SONS OF GWALIA LIMITED (ASX.SGW)

company is deregistered today 23/11/2012

at meetings of creditors held today, creditors passed the required resolution approving the terms of the settlement between Ernst & Young, the SOG Group and the Participating Shareholders - the settlement has become unconditional with $125m to be paid by Ernst & Young to the SOG Group by no later than 23 October 2009

a settlement has been reached with Ernst & Young and the Shareholders that will result in $125m being payable to Sons of Gwalia Limited

creditors pass the required resolutions to give effect to the approval of a Scheme of Arrangement and variation of the Deed of Company Arrangement for dealing with creditor and shareholder claims - the Varied Deed of Company Arrangement has been executed by the Deed Administrators and each of the companies within the Group

in a 112 page report, the Corporations and Markets Advisory Committee (CAMAC) has advised the government that the High Court's decision in the Sons of Gwalia case (which ranks the claims of aggrieved shareholders alongside those of unsecured creditors of a failed company) should remain as a matter of policy - we understand that some $1.2 billion in claims have been admitted by SGW administrators, about a third of which are shareholder claims

some shareholders who sold their shares to deListed to crystallise their capital loss have offered to send us a cheque in respect of the proceeds from their claims - thank you but the proceeds are yours - you should seek professional tax advice in relation to this recovery

administrators report that they have now received 8,043 claims from shareholders with a gross value exceeding $565 million - the review of claims received from shareholders is continuing and substantial progress has been made in addressing the volume of claims - certain conditions have to be met and the date for meeting them has been extended to 31 May 2008

NOTE TO SGW SHAREHOLDERS WHO HAVE SOLD THEIR SHARES TO deListed - we understand you may have received, or will shortly receive, notification and documents from Ferrier Hodgson, who are the Administrators to the company, to the effect that you may prove a debt or claim before 13 February 2008 to enable participation in a dividend to creditors - while you have subsequently sold your shares to us (remember they are held on trust pending registration of the transfer, which can only be effected if and when the company emerges from administration), in our view you are still entitled to prove your claim in this matter - if you are unsure how to proceed we suggest you obtain independent legal advice or contact Ferrier Hodgson

the meeting of creditors held today resolved to amend the Deeds of Company Arrangement ("DOCA") for the Companies in the SOG Group and authorised the Administrators to effect the interim dividend to creditors - based on the claims lodged by creditors to date, the interim dividend from the First Pool is likely to be in the range of 4.8 to 5.1 cents in the dollar to all admitted or positively assessed creditors

the Termination Date of the Deeds of Company Arrangement originally executed by each of the companies in the SOG Group on 30 August 2005, has been extended to 31 December 2007

at a meeting today creditors approved the sale of the Advanced Minerals Business on and subject to the terms of the Purchase and Sale Agreement (PSA) (as described in a report to creditors)

administrators estimate a return of 12 cents in the dollar for all creditors, including the shareholder claims of $250m - this depends on the approval, by creditors, of a proposed sale of the company's remaining assets for $205m - that could be more if legal actions against auditors, Ernst & Young and former directors, are successful - the administrators are proposing to split shareholders into junior and senior claims with a one off payment for junior claimants with no ongoing rights and a more vigorous claim process for senior claimants with ongoing rights - there is no clarity as to what one-off payment means in money terms for junior claims

the Administrators have advised that the DOCA is extended till 30/06/07 due to the complexity of the administration and damage to accommodation on the site

the Administrators have informed creditors that the DOCA has been extended to 30 April 2007 due to the complexity of the administration - this will allow administrators to maximise the return to creditors

the High Court has ruled today that a person who buys shares in a company in reliance upon misleading or deceptive information from the company, or is misled as to the company's worth by its failure to make disclosures required by law, may have a claim for damages against the company which ranks equally with claims of other creditors - a Sons of Gwalia shareholder, Luka Margaretic lost $26,288 of his retirement savings after investing in the company 11 days before it went bust in August 2004 - Mr Margaretic claimed Sons of Gwalia had failed to notify the Australian Stock Exchange that its gold reserves were insufficient to meet its sale contracts and that it could not continue as a going concern - he said he was the victim of misleading and deceptive conduct in contravention of the Trade Practices Act, the Corporations Act and the Australian Securities and Investments Commission Act

a creditors report confirms the Deed of Company Arrangement has been extended to 31 March 2007 due to the complexity of the administration and to allow maximum recovery for creditors (Tat mines will produce cash positive position by then) - shareholders are claiming $242m

the High Court has reserved its decision (on the issue of whether shareholders with claims for misleading and deceptive conduct can rank as unsecured creditors) - IMF (Australia) Limited say it is difficult to predict when it will come down; it may be later this year but could be early next year

delisted following failure to pay its annual listing fee in respect of the year ended 30 June 2007

deed administrators reiterate that the total value of the assets of the SOG Group is exceeded by a significant amount by the known and estimated claims of creditors, and there is no prospect of a return to shareholders on liquidation of the SOG Group - creditors therefore have the primary interest in the Tantalum Assets and it is the interests of creditors that will be addressed by the restructure

a further extension of the DOCA period to 30 November 2006 is granted by Master Sanderson of the Supreme Court of Western Australia - the requirement for an extension is driven by the timetable required to effect the restructure of the SOG Group

High Court grants special leave (relating to the Sons of Gwalia question of whether shareholders with a claim can rank as creditors) and orders that the hearing of the appeal be listed for 7 and 8 August 2006, to be heard in Adelaide - the ION Deed Administrators say "given that the High Court decided to expedite hearing of the appeal, it might reasonably be expected that the High Court will deliver its judgment within a few months after the hearing"

we understand the High Court will hear, on 16 June 2006, a special leave application relating to the Sons of Gwalia question of whether shareholders with a claim can rank as creditors

company announces the appointment of Peter Robinson as Chief Executive Officer - this appointment is in anticipation of SOG's emergence from a Deed of Company Arrangement in the next few months

ASIC has accepted an enforceable undertaking from Shareholder Advocacy Pty Ltd (SAPL) in relation to their prohibited use of information on company registers - SAPL had sent unsolicited letters, offering to lodge proof of debts with the companies, ION, Sons of Gwalia and Henry Walker Eltin - SAPL has agreed to cease sending offers to shareholders, lodge proof of debts for those persons who accepted SAPL's offer with the Administrator of the relevant companies and also refund to shareholders "a pro-rata amount of the fee paid by shareholders to SAPL" - sorry we don't know how much you will get back!

the following endeavours to summarise an announcement that has been made by ION Limited which is also of relevance to SGW shareholders "deed administrators confirm that unless and until such time as the High Court makes a different finding (in the Sons of Gwalia case), they are bound to apply the Full Court's reasoning in that proceeding in their administration of the ION DOCA - this means that claims made by shareholders who acquired their shares in ION on-market, alleging misleading conduct or non-disclosure by the company, should be treated on the same basis as the claims of other unsecured creditors - to date approximately 3000 proofs of debt, totalling in excess of $100 million, have been lodged by shareholders of ION - given the legal issues involved, the Deed Administrators are presently considering the issues in conjunction with their legal advisers"

IMF (Australia) Ltd announces that the Full Court of the Federal Court today unanimously dismissed the Administrators' appeal from Emmett J's decision - the Court confirmed that shareholders who buy on the market are entitled to prove as creditors in an insolvent administration where the company breached continuous disclosure obligations or misled them in representations made to the market about the company's financial circumstances and the shareholders' claims rank equally with non-shareholder creditors - unless the Administrators are granted special leave to appeal to the High Court from this judgment of the Full Federal Court then the matter will proceed through the Administrators' proof process

company announces it will undertake an operational restructure to maximise tantalum production at SGW's lower cost Wodgina mine

the company and Cabot Supermetals announce that the arbitration regarding the price at which Sons of Gwalia will supply tantalum ore to Cabot has been settled, and that the parties have entered into a new supply agreement - under the settlement, Cabot paid Sons of Gwalia a lump sum payment of US$27 million to terminate the existing supply agreement and other related agreements with Sons of Gwalia - Cabot and Sons of Gwalia have entered into a new three year tantalum ore supply agreement that incorporates a significantly reduced annual volume

reports that there are three choices facing the administrators: sell off the mines, refloat the company locally or go for a Toronto listing (apparently under the last option the company would enjoy a higher valuation)

Haddington Resources Limited announces that it has appointed its alliance partner Mitsubishi Development Pty Ltd (MDP) as its exclusive Sales Representative for the marketing of its tantalite production from the Bald Hill Project - this is consistent with Haddington's strategy of becoming an independent tantalite producer and "will provide Haddington with the opportunity to expand its position and profile in the tantalite market through the expertise and global network of one of the largest trading houses in the world"

reports that IMF Australia's attempts to gain access to the Sons of Gwalia share registry has been thwarted, with the High Court rejecting its application to use the registry to contact potential litigants

reports that the sale of Sons of Gwalia's tantalum division is delayed until next year

reports of Zinifex forming a strategic tantalum alliance with Haddington and Mitsubishi and suggestions this is a precursor to it making a possible offer for Sons of Gwalia's tantalum business

Haddington Resources Limited will bring forward plans to independently market tantalite concentrate from its Bald Hill operation after SGW advised that they are not in a position to receive concentrate from Bald Hill beyond 30 September 2005 and that they will not require the estimated 75,000 pounds of Ta2O5 expected to be produced from Bald Hill to 31 March 2006

ASIC issues an order relieving the company of certain financial reporting requirements

we understand shareholders have been sent a letter from a company by the name of Shareholder Advocacy P/L - deListed is opposed in principle to lawyers seeking an advance fee from small shareholders to fund class actions - we believe initial funding should come from the large shareholders who have the resources and expertise to better assess the chances of success - we recommend that shareholders (including those who have sold their shares to deListed) do not participate in this action at this juncture but instead obtain an Information Pack from IMF Australia at www.imf.com.au

the Judge has found in favour of the shareholder who cross claimed seeking a declaration that he is a creditor of the Company - according to this decision shareholders are therefore entitled to all the rights of a creditor under the Corporations Act including the right to attend meetings of creditors of the Company, vote at meetings of creditors of the Company and receive information and circulars sent by the Company to its creditors - also payment of the debt is not to be postposed behind payment of debts owed to other creditors who are not shareholders - IMF Australia funded this action and say "this decision is a clear precedent for all shareholders who purchased their shares on the market, as distinct from shareholders who purchased their shares from the Company through an initial public offering, placement or rights issue" (while this may ultimately benefit SGW shareholders it will have much wider ramifications for the relationship between the providors of debt and equity capital) - the lawyers for the Administrators are currently preparing to appeal this decision to the Full Court of the Federal Court - their case will be filed within the next 21 days

creditors voted today to accept the continued administration of the company and each company in the Group executed a Deed of Company Arrangement - creditors want to see whether shareholders are going to share in the available assets or not (a decision in a test case is yet to be delivered) before they make decisions about the company - the company is also locked in a price dispute for tantalum from its West Australian tantalum mines with offtake partner US-based Cabot Corporation - this matter is due to go to arbitration next month

ASIC confirms that it has an ongoing investigation into the affairs of the company - its investigation commenced in February 2005 after discussions with the administrator Ferrier Hodgson regarding possible offences

a meeting is to be held on August 30 to enable creditors to consider the Administrators' recommendations and to resolve whether each company in the Group should execute a Deed of Company Arrangement (this option recommended by administrators) or the administration of each company should end or each company be wound up - the administrators state that the question of whether claims by shareholders are provable as ordinary unsecured debts ranking equally with the debts due to ordinary unsecured creditors is unclear - this issue is the subject of a one day trial on 29 August 2005 - should shareholders wish to be considered for voting purposes, they will need to lodge with the Administrators prior to 11am on 29 August 2005 an informal proof of debt - if they don't, they will not be precluded from later asserting a right to be treated as a creditor of the Group for the purposes of participating in any distribution of the Group's assets

administrator's report says that the Lalors' possible breaches include failing to install effective internal controls over the company's treasury operations; failing to supervise those operations; failing to ensure Ross-Adjie abided by the trading limits set by the board; and failing to tell the board how those treasury operations were being conducted - the Lalors may also have breached the corporations law by failing to keep adequate financial records in the six years to 2003; failed to ensure those financial reports complied with accounting standards; failed to meet the stock exchange's continuous disclosure obligations and failed to understand the nature of the financial derivative products being traded and the imprudent financial risk associated with them

Luke Tonkin will cease to act as Chief Executive Officer on or before 25 October 2005

administrators announce that the Committee of Creditors approved the acceptance of a cash offer of $3m from Minara Resources Ltd for Sons of Gwalia's interest in the following Non Gold Project Assets: Eulaminna Tenements east of Leonora Coglia Well Nickel Cobalt Project Weld Range Platinum Group Minerals JV Weld Range General Minerals JV Forrestania/Bounty Nickel Royalty

a loss declaration has been issued and the capital loss can therefore be claimed in the financial year the declaration is issued

IMF Australia advises of the Full Courts decision in support of an earlier court decision that it would not be lawful for IMF to use the register in order to contact shareholders in relation to the potential litigation - the Court accordingly declined to make the declaration and IMF are contemplating further action to secure the register

John Leevers is ceasing to act as Chief Executive Officer and will be replaced by Luke Tonkin

the sale of Sons of Gwalia's Gold Division to St Barbara Mines was successfully completed today

announces it has signed an agreement for the sale of the Gold Division to St Barbara Mines Limited - the consideration for the sale is of a value of approx $38m

the statutory convening period for the second (decision) meeting of creditors has been extended until 30 June 2005

class (group) action - IMF Australia report they have received funding agreements from 201 shareholders and provided proofs of debt to the administrator for most of them - a procedure has been agreed whereby the Federal Court will be asked to rule on whether or not shareholders are prevented by the Corporations Act from becoming unsecured creditors - if the Court rules they are prevented, further action will follow - IMF Australia is also waiting the outcome of a court decision over use of the share register to contact other SGW shareholders

John Leevers resigns as Managing Director of Sons of Gwalia Ltd but will continue as Chief Executive Officer of the Company

the Directors of Oropa Limited ("Oropa")announce that Sons of Gwalia Limited (parent company of Pacmin Mining Corporation Limited ("Pacmin")), have decided to sell Pacmin's entire holding of 18.33 million shares in Oropa - Pacmin acquired this shareholding in August 2004 as full and final settlement for its former 66.6% interest in the Pungkut Gold Project in Indonesia

administrators launch court action against auditors Ernst & Young - the administrators allege the auditors failed to warn the directors that there were no proper or effective internal controls over the treasury operations that would enable exposures to be ascertained and controlled

class (group) action - we understand it will be some six weeks before the court hands down its decision regarding access to the SGW share register

reference our note below of 2/11/2004, regarding the SGW share register, we understand an appeal to the Federal Court is being heard in Perth on 24 February 2005

five directors (including the chairman) and the company secretary resign

according to a release by IMF (Australia) Limited, it is funding the class action against the company with a maximum claim value of $15m and it expects the case to be completed by 31 December 2006

the administrators advise that ASIC has provided an order relieving the company from the requirement to comply with Part 2M.3 of the Act in relation to the financial reports for the year ending 30 June 2004

the company and H.C. Starck announce agreement on a new long-term take or pay tantalum supply contract

IMF (Australia) Limited announces its decision to proceed with litigation funding for shareholders of Sons of Gwalia Limited, claiming damages by virtue of the failure of SOG to keep the market continuously informed as to its gold reserves and resources and its forward sale commitments

the Federal Court rules that an application by litigation funder IMF Australia to use the company's share register to contact shareholders would contravene the privacy provisions of the Corporations Act - IMF wants the register so that it can invite some 1400 shareholders to join a class action against the company for failing to fully disclose its gold hedging commitments - deListed supports the use of the register for this purpose even if it means competing litigation funders contact shareholders with offers to recover losses

we understand shareholders have been approached to join a class action - we will have some pointers here on this site in a few days

administrators advise of the appointment of advisors to assist in the sale or reconstruction of the advanced minerals business and the gold assets

advises of extension up until 29 May 2005 to hold the 2004 Annual General Meeting

administrators estimate the company's liabilities at $862 million - for the moment it is business as usual as the administrators explore restructuring options including sale of certain assets to reduce debt levels or sale and/or recapitalisation of the remaining core business

we understand a Class Action form has been sent to shareholders - the action is against the company, its directors, officers or auditors - we will have further details mid-October

Court grants an extension to 19 December 2004 to hold the second meeting of creditors

first meeting of creditors held

reports that nine banks and financial institutions refused to accept the standstill agreement on a gold and currency hedging debt of about $423 million following a serious deterioration in the company's gold reserves (or was it the sudden realisation that the gold reserves could not be economically mined?)

reports that ASX is investigating allegations that management overstated the company's gold reserves - the issues are: what has changed from the previous situation and at what point did the company become aware of it - was the market informed of developments given the company's market capitalisation of $190 million when shares were suspended from quotation?

WMC Resources indicate they may be prepared to poke a stick at the company's tantalum operations

shares suspended from quotation following the appointment of administrators A Love G Trevor and D Weaver of Ferrier Hodgson - directors decided the company was likely to become insolvent as a consequence of failure by certain creditors to agree to a standstill agreement (which may have allowed the company to reorganise etc) - it is too early to speculate on the outcomes but administration rarely augurs well for shareholders

name changed from Sons of Gwalia NL

apparently delisted at entity's request (this was probably the first time Sons of Gwalia collapsed)