NOTICE OF GENERAL MEETING For personal use only · Chemicals and Coking Co. Ltd (CY (Huaibei)). CY...

This is an impor tant document. The matters raised in this document will affect your shareholding in the Company. You are advised

to read this document carefully and in full before the extraordinary general meeting referred to in this document is held. If you are in

any doubt how to deal with this document, please consult your legal, financial or other professional advisor.

ROCKLANDS RICHFIELD LIMITEDABN 82 057 121 749

This Notice of General Meeting is dated 9th August 2007

(Incorporating an Explanatory Memorandum to Shareholders and Independent Exper t’s Repor t)

To be held at Westin Hotel, 205 Collins Street, Melbourne on 18 September 2007 at 10:00 am

In relation to the acquisition of

CHINA COKE & CHEMICALS LIMITED (a company incorporated and registered in Bermuda)

NOTICE OF GENERAL MEETING

For

per

sona

l use

onl

y

CO

NT

EN

TS NOTICE OF GENERAL MEETING

PART A: CHAIRMAN’S LETTER 1

PART B: NOTICE OF MEETING 2

PART C: EXPLANATORY MEMORANDUM 5

PART D: GLOSSARY 46

PART E: INDEPENDENT EXPERT’S REPORT 48

PART F: PROXY FORM 135

PART G: CONVERTIBLE UNSECURED NOTES 137

PART H: TERMS AND CONDITIONS OF OPTIONS 149

PART I: TERMS AND CONDITIONS OF MANAGEMENT OPTIONS 150

PART J: TERMS AND CONDITIONS OF PERFORMANCE OPTIONS 151

For

per

sona

l use

onl

y

1

Shareholders should note that by virture of the proposed acquisition, BDO Kendalls has assessed that the net assets per Ordinary Share will increase from the current $0.089 to $0.17 per Ordinary Share assuming their base case scenario is realised. Further, based on these parameters, the proposed acquisition will provide the Company with a revenue generating business, capable of delivering an annual cash earnings rate approaching $0.035 per Ordinary Share on a fully diluted basis. As such, in the view of Directors, the proposed acquisition provides considerable upside to shareholder value.

As the Shareholders are aware, an announcement was made by Bowen Energy Limited (Bowen) on 5 June 2007 regarding its intention to make an off-market takeover bid to acquire all of the issued shares in the Company. On 13 July 2007 a copy of the Bidder’s Statement was lodged with the ASX by Bowen. Since that date, the Company has received notice from Bowen that it is the intention of Bowen to file a supplementary bidder’s statement. As at the date of this Notice of Meeting, Bowen has not filed a supplementary bidder’s statement. Upon receipt of the supplementary bidder’s statement, the Directors will consider the merits of the offer and the Company will provide its response to Shareholders in accordance with its obligations under the Corporations Act.

Furthermore, Shareholders should also be aware that on 13 July 2007, the Company announced that it is currently in discussions, for a prospective joint venture for a co-operative development of the Company’s Australian resources, with Chinese Huaibei Mining (Group) Company Ltd. Further details are provided in the Company’s announcement to the ASX on 13 July 2007. Whist negotiations are still at an early stage, potential collaboration is conditional on the acquisition of CCS by the Company.

Please consider carefully the contents of this Notice of Meeting, including, without limitation, the Explanatory Memorandum and the Independent Expert’s Report. If you are in any doubt as to any matter, please consult your legal, financial or other professional advisor.

Your Directors unanimously recommend that you vote in favour of all the Resolutions required to implement the proposed acquisition of CCS, as they believe that it is in the interests of Shareholders.

Yours Sincerely

Hung Kwang Hou Chairman

9th August 2007

Dear Shareholder

Proposed Acquisition of China Coke and Chemicals LtdOn 21 March 2007 the Company announced its proposal to acquire all of the shares in the capital of China Coke & Chemicals Ltd, a company incorporated and registered in Bermuda (CCS).

The proposed acquisition will be implemented by way of a series of interrelated transactions which are described in more detail in this Notice of Meeting.

The Meeting is an opportunity for Shareholders to approve or not approve the proposed acquisition, as each Resolution that will be considered at the Meeting is critical to the proposed acquisition and it will not proceed if all Resolutions are not passed.

CCS’s main activities are associated with the manufacture of coke and coke by - products from its 450,000 tonne per annum coke plant operated by CCS’s wholly owned subsidiary, Chang Yuan (Huaibei) Chemicals and Coking Co. Ltd (CY (Huaibei)). CY (Huaibei) is a company registered and incorporated in the Peoples Republic of China.

The Directors believe that CCS has a successful business with the prospect for strong financial performance and the proposed acquisition will provide the Company with a profitable new business and the financial means to complete its exploration activities and development of its Queensland based coal tenements.

If the proposed acquisition proceeds, on Completion, the Vendor of CCS will be issued with Ordinary Shares and Options in the Company, representing 54.3% of the issued capital of the Company on an undiluted basis, and up to 58.3% of the issued capital on a fully diluted basis. An interrelated transaction will involve further Ordinary Shares and Options being issued to the Vendor under a performance incentive arrangement. If delivered, the issue will increase the Vendor’s holding in CCS to up to 71.1% on an undiluted basis and up to 74.3% on a fully diluted basis.

The Directors have engaged an independent expert, BDO Kendalls, to undertake an analysis of whether the proposed acquisition is fair and reasonable when considered in the context of the interests of the Shareholders (other than those involved in the proposed allotment or associated with such persons).

BDO Kendalls, has concluded that the proposed acquisition is fair and reasonable to the Shareholders. A copy of the report of BDO Kendalls is contained in Part E of this Notice of Meeting.

PA

RT

A

CHAIRMAN’S LETTERF

or p

erso

nal u

se o

nly

Notice is given that an extraordinary general meeting of the Shareholders of Rocklands Richfield Limited ABN 82 057 121 749 (Company) will be held at the time and location and to conduct the business specified below:

Date: 18 September 2007Time: 10:00amLocation: Westin Hotel, 205 Collins Street, Melbourne

BUSINESSResolution 1To consider, and if thought fit, to pass the following ordinary resolution:

That subject to each Interdependent Resolution being passed, the issue of 100,266,667 Ordinary Shares and 100,266,667 Options (including an allotment of 100,266,667 Ordinary Shares under the Options) to Mr Wu Pun Yan in accordance with the Share Purchase Agreement, be approved for all purposes including for the purpose of sections 208 and 611, Item 7 of the Corporations Act.

Note: The Company will disregard any votes cast on Resolution 1 by Mr Wu Pun Yan or any associates of Mr Wu Pun Yan.

Resolution 2To consider, and if thought fit, to pass the following ordinary resolution:

That subject to each Interdependent Resolution being passed, the issue of 106,666,667 Ordinary Shares and 106,666,667 Options (including an allotment of 106,666,667 Ordinary Shares under the Options) to Mr Wu Pun Yan in accordance with the Performance Based Entitlement Agreement, be approved for all purposes including for the purpose of sections 208 and 611, Item 7 of the Corporations Act.



That subject to each Interdependent Resolution being passed, the change in the nature and scale of activities of the Company following from the acquisition of all of the shares in the capital of CCS in accordance with the Share Purchase Agreement, be approved for the purposes of ASX Listing Rule 11.1.2.

Note: The Company will disregard any votes cast on Resolution 3 by:

• Mr Wu Pun Yan; and

• any associates of Mr Wu Pun Yan and any person who might obtain a benefit, except a benefit solely in the capacity of a holder of ordinary securities, if the resolution is passed.

However, the Company need not disregard a vote if:

• it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form; or

• it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.


That subject to each Interdependent Resolution being passed and completion of the Share Purchase Agreement, Mr Wu Pun Yan being eligible and having consented to act, be appointed a Director of the Company with effect from Completion of the Share Purchase Agreement.



That subject to each Interdependent Resolution being passed and completion of the Share Purchase Agreement, Mr Zhao Dening being eligible and having consented to act, be appointed a Director of the Company with effect from Completion of the Share Purchase Agreement.

Note: The Company will disregard any votes cast on Resolution 5 by Mr Wu Pun Yan or Mr Zhao Dening or any associates of Mr Wu Pun Yan or Mr Zhao Dening.


That subject to each Interdependent Resolution being passed and completion of the Share Purchase Agreement, Mr Chen De Hao being eligible and having consented to act, be appointed a Director of the Company with effect from Completion of the Share Purchase Agreement.

Note: The Company will disregard any votes cast on Resolution 6 by Mr Wu Pun Yan or Mr Chen De Hao or any associates of Mr Wu Pun Yan or Mr Chen De Hao.

2

PA

RT

B

NOTICE OF MEETINGF

or p

erso

nal u

se o

nly

Resolution 7 To consider, and if thought fit, to pass the following ordinary resolution:

That subject to each Interdependent Resolution being passed and completion of the Share Purchase Agreement, Mr John Girdlestone being eligible and having consented to act, be appointed a Director of the Company with effect from Completion of the Share Purchase Agreement.

Note: The Company will disregard any votes cast on Resolution 7 by Mr Wu Pun Yan or Mr John Girdlestone or any associates of Mr Wu Pun Yan or Mr John Girdlestone.


That subject to each Interdependent Resolution being passed, for the purposes of ASX Listing Rule 10.11 and section 208 of the Corporations Act and for all other purposes, the Directors be authorised to grant Mr Ugo Cario 1,000,000 Management Options.


• Mr Ugo Cario; and

• any associates of Mr Ugo Cario.





That subject to each Interdependent Resolution being passed, for all purposes, the Directors be authorised to grant Mr Vivien Forbes 500,000 Management Options.

Note: The Company will disregard any votes cast on Resolution 9 by Mr Vivien Forbes or any associates of Mr Vivien Forbes.


That subject to each Interdependent Resolution being passed, the cancellation by the Company of any Excess Performance Shares on and subject to, the terms of the Performance Based Entitlement Agreement, be approved for the purpose of Section 258D of the Corporations Act and for all other purposes.



That subject to each Interdependent Resolution being passed, the issue of 10 Convertible Unsecured Notes (including an allotment of up to 40,000,000 Ordinary Shares under the Convertible Unsecured Notes) to Mr Jiqun Chen in accordance with the Convertible Unsecured Notes, be approved for all purposes including for the purpose of ASX Listing Rule 7.1.


• Mr Jiqun Chen ; and

• any associates of Mr Jiqun Chen and any person who might obtain a benefit, except a benefit solely in the capacity of a holder of ordinary securities, if the resolution is passed.




By order of the Board of Directors


Dated 9th day of August, 2007

3

PA

RT

B

NOTICE OF MEETINGF

or p

erso

nal u

se o

nly

4

NOTES1. Further details of the Resolutions in this Notice of Meeting

are contained in section 6 of the Explanatory Memorandum contained in Part C of this Notice of Meeting. The Explanatory Memorandum should be read together with, and forms part of this Notice of Meeting.

2. Shareholders unable to attend the Meeting can complete the Proxy Form contained in Part F of this Notice of Meeting and return it to the Company at the address or the facsimile numbers indicated in the Proxy Form no less than 48 hours before the time scheduled for the commencement of the Meeting.

3. Shareholders are advised that each Resolution is interdependent with each other Resolution. To the extent that any Resolution is not passed, each other Resolution will be deemed not to have been passed in which case the proposed acquisition will not proceed.

4. The Company need not disregard a vote in accordance with a voting exclusion statement if:

(a) it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions of the Proxy Form; or

(b) it is cast by a person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

VOTING IN PERSONShareholders who plan to attend the Meeting are asked to arrive at the venue 30 minutes prior to the time designated for the Meeting, if possible, so that we may check the shareholding against the Share Register and note attendances.

In order to vote in person at the Meeting, a corporation that is a Shareholder may appoint an individual to act as its representative. The appointment must comply with the requirements of Section 250D of the Corporations Act. The representative should bring to the Meeting evidence of their appointment, including any authority under which it is signed.

PA

RT

B

NOTICE OF MEETINGF

or p

erso

nal u

se o

nly

5

1. INTRODUCTION1.1 GeneralThis Explanatory Memorandum has been prepared for the information of Shareholders in connection with the business to be conducted at a meeting of the Company to be held at 10.00am Melbourne time on 18 September 2007 at 205 Collins Street, Melbourne. It forms part of the Notice of Meeting and must be read together with that notice.

A copy of the Notice of Meeting (including this Explanatory Memorandum) was lodged with the Australian Securities & Investments Commission (ASIC) and the Australian Stock Exchange Limited (ASX) on 3 August 2007. No responsibility is taken for the content of the Notice of Meeting (including this Explanatory Memorandum) by either the ASIC or the ASX.

Shareholders are advised to read this document carefully and in full before the Meeting, referred to in this document, is held. If you are in any doubt how to deal with this document, please consult your legal, financial or other professional advisor.

1.2 Purpose of the meetingThe purpose of the Meeting is to consider a proposed acquisition by the Company of all the shares in the capital of CCS, in the context of an overall strategy to provide funds for the completion of exploration activities and the development of the Company’s coal tenements.

1.3 Interdependence of ResolutionsShareholders are advised that each Resolution is interdependent with each other Resolution. To the extent that any Resolution is not passed, each other Resolution will be deemed not to have been passed in which case the proposed acquisition will not proceed.

1.4 Forward looking statementsThis Explanatory Memorandum may contain forward looking statements. Shareholders should be aware that such statements are only predictions and are subject to inherent risks and uncertainties. Those risks and uncertainties include factors and risks specific to the Company as well as general economic conditions and conditions in the financial markets.

Actual events or results may differ materially from the events or results expressed or implied in any forward looking statement and such deviations are both normal and to be expected. Neither the Company, any of its officers or any person named in the Notice of Meeting and the Explanatory Memorandum or involved in the preparation of the Notice of Meeting and the Explanatory Memorandum makes any representation or warranty (either express or implied) as to the accuracy or likelihood of fulfilment of any forward looking statement, or any events or results expressed or implied in any forward looking statement, and Shareholders are cautioned not to place undue reliance on those statements.

To the extent that there are any forward looking statements in the Notice of Meeting and the Explanatory Memorandum, such statements reflect views held only as at the date of this Notice of Meeting.

1.5 Currency Conversion RatesShareholders are advised that for the purpose of this notice of Meeting the Company has used the following conversion rates for the following foreign currencies:

(a) 6.45 RMB = 1 AUD; and

(b) 6.45 HKD = 1 AUD.

Shareholders are warned that these rates may vary between the date of this Notice of Meeting and the date of the Meeting.

2. CURRENT POSITION AND RESTRUCTURE STRATEGY2.1 OverviewRocklands Richfield Limited is one of Australia’s newest independent coal exploration companies with three projects located in Queensland’s Bowen Basin currently subject to exploration drilling.

The Company’s registered office is located at Ground Floor, 470 St Kilda Road, Melbourne, Victoria.

The Company is currently undertaking exploration activities on three tenements, namely at:

• Hillalong, MDL324, where the Company holds a 3,189 hectare mineral development licence located 100 kilometres west of Mackay;

• Rocklands, EPC890, a 150 square kilometre exploration permit in the central part of the Bowen basin, 20 kilometres south of Blackwater; and

• Richfield, EPC 930, close to the township of Middlemount.

The Company listed on the Australian Stock Exchange (ASX) in March 2006, following a successful $9.751 million initial public offering and commenced exploration drilling in mid 2006.

2.2 Current ConstraintsThe Company’s exploration activities are well underway with drilling results starting to confirm the existence and nature of coal deposits at Hillalong and Rocklands.

Whilst yet too early to announce the precise quantum of proven resources and confirmation of coal quality, the potential existence of coal in economic quantities requires the Company to prudently review its funding strategy for the economic exploitation of its tenements, particularly the Hillalong site as a small open cut mine in the medium term and the Rocklands site as an underground mine in the longer term.

This review had been anticipated as part of the Company’s growth strategy. It entails sourcing additional financial support to enable funding as existing funds are currently earmarked and only sufficient for the completion of 2007 and partial 2008 exploration activities.

PA

RT

C

EXPLANATORY MEMORANDUMF

or p

erso

nal u

se o

nly

6

2.3 Funding strategyThe Directors of the Company believe that the best means of improving and fast tracking the Company’s development prospects and to increase Shareholder value in the medium term is to apply its cash reserves and ability to issue new shares to acquire quality, income producing assets owned by a potential stakeholder who shares the current Directors’ enthusiasm for realising the Company’s potential as a serious coal miner based in the Bowen Basin.

The profits derived from these assets in turn can be directed and invested in the Company to progress development of its coal tenements beyond pure exploration to production.

In pursuance of these goals, the Directors have resolved to proceed with the acquisition of all the issued shares in CCS in a cash and share deal which will result in the Vendor owning a majority of Ordinary Shares in the capital of the Company. It is a term of the acquisition that the Vendor will have the potential to increase his ownership in the Company, subject to delivering agreed profit performances over a two year period.

In the event that the proposed acquisition is approved, the Company will receive dividend income generated by Chang Yuan (Huaibei) Chemicals and Coking Co Ltd. (CY (Huaibei)), a wholly owned subsidiary of CCS, which operates a 450,000 tonne per annum

capacity coke and coke by-product plant. This dividend income can be utilised to further progress the Company’s existing coal exploration and development business.

In addition, the Company has received a commitment, subject to Shareholder approval, from Mr Jiqun Chen, that in the event that the proposed acquisition is approved, he will enter into 10 Convertible Unsecured Notes with the Company, raising in aggregate HKD50,000,000.00 (approximately AUD 7,751,938). This money will further assist the Company to meet its objectives stated in this Notice of Meeting.

The funds raised will not be applied for the purpose of repaying the Convertible Notes nor the long term loan in the amount of RMB55,000,000 referred to in item 9 of section 4.3 of this Notice of Meeting.

2.4 Working capitalThe Directors believe that, together with existing funds already earmarked for the completion of 2007 and partial 2008 exploration activities, by acquiring all of the shares in the capital of CCS (whereby the Company will receive dividend income generated by CY (Huaibei)) and raising the funds under the Convertible Unsecured Notes, the Company will have enough working capital to carry out the following expenditure program in relation to the Company’s exploration activities to 2010.

Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Total 3 yrs ended

June 2010HILLALONG MDL 324 - AUS$’000

Rent, Management & Overheads $63.5 $20.9 $66.1 $20.9 $67.1 $20.9 $259.4

Finish Structure & Geotech Drilling $1,337.3 $1,337.3

Environmental Surveys & Approval $312.0 $312.0

Cultural Heritage $112.1 $112.1

Seamgas Co-Development Agreement $49.5 $49.5

Land Access and Compensation $115.0 $230.0 $3,744.4 $4,089.4

Acquire Additional Land for Waste Dumps $947.6 $947.6

Mining Lease Application/Hearing $319.7 $319.7

Feasibility Studies $287.5 - $71.9 $71.9 $50.0 $50.0 $531.3

Total Expenditure Hillalong Prospect $466.0 $1588.2 $5303.6 $412.5 $117.1 $70.9 $7,958.3

ROCKLANDS EPC 890

Tenement Rent $6.1 $6.4 $6.6 $19.1

Tenement Admin, Management, Reports $4.0 $4.0 $4.0 $4.0 $4.0 $4.0 $24.0

Future Exploration $200.0 $200.0 $200.0 $200.0 $200.0 $200.0 $1,200.0

Contingency/Inflation $21.0 $20.4 $21.0 $20.4 $21.1 $20.4 $124.3

Total Expenditure Rocklands EPC 890 $231.1 $224.4 $231.4 $224.4 $231.7 $224.4 $1,367.4

RICHFIELD EPC 930, OTHER PROSPECTS

Tenement Rent $30.6 $31.8 $33.1 $95.5

Tenement Admin, Management, Reports $3.0 $3.0 $3.0 $3.0 $3.0 $3.0 $18.0

Future Exploration $200.0 $200.0 $200.0 $200.0 $200.0 $200.0 $1,200.0Contingency/Inflation $20.3 $23.4 $20.3 $23.5 $20.3 $23.6 $131.4

Total Richfield EPC 930 & Others $223.3 $257.0 $223.3 $258.3 $223.3 $259.7 $1,444.9

CORPORATE OVERHEADS $350.0 $350.0 $350.0 $350.0 $350.0 $350.0 $2,100.0

Total Expenditure estimate $1,270.4 $2419.6 $6108.3 $1,245.2 $922.1 $905 $12,870.6

PA

RT

C

EXPLANATORY MEMORANDUM

Expenditure Rocklands Richfield - Half year estimates

For

per

sona

l use

onl

y

7

The expenditure program outlined above has been prepared on the basis of information currently available to the Company. Shareholders should be aware that the expenditure program is subject to ongoing review by the Company and is dependent on the outcome of drilling results and feasibility studies. Accordingly, actual expenditure may differ materially from that expenditure indicated in the above expenditure program and such deviations are both normal and to be expected.

3. CHINA COKE & CHEMICALS LTD3.1 Proposed AcquisitionOn 21st March 2007, the Company announced that it had entered into a conditional Share Purchase Agreement to acquire all of the shares of CCS, subject to various conditions precedent to Completion including finalisation of due diligence and Shareholder approval.

3.2 Corporate DetailsCCS is a company registered in Bermuda and owns 100% of the shares in the capital of CY (Huaibei), a company registered and located in the Peoples Republic of China. CY (Huaibei) operates a 450,000 tonne per annum capacity coke plant and is involved in the sale of coke and its by-products.

Fig. 1. Huaibei cokeoven plant.

PA

RT

C


or p

erso

nal u

se o

nly

8

CCS is wholly owned by Mr Wu Pun Yan, a Hong Kong resident.

On the 21st April 2003, Mr Wu was instrumental in the acquisition of the coke plant from the People’s Government of Huaibei City. The coke manufacturer had previously been established by the Huaibei Mining Bureau (HCCP) as a state owned enterprise in 1974.

When HCCP first commenced operation in 1974, it had only one coke oven, comprising four chambers, with a coke capacity of 200,000 tonnes per annum. During the period from 1995 to 1998, HCCP constructed another two chamber coke ovens. By 1999, its coke production capacity increased to 400,000 tonnes per annum.

Following the acquisition and to stem losses, Mr Wu streamlined the operating and management structure of the coke business and undertook a rationalisation of its customer base, with a view to focus on sales to established companies in the iron and steel industry in the Peoples Republic of China.

Fig. 2. Plant location. Peoples Republic of China

In June 2004, Mr Wu completed the construction of a new 200,000 tonne per annum coke oven which replaced the 1974 vintage ovens raising total capacity to the current 450,000 tonne per annum capacity.

In addition to coke production, a variety of by products are produced by the coke works which enhance the profitability and business activities of the plant.

The principal business activities of CY (Huaibei) are as follows:

• Manufacture and sale of grade 2 coke from locally sourced coals;

• Production of coke by-products namely; Tar, benzene and ammonium sulphate; and

• Production of coal gas which is used to fuel the city of Huaibei.

PA

RT

C


or p

erso

nal u

se o

nly

9

3.3 The Production Process

The processing of metallurgical coal into coke and other by-products is illustrated below;

The principal product, coke, is used primarily in the manufacture of pig iron which is a major component in the production of steel.

Generally, CY (Huaibei) produces approximately 0.70-0.75 tonnes of coke from processing 1 ton of metallurgical coal. The bulk of the coke, which is on average more than 25mm, is used in blast furnaces to make iron.

Blast furnace coke is generally divided into three different grades depending on the level of carbon and other mineral content. Grade 1 coke is suitable for use in larger furnaces and has a higher heat yield compared to grade 2 and 3 coke. The quality grade of coke also affects the production of iron. As compared to other grades of coke, grade 1 coke produces the least ash and consequently yields more iron and achieves higher productivity.

CY (Huaibei) has the production capabilities to produce all grades of blast furnace coke, but mainly produces Grade 2 coke as the type of metallurgical coal used in their production process is more suitable for this grade of coke.

Tar is a by product of the distillation of metallurgical coal in coke processing. Generally CY (Huaibei) achieves approximate yields of 0.031 tonnes of tar from processing 1 ton of metallurgical coal.

Fig 3. Typical Processing schematic

Coal tar in turn is distilled into many fractions to yield a number of useful organic products, including benzene, toluene, naphthalene and anthracene. CY (Huaibei) tar is sold mainly to producers of naphthalene, anthracene, carbon lack and water proofing materials.

Coal gas is obtained as a by-product in the preparation of coke. Its composition varies but is largely made up of hydrogen and methane with small amounts of other hydrocarbons, carbon monoxide, carbon dioxide and nitrogen. Generally CY (Huaibei) produces 330 m3 of coal gas from processing 1 tonne of metallurgical coal. Coal gas is used as a fuel and illuminate.

CY (Huaibei) is the only producer of piped coal gas to the city of Huaibei, delivering up to 40 million cubic metres of the requisite gas composition annually through direct piping from the coke plant to the residents and enterprises in Huaibei city.

CY (Huaibei) also use the coal gas to power in house plant generators to supplement electricity usage. Gas is also burnt in the coke ovens and other plant boilers. Coal gas in excess of these requirements is combusted.

PA

RT

C


or p

erso

nal u

se o

nly

10

3.4 Historical Sales performanceThe sales output of CY(Huaibei) since acquisition is as follows;

Annual Sales by Type

May 03- June 04 (Tonnes)

Y/E June 05

(Tonnes)

Y/E June 06

(Tonnes)

10 Months to April 2007 (Tonnes)

Metallurgical coke 503,083 524,953 346,290 359,504

Tar 18,404 20,432 14,693 15,221

Ammonium Sulphate - 3,773 3,599 3,069

Benzol 4,650 3,212 9,756 33,160

Coal Gas m3 (net of internal usage)

30,700,000 23,350,000 21,590,000 30,390,000

3.5 Management.The principal managers of CCS are as follows:

• Mr Wu Pun YanBackground and qualifications

Mr Wu Pun Yan is Chairman and Chief Executive Officer of CCS. Mr Wu owns 100% of the issued shares in CCS.

Mr Wu is an engineering graduate majoring in metallurgy machinery from Jiangxi Province Xin Yu University and also studied Physics and advanced mathematics at Jiangxi Province Technological University.

He was deputy general manager of Shenzhen Jiangzhou Hardware Company overseeing daily operations of the steel cutting factory with an annual production of 30,000 tonnes of steel. From 1993 to 1995 Mr Wu was the China Department Chief Executive Officer of Nobel Resources Group Company, a subsidiary of Singapore listed Nobel Group Limited. Since 1995 to present, Mr Wu is the chairman of Hong Kong Chang Yuan Group Co. Ltd an investment company and responsible for the main operations and business development of the companies within its group. In this role he is engaged in the trading of metal ore, scrap steel, casting works and the export and import of foodstuffs.

Mr Wu has over 30 years experience in the steel industry and owns various investment and trading companies located in China and Hong Kong.

• Mr Chen De HaoBackground and qualifications

Mr Chen De Hao is the General Manager of CY (Huaibei) and is responsible for the overall management of the company’s day to day operations including the production department.

Prior to joining the group in June 2003, Mr Chen worked at Benxi Iron & Steel Company as a technician in the steel research institute responsible for research into coking technology. Prior to the 2003 appointment, Mr Chen was a director and deputy general manager in Baosteel Group Shanghai Meishan Company and the head of its technology centre. In June 2003, Mr Chen spearheaded the construction of CY (Huaibei) new cokeovens which was completed in 2004.

Mr Chen graduated from Zhejiang University in September 1964 with a bachelor in chemical engineering.

• Mr Zhao DeningBackground and qualifications

Mr Zhao is a graduate of the Shanghai Marine Transportation institute (COSCO) with qualifications in economics and professional ship management.

He has held various positions with COSCO from 1982 in China and overseas and from 1993 with Freighter Shipping Company limited. In these roles he has been responsible for overseeing the chartering and cargo fixing for bulk cargo ships and tankers. During his period with COSCO, Mr Zhao was responsible for 220 -230 bulk vessels with cargo volumes amounting to 40 million tonnes, representing 50% of COSCO’s freight revenue.

3.6 Historical financial performance and historical financial positionA summary of the financial performance and financial position of CCS for the financial years ended 30 June 2005, 30 June 2006, the six months ended 31 Dec 2006 and unaudited management accounts to 30 April 2007 are set out below.

A balance sheet for the six months ended 31 Dec 2006 and the four months ended 30 April 2007 of CCS is also set out below.

Discussion and analysis of these results is contained in section VI of the Independent Expert’s Report.

Audited FY Jun 2005 RMB ‘000

Audited FY Jun 2006 RMB ‘000

Unaudited 10 mths Apr 2007 RMB ‘000

FINANCIAL PERFORMANCERevenue 570,195 325,482 379,495

Gross profit 47,631 (52,720) 36,035

Profit/ (loss) after tax 150,212 (89,706) 13,292

AUS$ Equivalent mill * $23.29 ($13.91) $2.061

FINANCIAL POSITIONNet Assets 150,311 60,506 102,202

Issued and paid up capital 99 99 99*Assumes Aus$1= 6.45 RMB

Fig. 4.CCS Historical Profit and Loss RMB

PA

RT

C


or p

erso

nal u

se o

nly

11

Fig 5. CCS Balance sheet RMB

Post transaction (pro forma) 30 Apr 07 RMB’000

Unaudited

30 Apr 07 RMB’000

Audited

31 Dec 06 RMB’000

ASSETS

Non-Current AssetsProperty, plant and equipment 196,010 196,010 197,973

Prepaid land lease payments 71,590 71,590 74,654

Purchased goodwill 65,933 65,933 65,933

Total Non-Current Assets 333,533 333,533 338,560

Current AssetsInventories 46,367 46,367 32,301

Trade receivables 22,442 22,442 1,819

Other receivables, deposits and prepayment 13,117 13,117 19,055

Fixed deposit with a licensed bank 105,000 - 35,000

Cash and bank balances 33,713 23,713 2,315

Total Current Assets 220,639 105,639 90,490

TOTAL ASSETS 554,172 439,172 429,050

EQUITY AND LIABILITIES

Shareholders’ EquityShare capital 99 99 99

Reserves 237,985 102,103 95,988

Total Shareholders’ Equity 238,084 102,202 96,087

Current LiabilitiesTrade payables 22.445 98,327 35,447

Other payables and accruals 12,827 12,827 44,602

Short-term borrowings 98.452 98,452 137,059

Total Current Liabilities 133,724 209,606 217,108

Non-Current LiabilitiesOther payables 83,192 83,192 83,192

Long-term borrowings 86,959 31,959 20,450

Deferred taxation 12,213 12,213 12,213

Total Non-Current Liabilities 182,364 127,364 115,855

TOTAL EQUITY AND LIABILITIES 554,172 439,172 429,050

The balance sheet financial position post transaction includes a number of conditions precedent to be implemented by the vendor which are detailed in section 4.2.

The financial position and financial performance for the financial years ended 30 June 2005 and 30 June 2006 and the six months ended 31 December 2006 are based on the results of an audit undertaken by the auditors of CCS, Horwath Kuala Lumpur.

Shareholders are advised that the financial performance for the 10 months to 30 April 2007 is based on management accounts provided by CCS to the Company and has not been audited.

PA

RT

C


or p

erso

nal u

se o

nly

12

3.7 Financial Performance The financial performance of CCS has closely mirrored the fortunes of the Chinese coke industry which has been influenced by periods of sustained oversupply and great variability in the two principal drivers impacting on profitability, namely the coke price and the average price of coal supply.

The graph above exhibits historical coke and coal price movements for CCS with the disparity in margins between the two drivers, largely explaining the historical variability in the profitability performance attributed to CY (Huaibei).

3.8 Background to domestic prices and market dynamicsThere are an estimated 1,400 coke facilities in China and official 2005 and 2006 production figures were 254MT and 280MT respectively. About 50% of this total was produced at iron and steel mills for internal consumption, leaving some 140MT from merchant producers, many unlike CCS, are small-scale plants employing no heat/gas recovery processes and engaging in little or no emission reduction.

Many do not use mechanised production processes producing coke from “beehive’ shaped earth structures. Most are located adjacent to captive coalmines making them very low cost producers. In order to address the pressing issues of environmental protection and resource depletion, since the early 2000’s the Chinese government policy has aimed to eliminate the ‘beehive’ or non mechanized producer segment with mixed results.

Jan – Nov 06 % of total

Shanxi 64.87 30.12

Hebei 22.02 10.22

Shandong 15.16 7.04

Henan 11.44 5.31

Liaoning 11.11 5.16

Inner Mongolia 8.17 3.79

Jiangsu 7.76 3.60

Sichuan 7.73 3.59

Yunnan 7.19 3.34

Shanghai 6.99 3.24

Hubei 6.23 2.89

Shaanxi 5.92 2.75

Anhui 4.49 2.09

Guizhou 4.41 2.05

Heilongjiang 4.32 2.01

Hunan 5.76 1.75

Jiangxi 3.64 1.69

Tianjin 3.27 1.52

Beijing 3.15 1.46

Jilin 2.38 1.10

Xinjiang 2.14 0.99

Guangxi 2.00 0.93

Chongqing 1.98 0.92

Gansu 1.81 0.84

Guangdong 1.14 0.53

Ningxia 0.96 0.44

Fujian 0.83 0.39

Zhejiang 0.51 0.24

Qinghai 0.01 0.00

Total 215.37 100

PA

RT

C


or p

erso

nal u

se o

nly

13

About one third of all Chinese coke production comes from the Shanxi province, reflecting the relatively large resources of mineable coking coals in the province. Hebei is the next largest producing province followed by Shandong. Very little coal is produced in eastern China. Whilst Anhui is well located next to the Shanxi coalfields, only 2% of the national total is produced in Anhui province.

Coke pricesThe prices received from CCS’s cokeplant have been confirmed to have followed the general market trend (Barlow Jonker review January 2007) falling since the fourth quarter of 2004, bottoming out in first quarter 2006 and experiencing a gradual recovery since then. Recently the coke price has experienced significant rises exceeding the historical highs seen in 2004.

This volatility in coke prices represented in the CCI price data is evident throughout China and can be attributed to several factors.

High coke demand, principally from the Iron and Steel industry, and a perceived and real lack of coke production capacity at the steel mills resulted in rising prices in 2003. This was paralleled and augmented by real/perceived under – supply of key coal types used in coke making blends – particularly hard coking coals.

Overinvestment in new facilities immediately followed rising prices from investors at the steel mills and of merchant coke producers (including CCS’s new 45 battery facility) and began to drive down prices in second quarter 2004. It is also likely the non mechanical segment of the industry also significantly increased production. Coke batteries in China can be constructed much faster and far cheaper than is the case in more mature economies, meaning, the lag between high prices and new capacity is generally much shorter in China. Hence, supply was able to react quickly to demand and drove down prices.

Government policy has impacted on prices with the timing of some of the more important policy decisions significantly impacting on prices as follows:

• In Jan 2004 the Shanxi provincial department of the National Development and Reform commission (NDRC) announced that no new coke projects or expansions of existing facilities would be approved for the foreseeable future. This was the first such directive of its kind in China and a response to falling prices and the need for industry consolidation.

• In June 2005 Shanxi province’s 100 largest coke producers publicly agreed to cut their combined production by 33% in response to falling prices.

• As the market hit its lowest point in first quarter 2006, the NDRC announced no approvals for any new coke projects would be given over the next five years (expansions or new builds).

• In April/May 2006 the Shanxi Coking Coke Industry Association, a cartel group in Shanxi province representing some 20Mt of coke production capacity, announced changing market conditions justified a RMB 40/t price increase would occur in Jan 2007 and a further RMB 120/tonne in May 2007. Given the importance of this organisation and of Shanxi coke more generally in setting price levels across China, the market (and CCI) has tended to follow such announcements with prices rising accordingly.

Coal pricesThe Chinese coal market has been enjoying tremendous growth in the last few years in line with the performance in the steel sector which has been underpinned by strong GDP growth. China is the world’s largest producer of coal with production more than doubling from 998 million tonnes in 2000 to 2.38 billion tonnes in 2006. According to the NDRC the forecast demand for coal in China will be 2.5 billion tonnes in 2007.

Most Chinese coke producers use a number of coals which are blended together to make coke. The proportions of their blends vary significantly reflecting regional access to coking coals. For example, those in coking coal rich areas in Shanxi province use a much higher proportion of mid-VM hard coking coals while those in east China blend other higher VM coals to compensate for the relatively more expensive and difficult to obtain mid VM-coals. CCI is typical of such suppliers however its location within the coal producing region of Anhui province and adjacent coking coal rich Shanxi province ensures a ready supply of coals for blending. As such its historical coal price movements have mirrored prices in Shanxi province whereby;

• Domestic coking coal prices peaked around the second quarter of 2005 and have gradually come down since to about RMB 500/t FOT currently in western Shanxi province. Transport and other costs bring these coals up to around RMB 650/t delivered into eastern China,

similar to levels reported by CCI.

• Free on transport (FOT) Shanxi coking coal prices loaded into trains for transhipment out of the province have remained more stable over the last two years compared to coke prices. This is partly due to the relatively fixed market for Shanxi coals which are limited by transport capacity out of western Shanxi. The short term market for these and other mid-VM coals in eastern China is, however, more volatile because of greater demand and in fact buyers are blending coals from other parts of china.

As a result of these factors the financial performance of CCS as presented in fig 4 can be described as volatile, with a period of excellent profitability followed by losses for the reasons explained above and a recent return to profitability on the back of vastly improved coke prices.

PA

RT

C


or p

erso

nal u

se o

nly

14

3.8 Future prospects for CCS profitabilityPricingThe future profitability of CCS will continue to be influenced by the two principal drivers of coal and coke price. In 2006, coal price comprised 86% of cost of goods sold with the balance comprising labour and other operating costs. By necessity the outlook for both drivers are of critical importance in determining potential profitability.

Directors are of the view and are supported by Barlow Jonker that it is difficult to see how domestic Chinese metallurgical coal prices will fall over the short term (out to end of 2008). Merchant coke producers such as CCS are thus unlikely to experience any relief from the supply side and RMB 650 – 700/CFR coking coal price level is likely to remain for some time.

Such a scenario is supported as China no longer approves coal mines with an annual capacity of less than 300,000 tonnes and according to the NDRC has vowed to close 10,000 small coal mines by the end of 2007 in an attempt to improve the performance and adverse safety record in the industry. To curb pollution, China last year abolished tax rebates on coal exports and imposed export tariffs while cutting import duties. As a consequence China was a net importer of coal in the first three months of 2007.

Domestic coal prices whilst driven by internal factors continue to be referenced to the price of world traded coals especially for metallurgical coals. World coking coal prices currently at US$90 - $100 remain at a historical high despite falling from higher 2006 levels and as such support the projected prices.

On the demand front, strong domestic and export demand for steel remains a mainstay of the Chinese economy. Chinese steel production increased by 21.2% in the four months to April amounting to 155.1 million tonnes defying the NDRC stated commitment to cap Chinese steel production at 400 Mt per annum. Chinese steel exports have continued to rise in 2007, reaching 23.8 million tonnes in the first four months of 2007, more than double the total for the same period in 2006.

These aggregate factors are expected to support the outlook for stable coal price projections.

Coke prices are far less easy to anticipate. A review by Barlow Jonker in January 2007 advised that increases back up to the RMB 1,100/t ex works such as CCS experienced in 2003-4 were unlikely to reappear over the short term despite Chinese demand from steel and other industries remaining strong. Issues such as oversupply and government policies aimed at controlling inefficient and polluting cokemakers were unlikely to make further inroads into reducing production capacity in the short term.

The reality appears to support a contrary view.

Coke prices received for CCS products have increased sharply in the last four months on the back of announced price increases by the Shanxi Coking Coke Association and strong demand from steelmakers.

The average price for December was 662RMB FOT (excluding VAT) but in May, CCS has contracted prices with its major customers at 1035 RMB respectively, an average increase of 56% over December levels. Further increases to 1,170 RMB have been secured in June.

In China generally, new coke capacity increase was 12.5 million tonnes in 2006, with the corresponding consumption increase totalling 30 million tonnes. This undersupply situation appears to have been instrumental in eroding the oversupply carried over from previous years over-investment in the sector, supporting higher prices.

China’s consumption of coke approximated 70 million tonnes in the first three months of 2007, a 24% increase year on year.

Combined with the government policy restricting the size of new plant construction, the closure of inefficient and highly polluting smaller plants coupled with high steel production levels, it is reasonable to conclude that coke prices will remain at high levels in the short term.

Essential industry statusCY (Huaibei) is a middle ranking coke manufacturer with a current production capacity of 450,000 tonnes. The majority of competing modern newly constructed plants in China are 1 – 2mtpa, low cost operations.

However CY(Huaibei) as a recently built plant (2004 ) can compete well, based not only on its coke productivity, but also through the sale of its high valued by products.

In particular, CY (Huaibei) is the sole supplier of coal gas to Huaibei city and as such the company is classified as an essential industry. It provides up to 40 million cubic metres of coal gas to the city and through its essential classification will be immune from government imposed consolidation pressures facing the rest of the industry.

New MarketsThe Huaibei local authorities have invested heavily in recent times to develop new industries in the region exploiting local in situ resources and low labour costs. Of particular note is the substantial investment (both foreign and domestic) in ceramics manufacture with a number of factories recently opening in close proximity to the CY (Huaibei) plant. These not insubstantial operators require fuel energy for their furnaces and have typically been serviced via attendant coal fired energy sources.

Recently, environmental impositions and the high cost of coal has resulted in approaches to CY (Huaibei) from the ceramics operators for the supply of coal gas as an alternative fuel as it is a cleaner option and more cost effective.

On the 16th May 2007, CY (Huaibei) signed a contract with a ceramics producer whereby the company will sell 1.1 million cubic metres of coal gas to the manufacturer from August 2007, rising to 2 million cubic metres from January 2008 at a premium price to other coal gas sales. This is in addition to the city gas supply referred to above. The revenue receipt from these and future sales is expected to substantially lift the future profitability of CCS.

PA

RT

C


or p

erso

nal u

se o

nly

15

Proximity to established customer baseThe main users of CY (Huaibei)’s coke and by products are steel manufacturers located in close proximity to the plant in Anhui province or the adjacent provinces of Jiangsu and Shanghai municipality enhancing its ability to compete against higher distribution cost competitors from the higher output western Shanxi province. Whilst steel manufacturers have the option to purchase coke from other suppliers in neighbouring provinces, CYy (Huaibei)’s close proximity and availability of coke enables the company to supply its coke on a timely basis which is a criteria that is valued by steel manufacturers as any disruption in supply will result in huge losses.

CY (Huaibei) has maintained a consistent, and strong working relationship with its customers as a result of these factors. It has attained quality control accreditation for its manufacturing process to ensure the highest level of customer service and through these efforts has maintained a very stable and loyal customer base.

Close proximity to coal suppliesApproximately 50% of the PRC’s coal reserves are located in Shandong and the surrounding provinces of Shanxi, Anhui, Shaanxi and Henan provinces. All these provinces border the CY (Huaibei) plant and provide 100% of its coal needs. Over 45% of the plants needs are sourced from the local Huaibei coalfields with low distribution costs and ready supply offering competitive advantages. Higher quality, lower volatile metallurgical coal can be easily sourced from Shanxi, Jiangsu and Shandong provinces. This advantageous location ensures that CY (Huaibei) will enjoy continued and undisrupted coal supply and relatively lower transportation costs in the future. Furthermore, CY (Huaibei) is directly connected to the railway grid as the rail tracks run directly into the company’s premises. It also owns its own locomotive to cater to its own transportation needs.

Close proximity to power plant CCS believes that a continuous and low cost power supply is a vital success factor for coke manufacture. Accordingly, CY (Huaibei) runs its own 4 megawatt on site power plant fuelled by internal coal gas supplies and as such is essentially self sufficient. In addition it provides coal gas to an adjacent 18 MW power plant owned and operated by Mr Benny Wu from which it draws electric power when required as an auxiliary power source. As well CY (Huaibei) has access to the domestic power grid when required.

With the abovementioned electricity power arrangements the CY group is assured of continuous and reliable power to meet all needs and at a preferential cost to the market rate.

Experienced management team and workforceThe CY (Huaibei) management and operational team, have extensive experience in cokemaking and related end use industries, including production and specialist marketing functions.

With their perceived vast experience and knowledge, the management team at CY (Huaibei) is able to cope and adjust to the ever changing market conditions to react and maintain competitiveness. In addition, they have the necessary experience to respond to the increased regulations imposed on the coke industry through pollution controls whilst maintaining optimal operational performance.

Accredited with ISO 9001 and ISO 14001 certificationThe CY (Huaibei) company has fulfilled all necessary requirements for its accreditation for ISO9001:2000 certification on the 28th January 2005 in respect of quality management and system of specific business activities. In addition CY (Huaibei) was awarded the ISO 14001 certification by the Shanghai Audit Centre for compliance with environmental regulations.

The company employs stringent environmental control procedures to ensure that the production processes are environmentally friendly. This accreditation evidences the company’s adherence to best practice and ensures its commitment to product quality and environmental compliance.

Future expansion plans.The CY (Huaibei) group has intentions to increase its coal usage capacity to 1.2 million tpa over the next two to three years dependent on continued buoyancy in the coke market. In this regard, steps have been taken to demolish the vintage 1970’s ovens, and the site location levelled in readiness for construction should market conditions continue to support this investment. Costings and preliminary financial arrangements have been initiated and are scheduled to be considered by the board in 2008.

Directors are of the view that CY(Huaibei) faces a number of positive opportunities highlighted in section 3.8 above. They believe that CY (Huaibei) is well positioned, certainly in the near future, to capitalise on continued coke market growth, high prices and to improve the economic performance of CY (Huaibei) post acquisition. Whilst there are considerable risks associated with doing business in China (detailed below) the acquisition can be categorised as a reasonably high risk, high return proposition and as such believe it is worthy of consideration by shareholders. They believe the ability of CY (Huaibei) to generate good profits and contribute to the development and exploitation of the Rocklands Richfield Australian coal tenements through such an acquisition is a real and sustainable proposition.

3.9 CCS ValuationAs part of its Independent Experts Report, the Independent Expert, BDO Kendalls, has valued the entire issued share capital of CCS as at the 30 April 2007 in the range of $37.1 to $42.3 million. A full copy of the valuation is contained in the Independent Experts Report in Part E of this Notice of Meeting.

BDO Kendalls, has concluded that the proposed acquisition is fair and reasonable to the Shareholders.

PA

RT

C


or p

erso

nal u

se o

nly

16

4 THE PROPOSED ACQUISITION4.1 Details of the proposed acquisitionThe proposed acquisition is documented in the Share Purchase Agreement between the Vendor and the Company dated 20 March 2007. Pursuant to the Share Purchase Agreement, the Company has agreed to purchase the shares in CCS for AUD26,666,667. The purchase price has been calculated on the basis that net assets of CCS on Completion is not less than HKD 160,000,000 and the net tangible assets of CCS being not less than HKD 100,000,000.

The purchase price will be payable by way of a cash component of AUD1,600,000 and an issue of 100,266,667 Ordinary Shares and 100,266,667 Options in the capital of the Company. Ordinary shares will be issued on the basis of a notional issue price of 25 cents per share. The terms of the Options to be issued pursuant to the transaction are set out in Part H of this Notice of Meeting.

The proposed acquisition will also involve an additional consideration element comprising a vendor profit performance incentive arrangement under which the Company will issue 106,666,667 fully paid Ordinary Shares (Performance Shares) and 106,666,667 Options (Performance Options) to the Vendor on and subject to the terms of the Performance Based Entitlement Agreement.

It is proposed that the Performance Shares and Performance Options will be issued on Completion and held in escrow by a third party pending release to the Vendor subject to satisfaction of the performance requirements set out in the following paragraphs.

If during the period 1 July 2007 to 30 June 2009 (Performance Period), the net profit after income tax of CCS, as disclosed in the Company’s audited financial accounts (applying International Financial Reporting Standards) (Profit Result), is HKD40,000,000 or greater, the Company will direct the escrow agent to release to the Vendor, that number of Performance Shares and Performance Options determined in accordance with the following terms:

• if the Profit Result produced by CCS is HKD40,000,000 or greater but less than HKD50,000,000 then the total number of securities to be released to the Vendor will be 21,333,333 Performance Shares and 21,333,333 Performance Options;




• if the Profit Result produced by CCS is HKD80,000,000 or greater then the total number of securities to be released to the Vendor will be 106,666,667 Performance Shares and 106,666,667 Performance Options.

Any Performance Shares and Performance Options that have been issued in excess of the ultimate entitlement of the Vendor will:

• in relation to any excess Performance Shares, the excess Performance Shares will be forfeited and subject to Shareholders passing Resolution 10, immediately cancelled; and

• in relation to any excess Performance Options, the excess Performance Options will immediately lapse, whereupon any certificate will be immediately cancelled.

4.2 Conditions precedent to CompletionThe Share Purchase Agreement sets out the following conditions precedent to completion of the proposed acquisition:

• The Treasurer of the Commonwealth of Australia consenting under the Foreign Acquisitions and Takeovers Act 1975 (Cth) (FATA) to the issue of the Securities to the Vendor;

• All third party consents in relation to the proposed acquisition being received;

• Each Transaction Document is entered into by each party to that Transaction Document;

• Each condition precedent in or to each Transaction Document is satisfied or waived in accordance with that Transaction Document;

• The Directors have passed all necessary resolutions in respect of the execution or performance of, or otherwise giving effect to, the Share Purchase Agreement and each other Transaction Document;

• The Shareholders have passed all necessary resolutions in respect of the execution or performance of, or otherwise giving effect to, the Share Purchase Agreement and each other Transaction Document;

• The requirements of all laws and listing rules and/or the requirements of any regulatory authorities in Australia and/or the Peoples Republic of China, including without limitation under the Corporations Act 2001 (Cth) and the ASX Listing Rules, are satisfied in respect of the terms of, execution or performance of, or otherwise giving effect to, the Share Purchase Agreement and each other Transaction Document, or any transaction contemplated by the Share Purchase Agreement and each other Transaction Document;

• The Vendor subscribing for, and being allotted, 10,000,000 fully paid Ordinary Shares in the capital of CCS, in consideration of the payment by the Vendor to CCS of HKD10,000,0001;

• The Vendor and the Company procuring a binding letter of offer for a 18 month term loan from a financier in the amount of RMB55,000,0002 for working capital purposes on terms, and with a financier, acceptable to the Company;

PA

RT

C


or p

erso

nal u

se o

nly

17

• The Vendor procuring for the benefit of the Company, the entry by unrelated third parties, of HKD50,000,000 in Convertible Unsecured Notes;

• The Company giving notice that it has completed and is satisfied with the outcome of its due diligence investigations of the Vendor Group and their business, assets and financial position;

• There is no Material Adverse Change affecting the Vendor Group (or any of them), or the business, assets, financial, trading position or prospects of the Vendor Group (or any of them), between the date of the Share Purchase Agreement and the Completion Date;

• There being no breach of Warranty by the Vendor between the date of the Share Purchase Agreement and the Completion Date; and

• The Vendor giving notice that it has completed and is satisfied with the outcome of its due diligence investigations of the Company and its business, assets and financial position.

1 The shares issued to the Vendor in satisfaction of this condition precedent are included in the shares being acquired by the Company.

2 On the date immediately prior to the date of the Notice of Meeting the approximate conversion rate was

6.45 RMB = 1 AUD

4.3 Status of Conditions PrecedentAt the date of this Notice of Meeting, the status of each condition precedent was as follows:

Number Condition Precedent Status1 The Treasurer of the Commonwealth of Australia consenting under the

FATA to the issue of the Securities to the Vendor.The FATA does not apply to the proposed acquisition. As a result, the Company has waived this as a condition precedent to the proposed acquisition.

2 All third party consents in relation to the proposed acquisition being received.

Satisfied.

3 Each Transaction Document is entered into by each party to that Transaction Document.

Each Transaction Document (other than a Restriction Agreement in respect of the Consideration Securities and the Performance Securities) has been entered into by each relevant party.

The Vendor will enter into a Restriction Agreement with ASX in relation to the Consideration Securities and the Performance Securities in the event that Shareholders approve all Resolutions.

4 Each condition precedent in or to each Transaction Document is satisfied or waived in accordance with that Transaction Document.

Satisfied

5 The Directors have passed all necessary resolutions in respect of the execution or performance of, or otherwise giving effect to, the Share Purchase Agreement and each other Transaction Document.

Satisfied.

6 The Shareholders have passed all necessary resolutions in respect of the execution or performance of, or otherwise giving effect to, the Share Purchase Agreement and each other Transaction Document.

In the event that Shareholders pass each Resolution, this condition precedent will be satisfied.

7 The requirements of all laws and listing rules and/or the requirements of any regulatory authorities in Australia and/or the Peoples Republic of China, including without limitation under the Corporations Act 2001 (Cth) and the ASX Listing Rules, are satisfied in respect of the terms of, execution or performance of, or otherwise giving effect to, the Share Purchase Agreement and each other Transaction Document, or any transaction contemplated by the Share Purchase Agreement and each other Transaction Document.

This Notice of Meeting is issued for the purpose of complying with the laws in Australia relevant to this condition precedent.

The Board is not aware of any law in the Peoples Republic of China which is required to be satisfied for the purpose of satisfying this condition precedent.

8 The Vendor subscribing for, and being allotted, 10,000,000 fully paid ordinary shares in the capital of CCS, in consideration of the payment by the Vendor to CCS of HKD10,000,000.

The Vendor has confirmed that the Vendor will subscribe for 10,000,000 fully paid ordinary shares in the capital of CCS 7 days prior to Completion.

9 The Vendor and the Company procuring a binding letter of offer for a long term loan from a financier, in the amount of RMB55,000,000.00 on terms, and with a financier, acceptable to the Company.

Satisfied

10 The Vendor procuring for the benefit of the Company, the entry by unrelated third parties, of HKD50,000,000 in Convertible Unsecured Notes.

The Company has received a commitment from Mr Jiqun Chen that, on all Resolutions being passed, he will execute Convertible Unsecured Notes in the amount of HKD50,000,000.

PA

RT

C


or p

erso

nal u

se o

nly

18

Number Condition Precedent Status11 The Company giving notice that it has completed and is satisfied with

the outcome of its due diligence investigations of the Vendor Group and their business, assets and financial position.

Satisfied

12 There is no Material Adverse Change affecting the Vendor Group (or any of them), or the business, assets, financial, trading position or prospects of the Vendor Group (or any of them), between the date of the Share Purchase Agreement and the Completion Date.

At the date of this Notice of Meeting the Board was not aware of any Material Adverse Change.

13 There being no breach of Warranty by the Vendor between the date of the Share Purchase Agreement and the Completion Date.

At the date of this Notice of Meeting the Board was not aware of any breach of Warranty.

14 The Vendor giving notice that it has completed and is satisfied with the outcome of its due diligence investigations of the Company and its business, assets and financial position.

Satisfied

15 The Vendor and the Company have also agreed that the Vendor will fully forgive a loan debt owed to the Vendor by CCS in the amount of US$10,000,000.

Satisfied

4.4 RCI following the acquisition of CCSIf the Resolutions are passed and the proposed acquisition proceeds, the following will occur:

• The issue of Ordinary Shares and Options pursuant to the proposed acquisition will result in the Vendor acquiring a substantial holding in the Company. The impact of the issue on the present equity position of the Company is likely to be as follows:

• The issue of 100,266,667 Shares and 100,266,667 Options in consideration for the sale and purchase of all the shares in the capital of CCS will likely result in the acquisition by the Vendor of approximately 54.3% of the issued capital of the Company on an undiluted basis, and up to 58.3% of the issued capital of the Company on a fully diluted basis; and

• The issue of a further 106,666,667 Ordinary Shares and 106,666,667 Options under the Performance Based Entitlement Agreement will, subject to CCS delivering a profit performance of HKD 80,000,000 over the Performance Period, result in the Vendor controlling up to 71.1% of the issued capital of the Company on an undiluted basis, and up to 74.3% of the issued capital of the Company on a fully diluted basis.

• The composition of the Board will change as follows:

• Mr Wu Pun Yan, Mr Zhao Dening, Mr John Girdlestone and Mr Chen De Hao will be appointed as Directors. Details of Mr Wu Pun Yan , Mr Zhao Dening and Mr Chen De Hao’s experiences and qualifications are set out in section 3.5 of this Explanatory Memorandum. Details of Mr John Girdlestone’s experiences and qualifications are set out in section 6.7.1 of this Explanatory Memorandum;

• Mr Wu Pun Yan will be appointed Chairman of the Board; and

• Mr Ugo Cario3 and Mr Jack Tan will resign as Directors of the Company.

If any one of the Resolutions is not passed, the proposed acquisition will not proceed and none of the above described events will occur.

3 Mr Ugo Cario will remain with the Company in his capacity as CEO

.

PA

RT

C


or p

erso

nal u

se o

nly

19

4.5 Changes to the capital structureIf the proposed acquisition proceeds, the capital structure of the Company will change as follows

Rocklands Richfield Limited Capital Structure following Proposed Acquisition of CCS

ORDINARY SHARES A$

84,260,806 Existing holders 16,852,161

100,266,667 Ordinary Shares to Vendor (at current market of 20c) 20,053,333

106,666,667 Performance Shares to Vendor (at current market of 20c)4 21,333,333

291,194,140 Ordinary Shares $ 58,238,827

OPTIONS Potential Exercise A$

57,632,220 Existing options exercisable at 30c before 30 Nov 2009 17,289,666

100,266,667 Options to Vendor exercisable at 50c with 5 years of issue 50,133,334

106,666,667 Performance Options to Vendor exercisable at 50c within 5 years of issue5 53,133,333

1,500,000 Management Options3 450,000

266,065,554 Options 121,006,333

4 Assuming that all Performance Options are issued to the Vendor under the Performance Based Entitlement Agreement.

5 Comprised of 1,000,000 options proposed to be issued to Mr Ugo Cario under Resolution 8 and 500,000 options proposed to be issued by the Board to the general manger of explorations, Mr Viv Forbes, following the completion of the proposed acquisition. As Mr Forbes is not a related party of the Company no Shareholder approval is required in connection with the proposed issue of the Management Options to Mr Forbes.

4.6 Effect on working capital requirementsThe Directors believe that the arrangements put in place in connection with the proposed transaction will provide adequate short term working capital for the Company.

PA

RT

C


or p

erso

nal u

se o

nly

20

4.7 Effect on Financial PositionA draft pro forma consolidated balance sheet for the Company/CCS as at 30 April 2007, set out below, illustrates the effect that the acquisition is likely to have on the Company. This balance sheet assumes satisfaction of all conditions precedent to the acquisition and has been prepared on the basis of information provided by the Vendor to date and has not been audited.

ROCKLANDS RICHFIELD LIMITED GROUPBALANCE SHEET RCI ProformaApril 07 April 07 Consolidated unaudited unaudited

A$ A$

ASSETS Current Assets Cash 3,651,116 23,557,008Receivables 101,347 3,580,727Inventories 0 7,188,682Other 27,561 2,061,203

Total Current Assets 3,780,024 36,387,620

Non-Current Assets

Exploration & Evaluation Expenditure 3,721,370 3,721,370New Projects 90,249 90,249Fixed Assets 15,247 30,404,393Prepaid land lease payments 0 11,099,225Investment 0 0Purchased goodwill 0 13,682,806Future Tax Benefit 0 0

Total Non-Current Assets 3,826,866 58,998,043

Total Assets 7,606,890 95,385,663

LIABILITIES Current Liabilities Trade & Other Payables (86,777) (3,566,567)Other payables and accruals 0 (1,988,682)Short term borrowings 0 (15,263,876)

Total Current Liabilities (86,777) (20,819,125)

Non-Current Liabilities Other payables 0 (12,897,984)Long term borrowings 0 (21,233,953)Deferred Tax Liability 0 (1,893,488)

Total Non-Current Liabilities 0 (36,025,425)

Total Liabilities (86,777) (56,844,550)

Net Assets 7,520,113 38,541,113

EQUITY Equity attributable to Shareholders of Parent Issued Capital (15,211,832) (46,232,832)Cost of Share issue 1,092,667 1,092,667Reserves 0 0Retained Earnings 6,143,212 6,143,212Current Year Earnings 455,840 455,840

Parent Interests (7,520,113) (38,541,113)

Minority Interests 0 0

Total Equity (7,520,113) (38,541,113)

PA

RT

C


or p

erso

nal u

se o

nly

21

4.8 Proposed timetableThe current timetable for completion of the proposed acquisition is

as follows:

Event Indicative Timing

Notice of Meeting lodged with the ASIC and ASX 3 August 2007

Notice of Meeting despatched to Shareholders 17 August 2007

Prospectus lodged with ASIC in connection with the issue of Convertible Unsecured Notes

17 August 2007

General Meeting of Shareholders 18 September 2007

ASX Announcement – Results of Meeting 18 September 2007

The Company’s securities suspended from trading pursuant to Chapter 11 of ASX Listing Rules

18 September 2007

Completion of the proposed acquisition in accordance with the Share Purchase Agreement

18 September 2007

Completion of issue of Convertible Unsecured Notes 18 September 2007

ASX Announcement: Completion of Sale and Purchase 18 September 2007

Lodge the following with ASIC:

• ASIC Form 484

• Substantial Shareholder Notice

18 September 2007

The Company’s securities resume trading on the ASX 19 September 2007*

Apart from the date of the Meeting, the dates are indicative only and may be varied in the event of a change in circumstances not foreseen at this time. The Board reserves the right to vary the dates either by shortening or extending the dates, subject to the Corporations Act and the ASX Listing Rules.

*Shareholders are advised that the ability of the Company’s securities to resume trading on the ASX is in the discretion of the ASX and is dependent on the satisfaction by the Company of Chapters 1 & 2 of the ASX Listing Rules. Shareholders are referred to sections 6.3.3 and 6.3.4 of this Notice of Meeting for a further explanation of the Company’s requirement to satisfy Chapters 1 & 2 of the ASX Listing Rules.

5 ADVANTAGES, DISADVANTAGES AND RISKS5.1 AdvantagesThe Directors believe that the benefits for the Company if the proposed acquisition proceeds include:

• (A strengthened business) The Company will acquire an established and profitable business with an expanded and diversified business base. Any dividends generated from this new business will be utilised to augment the Company’s current cash holdings to enable it to complete the Company’s current exploration program and fast track the development of its tenements to coal producing status.

• (Improved access to capital) With a strengthened business model, the Company is likely to have better access to both debt and equity capital for the development of its coal tenements. Through its location in the Peoples Republic of China and excellent contacts in the Peoples Republic of China coal sector, CCS has the ability to assist in identifying and securing significant Peoples Republic of China investor interest to fund the significant development of the Company’s coal tenements.

• (Potential for sales growth) Dependent on the international price of coal, CCS may provide an international market for future coal production from the Company’s mines once developed. Through this downstream processing the Company may potentially benefit from both mining and coke processing margins.

• (Foothold in one of the world’s fastest growing economy) The Peoples Republic of China is experiencing GDP growth in excess of 10% per annum with very strong growth in the steel sector which is underpinned by this growth. Coke is an essential ingredient for steelmaking and as such the proposed acquisition of CCS provides a unique opportunity to participate in steel sector growth.

5.2 DisadvantagesThe disadvantages of the proposed acquisition proceeding include:

• (Dilution of current shareholdings) Current Shareholders will be materially diluted by the issue of Securities to the Vendor. The effect of the proposed acquisition and issue of Ordinary Shares and Options on the current equity position of the Company is set out in sections 4.4 and 4.5 of this Explanatory Memorandum. The Directors believe that the dilutory effect of the proposed acquisition will be offset at least in part by the increased size of the Company after acquisition together with the additional opportunities likely to be available to the Company as a result of the acquisition.

The Directors also note that the Independent Expert has taken into account the dilutory effect and has concluded that the proposed acquisition is fair and reasonable to the Shareholders.

• (Change of control) If the proposed acquisition proceeds, the Vendor will obtain a controlling interest in the Company.

• (Foreign Investment) Overseas shareholdings would increase unless more placements are made locally in the future.

PA

RT

C


or p

erso

nal u

se o

nly

22

5.3 RisksThe future performance of the Company, the future levels of dividends, the value of assets and the price at which the Company’s Ordinary Shares trade on the ASX, if the proposed acquisition proceeds, may be influenced by a range of factors, many of them outside the control of the Company and the Directors. These include market risk, movements in international and local stock markets, inflation, interest rates, currency fluctuations, general economic conditions and changes in government fiscal, monetary and regulatory policies.

Some of the material specific risk factors are set out below:

• (Integration risk) There are risks in being able to successfully integrate the two businesses. The primary integration issues to be addressed are the consolidation of operating centres, the elimination of duplicate corporate expenses and the remote management of offshore assets. The ability of the Company to realize these challenges as soon as possible will have an effect on the financial performance of the Company after the proposed acquisition and on the value of the Ordinary Shares post proposed acquisition.

• (Operational risk) Failure to adequately perform contractual obligations and any loss or change to customers or suppliers may have a material adverse effect on the expanded financial performance or position.

• (Limited operating track record) As the coke business was acquired by CY (Huaibei) in May 2003, the company has a short operating record for due diligence assessment. Prior to and after acquisition, the coke business has incurred losses and the management of CCS cannot assure that the business enterprise will continue to be successful or profitable in the future. This is dependant upon future coke and coal prices.

• (Management team) The CCS management team has been with the group for a short period of time. Although each member of the management team has considerable experience in related fields of coke production, there is no assurance that the management team will continue to function effectively as a team in the long term. Company performance will be affected if the management team is not able to function effectively for any reason.

• (Raw material cost) The prices at which CY (Huaibei) purchases raw material, metallurgical coal, are based on prevailing prices which are affected by market demand and supply conditions in the coal industry and may fluctuate from time to time.

Prices of metallurgical coal may also increase rapidly due to intervening factors such as industrial disruption and higher government duties and taxes and shortages. In addition, prices may be affected by the demand for other coal types in other industries such as the energy industry where power plants use thermal coal. Coal mines may increase production of thermal coal as an alternative to metallurgical

coal to alleviate power shortages. In the event that there are substantial increases in the purchase cost of metallurgical coal, and the company is unable to pass on the price to customers, the cost of sales will increase without a corresponding increase in the company’s revenue and accordingly, gross margins will be adversely affected.

• (Price of Coke) Coke is a commodity and its price is primarily determined by market demand and supply, both in the Peoples Republic of China and internationally. The selling price of CY(Huaibei) coke output are predominantly determined by prevailing market conditions in the Peoples Republic of China and such prices are generally lower than, but move in line with, international prices of coke.

During the last three years, the selling price of coke and coke by products have significantly fluctuated. CCS cannot assure that the selling prices of coke (and by products) will be sustainable in the future or that they will not decline. CCS’s financial performance will be adversely affected if there is a significant decrease in the selling prices of CY(Huaibei)’s products.

• (Dependence on the iron and steel industry) Coke is an important component in the manufacture of pig iron which is an essential element to the manufacture of steel. CY(Huaibei) coke product is mostly sold to iron and steel producers. The iron and steel industry is regulated to a large extent by the government of the Peoples Republic of China via policies designed to control the overall production capacity of steel production. In the past the government of the Peoples Republic of China has imposed policies to reduce the number of obsolete coke ovens as well as those which do not meet criteria related to environmental standards.

There is no assurance that the government of the Peoples Republic of China will not in the future introduce or implement any other changes or regulations affecting the iron and steel industry or other related industries. Unfavourable changes in the economic condition, or in the regulatory environment, of the iron and steel industry or other related industries in the Peoples Republic of China, such as a decrease in the number of players due to industry consolidation or government intervention, may have a negative impact on CY(Huaibei) sales and therefore affect overall financial performance.

• (Competition) CY (Huaibei)’s main product, coke, is a commodity and CY (Huaibei) operates in a highly competitive environment. There are many coke producers in the Peoples Republic of China and market players usually compete on pricing, types of coke and coke quality, timeliness of delivery, responsiveness, reliability and track record. There is no assurance that competition will not intensify and that CY (Huaibei) will continue to compete successfully in the future. CY (Huaibei) will not be able to maintain market position if existing competitors or new competitors are able to price products more attractively, deliver more efficiently, or have greater access to capital resources, higher production capacity better production techniques. CY (Huaibei)’s inability to remain competitive in the future will adversely and materially affect its business and operating results.

PA

RT

C


or p

erso

nal u

se o

nly

23

• (Contamination) The Company has not undertaken any due diligence in connection with the environmental condition of the land on which the coke plant is situated or in relation to adjoining land. It is possible that the profitability of CY (Huaibei) and CCS may be affected in the event of any environmental liability or the need to defend any action taken by others in relation to human health and environmental impact in connection with the plant. The following environmental risks may be associated with the past operation of the plant:

• The soil on the site on which the plant is operated may be contaminated. CY (Huaibei) may be required to clean up any such contamination.

• Groundwater may become contaminated. The risk becomes extreme if groundwater (or receiving waters) is contaminated (above internationally accepted guidelines design to protect human health and the environment) and is used for beneficial uses such as crop irrigation, potable water.

• Coal stored in the open can generate significant respirable airborne dust which depending on the age of the facility, size, management and proximity to residents could be potentially impact human health.

To the extent that procedures have not already been established, the Company will seek to implement policies to minimize the impact of contamination and environmental issues following Completion.

• (Continuous Production) It is critical to ensure continuous coke production process as a coke oven must be kept burning continuously with minimal disruption and any stoppages will result in malfunction of a coke oven which may be irreparable. In the event that the coke production process is disrupted or has to be stopped due to unavailability of metallurgical coal, power failure, or any other reason, CY (Huaibei)’s coke ovens may be damaged to an irreparable extent and accordingly, production capacity and financial performance will be adversely affected.

• (Tax consequences for Shareholders) There may be taxation effects in the event that the proposed acquisition is approved. The taxation effect will vary depending on the individual circumstances of each Shareholder. Shareholders who are uncertain as to the tax consequences of approving the proposed acquisition should seek independent taxation advice.

• (Tax consequences for the Company)

The following is a summary of the expected taxation consequences for the Company if the acquisition proceeds.

The Company has obtained advice that:

(a) in Bermuda

• no stamp duty is payable on the transfer of the CCS shares to the Company;

• thin capitalization rules do not apply; and

• no withholding tax is payable on dividend income paid to the Company by CCS.

(b) in the Peoples Republic of China (PRC)

• no stamp duty is payable on the transfer of the CCS shares to the Company;

• under the current PRC policy, there is no withholding tax on dividends paid by CY (Huaibei) to CCS. However, this current policy may change in the future; and

• the PRC imposes a debt to equity ratio on foreign investment enterprises, with the amount of permitted debt being the difference between the total investment and the registered capital.

(c) in Australia

• If the proposed acquisition proceeds CCS, will become a subsidiary of the Company and a controlled foreign corporation (CFC) for the purpose of Part X of the Income Tax Assessment Act 1936 (the Act). However, it is expected that the central management and control of CCS will remain outside Australia, so that CCS will not become an Australian resident for income tax purposes. Accordingly, dividends declared by CCS in favour of the Company will be treated as exempt from income tax in Australia by virtue of the provisions of Section 23AJ of the Act.

5.4 Consequences if the proposed acquisition does not proceedIf the proposed acquisition does not proceed:

• (No change to business model) There will be no change to the Company’s business or business model.

• (Fast tracking development of coal tenements to production will be constrained) The Company’s ability to fast track its exploration and mining feasibility as a precursor to full production on one or more of its coal tenements will be limited to existing funds. Future access to new capital through borrowings or issue of new shares will be required to enable this to be accomplished.

• (Access to new capital) The Company’s ability to access new capital and or borrowings may be limited.

• (Limit new opportunities) The Company may be constrained by limited funds in finding and securing title to new resource opportunities.

• (No dilution of existing Shareholders) The existing Shareholders will not be diluted by the issue of additional Securities and control of the Company will not pass to the Vendor.

PA

RT

C


or p

erso

nal u

se o

nly

24

6. EXPLANATORY NOTES TO RESOLUTIONS6.1 Resolution 1Resolution 1 seeks the approval of the Shareholders for the issue of 100,266,667 Ordinary Shares and 100,266,667 Options to Mr Wu Pun Yan in accordance with the Share Purchase Agreement.

The requirement for Shareholder approval of the proposed issue described in Resolution 1 arises under Sections 208 and 611, Item 7 of the Corporations Act.

6.1.1 Section 208 of the Corporations ActThe issue of 100,266,667 Ordinary Shares and 100,266,667 Options to Mr Wu Pun Yan will constitute the giving of a financial benefit to a related party of the Company, for which Shareholder approval is usually required pursuant to subsection 208(1) of the Corporations Act.

There are various exceptions to the requirement for Shareholder approval. This includes, in accordance with section 210 of the Corporations Act, where the giving of the financial benefit:

(a) would be reasonable in the circumstances if the public company or entity and the related party were dealing at arms length; or

(b) are less favourable to the related party that the terms referred to in paragraph (a).

The terms of the Share Purchase Agreement have been extensively negotiated between the Company and the Vendor at arms length. Each party has engaged the services of, and been individually represented by, lawyers in the negotiations and the Directors unanimously believe that the terms of the Share Purchase Agreement and each other Transaction Document are reasonable in the circumstances. On this basis, it follows that Shareholder approval is not required under section 208 of the Corporations Act.

Notwithstanding, in the interests of due and proper disclosure, through Resolution 1, the Company is seeking the approval of Shareholders to the issue of 100,266,667 Ordinary Shares and 100,266,667 Options to Mr Wu Pun Yan for the purposes of section 208 of the Corporations Act.

Section 219 of the Corporations Act requires that the following information is set out in, or accompanies, the Notice of Meeting at which a resolution is to be considered:

Requirement Explanation1 The related parties to whom the proposed resolution

would permit the financial benefits to be given.Mr Wu Pun Yan. Further details on Mr Wu Pun Yan are provided in section 3.5 of Part C of this Notice of Meeting.

2 The nature of the financial benefits. Subject to the approval of Shareholders, Mr Wu Pun Yan will be issued 100,266,667 Ordinary Shares and 100,266,667 Options under Resolution 1.

3 In relation to each Director of the Company:

• if the Director wanted to make a recommendation to members about the proposed resolution – the recommendation and his or her reasons for it; or

• if not, why not; or

• if the director was not available to consider the proposed resolution - why not.

Each Director recommends that Shareholders vote in favour of Resolution 1.

Each Director believes that the proposed acquisition is in the best interests of the Company as:

• The proposed acquisition provides operational, financial and strategic benefits to the Company and Shareholders as a whole; and

• The Independent Expert, has concluded that in its opinion the proposed acquisition is fair and reasonable to the Shareholders.

Each Director intends to vote in favour of Resolution 1 in respect of the Ordinary Shares that they hold.

PA

RT

C


or p

erso

nal u

se o

nly

25

Requirement Explanation4 In relation to each such Director:

• whether the Director had an interest in the outcome of the proposed resolution; and

• if so, what it was.

Other than as holders of the following Securities, the Directors have no interest in the outcome of Resolution 1:

Hung Kwang Hou7,000,000 non-restricted ordinary shares; and

7,000,000 non-restricted options, vest 1 May 2009, exercisable at 30c before 30 November 2009.

Ugo Cario250,000 non-restricted ordinary shares; and

250,000 non-restricted options, vest 1 May 2009, exercisable at 30c before 30 November 2009.

Kit Foo Chye852,000 non-restricted ordinary shares;

1,619,000 restricted to 6 March 2008 ordinary shares; and

404.750 restricted to 6 March 2008 options, vest 1 May 2009, exercisable at 30c before 30 November 2009.

Jack Tan556,333 non-restricted ordinary shares;

139,083 non-restricted options, vest 1 May 2009, exercisable at 30c before 30 November 2009;


291,000 restricted to 6 March 2008 options, vest 1 May 2009 exercisable at 30c before 30 November 2009.

No payment or other benefit has been given or is proposed to be given to any Director or to any associate of the Director in connection with or conditional upon the outcome of Resolution 1.

No agreement or arrangement has been made between any Director or with any associate of a Director in connection with or conditional upon the outcome of Resolution 1.

There has been no dealings in Securities by Directors or any of their associates in the four months to the date of this Notice of Meeting.

5 All other information that:

• is reasonably required by members in order to decide whether or not it is in the company’s interest to pass the proposed resolution; and

• is known to the company or to any of its directors.

Shareholders are advised to carefully and fully read the Notice of Meeting (including this Explanatory Memorandum and the Independent Expert’s Report).

PA

RT

C


or p

erso

nal u

se o

nly

26

6.1.2 Section 611, Item 7 of the Corporations ActThe issue of 100,266,667 Ordinary Shares and 100,266,667 Options to Mr Wu Pun Yan will constitute the acquisition of a relevant interest in more than 20% of the issued voting shares of the Company.

Subsection 606(1) of the Corporations Act prohibits an acquisition of a relevant interest in issued voting shares by a person in a company if the company is a listed company, and through a transaction entered into by the person in relation to securities, that person’s voting power in the company increases from 20% or below to more than 20%.

Section 611 of the Corporations Act sets out various exemptions to the prohibition. Section 611, Item 7 provides that an acquisition will be exempted from the prohibition if approved by a resolution passed at a general meeting of the company in which the acquisition is made, in accordance with the requirements of section 611, Item 7.

Resolution 1 seeks the approval of Shareholders to the issue of 100,266,667 Ordinary Shares and 100,266,667 Options (including an allotment of 100,266,667 Ordinary Shares under the Options) to Mr Wu Pun Yan for the purposes of section 611, Item 7.

Section 611, Item 7 of the Corporations Act requires that the Shareholders be given all information known to the person proposing to make the acquisition or their associates, or known to the company, that is material to the decision on how to vote on the resolution. Section 611, Item 7 includes, as a guide information in relation to the following:

Requirement Explanation1 The identity of the person proposing to

make the acquisition and their associates.Mr Wu Pun Yan. Further details in relation to Wu Pun Yan are provided in section 3.5 of this Explanatory Memorandum.

2 The maximum extent of the increase in that person’s voting power in the company that would result from the acquisition.

The issue of 100,266,667 Ordinary Shares and 100,266,667 Options in accordance with Resolution 1 will result in an increase of the voting power of the Vendor from 0% to 54.3% on an undiluted basis and from 0% to up to 58.3% on a fully diluted basis.

However, Shareholders should be aware that in the event that Resolution 1 is Effectively Passed, Resolution 2 will result in the issue of a further 106,666,667 Ordinary Shares and 106,666,667 Options under the Performance Based Entitlement Agreement.

Subject to the rights of the Company to buy-back those further Ordinary Shares and Options under the Performance Based Entitlement Agreement, the issue of these further Ordinary Shares and Options will effectively result in the Vendor increasing its voting power from 0% to 71.1% on an undiluted basis from 0% to up to 74.3% on a fully diluted basis.

3 The voting power that person would have as a result of the acquisition.

The issue of 100,266,667 Ordinary Shares and 100,266,667 Options in accordance with Resolution 1 will result in a voting power of the Vendor of 54.3% on an undiluted basis and up to 58.3% on a fully diluted basis.


Subject to the rights of the Company to buy-back those further Ordinary Shares and Options under the Performance Based Entitlement Agreement, the issue of these further Ordinary Shares and Options will result in the Vendor having a voting power of 71.1% on an undiluted basis and up to 74.3% on a fully diluted basis.

PA

RT

C


or p

erso

nal u

se o

nly

27

Requirement Explanation4 The maximum extent of the increase in

the voting power of each of that person’s associates that would result from the acquisition.

Subsection 12(2) provides that for the purposes of the application of the associate reference in relation to the designated body, a person (second person) is an associate of the primary person if, and only if, one or more of the following paragraphs applies:

(a) the primary person is a body corporate and the second person is:

(i) a body corporate the primary person controls; or

(ii) a body corporate that controls the primary person; or

(iii) a body corporate that is controlled by an entity that controls the primary person;

(b) the second person is a person with whom the primary person has, or proposes to enter into, a relevant agreement for the purpose of controlling or influencing the composition of the designated body’s board or the conduct of the designated body’s affairs;

(c) the second person is a person with whom the primary person is acting, or proposing to act, in concert in relation to the designated body’s affairs.

Mr Wu Pun Yan has advised the Company that he has no associate (within the meaning of that term in subsection 12(2) of the Corporations Act) holding Securities in the Company.

5 The voting power that each of that person’s associates would have as a result of the acquisition.


ASIC Regulatory Guide 74 sets out the following additional information which should be considered by Shareholders for the purpose of approving an acquisition under section 611, Item 7:

Requirement Explanation1 The identity of the allottee or purchaser

and any person who will have a relevant interest in the shares to be allotted or purchased.

Mr Wu Pun Yan will be the allottee of the Ordinary Shares and Options issued under Resolution 1. Further details in relation to Wu Pun Yan are provided in section 3.4 of this Explanatory Memorandum.

Subsection 608(1) provides that a person has a relevant interest in securities if they:

(a) are the holder of the securities; or

(b) have power to exercise, or control the exercise of, a right to vote attached to the securities; or

(c) have power to dispose of, or control the exercise of a power to dispose of, the securities.

It does not matter how remote the relevant interest is or how it arises. If 2 or more people can jointly exercise one of these powers, each of them is taken to have that power.

Mr Wu Pun Yan has advised the Company that no person other than himself will have a relevant interest (within the meaning of that term in subsection 608(1) of the Corporations Act) in the Ordinary Shares and Options proposed to be issued under Resolution 1.

PA

RT

C


or p

erso

nal u

se o

nly

28

Requirement Explanation2 Full particulars (including the number

and the percentage) of the shares in the company to which the allottee or purchaser is or will be entitled immediately before and after the proposed acquisition.

Mr Wu Pun Yan does not currently have an entitlement to any Securities in the capital of the Company.

In the event that that Resolution 1 is passed, Mr Wu Pun Yan will be entitled to the following Securities:

• 100,266,667 Ordinary Shares;

• 100,266,667 Options (convertible into 100,266,667 Ordinary Shares under the Options).

The Securities issued in accordance with Resolution 1 will result in the Vendor acquiring of 54.3% of the capital of the Company on an undiluted basis and up to 58.3% on a fully diluted basis.


Subject to the rights of the Company to buy-back those further Ordinary Shares and Options under the Performance Based Entitlement Agreement, the issue of these further Ordinary Shares and Options will result in the Vendor being entitled to the following total number of Securities:

• 206,533,334 Ordinary Shares; and

• 206,533,334 Options (convertible into 206,533,334 Ordinary Shares under the Options)

This means that the Securities issued in accordance with Resolutions 1 and 2 will result in the Vendor acquiring 71.1% of the capital of the Company on an undiluted basis and up to 74.3% on a fully diluted basis.

3 The identity, associations (with the allottee, purchaser or vendor, and with any of their associates) and qualifications of any person who it is intended will become a director if shareholders agree to the allotment or purchase.

This information is provided in section 3.4 of this Explanatory Memorandum.

4 A statement of the allottee’s or purchaser’s intentions regarding the future of the company if the shareholders agree to the allotment or purchase and in particular:..any intention to change the business of the company;

(a) any intention to inject further capital into the company, and if so, how;

(b) the future employment of the present employees of the company;

(c) any proposal whereby any property will be transferred between the company and the allottee, vendor or purchaser or any person associated with any of them; and

(d) any intention to otherwise redeploy the fixed assets of the company.

(a) The allottee has confirmed that there will be no change to the exploration activities of the Company nor the production of coke from the Huaibei plant.

(b) Further capital injection will be required to fully develop the Queensland coal tenements to production status and also for the increase in the production capacity of the Hauibei plant. The capital requirements will be initially funded through profits with any balance via debt, strategic partnerships with future investors, or access to the capital markets.

(c) The allottee considers the employees of the company to be an experienced and valuable resource necessary to realise the future potential of the Company. As such their employment will continue without disruption.

(d) No property owned by the Company will be transferred between the Company and the allottee or vendor or any associated person.

(e) There is no intention on behalf of the allottee to redeploy the fixed assets of the Company.

PA

RT

C


or p

erso

nal u

se o

nly

29

Requirement Explanation5 Particulars of the terms of the proposed

allotment or purchase and any other contract between the allottee or the purchaser and the company or the vendor or any of their associates which is conditional upon, or directly or indirectly dependent on, shareholders agreement to the allotment or purchase.

This information is set out in section 4.1, 4.2 and 4.3 of this Explanatory Memorandum.

6 When the allotment is to be made or the purchase is to be completed.

On the date of satisfaction or waiver of all Conditions Precedent.

7 An explanation of the reason for the proposed allotment.

The Ordinary Shares and Options are issued in part consideration of the purchase by the Company of all of the shares in the capital of CCS.

8 The interests of the directors in the proposed resolution.














No agreement or arrangement has been made between any Director or to any associate of the director in connection with or conditional upon the outcome of Resolution 1.


9 In the case of a listed company, any additional information that the Listing Rules require be disclosed.

The ASX Listing Rules do not provide for any additional disclosure requirements in connection with Resolution 1 (see sections 6.1.3 and 6.1.4 of this Explanatory Memorandum).

PA

RT

C


or p

erso

nal u

se o

nly

30

Requirement Explanation10 The identity of the directors who approved

or voted against the proposal to put the resolution to shareholders and the relevant information memorandum.

Mr Hung Kwang Hou, Mr Ugo Cario, Mr Kit Foo Chye and Mr Jack Tan voted unanimously to put Resolution 1 to Shareholders and have approved the Explanatory Memorandum in the Notice of Meeting.

11 The recommendation or otherwise of each director as to whether non-associated shareholders should agree to the acquisition, and the reasons for that recommendation or otherwise.






12 Any intention of the acquirer to change significantly the financial or dividend policies of the company.

Financial and dividend policy will be determined by the board following the acquisition.

13 An analysis of whether the proposal is fair and reasonable when considered in the context of the interests of, the shareholders other than those involved in the proposed allotment or purchase or associated with such persons (“non-associated shareholders).

The Directors have engaged an independent expert, BDO Kendalls, to undertake an analysis of whether the proposed acquisition is fair and reasonable when considered in the context of the interests of, the Shareholders (other than those involved in the proposed allotment or purchase or associated with such persons).

BDO Kendalls has concluded that the proposed acquisition is fair and reasonable to the Shareholders.

A copy of the report of BDO Kendalls is contained in Part E of the Notice of Meeting.

6.1.3 Rule 7.1 of the ASX Listing RulesASX Listing Rule 7.1 provides that without the approval of holders of ordinary securities, an entity must not issue or agree to issue more equity securities than the number calculated according to the formula set out in ASX Listing Rule 7.1.

In effect, the rule requires that the approval of the holders of ordinary securities be obtained in respect of any proposal to issue more equity securities in any 12 month period than the number which exceeds 15% of the number of fully paid ordinary securities on issue 12 months before the date of the issue or agreement (as determined in accordance with the formula set out in ASX Listing Rule 7.1).

ASX Listing Rule 7.2 sets out various exemptions to ASX Listing Rule 7.1. ASX Listing Rule 7.2, Exception 16 provides that ASX Listing Rule 7.1 does not apply to an issue of securities approved for the purposes of Item 7 of section 611 of the Corporations Act.

Approval for the purposes of Item 7 of section 611 of the Corporations Act to the issue of 100,266,667 Ordinary Shares and 100,266,667 Options to Mr Wu Pun Yan is sought in Resolution 1. It follows that approval is not required under ASX Listing Rule 7.1.

6.1.4 Rule 10.1 of the ASX Listing RulesASX Listing Rule 10.1 provides that without the approval of holders of ordinary securities, an entity must ensure that neither it, nor any of its child entities, acquires a substantial asset from a related party.

ASX Listing Rule 10.2 provides that an asset is substantial if its value, or the value of consideration for it is, or in ASX’s opinion is, 5% or more of the equity interests of the entity as set out in the latest account given to the ASX under the listing rules.

Chapter 19 of the ASX Listing Rules provides that a related party has the same meaning given in section 228 of the Corporations Act. Section 229 of the Corporations Act defines a related party as:

1. An entity that controls a public company is a related party of the public company.

2. The following persons are related parties of a public company: a. directors of the public company; b. directors (if any) of an entity that controls the public company; c. if the public company is controlled by an entity that is not a body

corporate--each of the persons making up the controlling entity; d. spouses and de facto spouses of the persons referred to in

paragraphs (a), (b) and (c).

PA

RT

C


or p

erso

nal u

se o

nly

31

3. The following relatives of persons referred to in subsection (2) are related parties of the public company: a. parents; b. children.

4. An entity controlled by a related party referred to in subsection (1), (2) or (3) is a related party of the public company unless the entity is also controlled by the public company.

5. An entity is a related party of a public company at a particular time if the entity was a related party of the public company of a kind referred to in subsection (1), (2), (3) or (4) at any time within the previous 6 months.

6. An entity is a related party of a public company at a particular time if the entity believes or has reasonable grounds to believe that it is likely to become a related party of the public company of a kind referred to in subsection (1), (2), (3) or (4) at any time in the future.

7. An entity is a related party of a public company if the entity acts in concert with a related party of the public company on the understanding that the related party will receive a financial benefit if the public company gives the entity a financial benefit.

The shares in the capital of CCS are a substantial asset for the purposes of ASX Listing Rule 10.1. Similarly, the Vendor, by reason of subsection 228(6) will be deemed to be a related party.

However, ASX Listing Rule 10.3 provides that ASX Listing Rule 10.1 does not apply to a transaction between the entity and a person who is a related party by reason only of the transaction and the application to it of subsection 228(6).

The only reason the Vendor is a related party of the Company is by reason of the application to it of subsection 228(6).

It follows that in the absence of any other subsection in section 228 applying to the Vendor, that approval of Resolution 2 is not required for the purpose of ASX Listing Rule 10.1.

6.2 Resolution 2

Resolution 2 seeks the approval of the Shareholders for the issue of 106,666,667 Ordinary Shares and 106,666,667 Options to Mr Wu Pun Yan in accordance with the Performance Based Entitlement Agreement.

The requirement for Shareholder approval of the proposed issue described in Resolution 2 arises under Sections 208 and 611, Item 7 of the Corporations Act.

6.2.1 Section 208 of the Corporations ActThe issue of 106,666,667 Ordinary Shares and 106,666,667 Options to Mr Wu Pun Yan will constitute the giving of a financial benefit to a related party of the Company, for which Shareholder approval is usually required pursuant to subsection 208(1) of the Corporations Act.

There are various exceptions to the requirement for Shareholder approval. This includes, in accordance with section 210 of the Corporations Act, where the giving of the financial benefit:

(a) would be reasonable in the circumstances if the public company or entity and the related party were dealing at arms length; or

(b) are less favourable to the related party that the terms referred to in paragraph (a).

The terms of the Performance Based Entitlement Agreement have been extensively negotiated between the Company and the Vendor at arms length. Each party has engaged the services of, and been individually represented by, lawyers in the negotiations and the Directors unanimously believe that the terms of the Performance Based Entitlement Agreement and each other Transaction Document are reasonable in the circumstances. On this basis, it follows that Shareholder approval is not required under section 208 of the Corporations Act.

Notwithstanding, in the interests of due and proper disclosure, Resolution 2 is seeking the approval of Shareholders to the issue of 106,666,667 Ordinary Shares and 106,666,667 Options to Mr Wu Pun Yan for the purposes of section 208 of the Corporations Act.


Requirement Explanation1 The related parties to whom the proposed

resolution would permit the financial benefits to be given.

Mr Wu Pun Yan. Further details on Mr Wu Pun Yan are provided in section 3.4 of this Explanatory Memorandum.

2 The nature of the financial benefits. Subject to the approval of Shareholders, Mr Wu Pun Yan will be issued 106,666,667 Ordinary Shares and 106,666,667 Options under Resolution 2.

PA

RT

C


or p

erso

nal u

se o

nly

32

Requirement Explanation3 In relation to each Director of the

Company:









4 In relation to each such Director:

















There has been no dealings in Securities by Directors or any of their associates in the last four months.




Shareholders are advised to carefully and fully read the Notice of Meeting (including this Explanatory Memorandum and the Independent Expert’s Report).

PA

RT

C


or p

erso

nal u

se o

nly

33

Requirement Explanation1 The identity of the person proposing to

make the acquisition and their associates.Mr Wu Pun Yan. Further details in relation to Wu Pun Yan are provided in section 3.4 of this Explanatory Memorandum.

2 The maximum extent of the increase in that person’s voting power in the company that would result from the acquisition.

The issue of 100,266,667 Ordinary Shares and 100,266,667 Options in accordance with Resolution 1 will result in an increase of the voting power of the Vendor from 0% to 54.3% on an undiluted basis and from 0% up to 58.3% on a fully diluted basis.

The issue of 106,666,667 Ordinary Shares and 106,666,667 Options in accordance with Resolution 2 will, subject to any cancellation of those Ordinary Shares and lapse of Options under the Performance Based Entitlement Agreement, result in the Vendor increasing its voting power from 54.3% to 71.1% on an undiluted basis from 58.3% up to 74.3% on a fully diluted basis.

3 The voting power that person would have as a result of the acquisition.

The issue of 100,266,667 Ordinary Shares and 100,266,667 Options in accordance with Resolution 1 will result in a voting power of the Vendor of 54.3% on an undiluted basis and up to 58.3% on a fully diluted basis.

The issue of 106,666,667 Ordinary Shares and 106,666,667 Options in accordance with Resolution 2 will, subject to any cancellation of those further Ordinary Shares and lapse of Options under the Performance Based Entitlement Agreement, result in the Vendor having a voting power of 71.1% on an undiluted basis and up to 74.3% on a fully diluted basis.

6.2.2 Section 611, Item 7 of the Corporations ActThe issue of 106,666,667 Ordinary Shares and 106,666,667 Options to Mr Wu Pun Yan will constitute the acquisition of a relevant interest in more than 20% of the issued voting shares of the Company.

Subsection 606(1) of the Corporations Act prohibits an acquisition of a relevant interest in issued voting shares by a person in a company if the company is a listed company, and through a transaction entered into by the person in relation to securities, that person’s voting power in the company increases from 20% or below to more than 20%.

Section 611 of the Corporations Act sets out various exemptions to the prohibition. Section 611, Item 7 provides that an acquisition will be exempted from the prohibition if approved by a resolution passed at a general meeting of the company in which the acquisition is made, in accordance with the requirements of section 611, Item 7.

Resolution 2 seeks the approval of Shareholders to the issue of 106,666,667 Ordinary Shares and 106,666,667 Options (including an allotment of 106,666,667 Ordinary Shares under the Options) to Mr Wu Pun Yan for the purposes of section 611, Item 7.

Section 611, Item 7 of the Corporations Act requires that the Shareholders be given all information known to the person proposing to make the acquisition or their associates, or known to the company, that is material to the decision on how to vote on the resolution. Section 611, Item 7 includes, as a guide information in relation to the following:

PA

RT

C


or p

erso

nal u

se o

nly

34

4 The maximum extent of the increase in the voting power of each of that person’s associates that would result from the acquisition.

Subsection 12(2) provides that for the purposes of the application of the associate reference in relation to the designated body, a person (second person) is an associate of the primary person if, and only if, one or more of the following paragraphs applies:

(a) the primary person is a body corporate and the second person is:

(iv) a body corporate the primary person controls; or

(v) a body corporate that controls the primary person; or

(vi) a body corporate that is controlled by an entity that controls the primary person;

(b) the second person is a person with whom the primary person has, or proposes to enter into, a relevant agreement for the purpose of controlling or influencing the composition of the designated body’s board or the conduct of the designated body’s affairs;

(c) the second person is a person with whom the primary person is acting, or proposing to act, in concert in relation to the designated body’s affairs.


5 The voting power that each of that person’s associates would have as a result of the acquisition.


ASIC Regulatory Guide 74 sets out the following additional information which should be considered by Shareholders for the purpose of approving an acquisition under section 611, Item 7:

Requirement Explanation1 The identity of the allottee or purchaser

and any person who will have a relevant interest in the shares to be allotted or purchased.

Mr Wu Pun Yan will be the allottee of the Ordinary Shares and Options issued under Resolution 2. Further details in relation to Wu Pun Yan are provided in section 3.4 of this Explanatory Memorandum.

Subsection 608(1) provides that a person has a relevant interest in securities if they:

(d) are the holder of the securities; or

(e) have power to exercise, or control the exercise of, a right to vote attached to the securities; or

(f) have power to dispose of, or control the exercise of a power to dispose of, the securities.

It does not matter how remote the relevant interest is or how it arises. If 2 or more people can jointly exercise one of these powers, each of them is taken to have that power.

Mr Wu Pun Yan has advised the Company that no person other than himself will have a relevant interest (within the meaning of that term in subsection 608(1) of the Corporations Act) in the Ordinary Shares and Options proposed to be issued under Resolution 2.

Requirement Explanation

PA

RT

C


or p

erso

nal u

se o

nly

35

Requirement Explanation2 Full particulars (including the number

and the percentage) of the shares in the company to which the allottee or purchaser is or will be entitled immediately before and after the proposed acquisition.

Mr Wu Pun Yan does not currently have an entitlement to any Securities in the capital of the Company.

In the event that that Resolution 1 is passed, Mr Wu Pun Yan will be entitled to the following Securities:

• 100,266,667 Ordinary Shares;

• 100,266,667 Options (convertible into 100,266,667 Ordinary Shares under the Options).

The Securities issued in accordance with Resolution 1 will result in the Vendor acquiring of 54.3% of the capital of the Company on an undiluted basis and up to 58.3% on a fully diluted basis.

However, in the event that Resolution 2 is passed, subject to any cancellation of those further Ordinary Shares and lapse of Options under the Performance Based Entitlement Agreement, the issue of 106,666,667 Ordinary Shares and 106,666,667 Options under Resolution 2 will result in the Vendor being entitled to the following total number of Securities:

• 206,533,334 Ordinary Shares; and

• 206,533,334 Options (convertible into 206,533,334 Ordinary Shares under the Options)

This means that the Securities issued in accordance with Resolutions 1 and 2 will result in the Vendor acquiring 71.1% of the capital of the Company on an undiluted basis and up to 74.3% on a fully diluted basis.

3 The identity, associations (with the allottee, purchaser or vendor, and with any of their associates) and qualifications of any person who it is intended will become a director if shareholders agree to the allotment or purchase.

This information is provided in section 3.4 of this Explanatory Memorandum.

4 A statement of the allottee’s or purchaser’s intentions regarding the future of the company if the shareholders agree to the allotment or purchase, and in particular:

(a) any intention to change the business of the company;

(b) any intention to inject further capital into the company, and if so, how;

(c) the future employment of the present employees of the company;

(d) any proposal whereby any property will be transferred between the company and the allottee, vendor or purchaser or any person associated with any of them; and

(e) any intention to otherwise redeploy the fixed assets of the company.

The allottee has confirmed that there will be no change to the exploration activities of the Company nor the production of coke from the Huaibei plant.

(b) Further capital injection will be required to fully develop the Queensland coal tenements to production status and also for the increase in the production capacity of the Huaibei plant. The capital requirements will be initially funded through profits with any balance via debt, strategic partnerships with future investors, or access to the capital markets.

(c) The allottee considers the employees of the company to be an experienced and valuable resource necessary to realise the future potential of the Company. As such their employment will continue without disruption.

(d) No property owned by the Company will be transferred between the Company and the allottee or vendor or any associated person.

(e) There is no intention on behalf of the allottee to redeploy the fixed assets of the Company.

PA

RT

C


or p

erso

nal u

se o

nly

36

Requirement Explanation5 Particulars of the terms of the proposed

allotment or purchase and any other contract between the allottee or the purchaser and the company or the vendor or any of their associates which is conditional upon, or directly or indirectly dependent on, shareholders agreement to the allotment or purchase.

This information is set out in section 4.1, 4.2 and 4.3 of this Explanatory Memorandum.

6 When the allotment is to be made or the purchase is to be completed.

On the date of satisfaction or waiver of all Conditions Precedent.

However, Shareholders should note that it is proposed that the Performance Shares and Performance Options will be issued on Completion and held in escrow by a third party pending release to the Vendor subject to satisfaction of the performance requirements set out in section 4.1 of Part C of this Notice of Meeting. To the extent that there has been an issue of Performance Shares and Performance Options in excess of the entitlement of the Vendor, the excess Ordinary Shares will be forfeited and immediately cancelled by the Company and the excess Options will lapse.

7 An explanation of the reason for the proposed allotment.

The Ordinary Shares and Options are issued pursuant to the terms of the Performance Based Entitlement Agreement. Further information is provided in section 4.1 of this Explanatory Memorandum.

PA

RT

C


or p

erso

nal u

se o

nly

37

Requirement Explanation8 The interests of the directors in the

proposed resolution.Other than as holders of the following Securities, the Directors have no interest in the outcome of Resolution 2:















9 In the case of a listed company, any additional information that the Listing Rules require be disclosed.

The ASX Listing Rules do not provide for any additional disclosure requirements in connection with Resolution 2 (see sections 6.2.3 and 6.2.4 of this Explanatory Memorandum).

10 The identity of the directors who approved or voted against the proposal to put the resolution to shareholders and the relevant information memorandum.

Mr Hung Kwang Hou, Mr Ugo Cario, Mr Kit Foo Chye and Mr Jack Tan voted unanimously to put Resolution 2 to Shareholders and have approved the Explanatory Memorandum in the Notice of Meeting.

PA

RT

C


or p

erso

nal u

se o

nly

38

Requirement Explanation11 The recommendation or otherwise

of each director as to whether non-associated shareholders should agree to the acquisition, and the reasons for that recommendation or otherwise.






12 Any intention of the acquirer to change significantly the financial or dividend policies of the company.

The financial and dividend policy of the Company will be determined by the board following the acquisition.

13 An analysis of whether the proposal is fair and reasonable when considered in the context of the interests of, the shareholders other than those involved in the proposed allotment or purchase or associated with such persons (“non-associated shareholders).

The Directors have engaged an independent expert, BDO Kendalls, to undertake an analysis of whether the proposed acquisition is fair and reasonable when considered in the context of the interests of, the Shareholders (other than those involved in the proposed allotment or purchase or associated with such persons).

BDO Kendalls, has concluded that the proposed acquisition is fair and reasonable to the Shareholders.

A copy of the report of BDO Kendalls is contained in Part E of this Notice of Meeting.



ASX Listing Rule 7.2 sets out various exemptions to ASX Listing Rule 7.1. ASX Listing Rule 7.2, Exception 16 provides that ASX Listing Rule 7.1 does not apply to an issue of securities approved for the purposes of Item 7 of section 611 of the Corporations Act.

Approval for the purposes of Item 7 of section 611 of the Corporations Act to the issue of 106,666,667 Ordinary Shares and 106,666,667 Options to Mr Wu Pun Yan is sought in Resolution 2. It follows that approval is not required under ASX Listing Rule 7.1.

6.2.4 Rule 10.1 of the ASX Listing RulesASX Listing Rule 10.1 provides that without the approval of holders of ordinary securities, an entity must ensure that neither it, nor any of its child entities, acquires a substantial asset from a related party.

ASX Listing Rule 10.2 provides that an asset is substantial if its value, or the value of consideration for it is, or in ASX’s opinion is, 5% or more of the equity interests of the entity as set out in the latest account given to the ASX under the listing rules.

Chapter 19 of the ASX Listing Rules provides that a related party has the same meaning given in section 228 of the Corporations Act. Section 228 of the Corporations Act defines a related party as:

1. An entity that controls a public company is a related party of the public company.

2. The following persons are related parties of a public company:

a. directors of the public company;

b. directors (if any) of an entity that controls the public company;

c. if the public company is controlled by an entity that is not a body corporate--each of the persons making up the controlling entity;

d. spouses and de facto spouses of the persons referred to in paragraphs (a), (b) and (c).

3. The following relatives of persons referred to in subsection (2) are related parties of the public company:

a. parents;

b. children.

4. An entity controlled by a related party referred to in subsection (1), (2) or (3) is a related party of the public company unless the entity is also controlled by the public company.

5. An entity is a related party of a public company at a particular time if the entity was a related party of the public company of a kind referred to in subsection (1), (2), (3) or (4) at any time within the previous 6 months.

PA

RT

C


or p

erso

nal u

se o

nly

39

6. An entity is a related party of a public company at a particular time if the entity believes or has reasonable grounds to believe that it is likely to become a related party of the public company of a kind referred to in subsection (1), (2), (3) or (4) at any time in the future.

7. An entity is a related party of a public company if the entity acts in concert with a related party of the public company on the understanding that the related party will receive a financial benefit if the public company gives the entity a financial benefit.

The shares in the capital of CCS are a substantial asset for the purposes of ASX Listing Rule 10.1. Similarly, the Vendor, by reason of subsection 228(6) will be deemed to be a related party.

However, ASX Listing Rule 10.3 provides that ASX Listing Rule 10.1 does not apply to a transaction between the entity and a person who is a related party by reason only of the transaction and the application to it of subsection 228(6).

The only reason the Vendor is a related party of the Company is by reason of the application to it of subsection 228(6).

It follows that in the absence of any other subsection in section 228 applying to the Vendor, that approval of Resolution 2 is not required for the purpose of ASX Listing Rule 10.1.

6.3 Resolution 36.3.1 OverviewASX Listing Rule 11.1 requires that a listed entity proposing to make a ‘significant change’ in the nature or scale of its activities must provide details of the proposal to the ASX as soon as possible and in any event before making the change.

Where the ASX considers that a proposal constitutes a change in the nature or scale of activities of the Company it may require that:

(a) an entity get the approval of holders of its ordinary securities and comply with any requirements of the ASX in relation to the notice of meeting; and

(b) an entity meet the requirements in Chapters 1 and 2 of the ASX Listing Rules as if the entity were applying for admission to the official list.

The ASX may suspend quotation of the entities securities until the entity has satisfied the requirements of ASX Listing Rules 11.1.

The ASX has advised the Company that the proposed acquisition, if approved by Shareholders, will result in a change of main undertaking for the purposes of Chapter 11 of the ASX Listing Rules.

The ASX has further advised the Company that:

(a) it must get the approval of the Shareholders to the proposed acquisition in accordance with ASX Listing Rule 11.1.2; and

(b) it must meet the requirements in Chapters 1 and 2 of the ASX Listing Rules as if the Company were applying for admission to the official list.

6.3.2 Shareholder ApprovalResolution 3 seeks the approval of Shareholders to a change in the nature and scale of activities of the Company, for the purposes of ASX Listing Rule 11.1.2, following from the acquisition of all of the shares in the capital of CCS in accordance with the Share Purchase Agreement.

6.3.3 Compliance with ASX Listing Rules 1 & 2ASX has advised the Company that in the event that Shareholders approve the proposed acquisition, it will suspend trading in the Securities of the Company until it is satisfied that the Company meets the requirements of Chapters 1 and 2 of the ASX Listing Rules as if it were applying for admission to the official list.

One of the requirements of Chapter 1 of the ASX Listing Rules is that the Company issue a prospectus or Product Disclosure Statement, or if the ASX agrees, an information memorandum that complies with the information memorandum requirements of Appendix 1A of the ASX Listing Rules.

The ASX has advised the Company that it will require the issue of a prospectus in connection with the issue of the Convertible Unsecured Notes. The Company will prepare and lodge a prospectus in connection with the issue of the Convertible Unsecured Notes prior to the Meeting.

In all other respects, whilst the ASX ultimately retains a discretion on satisfaction or otherwise of the requirements of Chapters 1 and 2 of the ASX Listing Rules, it is the Directors’ view that at the date of this Notice of Meeting the Company satisfies, and will on Completion of the proposed acquisition, continue to satisfy, the requirements of Chapters 1 and 2 of the ASX Listing Rules.

6.3.4 Suspension of TradingIn accordance with ASX Guidance Note 12, the Company will request a trading halt for the day of the Meeting. In the event that Shareholders approve all Resolutions, the Company’s Securities will remain suspended from that date until the date that the Company satisfies all of the requirements of Chapters 1 and 2 of the ASX Listing Rules. Once these requirements are met, the Company will seek to have the suspension from trading of its Securities lifted.

If all Resolutions are not approved or Completion does not occur for any reason, the suspension of the Company’s Securities will normally be lifted after the Company notifies the ASX that the proposed acquisition will not proceed.

The fact that the ASX may consent to the lifting of a suspension from trading of the Securities of the Company should not to be taken in any way as an indication of the merits of the Company.

6.4 Resolution 4Resolution 4 seeks the approval of Shareholders to the appointment of Mr Wu Pun Yan as a Director of the Company. Information in relation to the background and qualifications of Mr Wu Pun Yan are provided in section 3.5 of this Explanatory Memorandum.

PA

RT

C


or p

erso

nal u

se o

nly

40

6.5 Resolution 5Resolution 5 seeks the approval of Shareholders to the appointment of Mr Zhao Dening as a Director of the Company. Information in relation to the background and qualifications of Mr Zhao Dening are provided in section 3.5 of this Explanatory Memorandum.

6.6 Resolution 6Resolution 6 seeks the approval of Shareholders to the appointment of Mr Chen De Hao as a Director of the Company. Information in relation to the background and qualifications of Mr Chen De Hao are provided in section 3.5 of this Explanatory Memorandum.

6.7 Resolution 7Resolution 7 seeks the approval of Shareholders to the appointment of Mr John Girdlestone as a Director of the Company. Information in relation to the background and qualifications of Mr John Girdlestone are provided in section 6.7.1 of this Explanatory Memorandum.

6.7.1 Background and qualifications of Mr John Girdlestone Mr Girdlestone is currently the manger of the western region of Terex Mining Australia Pty Ltd (trading as Terex-Jaques) and is responsible for the profitability of the business throughout Western Australia. Terex-Jaques is a long established manufacturer of mineral processing equipment for the mining an quarrying industries.

Mr Girdlestone holds a diploma in mechanical engineering and has years of experience in general management, joint ventures, contract management and safety, primarily in the iron-ore industry.

Prior to joining Terex-Jaques in 2002, Mr Girdlestone was the operations manager at Mount Gibson Iron Limited, responsible for pre-development work for the Mt Gibson and Tallering Peak iron ore

projects. In 2000 Mr Girdlestone was a project technical co-ordinator with Iluka Resources Limited. He was a member of a project team assembled to manage the closure and decommissioning of the South Capel mineral sands mining and processing operations

Mr Girdlestone has held the position of general manager of operations (Perth) with Koolynanobbing Iron Pty Ltd between 1994 and 1999. Prior to 1999, he held the positions of manger with Rio Tinto Limited (Hamersley Iron Pty Ltd and Otter Group Management Pty Ltd).

6.8 Resolution 8Resolution 8 seeks the approval of the Shareholders to the issue of 1,000,000 Management Options to Mr Ugo Cario.

The requirement for Shareholder approval of the proposed issue described in Resolution 8 arises under Section 208 of the Corporations Act and ASX Listing Rule 10.11.

6.8.1 Section 208 of the Corporations Act

The issue of 1,000,000 Management Options to Mr Ugo Cario will constitute the giving of a financial benefit to a related party of the Company, for which Shareholder approval is usually required pursuant to subsection 208(1) of the Corporations Act.

There are various exceptions to the requirement for Shareholder approval in the Corporations Act, none of which will apply to the proposed issue of the Management Options to Mt Ugo Cario under Resolution 8.


Requirement Explanation1 The related parties to whom the proposed

resolution would permit the financial benefits to be given.

Mr Ugo Cario, who is a director of the Company and thereby a related party of the Company by virtue of subsection 228(2)(a) of the Corporations Act.

2 The nature of the financial benefits. Subject to the approval of Shareholders, Mr Ugo Cario will be issued 1,000,000 Management Options under Resolution 8.

3 In relation to each Director of the Company:




Mr Ugo Cario has a material personal interest in the outcome of Resolution 8 and accordingly makes no recommendation to the Shareholders.

Each other Director recommends that Shareholders vote in favour of Resolution 8.

The Directors believe that the proposed issue of Management Options is an appropriate means of providing Mr Ugo Cario with an incentive to continue to create value for Shareholders.With the exception of Mr Ugo Cario, who will be excluded from voting on Resolution 8, each Director intends to vote in favour of Resolution 8 in respect of the Ordinary Shares that they hold.

PA

RT

C


or p

erso

nal u

se o

nly

41

Requirement Explanation4 In relation to each Director:



Mr Ugo Cario has a material personal interest in the outcome of Resolution 8.

Each other Director has no interest in the outcome of Resolution 8.




Shareholders are advised to carefully and fully read the Notice of Meeting (including this Explanatory Memorandum).

6.8.2 Listing Rule 10.11 of the ASX Listing Rules ASX Listing Rule 10.11 provides that without the approval of holders of ordinary securities, an entity must not issue or agree to issue equity securities to a related party.

Chapter 19 of the ASX Listing Rules defines equity securities to include an option over an issued or unissued security.

Chapter 19 of the ASX Listing Rules provides that a related party has the same meaning given in section 228 of the Corporations Act. Section 228 of the Corporations Act defines a related party of a public company to include directors of the public company.

There are various exceptions to the requirement for Shareholder approval in ASX Listing Rule 10.12, none of which will apply to the proposed issue of the Management Options to Mr Ugo Cario under Resolution 8.

Listing Rule 10.13 requires that the Notice of Meeting to approve the issue of the securities under Resolution 8 must include the following information:

Requirement Explanation1 Name of the person Mr Ugo Cario, director of the Company2 The number of securities to be issued or

the formula for calculating the number of securities to be issued

Subject to the approval of Shareholders, Mr Ugo Cario will be issued 1,000,000 Management Options under Resolution 8.

3 The date by which the Company will issue the securities, which must not be more than 1 month after the date of the meeting

Within one month of Shareholders approval

4 The issue price of the securities and a statement of the terms of the issue

The Management Options will be issued free of charge and upon the terms and conditions specified in Part J of this Notice of Meeting.

5 Voting Exclusion Statement The Company will disregard any votes cast on Resolution 8 by Mr Ugo Cario and any associates of Mr Ugo Cario.

6 The intended use of the funds raised The Management Options will be issued free of charge and therefore no funds will be raised by their issue.

Any funds raised from the exercise of the Management Options will be used for the Company’s general working capital requirements.

PA

RT

C


or p

erso

nal u

se o

nly

42

6.9 Resolution 9 Resolution 9 seeks the approval of the Shareholders for the granting of 500,000 Management Options to Mr Vivien Forbes.

Whilst Mr Vivien Forbes is not a related party of the Company, for which Shareholder approval is usually required pursuant to subsection 208(1) of the Corporations Act and ASX Listing Rule 10.11, the Directors believe that given the takeover offer announced by Bowen on 5 June 2007, that Shareholder approval should be obtained to the grant of the Management Options to Mr Vivien Forbes.

The Directors believe that the proposed issue of Management Options to Mr Vivien Forbes is an appropriate means of providing Mr Forbes with an incentive to continue to create value for Shareholders.

6.10 Resolution 10 Resolution 10 seeks the approval of the Shareholders to the cancellation of the Excess Performance Shares under the Performance Based Entitlement Agreement.

The requirement for Shareholder approval for the cancellation of the Excess Performance Shares under Resolution 10 arises under Section 258D of the Corporations Act.

Section 258D of the Corporations Act provides that a company may, by resolution passed at a general meeting, cancel shares that have been forfeited under the terms on which the shares are on issue.

Pursuant to the terms of the Performance Based Entitlement Agreement the Performance Shares and Performance Options will be issued on terms such that in the event that the Vendor is not entitled to the release from escrow of any Share Certificates and Option Certificates (Excess Certificates):

• the Performance Shares, the subject of those Excess Certificates (Excess Shares) will be immediately forfeited by the Vendor and the Company will direct the Escrow Agent to release the Excess Certificates the subject of the Excess Shares to the Company, on receipt of which, and subject to Shareholders passing Resolution 10, the Excess Shares will be cancelled;

• the Performance Options, the subject of those Excess Certificates (Excess Options) will immediately lapse, and the Company will direct the Escrow Agent to release the Excess Certificates the subject of the Excess Options to the Company, on receipt of which, the Excess Certificates the subject of the Excess Options will be cancelled.

If Shareholders pass Resolution 10, the Company will be able to give effect to any cancellation of Performance Shares, without need for further approval.

6.11 Resolution 11Resolution 11 seeks the approval of the Shareholders to the issue of 10 Convertible Unsecured Notes (including an allotment of up to 40,000,000 Ordinary Shares under the Convertible Unsecured Notes) to Mr Jiqun Chen in accordance with the Convertible Unsecured Notes.

The requirement for Shareholder approval of the proposed issue described in Resolution 11 arises under ASX Listing Rule 7.1.

6.11.1 Overview of Convertible Unsecured NotesA copy of the Convertible Unsecured Notes is set out in Part G of this Notice of Meeting and Shareholders are encouraged to read the Convertible Unsecured Notes carefully and in full. Subject to the approval of the Shareholders under Resolution 11, the Company intends to issue 10 Convertible Unsecured Notes to Mr Jiqun Chen to raise an aggregate amount of HKD50,000,000.

By way of overview, the material terms of the Convertible Unsecured Notes are as follows:

• each Convertible Unsecured Note will be issued for an issue price of HKD5,000,000.00;

• the issue date of the Convertible Unsecured Notes will, subject to the approval of the Shareholders under Resolution 11, be the date of the Meeting but in any event no later than 3 months after the date of the Meeting (Issue Date);

• each Convertible Unsecured Note may be converted into a maximum of 4,000,000 Ordinary Shares, by written notice given by Mr Jiqun Chen to the Company, on any day after the date that is 101 days from the Issue Date, up to and including the date that is 5 years from the Issue Date;

• each Convertible Unsecured Note may be redeemed (ie repaid) by the Company at any time prior to the date that is 5 years from the Issue Date, by giving written notice Mr Jiqun Chen;

• each Convertible Unsecured Note that is not converted by Mr Jiqun Chen or redeemed by the Company, by the date that is 5 years from the Issue Date , will mature and the Company must pay to Mr Jiqun Chen HKD5,000,000 in respect of each mature Convertible Unsecured Note (Principal Amount);

• in the event that the Company does not pay Mr Jiqun Chen the Principal Amount, Mr Jiqun Chen’s only remedy is to serve upon the Company notice requiring the Company to convert each mature Convertible Unsecured Note into Ordinary Shares (each Convertible Unsecured Note may be converted into a maximum of 4,000,000 Ordinary Shares); and

• all shares issued in consequence of the conversion of any Convertible Unsecured Note will, on and from the date upon which they are issued, rank pari passu in all respects with the Ordinary Shares then on issue.

PA

RT

C


or p

erso

nal u

se o

nly

43

Shareholders should note that under the Convertible Unsecured Note Agreement it is an option for the Company to redeem some or all of the Convertible Unsecured Notes during the first 101 days following the Issue Date and not an obligation.

The Company is currently not in a position to determine whether it will redeem any Convertible Unsecured Note during this period however, if the circumstances permit and subject to prudent financial management the Board may determine that it is in the interests of the Company to redeem one or more of the Convertible Unsecured Notes prior to the expiration of the 101 days period.

If the Board does not so determine, the Company will still have an option to redeem any Convertible Unsecured Notes at any time, subject to Mr Jiqun Chen not electing to convert the Convertible Unsecured Notes, during the 5 year period commencing on the Issue Date.



The term “equity security” is defined in Chapter 19 of the ASX Listing Rules and includes a “convertible security”. A “convertible security” is defined as a security which is convertible by the holder or otherwise by their terms of issue into an equity security. It follows that the Company is of the view that the Convertible Unsecured Notes fall within the definition of equity security under the ASX Listing Rules.

ASX Listing Rule 7.3 requires that the Notice of Meeting to approve the issue of the equity securities under Resolution 11 must include the following information:

Requirement Explanation1 The maximum number of securities the

entity is to issue (if known ) or the formula for calculating the number of securities the entity is to issue

Subject to the approval of the Shareholders under Resolution 11, the Company will issue 10 Convertible Unsecured Notes (including an allotment of up to 40,000,000 Ordinary Shares under the Convertible Unsecured Notes) to Mr Jiqun Chen in accordance with the Convertible Unsecured Notes.

2 The date by which the entity will issue the securities

The issue date of the Convertible Unsecured Notes will, subject to the approval of the Shareholders under Resolution 11, be the Issue Date.

3 The issue price of the securities Each Convertible Unsecured Note will be issued for an issue price of HKD5,000,000.00 (approximately AUD775,194).

The Company intends to issue 10 Convertible Unsecured Notes to raise an aggregate amount of HKD50,000,000 (approximately AUD7,751,938).

4 The name of the allotees (if known) or the basis upon which allotees will be identified or selected

Mr Jiqun Chen

5 The terms of the securities A copy of the Convertible Unsecured Notes is set out in Part G of this Notice of Meeting.

An overview of the material terms of the Convertible Unsecured Notes is set out in section 6.11.1 of this Notice of Meeting.

6 The intended use of the funds raised The funds raised from the issue of the Convertible Unsecured Notes will be used to contribute to the capital requirements relevant to the carrying out of the expenditure program in relation to the Company’s exploration activities to 2010 (as set out in section 2.4 of this Notice of Meeting) and for the Company’s general working capital requirements.

7 The dates of the allotment or a statement that allotment will occur progressively

Each Convertible Unsecured Note will be allotted on the Issue Date.

Shareholders are referred to the summary of the material terms in section 6.11.1 of this Notice of Meeting for the basis on which the Convertible Unsecured Notes may be convertible into Ordinary Shares.

PA

RT

C


or p

erso

nal u

se o

nly

44

Requirement Explanation8 Voting Exclusion Statement The Company will disregard any votes cast on Resolution 11 by:

• Mr Jiqun Chen ; and

• any associates of Mr Jiqun Chen and any person who might obtain a benefit, except a benefit solely in the capacity of a holder of ordinary securities, if the resolution is passed.



it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

7. ConsentsBDO Kendalls has given its consent to being named in the Notice of Meeting in the form and context in which that reference is made and has not withdrawn that consent before the date of the Notice of Meeting.

Horwath KL has given its consent to being named in the Notice of Meeting in the form and context in which that reference is made and has not withdrawn that consent before the date of the Notice of Meeting.

Minarco has given its consent to being named in the Notice of Meeting in the form and context in which that reference is made and has not withdrawn that consent before the date of the Notice of Meeting.

8. Supplementary InformationThe Company will issue a supplementary explanatory memorandum if the Company becomes aware of any of the following between the date of the Notice of Meeting and the date of the Meeting:

(a) a material statement in the Explanatory Memorandum is misleading or deceptive;

(b) there is a material omission from the Explanatory Memorandum;

(c) there has been a significant change affecting a matter included in the Explanatory Memorandum; or

(d) a significant new circumstance has arisen and it would have been required to be included in the Explanatory Memorandum.

9. Bowen OfferOn 13 July 2007 a copy of the Bidder’s Statement was lodged with the ASX by Bowen in respect of the Bowen Offer. Since that date, the Company has received notice from Bowen that it is the intention of Bowen to file a supplementary bidder’s statement.

As at the date of this Notice of Meeting, Bowen has not filed a supplementary bidder’s statement. Upon receipt of the supplementary bidder’s statement, the Directors will consider the merits of the offer and the Company will provide a Target’s Statement to Shareholders in accordance with its obligations under the Corporations Act.

Shareholders are advised to read the contents of any Target’s Statement issued by the Company in connection with the Bowen Offer together with this Notice of Meeting, before determining how to vote on any Resolution.

10. Recommendations of DirectorsEach Director recommends that in the absence of a superior proposal, Shareholders vote in favour of each Resolution.

Shareholders are advised that each Resolution is interdependent with each other Resolution. It follows that each Resolution must be passed to effect the proposed acquisition. In the event that the Shareholders do not approve any Resolution, it is likely that the proposed acquisition will be unable to proceed.

Each Director believes that in the absence of a superior proposal, the proposed acquisition is in the best interests of the Company as:



In the absence of a superior proposal, each Director intends to vote in favour of each Resolution in respect of the Ordinary Shares that they hold.

PA

RT

C


or p

erso

nal u

se o

nly

45

11. Statement by DirectorsThe Directors report that, in their opinion, since the date of the accounts of the Company used in the preparation of the Independent Expert’s Report, namely 30 April 2007, there have not been any circumstances that have materially affected or will materially affect the profitability of the Company or the value of its assets and liabilities, except as disclosed in the Notice of Meeting.

The Directors state that they have made all reasonable inquiries and have reasonable grounds to believe that the statements by the Directors in the Notice of Meeting are true and not misleading and that in respect of statements made in the Notice of Meeting by persons other than Directors, the Directors have made reasonable inquiries and have reasonable grounds to believe that the persons making the statement or statements were competent to make such statement or statements and that those persons who have made statements in the Notice of Meeting, or a statement said in the Notice of Meeting to be based on a statement by the person, have given their consent to be named in the Notice of Meeting in the form and context in which that reference is made and have not withdrawn that consent before the date of the Notice of Meeting.

Each Director, and proposed Director of the Company has consented to the issue of the Notice of Meeting and has not withdrawn that consent prior to the date of the Notice of Meeting.


PA

RT

C


or p

erso

nal u

se o

nly

46

In this Notice of Meeting, the following terms and abbreviations have the following meaning unless the context otherwise requires:

ASIC means the Australian Securities and Investments Commission

ASX means Australian Stock Exchange Limited

ASX Listing Rules means the listing rules of the ASX

AUD means an Australian dollar

BDO Kendalls means BDO Kendalls Corporate Finance (VIC) Pty Ltd ABN 82 065 203 492

Board means the board of Directors of the Company

Bidder’s Statement means any bidder’s statement issued by Bowen on 13 July 2007 pursuant to the Bowen Offer

Bowen means Bowen Energy Limited ACN 120 965 095

Bowen Offer means the offer by Bowen to the Shareholders as notified to the market on 5 June 2007

CCS means China Coke and Chemicals Company Limited

Company means Rocklands Richfield Limited ABN 82 057 121 749

Completion has the meaning given to that term in the Share Purchase Agreement

Completion Date has the meaning given to that term in the Share Purchase Agreement

Condition Precedent means a condition precedent to the proposed acquisition as set out in section 4.2 of the Explanatory Memorandum

Consideration Securities means the Ordinary Shares and Options to be issued to the Vendor pursuant to Resolution 1

Constitution means the constitution of the Company

Convertible Unsecured Notes

means a note in the form contained in Part H of the Notice of Meeting

Corporations Act means the Corporations Act 2001 (Cth)

CY (Huaibei) means Chang Yuan (Huaibei) Chemicals and Coking Co Ltd

Director means a director of the Company

Effectively Passed means, in relation to a Resolution, a Resolution that has been passed and in respect of which any condition precedent to the Resolution has been satisfied

Escrow Agent Escrow Agent means Gadens Lawyers, of Level 25, 600 Bourke Street, Melbourne, Victoria, Australia or such other person agreed in writing between the parties

Excess Performance Options

means the Performance Options that the Vendor is not entitled to under the Performance Based Entitlement Agreement and which will be immediately forfeited

Excess Performance Shares means the Performance Shares that the Vendor is not entitled to under the Performance Based Entitlement Agreement and which will be immediately forfeited

Explanatory Memorandum means the explanatory memorandum contained in Part C of the Notice of Meeting

FATA means the Foreign Acquisitions and Takeovers Act 1975 (Cth)

HKD means a Hong Kong dollar

Horwath KL means Horwath Chartered Accountants, Kuala Lumpur

Independent Expert’s Report

means the report of the Independent Expert contained in Part E of the Notice of Meeting

Independent Expert means BDO Kendalls

Interdependent Resolution means each Resolution

PA

RT

D

GLOSSARYF

or p

erso

nal u

se o

nly

47

Management Option means an option over Ordinary Shares carrying the rights and conditions specified in Part I of this Notice of Meeting

Material Adverse Change means a change affecting the financial or trading position, prospects, turnover, cash flow, goodwill, assets or liabilities of AUD1,000,000 or more

Meeting means an extraordinary general meeting of the Company to be held on the date, at the time, and at the place specified in this Notice of Meeting

Minarco means Minarco Asia Pacific Pty Ltd ACN 076 965 323

MT means million tonnes

Notice of Meeting means this document, including all parts and enclosures

Option means an option over Ordinary Shares carrying the rights and conditions specified in Part H of this Notice of Meeting

Option Certificate means a holding certificate in respect of a Performance Option, duly executed by the Company

Ordinary Share means an ordinary share in the capital of the Company

PRC means Peoples Republic of China

Performance Based Entitlement Agreement

means an agreement between the Company and the Vendor dated 6 July 2007 in relation to the issue and cancellation of the Performance Shares and Performance Options to the Vendor as amended by a deed of variation dated 13 July 2007

Performance Options means 106,666,667 options having the rights specified in Part J, issued on and subject to the terms of the Performance Based Entitlement Agreement

Performance Period means the period 1 July 2007 to 30 June 2009

Performance Securities means each of the Performance Shares and the Performance Options

Performance Shares means 106,666,667 Ordinary Shares issued on and subject to the terms of the Performance Based Entitlement Agreement

Profit Result means, in relation to the Performance Period, the net profit after income tax of CCS, as disclosed in the Company’s audited financial accounts (applying International Financial Reporting Standards)

Proxy Form means a proxy form in the form contained in Part F of the Notice of Meeting

Resolution means a resolution in Part B of this Notice of Meeting

Restriction Agreement means an agreement substantially in the form contained in Appendix 9A of the ASX Listing Rules which imposes a 12 month restriction in accordance with the terms of that agreement

RMB means China Yuan Renminbi

Security means a security in the capital of the Company

Share Purchase Agreement means an agreement between the Company and the Vendor dated 20 March 2007 in relation to the sale and purchase of all of the shares in the capital of CCS

Share Certificate means a holding certificate in respect of a Performance Share duly executed by the Company

Share Register means the register of the Securities of the Company

Shareholder means a holder of Ordinary Shares in the capital of the Company

Target’s Statement means the Target’s Statement to be issued by the Company in response to the Bidder’s Statement

Transaction Document has the meaning given to that term in the Share Purchase Agreement

tpa means tonnes per annum

Vendor means Mr Wu Pun Yan

Vendor Group means CCS and CY (Huaibei)

Warranty means a warranty of the Vendor given in the Share Purchase Agreement

PA

RT

D

GLOSSARYF

or p

erso

nal u

se o

nly

RCI_WIP_141855/000001/000001

*L000001*

Rocklands Richfield LimitedABN 82 057 121 749

000001000RCI

1301011221012102012221332120133322113MR JOHN SMITH 2FLAT 123123 SAMPLE STREETTHE SAMPLE HILLSAMPLE ESTATESAMPLEVILLE VIC 3030

For

per

sona

l use

onl

y

For

per

sona

l use

onl

y

RCI_WIP_141855/000001/000002/i

*M000001Q02*

For

per

sona

l use

onl

y

NOTICE OF GENERAL MEETING For personal use only · Chemicals and Coking Co. Ltd (CY (Huaibei)). CY...

Documents

Transcript of NOTICE OF GENERAL MEETING For personal use only · Chemicals and Coking Co. Ltd (CY (Huaibei)). CY...