Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Bligh Prospectous

1,009 views

Published on

  • Be the first to comment

  • Be the first to like this

Bligh Prospectous

  1. 1. Bligh Mining Limited ABN 86 073 153 223 Prospectus For the offer of up to 20,000,000 Shares at an issue price of $0.30 each to raise up to $6,000,000. IMPORTANT NOTICE Securities offered by this Prospectus should be consid- ered speculative and potential investors should refer to Section 5 for further details concerning the risk factors associated with an investment in the Securities. This document is important and requires your immedi- ate attention. It should be read in its entirety. If you do not understand its contents or are in doubt as to the course you should follow, you should consult your stockbroker or professional adviser. Neither Bligh Mining Ltd nor any other person guaran- tees the performance of the Securities offered pursuant to this Prospectus, or the performance of Bligh Mining Ltd, or the return of any investment. Bligh Mining Forpersonaluseonly
  2. 2. DIRECTORS Andrew Nutt (Executive Chairman) Muhammad Iqbal (Executive Director) Sevag Chalabian (Executive Director) Brett Gunter (Non-Executive Director) Michael Doyle (Non-Executive Director) Anthony Crimmins (Non-Executive Director) COMPANY SECRETARY Anne Adaley AUSTRALIAN BUSINESS NUMBER 86 073 153 223 REGISTERED AND PRINCIPAL OFFICE Suite 605, Level 6 66 Hunter Street SYDNEY NSW 2000 Telephone: (02) 9224 9292 Facsimile: (02) 9224 9299 Email: info@blighmining.com.au Web: www.blighmining.com.au SHARE REGISTRY* Link Market Services Locked Bag A14 SYDNEY SOUTH NSW 1235 Level 12, 680 George Street SYDNEY NSW 2000 Telephone: 1300 554 474 or (02) 8280 7111 Facsimile: (02) 9287 0303 registrars@linkmarketservices.com.au www.linkmarketservices.com.au * This entity is included for information purposes. It was not involved in the preparation of this Prospectus. CORPORATE ADVISER Wentworth Global Capital Partners Pty Ltd Level 17, 383 Kent Street SYDNEY NSW 2000 INDEPENDENT GEOLOGIST Al Maynard & Associates Pty Ltd Consulting Geologists 9/280 Hay Street SUBIACO WA 6008 AUSTRALIAN SOLICITORS TO THE COMPANY Norton Rose Australia 225 George Street SYDNEY NSW 2000 INDONESIAN LEGAL ADVISERS TO THE COMPANY Susandarini and Partners Level 33, Equity Tower Sudirman Central Business District Jalan Jend. Sudirman Kav. 52–53 Jakarta 12190 INDONESIA INVESTIGATING ACCOUNTANT Hall Chadwick Corporate (NSW) Ltd GPO Box 3555 SYDNEY NSW 2001 Level 29 St Martins Tower 31 Market Street SYDNEY NSW 2000 Corporate directory Forpersonaluseonly
  3. 3. i Bligh Mining P R O S P E C T U S 2 0 1 2 This Prospectus is a re-compliance prospectus for the purposes of satisfying Chapters 1 and 2 of the ASX Listing Rules and to satisfy ASX requirements for re- listing following a change to the nature and scale of the Company’s activities. The Offer under this Prospectus is conditional on: (a) the satisfaction or waiver of all of the conditions precedent to the Share Sale Agreement; and (b) the Company’s successful re-compliance with Chap- ters 1 and 2 of the ASX Listing Rules. The Company’s securities were suspended from Of- ficial Quotation on 12 November 2009 and will not be reinstated until satisfaction of the conditions to the Offer and ASX approving the Company’s compliance with the admission requirements of Chapters 1 and 2 of the ASX Listing Rules. There is a risk that the Company may not be able to meet the requirements of ASX for re-quotation on ASX. In the event the conditions to the Offer are not satisfied or the Company does not receive conditional approval for re-quotation on ASX then the Company will not proceed with the Offer and will repay all application monies received without interest. Dates This Prospectus is dated 9 November 2012 and was lodged with ASIC on that date. Neither ASIC nor ASX take any responsibility for the contents of this Prospectus or the merits of the investment to which the Prospectus relates. The expiry date of this Prospectus is at 5.00pm Sydney Time on that date which is 13 months after the date this Prospectus was lodged with ASIC (Expiry Date). No securities may be issued on the basis of this Prospectus after the Expiry Date. Application to ASX Application will be made to ASX within seven days after the date of this Prospectus for Official Quotation of the Shares that are the subject of this Prospectus. The distribution of this Prospectus in jurisdictions out- side Australia may be restricted by law, and persons who come into possession of this Prospectus should seek advice on and observe any of these restrictions. Failure to comply with these restrictions may violate securities laws. Applicants who are resident in countries other than Australia should consult their professional advisers as to whether any governmental or other consents are required or whether any other formalities need to be considered and followed. This Prospectus does not constitute an offer in any place in which, or to any person to whom, it would not be lawful to make such an offer. It is important that investors read this Prospectus in its entirety and seek professional advice where necessary. The Shares that are the subject of this Prospectus should be considered speculative. Web site—electronic prospectus A copy of this Prospectus can be downloaded from the website of the Company at www.blighmining.com. au. Any person accessing the electronic version of this Prospectus for the purpose of making an investment in the Company must be an Australian resident and must only access the Prospectus from within Australia. The Corporations Act prohibits any person passing onto another person an application form unless it is attached to a hard copy of this Prospectus or it accompanies the complete and unaltered version of this Prospectus. Any person may obtain a hard copy of this Prospectus free of charge by contacting the Company. Important information Forpersonaluseonly
  4. 4. ii Important information Exposure period This Prospectus will be circulated during the Exposure Period. The purpose of the Exposure Period is to enable this Prospectus to be examined by market participants prior to the raising of funds. Potential investors should be aware that this examination may result in the identi- fication of deficiencies in the Prospectus and, in those circumstances, any application that has been received may need to be dealt with in accordance with Section 724 of the Corporations Act. Applications for shares under this Prospectus will not be processed by the Company until after the expiry of the Exposure Period. No preference will be conferred on persons who lodge applications prior to the expiry of the Exposure Period. Summary of important dates Lodgement of Prospectus with ASIC 9 November 2012 Opening Date 23 November 2012 Anticipated Closing Date 14 December 2012 Dispatch date 21 December 2012 Expected date suspension of trading is lifted and the Company’s securities commence trading again on ASX 28 December 2012 The above dates are indicative only and may change without notice. The Company reserves the right to extend the Anticipated Closing Date or close the Offer early and accept late applications without notice. Unless otherwise indicated, all times are Sydney Time. Speculative The Securities offered under this Prospectus should be considered speculative. The risks associated with an investment in the Company are significant. It is impor- tant that investors read this Prospectus in its entirety and seek professional advice where necessary. Potential investors should carefully consider the factors in light of their personal circumstances and consult with their professional advisers before deciding whether to apply for Shares. The Securities offered under this Prospectus carry no guarantee with respect to return on capital investment, payment of dividends or the future value of the Securities. For further information in relation to the risk factors of the Company, please refer to Section 5 of this Prospectus. Forward looking statements Various statements in this Prospectus constitute state- ments relating to intentions, future acts and events. Such statements are generally classified as forward looking statements and involve known and unknown risks, uncertainties and other important factors that could cause those future acts, events and circumstances to dif- fer from the way implicitly portrayed in this Prospectus. These risks, uncertainties and other factors include, but are not limited to, the matters described in Section 5 and in the Independent Geological Report in Section 7 of this Prospectus. The Company gives no assurance that the anticipated results, performance or achievements expressed or implied in those forward looking state- ments will be achieved. JORC Competent Person statement The information in this Prospectus that relates to Explo- ration Targets, Exploration Results, Mineral Resources or Ore Reserves is based on information compiled by Mr Brian Varndell, who is a Fellow of the Australasian Institute of Mining & Metallurgy (AusIMM) and independent consultant to the Company. Mr Varndell is a consultant of Al Maynard & Associates Pty Ltd and has 40 years of experience in exploration and mining in a variety of mineral deposit styles. Mr Varndell has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity that he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Photographs Photographs used in this Prospectus which do not have descriptions are for illustration only and should not be interpreted to mean that any person shown endorses the Prospectus or its contents or that the assets shown in them are owned by the Company. Forpersonaluseonly
  5. 5. 1 Bligh Mining P R O S P E C T U S 2 0 1 2 Contents 1 CHAIRMAN’S LETTER............................................................................................ 3 2 INVESTMENT OVERVIEW....................................................................................... 4 3 DETAILS OF THE OFFER....................................................................................... 15 4 BUSINESS SUMMARY.......................................................................................... 19 5 RISK FACTORS...................................................................................................... 29 6 DIRECTORS, MANAGEMENT AND CORPORATE GOVERNANCE........................ 37 7 INDEPENDENT GEOLOGICAL REPORT............................................................... 45 8 SOLICITOR’S REPORT.........................................................................................107 9 INVESTIGATING ACCOUNTANT’S REPORT.........................................................167 10 PRO FORMA FINANCIAL INFORMATION............................................................170 11 SUMMARY OF MATERIAL CONTRACTS..............................................................179 12 ADDITIONAL INFORMATION...............................................................................191 13 DIRECTORS’ AUTHORISATION............................................................................201 APPLICATION FORM............................................................................................203 GLOSSARY............................................................................................................205 Forpersonaluseonly
  6. 6. 2 “... the Board are genuinely excited by the significant opportunity for the Company to become an explorer, developer and potential producer of manganese and other metals.” ANDREW NUTT, CHAIRMAN Bligh Mining P R O S P E C T U S 2 0 1 2 Forpersonaluseonly
  7. 7. 3 Bligh Mining P R O S P E C T U S 2 0 1 2 Dear investor, On behalf of the Directors of Bligh Mining Limited (Company), I am pleased to introduce this Prospectus for the offer of up to 20,000,000 Shares at an issue price of $0.30 per share to raise up to $6,000,000. Following approval of a number of resolutions put to Shareholders at a general meeting held on 5 October, the Company has undergone a number of substantial changes. These include: (a) consolidation of the Company’s Shares on a one-for- nine basis (Consolidation); (b) the pending acquisition of Bligh Mining (Holdings) Pty Ltd (BMH) (Acquisition); (c) a change in the nature and scale of the Company’s activities as a result of the Acquisition; (d) the appointment of me and several other new Direc- tors to the board of the company; and (e) a change of the Company’s name from Blackcrest Resources Limited to Bligh Mining Limited. Subject to final ASX approval, the Company will acquire BMH, an Australian-registered company established in May 2010. BMH is a minerals exploration company holding rights to prospective concessions in Indonesia, with an objective of becoming a mid-tier resource development company in Southeast Asia through the development of those assets. Its primary assets include 23 tenements in Flores, West Timor and Sulawesi. These cover 54,285 hectares prospective for manganese in West Timor, 23,010 hectares in Flores, including the potential of gold, copper, lead and zinc deposits, and 7564 hectares in Sulawesi prospective for gold and copper. Further details about these projects are provided in Section 4 of this Prospectus. Manganese is essential to the steel industry by virtue of its sulphur-fixing, deoxidising and alloying properties. Manganese has no satisfactory substitute as a hardening alloy element and deoxidant in steel. The manganese market is therefore closely tied to the growing demand for steel, particularly in the developing nations of China, India and Brazil. With its newly acquired assets, the Board are genuinely excited by the significant opportu- nity for the Company to become an explorer, developer and potential producer of manganese and other metals. I am joined on the newly reconstituted Board of the Company by executive Directors Muhammad Iqbal and Sevag Chalabian, and Non-Executive Directors Brett Gunter and Michael Doyle. Tony Crimmins remains on the Board as a Non-Executive Director, while previous directors Richard Pritchard and Andrew Wild have resigned. Messrs Iqbal, Chalabian, Gunter, Doyle and I are current directors of BMH, giving us an intimate understanding of the business and assets to be acquired by the Company. The Company has also assembled a highly skilled Indonesian management team to undertake exploration programs including mapping, sampling, geochemical and geophysical surveys, and drilling across the concessions. The new Board and management team bring with us the necessary expertise and experience required to guide the Company in pursuing its objectives. Details of the Offer, including information on the Company’s proposed projects, business strategy, markets, management and finances, are set out in this Prospectus, which I encourage you to read before making a decision to invest. The risks of an investment in the Company are set out in Section 5 of this Prospectus, and you should pay particular attention to them in light of your personal circumstances and consult with your professional advisers before deciding whether to apply for Shares. On behalf of the Board, I am pleased to present this Prospectus to you and invite you to take part in this exciting investment opportunity. We look forward to welcoming new stakeholders and investors to share the journey with us. Yours sincerely, Andrew Nutt Executive Chairman 9 November 2012 1 CHAIRMAN’S LETTER Forpersonaluseonly
  8. 8. 4 2.1 IMPORTANT NOTICE This section is not intended to provide full information for investors intending to apply for Shares offered pursuant to this Prospectus. This Prospectus should be read and considered in its entirety. 2.2 COMPANY’S OBJECTIVES & BUSINESS MODEL The strategic objectives of the Company are to: (a) successfully close the Offer (b) satisfy the requirements of ASX and re-comply with Chapters 1 and 2 of the ASX Listing Rules (c) complete the Acquisition; (d) further explore its projects to better determine the size and economic potential of these projects; (e) obtain the necessary regulatory approvals and build the infrastructure required to begin developing its projects; and (f) obtain rights to explore and develop other resources projects in Indonesia. On completion of the Offer, the Board believes the Company will have sufficient working capital to achieve these objectives. Subject to the completion of the Acquisition, the business model of the Company will be to identify and develop mining opportunities in Indonesia that are highly prospective for manganese, base metals and precious metals mineralisation. The primary assets of BMH include tenements located in Flores, West Timor and Sulawesi, covering 54,285 hectares prospective for manganese in West Timor, 23,010 hectares in Flores including the potential of gold, copper, lead and zinc deposits, and 7564 hectares in Sulawesi prospective for gold and copper. The Company’s medium-term focus will be to develop the current assets described above and aim to bring them into production. If successful, this is expected to generate revenues that can be used to fund ongoing exploration for highly prospective base and precious metals, including porphyry copper/gold targets across all tenements. The Company aims to become a predominant manga- nese participant in Indonesia through internal growth of existing assets. It also aims to become a medium scale, low-cost producer for the steel industry, with easy access to shipping routes to the major export markets. The Company’s business model is highly dependent on the Company achieving technical and commercial success within its exploration programs as well as being dependent on a number of other fiscal, economic, regulatory and environmental factors. Income growth in the form of dividends to investors will only eventuate if the Company’s planned or future exploration programs yield commercial discoveries and are ultimately economi- cally developed. Prospective investors should refer to the risks to the Company and its business model as outlined in Section 5 of this Prospectus. Further details in respect of the Company and its projects are set out in Section 4 of this Prospectus. 2.3 THE ACQUISITION On 10 August 2012 the Company entered into a share sale agreement with BMH and each of the vendors of BMH (Vendors) (Share Sale Agreement). Pursuant to the Share Sale Agreement, the Company agreed to acquire all of the share capital of BMH on a ‘one-for- one’ basis (Acquisition). That is, in consideration for the Acquisition, the Company will issue a number of securities to the shareholders of BMH (Consideration Securities). The Consideration Securities comprise: (a) 112,861,202 ordinary Shares in the capital of the Company (post-Consolidation) at a deemed issue price of $0.30 per Share ($33,858,361) (Considera- tion Shares); and (b) 54,012,000 unlisted Options exercisable at $0.40 per Option on the terms set out in Section 12.2 of this Prospectus (Consideration Options). Completion of the Acquisition under the Share Sale Agreement is subject to a number of conditions precedent being satisfied or waived, the details of which are set out in Section 11.1. It is expected that all these conditions precedent will be satisfied or waived and the Acquisition is expected to be completed concurrently with completion of the Offer. 2 INVESTMENT OVERVIEW Forpersonaluseonly
  9. 9. 5 Bligh Mining P R O S P E C T U S 2 0 1 2 2.4 CHANGE IN NATURE AND SCALE OF ACTIVITIES As a result of the nature and scale of the Acquisition, the Company was required to obtain Shareholder approval for a change of nature and activities, which it received at its General Meeting, and to comply with Chapters 1 and 2 of the Listing Rules as if it were seek- ing admission to the Official List. This Prospectus is issued to assist the Company to comply with these requirements. 2.5 THE OFFER The minimum number of Shares to be issued pursuant to the Offer is 6,666,667 Shares to raise $2,000,000. The maximum number of Shares to be issued pursuant to the Offer is 20,000,000 Shares to raise $6,000,000. The Shares offered under this Prospectus will rank equally with the existing Shares on issue. Rights and liabilities attaching to the Shares are summarised in Section 12.1 of this Prospectus. Please refer to Section 3 of this Prospectus for further information on the Offer. 2.6 INDICATIVE TIMETABLE Table 1. Indicative timetable. Lodgement of Prospectus with ASIC 9 November 2012 Opening Date 23 November 2012 Anticipated Closing Date 14 December 2012 Dispatch date 21 December 2012 Expected date suspension of trading is lifted and the Company’s securities commence trading again on ASX 28 December 2012 The above dates are indicative only and may change without notice subject to ASIC and ASX approval, if required. The Company reserves the right to extend the Anticipated Closing Date, close the Offer early and accept late Applications without notice. Unless otherwise indicated, all times are Sydney Time. 2.7 PURPOSE OF THE OFFER AND USE OF PROCEEDS The purpose of the Offer is to: (a) assist the Company in meeting the requirements of ASX and re-comply with Chapters 1 and 2 of the Listing Rules; and (b) raise up to $6,000,000 pursuant to the Offer to provide additional funds for expenditure commit- ments and further exploration and development of the Indonesian projects, general working capital, and meet the expenses of the Offer. The minimum subscription under the Offer is $2,000,000, which is sufficient for the Offer to complete. On completion of the Offer, the Board believes that the Company will have sufficient working capital to achieve these objectives. The Directors intend that the proceeds of the Offer will be applied as per Tables 2 and 3, based on the raising of the minimum subscription and maximum subscription, respectively. The tables below are a statement of current intentions as of the date of lodgement of this Prospectus with ASIC. Although the proceeds of the Offer are intended to be used as set out in the above tables, the actual use of the proceeds may change depending on the progres- sive results of the exploration program, the analysis of those results, opportunities for third parties to fund parts of the exploration program and opportunities that may arise for the acquisition of interests in additional projects. The Board reserves the right to alter the way funds are applied on this basis. Forpersonaluseonly
  10. 10. 6 2 INVESTMENT OVERVIEW Table 2. Use of funds assuming the minimum subscription of $2,000,000 is raised under the Offer. Application Year 1 Year 2 Total Proportion of funds used ($) ($) ($) (%) Exploration expenditure—Flores project 120,000 70,000 190,000 9.5 Exploration expenditure—West Timor projects 550,000 290,000 840,000 42.0 Exploration expenditure—Sulawesi projects – – – – Social programs and land acquisition 100,000 100,000 200,000 10.0 Working capital 240,000 150,000 390,000 19.5 Costs of the Offer (see Section 12.11) 380,000 – 380,000 19.0 Total applications of funds 1,390,000 610,000 2,000,000 100.0 Table 3. Use of funds assuming the maximum subscription of $6,000,000 is raised under the Offer. Application Year 1 Year 2 Total Proportion of funds used ($) ($) ($) (%) Exploration expenditure—Flores project 422,000 249,000 671,000 11.2 Exploration expenditure—West Timor projects 1,050,000 1,073,000 2,123,000 35.4 Exploration expenditure—Sulawesi projects 308,000 368,000 676,000 11.3 Social programs and land acquisition 200,000 200,000 400,000 6.7 Working capital 900,000 750,000 1,650,000 27.5 Costs of the Offer (see Section 12.11) 480,000 – 480,000 8.0 Total applications of funds 3,360,000 2,640,000 6,000,000 100.0 Notes 1. For a detailed breakdown of the proposed exploration expenditure for each project, please refer to tables 5–7 in the Independent Geological Report in Section 7 of this Prospectus. 2. Overheads and working capital include the normal general and administrative costs associated with running a public company, including but not limited to salaries and Directors’ fees, technical consulting fees, legal fees, rental of office premises, investor relations and finance and accounting fees. 3. Please refer to Section 12.11 of this Prospectus for details associated with the Costs of the Offer. Forpersonaluseonly
  11. 11. 7 Bligh Mining P R O S P E C T U S 2 0 1 2 2.8 PROJECTS 2.8.1 Flores The Flores project covers a total of 23,010 hectares in the Sambi Rampas and Elar Sub District, East Mang- garai Regency, East Nusa Tenggara Province in the northern parts of Flores, Indonesia. The IUP for this area has the potential for manganese, copper, lead and zinc as well as gold and silver. It is held by PT Manggarai Manganese (PTMM), which is owned 99% by Flores NTT Mining Pte Ltd (FNM), which is owned 85% by BMH (with an agreement in place for BMH to acquire a further 10% of FNM, bringing its total ownership to 95%). For further details, see Section 4.5 and the Solici- tor’s Report in Section 8 of this Prospectus. A total of four main prospect areas have been identi- fied by Bligh Mining, three of which are of primary interest for manganese, namely Pebobiar, Cembakloe and Marabola, and a fourth, Pepan, for multi-elements including copper, lead, zinc, gold and silver. Previous exploration activities that cover about 70% of the concession area have identified the presence and potential to host economical deposits of manganese, other base metals such as zinc, copper and lead, and precious metals gold and silver. The manganese mineralisation is interpreted as being similar to that of the Woodie Woodie deposit located in the Pilbara of Western Australia, which is a limestone-dolomite hosted replacement style. Further detailed investigation is required to determine the manganese mineralisation styles and consequential additional manganese targets. For further details, see section 2 of the Independent Geological Report in Section 7 of this Prospectus. BMH has a proposed exploration program in place including a magnetic and radiometric program, mapping, sampling and defining a drilling program. 2.8.2 West Timor The West Timor projects cover a total area of 54,285 hectares clustered in three Regencies; Kupang with 13,600 hectares, Timor Tengah Selatan (TTS) with 23,840 hectares, and Timor Tengah Utara (TTU) with 16,845 hectares, all located in West Timor, Nusa Tenggara Timur Province, Indonesia. BMH’s majority- owned Indonesian subsidiary company PT Endeavour Resources NTT (ERN) has acquired, from the Elang Group, 51% of seven Indonesian companies that hold the manganese concessions. Under a set of share sale agreements, summarised in Section 11.5.1, ERN also has the rights to purchase a further 39% of the shares of each of these subsidiary companies upon the investment of up to US$400,000 in exploration costs for each company, which would increases its shareholdings to 90% in each case. Also see Section 4.5 and the Solicitor’s Report in Section 8 of this Prospectus for further details. Under a set of shareholder and royalty agreements, sum- marised in Section 11.5.2, the sellers of the Elang Group companies are also entitled to royalty payments upon the achievement of certain milestones. See Section 11.5.2 and the Solicitor’s Report in Section 8 of this Prospectus for further details. Geological work to date on the West Timor conces- sions includes reconnaissance field visits to four of the tenements with a more detailed review at two of the locations. An independent geologist has conducted limited work on the three West Timor tenement clusters, with site visits to three of the 20 concessions held by BMH. The initial results demonstrate the presence of medium to high grade manganese in each of the licences. The observed layers are 10–30 cm within reasonably wide zones that reach up to 3 metres in total width. Boulder- style manganese outcrops have also been identified but further mapping and assaying with associated trenching and drilling is required to fully delineate potential economic manganese deposits. The identification of manganese indicates that additional exploration in the remaining 17 tenements may probably identify additional manganese deposit areas. For further details, see section 3 of the Independent Geological Report in Section 7 of this Prospectus. BMH has a proposed exploration program in place including mapping, sampling and designing a drilling program to define a JORC-compliant resource and reserves of the manganese deposits. Forpersonaluseonly
  12. 12. 8 2.8.3 Sulawesi The Sulawesi projects cover a total area of 7564 hectares located in the Donggala District of Central Sulawesi. The two IUPs are owned by PT Charlie Sapa Prima (CSP) and PT Konstruktor Donggala (KD). CSP and KD have each entered into a share sale and purchase agreement with PT Golden Castle Resources (GCR), which is 99% owned by Whole Dragon Enterprises Ltd (WDE), which is 100% owned by BMH. For further details, see Section 4.5 and the Solicitor’s Report in Section 8 of this Prospectus. The concessions are located in a highly prospective area for gold and copper. Base metal mineralisation (chal- copyrite, galena and sphalerite) has also been observed in the veins, faults and stockworks. For further details, see section 4 of the Independent Geological Report in Section 7 of this Prospectus. 2.9 CAPITAL STRUCTURE The capital structure of the Company following comple- tion of the Acquisition and completion of the Offer is summarised in Table 4. 2.10 RESTRICTED SECURITIES Subject to the Shares being re-instated to Official Quotation, a certain number of the Shares on issue may be classified by ASX as restricted securities and will be required to be held in escrow for such time as prescribed 2 INVESTMENT OVERVIEW Table 4. Capital structure of the Company following completion of the Acquisition and completion of the Offer. Shares (min. subscription) Shares (max. subscription) Options1 Securities on issue at the date of this Prospectus 8,933,876 8,933,876 – Consideration Securities to be issued upon completion of the Acquisition 112,861,202 112,861,202 54,012,000 Securities to be issued under the Offer 6,666,667 20,000,000 – Total number of Securities 128,461,745 141,795,078 54,012,000 Note 1. Details relating to the Options are set out in Section 12.2. by ASX. During the period in which these securities are prohibited from being transferred, trading in Shares may be less liquid which may impact on the ability of a Shareholder to dispose of his or her Shares in a timely manner. The Shares issued to the Vendors pursuant to the Share Sale Agreement as part of the Consideration Securities will be held in escrow for up to a maximum period of 24 months from the date of re-quotation. The Company will announce to ASX full details of the quantity and duration for the securities required to be held in escrow prior to re-quotation of the Company on ASX. 2.11 SUBSTANTIAL SHAREHOLDERS Set out in Table 5 are the substantial Shareholders in the Company, being those who have (together with their associates) voting power in excess of 5% of the Shares, prior to completion of the Offer and Acquisition. Set out in Table 6 are the substantial Shareholders in the Company, being those who have (together with their associates) voting power in excess of 5% of the Shares, following completion of the Offer and the Acquisition, and assuming no substantial Shareholders acquire any Shares under the Offer. The Company will announce to ASX details of its top 20 Shareholders following completion of the Offer and prior to the Shares recommencing trading on ASX. Forpersonaluseonly
  13. 13. 9 Bligh Mining P R O S P E C T U S 2 0 1 2 Table 5. Substantial Shareholders in the Company prior to completion of the Offer and Acquisition. Current Share on issue Registered interest in total Shares on issue (pre-Offer) (%) B. Sumanth Kumar Reddy 698,809 7.8 Ardila Holdings Pty Ltd 682,540 7.6 Griffinc Pty Ltd 637,167 7.1 The Duffster Pty Ltd <The Duffster Trust A/C> 600,000 6.7 Panola Pty Ltd 500,000 5.6 Note 1. None of the substantial Shareholders in the Company prior to completion of the Offer and Acquisition will be a substantial Shareholder fol- lowing completion of the Offer and Acquisition. Table 6. Substantial Shareholders in the Company following completion of the Acquisition and Offer, assuming no Substantial Shareholders acquire any Shares under the Offer and no Options are exercised. Minimum subscription Maximum subscription Shareholder Shares held Registered holding in total Shares on issue post-Offer Voting power Registered holding in total Shares on issue post-Offer Voting power (%) (%) (%) (%) Sampoerna Agri Resources Pte Ltd 22,800,000 17.7 56.5 16.1 51.2 Nisso Resources (Hong Kong) Co Ltd 12,000,000 9.3 56.5 8.5 51.2 Alligard Investments Ltd 11,800,000 9.2 56.5 8.3 51.2 Marc Flory 6,500,001 5.1 56.5 4.6 51.2 Andrew Nutt 3,000,001 2.3 56.5 2.1 51.2 Fahrsai Consulting Ltd 3,000,000 2.3 56.5 2.1 51.2 Ohmega Ltd 3,000,000 2.3 56.5 2.1 51.2 Sevag Chalabian 2,500,000 1.9 56.5 1.8 51.2 Laia Ltd 2,000,000 1.6 56.5 1.4 51.2 PT Para Amartha Investama 2,000,000 1.6 56.5 1.4 51.2 Antonietta Adaley 1,500,000 1.2 56.5 1.1 51.2 STC Advisory Pty Ltd 1,500,000 1.2 56.5 1.1 51.2 PT Bestindo Kwadratama 1,000,000 0.8 56.5 0.7 51.2 Total 72,600,002 56.5 51.2 Note 1. Although most of the above Shareholders will have a registered holding in less than 5% of the Shares following completion of the Acquisi- tion and Offer, under the terms of the Voting Agreement referred to in Section 12.5, their voting power is considerably higher than 5%. Forpersonaluseonly
  14. 14. 10 2.12 BOARD AND MANAGEMENT The Board and other key personnel of the Company are set out in Table 7. Under the terms of the Amended and Restated Share- holders Deed (see Section 11.4), Sampoerna has the right to nominate at least two directors to the Company’s Board at all times that it holds an aggregate shareholding of at least 10% of the Company, which it will hold fol- lowing completion of the Offer and Acquisition. Sam- poerna has indicated that they will nominate Mr Tommy Tjiptadjaja to the Board, but have not yet indicated the identify of their second director nomination. Refer to Section 6 of this Prospectus for further details on the Board and key personnel. Refer to Sections 12.6 and 12.7 of this Prospectus for details on the Directors’ interests and remuneration. Table 7. Board and other key personnel of Bligh Mining. Person Position Country Andrew Nutt Executive Chairman Indonesia Muhammad Iqbal Executive Director Indonesia Sevag Chalabian Executive Director Australia Brett Gunter Non-Executive Director Indonesia Michael Doyle Non-Executive Director Australia Anthony Crimmins Non-Executive Director Australia Tommy Tjiptadjaja Proposed Non-Executive Director Indonesia Anne Adaley Company Secretary & Chief Financial Officer Australia Marc Flory Country Manager, Flores Indonesia Eko Budi Harto Country Manager, West Timor Indonesia Agus W Permadi Technical Coordinator Indonesia Deista T Harahap Socialisation & Community Development Coordinator Indonesia Robyn Shearwood Office Manager, Sydney Australia 2.13 RISKS You should consider all of the risks associated with an investment in the Company before deciding whether to invest. You should be aware that an investment in Shares should be considered a highly speculative investment and the objectives of the Company set out in this Prospectus are considered high risk. Some risks are beyond the control of the Company and its Directors and manage- ment and those risks may have a material impact on the Company and its financial performance and position. A detailed list of the risks that you should be aware of is set out in Section 5 of this Prospectus. In particular, the following specific risks are noted. 2.13.1 General economic risks and business climate Share market conditions may affect the listed securities regardless of operating performance. Share market conditions are affected by many factors, such as general economic outlook, movements in or outlook on interest rates and inflation rates, currency fluctuations, com- modity prices, changes in investor sentiment towards particular market sectors, and the demand and supply for capital. Commodity prices are influenced by physical and investment demand for those commodities. Fluctuations in commodity prices may influence individual projects in which the Company has an interest. 2.13.2 Exploration, development, mining and processing risks Bligh Mining is in the business of mineral exploration, project development and mining. This business by its nature contains elements of significant risk. Ultimate and continuous success of these activities depends on many factors such as: (a) the discovery and/or acquisition of economically recoverable ore reserves; (b) successful conclusions to bankable feasibility studies; (c) access to adequate capital for project development; (d) design and construction of efficient mining and processing facilities within capital expenditure budg- ets; 2 INVESTMENT OVERVIEW Forpersonaluseonly
  15. 15. 11 Bligh Mining P R O S P E C T U S 2 0 1 2 (e) securing and maintaining title to tenements and com- pliance with the terms of those tenements; (f) obtaining consents and approvals necessary for the conduct of exploration and mining; and (g) access to competent operational management and prudent financial administration. This includes the availability and reliability of appropriately skilled and experienced employees, contractors and consultants. Many regions of Indonesia are frequently subject to adverse weather conditions over a prolonged period. Many regions of Indonesia are also subject to significant volcanic and seismic activity. These conditions can adversely affect exploration and mining operations and the timing of revenues. Whether or not income will result from projects under- going exploration and development programs depends on the successful establishment of manganese mining operations. Factors including costs, actual mineralisation, consistency and reliability of manganese ore grades and manganese prices affect successful project development, mining operations and the availability of willing, reliable off-takers. Mining is an industry that in Indonesia has become subject to increasing legislative regulation including but not limited to environmental responsibility and liability, taxation, mineral export restrictions and protectionism in relation to national interests. The potential for liability is an ever present risk. The use and disposal of chemicals in the mining industry is under constant legislative scrutiny and regulation. The introduction of new laws and regulations or changes to underlying policy may adversely impact on the operations of the Company. 2.13.3 Operating risks The current and future operations of the Company, including exploration, appraisal and possible production activities may be affected by a range of factors, includ- ing: (a) geological conditions; (b) limitations on activities owing to seasonal weather patterns and cyclone activity; (c) alterations to joint venture programs and budgets; (d) unanticipated operational and technical difficulties encountered in geophysical surveys, drilling and production activities; (e) mechanical failure of operating plant and equipment; adverse weather conditions, industrial and environ- mental accidents, acts of terrorism or political or civil unrest and other force majeure events; (f) industrial action, disputation or disruptions; (g) unavailability of aircraft or other transportation or drilling equipment to undertake airborne electromag- netic and other geological and geophysical investiga- tions; (h) shortages or unavailability of manpower or appropri- ately skilled manpower; (i) unexpected shortages or increases in the costs of consumables, spare parts, plant and equipment; and (j) prevention or restriction of access by reason of political unrest, outbreak of hostilities, and inability to obtain consents or approvals. 2.13.4 Manganese prices The Company expects to derive the bulk of its revenue from the sale of manganese ore. Consequently, the Company’s expected earnings will be closely related to the price of manganese ore together with the terms of the off-take agreement(s) under which manganese ore will be sold. The price of manganese, like all mineral commodities, fluctuates and is affected by numerous factors beyond the control of the Company. These factors include worldwide and regional supply and demand for steel, which is the main driver affecting demand for manga- nese, commodity trading on the futures markets, general world economic conditions and the outlook for interest rates, inflation and other economic factors on both a regional and global basis. These factors may have a positive or negative effect on the Company’s exploration, project development and production plans and activi- ties, together with the ability to fund those plans and activities. Forpersonaluseonly
  16. 16. 12 2.13.5 Changes in legislation or regulation Changes in legislation or regulation, or changes to accounting rules, could have adverse impacts on the Company from a financial and operational perspective. Although the Company is reasonably familiar with the Indonesian regulatory regime and has undertaken all reasonable due diligence in assessing and managing the risks associated with investing and operating in Indo- nesia, the legal and political conditions of the country and any changes thereto are outside the control of the Company. In 2012, the Indonesian Government made sweeping and substantive changes to its mining laws. For full details, see Section 5.4.3 2.13.6 Early stage of development The mineral tenements (IUPs) of the Company as described in this Prospectus are at an early stage of development. The Company does not have other eco- nomic resources that could be classified for the purposes of a regulatory or securities exchange code. Hence, the Company’s shares are deemed speculative. There can be no assurance that exploration of the project areas described in this Prospectus, or any other tenements that may be acquired in the future, will result in the discovery of an economic ore deposit. Even if an apparently viable deposit is identified, there is no guarantee that it can be economically exploited. Potential investors should understand that mineral exploration and development are high risk undertakings. 2.13.7 Expiry of title The exploration licences (IUPs) comprising some of the tenements that the Company holds or in which it has an interest may be the subject of applications for exten- sion in the future. If a tenement is not extended, the Company may suffer significant damage through loss of the opportunity to discover and/or develop any mineral resources on that tenement. In addition, the Company cannot guarantee that those tenements that are applica- tions for tenements will ultimately be granted in whole or in part. For more details on the issue of title to the tenements, refer to the Solicitor’s Report in Section 8. 2.13.8 ‘Clean and clear’ title In an effort to bring licensing into some order, Indone- sia’s Ministry of Energy and Mineral Resources (ESDM) has forbidden the issuing of new licences under Indonesian mining law and has been undertaking limited audits of all licences issued. The intention is to reveal where there are overlapping licences. As a result of this process, ESDM issues lists, maps and statements on request, indicating that the licence involved is ‘clean and clear’ (CNC). The IUP is thereby recognised by ESDM as legitimate, which carries an inference that the IUP has been properly issued, although this is not stated. The CNC lists are an administrative attempt to clear away confusion, and carry no legal status. There is no definition of what ‘clean and clear’ means, but it is understood to mean simply that there are no overlapping issues (with conflicting licences for the same product). What ‘clean and clear’ does not mean is that the licence-holder is up to date with its obligations under the licence, that it has obtained any necessary approv- als from the Ministry of Forestry, whether or not the licence-holder also owns the land involved, whether or not there are land titles in place, whether there are any disputes with registered or traditional land owners, and whether there is any illegal mining activity taking place. Only three of the Company’s 22 IUPs are currently included on any CNC list. There is no guarantee that any of the remaining IUPs will ultimately be included in the CNC list. For further details, see the Solicitor’s Report in Section 8 of this Prospectus. As noted on page 39 of the Solicitor’s Report in Section 8 of this Prospectus, IUP Exploration Number 297 owned by PT Elang Perkasa Kencana (IUP 297) overlaps with an IUP issued to PT Tiara Utama Mandiri (Tiara IUP). The Company has become aware that the Tiara IUP has been included on the CNC list. Upon further enquiry by the Company, the Company has become aware that the issue of the Tiara IUP (and hence its inclusion on the CNC List) is under legal challenge and, depending of the outcome of that challenge, the Tiara IUP may be cancelled, the result of which would be that the Company’s majority-owned IUP 297 would no longer overlap the Tiara IUP. 2 INVESTMENT OVERVIEW Forpersonaluseonly
  17. 17. 13 Bligh Mining P R O S P E C T U S 2 0 1 2 2.13.9 Funding The Company may have difficulty in obtaining future equity or debt funding to support exploration programs and the evaluation and development of its projects. The Company’s ability to raise further equity or debt or to divest part of its interest in a project, and the terms of such transactions will vary according to a number of factors, including the success of exploration results and the future development of the projects, stock market conditions and prices for commodities. Should it subsequently be established that a mining production operation is technically, environmentally and economically viable, the Company will require substan- tial additional financing to establish mining operations and production facilities. The Company may not be able to raise the additional finances that may be required for future activities. Commodity prices, environmental regulations, environmental rehabilitation or restitu- tion obligations, revenues, taxes, transportation costs, capital expenditures, operating expenses and technical aspects are all factors that will impact on the amount of additional capital that may be required. Additional financing may not be available on terms acceptable to the Company, or at all. Significantly, any additional equity financing or the exercising of op- tions may dilute your existing shareholdings and debt financing, if available, may restrict financing and future activities. If the Company fails to obtain additional financing, as needed, it may be required to reduce the scope of its operations and scale back its exploration programs as the case may be, which may adversely affect the busi- ness and financial condition of the Company and its performance. 2.13.10 Completion of the Acquisition The Acquisition is subject to a number of conditions precedent that are required to be achieved for comple- tion to occur. Key conditions precedent include the Vendors entering into escrow agreements with respect to restricted shares as required and obtaining ASX’s conditional approval to the Company’s admission to the Official List of ASX and to Official Quotation, on terms and conditions acceptable to the Company. There is a risk that one or more of these conditions precedent may not be met. If this occurs then the Acquisition and/ or the Offer may not proceed. A summary of the terms and conditions of the Share Sale Agreement is set out in Section 11.1. 2.13.11 Projects will not be fully owned BMH has entered into agreements with respect to certain projects. Please refer to Section 4.4, which sets out the ownership interest of BMH in each project and a description of those agreements. In the event that these acquisitions are completed, there is a risk the exploration/development activity could be disrupted in situations where there is disagreement on development programs or other issues between BMH and its part- ners. Should such disagreements occur, this may have an adverse impact on the Company’s operations and performance generally. 2.13.12 Change of activities and re-quotation of Shares on ASX The Acquisition, if completed, would constitute a change in the nature and scale of the Company’s activi- ties. In accordance with the requirements of ASX in relation to this proposed change in activity, the Company must re-comply with Chapters 1 and 2 of the Listing Rules as if it were seeking admission to the Official List. Accordingly, the Company is required to issue a Prospectus to, among other things, assist the Company to re-comply with these admission requirements. The Company’s Shares have been suspended from Official Quotation since November 2009 and will not be rein- stated until the Company has re-complied with Chapters 1 and 2. If the conditions precedent to the Share Sale Agreement are not satisfied or waived (if applicable), the Company will not proceed with the Acquisition and will seek re-quotation of its Shares. There is a risk that the Company may not be able to meet the requirements of ASX for re-quotation of its Shares on ASX. Shares will not be able to be traded on ASX until such time as ASX’s requirements for re-quotation can be met, if at all. Forpersonaluseonly
  18. 18. 14 Forpersonaluseonly
  19. 19. 15 Bligh Mining P R O S P E C T U S 2 0 1 2 3 DETAILS OF THE OFFER 3.1 THE OFFER Under this Prospectus, the Company offers for subscrip- tion up to 20,000,000 Shares at an issue price of $0.30 each to raise up to $6,000,000. The Shares offered under this Prospectus are fully paid ordinary Shares and will rank equally with the existing Shares on issue, and otherwise will be on the terms set out in Section 12.1. 3.2 APPLICATIONS Applications for Shares under the Offer must be made using the Application Form included at the back of this Prospectus. Payment for the Shares must be made in full at the issue price of $0.30 per Share. Applications for Shares must be for a minimum of 10,000 Shares and thereafter in multiples of 1,000 Shares. Completed Application Forms and accompanying cheques must be mailed or delivered to: Postal delivery Hand delivery Bligh Mining Ltd c/- Link Market Services Locked Bag A14 SYDNEY SOUTH NSW Bligh Mining Ltd c/- Link Market Services 1A Homebush Bay Drive RHODES NSW 2138 Cheques should be made payable to ‘Bligh Mining Ltd— Share Offer Account’ and crossed ‘Not Negotiable’. Completed Application Forms must reach one of the above addresses by no later than the Anticipated Closing Date. The Company reserves the right to close the Offer early. 3.3 MINIMUM SUBSCRIPTION The minimum subscription to be raised pursuant to this Prospectus is $2,000,000. If the minimum subscription has not been raised within four months after the date of this Prospectus, all applications will be dealt with in accordance with the Corporations Act. 3.4 OVERSUBSCRIPTIONS The Company will not accept oversubscriptions. 3.5 ALLOTMENT Subject to ASX granting approval for the Shares offered under this Prospectus to be admitted to official quota- tion, allotment of Shares offered under this Prospectus will take place as soon as practicable after the Antici- pated Closing Date. Prior to allotment, all application monies shall be held by the Company in trust. The Company, irrespective of whether the allotment of Shares takes place, will retain any interest earned on the application monies. The Directors reserve the right to allot Shares in full for any application or to allot any lesser number or to decline any application. Where the number of Shares allotted is less than the number applied for, or where no allotment is made, the surplus application monies will be returned by cheque to the applicant within seven days of the allotment date. 3.6 OFFER OF SHARES TO SAMPOERNA At the general meeting of Shareholders held on 5 October 2012 (General Meeting), approval was given for Sampoerna Agri Resources Pte Ltd (Sampoerna) to be offered the opportunity to subscribe for, and be allotted and issued, up to 10,000,000 Shares under the Offer. Sampoerna is not obliged to subscribe for any Shares under the Offer and has indicated in writing to the Company that it will not participate in the Offer. Forpersonaluseonly
  20. 20. 16 3 DETAILS OF THE OFFER 3.7 RE-COMPLIANCE WITH CHAPTERS 1 AND 2 OF THE ASX LISTING RULES At the General Meeting the Company received Share- holder approval to the change in the nature and scale of its activities to include minerals exploration and mining by undertaking the Acquisition. In accordance with the requirements of ASX in relation to this change in activ- ity, the Company must re-comply with Chapters 1 and 2 of the ASX Listing Rules as if it were seeking admission to the Official List. This Prospectus is issued to, among other things, assist the Company to re-comply with these requirements. Trading in the Company’s Shares has been suspended for some time from Official Quotation and will not be reinstated until the Company has re-complied with Chapters 1 and 2 of the ASX Listing Rules. There is a risk that the Company may not be able to meet the requirements of ASX for re-quotation of its Shares on ASX and the Acquisition may not be complet- ed. If the Acquisition is not completed, the Company: (a) will not proceed with the Offer; and (b) will repay application monies received from appli- cants under the Offer. Shares will not be able to be traded on ASX until such time as ASX’s requirements for re-quotation can be met, if at all. The Company will apply to ASX within seven days after the date of this Prospectus for Official Quotation of the Shares offered under this Prospectus. If ASX does not grant permission for Official Quotation of the Shares within three months after the date of this Prospectus, or such longer period as is permitted by the Corporations Act, none of the Shares offered under this Prospectus will be allotted or issued. In that circumstance, all applications will be dealt with in accordance with the Corporations Act. 3.8 APPLICANTS OUTSIDE AUSTRALIA This Prospectus does not, and is not intended to, constitute an offer in any place or jurisdiction where, or to any person to whom, it would not be lawful to make such an offer or to issue this Prospectus. The distribu- tion of this Prospectus in jurisdictions outside Australia may be restricted by law, and persons who come into possession of this Prospectus should seek advice on and observe any such restrictions. Any failure to comply with such restrictions may constitute a violation of applicable securities laws. No action has been taken to register or qualify these Shares or otherwise permit a public offer- ing of the Shares that are the subject of this Prospectus in any jurisdiction outside Australia. It is the responsibility of applicants outside Australia to obtain all necessary approvals for the allotment and issue of the Shares pursuant to this Prospectus. The return of a completed Application Form will be taken by the Company to constitute a representation and warranty by the applicant that all relevant approvals have been obtained. 3.9 UNDERWRITER The Offer is not underwritten. 3.10 COMMISSIONS ON APPLICATIONS The Company reserves the right to pay a commission of up to 5% (exclusive of goods and services tax) of amounts subscribed to any Australian Financial Services licensee in respect of valid applications lodged and accepted by the Company and bearing the stamp of the Australian Financial Services licensee. Payments will be subject to the receipt of a proper tax invoice from the licensed securities dealer or Australian Financial Services licensee. Forpersonaluseonly
  21. 21. 17 Bligh Mining P R O S P E C T U S 2 0 1 2 3.11 CHESS The Company will apply to participate in the Clearing House Electronic Subregister System (CHESS). CHESS is operated by ASX Settlement and Transfer Corporation Pty Ltd (ASTC), a wholly-owned subsidiary of ASX, in accordance with the Listing Rules and the ASTC Settlement Rules. Under CHESS, the Company will not issue certificates to investors. Instead, Shareholders will receive a state- ment of their holdings in the Company. If an investor is broker sponsored, ASTC will send a CHESS statement. 3.12 RISK FACTORS Prospective investors in the Company should be aware that subscribing for Shares that are the subject of this Prospectus involves a number of risks. These risks are set out in Section 5 of this Prospectus and investors are urged to consider those risks carefully (and if neces- sary, consult their professional adviser) before deciding whether to invest in the Company. The risk factors set out in Section 5, and other general risks applicable to all investments in listed securities not specifically referred to, may in the future affect the value of the Shares. Accordingly, an investment in the Company should be considered speculative. 3.13 TAXATION The Company does not propose to give any taxation advice and neither the Company, its Directors nor any of its officers accepts any responsibility or liability for any taxation consequence to applicants. A general overview of the taxation implications has been included in Section 12.13 of this Prospectus; however, applicants should consult their own professional tax advisers in regard to taxation implications of the Offer. 3.14 PRIVACY STATEMENT If you complete an application for Shares, you will be providing personal information to the Company. The Company collects, holds and will use that information to assess your application, service your needs as a Shareholder, and facilitate distribution payments and corporate communications to you as a Shareholder. The information may also be used from time to time and disclosed to persons inspecting the register, including bidders for your securities in the context of takeovers, regulatory bodies, including the Australian Taxation Office, authorised securities brokers, print service providers, mail houses and the Share Registry. You can access, correct and update the personal infor- mation that we hold about you. If you wish to do so, please contact the Share Registry at the relevant contact number set out in this Prospectus. Collection, maintenance and disclosure of certain personal information is governed by legislation including the Privacy Act 1988 (as amended), the Corporations Act and certain rules such as the ASTC Settlement Rules. If you do not provide the information required on the Application Form, the Company may not be able to accept or process your application. 3.15 FINANCIAL FORECASTS The Directors have considered the matters set out in ASIC Regulatory Guide 170 and believe that they do not have a reasonable basis to forecast future earnings because the operations of the Company are inherently uncertain. Accordingly, any forecast or projection infor- mation would contain such a broad range of potential outcomes and possibilities that it is not possible to prepare a reliable best estimate forecast or projection. 3.16 QUERIES Any questions concerning the Offer should be directed to the Company Secretary, Anne Adaley on (02) 9224 9292 (within Australia) or +61 2 9224 9292 (outside Australia). Forpersonaluseonly
  22. 22. 18 Forpersonaluseonly
  23. 23. 19 Bligh Mining P R O S P E C T U S 2 0 1 2 4.1 COMPANY HISTORY The Company (formerly Blackcrest Resources Ltd) is an Australian public company listed on the official list of ASX. The Company’s securities have been suspended from official quotation on ASX since November 2009. The Company has historically focused on the provision of insolvency and administration advice services. This business has been inactive for some time and, until recently, the Company has been actively seeking a new business opportunity. On 10 August 2012, the Company entered into the Capital Share Sale Agreement with the Vendors and BMH to acquire 100% of the shares of BMH. Further details of the terms of the Share Sale Agreement are set out in Section 11.1. The Acquisition was approved at a general meeting of Shareholders held on 5 October 2012 and is expected to be completed concurrently with completion of the Offer. Following shareholder approval, the Company has recently changed its name to Bligh Mining Ltd, undergone a one-for-nine consolida- tion of its Shares and issued this Prospectus. The following sections describe the business and assets of BMH, the market in which it operates, its strategies for building shareholder wealth, and its social programs. 4.2 BUSINESS OVERVIEW BMH is an Australian-registered company established in May 2010. Its principal business is identifying and developing mining opportunities in Indonesia that are highly prospective for manganese, base metals and precious metals mineralisation. The primary assets of BMH include tenements located in Flores, West Timor and Sulawesi, covering 54,285 hectares prospective for manganese in West Timor, 23,010 hectares in Flores including the potential of gold, copper, lead and zinc deposits, and 7564 hectares in Sulawesi prospective for gold and silver. 4.3 MANGANESE MARKET Manganese (chemical symbol: Mn) is a silvery-grey metal resembling iron. It is hard and very brittle, difficult to fuse, but easy to oxidise. About 85–90% of manganese production is used to make steel. Manganese is essential to this industry by virtue of its sulphur-fixing, deoxidising and alloying properties. It is, for example, a key component of low-cost stainless steel. Manganese has no satisfactory substitute as a hardening alloy element and deoxidant in steel. World manganese ore production was estimated by the International Manganese Institute (IMnI) at 17.2 Mt (contained manganese) in 2011 (see Figure 1). On a manganese-content basis, the leading manganese- producing countries are China (24%), South Africa (21%), Australia (18%), Gabon (11%), Brazil (7%) and India (5%) (see Figure 2).1 Until recently, then world’s main producer of high grade manganese ore has been South Africa. Manganese assets outside of South Africa are becoming increasingly low grade at a time when China and India are increasingly in need of high grade ores. The manganese market is closely tied to demand for steel, particularly in the developing nations of China, India and Brazil. In 2011, every tonne of steel produced around the world required almost 11.9 kg of manganese on average.2 According to the IMnI, global production of steel grew by 7% between 2010 and 2011, reaching an all-time record high of 1.5 Gt.3 Consequently, manganese alloy smelters ramped up production in 2010 and 2011 after global inventories were depleted in the de-stocking cycle of 2009. Manganese ore miners also ramped up production rates in 2010 and 2011, with global output exceeding 17 Mt (in Mn content) in 2011, up 13% from 2010 and 55% from 2009.4 This represents a record high of 55 Mt of ‘wet’ Mn ore.5 China, the major consumer of manganese ore, imported over 5 Mt (in Mn content) in 2011.6 References 1. IMnI (2011), Annual Market Research Report 2011, p. 28. 2. Ibid., pp. 35–36. 3. IMnI (2011), Annual Review 2011, p. 9. 4. Ibid. 5. Ibid. 1, p. 27. 6. Ibid., pp. 28–29. 4 BUSINESS SUMMARY Forpersonaluseonly
  24. 24. 20 7.9 8.2 8.6 10.7 11.7 11.7 12.8 14.4 11.1 15.3 17.2 0 5 10 15 20 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Production(Mt) China (24%) South Africa (21%) Australia (18%) Gabon (11%) Brazil (7%) India (5%) Ukraine (3%) Other (11%) Figure 1. Global manganese production from 2001 to 2011 (source: IMnI (2011), Annual Market Research Report, p. 28). Figure 2. Breakdown of global manganese production by country for 2011 (source: IMnI (2011), Annual Market Research Report, p. 28). 4 BUSINESS SUMMARY Forpersonaluseonly
  25. 25. 21 Bligh Mining P R O S P E C T U S 2 0 1 2 Figure 3. Company structure, assuming completion of the Acquisition. Notes 1. Blue Castle Investments Ltd (BCI) owns 85% of the shares of PT Endeavor Resources NTT (ERN). BCI has also entered into a share sale and purchase agreement for a further 10% of the shares of ERN with Muhammad Iqbal, which will take its ownership of ERN to 95%. This transaction has been approved by the Indonesian Capital Investment Coordinating Board (BKPM). See Section 11.5.3 and the Solicitor’s Report in Section 8 of this Prospectus for further information. 2. PT Endeavor Resources NTT (ERN) owns 51% of the shares of EPK, EPKR, EPM, EPRI, Elgary, NIR and OPS. Under a set of binding agreements between ERN and the Elang Group, ERN also has the rights to purchase a further 39% of the shares of each of these subsidiary companies upon the investment of up to US$400,000 in exploration costs for each company, which would increase its shareholdings to 90% in each case. See Section 11.5 for further details. 3. PT Golden Castle Resources (GCR) has entered into a binding agreement to purchase 90% of the shares of PT Charlie Sapa Prima and has received BKPM approval for that acquisition. See Section 11.7 for further details. 4. GCR has entered into a binding agreement to purchase 49% of the shares of PT Konstruktor Donggala (KD) with a right to acquire a further 26%, taking its total interest to 75%. GCR is yet to receive BKPM approval for this acquisition. See Section 11.8 for further details. 5. See note 1 to Table 11. Bligh Mining (Holdings) Pty Limited (Australia) Blue Castle Investments Ltd (Hong Kong) Bligh Mining Limited (Australia) PT Endeavor Resources NTT (PMA Indonesia) 100% 2 IUPs3 IUPs2 IUPs5 IUPs 1 IUP4 IUPs 3 IUPs West Timor assets Flores NTT Mining Pte Ltd (Singapore) PT Manggarai Manganese 1 IUP Whole Dragon Enterprises Ltd (Hong Kong) PT Golden Castle Resources (PMA Indonesia) PT Charlie Sapa Prima Sulawesi assets PT Konstruktor Donggala 1 IUP 1 IUP5 Flores asset PT Elang Perkasa Kencana PT Elang Perkasa Kencana Resources PT Elang Perkasa Mining PT Elang Perkasa Resources Indonesia PT Elgary Resources PT Nisso Indonesia Resources PT Oriental Pratama Steel 85% 100% 85% 100% 99% 99% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 51%2 51%2 51%2 51%2 51%2 51%2 51%2 90%3 49%4 Forpersonaluseonly
  26. 26. 22 4 BUSINESS SUMMARY 4.4 COMPANY STRUCTURE The structure of the Company, assuming completion of the Acquisition, including its subsidiary companies and projects, is shown in Figure 3. Each of the Indonesian subsidiaries of BMH is identified in Table 8. Table 8. Indonesian subsidiaries of BMH. Indonesian company Interest of BMH Flores PT Manggarai Manganese (PTMM) Flores NTT Mining Pte Ltd (FNM) owns 99% of PTMM. FNM is owned 100% by BMH. West Timor PT Elang Perkasa Kencana (EPK) PT Endeavor Resources NTT (ERN)1 has entered into a sales and purchase agreement for 51% of the shares EPK and has the right to purchase up to 90% of the total shares of EPK upon the investment of up to US$400,000 in exploration costs for EPK. The sale and purchase of 51% of the shares has been approved by the BKPM. PT Elang Perkasa Kencana Resources (EPKR) ERN1 owns 51% of EPKR and has the right to purchase up to 90% of the total shares of EPKR upon the investment of up to US$400,000 in exploration costs for EPKR. PT Elang Perkasa Mining (EPM) ERN1 owns 51% of EPM and has the right to purchase up to 90% of the total shares of EPM upon the investment of up to US$400,000 in exploration costs for EPM. PT Elang Perkasa Resources Indonesia (EPRI) ERN1 owns 51% of EPRI and has the right to purchase up to 90% of the total shares of EPRI upon the investment of up to US$400,000 in exploration costs for EPRI. PT Elgary Resources (Elgary) ERN1 owns 51% of Elgary and has the right to purchase up to 90% of the total shares of Elgary upon the investment of up to US$400,000 in exploration costs for Elgary. PT Nisso Indonesia Resources (NIR) ERN1 owns 51% of NIR and has the right to purchase up to 90% of the total shares of NIR upon the investment of up to US$400,000 in exploration costs for NIR. PT Oriental Pratama Steel (OPS) ERN1 owns 51% of OPS and has the right to purchase up to 90% of the total shares of OPS upon the investment of up to US$400,000 in exploration costs for OPS. Sulawesi PT Charlie Sapa Prima (CSP) PT Golden Castle Resources (GCR)2 has entered into a share sales and purchase agreement for 90% of the shares of CSP. The sale and purchase of these shares has been approved by the BKPM. PT Konstruktor Donggala (KD) GCR2 has entered into a share sales and purchase agreement for 49% of the shares of KD with an option to purchase up to 75% of the shares of KD. Notes 1. ERN is 85% owned by Blue Castle Investments Ltd (BCI), a 100% subsidiary of BMH. BCI has also entered into a share sale and purchase agreement for a further 10% of the shares of ERN with Muhammad Iqbal, which will take its ownership of ERN to 95%. This transaction has been approved by the BKPM. 2. GCR is 99% owned by Whole Dragon Enterprises Ltd (WDE), which is 100% owned by BMH. Forpersonaluseonly
  27. 27. 23 Bligh Mining P R O S P E C T U S 2 0 1 2 4.5 PROJECTS 4.5.1 Overview An overview of Bligh Mining’s project areas is given in Table 9. Table 9. Bligh Mining project areas. Project area Size Tenements (ha) Flores, East Manggarai—Prospective for Manganese & Base Metals 23,010 1 West Timor, Kupang Regency—Prospective for Manganese 13,600 7 West Timor, Timor Tengah Selatan (TTS)—Prospective for Manganese 23,840 2 West Timor, Timor Tengah Utara (TTU)—Prospective for Manganese 16,845 10 Sulawesi, Palu Regency, Central Sulawesi—Prospective for Copper & Gold 7,564 2 Total 84,859 23 Figure 4. Map of Indonesia, showing the locations of the project areas in which the Company has interests. Java Sumatra Kalimantan Sulawesi Timor (TTU)Flores Timor (TTS) Timor (Kupang) Forpersonaluseonly
  28. 28. 24 4 BUSINESS SUMMARY 4.5.2 Flores The Flores Project area covers a total of 23,010 hectares in the Sambi Rampas and Elar Sub District, East Manggarai Regency, East Nusa Tenggara Province in the northern parts of Flores Island, Indonesia. The IUP for this area, described in Table 10, has the potential for manganese, copper, lead and zinc as well as gold and silver. As illustrated in Figure 3, the IUP is held by PT Manggarai Manganese (PTMM), which is owned 99% by Flores NTT Mining Pte Ltd (FNM), which is owned 85% by BMH (with an agreement in place for BMH to acquire a further 10% of FNM). For further details, see Section 4.5 and the Solicitor’s Report in Section 8 of this Prospectus. A total of four main prospect areas have been identified by BMH, three of which are of primary interest for manganese, namely Pebobiar, Cembakloe, and Marabola and a fourth, Pepan, for multi-elements including cop- per, lead, zinc, gold and silver. Previous exploration activities that cover about 70% of the concession area, have identified the presence and potential to host economical deposits of manganese, other base metals such as zinc, copper and lead and pre- cious metals gold and silver. The manganese mineralisa- tion is interpreted as being similar to that of the Woodie Woodie deposit located in the Pilbara of Western Australia which is a limestone-dolomite hosted replace- ment style. Further detailed investigation is required to determine the manganese mineralisation styles and consequential additional manganese targets. For further details, see section 2 of the Independent Geological Report in Section 7 of this Prospectus. BMH has a proposed exploration program in place including a magnetic and radiometric program, mapping, sampling and defining a drilling program. 4.5.3 West Timor The West Timor projects cover a total area of 54,285 hectares clustered in three Regencies; Kupang with 13,600 hectares, Timor Tengah Selatan (TTS) with 23,840 hectares, and Timor Tengah Utara (TTU) with 16,845 hectares, all located in West Timor, Nusa Tenggara Timur Province, Indonesia. BMH’s majority- owned Indonesian subsidiary company PT Endeavour Resources NTT (ERN) has acquired, from the Elang Group, 51% of seven Indonesian companies that hold the manganese concessions. The companies are listed in Table 8 and illustrated in Figure 3. The IUPs and other interests held by these companies are described in Table 11. Under a set of share sale agreements, summarised in Section 11.5.1, ERN also has the rights to purchase a further 39% of the shares of each of these subsidiary companies upon the investment of up to US$400,000 in exploration costs for each company, which would increase its shareholdings to 90% in each case. Also see Section 4.5 and the Solicitor’s Report in Section 8 of this Prospectus for further details. Under a set of shareholder and royalty agreements, sum- marised in Section 11.5.2, the sellers of the Elang Group companies are also entitled to royalty payments upon the achievement of certain milestones. See Section 11.5.2 and the Solicitor’s Report in Section 8 of this Prospectus for further details. Geological work to date on the West Timor conces- sions includes reconnaissance field visits to four of the tenements with a more detailed review at two of the locations. An independent geologist has conducted limited work on the three West Timor tenement clusters, with site visits to three of the 20 concessions held by BMH. The initial results demonstrate the presence of medium to high grade manganese in each of the licences. The observed layers are 10–30 cm within reasonably wide zones that reach up to 3 metres in total width. Boulder- style manganese outcrops have also been identified but further mapping and assaying with associated trenching and drilling is required to fully delineate potential economic manganese deposits. The identification of manganese indicates that additional exploration in the remaining 17 tenements may probably identify additional manganese deposit areas. For further details, see section 3 of the Independent Geological Report in Section 7 of this Prospectus. BMH has a proposed exploration program in place including mapping, sampling and designing a drilling program to define a JORC-compliant resource and reserves of the manganese deposits. Forpersonaluseonly
  29. 29. 25 Bligh Mining P R O S P E C T U S 2 0 1 2 Table 10. IUP held by BMH’s Flores subsidiary. Company IUP IUP issued IUP expiry Area (ha) PT Manggarai Manganese (PTMM) IUP Exploration No. 109 7 December 2009 7 December 2013 23,010 Table 11. The IUPs and other main assets of BMH’s West Timor companies. No. Indonesian company IUP/tenement IUP issued IUP expiry Regency Area (ha) 1. EPK IUP No. 303 Year 2011 27 May 2011 27 May 2013 TTU 2,021 2. EPK IUP No. 745 Year 2011 8 November 2011 8 November 2014 Kupang 2,000 3. EPK IUP No. 746 Year 2011 8 November 2011 8 November 2014 Kupang 2,000 4. EPK IUP No. 44 Year 2011 29 March 2011 29 March 2016 TTS 5,000 5. EPK IUP No. 297 Year 20111 27 May 2011 27 May 2013 TTU 1,427 6. EPKR IUP No. 259 Year 2011 27 May 2011 27 May 2013 TTU 2,017 7. EPKR IUP No. 293 Year 2011 27 May 2011 27 May 2013 TTU 864 8. EPKR IUP No. 744 Year 2011 8 November 2011 8 November 2014 Kupang 2,000 9. EPKR IUP No. 743 Year 2011 8 November 2011 8 November 2014 Kupang 2,000 10. EPM IUP No. 301 Year 2011 27 May 2011 27 May 2013 TTU 1,995 11. EPM IUP No. 747 Year 2011 8 November 2011 8 November 2014 Kupang 2,000 12. EPM IUP No. 748 Year 2011 8 November 2011 8 November 2014 Kupang 1,950 13. EPRI IUP No. 296 Year 2011 27 May 2011 27 May 2013 TTU 1,739 14. Elgary IUP No. 299 Year 2011 27 May 2011 27 May 2013 TTU 934 15. Elgary IUP No. 749 Year 2011 8 November 2011 8 November 2014 Kupang 1,650 16. NIR IUP No. 300 Year 2011 27 May 2011 27 May 2013 TTU 2,245 17. NIR IUP No. 304 Year 2011 27 May 2011 27 May 2013 TTU 1,739 18. NIR IUP No. 110 Year 2011 14 May 2011 14 May 2016 TTS 4,920 19. OPS IUP No. 295 Year 2011 27 May 2011 27 May 2013 TTU 1,864 20. OPS Development letter No. 2035/30/DBM/20102 – – TTS 13,920 Total 54,285 Note 1. As noted on page 39 of the Solicitor’s Report in Section 8 of this Prospectus, IUP Exploration Number 297 owned by PT Elang Perkasa Kencana (IUP 297) overlaps with an IUP issued to PT Tiara Utama Mandiri (Tiara IUP). The Company has become aware that the Tiara IUP has been included on the CNC list. Upon further enquiry by the Company, the Company has become aware that the issue of the Tiara IUP (and hence its inclusion on the CNC List) is under legal challenge and, depending of the outcome of that challenge, the Tiara IUP may be cancelled, the result of which would be that the Company’s majority-owned IUP 297 would no longer overlap the Tiara IUP. 2. Refer to the Legal Report in Section 8 of this Prospectus. Table 12. IUPs held by BMH’s Sulawesi subsidiaries. Company IUP IUP issued IUP expiry Area (ha) PT Charlie Sapa Prima (CSP) IUP Exploration No. 540 28 January 2010 7 December 2013 5,280 PT Konstruktor Donggala (KD) IUP Exploration No. 387 as amended by IUP No. 188. 23 May 2012 16 October 2016 2,284 Total 7,564 Forpersonaluseonly
  30. 30. 26 4 BUSINESS SUMMARY 4.5.4 Sulawesi The Sulawesi projects cover a total area of 7564 hectares located in the Donggala District of Central Sulawesi. The two IUPs are owned by PT Charlie Sapa Prima (CSP) and PT Konstruktor Donggala (KD). CSP and KD have each entered into a share sale and purchase agreement with PT Golden Castle Resources (GCR), which is 99% owned by Whole Dragon Enterprises Ltd (WDE), which is 100% owned by BMH, as illustrated in Figure 3. For further details, see Section 4.5 and the Solicitor’s Report in Section 8 of this Prospectus. The concessions, described in Table 12, are located in a highly prospective area for gold and copper. Base metal mineralisation (chalcopyrite, galena and sphalerite) has also been observed in the veins, faults and stockworks. For further details, see section 4 of the Independent Geological Report in Section 7 of this Prospectus. 4.6 BUSINESS STRATEGY 4.6.1 Business development strategy The Company’ strategic focus is maximising shareholder value through identifying, acquiring, exploring, evaluat- ing and developing appropriate mining opportunities throughout Indonesia. The Company’s medium-term focus will be to develop the current assets described above and aim to bring them into production. If suc- cessful, this is expected to generate revenues that can be used to fund ongoing exploration for highly prospective base and precious metals, including porphyry copper/ gold targets across all tenements. The Company aims to become a predominant manga- nese participant in Indonesia through internal growth of existing assets and the possible acquisition of other appropriate manganese assets. It also aims to become a medium scale, low-cost producer for the steel industry, with easy access to shipping routes to the major export markets. The Company’s business model is highly dependent on the Company achieving technical and commercial success within its exploration programs as well as being dependent on a number of other fiscal, economic, regulatory and environmental factors. Income growth in the form of dividends to investors will only eventuate if the Company’s planned or future exploration programs yield commercial discoveries and are ultimately economi- cally developed. Prospective investors should refer to the risks to the Company and its business model as outlined in Section 5 of this Prospectus. 4.6.2 Finance strategy The Company will likely fund its future activities by issu- ing additional Shares to new and existing Shareholders, and, where attainable, by the raising of debt finance. Forpersonaluseonly
  31. 31. 27 Bligh Mining P R O S P E C T U S 2 0 1 2 4.6.3 Environmental management strategy The Company’s projects are subject to Indonesian laws and regulations regarding environmental matters and the discharge of hazardous wastes and materials. As with all mining projects, these projects would be expected to have a variety of environmental impacts should develop- ment proceed. The Company is committed to responsible environmen- tal management of all activities. The Company believes the environmental effects of its mining and infrastruc- ture activities must be planned or avoided, or unavoid- able effects minimised and remediated to an acceptable level. Areas disturbed by the Company’s activities will be rehabilitated as required by applicable laws and regula- tions. In order to ensure this commitment is achieved, external expertise will be engaged in the development and implementation of a structured environmental management system that is compliant with Indonesian environmental management standards. 4.6.4 Occupational health and safety The Company is committed to Occupational Health and Safety (OH&S) and will provide and maintain a safe working environment including safe systems of work for all its employees, visitors and contractors, in keeping with both Indonesian and Australian conventions. To ensure this commitment is achieved, the Company has developed a rigid OH&S policy to enforce best practice in the development and implementation of a structured health and safety management system that is compliant with AS4801—Occupational Health and Safety Management Systems and other globally recognised standards. The Company’s internal expertise will also provide on- going inspection/auditing services to ensure compliance and measure progress towards best practice in OH&S management of its operations. 4.7 SOCIAL PROGRAMS To date, BMH has been highly active in the local communities surrounding its projects. All of its social programs are guided by principles of corporate social responsibility and involve engaging local people and governments to ensure they are targeted and effective regarding participation. BMH’s social programs began by completing a social and scientific census of the residents within the PTMM concession on Flores. The aim of the census was to obtain statistics that would assist BMH, the local people and regional government bodies in deciding on the most appropriate social programs. By following the results of the census, BMH was able to focus on a number of social programs in conjunction with the local people and government. These included: • Delsos—provided assistance to Delsos, a commis- sion for social and economic development whose aim is to combat poverty in the Manggarai area of Flores. • Chapel of Lema–St Klemens—assistance in funding renovation of the local chapel, which is used as a school for young children. • Agriculture and agribusiness education—funded technical training at the elementary school in Gole Lebo. • The Bupati Cup—the Cup is an annual football tournament for young boys in the region of East Manggarai. BMH supported this event via donations for transport, food and apparel. • Road building—this is an essential part of helping the local community of Pota. BMH is providing donations to help complete the road renovation. The Company intends to continue with similar social programs in the future, again using census results and collegiate agreements between local people and govern- ments to engage the participants, increase cumulative intellectual capital, and maximise benefits to these communities. Forpersonaluseonly
  32. 32. Forpersonaluseonly
  33. 33. 29 Bligh Mining P R O S P E C T U S 2 0 1 2 5 RISK FACTORS 5.1 INTRODUCTION The Company’s Shares offered for investment under this Prospectus should be deemed speculative because of the nature of the business activities of the Company. Although the Directors commend any consideration of investment in the Company, potential investors should consider whether the Company’s Shares are a suitable investment having regard to their own personal invest- ment objectives and financial circumstances and the risk factors set out below. The Directors have attempted, based on their current understanding, to prioritise the following list of risk factors, taking into account their likelihood of occurring, their likely impact should they occur, and their potential for mitigation. This list is not exhaustive and potential investors should read this Prospectus in its entirety. Potential investors should consider that the investment in the Company is speculative and should consult their professional advisors before deciding whether to apply for shares. 5.2 GENERAL ECONOMIC RISKS AND BUSINESS CLIMATE Share market conditions may affect the listed securities regardless of operating performance. Share market conditions are affected by many factors such as: (a) general economic outlook; (b) movements in or outlook on interest rates and infla- tion rates; (c) currency fluctuations; (d) commodity prices; (e) changes in investor sentiment towards particular market sectors; and (f) the demand and supply for capital; Commodity prices are influenced by physical and investment demand for those commodities. Fluctuations in commodity prices may influence individual projects in which the Company has an interest. 5.3 EXPLORATION, DEVELOPMENT, MINING AND PROCESSING RISKS Bligh Mining is in the business of mineral exploration, project development and mining. This business by its nature contains elements of significant risk. Ultimate and continuous success of these activities depends on many factors such as: (a) the discovery and/or acquisition of economically recoverable ore reserves; (b) successful conclusions to bankable feasibility studies; (c) access to adequate capital for project development; (d) design and construction of efficient mining and processing facilities within capital expenditure budg- ets; (e) securing and maintaining title to tenements and com- pliance with the terms of those tenements; (f) obtaining consents and approvals necessary for the conduct of exploration and mining; and (g) access to competent operational management and prudent financial administration. This includes the availability and reliability of appropriately skilled and experienced employees, contractors and consultants. Many regions of Indonesia are frequently subject to adverse weather conditions over a prolonged period. Many regions of Indonesia are also subject to significant volcanic and seismic activity. These conditions can adversely affect exploration and mining operations and the timing of revenues. Whether or not income will result from projects under- going exploration and development programs depends on the successful establishment of manganese mining operations. Factors including costs, actual mineralisation, consistency and reliability of manganese ore grades and manganese prices affect successful project development, mining operations and the availability of willing, reliable off-takers. Mining is an industry that in Indonesia has become subject to increasing legislative regulation including but not limited to environmental responsibility and liability, taxation, mineral export restrictions and protectionism in relation to national interests. The potential for liability is Forpersonaluseonly
  34. 34. 30 an ever present risk. The use and disposal of chemicals in the mining industry is under constant legislative scrutiny and regulation. The introduction of new laws and regulations or changes to underlying policy may adversely impact on the operations of the Company. 5.4 RISKS SPECIFIC TO THE COMPANY’S PROJECTS The Company’s Indonesian manganese projects represent the main business activity and focus of the Company. Risks specific to these projects include the following: 5.4.1 Operating risks The current and future operations of the Company, including exploration, appraisal and possible production activities may be affected by a range of factors, includ- ing: (a) geological conditions; (b) limitations on activities owing to seasonal weather patterns and cyclone activity; (c) alterations to joint venture programs and budgets; (d) unanticipated operational and technical difficulties encountered in geophysical surveys, drilling and production activities; (e) mechanical failure of operating plant and equipment; adverse weather conditions, industrial and environ- mental accidents, acts of terrorism or political or civil unrest and other force majeure events; (f) industrial action, disputation or disruptions; (g) unavailability of aircraft or other transportation or drilling equipment to undertake airborne electromag- netic and other geological and geophysical investiga- tions; (h) shortages or unavailability of manpower or appropri- ately skilled manpower; (i) unexpected shortages or increases in the costs of consumables, spare parts, plant and equipment; and (j) prevention or restriction of access by reason of political unrest, outbreak of hostilities, and inability to obtain consents or approvals. 5.4.2 Manganese prices The Company expects to derive the bulk of its revenue from the sale of manganese ore. Consequently, the Company’s expected earnings will be closely related to the price of manganese ore together with the terms of the off-take agreement(s) under which manganese ore will be sold. The price of manganese, like all mineral commodities, fluctuates and is affected by numerous factors beyond the control of the Company. These factors include worldwide and regional supply and demand for steel, which is the main driver affecting demand for manga- nese, commodity trading on the futures markets, general world economic conditions and the outlook for interest rates, inflation and other economic factors on both a regional and global basis. These factors may have a positive or negative effect on the Company’s exploration, project development and production plans and activi- ties, together with the ability to fund those plans and activities. 5.4.3 Changes in legislation or regulation Changes in legislation or regulation, or changes to accounting rules, could have adverse impacts on the Company from a financial and operational perspective. Although the Company is reasonably familiar with the Indonesian regulatory regime and has undertaken all reasonable due diligence in assessing and managing the risks associated with investing and operating in Indo- nesia, the legal and political conditions of the country and any changes thereto are outside the control of the Company. In 2012, the Indonesian government made sweeping and substantive changes to its mining laws. The three primary and notable changes were: (a) The issuance of Regulation of the Minister of Energy and Mineral Resources, Number 7 of 2012, which states that certain minerals, most of which the Company intends mining, will be subject to an ‘added value’ through either processing, refining or smelting to attain a defined level of concentration prior to exportation; 5 RISK FACTORS Forpersonaluseonly
  35. 35. 31 Bligh Mining P R O S P E C T U S 2 0 1 2 (b) The amended government regulation on divest- ment rules has just been issued (Government Regulation Number 24 Year 2012). Under Article 97(1) of the amended regulation, the divestment percentage is significantly increased to at least 51% of the shares held by the foreign investor. However, the amended regulation has introduced a deadline of 10 years within which the divestment process must be com- pleted, once again counting from the date of com- mencement of production. In addition, the amended regulation sets minimum percentages that must be divested each year from the sixth to the 10th. The anniversaries and required sell-down of equity are 20% in the sixth year, 30% in the seventh year, 37% in the eighth year, 44% in the ninth year and 51% in the 10th year; and (c) On May 4 2012, the Minister of Energy and Mineral Resources released details of a new mining policy that in essence has introduced on average a 20% export tax to be applied to the exportation of 14 minerals effective from 4 August 2012. Furthermore, by 2014 exports of these minerals will be completely banned. The Company intend mining many of those defined minerals. Again, the Company’s primary focus is the Indonesian archipelago and changes in the country’s legislation or regulation could have a financial impact on the Company or affect its ability to operate in Indonesia. 5.4.4 Early stage of development The mineral tenements (IUPs) of the Company as described in this Prospectus are at an early stage of development. The Company does not have other eco- nomic resources that could be classified for the purposes of a regulatory or securities exchange code. Hence, the Company’s shares are deemed speculative. There can be no assurance that exploration of the project areas described in this Prospectus, or any other tenements that may be acquired in the future, will result in the discovery of an economic ore deposit. Even if an apparently viable deposit is identified, there is no guarantee that it can be economically exploited. Potential investors should understand that mineral exploration and development are high risk undertakings. 5.4.5 Expiry of title The exploration licences (IUPs) comprising some of the tenements that the Company holds or in which it has an interest may be the subject of applications for exten- sion in the future. If a tenement is not extended, the Company may suffer significant damage through loss of the opportunity to discover and/or develop any mineral resources on that tenement. In addition, the Company cannot guarantee that those tenements that are applica- tions for tenements will ultimately be granted in whole or in part. For more details on the issue of title to the tenements, refer to the Solicitor’s Report in Section 8 of this Prospectus. 5.4.6 ‘Clean and clear’ title In an effort to bring licensing into some order, Indone- sia’s Ministry of Energy and Mineral Resources (ESDM) has forbidden the issuing of new licences under Indonesian mining law and has been undertaking limited audits of all licences issued. The intention is to reveal where there are overlapping licences. As a result of this process, ESDM issues lists, maps and statements on request, indicating that the licence involved is ‘clean and clear’ (CNC). The IUP is thereby recognised by ESDM as legitimate, which carries an inference that the IUP has been properly issued, although this is not stated. The CNC lists are an administrative attempt to clear away confusion, and carry no legal status. There is no definition of what ‘clean and clear’ means, but it is understood to mean simply that there are no overlapping issues (with conflicting licences for the same product). What ‘clean and clear’ does not mean is that the licence-holder is up to date with its obligations under the licence, that it has obtained any necessary approv- als from the Ministry of Forestry, whether or not the licence-holder also owns the land involved, whether or not there are land titles in place, whether there are any disputes with registered or traditional land owners, and whether there is any illegal mining activity taking place. Only three of the Company’s 22 IUPs are currently Forpersonaluseonly
  36. 36. 32 included on any CNC list. There is no guarantee that any of the remaining IUPs will ultimately be included in the CNC list. For further details, see the Solicitor’s Report in Section 8 of this Prospectus. As noted on page 39 of the Solicitor’s Report in Section 8 of this Prospectus, IUP Exploration Number 297 owned by PT Elang Perkasa Kencana (IUP 297) overlaps with an IUP issued to PT Tiara Utama Mandiri (Tiara IUP). The Company has become aware that the Tiara IUP has been included on the CNC list. Upon further enquiry by the Company, the Company has become aware that the issue of the Tiara IUP (and hence its inclusion on the CNC List) is under legal challenge and, depending of the outcome of that challenge, the Tiara IUP may be cancelled, the result of which would be that the Company’s majority-owned IUP 297 would no longer overlap the Tiara IUP. 5.4.7 Funding The Company may have difficulty in obtaining future equity or debt funding to support exploration programs and the evaluation and development of its projects. The Company’s ability to raise further equity or debt or to divest part of its interest in a project, and the terms of such transactions will vary according to a number of factors, including the success of exploration results and the future development of the projects, stock market conditions and prices for commodities. Should it subsequently be established that a mining production operation is technically, environmentally and economically viable, the Company will require substan- tial additional financing to establish mining operations and production facilities. The Company may not be able to raise the additional finances that may be required for future activities. Commodity prices, environmental regulations, environmental rehabilitation or restitu- tion obligations, revenues, taxes, transportation costs, capital expenditures, operating expenses and technical aspects are all factors that will impact on the amount of additional capital that may be required. Additional financing may not be available on terms acceptable to the Company, or at all. Significantly, any additional equity financing or the exercising of op- tions may dilute your existing shareholdings and debt financing, if available, may restrict financing and future activities. If the Company fails to obtain additional financing, as needed, it may be required to reduce the scope of its operations and scale back its exploration programs as the case may be, which may adversely affect the busi- ness and financial condition of the Company and its performance. 2.13.10 Completion of the Acquisition The Acquisition is subject to a number of conditions precedent that are required to be achieved for comple- tion to occur. Key conditions precedent include the Vendors entering into escrow agreements with respect to restricted shares as required and obtaining ASX’s conditional approval to the Company’s admission to the Official List of ASX and to Official Quotation, on terms and conditions acceptable to the Company. There is a risk that one or more of these conditions precedent may not be met. If this occurs then the Acquisition and/ or the Offer may not proceed. A summary of the terms and conditions of the Share Sale Agreement is set out in Section 11.1. 2.13.11 Projects will not be fully owned BMH has entered into agreements with respect to certain projects. Please refer to Section 4.4, which sets out the ownership interest of BMH in each project and a description of those agreements. In the event that these acquisitions are completed, there is a risk the exploration/development activity could be disrupted in situations where there is disagreement on development programs or other issues between BMH and its part- ners. Should such disagreements occur, this may have an adverse impact on the Company’s operations and performance generally. 5 RISK FACTORS Forpersonaluseonly

×