Dalrymple Resources NL

[2003] FCA 1096

FEDERAL COURT OF AUSTRALIA

Dalrymple Resources NL [2003] FCA 1096

CORPORATIONS – scheme of arrangement – application for leave to convene meeting of shareholders – application granted.

Corporations Act 2001 (Cth), ss 411, 412

Re ACM Gold Ltd (1992) 34 FCR 530 cited
Re Stockbridge (1993) 11 ACLC 201 cited

IN THE MATTER OF DALRYMPLE RESOURCES NL

W3019 of 2003

CARR J
15 SEPTEMBER 2003
PERTH

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY	W3019 OF 2003

IN THE MATTER OF DALRYMPLE RESOURCES NL
(ACN 009 423 689)
APPLICANT

JUDGE:	CARR J
DATE OF ORDER:	15 SEPTEMBER 2003
WHERE MADE:	PERTH

THE COURT ORDERS THAT:

1.Pursuant to s 411(1) of the Act the applicant convene a meeting of the holders of ordinary shares in the applicant at the Celtic Club, 48 Ord Street, West Perth, Western Australia on 20 October 2003 at 10.00 am for the purpose of considering and if thought fit approving, with or without modifications, a scheme of arrangement between the applicant and its members (being Appendix 2 to the Explanatory Statement referred to below).

2.        The meeting be convened, held and conducted:

(a)in accordance with the provisions of part 2G.2 of the Act that apply to members of a company and the provisions of the applicant’s constitution that are not inconsistent therewith and that apply to a meeting of members; and

(b)on the basis that Corporations Regulations 5.6.12 to 5.6.36A do not apply to the meeting.

3.The applicant advertise the meeting in The Australian Newspaper and The West Australian Newspaper in the form of the Annexure A to these orders as soon as practicable.

4.Neil Tomkinson, or failing him, Joshua Norman Pitt shall act as Chairman of the meeting and report the results of the meeting to this Court.

5.The proposed Explanatory Statement, which is part of annexure RC5 to the affidavit of Rick Wayne Crabb sworn on 12 September 2003 and appendices 1, 5, 7, 8 and 9 to the draft Explanatory Statement that appears as annexure NT7 to the affidavit of Neil Tomkinson sworn on 13 August 2003, being the Explanatory Statement required by s 412(1)(a) of the Act be and is approved (subject to any minor amendments required or approved by the Australian Securities and Investments Commission (ASIC) for purposes of registration thereof under s 412(6) of the Act) (the “Explanatory Statement”) and subject to the date first appearing on page 3 of that document being amended to read “31 December 2002”.

6.The applicant shall (subject to the registration of the Explanatory Statement by ASIC pursuant to s 412(6) of the Act) dispatch documents as soon as practicable in the form of:

(a)the Explanatory Statement;

(b)Notice of Court Ordered Meeting in the form of Annexure B to these orders; and

(c)Proxy Form in the form of Annexure C to these orders,

to the applicant’s shareholder members and the holders of any registered charges over any of the applicant’s assets by ordinary pre-paid post (or by airmail to holders of shares registered outside Australia) at their addresses appearing on the applicant’s register of members on the closest practicable business day before the dispatch of documents.

7.Leave be given to make application for orders under ss 411(4) and 411(6) of the Act following the meeting for approval of the scheme of arrangement and that 10.15 am on 29 October 2003 or such later date as the Court sees fit to substitute be set for such purpose.

7A.The Court, for the purposes of s 411(2) of the Act, permits the lesser period of notice consequent upon notice of the hearing today having been given to ASIC on 12 September 2003.

8.There be liberty to apply upon the giving of 24 hours written notice to ASIC.

9.An office copy of this order shall be lodged with ASIC as soon as practicable after these orders are made.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

Annexure A

Corporations Act 2001
Section 411(1)
DALRYMPLE RESOURCES NL

NOTICE OF COURT ORDERED MEETING OF SHAREHOLDERS

Take notice that, by an order of the Federal Court of Australia made on 15^th September 2003, a meeting of the shareholders of Dalrymple Resources NL (“Dalrymple”) will be held at The Celtic Club, 48 Ord Street, West Perth on 20^th October 2003 at 10 am for the purpose of considering and, if thought fit, agreeing (with or without modification) to a proposed Scheme of Arrangement between Dalrymple and its shareholders relating to a proposed merger of Dalrymple and LionOre Mining International Limited. A copy of the Explanatory Statement which accompanies the notice of meeting to shareholders may be obtained by contacting the Company Secretary, Level 2, 9 Havelock Street, West Perth, Western Australia 6005 Telephone: [phone] Facsimile: [phone] or by downloading and printing a copy from Dalrymple’s website at Ruttledge
Company Secretary
16 September 2003

Annexure B

NOTICE OF COURT ORDERED MEETING OF SHAREHOLDERS

By an order of the Federal Court of Australia made on 15^th September 2003, NOTICE IS HEREBY GIVEN that a meeting of the shareholders will be held at The Celtic Club, 48 Ord Street, West Perth on 20^th October 2003 at 10 am for the purpose of considering and, if thought fit, agreeing (with or without modification) to a proposed Scheme of Arrangement between Dalrymple Resources NL and its shareholders.  In addition, the Court has directed that Neil Tomkinson or, failing him, Joshua Norman Pitt is to act as Chairman of the meeting.

In accordance with section 412(1) of the Corporations Act 2001, and to allow shareholders to make an informed voting decision, an Explanatory Statement which gives further information on the proposed Scheme of Arrangement and also sets out the Scheme of Arrangement as Appendix 2 accompanies this Notice.

RESOLUTION

To consider and if thought fit, pass the following resolution:

“That pursuant to and in accordance with the provisions of section 411 of the Corporations Act 2001 (Cth.) the scheme of arrangement proposed between Dalrymple Resources NL and the holders of its fully paid ordinary shares designated the “Scheme” as contained in and more particularly defined in Appendix 2 to the Explanatory Statement which accompanied the Notice convening this meeting is agreed to and the Board of Directors of Dalrymple Resources NL are authorised to agree to such alterations or conditions as are thought fit by the Federal Court of Australia and subject to approval of the Scheme by the Court to implement the Scheme together with any such alterations or conditions.”

The Scheme of Arrangement is subject to subsequent approval by the Court.

Words and expressions defined in and for the purpose of the Scheme of Arrangement have the same meanings where used in this Notice.

A proxy form accompanies this Notice.  The instructions on the proxy form are deemed to be incorporated in this Notice.

DATED: 19 September 2003

Peter Ruttledge
Company Secretary

Annexure C

DALRYMPLE RESOURCES NL
ABN 76 009 423 689
PROXY FORM

The Company Secretary
Dalrymple Resources NL
2^nd Floor
9 Havelock Street
WEST PERTH,  WA  6005
Facsimile: 9481 8445

I/We,…………………………………………………………………………………………………… of ……………………………………………………………………….……. being a holder/holders of Scheme Shares (as that expression is defined in and for the purposes of a Scheme of Arrangement proposed by the Company between the Company and its members) hereby appoint ………………………………………………………………………………… of …………………………………………………………………………………………….. or failing him the Chairman of the meeting as my/our proxy to vote for me/us and on my/our behalf at the meeting convened pursuant to an order of the Federal Court of Australia made on 15 September 2003 to be held on 20 October 2003 at 10.00am and at any meeting held subsequent and pursuant to an adjournment of that meeting.

This form is to be used in accordance with the directions below.  Unless the proxy is directed otherwise, he may vote as he thinks fit.  Where the Chairman is appointed as proxy and no directions are given the Chairman will vote in favour of the resolution.

For:                 Against:              Abstain:

Resolution to approve the Scheme of   
Arrangement 

Instructions:

1.To direct the appointee to cast all votes covered by this instrument in a particular manner, place a sufficient indication (including, without limitation, a tick or a cross) in one of the boxes headed For, Against or Abstain.

2.To direct the appointee to cast some only of the votes covered by this instrument in a particular manner, place in the relevant box the percentage of the total votes covered by this instrument.

3.A holder of Scheme Shares entitled to attend and vote at the meeting is entitled to appoint not more than two proxies to attend and, on a poll, to vote in his stead.

4.Where two proxies are appointed, neither proxy shall be entitled to vote on a show of hands and, on a poll, the appointment shall be of no effect unless each proxy is appointed to represent a specified proportion of the holder’s voting rights in which case you should indicate the proportion of voting rights this proxy represents in this box:

%

 

 

5.A proxy need not himself be a holder of Scheme Shares.

6.The Proxy Form must be signed by the holder or his attorney duly authorised in writing (or, if the holder is a corporation, either under the common seal of that corporation or under the hand of an officer or attorney of the corporation duly authorised in writing). 

7.The Proxy Form (and any power of attorney or other authority pursuant to which the Proxy Form has been signed) must be deposited at the registered office of the Company, 2^nd Floor, 9 Havelock Street, West Perth, WA 6005, or be sent by post to Dalrymple Resources NL, PO Box 689 West Perth, WA 6872, or be sent by facsimile to the Company at [phone] in time to be received not later than 48 hours before the time fixed for the holding of the meeting, that is to be received by 10.00am Western Standard Time on Saturday 18 October 2003.

Dated: ………………..………………… 2003

Signed …………………………………..

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY	W3019 OF 2003

IN THE MATTER OF DALRYMPLE RESOURCES NL
(ACN 009 423 689)
Applicant

JUDGE:	CARR J
DATE:	15 SEPTEMBER 2003
PLACE:	PERTH

REASONS FOR JUDGMENT

1. The applicant has applied to the Court under s 411(1) of the Corporations Act 2001 (Cth) (“the Act”) for leave to convene a meeting of its members for the purpose of considering and if thought fit approving, with or without modifications, a scheme of arrangement between the applicant and its members. It also seeks approval of the explanatory statement required by s 412(1)(a) to accompany notices of the proposed meeting.

2. The applicant is a company which engages in gold mining and gold and nickel exploration either in its own right or through joint ventures with third parties.  Such exploration has predominantly been in the north-eastern goldfields of Western Australia, but the applicant has exploration interests in other areas including a gold project in Queensland.  The applicant’s primary asset is a 40% interest in the Thunderbox Gold Mine which commenced production in late 2002.  It is currently producing at a rate of approximately 20,000 ounces of gold per month.  The remaining 60% interest in the Thunderbox Gold Mine is held by a company named LionOre Mining International Ltd (“LIM”) and its subsidiaries.  LIM was incorporated in Canada forty-five years ago, is listed on the Toronto Stock Exchange and also on the Australian Stock Exchange (“ASX”) where quotation of its shares commenced on 8 August 2003. 

3. The object of the proposed scheme of arrangement is that the applicant will merge with LIM by becoming a wholly-owned subsidiary of that company.  The proposal is that members of the applicant transfer their shares to LIM or one of its subsidiaries in an exchange at the rate of one ordinary full paid share in the capital of LIM for each 2.92 shares which they hold in the applicant.  Initially those shares in LIM will be held by Chess Nominees Pty Ltd (a wholly-owned subsidiary of Australian Stock Exchange Limited) on trust for the respective transferors.  Those transferors’ beneficial interest in their LIM shares will be the subject of LIM Chess Depository Interests (“LIM CDIs”) to be issued to them.  The LIM CDIs will be tradeable on the ASX.  Furthermore, holders of the LIM CDIs may at any time convert them into certificated shares which will be tradeable on the Toronto Stock Exchange. 

4. The proposed scheme is subject to, among other things, approval by the applicant’s members at a meeting convened by the Court under s 411(1) of the Act and to subsequent Court approval under s 411(4)(b) and (6) of the Act. It is proposed that if and when the applicant becomes a wholly-owned subsidiary of LIM, it will be removed from official quotation by the ASX, and its shares will cease to be traded on that exchange. It is estimated that, after implementation of the scheme, the current members of the applicant will own about 13 per cent of LIM’s issued capital.

5. There is evidence that LIM is a much larger company than the applicant, with a greater spread of assets and more market liquidity.  In a supporting affidavit Mr Neil Tomkinson, chairman of directors of the applicant, states that the directors have from the outset of negotiations between the two companies wished to ensure with certainty that members of the applicant would receive the same consideration for their shares and would also be able to take advantage of the recently-introduced “Rollover Relief” provisions of the capital gains tax regime.  Those provisions (which enable deferral of capital gains tax under certain conditions) are detailed in the draft explanatory statement and are also referred to in Mr Tomkinson’s affidavit.  In the view of the directors of the applicant, any other take-over scheme could not offer such certainty.  Mr Tomkinson gives an example of a situation in which there would not be such certainty under a different take-over scheme. 

6. The proposed scheme has been approved unanimously by the directors of the applicant who recommend that its members vote in favour of it. 

7. Mr Tomkinson, in his affidavit, refers to the factual basis upon which such approval and recommendation have been made, including exposure to a wider spread of assets, synergy of assets, increased liquidity in the share market, attraction to institutional investors, and roll-over relief. 

8. I have examined the documentation including annexures to the four affidavits filed in support of the application. Those documents include the scheme itself (as amended), related agreements and the explanatory statement. I have also been assisted by the written submissions filed on behalf of the applicant and the oral submissions made by Mr Peter Jooste QC, senior counsel for the applicant. I am satisfied that there has been proper disclosure in the explanatory statement as required by s 411(3) of the Act. Of course I have not tested the factual accuracy of the matters stated in that document. My satisfaction about proper disclosure is based on the assumption that the facts are as they have been stated.

9. I am satisfied also that the other procedural requirements of the Act and those prescribed in the relevant regulations made under that Act have been complied with.

10. In particular, I am satisfied that appropriate notice of the hearing of the application has been given to the Australian Securities and Investments Commission (“ASIC”). The scheduled hearing of the application was adjourned last month, initially, at the indirect request of ASIC. In all the circumstances I fix the period from 12 September 2003 (being the day upon which ASIC was given notice of today’s hearing) and today as being the lesser period of notice referred to in s 411(2)(a) of the Act.

11. I am further satisfied, in terms of s 411(2)(b), that ASIC has had a reasonable opportunity to examine the terms of the proposed arrangement and drafts of explanatory statement relating to it, and to make submissions to the Court in relation to those documents.

12. I am satisfied that the proposed scheme can properly be described as an “arrangement” within the meaning of that expression in s 411 and that the applicant falls within the definition of a “Part 5.1 body”.

13. My assessment, on the materials filed to date, is that the scheme has been properly proposed in the sense that no improper purpose is evident. 

14. I think that it is appropriate to note, for the benefit of any member of the applicant who may read these reasons, that by granting leave to convene the meeting, the Court does not give its imprimatur or approval (at this stage) to the proposed scheme.  The authorities show that the test at this stage is whether the arrangement is one which appears to be fit for consideration by the meeting of members and is a commercial proposition likely to gain the Court’s approval if passed by the necessary majorities – see Re ACM Gold Ltd (1992) 34 FCR 530 at 534 and the cases there discussed. I adopt in relation to this scheme the words of Murray J in Re Stockbridge (1993) 11 ACLC 201 at 210, where his Honour said this:

    ‘This scheme seems to me to present a commercial arrangement which reasonable persons [being members] … might well approve.’  

15. In short, I am satisfied that the orders now proposed should be made.  There will be orders in terms of the minute passed up this afternoon in Court subject to the alterations made during the course of submissions from counsel during the hearing.  I will initial and date that document (for the purposes of identification) and I will place it with the Court file.  

I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of Justice Carr. 

Associate:

Dated:             22 October 2003

Counsel for the Applicant:	Mr P Jooste QC
Solicitor for the Applicant:	Messrs Blakiston & Crabb
Date of Hearing:	15 September 2003
Date of Judgment:	15 September 2003