Energy Fuels Inc 10-K/A, filed Jun 28, 2024
Energy Fuels Inc (UUUU)
About this 10-K/A
Energy Fuels Inc filed this 10-K/A on June 28, 2024, covering the fiscal year ended December 31, 2023.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
Amendment No. 1
For the fiscal year ended
or
For the transition period from ___________________ to ___________________
Commission file number:
(Exact Name of Registrant as Specified in Its Charter)
| Ontario, |
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| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
| (Address of principal executive offices) | (Zip Code) |
(
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
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EFR |
Toronto Stock Exchange |
Securities registered pursuant to Section 12(g) of the Act:
None
(Title of Class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes ☐
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act:
| Accelerated Filer ☐ | |
| Non-Accelerated Filer ☐ | Smaller Reporting Company |
| Emerging Growth Company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. Yes ☐ No ☒
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). Yes ☐ No ☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐
State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter: $
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
The number of common shares of the Registrant outstanding as of February 21, 2024 was
| Auditor Name: |
Auditor Location: |
Firm ID: |
EXPLANATORY NOTE
Energy Fuels Inc. (the “Company” or “Energy Fuels”) is filing this Amendment No. 1 (the “Amendment”) to our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, which was filed on February 23, 2024 (the “Form 10-K”), to (i) provide financial statements for Consolidated Uranium Inc. (“Consolidated Uranium”), pursuant to Rule 3-09 of Regulation S-X, for the period ended December 5, 2023 and years ended December 31, 2022 and 2021, and (ii) file as exhibits the material agreements entered into since the filing of the Form 10-K and the reports that have been furnished by the Company on Form 8-K.
Consolidated Uranium was significant under Rule 3-09 for the year ended December 31, 2022, but not for the year ended December 31, 2021 or the period ended December 5, 2023. As a result, under Rule 3-09, we have included in this Amendment unaudited consolidated financial statements for the period ended December 5, 2023, audited consolidated financial statements for the year ended December 31, 2022 and unaudited consolidated financial statements for the year ended December 31, 2021. In accordance with Rule 3-09(b), the financial statements of Consolidated Uranium are being filed as an amendment to the Form 10-K as Exhibit 99.2 included in Part IV, Item 15 of this filing.
Except as otherwise expressly noted, this Amendment does not modify or update in any way (i) the consolidated financial position, the results of operations or cash flows of the Company, or (ii) the disclosures in or exhibits to the Form 10-K; nor does it reflect events occurring after the filing of the Form 10-K. Among other things, forward-looking statements made in the Form 10-K have not been revised to reflect events that occurred or facts that became known to us after the filing of the Form 10-K, and such forward-looking statements should be read in their historical context. Furthermore, this Amendment should be read in conjunction with the Form 10-K and any subsequent filings with the United States Securities and Exchange Commission.
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Documents Filed as Part of This Report.
(1) Financial Statements
| Report of Independent Registered Public Accounting Firm | |
| Consolidated Statements of Financial Position as at December 5, 2023 and December 31, 2022 | |
| Consolidated Statements of Loss and Comprehensive Loss for the period ended December 5, 2023 and the years ended December 31, 2022 and 2021 | |
| Consolidated Statements of Changes in Equity for the period ended December 5, 2023 and the years ended December 31, 2022 and 2021 | |
| Consolidated Statements of Cash Flows for the period ended December 5, 2023 and the years ended December 31, 2022 and 2021 | |
| Notes to the Consolidated Financial Statements |
(2) Financial Statement Schedules
Schedules are omitted and are not applicable or not required, or the required information is shown in the financial statements or notes thereto.
(3) Exhibits
A list of exhibits required to be filed or furnished as part of this Amendment is set forth in the Exhibit Index below.
(c) Separate financial statements of subsidiaries not consolidated and fifty percent or less owned persons
The unaudited consolidated financial statements as at January 23, 2023 and for the 23-day period ended January 23, 2023, as at December 31, 2022 and for the year ended December 31, 2022 and the audited consolidated financial statements for the year ended December 31, 2021 of Virginia Energy Resources Inc. included in Exhibit 99.1 are filed as part of Item 15 of this Amendment to the Company's Form 10-K and should be read in conjunction with the Company's consolidated financial statements.
Exhibit Index
* Filed herewith.
† Previously filed or furnished, as applicable, with the Form 10-K on February 23, 2024.
# Portions of this exhibit have been redacted in accordance with the rules of the SEC. Energy Fuels agrees to provide an unredacted copy of the exhibit to the SEC upon its request.
(1) Incorporated by reference to Exhibit 3.1 of Energy Fuels' Form F-4 filed with the SEC on May 8, 2015.
(2) Incorporated by reference to Exhibit 3.2 of Energy Fuels' Form F-4 filed with the SEC on May 8, 2015.
(3) Incorporated by reference to Exhibit 3.3 of Energy Fuels' Form F-4 filed with the SEC on May 8, 2015.
(4) Incorporated by reference to Appendix B of Energy Fuels' Schedule 14A filed with the SEC on April 2, 2021.
(5) Incorporated by reference to Exhibit 4.1 to Energy Fuels' Form 8-K filed with the SEC on June 14, 2024.
(6) Incorporated by reference to Exhibit 4.2 to Energy Fuels' Form S-8 filed with the SEC on June 24, 2015.
(7) Incorporated by reference to Appendix A to Energy Fuels' Schedule 14A filed with the SEC on April 2, 2021.
(8) Incorporated by reference to Exhibit 10.4 to Energy Fuels' Form 10-K filed with the SEC on March 15, 2016.
(9) Incorporated by reference to Exhibit 10.1 to Energy Fuels' Form 8-K filed with the SEC on April 4, 2023.
(10) Incorporated by reference to Exhibit 10.3 to Energy Fuels' Form 8-K filed with the SEC on April 4, 2023.
(11) Incorporated by reference to Exhibit 10.5 to Energy Fuels' Form 8-K filed with the SEC on April 4, 2023.
(12) Incorporated by reference to Exhibit 10.5 to Energy Fuels' Form 10-Q filed with the SEC on November 2, 2020.
(13) Incorporated by reference to Exhibit 10.6 to Energy Fuels' Form 10-Q filed with the SEC on November 2, 2020.
(14) Incorporated by reference to Exhibit 10.1 to Energy Fuels' Form 10-Q filed with the SEC on August 5, 2019.
(15) Incorporated by reference to Exhibit 1.1 to Energy Fuels' Form S-3 Registration Statement filed with the SEC on March 22, 2024
(16) Incorporated by reference to Exhibit 10.1 to Energy Fuels' Form 8-K filed with the SEC on April 19, 2024.
(17) Incorporated by reference to Exhibit 10.2 to Energy Fuels' Form 8-K filed with the SEC on April 19, 2024.
(18) Incorporated by reference to Appendix A to Energy Fuels' Schedule 14A filed with the SEC on April 24, 2024.
(19) Incorporated by reference to Exhibit 99.2 to Energy Fuels' Form 8-K filed with the SEC on March 1, 2023.
(20) Incorporated by reference to Exhibit 99.3 to Energy Fuels' Form 8-K filed with the SEC on March 1, 2023.
(21) Incorporated by reference to Exhibit 99.6 to Energy Fuels' Form 8-K filed with the SEC on March 11, 2022.
(22) Incorporated by reference to Exhibit 99.2 to Energy Fuels' Form 8-K filed with the SEC on March 11, 2022.
(23) Incorporated by reference to Exhibit 99.1 to Energy Fuels' Form 8-K filed with the SEC on March 1, 2023.
(24) Incorporated by reference to Exhibit 99.3 to Energy Fuels' Form 8-K filed with the SEC on March 11, 2022.
(25) Incorporated by reference to Exhibit 99.1 to Energy Fuels' Form 8-K filed with the SEC on March 11, 2022.
(26) Incorporated by reference to Exhibit 99.1 to Energy Fuels' Form 8-K filed with the SEC on March 22, 2024.
(27) Incorporated by reference to Exhibit 99.1 to Energy Fuels' Form 8-K filed with the SEC on April 25, 2024.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
ENERGY FUELS INC.
| By: | /s/ Mark S. Chalmers | |
| Mark S. Chalmers, President & Chief Executive Officer | ||
| Principal Executive Officer | ||
| Date: June 27, 2024 |
Scheme Implementation Deed
Energy Fuels Inc.
EFR Australia Pty Ltd
Base Resources Limited
|
Narrm Country Level 43 Bourke Place 600 Bourke Street Melbourne VIC 3000 Australia T +61 3 9620 2223 F +61 3 9194 8310 |
Scheme Implementation Deed
Dated
Parties
1. Energy Fuels Inc. of 225 Union Boulevard Suite 600 Lakewood, Colorado 80228 United States (Bidder Holdco).
2. EFR Australia Pty Ltd ACN 676 689 419 of Level 43, 600 Bourke Street, Melbourne, VIC 3000, Australia (Bidder AU).
3. Base Resources Limited ACN 125 546 910 of Level 3, 46 Colin Street, West Perth WA 6005, Australia (Company).
Background
A. The Company has agreed to propose the Scheme between the Company and the Scheme Shareholders pursuant to which Bidder AU will acquire all of the ordinary shares in the Company.
B. Bidder AU proposes to acquire all of the ordinary shares in the Company pursuant to the Scheme and Bidder Holdco proposes to provide the Scheme Consideration upon the Scheme taking effect.
C. The Company, Bidder Holdco and Bidder AU have agreed to implement the Scheme on and subject to the terms and conditions of this Deed.
Operative provisions
1. Definitions and interpretation
1.1 Definitions
In this Deed unless the context otherwise requires, the following words and expressions have the following meanings:
Accounting Standards means, at any time:
(a) the requirements of the Corporations Act about the preparation and contents of financial reports;
(b) the accounting standards approved under the Corporations Act; and
(c) generally accepted accounting principles policies, practices and procedures in Australia to the extent not inconsistent with the accounting standards described in paragraph (b).
Advisor means, in relation to an entity, its legal, financial, tax and other expert advisors (not including the Independent Expert).
Agreed Announcement means the announcement that the parties have entered into this Deed in the form agreed between the parties on or before the date of this Deed, which announcement will be made to ASX and AIM and which may also be filed on SEDAR+ and/or with the SEC on EDGAR, and provided to the NYSE and TSX, as required.
AIM means the market of that name operated by the London Stock Exchange.
AIM Rules means the AIM Rules for Companies published by the London Stock Exchange.
ASIC means the Australian Securities and Investments Commission.
ASIC Draft means the draft of the Scheme Booklet approved in accordance with clauses 5.1(j) and 5.2(d) and provided to ASIC for approval under section 411(2) of the Corporations Act.
ASIC Regulatory Guide means a regulatory guide issued by ASIC.
ASIC Review Period means the period from the date on which the ASIC Draft is submitted to ASIC to the date on which ASIC provides a letter of intent under section 411(17)(b) of the Corporations Act that it does not object to the Scheme.
ASX means ASX Limited ABN 98 008 624 691 or the financial markets operated by it (as the context requires).
ASX Listing Rules means the official listing rules of the ASX as from time to time amended or waived in their application to a party.
Authorisation means any licence, permit, lease, authorisation, concession, consent, certificate or approval issued or granted by a Governmental Agency.
Bidder Data Room means the virtual data room created by Bidder Holdco and to which the Company and/or the Company Indemnified Parties have had access, an index to which has been initialled by the parties for the purposes of identification.
Bidder Due Diligence Materials means the information disclosed by or on behalf of Bidder Holdco and its Subsidiaries to the Company or any of its Representatives prior to the date of this Deed in respect of the subject matter of this Deed (including the information in the Bidder Data Room).
Bidder Group means Bidder Holdco and its Subsidiaries, including Bidder AU.
Bidder Group Member means each body corporate in the Bidder Group.
Bidder Holdco Board means the board of directors of Bidder Holdco.
Bidder Holdco Material Adverse Change means any event, occurrence or matter (whether occurring on or after the date of this Deed) which is or would (either individually or when aggregated together with any other events, matters or circumstances of a similar type or nature) reasonably be expected to:
(a) have the effect of diminishing the net assets of the Bidder Group, on a consolidated basis, by $47,400,625 or more against what it would reasonably have expected to have been but for the event, occurrence or matter;
(b) be material and adverse to the Bidder Group's ownership interest in a Bidder Material Project, including any material and adverse changes to:
(i) the legal status of or terms applicable to a Bidder Material Project; or
(ii) the Bidder Group's ability (as the owner of a Bidder Material Project) to (as the case may be) operate or exploit that Bidder Material Project, including as a result of any public statement or regulatory action by or on behalf of the governments of the United States of America, Utah, Wyoming, Arizona or New Mexico (as applicable) or any applicable court of law,
in each case, relative to the position or reasonable expectations as at the date of this Deed;
other than matters, events or occurrences:
(c) that are not material to the Bidder Group as a whole;
(d) required or expressly permitted by this Deed or the Scheme;
(e) Fairly Disclosed in the Bidder Due Diligence Materials;
(f) Fairly Disclosed in an SEC Report or SEDAR Report in the period from 1 July 2023 to the date of this Deed (excluding any risk factor disclosure and disclosure of risks in "forward looking statement" disclaimers that are predictive, forward-looking or primarily cautionary in nature);
(g) undertaken or occurring with the prior written consent of the Company;
(h) arising from any act of terrorism, outbreak or escalation of war (whether or not declared), major hostilities, civil unrest or outbreak or escalation of any disease epidemic or pandemic;
(i) arising from any act of God, natural disaster, lightning, storm flood, bushfire, earthquake, explosion, cyclone, tidal wave, landslide, on or after the date of this Deed;
(j) arising as a result of the execution, announcement or performance of this Deed or the Scheme in accordance with its terms; or
(k) which do not relate specifically to the Bidder Group and which arise from:
(i) changes to accounting standards or laws (including subordinate legislation, regulations, directions, orders or government policy) in the United States of America or any other jurisdiction in which the Bidder Group operates;
(ii) changes in exchange rates, interest rates or commodity prices; or
(iii) changes in general economic or business conditions, including those that relate to the industries in which the Bidder Group operates,
but in each case under this paragraph (k), excluding any such changes which have an adverse effect on the Bidder Group, taken as a whole, that is materially disproportionate as compared to the adverse effect of the relevant change on other participants in the industries in which the Bidder Group operates.
For the purposes of this definition and determining whether a Bidder Holdco Material Adverse Change has occurred:
(a) consolidated net assets will be calculated using the same principles as were used to calculate the consolidated net assets in the most recent audited financial statements of Bidder Holdco as filed with the SEC as at the date of this Deed; and
(b) the parties must take into account any amounts which are recoverable, or would reasonably be likely to be recoverable, under the Bidder Group's insurance policies.
Bidder Holdco Prescribed Event means the occurrence of any of the following:
(a) Bidder Holdco or any of its Subsidiaries converting all or any of its shares or securities into a larger or smaller number of shares or securities;
(b) Bidder Holdco or any of its Subsidiaries resolving to reduce its share capital in any way or reclassifying, combining, splitting or repurchasing directly or indirectly any of its issued securities;
(c) Bidder Holdco or any of its Subsidiaries:
(i) entering into a buy-back agreement; or
(ii) resolving to approve the terms of a buy-back agreement,
or taking equivalent action under the laws of its place of incorporation or registration;
(d) Bidder Holdco or any of its Subsidiaries issuing shares, or granting an option over its shares to a person other than:
(i) in the case of Bidder Holdco's Subsidiaries, to Bidder Holdco or one of its wholly owned Subsidiaries;
(ii) the issue of shares upon the conversion or exercise of Bidder Holdco equity incentives or performance rights, as Fairly Disclosed before the date of this Deed;
(iii) the issue of awards that are convertible or exercisable into shares under the terms of Bidder Holdco's equity incentive plan as Fairly Disclosed before the date of this Deed;
(iv) in respect of matters Fairly Disclosed in the Bidder Due Diligence Materials; or
(v) the issue of shares pursuant to the terms and conditions of the sales agreement between Bidder Holdco, Cantor Fitzgerald & Co., BMO Capital Markets Corp., Canaccord Genuity LLC and B. Riley Securities Inc. dated March 22, 2024 (and provided such agreement has not subsequently been amended);
(e) Bidder Holdco or any of its Subsidiaries issuing or agreeing to issue securities, other instruments convertible into shares or debt securities or rights for the issue of shares or debt securities, or vesting or accelerating or agreeing to vest or accelerate a performance right or an option over its shares other than:
(i) in the case of any of Bidder Holdco's Subsidiaries, to Bidder Holdco or one of its other wholly owned Subsidiaries; or
(ii) as permitted under paragraph (d) above;
(f) the Company or any of its Subsidiaries making any change or amendment to its constitution or convening a meeting to consider a resolution to change or amend its constitution;
(g) Bidder Holdco or any of its Subsidiaries creates, or agrees to create, an Encumbrance (other than a Permitted Encumbrance) over, or declares itself the trustee of, all or substantially all of the business, property or other assets of the Bidder Group (as a whole);
(h) an Insolvency Event occurring in respect of Bidder Holdco or a material Bidder Group Member;
(i) Bidder Holdco Shares being removed from quotation on the TSX or NYSE; or
(j) Bidder Holdco or any of its Subsidiaries agreeing to any revocation, suspension or variation of any of the Authorisations or mining tenure for the Bidder Material Projects in a manner that has a materially negative impact on the Bidder Group as a whole,
provided that a Bidder Holdco Prescribed Event does not include any matter:
(a) required to be done or procured by Bidder Holdco pursuant to, or which is otherwise expressly contemplated or expressly permitted by, this Deed or the Scheme;
(b) to the extent it is Fairly Disclosed in the Bidder Due Diligence Materials;
(c) Fairly Disclosed in an SEC Report or SEDAR Report in the period from 1 July 2023 to the date of this Deed (excluding any risk factor disclosure and disclosure of risks in "forward looking statement" disclaimers that are predictive, forward-looking or primarily cautionary in nature); or
(d) the undertaking of which the Company has approved in writing (such approval not to be unreasonably withheld or delayed).
Bidder Holdco Share means a common share in the capital of Bidder Holdco.
Bidder Indemnified Officer means each director, officer, employee and Advisor of each of the Bidder Group Members.
Bidder Indemnified Parties means each of the Bidder Group Members and the Bidder Indemnified Officers.
Bidder Information means all information regarding Bidder AU, Bidder Holdco, and the Bidder Group provided by Bidder Holdco or Bidder AU under clause 5.2(a) for inclusion in the Scheme Booklet (including information relating to the Bidder Group or the businesses of the Bidder Group expressly provided by or on behalf of Bidder Holdco in writing for use in the preparation of the Merged Group Information).
Bidder Material Projects means each of the White Mesa Mill, Pinyon Plain Mine, La Sal Complex, Nichols Ranch ISR and Roca Honda.
Break Fee means $2,400,000 (excluding GST).
Business Day means any day that is:
(a) a business day as defined in the ASX Listing Rules;
(b) a business day as defined in the AIM Rules; and
(c) a day, other than a Saturday or Sunday, that banks are open for business in Denver, Colorado, USA.
CAK means the Competition Authority of Kenya established under the Kenya Competition Act.
Company Board means the board of directors of the Company.
Company Board Nominee has the meaning given to that term in clause 9.4(a).
Company DI Holder means a holder of a Company DI.
Company Director means a director of the Company.
Company DIs means the depositary interests issued by the Depositary in respect of the Company Shares deposited with it.
Company Group means the Company and its Subsidiaries.
Company Group Member means each body corporate in the Company Group.
Company Indemnified Officer means each director, officer, employee and Advisor of each of the Company Group Members.
Company Indemnified Parties means each Company Group Member and each Company Indemnified Officer.
Company Information means information included in the Scheme Booklet, including information relating to the Company Group or the businesses of the Company Group expressly provided by or on behalf of the Company in writing for use in the preparation of the Merged Group Information in the Scheme Booklet (or in any amendment or supplement), but not including the Bidder Information, the Independent Expert's Report, any investigating accountant's report or any description of the taxation effect of the Scheme on Scheme Shareholders prepared by an external Advisor to the Company.
Company LTIP means the Company's Long Term Incentive Plan, as amended from time to time.
Company Material Adverse Change means any event, occurrence or matter (whether occurring on or after the date of this Deed) which is or would (either individually or when aggregated together with any other events, matters or circumstances of a similar type or nature) reasonably be expected to:
(a) have the effect of diminishing the net assets of the Company Group, on a consolidated basis, by $32,271,250 or more against what it would reasonably have expected to have been but for the event, occurrence or matter;
(b) be material and adverse to the Company Group's ownership interest in a Material Project, including any material and adverse changes to:
(i) the legal status of or terms applicable to a Material Project; or
(ii) the Company Group's ability:
(A) in the case of the Kwale Project, to operate or exploit that Material Project; and
(B) in the case of the Toliara Project, to lift the suspension, obtain the legal right to exploit monazite or otherwise exploit the Toliara Project (including as a result of any public statement or regulatory action by or on behalf of the Government of Madagascar or any applicable court of law),
in each case, relative to the position or reasonable expectations as at the date of this Deed,
other than matters, events or occurrences:
(c) that are not material to the Company Group as a whole;
(d) required or expressly permitted by this Deed or the Scheme;
(e) Fairly Disclosed in the Due Diligence Materials;
(f) Fairly Disclosed in public announcements issued by the Company to the ASX or AIM in the period from 1 July 2023 to the date of this Deed (excluding any risk factor disclosure and disclosure of risks in "forward looking statement" disclaimers that are predictive, forward-looking or primarily cautionary in nature);
(g) undertaken or occurring with the prior written consent of Bidder Holdco;
(h) arising from any act of terrorism, outbreak or escalation of war (whether or not declared), major hostilities, civil unrest or outbreak or escalation of any disease epidemic or pandemic (not including arising from an outbreak or escalation of war (whether or not declared) or major hostilities in Madagascar));
(i) arising from any act of God, natural disaster, lightning, storm flood, bushfire, earthquake, explosion, cyclone, tidal wave, landslide, on or after the date of this Deed;
(j) arising from any assessment of the Company Group's asset carrying values or net realisable values following the date of this Deed (using the same accounting policies used in the most recent audited financial statements of the Company as at the date of this Deed) which may result from the planned cessation of mining operations at the Kwale Project prior to 31 December 2024;
(k) arising as a result of the execution, announcement or performance of this Deed or the Scheme in accordance with its terms; or
(l) which do not relate specifically to the Company Group and which arise from:
(i) changes to accounting standards or laws (including subordinate legislation, regulations, directions, orders or government policy) in Australia, Kenya, Madagascar or any other jurisdiction in which the Company Group operates;
(ii) changes in exchange rates, interest rates or commodity prices; or
(iii) changes in general economic or business conditions, including those that relate to the industries in which the Company Group operates,
but in each case under this paragraph (l), excluding any such changes which have an adverse effect on the Company Group, taken as a whole, that is materially disproportionate as compared to the adverse effect of the relevant change on other participants in the industries in which the Company Group operates.
For the purposes of this definition and determining whether a Company Material Adverse Change has occurred:
(a) consolidated net assets will be calculated using the same principles as were used to calculate the consolidated net assets in the most recent audited financial statements of the Company as at the date of this Deed; and
(b) the parties must take into account any amounts which are recoverable, or would reasonably be likely to be recoverable, under the Company Group's insurance policies.
Company Performance Right means a performance right granted under the Company LTIP.
Company Performance Rights Holder means the holder of a Company Performance Right.
Company Prescribed Event means the occurrence of any of the following:
(a) the Company or any of its Subsidiaries converting all or any of its shares or securities into a larger or smaller number of shares or securities;
(b) the Company or any of its Subsidiaries resolving to reduce its share capital in any way or reclassifying, combining, splitting or repurchasing directly or indirectly any of its issued securities;
(c) the Company or any of its Subsidiaries:
(i) entering into a buy-back agreement; or
(ii) resolving to approve the terms of a buy-back agreement under the Corporations Act,
or taking equivalent action under the laws of its place of incorporation or registration;
(d) the Company or any of its Subsidiaries issuing shares, or granting an option over its shares to a person other than:
(i) in the case of the Company's Subsidiaries, to the Company or one of its wholly owned Subsidiaries; or
(ii) the issue of shares upon the conversion or exercise of Company Performance Rights, the number of which was Fairly Disclosed in writing to Bidder Holdco before the date of this Deed;
(e) the Company or any of its Subsidiaries issuing or agreeing to issue securities, other instruments convertible into shares or debt securities or rights for the issue of shares or debt securities, or vesting or accelerating or agreeing to vest or accelerate a performance right or an option over its shares other than:
(i) in the case of any of the Company's Subsidiaries, the Company or one of its other wholly owned Subsidiaries; or
(ii) as permitted under paragraph (d) above or where the vesting of a performance right occurs in accordance with clause 6.7;
(f) the Company or any of its Subsidiaries settling or agreeing to settle in cash the conversion, exercise or termination of the Company Performance Rights;
(g) the Company or any of its Subsidiaries creating any new employee incentive plan or similar share or incentive scheme or amending the terms of the Company LTIP or the Company STIP;
(h) the Company or any of its Subsidiaries issuing or agreeing to issue offers to participate in the Company LTIP;
(i) the Company or any of its Subsidiaries making any change or amendment to its constitution or convening a meeting to consider a resolution to change or amend its constitution;
(j) subject to paragraph (n) of this definition, the Company or any of its Subsidiaries:
(i) acquiring, taking a lease over, disposing of or leasing to another party;
(ii) agreeing to acquire, take a lease over, dispose of or lease to another party; or
(iii) offering, proposing or announcing an intention to do any of the above in relation to,
any securities, businesses, assets, interests in a joint venture, entity or undertaking, whether in one transaction or a number of such transactions, where:
(iv) the amount or value involved in such transaction or transactions of the same or substantially the same kind or which are related exceeds $2,500,000; or
(v) which otherwise constitutes the whole or a substantial part of the Company Group's business,
excluding any disposal of property, plant and equipment in connection with the expected cessation of mining operations at the Kwale Project and any short term rental or leasing of equipment for operations at the Kwale Project in a manner consistent with recent past practice;
(k) the Company or any of its material Subsidiaries ceasing, or threatening to cease, carrying on the business conducted by the relevant Company Group Member in the 12 months prior to the date of this Deed;
(l) the Company or any of its Subsidiaries entering into any new lines of business or undertaking any other activities which are material to the Company Group (as a whole) which it is not engaged as of the date of this Deed;
(m) the Company or any of its Subsidiaries agreeing to any revocation, suspension or variation of any of the Authorisations or mining tenure for the Material Projects in a manner that has a materially negative impact on the Company Group as a whole;
(n) the Company or any of its Subsidiaries entering into any royalty agreement, offtake agreement, joint venture, farm-in, farm-out or similar arrangement with respect to the Material Projects;
(o) the Company or any of its Subsidiaries:
(i) entering into any investment agreement, stability agreement or similar arrangement, including any binding memorandum of understanding or heads of agreement, with respect to a Material Project with a Governmental Agency, or an amendment relating thereto; or
(ii) agreeing the terms for the voluntary participation of a Governmental Agency in a Material Project (or a share interest in the Company Group Member that holds the Company Group interest in a Material Project),
in each case on terms which are materially less favourable to the Company Group (as a whole) than the commercial terms which were Fairly Disclosed in the Due Diligence Materials, provided that (except in the case of entering into a binding memorandum of understanding with respect to the Toliara Project in the form Fairly Disclosed in the Data Room), before taking an action pursuant to paragraph (o) of this definition, the Company must provide Bidder Holdco a reasonable opportunity to review and, provided Bidder Holdco promptly responds prior to any reasonable deadlines communicated by the Company (having regard to any applicable commercial or regulatory deadlines imposed on the Company Group), the Company must incorporate Bidder Holdco's reasonable comments;
(p) the Company or any of its Subsidiaries creates, or agrees to create, an Encumbrance (other than a Permitted Encumbrance) over, or declares itself the trustee of, all or substantially all of the business, property or other assets of the Company Group (as a whole);
(q) the Company or any of its Subsidiaries directly or indirectly enters into or provides any guarantee, indemnity or security on behalf of, or in respect of the obligations of, any other person other than to another member of the Company Group or in the ordinary course of business;
(r) the Company or any of its Subsidiaries:
(i) increasing the remuneration of, or otherwise varying, the employment arrangements with any of its directors or general manager level employees (except where the total increase of the remuneration of its directors or general manager level employees is (in aggregate) consistent with the Company Group's approach for previous periods and no more than 5% of the total remuneration paid to the directors and general manager level employees (in aggregate) as at the date of this Deed);
(ii) any increase in the remuneration of, or otherwise varying, the employment arrangements with any of its employees (other than directors or general manager level employees) which is not in the ordinary course of business on terms that are reasonable in the circumstances and (in aggregate) consistent with the Company Group's approach for previous periods;
(iii) except as contemplated or permitted under clause 6.7 in relation to the Company Performance Rights Holders, accelerating the rights of any of its directors or employees to compensation or benefits of any kind (including under the Company LTIP); or
(iv) paying any of its directors or employees a bonus, termination or retention payment (other than in the ordinary course of business and on terms which are reasonable in the circumstances, including in accordance with an existing contract or the terms of the Company STIP disclosed to Bidder Holdco or Bidder AU before the date of this Deed);
(s) the Company or any of its Subsidiaries:
(i) entering into, terminating or amending in a material manner; or
(ii) waiving any material claims or rights under, or waiving the benefit of, or making any material election or exercising any material rights under, any provisions of,
any agreement, arrangement or understanding:
(iii) where the entry into, amendment or waiver of, or election or exercise of rights under, the relevant agreement, arrangement or understanding will have a financial impact on the Company or any of its Subsidiaries of at least $2,500,000 or more (in aggregate), other than in the ordinary course of business; or
(iv) where the entry into, amendment or waiver of, or election or exercise of rights under, the relevant agreement, arrangement or understanding is otherwise material to the business or operations of the Company Group as a whole;
(t) an Insolvency Event occurring in respect of the Company or any of its material Subsidiaries;
(u) other than the Special Dividend, the Company announcing, making, declaring, paying, distributing or incurring a liability to pay any distribution whether by way of dividend, bonus or capital reduction or otherwise and whether in cash or in specie;
(v) the Company or any of its Subsidiaries:
(i) increasing its level of financial indebtedness (including financial liabilities incurred under finance leases) other than indebtedness owed to another Company Group Member by more than $250,000 (in aggregate); or
(ii) making any loans, advances or capital contributions to or investments in any person other than to another Company Group Member by more than $250,000 (in aggregate);
(w) the Company or any of its Subsidiaries cancelling, materially amending or failing to renew (or replace) on its expiry any existing insurance policy, on which the business of the Company depends in a material respect;
(x) the Company or any of its Subsidiaries making capital expenditure in excess of $2,500,000 in aggregate;
(y) the Company or any of its Subsidiaries changing any significant accounting policy applied by them to report their financial position other than if required by law or the Accounting Standards;
(z) the Company or any of its Subsidiaries:
(i) making, commencing or serving any legal action, proceeding, dispute, claim, crossclaim, counterclaim, demand, notice, direction, inquiry, arbitration, mediation, dispute resolution or litigation; or
(ii) settling, compromising, agreeing to any resolution, or making any admission,
in relation to any material legal proceedings, claim, investigation, arbitration or other like proceedings, other than:
(i) any arising out of or in respect of this Deed; or
(ii) settling, compromising, agreeing to any resolution, or making any admission in relation to any legal proceedings, claim, investigation, arbitration or other like proceedings for less than $2,500,000 in aggregate;
(aa) Company Shares being removed from quotation on the ASX;
(bb) the Company or any of its Subsidiaries entering into any agreement that contains a change of control consent right or fee or unilateral termination right that would be exercisable as a result of the Scheme being implemented, and in respect of which the implementation of the Scheme is reasonably likely to give rise to an adverse financial impact in excess of $500,000 in aggregate, unless the counterparty to the agreement has provided a binding waiver or release of those rights;
(cc) the Company or any of its Subsidiaries settling or conceding any material matters during tax reviews or audits with any Tax Authority (in each case, where the financial impact of the settlement or concession on the Company Group is reasonably likely to be in excess of $1,000,000); or
(dd) the Company or any of its Subsidiaries, officers or directors is or becoming a party to any material legal proceedings, claim, investigation, prosecution, litigation or arbitration other than as a plaintiff or applicant, in respect of the Company or any of its Subsidiaries or their respective business or assets which could reasonably be expected to give rise to a liability for the Company Group in excess of $2,500,000 (excluding legal costs) or reasonably be expected to have a material effect on the business of the Company or any of its Subsidiaries, not including litigation that is:
(i) frivolous or vexatious;
(ii) litigation initiated or instigated by Bidder Holdco or any of its Subsidiaries;
(iii) litigation where the Company receives bona fide legal advice within 10 Business Days of the Company being served with the relevant proceedings to the effect that the litigation has no reasonable prospect of success; or
(iv) any legal proceedings, claim, investigation, prosecution, litigation or arbitration to the extent that an insurer has agreed to cover the liability under an insurance policy maintained by a Company Group Member;
(ee) the Company Group making any acquisition, purchase or payment or incurring any expenditure or other financial commitment (other than pursuant to a contract or arrangement in the form that existed as at the date of this Deed), or incurring any new indebtedness following the date of this Deed, in each case which would have a reasonable likelihood of causing the Company Group's Consolidated Working Capital as at the Implementation Date to be less than $5,000,000, without the prior written consent of Bidder Holdco (such approval not to be unreasonably withheld or delayed). For the purpose of this paragraph (ee), the Company Group's Consolidated Working Capital is the amount which is equal to the Company Group's: (i) cash, cash equivalents and trade and other receivables; less (ii) current trade payables, including any change of control payments payable as a result of the completion of the Scheme, in each case as determined in accordance with the accounting principles, policies or procedures used to prepare the Company Group's management accounts,
provided that a Company Prescribed Event (other than the Company Prescribed Event in paragraph (ee)) does not include any matter:
(a) required to be done or procured by the Company pursuant to, or which is otherwise expressly contemplated or expressly permitted by, this Deed or the Scheme;
(b) to the extent it is Fairly Disclosed in the Due Diligence Materials;
(c) to the extent it is the Company or any of its Subsidiaries entering into any investment agreement, stability agreement or similar arrangement, or entering into any memorandum of understanding (or similar) which contemplates entry into those arrangements, with respect to a Material Project with a Governmental Agency, or any material amendment relating thereto, in each case on terms which are not materially less favourable to the Company Group (as a whole) than the commercial terms which were Fairly Disclosed in the Due Diligence Materials, provided that (except in the case of entering into a binding memorandum of understanding with respect to the Toliara Project in the form Fairly Disclosed in the Data Room), before entering into such investment agreement, stability agreement or similar arrangement, or entering into any memorandum of understanding (or similar), the Company must provide Bidder Holdco a reasonable opportunity to review and, provided Bidder Holdco promptly responds prior to any reasonable deadlines communicated by the Company (having regard to any applicable commercial or regulatory deadlines imposed on the Company Group), the Company must incorporate Bidder Holdco's reasonable comments;
(d) Fairly Disclosed in public announcements issued by the Company to the ASX or AIM in the period from 1 July 2023 to the date of this Deed (excluding any risk factor disclosure and disclosure of risks in "forward looking statement" disclaimers that are predictive, forward-looking or primarily cautionary in nature);
(e) which is an offtake agreement (whether for a single delivery or multiple deliveries) entered in the ordinary course for mineral sands products from the Kwale Project; or
(f) the undertaking of which Bidder Holdco has approved in writing (such approval not to be unreasonably withheld or delayed).
Company Registry means Computershare Investor Services Pty Limited.
Company Shareholder means each person registered in the Register as a holder of Company Shares.
Company Shares means fully paid ordinary shares in the Company.
Company STIP means the Company's Short Term Incentive Plan, as amended from time to time.
Competing Proposal means a bona fide proposal, offer or transaction by a party (other than Bidder Holdco or any Bidder Group Member) that, if entered into or completed substantially in accordance with its terms, would result in:
(a) a person acquiring a Relevant Interest, in more than 20% of the Company Shares, or acquire a right to obtain a Relevant Interest in more than that number of the Company Shares;
(b) a person directly or indirectly acquiring or obtaining an interest (including an economic interest) in all or substantially all of the business conducted by, or assets or property of the Company Group (including the Material Projects);
(c) a person directly or indirectly acquiring Control of, or otherwise acquire, merge with, or be stapled with, the Company or any material Company Group Member; or
(d) any other similar transaction or series of transactions involving the Company Group, the consummation of which would reasonably be expected to impede, interfere with, present a delay to the transactions contemplated herein,
whether by way of takeover bid, scheme, capital reduction, issue of securities, sale of assets, sale of securities, stapling, strategic alliance, dual listed company structure, joint venture or partnership, or other transaction or arrangement. For the avoidance of doubt, each successive material modification or variation of any proposal, offer or transaction in relation to a Competing Proposal will constitute a new Competing Proposal.
Conduit Foreign Income has the meaning given to that term in Subdivision 802-A of the Tax Act.
Confidentiality Deed means the mutual confidentiality undertaking dated 10 November 2022 and amended on 19 April 2023 between the Company and Energy Fuels Resource (USA) Inc., a wholly owned subsidiary of Bidder Holdco, as amended, supplemented and novated by Energy Fuels Resource (USA) Inc. to Bidder Holdco on 5 December 2023, and as may be further amended between the Company and Bidder Holdco.
Control has the meaning given to that term in section 50AA of the Corporations Act.
Corporations Act means the Corporations Act 2001 (Cth).
Corporations Regulations means the Corporations Regulations 2001 (Cth).
Counterproposal has the meaning given in clause 12.6(b).
Court means the Federal Court of Australia (commenced in the Perth registry) or any another court having jurisdiction under the Corporations Act, as determined by the Company.
Data Room means the virtual data rooms created by the Company and to which Bidder Holdco and certain Bidder Indemnified Parties have had access, indexes to which have been initialled by the parties for the purposes of identification.
Deed means this Scheme Implementation Deed.
Deed Poll means a deed to be executed by Bidder AU and Bidder Holdco substantially in the form of Annexure C (or in such other form agreed by the parties in writing) under which Bidder AU and Bidder Holdco covenants in favour of the Scheme Shareholders to perform its obligations under the Scheme.
Depositary means Computershare Investor Services PLC.
Due Diligence Material means the information disclosed by or on behalf of the Company and its Subsidiaries to Bidder Holdco or any of its Representatives prior to the date of this Deed in respect of the subject matter of this Deed (including the information in the Data Room).
EDGAR means the Electronic Data Gathering, Analysis and Retrieval internal database system as available at www.edgarfiling.sec.gov.
Effective when used in relation to the Scheme, means the coming into effect, under section 411(10) of the Corporations Act, of the order of the Court made under section 411(4)(b) (and, if applicable, section 411(6)) of the Corporations Act in relation to the Scheme.
Effective Date means the date on which the Scheme becomes Effective.
Encumbrance means a mortgage, charge, pledge, lien, encumbrance, title retention, preferential right, trust arrangement, contractual right of set-off, or any other security agreement, arrangement or interest (including any "security interests" within the meaning of section 12 of the Personal Property Securities Act 2009 (Cth)) in favour of any person, whether registered or unregistered.
End Date means the date which is 8 months from the date of this Deed or such other later date as agreed in writing between Bidder Holdco and the Company before that date.
Exclusivity Period means the period from and including the date of this Deed to the earlier of:
(a) the Effective Date;
(b) the termination of this Deed; and
(c) the End Date.
Fairly Disclosed means:
(a) in relation to the Company, fairly disclosed in writing to Bidder Holdco or its Representatives (or, where the context requires, to ASX and AIM) in such a manner (including in sufficient detail and with sufficient specificity) so as to enable a reasonable person who is experienced in the mining industry, but without specific knowledge or expertise on the Company's business and affairs, receiving the relevant information to identify and reasonably and properly assess, the nature, scope and financial, technical, legal or other consequences of the relevant matter; and
(b) in relation to Bidder Holdco, fairly disclosed in writing to the Company or its Representatives (or where the context requires, in an SEC Report or SEDAR Report) in such a manner (including in sufficient detail and with sufficient specificity) so as to enable a reasonable person who is experienced in the mining industry, but without specific knowledge or expertise on Bidder Holdco's business and affairs, receiving the relevant information to identify and reasonably and properly assess, the nature, scope and financial, technical, legal or other consequences of the relevant matter.
First Court Date means the first day on which an application made to the Court, in accordance with clause 5.1(p), for orders under section 411(1) of the Corporations Act convening the Scheme Meeting to consider the Scheme is heard or, if the application is adjourned or subject to an appeal for any reason, the first day on which the adjourned application is heard.
Governmental Agency means any Australian or foreign government or governmental, semi-governmental, administrative, fiscal, regulatory or judicial body, department, commission, authority, tribunal agency or entity or any President, minister, or parliament of any federal, state, provincial, or local government, whether foreign or Australian, and includes the ASX, NYSE, TSX, AIM and any other relevant stock exchange, the SEC, the Canadian securities regulatory agencies and commissions, the Financial Conduct Authority and any state or territory revenue offices.
GST has the meaning given by 195-1 of the GST Act or any replacement or other relevant legislation and regulations.
GST Act means the A New Tax System (Goods and Services Tax) Act 1999 (Cth).
Implementation Date means the date that is ten Business Days after the Record Date or such other date as the parties agree in writing (acting reasonably).
Independent Expert means the independent expert in respect of the Scheme appointed by the Company.
Independent Expert's Report means the report to be issued by the Independent Expert in connection with the Scheme.
Ineligible Foreign Shareholder means a Scheme Shareholder whose address shown in the Register on the Record Date is a place outside:
(a) Australia and its external territories;
(b) Canada;
(c) New Zealand;
(d) the United Kingdom;
(e) the United States;
(f) the Cayman Islands (British Overseas Territory); and
(g) such other jurisdictions agreed to in writing by Bidder Holdco and the Company,
unless Bidder Holdco (after consultation with the Company) determines that it is lawful and not unduly onerous or unduly impractical to issue that Scheme Shareholder with New Bidder Holdco Shares when the Scheme becomes Effective.
Insolvency Event means in relation to a person or entity:
(a) the appointment of a liquidator, provisional liquidator, administrator, receiver, receiver and manager, controller or other insolvency official (whether under an Australian law or a foreign law) to the person or to the whole or a substantial part of the property or assets of the person;
(b) the entry by the person into a compromise, arrangement or composition with, or assignment for the benefit of, its creditors or a class of them generally;
(c) the entry by the person into a deed of company arrangement;
(d) the calling of a meeting to consider a resolution to wind up the person (other than where the resolution is frivolous or cannot reasonably be considered to be likely to lead to the actual winding up of the person) or the making of an application or order for the winding up or dissolution of the person other than where the application or order (as the case may be) is set aside within 14 days;
(e) the person suspends or threatens to suspend payment of its debts generally;
(f) the person ceases or threatens to cease to carry on business;
(g) the person is or becomes unable to pay its debts when they fall due within the meaning of the Corporations Act or is otherwise presumed to be insolvent under the Corporations Act or any similar law of a foreign jurisdiction in which the person is located; or
(g) anything analogous to anything referred to in the above paragraphs, or which has substantially similar effect, occurring with respect to the person.
Kenya Competition Act means the Competition Act of Kenya (No. 12 of 2010).
Kenyan Special Mining Lease means Special Mining Lease No. 23 dated 6 July 2004, as issued by the Commissioner of Mines and Geology of the Republic of Kenya, as amended and varied.
Kwale Project means the mineral sands mining and processing project carried out on the Kenyan Special Mining Lease in Kenya.
La Sal Complex means the series of uranium and vanadium mining operations known as the La Sal Complex in Utah, United States of America, including the Beaver, Pandora, and La Sal mines.
London Stock Exchange means London Stock Exchange plc.
Madagascar Exploitation Permit means Exploitation Permit 37242 dated 23 October 2017 issued to Base Toliara SARL by the Ministry for Mines and Strategic Resources of Madagascar and the Bureau of Mining Titles of Madagascar.
Material Projects means the Kwale Project and the Toliara Project.
Merged Group means the combination of the Bidder Group and the Company Group, as comprised by Bidder Holdco and its Subsidiaries following implementation of the Scheme.
Merged Group Information means any information regarding the Merged Group in the Scheme Booklet or any amendments or supplements of such disclosure (as applicable).
New Bidder Holdco Share means a fully paid Bidder Holdco Share to be issued to Scheme Shareholders as Scheme Consideration under the terms of the Scheme.
Nichols Ranch ISR means the Nichols Ranch in situ recovery uranium mining and processing operation carried out in Wyoming, United States of America.
Nominated Adviser means Canaccord Genuity Limited, the Company's nominated adviser and joint UK corporate broker.
NYSE means the NYSE American (or any successor to the NYSE American).
NYSE Rules means the rules and regulations of the New York Stock Exchange applicable to companies listed on the NYSE, including without limitation the NYSE American LLC Company Guide and the NYSE Listed Company Manual.
Permitted Encumbrance means an Encumbrance granted by any member of the Company Group in the ordinary course of business:
(a) under any retention of title, hire purchase or conditional sale arrangement or arrangement having similar effect in respect of goods supplied on the supplier's standard or usual terms (or terms more favourable to the customer);
(b) arising by operation of law in the ordinary course of trading;
(c) in respect of assets having a value not exceeding $500,000; or
(d) as permitted under the Company Group's existing credit facilities as at the date of this Deed.
Pinyon Plain Mine means the Pinyon Plain uranium mining operation carried out in Arizona, United States of America.
Record Date means 5.00 pm on the date that is three Business Days after the Effective Date or such other date as the Company, Bidder AU and Bidder Holdco, agree in writing (acting reasonably).
Register means the share register of the Company maintained in accordance with the Corporations Act.
Regulatory Approvals means the approvals referred to in clauses 3.1(a), 3.1(j), 3.1(n) and 3.1(o).
Related Body Corporate has the meaning given to that term in the Corporations Act.
Related Party means in relation to:
(a) the Company, the Company and its Related Bodies Corporate and each of the directors, officers, employees, representatives, agents, Advisors and financiers of the Company or any of its Related Bodies Corporate;
(b) Bidder AU and each of the directors, officers, employees, contractors, representatives, agents, Advisors and financiers of Bidder AU; and
(c) Bidder Holdco and each of the directors, officers, employees, contractors, representatives, agents, Advisors and financiers of Bidder Holdco.
Relevant Interest has the meaning given in the Corporations Act.
Representative means, in relation to an entity:
(a) each of the entity's Related Parties; and
(b) each of the officers and Advisors of the entity or of any of its Related Parties.
Reverse Break Fee means $2,400,000 (excluding GST).
Roca Honda means the Roca Honda uranium project carried out in New Mexico, United States of America.
Scheme means the scheme of arrangement under Part 5.1 of the Corporations Act between the Company and the Scheme Shareholders, substantially in the form of Annexure A or in such other form as the parties agree in writing, subject to any alterations or conditions made or required by the Court under section 411(6) of the Corporations Act and agreed to by the Company and Bidder Holdco.
Scheme Booklet means the booklet containing the information described in clause 6.1 to be approved by the Court and despatched to the Company Shareholders in accordance with this Deed.
Scheme Consideration means the consideration to be provided to each Scheme Shareholder by Bidder Holdco for the transfer to Bidder AU of each Scheme Share, being 0.0260 New Bidder Holdco Shares for each Company Share held by a Scheme Shareholder as at the Record Date.
Scheme Meeting means the meeting of the Company Shareholders ordered by the Court to be convened under section 411(1) of the Corporations Act at which the Company Shareholders will consider and vote on the Scheme and includes any meeting convened following any adjournment or postponement of that meeting.
Scheme Share means a Company Share held by a Scheme Shareholder as at the Record Date.
Scheme Shareholders means the Company Shareholders as at the Record Date.
SEC means the United States Securities and Exchange Commission.
SEC Report means a report, schedule, form, statement or other document filed by Bidder Holdco on EDGAR pursuant to the U.S. Securities Act or the U.S. Exchange Act.
Second Court Date means the first day on which an application made to the Court for an order pursuant to section 411(4)(b) (and, if applicable, section 411(6)) of the Corporations Act approving the Scheme is heard or scheduled to be heard or, if the application is adjourned for any reason, means the date on which the adjourned application is heard or scheduled to be heard.
Security Interest means any mortgage, charge, pledge, lien, assignment or other security interest or any other arrangement (including a right of set off or combination) entered into for the purpose of conferring a priority, including any security interest as defined in section 12 of the Personal Properties and Securities Act 2012 (Cth).
SEDAR Report means a report, schedule, form, statement or other document filed by Bidder Holdco on SEDAR+ pursuant to applicable Canadian securities laws or the TSX Rules.
SEDAR+ means the System for Electronic Data Analysis and Retrieval as available at www.sedarplus.ca.
Special Dividend has the meaning given to that term in clause 4.9.
Subsidiary has the meaning given to that term in section 46 of the Corporations Act.
Superior Proposal means a Competing Proposal received after the date of this Deed not resulting from a breach by the Company of any of its obligations under clause 12 of this Deed (it being understood that any actions by a Related Party of the Company not permitted by clause 12 will be deemed to be a breach by the Company for these purposes), which the Company Board, acting in good faith in the interests of the Company and the Company Shareholders and after receiving written advice from their external legal advisor and financial advisors, determines:
(a) is reasonably capable of being completed, but without having regard to the potential intentions of Bidder Holdco in relation to such proposal, including as a holder of Company Shares, within a reasonable timeframe in accordance with its terms, having regard to conditionality and taking into account all aspects of the Competing Proposal and the person making it, including having regard to timing considerations, legal, regulatory and financial matters and any conditions precedent; and
(b) would, if completed substantially in accordance with its terms, be more favourable to the Company and the Company Shareholders than the transactions contemplated in the Scheme or any Counterproposal provided by Bidder Holdco (if any), as the case may be, after taking into account all of the terms and conditions of the Competing Proposal and the Scheme or any Counterproposal provided by Bidder Holdco (if any), including consideration, conditionality, funding, certainty, timing and any other matters affecting the probability of the Competing Proposal being completed on its terms,
and solely for the purposes of this definition of Superior Proposal, the reference to 'more than 20%' in paragraph (a) of the definition of Competing Proposal is replaced with 'more than 50%'.
Takeovers Panel means the Takeovers Panel constituted under the Australian Securities and Investments Commission Act 2001 (Cth).
Tax Act means the Income Tax Assessment Act 1997 (Cth).
Tax Authority means the Australian Tax Office or any equivalent Governmental Agency in any jurisdiction.
Third Party means a person other than a Company Group Member or a Bidder Group Member.
Timetable means the indicative timetable set out in Annexure B.
Toliara Project means the proposed mineral sands and rare earths development project to be carried out primarily on the Madagascar Exploitation Permit in Madagascar.
Transaction Implementation Committee means a committee to be made up of:
(a) representatives of each of the Company and Bidder Holdco; and
(b) such other persons as the parties may agree from time to time.
TSX means the Toronto Stock Exchange.
TSX Rules means the rules of the TSX in the TSX Company Manual.
U.S. Exchange Act means the United States Securities Exchange Act of 1934, as amended and the rules and regulations thereunder.
U.S. Securities Act means the United States Securities Act of 1933, as amended, and the rules and regulations thereunder.
UK Corporate Broker means Berenberg, Gossler & Co. KG, London Branch.
UK MAR means the UK version of Regulation (EU) No 596/2014 of the European Parliament and of the Council on 16 April 2014 on market abuse, which is part of UK law by virtue of the European Union (Withdrawal) Act 2018.
White Mesa Mill means the uranium, vanadium and rare earth elements milling and processing operation carried out in San Juan County, Utah, United States of America.
1.2 Interpretation
In this Deed, headings are for convenience only and do not affect the interpretation of this Deed, and unless the context otherwise requires:
(a) a word or expression to which a meaning is attributed in the Corporations Act will have that meaning;
(b) words importing the singular include the plural and vice versa;
(c) words importing a gender include any gender;
(d) other parts of speech and grammatical forms of a word or phrase defined in this Deed have a corresponding meaning;
(e) an expression importing a natural person includes any company, partnership, joint venture, association, corporation or other body corporate and any Governmental Agency;
(f) a reference to a clause, party, annexure, exhibit or schedule is a reference to a clause of, and a party, annexure, exhibit and schedule to, this Deed and a reference to this Deed includes any annexure, exhibit and schedule;
(g) a reference to a statute, regulation, proclamation, ordinance or by-law includes all statutes, regulations, proclamations, ordinances or by-laws amending, consolidating or replacing it, whether passed by the same or another Governmental Agency with legal power to do so, and a reference to a statute includes all regulations, proclamations, ordinances and by-laws issued under that statute;
(h) a reference to a document includes all amendments or supplements to, or replacements or novations of, that document;
(i) a reference to a party to a document that includes the party's successors and permitted assigns;
(j) no provision of this Deed will be construed adversely to a party solely on the ground that the party was responsible for the preparation of this Deed or that provision;
(k) a reference to an agreement other than this Deed includes an undertaking, deed, agreement or legally enforceable arrangement or understanding whether or not in writing;
(l) the word includes in any form is not a word of limitation;
(m) a reference to $ or dollar is to United States currency (unless otherwise stated);
(n) information will be deemed to have been provided or disclosed by one party to the other if the party provides the other party or its agents or Advisors with a document and the relevant piece of information is Fairly Disclosed in the document;
(o) a reference to any time is a reference to Australian Western Standard Time; and
(p) a reference to the ASX Listing Rules, the AIM Rules, TSX Rules or NYSE Rules includes any variation, consolidation or replacement of those rules and is taken to be subject to any waiver or exemption granted by the ASX, the London Stock Exchange, TSX or NYSE (as applicable) to the compliance of those rules.
1.3 Awareness
(a) If a representation or warranty is given so far as a party is "aware" or with a similar qualification as to awareness or knowledge, the awareness or knowledge of a party is limited to and deemed only to comprise the facts, matters and circumstances of which:
(i) in the case of the Company, Timothy Carstens, Kevin Balloch and Chadwick Poletti; or
(ii) in the case of Bidder Holdco and Bidder AU, Mark S. Chalmers, David C. Frydenlund and Daniel Kapostasy,
is actually aware as at the date of this Deed after having made reasonable inquiry of the employees directly reporting to that person.
(b) Without limiting clause 9, none of the persons referred to in this clause 1.3 will bear any personal liability in respect of the representations and warranties in clause 8 or otherwise under this Deed, except where such person has engaged in wilful misconduct, wilful concealment or fraud.
2. Commitment to Scheme
2.1 Agreement to propose Scheme
(a) The Company agrees to propose and implement the Scheme subject to and in accordance with the terms of this Deed and the Corporations Act.
(b) Bidder Holdco and Bidder AU agree to assist the Company to propose and implement the Scheme subject to and in accordance with the terms of this Deed.
2.2 Implementation of Scheme
Each party:
(a) agrees to execute all documents and do all acts and things within its power as may be necessary or desirable for the implementation and performance of the Scheme substantially in accordance with this Deed; and
(b) must comply with its obligations under this Deed.
2.3 Timetable
(a) Subject to clause 2.3(b), each party agrees to use its best endeavours to:
(i) complete its obligations under this Deed; and
(ii) take all necessary steps and exercise all rights necessary to implement the Scheme,
in accordance with the Timetable.
(b) Failure by a party to meet any timeframe or deadline set out in the Timetable will not constitute a breach of clause 2.3(a) to the extent that such failure is due to circumstances and matters outside the party's control (including, for the avoidance of doubt, any delays caused by a Governmental Agency).
(c) Each party must keep the other reasonably informed about their progress against the Timetable and notify the other if it believes that any of the dates in the Timetable are not achievable.
(d) To the extent that any of the dates or timeframes set out in the Timetable are unable to be achieved or not reasonably likely to be able to be achieved due to matters outside the parties' control (including, for the avoidance of doubt, any delays caused by a Governmental Agency), the parties will consult in good faith to agree on any necessary extension to ensure such matters are completed as soon as is reasonably possible.
3. Conditions precedent
3.1 Conditions precedent to the implementation of the Scheme
Subject to this clause 3, the Scheme will not become Effective unless each of the following conditions are satisfied (or waived to the extent and in the manner set out in clause 3.2):
(a) FIRB: before 8.00am on the Second Court Date, either:
(i) Bidder Holdco has received a written notice under the FATA, by or on behalf of the Treasurer of the Commonwealth of Australia, stating that the Commonwealth Government does not object to the acquisition by Bidder AU of the Scheme Shares pursuant to the Scheme, either unconditionally or on terms that Bidder Holdco considers to be acceptable (acting reasonably);
(ii) the Treasurer of the Commonwealth of Australia becomes precluded from making an order under Division 2 of Part 3 of the FATA in relation to the acquisition by Bidder AU of the Scheme Shares pursuant to the Scheme and the acquisition by Bidder AU of the Scheme Shares is not prohibited under the FATA; or
(iii) if an interim order is made under the FATA in respect of the acquisition by Bidder AU of the Scheme Shares pursuant to the Scheme, the subsequent period for making a final order prohibiting the acquisition of the Scheme Shares pursuant to the Scheme by Bidder AU elapses without a final order being made.
(b) Restraints: before 8.00 am on the Second Court Date none of the following has been issued or made:
(i) a conditional or unconditional decision, determination, statement or order issued by any Governmental Agency in connection with the Scheme that:
(A) restrains, prohibits or otherwise materially adversely affects (or could reasonably be expected to restrain, prohibit or otherwise materially adversely affect) the implementation of the Scheme; or
(B) requires Bidder Holdco, Bidder AU or the Company to cease trade or enjoins, prohibits, or imposes any limitations, damages or conditions on, Bidder Holdco's or Bidder AU's, as applicable, ability to acquire, hold, or exercise full rights of ownership over, the Scheme Shares or the Material Projects; or
(C) prohibits or restricts the direct or indirect ownership or operation of or benefit of the rights relating to any of the Bidder Material Projects or the Material Projects by Bidder Holdco or Bidder AU or compels Bidder Holdco, Bidder AU or the Company to dispose of the Bidder Material Projects or the Material Projects as applicable; or
(ii) a temporary restraining order, preliminary or permanent injunction or other order issued by any court of competent jurisdiction or the Takeovers Panel or other legal restraint or prohibition preventing the Scheme,
unless such order, injunction decision, decree, action, investigation or application has been disposed of to the satisfaction of Bidder Holdco acting reasonably or is otherwise no longer effective or enforceable, by 8.00am on the Second Court Date.
(c) Scheme Shareholders' approval: the Scheme is approved at the Scheme Meeting by the required majorities of Scheme Shareholders under paragraph 411(4)(a)(ii) of the Corporations Act.
(d) Independent Expert: the Independent Expert issues a report which concludes that the Scheme is in the best interests of Scheme Shareholders before the date on which the Scheme Booklet is lodged with ASIC and the Independent Expert does not change that conclusion or withdraw the report by notice in writing to the Company prior to 8.00 am on the Second Court Date.
(e) Court approval: the Court approves the Scheme under section 411(4)(b) of the Corporations Act and an office copy of the Court orders approving the Scheme is lodged with ASIC in accordance with section 411(10) of the Corporations Act.
(f) No Company Prescribed Event: no Company Prescribed Event occurs between the date of this Deed and 8.00 am on the Second Court Date.
(g) No Bidder Holdco Prescribed Event: no Bidder Holdco Prescribed Event occurs between the date of this Deed and 8.00 am on the Second Court Date.
(h) No Company Material Adverse Change: no Company Material Adverse Change occurs between the date of this Deed and 8.00 am on the Second Court Date.
(i) No Bidder Holdco Material Adverse Change: no Bidder Holdco Material Adverse Change occurs between the date of this Deed and 8.00 am on the Second Court Date.
(j) Other regulatory approvals: all other approvals, waivers, consents, exemptions or declarations of a Governmental Agency that are necessary or desirable to implement the Scheme are granted, given, made or obtained, in each case either unconditionally or on terms that Bidder Holdco considers to be acceptable (acting reasonably) and the approvals, waivers, consents, exemptions or declarations have not been withdrawn, cancelled, varied or revoked before 8.00am on the Second Court Date.
(k) Company Performance Rights: the Company has done all things and taken all necessary steps before 8.00am on the Second Court Date to ensure that before the Record Date all Company Performance Rights vest and have been exercised and converted into Company Shares or otherwise lapsed, as contemplated in clause 6.7.
(l) NYSE and TSX listing: the New Bidder Holdco Shares have been authorized for listing on NYSE and conditionally approved for listing on the TSX before 8.00am on the Second Court Date, subject only to official notice of issuance and customary listing conditions.
(m) U.S. Securities Act Exemption:
(i) the New Bidder Holdco Shares to be issued pursuant to the Scheme shall be exempt from the registration requirements of the U.S. Securities Act pursuant to Section 3(a)(10) thereof; and
(ii) the distribution of the New Bidder Holdco Shares shall be exempt from the prospectus and registration requirements of applicable Canadian securities laws either by virtue of exemptive relief from the securities regulatory authorities of each of the provinces and territories of Canada or by virtue of applicable exemptions under Canadian securities laws and shall not be subject to resale restrictions under applicable Canadian securities laws.
(n) CAK: Before 8.00 am on the Second Court Date, the CAK issuing its approval or an authorising order under section 46 of the Kenya Competition Act in respect of the acquisition contemplated by this Deed, which is unconditional or, if subject to conditions, is subject to conditions that do not materially adversely affect the planned closure of the Kwale Project.
(o) Malagasy Competition Council: Before 8.00 am on the Second Court Date, the Malagasy Competition Council approving the acquisition contemplated by this Deed under the Malagasy Competition Law no.2018 dated 29 June 2018, which approval is unconditional or, if subject to conditions, is subject to conditions that are acceptable to Bidder Holdco (acting reasonably).
3.2 Waiver of Conditions Precedent
(a) The Condition Precedent is clause 3.1(a) (FIRB) cannot be waived.
(b) The Conditions Precedent in clause 3.1(b) (Restraints), 3.1(c) (Scheme Shareholders' Approval), 3.1(d) (Independent Expert), 3.1(e) (Court approval), 3.1(j) (Other regulatory approvals) and 3.1(l) (NYSE and TSX listing), 3.1(m) (U.S. Securities Act Exemption), 3.1(n) (CAK) and 3.1(o) (Malagasy Competition Council) are for the benefit of the Company, Bidder Holdco and Bidder AU and may only be waived by written agreement between the parties.
(c) The Conditions Precedent in clauses 3.1(f) (No Company Prescribed Event), 3.1(h) (No Company Material Adverse Change) and 3.1(k) (Company Performance Rights) are for the sole benefit of Bidder Holdco and Bidder AU and any breach or non-fulfilment of that condition may only be waived by Bidder Holdco and/or Bidder AU (as applicable) in writing (in its absolute discretion).
(d) The Conditions Precedent in clauses 3.1(g) (No Bidder Holdco Prescribed Event) and 3.1(i) (No Bidder Holdco Material Adverse Change) are for the sole benefit of the Company and any breach or non-fulfilment of that condition may only be waived by the Company in writing (in its absolute discretion).
(e) If a party waives the breach or non-satisfaction of any of the Conditions Precedent in accordance with clauses 3.2(a) to 3.2(d) then subject to clause 3.2(f), that waiver precludes that party from suing the other for any breach of this Deed arising as a result of the breach or non-fulfilment of that Condition Precedent.
(f) If the waiver of a Condition Precedent under clause 3.2(e) is itself given subject to a condition and the other party:
(i) accepts the condition, the terms of that condition apply and are binding under this Deed; or
(ii) does not accept the condition, the Condition Precedent is not waived for the purposes of this Deed.
(g) Waiver of a breach or non-fulfilment in respect of one Condition Precedent does not constitute:
(i) a waiver of breach or non-fulfilment of any other Condition Precedent resulting from the same event; or
(ii) a waiver of breach or non-fulfilment of that Condition Precedent resulting from any other event.
(h) If the Condition Precedent in clause 3.1(c) (Scheme Shareholders' approval) is not satisfied only because of a failure to obtain the majority required by subparagraph 411(4)(a)(ii)(A) of the Corporations Act, then any of Bidder Holdco, Bidder AU or the Company may by written notice to the other within three Business Days after the date of the conclusion of the Scheme Meeting require the approval of the Court to be sought, pursuant to the Court's discretion in that sub-paragraph, provided the party has, in good faith, reasonably formed the view that the prospect of the Court exercising its discretion in that way is reasonable. If approval is given, the Condition Precedent in clause 3.1(c) (Scheme Shareholder approval) is deemed to be satisfied for all purposes.
(i) In respect of the Conditions Precedent in clause 3.1(f) (No Company Prescribed Events) and clause 3.1(h) (No Company Material Adverse Change), if a Company Prescribed Event or Company Material Adverse Change occurs between (and including) the date of this Deed and 8.00am on the Second Court Date, then provided that the Company has given written notice to Bidder Holdco in accordance with clause 3.4 setting out the relevant circumstances of the Company Prescribed Event or Company Material Adverse Change (as applicable) and the Company Prescribed Event or Company Material Adverse Change (as applicable) is remediable, then Condition Precedent in clause 3.1(f) (No Company Prescribed Events) or clause 3.1(h) (No Company Material Adverse Change) (as applicable) will not be taken to have been triggered unless such matter is not remedied to the satisfaction of Bidder Holdco (acting reasonably) on the earlier of: (i) 10 Business Days after the notice provided under this clause 3.2(i); and (ii) 8.00am on the Second Court Date.
(j) In respect of the Conditions Precedent in clause 3.1(g) (No Bidder Holdco Prescribed Event) and clause 3.1(i) (No Bidder Holdco Material Adverse Change), if a Bidder Holdco Prescribed Event or Bidder Holdco Material Adverse Change occurs between (and including) the date of this Deed and 8.00am on the Second Court Date, then provided that Bidder Holdco has given written notice to the Company in accordance with clause 3.4 setting out the relevant circumstances of the Bidder Holdco Prescribed Event or Bidder Holdco Material Adverse Change (as applicable) and the Bidder Holdco Prescribed Event or Bidder Holdco Material Adverse Change (as applicable) is remediable, then Condition Precedent in clause 3.1(g) (No Bidder Holdco Prescribed Event) or clause 3.1(i) (No Bidder Holdco Material Adverse Change) (as applicable) will not be taken to have been triggered unless such matter is not remedied to the satisfaction of the Company (acting reasonably) on the earlier of: (i) 10 Business Days after the notice provided under this clause 3.2(j); and (ii) 8.00am on the Second Court Date.
(k) Bidder Holdco acknowledges and agrees that the following conditions are reasonable and acceptable to it if they are included in any "no objections" notification contemplated by clause 3.1(a)(i) that is received in connection with the acquisition by Bidder AU of the Scheme Shares pursuant to the Scheme:
(i) the Standard Tax Conditions issued by FIRB in accordance with Guidance Note 12;
(ii) any terms or conditions that are consistent with any positive undertakings, plan or intention specified in writing in Bidder Holdco's application to FIRB under the FATA; and
(iii) terms that the Bidder Holdco considers to be acceptable (acting reasonably).
3.3 Satisfaction of Conditions Precedent
(a) The Company must use its best endeavours (other than waiver) to procure that each of the Conditions Precedent in clauses 3.1(c) (Scheme Shareholders' Approval), 3.1(d) (Independent Expert), 3.1(e) (Court approval), 3.1(f) (No Company Prescribed Event), 3.1(h) (No Company Material Adverse Change) and 3.1(k) (Company Performance Rights) are satisfied as soon as practicable after the date of this Deed and continue to be satisfied at all times until the last time they are to be satisfied.
(b) Bidder Holdco and Bidder AU must use their best endeavours (other than waiver) to procure that each of the Conditions Precedent in clauses 3.1(g) (No Bidder Holdco Prescribed Event), 3.1(i) (No Bidder Holdco Material Adverse Change) and 3.1(l) (NYSE and TSX listing), 3.1(m) (U.S. Securities Act Exemption) and 3.1(n) (CAK) are satisfied as soon as practicable after the date of this Deed and continue to be satisfied at all times until the last time they are to be satisfied.
(c) The Company, Bidder Holdco and Bidder AU must use their best endeavours (other than waiver) to procure that:
(i) the Conditions Precedents in clause 3.1(a) (FIRB), 3.1(b) (Restraints) 3.1(j) (Other regulatory approvals), 3.1(m) (CAK) and 3.1(o) (Malagasy Competition Council) are satisfied as soon as practicable after the date of this Deed and continue to be satisfied at all times until the last time they are to be satisfied; and
(ii) there is no occurrence within the reasonable control of the Company, Bidder Holdco and Bidder AU (as the context requires) or their Related Bodies Corporate that would prevent any of the Conditions Precedents in clause 3.1 being satisfied.
(d) The Company, Bidder Holdco and Bidder AU must cooperate, to the extent reasonably practicable, to assist one another with satisfying their obligations under this clause 3.3.
(e) For the avoidance of doubt, the Company will not be in breach of its obligations under this clause 3.3 to the extent that it takes an action or omits to take an action as:
(i) expressly permitted in or expressly contemplated by this Deed (including clause 12 of this Deed) in response to a Competing Proposal; or
(ii) which has been consented to in writing by Bidder Holdco (such consent not to be unreasonably withheld or delayed).
(f) Without limiting this clause 3.3 and except to the extent prohibited by a Governmental Agency:
(i) the Company and Bidder Holdco (Submitting Party) must to the extent reasonable to do so provide the other party (Non-Submitting Party) with drafts of any material written communications the Submitting Party proposes sending to a Governmental Agency regarding any Regulatory Approval (including applications) and provide the Non-Submitting Party a reasonable opportunity to comment and propose amendments and must, to the extent Non-Submitting Party provides comments or proposes amendments to the Submitting Party promptly in relation to any draft written material communications to be sent to a Governmental Agency (including applications), the Submitting Party must correct any factual inaccuracy notified to it relating to Non-Submitting Party and consider any other reasonable comments from the Non-Submitting Party in good faith;
(ii) the Submitting Party must provide a copy of any communications to which clause 3.3(f)(i) applies ultimately sent to a Government Agency promptly after such communication is sent;
(iii) the Company and Bidder Holdco must each promptly take all reasonable steps to enable an application for all Regulatory Approvals to be made as soon as reasonably possible after the date of this Deed (to the extent not applied for before the date of this Deed);
(iv) the Company and Bidder Holdco must each take all steps they are responsible for as part of the Regulatory Approval process (Responsible Party), including responding to requests for information from the relevant Governmental Agencies at the earliest practicable time, and the other party must provide all assistance and information the Responsible Party reasonably requests in respect of the steps it is responsible for;
(v) the Company and Bidder Holdco must each keep the other reasonably informed of progress in relation to each Regulatory Approval (including in relation to any material matters raised by, or conditions or other arrangements proposed by, or to, any Governmental Agency in relation to a Regulatory Approval) that they become aware of;
(vi) the Company and Bidder Holdco must consult in relation to the progress of obtaining any of the Regulatory Approvals; and
(vii) the Company shall pay all filing fees in respect of the Regulatory Approvals, provided that Bidder Holdco shall pay all filing fees in respect to clause 3.1(a) (FIRB),
provided that:
(viii) the Company and Bidder Holdco may withhold or redact information or documents from provided to the other party if and to the extent that they are either confidential to a third party or commercially sensitive and confidential to the applicant;
(ix) neither Bidder Holdco nor the Company is required to disclose materially commercially sensitive information to the other party;
(x) a Responsible Party is not prevented from taking any step (including communicating with a Governmental Agency) in respect of a Regulatory Approval if the other party has not promptly responded under clause 3.3(f)(vi); and
(xi) neither the Company nor Bidder Holdco shall not be required to make, or accept, any divestiture of assets or other actions that could reasonably be expected to be adverse to it if required by a Governmental Agency.
3.4 Certain notices
(a) Each party must:
(i) keep the others promptly and reasonably informed of the steps it has taken and of its progress towards satisfaction of the Conditions Precedent;
(ii) promptly notify the others in writing if it becomes aware that any Condition Precedent has been satisfied; and
(iii) promptly give the others notice of a failure to satisfy a Condition Precedent in clause 3.1 or of any event that will prevent a Condition Precedent in clause 3.1 being satisfied.
(b) A waiver of a breach or non-fulfilment of one Condition Precedent does not constitute:
(i) a waiver of the breach or non-fulfilment of any other Condition Precedent resulting from the same event; or
(ii) a waiver of the breach or non-fulfilment of that Condition Precedent resulting from any other event.
3.5 Conditions precedent not met
(a) If there is an act, a failure to act, an event or an occurrence that does, will or would be reasonably likely to prevent any of the Conditions Precedent in clause 3.1 being satisfied or if any of the Conditions Precedent will not otherwise be satisfied, by the earlier of the time and date specified in this Deed for its satisfaction and 11.59 pm on the End Date, then the parties will promptly consult in good faith:
(i) with a view to determining whether the Scheme, or a transaction which results in the transfer of all of the Scheme Shares to a Bidder Group Member may proceed by alternative means or whether, in the case of a breach of (or an event that does, will or would be reasonably likely to prevent the satisfaction of) a Condition Precedent in clauses 3.1(f) (No Company Prescribed Event), 3.1(g) (No Bidder Holdco Prescribed Event), 3.1(h) (No Company Material Adverse Change) or 3.1(i) (No Bidder Holdco Material Adverse Change), the breach or the effects of the breach are capable of being remedied; or
(ii) to extend the date for satisfaction of the relevant Condition Precedent or the End Date, adjourn or change the date of an application to the Court for orders approving the Scheme or otherwise amend the Timetable,
and agree on a course of action that achieves either (i) or (ii) above.
(b) If the parties are unable to reach agreement under clause 3.5(a) by the earlier of the date that is 10 Business Days after they commence discussions and 8.00 am on the Second Court Date, then unless the relevant condition is waived in accordance with clause 3.2, a party entitled to the benefit of that condition under clause 3.2 may (subject to clause 3.5(c)) terminate this Deed.
(c) A party will not be entitled to terminate this Deed pursuant to clause 3.5(b) if the relevant condition has not been satisfied (or has become incapable of being satisfied) as a result of that party's:
(i) breach of this Deed; or
(ii) deliberate act or omission.
(d) Termination of this Deed under clause 3.5(b) does not affect any accrued rights arising from any breach of this Deed prior to termination or the obligation of the Company to pay the Break Fee or Bidder Holdco to pay the Reverse Break Fee if required to do so under clauses 13 or 14 respectively.
4. Key features of Scheme
4.1 Scheme and Scheme Consideration
(a) The Company must propose the Scheme to the Scheme Shareholders on and subject to the terms and conditions of this Deed and the Scheme.
(b) Subject to clause 3.1, if the Scheme becomes Effective:
(i) all of the Scheme Shares must be transferred to Bidder AU and the Scheme Shareholders will be entitled to receive the Scheme Consideration in accordance with the terms of the Scheme; and
(ii) in consideration for the transfer to Bidder AU of each Scheme Share held by a Scheme Shareholder under the terms of the Scheme on the Implementation Date, Bidder Holdco or a Bidder Group Member must provide the Scheme Consideration to each Scheme Shareholder in accordance with the terms of the Scheme.
4.2 No amendment to Scheme or Timetable without consent
The Company must not consent to any modification of, or amendment to, or the making or imposition by a court of any condition in respect of, the Scheme, or delay the Timetable including by way of adjournment of the First Court Date, Scheme Meeting or Second Court Date without the prior written consent of Bidder Holdco (which consent may not be unreasonably withheld or delayed).
4.3 Fractional entitlements and splitting
Where the calculation of the number of New Bidder Holdco Shares to be issued to a particular Scheme Shareholder would result in the Scheme Shareholder becoming entitled to a fraction of a New Bidder Holdco Share, the fractional entitlement will be rounded down to the nearest whole number of New Bidder Holdco Shares.
4.4 New Bidder Holdco Shares
Bidder Holdco covenants in favour of the Company (in its own right and separately as trustee and nominee for each of the Scheme Shareholders) that, subject to the Company's compliance with the terms of this Deed and the accuracy of the Company representations and warranties in clause 8.3(b), the New Bidder Holdco Shares issued as Scheme Consideration will:
(a) on their issue rank equally in all respects with all other Bidder Holdco Shares on issue;
(b) on their issue be duly and validly issued and authorized in accordance with all applicable laws and Bidder Holdco's articles of incorporation, by-laws and other constituent documents;
(c) from the Business Day following the date this Scheme becomes Effective (or such later date as NYSE or TSX requires), be quoted and listed for trading on the NYSE and TSX;
(d) on their issue be fully paid, non-assessable and free of any Security Interest or encumbrance; and
(e) on their issue be entitled to participate in and receive any dividends or distribution of capital paid and any other entitlements accruing in respect of Bidder Holdco Shares on and from the Implementation Date.
4.5 Ineligible Foreign Shareholders
(a) Bidder Holdco must ensure that the New Bidder Holdco Shares to which an Ineligible Foreign Shareholder would otherwise have been entitled will be issued to a nominee appointed by Bidder Holdco and Bidder Holdco must procure that the nominee:
(i) as soon as reasonably practicable after the Implementation Date (and in any event within 20 days after the Implementation Date) sells or procures the sale of all of the New Bidder Holdco Shares issued to the nominee pursuant to this clause 4.5 in the ordinary course of trading on the TSX and in such manner, at such price and on such other terms as the nominee reasonably determines; and
(ii) as soon as reasonably practicable after settlement (and in any event within 10 Business Days) remits to Bidder Holdco the proceeds of sale (after deducting any reasonable brokerage or other selling costs, taxes and charges).
(b) Promptly after the last sale of New Bidder Holdco Shares in accordance with clause 4.5, Bidder Holdco will pay to each Ineligible Foreign Shareholder an amount equal to the proportion of the net proceeds of sale received by Bidder Holdco pursuant to clause 4.5 to which that Ineligible Foreign Shareholder is entitled in full satisfaction of the Ineligible Foreign Shareholder's entitlement to the relevant New Bidder Holdco Shares.
(c) Bidder Holdco must appoint the nominee on terms reasonably acceptable to the Company at least five Business Days before the date of the Scheme Meeting.
4.6 Provision of Company Share information
(a) In order to facilitate the provision of the Scheme Consideration, the Company must provide, or procure the provision of, a complete copy of the Register as at the Record Date (which must include the name, registered address and registered holding of each Scheme Shareholder as at the Record Date) to Bidder Holdco or a nominee of Bidder Holdco, within one Business Day after the Record Date.
(b) The details and information to be provided under clause 4.6(a) must be provided in such form as Bidder Holdco, its nominee or Bidder Holdco's share registry may reasonably require.
4.7 Excluded Shareholders
(a) Bidder Holdco represents that any Bidder Group Member who holds the Company Shares on the Record Date consents to be excluded from the operation of the Scheme.
(b) If any Bidder Group Member holds or acquires any Company Shares after the date of this Deed, Bidder Holdco must notify the Company in writing of such acquisition and the relevant Bidder Group Member, and that entity will not be a "Scheme Shareholder" for the purposes of this Deed and will be excluded from the operation of the Scheme.
4.8 Australian tax roll-over
(a) Bidder Holdco acknowledges that each Scheme Shareholder who is an eligible Australian resident shareholder who holds Company Shares on capital account is expected to seek roll-over relief under subdivision 124-M of the Tax Act, to the extent permitted under the Tax Act.
(b) Bidder Holdco undertakes that it will not make a choice to deny roll-over relief to the Scheme Shareholders under subsection 124-795(4) of the Tax Act.
4.9 Special Dividend
Notwithstanding any other provision of this Deed, subject to:
(a) the Scheme becoming Effective; and
(b) the Company complying with the requirements of section 254T of the Corporations Act,
the Company may (in its absolute discretion) determine and pay a special dividend of up to A$0.065 per Company Share to the Company Shareholders (Special Dividend), provided that:
(c) the Special Dividend:
(i) must not be franked to any extent; and
(ii) must not breach the "benchmark rule" under section 203-25 of the Tax Act;
(d) if the Company declares (whether by a dividend statement accompanying the Special Dividend or otherwise) that any portion of the Special Dividend is Conduit Foreign Income - the Company must not breach section 288-80 of Schedule 1 to the Taxation Administration Act 1953 by over declaring Conduit Foreign Income;
(e) to the extent that any portion of the Special Dividend is not declared to be Conduit Foreign Income, the Company must withhold tax (as required by law) from the Special Dividend if:
(i) payment of the Special Dividend is made to a Company Shareholder with an address outside Australia; or
(ii) the Company is authorised to pay the Special Dividend to an entity outside Australia;
(f) the record date for the Special Dividend must be on or before the Record Date; and
(g) the payment date for the Special Dividend will be determined by the Company (in its absolute discretion), provided that the payment date occurs on or before the Implementation Date.
5. Transaction steps and implementation
5.1 Company obligations
The Company must use best endeavours to propose and implement the Scheme in accordance with the Timetable (as further provided in clause 2.3) and in accordance with applicable law, including by taking each of the following steps:
(a) Scheme Booklet: subject to Bidder Holdco complying with clauses 5.2(a), 5.2(c) and 5.2(d), prepare and send to the Company Shareholders a Scheme Booklet which:
(i) complies with all applicable Australian laws, ASX Listing Rules and ASIC Regulatory Guides (including ASIC Regulatory Guide 60), AIM Rules, UK MAR and is not misleading or deceptive in any material respect (whether by omission or otherwise);
(ii) includes the information and documents referred to in clauses 6.1 and 6.2; and
(iii) is updated by all such further or new information which may arise after the Scheme Booklet has been despatched until the date of the Scheme Meeting which is necessary to ensure that it is not misleading or deceptive in any material respect (whether by omission or otherwise).
(b) Independent Expert: promptly appoint the Independent Expert and provide all assistance and information reasonably requested by the Independent Expert (and any specialist expert appointed by the Independent Expert) to enable it to prepare its report (including any updates to such report) for inclusion in the Scheme Booklet (including any updates thereto) consistently with the Timetable.
(c) Directors' recommendation: subject to clause 5.4, the Company must include in the Scheme Booklet and the public announcement contemplated by clause 10.1 (on the basis of statements made to it by each Company Director) a statement by the Company Board:
(i) unanimously recommending that the Company Shareholders vote in favour of the Scheme subject to the Independent Expert opining and not subsequently modifying or withdrawing its opinion that the Scheme is in the best interests of the Company Shareholders and in the absence of a Superior Proposal received by the Company; and
(ii) that each Company Director will (subject to the Independent Expert opining and not subsequently modifying or withdrawing its opinion that the Scheme is in the best interests of the Company Shareholders and in the absence of the Company receiving a Superior Proposal) vote, or procure the voting of, any Company Shares (as applicable) held by, or on behalf of, the Company Director at the time of the Scheme Meeting in favour of the Scheme,
unless there has been a change of recommendation permitted by clause 5.4(c) or, 5.4(d).
(d) Consult Bidder Holdco:
(i) provide to Bidder Holdco drafts of the Scheme Booklet to reasonably allow Bidder Holdco to review and comment on those drafts;
(ii) take the comments made by Bidder Holdco into account in good faith when producing revised drafts of the Scheme Booklet; and
(iii) provide to Bidder Holdco a draft of the Scheme Booklet proposed to be provided to ASIC within a reasonable time before the ASIC Draft is finalised and to enable Bidder Holdco to review the ASIC Draft at least three Business Days before its submission.
(e) Amend Scheme Booklet: implement such changes to those parts of the Scheme Booklet containing the Bidder Information which are provided in accordance with clause 5.2(a) as reasonably requested by Bidder Holdco and prior to finalising the ASIC Draft.
(f) Update the Scheme Booklet: if it becomes aware of information after the date the Scheme Booklet is despatched which is material for the disclosure to the Company's Shareholders in deciding whether to vote in favour of the Scheme, that has become false or misleading after the date of this Deed in any material respect, or that is required to be disclosed under any applicable law, as expeditiously as practicable;
(i) notify Bidder Holdco of the relevant information;
(ii) inform the Company Shareholders of the information in an appropriate and timely manner, in accordance with applicable law and consultation with Bidder Holdco; and
(iii) provide Bidder Holdco with drafts of any documents that it proposes to issue to any of the Company Shareholders under clause 5.1(f)(ii) and take into account (in good faith), for the purpose of amending those drafts, any comments received in a timely manner from Bidder Holdco on those drafts.
(g) Bidder Information: obtain written consent from Bidder Holdco for the form and context in which the Bidder Information appears in the Scheme Booklet (which approval must not be unreasonably withheld or delayed), not lodge the Scheme Booklet with ASIC until such approval is obtained from Bidder Holdco and not use the Bidder Information for any purposes other than those expressly contemplated or expressly permitted by this Deed or the Scheme.
(h) Merged Group information: prepare and promptly provide to Bidder Holdco any information regarding the Company Group that Bidder Holdco reasonably requires in order to prepare the information regarding the Merged Group for inclusion in the Scheme Booklet.
(i) Provide a copy of the Independent Expert's Report: promptly provide Bidder Holdco with a copy of any final report received from the Independent Expert.
(j) Approval of draft for ASIC: as soon as practicable after the preparation of an advanced draft of the Scheme Booklet suitable for review by ASIC, procure that a meeting of the Company Board, or of a committee of the Company Board appointed for the purpose, is convened to consider approving that draft as being in a form appropriate for provision to ASIC for its review and approval for the purposes of section 411(2) of the Corporations Act.
(k) ASIC Review Period: as soon as reasonably practicable after the date of this Deed and in accordance with the Timetable, provide the ASIC Draft to ASIC and during the ASIC Review Period:
(i) liaise with ASIC during the period of its consideration of the ASIC Draft;
(ii) promptly provide to Bidder Holdco, and include in a revised draft of the Scheme Booklet, any new information not included in the ASIC Draft which is required by the Corporations Act, Corporations Regulations, ASIC Regulatory Guide 60 or the ASX Listing Rules to be included in the Scheme Booklet; and
(iii) keep Bidder Holdco informed of any matters raised by ASIC or ASX about the Scheme Booklet, and use all reasonable endeavours, in co-operation with Bidder Holdco, to resolve any such matters, save where the resolution of such matters requires an amendment to the Bidder Information, such amendments must be approved by Bidder Holdco in its absolute discretion.
(l) Section 411(17)(b) statement: apply to ASIC for the production of:
(i) an indication of intent letter stating that it does not intend to appear before the Court on the First Court Date; and
(ii) a statement under section 411(17)(b) of the Corporations Act that ASIC has no objection to the Scheme.
(m) Approval of Scheme Booklet: as soon as practicable after the conclusion of the review by ASIC of the Scheme Booklet, procure that a meeting of the Company Board, or of a committee of the Company Board appointed for the purpose, is convened to consider approving the Scheme Booklet for despatch to the Company Shareholders, subject to approval of the Court.
(n) Shareholder support:
(i) subject to the Corporations Act and all applicable Australian laws, UK MAR and the AIM Rules, participate in efforts reasonably requested by Bidder Holdco to promote to the Company Shareholders the merits of the Scheme, including soliciting proxy votes in favour of the Scheme and meeting with key Company Shareholders; and
(ii) provide all necessary information, and procure that the Company Registry provides all necessary information, in each case in its or the Company Registry's possession in a form reasonably requested by Bidder Holdco, for the purpose of understanding legal and beneficial ownership of the Company Shares and proxy appointments and directions received by the Company prior to the Scheme Meeting.
(o) Court documents: consult with Bidder Holdco and Bidder AU in relation to the content of, and prepare the documents required for the purpose of each of the Court hearings held for the purposes of sections 411(1) and 411(4)(b) of the Corporations Act in relation to the Scheme (including originating process, affidavits, submissions and draft minutes of Court orders).
(p) Court direction: apply to the Court for, and take all other reasonable steps to obtain, an order under section 411(1) of the Corporations Act directing the Company to convene the Scheme Meeting.
(q) Legal representation: allow and not oppose any application by Bidder Holdco nor Bidder AU for leave of the Court to be represented by legal counsel representing Bidder Holdco or Bidder AU at the Court hearings convened for the purposes of sections 411(1) and 411(4)(b) of the Corporations Act.
(r) Scheme meeting: take all reasonable steps necessary to comply with the orders of the Court including despatching the Scheme Booklet to the Company Shareholders and convening the Scheme Meeting.
(s) Registration of explanatory statement: ask ASIC to register the explanatory statement included in the Scheme Booklet in accordance with section 412(6) of the Corporations Act.
(t) Court order: if the Scheme Meeting approves the Scheme by the necessary majorities, and the parties agree that it can reasonably be expected that all remaining Conditions Precedent in clause 3.1 will be satisfied or waived prior to the proposed Second Court Date, apply (and, to the extent necessary, re-apply) to the Court for, and take all other reasonable steps to obtain, an order approving the Scheme in accordance with sections 411(4)(b) and 411(6) of the Corporations Act.
(u) Certificate: at the hearing on the Second Court Date, provide to the Court a certificate in the form of a deed and substantially in the form set out in Annexure D confirming (in respect of matters within its knowledge) whether or not the Conditions Precedent in clause 3.1 (other than the Condition Precedent in clause 3.1(e)) have been satisfied or waived in accordance with this Deed and provide a draft of that certificate to Bidder Holdco by 5.00pm on the date that is two Business Days prior to the Second Court Date.
(v) Lodge copy of court order: lodge with ASIC an office copy of the orders approving the Scheme in accordance with section 411(10) of the Corporations Act.
(w) Transfer and registration: if the Scheme becomes Effective:
(i) close the register of members of the Company as at the Record Date and determine entitlements to the Scheme Consideration in accordance with the Scheme and Deed Poll;
(ii) execute a master transfer as agent and attorney for the Scheme Shareholders in accordance with the Scheme and effect and register the transfer of the Scheme Shares on the Implementation Date in accordance with the Scheme; and
(iii) do all other things contemplated by or necessary to give effect to the Scheme and the orders of the Court approving the Scheme.
(x) Information: provide all necessary information about the Scheme Shareholders to Bidder Holdco which Bidder Holdco requires in order to facilitate the provision by Bidder Holdco of the Scheme Consideration.
(y) Listing: take all reasonable and appropriate steps to maintain the Company's listing on ASX and AIM, up to and including the later of the Business Day after the Implementation Date and the Business Day after the date on which all transfers of Scheme Shares have been duly registered in accordance with the Scheme, including without limitation, making appropriate applications to ASX, AIM (in respect of the Company DIs) and ASIC.
(z) Company DI Holders: consult with the Depositary to ensure each Company DI Holder as at the Record Date (and the record date for the Special Dividend) receives the Scheme Consideration (and the Special Dividend), and coordinate with the Depositary to terminate the depositary agreement between the Company and the Depositary with effect from the de-listing of the Company on AIM, or such other date and time agreed between the Company and Bidder Holdco.
(aa) Suspension of trading: apply to ASX and AIM to suspend trading in the Company Shares with effect from the close of trading on the Effective Date, or such other date and time agreed between the Company and Bidder Holdco.
(bb) Due diligence and verification: undertake appropriate due diligence and verification processes in relation to the Scheme Booklet (other than in relation to the Bidder Information and the Independent Expert's Report).
(cc) Accuracy: ensure that the Scheme Booklet (other than the Bidder Information and the Independent Expert's Report) does not contain any material statement that is misleading, inaccurate or false in a material respect (whether by omission or otherwise).
(dd) Application for de-listing: in sufficient time prior to the Second Court Date, the Company will apply to ASX and AIM for the cancellation of admission to trading of the Company Shares on ASX and the Company DIs on AIM, respectively, which cancellation is to take effect from the later of the Business Day after the Implementation Date and the Business Day after the date on which all transfers of Scheme Shares have been duly registered in accordance with the Scheme.
(ee) Compliance with laws: comply with all applicable laws and regulations, including the ASX Listing Rules and AIM Rules in carrying out all actions and transactions contemplated by this Deed.
(ff) Proxy votes: keep Bidder Holdco reasonably informed (and at least on a daily basis on each of the 5 Business Days prior to the deadline for receipt of proxies) as to the aggregate tally of the proxies received by the Company (or by its registry) for the Scheme Meeting, including promptly following the deadline for the receipt of proxies.
(gg) All other things necessary: take all other actions and do all things reasonably necessary or desirable to give effect to the Scheme having regard to the Timetable.
5.2 Bidder Holdco's obligations
Bidder Holdco must use its best endeavours to implement the Scheme in accordance with the Timetable (as further provided in clause 2.3) and in accordance with applicable law, including taking each of the following steps:
(a) Bidder Information:
(i) prepare and promptly provide to the Company all information regarding Bidder Holdco, Bidder AU, the Merged Group and the Scheme Consideration, required by all applicable laws, the ASX Listing Rules and ASIC Regulatory Guides and the AIM Rules for inclusion in the Scheme Booklet, which information must:
(A) satisfy section 411(3) of the Corporations Act and ASIC Regulatory Guide 60 in respect of that information;
(B) not be misleading or deceptive in any material respect (whether by omission or otherwise) including in the form and context in which it appears in the Scheme Booklet, provided that it appears in the form to which Bidder Holdco has consented; and
(C) be updated by all such further or new information which may arise after the Scheme Booklet has been despatched until the date of the Scheme Meeting which is necessary to ensure that it is not misleading or deceptive in any material respect (whether by omission or otherwise); and
(ii) on or before each of:
(A) the Business Day prior to each day on which the Company Board is scheduled to meet to approve the Scheme Booklet as contemplated in clause 5.1(m) (and as notified in writing to Bidder Holdco);
(B) the Business Day before the Company proposes to despatch the Scheme Booklet to the Company Shareholders (as notified in writing to Bidder Holdco); and
(C) the Business Day before the Scheme Meeting,
Bidder Holdco must verify all statements comprising part of the Bidder Information or the Merged Group Information and any statements directly derived from the Bidder Information or Merged Group Information, contained in the Scheme Booklet and provide such documentation to evidence its verification that the Company may reasonably request, including a verification certificate duly signed by those Bidder Holdco representatives responsible for verification.
(b) Independent Expert: promptly provide all assistance and information reasonably requested by the Independent Expert (and any specialist expert appointed by the Independent Expert) to enable it to prepare its report for the Scheme Booklet.
(c) Review of Scheme Booklet: as soon as practicable after receipt, review the drafts of the Scheme Booklet prepared by the Company and provide comments in good faith.
(d) Approval of Scheme Booklet: as soon as practicable after the conclusion of ASIC's review of the Scheme Booklet, procure that a meeting of Bidder Holdco Board (or of a committee of the Bidder Holdco Board appointed for the purpose) is convened to consider approving the Bidder Information and Merged Group Information in the Scheme Booklet as being in a form appropriate for despatch to the Company Shareholders, subject to approval of the Court. If Bidder Holdco and the Company disagree on the form or content of the Scheme Booklet, they must consult in good faith to try to settle an agreed form of the Scheme Booklet. If complete agreement is not reached after reasonable consultation, then:
(i) if the disagreement relates to the form or content of the Bidder Information or the Merged Group Information contained in the Scheme Booklet, the Company will, acting in good faith, make such amendments as Bidder Holdco reasonably requires; and
(ii) if the disagreement relates to the form or content of any other part of the Scheme Booklet, the Company Board will, acting in good faith and taking into account any reasonable comments provided by Bidder Holdco, decide the final form or content of the disputed part of the Scheme Booklet.
(e) Deed Poll: by no later than the Business Day prior to the First Court Date, enter into the Deed Poll.
(f) Representation: procure that it is represented by counsel at the Court hearings convened for the purposes of section 411(1) and 411(4)(b) of the Corporations Act in relation to the Scheme, at which, through its counsel, Bidder Holdco will undertake (if requested by the Court) to do all such things within its power as may be necessary in order to ensure the fulfilment of its obligations under the Scheme, and, to the extent that leave of the Court is required for Bidder Holdco to be represented at those Court hearings, apply for that leave. Nothing in this Deed is to be taken to give the Company any right or power to make or give undertakings to the Court for or on behalf of Bidder Holdco and similarly nothing in this Deed is to be taken to give Bidder Holdco any right or power to make or give undertakings to the Court for or on behalf of the Company.
(g) Certificate: at the hearing on the Second Court Date, provide to the Court a certificate in the form of a deed and substantially in the form set out in Annexure D confirming (in respect of matters within its knowledge) whether or not the Conditions Precedent in clause 3.1 (other than the Condition Precedent in clause 3.1(e)) have been satisfied or waived in accordance with this Deed and provide a draft of that certificate to the Company by 5.00pm on the date that is two Business Days prior to the Second Court Date.
(h) Scheme Consideration: if the Scheme becomes Effective, provide the Scheme Consideration on the Implementation Date in accordance with the Deed Poll.
(i) NYSE and TSX approvals: ensure the issue of New Bidder Holdco Shares have been authorized for listing, and shall be listed, on NYSE and conditionally approved for listing on the TSX, subject only to official notice of issuance and customary listing conditions.
(j) Class ruling: Bidder Holdco undertakes to provide the Company with such assistance and information as may reasonably be requested by the Company for the purposes of obtaining from the Australian Tax Office a class ruling in a form reasonably acceptable to the Company in relation to:
(i) scrip for scrip roll over relief under subdivision 124-M of the Tax Act; and
(ii) any Special Dividend paid,
provided, in each case, Bidder Holdco shall not be required to take any action that will or could reasonably be expected to:
(i) result in costs or a tax burden to Bidder Holdco or the Company post-Implementation Date; and
(ii) delay, impede or otherwise negatively affect the closing of the Scheme.
(k) Compliance with laws: comply with all applicable laws and regulations, including the ASX Listing Rules, UK MAR, the AIM Rules, requirements of the TSX, NYSE, the SEC and other applicable Canadian securities laws in carrying out all actions and transactions contemplated by this Deed.
(l) All other things necessary: take all other actions and do all things reasonably necessary or desirable to give effect to the Scheme having regard to the Timetable.
5.3 Bidder AU's Obligations
Bidder AU must use its best endeavours to implement the Scheme in accordance with the Timetable (as further provided in clause 2.3) and in accordance with applicable law, including taking each of the following steps:
(a) Deed Poll: by no later than the Business Day prior to the First Court Date, execute and deliver to the Company the Deed Poll.
(b) Share Transfer: if the Scheme becomes Effective:
(i) accept a transfer of the Scheme Shares as contemplated by clause 4.1; and
(ii) execute instruments of transfer in respect of the Scheme Shares.
(c) Scheme Consideration: if the Scheme becomes Effective, provide or procure the provision of the Scheme Consideration in the manner and amount contemplated by clause 4.1 and the terms of the Scheme and Deed Poll.
(d) All other things necessary: take all other actions and do all things reasonably necessary or desirable to give effect to the Scheme having regard to the Timetable.
5.4 Company Board Recommendations and Voting Intention
(a) The Company represents and warrants to Bidder Holdco and Bidder AU that each Company Director in office as at the date of this Deed has confirmed by way of a resolution of the Company Board or by separate written confirmation that:
(i) they will recommend that the Company Shareholders vote in favour of the Scheme (Recommendation); and
(ii) they intend to vote, or cause to be voted, all Company Shares in which they have a Relevant Interest in favour of the Scheme (Voting Intention),
in each case:
(iii) in the absence of a Superior Proposal; and
(iv) subject to the Independent Expert concluding and continuing to conclude that the Scheme is in the best interests of the Company Shareholders.
(b) Subject to a Company Director withdrawing or changing a Recommendation or Voting Intention in the circumstances set out in clauses 5.4(c) or 5.4(d), the Company must ensure that the Scheme Booklet includes statements to the effect that each Company Director gives the Recommendation and provides the Voting Intention.
(c) The Company must use its best endeavours to procure that the Company Board collectively and the members of the Company Board individually do not change, withdraw or modify their Recommendation or Voting Intention in favour of the Scheme unless:
(i) the Independent Expert concludes in its report (or in any revised or supplemental report) that the Scheme is not in the best interests of the Company Shareholders;
(ii) the change, withdrawal or modification occurs because of a requirement by a court or Governmental Agency that one or more Company Directors abstain or withdraw from making a recommendation that Company Shareholders vote in favour of the Scheme after the date of this Deed; or
(iii) the Company receives a Competing Proposal and the Company Directors determine that the Competing Proposal constitutes a Superior Proposal and all of Bidder Holdco's rights under clause 12.6 have been exhausted.
(d) If an executive director who is a Company Director reasonably determines that they may not make a Recommendation in respect of the Scheme because they may receive a management incentive from a Bidder Group Member or entitlements (including acceleration or vesting of such entitlements) under the Company STIP or the Company LTIP in connection with the Scheme, then, notwithstanding anything else in this Deed, that executive director will not make any recommendation in respect of the Scheme and the Company will procure that such executive director complies with all laws, the ASX Listing Rules, the AIM Rules and ASIC Regulatory Guides in respect of the disclosure of such an interest and participation in any Company Board consideration of the Scheme and matters associated with this Deed or the Scheme.
(e) If the Company Board collectively, or any Company Director individually, proposes to withdraw, change or modify its Recommendation or Voting Intention pursuant to clause 5.4(c)(i) or 5.4(c)(ii), which it may only do in accordance with those clauses, then:
(i) the Company must provide written notification to Bidder Holdco and Bidder AU as soon as practicable and in any event, not exceeding 2 Business Days from being aware of such proposal; and
(ii) to the extent practicable in the circumstances, Bidder Holdco, Bidder AU and Company must consult in good faith for 2 Business Days from the date notification is given under clause 5.4(e)(i) to determine whether any change is required to the Recommendation or Voting Intention.
6. Co-ordination and timing
6.1 Content of Scheme Booklet
(a) The Company must consult with Bidder Holdco on the content of the Scheme Booklet (other than the Bidder Information) and give Bidder Holdco and its Representatives reasonable opportunity to comment on successive drafts of the Scheme Booklet in respect of its content and presentation (in the case of the Independent Expert's Report, to the extent agreed or consented to by the Independent Expert).
(b) The Company must prepare the Scheme Booklet substantially in accordance with the Timetable and it must include:
(i) the terms of the Scheme;
(ii) a notice of Scheme Meeting, and any other notice of meeting in respect of any resolution that is necessary, expedient or incidental to give effect to the Scheme, together with a proxy form for the Scheme Meeting, and for any ancillary meeting;
(iii) the Company Information;
(iv) the Bidder Information, which will be:
(A) so far as is practicable, contained in a separate and distinct section of the Scheme Booklet; and
(B) clearly identified as the Bidder Information;
(v) a copy of this Deed (without the schedules or annexures) or a summary of it;
(vi) a copy of the executed Deed Poll; and
(vii) the Independent Expert's Report.
(c) Each of Bidder Holdco and the Company must co-operate in good faith to prepare the Merged Group Information.
6.2 Responsibility statements
(a) The Scheme Booklet will contain a responsibility statement to the effect that:
(i) Bidder Holdco is responsible for the Bidder Information and the Merged Group Information contained in the Scheme Booklet (other than any information regarding the Company Group contained in, or used in the preparation of, the information regarding the Merged Group);
(ii) The Company is responsible for the Company Information contained in the Scheme Booklet and any information regarding the Company Group contained in, or used in the preparation of, the information regarding the Merged Group; and
(iii) the Independent Expert has provided and is responsible for the Independent Expert's Report, and that neither Bidder Holdco nor the Company assume any responsibility for the accuracy or completeness of the Independent Expert's Report.
(b) If the Company and Bidder Holdco disagree on the form or content of the Scheme Booklet, they must consult in good faith to try to settle an agreed form of the Scheme Booklet. If after three Business Days of consultation, Bidder Holdco and the Company are unable to agree on the form or content of the Scheme Booklet:
(i) where the determination relates to Bidder Information, Bidder Holdco will make the final determination, acting reasonably, as to the form and content of the Bidder Information; and
(ii) in any other case, the final determination as to the form and content of the Scheme Booklet will be made by the Company, acting reasonably.
6.3 Conduct of Court proceedings
(a) The Company and Bidder Holdco are entitled to separate representation at all Court proceedings affecting the Scheme.
(b) This Deed does not give the Company, Bidder Holdco nor Bidder AU any right or power to give undertakings to the Court for or on behalf of the other party without that party's written consent.
(c) The Company, Bidder Holdco and Bidder AU must, acting reasonably and in good faith, consider all undertakings to the Court in such Court proceedings which are reasonably required to obtain Court approval and confirmation of the Scheme as contemplated by this Deed.
6.4 Verification
(a) The Company undertake appropriate due diligence and verification processes to ensure that the Scheme Booklet (other than the Bidder Information and the Merged Group Information (other than any information regarding the Company Group contained in, or used in the preparation of, the information regarding the Merged Group) and the Independent Expert's Report) is not misleading or deceptive in any material respect (whether by omission or otherwise) as at the date on which the Scheme Booklet is despatched to the Company Shareholders and confirm in writing to Bidder Holdco that is has done so, and if required by the Court, provide evidence to the Court on or before the First Court Date confirming those due diligence and verification processes and their completion.
(b) Bidder Holdco must undertake appropriate due diligence and verification processes to ensure that the Bidder Information and the Merged Group Information (other than any information regarding the Company Group contained in, or used in the preparation of, the information regarding the Merged Group) is not misleading or deceptive in any material respect (whether by omission or otherwise) as at the date on which the Scheme Booklet is despatched to the Company Shareholders, and confirm in writing to the Company that it has so done, and if required by the Court, providing evidence to the Court on or before the First Court Date confirming those due diligence and verification processes and their completion.
6.5 Co-operation
The Company and Bidder Holdco must each use all reasonable endeavours and utilise all necessary resources (including management, shareholder, marketing and corporate relations resources, as well as the resources of external Advisors) to produce the Scheme Booklet and implement the Scheme as soon as reasonably practicable and substantially in accordance with the Timetable.
6.6 US securities laws matters
The parties agree that the Scheme shall be carried out with the intention that, and must use their commercially reasonable efforts to ensure that, all New Bidder Holdco Shares issued under the Scheme are issued by Bidder Holdco in reliance on the exemption from registration requirements under Section 3(a)(10) of the U.S. Securities Act. In order to ensure the availability of the exemption under Section 3(a)(10) of the U.S. Securities Act and to facilitate Bidder Holdco's compliance with other U.S. securities laws, the parties agree that:
(a) the Court will be asked to approve and conclude affirmatively the procedural and substantive fairness of the terms and conditions of the Scheme;
(b) before the commencement of the hearing on the First Court Date, the Court shall be advised of the intention of Bidder Holdco and the Company to rely on the exemption from registration requirements provided by Section 3(a)(10) of the U.S. Securities Act with respect to the issuance of New Bidder Holdco Shares to Scheme Shareholders and Company Performance Rights Holders pursuant to the Scheme, based on the Court's approval of the Scheme, and that its approval of the Scheme is to be relied upon as a determination that the Court has satisfied itself as to the procedural and substantive fairness of the terms and conditions of the Scheme to all persons who are entitled to receive Scheme Consideration pursuant to the Scheme;
(c) the Company shall request that the orders of the Court on the First Court Date specify that each person entitled to receive Scheme Consideration pursuant to the Scheme will have the right to appear before the Court at the hearing of the Court to give approval of the Scheme;
(d) the Company will ensure that each Company Shareholder, Company DI Holder, Company Performance Rights Holder and any other person entitled to receive Scheme Consideration pursuant to the Scheme will be given adequate and appropriate notice advising them of their right to attend the hearing of the Court to approve the procedural and substantive fairness of the terms and conditions of the Scheme and providing them with sufficient information necessary for them to exercise that right, and the Company shall request that the orders of the Court on the Second Court Date expressly state that the Scheme, including the terms and conditions thereof and the issuances and exchanges of securities contemplated therein, is approved by the Court as being procedurally and substantively fair and reasonable to all persons entitled to receive Scheme Consideration pursuant to the Scheme and include a statement to substantially the following effect: "It is the intention of the parties to rely on Section 3(a)(10) of the United States Securities Act of 1933, as amended (U.S. Securities Act), and that the declaration of the fairness of, and the approval of, the Scheme contemplated by the Scheme of Arrangement, a copy of which is attached to this final Order, by the Court will serve as a basis for reliance on the exemption provided by Section 3(a)(10) of the U.S. Securities Act, from the registration requirements otherwise imposed by that Act, regarding the issuance and distribution of securities of Bidder Holdco, pursuant to the Scheme of Arrangement.";
(e) the Court will hold a hearing before approving the procedural and substantive fairness of the terms and conditions of the Scheme and issuing the order on the Second Court Date;
(f) the Scheme Booklet will include a statement to substantially the effect that the New Bidder Holdco Shares issued pursuant to the Scheme have not been registered under the U.S. Securities Act and shall be issued by Bidder Holdco in reliance on the exemption from registration under Section 3(a)(10) of the U.S. Securities Act and that certain restrictions on resale under U.S. securities laws, including Rule 144 under the U.S. Securities Act, may be applicable with respect to securities issued to holders that are (or have been in the 90 days immediately prior to the issuance of the New Bidder Holdco Shares) affiliates (as defined in Rule 405 of the U.S. Securities Act) of Bidder Holdco; and
(g) the issuance of any New Bidder Holdco Shares to a person in any state, territory or possession of the United States shall comply with any issuer broker-dealer registration requirement applicable in that state, territory or possession, unless an exemption from such issuer broker-dealer registration requirement is available.
6.7 Company Performance Rights
(a) Despite any other provision of this Deed:
(i) subject to clause 6.7(a)(ii), the Company and Bidder Holdco agree that the Company Performance Rights may be vested (including on an accelerated basis) and either:
(A) converted into Company Shares prior to the Record Date and the record date for any Special Dividend and that the Scheme Consideration will be provided and any Special Dividend paid in relation to those Company Shares; or
(B) cash-settled (with the cash amount per vested Company Performance Right to be equal to the aggregate of the Company's closing share price on the Effective Date and the amount of any Special Dividend), subject to the proviso that the holder of the vested Company Performance Rights is a Malagasy resident, the receipt of Company Shares by such holder is not permitted pursuant to Malagasy law and no more than 4,194,376 vested Company Performance Rights are cash settled; and
(ii) the Company must ensure that Company Performance Rights have either lapsed or vested and then been converted into Company Shares or cash-settled such that there are no outstanding Company Performance Rights or any other Company equity incentives which are not Company Shares on issue as at the Record Date.
(b) For the avoidance of doubt, the exercise of any discretion by the Company Board, or any other action, which is made in accordance with this clause 6.7, will not be a Company Prescribed Event or a breach of any provision of this Deed, or give rise to any right to terminate this Deed.
7. Conduct of business
7.1 Conduct of business - Company
(a) From the date of this Deed up to and including the Implementation Date, the Company must, and must cause each other Company Group Member to:
(i) carry on and operate their businesses as a going concern, in the ordinary and normal course and consistent with the business plans and budgets disclosed to Bidder Holdco prior to the date of this Deed and otherwise on a basis consistent with that adopted in the previous two years (subject to changes in business composition and seasonal conditions);
(ii) use commercially reasonable endeavours to lift the suspension affecting the Madagascar Exploitation Permit by applying the strategy, and seeking to have material engagements with the relevant Governmental Agency at points in time, that, in each case, have been determined by the Company in consultation with the Transaction Implementation Committee in accordance with clause 7.5, including the negotiation of agreements, commitments, memorandum of understandings or arrangements with any Governmental Agency relating thereto;
(iii) comply with all relevant laws, the ASX Listing Rules, UK MAR, the AIM Rules and Authorisations in all material respects;
(iv) use its best endeavours to prevent a Company Prescribed Event occurring;
(v) use its best endeavours to procure the release of PPSR registration numbers 201112041105766 and 201112041107900 as soon as practical;
(vi) use its best endeavours to:
(A) keep available the services of their officers and senior management;
(B) preserve their relationships with joint venturers, customers, suppliers, landlords, licensors, licensees and other persons with whom it has material business dealings;
(C) ensure that all assets are maintained in the normal course and consistent with past practice; and
(D) ensure that there is no occurrence within their control that would constitute or be reasonably likely to constitute a Company Material Adverse Change.
(b) Without limiting clause 7.1(a) the Company must keep Bidder Holdco reasonably informed of any material progress in lifting the suspension affecting the Toliara Project, including the status of negotiation of all material agreements, commitments, memoranda of understanding or arrangements proposed to be entered into with any Governmental Agency relating thereto.
(c) The obligations of the Company under clauses 7.1(a) and 7.1(b) do not restrict the Company or another Company Group Member undertaking any action:
(i) which is required to be done or procured by the Company pursuant to, or which is otherwise expressly contemplated or expressly permitted by, this Deed or the Scheme (including in connection with an actual, proposed or potential Competing Proposal to the extent permitted by clause 12);
(ii) to the extent that action is required by law;
(iii) which has been Fairly Disclosed in the Due Diligence Materials:
(iv) which is required to be done to reasonably respond to an emergency or disaster including:
(A) situations giving rise to a risk of personal injury or material damage to property; or
(B) a public health emergency, epidemic, pandemic or disease outbreak and any shutting down or reinitiating operation of all or a portion of the business of the Company Group to the extent affected; or
(v) which has been agreed to in writing by Bidder Holdco (which approval must not be unreasonably withheld or delayed).
7.2 Conduct of business - Bidder Holdco
(a) From the date of this Deed up to and including the Implementation Date, Bidder Holdco must, and must cause each other Bidder Group Member to:
(i) carry on and operate their businesses as a going concern, in the ordinary and normal course and consistent with the business plans and budgets disclosed to the Company prior to the date of this Deed and otherwise on a basis consistent with that adopted in the previous two years (subject to changes in business composition and seasonal conditions);
(ii) comply with all relevant laws, the NYSE Rules, the TSX Rules and Authorisations in all material respects; and
(iii) use its best endeavours to prevent a Bidder Holdco Prescribed Event occurring.
(b) The obligations of Bidder Holdco under clause 7.2(a) do not restrict Bidder Holdco or the Bidder Group undertaking any action:
(i) which is required to be done or procured by Bidder Holdco pursuant to, or which is otherwise expressly contemplated or expressly permitted by, this Deed or the Scheme;
(ii) to the extent that action is required by law;
(iii) which has been Fairly Disclosed in the Bidder Due Diligence Materials;
(iv) which is required to be done to reasonably respond to an emergency or disaster including:
(A) situations giving rise to a risk of personal injury or material damage to property; or
(B) a public health emergency, epidemic, pandemic or disease outbreak and any shutting down or reinitiating operation of all or a portion of the business of the Bidder Group to the extent affected; or
(v) which has been agreed to in writing by the Company (which approval must not be unreasonably withheld or delayed).
7.3 Access to people and Company Information
(a) Between the date of this Deed and the Implementation Date, the Company must provide Bidder Holdco with:
(i) copies of any material written correspondence from any Governmental Agency regarding the Material Projects;
(ii) copies of any notices of any claims, investigations, actual or threatened litigation or other legal proceedings with respect to any Material Project having the potential to be material in the context of the relevant project;
(iii) monthly management accounts of the Company and the Company Group prepared in accordance with the Company Group's past practice in the 12 months prior to entry into this Deed;
(iv) details of any material change in the Company Group's business, financial position or prospects (as a whole);
(v) reasonable access to the records, premises, key officers, senior executives and relevant experts of the Company Group Members at times mutually agreed between the parties (acting reasonably) in order to allow Bidder Holdco to:
(A) understand the Company's financial position (including its cash flow and working capital position), trading performance and management control systems;
(B) keep itself informed of material developments relating to the Company Group;
(C) implement the Scheme; and
(D) plan for the transition when the Scheme completes (including coordinating the matters set out in clause 5),
provided that:
(E) nothing in this clause 7.3 will require the Company to provide, or procure the provision of, information concerning:
(I) the Company's directors and management's consideration of the Scheme; or
(II) any actual, proposed or potential Competing Proposal (including directors' and management's consideration of any actual, proposed or potential Competing Proposal);
(F) Bidder Holdco must:
(I) keep all information obtained by it as a result of this clause 7.3 confidential;
(II) provide the Company with reasonable notice of any request for information or access; and
(III) comply with the reasonable requirements of the Company in relation to any access granted;
(G) the Company may provide to Bidder Holdco its records at a place other than the Company's business premises;
(H) nothing in this clause 7.3 will require the Company to provide, or procure the provision of, information concerning the Company Group's business that is, in the reasonable opinion of the Company, commercially sensitive, including any specific pricing and margin information or customer details; and
(I) nothing in this clause 7.3 will require the Company to provide, or procure the provision of, information if to do so would or would be reasonably likely to:
(I) breach any confidentiality obligation owed to a third party or any applicable law; or
(II) result in a waiver of legal professional privilege.
7.4 Access to people and Bidder Holdco information
(a) Between the date of this Deed and the Implementation Date, Bidder Holdco must provide the Company with:
(i) copies of any material correspondence from any Governmental Agency regarding the Bidder Material Projects;
(ii) copies of any notices of any claims, investigations, actual or threatened litigation or other legal proceedings with respect to any Bidder Material Project having the potential to be material in the context of the relevant project;
(iii) monthly management accounts of Bidder Holdco and the Bidder Group prepared in accordance with the Bidder Group's past practice in the 12 months prior to entry into this Deed;
(iv) details of any material change in the Bidder Group's business, financial position or prospects (as a whole);
(v) reasonable access to the records, premises, key officers, senior executives and relevant experts of the Bidder Group Members at times mutually agreed between the parties (acting reasonably) in order to allow the Company to:
(A) understand Bidder Holdco's financial position (including its cash flow and working capital position), trading performance and management control systems;
(B) keep itself informed of material developments relating to the Bidder Group;
(C) implement the Scheme; and
(D) plan for the transition when the Scheme completes (including coordinating the matters set out in clause 5),
provided that:
(E) nothing in this clause 7.4 will require Bidder Holdco to provide, or procure the provision of, information concerning Bidder Holdco's directors and management's consideration of the Scheme;
(F) the Company must:
(I) keep all information obtained by it as a result of this clause 7.4 confidential;
(II) provide Bidder Holdco with reasonable notice of any request for information or access; and
(III) comply with the reasonable requirements of Bidder Holdco in relation to any access granted;
(G) Bidder Holdco may provide to the Company its records at a place other than Bidder Holdco's business premises;
(H) nothing in this clause 7.4 will require Bidder Holdco to provide, or procure the provision of, information concerning the Bidder Group's business that is, in the reasonable opinion of Bidder Holdco, commercially sensitive, including any specific pricing and margin information or customer details; and
(I) nothing in this clause 7.4 will require Bidder Holdco to provide, or procure the provision of, information if to do so would or would be reasonably likely to:
(I) breach any confidentiality obligation owed to a third party or any applicable law; or
(II) result in a waiver of legal professional privilege.
7.5 Transaction Implementation Committee
(a) The parties must establish a Transaction Implementation Committee as soon as reasonably practicable after the date of this Deed and work together in good faith, consult with each other and plan to:
(i) implement the Scheme; and
(ii) ensure the orderly integration of the business and affairs of the Company Group into the Bidder Group following the implementation of the Scheme.
(b) The Transaction Implementation Committee shall co-operate with and keep one another reasonably informed as to the status of and the processes and proceedings relating to:
(i) obtaining the Regulatory Approvals, and (without limiting clause 3.3 and 3.4) shall promptly notify each other in writing of any communication from any Governmental Agency in respect of the Regulatory Approvals; and
(ii) obtaining any material Authorisations required for any Material Project (including the lifting of the suspension affecting the Madagascar Exploitation Permit) and provide the Transaction Implementation Committee with a reasonable opportunity to consult with the Company on its proposed strategy and timing for any material engagement with the relevant Governmental Agency in relation to those matters (provided that nothing in this clause gives the Transaction Implementation Committee any rights as to decision making of the Company Group in relation to those matters).
8. Representations and warranties
8.1 Bidder Holdco Representations and Warranties
(a) Bidder Holdco represents and warrants to the Company (on the Company's own behalf and separately as trustee or nominee for each of the Company Indemnified Parties) each of the matters set out in clause 8.1(b):
(i) as at the date of this Deed, the date of the Scheme Meeting and 8.00 am on the Second Court Date; or
(ii) where expressed, such other date on which a representation in clause 8.1(b) is expressed to be given.
(b) Bidder Holdco represents and warrants to the Company that:
(i) it is a validly existing corporation registered under the laws of the province of Ontario, Canada;
(ii) the execution and delivery of this Deed by Bidder Holdco has been properly authorised by all necessary corporate action and Bidder Holdco has full corporate power and lawful authority to execute this Deed and to perform or cause to be performed its obligations under this Deed;
(iii) (subject to laws generally affecting creditors' rights and the principles of equity) this Deed creates legal, valid and binding obligations on it and execution and performance of this Deed will not result in a breach of Bidder Holdco's constitution or any agreement or deed or any writ, order or injunction, rule or regulation to which Bidder Holdco or any of its Related Bodies Corporate is a party or to which they are bound or require any consent, approval, clearance, waiver, ruling, relief, exemption, declaration, Authorisation or permit from its shareholder or any Governmental Agency, except for the Regulatory Approvals;
(iv) all the Bidder Information and Merged Group Information (other than any information regarding the Company Group contained in, or used in the preparation of, the information regarding the Merged Group) included in the Scheme Booklet as at the date it is despatched will comply with the Corporations Act, the Corporations Regulations, ASIC Regulatory Guides, the ASX Listing Rules, UK MAR, the AIM Rules and any applicable laws in all material respects;
(v) it will provide the Company all additional information of which it becomes aware after the Scheme Booklet has been despatched until the date of the Scheme Meeting that it reasonably believes is necessary to ensure that the Scheme Booklet continues to comply with clauses 5.2(a)(i)(A) and 5.2(a)(i)(B) in all material respects;
(vi) all information provided by or on behalf of Bidder Holdco to the Company for inclusion in the Scheme Booklet is, in such form and context as Bidder Holdco has approved for inclusion in the Scheme Booklet, complete, accurate and not misleading or deceptive in any material respect (including by omission) as at the date it is provided to the Company and the date of the Scheme Booklet;
(vii) the Bidder Information has been prepared and will be provided by or on behalf of Bidder Holdco:
(A) to the Company for inclusion in the Scheme Booklet in good faith and on the understanding that the Company and the Company Board will rely on that information for the purposes of considering and approving the Scheme Booklet before it is despatched, and implementing the Scheme; and
(B) to the Independent Expert in good faith and on the understanding that the Independent Expert will rely on that information for the purposes of preparing its report;
(viii) in the 12 months prior to the date of this Deed, Bidder Holdco has complied in all material respects with the material disclosure requirements of the TSX, NYSE, the SEC and other applicable Canadian securities laws;
(ix) as at the date of this Deed, Bidder Holdco's issued equity securities comprise:
(A) 163,651,897 Bidder Holdco Shares; and
(B) the following equity securities granted under Bidder Holdco's 2021 Amended and Restated Omnibus Equity Incentive Compensation Plan:
(I) 1,035,707 stock options (each convertible into one Bidder Holdco Share);
(II) 640,430 restricted stock units (with each restricted stock unit entitling the holder to receive one Bidder Holdco Share);
(III) 1,016,745 share appreciation rights (each which may be settled in cash or Bidder Holdco Shares, at Bidder Holdco's election);
(x) and it has not issued or granted (or agreed to issue or grant) any other securities, options, warrants, performance rights or other instruments which are still outstanding and may convert into Bidder Holdco Shares other than as set out above and it is not under any obligation to issue or grant, and no person has any right to call for the issue or grant of, any Bidder Holdco Shares, options, warrants, performance rights or other securities or instruments in Bidder Holdco other than as set out above;
(xi) as at the date of this Deed:
(A) Bidder Holdco and its Related Parties do not have a Relevant Interest in any Company Shares, and neither Bidder Holdco nor any Related Party of Bidder Holdco has a Relevant Interest in, or a right to acquire, any other Company Shares (whether issued or not or held by Bidder Holdco or not); and
(B) Bidder Holdco and each of its Related Parties have not entered into any agreement or arrangement that confers rights the economic effect of which is equivalent or substantially equivalent to holding, acquiring, or disposing of securities in the Company or any of its Related Parties or of any assets of the Company or any of its Related Parties (including cash settled derivative contract, contracts for difference or other derivative contracts);
(xii) as far as Bidder Holdco is aware, no Bidder Holdco Material Adverse Change has occurred since 30 June 2023;
(xiii) the Bidder Holdco Shares to be issued as the Scheme Consideration will:
(A) on their issue be duly and validly issued and authorized in accordance with all applicable laws and Bidder Holdco's articles of incorporation, by-laws and other constituent documents;
(B) on their issue be fully paid, non-assessable and free of any Security Interest or encumbrance;
(C) on their issue rank equally in all respects with all other Bidder Holdco Shares;
(D) from the Business Day following the date this Scheme becomes Effective (or such later date as NYSE or TSX requires), be quoted and listed for trading on the NYSE and TSX; and
(E) on their issue be entitled to participate in and receive any dividends or distribution of capital paid and any other entitlements accruing in respect of Bidder Holdco Shares on and from the Implementation Date;
(xiv) no Insolvency Event has occurred in relation to Bidder Holdco nor has any regulatory action of any nature of which Bidder Holdco is aware been taken or threatened to be taken that would prevent or restrict Bidder Holdco's ability to fulfil its obligations under this Deed;
(xv) the Bidder Due Diligence Materials have been prepared in good faith and in this context and, so far as Bidder Holdco is aware:
(A) are true and accurate in all material respects as at the date of this Deed; and
(B) are not misleading or deceptive in any material respect when taken as a whole (including any omission);
(xvi) Bidder Holdco and its Subsidiaries, have all material licences, permits, Authorisations and approvals necessary for Bidder Holdco and its Subsidiaries to conduct their business in the manner in which it is conducted as at the date of this Deed except where the failure to have any such license, permit, Authorisation or approval would not have a Bidder Holdco Material Adverse Effect, and (so far as Bidder Holdco is aware) none of Bidder Holdco or its Subsidiaries is in material breach of, or default under, any such licence, permit, Authorisation or approval, nor has Bidder Holdco or any of its Subsidiaries received any notice in respect of the termination, revocation, variation or non-renewal of any such licence, permit, Authorisation or approval;
(xvii) the Bidder Group has not discharged or released, and is not discharging or releasing, any effluents to the environment outside any Bidder Group property boundaries in violation of any licenses, permits, authorizations, laws or regulations which would be material to the Bidder Group as a whole; and
(xviii) so far as Bidder Holdco is aware, there are no facts or circumstances having a reasonable likelihood of eventuating that present a material risk to the structural integrity of the White Mesa Mill's tailings cells or evaporation ponds.
8.2 Bidder AU's Representations and Warranties
(a) Bidder AU represents and warrants to the Company (in its own right and separately as trustee or nominee for each of the other Company Indemnified Parties each of the matters set out in clause 8.2(b)) that:
(i) as at the date of this Deed, the date of the Scheme Meeting and 8.00 am on the Second Court Date; or
(ii) where expressed, such other date on which a representation in clause 8.2(b) is expressed to be given.
(b) Bidder AU represents and warrants to the Company that:
(i) it is a validly existing corporation registered under the laws of Australia;
(ii) the execution and delivery of this Deed has been properly authorised by all necessary corporate action of Bidder AU and Bidder AU has taken or will take all necessary corporate action to authorise the performance of this Deed, the Scheme and the Deed Poll;
(iii) it has full capacity, corporate power and lawful authority to execute, deliver and perform this Deed;
(iv) this Deed does not conflict with or result in the breach of or a default under:
(A) any provision of Bidder AU's certificate of incorporation, by-laws or other constituent documents; or
(B) any material contract or any writ, order or injunction, judgment, law, rule or regulation to which it is party or subject or by which it is bound,
and it is not otherwise bound by any agreement that would prevent or restrict it from entering into or performing this Deed; and
(v) this Deed is a valid and binding obligation of Bidder AU, enforceable in accordance with its terms.
8.3 Company representations and warranties
(a) The Company represents and warrants to Bidder Holdco and Bidder AU (on Bidder Holdco's and Bidder AU's own behalf and separately as trustee for each of the Bidder Indemnified Parties) each of the matters set out in clause 8.3(b):
(i) as at the date of this Deed, the date of the Scheme Meeting and 8.00 am on the Second Court Date; or
(ii) where expressed, such other date on which a representation in clause 8.3(b) is expressed to be given.
(b) The Company represents and warrants to Bidder Holdco and Bidder AU that:
(i) it is a validly existing corporation registered under the Corporations Act;
(ii) as at the date of this Deed the Company's issued equity securities comprise:
(A) 1,178,011,850 Company Shares; and
(B) 72,041,626 Company Performance Rights,
and neither the Company nor any of its Subsidiaries is under any obligation to issue securities to any person and no person has the right to call for the issue of any shares or other securities in the Company or any of its Subsidiaries other than as set out in this paragraph;
(iii) the corporate structure diagram disclosed in the Due Diligence Materials lists all of the members of the Company Group and the details included are true and accurate in all material respects;
(iv) the execution and delivery of this Deed by the Company has been properly authorised by all necessary corporate action and the Company has full corporate power and lawful authority to execute and deliver this Deed and to perform or cause to be performed its obligations under this Deed;
(v) (subject to laws generally affecting creditors' rights and the principles of equity) this Deed creates legal, valid and binding obligations on it and execution and performance of this Deed will not result in a breach of the Company's constitution or any agreement or deed or any writ, order or injunction, rule or regulation to which the Company or any of its Related Bodies Corporate is a party or to which they are bound or require any consent, approval, Authorisation or permit from any Governmental Agency, except for the Regulatory Approvals;
(vi) all the Company Information included in the Scheme Booklet as at the date it is despatched will comply with the Corporations Act, the Corporations Regulations, ASIC Regulatory Guides and the ASX Listing Rules in all material respects;
(vii) all information provided by or on behalf of the Company for inclusion in the Scheme Booklet is complete, accurate and not misleading or deceptive in any material respect (including by omission) as at the date of the Scheme Booklet;
(viii) the Company Information:
(A) has been prepared and will be included in the Scheme Booklet in good faith and on the understanding that Bidder Holdco and the Bidder Holdco Board will rely on that information for the purposes of considering and approving the Bidder Information in the Scheme Booklet before it is despatched, approving the entry into of the Deed Poll and implementing the Scheme; and
(B) will be provided by or on behalf of the Company to the Independent Expert in good faith and on the understanding that the Independent Expert will rely on that information for the purposes of preparing its report;
(ix) as at the date of this Deed and the Due Diligence Materials have been prepared in good faith and in this context and, so far as the Company is aware:
(A) are true and accurate in all material respects; and
(B) are not misleading or deceptive in any material respect when taken as a whole (including any omission);
(x) the Company is not in breach of its continuous disclosure obligations under the ASX Listing Rules, UK MAR, the AIM Rules and is not relying on Listing Rule 3.1A to withhold any information from disclosure other than information in relation to the parties entering into this Deed, which information will be duly provided for disclosure to the market immediately after signing this Deed;
(xi) no material information contained in any document or announcement which any Company Group Member has lodged or filed with, or otherwise given to, ASIC, ASX or AIM (or which has been lodged, filed or given on behalf of a Company Group Member) since the date 12 months prior to the date of this Deed, was misleading or deceptive in any material respect (whether by omission or otherwise) as at the date the relevant document was lodged, filed with or given to ASIC, ASX or AIM (or, if applicable, such other date that the information in the relevant document was expressed to be given);
(xii) as far as the Company is aware, no Company Material Adverse Change has occurred since 31 December 2023;
(xiii) the Company Group's financial statements for the financial half year ended 31 December 2023 and the Company Group's financial statements for the financial year ended 30 June 2023:
(A) comply with applicable statutory requirements and were prepared in accordance with the Corporations Act and the Accounting Standards and all other applicable laws and regulations; and
(B) give a true and fair view of the financial position and assets and liabilities of the Company Group as at the end of the relevant financial half year or financial year (as applicable);
(xiv) as at the date of this Deed and so far as the Company is aware, none of the Company or its Subsidiaries has any material liabilities arising after 31 December 2023 which are required under the Accounting Standards to be reflected on the consolidated balance sheet of the Company (using the same accounting policies used in the most recent consolidated audited financial statements of the Company as at the date of this Deed), except for (i) liabilities incurred in the ordinary course of business since 31 December 2023; (ii) arising from any assessment of the Company Group's asset carrying values or net realisable values following the date of this Deed (using the same accounting policies used in the most recent audited financial statements of the Company as at the date of this Deed) which may result from the planned cessation of mining operations at the Kwale Project prior to 31 December 2024; and (iii) those incurred in connection with the execution of this Deed;
(xv) neither the Company nor any of its Subsidiaries is:
(A) a party to or the subject of any legal action, investigation, proceeding, dispute, claim, demand, notice, direction, inquiry, arbitration, mediation, dispute resolution or litigation; or
(B) the subject of any ruling, judgement, order, declaration or decree by any Governmental Agency,
which may have a material adverse effect on the Company Group (as a whole), or its businesses or assets (as a whole) and, so far as the Company is aware, there is no such legal action, investigation, proceeding, dispute, claim, demand, notice, direction, inquiry, arbitration, mediation, dispute resolution, litigation, ruling, judgement, order, declaration or decree pending, threatened or anticipated, against the Company or its Subsidiaries, which may have a material adverse effect on the Company Group (as a whole), its businesses or assets (as a whole);
(xvi) the Company and its Subsidiaries, have all material licences, permits, Authorisations and approvals necessary for the Company and its Subsidiaries to conduct their business in the manner in which it is conducted as at the date of this Deed except where the failure to have any such license, permit, Authorisation or approval would not have a Company material adverse effect, and (so far as the Company is aware) none of the Company or its Subsidiaries is in material breach of, or default under, any such licence, permit, Authorisation or approval, nor has the Company or any of its Subsidiaries received any notice in respect of the termination, revocation, variation or non-renewal of any such licence, permit, Authorisation or approval;
(xvii) so far as the Company is aware, each member of the Company Group has complied in all material respects with all applicable laws and regulations, including applicable securities laws and anti-bribery and corruption laws, in each applicable jurisdiction in which the Company Group operates or which they are subject to, and the Company is not aware of, and has not received notice of, any actual or alleged material breach of any such laws or regulations by any member of the Company Group;
(xviii) each member of the Company Group has complied in all material respects with each material contract to which it is a party, and no member of the Company Group is aware of any intention on the part of any counterparty to a material contract to terminate such material contract or amend the terms of such material contract in any material respect;
(xix) no Insolvency Event has occurred in relation to the Company or any of its material Subsidiaries nor has any regulatory action of any nature of which the Company is aware been taken or threatened to be taken that would prevent or restrict the Company's ability to fulfil its obligations under this Deed;
(xx) the Company Group has not discharged or released, and is not discharging or releasing, any effluents to the environment outside any Company Group property boundaries in violation of any licenses, permits, authorizations, laws or regulations which would be material to the Company Group as a whole; and
(xxi) so far as the Company is aware, there are no facts or circumstances having a reasonable likelihood of eventuating that present a material risk to the structural integrity of: (A) the Kwale Project tailings storage facility, other than the need to install a suitable spillway on the downgradient dike of the facility; or (B) the dam on the Mukurumudzi reservoir, other than the spillway upgrade to the dam that is currently underway.
8.4 Reliance by parties
(a) Each party (Representor) acknowledges that in entering into this Deed the other party has only relied on the representations and warranties provided by the Representor under this clause 8 and has not relied on any other warranty or representation made by or on behalf of the Representor and that all other representations, warranties and conditions implied by statute or otherwise in relation to any matter relating to this Deed, the circumstances surrounding the parties' entry into it and the transactions contemplated by it are expressly excluded.
(b) Each party acknowledges and confirms that it does not enter into this Deed in reliance on any representation or other inducement by or on behalf of any other party, except for any representation or inducement expressly set out in this Deed.
8.5 Severability and survival of representations and warranties
(a) The representations and warranties provided by each party under this clause 8:
(i) are severable;
(ii) will survive the termination of this Deed; and
(iii) are given with the intent that liability under them will not be confined to breaches of them discovered prior to the date of termination of this Deed.
8.6 Qualification on Company representations and warranties
Except for clauses 8.3(b)(xx) and 8.3(b)(xxi), which are qualified only by the documents contained in Data Room document folders 3.10.19, 3.15 and 3.16 and the answers provided to questions submitted as part of the question and answer process which are contained in the Data Room, the Company's representations and warranties are subject to all matters which have been Fairly Disclosed in the Due Diligence Materials or Fairly Disclosed by the Company to the ASX or AIM in the period from 1 July 2023 to the date of this Deed (excluding any risk factor disclosure and disclosure of risks in "forward looking statement" disclaimers that are predictive, forward-looking or primarily cautionary in nature).
8.7 Qualification on Bidder representations and warranties
Except for clauses 8.1(b)(xvii) and 8.1(b)(xviii), which are qualified only by the documents contained in Bidder Data Room folder 3.3 and the answers provided to questions submitted as part of the question and answer process which are contained in the Bidder Data Room, Bidder Holdco's and Bidder AU's respective representations and warranties are subject to all matters which have been Fairly Disclosed in the Bidder Due Diligence Materials or Fairly Disclosed in an SEC Report or SEDAR Report in the period from 1 July 2023 to the date of this Deed (excluding any risk factor disclosure and disclosure of risks in "forward looking statement" disclaimers that are predictive, forward-looking or primarily cautionary in nature).
8.8 Notifications
Each party will promptly advise the other in writing if it becomes aware of any fact, matter or circumstance which constitutes or may be reasonably expected to constitute a breach of any of the representations or warranties given by it under this clause 8.
9. Board, Releases and Insurance
9.1 Company directors and officers
(a) Bidder Holdco and Bidder AU releases their respective rights, and agrees with the Company that they will not make, and that after the Implementation Date it will procure that each Company Group Member does not make, any claim against any Company Indemnified Officer as at the date of this Deed and from time to time in connection with:
(i) the Company's execution or delivery of this Deed;
(ii) any breach of any representations, warranties and covenants of the Company (including, to avoid doubt, where those provisions and the breach concern another Company Group Member) in this Deed;
(iii) the implementation of the Scheme; or
(iv) any disclosures made by the Company containing any statement which is false or misleading whether in content or by omission or any other failure to provide information,
whether current or future, known or unknown, arising at common law, in equity (including negligence), under statute or otherwise, except where the Company Indemnified Officer has not acted in good faith, or has engaged in wilful misconduct or fraudulent conduct.
(b) This clause 9.1 is subject to any Corporations Act or other statutory restriction and will be read down accordingly.
(c) The Company receives and holds the benefit of this clause 9.1 to the extent it relates to each Company Indemnified Officer as trustee for each of them.
9.2 Bidder directors and officers
(a) The Company releases its respective rights, and agrees with Bidder Holdco and Bidder AU that it will not make a claim, against any Bidder Indemnified Officer as at the date of this Deed and from time to time in connection with:
(i) Bidder Holdco's or Bidder AU's execution and delivery of this Deed;
(ii) any breach of any representations, warranties and covenants of Bidder Holdco or Bidder AU in this Deed;
(iii) the implementation of the Scheme; or
(iv) any disclosures made by Bidder Holdco or Bidder AU containing any statement which is false or misleading whether in content or by omission, or any other failure to provide information,
whether current or future, known or unknown, arising at common law, in equity (including negligence), under statute or otherwise, except where the Bidder Indemnified Officer has not acted in good faith, or has engaged in wilful misconduct or fraudulent conduct.
(b) This clause 9.2 is subject to any Corporations Act or other statutory restriction and will be read down accordingly.
(c) Bidder Holdco and Bidder AU receive and hold the benefit of this clause 9.2 to the extent it relates to each Bidder Indemnified Officer as trustee for each of them.
9.3 Maintenance of the Company Directors' and Officers' Insurance
(a) Subject to the Scheme becoming Effective and implementation of the Scheme, Bidder Holdco and Bidder AU undertake in favour of the Company and each other Company Indemnified Party, that each will:
(i) for seven years from the Implementation Date, ensure that the constitutions of the Company and each other Company Group Member continue to contain rules as are contained in those constitutions as at the date of this Deed which provide for each of them to indemnify each of their directors and officers against any liability incurred by those persons in their capacity as a director or officer of the relevant company to any person other than a Company Group Member; and
(ii) procure the Company and each Company Group Member to comply with the deeds of indemnity, access and insurance made by them in favour of directors and officers of a Company Group Member from time to time.
(b) The undertakings in this clause 9.3 are subject to any restriction under the Corporations Act or other applicable legislation, and will be read down to reflect this.
(c) Nothing in this clause 9.3 will require the Company not to fulfil its contractual obligations under the relevant insurance policies.
(d) Each party acknowledges that, notwithstanding any other provision of this Deed:
(i) the Company may at its election, prior to the Implementation Date enter into an arrangement to secure directors and officers run-off insurance for up to a seven year period (Policy) and pay upfront (in full) any amounts required to maintain the Policy (for its entire duration) prior to the implementation of the Scheme; and
(ii) that any actions to facilitate that insurance or in connection with such insurance will not be a Company Material Adverse Change or Company Prescribed Event,
provided that (i) the scope and cover of the Policy is the same or substantially the same as the terms of the existing insurance policies in place for directors or officers of the Company at the date of this Deed, and (ii) the Company will use reasonable endeavours to procure the Policy from a reputable insurer on reasonable commercial terms.
(e) The Company receives and holds the benefit of this clause 9.3 as it relates to each director and officer of the Company or a Related Body Corporate as trustee for each of them.
9.4 Bidder Holdco Board composition
(a) With effect on and from the Implementation Date but subject to all necessary regulatory approvals, Bidder Holdco must invite one existing Company Director (as at the date of this Deed) whose identity is nominated in writing by the Company to join the Bidder Holdco Board (Company Board Nominee), provided that such Company Board Nominee satisfies the independence requirements under the TSX, the NYSE, the SEC and other applicable Canadian securities laws.
(b) Subject to the Company Board Nominee providing the necessary signed documents to Bidder Holdco contemplated in clause 9.4(a), Bidder Holdco must take all necessary steps to ensure that Bidder Holdco appoints the Company Board Nominee to the Bidder Holdco Board with effect on and from the Implementation Date.
9.5 Company Board composition
With effect on and from the Implementation Date but subject to all necessary regulatory approvals and the Scheme Consideration having been provided in full to Scheme Shareholders, the Company:
(a) must take all actions necessary to procure that each Company Director (excluding the executive director) in office on the Implementation Date resigns their office as a Company Director by providing a written notice of resignation; and
(b) must cause the appointment to the Company Board and to the boards of each of the Company's Subsidiaries of such persons as are nominated by Bidder Holdco and subject to those persons having provided a consent to act as directors of the relevant companies,
in each case, in accordance with the constitution of the relevant Company Group Member and applicable laws and regulations.
9.6 Resignation of the Nominated Adviser and the UK Corporate Broker
As soon as practicable after the Effective Date and with effect on and from the date of the Company's de-listing from AIM but subject to all necessary regulatory approvals and the Scheme Consideration having been provided in full to Scheme Shareholders, the Company must take all actions necessary to procure that each of:
(a) the Nominated Adviser; and
(b) the UK Corporate Broker,
resigns from their office by providing written notice to the Company.
10. Public announcements
10.1 Announcements of Scheme
Immediately after the execution of this Deed, the parties must jointly make the Agreed Announcement and attach a copy of this Deed (excluding any commercially sensitive information).
10.2 Public announcement and submissions
Subject to clause 10.3, any further public announcement or public disclosure of the Scheme by Bidder Holdco or the Company in relation to, or in connection with, the Scheme or any other transaction contemplated by this Deed may only be made in a form approved by each party in writing (acting reasonably), but each party must use all reasonable endeavours to provide such approval as soon as practicable. For the avoidance of doubt, this clause 10.2 does not apply to any announcement or disclosure relating to a Competing Proposal.
10.3 Required disclosure
Where a party is required by law, the ASX Listing Rules, the AIM Rules or any other applicable stock exchange or securities regulator, including the NYSE, TSX, SEC or Canadian securities regulators to make any announcement or make any disclosure relating to a matter the subject of this Deed or the Scheme, it may do so despite clause 10.2 but must use all reasonable endeavours, to the extent practicable and lawful, to consult with the other party prior to making the relevant disclosure.
11. Termination
11.1 Termination by notice
(a) The Company or Bidder Holdco may, by notice to the other, terminate this Deed at any time prior to 8.00 am on the Second Court Date:
(i) if the non-terminating party (or where Bidder Holdco is the non-terminating party, Bidder Holdco or Bidder AU) is in material breach of any of its obligations under this Deed (other than a material breach of a representation or warranty, which is dealt with in clause 11.2) and the non-terminating party (or, where applicable, Bidder AU) has failed to remedy that breach within 10 Business Days (or any shorter period ending at 5.00 pm on the day before the Second Court Date) of receipt by it of a notice from the terminating party setting out details of the relevant circumstances and requesting the other party to remedy the breach; or
(ii) in accordance with clause 3.5.
(b) Bidder Holdco may, by notice to the Company, terminate this Deed at any time prior to 8.00 am on the Second Court Date if at any time before then a Company Director changes, withdraws or adversely modifies their Recommendation or Voting Intention in favour of the Scheme or publicly recommends, supports or endorses a Competing Proposal, for any reason, whether or not permitted to do so under this Deed, other than:
(i) in the circumstances contemplated in clause 5.4(d) or clause 5.4(c)(ii) (unless, in the case of clause 5.4(c)(ii) only, a majority of the Company Directors are required to change, withdraw or adversely modify their Recommendation of the Scheme, in which case Bidder Holdco may terminate this Deed); or
(ii) a statement that:
(A) no action should be taken by the Company Shareholders pending assessment of a Competing Proposal; or
(B) the Company has agreed to provide due diligence or access to information to satisfy a due diligence or access to information condition contained in a Competing Proposal (in accordance with clause 12.5 of this Deed), where such disclosure is required by law;
(C) that the Company Directors have determined that a Competing Proposal is a Superior Proposal and have commenced the matching right process set out in clause 12.6.
(c) The Company may, by notice to Bidder Holdco, terminate this Deed at any time prior to 8.00 am on the Second Court Date if at any time before then a majority of the Company Directors withdraw or adversely modify their Recommendation of the Scheme or publicly recommends a Competing Proposal, in each case where permitted to do so under this Deed, but other than a statement that:
(i) no action should be taken by the Company Shareholders pending assessment of a Competing Proposal;
(ii) the Company has agreed to provide due diligence or access to information to satisfy a due diligence or access to information condition contained in a Competing Proposal (in accordance with clause 12.5 of this Deed), where such disclosure is required by law; or
(iii) the Company Directors have determined that a Competing Proposal is a Superior Proposal and have commenced the matching right process set out in clause 12.6.
11.2 Termination for breach of warranties
(a) Bidder Holdco may, at any time prior to 8.00am on the Second Court Date, terminate this Deed for any breach of clause 8.3 (Company Representations and Warranties) by the Company only if:
(i) Bidder Holdco has given written notice to the Company setting out the relevant circumstances and stating an intention to terminate;
(ii) the relevant breach is not curable, or if curable, continues to exist 10 Business Days (or any shorter period ending at 5.00pm on the Business Day before the Second Court Date) after the date on which the notice is given under clause 11.2(a)(i); and
(iii) the relevant breach is material in the context of the Scheme taken as a whole.
(b) The Company may, at any time before 8.00am on the Second Court Date, terminate this Deed for any breach of clause 8.1 (Bidder Holdco Representations and Warranties) or clause 8.2 (Bidder AU Representations and Warranties) only if:
(i) the Company has given written notice to Bidder Holdco setting out the relevant circumstances and stating an intention to terminate;
(ii) the relevant breach is not curable, or if curable, continues to exist 10 Business Days (or any shorter period ending at 5.00pm on the Business Day before the Second Court Date) after the date on which the notice is given under clause 11.2(b)(i); and
(iii) the relevant breach is material in the context of the Scheme taken as a whole.
11.3 Effect of termination
(a) Termination of this Deed does not affect any accrued rights arising from a breach of this Deed prior to termination.
(b) Clauses 1, 8, 9, 11, 13, 14, 15 and 16 (other than clause 16.1) survive termination of this Deed.
12. Exclusivity
12.1 No current discussions
(a) The Company represents and warrants that, as at the date of this Deed:
(i) it is not in any negotiations or discussions, with any person in respect of any actual, proposed or potential Competing Proposal;
(ii) has ceased any existing negotiations or discussions, with any person in respect of any actual, proposed or potential Competing Proposal; and
(iii) has ceased to provide or make available any non-public information in relation to the Company to a Third Party where such information was provided for the purpose of facilitating, or could reasonably be expected to lead to, a Competing Proposal.
(b) Subject to clause 12.5, the Company undertakes:
(i) in respect of any confidentiality or other agreement it has with any person that has been entered into in the last 12 months in connection with the provision of confidential information to that person or in connection with a Competing Proposal, to not waive, and to promptly enforce (including with respect to an anticipated breach) any standstill obligations under any such agreements; and
(ii) to request the return or destruction of any substantive confidential information (for clarity, excluding any management presentations which only contain high-level summaries of confidential information) in relation to the Company Group (including any Company Information) provided to any person in the last 12 months in connection with a Competing Proposal.
12.2 No-shop
During the Exclusivity Period, the Company must not, and must ensure that neither it nor any of its Related Parties, directly or indirectly:
(a) solicits, invites, encourages or initiates any expressions of interest, offers, proposals, inquiries, negotiations or discussions; or
(b) communicates any intention to do any of the things referred to above,
with a view to obtaining, or that may be expected to encourage or lead to the making of any actual, proposed or potential Competing Proposal.
12.3 No-talk
Subject to clause 12.5, during the Exclusivity Period, the Company must not, and must ensure that neither it nor any of its Related Parties, directly or indirectly:
(a) negotiates, accepts or enters into, or offers to agree to negotiate, accept or enter into, or publicly proposes;
(b) participates in or continues any negotiations or discussions with any other person regarding; or
(c) disclose or otherwise provide or make available any confidential or material non-public information about the business or affairs of the Company Group to a Third Party (other than a Governmental Agency that has the right to obtain that information and has sought it) in connection with, with a view to obtaining,
an actual, proposed or potential Competing Proposal or any agreement, arrangement, or understanding that might be reasonably expected to lead to a Competing Proposal.
12.4 Notification of approaches
(a) During the Exclusivity Period, the Company must promptly, and in any event within two Business Days, notify Bidder Holdco and Bidder AU in writing if the Company or any of its Related Parties becomes aware of any:
(i) approach or attempt to initiate discussions or negotiations regarding any actual, proposed or potential Competing Proposal; or
(ii) proposal made to the Company or any of its Related Parties regarding an actual, proposed or potential Competing Proposal,
whether direct or indirect and whether or not that actual, proposed or potential Competing Proposal was solicited, invited, encouraged or initiated by the Company or any of its Related Parties. For clarity, any of the acts described in this clause 12.4(a) may only be taken by the Company or its Related Parties if permitted by clause 12.5.
(b) A notification given under clause 12.4(a) must include notice of:
(i) the fact of the approach, the material terms and conditions of the Competing Proposal, including the price, timetable, break fee, reimbursement fee and any material updates to the proposal; and
(ii) the identity of the person making the approach (and if different, details of the person making or proposing the relevant Competing Proposal).
12.5 Fiduciary carve out
Clauses 12.1(b) and 12.3 do not prohibit any action or inaction by the Company or any of its Related Parties, in relation to a Competing Proposal (which was not directly or indirectly solicited, invited, encouraged or initiated by the Company or any of its Related Parties in breach of clause 12.2 or 12.3) provided that the Company Board has first determined, acting in good faith, that:
(a) after receiving advice from its financial and legal advisors, such Competing Proposal is, or could reasonably be considered to become, a Superior Proposal; and
(b) after receiving written legal advice from its external legal advisors, compliance with those clauses would, or would be reasonably likely to, constitute a breach of the Company Directors' fiduciary or statutory obligations,
and provided that to the extent the Company or its Related Parties propose to provide information to which clause 12.3(c) applies, the Company has entered into a binding confidentiality agreement with the relevant person who will receive that information, and either:
(c) the terms of the confidentiality agreement are no less favourable to the Company than the Confidentiality Deed; or
(d) the Company agrees to amend the terms of the Confidentiality Deed such that the obligations imposed on the Bidder Holdco under that agreement are no less favourable to the Bidder Holdco than the obligations imposed on the relevant person who will receive that information are to that other person.
12.6 Matching right
(a) Without limiting clauses 12.2 and 12.3, during the Exclusivity Period:
(i) the Company must not, and must procure that its Related Bodies Corporate do not, enter into any agreement (whether or not in writing) pursuant to which one or more of a Third Party, the Company or any Related Body Corporate of the Company proposes, or proposes to undertake or to give effect to, any actual, proposed or potential Competing Proposal; and
(ii) neither the Company nor any of the Company Directors may change, withdraw or modify their Recommendation or Voting Intention in favour of the Scheme, publicly recommend, support or endorse a Competing Proposal or make any public statement to the effect that they may do so at a future point in time (provided that any of the following statements will not contravene this clause):
(A) no action should be taken by the Company Shareholders pending the assessment of a Competing Proposal by the Company Board and its Advisors;
(B) the Company has agreed to provide due diligence or access to information to satisfy a due diligence or access to information condition contained in a Competing Proposal (in accordance with clause 12.5 of this Deed), where such disclosure is required by law; or
(C) that the Company Directors have determined that a Competing Proposal is a Superior Proposal and have commenced the matching right process set out in this clause 12.6,
unless:
(iii) the Company Board, acting in good faith and in order to satisfy what the Company Directors consider to be their statutory or fiduciary duties (having received written legal advice from their external legal advisor) determine that the Competing Proposal is a Superior Proposal;
(iv) the Competing Proposal is not subject to a due diligence or access to information condition precedent (it being expressly acknowledged that the Company may provide due diligence or access to information to satisfy such a condition prior to commencing the matching rights process set out in this clause 12.6, where the provision of such due diligence or access to information is permitted under clause 12.5);
(v) the Company has provided Bidder Holdco with the material terms and conditions of the Competing Proposal, including the price, timetable, break fee, reimbursement fee and identity of the third party making the Competing Proposal, in each case to the extent known by the Company or any of its Related Parties;
(vi) the Company has given Bidder Holdco at least five Business Days from the provision of the information under clause 12.6(a)(v) to provide a matching or superior proposal to the terms of the Competing Proposal, and during this period, has made itself reasonably available, to the extent requested by Bidder Holdco, to negotiate in good faith with Bidder Holdco as part of Bidder Holdco's consideration of providing a matching or superior proposal to the terms of the Competing Proposal; and
(vii) Bidder Holdco has not announced or otherwise formally proposed to the Company a matching or superior proposal to the terms of the Competing Proposal by the expiry of the five Business Day period in clause 12.6(a)(vi),
provided that, for the avoidance of doubt, this clause 12.6(a) will be separately applied to each new Competing Proposal that is a material modification or variation of an existing Competing Proposal.
(b) If Bidder Holdco provides the Company with a proposal as contemplated by clause 12.6(a)(vi) (Counterproposal) the Company must procure that the Company Board considers the Counterproposal and determines whether, acting in good faith, the Counterproposal would provide an equal or superior outcome to the Company Shareholders compared to the Competing Proposal. Following that determination, the Company must within two Business Days, notify Bidder Holdco in writing of the determination, stating the reasons for that determination.
(c) If the notification provided by the Company to Bidder Holdco is that the Company Board has determined that the Counterproposal would provide an equal or superior outcome to the Company Shareholders compared to the Competing Proposal, then:
(i) the Company and Bidder Holdco must use their reasonable endeavours to agree on any necessary amendments to this Deed and agree on such other documents that are reasonably necessary to reflect the Counterproposal as soon as reasonably practicable; and
(ii) the Company must use reasonable endeavours to procure that each of the Company Directors continues to recommend that the Company Shareholders vote in favour of the Scheme (as modified by the Counterproposal) (subject to the same qualifications as set out in clause 5.4).
12.7 General exception to the exclusivity arrangements
Nothing in this clause 12 prevents the Company from:
(a) providing any information to its Related Parties;
(b) providing any information to any Governmental Agency;
(c) providing any information to its auditors, customers, financiers or potential financiers, joint venturers and suppliers acting in that capacity in the ordinary course of business;
(d) engaging with the Company Shareholders (in their capacity as shareholders of the Company) in relation to the Company in the ordinary course of the Company's investor relations activities;
(e) making presentations to, and responding to enquiries from, brokers, portfolio investors, analysts and institutional lenders in the ordinary course in relation to the Company's business generally; or
(f) providing any information required to be provided by any applicable law, including to satisfy its obligations under the AIM Rules or the ASX Listing Rules.
12.8 Compliance with law
(a) The parties acknowledge that this clause 12 is a material provision and that Bidder Holdco would not have entered into this Deed without the benefit of clause 12.
(b) If it is finally determined by a Court or the Takeovers Panel that this clause 12 or any part of it:
(i) constitutes a breach of the fiduciary or statutory duties of the Company Board;
(ii) constitutes 'unacceptable circumstances' within the meaning of the Corporations Act or as declared by the Takeovers Panel; or
(iii) is unlawful for any other reason,
then, the Company will not be obliged to comply with that part (and only to that extent) of clause 12.
(c) The parties must not make or cause or permit to be made, any application to a Court or the Takeovers Panel for or in relation to a determination of the kind set out in this clause 12.8.
13. Break fee
13.1 Acknowledgments
(a) The Company acknowledges that:
(i) it believes, having taken advice from its external legal advisor and financial advisors, that it and its shareholders will derive significant benefits from the implementation of the Scheme and acknowledges that:
(A) each of Bidder Holdco and Bidder AU has and will incur significant costs, expenses, outgoings and losses if the Scheme is not successful, and that it is not possible to accurately ascertain these costs;
(B) it is reasonable and appropriate to agree to pay the Break Fee to secure each of Bidder Holdco's and Bidder AU's entry into this Deed; and
(C) the Break Fee represents a genuine and reasonable pre-estimate of the internal, external advisory and financial costs (and all associated out of pocket expenses) of Bidder Holdco and Bidder AU in relation to the proposed Scheme.
(b) The Company confirms that:
(i) it has received legal advice on this Deed and the operation of this clause; and
(ii) it considers this clause to be fair and reasonable and that it is appropriate to agree to the terms in this clause in order to secure the significant benefits to it (and its shareholders) resulting from the Scheme.
13.2 Break Fee
Subject to clauses 13.3 and 13.5, the Company must pay to Bidder Holdco the Break Fee in accordance with clause 13.4 if, during the Exclusivity Period:
(a) Competing Proposal: a Competing Proposal of any kind is made or announced (whether or not such proposal is stated to be subject to any pre-conditions) and, within 12 months of the date of the termination of this Deed (whether or not during the Exclusivity Period), that Third Party (or its Related Bodies Corporate) completes a Competing Proposal of a kind referred to in paragraphs (b), (c) or (d) of the definition of Competing Proposals or paragraph (a) of the definition of Competing Proposal, on the basis that the reference to 'more than 20%' in that paragraph is replaced with 'more than 50%';
(b) Superior Proposal: a Superior Proposal is received by the Company or publicly announced and the Company terminates this Deed in accordance with clause 11.1(c);
(c) Change of recommendation: a Company Director:
(i) fails to recommend that the Company Shareholders vote in favour of the Scheme in accordance with clause 5.4;
(ii) withdraws or adversely modifies that recommendation;
(iii) does not vote, or makes a public statement to the effect that they will not vote, any Company Shares in which they have a Relevant Interest in favour of the resolution to approve the Scheme; or
(iv) recommends, supports or endorses a Competing Proposal,
except:
(v) where the Company is entitled to terminate this Deed pursuant to clause 11.1(a)(i), 11.1(a)(ii) or 11.2(b); or
(vi) in the circumstances contemplated in clause 5.4(d) or clause 5.4(c)(ii) (unless, in the case of clause 5.4(c)(ii) only, a majority of the Company Directors are required to change, withdraw or adversely modify their Recommendation of the Scheme), or
(vii) where the Company Director takes (or fails to take) any of the actions set out in sub-clauses (i) to (iv) above because the Independent Expert does not conclude in the Independent Expert's Report (or any update of, or revision, amendment or supplement to that report) that the Scheme is in the best interests of Scheme Shareholders (other than in circumstances where a reason provided for the Independent Expert reaching that conclusion is a Competing Proposal having been made or announced),
but in each case excluding any statement that:
(viii) no action should be taken by the Company Shareholders pending the assessment of a Competing Proposal by the Company Board and its Advisors;
(ix) the Company has agreed to provide due diligence or access to information to satisfy a due diligence or access to information condition contained in a Competing Proposal (in accordance with clause 12.5 of this Deed), where such disclosure is required by law; or
(x) that the Company Directors have determined that a Competing Proposal is a Superior Proposal and have commenced the matching right process set out in clause 12.6; or
(d) Material breach by the Company: the Company is in material breach of any of its obligations under this Deed (including of a representation or warranty) and Bidder Holdco validly terminates this Deed in accordance with (and subject to the cure periods specified in) clause 11.1(a)(i) or 11.2(a) (as applicable).
13.3 Limits on payment of the Break Fee
(a) The Break Fee is not payable under clause 13.2 if the Scheme becomes Effective despite the occurrence of any event under clause 13.2 and, if the Break Fee has already been paid it must be refunded by Bidder Holdco.
(b) For the purposes of clause 13.2, qualifications and explanations of the kind set out in clause 5.1(c) contained in the Scheme Booklet will not be regarded as a failure to make or as a withdrawal of the making of a recommendation in favour of the Scheme and will not require the Company to pay the Break Fee to Bidder Holdco.
(c) Notwithstanding any other provision of this Deed, the maximum aggregate liability of the Company to Bidder Holdco under or in connection with this Deed, including in respect of a breach of this Deed (including a breach of representation or warranty), is an amount equal to the amount of the Break Fee, except to the extent that liability arises in connection with any wilful misconduct or fraud by, or on behalf of, any Company Indemnified Party.
13.4 Payment of the Break Fee
(a) Any payment of the Break Fee required under this clause 13 must be made into the account nominated by Bidder Holdco, without set-off or withholding, within 10 Business Days of receipt of a written demand from Bidder Holdco.
(b) Any payment of the Break Fee under this clause 13 which has been made in accordance with clause 13.4(a) can only be made once and Bidder Holdco cannot make any claim against the Company for any further or subsequent Break Fee.
13.5 Compliance with law
(a) If it is finally determined following the exhaustion of all reasonable avenues of appeal to the Takeovers Panel or a court that all or any part of the Break Fee required to be paid under this clause 13 (Impugned Amount):
(i) involves a breach of a statutory, fiduciary or other duty of a director of a party;
(ii) is, was or would be unlawful; or
(iii) constitutes unacceptable circumstances (as declared by the Takeovers Panel or a court) or breaches an order of the Takeovers Panel,
then where the Company has paid the Break Fee to Bidder Holdco in accordance with this clause 13, the requirement to pay the Break Fee does not apply to the extent to the Impugned Amount, and if Bidder Holdco has received the Impugned Amount, it must refund it within five Business Days of the determination being made.
(b) The parties must not make or cause to be made, any application to a court or the Takeovers Panel for or in relation to a declaration or determination referred to in clause 13.5(a).
14. Reverse Break Fee
14.1 Acknowledgement
(a) Bidder Holdco acknowledges that:
(i) Bidder Holdco believes, having taken advice from its external legal advisor and financial advisors, that it and its shareholders will derive significant benefits from the implementation of the Scheme and acknowledges that:
(A) the Company has and will incur significant costs, expenses, outgoings and losses if the Scheme is not successful, and that it is not possible to accurately ascertain these costs;
(B) it is reasonable and appropriate to agree to pay the Reverse Break Fee to secure the Company's entry into this Deed; and
(C) the Reverse Break Fee represents a genuine and reasonable pre-estimate of the internal, external advisory and financial costs (and all associated out of pocket expenses) of the Company in relation to the proposed Scheme.
(b) Bidder Holdco confirms that:
(i) it has received legal advice on this Deed and the operation of this clause; and
(ii) it considers this clause to be fair and reasonable and that it is appropriate to agree to the terms in this clause in order to secure the significant benefits to it (and its shareholders) resulting from the Scheme.
14.2 Reverse Break Fee triggers
Subject to clauses 14.3 and 14.5, Bidder Holdco must pay the Reverse Break Fee to the Company, if, during the Exclusivity Period:
(a) Bidder Holdco Shares CPs: this Deed is validly terminated in accordance with clause 3.5 due to the failure to satisfy the Condition Precedent set out in clause 3.1(l) (NYSE and TSX listing) or 3.1(m) (U.S. Securities Act Exemption);
(b) Material breach by Bidder Holdco: Bidder Holdco is in material breach of any of its obligations under this Deed (including of a representation or warranty) and the Company validly terminates this Deed in accordance with (and subject to the cure periods specified in) clause 11.1(a)(i) and 11.2(b); or
(c) Failure to complete: Bidder Holdco or Bidder AU do not provide the Scheme Consideration in accordance with its obligation under this Deed, the Scheme and the Deed Poll.
14.3 Limits on payment of the Reverse Break Fee
(a) The Reverse Break Fee is not payable under clause 14.2 if the Scheme becomes Effective despite the occurrence of any event under clause 14.2(a) or 14.2(b) and, if the Reverse Break Fee has already been paid it must be refunded by the Company.
(b) Notwithstanding any other provision of this Deed, but subject to 14.6, the maximum aggregate liability of the Bidder Group Members, as a whole, to the Company under or in connection with this Deed, including in respect of a breach of this Deed (including a breach of representation or warranty), is an amount equal to the amount of the Reverse Break Fee, except to the extent that liability arises in connection with any wilful misconduct or fraud by, or on behalf of, any Bidder Indemnified Party.
14.4 Payment of the Reverse Break Fee
(a) Any payment of the Reverse Break Fee required under this clause 14 must be made into the account nominated by the Company, without set-off or withholding, within 10 Business Days of receipt of a written demand from the Company.
(b) Any payment of the Reverse Break Fee under this clause 14 which has been made in accordance with clause 14.4(a) can only be made once and the Company cannot make any claim against Bidder Holdco for any further or subsequent Reverse Break Fee.
14.5 Compliance with law
(a) If it is finally determined following the exhaustion of all reasonable avenues of appeal to the Takeovers Panel or a court that all or any part of the Reverse Break Fee required to be paid under this clause 14 (Reverse Break Fee Impugned Amount):
(i) involves a breach of a statutory, fiduciary or other duty of a director of a party;
(ii) is, was or would be unlawful; or
(iii) constitutes unacceptable circumstances (as declared by the Takeovers Panel or a court) or breaches an order of the Takeovers Panel,
then where Bidder Holdco has paid the Reverse Break Fee to the Company in accordance with this clause 14, the requirement to pay the Reverse Break Fee does not apply to the extent to the Reverse Break Fee Impugned Amount, and if the Company has received the Reverse Break Fee Impugned Amount, it must refund it within five Business Days of the determination being made.
(b) The parties must not make or cause to be made, any application to a court or the Takeovers Panel for or in relation to a declaration or determination referred to in clause 14.5(a).
14.6 Claims under the Deed Poll
Nothing in clause 14 or otherwise in this Deed, will limit:
(a) Bidder Holdco or Bidder AU's liability in connection with a failure of Bidder Holdco or Bidder Au to provide, or procure the provision of, the Scheme Consideration to each Scheme Shareholder for each Company Share in accordance with the terms of this Deed and the Scheme in breach of clause 4.1 of this Deed, clause 4 of the Scheme or the Deed Poll; or
(b) any application to a court or claim for specific performance or injunctive relief in relation to Bidder Holdco's or Bidder AU's failure to provide or procure the Scheme Consideration in accordance with clause 4.1 of this Deed, clause 4 of the Scheme or the Deed Poll.
15. Confidentiality and restrictions on contacting Government Agencies
Bidder Holdco and the Company acknowledge and agree that they continue to be bound by the Confidentiality Deed after the date of this Deed (including the confidentiality undertakings and restrictions on contact with government contained in that deed). The rights and obligations of the parties under the Confidentiality Deed survive termination of this Deed. To the extent of any inconsistency between the Confidentiality Deed and this Deed, the terms of this Deed shall prevail.
16. General
16.1 Further acts
Each party will promptly do and perform all further acts and execute and deliver all further documents (in form and content reasonably satisfactory to that party) required by law or reasonably requested by any other part to give effect to this Deed.
16.2 Notices
Any communication under or in connection with this Deed:
(a) must be in writing;
(b) must be addressed as shown below:
Company
Address: Level 3, 46 Colin Street
West Perth WA 6005, Australia
Attention of: Tim Carstens, Managing Director
Email: [******************************]
Attention of: Chadwick Poletti, Chief Legal Officer
Email: [******************************]
with a copy to:
Address: Level 11/1 The Esplanade
Perth WA 6000, Australia
Attention of: Simon Reed
Email: [******************************]
Bidder Holdco and Bidder AU
Address: 225 Union Blvd., Suite 600
Lakewood Co., 80228, USA
Attention: Mark S. Chalmers, President and CEP
Email: [******************************]
with a copy to:
Address: Level 43, Bourke Place
600 Bourke Street
Narrm Country
Melbourne, VIC 3000, Australia
Attention of: John Mollard
Email: [******************************]
(or as otherwise notified by that party to the other party from time to time);
(c) must be signed by a person duly authorised by the sender;
(d) must be hand delivered or posted by prepaid post, or sent by email, to the address in clause 16.2(b); and
(e) will be taken to be given:
(i) (in the case of post) on the third Business Day after the date of posting (if posted to an address in the same country) or the seventh Business Day after the date of posting (if posted to an address in another country);
(ii) (in the case of delivery by hand) on delivery, unless that delivery is made on a day that is not a Business Day, or is made after 5.00 pm on a Business Day, when that communication will be taken to be given at 9.00 am on the next Business Day; and
(iii) (in the case of email) on sending (unless the sender's computer reports that the message has not been delivered), unless it is sent on a day that is not a Business Day, or is made after 5.00 pm on a Business Day, when that communication will be taken to be given at 9.00 am on the next Business Day.
16.3 GST
(a) Unless expressly included, the consideration for any supply under or in connection with this Deed does not include GST.
(b) To the extent that any supply made by a party to another party (Recipient) under or in connection with this Deed is a taxable supply and a tax invoice has been provided to the Recipient, the Recipient must pay, in addition to the consideration to be provided under this Deed for that supply (unless it expressly includes GST) an amount equal to the amount of that consideration (or its GST exclusive market value) multiplied by the rate at which GST is imposed in respect of the supply.
(c) The amount of GST payable in accordance with this clause 16.3 will be paid at the same time and in the same manner as the consideration otherwise payable for the supply is provided.
16.4 Costs
Except as expressly stated in this Deed, each party must pay its own costs and expenses in connection with the negotiation, preparation, execution and performance of this Deed.
16.5 Duty
Bidder Holdco or Bidder AU (as applicable) must pay all duties (if any) and any fines and penalties with respect to duty in respect of this Deed or the Scheme or the steps to be taken under this Deed or the Scheme.
16.6 Variations
This agreement may only be varied by a document signed by or on behalf of each of the parties.
16.7 Assignment
A party cannot assign, novate or otherwise transfer any of its rights or obligations under this Deed without the prior written consent of the other party.
16.8 Governing law
(a) This agreement is governed by and will be construed according to the laws of Western Australia.
(b) Each party irrevocably submits to the non-exclusive jurisdiction to the courts of Western Australia and of the courts competent to determine appeals from those courts.
16.9 Business Day
Except where otherwise expressly provided, where under this Deed the day on which any act, matter or thing is to be done is a day other than a Business Day, such act, matter or thing will be done on the next Business Day.
16.10 Waiver
(a) Failure to exercise or enforce or a delay in exercising or enforcing or the partial exercise or enforcement of any right, power or remedy provided by law or under this Deed by any party will not in any way preclude, or operate as a waiver of, any exercise or enforcement, or further exercise or enforcement of that or any other right, power or remedy provided by law or under this Deed.
(b) Any waiver or consent given by any party under this Deed will only be effective and binding on that party if it is given or confirmed in writing by that party.
(c) No waiver of a breach of any term of this Deed will operate as a waiver of another breach of that term or of a breach of any other term of this Deed.
16.11 Consents
Any consent referred to in, or required under, this Deed from any party may not be unreasonably withheld, unless this Deed expressly provides for that consent to be given in that party's absolute discretion.
16.12 Counterparts
This agreement may be executed in any number of counterparts and by the parties on separate counterparts. Each counterpart constitutes the agreement of each party who has executed and delivered that counterpart.
16.13 Entire agreement
To the extent permitted by law, in relation to the subject matter of this Deed, this Deed and the Confidentiality Deed:
(a) embody the entire understanding of the parties and constitute the entire terms agreed upon between the parties; and
(b) supersede any prior agreement (whether or not in writing) between the parties.
16.14 No merger
The rights and obligations of the parties will not merge on completion of any transaction under this Deed. They will survive the execution and delivery of any assignment or other document entered into for the purpose of implementing any transaction.
16.15 Remedies cumulative
The rights and remedies provided in this Deed are in addition to other rights and remedies given by law independently of this Deed.
16.16 Specific performance
The parties acknowledge that damages will not be an adequate remedy for breaches of obligations under this Deed and that it would be appropriate for a court to grant specific performance of those obligations.
16.17 Severability
Any provision of this Deed that is prohibited or unenforceable in any jurisdiction is ineffective in that jurisdiction to the extent of prohibition or unenforceability and does not invalidate the remaining provisions of this Deed nor the validity or enforceability of that provision in any other jurisdiction.
16.18 Relationship of parties
This document is not intended to create a partnership, joint venture or agency relationship between the parties.
16.19 The City Code on Takeovers and Mergers
By virtue of its status as a public company limited by shares, incorporated in Australia and taken to be registered in Western Australia, the City Code on Takeovers and Mergers does not apply to the Company and the Scheme is not subject to the jurisdiction of, nor is being regulated by, the UK Takeover Panel.
16.20 FRCGT Withholding
(a) Bidder Holdco must make all payments that become due under the Scheme free and clear and without deduction of all present and future withholdings (including taxes or duties), unless Bidder Holdco determines (acting reasonably) that it is required to by law or it is required to pay an amount to the Commissioner of Taxation pursuant to Subdivision 14-D of Schedule 1 to the Taxation Administration Act 1953 (Cth) (CGT Withholding Amount).
(b) If Bidder Holdco determines (acting reasonably) that it is required to pay a CGT Withholding Amount with respect to the acquisition of the Scheme Shares from a Scheme Shareholder, Bidder Holdco will:
(i) determine the amount of the CGT Withholding Amount;
(ii) remit the CGT Withholding Amount to the Commissioner within the time required under Subdivision 14-D of Schedule 1 to the Taxation Administration Act 1953 (Cth); and
(iii) be deemed to have satisfied its obligations to pay the CGT Withholding Amount to the Scheme Shareholder for the purposes of the Scheme.
Signing page
Executed as a deed.
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Signed, sealed and delivered by Base Resources Limited by |
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(signed) "Chadwick Byron Poletti" |
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(signed) "Timothy James Carstens" |
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Company Secretary/Director |
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Director |
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Chadwick Byron Poletti |
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Timothy James Carstens |
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Signed, sealed and delivered by EFR Australia Pty Ltd by |
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(signed) "Mark Chalmers" |
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(Signed) "Melanie Leydin" |
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Director |
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Mark Chalmers |
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Melanie Leydin |
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Signed sealed and delivered by Energy Fuels Inc. in the presence of |
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(signed) "Mark Chalmers" |
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(Signed) "Andreas Kloppenborg" |
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Authorised signatory |
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Witness |
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Mark Chalmers |
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Andreas Kloppenborg |
Annexure A - Scheme of Arrangement
SCHEME OF ARRANGEMENT - SHARE SCHEME
This scheme of arrangement is made under section 411 of the Corporations Act 2001 (Cth)
between
Base Resources Limited
ACN 125 546 910
and
EACH PERSON REGISTERED AS A HOLDER OF FULLY PAID ORDINARY SHARES IN BASE RESOURCES LIMITED AS AT 5.00 PM ON THE RECORD DATE
1. Preliminary
1.1 Company Limited
(a) The Company is a public company incorporated in Australia and registered in Western Australia and is a company limited by shares.
(b) The Company has been admitted to the official list of the ASX and the:
(i) Company Shares are quoted for trading on the financial market operated by the ASX; and
(ii) Company DIs (representing Company Shares) are quoted on AIM.
1.2 Bidders
Bidder Holdco is a company incorporated in the Province of Ontario, Canada.
Bidder AU is a company incorporated in Australia and registered in the State of Victoria, Australia and is a proprietary company limited by shares.
1.3 Effect of Scheme
If this Scheme becomes Effective, then:
(a) in consideration of the transfer of each Company Share to Bidder AU, Bidder Holdco will provide the Scheme Consideration to Scheme Shareholders in accordance with the terms of this Scheme and the Deed Poll;
(b) all of the Company Shares, and all the rights and entitlements attaching to them as at the Implementation Date, held by Scheme Shareholders will be transferred to Bidder AU;
(c) the Company will enter the name of Bidder AU in the Register in respect of all of the Company Shares transferred to Bidder AU in accordance with the terms of the Scheme; and
(d) the Company will become a wholly-owned subsidiary of Bidder AU.
1.4 Scheme Implementation Deed
Bidder Holdco, Bidder AU and the Company have agreed, by executing the Scheme Implementation Deed, to fulfil their respective obligations under that agreement and to implement this Scheme.
1.5 Deed Poll
Bidder Holdco and Bidder AU have entered into the Deed Poll in favour of Scheme Shareholders pursuant to which Bidder Holdco has covenanted to provide to each Scheme Shareholder the Scheme Consideration to which such Scheme Shareholder is entitled under this Scheme and to carry out its other obligations under this Scheme.
2. Conditions
2.1 Conditions precedent to this Scheme
This Scheme is conditional on and will come into effect only if:
(a) neither the Scheme Implementation Deed nor the Deed Poll have been terminated;
(b) all of the Conditions Precedent in clause 3.1 of the Scheme Implementation Deed have been satisfied or waived in accordance with the terms of the Scheme Implementation Deed (other than the Condition Precedent in clause 3.1(e) relating to the Court approving this Scheme in accordance with section 411(4)(b) of the Corporations Act);
(c) the Court having approved this Scheme, with or without any modification or condition, pursuant to section 411(4)(b) of the Corporations Act, and if applicable, the Company and Bidder Holdco having accepted in writing any modification or condition made or required by the Court under section 411(6) of the Corporations Act,
(d) subject to clause 9.8, such other conditions made or required by the Court under section 411(6) of the Corporations Act in relation to this Scheme and agreed to by the Company and Bidder Holdco having been satisfied or waived; and
(e) the coming into effect, pursuant to section 411(10) of the Corporations Act, of the orders of the Court made under section 411(4)(b) of the Corporations Act (and, if applicable, section 411(6) of the Corporations Act) in relation to this Scheme on or before the End Date (or any later date the Company and Bidder Holdco agree in writing in accordance with the Scheme Implementation Deed) (other than the Condition Precedent in clause 3.1(e) relating to the Court approving this Scheme in accordance with section 411(4)(b) of the Corporations Act).
2.2 Effect of Conditions
The fulfilment of the conditions in clause 2.1 is a Condition Precedent to the operation of clauses 3, 4 and 6 of this Scheme.
2.3 Certificate
(a) Each of the Company, Bidder Holdco and Bidder AU will provide to the Court at the Second Court Hearing a certificate in the form of a deed and substantially in the form set out in Annexure D of the Scheme Implementation Deed, or such other evidence as the Court requests, confirming (in respect of matters within its knowledge) that all the Conditions Precedent in the Scheme Implementation Deed (for which it is required to use its best endeavours to satisfy under clause 3.3(a), 3.3(b) or 3.3(c) of the Scheme Implementation Deed, as applicable) and this Scheme (other than Court approval under section 411(4)(b) of the Corporations Act) have been satisfied or waived.
(b) The certificates referred to in clause 2.3(a) will constitute conclusive evidence that such Conditions Precedent were satisfied or waived or taken to have been waived as at 8.00 am on the Second Court Date.
2.4 End Date
This Scheme will lapse and be of no further force or effect if:
(a) this Scheme does not become Effective on or before the End Date; or
(b) the Scheme Implementation Deed or the Deed Poll is terminated in accordance with their respective terms,
unless Bidder Holdco, Bidder AU and the Company otherwise agree in writing.
3. Scheme Implementation
3.1 Lodgement of Court Order with ASIC
As soon as possible following the approval of this Scheme by the Court in accordance with section 411(4)(b) of the Corporations Act, the Company must lodge with ASIC under section 411(10) of the Corporations Act an office copy of the Court order approving this Scheme.
3.2 Transfer of Company Shares held by Scheme Shareholders
On the Implementation Date:
(a) subject to the provision of the Scheme Consideration in the manner contemplated by clause 4, the Company Shares held by Scheme Shareholders, together with all rights and entitlements attaching to the Scheme Shares as at that date, must be transferred to Bidder AU without the need for any further acts by Scheme Shareholders (other than acts performed pursuant to clause 3.6(b) or by the Company as attorney and agent for the Scheme Shareholders, including under clauses 3.6 or 9.1);
(i) the Company must deliver to Bidder Holdco and Bidder AU a duly completed and executed master transfer form (executed by the Company as the attorney for the Scheme Shareholders) to transfer all of the Company Shares held by Scheme Shareholders to Bidder AU; and
(ii) Bidder Holdco and Bidder AU must duly execute the master transfer form, attend to the stamping of the master transfer form (if required) and deliver it to the Company for registration; and
(b) immediately following receipt of the master transfer form in accordance with clause 3.2(a)(ii), but subject to the stamping of the master transfer form (if required), the Company will record Bidder AU in the Register as holder of all the Company Shares transferred to Bidder AU under this Scheme.
3.3 Agreement by Scheme Shareholders
In consideration of the Scheme Consideration, the Scheme Shareholders agree to the transfer of all of their Company Shares to Bidder AU in accordance with the terms of this Scheme.
3.4 Warranties by Scheme Shareholders
Each Scheme Shareholder is deemed to have warranted to the Company. In its own right and for the benefit of Bidder Holdco and Bidder AU, that:
(a) all of its Company Shares (including any rights attaching to those shares) which are transferred to Bidder AU under this Scheme will, at the date of the transfer of the Company Shares to Bidder AU, be fully paid and free from all mortgages, charges, liens, encumbrances, pledges, security interests (including any "security interests" within the meaning of section 12 of the Personal Property Securities Act 2009 (Cth)), and rights and interests of third parties (other than the Depositary) of any kind, whether legal or otherwise, and any restrictions on their transfer;
(b) all of its Company Shares which are transferred to Bidder AU under this Scheme will, on the date on which they are transferred to Bidder AU, be fully paid;
(c) it has full power and capacity to sell and transfer the Company Shares registered in their name as at the Record Date, together with all rights and entitlements attaching to such Company Shares; and
(d) it has no rights to be issued any Company Shares or any other Company securities, other than, in the case of a Scheme Shareholder who is also the holder of the Company Performance Rights, the right to receive the Company Shares on the exercise of those, or otherwise in accordance with their terms.
3.5 Beneficial Entitlement by Bidder AU
From the Effective Date, Bidder AU will be beneficially entitled to the Company Shares transferred to it under this Scheme pending registration of Bidder AU as the holder of those Company Shares.
3.6 Appointment of Bidder AU as Sole Proxy
From the Effective Date until the Company registers Bidder AU as the holder of all the Company Shares in the Register, each Scheme Shareholder:
(a) is deemed to have appointed the Company as attorney and agent (and directed the Company in such capacity) to appoint the Chairman of Bidder AU as its sole proxy and where applicable, corporate representative, to attend shareholders' meetings, exercise the votes attaching to the Company Shares registered in its name and sign any shareholders' resolution, and no Scheme Shareholder may itself attend or vote at any of those meetings or sign any resolutions, whether in person, or by proxy or by corporate representative (other than Bidder AU); and
(b) must take all other actions in their capacity as registered holder of the Company Shares as Bidder AU directs.
The Company undertakes in favour of each Scheme Shareholder that it will appoint the Chairman of Bidder AU as that Scheme Shareholder's proxy or, where applicable, corporate representative in accordance with clause 3.6(a).
4. Scheme Consideration
4.1 Scheme Consideration
On the Implementation Date, in consideration of the transfer of the Company Shares to Bidder AU, Bidder Holdco must issue the Scheme Consideration to each Scheme Shareholder in accordance with the terms of the Scheme.
4.2 Provision of Scheme Consideration
Subject to clauses 4.3, 4.4 and 4.6 the obligation of Bidder Holdco to provide, or procure the provision of, the Scheme Consideration to the Scheme Shareholders will be satisfied where the Scheme Consideration that is required to be provided to Scheme Shareholders is in the form of New Bidder Holdco Shares, by Bidder Holdco:
(a) on the Implementation Date, issuing the Scheme Consideration comprising New Bidder Holdco Shares to each Scheme Shareholder and procuring that the name and address of the Scheme Shareholder is entered in the share register of Bidder Holdco in respect of those New Bidder Holdco Shares; and
(b) procuring that on or before the date that is five Business Days after the Implementation Date, a share certificate or holding statement (or equivalent document) is sent to the Registered Address of each Scheme Shareholder representing the number of New Bidder Holdco Shares issued to the Scheme Shareholder pursuant to this Scheme.
4.3 Fractional Entitlements and Splitting
Where the calculation of the number of New Bidder Holdco Shares to be issued to a particular Scheme Shareholder would result in the Scheme Shareholder becoming entitled to a fraction of a New Bidder Holdco Share, the fractional entitlement will be rounded down to the nearest whole number of New Bidder Holdco Shares.
4.4 Ineligible Foreign Shareholders
(a) Bidder Holdco has no obligation to issue any New Bidder Holdco Shares under this Scheme to any Ineligible Foreign Shareholder and instead:
(i) subject to clauses 4.3 and 4.5, Bidder Holdco must, on or before the Implementation Date, issue the New Bidder Holdco Shares which would otherwise be required to be issued to the Ineligible Foreign Shareholders (Relevant Bidder Holdco Shares) under this Scheme to the Sale Agent;
(ii) Bidder Holdco must procure that as soon as reasonably practicable after the Implementation Date (and in any event within 20 days after the Implementation Date), the Sale Agent:
(A) in consultation with Bidder Holdco, sells or procures the sale of the Relevant Bidder Holdco Shares in the ordinary course of trading on the TSX and in such manner, at such price and on such other terms as the Sale Agent reasonably determines; and
(B) as soon as reasonably practicable after settlement (and in any event within 10 Business Days), remits to Bidder Holdco the proceeds of the sale (after deduction of any reasonable brokerage or other selling costs, taxes and charges) (Proceeds);
(iii) promptly after receiving the Proceeds in respect of the sale of all of the Relevant Bidder Holdco Shares in accordance with clause 4.4(a)(ii)(B), Bidder Holdco must pay, or procure the payment of, to each Ineligible Foreign Shareholder, the amount 'A' calculated in accordance with the following formula and rounded down to the nearest cent:
Where
A = the amount to be paid to the relevant Ineligible Foreign Shareholder;
B = the number of Relevant Bidder Holdco Shares attributable to, and that would otherwise have been issued to, that Ineligible Foreign Shareholder had it not been an Ineligible Foreign Shareholder and which were instead issued to the Sale Agent;
C = the total number of Relevant Bidder Holdco Shares attributable to, and which would otherwise have been issued to, all Ineligible Foreign Shareholders collectively and which were issued to the Sale Agent; and
D = the Proceeds (as defined in clause 4.4(a)(ii)(B)).
(b) The Ineligible Foreign Shareholders acknowledge that none of Bidder Holdco, Bidder AU, the Company nor the Sale Agent gives any assurance or representation as to the price that will be achieved for the sale of New Bidder Holdco Shares described in clause 4.4(a) or the amount of proceeds of sale to be received by Ineligible Foreign Shareholders under the Sale Facility. Each of the Company, Bidder Holdco or Bidder AU and the Sale Agent expressly disclaim any fiduciary duty to the Ineligible Foreign Shareholders which may arise in connection with this clause 4.4.
(c) Bidder Holdco or Bidder AU must make, or procure the making of, payments to Ineligible Foreign Shareholders under clause 4.4(a) by either (in the absolute discretion of Bidder Holdco or Bidder AU, and despite any election referred to in clause 4.4(c)(i)(ii) or authority referred to in clause 4.4(c)(i) made or given by the Scheme Shareholder):
(i) paying, or procuring the payment of, the relevant amount in United States dollars by electronic means to a bank account nominated by the Ineligible Foreign Shareholder by an appropriate authority from the Ineligible Foreign Shareholder to Bidder Holdco or Bidder AU; or
(ii) if a bank account has not been nominated by the Ineligible Foreign Shareholder in accordance with clause 4.4(c)(i):
(A) if an Ineligible Foreign Shareholder has, before the Record Date, made a valid election in accordance with the requirements of the Company Registry to receive dividend payments from the Company by electronic funds transfer to a bank account nominated by the Ineligible Foreign Shareholder, paying, or procuring the payment of, the relevant amount in United States dollars by electronic means in accordance with that election; or
(B) otherwise dispatching, or procuring the dispatch of, a cheque for the relevant amount in United States dollars to the Ineligible Foreign Shareholder by prepaid post to their Registered Address (as at the Record Date), such cheque being drawn in the name of the Ineligible Foreign Shareholder (or, each in the case of joint holders, in accordance with the procedures set out in clause 4.3).
(d) If Bidder Holdco or Bidder AU receives professional advice that any withholding or other tax is required by law or by a Governmental Agency to be withheld from a payment to an Ineligible Foreign Shareholder, Bidder Holdco is entitled to withhold the relevant amount before making the payment to the Ineligible Foreign Shareholder (and payment of the reduced amount shall be taken to be full payment of the relevant amount for the purposes of this Scheme, including clause 4.4(a)(iii)). Bidder Holdco or Bidder AU must pay any amount so withheld to the relevant taxation authorities within the time permitted by law, and, if requested in writing by the relevant Ineligible Foreign Shareholder, provide a receipt or other appropriate evidence of such payment (or procure the provision of such receipt or other evidence) to the relevant Ineligible Foreign Shareholder.
(e) Each Ineligible Foreign Shareholder appoints Bidder Holdco as its agent to receive on its behalf any financial services guide (or similar or equivalent document) or other notices (including any updates of those documents) that the Sale Agent is required to provide to Ineligible Foreign Shareholders under the Corporations Act or any other applicable law.
(f) Payment of the amount 'A' calculated in accordance with clause 4.4(a) to an Ineligible Foreign Shareholder in accordance with this clause 4.4 satisfies in full the Ineligible Foreign Shareholder's right to Scheme Consideration.
(g) Where the issue of New Bidder Holdco Shares to which a Company Shareholder would otherwise be entitled under this Scheme would result in a breach of law:
(i) Bidder Holdco will issue the maximum possible number of New Bidder Holdco Shares to the Company Shareholder without giving rise to such a breach; and
(ii) any further New Bidder Holdco Shares to which that Company Shareholder is entitled, but the issue of which to the Company Shareholder would give rise to such a breach, will instead be issued to the Sale Agent and dealt with under the preceding provisions in this clause 4.4, as if a reference to Ineligible Foreign Shareholders also included that Company Shareholder and references to that person's New Bidder Holdco Shares in that clause were limited to the New Bidder Holdco Shares issued to the Sale Agent under this clause.
4.5 Orders of a court or Governmental Agency
If a law requires, or if written notice is given to the Company (or the Company Registry) or Bidder Holdco (or Bidder Holdco share registry) of an order or direction made by a court of competent jurisdiction or by another Governmental Agency that:
(a) requires consideration to be provided to a third party (either through payment of a sum or the issuance of a security) in respect of Scheme Shares held by a particular Scheme Shareholder, which would otherwise be payable or required to be issued to that Scheme Shareholder by the Company or Bidder Holdco in accordance with this clause 4, or which requires an amount to be deducted or withheld from any consideration which would otherwise be payable or provided to a Scheme Shareholder in accordance with this clause 4, then the Company or Bidder Holdco (as applicable) shall be entitled to procure that provision of that consideration, or deduction or withholding, is made in accordance with that order or direction; or
(b) prevents the Company or Bidder Holdco from providing consideration to any particular Scheme Shareholder in accordance with this clause 4, or the payment or issuance of such consideration is otherwise prohibited by applicable law, the Company or Bidder Holdco shall be entitled to (as applicable):
(i) in the case of an Ineligible Foreign Shareholder or other shareholder referred to in clause 4.4, retain an amount, in United States dollars, equal to the relevant shareholder's share of the Proceeds; or
(ii) not to issue (or direct Bidder Holdco to issue), or to issue to a trustee or nominee, such number of New Bidder Holdco Shares that Scheme Shareholder would otherwise be entitled under clause 4.2,
until such time as provision of the Scheme Consideration in accordance with this clause 4 is permitted by that (or another) order or direction or otherwise by law.
To the extent that amounts are deducted or withheld under or in accordance with this clause 4.5, such deducted or withheld amounts will be treated for all purposes under this Scheme as having been paid to the person in respect of which such deduction or withhold was made.
4.6 Unclaimed monies
(a) Bidder Holdco or Bidder AU may cancel a cheque issued under clause 4.4(c)(ii)(B) if the cheque:
(i) is returned to the Company or Bidder AU; or
(ii) has not been presented for payment within 6 months after the date on which the cheque was sent.
(b) During the period of 12 months commencing on the Implementation Date, on request in writing from a Scheme Shareholder to the Company or Bidder AU (or the Company Registry) (which request may not be made until the date that is 20 Business Days after the Implementation Date), Bidder Holdco or Bidder AU must reissue a cheque that was previously cancelled under clause 4.6(a).
(c) The Unclaimed Money Act will apply in relation to any Scheme Consideration that becomes "unclaimed money" (as defined in section 6 of the Unclaimed Money Act), but any interest or other benefit accrued from the unclaimed Scheme Consideration will be for the benefit of Bidder AU.
4.7 Status of New Bidder Holdco Shares
Bidder Holdco covenants in favour of the Company (in its own right and on behalf of the Scheme Shareholders) that the New Bidder Holdco Shares required to be issued by it under this Scheme will:
(a) on their issue rank equally in all respects with all other Bidder Holdco Shares on issue;
(b) on their issue be duly and validly issued and authorized in accordance with all applicable laws and Bidder Holdco's articles of incorporation, by-laws and other constituent documents;
(c) on their issue be entitled to participate in and receive any dividends or distribution of capital paid and any other entitlements accruing in respect of Bidder Holdco Shares on and from the Implementation Date;
(d) from the Business Day following the date this Scheme becomes Effective (or such later date as NYSE or TSX requires), be quoted and listed for trading on the NYSE and TSX; and
(e) on their issue be fully paid, non-assessable and free of any Security Interest or encumbrance.
4.8 Joint Holders
In the case of the Company Shares held in joint names:
(a) the New Bidder Holdco Shares to be issued under this Scheme must be issued to and registered in the names of the joint holders; and
(b) any other document required to be sent under this Scheme, will be forwarded to either, at the sole discretion of the Company, the holder whose name appears first in the Register as at the Record Date or to the joint holders.
5. Dealings in the Company Shares
5.1 Determination of Scheme Shareholders
For the purposes of identifying the Scheme Shareholders, dealings in the Company Shares will only be recognised if:
(a) in the case of dealings of the type to be effected using CHESS, the transferee is registered in the Register as the holder of the relevant Company Shares at or before 5.00 pm on the Record Date; and
(b) in all other cases, registrable transmission applications or transfers in registrable form in respect of those dealings are received at or before 5.00 pm on the Record Date at the place where the Register is kept.
5.2 Register
(a) (Transmission applications or transfers received at or before 5.00 pm on the Record Date): the Company must register registrable transmission applications or transfers of the kind referred to in clause 5.1(b) by 5.00 pm on the Record Date, provided that, for the avoidance of doubt, nothing in this clause 5.2(a) requires the Company to register a transfer that would result in a Company Shareholder holding a parcel of the Company Shares that is less than a "marketable parcel" (for the purposes of this clause 5.2(a), "marketable parcel" has the meaning given in the Operating Rules).
(b) (Transmission applications or transfers received after 5.00 pm on the Record Date): the Company will not accept for registration or recognise for any purpose any transmission applications or transfers in respect of the Company Shares received after 5.00 pm on the Record Date, other than a transfer to Bidder AU in accordance with this Scheme and any subsequent transfer by Bidder AU or its successors in title.
(c) (Maintaining of the Register): for the purpose of determining entitlements to participate in this Scheme, the Company will, until the Scheme Consideration has been provided, maintain the Register in accordance with the provisions of this clause 5 and the Register in this form will solely determine entitlements to the Scheme Consideration.
(d) (Scheme Shareholder details): the Company must procure that by 9.00 am on the Implementation Date, details of the names, registered addresses and holdings of the Company Shares of every Scheme Shareholder as shown in the Register at 5.00 pm on the Record Date are available to Bidder Holdco in such form as Bidder Holdco may reasonably require.
(e) (Effect of the Record Date): all statements of holding for the Company Shares (other than statements of holding in favour of Bidder AU) will cease to have any effect from 5.00 pm on the Record Date as documents of title in respect of those Company Shares and, as from that date and time, each entry current at that date on the Register relating to the Company Shares will cease to be of any effect other than as evidence of entitlement to the Scheme Consideration in respect of the Company Shares relating to that entry.
6. Quotation of Shares
6.1 Suspension of Trading in the Company Shares
(a) The Company will apply for suspension of trading in the Company Shares on the financial market operated by ASX from the close of trading on the Effective Date.
(b) The Company will apply for suspension of trading in the Company DIs on AIM from the commencement of trading on the Effective Date.
6.2 Termination of Official Quotation of the Company Shares
The Company will apply for termination of the official quotation of the Company Shares on the financial market operated by ASX and AIM and the removal of the Company from the official list of ASX and cancellation of the admission to trading on AIM to take effect after this Scheme has been fully implemented.
7. Instructions and elections
If not prohibited by law (and including where permitted or facilitated by relief granted by a Governmental Agency), all instructions, notifications or elections by a Scheme Shareholder to the Company that are binding or deemed binding between the Scheme Shareholder and the Company relating to the Company or Company Shares, including instructions, notifications or elections relating to:
(a) whether dividends are to be paid by cheque or into a specific bank account;
(b) payments of dividends on Company Shares; and
(c) notices or other communications from the Company (including by email),
will be deemed from the Implementation Date (except to the extent determined otherwise by Bidder Holdco in its sole discretion), by reason of this Scheme, to be made by the Scheme Shareholder to Bidder Holdco and to be a binding instruction, notification or election to, and accepted by, Bidder Holdco in respect of the New Bidder Holdco Shares issued to that Scheme Shareholder until that instruction, notification or election is revoked or amended in writing addressed to Bidder Holdco at its registry.
8. General Scheme Provisions
8.1 Consent to amendments to this Scheme
If the Court proposes to approve this Scheme subject to any alterations or conditions:
(a) the Company may by its counsel consent on behalf of all persons concerned to those alterations or conditions to which Bidder Holdco (for and on behalf of Bidder Holdco and Bidder AU) has consented to in writing; and
(b) each Scheme Shareholder agrees to any such alterations or conditions which the Company (by its counsel) has consented to.
8.2 Consent to amendments to this Scheme
(a) Each Scheme Shareholder:
(i) agrees for all purposes to:
(A) the transfer of their Company Shares together with all rights and entitlements attaching to those Company Shares in accordance with this Scheme;
(B) the variation, cancellation or modification (if any) of the rights attached to their Company Shares constituted by or resulting from this Scheme; and
(C) on the direction of Bidder Holdco, destroy any share certificates or holding statements relating to their Company Shares;
(ii) that is issued New Bidder Holdco Shares, agrees to become a member of Bidder Holdco and to be bound by the certificate of incorporation, by-laws and other constituent documents of Bidder Holdco;
(iii) who holds their Company Shares in a CHESS Holding agrees to the conversion of those Company Shares to an Issuer Sponsored Holding and irrevocably authorises the Company to do anything necessary or expedient (whether required by the Settlement Rules or otherwise) to effect or facilitate such conversion; and
(iv) acknowledges and agrees that this Scheme binds the Company and all Scheme Shareholders (including those who do not attend the Scheme Meeting and those who do not vote, or vote against this Scheme, at the Scheme Meeting),
in each case, irrevocably and without the need for any further act by the Scheme Shareholder.
(b) Each Scheme Shareholder is taken to have warranted to the Company and Bidder AU on the Implementation Date, and appointed and authorised the Company as its attorney and agent to warrant to Bidder AU on the Implementation Date, that:
(i) all their Company Shares (including any rights and entitlements attaching to those shares) which are transferred to Bidder AU under this Scheme will, at the time of transfer of them to Bidder AU, be fully paid and free from all mortgages, charges, liens, encumbrances, pledges, security interests (including any Security Interests) and interests of third parties of any kind, whether legal or otherwise, and restrictions on transfer of any kind;
(ii) they have full power and capacity to sell and transfer their Company Shares to Bidder AU under this Scheme together with any rights and entitlements attaching to those shares; and
(iii) they have no existing right to be issued any Company Shares, or any options, performance rights, securities or other instruments exercisable, or convertible, into Company Shares.
(c) The Company undertakes that it will provide such warranty in clause 8.2(b) to Bidder AU as agent and attorney of each Scheme Shareholder.
8.3 Title to and rights in Scheme Shares
(a) To the extent permitted by law, the Scheme Shares (including all rights and entitlements attaching to the Scheme Shares) transferred under this Scheme will, at the time of transfer, vest in Bidder AU free from all mortgages, charges, liens, encumbrances, pledges, security interests (including any Security Interests) and interests of third parties of any kind, whether legal or otherwise and free from any restrictions on transfer of any kind.
(b) Immediately upon the provision of the Scheme Consideration to each Scheme Shareholder in the manner contemplated by clause 4.2 Bidder AU will be beneficially entitled to the Scheme Shares to be transferred to it under this Scheme pending registration by the Company of Bidder AU in the Register as the holder of the Scheme Shares.
8.4 Appointment of sole proxy
Immediately upon the provision of the Scheme Consideration to each Scheme Shareholder in the manner contemplated by clause 4.2 and until the Company registers Bidder AU as the holder of all Scheme Shares in the Register, each Scheme Shareholder:
(a) is deemed to have irrevocably appointed Bidder AU as attorney and agent (and directed Bidder AU in each such capacity) to appoint any director, officer, secretary or agent nominated by Bidder AU from time to time as its sole proxy and, where applicable or appropriate, corporate representative to attend shareholders' meetings, exercise the votes attaching to the Scheme Shares registered in their name and sign any shareholders' resolution or document (whether in person, by proxy or corporate representative);
(b) must not attend or vote at any of those meetings, exercise the votes attaching to Scheme Shares registered in their names, or sign any shareholders' resolutions, whether in person, by proxy or by corporate representative (other than pursuant to clause 8.4(a));
(c) must take all other actions in the capacity of a registered holder of Scheme Shares as Bidder AU reasonably directs; and
(d) acknowledges and agrees that in exercising the powers referred to in clause 8.4(a), Bidder AU and any director, officer, secretary or agent nominated by Bidder AU under clause 8.4(a) may act in the best interests of Bidder AU as the intended registered holder of the Scheme Shares.
8.5 Authority given to the Company
(a) Each Scheme Shareholder, without the need for any further act by the Scheme Shareholder:
(i) on the Effective Date, irrevocably appoints the Company and each of its directors, officers and secretaries (jointly and each of them severally) as its attorney and agent for the purpose of enforcing the Deed Poll against Bidder Holdco and Bidder AU, and the Company undertakes in favour of each Scheme Shareholder that it will enforce the Deed Poll against Bidder Holdco and Bidder AU on behalf of and as agent and attorney for each Scheme Shareholder; and
(ii) on the Implementation Date, irrevocably appoints the Company and each of its directors, officers and secretaries (jointly and each of them severally) as its attorney and agent for the purpose of executing any document or doing or taking any other act necessary, desirable or expedient to give effect to this Scheme and the transactions contemplated by it, including (without limitation):
(A) executing the Scheme Transfer; and
(B) executing and delivering any deed or document required by Bidder Holdco, that causes each Scheme Shareholder to become a shareholder of Bidder Holdco and to be bound by the certificate of incorporation and by-laws of Bidder Holdco, and the Company accepts each such appointment.
(b) The Company as attorney and agent of each Scheme Shareholder, may sub-delegate its functions, authorities or powers under this clause 8.5 to all or any of its directors, officers, secretaries or employees (jointly, severally or jointly and severally).
8.6 Instructions and elections
If not prohibited by law (and including where permitted or facilitated by relief granted by a Governmental Agency), all instructions, notifications or elections by a Scheme Shareholder to the Company that are binding or deemed binding between the Scheme Shareholder and the Company relating to the Company or Company Shares, including instructions, notifications or elections relating to:
(a) whether dividends are to be paid by cheque or into a specific bank account;
(b) payments of dividends on Company Shares; and
(c) notices or other communications from the Company (including by email),
will be deemed from the Implementation Date (except to the extent determined otherwise by Bidder Holdco in its sole discretion), by reason of this Scheme, to be made by the Scheme Shareholder to Bidder Holdco and to be a binding instruction, notification or election to, and accepted by, Bidder Holdco in respect of the New Bidder Holdco Shares issued to that Scheme Shareholder until that instruction, notification or election is revoked or amended in writing addressed to Bidder Holdco at its registry.
8.7 Binding effect of scheme
This Scheme binds the Company and all of the Scheme Shareholders (including those who did not attend the Scheme Meeting to vote on this Scheme, did not vote at the Scheme Meeting, or voted against this Scheme at the Scheme Meeting) and, to the extent of any inconsistency, overrides the constitution of the Company.
9. General
9.1 Appointment of Attorney
(a) The Company will execute all documents and do all acts and things necessary for the implementation of, and performance of, its obligations under this Scheme and the Shareholders consent to the Company doing all things necessary or incidental to the implementation of this Scheme.
(b) Each Scheme Shareholder, without the need for any further act, irrevocably appoints the Company and all of its directors, secretaries and officers (jointly and severally) as its attorney and agent for the purpose of executing any document necessary to give effect to this Scheme including a proper instrument of transfer of the Company Shares held by Scheme Shareholders for the purposes of section 1071B of the Corporations Act (which may be a master transfer of all the Company Shares held by Scheme Shareholders) and any instrument appointing Bidder AU as proxy or, where applicable, corporate representative of each Scheme Shareholder as contemplated by clause 3.6.
(c) This Scheme has effect despite any inconsistent provision in the Company's constitution.
9.2 Company and Scheme Shareholders Bound
This Scheme binds the Company and all Scheme Shareholders and will, for all purposes, have effect despite any provision in the constitution of the Company.
9.3 Further Assurances
The Company will execute all documents and do all acts and things necessary or expedient for the implementation of, and performance of its obligations under this Scheme.
9.4 Authority
Each of the Scheme Shareholders consent to the Company doing all things necessary or incidental to the implementation of this Scheme.
9.5 Communications
(a) Where a notice, transfer, transmission application, direction or other communication referred to in this Scheme is sent by post to the Company, it will not be deemed to have been received in the ordinary course of post or on a date other than the date (if any) on which it is actually received at the Company's registered office or at the Company Registry.
(b) The accidental omission to give notice of the Scheme Meeting or the non-receipt of such notice by a particular Company Shareholder will not, unless so ordered by the Court, invalidate the Scheme Meeting or the proceedings of the Scheme Meeting.
9.6 Alterations and Conditions
The Company may, with the consent of Bidder Holdco (which consent will not be unreasonably withheld or delayed), by its counsel consent on behalf of all persons concerned to any modifications or conditions which the Court thinks fit to impose in the course of considering this Scheme.
9.7 Stamp Duty
All stamp duty (if any) payable in connection with the transfer of the Company Shares to Bidder AU will be paid by Bidder Holdco or Bidder AU.
9.8 Governing Law
This Scheme is governed by the laws of Western Australia. The parties submit to the exclusive jurisdiction of the courts in Western Australia.
9.9 No liability when acting in good faith
Each Scheme Shareholder agrees that neither Company, Bidder Holdco, nor Bidder AU nor any director, officer, secretary or employee of any of those companies shall be liable for anything done or omitted to be done in the performance of this Scheme or the Deed Poll in good faith.
10. Definitions
10.1 Definitions
In this Scheme, except where the context otherwise requires:
AIM means the market of that name operated by the London Stock Exchange.
AIM Rules means the AIM Rules for Companies published by the London Stock Exchange.
ASIC means the Australian Securities and Investments Commission.
ASX means ASX Limited ACN 008 624 691 or the financial market operated by it (as the context requires).
ASX Listing Rules means the official listing rules of the ASX as from time to time amended or waived in their application to a party.
Bidder AU means EFR Australia Pty Ltd ACN 676 689 419.
Bidder Group means Bidder Holdco and its Subsidiaries, including Bidder AU.
Bidder Group Member means each body corporate in the Bidder Group.
Bidder Holdco means Energy Fuels Inc..
Bidder Holdco Share means a common share in the capital of Bidder Holdco.
Business Day means any day that is:
(a) a business day as defined in the ASX Listing Rules;
(c) a business day as defined in the AIM Rules; and
(b) a day, other than a Saturday or Sunday, that banks are open for business in Denver, Colorado, USA.
CHESS means the Clearing House Electronic Subregister System operated by ASX Settlement Pty Ltd and ASX Clear Pty Limited.
CHESS Holding has the meaning given in the Settlement Rules.
Company means Base Resources Limited ACN 125 546 910.
Company DIs means the depositary interests issued by the Depositary in respect of the Company Shares deposited with it.
Company Registry means Computershare Investor Services Pty Limited.
Company Shareholder means each person registered in the Register as a holder of the Company Shares.
Company Shares means fully paid ordinary shares in the Company.
Corporations Act means the Corporations Act 2001 (Cth).
Court means the Federal Court of Australia (commenced in the Perth registry) or any another court having jurisdiction under the Corporations Act, as determined by the Company.
Deed Poll means the deed poll dated [ ] made by Bidder Holdco and Bidder AU in favour of Scheme Shareholders, a copy of which is contained in Annexure [ ] of the Scheme Booklet.
Depositary means Computershare Investor Services PLC.
Effective, when used in relation to this Scheme, means the coming into effect, under section 411(10) of the Corporations Act, of the order of the Court made under section 411(4)(b) (and, if applicable, section 411(6)) of the Corporations Act in relation to this Scheme.
Effective Date means date on which this Scheme becomes Effective.
End Date means the date which is 8 months from the date of the Scheme Implementation Deed or such other later date as agreed in writing between the Company and Bidder Holdco before that date.
Governmental Agency has the meaning given in the Scheme Implementation Deed.
Implementation Date means the date that is 10 Business Days after the Record Date or such other date as the Company, Bidder Holdco and Bidder AU agree in writing (acting reasonably).
Ineligible Foreign Shareholder means a Scheme Shareholder whose address shown in the Register on the Record Date is a place outside:
1 Australia and its external territories;
2 Canada;
3 New Zealand;
4 the United Kingdom;
5 the United States;
6 the Cayman Islands (British Overseas Territory); and
7 such other jurisdictions agreed to in writing by the Company and Bidder Holdco,
unless Bidder Holdco (after consultation with the Company) determines that it is lawful and not unduly onerous or unduly impractical to issue that Scheme Shareholder with New Bidder Holdco Shares when the Scheme becomes Effective.
Issuer Sponsored Holding means has the meaning given in the Settlement Rules.
New Bidder Holdco Share means a fully paid Bidder Holdco Share to be issued to Scheme Shareholders as Scheme Consideration under the terms of the Scheme.
NYSE means the NYSE American (or any successor to the NYSE American).
Operating Rules means the official operating rules of the financial market operated by the ASX.
Record Date means 5.00 pm on the third Business Day following the Effective Date or such other date as the Company, Bidder AU and Bidder Holdco agree in writing (acting reasonably).
Register means the share register of the Company maintained in accordance with the Corporations Act.
Related Body Corporate has the meaning given to that term in the Corporations Act.
Relevant Bidder Holdco Shares has the meaning given to in clause 4.4(a)(i) of this Scheme.
Sale Agent means the nominee appointed under clause 4.5 of the Scheme Implementation Deed.
Sale Facility means the facility to be conducted in accordance with clause 4.4(a).
Scheme means this scheme of arrangement subject to any modifications or conditions made or required by the Court pursuant to section 411(6) of the Corporations Act and agreed or consented to by the Company or Bidder Holdco.
Scheme Booklet means the explanatory statement that is registered by ASIC under section 412(6) of the Corporations Act in relation to this Scheme.
Scheme Consideration means the consideration to be provided to each Scheme Shareholder by Bidder Holdco for the transfer to Bidder AU of each Scheme Share, being 0.0260 New Bidder Holdco Shares for each Company Share held by a Scheme Shareholder as at the Record Date.
Scheme Implementation Deed means the Scheme Implementation Deed between Bidder Holdco, Bidder AU and the Company dated 21 April 2024.
Scheme Meeting means the meeting of Company Shareholders ordered by the Court to be convened under subsection 411(1) of the Corporations Act to consider any vote on this Scheme and includes any meeting convened following any adjournment or postponement of that meeting.
Scheme Shareholders means the Company Shareholders as at the Record Date.
Scheme Shares means all Company Shares held by the Scheme Shareholders as at the Record Date.
Scheme Transfer for each Scheme Shareholder, means a duly completed and executed proper instrument of transfer of the Scheme Shares held by that Scheme Shareholder for the purposes of section 1071B of the Corporations Act, which will be represented by a master transfer of all Scheme Shares.
Second Court Date means the first day on which the Second Court Hearing is heard or, if the application is adjourned for any reason, means the date on which the adjourned application is heard.
Second Court Hearing means the hearing of the application made to the Court for an order pursuant to sections 411(4)(b) and 411(6) of the Corporations Act approving this Scheme.
Security Interest means any mortgage, charge, pledge, lien, assignment or other security interest or any other arrangement (including a right of set off or combination) entered into for the purpose of conferring a priority, including any security interest as defined in section 12 of the Personal Property and Securities Act 2012 (Cth).
Settlement Rules means the ASX Settlement Operating Rules, being the official operating rules of the settlement facility provided by ASX Settlement Pty Ltd.
Unclaimed Money Act means the Unclaimed Money Act 1990 (WA).
10.2 Interpretation
In this Scheme, unless the context otherwise requires:
(a) headings and bolding are for convenience and do not affect interpretation;
(b) the singular includes the plural and vice versa;
(c) the word person includes a body corporate, a partnership, a joint venture, an unincorporated body or association, or any Governmental Agency;
(d) a reference to a person includes a reference to the person's executors, administrators, successors, substitutes and assigns;
(e) words and phrases have the same meaning (if any) given to them in the Corporations Act;
(f) references to any legislation or regulations include any statutory modification of or substitution for such legislation or regulations;
(g) references to agreements or deeds are to agreements or deeds as amended from time to time;
(g) a reference to a clause, party, annexure, exhibit or schedule is a reference to a clause of, and a party, annexure, exhibit and schedule to, this Scheme and a reference to this Scheme includes any annexure, exhibit and schedule;
(i) the words including, for example or such as when introducing an example, do not limit the meaning of the words to which the example relates to that example or examples of a similar kind;
(j) a reference to a holder includes a joint holder;
(k) references to a $ or dollar is to United States currency (unless otherwise stated); and
(l) a reference to any time is a reference to Australian Western Standard Time.
Annexure B - Timetable
|
Date |
Event |
|
Late June/early July 2024 |
First Court Date |
|
Late June/early July 2024 |
Despatch Scheme Booklet to Company Shareholders |
|
Late July/early August 2024 |
Scheme Meeting |
|
Early/mid August 2024 |
Second Court Date |
|
mid August 2024 |
Effective Date |
|
mid August 2024 |
Special Dividend Record Date and Record Date |
|
late August 2024 |
Special Dividend Payment Date |
|
late August 2024 |
Implementation Date |
Note: This is an indicative timetable only and is subject to change, including following any regulatory consultation and as may be required by the Court.
Annexure C - Deed Poll
This deed poll is made on 2024
By Energy Fuels Inc.
225 Union Boulevard, Suite 600
Lakewood, Colorado 80228
United States
(Bidder Holdco)
and
EFR Australia Pty Ltd
ACN 676 689 419
Level 43, 600 Bourke Street
Melbourne, VIC, 3000
Australia
(Bidder AU)
IN FAVOUR OF Each holder of ordinary shares in
Base Resources Limited
ACN 125 546 910
Level 3, 46 Colin Street
West Perth, WA, 6005
Australia
as at the Record Date
(Scheme Shareholders)
Background
A. The Company, Bidder Holdco and Bidder AU have entered into the Scheme Implementation Deed.
B. Under the Scheme Implementation Deed, Bidder Holdco and Bidder Holdco have agreed, subject to the satisfaction or waiver of certain conditions, to do all things within its power necessary or desirable on its part to implement the Scheme, including providing the Scheme Consideration.
C. Bidder Holdco and Bidder AU are entering into this document for the purpose of covenanting in favour of Scheme Shareholders to:
(a) comply with all of its obligations under the Scheme Implementation Deed;
(b) perform the obligations attributed to Bidder Holdco and Bidder AU (as applicable) under the Scheme; and
(c) provide the Scheme Consideration in accordance with the Scheme.
Operative provisions
1. Interpretation
1.1 Definitions
The following definitions apply in this document.
Scheme Implementation Deed means the Scheme Implementation Deed dated 21 April 2024 between the Company and Bidder Holdco and Bidder AU.
Other capitalised words and phrases have the same meaning as given to them in the Scheme Implementation Deed.
1.2 Interpretation
In this deed poll, headings and bolding are for convenience only and do not affect its interpretation and, unless the context requires otherwise:
(a) words importing the singular include the plural and vice versa;
(b) a reference to any document (including the Scheme Implementation Deed and the Scheme) is to that document as varied, novated, ratified or replaced;
(c) a reference to a clause, party, annexure or schedule is a reference to a clause of, and a party, annexure and schedule to, this deed poll and a reference to this deed poll includes any annexure and schedule;
(d) a reference to a party to a document includes that party's successors and permitted assigns;
(e) no provision of this Deed will be construed adversely to a party solely on the ground that the party was responsible for the preparation of this deed poll or that provision;
(f) a reference to an agreement or consent by a person is to an agreement or consent in writing;
(g) the word includes in any form is not a word of limitation;
(g) a reference to $ or dollar is to United States currency (unless otherwise stated); and
(i) a reference to any time is a reference to Australian Western Standard Time.
1.3 Nature of this deed poll
Bidder Holdco and Bidder AU acknowledge:
(a) that this deed poll may be relied on and enforced by a Scheme Shareholder in accordance with its terms, even though the Scheme Shareholders are not party to it; and
(b) under the Scheme, each Scheme Shareholder irrevocably appoints the Company and each of its directors, officers and secretaries (jointly and each of them severally) as its agent and attorney to enforce this deed poll against Bidder Holdco and Bidder AU.
2. Conditions
2.1 Conditions precedent
The obligations of Bidder Holdco and Bidder AU under clause 3 are subject to the Scheme becoming Effective.
2.2 Termination
If the Scheme Implementation Deed is terminated in accordance with its terms or the Scheme has not become Effective on or before the End Date, the obligations of Bidder Holdco and Bidder AU under this deed poll will automatically terminate, unless Bidder Holdco and Bidder AU otherwise agree in writing.
2.3 Consequences of Termination
If this deed poll is terminated under clause 2.2 then, in addition and without prejudice to any other rights, powers or remedies available to it:
(a) Bidder Holdco and Bidder AU are released from their obligations to further perform this deed poll; and
(b) each Scheme Shareholder retains the rights it has against Bidder Holdco and Bidder AU in respect of any breach of this deed poll which occurs before it is terminated.
3. Consideration
3.1 Performance of Obligations Generally
Subject to clause 2, Bidder Holdco and Bidder AU must comply with their obligations under the Scheme and must do all things necessary or expedient on its part to implement the Scheme.
3.2 Scheme Consideration
Subject to clause 2, in consideration of the transfer to Bidder AU of each Company Share held by a Scheme Shareholder under the terms of the Scheme, Bidder Holdco undertakes in favour of each Scheme Shareholder to issue the Scheme Consideration to each Scheme Shareholder in accordance with the Scheme.
3.3 Shares to rank equally
Bidder Holdco covenants in favour of each Scheme Shareholder that the New Bidder Holdco Shares which are issued to each Scheme Shareholder in accordance with the Scheme will:
(a) on their issue rank equally in all respects with all other Bidder Holdco Shares on issue;
(b) on their issue be duly and validly issued and authorized in accordance with all applicable laws and Bidder Holdco's articles of incorporation, by-laws and other constituent documents;
(c) on their issue be entitled to participate in and receive any dividends or distribution of capital paid and any other entitlements accruing in respect of Bidder Holdco Shares on and from the Implementation Date;
(d) from the Business Day following the date this Scheme becomes Effective (or such later date as NYSE or TSX requires), be quoted and listed for trading on the NYSE and TSX; and
(e) on their issue be fully paid, non-assessable and free of any Security Interest or encumbrance.
4. Bidder representations and warranties
Bidder Holdco and Bidder AU each represent and warrant, in respect of itself, that:
(a) it has been incorporated or formed in accordance with the laws of its place of incorporation or formation and is a validly existing under those laws;
(b) it has the power to enter into and perform its obligations under this deed poll, to comply with its obligations under this deed poll, to carry out the transaction contemplated by this deed poll, and to exercise its rights under this deed poll in accordance with its terms;
(c) it has taken all necessary action to authorise entry into this deed poll and has taken or will take all necessary action to authorise the performance of this deed poll and to carry out the transactions contemplated by this deed poll;
(d) this deed poll is valid and binding on it and is enforceable in accordance with its terms;
(e) the execution and performance of this document and each transaction contemplated by it did not and will not conflict with or violate in any respect:
(i) any provision of its constitution or cause a limitation on its powers or the powers of its directors to be exceeded;
(ii) any writ, order or injunction, judgement, law, rule or regulation to which it is subject or by which it is bound; or
(iii) any Security Interest or other encumbrance binding on or applicable to it;
(f) it is not otherwise bound by any agreement that would prevent, restrain or restrict it from entering into or performing any of its obligations contained in this deed poll; and
(g) no Insolvency Event has occurred in relation to Bidder Holdco nor Bidder AU nor has any regulatory action of any nature of which Bidder Holdco or Bidder AU is aware been taken or threatened to be taken that would prevent or restrict Bidder Holdco's and Bidder AU's ability to fulfil its obligations under this deed poll.
5. Continuing obligations
This deed poll is irrevocable and remains in full force and effect until the earlier of:
(a) Bidder Holdco and Bidder AU have fully performed its obligations under this deed poll; or
(b) the earlier termination of this deed poll under clause 2.2.
6. Notices
6.1 Form
Any communications in connection with this deed poll must be:
(a) in writing;
(b) addressed to Bidder Holdco or Bidder AU at the address shown below and marked for the attention of the Company Secretary;
Bidder
Address: 225 Union Blvd., Suite 600
Lakewood Co., 80228, USA
Attention: Mark S. Chalmers, President and CEP
Email: [******************************]
with a copy to:
Address: Level 43, Bourke Place
600 Bourke Street
Narrm Country
Melbourne, VIC 3000, Australia
Attention of: John Mollard
Email: [******************************]
signed by the person making the communication or (on its behalf) by the solicitor for, or by any attorney, director, secretary, or authorised agent of that person.
6.2 Delivery
Communications under this deed poll must be:
(a) left at the address set out for referred to in clause 6.1(b) of this deed poll;
(b) sent by prepaid ordinary post (airmail if appropriate) to the address set out or referred to in clause 6.1(b) of this deed poll;
(c) sent by email to the email address set out or referred to in clause 6.1(b) of this deed poll; or
(d) given in any other way permitted by law.
They take effect from the time they are received unless a later time is specified in this clause 6.
6.3 Receipt - Postal
Communications sent by post are taken to be received three days after posting (or seven days after posting if sent to or from a place outside Australia).
6.4 Receipt - Email
Communications sent by email are taken to be received on sending (unless the sender's computer reports that the message has not been delivered).
6.5 Receipt - General
Despite clauses 6.3 and 6.4, communications are received after 5.00 pm in the place of receipt or on a non-Business Day are taken to be received at 9.00 am on the next Business Day.
7. Duty
Bidder Holdco or Bidder AU (as applicable) will:
(a) pay all duties and any related fines and penalties in respect of this deed poll, the performance of this deed poll and each transaction effected by or made under this deed poll; and
(b) indemnify each Scheme Shareholder against any liability arising from failure to comply with paragraph 7(a).
8. General
8.1 Exercise of Rights
If a Scheme Shareholder does not exercise a right of remedy fully or at a given time, it may still exercise it later.
8.2 Cumulative Rights
The rights, powers and remedies of Bidder Holdco, Bidder AU and each Scheme Shareholder under this deed poll are cumulative and do not exclude any other rights, powers or remedies provided by law independently of this deed poll.
8.3 Assignment
The rights and obligations of Bidder Holdco, Bidder AU and each Scheme Shareholder under this deed poll are personal and must not be assigned or otherwise dealt with at law or in equity.
8.4 Amendment
Bidder Holdco or Bidder AU must not vary a provision of this deed poll, or right created under it, unless:
(a) before the Second Court Date, the variation is agreed to in writing by the Company; or
(b) on or after the Second Court Date, the variation is agreed to in writing by the Company and is approved by the Court.
8.5 Waiver
Failure to exercise or enforce or a delay in exercising or enforcing or the partial exercise or enforcement of any right, power or remedy provided by law or under this Deed by any party will not in any way preclude, or operate as a waiver of, any exercise or enforcement, or further exercise or enforcement of that or any other rights, power or remedy provided by law or under this Deed.
8.6 Severability
If the whole or part of a provision of this deed poll is void, unenforceable or illegal in jurisdiction it is severed for that jurisdiction. The remainder of this deed poll has full force and effect and the validity or enforceability of that provision in any other jurisdiction is not effected. This clause 8.6 has no effect if the severance alters the basic nature of this deed poll or is contrary to public policy.
8.7 Further Action
Bidder Holdco and Bidder AU each will promptly do all things and execute and deliver all further documents required by law or reasonably requested by any other party to give effect to this deed poll.
8.8 Joint and several obligations
Bidder Holdco and Bidder AU are jointly and severally liable for each obligation imposed on both of them by the terms of this deed poll.
8.9 Governing Law and Jurisdiction
This deed poll is governed by the law in force in the State of Western Australia. Bidder Holdco and Bidder AU each irrevocably and unconditionally submits to the exclusive jurisdiction of the courts of the State of Western Australia and courts of appeal from them.
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Annexure D - Conditions Precedent Certificate
Base Resources Limited (Company), Energy Fuels Inc. (Bidder Holdco) and EFR Australia Pty Ltd (Bidder AU) certify, confirm and agree that each of the conditions precedent:
(a) in clause 3.1 (other than the condition in clause 3.1(e) relating to Court approval) of the scheme implementation deed dated 21 April 2024 between the Company, Bidder AU and Bidder Holdco (SID) has been satisfied or is hereby waived by the relevant party (or parties) to the SID in accordance with the terms of the SID; and
(b) in clause 2.1 of the scheme of arrangement between the Company and the relevant Company shareholders which appears in Annexure [insert date] of the Company's scheme booklet dated [insert date] has been satisfied.
This deed is governed by the laws of Western Australia, Australia.
This deed may be executed in any number of counterparts. All counterparts, taken together, constitute one instrument. Subject to applicable law, a counterpart may be signed electronically and may be in hard copy or electronic form.
Dated: [insert date]
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Certain portions of this exhibit have been redacted because the information is both (i) not material and (ii) the type
that the registrant customarily and actually treats as private or confidential. Redacted information has
been noted in this document with a placeholder identified by the mark "[***]".
Donald Mineral Sands and Rare Earths Project -
Mining Joint Venture Agreement
Dickson & Johnson Pty Ltd
Donald Mineral Sands Pty Limited
EFR Donald Ltd
Donald Project Pty Ltd
Astron Mineral Sands Pty Ltd
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Narrm Country Level 43 Bourke Place 600 Bourke Street Melbourne VIC 3000 Australia T +61 3 9620 2223 F +61 3 9194 8310 Ref 43059443 |
Contents
Donald Mineral Sands and Rare Earths Project -
Mining Joint Venture Agreement
Dated 4 June 2024 (the "Effective Date")
Parties
1. Dickson & Johnson Pty Ltd ACN 000 092 008 of Level 10, 224 Queen Street, Melbourne VIC 3000 (D&J).
2. Donald Mineral Sands Pty Limited ACN 087 469 707 of Level 10, 224 Queen Street, Melbourne VIC 3000 (DMS).
3. EFR Donald Ltd a corporation incorporated under the laws of Ontario, Canada (EFR).
4. Donald Project Pty Ltd ACN 674 664 629 of Level 10, 224 Queen Street, Melbourne VIC 3000 (JV Company).
5. Astron Mineral Sands Pty Ltd ACN 150 992 724 of Level 10, 224 Queen Street, Melbourne VIC 3000 (AMS).
Background
A. The Phase 1 Definitive Feasibility Study has been completed for the Donald Project and D&J has determined to advance evaluation of the project towards an FID for Phase 1.
B. D&J and EFR wish to establish and operate a joint venture through the JV Company in respect of the Donald Project.
C. The Joint Venturers and the JV Company have agreed to enter into this agreement to set out the terms on which (i) EFR will provide the Farm-in Funding to acquire up to a 49% interest in the JV Company and (ii) they will progress activities towards FID for Phase 1, implement Phase 1 and to then proceed to Phase 2, on the terms and conditions set out in this agreement.
D. D&J and EFR wish to set out in this agreement the terms that will govern their relationship as shareholders of the JV Company, and the terms on which the joint venture will be managed.
E. DMS is the current owner of the Tenements and other assets that will be transferred or licensed to the JV Company.
F. AMS will be the initial Manager of the Joint Venture and wishes to set out its rights and obligations in connection therewith, in addition to its rights and obligations as otherwise set out in the Transaction Documents.
Operative provisions
The parties agree in consideration of, among other things, the mutual promises contained in this agreement:
1. Definitions and interpretation
1.1 Definitions
Unless the context otherwise requires, the following expressions have the respective meanings in this agreement (including the Background):
2 Year Option Date has the meaning set out in clause 6.3(c).
Aboriginal Cultural Heritage means (as the context requires):
(a) 'Aboriginal cultural heritage' as defined in section 4(1) of the Aboriginal Heritage Act 2006 (Vic); or
(b) 'significant Aboriginal area' or 'significant Aboriginal object' as set out in the Aboriginal and Torres Strait Islander Heritage Protection Act 1984 (Cth).
ACICA has the meaning set out in clause 23.4.
Affiliate means any person which directly or indirectly Controls, is Controlled by, or is under common Control with, a party.
Agreed Interest Rate means the rate of interest which is the average bid rate for bills (as defined in the Bills of Exchange Act 1909 (Cth)) having a tenor of 90 days which is displayed on the page of the Reuters Monitor System designated 'BBSY' plus 5 per cent calculated on a daily basis and compounded monthly, or such other interest rate agreed by the parties.
Agreed Post MOU Expenditure means the actual cash expenditure of D&J and its Affiliates, appropriately evidenced, incurred in respect of the Donald Project from (and including) 28 December 2023 until the date of this agreement.
Annual Accounts has the meaning set out in clause 14.3(a).
Anticorruption Laws has the meaning set out in clause 7.13(a).
Approvals Period means the period of four months from the date of this agreement.
Approved Programme and Budget means a programme and budget relating to Joint Venture Activities for a particular period which has been approved or deemed to have been approved in accordance with clause 13.
ASNO means the Australian Safeguards and Non-Proliferation Office.
Asset Transfer Agreement means the agreement in the form as set out in Schedule 8.
Assignment means the sale, assignment, farm-in, farm-out, transfer, sublease or other similar dealing with, or creation of, an interest relating to the whole or any part of a Joint Venture Interest, but does not include the creation of an interest which is an Encumbrance, and Assign has a corresponding meaning.
Astron means Astron Corporation Limited ABRN 154 924 553, a Hong Kong incorporated company with its principal business address at Level 10, 224 Queen Street, Melbourne VIC 3000.
Astron Background Intellectual Property means all Intellectual Property that is owned, licensed, or controlled by Astron and its Affiliates as at the date of this agreement (including any rights in respect of its know-how, techniques and operating capability and test works), or that is otherwise developed, acquired, or licensed independent of the matters set out in this agreement and that Astron or its Affiliates makes available, contributes, brings to or uses in connection with this agreement (including in accordance with clause 7.5(a)).
ASX means ASX Limited (ACN 008 624 691), or its lawful successor.
Auditor means the auditor appointed in accordance with clause 14.6.
Authorisation is any consent, authorisation, registration, filing, lodgement, notification, agreement, certificate, commission, lease, licence, permit, approval or exemption from, by or with an Authority (including the Tenements).
Authority is any government department, local government council, government or statutory authority or any other person or entity under a Law which has a right to impose a requirement or whose consent is required with respect to Joint Venture Activities.
Board means the board of directors of the JV Company, which is also the management committee of the JV Company.
Breach Default Event means, in relation to a Joint Venturer, the happening of an Insolvency Event to that Joint Venturer or that Joint Venturer committing a material breach of any of its material obligations under this agreement (other than an Unpaid Monies Default Event), including where permitting the creation of an Encumbrance (other than a Permitted Encumbrance or an Encumbrance approved by the Joint Venturers under this agreement) over or attached to the Joint Venture Interest of that Joint Venturer. For purposes of clarity, the happening of any Exclusion Event or Prescribed Event itself will not constitute a Breach Default Event.
Business Day means a day that is not a Saturday, Sunday, public holiday or bank holiday in Melbourne, Australia and Denver, Colorado, USA.
Buy-Back Amount has the meaning set out in clause 16.3(d)(i).
Buy-Back Interest has the meaning set out in clause 16.3(b).
Buy-Back Joint Venturer has the meaning set out in clause 16.3(c).
Buy-Back Premium has the meaning set out in clause 16.3(d)(ii).
Buy-Out Completion Date has the meaning set out in clause 18.2(c).
Buy-Out Election has the meaning given in clause 17.6(a).
Called Sum means:
(a) subject to clauses 6.3 and 8.4, from the date of this agreement to the Farm-in Completion Date the funds agreed to be provided by EFR up to the aggregate amount of the Farm-in Funding, in accordance with the Pre-FID Budget, Additional Pre-FID Budget (if applicable) and Phase 1 Budget; and
(b) following the end of the Farm-in Period, the Percentage Share of funds required to be paid by a Joint Venturer in accordance with Approved Programmes and Budgets and otherwise in accordance with this agreement.
Capital Works means capital works and services, either associated with a Development described in a Definitive Feasibility Study or to further support, expand, suspend, Rehabilitate or Relinquish, Mining and Concentration, as approved by the Board.
Change of Control means, in relation to a Joint Venturer, if for any reason, a person who directly or indirectly has Control of the Joint Venturer as at the date of the agreement ceases to do so, or if a person obtains direct or indirect Control of the Joint Venturer after the date of the agreement provided that, without prejudice to the provisions of clause 17.5, there shall be no Change of Control where:
(a) the change is between persons who are Affiliates; or
(b) the shares of that Joint Venturer or any of its holding companies are listed by NYSE, TSX, ASX or another recognised stock exchange and such Joint Venturer undergoes a Change of Control by reason of an allotment, issue or transfer, or any other dealing in, those shares, including any takeover offer or scheme of arrangement or other acquisition of shares of that listed entity by a third party.
Changed Joint Venturer has the meaning set out in clause 15.7(a).
CHMP means Cultural Heritage Management Plan 11572 prepared by Landscape which lists DMS as sponsor, dated 29 January 2014 and approved on 14 February 2014.
Completion means completion of the steps set out in clause 5.1.
Completion Date means the date which is 3 Business Days after the date that the last of the Conditions Precedent has been satisfied or waived in accordance with this agreement, or such other date as agreed by D&J and EFR in writing.
Concentration means the concentration of HMC from the Mineral Resource using physical, non-chemical means up to and including producing Products, and includes any required crushing, screening, weighing, sampling, assaying, concentrating HMC, separating REEC from the remaining HMC (by flotation or other physical means), handling, storage and loading of the Products, but does not include Mining or Development.
Concentration Plant means all Capital Works, buildings, plant, facilities and other infrastructure established for Concentration, including the ore pad and associated crushing systems, separation systems, spirals, conveyors, screens, stockpiles, loading systems, flotation systems, offices, workshops and recovery areas.
Conditions Precedent means each of the conditions precedent set out in Schedule 1.
Confidential Information has the meaning set out in clause 22.1.
Constitution means the agreed form of constitution set out in Schedule 11.
Contract Limit means $1,000,000.
Control means in relation to any person, possession, directly or indirectly, of the power to direct or cause direction of management and policies of that person through ownership of voting securities, contract, voting trust or otherwise and Controlled has a corresponding meaning. For greater certainty, and without limitation, Control shall be deemed to exist if one person owns, directly or indirectly, through shareholdings or otherwise, at least 50% of the voting shares or other voting units of participation in another person.
Corporations Act means the Corporations Act 2001 (Cth).
D&J Actual Expenditure means any funding contributed by D&J pursuant to any Called Sums in accordance with this agreement, including any expenditure contributed during the Farm-In Period.
D&J Deemed Expenditure has the meaning set out in clause 20(b).
Data Room means the virtual data room created by Astron accessible at [***] and to which EFR has had access.
Data Room Index means the index of the Data Room initialled by the parties for the purposes of identification.
Deadlock has the meaning set out in clause 11.1(a).
Deemed Sale Offer means an offer by a Joint Venturer to sell all of its Joint Venture Interest to the other Joint Venturers, free from Encumbrances.
Default Event means a Breach Default Event or an Unpaid Monies Default Event.
Defaulting Joint Venturer means a Joint Venturer which it or its Affiliates has committed an Unpaid Monies Default Event or a Breach Default Event, which has not been remedied by the Joint Venturer or its Affiliates.
Definitive Feasibility Study means a study of the technical, commercial and economic feasibility of Development, Mining, Concentration and Rehabilitation in the Mining Area and producing Products prepared by or supported by relevant subject matter reports from one or more expert(s), which includes exploration, geological, engineering, environmental and other relevant data, capital and operating cost estimates, confirmation of the required permits and approvals (if applicable), and (if appropriate) marketing studies in sufficient detail to enable options for optimum Development, Mining, Concentration and Rehabilitation to be identified in reasonable detail, which study is of a standard suitable to be submitted to a financial institution as the basis for lending of funds for the development and operation of the Mining activites contemplated in the study and is capable of supporting a FID and that qualifies as a "definitive feasibility study" under JORC.
Development means the construction, supply, completion and commissioning of a commercial Mining and Concentration operation for extraction and concentration of Products, including the construction or supply of a Mining Plant and a Concentration Plant, an ore pad and associated crushing systems, conveyors, stockpiles, loading systems, utilities, vehicles, offices, workshops, and all other facilities, systems, plant, equipment and personnel required for the safe and efficient development, operation and rehabilitation of the Mine in accordance with the Mine Plans, but does not include Mining, Concentration or Rehabilitation.
Diluting Joint Venturer has the meaning set out in clause 20(a).
Director means a director appointed to the Board in accordance with this agreement.
Dispute has the meaning set out in clause 23.2(a).
Dispute Notice has the meaning set out in clause 23.2(a).
Dispute Resolution Process has the meaning set out in clause 23.1(b).
Donald Assets means each of the assets as described in the relevant Schedule to the Asset Transfer Agreement.
Donald Project means the Donald Rare Earth and Mineral Sands Project to be developed on the Mining Area.
Due Date means the date on which a payment is due under this agreement.
Due Diligence Materials means the documents contained in the Data Room on the date which is five Business Days prior to the date of this agreement as set out in the Data Room Index.
Dy means dysprosium.
Effective Date means the date of this agreement as first written above.
EFI means Energy Fuels Inc. an Ontario corporation with an address at 82 Richmond Street East, Suite 308 Toronto, Ontario, M5C 1P1, Canada.
EFI Common Shares means the common shares in the capital of EFI.
EFI Share Issue (Completion) means the issue of such number of EFI Common Shares equal to US$3.5 million (which for the purposes of this agreement is deemed to be equal to $5 million), divided by the volume weighted average trading price of the EFI Common Shares on the NYSE over the five NYSE trading days ending on the last trading day immediately prior to the date of issuance of the EFI Common Shares and as set out in the Share Sale Agreement.
EFI Share Issue (FID) means the issue of such number of EFI Common Shares equal to US$14 million (which for the purposes of this agreement is deemed to be equal to $20 million), divided by the volume weighted average trading price of the EFI Common Shares on the NYSE over the five NYSE trading days ending on the last trading day immediately prior to the date of issuance of the EFI Common Shares and as set out in the Share Sale Agreement, less the EFI Share Issue (Completion).
EFR Actual Expenditure means the amount of funding contributed by EFR through payment of the Exclusivity Extension Fee and the Pre-Commencement Funding and Called Sums in accordance with this agreement including the EFR Actual Farm-In Expenditure.
EFR Actual Farm-In Expenditure at any time means the amount of funding contributed up to that time by EFR through payment of the Exclusivity Extension Fee, the Pre-Commencement Funding and Called Sums in accordance with this agreement up to the amount of the Farm-In Funding, during the Farm-In Period.
Eligible Transferee means a person that:
(a) is not a Specified Foreign Party; and
(b) has sufficient technical and financial capabilities to fulfil the obligations of the transferring Joint Venturer under this agreement.
Emergency means a situation involving actual or reasonably apprehended substantial damage to or loss of Joint Venture Property or Joint Venture Activities, damage to the environment or serious injury to persons or loss of life.
Encumbrance means:
(a) any Security Interest; and
(b) any other security for the payment of money or performance of obligations including any security or preferential interest or arrangement of any kind, or any other right of or arrangement with any creditor to have its claims satisfied prior to other creditors with, or from the proceeds of, any asset including, without limitation, retention of title other than in the ordinary course of business and any deposit of money by way of security.
Enforcing Joint Venturer has the meaning set out in clause 18.1.
Environmental Approval means approval number 2005/237, titled Donald Mineral Sands Project, Western Victoria, granted to Astron Limited under section 133 of the Environment Protection and Biodiversity Conservation Act 1999 (Cth), dated 13 March 2009, as varied on 15 February 2016 and 5 January 2018.
EPBC Amendment Approval means the amendment to the Environmental Approval to include REEC production and receipt from the relevant Minister to the last commencement of the approved action under the Environmental Approval.
ERR means the Earth Resources Regulator, Department of the Victorian Government.
Exclusion Event means each of:
(a) the cancellation, suspension, material variation that materially adversely impacts production or the Donald Project, or non-renewal (or written notice from an Authority of its intention to do the same is received and any relevant remedial period has expired) of any Tenement, Environmental Approval or any issued REEC Permit;
(b) the failure of the issue of the Work Authority for MIN5532 or issue on terms that do not include the REEC production, or the failure to issue the REEC Permits on terms acceptable to EFR acting reasonably, or the failure to transfer the Environmental Approval to the JV Company or to obtain the EPBC Amendment Approval, in each case by the 2 Year Option Date (or such period as may be extended in accordance with clause 6.3(c));
(c) any Breach Default Event by AMS, DMS or D&J not remedied within the required period and any breach of a Fundamental Warranty (subject to clause 2 of Schedule 3) in each case which has a material adverse impact on the ability to undertake the Donald Project; or
(d) with respect to the period post Phase 1 FID only, the third-party project financier signed for the Phase 1 development suspending or terminating the funding arrangements in accordance with the terms of the facility other than due (or materially contributed to by) an act or omission of EFR or any of its Affiliates.
Exclusivity Extension Fee means $1,515,381 (being the proceeds received by Astron) on 5 March 2024 to extend the exclusivity period in the MOU from 1 March 2024 to 31 March 2024..
Expert means a person independent of the parties:
(a) who is suitably qualified and capable of making an expert determination under this agreement; and
(b) is appointed in accordance with clause 24.
Exploration means searching for, discovery and delineation of commercial Mineral Resources in the Mining Area and the evaluation of such resources, including prospecting, surface mapping, sampling, aerial mapping and reconnaissance, drilling, trenching and related field work, geophysical and geochemical testing, core sampling, assaying, exploration declines, test mining, analysis and evaluation of activities undertaken and results obtained, conducting preliminary feasibility studies, preparing feasibility study reports, and planning, supervising and administrating all activities undertaken, but does not include Development, Mining or Concentration.
Fair Market Value means in respect of any asset or property (or interest therein) of whatever kind, means the fair market value of such as agreed or determined under the process in clause 19.
Fairly Disclosed means in relation to a fact, matter of circumstances or information, disclosed in sufficient detail so as to enable a reasonable investor who is experienced in transactions of the nature of the transactions contemplated by this agreement to identify the nature of the fact, matter of circumstances or information.
Farm-in Completion Date means, subject to clauses 6.3 and 8.4, the date that EFR contributes to the JV Company in cleared funds the last Called Sum which in aggregate with all other Called Sums contributed by EFR is equal to the Farm-in Funding.
Farm-in Funding means the sum of A$183 million paid by EFR through the payment of the Exclusivity Extension Fee, which is acknowledged to have been paid as of the Effective Date, and through Called Sums in accordance with this agreement during the Farm-in Period.
Farm-in Period means the period that EFR sole funds the Joint Venture between the date of this agreement and the earlier of:
(a) the Farm-in Completion Date;
(b) the Pre-FID Option Decline Date;
(c) No FID Decision Date; and
(d) the Post-FID Failure to Fund Option Decline Date,
in accordance with the terms of this agreement.
FATA means the Foreign Takeover and Acquisition Act 1975 (Cth).
FEOC means "foreign entity of concern" as defined by 26 U.S.C. § 30D(d)(7) and section 40207(a)(5) of the Infrastructure Investment and Jobs Act, 42 U.S.C. § 18741(a)(5), and any regulations or other official guidance or interpretations promulgated thereunder, as amended from time to time.
FID means a final investment decision by the Joint Venturers to proceed to Development and Mining of an Ore Reserve located within the Tenements, made in accordance with clause 6.2.
FID Completion means completion of the steps set out in clause 6.5.
FID Completion Date means the date which is 3 Business Days after the Phase 1 FID decision has been made in accordance with clause 6.2, or such other date as agreed by D&J and EFR in writing.
Financial Year means the period of 12 months from 1 July and ending on 30 June, or as otherwise agreed by the parties.
FIRB means the Australian Foreign Investment Review Board.
FIRB Submission means the submission to FIRB to be prepared and made by EFR in relation to the proposed investment by EFR as set out in this agreement.
Fit and Proper Person means a person who is not disqualified from being the director of a company pursuant to section 206B of the Corporations Act and is not otherwise precluded by law from being lawfully appointed as a Director.
Force Majeure has the meaning set out in clause 25.1.
Force Majeure Event has the meaning set out in clause 25.2.
Fundamental Warranty means the Warranties set out in clauses 1(a), 1(b), 1(c), 1(e), 1(g), 1(h) and 1(m) of Schedule 3.
General Meetings means general meetings of the JV Company called in accordance with clause 10.
General Security Deed means a general security deed in the agreed form issued by the JV Company in favour of EFR.
Good Mining Practice means in relation to Exploration, Development, Mining and Concentration, as the case may be, those practices, methods and acts engaged in or approved by a person which, in the conduct of its undertaking, exercises that degree of skill, safe and efficient practice, diligence, prudence, and foresight reasonably and ordinarily exercised by skilled and experienced operators engaged in the international mining industry.
Guarantee means a guarantee in the form as set out in Schedule 6.
Guarantors means each of EFI and Astron, severally.
HMC means a concentrate of heavy minerals, containing approximately 90% heavy minerals of ilmenite, leucoxene, rutile, zircon, monazite and xenotime.
HMC Offtake Agreement has the meaning set out in clause 7.19(a).
HMC Offtake ROFR Notice has the meaning set out in clause 7.19(c).
Indicated Mineral Resource means that part of a Mineral Resource for which quantity, grade (or quality), densities, shape and physical characteristics are estimated with sufficient confidence to allow the application of Modifying Factors in sufficient detail to support mine planning and evaluation of the economic viability of the deposit, as defined in accordance with the JORC Code.
Indigenous Land Use Agreement has the meaning given in the Native Title Act.
Insolvency Event means the happening of any of the following events in relation to a Joint Venturer:
(a) it is unable to pay all its debts as and when they become due and payable or it has failed to comply with a statutory demand as provided in section 459F(1) of the Corporations Act;
(b) a resolution is validly passed to wind up the body corporate voluntarily or to appoint an administrator, liquidator or provisional liquidator;
(c) it, or any other person, makes an application to a court for its winding up, being an application that is not stayed, withdrawn or dismissed within 7 days;
(d) an order is made for it to be wound up;
(e) a receiver, receiver and manager, trustee, other controller or similar officer is appointed over the assets or undertaking of the Joint Venturer;
(f) it proposes to enter into or enters into any form of arrangement (formal or informal) with its creditors or any of them, including a deed of company arrangement;
(g) is unable to pay its debts as and when they fall due and payable or is presumed to be insolvent under applicable Law; or
(h) any proceedings under any applicable insolvency, reorganisation or similar laws in any relevant jurisdictions, or something, having substantially similar effect to any of the events specified above occur in any jurisdiction under or in respect of any existing or future Law.
Intellectual Property means any intellectual or industrial property rights, whether registered or unregistered, including:
(a) all patents, trademarks, copyright, designs, trade secrets, know-how and rights in confidential information (including the right to enforce an obligation to keep information confidential);
(b) all licences and other rights to use or grant the use of any of the foregoing or to be the registered proprietor or user of any of the foregoing;
(c) all computer programs, data and software, including source code; and
(d) all user manuals, technical information and other documentation relating to the use or operation of the computer programs and other relevant systems.
Jackson Deposit has the meaning set out in clause 7.6(a).
Jackson Deposit Development Proposal has the meaning set out in clause 7.6(d).
Joint Venture means the joint venture established under this agreement.
Joint Venture Activities means all Exploration, Development, Mining, Concentration and Rehabilitation activities involved in the acquisition, use, development, operation and maintenance of Joint Venture Property and all other activities, undertakings, and operations undertaken by the JV Company pursuant to this agreement.
Joint Venture Intellectual Property means all Intellectual Property developed by the JV Company pursuant to an Approved Programme and Budget in the course of Joint Venture Activities, excluding any Astron Background Intellectual Property.
Joint Venture Interest means the Shares held by a Joint Venturer.
Joint Venture Property means all rights, titles, interest, claims, benefits and all other property of whatever kind, real or personal, from time to time owned by the JV Company for the purposes of the Donald Project, and includes:
(a) the Donald Assets;
(b) the Tenements;
(c) the JV Company's bank accounts;
(d) the Joint Venture Intellectual Property;
(e) any facilities, equipment, materials, assets, capital works, plant, equipment, machinery, facilities, infrastructure, licences, permits, Authorisations and property held for use in the Mining or Concentration operations or activities within the Mining Area;
(f) the Products and associated minerals (if any) before delivery to customers; and
(g) all Mining Information.
Joint Venturer means a person which holds a Joint Venture Interest.
JORC Code means the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (2012 Edition) as adopted by the Australasian Joint Ore Reserves Committee (JORC), which is sponsored by the Australian mining industry and its professional organisations, for the purposes of compliance with the Listing Rules.
Law means any law, code, act, regulation, by-law, decree, rule, order, ordinance, proclamation (including any regulation and order thereunder), policy and guideline, or decision, ruling and judgment, of any authority having jurisdiction and which is binding on the relevant person or persons referred to in the context where such word is used.
Lease Agreement means the lease agreement in the form as set out in Schedule 10.
Leased Assets has the meaning set out in clause 5.4(a).
Listing Rules means the ASX Listing Rules or, to the extent that a party or an Affiliate is bound thereby, the listing rules of another recognised stock exchange.
Loss means losses, liabilities, claims, proceedings, actions, demands, damages, costs, charges, expenses or diminution in value, however arising, and whether present or future, fixed or unascertained, actual or contingent.
Management Activities has the meaning set out in the Management Agreement.
Management Agreement means the management agreement for the JV Company in the form of Schedule 5.
Manager means AMS or such other person or entity as may be engaged or appointed by the Board as Manager from time to time under this agreement.
Material Adverse Change means any matter, event or circumstance occurring after the date of this agreement, which has had or is reasonably expected to have, either individually or when aggregated with other matters, events or circumstances of a like kind that have occurred, an adverse effect of more than $40 million on the business, assets, liabilities, financial position, trading position, commercial performance, profitability or prospects of the JV Company taken as a whole, provided that notwithstanding the foregoing, a Material Adverse Change will include:
(a) a Prescribed Event or a Change of Control; and
(b) an Exclusion Event;
but does not include a change resulting from, or attributable to:
(c) changes in economic conditions (including financial market fluctuations, changes in interest rates, currency, exchange rates, commodities prices, securities or other market conditions);
(d) changes in applicable laws, regulations or accounting standards or practices (including tax laws or tax rates) or in the judicial or administrative interpretation of any law or any regulation, including its application or non-application;
(e) health pandemics including the COVID-19 pandemic;
(f) any action taken by D&J by written agreement or request or with the written consent of EFR;
(g) any change in general economic, political, business or financial conditions;
(h) any fact, matter or circumstance that has been Fairly Disclosed in accordance with Schedule 3;
(i) activism, acts of terrorism, riot, war (whether or not declared), armed hostilities or sabotage;
(j) any industrial action, strike, lockout or other labour difficulty; or
(k) the satisfaction or waiver of a Condition Precedent.
Measured Mineral Resource means that part of a Mineral Resource for which quantity, grade (or quality), densities, shape, and physical characteristics are estimated with confidence sufficient to allow the application of Modifying Factors to support detailed mine planning and final evaluation of the economic viability of the deposit, as defined in accordance with the JORC Code.
MIN5532 means Mining Licence 5532 issued pursuant to the Mining Act.
Mine is the mine, including that as described in a Definitive Feasibility Study, for the Mining and Concentration of Products that is the subject of a FID, and any other mine the Joint Venturers decide to develop in any part of the Mining Area.
Mine Closure means all or any action or conduct by the JV Company for the purpose of Relinquishing all of the Joint Venture Activities or Joint Venture Property under this agreement, which will form part of Rehabilitation.
Mine Plans means the long term life-of-mine plan, and shorter term mining plans of various terms, in each case as amended from time to time, which describe the sequencing of mining ore, overburden, non-HMC sands and waste from the Mine, and which incorporate the key parameters for mining, including mining sequence plans, landform designs, access and haulage roads, and which provide schedules for the volumes of ore, overburden, non-HMC sands and waste to be mined, stored, concentrated or disposed of, and the production of Products within the range and periods required by the Board from time to time.
Mine Work Plan or Work Plan means the primary document describing the permitted activities to be undertaken on a mining licence as more fully described in section 40 of the Mining Act.
Mineral Resource means a concentration or occurrence of solid material of economic interest in or on the earth's crust in such form, grade (or quality), and quantity that there are reasonable prospects for eventual economic extraction, as defined in accordance with the JORC Code.
Minimum Interest means a 10% Percentage Share of Joint Venture Interest.
Mining means all operations associated with the extraction of Ore Reserve from the Mining Area, and haulage and delivery to the Concentration Plant, including pre-stripping, and the removal and disposal of overburden, non-HMC sands and waste, but does not include Exploration, Development, Concentration or Rehabilitation.
Mining Act means the Mineral Resources (Sustainable Development) Act 1990 (Vic).
Mining Area means the whole of the area within the Tenements as depicted on the plan annexed as Exhibit A, and any other additional Tenements or areas of land applied for or acquired for the purposes of this agreement or otherwise acquired by the Joint Venture, which includes the Phase 1 Mining Area and the Phase 2 Mining Area.
Mining Information means all information, data and records relating to the Tenements including all surveys, maps, aerial photographs, electronically stored data, sketches, drawings, memoranda, drill cores, logs of those drill cores, geophysical, geological or drill maps, sampling and assay reports, notes, estimates of reserves and resources, and technical and economic studies in respect of the extraction of Mineral Resources from the Mining Area.
Mining Plant means all Capital Works, plant, equipment, machinery, facilities and other infrastructure required to carry out Mining operations.
Mining Regulation means the Mineral Resources (Sustainable Development) (Mineral Industries) Regulations 2019 (Vic).
Modifying Factor means considerations used to convert Mineral Resources to Ore Reserves, including but are not restricted to, mining, processing, metallurgical, infrastructure, economic, marketing, legal, environmental, social and governmental factors, as defined in accordance with the JORC Code.
MOU means the non-binding memorandum of understanding entered into by Astron and Energy Fuels (USA) Inc on 27 December 2023 in relation to the Donald Project.
Native Title has the same meaning as the expressions 'native title' or 'native title rights and interests' as defined in section 223(1) of the Native Title Act.
Native Title Act means the Native Title Act 1993 (Cth).
Native Title Claims means any claim, application or proceeding in respect of Native Title which is accepted by the National Native Title Tribunal or the Registrar thereof pursuant to the Native Title Act.
NdPr means neodymium/praseodymium.
NI 43-101 means Canadian National Instrument 43-101 - Standards of Disclosure for Mineral Projects, a rule developed by the Canadian Securities Administrators that establishes standards for all public disclosure an issuer makes of scientific and technical information concerning mineral projects, as amended from time-to-time.
No FID Decision Date has the meaning as set out in clause 6.3(d).
Nominated State means Victoria, Australia.
Non-Defaulting Joint Venturer means a Joint Venturer which is not a Defaulting Joint Venturer and is not an Affiliate of a Defaulting Joint Venturer.
Notice has the meaning set out in clause 27.1.
NYSE means The New York Stock Exchange, American stock exchange.
Offer has the meaning set out in clause 15.3(b).
Offtake Agreements means the REEC Offtake Agreement and the HMC Offtake Agreement.
Option Period has the meaning set out in clause 15.3(d).
Ore Reserve means is the economically mineable part of a Measured and/or Indicated Mineral Resource; it includes diluting materials and allowances for losses, which may occur when the material is mined or extracted and is defined by studies at pre-Feasibility or feasibility level as appropriate that include application of Modifying Factors; such studies demonstrate that, at the time of reporting, extraction could reasonably be justified, as defined in accordance with the JORC Code.
Percentage Share means the percentage of Joint Venture Interest which a Joint Venturer has in the JV Company in accordance with this agreement.
Permitted Encumbrances means:
(a) every lien or retention of title arrangement securing the unpaid balance of purchase money for property acquired in the ordinary course of business;
(b) any Encumbrance in relation to personal property (as defined in the PPSA and to which that Act applies) that is created or provided for by:
(i) a transfer of an Account or Chattel Paper;
(ii) a PPS Lease; or
(iii) a Commercial Consignment,
that is not a security interest within the meaning of section 12(1) of the PPSA; and
(c) the interest of the lessor or owner in respect of assets subject to a finance or capital lease, a hire-purchase agreement or a conditional sale agreement.
In this definition, Account, Chattel Paper, PPS Lease and Commercial Consignment have the meanings given in the PPSA.
Personnel means employees, representatives, agents, consultants, advisors, contractors, sub-contractors and anyone else on the Mining Area with the consent or authority of the JV Company.
Phase 1 has the meaning as set out in the Phase 1 Definitive Feasibility Study which includes Development of the MIN5532 Mining Area, with an estimated average ore throughput of 7,500,000 tonnes per year to produce approximately 200,000-250,000 tonnes per year of HMC and approximately 7,000-8,000 tonnes per year of REEC.
Phase 1 and 2 HMC Product has the meaning set out in clause 7.19(a).
Phase 1 Budget means the budget for Phase 1 prepared by the Manager and approved as part of making the Phase 1 FID decision in accordance with clause 6.2 and the terms of this agreement.
Phase 1 Definitive Feasibility Study means the definitive feasibility study for Phase 1 of the Donald Project announced by Astron on the ASX on 26 April 2023, supported by independent technical reports from Mineral Technologies, AMC Consultants, Snowden Optiro, ATC Williams, AECOM, TAM International, TZMI, Adamas Intelligence, Powercor, and ProjectWorx.
Phase 1 FID means the final investment decision by the Board made in accordance with clause 6.2(b) to proceed to Development and Mining of an Ore Reserve located within the Tenements for Phase 1.
Phase 1 FID Decision has the meaning set out in clause 6.2(b).
Phase 1 FID Proposal means a proposed FID put by the Manager to the JV Company under clause 6.2, or by EFR under clause 6.4.
Phase 1 Mining Area means the area shown for mining operations on MIN5532 as set out in Exhibit A labelled 'MIN5532 Phase 1 Mining Area'.
Phase 2 means the permitting and construction of a second heavy Concentration Plant or the expansion of the Phase 1 operations resulting in approximately doubling the mining tonnages from Phase 1, with an estimated average ore throughput of 15,000,000 tonnes per year to produce approximately 400,000-500,000 tonnes per year of HMC and approximately 13,000-14,000 tonnes per year of REEC for at least 40 years.
Phase 2 Budget means the budget for Phase 2 prepared by the Manager and approved as part of making the Phase 2 FID decision in accordance with clause 7.3 and the terms of this agreement.
Phase 2 Definitive Feasibility Study means the definitive feasibility study for Phase 2 of the Donald Project to be commissioned by the JV Company as described in clause 7.3(a).
Phase 2 DFS Budget means the budget for Phase 2 Definitive Feasibility Study as approved in accordance with the terms of this agreement.
Phase 2 FID means the final investment decision by the Board to proceed to Development and Mining of an Ore Reserve located within the Tenements for Phase 2.
Phase 2 Mining Area means the area shown for mining operations on RL2002 in the Phase 2 preliminary definitive feasibility study that was prepared by DMS in 2023 and as set out in Exhibit A labelled 'RL2002 Phase 2 Mining Area'.
Post FID Failure to Fund Option Date has the meaning as set out in clause 8.4(a).
Post-FID Failure to Fund Option Decline Date has the meaning as set out in clause 8.4(c).
PPSA means the Personal Property Securities Act 2009 (Cth) and any regulations made pursuant to it.
Pre-Commencement Funding means the funding provided by EFR in accordance with clause 3.1 via an interest free loan during the Pre-Commencement Period.
Pre-Commencement Period has the meaning as set out in clause 3.3.
Pre-FID Budget means the budget for the activities of the JV Company for the period between the date of this agreement and the Phase 1 FID as set out in Schedule 7.
Prescribed Event means if after the date of this agreement there is a change in shareholding, or any other matter that affects Control, of a Joint Venturer, or in any entity that Controls a Joint Venturer, and as a consequence of that change after the date of this agreement the Joint Venturer or the relevant Controlling entity becomes a Specified Foreign Party.
Prescribed Event Date has the meaning set out in clause 17.5(a)(ii).
Pre-FID Failure to Fund Option Date has the meaning as set out in clause 6.3(a).
Pre-FID Option Decline Date has the meaning as set out in clause 6.3(d).
Products mean all mineral or metallic Mineral Resources, HMC, REEC, other concentrates, metals saleable mineral products, and any other mineral resources, concentrated or derived from Mineral Resources extracted from the Mining Area under this agreement which are capable of being sold.
Proposed Programme and Budget means a work programme and budget for a given Year, or other relevant period, in relation to the conduct of Joint Venture Activities proposed in accordance with this agreement.
REEC means a mineral concentrate containing predominantly xenotime and monazite minerals.
REEC Offtake Agreement means the offtake agreement between EFR or its Affiliate and the JV Company for the sale of the REEC produced by the JV Company during Phase 1 and Phase 2.
REEC Permits means the issue in the name of the JV Company, or a transfer to the JV Company, of a current:
(a) Permission to Export by the Commonwealth of Australia for the REEC to the end user EFI or one or more of its Affiliates;
(b) approval from ASNO for possessing, transport and delivery of nuclear material of the nature of the REEC; and
(c) Radiation Licence for the mining and transport of radioactive materials for the purposes of the Radiation Act 2005 (Vic) which covers the REEC and HMC.
Rehabilitation means rehabilitation of land as required under Part 7 of the Mining Act, and Rehabilitate has an equivalent meaning.
Rehabilitation Obligations means the obligations of the JV Company under the Mining Act, all Tenements and Authorisations, and all applicable statutory and contractual obligations relating to Rehabilitation during and following completion of Joint Venture Activities.
Relevant Director has the meaning set out in clause 9.1(g).
Relinquish means to intentionally and permanently give up, surrender, leave and relinquish all, or substantially all, of the Joint Venture Activities or Joint Venture Property, whether by way of removal, placement on permanent care and maintenance or other basis, in all cases performed in accordance with all applicable Laws and Authorisations, and Relinquishing and Relinquishment have similar meanings.
RL2002 means retention licence 2002 issued under the Mining Act.
RL2003 means retention licence 2003 issued under the Mining Act.
ROFR Notice has the meaning set out in clause 7.6(b).
S-K 1300 means the SEC's mining disclosure framework effective as of 2021 set out in United States 17 Code of Federal Regulations Subparts 220.1300 and 229.601(b)(96), as amended from time-to-time.
SEC means the United States Securities and Exchange Commission.
Security Interest has the same meaning as in the PPSA.
Selling Joint Venturer has the meaning set out in clause 15.3(b).
Share Sale Agreement means the share sale agreement in the form as set out in Schedule 9.
Shareholder means a Joint Venturer who holds Shares.
Shares means ordinary shares of the JV Company.
Shutdown Costs means all costs associated with shutting down or suspending Joint Venture Activities within the Mining Area including the costs associated with satisfaction of Rehabilitation Obligations, and any redundancy or termination benefits or payments to any consultant or contractor or employee who is engaged by the JV Company in the conduct of Joint Venture Activities.
Sole Risk Area has the meaning given in clause 16.1(a).
Sole Risk Development has the meaning given in clause 16.2(a).
Sole Risk Development Joint Venturer has the meaning set out in clause 16.2(a).
Sole Risk Notice has the meaning set out in clause 16.1(c).
Sole Risk Operations Report has the meaning set out in clause 16.3(a).
Sole Risk Proposal has the meaning set out in clause 16.1(a).
Sole Risk Proposal Area has the meaning set out in clause 16.1(a).
Special Majority Vote means:
(a) in the case of a resolution of the Board, at least 66% of votes cast by Directors eligible to vote or pass the resolution; and
(b) in the case of a vote or resolution of Shareholders, a vote or resolution that has been passed by at least 66% of the votes cast by Shareholders entitled to vote on the resolution,
in each case excluding for this purpose the votes held by a Defaulting Joint Venturer or its appointed Director(s), as the case may be, if the Defaulting Joint Venturer has not remedied the relevant Breach Default Event within 30 days from the date of receipt of notice under clause 17.1(a) or in the case of an Unpaid Monies Default Event, within 30 days from the date of receipt of the notice under clause 17.2(b).
Specified Foreign Party means a FEOC or a Foreign Government Investor as defined in the FATA and its regulations that is a "covered nation" (as defined in the relevant Infrastructure Investment and Jobs Act and any regulations or other official guidance or interpretations promulgated thereunder, as amended from time to time).
Steady State First Production means 85% of name plate capacity of the Phase 1 production of the Concentration Plant for a period of three months.
Tax Conditions means the standard tax conditions included in items 1 to 6 of Part D (D: Examples of Tax Conditions) of Guidance Note 12 issued by FIRB.
Tb means terbium.
Technical Committee has the meaning set out in clause 4.1.
Tenement Transfer means the transfer of MIN5532 and RL2002 from DMS to the JV Company in accordance with the terms of the Asset Transfer Agreement.
Tenements means MIN5532, and RL2002 and any extension, successor permit or variation thereto, and includes any other lease, licence, claim or permit issued or to be issued under the Mining Act to the JV Company for the purposes of the Joint Venture which confers or may confer a right to prospect, explore for or mine any mineral in the Mining Area, or which may facilitate the enjoyment of such right, and includes any application for, and any extension, renewal, conversion or substitution of, any of those tenements.
Termination Event has the meaning set out in clause 21.1.
Third Party means a person not a party, or an Affiliate of a party, to this agreement.
Transaction Document means each of this agreement, the Share Sale Agreement, Asset Transfer Agreement, General Security Deed, REEC Offtake Agreement, Management Agreement and Lease Agreement, and the HMC Offtake Agreement if entered into by D&J or any of its Affiliates.
TSX means the Toronto Stock Exchange.
Ultimate Holding Company means in relation to a body corporate, the body corporate(s) or individual(s) that ultimately Controls such body corporate.
Unanimous Vote means:
(a) in the case of a resolution of the Board, a resolution voted in favour by all Directors eligible to vote or pass the resolution; and
(b) in the case of a vote or resolution of Shareholders, a resolution voted in favour by all Shareholders entitled to vote on the resolution,
in each case excluding for this purpose the votes held by a Defaulting Joint Venturer, in the case of a Breach Default Event if the Defaulting Joint Venturer has not remedied the relevant Breach Default Event within 30 days from the date of receipt of notice under clause 17.1(a).
Unpaid Monies means monies due for payment under this agreement and include monetary compensation and damages payable by a Defaulting Joint Venturer which are agreed, awarded or determined following an unremedied Breach Default Event for so long as it is unpaid, and interest and costs payable or reimbursable in accordance with this agreement.
Unpaid Monies Default Event is the failure by a Joint Venturer to pay Unpaid Monies on or before the Due Date (other than as a result of an Exclusion Event).
Updated Phase 1 Definitive Feasibility Study means an updated Phase 1 Definitive Feasibility Study, satisfactory to each party acting reasonably, that includes the results of the work performed under the Pre-FID Budget and that is prepared in accordance with JORC, NI 43-101 and S-K 1300 and meets the definition of "definitive feasibility study" in JORC and "feasibility study" in each of NI 43-101 and S-K 1300.
U.S. Securities Act has the meaning set out in clause 2.7(b)(i).
VHMC means a concentrate of heavy minerals, containing approximately 90% mineral sand minerals of ilmenite, leucoxene, rutile and zircon only. It does not include significant quantities of REEC or rare earth minerals.
Warranty means the warranties given by D&J and DMS set out in Schedule 3.
Water Agreement means the water headworks supply agreement (and deed of variation) originally dated 12 December 2011 between DMS and Grampians Wimmera Mallee Water Corporation.
Work Authority means the material Authorisations required for the commencement of the Development of the Donald Project including approval of the Work Plan.
Year means a year commencing on and including the first day of January and ending on and including the following thirty-first day of December.
1.2 Interpretation
In this agreement, unless the context otherwise requires:
(a) the singular includes the plural and vice-versa;
(b) headings do not affect the interpretation of this agreement;
(c) words importing a gender include any gender;
(d) a reference to a party means a party to this agreement as listed on page 1 of this agreement and includes that party's executors, administrators, substitutes, successors and permitted assigns;
(e) references to a part, clause, schedule, exhibit and annexure refers to a part, clause, schedule, exhibit or annexure of, in or to this agreement;
(f) a reference to this agreement includes all schedules, exhibits and annexures to this agreement;
(g) a reference to an agreement, deed, instrument or other document includes the same as amended, novated, supplemented, varied or replaced from time to time;
(h) a reference to a court is to an Australian court;
(i) a reference to any legislation or legislative provision includes any statutory modification or re-enactment of, or legislative provision substituted for, and any subordinated legislation issued under, that legislation or legislative provision (unless otherwise specified in this agreement);
(j) a reference to a day, month or year is relevantly to a calendar day, calendar month or calendar year;
(k) in relation to time:
(i) a reference to time is a reference to Melbourne, Australia time;
(ii) if a period of time is specified and dates from a given day or the day of an act or event, it is to be calculated exclusive of that day;
(iii) where the day on or by which any thing is required to be done is not a Business Day, that thing must be done on or by the next Business Day; and
(iv) where any thing is required to be done on or by a given day, it must be done before 5.00pm on that day;
(l) unless otherwise specified herein, a reference to $, AUD or dollars is to the lawful currency of the Commonwealth of Australia;
(m) the expressions 'including', 'includes' and 'include' have the meaning as if followed by 'without limitation';
(n) no rule of construction is to apply to the disadvantage of a party on the basis that that party drafted the whole or any part of this agreement;
(o) a party may exercise a right or remedy or give or refuse its consent in any way it consider appropriate (including by imposing conditions), unless this agreement expressly states otherwise; and
(p) where a word or phrase is defined, its other grammatical forms have a corresponding meaning.
2. Conditions precedent
2.1 Coming into effect of agreement
This agreement other than this clause 2 and clauses 1 (Definitions), 3 (Pre-Commencement Period), 4 (Technical Committee), 12 (Management), 13.5(a), 13.5(b) and 13.6 (Called Sums) (in respect of the Pre-Commencement Funding), 22 (Confidentiality), 27 (Notices) and 28 (Ancillary provisions) does not come into effect unless and until satisfaction, or waiver under clause 2.2 of the Conditions Precedent.
2.2 Satisfaction of Conditions Precedent
(a) Each party must use all reasonable endeavours (other than waiver) at its cost to ensure that the Conditions Precedent are satisfied as expeditiously as possible and within the Approvals Period, including providing all reasonable assistance to the other party as is necessary to satisfy such conditions.
(b) Each party must keep each other reasonably informed of its progress in obtaining satisfaction of any Condition Precedent it is required to obtain and any circumstance that may result in any of those conditions not being satisfied in accordance with its terms.
(c) Each party must give the other party notice as soon as reasonably possible and in any event within 3 Business Days after receiving notice of the conditions whether the conditions for the satisfaction of a Condition Precedent (if any) are acceptable, or unacceptable, to it (in each case, acting reasonably), provided that any Tax Conditions imposed by FIRB will be deemed to be acceptable. Only the party who has the benefit of the Condition Precedent as specified in Schedule 1 may waive that Condition Precedent.
2.3 Government Approvals and Asset Transfers
(a) To the extent that such applications have not been made prior to the date of this agreement, as soon as practical after the date of this agreement, and in any event no later than 15 Business Days thereafter:
(i) DMS will submit to the ERR the documents required for the Tenement Transfer;
(ii) DMS will submit the relevant documents for the EPBC Amendment Approval and for the transfer of the Environmental Approval to the JV Company; and
(iii) EFR will make the FIRB Submission.
2.4 Correspondence with Authorities
Without limiting the generality of clauses 2.2 and 2.3, the parties must:
(a) use all reasonable endeavours in good faith to diligently pursue the applications to the extent required to satisfy each Condition Precedent;
(b) in the case of D&J, AMS and DMS, provide to EFR drafts of all material applications, agreements, consents and releases to be entered into between D&J, AMS, DMS, the JV Company and/or any Affiliate of D&J and Third Parties, and not to execute the same until EFR has agreed to their terms and conditions (acting reasonably);
(c) before any submission or correspondence is sent to any Authority, consult with the other party in relation to, and provide the other party with a draft copy of, and the opportunity to comment on, such submission or correspondence as soon as practical;
(d) provide reasonable notice to the other party of all material communications between it and any Authority, for the purposes of satisfying the Conditions Precedent (including any letters, meetings and written submissions);
(e) respond to reasonable requests for information that are made by any Authority at the earliest practicable time;
(f) in the case of D&J, AMS and DMS, provide to EFR such reasonably necessary information and assistance as EFR may reasonably request in connection with its preparation and filing of the FIRB Submission; and
(g) in the case of clauses 2.4(b) and 2.4(c), EFR approval will be deemed to be given if no opposition or comments have been provided by EFR within 5 Business Days after the relevant document has been provided to EFR (or such alternative period as agreed by the parties (acting reasonably)).
2.5 Failure to satisfy Conditions Precedent
If all the Conditions Precedent are not satisfied, or otherwise waived, within the Approvals Period, D&J or EFR may (provided that that party has complied with its obligations under clauses 2.2, 2.3 and 2.4) terminate this agreement by not less than 2 Business Days' notice to the other, provided that if the Conditions Precedent related to the Tenement Transfer and/or the Water Agreement are the only Conditions Precedent not satisfied by the end of the Approvals Period then the Approvals Period will be automatically extended by the period of three months and if the relevant Condition(s) Precedent are not satisfied within such extended period then either D&J or EFR may terminate this agreement by notice to the others in accordance with this clause 2.5.
2.6 Termination of the agreement prior to the Completion Date
(a) If a party terminates this agreement in accordance with clauses 2.5, 2.8 or 3.2, then:
(i) each party is released from all further obligations to perform under this agreement (except those expressed to survive termination);
(ii) no party has any claim against another party as a consequence of the termination provided that each party retains the rights it has against the other in respect of any breach of this agreement occurring before termination;
(iii) EFR will have earned no interest in the Joint Venture Property and subject to clause 3.1(e), will have no right to reimbursement of any expenditures incurred by it in connection with the Donald Project; and
(iv) EFR will return to D&J all Mining Information it holds in relation to the Donald Project.
(b) For clarification, notwithstanding clause 2.6 or any other provision in this agreement, D&J will in all cases permanently retain the Exclusivity Extension Fee (and any accrued interest in respect of the Exclusivity Extension Fee) unless this agreement is terminated by EFR as a result of one or more Conditions Precedent not being satisfied due, in whole or in part, to a breach by D&J of its obligations under clauses 2.2, 2.3 or 2.4, in which case the Exclusivity Extension Fee (and any accrued interest in respect of the Exclusivity Extension Fee) shall be promptly returned to EFR.
2.7 EFI Common Shares
(a) The EFI Common Shares the subject of the Share Sale Agreement will contain such legends as are required by applicable law.
(b) From the date of this agreement (to the extent not already commenced), EFR will procure that EFI will:
(i) use commercially reasonable efforts to ensure that Rule 144 under the U.S. Securities Act of 1933, as amended (U.S. Securities Act) is available for the resale of the EFI Common Shares, and
(ii) reasonably cooperate with all requests to remove any restrictive legends, including by consenting to the removal, and instructing its transfer agent to remove, any such legends, on delivery to EFI and transfer agent an opinion reasonably satisfactory to EFI and the transfer agent, to the effect that the legend is no longer required under applicable requirements of the U.S. Securities Act or applicable state securities laws.
2.8 Material Adverse Change
(a) If, before Completion, D&J becomes aware that a Material Adverse Change has occurred, it must promptly give written notice to EFR of the full details of the Material Adverse Change and any circumstances which caused or contributed to the Material Adverse Change.
(b) If, before Completion, EFR becomes aware that a Material Adverse Change has occurred, it must promptly give written notice to D&J of the full details of the Material Adverse Change and any circumstances which caused or contributed to the Material Adverse Change.
(c) If a Material Adverse Change occurs before Completion, D&J will have a reasonable and adequate opportunity to investigate and cure (or procure the cure of) the Material Adverse Change (for clarity, D&J is not obliged to cure the Material Adverse Change, including by the payment of money).
(d) If the Material Adverse Change is cured (including by the payment of money) or otherwise ceases to exist on or before Completion, D&J must promptly give written notice to EFR.
(e) If a Material Adverse Change occurs before Completion and is not cured or has not otherwise ceased to exist on or before Completion, EFR may, until Completion, by written notice to D&J, terminate this agreement.
(f) For clarification, a Material Adverse Change will not constitute a breach of this agreement by D&J.
3. Pre-Commencement Period
3.1 Pre-Commencement Funding
(a) D&J will be responsible for the on-going development of the Donald Project between the date of this agreement and Completion in accordance with the Pre-FID Budget and the terms of this agreement.
(b) Subject to clause 3.1(e), and the delivery of a signed General Security Deed by the JV Company and a Guarantee signed by Astron in the form of Schedule 6 by Astron, unless otherwise agreed in writing by D&J and EFR, from the date of this agreement until Completion:
(i) EFR must commence funding in accordance with the Pre-FID Budget;
(ii) the Manager will issue Called Sums for up to the Pre-Commencement Funding in accordance with the Pre-FID Budget and process set out in clause 13.5(a) and 13.5(b) of this agreement and EFR will make payment of such amounts in accordance with clause 13.6; and
(iii) the Pre-Commencement Funding shall be secured by the General Security Deed;
(iv) the Pre-Commencement Funding amount shall be treated as an interest free loan to the JV Company and be converted to Shares at the Completion Date in accordance with clause 5.2.
(c) Subject to clause 3.1(e), from the date of this agreement, expenditure will be charged in accordance with the Management Agreement. If there is any disagreement between D&J and EFR as to whether an expense of AMS is in accordance with the Management Agreement it shall be referred to the Expert for determination in accordance with clause 24.
(d) D&J acknowledges and agrees that on the date of this agreement Astron will provide a parent company guarantee in the form of Schedule 6, guaranteeing AMS, DMS, D&J's obligations arising under this agreement and each of the Transaction Documents to which they are a party, and guaranteeing the JV Company's repayment obligations with respect to the Pre-Commencement Funding arising under this agreement until such Pre-Commencement loan is repaid or extinguished (as applicable).
(e) Where the agreement is terminated under clause 2.5 or 2.8, the JV Company shall repay the loan up to the Pre-Commencement Funding amount:
(i) over a period of 1 year interest free where the agreement is terminated due to the failure of D&J to satisfy the Condition Precedent in Items 1, 3 and 4 of Schedule 1, provided that the JV Company can elect (30 days prior to the expiry of the first term) to extend the repayment period for an additional 1 year during such time interest shall be payable on the unpaid balance at the Agreed Interest Rate;
(ii) over a period of 3 years interest free where the agreement is terminated due to the failure of EFR to satisfy the Condition Precedent in Item 2 of Schedule 1, provided that the JV Company can elect (30 days prior to the expiry of the first term) to extend the repayment period for an additional 1 year during such time interest shall be payable on the unpaid balance at the Agreed Interest Rate.
(f) At Completion, the loan provided under this clause 3.1 will be converted to Shares (as described in clause 3.1(b)(iv)) (and the loan will be deemed to be extinguished) and the Pre-Commencement Funding amount will be treated as EFR Actual Farm-In Expenditure.
3.2 Failure to meet Pre-Commencement Funding
Where EFR fails to provide any Pre-Commencement Funding in accordance with clause 3.1(b) by the relevant Due Date other than due to an Exclusion Event and does not remedy that failure within 30 days of a written request to remedy it:
(a) D&J is not obliged to complete in accordance with clause 5; and
(b) to the extent that Completion would have occurred but for EFR's failure to fund the Pre-Commencement Funding, then either D&J or EFR may terminate the agreement and without limiting D&J's other rights, the JV Company shall repay 70% of the loan of the Pre-Commencement Funding amount over a period of 3 years interest free, provided that the JV Company can elect to extend the repayment period for an additional 1 year during such time interest shall be payable on the unpaid balance at the Agreed Interest Rate.
3.3 Pre-Commencement covenants
During the period from the date of this agreement until the Completion Date (Pre-Commencement Period), D&J, DMS, AMS and the JV Company:
(a) must not dispose of or encumber (including the creation of any Encumbrance other than a Permitted Encumbrance) any of the Tenements in any circumstances, or any other Joint Venture Property other than in the ordinary course of business, provided that notwithstanding the foregoing D&J will obtain prior approval from the EFR with respect to the disposal of any Joint Venture Property:
(i) that is a Tenement;
(ii) in a single transaction having a value exceeding $1,000,000; or
(iii) is reasonably necessary to achieve the purposes of the Donald Joint Venture;
(b) must keep the Tenements in good standing in accordance with the requirements under the Mining Act (including satisfying works and expenditure obligations and paying all fees, rent, rates and other similar charges applicable under the Mining Act, Mining Regulation and any other applicable Law);
(c) if DMS or the JV Company is required to relinquish ground or surrender any other rights held under a Tenement, AMS, DMS, D&J, the JV Company and EFR must acting reasonably and in good faith first negotiate and agree the area of the Tenements to be surrendered to comply with the compulsory relinquishment provisions of the Mining Act. If the parties cannot agree on the area or location of the ground to be relinquished or surrendered within 30 days of the date one party notifies the other to commence negotiations, the matter must be treated as a Dispute, and the parties must comply with clause 23;
(d) must conduct all Exploration and Development on the Tenements in accordance with the Pre-FID Budget and Good Mining Practice;
(e) in conducting Exploration and Development and using the Donald Assets must comply with the Mining Act, the terms and conditions of the Tenements, all Authorisations and all other applicable Laws;
(f) must provide EFR with monthly reports including statements of expenditure and comparisons of such expenditures to the Pre-FID Budget and periodic summaries of data acquired including copies of all reports filed under the Mining Act on the nature and results of all operations carried out in or about the Tenements (including copies of all relevant geological, geochemical and geophysical data); and
(g) must give a monthly technical presentation to the Technical Committee on the outcome of Exploration and Development activities on the Tenements.
3.4 Pre-Commencement loan repayment upon Insolvency Event
(a) If at any time:
(i) during the Pre-Commencement Period; and
(ii) following termination of the agreement under clauses 2.5, 2.8 or 3.2(b), that the Pre-Commencement Funding loan amount remains outstanding,
an Insolvency Event occurs in respect of D&J or the JV Company, EFR may at any time after its occurrence by notice to D&J and the JV Company declare that the Pre-Commencement Funding loan amount and any interest that is payable (if applicable) (Due Amount) is immediately due and payable.
(b) The JV Company must immediately repay the Due Amount on receipt of a notice under clause 3.4(a).
4. Technical Committee
4.1 Establishment of Technical Committee
With effect from the date of this agreement, D&J and EFR will establish a technical committee (Technical Committee) consisting of four representatives, of which two representatives shall be appointed by D&J and two representatives shall be appointed by EFR. Appointments of representatives on the Technical Committee may be made or changed by the appointing party at any time by notice to the other party.
4.2 Roles and functions
(a) Subject to the authority of the Board and the other provisions of this agreement, the Technical Committee will have the role and function described in clauses 4.2(b) to 4.2(f) below.
(b) The Manager may consult with the Technical Committee on technical items in relation to:
(i) amendments to and conditions of issue of the Work Authority for MIN5532;
(ii) proposed Programmes and Budgets;
(iii) material permit or license or Environmental Approval applications or applications for material amendments thereto;
(iv) applications for REEC Permits and any material amendments thereto;
(v) proposed material changes to the Phase 1 Definitive Feasibility Study or in relation to all matters in relation to the preparation of the Phase 2 Definitive Study;
(vi) the development of and any proposed material changes to Mine Work Plans, the Phase 1 Budget or Phase 2 Budget;
(vii) material technical matters or technical changes relating to: Capital Works; Development activities; Exploration activities; Joint Venture Intellectual Property matters; Rehabilitation activities; or Shutdown Costs;
(viii) the evaluation and acquisition of equipment relating to Exploration, Development, Mining, or Concentration having a value in excess of $1,000,000; and
(ix) any significant and material new or novel matter of a technical nature.
(c) The Manager will provide to the Technical Committee the scope of the design and construction contracts for the Concentration Plants and other facilities for Phase 1 and Phase 2, including any material amendments or expansions thereto.
(d) The Manager will consult with the Technical Committee in relation to the Product concentrate specifications.
(e) The Technical Committee, D&J and EFR through their representatives on the Technical Committee shall make reasonable efforts to reach mutual agreement on all matters put before the Technical Committee by the Manager and provide feedback to the Manager in a timely manner.
(f) The Technical Committee is an advisory body only. Its representatives shall not be considered managers under the Mining Act. The Manager will make decisions in accordance with the Management Agreement and the Manager may (but is not obliged to) take into consideration any advice and input from the Technical Committee. Each member of the Technical Committee may invite a reasonable number of other persons to participate in Technical Committee meetings from time to time based on the need for subject matter experts to discuss specific technical matters.
4.3 Meetings of the Technical Committee
(a) Technical Committee meetings shall be held monthly during the first 12 months from the date of this agreement, after which time the meeting frequency will be as set and varied from time to time by Special Majority Vote of the Board, at such times and at such place as the Technical Committee shall determine.
(b) In addition to regularly scheduled meetings, the Manager or the Board or in the case of an emergency only, a representative of the Technical Committee, may call a special meeting of the Technical Committee upon 48 hours' notice. In case of emergency, reasonable notice of a special meeting shall suffice.
(c) Each notice of a meeting shall include an agenda or statement of the purpose of the meeting prepared by the Manager in the case of a regular meeting, or by the Manager or representative calling the meeting in the case of a special meeting, but any matters may be considered at the meeting. Meetings may be held in person, by means of conference telephone or web-based audio or video call.
(d) The Manager shall prepare minutes of all meetings and shall distribute copies of such minutes to the Technical Committee representatives within 21 days after the meeting.
4.4 Term and composition of the Technical Committee
(a) For the purpose of clarification, the Technical Committee will continue after Completion with the abovementioned responsibilities provided that:
(i) where the Percentage Share of a Joint Venturer is less than 25%, the Joint Venturer will only be entitled to appoint 1 representative to the Technical Committee; and
(ii) where the Percentage Share of a Joint Venturer is less than 10% the Joint Venturer will not be entitled to participate in the Technical Committee.
(b) Notwithstanding the above, in the period between the date of this agreement until the earlier of the Pre-FID Failure to Fund Option Date, Pre-FID Option Decline Date, No FID Decision Date, the Post-FID Failure to Fund Option Date and the Farm-in Completion Date, EFR will be entitled to appoint two representatives to the Technical Committee.
5. Completion
5.1 Completion
On the Completion Date:
(a) Subject to D&J complying with its obligations under clause 5.1(b) and the JV Company complying with its obligations under clause 5.1(c)(ii), EFR shall complete (or procure that its Affiliates complete) the EFI Share Issue (Completion) in accordance with the terms of the Share Sale Agreement;
(b) Subject to EFR complying with its obligations under clause 5.1(a) and 5.1(c)(i), D&J will (or procure that its Affiliates):
(i) the execution and delivery of the Asset Transfer Agreement and Lease Agreement, if not already signed and delivered prior to Completion, and provide a copy to EFR;
(ii) transfer the Donald Assets to the JV Company in accordance with the terms of the Asset Transfer Agreement (to the extent not already transferred);
(iii) transfer the Tenements to the JV Company in accordance with the terms of Asset Transfer Agreement (to the extent not already transferred); and
(iv) transfer to EFR the number of Shares as set out in clause 3.3(a) of the Share Sale Agreement;
(c) On or prior to the Completion Date:
(i) EFR or its Affiliate will execute and deliver to the JV Company the REEC Offtake Agreement; and
(ii) the JV Company will execute and deliver to EFR the REEC Offtake Agreement, and provide a copy to D&J of the fully executed agreement;
(d) The loan under clause 3.1(b) being the Pre-Commencement Funding amount, together with the Exclusivity Extension Fee, will be treated as EFR Actual Farm-In Expenditure; and
(e) EFR and D&J will procure that each of the Guarantors enter into the Guarantees and that those Guarantees come into force (to the extent not already provided).
5.2 Issue of Shares
From Completion, EFR will hold the Joint Venture Interest as calculated under clause 8.1 and the parties will immediately hold a Board meeting of the JV Company to approve:
(a) the issue of fully paid Shares equal to the Joint Venture Interest calculated under clause 8.1, if not already issued at that time;
(b) update the register of members of the JV Company to reflect that allocation, if not already updated at that time; and
(c) issue a share certificate in the name of EFR for those Shares, if not already issued at that time;
and provide a copy of the updated register of members and the share certificate to EFR.
5.3 Constitution
From the Completion Date, the JV Company agrees to be bound by the Constitution and the parties will pass the requisite board and shareholder resolutions to adopt the same by the JV Company.
5.4 Lease of assets and water rights
(a) All other assets that are owned by Astron or an Affiliate, director, officer or shareholder of Astron that are associated with or required for the development and operation of the Donald Project not included in the Asset Transfer Agreement and as set out in the schedule to the Lease Agreement (including land, buildings, structures, utilities and other relevant assets) (Leased Assets) shall be leased to the JV Company for the life of the Donald Project at no cost other than the pass through of operating costs that would be required to be paid directly by the JV Company if such assets were owned by the JV Company, in accordance with and subject to the terms of the Lease Agreement.
(b) For the avoidance of doubt nothing in clause 5.4(a) or this agreement, restricts, and Astron and its Affiliates will be permitted to deal with its other land or assets that are not Leased Assets as it sees fit.
(c) Astron and its Affiliates are permitted to use any excess water rights owned by the JV Company which are not required by the JV Company for Phase 1 or Phase 2 at cost, provided that they are only used in a manner that does not interfere with the JV Company's operations or planned operations.
5.5 Stamp duty and taxes
D&J will be liable for all stamp duty and taxes associated with the transfer of the Donald Assets, Environmental Approval and the Tenements into the JV Company.
5.6 Notice to complete
If Completion does not occur in accordance with this clause 5 due to a failure of D&J or EFR (Defaulting Party) to satisfy its obligations under clause 5.1 then the other party (Notifying Party) may give the Defaulting Party a notice requiring the Defaulting Party to satisfy those obligations within 10 Business Days. If the Defaulting Party fails to satisfy those obligations within those 10 Business Days the Notifying Party may, without limitation to any other rights it may have, terminate this agreement by giving written notice to the Defaulting Party.
5.7 Completion simultaneous
(a) Subject to clause 5.7(b), the actions to take place as contemplated by clause 5.1 are interdependent and must take place, as nearly as possible, simultaneously.
(b) EFR may, in its sole discretion, waive any or all of the actions that D&J or its Affiliates is required to perform under clause 5.1 and D&J may, in its sole discretion, waive any or all of the actions that EFR or its Affiliates is required to perform under clause 5.1.
6. Phase 1 FID
6.1 Pre-FID Budget funding and activities
(a) From Completion, EFR will continue to sole fund all of the Pre-FID Budget as part of the Farm-in Funding and the Manager must carry out the Pre-FID Budget activities, including preparation of the Updated Phase 1 Definitive Feasibility Study, and prepare and provide to the Board the Phase 1 FID Proposal for determination in accordance with the timeline set out in the Pre-FID Budget.
(b) If the Phase 1 FID has not occurred after expenditure of the amounts provided for under the Pre-FID Budget, further budget(s) will be prepared for Unanimous Vote by EFR and D&J acting reasonably for the period from the date that the Pre-FID Budget is expended and FID, which must at a minimum contain minimum expenditure to keep the Tenements in good standing, meet the requirements of any Authorisations, maintain the Joint Venture Property in good condition (including maintaining any plant and equipment in safe and operable condition) and ensure compliance with safety and environmental requirements (Additional Pre-FID Budget). EFR must agree to and will fund the minimum Additional Pre-FID Budget as part of the Farm-in Funding. For the purpose of clarification, the provisions of clause 12 do not apply to the Additional Pre-FID Budget.
6.2 Phase 1 FID decision
(a) Upon presentation to the Board of the Phase 1 FID Proposal, the JV Company must in accordance with clause 10, convene a meeting of the Joint Venturers and vote on the Phase 1 FID Proposal.
(b) D&J and EFR agree that they will make a decision to proceed with Phase 1 FID (Phase 1 FID Decision) unless it is not commercially reasonable to proceed for one or both parties acting reasonably taking into consideration (among other matters):
(i) the Phase 1 FID Proposal which includes an evaluation of the economics of Phase 1 of the Donald Project taking into account the conclusions and recommendations in the Updated Phase 1 Definitive Feasibility Study;
(ii) the development plan and budget for Phase 1;
(iii) external financing for Phase 1;
(iv) cash-flow forecasts for both Joint Venturers (including, without limitation, under suitable downstream offtake agreements for REEC and HMC); and
(v) the Donald Project is fully permitted for Mining, processing, transport and export of REEC and HMC.
6.3 Pre-Phase 1 FID buy-out options
(a) During the Farm-in Period prior to Phase 1 FID, if EFR fails to fund the Pre-FID Budget or Additional Pre-FID Budget other than due to an Exclusion Event and such Unpaid Monies Default Event is not remedied within 30 days (Pre-FID Failure to Fund Option Date) D&J may elect by written notice to EFR to purchase EFR's Joint Venture Interest for the sole consideration equal to the lesser of:
(i) 70% of the dollar amount of the EFR Actual Farm-In Expenditure at the Pre-FID Failure to Fund Option Date; and
(ii) the Fair Market Value of EFR's Joint Venture Interest at the Pre-FID Failure to Fund Option Date,
within a period of 90 days from the Pre-FID Failure to Fund Option Date. During the 90-day period from the Pre-FID Failure to Fund Option Date EFR will not be deemed in default of this agreement in respect of such Unpaid Monies Default Event and the provisions relating to default, including clause 17, will be suspended and not apply. An election by D&J to exercise its rights under clause 6.3(a) will be D&J's sole remedy for a failure by EFR to fund the Pre-FID Budget or Additional Pre-FID Budget and upon such election the REEC Offtake Agreement will terminate (or not come into effect) in accordance with its terms. Where D&J do not exercise its rights under clause 6.3(a) nothing in this clause 6.3(a) will limit D&J rights.
(b) Subject to clause 6.4, in the event that no FID for Phase 1 has occurred within 2 years of the Completion Date as may be extended in the circumstances described in paragraph (c) below (2 Year Option Date), and as at the 2 Year Option Date D&J has voted in favour of and EFR has voted against the Phase 1 FID Proposal then before the Board, and if the reasonable reasons for EFR withholding approval cannot be addressed or have not been able to be addressed within 12 months of the 2 Year Option Date (Negotiation Period), D&J may as its sole remedy elect by written notice to EFR to purchase EFR's Joint Venture Interest for the sole consideration equal to the Fair Market Value of EFR's Joint Venture Interest within a period of 90 days from the end of the Negotiation Period and upon such election the REEC Offtake Agreement will terminate (or not come into effect) in accordance with its terms.
(c) If a FID for Phase 1 has not occurred within 2 years of the Completion Date because of any matter set out in paragraphs (a) and (b) of the definition of Exclusion Event including if the Donald Project is not fully permitted for mining, processing, transport and export of REEC and HMC, then the 2 Year Option Date shall be extended until such date (not to exceed three years from the Completion Date unless all Joint Venturers agree otherwise) as such Work Authority and all such required approvals and permits are issued.
(d) Subject to clause 6.4, if (i) D&J does not elect within the 90 days from the Pre-FID Failure to Fund Option Date or where clause 6.3(b) applies from the end of the Negotiation Period (as may be extended in the circumstances described above) to purchase EFR's Joint Venture Interest (in each case the date of the non-election or the end of the 90 day period, whichever is the earlier, being the Pre-FID Option Decline Date) or (ii) where clause 6.3(a) and clause 6.3(b) do not apply, if there has been no Phase 1 FID Decision by the date that is 12 months after the 2 Year Option Date as may be extended by paragraph (c) above (No FID Decision Date) then from the Pre-FID Option Decline Date or No FID Decision Date (as applicable) (without prejudice to D&J's rights in respect of a failure to fund with respect to clause 6.3(a)):
(i) the Farm-In Period will end;
(ii) EFR will hold the Joint Venture Interest as calculated under clause 8.1 and the parties will immediately hold a Board meeting of the JV Company to approve:
(A) the issue of fully paid Shares equal to the Joint Venture Interest calculated under clause 8.1, if not already issued at that time;
(B) update the register of members of the JV Company to reflect that allocation, if not already updated at that time;
(C) issue a share certificate in the name of EFR for those Shares, if not already issued at that time; and
(iii) as from the Pre-FID Option Decline Date or No FID Decision Date, as the case may be, all funding for the JV Company will be pro rata in D&J and EFR's Percentage Share (subject to clause 7.8).
(e) If D&J does elect within the 90 days from the Pre-FID Failure to Fund Option Date or from the end of the Negotiation Period (as applicable) to purchase EFR's Joint Venture Interest then the parties will proceed with the sale and transfer of EFR's Joint Venture Interest in accordance with clauses 18.3 to 18.5 (the Buy-Out Completion Date being the later of 30 Business Days from the date that D&J elects to exercise the option to purchase EFR's Joint Venture Interest and the determination by the Expert of the Fair Market Value).
6.4 EFR's right to proceed with Phase 1 FID
(a) If a Phase 1 FID Proposal (which for clarification is fully funded and includes funding of the full Farm-In Funding amount (as further described below)) has been presented in accordance with clause 6.2 and EFR has voted in favour of the Phase 1 FID Proposal and D&J has voted against the Phase 1 FID Proposal, and the reasonable reasons for D&J withholding approval cannot be addressed or have not been able to be addressed within 12 months of the vote on such Phase 1 FID Proposal, or if no Phase 1 FID Proposal has been presented within 2 years of the Completion Date, EFR shall have the right (but not the obligation) at any time up to the 2 Year Option Date (as may be extended in clause 6.3(c) above), provided D&J has not elected to purchase EFR's Joint Venture Interest in accordance with clause 6.3(a) or EFR has not ceased the Farm-in Funding, to require the Manager to make a Phase 1 FID Proposal on reasonable terms proposed by EFR and the Phase 1 FID decision will be deemed approved on behalf of both Joint Venturers provided that in relation to such EFR proposed Phase 1 FID Proposal:
(i) EFR or the Manager has presented to the JV Company a reasonable development plan and budget for Phase 1 FID taking into account the conclusions and recommendations in the Updated Phase 1 Definitive Feasibility Study (and any necessary update of that study);
(ii) any external financing (which may not include equity or royalty financing by the JV Company unless otherwise unanimously agreed between EFR and D&J) raised or to be raised in connection with the Phase 1 development in order to fully fund the Phase 1 proposal shall not require any equity contribution by D&J and shall be non-recourse to D&J and its Affiliates and on reasonable terms and rates (and will not transfer economic ownership outside of the Joint Venture);
(iii) EFR agrees to fund the Farm-In Funding amount (less amounts already funded) and such Farm-In Funding amount will be expended in advance of external financing;
(iv) a Work Authority (and updated ESS) has been issued for Phase 1 in accordance with the applications submitted by DMS in October 2023 (as updated with the consent of EFR), which includes REEC, and the Donald Project is fully permitted for mining, processing, transport and export of REEC and HMC;
(v) implementation of the Phase 1 FID Proposal will not cause a material breach of any law or contract;
(vi) the Offtake Agreements have been agreed and entered into, or if the HMC Offtake Agreement has not been entered into, EFR has identified one or more third parties that have agreed to enter into one or more HMC Offtake Agreements for the purchase of 100% of the Phase 1 and Phase 2 HMC production from the Donald Project at a price per tonne of HMC based on an industry standard pricing formula and otherwise on reasonable commercial terms and conditions and consistent with Schedule 4; and
(vii) all other conditions reasonably and usually required for a final investment decision have been achieved.
(b) In the event that the Phase 1 FID decision is deemed to be approved by the Joint Venturers in accordance with clause 6.4(a), then:
(i) for all purposes of this agreement, the Joint Venturers shall be deemed to have made the FID decision for Phase 1 by Unanimous Vote of the Joint Venturers, acting reasonably, as contemplated by clause 6.2(b);
(ii) the budget referred to in clause 6.4(a)(i) shall be the Phase 1 Budget;
(iii) all other terms and provisions of this agreement shall continue in effect, unamended.
6.5 Phase 1 FID Completion
(a) On the FID Completion Date:
(b) EFR shall complete (or procure that its Affiliates complete) the EFI Share Issue (FID) in accordance with the terms of clause 5.2 of the Share Sale Agreement; and
(c) the JV Company shall issue to EFR the relevant number of fully paid Shares as set out in clause 8.1, if not already issued at that time.
7. Joint Venture objectives and relationships
7.1 Objects and scope of the Joint Venture
Subject to Completion, D&J and EFR wish to establish and undertake a joint venture through the JV Company with the objectives of undertaking the Joint Venture Activities within the Mining Area in particular, to:
(a) implement the Pre-FID Budget;
(b) evaluate and make an FID for Phase 1;
(c) design, and assuming a positive Phase 1 FID, construct, develop and operate the Phase 1 mine and associated works and services in accordance with the approved Phase 1 FID Proposal, as amended or supplemented from time to time;
(d) assuming a positive Phase 1 FID, mine and, as appropriate, crush, screen, beneficiate, concentrate, convey, handle, store and stockpile Mineral Resource, overburden, non-HMC sands and waste extracted from the Phase 1 Mine, and produce Products;
(e) carry out further evaluation and prepare the Phase 2 Definitive Feasibility Study and make an FID for Phase 2;
(f) design, and assuming a positive Phase 2 FID, construct, develop and operate the Phase 2 mine and associated works and services in accordance with the adopted Phase 2 Definitive Feasibility Study and Phase 2 FID as amended or supplemented from time to time;
(g) assuming a positive Phase 2 FID, mine and, as appropriate, crush, screen, beneficiate, concentrate, convey, handle, store and stockpile Mineral Resource, overburden, non-HMC sand and waste extracted from the Phase 2 mine, and produce Products;
(h) decommission any Joint Venture Property no longer required for Mining and Concentration and Rehabilitate any areas within the Mining Area where the Joint Venture has ceased Mining;
(i) maintain the Tenements and further explore and evaluate the Mining Area for reserves of Mineral Resources;
(j) if Exploration indicates the probable existence of a further commercially minable mineral resource in any part of the Mining Area, including RL2002, carry out additional feasibility studies, to test the feasibility of further Development;
(k) do all things incidental to any of the objects as resolved by the Board; and
(l) undertake such other activities as the Joint Venturers agree from time to time,
all upon the terms and conditions set out in this agreement.
7.2 Phase 1 implementation
If the Phase 1 FID is approved by the Joint Venturers in accordance with clause 6.2, the Board will implement the Phase 1 Budget with a goal of commencing commercial production of Phase 1 as soon as technically and economically practicable. The actual annual expenditures and the timing of expenditure for Phase 1 will be as set out in the Phase 1 Budget as prepared by the Manager and approved by the Joint Venturers at the time of making the Phase 1 FID. The Manager will prepare the Phase 1 Budget using the figures set out in the Phase 1 Definitive Feasibility Study updated to reflect changes in scope and costs since the Phase 1 Definitive Feasibility Study was prepared.
7.3 Phase 2
(a) The Board will determine the funding to carry out the Phase 2 Definitive Feasibility Study and the Board will instruct the Manager to use best endeavours to complete the Phase 2 Definitive Feasibility Study within 24 months after the date of the Steady State First Production for Phase 1. The budget for the Phase 2 Definitive Feasibility Study will be prepared on a stand alone basis and will be funded by the Joint Venturers pro-rata in accordance with their respective Joint Venture Interests in accordance with clause 13.5.
(b) The Manager must use best endeavours to prepare the Phase 2 FID proposal in accordance with the timeline set out in the Phase 2 DFS Budget.
(c) Upon presentation to the Board of the Phase 2 FID proposal, the JV Company must in accordance with clause 6.2(a), convene a meeting of the Joint Venturers and vote on the Phase 2 FID proposal.
(d) D&J and EFR agree that they will make a decision to proceed with a Phase 2 FID unless it is not commercially reasonable to proceed for one or both parties, acting reasonably. If either of D&J and EFR does not agree to proceed acting reasonably then either party can suggest amendments to the Phase 2 FID proposal to modify the proposal to make it commercially reasonable for both parties.
7.4 CHMP
(a) On and from the Completion Date, DMS authorises the JV Company to undertake the Joint Venture Activities (as the context requires) in accordance with the CHMP.
(b) On and from the Completion Date, the JV Company agrees to comply with and implement the CHMP, including but not limited to, any requirements to salvage, preserve or protect certain areas, sites, artefacts or Aboriginal Cultural Heritage, as if it was listed as the sponsor of the CHMP instead of DMS.
(c) The JV Company indemnifies and must keep indemnified DMS from and against all Loss that may be incurred or sustained by DMS arising from or in connection with:
(i) a breach of, or non-compliance with, or an offence under, the Aboriginal Heritage Act 2006 (Vic) which relates to or is connected with the CHMP; or
(ii) a breach of, or a non-compliance with, the CHMP or any other plan, report, recommendation or document approved under the CHMP,
to the extent that the breach, non-compliance, or offence is caused or contributed to by acts or omissions of the JV Company or its Personnel.
(d) DMS must not do anything which would have the effect or varying or terminating the CHMP. DMS must provide the JV Company with all information and correspondence which is held by it and which is necessary for the JV Company to comply with the CHMP (including promptly providing any notices received in respect of the CHMP) and organise such liaison with the relevant indigenous representatives as needed to allow the JV Company to satisfy the provisions of the CHMP.
7.5 RL2002
(a) The Joint Venturers may carry out technical investigations into the conduct of further mining and processing operations in the area of RL2002 outside of the Phase 2 Mining Area as a Joint Venture Activity.
(b) If D&J wishes to solely pursue any further development on RL2002 in the area outside of the Phase 2 Mining Area (which may include any activities up to and including construction and operation of a mine and mineral processing facilities), then D&J shall provide EFR with a Sole Risk Proposal in accordance with clause 16 save as amended by this clause.
(c) The Sole Risk Proposal under this clause must:
(i) be a proposal prepared in accordance with Good Mining Practice; and
(ii) include all information reasonably necessary for a potential joint venture partner to make an informed decision about participation in such development.
(d) DMS will provide EFR in a timely manner upon reasonable advance notice with such information that EFR reasonably requires in order to evaluate the Sole Risk Proposal in accordance with clause 7.5(c)(ii).
(e) Within 30 days of receipt of the Sole Risk Proposal EFR will have the right to accept, reject or produce a counter proposal in relation to a smaller or different area to be the subject of the Sole Risk Proposal. Such 30 days shall be extended by a reasonable period until D&J has provided all information reasonably required under clause 7.5(c)(ii) and 7.5(d).
(f) If EFR provides a counter proposal then the parties will negotiate in good faith a basis on which they can jointly develop the counter proposal area under the JV Company. If D&J and EFR cannot reach agreement within 60 days of the date of the counter proposal then D&J shall have the right to continue with the Sole Risk Proposal in accordance with clause 16. For clarity, the failure to agree the scale and scope set out in a counter proposal, if acting reasonably, are acceptable grounds for D&J to not reach agreement on the counter proposal.
7.6 RL2003
(a) EFR and/or its Affiliates shall have a right of first refusal to participate in the development of any REEC production from the Jackson Deposit (RL2003) (Jackson Deposit).
(b) If D&J or its Affiliates receives an offer from a Third Party to jointly develop the Jackson Deposit that it wishes to accept, then, prior to any such acceptance of the offer from the Third Party, it must provide written notice to EFR of all of the terms of the proposal (excluding the identity of the Third Party) (ROFR Notice).
(c) The ROFR Notice shall state that D&J or its Affiliates (as applicable) has received an offer from a Third Party to develop the Jackson Deposit, include the financial terms of such development, and also state that such party is a bona fide party who D&J or its Affiliates is acting with on an arm's length basis.
(d) Without limiting the other provisions of this clause 7.6, D&J or its Affiliates may at any time present a proposal to EFR regarding participation in a development in the Jackson Deposit which must:
(i) be prepared in accordance with Good Mining Practice; and
(ii) include all information reasonably necessary for a potential joint venture partner to make an informed decision about participation in such development,
(Jackson Deposit Development Proposal).
(e) EFR will have the right, but not the obligation, exercisable by written notice within 30 Business Days from receipt of the ROFR Notice or Jackson Deposit Development Proposal (as applicable), to determine whether or not to accept the proposal. During the 30 Business Day period D&J must use reasonable endeavours to provide EFR with all reasonable information that it may reasonably request in order to evaluate the proposal.
(f) If EFR advises that it does not wish to pursue the Jackson Deposit Development Proposal or enter into a development on the same terms of the ROFR Notice (as applicable) (or if EFR does not send a notice in which it accepts the proposal set out in the Jackson Deposit Development Proposal or terms of the ROFR Notice), in each case within the 30 Business Day period, EFR shall be deemed to have rejected such offer and D&J and its Affiliates shall have the right to conclude the proposal within the next 6 months (i) with the Third Party on substantially similar or no less favourable terms as set out in the ROFR Notice; or (ii) with any Third Party on substantially similar or no less favourable terms as set out in the Jackson Deposit Development Proposal.
(g) If D&J or its Affiliates do not enter into the definitive agreements with the Third Party on substantially similar or no less favourable terms within 6 months from the date that EFR declines the offer under clause 7.6(f), the provisions of this clause 7.6 shall again be followed with respect to the relevant proposal and a new ROFR Notice or Jackson Deposit Development Proposal (as applicable) will be issued to EFR.
(h) If, within the allotted 30 Business Days EFR delivers a written notice that it accepts the proposal as set out in the ROFR Notice or Jackson Deposit Development Proposal (as applicable), then D&J or its Affiliates and EFR shall negotiate in good faith to enter into definitive agreements regarding such proposal within 90 days from the date EFR accepts the proposal.
(i) For the avoidance of doubt, nothing in this clause 7.6 restricts D&J or its Affiliates in any way from solely pursuing a development on RL2003 in its own right.
(j) During the term of this agreement D&J must procure that:
(i) RL2003 is maintained in good standing in accordance with the requirements of the Mining Act; and
(ii) EFR is given prior written notice of D&J or its Affiliates intention to voluntarily relinquish ground or surrender any other rights held under RL2003 (other than as required by Law or under the Mining Act) (Relinquished Tenement), and to the extent that the Relinquished Tenement is capable of being conveyed, EFR may elect within 20 Business Days to acquire the Relinquished Tenement on an 'as is' basis with no liability to D&J or its Affiliates, for $1, with all related stamp duty, taxes and costs for the transfer to be borne by EFR.
7.7 Joint Venture funding
(a) D&J and EFR agree that capital and working capital expenditure of the JV Company for Phase 1 and Phase 2, following the completion of the Farm-in Funding, will be funded by a combination of equity contributed by the Joint Venturers in accordance with clause 13.5 and debt financing from third-party sources.
(b) The Board in accordance with Schedule 2 may from time to time determine whether the JV Company requires further capital, and in what form, manner or timing any such capital is to be provided (including by shareholder loans if agreed unanimously by the Joint Venturers).
7.8 Agreed Post MOU Expenditure
(a) From Completion, the Agreed Post MOU Expenditure amount contributed by D&J or its Affiliates prior to the date of this agreement will be treated as an interest free loan from D&J to the JV Company.
(b) From the earlier of the Pre-FID Option Decline Date, No FID Decision Date, Post-FID Failure to Fund Option Date or the Farm-In Completion Date, the loan of the Agreed Post MOU Expenditure amount will be repaid by such amount being credited against the Called Sum(s) payable by D&J.
7.9 Mineral separation plant
The Joint Venture Activities do not include the permitting, development, construction or operation of a mineral separation plant for the separation of rutile, ilmenite and zircon from the HMC produced by the JV Company or the separation of any other HMC other than REEC, which is intended to be separated from the HMC via a flotation circuit, unless the Joint Venturers approve it by Special Majority Vote or if D&J undertakes in accordance with clause 7.5, provided that, notwithstanding any other provision to the contrary in this agreement, D&J shall not undertake the permitting, development, construction or operation of a mineral separation plant for the separation of rutile, ilmenite and zircon from the HMC produced by the JV Company or otherwise on any location within RL2002, whether undertaken in accordance with clause 7.5 or otherwise, that would adversely interfere with or impact the actual or future production by the JV Company of HMC or REEC from RL2002 in accordance with the Mine Plans, unless the Joint Venturers approve it by Special Majority Vote.
7.10 Further Development and Mining
Subject to and without limiting clauses 7.5 and 7.6, at any time after the FID is made for Phase 1 and Phase 2, a Joint Venturer may propose to the Board that a further FID be made and that further Development, Mining and Concentration be undertaken, which proposal must include preparation of a further Definitive Feasibility Study which must:
(a) specify the parts of the Mining Area required for new Development, Mining and Concentration and specify the location and delineation of the Mineral Resource;
(b) describe in reasonable detail the nature and extent of the proposed Development, Mining and Concentration together with estimates of the capital and likely operating expenditure required for the establishment and conduct of the proposed Development, Mining, Concentration and Rehabilitation; and
(c) estimate the probable period from commencement of planning to commencement of commercial production.
7.11 Rights, obligations and liabilities of Joint Venturers
Nothing in this agreement, or any action taken pursuant to this agreement, is to be construed or interpreted as:
(a) constituting a partnership or other fiduciary relationship between the parties or making any Joint Venturer the agent or representative of any other Joint Venturer; or
(b) the Joint Venturers acting in concert with each other or the Manager.
7.12 Joint Venturer covenants
Each Joint Venturer covenants and agrees separately with each other Joint Venturer:
(a) not to engage either alone or in association with another or others or through an Affiliate in any activity over the Mining Area except as provided or authorised by or under this agreement; and
(b) subject to the confidentiality provisions of this agreement and clause 7.16, each Joint Venturer is entitled to use and apply Mining Information outside the Mining Area, provided that such activities are carried out in a manner which does not prejudice, impair or impede Joint Venture Activities.
7.13 Business conduct
Each of the Joint Venturers acknowledges and agrees for itself, its Affiliates and for each of its officers, directors, employees and agents, that it:
(a) is subject to the anti-bribery and anti-corruption provisions of the Law of the Nominated State and, where applicable to them, other legal jurisdictions (collectively the Anticorruption Laws);
(b) must conduct its activities relating to this agreement in accordance with its obligations under the Anticorruption Laws; and
(c) must not make, offer, or authorise with respect to the matters the subject of this agreement, any payment, gift, promise or other advantage to any private party or public official, whether directly or through any other person or entity, which is in breach of the Anticorruption Laws.
7.14 Stoppage of production
(a) The decision to stop production must be made by a Unanimous Vote of the Joint Venturers.
(b) Upon the determination being made under clause 7.14(a), the Manager and Board shall cause the JV Company to stop production as soon as reasonably practicable thereafter. Any mined or partially concentrated material will be concentrated to finished Product to the extent incremental revenues from sales of the resulting Product would equal or exceed the incremental costs of further concentration of the material into Product and handling of the Product, with all other material stockpiled as appropriate.
(c) Any stoppage of production will continue for such time as the Joint Venturers by Unanimous Vote determines.
(d) During any period of stopped production, the Joint Venturers will continue to fund the JV Company to keep the Tenements in good standing, meet the requirements of any Authorisations, ensure that the Joint Venture Property is maintained in good condition (including to ensure that the Mining Plant and any plant and equipment owned or held by the JV Company is maintained in safe and operable condition) and ensure that appropriate safety and environmental requirements are maintained, which shall be treated as Called Sums and shall be paid by the Joint Venturers to the JV Company in accordance with clause 13.5.
(e) Notwithstanding the foregoing paragraphs of this clause 7.14, under all circumstances, the JV Company will comply with all Laws, Authorisations and follow Good Mining Practice in connection with any stoppage of production, standby period, and resumption of production.
7.15 Joint Venture Intellectual Property
(a) The JV Company must ensure at all times it has an enforceable right to use all Intellectual Property that is necessary for the conduct of the Joint Venture Activities.
(b) The JV Company grants to each Joint Venturer and its Affiliates (for so long as the Joint Venturer remains a shareholder in the JV Company) a non-exclusive, world-wide, royalty-free, revocable, transferable (only in accordance with a disposal of Shares under clause 15) licence to use all Joint Venture Intellectual Property, including any modifications and enhancements in respect of such Joint Venture Intellectual Property for any purposes, subject to the obligations of confidentiality contained in this agreement.
7.16 Astron Background Intellectual Property
(a) During the term of this agreement, the Astron Background Intellectual Property remains vested with Astron and its Affiliates and any improvements to the Astron Background Intellectual Property resulting from the Joint Venture Activities will be owned by, and to the extent necessary is assigned to, Astron.
(b) D&J grants to the JV Company an irrevocable, non-exclusive, non-transferable, royalty-free, sub-licensable right and license to use the Astron Background Intellectual Property (including any improvements thereto) for the furtherance and benefit of the Donald Project and the Joint Venture Activities for the life of the Donald Project.
7.17 Rehabilitation of Joint Venture Property and Mining Activities
The parties acknowledge and agree that, as between the parties, the JV Company is solely responsible for undertaking Rehabilitation as required by the Mining Act in respect of the Joint Venture Property and the Joint Venture Activities. For the avoidance of doubt, the JV Company:
(a) must undertake Rehabilitation in accordance with the Mining Act (including the rehabilitation plan required under sections 78(1) and 78 of the Mining Act), all Authorisations (including their conditions) and Good Mining Practice; and
(b) is solely responsible for entering into, lodging, maintaining, renewing and supplementing any rehabilitation bond required in respect any Exploration, Development, Mining, Concentration or Rehabilitation undertaken in respect of or connected with the Joint Venture Activities.
7.18 Mine Closure
(a) If the Board in accordance with Schedule 2 decides that the JV Company will undertake Mine Closure, then the Board must formulate (or direct the Manager to formulate) and present to the Joint Venturers for their approval prior to undertaking any Mine Closure, a Proposed Programme and Budget designed to satisfy the obligations of the JV Company and Joint Venturers (as applicable) in respect of the Mine Closure.
(b) Unless the Board otherwise determines, any Approved Programme and Budget for Mine Closure must be carried out by the Manager.
7.19 HMC offtake
(a) D&J or its Affiliates may enter into an offtake agreement with the JV Company (HMC Offtake Agreement), approved by the Board of the JV Company, substantially on the terms and conditions set out in Schedule 4, under which D&J or its Affiliates may purchase and JV Company may sell up to 100% of the Phase 1 and Phase 2 HMC production from the Donald Project (Phase 1 and 2 HMC Product) at a price per tonne of HMC based on an industry standard pricing formula to be agreed to by EFR and D&J.
(b) D&J and its Affiliates will have a right of first refusal in respect of any HMC Offtake Agreements with third parties and the JV Company, approved by the Board of the JV Company, in respect of 100% of the Phase 1 and 2 HMC Product.
(c) If the JV Company receives a binding offer from a Third Party to purchase any Phase 1 and 2 HMC Product, and the Board of the JV Company has resolved to approve such offer, then the JV Company must provide written notice to D&J of all of the terms of the proposal (HMC Offtake ROFR Notice).
(d) The HMC Offtake ROFR Notice shall state that the JV Company has received an offer from a Third Party to enter into an HMC Offtake Agreement, include the financial terms of such offtake and also state that such party is a bona fide party who the JV Company is acting with on an arm's length basis, and that the Board of the JV Company has approved entering into such HMC Offtake Agreement, subject to the right of first refusal set out in this clause 7.19.
(e) D&J and its Affiliates will have the right, but not the obligation, exercisable by written notice within 30 Business Days from receipt of the HMC Offtake ROFR Notice, to determine whether or not to accept the proposal. During the 30 Business Day period the JV Company must use reasonable endeavours to provide D&J with all reasonable information that it or its Affiliates may reasonably request in order to evaluate the proposal.
(f) If D&J advises that it does not (via itself directly or a Affiliates) wish to enter into an HMC Offtake Agreement on the same terms of the HMC Offtake ROFR Notice (or if D&J does not send a notice in which it accepts the terms of the HMC Offtake ROFR Notice), within the 30 Business Day period, D&J shall be deemed to have rejected such offer and (subject to the other terms of this agreement (including voting rights)) the JV Company shall have the right to conclude the proposal within the next 6 months with the Third Party on substantially similar or no less favourable terms as set out in the HMC Offtake ROFR Notice.
(g) If the JV Company does not enter into a definitive HMC Offtake Agreement with the Third Party on substantially similar or no less favourable terms within 6 months from the date that D&J declines the offer under clause 7.19(g), the provisions of this clause 7.19 shall again be followed with respect to the relevant proposal and a new HMC Offtake ROFR Notice will be issued to D&J.
(h) If, within the allotted 30 Business Days D&J delivers written notice that it accepts the proposal as set out in the HMC Offtake ROFR Notice, then D&J and the JV Company shall negotiate in good faith to enter into definitive HMC Offtake Agreement (to be entered by D&J or its Affiliates) regarding such proposal within 90 days from the date D&J (by itself or its nominee) accepts the proposal.
(i) Any HMC Offtake Agreement(s) with Third Parties shall be a binding fixed quantity sale commitments of JV Company to the Third Party purchaser and a binding take or pay obligation of the Third Party purchaser.
(j) The JV Company must not enter into any agreement for the sale of HMC other than after first complying with this clause 7.19.
8. Farm-in Period
8.1 Joint Venture Interests
(a) During the Farm-in Period, EFR will have been deemed to have earned a Joint Venture Interest on a continuous basis at any particular time as follows:
| IE = |
EA | * 49% |
| EA + EU |
Where:
IE = EFR's Percentage Share
EA = EFR Actual Expenditure plus the value of any EFI Common Shares that have been issued to Astron under clauses 5.1 and 6.5
Eu = EFR un-spent farm-in commitment determined as $183,000,000 plus the AUS$ value of US$17,500,000 of EFI Common Shares which is deemed to be $25,000,000 for all purposes of this agreement ($208m less EA)
(b) The following are worked examples of estimated shareholdings at certain specified points in time:
(c) From completion under the Asset Transfer Agreement, D&J will hold the following shareholding in the JV Company. From the date of this agreement until the Completion Date, EFR will have a senior loan in respect of the Pre-Commencement Funding but no shareholding in the JV Company.
|
Joint |
Expected Farm-in |
Number of JV |
Joint Venture Interest |
|
D&J |
$0 |
52,000 |
100% |
|
EFR |
$0 |
0 |
N/A |
(d) The estimated shareholding in the JV Company at the Completion Date (assuming EFR Actual Farm-In Expenditure of $8 million is provided by EFR) is:
|
Joint |
Expected Farm-in |
Number of JV |
Joint Venture Interest |
|
D&J |
$0 |
52,000 less 200 (in exchange for EFI Shares (Completion)) = 51,800 |
96.58% |
|
EFR |
$1,515,381 (US$1 million) Exclusivity Extension Fee; plus $8 million 1 Pre-Commencement Funding loan converted to EFR Actual Farm-In Expenditure; plus US$3.5 million (deemed to be valued at $5 million for all purposes of this agreement) EFI Shares (Completion) = $14,515,381 |
1,834 |
3.42% |
1 This figure is used for illustrative purposes only.
(e) The estimated shareholding at the FID Completion Date is:
|
Joint |
Expected Farm-in |
Number of JV |
Joint Venture Interest |
|
D&J |
$0 |
52,000 less 1,000 (in exchange for EFI Shares (Completion) and EFI Shares (FID)) |
89.51% |
|
EFR |
$1,515,381 (US$1 million) Exclusivity Extension Fee; plus $18 million EFR Actual Farm-In Expenditure (including $8 million 1 Pre-Commencement Funding loan converted to EFR Actual Farm-In Expenditure); plus US$3.5 million ($5 million) EFI Shares (Completion); plus US$14 million (deemed to be valued at $20 million for all purposes of this agreement) EFI Shares (FID) = $44,515,381
|
5,974 |
10.49% |
1 This figure is used for illustrative purposes only.
(f) Following the Farm-in Completion Date the shareholding of the JV Company will be:
|
Joint |
Expected Farm-in |
Number of JV |
Joint Venture Interest |
|
D&J |
$0 |
51,000 |
51% |
|
EFR |
$1,515,381 (US$1 million) Exclusivity Extension Fee; plus $183 million EFR Actual Farm-In Expenditure (including $1,515,381 (US$1 million) Exclusivity Extension Fee and 8 million 1 (Pre-Commencement Funding loan converted to EFR Actual Farm-In Expenditure)); plus US$3.5 million ($5 million) EFI Shares (Completion); plus US$14 million ($20 million) EFI Shares (FID) = $208 million |
49,000 |
49% |
1 This figure is used for illustrative purposes only.
8.2 Farm-in obligation
(a) EFR has the right to earn a 49% Joint Venture Interest in the JV Company by providing to the JV Company the Farm-in Funding and the EFI Share Issue (Completion) and EFI Share Issue (FID) in accordance with the terms of this agreement.
(b) As from Completion and up to the Phase 1 FID, EFR must provide the Farm-in Funding to the JV Company in accordance with the Pre-FID Budget and any Additional Pre-FID Budget (as applicable) as otherwise set out in and subject to this agreement.
(c) As from the date of the Phase 1 FID, EFR must provide the Farm-in Funding to the JV Company in accordance with the Phase 1 Budget as otherwise set out in and subject to this agreement.
(d) During the Farm-in Period, the Manager will provide EFR with a notice for Called Sums in accordance with the Pre-FID Budget, Additional Pre-FID Budget or Phase 1 Budget, as the case may be in accordance with clause 13.5 as otherwise set out in and subject to this agreement.
(e) As otherwise set out in and subject to this agreement (including clause 7.8), the Farm-in Funding by EFR must be the first $183 million funding for the JV Company following the Completion Date and, D&J will not be required to make any equity or other financial contributions to the JV Company until such time as EFR has completed the Farm-in Funding.
8.3 Farm-in Completion
Within 2 Business Days after the Farm-in Completion Date, the parties will hold a Board meeting of the JV Company to approve:
(a) the issue of that number of fully paid Shares constituting the final Called Sum that results in EFR holding 49% of the issued Shares of the JV Company;
(b) update the register of members of the JV Company to reflect that allocation; and
(c) issue a share certificate in the name of EFR for those Shares.
8.4 Funding less than the Farm-in Funding post Phase 1 FID
(a) Subject to clause 8.4(e), during the Farm-in Period following the Phase 1 FID occurring, if EFR commits an Unpaid Monies Default Event, and if the default is not remedied within 30 days other than due to an Exclusion Event (Post FID Failure to Fund Option Date), D&J may elect by written notice to EFR to purchase EFR's Joint Venture Interest for the sole consideration (with any duty to be borne by EFR) of:
(i) 70% of the dollar amount of the EFR Actual Farm-in Expenditure actually funded by EFR (including the Exclusivity Extension Fee) up to that time for periods prior to the Phase 1 FID; and
(ii) 80% of the dollar amount of EFR Actual Farm-in Expenditure actually funded by EFR for periods after the Phase 1 FID;
within a period of 90 days from the Post-FID Failure to Fund Option Date. During the 90 day period from the Post-FID Failure to Fund Option Date EFR will not be deemed in default of this agreement in respect of such Unpaid Monies Default Event and the provisions relating to default, including clause 13, will be suspended and not apply. An election by D&J to exercise its rights under clause 8.4(a) will be D&J's sole remedy for EFR's failure to fully fund the Farm-In Funding amount. Where D&J does not exercise its rights under 8.4(a) nothing in this clause 8.4(a) will limit D&J's rights.
(b) Without limiting clause 8.4(a), from the Post FID Failure to Fund Option Date, the REEC Offtake Agreement will be terminated in accordance with its terms (subject to completion of current shipment orders (if relevant)), without any liability to D&J, the JV Company or EFR with respect to the termination of the REEC Offtake Agreement.
(c) If D&J does not elect within the 90 days from the Post-FID Failure to Fund Option Date to purchase EFR's Joint Venture Interest (the date of the non-election or the end of the 90 day period, whichever is the earlier, being the Post-FID Failure to Fund Option Decline Date), then from the Post-FID Failure to Fund Option Decline Date:
(i) the Farm-In Period will end;
(ii) EFR will hold the Joint Venture Interest as calculated under clause 8.1 and the parties will immediately hold a Board meeting of the JV Company to approve:
(A) the issue of fully paid Shares equal to the Joint Venture Interest calculated under clause 8.1, if not already issued at that time;
(B) update the register of members of the JV Company to reflect that allocation, if not already updated at that time; and
(C) issue a share certificate in the name of EFR for those Shares, if not already issued at that time; and
(iii) as from the Post-FID Failure to Fund Option Decline Date, all funding for the JV Company will be pro rata in D&J and EFR's Percentage Share (subject to clause 7.8).
(d) If D&J does elect within the 90 days from the Post-FID Failure to Fund Option Date to purchase EFR's Joint Venture Interest then the parties will proceed with the sale and transfer of EFR's Joint Venture Interest in accordance with clauses 18.3 to 18.5 (the Buy-Out Completion Date being the later of 30 Business Days from the date that D&J elects to exercise the option to purchase EFR's Joint Venture Interest and the determination by the Expert of the Fair Market Value).
(e) If during the Farm-in Period, EFR determines not to continue with the Farm-in Funding due to an Exclusion Event, then EFR will not be deemed in default for the purposes of this agreement and:
(i) In the case of an event within paragraph (a) or (b) of the definition of Exclusion Event then EFR may elect to cease the Farm-In Funding on 30 days' notice without any further liability and the provisions of clause 8.1(a) shall apply and EFR will be issued its Shares in the JV Company earned as at that date, and all funding for the JV Company going forward will be pro rata in D&J and EFR's Percentage Share.
(ii) In the case of an event within paragraph (c) of the definition of Exclusion Event, then the provisions of clause 17.1 will apply to that breach by AMS, DMS and/or D&J, and EFR's obligations to provide the Farm-in Funding will be suspended until AMS, DMS and/or D&J, as the case may be, has remedied such breach, provided that if there is a breach of Fundamental Warranties set out in Schedule 3 then EFR may elect to cease funding the Farm-in Funding on 30 days' notice without any further liability and the provisions of clause 8.1(a) shall apply and EFR will be issued its Shares in the JV Company earned as at that date and all funding for the JV Company going forward will be pro rata in D&J and EFR's Percentage Share;
(iii) in the case of an event within paragraph (d) of the definition of Exclusion Event then EFR may cease funding until the suspension of the funding arrangement ends in accordance with the facility agreement, provided that if the facility is terminated then EFR may elect to cease funding the Farm-in Funding on 7 days' notice without any further liability and the provisions of clause 8.1(a) shall apply and EFR will be issued its Shares in the JV Company earned as at that date and all funding for the JV Company going forward will be pro rata in D&J and EFR's Percentage Share.
8.5 Decision making during Farm-in Period
Notwithstanding any other provision of this agreement, in the period between the date of this agreement until the earlier of:
(a) the Pre-FID Failure to Fund Option Date,
(b) the Pre-FID Option Decline Date;
(c) No FID Decision Date;
(d) the Post-FID Failure to Fund Option Date; or
(e) the Farm-in Completion Date,
none of the matters set out in Schedule 2 may be undertaken by the JV Company or Manager without the prior written consent of EFR or its appointed Directors (as applicable) and none of the matters set out in Schedule 2 may be undertaken without the prior written consent of EFR or its appointed Directors, as the case may be, and the definitions of Special Majority Vote and Unanimous Vote will be deemed amended accordingly.
9. Board
9.1 Establishment of Board
(a) The Board shall consist of not less than two Directors.
(b) Subject to clauses 9.1(c) and 9.1(h):
(i) a Joint Venturer that holds at least 25% of the issued Shares may from time to time appoint two Directors to the Board each of whom must be a Fit and Proper Person to hold such office; and
(ii) between the date of this agreement until the earlier of the Pre-FID Failure to Fund Option Date, the Pre-FID Option Decline Date, the No FID Decision Date, the Post-FID Failure to Fund Option Date and the Farm-in Completion Date (Relevant Period), EFR will have the right to appoint two Directors even if it has not yet earned a 25% interest in the JV Company.
(c) Each Joint Venturer who nominates and appoints a Director in accordance with clause 9.1(b) may remove and replace any director appointed by it at any time by notice in writing to the JV Company. If a Director does not attend three or more consecutive Board meetings (in person, proxy or by alternate) then the appointing Joint Venturer must remove and replace that Director, unless each Joint Venturer agrees otherwise. The Joint Venturer removing any Director shall indemnify the JV Company against any liability arising as a result of that Director's removal from office.
(d) The role of the Board is to supervise the Manager in the management of the Joint Venture and to make, subject to this agreement, all strategic decisions relating to the conduct of Joint Venture Activities, including the consideration and approval of any Proposed Programme and Budget, Mine Plans, and other management plans, off take agreements, and any amendments to any Approved Programme and Budget, approved Mine Plans, approved management plans or off take agreements, in each case subject to and in accordance with this agreement.
(e) Unless the Joint Venturers otherwise unanimously agree, the Joint Venturer with the largest individual Joint Venture Interest must appoint (and may dismiss) its representative to be chair of the Board. The Joint Venturer appointing the chair must cause the chair to preside at all meetings of the Board.
(f) The JV Company shall procure that the Manager will appoint (and may dismiss) a person, who may be one of its employees, to be secretary of the Board. The Manager must cause the secretary to prepare agendas for meetings, keep proper minutes of all meetings and coordinate communications among the Joint Venturers regarding meetings of the Board.
(g) Each Joint Venturer shall be entitled to appoint one alternate at any time to act on behalf of one or more Directors (Relevant Director) as a Director. An alternate Director shall automatically vacate his or her office as an alternate Director if the Relevant Director ceases to be a Director or on the appointing Joint Venturer providing notice to the JV Company revoking the appointment.
(h) If the Percentage Share of a Joint Venturer is below 25% but is 10% or above that Joint Venturer is entitled to appoint one Director on the Board. If the Percentage Share of a Joint Venturer is below 10% that Joint Venturer is not entitled to appoint a Director on the Board. Notwithstanding the foregoing, and for greater certainty, EFR shall be entitled to appoint two Directors at all times during the Relevant Period.
(i) If for any reason at the end of the Relevant Period EFR's Percentage Share is less than 25% or 10%, then EFR's entitlement to appoint Directors will be in accordance with clause 9.1(h) above.
(j) Each party acknowledges that a person appointed as a Director under clause 9.1(b) is the nominee of the relevant Joint Venturer. To the maximum extent permitted by Law, a Director may have regard to and represent the interests of its nominating Joint Venturer in performing its duties or exercising any power, right or discretion as a director, and may communicate and provide copies of any information in respect of the affairs of the JV Company, either received by or made available to such Director, to its nominating Joint Venturer and to its nominating Joint Venturer's officers and advisers.
9.2 Functions of Board
Except as otherwise provided in this agreement or delegated in the Management Agreement, the Board may decide all strategic matters relating to the conduct of Joint Venture Activities, including (but not limited to):
(a) establishing policies from time to time covering Joint Venture Activities; and
(b) deciding on matters that require Board approval under the terms of this agreement and the Management Agreement.
9.3 Meetings of the Board
(a) All meetings of the Board must be held in the capital city of the Nominated State, unless otherwise agreed by the Joint Venturers and, in default of agreement, at the office of the Manager.
(b) The Board must meet at least quarterly, or more frequently as otherwise agreed by a majority of the Board.
(c) Each Director must be provided with reasonable prior notice of the meeting and at least 48 hours prior written notice of a meeting specifying the nature of the business to be discussed and including all documentation required to be considered at the meeting. Meetings may be held on less than 48 hours' notice if agreed in writing by all Joint Venturers entitled to be present or all Directors attend the meeting.
(d) Meetings may be convened in person, or by video meeting or conference telephone call at which all Directors have the opportunity to be present. All persons participating in the video meeting or conference telephone call must be able to hear and be heard by each of the others.
(e) If the existing chair of the Board is not present within 15 minutes after the time appointed for holding the meeting, the Directors present must elect one of themselves to be chair of the meeting.
(f) Unless otherwise agreed by Special Majority Vote of the Shareholders, each Joint Venturer must bear all expenses incurred by its appointed Directors and alternate Directors in attending meetings of the Board.
(g) A representative of the Manager must attend every meeting of the Board at the cost of the JV Company, unless the Board otherwise decides for a particular meeting or for a particular subject matter at any meeting.
9.4 Quorum
(a) A quorum for any meeting of the Board is present if a Director appointed by each Joint Venturer who holds at least a 25% Percentage Share is in attendance at such meeting.
(b) If a quorum is not present within 30 minutes from the time appointed for the meeting, the meeting must be adjourned for a period of at least 5 Business Days.
(c) If a quorum is not present at a reconvened meeting then, provided all Directors were given at least 5 Business Days' notice of the reconvened meeting, the representative(s) present at the reconvened meeting are deemed to constitute a quorum for the purposes of the business before that meeting.
9.5 Voting and decision making
(a) On any resolution or at any meeting of the Board, a Director (other than one appointed by a Defaulting Joint Venturer) may cast the number of votes equal to its appointing Joint Venturer's Percentage Share. If two Directors appointed by a Joint Venturer are in attendance then their votes in aggregate shall equal their appointing Joint Venturer's Percentage Share.
(b) At meetings of the Board, the Manager or its representative is not entitled to vote, and the chair does not have a second or casting vote.
(c) All decisions of the Board shall be made by simple majority vote, provided that any decisions of the Board set out in Part A and Part B of Schedule 2 must be determined by Special Majority Vote or by Unanimous Vote, respectively.
(d) Subject to applicable Law, a Director will be entitled to a vote on, and the Board must include such vote, in respect of a matter which is being considered at a Board meeting despite that Director has any actual, apparent or potential conflict of interest (including by reason of any interest of the Joint Venturer that appointed the Director). The fact that the Director is appointed by, and acting in the interests of, the relevant Joint Venturer shall be deemed disclosed at each Board meeting. Despite this, each Director must give notice to the Board of any material personal interest such Director has in a matter that relates to the affairs of the JV Company in accordance with section 191 of the Corporations Act.
(e) A resolution which is signed or approved by all the Directors entitled to receive notice of a meeting of Directors shall be as valid and effectual as if it had been passed at a meeting of Directors duly called and constituted. The resolution may be contained in one document or in several counterparts, each signed or approved by one or more of the Directors concerned. A resolution signed or approved by an alternate Director need not also be signed or approved by the alternate Director's appointor and, if it is signed or approved by a Director who has appointed an alternate Director, it need not be signed or approved by the alternate Director in that capacity. For the purposes of this clause the approval of a Director or alternate Director may be given by letter or by email.
9.6 Minutes
A copy of the minutes of each Board meeting must be given to each Joint Venturer as soon as practicable, but no later than 21 days, after each meeting. The minutes of a meeting must be submitted for approval at the next Board meeting and, if approved, must be signed by the chair of the later meeting and when signed are evidence of the proceedings and the decisions of the meeting to which they relate.
9.7 Sub-committees
The Board may from time to time create sub-committees (comprising such persons as the Board thinks fit) to consider and report back to the Board on any particular issues relating to Joint Venture Activities.
9.8 Loss of rights of participation and voting
To the extent permitted by Law, unless the default is subject to a bona fide dispute under this agreement, unless otherwise agreed by all Non-Defaulting Joint Venturers or as otherwise specified in this agreement, a Director appointed by a Defaulting Joint Venturer (or an alternate of such Director) is not entitled to attend or to vote at any meeting of the Board or any subcommittee formed under this agreement or join in passing a resolution, nor will the presence of the Director appointed by any such Joint Venturer be necessary to form a quorum at any meeting, until the relevant Default Event has been remedied. Any decisions made without the Defaulting Joint Venturer must nonetheless not be contrary to Good Mining Practice.
10. Joint Venturer meetings
10.1 Joint Venturer meetings
(a) Unless there are no matters requiring a Special Majority Vote or Unanimous Vote of by Joint Venturers, whenever a Board meeting has been convened a meeting of the Joint Venturers must also be convened in accordance with this clause 10.1 for the time immediately following the relevant Board meeting (and in the same place as the Board meeting).
(b) Meetings of the Joint Venturers will constitute general meetings of the members of the JV Company and shall be convened in accordance with the Constitution and the Corporations Act.
10.2 Notice
At least 14 days prior written notice of any General Meeting (other than a General Meeting adjourned pursuant to clause 10.4(c) below) shall be given to all Joint Venturers and all Directors.
10.3 Authorised representative
Each Joint Venturer which is not a natural person shall attend General Meetings by its authorised representative. Such appointment may be delivered to the JV Company at its registered office or principal place of business for the time being, and addressed to the Board at any time prior to the meeting or delivered at the meeting itself. Such appointment may be a standing appointment.
10.4 Quorum
(a) No General Meeting shall take place unless a quorum is present.
(b) At any General Meeting of Joint Venturers, a quorum is present if the representative of each Joint Venturer that holds a 25% or more Percentage Share is present at the meeting.
(c) If a quorum is not present within half an hour from the time stated for the meeting, or if during the meeting a quorum ceases to be present, the meeting shall be adjourned to a place and time determined by the Board.
10.5 Voting
Decisions of the Joint Venturers set out in Schedule 2 must be determined by Special Majority Vote or by Unanimous Vote, as the case may be. Otherwise, unless specifically provided for in this agreement, all other decisions will be made by a simple majority.
11. Deadlock
11.1 Deadlock notice
(a) For the purposes of this clause 11, a Deadlock will occur if the Board or the Joint Venturers (as applicable having regard to the nature of the relevant matter) fail to pass a resolution for or against a particular matter by the requisite majority required by this agreement either:
(i) at 2 or more consecutive Board or Joint Venturers' meetings (as applicable) at which the particular matter is the subject of a resolution; or
(ii) in respect solely of a matter or resolution involving the approval of a Proposed Programme and Budget by the date that the Proposed Programme and Budget was proposed to come into effect in accordance with clauses 13.1 and 13.2.
11.2 Failure to resolve Deadlock
The Deadlock will be dealt with in the following manner:
(a) where the Deadlock involves approval of a Proposed Programme and Budget or amendments to an existing Approved Programme and Budget, the JV Company will continue to be managed under the existing Approved Programme and Budget as adjusted for CPI plus:
(i) 10%; and
(ii) any additional amount determined by the Manager and notified to the JV Company as being necessary to conduct and maintain the then current operations required in respect of the Donald Project (including to keep the Tenements in good standing, meet the requirements of any Authorisations, maintain the Joint Venture Property in good condition (including to ensure that the Mining Plant and any plant and equipment owned or held by the JV Company is maintained in safe and operable condition) and ensure compliance with safety and environmental requirements),
until a new Approved Programme and Budget is approved by the Board; and
(b) in any other case, the Board or Joint Venturers (as applicable) will be taken to have recommended that no action be taken on the matter.
12. Management
12.1 Appointment of Manager
The JV Company will appoint the Manager to be manager of the JV Company from the Completion Date, on and subject to the provisions of the Management Agreement.
12.2 Pre-Farm-in Completion
AMS in its capacity as Manager will be responsible for the on-going development of the Donald Project between the date of this agreement and the Phase 1 FID, in accordance with the Pre-FID Budget, any Additional Pre-FID Budget and the Management Agreement, and thereafter in accordance with the Phase 1 Budget and subsequent Approved Programmes and Budgets.
12.3 Performance
For as long as the Manager is an Affiliate of D&J, D&J will procure that the Manager complies with the terms of this agreement to the extent applicable to it.
12.4 Termination of Management Agreement
(a) Where the Management Agreement is terminated, the JV Company must promptly appoint a new Manager under the terms of a replacement management agreement.
(b) Notwithstanding the other provisions of this agreement, where an Affiliate of a Joint Venturer is the Manager, the approval of such Joint Venturer will not be required for the JV Company to terminate the Management Agreement in accordance with its terms where the Manager is in default in accordance with clause 11 of the Management Agreement.
12.5 Termination of Offtake Agreements
Notwithstanding the other provisions of this agreement, where an Affiliate of a Joint Venturer is the buyer under the Offtake Agreement, the approval of such Joint Venturer will not be required for the JV Company to terminate the Offtake Agreement in accordance with its terms for prolonged suspension or material default of the buyer.
13. Programmes, Budgets and Called Sums
13.1 Pre-FID Budget, Phase 1 Budget and Phase 2 Budget
(a) The Pre-FID Budget, and any Additional Pre-FID Budget will be adopted by the JV Company as the Approved Programme and Budget from the date of this agreement up to the Phase 1 FID.
(b) The Phase 1 Budget and the Phase 2 Budget will be approved in accordance with this clause 13.
(c) Each Proposed Programme and Budget as determined in this clause 13 shall be prepared based on the relevant Phase 1 Budget and Phase 2 Budget as the case may be, to the extent appropriate.
13.2 Proposed Programmes and Budgets
(a) By no later than 1 November in each Year or such other date as the Board may agree, the JV Company must procure that the Manager provide the JV Company and Board with a Proposed Programme and Budget which must include:
(i) details of the programme of Joint Venture Activities proposed for the next calendar Year, or for the period of any proposed capital works if such period extends beyond the next calendar year;
(ii) an itemised budget specifying all estimated expenditure proposed to be called by the Manager on a monthly basis under the Management Agreement;
(iii) all available proposed major contracts and supporting documentation;
(iv) a cash-flow forecast through the period covered by the Proposed Programme and Budget, including capital call forecasts, cash and working capital balances at the start and end of the period; and
(v) a forecast, in summary form, of the expected programs and budgets, cash flows, and beginning and ending cash and working capital balances for the next two years following the end of the period covered by the Proposed Programme and Budget.
(b) Each Proposed Programme and Budget must include expenditure on the Tenements sufficient to comply with any applicable minimum expenditure obligations under the Mining Act and applicable Law during that period.
(c) Any Joint Venture Activities that cannot be efficiently completed within a single calendar Year or period may be proposed in a multi-year or period programme and budget. Upon approval by the Board, such multi-year or period programme and budget must be reflected in each annual Approved Programme and Budget.
13.3 Approved Programme and Budget
(a) Not less than 14 days after provision of a Proposed Programme and Budget, and by no later than 30 days after the provision of the Proposed Programme and Budget or such other time as the Board may determine, the Joint Venturers must meet (as many times as necessary) and discuss the Proposed Programme and Budget for the next calendar Year, or appropriate period and adopt, with or without amendment, an Approved Programme and Budget for that Year or period.
(b) Subject to the prior approval by the Board to the awarding of all contracts to a value of more than the Contract Limit, once the Proposed Programme and Budget is approved by the Special Majority Vote of the Board, the Manager must implement the Approved Programme and Budget, and give a copy to each Joint Venturer.
(c) An Approved Programme and Budget may only be amended by Special Majority Vote of the Board.
(d) If the Board for any reason fails to approve a Proposed Programme and Budget, prior to the commencement of the Year to which it relates, the Board must continue to meet no less frequently than every 10 Business Days and use all reasonable efforts to reach agreement. In the meantime clause 11.2 applies in respect of the Deadlock.
(e) During such periods, the Joint Venturers shall continue to contribute Called Sums in accordance with the last Approved Programme and Budget as modified in accordance with clause 11.2.
13.4 Expenditure not covered by Approved Programme and Budget
(a) The Manager must not undertake any Joint Venture Activities which are not substantially in accordance with an Approved Programme and Budget except:
(i) in case of an Emergency, the Manager may make such immediate expenditure as the Manager deems necessary for the protection of life or property including the Joint Venture Property, in which case the Manager must promptly notify the Joint Venturers of such expenditure;
(ii) if the Manager expects there will be a cost overrun in carrying out an Approved Programme and Budget which cannot be avoided by Good Mining Practice, the Manager may exceed a current Approved Programme and Budget by not more than 10%; or
(iii) if otherwise permitted by this agreement or by the Board.
(b) The Manager must report to the Board as soon as reasonably practicable any unbudgeted expenditure incurred by the Manager for whatever reason.
(c) If the Manager exceeds an Approved Programme and Budget by more than 10%, then the excess over 10%, unless otherwise covered by clause 13.4(a) above, shall be at the sole cost and expense of the Manager and shall not be considered a capital contribution or taken into account in the calculation of Percentage Share. Overruns of 10% or less shall be considered costs and expenses of the JV Company, and shall be funded by additional contributions through Called Sums to the JV Company.
13.5 Called Sums
(a) Subject to clause 13.2, on or before the 10th day of each month (or such other date or period as the Board directs), the Manager must submit to the Board monthly reports including a cash forecast for the next two months with the statement of proposed expenditure for the next month specifying:
(i) the Called Sum to be paid by that Joint Venturer to finance Joint Venture Activities set out in an Approved Programme and Budget during the next month (or such other period as the Board directs) including all existing and reasonably expected liabilities of the Joint Venture; and
(ii) the amount paid cumulatively to date for the current Year.
(b) During the Farm-in Period, at the same time as the statement referred to in clause 13.5(a) is issued, a statement for Called Sums up to the Farm-in Funding amount will be issued to EFR.
(c) Commencing from the Farm-in Completion Date, subject to clause 7.8 and other relevant terms of this agreement, EFR will fund the Called Sums in accordance with clause 13.5 up to the amount of the Farm-in Funding and thereafter all expenditures incurred in accordance with an Approved Programme and Budget will be the subject of a Called Sum by the Board to each Joint Venturer payable in accordance with their Percentage Share.
(d) Each time Called Sums are paid in full by the Joint Venturers (or deemed to be paid by a Joint Venturer in accordance with clause 7.8), the Joint Venturers will, unless otherwise agreed by D&J and EFR in writing, receive new Shares and share certificates at a price per share as determined by the Board by Unanimous Vote that reflects the value of the Called Sums while maintaining the Joint Venturers percent interest.
13.6 Payment of Called Sums
(a) A Joint Venturer must pay each Called Sum within 14 days of receipt of a billing statement.
(b) All payments must be in currency determined by the Board and made to a bank account nominated by the Manager.
14. Accounts, reports, audit and access
14.1 Joint Venture accounting
The Manager must maintain separate books, accounts and records for the JV Company in accordance with IFRS.
14.2 Reports to Joint Venturers
(a) The Manager must keep the Board informed of all Joint Venture Activities by submitting in writing to the Board under the Management Agreement:
(i) within 10 Business Days following the end of each month monthly progress reports which include statements of expenditure and comparisons of such expenditures to the Approved Programme and Budget;
(ii) a detailed final report within 60 days after completion of each Approved Programme and Budget (which shall generally be at the end of each calendar year, unless otherwise specified by the Board), which must include comparisons between actual and budgeted JV Company expenditure; and
(iii) such other reports and information as set out in the Management Agreement.
(b) The Manager is responsible for the conversion of the JORC resource for the Tenements to NI 43-101 and SK 1300 compliant resource in accordance with the Management Agreement and as required to prepare the Phase 1 FID Proposal to include financial information compliant with NI 43-101 and SK 1300.
14.3 Joint Venture accounts and audit
(a) The Manager must prepare accounts for the JV Company reflecting the results for each Financial Year of all transactions connected with Joint Venture Activities in accordance with this agreement (Annual Accounts) which Annual Accounts must be completed, audited by the Auditor and provided to the Joint Venturers (together with the Auditor's report) no later than 90 days after the end of the Financial Year, together with a conversion to U.S. Generally Accepted Accounting Principles if requested by EFR and at the cost and expense of EFR.
(b) The Board must use its reasonable endeavours to rectify any issues or qualifications raised by the Auditor concerning the Annual Accounts or Joint Venture Activities as soon as is reasonably practicable.
14.4 Joint Venturer access
The JV Company must at all reasonable times, provide or procure upon the reasonable request of any Joint Venturer:
(a) access to, and the right to inspect and copy, all maps, drill logs, core tests, reports, surveys, assays, analyses, production reports, operations, technical, accounting and financial records, legal, regulatory and ESG documents and correspondence, and other information acquired in the Joint Venture Activities; and
(b) at its sole discretion and at the Joint Venturer's sole risk and expense, and subject to reasonable safety regulations, allow the inspecting member to inspect the Joint Venture Property and Joint Venture Activities at reasonable times, provided that the inspecting member does not unreasonably interfere with Joint Venture Activities.
14.5 Technical consultant and sampling
EFR may (at its cost) appoint and retain a technical consultant to assist and advise EFR on the Exploration and Development and sampling activities to be conducted for the Donald Project. The JV Company agrees to provide reasonable assistance to such technical consultant in its role, including the provision of such information and access to the Tenements and Mining Information as the technical consultant may reasonably require and, where agreed by Special Majority Vote of the Board, allowing a secondee to the Manager as set out in the Management Agreement.
14.6 Auditor
(a) The JV Company must appoint an auditor which is an internationally recognised and reputable accounting firm nominated by D&J and agreed by EFR in writing as soon as reasonably practicable after the signing of this agreement.
(b) The auditor of the JV Company may be replaced by resolution of the Board in accordance with Schedule 2.
15. Assignment
15.1 Restriction on Assignment
(a) A Joint Venturer may not Assign the whole or any part of its Joint Venture Interest otherwise than:
(i) to an Eligible Transferee;
(ii) as permitted by this agreement; or
(iii) with the consent of all the other Joint Venturers, which they may give or refuse in their absolute discretion.
(b) Except as otherwise provided in this agreement, a Defaulting Joint Venturer may not Assign the whole or any part of its Joint Venture Interest.
(c) Any purported dealing by a Joint Venturer with its Joint Venture Interest contrary to this agreement is void.
15.2 Assignment to an Affiliate
A Joint Venturer which is not a Defaulting Joint Venturer may at any time without obtaining the prior consent of the other Joint Venturers Assign the whole (but not part) of its Joint Venture Interest to an Affiliate. If a Joint Venturer Assigns the whole of its Joint Venture Interest to an Affiliate, then that Joint Venturer:
(a) must, within 30 days prior to the date of the Assignment, notify all of the other Joint Venturers of the identity of the assignee and its relationship to the Joint Venturer;
(b) continues to be bound by this agreement and is not released from any of its obligations or discharged from any of its liabilities under this agreement, unless all the other Joint Venturers agree;
(c) must provide a guarantee of the obligations of such Affiliate if reasonably requested by the other Joint Venturers in a form reasonably acceptable to the other Joint Venturers; and
(d) must, where the Affiliate to which the whole of its Joint Venture Interest has been Assigned undergoes a Change of Control without the prior written consent of the other Joint Venturers in accordance with clause 15.6, ensure that all the Joint Venture Interest and rights and obligations under this agreement Assigned to that Affiliate have been re-Assigned to that Joint Venturer or Assigned to another Affiliate of that Joint Venturer in accordance with the requirements of this clause 15.2.
An Assignment under this clause 15.2 is free of any rights of pre-emption set out in this agreement.
15.3 Permitted right of pre-emption
(a) A Joint Venturer has the right of pre-emption on the terms and conditions set out in this clause in respect of an Assignment of the whole or part of the Joint Venture Interest by another Joint Venturer that is otherwise permitted under clause 15.1.
(b) Where a Joint Venturer receives a bona fide offer to Assign, or intends to make an offer to Assign to a Third Party, the whole or part of its Joint Venture Interest which it is willing to accept and dispose of or Assign, and such Assignment is otherwise permitted by clause 15.1, the Joint Venturer (Selling Joint Venturer) must promptly send written notice to the other Joint Venturers of the offer to Assign making the same offer to the other Joint Venturers (Offer). A Joint Venturer may not make an Offer under this clause in the period from the date of this agreement to the date of Steady State First Production for Phase 1 unless the other Joint Venturer has provided its prior written consent.
(c) The Offer must:
(i) set out all the details of the offer to Assign that the Selling Joint Venturer has received, including the identity of the proposed acquirer (if then known), to enable an assessment of the acquirer's financial standing including, where applicable, details of the financial standing of the acquirer's Ultimate Holding Company and any proposed parent company guarantees; and
(ii) attach a copy of all of the Offer documents.
(d) Each other Joint Venturer (Non-Selling Joint Venturer) has the right for a period of 45 days following receipt of an Offer (Option Period) to accept the Offer in full.
(e) To accept the Offer a Non-Selling Joint Venturer which wishes to accept the Offer must give written notice of acceptance to the Selling Joint Venturer during the Option Period.
(f) Where more than one Non-Selling Joint Venturer accept the Offer from the Selling Joint Venturer the accepting Non-Selling Joint Venturers are deemed to have accepted the Offer pro rata in proportion to their respective Percentage Shares, unless otherwise mutually agreed between them.
(g) For greater certainty, the rights of pre-emption set out in this agreement do not in and of themselves constitute a permitted Assignment under clause 15.1(a)(ii).
15.4 Selling Joint Venturer free to Assign
If none of the Non-Selling Joint Venturers accept the Offer and provided that no Joint Venturer would hold a Joint Venture Interest of less than the Minimum Interest as a consequence of the Assignment then, and provided the Assignment is otherwise permitted under clause 15.1, following the Option Period, the Selling Joint Venturer is free within 6 months from the date of the end of the Option Period, and subject to subsequent completion and delivery of the required Assignment documentation specified in this agreement, to Assign its Joint Venture Interest the subject of the Offer to the prospective acquirer at a price and subject to the terms and conditions which are no less favourable to the Selling Joint Venturer than the price, terms and conditions set out in the Offer.
15.5 Requirements of assignee
An Assignment of part or all of a Joint Venture Interest is not effective unless and until the assignee:
(a) obtains all relevant Authorisations;
(b) provides a replacement guarantee of the obligations of such assignee in a form reasonably acceptable to the other Joint Venturers; and
(c) executes and delivers to each Joint Venturer a form of assumption deed approved by the Joint Venturers (which approval must not be unreasonably withheld, conditioned or delayed) under which the assignee agrees to assume the obligations of the assignor under, and be bound by the terms and conditions of, this agreement, to the extent of the Joint Venture Interest Assigned or upon the Joint Venture Interest being earned under the terms of the Assignment.
15.6 Change of Control
A Joint Venturer must not undergo a Change of Control without the prior written consent of each of the other Joint Venturers.
15.7 Assignment on Change of Control or less than Minimum Interest
(a) If a Change of Control occurs in respect of a Joint Venturer (Changed Joint Venturer) other than with prior written consent in accordance with clause 15.6, any other Joint Venturer may, by notice given to all the Joint Venturers and the JV Company, cause the Changed Joint Venturer to make a Deemed Sale Offer to the other Joint Venturers for the Fair Market Value for all of the Joint Venture Interest as at the date of a Deemed Sale Offer.
(b) If the Joint Venture Interest of a Joint Venturer reduces to below the Minimum Interest, whether by Assignment, or other disposition or dilution as permitted under this agreement, any other Joint Venturer may, by notice given to all the Joint Venturers and the JV Company, cause that Joint Venturer to make a Deemed Sale Offer to the other Joint Venturers for the Fair Market Value for all of the Joint Venture Interest as at the date of a Deemed Sale Offer.
(c) On agreement or determination of the Fair Market Value, the Deemed Sale Offer is open for acceptance by all the other Joint Venturers pro rata in proportion to their respective Percentage Shares or such other proportions as they may agree and is irrevocable for a period of 60 days.
(d) A Deemed Sale Offer by a Changed Joint Venturer may be accepted by one or more of the other Joint Venturers. A Deemed Sale Offer of a less than Minimum Interest may be accepted by one or more of the other Joint Venturers.
(e) If a Joint Venturer does elect within the 60 days to accept the Deemed Sale Offer then the parties will proceed with the sale and transfer of the Joint Venture Interest in accordance with clauses 18.2(c) to 18.5.
(f) If the Deemed Sale Offer made as a result of the Change of Control is not accepted by any Joint Venturer in accordance with this clause, the Changed Joint Venturer is not required to transfer its Joint Venture Interest as a result of such Change of Control.
(g) If the Deemed Sale Offer of a less than Minimum Interest is not accepted by any of the other Joint Venturers in accordance with this clause, the Joint Venturer holding less than a Minimum Interest is not required to transfer its Joint Venture Interest.
15.8 Joint Venturer ceasing to be a Joint Venturer
(a) If an Assignment of the whole or part of a Joint Venture Interest is made in accordance with this agreement (other than an Assignment to an Affiliate) the assignor is released from its obligations under this agreement arising after the Assignment to the extent of the Joint Venture Interest Assigned, other than the obligations of confidentiality contained in this agreement.
(b) If a person ceases to be a Joint Venturer, that person is not relieved of any liability under this agreement which was incurred or arose on or before the date when it ceased to be a Joint Venturer, unless this agreement otherwise provides.
16. Sole Risk
16.1 Sole Risk Proposal and Area
(a) Subject to the Phase 1 FID occurring, at any time after 24 months from the Completion Date, a Joint Venturer may by 30 days' notice to the other Joint Venturers propose that a Proposed Programme and Budget for further Exploration and a Definitive Feasibility Study for a potential further Development be prepared (Sole Risk Proposal) in the area of RL2002 that is not included in the existing Mining Area (Sole Risk Proposal Area), identified in the notice (which shall be identified in a map) in which the Sole Risk Proposal is to be undertaken (Sole Risk Area). For clarity, the Sole Risk Proposal Area excludes MIN5532 and the Phase 2 Mining Area.
(b) The Directors must convene a meeting of the Board within 7 days of the expiration of the 30-day notice period and at that meeting the Board may resolve that the JV Company proceed with the Sole Risk Proposal as Joint Venture Activities.
(c) Where the Board resolves not to proceed or fails to pass a resolution to proceed with the Sole Risk Proposal as Joint Venture Activities any Joint Venturer who voted in favour of the Sole Risk Proposal may by written notice (Sole Risk Notice) to the other Joint Venturer elect to undertake the Sole Risk Proposal.
16.2 Sole Risk Development
(a) A Joint Venturer electing to undertake and contribute to the Sole Risk Proposal (Sole Risk Development Joint Venturer) is referred as undertaking a Sole Risk Development.
(b) The Sole Risk Development must be carried out at the cost, risk and expense of the Sole Risk Development Joint Venturer substantially in accordance with the Sole Risk Proposal, subject to reasonable (and not material) deviation from the Sole Risk Proposal in the ordinary course. In the event that the Sole Risk Development Joint Venturer electing to undertake the Sole Risk Proposal proposes to materially amend the Sole Risk Proposal, the Sole Risk Development Joint Venturer must seek Special Majority Vote by the Board.
(c) Upon commencement of the Sole Risk Development:
(i) the Sole Risk Area is excised from this agreement;
(ii) the Sole Risk Area must be held by the JV Company for the benefit of the Sole Risk Development Joint Venturer as beneficial owner; and
(iii) the Sole Risk Development Joint Venturer(s) must indemnify and keep indemnified the other Joint Venturers not electing to undertake the Sole Risk Proposal (Non-Participating Joint Venturers) against all claims and liability arising out of any acts or omissions committed by the Sole Risk Development Joint Venturer in carrying out any Sole Risk Development; and
(iv) if the Sole Risk Development Joint Venturer fails to commence the Sole Risk Development in the Sole Risk Area in accordance with the terms of the Sole Risk Proposal within 12 months from the date of the Sole Risk Notice, the Sole Risk Development Joint Venturer is deemed to have agreed not to proceed with Mining in the Sole Risk Area, whereupon the Sole Risk Area will revert to and be included in the Tenements and the Joint Venturers will be entitled to an interest in the Sole Risk Area in accordance with their then Percentage Shares.
16.3 Sole Risk Development report and buy-back
(a) Upon completion of any Sole Risk Development consisting of further Exploration and appraisal in the Sole Risk Area, 2 copies of a report of the outcome of the Sole Risk Development (Sole Risk Operations Report) must be prepared and delivered by the Joint Venturers.
(b) Within 60 days of receipt of the Sole Risk Operations Report, each Non-Participating Joint Venturer has the right, exercisable by notice given to the Sole Risk Development Joint Venturer, to elect to purchase from the Sole Risk Development Joint Venturer a Joint Venture Interest or the equivalent in the Sole Risk Development (Buy-Back Interest) equal to the Percentage Share in the Joint Venture which it surrendered to the Sole Risk Development Joint Venturer.
(c) A Non-Participating Joint Venturer which gives notice under this clause to purchase a Joint Venture Interest or the equivalent in the Sole Risk Development is called a Buy-Back Joint Venturer.
(d) The consideration payable by a Buy-Back Joint Venturer to the Sole Risk Development Joint Venturer is:
(i) A lump sum in cash equal to the amount of such Non-Participating Joint Venturer's Percentage Share of all costs and expenses that were incurred by the Sole Risk Development Joint Venturer in the Sole Risk Development up to the date of the exercise of the election by the Buy-Back Joint Venturer escalated at 10% per annum (Buy-Back Amount); plus
(ii) A further lump sum in cash equal to 0.5 times the Buy-Back Amount (Buy-Back Premium) in compensation for the risk that the Sole Risk Development Joint Venturer undertook in undertaking the Sole Risk Development.
(e) Within 60 days of exercising its right to purchase the Buy-Back Interest, the Buy-Back Joint Venturer must, in exchange for the assignment and transfer of the Buy-Back Interest:
(i) pay the Buy-Back Amount and the Buy-Back Premium to the Sole Risk Development Joint Venturer;
(ii) assume all future obligations and liabilities in respect of the Buy-Back Interest, including the obligation to fund its pro-rata share of any Definitive Feasibility Study;
(iii) pay all stamp duty and other transfer costs in respect of the transfer of the Buy-Back Interest; and
(iv) release the Sole Risk Development Joint Venturer from all claims the Buy-Back Joint Venturer may have against any of them in connection with the Buy-Back Interest.
16.4 Consequences of buy-back
If all the Non-Participating Joint Venturers acquire a Buy-Back Interest, so that the Joint Venturers then hold the same Percentage Share of Joint Venture Interest in the Sole Risk Development as in the JV Company, the parties may agree to terminate the Sole Risk Development as an independent arrangement and merge it into this Joint Venture agreement.
16.5 Consequence of non-exercise of the buy-back
If no or not all of the Non-Participating Joint Venturers elect to acquire a Buy-Back Interest:
(a) the Sole Risk Development will continue as an independent project and excised from this agreement;
(b) the Sole Risk Area must continue to be held by the JV Company for the benefit of the Sole Risk Development Joint Venturer(s) as beneficial owner;
(c) for such time that the JV Company remains the beneficial owner, the Sole Risk Development Joint Venturer(s) must indemnify and keep indemnified the other Joint Venturers against all claims and liability arising out of any acts or omissions committed by the Sole Risk Development Joint Venturer(s) in carrying out any Sole Risk Development; and
(d) the Sole Risk Development Joint Venturer(s) may at any time elect to transfer the legal interest in the Sole Risk Area and any other assets related to the Sole Risk Development from the JV Company to another entity at the Sole Risk Development Joint Venturer(s)'s cost and expense.
17. Default
17.1 Breach Default Event to be remedied
(a) The JV Company or any Non-Defaulting Joint Venturer may at any time after a Breach Default Event occurs serve a written notice on the Defaulting Joint Venturer specifying the nature of the Breach Default Event and requiring it to be remedied. The Defaulting Joint Venturer must then:
(i) if the Breach Default Event is capable of being remedied, remedy the default within 30 days of its receipt of the notice of default; or
(ii) if the Breach Default Event is not remedied within 30 days or is not capable of being remedied, pay adequate monetary compensation to the Non-Defaulting Joint Venturers such payment to be made within 7 days of receipt of notification of the amount of compensation payable as determined under this agreement unless the matter is a Breach Default Event which arises from an Insolvency Event in which case the provisions of clause 17.6 will apply.
(b) Other than in relation to a Breach Default Event which arises from an Insolvency Event, the Joint Venturers must agree in writing to the amount of adequate monetary compensation to be paid by the Defaulting Joint Venturer under this clause. If the Joint Venturers have not reached agreement within 30 days after the date on which notice of default is given, that amount must be determined by an Expert appointed under clause 24 of this agreement, who must make such determination within 60 days of his or her appointment.
(c) On agreement or determination of the amount of adequate monetary compensation under this clause, that amount, and any interest and costs payable or reimbursable under this agreement, becomes Unpaid Monies due under this agreement after 7 days.
17.2 Unpaid Monies Default Event to be remedied
(a) For clarity, Unpaid Monies Default Events that occur under this agreement will be remedied as follows:
(i) Unpaid Monies Default Events occurring during the Farm-In Period:
(A) prior to Completion, in accordance with clause 3.2;
(B) after Completion and prior to Phase 1 FID, in accordance with clause 6.3(a); and
(C) after Phase 1 FID and prior to the Farm-In Completion Date, in accordance with clause 8.4;
(ii) Unpaid Monies Default Events occurring after the Farm-In Period, in accordance with clause 17.2(b) and 17.2(c).
(b) Subject to clause 17.2(a), if an Unpaid Monies Default Event occurs, the Board or Non-Defaulting Joint Venturer must promptly give to the Defaulting Joint Venturer a notice to pay all Unpaid Monies within 30 days after the Due Date (Non-payment Notice).
(c) If the Defaulting Joint Venturer fails to comply with the Non-payment Notice, the Board or Non-Defaulting Joint Venturer shall be subject to dilution in accordance with clause 20.
17.3 Interest and costs
Interest at the Agreed Interest Rate is payable on all Unpaid Monies not paid on or before the Due Date, from but excluding the Due Date up to and including the date upon which the moneys are paid.
17.4 Period of Unpaid Monies Default
An Unpaid Monies Default Event must not be treated as having been remedied for the purposes of this agreement until:
(a) the Defaulting Joint Venturer has paid, or caused to be paid, all Unpaid Monies due to JV Company;
(b) the agreement is terminated in accordance with clause 3.2;
(c) the whole of the Defaulting Joint Venturer's Joint Venture Interest is acquired in accordance with clause 6.3(a) or 8.4; or
(d) the Defaulting Joint Venturer's Joint Venture Interest has been diluted in accordance with clause 20.
17.5 Prescribed Event
(a) If a Joint Venturer becomes subject to a Prescribed Event, the affected Joint Venturer must:
(i) give notice to the Board and the other Joint Venturers of the Prescribed Event as soon as reasonably possible after becoming aware of that fact; and
(ii) in the case of FEOC, [***] (Prescribed Event Date).
(b) The non-affected Joint Venturer will provide all assistance reasonably requested by the affected Joint Venturer in relation to the exemption, waiver or confirmation process, including entering into good faith discussions with a view to agreeing any changes to the agreement which may be necessary so that the affected Joint Venturer is no longer subject to a Prescribed Event.
(c) If a Joint Venturer becomes subject to a Prescribed Event:
(i) the affected Joint Venturer may, despite any other provision of this agreement, undertake and complete within 180 days of the Prescribed Event Date a sale of its Joint Venture Interest or undergo a Change of Control so that the Joint Venturer is no longer subject to a Prescribed Event (in which case the sale of the Joint Venture Interest or the Change of Control will be deemed permitted and the unaffected Joint Venturer will execute any document reasonably required to give effect to such sale (as long as the transferee itself is not a Specified Foreign Party)), such 180 day period which may be extended by agreement of the Joint Venturers (acting reasonably), including where additional time is required to satisfy a regulatory approval required for such sale or Change or Control; and
(ii) if the affected Joint Venturer does not obtain the exemption, waiver or other confirmation within such 180 days (as may be extended in accordance with this agreement) as set out in clause 17.5(a)(ii) or undertake a permitted sale or Change of Control within the 180 days (as may be extended in accordance with this agreement) as set out in clause 17.5(a)(ii), then the provisions of clause 17.6(a)(ii) will apply.
17.6 Buy-Out Election
(a) If:
(i) a Breach Default Event which arises from an Insolvency Event, is not remedied within 30 days from the Due Date, or from the date of receipt of the default notice under clause 17.1, as the case may be; or
(ii) any Joint Venturer undergoes a Prescribed Event and the exemption, wavier or confirmation referred to in clause 17.5 is not obtained within 180 days' of the Prescribed Event Date (as may be extended in accordance with this agreement) and the Prescribed Event is not otherwise remedied within that 180 day period (or such other period agreed in accordance with this agreement),
any one or more Non-Defaulting Joint Venturers may (but are not obliged to) give notice to the other Joint Venturers (including the Defaulting Joint Venturer) and the Manager stating that it wishes, or they wish, to acquire, subject to clause 18.1, the whole (but not part) of the Defaulting Joint Venturer's Joint Venture Interest pursuant to this agreement (Buy-Out Election). Where more than one Non-Defaulting Joint Venturer wishes to enforce a Buy-Out Election, those Non-Defaulting Joint Venturers must do so, unless otherwise mutually agreed between them, severally in the proportion to their respective Percentage Shares.
(b) For the purposes of this clause 17.6 and clause 18 only, references to a Defaulting Joint Venturer will be deemed to include a Joint Venturer who is affected by a Prescribed Event and Non-Defaulting Joint Venturer will have a corresponding meaning.
17.7 Preservation of other rights
Nothing in this agreement affects the right of a party to:
(a) subject to observance of the Dispute resolution provisions of this agreement, commence litigation in respect of a Default Event; or
(b) exercise any other rights or remedies available to the party under this agreement or at law or in equity.
18. Enforcement of Buy-Out Election
18.1 Effect of Buy-Out Election
Upon a Buy-Out Election being made, the Non-Defaulting Joint Venturers which have agreed or elected to pursue the Buy-Out Election (Enforcing Joint Venturers) must, within 30 days from the Buy-Out Election coming into effect, subject to clause 18.2(a), on the Buy-Out Completion Date, acquire:
(a) in the case of a Breach Default Event which arises from an Insolvency Event, the whole (but not part) of the Defaulting Joint Venturer's Joint Venture Interest, provided that if the relevant Insolvency Event is remedied in full in accordance with this agreement 14 days before the Buy-Out Completion Date, the Buy-Out Election under this agreement lapses; and
(b) in the case of a Prescribed Event:
(i) that proportion of the Defaulting Joint Venturer's Joint Venture Interest required to remedy the Prescribed Event, as determined by the Defaulting Joint Venturer and Enforcing Joint Venturers acting reasonably. Where this clause 18.1(b)(i) applies, the provisions of this clause 18 relating to the "whole of the Joint Venture Interest" will be interpreted to apply only to that proportion of the Defaulting Joint Venturer's Joint Venture Interest accordingly; and
(ii) where the Defaulting Joint Venturer and Enforcing Joint Venturers cannot agree on the Joint Venture Interest to remedy the Prescribed Event, the Enforcing Joint Venturers may, but are not required to, acquire 100% of the Defaulting Joint Venturer's Joint Venture Interest, for 80% of the Fair Market Value.
18.2 Determination of Fair Market Value and Completion Date
(a) Upon the Fair Market Value being determined by the Expert, each Enforcing Joint Venturer must within 7 days of receiving the Expert's determination advise the Defaulting Joint Venturer if it elects to proceed or not proceed with the Buy-Out Election, otherwise each Enforcing Joint Venturer that does not so advise of its election will be deemed to elect not to proceed with the Buy-Out Election.
(b) If no Enforcing Joint Venturers elect to proceed with the Buy-Out Election under clause 18.2(a), then the Buy-Out Election option will lapse and be no longer capable of exercise.
(c) The Buy-Out Completion Date will be 30 Business Days after the later of:
(i) the agreement by the parties of the Fair Market Value; or
(ii) the election of the Enforcing Joint Venturer to proceed with the Buy-Out Election in accordance with clause 18.2(a).
18.3 Buy-Out Completion
(a) On the Buy-Out Completion Date, the Defaulting Joint Venturer must on or before the Buy-Out Completion Date (provided that the Buy-Out Completion Date will be extended as required to seek FIRB approval or no objection):
(i) transfer the whole of its Joint Venture Interest to the Enforcing Joint Venturers by executing and delivering all share transfers, Director resignations, deeds and documents necessary for, and complete (and register, if required by the law of the Nominated State), the Assignment of its Joint Venture Interest to the Enforcing Joint Venturers; and
(ii) cause any Directors it has appointed to the Board to resign with immediate effect.
(b) Upon the Buy-Out Completion Date, the Enforcing Joint Venturers must severally in proportion to their respective Percentage Shares, or in such other proportions they agree:
(i) assume all future obligations and liabilities in respect of the whole of the Defaulting Joint Venturer's Joint Venture Interest;
(ii) pay the amount of consideration determined in accordance with this agreement for the Joint Venture Interest to the Defaulting Joint Venturer in immediately available funds, without counterclaim or set-off;
(iii) pay all stamp duty and other transfer costs which become payable upon the Enforcing Joint Venturers acquiring its Joint Venture Interest; and
(iv) release the Defaulting Joint Venturer from all claims the Enforcing Joint Venturers have against the Defaulting Joint Venturer in connection with the relevant Default Event or Prescribed Event (as applicable).
18.4 Release of Defaulting Joint Venturer
Upon completion (and registration, if required) of the Assignment of its Joint Venture Interest to the Enforcing Joint Venturers in accordance with clause 18.3, the Defaulting Joint Venturer is released from its obligations under this agreement arising after the Buy-Out Completion Date other than those obligations accruing or arising prior to the Buy-Out Completion Date.
18.5 Attorney
Each Defaulting Joint Venturer irrevocably appoints the Enforcing Joint Venturers jointly and severally as its lawful attorney to act for it in its name or otherwise as the Manager (acting reasonably) deems fit for the purposes of on default by it of performance of any of its obligations under clause 18.3(a).
19. Fair Market Value
(a) This clause 19 applies in any other situation where this agreement otherwise permits or requires any Fair Market Value to be agreed or determined.
(b) The Joint Venturers must use their best endeavours to agree on the Fair Market Value of the relevant Joint Venture Interest.
(c) If the Joint Venturers cannot agree on the Fair Market Value within 14 days of the date they first seek to come to agreement then the value will be determined by an Expert appointed under clause 24 this agreement in accordance with the procedures set out in clause 24.
(d) In addition to the procedures set out in clause 24, the Joint Venturers may make submissions to the Expert on its nominated value (including supporting data, calculations and assumptions) (a copy of which must be provided to the other Joint Venturers).
(e) Unless the Joint Venturers otherwise agree, the Expert must conduct, and make, the determination in accordance with the then applicable Australasian Code for Public Reporting of Technical Assessments and Valuations of Mineral Assets Resolution Institute's then applicable Expert Determination Rules (as may be varied by any provision of this agreement).
(f) Notwithstanding any other provision in this agreement, the Fair Market Value shall be determined without taking into account any control premium or lack thereof.
20. Dilution
(a) This clause 20 applies where the Joint Venture Interest of a Joint Venturer (Diluting Joint Venturer) is reduced and diluted in accordance with this agreement.
(b) The Percentage Share of the Joint Venturer's Joint Venture Interest will be calculated as follows:
EFR's Percentage Interest:
D&J's Percentage Interest:
Where:
IE = EFR's Percentage Share
IA = D&J's Percentage Share
EA = EFR Actual Expenditure plus the value of any EFI Common Shares that have been issued to Astron under clauses 5.1 and 6.4
Eu = EFR un-spent farm-in commitment ($208m less EA)
AD = D&J Deemed Expenditure = $((183 + 25)/0.49 - (183 + 25)) million = $216.49 million
AA = D&J Actual Expenditure
(c) The Board must direct the Manager to recalculate the Joint Venture Interest of each Joint Venturer in accordance with the dilution formula set out in clause 20(b) above and notify the Joint Venturers of their respective Joint Venture Interest.
(d) Upon the effectiveness of such recalculation, on request by a Joint Venturer, the Diluting Joint Venturer must within 30 days of receiving the request, at its cost and expense execute and deliver all documents, including share transfers, Director resignations, and pay all stamp duty and other transfer costs necessary to complete the transfer of the applicable Joint Venture Interest to the non-Diluting Joint Venturers.
21. Term, suspension and termination of Joint Venture
21.1 Term of agreement
This agreement commences in accordance with clause 2.1 and continues until the earliest to occur of any of the following Termination Events:
(a) all Joint Venturers agree in writing to terminate the Joint Venture;
(b) any Joint Venturer holds all of the issued Shares;
(c) the Board determines unanimously that all economically recoverable reserves of Products in the Mining Area have been recovered, there is no reasonable prospect of economically recovering Products from the Mining Area in the future, and it is in the best interests of the Joint Venture to terminate; or
(d) the JV Company holds no interest in any Tenement,
and further until completion of the winding up of all Joint Venture Activities.
21.2 Winding up of Joint Venture
Immediately following the occurrence of a Termination Event, the Board must commence (or procure) winding up Joint Venture Activities including:
(a) arranging for an evaluation of the Shutdown Costs as at the date of the termination of the Joint Venture, including the cost of satisfying the Rehabilitation Obligations;
(b) taking such steps to dispose of Joint Venture Property as directed by the Board;
(c) satisfying all Rehabilitation Obligations;
(d) to the extent reasonably possible, meeting the Shutdown Costs from the proceeds of realization of Joint Venture Property; and
(e) after paying the Shutdown Costs distributing by way of dividend or return of capital any net amount remaining from the proceeds of realization of Joint Venture Property among the Joint Venturers pro rata in proportion to their respective Percentage Shares.
21.3 Certain obligations continue beyond termination
Subject to clause 21.5, upon termination of this agreement for any reason, all rights and obligations of the Joint Venturers to each other in their capacity as Joint Venturers cease.
21.4 Extension of term
The Joint Venturers may at any time consult with each other for the purpose of determining whether the term of this agreement should be extended beyond the period it would otherwise expire. A failure by any Joint Venturer to agree to such extension may not be referred to any Dispute Resolution Process.
21.5 Survival
The occurrence of any event specified in clause 21.1 will not affect:
(a) any accrued rights and obligations of the parties in respect of any breach of this agreement prior to the occurrence of that event; or
(b) any provision of this agreement which is expressed to come into effect on, or survive, the occurrence of that event.
22. Confidentiality
22.1 Confidentiality
Each party (recipient) must keep secret and confidential, and must not divulge or disclose:
(a) the terms and conditions of this agreement;
(b) all information flowing to any Joint Venturer from Joint Venture Activities, or in relation to Joint Venture Activities;
(c) any information relating to another Joint Venturer or its business (which is disclosed to the recipient in the course of a transaction contemplated by this agreement); and
(d) any Mining Information, Joint Venture Intellectual Property and Astron Background Intellectual Property,
(Confidential Information).
22.2 No disclosure except as permitted
Except as permitted by this agreement, each Joint Venturer and the JV Company undertakes that it will keep confidential all Confidential Information received by it and that neither it nor its directors, officers, employees or agents will, without the consent of each of the other Joint Venturers, disclose any Confidential Information to any Third Party.
22.3 Permitted disclosure
(a) A party may disclose Confidential Information:
(i) to the professional advisers or agents of that party;
(ii) to an Affiliate of that Joint Venturer, provided that the recipient must ensure that its Affiliates comply in all respects with the recipient's obligations under this clause 22;
(iii) the information is in the public domain as at the date of this agreement (or subsequently becomes in the public domain other than by breach of any obligation of confidentiality binding on the recipient);
(iv) subject to clause 22.4(b), as required by Law (except to the extent the requirement can be excluded or limited by contract or by a confidentiality obligation) or by any competent Authority, whether the obligation arises as a consequence of the act of the recipient or otherwise;
(v) subject to clause 22.4(b), to any stock exchange pursuant to Listing Rules which require disclosure;
(vi) subject to clause 22.4(b), where reasonably necessary for the purposes of any arbitration or administrative or legal proceedings involving only the parties; or
(vii) to a Third Party, and its advisers, bona fide tendering for or negotiating the purchase of all or part of the interest of a Joint Venturer in the Joint Venture or for the provision of finance to that Joint Venturer but only if the Third Party and its advisers first covenant in writing to the disclosing Joint Venturer to preserve confidentiality of information disclosed in the same terms as this clause 22.
(b) A Joint Venturer making a permitted disclosure under this clause must take all reasonable steps to ensure that the person to whom disclosure is made keeps confidential all Confidential Information disclosed.
22.4 Publicity and disclosure
(a) Except for an announcement or other disclosure required by Law or permitted by this agreement, no public announcement naming a Joint Venturer or other public disclosure may be made in relation to Joint Venture Activities or Joint Venture Property unless the text of the announcement or disclosure has been approved by the other Joint Venturers.
(b) To the extent that an announcement or other disclosure is required by Law, the Joint Venturers must use all reasonable endeavours to agree, as soon as reasonably practicable having regard to the required timing of the disclosure, the wording of such announcement or disclosure before it is made.
22.5 PPSA
In addition to the obligations imposed under this clause 22, each party agrees to not disclose any information of the kind described in section 275(1) of the PPSA, including:
(a) information about this agreement including a copy of it; or
(b) information about the amount or the obligation secured by any 'Security Interest' (for the purposes of the PPSA) created by or under this agreement and the terms of such payment or performance at any time.
22.6 Obligations exist beyond termination
The obligations in relation to Confidential Information imposed by this agreement continue until all the Confidential Information ceases to be confidential despite the termination of this agreement for any reason.
23. Dispute Resolution
23.1 General
(a) Clauses 23.2, 23.3 and 23.4 will not apply to:
(i) any matter which is the subject of resolution of the Board or the Joint Venturers pursuant to clauses 9 or 10, or a Deadlock pursuant to clause 11; or
(ii) any dispute or matter that this agreement provides is to be determined by an Expert under clause 24.
(b) A party may not commence court proceedings in relation to any dispute arising out of or in relation to this agreement until it has complied with the dispute resolution process set out in clauses 23.2, 23.3 and 23.4 (Dispute Resolution Process), unless the party seeks appropriate injunctive or other interlocutory relief to preserve property or rights or to avoid losses that are not compensable in damages.
23.2 Dispute resolution process
(a) If any claim, dispute or question arises under this agreement or between the parties (Dispute), then either party may give a notice in writing to the other parties in respect of the Dispute (Dispute Notice) which Dispute Notice must:
(i) state that the notice is given under this clause 23; and
(ii) describe the nature of the Dispute.
(b) Representatives of the parties, who are authorised to negotiate and settle the Dispute on behalf of such party, must negotiate in good faith with a view to resolving the Dispute within 14 days after the receipt of the Dispute Notice, (or such longer period as those representatives agree), failing which the Dispute must be immediately referred to the Chief Executive Officers of the parties.
(c) The Chief Executive Officers must negotiate in good faith with a view to resolving the Dispute within 14 days of the Dispute being referred to them (or such longer period as the Chief Executive Officers agree) failing which, the Dispute may be immediately referred by any party by notice to mediation under clause 23.3 (or where applicable Expert determination) under this agreement, unless otherwise agreed by the parties.
23.3 Mediation
Mediation of a Dispute must:
(a) be conducted in the Nominated State by the person or body agreed to by the parties or, failing agreement within 35 days after receipt of the Dispute Notice, as nominated by the President for the time being of the Law Society of the Nominated State on request by either party;
(b) be conducted in accordance with such rules as may be agreed by the parties or, failing agreement within 35 days after receipt of the Dispute Notice, in accordance with the rules nominated by the person or body agreed or nominated to conduct the mediation;
(c) be at the cost and expense of the parties equally (except that each party must pay its own advisers, consultants and legal fees and expenses) unless the parties otherwise agree; and
(d) if not earlier resolved, be continued for a period expiring on the date being 14 days after the nomination of the mediator (or such other period as the parties may agree) after which the parties may at any time after that date by agreement refer the matter to arbitration in accordance with clause 23.4 and in the absence of such an agreement a party may commence legal proceedings in an appropriate court in Victoria.
23.4 Arbitration
(a) Any Dispute submitted by agreement to arbitration in accordance with clause 23.3(d) will be resolved in accordance with the rules of the Australian Centre for International Commercial Arbitration (ACICA).
(b) The number of arbitrators will be one, being an independent person agreed between the parties, and failing agreement a person appointed by the ACICA (or such other similar arbitration centre agreed between the parties). The seat of the arbitration will be Melbourne, Victoria, Australia. The language of the arbitration will be English.
(c) The arbitration agreement set out in clauses 23.4(a) and 23.4(b) is governed by the law in force in Victoria, Australia.
(d) The costs of the arbitrator will be borne as between the parties to the dispute as determined by the arbitrator.
(e) Each party is responsible for its own costs in connection with the Dispute Resolution Process.
23.5 Dispute Resolution Process not to interrupt Joint Venture Activities
The parties must ensure that neither the commencement nor conduct of any Dispute Resolution Process, including mediation, arbitration or Expert determination, causes any interruption to Joint Venture Activities or to the performance by the parties of their respective obligations under this agreement, nor will it affect any of the time limits fixed in this agreement unless the performance of Joint Venture Activities or a party under this agreement is materially affected by the submission of the matter in dispute to arbitration or by the result of the arbitration.
23.6 Clause does not apply to matters where consent required
If this agreement refers to the parties reaching agreement on a matter or the consent of any party being given then, except where this agreement requires that consent or agreement is not to be unreasonably withheld, the Dispute Resolution Process cannot be used to resolve a dispute between the parties in relation to the reaching of that agreement or the giving of that consent.
24. Expert Determination
24.1 Expert determination
Where a matter is permitted or required by this agreement to be determined by an Expert or if the parties otherwise agree, any party may refer the matter to the expert determination by an Expert and the following provisions apply:
(a) the process for the Expert's determination must be conducted in accordance with the rules of the Resolution Institute current as at the date the matter is referred to the Expert;
(b) subject to any other determination by the Expert, the costs of obtaining the determination must be at the cost and expense of the parties equally (except that each party must pay its own advisers, consultants and legal fees and expenses) unless the parties otherwise agree;
(c) the Expert determination must be conducted by a person or body agreed to and appointed by the Joint Venturers, or failing agreement within 14 days after a party proposes a person or body by the person or body nominated by the Resolution Institute, who accepts that appointment;
(d) before being appointed as an Expert, the person or body must disclose fully to the parties any interest or duty which may conflict with his or her position;
(e) except as disclosed to and accepted by all the parties, the appointed Expert:
(i) must have no interest or duty which conflicts, or which may conflict, with his or her function as the Expert; and
(ii) must not be a current employee or representative of, or a person who provides consultancy services on a regular basis to any party;
(f) the terms of the appointment must provide that the Expert must not make a determination of a matter in relation to the dispute which is outside his or her subject matter expertise;
(g) except where the terms of the appointment provide otherwise, the determination must be made in accordance with, and subject to, the Institute of Arbitrators & Mediators Australia Expert Determination Rules in force when the issue arises;
(h) in making a determination:
(i) the Expert must act in that capacity and not as an arbitrator;
(ii) the Expert's finding is final and binding upon the parties in the absence of manifest error or fraud; and
(iii) the Expert must determine which party or parties should bear the costs of any such determination and in what proportion. In making this decision, the Expert must consider the degree to which he or she considers such party was unreasonable in failing to agree to the matter; and
(iv) the Expert must exercise their own skill, judgment and experience but the Expert may employ consultants and obtain advice on matters outside his or her expertise to assist the Expert to carry out his or her duties.
(i) the Expert must give the JV Company and the Joint Venturers a written decision, including reasons for the decision, within 20 Business Days after the date of appointment of the Expert; and
(j) the JV Company and the Joint Venturers must continue to perform their obligations under this agreement except to the extent that the matter, the subject of the Expert determination and matters necessarily dependent on it, cannot be proceeded with until the matter has been determined by the Expert.
25. Force Majeure
25.1 Meaning of Force Majeure
The term 'Force Majeure' as used in this agreement means any cause which is not reasonably within the control of the Joint Venturer or the Manager claiming relief by reason of Force Majeure, which cause may include, but is not limited to:
(a) an act of God, earthquake, lightning, fire, flood, storm, cyclone, explosion or epidemic;
(b) strike, lockout, stoppage, protest, ban or other types of community, social or labour difficulty whether at the Mining Area, haulage roads, railway or port or otherwise;
(c) war (whether declared or undeclared), blockade, act of the public enemy, act of terrorism, cybersecurity attack, revolution, insurrection, riot or civil commotion;
(d) embargoes or restraint by an Authority (including heritage related restraints and, refusal or failure to grant any Authorisation despite timely and reasonable endeavours to obtain the same);
(e) inability to access all or any part of the Mining Area because of Native Title Claims or otherwise; or
(f) unavailability of equipment or transport, or inability to access the Tenements or any relevant portion of them;
and any other cause whether of the kind specifically listed above or otherwise which is not reasonably within the control of the Joint Venturer or Manager claiming Force Majeure, except where:
(g) the cause is the inability to obtain, use or pay, moneys for any reason; or
(h) the consequences of the cause could have been prevented, overcome or remedied by the exercise by the party affected of care and diligence consistent with Good Mining Practice.
25.2 Relief
If, as a direct result of an event or occurrence of Force Majeure (Force Majeure Event), a Joint Venturer or the Manager becomes unable, wholly or in part, to perform an obligation under this agreement:
(a) that Joint Venturer or the Manager may give the other Joint Venturers notice of the Force Majeure Event with reasonably full particulars and, insofar as is known to it, the probable extent to which it will be unable to perform, or be delayed in performing its obligation;
(b) on giving the notice of the Force Majeure Event, that obligation is suspended but only to the extent that and for so long as it is affected by the Force Majeure Event;
(c) the Joint Venturer or Manager affected by the Force Majeure Event must use all reasonable diligence to overcome or remove the effect of the Force Majeure Event as quickly as possible;
(d) if the Force Majeure Event cannot be removed, overcome or abated to an extent that allows resumption of performance within 6 months (or such other period as the Joint Venturers agree) from the date the Joint Venturers first became so affected, the Joint Venturers must consider and determine whether this agreement must be modified or terminated; and
(e) despite the Force Majeure Event, the Joint Venturers must continue to pay the Manager such monies as are necessary to maintain the Joint Venture Property in good condition and keep the Tenements in good standing in accordance with Good Mining Practice, and in the event of a Force Majeure Event affecting the JV Company the parties acting reasonably will agree on any necessary changes to modify the Called Sums (including for the Farm-in Funding during the Farm-in Period) for activities that may be affected by the Force Majeure Event.
25.3 Labour disputes and Native Title matters
The obligation to use all reasonable diligence to overcome or remove the effect of the Force Majeure does not require the affected Joint Venturer or Manager to:
(a) settle any strike, or other labour dispute;
(b) contest the validity or enforceability of any law, regulation or legally enforceable order by way of legal proceedings; or
(c) settle any Native Title Claim or enter into any agreement with respect to Native Title Claims,
on terms not acceptable to it solely for the purpose of removing the event of Force Majeure.
25.4 Resumption
The affected Joint Venturer must resume performance of its obligations as soon as, and to the extent that, it is no longer affected by the Force Majeure Event.
26. Representations and warranties
26.1 Representations and warranties from D&J
(a) D&J and DMS warrant for the benefit of EFR the Warranties set out in Schedule 3. Such Warranties are given and are current as of the date of this agreement and as at the Completion Date. D&J and DMS acknowledge that EFR has entered into this agreement in reliance on Warranties set out in Schedule 3. Each Warranty must be construed independently and is not limited by reference to another Warranty.
(b) The liability of D&J and DMS for any breach of the Warranties set out in Schedule 3 will be limited on the terms as set out in Schedule 3.
(c) Where a Warranty is given subject to the awareness of DMS or D&J such awareness is to be construed by reference to the knowledge of Tiger Brown, Greg Bell, Sean Chelius and Joshua Theunissen.
(d) The maximum aggregate amount that D&J, DMS or its Affiliates is required to pay in respect of any claim or loss under this agreement for breach of any and all Warranties is $25 million.
26.2 Party warranties
Each party warrants for the benefit of each other party that:
(a) it is validly incorporated, organised and subsisting in accordance with the laws of its place of incorporation;
(b) it has full power and capacity to enter into and perform its obligations under this agreement;
(c) all necessary authorisations for the execution, delivery and performance by it of this agreement in accordance with its terms have been obtained;
(d) its execution, delivery and performance of this agreement complies with its constating documents and does not constitute a breach of any law or obligation, or cause a default under any agreement by which it is bound; and
(e) it enters into and performs this agreement on its own account and not as trustee for or nominee of any other person.
27. Notices
27.1 Form of Notice
A notice, certificate, consent, approval, waiver or other communication in connection with this agreement (Notice) must be in writing or given by electronic transmission in accordance with this clause 27, signed by the sender (if an individual) or an authorised officer of the sender and marked for the attention of the person set out below or such person otherwise notified:.
(a) D&J
Address: Level 10, 224 Queen Street, Melbourne VIC 3000
Attention: Joshua Theunissen, Company Secretary
Email: [******************************]
(b) EFR:
Address: 225 Union Blvd., Suite 600, Lakewood CO, USA 80228
Attention: David C. Frydenlund, Executive Vice President and Chief Legal Officer
Email: [******************************]
(c) JV Company:
Address: Level 10, 224 Queen Street, Melbourne VIC 3000
Attention: Joshua Theunissen, Company Secretary
Email: [******************************]
(d) DMS
Address: Level 10, 224 Queen Street, Melbourne VIC 3000
Attention: Joshua Theunissen, Company Secretary
Email: [******************************]
AMS
Address: Level 10, 224 Queen Street, Melbourne VIC 3000
Attention: Joshua Theunissen, Company Secretary
Email: [******************************]
27.2 When Notices are taken to have been given and received
(a) A Notice is regarded as given and received:
(i) if delivered by hand, when left at the address set out in clause 27.1 (provided a copy has also been sent via email);
(ii) if sent by pre-paid post, on the date of delivery (provided a copy has also been sent via email); and
(iii) if sent by email, at the time shown in the delivery confirmation report generated by the sender's email system which indicates that the email was sent to the recipient's email address (as recorded on the device from which the sender sent the email) unless the sender receives a message that the email has not been delivered.
(b) A Notice delivered or received other than on a Business Day or after 5.00pm (recipient's time) is regarded as received at 9.00am on the following Business Day. A Notice delivered or received before 9.00am (recipient's time) is regarded as received at 9.00am.
28. Ancillary provisions
28.1 Entire agreement
This agreement contains all the express terms that the parties have agreed in respect of its subject matter and overrides and supersedes all earlier discussions, negotiations, understandings and agreements in respect of its subject matter.
28.2 Enurement
The provisions of this agreement enure for the benefit of and are binding on each party and their respective successors and permitted assigns.
28.3 No third party reliance or inducement
Unless expressly included in this agreement, no party has relied on any statements, inducements, undertakings, representations or advice given or made, whether orally or in writing, by or on behalf of any other party, including without limitation by any officer, employee or agent of any other party.
28.4 Further assurances
Each party must promptly execute all documents and do all things necessary or desirable to give full effect to the arrangements set out in this agreement and must use all reasonable endeavours to cause third parties to do likewise.
28.5 Amendment
No modification, variation or amendment of this agreement is of any force unless it is in writing and has been signed by each of the parties to this agreement.
28.6 Severability
If any clause or any part of any clause is in any way unenforceable, invalid or illegal, it is to be read down so as to be enforceable, valid and legal, to the maximum extent possible. If this is not possible, the clause (or where possible, the offending part) is to be severed from this agreement without affecting the enforceability, validity or legality of the remaining clauses (or parts of those clauses) which will continue in full force and effect.
28.7 Waiver
A waiver of any right, power or remedy under this agreement must be in writing signed by the party granting it. A waiver is only effective in relation to the particular right, power or remedy in respect of which it is given. It is not to be taken as an implied waiver of any other right, power or remedy or as an implied waiver of that right, power or remedy in relation to any other occasion.
28.8 Applicable law
(a) This agreement is governed by and must be construed in accordance with the laws of the Nominated State.
(b) Without limiting the other terms of this agreement (including clause 23), the parties submit irrevocably to the non-exclusive jurisdiction of the courts of the Nominated State and all courts competent to hear appeals from those courts.
28.9 Fees and charges
(a) Each party must bear its own costs for the preparation, execution, delivery and performance of this agreement.
(b) Unless otherwise agreed or specified in this agreement, all stamp duties and registration fees paid relating to the registration and performance of this agreement, and of all other documents arising out of this agreement, are expenses of the JV Company.
28.10 Counterparts
This agreement may be executed in any number of counterparts and by different parties in separate counterparts, including by way of electronic transmission. Each counterpart when so executed is deemed an original but all of which together constitute one and the same instrument.
28.11 Assignment
Rights and obligations arising under this agreement cannot be assigned or transferred without the prior written consent of all the parties or as otherwise provided for in accordance with this agreement (including clauses 15 and 17.5).
28.12 MOU
With effect from the date of this agreement, the MOU is terminated and upon such termination is of no further force and effect and each party is released from any further liability in respect of it.
28.13 Registration / Caveat
The parties acknowledge that each of D&J and EFR may lodge against the Tenements a caveat in respect of its interests under this agreement in accordance with the Mining Act. The JV Company shall provide in a timely manner all necessary co-operation and consents to perfect or give effect to such caveats (including signing any consents reasonably required).
Schedule 1 - Conditions Precedent
[***]
Schedule 2 - Voting
[***]
Schedule 3 - Project representations and warranties
[***]
Schedule 4 - Offtake arrangements
[***]
Schedule 5 - Management Agreement
[***]
Schedule 6 - Form of Guarantee
[***]
Schedule 7 - Pre-FID Budget
[***]
Schedule 8 - Form of Asset Transfer Agreement
[***]
Schedule 9 - Form of Share Sale Agreement
[***]
Schedule 10 - Form of Lease Agreement
[***]
Schedule 11 - Constitution
[***]
Schedule 12 - Form of REEC Offtake Agreement
[***]
Exhibit A - Mining Area
[***]
Signing page
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Executed by Dickson & Johnson Pty Ltd in accordance with section 127(1) of the Corporations Act:
(signed) "George Alfred Lloyd" |
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(signed) "Tiger Alexander Brown" |
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Director
George Alfred Lloyd |
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Tiger Alexander Brown |
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| Executed by Donald Minerals Sands Pty Ltd in accordance with section 127(1) of the Corporations Act: (signed) "George Alfred Lloyd" |
(signed) "Tiger Alexander Brown" |
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Director Tiger Alexander Brown |
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Executed by EFR Donald Ltd.by authority of its directors in the presence of:
(signed) "Mark S. Chalmers" |
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Mark S. Chalmers |
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Executed by Donald Project Pty Ltd in accordance with section 127(1) of the Corporations Act:
(signed) "George Alfred Lloyd" |
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(signed) "Tiger Alexander Brown" |
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Director
George Alfred Lloyd |
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Tiger Alexander Brown |
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Executed by Astron Mineral Sands Pty Ltd in accordance with section 127(1) of the Corporations Act:
(signed) "George Alfred Lloyd" |
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(signed) "Tiger Alexander Brown" |
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Director
George Alfred Lloyd |
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EX 23.15
Consent of Independent Accounting Firm
June 27, 2024
United States Securities and Exchange Commission
Dear Sirs / Mesdames:
Re: Consolidated Uranium Inc.
We consent to the incorporation by reference into the registration statements (Nos. 333-205182, 333-217098, 333-226654, 333-254559, 333-194900 and 333-278611) on Form S-8 and registration statements (Nos. 333-253666, 333-226878 and 333-278193) on Form S-3 of Energy Fuels Inc. (the “Company”) of our report dated May 1, 2023, with respect to the December 31, 2022 and 2021 consolidated financial statements of Consolidated Uranium Inc. which are included in this Amendment No. 1 to the Annual Report on Form 10-K of the Company being filed with the United States Securities and Exchange Commission.
Yours very truly,
McGovern Hurley LLP
Chartered Professional Accountants
Licensed Public Accountants
EXHIBIT 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO RULE 13a-14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
I, Mark S. Chalmers, certify that:
| 1. | I have reviewed this Amendment No. 1 to the annual report on Form 10-K of Energy Fuels Inc.; | |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |
| 4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: | |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| (c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| (d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and | |
| 5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): | |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and | |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. | |
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/s/ Mark S. Chalmers |
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Date: June 27, 2024 |
Mark S. Chalmers |
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Chief Executive Officer |
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(Principal Executive Officer) |
EXHIBIT 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO RULE 13a-14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
I, Nathan Bennett, certify that:
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I have reviewed this Amendment No. 1 to the annual report on Form 10-K of Energy Fuels Inc.; |
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
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The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
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Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
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Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
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The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
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/s/ Nathan Bennett |
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Date: June 27, 2024 |
Nathan Bennett |
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Chief Accounting Officer and Interim Chief Financial Officer |
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(Principal Financial Officer) |
EXHIBIT 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. §1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Amendment No. 1 to the Annual Report of Energy Fuels Inc. (the "Company") on Form 10-K for the period ended December 31, 2023 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Mark S. Chalmers, Chief Executive Officer, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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/s/ Mark S. Chalmers |
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Mark S. Chalmers |
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Chief Executive Officer |
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(Principal Executive Officer) |
Date: June 27, 2024
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
EXHIBIT 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. §1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Amendment No. 1 to the Annual Report of Energy Fuels Inc. (the "Company") on Form 10-K for the period ended December 31, 2023 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Nathan R. Bennett, Interim Chief Financial Officer, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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/s/ Nathan Bennett |
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Nathan Bennett |
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Chief Accounting Officer and Interim Chief Financial Officer |
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(Principal Financial Officer) |
Date: June 27, 2024
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
Condensed Interim Consolidated Financial Statements of
Consolidated Uranium Inc.
For the period ended December 5, 2023 (unaudited), December 31, 2022 and
December 31, 2021
(Expressed in Canadian dollars)
Independent Auditor's Report
To the Directors of Consolidated Uranium Inc.
Opinion
We have audited the consolidated financial statements of Consolidated Uranium Inc., and its subsidiaries (the "Company"), which comprise the consolidated statements of financial position as at December 31, 2022 and 2021, and the consolidated statements of loss and comprehensive loss, consolidated statements of changes in equity and consolidated statements of cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as at December 31, 2022 and 2021 and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with International Financial Reporting Standards ("IFRS").
Basis for opinion
We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the consolidated financial statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Canada. We have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
We have determined that there were no key audit matters to communicate in our report.
Other information
Management is responsible for the other information. The other information comprises Management's Discussion and Analysis.
Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
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Page 1 |
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.
We obtained Management's Discussion and Analysis prior to the date of this auditor's report. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of management and those charged with governance for the consolidated financial statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRS, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company's financial reporting process.
Auditor's responsibilities for the audit of the consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgement and maintain professional skepticism throughout the audit. We also:
- Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risks of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
- Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control.
- Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
- Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.
- Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
The engagement partner of the audit resulting in this independent auditor's report is Glen McFarland.
McGovern Hurley LLP
Chartered Professional Accountants
Licensed Public Accountants
Toronto, Ontario
May 1, 2023
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NOTICE TO READER
CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
The unaudited condensed interim consolidated financial statements of Consolidated Uranium Inc. (the "Company") include financial statements as at December 5, 2023 and for the period ended December 5, 2023, and audited financial statements as at December 31, 2022 and 2021, and for the years ended December 31, 2022 and 2021. On December 5, 2023, the Company was acquired by IsoEnergy Ltd. (TSXV: ISO) and audited statements for the periods ended December 5, 2023 or December 31, 2023 were not required to be publicly filed by the Company with any securities regulatory authorities in Canada or the United States.
CONSOLIDATED URANIUM INC.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
Expressed in Canadian Dollars
| December 5, 2023 | December 31, 2022 | ||||||
| Note | (Unaudited) | ||||||
| Assets | |||||||
| Current Assets | |||||||
| Cash and cash equivalents | $ | 3,596,482 | $ | 14,834,706 | |||
| Restricted cash | 55,000 | 55,000 | |||||
| Amounts receivable | 764,409 | 413,828 | |||||
| Marketable securities | 3 | 7,787,750 | 1,642,583 | ||||
| Prepaid expenses and deposits | 331,533 | 538,916 | |||||
| Total Current Assets | 12,535,174 | 17,485,033 | |||||
| Non-Current Assets | |||||||
| Property and equipment | 5 | 6,590,564 | 256,168 | ||||
| Other investments | 9 | - | 800,000 | ||||
| Environmental bond | 4(a),7 | 2,594,281 | 1,837,903 | ||||
| Total Assets | $ | 21,720,019 | $ | 20,379,104 | |||
| Liabilities | |||||||
| Current Liabilities | |||||||
| Accounts payable and accrued liabilities | 6,17 | $ | 5,926,732 | $ | 2,244,053 | ||
| Lease liability | 5 | 116,940 | 19,805 | ||||
| Total Current Liabilities | 6,043,672 | 2,263,858 | |||||
| Non-Current Liabilities | |||||||
| Long term lease liability | 5 | 402,887 | - | ||||
| Asset retirement obligation | 7 | 2,157,000 | 1,742,000 | ||||
| Total Liabilities | $ | 8,603,559 | $ | 4,005,858 | |||
| Shareholders' Equity | |||||||
| Share capital | 8(a) | 160,062,842 | 115,243,596 | ||||
| Warrant reserve | 8(b) | 2,239,539 | 10,175,257 | ||||
| Option reserve | 8(c) | 10,356,585 | 8,226,490 | ||||
| RSU reserve | 8(d) | - | 565,380 | ||||
| Accumulated other comprehensive income | 2,860,964 | 1,311,844 | |||||
| Accumulated deficit | (162,403,470 | ) | (119,149,321 | ) | |||
| Total Shareholders' Equity | 13,116,460 | 16,373,246 | |||||
| Total Liablities and Shareholders' Equity | $ | 21,720,019 | $ | 20,379,104 | |||
Nature of operations and going concern (Note 1)
Commitments and contingencies (Note 4, 17)
These condensed interim consolidated financial statements were authorized for issue by the Board of Directors on June 27, 2024.
| "Philip Williams" | “Peter Netupsky” | ||
| Philip Williams, Director | Peter Netupsky, Director |
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
CONSOLIDATED URANIUM INC.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS
Expressed in Canadian Dollars
| For the period ended: | ||||||||||
| December 5, | December 31, | December 31, | ||||||||
| Note | 2023 | 2022 | 2021 | |||||||
| (Unaudited) | ||||||||||
| Expenses | ||||||||||
| Mineral property acquisition and exploration | 4 | $ | 41,257,780 | $ | 13,025,110 | $ | 59,723,076 | |||
| Share-based compensation | 8,14 | 3,120,212 | 4,474,289 | 3,181,507 | ||||||
| Professional fees | 11 | 5,844,732 | 3,990,567 | 3,672,070 | ||||||
| Consulting fees and salaries | 14 | 3,325,013 | 2,533,399 | 1,652,170 | ||||||
| Shareholder communications | 11 | 1,215,772 | 1,103,332 | 2,381,655 | ||||||
| Office and other | 1,017,619 | 417,420 | 132,624 | |||||||
| Travel | 246,622 | 229,270 | - | |||||||
| Depreciation | 5 | 212,886 | 68,709 | 44,866 | ||||||
| Total operating expenditures | 56,240,636 | 25,842,096 | 70,787,968 | |||||||
| Interest income | (426,245 | ) | (255,722 | ) | (29,636 | ) | ||||
| Other income | (82,611 | ) | - | - | ||||||
| Foreign exchange loss/(gain) | (540,402 | ) | (532,739 | ) | 112,487 | |||||
| Impairment loss | - | - | 310,000 | |||||||
| Termination payment | - | - | (160,000 | ) | ||||||
| Loss for the year before discontinued operations | 55,191,378 | 25,053,635 | 71,020,819 | |||||||
| Discontinued operations | ||||||||||
| Spin-out of Colorado Leases | 15 | 112,698 | - | - | ||||||
| Moran Lake exploration expenditures | - | - | 1,983,383 | |||||||
| Realized gain on spin-out of Labrador Uranium Inc. | - | (8,720,000 | ) | - | ||||||
| Realized gain on spin-out of Premier Uranium Inc. | 15 | (9,599,337 | ) | - | - | |||||
| Loss/(gain) from discontinued operations | (9,486,639 | ) | (8,720,000 | ) | 1,983,383 | |||||
| Net loss for the period | 45,704,739 | 16,333,635 | 73,004,202 | |||||||
| Other comprehensive loss (income) | ||||||||||
| Unrealized (gain)/loss on marketable securities and other investments | 3,9 | (1,549,120 | ) | 107,459 | (567,976 | ) | ||||
| Comprehensive loss for the period | $ | 44,155,619 | $ | 16,441,094 | $ | 72,436,226 | ||||
| Loss from continuing operations attributable to shareholders of the Company, per share | $ | 0.33 | $ | 1.56 | ||||||
| Basic and diluted | $ | 0.56 | ||||||||
| Loss/(gain) from discontinued operations per share | $ | $ | ||||||||
| Basic | $ | (0.10 | ) | (0.11 | ) | 0.04 | ||||
| Diluted | $ | (0.09 | ) | $ | (0.11 | ) | $ | 0.04 | ||
| Weighted average shares outstanding, basic and diluted | ||||||||||
| Basic | 99,008,587 | 76,338,627 | 45,544,824 | |||||||
| Diluted | 101,981,968 | 80,834,043 | 45,544,824 | |||||||
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
CONSOLIDATED URANIUM INC.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
Expressed in Canadian Dollars
| Accumulated | ||||||||||||||||||||||||
| Restricted | other | |||||||||||||||||||||||
| Common | Warrant | Stock Unit | comprehensive | Accumulated | ||||||||||||||||||||
| Shares | Amount | Reserve | Option Reserve | Reserve | income | deficit | Total Equity | |||||||||||||||||
| # | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||
| Balance - January 1, 2023 | 79,002,116 | 115,243,596 | 10,175,257 | 8,226,490 | 565,380 | 1,311,844 | (119,149,321 | ) | 16,373,246 | |||||||||||||||
| Share-based compensation (note 8) (unaudited) | - | - | - | 2,350,432 | 769,780 | - | - | 3,120,212 | ||||||||||||||||
| Shares issued for services (note 8) (unaudited) | 160,000 | 299,200 | - | - | - | - | - | 299,200 | ||||||||||||||||
| Warrants exercised (note 8) (unaudited) | 3,715,612 | 4,136,893 | (863,131 | ) | - | - | - | - | 3,273,762 | |||||||||||||||
| Warrants expired during the period (note 8) (unaudited) | - | - | (7,072,587 | ) | - | - | - | 7,072,587 | - | |||||||||||||||
| Options exercised (note 8) (unaudited) | 516,500 | 806,894 | - | (603,464 | ) | - | - | - | 203,430 | |||||||||||||||
| Options expired during the period (note 8) (unaudited) | - | - | - | (158,007 | ) | - | - | 158,007 | - | |||||||||||||||
| RSUs issued (note 8) (unaudited) | 708,330 | 1,335,160 | - | - | (1,335,160 | ) | - | - | - | |||||||||||||||
| Shares issued for property acqusitions (note 4,8) (unaudited) | 3,279,104 | 5,838,061 | - | - | - | - | - | 5,838,061 | ||||||||||||||||
| Acquisition of Virginia Energy Inc. (note 4,8) (unaudited) | 17,847,828 | 32,403,038 | - | 541,134 | - | - | - | 32,944,172 | ||||||||||||||||
| Dividend in-kind - spin-out of Premier American Uranium (note 15) (unaudited) | (4,780,004 | ) | (4,780,004 | ) | ||||||||||||||||||||
| Unrealized gain on securities and other investment (note 3,9) (unaudited) | - | - | - | - | - | 1,549,120 | - | 1,549,120 | ||||||||||||||||
| Loss for the period (unaudited) | - | - | - | - | - | - | (45,704,739 | ) | (45,704,739 | ) | ||||||||||||||
| Balance - December 5, 2023 (unaudited) | 105,229,490 | 160,062,842 | 2,239,539 | 10,356,585 | - | 2,860,964 | (162,403,470 | ) | 13,116,460 | |||||||||||||||
| Accumulated | ||||||||||||||||||||||||
| Restricted | other | |||||||||||||||||||||||
| Common | Warrant | Stock Unit | comprehensive | Accumulated | Shareholders' | |||||||||||||||||||
| Shares | Amount | Reserve | Option Reserve | Reserve | income | deficit | equity | |||||||||||||||||
| # | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||
| Balance - Janaury 1, 2022 | 72,036,827 | 105,032,556 | 10,526,667 | 5,171,049 | - | 1,419,303 | (94,484,789 | ) | 27,664,786 | |||||||||||||||
| Share-based compensation (note 8) | - | - | - | 3,466,902 | 1,007,386 | - | - | 4,474,288 | ||||||||||||||||
| Options exercised (note 8) | 52,500 | 53,308 | - | (22,358 | ) | - | - | - | 30,950 | |||||||||||||||
| Options expired during the year (note 8) | - | (389,103 | ) | - | 389,103 | - | ||||||||||||||||||
| Warrants exercised (note 8) | 2,832,311 | 1,371,968 | (351,410 | ) | - | - | - | - | 1,020,558 | |||||||||||||||
| RSUs issued (note 8) | 194,670 | 322,126 | - | (442,006 | ) | (119,880 | ) | |||||||||||||||||
| Share issued pursuant to option agreements (note 8) | 3,885,808 | 8,463,638 | - | - | - | - | - | 8,463,638 | ||||||||||||||||
| Dividend in-kind - spin-out of Labrador Uranium (note 15) | - | - | - | - | - | - | (8,720,000 | ) | (8,720,000 | ) | ||||||||||||||
| Unrealized loss on marketable securities (note 3) | - | - | - | - | - | (107,459 | ) | - | (107,459 | ) | ||||||||||||||
| Loss for the period | - | - | - | - | - | - | (16,333,635 | ) | (16,333,635 | ) | ||||||||||||||
| Balance - December 31, 2022 | 79,002,116 | 115,243,596 | 10,175,257 | 8,226,490 | 565,380 | 1,311,844 | (119,149,321 | ) | 16,373,246 | |||||||||||||||
| Accumulated | ||||||||||||||||||||||||
| Restricted | other | |||||||||||||||||||||||
| Common | Warrant | Stock Unit | comprehensive | Accumulated | Shareholders' | |||||||||||||||||||
| Shares | Amount | Reserve | Option Reserve | Reserve | income | deficit | equity | |||||||||||||||||
| # | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||
| Balance - December 31, 2020 | 29,426,842 | 24,374,002 | 3,896,122 | 2,828,017 | - | 851,327 | (21,480,587 | ) | 10,468,881 | |||||||||||||||
| Private placement financings | 19,447,938 | 32,363,446 | 7,637,000 | - | - | - | - | 40,000,446 | ||||||||||||||||
| Finders compensation warrants | - | - | 915,232 | - | - | - | - | 915,232 | ||||||||||||||||
| Shares issued for services | 83,786 | 242,979 | - | - | - | - | - | 242,979 | ||||||||||||||||
| Cost of share issuance | - | (3,197,515 | ) | (364,748 | ) | - | - | - | - | (3,562,263 | ) | |||||||||||||
| Share-based compensation | 31,954 | 71,670 | - | 3,039,366 | - | - | - | 3,111,036 | ||||||||||||||||
| Options exercised | 756,667 | 1,552,434 | - | (696,334 | ) | - | - | - | 856,100 | |||||||||||||||
| Warrants exercised | 6,605,988 | 7,009,500 | (1,556,939 | ) | - | - | - | - | 5,452,561 | |||||||||||||||
| Shares issued to acquire mineral properties | 14,727,346 | 40,748,955 | - | - | - | - | - | 40,748,955 | ||||||||||||||||
| Shares issued for property option agreements | 956,306 | 1,867,085 | - | - | - | - | - | 1,867,085 | ||||||||||||||||
| Unrealized gain on marketable securities | - | - | - | - | - | 567,976 | - | 567,976 | ||||||||||||||||
| Loss for the period | - | - | - | - | - | - | (73,004,202 | ) | (73,004,202 | ) | ||||||||||||||
| Balance - December 31, 2021 | 72,036,827 | 105,032,556 | 10,526,667 | 5,171,049 | - | 1,419,303 | (94,484,789 | ) | 27,664,786 |
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
CONSOLIDATED URANIUM INC.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
Expressed in Canadian Dollars
| For the period ended: | ||||||||||
| December 5, | December 31, | December 31, | ||||||||
| Note | 2023 | 2022 | 2021 | |||||||
| (Unaudited) | ||||||||||
| Cash flows from (used in) operating activities | ||||||||||
| Loss for the period | $ | (45,704,739 | ) | $ | (16,333,635 | ) | $ | (73,004,202 | ) | |
| Adjustment for non-cash items: | ||||||||||
| Acquisition of exploration properties | 4 | 33,909,294 | 8,463,638 | 42,616,040 | ||||||
| Share-based compensation | 8 | 3,120,212 | 4,354,408 | 3,111,036 | ||||||
| Depreciation | 5 | 212,886 | 68,709 | 44,866 | ||||||
| Interest expense | 5 | 53,074 | 2,559 | 4,081 | ||||||
| Lease modification | 6 | - | - | (1,549 | ) | |||||
| Unrealized loss on investment | - | - | 310,000 | |||||||
| Termination payment | - | - | (160,000 | ) | ||||||
| Shares issued for services | 8 | 299,200 | - | 242,979 | ||||||
| Asset retirement obligation | 7 | 415,000 | 442,000 | 1,300,000 | ||||||
| Realized gain on spin-out of Colorado Leases | 15 | (9,599,337 | ) | - | - | |||||
| Realized gain on spin-out of Labrador Uranium | 15 | - | (8,720,000 | ) | - | |||||
| Change in working capital items: | ||||||||||
| Amounts receivable | (350,581 | ) | 509,786 | (856,332 | ) | |||||
| Prepaid expenses and deposits | 207,383 | 542,798 | (638,299 | ) | ||||||
| Accounts payable and accrued liabilities | 3,733,565 | (3,327,347 | ) | 5,193,361 | ||||||
| Net cash (used in) operating activities | (13,704,043 | ) | (13,997,084 | ) | (21,838,019 | ) | ||||
| Cash flows from (used in) investing activities | ||||||||||
| Environmental bond | (756,378 | ) | (460,386 | ) | (1,377,517 | ) | ||||
| Restricted cash | - | (20,000 | ) | - | ||||||
| Purchase of property and equipment | 5 | (268,575 | ) | (248,741 | ) | - | ||||
| Purchase of other investment | - | (800,000 | ) | (150,000 | ) | |||||
| Cash acquired from Virginia Energy | 4(j) | 158,677 | - | 25,000 | ||||||
| Net cash (used in) investing activities | (866,276 | ) | (1,529,127 | ) | (1,502,517 | ) | ||||
| Cash flows from (used in) financing activities | ||||||||||
| Shares issued for cash from exercise of warrants | 8 | 3,273,762 | 1,020,558 | 5,452,561 | ||||||
| Shares issued for cash from exercise of options | 8 | 203,430 | 30,950 | 856,100 | ||||||
| Lease payments | 5 | (145,097 | ) | (60,000 | ) | (47,500 | ) | |||
| Shares and warrants issued for cash | - | - | 40,000,446 | |||||||
| Share issue costs | - | - | (2,647,031 | ) | ||||||
| Net cash provided by financing activities | 3,332,095 | 991,508 | 43,614,576 | |||||||
| Net decrease in cash and cash equivalents | (11,238,224 | ) | (14,534,703 | ) | 20,274,040 | |||||
| Cash and cash equivalents - beginning of period | 14,834,706 | 29,569,409 | 9,295,369 | |||||||
| Cash and cash equivalents - end of period | $ | 3,596,482 | $ | 15,034,706 | $ | 29,569,409 | ||||
| Cash | 1,076,482 | 1,744,706 | 29,525,493 | |||||||
| Cash equivalents | 2,520,000 | 13,090,000 | 43,916 | |||||||
| Total | $ | 3,596,482 | $ | 14,834,706 | $ | 29,569,409 | ||||
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
CONSOLIDATED URANIUM INC.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Expressed in Canadian Dollars
For the period ended December 5, 2023 (unaudited), and years ended December 31, 2022 and December 31, 2021
1. NATURE OF OPERATIONS
Consolidated Uranium Inc. (the "Company" or "CUR") was incorporated under the Business Corporations Act (British Columbia) on April 26, 2004. The Company is currently engaged in the acquisition, exploration and development of mineral properties in Argentina, Australia, Canada and the United States of America. The head office and principal address of the Company is 217 Queen Street West, Suite 303, Toronto, Ontario, M5V 0P5.
On July 23, 2021, the Company announced its continuance to Ontario under the name "Consolidated Uranium Inc.". The Company's common shares trade under the ticker symbol, "CUR", on the TSX Venture Exchange ("TSXV"), and on the OTCQX under the ticker symbol "CURUF".
The Company's subsidiaries include:
- NxGold Australia Pty. Ltd. ("NxGold Australia"), was incorporated in Australia on December 18, 2017. NxGold Australia owns 100% of Roe Gold Limited.
- ICU Australia Pty Ltd. was registered in Queensland, Australia on February 8, 2021.
- CUR Australia Pty Ltd. was registered in Queensland, Australia on September 10, 2021.
- 2847312 Ontario Inc. was incorporated in Ontario, Canada on June 14, 2021.
- On August 19, 2021 the Company acquired a 100% interest in 12942534 Canada Ltd.
- CUR USA Blocker Inc, was incorporated in Delaware, United States on August 30, 2021.
- On January 24, 2023, the Company acquired a 100% interest in Virginia Energy Resources Inc. ("Virginia Energy")
These condensed interim consolidated financial statements of the Company consolidate the accounts of the Company and its subsidiaries. All intercompany transactions, balances, and unrealized gains and losses from intercompany transactions are eliminated on consolidation.
Subsidiaries consist of entities over which the Company is exposed to, or has rights to, variable returns as well as the ability to affect those returns through the power to direct the relevant activities of the entity. Subsidiaries are fully consolidated from the date control is transferred to the Company and are de-consolidated from the date control ceases. The condensed interim consolidated financial statements include all the assets, liabilities, revenues, expenses and cash flows of the Company and its subsidiaries after eliminating intercompany balances and transactions.
The business of mining and exploring for minerals involves a high degree of risk and there can be no assurance that current exploration programs will result in profitable mining operations. The Company's continued existence is dependent upon the preservation of its interests in the underlying properties, the achievement of profitable operations, or the ability of the Company to raise additional financing, as necessary, or alternatively upon the Company's ability to dispose of its interests on an advantageous basis.
Although the Company has taken steps to verify title to the properties on which it is conducting exploration and in which it has an interest, in accordance with industry standards for the current stage of operations for such properties, these procedures do not guarantee the Company's title. Property title may be subject to government licensing requirements or regulations, social licensing requirements, unregistered prior agreements, unregistered claims, aboriginal claims, and non-compliance with regulatory, environmental, and social requirements. The Company's property interests may also be subject to increases in taxes and royalties, renegotiation of contracts, and political uncertainty.
During the period ended December 5, 2023, the Company had a loss of $45,704,739 (period ended December 31, 2022, loss of $16,333,635) and comprehensive loss of $44,155,619 (period ended December 31, 2022 of $16,441,094) and working capital as at December 5, 2023 of $6,491,502 (December 31, 2022 - $15,221,175). The Company believes that it will have sufficient capital to operate over the next 12 months, including carrying out the Company's planned exploration activities.
These condensed interim consolidated financial statements are prepared in accordance with International Financial Reporting standards ("IFRS") appropriate for a going concern which assumes that the Company will continue to realize the value of its assets and discharge its liabilities and other obligations in the ordinary course of business. Should the Company be required to realize the value of its assets in other than the ordinary course of business, the net realizable value of its assets may be materially less than the amounts shown in the condensed interim consolidated financial statements. These condensed interim consolidated financial statements do not include any adjustments to the amounts and classifications of assets and liabilities that may be necessary should the Company be unable to repay its liabilities and meet its other obligations in the ordinary course of business or continue operations.
CONSOLIDATED URANIUM INC.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Expressed in Canadian Dollars
For the period ended December 5, 2023 (unaudited), and years ended December 31, 2022 and December 31, 2021
Approval of the condensed interim consolidated financial statements
These condensed interim consolidated financial statements of the Company for the period ended December 5, 2023 and years ended December 31, 2022 and 2021 were reviewed, approved and authorized for issue by the Board of Directors of the Company on June 25, 2024.
2. BASIS OF PRESENTATION
These condensed interim consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") and Interpretations of the International Financial Reporting Interpretations Committee ("IFRIC") which the Canadian Accounting Standards Board has approved for incorporation into Part 1 of the Handbook of Chartered Professional Accountants of Canada applicable to the preparation of interim financial statements, including International Accounting Standard ("IAS") 34, Interim Financial Reporting. These condensed interim consolidated financial statements do not include all the information and disclosures required in the annual financial statements and should be read in conjunction with the Company's annual financial statements as at and for the year ended December 31, 2022. In particular, the Company's significant accounting policies were summarized in Note 3 of the financial statements for the year ended December 31, 2022, and have been consistently applied in the preparation of these condensed interim consolidated financial statements. These unaudited condensed interim consolidated financial statements were prepared on a going concern basis.
Future Accounting Pronouncements
On January 1, 2023, the Company adopted a number of amendments and improvements of existing standards. These included amendments to IAS 1, IAS 8, and IAS 12. These new standards and changes did not have any material impact on the Company's financial statements.
Certain new standards, interpretations, amendments and improvements to existing standards were issued by IASB or IFRIC that are mandatory for accounting periods beginning on or after January 1, 2024 which are not applicable or are not consequential to the Company or are being evaluated to determine their impact on the financial statements.
3. MARKETABLE SECURITIES
Marketable securities consist of 279,791 common shares of NexGen Energy Ltd. and 3,876,786 common shares of Premier American Uranium Inc. The carrying value is based on the estimated fair value of the common shares determined using quoted market prices. These shares are classified as FVOCI.
| (Unaudited) December 5, 2023 |
December 31, 2022 | |||||
| Opening | $ | 1,642,583 | $ | 1,550,042 | ||
| Additions | 4,596,047 | - | ||||
| Unrealized gain | 1,549,120 | 92,541 | ||||
| Ending | $ | 7,787,750 | $ | 1,642,583 |
CONSOLIDATED URANIUM INC.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Expressed in Canadian Dollars
For the period ended December 5, 2023 (unaudited), and years ended December 31, 2022 and December 31, 2021
4. MINERAL PROPERTY ACQUISITION AND EXPLORATION EXPENDITURES
For the period ended December 5, 2023, and years ended December 31, 2022 and 2021, the Company’s mineral property acquisition and exploration expenditures were as follows:
| 2023 (unaudited) | Argentina | Australia | |||||||||||||
| Huemul | Laguna Salada | Other | Yarranna | Other | |||||||||||
| Acquisition cost | $ | 1,031,080 | $ | - | $ | - | $ | 3,891,870 | $ | 1,750,518 | |||||
| Exploration and evaluation expenditures | |||||||||||||||
| Personnel | 200,655 | 411,354 | - | - | 273,563 | ||||||||||
| Drilling | - | 11,101 | - | - | - | ||||||||||
| Land management | 135,489 | 43,798 | 11,782 | 16,367 | 381,279 | ||||||||||
| Travel | 118,718 | 2,603 | - | - | 21,012 | ||||||||||
| Other | 4,837 | 4,337 | - | 129,984 | 338,914 | ||||||||||
| Balance, December 5, 2023 (unaudited) | $ | 1,490,779 | $ | 473,193 | $ | 11,782 | $ | 4,038,221 | $ | 2,765,286 | |||||
| 2023 (unaudited) | North America | |||||||||||
| Energy Fuels | Virginia Energy | Other | Total | |||||||||
| Acquisition cost | $ | - | $ | 28,703,476 | $ | - | $ | 35,376,944 | ||||
| Exploration and evaluation expenditures | ||||||||||||
| Personnel | 636,545 | - | - | 1,454,324 | ||||||||
| Drilling | 820,893 | - | - | 832,156 | ||||||||
| Land management | 625,876 | - | - | 1,250,215 | ||||||||
| Travel | 165,284 | - | - | 310,323 | ||||||||
| Other | 1,049,965 | 21,774 | 454,706 | 2,033,818 | ||||||||
| Balance, December 5, 2023 (unaudited) | $ | 3,298,563 | $ | 28,725,250 | $ | 454,706 | $ | 41,257,780 | ||||
| 2022 | North America | Argentina | ||||||||||
| Energy Fuels | Other | Laguna Salada | Other | |||||||||
| Acquisition cost | $ | - | $ | - | $ | 944,795 | $ | - | ||||
| Exploration and evaluation expenditures | ||||||||||||
| Personnel | 548,818 | - | 332,859 | 278,461 | ||||||||
| Drilling | 1,017,628 | - | 13,451 | - | ||||||||
| Land management | 962,530 | - | 85,746 | 58,714 | ||||||||
| Travel | 228,185 | - | 360,681 | 86,681 | ||||||||
| Other | 287,928 | 275,596 | 121,174 | 29,239 | ||||||||
| Balance, December 31, 2022 | $ | 3,045,089 | $ | 275,596 | $ | 1,858,706 | $ | 453,095 | ||||
| 2022 | Australia | Total | |||||||||||||
| Ben Lomond | Milo | Queensland | Other | ||||||||||||
| Acquisition cost | $ | 3,011,707 | $ | 1,953,523 | $ | 1,123,607 | $ | 20,823 | $ | 7,054,455 | |||||
| Exploration and evaluation expenditures | |||||||||||||||
| Personnel | 53,952 | 81,599 | 2,035 | 75,140 | 1,372,864 | ||||||||||
| Drilling | - | - | - | - | 1,031,079 | ||||||||||
| Land management | 332,151 | 8,321 | - | 80,992 | 1,528,454 | ||||||||||
| Travel | - | - | 3,879 | - | 679,426 | ||||||||||
| Other | 391,643 | 18,614 | 183,660 | 50,978 | 1,358,832 | ||||||||||
| Balance, December 31, 2022 | $ | 3,789,453 | $ | 2,062,057 | $ | 1,313,181 | $ | 227,933 | $ | 13,025,110 | |||||
CONSOLIDATED URANIUM INC.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Expressed in Canadian Dollars
For the period ended December 5, 2023 (unaudited), and years ended December 31, 2022 and December 31, 2021
| 2021 | North America | |||||||||||
| Energy Fuels | Mountain Lake | Dieter Lake | Matoush | |||||||||
| Acquisition cost | $ | 42,520,259 | $ | 1,811,000 | $ | 268,903 | $ | 10,740,692 | ||||
| Exploration and evaluation expenditures | ||||||||||||
| Personnel | 34,495 | - | - | - | ||||||||
| Land management | 87,630 | - | - | 1,550 | ||||||||
| Travel | 1,808 | - | - | - | ||||||||
| Other | 1,502,740 | - | - | 42,357 | ||||||||
| Balance, December 31, 2021 | $ | 44,146,932 | $ | 1,811,000 | $ | 268,903 | $ | 10,784,599 | ||||
| 2021 | Australia | Argentina | |||||||
| Milo | Laguna Salada | Total | |||||||
| Acquisition cost | $ | 500,000 | $ | 2,129,840 | $ | 57,970,694 | |||
| Exploration and evaluation expenditures | |||||||||
| Personnel | - | - | 34,495 | ||||||
| Land management | - | - | 89,180 | ||||||
| Travel | - | - | 1,808 | ||||||
| Other | - | 81,802 | 1,626,899 | ||||||
| Balance, December 31, 2021 | $ | 500,000 | $ | 2,211,642 | $ | 59,723,076 |
(a) Acquisition and Strategic Alliance with Energy Fuels
On October 27, 2021, the Company and Energy Fuels Inc., an arms-length party prior to this transaction ("Energy Fuels"), closed an acquisition (the "EF Transaction"), whereby the Company acquired a portfolio of uranium projects located in Utah and Colorado, United States (the "EF Projects") pursuant to an asset purchase agreement (the "EF Purchase Agreement") among CUR and certain wholly-owned subsidiaries of Energy Fuels (collectively, the "EF Parties"). In connection with the closing of the EF Transaction, the companies have also entered into toll-milling, operating and investor rights agreements with respect to the Projects.
Pursuant to the EF Purchase Agreement, CUR acquired from the EF Parties a 100% interest in the Tony M, Daneros and Rim mines in Utah, as well as the Sage Plain property and eight U.S. Department of Energy Leases in Colorado, for the following consideration:
- the payment of US$2.0 million in cash at closing;
- the issuance of 11,860,101 CUR common shares ("CUR Shares") at closing, which resulted in Energy Fuels holding 19.9% of the outstanding CUR Shares at that time (see Note 8);
- the payment of US$3.0 million in cash on or before the 18-month anniversary of closing of the Transaction (the "First Deferred Payment");
- the payment of an additional US$3.0 million in cash on or before the 36-month anniversary of closing of the Transaction (the "Second Deferred Payment"); and
- the payment of up to US$5.0 million in contingent cash payments tied to achieving commercial production at the Tony M Mine, the Daneros Mine and the Rim Mine.
The EF Purchase Agreement includes provision for the return of the Projects to Energy Fuels in the event that CUR does not make the First Deferred Payment or Second Deferred Payment, as described above.
In relation to the EF Projects, the Company has paid an environmental bond to the U.S. Bureau of Land Management in the amount of $2,173,834 (December 31, 2022 - $1,738,781) and has recorded environmental obligations of $1,647,000 (December 31, 2022 - $1,366,000). See Note 7.
In the event that CUR completed a private placement or prospectus offering for minimum gross proceeds of $1,000,000 within 36 months, the EF Parties had the right to accelerate (the "Acceleration Right") a portion of the First Deferred Payment and the Second Deferred Payment, as applicable, through the issuance of CUR Shares up to a maximum amount equal to the product of: (A) the gross proceeds of the financing, multiplied by (B) the EF Parties' then current cumulative percentage ownership of CUR Shares on a non-diluted basis prior to completion of the financing. The CUR Shares issued pursuant to the Acceleration Right will be based on the market price of the CUR Shares at the time of issuance.
CONSOLIDATED URANIUM INC.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Expressed in Canadian Dollars
For the period ended December 5, 2023 (unaudited), and years ended December 31, 2022 and December 31, 2021
On November 22, 2021, the Company completed a private placement financing that triggered the Acceleration Right, and the Company issued 1,875,085 common shares to the EF Parties at a fair value of $4,968,975 based on the unit price of the private placement financing. The share issuance fully satisfies the First Deferred Payment and partially satisfies the Second Deferred Payment.
The balance of the second deferred payment of $1,031,025 is accrued at December 5, 2023 (December 31, 2022 - $838,423).
Pursuant to a financial advisory agreement related to the EF Transaction, the Company paid an advisory fee comprised of $450,624 in cash and 83,786 common shares at a value of $2.90 per share based on the quoted market price of the Company's shares issued at the transaction date.
On May 24, 2023, the Company entered into an agreement with Premier American Uranium Inc. ("PUR"), pursuant to which among other things the Company has agreed to transfer ownership of certain indirect wholly-owned subsidiaries which hold eight U.S. Department of Energy Leases in Colorado and certain patented claims to PUR. See Note 15.
(b) Matoush Uranium Project
On August 19, 2021, the Company completed the acquisition of a 100% undivided interest in the Matoush uranium project, located in the province of Québec, Canada. The project is subject to a 1.5% net smelter return royalty from the sale of the mineral products extracted or derived.
Upon closing, the Company issued 2,000,000 common shares of the Company, having a value of $3,480,000, and made a cash payment of $3,500,000. The value of share consideration was priced at $1.74 per share, based on the quoted market price of the Company's shares issued at the transaction date. On February 18, 2022, the Company issued an additional 821,976 common shares, having a value of $2,211,115 based on the closing share price of the Company and $1,500,000 in cash to satisfy the deferred payment terms of the acquisition (Note 8(a)(xvii)).
(c) Laguna Salada Uranium and Vanadium Project
In December 2020, the Company entered into an option agreement with Green Shift Commodities Ltd. ("Green Shift") (Formerly U3O8 Corp.) to acquire a 100% interest in the Laguna Salada uranium and vanadium project in Chubut Province, Argentina. The acquisition was completed on December 21, 2021.
On June 11, 2021, the Company paid consideration of $148,085 satisfied by the issuance of 56,306 common shares and a cash payment of $225,000. The shares issued reflected a market price of $2.63 based on the quoted price of the Company's shares issued at the transaction date.
On April 14, 2022, the Company issued 374,441 common shares with a value of $928,614, at a share price of $2.48 based on the quoted market price of the Company's shares at the transaction date to Green Shift, in satisfaction of all future contingent payments owed in relation to the Laguna Salada Project including exercise of the option (Note 8(a)(xvi)).
(d) Dieter Lake Uranium Project
On February 3, 2021, the Company announced its acquisition of Dieter Lake uranium deposit in Québec, Canada.
(e) Ben Lomond Uranium Project
In June 2020, the Company entered into an option agreement with Mega Uranium Ltd. ("Mega") to acquire a 100% interest in the Ben Lomond uranium projects in Australia.
CONSOLIDATED URANIUM INC.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Expressed in Canadian Dollars
For the period ended December 5, 2023 (unaudited), and years ended December 31, 2022 and December 31, 2021
Pursuant to the option agreement, the Company issued 900,000 common shares and 900,000 common share purchase warrants to Mega, with each warrant entitling the holder to acquire a common share at an exercisable price of $0.30 per common share for a period of 24 months from the date of issuance, and $180,000 in cash.
The Company provided notice to Mega of its exercise of the option to acquire 100% of the Ben Lomond project on June 14, 2022, for consideration of $2,453,203, comprised of $2,020,760 for the exercise of the option and an additional $432,443 Mega is entitled to receive under the spot price contingent payment terms of the agreement. The entire amount was satisfied by the issuance of 1,340,548 common shares, with the value of share consideration priced at $1.83 per share, based on the quoted market price of the Company's shares at the transaction date (Note 8(a)(xiv)). The Company has an obligation to make contingent payments, in cash or shares, tied to the future spot price of uranium as follows:
| Ben Lomond | |||
| Uranium Spot Price | Ben Lomond | ||
| (USD) | Payments (CDN) | ||
| $100 | $ | 1,050,000 | |
The Company issued 400,000 common shares of the Company with a value of $780,000 to satisfy the spot price of uranium exceeding $75/lbs (Note 8(a)(vii)).
The Ben Lomond Property is subject to the following royalties:
- a royalty equal to AUD$0.50 per pound U₃O₈ recoverable from any feasibility study completed with respect to the Ben Lomond Property on or prior to the date that is 30 days after the mill operates at 90% planned capacity; or
- after the mill operates at 90% capacity, a 1% net smelter return royalty on all marketable minerals produced from the mineral claims that comprise the Ben Lomond property; and a 1% net smelter returns royalty on all marketable minerals produced from the mineral claims that comprise the Ben Lomond Property.
(f) Mountain Lake Uranium Project
On July 16, 2020, the Company entered into on option agreement with IsoEnergy Ltd. ("IsoEnergy") and received shareholder and TSXV conditional approval on August 3, 2021.
Pursuant to the option agreement, the Company has a right to acquire a 100% interest in the Mountain Lake uranium project in Nunavut, Canada.
Under the terms of the option agreement, the Company paid initial consideration to IsoEnergy of 900,000 common shares and a cash payment of $20,000 on August 10, 2021. The share consideration is valued at a market price of $1.91 per share, based on the quoted market price of the Company's shares issued at the transaction date.
The option is exercisable at the Company's election on or before December 31, 2023, upon payment of $1,000,000 payable in cash or shares at a price per share equal to the five-day VWAP of CUR shares up to the second last trading day prior to the exercise date of the option and reimbursement of certain expenditures incurred by IsoEnergy on the project. The Company is also required to reimburse IsoEnergy for certain expenditures incurred during the option period.
If the Company elects to exercise its option acquire the project, IsoEnergy will also be entitled to receive the following contingent payments, payable in cash or shares, at the Company's election:
CONSOLIDATED URANIUM INC.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Expressed in Canadian Dollars
For the period ended December 5, 2023 (unaudited), and years ended December 31, 2022 and December 31, 2021
| Uranium Spot Price | Vendor Payment | ||
| (USD) | (CDN in Cash or Shares) | ||
| $50 | $ | 410,000 | |
| $75 | $ | 615,000 | |
| $100 | $ | 820,000 |
The Company's obligation to make the contingent payments will expire 10 years following the date the option is exercised. In the event that the first contingency payment has been paid by the Company upon the uranium spot price reaching USD$50, IsoEnergy will have the one-time option to elect to receive $205,000 in lieu of, and not in addition to, each of the second and the third contingent payments for a total aggregate amount of $410,000. If elected by IsoEnergy, such $410,000 will be payable at the Company's option in cash or shares.
(g) Milo Project
On November 10, 2021, the Company announced that it had signed a definitive sale and purchase agreement with Isa Brightlands Pty Ltd, a wholly owned subsidiary of GBM Resources, to acquire a 100% interest in the Milo Uranium, Copper, Gold, Rare Earth Project (the "Milo Project"). The Milo Project consists of EPM (Exploration Permit - Minerals) rights located in Northwestern Queensland.
On April 20, 2022, the Company issued 750,000 common shares, with a value of $1,942,500 based on the value of share consideration priced at $2.59 per share, based on the quoted market price of the Company's shares at the transaction date (Note 8(a)(xv)).
(h) Queensland Projects
On September 6, 2022, the Company announced it entered into a definitive share sale and purchase agreement with GlobalOreInvestments Pty Limited ("GOI") pursuant to whereby CUR has agreed to acquire from GOI all of the outstanding shares of Management X Pty Ltd. ("Management X"), a privately owned Australian exploration company which holds a 100% undivided interest in the West Newcastle Range, Teddy Mountain and Ardmore East Projects.
Pursuant to the purchase agreement, on December 13, 2022, the Company issued 598,843 common shares with a value of $928,207 based on the value of share consideration priced at $1.55 per share, based on the quoted market price of the Company's shares at the transaction date (Note 8(a)(xiii)) and $200,000 in cash upon granting of the West Newcastle Range, Teddy Mountain and Ardmore East exploration licences.
There were no material assets or liabilities assumed upon the acquisition of Management X.
The Company has an obligation to make contingent payments of $500,000 in cash or shares, if the following milestones are met within eight years: The price of uranium exceed $60/lbs as published by UxC, LLC; and a National Instrument 43-101 compliant mineral resources estimate for the West Newcastle Range and Teddy Mountain projects is prepared where the mineral resource estimate is greater than or equal to 6.0 Mlbs of U₃O₈, or with respect to the Ardmore East project the mineral resources estimate is greater than or equal to 6.0 Mlbs of U₃O₈ equivalent (Note 19). The Company issued 200,000 shares with a value of $362,000 to Management X related to the price of uranium exceeding $60/lbs (Note 8(a)(vi)).
(i) Yarranna Uranium Projects
The Company entered into a definitive share sale and purchase agreement dated October 30, 2022, with certain entities (the "Sellers") pursuant to which CUR has agreed to acquire all of the outstanding shares of New Standard Resources Pty Ltd. ("New Standard"), a privately owned Australian exploration company which holds a 100% undivided interest in the Yarranna Uranium projects (the "Yarranna Projects") in South Australia. As New Standard did not meet the definition of a business as per IFRS 3, the acquisition was treated as an asset acquisition.
CONSOLIDATED URANIUM INC.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Expressed in Canadian Dollars
For the period ended December 5, 2023 (unaudited), and years ended December 31, 2022 and December 31, 2021
CUR acquired 100% interest in New Standard for consideration comprised of 2,059,732 common shares with a value of $3,872,296 based on the value of share consideration priced at $1.88 per share based on the quoted market price of the Company's shares issued at the transaction date. The shares were issued on January 20, 2023 (Note 8(a)(v)).
In addition, CUR has agreed to grant to the Sellers a 2% net smelter returns royalty on the Yarranna Projects, 1% of which can be repurchased by CUR for the payment of $1,000,000.
(j) Virginia Energy Resources Inc.
On January 24, 2023, the Company obtained control and completed the acquisition of Virginia Energy via an agreement and plan of arrangement date November 15, 2022. The merger was completed by the Company acquiring all the outstanding common shares of Virginia Energy through exchanging each outstanding Virginia Energy share for approximately 0.26 common shares of the Company. Outstanding Virginia Energy options were exchanged for common share purchase options of the Company under the same exchange ratio.
Upon closing of the transaction, CUR and Virginia Energy own approximately 82.4% and 17.6% of the outstanding shares of CUR. The transaction was completed January 24, 2023, with the issuance of 17,847,828 shares of CUR to Virginia Energy shareholders and 160,000 shares of CUR for financial advisory (Note 8(a)(iii and iv)).
The merger has been accounted for as an asset acquisition with the Company identified as the acquirer for accounting purposes.
Virginia Energy owns 100% of Coles Hill Uranium Project located in south central Virginia, United States.
The consideration paid is calculated as follows:
| Non-diluted VUI common shares outstanding, January 24, 2023 | $ | 68,645,614 | |
| Implicit share exchange ratio | 0.26 | ||
| The Company's common shares exchanged for VUI common shares | 17,847,828 | ||
| The Company's share price, January 24, 2023 | $ | 1.87 | |
| Total common share consideration | $ | 33,375,438 | |
| Options exchanged for options | 541,134 | ||
| Less: existing shareholdings | (972,400 | ) | |
| Total consideration | $ | 32,944,173 |
The purchase price allocation is as follows:
| Acquisition costs | $ | 27,084,773 | |
| Land | 5,686,662 | ||
| Cash and cash equivalents | 158,677 | ||
| Amounts receivable | 12,747 | ||
| Prepaid expenses | 6,728 | ||
| Accounts payable | (5,414 | ) | |
| $ | 32,944,173 |
The acquisition of Virginia Energy by the Company was completed on January 24, 2023. As of the date of these condensed interim consolidated financial statements, the determination of the fair value of assets and liabilities acquired is based on preliminary estimates and has not been finalized. In particular, the fair values of land and acquisition costs and related tax consequences and exposures have been determined provisionally. The actual fair value may differ materially from the amounts disclosed in the preliminary fair values above and are subject to change. Management will complete its review of the fair values within twelve months of the acquisition date.
CONSOLIDATED URANIUM INC.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Expressed in Canadian Dollars
For the period ended December 5, 2023 (unaudited), and years ended December 31, 2022 and December 31, 2021
(k) Huemul Uranium-Vanadium-Copper Project
On August 1, 2023, the Company announced that it has acquired a 100% interest in certain claims within the Huemul Project area held by the vendor of Huemul (the "Huemul Vendor") for consideration comprised of:
- US$200,000 in cash paid;
- 500,000 CUR Shares issued (Note 8(a)(i)); and
- A 2% NSR royalty payable by the Company to the Huemul Vendor on certain portions of the Huemul Project (the "Huemul Royalty"). CUR has the right to repurchase 1% of the Huemul Royalty by paying the amount of US$2,000,000.
Pursuant to an agreement between the Company and NewEra Metal Resources Ltd. ("NewEra"), the Company has acquired a 100% interest in two claim applications within the Huemul Project area held by NewEra (the "NewEra Claim Applications") for consideration comprised of:
- US$120,000 in cash paid;
- 119,372 CUR Shares issued (Note 8(a)(ii)); and
- A 1% NSR royalty payable by the Company to NewEra on the claims covered by the NewEra Claim Applications.
The Common Shares issuable pursuant to the acquisitions are subject to a hold period expiring four months and one day from the date of issuance. There are no finders' fees payable in connection with the acquisitions and the Huemul Vendor and NewEra are arms-length parties with respect to the Company.
5. PROPERTY, EQUIPMENT AND LEASE LIABILITY
For the period ended December 5, 2023 and the year ended December 31, 2022, the Company's property and equipment comprised:
| Right-of- | Leasehold | Vehicles & | ||||||||||||||||
| Land | use asset | Improvements | Furniture | Equipment | Total | |||||||||||||
| Cost | ||||||||||||||||||
| Balance, January 1, 2022 | $ | - | $ | 109,444 | $ | - | $ | - | $ | - | $ | 109,444 | ||||||
| Additions | - | - | 154,608 | 16,746 | 77,387 | 248,741 | ||||||||||||
| Balance, December 31, 2022 | $ | - | $ | 109,444 | $ | 154,608 | $ | 16,746 | $ | 77,387 | $ | 358,185 | ||||||
| Additions (unaudited) | - | - | - | 18,252 | 250,323 | 268,575 | ||||||||||||
| Acquisition of Virginia Energy (unaudited) | 5,686,662 | - | - | - | - | 5,686,662 | ||||||||||||
| Additions, lease modification (unaudited) | - | 502,405 | - | - | - | 502,405 | ||||||||||||
| Balance, December 5, 2023 (unaudited) | 5,686,662 | 611,849 | 154,608 | 34,998 | 327,710 | 6,815,827 | ||||||||||||
| Accumulated depreciation | ||||||||||||||||||
| Balance, Janaury 1, 2022 | - | 33,308 | - | - | - | 33,308 | ||||||||||||
| Depreciation | - | 57,101 | - | - | 11,608 | 68,709 | ||||||||||||
| Balance, December 31, 2022 | - | 90,409 | - | - | 11,608 | 102,017 | ||||||||||||
| Depreciation (unaudited) | - | 113,817 | 28,760 | 6,510 | 63,799 | 212,886 | ||||||||||||
| Lease modification (unaudited) | - | (89,640 | ) | - | - | - | (89,640 | ) | ||||||||||
| Balance, December 5, 2023 (unaudited) | - | 114,586 | 28,760 | 6,510 | 75,407 | 225,263 | ||||||||||||
| Net book value: | ||||||||||||||||||
| Balance, December 31, 2022 | - | 19,035 | 154,608 | 16,746 | 65,779 | 256,168 | ||||||||||||
| Balance, December 5, 2023 (unaudited) | $ | 5,686,662 | $ | 497,263 | $ | 125,848 | $ | 28,488 | $ | 252,303 | $ | 6,590,564 |
On January 1, 2023, the Company entered a lease paying $13,000 per month until December 31, 2027. The discount rate applied to the lease was 10%. The Company recognized a right-of-use asset and a lease liability of $611,850 in respect of this lease.
CONSOLIDATED URANIUM INC.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Expressed in Canadian Dollars
For the period ended December 5, 2023 (unaudited), and years ended December 31, 2022 and December 31, 2021
| (unaudited) Period ended |
Year ended | |||||
| December 5, 2023 | December 31, 2022 | |||||
| Opening | $ | 19,805 | $ | 77,246 | ||
| Lease modification | 592,045 | - | ||||
| Interest expense | 53,074 | 2,559 | ||||
| Payments | (145,097 | ) | (60,000 | ) | ||
| Ending | $ | 519,827 | $ | 19,805 | ||
| Less current portion | (116,940 | ) | (19,805 | ) | ||
| Long-term lease liability | $ | 402,887 | $ | - |
Minimum lease payments remaining:
| Years | Amount | ||
| 2023 | $ | 10,903 | |
| 2024 | $ | 156,000 | |
| 2025 | $ | 156,000 | |
| 2026 | $ | 156,000 | |
| 2027 | $ | 156,000 | |
6. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
| (Unaudited) December 5, 2023 |
December 31, 2022 | |||||
| Trade payables | $ | 2,581,996 | $ | 363,807 | ||
| Accrued liabilities | 2,630,568 | 626,766 | ||||
| Payroll liabilities | 595,733 | 438,668 | ||||
| Property payments | 118,435 | 814,812 | ||||
| $ | 5,926,732 | $ | 2,244,053 | |||
7. ASSET RETIREMENT OBLIGATION
A provision for environmental rehabilitation was recognized on the Energy Fuels mineral properties area (see Note 4(a)) in the amount of $1,764,000 (December 31, 2022 - $1,364,000) and the Ben Lomond property for $393,000 (December 31, 2022 - $378,000). The Energy Fuels mineral properties areas requires amounts to be held on deposit in the amount of $2,183,320 (December 31, 2022 - $1,738,781) and the Ben Lomond property requires an amount held on deposit for $410,961 (December 31, 2022 - $99,122). The provision is based on the regulatory bodies estimates of projected reclamation costs and the bond required for exploration activities. The asset retirement obligation is estimated at an undiscounted amount of $2,608,749 over a period of 3 to 10 years and discounted using a risk-free rate varying from 3.34% to 3.89%.
| (Unaudited) December 5, 2023 |
December 31, 2022 | |||||
| Balance, beginning of period | $ | 1,742,000 | $ | 1,300,000 | ||
| Accretion | 69,000 | - | ||||
| Change in estimates | 346,000 | 442,000 | ||||
| Balance, end of period | $ | 2,157,000 | $ | 1,742,000 |
CONSOLIDATED URANIUM INC.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Expressed in Canadian Dollars
For the period ended December 5, 2023 (unaudited), and years ended December 31, 2022 and December 31, 2021
8. SHARE CAPITAL
(a) Common Shares
The Company's authorized share capital is an unlimited number of common shares without par value.
| Number of shares | ||||||
| outstanding | Amount | |||||
| Balance, January 1, 2022 | 72,036,827 | $ | 105,032,556 | |||
| Shares issued in acquisitions (xiii, xiv, xv, xvi, xvii) | 3,885,808 | 8,463,638 | ||||
| Warrant exercises (xviii) | 2,832,311 | 1,371,968 | ||||
| Option exercises (xviii) | 52,500 | 53,308 | ||||
| Share-based compensation (xi, xii) | 194,670 | 322,126 | ||||
| Balance, December 31, 2022 | 79,002,116 | $ | 115,243,596 | |||
| Shares issued in acquisitions (i, ii, iii, v, vi, vii) (unaudited) | 21,126,932 | 38,241,099 | ||||
| Shares issued for services (iv) (unaudited) | 160,000 | 299,200 | ||||
| Warrant exercises (viii) (unaudited) | 3,715,612 | 4,136,893 | ||||
| Option exercises (ix) (unaudited) | 516,500 | 806,894 | ||||
| Share-based compensation (x) (unaudited) | 708,330 | 1,335,160 | ||||
| Balance, December 5, 2023 (unaudited) | 105,229,490 | $ | 160,062,842 |
During the period ended December 5, 2023, the Company issued the following common shares:
i. On August 1, 2023, the Company issued 500,000 common shares to the Huemul Vendor with a value of $665,000 based on the value of the share consideration price at $1.33 per share based on the quoted market price of the Company's share issued at the transaction date for the acquisition of Huemul Project. See Note 4(k).
ii. On August 1, 2023, the Company issued 119,372 common shares to NewEra with a value of $158,765 based on the value of the share consideration price at $1.33 per share based on the quoted market price of the Company's share issued at the transaction date for the acquisition of the NewEra Claim Applications. See Note 4(k).
iii. On January 24, 2023, the Company issued 17,847,828 common shares with a value of $32,403,038 based on the value of share consideration price at $1.87 per share based on the quoted market price of the Company's shares issued at the transaction date for the acquisition of Virginia Energy Resources Inc. See Note 4(j)
iv. On January 24, 2023, the Company issued 160,000 common shares with a value of $299,200 based on the value of share consideration price at $1.87 per share based on the quoted market price of the of the Company's shares at the transaction date for financial advisory services. See Note 4(j)
v. On January 20, 2023, the Company issued 2,059,732 common shares with a value of $3,872,296 based on the value of share consideration price at $1.88 per share based on the quoted market price of the Company's shares issued at the transaction date for the acquisition of the Yarranna project in Australia. See Note 4(i)
vi. On October 6, 2023, the Company issued 200,000 common shares with a value of $362,000 based on the value of share consideration at $1.81 per share based on the quoted market price of the Company's shares issued at the transaction date to Management X related to the contingent payment if the spot price of uranium exceeds $US60/pound for the Queensland Projects. See Note 4(h)
vii. On December 1, 2023, the Company issued 400,000 common shares with a value of $780,000 based on the value of share consideration at $1.95 per share based on the quoted market price of the Company's shares issued at the transaction date to Mega Uranium related to the contingent payment if the spot price of uranium exceeds $US75/pound for the Ben Lomond project. See Note 4(e)
CONSOLIDATED URANIUM INC.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Expressed in Canadian Dollars
For the period ended December 5, 2023 (unaudited), and years ended December 31, 2022 and December 31, 2021
viii. During the period ended December 5, 2023, the Company issued 3,715,612 common shares following the exercise of 3,715,612 of the Company's warrants. Net proceeds of $3,273,762 were received.
ix. During the period ended December 5, 2023, the Company issued 516,500 common shares following the exercise of 516,500 of the Company's options. Net proceeds of $203,430 were received.
x. During the period ended December 5, 2023, the Company issued 708,330 common shares with a value of $1,335,160 in relation to the Company's RSU grant on December 1, 2021, December 24, 2021 and December 30, 2022.
During the year ended December 31, 2022, the Company issued the following common shares:
xi. On December 28, 2022, the Company issued 171,670 common shares with a value of $283,256 in relation to the Company's RSU grant of December 24, 2021.
xii. On December 20, 2022, the Company issued 23,000 common shares with a value of $38,870 in relation to the Company's RSU grant of December 1, 2021.
xiii. On December 13, 2022, the Company issued 598,843 common shares with a value of $928,207 based on the value of share consideration price at $1.55 per share based on the quoted market price of the Company's shares issued at the transaction date for the acquisition of the Queensland project in Australia. See Note 4(h)
xiv. On September 30, 2022, the Company issued 1,340,548 common shares with a value of $2,453,203 based on the value of share consideration price at $1.83 per share based on the quoted market price of the Company's shares issued at the transaction date to Mega to complete the option exercise on the Ben Lomond uranium project in Australia and the spot price contingent payment. See Note 4(e).
xv. On April 20, 2022, the Company issued 750,000 common shares with a value of $1,942,500 based on the value of share consideration price at $2.59 per share based on the quoted market price of the Company's shares issued at the transaction date to complete its Milo Project acquisition. See Note 4(g).
xvi. On April 14, 2022, the Company issued 374,441 common shares with a value of $928,614 based on the value of share consideration price at $2.48 per share based on the quoted market price of the Company's shares issued at the transaction date to Green Shift to satisfy all future contingent payments owed in relation to the Laguna Salada Project. See Note 4(c).
xvii. On February 18, 2022, the Company issued 821,976 common shares with a value of $2,211,115 based on the value of share consideration price at $2.69 per share based on the quoted market price of the Company's shares issued at the transaction date to complete its Matoush acquisition. See Note 4(b).
xviii. During the year ended December 31, 2022, the Company issued 2,884,811 common shares following the exercise of 2,832,311 of the Company's warrants and 52,500 of the Company's options. Net proceeds of $1,051,508 were received.
(b) Warrants
Below is a summary of changes to warrants for the period ended December 5, 2023 and the year ended December 31, 2022:
CONSOLIDATED URANIUM INC.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Expressed in Canadian Dollars
For the period ended December 5, 2023 (unaudited), and years ended December 31, 2022 and December 31, 2021
| Number of | Weighted average | |||||
| warrants | exercise price | |||||
| Balance, January 1, 2022 | 16,986,028 | $ | 2.10 | |||
| Exercised | (2,832,311 | ) | 0.36 | |||
| Adjustment for LUR spinout (note 15) | 873,023 | - | ||||
| Balance, December 31, 2022 | 15,026,740 | $ | 2.29 | |||
| Exercised (unaudited) | (3,715,612 | ) | 0.65 | |||
| Expired (unaudited) | (8,418,984 | ) | 3.18 | |||
| Adjustment for PUR spinout (note 15) (unaudited) | 86,764 | - | ||||
| Balance, December 5, 2023 (unaudited) | 2,978,908 | $ | 1.49 |
The Company received $2,407,875 in proceeds from the exercise of warrants during the period ended December 5, 2023 (year ended December 31, 2022 - $1,020,558).
In relation to the Company's Spin-Out Transaction (see Note 15), the number of warrants outstanding were adjusted on a pro rata basis. The fair value of the warrants was unchanged.
As at December 5, 2023 the Company had the following warrants outstanding:
| Number of | Remaining life at | ||||||||
| Expiry date | Exercise price | warrants | December 5, 2023 | ||||||
| 30-Dec-23 | $ | 1.10 | 587,456 | 0.1 years | |||||
| 30-Dec-23 | $ | 0.74 | 178,646 | 0.1 years | |||||
| 04-Mar-24 | $ | 1.65 | 2,212,806 | 0.2 years | |||||
| Balance, December 5, 2023 (unaudited) | $ | 1.49 | 2,978,908 | 0.2 years |
(c) Stock Options
Pursuant to the Company's stock option plan, directors may, from time to time, authorize the issuance of options to directors, officers, employees and consultants of the Company, entitling them to acquire up to 10% of the issued and outstanding common shares of the Company. The options can be granted for a maximum term of five years and are subject to vesting provisions as determined by the Board of Directors of the Company.
Stock option activity for the period ended December 5, 2023 and the year ended December 31, 2022 is summarized as follows:
CONSOLIDATED URANIUM INC.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Expressed in Canadian Dollars
For the period ended December 5, 2023 (unaudited), and years ended December 31, 2022 and December 31, 2021
| Number of | Weighted average | |||||
| options | exercise price | |||||
| Balance, January 1, 2022 | 5,383,333 | $ | 1.83 | |||
| Granted | 1,450,000 | 1.71 | ||||
| Exercised | (52,500 | ) | 0.59 | |||
| Forfeited | (235,266 | ) | 1.91 | |||
| Expired | (359,367 | ) | 1.34 | |||
| Adjustment for LUR spinout (note 15) | 320,000 | - | ||||
| Balance, December 31, 2022 | 6,506,200 | $ | 1.75 | |||
| Granted (unaudited) | 457,500 | 0.67 | ||||
| Exercised (unaudited) | (516,500 | ) | 0.36 | |||
| Expired (unaudited) | (90,100 | ) | 1.75 | |||
| Adjustment for PUR spinout (note 15) (unaudited) | 190,713 | - | ||||
| Balance, December 5, 2023 (unaudited) | 6,547,813 | $ | 1.78 | |||
| Exercisable, December 5, 2023 (unaudited) | 4,555,004 | $ | 1.70 |
The Company received proceeds of $203,430 from the exercise of stock options during the period ended December 5, 2023 (year ended December 31, 2022 - $30,950).
In relation to the Company's Spin-Out Transactions (see Note 15), the number of options outstanding were adjusted on a pro rata basis. The fair value of the options was unchanged.
As at December 5, 2023, the Company had the following stock options outstanding:
| Remaining | ||||
| contractual life of | ||||
| Number of options | Exercise price per | Number of options | options outstanding | |
| outstanding | option | exercisable | (years) | Expiry date |
| 655,080 | $0.27 | 655,080 | 1.5 | 18-Jun-25 |
| 54,590 | $0.48 | 54,590 | 1.7 | 05-Aug-25 |
| 414,884 | $0.50 | 414,884 | 1.9 | 15-Oct-25 |
| 21,836 | $0.56 | 21,836 | 2.0 | 25-Nov-25 |
| 54,590 | $0.55 | 54,590 | 2.0 | 03-Dec-25 |
| 32,754 | $1.12 | 32,754 | 2.2 | 01-Feb-26 |
| 797,014 | $1.53 | 531,343 | 2.3 | 26-Mar-26 |
| 846,145 | $2.05 | 564,097 | 2.5 | 09-Jun-26 |
| 545,900 | $2.39 | 545,900 | 3.0 | 01-Dec-26 |
| 1,528,520 | $2.55 | 1,019,013 | 3.1 | 24-Dec-26 |
| 180,250 | $1.88 | 120,167 | 3.5 | 30-May-27 |
| 51,500 | $1.64 | 17,167 | 3.6 | 14-Jul-27 |
| 103,000 | $2.27 | 103,000 | 3.8 | 06-Sep-27 |
| 1,158,750 | $1.57 | 386,250 | 4.1 | 30-Dec-27 |
| 103,000 | $1.74 | 34,333 | 4.1 | 06-Jan-28 |
| 6,547,813 | 4,555,004 | 2.9 |
On January 24, 2023, the Company exchanged 1,375,000 Virginia Energy stock options for 357,500 CUR options as part of the acquisition of Virginia Energy. The options are exercisable at a price of $0.36 per common share for a period of 0.25 years and vested immediately. The options have a fair value per option granted of $1.51. See Note 4(j).
CONSOLIDATED URANIUM INC.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Expressed in Canadian Dollars
For the period ended December 5, 2023 (unaudited), and years ended December 31, 2022 and December 31, 2021
On January 6, 2023, the Company granted incentive stock options to certain consultants of the Company to purchase a total of 100,000 common shares pursuant to the Company's long-term omnibus incentive plan. The options are exercisable at a price of $1.79 per common share for a period of five years. 33,334 options vested immediately, and the remaining options vest one half on January 6, 2024 and one half on January 6, 2025. The options have a fair value per option granted of $1.48.
On December 30, 2022, the Company granted incentive stock options to certain officers, directors, employees and consultants of the Company to purchase a total of 1,125,000 common shares pursuant to the Company's long-term omnibus incentive plan. The options are exercisable at a price of $1.62 per common share for a period of five years. 375,008 options vested immediately, and the remaining options vest one half on December 30, 2023 and one half on December 30, 2024. The options have a fair value per option granted of $1.34. Directors and officers were granted 775,000 options.
On September 6, 2022, the Company granted incentive stock options to a consultant of the Company to purchase a total of 100,000 common shares pursuant to the Company's long-term omnibus incentive plan. The options are exercisable at a price of $2.34 per common share for a period of five years. 1/4 vests in 3-month intervals until September 6, 2023. The options have a fair value per option granted of $1.97.
On July 14, 2022, the Company granted incentive stock options to an employee of the Company to purchase a total of 50,000 common shares pursuant to the Company's long-term omnibus incentive plan. The options are exercisable at a price of $1.69 per common share for a period of five years. The options vest one third each year, over a three year term. The options have a fair value per option granted of $1.42.
On May 30, 2022, the Company granted incentive stock options to consultants of the Company to purchase a total of 175,000 common shares pursuant to the Company's long-term omnibus incentive plan. The options are exercisable at a price of $2.00 per common share for a period of five years. 58,333 options vested immediately and the remaining options vest one half on May 30, 2023 and one half on May 30, 2024. The options have a fair value per option granted of $1.62.
The Company uses the Black-Scholes option pricing model to calculate the fair value of granted stock options. The model requires management to make estimates, which are subjective and may not be representative of actual results. Changes in assumptions can materially affect fair value estimates.
For stock option grants, the following assumptions were applied in their valuation:
| (Unaudited) Period ended |
Period ended | |
| December 5, 2023 | December 31, 2022 | |
| Expected stock price volatility | 117%-118% | 118%-122% |
| Expected life of options | 0.25 years-5 years | 5 years |
| Risk-free interest rate | 3.24%-3.80% | 2.66%-3.41% |
| Expected dividend yield | 0.00% | 0% |
| Stock price | $1.79-$1.87 | $1.62 - $2.34 |
| Exercise price | $0.36-$1.79 | $1.62 - $2.34 |
(d) Restricted Share Units
Pursuant to the Company's Long-Term Incentive Plan, directors may, from time to time, authorize the issuance of restricted share units ("RSUs") to directors, officers, employees and consultants of the Company ("Participants"), entitling them to acquire up to 10% of the issued and outstanding common shares of the Company. Pursuant to the terms of each RSU award agreement, Participants will receive, upon vesting of the RSUs, cash or common shares of the Company, issued from treasury, at the Company's discretion. RSU vesting terms are specific to each individual grant as determined by the Board of Directors. The Company currently has RSUs vesting based on time conditions. The fair value of the RSUs is expensed over the vesting period specific to the grant or at the grant date for those that vest immediately.
RSU activity for the period ended December 5, 2023 and the year ended December 31, 2022 is summarized as follows:
CONSOLIDATED URANIUM INC.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Expressed in Canadian Dollars
For the period ended December 5, 2023 (unaudited), and years ended December 31, 2022 and December 31, 2021
| Number of RSUs | |||
| Balance, January 1, 2022 | 750,000 | ||
| Vested | (266,670 | ) | |
| Granted | 225,000 | ||
| Balance, December 31, 2022 | 708,330 | ||
| Vested (unaudited) | (708,330 | ) | |
| Balance, December 5, 2023 (unaudited) | - |
On December 30, 2022, the Company granted 225,000 RSU's to directors, officers, and consultants of the Company. The RSU's were issued at $1.62 per common share, vesting one third each year over a three-year term. Directors and officers were issued 200,000 RSU's.
On December 1, 2023, the Company granted 50,000 common shares of the Company for RSUs that vested.
On December 5, 2023, the Company granted 658,330 common shares of the Company for RSUs that vested.
9. OTHER INVESTMENT
In connection with the Virginia Energy transaction, CUR and Virginia Energy entered into a subscription agreement which Virginia Energy has agreed to issue and CUR has agreed to purchase, on a non-brokered private placement basis 2,000,000 Virginia Energy shares at a price of $0.50 per share for cash consideration of $1,000,000. The private placement closed on December 6, 2022.
On January 24, 2023, upon closing of the Virginia Energy acquisition, the investment was eliminated.
| Virginia Energy | Total | |||||
| Opening, January 1, 2022 | $ | - | $ | - | ||
| Additions | 1,000,000 | 1,000,000 | ||||
| Unrealized loss | (200,000 | ) | (200,000 | ) | ||
| Balance, December 31, 2022 | 800,000 | 800,000 | ||||
| Unrealized gain (unaudited) | 172,400 | 172,400 | ||||
| Eliminated on Virginia Energy acqusition (unaudited) | (972,400 | ) | (972,400 | ) | ||
| Balance, December 5, 2023 (unaudited) | $ | - | $ | - |
10. MANAGEMENT OF CAPITAL
The Company's capital management objectives, policies and processes have remained unchanged during the period ended December 5, 2023 and the year ended December 31, 2022.
The Company is not subject to any capital requirements imposed by a lending institution or regulatory body, other than of the TSXV prior to December 5, 2023, which requires adequate working capital or financial resources of the greater of (i) $50,000 and (ii) an amount required in order to maintain operations and cover general and administrative expenses for a period of 12 months.
As of December 5, 2023, the Company believes it is compliant with the policies of the TSXV.
CONSOLIDATED URANIUM INC.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Expressed in Canadian Dollars
For the period ended December 5, 2023 (unaudited), and years ended December 31, 2022 and December 31, 2021
11. EXPENSES
Shareholder communication expenses for the period ended December 5, 2023, and the years ended December 31, 2022 and 2021 were comprised of the following:
| (unaudited) | For the period ended | ||||||||
| December 5, | December 31, | December 31, | |||||||
| 2023 | 2022 | 2021 | |||||||
| Investor relations costs | $ | 535,948 | $ | 210,575 | $ | 148,461 | |||
| Filing and listing fees | 429,043 | 332,778 | 251,458 | ||||||
| Marketing and promotion | 250,781 | 559,979 | 1,981,736 | ||||||
| Shareholder communications | $ | 1,215,772 | $ | 1,103,332 | $ | 2,381,655 | |||
Professional fees expenses for the period ended December 5, 2023 and the years ended December 31, 2022 and 2021 were comprised of the following:
| (unaudited) | For the period ended | ||||||||
| December 5, | December 31, | December 31, | |||||||
| 2023 | 2022 | 2021 | |||||||
| Legal | $ | 556,349 | $ | 771,358 | $ | 1,151,898 | |||
| Accounting | 362,795 | 217,600 | 80,888 | ||||||
| Corporate development | 1,515,585 | 855,151 | 641,939 | ||||||
| Financial advisory | 3,410,003 | 2,146,458 | 1,797,345 | ||||||
| Professional fees | $ | 5,844,732 | $ | 3,990,567 | $ | 3,672,070 | |||
12. SEGMENTED INFORMATION
The Company has one operating segment in three geographic areas in North America, Australia and Argentina, with the corporate office in Canada. Segmented disclosure and Company-wide information is as follows:
| December 5, 2023 (unaudited) | North America | Australia | Argentina | Total | ||||||||
| Current assets | $ | 12,155,279 | $ | 246,354 | $ | 133,541 | $ | 12,535,174 | ||||
| Non-current assets | 8,713,154 | 410,961 | 60,730 | 9,184,845 | ||||||||
| Total assets | $ | 20,868,433 | $ | 657,315 | $ | 194,271 | $ | 21,720,019 | ||||
| Total liabilities | 8,546,562 | $ | 14,985 | $ | 42,012 | $ | 8,603,559 | |||||
| December 31, 2022 | North America | Australia | Argentina | Total | ||||||||
| Current assets | $ | 16,975,045 | $ | 241,628 | $ | 268,361 | $ | 17,485,033 | ||||
| Non-current assets | 2,894,071 | - | - | 2,894,071 | ||||||||
| Total assets | $ | 19,869,116 | $ | 241,628 | $ | 268,361 | $ | 20,379,104 | ||||
| Total liabilities | 3,853,673 | $ | 93,720 | $ | 58,465 | $ | 4,005,858 | |||||
| Period ended December 5, 2023 (unaudited) | North America | Australia | Argentina | Total | ||||||||
| Mineral property acquisition and exploration expenditures | $ | 32,478,519 | $ | 6,803,507 | $ | 1,975,754 | $ | 41,257,780 | ||||
| Share-based compensation | 3,120,212 | - | - | 3,120,212 | ||||||||
| Professional fees | 5,788,585 | 56,147 | - | 5,844,732 | ||||||||
| Consulting fees and salaries | 2,873,414 | 451,599 | - | 3,325,013 | ||||||||
| Shareholder communications | 1,215,772 | - | - | 1,215,772 | ||||||||
| Office and other | 842,605 | 48,322 | 126,692 | 1,017,619 | ||||||||
| Travel | 246,622 | - | - | 246,622 | ||||||||
| Depreciation | 212,886 | - | - | 212,886 | ||||||||
| Total operating expenditures | $ | 46,778,615 | $ | 7,359,575 | $ | 2,102,446 | $ | 56,240,636 |
CONSOLIDATED URANIUM INC.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Expressed in Canadian Dollars
For the period ended December 5, 2023 (unaudited), and years ended December 31, 2022 and December 31, 2021
| Years ended December 31, 2022 | North America | Australia | Argentina | Total | ||||||||
| Mineral property acquisition and exploration expenditures | $ | 3,320,685 | $ | 7,392,624 | $ | 2,311,801 | $ | 13,025,110 | ||||
| Share-based compensation | 4,474,289 | - | - | 4,474,289 | ||||||||
| Professional fees | 3,955,303 | 35,264 | - | 3,990,567 | ||||||||
| Consulting fees and salaries | 2,317,069 | 216,330 | - | 2,533,399 | ||||||||
| Shareholder communications | 1,103,332 | - | - | 1,103,332 | ||||||||
| Office and other | 296,982 | 28,691 | 91,747 | 417,420 | ||||||||
| Travel | 227,522 | 1,748 | - | 229,270 | ||||||||
| Depreciation | 68,709 | - | - | 68,709 | ||||||||
| Total operating expenditures | $ | 15,763,891 | $ | 7,674,657 | $ | 2,403,548 | $ | 25,842,096 | ||||
| Years ended December 31, 2021 | North America | Australia | Argentina | Total | ||||||||
| Mineral property acquisition and exploration expenditures | $ | 57,011,434 | $ | 500,000 | $ | 2,211,642 | $ | 59,723,076 | ||||
| Share-based compensation | 3,181,507 | - | - | 3,181,507 | ||||||||
| Professional fees | 3,652,960 | 19,110 | - | 3,672,070 | ||||||||
| Consulting fees and salaries | 1,652,170 | - | - | 1,652,170 | ||||||||
| Shareholder communications | 2,381,655 | - | - | 2,381,655 | ||||||||
| Office and other | 86,312 | 46,312 | - | 132,624 | ||||||||
| Depreciation | 44,866 | - | - | 44,866 | ||||||||
| Total operating expenditures | $ | 68,010,904 | $ | 565,422 | $ | 2,211,642 | $ | 70,787,968 |
13. FINANCIAL INSTRUMENTS
The Company's financial instruments include cash and cash equivalents, restricted cash, amounts receivable, marketable securities, other investments, accounts payable and accrued liabilities, and lease liability. The risks associated with these financial instruments and the policies regarding their management are discussed below. Management monitors these risk exposures to ensure appropriate measures are implemented in a timely and effective manner.
The carrying value of the Company's financial instruments are classified into the following categories:
| (Unaudited) December 5, |
December 31, | ||||||||
| Financial Instrument | Category | 2023 | 2022 | ||||||
| Cash | Amortized cost | $ | 1,076,482 | $ | 1,744,706 | ||||
| Cash equivalents | Fair value | 2,520,000 | 13,090,000 | ||||||
| Restricted cash | Fair value | 55,000 | 55,000 | ||||||
| Amounts receivable | Amortized cost | 764,409 | 413,828 | ||||||
| Marketable securities | FVOCI | 7,787,750 | 1,642,583 | ||||||
| Other investments | FVOCI | - | 800,000 | ||||||
| Accounts payable and accrued liabilities | Amortized cost | 5,926,732 | 2,244,053 | ||||||
| Lease liability | Amortized cost | 519,827 | 19,805 |
Fair value
The Company's financial instruments recorded at fair value require disclosure about how the fair value was determined based on significant levels of input described in the following hierarchy:
- Level 1 - applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
- Level 2 - applies to assets or liabilities for which there are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly such as quoted prices for similar assets or liabilities in active markets or indirectly such as quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions.
- Level 3 - applies to assets or liabilities for which there are unobservable market data.
CONSOLIDATED URANIUM INC.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Expressed in Canadian Dollars
For the period ended December 5, 2023 (unaudited), and years ended December 31, 2022 and December 31, 2021
The Company's financial instruments recorded at fair value consist of cash equivalents, restricted cash, marketable securities and other investments are measured based on Level 1 inputs.
The book value of cash, amounts receivable, accounts payable and accrued liabilities, and current lease liabilities approximate their fair value due to the short-term nature of these instruments.
Financial risk management objectives and policies
Interest rate risk - The Company is not exposed to significant interest rate risk.
Currency risk - Currency risk is the risk to the Company's earnings that arises from fluctuations of foreign exchange rates and the degree of volatility of these rates. The Company is exposed to foreign currency exchange risk primarily on cash held in Australian and U.S. dollars, and property payments made in United States dollars. The Company does not use derivative instruments to reduce its exposure to foreign currency risk.
As of December 5, 2023 and December 31, 2022, the Company had the following financial instruments denominated in foreign currency (expressed in Canadian dollars):
| December 5, 2023 (Unaudited) | US Dollars | Australian Dollars | ||||
| Cash | $ | 163,603 | $ | 179,129 | ||
| Amounts receivable | 83,028 | 36,955 | ||||
| Environmental bonds | 2,183,320 | 410,961 | ||||
| Accounts payable and accrued liabilities | (1,094,196 | ) | (14,985 | ) | ||
| $ | 1,335,755 | $ | 612,060 | |||
| December 31, 2022 | US Dollars | Australian Dollars | ||||
| Cash | $ | 712,998 | $ | 28,469 | ||
| Amounts receivable | 167,241 | 62,901 | ||||
| Environmental bonds | 1,738,781 | 99,122 | ||||
| Accounts payable and accrued liabilities | (1,042,934 | ) | (93,720 | ) | ||
| $ | 1,576,086 | $ | 96,772 | |||
A 10% strengthening (weakening) of the Canadian dollar against the US dollar would decrease (increase) net loss by approximately $133,600 (December 31, 2022 - $157,600).
A 10% strengthening (weakening) of the Canadian dollar against the Australian Dollar would decrease (increase) net loss by approximately $61,200 (December 31, 2022 - $9,700).
Credit risk - Credit risk is the risk of an unexpected loss if a counterparty to a financial instrument fails to meet its contractual obligations. The credit risk associated with cash is believed to be minimal as cash is on deposit with Canadian banks that are believed to be creditworthy. Amounts receivable is comprised of amounts due from the Government of Canada. The Company does not believe it is exposed to significant credit risk.
Liquidity risk - Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities. The Company's approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meet liabilities when due. At December 5, 2023, the Company had cash and cash equivalents balance of $3,596,482 (December 31, 2022 - $14,834,706) to settle current liabilities of $6,043,672 (December 31, 2022 - $2,263,858). The Company's trade payables have contractual maturities of less than 30 days and are subject to normal trade terms.
CONSOLIDATED URANIUM INC.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Expressed in Canadian Dollars
For the period ended December 5, 2023 (unaudited), and years ended December 31, 2022 and December 31, 2021
14. RELATED PARTY DISCLOSURES
Key management personnel include those persons having authority and responsibility for planning, directing and controlling the activities of the Company. The Company has determined that key management personnel consist of executive and non-executive members of the Company's Board of Directors and corporate officers.
Remuneration attributed to key management personnel during the period ended December 5, 2023, and the years ended December 31, 2022 and 2021 is summarized as follows:
| (Unaudited) | For the period ended: | ||||||||
| December 5, | December 31, | December 31, | |||||||
| 2023 | 2022 | 2021 | |||||||
| Management fees | $ | 1,397,317 | $ | 1,397,216 | $ | 881,483 | |||
| Directors' fees | 255,726 | 240,000 | 76,340 | ||||||
| Share-based compensation - Management | 1,367,178 | 2,313,422 | 1,227,194 | ||||||
| Share-based compensation - Directors | 946,688 | 1,437,020 | 532,754 | ||||||
| $ | 3,966,909 | $ | 5,387,658 | $ | 2,717,771 | ||||
As at December 5, 2023 there was $nil (December 31, 2022 - $389,340) included in accounts payable and accrued liabilities owing to a director for compensation.
As at December 5, 2023, there was $1,094,709 (December 31, 2022 - $945,703) included in accounts payable and accrued liabilities owing to Energy Fuels Inc. for property payments and costs incurred on the Company's behalf at the Company's mineral properties. Energy Fuels holds 15.7% of the Company's common shares at December 5, 2023 (December 31, 2022- 17.4%).
As at December 5, 2023, there was $69,780 (December 31, 2022 - $nil) in amounts receivable owing by Green Shift.
Balances owed and owing to related parties are unsecured, non-interest bearing and due on demand.
As at December 5, 2023, LUR, PUR and Green Shift are related parties due to common directors and officers.
15. SPIN-OUT TRANSACTIONS
Labrador Uranium Inc.
In November 2020, the Company entered into an option agreement with a private, arm's length party to acquire a 100%, undivided interest, in the Moran Lake Project uranium project in the Central Mineral Belt of Labrador, Canada.
On November 30, 2020, the Company delivered consideration of $150,000, satisfied through the issuance of 253,568 common shares and made a cash payment in the amount of $150,000 to the optionor. The market price of the shares was $0.59, reflecting the 5-day volume weighted average price ("VWAP") of the Company's common shares.
On October 18, 2021, the Company announced the creation and planned Spin-Out Transaction of Labrador Uranium Inc. ("LUR"), an entity originally incorporated by CUR focused on the consolidation, exploration and development of uranium projects in Labrador, Canada ("Spin-Out Transaction").
In connection with the spin-out of Labrador Uranium Inc., the Company provided notice to exercise its option pursuant to the option agreement to acquire the Moran Lake project for consideration of $1,000,000 with $500,000 to be satisfied through the issuance of 191,570 common shares of CUR at a valuation of $524,902, based on the quoted market price of the Company's shares acquired at the transaction date, and $500,000 in cash. The 191,570 shares were issued on October 27, 2021.
CONSOLIDATED URANIUM INC.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Expressed in Canadian Dollars
For the period ended December 5, 2023 (unaudited), and years ended December 31, 2022 and December 31, 2021
To effect the Spin-Out Transaction, the Company entered into an arrangement agreement with LUR, pursuant to which, among other things, the Company transferred ownership of the Moran Lake Project to LUR in exchange for 16,000,000 common shares of LUR, which the Company distributed to CUR shareholders on a pro rata basis (the "Arrangement"). The Company applied to list the LUR Shares (the "Listing") on the Canadian Securities Exchange (the "CSE"). The CSE listing was completed on March 15, 2022.
The Company distributed the LUR Shares it received under the Arrangement to the Company's shareholders of record on February 14, 2022. Each shareholder received 0.214778 of an LUR share for each common share of the Company held.
As a result of the distribution of the LUR Shares, the Company recorded a dividend in-kind of $8,720,000 during the period ended December 31, 2022. The fair value of the LUR shares dividend was estimated using the November 2021 private placement financing by LUR and a realized gain of $8,720,000 was recognized in the condensed interim consolidated statement of loss for the period ended December 31, 2022.
In connection with the spin-out, the outstanding warrants and options were adjusted on a pro rata basis. The fair value of the warrants and options was unchanged.
On February 22, 2022, after receiving shareholder approval, the Company completed its Spin-Out Transaction and all related acquisitions and financings.
Spin-out of Premier American Uranium Inc. and acquisition of Premier Uranium Inc.
On May 24, 2023, the Company entered into an arrangement agreement with Premier American Uranium Inc. ("PUR"), pursuant to which among other things the Company has agreed to transfer ownership of certain indirect wholly-owned subsidiaries which hold eight U.S. Department of Energy leases and certain patented claims located in Colorado to PUR in exchange for 7,753,752 Class A common shares of PUR ("PUR Shares"), a portion of which will be distributed to the Company's shareholders on a pro rata basis (the "Arrangement").
Under the terms of the Arrangement, CUR distributed 50% of the PUR Shares it received to its shareholders on a pro-rata basis based on the number of CUR Shares held at the effective date of the Arrangement. There was no change in CUR shareholders' proportionate ownership in CUR as a result of the Arrangement. In addition, holders of options and warrants of CUR as of the effective date of the Arrangement will have such securities adjusted in accordance with their terms as a result of the Arrangement.
In addition, CUR and PUR entered into a purchase agreement with, among others, Premier Uranium Inc. ("Premier"), a privately held U.S. uranium focused project acquisition vehicle which owns a 100% interest in the Cyclone project in the Great Divide Basin of Wyoming (the "Cyclone Project") and various mining claims in the Uravan Mineral Belt of Colorado, pursuant to which PUR has agreed to acquire all of the outstanding 1,099,900 shares of Premier.
As a result of the spin out of PUR, the Company recorded discontinued operations of $112,698 for the period ended December 5, 2023 (December 31, 2022 - $nil) related to the expenditures on the transferred subsidiaries to PUR.
16. TRANSACTION WITH ISOENERGY LTD.
On September 27, 2023, the Company and IsoEnergy announced that they have entered into a definitive arrangement agreement for a share-for-share merger of IsoEnergy and Consolidated Uranium (the "IsoEnergy Arrangement Agreement"), pursuant to which IsoEnergy will acquire all of the issued and outstanding CUR Shares of Consolidated Uranium not already held by IsoEnergy or its affiliates by way of a court-approved plan of arrangement under the Business Corporations Act (Ontario) (the "IsoEnergy Merger").
CONSOLIDATED URANIUM INC.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Expressed in Canadian Dollars
For the period ended December 5, 2023 (unaudited), and years ended December 31, 2022 and December 31, 2021
Under the terms of the IsoEnergy Merger, CUR shareholders (the "CUR Shareholders") received 0.500 of a common share of IsoEnergy (each whole share, an "IsoEnergy Share") for each CUR Share held (the "Exchange Ratio"). The Exchange Ratio was determined giving consideration to recent weighted average prices for each of IsoEnergy and CUR for the period ended September 26, 2023. The implied fully diluted in the-money equity value of the combined company (the "Combined Company") is estimated at approximately $903.5 million. Upon completion of the Merger, existing IsoEnergy and Consolidated Uranium shareholders will own approximately 70.5% and 29.5% of the Combined Company, respectively, on a fully diluted in the-money basis.
In connection with the IsoEnergy Arrangement, IsoEnergy has entered into an agreement with Canaccord Genuity Corp., TD Securities Inc. and Eight Capital on behalf of a syndicate of agents (collectively, the "Agents") in connection with a private placement of 8,134,500 subscription receipts of IsoEnergy (the "Subscription Receipts") at an issue price of $4.50 per Subscription Receipt (the "Offering Price") for gross proceeds of $36,605,250 (the "Offering"). In connection with the Offering, each of NexGen Energy Ltd., Mega Uranium Ltd. and Energy Fuels Inc. (collectively, the "Cornerstone Investors"), have indicated their intention of subscribing for up to $21,001,500 of the Offering, subject to customary conditions, and satisfaction with the terms of the Offering.
The Offering closed October 19, 2023, with the gross proceeds of the Offering held in escrow pending the satisfaction of the escrow release conditions, including the satisfaction of the conditions to the closing of the IsoEnergy Merger, and certain other customary conditions.
On December 5, 2023, the Company and IsoEnergy completed the IsoEnergy Merger and the escrow release conditions were satisfied.
17. COMMITMENTS AND CONTINGENCIES
The Company is party to certain management contracts. As at the date of this report, these contracts contain minimum commitments of approximately $2,496,000 (December 31, 2022 - $1,766,000) and additional contingent payments of approximately $2,792,900 (December 31, 2022 - $2,078,000) upon the occurrence of a change of control. As a triggering effect for a change of control has not taken place, the contingent payments have not been reflected in these condensed interim consolidated financial statements.
Underlying royalties on the Company's properties are described in Note 4.
Several of the Company's property acquisition agreements include contingent payments to be made based on the spot price of uranium (see Note 4). Contingent payments based on price thresholds not yet reached have not been reflected in these condensed interim consolidated financial statements.
There is a $1,650,000 fee payable contingent on closing of the IsoEnergy Merger.
The Company's mining and exploration activities are subject to various laws and regulations governing the protection of the environment. These laws and regulations are continually changing and generally becoming more restrictive. The Company believes its operations are materially in compliance with all applicable laws and regulations. The Company has made, and expects to make in the future, expenditures to comply with such laws and regulations.