ZEOTECH LIMITED - Capital/Financing Update 2014

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LACONIA RESOURCES LIMITED

ACN 137 984 297

OFFER DOCUMENT

For a non-renounceable entitlement issue of five (5) new Shares for every seven (7) Shares held by those Shareholders registered at the Record Date at an issue price of $0.005 per Share to raise up to $1,727,580 (based on the number of Shares on issue as at the date of this Offer Document) ( New Shares ) (together with one (1) free attaching option exercisable at $0.06 on or before 30 September 2018 for every one (1) New Share subscribed for and issued ( New Option )) ( Offer ).

Lead Manager

CPS Capital Group Pty Ltd (ACN 088 055 636) (AFSL 294848) has been appointed as Lead Manager to the Offer. The Lead Manager Agreement contains terms and conditions, details of which are set out in Section 2.9 of this Offer Document.

IMPORTANT NOTICE

This Offer is being made without a prospectus in accordance with section 708AA of the Corporations Act, as modified by Class Order [CO 08/35].

This Offer Document is not a prospectus or any other form of disclosure document and has not been lodged with ASIC. Accordingly, this Offer Document does not contain all of the information which a prospective investor may require to make a decision as to whether to subscribe for New Shares and New Options. Further, this Offer Document does not contain all of the information which would otherwise be required to be disclosed in a prospectus or other form of disclosure document.

This document is important and requires your immediate attention. It should be read in its entirety. If you do not understand its content or are in doubt as to the course you should follow, you should consult your stockbroker or professional adviser without delay.

This Offer opens on 12 September 2014 and closes at 5:00pm WST on 23 September 2014.

Valid acceptances must be received before that time.

Please read the instructions in this document and on the accompanying Entitlement and Acceptance Form regarding the acceptance of your Entitlement.

IMPORTANT NOTES

This Offer Document and enclosed personalised Entitlement and Acceptance Form have been prepared by Laconia Resources Limited (ACN 137 984 297) ( Laconia or the Company ). This Offer Document is dated 5 September 2014.

No party other than Laconia has authorised or caused the issue of this Offer Document, or takes any responsibility for, or makes, any statements, omissions, representations or undertakings in this Offer Document.

No person is authorised to give any information or to make any representation in connection with the Offer which is not contained in this Offer Document. Any information or representation not so contained may not be relied on as having been authorised by the Company in connection with the Offer.

Eligibility

Applications for Securities by Eligible Shareholders can only be made on an original Entitlement and Acceptance Form, as sent with this Offer Document. The Entitlement and Acceptance Form sets out an Eligible Shareholder's Entitlement to participate in the Offer.

Overseas shareholders

This Offer does not, and is not intended to, constitute an offer in any place or jurisdiction in which, or to any person to whom, it would not be lawful to make such an offer or to issue this Offer Document.

It is not practicable for the Company to comply with the securities laws of overseas jurisdictions having regard to the number of overseas Shareholders, the number and value of the New Shares these Shareholders would be offered and the cost of complying with regulatory requirements in each relevant jurisdiction. Accordingly, the Offer is not being extended and New Shares will not be issued to Shareholders with a registered address which is outside Australia or New Zealand.

Shareholders resident in New Zealand should consult their professional advisors as to whether any government or other consents are required, or other formalities need to be observed, to enable them to take up their Entitlements under the Offer.

Privacy Act

If you complete an application for Securities, you will be providing personal information to the Company (directly or by the Company’s share registry). The Company collects, holds and uses that information to assess your application, service your needs as a Shareholder, facilitate distribution payments and corporate communications to you as a Shareholder and carry out administration.

The information may also be used from time to time and disclosed to persons inspecting the register, bidders for your securities in the context of takeovers, regulatory bodies, including the Australian Taxation Office, authorised securities brokers, print service providers, mail houses and the Share Registry.

You can access, correct and update the personal information that we hold about you. Please contact the Company or the Share Registry if you wish to do so at the relevant contact numbers set out in this Offer Document.

Collection, maintenance and disclosure of certain personal information is governed by legislation including the Privacy Act 1988 (Cth) (as amended), the Corporations Act and certain rules such as the ASX Settlement Operating Rules. You should note that if you do not provide the information required on the application for Shares, the Company may not be able to accept or process your application.

1.	CHAIRMAN’S LETTER ....................................................................................................... 4
2.	DETAILS OF THE OFFER .................................................................................................... 5
3.	ACTION REQUIRED BY SHAREHOLDERS ....................................................................... 12
4.	RISK FACTORS ............................................................................................................... 14
5.	CAPITAL STRUCTURE AND FINANCIAL INFORMATION ................................................ 22
DEFINED	TERMS ............................................................................................................................ 25

1. CHAIRMAN’S LETTER

5 September 2014

Dear Shareholder

On behalf of Laconia Resources Limited ( Laconia or the Company ), I am pleased to invite you to participate in a pro rata non-renounceable entitlement issue on the basis of five (5) New Shares for every seven (7) Shares held on the Record Date at an issue price of $0.005 per New Share, together with one (1) free New Option exercisable at $0.06 on or before 30 September 2018 for every one (1) New Share subscribed for and issued, to raise approximately $1,727,580.

The Company intends to apply the funds raised from the Offer as set out in Section 2.2 of this Offer Document.

Entitlements are non-renounceable and will not be tradeable on ASX or otherwise transferable. Shareholders who do not take up all or any part of their Entitlements will not receive any payment or value in respect of those Entitlements and their equity interest in the Company will be diluted.

CPS Capital Group Pty Ltd has been appointed Lead Manager to the Company for the Entitlement Issue and will manage any entitlement shortfall.

This Offer Document contains important information about the Offer, including:

(a) details of the Offer, including key dates;
(b) actions required by Shareholders; and
(c) risk factors associated with the Offer.

Should you elect to participate in the Offer, you must complete the personalised Entitlement and Acceptance Form in accordance with the instructions provided.

This Offer Document should be read carefully and in its entirety before deciding whether or not to participate in the Offer. In particular, you should consider the key risk factors included in Section 4 of this Offer Document.

Shareholders who have any queries about the Offer should contact the Company at any time from 8:30am to 5:00pm during the Offer period.

On behalf of the Board of Laconia, I invite you to consider this investment opportunity and thank you for your ongoing support of our company.

Yours faithfully,

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Matthew Howison Chairman

2. DETAILS OF THE OFFER

2.1 The Offer

The Company is making a pro rata non-renounceable offer of New Shares at an issue price of $0.005 each on the basis of five (5) New Shares for every seven (7) Shares held on the Record Date, together with one (1) free attaching option exercisable at $0.06 on or before 30 September 2018 for every one (1) New Share subscribed for and issued.

The New Options are the same class as the Company’s existing listed Options that trade under ASX Code “LCROA”. The New Options will be listed on ASX.

At the date of this Offer Document, the Company has 483,722,597 Shares, 323,377,849 options, 14,500,000 performance shares and 6,000,000 performance rights on issue.

On the basis that no further Shares are issued or no Options exercised prior to the Record Date, the Offer is for 345,516,141 New Shares and 345,516,141 New Options.

Where the determination of the Entitlement of any Eligible Shareholder results in a fraction of a New Share, such fraction will be rounded up to the nearest whole New Share or New Option.

2.2 Use of Funds

Completion of the Offer will result in an increase in cash in hand of up to approximately $1,727,580 (before the payment of costs associated with the Offer).

The Company intends to apply the funds raised from the Offer to:

(a) fund the Company’s next phase of exploration drilling and drill targeting at its Kimsa Orcco copper-gold-silver Project in Peru;
(b) fund the issue costs associated with the Offer; and/or
(c) pay for additional liabilities and provide working capital.

2.3 Indicative Timetable

Indicative Timetable
Event	Date
Announcement Entitlement Offer, lodge Appendix 3B and Notice sent to Optionholders	5 September 2014
Notice sent to Shareholders	8 September 2014
Ex date	9 September 2014
Record date for determining Shareholder entitlements	11 September 2014
Despatch of Offer Document (Offer opens)	12 September 2014
Close of Offer	23 September 2014

Securities quoted on a deferred settlement basis	24 September 2014
Notification to ASX of shortfall	26 September 2014
Despatch date/securities entered into Shareholders holdings	30 September 2014

Subject to the Listing Rules, the Directors reserve the right to extend the Closing Date for the Offer at their discretion. Should this occur, the extension will have a consequential effect on the anticipated date of issue for the New Shares

** These dates are indicative only.

2.4 Entitlements and acceptance

The Entitlement of Eligible Shareholders to participate in the Offer will be determined on the Record Date. Your Entitlement is shown on the Entitlement and Acceptance form accompanying this Offer Document.

2.5 No Rights trading

The rights to New Shares under the Offer are non-renounceable. Accordingly, there will be no trading of rights on the ASX and you may not dispose of your rights to subscribe for New Shares under the Offer to any other party. If you do not take up your Entitlement to New Shares under the Offer by the Closing Date, the Offer to you will lapse.

2.6 Overseas Eligible Shareholders

No Offer will be made to Eligible Shareholders who have a registered address outside Australia and New Zealand.

New Shares to which any Eligible Shareholders who do not have a registered address in Australia or New Zealand would otherwise be entitled will form part of the Shortfall and will be placed in accordance with the Underwriting Agreement.

This Offer Document and accompanying Entitlement and Acceptance Form do not, nor are they intended to, constitute an offer in any place in which, or to any person to whom, it would not be lawful to make such an offer.

2.7 New Zealand Shareholders

New Zealand

The New Shares are not being offered or sold to the public within New Zealand other than to existing shareholders of the Company with registered addresses in New Zealand to whom the offer of New Shares is being made in reliance on the Securities Act (Overseas Companies) Exemption Notice 2002 (New Zealand).

In accordance with the Securities Act (Overseas Companies) Exemption Notice 2002 (NZ), a person who, on the Record Date was registered as a holder of Shares with a New Zealand address but who, as at the time of this Offer no longer holds Shares is not eligible to participate in this Offer.

Notice to nominees and custodians

Nominees and custodians may not distribute any part of this Offer Document in any other country outside Australia, except to beneficial shareholders in New Zealand and any other country where the Company may determine it is lawful and practical to make the Rights Issue. Any person in New Zealand with a holding through a nominee may not participate in the Rights Issue.

2.8 New Options

The New Options entitle the holder to subscribe for Shares on the following terms and conditions:

(a) Each New Option is a right to subscribe for one Share.
(b) The exercise price of the New Options is 6 cents per Option.
(c) The New Options will lapse on 30 September 2018 ( Expiry Date ).
(d) The New Options will be transferable in whole or in part with the prior approval of the Board of the Company, subject to the provisions of the Constitution of the Company, Corporations Act and the ASX Listing Rules.
(e) The New Options may be exercised wholly or in part by delivering a duly completed form of notice of exercise together with a cheque for the exercise price per New Option to the Company at any time on or after the date on which the New Options vest and on or before the Expiry Date. Reminder notices will be forwarded to each option holder prior to the Expiry Date. New Options not exercised by the Expiry Date will lapse.
(f) Upon the valid exercise of the New Options and payment of the exercise price, the Company will issue Shares raking pari passu with the then issued Shares of the Company.
(g) The Company shall apply for listing on the ASX of the resultant Shares issued upon exercise of any of the New Options.
(h) Reconstruction of Capital: If during the currency of the New Options the issued capital of the Company is reconstructed (including capital reductions and share consolidations and divisions), the number or nominal value of the New Options to which the holder is entitled will be reconstructed in the same proportion as the issued capital of the Company is reconstructed in accordance with the ASX Listing Rules but in all respects the term for the exercise of the New Options shall remain unchanged. Where appropriate the exercise price of the New Options will be revised in accordance with the ASX Listing Rules.
(i) Bonus Issue: If there is a bonus issue to the holders of the ordinary Shares of the Company, the number of ordinary Shares over which the New Option is exercisable will be increased by the number of ordinary Shares which the holder of the New Option would have received if the New Option had been exercised before the record date for the bonus issue.
(j) Rights Issue: If the Company makes a pro rata issue (other than a bonus issue), the exercise price of New Options on issue will not be adjusted.
(k) Participating Rights and Entitlements: The New Options carry no right

(without exercising the New Options) to participate in new issues which may be offered by the Company to its Shareholders after the date of the issue of the New Options or in dividends. However, the Company must give prior notice to the New Option holders of any new issue before the record date for determining entitlements to the issue in accordance with ASX Listing Rules and New Option holders have the right to exercise the New Options prior to the record date for determining entitlements.

(l) Amendments: Despite anything else contained in these terms to the contrary, the terms and conditions may be changed by the Company to the extent it reasonably considers to be necessary to comply with the ASX Listing Rules, particularly as they may apply to a reconstruction or reorganisation of the capital of the Company at the time of reorganisation or reconstruction.

2.9 Lead Manager Agreement

The Company has appointed CPS Capital Group Pty Ltd as Lead Manager to the Offer to assist in placing the Shortfall.

The Company has agreed to pay CPS Capital Group Pty Ltd (or its nominees) the following fees in relation to this appointment:

(a) a management fee of 1% (plus GST) of the total amount raised under the Offer (including placement of the Shortfall) and 40,000,000 New Options (LCROA) expiring 30th of September 2018 at an issue price of $0.0001 per New Option;
(b) a shortfall placement fee of 5% (plus GST) in relation to the amount of funds raised from placing the Shortfall;
(c) a corporate advisory/public relations fee of $5,000 per month exclusive of GST payable monthly in advance for a total period of 12 months from the date of this agreement, reviewable at the Company’s option every three months.

2.10 Directors Interests and Participation

Each Director’s interest in the securities of the Company at the date of this Offer Document and their Entitlement is set out in the table below.

Director	Shares	30 Sept 2014 Options	30 Sept 2018 Options	30 Sept 2018 Incentive Options	Performance Rights
Matthew Howison	2,875,0001	5,000,0002	3,750,0003	2,000,0004	3,400,0005
Ian Stuart	13,278,8006	2,500,0007	12,500,0008	2,000,0009	3,400,00010
Matthew Edmondson	2,150,00011	Nil	5,800,00012	2,000,00013	3,400,00014

Notes:

Held directly (100,000) and indirectly through Laconia Holdings Pty Ltd (2,500,000 Shares), Kaos Partners Pty Limited (75,000 Shares) and Emerald Partners Pty Ltd (200,000).

Held indirectly through Laconia Holdings Pty Ltd unlisted options (exercisable at $0.1987 expiring 30 September 2014).
Held directly (exercisable at $0.06 expiring 30 September 2018).
Held directly (exercisable at $0.014, expiring 30 September 2018, subject to Incentive Option Vesting Condition).
Held directly (subject to vesting conditions, automatically converting to one Share, 1,700,000 expiring 31 December 2015 and 1,700,000 expiring 31 December 2016).
Held directly (3,000,000) and indirectly through Scarfell Pty Ltd (6,278,800) and Eclectricity Pty Ltd (4,000,000).
Held directly (exercisable at $0.1987 expiring 30 September 2014).
Held directly (500,000) and indirectly through Scarfell Pty Ltd (1,000,000) and Eclectricity Pty Ltd (11,000,000) (exercisable at $0.06 expiring 30 September 2018).
Held directly by Eclectricity Pty Ltd (exercisable at $0.014, expiring 30 September 2018, subject to Incentive Option Vesting Condition).
Held directly (subject to vesting conditions, automatically converting to one Share, 1,700,000 expiring 31 December 2015 and 1,700,000 expiring 31 December 2016).
Held directly.
Held directly (1,300,000) and indirectly by Matthew Edmondson (3,500,000) (exercisable at $0.06 expiring 30 September 2018).
Held indirectly by Matthew Edmondson (exercisable at $0.014, expiring 30 September 2018, subject to Incentive Option Vesting Condition).
Held indirectly by Matthew Edmondson (subject to vesting conditions, automatically converting to one Share, 1,700,000 expiring 31 December 2015 and 1,700,000 expiring 31 December 2016).

The Directors intend to participate in the Offer for all or part of their Entitlement.

2.11 Potential Dilution to Shareholders

Shareholders should note that if they do not participate in the Offer (or the Placement) their holdings are likely to be diluted by approximately 71.43% (as compared to their holdings and number of Shares on issue as at the date of the Offer Document). Examples of how the dilution may impact Shareholders are set out in the table below:

Holder	Holding as at Record date	% at Record Date	Entitlements under the Offer	Holdings if Offer not taken Up	% post Offer
Shareholder 1	10,000,000	2.07%	7,142,858	10,000,000	1.21%
Shareholder 2	5,000,000	1.03%	3,571,429	5,000,000	0.60%
Shareholder 3	1,500,000	0.31%	1,071,429	1,500,000	0.18%
Shareholder 4	400,000	0.08%	285,715	400,000	0.05%
Shareholder 5	50,000	0.01%	35,715	50,000	0.01%

It is not expected that the Offer will have any material effect on control of the Company.

2.12 Market Price of Shares and Options

The Company is a disclosing entity for the purposes of the Corporations Act and its Shares and New Options are enhanced disclosure securities quoted on ASX.

The highest, lowest and last market sale prices of the Shares on ASX during the three months immediately preceding the date of this Offer Document and the respective dates of those sales were:

Highest	$0.015	5, 6 September 2013
Lowest	$0.005	11, 22, 28 August 2014,
		1, 2, 4 September 2014
Last	$0.005	4 September 2014

The highest, lowest and last market sale prices of the New Options on ASX during the three months immediately preceding the date of this Offer Document and the respective dates of those sales were:

Highest	$0.003		11 March 2013
Lowest	$0.001		10 September 2013,
		26	June 14, 14 August 2014,
			2 September 2014
Last	$0.001		2 September 2014

2.13 Opening and Closing Dates

The Offer opens on the Opening Date, being 12 September 2014, and closes on the Closing Date, being 23 September 2014. The Company will accept Entitlement and Acceptance Forms until the Closing Date or such other date as the Directors in their absolute discretion shall determine, subject to the Listing Rules.

2.14 Issue and despatch

Securities issued pursuant to this Offer Document will be issued in accordance with the ASX Listing Rules and timetable set out at the commencement of this Offer Document.

Securities issued pursuant to the Shortfall Offer may be issued on a progressive basis. Where the number of Shares issued is less than the number applied for, or where no issue is made surplus application monies will be refunded without any interest to the Applicant as soon as practicable after the closing date of the Shortfall Offer.

Pending the issue of the Securities or payment of refunds pursuant to this Offer Document, all application monies will be held by the Company in trust for the Applicants in a separate bank account as required by the Corporations Act. The Company, however, will be entitled to retain all interest that accrues on the bank account and each Applicant waives the right to claim interest.

Holding statements for Securities issued under the Offer will be mailed in accordance with the ASX Listing Rules and timetable set out at the

commencement of this Offer Document and for Shortfall Securities issued under the Shortfall Offer as soon as practicable after their issue.

2.15 ASX listing

Application for official quotation by ASX of the New Shares and New Options offered pursuant to this Offer Document will be made.

The fact that ASX may grant official quotation to the New Shares and New Options is not to be taken in any way as an indication of the merits of the Company or the New Shares now offered for subscription.

2.16 CHESS

The Company is a participant in CHESS, for those investors who have, or wish to have, a sponsoring stockbroker. Investors who do not wish to participate through CHESS will be issuer sponsored by the Company. Because the sub-registers are electronic, ownership of securities can be transferred without having to rely upon paper documentation.

Electronic registers mean that the Company will not be issuing certificates to investors. Instead, investors will be provided with a statement (similar to a bank account statement) that sets out the number of New Shares allotted to them under this Offer Document. The notice will also advise holders of their Holder Identification Number or Security Holder Reference Number and explain, for future reference, the sale and purchase procedures under CHESS and issuer sponsorship.

Further monthly statements will be provided to holders if there have been any changes in their security holding in the Company during the preceding month.

2.17 Taxation implications

The Directors do not consider it appropriate to give Shareholders advice regarding the taxation consequences of subscribing for New Shares under this Offer Document. The Company, its advisers and its officers do not accept any responsibility or liability for any such taxation consequences to Shareholders.

Shareholders should consult their professional tax adviser in connection with subscribing for New Shares under this Offer Document.

2.18 Risk factors

An investment in New Shares should be regarded as speculative. In addition to the general risks applicable to all investments in listed securities, there are specific risks associated with an investment in the Company which are described in Section 4 .

3. ACTION REQUIRED BY SHAREHOLDERS

3.1 How to Accept the Offer

Your acceptance of the Offer must be made on the Entitlement and Acceptance Form accompanying this Offer Document.

You may participate in the Offer as follows:

(a) if you wish to accept your Entitlement in full and/or apply for additional Securities under the Shortfall:
(i) complete the Entitlement and Acceptance Form, filling in the details in the spaces provided; and
(ii) attach your cheque for the amount indicated on the Entitlement and Acceptance Form or pay via BPAY® by following the instructions set out in the Entitlement and Acceptance Form; or
(b) if you only wish to accept part of your Entitlement:
(i) fill in the number of Shares you wish to accept in the space provided on the Entitlement and Acceptance Form; and
(ii) attach your cheque for the appropriate application monies (at $0.005 per New Share) or pay via BPAY® by following the instructions set out in the Entitlement and Acceptance Form; or
(c) if you do not wish to accept all or part of your Entitlement, you are not obliged to do anything.

All cheques must be drawn on an Australian bank or bank draft made payable in Australian currency to “Laconia Resources Limited – Share Account” and crossed “Not Negotiable” .

If paying via BPAY®, Applicants should be aware that their own financial institution may implement earlier cut off times with regards to electronic payment and it is the responsibility of the Applicant to ensure that funds are submitted through BPAY® by the date and time mentioned above. If you elect to pay via BPAY®, you must follow the instructions for BPAY® set out in the Entitlement and Acceptance Form and you will not need to return the Entitlement and Acceptance Form. It is your responsibility to ensure that funds submitted through BPAY® are received by 3.00pm (AEDT) on the Closing Date .

Your completed Entitlement and Acceptance Form and cheque must reach the Company no later than 5:00pm (WST) on the Closing Date.

The Offer is non-renounceable. Accordingly, a holder of Shares may not sell or transfer all or part of their Entitlement.

3.2 Entitlements not taken up

If you do not wish to accept any of your Entitlement, you are not obliged to do anything.

3.3 Shortfall

If any Eligible Shareholders do not take up their full Entitlement under this Offer, the New Shares and New Options that are not taken up will form the Shortfall.

Any Entitlement not taken up pursuant to the Offer will form the Shortfall Offer. The Shortfall Offer is a separate offer made pursuant to this Offer Document and will remain open for up to three months following the Closing Date. The issue price for each New Share to be issued under the Shortfall Offer shall be $0.005 being the price at which New Shares have been offered under the Offer.

Subject to the Corporations Act and the requirements under the ASX Listing Rules, the Directors, in consultation with CPS Capital Group Pty Ltd, reserve the right to issue Shortfall at their absolute discretion.

3.4 Applications for additional New Shares and New Options

Existing Shareholders will be given the right to apply for additional New Shares and New Options beyond their Entitlement. You may also apply for additional New Shares and New Options in accordance with Shortfall Offer by completing a Shortfall Application Form or the box marked on your Entitlement and Acceptance Form.

3.5 Queries concerning your Entitlement

If you have any queries concerning your Entitlement please contact Security Transfer Registrars Pty Limited on (08) 9315 2333.

4. RISK FACTORS

4.1 Introduction

The Securities offered under this Offer Document are considered highly speculative. An investment in the Company is not risk free and the Directors strongly recommend potential investors to consider the risk factors described below, together with information contained elsewhere in this Offer Document and to consult their professional advisers before deciding whether to apply for Securities pursuant to this Offer Document.

There are specific risks which relate directly to the Company’s business. In addition, there are other general risks, many of which are largely beyond the control of the Company and the Directors. The risks identified in this section, or other risk factors, may have a material impact on the financial performance of the Company and the market price of the Securities.

The following is not intended to be an exhaustive list of the risk factors to which the Company is exposed.

4.2 Risks specific to Peru

(a) Overview

Peru is located on the western coast of South America. It shares its borders with Ecuador and Colombia to the north, Brazil and Bolivia to the east and Chile to the south. Peru’s major cities are Lima, the nation’s capital, Arequipa, Trujillo, Chiclayo, Iquitos, Piura, Chimbote and Cusco.

(b) Peruvian political risk

The private sector could be affected by changes in the economic or other policies of the Government of Peru or other political, regulatory or economic authorities in Peru. The Company’s major assets are located in Peru, South America. Peru is, at present, a stable democracy but the Company cannot guarantee access, surety of title and/or tenure of its Peruvian based assets.

(c) Emerging Market Risks

Peru is an emerging market economy. Emerging markets are generally more vulnerable to market volatility as well as political and economic instability than developed markets. As such, investments in securities of issuers with all or substantially all of its interests in an emerging market are subject to certain risks which may affect economic and fiscal results. These risks include:

(i) currency fluctuations and devaluations; (ii) inflation;
(iii) exchange controls;
(iv) high interest rates;
(v) wage and price controls;

(vi) economic and political instability;
(vii) the imposition of trade barriers;
(viii) expropriation and political violence or disturbance; and
(ix) changes in economic, tax and other policies.
(x) In addition, economic conditions in Peru are, to some extent, influenced by economic and securities market conditions in other emerging market countries. Although economic conditions are different in each country, investors’ reaction to developments in one country can have effects on the securities of issuers in other countries, including Peru. There can be no assurance that the economic conditions in Peru will not continue to be affected negatively by events elsewhere, especially in emerging markets.

(d) Community issues in Peru

Some parts of Peru are sensitive to community issues and the authorities in some regions are politically motivated, being anti-investment and sympathisers of populist claims of organised groups including the organisation of anti-mining demonstrations.

Risk factors to be considered include the nationwide and localised protests and demonstrations against mining activity over the past years.

4.3 Company specific

(a) Potential for significant dilution

Upon implementation of the Offer, assuming all Entitlements are accepted and no Options are exercised prior to the Record Date the number of Shares in the Company will increase from 483,722,597 currently on issue to 829,238,738. This means that each Share will represent a significantly lower proportion of the ownership of the Company.

It is not possible to predict what the value of the Company or a Share will be following the completion of the Offer being implemented and the Directors do not make any representation as to such matters.

The last trading price of Shares on ASX prior to the Offer Document being lodged of $0.005 is not a reliable indicator as to the potential trading price of Shares after implementation of the Offer.

(b) Contractual Risks

As announced to ASX on 26 March 2013, the Company has entered into an option agreement to acquire the Huaco Cucho project in Peru ( Option Agreement ).

Exercise of the option under the Option Agreement and completion thereafter remains subject to a number of conditions precedent, including, without limitation, the entities that have a right to the licences formalizing their ownership.

Further, under the terms of the Option Agreement, settlement is scheduled to occur a number of years into the future (if the option is ultimately exercised).

In order for the Company to be able to achieve its objectives, the Company is reliant on the counter parties to the Option Agreement and the registered holders of the licences to respectively comply with their contractual obligations under the Option Agreement and to maintain the licences in full force and effect, free from any liability to forfeiture or non-renewal.

Where the Option Agreement is breached or the registered holder of the licences fails to extend or renew them or fails to comply with conditions of the licences which results in loss of title to the licences, the Company would lose its opportunity to acquire the Huaco Cucho Option Licences. In this circumstance, there can be no guarantee that a legal remedy will be available or ultimately granted to the Company. The Company has no current reason to believe that the parties to the Option Agreement will not comply with their obligations or the registered holders of the licences will not meet and satisfy their obligations to maintain them in good standing.

(c) Exploration and operational risk

The current and future operations of the Company, including exploration, appraisal and possible production activities may be affected by a range of factors, including:

geological conditions;
limitations on activities due to seasonal weather patterns and cyclone activity;
alterations to joint venture programs and budgets;
unanticipated operational and technical difficulties encountered in seismic survey, drilling and production activities;
mechanical failure of operating plant and equipment;
adverse weather conditions, industrial and environmental accidents, acts of terrorism or political or civil unrest and other force majeure events;
industrial action, disputation or disruptions;
unavailability of aircraft or drilling equipment to undertake airborne electromagnetic and other geological and geophysical investigations;
shortages or unavailability of manpower or appropriately skilled manpower;
unexpected shortages or increases in the costs of consumables, spare parts, plant and equipment; and



prevention or restriction of access by reason of political unrest, outbreak of hostilities, and inability to obtain consents or approvals.

(d) Resource Estimate

Resource estimates are expressions of judgment based on knowledge, experience and industry practice. Estimates, which were valid when made, may change significantly when new information becomes available. In addition, resource estimates are imprecise and depend to some extent on interpretations, which may prove to be inaccurate. Should the Company encounter mineralisation or formations different from those predicted by past sampling and drilling, resource estimates may have to be adjusted and mining plans may have to be altered in a way which could have either a positive or negative effect on the Company’s operations.

(e) Commodity Prices

The Company expects to derive any future revenue from the sale of commodities.

Consequently, the Company’s expected earnings will be closely related to the price of these commodities together with any terms of the offtake agreement(s) under which these metals will be sold.

Commodity prices fluctuate and are affected by numerous factors beyond the control of the Company. These factors include worldwide and regional supply and demand for the specific commodity, commodity trading on the futures markets, general world economic conditions and the outlook for interest rates, inflation and other economic factors on both a regional and global basis. These factors may have a positive or negative effect on the Company’s exploration, project development and production plans and activities, together with the ability to fund those plans and activities.

(f)

Future financing

The Company will be required to raise additional equity and/or debt capital to finance its activities in the future. There can be no assurance that the Company will be able to raise that finance on acceptable terms or in a timely manner.

Any additional equity financing will dilute shareholdings and debt financing, if available, may involve restrictions on financing and operating activities. If the Company is unable to obtain additional financing as needed, the Company may be required to reduce the scope of its operations and scale back its exploration programmes as the case may be.

(g) Environmental risks

Exploration programmes impact on the environment. These impacts are minimised by the Company's application of best practice principles. The Company will be subject to environmental laws and regulations in connection with activities and operations it may pursue. The Company intends to conduct its activities in an environmentally responsible

manner and in accordance with all applicable laws. However, the Company may be the subject of accidents or unforeseen circumstances that could subject it to extensive liability.

Approval may be required from the relevant authorities before the Company can undertake activities that are likely to impact the environment. Failure to obtain such approvals will prevent the Company from undertaking its desired activities. The Company is unable to predict the effect of additional environmental laws and regulations that may be adopted in the future, including whether any such laws or regulations would materially increase the Company's cost of doing business or affect its operations in any area.

The operations and proposed activities of the Company’s Rasuhuilca gold-silver project is located in Peru are subject to the laws of Peru and regulations concerning the environment. As with most exploration projects and mining operations, the Company’s activities are expected to have an impact on the environment. It is the Company’s intention to conduct its activities to the highest standard of environmental obligation, including compliance with all environmental laws.

(h) Title

The exploration licences comprising some of the tenements which the Company holds or in which it has an interest may be the subject of applications for extension or renewal in the future. Although the Company believes that exploration licences and tenements will be extended or renewed (as the case may be) according to applicable laws, there can be no assurance that they will be extended or renewed or as to the terms of any such extension or renewal.

If an exploration licence or a tenement is not extended or renewed, the Company may suffer significant damage through loss of the opportunity to discover and/or develop any mineral resources on that tenement.

In addition, the Company cannot guarantee that those tenements that are applications for tenements will ultimately be granted in whole or in part.

(i) Native Title (Australian Licences)

The Native Title Act 1993 (Cth)(Native Title Act) recognises and protects the rights and interests in Australia of Aboriginal and Torres Strait Islander people in land and waters, according to their traditional laws and customs. There is significant uncertainty associated with native title in Australia and this may impact on the Company’s operations and future plans.

Native title can be extinguished by valid grants of land or waters to people other than the native title holders or by valid use of land or waters. It can also be extinguished if the indigenous group has lost their connection with the relevant land or waters. Native title is not extinguished by the grant of mining licences, as they are not considered to be grants of exclusive possession. A valid mining lease prevails over native title to the extent of any inconsistency for the duration of the title.

All tenements granted prior to 1 January 1994 are valid or validated.

Tenements granted between 1 January 1994 and 23 December 1996 may be invalid if they fail to comply with the Native Title Act or for certain other reason because of native title. However, such invalid tenements may be validated if certain statutory criteria are met.

For tenements to be validly granted (or renewed) after 23 December 1996 the special “ right to negotiate ” regime established by the Native Title Act must be followed.

It is important to note that the existence of a native title claim is not an indication that native title in fact exists to the land covered by the claim, as this is a matter ultimately determined by the Federal Court.

The Company must also comply with Aboriginal heritage legislation requirements which require heritage survey work to be undertaken ahead of the commencement of mining operations.

(j) Joint venture/operator parties and contractors

The operations of the Company will require involvement with joint venture parties through incorporated or unincorporated joint ventures and contractors. The Directors are unable to predict the risk of:

(i) financial failure, default or non-compliance with respective obligations by a participant in any joint venture to which the Company is, or may become, a party;
(ii) default insolvency or other managerial failure by any of the contractors used by the Company in its exploration activities; or
(iii) insolvency or other managerial failure by any of the other service providers used by the Company for any activity.

(k) Sovereign risk

The Company’s Rasuhuilca gold-silver project is located in Peru. Peru has been a stable democracy for a number of years with a democratically elected government that is supportive of foreign investment. However, there are always risks for companies operating in countries such as Peru and the Company cannot guarantee access, surety of title and tenure of its Peruvian-based assets and cannot guarantee that government policy in Peru will remain supportive of the mining and resources sector as it currently is.

(l)

Metallurgy

Metal and/or mineral recoveries are dependent upon the metallurgical process, and by its nature contain elements of significant risk such as:

(i) identifying a metallurgical process through test work to produce a saleable metal and/or concentrate;
(ii) developing an economic process route to produce a metal and/or concentrate; and

(iii) changes in mineralogy in the ore deposit can result in inconsistent metal recovery, affecting the economic viability of the project.

4.4 General Risks

(a) Economic Risks

General economic conditions, movements in interest and inflation rates and currency exchange rates may have an adverse effect on the Company’s exploration, development and production activities, as well as on its ability to fund those activities.

(b) Market Conditions

Share market conditions may affect the value of the Company’s quoted securities regardless of the Company’s operating performance. Share market conditions are affected by many factors such as:

(i) general economic outlook;
(ii) interest rates and inflation rates;
(iii) currency fluctuations;
(iv) changes in investor sentiment toward particular market sectors;
(v) the demand for, and supply of, capital; and
(vi) terrorism or other hostilities.

The market price of securities can fall as well as rise and may be subject to varied and unpredictable influences on the market for equities in general and resource exploration stocks in particular. Neither the Company nor the Directors warrant the future performance of the Company or any return on an investment in the Company.

(c)

Potential Acquisitions

As part of its business strategy, the Company may make acquisitions of or significant investments in companies, products, technologies or resource projects. Any such future transaction would be accompanied by the risks commonly encountered in making acquisitions of companies, products, technologies or resource projects.

(d)

Exchange rate risk

Variations in exchange rates are unpredictable and the Company may incur losses or gains from time to time in respect of its activities in Peru or elsewhere overseas as a result of such variations.

(e) Weather condition risk

Field operations including drilling may be delayed due to extreme weather conditions such as flooding, storms or cyclones.

(f) Community risk

Carrying out activities on site may affect the neighbouring communities and local authorities. This can be of particular concern where the Company is operating in heavily populated areas. In this situation the Company would plan to carry out community consultation to take into account these concerns. However, there is a risk that in some circumstances there could be higher than normal community concern which could result in a project being denied permission to proceed or having permission withdrawn or having conditions imposed on continuation of the activities which make it unacceptable to the Company to proceed with those activities.

(g) Reliance on key personnel

The responsibility of overseeing the day-to-day operations and the strategic management of the Company depends substantially on its senior management and its key personnel. There can be no assurance given that there will be no detrimental impact on the Company if one or more of these employees cease their employment.

(h) Investment speculative

The above list of risk factors ought not to be taken as exhaustive of the risks faced by the Company or by investors in the Company. The above factors, and others not specifically referred to above, may in the future materially affect the financial performance of the Company and the value of the securities offered under this Offer Document. Therefore, the securities to be issued pursuant to this Offer Document carry no guarantee with respect to the payment of dividends, returns of capital or the market value of those Securities.

Potential investors should consider that the investment in the Company is speculative and should consult their professional advisers before deciding whether to apply for securities pursuant to this Offer Document.

5. CAPITAL STRUCTURE AND FINANCIAL INFORMATION

5.1 Effect on capital structure

The effect of the Offer on the capital structure of the Company, assuming all Entitlements are accepted and no Options are exercised prior to the Record Date, is set out below.

	Number
Shares currently on issue1	483,722,597
Shares offered pursuant to the Offer	345,516,141
Total Shares on issue after completion of the Offer and Placement	829,238,738

Options

	Number
Options currently on issue2	323,377,849
Options offered pursuant to the Offer	345,516,141
Total Options on issue after completion of the Offer and Placement	668,893,990

Performance Rights

	Number
Performance Shares on issue3	10,200,000
Performance shares offered pursuant to the Offer	Nil
Total Performance Shares on issue after completion of the Offer and Placement	10,200,000

Performance Shares

	Number
Performance Shares on issue3	14,500,000
Performance shares offered pursuant to the Offer	Nil
Total Performance Shares on issue after completion of the Offer and Placement	14,500,000

Notes:

The number of Shares on issue after the Offer assumes that no Options are exercised until the Offer Options are issued.

This figure comprises:
a. 296,877,849 listed September 2018 Options exercisable at $0.06 on or before 30 September 2018
b. 20,500,000 unlisted September 2014 Options exercisable at $0.1987 on or before 30 September 2014; and
c. 6,000,000 unlisted Incentive Options exercisable at $0.014 on or before 30 September 2018, subject to incentive option vesting conditions being satisfied;
On the vesting date, each related party Performance Right will automatically vest into one Share. Each of two tranches of 5,100,000 Performance Rights will automatically vest into 5,100,000 Shares as follows:

Tranche 1 – 5,100,000 Performance Rights

On or before 31 December 2015, if the Company (or one of its subsidiaries):

a. entering into a binding joint venture arrangement with one or more third parties in relation to the Kimsa Orcco Project, or
b. an investor (which may include a current Shareholder) acquires 15%, of the issued share capital of the Company (15% Acquisition). For the purpose of this vesting condition any Shares held as at the date of the Meeting shall not count toward the calculation of the 15% Acquisition.

Tranche 2 – 5,100,000 Performance Rights

On or before 31 December 2016, if the Company achieves a market capitalisation equal to or greater than $30 million for a period equal to at least 10 consecutive trading days.

Each Performance Share will automatically convert into one Ordinary Share upon the Company announcing that it has commenced the commercial production of gold and or silver or gold and or silver ore on any part of the Rasuhuilca tenements (“the Milestone”) on or before 21 June 2017. If the Milestone is not achieved by this date, the Performance Shares shall automatically convert to ordinary shares on the basis that one ordinary shall be issued for every 500,000 (five hundred thousand) Performance Shares held.

5.2 Consolidated balance sheet

The Balance Sheet as at 30 June 2014 (unaudited) and the Pro Forma Balance Sheet shown on the following page have been prepared on the basis of the accounting policies normally adopted by the Company and reflect the changes to its financial position. The Pro Forma Balance Sheet has been prepared on the assumption that all Shares pursuant to the Offer are issued.

The Balance Sheets have been prepared to provide Shareholders with information on the assets and liabilities of the Company and pro-forma assets and liabilities of the Company as noted below. The historical and pro-forma financial information is presented in an abbreviated form, insofar as it does not include all of the disclosures required by Australian Accounting Standards applicable to annual financial statements.

Current Assets Cash and cash equivalents Trade and other receivables Total Current Assets	Unaudited 30/06/2012 $ Pro Forma After 1:1 Rights Issue $ 172,497 1,900,078 170,945 170,945 343,442 2,071,023

Non-Current Assets Plant and equipment Mining Properties Loans to controlled entities Total Non-Current Assets Total Assets Current Liabilities Trade and other payables Provisions Total Current Liabilities Total Non-Current Liabilities Total Liabilities Net Assets Equity Issued Capital Reserve Accumulated losses Total Equity	36,993 36,993 2,963,502 2,963,502 5,308,205 5,308,205
	8,308,700 8,308,700
	8,652,142 10,379,723
	140,002 140,002 3,262 3,262
	143,264 143,264

	- -
	143,264 143,264
	8,508,878 10,236,459
	16,092,321 17,819,902 1,921,066 1,921,066 (9,504,509) (9,504,509)
	8,508,878 10,236,459

5.3 Pro Forma Assumptions

The pro forma Statement of Financial Position has been prepared on the following assumptions:

(a) a pro rata non-renounceable rights offer on the basis of five (5) New Shares for every seven (7) Shares held at the Record Date at an issue price of $0.005 per Share;
(b) all New Shares issued pursuant to the Offer are issued;
(c) the total number of New Shares issued under the Offer is 345,516,141; and
(d) the total number of New Options issued under the Offer is 345,516,141.

5.4 Dividend Policy

The Directors are not able to say when and if dividends will be paid in the future, as the payment of any dividends will depend on the future profitability, financial position and cash requirements of the Company.

DEFINED TERMS

$ or A$ means an Australian dollar.

Applicant refers to a person who submits an Entitlement and Acceptance Form.

Application refers to the submission of an Entitlement and Acceptance Form.

ASX means ASX Limited (ACN 008 624 691) or, where the context permits, the Australian Securities Exchange operated by ASX Limited.

Board means the board of directors.

Closing Date means the closing date set out in Section 2.3 or such other date as may be determined by the Directors.

Company means Laconia Resources Limited (ACN 137 984 297).

Completion means the date on which the last of the Entitlement and, where applicable, the Shortfall, is issued in accordance with the Offer.

CPS means Indian CPS Capital Group Pty Ltd (ACN 088 055 636) (AFSL 249848).

Directors means the directors of the Company.

Eligible Shareholder means a Shareholder whose details appear on the Company's register of Shareholders as at the Record Date whose registered address is in Australia or New Zealand.

Entitlement means the entitlement to subscribe for five (5) New Shares for every seven (7) Shares held by an Eligible Shareholder on the Record Date.

Entitlement and Acceptance Form means the Entitlement and Acceptance Form accompanying this Offer Document.

Foreign Holder means a holder of a Share whose address, as shown in the records of the Share Registry, is a place outside of Australia or New Zealand.

Group Company means the Company and each Subsidiary.

Listing Rules means the Listing Rules of the ASX.

New Share means a new Share proposed to be issued pursuant to this Offer.

New Option means an Option to be issued on the terms and conditions set out in Section 2.8 of this Offer Document and which will be issued pursuant to the Offer.

Offer or Rights Issue means the pro rata non-renounceable offer of New Shares at an issue price of $0.005 each on the basis of five (5) New Shares for every seven (7) Shares held on the Record Date subscribed for pursuant to this Offer Document.

Offer Document means this Offer Document dated 5 September 2014.

Official List means the official list of ASX.

Opening Date means the opening date set out in Section 2.3.

Option means an option to acquire a Share.

Record Date means the record date set out in Section 2.3.

Section means a section of this Offer Document.

Securities means Shares and Options.

Share means an ordinary fully paid share in the capital of the Company.

Share Registry means Security Transfer Registrars Pty Ltd.

Shortfall means those New Shares under the Offer not applied for by the Closing Date .

Shortfall Offer means the offer of New Shares which form the Shortfall as detailed in Section 3.3 of this Offer Document.

Shareholder means a holder of Shares.

Valid Applications means an Application for Shares pursuant to the Offer:

(a) that is received by the Company or a representative acting on its behalf on or before 5.00pm on the Closing Date at a place specified in the Application;
(b) that is not withdrawn before it ceases to be capable of being withdrawn; and
(c) in respect of which payment of $0.005 per Share for the relevant number of Entitlement Shares is received and is cleared (either before or after the Closing Date) when presented (either before or after the Closing Date) for payment by the relevant financial institution on which the payment is drawn.

Subsidiary means a subsidiary of the Company within the meaning of the Corporations Act.

Timetable means the timetable set out in clause 2.3 approved by ASX and as may from time to time be varied by written agreement by the Company and the Underwriter (each party acting reasonably) and ASX (if applicable).

WST means Australian Western Standard Time.