SCOTGOLD RESOURCES LIMITED ACN PROSPECTUS

Transcription

1 SCOTGOLD RESOURCES LIMITED ACN PROSPECTUS For a pro-rata non-renounceable rights issue (Rights Issue or Offer) of fully paid ordinary shares in the capital of the Company at an issue price of 1.3 cents (New Shares) on the basis of one (1) New Share for every ten (10) existing shares held at the record date of 4 September 2015 (Record Date), together with one (1) free attaching Unlisted Option per New Share subscribed exercisable at 0.01 on or before 30 September 2017 (New Options) to raise approximately $1,476,010 (before expenses). The Offer closes at 5.00pm WST on 30 September 2015 The Offer is not underwritten. Important Notice This is an important document and should be read in its entirety. This Prospectus is a transaction-specific prospectus issued in accordance with Section 713 of the Corporations Act If you have any queries about any part of the Prospectus, please contact your professional adviser without delay. The Securities offered by this Prospectus should be considered speculative.

2 TABLE OF CONTENTS IMPORTANT INFORMATION 2 CORPORATE DIRECTORY 5 TIMETABLE AND IMPORTANT DATES 6 SECTION 1 DETAILS OF THE OFFER 9 SECTION 2 RISK FACTORS 15 SECTION 3 PURPOSE AND EFFECT OF THE OFFER 21 SECTION 4 RIGHTS ATTACHING TO SECURITIES 24 SECTION 5 ADDITIONAL INFORMATION 27 SECTION 6 INFORMATION AVAILABLE TO SHAREHOLDERS 31 SECTION 7 DIRECTORS CONSENT 33 SECTION 8 DEFINITIONS 34 IMPORTANT INFORMATION This Prospectus is dated 26 August 2015 and was lodged with ASIC on that date. Neither ASIC nor ASX, nor any of their officers, take any responsibility for the contents of this Prospectus. No securities will be issued on the basis of this Prospectus later than 13 months after the date of this Prospectus. An application will be made to ASX within 7 days after the date of this Prospectus for the quotation of the New Shares the subject of this Prospectus. In preparing this Prospectus, regard has been had to the fact that the Company is a disclosing entity for the purposes of the Corporations Act and that certain matters may reasonably be expected to be known to investors and their professional advisers. This Prospectus is issued pursuant to Section 713 of the Corporations Act. Section 713 allows the issue of a more concise prospectus in relation to an offer of continuously quoted securities. This Prospectus is intended to be read in conjunction with the publicly available information in relation to the Company which has been notified to ASX and does not include all information that would be included in a prospectus for an initial public offering. This document is important and it should be read in its entirety. The New Shares to be issued pursuant to this Prospectus should be viewed as a speculative investment and Eligible Shareholders should refer to the Risk Factors affecting the Company set out in Section 2. Eligible Shareholders should consult their stockbroker, solicitor, accountant or other professional adviser if necessary. No person is authorised to give any information or to make any representation in relation to the Offer which is not contained in this Prospectus and any such information may not be relied upon as having been authorised by the Directors. A copy of this Prospectus can be downloaded from the Company's website at The offer constituted by an electronic version of this Prospectus is only available to persons receiving an electronic version of this Prospectus within Australia. Any Shareholder or Optionholder may obtain a hard copy of this Prospectus by contacting the Company. A number of terms and abbreviations used in this Prospectus have defined meanings set out in Section 8. OVERSEAS SHAREHOLDERS OFFER RESTRICTIONS AND NOMINEE ARRANGEMENTS This Prospectus does not, and is not intended to, constitute an offer of securities in any jurisdiction where, or to any person to whom, it would be unlawful to make such an offer or issue. This Prospectus has not been, nor will it be lodged, filed or registered with any regulatory authority under the securities laws of any other country outside Australia. However, pursuant to section 615 of the Corporations Act and ASX Listing Rule 7.7, the Company has appointed CPS Capital Group Pty Ltd as the Company s foreign holder nominee for the Offer (Nominee) to sell the Entitlements of Ineligible Shareholders. The Company has applied to ASIC to approve the appointment of the Nominee. However, as at the date of this Prospectus, ASIC has not approved the appointment of the Nominee. The Company will pay set up and transaction fees to the Nominee of $4,000 as described section 1.14 below. The total consideration of the Offer is less than Euro 2,500,000. Therefore, in accordance with section 85 of the Financial Services and Markets Act 2000, this document does not constitute a prospectus for the purposes of the Prospectus Rules of the Financial Conduct Authority in the United Kingdom and a copy of it has not been, and will not be, approved or reviewed by the Financial Conduct Authority in the United Kingdom or the UK Listing Authority. The distribution of this Prospectus in jurisdictions outside of Australia and New Zealand may be restricted by law and therefore persons who come into possession of this Prospectus should seek advice on and observe any such restrictions. Any failure to comply with any such restrictions may constitute a violation of the applicable securities law. This Prospectus does not, and is not intended to, constitute an offer of securities in any jurisdiction where, or to any person to whom, it would be unlawful to make such an offer or issue. This Prospectus has not been, nor will it be lodged, filed or registered with any regulatory authority under the securities laws of any other country. 1 2

3 RISK FACTORS (Refer to sections 1.12 and 2) Refer to sections 1.12 and 2 for details of the risks associated with an investment in the Company. As with any securities investment, there are risks associated with investing in the Company. Investors should be aware that an investment in the Company involves risks that may be greater than risks associated with an investment in some other companies. The principal risks that could affect the financial and market performance of the Company are detailed in Section 2 of this Prospectus. The Securities on offer under this Prospectus should be considered speculative. Accordingly, before deciding to invest in the Company, investors should read this Prospectus in its entirety and should consider all factors in light of their individual circumstances and seek appropriate professional advice. The key risks involved with an investment in the Company include, but are not limited to, Cononish Project permitting risks, securing project financing risk, and commodity price volatility and exchange rate risk. Whilst the Directors recommend that Shareholders take up their Entitlement, there are however numerous risk factors involved. Some of these risks can be mitigated by the use of safeguards and appropriate systems and controls, but some are outside the control of the Company and cannot be mitigated. Accordingly, an investment in the Company carries no guarantee with respect to the payment of dividends, return of capital or price at which the New Shares will trade. Careful consideration should be given to all matters raised in this Prospectus and the relative risk factors prior to applying for Securities offered for subscription under this Prospectus. Investors should consider the risk factors described above and outlined in more detail in Section 2, together with the information contained elsewhere in this Prospectus, before deciding whether to apply for Securities. DIRECTORS INTERESTS (Refer to Section 5.6) SUBSTANTIAL HOLDERS AND RIGHTS ISSUE EFFECT ON CONTROL OF COMPANY Based on public information as at the date of this Prospectus, there are no persons (other than the Chairman, Mr Nat le Roux, whose shareholding is set out in the table above) who, together with their associates, have a relevant interest in 5% or more of the Company s Securities. As set out in the Directors Interests section above, Chairman Mr Nat le Roux intends to subscribe for 100% of his Entitlement. In the event all Entitlements are accepted (or all Shortfall is placed) there will be no change to the substantial holders on completion of the Offer. However, in the event Eligible Shareholders do not take up their full Entitlement, and the Chairman takes up his full Entitlement, the maximum potential effect on control of the Company is set out in the table below. The actual effect on control will depend on the level of subscription by Eligible Shareholders pursuant to the Offer, Excess Entitlement Facility, as well as the extent to which the Directors allocate any Shortfall Shares to third parties. The potential effect of control of the Company that may arise as a result of the Rights Issue is listed below (not an exhaustive list): Event Shares held by Chairman prior to the Offer 456,564,373 Chairman s % holding prior to the Offer 40% Chairman s % holding following the Offer assuming Eligible Shareholders take up their full Entitlements 40% The direct and indirect interests of the Directors in the securities of the Company as at the date of this Prospectus, together with their respective Entitlements under the Offer are set out below. Director Shares (Direct & Indirect) Options (Direct & Indirect) Voting Power (%) Entitlement Value of Entitlement ($) Nat le Roux 1 456,564,373 Nil 40.2% 45,656, ,533 Richard Gray 2 2,912,946 Nil 0.3% 291,294 3,786 Chairman s % holding following the Offer assuming 75% of New Shares subscribed under the Offer or Excess Entitlement Facility Chairman s % holding following the Offer assuming 50% of New Shares subscribed under the Offer or Excess Entitlement Facility Chairman s % holding following the Offer assuming 25% of New Shares subscribed under the Offer or Excess Entitlement Facility 41.1% 42.1% 43.2% Chris Sangster 3 17,150,213 Nil 1.5% 1,715,021 22,295 Richard Harris 4 42,999,999 Nil 3.8% 4,299,999 55,899 Maximum number of new Shares which may be issued pursuant to Chairman s Entitlement 45,656,437 Phillip Jackson 5 1,312,500 Nil 0.1% 131,250 1,706 Notes: 1. Nat le Roux has advised he intends to subscribe for 100% of his Entitlement under this Prospectus. 2. Richard Gray has advised he intends to subscribe for 100% of his Entitlement under this Prospectus. 3. Chris Sangster has not advised his intentions to subscribe for his Entitlement under this Prospectus. 4. Richard Harris has not advised his intentions to subscribe for his Entitlement under this Prospectus. 5. Phillip Jackson has not advised his intentions to subscribe for his Entitlement under this Prospectus. 6. The Directors cannot participate in the Excess Entitlements Facility or Shortfall, as described in sections 1.7 and 1.8 below. 7. The Constitution of the Company provides that the non-executive Directors may be paid for their services as Directors, a sum not exceeding such fixed sum per annum as may be determined by the Company in general meeting to be divided between the Directors as agreed, currently set at $300, The Company incurred remuneration costs relating to its current and previous Directors of $539,490 for the year ended 30 June 2013, $536,430 for the year ended 30 June 2014, $498,714 for the year ended 30 June In addition to the above, the Directors remuneration costs from 1 July 2015 to the date of this Prospectus total approximately $80, If a Director, at the request of the Board of Directors, performs extra services, the Company may pay that Director a fixed sum set by the Board of Directors for doing so. Directors are also reimbursed for out of pocket expenses incurred as a result of the directorship or any special duties. 10. For the purpose of calculating Entitlement, it is assumed that no Options have been exercised. 3 4

4 CORPORATE DIRECTORY TIMETABLE AND IMPORTANT DATES Directors Nathaniel le Roux (Non-Executive Chairman) Richard Gray (Managing Director and CEO) Chris Sangster (Non-Executive Director) Richard Harris (Non-Executive Director) Phillip Jackson (Non-Executive Director) Company Secretary Peter Newcomb Registered Office and Principal Place of Business 24 Colin Street West Perth WA 6005 Telephone: Facsimile: Website: Securities Exchange Listing Scotgold Resources Limited shares are listed on the Australian Securities Exchange and on the AIM board of the London Stock Exchange. The home exchange is ASX Perth, Western Australia. ASX Code: SGZ AIM Code: SGZ Share Registry* Computershare Investor Services Pty Ltd Level 11, 172 St Georges Terrace PERTH WA AUSTRALIA,6000 Investor enquiries: Telephone: (Within Australia) Facsimile: Solicitors Nova Legal Ground Floor 10 Ord Street West Perth WA 6005 Auditors* HLB Mann Judd Level 4, 130 Stirling Street Perth WA 6000 * These parties are included for information purposes only. They have not been involved in the preparation of this Prospectus. The proposed timetable for the Rights Issue is as follows: Event Announcement of Rights Issue, Appendix 3B 26 August 2015 Lodgement of Prospectus at ASIC and ASX Notice Sent to Security Holders Ex Date (date from which securities commence trading without the entitlement to participate in the Rights Issue) Record Date (date for determining Entitlements of eligible shareholders to participate in the Rights Issue) Prospectus Dispatched to Shareholders (expected date of dispatch of Prospectus, entitlement and acceptance forms) Date 26 August September September September 2015 Rights Issue Opens 8 September 2015 Closing Date 5pm (WST) 30 September 2015 New Shares quoted on a deferred settlement basis 1 October 2015 ASX Notified of Undersubscriptions 6 October 2015 Issue Date (Deferred settlement trading ends, and Company will confirm to ASX all information required by Appendix 3B) Dispatch Holding Statements (normal T+3 trading commences) 7 October October 2015 *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 Securities ** Dates are indicative only. 5 6

5 BRIEF INSTRUCTIONS THE RIGHTS ISSUE For Eligible Shareholders What You May Do The number of New Shares and New Options to which you are entitled is shown on the accompanying Entitlement and Acceptance Form. You may: Accept your Entitlement in full or part; or accept your Entitlement in full and apply for additional Securities pursuant to the Excess Entitlement Facility; or Allow the whole of the Entitlement to lapse. If You Wish To Take Up All or Part Of Your Entitlement Complete the accompanying Entitlement and Acceptance Form in accordance with the instructions set out in the form. Forward your completed Entitlement and Acceptance Form, together with your cheque for the amount shown on the form or for such lesser amount as you wish to apply for, so as to reach the Company s Share Registry no later than 5:00pm WST on 30 September Shareholders should be made aware that their own financial institution may have an earlier cut off time for BPAY payments. By paying by BPAY you will be deemed to have completed an Application Form for the number of Shares subject of your application payment. Applying for Excess Securities Subject to any restrictions imposed by law, Eligible Shareholders who have subscribed for their Entitlements in full may apply for additional Securities under the Excess Entitlement Facility by completing the section of the Entitlement and Acceptance Form entitled Excess Securities in accordance with its instructions. CHAIRMAN S LETTER Dear fellow shareholders, The announcement of the bankable feasibility study on 5 August 2015 (BFS) represents significant progress in the development of the Cononish Project. The Company will now focus on securing suitable and sufficient project financing on commercially suitable terms, which it anticipates may take several months. In the meantime, the Company requires ongoing capital. Accordingly, the Company wishes to give existing Shareholders the opportunity to further invest in the Company via a pro-rata non-renounceable rights issue of fully paid ordinary shares in the capital of the Company at an issue price of 1.3 cents on the basis of one (1) New Share for every ten (10) existing shares held at the record date of 4 September 2015, together with one (1) free attaching Unlisted Option per New Share subscribed exercisable at 0.01 on or before 30 September 2017 to raise approximately $1,476,010 (before expenses). I strongly recommend you to carefully read the Prospectus in full, and as required seek professional financial advice before investing. In particular, you should read the risks associated with an investment in the Company, as set out in section 2, including but not limited to, Cononish Project permitting risks, securing project financing risks, and commodity price volatility and exchange rate risk. I would like to thank you for your support to date. Richard Gray, our Chief Executive Officer and Managing Director, and I both intend taking up our rights in full and I hope that you will also continue to support Scotgold in this fund raising, as we look to progress the Cononish Project. Yours sincerely Nat le Roux Chairman Scotgold Resources Limited Entitlements Not Taken Up If you decide not to accept all or part of your Entitlement pursuant to the Rights Issue, you are not required to take any action. The New Shares not accepted will form part of the Excess Entitlements Facility and Shortfall. 7 8

6 SECTION 1 DETAILS OF THE OFFER 1.1 Details of the Offer The Company is making a pro rata non-renounceable rights issue on the basis of one (1) New Share at an issue price of 1.3 cents per New Share for every ten (10) existing Shares held. For each New Share subscribed, one (1) free attaching Unlisted Option per New Share will be issued, exercisable at 0.01 on or before 30 September 2017 The Offer will raise $1,476,010 (before expenses) such that a maximum of 113,539,247 New Shares and 113,539,247 New Options will be issued. The New Shares are being offered to Eligible Shareholders on the basis of Shares held on the Record Date of 4 September In the calculation of any entitlement, fractions will be rounded down to the nearest whole number. The New Shares offered pursuant to this Prospectus will rank equally with existing Shares on issue. The full terms and conditions of the New Shares and New Options are set out in Sections 4.1 and 4.2 respectively. The Company has on issue 1,135,392,472 Shares and 40,264,272 Unlisted Options. Optionholders who exercise their Unlisted Options after the date of this Prospectus but prior to the Record Date will be entitled to participate in the Offer. The number of New Shares and New Options to which you are entitled as an Eligible Shareholder is shown on the accompanying personalised Entitlement and Acceptance Form. 1.2 Underwriting The Offer is not underwritten. 1.3 No Rights Trading The rights to New Shares and New Options under the Offer are non-renounceable. Accordingly, there will be no trading of rights on ASX and you may not dispose of your right to subscribe for New Shares to another party. If you do not take up your Entitlement under the Offer by the Closing Date, the Offer to you will lapse. 1.4 Minimum Subscription There is no minimum subscription under the Rights Issue. 1.5 Opening and Closing Dates The Rights Issue will open for receipt of acceptances on 8 September The Rights Issue will close at 5:00pm (WST) on 30 September 2015, or such later date as the Directors, in their absolute discretion and subject to compliance with the Listing Rules, may determine and provided that the Company gives ASX notice of the change at least 3 Business Days prior to the Closing Date. 1.6 Directors Participation Due to restrictions under the Corporations Act and the Listing Rules, the Directors cannot participate in the Excess Entitlement Facility or Shortfall, as described in sections 1.7 and 1.8 below. 1.7 Excess Entitlement Facility If you decide not to accept all or part of your Entitlement pursuant to the Prospectus, you are not required to take any action under this section. Eligible Shareholders who have subscribed for their full Entitlement may apply for additional New Shares and New Options (Excess Securities) in excess of their entitlement as described below (Excess Entitlement Facility). Excess Securities will only be available where there is a shortfall between applications received from Eligible Shareholders and the number of New Shares proposed to be issued under the Offer (Entitlement Shortfall). Excess Securities will be issued on the same terms and conditions of the New Shares under the Offer at an issue price of 1.3 cents per New Share. The Company proposes to adopt the following allocation policy for Excess Securities subscribed pursuant to the Excess Entitlement Facility: (a) firstly, subject to availability, 150,000 Excess Securities ($1,950) or such lower amount subscribed for; and (b) secondly, to those Eligible Shareholders who apply for Excess Securities in excess of 150,000 Excess Securities then the number applied for pro rata to their Entitlement. (c) No person is permitted to increase its relevant interest to more than 20% of the total number of Shares on issue following the Offer through an application for Excess Securities under this mechanism. (d) If a relevant interest of 20% or more is already held by a person, then no increase is permitted. (e) The Excess Securities will be allocated on the Issue Date. (f) If any shortfall remains after the Excess Entitlement Facility allocation has been completed (Shortfall), it will be dealt with in accordance with section 1.8 below. Accordingly, Eligible Shareholders who apply for Excess Securities may be allocated a lesser number of Excess Securities than applied for (whether wholly or partially) in which case excess application money will be refunded without interest in accordance with the Corporations Act. The Company does not guarantee that you will receive any Excess Securities. If you wish to subscribe for Excess Securities in addition to your full Entitlement then you should nominate the maximum dollar value of Shares you wish to subscribe for on the Entitlement and Acceptance Form and make corresponding payment for your full Entitlement plus the value of any 9 10

7 Excess Securities subscribed for, or follow the instructions for BPay set out in the Entitlement and Acceptance Form. However, the Directors and any related parties are unable to participate in the Excess Entitlement Facility due to restrictions under the Corporations Act and Listing Rules. Accordingly, no Excess Securities will be issued to the Directors or any related parties. 1.8 Shortfall Offer Subject to the Corporations Act and Listing Rules, the Directors reserve the right to deal with, at their absolute discretion the New Shares which are not taken up by Eligible Shareholders under the Offer after the issue and allocation of the Excess Shares under the Excess Entitlement Facility (Shortfall Shares). The Shortfall Shares will be issued at the same issue price as offered to Eligible Shareholders pursuant to this Prospectus, being 1.3 cents per New Share issued under the Shortfall. Following completion of the Offer and Excess Entitlement Facility, the Directors may invite persons to apply for Shortfall Shares under this Prospectus by completing an application form for Shortfall Shares and returning it to the Company together with the relevant application money. The Directors reserve the right to place the Shortfall Shares at their discretion within 3 months following the Closing Date of the Offer. However, the Directors and any related parties are unable to be issued Shortfall Shares due to restrictions under the Corporations Act and Listing Rules. Accordingly, no Shortfall Shares will be issued to the Directors or any related parties. 1.9 Australian Securities Exchange Listing The Company will apply to ASX for quotation of the Securities offered pursuant to this Prospectus within seven days after the date of this Prospectus. If an application for quotation of the Securities is not made within seven days after the date of this Prospectus, or ASX does not grant permission for official quotation of the Securities within three months after the date of this Prospectus, the Company will not issue any Securities and will repay all Application Monies for the Securities within the time prescribed under the Corporations Act, without interest. The fact that ASX may grant official quotation to the Securities is not to be taken in any way as an indication of the merits of the Company or the Securities now offered under this Prospectus Issue of Securities The Securities to be issued pursuant to the Offer will be issued in accordance with the Timetable and Important Dates and otherwise in accordance with the Listing Rules. Where the number of Securities issued is less than the number applied for, surplus Application Monies will be refunded without any interest to the Applicant as soon as practicable after the Closing Date. Securities issued pursuant to the Shortfall Offer will 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 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 Offer will be mailed in accordance with the Timetable and Important Dates and otherwise in accordance with the Listing Rules and for Shortfall Shares issued under the Shortfall Offer as soon as practicable after their issue CHESS and Issuer Sponsorship The Company operates an electronic CHESS sub-register and an electronic issuer sponsored sub-register. These two sub-registers make up the Company s register of securities. The Company will not issue certificates to investors. Rather, holding statements (similar to bank statements) will be dispatched to investors as soon as practicable after issue. Holding statements will be sent either by CHESS (for new investors who elect to hold their securities on the CHESS sub-register) or by the Company s Share Registry (for new investors who elect to hold their securities on the Issuer sponsored sub-register). The statements will set out the number of Securities issued under the Prospectus and provide details of a Holder Identification Number (for new investors who elect to hold their securities on the Chess subregister) or Security holder Reference Number (for new investors who elect to hold their securities on the issuer sponsored sub-register). Updated holding statements will also be sent to each new investor following the month in which the balance of their holding of Securities changes, and also as required by the Listing Rules or the Corporations Act Risks As with any securities investment, there are risks associated with investing in the Company. The principal risks that could affect the financial and market performance of the Company are detailed in Section 2 of this Prospectus. The Securities on offer under this Prospectus should be considered speculative. Accordingly, before deciding to invest in the Company, investors should read this Prospectus in its entirety and should consider all factors in light of their individual circumstances and seek appropriate professional advice Overseas Shareholders This Prospectus does not, and is not intended to, constitute an offer of securities in any jurisdiction where, or to any person to whom, it would be unlawful to make such an offer or issue. This Prospectus has not been, nor will it be lodged, filed or registered with any regulatory authority under the securities laws of any other country outside Australia. Shareholders who are not Eligible Shareholders are Ineligible Shareholders. The Company has determined, in reliance of ASX Listing Rule 7.7.1, that it would be unreasonable to extend the Offer to Ineligible Shareholders, having regard to: (a) the small number of Ineligible Shareholders; (b) the small number and value of the New Shares which would be offered to Ineligible Shareholders if they were Eligible Shareholders; and 11 12

8 (c) the cost of complying with the legal and regulatory requirements in the respective overseas jurisdictions. Accordingly, the Offer is not being extended to any Shareholders outside Australia, New Zealand and the United Kingdom unless those Shareholders would be eligible under all applicable securities laws to receive an offer of, and be issued, New Shares under the Offer. Where this Prospectus has been dispatched to an Ineligible Shareholder and where that jurisdiction s law, code or legislation prohibits or restricts in any way the making of the Offer, this Prospectus is provided for information purposes only Appointment of Foreign Holder Nominee Pursuant to section 615 of the Corporations Act and for the purposes of Listing Rule 7.7, the Company has appointed CPS Capital Group Pty Ltd as the Company s foreign holder nominee (Nominee). The Company has applied to ASIC to approve the appointment of the Nominee. However, as at the date of this Prospectus, ASIC has not approved the appointment of the Nominee. Pursuant to the arrangement with the Nominee, the Nominee will subscribe for the New Shares which Ineligible Shareholders would be entitled to if they were eligible to participate in the Offer (Nominee Shares). The Nominee will then sell the Nominee Shares and remit the net proceeds from the sale of the Nominee Shares (if any) to the Ineligible Shareholders in proportion to their respective shareholdings. The Nominee will have the absolute and sole discretion to determine the timing and price at which the Nominee Shares must be sold and the manner of any such sale. Any interest earned on the proceeds of the sale of the Nominee Shares will firstly be applied against expenses of the sale, including brokerage, and any balance will form part of the proceeds payable to the Ineligible Shareholders (if any). The Company will forward the proceeds of the sale of the Nominee Shares (if any) as soon as reasonably practicable to the Ineligible Shareholders in proportion to their respective shareholdings (after deducting the subscription price, brokerage commission and other expenses). If any such net proceeds of sale are less than the reasonable costs that would be incurred by the Company for distributing those proceeds, such proceeds may be retained by the Company. Notwithstanding that the Nominee must sell the Nominee Shares, Ineligible Shareholders may nevertheless receive no net proceeds if the subscription price plus costs of the sale is greater than the sale proceeds. The Company will pay the Nominee $4,000 plus GST. Both the Company and the Nominee take no responsibility for the outcome of the sale of the Nominee Shares Nominees, Trustees and Custodians The distribution of this Prospectus in jurisdictions outside Australia may be restricted by law and persons who come into possession of this Prospectus should seek advice on and observe any such restrictions. Any failure to comply with such restrictions may constitute a violation of applicable securities laws. No action has been taken to register or qualify the Securities the subject of this Prospectus or otherwise permit a public offering of the Securities the subject of this Prospectus in any jurisdiction outside Australia. 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 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. Shareholders resident in Australia or New Zealand holding shares on behalf of persons who are resident overseas should seek independent advice as to how they should proceed Taxation It is the responsibility of all persons to satisfy themselves of the particular taxation treatment that applies to them by consulting their own professional tax advisers. Taxation consequences will depend on particular circumstances. Neither the Company nor any of its officers accept any liability or responsibility in respect of the taxation consequences of the matters referred to above or any other taxation consequences connected with an investment in the Securities of the Company Privacy Disclosure Persons who apply for Securities pursuant to this Prospectus are asked to provide personal information to the Company, either directly or through the Share Registry. The Company and the Share Registry collect, hold and use that personal information to assess applications for securities to provide facilities and services to Shareholders and Shareholders, and to carry out various administrative functions. Access to the information collected may be provided to the Company s agents and service providers and to ASX, ASIC and other regulatory bodies on the basis that they deal with such information in accordance with the relevant privacy laws. If the information requested is not supplied, applications for Securities will not be processed. In accordance with privacy laws, information collected in relation to specific Shareholders and Shareholders can be obtained by that Shareholder or Shareholder through contacting the Company or the Share Registry Enquiries This document is important and should be read in its entirety. Persons who are in any doubt as to the course of action to be followed should consult their stockbroker, solicitor, accountant or other professional adviser without delay. If you have any questions regarding your Entitlement or the Offer, please contact the Company on , from 9.30am to 5.00pm WST, Monday to Friday

9 SECTION 2 RISK FACTORS 2.1 Introduction The Securities offered under this Prospectus should be considered speculative because of the nature of the Company s business. Whilst the Directors recommend that Shareholders take up their Entitlement, there are however numerous risk factors involved. Some of these risks can be mitigated by the use of safeguards and appropriate systems and controls, but some are outside the control of the Company and cannot be mitigated. Accordingly, an investment in the Company carries no guarantee with respect to the payment of dividends, return of capital or price at which the New Shares will trade. The following is a summary of the more material matters to be considered and should be read in conjunction with specific matters referred to in the Company s announcements and reports. However, the summary is not exhaustive and potential investors should examine the contents of this Prospectus in its entirety and consult their professional advisors before deciding whether to apply for the Securities. 2.2 Specific Risks Transaction Specific A number of specific risk factors that may impact the future performance of the Company are described below. Shareholders should note that this list is not exhaustive Cononish Project Permitting The decision notice granting planning permission to the project issued by the Loch Lomond and the Trossachs National Park Planning Authority (Planning Authority) on 13 February 2012 and subsequently re-issued on 6 February 2015 requires a number of conditions to be satisfied prior to the start of development. In conjunction with Scotgold s planning and other consultants, 100% of those conditions requiring written submissions have been delivered and 64% of these have been accepted and discharged by the Planning Authority. The Company awaits discharge of the remaining conditions by the Planning Authority which may seek further clarification. However there is a risk that the Planning Authority may include what the Company would consider onerous terms before accepting and discharging these remaining conditions. In the event that the remaining conditions to the planning permission are not accepted and discharged by the Planning Authority, development will not be able to be commenced Securing Project Financing The Company s ability to substantially implement its plans based upon the bankable feasibility study announced on 5 August 2015 (BFS) are contingent upon the Company securing (or being able to secure) suitable and sufficient project financing on commercially suitable terms. If suitable and sufficient project financing is not secured on commercially suitable terms, the Company may not be able to substantially implement its plans under the BFS. In which case, the Company may need to implement a significantly reduced or scaled down version of the current BFS, commission a new BFS, and/or otherwise reassess its plans in respect of the Cononish Project Commodity Price Volatility and Exchange Rate Risk If the Company achieves success leading to mineral production, the revenue it will derive through the sale exposes the potential income of the Company to commodity price and exchange rate risks. Commodity prices fluctuate and are affected by many factors beyond the control of the Company. Such factors include supply and demand fluctuations for precious and base metals, technological advancements, forward selling activities and other macro-economic factors. Furthermore, international prices of various commodities are denominated in United States dollars, whereas the income of the Company are and will be taken into account in Australian and British currency, exposing the Company to the fluctuations and volatility of the rate of exchange between the United States dollar, the Australian dollar and British Pound as determined in international markets. As materials and equipment may be also be sourced internationally, the expenditure of the Company will also be exposed to fluctuations in the currency markets, most notably United States dollar, the Australian dollar, British Pound, South African Rand, Canadian dollar and the Euro Operational Risks The business of mineral exploration, project development and production, by its nature, contains elements of significant risk with no guarantee of success. Ultimate and continuous success of these activities is dependent on, amongst other things: (a) (b) (c) (d) (e) (f) the discovery and-or acquisition of economically recoverable reserves; access to adequate capital for project development; design and construction of efficient development and production infrastructure within capital expenditure budgets; securing and maintaining title to interests; obtaining consents and approvals necessary for the conduct of mineral exploration, development and production; and access to competent operational management and prudent financial administration, including the availability and reliability of appropriately skilled and experienced employees, contractors and consultants. Whether or not income will result from projects undergoing exploration and development programs depends on successful exploration and establishment of production facilities. There is no assurance that any exploration on current or future interests will result in the discovery of an economic mineral deposit. Even if an apparently viable deposit is identified, there is no guarantee that it can be economically developed Exploration and Mining Risk The business of mineral exploration and mining involves risks and hazards. For example, in an exploration context no assurance can be given that ore bodies will be detected with preferred or desirable tonnages or grades. High risk and substantial expense can be incurred without the requisite or expected degree of reward. Even if commercial quantities of ore are discovered unforeseen risks can arise in the development and production phase including mining or 15 16

10 processing issues, environmental hazards, industrial accidents, labour forced disruption, the unavailability of materials and equipment, unusual or unexpected geological formation, pit failures, changes in the regulatory environment and weather conditions. Such occurrences could result in damage to, or destruction of, mineral properties or production facilities, personal injury or death, environmental damage, delays in mining, monetary losses and possible legal liability Uncertainty of Exploration and Development Programs Exploration for minerals is highly speculative in nature, involves many risks and is frequently unsuccessful. Among the many uncertainties inherent in any exploration and development program are the location of ore bodies, the development of appropriate metallurgical processes, the receipt of necessary governmental permits, access to permits and the construction of mining and processing facilities. Assuming the discovery of an economic deposit, several years may lapse from the initial phases of drilling until commercial operations commence and, during such time, the economic feasibility of production may change. Accordingly, the Company s exploration and development program may not result in any new economically viable mining operations Resource Estimates Resource estimates are expressions of judgment based on knowledge, experience and industry practice. Estimates that were valid when made may change significantly when new information or techniques becomes available. In addition, resource estimates are necessarily imprecise and depend to some extent on interpretations, which may prove to be inaccurate. Even if the Company identifies a resource or reserve, actual ore reserves and resources (including grade and quantity) may differ from those estimated at an earlier time which may result in alterations to development and mining plans which may, in turn, adversely affect the Company s operations Ability to Exploit Successful Discoveries It may not always be possible for the Company to participate in the exploitation of successful discoveries made in areas in which the Company has an interest. Such exploitation will involve the need to obtain the necessary licences or clearances from the relevant authorities, which may require conditions to be satisfied and/or the exercise of discretions by such authorities. It may or may not be possible for such conditions to be satisfied. The infrastructure requirements around a successful discovery may also impact on the exploitation of a discovery. Further the decision to proceed to further exploitation may require the participation of other companies whose interests and objectives may not be the same as the Company. As described above, such work may require the Company to meet or commit to financing obligations for which it may have not planned Compliance Risk The Company holds an interest in mining tenements. Title to these tenements is subject to the Company, as tenement holder, complying with the terms and conditions of each tenement, including the minimum annual expenditure commitments. There is a risk that if the Company does not comply with the terms and conditions of each tenement, it may lose its interest in the relevant tenement. The Company has implemented appropriate policies and practices to mitigate the risk that the terms and conditions attaching to each of the tenements it has an interest in are not complied with Agents and Contractors and Joint Venture Parties The Directors are unable to predict the risk of financial failure or default by a participant in any joint venture to which the Company is or may become a party or the insolvency or managerial failure by any of the contractors used by the Company in any of its activities or the insolvency or other managerial failure by any of the other service providers used by the Company for any activity Country Risk The Company holds interest in assets located in Scotland but may acquire assets in foreign countries in the future. Operations by the Company may require approvals from regulatory authorities which include renewals of existing service contacts, licences or permits, which may not be forthcoming or which may not be able to be obtained on terms acceptable to the Company. While the Company has no reason to believe that all requisite approvals will not be forthcoming and while the Company s obligations for expenditure will be predicated on any requisite approvals being obtained it should be understood that the Company cannot guarantee that any requisite approvals will be obtained. A failure to obtain any approvals would mean the ability of the Company to develop or operate any project, or possibly acquire any project, may be limited or restricted either in part or absolutely. Additionally, there are risks associated with exploration and mining activities and investments generally in foreign countries that may adversely affect the business, costs, expenditure and profitability of the Company. These risks include: (a) (b) (c) changes in foreign country government, government policies, regulatory regime, economic change, civil instability, attitudes towards foreigners or their businesses in their country; land access and environmental regulation may be adverse or beneficial; and the applicable legal regime including investment into and repatriation of revenue out of the foreign country Environmental The Company s activities are subject to the environmental risks inherent in the mining industry. The Company is subject to environmental laws and regulations in connection with operations it may pursue in the mining industry. 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 the Company to extensive liability. Further, the Company may require approval from the relevant authorities before it can undertake activities 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 on any area

11 Future capital needs and additional funding The funding of any further ongoing capital requirements beyond the requirements as set out in this Prospectus will depend upon a number of factors including the extent of the Company s ability to generate income from activities which the company cannot forecast with any certainty. Any additional equity financing will be dilutive to shareholders, and debt financing, if available, may involve restrictions on financing and operating activities. If the Company is unable to obtain additional funding as needed, it may not be able to take advantage of opportunities or develop projects. Further, the Company may be required to reduce the scope of its operations or anticipated expansion and it may affect the Company s ability to continue as a going concern Insurance Insurance against all risks associated with mineral exploration is not always available or affordable. The Company will maintain insurance where it is considered appropriate for its needs however it will not be insured against all risks either because appropriate cover is not available or because the Directors consider the required premiums to be excessive having regard to the benefits that would accrue. The occurrence of an event that is not covered or fully covered by insurance could have a material adverse effect on the business, financial condition and results of the operations of the Company. There is no assurance that the Company will be able to maintain adequate insurance in the future at rates that it considers is reasonable. 2.3 General Risks The future prospects of the Company s business may be affected by circumstances and external factors beyond the Company s control. Financial performance of the Company may be affected by a number of business risks that apply to companies generally and may include economic, financial, market or regulatory conditions General Economic Climate Factors such as inflation, currency fluctuation, interest rates and supply and demand have an impact on operating costs, commodity prices and stock market prices. The Company s future revenues and securities price may be affected by these factors, as well as by fluctuations in the price of commodities, which are beyond the Company s control Competition for Projects The Company competes with other companies, including mineral exploration and production companies. Some of these companies have greater financial and other resources than the Company. As a result, such companies may be in a better position to compete for future business opportunities and there can be no assurance that the Company can effectively compete with these companies. In the event that the Company is not able to secure a new project or business opportunity this may have an adverse effect on the operations of the Company, its possible future profitability and the trading price of its securities, including the Securities offered under this Prospectus Reliance on Key Personnel The Company's success depends largely on the core competencies of its directors and management, and their familiarisation with, and ability to operate, in the mining industry and the Company's ability to find and retain key executives Sharemarket Conditions The market price of the Company s securities may be subject to varied and unpredictable influences on the market for equities in general and resources stocks in particular. 2.4 Speculative Nature of Investment 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 Prospectus. Therefore, the Securities offered pursuant to this Prospectus carry no guarantee with respect to the payment of dividends, returns of capital or the market value of the 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 Changes in Legislation and Government Regulation Government legislation in Australia or any other relevant jurisdiction, including changes to the taxation system, may affect future earnings and relative attractiveness of investing in the Company. Changes in government policy or statutory changes may affect the Company and the attractiveness of an investment in it