Bligh Mining - ASX

Bligh Mining LimitedABN 86 073 153 223

Prospectus

For the offer of up to 20,000,000 Shares at an issue price of $0.30 each to raise up to $6,000,000.

IMPORTANT NOTICE

Securities offered by this Prospectus should be consid-ered speculative and potential investors should refer to Section 5 for further details concerning the risk factors associated with an investment in the Securities.

This document is important and requires your immedi-ate attention. It should be read in its entirety. If you do not understand its contents or are in doubt as to the course you should follow, you should consult your stockbroker or professional adviser.

Neither Bligh Mining Ltd nor any other person guaran-tees the performance of the Securities offered pursuant to this Prospectus, or the performance of Bligh Mining Ltd, or the return of any investment.

Bligh Mining

For

per

sona

l use

onl

y

DIRECTORS

Andrew Nutt (Executive Chairman) Muhammad Iqbal (Executive Director) Sevag Chalabian (Executive Director) Brett Gunter (Non-Executive Director) Michael Doyle (Non-Executive Director) Anthony Crimmins (Non-Executive Director)

COMPANY SECRETARY

Anne Adaley

AUSTRALIAN BUSINESS NUMBER

86 073 153 223

REGISTERED AND PRINCIPAL OFFICE

Suite 605, Level 6 66 Hunter Street SYDNEY NSW 2000

Telephone: (02) 9224 9292 Facsimile: (02) 9224 9299

Email: [email protected] Web: www.blighmining.com.au

SHARE REGISTRY*

Link Market Services Locked Bag A14 SYDNEY SOUTH NSW 1235

Level 12, 680 George Street SYDNEY NSW 2000

Telephone: 1300 554 474 or (02) 8280 7111 Facsimile: (02) 9287 0303

[email protected] www.linkmarketservices.com.au

* This entity is included for information purposes. It was not involved in the preparation of this Prospectus.

CORPORATE ADVISER

Wentworth Global Capital Partners Pty Ltd Level 17, 383 Kent Street SYDNEY NSW 2000

INDEPENDENT GEOLOGIST

Al Maynard & Associates Pty Ltd Consulting Geologists 9/280 Hay Street SUBIACO WA 6008

AUSTRALIAN SOLICITORS TO THE COMPANY

Norton Rose Australia 225 George Street SYDNEY NSW 2000

INDONESIAN LEGAL ADVISERS TO THE COMPANY

Susandarini and Partners Level 33, Equity Tower Sudirman Central Business District Jalan Jend. Sudirman Kav. 52–53 Jakarta 12190 INDONESIA

INVESTIGATING ACCOUNTANT

Hall Chadwick Corporate (NSW) Ltd GPO Box 3555 SYDNEY NSW 2001

Level 29 St Martins Tower 31 Market Street SYDNEY NSW 2000

Corporate directory

For

per

sona

l use

onl

y

i

Bligh MiningP R O S P E C T U S 2 0 1 2

This Prospectus is a re-compliance prospectus for the purposes of satisfying Chapters 1 and 2 of the ASX Listing Rules and to satisfy ASX requirements for re-listing following a change to the nature and scale of the Company’s activities.

The Offer under this Prospectus is conditional on:

(a) the satisfaction or waiver of all of the conditions precedent to the Share Sale Agreement; and

(b) the Company’s successful re-compliance with Chap-ters 1 and 2 of the ASX Listing Rules.

The Company’s securities were suspended from Of-ficial Quotation on 12 November 2009 and will not be reinstated until satisfaction of the conditions to the Offer and ASX approving the Company’s compliance with the admission requirements of Chapters 1 and 2 of the ASX Listing Rules.

There is a risk that the Company may not be able to meet the requirements of ASX for re-quotation on ASX. In the event the conditions to the Offer are not satisfied or the Company does not receive conditional approval for re-quotation on ASX then the Company will not proceed with the Offer and will repay all application monies received without interest.

Dates

This Prospectus is dated 9 November 2012 and was lodged with ASIC on that date. Neither ASIC nor ASX take any responsibility for the contents of this Prospectus or the merits of the investment to which the Prospectus relates.

The expiry date of this Prospectus is at 5.00pm Sydney Time on that date which is 13 months after the date this Prospectus was lodged with ASIC (Expiry Date). No securities may be issued on the basis of this Prospectus after the Expiry Date.

Application to ASX

Application will be made to ASX within seven days after the date of this Prospectus for Official Quotation of the Shares that are the subject of this Prospectus.

The distribution of this Prospectus in jurisdictions out-side Australia may be restricted by law, and persons who come into possession of this Prospectus should seek advice on and observe any of these restrictions. Failure to comply with these restrictions may violate securities laws. Applicants who are resident in countries other than Australia should consult their professional advisers as to whether any governmental or other consents are required or whether any other formalities need to be considered and followed.

This Prospectus does not constitute an offer in any place in which, or to any person to whom, it would not be lawful to make such an offer.

It is important that investors read this Prospectus in its entirety and seek professional advice where necessary. The Shares that are the subject of this Prospectus should be considered speculative.

Web site—electronic prospectus

A copy of this Prospectus can be downloaded from the website of the Company at www.blighmining.com.au. Any person accessing the electronic version of this Prospectus for the purpose of making an investment in the Company must be an Australian resident and must only access the Prospectus from within Australia.

The Corporations Act prohibits any person passing onto another person an application form unless it is attached to a hard copy of this Prospectus or it accompanies the complete and unaltered version of this Prospectus. Any person may obtain a hard copy of this Prospectus free of charge by contacting the Company.

Important information

For

per

sona

l use

onl

y

ii

Important informationExposure period

This Prospectus will be circulated during the Exposure Period. The purpose of the Exposure Period is to enable this Prospectus to be examined by market participants prior to the raising of funds. Potential investors should be aware that this examination may result in the identi-fication of deficiencies in the Prospectus and, in those circumstances, any application that has been received may need to be dealt with in accordance with Section 724 of the Corporations Act.

Applications for shares under this Prospectus will not be processed by the Company until after the expiry of the Exposure Period. No preference will be conferred on persons who lodge applications prior to the expiry of the Exposure Period.

Summary of important datesLodgement of Prospectus with ASIC 9 November 2012Opening Date 23 November 2012Anticipated Closing Date 14 December 2012Dispatch date 21 December 2012Expected date suspension of trading is lifted and the Company’s securities commence trading again on ASX 28 December 2012

The above dates are indicative only and may change without notice. The Company reserves the right to extend the Anticipated Closing Date or close the Offer early and accept late applications without notice. Unless otherwise indicated, all times are Sydney Time.

Speculative

The Securities offered under this Prospectus should be considered speculative. The risks associated with an investment in the Company are significant. It is impor-tant that investors read this Prospectus in its entirety and seek professional advice where necessary. Potential investors should carefully consider the factors in light of their personal circumstances and consult with their professional advisers before deciding whether to apply for Shares. The Securities offered under this Prospectus carry no guarantee with respect to return on capital investment, payment of dividends or the future value of

the Securities. For further information in relation to the risk factors of the Company, please refer to Section 5 of this Prospectus.

Forward looking statements

Various statements in this Prospectus constitute state-ments relating to intentions, future acts and events. Such statements are generally classified as forward looking statements and involve known and unknown risks, uncertainties and other important factors that could cause those future acts, events and circumstances to dif-fer from the way implicitly portrayed in this Prospectus. These risks, uncertainties and other factors include, but are not limited to, the matters described in Section 5 and in the Independent Geological Report in Section 7 of this Prospectus. The Company gives no assurance that the anticipated results, performance or achievements expressed or implied in those forward looking state-ments will be achieved.

JORC Competent Person statement

The information in this Prospectus that relates to Explo-ration Targets, Exploration Results, Mineral Resources or Ore Reserves is based on information compiled by Mr Brian Varndell, who is a Fellow of the Australasian Institute of Mining & Metallurgy (AusIMM) and independent consultant to the Company. Mr Varndell is a consultant of Al Maynard & Associates Pty Ltd and has 40 years of experience in exploration and mining in a variety of mineral deposit styles. Mr Varndell has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity that he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves.

Photographs

Photographs used in this Prospectus which do not have descriptions are for illustration only and should not be interpreted to mean that any person shown endorses the Prospectus or its contents or that the assets shown in them are owned by the Company.

For

per

sona

l use

onl

y

1


Contents1 CHAIRMAN’S LETTER ........................................................................................... 3

2 INVESTMENT OVERVIEW....................................................................................... 4

3 DETAILS OF THE OFFER ...................................................................................... 15

4 BUSINESS SUMMARY.......................................................................................... 19

5 RISK FACTORS ..................................................................................................... 29

6 DIRECTORS, MANAGEMENT AND CORPORATE GOVERNANCE ....................... 37

7 INDEPENDENT GEOLOGICAL REPORT .............................................................. 45

8 SOLICITOR’S REPORT ........................................................................................107

9 INVESTIGATING ACCOUNTANT’S REPORT ........................................................167

10 PRO FORMA FINANCIAL INFORMATION ...........................................................170

11 SUMMARY OF MATERIAL CONTRACTS .............................................................179

12 ADDITIONAL INFORMATION ..............................................................................191

13 DIRECTORS’ AUTHORISATION ...........................................................................201

APPLICATION FORM ...........................................................................................203

GLOSSARY ...........................................................................................................205

For

per

sona

l use

onl

y

2

“... the Board are genuinely excited by the significant opportunity for

the Company to become an explorer, developer and potential

producer of manganese and other metals.”

ANDREW NUTT, CHAIRMAN


For

per

sona

l use

onl

y

3


Dear investor,

On behalf of the Directors of Bligh Mining Limited (Company), I am pleased to introduce this Prospectus for the offer of up to 20,000,000 Shares at an issue price of $0.30 per share to raise up to $6,000,000.

Following approval of a number of resolutions put to Shareholders at a general meeting held on 5 October, the Company has undergone a number of substantial changes. These include:

(a) consolidation of the Company’s Shares on a one-for-nine basis (Consolidation);

(b) the pending acquisition of Bligh Mining (Holdings) Pty Ltd (BMH) (Acquisition);

(c) a change in the nature and scale of the Company’s activities as a result of the Acquisition;

(d) the appointment of me and several other new Direc-tors to the board of the company; and

(e) a change of the Company’s name from Blackcrest Resources Limited to Bligh Mining Limited.

Subject to final ASX approval, the Company will acquire BMH, an Australian-registered company established in May 2010. BMH is a minerals exploration company holding rights to prospective concessions in Indonesia, with an objective of becoming a mid-tier resource development company in Southeast Asia through the development of those assets. Its primary assets include 23 tenements in Flores, West Timor and Sulawesi. These cover 54,285 hectares prospective for manganese in West Timor, 23,010 hectares in Flores, including the potential of gold, copper, lead and zinc deposits, and 7564 hectares in Sulawesi prospective for gold and copper. Further details about these projects are provided in Section 4 of this Prospectus.

Manganese is essential to the steel industry by virtue of its sulphur-fixing, deoxidising and alloying properties. Manganese has no satisfactory substitute as a hardening alloy element and deoxidant in steel. The manganese market is therefore closely tied to the growing demand for steel, particularly in the developing nations of China, India and Brazil. With its newly acquired assets, the Board are genuinely excited by the significant opportu-nity for the Company to become an explorer, developer and potential producer of manganese and other metals.

I am joined on the newly reconstituted Board of the Company by executive Directors Muhammad Iqbal and Sevag Chalabian, and Non-Executive Directors Brett Gunter and Michael Doyle. Tony Crimmins remains on the Board as a Non-Executive Director, while previous directors Richard Pritchard and Andrew Wild have resigned. Messrs Iqbal, Chalabian, Gunter, Doyle and I are current directors of BMH, giving us an intimate understanding of the business and assets to be acquired by the Company. The Company has also assembled a highly skilled Indonesian management team to undertake exploration programs including mapping, sampling, geochemical and geophysical surveys, and drilling across the concessions. The new Board and management team bring with us the necessary expertise and experience required to guide the Company in pursuing its objectives.

Details of the Offer, including information on the Company’s proposed projects, business strategy, markets, management and finances, are set out in this Prospectus, which I encourage you to read before making a decision to invest.

The risks of an investment in the Company are set out in Section 5 of this Prospectus, and you should pay particular attention to them in light of your personal circumstances and consult with your professional advisers before deciding whether to apply for Shares.

On behalf of the Board, I am pleased to present this Prospectus to you and invite you to take part in this exciting investment opportunity. We look forward to welcoming new stakeholders and investors to share the journey with us.

Yours sincerely,

Andrew NuttExEcutivE chairman

9 November 2012

1 CHAIRMAN’S LETTER

For

per

sona

l use

onl

y

4

2.1 IMPORTANT NOTICE

This section is not intended to provide full information for investors intending to apply for Shares offered pursuant to this Prospectus. This Prospectus should be read and considered in its entirety.

2.2 COMPANY’S OBJECTIVES & BUSINESS MODEL

The strategic objectives of the Company are to:

(a) successfully close the Offer

(b) satisfy the requirements of ASX and re-comply with Chapters 1 and 2 of the ASX Listing Rules

(c) complete the Acquisition;

(d) further explore its projects to better determine the size and economic potential of these projects;

(e) obtain the necessary regulatory approvals and build the infrastructure required to begin developing its projects; and

(f) obtain rights to explore and develop other resources projects in Indonesia.

On completion of the Offer, the Board believes the Company will have sufficient working capital to achieve these objectives.

Subject to the completion of the Acquisition, the business model of the Company will be to identify and develop mining opportunities in Indonesia that are highly prospective for manganese, base metals and precious metals mineralisation. The primary assets of BMH include tenements located in Flores, West Timor and Sulawesi, covering 54,285 hectares prospective for manganese in West Timor, 23,010 hectares in Flores including the potential of gold, copper, lead and zinc deposits, and 7564 hectares in Sulawesi prospective for gold and copper.

The Company’s medium-term focus will be to develop the current assets described above and aim to bring them into production. If successful, this is expected to generate revenues that can be used to fund ongoing exploration for highly prospective base and precious metals, including porphyry copper/gold targets across all tenements.

The Company aims to become a predominant manga-nese participant in Indonesia through internal growth of existing assets. It also aims to become a medium scale, low-cost producer for the steel industry, with easy access to shipping routes to the major export markets.

The Company’s business model is highly dependent on the Company achieving technical and commercial success within its exploration programs as well as being dependent on a number of other fiscal, economic, regulatory and environmental factors. Income growth in the form of dividends to investors will only eventuate if the Company’s planned or future exploration programs yield commercial discoveries and are ultimately economi-cally developed. Prospective investors should refer to the risks to the Company and its business model as outlined in Section 5 of this Prospectus.

Further details in respect of the Company and its projects are set out in Section 4 of this Prospectus.

2.3 THE ACQUISITION

On 10 August 2012 the Company entered into a share sale agreement with BMH and each of the vendors of BMH (Vendors) (Share Sale Agreement). Pursuant to the Share Sale Agreement, the Company agreed to acquire all of the share capital of BMH on a ‘one-for-one’ basis (Acquisition). That is, in consideration for the Acquisition, the Company will issue a number of securities to the shareholders of BMH (Consideration Securities). The Consideration Securities comprise:

(a) 112,861,202 ordinary Shares in the capital of the Company (post-Consolidation) at a deemed issue price of $0.30 per Share ($33,858,361) (Considera-tion Shares); and

(b) 54,012,000 unlisted Options exercisable at $0.40 per Option on the terms set out in Section 12.2 of this Prospectus (Consideration Options).

Completion of the Acquisition under the Share Sale Agreement is subject to a number of conditions precedent being satisfied or waived, the details of which are set out in Section 11.1. It is expected that all these conditions precedent will be satisfied or waived and the Acquisition is expected to be completed concurrently with completion of the Offer.

2 INVESTMENT OVERVIEW

For

per

sona

l use

onl

y

5


2.4 CHANGE IN NATURE AND SCALE OF ACTIVITIES

As a result of the nature and scale of the Acquisition, the Company was required to obtain Shareholder approval for a change of nature and activities, which it received at its General Meeting, and to comply with Chapters 1 and 2 of the Listing Rules as if it were seek-ing admission to the Official List.

This Prospectus is issued to assist the Company to comply with these requirements.

2.5 THE OFFER

The minimum number of Shares to be issued pursuant to the Offer is 6,666,667 Shares to raise $2,000,000. The maximum number of Shares to be issued pursuant to the Offer is 20,000,000 Shares to raise $6,000,000.

The Shares offered under this Prospectus will rank equally with the existing Shares on issue. Rights and liabilities attaching to the Shares are summarised in Section 12.1 of this Prospectus. Please refer to Section 3 of this Prospectus for further information on the Offer.

2.6 INDICATIVE TIMETABLE

Table 1. Indicative timetable.

Lodgement of Prospectus with ASIC 9 November 2012Opening Date 23 November 2012Anticipated Closing Date 14 December 2012Dispatch date 21 December 2012Expected date suspension of trading is lifted and the Company’s securities commence trading again on ASX 28 December 2012

The above dates are indicative only and may change without notice subject to ASIC and ASX approval, if required. The Company reserves the right to extend the Anticipated Closing Date, close the Offer early and accept late Applications without notice. Unless otherwise indicated, all times are Sydney Time.

2.7 PURPOSE OF THE OFFER AND USE OF PROCEEDS

The purpose of the Offer is to:

(a) assist the Company in meeting the requirements of ASX and re-comply with Chapters 1 and 2 of the Listing Rules; and

(b) raise up to $6,000,000 pursuant to the Offer to provide additional funds for expenditure commit-ments and further exploration and development of the Indonesian projects, general working capital, and meet the expenses of the Offer.

The minimum subscription under the Offer is $2,000,000, which is sufficient for the Offer to complete. On completion of the Offer, the Board believes that the Company will have sufficient working capital to achieve these objectives.

The Directors intend that the proceeds of the Offer will be applied as per Tables 2 and 3, based on the raising of the minimum subscription and maximum subscription, respectively.

The tables below are a statement of current intentions as of the date of lodgement of this Prospectus with ASIC. Although the proceeds of the Offer are intended to be used as set out in the above tables, the actual use of the proceeds may change depending on the progres-sive results of the exploration program, the analysis of those results, opportunities for third parties to fund parts of the exploration program and opportunities that may arise for the acquisition of interests in additional projects. The Board reserves the right to alter the way funds are applied on this basis.

For

per

sona

l use

onl

y

6


Table 2. Use of funds assuming the minimum subscription of $2,000,000 is raised under the Offer.

Application Year 1 Year 2 TotalProportion of

funds used($) ($) ($) (%)

Exploration expenditure—Flores project 120,000 70,000 190,000 9.5Exploration expenditure—West Timor projects 550,000 290,000 840,000 42.0Exploration expenditure—Sulawesi projects – – – –Social programs and land acquisition 100,000 100,000 200,000 10.0Working capital 240,000 150,000 390,000 19.5Costs of the Offer (see Section 12.11) 380,000 – 380,000 19.0Total applications of funds 1,390,000 610,000 2,000,000 100.0

Table 3. Use of funds assuming the maximum subscription of $6,000,000 is raised under the Offer.

Application Year 1 Year 2 TotalProportion of

funds used($) ($) ($) (%)

Exploration expenditure—Flores project 422,000 249,000 671,000 11.2Exploration expenditure—West Timor projects 1,050,000 1,073,000 2,123,000 35.4Exploration expenditure—Sulawesi projects 308,000 368,000 676,000 11.3Social programs and land acquisition 200,000 200,000 400,000 6.7Working capital 900,000 750,000 1,650,000 27.5Costs of the Offer (see Section 12.11) 480,000 – 480,000 8.0

Total applications of funds 3,360,000 2,640,000 6,000,000 100.0

Notes1. For a detailed breakdown of the proposed exploration expenditure for each project, please refer to tables 5–7 in the Independent Geological

Report in Section 7 of this Prospectus.2. Overheads and working capital include the normal general and administrative costs associated with running a public company, including but

not limited to salaries and Directors’ fees, technical consulting fees, legal fees, rental of office premises, investor relations and finance and accounting fees.

3. Please refer to Section 12.11 of this Prospectus for details associated with the Costs of the Offer.

For

per

sona

l use

onl

y

7


2.8 PROJECTS

2.8.1 Flores

The Flores project covers a total of 23,010 hectares in the Sambi Rampas and Elar Sub District, East Mang-garai Regency, East Nusa Tenggara Province in the northern parts of Flores, Indonesia. The IUP for this area has the potential for manganese, copper, lead and zinc as well as gold and silver. It is held by PT Manggarai Manganese (PTMM), which is owned 99% by Flores NTT Mining Pte Ltd (FNM), which is owned 85% by BMH (with an agreement in place for BMH to acquire a further 10% of FNM, bringing its total ownership to 95%). For further details, see Section 4.5 and the Solici-tor’s Report in Section 8 of this Prospectus.

A total of four main prospect areas have been identi-fied by Bligh Mining, three of which are of primary interest for manganese, namely Pebobiar, Cembakloe and Marabola, and a fourth, Pepan, for multi-elements including copper, lead, zinc, gold and silver.

Previous exploration activities that cover about 70% of the concession area have identified the presence and potential to host economical deposits of manganese, other base metals such as zinc, copper and lead, and precious metals gold and silver. The manganese mineralisation is interpreted as being similar to that of the Woodie Woodie deposit located in the Pilbara of Western Australia, which is a limestone-dolomite hosted replacement style. Further detailed investigation is required to determine the manganese mineralisation styles and consequential additional manganese targets. For further details, see section 2 of the Independent Geological Report in Section 7 of this Prospectus.

BMH has a proposed exploration program in place including a magnetic and radiometric program, mapping, sampling and defining a drilling program.

2.8.2 West Timor

The West Timor projects cover a total area of 54,285 hectares clustered in three Regencies; Kupang with 13,600 hectares, Timor Tengah Selatan (TTS) with 23,840 hectares, and Timor Tengah Utara (TTU)

with 16,845 hectares, all located in West Timor, Nusa Tenggara Timur Province, Indonesia. BMH’s majority-owned Indonesian subsidiary company PT Endeavour Resources NTT (ERN) has acquired, from the Elang Group, 51% of seven Indonesian companies that hold the manganese concessions.

Under a set of share sale agreements, summarised in Section 11.5.1, ERN also has the rights to purchase a further 39% of the shares of each of these subsidiary companies upon the investment of up to US$400,000 in exploration costs for each company, which would increases its shareholdings to 90% in each case. Also see Section 4.5 and the Solicitor’s Report in Section 8 of this Prospectus for further details.

Under a set of shareholder and royalty agreements, sum-marised in Section 11.5.2, the sellers of the Elang Group companies are also entitled to royalty payments upon the achievement of certain milestones. See Section 11.5.2 and the Solicitor’s Report in Section 8 of this Prospectus for further details.

Geological work to date on the West Timor conces-sions includes reconnaissance field visits to four of the tenements with a more detailed review at two of the locations.

An independent geologist has conducted limited work on the three West Timor tenement clusters, with site visits to three of the 20 concessions held by BMH. The initial results demonstrate the presence of medium to high grade manganese in each of the licences. The observed layers are 10–30 cm within reasonably wide zones that reach up to 3 metres in total width. Boulder-style manganese outcrops have also been identified but further mapping and assaying with associated trenching and drilling is required to fully delineate potential economic manganese deposits. The identification of manganese indicates that additional exploration in the remaining 17 tenements may probably identify additional manganese deposit areas. For further details, see section 3 of the Independent Geological Report in Section 7 of this Prospectus.

BMH has a proposed exploration program in place including mapping, sampling and designing a drilling program to define a JORC-compliant resource and reserves of the manganese deposits.

For

per

sona

l use

onl

y

8

2.8.3 Sulawesi

The Sulawesi projects cover a total area of 7564 hectares located in the Donggala District of Central Sulawesi. The two IUPs are owned by PT Charlie Sapa Prima (CSP) and PT Konstruktor Donggala (KD). CSP and KD have each entered into a share sale and purchase agreement with PT Golden Castle Resources (GCR), which is 99% owned by Whole Dragon Enterprises Ltd (WDE), which is 100% owned by BMH. For further details, see Section 4.5 and the Solicitor’s Report in Section 8 of this Prospectus.

The concessions are located in a highly prospective area for gold and copper. Base metal mineralisation (chal-copyrite, galena and sphalerite) has also been observed in the veins, faults and stockworks. For further details, see section 4 of the Independent Geological Report in Section 7 of this Prospectus.

2.9 CAPITAL STRUCTURE

The capital structure of the Company following comple-tion of the Acquisition and completion of the Offer is summarised in Table 4.

2.10 RESTRICTED SECURITIES

Subject to the Shares being re-instated to Official Quotation, a certain number of the Shares on issue may be classified by ASX as restricted securities and will be required to be held in escrow for such time as prescribed


Table 4. Capital structure of the Company following completion of the Acquisition and completion of the Offer.

Shares (min. subscription)

Shares (max. subscription) Options1

Securities on issue at the date of this Prospectus 8,933,876 8,933,876 –Consideration Securities to be issued upon completion of the Acquisition 112,861,202 112,861,202 54,012,000Securities to be issued under the Offer 6,666,667 20,000,000 –Total number of Securities 128,461,745 141,795,078 54,012,000

Note1. Details relating to the Options are set out in Section 12.2.

by ASX. During the period in which these securities are prohibited from being transferred, trading in Shares may be less liquid which may impact on the ability of a Shareholder to dispose of his or her Shares in a timely manner.

The Shares issued to the Vendors pursuant to the Share Sale Agreement as part of the Consideration Securities will be held in escrow for up to a maximum period of 24 months from the date of re-quotation. The Company will announce to ASX full details of the quantity and duration for the securities required to be held in escrow prior to re-quotation of the Company on ASX.

2.11 SUBSTANTIAL SHAREHOLDERS

Set out in Table 5 are the substantial Shareholders in the Company, being those who have (together with their associates) voting power in excess of 5% of the Shares, prior to completion of the Offer and Acquisition.

Set out in Table 6 are the substantial Shareholders in the Company, being those who have (together with their associates) voting power in excess of 5% of the Shares, following completion of the Offer and the Acquisition, and assuming no substantial Shareholders acquire any Shares under the Offer.

The Company will announce to ASX details of its top 20 Shareholders following completion of the Offer and prior to the Shares recommencing trading on ASX.

For

per

sona

l use

onl

y

9


Table 5. Substantial Shareholders in the Company prior to completion of the Offer and Acquisition.

Current Share on issue

Registered interest in total Shares on issue (pre-Offer)

(%)B. Sumanth Kumar Reddy 698,809 7.8Ardila Holdings Pty Ltd 682,540 7.6Griffinc Pty Ltd 637,167 7.1The Duffster Pty Ltd <The Duffster Trust A/C> 600,000 6.7Panola Pty Ltd 500,000 5.6

Note1. None of the substantial Shareholders in the Company prior to completion of the Offer and Acquisition will be a substantial Shareholder fol-

lowing completion of the Offer and Acquisition.

Table 6. Substantial Shareholders in the Company following completion of the Acquisition and Offer, assuming no Substantial Shareholders acquire any Shares under the Offer and no Options are exercised.

Minimum subscription Maximum subscription

Shareholder Shares held

Registered holding in total Shares on

issue post-Offer Voting power

Registered holding in total Shares on

issue post-Offer Voting power

(%) (%) (%) (%)Sampoerna Agri Resources Pte Ltd 22,800,000 17.7 56.5 16.1 51.2Nisso Resources (Hong Kong) Co Ltd 12,000,000 9.3 56.5 8.5 51.2Alligard Investments Ltd 11,800,000 9.2 56.5 8.3 51.2Marc Flory 6,500,001 5.1 56.5 4.6 51.2Andrew Nutt 3,000,001 2.3 56.5 2.1 51.2Fahrsai Consulting Ltd 3,000,000 2.3 56.5 2.1 51.2Ohmega Ltd 3,000,000 2.3 56.5 2.1 51.2Sevag Chalabian 2,500,000 1.9 56.5 1.8 51.2Laia Ltd 2,000,000 1.6 56.5 1.4 51.2PT Para Amartha Investama 2,000,000 1.6 56.5 1.4 51.2Antonietta Adaley 1,500,000 1.2 56.5 1.1 51.2STC Advisory Pty Ltd 1,500,000 1.2 56.5 1.1 51.2PT Bestindo Kwadratama 1,000,000 0.8 56.5 0.7 51.2Total 72,600,002 56.5 51.2

Note1. Although most of the above Shareholders will have a registered holding in less than 5% of the Shares following completion of the Acquisi-

tion and Offer, under the terms of the Voting Agreement referred to in Section 12.5, their voting power is considerably higher than 5%. For

per

sona

l use

onl

y

10

2.12 BOARD AND MANAGEMENT

The Board and other key personnel of the Company are set out in Table 7.

Under the terms of the Amended and Restated Share-holders Deed (see Section 11.4), Sampoerna has the right to nominate at least two directors to the Company’s Board at all times that it holds an aggregate shareholding of at least 10% of the Company, which it will hold fol-lowing completion of the Offer and Acquisition. Sam-poerna has indicated that they will nominate Mr Tommy Tjiptadjaja to the Board, but have not yet indicated the identify of their second director nomination.

Refer to Section 6 of this Prospectus for further details on the Board and key personnel. Refer to Sections 12.6 and 12.7 of this Prospectus for details on the Directors’ interests and remuneration.

Table 7. Board and other key personnel of Bligh Mining.

Person Position CountryAndrew Nutt Executive Chairman IndonesiaMuhammad Iqbal Executive Director IndonesiaSevag Chalabian Executive Director AustraliaBrett Gunter Non-Executive Director IndonesiaMichael Doyle Non-Executive Director AustraliaAnthony Crimmins Non-Executive Director AustraliaTommy Tjiptadjaja Proposed Non-Executive

DirectorIndonesia

Anne Adaley Company Secretary & Chief Financial Officer

Australia

Marc Flory Country Manager, Flores IndonesiaEko Budi Harto Country Manager, West

TimorIndonesia

Agus W Permadi Technical Coordinator IndonesiaDeista T Harahap Socialisation &

Community Development Coordinator

Indonesia

Robyn Shearwood Office Manager, Sydney Australia

2.13 RISKS

You should consider all of the risks associated with an investment in the Company before deciding whether to invest. You should be aware that an investment in Shares should be considered a highly speculative investment and the objectives of the Company set out in this Prospectus are considered high risk. Some risks are beyond the control of the Company and its Directors and manage-ment and those risks may have a material impact on the Company and its financial performance and position.

A detailed list of the risks that you should be aware of is set out in Section 5 of this Prospectus. In particular, the following specific risks are noted.

2.13.1 General economic risks and business climate

Share market conditions may affect the listed securities regardless of operating performance. Share market conditions are affected by many factors, such as general economic outlook, movements in or outlook on interest rates and inflation rates, currency fluctuations, com-modity prices, changes in investor sentiment towards particular market sectors, and the demand and supply for capital. Commodity prices are influenced by physical and investment demand for those commodities. Fluctuations in commodity prices may influence individual projects in which the Company has an interest.

2.13.2 Exploration, development, mining and processing risks

Bligh Mining is in the business of mineral exploration, project development and mining. This business by its nature contains elements of significant risk. Ultimate and continuous success of these activities depends on many factors such as:

(a) the discovery and/or acquisition of economically recoverable ore reserves;

(b) successful conclusions to bankable feasibility studies;

(c) access to adequate capital for project development;

(d) design and construction of efficient mining and processing facilities within capital expenditure budg-ets;


For

per

sona

l use

onl

y

11


(e) securing and maintaining title to tenements and com-pliance with the terms of those tenements;

(f) obtaining consents and approvals necessary for the conduct of exploration and mining; and

(g) access to competent operational management and prudent financial administration. This includes the availability and reliability of appropriately skilled and experienced employees, contractors and consultants.

Many regions of Indonesia are frequently subject to adverse weather conditions over a prolonged period. Many regions of Indonesia are also subject to significant volcanic and seismic activity. These conditions can adversely affect exploration and mining operations and the timing of revenues.

Whether or not income will result from projects under-going exploration and development programs depends on the successful establishment of manganese mining operations. Factors including costs, actual mineralisation, consistency and reliability of manganese ore grades and manganese prices affect successful project development, mining operations and the availability of willing, reliable off-takers.

Mining is an industry that in Indonesia has become subject to increasing legislative regulation including but not limited to environmental responsibility and liability, taxation, mineral export restrictions and protectionism in relation to national interests. The potential for liability is an ever present risk. The use and disposal of chemicals in the mining industry is under constant legislative scrutiny and regulation. The introduction of new laws and regulations or changes to underlying policy may adversely impact on the operations of the Company.

2.13.3 Operating risks

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

(a) geological conditions;

(b) limitations on activities owing to seasonal weather patterns and cyclone activity;

(c) alterations to joint venture programs and budgets;

(d) unanticipated operational and technical difficulties encountered in geophysical surveys, drilling and production activities;

(e) mechanical failure of operating plant and equipment; adverse weather conditions, industrial and environ-mental accidents, acts of terrorism or political or civil unrest and other force majeure events;

(f) industrial action, disputation or disruptions;

(g) unavailability of aircraft or other transportation or drilling equipment to undertake airborne electromag-netic and other geological and geophysical investiga-tions;

(h) shortages or unavailability of manpower or appropri-ately skilled manpower;

(i) unexpected shortages or increases in the costs of consumables, spare parts, plant and equipment; and

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

2.13.4 Manganese prices

The Company expects to derive the bulk of its revenue from the sale of manganese ore. Consequently, the Company’s expected earnings will be closely related to the price of manganese ore together with the terms of the off-take agreement(s) under which manganese ore will be sold.

The price of manganese, like all mineral commodities, fluctuates and is affected by numerous factors beyond the control of the Company. These factors include worldwide and regional supply and demand for steel, which is the main driver affecting demand for manga-nese, commodity trading on the futures markets, general world economic conditions and the outlook for interest rates, inflation and other economic factors on both a regional and global basis. These factors may have a positive or negative effect on the Company’s exploration, project development and production plans and activi-ties, together with the ability to fund those plans and activities.

For

per

sona

l use

onl

y

12

2.13.5 Changes in legislation or regulation

Changes in legislation or regulation, or changes to accounting rules, could have adverse impacts on the Company from a financial and operational perspective. Although the Company is reasonably familiar with the Indonesian regulatory regime and has undertaken all reasonable due diligence in assessing and managing the risks associated with investing and operating in Indo-nesia, the legal and political conditions of the country and any changes thereto are outside the control of the Company. In 2012, the Indonesian Government made sweeping and substantive changes to its mining laws. For full details, see Section 5.4.3

2.13.6 Early stage of development

The mineral tenements (IUPs) of the Company as described in this Prospectus are at an early stage of development. The Company does not have other eco-nomic resources that could be classified for the purposes of a regulatory or securities exchange code. Hence, the Company’s shares are deemed speculative. There can be no assurance that exploration of the project areas described in this Prospectus, or any other tenements that may be acquired in the future, will result in the discovery of an economic ore deposit. Even if an apparently viable deposit is identified, there is no guarantee that it can be economically exploited. Potential investors should understand that mineral exploration and development are high risk undertakings.

2.13.7 Expiry of title

The exploration licences (IUPs) comprising some of the tenements that the Company holds or in which it has an interest may be the subject of applications for exten-sion in the future. If a tenement is not extended, the Company may suffer significant damage through loss of the opportunity to discover and/or develop any mineral resources on that tenement. In addition, the Company cannot guarantee that those tenements that are applica-tions for tenements will ultimately be granted in whole or in part.

For more details on the issue of title to the tenements, refer to the Solicitor’s Report in Section 8.

2.13.8 ‘Clean and clear’ title

In an effort to bring licensing into some order, Indone-sia’s Ministry of Energy and Mineral Resources (ESDM) has forbidden the issuing of new licences under Indonesian mining law and has been undertaking limited audits of all licences issued. The intention is to reveal where there are overlapping licences. As a result of this process, ESDM issues lists, maps and statements on request, indicating that the licence involved is ‘clean and clear’ (CNC). The IUP is thereby recognised by ESDM as legitimate, which carries an inference that the IUP has been properly issued, although this is not stated. The CNC lists are an administrative attempt to clear away confusion, and carry no legal status.

There is no definition of what ‘clean and clear’ means, but it is understood to mean simply that there are no overlapping issues (with conflicting licences for the same product).

What ‘clean and clear’ does not mean is that the licence-holder is up to date with its obligations under the licence, that it has obtained any necessary approv-als from the Ministry of Forestry, whether or not the licence-holder also owns the land involved, whether or not there are land titles in place, whether there are any disputes with registered or traditional land owners, and whether there is any illegal mining activity taking place.

Only three of the Company’s 22 IUPs are currently included on any CNC list. There is no guarantee that any of the remaining IUPs will ultimately be included in the CNC list. For further details, see the Solicitor’s Report in Section 8 of this Prospectus.

As noted on page 39 of the Solicitor’s Report in Section 8 of this Prospectus, IUP Exploration Number 297 owned by PT Elang Perkasa Kencana (IUP 297) overlaps with an IUP issued to PT Tiara Utama Mandiri (Tiara IUP). The Company has become aware that the Tiara IUP has been included on the CNC list. Upon further enquiry by the Company, the Company has become aware that the issue of the Tiara IUP (and hence its inclusion on the CNC List) is under legal challenge and, depending of the outcome of that challenge, the Tiara IUP may be cancelled, the result of which would be that the Company’s majority-owned IUP 297 would no longer overlap the Tiara IUP.


For

per

sona

l use

onl

y

13


2.13.9 Funding

The Company may have difficulty in obtaining future equity or debt funding to support exploration programs and the evaluation and development of its projects. The Company’s ability to raise further equity or debt or to divest part of its interest in a project, and the terms of such transactions will vary according to a number of factors, including the success of exploration results and the future development of the projects, stock market conditions and prices for commodities.

Should it subsequently be established that a mining production operation is technically, environmentally and economically viable, the Company will require substan-tial additional financing to establish mining operations and production facilities. The Company may not be able to raise the additional finances that may be required for future activities. Commodity prices, environmental regulations, environmental rehabilitation or restitu-tion obligations, revenues, taxes, transportation costs, capital expenditures, operating expenses and technical aspects are all factors that will impact on the amount of additional capital that may be required.

Additional financing may not be available on terms acceptable to the Company, or at all. Significantly, any additional equity financing or the exercising of op-tions may dilute your existing shareholdings and debt financing, if available, may restrict financing and future activities.

If the Company fails to obtain additional financing, as needed, it may be required to reduce the scope of its operations and scale back its exploration programs as the case may be, which may adversely affect the busi-ness and financial condition of the Company and its performance.

2.13.10 Completion of the Acquisition

The Acquisition is subject to a number of conditions precedent that are required to be achieved for comple-tion to occur. Key conditions precedent include the Vendors entering into escrow agreements with respect to restricted shares as required and obtaining ASX’s conditional approval to the Company’s admission to the Official List of ASX and to Official Quotation, on

terms and conditions acceptable to the Company. There is a risk that one or more of these conditions precedent may not be met. If this occurs then the Acquisition and/or the Offer may not proceed. A summary of the terms and conditions of the Share Sale Agreement is set out in Section 11.1.

2.13.11 Projects will not be fully owned

BMH has entered into agreements with respect to certain projects. Please refer to Section 4.4, which sets out the ownership interest of BMH in each project and a description of those agreements. In the event that these acquisitions are completed, there is a risk the exploration/development activity could be disrupted in situations where there is disagreement on development programs or other issues between BMH and its part-ners. Should such disagreements occur, this may have an adverse impact on the Company’s operations and performance generally.

2.13.12 Change of activities and re-quotation of Shares on ASX

The Acquisition, if completed, would constitute a change in the nature and scale of the Company’s activi-ties. In accordance with the requirements of ASX in relation to this proposed change in activity, the Company must re-comply with Chapters 1 and 2 of the Listing Rules as if it were seeking admission to the Official List. Accordingly, the Company is required to issue a Prospectus to, among other things, assist the Company to re-comply with these admission requirements. The Company’s Shares have been suspended from Official Quotation since November 2009 and will not be rein-stated until the Company has re-complied with Chapters 1 and 2. If the conditions precedent to the Share Sale Agreement are not satisfied or waived (if applicable), the Company will not proceed with the Acquisition and will seek re-quotation of its Shares. There is a risk that the Company may not be able to meet the requirements of ASX for re-quotation of its Shares on ASX. Shares will not be able to be traded on ASX until such time as ASX’s requirements for re-quotation can be met, if at all.

For

per

sona

l use

onl

y

14

For

per

sona

l use

onl

y

15


3 DETAILS OF THE OFFER

3.1 THE OFFER

Under this Prospectus, the Company offers for subscrip-tion up to 20,000,000 Shares at an issue price of $0.30 each to raise up to $6,000,000.

The Shares offered under this Prospectus are fully paid ordinary Shares and will rank equally with the existing Shares on issue, and otherwise will be on the terms set out in Section 12.1.

3.2 APPLICATIONS

Applications for Shares under the Offer must be made using the Application Form included at the back of this Prospectus.

Payment for the Shares must be made in full at the issue price of $0.30 per Share. Applications for Shares must be for a minimum of 10,000 Shares and thereafter in multiples of 1,000 Shares. Completed Application Forms and accompanying cheques must be mailed or delivered to: Postal delivery Hand deliveryBligh Mining Ltd c/- Link Market Services Locked Bag A14 SYDNEY SOUTH NSW

Bligh Mining Ltd c/- Link Market Services 1A Homebush Bay Drive RHODES NSW 2138

Cheques should be made payable to ‘Bligh Mining Ltd—Share Offer Account’ and crossed ‘Not Negotiable’. Completed Application Forms must reach one of the above addresses by no later than the Anticipated Closing Date.

The Company reserves the right to close the Offer early.

3.3 MINIMUM SUBSCRIPTION

The minimum subscription to be raised pursuant to this Prospectus is $2,000,000.

If the minimum subscription has not been raised within four months after the date of this Prospectus, all applications will be dealt with in accordance with the Corporations Act.

3.4 OVERSUBSCRIPTIONS

The Company will not accept oversubscriptions.

3.5 ALLOTMENT

Subject to ASX granting approval for the Shares offered under this Prospectus to be admitted to official quota-tion, allotment of Shares offered under this Prospectus will take place as soon as practicable after the Antici-pated Closing Date. Prior to allotment, all application monies shall be held by the Company in trust. The Company, irrespective of whether the allotment of Shares takes place, will retain any interest earned on the application monies.

The Directors reserve the right to allot Shares in full for any application or to allot any lesser number or to decline any application. Where the number of Shares allotted is less than the number applied for, or where no allotment is made, the surplus application monies will be returned by cheque to the applicant within seven days of the allotment date.

3.6 OFFER OF SHARES TO SAMPOERNA

At the general meeting of Shareholders held on 5 October 2012 (General Meeting), approval was given for Sampoerna Agri Resources Pte Ltd (Sampoerna) to be offered the opportunity to subscribe for, and be allotted and issued, up to 10,000,000 Shares under the Offer. Sampoerna is not obliged to subscribe for any Shares under the Offer and has indicated in writing to the Company that it will not participate in the Offer.

For

per

sona

l use

onl

y

16

3 DETAILS OF THE OFFER

3.7 RE-COMPLIANCE WITH CHAPTERS 1 AND 2 OF THE ASX LISTING RULES

At the General Meeting the Company received Share-holder approval to the change in the nature and scale of its activities to include minerals exploration and mining by undertaking the Acquisition. In accordance with the requirements of ASX in relation to this change in activ-ity, the Company must re-comply with Chapters 1 and 2 of the ASX Listing Rules as if it were seeking admission to the Official List. This Prospectus is issued to, among other things, assist the Company to re-comply with these requirements.

Trading in the Company’s Shares has been suspended for some time from Official Quotation and will not be reinstated until the Company has re-complied with Chapters 1 and 2 of the ASX Listing Rules.

There is a risk that the Company may not be able to meet the requirements of ASX for re-quotation of its Shares on ASX and the Acquisition may not be complet-ed. If the Acquisition is not completed, the Company:

(a) will not proceed with the Offer; and

(b) will repay application monies received from appli-cants under the Offer.

Shares will not be able to be traded on ASX until such time as ASX’s requirements for re-quotation can be met, if at all.

The Company will apply to ASX within seven days after the date of this Prospectus for Official Quotation of the Shares offered under this Prospectus. If ASX does not grant permission for Official Quotation of the Shares within three months after the date of this Prospectus, or such longer period as is permitted by the Corporations Act, none of the Shares offered under this Prospectus will be allotted or issued. In that circumstance, all applications will be dealt with in accordance with the Corporations Act.

3.8 APPLICANTS OUTSIDE AUSTRALIA

This Prospectus does not, and is not intended to, constitute an offer in any place or jurisdiction where, or to any person to whom, it would not be lawful to make such an offer or to issue this Prospectus. The distribu-tion 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 these Shares or otherwise permit a public offer-ing of the Shares that are the subject of this Prospectus in any jurisdiction outside Australia.

It is the responsibility of applicants outside Australia to obtain all necessary approvals for the allotment and issue of the Shares pursuant to this Prospectus. The return of a completed Application Form will be taken by the Company to constitute a representation and warranty by the applicant that all relevant approvals have been obtained.

3.9 UNDERWRITER

The Offer is not underwritten.

3.10 COMMISSIONS ON APPLICATIONS

The Company reserves the right to pay a commission of up to 5% (exclusive of goods and services tax) of amounts subscribed to any Australian Financial Services licensee in respect of valid applications lodged and accepted by the Company and bearing the stamp of the Australian Financial Services licensee. Payments will be subject to the receipt of a proper tax invoice from the licensed securities dealer or Australian Financial Services licensee.F

or p

erso

nal u

se o

nly

17


3.11 CHESS

The Company will apply to participate in the Clearing House Electronic Subregister System (CHESS). CHESS is operated by ASX Settlement and Transfer Corporation Pty Ltd (ASTC), a wholly-owned subsidiary of ASX, in accordance with the Listing Rules and the ASTC Settlement Rules.

Under CHESS, the Company will not issue certificates to investors. Instead, Shareholders will receive a state-ment of their holdings in the Company. If an investor is broker sponsored, ASTC will send a CHESS statement.

3.12 RISK FACTORS

Prospective investors in the Company should be aware that subscribing for Shares that are the subject of this Prospectus involves a number of risks. These risks are set out in Section 5 of this Prospectus and investors are urged to consider those risks carefully (and if neces-sary, consult their professional adviser) before deciding whether to invest in the Company.

The risk factors set out in Section 5, and other general risks applicable to all investments in listed securities not specifically referred to, may in the future affect the value of the Shares. Accordingly, an investment in the Company should be considered speculative.

3.13 TAXATION

The Company does not propose to give any taxation advice and neither the Company, its Directors nor any of its officers accepts any responsibility or liability for any taxation consequence to applicants. A general overview of the taxation implications has been included in Section 12.13 of this Prospectus; however, applicants should consult their own professional tax advisers in regard to taxation implications of the Offer.

3.14 PRIVACY STATEMENT

If you complete an application for Shares, you will be providing personal information to the Company. The Company collects, holds and will use that information to assess your application, service your needs as a Shareholder, and facilitate distribution payments and corporate communications to you as a Shareholder.

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

You can access, correct and update the personal infor-mation that we hold about you. If you wish to do so, please contact the Share Registry at the relevant contact number set out in this Prospectus.

Collection, maintenance and disclosure of certain personal information is governed by legislation including the Privacy Act 1988 (as amended), the Corporations Act and certain rules such as the ASTC Settlement Rules. If you do not provide the information required on the Application Form, the Company may not be able to accept or process your application.

3.15 FINANCIAL FORECASTS

The Directors have considered the matters set out in ASIC Regulatory Guide 170 and believe that they do not have a reasonable basis to forecast future earnings because the operations of the Company are inherently uncertain. Accordingly, any forecast or projection infor-mation would contain such a broad range of potential outcomes and possibilities that it is not possible to prepare a reliable best estimate forecast or projection.

3.16 QUERIES

Any questions concerning the Offer should be directed to the Company Secretary, Anne Adaley on (02) 9224 9292 (within Australia) or +61 2 9224 9292 (outside Australia).

For

per

sona

l use

onl

y

18

For

per

sona

l use

onl

y

19


4.1 COMPANY HISTORY

The Company (formerly Blackcrest Resources Ltd) is an Australian public company listed on the official list of ASX. The Company’s securities have been suspended from official quotation on ASX since November 2009. The Company has historically focused on the provision of insolvency and administration advice services. This business has been inactive for some time and, until recently, the Company has been actively seeking a new business opportunity.

On 10 August 2012, the Company entered into the Capital Share Sale Agreement with the Vendors and BMH to acquire 100% of the shares of BMH. Further details of the terms of the Share Sale Agreement are set out in Section 11.1. The Acquisition was approved at a general meeting of Shareholders held on 5 October 2012 and is expected to be completed concurrently with completion of the Offer. Following shareholder approval, the Company has recently changed its name to Bligh Mining Ltd, undergone a one-for-nine consolida-tion of its Shares and issued this Prospectus.

The following sections describe the business and assets of BMH, the market in which it operates, its strategies for building shareholder wealth, and its social programs.

4.2 BUSINESS OVERVIEW

BMH is an Australian-registered company established in May 2010. Its principal business is identifying and developing mining opportunities in Indonesia that are highly prospective for manganese, base metals and precious metals mineralisation. The primary assets of BMH include tenements located in Flores, West Timor and Sulawesi, covering 54,285 hectares prospective for manganese in West Timor, 23,010 hectares in Flores including the potential of gold, copper, lead and zinc deposits, and 7564 hectares in Sulawesi prospective for gold and silver.

4.3 MANGANESE MARKET

Manganese (chemical symbol: Mn) is a silvery-grey metal resembling iron. It is hard and very brittle, difficult to fuse, but easy to oxidise.

About 85–90% of manganese production is used to make steel. Manganese is essential to this industry by virtue of its sulphur-fixing, deoxidising and alloying properties. It is, for example, a key component of low-cost stainless steel. Manganese has no satisfactory substitute as a hardening alloy element and deoxidant in steel.

World manganese ore production was estimated by the International Manganese Institute (IMnI) at 17.2 Mt (contained manganese) in 2011 (see Figure 1). On a manganese-content basis, the leading manganese-producing countries are China (24%), South Africa (21%), Australia (18%), Gabon (11%), Brazil (7%) and India (5%) (see Figure 2).1

Until recently, then world’s main producer of high grade manganese ore has been South Africa. Manganese assets outside of South Africa are becoming increasingly low grade at a time when China and India are increasingly in need of high grade ores.

The manganese market is closely tied to demand for steel, particularly in the developing nations of China, India and Brazil. In 2011, every tonne of steel produced around the world required almost 11.9 kg of manganese on average.2

According to the IMnI, global production of steel grew by 7% between 2010 and 2011, reaching an all-time record high of 1.5 Gt.3 Consequently, manganese alloy smelters ramped up production in 2010 and 2011 after global inventories were depleted in the de-stocking cycle of 2009. Manganese ore miners also ramped up production rates in 2010 and 2011, with global output exceeding 17 Mt (in Mn content) in 2011, up 13% from 2010 and 55% from 2009.4 This represents a record high of 55 Mt of ‘wet’ Mn ore.5 China, the major consumer of manganese ore, imported over 5 Mt (in Mn content) in 2011.6

References1. IMnI (2011), Annual Market Research Report 2011, p. 28.2. Ibid., pp. 35–36.3. IMnI (2011), Annual Review 2011, p. 9.4. Ibid.5. Ibid. 1, p. 27.6. Ibid., pp. 28–29.

4 BUSINESS SUMMARY

For

per

sona

l use

onl

y

20

7.9 8.2 8.6

10.711.7 11.7

12.8

14.4

11.1

15.3

17.2

0

5

10

15

20

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Prod

uctio

n (M

t)

China(24%)

South Africa(21%)

Australia(18%)

Gabon(11%)

Brazil(7%)

India(5%)

Ukraine(3%)

Other(11%)

Figure 1. Global manganese production from 2001 to 2011 (source: IMnI (2011), Annual Market Research Report, p. 28).

Figure 2. Breakdown of global manganese production by country for 2011 (source: IMnI (2011), Annual Market Research Report, p. 28).

4 BUSINESS SUMMARY

For

per

sona

l use

onl

y

21


Figure 3. Company structure, assuming completion of the Acquisition.

Notes1. Blue Castle Investments Ltd (BCI) owns 85% of the shares of PT Endeavor Resources NTT (ERN). BCI has also entered into a share sale

and purchase agreement for a further 10% of the shares of ERN with Muhammad Iqbal, which will take its ownership of ERN to 95%. This transaction has been approved by the Indonesian Capital Investment Coordinating Board (BKPM). See Section 11.5.3 and the Solicitor’s Report in Section 8 of this Prospectus for further information.

2. PT Endeavor Resources NTT (ERN) owns 51% of the shares of EPK, EPKR, EPM, EPRI, Elgary, NIR and OPS. Under a set of binding agreements between ERN and the Elang Group, ERN also has the rights to purchase a further 39% of the shares of each of these subsidiary companies upon the investment of up to US$400,000 in exploration costs for each company, which would increase its shareholdings to 90% in each case. See Section 11.5 for further details.

3. PT Golden Castle Resources (GCR) has entered into a binding agreement to purchase 90% of the shares of PT Charlie Sapa Prima and has received BKPM approval for that acquisition. See Section 11.7 for further details.

4. GCR has entered into a binding agreement to purchase 49% of the shares of PT Konstruktor Donggala (KD) with a right to acquire a further 26%, taking its total interest to 75%. GCR is yet to receive BKPM approval for this acquisition. See Section 11.8 for further details.

5. See note 1 to Table 11.

Bligh Mining (Holdings) Pty Limited(Australia)

Blue Castle Investments Ltd(Hong Kong)

Bligh Mining Limited(Australia)

PT Endeavor Resources NTT(PMA Indonesia)

100%

2 IUPs3 IUPs2 IUPs5 IUPs 1 IUP4 IUPs 3 IUPs

West Timor assets

Flores NTT Mining Pte Ltd

(Singapore)

PT Manggarai Manganese

1 IUP

Whole Dragon Enterprises Ltd

(Hong Kong)

PT Golden Castle Resources

(PMA Indonesia)

PT Charlie Sapa

Prima

Sulawesi assets

PTKonstruktor

Donggala

1 IUP 1 IUP5

Flores asset

PT Elang Perkasa Kencana

PT Elang Perkasa Kencana

Resources

PT Elang Perkasa Mining

PT Elang Perkasa

Resources Indonesia

PT Elgary Resources

PT Nisso Indonesia Resources

PT Oriental Pratama

Steel

85% 100%

85%

100%

99%

99%

100% 100% 100% 100% 100% 100% 100% 100% 100% 100%

51%2 51%2 51%2 51%2 51%2 51%2 51%2 90%3 49%4

For

per

sona

l use

onl

y

22

4 BUSINESS SUMMARY

4.4 COMPANY STRUCTURE

The structure of the Company, assuming completion of the Acquisition, including its subsidiary companies and projects, is shown in Figure 3. Each of the Indonesian subsidiaries of BMH is identified in Table 8.

Table 8. Indonesian subsidiaries of BMH.

Indonesian company Interest of BMH

FloresPT Manggarai Manganese (PTMM)

Flores NTT Mining Pte Ltd (FNM) owns 99% of PTMM. FNM is owned 100% by BMH.

West TimorPT Elang Perkasa Kencana (EPK)

PT Endeavor Resources NTT (ERN)1 has entered into a sales and purchase agreement for 51% of the shares EPK and has the right to purchase up to 90% of the total shares of EPK upon the investment of up to US$400,000 in exploration costs for EPK. The sale and purchase of 51% of the shares has been approved by the BKPM.

PT Elang Perkasa Kencana Resources (EPKR)

ERN1 owns 51% of EPKR and has the right to purchase up to 90% of the total shares of EPKR upon the investment of up to US$400,000 in exploration costs for EPKR.

PT Elang Perkasa Mining (EPM)

ERN1 owns 51% of EPM and has the right to purchase up to 90% of the total shares of EPM upon the investment of up to US$400,000 in exploration costs for EPM.

PT Elang Perkasa Resources Indonesia (EPRI)

ERN1 owns 51% of EPRI and has the right to purchase up to 90% of the total shares of EPRI upon the investment of up to US$400,000 in exploration costs for EPRI.

PT Elgary Resources (Elgary)

ERN1 owns 51% of Elgary and has the right to purchase up to 90% of the total shares of Elgary upon the investment of up to US$400,000 in exploration costs for Elgary.

PT Nisso Indonesia Resources (NIR)

ERN1 owns 51% of NIR and has the right to purchase up to 90% of the total shares of NIR upon the investment of up to US$400,000 in exploration costs for NIR.

PT Oriental Pratama Steel (OPS)

ERN1 owns 51% of OPS and has the right to purchase up to 90% of the total shares of OPS upon the investment of up to US$400,000 in exploration costs for OPS.

SulawesiPT Charlie Sapa Prima (CSP)

PT Golden Castle Resources (GCR)2 has entered into a share sales and purchase agreement for 90% of the shares of CSP. The sale and purchase of these shares has been approved by the BKPM.

PT Konstruktor Donggala (KD)

GCR2 has entered into a share sales and purchase agreement for 49% of the shares of KD with an option to purchase up to 75% of the shares of KD.

Notes1. ERN is 85% owned by Blue Castle Investments Ltd (BCI), a 100% subsidiary of BMH. BCI has also entered into a share sale and purchase

agreement for a further 10% of the shares of ERN with Muhammad Iqbal, which will take its ownership of ERN to 95%. This transaction has been approved by the BKPM.

2. GCR is 99% owned by Whole Dragon Enterprises Ltd (WDE), which is 100% owned by BMH.

For

per

sona

l use

onl

y

23


4.5 PROJECTS

4.5.1 Overview

An overview of Bligh Mining’s project areas is given in Table 9.

Table 9. Bligh Mining project areas.

Project area Size Tenements(ha)

Flores, East Manggarai—Prospective for Manganese & Base Metals 23,010 1West Timor, Kupang Regency—Prospective for Manganese 13,600 7West Timor, Timor Tengah Selatan (TTS)—Prospective for Manganese 23,840 2 West Timor, Timor Tengah Utara (TTU)—Prospective for Manganese 16,845 10Sulawesi, Palu Regency, Central Sulawesi—Prospective for Copper & Gold 7,564 2Total 84,859 23

Figure 4. Map of Indonesia, showing the locations of the project areas in which the Company has interests.

Java

Sumatra

Kalimantan

Sulawesi

Timor (TTU)Flores

Timor (TTS)

Timor (Kupang)For

per

sona

l use

onl

y

24

4 BUSINESS SUMMARY

4.5.2 Flores

The Flores Project area covers a total of 23,010 hectares in the Sambi Rampas and Elar Sub District, East Manggarai Regency, East Nusa Tenggara Province in the northern parts of Flores Island, Indonesia. The IUP for this area, described in Table 10, has the potential for manganese, copper, lead and zinc as well as gold and silver. As illustrated in Figure 3, the IUP is held by PT Manggarai Manganese (PTMM), which is owned 99% by Flores NTT Mining Pte Ltd (FNM), which is owned 85% by BMH (with an agreement in place for BMH to acquire a further 10% of FNM). For further details, see Section 4.5 and the Solicitor’s Report in Section 8 of this Prospectus.

A total of four main prospect areas have been identified by BMH, three of which are of primary interest for manganese, namely Pebobiar, Cembakloe, and Marabola and a fourth, Pepan, for multi-elements including cop-per, lead, zinc, gold and silver.

Previous exploration activities that cover about 70% of the concession area, have identified the presence and potential to host economical deposits of manganese, other base metals such as zinc, copper and lead and pre-cious metals gold and silver. The manganese mineralisa-tion is interpreted as being similar to that of the Woodie Woodie deposit located in the Pilbara of Western Australia which is a limestone-dolomite hosted replace-ment style. Further detailed investigation is required to determine the manganese mineralisation styles and consequential additional manganese targets. For further details, see section 2 of the Independent Geological Report in Section 7 of this Prospectus.

BMH has a proposed exploration program in place including a magnetic and radiometric program, mapping, sampling and defining a drilling program.

4.5.3 West Timor

The West Timor projects cover a total area of 54,285 hectares clustered in three Regencies; Kupang with 13,600 hectares, Timor Tengah Selatan (TTS) with 23,840 hectares, and Timor Tengah Utara (TTU)with 16,845 hectares, all located in West Timor, Nusa Tenggara Timur Province, Indonesia. BMH’s majority-owned Indonesian subsidiary company PT Endeavour

Resources NTT (ERN) has acquired, from the Elang Group, 51% of seven Indonesian companies that hold the manganese concessions. The companies are listed in Table 8 and illustrated in Figure 3. The IUPs and other interests held by these companies are described in Table 11.

Under a set of share sale agreements, summarised in Section 11.5.1, ERN also has the rights to purchase a further 39% of the shares of each of these subsidiary companies upon the investment of up to US$400,000 in exploration costs for each company, which would increase its shareholdings to 90% in each case. Also see Section 4.5 and the Solicitor’s Report in Section 8 of this Prospectus for further details.

Under a set of shareholder and royalty agreements, sum-marised in Section 11.5.2, the sellers of the Elang Group companies are also entitled to royalty payments upon the achievement of certain milestones. See Section 11.5.2 and the Solicitor’s Report in Section 8 of this Prospectus for further details.

Geological work to date on the West Timor conces-sions includes reconnaissance field visits to four of the tenements with a more detailed review at two of the locations.

An independent geologist has conducted limited work on the three West Timor tenement clusters, with site visits to three of the 20 concessions held by BMH. The initial results demonstrate the presence of medium to high grade manganese in each of the licences. The observed layers are 10–30 cm within reasonably wide zones that reach up to 3 metres in total width. Boulder-style manganese outcrops have also been identified but further mapping and assaying with associated trenching and drilling is required to fully delineate potential economic manganese deposits. The identification of manganese indicates that additional exploration in the remaining 17 tenements may probably identify additional manganese deposit areas. For further details, see section 3 of the Independent Geological Report in Section 7 of this Prospectus.

BMH has a proposed exploration program in place including mapping, sampling and designing a drilling program to define a JORC-compliant resource and reserves of the manganese deposits.

For

per

sona

l use

onl

y

25


Table 10. IUP held by BMH’s Flores subsidiary.

Company IUP IUP issued IUP expiry Area (ha)PT Manggarai Manganese (PTMM) IUP Exploration No. 109 7 December 2009 7 December 2013 23,010

Table 11. The IUPs and other main assets of BMH’s West Timor companies.

No.

Indonesian company

IUP/tenement

IUP issued

IUP expiry

Regency

Area(ha)

1. EPK IUP No. 303 Year 2011 27 May 2011 27 May 2013 TTU 2,0212. EPK IUP No. 745 Year 2011 8 November 2011 8 November 2014 Kupang 2,0003. EPK IUP No. 746 Year 2011 8 November 2011 8 November 2014 Kupang 2,0004. EPK IUP No. 44 Year 2011 29 March 2011 29 March 2016 TTS 5,0005. EPK IUP No. 297 Year 20111 27 May 2011 27 May 2013 TTU 1,4276. EPKR IUP No. 259 Year 2011 27 May 2011 27 May 2013 TTU 2,0177. EPKR IUP No. 293 Year 2011 27 May 2011 27 May 2013 TTU 8648. EPKR IUP No. 744 Year 2011 8 November 2011 8 November 2014 Kupang 2,0009. EPKR IUP No. 743 Year 2011 8 November 2011 8 November 2014 Kupang 2,00010. EPM IUP No. 301 Year 2011 27 May 2011 27 May 2013 TTU 1,99511. EPM IUP No. 747 Year 2011 8 November 2011 8 November 2014 Kupang 2,00012. EPM IUP No. 748 Year 2011 8 November 2011 8 November 2014 Kupang 1,95013. EPRI IUP No. 296 Year 2011 27 May 2011 27 May 2013 TTU 1,73914. Elgary IUP No. 299 Year 2011 27 May 2011 27 May 2013 TTU 93415. Elgary IUP No. 749 Year 2011 8 November 2011 8 November 2014 Kupang 1,65016. NIR IUP No. 300 Year 2011 27 May 2011 27 May 2013 TTU 2,24517. NIR IUP No. 304 Year 2011 27 May 2011 27 May 2013 TTU 1,73918. NIR IUP No. 110 Year 2011 14 May 2011 14 May 2016 TTS 4,92019. OPS IUP No. 295 Year 2011 27 May 2011 27 May 2013 TTU 1,86420. OPS Development letter No.

2035/30/DBM/20102– – TTS 13,920

Total 54,285

Note1. As noted on page 39 of the Solicitor’s Report in Section 8 of this Prospectus, IUP Exploration Number 297 owned by PT Elang Perkasa

Kencana (IUP 297) overlaps with an IUP issued to PT Tiara Utama Mandiri (Tiara IUP). The Company has become aware that the Tiara IUP has been included on the CNC list. Upon further enquiry by the Company, the Company has become aware that the issue of the Tiara IUP (and hence its inclusion on the CNC List) is under legal challenge and, depending of the outcome of that challenge, the Tiara IUP may be cancelled, the result of which would be that the Company’s majority-owned IUP 297 would no longer overlap the Tiara IUP.

2. Refer to the Legal Report in Section 8 of this Prospectus.

Table 12. IUPs held by BMH’s Sulawesi subsidiaries.

Company IUP IUP issued IUP expiry Area(ha)

PT Charlie Sapa Prima (CSP) IUP Exploration No. 540 28 January 2010 7 December 2013 5,280PT Konstruktor Donggala (KD) IUP Exploration No. 387 as

amended by IUP No. 188.23 May 2012 16 October 2016 2,284

Total 7,564

For

per

sona

l use

onl

y

26

4 BUSINESS SUMMARY

4.5.4 Sulawesi

The Sulawesi projects cover a total area of 7564 hectares located in the Donggala District of Central Sulawesi. The two IUPs are owned by PT Charlie Sapa Prima (CSP) and PT Konstruktor Donggala (KD). CSP and KD have each entered into a share sale and purchase agreement with PT Golden Castle Resources (GCR), which is 99% owned by Whole Dragon Enterprises Ltd (WDE), which is 100% owned by BMH, as illustrated in Figure 3. For further details, see Section 4.5 and the Solicitor’s Report in Section 8 of this Prospectus.

The concessions, described in Table 12, are located in a highly prospective area for gold and copper. Base metal mineralisation (chalcopyrite, galena and sphalerite) has also been observed in the veins, faults and stockworks. For further details, see section 4 of the Independent Geological Report in Section 7 of this Prospectus.

4.6 BUSINESS STRATEGY

4.6.1 Business development strategy

The Company’ strategic focus is maximising shareholder value through identifying, acquiring, exploring, evaluat-ing and developing appropriate mining opportunities throughout Indonesia. The Company’s medium-term focus will be to develop the current assets described above and aim to bring them into production. If suc-cessful, this is expected to generate revenues that can be used to fund ongoing exploration for highly prospective base and precious metals, including porphyry copper/gold targets across all tenements.

The Company aims to become a predominant manga-nese participant in Indonesia through internal growth of existing assets and the possible acquisition of other appropriate manganese assets. It also aims to become a medium scale, low-cost producer for the steel industry, with easy access to shipping routes to the major export markets.

The Company’s business model is highly dependent on the Company achieving technical and commercial success within its exploration programs as well as being dependent on a number of other fiscal, economic, regulatory and environmental factors. Income growth in the form of dividends to investors will only eventuate if the Company’s planned or future exploration programs yield commercial discoveries and are ultimately economi-cally developed. Prospective investors should refer to the risks to the Company and its business model as outlined in Section 5 of this Prospectus.

4.6.2 Finance strategy

The Company will likely fund its future activities by issu-ing additional Shares to new and existing Shareholders, and, where attainable, by the raising of debt finance.F

or p

erso

nal u

se o

nly

27


4.6.3 Environmental management strategy

The Company’s projects are subject to Indonesian laws and regulations regarding environmental matters and the discharge of hazardous wastes and materials. As with all mining projects, these projects would be expected to have a variety of environmental impacts should develop-ment proceed.

The Company is committed to responsible environmen-tal management of all activities. The Company believes the environmental effects of its mining and infrastruc-ture activities must be planned or avoided, or unavoid-able effects minimised and remediated to an acceptable level. Areas disturbed by the Company’s activities will be rehabilitated as required by applicable laws and regula-tions. In order to ensure this commitment is achieved, external expertise will be engaged in the development and implementation of a structured environmental management system that is compliant with Indonesian environmental management standards.

4.6.4 Occupational health and safety

The Company is committed to Occupational Health and Safety (OH&S) and will provide and maintain a safe working environment including safe systems of work for all its employees, visitors and contractors, in keeping with both Indonesian and Australian conventions.

To ensure this commitment is achieved, the Company has developed a rigid OH&S policy to enforce best practice in the development and implementation of a structured health and safety management system that is compliant with AS4801—Occupational Health and Safety Management Systems and other globally recognised standards.

The Company’s internal expertise will also provide on-going inspection/auditing services to ensure compliance and measure progress towards best practice in OH&S management of its operations.

4.7 SOCIAL PROGRAMS

To date, BMH has been highly active in the local communities surrounding its projects. All of its social programs are guided by principles of corporate social responsibility and involve engaging local people and governments to ensure they are targeted and effective regarding participation.

BMH’s social programs began by completing a social and scientific census of the residents within the PTMM concession on Flores. The aim of the census was to obtain statistics that would assist BMH, the local people and regional government bodies in deciding on the most appropriate social programs. By following the results of the census, BMH was able to focus on a number of social programs in conjunction with the local people and government. These included:

• Delsos—provided assistance to Delsos, a commis-sion for social and economic development whose aim is to combat poverty in the Manggarai area of Flores.

• Chapel of Lema–St Klemens—assistance in funding renovation of the local chapel, which is used as a school for young children.

• Agriculture and agribusiness education—funded technical training at the elementary school in Gole Lebo.

• The Bupati Cup—the Cup is an annual football tournament for young boys in the region of East Manggarai. BMH supported this event via donations for transport, food and apparel.

• Road building—this is an essential part of helping the local community of Pota. BMH is providing donations to help complete the road renovation.

The Company intends to continue with similar social programs in the future, again using census results and collegiate agreements between local people and govern-ments to engage the participants, increase cumulative intellectual capital, and maximise benefits to these communities.

For

per

sona

l use

onl

y

For

per

sona

l use

onl

y

29


5 RISK FACTORS

5.1 INTRODUCTION

The Company’s Shares offered for investment under this Prospectus should be deemed speculative because of the nature of the business activities of the Company. Although the Directors commend any consideration of investment in the Company, potential investors should consider whether the Company’s Shares are a suitable investment having regard to their own personal invest-ment objectives and financial circumstances and the risk factors set out below.

The Directors have attempted, based on their current understanding, to prioritise the following list of risk factors, taking into account their likelihood of occurring, their likely impact should they occur, and their potential for mitigation.

This list is not exhaustive and potential investors should read this Prospectus in its entirety.

Potential investors should consider that the investment in the Company is speculative and should consult their professional advisors before deciding whether to apply for shares.

5.2 GENERAL ECONOMIC RISKS AND BUSINESS CLIMATE

Share market conditions may affect the listed securities regardless of operating performance. Share market conditions are affected by many factors such as:

(a) general economic outlook;

(b) movements in or outlook on interest rates and infla-tion rates;

(c) currency fluctuations;

(d) commodity prices;

(e) changes in investor sentiment towards particular market sectors; and

(f) the demand and supply for capital;

Commodity prices are influenced by physical and investment demand for those commodities. Fluctuations in commodity prices may influence individual projects in which the Company has an interest.

5.3 EXPLORATION, DEVELOPMENT, MINING AND PROCESSING RISKS

Bligh Mining is in the business of mineral exploration, project development and mining. This business by its nature contains elements of significant risk. Ultimate and continuous success of these activities depends on many factors such as:

(a) the discovery and/or acquisition of economically recoverable ore reserves;

(b) successful conclusions to bankable feasibility studies;

(c) access to adequate capital for project development;

(d) design and construction of efficient mining and processing facilities within capital expenditure budg-ets;

(e) securing and maintaining title to tenements and com-pliance with the terms of those tenements;

(f) obtaining consents and approvals necessary for the conduct of exploration and mining; and

(g) access to competent operational management and prudent financial administration. This includes the availability and reliability of appropriately skilled and experienced employees, contractors and consultants.

Many regions of Indonesia are frequently subject to adverse weather conditions over a prolonged period. Many regions of Indonesia are also subject to significant volcanic and seismic activity. These conditions can adversely affect exploration and mining operations and the timing of revenues.

Whether or not income will result from projects under-going exploration and development programs depends on the successful establishment of manganese mining operations. Factors including costs, actual mineralisation, consistency and reliability of manganese ore grades and manganese prices affect successful project development, mining operations and the availability of willing, reliable off-takers.

Mining is an industry that in Indonesia has become subject to increasing legislative regulation including but not limited to environmental responsibility and liability, taxation, mineral export restrictions and protectionism in relation to national interests. The potential for liability is

For

per

sona

l use

onl

y

30

an ever present risk. The use and disposal of chemicals in the mining industry is under constant legislative scrutiny and regulation. The introduction of new laws and regulations or changes to underlying policy may adversely impact on the operations of the Company.

5.4 RISKS SPECIFIC TO THE COMPANY’S PROJECTS

The Company’s Indonesian manganese projects represent the main business activity and focus of the Company. Risks specific to these projects include the following:

5.4.1 Operating risks

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

(a) geological conditions;

(b) limitations on activities owing to seasonal weather patterns and cyclone activity;

(c) alterations to joint venture programs and budgets;

(d) unanticipated operational and technical difficulties encountered in geophysical surveys, drilling and production activities;

(e) mechanical failure of operating plant and equipment; adverse weather conditions, industrial and environ-mental accidents, acts of terrorism or political or civil unrest and other force majeure events;

(f) industrial action, disputation or disruptions;

(g) unavailability of aircraft or other transportation or drilling equipment to undertake airborne electromag-netic and other geological and geophysical investiga-tions;

(h) shortages or unavailability of manpower or appropri-ately skilled manpower;

(i) unexpected shortages or increases in the costs of consumables, spare parts, plant and equipment; and

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

5.4.2 Manganese prices

The Company expects to derive the bulk of its revenue from the sale of manganese ore. Consequently, the Company’s expected earnings will be closely related to the price of manganese ore together with the terms of the off-take agreement(s) under which manganese ore will be sold.

The price of manganese, like all mineral commodities, fluctuates and is affected by numerous factors beyond the control of the Company. These factors include worldwide and regional supply and demand for steel, which is the main driver affecting demand for manga-nese, commodity trading on the futures markets, general world economic conditions and the outlook for interest rates, inflation and other economic factors on both a regional and global basis. These factors may have a positive or negative effect on the Company’s exploration, project development and production plans and activi-ties, together with the ability to fund those plans and activities.

5.4.3 Changes in legislation or regulation

Changes in legislation or regulation, or changes to accounting rules, could have adverse impacts on the Company from a financial and operational perspective. Although the Company is reasonably familiar with the Indonesian regulatory regime and has undertaken all reasonable due diligence in assessing and managing the risks associated with investing and operating in Indo-nesia, the legal and political conditions of the country and any changes thereto are outside the control of the Company.

In 2012, the Indonesian government made sweeping and substantive changes to its mining laws. The three primary and notable changes were:

(a) The issuance of Regulation of the Minister of Energyand Mineral Resources, Number 7 of 2012, which states that certain minerals, most of which the Company intends mining, will be subject to an ‘added value’ through either processing, refining or smelting to attain a defined level of concentration prior to exportation;

5 RISK FACTORS

For

per

sona

l use

onl

y

31


(b) The amended government regulation on divest-ment rules has just been issued (Government Regulation Number 24 Year 2012). Under Article 97(1) of the amended regulation, the divestment percentage is significantly increased to at least 51% of the shares held by the foreign investor. However, the amended regulation has introduced a deadline of 10 years within which the divestment process must be com-pleted, once again counting from the date of com-mencement of production. In addition, the amended regulation sets minimum percentages that must be divested each year from the sixth to the 10th. The anniversaries and required sell-down of equity are 20% in the sixth year, 30% in the seventh year, 37% in the eighth year, 44% in the ninth year and 51% in the 10th year; and

(c) On May 4 2012, the Minister of Energy and Mineral Resources released details of a new mining policy that in essence has introduced on average a 20% export tax to be applied to the exportation of 14 minerals effective from 4 August 2012. Furthermore, by 2014 exports of these minerals will be completely banned. The Company intend mining many of those defined minerals.

Again, the Company’s primary focus is the Indonesian archipelago and changes in the country’s legislation or regulation could have a financial impact on the Company or affect its ability to operate in Indonesia.

5.4.4 Early stage of development

The mineral tenements (IUPs) of the Company as described in this Prospectus are at an early stage of development. The Company does not have other eco-nomic resources that could be classified for the purposes of a regulatory or securities exchange code. Hence, the Company’s shares are deemed speculative. There can be no assurance that exploration of the project areas described in this Prospectus, or any other tenements that may be acquired in the future, will result in the discovery of an economic ore deposit. Even if an apparently viable deposit is identified, there is no guarantee that it can be economically exploited. Potential investors should understand that mineral exploration and development are high risk undertakings.

5.4.5 Expiry of title

The exploration licences (IUPs) comprising some of the tenements that the Company holds or in which it has an interest may be the subject of applications for exten-sion in the future. If a tenement is not extended, the Company may suffer significant damage through loss of the opportunity to discover and/or develop any mineral resources on that tenement. In addition, the Company cannot guarantee that those tenements that are applica-tions for tenements will ultimately be granted in whole or in part.

For more details on the issue of title to the tenements, refer to the Solicitor’s Report in Section 8 of this Prospectus.

5.4.6 ‘Clean and clear’ title

In an effort to bring licensing into some order, Indone-sia’s Ministry of Energy and Mineral Resources (ESDM) has forbidden the issuing of new licences under Indonesian mining law and has been undertaking limited audits of all licences issued. The intention is to reveal where there are overlapping licences. As a result of this process, ESDM issues lists, maps and statements on request, indicating that the licence involved is ‘clean and clear’ (CNC). The IUP is thereby recognised by ESDM as legitimate, which carries an inference that the IUP has been properly issued, although this is not stated. The CNC lists are an administrative attempt to clear away confusion, and carry no legal status.

There is no definition of what ‘clean and clear’ means, but it is understood to mean simply that there are no overlapping issues (with conflicting licences for the same product).

What ‘clean and clear’ does not mean is that the licence-holder is up to date with its obligations under the licence, that it has obtained any necessary approv-als from the Ministry of Forestry, whether or not the licence-holder also owns the land involved, whether or not there are land titles in place, whether there are any disputes with registered or traditional land owners, and whether there is any illegal mining activity taking place.

Only three of the Company’s 22 IUPs are currently

For

per

sona

l use

onl

y

32

included on any CNC list. There is no guarantee that any of the remaining IUPs will ultimately be included in the CNC list. For further details, see the Solicitor’s Report in Section 8 of this Prospectus.

As noted on page 39 of the Solicitor’s Report in Section 8 of this Prospectus, IUP Exploration Number 297 owned by PT Elang Perkasa Kencana (IUP 297) overlaps with an IUP issued to PT Tiara Utama Mandiri (Tiara IUP). The Company has become aware that the Tiara IUP has been included on the CNC list. Upon further enquiry by the Company, the Company has become aware that the issue of the Tiara IUP (and hence its inclusion on the CNC List) is under legal challenge and, depending of the outcome of that challenge, the Tiara IUP may be cancelled, the result of which would be that the Company’s majority-owned IUP 297 would no longer overlap the Tiara IUP.

5.4.7 Funding

The Company may have difficulty in obtaining future equity or debt funding to support exploration programs and the evaluation and development of its projects. The Company’s ability to raise further equity or debt or to divest part of its interest in a project, and the terms of such transactions will vary according to a number of factors, including the success of exploration results and the future development of the projects, stock market conditions and prices for commodities.

Should it subsequently be established that a mining production operation is technically, environmentally and economically viable, the Company will require substan-tial additional financing to establish mining operations and production facilities. The Company may not be able to raise the additional finances that may be required for future activities. Commodity prices, environmental regulations, environmental rehabilitation or restitu-tion obligations, revenues, taxes, transportation costs, capital expenditures, operating expenses and technical aspects are all factors that will impact on the amount of additional capital that may be required.

Additional financing may not be available on terms acceptable to the Company, or at all. Significantly, any additional equity financing or the exercising of op-

tions may dilute your existing shareholdings and debt financing, if available, may restrict financing and future activities.

If the Company fails to obtain additional financing, as needed, it may be required to reduce the scope of its operations and scale back its exploration programs as the case may be, which may adversely affect the busi-ness and financial condition of the Company and its performance.

2.13.10 Completion of the Acquisition

The Acquisition is subject to a number of conditions precedent that are required to be achieved for comple-tion to occur. Key conditions precedent include the Vendors entering into escrow agreements with respect to restricted shares as required and obtaining ASX’s conditional approval to the Company’s admission to the Official List of ASX and to Official Quotation, on terms and conditions acceptable to the Company. There is a risk that one or more of these conditions precedent may not be met. If this occurs then the Acquisition and/or the Offer may not proceed. A summary of the terms and conditions of the Share Sale Agreement is set out in Section 11.1.

2.13.11 Projects will not be fully owned

BMH has entered into agreements with respect to certain projects. Please refer to Section 4.4, which sets out the ownership interest of BMH in each project and a description of those agreements. In the event that these acquisitions are completed, there is a risk the exploration/development activity could be disrupted in situations where there is disagreement on development programs or other issues between BMH and its part-ners. Should such disagreements occur, this may have an adverse impact on the Company’s operations and performance generally.

5 RISK FACTORS

For

per

sona

l use

onl

y

33


2.13.12 Change of activities and re-quotation of Shares on ASX

The Acquisition, if completed, would constitute a change in the nature and scale of the Company’s activi-ties. In accordance with the requirements of ASX in relation to this proposed change in activity, the Company must re-comply with Chapters 1 and 2 of the Listing Rules as if it were seeking admission to the Official List. Accordingly, the Company is required to issue a Prospectus to, among other things, assist the Company to re-comply with these admission requirements. The Company’s Shares have been suspended from Official Quotation since November 2009 and will not be rein-stated until the Company has re-complied with Chapters 1 and 2. If the conditions precedent to the Share Sale Agreement are not satisfied or waived (if applicable), the Company will not proceed with the Acquisition and will seek re-quotation of its Shares. There is a risk that the Company may not be able to meet the requirements of ASX for re-quotation of its Shares on ASX. Shares will not be able to be traded on ASX until such time as ASX’s requirements for re-quotation can be met, if at all

5.4.8 Competition

The markets for manganese involve a number of par-ticipants. Current levels of demand may see an increase in production from existing market participants, the potential for past participants in the market to re-enter or new start-ups to emerge.

5.4.9 Currency

The Company’s expected revenue will be in United States dollars while its cost base will be in Indonesian rupiah; consequently the exchange rate between United States dollars and Indonesian rupiah will have an impact on the Company’s ultimately expected earnings in Australian dollars.

The exchange rate between United States dollars and Indonesian rupiah is affected by numerous factors be-yond the control of the Company. These factors include Indonesia’s and the USA’s economic conditions and the outlook for interest rates, inflation and other economic factors. These factors may have a positive or negative effect on the Company’s exploration, project develop-ment and production plans and activities, together with the ability to fund those plans and activities.

5.4.10 Environmental impact constraints

The proposed activities of the Company in Indonesia are subject to Indonesian laws and regulation concerning the environment. As with most exploration projects and mining operations, the Company’s activities are expected to have an impact on the environment, particularly if advanced exploration or mine development proceeds. It is the Company’s intention to conduct its activities to the highest standard of environmental obligation, including compliance with all environmental laws.

The Company may also become liable for environmental damage caused by previous owners of any tenements the Company acquires. As a result, substantial liabilities to third parties or governmental entities may be incurred, the payment of which could reduce or eliminate funds available for acquisitions, exploration and development or cause the Company to suffer losses.

For

per

sona

l use

onl

y

34

5.4.11 Social programs and interests of landowners

The objectives of the Company’s social programs are to contribute to sustainable economic development and work with employees, their families, the local community and broader society to improve quality of life in ways that are good for business and for development.

In achieving these objectives, the Company uses a ‘bottom-up implementation’ by conducting a census to assess and address the basic rights and needs of the community.

There is no guarantee that this pre-emptive approach will succeed in garnering community support for the Company’s exploration, development and mining aspirations.

Additionally, the Company may be required to pay com-pensation to land owners, local authorities, traditional land users and others who may have an interest in the area covered by the mining tenements. The Company’s ability to resolve compensation issues and compensation costs involved will have an impact on the future success and financial performance of the Company’s mining op-erations. Should the Company be unable to resolve such compensation claims on economic terms, this could have a material adverse effect on the business, results, operations or financial condition of the Company.

5.4.12 Directors and management

The Company depends on a small and skilled team to undertake the business of the Company and implement its exploration and development programs. The Direc-tors and management also have specific expertise of establishing start up mining companies and exploration programs. If Directors or managers were to leave the Company, the Company may not be able to find suitable replacements.

Consequently, the exploration and development programs and the management of the Company could be affected by the lack of suitable Directors, managers, employees or staff.

5.4.13 Solvency and liquidity risk

For the first 12–18 months of operations following completion of the Offer, the Company may not have any income other than the interest on the cash deposits from its capital raising. If the Company is not successful in establishing early mining operations, securing off-take agreements and/or joint ventures then the Company could run out of working capital if it were then not able to raise further working capital. Accordingly, in these circumstances, the Company could lose entitlement or rights to interests in these projects. As the Company currently has no operating income, the Shares should be considered speculative.

5.4.14 Country risk

Indonesian mining is highly competitive by international standards. The mining sector in Indonesia faces chal-lenges of legal, governance and labour issues in transi-tion to regional autonomy. For the avoidance of doubt, these risks will continue to pervade the mining sector and hence can be expected to adversely impact the mining exploration and mineral production and exports in Indonesia.

Additionally, the risk of terrorism, war and social upheaval activities in Indonesia or indeed the whole Asia Pacific region or other areas in which the Company operates or may operate and the resulting impact upon the projects, is also a relevant risk factor.

The legal system operating in Indonesia may be less developed than in more stable and advanced countries, which may result in such risks as:

(a) political difficulties in obtaining effective legal re-dress in the courts, whether in respect of a breach of law or regulation, or in an ownership dispute;

(b) a higher degree of discretion on the part of govern-mental agencies; and

(c) inconsistencies or conflicts between and within vari-ous laws, regulations, decrees, orders and resolutions.

Furthermore, there can be no assurance that joint ventures, licences, licence applications or other legal

5 RISK FACTORS

For

per

sona

l use

onl

y

35


arrangements will not be adversely affected by the actions of the government authorities or others and the effectiveness of and enforcement of such arrangements cannot be assured.

5.5 OTHER RISKS

5.5.1 Unforeseen risks

There may be other unforeseen risks that the Directors are unaware of at the time of issuing this Prospectus, which may impact on the Company, its operations, and/or the valuation and performance of the Company’s Shares.

5.5.2 Combination of risks

The Company may be subject to more than a single risk. A combination of risks, including any of the risks outlined in all the subsections of this section could affect the performance, valuation, financial position and prospects of the Company.

5.5.3 Unforeseen expenditure risk

Expenditure may need to be incurred that has not been taken into account in the preparation of this Prospectus. Although the Company is not aware of any such additional expenditure requirements, if such expenditure is subsequently incurred, this may adversely affect the expenditure proposals of the Company.

5.5.4 Additional financing requirements

The Directors can give no assurances that its objectives will in fact be met without future borrowings or further capital raisings and if such borrowings or capital raisings are required, that they can be obtained on terms favour-able to the Company.

5.5.5 Uninsured loss and liability

Exploration for and development of minerals involves hazards and risks that could result in the Company incurring losses and liabilities to third parties. There is a risk that the Company may not be insured against all losses or liabilities that could arise from its operations. If the Company incurs losses or liabilities that are not covered by its insurance policies, the funds available for exploration and development will be reduced and the value and/or tenure of the Company’s assets may be at risk.

For

per

sona

l use

onl

y

For

per

sona

l use

onl

y

37


6.1 DIRECTORS

6.1.1 Andrew NuttExEcutivE chairman

Andrew Nutt is currently an Executive Director of BMH. Before joining the finance industry, Mr Nutt worked in the IT industry for 10 years, with stints in senior sales and management roles at Australia’s largest IT distributor, and in the UK as country manager for a partner of Sun Microsystems.

Subsequently, Mr Nutt has worked as a private client adviser at Patersons Securities and at Ord Minnett where he participated in numerous corporate finance deals and successfully raised capital for a number of IPOs. He has continued to have success in raising funds for a number of pre-IPO and IPO junior mining companies with a particular focus on operations based in Indonesia, where he now resides.

6.1.2 Muhammad IqbalExEcutivE DirEctor

Muhammad Iqbal is currently an Executive Director of BMH. He graduated from the University of Arizona with a Bachelor of Science in Business Administration and has over 12 years’ experience in developing and operating successful businesses in Indonesia.

Prior to joining BMH, Mr Iqbal was the founder and President of EPN Consulting, a strategy consulting, IT consulting and corporate finance advisory firm. EPN’s clients include several Indonesian state-owned enterprises and major Indonesian corporations, ranging across multiple sectors such as mining and resources, transport, food and beverage, pharmaceuticals, educa-tion and banking, where EPN was the first to introduce mobile banking and microfinance to rural Indonesian communities.

Mr Iqbal has a solid track record in the resources and energy sectors, starting his formal mining career as senior adviser at SCL, an Indonesian–Malaysian–Chinese coal and gold mining company with assets and opera-tions in Sumatra and Sulawesi. More recently, he has forged a strong background in the manganese industry,

having been an active director in an operating manga-nese mining company with assets in West Timor, as well as Director of Finance and Business Development at a manganese explorer with assets in West Java and West Timor.

Mr Iqbal has assembled a strong and talented Indonesian team covering both Bligh’s corporate requirements and ground operations, and brings a wealth of connections at all levels in Indonesian society.

6.1.3 Sevag Chalabian ExEcutivE DirEctor

Sevag Chalabian is currently a Non-Executive Director of BMH. He is a practicing commercial lawyer with over 17 years’ experience and particular specialisation in corporate and commercial transactions in the mining, finance and property industries.

Mr Chalabian was formerly a partner at the Australian national law firm Phillips Fox. He was formerly Chair-man of Apollo Minerals Ltd, Artemis Resources Ltd, and Global Strategic Metals NL. He is currently Non-Executive Chairman of Kollakorn Corporation Ltd.

6.1.4 Brett Gunternon-ExEcutivE DirEctor

Brett Gunter is currently a Non-Executive Director of BMH. Since completing his Bachelor of Applied Science (Geology) at the University of Technology (Sydney), he has spent more than 20 years within the mining industry as a geologist. Earlier in his career, Mr Gunter was involved in various aspects of exploration and mining geology, including senior mine management positions in base metal and gold mines in Australia.

Since moving to Indonesia in the mid 1990s, Mr Gunter has been involved in grass roots exploration throughout the archipelago, spending five years with Ivanhoe Mines in Kalimantan and two years as Project Manager at the Mount Muro gold mine in Central Kalimantan. Subsequently, he established PT GMT Indonesia, which provides consulting services to multinational and na-tional mineral and bulk commodity clients, leveraging his deep understanding of the Indonesian mining situation and the geological provinces throughout the region.

6 DIRECTORS, MANAGEMENT AND CORPORATE GOVERNANCE

For

per

sona

l use

onl

y

38

Mr Gunter has completed a large number of due dili-gence studies on mineral and bulk commodity proper-ties, including coal, iron ore, bauxite, nickel laterite, gold, copper, lead, zinc and manganese, and has led teams in exploration planning, program implementation, auditing, resource estimations, scoping studies and feasibility stud-ies. He is a current member of the Australian Institute of Mining and Metallurgy and is a Competent Person for reporting of a number of commodities, including coal, nickel laterite, gold, silver, residual and placer deposits, base metals and manganese.

6.1.5 Michael DoyleinDEpEnDEnt non-ExEcutivE DirEctor

Michael Doyle is a current Independent Non-Executive Director of BMH. His 26 year career spans corporate, project and infrastructure finance in the mining, transport and power sectors. He attended the University of Sydney, where he attained a BA Psychology with honours, and in 2005 completed an advanced project finance program at Macquarie University. He started his professional life as a Manager of Equities at Deutsche Bank in Hong Kong (formerly Bain & Co) and as a Director of Australian Equities at Merrill Lynch in Hong Kong. He later worked in Indonesia, providing funding packages of US$474 million for the Ciwaki-Sukabumi toll-road project located in West Java.

Most recently, Mr Doyle has consulted for an ASX-listed South American iron and steel company, for which he created the company’s business plan, and executed the strategic planning for the BFS and financing package for a two-stage iron sands processing facility in Chile and Ecuador. Prior to that engagement, he worked in a corporate finance advisory role for an ASX-listed entity to which he introduced the Shandong Mining and Exploration Group to assist management in realising a long-term off-take of their Zambian manganese assets.

6.1.6 Anthony CrimminsinDEpEnDEnt non-ExEcutivE DirEctor

Tony Crimmins has held numerous roles in project and general management, including six years as an envi-ronmental engineer for Brambles in China, involved in high priority environmental impact assessment for toxic

waste clearance, site evaluation and project management. During this time he developed a working proficiency in Mandarin and an understanding of Asian business practices.

For the past eight years, Mr Crimmins has been involved in the listing of 13 companies on ASX from IPOs to reconstituted listed companies. In the process he has helped raise over $65 million for projects, including five technology projects from Australian universities.

Mr Crimmins is currently the Executive Chairman of Jatenergy Ltd and a Non-Executive Director of Wel-come Stranger Mining Ltd and SVC Group Ltd.

6.2 PROPOSED DIRECTORS

Under the terms of the Shareholders Deed (see Section 11.4), Sampoerna has the right to nominate at least two directors to the Company’s Board at all times that it holds an aggregate shareholding in excess of 10%, which it will hold following completion of the Offer and Acquisition. Sampoerna has indicated that they will nominate Mr Tommy Tjiptadjaja to the Board, but have not yet indicated the identity of their second director nomination.

Tommy Tjiptadjaja is an experienced business manager with specialisation in corporate strategy, marketing strategy, operations management, IT management, cross-cultural management, large-scale project manage-ment, corporate finance/valuation and mergers. He is currently Head of Corporate and Business Development at Sampoerna Strategic Group and was previously a Project Leader for Boston Consulting Group, where he led consulting teams for a range of clients across Southeast Asia, particularly Indonesia.

Mr Tjiptadjaja’s experience covers key industries such as telecommunications, healthcare, retail, financial services, energy/oil and gas, software and hardware manufactur-ing. He holds a Bachelor of Business Administration from the Red McCombs School of Business, University of Texas at Austin and a Master of Business Administra-tion from the University of Chicago’s Booth School of Business, and has studied at the London School of Economics and Political Science.


For

per

sona

l use

onl

y

39


6.3 COMPANY SECRETARY

6.3.1 Anne Adaleycompany SEcrEtary anD chiEf financial officEr

Anne Adaley has extensive experience in the resources sector, having held senior management roles with a number of ASX-listed Australian exploration and min-ing companies over the last 25 years, including 11 years as Company Secretary for several ASX-listed companies. She has extensive experience in corporate accounting, financial management, administration and company secretarial work across a diverse range of companies.

Ms Adaley is a qualified accountant and Principal of Australian Mining Corporate and Administrative Services Pty Ltd, which provides a full range of serv-ices including accounting, financial management and company secretarial. She has served as Chief Financial Officer and Company Secretary to Monaro Mining NL (2007–2009), Finance and Administration Manager to Climax Mining Ltd (2005 to 2006) and Company Secretary and Group Financial Controller to Gympie Gold Ltd (1997 to 2004). She is currently the Company Secretary and Chief Financial Officer of BMH.

6.4 MANAGEMENT TEAM

6.4.1 Indonesia

BMH’s Indonesian management team comprises:

• Andrew Nutt—Executive Director and Chairman

• Muhammad Iqbal—Executive Director

• Marc Flory—Country Manager, Flores

• Eko Budi Harto—Country Manager, West Timor

• Agus W Permadi—Technical Coordinator; and

• Deista T Harahap—Socialisation and Community Development Coordinator.

6.4.2 Australia

BMH’s Australian management team comprises:

• Robyn Shearwood—Office Manager, Sydney

• Anne Adaley—Chief Financial Officer and Com-pany Secretary, Sydney; and

• Sevag Chalabian—Executive Director, Sydney.

For

per

sona

l use

onl

y

40


6.5 CORPORATE GOVERNANCE

The Directors monitor the business affairs of the Company on behalf of Shareholders and have formally adopted a corporate governance policy that is designed to encourage Directors to focus their attention on accountability, risk management and ethical conduct.

6.5.1 Board of Directors

The Company’s Board of Directors is responsible for corporate governance of the Company. The Board develops strategies for the Company, reviews strategic objectives and monitors performance against those objectives. So as to effectively ensure that the Board is adequately equipped to enact its responsibilities, it has established guidelines for the nomination and selection of directors and the operation of the Board. These responsibilities include:

(a) Establishing the strategy for the company, including operational and financial objectives as well as making certain that the Company’s resources are adequate to achieve this strategy;

(b) Appointing and, where appropriate, removing an Executive Director and Chief Executive Officer, approving other key executive appointments and planning for executive succession;

(c) Overseeing and evaluating the Executive Directors and Chief Executive Officer and the executive team through a formal performance appraisal process in light of the Company’s business planning and objec-tives;

(d) Observing compliance with legal, regulatory and occupational health and safety requirements and standards;

(e) Ensuring that the assessment of key risks posed to the company is executed and that an internal frame-work for mitigation of those risks is implemented;

(f) Approving the Company’s budgetary items, inclusive of operational and capital budgets and approving significant acquisitions, expenditures or divestitures;

(g) Approving the annual and half-yearly financial re-ports;

(h) Ensuring the market and shareholders receive full and timely disclosure with regard to matters of mate-riality.

The Company is committed to the circulation of relevant materials to Directors in a timely manner to facilitate Directors’ participation in the Board discus-sions on a fully-informed basis.

6.5.2 Composition of the Board

Election of Board members is substantially the province of the Shareholders in general meetings. However, subject thereto, the Company is committed to the following principles:

(a) the Board is to comprise Directors with a blend of skills, experience and attributes appropriate for the Company and its business; and

(b) the principal criterion for the appointment of new Directors is their ability to add value to the Company and its business.

No formal nomination committee or procedures have been adopted for the identification, appointment and review of Board membership, but an informal assess-ment process, facilitated by the Chairman in consultation with the Company’s professional advisors, has been adopted by the Board. The Company aspires to have at least three non-executive Directors and, where practical, at least half the Board will be independent.

Under the terms of the Shareholders’ Deed, summarised in Section 11.4, the Principal Shareholders agree to support the election, removal and replacement of the Directors nominated by Sampoerna at Sampoerna’s discretion, including to exercise the votes attaching to its Shares in favour of the election, re-election, removal and replacement of the nominated Directors.

For

per

sona

l use

onl

y

41


6.5.3 Directors’ Performance Evaluation

The Board undertakes an assessment of it collective performance, the performance of the Board committees (once established) and the Chairman on an annual basis.

In order to ensure the Board continues to discharge its responsibilities in an appropriate manner, a review of the performance over the previous 12 months (or from inception) of the Board and individual Directors will be arranged by the Board in accordance with the terms of the Nomination Committee Charter, until such time as a Nomination Committee is established.

6.5.4 Independent professional advice

Subject to the Chairman’s approval (not to be unreason-ably withheld), the Directors, at the Company’s expense, may obtain independent professional advice on issues arising in the course of their duties.

6.5.5 Remuneration arrangements

The remuneration of an executive Director will be decided by the Board, without the affected executive Di-rector participating in that decision-making process. The total maximum remuneration of non-executive Directors is the subject of a Shareholder resolution in accordance with the Company’s Constitution, the Corporations Act and the ASX Listing Rules, as applicable. The determina-tion of non-executive Directors’ remuneration within that maximum will be made by the Board having regard to the inputs and value to the Company of the respec-tive contributions by each non-executive Director. The current limit, which may only be varied by Shareholders in general meeting, is an aggregate amount of $300,000 per annum.

The Board may award additional remuneration to non-executive Directors called upon to perform extra services or make special exertions on behalf of the Company.

6.5.6 Board committees

Audit and Risk Management Committee

The Company is to have a separate, constituted audit committee. The Company’s Audit Committee is intended to facilitate and provide a means of open communica-tion between management, the external auditors and the Board. The Committee was established to provide an independent and objective review of financial and other information to be prepared by management, and to assist the Board in fulfilling its oversight responsibilities with respect to the following areas:

(a) overseeing the Company’s relationship with the external auditor (including forming a policy on the provision of non-audit services and the rotation of external auditor personnel on a regular basis) and the external audit function generally;

(b) overseeing the adequacy of the control processes in place in relation to the preparation of financial state-ments and reports;

(c) overseeing the adequacy of the Company’s financial controls and systems;

(d) overseeing the process of identification and manage-ment of business, financial and commercial risks (other than credit and trading (financial market) risk);

(e) recommending to the Board the appointment and removal of the external auditors, reviewing the terms of engagement, and approving the audit plan of the external auditors;

(f) monitoring the effectiveness and independence of the external auditors;

(g) obtaining assurances that the audit is conducted in accordance with the Auditing Standards and all other relevant accounting policies and standards;

(h) providing recommendations to the Board as to the role of the internal auditor/internal audit function, if any;

(i) reviewing and appraising the quality of audits con-ducted by the Company’s external auditors and con-firming their respective authority and responsibilities;

(j) monitoring the relationship between management and the external auditors;

For

per

sona

l use

onl

y

42


(k) evaluating the adequacy, effectiveness and appropri-ateness of the Company’s administrative, operating and accounting control systems and policies;

(l) reviewing and evaluating controls and processes in place to ensure compliance with approved policies, applicable accounting standards, and other require-ments relating to the preparation and presentation of financial results;

(m) overseeing the Company’s financial reporting and disclosure processes and the outputs of that process;

(n) determining the reliability, integrity and effectiveness of accounting policies and financial reporting and disclosure practices;

(o) reviewing (in consultation with management and external auditors) the appropriateness of the ac-counting principles adopted by management in the composition and presentation of financial reports and approving all significant accounting policy changes.

The Company’s Audit and Risk Management Committee Charter is available on the Company’s website at www.blighmining.com.au.

6.5.7 Continuous disclosure obligations

The Company is a “disclosing entity” for the purposes of Part 1.2A of the Corporations Act. As such, it is subject to regular reporting and disclosure obligations, which require it to disclose to ASX any information that it is or becomes aware of concerning the Company and that a reasonable person would expect to have a material effect on the price or value of the securities of the Company.

Consequently, the Company has adopted a continuous disclosure policy in order to comply with its continu-ous disclosure obligations under the Listing Rules. In addition to the ongoing role of monitoring information for continuous disclosure purposes, the Board formally considers this issue at each board meeting to ensure ongoing compliance. All information disclosed to ASX is available on the ASX website free of charge and is also posted on the Company’s website as soon as practicable after it is disclosed to the ASX.

6.5.8 Identification and management of risk

The Company has a risk management program that is re-viewed by the Audit and Risk Committee and approved by the Board. The program is designed to ensure risks (strategic, operational, legal, reputational and financial) are identified, assessed, addressed and monitored to enable the Company to achieve its business objectives.

The Board’s collective experience will enable accurate identification of the principal risks that may affect the Company’s business. Key operational risks and their management will be recurring items for deliberation at Board meetings.

A full copy of the Company’s Risk Management Policy is available on the Company’s website at www.blighmining.com.au.

6.5.9 Departure from ASX Corporate Governance Principles and Recommendations

The following addresses the areas where the Company has departed from the ASX Principles. Where the Company’s corporate governance practices do not cor-relate with the ASX Principles, the Company is working towards compliance; however, it does not consider that all practices are appropriate for the Company owing to the size and scale of the Company’s operations. The Board is of the view that, with the exception of the departures from the ASX Principles as set out below, it otherwise complies with all of the ASX Principles.

Principle 1—Lay solid foundations for management and oversight

Recommendation 1.2—Companies should disclose the process for evaluating the performance of senior executives.

The Board has not established a separate nomination committee. In the absence of a formally constituted nomination committee, the full Board is responsible for the proper oversight of the Board, the Directors and senior management. The Board considers that given its size, no efficiencies or other benefits would be gained by establishing a separate committee.

For

per

sona

l use

onl

y

43


Recommendation 2.4—The board should establish a nomination committee.

The Board’s view is that the Company is not cur-rently of the size to justify the formation of a separate nomination committee. The Board currently performs the functions of a nomination committee and where necessary will seek the advice of external advisors in relation to this role. The Board shall, upon the Com-pany reaching the requisite corporate and commercial maturity, approve the constitution of a nomination committee to assist the Board in relation to the appoint-ment of Directors and senior management.

Principle 4—Safeguard integrity in financial reporting

Recommendation 4.2—The audit committee should be structured so that it:

• consists only of non-executive Directors

• consists of a majority of independent Directors

• is chaired by an independent chair, who is not chair of the board, and

• has at least three members.

Given the size and composition of the current Board of the Company, the constitution of the Company’s Audit and Risk Management Committee does not comply with the requirement to consist only of non-executive Directors as contained in Recommendation 4.2.

Although the Company does not presently comply with this Recommendation 4.2, the Company may consider appointing further non-executive Directors in the future, at which time it may reconsider the composition of the Audit and Risk Management Committee. The Company believes that given the size and scale of its operations, non-compliance by the Company with this Recommen-dation 4.2 will not be detrimental to the Company.

Principle 8—Remunerate fairly and responsibly

A guideline associated with Recommendation 8 recommends that non-executive Directors should not receive Options.

The Board considers that the issue of Director Options to certain non-executive Directors may be appropriate and is unlikely to adversely affect their independence. The issue of Director Options enables the Company to provide adequate remuneration to attract and retain experienced Directors without drawing on additional cash reserves of the Company.

Recommendation 8.2—Companies should clearly distinguish the structure of non-executive Direc-tor’s remuneration from that of executive Directors and senior executives.

The Board, in the absence of a formally constituted remuneration committee, is responsible for reviewing the remuneration policies and practices of the Company in respect of executive and non-executive remuneration packages and incentives.

For

per

sona

l use

onl

y

For

per

sona

l use

onl

y

45


AL MAYNARD & ASSOCIATES Pty Ltd

Consulting Geologists www.geological.com.au (ABN 75 120 492 435)

9/280 Hay Street, Tel: (+618) 9388 1000 Mob: 04 0304 9449 SUBIACO, WA, 6008 Fax: (+618) 9388 1768 [email protected] Australia

Australian & International Exploration & Evaluation of Mineral Properties

INDEPENDENT GEOLOGICAL REPORT

Prepared for Inclusion in the Prospectus for

BLIGH MINING (HOLDINGS) PTY LTD

Prepared by: B.J. Varndell BSc(Spec Hons Geol) FAusIMM A.J. Maynard BAppSc(Geol), MAIG, MAusIMM Date: 9th November 2012 F

or p

erso

nal u

se o

nly

46

Bligh Mining – Independent Geological Report

Bligh Mining Ltd 2012IGR Contents Page 1

EXECUTIVE SUMMARY

Bligh Mining (Holdings) Pty Ltd (“Bligh”) is a private company that has requested this Independent Geological Report (“IGR”) on ground that is covered by tenements in three major regions in Indonesia. Following completion of the acquisition and recompliance of Bligh Mining Limited upon listing on the Australian Securities Exchange (“ASX”), Bligh will operate one project in Flores, 20 in Timor and two in Sulawesi (Fig 1). The company intends to explore the project areas for manganese, gold and base metals. The Bligh tenement portfolio includes 20 concessions in Timor, one concession in Flores and two concessions in Sulawesi covering a total of 84,859ha.

Bligh is an Australian based minerals exploration company holding rights to prospective concessions in Indonesia for manganese, base metals and precious metals as part of its objective to become a mid-tier resource development company in South East Asia through acquisitions and development.

The tenements held by Bligh are located in Flores, West Timor and Sulawesi for manganese in West Timor, and include the potential of gold, copper, lead and zinc deposits in Flores and Sulawesi.

This report is prepared in accordance with the required definitions as an Independent Geological Report (“IGR”) for the purpose of being included in a prospectus to be issued by Bligh for an Initial Public Offering (“IPO”) on the Australian Securities Exchange (“ASX”) and outlines the geology and the potential for mineralisation within the Bligh areas of interest.

Flores

The Flores Project area covers a total of 23,010ha in the Sambi Rampas and Elar Sub District, East Manggarai Regency, East Nusa Tenggara Province in the northern parts of Flores Island, Indonesia (Fig 4). It is held by PT Manggarai Manganese (“PT MM”) and Bligh has 85% ownership rights on the IUP that has the potential for discovery of manganese, copper, lead, zinc as well as gold and silver.

A total of four main Prospect Areas have been identified by Bligh, three of which are of primary interest for manganese namely Pebobiar, Cembakloe, and Marabola and a fourth, Pepan, for multi-elements including copper, lead, zinc, gold and silver (Fig 5).

Timor

The geology of the 54,285ha concession areas is mainly of Tertiary age with the Bobonaro Complex and the Ofu Formation comprising the majority of the prospective terrain surveyed. However, older rock sequences are seen in some areas, particularly in the concession areas within the Regency of TTU. Recent work has defined prospective drill targets in the area, with mapping, soil sampling and geophysics programs being completed at the time of this report.

Limited work has been conducted on the three Timor tenement clusters with detailed site visits to only three of the twenty concessions held by Bligh. The initial results demonstrate the presence of medium to high-grade manganese in each of the licences. The observed layers are 10-30cm within reasonably wide zones that reach up to 3m in

For

per

sona

l use

onl

y

47



Bligh Mining Ltd 2012IGR Contents Page 2

total width. Boulder style manganese outcrops have also been identified but further mapping and assaying with associated trenching and drilling is required to fully delineate potential economic manganese deposits.

Sulawesi

The Sulawesi Project area covers a total of 7,564ha in the Donggala and Parigi Regency, Central Sulawesi Province in Sulawesi Island, Indonesia (Fig 29). It is held by PT Charlie Sapa Prima (“PT CSP”) and PT Konstruktor on the IUP that has the potential for discovery of copper, lead, zinc as well as gold and silver.

The geology of the concession areas is mainly of Tertiary age for PT Konstruktor concession with the Tinombo Formation and Celebes Molasse as major units. However, the older rock sequence is Metamorphic Complex with Pre Tertiary ages dominated PT. Charlie Sapa Prima concession area.

There are no initial reports from previous exploration available for those two concessions.

Figure 1: Bligh Indonesian Projects Location Map.

A two year exploration budget range from $1.6M to $3.8M is proposed for all three project areas depending on the total funds raised from a minimum of $2.0M to a maximum of $6.0M.

For

per

sona

l use

onl

y

48


Bligh Mining Ltd 2012IGR Contents ( i )

Contents Page

Executive Summary ........................................................................................................... 1 Preamble ............................................................................................................................. 1 1.0 Indonesia - General ...................................................................................................... 4

1.1 Introduction ................................................................................................................. 4 1.2 Location and Access .................................................................................................. 4 1.3 Tenure ........................................................................................................................ 4 1.4 Geology ...................................................................................................................... 6

1.4.1 Regional Geology of Indonesia. ........................................................................................ 6

2.0 Flores Project ............................................................................................................... 9 2.1 Introduction ................................................................................................................. 9 2.2 Location and Access .................................................................................................. 9 2.3 Tenure ...................................................................................................................... 12 2.4 Local Geology ........................................................................................................... 12 2.5 Mineralisation ............................................................................................................ 13 2.6 Previous Exploration ................................................................................................. 13 2.7 Prospect Areas ......................................................................................................... 17

2.7.1 Pepan Prospect Area ...................................................................................................... 17 2.7.2 Pebobiar Prospect Area .................................................................................................. 20 2.7.3 Cembakloe Prospect Area .............................................................................................. 22 2.7.4 Marabola Cluster Prospect Area ..................................................................................... 22

2.8 Exploration Potential .................................................................................................. 24 2.9 Proposed Exploration Program and Budget. ............................................................ 24

3.0 West Timor Project ............................................................................................... 25 3.1 Introduction ............................................................................................................... 25 3.2 Location and Access ................................................................................................. 25 3.3 Tenure ...................................................................................................................... 31 3.4 Local Geology ........................................................................................................... 31 3.5 Mineralisation ........................................................................................................... 35 3.6 Exploration History ................................................................................................... 35 3.7 Tenement Areas ....................................................................................................... 35

3.7.1 PT Nisso Indonesia Resources (110/KEP/HK/2011), TTS Regency .............................. 35 3.7.2 PT Nisso Indonesia Resources (IUP No.304/2011), TTU Regency ............................... 36 3.7.3 PT Elang Perkasa Kencana (IUP No.303/2011), TTU Regency .................................... 36

3.8 Exploration Potential ................................................................................................. 40 3.9 Proposed Exploration Program and Budget ............................................................. 40

For

per

sona

l use

onl

y

49



Bligh Mining Ltd 2012IGR Contents ( ii )

4.0 Sulawesi Gold Project ............................................................................................... 41 4.1 Introduction ............................................................................................................... 41 4.2 Regional Geology and Structure ................................................................................ 43 4.3 PT Konstruktor Donggala .......................................................................................... 45

4.3.1 Enu Prospect .................................................................................................................. 45 4.3.2 Tibo Prospect .................................................................................................................. 46 4.3.3 Saloya Prospect .............................................................................................................. 46

4.4 PT Charlie Sapa Prima .............................................................................................. 47 4.5 Proposed Exploration Program and Budget ............................................................. 48

5.0 Combined Proposed Work Program and Budget ............................................... 49 6.0 Conclusions .......................................................................................................... 49 7.0 References ............................................................................................................. 50 8.0 Glossary of Technical Terms and Abbreviations ............................................... 51 Appendix 1 Flores Concession Coordinates ................................................................. 54 Appendix 2 Timor Island Concession Coordinates ...................................................... 56 Appendix 3 Sulawesi Concessions Coordinates .......................................................... 63 Appendix 4 Mining Business Licence (IUPs) ................................................................ 65

List of Figures

Figure 1: Bligh Indonesian Projects Location Map. .................................................................... 2

Figure 2: Tectonic setting of Indonesia. ...................................................................................... 7

Figure 3: Indonesian Regional Geology (Darman & Sidi, 2000). ............................................... 8

Figure 4: Flores Tenement Location with Adjacent Manganese Mine Locations and Outcrop Types. ........................................................................................................................................ 10

Figure 5: Flores Licence Area over Regional Geology with Prospect Areas........................... 11

Figure 6: Flores Key Assay Map and Prospect Area Locations. ............................................. 16

Figure 7: Lower hills of highly altered, brecciated and mineralised volcanics and volcanoclastics. ......................................................................................................................... 17

Figure 8: Satellite image displaying the 4km2 of argillic alteration identified in the Pepan area. ................................................................................................................................................... 18

Figure 9: Channel sampling of intense argillic altered rocks containing disseminated sulphides. .................................................................................................................................. 18

Figure 10: Close up view of a volcanic breccia with intense argillic alteration and disseminated sulphides at Pepan. ............................................................................................ 19

For

per

sona

l use

onl

y

50


Bligh Mining Ltd 2012IGR Contents ( iii )

Figure 11: Close up view of argillic altered tuff with malachite and azurite staining (analysis result of 3.3%Cu). ..................................................................................................................... 19

Figure 12: Manganese outcrop (analysis result of 51.8% Mn). ............................................... 20

Figure 13: Pebobiar manganese outcrop. ................................................................................ 21

Figure 14: Brecciated limestone with strong hematite staining. ............................................... 21

Figure 15: Cembakloe manganese outcrop. ............................................................................ 22

Figure 16: Marabola Cluster manganese outcrop. ................................................................... 23

Figure 17: Marabola basal contact of manganese on limestone. ............................................ 23

Figure 18: Timor Island Concession Areas. ............................................................................. 27

Figure 19: Timor Island; Concession Areas located within the Kabupaten of Kupang. .......... 28

Figure 20: Timor Island; Concession Areas Located Within the Kabupaten of TTS. .............. 29

Figure 21: Timor Island; Concession Areas Located Within the Kabupaten of TTU. .............. 30

Figure 22: Timor Island Regional Geology with Kupang Tenement Areas. ............................ 32

Figure 23: Timor Island Regional Geology with TTS Tenement Locations. ............................ 33

Figure 24: Timor Island Regional Geology with TTU Tenement Locations. ............................ 34

Figure 25: PT Nisso Indonesia Resources (110/KEP/HK/2011 - TTS) concession manganese outcrop. ..................................................................................................................................... 36

Figure 26: PT Nisso Indonesia Resources (IUP No.304/2011 - TTU) concession manganese outcrop in a pit. .......................................................................................................................... 37

Figure 27:Timor Island TTS Cluster Manganese Highlight Assays. ........................................ 38

Figure 28: Timor Island TTU Cluster Manganese Highlight Assays. ...................................... 39

Figure 29: Location map showing the two concession areas of Konstruktor and Charlie in Central Sulawesi. ...................................................................................................................... 42

Figure 30: Regional published geology of the concession area. ............................................. 44

Figure 31: Geology and prospect areas defined in the Konstruktor concession area. ........... 45

Figure 32: Trench plan, completed and in progress, showing the geological interpretation and the mineralised intercepts recorded. ........................................................................................ 47

For

per

sona

l use

onl

y

51



Bligh Mining Ltd 2012IGR Contents ( iv )

List of Tables Table 1: Flores Tenement Details. ............................................................................................. 5

Table 2: Timor Tenement Details. .............................................................................................. 6

Table 3: Sulawesi Tenement Details. ......................................................................................... 6

Table 4: Highlight Assay Values from the Flores Concession Area. ....................................... 15

Table 5: PT MM Project Proposed Exploration Budget. .......................................................... 25

Table 6: Timor Project Proposed Exploration Budget. ............................................................. 41

Table 7: Sulawesi Project Proposed Exploration Budget. ....................................................... 48

Table 8: Exploration Budgets for Two Year Plan. ................................................................... 49

For

per

sona

l use

onl

y

52


Bligh Mining 2012 -IGR – AM&A Page 1

The Directors, 5th November, 2012 Bligh Mining Pty Ltd, Level 10, 84 Pitt Street, Sydney, NSW, 2000.

Dear Sirs,

PREAMBLE

At your request Al Maynard and Associates (“AM&A”) has prepared this IGR on the mineral assets that Bligh Mining Pty Ltd (“the Company” or “Bligh”) either owns outright or holds an interest in the properties. The tenements are located in Flores, Timor and Sulawesi, Indonesia.

This IGR has been prepared in accordance with the Code and Guidelines for Assessment and Valuation of Mineral Assets and Mineral Securities for Independent Expert Reports (“Valmin Code”), the Joint Ore Resources Committee (“JORC”) Code and Guidelines for reporting on mineral exploration results and ore resources and the rules and guidelines relating to Independent Expert Reports set by the Australian Securities and Investments Commission (“ASIC”) and the ASX.

No estimates of the quantum of mineralisation associated with the projects have been generated prior to the introduction of the JORC Code guidelines for the reporting of identified mineral resources and ore reserves; neither have any recent estimates been undertaken. While we consider that estimates of target mineralisation provide a reasonable reflection of the quantum and grade of mineralisation, there is no guarantee that future classification will occur in the short term or at all. More details are provided below.

This report has been prepared for inclusion in a Prospectus to be issued by Bligh dated on or about 9th November, 2012 offering for subscription 20,000,000 Shares at $0.30 each to raise $6,000,000.

This report has been prepared by Allen J. Maynard and Brian J. Varndell.

Allen J. Maynard is the Principal of AM&A, a qualified geologist, a Member of the Australasian Institute of Mining & Metallurgy (“AusIMM”) and a Member of the Australian Institute of Geoscientists (“AIG”). He has over 30 years’ experience in mineral exploration and evaluation and more than 25 years’ experience in mineral asset valuation.

Brian J. Varndell B.Sc.(Spec Hons Geol) is an associate of AM&A, a qualified geologist and a Fellow of the AusIMM. He has more than 40 years’ experience in mineral exploration, resource and reserve calculation and the evaluation of mineral properties.

Neither the authors of this report nor any of their associates or employees have any material interest either direct, indirect or contingent in Bligh nor in any of the mineral assets included in this report nor in any other Bligh asset nor has any such interest existed previously. No commercial relationship has existed between AM&A and Bligh prior to their appointment to prepare this Report.

For

per

sona

l use

onl

y

53




AM&A has had no input into the formulation of any of the mineral tenements under review. This geological report has been prepared by AM&A strictly in the role of an independent consulting geologist.

The present status of tenements listed in this report is based on information provided by Bligh and the report has been prepared on the assumption that the tenements will prove lawfully accessible for evaluation and development.

Bligh has warranted to AM&A that full disclosure has been made of all material information in its possession or knowledge and that such information is complete, accurate and true. None of the information provided by Bligh has been specified as being confidential and not to be disclosed in our reports.

As recommended by the Valmin Code Bligh has indemnified AM&A for any liability that may arise from AM&A’s reliance on information provided by Bligh or not provided by Bligh.

Fees for the preparation of this report are being charged at normal commercial rates with expenses being reimbursed at cost. Payment of fees and expenses is in no way contingent upon the conclusions of these documents, nor on the outcome of the proposed listing of Bligh.

Site visits have been made to some of the project areas in the recent past for a previous client and Mr Varndell completed a site visit to the Sulawesi concession areas in August 2012. Information used in the preparation of this report has been derived from technical information provided by Bligh and other publicly available data.

The authors are generally familiar with the various geological settings and styles of mineralisation and combined with the technical data available are able to make informed comments on the project areas.

For the purpose of Sections 731 to 733 of the Corporations Law, AM&A were involved in the preparation of the IGR included in this Prospectus, and have authorised or caused the issue of this part of the Prospectus only. AM&A has given consent in writing to the issue of the Prospectus with IGR included in the form and context it was provided and has not withdrawn that consent before the lodgement of the Prospectus with ASIC.

We are of the opinion that:

Bligh has satisfactory and clearly defined exploration and expenditure programs which are reasonable having regard to the stated objectives of the Company; and

Sufficient exploration work has taken place in the past two years to justify the budgeted exploration and expenditure program.

Bligh’s exploration programs are included in this report and have been phased over two years, but they may be altered in view of results gained which could revise the emphasis of current priorities.

AM&A observes Section 947B of the Corporations Act 2001 (Cwlth). In accordance with Corporations Regulation 7.6.01(1)(u) and Corporations Amendment Regulations 2003 (No. 7) 2003 No. 202, this IGR is not financial product advice but is intended to provide investors with expert opinion on matters relevant to an investment in the Company. Allen

For

per

sona

l use

onl

y

54



J Maynard and AM&A are not operating under an Australian financial services licence and the advice in this IGR is an opinion on matters other than financial products and does not include advice on a financial product.

Yours faithfully,

Allen J. Maynard BAppSc(Geol), MAIG, MAusIMM.

For

per

sona

l use

onl

y

55




1.0 INDONESIA - GENERAL

1.1 Introduction

Bligh is an Australian based minerals exploration company holding rights to prospective concessions in Indonesia for manganese, base metals and precious metals as part of its objective to become a mid-tier resource development company in South East Asia through acquisitions and development.

The tenements held by Bligh are located in Flores, West Timor and Sulawesi covering 54,285ha for manganese in West Timor, 23,010ha in Flores and 7,564ha in Sulawesi including the potential of gold, copper, lead and zinc deposits.

This report is prepared in accordance with the required definitions as an Independent Geological Report for the purpose of being used for a prospectus to be issued by Bligh for an Initial Public Offering (“IPO”) on the ASX and outlines the geology and its potential for mineralisation in the Bligh areas of interest.

1.2 Location and Access

The Flores tenement located in the north western coastal parts of Flores, in the Sambi Rampas and Elar Sub District of the East Manggarai Regency, East Nusa Tenggara Province, is accessed via Reo to Pota. Pota is reached by driving from either Ruteng or Labuan Bajo taking 4 hours or 9 hours respectively with regular flights from Jakarta to Labuan Bajo or Ruteng.

Bligh has three main clusters of manganese tenements in Timor Island, accessed via regular flights from Jakarta to Kupang. The closest cluster, located in the Kupang Regency, is accessed via sealed roads and takes 2 hours. The second cluster, further to the east of Kupang, in the Timor Tengah Utara Regency takes 3 to 4 hours by driving. The third cluster, located in the Timor Tengah Selatan Regency to the northeast of Kupang takes 4 to 5 hours from Kupang.

The Sulawesi tenements can be reached using commercial airlines to the provincial capital of Palu in approximately 3 hours from Jakarta. From Palu, the PT Konstruktor Donggala concession can be reached by vehicle in 1 hour and the PT Charlie Sapa Prima concession area in 2.5 hours via asphalt roads.

1.3 Tenure

During February 2009, Indonesia’s new Law 4/2009 on Mineral and Coal Mining came into effect, replacing Mining Law No. 11/1967. Under the previous Indonesian national law, the mid-tier companies involved in the activities of mineral exploration, development and production are primarily regulated by the Kuasa Pertambangan (“KP”). A SKIP is issued upon application and allows for initial survey for a two month period. The KP is issued over a specific area with separate permits granted for each of the five stages of operation, as following:

General survey - 2 years Exploration - 3 to 5 years renewable

For

per

sona

l use

onl

y

56



Exploitation (mining) - up to 30 years Processing and refining, transport and sale.

The New Mining Law, which was implemented in February, 2009, provides that KP authorisations will be collapsed into a single form of mining right, known as an Ijin Usaha Pertambangan (“IUP”) within a set timeframe. The IUP license is a legally binding agreement that appoints the investor (foreigner/national) as exclusive contractor for a specified area. The first issue is the Exploration IUP, which authorises activities from general survey exploration through to mining feasibility. For manganese the maximum period that an Exploration IUP can be held is eight years. With the grant of the first permit, the company has the automatic right to a second permit issue that allows for commercial mining and production. This second permit, Production IUP, is valid for 20 years with two 10 year extensions.

Bligh has the right to earn 85% in one exploration IUP in Flores, through an agreement with PT Manggarai Manganese (“PT MM”), with license details listed in Table 1 for the largest single tenement in the Manggarai Region, Flores covering 23,010ha with corner coordinates listed in Appendix 1.

Tenement Number Current Holder Bligh % Granted Expiry Area (ha)

HK/109/2009 PT Manggarai Manganese 85 07-Dec-2009 07-Dec-2013 23,010

Table 1: Flores Tenement Details.

Bligh has the right to twenty exploration IUP licenses in Timor covering 44,920ha clustered in three Regencies; Kupang with 15,516ha, Timor Tengah Selatan “(TTS”) with 14,920ha and TTU with 14,484ha. These licences are located in West Timor, Nusa Tenggara Timor Province, Indonesia (refer to Figure 18).

Bligh has entered into an agreement with the Elang Group (“EG”) to acquire up to 90% of the manganese concessions through its Indonesian subsidiary company PT Endeavour Resources NTT (“ER”) with 51% upon IPO. The licences are defined in Table 2 and Appendix 2.

Full details of these legal relationships are presented elsewhere in this Prospectus.

Company IUP Number IUP Issued

IUP Expiry Regency Area

(Ha)

PT. ELANG PERKASA KENCANA RESOURCES

IUP No. 743/KEP/HK/2011 8-Nov-11 8-Nov-14 KUPANG 2,000

PT. ELANG PERKASA KENCANA RESOURCES

IUP No. 744/KEP/HK/2011 8-Nov-11 8-Nov-14 KUPANG 2,000

PT. ELANG PERKASA KENCANA RESOURCES IUP No. 259 Thn 2011 27-May-11 27-May-13 T.T.U 2,017

PT. ELANG PERKASA KENCANA RESOURCES IUP No. 293 Thn 2011 27-May-11 27-May-13 T.T.U 864

PT. ELANG PERKASA MINING IUP No. 748/KEP/HK/2011 8-Nov-11 8-Nov-14 KUPANG 1,950

PT. ELANG PERKASA MINING IUP No. 747/KEP/HK/2011 8-Nov-11 8-Nov-14 KUPANG 2,000

For

per

sona

l use

onl

y

57




PT. ELANG PERKASA MINING IUP No. 301 Thn 2011 27-May-11 27-May-13 T.T.U 1,995

PT. ELANG PERKASA KENCANA IUP No. 746/KEP/HK/2011 8-Nov-11 8-Nov-14 KUPANG 2,000

PT. ELANG PERKASA KENCANA IUP No. 745/KEP/HK/2011 8-Nov-11 8-Nov-14 KUPANG 2,000

PT. ELANG PERKASA KENCANA IUP No. 44/KEP/HK/2011 29-Mar-11 29-Mar-16 T.T.S. 5,000

PT. ELANG PERKASA KENCANA IUP No. 303 Thn 2011 27-May-11 27-May-13 T.T.U 2,021

PT. ELANG PERKASA KENCANA IUP No. 297 Thn 2011 27-May-11 12-May-13 T.T.U 1,427

PT. NISSO INDONESIA RESOURCES IUP No. 110/KEP/HK/2011 14-May-2011 14-May-2016 T.T.S. 4,920

PT. NISSO INDONESIA RESOURCES IUP No. 300 Thn 2011 27-May-11 27-May-13 T.T.U 2,245

PT. NISSO INDONESIA RESOURCES IUP No. 304 Thn 2011 27-May-11 27-May-13 T.T.U 1,739

PT. ELGARY RESOURCES IUP No. 749/KEP/HK/2011 08 Nov 2011 8-Nov-14 KUPANG 1,650

PT. ELGARY RESOURCES IUP No. 299 Thn 2011 27-May-11 27-May-2013 T.T.U 934

PT. ORIENTAL PRATAMA STEEL Refer to legal opinion, Attachment Two, 1.2 T.T.S. 13,920

PT. ORIENTAL PRATAMA STEEL IUP No.295 Thn 2011 27-May-11 27-May-2013 T.T.U 1,864

PT. ELANG PERKASA RESOURCES INDONESIA IUP No. 296 Thn 2011 27-May-11 27-May-2013 T.T.U 1,739

Total 54,285

Table 2: Timor Tenement Details.

Bligh (through its subsidiary PT Golden Castle Resources) has entered into a Sales and Purchase Agreement to purchase 99% of the PT Charlie Sapa Prima IUP, whilst for the PT. Konstruktor Donggala IUP, Bligh (through its subsidiary PT Golden Castle Resources) has entered into a Sales and Purchase Agreement to purchase 49% of the IUP. The concession areas total 7,564ha, which are prospective for gold, silver and copper. The concession areas are located within the Regencies of Parigi Moutong and Donggala in the province of Central Sulawesi. The concession details are outlined in Table 3 and further details regarding the legality of these concessions is outlined in the Legal report contained within this prospectus.

Tenement Number Current Holder Bligh % Granted Expiry Area (ha)

540/0262/DESDM PT Charlie Sapa Prima 90 28-Jan-2010 28-Jan-2018 5,280

188.45/0298/DESDM/2012 PT Konstruktor Donggala 49 23-May-2012 23-May-2014 2,284

Total 7,564

Table 3: Sulawesi Tenement Details.

1.4 Geology

1.4.1 Regional Geology of Indonesia.

Indonesia is the largest archipelago in the world, comprising five major islands and 300 smaller island groups. There are over 18,000 islands in total; of which 6,000 are inhabited; with islands formed over the past 300 million years by reassembly of fragments rifted from the Gondwana supercontinent. The archipelago is situated where the Pacific and Indian

For

per

sona

l use

onl

y

58



Oceans join. Tectonically, the country is bounded by the south-eastern extension of the Eurasian Plate, to the south and west by the Indian Ocean Plate and to the east by the Philippine Sea and Pacific Plates characterised by intense seismic activity and volcanism (Fig 2 & 3).

The margins of these Plates are colliding, resulting in the consumption of plates along subduction zones, the creation of volcanic arcs and formation of compressional and oblique slip structures.

The physiographic setting of the Indonesian archipelago is dominated by two continental shelves. The Sunda Shelf lies to the west and the Sahul Shelf lies to the east, separated by a geologically complex region of deep sea basins and island arcs. The Banda Arc, a west facing horse-shore shaped arc in eastern Indonesia, defines the locus of the three converging and colliding major plates. Splinters of the Mesozoic southern Tethyan crust now form the base of the Banda Sea and on the surrounding islands, dismembered ophiolites can be found in high mountains. The Banda Terrane is regard as a dismembered, high level nappe consisting of forearc basin and volcanic arc lithologies.

During the early mid Miocene period, a volcanic island arc of basaltic volcanoes emerged as a result of the subduction of part of the Pacific oceanic plate beneath the Eurasian continental plate. Pillow lavas on Timor represent a late stage of this volcanism. Sedimentation in restricted offshore and onshore basins gave rise to calc-arenites and marls. During the late Miocene, a new period of volcanism commenced with magmas of andesitic composition. Eruptions were violent, with large blocks and lapilli-crystal lithic tuffs being ejected and falling into onshore and offshore sedimentary basins.

Figure 2: Tectonic setting of Indonesia.

For

per

sona

l use

onl

y

59




Fringing coral reefs began to form in the early Pliocene period, to be followed by a major event in Indonesia geological history, namely the reaction between the Indian, Pacific and Eurasian plates. Uplift of at least 300m occurred and the orientation of the outcrops of the district was set with NW trending and shallow NE dipping beds. These landforms have been recently modified by Quaternary erosion.

Western Indonesia is largely underlain by continental crust transitioning to an arc while ophiolitic crust dominates in the eastern parts. The current day geology of Indonesia is mainly the result of Cainozoic subduction and collision at the Eurasian subduction margin.

The Banda Arc, located in the eastern parts of Indonesia, comprises a complex of the converging and colliding major plates and is regarded as being formed from Miocene intrusions and volcanic rocks emerging as a result of the subduction of the Pacific Ocean plate under the Eurasian continental plate resulting in the islands of Flores and Timor. Sedimentation in restricted offshore and onshore basins gave rise to calcarenites and marls with a reinitiated period of volcanism and intrusives in late Miocene with andesitic magma and diorites and extensive tuffs deposited in the sedimentary basins. Coral reef building in the early Pliocene was followed by a major uplift of more than 300m causing outcrops in northwestern trending and northeasterly dipping beds with subsequent Quaternary erosion and tectonic activity (Charlton, 2002).

Due to the Banda Arc’s structural complexity there are several alternative theories attempting to explain the tectonic and formational theory such as the imbricate model (Fitch & Hamilton, 1974; Hamilton, 1979); the rebound model (Chamalaun & Grady, 1978); and the obduction model (Sopaheluwakan, 1991).

Figure 3: Indonesian Regional Geology (Darman & Sidi, 2000).

For

per

sona

l use

onl

y

60



2.0 FLORES PROJECT

2.1 Introduction

The Flores Project area covers a total of 23,010ha in the Sambi Rampas and Elar Sub District, East Manggarai Regency, East Nusa Tenggara Province in the northern parts of Flores Island, Indonesia (Fig4). It is held by PTMM where Bligh has 85% ownership rights on the IUP that has the potential for manganese, copper, lead and zinc as well as gold and silver.

A total of four main Prospect Areas have been identified by Bligh, three of which are of primary interest for manganese namely Pebobiar, Cembakloe, and Marabola and a fourth, Pepan, for multi elements including copper, lead, zinc, gold and silver (Fig 5).


The project area can be accessed by daily commercial flights from Jakarta via Denpasar to Labuan Bajo taking about 2 hours and 1.5 hours respectively. Travel by road from Labuan Bajo takes about 9 hours to the Pota district. An alternative route is to fly via Surabaya or Denpasar from Jakarta to Kupang taking about 4 hours, and then fly south to Bejawa in about 1.5 hours and then by road to Pota in about 7 hours.

Pota, located within the tenement area at 120° 45’ 53.28”E and 8° 20’ 17.57”S is approximately 1,550km east of Jakarta (Fig4). Pota is close to the coast and an existing road network makes it a favourable shipping location after the construction of a private port; however initially shipping in small quantities from Pota is possible.

The climate is tropical to semi-arid, with a distinct wet season normally between November and March and a dry season between April and October where rainfall is sparse with high evaporation rates.

The tenement area comprises lowland near the coast typically used for subsistence agriculture passing inland to rolling hills with moderate to high slopes comprising natural vegetation including bushes and small trees. The area is cut by gullies and large run-off creeks flowing in a southern to northerly direction and discharging into the north Flores Sea (Fig 4).

PT Istindo Mitra Perdana and PT Tribina operate manganese mining concessions to the west of the concession area, currently using a low technology production process that employs a crusher followed by manual sorting of the manganese (Fig 4). The former commenced production of up to 40,000 tpa, which was exported to China. Recent exports in 2011 were reportedly periodically shipped in 16,000t vessels. The stated mineable reserves are 1.3Mt. PT Tribina has reportedly exported about 270,000t in 90,000t vessels and existing resources in their Soga and Bonewangka Prospects could be about 180,000t. F

or p

erso

nal u

se o

nly

61


Blig

h M

inin

g –

Inde

pend

ent G

eolo

gica

l Rep

ort

Blig

h M

inin

g 20

12 -I

GR

– A

M&

A

Pa

ge 1

0

Figu

re 4

: Flo

res

Tene

men

t Loc

atio

n w

ith A

djac

ent M

anga

nese

Min

e Lo

catio

ns a

nd O

utcr

op T

ypes

.

For

per

sona

l use

onl

y

62

Blig

h M

inin

g –

Inde

pend

ent G

eolo

gica

l Rep

ort

Blig

h M

inin

g 20

12 -I

GR

– A

M&

A

Pa

ge 1

1

Figu

re 5

: Flo

res

Lice

nce

Are

a ov

er R

egio

nal G

eolo

gy w

ith P

rosp

ect A

reas

.

For

per

sona

l use

onl

y

63




2.3 Tenure

Tenure has been described in Section 1.3 above.

2.4 Local Geology

The geology of the PT MM concession is dominated by the Bari Formation, comprising alternating layers of limestone and sandy limestone units, shallowly dipping with up to 1,200m in thickness. To a lesser extent Kiro volcanic breccia zones and andesitic volcanics are present over the eastern parts of the license area. Normal faults are oriented in an east-west direction, originating from Middle Miocene and Miocene-Pliocene time. Folds, when observed, are trending in a northeast- southwest direction and dipping 10-25°.

The main geological formations present in the vicinity of the PTMM concession area include (Fig 5):

Intrusive – Quartz Diorite (Tmd): Greenish grey, medium to coarse grained, silicified, mafic minerals and feldspars altered to chlorite and sericite-calcite respectively. Consists of andesitic, basaltic and granitic pebbles and gravels, sand mud and silt deposited in fluvial and coastal environments.

Laka Formation (Tmpl): Tuff interbedded with tuffaceous sandstone, and local intercalations of calcareous sandstone. Tuff is greenish white, fine to coarse grained, dense. Contains fossils indicating a Late Miocene age and deposition in a sub-littoral environment with thickness of 750-1,000m. This formation is interfingering with the Waihekang Formation and is unconformably overlain by the old volcanic unit.

Bari Formation (Tmb): Alternating layers of limestone with sandy limestone; locally with intercalation of calcareous limestone. The limestone is white-grey, slightly compact to compact, and contains numerous fossils indicating a Middle Miocene age and a littoral depositional environment. The thickness of the formation is estimated to be 1200m. This formation is overlain conformably by the Waihekang Formation and the Laka Formation.

Nangapanda Formation (Tmn): Sandstone and limestone with local lenses of marl and breccia. Sandstone is fine to coarse grained with andesite and basalt clasts. Limestone is grey, hard and compact. Fossils indicate a Middle Miocene age and a neritic depositional environment. Presumed to interfinger with the Kiro Formation and is estimated to be 2,000m thick.

Kiro Formation (Tmk): Breccia, tuff and lava, with intercalation of tuffaceous sandstone. Breccia has andesite and basalt clasts and can show alteration including silicification, and magnetite and manganese deposition. Lavas can be of andesitic, basaltic or trachytic composition – light greenish grey to black. The unit interfingers with the Bari and Nangapanda Formations, and is unconformably overlain by the Waihekang Formation.

For

per

sona

l use

onl

y

64



2.5 Mineralisation

Based on previous work conducted in the area the concession has potential for mineral resources including manganese, base metals including copper, zinc and lead and the precious metals gold and silver.

The manganese mineralisation found within the Bari Formation across the area is also present at the neighbouring mines that have a similar structural and depositional setting. Most of the manganese observed is reddish black in colour and contains hematite and goethite and oxides in the form of brecciated limonite and manganese replacement in limestone. At some locations float manganese contains silica with brecciated and chlorite alteration.

Manganese outcrops have been located in the Cembakloe Region and at multiple locations near Marabola Village where one outcrop has a strike length greater than 27msplit into one 15mlong and another 12mlong section with thickness between 1.2-1.5m.Extensive manganese float has been found 500m to the east and 100m to the west of this outcrop zone. Other areas of manganese float are found in the Pebobiar and Kemp village areas. The assay results of the manganese samples in these areas ranges from a low of 0.02% to a high of 52.05% Mn.

Open pit outcrops at the PT Goodearth Property, located close to the west of the concession shows mineralisation to be broadly layered and irregularly dipping. The manganese quality at the mine is reputed to be increasing with depth below 10-15m to values between 15 and 44%Mn (Bligh field personnel comment).

The manganese mineralisation is interpreted as being similar to that of the Woodie Woodie deposit located in the Pilbara region of Western Australia which is a limestone-dolomite hosted replacement style. Brecciation textures within the limestone margins indicate areas of structural activity that may have provided favourable mineralised depositional sites or remobilisation zones. Further detailed investigation is required to determine the manganese mineralisation styles and consequential additional manganese targets.

The mineralisation in the eastern parts around the Pepan Prospect is indicative of distinct mineralisation models including:

a high sulphide intrusion model, associated with a potential porphyry intrusive with a possibility of an epithermal overprint as detected in other regions

and/or direct emplacement of sulphide mineralisation in association with felsic volcanics

precipitates from sea water

The large amounts of breccia zones identified in the outcrops suggest a possible intrusive relationship.

2.6 Previous Exploration

Previous exploration within the concession area is limited to 2008 when Liberty Resources Ltd appointed PT Arbico to conduct a reconnaissance survey focusing mainly on the

For

per

sona

l use

onl

y

65




economic potential of the manganese deposits in the eastern parts of the license area and also on altered or visibly mineralised lithologies by using rock chip sampling and assay for gold, silver and base metals.

The main result from this survey was the identification of the Pepan, Lijun and Pebobiar prospect areas, characterised by anomalous values related to alteration in volcanics and breccias including silicification and argillic-pyrite systems. Some samples also had strong hematite alteration. The highest values identified in the PT Intertek assays for the prospect areas were:

Mn 52.05% Zn 40.3% Cu 3.33% Ag 105g/t Au 0.9g/t Mo 100ppm Pb 4.2%

In January – February 2010 PT Arbico followed up with an infill sample program to assess the known manganese occurrences and gain further geological control in the identified prospect areas. A total of 296 rock chip samples were taken and analysed by PT Intertek returning values of manganese between 30.02-58.75% at the Pepan Prospect and ferruginous manganese veins with 5.21-11.6% Mn and also associated with zinc from 5.89-42.00%, copper from 1.88-3.33%, silver from 38.4–105.0g/t and gold 0.52-0.9g/t.

The Pebobiar Prospect returned manganese values between 13.82-30.02% and ferruginous manganese veins with 0.04-11.60% Mn that are also associated with 0.28% Zn, 1.07% Cu and 14g/t Ag. The Lijun Prospect was identified from ferruginous manganese veins with up to 0.42% Mn, 0.35% Pb, 42.0% Zn, 1.13% Cu, 42.7g/t Ag and gold of 0.5g/t Au.

Between May and October 2011, CSA Global was appointed by Bligh to conduct a follow up reconnaissance survey that identified an extension of the Kiro Formation volcanics over a larger area from the Kembo village in the north across and beyond the Pepan Prospect area to the south. This extension is characterised by the anomalous base and precious metal values in the eastern parts of the concession area.

Two regions were delineated hosting manganese outcrop occurrences as the Cembakloe and Marabola Clusters that reconfirmed the manganese potential at Pebobiar. CSA Global also recommended further investigation at the Lijun Prospect to define target areas. In total 27 samples were collected and assayed by PT Intertek with manganese values ranging between 0.06-16.98%. Rock chip and channel sampling was conducted across the Pepan Prospect area with a total of 135 samples analysed for base and precious metals and results ranging between 1.55-1.94% Cu, 1.83-35.6% Zn, 1.83–2.11g/t Au and 32.8–52.9g/t Ag.

In addition 26 samples were taken for petrographic analysis and 4 samples for mineralogical analysis that identified tuff altered by hydrothermal processes. Two samples, PS9 and PS12 also contained chalcopyrite and galena.

For

per

sona

l use

onl

y

66



To date about 70% of the PT MM concession area has been surveyed. The assay highlight values are presented in Figure 6 and Table 3.

No Sample Location Easting Northing Description Mn (%)

Cu (%)

Zn (%)

Au (g/t)

Ag (g/t)

Pb (%)

1MM2RF JRD011

Marapurung's Riv er 266248 9065346

Rock chip f rom 40 cm unif orm black manganese boulder f loat. Showing limonite skins and calcite as

v einlets and disseminations0,52

2MM2RG JRD009 266826 9064921

Rock chip/grab sample f rom unif orm y ellowish, greenish, white outcrop of tuf f aceous rock (3mx6m),

strong malachite and azurite0,03

3MM2RG ANT033

Wae Buntal 266678 9065730Rock grab, tuf f intense argilic silica alteration,

whitish grey f ine to coarse grained, limonitic with sphalenite and chalcopy rite

0,01 0,42 0.52 42.70

4 MM2TS ANTO34F

Wae Buntal 266707 9065669

10 samples f rom rock grabs, taken ev ery 2m ov er 20 mtotal length of trav erse. Unif orm altered rock (tuf f ), greenish y elloe with py rite, sphalerite and

chalcopy rite

0,04 0,40 0.90 105,00

5 MM2RG JRD002D

Padang Khao's Riv er

266874 9064946

Rock grab f rom 2mx6m argilic tif f outcrop. Whitish grey , coarse to f ine grained, limonite on f ractures, disseminated galena, spharelite and chalcopy rite

spotted.

0,04

6 MM2SRG AM022

S. Buntal 266945 9066381 Rhy olitic tuf f , white to reddish, limonitic, quartz v ein with pb

0,02

7 BG01 Cemakloe 239864,59 9078397 Irregular lozenge of white xline calcite in contact with black f inely xline MnO replacement of Lst

0,03

8 BG02 Cemakloe 239864,59 9078397Orange brown limonite alteration xone adjacent to MnO alteration of f ine grained lst host with calcite

inclusions0,06

9 BG03 Cemakloe 239864,59 9078397 0,03

10 BG04 Cemakloe 239864,59 9078397 0,1111 BG05 Cemakloe 239861 9078433 0,06

12 CP007 Pebobiar 262682,09 9068149 0,17

13 CP012 Pebobiar 262688 9068137 Manganese with limestone, reddish black, boulder diameter ± 0,50m, weatgered

0,08

14 CP013 Pebobiar 262685 9068128 Manganese with limestone, reddish black, boulder diameter ±0,70 m, weathered, oxide, carbona

0,09

15 PP021 Pepan 266692,19 9065611 0,02 0,36 2.11 2.11

16 PP022 Pepan 266692,19 9065611 0,02 0,24 1.03 1.03

17 PP029 Pepan 266839,09 9065043 0,02

Table 4: Highlight Assay Values from the Flores Concession Area.

For

per

sona

l use

onl

y

67


Blig

h M

inin

g –

Inde

pend

ent G

eolo

gica

l Rep

ort

Blig

h M

inin

g 20

12 -I

GR

– A

M&

A

Pa

ge 1

6

Fi

gure

6: F

lore

s K

ey A

ssay

Map

and

Pro

spec

t Are

a Lo

catio

ns.

For

per

sona

l use

onl

y

68



2.7 Prospect Areas

2.7.1 Pepan Prospect Area

The Pepan mineralised zone is defined over a rectangular area some 1,500m east-west by 2,500m north-south located in the south eastern parts of the concession area (Fig 6). It is characterised by intense argillic alteration, silicification and sulphide mineralisation associated with felsic volcanic and breccia zones. The major zones of the alteration appear to occur in areas of lower undulating topography. The surrounding steeper hills and ridges that comprise limestone and volcanics are markedly less altered (Fig 7-12).

Key points are:

anomalous zones identified with grades of Au, Ag, Zn and Cu mineralisation channel assays show potential for significant wide zones of Zn mineralisation grades and occurrence of skarn float indicate a potential intrusive nearby

Figure 7: Lower hills of highly altered, brecciated and mineralised volcanics and volcanoclastics.

For

per

sona

l use

onl

y

69




Figure 8: Satellite image displaying the 4km2 of argillic alteration identified in the Pepan area.

Figure 9: Channel sampling of intense argillic altered rocks containing disseminated sulphides.

For

per

sona

l use

onl

y

70



Figure 10: Close up view of a volcanic breccia with intense argillic alteration and disseminated sulphides at Pepan.

Figure 11: Close up view of argillic altered tuff with malachite and azurite staining (analysis result of 3.3%Cu). F

or p

erso

nal u

se o

nly

71




Figure 12: Manganese outcrop (analysis result of 51.8% Mn). 2.7.2 Pebobiar Prospect Area

The Pebobiar Prospect mineralisation is located in the mid-east of the concession area and is defined as a manganese target evidenced by float samples and outcrops taken from the area (Fig 4 to 6). In 2011 CSA Global identified a zone of multiple outcrops over a 100x50m area with the largest extending over 35m with dips<15°and widths of between 0.2-0.8m. The manganese is associated with limonite and potentially hematite alterations with a weak magnetic signature (Fig 13 &14). A contact point between the limestone and volcanoclastics has been defined approximately 30m from the first of five outcrop samples. Sampling in the prospect area has returned values of up to 16.98% Mn.

Key points are:

manganese outcrops and floats defined with quality up to 16.98% distance to existing port of 12km and to the coast 7.4km

For

per

sona

l use

onl

y

72



Figure 13: Pebobiar manganese outcrop.

Figure 14: Brecciated limestone with strong hematite staining.

For

per

sona

l use

onl

y

73




2.7.3 Cembakloe Prospect Area

The Cembakloe Prospect is located in the north western part of the concession area and is identified by the presence of manganese with maximum assay values of 10.54% Mn and the potential for volcanics as defined by chalcopyrite and hydrothermal alteration in the area (Fig 4 to 6 &15).

Key points are:

manganese identified in outcrops over a strike length of 100m with widths of 1.5-2.0m

assay to 10.54% Mn irregular brecciation with replacement alteration existing operating manganese mine close to the location with high grade >40% Mn

and short haul of ~14km to existing port potential for volcanics in the area

Figure 15: Cembakloe manganese outcrop.

2.7.4 Marabola Cluster Prospect Area

The Marabola Cluster of manganese mineralisation is located to the north and west of Marabola village in the mid southeastern part of the concession area (Fig4 to 6). Seven outcrops have been identified by CSA Global to date and additional field work is required since this area was only identified late during the field survey (Fig 16 & 17).

For

per

sona

l use

onl

y

74



Key points are:

seven manganese outcrops defined zones of up to 100m in strike length but typically 12-15m ranging from between 0.4

to 1.5m wide strong association with hematite alteration

Figure 16: Marabola Cluster manganese outcrop.

Figure 17: Marabola basal contact of manganese on limestone.

For

per

sona

l use

onl

y

75




2.8 Exploration Potential

Previous exploration activities that cover about 70% of the concession area, have identified the presence and potential to host economical deposits of manganese, other base metals such as zinc, copper and lead and precious metals gold and silver.

The Pepan Prospect Area mineralisation of precious and base metals has shown association with highly altered brecciated volcanics and volcanoclastics with carbonate rich veins indicative of the in proximity of an intrusive centre where hot acidic metal rich hydrothermal fluids have been active. Further field work is required to establish the type and class of deposit that characterises the Pepan deposit.

The PT MM license area contains analogue lithologies and structural-depositional settings to active manganese mines in the district. Three manganese Prospect Areas have been defined at Cembakloe, Pebobiar and Marabole with outcrops returning assay values associated with high-grade manganese at 52% Mn and manganese veins associated with lower grade manganese and base metal deposits. The local style of manganese mineralisation is interpreted as similar to that of the Woodie Woodie Manganese Mine in Western Australia, which is the fourth largest manganese producer in the world.

Operation costs for manganese mining in the area of interest are low due to the proximity of the coast with deep-water access for off take which provides an incentive for further exploration.

2.9 Proposed Exploration Program and Budget.

The geological and tectonic history of Flores, including the concession area, is complex and thus requires a detailed and consistent staged exploration program to further delineate, quantify and qualify existing Prospect Areas as well as other potential locations not yet traversed or omitted from previous exploration campaigns. It is proposed that the following be conducted in the concession area:

1. Conduct a VTEM study with an airborne magnetic and radiometric program over the entire concession area in order to:

characterise existing Prospect Areas such as the Pepan, Cembakloe, Pebobiar and Marabole

identify other potential intrusives identify potential additional manganese mineralisation with the aid of

magnetics due to its association with altered hematite 2. Conduct geological mapping in the concession area focusing on the defined

Prospect Areas in order to: obtain a detailed geological understanding of the types and size of any

potential mineralisation conduct trenching and pitting in defined Prospect Areas include sampling, trenching and pitting, in areas of interest as a follow up to

the VTEM study depending on its results 3. Satellite image interpretation and Aster Crosta analysis of the Pepan Prospect Area

to define and delineate the lateral extent of the altered volcanic rocks and

For

per

sona

l use

onl

y

76



potentially correlate this to other prospective areas in the concession to identify additional intrusives.

4. Define a drilling program in the Pepan and manganese Prospect Areas at Cembakloe, Pebobiar and Marabole to:

define the manganese mineralisation at depth <50m and its potential lateral extent along and across known outcrop occurrences and to potentially correlate this with the existing producing mines in the proximity to the concession area.

define the potential mineralisation at Pepan to obtain an understanding of the size and shape of the mineralisation

The proposed expenditure for the area is presented below based on the maximum raising of $6.0M. .

ACTIVITY YEAR ONE $000s

YEAR TWO $000s

TOTAL $000s

Data collection and validation 40 0 40 Geological- salaries & consultants 50 30 80 Mapping, geochemistry 80 0 80 Geophysical surveys 125 0 125 Satellite Data collection & Interpretation 75 154 229 Diamond Drilling 0 20 20 Environmental studies 37 30 67 Tenement administration* 15 15 30

Totals 422 249 671

Table 5: PT MM Project Proposed Exploration Budget.

3.0 WEST TIMOR PROJECT

3.1 Introduction

The West Timor project area covers a total area of 54,285ha clustered in three Regencies; Kupang with 13,600ha, Timor Tengah Selatan “(TTS”) with 18,840ha and Timor Tengah Utara (“TTU”) with 21,845ha, all located in West Timor, Nusa Tenggara Timur Province, Indonesia (Fig 18). Bligh has entered into an agreement with the Elang Group (“EG”) to acquire up to 90% of the manganese concessions through its Indonesian subsidiary company PT Endeavour Resources NTT (“ER”).

Geological work to date includes reconnaissance field visits to four of the tenements with a more detailed review at two of the locations.


For

per

sona

l use

onl

y

77




The concessions are clustered together in three main areas on the Timor Island and are all accessed by commercial daily flights from Jakarta to Kupang taking about 4 hours. The climate is mainly of single dry and rainy seasons. Generally the annual rainfall is 1,000-2,000mm per annum with major heavy rainfall during the wet season from November to March.

The Kupang Project cluster area is accessed by road from Kupang to the concession areas and takes about 2 hours, depending on the season, covering a distance of 40-60km. Rabe is within the concession cluster at 124° 1'33.96"E and 10°11'53.92"S and is approximately 1,950km east of Jakarta (Fig 19). The seven concessions are grouped together and are near the south coast that enhances the possibility for potential nearby shipping after the construction of a private port.

The TTS project cluster is situated further to the east of Kupang about 1,960km east of Jakarta near the town of Soe at 124°16'37.56"E and 9°51'37.70"S. Driving to this area takes about 3-4 hours from Kupang. Two of the three are located about 20km from the southern coast of Timor and the other approximately 10-15km (Fig 20). There is a mine operated by SMR Utama, located in the centre of the concessions reportedly producing 35,000tpa in 2010 and with a planned production rate of 50,000tpa from a stated non-JORC resource of 3.78Mt of manganese (SMR Utama, 2012).

The TTU project areas are located to the northern parts of Timor and are approximately 2,000km east of Jakarta and accessed by road from Kupang taking about 4-5 hours depending on the season and accessibility. Two of the licences are located approximately 5-10km west of Halilulik village at 124°52'11.65"E and 9°16’ 80"S approximately 30km from the northern coast of Timor. The other eight tenements are located approximately 15km to the east of Kefamenanu at124°28'16.67"E and 9°26'16.63"S some 10-20km from the northern coast (Fig 21).

The concession areas comprise low land with undulating hills inland with moderate to high slopes, in general elevation is between 200-400masl. Coastal areas are typically used for subsistence agriculture and the inland areas comprise natural vegetation including bushes and small trees.

For

per

sona

l use

onl

y

78

Blig

h M

inin

g –

Inde

pend

ent G

eolo

gica

l Rep

ort

Blig

h M

inin

g 20

12 -I

GR

– A

M&

A

Pa

ge 2

7

Figu

re 1

8: T

imor

Isla

nd C

once

ssio

n A

reas

.

For

per

sona

l use

onl

y

79


Blig

h M

inin

g –

Inde

pend

ent G

eolo

gica

l Rep

ort

Blig

h M

inin

g 20

12 -I

GR

– A

M&

A

Pa

ge 2

8

Fi

gure

19:

Tim

or Is

land

; Con

cess

ion

Are

as lo

cate

d w

ithin

the

Kab

upat

en o

f Kup

ang.

For

per

sona

l use

onl

y

80

Blig

h M

inin

g –

Inde

pend

ent G

eolo

gica

l Rep

ort

Blig

h M

inin

g 20

12 -I

GR

– A

M&

A

Pa

ge 2

9

Fi

gure

20:

Tim

or Is

land

; Con

cess

ion

Are

as L

ocat

ed W

ithin

the

Kab

upat

en o

f TTS

.

For

per

sona

l use

onl

y

81


Blig

h M

inin

g –

Inde

pend

ent G

eolo

gica

l Rep

ort

Blig

h M

inin

g 20

12 -I

GR

– A

M&

A

Pa

ge 3

0

Fi

gure

21:

Tim

or Is

land

; Con

cess

ion

Are

as L

ocat

ed W

ithin

the

Kab

upat

en o

f TTU

.

For

per

sona

l use

onl

y

82



3.3 Tenure

Tenure has been described in Section 1.3 above.

3.4 Local Geology

The geology in the concession areas is mainly of Tertiary age with the Bobonaro Complex and the Ofu Formation comprising the majority of the terrain surveyed (Fig 22 to 24).

The Bobonaro Complex comprises two principal constituents:

scaly clay with a uniform character including slickenside soft surfaces and its colour varies from dark red, greenish, greyish green, brownish red, bluish-grey to pink. Sometimes the clay swells when weathered and displays a ‘popcorn’ fabric. The scaly clay forms a matrix within which exotic blocks derived from older rocks are embedded.

exotic blocks of various sizes that may be micaceous sandstone of the Binase Formation, limestone of the Cablac Formation, chert, ultrabasic rocks, pillow lava and crinoidal limestone of the Maubisse Formation and rocks of the Mutis Complex, the Ofu Formation, Nakfunu Formation and other unidentified formations.

The thickness of the Bobonaro Complex is highly variable, and due to its physical nature is difficult to estimate.

The Ofu Formation comprises deep sea sediments consisting of pink to reddish brown calcilutite, marls and shales with intercalations of yellowish radiolarian chert in the lower part. Variable coloured chert layers (red, brown, orange and greenish yellow) are common in calcilutite. The upper part consists of pink spotted white marl, and white calcilutite.

The Ofu Formation has undergone intense deformation and imbrication. Internal structures such as fracture cleavage and stylolites are well developed in calcilutite. Due to its complicated structure and unexposed basement it is difficult to determine its thickness, estimated to be more than 2,500m.

For

per

sona

l use

onl

y

83


Blig

h M

inin

g –

Inde

pend

ent G

eolo

gica

l Rep

ort

Blig

h M

inin

g 20

12 -I

GR

– A

M&

A

Pa

ge 3

2

Figu

re 2

2: T

imor

Isla

nd R

egio

nal G

eolo

gy w

ith K

upan

g Te

nem

ent A

reas

.

For

per

sona

l use

onl

y

84

Blig

h M

inin

g –

Inde

pend

ent G

eolo

gica

l Rep

ort

Blig

h M

inin

g 20

12 -I

GR

– A

M&

A

Pa

ge 3

3

Figu

re 2

3: T

imor

Isla

nd R

egio

nal G

eolo

gy w

ith T

TS T

enem

ent L

ocat

ions

.

For

per

sona

l use

onl

y

85


Blig

h M

inin

g –

Inde

pend

ent G

eolo

gica

l Rep

ort

Blig

h M

inin

g 20

12 -I

GR

– A

M&

A

Pa

ge 3

4

Figu

re 2

4: T

imor

Isla

nd R

egio

nal G

eolo

gy w

ith T

TU T

enem

ent L

ocat

ions

.

For

per

sona

l use

onl

y

86



3.5 Mineralisation

The manganese mineralisation is primarily found as sedimentary intercalations in carbonates through chemical reaction between hot volcanic ejecta and colder surrounding calcareous environments with sea water precipitating the manganese deposits in the area. Due to continuous sedimentation between the volcanic activities the thicknesses of manganese is of varying lateral and vertical extent.

3.6 Exploration History

Previous exploration within the concession area has been limited until November 2011, except for known artisanal mining activities and selective field visits by EG when a team from Bligh and EG conducted a fact finding and reconnaissance survey focusing mainly on the potential of manganese occurrences in the tenement areas including selective samples from artisanal mining pits and outcrops. Over 30 rock chip samples were taken during mapping of identified outcrops.

Additionally, preliminary surveys visited three concessions early in 2012, namely PT Nisso Indonesia Resources (IUP No.110/KEP/HK/2011), PT Nisso Indonesia Resources (TTU/304/2011), PT Elang Perkasa Mining (TTU/301/2011) and PT Elang Perkasa Kencana (TTU/303/2011 of which PT Elang Perkasa Kencana(TTU/303/2011) was checked in greater detail.

The survey concluded that manganese outcrops occur within a volcanoclastic sedimentary system with evidence of major tectonic activity including folding and faulting. The majority of the mineralisation was found within the Tertiary Bobonaro Complex and the Ofu Formation (Fig 22 to 24).

Recent works have included reconnaissance to semi-detailed mapping in a number of concessions, auger sampling over a manganese occurrence in the tenement cluster in the Regency of Kupang, detailed mapping and geophysical surveys in several areas in the TTU Regency cluster of concessions and the identification of a number of drill targets in these concessions.

3.7 Tenement Areas

3.7.1 PT Nisso Indonesia Resources (110/KEP/HK/2011), TTS Regency

The PT Nisso Indonesia Resources (TTS/110/KEP/HK/2011) tenement is located close to Teas village in Amanuban Selatan.

Key points for this tenement are:

outcrops of manganese observed with one assay of 24.31% Mn and two other assays, outside the northern border of the concession, show values between 54.56-57.82% Mn (Fig 25 & 27)

proximity to the coast for potential shipping after construction of a private jetty.

For

per

sona

l use

onl

y

87




Figure 25: PT Nisso Indonesia Resources (110/KEP/HK/2011 - TTS) concession manganese outcrop.

3.7.2 PT Nisso Indonesia Resources (IUP No.304/2011), TTU Regency

The PT Nisso Indonesia Resources (TTU/304/2011) tenement is located in the northern parts of Timor and approximately 15km west of the Halilulik village, adjacent to the PT Elang Perkasa Kencana (TTU/303/2011) tenement.

Key points for this tenement are:

manganese outcrops identified with three samples returning manganese values between 35.87-46.3% Mn with one sample site inside the tenement of 46.3% Mn(Fig 26&28).

the manganese outcrops have dips between 10-400 striking north- northwest proximity to the coast for off take via existing ports or construction of private jetty

3.7.3 PT Elang Perkasa Kencana (IUP No.303/2011), TTU Regency

The PT Elang Perkasa Kencana (IUP No. 303/2011) tenement is located in the northeastern parts of the Timor approximately 15km west of the Halilulik village.

Key points for this tenement include:

manganese outcrops identified with four samples assaying manganese values between 53.15 to 57.16% Mn. One sample inside the tenement had a grade of 53.15% Mn, the other three samples sites are located outside the license area (Fig 28)

For

per

sona

l use

onl

y

88



proximity to the coast for shipping via existing ports or construction of a private jetty

Figure 26: PT Nisso Indonesia Resources (IUP No.304/2011 - TTU) concession manganese outcrop in a pit.

For

per

sona

l use

onl

y

89


Blig

h M

inin

g –

Inde

pend

ent G

eolo

gica

l Rep

ort

Blig

h M

inin

g 20

12 -I

GR

– A

M&

A

Pa

ge 3

8

Fi

gure

27:

Tim

or Is

land

TTS

Clu

ster

Man

gane

se H

ighl

ight

Ass

ays.

For

per

sona

l use

onl

y

90

Blig

h M

inin

g –

Inde

pend

ent G

eolo

gica

l Rep

ort

Blig

h M

inin

g 20

12 -I

GR

– A

M&

A

Pa

ge 3

9

Figu

re 2

8: T

imor

Isla

nd T

TU C

lust

er M

anga

nese

Hig

hlig

ht A

ssay

s.

For

per

sona

l use

onl

y

91




3.8 Exploration Potential

Limited work has been conducted on the three Timor tenement clusters with site visits to only three of the 20 concessions held by Bligh. The initial results demonstrate the presence of medium to high grade manganese in each of the licenses. The observed layers are 10-30cm within reasonably wide zones that reach up to 3m in total width. Boulder style manganese outcrops have also been identified but further mapping and assaying with associated trenching and drilling is required to fully delineate potential economic manganese deposits.

The identification of manganese in the sedimentary hosted Bobonaru Complex and Obu Formation indicates that additional exploration in the remaining 17 tenements should probably identify additional manganese deposit areas. The presence of existing artisanal mining in the Kefamenanu, Atambua and Soe Districts and commercial mining by SMR Utama at Soe elucidates the upside by conducting more detailed exploration within the concession areas.

3.9 Proposed Exploration Program and Budget

Since the geological and tectonic history on Timor Island is complex, it requires a detailed, well defined and focussed exploration program to define potential commercial quantities of manganese and other minerals.

The proposed exploration program for the three clustered tenements includes:

conduct a reconnaissance survey to update the 20 concessions conduct a general reconnaissance survey of all tenements to include mapping of

potential outcrops, GPS coordinate recording, geological overview including geological type, strike, dip and documentation including sample collection for assay

traverse neighbouring alternative locations with the same scope of work conduct infill geological mapping and sampling focusing on identified prospect

areas from the previous work in order to outline the size and potential manganese mineralisation

define a drilling program in identified areas to define the manganese mineralisation at depths<50m and test potential lateral extent along and across known outcrops

derive JORC compliant resources and reserves of the manganese deposits The proposed work program expenditure for the area is presented below based on the maximum raising of $6.0M.

For

per

sona

l use

onl

y

92



ACTIVITY YEAR ONE $000s

YEAR TWO $000s

TOTAL $000s

Data collection and validation 50 10 60 Geological- salaries and consultants 160 100 260 Mapping, geochemistry 200 150 350 Geophysical surveys 280 100 380 Diamond Drilling 300 540 840 Environmental studies 40 53 93 Metallurgical test work 0 100 100 Tenement administration* 20 20 40

Totals 1050 1073 2123 Table 6: Timor Project Proposed Exploration Budget.

4.0 SULAWESI GOLD PROJECT

4.1 Introduction

The Sulawesi Gold Project comprises two concession areas in Central Sulawesi, namely the PT Konstruktor Donggala (“Konstruktor”) concession area of 2284ha in the Donggala district and the PT Charlie Sapa Prima (“Charlie”) concession area of 5280ha in the Parigi district, both in the province of Central Sulawesi on the island of Sulawesi, Indonesia (Fig 29).

Both areas are held under IUP’s in the exploration stage.

The Konstruktor concession area was previously held under a Contract of Work concession, initially by Rio Tinto Exploration and subsequently operated by Newcrest Mining. There is no record of the results of work by these companies available.

The Charlie concession area lies to the east of the Poboya vein system, which is mined locally by villagers, and forms part of the PT Bumi Resources concession of PT Citra Palu Minerals. The Poboya vein system contains gold, silver and base metals and additional indications of high sulphidation mineralisation.

For

per

sona

l use

onl

y

93


Blig

h M

inin

g –

Inde

pend

ent G

eolo

gica

l Rep

ort

Blig

h M

inin

g 20

12 -I

GR

– A

M&

A

Pa

ge 4

2

Figu

re 2

9: L

ocat

ion

map

sho

win

g th

e tw

o co

nces

sion

are

as o

f Kon

stru

ktor

and

Cha

rlie

in C

entr

al S

ulaw

esi.

For

per

sona

l use

onl

y

94



4.2 Regional Geology and Structure

Sulawesi is situated in a tectonically complex region where the Eurasian, Indian-Australian and Pacific mega plates and a number of smaller plates interact and collide. It is made up of accretionary complexes, islands arcs, melange terrain, ophiolite nappes and micro-continental fragments brought together by a series of subduction, collision and other tectonic events, which are as yet poorly understood. At present the island is undergoing a process of fragmentation and re-organization along major strike- slip and thrust faults.

Sulawesi consists of three distinct litho-tectonic belts, which comprises a western magmatic arc, a central metamorphic belt overlain by a tectonic melange, and an eastern ophiolite nappe with imbricated Triassic to Miocene sedimentary rocks. Welded onto the eastern Sulawesi area are several micro-continental fragments, including the Sula and Tukang Besi micro plates.

Physiographically, the Palu area consists of an eastern and western ridge, both of which trend north-south and are separated by the Palu Valley (Fossa Sarasina). The western ridge is over 2,000m high near Palu but descends to sea level at Donggala. The eastern ridge, with peak elevations from 400 to 1,900m connects the mountains of mid – Sulawesi with the north arm of Sulawesi.

The north-northwest trending Palu Fault Zone dominates the structure of the area. Its present expression is as a graben bounded by active faults, some of which have hot springs along their surface traces. Other faults and lineaments are parallel to the trend of the Palu Fault Zone. Many smaller faults and lineaments, approximately at right angles to this trend, are seen throughout the area. East dipping thrust faults within the metamorphic complex and in the Tinombo Formation indicate the compressive nature of some of the older faulting (Fig 30).

Generally, the main formations in the area are:

Metamorphic Core Rocks: The oldest rock in this area are metamorphic rock, exposed only in the ridge where they from the core the ridge. The complex consists of amphibolitic schist, mica schist, gneiss and marble. The schists are more abundant on the west side, and gneiss with minor marble are dominant on the east side.

Tinombo Formation: This sequence of rocks is widely exposed in both the eastern and western ridges. It unconformably overlies the metamorphic complex and contains detritus derived from the metamorphics. This formation consists mostly of shale, sandstone, conglomerate, limestone, radiolarian chert and volcanic rocks deposited in a shallow sea or open shelf environment.

Celebes Molasse: These rocks occur at lower elevations along the flanks of both ridges, it unconformably overlies the Tinombo Formation and Metamorphic Complex, contains detritus derived from the older formations, and consists of weakly consolidated conglomerate, sandstone, mudstone, coral limestone and marl. Near the metamorphic complex towards the western parts of the eastern ridge, the deposit mainly consists of very coarse boulders and seems to have been deposited close to a major fault.

For

per

sona

l use

onl

y

95


Blig

h M

inin

g –

Inde

pend

ent G

eolo

gica

l Rep

ort

Blig

h M

inin

g 20

12 -I

GR

– A

M&

A

Pa

ge 4

4

Figu

re 3

0: R

egio

nal p

ublis

hed

geol

ogy

of th

e co

nces

sion

are

a.

For

per

sona

l use

onl

y

96



Alluvium and Coastal Deposits: Consists of gravel, sand, mud and coral limestone formed in fluvial, deltaic and shallow marine environment, probably of Holocene age.

Intrusive rocks: The intrusive rocks consist of hypabyssal andesite and basalt intrusions, which have intruded the Tinombo Formation. These intrusions are probably feeders for the volcanic rocks that also occur in the Tinombo formation. The rocks include diorite, diorite porphyry, micro-diorite and granodiorite.

4.3 PT Konstruktor Donggala

Exploration to date has defined three main target areas, as outlined below and shown on Figure 31.

A total 63 rock chip samples have been collected to date from throughout the concession area comprising zones of alteration, quartz veins, quartz vein stockworks and sheeted vein zones. The best result were returned from sample BK000047 which contained 8.49% Cu, 0.48g/t Au, 43.2g/t Ag and 2.29% Zn. The rock is described as a Chlorite-Magnetite-K-Feldspar-Silica altered andesite, with possible affinity to a porphyry-style setting.

Figure 31: Geology and prospect areas defined in the Konstruktor concession area.

4.3.1 Enu Prospect

The Enu Prospect is a possible porphyry system controlled by intense faulting, the dominant host rocks in the area are andesites. Observed mineralisation occurs as quartz veins and stringers/sheeted veins hosted within the andesite with associated sulphide mineralisation of pyrite, chalcopyrite and possibly bornite and chalcocite. The sulphide content is occasionally as high as 30% of the vein but is dominated by pyrite.

For

per

sona

l use

onl

y

97




Trenching has been completed in one area of the prospect, with two trenches intersecting mineralised veins containing gossanous Cu-rich magnetite-sulphide veins. The results returned from the trenches include:

TENU01, comprising intervals of gossanous magnetite veins,

From 25.00-35.00m, 10m @ 5.13% Cu, 1.03g/t Au, 27.35g/t Ag, 47ppm Mo and 3.53% Zn.

TENU02, intersected multiple gossanous magnetite veins,

From 70.00-80.00m, 10m @ 1.19% Cu, 0.08g/t Au and 2.2 g/t Ag, and, From 30.00-40.00m, 10m @ 3.85% Cu, 0.08g/t Au, 6.25g/t Ag, 34.5ppm Mo and

0.9% Zn.

The mineralised veins corridor may appear to trend generally west-northwest to east-southeast however the site strikes within the trenches are NE (Fig 32) but preliminary results of a ground magnetometer survey have indicated that a northeast-southwest trend may also be possible for the mineralised zone. A full interpretation of the results may elucidate further the important mineralisation trend.

4.3.2 Tibo Prospect

The Tibo Prospect lithology comprises granite, foliated andesite, phyllite, and surface limestone deposits. Quartz vein systems are hosted by brecciated andesite and mineralisation is dominated by sulphide bearing (pyrite) quartz veins and hydrothermal breccia. Maximum vein widths observed are 40cm and trend NW-SE. This area is interpreted to host multiple vein sets as abundant quartz vein float can be identified within creeks and along ridges. Traces of spotted chalcopyrite can also be observed in foliated andesite in addition to gossanous float and outcrops of foliated andesite containing significant disseminated sulphides, such as pyrite.

4.3.3 Saloya Prospect

The Saloya Prospect has porphyry style mineralisation observed as intense sheeted-stockwork veins within a phyllite host rock with chlorite–silica–sericite±magnetite alteration. Mineralisation consists of sulphides (pyrite-trace chalcopyrite and bornite). Andesite rocks have also been observed during the general survey of other parts of the concession and are interpreted to be a continuation of the host rocks in the Enu Prospect area.

For

per

sona

l use

onl

y

98



Figure 32: Trench plan, completed and in progress, showing the geological interpretation and the mineralised intercepts recorded.

4.4 PT Charlie Sapa Prima

The main prospectivity of the Charlie area is related to the occurrence of gold within orogenic-style quartz carbonate lodes, with potential areas of interest associated with the Parigi Vein systems. To date there has been limited success in identifying a target zone within the metamorphic rocks of the area, with individual veins being from a few millimetres to a few centimetres in size.

Future exploration will focus on structural targets that could potentially host a higher density of veins than the individual sets outlined to date in different areas. Structural

For

per

sona

l use

onl

y

99




interpretation of aerial images and satellite imagery may assist in target definition, in conjunction with detailed structural mapping.

4.5 Proposed Exploration Program and Budget

Since the geological and tectonic history of Sulawesi is complex, it requires a detailed, well defined and focussed exploration program to define potential commercial mineralisation.

The proposed exploration program for the tenements includes:

complete the reconnaissance survey conduct a general reconnaissance survey of both tenements to include mapping of

potential outcrops, GPS coordinate recording, geological overview including geological type, strike, dip and documentation including sample collection for assay

traverse neighbouring alternative locations with the same scope of work conduct infill geological mapping and sampling focusing on identified prospect

areas from the previous work in order to outline the size and potential mineralisation

conduct close spaced MMI soil sampling of main prospect areas define a drilling program in identified areas to define the manganese mineralisation

at depths<50m and test potential lateral extent along and across known outcrops derive JORC compliant resources and reserves of the manganese deposits

The proposed work program expenditure for the area is presented below based on the maximum raising of $6.0M.

ACTIVITY YEAR ONE

$000s

YEAR TWO TOTAL

$000s $000s Data collection and validation 20 0 20 Geological- salaries and consultants 60 30 90 Mapping, geochemistry 75 25 100 Geophysical surveys 75 0 76 Diamond Drilling 50 250 300 Environmental studies 0 20 20 Metallurgical test work 15 25 40 Tenement administration* 15 15 30

Totals 310 365 676 Table 7: Sulawesi Project Proposed Exploration Budget.

For

per

sona

l use

onl

y

100



5.0 COMBINED PROPOSED WORK PROGRAM AND BUDGET

The following budget is proposed for all projects with Year 2 expenditure dependent on continued positive results from the Year 1 program.

Project Year ONE Min $000s

Year One Max $000s

Year TWO Min $000s

Year TWO Max $000s

Total $000s Min Max

Flores 120 422 70 249 190 - 671 Timor 550 1,050 290 1,073 840 - 2,123

Sulawesi 0 310 0 365 0 - 676 Total 670 1,782 360 1,687 1,030 – 3,470

Table 8: Exploration Budgets for Two Year Plan.

6.0 CONCLUSIONS

Since the geological and tectonic history of the Project areas is complex, it requires a detailed, well defined and focussed exploration program aimed to define potential commercial quantities of manganese and other minerals.

Programs will include mapping, sampling, geochemical and geophysical surveys and drilling to fully outline the potential at each deposit. Infill drilling will then be planned to identify JORC compliant resources and reserves.

Yours faithfully,

(signed)

Allen J. Maynard BAppSc (Geol), MAIG, MAusIMM.

Competent Persons Statement.

The information in this report which relates to Exploration Targets, Exploration Results, Mineral Resources or Ore Reserves is based on information compiled by Mr Brian Varndell, who is a Fellow of the Australasian Institute of Mining & Metallurgy (“AusIMM”) and independent consultant to the Company. Mr Varndell is a consultant of Al Maynard & Associates Pty Ltd and has 40 years of experience in exploration and mining in a variety of mineral deposit styles. Mr Varndell has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity that he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the “Australasian Code for reporting of Exploration Results, Mineral Resources and Ore Reserves”. Mr Varndell consents to inclusion in the report of the matters based on his information in the form and context in which it appears.

For

per

sona

l use

onl

y

101




7.0 REFERENCES

Chamalaun, F.H. & Grady, A.E., 1978. The tectonic development of Timor: a new model and its implications for petroleum geology. APEA Journal 18, 102-108.

Charlton, T. R., 2002. The petroleum potential of East Timor. APPEA J. 42, p. 351-369.

Darman, H. & Sidi, H., 2000. An Outline of the Geology of Indonesia, Indonesian Geologists Association publication (eds.).

Fitch, T.J., Hamilton, W.B., 1974. Plate convergence, transcurrent faults, and internal deformation adjacent to Southeast Asia and the western Pacific-reply. Journal of Geophysical Research 79, pp. 4982–4985.

Hamilton, W. 1979. Tectonics of the Indonesian Region. US Geol. Surv., Prof. Paper 1078: 304 pp

Sopaheluwakan, J., 1991b. The Mutis metamorphic complex of Timor: a new view on the origin and its regional consequences. Proceedings 20th Ann. Convention IAGI, Jakarta

SMR Utama, 2012.[online] Accessed from: www.smrutama.com [accessed on the 2nd of February, 2012]

Sukamto, RAB, et all, 1973. Reconnaissance Geological Map of Palu Quadrangle, Sulawesi.

Susandarini & Partners, 2012: Limited Legal Due Diligence & Opinion for Bligh Mining Ltd on Status of ‘Mining Business Licences’ (IUPs).

Theo M. van Leeuwen, et all, 1993. Porphyry molybdenum moralization in a continental collision setting at Malala, northwest Sulawesi, Indonesia, Journal of geochemical exploration, volume 50 – NOS. 1-3, March 1994, page 279 – 284.

For

per

sona

l use

onl

y

102



8.0 GLOSSARY OF TECHNICAL TERMS AND ABBREVIATIONS

Aeromagnetic A survey made from the air for the purpose of recording magnetic Survey characteristics of rocks. Alluvial Transported and deposited by water. Anomaly Value higher or lower than the expected or norm. Base metal Generally a metal inferior in value to the precious metals, eg. copper,

lead, zinc, nickel. Complex An assemblage of rocks or minerals intricately mixed or folded together. Conformable Beds deposited upon one another in uninterrupted sequence. Conglomerate Sedimentary rock formed by the cementing together of rounded

water- worn pebbles, distinct from breccia. Diamond drill Rotary drilling using diamond impregnated bits, to produce a solid

continuous core sample of the rock. Dip The angle at which a rock layer, fault of any other planar structure is

inclined from the horizontal. Dyke A tabular intrusive body of igneous rock that cuts across bedding at a

high angle. Fault A fracture in rocks on which there has been movement on one of the

sides relative to the other, parallel to the fracture. Felsic Descriptive of an igneous rock which is predominantly of light

coloured minerals (antonym: mafic). Fine Ounce Equal to 31.1035 grams of gold. Footwall Rocks underlying mineralisation. Geochemistry Study of variation of chemical elements in rocks or soils. Geochemical The systematic study of the variation of chemical elements in rocks survey and soil. Granite A coarse grained igneous rock consisting essentially of quartz and

more alkali feldspar than plagioclase. Intercept The length of rock or mineralisation traversed by a drillhole. JORC Joint Ore Reserves Committee- Australasian Code for Reporting of

Identified Resources and Ore Reserves. Laterite A red, residual soil, cemented in place, containing iron and aluminium

oxides but leached of quartz. Magnetic Systematic collection of readings of the earth's magnetic field. Survey Mineralisation In economic geology, the introduction of valuable elements into a

rock body. Ore A mixture of minerals, host rock and waste material which is

expected to be mineable at a profit. Outcrop The surface expression of a rock layer (verb: to crop out).

For

per

sona

l use

onl

y

103




Palaeochannel A drainage channel of the geological past which may be buried. Palaeozoic A time period from approximately 590 to 225 million years ago. Porphyry A rock with conspicuous crystals in a fine-grained ground mass. Primary Mineralisation which has not been affected by near surface

mineralisation oxidising process. Proterozoic The geological age after Archaean, approximately 570 to 2400 million

years ago. Quartz A very common mineral composed of silicon dioxide-SiO2. Quaternary A division of geological time ranging between 1.8 million years and

the present. . RAB Rotary Air Blast (as related to drilling)—A drilling technique in which

the sample is returned to the surface outside the rod string by compressed air.

RC Reverse Circulation (as relating to drilling)—A drilling technique in which the cuttings are recovered through the drill rods thus minimising sample losses and contamination.

Recent Geological age from about 20,000 years ago to present (synonym: Holocene).

Reconnaissance A general examination or survey of a region with reference to its main features, usually as a preliminary to a more detailed survey.

Remote Sensing Geophysical data obtained by satellites processed and presented Imagery as photographic images in real or false colour combinations. Reserve In-situ mineral occurrence which has had mining parameters

applied to it, from which valuable or useful minerals may be recovered.

Resource In-situ mineral occurrence from which valuable or useful minerals may be recovered, but from which only a broad knowledge of the geological character of the deposit is based on relatively few samples or measurements.

Sandstone A cemented or otherwise compacted detrital sediment composed predominantly of quartz grains.

Shear (zone) A zone in which shearing has occurred on a large scale so that the rock is crushed and brecciated.

Stratigraphy The succession of superimposition of rock strata. Composition, sequence and correlation of stratified rock in the earth’s crust.

Strike The direction or bearing of the outcrop of an inclined bed or structure on a level surface.

Stringer A narrow vein or irregular filament of mineral traversing a rock mass. Subcrop The surface expression of a mostly concealed rock layer. Syncline A fold where the rock strata dip inwards towards the axis (antonym:

anticline). Ultramafic Synonymous with ultrabasic. Unconformable Descriptive of rocks on either side of an unconformity.

For

per

sona

l use

onl

y

104



Unconformity Lack of parallelism between rock strata in sequential contact, caused by a time break in sedimentation.

Vein A narrow intrusive mineral body. Volcanic Relating to the eruption of a volcano. Volcanic Describes clastic fragments of volcanic origin. CHEMICAL SYMBOLS Ag Silver As Arsenic Au Gold Cu Copper Mn Manganese Mo Molybdenum Ni Nickel Pb Lead Zn Zinc ABBREVIATIONS cm centimetre ha hectare kg kilogram km kilometre km2 square kilometre m metre m2 square metre m3 cubic metre mm millimetre M million t tonne UNITS OF CONCENTRATION ppb parts per billion ppm parts per million

For

per

sona

l use

onl

y

105


APPENDICES

To download a full copy of the Independent Geological Report, including all appendices, please visit www.blighmining.com.au.

7 INDEPENDENT GEOLOGICAL REPORT

For

per

sona

l use

onl

y

106

For

per

sona

l use

onl

y

107


29 October 2012 Our ref: 9000823 Bligh Mining (Holdings) Pty Limited Suite 301, Level 3 66 Hunter Street Sydney NSW Australia 2000 T: +61 2 9705 1218 F: +61 2 9713 1140 Dear Sirs RE: LIMITED LEGAL DUE DILIGENCE AND OPINION

This legal opinion (Opinion) has been prepared by us at the request of Bligh Mining (Holdings) Pty Limited (Bligh), a company incorporated under the laws of Australia, in relation to the prospectus (Prospectus) to be lodged by Bligh Mining Limited with the Australian Securities & Investments Commission.

1 PURPOSE OF OPINION

This Opinion has been prepared with respect to the following companies:

(1) PT Endeavor Resources NTT

(2) PT Golden Castle Resources

(3) PT Elang Perkasa Kencana Resources

(4) PT Elang Perkasa Mining

(5) PT Elang Perkasa Kencana

(6) PT Nisso Indonesia Resources

(7) PT Elgary Resources

(8) PT Oriental Pratama Steel

(9) PT Elang Perkasa Resources Indonesia

Susandarini & Partners Equity Tower, Level 33 Sudirman Central Business District Jalan Jend. Sudirman Kav. 52-53 Jakarta 12190, Indonesia Tel +62 21 2924 5000 Fax +62 21 2924 5099

8 SOLICITOR’S REPORT

For

per

sona

l use

onl

y

108

Jakarta-#108235-v1 2

(10) PT Manggarai Manganese

(11) PT Charlie Sapa Prima

(12) PT Konstruktor Donggala

hereinafter referred to as the Mining Companies.

2 LEGAL DUE DILIGENCE

Susandarini & Partners in association with Norton Rose in Australia (S&P) has been instructed to conduct the following legal due diligence:

(1) Corporate, to confirm whether Bligh has an indirect ownership interest in the Mining Companies;

(2) Licensing, to confirm whether the Mining Companies hold the Mining Business Licences listed in Attachment Two (the IUPs); and

(3) Material Agreements, to confirm whether the share transfer arrangements set out in the contracts listed in Attachment One (Material Agreements) are enforceable under Indonesian law.

3 INFORMATION AND DOCUMENTS

For the purpose of this Opinion, we have examined and relied upon copies of the following documents:

(1) Copies of the IUPs provided to us by Bligh;

(2) Lists of IUPs that have been declared clean and clear, as published by Indonesia’s Ministry of Energy and Mineral Resources (MEMR);

(3) Maps issued by the MEMR’s Directorate General of Minerals and Coal (DGMC) and provided to us by Bligh, illustrating the location of the various IUPs in relation to other mining licences for each of the Mining Companies other than PT Manggarai Manganese, PT Charlie Sapa Prima, PT Konstruktor Donggala, PT Endeavor Resources NTT, and PT Golden Castle Resources (collectively referred to as the MEMR Maps);

(4) Corporate documents of the Mining Companies provided to us by Bligh; and

(5) Material Agreements provided to us by Bligh.

The documents listed in points 1 to 5 are hereinafter jointly referred to as the Documents.

This Opinion is based on information obtained prior to 29 October 2012.


For

per

sona

l use

onl

y

109



4 OPINION

Subject to the assumptions, qualifications and notes set out in this letter, we are of the opinion that:

PART A: EXECUTIVE SUMMARY

1 Coporate Structure We have conducted a limited due diligence on the Mining Companies. As we do not have any direct access to the companies, we have relied on copies of documents of the Mining Companies provided to us by Bligh. To the best of our knowledge and based on the Documents: (1) Each company is a limited liability company established pursuant to Law

No. 40 of 2007 on Limited Liability Companies (the Company Law) and has been properly incorporated.

(2) Each of the Mining Companies is validly established according to

Indonesian law; (2) Each company has maintained the correct ownership structure of at least

two shareholders, and the correct management structure of at least one director and one commissioner.

(3) In respect of the Mining Companies:

(a) 85% of the shares in PT Endeavor Resources NTT are held directly by a foreign company, Blue Castle Investment Limited. We are advised that Blue Castle Investment Limited is a subsidiary of Bligh;

(b) 99% of the shares in PT Golden Castle Resources are held directly by a foreign company, Whole Dragon Enterprises Limited. We are advised that Whole Dragon Enterprises Limited is a subsidiary of Bligh;

(c) 99% of the shares in PT Manggarai Manganese are held directly by a foreign company, Flores NTT Mining Pte Limited. We are advised that Flores NTT Mining Pte Limited is a subsidiary of Bligh;

(d) 51% of the shares in PT Elang Perkasa Kencana Resources, PT Elang Perkasa Mining, PT Elang Perkasa Kencana, PT Nisso Indonesia Resources, PT Elgary Resources, PT Oriental Pratama Steel and PT Elang Perkasa Resources Indonesia are held directly by PT Endeavor Resources NTT;

(e) 90% of the shares in PT Charlie Sapa Prima are held directly by PT Golden Castle Resources; and

For

per

sona

l use

onl

y

110


(f) Under the terms of a share sale and purchase agreement entered into by PT Golden Castle Resources, PT Golden Castle Resources holds the right to acquire 49% of the shares in PT Konstruktor Donggala.

(4) We have been provided with copies of the latest Ministry of Law and

Human Rights (MOLHR) approval for the acquisition of the shares in PT Golden Castle Resources, PT Elgary Resources, PT Elang Perkasa Kencana Resources, PT Elang Perkasa Mining, PT Elang Perkasa Resources Indonesia, PT Manggarai Manganese, PT Charlie Sapa Prima, PT Elang Perkasa Kencana and PT Nisso Indonesia Resources.

(5) We have not seen the MOLHR approvals for the acquisition of the shares of

PT Endeavor Resources NTT, Oriental Pratama Steel and PT Konstruktor Donggala. However, we have been provided with copies of the BKPM approvals for the shareholder changes in PT Endeavor Resources NTT, PT Elang Perkasa Kencana and Oriental Pratama Steel but not for PT Konstruktor Donggala. In our experience, where BKPM has issued its approval to shareholder changes, MOLHR will typically issue its subsequent approval to those changes.

2 IUPs

(1) The IUPs listed in Part B and in Attachment Two are the subject of this Opinion. These are licences granted by the relevant regional/local government agency (Bupati).

(2) The MEMR maintains and periodically publishes a list of clean and clear licences (C&C List). We have checked the IUPs against the most recent C&C List issued by the MEMR dated 1 August 2012. IUP Exploration No. 295 of PT Oriental Pratama Steel, IUP Exploration No. 304 of PT Nisso Indonesia Resources and IUP Exploration No. 540 of PT Charlie Sapa Prima are listed by the MEMR as clean and clear. The other IUPs are not listed by the MEMR as clean and clear on the C&C List.

(3) We met with an official of the MEMR to discuss the status of the IUPs that are not listed on the C&C List. We were orally advised by an MEMR officer, and that information is set out in Part B.

(4) According to the MEMR Maps, it appears that the areas of the IUPs of the Mining Companies do not overlap with forestry areas, except for:

(a) IUP Exploration No. 746, IUP Exploration No. 745 and IUP Exploration No. 297 of PT Elang Perkasa Kencana;

(b) IUP Exploration No. 744 of PT Elang Perkasa Kencana Resources; and

(c) IUP Exploration No. 749 and IUP Exploration No. 299 of PT Elgary Resources,


For

per

sona

l use

onl

y

111



which overlap with forestry areas. Details are set out in Part B. Production and protected forest areas may be used for non-forest purposes (including mining) subject to a forestry licence (ijin pinjam pakai) being obtained. We have not seen any forestry licence held by any of the Mining Companies cited above.

(5) According to the MEMR Maps, the areas of the IUPs of the Mining Companies do not overlap with other mining areas, except for:

(a) IUP Exploration No. 297 of PT Elang Perkasa Kencana;

(b) IUP Exploration No. 749 of PT Elgary Resources;

(c) IUP Exploration No. 744 of PT Elang Perkasa Kencana Resources; and

(d) IUP Exploration No. 301 of PT Elang Perkasa Mining,

which overlap with other mining concession areas. Details are set out in Part B. Where there is an overlap with another mining area, the Mining Company will need to either relinquish the overlapping area or enter into an agreement with the holder of the other rights regarding proposed exploration and mining activities. Such an agreement may take the form of a Letter of No Objection. We have seen no evidence that any such agreements are in place.

(6) Based on the mining overlay map issued by the MEMR on 27 September 2012, we note the following:

(a) the same IUP licence and area (IUP Exploration No. 301 and its area) has been issued to two different companies, being PT Elang Perkasa Mining and PT Elang Perkasa Kencana Resources; and

(b) IUP Exploration No. 296 on its face is issued to PT Elang Perkasa Resources Indonesia. However, on maps issued by MEMR, the IUP is recorded as being held by PT Elang Perkasa Kencana Resources.

We have not received any clarification on the above matter from the MEMR or the relevant department.

3 Material Agreements

(1) In relation to the Material Agreements:

(a) The shareholders of the Mining Companies, other than PT Charlie Sapa Prima and PT Konstruktor Donggala have each entered into a Shareholders and Royalty Agreement with PT Endeavor Resources NTT; and

For

per

sona

l use

onl

y

112


(b) The shareholders of PT Charlie Sapa Prima and PT Konstruktor Donggala have each entered into a Share Sale and Purchase Agreement with PT Golden Castle Resources.

These agreements are collectively referred to as the Material Agreements. Further details are set out in Attachment One.

(2) The Material Agreements are signed in a dual language form. The terms of the Material Agreements provide that in the event of inconsistency between the Indonesian language version and the English language version of the Material Agreements, the English Text will prevail. In our view, this is in compliance with Law No. 24 of 2009 as described below.

(3) The share transfer arrangements set out in the Material Agreements are enforceable under Indonesian law.

PART B SUBSTANTIVE OF OPINION

1 Corporate Structure

1.1 Legal background

(1) Types of companies

Indonesian law recognises three principal types of companies:

(a) General Indonesian Companies (Perseroan Terbatas Biasa), which are:

(i) 100% Indonesian-owned;

(ii) not able to take advantage of any taxation facilities offered by the Capital Investment Coordinating Board (Badan Koordinasi Penanaman Modal) (BKPM);

(iii) subject to the Ministry of Law and Human Rights (Menteri Hukum dan Hak Asasi Manusia) (MOLHR) company regulatory regime; and

(iv) required to obtain a Business Licence (Surat Ijin Usaha Perdagangan) (SIUP) from the Ministry of Trade (MOT);

(b) Domestic Capital Investment Companies (Penanaman Modal Dalam Negeri) (PMDN Companies), which are:

(i) 100% Indonesian-owned;

(ii) able to take advantage of taxation facilities offered by BKPM; and


For

per

sona

l use

onl

y

113



(iii) subject to the MOLHR and BKPM company regulatory regimes; and

(c) Foreign Capital Investment Companies (Penanaman Modal Asing) (PMA Companies), which:

(i) have a percentage of, or total, foreign share ownership;

(ii) are able to take advantage of taxation facilities offered by BKPM; and

(iii) are subject to the MOLHR and BKPM company regulatory regimes.

(2) Company formation

The following is a summary of the steps required under Law No. 40 of 2007 on Limited Liability Companies (Company Law) and the practice of the MOLHR for incorporation of a General Indonesian Company:

Item Action Required

Deed of Establishment

Execute Deed of Establishment containing Articles of Association of the company before a Notary.

Letter of Domicile Obtain Letter of Domicile (Surat Domisili) from Local Government in relation to office space to be leased by the company.

Tax File Number Obtain Tax File Number (Nomor Pokok Wajib Pajak) (NPWP) from the Regional Tax Office.

Transfer of Capital Open bank account and transfer amount representing entire paid-up capital of the company.

MOLHR Submit Deed of Establishment to MOLHR for approval together with Letter of Domicile, NPWP and bank slip as evidence of transfer of funds to the company.

Certificate of Company Registration

Register the company at the Register of Enterprises at MOT and obtain a Certificate of Company Registration (Tanda Daftar Perusahaan) (TDP)

Business Licence Obtain a Business Licence (Surat Ijin Usaha Perdagangan) (SIUP) from MOT or BKPM

For

per

sona

l use

onl

y

114


approval.

State Gazette Announce the Deed of Establishment in the Supplement to the State Gazette (Berita Negara)

A General Indonesian Company will not exist as a separate legal entity under the Company Law until such time as the MOLHR approval of the Deed of Establishment has been obtained. The company should not commence business until such time as a SIUP is received.

Articles of Association

Each company incorporated in Indonesia must have Articles of Association. MOLHR has issued standard form Articles of Association for:

(a) General Indonesian Companies; and

(b) PMA Companies.

MOLHR will permit deviation from the standard-form Articles of Association in a limited number of areas only, such as objectives and purposes, quorum requirements and voting majorities.

MOLHR must:

(a) approve amendments to Articles of Association, where the amendments concern:

(i) the name of a company;

(ii) the purposes and objectives of a company;

(iii) a company’s business activities;

(iv) the period for which a company is established;

(v) the amount of authorised capital;

(vi) a reduction in the issued or paid-up capital;

(vii) the status of a private or public company; and

(b) be notified of any amendments to the Articles of Association which are not within (a) above.

The following is a summary of the steps required to amend the Articles of Association of an Indonesian Company:


For

per

sona

l use

onl

y

115



Item Action Required

Shareholders’ Resolution

Shareholders’ resolution approving amendment to Articles of Association, which is then re-executed in the form of a notarial deed.

MOLHR Deed of Amendment submitted to MOLHR for either approval or notification (refer to discussion above regarding amendments that require approval and those that simply require notification)

MOT Deed of Amendment submitted to MOT to update the Company Register.

State Gazette Publication of Deed of Amendment of the Company in the Supplement to the State Gazette (Berita Negara) – if the amendment changes the Articles of Association.

(3) Company officers

The Company Law, following the Dutch Civil Law tradition, adopts a two-tier management structure, comprising:

(a) a Board of Directors (Direksi); and

(b) a Board of Commissioners (Komisaris).

Under the two-tier management structure, the basic function of directors is to manage and represent the company. The role of the commissioners is to supervise and advise the directors. A limited analogy may be made between the roles of:

(a) Direksi and common law executive directors; and

(b) Komisaris and common law non-executive directors.

A company must have at least one director and one commissioner. In the event there is more than one director, one of the directors may be appointed as President Director, who generally has the authority to bind a company under agreements with third parties. In the event there is more than one commissioner, one of the commissioners can be appointed as President Commissioner.

Each time there is a change to the members of the Board of Directors or the Board of Commissioners, the following must take place:

For

per

sona

l use

onl

y

116

Jakarta-#108235-v1 10

(a) the shareholders approve the change to the members of the Board of Directors and/or Board of Commissioners, with such shareholders’ resolution being restated in notarial deed form;

(b) the change to the members of the Board of Directors and/or the Board of Commissioners is informed to MOLHR; and

(c) the change to the members of the Board of Directors and/or the Board of Commissioners is informed to MOT.

The Articles of Association of Indonesian companies must include a fixed term for the appointment of members of the Board of Directors and Board of Commissioners, and they can be reappointed. The reappointment or replacement must be notified to MOLHR and MOT.

Indonesian companies are not required to maintain a Register of Directors or Register of Commissioners. Rather, evidence of the current composition of the Board of Directors and Board of Commissioners is in the form of the shareholders’ resolution appointing the directors and commissioners of the company, which follows the notification steps referred to above.

(4) Share transfers and increase in capital

Each time a share transfer, share issue or increase in capital takes place:

(a) the shareholders must resolve to approve the share transfer, share issue or increase in capital, with such shareholders’ resolution being restated in notarial deed form;

(b) in the case of a share transfer or share issue, a report on the transfer of shares must be submitted to MOLHR;

(c) in the case of an increase in capital, the increase must be approved by MOLHR;

(d) the share transfer, share issue or increase in capital must be reported by the company to MOT; and

(e) in the case of an increase in authorised capital, the increase must be published in the State Gazette.

Following enactment of the Company Law in July 2007, the following additional steps must be taken prior to a transfer of shares in a private company, where the transfer will result in a change in control of the company:

(a) the Board of Directors must:


For

per

sona

l use

onl

y

117


Jakarta-#108235-v1 11

(i) publish the proposed share transfer in a daily newspaper; and

(ii) announce the proposed share acquisition to employees,

at least 30 days prior to the General Meeting of Shareholders (GMS) at which the shareholders resolve to approve or reject the proposed share transfer;

(b) creditors of the company may file objections to the proposed share transfer within the 30-day period;

(c) the Board of Directors must resolve any creditor objections within the 30-day period;

(d) to the extent that the Board of Directors does not resolve creditor objections within the 30-day period, then the GMS must resolve any creditor objections; and

(e) if the GMS does not satisfy creditor objections, then the proposed share transfer may not take place.

The rationale behind employee notifications is understandable, as Law No. 13 of 2003 on Employment (the Manpower Law) confers upon employees a right to resign and receive certain entitlements according to the Manpower Law if a change in control of the employer company takes place and the employee does not wish to continue the employment relationship under new management.

(5) Register of Shareholders and security over shares

The Company Law requires the Board of Directors to maintain a “Register of Shareholders” (Daftar Pemegang Saham), setting out, among other matters:

(a) the name and address of each shareholder;

(b) the amount, number and date of acquisition of the shares owned by the shareholders and, if more than one class of shares is issued, each class of the shares issued;

(c) the name and address of any individual or legal body which holds rights under a pledge of shares, and the date of obtaining such rights of pledge; and

(d) information with respect to shares paid in a form other than cash.

The Register of Shareholders comprises evidence of:

(a) ownership of shares in Indonesian companies; and

For

per

sona

l use

onl

y

118

Jakarta-#108235-v1 12

(b) whether any security has been granted over the shares.

Failure to maintain a Register of Shareholders results in:

(a) uncertainty as to the legal ownership of the shares in the relevant company, given that the Register of Shareholders comprises evidence of ownership under the Company Law; and

(b) the directors being in breach of the Company Law.

(6) Special Register

The Company Law requires the Board of Directors to maintain a “Special Register” (Daftar Khusus) containing information on the shareholdings of the members of the Board of Directors and Board of Commissioners and their families in both the company and any other companies (this disclosure requirement is aimed at preventing conflict of interest). “Family” means wife/husband and children of the members of the Board of Directors and Board of Commissioners, but it is unclear whether the obligation is in relation to shares held in Indonesian companies only or shares in any companies on a worldwide basis. A number of notaries in Jakarta have previously indicated to us that the obligation should not be limited to shares held in Indonesian companies but disclosure should rather be made on a worldwide basis.

We note in passing that the majority of Indonesian companies fail to maintain a Special Register. The Company Law does not provide for any penalties for such a failure. The most likely consequence of such a failure would be shareholder action against a director for failure to

disclose a conflict of interest. However, we are not aware of any such action to date in Indonesia.

(7) Company resolutions

(a) Shareholders’ Resolutions

The Articles of Association will provide details of the percentage of shareholder votes required for passing a Shareholders’ Resolution of the company. Whilst most matters will require a simple majority of shareholder votes, some matters, such as a merger or dissolution of the relevant company, require a special majority of 75% of shareholder votes.

The Company Law, and typically the Articles of Association of Indonesian companies, require the Board of Directors to compile an Annual Opinion attaching the company’s Financial Statements approved by the Board of


For

per

sona

l use

onl

y

119


Jakarta-#108235-v1 13

Commissioners and submitted to the Annual General Meeting of Shareholders’ (AGMS) within six months of the end of the company’s financial year.

(b) Directors’ Resolutions

The Articles of Association of Indonesian companies typically require a Board of Directors meeting to take place only when requested by a director, a commissioner or a shareholder holding 10% or more of the shares in the company. The Articles of Association usually provide details of the percentage of director votes required for passing a Directors’ Resolution which, in relation to most matters, is typically by a simple majority of director votes.

(c) Commissioners’ Resolutions

The Articles of Association of Indonesian companies typically require a Board of Commissioners meeting to take place only when requested by a commissioner, a director, or a shareholder holding 10% or more of the shares in the company. The Articles of Association usually provide details of the percentage of commissioner votes required for passing a Commissioners’ Resolution which, in relation to most matters, is typically by a simple majority of commissioner votes.

(8) Letter of Domicile, NPWP and Taxable Entrepreneur

(a) Requirement for Domicile Confirmation

In Indonesia, government departments will frequently require that a company provide a current Letter of Domicile (Surat Domisili) when applying for new licences or extensions to existing licences.

(b) NPWP and Taxable Entrepreneur Number

All companies in Indonesia must have a Tax Identification Number (Nomor Pokok Wajib Pajak) (NPWP).

All companies in Indonesia with Value Added Tax obligations must have a Taxable Entrepreneur Number.

(9) Public searches of company information

Indonesia has no reliable registry of corporate information which is available to the public. Accordingly, we are unable to independently verify the information contained in this Corporate Section of this Opinion by conducting a company search, which would be standard in other jurisdictions.

For

per

sona

l use

onl

y

120

Jaka

rta-#

1082

35-v

1 14

1.

2

Sum

mar

y of

Cor

pora

te D

ocum

ents

of t

he M

inin

g C

ompa

nies

A

Bel

ow is

a s

umm

ary

of th

e co

rpor

ate

docu

men

ts o

f the

Min

ing

Com

pani

es.

(1)

PT

End

eavo

r Res

ourc

es N

TT

A

ddre

ss

Com

pany

Add

ress

E

quity

Tow

er S

CB

D, 3

5th F

loor

, Jal

an J

ende

ral S

udirm

an K

av. 5

2-53

, Sou

th J

akar

ta 1

2190

.

Boa

rd o

f Dire

ctor

s

Dire

ctor

M

r. E

ko B

udi H

arto

Boa

rd o

f Com

mis

sion

ers

Pre

side

nt C

omm

issi

oner

M

r. M

uham

mad

Iqba

l C

omm

issi

oner

M

r. A

ndre

w E

dwar

d N

utt

Cap

italis

atio

n

Aut

horis

ed C

apita

l of t

he

Com

pany

R

p. 2

,139

,000

,000

Issu

ed C

apita

l R

p. 2

,139

,000

,000

P

aid-

up C

apita

l R

p. 2

,139

,000

,000

Shar

ehol

ders

N

ote:

Th

is

shar

ehol

ding

co

mpo

sitio

n is

bas

ed o

n th

e la

test

B

KP

M

appr

oval

is

sued

to

th

e co

mpa

ny, a

s w

e ha

ve n

ot r

ecei

ved

the

MO

LHR

ap

prov

al

for

the

rele

vant

dee

d. W

e no

te t

hat

ther

e is

a t

rans

fer

of s

hare

s ag

reem

ent

date

d 29

Aug

ust

2012

to

trans

fer

an

addi

tiona

l 10

%

(tota

l 95

%

owne

rshi

p of

sha

res)

of t

he s

hare

s he

ld

by

Iqba

l to

B

lue

Cas

tle

Inve

stm

ents

Lim

ited.

No.

N

ame

of S

hare

hold

er

Num

ber

of

Shar

es

Am

ount

of S

hare

s (ID

R)

%

1.

Blu

e C

astle

Inve

stm

ents

Lim

ited

212,

500

1,81

8,57

5,00

085

2.

Mr M

uham

mad

Iqba

l 37

,500

320,

925,

000

15To

tal

250,

000

2,13

9,50

0,00

010

0


For

per

sona

l use

onl

y

121


Jaka

rta-#

1082

35-v

1 15

(2)

PT

Gol

den

Cas

tle R

esou

rces

Add

ress

Com

pany

Add

ress

E

quity

Tow

er 3

5th F

loor

, SC

BD

Jl

. Jen

d. S

udirm

an K

av. 5

2-53

, Sou

th J

akar

ta –

121

90

Boa

rd o

f Dire

ctor

s

Pre

side

nt D

irect

or

Mr M

uham

mad

Iqba

l D

irect

or

Mr H

anty

asno

Y. M

arto

yo

Boa

rd o

f Com

mis

sion

ers

Pre

side

nt C

omm

issi

oner

M

r And

rew

Mie

czys

law

C

omm

issi

oner

M

r And

rew

Edw

ard

Nut

t

Cap

italis

atio

n

Aut

horis

ed C

apita

l of t

he

Com

pany

R

p. 1

5,00

0,00

0,00

0

Issu

ed C

apita

l R

p. 5

,000

,000

,000

P

aid-

up C

apita

l R

p. 5

,000

,000

,000

Shar

ehol

ders

N

o.

Nam

e of

Sha

reho

lder

N

umbe

r of

Shar

es

Am

ount

of S

hare

s (U

SD)

%

1.

Who

le D

rago

n En

terp

rise

Ltd

247,

500

247,

500

99

2.

Lana

San

toso

2,

500

2,50

0 1

Tota

l 25

0,00

0 25

0,00

0 10

0

For

per

sona

l use

onl

y

122

Jaka

rta-#

1082

35-v

1

16

(3)

PT

Ela

ng P

erka

sa K

enca

na R

esou

rces

Add

ress

Com

pany

Add

ress

Jl

. Tan

ah P

asir

No.

45

EE

, RT/

RW

. 001

/009

, Pen

jarin

gan

Dis

trict

, Pen

jarin

gan

Sub

-Dis

trict

, Nor

th J

akar

ta

Boa

rd o

f Dire

ctor

s

Dire

ctor

M

r. E

ko B

udi H

arto

Boa

rd o

f Com

mis

sion

ers

Com

mis

sion

er

Mrs

. Eve

linda

Cap

italis

atio

n

Aut

horis

ed C

apita

l of t

he

Com

pany

R

p. 1

5,00

0,00

0,00

0

Issu

ed C

apita

l R

p. 5

,000

,000

,000

P

aid-

up C

apita

l R

p. 5

,000

,000

,000

Shar

ehol

ders

N

o.

Nam

e of

Sha

reho

lder

N

umbe

r of

Shar

es

Am

ount

of S

hare

s (ID

R)

%

1.

Mrs

. Lan

ny L

esta

ri 1,

750

1,75

0,00

0,00

035

2.

Mrs

. Eve

linda

70

070

0,00

0,00

014

3.

PT

End

eavo

r Res

ourc

es N

TT (E

RN

) 2,

550

2,55

0,00

0,00

051

Tota

l 5,

000

5,00

0,00

0,00

010

0


For

per

sona

l use

onl

y

123


Jaka

rta-#

1082

35-v

1

17

(4)

PT

Ela

ng P

erka

sa M

inin

g

Add

ress

Com

pany

Add

ress

Jl

. Vet

eran

No.

8 R

T 04

/03

Cuk

angg

alih

Vill

age,

Cur

ug D

istri

ct, T

ange

rang

Reg

ency

– 1

5810

Boa

rd o

f Dire

ctor

s

Dire

ctor

M

r Eko

Bud

i Har

to

Boa

rd o

f Com

mis

sion

ers

Com

mis

sion

er

Ms

Elic

ia

Cap

italis

atio

n

Aut

horis

ed C

apita

l of t

he

Com

pany

R

p. 1

5,00

0,00

0,00

0

Issu

ed C

apita

l R

p. 5

,000

,000

,000

P

aid-

up C

apita

l R

p. 5

,000

,000

,000

Shar

ehol

ders

No.

N

ame

of S

hare

hold

er

Num

ber o

f Sh

ares

A

mou

nt o

f Sha

res

(IDR

) %

1.

PT

End

eavo

r Res

ourc

es N

TT (E

RN

) 2,

550

2,55

0,00

0,00

0 51

2.

Mr E

dija

nto

1,25

0 1,

250,

000,

000

25

3.

Ms

Elic

ia

1,20

0 1,

200,

000,

000

24

Tota

l 50

00

5,00

0,00

0,00

0 10

0

For

per

sona

l use

onl

y

124

Jaka

rta-#

1082

35-v

1 18

(5)

PT

Ela

ng P

erka

sa K

enca

na

Add

ress

Com

pany

Add

ress

Jl

. Vet

eran

No.

8 R

T 04

/03

Cuk

angg

alih

Vill

age,

Cur

ug D

istri

ct, T

ange

rang

Reg

ency

– 1

5810

Boa

rd o

f Dire

ctor

s

Dire

ctor

M

r Eko

Bud

i Har

to

Boa

rd o

f Com

mis

sion

ers

Com

mis

sion

er

Ms

Elic

ia

Cap

italis

atio

n

Aut

horis

ed C

apita

l of t

he

Com

pany

R

p. 1

5,00

0,00

0,00

0

Issu

ed C

apita

l R

p. 5

,000

,000

,000

P

aid-

up C

apita

l R

p. 5

,000

,000

,000

Shar

ehol

ders

No.

N

ame

of S

hare

hold

er

Num

ber o

f Sh

ares

A

mou

nt o

f Sha

res

(IDR

) %

1.

PT

End

eavo

r Res

ourc

es N

TT (E

RN

) 2,

550

2,55

0,00

0,00

051

2.

Mrs

Lan

ny L

esta

ri 2,

450

2,45

0,00

0,00

049

Tota

l 5,

000

5,00

0,00

0,00

010

0


For

per

sona

l use

onl

y

125


Jaka

rta-#

1082

35-v

1

19

(6)

PT

Nis

so In

done

sia

Res

ourc

es

A

ddre

ss

Com

pany

Add

ress

Jl

. Tan

ah P

asir

RT/

RW

. 001

/009

, Pen

jarin

gan

Dis

trict

, Pen

jarin

gan

Sub

-Dis

trict

, Nor

th J

akar

ta

Boa

rd o

f Dire

ctor

s

Pre

side

nt D

irect

or

Mr.

Eko

Bud

i Har

to

Dire

ctor

M

r. Irh

am H

amid

Boa

rd o

f Com

mis

sion

ers

Com

mis

sion

er

Mrs

. Lan

ny L

esta

ri

Cap

italis

atio

n

Aut

horis

ed C

apita

l of t

he

Com

pany

R

p. 1

,000

,000

,000

Issu

ed C

apita

l R

p. 3

00,0

00,0

00

Pai

d-up

Cap

ital

Rp.

300

,000

,000

Shar

ehol

ders

No.

N

ame

of S

hare

hold

er

Num

ber o

f Sh

ares

A

mou

nt o

f Sha

res

(IDR

) %

1.

PT

End

eavo

r Res

ourc

es N

TT (E

RN

) 2,

550

2,55

0,00

0,00

051

2.

Mrs

. Lan

ny L

esta

ri

1,35

01,

350,

000,

000

253.

M

rs. E

licia

Alim

1,

100

1,10

0,00

0,00

024

Tota

l 5,

000

5,00

0,00

0,00

010

0

For

per

sona

l use

onl

y

126

Jaka

rta-#

1082

35-v

1 20

(7)

PT

Elg

ary

Res

ourc

es

Add

ress

Com

pany

Add

ress

Jl

. Joh

ar H

ijau

Gol

f Ray

a N

o. 5

6 P

anta

i Ind

ah K

apuk

RT/

RW

.004

/003

Kam

al M

uara

Sub

-dis

trict

, Pen

jarin

gan

Dis

trict

, Nor

th J

akar

ta

Boa

rd o

f Dire

ctor

s

Dire

ctor

M

r Hos

eini

l Hai

kal

Boa

rd o

f Com

mis

sion

ers

Com

mis

sion

er

Ms

Elic

ia

Cap

italis

atio

n

Aut

horis

ed C

apita

l of t

he

Com

pany

R

p. 1

5,00

0,00

0,00

0

Issu

ed C

apita

l R

p. 5

,000

,000

,000

P

aid-

up C

apita

l R

p. 5

,000

,000

,000

Shar

ehol

ders

N

o.

Nam

e of

Sha

reho

lder

N

umbe

r of

Shar

es

Am

ount

of S

hare

s (ID

R)

%

1.

PT

End

eavo

r Res

ourc

es N

TT (E

RN

) 2,

550

2,55

0,00

0,00

051

2.

Ms

Lann

y Le

star

i 2,

450

2,45

0,00

0,00

049

Tota

l 5,

000

5,00

0,00

0,00

010

0


For

per

sona

l use

onl

y

127


Jaka

rta-#

1082

35-v

1 21

(8)

PT

Orie

ntal

Pra

tam

a S

teel

A

ddre

ss

Com

pany

Add

ress

R

uko

Per

mat

a A

ncol

, Blo

k L,

No.

28

Jl. R

E M

arta

dina

ta, P

adem

anga

n B

arat

Sub

dist

rict,

Nor

th J

akar

ta

Boa

rd o

f Dire

ctor

s

Dire

ctor

M

s. E

licia

Boa

rd o

f Com

mis

sion

ers

Com

mis

sion

er

Mrs

Lan

ny L

esta

ri

Cap

italis

atio

n

Aut

horis

ed C

apita

l of t

he

Com

pany

R

p. 1

0,00

0,00

0,00

0

Issu

ed C

apita

l R

p. 1

,000

,000

,000

P

aid-

up C

apita

l R

p. 1

,000

,000

,000

Shar

ehol

ders

N

ote:

Th

is

shar

ehol

ding

co

mpo

sitio

n is

bas

ed o

n th

e la

test

BK

PM

app

rova

l iss

ued

to

the

com

pany

, as

we

have

not

re

ceiv

ed th

e M

OLH

R a

ppro

val.

No.

N

ame

of S

hare

hold

er

Num

ber o

f Sh

ares

A

mou

nt o

f Sha

res

(IDR

) %

1.

PT

End

eavo

r Res

ourc

es N

TT

25,5

002,

550,

000,

000

512.

E

licia

Alim

12

,250

1,22

5,00

0,00

024

.53.

La

nny

Lest

ari

12,2

501,

225,

000,

000

24.5

To

tal

50,0

005,

000,

000,

000

100

For

per

sona

l use

onl

y

128

Jaka

rta-#

1082

35-v

1

22

(9)

PT

Ela

ng P

erka

sa R

esou

rces

Indo

nesi

a

Add

ress

Com

pany

Add

ress

Jl

. Vet

eran

No.

8 R

T 04

/03

Cuk

angg

alih

Vill

age,

Cur

ug D

istri

ct, T

ange

rang

Reg

ency

– 1

5810

Boa

rd o

f Dire

ctor

s

Pre

side

nt D

irect

or

Mr.

Hoe

sini

l Hai

kal

Dire

ctor

M

r. E

ko B

udi H

arto

Boa

rd o

f Com

mis

sion

ers

Com

mis

sion

er

Mrs

Eve

linda

Cap

italis

atio

n

Aut

horis

ed C

apita

l of t

he

Com

pany

R

p. 1

,000

,000

,000

Issu

ed C

apita

l R

p. 3

00,0

00,0

00

Pai

d-up

Cap

ital

Rp.

300

,000

,000

Shar

ehol

ders

No.

N

ame

of S

hare

hold

er

Num

ber o

f Sh

ares

A

mou

nt o

f Sha

res

(IDR

) %

1.

Mr E

dija

nto

110

110,

000,

000

372.

M

rs. E

velin

da

3737

,000

,000

123.

P

T E

ndea

vor R

esou

rces

NTT

(ER

N)

153

153,

000,

000

51To

tal

300

300,

000,

000

100


For

per

sona

l use

onl

y

129


Jaka

rta-#

1082

35-v

1

23

(10)

P

T M

angg

arai

Man

gane

se

A

ddre

ss

Com

pany

Add

ress

G

edun

g S

udirm

an P

laza

, In

dofo

od T

ower

, 7th

flo

or,

Sui

te 7

01,

Jala

n Je

nder

al S

udirm

an K

av.

76-7

8,

Set

iabu

di D

istri

ct, S

etia

budi

Sub

-Dis

trict

, Sou

th J

akar

ta 1

2910

Boa

rd o

f Dire

ctor

s

Dire

ctor

M

r. M

arce

l Chr

istia

an J

ohan

nes

Flor

y

Boa

rd o

f Com

mis

sion

ers

Pre

side

nt C

omm

issi

oner

M

r. A

ndre

w E

dwar

d N

utt

Com

mis

sion

er

Mr.

Dei

sta

Orc

hidi

to T

agor

Har

ahap

Cap

italis

atio

n

Aut

horis

ed C

apita

l of t

he

Com

pany

R

p. 6

,000

,000

,000

Issu

ed C

apita

l R

p. 6

,000

,000

,000

P

aid-

up C

apita

l R

p. 6

,000

,000

,000

Shar

ehol

ders

N

o.

Nam

e of

Sha

reho

lder

N

umbe

r of

Shar

es

Am

ount

of S

hare

s (ID

R)

%

1.

Flor

es N

TT M

inin

g P

te. L

td

99

5,94

0,00

0,00

0 99

2.

A

lligar

d In

vest

men

ts L

imite

d 1

60,0

00,0

00

1 To

tal

100

6,00

0,00

0,00

010

0

For

per

sona

l use

onl

y

130

Jaka

rta-#

1082

35-v

1

24

(11)

P

T C

harli

e S

apa

Prim

a

Add

ress

Com

pany

Add

ress

E

quity

Tow

er S

CB

D, 3

5th F

loor

, Jal

an J

ende

ral S

udirm

an K

av. 5

2-53

, Sen

ayan

Dis

trict

, Keb

ayor

an B

aru

Sub-

Dis

trict

, Sou

th J

akar

ta 1

2190

Boa

rd o

f Dire

ctor

s

Dire

ctor

M

r. H

anty

asno

Yun

iarto

Boa

rd o

f Com

mis

sion

ers

Pre

side

nt C

omm

issi

oner

M

r. M

uham

ad Iq

bal

Com

mis

sion

er

Mr.

Ir. Y

ahja

Dja

nggo

la

Cap

italis

atio

n

Aut

horis

ed C

apita

l of t

he

Com

pany

R

p. 1

,000

,000

,000

Issu

ed C

apita

l R

p. 7

00,0

00,0

00

Pai

d-up

Cap

ital

Rp.

700

,000

,000

Shar

ehol

ders

No.

N

ame

of S

hare

hold

er

Num

ber o

f Sh

ares

A

mou

nt o

f Sha

res

(IDR

) %

1.

PT

Nus

anta

ra In

vest

ama

Con

sulti

ng (N

IC)

500

500,

000,

000

102.

G

olde

n C

astle

Res

ourc

es L

imite

d 4,

500

4,50

0,00

0,00

090

Tota

l 5,

000

5,00

0,00

0,00

010

0


For

per

sona

l use

onl

y

131


Jaka

rta-#

1082

35-v

1

25

(12)

P

T K

onst

rukt

or D

ongg

ala

Add

ress

C

ompa

ny A

ddre

ss

Sou

th J

akar

ta

Boa

rd o

f Dire

ctor

s D

irect

or

Mr.

Ir. D

ani

Boa

rd o

f Com

mis

sion

ers

Com

mis

sion

er

Mr.

Mic

hael

Mau

lana

Cap

italis

atio

n A

utho

rised

Cap

ital o

f the

C

ompa

ny

Rp.

10,

000,

000,

000

Issu

ed C

apita

l R

p. 2

,500

,000

,000

P

aid-

up C

apita

l R

p. 2

,500

,000

,000

Shar

ehol

ders

N

ote:

W

e no

te

that

M

icha

el

Mau

lana

an

d P

T K

onst

rukt

or

have

ent

ered

int

o a

sale

and

pu

rcha

se a

gree

men

t w

ith P

T G

olde

n C

astle

R

esou

rces

(u

ndat

ed).

Afte

r th

e co

mpl

etio

n of

the

sal

e an

d pu

rcha

se o

f sh

ares

, 49

% o

f th

e sh

ares

of

the

com

pany

will

be h

eld

by P

T G

olde

n C

astle

Res

ourc

es.

No.

Nam

e of

Sha

reho

lder

N

umbe

r of

Shar

es

Am

ount

of

Shar

es (I

DR

) %

1 P

T K

onst

rukt

or

1,27

51,

275,

000,

000

512

Mr M

icha

el M

aula

na

1,22

51,

225,

000,

000

49To

tal

2,50

02,

500,

000,

000

100

For

per

sona

l use

onl

y

132

Jakarta-#108235-v1

2. IUPs

2.1 Legal Basis

The following are key laws and regulations relating to mining activities in Indonesia:

a. Law Number 4 of 2009 on Mineral and Coal Mining (the New

Mining Law). b. Government Regulation Number 22 of 2010 on Mining Areas

(Government Regulation No. 22). c. Government Regulation Number 23 of 2010 on Implementation

of Mineral and Coal Mining Business Activities (Government Regulation No. 23) as amended by Government Regulation Number 24 of 2012 (Government Regulation No. 24).

d. Government Regulation Number 78 of 2010 on Reclamation and

Post-Mining (Government Regulation No. 78). e. Regulation of the MEMR Number 28 of 2009 on the

Arrangement of Mineral and Coal Mining Business Services as amended by the Regulation of the MEMR No. 24 of 2012 (MEMR Regulation No. 28).

f. Regulation of the MEMR Number 34 of 2009 on Prioritising the

Supply of Minerals and Coal for Domestic Needs (MEMR Regulation No. 34).

g. Regulation of the MEMR Number 5 of 2010 on Delegation of

Issue of Business Licences in the field of Energy and Mineral Resources to the BKPM (MEMR Regulation No. 5).

h. Regulation of the MEMR Number 17 of 2010 on Procedures for

Stipulating Benchmark Prices of Minerals and Coal Sales (MEMR Regulation No. 17).

i. Regulation of the MEMR Number 7 of 2012 on Value Added to

Minerals Through Processing and Refining (MEMR Regulation No. 7).

j. Regulation of the MOT Number 29 of 2012 on Provisions for the

Export of Mining Products (MOT Regulation No. 29).

k. Regulation of the MEMR Number 574.K/30/DJB/2012 of 2012 on Procedures and Requirements for Export Recommendations for Mining Products (MEMR Regulation No. 574).


For

per

sona

l use

onl

y

133


Jakarta-#108235-v1 27

l. Bank Indonesia Regulation Number 13/20/PBI/2011 on Export Proceeds and Foreign Exchange Debt (Bank Indonesia Regulation).

m. Regulation of the Minister of Finance Number 75/PMK.011/2012

on Customs Duty Rates for Export Goods (MOF Regulation No. 75).

2.2 Legal Background

(1) Previous regime

Traditionally, mining rights in Indonesia were issued under Law Number 11 of 1967 on Basic Regulation on Mining, in the form of:

(a) Contracts of Work (COWs) between the Government of Indonesia (GOI) and PMA Companies;

(b) Coal Contracts of Work (CCOWs) between the GOI and any of:

(i) PMA Companies;

(ii) PMDN Companies; or

(iii) General Indonesian Companies; and

(c) Mining Rights (KPs), which are issued to General Indonesian Companies, PMDN companies and limited partnerships (Commanditaire Vennootschap).

A COW and CCOW require the approval of the Parliament, the President, the Minister of Mines, and BKPM, which is an extremely protracted process.

KPs were originally granted and regulated pursuant to centrally enacted mining laws and regulations and, increasingly, regional regulations. Provincial and regional governments had also begun to exercise their perceived authority conferred under the policy of regional autonomy since 1999, by attaching conditions to grants of mining rights and imposing additional obligations and taxes on their holders. These conditions, and regional regulations, may conflict with central laws and so be subject to review and cancellation by the central government.

For

per

sona

l use

onl

y

134

Jakarta-#108235-v1 28

Again, traditionally Indonesia’s mining laws also contemplated the granting of mining rights under contracts, in the form of COWs, between government and private sector contractors. As a general rule, COWs are in theory “negotiated” but in practice have followed a series of evolving standard-form agreements. Indonesia is currently up to the “eighth generation” COW although, to our understanding, few eighth generation COWs have actually been executed. Regional autonomy conferred upon the regencies the power to execute COWs. However, this has now changed with the enactment of the New Mining Law.

(2) New Mining Law

In January 2009, the New Mining Law came into effect in Indonesia. The New Mining Law abolished the distinction between COWs, CCOWs and KPs and introduced a single form of mining right known as an IUP. Significantly, the New Mining Law allows IUPs to be held by PMA Companies, resulting in foreigners being able to hold shares in a company which holds an IUP.

The key elements of the New Mining Law include:

(a) the current system of mining rights under COWs, CCOWs and KPs has been abolished and replaced by a new scheme of mining permits including Mining Business Permits (Ijin Usaha Pertambangan) (IUPs) and Special Mining Business Permits (Ijin Usaha Pertambangan Khusus) (IUPKs);

(b) there are tender/auction provisions to apply in respect of the issue of certain types of mining permits;

(c) all Indonesian entities including those with foreign shareholders (ie PMA Companies) can hold IUPs. This is distinct from the regime to date, where PMA Companies could only directly hold COWs and CCOWs, and not KPs;

(d) permits will have size and duration limits, and will generally be provided to the exploration and production phases of mining; and

(e) production royalties must be paid, with additional amounts payable where activities are in State Reserve Areas.

(3) Types of IUP

An IUP consists of the following two stages:

(a) Exploration IUP, which permits activities of general survey, exploration and feasibility study; and

(b) Operation Production IUP, which permits activities of construction, mining, utilisation and purification, and also transportation and sales.


For

per

sona

l use

onl

y

135


Jakarta-#108235-v1 29

(4) Mining Areas The central government establishes that an area is open to mining,

called a Mining Area (Wilayah Pertambangan) (Mining Area). Within a Mining Area there is a Mining Business Area (Wilayah Usaha Pertambangan) (Business Area). Within a Business Area there is a Mining Business Licence Area (Wilayah Izin Usaha Pertambangan) (Licence Area). A mining licence in the Licence Area is usually called an IUP and is granted by central or regional government to a successful bidder. The procedure for issuance of IUP by the central government has not yet been announced.

The New Mining Law did not provide for conversion of the previous licensing system (KP) to the IUP. Government Regulation No. 23 only states that old licences must be converted into new licences by 30 April 2010 at the latest, which was three months after the regulation was published. No new licences have been issued since January 2009, with all IUPs now being a result of conversion from KP to IUP.

(5) Holder of IUP

IUPs may be granted to companies, cooperatives or individuals. However, the only way for foreigners to hold a licence is to acquire a mining company. An IUP cannot be transferred in most circumstances. Article 93 of the New Mining Law allows for ownership of companies holding licences to change “after certain phases of exploration have been carried out”. This is defined to mean after two prospective areas have been discovered. In the case of coal, this is being treated for practical purposes as almost immediately, but will depend on the Bupati involved. However, Government Regulation No. 24 appears to conflict with this, as it provides that an IUP can be transferred as long as the IUP holder becomes a majority shareholder in the company that will purchase the IUP.

(6) Rules on Divestment and Transfer of Mining Licences (IUPs)

On 21 February 2012, the Government of Indonesia (GOI) issued MEMR Regulation No. 24. MEMR Regulation No. 24 increases the divestment requirement to Indonesian interests for PMA Companies holding an IUP, from 20% to 51%. The new divestment requirement commences after five years of commercial production, and is as follows:

20% in the sixth year; 30% in the seventh year; 37% in the eighth year; 44% in the ninth year; and 51% in the 10th year.

For

per

sona

l use

onl

y

136

Jakarta-#108235-v1 30

The "pecking order" for divestment basically stays the same: an offer must first be made to the national government, then to provincial/local governments and state/region-owned enterprises, and lastly to private interests. There is currently some regulatory uncertainty as to whether this divestment obligation applies to smelting companies.

While slightly contradictory, the elucidation to MEMR Regulation No. 24 indicates that an IUP may be transferred to another entity as long as the original IUP holder holds at least 51% of the shares in the entity receiving the IUP. There has previously been some confusion as to the transferability of IUPs, as the New Mining Law provides that IUPs are non-transferable, while the MEMR has issued circulars stating the contrary.

MEMR Regulation No. 24 also provides that IUPs for PMA Companies are to be issued at the central, rather than regional, level. Under the New Mining Law, mining rights are subject to tender/auction provisions. Pending the issue of implementing regulations that set out these tender/auction provisions, the general view is that IUPs should not currently be issueddirectly.Accordingly,the requirement that IUPs be issued at the central level will not immediately impact on new concessions. However, to the extent that a PMA Company wishes to upgrade an existing IUP from the status of exploration to production, it appears that the IUP Production will need to be issued at the regency level.

(7) Clean and Clear (C&C) An IUP is declared “clean and clear” if it is included in the MEMR’s

C&C List. The “clean and clear” process does not guarantee whether such a permit is in place, or uncover any disputes with local landowners (whether arising from registered or traditional rights) or that arise from illegal mining activity and overlapping areas. The area of overlap can be settled by mutual agreement, negotiation, relinquishing the land, or settling the overlap issue in court.

To be registered in the C&C List, the mining area must not overlap with

any other mining area and the IUP must have been issued before 1 May 2010.

In late September 2012 the Directorate General of Minerals and Coal (DGMC) at MEMR issued a number of announcements to regional governments (including Bupati) stating that after specified dates (referred to as the Schedule of the Second National Reconciliation of IUP), the DGMC would no longer receive data regarding IUPs issued by regional governments. The specified dates in the announcements for the Second National Reconciliation of IUP for various regions are as follows:

(a) Kalimantan (18-19 September 2012); (b) Sulawesi (2-3 October 2012); (c) Sumatra (16-17 October 2012);


For

per

sona

l use

onl

y

137


Jakarta-#108235-v1 31

(d) Papua and Maluku (30-31 October 2012), and (e) Java and Nusa Tenggara (13-14 November 2012).

Given the recent nature of these announcements, there is some uncertainty regarding their operation. We met with an MEMR official on 4 October 2012 who advised that after the dates specified, the MEMR will no longer receive information required to place IUPs on the C&C List directly from IUP holders, and that the IUP holder would need to contact the issuer of the IUP (ie the Bupati) to discuss placing the IUP o the C&C List. Whether this new procedure will place additional obstacles in the path of placing IUPs on the C&C List is currently uncertain.

In relation to the C&C LIST, MEMR faces the problem that many

Bupatis have not yet reported to MEMR the licences they have issued.

8) Multiple Licences Under the relevant regulation, one entity may only hold one IUP,

except if (i) it is a listed company, and (ii) the IUP is for non-metal minerals and/or rock. However, there are currently miners that already hold more than one licence, as the IUP is a result of conversion from KP.

Article 112 of Government Regulation No. 23 states that an owner with

more than one licence at the time the New Mining Law came into effect (on 12 January 2009) may continue to hold the licences until the expiry date, and the licences may be converted into IUP. Pursuant to Article 93 of the New Mining Law, licence holders may not transfer a licence to another party. However, Government Regulation No. 23 as amended by Government Regulation No. 24 states that this exclusion does not apply to majority-owned subsidiaries of the IUP holder. Although this regulation may be seen as being inconsistent with the current law, on this basis a miner may establish a subsidiary and then transfer the licence.

(9) Multiple Deposits The New Mining Law and Government Regulation No. 24 provide that

a miner may hold an IUP only for one type of mineral or coal in the relevant mining area. If a miner finds other minerals (resources) in the mining area, it may apply for another IUP. In this case, the holder of the first IUP has priority.

(10) Land Rights

It is clear that an IUP is not a right to the land. The miner must either buy the land or obtain permits to use or otherwise enter into agreement with the government or private owners. Post-mining land use must be agreed with the landowner before exploitation commences.

For

per

sona

l use

onl

y

138

Jakarta-#108235-v1 32

(11) Obligations of a Miner

The licence holder must be the miner. It is intended that while the licence holder can contract out all other activities, the licence holder must actually remove the coal or minerals itself. The miner has an obligation to give priority to domestic needs. The miner must contribute to a reclamation guarantee fund, which will be used if the miner does not meet its reclamation obligations. Major obligations are set out in Attachment Three to this Opinion.

Failure to comply with these obligations may lead to administrative sanctions, in the form of; 1. a written warning; 2. suspension of the whole or part of the exploration or production

operation; or 3. revocation of the IUP. Criminal sanctions may also apply in certain conditions, eg if mining activities are conducted without a borrow-and-use permit in a forestry area.

(12) Environmental Obligations

A miner has an obligation to manage and monitor the environment, including reclamation and post-mining.

The basic tools of environmental management are the Environmental Impact Analysis (AMDAL) and the Environmental Management Plan (RKL) relating to dealing with identified problem areas, and an Environmental Monitoring Plan (RPL), which sets out the means for monitoring the handling of identified problem areas of a company’s business activities. Mining is listed as an activity for which an AMDAL is required.

Failure to comply with environmental obligations may lead to an administrative sanction in the form of a warning, a suspension of the IUP, or cancellation of the IUP.

(13) Processing of Ore

At the start of 2012, the Minister of Energy and Mineral Resources signed a ministerial regulation implementing a ban on exports of raw ore. Mineral raw materials will have to be processed in Indonesia, rather than being exported in a raw state. This regulation is intended to develop the country’s downstream mining industry, increase domestic revenues, and ensure availability of refined products for domestic use. Sanctions for failure to comply include suspension of activities and/or


For

per

sona

l use

onl

y

139


Jakarta-#108235-v1 33

permit revocation. The above prohibitions do not cover coal.

MEMR Regulation No. 7 states that the minerals that need to be processed further (ie added value by processing the ore) include 14 minerals: antimony, bauxite, chromium, copper, gold, iron ore, iron sand, lead, manganese, molybdenum, nickel, platinum, silver and tin. Coal is excluded.

MEMR Regulation No. 7 does not apply to holders of COWs and CCOWs, which have their own contractual regimes. However, the New Mining Law requires COW and CCOW holders to undertake processing by 12 January 2014 and the COW and CCOW do contain general requirements regarding processing. An IUP holder may use another IUP holder to undertake its processing. A Production Operation IUP may be issued specifically for processing, and companies holding these IUPs currently are not subject to the divestment requirements imposed on miners.

(14) Value Adding and Domestic Obligations

While MEMR Regulation No. 7 prohibits the export of the 14 specified minerals in an unprocessed state from 6 May 2012, MEMR Regulation No. 574 and the Ministry of Trade (through the issue of MOT Regulation No. 29) provide that minerals can only be exported by companies that have obtained a recommendation from MEMR and been approved by the Ministry of Trade as “Mineral Product Exporters” (ET-Produk Pertambangan) (Acknowledgement as Mineral Product Exporter), which are valid until 12 January 2014. Further parties that have obtained an Acknowledgement as Mineral Product Exporter, subject to certain requirements, will then be required to obtain an export approval from the Minister of Trade before they can export any mineral (raw or processed).

MOT Regulation No. 29 allows “mining products” to be exported on the following basis: 1. The company has a Production Operation IUP or a COW. 2. The company is approved as an exporter by the Minister of

Trade. 3. The company has obtained an Export Agreement from the

Minister of Trade. 4. The company has obtained a recommendation from MEMR. The Directorate General of Minerals and Coal is required to stipulate procedures for the issue of recommendation letters. The companies that can be approved for export are companies that:

1. hold an IUP that has been declared “clean and clear”;

For

per

sona

l use

onl

y

140

Jakarta-#108235-v1 34

2. are up-to-date in paying their taxes (including a 20% tax on exports applicable from 7 May 2012);

3. have signed an integrity pact, agreeing that in 2014 they must

stop exporting unprocessed ore; and 4. submit a comprehensive proposal on whether they will build

their own smelter, enter a consortium, or sell their ore to smelting companies within the country.

Coal is not mentioned in relation to any immediate restrictions on exports or the imposition of export taxes under MOT Regulation No. 29.

(15) Receipt of Export Proceeds into Indonesian Bank Accounts and Withdrawal of Foreign Exchange from External Debt

New regulations relating to offshore borrowings (foreign exchange from external debt, or DULN) and export proceeds came into force in January 2012. Bank Indonesia’s stated aim in introducing these regulations is to support the creation of a sounder financial market by bringing Indonesia’s considerable export proceeds into the local banking system.

In short, the regulations stipulate that:

export proceeds must be received through a local foreign

exchange bank, and

DULN must be withdrawn through a local foreign exchange bank account.

There is neither a requirement for foreign currency to be converted into local currency nor a limit on the period of time it must remain onshore. There are, however, some additional reporting requirements.

Sanctions, which take effect from 2 July 2012, include a fine of Rp. 10 million for each non-compliant drawdown of offshore borrowings and a fine of 0.5% of export proceeds that have not been received onshore, subject to a minimum amount of Rp. 10 million and a maximum of Rp. 100 million.

Where it has been contractually agreed that the export proceeds will not use a local foreign exchange bank before 2 January 2012, they will not be subject to this Bank Indonesia Regulation until 2 January 2013. Similar conditions will apply for DULN, except for DULN withdrawals based on an increased offshore loan facility as a result of an amendment to the agreement signed after 2 January 2012.

The regulation does not specifically prohibit transfers of funds, once made into a local foreign exchange bank account, to an offshore bank account. As a passing comment, financiers of Indonesian mining


For

per

sona

l use

onl

y

141


Jakarta-#108235-v1 35

projects often prefer funds to be kept in offshore bank accounts, as these may be subject to registrable securities. As of about five years ago, cash in bank accounts can no longer be registered as security in Indonesia.

(16) New Minister of Finance Regulation Imposes Export Duties to

Encourage Minerals Processing MOF Regulation No. 75 regulates goods that are subject to export

duties. The regulation applies to exports of mineral ores, including 65 types of minerals comprising 21 metal minerals, 9 non-metal minerals, and 33 rocks (see Annex IV of that regulation).

The export duty applies to mixtures of ores, not to individual ore, based

on the presumption that individual ores have already been refined to an acceptable degree in accordance with MEMR Regulation No. 7.

Minerals are commonly found impure and need further processing and

sorting before they can be separated into individual minerals. Once processed and purified, they command higher prices.

Of importance is the previously issued MEMR Regulation No. 7, which

stipulates that only 41 mineral ores (14 metal minerals, 8 non-metal minerals, and 19 rocks) are subject to further processing and refining before export, whereas MOF Regulation No. 75 stipulates that 65 types of ores are subject to 20 percent export tax (Annex IV of that regulation).

Many businesses relating to ores have criticised this discrepancy, as

they had expected that the categories of minerals subject to export tax would be similar to those that must be processed and refined.

Article 10 juncto Article 1 of MOF Regulation No. 75 taxes exports of

any mixture of two or more ores where one of them falls under a category stipulated in Annex IV of that regulation.

Though MOF Regulation No. 75 imposes a 20% duty on all 65 ores in

the Annex, the duty is calculated based on the highest price of the mixture's component. This regulation is, however, silent on what is considered the “highest price,” ie whether it is the sales price or the market price.

(17) Mineral and Coal Sales Exports are to be priced according to reference prices set for minerals

and coal by the MEMR. This is to protect the economy against transfer pricing, but applies to all sales, not just those involving related parties.

Benchmark prices are set monthly for thermal coal and for coking coal. There are special benchmark prices for low quality coal. Sales may be conducted on the basis of FOB vessel, FOB barge, point of sale if on the same island, or CIF or C&F (now called CFR). Term sales must be

For

per

sona

l use

onl

y

142

Jakarta-#108235-v1 36

adjusted each year. It appears that sales below the benchmark are tolerated in tight times as long as relevant fees and taxes are based on the relevant benchmark.

(18) Core Services MEMR Regulation No. 28 (as amended) describes a range of activities

which can be contracted, and these include mine planning and consulting for the actual line process. Exploration, construction, transport, reclamation, and health and safety are all activities which can be contracted out. MEMR Regulation No. 28 requires such contractors to obtain a Mining Services Licence (IUJP), which is valid for five years.

(19) Non-Core Services

MEMR Regulation No. 28 (as amended) adds a category of any activities other than Core Services. The operators of such services are required to obtain a licence known as a certificate of registration (SKT), which like the IUJP is valid for five years.

(20) Mining in Forest Areas

Article 38 of the Forestry Law (Law Number 41 of 1999) allows production and protected forest areas to be used for non-forest purposes (including mining), and for the Forestry Minister to grant borrow-and-use permits (ijin pinjam pakai). Open-pit mining will never be permitted in a protected forest area, except under 13 pre-existing approvals.

In general, except for the exploration phase, borrow-and-use permits may be granted initially on an in-principle basis with a maximum period of no more than two years, and can be extended. The in-principle licence may be followed by a borrow-and-use permit. Such licences carry obligations to pay fees, protect forests, plant trees, and carry out reclamation.

The period of the borrow-and-use permit is for the same period as the licence for the activity to which it relates, or up to 20 years. The Forestry Law also provides that any disputes on forestry areas may be settled by agreement (except if a criminal act is involved), or through the courts. Any activities in a forest area without a borrow-and-use permit can be deemed as a criminal act that is punishable by imprisonment for up to 10 years and a fine of up to Rp 5 billion (approximately US$500,000).

2.3 IUPs Issued to Mining Companies

We have reviewed the following IUPs (additional details regarding the IUPs are set out in Attachment Two):


For

per

sona

l use

onl

y

143


Jakarta-#108235-v1 37

No. Name of Company IUP

1. PT Oriental Pratama Steel IUP Exploration No. 295

2. PT Nisso Indonesia Resources IUP Exploration No. 304

IUP Exporation No. 300

IUP Exploration No. 110

3. PT Elang Perkasa Resources Indonesia IUP Exploration No. 296

4. PT Elang Perkasa Kencana IUP Exploration No. 745





5. PT Elgary Resources IUP Exporation No. 749


6. PT Elang Perkasa Kencana Resources IUP Exploration No. 743




7. PT Elang Perkasa Mining IUP Exploration No. 747



8. PT Manggarai Manganese IUP Exploration No.109

9. PT Charlie Sapa Prima IUP Exploration No. 540

10. PT Konstruktor Donggala IUP Exploration No. 188

Each of the IUPs has been issued by the Bupati to one of the Mining Companies. IUP Exploration No. 296 issued to PT Elang Perkasa Resources Indonesia, IUP Exploration No. 303 issued to PT Elang Perkasa Kencana, IUP Exploration No. 301 issued to PT Elang Perkasa Mining, and IUP Exploration No. 188 issued to PT Konstruktor Donggala are subject to our further comments below.

For

per

sona

l use

onl

y

144

Jakarta-#108235-v1 38

C&C List

We have been provided with copies of the IUPs for each of the Mining Companies and we have checked them against the C&C List. Based on our review, the IUPs of the following companies are on the C&C List:

No. Name of Company IUPs

1. PT Oriental Pratama Steel IUP Exploration No. 295

2. PT Nisso Indonesia Resources IUP Exploration No. 304

3. PT Charlie Sapa Prima IUP Exploration No. 540

The following IUPs are not listed in the C&C List. The IUPs are at different stages with some not yet having been submitted to MEMR for registration and some being well advanced in the registration process. There is no guarantee that an IUP not listed in the C&C List will be added to the C&C List.

We met with an official of MEMR on 2 - 3 October 2012 to discuss the status of the IUPs that are not listed on the C&C List. We were orally advised by the MEMR officer as follows:

No. Company IUPs Remarks

1. PT Nisso Indonesia Resources

IUP Exporation No. 300 IUP Exploration No. 300 has been registered at MEMR and is waiting to be announced in the next C&C List.

IUP Exploration No. 110 IUP Exploration No. 110 is listed in the Non-C&C List as MEMR has not received the previous mining licence (Mining Rights/Kuasa Pertambangan (KP)).

2. PT Elang Perkasa Resources Indonesia

IUP Exploration No. 296 IUP Exploration No. 296 has been registered at the MEMR and is pending an announcement in the C&C List. The delay in being announced in the C&C List was caused by a previous failure to meet the deadline (30 April 2010) to change the mining licence from Mining Rights (KP) to IUP.

3. PT Elang Perkasa Kencana

IUP Exploration No. 745 IUP Exploration No. 745 has not been registered at MEMR.


For

per

sona

l use

onl

y

145


Jakarta-#108235-v1 39




IUP Exploration No. 303 IUP Exploration No. 303 has been registered at the MEMR and is pending an announcement in the C&C List. The delay in being announced in the C&C List is caused by a previous failure to meet the deadline (30 April 2010) to change the mining licence from Mining Rights (KP) to IUP.

IUP Exploration No. 297 IUP Exploration No. 297 has been registered at the MEMR and is pending an announcement in the C&C List. The delay in being announced in the C&C List is caused by a previous failure to meet the deadline (30 April 2010) to change the mining licence from Mining Rights (KP) to IUP.

overlaps with PT Tiara Utama Mandiri (1,292.96 Ha – Manganese) located in Bakitolas, Timur Tengah Utara (Bakitolas Area).

4. PT Elgary Resources

IUP Exporation No. 749 IUP Exploration No. 749 has not been registered at MEMR.

IUP Exploration No. 299 IUP Exploration No. 299 has been registered at MEMR and is pending an announcement in the C&C List. The delay in being announced in the C&C List is caused by a previous failure to meet the deadline (30 April 2010) to change the mining licence from Mining Rights (KP) to IUP.

5. PT Elang Perkasa Kencana Resources


For

per

sona

l use

onl

y

146

Jakarta-#108235-v1 40



IUP Exploration No. 293 IUP Exploration No. 293 has been registered at MEMR and is pending an announcement in the C&C List. The delay in being announced in the C&C List is caused by a previous failure to meet the deadline (30 April 2010) to change the mining licence from Mining Rights (KP) to IUP.

IUP Exploration No. 259 IUP Exploration No. 259 has been registered at MEMR and is now pending an announcement in the C&C List. The delay in being announced in the C&C List is caused by a previous failure to meet the deadline (30 April 2010) to change the mining licence from Mining Rights (KP) to IUP.

6. PT Elang Perkasa Mining



IUP Exploration No. 301 IUP Exploration No. 301 has been registered at MEMR and is pending an announcement in the C&C. The delay in being announced in the C&C is caused by a previous failure to meet the deadline (30 April 2010) to change the mining licence from Mining Rights (KP) to IUP.

Based on the mining overlay map issued by MEMR on 27 September 2012, an IUP licence and area (IUP Exploration No. 301 and its area) has been issued to two different companies, ie EPM and EPKR.


For

per

sona

l use

onl

y

147


Jakarta-#108235-v1 41


7. PT Manggarai Manganese

IUP Exploration No.109 IUP Exploration No. 109 has not been registered at MEMR.

8. PT Konstruktor Donggala

IUP Exploration No. 188 IUP Exploration No. 188 has not been registered in the C&C List.

Overlap Areas

Some of the IUPs of the Mining Companies are identified as being within forestry areas and therefore a borrow-and-use permit is required from the MOF. However, as we have not conducted further research to the MOF, we cannot verify which IUP areas overlap with forestry areas. Exploration activity must not commence until a licence has been obtained. Some of the IUPs for the Mining Companies also overlap with other mining areas. Following are details of the overlaps of the IUPs based on the information provided to us:

(1) IUP Exploration No. 746 of PT Elang Perkasa Kencana, IUP Exploration No. 744 of PT Elang Perkasa Kencana Resources and IUP Exploration No. 749 of PT Elgary Resources overlap with production forest areas. IUP Exploration No. 745 and IUP Exploration No. 297 of PT Elang Perkasa Kencana and IUP Exploration No. 229 of PT Elgary Resources overlap with protected forest areas. We have not seen any forestry licence (known as pinjam pakai) obtained by these companies. Note that in forest areas classified as protected forest, only underground mining activities are permitted.

(2) IUP Exploration No. 749 of PT Elgary Resources overlaps with PT Gendewa Bima Sakti (18.61 Ha – Manganese) and PT Titisan Mangan (3.10 Ha – Manganese). IUP Exploration No. 744 of PT Elang Perkasa Kencana Resources overlaps with PT Timor Mangan Abadi (15.93 Ha – Manganese) and PT Alamindah Kencana (3.02 Ha – Manganese).

(3) Based on the mining overlay map issued by the MEMR on 27

September 2012, an IUP licence and area (IUP Exploration No. 301 and its area) has been issued for two different companies, ie PT Elang Perkasa Mining and PT Elang Perkasa Kencana Resources. IUP Exploration No. 296 of PT Elang Perkasa Resources Indonesia is issued to PT Elang Perkasa Kencana Resources instead of PT Elang Perkasa Resources Indonesia. We have not received any clarification on this matter.

(4) IUP Exploration No. 297 of PT Elang Perkasa Kencana overlaps with

PT Tiara Utama Mandiri (1,292.96 Ha – Manganese) located in Bakitolas, Timur Tengah Utara (Bakitolas Area). We have been advised by Bligh that PT Tiara Utama Mandiri has submitted an administrative claim against the government in regard to this overlap. However, as we lack direct access to PT Tiara Utama Mandiri, we cannot obtain any further information on this matter.

For

per

sona

l use

onl

y

148

Jakarta-#108235-v1 42

Where there is an overlap with another IUP, the relevant company needs to relinquish the overlap area or reach agreement with the holders of the rights regarding proposed exploration and mining activities. Such agreement may take the form of a Letter of No Objection. We have seen no evidence that any such agreements are in place.

Transfer of IUPs (1) In relation to IUP Exploration No. 188 of PT Konstruktor Donggala, the

IUP holder’s name has changed from PT Konstruktor to PT Konstruktor Donggala. However, according to the Articles of Association of PT Konstruktor Donggala, PT Konstruktor is a shareholder of PT Konstruktor Donggala. On this basis, it appears that there has been a transfer of the IUP from the shareholder (PT Konstruktor) to its subsidiary (PT Konstruktor Donggala) rather than a change of name of the company holding the IUP.

The regulatory arrangements in relation to transfers of IUPs are currently subject to some uncertainty. According to the elucidation to MEMR Regulation No. 24, an IUP may be transferred to another entity as long as the original IUP holder holds at least 51% of the shares in the entity receiving the IUP. However, there is some uncertainty on this issue, given that the New Mining Law provides that IUPs are non-transferable, while the MEMR has issued circulars stating the contrary. We are not aware of the procedure for transferring IUPs having been tested.

(2) We note that the Directorate of Mineral and Coal Concession Development issued a Letter No. 2035/30/DBM/2010 dated 11 June 2010 to the Regent of Timor Tengah Selatan Regarding the Issuance of Mining Business Licence (IUP) (Persetujuan Penerbitan Ijin Usaha Pertambangan) to PT Oriental Pratama Steel and PT Nisso Indonesia Resources. Based on this letter, PT Oriental Pratama Steel has obtained Statement on Survey Permit No. Distamben.535/III/210/2008 dated 2 September 2008, which was valid until 2 October 2008, and PT Nisso Indonesia Resources has obtained Statement on Survey Permit No. Distamben.540.1/31A/2008 dated 6 August 2008, which was valid until 6 September 2008. Further, this letter states that once PT Oriental Pratama Steel and PT Nisso Indonesia Resources have fulfilled all requirements and provided the applications for IUPs are submitted before 12 January 2009, these applications can be processed. According to information provided by Bligh to us, PT Nisso Indonesia Resources is not proceeding with the area referred to in this letter. We have not received any clarification on which IUP of PT Pratama Oriental Steel was issued based on this letter.

All of the IUPs contain a similar list of general rights and obligations of IUP holders. We have summarised these general rights and obligations in Attachment Three.


For

per

sona

l use

onl

y

149


Jakarta-#108235-v1 43

3. Material Agreements

3.1 Legal Background

(1) The "Freedom of Contract" Principle in Indonesian Law

Indonesia is a civil law jurisdiction in which the basic commercial law is found in the Civil and Commercial Codes initially promulgated during the Dutch colonial era. The concept of free will of the parties under Indonesian law is commonly referred to as the principle of "freedom of contract". This means that the parties are free to enter into any type of contract provided the agreement fulfils the four basic statutory requirements set out in Article 1320 of the Indonesian Civil Code:

(i) consent of the parties; (ii) capacity to contract; (iii) a certain object; and (iv) a permissible cause.

After fulfilling these four basic elements, a contract will be regarded as law for the signatories, and they will be bound to comply with it.

Issues on Consent

In general, the Indonesian Civil Code does not define when the parties to a contract consent to be bound. Nonetheless, well established doctrines provide that the parties are considered bound when they have reached an agreement, i.e. when one party's offer is accepted by the other party. It is generally held that the contract is formed the exact moment when this acceptance is received by the offeror. In any event, mutual consent of the parties is required to make a contract binding. Contracts are voidable in the event the mutual consent is formed under duress or by mistake.

Issues on Competence

Contracts that are signed by incompetent parties are voidable. Incompetent parties are minors, persons who represent other parties without authority, and legal entities that are barred by their Articles of Association from concluding the contract concerned. A minor (i.e. someone under the age of 17) who has signed a contract may submit a claim (presumably through his guardian) to an Indonesian court to have the contract declared void. Likewise, companies may ask the court to void contracts signed on their behalf by other parties who have no authority to represent them.

Issues on a Certain Object

Under Indonesian law, contracts that do not have any definite object are null and void. As an example, a sale and purchase contract is null and void if it fails to specify a certain object of the sale and purchase transaction.

For

per

sona

l use

onl

y

150

Jakarta-#108235-v1 44

Issue on Permissible Cause

A contract shall not contravene the prevailing laws and regulations and principles of public order and morality. Contracts that do not fulfil this requirement are null and void.

Contract Construction Principles

Further, in applying the concept of freedom of contract, it is also important to understand the rules of construction of agreed contractual provisions. The basic underlying principles stated in the Indonesian Civil Code governing the performance of contracts, and thus their interpretation, are:

(a) Good faith All contracts are to be construed and performed in good faith.

(b) Customary Practice Custom plays an important role in contract interpretation because it is assumed that the language of a contract will not be exhaustive. "Notice", for example, is subject to customary local practice. Lessors wishing to terminate leases are ordinarily required by custom to give three months’ notice, except if the leasehold is a rice field, for example, in which case six months’ notice of termination is given. It is customary that the party in default must be given at least one warning before action is taken under a commercial contract.

(c) Basic Fairness In the event the Civil Code and custom are silent on a particular issue, a judge has discretion to rule on the basic fairness of the situation.

(d) Clear Meaning If the contract language is clear, there is no room for contrary interpretation.

(e) Intent of Parties If an agreement lends itself to various interpretations, the intent of the parties is to be preserved rather than simply adopting the literal meaning of the wording.

(f) Effect to Contract If two interpretations are possible, the one giving effect to the contract shall be chosen, i.e. the one making it possible for the contract to be performed.

(g) Contracts as a Whole Contract clauses are to be interpreted in concert with each other and construed as a whole.

(h) Construction against the drafter/requester In case of doubt, contract clauses are to be construed against the party requesting the clause.

(i) Role of experts Experts are sometimes used to clarify disputes between parties, however, a court is not bound to consider the evidence or testimony offered by an expert.


For

per

sona

l use

onl

y

151


Jakarta-#108235-v1 45

(j) Implied terms Subject to the overriding principle of freedom of contract, a judge is empowered to imply a term into a contract as required by the nature of the contract, the principles of reasonableness, custom and legislation.

(2) Choice of Law

The issue over the choice of law usually arises in matters relating to international commercial agreements between parties from different countries. In addition, it is also possible that two entities located in one country choose a different law from the law in which they are located. This might happen if, for example, the majority shareholder of one party is from a foreign country. The foreign majority shareholder may feel more comfortable if a contract, especially a major contract entered into by its subsidiary, is governed under the law of the foreign shareholders' home country.

The concept of freedom of contract includes the parties' choice of the law to govern a contract. If parties to a contract agree that their contract is governed in accordance with, for example, the laws of the United States of America, the parties are bound by these laws. Nevertheless, in determining the choice of law of a contract, it is important also to consider the enforceability of the contract.

Theoretically, Indonesian Courts should honour the choice of law and adjudicate the case based on the chosen law. It is not impossible to implement a contract governed under foreign law, however, it is also important to understand that Indonesian civil procedure law contains no specific procedures, and there are no court rules for establishing or proving foreign law. The courts may reach different conclusions on a contract governed under foreign law. There are cases where an Indonesian court declined to proceed because the case was governed by foreign law, or applied Indonesian law when the contract expressly provided otherwise. In reviewing a contract governed under foreign law, the Indonesian courts consider whether the merits of the contract contravene Indonesian public policy. One example; a gambling contract between a casino located in a country where gambling is legal and an Indonesian national. The contract is governed under the law of the country where the casino is located. In this case, Indonesian courts generally will apply Indonesian law and decide that this contract is null and void because gambling is prohibited under Indonesian law.

The different rulings that may come from the Indonesian courts are a result of, firstly, as mentioned above, the absence of specific regulations for establishing or proving foreign law. Secondly, like other civil law countries, Indonesia does not apply the concept of stare decisis or binding precedent, as is the case in a Common Law jurisdiction. Indonesian courts are not bound to previous court decisions of that court. Even previous decisions of higher courts do not have a definitive binding effect on the lower court. The practice is that courts at any level have the freedom to adjudicate cases and render their own judgment based on the merits of each case.

For

per

sona

l use

onl

y

152

Jakarta-#108235-v1 46

(3) Language Clause

Law No. 24 of 2009 regarding the National Flag, Language, Emblem and Anthem dated 9 July 2009 (Law No. 24 of 2009), requires that the Indonesian language be used in agreements entered by an Indonesian national or legal entities. If the agreements involve foreign parties, the agreements can be executed in dual language (i.e. using the Indonesian language and the language of the relevant foreign parties and/or the English language). Law No. 24 of 2009 does not provide any sanction for the failure to use the Indonesian language in such agreements. However, an Indonesian court may hold that failure to execute a document in the Indonesian language violates Law No. 24 of 2009 and/or public policy. Law No. 24 of 2009 provides that the details of this requirement will be further regulated in a Presidential Regulation. Pending further clarification of Law No. 24 of 2009 in a Presidential Regulation, the legal impact of having an agreement to which an Indonesian entity is a party executed in English is still unclear. Law No. 24 of 2009 is silent as to which language will prevail if an agreement is executed in both the English language and the Indonesian language. Law No. 24 of 2009 only provides that if an agreement is executed in dual language, they will be considered as “the same originals”.

3.2 Material Agreements

We have been provided by Bligh with copies of Material Agreements.

(1) The shareholders of the Mining Companies other than PT Charlie Sapa Prima and PT Konstruktor Donggala have each entered into a Shareholders and Royalty Agreement with PT Endeavor Resources NTT; and

(2) The shareholders of PT Charlie Sapa Prima and PT Konstruktor Donggalahave each entered into a Share Sale and Purchase Agreement with PT Golden Castle Resources.

These agreements are collectively referred to as the Material Agreements. Further details are set out in Attachment One.

Based on the information made available to us, the share transfer arrangements set out in the Material Agreements are enforceable under Indonesian law.

The Material Agreements are signed in a dual language form. The terms of the Material Agreements provide that in the event of inconsistency between the Indonesian language version and the English language version of the Material Agreements, the English Text will prevail. In our view, this is in compliance with Law No. 24 of 2009.


For

per

sona

l use

onl

y

153


Jakarta-#108235-v1 47

5. QUALIFICATIONS AND ASSUMPTIONS

This Opinion has been prepared on the following qualifications and assumptions:

(1) That we are not conducting a due diligence in relation to financial or taxation matters, assets, or any other matters not mentioned above;

(2) That where we have been provided with copies of Documents, the copy is an exact and complete reproduction of, and conforms with, the original of the Document, and the original of the Document still exists save where we have commented on or confirmed the authenticity of any Document in this Opinion;

(3) That no Document provided to us, or arrangement described to us, has been varied, cancelled or superseded by some other document or agreement or action of which we are not aware, unless otherwise expressly stated in this Opinion;

(4) That where a Document was provided to us in draft form, it was executed or will be executed in the form of that draft;

(5) That all signatories, dates of and any stamp duty or other marking on all Documents (whether copies or originals) are authentic and are not subject to penalty or fine arising out of late or inadequate stamping;

(6) Except as specifically stated in this Opinion, all Documents are within the capacity and power of, and have been or will be validly authorised, executed and delivered by each party to them, and constitute valid and binding obligations of those parties under all applicable laws, and that each party was solvent when it did so;

(7) All material information and documentation has been provided to us and all such information and documentation is true and complete and not misleading in any way;

(8) We have not been requested to conduct any court searches;

(9) We have checked the relevant IUPs in the clean-and-clear list maintained at the MEMR (C&C List). However, we have not conducted further research or clarification with local offices of the MEMR, the Ministry of Forestry (MOF), local offices of the MOF, the Plantation Agency (Dinas Perkebunan), Land Office, or the relevant Bupati (district head) issuing the IUPs. Please note that we have only conducted this legal due diligence based on the Documents we have received and our research on the C&C List; and

(10) The copies of the Deeds of Establishment, Articles of Association, IUPs and other mining licences, and the Material Agreements provided to us are the latest versions and still valid.

We have not verified the accuracy of facts or the basis of opinions supplied to us as stated above unless expressly stated in this Opinion.

For

per

sona

l use

onl

y

154

Jakarta-#108235-v1 48

This Opinion is based on the laws of the Republic of Indonesia. Any opinions expressed with respect to matters which may be subject to or governed by the law of any other jurisdiction should be verified and confirmed by lawyers competent to advise in those jurisdictions.

Yours faithfully

SUSANDARINI & PARTNERS


For

per

sona

l use

onl

y

155


Jakarta-#108235-v1 49

ATTACHMENT ONE

MATERIAL AGREEMENTS (as of 22 October 2012)

No. Company

Material Agreements Language

1. PT Oriental Pratama Steel (“OPS”)

Shareholders and Royalty Agreement entered into by and between Mrs Lanny Lestari, Mr Elicia Alim (as the Seller) and ERN (as the Buyer), dated 22 September 2012.

Bilingual (English and Indonesian Language)

2. PT. Nisso Indonesia Resources (“NIR”)

Shareholders and Royalty Agreement of the Company entered into by and between Mrs Lanny Lestari, Mr Elicia Alim (as the Seller) and ERN (as the Buyer), dated 28 February 2012.


3. PT Elang Perkasa Resources Indonesia (“EPRI”)

Shareholders and Royalty Agreement of the Company entered into by and between Mr Edijanto, Mrs Evelinda (as the Seller) and ERN (as the Buyer), dated 28 February 2012.


4. PT Elang Perkasa Kencana (“EPK”)

Shareholders and Royalty Agreement of the Company entered into by and between Mrs Lanny Lestari, Mr Tono Suryadi (as the Sellers) and ERN (as the Buyer), dated 28 February 2012.


5. PT Elgary Resources (“ER”)

Shareholders and Royalty Agreement of the Company entered into by and between Mrs Lanny Lestari and Ms Elicia (as the Seller) and ERN (as the Buyer), dated 28 February 2012.


6. PT Elang Perkasa Kencana Resources (“EPKR”)

Shareholders and Royalty Agreement of the Company entered into by and between Mrs. Lanny Lestari, Mr. Evelinda ( as the Seller) and ERN (as the Buyer), dated 28 February 2012.


7. PT Elang Perkasa Mining (“EPM”)

Shareholders and Royalty Agreement of the Company entered into by and between Mr Edijanto and Ms Elicia (as the Seller) and ERN (as the Buyer), dated 28 February 2012.


8. PT Charlie Sapa Prima (“CSP”)

Share Sale and Purchase Agreement of the Company entered into by and between PT Nusantara Investama Consulting and Ms Lana Santoso (as the Seller) and Golden Castle Resources (as the Buyer), dated 17 July 2012.


9. PT Konstruktor Donggala (“KD”)

Share Sale and Purchase Agreement of the Company, entered into by and between Mr. Michael Maulana, Mr. Dani and PT Golden


For

per

sona

l use

onl

y

156

Jakarta-#108235-v1 50

No. Company

Material Agreements Language

Castle Resources, no date.

10. PT Endeavor Resources (“ER”)

Share Sale and Purchase Agreement (“SPA”) of the Company entered into by and between Mr. Muhammad Iqbal and Blue Castle Investments Limited (No Date).



For

per

sona

l use

onl

y

157


Jakarta-#108235-v1 51

ATTACHMENT TWO MINING BUSINESS LICENCES (IUPs)

(as of 22 October 2012)

No. Company

IUPs Status

C&C List

NON C&C List

1. PT Oriental Pratama Steel (“OPS”)

1. Regent of Timor Tengah Utara Decree No. 295 of 2011 dated 27 May 2011 Regarding Perubahan atas Keputusan Bupati Timor Tengah Utara Nomor 51 Tahun 2011 tentang Persetujuan Ijin Usaha Pertambangan Eksplorasi Mineral Logam Mangaan kepada OPS (“IUP Exploration No. 295”). - Total Area : 1,864 Ha - Commodity : Mineral (Manganese) - Regency : Timor Tengah Utara - Province : East Nusa Tenggara - Period : 2 (two) years

Listed N/A

2. Directorate of Mineral and Coal Concession Development Letter No. 2035/30/DBM/2010 dated 11 June 2010 to Regent of Timor Tengah Selatan Regarding the Issuance of Mining Business Licence (IUP) (Persetujuan Penerbitan Ijin Usaha Pertambangan) to OPS and PT Nisso Indonesia Resources (“NIR”).

- -

2. PT. Nisso Indonesia Resources (“NIR”)

1. Regent of Timor Tengah Utara Decree No. 304 of 2011 dated 27 May 2011 Regarding Persetujuan Penyesuaian Ijin Usaha Pertambangan Eksplorasi Mineral Logam Mangaan Kepada NIR (“IUP Exploration No. 304”). - Total Area : 1,739 Ha - Commodity : Mineral (Manganese) - Regency : Timor Tengah Utara - Province : East Nusa Tenggara - Period : 2 (two) years

Listed N/A

2. Regent of Timor Tengah Utara Decree No. 300 of 2011 dated 27 May 2011 Regarding Persetujuan Penyesuaian Ijin Usaha Pertambangan Eksplorasi Mineral Logam Mangaan Kepada NIR (“IUP Exploration No. 300”). - Total Area : 2,245 Ha - Commodity : Mineral (Manganese) - Regency : Timor Tengah Utara - Province : East Nusa Tenggara - Period : 2 (two) years

N/A Listed

3. Regent of Timor Tengah Selatan Decree No. 110/KEP/HK/2011 dated 14 May 2011 Regarding Pemberian Izin Usaha Pertambangan Eksplorasi Kepada NIR (“IUP Exploration No. 110”). - Total Area : 4,920 Ha

N/A Listed For

per

sona

l use

onl

y

158

Jakarta-#108235-v1 52

No. Company

IUPs Status

C&C List

NON C&C List

- Commodity : Mineral (Manganese) - Regency : Timor Tengah Selatan - Province : East Nusa Tenggara - Period : 5 years – until 14 May 2016 -

4. Directorate of Mineral and Coal Concession Development Letter No. 2035/30/DBM/2010 dated 11 June 2010 to Regent of Timor Tengah Selatan Regarding the Issuance of Mining Business Licence (Persetujuan Penerbitan Ijin Usaha Pertambangan) to OPS and PT Nisso Indonesia Resources (“NIR”).

- -

3. PT Elang Perkasa Resources Indonesia (“EPRI”)

1. Regent of Timor Tengah Utara Decree No. 296 of 2011 dated 27 May 2011 Regarding Perubahan atas Keputusan Bupati Timor Tengah Utara Nomor 50 Tahun 2011 tentang Persetujuan Ijin Usaha Pertambangan Eksplorasi Mineral Logam Mangaan kepada EPRI (“IUP Exploration No. 296”). - Total Area : 1,739 Ha - Commodity : Mineral (Manganese) - Regency : Timor Tengah Utara - Province : East Nusa Tenggara - Period : 2 (two) years

N/A Listed

4. PT Elang Perkasa Kencana (“EPK”)

1. Regent of Kupang Decree No. 745/KEP/HK/2011 dated 8 November 2011 Regarding Penyesuaian Kuasa Pertambangan (KP) Eksplorasi Mangan menjadi Izin Usaha Pertambangan (IUP) Eksplorasi Mangan Kepada EPK. (“IUP Exploration No. 745”). - Total Area : 2,000 Ha - Commodity : Mineral (Manganese) - Regency : Kupang - Province : East Nusa Tenggara - Period : 3 (three) years

N/A N/A

2. Regent of Kupang Decree No. 746/KEP/HK/2011 dated 8 November 2011 Regarding Penyesuaian Kuasa Pertambangan (KP) Eksplorasi Mangan menjadi Izin Usaha Pertambangan (IUP) Eksplorasi Mangan Kepada EPK. (“IUP Exploration No. 746”). - Total Area : 2,000 Ha - Commodity : Mineral (Manganese) - Regency : Kupang - Province : East Nusa Tenggara - Period : 3 (three) years

N/A N/A

3. Regent of Timor Tengah Selatan Decree No. 44/KEP/HK/2011 dated 29 March 2011 Regarding Pemberian Izin Usaha Pertambangan Eksplorasi Kepada EPK (“IUP Exploration No. 44”).

N/A N/A


For

per

sona

l use

onl

y

159


Jakarta-#108235-v1 53

No. Company

IUPs Status

C&C List

NON C&C List

- Total Area : 5,000 Ha - Commodity : Mineral (Manganese) - Regency : Timor Tengah Selatan - Province : East Nusa Tenggara - Period : 5 (five) years, until 29 March

2016 4. Regent of Timor Tengah Utara Decree No.

303 of 2011 dated 27 May 2011 Regarding Persetujuan Ijin Usaha Pertambangan Eksplorasi Mineral Logam Mangaan kepada EPK (“IUP Exploration No. 303”). - Total Area : 2,021 Ha - Commodity : Mineral (Manganese) - Regency : Timor Tengah Utara - Province : East Nusa Tenggara - Period : 2 (two) years

N/A Listed

5. Regent of Timor Tengah Utara Decree No. 297 of 2011 dated 27 May 2011 Regarding Perubahan atas Keputusan Bupati Timor Tengah Utara Nomor 49 Tahun 2011 tentang Persetujuan Ijin Usaha Pertambangan Eksplorasi Mineral Logam Mangaan kepada EPK (“IUP Exploration No. 297”). - Total Area : 1,427 Ha - Commodity : Mineral (Manganese) - Regency : Timor Tengah Utara - Province : East Nusa Tenggara - Period : 2 (two) years

N/A Listed

5. PT Elgary Resources (“ER”)

1. Regent of Kupang Decree No. 749/KEP/HK/2011 dated 8 November 2011 Regarding Penyesuaian Kuasa Pertambangan (KP) Eksplorasi Mangan menjadi Izin Usaha Pertambangan (IUP) Eksplorasi Mangan Kepada ER. (“IUP Exploration No. 749”). - Total Area : 1,650 Ha - Commodity : Mineral (Manganese) - Regency : Kupang - Province : East Nusa Tenggara - Period : 3 (three) years

N/A N/A

2. Regent of Timor Tengah Utara Decree No. 299 of 2011 dated 27 May 2011 Regarding Persetujuan Penyesuaian Ijin Usaha Pertambangan Eksplorasi Mineral Logam Mangaan Kepada ER (“IUP Exploration No. 299”). - Total Area : 934,1 Ha - Commodity : Mineral (Manganese) - Regency : Timor Tengah Utara - Province : East Nusa Tenggara - Period : 2 (two) years

N/A Listed

For

per

sona

l use

onl

y

160

Jakarta-#108235-v1 54

No. Company

IUPs Status

C&C List

NON C&C List

6. PT Elang Perkasa Kencana Resources (“EPKR”)

1. Regent of Kupang Decree No. 743/KEP/HK/2011 dated 8 November 2011 Regarding Penyesuaian Kuasa Pertambangan (KP) Eksplorasi Mangan menjadi Izin Usaha Pertambangan (IUP) Eksplorasi Mangan Kepada EPKR. (“IUP Exploration No. 743”). - Total Area : 2,000 Ha - Commodity : Mineral (Manganese) - Regency : Kupang - Province : East Nusa Tenggara - Period : 3 (three) years

N/A N/A

2. Regent of Kupang Decree No. 744/KEP/HK/2011 dated 8 November 2011 Regarding Penyesuaian Kuasa Pertambangan (KP) Eksplorasi Mangan Menjadi Izin Usaha Pertambangan (IUP) Eksplorasi Mangan Kepada EPKR. (“IUP Exploration No. 744”). - Total Area : 2,000 Ha - Commodity : Mineral (Manganese) - Regency : Kupang - Province : East Nusa Tenggara - Period : 3 (three) years

N/A N/A

3. Regent of Timor Tengah Utara Decree No. 293 of 2011 dated 27 May 2011 Regarding Perubahan atas Keputusan Bupati Timor Tengah Utara Nomor 47 Tahun 2011 tentang Persetujuan Ijin Usaha Pertambangan Eksplorasi Mineral Logam Mangaan kepada EPKR (“IUP Exploration No. 293”). - Total Area : 864 Ha - Commodity : Mineral (Manganese) - Regency : Timor Tengah Utara - Province : East Nusa Tenggara - Period : 2 (two) years

N/A N/A

4. Regent of Timor Tengah Utara Decree No. 259 of 2011 dated 27 May 2011 Regarding Perubahan atas Keputusan Bupati Timor Tengah Utara Nomor 722 Tahun 2010 tentang Persetujuan Ijin Usaha Pertambangan Eksplorasi Mineral Logam Mangaan kepada EPKR (“IUP Exploration No. 259”). - Total Area : 2,017 Ha - Commodity : Mineral (Manganese) - Regency : Timor Tengah Utara - Province : East Nusa Tenggara - Period : 2 (two) years

N/A Listed.

7. PT Elang Perkasa Mining (“EPM”)

1. Regent of Kupang Decree No. 747/KEP/HK/2011 dated 8 November 2011 Regarding Penyesuaian Kuasa Pertambangan (KP) Eksplorasi Mangan menjadi Izin Usaha Pertambangan (IUP) Eksplorasi Mangan

N/A N/A


For

per

sona

l use

onl

y

161


Jakarta-#108235-v1 55

No. Company

IUPs Status

C&C List

NON C&C List

Kepada EPM. (“IUP Exploration No. 747”). - Total Area : 2,000 Ha - Commodity : Mineral (Manganese) - Regency : Kupang - Province : East Nusa Tenggara - Period : 3 (three) years

2. Regent of Kupang Decree No. 748/KEP/HK/2011 dated 8 November 2011 Regarding Penyesuaian Kuasa Pertambangan (KP) Eksplorasi Mangan menjadi Izin Usaha Pertambangan (IUP) Eksplorasi Mangan Kepada EPM (“IUP Exploration No. 748”). - Total Area : 1,950 Ha - Commodity : Mineral (Manganese) - Regency : Kupang - Province : East Nusa Tenggara - Period : 3 (three) years

N/A N/A

3. Regent of Timor Tengah Utara Decree No. 301 of 2011 dated 27 May 2011 Regarding Persetujuan Ijin Usaha Pertambangan Eksplorasi Mineral Logam Mangaan kepada EPM (“IUP Exploration No. 301”). - Total Area : 1,995 Ha - Commodity : Mineral (Manganese) - Regency : Timor Tengah Utara - Province : East Nusa Tenggara - Period : 2 (two) years

N/A Listed

8. PT Manggarai Manganese (“MM”)

1. Regent of Manggarai Timur Decree No. HK/109/2009 dated 7 December 2009 Regarding Persetujuan Izin Usaha Pertambangan Eksplorasi Kepada MM. (“IUP Exploration No. 109”). - Total Area : 23,010 Ha - Commodity : Mineral (Manganese) - Regency : Manggarai Timur - Province : East Nusa Tenggara - Period : 4 (four) years

N/A N/A

9. PT Charlie Sapa Prima (“CSP”)

1. Regent of Parigi Moutong Decree No. 540/0262/DESDM dated 28 January 2010 Regarding Persetujuan Izin Usaha Pertambangan Eksplorasi. (“IUP Exploration No. 540”). - Total Area : 5,280 Ha - Commodity : Gold - Regency : Parigi Moutong - Province : Central Sulawesi - Period : 8 (eight) years

Listed N/A

10. PT Konstruktor Donggala (“KD”)

1. Regent of Donggala Decree No. 188.45/0298/DESDM/2012 dated 23 May 2012 Regarding Perubahan atas Keputusan

N/A Listed

For

per

sona

l use

onl

y

162

Jakarta-#108235-v1 56

No. Company

IUPs Status

C&C List

NON C&C List

Bupati Donggala Nomor 188.45/0387/DESDM/2011 Tentang Persetujuan Izin Usaha Pertambangan Eksplorasi Kepada KD (previously PT Konstruktor) (“IUP Exploration No. 188”). - Total Area : 2,284 Ha - Commodity : Mineral (Gold Ore) - Regency : Donggala - Province : Central Sulawesi - Period : N/A -


For

per

sona

l use

onl

y

163


Jakarta-#108235-v1

ATTACHMENT THREE

GENERAL RIGHTS AND OBLIGATIONS OF IUP HOLDERS Rights: 1. Enter IUP Location (WIUP) according to map and coordinate list. 2. Conduct IUP Exploration activities (general investigation, exploration, feasibility study and

AMDAL) in accordance with prevailing laws and regulations. 3. Establish support facility for IUP Exploration activities (general investigation, exploration,

feasibility study and AMDAL) pursuant to the IUP. 4. May submit application to stop exploration activities at any time, in every part or some part of the

WIUP, on the grounds that continuation of such exploration activities is commercially not feasible or practical or due to force majeure, circumstances that preclude causing termination of the whole or part of mining business activity.

5. File a statement of no interest in another mineral concession which is not the main mineral association stipulated under WIUP.

6. Utilise public facilities and infrastructure for the purpose of IUP Exploration activities (general investigation, exploration, feasibility study and AMDAL) after complying with statutory provisions.

7. Submit application for temporary licence to conduct transportation and selling of minerals. 8. Submit written application to proceed or not proceed to Operation Production IUP (IUP OP)

stage, either in part or in some location within the WIUP. Obligations: 1. Establish a branch office in the WIUP location. 2. Report Investment plan. 3. Place an amount of funds as implementation collateral for exploration activities in the form of a

deposit at a designated government bank. 4. Submit a Mining Plan and Budget (Rencana Kerja dan Anggaran Belanja or RKAB) which

includes the next year’s plan and activities realisation each year to the Regent, with a copy to the Governor if the IUP was issued by the Regent.

5. Submit Quarterly Activity Report (Laporan Kerja Triwulanan) within 30 days, periodically after the end of the calendar quarter, to the Regent with a copy to the Governor if the IUP was issued by the Regent.

6. If the deadline for the RKAB and the report referred to in points 4 and 5 has passed, a written notice shall be given.

7. Submit a Community Development Plan for the area around the mining area as part of the RKAB to the Regent.

8. Comply with tax provisions in accordance with prevailing laws and regulations. 9. Pay an annual fixed fee (iuran tetap) in accordance with prevailing laws and regulations. 10. Prepare AMDAL and UKL/UPL in accordance with prevailing laws and regulations and as part of

the feasibility study document. 11. Prepare reclamation documents and post-mining documents pursuant to the feasibility study

document in accordance with prevailing laws and regulations. 12. Prepare local community development and empowerment efforts. 13. Deposit a reclamation bond and a post-mining bond in accordance with prevailing laws and

regulations. 14. Appoint a Head of Mining Techniques to be responsible for IUP Exploration activities, Mining

Safety and Heath, and Mining Environmental Management. 15. The application to upgrade the Exploration IUP must be submitted at the latest 3 (three) months

before the expiration of the licence, in line with the requirements under prevailing laws and regulations.

16. Upon failure to comply with the provision in point 15, the Exploration IUP becomes void by law and all mining activity shall be suspended. Within six months after the end of mining activity, the IUP holder must remove everything that belongs to the company, except for items that are for public use.

For

per

sona

l use

onl

y

164

- 58 -

Jakarta-#108235-v1

17. Apply the principles of good mining. 18. Undertake financial management in accordance with the Indonesian accounting system. 19. Report on local community development and empowerment periodically. 20. Report and preserve the function and carrying capacity of related water resources in accordance

with prevailing laws and regulations. 21. Prioritize the use of local workers and domestic goods and services in accordance with

prevailing laws and regulations. 22. Maximise the use of local entrepreneurs in the area. 23. Prioritize the use of local and/or national mining service companies and submit the data and

implementation of utilisation of supporting services periodically or from time to time as needed. 24. Prohibited to involve subsidiaries and/or affiliates in the mining service business field, except

with approval from the Minister. 25. Submit all data on the results of Exploration IUP activities to the Regent, with a copy to the

governor if the IUP was issued by the Regent. 26. Report the implementation of local community development and empowerment efforts as part of

the periodic report. 27. Compensate the title holders for land that is disturbed by Exploration IUP activities. 28. Submit an application for termination of Exploration IUP activities and return the WIUP. 29. Report mined minerals or coal upon implementation of Exploration IUP. 30. Submit final report on Exploration IUP activities in the form of general survey, exploration,

feasibility study final report, including mapping report for the entire WIUP.


For

per

sona

l use

onl

y

165


For

per

sona

l use

onl

y

166

For

per

sona

l use

onl

y

167


9 INVESTIGATING ACCOUNTANT’S REPORT

We have prepared this Investigating Accountant’s Report (Report) at the request of the Directors of Bligh Mining Limited (Bligh Mining or the Company) for inclusion in a Prospectus relating to the proposed issue by the Company of up to 20,000,000 shares at an issue price of $0.30 each to raise up to $6,000,000 before the costs of the issue (the Prospectus). The minimum amount of the Offer under the Prospectus is $2,000,000, which would comprise the issue of 6,666,667 shares at an issue price of $0.30 each.

Expressions defined in the Prospectus have the same meaning in this report.

Hall Chadwick Corporate (NSW) Limited holds an Aus-tralian Financial Services License (No. 227902) issued by the Australian Securities and Investments Commission for use in providing financial product advice, including Investigating Accountant’s reports.

Basis of preparation

This report has been prepared to provide investors with information on the Pro forma Historical Consolidated Financial Information as detailed in the Scope below. The Pro forma Historical Consolidated Financial Information is presented in an abbreviated form in the Prospectus and does not include all of the disclosures required by Australian Accounting Standards, Austral-ian Accounting Interpretations and other authoritative pronouncements of the Australian Accounting Stand-ards Board.

This report does not address the rights attaching to the shares to be issued in accordance with the Prospectus, nor the risks associated with the investment, and has been prepared based on the Offer being achieved. Hall Chadwick Corporate (NSW) Limited has not been re-quested to consider the prospects for the Company, the shares on offer and related pricing issues, nor the merits and risks associated with becoming a shareholder and accordingly, has not done so. Hall Chadwick Corporate (NSW) Limited takes no responsibility for these matters or for any matter or omission in the Prospectus, other than responsibility for this report.

8 November 2012

The Directors Bligh Mining Limited Suite 605, Level 6 66 Hunter Street SYDNEY NSW 2000

HALL CHADWICK CORPORATE (NSW) LIMITEDACN 080 462 488

SYDNEYLevel 29, St Martins Tower

31 Market Street Sydney NSW 2000 Australia

GPO Box 3555 Sydney NSW 2001

Ph: (612) 9263 2600 Fx: (612) 9263 2800

E: [email protected] www.hallchadwick.com.au

A member of AGN International Ltd, a worldwide association of separate and

independent accounting and consulting firms

Dear Sirs,

Re: Investigating Accountant’s Report on Pro forma Historical Consolidated Financial Information

For

per

sona

l use

onl

y

168

9 INVESTIGATING ACCOUNTANT’S REPORT

Background

Bligh Mining, formerly Blackcrest Resources Limited, is an Australian company listed on the Australian Securi-ties Exchange (ASX). Bligh Mining shares have been suspended from trading since 12 November 2009 until Directors identify a transaction suitable for the Company to comply with Chapters 1 and 2 of the ASX Listing Rules.

The Directors of the Company have identified Bligh Mining (Holdings) Pty Limited (BMH) as a suitable ac-quisition target with the potential to increase shareholder value. BMH was incorporated on 27 May 2010 and is an Australian-based minerals exploration company with a focus on identifying and developing mining opportuni-ties in Indonesia that are highly prospective for manga-nese, base metals and precious metals mineralisation. Its include tenements in Flores, West Timor and Sulawesi covering a total area of 84,859 hectare with the potential for manganese, gold, copper, lead and zinc deposits.

The acquisition of BMH by the Company will result in a change in the nature and scale of the Company’s activities to that of mineral exploration, specialising in the exploration and mining of manganese, base metals and precious metals mineralisation.

The maximum amount of funds to be raised by this Offer is $6,000,000. The purpose in making the Offer is to provide funds for exploration expenditure in Flores, West Timor and Sulawesi, social programs and land ac-quisition, and working capital.Potential investors should read the Prospectus in full. We make no comments as to the value of the current and proposed activities of the Company.

Scope

You have requested Hall Chadwick Corporate (NSW) Ltd. to prepare an Investigating Accountant’s Report covering the Pro forma Historical Consolidated Financial Statements of the Company to 30 June 2012 adjusted for the acquisition of BMH, effects of the Offer and material events occurring subsequent to 30 June 2012.

Scope of review of Pro forma Historical Consolidated Financial Information

The Pro forma Historical Consolidated Financial Information set out in this report has been extracted from the historical consolidated financial statements of the Company and BMH. The Company’s financial statements have been subject to an annual audit. BMH’s financial statements were subject to an independent review as at 31 March 2012.

The Directors of the Company are responsible for the preparation and presentation of the Pro forma Historical Consolidated Financial Information, including determination of the pro forma adjustments.

The Pro forma Consolidated Balance Sheet incorpo-rates:

(a) the Historical Consolidated Balance Sheets of Bligh Mining and BMH at 30 June 2012;

(b) the proceeds of the Offer and related costs; and

(c) other material events that have occurred subsequent to 30 June 2012 as detailed in the notes to the Bal-ance Sheet.

We have conducted our review of the Pro forma Historical Consolidated Financial Information in accord-ance with Australian Auditing and Assurance Standard ASRE 2405 Review of Historical Financial Information Other than a Financial Report.

We made such enquiries and performed such procedures as we, in our professional judgement, considered reason-able in the circumstances including:

• Enquiry of Directors, management and others;

• Review of the assumptions used to compile the Pro forma Consolidated Balance Sheet;

• Review of available financial information; and

• Review of work papers, accounting records and other documents.

These procedures do not provide all the evidence that would be required in an audit, thus the level of assur-ance provided is less than given in an audit. We have not performed an audit and, accordingly, we do not express an audit opinion.

For

per

sona

l use

onl

y

169


Statement on historical information

Based on our review, which is not an audit, nothing has come to our attention that causes us to believe that the Pro forma Historical Consolidated Financial Informa-tion, as set out in this report:

(a) does not fairly represent the Historical and Pro forma Consolidated Profit and Loss Statements of Bligh Mining and BMH for the year ended 30 June 2012;

(b) does not fairly represent the Historical Consolidated Balance Sheets of Bligh Mining and BMH as at 30 June 2012 and Pro forma Consolidated Balance Sheet adjusted for the effects of the Offer and mate-rial events detailed occurring subsequent to 30 June 2012;

(c) has not been prepared in accordance with the meas-urement and recognition requirements (but not all of the disclosure requirements) prescribed in the Aus-tralian Accounting Standards, Australian Accounting Interpretations and other authoritative pronounce-ments of the Australian Accounting Standards Board.

Subsequent events

Apart from the matters dealt with in this report, and having regard to the scope of our report, to the best of our knowledge and belief no material transactions or events outside of the ordinary business of the Company or BMH have come to our attention that would require comment on, or adjustment to, the information referred to in our report or that would cause such information to be misleading or deceptive.

Independence

Hall Chadwick Corporate (NSW) Limited does not have any interest in the outcome of this issue other than in its capacity as Investigating Accountant, for which normal professional fees will be received. Hall Chadwick Corporate (NSW) Limited does not hold nor have any interest in the ordinary shares of the Company.

Hall Chadwick Corporate (NSW) Limited was not involved in the preparation of any other part of the Prospectus, and accordingly, makes no representations or warranties as to the completeness and accuracy of any information contained in any other part of the Prospectus.

Hall Chadwick Corporate (NSW) Limited consents to the inclusion of this report in the Prospectus in the form and context in which it is included. At the date of this report, this consent has not been withdrawn.

Yours faithfully

Drew Townsend David KenneyDirEctorS

hall chaDwick corporatE (nSw) limitED

For

per

sona

l use

onl

y

170

10 PRO FORMA FINANCIAL INFORMATION

10.1 BASIS AND METHOD OF PREPARATION

This section contains a summary of the pro forma historical consolidated financial information for the Company.

As at 30 June 2012, the pro forma consolidated group comprises Bligh Mining and BMH. Assuming comple-tion of the Acquisition, Bligh Mining will acquire BMH through the issue of 112,861,202 Shares at a deemed issue price of $0.30 per Share and 54,012,000 Options, exercisable at $0.40 per Option, expiring three years after the date of issue.

The financial information presented comprises the following:

(a) Historical and pro forma consolidated profit and loss statements for the year ended 30 June 2012 (FY2012);

(b) Historical and pro forma consolidated balance sheets as at 30 June 2012; and

(c) Significant accounting policies and material account-ing matters.

The Company’s financial statements have been subject to an annual audit. BMH’s financial statements were subject to an independent review as at 31 March 2012.

The pro forma historical consolidated financial informa-tion should be read in conjunction with the Investigating Accountant’s Report presented in Section 9 of this Prospectus.

10.2 PROFIT AND LOSS STATEMENTS

The Company has no current business activity. In FY2012, the Company earned interest income of $23,311 and incurred a net loss after tax of $146,649 (FY2011 $364,714 loss, FY2010 $825,527 loss).

BMH incurred a loss of $8,199,584 for the year to 30 June 2012. This loss includes share-based payments totalling $5,546,415 relating to the issue of shares and options in BMH to consultants and management.

Set out in Table 13 are the summarised consolidated historical profit and loss statements for Bligh Mining and BMH. This information should be read in conjunc-tion with the information provided elsewhere in this Prospectus.

10.3 BALANCE SHEETS

Set out in Table 14 are the historical consolidated balance sheets for Bligh Mining and BMH as at 30 June 2012 and the pro forma consolidated balance sheet for the Company assuming the Acquisition occurred on 30 June 2012, completion of the Offer and other mate-rial events that have occurred or are expected to occur subsequent to 30 June 2012. This information should be read in conjunction with the information provided elsewhere in this Prospectus. The financial information presented in Table 14 has been prepared on the assump-tion that:

(a) the maximum subscription of $6,000,000 is received, less the costs of the Offer totalling $480,000; or

(b) the minimum subscription of $2,000,000 is received, less the costs of the Offer totalling $380,000.

For

per

sona

l use

onl

y

171


Table 13. Summarised historical consolidated profit and loss statements for Bligh Mining and BMH.

Historical consolidated profit

and loss FY2012

Historical consolidated profit

and loss FY2012

Pro forma consolidated profit

and loss FY2012Bligh Mining BMH Total

($’000) ($’000) ($’000)RevenueInterest income 23 13 36Realised gain on foreign exchange – 21 21Total revenue 23 34 57

ExpenditureGeneral and administrative expenditure 170 341 511Corporate expenditure – 412 412Personnel costs – 506 506Project costs – 1,156 1,156Depreciation and amortisation – 3 3Listing costs – 103 103Share-based payments – 5,546 5,546Foreign exchange losses – 9 9Unrealised loss on foreign exchange – 173 173Minority interest – –15 –15Total expenditure 170 8,234 8,404

Net operating loss –147 –8,200 –8,347

For

per

sona

l use

onl

y

172


Table 14. Historical consolidated balance sheets for Bligh Mining and BMH as at 30 June 2012, and the pro forma consolidated balance sheet for the Company assuming the Acquisition occurred on 30 June 2012, completion of the Offer and other material events that have occurred or are expected to occur subsequent to 30 June 2012.

Notes

Historical balance sheet 30 June 2012

of Bligh Mining1

Historical

consolidated balance sheet 30 June 2012

of BMH2

Pro forma consolidated

balance sheet 30 June 2012

minimum subscription3, 4

Pro forma consolidated

balance sheet 30 June 2012

maximum subscription3, 4

($’000) ($’000) ($’000) ($’000)ASSETS

Current assetsCash and cash equivalents 5 158 2,564 4,244 8,144 Trade and other receivables 6 206 206 206 Other assets 4 29 33 33 Total current assets 168 2,799 4,483 8,383

Non-current assetsMineral properties 6 – 8,427 8,427 8,427 Plant and equipment – 10 10 10 Exploration assets – 174 174 174 Total non-current assets – 8,611 8,611 8,611

TOTAL ASSETS 168 11,409 13,094 16,994

LIABILITIES

Current liabilitiesTrade and other payables 279 756 785 785Total current liabilities 279 756 785 785

Non-current liabilitiesTrade and other payables – 800 800 800Total non-current liabilities – 800 800 800

TOTAL LIABILITIES 279 1,556 1,585 1,585

NET ASSETS –112 9,853 11,509 15,409

EQUITYIssued capital 7 14,025 18,095 22,703 26,579Reserves 8 922 1,623 1,623 1,623Accumulated losses 9 –15,058 –9,864 –12,816 –12,792Equity before minority –112 9,854 11,510 15,410Minority interest – –1 –1 –1TOTAL EQUITY –112 9,853 11,509 15,409

For

per

sona

l use

onl

y

173


NOTES

1. Column 1 represents the historical balance sheet of Bligh Mining as at 30 June 2012.

2. Column 2 represents the historical consolidated balance sheet of BMH as at 30 June 2012.

3. Columns 3 and 4 represent the pro forma consolidated balance sheet of Bligh Mining assuming:

(a) The Acquisition occurred on 30 June 2012. Under the reverse acquisition accounting standard requirements the consolidated financial statements of the legal parent (Bligh Mining) are presented as a continuation of the financial statements of the private operating entity (BMH);

(b) The maximum (minimum) subscription from the Offer of $6,000,000 ($2,000,000), less estimated costs of capital raising to be satisfied in cash of $390,000 ($230,000). Costs of the Offer have been allocated as $197,000 ($72,000) to contributed equity relating to the issue of Shares (brokerage) and $283,000 ($308,000) to accumulated losses. Refer to Section 2.4 for details on the purpose of the Offer and use of proceeds.

4. Other pro forma adjustments included in Columns 3 and 4 to account for material events occurring subsequent to 30 June 2012 include the repayment of $251,000 in trade payables and the receipt of $219,500 in cash from the issue of shares.

5. Cash assets comprise the following:Minimum

subscriptionMaximum

subscription($,000) ($,000)

Cash balance from Bligh Mining 158 158Cash balance from BMH 2,564 2,564Cash assets as at 30 June 2012 2,722 2,722Proceeds from issue of shares 220 220Repayment of trade and other payables post 30 June 2012 –251 –251Material operating cash flows post 30 June 2012 –67 –67Offer proceeds 2,000 6,000Offer costs –380 –480Cash as per pro forma balance sheet 4,244 8,144

6. Mineral properties represents the cost of tenement acquisitions and mining licences by BMH and controlled enti-ties.

For

per

sona

l use

onl

y

174


7. Issued capital of Bligh Mining comprises the following:

Minimum subscription Maximum subscriptionNo. Shares Capital No. Shares Capital

($,000) ($,000)Issued capital at 30 June 2012 49,042,959 14,025 49,042,959 14,025Shares issued under placement 31,357,142 220 31,357,142 220Share consolidation 8,933,876 14,245 8,933,876 14,245

Shares issued to BMH shareholders 112,861,202 2,680 112,861,202 2,680Reserve acquisition account entry – –14,245 – –14,245Acquisition of BMH – 18,095 – 18,095Proceeds from issue of shares 6,666,667 2,000 20,000,000 6,000Payment of capital raising fees – –72 – –197Pro-forma issued capital 128,461,745 22,704 141,795,078 26,579

8. Reserves of Bligh Mining comprise the following:($,000)

Reserves as at 30 June 2012 922Reserve acquisition account entry –922Acquisition of BMH 1,623Pro forma reserves 1,623

9. Accumulated losses of Bligh Mining comprise the following:Minimum

subscriptionMaximum

subscription($,000) ($,000)

Accumulated losses as at 30 June 2012 –15,058 –15,058Reserve acquisition account entry 12,486 12,486Transaction costs –380 –355Acquisition of BMH –9,864 –9,864Pro-forma accumulated losses –12,816 –12,792

For

per

sona

l use

onl

y

175


10.4 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

The financial information includes the economic entities of Bligh Mining and BMH, companies limited by shares, incorporated and domiciled in Australia.

The following is a summary of the material accounting policies adopted by the Company in the preparation of the financial information. The accounting policies have been consistently applied, unless otherwise stated.

The principal accounting policies adopted in the preparation of the historical and pro forma financial information (collectively referred to as the Financial Statements) are set out below. The financial statements are for the consolidated entity consisting of Bligh Min-ing, BMH and their subsidiaries.

(a) Going concern

The financial information has been prepared on a going concern basis. The Directors are managing the Company’s cash flows carefully to meet its operational commitments. The Directors consider that the going concern basis is appropriate for the following reasons:

• By actively managing its cash flows, controlling costs and revising development plans as necessary, the Company believes it has sufficient cash reserves to continue as a going concern through the next 12 months; and

• If the Company undertakes an acquisition of ad-ditional project(s) then it may have to raise additional capital to fund the development of these; however no allowance for such circumstances has been made in the financial information.

(b) Principles of consolidation

The consolidated financial statements incorporate the assets, liabilities and results of Bligh Mining and BMH and their controlled entities at the end of the reporting period. A controlled entity is any entity over which Bligh Mining or BMH has the power to govern the financial and operating policies so as to obtain benefits from the entity’s activities. Control will generally exist when the parent owns, directly or indirectly through subsidiaries, more than half of the voting power of an entity. In assessing the power to govern, the existence and effect of holdings of actual and potential voting rights are also considered.

Where controlled entities have entered or left the group during the year, the financial performance of those entities is included only for the period of the year that they were controlled.

In preparing the consolidated financial statements, all inter-group balances and transactions between entities in the consolidated group have been eliminated on consolidation. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with those adopted by the parent entity.

Non-controlling interests, being the equity in a subsidi-ary not attributable, directly or indirectly, to a parent, are shown separately within the equity section of the consolidated balance sheet. The non-controlling interests in the net assets comprise their interests at the date of the original business combination and their share of changes in equity since that date.

For

per

sona

l use

onl

y

176


(c) Costs of mineral assets, exploration and development expenditure

Costs of mineral assets, exploration, evaluation and development expenditure incurred are accumulated in respect of each identifiable area of interest. These costs are only carried forward to the extent that they are expected to be recouped through the successful develop-ment of the area or where activities in the area have not yet reached a stage that permits reasonable assessment of the existence of economically recoverable reserves.

Accumulated costs in relation to an abandoned area are written off in full against profit in the year in which the decision to abandon the area is made.

When production commences, the accumulated cost for the relevant area of interest is amortised over the life of the area according to the rate of depletion of the economically recoverable reserves.

A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest.

Costs of site restoration are provided over the life of the facility from when exploration commences and are included in the costs of that stage. Site restoration costs include the dismantling and removal of mining plant, equipment and building structures, waste removal, and rehabilitation of the site in accordance with clauses of the mining permits. Such costs have been determined us-ing estimates of future costs, current legal requirements and technology on an undiscounted basis.

Any changes in the estimates for the costs are accounted on a prospective basis. In determining the costs of site restoration, there is uncertainty regarding the nature and extent of the restoration owing to community expecta-tions and future legislation. Accordingly the costs have been determined on the basis that the restoration will be completed within one year of abandoning the site.

(d) Impairment of assets

At the end of each reporting period, the group assesses whether there is any indication that an asset may be im-paired. The assessment will include the consideration of external and internal sources of information including dividends received from subsidiaries, associates or jointly controlled entities deemed to be out of pre-acquisition profits. If such an indication exists, an impairment test is carried out on the asset by comparing the recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use, to the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is expensed to the statement of comprehensive income.

Where it is not possible to estimate the recoverable amount of an individual asset, the group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Impairment testing is performed annually for goodwill and intangible assets with indefinite lives.

(e) Cash and cash equivalents

Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of 12 months or less, and bank overdrafts. Bank overdrafts are shown within short-term borrowings in current liabilities on the statement of financial position.

For

per

sona

l use

onl

y

177


(f) Revenue and other income

Revenue is measured at the fair value of the considera-tion received or receivable after taking into account any trade discounts and volume rebates allowed. Any con-sideration deferred is treated as the provision of finance and is discounted at a rate of interest that is generally accepted in the market for similar arrangements. The difference between the amount initially recognised and the amount ultimately received is interest revenue.

Revenue from the sale of goods is recognised at the point of delivery as this corresponds to the transfer of significant risks and rewards of ownership of the goods and the cessation of all involvement in those goods.

Interest revenue is recognised using the effective interest rate method, which, for floating rate financial assets, is the rate inherent in the instrument.

All dividends received shall be recognised as revenue when the right to receive the dividend has been estab-lished.

Revenue recognition relating to the provision of services is determined with reference to the stage of completion of the transaction at the end of the reporting period and where outcome of the contract can be estimated reliably. Stage of completion is determined with reference to the services performed to date as a percentage of total an-ticipated services to be performed. Where the outcome cannot be estimated reliably, revenue is recognised only to the extent that related expenditure is recoverable.

All revenue is stated net of the amount of goods and services tax (GST).

(g) Trade and other payables

Trade and other payables represent the liability outstand-ing at the end of the reporting period for goods and services received by the group during the reporting period which remains unpaid.

(h) Goods and Services Tax (GST)

Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the tax office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the statement of financial position are shown inclusive of GST.

Cash flows are presented in the statement of cash flows on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows.

(i) Foreign currency transactions and balances

Functional and presentation currency

The functional currency of the Company is measured in Australian dollars. The financial statements are presented in Australian dollars, which is the Company’s functional and presentation currency.

Transactions and balances

Foreign currency transactions during the period are translated into functional currency using the rates of ex-change prevailing at the date of the transaction. Foreign currency monetary items are translated at the period-end exchange rate. Non-monetary items measured at histori-cal cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair value are reported at the exchange rate at the date when fair values were determined. Exchange differences arising on the translation of monetary items are recog-nised in the statement of comprehensive income.

For

per

sona

l use

onl

y

178

For

per

sona

l use

onl

y

179


Set out below is a summary of the material contracts to which the Company is a party. On request, full versions of these material contracts can be viewed during normal business hours at the Company’s registered office.

11.1 SHARE SALE AGREEMENT

On 10 August 2012 the Company entered into a share sale agreement with Bligh Mining (Holdings) Pty Ltd (BMH) and each of the vendors of BMH (Vendors) (Share Sale Agreement). Pursuant to the Share Sale Agreement, the Company agreed to acquire all of the share capital of BMH on a ‘one-for-one’ basis (Acquisi-tion). That is, in consideration for the Acquisition, the Company will issue a number of securities to the shareholders of BMH (Consideration Securities). The Consideration Securities comprise:

(a) 112,861,202 ordinary Shares in the capital of the Company (post-Consolidation) at a deemed issue price of $0.30 per Share ($33,858,626) (Considera-tion Shares); and

(b) 54,012,000 unlisted Options. Following receipt of shareholder approval at the General Meeting of the Company held on 5 October 2012, the Options will be issued exercisable at $0.40 per Option and otherwise on the terms set out in Section 12.2 of this Prospectus (Consideration Options).

Completion of the Acquisition under the Share Sale Agreement is subject to the following conditions precedent being satisfied or waived:

(a) the Company having obtained all required gov-ernmental, regulatory, ASX and ASIC approvals, licences and permits necessary for the Acquisition to complete;

(b) the Vendors having obtained all required governmen-tal, regulatory, ASX and ASIC approvals, licences and permits necessary for the Acquisition to complete, including ministerial approval of the change in con-trol of the ownership of the Company in relation the tenements held by BMH;

(c) receipt of all required approvals for the Sharehold-ers’ Deed (see Section 11.4) to become effective

11 SUMMARY OF MATERIAL CONTRACTS

on terms and conditions reasonably acceptable to Sampoerna;

(d) the tenements being granted, to the extent not al-ready granted as at the date of the Share Sale Agree-ment;

(e) all Vendors entering into escrow arrangements in re-spect of the Consideration Shares, as required under the ASX Listing Rules, by the ASX;

(f) the Company is reasonably satisfied that there has not been any material adverse change;

(g) the Vendors are reasonably satisfied that there has not been any material adverse change; and

(h) where necessary or prudent in order to create, preserve or maintain any right or entitlement that the Vendors would otherwise have the benefit of, whether directly or indirectly, after Completion, obtain the consent from any person to the proposed change in control of BMH or the Company;

With the exception of final ASX approval, all of these conditions precedent have been satisfied or are expected to be satisfied and the Acquisition is expected to be completed concurrently with completion of the Offer.

Other key terms of the Share Sale Agreement are set out as follows:

Escrow restrictions

(a) Each of the Vendors acknowledges that:

(i) ASX may classify any or all of the Consideration Shares as Restricted Securities and require each Vendor to enter into restriction agreements in respect of those Consideration Shares that may be issued to a Vendor; and

(ii) one of the Conditions Precedent requires the Consideration Shares to be subject to any escrow period and restrictions required under the ASX Listing Rules or by ASX or the Company.

(b) The Vendors must provide all assistance reasonably requested by the Company in relation to:

(i) any application or submission made to ASX in connection with the Consideration Shares and their classification as Restricted Securities; and

For

per

sona

l use

onl

y

180

(ii) the Company’s compliance with, or obligations under, the ASX Listing Rules in respect of the Acquisition.

(c) If required by ASX, the Vendors will enter into restriction agreements with the Company, or procure the execution by any recipient of Consideration Shares of restriction agreements with the Company, generally in the form set out in Appendix 9A of the ASX Listing Rules in respect of any Consideration Shares that are determined to constitute Restricted Securities or otherwise in such other form as may be required by ASX.

Waiver of pre-emptive rights

Each of BMH and the Vendors agrees that they unconditionally and irrevocably waive and consent to the waivers of all pre-emptive rights it holds or may hold pursuant to the Constitution of BMH in respect of BMH, the Constitution of BMH, any other under-standing, arrangement or otherwise with BMH, the Corporations Act 2001 (Cth) and for all other purposes with respect to the sale of shares under the Share Sale Agreement.

Powers of Attorney

(a) Each Passive Vendor (as defined under the Share Sale Agreement) will irrevocably, and for valuable consideration (receipt of which is deemed to be acknowledged by the Vendors upon the issue of the Consideration Shares and Consideration Op-tions), appoint each of the Vendors’ Representatives (defined under the Share Sale Agreement as Sevag Chalabian and Andrew Nutt) (acting together/jointly and severally) its attorney to do anything, including sign any document:

(i) which the Passive Vendor is obliged to do under the Share Sale Agreement but has not done; or

(ii) which is necessary or desirable to give any effect to any right or power given to the Vendors’ Rep-resentatives by the Share Sale Agreement.

(b) Each Passive Vendor must ratify anything done by the Vendors’ Representatives as attorney in accord-ance with the appointment.

(c) In acting under this Power of Attorney, the Vendors’ Representatives must, at all times, act in good faith, and act consistently:

(i) with respect to each Passive Vendor; and

(ii) if the Vendors’ Representative is also an Active Vendor (as defined in the Share Sale Agreement), act consistently with respect to acting in its own capacity as Active Vendor.

Limitations on liability

(a) Threshold for Purchaser claims—The Company will not be liable for any claims or actions unless:

(i) the amount finally awarded or agreed as being payable in respect of the Claim or action in ques-tion is not less than $5,000; and

(ii) the aggregate amount finally awarded or agreed as being payable in respect of all claims and ac-tions is not less than $20,000, in which case the Company is liable for the whole of the amount and not just the excess.

(b) Cap on Purchaser claims—The maximum aggregate liability of the Company for all claims under or in connection with the Share Sale Agreement is limited to $200,000.

(c) Threshold for Vendor claims—The Vendors will not be liable for any claims or actions unless:

(i) the amount finally awarded or agreed as being payable in respect of the Claim or action in ques-tion is not less than $5,000; and the aggregate amount finally awarded or agreed as being pay-able in

(ii) respect of all claims and actions is not less than $20,000, in which case the Vendors are liable for the whole of the amount and not just the excess.

(d) Cap on Vendor claims—The maximum aggregate liability of the Vendors for all claims made by the Company under the Share Sale Agreement is limited to $1,000,000.

(e) The maximum liability of each Vendor in respect of each Claim and in respect of the aggregate of all claims is equal to that Vendor’s Respective Propor-


For

per

sona

l use

onl

y

181


tion in respect of the Claim or claims. For the avoid-ance of doubt, in relation to Ohmega Ltd as trustee for the Bligh Mining Bare Trust, the beneficiaries of the Bligh Mining Bare Trust will be liable.

(f) Time limits—A party is not liable to the other for any Claim unless:

(i) the other Party has given written notice to the Party setting out details of the Claim and the matters giving rise to that Claim (to the extent known), within two years after Completion; and

(ii) the Claim was agreed, compromised or settled or another Party has issued and served legal pro-ceedings against the Party in respect of the Claim within 12 months of giving notice of the Claim.

11.2 PLACEMENT LETTER

On 9 March 2012, BMH entered into a placement agree-ment with Sampoerna Agri Resources Pte Ltd (Sampo-erna) (Placement Letter), which sets out the terms and conditions of Sampoerna’s investment in BMH. The key terms of the Placement Letter are as follows:

(a) Sampoerna was offered an opportunity to acquire shares in BMH prior to the Acquisition (of which it acquired 22,800,000 shares in BMH) and an addi-tional 10,000,000 Shares in the Company under the Offer.

(b) The proceeds received by BMH would be used to fund payments due to the vendors of BMH’s mining concessions, costs expected to be incurred in relation to BMH’s exploration activities, farm-in and develop-ment for a particular mining project and costs associ-ated with the re-listing process.

(c) The Placement Letter set out that the offer could not take place unless and until certain conditions prec-edent were satisfied, including relevantly, execution of formal documentation that provided Sampoerna with certain protective rights, subject to any neces-sary approvals, including:

(i) to nominate directors to the board of BMH and also to certain Indonesian subsidiaries of BMH;

(ii) first rights of refusal and rights of participation

and pre-emptive rights, including:

(A) in the event BMH seeks to sell down its inter-est in certain concession holding vehicles, acquire that stake directly or indirectly and all other leases, licences, claims, permits or other tenements or authorities;

(B) in the event BMH seeks to sell 100% of its interest in any property relating to the concessions on the open market, acquire such interest;

(C) in the event BMH decides not to operate the concessions, to operate the concessions where it can be reasonably demonstrated that Sampoerna or its nominated partner has the necessary financial and technical capability to operate the concessions; and

(D) in relation to transfer of shares, including pre-emptive rights.

Following execution of the Placement Letter, and in accordance with the obligations under the Placement Letter, BMH entered into the following agreements with Sampoerna:

(a) Strategic Alliance Agreement (see Section 11.3);

(b) Share Issue Participation Deed; and

(c) Shareholders’ Deed (see Section 11.4).

11.3 STRATEGIC ALLIANCE AGREEMENT

On 30 October 2012, BMH and Sampoerna entered into an Amended and Restated Strategic Alliance Agreement (Strategic Alliance Agreement). Under the Strategic Alliance Agreement, BMH has granted certain options to Sampoerna to acquire shares in the Indonesian subsidiaries of BMH that hold the IUPs and also agreed to enter into operator agreements with Sampoerna (including agreements to provide technical services, mining services and other services) should it acquire a shareholding in the IUPs. The key terms of the option granted to Sampoerna to acquire an interest in IUPs under the Strategic Alliance Agreement are as follows:

(a) The BMH board may determine from time to time that it will divest an interest in any IUP by either the

For

per

sona

l use

onl

y

182

sale and transfer of existing shares or the issue of new shares in the Indonesian entity that holds the relevant IUP (Option Shares);

(b) Where the board makes such a determination:

(i) if BMH owns or controls 60% or more of the Indonesian entity, the Option Shares to be of-fered to third parties shall be at least 60% of the total shares in the relevant Indonesian entity (which would be on issue immediately following the sale and transfer or the new issue), but

(ii) if BMH owns or controls greater than 50% and less than 60% of the Indonesian entity, the Op-tion Shares to be offered to third parties shall be greater than 50% but less than 60% of the total shares in the relevant Indonesian entity (which would be on issue immediately following the sale and transfer or the new share issue) as determined by the board; e.g. if BMH owns 55% of an Indonesian entity, the Option Shares to be offered will be from 50.1% to 55% as determined by the board.

In either the case of (i) or (ii) above, then:

(A) BMH must give notice of that determination to Sampoerna (each an Option Notice) be-fore offering the Option Shares to any third party;

(B) Sampoerna shall be entitled (but is not obliged) at any time within 60 days of receipt of the Option Notice to elect by notice to BMH (each an Exercise Notice) to acquire all but not some of the Option Shares at a consideration determined in accordance with agreed valuation principles; and

(C) BMH shall not offer any or all of the Option Shares to any third party unless Sampoerna fails to issue an Exercise Notice within that 60 day period.

(c) Sampoerna may issue a maximum of five Exercise Notices.

(d) Sampoerna must pay the Consideration to BMH in full within 40 business days after the determination of the Consideration in accordance with the agreed valuation principles.


(e) With respect to IUPs that the Board considers to be at an early stage of exploration, the Board may at such time it deems appropriate offer to Sampoerna 60% of the total shares in the relevant Indonesian entity subject to that acquisition being for a mini-mum price of US$5 million and provided that BMH has obtained an independent valuation from a single valuer appointed by BMH that supports a valua-tion of US$5 million for that 60% shareholding. In making such an acquisition, Sampoerna shall not be deemed to have issued an Exercise Notice.

(f) Before an acquisition of Options Shares, Sampoerna:

(i) has non-exclusive access rights with consent to an IUP or any part thereof for the purposes of conducting geological analysis;

(ii) is entitled to nominate an observer or ‘non-vot-ing’ member of BMH’s management/investment committee or the equivalent thereof;

(iii) is entitled to nominate the following at such time as it determines following the acquisition of Option Shares or an interest in IUPs held under the corporate structure of the entities specified below:

(A) at least one director to the board of directors of FNM;

(B) at least one director to the board of directors of BCI;

(C) at least one director and one commissioner to the boards of PTMM;

(D) at least one director and one commissioner to the boards of ERN; and

(E) at least one director and (if applicable) one commissioner to the boards of other BMH holding entities for the IUPs.

(g) BMH shall as soon as practicable after Sampoerna issues an Exercise Notice, and to the extent permit-ted by Indonesian Law, restructure the Indonesian Entities and the IUPs so that each IUP is held sepa-rately by a single Indonesian Entity or alternatively that groups of IUPs in which Sampoerna may wish to take an interest are held by the same company (the Restructuring).

For

per

sona

l use

onl

y

183


(h) Where any BMH Entity determines to dispose of any interest in an Indonesian Entity or IUP, Sampo-erna shall be entitled to a pre-emptive right in respect of that interest.

(i) Sampoerna has a last right of refusal, where if BMH issues an Option Notice, Sampoerna fails to issue an Exercise Notice and BMH determines to proceed with disposing of its interest in an IUP or Indo-nesian entity, then upon receipt from a third party of an offer to acquire any or all of the interest, the interest is to be offered to Sampoerna on terms no less favourable to Sampoerna than the terms of the offer received from the relevant third party.

11.4 SHAREHOLDERS’ DEED

On 30 October 2012, Sampoerna Agri Resources Pte Ltd (Sampoerna), Alligard Investments Ltd, Andrew Nutt, Antonietta Adaley, Fahrsai Consulting Ltd, Laia Ltd, Marc Flory, Nisso Resources (Hong Kong) Co Ltd, Ohmega Ltd, PT Bestindo Kwadratama, PT Para Amartha Investama, Sevag Chalabian and STC Advisory Pty Ltd (Principal Shareholders) entered into an Amended and Restated Shareholders’ Deed (Sharehold-ers’ Deed). Under the Shareholders’ Deed, each of the Principal Shareholders agrees to act in relation to things, including the nomination of Directors and the exercise of their voting rights in relation to the issue of share capital and new asset purchases, in favour of Sampoerna. Specifically, under the Shareholders’ Deed, the Principal Shareholders agree, with respect to their Company Shares (to be issued upon completion of the Acquisition):

(a) to exercise or procure the exercise of all voting rights attached to its Shares against any resolution to increase the size of the board of directors of the Company unless Sampoerna otherwise consents;

(b) that Sampoerna can nominate at least two directors to the Company’s Board at all times that it has an ag-gregate shareholding of not less than 10% (Nomi-nated Directors);

(c) to support the election, removal and replacement of the Nominated Directors at Sampoerna’s discretion,

including to exercise the votes attaching to its Shares in favour of the election, re-election, removal and replacement of the Nominated Directors; and

(d) to exercise all voting rights attaching to its Shares against any resolution proposing the purchase by the Company of any new assets unless Sampoerna otherwise consents.

The Shareholders’ Deed does not require the Company to issue any new Shares, and does not involve the trans-fer of any legal or beneficial interest in any Shares, to or by any of the Principal Shareholders or their respective Associates.

By virtue of entering into the Shareholders’ Deed, each of the Principal Shareholders are associates (as defined in the Corporations Act) with each of the other Principal Shareholders in relation to the Company, and their voting power in the Company includes the shares in which their associates have a relevant interest

In addition to being the registered holder of shares, a party will have a relevant interest in any shares where that party has the ability to control the right to exercise the vote attached to that share. As discussed in Sec-tion 12.3, under the Shareholders Deed, the Principal Shareholders agree to exercise their voting power on certain matters in a manner that Sampoerna has or will direct. As a consequence of this, Sampoerna will have a relevant interest in not just the shares it directly holds but in the shares held by the other Principal Sharehold-ers.

11.5 AGREEMENTS OF PT ENDEAVOR RESOURCES NTT (ERN)

11.5.1 Share sale agreements

PT Endeavor Resources NTT (ERN) has entered into a series of share sale agreements regarding the seven subsidiary companies in which is currently holds a 51% interest (Subsidiary Companies). These agreements are listed in Table 15.

Under the terms of each of the share sale agreements, ERN has acquired 51% of each of the companies and can acquire a further 39% (bringing its total sharehold-

For

per

sona

l use

onl

y

184

ing to 90%) by spending US$400,000 in exploration and other costs on all or any of the IUPs owned by each Subsidiary Company. As each US$100,000 is spent (irrespective of which IUP within the Subsidiary Company on which the expenditure is made), ERN will be transferred 10% of the shares of the Subsidiary Company until it reaches 81%, and the last 9% tranche on spending the last US$100,000.

There is no time limit on when this progressive acquisi-tion is completed. Powers of attorney are to be granted to allow progressive share transfer to be executed and effected. The exploration expenditure is based on Bligh’s reported exploration expenditure.

11.5.2 Shareholder and royalty agreements

PT Endeavor Resources NTT (ERN) has entered into a series of shareholder and royalty agreements with the seven Subsidiary Companies in which it currently holds a 51% interest. These agreements are listed in Table 16.

Under the terms of each of the shareholder and royalty

agreements, the Sellers will receive a royalty as follows:

(a) Part A:

(i) If the gross price per tonne of the manganese ore sold is less than US$500/t (FOB)—US$5/t;

(ii) If the gross price per tonne of the manganese ore sold is between US$501/t and US$750/t (FOB)—US$10/t;

(iii) If the gross price per tonne of the manganese ore sold is between US$751/t and $1000/t (FOB)—US$15/t;

(iv) If the gross price per tonne of the manganese ore sold is over $1001/t (FOB)—$20/t;

from the IUPs owned by the Subsidiary Company payable within 14 days at the end of each quarter after payment is received for the sale of the manga-nese ore by the Subsidiary Company as determined by reported sales by Bligh Mining to ASX.

(b) Part B: the Sellers will receive a royalty of US$1/t of proven mineable reserve (JORC Standard) of man-


Table 15. Share sale agreements of ERN.

Subsidiary Company Parties to agreement Date of executionPT Elang Perkasa Kencana ERN, Ms Lanny Lestari and Tono Suryadi 24 February 2012PT Elang Perkasa Kencana Resources ERN, Ms Lanny Lestari and Ms Evelinda 24 February 2012PT Elang Perkasa Mining ERN, Ms Elicia and Mr Edijanto 24 February 2012PT Elang Perkasa Resources Indonesia ERN, Mr Edijanto and Ms Evelinda 24 February 2012PT Elgary Resources ERN, Ms Lanny Lestari and Ms Elicia 24 February 2012PT Nisso Indonesia Resources ERN, Ms Lanny Lestari and Ms Elicia 24 February 2012PT Oriental Pratama Steel ERN and Ms Elicia 23 July 2012

Table 16. Shareholder and royalty agreements of ERN.

Parties to agreementSubsidiary Company Buyer Seller Date of executionPT Elang Perkasa Kencana ERN Ms Lanny Lestari 22 September 2012PT Elang Perkasa Kencana Resources ERN Ms Evelinda and Ms Lanny Lestari 22 September 2012PT Elang Perkasa Mining ERN Ms Elicia and Mr Edijanto 22 September 2012PT Elang Perkasa Resources Indonesia ERN Ms Evelinda and Mr Edijanto 22 September 2012PT Elgary Resources ERN Ms Lanny Lestari 22 September 2012PT Nisso Indonesia Resources ERN Ms Elicia and Ms Lanny Lestari 22 September 2012PT Oriental Pratama Steel ERN Ms Lanny Lestari and Ms Elicia 22 September 2012

For

per

sona

l use

onl

y

185


ganese ore declared by Bligh Mining as announced to ASX over a total of 3.5 million tonnes of proven mineable reserve (JORC Standard) taken from across all of the Subsidiary Companies, and is payable by the issue of fully paid ordinary shares in Bligh Mining per each 500,000 tonnes of proven minable reserve (JORC Standard) declared over 3.5 million tonnes in total at a share price equal to the volume weighted average price of Bligh shares traded on ASX within 30 days at the end period on which the mineable reserves are announced by Bligh to ASX. This component of the royalty applies across the Subsidiary Companies acquired by ERN and will be appointed to the shareholders of the respective Subsidiary Company proportional to the source of mineable ore reserves as announced by Bligh to ASX. Bligh must use best endeavours to obtain all necessary shareholder approvals and Australian regu-latory requirements and approvals to issue the shares for the Part B royalty and the issue of such shares is subject to all necessary shareholder approvals and Australian regulatory requirements.

Additional material terms of the agreements are as follows:

(a) ERN shall nominate the board of directors of each Subsidiary Company to coordinate the management and operation of each company’s project, and to control day-to-day administration and management of the project.

(b) ERN agrees to lead the implementation of the project, and to supply and to employ the staff for implementation of the project.

(c) The Sellers agree to support the implementation of the project, to supply any necessary information in relation to the operation of the project in Indonesia, such as legal, accounting and social aspects, explora-tion, contracting, and obtain all required governmen-tal approval.

(d) Subject to the Sellers’ shareholding being no more than 10%, the Sellers’ interest in the joint venture is a free carried interest and they have no obligation to contribute to any of the costs (capital or otherwise) for the project.

(e) The Sellers must deal exclusively with ERN with respect to any other project in Timor and must put any other project to the company for consideration.

11.5.3 Shareholders’ agreement

On 24 April 2012, BMH, Blue Castle Investments Ltd (BCI), a wholly-owned subsidiary of BMH, and Mu-hammad Iqbal, an executive Director of Bligh Mining, entered into a shareholders’ agreement in relation to PT Endeavor Resources NTT (ERN). Under the agree-ment, BCI and Mr Iqbal (the Shareholders) agreed to participate in a joint venture (with ERN as the vehicle for the joint venture), namely developing the explora-tion, extraction and sale of minerals by companies in which ERN has an interest which own or have an interest in any mining or exploration concessions and/or IUPs in Indonesia and the listing of BMH on any stock exchange or its sale.

Under the agreement, BMH will issue 6 million BMH shares to Mr Iqbal’s nominee (Laia), on the following dates:

(a) 2,000,000 shares on or before the date of the agree-ment;

(b) 1,000,000 shares on 1 March 2013;

(c) 1,000,000 shares on 1 March 2014;

(d) 1,000,000 shares on 1 March 2015; and

(e) 1,000,000 shares on 1 March 2016;

In consideration of a further issue of 2,000,000 BMH shares to Laia on the date of the agreement, Mr Iqbal will transfer to BCI 10% of the 15% of the Shares he holds in ERN so that BCI and/or its nominee own and control 95% of the shares of ERN.

On or before the date that Laia is issued the shares, at which time ERN would become a 95% subsidiary of BMH, Mr Iqbal or his nominee and ERN and BMH will enter into a royalty deed whereby Mr Iqbal or his nominee would be entitled to a royalty of 5% of the after tax earnings from each subsidiary of ERN.

BCI shall have a right of first refusal for the purchase by BCI or any entity or individual nominated by BCI of any shares to be disposed of by Mr Iqbal at the same

For

per

sona

l use

onl

y

186

price and with the same rights attached to such shares as that offered to any potential third party purchaser. If BCI does not exercise its right of first refusal and such shares are offered to a potential third party purchaser at a different price or with different rights attached to such shares, or a different price or different rights attached to such shares are negotiated between Mr Iqbal and a potential third party purchaser, BCI or any entity or individual nominated by BCI shall have a right of first refusal for those shares the subject of the different price and/or with different rights attached to them.

The Shareholders shall procure that a budget is prepared and adopted by ERN as the annual budget for the 12 month period following the date of the agreement. Any amendments to any line item of more than US$100,000 shall be approved in writing by both Shareholders. The budget must be acceptable to BCI.

BCI shall bear all costs, expenses, fees, tariffs and similar including taxation charges and legal costs, whether direct or indirect costs, for the development of the project, exploitation of minerals related to the project and for any other mining projects (including exploration, exploitation and production) conducted by the ERN.

Mr Iqbal shall not contribute to any costs, expenses, fees, tariffs or similar relating to the project. Such costs, expenses, fees, tariffs and similar include mining explora-tion and mining operation costs. Such costs, expenses, fees, tariffs and similar shall be borne by BCI.

Dividends from ERN shall only be payable following the repayment of any and all loans provided by BCI to ERN. Notwithstanding any other term or condition, BCI shall be entitled to all profits or dividends from ERN and the projects.

11.6 FLORES NTT MINING PTE LTD—SHAREHOLDERS’ AGREEMENT

On 2 March 2012, BMH, Alligard Investments Ltd (Alligard, a BVI company) and Flores NTT Mining Pte Ltd (FNM) entered into a shareholders’ agreement. The agreement supersedes a previous shareholders’ agreement entered into between the parties dated 20 May 2011. The material terms of the agreement are as follows:

(a) BMH and Alligard agreed to participate in a joint venture for the purposes of developing the project that is the subject of the exploration IUP for PT Manggarai Manganese (PTMM) in Flores, with FNM as the vehicle for this joint venture;

(b) BMH and Alligard entered into a sale and purchase agreement pursuant to which Bligh agreed to pur-chase, and Alligard agreed to sell, 60 shares in FNM, on certain terms and conditions;

(c) BMH has a right of first refusal to any further trans-fer of Alligard’s shares in FNM and Alligard has a right of first refusal to any transfer of BMH’s shares in FNM;

(d) BMH granted Alligard an option to require BMH to purchase all of Alligard’s shares in FNM from 2 March 2013 for A$1,000,000;

(e) BMH shall procure that any third party to which it proposes to transfer its shares (Third Party) also makes an offer to acquire all of Alligard’s shares in FNM and unless the Third Party also purchases all of Alligard’s shares in FNM then BMH has no right to such proposed transfer;

(f) BMH shall procure that the Third Party also makes an offer for all of the shares held by Alligard in PTMM;

(g) Any increase of share capital in FNM shall be done so that Alligard retains the same proportion of shares in FNM;

(h) Alligard’s interest in PTMM and FNM shall be free carried interest and Alligard will assign any dividends it receives from FNM to BMH until all investment costs by BMH in relation to FNM are recovered; and

(i) Alligard is entitled to appoint one Non-Executive Director to the board of directors of FNM;

As a result of this transaction BMH now holds 85 shares in FNM while Alligard holds 14 shares.


For

per

sona

l use

onl

y

187


11.7 PT CHARLIE SAPA PRIMA—SHARE SALE AND PURCHASE AGREEMENT

On 17 July 2012, PT Golden Castle Resources (GCR) entered into a share sale and purchase agreement with PT Nuswantara Investama (an Indonesian company) and Lana Santoso regarding the purchase of shares in PT Charlie Sapa Prima (CSP). GCR is 99% owned by Whole Dragon Enterprises Ltd (WDE), which is 100% owned by BMH. The president of PT Nuswantara Investama is Muhammad Iqbal, an Executive Director of Bligh Mining.

Under the agreement, GCR will own 90% of the shares of CSP.

11.8 PT KONSTRUKTOR DONGGALA—SHARE SALE AND PURCHASE AGREEMENT

On 2 October 2012, PT Golden Castle Resources (GCR) entered into a share sale and purchase agreement with PT Konstruktor (an Indonesian company) and Michael Maulana regarding the purchase of shares in PT Konstruktor Donggala (KD). GCR is 99% owned by Whole Dragon Enterprises Ltd (WDE), which is 100% owned by BMH.

Under the agreement, GCR will own 49% of the shares of KD (purchased from Michael Maulana) and has agreed to purchase a further 26%, taking GCR’s total shareholding in KD to 75%.

11.9 ANDREW NUTT AND FAHRSAI LTD—CONTRACTOR AGREEMENT

On 1 November 2011, BMH entered into an independ-ent contractor agreement with Fahrsai Ltd (Fahrsai), a company registered in Hong Kong. The authorised representative of Fahrsai is Andrew Nutt, the Executive Chairman of the Company. Under the agreement, Fahr-sai agrees to provide services for the management of the day to day operations of the BMH board of directors and acting as managing director until BMH is listed on ASX and thereafter the role of Executive Chairman of the Company.

The term of the Fahrsai agreement is for a period until two years from the date BMH is listed on ASX.

BMH may terminate the agreement at any time without cause by:

(a) giving three months’ written notice to Fahrsai and paying Fahrsai the equivalent of three months’ con-sultancy fee (based on the average monthly fee for the previous six months), and

(b) paying Fahrsai an additional month’s consultancy fee (based on the average monthly fee for the previous six months) for each year of service since the com-mencement date, pro-rated for incomplete years, to a maximum of six months’ additional consultancy payment.

11.10 MUHAMMAD IQBAL—INDEPENDENT CONTRACTOR AGREEMENT

On 1 February 2012, BMH entered into an independent contractor agreement with Mr Iqbal Muhammad for the provision of management services, namely management of the day-to-day operations of BMH’s Indonesian subsidiaries and assets and business and acting as a Non-Executive Director of BMH and executive director of any of the company’s Indonesian subsidiaries nominated by the company from time to time.

The term of the independent contractor agreement is for a period until two years from the date BMH is listed on ASX.


(a) giving three months’ written notice to Mr Iqbal and paying Mr Iqbal the equivalent of three months’ consultancy fee (based on the average monthly fee for the previous six months), and

(b) paying Mr Iqbal an additional month’s consultancy fee (based on the average monthly fee for the previ-ous six months) for each year of service since the commencement date, pro-rated for incomplete years, to a maximum of three months’ additional consul-tancy payment.

For

per

sona

l use

onl

y

188

11.11 SEVAG CHALABIAN—CONSULTANCY AGREEMENT WITH STC ADVISORY PTY LTD

On 25 November 2010, BMH entered into an independ-ent contractor agreement with STC Advisory Pty Ltd (STCA) for the provision of management services. The authorised representative of STCA is Sevag Chalabian, an Executive Director of the Company. That agreement has since been assigned to State Capital Advisors Pty Ltd (SCA).

The term of the independent contractor agreement is for a period until two years from the date BMH is listed on ASX.


(a) giving three months’ written notice to SCA and pay-ing SCA the equivalent of three months’ consultancy fee (based on the average monthly fee for the previ-ous six months), and

(b) paying SCA an additional month’s consultancy fee (based on the average monthly fee for the previous six months) for each year of service since the com-mencement date, pro-rated for incomplete years, to a maximum of six months’ additional consultancy payment.

11.12 MARC FLORY—CONSULTANCY AGREEMENT

On 1 February 2012, BMH entered into a consultancy agreement with Mr Marc Flory, a substantial Shareholder in the Company, for the provision of management services, namely:

(a) being the country manager of the Company, respon-sible for all activities and business interests of BMH in Indonesia;

(b) undertaking board reporting;

(c) management of accounting and administration functions but does not include the provision of ac-counting services which it is acknowledged will be performed by parties qualified in the provision of these services as engaged by the Company from time to time;

(d) liaising with joint venture partners;

(e) any other matter required by the Board in relation to the management and administration of the BMH’s business in Indonesia.

The term of the agreement is six months from 1 Febru-ary 2012 and thereafter continues on a month to month basis.

11.13 CONSULTING AGREEMENT WITH BRETT DENNIS GUNTER

On 1 February 2012, BMH entered into a consultancy agreement with Mr Brett Dennis Gunter, a Non-Executive Director of the Company, for the provision of consultancy services, namely:

(a) acting as a Non-Executive Director of BMH;

(b) developing the BMH’s overall exploration strategy and budget;

(c) overseeing implementation of BMH’s exploration program through the management of its exploration team;

(d) providing personnel either through GMT or help to source and interview candidates to work for BMH who will report to the board;

(e) helping with project generation and review;

(f) overseeing all on-the-ground exploration work, sourcing equipment, assisting with logistics, travelling to review completed work at BMH’s exploration/mining locations when required;

(g) contributing to the development of Amdal, feasibil-ity studies and other government reports required under licensing requirements;

(h) drafting all ASX exploration-related releases and sign-off on reports;

(i) attending all board meetings;

(j) contributing to ASX quarterly reports when request-ed;

(k) preparing the prospectus for listing and other reports required as part of the ongoing development of BMH; and


For

per

sona

l use

onl

y

189


(l) any other matter required by the board in relation to the management and administration of BMH’s busi-ness in Indonesia.

The term of the agreement is 12 months from 1 Febru-ary 2012.

11.14 ANNE ADALEY—INDEPENDENT CONTRACTOR AGREEMENT WITH AUSTRALIAN MINING CORPORATE AND ADMINISTRATIVE SERVICES PTY LTD

On 15 February 2011, BMH entered into an independ-ent contractor agreement with Australian Mining Corpo-rate and Administrative Services Pty Ltd (AMCAS). The authorised representative of AMCAS is Anne Adaley, the Company Secretary and Chief Financial Officer. Under the agreement, AMCAS agreed to provide services for the management of the day-to-day company secretarial compliance and financial control and opera-tions of the board of directors of BMH and acting as company secretary and chief financial officer of BMH.

The term of the agreement is for a period until two years from the date BMH is listed on ASX.


(a) giving three months’ written notice to AMCAS and paying AMCAS the equivalent of three months’ consultancy fee (based on the average monthly fee for the previous six months), and

(b) paying AMCAS an additional month’s consultancy fee (based on the average monthly fee for the previ-ous six months) for each year of service since the commencement date, pro-rated for incomplete years, to a maximum of six months’ additional consultancy payment.

11.15 AGREEMENT TO ISSUE SHARES WITH PT BETA RESOURCES

On 23 April 2012, BMH entered into an agreement with PT Beta Resources (Beta) for the issue of BMH shares. Beta was retained by BMH to provide various services to develop its projects and in consideration for Beta providing its services, BMH agreed to issue 4,000,000 BMH Shares to Beta’s nominees as follows:

(a) Within seven days of the agreement, 2,000,000 shares, comprising 1,000,000 shares issued to PT Be-stindo Kwadratama (BK) and 1,000,000 shares issued to Aldergrove Group Ltd (AG);

(b) By 1 May 2013, 1,000,000 shares, comprising 500,000 shares to be issued to BK and 500,000 shares to be issued to AG;

(c) By 1 May 2014, 1,000,000 shares, comprising 500,000 shares to be issued to BK and 500,000 shares to be issued to AG.

In the event that Beta’s services to BMH are terminated for any reason by either party, any shares to be issued as set out above after the date of termination are no longer to be issued and BMH has no further obligations to Beta in that regard.

The agreement is governed by and construed in accord-ance with Singaporean law.

For

per

sona

l use

onl

y

190

For

per

sona

l use

onl

y

191


12 ADDITIONAL INFORMATION

12.1 RIGHTS ATTACHING TO SHARES

The following is a summary of the principal rights, privi-leges, liabilities and restrictions attaching to all Shares. This summary is not exhaustive and does not constitute a definitive statement of the rights and liabilities of Shareholders.

There is one class of share on issue in the Company, being Shares.

The rights attaching to the Shares in the Company are:

(a) set out in the Constitution, a copy of which is avail-able for inspection at the registered office of the Company during normal business hours; and

(b) in certain circumstances, regulated by the Corpora-tions Act, the Listing Rules, the ASX Settlement Operating Rules and the general law.

12.1.1 General meetings

Shareholders are entitled to be present in person, or by proxy, attorney or representative, to attend and vote at general meetings of the Company.

Shareholders may requisition meetings in accordance with Section 249D of the Corporations Act and the Constitution of the Company.

12.1.2 Voting rights

Subject to any rights or restrictions for the time being attached to any class or classes of shares, at general meetings of shareholders or classes of shareholders:

(a) each shareholder entitled to vote may vote in person or by proxy, attorney or representative;

(b) on a show of hands, every person present who is a shareholder or a proxy, attorney or representative of a shareholder has one vote; and

(c) on a poll, every person present who is a shareholder or a proxy, attorney or representative of a share-holder shall, in respect of each fully-paid share held by them, or in respect of which they are appointed a proxy, attorney or representative, have one vote for the share, but in respect of partly paid shares shall have such number of votes as bears the same pro-

portion to the total of such shares registered in the shareholder’s name as the amount paid (not credited) bears to the total amounts paid and payable (exclud-ing amounts credited).

12.1.3 Dividend rights

Subject to the rights of persons (if any) entitled to shares with special rights as to dividend, the Directors may declare a final dividend out of profits in accordance with the Corporations Act and may authorise the pay-ment or crediting by the Company to the shareholders of such a dividend. The Directors may authorise the payment or crediting by the Company to the sharehold-ers of such interim dividends as appear to the Directors to be justified by the profits of the Company. Subject to the rights of persons (if any) entitled to shares with spe-cial rights as to dividend, all dividends are to be declared and paid according to the amounts paid or credited as paid on the shares in respect of which the dividend is paid. Interest may not be paid by the Company in respect of any dividend, whether final or interim.

12.1.4 Winding up

If the Company is wound up, the liquidator may, with the authority of a special resolution of the Company, divide among the shareholders in kind the whole or any part of the property of the Company, and may for that purpose set such value as they consider fair on any property to be so divided, and may determine how the division is to be carried out as between the shareholders or different classes of shareholders. The liquidator may, with the authority of a special resolution of the Com-pany, vest the whole or any part of any such property in trustees upon such trusts for the benefit of the contributories as the liquidator thinks fit, but so that no shareholder is compelled to accept any shares or other securities in respect of which there is any liability. Where an order is made for the winding up of the Company or it is resolved by special resolution to wind up the Company, then on a distribution of assets to members, shares classified by ASX as restricted securities at the time of the commencement of the winding up shall rank in priority after all other shares.

For

per

sona

l use

onl

y

192

12.1.5 Transfer of Shares

Generally, Shares in the Company are freely transferable, subject to formal requirements, the registration of the transfer not resulting in a contravention of or failure to observe the provisions of a law of Australia, and the transfer not being in breach of the Corporations Act or the Listing Rules.

12.1.6 Variation of rights

Pursuant to section 246B of the Corporations Act, the Company may, with the sanction of a special resolution passed at a meeting of shareholders, vary or abrogate the rights attaching to shares.

If at any time the share capital is divided into different classes of shares, the rights attached to any class (unless otherwise provided by the terms of issue of the shares of that class), whether or not the Company is being wound up, may be varied or abrogated with the consent in writing of the holders of three-quarters of the issued shares of that class, or if authorised by a special resolu-tion passed at a separate meeting of the holders of the shares of that class.

12.1.7 Unmarketable parcels

As at the date of this Prospectus, it is the intention of the Company to seek shareholder approval at the 2012 Annual General Meeting to amend the Constitution to include a provision that would give the ability to the Company to sell the shares of any member who holds less than a marketable parcel of shares in the Company (being a parcel of shares with a market value of less than $500). This is proposed to reduce the significant admin-istrative and registry costs associated with unmarketable parcels.

12.2 OPTIONS

Following completion of the Acquisition, the Company will have 54,012,000 Options on issue. The material terms and conditions of the Options are as follows:

(a) each Option entitles the holder to one Share in the Company;

(b) the Options are exercisable at any time on or prior to 5.00pm (Sydney Time) on that date which is 36 months from their date of issue by completing an option exercise form and delivering it together with the payment for the number of Shares in respect of which the Options are exercised to the registered of-fice of the Company;

(c) the Option exercise price is $0.40 per Option;

(d) an Option does not confer the right to a change in exercise price or a change in the number of underly-ing securities over which the Option can be exer-cised;

(e) the Options are not transferable;

(f) all Shares issued upon exercise of the Options will rank pari passu in all respects with the Company’s then issued Shares;

(g) there are no participating rights or entitlements inherent in the Options and holders will not be entitled to participate in new issues of capital offered to Shareholders during the currency of the Options. However, the Company will ensure that for the pur-poses of determining entitlements to any such issue, the record date will be at least seven Business Days after the issue is announced. This will give Option holders the opportunity to exercise their Options prior to the date for determining entitlements to participate in any such issue; and

(h) if at any time the issued capital of the Company is reconstructed, all rights of an Option holder are to be changed in a manner consistent with the Corpora-tions Act and the Listing Rules.

12.3 EMPLOYEE SHARE PLAN

BMH has established an Employee Share Plan (Plan), under which the Board may invite Eligible Employees to subscribe for fully paid ordinary shares in the capital of the Company. The main features of the Plan are as follows:

(a) An ‘Eligible Employee’ is any Director, full time or part-time employee or consultant of Bligh or any of its subsidiaries or related companies or such other persons, as the Board determines.


For

per

sona

l use

onl

y

193


(b) The Board will determine the acquisition price per Share, and number of Shares for which an Eligible Employee may subscribe, in relation to an invitation.

(c) No Shares may be issued to a person under the Plan unless the person remains an employee as at the date the Shares are to be issued or as the Board deter-mines otherwise.

(d) The Board may, in its absolute discretion, determine the criteria to apply for participation in the Plan, including without limitation, a minimum period of service with Bligh. The Board may determine at any time that an Eligible Employee may not participate in the Plan in relation to a particular income year or at all (as the case may be). The Board must only invite an Eligible Employee to participate under the Plan in compliance with the Corporations Act.

(e) Invitations to subscribe for Shares under the Plan will be in such form and content and with such terms and conditions as the Board determines, but must include:

(i) when the first invitation is made to an Eligible Employee under the Plan rules, a summary or a copy of the Plan rules;

(ii) any other information or documents that certain applicable laws require Bligh to give to the Eligi-ble Employee.

The method of acceptance of invitations will be determined by the Board from time to time.

(f) Invitations may provide that Shares will only be acquired following the satisfaction of certain condi-tions, including, but not limited to, performance hurdles. The acquisition price of the Shares offered under the Plan will be determined by the Board. Shares may be acquired by a participant under the Plan by way of allotment, issue or transfer as deter-mined by the Board from time to time.

(g) The method of payment for Shares is determined by the Board from time to time, and may include:

(i) the Eligible Employee paying money on account of Shares to be acquired by him or her under the Plan;

(ii) loans by Bligh or a related company to a partici-pant; and

(iii) any payment in respect of the subscription for Shares under the Plan made by Bligh, any subsidiary or related company, on behalf of a participant.

(h) The Board may, at any time, impose restrictions on the disposal of Shares by a participant. A participant must comply with Bligh’s share trading policy.

(i) The Board may apply a holding lock to Shares is-sued under the Plan for a period not exceeding two years from the date of issue of those Shares. During the period for which the holding lock is applied, the relevant Shares are not transferable. Bligh may implement any procedure it considers appropriate to restrict a participant from dealing with the Shares while a holding lock is in place.

(j) Other than the restrictions on Shares set out in the Plan rules, Shares acquired under the Plan must rank equally in all respects with all other Shares from the date of acquisition, including with respect to:

(i) voting rights; and

(ii) entitlements to participate in:

(A) distributions and dividends; and

(B) all issues of securities made or offered pro rata to holders of Shares;

where the record date for determining entitle-ments falls on or after the date of allotment and issue.

(k) The Board may determine that Shares to be acquired under the Plan should be held in the name of a trus-tee on trust for the benefit of participants.

(l) Bligh may at any time, by written instrument or by resolution of the Board, amend all or any of the pro-visions of the Plan rules. The Board may determine that any amendment to the Plan rules or the terms of Shares granted under the Plan be given retrospec-tive effect. However, no amendment of the provi-sions of the Plan rules may reduce the accrued rights of any participant in respect of Shares acquired under the Plan prior to the date of the amendment, other than in certain circumstances.

For

per

sona

l use

onl

y

194

As at the date of this Prospectus, BMH has committed, under the employee share plan, to issuing a total of 9,700,000 Shares and 1,200,000 Options over the next two years to Eligible Employees. These totals include the following Shares to be issued pursuant to material contracts:

(a) 4,000,000 Shares to be issued under the ERN Share-holders Agreement (see Section 11.5.3); and

(b) 2,000,000 Shares to be issued under the agreement with Beta Resources (see Section 11.15).

12.4 RELATED PARTY TRANSACTIONS

At the date of this Prospectus, no transactions with related parties and Directors’ interests exist that the Directors are aware of, other than those disclosed in this Prospectus, being as follows:

(a) Each of the consultancy and contractor agreements with each of the Directors and the Company Secre-tary (see Sections 11.9 to 11.14). These agreements are reasonable remuneration.

(b) With respect to Muhammad Iqbal, the Sharehold-ers Agreement (as set out in Section 11.5.3) and the Share Sale and Purchase Agreement (as set out in Section 11.7). These agreements are on arms-length terms.

12.5 PRINCIPAL SHAREHOLDERS

As summarised in Section 11.4, on 7 August 2012, Sampoerna, Alligard Investments Ltd, Andrew Nutt, Antonietta Adaley, Fahrsai Consulting Ltd, Laia Ltd, Marc Flory, Nisso Resources (Hong Kong) Co Ltd, Ohmega Ltd, PT Bestindo Kwadratama, PT Para Am-artha Investama, Sevag Chalabian and STC Advisory Pty Ltd (Principal Shareholders) entered into a Sharehold-ers’ Deed. Under the Shareholders’ Deed, the Principal Shareholders agree to act in relation to things, including the nomination of Directors and the exercise of their voting rights in relation to the issue of share capital and new asset purchases, in favour of Sampoerna.

As a consequence of the arrangements under the Shareholders’ Deed (see Section 11.4), upon completion

of the Acquisition:

(a) Sampoerna will have a relevant interest in not just the Shares it directly holds (i.e. 22,800,000 Shares), but also a relevant interest in the Shares to be issued to, and held by, all other Principal Shareholders (i.e. 49,800,002 in aggregate), which gives Sampoerna a relevant interest in a total of 72,600,002 Shares; and

(b) each Principal Shareholder other than Sampoerna will acquire a relevant interest in those Consideration Shares to be issued to that Principal Shareholder.

Accordingly, upon completion of the Acquisition, Sam-poerna will hold a relevant interest in Shares that will reflect the aggregate of all those Consideration Shares issued to all the Principal Shareholders. Each of the other Principal Shareholders will hold a relevant interest in the Shares that are issued to them. For the reasons set out above regarding the associate relationship arising from the Shareholders’ Deed, each of the Principal Shareholders (including Sampoerna) will also have voting power equal to the aggregate of the voting power of all the Principal Shareholders, as set out in Table 17.

While Sampoerna’s relevant interest in Shares is reflected as the aggregate of all Consideration Shares issued to Principal Shareholders, each other Principal Share-holder’s relevant interest in Shares is reflected as those Considerations Shares issued to them directly.

If the acquisition is completed, the minimum subscrip-tion of $2,000,000 is raised under the Offer and all Con-sideration Options held by the Principal Shareholders are exercised but no other Options are exercised, then as a result of the Shareholders’ Deed, each Principal Shareholder including Sampoerna will hold voting power of 63.4% in the Company (on a fully diluted basis).

Table 17 sets out the share holdings, relevant interest and voting power of the Principal Shareholders under the above assumptions.

12.6 DIRECTORS’ INTERESTS

Directors are not required under the Company’s Constitution to hold any Shares. As at the date of this Prospectus, the Directors have relevant interests in Shares as set out in Table 18.


For

per

sona

l use

onl

y

195


Table 17. Share holdings, relevant interest and voting power of the Principal Shareholders, assuming completion of the Acquisition, that the minimum subscription is raised under the Offer, and that all Consideration Options held by the Principal Shareholders are exercised but no other Options are exercised.

Principal ShareholderShares on

Acquisition

Issue of Shares under

ProspectusExercise

of Options

Total number of

Shares

Regis-tered

interestRelevant interest

Voting power

(%) (%) (%)Alligard Investments Ltd 11,800,000 – 1,200,000 13,000,000 8.5 8.5 63.4Andrew Nutt 3,000,001 – – 3,000,001 2.0 2.0 63.4Antonietta Adaley 1,500,000 – – 1,500,000 1.0 1.0 63.4Fahrsai Consulting Ltd 3,000,000 – – 3,000,000 2.0 2.0 63.4Laia Ltd 2,000,000 – – 2,000,000 1.3 1.3 63.4Marc Flory 6,500,001 – – 6,500,001 4.3 4.3 63.4Nisso Indonesia Resources 12,000,000 – – 12,000,000 7.9 7.9 63.4Ohmega Ltd 3,000,000 – – 3,000,000 2.0 2.0 63.4PT Bestindo Kwadratama 1,000,000 – – 1,000,000 0.7 0.7 63.4PT Para Amartha Investama 2,000,000 – – 2,000,000 1.3 1.3 63.4Sampoerna Agri Resources Pte Ltd 22,800,000 – 22,800,000 45,600,000 29.9 63.4 63.4Sevag Chalabian 2,500,000 – – 2,500,000 1.6 1.6 63.4STC Advisory Pty Ltd 1,500,000 – – 1,500,000 1.0 1.0 63.4Total 72,600,002 – 24,000,000 96,600,002 63.4

Shares currently on issue 8,933,876 – – 8,933,876 5.9Other BMH shareholders 40,261,200 – – 40,261,200 26.4Prospectus raising – 6,666,667 – 6,666,667 4.4Total 121,795,078 6,666,667 24,000,000 152,461,745 100.0

Table 18. Directors’ direct and indirect Share holdings.

Director PositionShares held

directlyShares held

indirectly TotalAndrew Nutt1 Executive Chairman 3,000,001 6,000,000 9,000,001Muhammad Iqbal2 Executive Director – 2,000,000 2,000,000Sevag Chalabian3 Executive Director 2,500,000 4,500,000 7,000,000Brett Gunter Non-Executive Director 200,000 – 200,000Michael Doyle Non-Executive Director 200,000 – 200,000Anthony Crimmins Non-Executive Director 145,343 73,334 218,677Tommy Tjiptadjaja Proposed Non-Executive Director – – –

Notes1. Andrew Nutt’s indirect shareholdings include those of Fahrsai Ltd and Ohmega Ltd.2. Muhammad Iqbal’s indirect shareholdings include those of Laia Ltd, which is also entitled to a further 4,000,000 Shares pursuant to the ERN

Shareholders’ Agreement (see Section 11.5.3).3. Sevag Chalabian’s indirect shareholdings include those of STC Advisory Pty Ltd and Ohmega Ltd.

For

per

sona

l use

onl

y

196

12.7 DIRECTORS’ REMUNERATION

12.7.1 Executive Chairman’s and executive Directors’ remuneration

The Company’s Constitution allows an executive chair-man or executive Director to receive such remuneration as the Directors determine. In accordance with the Listing Rules, that remuneration must not include com-missions on or percentage of operating revenue.

The Company appointed Mr Andrew Nutt as Executive Chairman of the Company on 5 October 2012. Mr Nutt is retained through Fahrsai Ltd pursuant to an Independ-ent Contractor Agreement (see Section 11.8) and the remuneration package will comprise a consultancy fee of $12,000 per month plus accommodation for him and his family in Jakarta up to $2500 per month (plus GST), plus one return business class flight per annum from Indonesia to Australia for the authorised representative and his family.

The Company appointed Mr Muhammad Iqbal as an executive Director of the Company on 5 October 2012. Mr Iqbal is employed pursuant to an Independ-ent Contractor Agreement (see Section 11.10) and his remuneration package will comprise a consultancy fee of $8000 per month plus all approved, reasonable out-of-pocket expenses.

The Company appointed Mr Sevag Chalabian as an executive Director of the Company on 5 October 2012. Mr Chalabian is employed pursuant to an Independ-ent Contractor Agreement (see Section 11.11) and his remuneration package will comprise, following the listing of the Company on ASX, a consultancy fee of $10,000 per month (plus GST) plus all approved, reasonable out-of-pocket expenses.

12.7.2 Non-executive Directors’ remuneration

The Company’s Constitution provides that the non-exec-utive Directors may be paid such aggregate remuneration which, consistent with the Listing Rules, must not exceed the amount fixed from time to time by the Company in general meeting, and that remuneration accrues from day to day. The Constitution allows for the aggregate remuneration to be divided among the non-executive


Directors in such proportion as they agree from time to time (or, failing agreement, in equal proportions). At the date of this Prospectus, the Company’s annual aggregate maximum remuneration for non-executive Directors is $300,000.

In the last two years, the Company has paid the fol-lowing amounts by way of remuneration for services provided by the Directors, companies associated with Directors or their associates in their capacity as Direc-tors, consultants or advisers:

(a) $182,400 for the period to 30 June 2011; and

(b) $290,408 for the period to 30 June 2012.

Table 19 below sets out the remuneration provided to the non-executive Directors and their associated companies during the financial years ended 30 June 2011 and 30 June 2012. The remuneration of Directors for the current financial year is set out in Section 11.

Table 19. Directors’ past and future remuneration.

DirectorYear ended

30 June 20111

Year ended 30 June 20121

Andrew Nutt 46,400 134,545Muhammad Iqbal 96,000 16,000Sevag Chalabian 22,500 67,500Brett Gunter2 – 20,886Michael Doyle – 35,227Anthony Crimmins 17,500 16,250Total 182,400 290,408

Notes1. All amounts are exclusive of statutory superannuation.2. During the year ended 30 June 2012, fees of $36,933 were paid to

PT GMT Indonesia (GMTI), a company in which Mr Gunter has an interest for providing consulting and geological services to the Company. No fees were paid to GMTI in the year ended 30 June 2011.

The non-executive Directors are also entitled to fees or other amounts as the Board determines where they perform special duties or otherwise perform services outside the scope of the ordinary duties of a director. They may also be reimbursed for out of pocket expenses incurred as a result of their directorship or any special duties.

For

per

sona

l use

onl

y

197


12.8 FEES AND BENEFITS

Other than as set out below or elsewhere in this Prospectus, no:

(a) Director of the Company;

(b) person named in this Prospectus as performing a function in a professional advisory or other capacity in connection with the preparation or distribution of this Prospectus;

(c) promoter of the Company; or

(d) underwriter (but not a sub-underwriter) to the issue or a financial services licensee named in the Prospec-tus as a financial services licensee involved in the issue,

has, or had within two years before lodgement of this Prospectus with ASIC, any interest in:

(i) the formation or promotion of the Company;

(ii) any property acquired or proposed to be acquired by the Company in connection with its formation or promotion or in connection with the offer of Shares under this Prospectus; or

(iii) the offer of Shares under this Prospectus,

and no amounts have been paid or agreed to be paid and no benefits have been given or agreed to be given to any of those persons as an inducement to become, or to qualify as, a Director of the Company or for services rendered in connection with the formation or promo-tion of the Company or the offer of Shares under this Prospectus.

Wentworth Global Capital Partners Pty Ltd acts as corporate adviser to the Company and has assisted the Company in the preparation of this Prospectus. The Company estimates it will pay Wentworth Global Capital Partners Pty Ltd a total of $85,000 plus GST for these services. Subsequently, fees will be charged in accord-ance with normal charge out rates.

Al Maynard & Associates Pty Ltd has prepared the In-dependent Geological Report, which has been included in Section 7 of this Prospectus. The Company estimates it will pay Al Maynard & Associates Pty Ltd a total of approximately $55,000 for these services. Subsequently,

fees will be charged in accordance with normal charge out rates.

Susandarini and Partners has acted as the Indonesian legal adviser to the Company and has prepared the Solicitor’s Report, which has been included in Section 8 of this Prospectus. The Company estimates it will pay Susandarini and Partners a total of approximately $48,000 plus 10% VAT for these services. Subsequently, fees will be charged in accordance with normal charge out rates.

Hall Chadwick Corporate (NSW) Ltd has acted as Inves-tigating Accountant and has prepared an Investigating Accountant’s Report, which has been included in Section 9 of this Prospectus. The Company estimates it will pay Hall Chadwick Corporate (NSW) Ltd a total of $20,000 plus GST for these services. Subsequently, fees will be charged in accordance with normal charge out rates.

Norton Rose Australia has acted as the solicitors to the Company in relation to the Offer and has been involved in due diligence enquiries on legal matters. The Company estimates it will pay Norton Rose Australia approximately $100,000 for these services. Norton Rose Australia has received approximately $68,000 for other professional services during the 24 months precedeing the lodgement of this Prospectus. Subsequently, fees will be charged in accordance with normal charge out rates.

12.9 CONSENTS

Each of the parties referred to in this section:

(a) does not make, or purport to make, any statement in this Prospectus other than those referred to in this section; and

(b) to the maximum extent permitted by law, expressly disclaims and takes no responsibility for any part of this Prospectus other than a reference to its name and a statement included in this Prospectus with the consent of that party as specified in this section.

Wentworth Global Capital Partners Pty Ltd has given its written consent to being named as corporate adviser to the Company in this Prospectus. Wentworth Global Capital Partners Pty Ltd has not withdrawn its consent prior to the lodgement of this Prospectus with ASIC.

For

per

sona

l use

onl

y

198

Al Maynard & Associates Pty Ltd has given its written consent to being named as Independent Geologist to the Company in this Prospectus and to the inclusion of the Independent Geological Report in Section 7 in the form and context in which the report is included. Al Maynard & Associates Pty Ltd has not withdrawn its consent prior to lodgement of this Prospectus with ASIC.

Hall Chadwick Corporate (NSW) Ltd has given its writ-ten consent to being named as Investigating Accountant to the Company in this Prospectus and to the inclusion of the Investigating Accountant’s Report in Section 9 in the form and context in which the report is included. Hall Chadwick Corporate (NSW) Ltd has not withdrawn its consent prior to lodgement of this Prospectus with ASIC.

Susandarini and Partners has given its written consent to being named as the Indonesian legal adviser to the Company in this Prospectus and to the inclusion of the Solicitor’s Report in Section 8 in the form and context in which the report is included. Susandarini and Partners has not withdrawn its consent prior to lodgement of this Prospectus with ASIC.

Norton Rose Australia has given its written consent to being named as the solicitor to the Company in this Prospectus. Norton Rose Australia has not withdrawn its consent prior to the lodgement of this Prospectus with ASIC.

Link Market Services Ltd has given its written consent to being named the Company’s Share Registry in this Prospectus and has not withdrawn its consent prior to lodgement of this Prospectus with ASIC.

12.10 RESTRICTED SHARES

ASX has indicated that certain existing security holders may be required to enter into agreements that restrict dealings in Shares held by them. These agreements will be entered into in accordance with the Listing Rules.

12.11 EXPENSES OF THE OFFER

The total expenses of the Offer are estimated to be ap-proximately $380,000, assuming the minimum subscrip-tion of $2,000,000 is raised, and $480,000, assuming the

maximum subscription of $6,000,000 is raised. These expenses are expected to be applied towards the items set out in Table 20.

Table 20. Expenses of the Offer.

Item of expenditureMinimum

subscriptionMaximum

subscription($) ($)

Capital raising fees 55,000 150,000Investigating Accountant’s report 20,000 20,000Legal and advisory costs 250,000 250,000Administration expenses 10,000 10,000ASX and ASIC costs 30,000 35,000Printing and postage 15,000 15,000Total 380,000 480,000

12.12 LITIGATION

As noted on page 39 of the Solicitor’s Report in Section 8 of this Prospectus, IUP Exploration Number 297 owned by PT Elang Perkasa Kencana (IUP 297), in which the Company will hold an interest following com-pletion of the Acquisition, overlaps with an IUP issued to PT Tiara Utama Mandiri (Tiara IUP). The Company has become aware that the Tiara IUP has been included on the CNC list. Upon further enquiry by the Company, the Company has become aware that the issue of the Tiara IUP (and hence its inclusion on the CNC List) is under legal challenge and, depending of the outcome of that challenge, the Tiara IUP may be cancelled, the result of which would be that the Company’s majority-owned IUP 297 would no longer overlap the Tiara IUP.

As at the date of this Prospectus, the Company is not aware of any legal proceedings concerning it other than that outlined above and the Directors are not aware of any other legal proceedings pending or threatened against the Company.

12.13 ELECTRONIC PROSPECTUS

Pursuant to Class Order 00/044, ASIC has exempted compliance with certain provisions of the Corporations Act to allow distribution of an electronic prospectus


For

per

sona

l use

onl

y

199


and electronic application form on the basis of a paper prospectus lodged with ASIC, and the publication of notices referring to an electronic prospectus or electronic application form, subject to compliance with certain conditions.

If you have received this Prospectus as an electronic Prospectus, please ensure that you have received the entire Prospectus accompanied by the relevant Applica-tion Form. If you have not, please email the Company at [email protected] and the Company will send you, free of charge, either a hard copy or a further electronic copy of the Prospectus or both. Alternatively, you may obtain a copy of the Prospectus from the Company’s website at www.blighmining.com.au.

The Company reserves the right not to accept an Ap-plication Form from a person if it has reason to believe that when that person was given access to the electronic Application Form, it was not provided together with the electronic Prospectus and any relevant supplementary or replacement prospectus or any of those documents were incomplete or altered.

12.14 TAXATION

Set out below is an overview of the Australian tax implications for Australian residents and non-residents who acquire Shares under the Offer.

The taxation consequences of an investment in Bligh Mining will depend upon your particular circumstances. You should make your own enquiries about the taxation consequences of an investment in Bligh Mining. If you are in doubt, you should consult your accountant, stockbroker, lawyer or other professional adviser.

12.14.1 Tax considerations for Australian residents

Capital gains or losses

Australian income tax laws impose tax on capital gains (CGT). Resident Shareholders who hold Shares on capi-tal account may become liable to pay CGT if they make a capital gain when they dispose of Shares (or another CGT event has occurred in respect of those Shares).

Generally:

(a) The Shareholder will be taken to have acquired Shares under the Offer when these are issued to the Shareholder and to have disposed of them when they transfer (or agree to transfer) them to another person (although tax laws also deem a disposal to have occurred in other circumstances);

(b) The capital gain or loss will be calculated as the sale price of the Shares (or, in some cases, market value) minus the acquisition price of the Shares and other amounts included in the Shareholder’s cost base for the Shares (e.g. transaction costs);

(c) If the calculation results in a negative number, a capital loss has been made. A capital loss cannot be offset against ordinary taxable income but may be offset against current capital gains or carried forward and offset against future capital gains.

If the Shares are held for at least 12 months, the Share-holder may be entitled to a CGT discount (e.g. if the Shareholder is an individual or a trust, the capital gain may be discounted by 50% before tax is calculated or if the Shareholder is a complying superannuation fund or a similar entity, the discount is 33% but non-trustee com-panies are not entitled to this form of discount). The net taxable capital gain after permitted offsets (e.g. capital losses) and discounts is added to the Shareholder’s other assessable income.

Revenue gains or losses

Profits or losses in respect of Shares acquired for the purpose of share trading are likely to be treated for tax purposes as revenue gains or losses without the conces-sions available under the CGT provisions.

Shareholders who hold Shares for a share trading purpose should seek independent professional advice as the issues are complex.

Dividends

Generally:

(a) Dividends on Shares will be assessable income of the Shareholder in the tax year in which they are paid (or deemed to be paid) to the Shareholder (e.g. a

For

per

sona

l use

onl

y

200

dividend will be deemed to be paid where additional Shares are issued under a dividend reinvestment plan);

(b) If the dividend carries a franking credit, the divi-dend paid (or deemed to be paid) plus the franking credit will be included in the Shareholder’s assessable income;

(c) The Shareholder will be entitled to offset the frank-ing credit against tax payable by the Shareholder (provided the Shareholder is a qualifying person);

(d) A qualifying person is a Shareholder who satisfies the holding period rule (i.e. has held the Shares on which the dividend is paid ‘at risk’ for at least 45 days) and the related payments rule;

(e) Individuals and complying superannuation funds and some other taxpayers are entitled to a refund of any part of the franking credits that exceeds their tax payable; and

(f) Special rules apply to Shareholders who are trusts or partnerships.

12.14.2 Tax considerations for non-residents

The comments below are subject to the provisions of any applicable tax treaties and double taxation agree-ments that Australia may have with the country in which a Shareholder is resident. Non-resident applicants should seek their own independent professional advice in relation to the tax consequences in the country of their residence and any other relevant jurisdictions in respect of an investment in Bligh Mining.

Capital gains or losses

Shareholders who are foreign residents (or trustees of foreign trusts) would not ordinarily be subject to Aus-tralian CGT (nor be able to offset capital losses) on the disposal of all or some of their Shares (or where another CGT event has occurred in respect of those Shares).

Non-resident Shareholders should obtain their own independent professional advice about the tax conse-quences, including CGT, of acquiring Shares and any subsequent transfer (or agreement to transfer) of all or some of those Shares to another person.

Revenue gains or losses

Profits or losses in respect of Shares acquired for the purpose of share trading are likely to be treated for tax purposes as revenue gains or losses without the conces-sions available under the CGT provisions. Non-resident Shareholders who hold Shares for a share trading purpose should obtain their own independent profes-sional advice as the issues are complex.

Dividends

Generally, dividends paid (or deemed to be paid) to non-resident Shareholders will be subject to a final withhold-ing tax unless the dividend is fully franked. The rate of dividend withholding tax rate is 30% unless Australia has a double taxation agreement with the country in which the Shareholder is a resident (in which case, the rate of dividend withholding tax is usually reduced to 15%). Non-resident Shareholders should obtain their own independent professional advice in relation to the tax consequences of receiving (or being deemed to receive) dividends on Shares.

12.15 DOCUMENTS AVAILABLE FOR INSPECTION

The following documents are available for inspection during normal business hours at the Company’s regis-tered office:

(a) this Prospectus;

(b) the Company’s Constitution;

(c) the consents referred to in Section 12.9; and

(d) the corporate governance-related documents referred to in Section 6.5.


For

per

sona

l use

onl

y

201


13 DIRECTORS’ AUTHORISATION

This Prospectus is issued by the Company and its issue has been authorised by a resolution of the Directors.

The Directors state that they have made all reasonable enquiries and on that basis have reasonable grounds to believe that any statements made by the Directors in this Prospectus are not misleading or deceptive and that in respect to any other statements made in the Prospectus by persons other than Directors, the Directors have made reasonable enquiries and on that basis have reasonable grounds to believe that persons making the statement or statements were competent to make such statements, those persons have given their consent to the statements being included in this Prospectus in the form and context in which they are included and have not withdrawn that consent before lodgement of this Prospectus with ASIC, or to the Directors’ knowledge, before any issue of the Shares pursuant to this Prospec-tus.

Each Director has consented to the lodgement of this Prospectus with ASIC and has not withdrawn that consent.

Andrew NuttExEcutivE chairman

for anD on bEhalf of bligh mining ltD

For

per

sona

l use

onl

y

202

Public Offer Application Form

*BLH IPO001*

Broker Code

BLH IPO001

Adviser Code

G ( )Telephone Number where you can be contacted during Business Hours Contact Name (PRINT)

+F X

E

C

+

D

A(minimum 10,000, thereafter in multiples of 1,000)

Cheques or bank drafts should be made payable to “Bligh Mining Limited – Share Offer Account” in Australian currency and crossed “Not Negotiable”.

HCheque or Bank Draft Number BSB Account Number

-

Shares applied for Price per Share Application Monies

at B A$0.30, , A$ , , .

This is an Application Form for Shares in Bligh Mining Limited under the Public Offer on the terms set out in the Prospectus dated 9 November2012. You may apply for a minimum of 10,000 Shares and multiples of 1,000 thereafter. This Application Form and your cheque or bank draft must be received by 5pm (Sydney Time) on 14 December 2012.If you are in doubt as to how to deal with this Application Form, please contact your accountant, lawyer, stockbroker or other professional adviser. The Prospectus contains information relevant to a decision to invest in Shares and you should read the entire Prospectus carefully before applying for Shares.

Title First Name Middle Name

PLEASE COMPLETE YOUR DETAILS BELOW (refer overleaf for correct forms of registrable names)Applicant #1Surname/Company Name

Designated account e.g. <Super Fund> (or Joint Applicant #3)


Joint Applicant #2Surname

PLEASE COMPLETE ADDRESS DETAILSPO Box/RMB/Locked Bag/Care of (c/-)/Property name/Building name (if applicable)

Suburb/City or Town State Postcode

Unit Number/Level Street Number Street Name

Email address (only for purpose of electronic communication of shareholder information)

TFN/ABN type – if NOT an individual, please mark the appropriate box Company Partnership Trust Super Fund

TFN/ABN/Exemption Code First Applicant Joint Applicant #2 Joint Applicant #3

LODGEMENT INSTRUCTIONS You must return your application so it is received before 5pm (Sydney Time) on 14 December 2012 to: Link Market Services Limited, Locked Bag A14, Sydney South NSW 1235.

Please note: that if you supply a CHESS HIN but the name and address details on your Application Form do not correspond exactly with the registration details held at CHESS, your Application will be deemed to be made without the CHESS HIN and any Shares issued as a result of the Offer will be held on the issuer sponsored sub-register.

Total Amount A$ , , .

Bligh Mining Limited ABN 86 073 153 223

Bligh MiningF

or p

erso

nal u

se o

nly

Public Offer Application Form

*BLH IPO001*

Broker Code

BLH IPO001

Adviser Code

G ( )Telephone Number where you can be contacted during Business Hours Contact Name (PRINT)

+F X

E

C

+

D

A(minimum 10,000, thereafter in multiples of 1,000)

Cheques or bank drafts should be made payable to “Bligh Mining Limited – Share Offer Account” in Australian currency and crossed “Not Negotiable”.

HCheque or Bank Draft Number BSB Account Number

-

Shares applied for Price per Share Application Monies

at B A$0.30, , A$ , , .

This is an Application Form for Shares in Bligh Mining Limited under the Public Offer on the terms set out in the Prospectus dated 9 November2012. You may apply for a minimum of 10,000 Shares and multiples of 1,000 thereafter. This Application Form and your cheque or bank draft must be received by 5pm (Sydney Time) on 14 December 2012.If you are in doubt as to how to deal with this Application Form, please contact your accountant, lawyer, stockbroker or other professional adviser. The Prospectus contains information relevant to a decision to invest in Shares and you should read the entire Prospectus carefully before applying for Shares.


PLEASE COMPLETE YOUR DETAILS BELOW (refer overleaf for correct forms of registrable names)Applicant #1Surname/Company Name

Designated account e.g. <Super Fund> (or Joint Applicant #3)


Joint Applicant #2Surname

PLEASE COMPLETE ADDRESS DETAILSPO Box/RMB/Locked Bag/Care of (c/-)/Property name/Building name (if applicable)

Suburb/City or Town State Postcode

Unit Number/Level Street Number Street Name

Email address (only for purpose of electronic communication of shareholder information)

TFN/ABN type – if NOT an individual, please mark the appropriate box Company Partnership Trust Super Fund

TFN/ABN/Exemption Code First Applicant Joint Applicant #2 Joint Applicant #3

LODGEMENT INSTRUCTIONS You must return your application so it is received before 5pm (Sydney Time) on 14 December 2012 to: Link Market Services Limited, Locked Bag A14, Sydney South NSW 1235.

Please note: that if you supply a CHESS HIN but the name and address details on your Application Form do not correspond exactly with the registration details held at CHESS, your Application will be deemed to be made without the CHESS HIN and any Shares issued as a result of the Offer will be held on the issuer sponsored sub-register.

Total Amount A$ , , .

Bligh Mining Limited ABN 86 073 153 223

Bligh MiningF

or p

erso

nal u

se o

nly

Your Guide to the Application Form

CORRECT FORMS OF REGISTRABLE NAMESNote that ONLY legal entities are allowed to hold Shares. Applications must be in the name(s) of natural persons or companies. At least one full given name

designation if completed exactly as described in the examples of correct forms below.

Put the name(s) of any joint Applicant(s) and/or account description using < > as indicated above in designated spaces at section C on the Application Form.

Please complete all relevant white sections of the Application Form in BLOCK LETTERS, using black or blue ink. These instructions are cross-referenced to each section of the form.The Shares to which this Application Form relates are Bligh Mining Limited (Bligh Mining) Shares. Further details about the shares are contained in the Prospectus dated 9 November 2012 issued by Bligh Mining. The Prospectus will expire on 9 December 2013. While the Prospectus is current, Bligh Mining will send paper copies of the Prospectus, any supplementary document and the Application Form, free of charge on request.The Australian Securities and Investment Commission requires that a person who provides access to an electronic application form must provide access, by the same means and at the same time, to the relevant Prospectus. This Application Form is included in the Prospectus. The Prospectus contains important information about investing in the Shares. You should read the Prospectus before applying for Shares.

A Insert the number of Shares you wish to apply for. The Application must be for a minimum of 10,000 Shares and thereafter in multiples of 1,000. You may be issued all of the Shares applied for or a lesser number.

B Insert the relevant amount of Application Monies. To calculate your Application Monies, multiply the number of Shares applied for by the issue price. Amounts should be in Australian dollars. Please make sure the amount of your cheque or bank draft equals this amount.

C Write the full name you wish to appear on the register of Shares. This must be either your own name or the name of a company. Up to three joint Applicants may register. You should refer to the table below for the correct registrable title.

D Enter your Tax File Number (TFN) or exemption category. Business enterprises may alternatively quote their Australian Business Number (ABN). Where applicable, please enter the TFN or ABN for each joint Applicant. Collection of TFN(s) and ABN(s) is authorised by taxation laws. Quotation of TFN(s) and ABN(s) is not compulsory and will not affect your Application. However, if these are not provided, Bligh Mining will be required to deduct tax at the highest marginal rate of tax (including the Medicare Levy) from payments.

E Please enter your postal address for all correspondence. All communications to you from Bligh Mining and the Share Registry will be mailed to the person(s) and address as shown. For joint Applicants, only one address can be entered.

F If you are already a CHESS participant or sponsored by a CHESS

name or address recorded on CHESS for this HIN is different to the details given on this form, your Shares will be issued to Bligh Mining’s issuer sponsored subregister.

G Please enter your telephone number(s), area code and contact name in case we need to contact you in relation to your Application.

H Please complete the details of your cheque or bank draft in this section. The total amount of your cheque or bank draft should agree with the amount shown in section B.

Make your cheque or bank draft payable to “Bligh Mining Limited – Share Offer Account” in Australian currency and cross it “Not Negotiable”. Your cheque or bank draft must be drawn on an Australian

returned unpaid are likely to result in your Application being rejected.

LODGEMENT INSTRUCTIONSThis Application Form and your cheque or bank draft must be mailed or delivered so that it is received before 5pm (Sydney Time) on 14 December 2012 at: Mailing Address Hand DeliveryBligh Mining Limited Bligh Mining Limitedc/- Link Market Services Limited c/- Link Market Services LimitedLocked Bag A14 1A Homebush Bay DriveSydney South NSW 1235 Rhodes NSW 2138 (do not use this address for mailing purposes)

Link Market Services Limited advises that Chapter 2C of the Corporations Act 2001 requires information about you as a shareholder (including your name, address and details of the shares you hold) to be included in the public register of the entity in which you hold shares. Information is collected to administer your shareholding and if some or all of the information is not collected then it might not be possible to administer your shareholding. Your personal information may be disclosed to the entity in which you hold shares. You can obtain access to your personal information by contacting us at the address or telephone number shown on this form. Our privacy policy is available on our website (www.linkmarketservices.com.au).

Type of Investor Correct Form of Registration Incorrect Form of Registration

IndividualUse given names in full, not initials Mrs Katherine Clare Edwards K C Edwards

CompanyUse Company’s full title, not abbreviations Liz Biz Pty Ltd Liz Biz P/L or Liz Biz Co.

Joint HoldingsUse full and complete names

Mr Peter Paul Tranche &Ms Mary Orlando Tranche

Peter Paul & Mary Tranche

TrustsUse the trustee(s) personal name(s)

Mrs Alessandra Herbert Smith<Alessandra Smith A/C>

Alessandra SmithFamily Trust

Deceased EstatesUse the executor(s) personal name(s)

Ms Sophia Garnet Post &Mr Alexander Traverse Post<Est Harold Post A/C>

Estate of late Harold PostorHarold Post Deceased

Minor (a person under the age of 18 years)Use the name of a responsible adult with an appropriate designation

Mrs Sally Hamilton<Henry Hamilton>

Master Henry Hamilton

PartnershipsUse the partners’ personal names

Mr Frederick Samuel Smith &Mr Samuel Lawrence Smith<Fred Smith & Son A/C>

Fred Smith & Son

Long Names Mr Hugh Adrian John Smith-Jones Mr Hugh A J Smith Jones

Clubs/Unincorporated Bodies/Business Names Mr Alistair Edward Lilley<Vintage Wine Club A/C>

Vintage Wine Club

Superannuation FundsUse the name of the trustee of the fund

XYZ Pty Ltd<Super Fund A/C>

XYZ Pty LtdSuperannuation Fund

Telephone 1300 554 474 (within Australia)+61 2 8280 7111 (outside Australia)

For

per

sona

l use

onl

y

205


GlossaryA$ or $ means an Australian dollar.

Acquisition means the proposed purchase by the Company of all of the issued share capital of Bligh Min-ing (Holdings) Pty Ltd (ACN 143 902 845), approved by Shareholders on 5 October 2012 and expected to be completed concurrently with the Offer.

AG means Aldergrove Group Ltd.

Alligard means Alligard Investments Ltd, a company registered in the British Virgin Islands.

AMCAS means Australian Mining Corporate and Administrative Services Pty Ltd (21 142 899 778).

Application Form means the application form accompa-nying this Prospectus relating to the Offer.

ASIC means the Australian Securities and Investments Commission.

ASTC means ASX Settlement and Transfer Corporation Pty Ltd.

ASX means ASX Ltd (ABN 98 008 624 691) or the Australian Securities Exchange (as the context requires).

ASX Listing Rules means the official listing rules of ASX.

BCI means Blue Castle Investments Ltd, a company registered in Honk Kong (CRN 1620934).

Beta means PT Beta Resources, a company registered in Indonesia.

BK means PT Bestindo Kwadratama, a company registered in Indonesia.

BKPM means Badan Koordinator Penanaman Modal (Indonesian Capital Investment Coordinating Board).

Bligh or Bligh Mining means the Company.

BMH mean Bligh Mining (Holdings) Pty Ltd (ACN 143 902 845), formerly Bligh Mining Pty Ltd.

Board means the board of Directors as constituted from time to time.

Business Day means a week day when trading banks are ordinarily open for business in Perth, Western Australia.

BVI means British Virgin Islands.

Capital Raising means the proposed raising of up to $6,000,000 under this Prospectus.

CGT means capital gains tax.

CHESS means Clearing House Electronic Sub-register System, which is operated by ASTC, a wholly owned subsidiary of ASX.

Anticipated Closing Date means the anticipated closing date of the Offer as set out in Section 2.3.

CNC means ‘clean and clear’.

Company means Bligh Mining Ltd (ABN 86 073 153 223) (formerly Blackcrest Resources Ltd).

Consideration means the consideration to be given by the Company to the Vendors for the Acquisition, being:

(a) 112,861,202 Shares in the capital of the Company at a deemed issue price of $0.30 per Share; and

(b) 54,012,000 unlisted Options with the terms and conditions given in Section 12.2 of this Prospectus.

Consideration Option means an option to purchase a Share, which forms part of the Consideration Securities.

Consideration Securities means the Shares and Options that constitute the Consideration.

Consideration Shares means the Shares that form part of the Consideration Securities.

Consolidation means the one-for-nine consolidation of the Company’s Shares approved at the General Meeting.

Constitution means the constitution of the Company.

Corporations Act means the Corporations Act 2001 (Cth).

CSP means PT Charlie Sapa Prima, a company registered in Indonesia.

Directors means the directors of the Company at the date of this Prospectus.

Elgary means PT Elgary Resources, a company regis-tered in Indonesia.

EPK means PT Elang Perkasa Kencana, a company registered in Indonesia.

For

per

sona

l use

onl

y

206

EPKR means PT Elang Perkasa Kencana Resources, a company registered in Indonesia.

EPM means PT Elang Perkasa Mining, a company registered in Indonesia.

EPRI means PT Elang Perkasa Resources Indonesia, a company registered in Indonesia.

ERN means PT Endeavour Resources NTT, a company registered in Indonesia.

ESDM means Energi dan Sumber Daya Mineral (Indo-nesia’s Ministry of Energy and Mineral Resources).

Expiry Date mean 5.00pm Sydney Time on that date which is 13 months after the date this Prospectus was lodged with ASIC.

Exposure Period means the period of seven days after the date of lodgement of this Prospectus, which period may be extended by ASIC by not more than seven days pursuant to Section 727(3) of the Corporations Act.

Fahrsai means Fahrsai Ltd, a company registered in Hong Kong.

FNM means Flores NTT Mining Pte Ltd, a company registered in Singapore.

FOB means full on-board.

GAAP means Generally Accepted Accounting Princi-ples, a common set of accounting principles, standards and procedures.

GCR means PT Golden Castle Resources, a company registered in Indonesia.

General Meeting or Meeting means the general meeting of Shareholders held on 5 October 2012.

GMTI means PT GMT Indonesia, a company registered in Indonesia.

GST means Goods and Services Tax.

IMnI means the International Manganese Institute.

IUP means Izin Usaha Pertambangan, which roughly translates as ‘mining permission’. It is the licence that is required by Indonesian law for a mining company to do any kind of mining activities in a particular area includ-ing exploration, feasibility and environmental studies and where the relevant area does not overlap between Indonesian provinces, is granted by a local authority. The IUPs are specifically in relation to exploration activities.

JORC Code means the Australasian Code for Report-ing Exploration Results, Mineral Resources and Ore Reserves.

KD means PT Konstruktor Donggala, a company registered in Indonesia.

KP means Kuasa Pertambangan, which roughly translates as ‘mining authority’.

Listing Date means the date on which the Company is admitted to the Official List.

Listing Rules means the official listing rules of ASX.

Mn means manganese.

NIR means PT Nisso Indonesia Resources, a company registered in Indonesia.

Offer means the offer of Shares pursuant to this Prospectus as outlined in Section 3.1 of this Prospectus.

Official List means the Official List of ASX.

Official Quotation means official quotation by ASX in accordance with the Listing Rules.

OH&S means occupational health and safety.

OPS means PT Oriental Pratama Steel, a company registered in Indonesia.

Option means an option to subscribe for a Share.

Placement Letter means the placement agreement between BMH and Sampoerna dated 9 March 2012, which sets out the terms and conditions of Sampoerna’s investment in BMH.

Plan means the Employee Share Plan of BMH.

Glossary

For

per

sona

l use

onl

y

Principal Shareholders means the parties to the Share-holders’ Deed, being Sampoerna Agri Resources Pte Ltd, Alligard Investments Ltd, Andrew Nutt, Antonietta Adaley, Fahrsai Consulting Ltd, Laia Ltd, Marc Flory, Nisso Resources (Hong Kong) Co Ltd, Ohmega Ltd, PT Bestindo Kwadratama, PT Para Amartha Investama, Sevag Chalabian and STC Advisory Pty Ltd.

Prospectus means this prospectus.

PTMM means PT Manggarai Manganese, a company registered in Indonesia.

Sampoerna means Sampoerna Agri Resources Pte Ltd, a company registered in Singapore.

Securities means Shares, Options or both as the context requires.

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

Share Registry means Link Market Services Ltd (ABN 54 083 214 537).

Share Sale Agreement means the share sale agreement between the Company, BMH and each of the Vendors dated 10 August 2012 and summarised in Section 11.1 of this Prospectus.

Shareholder means a holder of Shares.

Shareholders’ Deed means the Amended and Restated Shareholders’ Deed entered into by the Principal Shareholders on 30 October 2012 and summarised in Section 11.4 of this Prospectus.

STA means State Capital Advisors Pty Ltd (ACN 154 857 002 ).

Strategic Alliance Agreement means the Amended and Restated Strategic Alliance Agreement entered into by BMH and Sampoerna on 30 October 2012 and sum-marised in Section 11.3 of this Prospectus.

STCA means STC Advisory Pty Ltd (ABN 13 093 680 838).

Subsidiary Companies means EPK, EPKR, EPM, EPRI, Elgary, NIR and OPS.

Sydney Time means the time as observed in Sydney, New South Wales.

TTS means Timor Tengah Selatan.

TTU means Timor Tengah Utara.

US$ means a United States dollar.

Vendors means the shareholders and option holders in BMH party to the Share Sale Agreement.

WDE means Whole Dragon Enterprises Ltd, a company registered in Hong Kong (CRN 1611058).

For

per

sona

l use

onl

y

www.blighmining.com.au

Bligh Mining

For

per

sona

l use

onl

y