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19/04/18
       
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Lachlan Star Ltd. (Subject to Deed of Company Arrangement)

Lachlan Star Limited (Subject to Deed of Company Arrangement) – Share Placement

 

DJ Carmichael Pty Limited (“DJC”) has been invited to participate in a share placement (“Placement”) being undertaken by Lachlan Star Limited (Subject to Deed of Company Arrangement (“DOCA”)) (“LSA”).

 

LSA is seeking to raise $1.5 million via the issue of 300 million fully paid ordinary shares (“Shares”) at an issue price of $0.005 per Share.

 

Placement Shares will be issued pursuant to a prospectus lodged with the ASIC on 16 March 2018 (“Prospectus”). The Prospectus may be viewed via the Company’s website at the following link: www.lachlanstar.com.au/uploads/LSA_Prospectus_March_16_2018.pdf. Please note that the Prospectus must be read and considered prior to bid applications being submitted.

 

The Prospectus aims to satisfy ASX requirements for re-listing following the DOCA being wholly effectuated. On completion of the Recapitalisation Proposal and Placement, the Company will seek the reinstatement to trading of its Shares on the ASX. If the conditions outlined in section 3.7 of the Prospectus are not met, the Placement will not proceed and applicants will be refunded application monies in accordance with the Corporations Act.

 

Participation in the Placement is open to all retail, sophisticated and professional investors.

 

Lachlan Star Limited (Subject to DOCA) is a minerals exploration and development company that is currently suspended from ASX quotation. The Administrators of the Company entered into a DOCA on 28 August 2015 to recapitalise the Company.

 

Investment Highlights

 

Princhester Magnesite Project

  • Located 85km north west of Rockhampton, Queensland and comprising two granted Mining Leases.
  • The area forms steeply dissected ridges where the serpentinite and associated rocks are deeply weathered and overlain in part by laterite.
  • Ultramafic intrusions lie along a fault system separating these early Paleozoic rocks from those of the Yarrol Basin in the west.
  • Intrusion of harzburgite and serpentinite as elongate north west - south east striking bodies concordant with the strike of the enclosing rocks.
  • The harzburgites have mostly been serpentinised and, as well as the separately emplaced serpentinites, have largely been weathered.
  • The magnesite mineralisation is a mixture of magnesite, quartz and magnesia silicates, which are associated with serpentinite.
  • The Princhester Magnesite Project represents a genuine magnesite resource (non-JORC) with a long history of detailed exploration and resource / metallurgical evaluation.

 

Bushranger Copper Project

  • Located 25km south of Oberon in the Lachlan Fold Belt in New South Wales and comprising an Exploration Licence.
  • The Project is currently the subject of the Bushranger Exploration Farmin and Joint Venture Agreement (“Agreement”), which was initially entered into by the Company’s wholly owned subsidiary ORD Investments Pty Ltd (“ORD”) and Newmont Exploration Pty Ltd (“Newmont”) on or around 30 September 2011.
  • Newmont’s interest in the Bushranger Agreement was subsequently novated to Anglo American Exploration (Australia) Pty Ltd (“Anglo American”) pursuant to a Deed of Novation (“Deed”) between Anglo American, Newmont and ORD on or around 10 January 2014, with the initial interests subsequent to the Deed being 51% to Anglo American and 49% to ORD.
  • The Company has since elected not to contribute to exploration expenditure on the project and has thereby diluted its interest.
  • In accordance with the terms of the Bushranger Agreement the Company’s interest will convert into a 2% Net Smelter Royalty (subject to formal confirmation, audit and documentation).

 

Recapitalisation Proposal approved by Shareholders

  • On 28 August 2015 the Company, the Proponent¹ and the administrators executed the DOCA¹, which embodied a proposal by the Proponent for the recapitalisation of the Company (“Recapitalisation Proposal”).
  • The Recapitalisation Proposal was approved by shareholders of the Company at the general meeting held on 19 March 2018.
  • Actions outlined in the Recapitalisation Proposal, which are now underway, are as follows:
    • The Company will retain its interest in the Princhester Magnesite Project and Bushranger Copper Project (“Retained Assets”).
    • The Company will consolidate its existing securities on a 1:5 basis – completed 20 March 2018.
    • The claims of creditors of the Company will be dealt with pursuant to the DOCA and the Company will thereafter be debt free.
    • Settlement will occur on the date that is 3 business days after the satisfaction (or waiver) of the last of the DOCA conditions (“Settlement”). At Settlement:
      • The Creditor Payment¹ will be made to the deed administrators;
      • The deed administrators will create a creditors’ trust (“Creditors’ Trust”) and transfer any other assets or property of the Company, other than the Retained Assets, to the Creditors’ Trust;
      • The DOCA will be wholly effectuated; and
      • The deed administrators will resign.
  • On successful reinstatement to the official list of ASX, the Company will pay the Recapitalisation Fee¹ to the Proponent.  
  1. As defined in the Prospectus

 
Funds raised via the Placement will be utilised as follows and as outlined in section 7.2 of the Prospectus.
 

Proposed capital structure
 

 

DJC is entitled to a fee of up to 6% plus GST on the gross amount raised under the Placement, as well as 15,000,000 Company options exercisable at $0.005 on or before the date that is three years from the date of issue.

 

Please ensure you contact your Adviser on 9263 5200 before 10.00am WST Friday 20 April 2018 if you are interested in participating. 

To Read the LSA Term Sheet Please CLICK HERE
Markets Summary
Australian Market Review
Local Markets
 

The Australian market notched a fourth straight session of gains, driven by strength in the energy, mining and retail sectors. The ASX200 index was up 0.3 per cent at 5,861 points, while the broader All Ordinaries was up 0.4 per cent at 5,956 points.

Gains by oil and gas producers, miners and retailers offset falls in the financial, healthcare and telecommunications sectors. While Wednesday's gains were modest, the market closed near its highs for the day marking a significant shift in investor behaviour. In recent days, the share market has posted early gains before losing momentum later in the session.

Investor confidence had improved as fears of a US-China trade dispute eased, along with US tensions with Russia in Syria.

A rise in oil and iron ore prices helped lift the miners and oil and gas producers. Oil Search gained 16 cents, or 2.1 per cent, to $7.70, Origin Energy added 14 cents, or 1.5 per cent, to $9.49 and Woodside Petroleum rose 33 cents, or 1.1 per cent, to $30.72 after reporting a lift in first-quarter production and sales revenue.

BHP Billiton gained 14 cents, or 0.5 per cent, to $30.07, Fortescue Metals added four cents, or 0.9 per cent, to $4.55, while Rio Tinto lifted 87 cents, or 1.1 per cent, to $78.96 after its first quarter iron ore production rose eight per cent from a year ago.

The best performing retailers included Harvey Norman, which gained nine cents, or 2.7 per cent, to $3.44, Kathmandu added 10 cents, or 4.4 per cent, to $2.37, and JB Hi-Fi was 57 cents stronger, up 2.3 per cent, at $25.94.

Wealth manager AMP fell 10 cents, or 2.2 per cent, to $4.45, continuing its decline since admitting to the financial services royal commission that it had lied to or misled the corporate regulator about its business practices.

All four major banks also lost ground, with Commonwealth Bank the worst performer, down 35 cents, or 0.5 per cent, to $72.41.

International Markets

The S&P 500 in the US eked out a small gain while the Dow declined after a volatile trading session, with weakness in sectors such as consumer staples and financials offsetting strong gains in the energy and industrial indexes.
 

Higher oil prices boosted energy stocks while transport stocks such as CSX Corp helped the industrial sector. But IBM's 7.5 per cent drop was the biggest drag on the S&P after the technology company's quarterly profit margins missed Wall Street targets.

United Continental gained 4.8 per cent and lifted other airline stocks after reporting a better-than-expected quarterly profit.

Trading was choppy, with the Dow swinging between positive and negative territory while the S&P 500 gave up most of its gains in the last few minutes of trading.

In late afternoon trade the S&P briefly lost ground after a Federal Reserve report said robust business borrowing, rising consumer spending, and tight labour markets indicated the US economy is on track for continued growth, with trade war risks being the one big outlier.

The Dow Jones fell 0.16 per cent, the S&P 500 gained 0.08 per cent, and the Nasdaq 0.19 per cent.

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DJ Carmichael Pty Limited ACN 003 058 857 is a wholly owned subsidiary of DJ Carmichael Group Pty Limited ACN 114 921 247. DJ Carmichael Pty Limited is the holder of (Australian Financial Service Licence Number 232571). In accordance with Section 949A of the Corporations Act 2001 DJ Carmichael Pty Limited advises this email contains general financial advice only. In preparing this document DJ Carmichael Pty Limited did not take into account the investment objectives, financial situation and particular needs (‘financial circumstances’) of any particular person. Accordingly, before acting on any advice contained in this document, you should assess whether the advice is appropriate in light of your own financial circumstances or contact your DJ Carmichael Pty Limited adviser. DJ Carmichael Pty Limited, its Directors, employees and advisers may earn brokerage or commission from any transactions undertaken on your behalf as a result of acting upon this information. DJ Carmichael Pty Limited, its Directors and employees advise that they may hold securities, may have an interest in and/or earn brokerage and other benefits or advantages, either directly or indirectly, from client transactions. DJ Carmichael Pty Limited believes that the advice herein is accurate however no warranty of accuracy or reliability is given in relation to any advice or information contained in this publication and no responsibility for any loss or damage whatsoever arising in any way for any representation, act or omission, whether express or implied (including responsibility to any persons by reason of negligence), is accepted by DJ Carmichael Pty Limited or any officer, agent or employee of DJ Carmichael Pty Limited. This message is intended only for the use of the individual or entity to which it is addressed and may contain information that is privileged, confidential and exempt from disclosure under applicable law. If you are not the intended recipient or employee or agent responsible for delivering the message to the intended recipient, you are hereby notified that any dissemination, distribution or copying of this communication and its attachments is strictly prohibited.
 
The recommendation made in this report is valid for four weeks from the stated date of issue. If in the event another report has been constructed and released on the company which is the subject of this report, the new recommendation supersedes this and therefore the recommendation in this report will become null and void.

Recommendation Definitions

SPECULATIVE BUY – Potential 10% or more outperformance, high risk
BUY – Potential 10% or more outperformance
HOLD – Potential 10% underperformance to 10% over performance
SELL – Potential 10% or more underperformance
Period: During the forthcoming 12 months, at any time during that period and not necessarily just at the end of those 12 months.

Stocks included in this report have their expected performance measured relative to the ASX All Ordinaries index. DJ Carmichael Pty Limited’s recommendation is made on the basis of absolute performance. Recommendations are adjusted accordingly as and when the index changes.

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© 2018 No part of this report may be reproduced or distributed in any manner without permission of DJ Carmichael Pty Limited.


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