Creat Resources Holdings Limited (Incorporated in Australia with registered number ACN )

Transcription

1 THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt about the contents of this document or what action you should take you should consult a person authorised under the Financial Services and Markets Act 2000, as amended ( FSMA ) who specialises in advising on the acquisition of shares and other securities. This document, which is an AIM admission document drawn up in accordance with the AIM Rules for Companies published by the London Stock Exchange plc, has been issued in connection with the application for Re-Admission. This document does not constitute a prospectus for the purposes of the Prospectus Rules published by the Financial Services Authority ( FSA ) (as amended) and has not been prepared in accordance with the Prospectus Rules, and has not been approved by or filed with the FSA. There is no requirement for this document to be approved by the Australian Securities and Investments Commission or any other governmental or regulatory authority in Australia. This document is not a prospectus under Chapter 6D of the Corporations Act 2001 (Cth) ( Australian Corporations Act ). The Directors, whose names appear on page 4 of this document, accept responsibility for the information contained in this document. To the best of the knowledge and belief of the Directors, who have taken all reasonable care to ensure that such is the case, the information contained in this document is in accordance with the facts and contains no omission likely to affect its import. In connection with this document and the Second Round Placing, no person is authorised to give any information or make any representations other than as contained in this document and, if given or made, such information or representation must not be relied upon as having been so authorised. The delivery of this document or any subscriptions or purchases made hereunder and at any time subsequent to the date of this document shall not, under any circumstances, create an impression that there has been no change in the affairs of the Company since the date of this document. Application will be made, conditional upon Resolutions 3 and 4 in the Notice of AGM being passed, for the entire issued share capital of the Company to be re-admitted to trading on AIM. AIM is a market designed primarily for emerging or smaller companies to which a higher investment risk tends to be attached than to larger or more established companies. AIM securities are not admitted to the official list of the FSA ( Official List ). A prospective investor should be aware of the risks of investing in such companies and should make the decision to invest only after careful consideration and, if appropriate, consultation with an independent financial adviser. Each AIM company is required pursuant to the AIM Rules for Companies to have a nominated adviser. The nominated adviser is required to make a declaration to London Stock Exchange plc on re-admission in the form set out in Schedule Two to the AIM Rules for Nominated Advisers. The rules of AIM are less demanding than those of the Official List and furthermore the London Stock Exchange plc has not itself examined or approved this document. It is emphasised that no application will be made for admission of the Ordinary Shares to the Official List. The whole of this document should be read in full. The attention of prospective investors is drawn, in particular, to the section headed Risk Factors which is set out in Part 2 of this document. All statements regarding the Company s business should be viewed in light of these factors. Creat Resources Holdings Limited (Incorporated in Australia with registered number ACN ) Re-Admission to trading on AIM Proposed acquisition of approximately 15.39% interest in Galaxy Resources Limited, Placing of up to 283,333,333 Placing Shares at 6 pence per share Nominated Adviser Grant Thornton Corporate Finance Broker Westhouse Securities Limited The Placing Shares will, following allotment and conditional upon Resolutions 3 and 4 in the Notice of AGM being passed, rank pari passu in all respects with the Existing Ordinary Shares including the right to receive all dividends and other distributions hereinafter declared made or paid on the Ordinary Shares. The contents of this document are not to be construed as legal, financial, or tax advice. Each prospective investor should consult his, her or its own legal adviser, financial adviser or tax adviser for legal, financial or tax advice. Prospective investors must inform themselves as to: (a) the legal requirements within their own countries for the purchase, holding, transfer or other disposal of Ordinary Shares; (b) any foreign exchange restriction applicable to the purchase, holding or transfer or other disposal of Ordinary Shares which they might encounter; and (c) the income and other tax consequences which may apply in their own countries as a result of the purchase, holding or transfer or other disposal of Ordinary Shares. Prospective investors must rely upon their own representatives, including their own legal advisers and accountants, as to legal, tax, investment or any other related matters concerning the Company and an investment therein. Statements made in this document are based on the Company s understanding of law and practice currently in force in England and Wales and Australia and may be subject to change. All holders of Ordinary Shares are entitled to the benefit of, and are bound by and are deemed to have notice of, the provisions of the Articles of the Company. The distribution of this document outside the UK may be restricted by law. No action has been taken by the Company, the holders of the Existing Ordinary Shares, Grant Thornton Corporate Finance or Westhouse Securities Limited that would permit a public offer of Ordinary Shares or possession or distribution of this document where action for those purposes is required. Persons outside the UK who come into possession of this document should inform themselves about and observe any restrictions on the placing of Ordinary Shares and/or the distribution of this document in their particular jurisdiction. Failure to comply with these restrictions may constitute a violation of the securities laws of such jurisdiction. This document does not constitute, and may not be used for the purposes of, an offer for, or the solicitation of any offer to subscribe for or buy any Ordinary Shares to any person in any jurisdiction to whom it is unlawful to make such an offer or solicitation in such jurisdiction. In particular this document should not be distributed, published, reproduced or otherwise made available in whole or in part (directly or indirectly) in or into the United States of America, Canada, Australia, Japan or South Africa or any other country outside the United Kingdom where such distribution may lead to a breach of any law or regulatory requirements save pursuant to an exemption from the registration or prospectus or other regulatory requirements of any such jurisdiction. Accordingly, subject to certain exceptions, the Ordinary Shares may not be offered or sold directly or indirectly in or into the United States of America, Canada, Australia, Japan or South Africa or to or for the account or benefit of any national, resident or citizen of the United States of America,

2 Canada, Australia, Japan or South Africa. The Ordinary Shares have not been and will not be registered under the United States Securities Act of 1933 (as amended) or under the securities legislation of any state of the United States of America, Canada, Japan or South Africa and they may not be offered or sold except pursuant to an available exemption from, or in a transaction not subject to the registration requirements of the US Securities Act and applicable US state securities laws. The offer in this document is not being made, directly or indirectly, to any person in Australia other than to persons to whom it is lawful for the offer of Placing Shares to be made without disclosure under one or more of the exemptions set out in section 708 of the Australian Corporations Act ( Exempt Person ). This document or any other material in connection with the offer or sale, or invitation for subscription or purchase, of Placing Shares may not be circulated or distributed, nor may Placing Shares be offered or sold, or made the subject of an invitation for subscription or purchase, whether directly or indirectly, to any person in Australia other than an Exempt Person. Neither Grant Thornton Corporate Finance nor Westhouse Securities Limited has approved this document for the purposes of FSMA. This document is only for distribution in the United Kingdom to: (i) investment professionals within the meaning of paragraph (5) of Article 19 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (SI 2005/1529), as amended (the Order ); or (ii) high net worth companies, unincorporated associations or other bodies falling within the meaning of paragraph (2)(a) to (d) of Article 49 of the Order; or, (iii) persons to whom it may otherwise lawfully be distributed (all such persons together being referred to as relevant persons ). This document must not be acted on or relied on in the United Kingdom by persons who are not relevant persons. Any investment or investment activity to which this document relates is available only in the United Kingdom to relevant persons, and will be engaged in only with such persons. By receiving this document and not returning it immediately, you are deemed to represent and warrant to the Company, Grant Thornton Corporate Finance and Westhouse Securities Limited that you fall within the categories of persons described above. Outside the United Kingdom, this document is only being sent to persons reasonably believed by the Company to be investment professionals or to persons to whom it is otherwise lawful to distribute it to. This document is being supplied to you solely for your information and may not be reproduced, further distributed or published in whole or in part by any other person. Persons outside the United Kingdom into whose possession this document comes are required by the Company, Grant Thornton Corporate Finance and Westhouse Securities Limited to inform themselves about and to observe any restrictions as to the offer or sale of Ordinary Shares and the distribution of this document under the laws and regulations of any territory in connection with any application for Ordinary Shares, including obtaining any requisite governmental or other consent and observing any other formality prescribed in such territory. No action has been taken or will be taken in any jurisdiction by the Company, Grant Thornton Corporate Finance or Westhouse Securities Limited that would permit a public offering of the Ordinary Shares in any jurisdiction where action for that purpose is required, nor has any such action been taken with respect to the possession or distribution of this document other than in any jurisdiction where actions for that purpose are required. As the Placing Shares will be offered to fewer than 100 persons (other than qualified investors within the meaning of Section 86(7) of FSMA) per member state of the European Economic Area, the Second Round Placing will be an exempt offer of securities to the public for the purposes of Section 86 of FSMA. Accordingly, this document is not a prospectus and does not require the approval of the FSA or any other relevant authority in any other member state of the European Economic Area ( EEA ). Any person making or intending to make any offer within the EEA of Ordinary Shares which are the subject of the Second Round Placing contemplated in this document should only do so in circumstances in which no obligation arises for the Company, Grant Thornton Corporate Finance or Westhouse Securities Limited to produce a prospectus for such offer. None of the Company, Grant Thornton Corporate Finance or Westhouse Securities Limited has authorised, nor do they authorise the making of any offer of Ordinary Shares through any financial intermediary, other than offers made by a financial intermediary with the consent of Westhouse Securities Limited and other than offers made by Westhouse Securities Limited which constitute the final placement of Ordinary Shares in this document. Certain risks to the Company of which the Directors are currently aware are specifically described in Part 2 of this document entitled Risk Factors. If one or more of these risks or uncertainties arises, or if underlying assumptions prove incorrect, the Company s actual results may vary materially from those expected, estimated or projected. Given these uncertainties, potential prospective investors should not place over-reliance on forward-looking statements and are advised to read, in particular, Part 2 of this document for a more complete discussion of the factors that could affect the Company s future performance and the industry in which the Company operates. Other than in compliance with the Company s obligations under the AIM Rules for Companies, the Company undertakes no obligation to update forward-looking statements or risk factors other than as required by applicable law, whether as a result of new information, future events or otherwise. Grant Thornton Corporate Finance, a division of Grant Thornton UK LLP, which is authorised and regulated in the UK by the FSA is acting as the Company s nominated adviser and Westhouse Securities Limited is acting as broker in connection with the Further Galaxy Subscription, the Second Round Placing and Re-Admission. The responsibilities of Grant Thornton Corporate Finance as the Company s nominated adviser under the AIM Rules for Nominated Advisers are owed solely to the London Stock Exchange and are not owed to the Company or to any Director, or to any other person in respect of his, her or their decision to acquire or subscribe for Ordinary Shares in reliance on any part of this document. No liability whatsoever is accepted by Grant Thornton Corporate Finance or Westhouse Securities Limited for the accuracy of any information or opinions contained in this document or for the omission of any material information from this document for which the Company and the Directors are solely responsible. Grant Thornton Corporate Finance and Westhouse Securities Limited will not be offering advice and will not otherwise be responsible for providing customer protections to any person other than the Company in relation to the contents of this document. Copies of this document will be available free of charge during normal business hours on any weekday (except Saturdays and public holidays) at the offices of Norton Rose LLP, 3 More London Riverside, London SE1 2AQ from the date of this document and shall remain available for a period of one month from Re-Admission. This document includes statements that are, or may be deemed to be, forward-looking statements. These statements relate to, among other things, analyses and other information that are based on forecasts of future results and estimates of amounts not yet determinable. These statements also relate to the Company s future prospects, developments and business strategies. These forward-looking statements are identified by their use of forward-looking terminology such as anticipate, believe, could, estimate, expect, intend, may, plan, predict, project, will or the negative of those variations, or comparable expressions, including reference to assumptions, or by discussions of strategy, plans, aims, objectives, goals, future events or intentions. These forward-looking statements include all matters that are not historical facts. These statements are contained in a number of places throughout this document and include statements concerning projections of the Company s future results, operating profits and earnings, financial condition, liquidity, prospects growth strategies and the industry in which the Company operates, are based on current expectations and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by those statements. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Forward-looking statements are not guarantees of future performance. The Company s actual results of operations, financial condition and liquidity, and the development of the business sector in which the Company operates, may differ materially from those suggested by the forward-looking statements contained in this document. In addition, even if the Company s results of operations, financial condition and liquidity, and the development of the business sector in which the Company operates, are consistent with the forward-looking statements contained in this document, those results or development may not be indicative of results or developments in subsequent periods. 2

3 CONTENTS Page DIRECTORS AND ADVISERS 4 DEFINITIONS 5 GLOSSARY OF TECHNICAL TERMS 11 SECOND ROUND PLACING AND RE-ADMISSION STATISTICS 13 EXPECTED TIMETABLE OF PRINCIPAL EVENTS 13 EXCHANGE RATE 13 PART 1: LETTER FROM THE CHAIRMAN 1. Introduction Background to and reasons for the Further Galaxy Subscription Details of the Galaxy Subscription and the Nomination Letter Funding of the Further Galaxy Subscription Galaxy Project Finance Facility Principal terms of the Further Galaxy Subscription Details of the Placings Completion of the Galaxy Subscription and the Second Round Placing Details of the Company Details of Galaxy Resources Limited Details of Creat Group Existing Directors and Senior Management Current trading, future prospects and significant trends Re-Admission to AIM and dealings in Ordinary Shares Dividend policy Lock-in and Orderly Market Arrangements Corporate governance CREST The Takeover Code Taxation Further information Notice of AGM Recommendation 27 PART 2: RISK FACTORS 28 PART 3: FINANCIAL INFORMATION 39 PART 4: EXPERTS REPORTS Anderson & Schwab Report Creat Resources Summary Report Galaxy Summary Report Extract from Coffey Mining Valuation Report 185 PART 5: ADDITIONAL INFORMATION 191 3

4 DIRECTORS AND ADVISERS Directors: all of: Company Secretary Dr Yuewen Zheng (Chairman and Non-executive Director) Mr Xiaojian Ren (Managing Director and Acting Chief Executive Officer) Mr Tad Mackay Ballantyne (Deputy Chairman and Non-executive Director) Mr Stephen Michael Powell (Non-executive Director) Mr Phillip Bradley Simpson (Non-executive Director) Registered Office Level Bathurst Street Hobart Tasmania 7000 Australia Telephone number: Ms Yasmine Healy Nominated Adviser Grant Thornton Corporate Finance 30 Finsbury Square London EC2P 2YU United Kingdom UK Solicitors to the Company Norton Rose LLP 3 More London Riverside London SE1 2AQ United Kingdom PRC lawyers to the Company Han Yi Law Office Suite 4103, II Grand Gateway Hongqiao Road Shanghai China Auditors and Reporting Accountants to the Company Deloitte Touche Tohmatsu Level 9, ANZ Centre 22 Elizabeth Street Hobart, Tasmania 7000 Australia Independent Mining Expert Coffey Mining Pty Ltd 1162 Hay Street West Perth, WA 6005 Australia Registrar Computershare Investor Services Pty Limited (Australia) 452 Johnston Street Abbotsford Victoria 3067 Australia Broker Westhouse Securities Limited One Angel Court London EC2R 7HJ United Kingdom Australian Solicitors to the Company Corrs Chambers Westgarth Woodside Plaza 240 St George s Terrace Perth, WA 6000 Australia Solicitors to the Nominated Adviser and Broker Bingham McCutchen LLP Suites One Exchange Square 8 Connaught Place Central, Hong Kong Independent Expert to the Company Deloitte Corporate Finance Pty Limited Woodside Plaza Level St Georges Terrace Perth, WA 6000 Australia Financial Public Relations First City PR 8th Floor 131 Finsbury Pavement London EC2A 1NT United Kingdom Depositary Computershare Investor Services plc PO Box 82 The Pavillions Bridgwater Road Bristol BS99 7NH United Kingdom 4

5 DEFINITIONS The following definitions apply throughout this document, unless the context applies otherwise: ACN Act or Corporations Act Admission AGM or Meeting of Shareholders AIM AIM Rules for Companies AIM Rules for Nominated Advisers Anderson & Schwab Report Australian dollar, A$ or $ ASIC ASX Board or Directors Borrowers Coffey Mining Australian Company Number the Corporations Act 2001 (Cth) (as amended), an act of the Commonwealth of Australia the admission of Ordinary Shares to trading on AIM on 6 March 2007 the meeting of Shareholders to be held in the Wellington Room at the Mercure Hobart Hotel, 156 Bathurst Street, Hobart, Tasmania 7000, Australia at 9.00am (local time) on 29 March 2010 AIM, the market of that name operated by the London Stock Exchange the rules for companies whose securities are traded on AIM, published by the London Stock Exchange (as amended) from time to time the rules of the London Stock Exchange which set out the eligibility, on-going obligations and certain disciplinary matters in relation to nominated advisers published by the London Stock Exchange (as amended) from time to time the report entitled Competent Person s Report and Independent Technical Valuation of the Mineral Assets of Zeehan Zinc Limited in Western Tasmania, Australia prepared by Anderson & Schwab Australia Limited dated 29 January 2007 and included in the Company s admission document dated 27 February 2007, contained in part 4 of this document the legal currency of the Commonwealth of Australia Australian Securities & Investments Commission, the regulatory body responsible for, among other things, administration and enforcement of the Corporations Act the Australian Securities Exchange, the market operated by ASX Limited together, the directors of the Company whose names are set out on page 5 of this document Galaxy Lithium Australia Limited (a wholly owned subsidiary of Galaxy) and Galaxy Lithium International Limited (an indirect subsidiary of Galaxy) Coffey Mining Pty Ltd, acting as independent mining expert to the Company or as independent mining expert to the Independent Expert, as the context requires Coffey Mining Valuation Report the independent technical valuation report dated 18 January 2010 prepared by Coffey Mining for the Independent Expert and included in its entirety as an annexure to the Notice of AGM Combined Code Company or Group the Principles of Good Governance and Code of Best Practice published in June 2006 by the Financial Reporting Council Creat Resources Holdings Limited (formerly known as Zeehan Zinc Limited), incorporated and registered in Tasmania, Australia with ACN , and, where the context requires, its subsidiaries 5

6 Computershare Constitution Convertible Loan Note Convertible Loan Subscriber Cornerstone Placing Cornerstone Subscribers Creat Group Creat Resources Summary Report CREST Computershare Investor Services Plc the constitution of the Company adopted on 6 October 2006 and amended on 23 November 2007, 14 November 2008 and 31 July 2009 the loan note which may be issued by the Company to the Convertible Loan Subscriber and which is convertible into Ordinary Shares in certain circumstances, such loan note issue being made only if necessary in order to fund any shortfall in the amount raised by way of the Second Round Placing Create Group (HK) Limited, a company incorporated in Hong Kong with number the placing of 114,000,000 Ordinary Shares to the Cornerstone Subscribers at a price of 0.05 per Ordinary Share on 14 December 2009 the three investors that subscribed for 114,000,000 Ordinary Shares pursuant to the Cornerstone Placing Creat Group Co. Ltd., a private investment company incorporated and in Nanchang City, Jiangxi Province, the PRC whose registered office is at 125, East Beijing Road, Nanchang City, Jiangxi, the PRC the summary report dated 19 January 2010 based on publicly available information and prepared by Coffey Mining on certain licences and agreements being all the material assets of the Company, contained in part 4 of this document the electronic, paperless transfer and settlement mechanism to facilitate the transfer of title to shares in uncertificated form, operated by Euroclear UK & Ireland CREST Regulations the Uncertificated Securities Regulations 2001 (as amended) including (i) any enactment or subordinate legislation which amends or supersedes those regulations and (ii) any applicable rules made under those regulations or any such enactment or subordinate legislation for the time being in force Depositary DI or Depositary Interest DTR DTAE Enlarged Share Capital Computershare acting in its capacity as depositary pursuant to the terms of the Depositary Agreement a depositary interest issued by the Depositary each representing one ordinary share in uncertificated form the Disclosure and Transparency Rules issued by the FSA Department of Tourism, Arts and Environment (of Tasmania) (the Environment division which was part of the Department of Primary Industry, Water and Environment prior to 5 April 2006) the Existing Ordinary Shares and the Placing Shares Equity Put Option the conditional put option granted by Creat Group to the Cornerstone Subscribers pursuant to which the Cornerstone Subscribers are entitled to sell the Ordinary Shares acquired under the Cornerstone Placing to Creat Group in certain circumstances Euroclear UK & Ireland Existing Ordinary Shares Euroclear UK & Ireland (formerly known as CRESTCo Limited) the 567,276,674 Ordinary Shares in issue at the date of this document 6

7 Exploration Licence or EL or Licence Facility Put Option Financier FSA FSMA Further Galaxy Subscription Further Galaxy Shares an exploration licence granted under the MRD Act, which provides the holder with the ability to undertake exploration of minerals in Tasmania the put option agreement appended to the Nomination Letter which it is proposed be entered into between the Company and the New Lending Banks, the Security Trustee and the Agent as described in paragraph 5 of Part 1 of this document the New Lending Banks, any substitute lender, the Security Trustee and the Agent the Financial Services Authority of the United Kingdom the Financial Services and Markets Act 2000, of the United Kingdom (as amended) the subscription by the Company for the Further Galaxy Shares such number of ordinary shares in Galaxy to be subscribed for by the Company which is equal to the lower of (a) the number which, together with the Initial Galaxy Shares, represents per cent. of Galaxy s enlarged issued share capital on the date of the Further Galaxy Subscription and (b) 31,000,000 shares Galaxy Galaxy Resources Limited, incorporated and registered in Australia with ACN and, where the context requires, its subsidiaries Galaxy Group Galaxy Shares Galaxy Subscription Agreement Galaxy and its subsidiaries, from time to time the Initial Galaxy Shares and the Further Galaxy Shares the agreement entered into between Galaxy and Creat Group on 21 August 2009 relating to the subscription by Creat Group or its nominee for the Galaxy Shares Galaxy Subscription the Initial Galaxy Subscription and the Further Galaxy Subscription Galaxy Summary Report Grant Thornton Corporate Finance or Nominated Adviser GST Independent Directors Independent Expert Independent Expert s Report the summary report dated 20 January 2010 based on publicly available information and prepared by Coffey Mining on certain licences and agreements being all the material assets of Galaxy, contained in part 4 of this Document the corporate finance division of Grant Thornton UK LLP which is authorised by the FSA to carry on investment business, acting as nominated adviser to the Company a goods and services tax levied pursuant to the GST Act, being A New Tax System (Goods and Services Tax) Act 1999 (Cth) of Australia (as amended) collectively, Tad Ballantyne, Stephen Powell and Phillip Simpson Deloitte Corporate Finance Pty Limited, acting as independent expert to the Company for the preparation of the Independent Expert s Report the report dated 5 February 2010 prepared by the Independent Expert to consider the Equity Put Option and issues under s.611 item 7 of the Act, such report which is included in its entirety as an annexure to the Notice of AGM Initial Galaxy Shares the 6,818,182 shares in Galaxy purchased by the Company on 15 December 2009 Initial Galaxy Subscription the subscription by the Company for the Initial Galaxy Shares 7

8 Jiangsu Project the proposed lithium carbonate plant to be operated by Galaxy and to be located in the Yangtze River International Chemical Industrial Park of the Zhangjiagang Free Trade Zone in the province of Jiangsu, PRC JORC the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves, as published by the Joint Ore Reserves Committee of the Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia (2004) Latest Practicable Date 8 February 2010 London Stock Exchange Long Stop Date 23 April 2010 Mining Lease or ML MRD Act Mt Cattlin Project MRT London Stock Exchange plc mining lease granted pursuant to the MRD Act. An ML provides the holder with the right to mine for minerals (as defined by the lease) Mineral Resources Development Act 1995 (Tas) (as amended), the Tasmanian law under which the mining industry in the State of Tasmania is controlled and regulated the Mt Cattlin lithium tantalum exploration and mining project owned by Galaxy and located approximately 2km north of the town of Ravensthorpe in Western Australia Mineral Resources Tasmania, a division of the Department of Infrastructure, Energy and Resources (of the state government of Tasmania) Nomination Letter the letter agreement dated 10 February 2010 between the Company, Creat Group and Galaxy confirming the nomination of the Company under the Galaxy Subscription Agreement to subscribe for the Initial Galaxy Shares on 15 December 2009 and pursuant to which the Company is conditionally entitled to subscribe for the Further Galaxy Shares Notice of AGM New Lending Banks New Lending Banks Facility New Lending Banks Facility Agreement Obligors the notice of annual general meeting and explanatory statement of the Company dated 10 February 2010 together, China Development Bank Corporation and RZB Austria Finance (Hong Kong) Limited the facility provided to the Borrowers by the New Lending Banks pursuant to the New Lending Banks Facility Agreement the draft facility agreement appended to the Nomination Letter which it is proposed will be entered into between, inter alia Galaxy, the Borrowers and the New Lending Banks, as described in paragraph 5 of Part 1 of this document the Borrowers, Galaxy, each security provider, Galaxy Lithium (Jiangsu) Co. Ltd and any other person who is or agrees to become an obligor under the New Lending Banks Facility Agreement Oceania Tasmania Oceania Tasmania Pty Ltd., incorporated and registered in Australia with ACN , a wholly owned subsidiary of the Company Official List Ordinary Shares the Official List of the FSA ordinary shares of no par value in the capital of the Company 8

9 Original Debt Facility Agreement Permit Placing Agreement Placing Price Placing Shares PRC or China Proceeds of the Placing Prospectus Rules the agreement entered into between Creat Group and Galaxy Lithium Australia Limited on 3 September 2009, as described in paragraph 5 of part 1 of this document a permit issued by the local council (West Coast Council), after consideration of planning and environmental issues, allowing a company to develop and mine a specified quantity of ore the conditional agreement dated 10 February 2010 between the Company, the Directors, Creat Group, the Convertible Loan Subscriber, Westhouse and Grant Thornton Corporate Finance in relation to the Second Round Placing, a summary of the terms of which are set out in paragraph 10.3 of part 5 of this document 0.06 per Placing Share up to 283,333,333 new Ordinary Shares which are the subject of the Second Round Placing the People s Republic of China the gross proceeds of the Second Round Placing the FSA rules which set out the form, content and approval requirements for prospectuses QCA Guidelines the corporate governance guidelines for AIM companies published by the Quoted Company Alliance Re-Admission Resolutions Retention Licence Second Round Placing Security Trustee or Agent Shareholders Share Option Plan Share Mortgage Sterling or Takeovers Panel United Kingdom or UK US or USA the admission of the Enlarged Share Capital to trading on AIM and such admission becoming effective in accordance with the AIM Rules for Companies the resolutions of the Company to be proposed at the AGM a retention licence granted pursuant to the MRD Act, which allows the discoverer of a resource which is not yet economic or otherwise possible to develop now, to retain its interest pending a change in the circumstances the further fundraising of up to 17 million to be undertaken by the Company to institutional and other investors Bank of China Limited, Sydney branch the holders of Ordinary Shares the 2006 Share Option Plan Rules established by the Company, further details of which are set out in paragraph 4 of Part 5 of this document the equitable mortgage of shares appended to the Nomination Letter which is proposed will be granted by the Company in favour of the Security Trustee as described in paragraph 5 of Part 1 of this document the legal currency of the UK the Australian body established by the Australian Securities and Investment Commissions Act 2001 (Cth) with powers defined in the Corporations Act in relation to takeover bids affecting Australian companies the United Kingdom of Great Britain and Northern Ireland the United States of America, its territories and possessions, any state of the United States of America and the District of Columbia 9

10 US Dollar or US$ Westhouse or Broker ZZ Administration ZZ Exploration the legal currency of the USA Westhouse Securities Limited, acting as broker to the Company Zeehan Zinc Administration Pty Ltd., incorporated and registered in Australia with ACN , a wholly-owned subsidiary of the Company ZZ Exploration Pty Ltd., incorporated and registered in Australia with ACN , a wholly-owned subsidiary of the Company 10

11 care and maintenance concentrate grade GLOSSARY OF TECHNICAL TERMS mining operations are temporarily shut down and related facilities are placed on standby mode at reduced costs mineral in which the valuable mineral fraction has been separated from the gangue (waste) or worthless material thereby upgrading the product the relative quantity or percentage of mineral or metal content gravity short term for the gravitational method of geophysical prospecting, which measures irregularities or variations in gravity attraction produced by differences in the densities of rock formations, locally and/or regionally gravity plant plant designed to separate and concentrate economically important minerals from non-economic minerals using gravity and crushing circuits Indicated Mineral Resource that part of a mineral resource for which tonnage, densities, shape, physical characteristics, grade and mineral content can be estimated with a reasonable level of confidence as defined by JORC Mineral Reserve proves the technical feasibility and economic viability of a Mineral Resource when all relevant modifying factors have been considered Mineralisation a concentration of valuable or potentially valuable minerals within a rock body Mineral Resource Measured Mineral Resource pre-concentrate Probable Ore Reserves Reserves an identified in-situ mineral occurrence from which valuable or useful minerals may be recovered is that part of a Mineral Resource for which tonnage, densities, shape, physical characteristics, grade and mineral content can be estimated with a high level of confidence, where sampling from outcrops, trenches, pits, workings and drill holes are spaced closely enough to confirm geological grade and continuity mineral in which the valuable mineral fraction has not been fully separated from the gangue (waste) or worthless material but a product that has undergone preliminary upgrading the economically mineable part of an Indicated, and in some circumstances, a Measured Mineral Resource, including diluting materials and allowances for losses which may occur when the material is mined. Assessment studies such as metallurgical, economic, marketing, legal, environmental, social and governmental factors demonstrate at the time of reporting that extraction could be reasonably justified the economically mineable part of a Measured and/or Indicated Mineral Resource. It includes diluting materials and allowances for losses, which may occur when the material is mined. Appropriate assessments and studies have been carried out, and include consideration of and modification by realistically assumed mining, metallurgical, economic, marketing, legal, environmental, social and governmental factors. These assessments demonstrate at the time of reporting that extraction could reasonably be justified. Ore reserves are sub-divided in order of increasing confidence into Probable Ore Reserves and Proved Ore Reserves under JORC 11

12 Resources t tenement tpa a concentration of material of intrinsic economic interest where there are reasonable prospects for eventual economic extraction. Mineral resources are subdivided in order of increasing geological confidence as Inferred, Indicated and Measured under JORC tonnes an exploration licence or a mining lease granted or deemed to have been granted under the MRD Act (including pending applications for same) tonnes per annum 12

13 SECOND ROUND PLACING AND RE-ADMISSION STATISTICS Placing Price 0.06 Number of Existing Ordinary Shares in issue 567,276,674 Maximum number of Placing Shares 283,333,333 Maximum number of Ordinary Shares on Re-Admission 850,610,007 Percentage of the Enlarged Share Capital represented by the Placing Shares (assuming the maximum number of Placing Shares are issued) per cent. Maximum gross proceeds receivable by the Company pursuant to the Second Round Placing 17,000,000 Estimated maximum net proceeds of the Second Round Placing receivable by the Company pursuant to the Second Round Placing 15,118,600 EXPECTED TIMETABLE OF PRINCIPAL EVENTS Publication of this document 10 February 2010 Latest time and date for receipt of Forms of Proxy Annual General Meeting Re-Admission to trading on AIM effective and commencement of dealings in the Enlarged Share Capital 9.00am (EDST) on 27 March am (EDST) on 29 March March 2010 CREST stock accounts credited (as applicable) on or about 30 March 2010 Definitive share certificates despatched (as applicable) Week commencing 5 April 2010 EXCHANGE RATE For the purposes of this document, the following exchange rate between A$ and Sterling should be assumed unless a specific rate is specified: 1.00 to A$

14 PART 1 LETTER FROM THE CHAIRMAN Creat Resources Holdings Limited (Incorporated and registered in Australia with registered number ACN ) Directors: Dr Yuewen Zheng (Chairman and Non-executive Director) Mr Xiaojian Ren (Managing Director and Acting Chief Executive Officer) Mr Tad Mackay Ballantyne (Deputy Chairman and Non-executive Director) Mr Stephen Michael Powell (Non-executive Director) Mr Phillip Bradley Simpson (Non-executive Director) Dear Shareholder, Registered Office: Level Bathurst Street Hobart Tasmania 7000 Australia 10 February 2010 Proposed acquisition of an interest in Galaxy Resources Limited, Placing of up to 283,333,333 Placing Shares at 6 pence per share and Re-Admission to trading on AIM 1. Introduction I am delighted to provide you with more information about the proposed Galaxy Subscription, which was announced on 10 December As further announced on 16 December 2009, the Company has acquired the Initial Galaxy Shares and now proposes to acquire the Further Galaxy Shares in order to complete the Galaxy Subscription. 2. Background to and reasons for the Further Galaxy Subscription On 21 August 2009, Creat Group, the controlling shareholder of the Company, entered into the Galaxy Subscription Agreement pursuant to which it agreed to subscribe for the Galaxy Shares and to provide a project finance facility to the Galaxy Group. Following completion of the Galaxy Subscription, the Galaxy Shares will represent up to approximately per cent. of the issued share capital of Galaxy, an ASX listed Australian mining and materials company focusing on lithium and tantalum exploration and production. On 17 November 2009, the Company announced that Creat Group intended to nominate the Company as the subscriber under the Galaxy Subscription Agreement. The Company took the decision to proceed with the Galaxy Subscription in two separate stages. On 9 December 2009, the Company announced that it intended to use some of the proceeds of the Cornerstone Placing to subscribe for the Initial Galaxy Shares. The funds required to purchase the Initial Galaxy Shares were raised on 14 December 2009 when the Company entered into the Cornerstone Placing pursuant to which it raised gross proceeds of 5.7 million. Part of the funds raised under the Cornerstone Placing (equivalent to approximately A$6 million) were used to finance the purchase of the Initial Galaxy Shares by the Company at a price of A$0.88 per Galaxy Share. The remainder of the funds raised under the Cornerstone Placing will be utilised by the Company for working capital purposes, to fund the Company s operations and/or acquire additional business assets or businesses. The Company now wishes to complete the Galaxy Subscription by subscribing for the Further Galaxy Shares. The Initial Galaxy Subscription and the proposed Further Galaxy Subscription form part of the Company s revised strategy, as announced on 18 July 2009, of exploring acquisitions or other transactions that would result in the expansion of its mining operations within and outside Australia, and the diversification of its resources. The announcement of the revised strategy followed the completion on 29 December 2008 of a subscription for further Ordinary Shares in the Company by Creat Group, whereby Creat Group increased its holding in the Company from 6.2 per cent. to approximately 70 per cent. Creat Group has a current holding of per cent. of the issued share capital of the Company through its nominees and wholly owned subsidiaries, Marvel Link Group Limited and Kingwealth Finance Limited. 14

15 3. Details of the Galaxy Subscription and the Nomination Letter The Galaxy Subscription Agreement gave Creat Group the right to subscribe for the Galaxy Shares and the obligation to provide (or to nominate another Creat entity or reputable commercial bank to provide) a project finance facility to Galaxy in the sum of A$130 million for the purpose of developing both the Mt Cattlin Project and the Jiangsu Project. Creat Group entered into the Original Debt Facility Agreement on 3 September 2009 which set out the further terms on which Creat Group would provide the project finance facility contemplated in the Galaxy Subscription Agreement. On 10 February 2010, the Company, Creat Group and Galaxy entered into the Nomination Letter pursuant to which it was acknowledged that, as permitted by the Galaxy Subscription Agreement, Creat Group had nominated the Company to subscribe for the Initial Galaxy Shares and that conditional upon the approval of the Company s Shareholders, the Company has been nominated to subscribe for the Further Galaxy Shares at the same subscription price of A$0.88. The number of Further Galaxy Shares shall be equal to the lower of (a) the number which, together with the Initial Galaxy Shares, represents per cent. of Galaxy s enlarged share capital immediately following such issuance; and (b) 31,000,000 shares. Accordingly, the maximum amount payable in respect of the Further Galaxy Shares shall be A$27,280,000 (equivalent to approximately 15,118,600). The Nomination Letter provides that the Company will be entitled to exercise all of the rights given by Galaxy to Creat Group under the Galaxy Subscription Agreement, specifically, a right to appoint a director to the board of Galaxy and the Company will have certain anti-dilution rights. On 8 January 2010, the Company exercised its right to appoint a director to the board of Galaxy and Dr Yuewen Zheng was appointed as a non-executive director and Mr Xiaojian Ren was appointed as his alternate. The Nomination Letter also makes a number of other amendments to the Galaxy Subscription Agreement. Further details of the terms of the Nomination Letter are set out in paragraph 10.1 of part 5 of this document. The Nomination Letter does not transfer to the Company the obligation to provide the project finance facility to Galaxy. Due to the size of the Further Galaxy Subscription (when aggregated with the Initial Galaxy Subscription) in comparison to the Company, the Further Galaxy Subscription constitutes a reverse takeover for the purposes of the AIM Rules for Companies. Accordingly, the Further Galaxy Subscription will require the approval of the Company s Shareholders and the production of this admission document. Following the approval of the Further Galaxy Subscription, the Company will seek Re-Admission. The Directors believe the Company will be well placed to continue its revised strategy to make further acquisitions or conduct other transactions to expand the Company s operations and work alongside Creat Group to support Galaxy as it develops the Mt Cattlin Project and the Jiangsu Project. 4. Funding of the Further Galaxy Subscription To fund the Further Galaxy Subscription, the Company intends to raise through the Second Round Placing up to 15,118,600 (approximately A$27,280,000) net of commissions and other transaction expenses. The maximum gross proceeds of the Second Round Placing will be approximately 17,000,000. Further details of the Second Round Placing are set out below. The Second Round Placing has not been underwritten and therefore there is no certainty that all or any of the funds necessary for the Further Galaxy Subscription will be raised. The Company has agreed with Creat Group that, in the event that the gross funds raised in the Second Round Placing are less than 17,000,000 (equivalent to approximately A$30,674,800), Creat Group shall procure that the Convertible Loan Subscriber shall advance to the Company an amount equal to such shortfall under the terms of an agreed form Convertible Loan Note. The Convertible Loan Note will have a coupon of 10 per cent. per annum and a maturity date twelve months after Shareholders approve the Further Galaxy Subscription. The Company must repay the Convertible Loan Note (together with accrued interest) in full on the maturity date. The Convertible Loan Note may be converted at any time at the option of the noteholder into Ordinary Shares at a conversion price of 0.06 per Ordinary Share. Under the requirements of the Act, and given Creat Group s current shareholding in the Company, the approval of the Company s shareholders would be needed for the Convertible Loan Subscriber to convert the Convertible Loan Note. The terms of the Convertible Loan Note entitle the Convertible Loan Subscriber to assign it to a third party in whole or part provided that the assignee enters into an orderly marketing arrangement in a form similar to that described in paragraph of part 5 of this document and (a) the Company has provided its prior written consent; or (b), inter alia, (i) the assignee is not a related party to the 15

16 Company; (ii) upon conversion, that the assignee s relevant interests in the Company s Ordinary Shares will not exceed per cent.; and (iii) notification of the assignment or subsequent conversion is not required by relevant legislation. Upon assignment, the assignee is obliged to immediately serve a notice on the Company requiring it to convert the Convertible Loan Note into Ordinary Shares. Pursuant to the Placing Agreement, if the Second Round Placing is not fully subscribed, Creat Group may itself procure third party investors to subscribe for Ordinary Shares at the Placing Price and/or agree with third party investors that the Convertible Loan Note shall be assigned to them immediately following its issue prior to Re-Admission (with the effect that the Convertible Loan Note would be converted into Ordinary Shares as described above). Creat Group intends to explore opportunities to procure such third party investors between the date of this document and the date of the AGM. Should it be proposed that any potential investor identified by Creat Group in accordance with the above will hold 10 per cent. or more of the Company s issued share capital, the identity of such investor will be announced by no later than 7 clear days immediately prior to the AGM. In the event that no funds are raised pursuant to the Second Round Placing and no third party investors are procured by Creat Group then the Convertible Loan Subscriber may (if the Convertible Loan Note is converted) acquire all shares issued pursuant to the terms of the Convertible Loan Note, which would (provided that any necessary regulatory requirements have been complied with) increase Creat Group s shareholding in the Company s enlarged share capital (together with its subsidiaries) to approximately per cent. 5. Galaxy Project Finance Facility The Galaxy Subscription Agreement provided that funds had to be available for drawdown under the project finance facility before the Galaxy Shares would be issued. The Nomination Letter has amended the Galaxy Subscription Agreement to provide that the issue of the Further Galaxy Shares may take place without such project finance facility funds being available for drawdown. The terms of the project finance facility were confirmed by the Original Debt Facility Agreement. The Galaxy Subscription Agreement and the Original Debt Facility Agreement permit Creat Group to nominate a reputable commercial bank prior to drawdown (with the approval of Galaxy) to provide the project finance facility. Galaxy and Creat Group are currently at an advanced stage of discussions with the New Lending Banks regarding the entry into a New Lending Banks Facility Agreement whereby the New Lending Banks will (if definitive agreements are entered into) provide a project finance facility in an amount of US$105 million to the Borrowers, in place of Creat Group s obligation to provide the A$130 million project finance facility under the Original Debt Facility Agreement. Unless and until the New Lending Banks Facility Agreement is entered into, the obligation to provide the project finance facility remains with Creat Group. However, Galaxy and Creat Group have agreed in the Nomination Letter that Creat Group is not obliged to make available the facility provided that the New Lending Banks Facility Agreement is signed on or prior to the Long Stop Date on substantially the terms of the draft agreement appended to the Nomination Letter. The New Lending Banks have indicated that they will not be in a position to sign the New Lending Banks Facility Agreement until after Re-Admission. As part of the New Lending Banks Facility Agreement, the New Lending Banks have indicated that they will require that the Company enter into the Share Mortgage and the Facility Put Option, further details of which are set out below. One of the conditions upon which Creat Group was prepared to nominate the Company to subscribe for the Further Galaxy Shares was that the Company agreed to enter into the Share Mortgage and the Facility Put Option, in order to assist Creat Group to procure that the New Lending Banks enter into the New Lending Banks Facility Agreement and that Galaxy enters into the Nomination Letter. Under the Nomination Letter, the Company has agreed that provided the New Lending Banks Facility Agreement is entered into in substantially the form appended thereto on or prior to the Long Stop Date (or such earlier date as Creat Group, the Company and Galaxy may agree) and provided Re-Admission has occurred, the Company will enter into the Share Mortgage and the Facility Put Option with the New Lending Banks. Under the terms of the Share Mortgage, the Company will, if the Share Mortgage is executed, agree to grant security at all times, up to a maximum aggregate of 19.9 per cent. of its shares in Galaxy in favour of the Security Trustee to secure the obligations of the Obligors under the New Lending Banks Facility Agreement and the obligations of the Company under the Facility Put Option. The amount secured by the Share Mortgage is limited to the proceeds realised from the sale of the shares pledged in favour of the Security Trustee. In the case of an event of default under the New Lending Banks Facility 16

17 Agreement which is not the fault of the Company, the New Lending Banks are only able to enforce the Share Mortgage once all other security granted pursuant to the New Lending Banks Facility, which is not granted by the Company, has been enforced. The Facility Put Option will, if executed, entitle the New Lending Banks to require the Company to purchase from the New Lending Banks the debt outstanding under the New Lending Banks Facility Agreement at the time the option is exercised. The purchase price for the debt outstanding under the New Lending Banks Facility Agreement will be an amount equal to the principal, accrued interest and fees outstanding under the New Lending Banks Facility Agreement at that time. In exercising this option, the New Lending Banks would also transfer their rights under the New Lending Banks Facility Agreement to the Company. The Facility Put Option is only exercisable by the New Lending Banks during the period from four years from initial drawdown until 10 December The Facility Put Option provides that all dividends and distributions which may be paid or declared by Galaxy to the Company prior to completion of the Facility Put Option are immediately lent back to Galaxy by way of shareholder loan. As with the Share Mortgage, recourse under the Facility Put Option (should the Company refuse to purchase the amount outstanding under the New Lending Banks Facility Agreement when the Facility Put Option is exercised) will be limited to the value of the shares pledged in favour of the Security Trustee. Shareholders should refer to part 2 of this document which details risk factors in respect of the Facility Put Option, the Share Mortgage and the New Lending Banks Facility Agreement. 6. Principal terms of the Further Galaxy Subscription The Further Galaxy Subscription is conditional upon, among other things: (a) Galaxy obtaining shareholder approval by no later than 28 February 2010 (which has been obtained on 10 February 2010); (b) no material adverse change occurring prior to the Further Galaxy Subscription; (c) Galaxy not, prior to the issue and allotment of the Further Galaxy Shares, issuing or agreeing to issue any Galaxy Shares other than to the Company, or to the holders of outstanding options over shares in Galaxy in respect of the exercise of such options; and (d) the warranties in the Galaxy Subscription Agreement being true and correct in all material respects on the date of the Further Galaxy Subscription. The nomination by Creat Group of the Company as the subscriber for the Further Galaxy Shares under the Galaxy Subscription Agreement is conditional upon: (a) approval having been given by the Shareholders (i) under Rule 14 of the AIM Rules for Companies in respect of the reverse takeover of the Company in relation to the subscription for the Further Galaxy Shares (when aggregated with the subscription of the Initial Galaxy Shares) and (ii) under section 136(2) of the Corporations Act to amend Article 17.2 of the Constitution as set out in the Notice of AGM; (b) the entry into on or about the date of this document of the Placing Agreement; and the conditions to the Placing Agreement being satisfied or waived (save for any condition as to the Nomination Letter becoming unconditional and not having been terminated, any condition as to the unconditional allotment of the Further Galaxy Shares and any condition relating to Re-Admission) and the Placing Agreement not having been terminated in accordance with its terms; (c) all Galaxy shareholder approvals which are required in order for the Further Galaxy Shares to be issued to the Company having been obtained (which has been obtained on 10 February 2010); and (d) an amount not less than the total subscription amount (in Australian dollars) for the Further Galaxy Shares (not including any amounts committed by investors through the Placing) having been deposited in an escrow account prior to the AGM. The conditions to the Further Galaxy Subscription and the nomination may be waived at the discretion of the Company. Pursuant to the Nomination Letter, Creat Group has agreed that the Company will have the benefit of all of its rights held under the Galaxy Subscription Agreement, including the following rights: 17

18 (a) the right to require Galaxy to use its best endeavours to appoint Creat Group s nominee to the board of directors of Galaxy and, amongst other things, for Galaxy to recommend the election of such nominee as a director of Galaxy at the next general meeting of Galaxy shareholders (the Company exercised this right and on 8 January 2010 when Dr Yuewen Zheng was appointed to the board of directors of Galaxy); (b) certain anti-dilution rights to participate in any further issue of shares by Galaxy until 21 August 2010; and (c) the benefit of certain warranties and representations given by Galaxy. Furthermore, the Company has agreed that following completion of the Further Galaxy Subscription, it will not increase its voting power in Galaxy other than in limited circumstances, including pursuant to the exercise of the anti-dilution rights given to the Company, in connection with a takeover bid of Galaxy or in accordance with the Act. In accordance with the AIM Rules for Companies, the entry by the Company into the Nomination Letter and the issuance of the Convertible Loan Note by the Company to the Convertible Loan Subscriber are each a Rule 13 Related Party Transaction. The Independent Directors, having consulted with the Nominated Adviser, consider that the terms of the Nomination Letter and Convertible Loan Note are fair and reasonable insofar as the Company s shareholders are concerned. 7. Details of the Placings Cornerstone Placing On 14 December 2009, the Company placed 114,000,000 Ordinary Shares with the Cornerstone Subscribers under the Cornerstone Placing raising 5.7 million (before expenses). Creat Group, the Company s majority shareholder, has granted to each of the Cornerstone Subscribers an Equity Put Option under which the Cornerstone Subscribers are permitted to require Creat Group to purchase all of the Ordinary Shares they subscribed for in the Cornerstone Placing. The Equity Put Option is exercisable only on the date falling twelve months after completion of the Cornerstone Placing and only if the market price of the Ordinary Shares on that date is less than The Equity Put Option is also conditional upon regulatory and legal approvals including member approval of the Company under section 611 item 7 of the Act as its exercise will result in Creat Group increasing its shareholding in the Company. The Company commissioned the Independent Expert to consider the advantages and disadvantages of the Equity Put Option for Australian regulatory purposes and the Independent Expert s conclusions are set out in its report dated 5 February 2010, which is included in its entirety in the Notice of AGM. A copy of the Notice of AGM can be found at Further details of the Cornerstone Placing are set out in paragraph 10.2 of part 5 of this document. A resolution will be proposed at the AGM in order to approve any acquisitions of a relevant interest in the Company s voting shares pursuant to the Equity Put Option. The Nomination Letter and the transactions contemplated thereunder are not conditional upon obtaining shareholder approval for the Equity Put Option. Second Round Placing Following the publication of this document and prior to the AGM on 29 March 2010, a further fundraising of up to approximately 17,000,000 (approximately A$30,674,800) will be undertaken by the Company to institutional and other investors. The Second Round Placing will seek to raise the funds required to satisfy the purchase price of the Further Galaxy Shares. Pursuant to the Placing Agreement, Westhouse, the Company s broker, has agreed to use its reasonable endeavours to place up to 283,333,333 Ordinary Shares with investors at the Placing Price. A commission of 5 per cent. of the amount raised pursuant to the Second Round Placing in respect of investors introduced by Westhouse shall be paid to Westhouse and will be funded from the proceeds of the Second Round Placing. Under the terms of the Placing Agreement the completion of the Second Round Placing is conditional upon, inter alia, the Shareholders having approved the Further Galaxy Subscription, the Company becoming unconditionally entitled under the Nomination Letter to subscribe for the Further Galaxy Shares, such shares having been allotted and issued to the Company, the Nomination Letter not having been terminated, the Company s funding for the Further Galaxy Subscription (other than the funds raised from investors through Westhouse under the Second Round Placing) being held in escrow in accordance with the Nomination Letter and Re-Admission becoming effective. The long stop date for such conditions to be fulfilled or waived in accordance with the Placing Agreement is 23 April

19 The Ordinary Shares to be issued at the Placing Price pursuant to the Second Round Placing will represent up to approximately per cent. of the Company s issued Ordinary Shares (assuming the maximum number of Placing Shares are issued). The Placing Shares will be issued credited as fully paid and will, on issue, rank pari passu in all respects with Existing Ordinary Shares. In the event that no funds are raised pursuant to the Second Round Placing and no third party investors are procured by Creat Group then the Convertible Loan Subscriber may (if the Convertible Loan Note is converted), acquire all shares issued pursuant to the terms of the Convertible Loan Note, which would (provided that any necessary regulatory requirements have been complied with) increase Creat Group s shareholding in the Company (together with its subsidiaries) to approximately per cent. Further details of the Placing Agreement are set out in paragraph 10.3 of part 5 of this document. 8. Completion of the Galaxy Subscription and the Second Round Placing Creat Group will procure that an amount sufficient to fund the subscription of the Further Galaxy Shares (less any amounts (net of placing commissions) where Westhouse has received commitments from third party investors in respect of the Second Round Placing) will be paid into an escrow account to be established with an escrow agent in Australia prior to the AGM. Promptly following the AGM, and subject to fulfilment or waiver of the conditions precedent set out in the Nomination Letter, the Further Galaxy Shares will be unconditionally issued against release of the subscription funds. Galaxy has agreed that the amounts committed by third party investors in respect of the Second Round Placing may be paid to it within three Business Days of the date of the AGM. In order to facilitate its Re-Admission, on the day of the AGM, the Company will have its Ordinary Shares suspended from trading on AIM. Re-Admission is then expected to occur on 30 March 2010, the business day after the AGM. Settlement under the Second Round Placing (subject to the Placing Agreement becoming unconditional and not having been terminated) will take place upon Re-Admission. 9. Details of the Company The Company (formerly known as Zeehan Zinc Limited), was initially incorporated as a mining, exploration and development company seeking to mine and process certain zinc, lead and silver deposits in Western Tasmania, Australia. The Ordinary Shares were admitted to trading on AIM on 6 March 2007 and the directors of the Company at the time intended to turn the Company into a leading producer in Australia of mined zinc, lead and silver by extracting these minerals through the establishment of (primarily) open pit mining operations to produce metal concentrates. At the time of the Company s initial admission to trading on AIM, the mining consultancy company, Anderson & Schwab Australia Limited, prepared an independent competent person s report on the mineral assets of the Company. The Anderson & Schwab Report is reproduced in its entirety in part 4 of this document. It should be noted that the Anderson & Schwab Report has not been updated for the purposes of its inclusion in this document. In particular, no reliance should be placed by potential investors or Shareholders on the conclusions of the mineral asset valuations contained at pages 74 to 86 of the report as these valuations were only valid as of the date of that report. For the purposes of the Independent Expert s Report, the Independent Expert commissioned Coffey Mining to provide it with an independent technical valuation report on the Company s mineral assets. An extract of the Coffey Mining Valuation Report dated 18 January 2010 with the report s principal conclusions is included in part 4 of this document. The conclusions are subject to the scope, assumptions and limitations of the full Coffey Mining Valuation Report, a copy of which can be found at During the period from the initial admission of the Company to trading on AIM to mid-2008, the Company commenced mining and production of pre-concentrate ore, built and commissioned a gravity plant and flotation plant and engaged in an exploration drilling program to prove up additional resources. The Company brought its mine at Comstock into initial production at the beginning of 2007 after an intensive construction period. Mining operations were carried out between February and June 2008 by mining contractor Hoare Brothers at Main Lode (South Pit) and Allison s Lode and the Company sold a trial amount of 500 tonnes of ore to Zinifex Australia Limited (Zinifex) in June The processing plant at Comstock went through extensive and costly commissioning, testing and adaptation from October 2007 through to June 2008 to produce product(s) consistent with potential customers specifications. The plant was in a continuous state of commission, adaptation and 19

20 re-commission throughout this construction period. As a result, commissioning and operating costs were high and the reliability proved below expectation. Ores crushed for batch testing and sampling were not truly representative of steady state production to a set product specification. Given the level of costs incurred on the processing plant, the Board considered it not economically viable to continue with mining and processing until a tailored plan could be implemented. Operations at Comstock were suspended in June 2008 and on 24 September 2008, the Company announced that it had ceased drilling on its Comstock and Oceana properties with the Company deciding to tailor its exploration plan to focus primarily on the discovery of nickel, and to concentrate on exploration rather than mining. The Company s gravity and processing plant was subsequently shut down and the processing plant and associated facilities located at Comstock were sold in July During this period the Board was considering the best strategic direction for the Company to exploit its existing Comstock and Oceana sites. In addition to the resource enhancement and exploration plans, the Board began to focus on steering the Company towards diversification of resources and expansion, both within Australia and internationally. The Board approved initial groundwork needed to begin exploration for nickel, and additional resource enhancement work at its Oceana and Comstock properties, and on its Exploration Licenses. The Board also started investigating strategic acquisitions with a view to expansion and commenced discussions with parties in Australia and internationally in relation to mutually beneficial corporate transactions. Through two of its wholly-owned subsidiaries, the Company holds two Mining Leases (currently being progressed as Retention Licence applications), four Exploration Licences and a Retention Licence which together cover a mineralised area of approximately 100 km 2 near the township of Zeehan in Western Tasmania. Overview of the Company s tenements A summary of the status of the Company s current leases and licences is set out below. Further information on the Company s mineral assets can be found in the Anderson & Schwab Report and in the Creat Resources Summary Report, both in part 4 of this document. For the purpose of Re-Admission, the Company has commissioned Coffey Mining to prepare an independent summary report on the Company s mineral assets, based on publicly available information to summarise the period from the date of the Company s initial admission to trading on AIM until the date of the report. The Creat Resources Summary Report is reproduced in its entirety in Part 4 of this document. Comstock Operations at Comstock have been suspended since July A retention licence has been applied for over the ML 5M/2007 lease area. The MRT, the government regulatory authority, entered this application into the register on 30 April 2009 as RL4/2009 and is currently processing the application. The likelihood of restarting mining at Comstock is low as there is no environmental approval, production is limited to a 1,000t limit and if the retention licence RL4/2009 is granted, mining will require application and an approval process to be initiated. If a retention licence is granted, the immediate focus will be on exploration and Ni explorations in particular. Oceana There has been no recent development activity. The Oceana DPEMP has been put on hold in line with the Board s current focus, and falling metal prices in 2008/09. A retention licence was applied for over the ML 2M/2005 lease area. The MRT entered this application on the register as RL3/2009 and is currently processing the application. Mariposa There has been no recent development activity. Retention Licence RL1/2008 was granted in February 2009, with the term of the licence extending until 1st February