ORBMINCO LIMITED — Audit Report / Information 2017

Mar 15, 2017

Level 49, 108 St George's Terrace Perth WA 6000

GPO Box E241 66 St George's Terrace Perth WA 6000 Tel 08 9463 3000

admin@wais.com.au www.wais.com.au

ABN 57 045 615 571

Our Ref: 7AUS017V:s439A report Contact: Jiin Herng Choong E-mail: jhchoong@wais.com.au

13 March 2017

CIRCULAR TO CREDITORS

Dear Sir/Madam

RE: AUSROC METALS LTD (IN LIOUIDATION) (ADMINISTRATORS APPOINTED) ACN 073 155 781 ("the Company")

I refer to the above matter and my Circular to Creditors dated 14 February 2017.

I confirm that Chris Williamson and I were appointed Joint and Several Voluntary Administrators ("the Administrators") of the Company on 10 February 2017 pursuant to section 436B of the Corporations Act 2001 ("the Act").

The first meeting of creditors of the Company was duly convened and held on Tuesday, 21 February 2017. At that meeting, creditors ratified our appointment as Administrators of the Company and a Committee of Creditors was not formed.

The second meeting of creditors of the Company has been convened for Monday, 20 March 2017 at the offices of WA Insolvency Solutions, Level 49, 108 St George's Terrace, Perth, Western Australia at 10:30 am.

A proposal for a Deed of Company Arrangement ("DOCA") has been received. It is the Administrators' opinion that it would be for the greater benefit of priority creditors and shareholders for the Company to execute a DOCA.

A resolution put to the vote at a meeting must be decided on the voices unless a poll is demanded.

Please note that should no result be reached for or against a resolution (i.e. a majority in number of creditors vote in favour but a majority in value vote against, or vice versa) then the Chairman presiding at the meeting may exercise a "casting vote" in favour of or against the resolution in accordance with regulation 5.6.21 of the Corporations Regulations.

For your information and assistance, I attach the following:

$1.$ Notice of Second Meeting of Creditors. Please note that you should arrive for registration at least fifteen (15) minutes prior to the meeting.

• $2.$ Administrators' Report, including a Statement about the Company's business, property, affairs and financial circumstances and our opinion about each of the following matters:
• whether it would be in the creditors' interests for the Company to execute a. a Deed of Company Arrangement; or

• whether it would be in the creditors' interests for the Company to be b. wound up: or
• whether it would be in the creditors' interests for the administration to c. end; or
• whether it would be in creditors' interests for the meeting to be adjourned d. for a period not exceeding forty-five (45) business days.
• 1. Remuneration Request Approval Report.
• Form 535: Formal Proof of Debt or Claim Form (only submit if you have not 4. previously lodged a claim).
• 1. Form 532: Appointment of Proxy - to be completed and returned to this office by 4:00 pm on Friday, 17 March 2017 in order that the validity of the proxy can be determined prior to the meeting. It should also be noted that if a company is the creditor then unless a proxy is provided to this office that is signed by a Director, then any person attending on behalf of that company will not be allowed to vote.

For your reference please note that in respect to the use of proxies given in favour of the Administrators in their own right or as the Chairman of the meeting:

• that general proxies should not be exercised in respect of voting on a DOCA $\overline{a}$ . proposal resolution, winding up resolution and resolutions for remuneration; and
• that special proxies (i.e. where the intention of the creditor as to the manner $h₁$ of voting is detailed) may be used in respect to voting on such resolutions.

Please take the above into account when considering the appointment of a proxy.

Should you wish to discuss this further, please contact Ms Jiin Herng Choong of my office on (08) 9463 3034.

Yours faithfully, 11 IR T

ADMINISTRATOR

Encls.

FORM 529A

CORPORATIONS ACT 2001

subregulation 5.6.12(2) section 439A

NOTICE OF SECOND MEETING OF CREDITORS OF COMPANY UNDER ADMINISTRATION

AUSROC METALS LTD (IN LIQUIDATION) (ADMINISTRATORS APPOINTED) ACN 073 155 781 ("the Company")

NOTICE is given that the second meeting of creditors of the Company will be held at the offices of WA Insolvency Solutions, Level 49, 108 St George's Terrace, Perth, Western Australia on Monday, 20 March 2017 at 10:30 am.

AGENDA

• To receive the report of the Joint and Several Voluntary Administrators. $1.$
• $2.$ Questions from creditors.
• 1. For creditors to resolve:
• that the Company execute a Deed of Company Arrangement ("DOCA"); $a_z$ or
• b. that the administration should end; or
• that the second meeting of creditors be adjourned for a period not $\mathsf{C}$ exceeding forty-five (45) business days.
• To fix the remuneration of the Joint and Several Voluntary Administrators. $4.$
• 1. If the Company is to execute a DOCA, to fix the remuneration of the Deed Administrators.
• 1. Any other business that may be lawfully brought forward.

Proxies to be used at the meeting should be lodged at the office of the Joint and Several Voluntary Administrators by 4:00 pm on Friday, 17 March 2017.

A corporate creditor can only be represented by proxy or by a representative appointed in accordance with regulations 5.6.28 to 5.6.31A of the Corporations Regulations ("the Regulations").

In accordance with regulation 5.6.23(1) of the Regulations, creditors will not be entitled to vote at this meeting unless they have previously lodged particulars of their claim against the company with the Joint and Several Voluntary Administrators.

DATED this 13th day of March 2017

D HURT

ADMINISTRATOR

WA Insolvency Solutions Level 49 108 St George's Terrace PERTH WA 6000

AUSROC METALS LTD (IN LIQUIDATION) (ADMINISTRATORS APPOINTED) ACN 073 155 781 ("the Company")

Report by Joint and Several Voluntary Administrators

Pursuant to subsection 439A(4) of the Corporations Act 2001 ("the Act")

David Ashley Norman Hurt

Christopher Michael Williamson

13 March 2017

	TABLE OF CONTENTS
1	Executive summary	5
1.1	Appointment	5
1.2	First meeting of creditors	5
1.3	Declaration of independence, relevant relationships and indemnities	5
1.4	Deed of Company Arrangement ("DOCA") Proposal	5
1.5	Options available to creditors	6
1.6	Administrators' recommendation	6
1.7	Creditors' meeting Contact details	6
1.8 1.9	Disclaimer	$\bf 6$ $\overline{7}$
$\mathbf{2}$	Introduction	8
3.	Company information	8
3.1	Company details	8
3.2	Company officers	9
3.3	Shareholders	9
3.4	Director' roles in other companies	11
3.5	Directors' shareholdings in other companies	11
3.6	Winding up applications
4	Personal Property Securities Register ("PPSR")	11
5 5.1	Company history Background	12 12
		12
5.2 5.3	Director' explanation of the Company's financial difficulties Administrators' opinion on the reasons for the Company's financial difficulties	12
6	Books and records	12
7 7.1	Historical financial information Profit and loss statements	13 13
7.2	Balance sheets	13
8	Summary of the Company's financial position	14
8,1	Sundry debtors	15
8.2	Plant and equipment	15
8.3	Other assets	15
8.4 8.5	Priority creditors Secured creditors	16 17

	TABLE OF CONTENTS
9 9.1 9.2 9.3 9.4 9.5	Priority creditors Estimated claims in DOCA and liquidation Statutory priorities Excluded employees Fair Entitlements Guarantee Scheme ("FEG") Administrators entitlements	18 18 19 19 19 19
10 10.1 10.2 10.3 10.4 10.5	Voidable transactions recoverable by a liquidator Unfair preferences Uncommercial transactions Unfair loans to company Unreasonable director-related transactions Circulating security interest within six (6) months before the relation back day	20 20 21 21 22 22
11 11.1 11.2	Duty and liability of officer of corporation Director' duties pursuant to sections 180-183 of the Act Director' duty to prevent insolvent trading	23 23 24
12	Report to ASIC	25
13 13.1 13.2	Proposal for a DOCA Key terms of the DOCA DOCA generally	26 26 27
14	DOCA / Liquidation comparison	27
15	Estimated return to creditors - DOCA	28
16	Estimated return to creditors - Liquidation	29
17	Impact on employees	29
18 18.1 18.2 18.3 18.4	Options available to creditors Entering into a DOCA The termination of the administration The Company be wound up Adjournment of the meeting	29 30 30 30 31
19	Remuneration	31

TABLE OF CONTENTS
20	Interests of creditors	31
21	Second meeting of creditors	32
22	Contact information	32

$\mathcal{L}$

1. EXECUTIVE SUMMARY

1.1 Appointment

Chris Williamson and I were appointed Joint and Several Liquidators ("the Liquidators") of the Company on 23 August 2016 pursuant to an Order of the Supreme Court of Western Australia (COR 138 of 2016).

At the meeting of creditors held on 9 February 2017, the creditors of the Company resolved to authorise the Liquidators to appoint themselves as Voluntary Administrators of the Company.

Chris Williamson and I appointed ourselves as Joint and Several Voluntary Administrators ("the Administrators") on 10 February 2017. Both the liquidation and administration of the Company are running concurrently.

1.2 First meeting of creditors

The first meeting of creditors of the Company was duly convened and held on Tuesday, 21 February 2017. At that meeting, creditors ratified our appointment as Administrators of the Company and a Committee of Creditors was not formed.

1.3 Declaration of independence, relevant relationships and indemnities

Pursuant to subsections 436DA(2) and 436DA(3) of the Corporations Act 2001 ("the Act") and the Australian Restructuring, Insolvency & Turnaround Association ("ARITA") Code of Professional Practice, a Declaration of Independence, Relevant Relationships and Indemnities ("DIRRI") was enclosed with the Circular to Creditors dated 14 February 2017.

This declaration disclosed information regarding the independence, any prior personal or professional relationships the Administrators, WA Insolvency Solutions or Jirsch Sutherland had with the Company or related parties, and any indemnities received in relation to the appointment.

There is no change to the information provided in the DIRRI dated 14 February 2017.

1.4 Deed of Company Arrangement ("DOCA") Proposal

The proponent of a recapitalisation proposal, Trident Capital Pty Ltd ("Trident"), has formulated a DOCA proposal.

Trident's DOCA proposal provides for inter alia payment of \$425,000 to the Deed Administrators' for the shell structure of the Company within 14 days of the latter of:

• execution of the DOCA; $\mathbf{o}$
• the Court prospectively approving the termination of the liquidation $\mathbf{o}$ simultaneously with the effectuation of the DOCA; and
• shareholders' approval to conduct the proposed capital raisings. $\circ$

The DOCA contemplates an estimated return to creditors of the Company as follows:

Creditor class	DOCA (cents in the \$)
Priority creditors:
- wages and SGC	55 cents in the dollar
- leave and retrenchment	Nil
Secured creditors	Nil
Ordinary unsecured creditors	Nil

It also provides for shareholders to receive shares on a 1 for 200 basis.

The principal terms and conditions of the DOCA proposal are outlined at Section 13 of the Report and the DOCA proposal is attached at Annexure A.

1.5 Options available to creditors

At the second meeting of creditors of the Company, creditors will be asked to resolve one (1) of the following courses of action, as provided for under section 439C of the Act:

• that the Company executes a DOCA: or
• that the administration should end.

The option of placing the Company into liquidation is not applicable in this instance in view of the earlier appointment of the Liquidators.

Alternatively, and pursuant to subsection 439B(2) of the Act, creditors can resolve to adjourn the meeting from time to time for a period not exceeding forty-five (45) business days.

1.6 Administrators' opinion

In view of the comments made in Sections 14 and 18 of this Report, it is my opinion that it would be for the greater benefit of priority creditors and shareholders for the Company to execute a DOCA.

1.7 Creditors' meeting

I refer you to the enclosed Notice of Second Meeting of Creditors and accompanying documentation.

The second meeting of creditors of the Company (refer Section 21 of this Report) is to be held at the offices of WA Insolvency Solutions, Level 49, 108 St George's Terrace, Perth Western Australia on Monday, 20 March 2017 at 10:30 am.

Creditors who have already lodged a proof of debt (informal or formal) do not need to complete a new proof of debt.

1.8 Contact details

Contact person:	Jiin Herng Choong	June Zhou
Contact number:	$(08)$ 9463 3034	$(08)$ 9463 3036
E-mail:	jhchoong@wais.com.au	jzhou@wais.com.au

PAGE 6

1.9 Disclaimer

In reviewing the Administrators' Report ("the Report") creditors should note the following:

• This Report is based upon our preliminary investigations to date. Any additional material issues which are identified subsequent to this Report may be the subject of a Supplementary Report and/or tabled at the forthcoming meeting of creditors.
• The statements and opinions given in this Report are given in good faith and $\bullet$ in the belief that such statements and opinions are not false or misleading. Except where otherwise stated, we reserve the right to alter any conclusions reached on the basis of any changed or additional information which may be provided to us between the date of this Report and the date of the second meeting.
• Neither the Administrators, WA Insolvency Solutions, Jirsch Sutherland nor its associates, officers, advisors or any member or employee thereof is responsible in any way whatsoever to any person for any errors in this Report arising from incorrect information provided to the Administrators and WA Insolvency Solutions.
• In considering the options available to creditors and formulating their recommendation, the Administrators have necessarily made estimates of potential recoveries and total creditors. Whilst the estimates are the result of the Administrators' best assessment in the circumstances, creditors should note that the outcome for creditors may differ materially from the information provided in this Report.

$2.$ INTRODUCTION

The first meeting of creditors of the Company was duly convened and held at the offices of WA Insolvency Solutions, Level 10, 111 St George's Terrace, Perth Western Australia on 21 February 2017. At that meeting, creditors ratified our appointment as Administrators of the Company and a Committee of Creditors was not formed.

I am required to submit to you the following:

• 1. A report as to the Company's business, property, affairs and financial circumstances;
• $2.$ A statement setting out my opinion, and the reasons for forming that opinion, on each of the following matters:
• Whether it would be in creditors' interests for the Company to execute a Deed a. of Company Arrangement ("DOCA"); or
• $b.$ Whether it would be in creditors' interests for the administration to end; or
• Whether it would be in creditors' interests for the Company to remain in $C_{1}$ liquidation: or
• d. Whether it would be in creditors' interests to adjourn the meeting for a period not exceeding forty-five (45) business days.

I hereby submit the following report and opinions as required by section 439A of the Act and regulation 5.3A,02 of the Corporations Regulations ("the Regulations").

$3.$ COMPANY INFORMATION

A review of the Australian Securities and Investments Commission's ("ASIC") database reveals the following information:

3.1 Company details

Date of Incorporation:	6 March 1996
Prior name:	Ausamerican Mining Limited
Registered office:	Suite 38, 44 Kings Park Road WEST PERTH WA 6005
Start date:	18 December 2015
Principal place of business:	Suite 38 44 Kings Park Road WEST PERTH WA 6005
Start date:	10 December 2015
Quotation:	ASX code ARK
Status of quotation:	Currently under suspension
Date of suspension:	27 November 2014
GICS Industry Group:	Materials

3.2 Company officers

Name	Position	Appointment date	Cessation date
Benjamin Warren Mead	Director	10/12/2015	N/A
("the Director")	Secretary	28/07/2016	N/A
Vinod Kumar Sharma	Former Director	10/12/2015	28/06/2016
James Lewis Michael	Former Director	10/12/2015	09/06/2016
Malone (Jim Malone)		30/07/2008	29/11/2013
	Former Secretary	02/02/2012	09/06/2016
Malengane Dumezulu Machel	Former Director	10/07/2014	10/12/2015
Peter Neil Landau	Former Director	01/08/2013	10/12/2015
Donald James Wentworth Falconer	Former Director	28/02/2011	10/07/2014
Richard Holmes	Former Director	14/03/2012	10/07/2014

3.3 Major shareholders

Shareholder	Ordinary	$%$ of
	Shares Held	total
Mr Govardhan Anthony	48,600,000	15.95
Mr Craig Astill < Caason Investments P/L A/C>	27,000,000	8.86
Celtic Capital Pty Ltd < Celtic Capital No2 A/C>	16,450,000	5.40
Peninsula Investments (WA) Pty Ltd	9,089,345	2.98
Australian Global Capital Pty Ltd	7,593,738	2.49
Citicorp Nominees Pty Limited	6,010,962	1.97
Mr Govardhan Anthony	5,400,000	1.77
HSBC Custody Nominees Limited	5,264,463	1.73
Kilkenny Enterprises P/L	4.084,684	1.34
Mr Rufaro Stephen Mupfanochiya	4,000,000	1.31
Mr Mato Veselcic & Ms Rebecca Macdonald	3,700,000	1.21
	3,534,154	1.16
Grey Nurse Pty Ltd < Glynn Jones Family A/C> Apluscpa Pty Ltd	2,800,000	0.92
		0.92
Niscal Singh	2,800,000
ABN Amro Clearing Sydney Nominees Pty Ltd	2,756,057	0.90
Percy Holdings Limited	2,550,000	0.84
Mr Nicholas Neil Peter Ord	2,500,000	0.82
Brocklebank Pty Ltd	2,400,000	0.79
Mr Larry Ashton House	2,390,000	0.78
Shearing Shed Investments Pty Ltd	2,357,662	0.77
Total	161,281,065	52.92

3.4 Directors' roles in other companies

A search of the ASIC records discloses the following associations:

Benjamin Mead (current):

Name	Role	Appointment Cessation date	date
Geopower Energy Limited*	Director	09/06/2009	N/A
	Secretary	09/06/2009	30/01/2013
Ageicion Pty Ltd	Director / Secretary	20/03/2007	N/A
*under external administration and/or Controller appointed
	PAGE 9		Jirsch Sutherland

Jim Malone (former):

Name	Role	Appointment date	Cessation date
MMNL Pty Ltd	Director	17/12/2009	N/A
	Secretary	17/12/2009	29/12/2015
Uranium King Pty Ltd	Director	07/04/2006	N/A
	Secretary	30/06/2015	N/A
Goldstation Pty Ltd	Director	06/02/2013	N/A
Mongolian Resource Corporation Ltd	Director	04/06/2013	07/07/2016

Vinod Sharma (former):

Name	Role	Appointment Cessation date	date
Satyanada Pty Ltd	Director / Secretary	02/04/2013	N/A
Belmont Wattle Pty Ltd	Director / Secretary	26/09/2016	N/A
VAS Properties (NSW) Pty Ltd	Director / Secretary	24/10/2012	N/A
Skylake Media Pty Ltd	Director	01/07/2016	N/A
Apluscpa Pty Ltd	Director / Secretary	12/10/2010	N/A
SKAR Group Pty Ltd	Director	01/04/2015	N/A

Peter Landau (former):

	Role	Appointment	Cessation
Name		date	date
Citation Resources Aus Pty Ltd	Director	07/02/2014	19/01/2016
Continental Coal Limited*	Director	13/02/2014	N/A
Doull Consolidated Pty Ltd**	Director	10/09/2010	N/A
Doull Holdings Pty Ltd	Director	18/05/2007	N/A
ICBC Capital Pty Ltd*	Director	18/11/2009	N/A
OKAP Ventures Pty Ltd	Director	29/05/2008	N/A
Becca Holdings Pty Ltd	Director	09/03/2011	03/02/2016
Becca Nominees Pty Ltd	Director	09/03/2011	03/02/2016
Black Mountain Resources Limited	Director	23/08/2011	13/04/2016
NKWE Platinum (Australia) Pty Ltd	Director /	30/03/2007	01/10/2014
	Secretary
NKWE Platinum Limited	Director	14/09/2006	01/10/2014
Range Resources Ltd	Director	08/11/2005	27/06/2014
	Secretary	02/01/2008	16/06/2009

*under external administration and/or Controller appointed **strike-off action in progress

Malengane Dumezulu Machel (former):

Name :	Role	Appointment Cessation date	date
Kaboko Mining Limited*	Director	13/02/2012	N/A
*under external administration and/or Controller appointed

3.5 Directors' shareholdings in other companies

A search of the ASIC records discloses the following shareholdings:

Benjamin Mead (current):

Company	Shares held Class
Ageicion Pty Ltd		Ordinary

Vinod Sharma (former):

Company	Shares held	Class
Satyananda Pty Ltd	1,000	Ordinary
V & V Sharma Holdings Pty Ltd		Ordinary
V & V Sharma Investments Pty Ltd		Ordinary
Australian Institute of Vedic Art and Culture Pty Ltd	12	Ordinary
Karrvi Enterprises Pty Ltd	60	Ordinary
Beimont Wattle Pty Ltd	1,000	Ordinary

Peter Landau (former):

Company	Shares held Class
ICBC Capital Pty Ltd	36	Ordinary

3.6 Winding up applications

On 25 July 2016, a former employee of the Company, Mr Simon Whybrow, filed an application to wind up the Company due to the non-payment of wages and employee entitlements.

As a result, an Order was made on 23 August 2016 by the Supreme Court of Western Australia for the Company to be wound up in insolvency.

$4.$ PERSONAL PROPERTY SECURITIES REGISTER ("PPSR")

A search of the PPSR reveals the following security interests registered against the Company as at the date of administration:

Secured party	Registration number	Registration Date
Robert Jesse Hunt	201602120033166	12/02/2016
Caason Investments Pty Ltd	201605310094784	31/05/2016

Refer to Section 8.5 of the Report for further comments.

$\overline{\mathbf{5}}$ . COMPANY HISTORY

5.1 Background

The Company operated from rented premises located at 39/44 Kings Park Road, West Perth, Western Australia. The Company's primary business activity was the exploration of minerals and development of mining tenements. The Company is listed on the Australian Stock Exchange ("ASX") with the ASX code being ARK, however it is currently under suspension.

The Company ceased to trade on or about December 2014.

5.2 Director's explanation of the Company's financial difficulty

Mr James Malone, a former Director of the Company, advises that, notwithstanding that the Company was struggling throughout 2015, he was of the view that the Company's position would improve following finalisation of the acquisition of Shenglong International Investment Limited ("Shenglong"), however it became apparent to him that the Company was in serious financial trouble in February 2016.

Mr Malone considers the circumstances leading to the winding up of the Company are:

• poor market for capital raisings of exploration companies; and $\bullet$
• the onerous terms of the Shenglong acquisition, which were ultimately unachievable.

5.3 Administrators' opinion on the reasons for the Company's financial difficulties

In addition to the above, the financial difficulties also appear to be attributable to:

• trading losses; $\bullet$
• a lack of accountability among directors and resignation of high level personnel:
• inadequate management of cash flows; and
• poor financial control and management.

BOOKS AND RECORDS 6.

Section 286 of the Act requires a company to keep written financial records that:

• correctly record and explain its transactions, financial position and performance; and
• would enable true and fair financial statements to be prepared and audited.

Failure to maintain books and records may give rise to a presumption of insolvency pursuant to section 588E of the Act. This presumption can be relied upon by a duly appointed liquidator in an application for compensation for insolvent trading and other actions for recoveries pursuant to Division 2 of Part 5.7B of the Act from related entities.

In my opinion, the books and records are adequate pursuant to section 286 of the Act.

7. HISTORICAL FINANCIAL INFORMATION

I have reviewed audited profit and loss statements and balance sheets for the financial years ended 30 June 2013 ("FY13") and 30 June 2014 ("FY14"). The profit and loss statements and balance sheets for the financial years ended 30 June 2015 ("FY15") and 30 June 2016 ("FY16") have been extracted from the Company's accounting software.

$7.1$ Profit and loss statements

Set out below is a summary of the Company's profit and loss statements for the following periods:

	FY13 Audited (5)	FY14 Audited (5)	FY15 MYOB (5)	FY16 MYOB (5)
Income	60,222	18,243	221,053
Expenses	(5,787,479)	(9,560,565)	(5,375,267)	(388,116)
Gross profit	(5,727,257)	(9, 542, 322)	(5, 154, 214)	(388, 116)
Other income	385,342	35,266	96,631
Expenses	(300,000)	-	٠	٠
Net loss	(5,641,915)	(9,507,056)	(5,057,583)	(388, 116)

$7.2$ Balance sheets

Set out below is a summary of the Company's balance sheets and working capital positions for the following periods:

	FY13 Audited (5)	FY14 Audited (5)	FY15 MYOB (5)	FY16 MYOB (s)
Current assets	228,583	357,237	82,746	19,567
Non-current assets	7,243,302	341,085	52,519	10,428,283
Total assets	7,584,039	698,321	135,265	10,447,850
Current liabilities	(315, 202)	(1,222,739)	(3,789,512)	(3,660,144)
Non-current liabilities	(771, 756)			(2,007,328)
Total liabilities	(1,086,958)	(1,222,739)	(3,789,512)	(5,667,472)
Net asset surplus / (deficiency)	6,497,081	(524, 418)	(3,654,247)	4,780,378

	FY13	FY14	FY15	FY16
	Audited	Audited	MYOB	MYOB
	(5)	(5)	(5)	(5)
Current assets	228,583	357,237	82,746	19,567
Current liabilities	(315, 202)	(1,222,739)	(3,789,512)	(3,660,144)
Working capital	(86, 619)	(865,502)	(3,706,766)	(3,640,577)
Current ratio	0.73:1	0.29:1	0.02:1	0.01:1
				$\overline{\phantom{a}}$

I make the following comments in respect of the financial statements:

• the Company incurred losses from FY13 and had a net asset deficiency from FY14, with the main contributing factor being the significant reduction of non-current assets due to impairment of exploration expenditure and deferred tax liability in FY14;
• the working capital and current ratio deteriorated significantly from FY13 to FY14 due to the significant increase of trade creditors, borrowings from a related company (being OKAP Ventures Pty Ltd ("OKAP")) and convertible notes issued:
• the high net asset surplus for FY16 is due to the recognition of loans and investments in former subsidiaries as non-current assets however, these loans and investments are not recoverable; and
• the Company relied heavily on the access to loans / advances from related parties and capital raisings to fund operations and make up for the cash flow deficiencies from FY14.

8. SUMMARY OF THE COMPANY'S FINANCIAL POSITION

Pursuant to subsection 438B(2) of the Act, the Director is required to provide to the Administrators a statement about the Company's business, property, affairs and financial circumstances ("the Statement"). However, the Statement was not required as a Report as to Affairs ("RATA") was completed by a former Director, Mr Malone, for the purpose of the liquidation. A summary of the RATA outlining the position of the Company as at 23 August 2016 together with the Administrators' estimated realisable values is as follows:

As at 23 August 2016	Report reference	RATA (5)	Estimated realisable values (4)
Assets:
Sundry debtors	8.1	50,000
Plant and equipment	8.2	1,000
Other assets	8.3		Unascertained
Total available assets		51,000	Unascertained
Liabilities:
Priority creditors	8.4	(609, 045)	(278, 551)
Secured creditors	8.5	(600, 000)	(3,478,183)
Ordinary unsecured creditors	8,6	(2,000,000)	(2,588,083)
Total liabilities		(3, 209, 045)	(6, 344, 817)
Estimated surplus / (deficiency)		(3, 158, 045)	Unascertained

I provide comments on the Statement as follows:

8.1. Sundry debtors

The sundry debtor disclosed totalling \$50,000 was in respect to a loan to a former Director, Jim Malone. My enquiries to date suggest the amount is not recoverable and arguably may be set off against the former Director's outstanding employee entitlements.

The following loans to and investments in former subsidiaries are considered not recoverable:

	(\$)
Grants Ridge Inc. - Ioan	1,826,591
AA Investments - loan	162,317
Uranium King Corporation ("UKC") - Ioan	739,375
Uranium King Ltd ("UKL")- investment	7,700,000
Total	10,428,283

The former subsidiary, Grants Ridge Inc., has not responded to correspondence regarding the loan and no contact details can be located for AA Investments and UKC. The investment in UKL is considered not recoverable as the subsidiary no longer exists.

8.2. Plant and equipment

The RATA disclosed office equipment of \$1,000. The Administrators consider the equipment has no commercial value.

8.3. Other assets

The RATA did not disclose any other assets, however I note the following:

Company shell and recapitalisation

The Liquidators of the Company received three (3) offers from parties interested in the recapitalisation of the Company shell and a preferred proposal was selected.

Please refer to Section 14 of the Report for details of the recapitalisation proposal, which is to be facilitated through a DOCA.

Mining tenements

It is understood, from enquiries undertaken and comments made by creditors and shareholders, that the Company may have an interest in the mining tenements. Enquiries conducted and review of the records available indicate that the interest in all mining tenements previously held by the Company have lapsed due to nonpayment of annual renewal fees.

A summary of the Company's interest in these mining tenements appears hereunder:

Shenglong acquisition (copper/gold project)

The transaction with Shenglong stalled due to lack of funding and failure to reach an agreement for an exclusive period to be granted in respect to the "Moubiri" mine.

Blue Bell and De Soto (copper/gold project)

The Company had an option to purchase 100% of these projects in 2016 for a fee of US \$169,000. The Company was not in a position to exercise this option at the time of the option being due.

Rio Puerco (Uranium project)

All other uranium projects were dropped during the year ended 30 June 2014.

In December 2014, 80% of the asset was sold to Western Energy Investments LLC and the proceeds of \$200,000 were received in January 2015. The remaining 20% of the asset was subsequently sold to the same owner for \$40,000 during the quarter ended 30 September 2015.

San Marcos (copper/gold project)

The Company did not renew these tenements and Pelican Resources advised the Company that they were withdrawing from the project during the quarter ended 30 September 2015.

Muda River Gold Project (Mozambique)

The Company had previously entered into a "Heads of Agreement" with Mauritius based Crown Mercantile Limited to farm into the Muda River gold project located in the Republic of Mozambique. The Company paid \$50,000 for the option to acquire 40% of the project by spending \$1.5 million. The Company also negotiated that 100% of the funds required to bring the project into production would be recovered on a priority basis before any distribution to equity holders. On achieving its initial 40% interest, the Company had first right of refusal to acquire a further 35% of the project.

However, as the main focus had been on the Shenglong acquisition since July 2014, the timing of planned production was delayed until 2015. The former Director (Jim Malone) advises that the deal did not eventuate as the Company was without funds to acquire the interest.

Victoria Project

The Company was unable to secure funding and the ore purchase agreement lapsed during the year ended 30 June 2014.

La Paz Rare Earth Elements Project

The project was dropped during the year ended 30 June 2014.

8.4. Priority creditors

Refer to Section 9 of the Report.

8.5. Secured creditors

$8.5.1$ Robert Jesse Hunt ("Hunt")

Hunt made two (2) advances to the Company:

• a first advance of \$120,000 made on 7 December 2015; and
• a second advance of \$120,000 made on 27 January 2016.

Hunt's General Security Agreement ("GSA") was created on 9 February 2016, being within the six (6) months prior to the Company's relation back date (i.e. 25 July 2016). It appears that the GSA was utilised to secure an amount of \$120,000 paid on or before the date which is two (2) business days following the signing of a Term Sheet (i.e. 27 January 2016).

The Liquidators have corresponded with Hunt regarding the above and advised that, prima facie, the security interest is potentially void against the Liquidators pursuant to section 588FJ of the Act. Hunt's solicitors have advised:

• it was agreed that the funds provided by Hunt were to be held on trust by the Company until such time as a GSA was created, hence funds were not advanced for the purposes of section 588FJ of the Act until on or after the signing of the GSA;
• accordingly, the GSA secures an advance made at or after the time of execution of GSA and is therefore not void against the Official Liquidators; and
• Hunt was advised by Mr Malone that the Company was solvent at the time the GSA was executed and such funds would not have been provided if Hunt had knowledge that the Company was insolvent.

8.5.2 Caason Investments Pty Ltd ("Caason")

Caason advanced an amount of \$350,000 to the Company in November 2014 pursuant to a Loan Facility Agreement.

Caason has provided a Certificate of Lender dated 23 May 2016 claiming the amount owing by the Company is \$2,426,145. Caason has also recently lodged an additional claim of \$803,054 in respect of default interest from 23 May 2016 to the date of liquidation, being 23 August 2016. Accordingly, the total claim is \$3,229,199. The majority of the claim is cumulative default interest at 10% per month until paid. Refer also to comments at section $10.5.$

Caason obtained an Order of the Supreme Court of Western Australia on 11 August 2016 for late registration of its security interest pursuant to section 588FM of the Act. The Order states that, in the event that a winding up of the Company commences within six (6) months of the date of registration (being 31 May 2016), the liquidator or any unsecured creditor may apply to discharge or vary the Order extending the time for registration of security interest.

Given the extent of funds available under the DOCA proposal (refer Section 13 of the Report) and the lack of funds in the administration, I have not taken any further action to determine the validity of Hunt and Caason's security interests.
PAGE 17 Sutherland

INSOLVENCY SOLUTIONS

Similarly, in the absence of any asset recoveries and funds available in the liquidation, the Liquidators do not intend to take any action in this regard.

In the event that any of the security interests are rendered void / invalid, the quantum of ordinary unsecured claim will increase.

8.6. Ordinary unsecured creditors

The RATA disclosed ordinary unsecured creditors totalling \$2,000,000. Based on formal and informal proofs of debts received to date, ordinary unsecured creditor claims (including non-priority excluded employees' claims) total \$2,588,083, as follows:

	75)
Trade	401,949
Statutory	6,289
Gorvardhan Anthony - Ioan	1,781,226
Non-priority excluded employees	398.619
Total	2,588,083

Mr Anthony is the largest unsecured creditor of the Company in respect to loan advances to fund operations and various expenses totalling at least \$1,781,226.

Mr Anthony as trustee for The Anthony Family Trust ("the Anthony Family Trust") also lodged a claim for \$60 million in respect of a corporate bond offering. I requested further and better particulars from the Anthony Family Trust, however, no substantive supporting documentation has been provided to date.

$9₁$ PRIORITY CREDITORS

9.1 Estimated claims in DOCA and liquidation

The RATA disclosed claims by employees totalling \$609,045, as follows:

Entitlements	(\$)
Wages	521,283
Leave entitlements	87.762
Total	609,045

Based on claims received and enquiries conducted to date, priority creditors' claims in both a DOCA and liquidation scenario are estimated at \$278,552 and comprise:

Entitlements	(5)
$Wages*$	198,423
Superannuation Guarantee Charge ("SGC")*	59,831
Leave entitlements	12,125
Retrenchment	8.173
Total	278,552
*capped amount for excluded employees (i.e. directors, their spouses and

children) - refer Section 9.3 of the Report.

I note that the non-priority component of the excluded employees' claims (\$398,619) ranks as an ordinary unsecured claim (subject to further adjudication of validity of claim). Refer to Section 8.6 of the Report.

9.2 Statutory priorities

The unpaid superannuation will attract the SGC as a result of non-payment by the relevant date pursuant to section 52 of the Superannuation Guarantee (Administration) Act 1992 ("the SGC Act"). The Australian Taxation Office ("ATO") is responsible for proving this debt and any distribution from the Company must be paid to the ATO, who will ultimately remit the funds to the employees' superannuation funds.

Employee entitlements are paid pursuant to subsection 556(1) of the Act in priority to ordinary unsecured creditors, firstly, for wages, superannuation and SGC; secondly, for leave of absence; and thirdly, for termination payments.

9.3 Excluded employees

The Act provides that excluded employees, which includes company directors, their spouses and children ("Excluded Employees") are each restricted to a total maximum priority claim of \$2,000 in respect to unpaid wages and superannuation (section 556(1)(A) of the Act) and \$1,500 for leave entitlements (section 556(1)(B) of the Act) and nil for PILN and redundancy.

9.4 Fair Entitlements Guarantee Scheme ("FEG")

The Australian Government through the Department of Employment ("DOE") operates the Fair Entitlement Guarantee Scheme ("FEG"), which is available to meet employees' entitlements in respect of unpaid and underpaid wages, annual leave and termination payments (i.e. redundancy and PILN), where the claims have arisen because of the company's insolvency and the company is unable to meet the liability through the liquidation process. It does not however, provide for the payment of superannuation, SGC or any claims by employees who resign or whose employment is terminated more than six (6) months prior to the date of the company's insolvency, and excluded employee claims.

As a result of the Company being placed in to liquidation on 23 August 2016 (prior to the Voluntary Administration), certain employees have lodged claims under FEG and, to date, funds totalling \$65,998 have been distributed to two (2) employees prior to the voluntary administration, as follows:

Entitlement	TS).
Wages	50,200
Leave entitlements	7,625
Retrenchment	8.173
Total	65,998

The DOE has lodged a subrogated priority claim for the amount of \$65,998 distributed to employees, which is included in the total estimated claims at Section 9.1 of the Report.

9.5 Administration entitlements

All employees have been terminated prior to the Administration (on or about December 2014) and no employees are employed by the Administrators during the period of administration. Accordingly, no employee liabilities accrue during the period of the administration.

10. VOIDABLE TRANSACTIONS RECOVERABLE BY A LIQUIDATOR

Transactions that may be voidable in respect of which money, property or other benefits might be recoverable by a liquidator under Part 5.7B of the Act include:

• Unfair preferences;
• Uncommercial transactions;
• Unfair loans to a company;
• Unreasonable director-related transactions;
• Circulating security interest created within six (6) months before the relation-back dav.

Please find enclosed a "Creditor Information Sheet: Offences, Recoverable Transactions and Insolvent Trading" prepared by the ARITA for your information.

10.1 Unfair preferences

Section 588FA of the Act provides that a transaction is an unfair preference given by the Company to one of the Company's creditors, if:

• $1)$ the Company and the creditor are parties to the transaction; and
• the transaction results in the creditor receiving, from the Company in respect $2)$ of the debt owed to the creditor, more than the creditor would have received from the Company if the creditor was to prove for the debt in the liquidation of the Company.

I have reviewed the Company's records for the six (6) months prior to the relation back day, being the day of the winding up application (i.e. 25 July 2016), for payments which may be recoverable, with the following investigations undertaken to determine whether any creditors may have received an unfair preference:

• a review of creditors' correspondence from the available books and records;
• a review of bank statements and general ledger accounts to identify periodical payments, giving indication of payment plans;
• a review of payments to creditors that were suspected as possible preferential creditors;
• a review of creditors' statements provided as part of their informal and formal proofs of debt lodged with the Liquidators; and
• a review of the Running Balance Accounts obtained through Freedom of $\bullet$ Information in regards to payments made to the ATO.

Payments totalling \$126,376 were made by the Company during the period 25 January 2016 to 25 July 2016 (relation-back day). The information / evidence available suggests that majority of payments to creditors relate to:

• part payment of employees' wages; $\bullet$
• rental expenditure; and $\bullet$
• immaterial purchases below \$1,000.

INSOLVENCY SOLUTIONS

$\mathcal{L}_{\mathcal{A}}$

A running balance account test suggests that payments totalling \$53,108 made to five (5) creditors, may, prima facie, be considered preferential and recoverable under Part 5.7B of the Act.

Further investigations may be conducted by the Liquidator to determine the existence and strength of any preference claims and the commerciality of pursuing such claims. The recovery process can be lengthy and costly and there are a number of defences available.

Given the minimal quantum of the potential preference claims against each of the five (5) creditors and that the liquidation is bereft of funds, I consider that it would not be commercially viable for a Liquidator to pursue the claims.

10.2 Uncommercial transactions

I have considered whether the Company has been a party to a transaction which may be a voidable transaction under Part 5.7B Division 2 of the Act.

To prove that a transaction is uncommercial and voidable, it will be necessary to satisfy three (3) limbs:

• that the Company was insolvent at the time of the transaction or became $1)$ insolvent as a result of the transaction;
• $2)$ that a reasonable person in the Company's circumstances would not have entered into the transaction; and
• $3)$ that the transaction occurred within two (2) years ending on the relation back day.

My investigations to date have not identified any uncommercial transactions.

10.3 Unfair loans to company

I have considered whether any loans were made to the Company which may be deemed unfair.

Section 588FD of the Act provides a loan to a company is unfair if and only if:

• $(a)$ the interest on the loan was extortionate when the loan was made, or has since become extortionate because of variation; or
• the charges in relation to the loan were extortionate when the loan was $(b)$ made, or have since become extortionate because of variation.

My preliminary review of the Company's records suggested that the loan from Caason may be deemed unfair, given the high interest on the loan (being 10% monthly compound interest until the debt was paid in full).

The factors outlined in subsection 588FD(2) have been taken into consideration in determining whether the above loan was grossly exorbitant. This provision is designed to enable avoidable of a transaction (i.e. loan to the Company) for which the consideration was excessive.

As the liquidation is bereft of funds and there is unlikely to be any return to secured creditors (i.e. Caason) in the liquidation, I consider that it is unlikely that any further action would be taken in this matter in liquidation. Jirsch Sutherland

10.4 Unreasonable director-related transactions

Pursuant to section 588FDA of the Act, a transaction is an unreasonable directorrelated transaction if:

• the transaction is a payment made by the company, a disposition of property by the company, the issue of securities by the company, or the incurring of an obligation to make a payment, disposition or issue;
• the payment is to be made to a director, a close associate of a director, or a $\bullet$ person on behalf of or for the benefit of a director or close associate; and
• it may be expected that a reasonable person in the company's circumstances $\bullet$ would not have entered into the transaction, having regard to specific matters.

Investigations to date suggest that two (2) payments totalling \$137,000 to a related company, OKAP, on 18 August 2014 and 15 January 2015 may, prima facie, be considered unreasonable director-related transactions. The Company's former director, Mr Landau, is the sole director of OKAP.

I note that a loan in the amount of \$108,180 was provided to the Company by OKAP, however, a review of the Company's MYOB records indicates that payments totalling \$137,000 were not made to OKAP in repayment of the loan. No details regarding the nature of the payments could be identified from the Company's records.

Accordingly, the payments may have been made to OKAP to the detriment of the Company when Mr Landau knew or ought to have known that the Company had financial difficulties.

The Liquidators have corresponded with OKAP in respect to the nature of the above payments. Mr Landau advises that he is currently the subject of an ASIC investigation and, thus, OKAP's assets have been frozen pursuant to an asset preservation order. Mr Landau has provided a copy of an Order of the Federal Court of Australia dated 7 December 2015 listing OKAP as a defendant.

Mr Landau has not advised as to the nature of the payments totalling \$137,000. I have requested Mr Landau provide me with financial statements for OKAP, however I am yet to receive same.

10.5 Vesting of PPSA security interests if collateral not registered within time

Pursuant to section 588FL of the Act, a PPSA security interest will vest in the company immediately before the appointment of a liquidator, administrator or deed administrator if:

• at the critical time the security interest is enforceable against third parties under the law of Australia; and
• the security interest is perfected by registration and by no other means.

The critical time is the day on which a winding up or administration is taken to have begun.

The registration time for the collateral is after the latest of the following times:

• 6 months before the critical time;
• the time that is the end of 20 business days after the security agreement $\bullet$ that gave rise to the security interest came into force, or the time that is the critical time, whichever time is earlier.

As outlined in Section 8.5.2 of the Report, the security interest registered by Caason against the Company is potentially void / invalid under section 588FL of the Act.

In the absence of any asset recoveries and funds available in the liquidation, the Liquidators do not intend to take any action in this regard.

11. DUTY AND LIABILITY OF OFFICER OF CORPORATION

11.1 Directors' duties pursuant to sections 180-183 of the Act

I have considered whether there have been any breaches by the Director and former Directors in the exercise of their duties and in the use of their positions pursuant to sections 180 - 183 of the Act.

Such duties include:

• discharging their duties with the appropriate degree of care and diligence;
• exercising their powers and duties in good faith in the best interest of the corporation and for a proper purpose; and
• not improperly using their positions to gain an advantage for themselves or someone else or to cause detriment to the corporation.

Where there have been contraventions of subsections $180(1)$ , $181(1)$ or $182(1)$ of the Act and the Court is satisfied as to certain criteria, sections 598 and 1317H of the Act enable the Court to order a person to pay the company compensation for damage suffered by the company.

Issues which may come into consideration in this regard are the failure of the Director to meet the obligations to the ATO (including the non-remittance of PAYG, GST and Income Tax) and the Office of State Revenue for payroll tax.

A liquidator would also give consideration to the payments (if any) made to any parties, to determine whether the Director or any related entities derived any benefit or advantage e.g. through payments to associates.

It appears the Director and former Directors may not have acted in the best interests of the Company and contravened sections 180, 181, and 182 of the Act in respect of the following:

• potentially failing to exercise adequate degree of care and diligence in discharging their duties as Directors by not acting in the best interests of the Company;
• potentially trading the Company and incurring further debt whilst insolvent;

• failure to take appropriate steps to stop incurring debt and the proactive approach to obtain further loans / funding from external parties despite apparent negative financial indicators and the cessation of operations;
• payments to a related party despite failure to meet the obligations to the Company's creditors; and
• non-recoverable loans made to former subsidiaries with no security obtained and at no time did the Director or former Directors expected a repayment from such parties.

Further investigations and actions by the Liquidators would be influenced by the commercial viability of any further action in this regard and would be influenced by funds available to the liquidator and the financial status of the parties involved.

11.2 Directors' duties to prevent insolvent trading

Section 588G of the Act imposes a statutory duty on the director of a company to prevent the company from trading whilst insolvent. Further, pursuant to section 588M of the Act, a director who fails to prevent a company from incurring a debt when the director is aware, or should have suspected, that the company was insolvent or would become insolvent as a result of incurring that debt, is liable for an amount equal to the loss or damage suffered.

Section 588H of the Act provides the following defences for Directors in respect of actions under sections 588G and 588M of the Act:

• 588H(2) Reasonable grounds to expect company solvent
• $588H(3)$ Reliance on other person
• 588H(4) Illness, etc
• 588H(5) Reasonable steps to prevent incurring of debt
• 588H(6) Relevant matters

In this regard, I have considered whether there are such potential actions that may exist against the Director and former Directors in respect of trading the Company whilst insolvent.

My investigations to date indicate that the Company was insolvent from 1 July 2014 and the Directors had reasonable grounds to suspect that the Company was insolvent from at least 1 July 2014.

The alleged insolvent trading claim against the respective Director and former Directors have be estimated as follows:

Director/former Director	Relevant period	Estimated insolvent trading claim (5)
Ben Mead	10/12/15 to 23/8/16	174,693
Vinod Sharma	10/12/15 to 28/6/16	174,693
Jim Malone	3/07/08 to 9/06/16	1,299,242
Peter Landau	1/08/13 to 10/12/15	916,593
Malengane Dumezulu Machel	10/07/14 to 10/12/15	886,418
Total		3,451,639

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INSOLVENCY SOLUTIONS

The Liquidators corresponded with the Director and relevant former Directors regarding the respective insolvent trading claims and note the following:

• the Director refutes the claim and has sought legal advice;
• both Mr Malone and Mr Landau refute the claim on the basis that they had reasonable grounds to believe that the Company was solvent as the Company had entered into a series of binding financing commitments from 1 July 2014;
• Mr Malone advises that in any event he does not have the financial capacity $\bullet$ to meet any alleged insolvent trading claim and that, due to a negative asset position, he is considering his options as to dealing with his financial affairs;
• Mr Landau advises that he does not have the financial capacity to meet the alleged insolvent trading claim and that, because of an ASIC investigation into his dealings, all his personal assets are subject to a freezing order. Mr Landau has provided copies of Orders of The Federal Court of Australia dated 7 December 2015 and 22 December 2015 in this regard; and
• no responses to have been received from Mr Sharma or Mr Machel.

I have requested Mr Malone and Mr Landau provide evidence of the binding financing commitments the Company had entered into from 1 July 2014 however, I am yet to receive same.

The merits of any potential insolvent trading action by the Liquidator needs to be considered in light of the Director and former Director's asset positions. The Liquidators have requested the Director and former Director provide a statement as to their personal asset and liability positions, however to date neither the Director nor former Directors have provided same.

Preliminary enguiries have identified real estate owned by Mr Landau and Mr Sharma in Western Australia. I note that the properties are subject to mortgages with financial institutions.

Further investigations may be undertaken by a liquidator to determine the extent of the assets available to meet a successful insolvent trading claim.

A liquidator considering an insolvent trading claim would also need to consider the defences available to the Director and former Directors. Furthermore, experience has shown that insolvent trading claims can be expensive and time consuming to pursue, particularly if the claim is vigorously defended by the Director and former Directors.

I note that the liquidation is without funds to further any claim against the Director and former Directors. Accordingly, it may transpire that, in the absence of any settlement offer received from the Director and former Directors, the Liquidators would require creditor or third party funding for any further action to be initiated.

12. REPORT TO ASIC

Pursuant to section 438D of the Act, an Administrator is required to complete and lodge a report with the ASIC where it appears to an administrator that a past or present officer of a company may have been guilty of an offence. I advise that a report pursuant to section 438D of the Act has been completed and lodged with the ASIC setting out the Administrators' preliminary views. Jirsch $\Box$ Sutherland

I note that the Liquidators submitted a report to the ASIC pursuant to section 533 of the Act.

The ASIC has request the both the Liquidators and the Administrators lodge supplementary reports pursuant to subsection 533(2) and subsection 438D(1) of the Act respectively.

I have corresponded with the ASIC requesting that the lodgement of the supplementary reports be held in abevance pending the outcome of the Voluntary Administration and DOCA process.

13. PROPOSAL FOR A DOCA

The proponent of the recapitalisation proposal, Trident Capital Pty Ltd ("Trident"), has formulated a DOCA proposal. A copy of the DOCA proposal is attached at Annexure A and the key terms are detailed below:

13.1 Key terms of the DOCA proposal

Trident's DOCA proposal provides for inter alia:

• payment of \$425,000 to the Deed Administrators' trust account for the shell structure of the Company within 14 days of the latter of:
• execution of the DOCA; $\circ$
• the Court prospectively approving the termination of the liquidation $\circ$ simultaneously with the effectuation of the DOCA; and
• shareholders' approval to conduct the proposed capital raisings. $\circ$
• the DOCA sum (\$425,000) will be applied by the Deed Administrators (with reference to sections 556, 560 and 561 of the Act) in the manner and order of priority as follows:
• a. to pay any liabilities properly incurred by the Liquidators, Administrators and Deed Administrators during the course of the liquidation, administration and the DOCA;
• b. to pay the Liquidators, Administrators and Deed Administrators' remuneration and out of pocket expenses in the course of them carrying out their duties;
• c. to pay any outstanding employee entitlements as at 10 February 2017;
• d. to pay secured creditors of the Company as at 10 February 2017; and
• e. to pay dividends to the ordinary unsecured creditors of the Company whose debts and claims arose on or before 10 February 2017 and are admitted to proof.
• the Administrators will engage a lawyer nominated by Trident to make application to the Court to terminate the liquidation pursuant to section 482 of the Act.

• the offer is conditional upon and subject to the following:
• the passing of all necessary shareholder, creditor and Court approvals $\Omega$ to implement the proposal:
• all secured creditors providing their written agreement to be bound by a $\circ$ reconstruction deed; and
• the parties executing a reconstruction deed to give legal effect to the $\Omega$ offer within 30 days of the date of acceptance of the offer.

If the conditions are not waived by mutual agreement or satisfied by 31 October 2017, the offer will be at an end.

• the DOCA proposal is not contingent upon the completion of any fundraisings;
• any existing Convertible Notes to prove as debt; and
• the Company is to consolidate its share capital and existing listed options on a 1 for 200 basis whereby any unlisted options or partly paid shares are to be cancelled.

13.2 DOCA generally

If creditors accept the DOCA proposal, the Deed Administrators will keep creditors informed of the progress of the DOCA, including any material contraventions as required.

14. DOCA / LIQUIDATION COMPARISON

The estimated potential return to creditors under a DOCA and a liquidation scenario is summarised as follows:

Creditor class	DOCA (cents in the $$$ )	Liquidation (cents in the $$$ )
Priority creditors:
- wages and SGC	55 cents in the dollar	Unascertained*
- leave and retrenchment	Nil	Nil
Secured creditors	Nil	Nil
Ordinary unsecured creditors	Nil	Nil

*creditor or third party funding required to pursue recovery actions (refer Section 16 of the Report). Otherwise the return is likely to be nil.

The benefit to creditors of the proposed DOCA centres on:

• the recapitalisation of the ASX listed company shell will ensure a partial return to priority unsecured creditors;
• priority creditors receive a greater return under the DOCA scenario than compared to the likely nil return in liquidation;
• an increased going concern value being attributable to the Company which will ultimately benefit all stakeholders; and
• the trading suspension being lifted by the ASX and in turn benefiting the shareholders of the Company.

Jirsch Sutherland ان . INSOLVENCY SOLUTIONS

On this basis, the DOCA achieves the objectives of the voluntary administration regime under Part 5.3A of the Act being to provide for the business, property and affairs of an insolvent company to be administered in a way that:

• maximises the chances of the company, or as much as possible of its business, a. continuing in existence; or
• b. if it is not possible for the company or its business to continue in existence, results in a better return for the company's creditor and members than would result from the winding up of the company.

In liquidation, the Company's ASX listing would be lost and the creditors and members would be adversely affected.

15. ESTIMATED RETURN TO CREDITORS - DOCA

(\$)	(\$)
DOCA sum (1)	425,000
Less: (5,000) Legal fees (estimate) ASX listing fees (25,000) Administrators' remuneration (2) (48, 950) Administrators' disbursements (incl. advertising) (3,571) Deed Administrators' remuneration (2) (35, 145) Deed Administrators' disbursements (3,000) Liquidators' remuneration (3) (149, 027) Liquidators' disbursements (11,000)
Estimated funds available for distribution	(280,693) 144,307
Estimated priority creditors – wages and $SC(4)$	(258, 254)
Estimated dividend to priority creditors $-$ wages and SGC	55 cents in \$
Funds available for priority creditors - leave and retrenchment priority $c$ reditors $-$ Less: Estimated leave and retrenchment (4)	Nil (20,298)
Funds available for secured creditors Less: Estimated secured creditors (5)	Nil (3,478,183)
Funds available for ordinary unsecured creditors Less: Estimated ordinary unsecured creditors (6)	Nil (2,588,083)
dividend Estimated to ordinary unsecured creditors	Nil

Notes:

1) Refer to comments at section 13 of the Report.

2) Subject to creditors approval. Refer to section 19 of the Report and Remuneration Request Approval Report enclosed.

3) Approved by creditors in the liquidation at a meeting of creditors held on 9 February 2017.

4) Subject to admitted claims. Refer to comments at section 9.1 of the Report.

5) Refer to comments at section 8.5 of the Report - claims as being lodged.

6) Subject to admitted claims. Refer to comments at section 8.6 of the Report.

16. ESTIMATED RETURN TO CREDITORS - LIQUIDATION

Based on the information to hand, a dividend to priority creditors from the liquidation of the Company is unlikely being dependent on the successful recovery of potential claims available to the Liquidators in respect to the alleged insolvent trading claim and unreasonable director-related transactions pursuant to Part 5.7B of the Act.

As the liquidation is bereft of funds, the initiation of recovery actions would require funding from creditors or third parties.

Given the minimal assets of the Company, the uncertainty accompanying liquidator recovery actions, the costs of the liquidation to date and the extent of priority (employee) and secured creditors, there would be no dividend distribution to ordinary unsecured creditors from the liquidation of the Company.

17. IMPACT ON EMPLOYEES

Section 556 of the Act affords employees a statutory priority in respect of outstanding entitlements. This priority is maintained in the proposed DOCA and in liquidation.

The estimated priority claims are the same under both DOCA and liquidation scenarios.

The impact on the former employees of the Company of the DOCA and liquidation is as follows:

17.1.DOCA

• priority creditors (employees) are estimated to receive a return in respect to $\bullet$ wages and SGC in the vicinity of 55 cents in the dollar.
• it is estimated that there will be no return to priority creditors (employees) in respect of leave entitlements and retrenchment.
• FEG is not available (in voluntary administration) to employees.
• refer also to Section 9 of the Report.

17.2. Liquidation

• all employee entitlements will be subject to the available funds in the $\bullet$ liquidation.
• given there are insufficient funds available to meet outstanding employee entitlements, FEG is available to meet these entitlements (excluding SGC and subject to approval by FEG).
• an amount of \$65,998 has been distributed by FEG to former employees to date.
• no funds are likely to be available in the liquidation to meet outstanding SGC.

18. OPTIONS AVAILABLE TO CREDITORS

At the meeting of creditors to be held on Monday, 20 March 2017 (refer Section 21 of this Report), creditors will be asked to resolve one (1) of the following courses of action, as provided for under sections 439B and 439C of the Act:

• that the Company execute a Deed of Company Arrangement; or
• that the administration should end; or
• that the meeting be adjourned for a period not exceeding forty-five (45) business days.

In the event the administration is to end, then the Company remains in liquidation and that process continues.

In this Report, I am required to form an opinion and recommend which course of action would be in the best interests of the creditors. My comments on each of the alternatives are as follows:

18.1 Entering into a DOCA

The DOCA proposal contemplates a greater and more certain return to priority creditors of the Company than would result from the winding up of the Company. Refer to Section 14 for a comparison of the estimated return.

The proposed DOCA meets the objectives of the voluntary administration process (refer Section 14 of the Report) including, but no limited to enhancing the value to existing shareholders.

It is my opinion that it would be for the greater benefit of priority creditors and shareholders for the Company to execute a DOCA.

18.2 The termination of the administration

As the Company is already in liquidation then the termination of the administration has no effect on the continuation of the liquidation. As indicated, there appears to be no benefit to priority creditors under this option.

This option is therefore, in my opinion, not in the best interests of creditors.

18.3 The Company be wound up

The Company is already in liquidation. Ultimately this will result in the loss of the Company's ASX listing.

As noted in Section 16 of the Report, the Liquidator has investigated the affairs of the Company and the conduct of its officers and a return to priority creditors is uncertain and dependent on the successful recovery of potential claims in respect of an alleged insolvent trading claim and unreasonable director-related transactions pursuant to Part 5.7B of the Act.

On the information available, there would arguably be no return to any class of creditors in liquidation.

The DOCA proposal would require an application be made to the Supreme Court for the termination of the liquidation pursuant to section 482 of the Act.

For the reasons outlined and in view of my comments at 18.1 above, it is not in the best interests of the priority creditors (and shareholders) for the Company to remain in liquidation.

18.4 Adjournment of the meeting

Pursuant to subregulation 5.6.18(1A) of the Regulations and subsection 439B(2) of the Act, creditors may resolve to adjourn the second meeting for a period not exceeding forty-five (45) business days from the date of the second meeting. This normally occurs if there is insufficient information available for creditors to make an informed decision on the future of the company or if there is deemed a specific purpose for this course of action.

It is my opinion that there is no reason for creditors to adjourn the meeting.

19. REMUNERATION

The Administrators' time costs for the period 10 February 2017 to 28 February 2017 total \$21,255.50 (plus GST). These costs have been calculated by reference to the relevant hourly charge out rates of WA Insolvency Solutions as determined from time to time.

I estimate a further \$27,695 (plus GST) to be incurred from 1 March 2017 to the end of the Administration.

Please refer to the attached Remuneration Request Approval Report for further including:

• tasks undertaken by the Administrators and remuneration for the period 10 February 2017 to 28 February 2017;
• the Administrators' anticipated tasks and estimated prospective remuneration for the period 1 March 2017 to the finalisation of the Administration;
• where Deed Administrators' are appointed, a schedule of the Deed Administrators' anticipated tasks and estimated prospective remuneration for the period of the administration (if applicable); and
• resolutions regarding remuneration to be put to the creditors at the second meeting of creditors convened for Monday, 20 March 2017.

20. INTERESTS OF CREDITORS

The objective of Part 5.3A of the Act is to provide for the business, property and affairs of an insolvent company to be administered in a way that:

• maximises the chances of the Company, or as much as possible of its business, $\overline{a}$ . continuing in existence; or
• b. if it is not possible for the Company or the business to continue in existence - results in a better return for the Company's creditors and members than would result from an immediate winding up of the Company.

In view of the comments made in Sections 14 and 18 of the Report and on the basis the DOCA proposal provides a better and more certain return to priority creditors than would result from the liquidation, together with giving some ongoing benefit to shareholders, it is my opinion, on a commercial basis, that it would be in the interests of creditors (and stakeholders) generally for the Company to execute a DOCA. Jirsch Sutherland

21. SECOND MEETING OF CREDITORS

I refer you to the enclosed Notice of Second Meeting of Creditors to be held on Monday, 20 March 2017 and accompanying documentation. Please ensure that you understand the contents of this report, complete the enclosed Form 532: Appointment of Proxy ("Form 532") (if applicable) and return it to this office by 4:00 pm Friday, 17 March 2017 in order that the validity of the Form 532 can be determined prior to the meeting.

A resolution put to the vote of a meeting must be decided on the voices unless a poll is demanded. In the event of a poll, please note that should no result be reached for or against a resolution (i.e. a majority in number of creditors vote in favour but a majority in value vote against, or vice versa) then the Chairman presiding at the meeting may exercise a "casting vote" in accordance with regulation 5.6.21 of the Regulations.

22. CONTACT INFORMATION

If you have any queries or require further information regarding the above matters, please contact Jiin Herng Choong or June Zhou of this office.

DATED this 13th March 2017

Administrator

Encls.

Creditor Information Sheet

Offences, Recoverable transactions and Insolvent Trading

Offences

A summary of offences that may be identified by the administrator:

Section	Offence
180	Failure by officer to exercise a reasonable degree of care and diligence in the exercise of his powers
	and the discharge of his duties.
181	Failure to act in good faith.
182	Making improper use of position as an officer or employee, to gain, directly or indirectly, an advantage.
183	Making improper use of information acquired by virtue of his position.
184	Reckless or intentional dishonesty in failing to exercise duties in good faith for proper purpose. Use of
	position or information dishonestly to gain advantage or cause detriment.
206A	Contravening an order against taking part in management of a corporation.
206A, B	Taking part in management of corporation while being an insolvent under an administration.
206A, B	Acting as a director or promoter or taking part in the management of a company within five years after
	conviction or imprisonment for various offences.
209(3)	Dishonest failure to observe requirements on making loans to directors or related companies.
254T	Paying dividends except out of profits.
286	Failure to keep proper accounting records.
312	Obstruction of auditor.
$314 - 7$	Failure to comply with requirements for financial statement preparation.
437C	Performing or exercising a function or power as officer while a company is under administration.
437D(5)	Unauthorised dealing with company's property during administration.
438B(4)	Failure by directors to assist administrator, deliver records and provide information.
438C(5)	Failure to deliver up books and records to administrator.
590	Failure to disclose property, concealed or removed property, concealed a debt due to the company,
	altered books of the company, fraudulently obtained credit on behalf of the company, material omission
	from Report as to Affairs or false representation to creditors.

Voidable Transactions

Preferences

A preference is a transaction such as a payment between the company and one or more of its creditors, in which the creditor receiving the payment is preferred over the general body of creditors. The relevant time period is six months before the commencement of the liquidation. The company must have been insolvent at the time of the transaction, or become insolvent as a result of the transaction.

Where a creditor receives a preferred payment, the payment is voidable as against a liquidator and is liable to be paid back to the liquidator subject to the creditor being able to successfully maintain any of the defences available to the creditor under either the Corporations Act.

Uncommercial Transaction

An uncommercial transaction is one that it may be expected that a reasonable person in the company's circumstances would not have entered into having regard to:

• the benefit or detriment to the company:
• the respective benefits to other parties; and
• any other relevant matter.

To be voidable, an uncommercial transaction must have occurred during the two years before the liquidation.

However, if a related entity is a party to the transaction, the time period is four years and if the intention of the transaction is to defeat creditors, the time period is ten years.

Level 5, 33 Erskine Street, Sydney NSW 2000 Australia | GPO Box 9985, Sydney NSW 2001 ARITA .
CN 002 472 362 t +61 2 9290 5700 | f +61 2 9290 2820 | e admin@arita.com.au | arita.com.au

The company must have been insolvent at the time of the transaction, or become insolvent as a result of the transaction.

Unfair Loan

A loan is unfair if and only if the interest was extortionate when the loan was made or has since become extortionate. There is no time limit on unfair loans - they only have to have been entered into any time on or before the day when the winding up began.

Arrangements to avoid employee entitlements

If an employee suffers loss because a person (including a director) enters into an arrangement or transaction to avoid the payment of employee entitlements, the liquidator or the employee may seek to recover compensation from that person. It will only be necessary to satisfy the court that there was a breach on the balance of probabilities. There is no time limit on when the transaction occurred.

Unreasonable payments to directors

Liquidators have the power to reclaim "unreasonable payments" made to directors by companies prior to liquidation. The provision relates to transactions made to, on behalf of, or for the benefit of, a director or close associate of a director. To fall within the scope of the section, the transaction must have been unreasonable, and have been entered into during the 4 years leading up to a company's liquidation, regardless of its solvency at the time the transaction occurred.

Voidable charges

Certain charges are voidable by a liquidator:

• Circulating security interest created with six months of the liquidation unless it secures a subsequent advance;
• Unregistered charges; and
• Charges in favour of related parties who attempt to enforce the charge within 6 months of its creation.

Insolvent Trading

In the following circumstances, directors may be personally liable for insolvent trading by the company:

• a person is a director at the time a company incurs a debt;
• the company is insolvent at the time of incurring the debt or becomes insolvent because of incurring the debt:
• at the time the debt was incurred, there were reasonable grounds to suspect that the company was insolvent:
• the director was aware such grounds for suspicion existed; and
• a reasonable person in a like position would have been so aware.

The law provides that the liquidator, and in certain circumstances the creditor who suffered the loss, may recover from the director, an amount equal to the loss or damage suffered. Similar provisions exist to pursue holding companies for debts incurred by their subsidiaries.

A defence is available under the law where the director can establish:

• there were reasonable grounds to expect that the company was solvent and they actually did so expect:
• they did not take part in management for illness or some other good reason; or,
• they took all reasonable steps to prevent the company incurring the debt.

The proceeds of any recovery for insolvent trading by a liquidator are available for distribution to the unsecured creditors before the secured creditors.

Important note: This information sheet contains a summary of basic information on the topic. It is not a substitute for legal advice. Some provisions of the law referred to may have important exceptions or qualifications. This document may not contain all of the information about the law or the exceptions and qualifications that are relevant to your circumstances.

Annexure A

Draft DOCA Proposal

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13 March 2017

Commercial in Confidence

Ausroc Metals Limited (In Liquidation) (Administrators Appointed) WA Insolvency Solutions Level 10, 111 St George's Terrace Perth WA 6000

Attn: Trudie Walsh

By Email to: twalsh@wais.com.au

Dear Trudie.

Ausroc Metals Limited (In Liquidation) (Administrators Appointed) ("ARK" or the "Company")

Recapitalisation Proposal

I refer to the appointment of Chris Williamson and David Hurt of WA Insolvency Solutions as Joint & Several Official Liquidators ("Liquidators") of the Company on 23 August 2016 and as Voluntary Administrators on 9 February 2017.

The purpose of this communication is to provide you with a recapitalisation proposal for the Company (Appendix A) with accompanying standard clauses (Appendix B) and supporting information as to our experience and capabilities (Appendix C).

In brief our proposal is for the shell structure of the Company, for which we propose paying a total of AU\$425,000 cash as follows, subject to certain conditions being met:

• \$425,000 payable within 14 days of the latter of:
• o execution of the DOCA;
• The Court prospectively approving the termination of the $\Omega$ Liquidation simultaneously with the effectuation of the DOCA (subject to shareholder approval, receipt of the \$425,000 and distribution of funds); and
• o Shareholder approval of all resolutions.

Trident would also be responsible for paying the legal fees incurred in making the application to Court to terminate the liquidation.

The proposal is not dependent upon the completion of any fund raisings.

$\mathbf{1}$

We look forward to moving ahead with the recapitalisation as quickly as possible. Please contact Sean McCormick or myself on (08) 6211 5099 to discuss any aspect of this proposal.

Yours faithfully,

$\hat{\mathbf{v}}$

Ŷ

Adam Sierakowski Director

١ļ١

tridentcapital www.tridentcapital.com.au
Mob 0403 322 111 Ph (61-8) 6211 5099 Fax: (61-8) 9218 8875

APPENDIX A

Trident Capital Pty Ltd (or its nominees) (the "Proponent") hereby proposes to re-capitalise the Company on the following basis.

1. DOCA

$\mathbf{h}^{\dagger}$

• Establishment of a Deed of Company Arrangement ("DOCA") $1.1$ binding all parties to the terms of this Proposal.
• An aggregate amount of \$425,000 will be made available to the $1.2.$ Administrator for the settlement of all costs associated with the Administrator to effectuate this proposal as well as all creditor claims under the DOCA.
• Any assets and subsidiaries held by the Company shall be $1.3.$ disposed of for the benefit of Administrator's Costs and Creditors.
• If the sale of the entities mentioned in 1.3 above is not achievable $1.4.$ then Trident would review further these assets to ascertain whether any of the assets were of further interest. In the absence of further interest Trident would request that these entities be liquidated or transferred to another entity that may wish to acquire these entities.

2. APPLICATION TO TERMINATE THE LIQUIDATION

• $2.1$ The Administrators will engage a lawyer nominated by Trident ("Nominated lawyer") to undertake the application to Court to terminate the liquidation.
• $2.2$ Trident will pay the legal fees incurred by the Nominated Lawyer in making an application to the Court to terminate the Liquidation.
• The Administrators must bear their own expenses incurred, if any, $2.3$ in providing information necessary for the application to Court to terminate the Liquidation to the Nominated Lawyer.

3. LISTING FEES

• $3.1$ Any outstanding ASX Listing Fees, including any ASX Listing Fees that become payable before the DOCA is effectuated are to be paid as a priority from the \$425,000 made available to the Administrators trust account.
• $3.2$ Any outstanding ASX Listing Fees, including any ASX Listing Fees that become payable before the \$425,000 is made available to the Administrators trust account shall be paid by Trident and will reduce the amount payable by Trident to the Administrators trust account by the equivalent amount.

4. EFFECTUATION OF DOCA

A total of \$425,000 will be paid to the Administrators trust account $4.1$ to effectuate the DOCA, subject to clause 3 above, as follows:

$41.1$ \$425,000 payable within 14 days of the latter of Shareholder approval of the DOCA, the Reconstruction Deed arrangements, execution of the DOCA and the Court prospectively approving the termination of the Liquidation simultaneously with the effectuation of the DOCA

5. RECAPITALISATION PROPOSAL

Capital Structure

• $5.1$ Any existing Convertible Notes to prove as debt;
• $5.2$ The Company is to consolidate its capital on a 1 for 200 basis such that the existing 304,773,963 shares (or such other number as is the actual number of shares on issue) be reconstructed to 1.523.869 shares:
• 5.3 Any existing listed options to be reconstructed on a similar basis, and any unlisted options or partly paid shares are to be cancelled.

Funding

• 5.4 The DOCA proposal is not contingent upon the completion of any fundraisings, however it is contingent upon successful Shareholder approval to conduct each of the following capital raisings ("Raisings"):
• Issue of at least 750,000 shares at \$0.02 per $5.4.1$ share to raise at least \$15,000, with securities to be issued immediately following Shareholder approval ("Promoter Raising") The Promoter Raising may be conducted by way of convertible note or share placement at Trident's discretion;

Each Promoter Raising security shall have 9 free attaching options exercisable at not less than \$0.04 in certain periods, to be defined, up until their expiry, which is to be not greater than 4 years following the date of reinstatement of the Company; and

Issue of between 25,000,000 shares and 5.4.2 37,500,000 shares at \$0.02 per share to raise between \$500,000 and \$750,000, with securities to be issued immediately following Shareholder approval ("Seed Raising"). The Seed Raising may be conducted by way of convertible note or share placement at Trident's discretion.

The Proponent will undertake these Raisings at its own expense (which it shall be entitled to be reimbursed by the Company from the proceeds of Raisings) once shareholder the Capital resolutions are passed. Prospective investors will predominantly be those introduced by the

Proponent in association with a syndicate of brokers and high net worth individuals

In aggregate \$425,000 shall be made available to the Company's $5.5$ Creditors, subject to clause 3 above.

New Board

• The Administrator must procure the resignation of all existing 5.6 directors of the Company and its subsidiaries on or before dispatch of the Notice of Meeting, or other period as requested by Trident.
• The Proponent shall procure the appointment of not less than $5.7$ three new directors to be appointed on or before dispatch of the Notice of Meeting, or other period as requested by Trident.

6. CONDITIONS PRECEDENT

The binding offer is conditional on and subject to the following:

• The passing of all necessary shareholder, creditor and Court $6.1$ approvals to implement the proposal.
• All secured creditors providing their written consent to be bound 6.2 by the reconstruction deed.
• 6.3 The parties executing a reconstruction deed to give legal effect to this binding offer within 30 days of the date of acceptance of the binding offer.

If the conditions are not waived by mutual written agreement or satisfied by 31 October 2017, this binding offer will be at an end.

7. COSTS AND EXPENSES

• The Proponent must at its own expense (which it shall be entitled $7.1$ to be reimbursed by the Company out of the proceeds of the Capital Raisings) promptly prepare or procure the following documents or approvals.
• $7.1.1$ Shareholder meeting documents to give effect to the resolutions required to undertake the proposal.
• Any ASIC lodgements or approvals. $7.1.2$
• 7.1.3 Completion of all outstanding taxation and audit requirements (subject to required information being available).
• Reconstruction Deed for $7.1.4$ DOCA and Draft consideration and execution.

The meeting resolutions are to be inter-dependent and it will be a requirement that all resolutions be approved to give effect to the proposal.

AUSROC METALS LTD (IN LIQUIDATION)(ADMINISTRATORS APPOINTED) 073 155 781 ("the Company")

Pursuant to subsection 449E of the Corporations Act 2001

Remuneration Request Approval Report

David Ashley Norman Hurt

Christopher Michael Williamson

13 March 2017

TABLE OF CONTENTS

Item	Description	Page
1.	Declaration	з
2.	Executive summary	з
З.	Remuneration methods	4
4	Explanation of method chosen	4
5	Schedule of hourly rates and general guide to staff experience	4
6	Other creditor information on remuneration	5
7	Tasks undertaken by the Administrators and remuneration for the period 10 February 2017 to 28 February 2017	5
8	Summary of the Administrators' time costs for the period 10 February 2017 to 28 February 2017	7
9	Administrators' anticipated tasks and estimated prospective remuneration for the period 1 March 2017 to the end of the Administration	8
10	Where Deed Administrators are appointed, a schedule of the Deed Administrators' anticipated tasks and estimated prospective remuneration for the period of the Deed Administration	10
11	Remuneration recoverable from external sources	12
12	Resolution regarding remuneration to be considered by creditors at the meeting of creditors convened for Monday, 20 March 2017	12
13	Administrators' disbursements	13
14	Receipts and payments	14
15	Queries	14

1. DECLARATION

The Joint and Several Voluntary Administrators ("the Administrators") propose to have our remuneration fixed by the creditors. We have undertaken a proper assessment of this remuneration claim for our appointment as Administrators of the Company, in accordance with the law and the applicable professional standards. We are satisfied that the remuneration claimed is in respect of necessary work, properly performed in the conduct of this administration.

Approvals are sought for work undertaken in the following periods:

• remuneration of the Administrators for the period 10 February 2017 to 28 February 2017:
• future remuneration of the Administrators for the period 1 March 2017 to the finalisation of the Administration: and
• Administrators' anticipated tasks and estimated Deed prospective remuneration for the period of the Deed Administration.

The Administrators' Remuneration Request Approval Report ("the Report"), prepared pursuant to subsection 449E of the Act, takes the following format and should be read in conjunction with the Circular to Creditors dated 13 March 2017.

EXECUTIVE SUMMARY $2.$

To date no remuneration has been approved or paid in this administration.

The Report details time costs sought for the following:

Voluntary Administration

Resolution Period		Notice reference	(4)
'А'	10 February 2017 to 28 February 2017	Section 7 and 8 of the Report	21,255.50
`B'	1 March 2017 to the end of the administration	Section 9 of the Report	27,695.00
Total			48,950.50
	*Subject to the addition of 10% GST.

Deed of Company Arrangement ("DOCA")

Resolution Period		Notice reference \	(4)
`С'	For the period of deed administration	Section 10 of the Report	35,145.00
Total			35,145.00
	$*$ Subject to the addition of 10% GST

Subject to the addition of 10% GST.

Approval for the future remuneration sought is based on an estimate of the work necessary to the completion of this administration. Should additional work be necessary beyond what is contemplated, further approval may be sought from creditors.

Please refer to the Report references detailed above for full details of the calculation and composition of the remuneration sought.

$3.$ REMUNERATION METHODS

There are four (4) basic methods that can be used to calculate the remuneration charged by an Insolvency Practitioner. They are disclosed below.

Method	Description
Time based / hourly rates	This is the most common method. The total fee charged is based on the hourly rate charged for each person who carried out the work multiplied by the number of hours spent by each person on each of the tasks performed.
Fixed fee	The total fee charged is normally quoted at the commencement of the administration and is the total cost for the administration. Sometimes a Practitioner will finalise a administration for a fixed fee.
Percentage	The total fee charged is based on a percentage of a particular variable, such as the gross proceeds of asset realisations.
Contingency	The Practitioner's fee is structured to be contingent on a particular outcome being achieved.

METHOD CHOSEN 4.

Given the nature of this administration, I propose that the remuneration of the Administrators be calculated on time based / hourly rates. This method is selected as it is the most practical method and provides the most transparency to creditors.

5. SCHEDULE OF HOURLY RATES AND GENERAL GUIDE TO STAFF EXPERIENCE

The Administrators will seek their remuneration on a time basis at the applicable hourly rates (exclusive of GST) of WA Insolvency Solutions.

Please refer to Annexure 'A' for the applicable schedules of hourly rates and general guide to staff experience.

Creditors who are interested in specific details of the experience of staff conducting the administration, may obtain that information from this office upon request.

OTHER CREDITOR INFORMATION ON REMUNERATION 6.

Creditors should be aware that:

• an information sheet "Approving Fees $-$ A Guide for Creditors" is available from WA Insolvency Solution's website www.wais.com.au which provides more information to assist creditors to determine whether the fees for which approval is now sought are reasonable;
• further information in relation to the basis of the proposed remuneration can also be obtained from WA Insolvency Solutions upon request;
• detailed summaries of actual time spent on the various tasks are available on $\bullet$ request;
• they have the right to review the remuneration of the Administrators by $\bullet$ application to the Supreme Court; and
• the Administrators are members of the Australian Restructuring Insolvency & Turnaround Association ("ARITA") and follow the ARITA Code of Professional Practice. A copy of the Code of Professional Practice may be found on the ARITA website at www.arita.com.au.

7. TASKS UNDERTAKEN BY THE ADMINISTRATORS AND REMUNERATION FOR THE PERIOD 10 FEBRUARY 2017 TO 28 FEBRUARY 2017

Task area	General description	Includes
Assets 0.2 hours \$63.00 \$315 per hour	Other assets	liaising with an interested party $\bullet$ regarding the Information Memorandum and the Company shell.
	PPSA - General	initial correspondence with security ٠ interest holders regarding notice of appointment; and attend to queries and matters relating $\bullet$ to security interests.
	Proofs of debt	processing / reviewing of proofs of ٠ debt received.
Creditors 23.1 hours \$9,144.50 \$396 per hour	Reports to creditors	preparation of Circular to Creditors ٠ dated 14 February 2017; commence preparation of the ۰ Administrators' report dated 13 March 2017; and commence preparation of the Circular ۰ to Creditors and associated annexures dated 13 March 2017.

Task area	General description	Includes
Creditors continued.	Meeting of creditors	convening and holding first meeting of $\bullet$ creditors on 21 February 2017; preparation of meeting notices, proxies $\bullet$ and advertisements; forwarding notice of meeting and $\bullet$ circular to all known creditors; preparation of meeting file, including $\bullet$ agenda and attendance register; preparation and lodgement of minutes $\bullet$ of first meeting of creditors; responding to creditor queries $\bullet$ regarding the meeting and completion and lodgement of proxies; and preparation of meeting notices, proxies $\bullet$ and advertisements for second meeting of creditors convened for 20 March 2017.
Employees 0.2 hours \$59.50 \$298 per hour	Employee entitlements	receive and follow up employee enquiries regarding outstanding wages.
	History and background	conducting statutory searches; and $\bullet$ prepare and review working paper $\bullet$ regarding history and background.
	Identification of assets	conduct initial motor vehicle, land ۰ titles, lost monies and other relevant searches on appointment.
Investigations	Report to ASIC	preparation and lodgement of report to $\bullet$ ASIC pursuant to section 438D of the Act.
12.5 hours \$6,465.00	Identification of assets	conduct initial motor vehicle, land ۰ titles, lost monies and other relevant searches on appointment.
\$517 per hour	Restructuring proposal	review and assess proposed DOCA $\bullet$ including discussions with proponents regarding terms of proposal, timing of DOCA execution and effectuation and application to court to terminate the liquidation; and internal meetings and discussions regarding proposed DOCA.

Task area	General description	Includes
	General administration / File maintenance	filing of matter documents; and maintenance of matter files.
Administration $14.3$ hours \$5,523.50	Quality control	undertake administration review / $\bullet$ checklist completion / tasking; preparation of file note / memo $\bullet$ regarding ongoing administration; and internal meetings to discuss ongoing $\bullet$ administration.
\$386 per hour	Statutory compliance	complying with numerous statutory requirements imposed by the Act; and preparing and lodging the relevant $\bullet$ statutory lodgements with the Australian Securities and Investments Commission ("ASIC").
Administration	Post appointment taxation compliance	notification of appointment. ۰
continued.	Officer(s) $/$ Member(s)	prepare and review notification of ٠ statutory requirements to the Director.

8. SUMMARY OF THE ADMINISTRATORS' TIME COSTS FOR THE PERIOD 10 FEBRUARY 2017 TO 28 FEBRUARY 2017 BY PERSONNEL LEVEL AND TASK

At the forthcoming meeting of creditors, I shall seek creditors' approval of the Administrators' fees for the period 10 February 2017 to 28 February 2017 in the sum of \$21,255.50 (plus GST) comprising:

Type	Total actual hours	Total (4)	Average hourly rate (4)
Assets	0.2	63.00	315
Creditors	23.1	9,144.50	396
Employees	0.2	59.50	298
Investigations	12.5	6,465.00	517
Administration	14.3	5,523.50	386
Total	50.3	21,255.50	423

*Subject to the addition of 10% GST.

Please refer to Annexure B for a summary of the Administrators' time costs for the period 10 February 2017 to 28 February 2017 by personnel level and task.

This section of the Report has been left blank intentionally.

ADMINISTRATORS' ANTICIPATED TASKS AND ESTIMATED PROSPECTIVE 9. REMUNERATION FOR THE PERIOD 1 MARCH 2017 TO THE END OF THE ADMINISTRATION

Based on the following anticipated tasks, I estimate the Administrators' remuneration for the period 1 March 2017 to the end of the administration at \$27,695 (plus GST).

Task area	General description	Includes
Assets 23.0 hours \$9,370.00 \$407 per hour	DOCA	review and assess the proposed DOCA; ٠ meetings / discussions with director(s) / ۰ proponents and their advisors regarding the DOCA proposal, including funds available and timing of distribution; review of the draft DOCA proposal; ٠ internal meetings / discussions regarding the proposed DOCA; liaising with solicitors regarding the draft ۰ DOCA; liaising with the ASX regarding the ٠ recapitalisation of the Company; liaising with proponents regarding ٠ recapitalisation process, timing of DOCA execution and effectuation and application to the Court to termination the liquidation; liaising with solicitors regarding the ٠ application to court for termination of the winding up pursuant to section 482 of the Act; prepare and review of documentation required by solicitors for court application (including affidavits); liaising with ASIC, ASX, the proponents and relevant parties regarding the termination of the winding up; meetings and discussions regarding ongoing deed obligations and compliance and termination of the winding up; correspondence with the Company regarding ongoing deed obligations and compliance; and review, assess and execute terms of the draft DOCA and Reconstruction Deed.
Creditors		receive and follow up creditor enquiries
28.0 hours	Creditor	generally; internal discussions regarding potential
\$11,570.00	claims	creditor issues; and
		review and prepare correspondence to
\$413 per hour		creditors and their representatives.

Task area	General description	Includes
	Creditor reports / circulars	finalising the Administrators' report to $\bullet$ creditors dated 13 March 2017 and associated annexures; and internal discussions regarding the Administrators' report to creditors.
Creditors continued.	Meeting of creditors	responding to creditor queries and $\bullet$ questions regarding the meeting and completion and lodgement of proxies; convening and holding second meeting of ٠ creditors on 20 March 2017; preparation of meeting notices, proxies $\bullet$ and advertisements; forwarding notice of meeting and circular ٠ to all known creditors; preparation of meeting file, including ۰ agenda and attendance register; and preparation and lodgement of minutes for second meeting of creditors.
	Proof of debt	processing / reviewing / adjudication of ٠ proofs of debts received.
Employees		review employee files and Company's ٠
12.0 Hours \$4,880.00 \$407 per hour	Employee entitlements	books and records; further review of outstanding employee $\bullet$ entitlements and superannuation / SGC; liaising with employees regarding further and better particulars in substantiation of claims; and calculation of employee entitlements.
Investigations 7.0 Hours	Reporting to ASIC	correspondence with ASIC regarding ٠ request for the lodgement of a supplementary report; and preparation and lodgement of supplementary report to the ASIC (if required).
\$2,905.00 \$415 per hour	Restructuring proposal	review and assessment of DOCA proposal $\bullet$ including discussions with proponent regarding terms of proposal and compliance matters; internal meetings / discussions regarding ٠ proposal; and liaison with solicitor (if required).
Administration		undertake administration review / $\bullet$
10.0 hours \$3,850.00	Quality control	checklist completion / tasking; and internal meetings and preparation of file ۰ not/memos regarding ongoing administration.
\$385 per hour	General administration	filing of matter documents; and maintenance of matter files.

$\ddot{\phantom{a}}$

Task area	General description	Includes
	Statutory compliance	prepare and lodge statutory forms with the ASIC / other statutory authorities; correspondence with the ASIC regarding statutory lodgements; and correspondence with the ASX (as and ٠ when required).
Administration continued.	Post appointment taxation compliance	prepare and lodge post appointment $\bullet$ Business Activity Statements; and correspondence with the ATO regarding taxation liabilities.
	Director(s) / Member(s)	correspondence with the Director and ٠ former Directors regarding various matters.
	Remuneration	maintenance of remuneration approval; ٠ review of work in. progress and $\bullet$ disbursement position; and processing of fees, disbursements and payments.

10. WHERE DEED ADMINISTRATORS ARE APPOINTED, A SCHEDULE OF THE DEED ADMINISTRATORS' ANTICIPATED TASKS AND ESTIMATED PROSPECTIVE REMUNERATION FOR THE PERIOD OF THE DEED ADMINISTRATION

Based on the following anticipated tasks, I estimate the Deed Administrators' fees for the above period at \$35,145 (plus GST).

Task area	General description	Includes
Assets 53.5 hours \$22,315.00 \$417 per hour	DOCA	ensuring compliance with the terms of the DOCA and attending to / monitoring any ongoing issues and conditions precedent; liaising with proponent regarding timing of payment of funds and distribution; liaising with proponent regarding timing of shareholders' approval and lodgement of outstanding annual reports with the ASX: liaising with solicitors regarding the application to court to terminate the liquidation pursuant to section 482 of the Act; preparation and review of documentation required by solicitors for court application; liaising with ASIC, ASX, the proponents ٠ and relevant parties of interest regarding the termination of the winding up; and internal discussions / meetings ۰ regarding the termination of winding up.

Task area	General description	Includes
	Proofs of debt	receipting and processing of formal $\bullet$ proofs of debt.
Creditors 10.0 hours \$4,175.00	Creditor enquiries / correspondence	receive and follow up creditor enquiries $\bullet$ generally; and review and prepare correspondence to $\bullet$ creditors and their representatives.
\$418 per hour	Creditor reports / circulars	preparation of circular to creditors $\bullet$ regarding the execution of the DOCA; preparation of future reports to creditors; $\bullet$ and preparation of future remuneration $\bullet$ reports (if applicable).
	Employee enquiries	receive and follow up employee $\bullet$ enquiries.
Employees 12.0 hours \$4,805.00 \$400 per hour	Calculation of entitiements and dividend	reviewing employee files and company $\bullet$ books and records; reconciling superannuation accounts; ٠ reviewing, ascertaining and calculating ٠ employee entitlements; • correspondence with employees regarding dividend; calculating dividend rate; ۰ prepare dividend file; ۰ advertising dividend notice; and ٠ preparing and attending to dividend distribution.
	Director	providing assistance to the Director ٠ where required; liaising with the Director in respect to $\bullet$ various matters; and notifying the Director of his responsibilities.
Administration 10.0 hours \$3,850.00	Statutory compliance	complying with the numerous statutory ۰ requirements imposed by the Act; preparing and lodging the relevant ۰ statutory lodgements with the ASIC; and correspondence with ASIC regarding reporting, issues and statutory forms.
\$385 per hour	Books and records / storage	dealing with records in storage; and $\bullet$ sending job files to storage.
	Bank account administrations / payments	requesting bank statements; ٠ bank account reconciliations; and correspondence with banks regarding specific transfers.
	Planning / file reviews / checklists	internal discussions regarding status of $\bullet$ the DOCA; and completing checklists. ٠

$\hat{\mathcal{C}}$

Task area	General description	Includes
	Fees	preparation of fee approval; and • reviewing and drawing fees (if approved).
Administration continued.	Finalisation	• notifying ATO of finalisation; · cancellation of relevant registrations, including but not limited to GST / ABN / PAYG; • finalising WIP; and attending to file reviews and various internal processes.
	Post appointment taxation compliance	• attending to various taxation matters; and • attending to various correspondence to and from the ATO.

11. REMUNERATION RECOVERABLE FROM EXTERNAL SOURCES

No remuneration has been recovered by the Administrators from external parties.

12. RESOLUTIONS REGARDING REMUNERATION TO BE CONSIDERED BY CREDITORS AT THE MEETING OF CREDITORS CONVENED FOR MONDAY, 20 MARCH 2017

At the forthcoming meeting of Creditors of the Company convened for Monday, 20 March 2017, creditors will be asked to consider a number of resolutions in relation to the Administrators' remuneration, being:

Resolution 'A'

"That the remuneration of the Joint and Several Voluntary Administrators, their partners and staff are all proper costs, charges and expenses of, and incidental to the administration, and that the same be fixed on a time basis at the 2016/2017 hourly rates of WA Insolvency Solutions, and that such remuneration for the period 10 February 2017 to 28 February 2017 be fixed at \$21,255.50 (plus GST) and be approved for payment together with disbursements and out of pocket expenses."

Resolution 'B'

"That the further remuneration of the Joint and Several Voluntary Administrators, their partners and staff are all proper costs, charges and expenses of, and incidental to the administration, and that the same be charged on a time basis at the 2016/2017 hourly rates of WA Insolvency Solutions, and that such remuneration for the period 1 March 2017 to the finalisation of the Administration, be approved up to a limit of \$27,695 (plus GST) and that the Joint and Several Voluntary Administrators be authorised to make periodic payments on account of such accruing remuneration together with disbursements / out of pocket expenses, but subject always to the Joint and Several Voluntary Administrators' right to seek further approval if required."

If the creditors resolve to accept the proposed DOCA, the Deed Administrators' remuneration as follows:

Resolution 'C'

That the remuneration of the Joint and Several Deed Administrators, their partners and staff are all proper costs, charges and expenses of, and incidental to the administration, and that the same be charged on a time basis at the 2016/2017 hourly rates of WA Insolvency Solutions, or such hourly rates increased by 5% at 1 July each year (round to the nearest dollars) and that such remuneration for the period of the Deed Administration be approved up to a limit of \$35,145 (plus GST) and that the Joint and Several Deed Administrators be authorised to make periodic payments on account of such accruing remuneration together with disbursements / out of pocket expenses, but subject always to the Joint and Several Deed Administrators' right to seek further approval if required."

13. ADMINISTRATORS' DISBURSEMENTS

Disbursements are divided into three (3) types:

• those that are all externally provided professional services. These are $\blacksquare$ recovered at cost. An example is legal fees.
• those that are externally provided non-professional costs such as travel, accommodation and search fees are recovered at cost.
• those that are internally provided non-professional costs such $AC$ photocopying, printing and postage. If charged to the provisional liquidation, would generally be charged at cost; though some expenses such as telephone calls, photocopying and printing may be charged at a rate which recoups both variable and fixed costs.

Disbursements are recovered in addition to remuneration. Disbursements are charged to the client on a cost recovery basis, having regard to the systems required to gather and collate such information.

Please refer to page 2 of Annexure 'A' for a summary of disbursements.

We have undertaken a proper assessment of disbursements claimed from the administration, in accordance with the law and applicable professional standards. We are satisfied that the disbursements claimed are necessary and proper.

The following table summarises the disbursements that are outstanding and anticipated and that are yet to be paid:

Description	Actual $(5)$ *	Prospective $(5)^*$	Total $(5)^*$
Postage		300	377
Printing & photocopying	794	2,000	2,794
Advertising - ASIC notices	$\blacksquare$	400	400
Total	871	2,700	3.571

*amounts rounded to the nearest dollar and are subject to the addition of 10% GST.

Where amounts have been paid to WA Insolvency Solutions for externally provided services and costs that is in reimbursement of a cost previously paid by WA Insolvency Solutions either due to a lack of funds in the liquidation at the time the payment was due.

14. RECEIPTS AND PAYMENTS

Please find enclosed a summary of the Administrators' receipts and payments for the period 10 February 2017 to 13 March 2017.

15. QUERIES

If you have any queries in relation to the above matters, please contact Jiin Herng Choong of this office on (08) 9463 3034.

DATED this 13th day of March 2017

ADMINISTRATOR

Encis.

$\ddot{\phantom{a}}$

Annexure A

2016 / 2017 Schedule of Hourly Rates and General Guide to Staff
Experience

REMUNERATION RATES
EFFECTIVE 1 JULY 2016

Classification	Guide to level of Relevant Experience	Amount GST Excl.
		(S)
Partners	Generally in excess of 10 years' experience. Maybe a Registered Liquidator, Official Liquidator and/or Trustee. Maybe CAANZ and/or CPA qualified. Brings specialist skills to the appointment.	615
Principals	More than 8 years' experience. Maybe ARITA, CAANZ and/or CPA qualified. Maybe a Registered Liquidator, Official Liquidator and/or Trustee. Well-developed technical and commercial skills. Answerable to the Appointee (if not acting as the actual Appointee), but otherwise responsible for all aspects of an appointment. Experienced at all levels and considered very competent. Controls staff and their training.	565
Senior Managers	More than 8 years' experience. Maybe ARITA, CAANZ and/or CPA qualified. Well- developed technical and commercial skills. Answerable to the appointee but otherwise responsible for all aspects of an appointment. Experienced at all levels and considered very competent. Controls staff and their training.	530
Manager 1	More than 6 years' experience. Maybe ARITA, CAANZ and/or CPA qualified. Well- developed technical and commercial skills. Answerable to the appointee but otherwise responsible for all aspects of an appointment. Will have had conduct of minor administrations. Controls staff and their training.	515
Manager 2	More than 5 years' experience. Maybe ARITA, CAANZ and/or CPA qualified or undertaking study. Well-developed technical and commercial skills. Will have had conduct of minor administrations. Controls a small to medium team of staff. Answerable to the appointee.	485
Forensic Accountants	Experienced accountant. Maybe CAANZ and/or CPA qualified. High level of investigative accounting skills. Experience with providing litigation support for a wide range of varying matters including insolvency related matters and fraud investigations.	475
Supervisor 1	Has 4 to 6 years' experience. May hold undergraduate degree and maybe undertaking ARITA, CAANZ/CPA study. Will have had conduct of minor administrations and experience in control of one to three staff, assists planning and control of medium to larger administrations. Answerable to a Manager and/or an appointee if applicable.	415
Supervisor 2	More than 4 years' experience. May hold undergraduate degree and maybe undertaking ARITA, CAANZ/CPA study. Will have had conduct of minor administrations and experience in control of one to three staff, assists planning and control of medium administrations. Answerable to a Manager and/or an appointee if applicable.	390
Senior 1	Has 2 to 4 years' experience. May hold undergraduate degree and may commence the ARITA course. Assists planning and control of small to medium sized administrations as well as performing some of the more difficult work on larger administrations. Answerable to more senior staff.	375
Senior 2	Has 1 to 3 years' experience. May hold undergraduate degree and may commence the Required to control the fieldwork on small administrations and is ARITA course. responsible for assisting complete fieldwork on medium sized administrations. Answerable to more senior staff.	355
Intermediate 1	Up to 2 years' experience. Maybe undertaking an undergraduate degree. Required to assist in day-to-day fieldwork under supervision of more senior staff. Answerable to more senior staff.	315
Intermediate 2	Up to 1 year experience. Maybe undertaking an undergraduate degree. Required to assist in day-to-day fieldwork under supervision of more senior staff. Answerable to more senior staff.	280
Graduates/ Accountant	Trainee with a less than 1 year of experience. Maybe undertaking an undergraduate degree. Required to assist in day-to-day fieldwork under supervision of more senior staff including books and records management. Answerable to more senior staff.	265
Administration/Cle rical Staff - Senior	Appropriately experienced and undertakes support activities, including but not limited to word processing, maintaining the bookkeeping tasks including, receipts & payments and managing the cash book, preparing bank reconciliations and statutory lodgements for the ASIC and the ATO, accounts processing and books and records management. Answerable to Managers and/or more senior staff.	225
Administration/Cle rical Staff - Junior	Appropriately experienced and undertakes support activities. Answerable to more senior staff. These staff may typically be local or foreign (outsourced) administrative contractors.	180
Cadets	Trainee, very little experience. Required to assist in day-to-day fieldwork under supervision of more senior staff including books and records management. Answerable to more senior staff.	110

Notes:

• The hourly rates are exclusive of GST. $\bullet$
• Remuneration is calculated on a time cost basis in accordance with the above rates and Jirsch Sutherland $\bullet$ administers this time cost record via Core, a computerised software program.
• Staff members are classified in accordance with academic qualifications and/or relevant experience.
• Rates may be increased at 1 July each year at a rate of up to 5% (rounded up to the nearest \$5.00).
• The hourly rates charged encompass the total cost of providing professional services and should not be compared to an hourly wage.
• Any contingency arrangement/percentage of assets arrangement within the scope of the ARITA Code is not applicable as a standard charge; this requires a Creditors' resolution and /or Court Approval.
• Disbursements are calculated on the following basis:

Disbursements 24 사이 오히는 마을 하	Unit	Rate $(S$ Ex. $GST)$
Printing/Photocopying	Per Page	0.80
Printing/Photocopying - Outsourced	N/A	Cost
ASIC/PPSR Search Requests	Per Search	Cost
Vehicle/Vessel Search Requests	Per Search	Cost
Land Title/Property Search Requests	Per Search	Cost
Other Statutory Searches	Per Search	Cost
Statutory Advertising: ASIC Insolvency Notices	N/A	Cost
Other Print Advertising	N/A	Cost
Vehicle Mileage Travel Costs	Per Kilometre	0.66
Postage	N/A	Cost
Couriers	N/A	Cost
Security Storage	N/A	Cost
All Other Expenses & Disbursements	N/A	Cost
Meeting room (external)	N/A	Cost

Annexure B

Summary of the Administrators' time costs for the period
10 February 2017 to 28 February 2017 by employee and task

AUSROC METALS LTD (IN LIQUIDATION) (ADMINISTRATORS APPOINTED)
ACN 073 155 781

SUMMARY OF THE ADMINISTRATORS' TIME COSTS FOR THE PERIOD 10 FEBRUARY 2017 TO 28 FEBRUARY 2017 BY EMPLPOYEE AND TASK

ADMINISTRATION HRS ပ္ပ G. ్లా ူ 5 Ξ ø DIVIDEND HRS බ 517.2 12.5 6,465.00 3,051.00 1,131.00 315.00 1,968.00 INVESTIGATIONS HRS H თ ი 54 ္က $\tilde{\bm{s}}$ TRADE ON CHS H $\hat{S}$ g 297.5 31.50 59.50 28.00 EMPLOYEES SHH $\overline{c}$ 5 67.50 395.87 2,964.00 2.740.50 Ø 492.00 9,144.50 2,655.50 225.00 23.1 CREDITORS HRS č, 3. S ិ 4.7 $\ddot{s}$ 63.00 S 63.00 2 S $\widehat{\bm{v}}$ 315 ASSETS SHH ี อ						TASK AREA
	TOTAL RATE
	ŝ Ξ. Ø POSITION								ŝ
	123.00 2 O 615 Partner								123.00
	3.136.50 5 615 Partner								6.6.50
	6.667.00 $\frac{8}{11}$ 585 Principal								960.50
	53.00 5 នី Senior Manager								$\frac{8}{33.00}$
	5,382.00 $\frac{3}{2}$ 39 Supervisor 2								287.00
	5,229.00 $\frac{6}{5}$ 15 51 Intermediate 1								2,079.00
	28.00 ន្ល Intermediate 2
	344.50 $\mathbf{r}$ 385 Graduate								344.50
	8 85.00 25 23 Snr Admin Assist
	67.50 3 ន្ស Snr Admin Assist
	21,255.50 Total Remuneration (\$ Ex.GST)								5,523.50
	503 Total Remuneration (Hours)								14.3
	422.57 Average hourly rate for Period (\$ Ex. GST)								386.3

$\frac{1}{\sqrt{2}}$

FORM 535 CORPORATIONS ACT 2001

FORMAL PROOF OF DEBT OR CLAIM (GENERAL FORM)

ACN 073 155 781

To the Administrators of Ausroc Metals Ltd (In Liquidation) (Administrators Appointed)

This is to state that the company was, on 10 February 2017⁽¹⁾ and still is, justly and truly $1.$ indebted to⁽²⁾.................................... ......................................

Particulars of the debt are:

• To my knowledge or belief the creditor has not, nor has any person by the creditor's order, $2.$ had or received any manner of satisfaction or security for the sum or any part of it except for the following: (5)
• I am employed by the creditor and authorised in writing by the creditor to make this $3(6)*$ statement. I know that the debt was incurred for the consideration stated and that the debt, to the best of my knowledge and belief, still remains unpaid and unsatisfied.
• $3(6)*$ I am the creditor's agent authorised in writing to make this statement in writing. I know that the debt was incurred and for the consideration stated and that the debt, to the best of my knowledge and belief, still remains unpaid and unsatisfied.

DATED this	day of	2017
Signature of Signatory
NAME IN BLOCK LETTERS
Occupation
		Address ……………………………………………………………………………………………

See Directions overleaf for the completion of this form

OFFICE USE ONLY

POD No:		ADMIT - Ordinary
Date Received:		ADMIT - Preferential
Entered into IPS/Computer:		Reject
Amount per RATA		H/Over for Consideration
PREP BY/AUTHORISED
		TOTAL PROOF
∥ DATE AUTHORISED

Directions

• $\star$ Strike out whichever is inapplicable.
• Insert date of Court Order in winding up by the Court, or date of resolution to wind up, if a $(1)$ voluntary winding up.
• Insert full name and address (including ABN) of the creditor and, if applicable, the creditor's $(2)$ partners. If prepared by an employee or agent of the creditor, also insert a description of the occupation of the creditor.
• Under "Consideration" state how the debt arose, for example "goods sold and delivered to $(3)$ the company between the dates of ................................... advanced in respect of the Bill of Exchange".
• Under "Remarks" include details of vouchers substantiating payment. $(4)$
• Insert particulars of all securities held. Where the securities are on the property of the $(5)$ company, assess the value of those securities. If any bills or other negotiable securities are held, specify them in a schedule in the following form:

Date	Drawer	Acceptor	Amount	Date Due
	--		----

If proof is made by the creditor personally, strike the two (2) paragraphs numbered 3. $(6)$

Annexures

• If space provided for a particular purpose in a form is insufficient to contain all the required А. information in relation to a particular item, the information must be set out in an annexure.
• An annexure to a form must: B.
• $(a)$ have an identifying mark;
• and be endorsed with the words: $(b)$

"This is the annexure of (insert number of pages) pages marked (insert an identifying mark) referred to in the (insert description of form) signed by me/us and dated (insert date of signing); and

• be signed by each person signing the form to which the document is annexed. $(c)$
• The pages in an annexure must be numbered consecutively. C.
• If a form has a document annexed the following particulars of the annexure must be written D. on the form:
• the identifying mark; and $(a)$
• $(b)$ the number of pages.
• A reference to an annexure includes a document that is with a form. E.

FORM 532

CORPORATIONS ACT 2001

regulation 5.6.29

APPOINTMENT OF PROXY CREDITORS MEETING

AUSROC METALS LTD (IN LIQUIDATION) (ADMINISTRATORS APPOINTED) ACN 073 155 781 ("the Company")

*I/We (name of creditor)⁽¹⁾.................................... of (address of creditor).................................... a creditor of Ausroc Metals Ltd (In Liquidation)(Administrators Appointed) appoint (name of proxy) $(2)$ .................................... ....................................... or in *his/her absence (name of proxy).................................... as *my/our *general/special proxy ⁽³⁾ to vote at the second meeting of creditors to be held at the

offices of WA Insolvency Solutions, Level 49, 108 St George's Terrace, Perth, Western Australia on Monday, 20 March 2017, at 10:30 am, or at any adjournment of that meeting⁽³⁾, to vote:

On all matters arising at the meeting; $(i)$

OR

On each of the following kinds of resolution in the manner specified: $(ii)$

		For	Against	Abstain
(a)	That the Company execute a Deed of Company Arrangement in terms materially consistent with the proposal as outlined in the report dated 13 March 2017 (or any subsequent report issued).
(b)	That the administration should end.
(c)	That the meeting be adjourned for a period not exceeding forty-five (45) business days.
(d)	Administrators' Remuneration $-$ Resolution $A'$
	That the remuneration of the Joint and Several Voluntary

Administrators, their partners and staff are all proper costs, charges and expenses of, and incidental to the administration, and that the same be fixed on a time basis at the 2016/2017 hourly rates of WA Insolvency Solutions, and that such remuneration for the period 10 February 2017 to 28 February 2017 be fixed at \$21,255.50 (plus GST) and be approved for payment together with disbursements and out of pocket expenses.

		For	Against	Abstain
(e)	Administrators' Further Remuneration - Resolution 'B'
	That the further remuneration of the Joint and Several Voluntary Administrators, their partners and staff are all proper costs, charges and expenses of, and incidental to the administration, and that the same be charged on a time basis at the 2016/2017 hourly rates of WA Insolvency Solutions, and that such remuneration for the period 1 March 2017 to the finalisation of the Administration, be approved up to a limit of \$27,695 (plus GST) and that the Joint and Several Voluntary Administrators be authorised to make periodic payments on account of such accruing remuneration together with disbursements/out of pocket expenses, but subject always to the Joint and Several Voluntary Administrators' right to seek further approval if required.
(f)	Deed Administrators' Remuneration - Resolution 'C'
	That the remuneration of the Joint and Several Deed Administrators, their partners and staff are all proper costs, charges and expenses of, and incidental to the administration, and that the same be charged on a time basis at the 2016/2017 hourly rates of WA Insolvency Solutions, or such hourly rates increased by 5% at 1 July each year (rounded to the nearest \$5) and that such remuneration for the period of the Deed Administration be approved up to a limit of \$35,145 (plus GST) and that the Joint and Several Deed Administrators be authorised to make periodic payments on account of such accruing remuneration together with disbursements/out of pocket expenses, but subject always to the Joint and Several Deed Administrators' right to seek further approval if required.
(g)	All other matters as the proxy sees fit.
	If a firm, strike out "I" and set out the full name of the firm. (1) Insert the name, address and description of the person appointed. (2) If a special proxy add the words "to vote for" or the words "to vote against" and specify the particular resolution.
DATED this	day of March 2017.
Signature
	CERTIFICATE OF WITNESS

This certificate is to be completed only if the person giving the proxy is blind or incapable of writing. The signature of the creditor, contributory, debenture holder or member must not be witnessed by the person nominated as proxy.

I, .................................... certify that the above instrument appointing a proxy was completed by me in the presence of and at the request of the person appointing the proxy and read to him or her before he or she signed or marked the instrument.

Dated:

Signature of Witness:

Description:

Place of Residence:

AUSROC METALS LTD (IN LIQUIDATION) (ADMINISTRATORS APPOINTED) ACN 073 155 781

Summary of the Voluntary Administrators' Receipts and Payments
for the period 10 February 2017 to 13 March 2017

Receipts	(5) $\overline{\phantom{0}}$
Total Receipts	$\bullet$
Payments
Total Payments	$\,$
Funds on hand	$\blacksquare$

DATED 13th day of March 2017

D HURT

ADMINISTRATOR

$\overline{a}$