HERON RESOURCES 
By Reasons to support
Heron Offer, which the majority of
Golden Cross independent
directors also support
1. Funds received immediately
2. Significant cash funding package in excess of
November 2013 rights issue
3. Priced at a premium to prices immediately prior to
Heron Offer announcement
4. Fewer conditions than HQ Mining, and largely within the influence of the Golden Cross board
5. Effectively zero cost to Golden Cross
6. Introduces strategic shareholder with significant experience and commitment to Copper Hill
7. Funds employed directly on major projects, notably flagship Copper Hill
8. Ensures HQ Mining cannot control the company
9. Increases the importance of the voices of minority shareholders
10. Re-balances the board, adds significant relevant skills
11. Heron has no present intention to bid for
Golden Cross
Reasons to reject HQ Mining Competing Proposal
1. HQ Mining failed to support Golden Cross, ignoring the November 2013 rights issue
2. The HQ Mining proposal lacks clarity and certainty
3. Likely to result in effective control passing to HQ Mining
4. Regulatory impediments to HQ Mining underwriting a future rights issue
5. Will significantly delay receipt
of funds, probably to April 2014
6. Shareholders should be concerned about HQ Mining's motives
7. HQ Mining have shown a disregard for minority shareholders' views
8. HQ Mining nominees are in a position of board conflict in respect of the Heron Offer
Turn over for the full Heron Announcement detailing reasons24 January 2014
HERON RECOMMENDS THAT GOLDEN CROSS SHAREHOLDERS SUPPORT THE EGM RESOLUTION 1 - IN FAVOUR OF THE HERON OFFER REJECT THE EGM RESOLUTION 2 - HQ MINING COMPETING PROPOSAL
On 16 December 2013, Heron Resources Limited (ASX:HRR) announced that it had provided a binding offer to Golden Cross Resources (ASX:GCR) (Golden Cross or the Company) to take a strategic equity interest in the Company. The Heron Offer was made in response to the current Shortfall Share placement facility and there was no impediment whatsoever to stop its acceptance by Golden Cross with immediate provision of funds.
Under the Heron Offer, Heron proposed that Golden Cross issue to Heron 375,970,579 new shares under the currently live Golden Cross Shortfall Offer at a share price of $0.005, being the same price as the November
2013 Entitlement Offer (Rights Issue), for consideration of $1.88 million (Heron Offer), giving Heron an interest of 19.9% in the enlarged share capital.
The Golden Cross directors associated with HQ Mining Resources Holdings Pty Ltd (HQ Mining) rejected the Heron
Offer, and HQ Mining responded within two days with a competing proposal dated 18 December and amended on 23
December 2013 (Competing Proposal), with pricing identical to both the Rights Issue and Heron Offer. Given that HQ Mining neither underwrote nor subscribed to the Rights Issue, it is Heron's strong opinion that the Competing Proposal was activated solely in response to the Heron Offer in an attempt by HQ Mining to preserve its strong influence over Golden Cross.
This summary of the benefits of the Heron Offer is intended as a response to the Extraordinary General Meeting (EGM) notice dated 24 January 2014. The notice contains the 8 January 2014 Heron proposal (pages 11 to 14) to assist Golden Cross shareholders in making a decision about whether to support the Heron Offer or the HQ Mining Competing Proposal.
It is important that shareholders recognise that if they do not vote at the EGM, it is likely that the Heron Offer will not be accepted (because it appears that notwithstanding the proposals are competing, HQ Mining are eligible to vote against the Heron Offer), and that HQ Mining may subsequently gain effective or overall control over Golden Cross without a premium being paid.
R E A S O N S T O S U P P O R T T H E H E R O N O F F E R
Heron believes that the acceptance of funding from Heron is in the best interests of Golden Cross and in the best interests of shareholders as a whole, especially when compared to surrendering effective control of Golden Cross to HQ Mining through accepting further underwriting and funding from HQ Mining.
Funds from Heron can be received immediately
Following approval by the Golden Cross board and execution of standard procedural documentation, funds can be unconditionally received immediately, sourced from Heron's cash at bank.
This certainty of immediate timing contrasts with the extended timetable likely to extend to or beyond mid April 2014 associated with the receipt of proceeds from any underwriting of a further rights issue from HQ Mining which, because of HQ Mining's existing shareholding in Golden Cross, may require shareholder approval or may be delayed to meet other regulatory requirements.
additional funding to
Golden Cross
$753,730 raised from the Rights Issue for a total of $2,633,583.
Golden Cross trading
Offer, and they are almost
significant experience in
Cross major projects in
control of the Company
Re-balances the Golden Cross board and adds significant relevant skills
Under the Heron Offer, Heron will have the right to appoint one board member to the Golden Cross board as Heron's representative.
Heron notes that upon this appointment, Golden Cross' board will comprise six members, of which at least three including the Chairman, Managing Director and Ian Buchhorn as proposed from Heron have exceptionally strong technical backgrounds.
Ian Buchhorn will bring very strong exploration and mining skills to Golden Cross, with 40 years' experience as an exploration geologist, mineral economist and mine supervisor, and his history with Copper Hill dates back to 1982. He has familiarity with relevant porphyry copper-gold systems in Australia, the circum-Pacific, southern Africa and eastern Europe.
Heron has no present intention to increase its shareholding in Golden Cross above 19.9% or to make a takeover offer for Golden Cross
Heron approached Golden Cross in March 2013 on a non-binding, indicative and confidential basis to consider a potential scrip-based merger between the companies. Feedback from Golden Cross was that the board under HQ Mining's influence was not supportive, and follow-up preliminary soundings on potential farm-ins to Golden Cross projects failed to proceed.
Whilst Heron remains open to a later merger between the two companies, Heron recognises that the HQ Mining blocking stake currently provides a barrier to reaching an agreement on terms. Hence, Heron has no present intention to increase its shareholding in Golden Cross above 19.9% or to make a takeover offer for Golden Cross.
Given Heron's view that Golden Cross' projects, in particular Copper Hill, have the potential to deliver value uplifts to all Golden Cross shareholders, Heron is comfortable remaining as a strategic holder on the register in support of delivering this value.
R E A S O N S T O R E J E C T T H E H Q M I N I N G C O M P E T I N G P R O P O S A L
Following the announcement of Heron's Offer and as an apparent response to it, HQ Mining provided a binding competing proposal to Golden Cross on 18 and then 23 December 2013 to underwrite a further rights issue. Heron believes there are very good reasons for Golden Cross shareholders to reject this Competing Proposal.
HQ Mining ceased its support of Golden Cross through failing to underwrite the recent rights issue, and failing to support the issue through taking up their rights
HQ Mining has provided no financial support at all to Golden Cross since
2010
On 21 October 2013, Golden Cross announced a 1 for 1 Rights Issue priced at $0.005 to raise up to $6.81 million for exploration and development.
Despite being involved in the rights issue structuring through their board representation, HQ Mining declined to support the Company through taking up their rights, declined to provide a public statement of support, and declined to provide any form of underwriting to the Company at that time.
Only the emergence of Heron's interest in Golden Cross appears to have changed HQ Mining's lack of support for Golden Cross and Copper Hill.
In fact, HQ Mining has provided no financial support to Golden Cross for more than three and a half years.
The last financial support provided by a related party of HQ Mining to
Golden Cross was the underwriting of the 2:1 rights issue announced on 17
March 2010.
This lack of support by HQ Mining has seen Golden Cross' previously aggressive and successful exploration scaled right back.
certainty
Proposal is likely to result in effective control of
reasonable expectation that a significant premium should be payable above that offered for a strategic stake. If shareholders accept the HQ Mining
impediments to HQ Mining
to the HQ Mining Competing Proposal, "should the Company proceed to any
Proposal will significantly
delay receipt of funds by
be a significant delay after any shareholder EGM support of HQ Mining -
likely to be more than six weeks to mid April 2014 - in receiving the funds
shareholders should be concerned about HQ
clear that it would otherwise lose influence within the Company.
disregard for Golden
Cross minority
outstanding Golden Cross director Mr David Timms immediately prior to the
2012 Annual General Meeting, Golden Cross has failed to appoint a
a position of conflict in
dealing with the Heron
clear conflict when dealing with the Heron Offer because it is a directly offer to the HQ Mining Competing Offer.
The full text of the Heron Offer of 8 January 2014 is provided in the EGM Notice pages 11-14.
Listed in 1996, Heron is an exploration stage company headquartered
in West Perth, Western Australia whose key assets are its cash reserves of A$38.6 million as at 30 September 2013, and the Kalgoorlie Nickel Project ("KNP"), a world-class nickel laterite deposit. Heron has an active exploration programme for gold, copper and base metals including extensive tenement holdings in the Lachlan Fold Belt region of New South Wales, where Golden Cross is also active.
Ian Buchhorn
MANAGING DIRECTOR
For more information contact Ian Buchhorn via:
Email: heron@heronresources.com.au
Tel: +61 8 9215 4444
www.heronresources.com.au
ASX CODE: HRR
ABN: 30 068 263 098
Issued shares: 253M Share Price: $0.14
Market Cap: $35.4M
Cash (30 Sep 13):
$38.6M and listed investments of $5.0M Directors:· Ian Buchhorn
· Craig Readhead
· Stephen Dennis
7|
distributed by
|
