Together the Entitlement Offer and the Placement Options Offer are referred to as the Offers.

Transcription

1 ANSON RESOURCES LIMITED ACN ENTITLEMENT ISSUE PROSPECTUS For a non-renounceable entitlement issue of one (1) Share for every five (5) Shares held by those Shareholders registered at the Record Date at an issue price of $0.027 per Share to raise up to $702,989 (based on the number of Shares to be on issue as at the Record Date) (together with one (1) free attaching option exercisable at $0.03 on or before 13 July 2017 (New Option) for every one (1) Share subscribed for and issued) (Entitlement Offer). This Prospectus also contains an offer of up to 4,296,296 free New Options on the basis of one (1) free New Option for every one (1) Share subscribed for by Eligible Investors in the Placement (Placement Options Offer). Together the Entitlement Offer and the Placement Options Offer are referred to as the Offers. IMPORTANT NOTICE This document is important and should be read in its entirety. If after reading this Prospectus you have any questions about the securities being offered under this Prospectus or any other matter, then you should consult your stockbroker, accountant or other professional adviser. The Securities offered by this Prospectus should be considered as speculative.

2 CONTENTS 1. CORPORATE DIRECTORY TIMETABLE IMPORTANT NOTES DETAILS OF THE OFFERS PURPOSE AND EFFECT OF THE OFFERS RIGHTS AND LIABILITIES ATTACHING TO SECURITIES RISK FACTORS ADDITIONAL INFORMATION DIRECTOR S AUTHORISATION GLOSSARY... 38

3 1. CORPORATE DIRECTORY Directors Bruce McLeod (Non-Executive Chairman) Bruce Richardson (Managing Director) Greg Knox (Non-Executive Director) Company Secretary Michael van Uffelen ASX Code Registered Office Level 1, 8 Outram Street West Perth WA 6005 Telephone: Facsimile: info@ansonresources.com Website: ASN Share Registry* Security Transfer Registrars Pty. Limited 770 Canning Highway APPLECROSS, WA, AUSTRALIA, 6153 Telephone: Facsimile: Solicitors Steinepreis Paganin Lawyers and Consultants Level 4, The Read Buildings 16 Milligan Street Perth WA 6000 Auditor* Stantons International Level 2, 1 Walker Avenue West Perth WA 6005 * This entity is included for information purposes only. It has not been involved in the preparation of this Prospectus and has not consented to being named in this Prospectus. 1

4 2. TIMETABLE Lodgement of Prospectus with the ASIC 27 July 2016 Lodgement of Prospectus & Appendix 3B with ASX 27 July 2016 Notice sent to Optionholders 28 July 2016 Notice sent to Shareholders 29 July 2016 Issue of remaining Placement Shares on or before 29 July 2016 Ex date 3 August 2016 Record Date for determining Entitlements (5:00pm WST) 4 August 2016 Prospectus sent to Eligible Shareholders and Eligible Investors & Company announces this has been completed 9 August 2016 Last day to give notice to extend the Closing Date 15 August 2016 Closing Date* (5:00pm WST) 18 August 2016 Securities quoted on a deferred settlement basis 19 August 2016 ASX notified of under subscriptions 23 August 2016 Issue date/despatch of holding statements 25 August 2016 Quotation of Securities issued under the Offers* 26 August 2016 *The Directors may extend the Closing Date by giving at least 3 Business Days notice to ASX prior to the Closing Date. As such the date the Securities are expected to commence trading on ASX may vary. 2

5 3. IMPORTANT NOTES This Prospectus is dated 27 July 2016 and was lodged with the ASIC on that date. +The ASIC and its officers take no responsibility for the contents of this Prospectus or the merits of the investment to which this Prospectus relates. No Securities may be issued on the basis of this Prospectus later than 13 months after the date of this Prospectus. This Prospectus is a transaction specific prospectus for an offer of continuously quoted securities (as defined in the Corporations Act) and has been prepared in accordance with section 713 of the Corporations Act. It does not contain the same level of disclosure as an initial public offering prospectus. In making representations in this Prospectus regard has been given to the fact that the Company is a disclosing entity for the purposes of the Corporations Act and certain matters may reasonably be expected to be known to investors and professional advisers whom potential investors may consult. It is important that investors read this Prospectus in its entirety and seek professional advice where necessary. The Securities the subject of this Prospectus should be considered highly speculative. 3.1 Placement As announced on 20 July 2016, the Company is undertaking a placement raising a total of $216,000 through the issue of 8,000,000 Shares (Placement Shares) at an issue price of $0.027 per Share (Placement) with investors in the Placement (Investors) receiving a right to apply for one (1) free attaching New Option for every one (1) Share issued under the Placement (Placement Options). 3,703,704 of the Placement Shares and 3,703,704 Placement Options have been issued. The remaining 4,296,296 Placement Shares will be issued on or before 29 July 2016 and in any event, prior to the Record Date. Accordingly, the Investors will be entitled to participate in the Entitlement Offer. The remaining 4,296,296 Placement Options are being offered under this Prospectus under the Placement Options Offer to the Investors who subscribed under the Placement and who have not yet been issued Placement Options (Eligible Investors). 3.2 Risk factors Potential investors should be aware that subscribing for Securities in the Company involves a number of risks. The key risk factors of which investors should be aware are set out in Section 7. These risks together with other general risks applicable to all investments in listed securities not specifically referred to, may affect the value of the Securities in the future. Accordingly, an investment in the Company should be considered highly speculative. Investors should consider consulting their professional advisers before deciding whether to apply for Securities pursuant to this Prospectus. 3.3 Disclaimer No person is authorised to give information or to make any representation in connection with this Prospectus, which is not contained in the Prospectus. Any information or representation not so contained may not be relied on as having been authorised by the Company in connection with this Prospectus. 3

6 3.4 Applications Applications for Securities offered pursuant to this Prospectus can only be submitted on an original Entitlement and Acceptance Form, Placement Options Application Form or Shortfall Application Form. 3.5 Forward-looking statements This Prospectus contains forward-looking statements which are identified by words such as may, could, believes, estimates, targets, expects, or intends and other similar words that involve risks and uncertainties. These statements are based on an assessment of present economic and operating conditions, and on a number of assumptions regarding future events and actions that, as at the date of this Prospectus, are expected to take place. Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties, assumptions and other important factors, many of which are beyond the control of the Company, its Directors and management. No assurance can be, or is, given, that the results, performance or achievements expressed or implied by the forward-looking statements contained in this prospectus will actually occur and investors are cautioned not to place undue reliance on these forward-looking statements. There is no intention to update or revise forward-looking statements, or to publish prospective financial information in the future, regardless of whether new information, future events or any other factors affect the information contained in this prospectus, except where required by law. These forward looking statements are subject to various risk factors that could cause actual results to differ materially from the results expressed or anticipated in these statements. 4

7 4. DETAILS OF THE OFFERS 4.1 The Offers Entitlement Offer For a non-renounceable entitlement issue of one (1) Share for every five (5) Shares held by those Shareholders registered at the Record Date at an issue price of $0.027 per Share to raise up to $702,989 (based on the number of Shares to be on issue as at the Record Date) (together with one (1) free attaching New Option for every one (1) Share subscribed for and issued). Only Shareholders with a registered address in Australian or New Zealand at the Record Date will be eligible to participate in the Entitlement Offer (Eligible Shareholder). Fractional entitlements will be rounded up to the nearest whole number. Based on the capital structure of the Company as at the date of this Prospectus, (and assuming that all Placement Shares are issued prior to the Record Date and no existing Options are exercised or Performance Rights vest prior to the Record Date) a maximum of 26,036,637 Shares and 26,036,637 New Options will be issued pursuant to this Offer to raise up to $702,989. As at the date of this Prospectus the Company has 3,703,704 Options on issue, exercisable at $0.03 on or before 13 July 2017, all of which may be exercised prior to the Record Date in order to participate in the Placement Offer. The Company also has 5,885,000 Performance Rights on issue which will vest on the achievement of certain vesting conditions. The Company does not expect that the Performance Rights will vest prior to the Record Date and accordingly, the holders of Performance Rights will not be able to participate in the Placement Offer. Please refer to Section 5.4 for information on the exercise price and expiry date of the Options and the vesting conditions of the Performance Rights on issue. Placement Options Offer Under the terms of the Placement, the Company has offered all Investors who took part in the Placement the right to subscribe for one (1) free New Option for every one (1) Share subscribed for under the Placement. 3,703,704 of the Placement Options have been issued. In addition to the Entitlement Offer, this Prospectus makes the offer of up to 4,296,296 free New Options on the basis of one (1) free New Options for every one (1) Share subscribed for by the Investors in the Placement (Placement Options Offer). The Placement Options Offer is only extended to the Eligible Investors, being Investors who have not been issued New Options under the Placement, accordingly Placement Options Application Forms will only be provided by the Company to these parties. To apply for New Options under the Placement Options Offer, Eligible Investors must return the Placement Options Application Form to the Company no later than 5.00pm WST on the Closing Date. No funds will be raised from the Placement Options Offer under this Prospectus as relevant Options are being issued for nil consideration. 5

8 Offers All of the Shares offered under this Prospectus will rank equally with the Shares on issue at the date of this Prospectus. Please refer to Section 6.1 for further information regarding the rights and liabilities attaching to the Shares. All of the New Options offered under this Prospectus will be issued on the terms and conditions set out in Section 6.2. All Shares issued on conversion of the New Options will rank equally with the Shares on issue at the date of this Prospectus. The purpose of the Offers and the intended use of funds raised are set out in Section Minimum subscription There is no minimum subscription for the Entitlement Offer. 4.3 Acceptance Your acceptance of the Entitlement Offer must be made on the Entitlement and Acceptance Form accompanying this Prospectus. Your acceptance must not exceed your Entitlement as shown on that form. If it does, your acceptance will be deemed to be for the maximum Entitlement. You may participate in the Entitlement Offer as follows: (a) if you wish to accept your full Entitlement: (i) complete the Entitlement and Acceptance Form and return to the Company s share registry no later than 5:00 pm WST on the Closing Date and either: (A) (B) attach your cheque, drawn on an Australian bank or bank draft made payable in Australian currency, for the amount indicated on the Entitlement and Acceptance Form; or transfer the amount of funds equal to the amount indicated on the Entitlement and Acceptance Form to the Company by way of direct debit in accordance with Section 4.5 of this Prospectus so that the funds are received no later than 5:00 pm WST on the Closing Date; or (ii) make your payment by BPAY for the amount of your Entitlement indicated on 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 (you will be deemed to accept that number of New Options which equates to 1 New Option for every 1 Share accepted) and return it to the Company s share registry so that is received by no later than 5:00 pm WST on the Closing Date and either: 6

9 (A) attach your cheque, drawn on an Australian bank or bank draft made payable in Australian currency, for the appropriate application monies (at $0.027 per Share); (B) transfer the appropriate application monies (at $0.027 per Share) to the Company by way of direct debit in accordance with Section 4.5 of this Prospectus so that the funds are received no later than 5:00 pm WST on the Closing Date; or (ii) make your payment by BPAY for the amount of your Entitlement that you wish to accept calculated on the basis of $0.027 per Share; or (c) if you do not wish to accept all or part of your Entitlement, you are not obliged to do anything. Where the application monies required to be paid for the amount of Securities being accepted results in a fraction of a cent the amount to be paid is required to be rounded up to the nearest whole cent. The Entitlement Offer is non-renounceable. Accordingly, a Shareholder may not sell or transfer all or part of their Entitlement. One (1) New Option with an exercise price of $0.030 and an expiry date of 13 July 2017 will be issued for every one (1) Share subscribed for and issued under the Entitlement Offer. 4.4 Payment by cheque/bank draft All cheques must be drawn on an Australian bank or bank draft made payable in Australian currency to ANSON RESOURCES LIMITED and crossed Not Negotiable. Your completed Entitlement and Acceptance Form and cheque must reach the Company s share registry no later than 5:00 pm WST on the Closing Date. 4.5 Payment by direct debit All payments by direct debit must be made to the following account: Bank: Bank Account Name: Commonwealth Bank of Australia Anson Resources Business Transaction Account BSB: Account number: SWIFT code: Ref*: CTBAAU2S {quote the entitlement number as it appears on your Entitlement and Acceptance Form} *Failure to use your entitlement number as it appears on your personalised Entitlement and Acceptance Form may result in your Application Monies not being matched to your Entitlement and Acceptance Form and your Application not being processed. 7

10 Different financial institutions may implement earlier cut off times with regards to electronic payments therefore electronic payments should consider the relevant cut-off times as stipulated by your financial institution. It is your responsibility to ensure that funds submitted through direct debit are received by 5:00 pm WST on the Closing Date. Your completed Entitlement and Acceptance Form must reach the Company s share registry no later than 5:00 pm WST on the Closing Date. Any application monies received for more than your final allocation of Shares (only where the amount is $1.00 or greater) will be refunded. No interest will be paid on any application monies received or refunded. 4.6 Payment by BPAY For payment by BPAY, please follow the instructions on the Entitlement and Acceptance Form. You can only make a payment via BPAY if you are the holder of an account with an Australian financial institution that supports BPAY transactions. Please note that should you choose to pay by BPAY : (a) (b) you do not need to submit the Entitlement and Acceptance Form but are taken to have made the declarations on that Entitlement and Acceptance Form; and if you do not pay for your Entitlement in full, you are deemed to have taken up your Entitlement in respect of such whole number of Shares which is covered in full by your application monies. If you have more than one shareholding of Shares and consequently receive more than one Entitlement and Acceptance Form, when taking up your Entitlement in respect of one of those Shareholdings only use the unique customer reference number (CRN) specific to that Shareholding as set out in the applicable Entitlement and Acceptance Form. Do not use the same CRN for more than one of your Shareholdings. This can result in your application monies being applied to your Entitlement in respect of only one of your Shareholdings (with the result that any application in respect of your remaining Shareholdings will not be valid). It is your responsibility to ensure that your BPAY payment is received by the share registry by no later than 3:00 pm (WST) on the Closing Date. You should be aware that your financial institution may implement earlier cut-off times with regards to electronic payment and you should therefore take this into consideration when making payment. The Company shall not be responsible for any delays in the receipt of the BPAY payment. Any application monies received for more than your final allocation of Securities (only where the amount is $1.00 or greater) will be refunded. No interest will be paid on any application monies received or refunded. 4.7 Implications of an acceptance Returning a completed Entitlement and Acceptance Form with a cheque or paying any application monies by BPAY will be taken to constitute a representation by you that: (a) (b) you have received a copy of this Prospectus and the accompanying Entitlement and Acceptance Form, and read them both in their entirety; you acknowledge that once the Entitlement and Acceptance Form is returned, or a BPAY payment instruction is given in relation to any 8

11 4.8 Underwriting Application Monies, the application may not be varied or withdrawn except as required by law. The Entitlement Offer is not underwritten. 4.9 Effect of the Offer on the Control of the Company As at the date of this Prospectus, the Company s largest substantial holder, Wu Xiaonian, holds a total of 29,905,000 Shares, being a voting power in the Company equal to approximately 23.75%. Wu Xiaonian s present relevant interest and changes under several scenarios are set out in the table below and are based on the assumption that Wu Xiaonian takes up his full Entitlement of 5,981,000 Shares under each scenario and all Placement Shares are issued prior to Record Date. Event Shares held by Wu Xiaonian Voting power of Wu Xiaonian 6 months prior to Issue Date 29,905, % Date of Prospectus 29,905, % Record Date 29,905, % Completion of Entitlement Issue Fully subscribed* 35,886, % 75% subscribed* 35,886, % Only Wu Xiaonian subscribes* 35,886, % *Assuming no Shareholders take up Shortfall Shares, all Placement Shares are issued prior to Record Date and no Options are exercised or Performance Right vest. The number of Shares held by Wu Xiaonian and his voting power in the table above show the potential effect of his take up of the Entitlement Offer. However, the Company considers it is unlikely that no Shareholder (other than Wu Xiaonian) takes up any of their Entitlement. In the event that Wu Xiaonian does subscribe for his full Entitlements under the Entitlement Offer, no breach of section 606 of the Corporations Act will occur as such subscription and issue of Shares will fall within the exception to section 606 of the Corporations Act under Item 9 of section 611 of the Corporations Act as the relevant interest of Wu Xiaonian 6 months prior to the issue date was 25.00%. Furthermore, the Company will not issue any Securities under the Shortfall Offer to Wu Xiaonian. Pursuant to the requirements under the Corporations Act, Wu Xiaonian would be restricted from exercising New Options received under the Entitlement Offer if the exercise of the New Options would increase his voting power to be in breach of section 606 of the Corporations Act. If Wu Xiaonian accepts his full Entitlement he will also be issued 5,981,000 New Options. Under the Corporations Act, Wu Xiaonian will be restricted from exercising the New Options if the exercise of the New Options into Shares would result in Wu Xiaonian being in contravention of section 606(1) of the Corporations Act. In such situation then the exercise of the 9

12 Options shall be prevented until such later time or times that the exercise to Shares would not result in a contravention of section 606(1) of the Corporations Act Potential dilution from the Offers The capital structure on a fully diluted basis as at the Record Date (assuming all Placement Shares are issued) would be 139,771,887 Shares and on completion of the Offers (assuming all Entitlements are accepted, the Placement is fully subscribed, the Placement Options Offer is fully subscribed and no Options are exercised or Performance Rights vest prior to the Record Date) would be 196,141,457 Shares. Shareholders should note that if they do not participate in the Entitlement Offer, their holdings are likely to be diluted by approximately 28.74% on a fully diluted basis (as compared to their holdings and total number of Shares on issue as at the Record Date) if all the Securities offered under this Prospectus are issued Shortfall Offer Any Entitlement not taken up pursuant to the Entitlement Offer will form the Shortfall Offer. The Shortfall Offer is a separate offer made pursuant to this Prospectus and will remain open for up to three months following the Closing Date. The issue price for each Share to be issued under the Shortfall Offer shall be $0.027 being the price at which Shares have been offered under the Entitlement Offer and the New Options issued under the Shortfall Offer will be issued with the New Shares in the same ratio as under the Entitlement Offer. The Directors reserve the right to issue Shortfall Securities at their absolute discretion. Accordingly, do not apply for Shortfall Securities unless instructed to do so by the Directors. No action has been taken to register or qualify the Securities or otherwise permit a public offering of the Securities the subject of the Shortfall Offer in any jurisdiction outside Australia (other than in respect of Eligible Shareholders in New Zealand). Applicants with a registered address in countries other than Australia (and who are not an Eligible Shareholder in New Zealand) should consult their professional advisers as to whether any governmental or other consents are required or whether any other formalities need to be considered and followed. If you are an Applicant with a registered address in countries other than Australia (and are not an Eligible Shareholder in New Zealand) it is your responsibility to obtain all necessary approvals for the issue of the Securities pursuant to this Prospectus. The return of a completed Shortfall Application Form will be taken by the Company to constitute a representation and warranty by you that all relevant approvals have been obtained. No issue will be made under the Shortfall Offer if this would result in a person acquiring a relevant interest in more than 20% of the voting Shares immediately following that issue. Applications for Securities under the Shortfall Offer must be made using the Shortfall Application Form, in multiples that do not result in a fraction of a cent or alternatively the application monies must be rounded up to the nearest whole cent and payment for the Securities applied for must be made in full. 10

13 4.12 ASX listing 4.13 Issue Application for Official Quotation of the Shares and New Options offered pursuant to this Prospectus will be made in accordance with the timetable set out at the commencement of this Prospectus. If ASX does not grant Official Quotation of the Securities offered pursuant to this Prospectus before the expiration of 3 months after the date of issue of the Prospectus, (or such period as varied by the ASIC), the Company will not issue those Shares and will repay all application monies for the Shares within the time prescribed under the Corporations Act, without interest. The fact that ASX may grant Official Quotation to the Shares and New Options is not to be taken in any way as an indication of the merits of the Company or the Shares or New Options now offered for subscription. Securities issued pursuant to the Offers will be issued in accordance with the ASX Listing Rules and timetable set out at the commencement of this Prospectus. Securities issued pursuant to the Shortfall Offer will be issued on a progressive basis. Where the number of Securities 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 Prospectus, 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 Offers will be mailed in accordance with the ASX Listing Rules and timetable set out at the commencement of this Prospectus and for Shortfall Securities issued under the Shortfall Offer as soon as practicable after their issue Jurisdictions in which Offers will be made The Offers do not, and are 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 Prospectus. 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 Securities these Shareholders would be offered and the cost of complying with regulatory requirements in each relevant jurisdiction. Accordingly, the Offers are not being extended and Securities will not be issued to Shareholders with a registered address which is outside Australia or New Zealand. New Zealand The Securities are not being offered 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 these securities is being made in reliance on the Securities Act (Overseas Companies) Exemption Notice 2013 (New Zealand). This Prospectus has been prepared in compliance with Australian law and has not been registered, filed with or approved by any New Zealand regulatory authority. 11

14 This document is not a product disclosure statement under New Zealand law and is not required to, and may not, contain all the information that a product disclosure statement under New Zealand law is required to contain. Nominee holders Shareholders resident in Australia or New Zealand holding Shares on behalf of persons who are resident overseas are responsible for ensuring that taking up an Entitlement under the Entitlement Offer does not breach regulations in the relevant overseas jurisdiction. Return of a duly completed Entitlement and Acceptance Form will be taken by the Company to constitute a representation that there has been no breach of those regulations Enquiries Any questions concerning the Offers should be directed to the Company Secretary, on

15 5. PURPOSE AND EFFECT OF THE OFFERS 5.1 Purpose of the Offers Purpose of the Entitlement Offer The purpose of the Entitlement Offer is to raise up to approximately $702,989. The funds raised from the Entitlement Offer are planned to be used in accordance with the table set out below: Item Proceeds of the Entitlement Offer Full Subscription ($) % 1. Exploration activities (including general surveying, assaying and drilling) at the Company s Graphite Project 2. Metallurgical testwork on the samples to be collected at the Graphite Project 375, , Expenses of the Entitlement Offer 1 34, Working capital 143, Total 702, Notes: 1. Refer to Section 8.26 for further details relating to the estimated expenses of the Entitlement Offer. 2. The funds allocated to the working capital detailed above and current cash on hand are sufficient to ensure that the Company can maintain operations until 31 December The Company has additional listed investments, which could be sold to provide additional funding which is expected to be sufficient to maintain operations until 30 June The above table is a statement of current intentions as of the date of this Prospectus. As with any budget, intervening events and new circumstances have the potential to affect the manner in which the funds are ultimately applied. The Board reserves the right to alter the way funds are applied on this basis. In the event the Company raises less than the full subscription of $702,989 under the Entitlement Offer, the funds raised (after expenses of the Entitlement Offer and the Acquisition) will be first applied towards the exploration activities at the Graphite Project located in Western Australian and metallurgical testwork on the samples to be collected at the Graphite Project located in Western Australia and then working capital. The Directors consider that funds raised pursuant to the Entitlement Offer will provide a sound platform to pursue the Company s stated objectives. Purpose of the Placement Options Offer The purpose of the Placement Options Offer is to issue the remaining New Options offered to Investors under the Placement. No funds will be raised form the Offers as the New Options are free attaching to the Shares subscribed for under the Placement. 13

16 5.2 Effect of the Offers The principal effect of the Offers, assuming all Entitlements are accepted, the Placement is fully subscribed, the Placement Options Offer is fully subscribed and no Options are exercised or Performance Rights vest prior to the Record Date, will be to: (a) (b) (c) increase the cash reserves by $668,989 (after deducting the estimated expenses of the Entitlement Offer) immediately after completion of the Offers; increase the number of Shares on issue from 130,183,183 (being the number of Shares on issue as at the date of this Prospectus including all Placement Shares) to 156,219,820 Shares following completion of the Offers; and increase the number of Options on issue from 3,703,704 (at the date of this Prospectus) to 34,036,637 Options following completion of the Offers (comprising 4,296,296 New Options to be issued under the Placement Options Offer and 26,036,637 New Options under the Entitlement Offer). 5.3 Pro-forma balance sheet The unaudited management accounts balance sheet and the unaudited proforma balance sheet as at 30 June 2016 on completion of the Offers shown below 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 assuming all Placement Shares are issued, all Entitlements are accepted, the Placement Options Offer is fully subscribed, no existing Options are exercised or Performance Rights vest prior to the Record Date and including expenses of the Offer and include the proceeds from the Placement. The pro-forma balance sheet has been prepared to provide investors 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. UNAUDITED MANAGEMENT ACCOUNTS 30 JUNE 2016 UNAUDITED PROFORMA 30 JUNE 2016 CURRENT ASSETS Cash and cash equivalents 1 456,447 1,336,436 Trade and other receivables 24,910 24,910 TOTAL CURRENT ASSETS 481,357 1,361,346 NON-CURRENT ASSETS Investments 896, ,501 Plant and equipment 45,093 45,093 TOTAL NON-CURRENT ASSETS 941, ,594 14

17 TOTAL ASSETS 1,422,951 2,302,940 CURRENT LIABILITIES Trade and other payables 23,308 23,308 TOTAL CURRENT LIABILITIES 23,308 23,308 TOTAL LIABILITIES 23,308 23,308 NET ASSETS (LIABILITIES) 1,399,643 2,279,632 EQUITY Issued capital 6,952,930 7,866,919 Reserves 872, ,823 Accumulated losses (6,426,110) (6,460,110) TOTAL EQUITY 1,399,643 2,279,632 Notes: 1. Includes adjustment for net effect of the Placement, being $211,000 (which is $216,000 net of costs of $5, Effect on capital structure The effect of the Offer on the capital structure of the Company, assuming all Entitlements are accepted, the Placement is fully subscribed prior to Record Date, the Placement Options Offer is fully subscribed and no Options are exercised or Performance Rights vest prior to the Record Date, is set out below. Shares Number Shares currently on issue * 125,886,887 Placement Shares (to be issued prior to Record Date) 4,296,296 Shares offered pursuant to the Offer 26,036,637 Total Shares on issue after completion of the Offer * 156,219,820 * 10,000,000 of the Shares on issue are subject to escrow restrictions which will end on 21 December Options Number Options currently on issue: (Unquoted exercisable at $0.03 on or before 13 July 2017)* New Options offered pursuant to the Entitlement Offer (Quoted exercisable at $0.03 on or before 13 July 2017) 3,703,704 26,036,637 15

18 New Options offered pursuant to the Placement Options Offer (Quoted exercisable at $0.03 on or before 13 July 2017) 4,296,296 Total Options on issue after completion of the Offer 34,036,637 *Currently unlisted but intended to be listed pending the Company s application to quotation for the New Options. Performance Rights Number Performance Rights currently on issue: 5,885,000 Performance Rights offered pursuant to the Offer Nil Total Performance Rights on issue after completion of the Offer 5,885,000 (a) Note: The Performance Rights on issue are Tranche B Performance Rights. Under the terms of the Tranche B Performance Rights, the Performance Rights shall vest (following which the holder of a Performance Right (Holder) may elect to convert the Performance Rights into Shares) upon the earlier of any of the following events occurring in relation to a mining exploration or development project acquired by the Company with the approval of Shareholders (Project): (i) (ii) (iii) (iv) the sale by the Company of the Project or a majority interest in the Project where the sale consideration values the Project at a higher value than the sum of the acquisition cost of the project and all money spent by the Company in developing the Project; the farm out by the Company of the prospect where the sum of any consideration received by the Company in consideration of the farm out and the value of the retained interest of the Company in the project is higher than the sum of the acquisition cost of the project and all money spent by the Company developing the Project; the Company delineating a JORC compliant resource in relation to a Project; and the Company commencing the commercial extraction of minerals from a Project. No Options or Performance Rights on issue are subject to escrow restrictions, either voluntary or ASX imposed. 5.5 Details of substantial holders Based on substantial shareholder notices lodged prior to the date of this Prospectus, those persons which (together with their associates) have a relevant interest in 5% or more of the Shares on issue are set out below: Substantial holder Shares % Wu Xiaonian 29,905, Bruce Richardson 1 13,090, Ouro Pty Ltd 10,000, Greg Knox 2 7,680,

19 Following the issue of the Placement Shares (assuming no Options are exercised or Performance Rights vests), those persons which (together with their associates) will have a relevant interest in 5% or more of the Shares on issue are set out below: Substantial holder Shares % Wu Xiaonian 29,905, Bruce Richardson 1 13,090, Ouro Pty Ltd 10,000, Greg Knox 2 7,680, Note: 1. 9,700,000 Shares held indirectly by Richardson Business Consultants Pty Ltd, a company controlled by Bruce Richardson. 2. 6,830,000 Shares held indirectly by New City Enterprises, a company in which Greg Knox holds a beneficial interest, and 100,000 Shares held by Knox Super Pty Ltd (ATF Peter Knox Private), of which Mr Knox is a director and shareholder and a beneficiary of the superannuation fund. In the event all Entitlements are accepted there will be no change to these substantial holders on completion of the Entitlement Offer. For further details in respect of Wu Xiaonian s holdings please refer to Section

20 6. RIGHTS AND LIABILITIES ATTACHING TO SECURITIES 6.1 Shares The following is a summary of the more significant rights and liabilities attaching to Shares being offered pursuant to this Prospectus. This summary is not exhaustive and does not constitute a definitive statement of the rights and liabilities of Shareholders. To obtain such a statement, persons should seek independent legal advice. Full details of the rights and liabilities attaching to Shares are set out in the Constitution a copy of which is available for inspection at the Company s registered office during normal business hours. (a) General meetings Shareholders are entitled to be present in person, or by proxy, attorney or representative to attend and vote at general meetings of the Company. Shareholders may requisition meetings in accordance with section 249D of the Corporations Act and the Constitution of the Company. (b) Voting rights Subject to any rights or restrictions for the time being attached to any class or classes of shares, at general meetings of shareholders or classes of shareholders: (i) (ii) (iii) each Shareholder entitled to vote may vote in person or by proxy, attorney or representative; on a show of hands, every person present who is a Shareholder or a proxy, attorney or representative of a Shareholder has one vote; and on a poll, every person present who is a Shareholder or a proxy, attorney or representative of a Shareholder shall, in respect of each fully paid Share held by him, or in respect of which he is appointed a proxy, attorney or representative, have one vote for each Share held, but in respect of partly paid shares shall have such number of votes as bears the same proportion to the total of such Shares registered in the Shareholder s name as the amount paid (not credited) bears to the total amounts paid and payable (excluding amounts credited). (c) Dividend rights Subject to the rights of any preference Shareholders and to the rights of the holders of any shares created or raised under any special arrangement as to dividend, the Directors may from time to time declare a dividend to be paid to the Shareholders entitled to the dividend which shall be payable on all Shares according to the proportion that the amount paid (not credited) is of the total amounts paid and payable (excluding amounts credited) in respect of such Shares. 18

21 The Directors may from time to time pay to the Shareholders any interim dividends as they may determine. No dividend shall carry interest as against the Company. The Directors may set aside out of the profits of the Company any amounts that they may determine as reserves, to be applied at the discretion of the Directors, for any purpose for which the profits of the Company may be properly applied. Subject to the ASX Listing Rules and the Corporations Act, the Company may, by resolution of the Directors, implement a dividend reinvestment plan on such terms and conditions as the Directors think fit and which provides for any dividend which the Directors may declare from time to time payable on Shares which are participating Shares in the dividend reinvestment plan, less any amount which the Company shall either pursuant to the Constitution or any law be entitled or obliged to retain, be applied by the Company to the payment of the subscription price of Shares. (d) Winding-up If the Company is wound up, the liquidator may, with the authority of a special resolution, divide among the Shareholders in kind the whole or any part of the property of the Company, and may for that purpose set such value as he considers fair upon any property to be so divided, and may determine how the division is to be carried out as between the Shareholders or different classes of Shareholders. The liquidator may, with the authority of a special resolution, vest the whole or any part of any such property in trustees upon such trusts for the benefit of the contributories as the liquidator thinks fit, but so that no Shareholder is compelled to accept any shares or other securities in respect of which there is any liability. (e) Shareholder liability As the Shares issued will be fully paid shares, they will not be subject to any calls for money by the Directors and will therefore not become liable for forfeiture. (f) Transfer of shares Generally, shares in the Company are freely transferable, subject to formal requirements, the registration of the transfer not resulting in a contravention of or failure to observe the provisions of a law of Australia and the transfer not being in breach of the Corporations Act and the ASX Listing Rules. (g) Future increase in capital The issue of any new Shares is under the control of the Directors of the Company. Subject to restrictions on the issue or grant of Securities contained in the ASX Listing Rules, the Constitution and the Corporations Act (and without affecting any special right previously conferred on the holder of an existing share or class of shares), the Directors may issue Shares as they shall, in their absolute discretion, determine. (h) Variation of rights Under section 246B of the Corporations Act, the Company may, with the 19

22 6.2 New Options sanction of a special resolution passed at a meeting of Shareholders vary or abrogate the rights attaching to shares. If at any time the share capital is divided into different classes of shares, the rights attached to any class (unless otherwise provided by the terms of issue of the shares of that class), whether or not the Company is being wound up, may be varied or abrogated with the consent in writing of the holders of three quarters of the issued shares of that class, or if authorised by a special resolution passed at a separate meeting of the holders of the shares of that class. Set out below are the terms and conditions attaching to New Options being offered pursuant to this Prospectus. (a) Entitlement Each New Option entitles the holder to subscribe for one Share upon exercise of the New Option. (b) Exercise Price Subject to paragraph (j), the amount payable upon exercise of each New Option will be $0.03 (Exercise Price) (c) Expiry Date Each New Option will expire at 5:00 pm (WST) on 13 July 2017 (Expiry Date). A New Option not exercised before the Expiry Date will automatically lapse on the Expiry Date. (d) Exercise Period The New Options are exercisable at any time on or prior to the Expiry Date (Exercise Period). (e) Notice of Exercise The New Options may be exercised during the Exercise Period by notice in writing to the Company in the manner specified on the Option certificate (Notice of Exercise) and payment of the Exercise Price for each New Option being exercised in Australian currency by electronic funds transfer or other means of payment acceptable to the Company. Where the Exercise Price for the aggregate number of New Options being exercised as specified on a Notice of Exercise is a fraction of a cent the payment must be rounded up the nearest whole cent. (f) Exercise Date A Notice of Exercise is only effective on and from the later of the date of receipt of the Notice of Exercise and the date of receipt of the payment of the Exercise Price for each New Option being exercised in cleared funds (Exercise Date). 20

23 (g) Timing of issue of Shares on exercise Within 15 Business Days after the Exercise Date, the Company will: (i) (ii) (iii) allot and issue the number of Shares required under these terms and conditions in respect of the number of New Options specified in the Notice of Exercise and for which cleared funds have been received by the Company; and if required, give ASX a notice that complies with section 708A(5)(e) of the Corporations Act, or, if the Company is unable to issue such a notice, lodge with ASIC a prospectus prepared in accordance with the Corporations Act and do all such things necessary to satisfy section 708A(11) of the Corporations Act to ensure that an offer for sale of the Shares does not require disclosure to investors; and if admitted to the official list of ASX at the time, apply for official quotation on ASX of Shares issued pursuant to the exercise of the New Options. If a notice delivered under (g)(ii) for any reason is not effective to ensure that an offer for sale of the Shares does not require disclosure to investors, the Company must, no later than 20 Business Days after becoming aware of such notice being ineffective, lodge with ASIC a prospectus prepared in accordance with the Corporations Act and do all such things necessary to satisfy section 708A(11) of the Corporations Act to ensure that an offer for sale of the Shares does not require disclosure to investors. (h) Shares issued on exercise Shares issued on exercise of the New Options rank equally with the then issued shares of the Company. (i) Quotation of Shares issued on exercise If admitted to the official list of ASX at the time, application will be made by the Company to ASX for quotation of the Shares issued upon the exercise of the New Options. (j) Reconstruction of capital If at any time the issued capital of the Company is reconstructed, all rights of an Optionholder are to be changed in a manner consistent with the Corporations Act and the ASX Listing Rules at the time of the reconstruction. (k) Participation in new issues There are no participation rights or entitlements inherent in the New Options and holders will not be entitled to participate in new issues of capital offered to Shareholders during the currency of the New Options without exercising the New Options. 21

24 (l) Change in exercise price A New Option does not confer the right to a change in Exercise Price or a change in the number of underlying securities over which the New Option can be exercised. (m) Transferability The New Options are transferable subject to any restriction or escrow arrangements imposed by ASX or under applicable Australian securities laws. 22

25 7. RISK FACTORS 7.1 Introduction The Securities offered under this Prospectus 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 Prospectus and to consult their professional advisers before deciding whether to apply for Securities pursuant to this Prospectus. 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. 7.2 Company specific (a) Operating risks The current and future operations of the Company, including exploration, appraisal and possible production activities may be affected by a range of factors, including failure to locate or identify mineral deposits, failure to achieve predicted grades in exploration and mining, operational and technical difficulties encountered in mining, difficulties in commissioning and operating plant and equipment, mechanical failure or plant breakdown, unanticipated metallurgical problems which may affect extraction costs, adverse weather conditions, industrial and environmental accidents, industrial disputes and unexpected shortages or increases in the costs of consumables, spare parts, plant and equipment. No assurances can be given that the Company will achieve commercial viability through the successful exploration and/or mining of its tenement interests. Until the Company is able to realise value from its projects, it is likely to incur ongoing operating losses. (b) Exploration costs The exploration costs of the Company are based on certain assumptions with respect to the method and timing of exploration. By their nature, these estimates and assumptions are subject to significant uncertainties and, accordingly, the actual costs may materially differ from these estimates and assumptions. Accordingly, no assurance can be given that the cost estimates and the underlying assumptions will be realised in practice, which may materially and adversely affect the Company s viability. (c) Exploration success The Company s projects, including the Graphite Project are at various stages of exploration, and potential investors should understand that mineral exploration and development are high-risk undertakings. 23