both the cancellation of the Minority Options and the provision of the Minority Options Consideration; and •the Scheme becoming Effective (unless Conquest, Catalpa and Newcrest agree to waive this condition). |
| What happens if the Minority Options Resolution is not approved at the General Meeting? |
A condition to implementation of the Transaction is that ConquestShareholders approve both the cancellation of the Minority Options and the issue of the Minority Options Consideration for the beneft of the Interested Directors. This means that, if the Minority Options Resolution is not approved at the General Meeting, the Transaction will not be implemented (unless Conquest, Catalpa and Newcrest agree to waive the relevant condition in accordance with the Transaction Implementation Deed). |
| What happens if the Minority Options Offers become unconditional? |
If the conditions of the Minority Options Offers are satisfed or (if applicable) waived: •the Minority Options will be cancelled; and •the Minority Options Consideration will be issued to the Trustee for the beneft of the Interested Directors – that is: —the Trustee will be issued 15,267,489 Conquest Shares, to be held on behalf of Jake Klein; —the Trustee will be issued 1,413,656 Conquest Shares, to be held on behalf of James Askew; and —the Trustee will be issued 1,413,656 Conquest Shares, to be held on behalf of Nicholas Curtis. |
SCHEME BOOKLET 93
| When will the Minority Options Consideration be provided? |
The Minority Options Consideration will be issued to the Trustee for the beneft of the Interested Directors as soon as practicable after the conditions of the Minority Options Offers are satisfed or (if applicable) waived, and, in any event, in suffcient time before the Scheme Record Date to enable the Conquest Shares issued as Minority Options Consideration to participate in the Scheme. |
|---|---|
| What are the terms on which the Minority Options Consideration will be provided? |
The Interested Directors: •have agreed not to Deal in the Conquest Shares issued to the Trustee for their beneft as Minority Options Consideration before the Scheme Record Date, with the effect of this restriction being that these Conquest Shares will be transferred to Catalpa under the Scheme (if, that is, the Scheme becomes Effective); and •have agreed that, for a period of two years, 50% of the New Catalpa Shares issued to the Trustee for their beneft under the Scheme as consideration for the Conquest Shares issued to the Trustee as Minority Options Consideration will be subject to the Escrow Restrictions. The Trustee has agreed not to do anything which would be contrary to these restrictions. These restrictions may be waived by mutual agreement between Conquest, Catalpa and Newcrest. |
12.3 recommendation of the independent directors
It was agreed between Conquest, Catalpa and Newcrest that, as part of the Transaction, the Minority Options would be dealt with in the manner explained in Section 12.2 . On this basis, the Independent Directors unanimously recommend that Conquest Shareholders vote in favour of the Minority Options Resolution.
None of the Independent Directors have an interest in the outcome of the Minority Options Resolution.
12.4 interested directors
The Interested Directors consider that they have a material personal interest in the outcome of the Minority Options Resolution for the following reasons:
-
Jake Klein – on the basis that, if the resolution is passed and the Minority Options which the Trustee holds on his behalf are cancelled, 15,267,489 Conquest Shares will be issued for his benefit as consideration for such cancellation;
-
James Askew – on the basis that, if the resolution is passed and the Minority Options which the Trustee holds on his behalf are cancelled, 1,413,656 Conquest Shares will be issued for his benefit as consideration for such cancellation; and
-
Nicholas Curtis – on the basis that, if the resolution is passed and the Minority Options which the Trustee holds on his behalf are cancelled, 1,413,656 Conquest Shares will be issued for his benefit as consideration for such cancellation.
-
Because of these interests:
-
none of the Interested Directors voted or were present at the meeting of the Conquest board at which it was resolved to put the Minority Options Resolution to Conquest Shareholders at the General Meeting; and
-
none of the Interested Directors will vote, or cause to be voted, any Conquest Shares held by them or on their behalf on the Minority Options Resolution.
94
CONquEST MINING LIMITED
part 3 – gloSSary
13 gloSSary
In this Scheme Booklet, words have the following meanings, unless the context requires otherwise.
2010 egm means the extraordinary general meeting of Conquest Shareholders held on 12 May 2010.
additional options has the meaning given in Section 10.2(b).
announcement date means 15 June 2011, being the day on which the Transaction Implementation Deed was executed. asic means the Australian Securities & Investments Commission.
asset Purchase means the purchase by Catalpa subsidiaries of the Newcrest Assets pursuant to the Asset Sale Agreement.
asset sale agreement means the asset sale agreement to be entered into between Catalpa, Mt Rawdon Operations Pty Ltd, Lion Mining Pty Ltd, Newcrest and the Asset Vendors if the Scheme Conditions are satisfied or (if applicable) waived.
asset vendors means, collectively, LGL Mount Rawdon Operations Pty Limited and Newcrest Operations Limited, being the owners of the Mt Rawdon Assets and the Newcrest Group’s 70% interest in the Cracow Assets (respectively).
asX means ASX Limited ACN 008 624 691 or, where the context requires, the financial market operated by it on which Conquest Shares are quoted.
attachment means an attachment to this Scheme Booklet.
Baker steel means Baker Steel Capital Managers LLP.
Blackrock means BlackRock Investment Management (uK) Limited.
Business day means any day that banks are open for business in each of Perth, Melbourne and Sydney.
cancellation confirmations means, collectively, the letters signed by the Interested Directors dated 5 September 2011 confirming their agreement to the cancellation of their Nondilution Rights subject to the Scheme becoming Effective.
catalpa means Catalpa Resources Limited ACN 084 669 036.
catalpa disclosure materials means, collectively:
(a) all documentation:
-
(i) referred to in the Transaction Implementation Deed, the Asset Sale Agreement and the Subscription Deed; and
-
(ii) contained in the data room established by Catalpa in connection with the Transaction and listed in any index for that data room provided to Conquest, Newcrest or their representatives (up to and including 10.00am on the day immediately preceding the Announcement Date);
-
(b) all information (including answers) made available to Conquest, Newcrest or their representatives as part of the question and answer process conducted in connection with Catalpa’s data room; and
-
(c) all information available by searching records open to public inspection in Australia prior to the Announcement Date.
catalpa group means Catalpa and each of its subsidiaries and catalpa group member means Catalpa or one of its subsidiaries.
catalpa information means all information regarding Catalpa, the Catalpa Group and Catalpa Shares provided by or on behalf of Catalpa for inclusion in this Scheme Booklet (and any information solely derived from, or prepared solely in reliance on, such information), and any updates to that information prepared by or on behalf of Catalpa, and includes all of the information in Section 4 (but does not include the Cracow Information or the Evolution Mining Information).
catalpa material adverse change means any event, occurrence or matter that individually or when aggregated with all such events, occurrences or matters:
-
(a) diminishes, or is reasonably likely to diminish, (whether now or in the future) the consolidated net assets of the Catalpa Group by an amount equal to $35 million or more; or
-
(b) has the result that the Catalpa Group is unable to carry on its business in substantially the same manner as carried on as at the Announcement Date,
other than an event, occurrence or matter:
-
(c) required to be undertaken or procured by the Catalpa Group pursuant to the Transaction Documents;
-
(d) to the extent fairly disclosed in the Catalpa Disclosure Materials;
-
(e) to the extent known to Newcrest and Conquest prior to the Announcement Date (which does not include knowledge of the risk of an event, occurrence or matter happening);
-
(f) arising as a result of any generally applicable change in law or governmental policy; or
-
(g) arising from changes in economic or business conditions (including commodity prices and exchange rates) which impact on Catalpa and its competitors in substantially the same manner.
catalpa meeting means the meeting of Catalpa Shareholders at which the Catalpa Resolutions will be voted on.
catalpa option means an option over an unissued Catalpa Share.
catalpa Prescribed occurrence means, other than as:
-
(a) required by a Transaction Document;
-
(b) agreed to in writing by Conquest and Newcrest;
-
(c) fairly disclosed in the Catalpa Disclosure Materials; or
-
(d) fairly disclosed by Catalpa in an announcement made to ASX, or a document lodged with ASIC, before the Announcement Date,
SCHEME BOOKLET 95
the occurrence of any of the following:
-
(e) Catalpa converting all or any of its shares into a larger or smaller number of shares;
-
(f) Catalpa resolving to reduce its share capital in any way or reclassifying, combining, splitting or redeeming or repurchasing directly or indirectly any of its shares;
-
(g) Catalpa:
-
(i) entering into a buy-back agreement; or
-
(ii) resolving to approve the terms of a buy-back agreement under the Corporations Act;
-
(h) Catalpa declaring, paying or distributing any dividend, bonus or other share of its profits or assets or returning or agreeing to return any capital to its members;
-
(i) a Catalpa Group Member issuing shares (other than as a result of the exercise of Catalpa Options or the vesting of Catalpa performance rights), or granting an option over its shares, or agreeing to make such an issue or grant such an option other than to a Catalpa Group Member;
-
(j) a Catalpa Group Member issuing or agreeing to issue securities convertible into shares, including pursuant to a dividend reinvestment plan;
-
(k) a Catalpa Group Member making any change to its constitution;
-
(l) a Catalpa Group Member disposing, or agreeing to dispose, of, or surrendering, relinquishing or failing to renew:
-
(i) the whole, or a substantial part, of its business or property; or
-
(ii) all or any part of, or interest in, any mining or exploration licence, lease, tenement or application;
-
(m) a Catalpa Group Member:
-
(i) acquiring, leasing or disposing of;
-
(ii) agreeing to acquire, lease or dispose of; or
-
(iii) offering, proposing, announcing a bid or tendering for, any business, assets, entity or undertaking, the value of which exceeds $5 million;
-
(n) a Catalpa Group Member entering into a contract or commitment restraining a Catalpa Group Member from competing with any person or conducting activities in any market;
-
(o) a Catalpa Group Member creating, or agreeing to create, any mortgage, charge, lien or other encumbrance over the whole, or a substantial part, of its business or property other than a lien which arises by operation of law or legislation securing an obligation that is not yet due;
-
(p) a Catalpa Group Member:
-
(i) entering into any contract or commitment (including in respect of Financial Indebtedness) requiring payments by the Catalpa Group in excess of $5 million other than any tax payment required by law or instalment or any repayment required under any facility agreement in effect as at the Announcement Date and which has been provided in the Catalpa Disclosure Materials;
-
(ii) (without limiting the foregoing) agreeing to incur capital expenditure from the Announcement Date of more than $5 million;
-
(iii) waiving any material third party default where the financial impact on the Catalpa Group will be in excess of $1 million; or
-
(iv) accepting as a compromise of a matter less than the full compensation due to a Catalpa Group Member where the compromise is more than $1 million;
-
(q) a Catalpa Group Member providing financial accommodation other than to members of the Catalpa Group (irrespective of what form of Financial Indebtedness that accommodation takes) in excess of $1 million;
-
(r) a Catalpa Group Member entering into any agreement, arrangement or transaction with respect to derivative instruments (including, but not limited to, swaps, futures contracts, forward commitments, commodity derivatives or options) or similar instruments other than under Catalpa’s existing finance facilities in effect at the Announcement Date and as disclosed in the Catalpa Disclosure Materials;
-
(s) a Catalpa Group Member resolving that it be wound up or the making of an application or order for the winding up or dissolution of a Catalpa Group Member other than where the application or order (as the case may be) is set aside within 14 days;
-
(t) a liquidator or provisional liquidator of a Catalpa Group Member being appointed;
-
(u) a court making an order for the winding up of a Catalpa Group Member;
-
(v) an administrator of a Catalpa Group Member being appointed under the Corporations Act;
-
(w) a Catalpa Group Member ceases, or threatens to cease to, carry on the business conducted by the Catalpa Group as at the Announcement Date;
-
(x) a Catalpa Group Member is or becomes unable to pay its debts when they fall due within the meaning of the Corporations Act or is otherwise presumed to be insolvent under the Corporations Act unless that member has, or has access to, committed financial support from its parent entity such that it is able to pay its debts;
-
(y) a Catalpa Group Member executing a deed of company arrangement;
-
(z) a receiver, or a receiver and manager, being appointed in relation to the whole, or a substantial part, of the property of a Catalpa Group Member;
-
(aa) a Catalpa Group Member entering into or resolving to enter into a transaction with any related party of Catalpa (other than a related party which is a Catalpa Group Member) as defined in section 228 of the Corporations Act;
-
(bb) Catalpa or any of its subsidiaries being deregistered as a company or otherwise dissolved;
-
(cc) a Catalpa Group Member entering into or materially amending any employment, consulting, severance or similar agreement or arrangement with officers, directors, other executives or employees of Catalpa or a Catalpa Group Member, accelerating or otherwise materially increasing compensation or benefits for any of the above, in each case other than pursuant to:
-
(i) contractual arrangements in effect on the Announcement Date and which have been disclosed in writing to Conquest and Newcrest prior to the Announcement Date;
96
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13 gloSSary contInueD
-
(ii) Catalpa’s policies and guidelines in effect on the Announcement Date and which have been disclosed in writing to Conquest and Newcrest prior to the Announcement Date,
- provided that the aggregate of all increases in compensation or benefits is no greater than $2 million;
-
(dd) a Catalpa Group Member paying any of its directors or employees a termination or retention payment, other than in accordance with contractual arrangements in effect on the Announcement Date and which have been disclosed in writing to Conquest and Newcrest prior to the Announcement Date;
-
(ee) a Catalpa Group Member entering into any enterprise bargaining agreement other than in the ordinary course of business or pursuant to contractual arrangements in effect on the Announcement Date and which have been disclosed in writing to Conquest and Newcrest prior to the Announcement Date;
-
(ff) a Catalpa Group Member changing any accounting policy applied by them to report their financial position other than any change in policy required by a change in accounting standards;
-
(gg) a Catalpa Group Member doing anything that would result in a change in the Catalpa Consolidated Group or MEC group (as those terms are defined in the Tax Act); or
-
(hh) notice of any material investigation, prosecution, arbitration, litigation or dispute threatened against a Catalpa Group Member which could reasonably be expected to give rise to a liability for the Catalpa Group in excess of $1 million ( material Proceedings ) and for the avoidance of doubt which is not frivolous or vexatious, or circumstances arising which could reasonably be expected to give rise to any Material Proceedings, other than in relation to matters where the liability or likely liability for the Catalpa Group has been fully and fairly disclosed in the Catalpa Disclosure Materials. For the avoidance of doubt, Material Proceedings do not include any liability relating to an investigation, prosecution, arbitration, litigation or dispute to the extent that an insurer has agreed to cover the liability under an insurance policy maintained by a Catalpa Group Member.
catalpa resolutions means, collectively:
-
(a) a resolution to approve the Share Issue;
-
(b) a resolution to approve the change of the company name of Catalpa to “Evolution Mining Limited” with effect from implementation of the Transaction; and
-
(c) a resolution to approve the provision of the Majority Options Consideration in respect of the Majority Options held by or on behalf of Jake Klein and James Askew.
catalpa share means a fully paid ordinary share in the capital of Catalpa.
catalpa shareholder means a person shown in the register of members of Catalpa as holding one or more Catalpa Shares.
cgt means capital gains tax.
competent Person has the meaning given in the JORC Code.
competing Proposal means an expression of interest, proposal, offer, transaction or arrangement pursuant to which a third party will, if the expression of interest, proposal, offer, transaction or arrangement is entered into or completed substantially in accordance with its terms:
-
(a) acquire (whether directly or indirectly) or become the holder of, or otherwise acquire, have a right to acquire or have an economic interest in all or a substantial part of the assets or business of the Catalpa Group or the Conquest Group (as the context requires);
-
(b) acquire a Relevant Interest in, become the holder of, or otherwise acquire, have a right to acquire or have an economic interest in 15% or more of all issued Catalpa Shares or all issued Conquest Shares (as the context requires);
-
(c) acquire control (as determined in accordance with section 50AA of the Corporations Act) of Catalpa or Conquest (as the context requires);
-
(d) otherwise acquire or merge with Catalpa or Conquest (as the context requires); or
-
(e) would require a party to abandon, or otherwise fail to proceed with, the Transaction,
whether by way of takeover offer, scheme of arrangement, shareholder approved acquisition, capital reduction, buy back, sale or purchase of shares or assets, joint venture, duallisted company structure (or other synthetic merger), or other transaction or arrangement.
conquest means Conquest Mining Limited ACN 009 232 277.
conquest disclosure materials means, collectively:
-
(a) all documentation:
-
(i) referred to in the Transaction Implementation Deed, the Asset Sale Agreement and the Subscription Deed; and
-
(ii) contained in the data room established by Conquest in connection with the Transaction and listed in any index for that data room provided to Catalpa, Newcrest or their representatives (up to and including 10.00am on the day immediately preceding the Announcement Date);
-
(b) all information (including answers) made available to Newcrest, Catalpa or their representatives as part of the question and answer process conducted in connection with Conquest’s data room; and
-
(c) all information available by searching records open to public inspection in Australia prior to the Announcement Date.
conquest fee trigger event means a Competing
Proposal of any kind is announced prior to expiry of the Exclusivity Period and within one year of the date of such announcement, the relevant third party or an associate of that third party:
-
(a) completes a Competing Proposal with respect to the Conquest Group; or
-
(b) (without limiting paragraph (a) of this definition) acquires a Relevant Interest in at least 50% of Conquest Shares.
conquest group means Conquest and each of its subsidiaries and conquest group member means Conquest or one of its subsidiaries.
SCHEME BOOKLET 97
conquest information means all information included in this Scheme Booklet and any updates to that information prepared by or on behalf of Conquest, other than the information in Section 8, the Evolution Mining Information, the Cracow Information, the Catalpa Information and the Newcrest Information (and any information solely derived from, or prepared solely in reliance on, any such information), and does not include the Independent Expert’s Report (including the Technical Specialist’s Report) or the Investigating Accountant’s Report (or any information solely derived from, or prepared solely in reliance on, information in either of those reports).
conquest material adverse change means any event, occurrence or matter that individually or when aggregated with all such events, occurrences or matters:
-
(a) diminishes, or is reasonably likely to diminish, (whether now or in the future) the consolidated net assets of the Conquest Group by an amount equal to $35 million or more; or
-
(b) has the result that the Conquest Group is unable to carry on its business in substantially the same manner as carried on as at the Announcement Date,
other than an event, occurrence or matter:
-
(c) required to be undertaken or procured by the Conquest Group pursuant to the Transaction Documents;
-
(d) to the extent fairly disclosed in the Conquest Disclosure Materials;
-
(e) to the extent known to Newcrest and Catalpa prior to the Announcement Date (which does not include knowledge of the risk of an event, occurrence or matter happening);
-
(f) arising as a result of any generally applicable change in law or governmental policy; or
-
(g) arising from changes in economic or business conditions (including commodity prices and exchange rates) which impact on Conquest and its competitors in substantially the same manner.
conquest option means an option over an unissued Conquest Share.
conquest Prescribed occurrence means, other than as:
-
(a) required by the Transaction Documents;
-
(b) agreed to in writing by Catalpa and Newcrest;
-
(c) fairly disclosed in the Conquest Disclosure Materials; or
-
(d) fairly disclosed by Conquest in an announcement made to ASX, or a document lodged with ASIC, before the Announcement Date,
-
the occurrence of any of the following:
-
(e) Conquest converting all or any of its shares into a larger or smaller number of shares;
-
(f) a Conquest Group Member resolving to reduce its share capital in any way;
-
(g) a Conquest Group Member:
-
(i) entering into a buy-back agreement, except as announced to ASX prior to the Announcement Date; or
-
(ii) resolving to approve the terms of a buy-back agreement under the Corporations Act;
-
(h) other than in connection with the granting of any Nondilution Rights Options, a Conquest Group Member issuing shares, or granting an option over its shares, or
agreeing to make such an issue or grant such an option other than to a Conquest Group Member;
-
(i) other than in connection with the granting on any Nondilution Rights Options, a Conquest Group Member issuing or agreeing to issue securities convertible into shares;
-
(j) a Conquest Group Member disposing, or agreeing to dispose, of, or surrendering, relinquishing or failing to renew:
-
(i) the whole, or a substantial part, of its business or property; or
-
(ii) all or any part of, or interest in, any mining or exploration licence, lease, tenement or application;
-
(k) a Conquest Group Member creating, or agreeing to create, any mortgage, charge, lien or other encumbrance over the whole, or a substantial part, of its business or property other than a lien which arises by operation of law or legislation securing an obligation that is not yet due;
-
(l) a Conquest Group Member resolving that it be wound up or the making of an application or order for the winding up or dissolution of a Conquest Group Member other than where the application or order (as the case may be) is set aside within 14 days;
-
(m) a liquidator or provisional liquidator of a Conquest Group Member being appointed;
-
(n) a court making an order for the winding up of a Conquest Group Member;
-
(o) an administrator of a Conquest Group Member being appointed under the Corporations Act;
-
(p) a Conquest Group Member executing a deed of company arrangement; or
-
(q) a receiver, or a receiver and manager, being appointed in relation to the whole, or a substantial part, of the property of a Conquest Group Member;
-
(r) a Conquest Group Member reclassifying, combining, splitting or redeeming or repurchasing directly or indirectly any of its shares;
-
(s) Conquest declaring, paying or distributing any dividend, bonus or other share of its profits or assets or returning or agreeing to return any capital to its members;
-
(t) a Conquest Group Member making any change to its constitution;
-
(u) a Conquest Group Member:
-
(i) acquiring, leasing or disposing of;
-
(ii) agreeing to acquire, lease or dispose of; or
(iii) offering, proposing, announcing a bid or tendering for, any business, assets, entity or undertaking, the value of which exceeds $5 million;
-
(v) a Conquest Group Member entering into a contract or commitment restraining a Conquest Group Member from competing with any person or conducting activities in any market;
-
(w) a Conquest Group Member:
-
(i) entering into any contract or commitment (including in respect of Financial Indebtedness) requiring payments by the Conquest Group in excess of $5 million other than the proposed financing arrangements for the development of Catalpa’s Mt Carlton gold-silver-copper-
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13 gloSSary contInueD
project as described in the documents contained in the “Mt Carlton Financing” folder in Conquest’s data room, any tax payment required by law or instalment, any repayment required under any facility agreement in effect as at the Announcement Date;
-
(ii) (without limiting the foregoing) agreeing to incur capital expenditure from the Announcement Date of more than $5 million;
-
(iii) waiving any material third party default where the financial impact on the Conquest Group will be in excess of $1 million; or
-
(iv) accepting as a compromise of a matter less than the full compensation due to a Conquest Group Member where the compromise is more than $1 million;
-
(x) a Conquest Group Member providing financial accommodation other than to members of the Conquest Group (irrespective of what form of Financial Indebtedness that accommodation takes) in excess of $1 million;
-
(y) a Conquest Group Member entering into any agreement, arrangement or transaction with respect to derivative instruments (including, but not limited to, swaps, futures contracts, forward commitments, commodity derivatives or options) or similar instruments other than the revolver and term finance facility rolls under Conquest’s existing finance facilities in effect as at the Announcement Date;
-
(z) a Conquest Group Member ceases, or threatens to cease to, carry on the business conducted by the Conquest Group as at the Announcement Date;
-
(aa) a Conquest Group Member is or becomes unable to pay its debts when they fall due within the meaning of the Corporations Act or is otherwise presumed to be insolvent under the Corporations Act unless that member has, or has access to, committed financial support from its parent entity such that it is able to pay its debts;
-
(bb) a Conquest Group Member entering into or resolving to enter into a transaction with any related party of Conquest (other than a related party which is a Conquest Group Member) as defined in section 228 of the Corporations Act;
-
(cc) Conquest or any of its subsidiaries being deregistered as a company or otherwise dissolved;
-
(dd) a Conquest Group Member entering into or materially amending any employment, consulting, severance or similar agreement or arrangement with officers, directors, other executives or employees of Conquest or a Conquest Group Member, accelerating or otherwise materially increasing compensation or benefits for any of the above, in each case other than pursuant to:
-
(i) contractual arrangements in effect on the Announcement Date and which have been disclosed in writing to Catalpa and Newcrest prior to that date; or
-
(ii) Conquest’s policies and guidelines in effect on the Announcement Date and which have been disclosed in writing to Catalpa and Newcrest prior to the Announcement Date,
- provided that the aggregate of all increases in compensation or benefits is no greater than $2 million (taken in aggregate with any payments falling within the scope of paragraph (ii) of this definition below);
-
(ee) a Conquest Group Member entering into any enterprise bargaining agreement other than in the ordinary course of business or pursuant to contractual arrangements in effect on the Announcement Date and which have been disclosed in writing to Catalpa and Newcrest prior to that date;
-
(ff) a Conquest Group Member changing any accounting policy applied by them to report their financial position other than any change in policy required by a change in accounting standards;
-
(gg) a Conquest Group Member doing anything that would result in a change in the Conquest Consolidated Group or MEC group (as those terms are defined in section 995-1 of the Tax Act);
-
(hh) notice of any material investigation, prosecution, arbitration, litigation or dispute threatened against a Conquest Group Member which could reasonably be expected to give rise to a liability for the Conquest Group in excess of $1 million ( material Proceedings ) and for the avoidance of doubt which is not frivolous or vexatious, or circumstances arising which could reasonably be expected to give rise to any Material Proceedings, other than in relation to matters where the liability or likely liability for the Conquest Group has been fully and fairly disclosed to ASX prior to the Announcement Date. For the avoidance of doubt, Material Proceedings do not include any liability relating to an investigation, prosecution, arbitration, litigation or dispute to the extent that an insurer has agreed to cover the liability under an insurance policy maintained by a Conquest Group Member; or
-
(ii) a Conquest Group Member paying any of its directors or employees a termination or retention payment, other than in accordance with contractual arrangements in effect on the Announcement Date and which have been disclosed in writing to Catalpa and Newcrest prior to the Announcement Date, except where the quantum of such payments, taken in aggregate with any increases in compensation or benefits falling within the scope of paragraph (dd) of this definition is no greater than $2 million.
conquest register means the register of members of Conquest from time to time.
conquest registry means Link Market Services Limited ACN 083 214 537.
conquest share means a fully paid ordinary share in the capital of Conquest.
conquest shareholder means a person shown in the Conquest Register as holding one or more Conquest Shares.
corporations act means the Corporations Act 2001 (Cth) (as modified from time to time).
corporations regulations means the Corporations Regulations 2001 (Cth).
court means the Federal Court of Australia.
cracow assets means the assets of the gold mining and exploration joint ventures at Cracow in which the Newcrest Group holds a 70% interest and the Catalpa Group holds a 30% interest as at the Implementation Date.
SCHEME BOOKLET 99
cracow goldfield has the meaning given in 5.2(a).
cracow information means the information in Section 5 that relates to the Cracow Assets (and any information solely derived from, or prepared solely in reliance on, such information), and any updates to that information provided by or on behalf of Catalpa or Newcrest.
cy means calendar year.
deal means to:
-
(a) sell, assign, transfer or otherwise dispose of (directly or indirectly); or
-
(b) agree to offer to sell, assign, transfer or otherwise dispose of (directly or indirectly).
deed Poll means the deed poll to be executed by Catalpa, a copy of which is included at Attachment D.
deloitte means Deloitte Touche Tohmatsu ABN 74 490 121 060.
effective means the coming into effect, under section 411(10) of the Corporations Act, of the order of the Court made under section 411(4)(b) in relation to the Scheme.
effective date means the date on which the Scheme becomes Effective.
eligible shareholder means a Scheme Shareholder who is not a Foreign Shareholder.
escrow restrictions means, collectively, the restriction against:
-
(a) Dealing in any Escrowed Shares or in any interest or right in respect of Escrowed Shares;
-
(b) creating, or agreeing or offering to create, an encumbrance (of whatsoever nature) over or affecting all or any part of the Escrowed Shares; and
-
(c) doing or omitting to do any act which would have the effect of transferring effective control of all or any part of the Escrowed Shares.
escrowed shares means 50% of the Scheme Shares issued to the Trustee for the benefit of an Interested Director as consideration for the Conquest Shares issued to the Trustee pursuant to a Minority Options Offer.
evolution mining means Catalpa following implementation of the Transaction, assuming that Catalpa Shareholders approve the resolution to change the company name of Catalpa to Evolution Mining Limited at the Catalpa Meeting.
evolution mining information means all of the information in Section 6 (other than in Section 6.7) and all statements in this Scheme Booklet regarding the intentions of Evolution Mining or the shared intentions of Conquest and Catalpa, but does not include any information that constitutes Conquest Information, Catalpa Information, Newcrest Information or Cracow Information.
exclusivity Period means the period from the Announcement Date to the earlier of the date on which the Transaction Implementation Deed is terminated and the Effective Date.
explanatory memorandum means the explanatory memorandum to be prepared by Catalpa and sent to Catalpa Shareholders in respect of the Catalpa Resolutions.
exploration results has the meaning given in the JORC Code.
fiduciary exception has the meaning given in Section 9.1. financial indebtedness means any debt or other monetary liability (whether actual or contingent) in respect of moneys borrowed or raised or any financial accommodation.
firB means Foreign Investment Review Board.
foreign shareholder means a Scheme Shareholder whose address shown in the Conquest Register is a place outside Australia and its external territories or New Zealand and other jurisdictions agreed in writing between Conquest, Catalpa and Newcrest.
fully diluted value Basis means the basis on which the number of Subscription Shares will be calculated, as explained in the Transaction overview – Share Issue (page 13).
fy means a financial year ending 30 June.
general meeting means the meeting of Conquest Shareholders at which the General Meeting Resolutions will be voted on.
general meeting resolutions means, collectively, the Non-dilution Rights Resolutions, Majority Options Resolution and Minority Options Resolution.
general Proxy form means the green proxy form for the General Meeting enclosed with this Scheme Booklet.
grant samuel means Grant Samuel & Associates Pty Limited ACN 050 036 372.
implementation date means the fifth Business Day after the Scheme Record Date or such other day as Conquest, Catalpa and Newcrest agree.
independent directors means, collectively, Richard Krasnoff, Paul Marks and Doug Stewart.
independent expert means Grant Samuel.
independent expert’s report means the report by
the Independent Expert dated 12 September 2011, a concise version of which is included at Attachment A and a full version of which is included in the Scheme Booklet Supplement.
indicated mineral resource has the meaning given in the JORC Code.
inferred mineral resource has the meaning given in the JORC Code.
interested directors means, collectively, Jake Klein, James Askew and Nicholas Curtis.
investigating accountant means Deloitte.
investigating accountant’s report means the report by the Investigating Accounting dated 12 September 2011 included at Attachment B.
Jake klein resolution means the resolution to be voted on at the General Meeting in relation to the issue of the Tranche 1 Non-dilution Rights Options for the benefit of Jake Klein, as set out in the Notice of General Meeting.
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13 gloSSary contInueD
James askew resolution means the resolution to be voted on at the General Meeting in relation to the issue of the Tranche 2 Non-dilution Rights Options for the benefit of James Askew, as set out in the Notice of General Meeting.
Jorc code means the December 2004 edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”.
key management Personnel has the meaning given in the Corporations Act.
koz means thousand ounces.
last trading day means 6 September 2011.
listing rules means the official listing rules of ASX.
macquarie means Macquarie Group Limited ACN 122 169 279.
macquarie facilities means the following finance facilities which Macquarie has offered to make available to Conquest to finance the development of the Mt Carlton project:
(a) $50 million project finance facility;
-
(b) $40 million bridge finance facility; and
-
(c) $10 million performance bond facility,
as more particularly described in Section 3.2(b)(ii).
majority optionholder means a holder of one or more Majority Options.
majority options means, collectively, the Conquest Options set out in the table below and majority options consideration means, collectively, the Catalpa Options set out in the table below.
==> picture [238 x 339] intentionally omitted <==
----- Start of picture text -----
conquest oPtions catalPa oPtions
(a) 2,000,000 Conquest 600,000 Catalpa Options
Options exercisable at exercisable at $3.10 per
$0.93 per option and option and expiring on
expiring on 26 February 2013
26 February 2013
(b) 5,500,000 Conquest 1,650,000 Catalpa
Options exercisable at Options exercisable at
$0.60 per option and $2.00 per option and
expiring on expiring on
19 October 2012 19 October 2012
(c) 1,684,302 Conquest 505,291 Catalpa Options
Options exercisable at exercisable at $1.86 per
$0.558 per option and option and expiring on
expiring on 25 November 2016
25 November 2016
(d) 20,968 Conquest 6,290 Catalpa Options
Options exercisable at exercisable at $1.82 per
$0.546 per option and option and expiring on
expiring on 25 November 2016
25 November 2016
(e) 50,574 Conquest 15,172 Catalpa Options
Options exercisable at exercisable at $1.90 per
$0.569 per option and option and expiring on
expiring on 25 November 2016
25 November 2016
----- End of picture text -----
==> picture [239 x 700] intentionally omitted <==
----- Start of picture text -----
conquest oPtions catalPa oPtions
(f) 1,515,484 Conquest 454,645 Catalpa Options
Options exercisable at exercisable at $1.97 per
$0.592 per option and option and expiring on
expiring on 25 November 2016
25 November 2016
(g) 2,115,572 Conquest 634,672 Catalpa Options
Options exercisable at exercisable at $1.92 per
$0.575 per option and option and expiring on
expiring on 25 November 2016
25 November 2016
(h) 1,156,217 Conquest 346,865 Catalpa Options
Options exercisable at exercisable at $2.11 per
$0.633 per option and option and expiring on
expiring on 25 November 2016
25 November 2016
(i) 5,201,501 Conquest 1,560,450 Catalpa
Options exercisable at Options exercisable at
$0.552 per option and $1.84 per option and
expiring on expiring on
25 November 2016 25 November 2016
(j) 1,940,470 Conquest 582,141 Catalpa Options
Options exercisable at exercisable at $1.51 per
$0.453 per option and option and expiring on
expiring on 25 November 2016
25 November 2016
(k) 311,908 Conquest 93,572 Catalpa Options
Options exercisable at exercisable at $1.86 per
$0.558 per option and option and expiring on
expiring on 25 November 2015
25 November 2015
(l) 3,882 Conquest Options 1,165 Catalpa Options
exercisable at $0.546 per exercisable at $1.82 per
option and expiring on option and expiring on
25 November 2015 25 November 2015
(m) 9,366 Conquest Options 2,810 Catalpa Options
exercisable at $0.569 per exercisable at $1.90 per
option and expiring on option and expiring on
25 November 2015 25 November 2015
(n) 280,646 Conquest 84,194 Catalpa Options
Options exercisable at exercisable at $1.97 per
$0.592 per option and option and expiring on
expiring on 25 November 2015
25 November 2015
(o) 391,772 Conquest 117,532 Catalpa Options
Options exercisable at exercisable at $1.92 per
$0.575 per option and option and expiring on
expiring on 25 November 2015
25 November 2015
(p) 214,114 Conquest 64,234 Catalpa Options
Options exercisable at exercisable at $2.11 per
$0.633 per option and option and expiring on
expiring on 25 November 2015
25 November 2015
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SCHEME BOOKLET 101
==> picture [239 x 713] intentionally omitted <==
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conquest oPtions catalPa oPtions
(q) 1,333,612 Conquest 400,084 Catalpa Options
Options exercisable at exercisable at $1.84 per
$0.552 per option and option and expiring on
expiring on 25 November 2015
25 November 2015
(r) 359,346 Conquest 107,804 Catalpa Options
Options exercisable at exercisable at $1.51 per
$0.453 per option and option and expiring on
expiring on 25 November 2015
25 November 2015
(s) 4,050,000 Conquest 1,215,000 Catalpa
Options exercisable Options exercisable at
(subject to vesting $1.27 per option and
conditions) at $0.38 per expiring on
option and expiring on 1 June 2015
1 June 2015
(t) 1,050,000 Conquest 315,000 Catalpa Options
Options exercisable exercisable at $1.40 per
(subject to vesting option and expiring on
conditions) at $0.42 per 6 October 2015
option and expiring on
6 October 2015
(u) 2,000,000 Conquest 600,000 Catalpa Options
Options exercisable exercisable at $1.84 per
(subject to vesting option and expiring on
conditions) at $0.552 per 25 November 2016
option and expiring on
25 November 2016
(v) 2,450,000 Conquest 735,000 Catalpa Options
Options exercisable exercisable at $2.13 per
(subject to vesting option and expiring on
conditions) at $0.64 per 25 November 2015
option and expiring on 25
November 2015
(w) 1,850,000 Conquest 555,000 Catalpa Options
Options exercisable exercisable at $1.88 per
(subject to vesting option and expiring on
conditions) at $0.565 per 1 April 2016
option and expiring on 1
April 2016
(x) 738,816 Conquest 221,645 Catalpa Options
Options exercisable at exercisable at $2.11 per
$0.633 per option and option and expiring on
expiring on 5 years after 5 years after they are
they are granted, provided granted
that any options which
have not vested by 5pm
on 8 March 2015 will
expire 6 years after these
options are granted
(being the options
referred to in paragraph
(a) of the definition of
“Tranche 1 Non-dilution
Rights Options” in this
Section 13)
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conquest oPtions catalPa oPtions (y) 1,167,548 Conquest 350,264 Catalpa Options Options exercisable at exercisable at $2.45 $0.736 per option and per option and expiring expiring 5 years after they 5 years after they are are granted, provided granted that any options which have not vested by 5pm on 8 March 2015 will expire 6 years after these options are granted (being the options referred to in paragraph (b) of the definition of “Tranche 1 Non-dilution Rights Options” in this Section 13) (z) 68,409 Conquest 20,523 Catalpa Options Options exercisable at exercisable at $2.11 $0.633 per option and per option and expiring expiring 5 years after 5 years after they are they are granted (being granted the options referred to in paragraph (a) of the definition of “Tranche 2 Non-dilution Rights Options” in this Section 13) (aa) 108,105 Conquest 32,432 Catalpa Options Options exercisable at exercisable at $2.45 $0.736 per option and per option and expiring expiring 5 years after 5 years after they are they are granted (being granted the options referred to in paragraph (b) of the definition of “Tranche 2 Non-dilution Rights Options” in this Section 13) (bb) 68,409 Conquest Options 20,523 Catalpa Options exercisable at $0.633 exercisable at $2.11 per option and expiring per option and expiring 5 years after they are 5 years after they are granted (being the options granted referred to in paragraph (a) of the definition of “Tranche 3 Non-dilution Rights Options” in this Section 13) (cc) 108,105 Conquest 32,432 Catalpa Options Options exercisable at exercisable at $2.45 $0.736 per option and per option and expiring expiring 5 years after 5 years after they are they are granted (being granted the options referred to in paragraph (b) of the definition of “Tranche 3 Non-dilution Rights Options” in this Section 13)
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majority options offer means an offer made to a Majority Optionholder for all of his or her Majority Options pursuant to clause 4.7 of the Transaction Implementation Deed, as referred to in Section 11.2.
majority options resolution means the resolution to be voted on at the General Meeting in relation to the cancellation of the Majority Options, as set out in the Notice of General Meeting.
material Proceedings has the meaning given in paragraph (hh) in the definitions of “Catalpa Prescribed Occurrence” and “Conquest Prescribed Occurrence” in this Section 13 (as the case may be).
measured mineral resource has the meaning given in the JORC Code.
meeting means the Scheme Meeting or the General Meeting and meetings means, collectively, the Scheme Meeting and the General Meeting.
mineral resource has the meaning given in the JORC Code.
minority options means, collectively, the:
-
(a) Tranche 1 Minority Options;
-
(b) Tranche 2 Minority Options; and
-
(c) Tranche 3 Minority Options.
minority options consideration means collectively:
-
(a) in relation to the Tranche 1 Minority Options, 15,267,489 Conquest Shares; and
-
(b) in relation to each of the Tranche 2 Minority Options and the Tranche 3 Minority Options, 1,413,656 Conquest Shares.
minority options offer means an offer made to an Interested Director for all of his Minority Options pursuant to clause 4.8 of the Transaction Implementation Deed, as referred to in Section 12.
minority options resolution means the resolution to be voted on at the General Meeting in relation to the cancellation of the Minority Options and the issue of the Minority Options Consideration to the Interested Directors, as set out in the Notice of General Meeting.
moz means million ounces.
mt rawdon assets means the assets of the gold mining and exploration project at Mt Rawdon in which the Newcrest Group holds a 100% interest as at the Implementation Date.
new catalpa share means a Catalpa Share issued as Scheme Consideration or a Subscription Share.
newcrest means Newcrest Mining Limited ACN 005 683 625.
newcrest assets means, collectively, the Mt Rawdon Assets and the Newcrest Group’s 70% interest in the Cracow Assets.
newcrest disclosure materials means, collectively:
-
(a) all documentation:
-
(i) referred to in the Transaction Implementation Deed, the Asset Sale Agreement and the Subscription Deed; and
-
(ii) contained in the data room established by Newcrest in connection with the Transaction and listed in any index for that data room provided to Conquest, Catalpa or their representatives (up to and including 10.00am on the day immediately preceding the Announcement Date);
-
(b) all information (including answers) made available to Conquest, Catalpa or their representatives as part of the question and answer process conducted in connection with Newcrest’s data room; and
-
(c) all information available by searching records open to public inspection in Australia prior to the Announcement Date.
newcrest group means Newcrest and each of its subsidiaries and newcrest group member means Newcrest or one of its subsidiaries.
newcrest information means all information in Section 5 (other than the Cracow Information) and in Section 6.7 (and any information solely derived from, or prepared solely in reliance on, such information), and any updates to that information provided by or on behalf of Newcrest.
newcrest material adverse change means any event, occurrence or matter that individually or when aggregated with all such events, occurrences or matters:
-
(a) diminishes, or is reasonably likely to diminish, (whether now or in the future) the consolidated net assets of the businesses relating to the Cracow and Mt Rawdon gold mining and exploration projects by an amount equal to $35 million or more; or
-
(b) has the result that the businesses relating to the Cracow and Mt Rawdon gold mining and exploration projects are unable to be carried on in substantially the same manner as carried on as at the Announcement Date,
other than an event, occurrence or matter:
-
(c) required to be undertaken or procured by Newcrest in relation to the Businesses pursuant to the Transaction Documents;
-
(d) to the extent fairly disclosed in the Newcrest Disclosure Materials;
-
(e) to the extent known to Catalpa and Conquest prior to the Announcement Date (which does not include knowledge of the risk of an event, occurrence or matter happening);
-
(f) arising as a result of any generally applicable change in law or governmental policy; or
-
(g) arising from changes in economic or business conditions (including commodity prices and exchange rates) which impact on Newcrest and its competitors in substantially the same manner.
nicholas curtis resolution means the resolution to be voted on at the General Meeting in relation to the issue of the Tranche 3 Non-dilution Rights Options for the benefit of Nicholas Curtis, as set out in the Notice of General Meeting.
non-dilution rights means, collectively, the rights held by the Interested Directors to be issued Conquest Options in the event of certain future issues of Conquest Shares.
non-dilution rights options means, collectively:
(a) the Tranche 1 Non-dilution Rights Options;
- (b) the Tranche 2 Non-dilution Rights Options; and
(c) the Tranche 3 Non-dilution Rights Options, with such options to be treated as Majority Options if the Non-dilution Rights Resolutions are passed.
non-dilution rights resolutions means, collectively:
(a) Jake Klein Resolution;
-
(b) James Askew Resolution; and
-
(c) Nicholas Curtis Resolution.
SCHEME BOOKLET 103
notice of general meeting means the notice in relation to the General Meeting, as set out at Attachment F.
notice of scheme meeting means the notice in relation to the Scheme Meeting, as set out at Attachment E.
nqm means North queensland Metals Limited ACN 115 279 653, now known as “CqT Holdings Pty Limited”. ore reserve has the meaning given in the JORC Code.
Proxy form means, as the context requires, the Scheme Proxy Form or the General Proxy Form, and Proxy forms means both of them.
relevant interest has the meaning given in the Corporations Act.
relevant shares has the meaning given in Section 10.2(b). resolutions means, collectively, the Scheme Resolution and the General Meeting Resolutions.
rights offer means a renounceable offer for the issue of shares by Evolution Mining to raise approximately $150 million made on a pro rata basis to all shareholders on a date that is after the Implementation Date.
sale agent means a person appointed by Catalpa after consultation with Conquest to sell the New Catalpa Shares that are attributable to Foreign Shareholders under the terms of the Scheme.
scheme means a scheme of arrangement made under section 411 of the Corporations Act, the form of which is set out at Attachment C.
scheme Booklet means this document including each Attachment.
scheme Booklet supplement means a supplement to this Scheme Booklet which includes full versions of the Independent Expert’s Report and the version of the Transaction Implementation Deed released to ASX by Conquest on the Announcement Date.
scheme conditions means the conditions to which the Scheme is subject, being the conditions set out in clause 3.1 of the Transaction Implementation Deed and summarised in Section 7.4.
scheme consideration means the consideration to be provided by Catalpa for the Scheme Shares pursuant to the Scheme and the Deed Poll, being 0.3 New Catalpa Shares for each Scheme Share.
scheme meeting means the meeting of Conquest Shareholders at which the Scheme Resolution will be voted on, convened pursuant to orders of the Court made on 12 September 2011, and includes any adjournment of that meeting.
scheme Proxy form means the blue proxy form for the Scheme Meeting enclosed with this Scheme Booklet.
scheme record date means 5.00pm on the fifth Business Day after the Effective Date.
scheme resolution means the resolution in relation to the Scheme to be voted on at the Scheme Meeting, as set out in the Notice of Scheme Meeting.
scheme shareholder means a Conquest Shareholder as at the Scheme Record Date.
scheme share means a Conquest Share held by a Scheme Shareholder.
second court date means the first day on which an application made to the Court for an order under section 411(4)(b) of the Corporations Act approving the Scheme is heard.
section means a section of this Scheme Booklet.
sgg means Shandong Guoda Gold Co. Limited.
share issue means the issue of the Subscription Shares.
subscription deed means the subscription deed to be entered into between Catalpa and Newcrest if the Scheme Conditions are satisfied or (if applicable) waived.
subscription shares means the Catalpa Shares to be issued and allotted to Newcrest (or its nominees) by Catalpa as consideration for the Newcrest Assets pursuant to the Subscription Deed.
superior Proposal means:
-
(a) with respect to Conquest – a publicly announced bona fide Competing Proposal which the Conquest board, acting in good faith, and after taking advice from Conquest’s legal advisor and financial advisor, determines is:
-
(i) reasonably capable of being completed on a timely basis; and
-
(ii) more favourable to Conquest Shareholders than the Transaction, taking into account all aspects of the Competing Proposal including its terms (such as the consideration proposed to be offered under the transaction, any conditions to which the transaction would be subject and the likelihood of those conditions being satisfied) and the identity of the proponent; and
-
(b) with respect to Catalpa – a publicly announced bona fide Competing Proposal which the Catalpa board, acting in good faith, and after taking advice from Catalpa’s legal advisor and financial advisor, determines is:
-
(i) reasonably capable of being completed on a timely basis; and
-
(ii) more favourable to Catalpa Shareholders than the Transaction taking into account all aspects of the Competing Proposal including its terms (such as the consideration proposed to be offered under the transaction, any conditions to which the transaction would be subject and the likelihood of those conditions being satisfied) and the identity of the proponent.
tax act has the meaning given in Section 8.
technical specialist means AMC Consultants Pty Ltd.
technical specialist’s report means the report by the Technical Specialist dated 12 September 2011, a concise version of which forms a part of the concise version of the Independent Expert’s Report at Attachment A and a full version of which forms a part of the full version of the Independent Expert’s Report in the Scheme Booklet Supplement.
terP means the theoretical market price for Catalpa Shares immediately following the Rights Offer assuming the Rights Offer is fully subscribed, based on the VWAP of a Catalpa Share on the last day of trading before the launch of the Rights Offer.
104
Conquest MInInG LIMIteD
13 gloSSary contInueD
terP shortfall means the amount (if any) by which the Theoretical Excessive Discount Value exceeds the proceeds which Newcrest or its relevant subsidiaries receives as a result of the sale or renunciation of their entitlements under the Rights Offer.
theoretical excessive discount value means
((a – B) – (c x 15%)) x d , where:
tranche 3 non-dilution rights options means, collectively:
-
(a) 68,409 Conquest Options exercisable at $0.633 per option and expiring 5 years after they are granted; and
-
(b) 108,105 Conquest Options exercisable at $0.736 per option and expiring 5 years after they are granted,
-
which will be issued for the benefit of Nicholas Curtis if the Nicholas Curtis Resolution is passed.
-
a is TERP
-
B is the price at which Catalpa Shares are offered under the Rights Offer
-
c is TERP as if the price at which Catalpa Shares were to be issued under the Rights Offer was 85% of TERP and assuming the Rights Offer was fully subscribed
-
d is the number of Catalpa Shares to which Newcrest and its subsidiaries are entitled to subscribe under the Rights Offer
tranche 1 minority options means, collectively, the following Conquest Options held by the Trustee on behalf of Jake Klein:
-
(a) 13,500,000 Conquest Options exercisable (subject to vesting conditions) at $0.28 per option and expiring on 1 June 2015; and
-
(b) 13,500,000 Conquest Options exercisable (subject to vesting conditions) at $0.32 per option and expiring on 1 June 2016.
tranche 2 minority options means, collectively, the following Conquest Options held by the Trustee on behalf of James Askew:
-
(a) 1,250,000 Conquest Options exercisable at $0.28 per option and expiring on 1 June 2015; and
-
(b) 1,250,000 Conquest Options exercisable at $0.32 per option and expiring on 1 June 2016.
tranche 3 minority options means, collectively, the following Conquest Options held by the Trustee on behalf of Nicholas Curtis:
-
(a) 1,250,000 Conquest Options exercisable at $0.28 per option and expiring on 1 June 2015; and
-
(b) 1,250,000 Conquest Options exercisable at $0.32 per option and expiring on 1 June 2016.
tranche 1 non-dilution rights options means, collectively:
-
(a) 738,816 Conquest Options exercisable at $0.633 per option and expiring 5 years after they are granted, provided that any options which have not vested by 5pm on 8 March 2015 will expire 6 years after these options are granted; and
-
(b) 1,167,548 Conquest Options exercisable at $0.736 per option and expiring 5 years after they are granted, provided that any options which have not vested by 5pm on 8 March 2015 will expire 6 years after these options are granted,
which will be issued for the benefit of Jake Klein if the Jake Klein Resolution is passed.
tranche 2 non-dilution rights options means, collectively:
-
(a) 68,409 Conquest Options exercisable at $0.633 per option and expiring 5 years after they are granted; and
-
(b) 108,105 Conquest Options exercisable at $0.736 per option and expiring 5 years after they are granted,
-
which will be issued for the benefit of James Askew if the James Askew Resolution is passed.
transaction means, collectively:
-
(a) the acquisition of all the Scheme Shares by Catalpa pursuant to the Scheme;
-
(b) the Asset Purchase; and
-
(c) the Share Issue.
transaction documents means, collectively:
-
(a) the Transaction Implementation Deed;
-
(b) the Asset Sale Agreement;
-
(c) the Subscription Deed;
-
(d) the Scheme;
-
(e) the Deed Poll;
-
(f) the Transitional Services Agreement; and
-
(g) such other documents that are agreed by Conquest, Catalpa and Newcrest in writing to be considered “Transaction Documents” for the purposes of the Transaction Implementation Deed.
transaction implementation deed means the transaction implementation deed entered into between Conquest, Catalpa and Newcrest on the Announcement Date.
transitional services agreement means the transitional services agreement to be entered into between one or more Catalpa Group Members on the one part and one or more Newcrest Group Members on the other part if the Scheme Conditions are satisfied or (if applicable) waived, pursuant to which Newcrest will provide, or procure the provision of, administrative transitional services with respect to the Newcrest Assets on arm’s length terms for a period not exceeding six months.
trustee means Trinity Management Pty Ltd, being the trustee of the Conquest option share trust established in connection with the Conquest directors and employees share option plan.
underwriter means an entity appointed to underwrite the Rights Offer that is acceptable to Newcrest and Conquest (each acting reasonably).
underwriting agreement means an agreement pursuant to which the underwriter(s) agree to fully underwrite the Rights Offer, on terms and conditions (including as to termination rights) which generally are customary or usual for an agreement of its kind and on the following specific terms and conditions:
-
(a) the obligations of the underwriter(s) are conditional upon the Scheme becoming Effective; and
-
(b) the price at which Catalpa Shares are to be issued under the Rights Offer is not less than 80% of TERP per Catalpa Share.
vwaP means volume weighted average price.
vwaP calculation has the meaning given in Section 12.2.
105
SCHEME BOOKLET
part 4 – attachmentS
a — concISe verSIon of InDepenDent expert’S report
B — InveStIgatIng accountant’S report
c — Scheme
D — DeeD poll
e — notIce of Scheme meetIng
f — notIce of general meetIng
106
Conquest MInInG LIMIteD
attachment a - concISe InDepenDent expert’S report
==> picture [241 x 37] intentionally omitted <==
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SCHEME BOOKLET 107
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SCHEME BOOKLET 117
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118
Conquest MInInG LIMIteD
attachment a - concISe InDepenDent expert’S report contInueD
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SCHEME BOOKLET 119
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120
Conquest MInInG LIMIteD
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SCHEME BOOKLET 157
AMC Consultants Pty Ltd
ABN 58 008 129 164
Level 12, 179 North Quay BRISBANE QLD 4000
T +61 7 3839 0099 F +61 7 3839 0077
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12 September 2011
The Directors Grant Samuel & Associates Pty Ltd Level 6, 1 Collins Street MELBOURNE VIC 3000
Dear Sirs
CONQUEST MINING LIMITED AND CATALPA RESOURCES LIMITED TECHNICAL SPECIALISTS REPORT
This report is a concise version of a technical specialists report prepared by AMC Consultants Pty Ltd (AMC) for Grant Samuel and Associates Pty Ltd (Grant Samuel) on the mineral assets of Catalpa Resources Limited (Catalpa) and Conquest Mining Limited (Conquest), and certain mineral assets of Newcrest Mining Limited (Newcrest). The mineral assets of Catalpa and Conquest are the subject of a binding transaction agreement by Catalpa and Conquest (the Merged Entity) announced on 15 June 2011. In a separate and interconditional transaction, the Merged Entity will concurrently purchase Newcrest’s interests in the Cracow and Mt Rawdon gold mines. The full version of AMC’s report has been provided to Grant Samuel and is available to Shareholders on request.
AMC’s report covers the following mines, projects and exploration interests:
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The Edna May Gold Mine, 100% owned by Catalpa, located in the eastern part of the Central Wheat Belt of Western Australia, approximately 300 km east of Perth.
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The Pajingo Gold Mine, 100% owned by Conquest, located 53 km south of Charters Towers in north Queensland.
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The Mt Rawdon Gold Mine, 100% owned by Newcrest, situated in southeast Queensland, approximately 80 km southwest of Bundaberg and 300 km north-northwest of Brisbane.
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The Cracow Gold Mine, owned 70% by Newcrest and 30% by Catalpa, located approximately 100 km south of Biloela in southeast Queensland.
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The Mt Carlton Project, 100% owned by Conquest, located 150 km south of Townsville in the Charters Towers Mining Region of north Queensland.
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Exploration interests of the Merged Entity and the Mt Rawdon and Cracow gold mines.
ADELAIDE BRISBANE MELBOURNE PERTH UNITED KINGDOM VANCOUVER +61 8 8201 1800 +61 7 3839 0099 +61 3 8601 3300 +61 8 6330 1100 +44 1628 778 256 +1 604 669 0044
www.amcconsultants.com.au
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CONQUEST MINING & CATALPA RESOURCES Project Fort Knox
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This report presents AMC’s assessment of the quality and reasonableness of the mineral resource and ore reserve estimates prepared by Catalpa, Conquest and Newcrest.
The mineral resource and ore reserve estimates presented as tables in the report are a reproduction of those reported by Catalpa, Conquest and Newcrest in each company’s Australian Securities Exchange (ASX) Releases, except that AMC has reformatted the tables for consistency with the style of the report, and applied rounding adjustments and totals to some of the tables where it considers this necessary for clarity. In all cases, the mineral resources shown in the tables include mineral resources that have been converted to ore reserves.
AMC has not performed, nor does it accept the responsibilities of a Competent Person as defined by the JORC[1] Code in respect to the mineral resource and ore reserve estimates presented in the report, except for the mineral resource estimate for Pajingo. AMC personnel, not involved in the preparation of this report, undertook some of the Pajingo mineral resource estimates, including the role of Competent Person for those estimates.
This report provides summary information from the schedules of prospective production, capital and operating costs, and modelling scenarios prepared by AMC for use by Grant Samuel as a basis for valuing the mineral assets. AMC has modelled two scenarios for each operation and project with the exception of Mt Rawdon Gold Mine for which a single scenario has been modelled.
The modelling scenarios (Cases) have been developed from detailed information provided by the owners of each asset. Case 1 scenarios are generally based on operating plans and approved expansions for mining known reserves and some resources, which AMC reasonably expects will be converted to reserves with further drilling and evaluation work. Case 2 scenarios include more aggressive expectation of conversion of resources and exploration targets to reserves. AMC considers its Case 2 scenarios to be optimistic, but not unreasonable, given favourable conditions.
The modelling scenarios are based on ore reserve and mineral resource estimates reported at 30 June 2011. Where the estimates have been reported at a prior date, AMC has estimated the depletion of reserves and resources by mining to 30 June 2011. Production and costs are generally presented on a financial (July to June) basis and prefaced with the letters FY. All monetary figures are expressed in Australian dollars ($) unless otherwise stated, and costs are presented on a current cash cost basis. Totals shown in tables do not necessarily equal the sum of the components due to rounding adjustments.
EDNA MAY GOLD MINE
The Edna May Gold Mine is located in the eastern part of the Central Wheat Belt of Western Australia, approximately 300 km east of Perth. Catalpa has a 100% interest in the mine and the surrounding tenements covering 20 km to 30 km of strike of the Westonia greenstone belt.
Catalpa acquired the Edna May Project in 1994 and in 2004 completed a feasibility study, but did not develop the project due to the low gold price at the time. In December 2008, Catalpa completed an updated feasibility study. The study envisaged ore being processed at an initial rate of 2.8 Mtpa, increasing to 3.2 Mtpa after two years using a refurbished and upgraded
1 Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves, The JORC Code 2004 Edition, Effective December 2004, Prepared by the Joint Ore Reserves Committee of the Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia (JORC).
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process plant. Open pit mining and plant construction commenced in late 2009, with first gold produced in April 2010. Based on current ore reserves, Edna May is expected to have a mine life of more than nine years at an annual production rate in excess of 100,000 ounces of gold recovered.
Mineral Resources and Ore Reserves
Mineral Resource and Ore Reserve estimates for Edna May Gold Mine reported at 30 June 2011 are shown in the following tables. The Edna May Gold Mine includes the following resource areas: Edna May & Golden Point; Greenfinch; Edna May Underground; and the Stockpile.
The Edna May & Golden Point and Greenfinch open pit resource estimates have been reported at a 0.4 g/t Au cut-off. The Edna May underground resource estimate has been reported at a 3 g/t Au cut-off. Ore reserves for the Edna May and Greenfinch open pits are based on a cut-off grade of 0.4 g/t Au estimated using a gold price of $1,250/oz.
Edna May Gold Mine Mineral Resource at 30 June 2011
| Mineral Resource Locations |
Measured Resource |
Measured Resource |
Indicated Resource |
Indicated Resource |
Inferred Resource |
Inferred Resource |
Total Resource |
Total Resource |
|---|---|---|---|---|---|---|---|---|
| Tonnes (Mt) |
Au (g/t) |
Tonnes (Mt) |
Au (g/t) |
Tonnes (Mt) |
Au (g/t) |
Tonnes (Mt) |
Au (g/t) |
|
| Edna May & Golden Point Greenfinch Edna May Underground Stockpiles |
19.7 0.9 – – |
1.0 1.1 – – |
15.5 2.5 0.4 2.2 |
1.0 1.0 7.3 0.5 |
10.0 0.6 0.3 – |
0.9 1.2 7.6 – |
45.2 4.0 0.7 2.2 |
1.0 1.0 7.4 0.5 |
| Total Resource | 20.6 | 1.0 | 20.6 | 1.1 | 10.9 | 1.1 | 52.1 | 1.1 |
Edna May Gold Mine Ore Reserve at 30 June 2011
| Ore Reserve Locations |
Proved Reserve | Proved Reserve | Proved Reserve | Probable Reserve | Probable Reserve | Probable Reserve | Total Reserve | Total Reserve | Total Reserve |
|---|---|---|---|---|---|---|---|---|---|
| Tonnes (Mt) |
Au (g/t) |
Au (koz) |
Tonnes (Mt) |
Au (g/t) |
Au (koz) |
Tonnes (Mt) |
Au (g/t) |
Au (koz) |
|
| Edna May Greenfinch Stockpiles |
14.4 0.8 - |
1.1 1.1 - |
504 28 - |
8.5 1.7 2.2 |
1.1 1.0 0.5 |
298 58 38 |
22.8 2.5 2.2 |
1.1 1.1 0.5 |
803 86 38 |
| Total Reserve | 16.5 | 1.1 | 532 | 12.4 | 1.0 | 394 | 27.5 | 1.1 | 927 |
In AMC’s opinion, the Edna May Mineral Resource and Ore Reserve estimates have been prepared using appropriate methods by a Competent Person, and have been classified and reported in accordance with the JORC Code.
Key observations
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The Edna May plant was commissioned in April/May 2010 and has achieved a slow ramp up. Actual ore processed is 17% below budget, and gold production is 32% below budget. The low gold production is a combination of below budget ore grade, throughput, and gold recovery. Plant throughput and gold recovery have been inconsistent on a monthly basis. Plant throughput finally achieved design levels in May 2011.
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Actual mining performance for the 2011 financial year was 6% under budget; however, ore mined is significantly lower as a result of the north wall failure, which restricted ore access until the failed material was removed.
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Historical underground mining has occurred at the Edna May deposit. As a result, voids or loosely filled stopes and other openings are encountered in the pit. There is a potential for wall instability due to voids intersecting the walls and floor of the pit. AMC believes that with appropriate consideration, this issue should not adversely impact materially on the operation.
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Catalpa has identified tungsten as scheelite in tailings from the Edna May processing plant, and has been conducting studies for plant modification that might lead to recovery of a tungsten-bearing concentrate, and concomitant enhanced gold recovery.
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Catalpa has completed a scoping study on underground mining below the Edna May open pit, and is adopting a phased approach to the evaluation of this option.
Edna May Modelling Scenarios
AMC’s Case 1 modelling scenario is based on the December 2010 open pit ore reserve, less AMC’s adjustment for estimated depletion to June 2011[2] , plus a portion of the current underground mineral resource that AMC believes may be recovered by underground mining.
AMC’s Case 2 modelling scenario adds material to the Case 1 mining inventory to reflect the potential for mining a greater portion of the Edna May and Greenfinch open pit resource, and mining additional open pit material discovered through successful exploration. AMC has also extended the underground mining inventory based on the potential for exploration success. Case 2 assumes that a tungsten recovery plant will be constructed.
The mining inventories used in the two cases are shown in the following table.
Case 1 and Case 2 Mining Inventories for Edna May
| Source | Case 1 | Case 2 | ||||
|---|---|---|---|---|---|---|
| Tonnes (Mt) |
Au (g/t) |
Au (Moz) |
Tonnes (Mt) |
Au (g/t) |
Au (Moz) |
|
| Edna May & Greenfinch open pits Stockpiles Underground Edna May & Greenfinch extensions New open pit (regional discovery) |
25.2 1.6 0.4 – – |
1.1 0.7 8.5 – – |
0.89 0.04 0.11 – – |
25.2 1.6 0.6 3.5 2.0 |
1.1 0.7 8.1 1.1 1.2 |
0.89 0.04 0.16 0.12 0.08 |
| Total | 27.5 | 1.2 | 1.04 | 33.2 | 1.2 | 1.30 |
Operating costs in both cases have been based on the 2012 budget provided by Catalpa. Underground mine operating costs have been estimated by consultants engaged by Catalpa. AMC considers the costs to be reasonable.
Capital expenditure for Case 1 includes expenditure associated with improving the reliability of the mill to achieve a consistent design throughput, and ensuring reliable water and power supplies ($6.9M). A further $12M is provided to upgrade processing facilities to a throughput rate of 3.2 Mtpa. Expenditure of $16.1M has been included for establishment of the underground mining operation.
- 2 The 30 June 2011 Ore Reserve Estimate had not been completed prior to AMC preparing its modelling scenarios.
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Capital expenditure for Case 2 includes the additional cost of constructing the tungsten recovery plant. Sustaining capital costs have been included in both cases. These costs include $2M every three years for expansion of the tailings storage facility. AMC considers that the exploration budget is adequate for the envisaged discovery and resource conversion assumed in Case 2.
Closure costs of $8.3M have been included in both cases. A further $0.1M has been added to Case 2 for rehabilitation of another small open pit.
PAJINGO GOLD MINE
Pajingo Gold Mine (Pajingo) is located 53 km south of Charters Towers in north Queensland. Conquest has a 100% interest in the mine and associated tenements.
Underground mining of gold bearing epithermal quartz veins commenced at Pajingo in 1996. In addition to underground mining, a number of small open pits have also been mined. The operation has the capability to process up to 650,000 tpa, but in recent years underground production has been approximately 300,000 tpa. Conquest has recently recommenced open cut mining and is actively seeking to delineate additional open cut resources to better utilise processing capacity.
Mineral Resources and Ore Reserves
Mineral Resources and Ore Reserves for Pajingo at 30 June 2011 are reported in the following tables. The mineral resources are inclusive of ore reserves and are reported at a 1.0 g/t Au cutoff for underground resources and 0.65 g/t Au for open pit resources. The reserves are reported at a cut-off grade of 3.9 g/t Au for underground and 0.7 g/t Au for open pit.
Pajingo Mineral Resource at 30 June 2011
| Measured | Measured | Measured | Indicated | Indicated | Indicated | Inferred | Inferred | Total | Total | |||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Vein | Tonnes | Au (g/t) |
Au | Tonnes | Au | Au | Tonnes | Au | Au | Tonnes | Au | Au |
| (kt) | (koz) | (kt) | (g/t) | (koz) | (kt) | (g/t) | (koz) | (kt) | (g/t) | (koz) | ||
| Underground (Cut-off grade 1.0 g/t Au) | ||||||||||||
| Cindy | – | – | – | 69 | 6.5 | 15 | 46 | 4.4 | 7.0 | 115 | 5.7 | 21 |
| Faith | 19 | 4.7 | 3 | 105 | 6.5 | 22 | 101 | 4.7 | 15 | 225 | 5.6 | 40 |
| Jandam | 110 | 5.1 | 18 | 997 | 4.3 | 138 | 453 | 2.7 | 39 | 1,560 | 3.9 | 195 |
| Sonia | 26 | 3.6 | 3 | 151 | 9.8 | 47 | 206 | 10.7 | 71 | 382 | 9.9 | 121 |
| Venue-VNU | – | – | – | 356 | 2.4 | 28 | 262 | 1.3 | 11 | 617 | 1.9 | 39 |
| Veracity | 2 | 16.9 | 1 | 299 | 6.0 | 58 | 123 | 3.8 | 15 | 425 | 5.4 | 74 |
| Zed | 43 | 7.1 | 10 | 526 | 4.0 | 68 | 1,147 | 3.5 | 130 | 1,715 | 3.8 | 208 |
| Subtotal UG | 200 | 5.4 | 35 | 2,502 | 4.7 | 375 | 2,337 | 3.8 | 288 | 5,039 | 4.3 | 698 |
| Open Pit (Cut-off grade 0.65 g/t Au) | ||||||||||||
| VNU | – | – | – | 102 | 2.5 | 8 | 7 | 0.9 | 0.2 | 110 | 2.4 | 8 |
| Venue | – | – | – | 203 | 3.3 | 22 | 1 | 1.7 | 0.1 | 205 | 3.3 | 22 |
| Sub Total OP | – | – | – | 306 | 3.0 | 30 | 8 | 1.0 | 0.3 | 314 | 3.0 | 30 |
| Total Resource | 200 | 5.4 | 35 | 2,808 | 4.5 | 405 | 2,346 | 3.8 | 288 | 5,354 | 4.2 | 728 |
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Pajingo Ore Reserve at 30 June 2011
| Vein | Proved | Proved | Probable | Probable | Probable | Total | |||
|---|---|---|---|---|---|---|---|---|---|
| Tonnes (kt) |
Au (g/t) |
Au (koz) |
Tonnes (kt) |
Au (g/t) |
Au (koz) |
Tonnes (kt) |
Au (g/t) |
Au (koz) |
|
| Underground (Cut-off grade 3.9 g/t Au) | |||||||||
| Cindy | – | – | – | 33 | 5.5 | 6 | 33 | 5.5 | 6 |
| Faith | 6 | 5.8 | 1 | 83 | 6.1 | 16 | 90 | 6.1 | 18 |
| Jandam | – | – | – | 43 | 5.1 | 7 | 43 | 5.1 | 7 |
| Sonia | 7 | 4.4 | 1 | 116 | 9.3 | 35 | 123 | 9.0 | 36 |
| Veracity | – | – | – | 74 | 5.3 | 13 | 74 | 5.3 | 13 |
| Zed | 41 | 5.9 | 8 | 122 | 6.0 | 23 | 164 | 6.0 | 31 |
| Subtotal UG | 54 | 5.7 | 10 | 471 | 6.6 | 100 | 525 | 6.5 | 110 |
| Open Pit (Cut-off grade 0.7 g/t Au) | |||||||||
| VNU | – | – | – | 120 | 2.2 | 8 | 120 | 2.2 | 8 |
| Venue | – | – | – | 219 | 3.1 | 22 | 219 | 3.1 | 22 |
| Subtotal OC | – | – | – | 339 | 2.8 | 30 | 339 | 2.8 | 31 |
| Total Reserve | 54 | 5.7 | 10 | 810 | 5.0 | 130 | 864 | 5.1 | 140 |
In AMC’s opinion, the Pajingo Mineral Resource and Ore Reserve estimates have been prepared using appropriate methods by a Competent Person, and have been classified and reported in accordance with the JORC Code.
Mine Planning Inventory
Long-term production planning for Pajingo is based on a mine planning inventory in excess of 3 Mt. The mine planning inventory prepared by PGM includes ore reserves and non-reserve material. Estimates of non-reserve material are derived from:
-
Extensions to existing lodes where there is reasonable expectation, based on historical performance, that inferred resources and in some cases unclassified material will ultimately be converted to reserves. It includes both open pit and underground material.
-
Remnants from previously mined underground areas, which may not have been economic or practical to mine at that time.
-
Future production from reasonably assured exploration success. This material is derived from both inferred resources in the lodes hosting ore reserves, and from exploration targets.
Key Observations
-
Production scenarios for Pajingo envisage the mill throughput rate increasing progressively from 450 ktpa to 590 ktpa. Mill throughput capacity is expected to exceed the mine production rate over this range.
-
Pajingo has been predominantly an underground mine in recent years, but with a renewed focus on supplementing underground production with production from small open pits.
-
The underground mine has suffered from a lack of capital investment in equipment, capital development, and resource drilling under the previous owners. Conquest has embarked on an ambitious program to redress these issues and return the mine to a sound operational
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basis with reasonable future ore supplies. Provided the capital equipment purchases proceed as planned, AMC considers that the underground mine has the capability to increase production from the current rate to approximately 500 ktpa over the next five years.
- The main challenge at Pajingo is the need to replace ore reserves at a sufficient rate to meet its long-term production plan. This is typical of this type of epithermal vein gold operation. The mine has substantial inferred resources and many prospective targets .An aggressive exploration and infill drilling programme is required to constantly replace depleted ore reserves.
Pajingo Modelling Scenarios
AMC’s Case 1 underground mining production plan is based on the 30 June 2011 ore reserves, plus substantial additional material from an inventory of non-reserve material prepared by Conquest, which AMC accepts is reasonable. A small amount of material is included from assumed exploration success in Year 5.
Case 2 extends the Case 1 underground and open pit production plans by one year. The additional open pit production is assumed to come from a new pit on one of the current exploration targets at a similar grade and stripping ratio to the other pits.
The mining inventories used in the two cases are shown in the following table.
Case 1 and Case 2 Mining Inventories for Pajingo
| Case 1 | Case 2 | |||||
|---|---|---|---|---|---|---|
| Source | Tonnes (Mt) |
Au (g/t) |
Au (Moz) |
Tonnes (Mt) |
Au (g/t) |
Au (Moz) |
| Ore reserves - Underground Non-reserve material - Underground Ore reserves - Open pits Non-reserve material - Open pits |
0.52 1.71 0.34 0.17 |
6.5 5.5 2.8 3.9 |
0.11 0.30 0.04 0.02 |
0.52 2.21 0.34 0.25 |
6.5 5.5 2.8 3.6 |
0.11 0.39 0.04 0.03 |
| Total | 2.74 | 5.3 | 0.46 | 3.32 | 5.2 | 0.56 |
In both cases, the mill throughput rate has been increased progressively from 0.45 Mtpa in 2012 to 0.59 Mtpa in 2014 to compensate for declining feed grades. A metallurgical recovery of 95% has been assumed in both cases.
The underground mining unit costs are initially based on recent performance, but decrease as the underground mining fleet is updated with new equipment. Open pit mining unit costs are based on those provided by Conquest, but adjusted by AMC to reflect the actual stripping ratios each year.
Processing unit costs reflect recent performance initially, but decreases slightly as throughput increases. Administration unit costs are also adjusted in accordance with throughput to maintain a fairly constant total cost, but with the benefit of some efficiency improvement.
Sustaining capital costs are based on Conquest’s FY2012 budget and adjusted in future years to ensure that underground capital development and exploration drilling is maintained at an adequate level. AMC has included the cost of open pit development in the open pit operating costs.
Closure costs of $9.4M has been included for both cases.
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MT RAWDON GOLD MINE
Mt Rawdon open cut gold mine is situated in southeast Queensland, approximately 80 km southwest of Bundaberg and 300 km north-northwest of Brisbane. The mine is 100% owned by Newcrest.
Construction of the Mt Rawdon project commenced in early 2000 followed by commissioning in January 2001. Based on the current life-of-mine plan, the mine is scheduled to cease production in 2018 with milling of low-grade stockpiles continuing into the first half of 2020.
Mineral Resources and Ore Reserves
Mineral Resources and Ore Reserves for Mt Rawdon as reported by Newcrest at 30 June 2011 are shown in the following tables. The estimates are based on a resource model prepared by Newcrest in October 2010.
The resources within the pit have been reported at a cut-off grade of 0.38 g/t Au. Classification of resources is based on drillhole spacing and the number of samples used to estimate the block. The measured resource is all stockpiled material.
Ore reserves reported are based on a cut-off grade of 0.4 g/t Au. The ore reserves are based on metal prices of US$850/oz Au and US$13.50/oz Ag at an exchange rate of A$1.00 = US$0.75. The reserve includes 0.2 Mt of stockpile material which is classified as Proved. All in-situ reserve is classified as Probable.
Mt Rawdon Mineral Resource at 30 June 2011
| Resource Classification |
Tonnes (Mt) |
Au (g/t) |
Ag (g/t) |
Au (Moz) |
Ag (Moz) |
|---|---|---|---|---|---|
| Measured Indicated Inferred |
0.2 36.3 0.2 |
1.10 0.87 0.64 |
1.87 2.43 2.00 |
0.01 1.02 0.00 |
0.01 2.84 0.01 |
| Total Resource | 36.7 | 0.87 | 2.42 | 1.03 | 2.86 |
Mt Rawdon Ore Reserve at 30 June 2011
| Reserve Classification |
Tonnes (Mt) |
Au (g/t) |
Ag (g/t) |
Au (Moz) |
Ag (Moz) |
|---|---|---|---|---|---|
| Proved Probable |
0.2 31.8 |
1.10 0.89 |
1.87 2.46 |
0.01 0.91 |
0.01 2.52 |
| Total Reserve | 32.0 | 0.89 | 2.46 | 0.92 | 2.53 |
In AMC’s opinion, the Mt Rawdon Mineral Resource and Ore Reserve estimates have been prepared using appropriate methods by a Competent Person, and have been classified and reported in accordance with the JORC Code.
Key Observations
-
Mt Rawdon uses conventional drill, blast and haul mining techniques and conventional gold ore processing technology.
-
Potential exists to increase the resources and reserves at depth and down plunge to the south and southwest of the main pit. The mineralisation is currently open at depth. The
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stripping ratio, average gold grade and the need to relocate major infrastructure pose the most significant issues to the viability of mining at greater depth.
-
Exploration potential in the region is considered to be low.
-
The mining rate is generally limited to a total material movement rate of 20 Mtpa, and the processing rate to 3.6 Mtpa. Substantial capital investment would be needed to remove these constraints.
Mt Rawdon Modelling Scenario
AMC has prepared a single modelling scenario for Mt Rawdon (Case 1), based on the life-of-mine plan prepared by Newcrest. The plan is based on the 30 June 2011 ore reserve estimate and envisages mining until 2018 and processing until 2020.
AMC has not changed the production plan except for minor changes to metal recoveries and costs. Gold recoveries over the life of the plan average approximately 90%.
An amount of $5M has been added to the closure cost in addition to the guarantee lodged with the state government. The additional amount brings the total closure cost to $15M.
In AMC’s opinion, there are currently no additional mineral resources with a reasonable expectation of being mined to justify a Case 2 modelling scenario.
CRACOW GOLD MINE
The Cracow Gold Mine (CGM) is located in the Cracow Goldfield, approximately 1.5 km west-northwest of the town of Cracow and some 100 km south of Biloela in southeast Queensland. It is operated by the Cracow Joint Venture between Newcrest (70%) and Catalpa (30%). Newcrest manages the joint venture.
Gold mineralisation occurs in structurally controlled, steeply dipping, quartz (carbonate), low sulphidation, epithermal, gold-silver deposits formed within lode channels in steep-dipping fault zones. The main deposits occur within a zone approximately 6 km long x 2 km wide, although a number of other historical mines occur some kilometres to the east. The veins are mined by underground methods.
Mineral Resources and Ore Reserves
Mineral Resource and Ore Reserve estimates for CGM reported by Newcrest at 30 June 2011 are shown in the following tables.
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CGM Mineral Resource at 30 June 2011
| Measured | Measured | Indicated | Indicated | Inferred | Inferred | Total | Total | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Deposit | Tonnes (kt) |
Au (g/t) |
Au (koz) |
Tonnes (kt) |
Au (g/t) |
Au (koz) |
Tonnes (kt) |
Au (g/t) |
Au (koz) |
Tonnes (kt) |
Au (g/t) |
Au (koz) |
| Royal Crown Klondyke Sovereign Kilkenny Tipperary Empire Roses Pride Phoenix Stockpiles |
32 77 1 108 42 - - - 12 6 |
12.5 9.8 8.0 7.0 13.1 - - - 15.5 5.0 |
13 24 0 24 18 - - - 6 1 |
- - 185 120 213 345 - 51 129 - |
- - 5.7 4.7 7.3 7.5 - 14.6 11.8 - |
- - 34 18 50 84 - 24 49 - |
85 364 189 357 1,056 196 424 429 1 - |
6.7 4.8 4.2 3.8 6.0 5.0 6.5 6.0 4.3 - |
18 56 26 43 203 32 89 82 0 - |
117 441 375 585 1,311 541 424 480 142 6 |
8.3 5.7 4.9 4.5 6.4 6.6 6.5 6.9 12.1 5.0 |
31 81 60 85 270 115 89 106 55 1 |
| Total | 278 | 9.7 | 86 | 1,042 | 7.7 | 258 | 3,101 | 5.5 | 548 | 4,422 | 6.3 | 893 |
CGM Ore Reserve at 30 June 2011
| Category | Proved | Proved | Probable | Probable | Total | Total | |||
|---|---|---|---|---|---|---|---|---|---|
| Ore Shoot | Tonnes (kt) |
Au (g/t) |
Au (koz) |
Tonnes (kt) |
Au (g/t) |
Au (koz) |
Tonnes (kt) |
Au (g/t) |
Au (koz) |
| Royal Crown Klondyke North Sovereign Kilkenny Tipperary Roses Pride Phoenix Stockpiles |
44 41 -91 45 --9 6 |
10.6 7.3 -6.1 9.8 --13.2 5.0 |
15 9 -18 14 --4 1 |
-3 30 48 231 325 76 128 - |
-17.8 5.2 5.0 5.9 5.6 9.0 10.6 - |
-2 5 8 44 59 22 43 - |
44 44 30 138 276 325 76 137 6 |
10.6 8.0 5.2 5.7 6.5 5.6 9.0 10.8 5.0 |
15 11 5 25 58 59 22 47 1 |
| Total | 236 | 8.1 | 61 | 840 | 6.8 | 182 | 1,075 | 7.0 | 244 |
Mineral resources are reported at a cut-off grade of 2.5 g/t Au based on a US$1,000/oz gold price and an exchange rate of A$1.00 = US$0.80. Silver is not taken into consideration and fixed mining costs are not included in the cut-off grade calculation.
Ore reserves are reported at a cut-off grade of 2.4 g/t Au, the grade that covers all operating costs except mining fixed costs, calculated using a gold price of US$1,000/oz and an exchange rate of A$1.00 = US$0.80
In AMC’s opinion, the CGM Mineral Resource and Ore Reserve estimates have been prepared using appropriate methods by a Competent Person, and have been classified and reported in accordance with the JORC Code.
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Mine Planning Inventory
Long-term production planning at CGM uses a mine planning inventory comprising ore reserves and non-reserve material. The inventory, which totalled approximately 2.8 Mt at 31 March 2011, is based on an established history at CGM of resource conversion to reserves as a result of exploration by drilling, and sampling from underground mine development. AMC has reviewed the mine planning inventory and is of the opinion that it forms a reasonable basis for long-term production planning.
In addition to the mine planning inventory, CGM has a large low grade stockpile (IO Dumps) containing an estimated 800 kt of material grading approximately 1.0 g/t Au. A parcel of this material was recently treated to assess its potential for future recovery with promising results.
There is also potential for a cutback of the old Golden Plateau open pit that could be included in the mining inventory.
Key Observations
-
CGM is a modern, mechanised underground mine using standard mobile equipment. The narrow orebodies and small stope sizes, typically only 5-10 kt each result in relatively high operational costs. In AMC’s opinion, the mine is currently running very efficiently and there are few opportunities to achieve significant cost reductions.
-
The processing plant is a typical small gold operation employing conventional processing technology. Mined gold grades have decreased steadily in recent years and no new highgrade ore shoots have been discovered. Consequently, the mine has increased the production rate to maintain gold output. The upgraded mill has a nominal capacity of 550 ktpa, with potential to treat up to 600 ktpa. In AMC’s opinion, the underground mine will have difficulty in achieving a production rate greater than 550 ktpa and any additional mill feed will need to be sourced from low-grade dumps and/or an open pit cutback.
-
The main challenge is the need to replace ore reserves at a sufficient rate to meet its long-term production plan. This situation is fairly typical of this type of epithermal narrow vein gold mine. However, the mine has substantial inferred resources and some prospective targets; and an aggressive exploration and infill drilling programme is required to constantly replace depleted ore reserves.
CGM Modelling Scenarios
AMC’s Case 1 production plan is based on the 30 June 2011 ore reserve plus a significant quantity of non-reserve material. AMC’s estimate of non-reserve material includes low-grade material recovered from the IO Dumps. The production plan includes an increase in the milling rate from 550 ktpa in FY2012 to 600 ktpa in subsequent years. Production continues at this rate for four years.
Case 1 has lower gold grades than are scheduled by Newcrest in its life-of-mine plan for CGM. AMC considers the plan grade of 6.0 g/t for years 2013 to 2016 to be unrealistic, given the current mine planning inventory and lack of recent exploration success.
AMC’s Case 2 production plan extends the Case 1 underground mine life by a further two years at a production rate of 430 ktpa and a gold grade of 5.8 g/t, based on the expectation of some exploration success. Production from the underground mine is supplemented by production from the Golden Plateau open pit and from low-grade dumps to enable the throughput rate to be maintained at 600 ktpa.
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The mining inventories used in both cases are shown in the following table.
Case 1 and Case 2 Mining Inventories for CGM
| Source | Case 1 | Case 2 | ||||
|---|---|---|---|---|---|---|
| Tonnes (Mt) |
Au (g/t) |
Au (Moz) |
Tonnes (Mt) |
Au (g/t) |
Au (Moz) |
|
| Ore reserves - Underground Non-reserve material - Underground Non-reserve material - Open Pit Non-reserve material - LG Dumps |
1.08 1.63 – 0.25 |
7.0 4.7 – 1.0 |
0.24 0.25 – 0.01 |
1.08 2.49 0.24 0.35 |
7.0 5.1 1.7 1.0 |
0.24 0.41 0.01 0.01 |
| Total | 2.95 | 5.3 | 0.50 | 4.15 | 5.1 | 0.68 |
AMC has estimated a reduction in gold recovery from 92% at a throughput of 550 ktpa to 90% at 600 ktpa. AMC has estimated 70% gold recovery for low-grade open pit and dump material.
A capital amount of $1M has been included in both cases for the completion of the mill expansion work. Sustaining capital of $2.5M per annum and a one off amount of $2.5M to expand the tailings storage facility, has been included in both cases.
Operating costs have been based on Newcrest’s 2011-2012 budget, which AMC considers reasonable. In subsequent years, unit costs of $80/t mined, $27/t milled, and $12/t milled have been used to estimate total mining, processing and administration costs respectively.
Closure costs of $7.7M have been included in both cases.
MT CARLTON GOLD PROJECT
The Mt Carlton gold-silver-copper project is located 150 km south of Townsville and 80 km southwest of Bowen within the Charters Towers Mining Region of north Queensland. The Mt Carlton project is 100% owned by Conquest.
Conquest discovered Mt Carlton in 2006 and completed a Definitive Feasibility Study (DFS) as an open pit poly-metallic gold-silver-copper project in late 2009, and a DFS Optimisation Study (DFSOS) in late 2010.
Mineralisation comprises a refractory sulphide ore contained within a complex network of narrow veins that will require selective mining and blending. Conquest proposes mining two open pits located adjacent to a processing plant. The largest pit (V2) contains gold-silver-copper ore and the smaller pit (A39) a high grade silver rich ore.
Mineral Resources and Ore Reserves
The Mineral Resource and Ore Reserve estimates at 30 June 2011 and 15 December 2010 respectively as published by Conquest and released to the Australian Securities Exchange (ASX) on 9 August 2011 are summarised in the following tables. When developing the resource and reserve estimates for the V2 and A39 deposits, net metal value calculations were used to define the ore. The resource estimate is reported at a cut-off of $20/t and the reserve estimate is reported at a cut-off value of $25/t.
The V2 pit has a waste to ore stripping ratio of 3.9:1 and the A39 Pit has a waste to ore stripping ratio of 11.9:1.
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Mt Carlton Mineral Resource at 30 June 2011
| Category | Tonnes (Mt) |
Au (g/t) |
Ag (g/t) |
Cu (%) |
Au (Moz) |
Ag (Moz) |
Cu (kt) |
|---|---|---|---|---|---|---|---|
| V2 deposit | |||||||
| Measured Indicated Inferred |
12.7 10.9 1.2 |
1.78 1.41 0.67 |
27 20 29 |
0.30 0.23 0.17 |
0.70 0.49 0.03 |
11.0 7.0 1.1 |
38 25 2 |
| Total Resource | 24.7 | 1.56 | 24 | 0.26 | 1.24 | 19.1 | 64 |
| A39 deposit | |||||||
| Measured Indicated Inferred |
1.9 0.4 0.3 |
– – – |
226 99 62 |
0.18 0.06 0.03 |
– – – |
13.8 1.4 0.7 |
3.4 0.3 0.1 |
| Total Resource | 2.7 | – | 185 | 0.14 | – | 15.8 | 3.8 |
Mt Carlton Ore Reserve at 15 December 2010
| Category | Tonnes (Mt) |
Au (g/t) |
Ag (g/t) |
Cu (%) |
Au (Moz) |
Ag (Moz) |
Cu (kt) |
|---|---|---|---|---|---|---|---|
| V2 Pit | |||||||
| Proved Probable |
5.2 4.1 |
2.90 2.51 |
36 23 |
0.40 0.26 |
0.48 0.33 |
6.0 3.0 |
21 11 |
| Total Reserve | 9.3 | 2.73 | 30 | 0.34 | 0.81 | 9.0 | 31 |
| A39 Pit | |||||||
| Proved | 0.47 | – | 553 | 0.64 | – | 8.3 | 3 |
| Probable | 0.0003 | – | 352 | 0.41 | – | 0.004 | 0 |
| Total Reserve | 0.47 | – | 552 | 0.64 | – | 8.3 | 3 |
In AMC’s opinion, the Mt Carlton Mineral Resource and Ore Reserve estimates have been prepared using appropriate methods by a Competent Person, and have been classified and reported in accordance with the JORC Code.
Key Observations
-
Conquest proposes mining the V2 and A39 deposits by conventional open pit methods using a mining contractor. AMC believe the mining and support equipment proposed is appropriate for the degree of selectivity required to mine the pits.
-
Conquest’s scheduling strategy is to commission the mill using V2 ore, then campaign A39 ore through the mill until it is exhausted approximately 10 months later, then change back to 100% V2 feed.
-
Conquest proposes to produce a bulk pyrite concentrate containing gold, silver, and copper values. The processing flowsheet includes primary crushing, semi-autogenous grinding (SAG), flotation and concentrate filtering. It is proposed that concentrate will be bagged, transported from site and exported. An ore processing rate of 800 ktpa is envisaged.
-
Marketing efforts have resulted in a sales agreement for V2 material. Payment for gold and other metals in concentrate reduces if the concentrate gold grade falls below 40 g/t.
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Maintaining concentrate grades above 40 g/t Au will therefore be important to the success of the project.
- The project has been approved by the Queensland Department of Environment and Resource Management (DERM) to advance under an Environmental Management Plan (EM Plan). An EM Plan was prepared and submitted to DERM in May 2011. A significant proportion of the waste rock generated by the mine will be potentially acid forming (PAF). The EM Plan recommends that this material be encapsulated within a waste rock storage facility as quickly as possible after being mined.
Mt Carlton Modelling Scenarios
AMC has prepared two modelling scenarios for Mt Carlton. The scenarios are based on the production and cost schedule prepared by Conquest as part of the DFSOS. Although Conquest does not report gold grades for the A39 deposit, AMC has attributed value to the contained gold, based on grades advised by Conquest.
The Case 1 production plan is based on the December 2010 ore reserve. As there are no inferred resource blocks within the pit design or advanced exploration projects that are likely to provide additional tonnages at a high level of certainty, therefore no non-reserve material has been included in Case 1.
The Case 2 production plan includes additional tonnages, based on mining depth extensions to both V2 and A39 deposits identified during the pit optimisation process. In addition to the incremental tonnages within the enlarged pit shells, AMC has added 0.8 Mt at the same grade as the V2 pit extension to the Case 2 mining inventory, on the basis of reasonable expectation for exploration success.
Grades within the V2 and A39 deposits decrease with depth, and AMC considers it reasonable to assume that there is limited potential for underground mining at either deposit.
The mining inventories used in both cases are shown in the following table.
Case 1 and Case 2 Mining Inventories for Mount Carlton
| Source | Case 1 | Case 1 | Case 2 | Case 2 | ||||
|---|---|---|---|---|---|---|---|---|
| Tonnes (Mt) |
Au (g/t) |
Ag (g/t) |
Cu (%) |
Tonnes (Mt) |
Au (g/t) |
Ag (g/t) |
Cu (%) |
|
| Ore reserves – V2 Non-reserve material – V2 |
9.27 – |
2.73 – |
30 – |
0.34 – |
9.27 3.30 |
2.73 1.51 |
30 25 |
0.34 0.39 |
| Total Inventory – V2 | 9.27 | 2.73 | 30 | 0.34 | 12.57 | 2.41 | 29 | 0.35 |
| Ore reserve – A39 Non-reserve material – A39 |
0.47 – |
0.15 – |
553 – |
0.64 – |
0.47 0.38 |
0.15 0.15 |
553 404 |
0.64 0.26 |
| Total Inventory – A39 | 0.47 | 0.15 | 553 | 0.64 | 0.85 | 0.15 | 486 | 0.47 |
AMC applied an average gold recovery of 86% in both cases. The recovery is based on mineral processing test work and reflects a feed grade of 2.73 g/t Au (average grade of the V2 deposit) and a 50 g/t Au concentrate grade to avoid incurring concentrate penalties. Average silver recoveries of 91% and 90.2% have been used for the V2 and A39 deposits respectively. Copper recoveries of approximately 95% have been applied to both deposits.
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AMC has adjusted the costs estimated in the DFSOS to reflect AMC’s assessment that some costs have been underestimated. The adjustments apply to both cases.
A cost of $0.35/t (approximately 8%) has been added to mining costs to cover AMC’s expectation of higher labour costs and to allow for additional peripheral mining costs not included in the original estimate.
A cost equating to $2.13/t processed has been added to the processing costs to cover AMC’s expectation of higher labour costs.
General and administration costs have been increased by $0.76/t processed.
Project capital costs have been increased by $1M for the purchase of an on-stream analyser.
Sustaining capital costs have been increased to 2% of the ore processing and administration costs.
Closure costs have been increased from $5.6M to $17.6M as AMC considers the original estimate is too low to cover the costs of rehabilitating the site, considering the quantities of PAF material produced by mining.
EXPLORATION PROJECTS
Most of the exploration projects valued by AMC are largely at a pre-mineral resource stage and methods for valuing such projects are subjective. AMC’s approach is to use as many methods as are relevant to a particular project, and to choose from the indicated values a range which it considers appropriate. Limited, if any, use is made of share market indicators given the volatility of markets for speculative exploration. The values accordingly are Technical Values as defined by the Valmin Code[3] .
The methods considered by AMC include:
-
The past expenditure method.
-
Actual transactions for the project being reviewed or, more frequently, recent comparable transactions applicable to projects considered to have similarities with that under review.
-
Yardstick values derived from comparable transactions, where there are mineral resources or mineralisation potential that can be reasonably quantified.
Exploration Values
AMC assessed the exploration assets of Catalpa, Conquest and Newcrest relevant to this proposed transaction, specifically:
-
Catalpa’s exploration assets associated with the Edna May mine.
-
Conquest’s exploration assets associated with the Pajingo mine, the Mt Carlton project and the Twin Hills project.
-
Conquest’s North Queensland regional exploration assets.
3 Code for the Technical Assessment and Valuation of Mineral and Petroleum Assets and Securities for Independent Expert Reports, The VALMIN Code 2005 Edition, Prepared by The VALMIN Committee, a joint committee of the Australasian Institute of Mining and Metallurgy, the Australian Institute of Geoscientists and the Mineral industry Consultants Association with the participation of the Australian Securities and Investment Commission, the Australian Stock Exchange Limited, the Minerals Council of Australia, the Petroleum Exploration Society of Australia, the Securities Association of Australia and representatives from the Australian finance sector.
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- Newcrest’s exploration assets associated with the Mt Rawdon and Cracow mines.
To avoid double counting, AMC has not valued exploration targets or mineralisation that has been included in its modelling scenarios provided to Grant Samuel.
The exploration properties covered by this valuation are owned by three different companies and AMC elected to use a similar approach to ensure consistency and relativity between the assets. To do this, AMC assessed the valuation methods appropriate to each asset and generated a Yardstick Value, represented in dollars per square kilometre, to estimate the exploration value of each asset. These values generally range from less than $500 per km[2] for exploration properties in greenfields areas, or areas deemed to have relatively low prospectivity, to values up to $10,000 per km[2] for exploration properties deemed to have relatively high prospectivity.
The various exploration projects together with the value ranges assigned to them are summarised in the following table. AMC’s preferred values are the rounded average of the ranges shown. AMC values the overall exploration projects at $19.35M.
Summary of Exploration Values
| Summary Exploration Valuations ($M) | Low | Preferred | High |
|---|---|---|---|
| Edna May Pajingo Mt Rawdon Cracow Mt Carlton Twin Hills North QLD Regional Exploration |
$1.71 $3.15 $0.68 $2.28 $2.20 $2.04 $0.44 |
$3.00 $4.10 $1.70 $3.15 $3.30 $2.80 $1.30 |
$4.28 $5.04 $2.72 $3.99 $4.40 $3.58 $2.20 |
| Total | $12.50 | $19.35 | $26.20 |
Yours sincerely
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M Dorricott FAusIMM (CP) Principal Mining Engineer
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M Thomas
MAusIMM (CP)
Director
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Deloitte Touche Tohmatsu ABN 74 490 121 060
Woodside Plaza Level 14 240 St Georges Terrace Perth WA 6000 GPO Box A46 Perth WA 6837 Australia
Private & Confidential
DX: 206 Tel: +61 (0) 8 9365 7000 Fax: +61 (8) 9365 7001 www.deloitte.com.au
The Directors Catalpa Resources Limited Level 1, 9 Havelock Street West Perth, WA 6005
The Directors Conquest Mining Limited Suite 7, 282 Oxford Street Bondi Junction, NSW 2022
12 September 2011
Dear Directors
Investigating Accountants’ Report on Historical and Pro Forma Financial Information
We have prepared this Investigating Accountants’ Report (the Report ) on certain historical and pro forma financial information in respect of Catalpa Resources Limited and its controlled entities ( Catalpa ) and Conquest Mining Limited and its controlled entities ( Conquest ) and certain assets of Newcrest Mining Limited ( Newcrest ) as discussed below, for inclusion in:
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the scheme booklet ( Scheme Booklet ) to be issued by Conquest in connection with the proposed acquisition of Conquest by Catalpa via scheme of arrangement ( Scheme ); and
-
the explanatory memorandum ( EM ) to be issued by Catalpa in connection with the proposed acquisition by Catalpa of Newcrest’s 70% interest in the Cracow Project and 100% interest in the Mt Rawdon Project (the Newcrest Assets ) in exchange for shares in Catalpa (the Asset Purchase and Share Issue respectively).
It is intended that shortly following implementation of the Scheme and completion of the Asset Purchase and Share Issue, Catalpa will conduct a pro rata renounceable entitlement offer to raise approximately $150 million (before issue costs) (the Rights Offer ). The Scheme, Asset Purchase, Share Issue and Rights Offer together constitute the Transaction .
Expressions defined in the Scheme Booklet and the EM have the same meaning in this Report.
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/au/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited
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CONquEST MINING LIMITED
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Page 2
Scope
You have requested Deloitte Touche Tohmatsu to prepare this Report covering the following financial information:
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(i) Summary consolidated statement of financial position for each of Catalpa, Conquest, and the Newcrest Assets as at 31 December 2010 as set out in Section 6.8 of the Scheme Booklet and in Section 7.9 of the EM (the Historical Financial Information ); and
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(ii) Summary pro forma consolidated statement of financial position of Catalpa (post-acquisition of Conquest, and the Newcrest Assets) as at 31 December 2010 including all pro forma adjustments described in Section 6.8 (d) of the Scheme Booklet and Section 7.9(d) of the EM (the Pro Forma Consolidated Statement of Financial Position ).
(Collectively the Historical and Pro Forma Financial Information )
The Historical Financial Information set out in Section 6.8 of the Scheme Booklet and Section 7.9 of the EM has been extracted from the reviewed half-year financial statements of Catalpa and Conquest and unaudited management accounts pertaining to the Newcrest Assets. The half-year financial statements were reviewed by Deloitte Touche Tohmatsu and KPMG respectively who issued unqualified review conclusions on them. The Newcrest Assets are held by subsidiaries of Newcrest Mining Limited which was reviewed to a group materiality level by Ernst & Young. The Pro Forma Consolidated Statement of Financial Position incorporates such pro forma transactions and adjustments as the Directors of Catalpa and Conquest considered necessary to present the Pro Forma Consolidated Statement of Financial Position on a basis consistent with the financial position of the combined entity after the Transaction.
This Report has been prepared for inclusion in the Scheme Booklet and the EM. We disclaim any assumption of responsibility for any reliance on this Report or on the Historical and Pro Forma Financial Information to which this Report relates for any purpose other than that for which it was prepared.
The directors of Catalpa and Conquest are jointly responsible for the preparation of the Historical and Pro Forma Financial Information including the determination of the pro forma adjustments, except that the directors of Catalpa are responsible for the information regarding Catalpa, the directors of Conquest are responsible for the information regarding Conquest and the directors of Newcrest are responsible for the information regarding the Newcrest Assets provided to Catalpa and Conquest to prepare the Historical and Pro Forma Financial Information.
The Historical and Pro Forma Financial Information is presented in summarised form in that it does not include all of the disclosures required by Australian Accounting Standards applicable to annual financial reports prepared in accordance with the Corporations Act 2001.
Scope of review of Historical and Pro Forma Financial Information
We have conducted our review of the Historical and Pro Forma Financial Information in accordance with Australian Standard on Review Engagements ASRE 2405 “Review of Historical Financial Information Other than a Financial Report”. We made such inquiries and performed such procedures as we, in our professional judgement, considered reasonable in the circumstances including:
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A review of work papers, accounting records and other documentation;
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A review of the pro forma adjustments made to the Historical Financial Information;
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A review of the assumptions (which include the pro forma adjustments) used to compile the Pro Forma Consolidated Statement of Financial Position;
SCHEME BOOKLET 175
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A comparison of consistency in application of the recognition and measurement principles under the Australian Accounting Standards and the accounting policies adopted by Catalpa; and
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Enquiry of directors, management and others.
These procedures do not provide all the evidence that would be required in an audit, thus the level of assurance provided is less than given in an audit. We have not performed an audit and, accordingly, we do not express an audit opinion on the Historical and Pro Forma Financial Information.
Review Statement on Historical and Pro Forma Financial Information
Based on our review, which is not an audit, nothing has come to our attention which causes us to believe that the Historical and Pro Forma Financial Information as set out in Section 6.8 of the Scheme Booklet and Section 7.9 of the EM is not presented fairly in accordance with the basis of preparation as disclosed in Section 6.8(b) of the Scheme Booklet and Section 7.9(b) of the EM, including the pro forma adjustments described in Section 6.8(d) of the Scheme Booklet and Section 7.9(d) of the EM, and the accounting policies adopted by Catalpa as disclosed in the Catalpa consolidated financial statements for the year ended 30 June 2010.
Subsequent events
Apart from the matters dealt with in this Report, and having regard for the scope of our Report, nothing has come to our attention that would cause us to believe that matters arising after 31 December 2010, other than as dealt with in this Report, would require comment on, or adjustment to, the information referred to in our Report, or that would cause such information to be misleading or deceptive.
Independence and disclosure of interest
Deloitte Touche Tohmatsu does not have any interest in the outcome of the Transaction other than the preparation of this Report for which normal professional fees will be received. Deloitte is the independent auditor of Catalpa.
Yours faithfully
DELOITTE TOUCHE TOHMATSU
Chris Nicoloff
Partner Chartered Accountants
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attachment c - Scheme of arrangement
Scheme of arrangement
Conquest Mining Limited
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SCHEME BOOKLET 177
Contents
Table of contents
| 1 | Definitions, interpretation and scheme components 1 |
Definitions, interpretation and scheme components 1 |
|---|---|---|
| 1.1 | Definitions ..................................................................................................................1 | |
| 1.2 | Interpretation..............................................................................................................1 | |
| 1.3 | Scheme components .................................................................................................1 | |
| 2 | Preliminary matters 1 |
|
| 3 | Conditions 2 |
|
| 4 | Implementation of this Scheme 2 |
|
| 5 | Scheme Consideration 3 |
|
| 5.1 | Provision of Scheme Consideration...........................................................................3 | |
| 5.2 | Joint holders...............................................................................................................3 | |
| 5.3 | Ineligible Foreign Shareholders.................................................................................3 | |
| 5.4 | Fractional entitlements and splitting ..........................................................................5 | |
| 5.5 | Unclaimed monies .....................................................................................................5 | |
| 5.6 | Orders of a court........................................................................................................6 | |
| 5.7 | Status of New Catalpa Shares...................................................................................6 | |
| 6 | Dealings in Conquest Shares 6 |
|
| 6.1 | Determination of Scheme Shareholders....................................................................6 | |
| 6.2 | Share Register...........................................................................................................7 | |
| 7 | Quotation of Conquest Shares 7 |
|
| 8 | General Scheme provisions 8 |
|
| 8.1 | Consent to amendments to this Scheme...................................................................8 | |
| 8.2 | Scheme Shareholders’ agreements and warranties..................................................8 | |
| 8.3 | Title to and rights in Scheme Shares.........................................................................8 | |
| 8.4 | Appointment of sole proxy .........................................................................................8 | |
| 8.5 | Authority given to Conquest.......................................................................................9 | |
| 8.6 | Instructions and elections ..........................................................................................9 | |
| 8.7 | Binding effect of Scheme.........................................................................................10 | |
| 9 | General 10 |
|
| 9.1 | Stamp duty...............................................................................................................10 | |
| 9.2 | Consent....................................................................................................................10 | |
| 9.3 | Notices.....................................................................................................................10 | |
| 9.4 | Governing law..........................................................................................................10 | |
| 9.5 | Further action...........................................................................................................11 | |
| 9.6 | No liability when acting in good faith........................................................................11 | |
| Definitions and interpretation 12 |
||
| Deed | Poll |
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attachment c - Scheme of arrangement contInueD
Scheme of arrangement
This scheme of arrangement is made under section 411 of the Corporations Act 2001 (Cth)
Between the parties
Conquest Mining Limited ACN 009 232 277 of 282 Oxford Street, Bondi Junction, 2022 ( Conquest )
Each Conquest Shareholder
1 Definitions, interpretation and scheme components
1.1 Definitions
Schedule 1 contains definitions used in this Scheme.
1.2 Interpretation
Schedule 1 contains interpretation rules for this Scheme.
1.3 Scheme components
This Scheme includes any schedule to it.
2 Preliminary matters
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(a) Conquest is a public company limited by shares, registered in Western Australia, Australia and has been admitted to the official list of the ASX. Conquest Shares are quoted for trading on ASX.
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(b) As at 14 June 2011, 583,241,478 Conquest Shares were on issue.
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(c) Catalpa is a listed public company limited by shares incorporated in Western Australia, Australia.
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(d) If this Scheme becomes Effective:
SCHEME BOOKLET 179
-
(1) Catalpa will provide or procure the provision of the Scheme Consideration to Scheme Shareholders in accordance with this Scheme and the Deed Poll; and
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(2) all the Scheme Shares, and all the rights and entitlements attaching to them as at the Implementation Date, will be transferred to Catalpa and Conquest will enter the name of Catalpa in the Share Register in respect of the Scheme Shares.
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(e) Conquest, Catalpa and Newcrest have agreed, by executing the Transaction Implementation Deed, to implement a transaction which involves, as one of its steps, the acquisition by Catalpa of all the Scheme Shares for the Scheme Consideration under this Scheme.
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(f) This Scheme attributes actions to Catalpa but does not itself impose an obligation on it to perform those actions. Catalpa has agreed, by executing the Deed Poll, to perform the actions attributed to it under this Scheme, including providing or procuring the provision of the Scheme Consideration to the Scheme Shareholders.
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3 Conditions This Scheme is conditional on, and will have no force or effect until, the satisfaction of each of the following conditions precedent:
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(a) all the conditions in clause 3 of the Transaction Implementation Deed (other than the condition relating to Court approval of this Scheme) having been satisfied or waived in accordance with the terms of the Transaction Implementation Deed by 8.00am on the Second Court Date;
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(b) neither the Transaction Implementation Deed nor the Deed Poll having been terminated in accordance with their terms before 8.00am on the Second Court Date;
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(c) approval of this Scheme by the Court under section 411(4)(b) of the Corporations Act, including with any alterations made or required by the Court under section 411(6) of the Corporations Act as are acceptable to Catalpa, Conquest and Newcrest;
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(d) such other conditions made or required by the Court under section 411(6) of the Corporations Act in relation to this Scheme as are acceptable to Catalpa, Conquest and Newcrest having been satisfied; and
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(e) the orders of the Court made under section 411(4)(b) (and, if applicable, section 411(6)) of the Corporations Act approving this Scheme coming into effect pursuant to section 411(10) of the Corporations Act on or before the End Date (or any later date Conquest, Catalpa and Newcrest agree in writing).
-
4 Implementation of this Scheme
| 4 | Implementation of this Scheme |
|---|---|
| On the Implementation Date: | |
| (a) | subject to the provision of the Scheme Consideration in the manner contemplated by |
| clause 5, the Scheme Shares, together with all rights and entitlements attaching to the | |
| Scheme Shares as at the Implementation Date, will be transferred to Catalpa, without the |
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need for any further act by any Scheme Shareholder (other than acts performed by Conquest as attorney and agent for Scheme Shareholders under clause 8.5), by:
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(1) Conquest delivering to Catalpa a duly completed Scheme Transfer duly executed by it (as transferor) on behalf of the Scheme Shareholders; and
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(2) Catalpa duly executing the Scheme Transfer (as transferee), attending to the stamping of the Scheme Transfer (if required) and delivering it to Conquest for registration; and
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(b) immediately following receipt of the Scheme Transfer in accordance with clause 4(a)(2), Conquest must enter, or procure the entry of, the name of Catalpa in the Share Register in respect of all the Scheme Shares transferred to Catalpa in accordance with this Scheme.
5 Scheme Consideration
5.1 Provision of Scheme Consideration
Catalpa must, subject to clauses 5.2, 5.3 and 5.4:
-
(a) on the Implementation Date, issue to the Scheme Shareholders the New Catalpa Shares to which they are entitled under this clause 5 and procure that their names and Registered Addresses are entered in the Catalpa Register in respect of the New Catalpa Shares issued to them; and
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(b) procure that on or before the date that is two Business Days after the Implementation Date, a share certificate or holding statement (or equivalent document) is sent to the Registered Address of each Scheme Shareholder representing the number of New Catalpa Shares issued to the Scheme Shareholder pursuant to this Scheme.
5.2 Joint holders
In the case of Scheme Shares held in joint names:
(a) the New Catalpa Shares to be issued under this Scheme must be issued to and registered in the names of the joint holders;
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(b) any cheque required to be sent under this Scheme will be made payable to the joint holders and sent to the holder whose name appears first in the Share Register as at the Scheme Record Date; and
-
(c) any other document required to be sent under this Scheme will be forwarded to the holder whose name appears first in the Share Register as at the Scheme Record Date.
5.3 Ineligible Foreign Shareholders
- (a) Catalpa will be under no obligation to issue, and will not issue, any New Catalpa Shares under this Scheme to an Ineligible Foreign Shareholder and instead:
SCHEME BOOKLET 181
-
(1) subject to clause 5.4, Catalpa must, on the Implementation Date, issue the New Catalpa Shares which would otherwise be required to be issued to the Ineligible Foreign Shareholders under this Scheme (had they been Scheme Shareholders who are not Ineligible Foreign Shareholders ( Eligible Shareholders )) to the Sale Agent;
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(2) Catalpa must procure that, as soon as reasonably practicable after the Implementation Date, the Sale Agent, in consultation with Catalpa, sells or procures the sale (including on an aggregate or partially aggregate basis), in the ordinary course of trading on ASX, of all the New Catalpa Shares issued to the Sale Agent and remits to Catalpa the proceeds of the sale (after deduction of any applicable brokerage, stamp duty and other costs, taxes and charges) ( Proceeds );
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(3) promptly after receiving the Proceeds in respect of the sale of all of the New Catalpa Shares referred to in clause 5.3(a)(1), Catalpa must pay, or procure the payment, to each Ineligible Foreign Shareholder, of the amount calculated in accordance with the following formula and rounded down to the nearest cent:
-
A = (B ÷ C) x D
where
- A = the amount to be paid to the Ineligible Foreign Shareholder;
B = the number of New Catalpa Shares that would otherwise have been issued to that Ineligible Foreign Shareholder (had the Ineligible Foreign Shareholder been an Eligible Shareholder) and which are issued to the Sale Agent;
- C = the total number of New Catalpa Shares which would otherwise have been issued to all Ineligible Foreign Shareholders (had they been Eligible Shareholders) and which are issued to the Sale Agent; and
D = the Proceeds (as defined in clause 5.3(a)(2)).
-
(b) None of Catalpa, Conquest, Newcrest or the Sale Agent gives any assurance as to the price that will be achieved for the sale of New Catalpa Shares described in clause 5.3(a)(2). The sale of the New Catalpa Shares under this clause 5.3 will be at the risk of the Ineligible Foreign Shareholders.
-
(c) Catalpa must make payments to Ineligible Foreign Shareholders under clause 5.3(a) by either (in the absolute discretion of Catalpa):
-
(1) where an Ineligible Foreign Shareholder has, before the Scheme Record Date, made a valid election in accordance with the requirements of the Conquest Registry to receive dividend payments from Conquest by electronic funds transfer to a bank account nominated by the Ineligible Foreign Shareholder, paying, or procuring the payment of, the relevant amount in Australian currency to that account by electronic funds transfer; or
-
(2) whether or not the Ineligible Foreign Shareholder has made an election referred to in clause 5.3(c)(1), dispatching, or procuring the dispatch of, a cheque for the relevant amount in Australian currency to the Ineligible Foreign Shareholder by prepaid post to their Registered Address (as at the Scheme Record Date), such cheque being drawn in the name of the Ineligible Foreign Shareholder (or in the case of joint holders, in accordance with clause 5.2(b)).
-
(d) If Catalpa receives professional advice that any withholding or other tax is required by law to be withheld from a payment to an Ineligible Foreign Shareholder, Catalpa is entitled to withhold the relevant amount before making the payment to the Ineligible Foreign
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Shareholder and payment of the reduced amount shall be taken to be full payment for the purposes of this Scheme (including clause 5.3(a)(3)). Catalpa must pay any amount so withheld to the relevant taxation authorities within the time permitted by law, and, if requested in writing by the relevant Ineligible Foreign Shareholder, must provide a receipt or other appropriate evidence of such payment (or procure the provision of such receipt or such evidence) to the relevant Ineligible Foreign Shareholder.
-
(e) Each Ineligible Foreign Shareholder appoints Catalpa as its agent to receive on its behalf any financial services guide or other notices (including any updates of those documents) that the Sale Agent is required to provide to Ineligible Foreign Shareholders under the Corporations Act.
-
(f) Payment of the amount calculated in accordance with clause 5.3(a)(3) to an Ineligible Foreign Shareholder in accordance with this clause 5.3 satisfies in full the Ineligible Foreign Shareholder’s right to Scheme Consideration.
5.4 Fractional entitlements and splitting
-
(a) Where the calculation of the number of New Catalpa Shares to be issued to a particular Scheme Shareholder would result in the issue of a fraction of a New Catalpa Share:
-
(1) any fractional entitlement which is 0.5 or greater will be rounded up to the nearest whole number of New Catalpa Shares; and
-
(2) any fractional which is less than 0.5 will be rounded down to the nearest whole number of New Catalpa Shares.
-
(b) If Catalpa, Conquest and Newcrest are of the opinion that two or more Scheme Shareholders, each of which holds a holding of Conquest Shares which results in a fractional entitlement to New Catalpa Shares, have, before the Scheme Record Date, been party to a shareholding splitting or division in an attempt to obtain an advantage by reference to the rounding provided for in the calculation of each Scheme Shareholder’s entitlement to the Scheme Consideration, Conquest will, if agreed between itself, Catalpa and Newcrest, give notice to those Scheme Shareholders:
-
(1) setting out the names and Registered Addresses of all of them;
-
(2) stating that opinion; and
-
(3) attributing to one of them specifically identified in the notice the Conquest Shares held by all of them,
and, after the notice has been so given, the Scheme Shareholder specifically identified in the notice shall, for the purposes of this Scheme, be taken to hold all those Conquest Shares and each of the other Scheme Shareholders whose names are set out in the notice shall, for the purposes of this Scheme, be taken to hold no Conquest Shares.
5.5 Unclaimed monies
-
(a) Catalpa may cancel a cheque issued under this clause 5 if the cheque:
-
(1) is returned to Catalpa; or
-
(2) has not been presented for payment within six months after the date on which the cheque was sent.
SCHEME BOOKLET 183
| (b) | During the period of one year commencing on the Implementation Date, on request from |
|---|---|
| a Scheme Shareholder, Catalpa must reissue a cheque that was previously cancelled | |
| under this clause 5.5. | |
| 5.6 | Orders of a court |
| If: | |
| (a) | written notice is given to Conquest (or the Conquest Registry) or Catalpa of an order |
| made by a court of competent jurisdiction that requires payment to a third party of a sum | |
| in respect of Scheme Shares held by a particular Scheme Shareholder which would | |
| otherwise be payable to that Scheme Shareholder by Catalpa in accordance with this | |
| Scheme, then Catalpa shall be entitled to procure that payment is made in accordance | |
| with that order; or | |
| (b) | written notice is given to Conquest (or the Conquest Registry) or Catalpa of an order |
| made by a court of competent jurisdiction that prevents Catalpa from making a payment | |
| by Catalpa to any particular Scheme Shareholder in accordance with this Scheme, or | |
| such payment is otherwise prohibited by applicable law, Catalpa shall be entitled to retain | |
| an amount, in Australian dollars, equal to the number of Scheme Shares held by that | |
| Scheme Shareholder multiplied by the Scheme Consideration until such time as payment | |
| in accordance with this Scheme is permitted by that order or otherwise by law. | |
| 5.7 | Status of New Catalpa Shares |
| Subject to this Scheme becoming Effective, Catalpa must: | |
| (a) | issue the New Catalpa Shares required to be issued by it under this Scheme on terms |
| such that each such New Catalpa Share will rank equally in all respects with each | |
| existing Catalpa Share; and | |
| (b) | ensure that each such New Catalpa Share is duly and validly issued in accordance with |
| all applicable laws and Catalpa’s constitution, fully paid and free from any mortgage, | |
| charge, lien, encumbrance or other security interest. | |
| 6 | Dealings in Conquest Shares |
| 6.1 | Determination of Scheme Shareholders |
| To establish the identity of the Scheme Shareholders, dealings in Conquest Shares or | |
| other alterations to the Share Register will only be recognised if: | |
| (a) | in the case of dealings of the type to be effected using CHESS, the transferee is |
| registered in the Share Register as the holder of the relevant Conquest Shares on or | |
| before the Scheme Record Date; and | |
| (b) | in all other cases, registrable transfer or transmission applications in respect of those |
| dealings, or valid requests in respect of other alterations, are received by the Conquest | |
| Registry on or before the Scheme Record Date, | |
| and Conquest will not accept for registration, nor recognise for any purpose (except a | |
| transfer to Catalpa pursuant to this Scheme and any subsequent transfer by Catalpa or |
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its successors in title), any transfer or transmission application or other request received after the Scheme Record Date, or received prior to the Scheme Record Date but not in registrable or actionable form.
6.2 Share Register
(a) Conquest must register registrable transmission applications or transfers of the Conquest Shares in accordance with clause 6.1(b) on or before the Scheme Record Date provided that, for the avoidance of doubt, nothing in this Scheme requires Conquest to register a transfer or transmission application that would result in a Conquest Shareholder holding a parcel of Conquest Shares that is less than a ‘marketable parcel’ (as defined in the official listing rules of ASX).
(b) If this Scheme becomes Effective, a holder of Scheme Shares (and any person claiming through that holder) must not dispose of, or purport or agree to dispose of, any Scheme Shares or any interest in them after the Scheme Record Date otherwise than pursuant to this Scheme, and any attempt to do so will have no effect and Conquest shall be entitled to disregard any such disposal.
(c) For the purpose of determining entitlements to the Scheme Consideration, Conquest must maintain the Share Register in accordance with the provisions of this clause 6.2 until the Scheme Consideration has been paid to the Scheme Shareholders. The Share Register in this form will solely determine entitlements to the Scheme Consideration.
-
(d) All statements of holding for Conquest Shares (other than statements of holding in favour of Catalpa) will cease to have effect after the Scheme Record Date as documents of title in respect of those shares and, as from that date, each entry current at that date on the Share Register (other than entries on the Share Register in respect of Catalpa) will cease to have effect except as evidence of entitlement to the Scheme Consideration in respect of the Conquest Shares relating to that entry.
-
(e) As soon as possible on or after the Scheme Record Date, and in any event within one Business Day after the Scheme Record Date, Conquest will ensure that details of the names, Registered Addresses and holdings of Conquest Shares for each Scheme Shareholder as shown in the Share Register are available to Catalpa in the form Catalpa reasonably requires.
-
7 Quotation of Conquest Shares (a) Conquest will apply to ASX to suspend trading on ASX in Conquest Shares with effect from the close of trading on the Effective Date.
-
(b) On a date after the Implementation Date to be determined by Catalpa, Conquest will apply:
-
(1) for termination of the official quotation of Conquest Shares on ASX; and
-
(2) to have itself removed from the official list of ASX.
SCHEME BOOKLET 185
8 General Scheme provisions
8.1 Consent to amendments to this Scheme
If the Court proposes to approve this Scheme subject to any alterations or conditions:
(a) Conquest may by its counsel consent on behalf of all persons concerned to those alterations or conditions to which each of Catalpa and Newcrest has consented; and
| (a) | Conquest may by its counsel consent on behalf of all persons concerned to those alterations or conditions to which each of Catalpa and Newcrest has consented; and |
|---|---|
| (b) | each Scheme Shareholder agrees to any such alterations or conditions which counsel for |
| Conquest has consented to. |
| 8.2 | Scheme Shareholders’ agreements and warranties |
|---|---|
| (a) | Each Scheme Shareholder: |
-
(1) agrees to the transfer of their Conquest Shares together with all rights and entitlements attaching to those Conquest Shares in accordance with this Scheme;
-
(2) agrees to become a shareholder in Catalpa and to be bound by the constitution of Catalpa; and
-
(3) acknowledges that this Scheme binds Conquest and all Scheme Shareholders.
-
(b) Each Scheme Shareholder is taken to have warranted to Conquest and Catalpa, and appointed and authorised Conquest as its attorney and agent to warrant to Catalpa, that all their Conquest Shares (including any rights and entitlements attaching to those Conquest Shares) which are transferred under this Scheme will, at the date of transfer, be fully paid and free from all mortgages, charges, liens, encumbrances, pledges, security interests and interests of third parties of any kind, whether legal or otherwise, and restrictions on transfer of any kind, and that they have full power and capacity to transfer their Conquest Shares to Catalpa together with all rights and entitlements attaching to those Conquest Shares. Conquest undertakes that it will provide such warranty to Catalpa as agent and attorney of each Scheme Shareholder.
-
8.3 Title to and rights in Scheme Shares (a) To the extent permitted by law, the Scheme Shares transferred under this Scheme will be transferred free from all mortgages, charges, liens, encumbrances and interests of third parties of any kind, whether legal or otherwise.
-
(b) On and from the time at which this Scheme becomes Effective, and without limitation to the other parts of this Scheme or the obligations of Catalpa under the Deed Poll, Catalpa will be beneficially entitled to the Scheme Shares to be transferred to it under this Scheme pending registration by Conquest of Catalpa in the Share Register as the holder of the Scheme Shares.
-
8.4 Appointment of sole proxy
On the Implementation Date, and until Conquest registers Catalpa as the holder of all Scheme Shares in the Share Register, each Scheme Shareholder:
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(a) is deemed to have appointed Catalpa as attorney and agent (and directed Catalpa in each such capacity) to appoint any director, officer, secretary or agent nominated by Catalpa as its sole proxy and, where applicable or appropriate, corporate representative to attend Conquest Shareholders' meetings, exercise the votes attaching to the Scheme Shares registered in their name and sign any Conquest Shareholders' resolution; (b) no Scheme Shareholder may itself attend or vote at any Conquest Shareholders’ meetings or sign any Conquest Shareholders’ resolutions, whether in person, by proxy or by corporate representative (other than pursuant to clause 8.4(a)); (c) must take all other actions in the capacity of a registered holder of Scheme Shares as Catalpa reasonably directs; and
(d) acknowledges and agrees that in exercising the powers referred to in clause 8.4(a), Catalpa and any director, officer, secretary or agent nominated by Catalpa under clause 8.4(a) may act in the best interests of Catalpa as the intended registered holder of the Scheme Shares.
8.5 Authority given to Conquest Each Scheme Shareholder, without the need for any further act: (a) upon this Scheme becoming Effective, irrevocably appoints Conquest and each of its directors, officers and secretaries (jointly and each of them severally) as its attorney and agent for the purpose of enforcing the Deed Poll against Catalpa, and Conquest undertakes in favour of each Scheme Shareholder that it will enforce the Deed Poll against Catalpa on behalf of and as agent and attorney for that Scheme Shareholder; and (b) on the Implementation Date, irrevocably appoints Conquest and each of its directors, officers and secretaries (jointly and each of them severally) as its attorney and agent for the purpose of executing any document or doing any other act necessary, desirable or expedient to give effect to this Scheme and the transactions contemplated by it, including executing the Scheme Transfer, and Conquest accepts each such appointment. Conquest as attorney and agent of each Scheme Shareholder, may sub-delegate its functions, authorities or powers under this clause 8.5 to all or any of its directors, officers or employees (jointly, severally or jointly and severally). 8.6 Instructions and elections If not prohibited by law (and including where permitted or facilitated by relief granted by a Government Agency), all instructions, notifications or elections by a Scheme Shareholder to Conquest which are binding or deemed to binding as between the Scheme Shareholder and Conquest and which relate to Conquest or Conquest Shares (including any email addresses, instructions relating to communications from Conquest, whether dividends are to be paid by cheque or into a specific bank account, notices of meetings or other communications from Conquest) will be deemed from the Implementation Date (except to the extent determined otherwise by Catalpa in its sole discretion), by reason of this Scheme, to be made by the Scheme Shareholder to Catalpa and to be a binding instruction, notification or election to, and accepted by, Catalpa in respect of the New Catalpa Shares issued to that Scheme Shareholder until that instruction, notification or election is revoked or amended by that Scheme Shareholder in writing addressed to Catalpa at its registry.
SCHEME BOOKLET 187
8.7 Binding effect of Scheme
This Scheme binds Conquest and all of the Scheme Shareholders (including those who did not attend the meeting of Conquest Shareholders to vote on this Scheme ( Scheme Meeting ), did not vote at the Scheme Meeting or voted against this Scheme at that Scheme Meeting) and, to the extent of any inconsistency, overrides the constitution of Conquest.
9 General
9.1 Stamp duty
Catalpa will:
(a) pay all stamp duty and any related fines and penalties in respect of this Scheme and the Deed Poll, the performance of the Deed Poll and each transaction effected by or made under this Scheme and the Deed Poll; and
(b) indemnify each Scheme Shareholder against any liability arising from any failure to comply with clause 9.1(a).
9.2 Consent
Each of the Scheme Shareholders consents to Conquest doing all things necessary or incidental to the implementation of this Scheme.
9.3 Notices (a) If a notice, transfer, transmission application, direction or other communication referred to in this Scheme is sent by post to Conquest, it will not be taken to be received in the ordinary course of post or on a date and time other than the date and time (if any) on which it is actually received at Conquest’s registered office or at the office of the Conquest Registry. (b) The accidental omission to give notice of the Scheme Meeting or the non-receipt of such notice by a Conquest Shareholder will not, unless so ordered by the Court, invalidate the Scheme Meeting or the proceedings of the Scheme Meeting. 9.4 Governing law
- (a) This Scheme is governed by the laws in force in New South Wales, Australia.
(b) The parties irrevocably submit to the non-exclusive jurisdiction of courts exercising jurisdiction in New South Wales and courts of appeal from them in respect of any proceedings arising out of or in connection with this Scheme. The parties irrevocably waive any objection to the venue of any legal process in these courts on the basis that the process has been brought in an inconvenient forum.
188
CONquEST MINING LIMITED
attachment c - Scheme of arrangement contInueD
9.5 Further action
Conquest must do all things and execute all documents necessary to give full effect to this Scheme and the transactions contemplated by it.
9.6 No liability when acting in good faith
None of Conquest, Catalpa or any of their respective related bodies corporate, directors, officers or secretaries (or any of the directors, officers or secretaries of their respective related bodies corporate), will be liable for anything done or omitted to be done in the performance of this Scheme or the Deed Poll in good faith.
For the avoidance of doubt, neither Newcrest, nor any of its related bodies corporate, directors, officers or secretaries (or any of the directors, officers or secretaries of Newcrest’s related bodies corporate), will be liable for anything done or omitted to be done in connection with this Scheme or the Deed Poll.
189
SCHEME BOOKLET
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Schedule 1
Definitions and interpretation
1 Definitions
The meanings of the terms used in this Scheme are set out below.
| Term | Meaning |
| ASIC | the Australian Securities and Investments Commission. |
| ASX | ASX Limited ABN 98 008 624 691 and, where the context requires, the financial market that it operates. |
| Business Day | any day that banks are open for business in each of Perth, Melbourne and Sydney. |
| Catalpa | Catalpa Resources Limited ACN 084 669 036 of 9 Havelock Street, West Perth, 6005. |
| Catalpa Register | the register of members of Catalpa maintained in accordance with the Corporations Act. |
| CHESS | the Clearing House Electronic Subregister System operated by ASX Settlement Pty Limited ACN 008 504 532 and ASX Clear Pty Limited ACN 001 314 503. |
| Conquest | Conquest Mining Limited ACN 009 232 277 of 282 Oxford Street, Bondi Junction, 2022. |
| Conquest Registry | Link Market Services Limited ACN 083 214 537. |
190
CONquEST MINING LIMITED
attachment c - Scheme of arrangement contInueD
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Schedule 1 Definitions and interpretation
| Term | Meaning |
| Conquest Share | a fully paid ordinary share in Conquest. |
| Conquest Shareholder | a person who is registered in the Share Register as the holder of a Conquest Share. |
| Corporations Act | the_Corporations Act 2001_(Cth). |
| Court | the Federal Court of Australia or such other court of competent jurisdiction under the Corporations Act agreed to in writing by Catalpa, Conquest and Newcrest. |
| Deed Poll | the deed poll substantially in the form of Attachment 1 under which Catalpa covenants in favour of the Scheme Shareholders to perform the obligations contemplated of it under this Scheme. |
| Effective | when used in relation to this Scheme, the coming into effect, under section 411(10) of the Corporations Act, of the Court order made under section 411(4)(b) of the Corporations Act in relation to this Scheme. |
| Effective Date | the date on which this Scheme becomes Effective. |
| End Date | 30 November 2011. |
| Government Agency | any foreign or Australian government or governmental, semi-governmental, administrative, fiscal or judicial body, department, commission, authority, tribunal, agency or entity, or any minister of the Crown in right of the Commonwealth of Australia or any state, or any other federal, state, provincial, local or other government, whether foreign or Australian. |
| Implementation Date | the fifth Business Day after the Scheme Record Date, or such other day as Conquest, Catalpa and Newcrest agree. |
| Ineligible Foreign Shareholder |
a Scheme Shareholder whose address shown in the Share Register is a place outside Australia and its external territories or New Zealand and other jurisdictions agreed in writing between Conquest, Catalpa and Newcrest. |
| New Catalpa Share | a fully paid ordinary share in Catalpa to be issued to Scheme Shareholders under this Scheme. |
SCHEME BOOKLET 191
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Schedule 1 Definitions and interpretation
| Term | Meaning |
| Newcrest | Newcrest Mining Limited ACN 005 683 625. |
| Registered Address | in relation to a Conquest Shareholder, the address shown in the Share Register as at the Scheme Record Date. |
| Sale Agent | a person appointed by Catalpa after consultation with Conquest to sell the New Catalpa Shares that are attributable to Ineligible Foreign Shareholders under the terms of this Scheme. |
| Scheme | this scheme of arrangement subject to any alterations or conditions made or required by the Court under section 411(6) of the Corporations Act and agreed to by Conquest, Catalpa and Newcrest. |
| Scheme Consideration | for each Conquest Share held by a Scheme Shareholder as at the Scheme Record Date, 0.3 New Catalpa Shares,subject to the terms of this Scheme. |
| Scheme Record Date | 5.00pm on the fifth Business Day after the Effective Date. |
| Scheme Shares | Conquest Share held by a Scheme Shareholder as at the Scheme Record Date. |
| Scheme Shareholder | Conquest Shareholders as at the Scheme Record Date. |
| Scheme Transfer | a proper instrument of transfer in respect of the Scheme Shares for the purposes of section 1071B of the Corporations Act. |
| Second Court Date | the first day on which an application made to the Court for an order under section 411(4)(b) of the Corporations Act approving this Scheme is heard. |
| Share Register | the register of members of Conquest maintained in accordance with the Corporations Act. |
| Transaction Implementation Deed |
the transaction implementation deed dated [insert date] between Conquest, Catalpa and Newcrest relating to, amongst other things, the implementation of this Scheme. |
192
CONquEST MINING LIMITED
attachment c - Scheme of arrangement contInueD
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Schedule 1 Definitions and interpretation
2 Interpretation
In this Scheme:
-
(a) headings and bold type are for convenience only and do not affect the interpretation of this Scheme;
-
(b) the singular includes the plural and the plural includes the singular;
-
(c) words of any gender include all genders;
-
(d) other parts of speech and grammatical forms of a word or phrase defined in this Scheme have a corresponding meaning;
-
(e) a reference to a person includes any company, partnership, joint venture, association, corporation or other body corporate and any Government Agency as well as an individual;
-
(f) a reference to a clause, party, part, schedule, attachment or exhibit is a reference to a clause or part of, and a party, schedule, attachment or exhibit to, this Scheme;
| (f) | a reference to a clause, party, part, schedule, attachment or exhibit is a reference to a clause or part of, and a party, schedule, attachment or exhibit to, this Scheme; |
|---|---|
| (g) | a reference to any legislation includes all delegated legislation made under it and |
| amendments, consolidations, replacements or re enactments of any of them; | |
| (h) | a reference to a document (including this Scheme) includes all amendments or |
| supplements to, or replacements or novations of, that document; | |
| (i) | a reference to ‘$’, ‘A$’ or ‘dollar’ is to Australian currency unless denominated otherwise; |
| (j) | a reference to any time is a reference to that time in Sydney; |
| (k) | a term defined in or for the purposes of the Corporations Act has the same meaning |
| when used in this Scheme; | |
| (l) | a reference to a party to a document includes that party’s successors and permitted |
| assignees; | |
| (m) | no provision of this Scheme will be construed adversely to a party because that party was |
| responsible for the preparation of this Scheme or that provision; | |
| (n) | any agreement, representation, warranty or indemnity by two or more parties (including |
| where two or more persons are included in the same defined term) binds them jointly and | |
| severally; | |
| (o) | any agreement, representation, warranty or indemnity in favour of two or more parties |
| (including where two or more persons are included in the same defined term) is for the | |
| benefit of them jointly and severally; and | |
| (p) | a reference to a body, other than a party to this Scheme (including an institute, |
| association or authority), whether statutory or not: | |
| (1) which ceases to exist; or |
|
| (2) whose powers or functions are transferred to another body, |
|
| is a reference to the body which replaces it or which substantially succeeds to its powers | |
| or functions. |
193
SCHEME BOOKLET
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Schedule 1 Definitions and interpretation
3 Interpretation of inclusive expressions
Specifying anything in this Scheme after the words ’include’ or ‘for example’ or similar expressions does not limit what else is included.
4 Business Day
Where the day on or by which any thing is to be done is not a Business Day, that thing must be done on or by the next Business Day.
194
CONquEST MINING LIMITED
attachment D - DeeD poll
Deed poll
Catalpa Resources Limited
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QV.1 Building 250 St Georges Terrace Perth WA 6000 Australia GPO Box U1942 Perth WA 6845 Australia Sydney Melbourne Perth Brisbane Singapore
Telephone +61 8 9211 7777 Facsimile +61 8 9211 7878 www.freehills.com DX 104 Perth
Correspondent offices in Hanoi Ho Chi Minh City Jakarta
SCHEME BOOKLET 195
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Contents
Table of contents
| 1 | Definitions and interpretation 1 |
Definitions and interpretation 1 |
|---|---|---|
| 1.1 | Definitions ..................................................................................................................1 | |
| 1.2 | Interpretation..............................................................................................................2 | |
| 1.3 | Nature of deed poll.....................................................................................................2 | |
| 2 | Conditions to obligations 2 |
|
| 2.1 | Conditions..................................................................................................................2 | |
| 2.2 | Termination................................................................................................................2 | |
| 2.3 | Consequences of termination....................................................................................2 | |
| 3 | Scheme obligations 2 |
|
| 3.1 | Undertaking to issue Scheme Consideration ............................................................2 | |
| 3.2 | Shares to rank equally...............................................................................................3 | |
| 4 | Warranties 3 |
|
| 5 | Continuing obligations 3 |
|
| 6 | Notices 3 |
|
| 6.1 | Form of Notice ...........................................................................................................3 | |
| 6.2 | How Notice must be given and when Notice is received...........................................4 | |
| 6.3 | Notice must not be given by email or other electronic communication .....................4 | |
| 7 | General 4 |
|
| 7.1 | Stamp duty.................................................................................................................4 | |
| 7.2 | Governing law and jurisdiction...................................................................................5 | |
| 7.3 | Waiver........................................................................................................................5 | |
| 7.4 | Variation.....................................................................................................................5 | |
| 7.5 | Cumulative rights .......................................................................................................5 | |
| 7.6 | Assignment ................................................................................................................6 | |
| 7.7 | Further action.............................................................................................................6 | |
| Scheme 7 |
||
| Signing page 8 |
196
CONquEST MINING LIMITED
attachment D - DeeD poll contInueD
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Deed poll
Date ► [ insert date ]
This deed poll is made
| By | Catalpa Resources Limited |
|---|---|
| ACN 084 669 036 of 9 Havelock Street, West Perth, 6005 | |
| (Catalpa) | |
| in favour of | each person registered as a holder of fully paid ordinary shares in |
| Conquest Mining Limited ACN 009 232 277 (Conquest) in the Share | |
| Register as at the Scheme Record Date. | |
| Recitals | 1 Conquest, Catalpa and Newcrest entered into the Implementation |
| Deed. | |
| 2 In the Implementation Deed, Catalpa agreed to enter into this |
|
| deed poll. | |
| 3 Catalpa is entering into this deed poll for the purpose of |
|
| covenanting in favour of the Scheme Shareholders to perform the | |
| obligations contemplated of it under the Scheme. |
This deed poll provides as follows:
1 Definitions and interpretation
1.1 Definitions
(a) The meanings of the terms used in this deed poll are set out below.
| Term | Meaning |
|---|---|
| Implementation Deed | the transaction implementation deed dated[insert date]between |
| Conquest, Catalpa and Newcrest, relating to, amongst other things, | |
| the implementation of the Scheme. | |
| Scheme | the proposed scheme of arrangement under Part 5.1 of the |
| Corporations Act between Conquest and the Scheme Shareholders, | |
| the form of which is set out in Attachment 1. |
SCHEME BOOKLET 197
2 Conditions to obligations
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- (b) Unless the context otherwise requires, terms defined in the Scheme have the same meaning when used in this deed poll.
1.2 Interpretation
Section 2 of Schedule 1 of the Scheme applies to the interpretation of this deed poll, except that references to ’this Scheme’ are to be read as references to ‘this deed poll’.
1.3 Nature of deed poll
Catalpa acknowledges that:
(a) this deed poll may be relied on and enforced by any Scheme Shareholder in accordance with its terms even though the Scheme Shareholders are not party to it; and
-
(b) under the Scheme, each Scheme Shareholder irrevocably appoints Conquest and each of its directors, officers and secretaries (jointly and severally) as its agent and attorney to enforce this deed poll against Catalpa.
-
2 Conditions to obligations
2.1 Conditions
The obligations of Catalpa under this deed poll are subject to the Scheme becoming Effective.
2.2 Termination
The obligations of Catalpa under this deed poll to the Scheme Shareholders will automatically terminate and the terms of this deed poll will be of no force or effect if:
-
(a) the Implementation Deed is terminated in accordance with its terms; or
-
(b) the Scheme has not become Effective by the End Date.
2.3 Consequences of termination
If this deed poll is terminated under clause 2.2, in addition and without prejudice to any other rights, powers or remedies available to it:
- (a) Catalpa is released from its obligations to further perform this deed poll; and
(b) each Scheme Shareholder retains the rights they have against Catalpa in respect of any breach of this deed poll which occurred before it was terminated.
- 3 Scheme obligations
3.1 Undertaking to issue Scheme Consideration
Subject to clause 2, Catalpa undertakes in favour of each Scheme Shareholder to:
- (a) provide or procure the provision of the Scheme Consideration in accordance with the terms of the Scheme; and
(b) undertake all other actions attributed to or contemplated of it under the Scheme, subject to and in accordance with the provisions of the Scheme.
198
CONquEST MINING LIMITED
attachment D - DeeD poll contInueD
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4 Warranties
3.2 Shares to rank equally
Catalpa covenants in favour of each Scheme Shareholder that the New Catalpa Shares which are issued to each Scheme Shareholder in accordance with the Scheme will:
-
(a) rank equally with all existing Catalpa Shares; and
-
(b) be issued fully paid and free from any mortgage, charge, lien, encumbrance or other security interest.
4 Warranties
Catalpa represents and warrants that:
-
(a) it is a corporation validly existing under the laws of its place of registration;
-
(b) it has the corporate power to enter into and perform its obligations under this deed poll and to carry out the transactions contemplated by this deed poll;
-
(c) it has taken all necessary corporate action to authorise its entry into this deed poll and has taken or will take all necessary corporate action to authorise the performance of this deed poll and to carry out the transactions contemplated by this deed poll;
-
(d) this deed poll is valid and binding on Catalpa and enforceable against Catalpa in accordance with its terms; and
-
(e) this deed poll does not conflict with, or result in the breach of or default under, any provision of the constitution of Catalpa, or any writ, order or injunction, judgment, law, rule or regulation to which Catalpa is a party or subject or by which Catalpa is bound.
5 Continuing obligations
This deed poll is irrevocable and, subject to clause 2, remains in full force and effect until:
-
(a) Catalpa has fully performed its obligations under this deed poll; or
-
(b) the earlier termination of this deed poll under clause 2.
6 Notices
6.1 Form of Notice
A notice or other communication in respect of this deed poll ( Notice ) must be:
-
(a) in writing and in English and signed by or on behalf of the sending party; and
-
(b) addressed to Catalpa in accordance with the details set out below (or any alternative details nominated by Catalpa by Notice).
Attention Erik Palmbachs Address 9 Havelock Street West Perth WA 6005
SCHEME BOOKLET 199
7 General
+61 8 9321 8804
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Fax no
6.2 How Notice must be given and when Notice is received
- (a) A Notice must be given by one of the methods set out in the table below.
(b) A Notice is regarded as given and received at the time set out in the table below. However, if this means the Notice would be regarded as given and received outside the period between 9.00am and 5.00pm (addressee’s time) on a Business Day ( business hours period ), then the Notice will instead be regarded as given and received at the start of the following business hours period.
| Method of giving Notice | When Notice is regarded as given and received |
|---|---|
| By hand to the nominated address | When delivered to the nominated address |
| By pre-paid post to the nominated | At 9.00am (addressee’s time) on the second Business |
| address | Day after the date of posting |
| By fax to the nominated fax | At the time indicated by the sending party’s transmission |
| number | equipment as the time that the fax was sent in its |
| entirety. | |
| However, if the recipient party informs the sending party | |
| within 4 hours after that time that the fax transmission | |
| was illegible or incomplete, then the Notice will not be | |
| regarded as given or received. When calculating this | |
| 4 hour period, only time within a business hours period is | |
| to be included. |
6.3 Notice must not be given by email or other electronic communication
A Notice must not be given by email or other electronic means of communication (other than fax as permitted in clause 6.2).
7 General
7.1 Stamp duty
Catalpa:
-
(a) will pay all stamp duty and any related fines and penalties in respect of the Scheme and this deed poll, the performance of this deed poll and each transaction effected by or made under the Scheme and this deed poll; and
-
(b) indemnify each Scheme Shareholder against any liability arising from any failure to comply with clause 7.1(a).
200
Conquest MInInG LIMIteD
attachment D - DeeD poll contInueD
7 General
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7.2 Governing law and jurisdiction
(a) This deed poll is governed by the law in force in New South Wales, Australia.
(b) Catalpa irrevocably submits to the non-exclusive jurisdiction of courts exercising jurisdiction in New South Wales and courts of appeal from them in respect of any proceedings arising out of or in connection with this deed poll. Catalpa irrevocably waives any objection to the venue of any legal process in these courts on the basis that the process has been brought in an inconvenient forum.
7.3 Waiver
(a) Catalpa may not rely on the words or conduct of any Scheme Shareholder as a waiver of any right unless the waiver is in writing and signed by the Scheme Shareholder granting the waiver.
-
(b) No Scheme Shareholder may rely on words or conduct of Catalpa as a waiver of any right unless the waiver is in writing and signed by Catalpa.
-
(c) The meanings of the terms used in this clause 7.3 are set out below.
| Term | Meaning |
|---|---|
| conduct | includes delay in the exercise of a right. |
| right | any right arising under or in connection with this deed and includes the |
| right to rely on this clause 7.3. | |
| waiver | includes an election between rights and remedies, and conduct which |
| might otherwise give rise to an estoppel. |
7.4 Variation
A provision of this deed poll may not be varied unless:
(a) if before the first day on which an application is made to the Court for an order under section 411(4)(a) of the Corporations Act convening a meeting of Conquest Shareholders to vote on the Scheme ( First Court Date ), the variation is agreed to by Conquest and Newcrest; or
- (b) if on or after the First Court Date, the variation is agreed to by Conquest and Newcrest and the Court indicates that the variation would not of itself preclude approval of the Scheme,
in which event Catalpa will enter into a further deed poll in favour of the Scheme Shareholders giving effect to the variation.
7.5 Cumulative rights
The rights, powers and remedies of Catalpa and the Scheme Shareholders under this deed poll are cumulative and do not exclude any other rights, powers or remedies provided by law independently of this deed poll.
SCHEME BOOKLET 201
7 General
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7.6 Assignment
-
(a) The rights created by this deed poll are personal to each Scheme Shareholder and must not be dealt with at law or in equity without the prior written consent of Catalpa.
-
(b) Any purported dealing in contravention of clause 7.6(a) is invalid.
7.7 Further action
Catalpa must, at its own expense, do all things and execute all documents necessary to give full effect to this deed poll and the transactions contemplated by it.
202
Conquest MInInG LIMIteD
attachment e - notIce of Scheme meetIng
notice of court ordered meeting – conquest mining limited acn 009 232 277
Notice is hereby given that, by an order of the Federal Court of Australia ( court ) made on 12 September 2011 pursuant to section 411(1) of the Corporations Act 2001 (Cth) ( corporations act ), a meeting of the holders of ordinary shares in Conquest Mining Limited ( company ) will be held:
At – the Hilton Sydney, 488 George St, Sydney, NSW 2000
On – 10:00am, 14 October 2011
The Court has directed that Jake Klein or, failing him, Richard Krasnoff, acts as chairman of the meeting.
PurPose of the meeting
The purpose of the Scheme Meeting is to consider and, if thought fit, to approve (with or without modification) a scheme of arrangement proposed to be made between the Company and the holders of its fully paid ordinary shares ( scheme ).
The Scheme and the explanatory statement required by section 412 of the Corporations Act in relation to the Scheme are contained in the Scheme Booklet.
scheme resolution
“That, pursuant to and in accordance with section 411 of the Corporations Act 2001 (Cth), the proposed scheme of arrangement between the Company and the holders of its fully paid ordinary shares, the terms of which are contained and more particularly described in the scheme booklet of which this notice forms part, is approved (with or without modification as approved by the Federal Court of Australia).”
By order of the court
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evan elstein
Company Secretary 13 September 2011
203
SCHEME BOOKLET
noteS to the notIce of Scheme meetIng
eXPlanatory notes
Information on the Scheme is set out in the scheme booklet of which this notice forms part (Scheme Booklet).
These notes should be read in conjunction with the Notice of Scheme Meeting.
unless the context requires otherwise, terms used in the Notice of Scheme Meeting and in these notes have the same meaning as set out in the glossary in the Scheme Booklet.
required maJorities
In accordance with section 411(4)(a)(ii) of the Corporations Act, the Scheme Resolution must be approved by:
-
a majority in number (ie. more than 50%) of Conquest Shareholders present and voting at the Scheme Meeting (whether in person or by proxy, attorney or, in the case of a body corporate, corporate representative); and
-
at least 75% of the votes cast on the Scheme Resolution.
entitlement to vote
The Court has ordered that, for the purposes of the Scheme Meeting, the time for determining eligibility to vote at the meeting is 7.00pm AEST on 12 October 2011. Only those Conquest Shareholders entered on the Conquest Register at that time will be entitled to attend and vote at the Scheme Meeting.
Voting will be conducted by poll.
voting at the meeting
You may vote in person at the Scheme Meeting or appoint a proxy, attorney or, if you are a body corporate, a corporate representative to attend and vote on your behalf.
(a) Voting in person
To vote in person, attend the Scheme Meeting on the date and at the place set out in the Notice of Scheme Meeting.
(b) Voting by proxy
A Conquest Shareholder entitled to attend and vote at the Scheme Meeting can vote by proxy. The Scheme Proxy Form is enclosed with the Scheme Booklet.
You may appoint not more than 2 proxies to attend and act for you at the Scheme Meeting. A proxy need not be a Conquest Shareholder. If 2 proxies are appointed, each proxy may be appointed to represent a specified number or proportion of your votes. If no such number or proportion is specified, each proxy may exercise half of your votes.
If you do not instruct your proxy on how to vote, you will be taken (for all relevant purposes) to have given your proxy discretion as to how to vote and your proxy may vote as he or she sees fit at the Scheme Meeting.
Conquest Shareholders who return their Scheme Proxy Form with a direction how to vote but do not nominate the identity of their proxy will be taken to have appointed the Chair of the Scheme Meeting as their proxy to vote on their behalf. If a Scheme Proxy Form is returned but the nominated proxy does not attend the Scheme Meeting, the Chair of the Scheme Meeting will act in place of the nominated proxy and vote in accordance with any instructions.
Instructions on how to complete and lodge the Scheme Proxy Form are included on the form. Please note that the Scheme Proxy Form must be received by the Conquest Registry, whose details are listed below, by no later than 10:00 am, 12 October 2011. If you have an attorney sign a Scheme Proxy Form on your behalf, the original or a certified copy of the power of attorney or other evidence of your attorney’s authority must be received by the Conquest Registry at the same time as the Scheme Proxy Form (unless previously provided to the Conquest Registry).
A proxy will be admitted to the Scheme Meeting upon providing evidence of their name and address at the point of entry to the meeting.
Proxy appointments may be revoked by the delivery of a written revocation to Conquest’s registered office at Suite 7, 282 Oxford Street, Bondi Junction, NSW, 2022.
(c) Voting by attorney
Powers of attorney must be received by the Conquest Registry by no later than 10:00 am 12 October 2011 .
Persons attending the Scheme Meeting as an attorney should bring to the Scheme Meeting the original or certified copy of the power of attorney under which they have been authorised to attend and vote at the Scheme Meeting.
(d) Voting by corporate representative
If you are a body corporate, you can appoint a corporate representative to attend and vote at the Scheme Meeting on your behalf. The appointment must comply with section 250D of the Corporations Act.
A corporate representative should bring to the Scheme Meeting evidence of their appointment including any authority under which the document appointing them as corporate representative was signed.
(e) Jointly held securities
If Conquest Shares are jointly held, either one of the joint shareholders is entitled to vote at the Scheme Meeting. If more than one joint shareholder votes in respect of jointly held shares, only the vote of the shareholder whose name appears first in the Conquest Register will be counted.
lodgement of ProXies
There are a number of ways that the Scheme Proxy Forms may be lodged:
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method instructions
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| Sent to the Conquest Registry (using the reply paid envelope included with the Scheme Booklet), |
||
|---|---|---|
| addressed to Conquest Mining Limited, c/Link | ||
| Market Services Limited at Locked Bag A14, Sydney | ||
| South, NSW, 1235, Australia | ||
| Hand | Delivered during business hours to the Conquest | |
| delivery | Registry at Link Market Services Limited, Level 12, | |
| 680 George Street, Sydney, NSW, 2000 | ||
| Fax | Sent to +61 2 9287 0309 | |
| Online | Lodged at www.investorcentre.linkmarketservices. | |
| com.au |
An instrument appointing a proxy shall not be valid unless the original instrument and the power of attorney or other authority (if any) under which the instrument is signed, or a copy or facsimile which appears on its face to be an authentic copy of that proxy, power or authority, is or are deposited or sent by fax to the Conquest Registry by no later than 10:00 am, 12 October 2011.
Conquest Shareholders should contact the Conquest Registry on 1300 554 474 (within Australia) or +61 2 8280 7761 (outside Australia) at any time between 9.00am and 5.00pm (AEST) on Monday to Friday with any queries regarding the number of Conquest Shares they hold, how to vote at the Scheme Meeting or how to lodge the Scheme Proxy Form.
conditions
If the Scheme Resolution is approved at the Scheme Meeting by the requisite majorities, the implementation of the Scheme (with or without modification) will be subject to:
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the subsequent approval of the Court under section 411(4)(b) of the Corporations Act; and
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the satisfaction or (if applicable) waiver of all other Scheme Conditions.
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attachment f - notIce of general meetIng
notice of general meeting – conquest mining limited acn 009 232 277
Notice is hereby given that a general meeting of the holders of ordinary shares in Conquest Mining Limited ACN 009 232 277 ( company ) will be held:
At – the Hilton Sydney, 488 George St, Sydney, NSW 2000
On – 10:30am, 14 October 2011 (or immediately after the Scheme Meeting, if later)
PurPose of the meeting
The purpose of the General Meeting is to consider and, if thought fit, to approve:
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the issue of the Tranche 1 Non-dilution Rights Options for the benefit of Jake Klein ( general resolution 1 );
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the issue of the Tranche 2 Non-dilution Rights Options for the benefit of James Askew ( general resolution 2 );
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the issue of the Tranche 3 Non-dilution Rights Options for the benefit of Nicholas Curtis ( general resolution 3 );
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the cancellation of the Majority Options ( general resolution 4 ); and
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the cancellation of the Minority Options and issue of the Minority Options Consideration for the benefit of the Interested Directors ( general resolution 5 ),
(together, the general resolutions ).
Business of the meeting
General Resolution 1 “That, for the purpose of section 208 of the Corporations Act, rule 10.11 of the Listing Rules and for all other purposes, the Company issue the Tranche 1 Non-dilution Rights Options to the Trustee, to be held on behalf of Jake Klein, on the terms more particularly described in the scheme booklet of which this notice forms part.”
Voting exclusion statement
Conquest will disregard any votes cast on the resolution by:
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Jake Klein; and
-
an associate of Mr Klein.
However, a vote need not be disregarded if:
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it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the General Proxy Form; or
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it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the General Proxy Form to vote as the proxy decides.
General Resolution 2
“That, for the purpose of section 208 of the Corporations Act, rule 10.11 of the Listing Rules and for all other purposes, the Company issue the Tranche 2 Non-dilution Rights Options to the Trustee, to be held on behalf of James Askew, on the terms more particularly described in the scheme booklet of which this notice forms part.”
Voting exclusion statement
Conquest will disregard any votes cast on the resolution by:
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James Askew; and
-
an associate of Mr Askew.
However, a vote need not be disregarded if:
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it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the General Proxy Form; or
-
it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the General Proxy Form to vote as the proxy decides.
SCHEME BOOKLET 205
attachment f - notIce of general meetIng contInueD
General Resolution 3 “That, for the purpose of section 208 of the Corporations Act, rule 10.11 of the Listing Rules and for all other purposes, the Company issue the Tranche 3 Non-dilution Rights Options to the Trustee, to be held on behalf of Nicholas Curtis, on the terms more particularly described in the scheme booklet of which this notice forms part.”
Voting exclusion statement Conquest will disregard any votes cast on the resolution by:
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Nicholas Curtis; and
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• an associate of Mr Curtis.
However, a vote need not be disregarded if:
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it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the General Proxy Form; or
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• it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the General Proxy Form to vote as the proxy decides.
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General Resolution 4 “That, for the purpose of rule 6.23.2 of the Listing Rules and for all other purposes, the Company cancel the Majority Options the subject of Majority Options Offers accepted by Majority Optionholders, subject to, and in accordance with, the terms of the relevant Majority Options Offers, as more particularly described in the scheme booklet of which this notice forms part.” Voting exclusion statement
Conquest will disregard any votes cast on the resolution by:
• a person who holds a Majority Option or a person on whose behalf a Majority Option is held; and
-
an associate of a person who holds a Majority Option or an associate of a person on whose behalf a Majority Option is held.
-
However, a vote need not be disregarded if:
• it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the General Proxy Form; or • it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the General Proxy Form to vote as the proxy decides. General Resolution 5 “That, for the purpose of rules 6.23.2 and 10.11 of the Listing Rules and for all other purposes, the Company cancel the Minority Options and issue the Minority Options Consideration to the Trustee, to be held on behalf of the Interested Directors, subject to, and in accordance with, the terms of the Minority Options Offers, as more particularly described in the scheme booklet of which this notice forms part.” Voting exclusion statement Conquest will disregard any votes cast on the resolution by:
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the Interested Directors; and
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an associate of an Interested Director.
However, a vote need not be disregarded if:
-
it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the General Proxy Form; or
-
it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the General Proxy Form to vote as the proxy decides.
By order of the conquest Board
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evan elstein
Company Secretary 13 September 2011
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Conquest MInInG LIMIteD
noteS to the notIce of general meetIng
eXPlanatory notes
These notes should be read in conjunction with the Notice of General Meeting and the information in the scheme booklet of which that notice forms part ( scheme Booklet )
unless the context requires otherwise, terms used in the Notice of General Meeting and in these notes have the same meaning as set out in the glossary in the Scheme Booklet.
required maJority
Each of the General Resolutions must be approved by more than 50% of the votes cast at the General Meeting by Conquest Shareholders entitled to vote.
entitlement to vote
For the purposes of the General Meeting, Conquest has determined that the time for determining the eligibility to vote at the meeting is 7.00pm on 12 October 2011. Only those Conquest Shareholders entered on the Conquest Register at that time will be entitled to attend and vote at the General Meeting (subject to the voting exclusions in the notice).
Voting will be conducted by poll.
voting at the meeting
You may vote in person at the General Meeting or appoint a proxy, attorney or, if you are a body corporate, a corporate representative to attend and vote on your behalf.
(a) Voting in person
To vote in person, attend the General Meeting on the date and at the place set out in the Notice of General Meeting.
(b) Voting by proxy
A Conquest Shareholder entitled to attend and vote at the General Meeting can vote by proxy. The General Proxy Form is enclosed with the Scheme Booklet.
You may appoint not more than 2 proxies to attend and act for you at the General Meeting. A proxy need not be Conquest Shareholder. If 2 proxies are appointed, each proxy may be appointed to represent a specified number or proportion of your votes. If no such number or proportion is specified, each proxy may exercise half of your votes.
If you do not instruct your proxy on how to vote, you will be taken (for all relevant purposes) to have given your proxy discretion as to how to vote and your proxy may vote as he or she sees fit at the General Meeting. However, if your proxy is a member of the Key Management Personnel for the Conquest Group (or is a closely related party (as defined in the Corporations Act) of such a member), your proxy will not be entitled to vote your undirected proxy on a resolution connected directly or indirectly with the remuneration of a member of the Conquest Group Key Management Personnel, with the exception that if you appoint the Chair of the General Meeting as your proxy and expressly authorise him to exercise your undirected proxy even if the resolution is connected directly or indirectly with the remuneration of a member of the Conquest Group Key Management Personnel.
Conquest Shareholders who return their General Proxy Form with a direction how to vote but do not nominate the identity of their proxy will be taken to have appointed the Chair of the General Meeting as their proxy to vote on their behalf. If a General Proxy Form is returned but the nominated proxy does not attend the General Meeting, the Chair of the General Meeting will act in place of the nominated proxy and vote in accordance with any instructions.
Instructions on how to complete and lodge the General Proxy Form are included on the form. Please note that the General Proxy Form must be received by the Conquest Registry, whose details are listed below, by no later than 10:30 am, 12 October 2011. If you have an attorney sign a General Proxy Form on your behalf, the original or a certified copy of the power of attorney or other evidence of your attorney’s authority must be received by the Conquest Registry at the same time as the General Proxy Form (unless previously provided to the Conquest Registry).
A proxy will be admitted to the General Meeting upon providing evidence of their name and address at the point of entry to the meeting. Proxy appointments may be revoked by the delivery of a written revocation to Conquest’s registered office at Suite 7, 282 Oxford Street, Bondi Junction, NSW, 2022
(c) Voting by attorney
Powers of attorney must be received by the Conquest Registry by no later than 10:30 am, 12 October 2011.
Persons attending the General Meeting as an attorney should bring to the General Meeting the original or certified copy of the power of attorney under which they have been authorised to attend and vote at the General Meeting.
(d) Voting by corporate representative
If you are a body corporate, you can appoint a corporate representative to attend and vote at the General Meeting on your behalf. The appointment must comply with section 250D of the Corporations Act.
A corporate representative should bring to the General Meeting evidence of their appointment including any authority under which the document appointing them as corporate representative was signed.
SCHEME BOOKLET 207
noteS to the notIce of general meetIng contInueD
(e) Jointly held securities
If Conquest Shares are jointly held, either one of the joint shareholders is entitled to vote at the General Meeting. If more than one joint shareholder votes in respect of jointly held shares, only the vote of the shareholder whose name appears first in the Conquest Register will be counted.
Lodgement of proxies
There are a number of ways that the Scheme Proxy Forms may be lodged:
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----- Start of picture text -----
method instructions
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| Sent to the Conquest Registry (using the reply paid envelope included with this Scheme Booklet), | |
|---|---|
| addressed to Conquest Mining Limited c/Link Market Services Limited at Locked Bag A14, Sydney | |
| South, NSW, 1235, Australia | |
| Hand delivery | Delivered during business hours to the Conquest Registry at Link Market Services Limited, Level 12, |
| 680 George Street, Sydney, NSW, 2000 | |
| Fax | Sent to +61 2 9287 0309 |
| Online | Lodged at www.investorcentre.linkmarketservices.com.au |
An instrument appointing a proxy shall not be valid unless the original instrument and the power of attorney or other authority (if any) under which the instrument is signed, or a copy or facsimile which appears on its face to be an authentic copy of that proxy, power or authority, is or are deposited or sent by fax to the Conquest Registry by no later than 10:30 am, 12 October 2011.
Conquest Shareholders should contact the Conquest Registry on 1300 554 474 (within Australia) or +61 2 8280 7761 (outside Australia) at any time between 9.00am and 5.00pm on Monday to Friday with any queries regarding the number of Conquest Shares they hold, how to vote at the General Meeting or how to lodge the General Proxy Form.
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