Re Beadell Resources Ltd - [2018] WASC 410

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   RE BEADELL RESOURCES LTD; EX PARTE BEADELL RESOURCES LTD [2018] WASC 410
CORAM:   VAUGHAN J
HEARD:   21 DECEMBER 2018
DELIVERED          :   21 DECEMBER 2018
FILE NO/S:   COR 220 of 2018

EX PARTE
BEADELL RESOURCES LTD
Plaintiff
GREAT PANTHER SILVER LTD
Interested Party

Catchwords:

Corporations law - Scheme of arrangement - Proposed acquisition - Application for orders convening scheme meeting under s 411(1) of the Corporations Act 2001 (Cth)

Legislation:

Corporations Act 2001 (Cth), s 411, s 412
Supreme Court (Corporations) (WA) Rules 2004 (WA)

Result:

Application granted

Category: B

Representation:

Counsel:

Plaintiff	:	A J Papamatheos
Interested Party	:	T P O'Leary

Solicitors:

Plaintiff	:	Herbert Smith Freehills
Interested Party	:	Gilbert + Tobin

Case(s) referred to in decision(s):

Re ACM Gold Ltd; Re Mt Leyson Gold Mines Ltd (1992) 34 FCR 530
Re Anatolia Energy Ltd [2015] FCA 1134
Re APN News & Media Ltd [2007] FCA 770; (2007) 62 ACSR 400
Re CIC Australia Ltd (No 2) [2015] NSWSC 1314
Re CIC Australia Ltd [2015] NSWSC 557
Re Cobalt One Ltd (No 2) [2017] FCA 1407
Re Cobalt One Ltd [2017] FCA 1228
Re Coles Group Ltd [2007] VSC 389; (2007) 25 ACLC 1,380
Re Cortona Resources Ltd [2012] FCA 1295
Re Cytopia Ltd (No 2) [2010] VSC 4
Re Cytopia Ltd [2009] VSC 560
Re GRD Ltd [2009] FCA 1595
Re Investa Properties Ltd [2007] FCA 1104; (2007) 25 ACLC 1186
Re Kangaroo Resources Ltd; Ex parte Kangaroo Resources Ltd [2018] WASC 327
Re PR Finance Group Ltd [2013] FCA 504; (2013) 94 ACSR 516
Re Rancoo Ltd (1995) 17 ACSR 206
Re Rift Valley Resources Ltd [2012] FCA 952
Re Sierra Mining Ltd [2014] FCA 694
Re Simeon Wines Ltd [2002] SASC 204; (2002) 42 ACSR 454
Re Tawana Resources NL [2018] FCA 1456
Re Wesfarmers Ltd; Ex parte Wesfarmers Ltd [2018] WASC 308
Re Westgold Resources Ltd [No 2] [2012] WASC 395
Zenyth Therapeutics Ltd v Smith [2006] VSC 436; (2006) 60 ACSR 548

VAUGHAN J:

Overview

The plaintiff, Beadell Resources Ltd (Beadell), is an Australian public company listed on the official list as conducted by the ASX Ltd (ASX). Great Panther Silver Ltd (Great Panther) is a public company incorporated under the laws of British Columbia, Canada whose securities trade on both the New York (American) Stock Exchange (NYSE) and the Toronto Stock Exchange (TSX).
On 24 September 2018 Great Panther announced the proposed acquisition of Beadell via a scheme of arrangement pursuant to pt 5.1 of the Corporations Act 2001 (Cth). Great Panther seeks to acquire 100% of Beadell's ordinary shares for a consideration comprising the issue of 0.0619 common shares of Great Panther for each ordinary share of Beadell. If effectuated the proposed scheme will result in Beadell shareholders holding 38% of the combined entity. Beadell will be delisted from the ASX.
By an originating process dated 6 December 2018 Beadell sought orders under s 411(1) of the Corporations Act 2001 (Cth) in relation to the proposed scheme of arrangement. The application came before me for hearing on 21 December 2018. The application was supported by Great Panther.
After hearing submissions I made orders pursuant to s 411(1) of the Act to convene a meeting of Beadell's members to consider and vote on the proposed scheme. Ancillary orders were made as to the convening and conduct of the meeting. Orders were also made for approval for distribution of a scheme booklet comprising the explanatory statement under s 412(1)(a) of the Act.
I informed the parties I would provide reasons for my orders in due course. These are my reasons for the orders made on 21 December 2018.

Evidence and background facts

Beadell relied on some 12 affidavits sworn by seven deponents. Annexure 'A' to these reasons summarises the deponents, their relationship with Beadell or Great Panther and the nature of the evidence in the affidavits. Based on that affidavit evidence I record the following matters.
Beadell is a gold mining and exploration company. Its operations are based in northern Brazil where it operates the 100% owned Tucano gold mine. However, Beadell's registered office is in West Perth. As mentioned, Beadell is an Australian public company which is admitted to the official list of the ASX. Beadell's ordinary shares are quoted for trading on the stock market conducted by the ASX. As at 6 December 2018 Beadell had 1,673,584,196 ordinary shares on issue.
On 24 September 2018 Beadell announced to the ASX that it had entered into a Scheme Implementation Deed (SID) with Great Panther. A copy of the SID is in evidence (attachment 'TDG‑5'). Great Panther is a Canadian company headquartered in Vancouver, British Columbia. Great Panther describes itself as a primary silver mining and precious metals producer and exploration company. It has mining operations in Mexico (the Guanajuato mine complex and the Topia mine) and Peru (the Coricancha mine). Great Panther's outstanding share capital is comprised of 169,165,007 common shares.
Under the terms of the proposed scheme Beadell shareholders will receive 0.0619 common shares in Great Panther for each ordinary share in Beadell.
The ASX announcement suggested that the proposed scheme provides for an implied consideration of 8.6 cents per Beadell share. (It should be noted, however, that the independent expert report assesses a lesser value for the scheme consideration - an amount of 4.3 cents to 6.4 cents per Beadell share.) The suggested implied consideration of 8.6 cents per Beadell share was said to represent a 51% premium over Beadell's closing share price on 21 September 2018 (5.7 cents per share) and a 69% premium to Beadell's volume weighted average share price for the 20 trading days preceding 21 September 2018.
Beadell's directors unanimously recommend that its shareholders vote in favour of the scheme in the absence of a superior proposal. No competing proposal has emerged. The directors' recommendation is, however, subject to an independent expert opining that the scheme is in the best interests of the shareholders. As will be seen, that has occurred. Shareholders holding in aggregate 18.06% of Beadell have agreed to vote in favour of the scheme in the absence of a superior proposal. The names of those shareholders, and the shares held, have been disclosed in the scheme booklet.
In recommending that shareholders approve the proposed scheme the chairman of Beadell, Brant Hinze, directs attention to Great Panther's balance sheet. It is noted that this reports some US$58 million in cash and deposits, and no debt, as at 30 September 2018. Mr Hinze says that this will support Tucano's transition to a fully optimised gold mine. Mr Hinze goes on to say that Beadell is unable to act on various value creation opportunities as a stand-alone entity because of its weak balance sheet. It is suggested that Beadell has limited ability to source capital other than on unacceptably punitive terms.
Importantly, materials within the draft scheme booklet suggest that:
[T]here are material uncertainties regarding Beadell's financial position in the short-term. These uncertainties principally result from the 2019 Tucano mine plan back-ending production and the significant debt repayments due in the first half of 2019.
Beadell has undertaken a process to identify and consider a range of alternatives to address these uncertainties …
The Directors consider the Scheme to be the best available alternative to address the Company's financial uncertainties …[1]
[1] Scheme Booklet par 8.1(g). See also at par 8.1(1).
Elsewhere the draft scheme booklet refers to the material uncertainties giving rise to significant doubt about the ability of Beadell to continue as a going concern.[2]
[2] Scheme Booklet pars 11.2(d), 14.5(b).
The evidence suggests that Beadell investigated a number of external financing alternatives before reaching an agreement with Great Panther. Beadell has undertaken what is described as a 'competitive, robust and thorough merger, acquisition and investment process' since late 2016.[3] Alternative proposals, in the form of an agreement with an entity called Golden Harp Resources Inc and a letter of intent with Ring The Bell Capital Corp, were terminated in June 2018 and September 2018 respectively.[4]
[3] Independent Experts' Report (IER) p 4.
[4] IER p 5.
The materials before me record that the proposed scheme with Great Panther was selected as the best available alternative. It is said that the scheme will provide an immediate solution to Beadell's capital expenditure and debt repayment commitments in the near term. It is also said that, if the scheme does not go ahead, Beadell's cash flow position on a stand-alone basis is 'highly constrained' and would likely require a significant capital raising. Without a significant capital raising Beadell would be left highly exposed to any adverse operational issues or downward movement in the gold price.[5]
[5] IER p 5.

Nature of the proposed scheme

By the proposed scheme of arrangement Great Panther will acquire all of the ordinary shares in Beadell for a consideration of 0.0619 new Great Panther shares for each Beadell share (cl 2(d), cl 4.2, cl 5). Where there is a fractional entitlement the shares to be issued will be rounded down to the nearest whole number of Great Panther shares (cl 5.6).
There are two relevant exceptions to the proposed scheme consideration of 0.0619 new Great Panther shares for each Beadell share:
•Ineligible Foreign Shareholders (this includes shareholders whose address is outside Australia, New Zealand, Canada and the United States of America) will have their Great Panther shares dealt with in accordance with a sale facility under the scheme and the net sale proceeds remitted to them (cl 5.3). A 1% brokerage commission will apply.
•Small Shareholders (those holding 10,000 Beadell shares or less) may elect to have their Great Panther shares dealt with in accordance with the sale facility under the scheme, thus also receiving remittance of the net sale proceeds applicable to their shares (cl 5.4, cl 5.5).
Accordingly, Ineligible Foreign Shareholders and Small Shareholders who elect to do so will receive a cash amount. The cash so received will be the net proceeds of the sale of their scheme consideration.
On effectuation of the proposed scheme Beadell will become a wholly owned subsidiary of Great Panther. Beadell will then be delisted from the ASX (cl 7). The new Great Panther common shares as issued to the former Beadell shareholders will be listed on the NYSE and the TSX (cl 2(d), cl 5.9).
The scheme will not become effective unless and until a number of scheme conditions as set out in the SID are satisfied or waived (cl 3.1). The material conditions precedent include:
•various regulatory approvals (the most significant being certain approvals on the part of the Foreign Investment Review Board (FIRB) and the TSX);
•approval on the part of the Great Panther shareholders to the issue of the scheme consideration by ordinary resolution in accordance with the requirements of the TSX;
•various third party consents - such consents being necessary under material third party contracts. One third party consent of particular importance concerns an agreement for financial accommodation (referred to as the 'MACA Agreement') pursuant to which Beadell has a A$54.7 million loan;
•certain arrangements being effected in relation to convertible debentures that Beadell has on issue; and
•Beadell entering into binding agreements with the holders of certain warrants issued by Beadell to accept identified consideration in exchange for their outstanding Beadell warrants.
Beadell announced on 2 November 2018 that the FIRB has issued a statement of 'no objection' under the Foreign Acquisitions andTakeovers Act 1975 (Cth). Accordingly, the FIRB condition precedent has been satisfied. So too some of the third party consents have been obtained including that in relation to the MACA Agreement - Great Panther having reached agreement with the counterparty on modifications to the outstanding loan due by Beadell. Beadell has also satisfied the warrant condition precedent in respect of all but one warrantholder.
Gregory Barrett, Beadell's company secretary, deposes that Beadell and its advisers continue to work toward the satisfaction or waiver of the conditions precedent. Mr Barrett affirms that he is not aware of any basis to believe that any condition precedent will not be satisfied or waived by the necessary time.[6]
[6] Affidavit of Gregory Barrett affirmed 19 December 2018 pars 49 ‑ 50.
The proposed scheme will be supported by a deed poll pursuant to which, among other things, Great Panther agrees to provide to or procure the provision to the scheme participants of the scheme consideration to which they are entitled under the scheme (Deed Poll cl 3.1; SID cl 2(f)).
The scheme is proposed pursuant to the SID. The SID provides for comprehensive terms as to the implementation of the transaction contemplated by the proposed scheme of arrangement. Among other things the SID makes provision for the steps Beadell is to take in relation to various options and performance rights (SID cl 3.1(s), cl 4.11) and the execution of the deed poll (SID cl 5.2(e)). The SID also provides for the conduct of the parties' business pending effectuation of the proposed scheme (SID cl 5.5). Importantly, the SID has certain exclusivity arrangements - operative for an exclusivity period of six months from the date of the SID - by way of no shop, no talk, notification and matching rights (cl 11). A break fee and a reverse break fee of $2.2 million - each described as a 'reimbursement fee' - are payable in prescribed circumstances (SID cl 12).
The SID has been amended by a deed of amendment dated 18 December 2018 (attachment 'TDG‑15'). The deed of amendment provides for two clarifications to the scheme terms. First, it addresses the process for Small Shareholders to elect to participate in the sale facility (cl 5.5). Second, it confirms that the new Great Panther common shares are to be tradeable on the NYSE (cl 5.9(c)).
I was provided with the draft proposed scheme booklet as provided to the Australian Securities and Investments Commission (ASIC) on 5 December 2018 and the various amendments that have been made to the document since then (attachments 'TDG‑18', 'TDG‑21' and 'TDG‑22'). At the hearing Beadell relied on a final version of the draft scheme booklet dated 20 December 2018 (attachment 'TDG‑23'). The draft scheme booklet is imposing in terms of size. Beadell does, however, seek to assist its members by providing various concise summaries that may be consulted.
The scheme booklet itself comprises sections as follows:
1.Overview of the scheme booklet.
2.Key dates relating to the transaction.
3.Letter from the chairman of Beadell.
4.Letter from the chair of Great Panther.
5.Overview of the transaction.
6.Next steps and voting at the scheme meeting.
7.Frequently asked questions.
8.Key considerations relevant to the exercise of vote.
9.Overview of the scheme.
10.Scheme consideration.
11.Profile of the Beadell group.
12.Profile of the Great Panther group.
13.Profile of the merged group.
14.Risk factors.
15.Tax considerations.
16.Comparison of Australian and Canadian laws and summary of rights attaching to the Great Panther shares (set out in fuller detail in annexure F to the scheme booklet).
17.Additional information.
18.Glossary and interpretation.
It is proposed that the scheme booklet will be accompanied by substantial annexures.
The scheme booklet will include an independent experts' report (IER). The IER has been prepared by Nicki Ivory and Stephen Reid of Deloitte Corporate Finance Pty Ltd. A draft version of the IER has been verified by Ms Ivory. Ms Ivory, a chartered accountant and chartered financial analyst with over 20 years corporate finance experience, confirms that the opinions expressed in the IER are opinions that she honestly and genuinely holds. The IER in part relies on an independent technical specialists' report prepared by CSA Global. That report provides an assessment and valuation of the mineral assets of Beadell and Great Panther.
Also to be included as annexures to the scheme booklet are the terms of the proposed scheme of arrangement, the deed poll to be executed by Great Panther, the notice of the scheme meeting and financial statements and other annual information in relation to Great Panther.

Legal framework

I described the applicable legal framework for an application of the nature brought by Beadell in Re Wesfarmers Ltd; Ex parte Wesfarmers Ltd.[7] I do not intend to repeat what I stated in Re Wesfarmers Ltd. I adopt and will apply what I stated in Re Wesfarmers Ltd.
[7] Re Wesfarmers Ltd; Ex parte Wesfarmers Ltd [2018] WASC 308 [46] ‑ [78] (Re Wesfarmers Ltd).
There is usually said to be six matters to be proved at this first stage of the process under s 411 of the Act. Those matters are that:
(1)The plaintiff is a Pt 5.1 body.
(2)The proposed scheme is a compromise or an arrangement within the meaning of s 411 of the Act. Here, relevantly, the question is whether the proposed scheme is an 'arrangement'.
(3)The proposed scheme booklet will provide proper disclosure to members.
(4)The scheme is bona fide and properly proposed. (For present purposes it is convenient, by reference to this hearing, to also consider the lawfulness and any class issues in relation to the proposed scheme of arrangement.)
(5)The ASIC has had at least 14 days' notice of the proposed hearing date and has had a reasonable opportunity to examine the terms of the scheme and the scheme booklet and to make submissions.
(6)The various procedural requirements of the Act and the Supreme Court (Corporations) (WA) Rules 2004 (WA) have been met.
It is also necessary that the court be satisfied that the scheme is of such a nature and cast in such terms that, if it receives a statutory majority at the scheme meeting, the court would be likely to approve the scheme at the hearing of an application which is unopposed. This does not require me to descend into the commercial merits or demerits of Beadell's proposed scheme. It is enough if the scheme is one that it would be open to the members of Beadell to adopt. I need only consider whether the proposed scheme is one that sensible business people might consider to be of benefit to the members.
There are some specific legal considerations that apply to the scheme of arrangement as proposed by Beadell. It is convenient to defer consideration of those matters and deal with them in providing my reasons for the orders as made.

Disposition: standard matters

Formal matters

The formal matters that Beadell had to prove were satisfied.
Beadell is a company; it is therefore a Pt 5.1 body. The proposed scheme constitutes an 'arrangement'; this type of merger acquisition scheme has been approved by court as an arrangement on numerous occasions. By letter dated 20 December 2018 (attachment 'TDG-27') the ASIC confirmed satisfaction of the service requirement and that it had been provided with the reasonable opportunity required under s 411(2). The ASIC also gave notice that it did not propose to appear to make submissions or intervene to oppose the scheme at the first hearing.
The various procedural requirements for making the orders were all attended to in the evidence; for example, there was the necessary consent and disclosure by the proposed chairperson of the meeting and his alternate.

Properly proposed

On the materials there was nothing to suggest that the proposed scheme was unlawful or not properly proposed.

There was no obvious flaw in the scheme such that it would be inappropriate for it to be submitted to Beadell shareholders for their consideration.
As to the fact that there was proposed to be a single class of members, counsel for Beadell drew my attention to the differential treatment proposed for Ineligible Foreign Shareholders and (at their election) the Small Shareholders. Differential treatment of this sort is commonplace in schemes of arrangement. It is not class creating as there is sufficient community of interest between the shareholders for them to consider whether the proposed scheme is in their collective interest.[8] Similarly, the circumstance that certain Beadell shareholders have given a voting intention statement is not class creating.[9]
[8] Re Wesfarmers Ltd; Ex parte Wesfarmers Ltd [91] ‑ [98].
[9] Re Tawana Resources NL [2018] FCA 1456 [53] ‑ [55].
Counsel for Beadell drew my attention to various other matters concerning the proposed scheme. More detailed discussion of those matters is best deferred and will be dealt with in the next main section of these reasons.

Disclosure and scheme booklet

I have read through an initial draft of the scheme booklet dated 5 December 2018 and considered the various amendments made to that draft. Subject to the matter I refer to below at par 85 (which was addressed in the course of the hearing) I was and am satisfied, to the necessary prima facie level given the interlocutory nature of the application before me, that there will be proper disclosure as to the effect of the proposed scheme and the material considerations to which shareholders ought to have regard.
Importantly, the scheme booklet gives disclosure as to the reasons that a shareholder may wish to vote against approval of the proposed scheme. These include:
•Disagreement with the directors' recommendation and the independent experts' conclusion.
•The uncertain monetary value of the scheme consideration.
•The fact that the members' investment will no longer be listed on the ASX - the members only being able to trade their Great Panther shares on the TSX and the NYSE.
There is also a comprehensive section on the risk factors, both general and specific, associated with the proposed scheme. These include the risks associated with Great Panther being a foreign company, the value to be attributed to the scheme consideration and potential restrictions of the trading of Great Panther shares. The scheme booklet also contains a comparison of Australian and Canadian laws in the context of providing a summary of the rights that will attach to the Great Panther shares issued by way of scheme consideration.
Beadell drew to my attention to the fact that it is not intended to include the SID as an annexure to the scheme booklet. Counsel also referred to the fact that it is proposed to copy certain annexures such that two pages are included on each A4 page.
The scheme booklet is already an imposing document. The SID would add a further 111 pages to the scheme booklet. Full and fair disclosure to members is essential. But the adequacy of the information given to the members is to be assessed in a practical and realistic way. The scheme booklet summarises the important features of the SID so far as it impacts on the terms of the proposed scheme and the scheme's intended effectuation. I am satisfied that proper disclosure does not necessitate that the SID be included as an attachment to the scheme booklet.
Beadell noted that the terms of the SID have already been the subject of an announcement on the ASX and that the scheme booklet refers to that fact (par 9.1). The implicit suggestion is that Beadell members can inform themselves about the precise terms of the SID if they wish to do so. I do not consider I ought to take this into account in assessing the adequacy of disclosure.
Section 412 requires the sending of an explanatory statement. In context the reference to 'send' necessitates a self‑contained document; it does not permit incorporation by reference. I would venture to suggest that this is something that ought to be the subject of legislative re-consideration. For present purposes, however, it is enough that I have concluded that the summary of the effect of the terms of the SID as provided in the scheme booklet suffices to properly inform the members and thereby enable them to exercise their judgment of the proposed scheme.
No difficulties arise from the proposal to reformat the annexures to the scheme booklet so as to minimise copying and cost.
More generally as to the content of the disclosure, I observe that there was active engagement by the ASIC in its review of the contents of the draft scheme booklet. This resulted in a number of changes to the scheme booklet which enhanced disclosure.
Pre‑hearing I also raised with Beadell's legal representatives whether certain clarifications to the scheme booklet were desirable to ensure a balanced presentation. In particular I was concerned that aspects of the chairman's letter and the reasons given to vote in favour of the scheme unduly focused attention on an apparent premium being received based on Beadell's and Great Panther's respective share prices as at the date of announcement. I questioned whether - to ensure that a fair picture was presented - there should be an accompanying contextual clarification referring the members to the value of the scheme consideration as assessed in the IER. That suggestion, and another more minor matter, has been accommodated in the final scheme booklet as presented for approval for distribution.
As to the due diligence and verification process undertaken by Beadell and Great Panther, I had regard to, and accept, the evidence given by Mr Barrett (at pars 14 to 32 of his affidavit) and the chief financial officer and corporate secretary of Great Panther, Jimmy Zadra (at pars 12 to 27 of his affidavit). In substance:
•Following the establishment of a due diligence committee, a due diligence and verification process has been undertaken by Beadell with the assistance of its external legal advisers. There has been verification of the various statements attributed to Beadell n the scheme booklet.
•A similar process has been undertaken in relation to the statements attributed to Great Panther.
•Appropriate steps have been taken to satisfy Beadell and Great Panther that the scheme booklet does not omit any material information.
The directors of Beadell have resolved to adopt the scheme booklet.[10]
[10] Affidavit of Thomas Gray affirmed 20 December 2018 pars 20 ‑ 21.
Otherwise, as to disclosure, I was satisfied that the scheme booklet contained the prescribed information in accordance with s 412(1)(a)(ii) of the Act and sch 8 of the Corporations Regulations 2001 (Cth). Those requirements have been modified in respect of item 8302(h) of pt 3 of sch 8 by the ASIC's letter dated 20 December 2018 (attachment 'TDG‑27'). In locating and satisfying myself as to disclosure of the prescribed requirements, as well as the ASIC Regulatory Guide 60: Schemes of Arrangement, I was assisted by a checklist provided by Beadell's counsel as an appendix to Beadell's written submissions.

Disposition: specific matters

In written and oral submissions counsel for Beadell drew a number of matters to my attention. These included the issue of performance risk, the exclusivity provisions, an intention to apply for an exemption under s 3(a)(10) of the Securities Act 1933 (USA) and issues as to particular terms within the scheme.
There are two other matters which, although not addressed by counsel in written submissions, were material. First, consideration must be given to the conclusion expressed in the IER that the proposed scheme is not fair but is nevertheless reasonable. Second, consideration must be given to the fact that the scheme booklet discloses that Beadell has entered into a loan agreement with Great Panther. Counsel raised the latter matter in his oral submissions having handed up at the hearing the affidavit of Thomas Gray affirmed 21 December 2018 which included a copy of the loan agreement (attachment 'TGD‑29'). That affidavit also demonstrated that the loan agreement had been brought to the attention of the independent experts.

IER: The proposed Scheme is not fair but reasonable

The IER was prepared by reference to the ASIC Regulatory Guide 111: Content of Expert Reports. The experts concluded that the proposed scheme is not fair but reasonable. It is thus said to be in the best interests of the Beadell shareholders.[11]
[11] IER p 8.
On occasions it has been suggested that the proposition that an offer may be 'not fair' but nevertheless 'reasonable' is one that presents some difficulty.[12] It has been said that 'persuasive applications of the distinction are likely to be rare'.[13] The distinction is, however, entrenched in the ASIC Regulatory Guide 111 and is one that has been long enforced by the ASIC.[14] On that basis the distinction is one that has meaning.[15] Fairness is concerned with a comparison of the scheme consideration and the true value of the shares. A scheme is reasonable if it is fair; but it may also be reasonable if there are other factors that make it reasonable to accept an offer that is less than fair in the absence of a higher bid.[16]
[12] See eg Re Rancoo Ltd (1995) 17 ACSR 206, 208.
[13] Zenyth Therapeutics Ltd v Smith [2006] VSC 436; (2006) 60 ACSR 548 [113].
[14] Re PR Finance Group Ltd [2013] FCA 504; (2013) 94 ACSR 516 [23].
[15] Re CIC Australia Ltd [2015] NSWSC 557 [9].
[16] ASIC Regulatory Guide 111: Content of Expert Reports [111.10] ‑ [111.15], [111.21]. See also Re Cytopia Ltd [2009] VSC 560 [5]; Re CIC Australia Ltd [8].
The circumstance that the IER has concluded that the proposed scheme is not fair but reasonable is not fatal to Beadell's application. There are numerous examples of courts convening scheme meetings and subsequently approving a scheme where an independent expert has concluded that the scheme was reasonable though not fair.[17]
[17] See eg Re Coles Group Ltd [2007] VSC 389; (2007) 25 ACLC 1,380 [77] - [79]; Re GRD Ltd [2009] FCA 1595 [28] - [31]; Re Cytopia Ltd [5] - [9]; Re Cytopia Ltd (No 2) [2010] VSC 4 [15] - [18]; Re Rift Valley Resources Ltd [2012] FCA 952 [7]; Re Westgold Resources Ltd [No 2] [2012] WASC 395 [36] - [42]; Re PR Finance Group Ltd [21] - [24]; Re Sierra Mining Ltd [2014] FCA 694 [41] - 44]; Re CIC Australia Ltd [8] - [9], [17]; Re CIC Australia Ltd (No 2) [2015] NSWSC 1314 [7]; Re Cobalt One Ltd [2017] FCA 1228 [15] - [21]; Re Cobalt One Ltd (No 2) [2017] FCA 1407 [10] - [12].
Nevertheless, where an independent expert reports that a scheme is 'not fair' there is a serious question for investigation by the court.[18] As Dodds‑Streeton J explained in Zenyth Therapeutics Ltd v Smith:
Courts should adopt a cautious approach to the approval of any scheme which the independent expert considers 'not fair', particularly when it may involve expropriation at an undervalue. In my opinion, a scheme involving an offer of an undervalue, which is not fair, should generally not be considered reasonable unless it is accompanied by some positive compensatory feature. The fact that the security holders are unable to exact fair, or better, consideration through any avenue alternative to the scheme would not necessarily render an unfair scheme reasonable in the relevant sense.[19]
[18] Re Cytopia Ltd [6].
[19] Zenyth Therapeutics Ltd v Smmith [114].
That said, as long as the scheme participants are properly informed that the independent expert considers the scheme not to be fair, and why, it is ultimately for the members to decide whether it is an offer that they should accept.[20]
[20] Re CIC Australia Ltd [17].
It follows that a key consideration is whether the expert report satisfactorily discloses the basis of the expert's opinion.[21] The members must be provided with a proper opportunity to understand and assess the basis of the opinion. The court should consider whether shareholders will be acting on sufficient information in order to make an informed decision as to whether to accept the scheme consideration for their shares.[22]
[21] Re Cytopia Ltd [9]; Re Cobalt One Ltd [20].
[22] Re ACM Gold Ltd; Re Mt Leyson Gold Mines Ltd (1992) 34 FCR 530, 534; Re Cytopia Ltd [6].
The court will also assess the independent expert's explanation for his or her conclusion. For example, in Zenyth Therapeutics Ltd v Smith Dodds‑Streeton J refused a s 411(4)(b) approval application where the expert's conclusion that the scheme was reasonable, despite being not fair, was not clear or logically compelling.[23]
[23] Zenyth Therapeutics Ltd v Smith [118], [120] - [121].
The IER concludes that the proposed scheme is not fair as:[24]
•the experts assess the fair market value of a Beadell share (inclusive of a premium for control) to be between 5.3 cents and 9 cents per share, with a mid‑point of 7.1 cents; however
•the experts assess the value of the scheme consideration (on a minority interests basis) to be between 4.3 cents and 6.4 cents per Beadell share, with a mid‑point of 5.4 cents.
[24] IER p 3.
The experts conclude, however, that the proposed scheme is 'reasonable' because various short-term financial challenges faced by Beadell - said to be due to its high gearing and the imminent repayment profile of its debt resulting in a vulnerable balance sheet and risks from a high operating leverage - leave Beadell vulnerable on a stand-alone basis to any exogenous shocks. It is said that Beadell shareholders could be significantly worse off if the scheme is not implemented and Beadell is forced to raise capital on a stand‑alone basis.[25]
[25] IER p 8.
The IER observes also that:[26]
(1)absent the proposed scheme Beadell's cashflow position is highly constrained and it would be likely to require a significant capital raising in the near term;
(2)Beadell has expected significant short-term cash outflows comprising repayment of A$13.5 million net debt in the first half of 2016 and settlement of about A$12 million of overdue creditors during the remainder of 2018; and
(3)Beadell's short‑term cash flow requirements that cannot be funded through operations could reach between A$25 million and A$35 million.
[26] IER p 5.
The IER assesses Beadell's available alternatives to finance its funding shortfall. It is said that a debt refinancing is likely to have a highly dilutive effect on Beadell's current shareholders.[27] That would also be the effect of an equity financing.[28] An analysis of the possible effect of an equity raising to alleviate Beadell's funding constraints suggests that the value of the consideration to be received under the scheme is higher than the adjusted value of a share in Beadell.[29] The IER also assesses and compares the value of a Beadell share as against the share consideration on the basis that the transaction is viewed by way of a merger rather than a control transaction.[30] On this basis the value of the Beadell shares is assessed in the range of 4.5 cents to 7.6 cents which compares more favourably to the assessed value of the scheme consideration at 4.3 cents to 6.4 cents.[31]
[27] IER p 5.
[28] IER p 6.
[29] IER p 6.
[30] IER p 7.
[31] IER p 7.
The IER notes other potential advantages accruing to the Beadell shareholders under the proposed scheme:[32]
•The members will continue to have some - albeit reduced - exposure to Beadell's mining assets.
•The members will have an interest in a wider portfolio of assets.
•The members are expected to benefit from the merged entity being listed on the TSX and the NYSE with improved exposure to North American capital markets.
•If the proposed scheme does not proceed Beadell is highly exposed to further operational issues and downward movements in the gold price.
•In the event that the proposed scheme does not proceed the Beadell share price is likely to decline.
[32] IER p 7.
I have, as suggested in Zenyth Therapeutics Ltd v Smith, carefully considered the proposed scheme by reference to the IER to determine whether there is some positive compensatory feature resulting in reasonableness given the independent experts' conclusion that - assessing the value of the Beadell shares inclusive of a premium for control - the scheme is not fair. I am satisfied that the matters referred to by the independent experts as detailed above provide prima facie justification that the scheme is reasonable. In that regard I also take into account the following observations in the ASIC Regulatory Guide 111: Content of Expert Reports:
A bidder may also offer a price which is 'not fair' where the target is in financial distress. This is because the fair value of the target securities should be determined on the basis of a knowledgeable and willing, but not anxious, seller that is able to consider alternative options to the bid (e.g. an orderly realisation of the target's assets). Such an offer may nonetheless be reasonable if the alternative methods of remedying the financial distress are likely to be less attractive to security holders than a successful offer.[33]
[33] ASIC Regulatory Guide 111: Content of Expert Reports [111.15].
In any case the reasons provided in the IER are clear and logical. There is fulsome disclosure of the basis for the independent experts' opinion. Sufficient information is provided such that the members will be provided with a proper opportunity to understand and assess the basis of the opinion that the proposed scheme is reasonable despite not being fair. A member reading the IER will be in a position to make an informed decision on whether or not to approve the scheme. More generally, elsewhere in the scheme booklet there is an extensive discussion of the advantages, disadvantages and risks of the proposed scheme.
The conclusion provided in the IER was not a reason to refuse to convene the scheme meeting. To the contrary, having reviewed the IER, I was satisfied that the opinion that the proposed scheme was reasonable and in the best interests of Beadell's shareholders was plainly open. On this basis the scheme is one that sensible business people might consider will be of benefit to Beadell's members; the scheme is thus fit for consideration by the members.

Performance risk

Counsel for Beadell submitted that the nature and terms of the proposed scheme were such that the members were adequately protected against the risk that Great Panther would not perform its obligations under the scheme.
I accept that submission. The main matter for consideration is assurance that the members' shares will not be transferred until the members have received the scheme consideration. As to members other than Ineligible Foreign Shareholders (and the Small Shareholders who elect to sell), the scheme itself is predicated on provision of the scheme consideration (cl 2(d)) and contemplates that the transfer of the members' shares to Great Panther is first subject to the provision of the scheme consideration to the members (cl 4.2). So too Great Panther's beneficial entitlement to the Beadell shares is dependent on its provision of the scheme consideration (cl 8.3(b)). The proposed arrangements for the Ineligible Foreign Shareholders and the electing Small Shareholders also provide for enforceable covenants on the part of Great Panther and Beadell (cl 5.3, cl 5.4) which are prima facie acceptable in terms of averting performance risk.
Great Panther has executed a deed poll in connection with the scheme (attachment 'TDG‑16'). This is in a usual form and provides - for the benefit of the scheme participants (cl 1.3(a)) - that Great Panther will provide the scheme consideration and otherwise perform its obligations under the scheme (cl 3.1). Beadell may enforce the deed poll on behalf of the members (cl 1.3(b)). Otherwise there are appropriate covenants as to the common shares to be issued (cl 3.2) and warranties on the part of Great Panther (cl 4).

There is evidence from a Canadian lawyer, Tom Theodorakis, as to the means by which, as a matter of the law of British Columbia, a company incorporated in that province may execute a contract. Authorised signatories who can bind the company include a director or officer. The deed poll has been signed by Mr Zadra on behalf of Great Panther. Mr Zadra deposes that a meeting of the board of Great Panther resolved to authorise and direct him to execute the deed poll in his capacity as chief financial officer and corporate secretary of Great Panther. Accordingly, prima facie the deed poll has been duly executed and constitutes a legal, valid and binding obligation of Great Panther enforceable against it according to the terms of the deed poll.

Exclusivity provisions and break fee

I have mentioned that the SID contained various exclusivity provisions. These comprised:
•A warranty that Beadell was not currently in negotiations or discussions concerning any competing proposal (cl 11.1).
•A 'no shop' and 'no talk' clause (cl 11.2) - the latter being subject to a fiduciary exception (cl 11.3).
•An obligation to notify Great Panther if Beadell received any competing approaches (cl 11.4) together with a matching right (cl 11.5).
The exclusivity arrangements are supported by a break fee provision which provides for a 'reimbursement fee' of $2.2 million to be paid on certain events (cl 12). The break fee is reciprocal, ie there is a 'Beadell reimbursement fee' (cl 12.2) and a 'Great Panther reimbursement fee' (cl 12.3). The triggers which result in the Beadell reimbursement fee becoming payable are relatively standard. They include, for example, a change of recommendation (unless the IER concludes that the scheme is not in the best interests of the shareholders), the recommendation or completion of a competing proposal or a material breach leading to Great Panther terminating the SID (cl 12.2).
In considering the propriety of exclusivity arrangements the authorities suggest that:[34]
(1)The exclusivity period should be certain and of reasonable duration.
(2)The exclusivity arrangements should be subject to a directors' duty carve-out, ie the directors should be able to consider an alternative proposal if it may result in a potentially superior transaction that will better serve the members' interests.
(3)The arrangements should be adequately disclosed in the explanatory statement.
[34] See eg Re Kangaroo Resources Ltd; Ex parte Kangaroo Resources Ltd [2018] WASC 327 [57] ‑ [61].
Appropriate affidavit evidence should be adduced to justify the exclusivity arrangements.[35]
[35] Re Kangaroo Resources Ltd; Ex parte Kangaroo Resources Ltd [58].
With a 'break' or 'reimbursement' fee there should also be affidavit evidence to justify the terms.[36] Ordinarily such fees are justified by costs to the bidder, benefits to the target and its members, and the desirability that commercial transactions be proposed.[37] Thus there is nothing improper in stipulating for a reimbursement fee.[38] However, the presence of such a feature will be of concern where it is coercive; it ought not be of such a magnitude that it might influence shareholders' voting.
[36] Re Kangaroo Resources Ltd; Ex parte Kangaroo Resources Ltd [58], [66].
[37] Re Kangaroo Resources Ltd; Ex parte Kangaroo Resources Ltd [70].
[38] Re Kangaroo Resources Ltd; Ex parte Kangaroo Resources Ltd [69].
The exclusivity period of six months is well justified in the circumstances of the transaction. Significant steps need to be taken outside of Australia insofar as the new Great Panther shares are to be listed for trading on the TSX and the NYSE. Also, to achieve satisfaction of the conditions precedent, various commercial arrangements need to be negotiated and entered into with a number of third parties. There is an appropriate 'directors' duty' carve‑out provision to the 'no talk' obligation. And the obligations are disclosed in the scheme booklet (par 9.14(a)).
Mr Barrett deposes that the exclusivity provisions, including the break fee, were inserted into the SID as a result of normal commercial negotiations in which Beadell and Great Panther were assisted by professional advisers. He records that Beadell received legal and financial advice as to the provisions. Beadell also had regard to the Takeovers Panel Guidance Note 7 - Lock-up Devices in the negotiations. Mr Barrett deposes to a belief that the provisions are in the best interests of the members to secure the transaction represented by the proposed scheme. A variety of reasons are given for Mr Barrett's belief that the reimbursement fee is reasonable and appropriate in the circumstances.[39]
[39] Affidavit of Gregory Barrett affirmed 19 December 2018 pars 53 ‑ 55, 57 ‑ 60.
Importantly, the reimbursement fee is not payable if the scheme is not approved by Beadell's shareholders. It therefore ought not be a disincentive to the members in their consideration of the proposed scheme.
The fact of the reimbursement fee and the circumstances in which it will become payable is disclosed in the scheme booklet (par 9(d)). There was, however, no express disclosure that the Beadell reimbursement fee was not payable solely because Beadell shareholders did not approve the scheme. I considered this a deficiency. Beadell's written submissions expressly noted that the reimbursement fee was not coercive as it is not triggered by scheme shareholders failing to approve the scheme.[40] In my view, to avoid any potential coercion, it was necessary to expressly inform members - in a relatively prominent way when dealing with the reimbursement fee - that this was the case. Accordingly, at the hearing I suggested, and Beadell by its counsel agreed, to amend the scheme booklet accordingly.
[40] Beadell's Submissions dated 19 December 2018 par 117.
The reimbursement fee of $2.2 million represents 0.972% of the enterprise value of Beadell having regard to Beadell's share price immediately before the proposed scheme was announced.[41] That is less than the 1% mentioned in the Takeover Panel Guidance Note 7 - Lock‑up Devices.[42] However, the reimbursement fee represents some 1.53% of the implied value of the scheme consideration.[43] That is high. In the Takeover Panel Guidance Note 7 - Lock‑up Devices it is said:
In the absence of other factors, a break fee not exceeding 1% of the equity value of the target is generally not unacceptable.[44] (emphasis added)
[41] Affidavit of Gregory Barrett affirmed 19 December 2018 par 57(f).
[42] Takeover Panel Guidance Note 7 - Lock-up Devices [9].
[43] Affidavit of Gregory Barrett affirmed 19 December 2018 par 57(g).
[44] Takeover Panel Guidance Note 7 - Lock-up Devices [9].
The Takeover Panel Guidance Note 7 identifies an exception to the use of equity value as the basis to apply the 1% guideline. It is said that in limited cases it may be appropriate for the 1% guideline to apply to a company's enterprise value. That may be the case where the target is highly geared.[45] Beadell notes that as at the time the SID was executed its equity value was approximately US$91 million but its debt was approximately US$80 million (representing an enterprise value of approximately A$234 million). It is said that, given Beadell's gearing, Great Panther insisted on a break fee set by Beadell's enterprise value, not its equity value.
[45] Takeover Panel Guidance Note 7 - Lock-up Devices [9].
Beadell also identifies that Great Panther has informed Beadell that its (Great Panther's) expenses have been considerably higher than might otherwise be expected. Specifically, expenses have been incurred in negotiations with various third parties - chiefly the counterparty to the MACA Agreement, the convertible debentureholders and other third party creditors of Beadell - as a result of Beadell's high gearing level.
I was persuaded, given the justification provided by Beadell's evidence, that the amount of the Beadell reimbursment fee was not unreasonable. Despite exceeding the usual parameters, when considered on an equity value basis, the $2.2 million was justified by the particular circumstances. In any case I formed the view that the amount is not of such a magnitude that it might unduly influence the members in their consideration of the scheme. That is all the more so where the break fee is not payable solely if Beadell shareholders do not approve the scheme.
Neither the exclusivity arrangements nor the break fee provided a reason not to make orders convening a scheme meeting for members to consider the proposed scheme.

Loan agreement between Beadell and Great Panther

The scheme booklet disclosed that on 7 December 2018 Beadell and Great Panther entered into a loan agreement pursuant to which Great Panther has agreed to advance Beadell a non‑revolving loan in an amount of US$5 million. The loan is to enable Beadell to meet costs associated with the scheme and to provide working capital. As mentioned, the loan agreement itself was provided in an affidavit handed up at the hearing. I was also informed that the loan has now been fully drawn.
The loan is unsecured and bears interest. It is intended to only be a short term arrangement. The loan is repayable on 15 January 2019 but may be extended by agreement for a further 30 days. The principal of the loan is to be repaid in any case on receipt by Beadell or one of its subsidiaries of expected valued added tax (VAT) refunds.
There are authorities in which the court has been concerned to ensure that a loan between bidder and target does not operate as a lock-up device. For example, in Re Cortona Resources Ltd a loan term sheet was entered into on the morning of the first hearing. The loan was a drawdown facility and was not repayable on demand. If the scheme was not implemented the target would be provided to give security. Barker J stated:
There is nothing obvious in that transaction, in my view, to suggest that it is a 'lock up' device or in the nature of a break fee by a side wind, which might prevent the free consideration by members of the scheme proposal.
…
I do not consider that the term sheet transaction identified is a reason not to make the orders convening a meeting of members. It too is a matter that the members may properly consider at the meeting in light of the disclosure made.[46]
[46] Re Cortona Resources Ltd [2012] FCA 1295 [43], [45].
In Re Anatolia Energy Ltd McKerracher J also adopted the touchstone of whether the loan agreement would prevent free consideration of the proposed scheme by members.[47]
[47] Re Anatolia Energy Ltd [2015] FCA 1134 [44] ‑ [45].
Here, on a prima facie basis, I was satisfied that the loan agreement as disclosed would not act as a de facto lock‑up device that has a coercive effect impairing a free consideration of the scheme. The scheme meeting will be held on 12 February 2019. The loan agreement contemplates that the principal advanced will have been repaid by then out of the VAT refunds. In any case, as McKerracher J observed in Re Anatolia Energy Ltd, any issue of unfairness or coercion can be addressed at the second court hearing if the members approve the proposed scheme by the statutory majorities.[48] To that end I expect that before the second hearing Beadell will file affidavit evidence that addresses the loan. Specifically, I would expect to be informed as to the amount, if any, that remains unpaid as at the meeting on 12 February 2018 and what additional disclosures, if any, were made about the loan agreement before the scheme meeting.

Notice of intention to rely on approval to qualify for exemption under s 3(a)(10) of the Securities Act 1933 (USA)

[48] Re Anatolia Energy Ltd [46].

Beadell has informed the court that, if the proposed scheme of arrangement is approved, Great Panther intends to rely on the exemption provided by s 3(a)(10) of the Securities Act 1933 (USA) for the common shares in Great Panther to be issued under the scheme.
Section 3(a)(10) of the Securities Act 1933 (USA) contains an exemption from certain registration requirements under that Act. The exemption requires that the terms and conditions of the issuance and exchange of the securities have been approved by a court after a hearing on the fairness of those terms and conditions at which all persons to whom it is proposed to issue securities in the exchange have had the right to appear. Apparently, one of the requirements for the operation of s 3(a)(10) in practice is that the proposed issuer of the securities must inform the court whose order will be relied on that the issuer will rely on the court's approval to seek the exemption under s 3(a)(10). Various other requirements for the operation of the exemption were set out in detail by Lander J in Re Simeon Wines Ltd.[49]
[49] Re Simeon Wines Ltd [2002] SASC 204; (2002) 42 ACSR 454 [21] - [22].
For present purposes it is enough that I record that I have been informed that Great Panther intends to rely on the exemption provided by s 3(a)(10). Further consideration of this aspect of the matter is otherwise best deferred to the second hearing (assuming that the members approve the proposed scheme by the requisite statutory majorities).

Other matters

Counsel for Beadell drew my attention to the 'deemed warranty' provision in the proposed scheme of arrangement (cl 8.2(b)). The presence of the deemed warranty provision is disclosed at pars 8.3(d) and 9.2 of the scheme booklet. Such deemed warranty clauses are not unusual and are acceptable provided that, as here, their presence is adequately disclosed.[50] The scheme also contains a provision for the Beadell shares to transfer and vest free from all encumbrances 'to the extent permitted by law' (cl 8.3(a)). That sort of clause is also permissible.[51]
[50] Re Tawana Resources NL [28] - [29] (referring to Re APN News & Media Ltd [2007] FCA 770; (2007) 62 ACSR 400 [60]).
[51] Re Investa Properties Ltd [2007] FCA 1104; (2007) 25 ACLC 1186 [22] - [30].
Additionally, Beadell sought orders for the electronic dispatch of the scheme booklet. I made such orders in Re Wesfarmers Ltd. For the reasons I gave there such orders are now commonplace.[52] Details were provided as to the terms of the proposed electronic notification (attachment 'GMB-3'). Based on that material, an order for electronic dispatch of the scheme booklet was also appropriate in relation to Beadell's proposed scheme.
[52] Re Wesfarmers Ltd; Ex parte Wesfarmers Ltd [145] - [152].
Otherwise, orders were sought as to notice of the second hearing and the conduct of the scheme meeting. Those orders were in relatively standard terms and presented no difficulties.

Conclusion

On the evidence presented, and after hearing from counsel for Beadell, I was satisfied that it was appropriate to make orders convening a scheme meeting to consider whether to approve the proposed scheme. The scheme is one that is fit for consideration by Beadell's members in the sense that sensible business people might consider it will be of benefit to those members.
I was also satisfied that the scheme booklet prima facie provides proper disclosure to Beadell's shareholders. Accordingly, I considered it appropriate to approve the draft scheme booklet for distribution.
For the reasons given I made orders in these terms:
1.Pursuant to section 411(1) of the Corporations Act 2001 (Cth) (Corporations Act), the plaintiff convene a meeting of holders of fully paid ordinary shares in the capital of the plaintiff (shareholders) to be held on 12 February 2019 at The Celtic Club, 48 Ord Street, West Perth, Western Australia to commence at 10.00 am AWST (scheme meeting) for the purpose of considering and if thought fit, approving with or without modifications, the scheme of arrangement proposed to be entered into between the plaintiff and its shareholders (scheme), a copy of which is contained in Annexure B to Attachment TDG23 to the fourth affidavit of Thomas David Gray affirmed 20 December 2018 and filed herein.
2.The scheme booklet contained in Attachment TDG23 to the fourth affidavit of Thomas David Gray affirmed 20 December 2018 which contains the explanatory statement required by section 412(1)(a) of the Corporations Act is approved for distribution to the shareholders, subject to:
(a)correction of any minor typographical or grammatical errors and final typesetting and formatting;
(b)any minor amendments required or approved by ASIC for registration under section 412(6) of the Corporations Act;
(c)correction or update of any relevant date references or last trading prices;
(d)adopting as Annexure A the Deloitte Report contained in Attachment NLI2 to the affidavit of Nicolette Louise Ivory sworn 18 December 2018, with any necessary changes contemplated by (a), (b) or (c) above; and
(e)adopting the proxy form, as suitably personalised, contained in Attachment TDG21 to the fourth affidavit of Thomas David Gray affirmed 20 December 2018.
3.Subject to these orders, and pursuant to section 1319 of the Corporations Act, the scheme meeting is to be:
(a)convened, held and conducted in accordance with the provisions of Part 2G.2 of the Corporations Act that apply to members of a company and the provisions of Beadell's constitution that are not inconsistent therewith and that apply to meetings of members;
(b)convened, held and conducted as if rule 2.15 of the Supreme Court (Corporations) (WA) Rules 2004 (WA) does not apply; and
(c)convened using the notice of meeting substantially in the form or to the general effect of the notice contained in Annexure D of the scheme booklet.
4.Subject to registration of the scheme booklet pursuant to section 412(6) of the Corporations Act, the plaintiff is to dispatch on or before 11 January 2019, a document substantially in the form of the scheme booklet (approved above), any applicable proxy form (or a link to a website for any electronic proxy lodgement) and any applicable sale facility election form (or a link to a website for any electronic lodgement of the sale facility election form) to the shareholders who appear on the register of members as at 5.00 pm (AWST) on 28 December 2018 as follows:
(a)to each shareholder who has nominated an electronic address for the purposes of receiving notices of meeting from the plaintiff, an email to such address substantially in the form of Attachment GMB3 to the affidavit of Gregory Michael Barrett affirmed 19 December 2018; and
(b)to each other shareholder, by any form of post, mail or courier to the address as set out in the register of the plaintiff's members.
5.Dispatch in accordance with order 4 (above) on or before 11 January 2019 is taken to be sufficient notice of the scheme meeting.
6.If it after comes to the attention of the plaintiff that any email dispatched in accordance with order 4(a) above has returned an undeliverable or undelivered receipt for a shareholder's nominated email address then, in respect of that shareholder, the plaintiff is to dispatch, within a reasonable time thereafter, a document substantially in the form of the scheme booklet and any applicable proxy form, in accordance with order 4(b).
7.Craig Leslie Readhead or, failing him, Nicole Adshead-Bell, is to be the chairperson of the scheme meeting.
8.The chairperson of the scheme meeting may adjourn the scheme meeting in his or her absolute discretion to such time, date and place as he or she considers appropriate.
9.Three shareholders present in person or by proxy, corporate representative or attorney under power will constitute a quorum for the scheme meeting.
10.Each shareholder, present and entitled to vote, will be entitled to one vote for each fully paid ordinary share in the capital of the plaintiff that the shareholder is registered as holding at 10:30 am (AWST) on 10 February 2019.
11.Voting on the resolution to approve the scheme at the scheme meeting is to be conducted by way of poll.
12.The time by which proxy forms must be returned or lodged online in accordance with any instructions given on the proxy form is on 10 February 2019 at 10.30 am (AWST).
13.If the matter is to be relisted, then on or before 11 February 2019 the plaintiff is to publish a completed notice of hearing substantially in the form of Annexure 'A' hereto once in The Australian newspaper and Beadell is otherwise relieved from compliance with Rule 3.4 of the Supreme Court (Corporations) (WA) Rules 2004 (WA).
14.The proceedings are stood over to 8.30 am on 15 February 2019 for the hearing of any application to approve the proposed scheme.
15.A copy of these orders is to be lodged with the Australian Securities and Investments Commission before 5.30 pm on 21 December 2018 (AWST).
16.Liberty to apply.

ANNEXURE 'A'
BEADELL RESOURCES LIMITED ACN 125 222 291
Notice of hearing to approve compromise or arrangement
TO all the members of BEADELL RESOURCES LIMITED ACN 125 222 291 (Beadell).
TAKE NOTICE that at 8.30 am on Friday, 15 February 2019 the Supreme Court of Western Australia at 28 Barrack Street, Perth, Western Australia will hear an application by Beadell seeking the approval of an arrangement between Beadell and its members, if agreed to by resolution to be considered by the members of Beadell at a meeting of such members held on 12 February 2019 at The Celtic Club, 48 Ord Street, West Perth, Western Australia at 10.00 am (Perth time).
If you wish to oppose the approval of the arrangement, you must file and serve on Beadell a notice of appearance, in the prescribed form, together with any affidavit on which you wish to rely at the hearing. The notice of appearance and affidavit must be served on Beadell at its address for service at least 1 day before the date fixed for the hearing of the application.
The address for service on Beadell is: c/o Herbert Smith Freehills, Level 36, 250 St Georges Terrace, Perth WA 6000 (Attention: Elizabeth Macknay / David Gray).
Gregory Barrett
Company Secretary
Beadell Resources Limited

Annexure 'A'
AFFIDAVITS RELIED ON BY BEADELL RESOURCES LTD

Deponent	Date	Deponent's role	Summary of affidavit
T Gray	Affirmed 6/12/18	Partner at Herbert Smith Freehills, solicitors for the plaintiff, with conduct of the proposed transaction	Description of the nature of the companies, their business and the nature of the proposed transaction.
N Ivory	Sworn 18/12/18	Authorised Representative of Deloitte Corporate Finance Pty Ltd, person with overall responsibility for preparation of the independent experts' report	Description of the independent experts' report and the process for the preparation of that report.
T Gray	Affirmed 18/12/18	Partner at Herbert Smith Freehills, solicitors for the plaintiff, with conduct of the proposed transaction	Description of solicitors' conferral with, and provision of scheme documents to, the ASIC; notes that the deed poll was executed by Great Panther on 17 December 2018.
G Barrett	Affirmed 19/12/18	Company Secretary and Chief Financial Officer of Beadell	Description of Beadell; the proposed scheme; the preparation and verification of the draft scheme booklet; key provisions of the scheme of arrangement; independent experts' report; board consideration of scheme.
T Theodorakis	Sworn 18/12/18	Partner at McMillan LLP, Great Panther's legal adviser	Description of conferral with Gilbert + Tobin (Great Panther's Australian legal advisers); legal advice provided to Gilbert + Tobin.
T Gray	Affirmed 19/12/18	Partner at Herbert Smith Freehills, solicitors for the plaintiff, with conduct of the proposed transaction	Description of further conferral with the ASIC and provision of amended scheme documents to the ASIC.
J Zadra	Sworn 19/12/18	Chief Financial Officer and Corporate Secretary of Great Panther	Description of the SID; deed poll; verification of the draft scheme booklet; obtainment of legal advice across relevant jurisdictions; issue of scheme consideration; disclosure of Great Panther directors' relevant interests.
N Adshead-Bell	Sworn 19/12/18	Chief Executive Officer and Managing Director of Great Panther	Consent to act as chair of the scheme meeting if Mr Readhead is unable to do so; disclosure of interests.
C Readhead	Sworn 20/12/18	Non-Executive Director of Beadell and proposed chair of the scheme meeting	Consent to act as chair of the scheme meeting; disclosure of interests.
T Gray	Affirmed 20/12/18	Partner at Herbert Smith Freehills, solicitors for the plaintiff, with conduct of the proposed transaction	Description of further verification of the draft scheme booklet; further conferral with the ASIC; conferral with the independent experts; a cleansing notice showing Beadell's performance rights, convertible debentures, options and warrants.
T Gray	Affirmed 20/12/18	Partner at Herbert Smith Freehills, solicitors for the plaintiff, with conduct of the proposed transaction	Description of further conferral with the ASIC.
T Gray	Affirmed 21/12/18	Partner at Herbert Smith Freehills, solicitors for the plaintiff, with conduct of the proposed transaction	Addresses loan agreement between Beadell and Great Panther.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
CC
Research Associate to the Honourable Justice Vaughan
21 DECEMBER 2018