Vulcan Resources Ltd (ACN 100 072 624), In the matter of Vulcan Resources Ltd (ACN 100 072 624) [2009] FCA 1599

Judgment (7 paragraphs)

[1]

Pursuant to section 411(1) of the Corporations Act 2001 ("Act"), the Plaintiff convene a meeting of its Shareholders ("Scheme Meeting") at King Street Room, Rydges Perth, Corner King & Hay Streets, Perth, Western Australia at 10.00 am (WST) on Friday 29 January 2010 for the purpose of considering and if thought fit approving, with or without modification, the Scheme, a copy of which is attached as Annexure 2 to the final draft document entitled "Scheme Booklet" (Vulcan Resources Limited ACN 100 072 624) ("Scheme Booklet") which is annexed as annexure "EEH6" to the affidavit of Eric Edwards Hughes sworn 10 December 2009 in support of the Originating Process; 2. Pursuant to section 1319 of the Act, the Scheme Meeting be convened, held and conducted in accordance with the provisions of: (a) Part 2G.2 of the Act that apply to the members of a company and have not been displaced or modified by the Plaintiff's Constitution; and (b) the Plaintiff's Constitution that are not inconsistent with that Part and that apply to a meeting of members, save that all voting at the Scheme Meeting be by poll demanded by the Chairman; 3. Pursuant to section 1319 of the Act and for the purposes of Corporations Regulation 7.11.37(3)(b), the specified time for identification of securities holdings for the Scheme Meeting, shall be 5.00 pm (WST) on Wednesday, 27 January 2010, with power to the Chairman of the Scheme Meeting in his absolute discretion to allow late proxies up to the commencement of the meeting; 4. Plaintiff be exempted from compliance with the requirements of Rule 2.15 of the Federal Court (Corporations) Rules 2000 ("Rules"), save in so far as that Rule applies reg. 5.6.13 (without the Form 530 stipulated therein) of the Corporations Regulations to the Scheme Meeting; 5. Mr Michael Blakiston, or failing him, Dr Alistair Cowden shall act as Chairman of the Meeting and report the results of the Scheme Meeting to this Court; 6. The Chairman appointed for the Scheme Meeting has the exclusive power to adjourn the meeting or not in his absolute discretion; 7. The proposed Scheme Booklet comprising the Explanatory Statement and its annexures which is annexure "EEH6" to the affidavit of Eric Edward Hughes sworn on 10 December 2009, which Scheme Booklet comprises the Explanatory Statement as required by section 412(1)(a) of the Act, be and is hereby approved for dispatch (subject to any minor amendments required or approved by the Australian Securities and Investments Commission ("ASIC") for purposes of registration thereof under section 412(6) of the Act); 8. No later than 31 December 2009, the Plaintiff (subject to the registration of the Explanatory Statement by ASIC pursuant to section 412(6) of the Act dispatch the following documents, namely: (a) The Scheme Booklet comprising the Explanatory Statement; and (b) The Notice of the Court ordered Scheme Meeting and Proxy Form, which are the annexures "EEH6", "EEH8" and "EEH9" to the affidavit of Eric Edward Hughes sworn on 10 December 2009 to all the Shareholders of the Plaintiff by ordinary pre-paid post (or, in the case of overseas members, by airmail) at their addresses appearing on the Plaintiff's register of members on the closest practicable business day before the dispatch of documents; 9. Leave be given to the Plaintiff to make application for orders under sections 411(4) and 411(6) of the Act following the Scheme Meeting for approval of the Scheme to be heard at 11.30 am on Thursday 4 February 2010 or such other date as the Court sees fit to set for such purpose; 10. The Plaintiff publish notice of the hearing of that application in the form or to the effect of the advertisement in the Schedule hereto once in the West Australian newspaper at least 5 days before the date fixed for the hearing of the application; 11. There be liberty to apply upon the giving of 18 hours notice to ASIC; 12. An office copy of this order shall be lodged with ASIC as soon as practicable after these orders are made. 13. Schedule: NOTICE OF HEARING TO APPROVE COMPROMISE OR ARRANGEMENT Take notice that at 11.30 am on Thursday, 4 February 2010 the Federal Court of Australia, Peter Durack Commonwealth Law Courts Building, 1 Victoria Avenue, Perth, will hear an application by Vulcan Resources Limited (Vulcan) seeking the approval of a Scheme of Arrangement proposed between Vulcan and its members, if such Scheme of Arrangement is approved by those members at the Court ordered meeting convened to be held on Friday, 29 January 2010 at 10.00 am. If you wish to oppose the approval of the Scheme of Arrangement, you must file and serve on Vulcan a notice of appearance, in the prescribed form, together with any affidavit on which you wish to rely at the hearing. The notice of appearance and affidavit must be served on Vulcan at its address for service at least one day before the day fixed for the hearing of the application. The address for service for Vulcan is Blakiston & Crabb, 1202 Hay Street, West Perth WA 6005. Name of person giving notice or of persons legal practitioner: Marcello Cardaci Partner Blakiston & Crabb

REASONS FOR JUDGMENT 1 Vulcan Resources Ltd (Vulcan) wishes to merge with Universal Resources Ltd (Universal). In order to achieve that purpose, Vulcan hopes to complete a Scheme of Arrangement between it and its ordinary share holding members pursuant to the provisions of Pt 5.1 of the Corporations Act 2001 (Cth) (the Act). Approval of the Court is sought today under s 411 of the Act to enable that process to occur. 2 The application is supported by affidavits from Mr Hughes who is Vulcan's Chief Financial Officer and Company Secretary and Mr Cardaci, Solicitor for Vulcan. 3 The evidence in support of Vulcan's application indicates that Vulcan's Directors and Universal's Directors have agreed upon the merger and have formed the opinion that the most efficient method of securing that outcome is pursuant to the Scheme for which s 411 of the Act approval is sought so as to put the Scheme to shareholders in Vulcan for their consideration. 4 An 'arrangement' under a Scheme is a broad notion. As observed in Re Hostworks Group Ltd (2008) 26 ACLC 137 at [26]; it may extend to any subject matter which is something a company is able to agree with its members, and is likened to a contract between a company and its members. 5 Typically, such a scheme will have some elements that are compulsory for its members, if it is approved. In this case, there are such elements, such as the requirement that all members transfer their shares in exchange for new shares in a new holding company. This will be on a ratio of 1 Vulcan share to 6.85 Universal shares. If the Scheme becomes effective and the merger is achieved, Vulcan will thereby become a 100 per cent subsidiary of Universal. 6 The Australian Securities and Investments Commission (ASIC) has received the requisite notice and information under s 411(2) of the Act. It has been provided with the Scheme Booklet. The Scheme Booklet contains a proposed Scheme, a final draft Explanatory Statement with annexures. It contains the relevant independent expert's report and the proposed Notice of Meeting and form of proxy. I am satisfied that ASIC has had a reasonable opportunity to examine the materials and ASIC has indicated that it does not oppose the making of the orders which are sought nor does it wish to be heard in relation to the Scheme. I take into account these facts. 7 I am satisfied that the Scheme Booklet which comprises the Explanatory Statement appears to comply with the provisions of the Act in the sense of giving the necessary information such that a member could make an informed decision whether or not to approve the Scheme. Over and above that, it provides additional information consistent with that which would be required under Ch 6 of the Act in the context of a takeover bid. There is an independent expert's report. That report confirms the Scheme is fair and reasonable and that it is in the best interests of Scheme participants. 8 As Mr Hughes deposes, Vulcan and all its option holders as well as Universal have entered into private treaties by which Vulcan and the option holders in Vulcan have agreed to the cancellation of their options in consideration for Universal issuing fully paid ordinary shares in Universal to each option holder. The completion of that transaction will occur if the Scheme becomes effective. 9 It is also confirmed that if orders are made today that a meeting of creditors will be held to approve the Scheme, the Scheme Booklet will be registered with ASIC and sent together with the Notice of Meeting and form of proxy to all Vulcan members. 10 There is nothing in the Constitution of Vulcan which is apparently inconsistent with or contrary to the terms of the Scheme. There is no reason to think that the Scheme has been proposed by either Vulcan or Universal for the purpose of enabling those companies to void the operation of Ch 6 of the Act. 11 There are a number of other aspects concerning the Scheme to which the Court's attention has appropriately been drawn. For present purposes, there is no reason to believe that any of them raise a difficulty, nor does it appear that ASIC is of that view. They include the mechanics of the mutual obligations. The warranty of unencumbered title is high-lighted. The reciprocal 'break-fees' in the merger implementation agreement arise from normal commercial merger negotiations. They are apparently within the reasonable bounds of the Takeover's Panel Guidance Note 7, (that is, not more than one per cent of equity value). The parties have each been separately advised and represented. The 'no-shop' constraints in the merger implementation agreement are subject to an exception for performance of fiduciary duties.

CONCLUSION 12 In the circumstances, this ex parte application being a first stage of the process, I am satisfied that the proposed Scheme, if it achieves the statutory majority at the members' meeting is one which the Court would be likely to finally approve on an unopposed hearing. 13 Accordingly, I will make the orders as sought in the minute as follows: 1. Pursuant to section 411(1) of the Corporations Act 2001 ("Act"), the Plaintiff convene a meeting of its Shareholders ("Scheme Meeting") at King Street Room, Rydges Perth, Corner King & Hay Streets, Perth, Western Australia at 10.00 am (WST) on Friday 29 January 2010 for the purpose of considering and if thought fit approving, with or without modification, the Scheme, a copy of which is attached as Annexure 2 to the final draft document entitled "Scheme Booklet" (Vulcan Resources Limited ACN 100 072 624) ("Scheme Booklet") which is annexed as annexure "EEH6" to the affidavit of Eric Edwards Hughes sworn 10 December 2009 in support of the Originating Process; 2. Pursuant to section 1319 of the Act, the Scheme Meeting be convened, held and conducted in accordance with the provisions of: (a) Part 2G.2 of the Act that apply to the members of a company and have not been displaced or modified by the Plaintiff's Constitution; and (b) the Plaintiff's Constitution that are not inconsistent with that Part and that apply to a meeting of members, save that all voting at the Scheme Meeting be by poll demanded by the Chairman; 3. Pursuant to section 1319 of the Act and for the purposes of Corporations Regulation 7.11.37(3)(b), the specified time for identification of securities holdings for the Scheme Meeting, shall be 5.00 pm (WST) on Wednesday, 27 January 2010, with power to the Chairman of the Scheme Meeting in his absolute discretion to allow late proxies up to the commencement of the meeting; 4. Plaintiff be exempted from compliance with the requirements of Rule 2.15 of the Federal Court (Corporations) Rules 2000 ("Rules"), save in so far as that Rule applies reg. 5.6.13 (without the Form 530 stipulated therein) of the Corporations Regulations to the Scheme Meeting; 5. Mr Michael Blakiston, or failing him, Dr Alistair Cowden shall act as Chairman of the Meeting and report the results of the Scheme Meeting to this Court; 6. The Chairman appointed for the Scheme Meeting has the exclusive power to adjourn the meeting or not in his absolute discretion; 7. The proposed Scheme Booklet comprising the Explanatory Statement and its annexures which is annexure "EEH6" to the affidavit of Eric Edward Hughes sworn on 10 December 2009, which Scheme Booklet comprises the Explanatory Statement as required by section 412(1)(a) of the Act, be and is hereby approved for dispatch (subject to any minor amendments required or approved by the Australian Securities and Investments Commission ("ASIC") for purposes of registration thereof under section 412(6) of the Act); 8. No later than 31 December 2009, the Plaintiff (subject to the registration of the Explanatory Statement by ASIC pursuant to section 412(6) of the Act dispatch the following documents, namely: (a) The Scheme Booklet comprising the Explanatory Statement; and (b) The Notice of the Court ordered Scheme Meeting and Proxy Form, which are the annexures "EEH6", "EEH8" and "EEH9" to the affidavit of Eric Edward Hughes sworn on 10 December 2009 to all the Shareholders of the Plaintiff by ordinary pre-paid post (or, in the case of overseas members, by airmail) at their addresses appearing on the Plaintiff's register of members on the closest practicable business day before the dispatch of documents; 9. Leave be given to the Plaintiff to make application for orders under sections 411(4) and 411(6) of the Act following the Scheme Meeting for approval of the Scheme to be heard at 11.30 am on Thursday 4 February 2010 or such other date as the Court sees fit to set for such purpose; 10. The Plaintiff publish notice of the hearing of that application in the form or to the effect of the advertisement in the Schedule hereto once in the West Australian newspaper at least 5 days before the date fixed for the hearing of the application; 11. There be liberty to apply upon the giving of 18 hours notice to ASIC; 12. An office copy of this order shall be lodged with ASIC as soon as practicable after these orders are made. 13. Schedule: NOTICE OF HEARING TO APPROVE COMPROMISE OR ARRANGEMENT Take notice that at 11.30 am on Thursday, 4 February 2010 the Federal Court of Australia, Peter Durack Commonwealth Law Courts Building, 1 Victoria Avenue, Perth, will hear an application by Vulcan Resources Limited (Vulcan) seeking the approval of a Scheme of Arrangement proposed between Vulcan and its members, if such Scheme of Arrangement is approved by those members at the Court ordered meeting convened to be held on Friday, 29 January 2010 at 10.00 am. If you wish to oppose the approval of the Scheme of Arrangement, you must file and serve on Vulcan a notice of appearance, in the prescribed form, together with any affidavit on which you wish to rely at the hearing. The notice of appearance and affidavit must be served on Vulcan at its address for service at least one day before the day fixed for the hearing of the application. The address for service for Vulcan is Blakiston & Crabb, 1202 Hay Street, West Perth WA 6005. Name of person giving notice or of persons legal practitioner: Marcello Cardaci Partner Blakiston & Crabb I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice McKerracher.

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Judgment (7 paragraphs)

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