Convertible Redeemable 10% Notes
Convertible Redeemable 10% Notes January 2015 (1) Gulf Minerals Corporation Gulf Minerals Corporation Limited is an Australian manganese development group listed on the Australian Securities Exchange (ASX: GMC) and shall make application to dual list on the Singapore Exchange’s Catalist Board. (2) Proposed business GMC will develop an alloying smelter facility based in the West Timor capital Kupang, Indonesia to take full advantage of the following: (1.1) (1.2) (1.3) (1.4) Low cost, low impurity high grade manganese ore Beneficial cost of labour Modest power cost Government Fiscal Incentives and 5 year Tax Holiday Production will be a premium quality 78% manganese alloy resulting from the unique qualities of the Indonesian ore blended with ore sourced from various Asian locations to produce a medium carbon ferromanganese alloy. (3) Stage of development To implement the business plan Gulf will complete the following; (3.1) (3.2) (3.3) (3.4) (3.5) (3.6) Raise funds via Convertible Notes offering – Terms Sheet attached Finalise engineering design Finalise Government industrial land in Kupang (West Timor) Finalise smelter Supply and Construction Contract Agreement Finalise Offtake Agreements Listing of GMC on the Singapore Stock Exchange Catalist Board (Q2 2015) (4) Business Plan The business plan contemplates dual function of exporting +50% manganese ore, under government licence, in 2015 and exporting premium quality ferromanganese alloy from 2016. Free cashflow is projected to increase from $1.7m in 2015 to $36.8m in 2019. (5) Management team Graham Anderson – Non Executive Chairman Graham holds a Bachelor of Business and is a Chartered Accountant with more than 25 years experience of commercial and corporate dealings with national chartered accounting firms in auditing and independent expert reports. He has extensive experience and knowledge of the ASX listing rules and the Corporations Act. Peter Williams – Non Executive Exploration Director Peter holds a PhD in structural geology and has a wide range of exploration experience in regional structural geology, particularly within Asia. Before retiring he was Managing Director of SRK Australia, one of the country’s largest specialist geological consulting groups. Michael Walters – Non Executive Marketing Director Michael is an engineer with 30 years experience in the resources industry. Previously he worked with Billiton, Western Mining and Consolidated Minerals where he was part of the team that built CSM into the world's 4th largest high-grade manganese supplier. He is principal of his own mineral ore marketing business. Bruce Morrin – Executive Technical Director Bruce is a mining engineer with over 45 years in mining covering open pit and underground operations. He commenced his career on the Zambian copper belt with Anglo American, was General Manager for African Associated Mines in Zimbabwe, Registered Mine Manager Mt Isa Copper Operations and Director of copper and molybdenum mining operations in Western Australia. Paul O’Shaughnessy – Non Executive Metallurgical Director Paul is a metallurgical engineer with some 40 years of industry experience which includes smelting operations producing both bulk and specialty manganese alloys. He operates his own consulting business, which includes advising on the manufacturing of ferro alloys. Michael Kiernan – President Director PT Internasional Mangan Grup Michael has spent 40 years in the mining and transport industries, most notably in the discovery, development and operations of manganese and iron ore. He previously built a resources group to become one of the ASX 200 resource companies. (6) Funding (pre IPO) Convertible notes January 2015 $2,500,000 Use of Funds: Finalise smelter engineering design and consulting costs IPO costs for listing on the Singapore Exchange. (7) Funding (IPO) Q3 2015 $15,000,000 (8) (9) Project Funding Convertible Notes Listing Project Debt Project Debt Capital Raising $2.5m $15m $12.5m $5m $25m Total $60m Capital Expenditure 2015 (1H) 2015 (2H) 2016 2017 2018 Total (10) 2014 2015 2016 2017 2018 $2m $12.5m $12.5m $12.5m $12.5m _______ $52m EBITDA 2015 2016 2017 2018 2019 $1.7m $9.7m $18.5m $27.3m $36.8m Engineering and IPO costs 2 Furnaces 2 Furnaces 2 Furnaces 2 Furnaces GULF MINERALS CORPORATION LIMITED REDEEMABLE CONVERTIBLE NOTES TERM SHEET COMPANY OVERVIEW January 2014 Gulf Minerals Corporation Limited will develop an ASEAN focused manganese alloy producer. The facilities based in Indonesia will take advantage of low cost of ore, labour and power. Production will be a premium quality 78% ferro manganese alloy resulting from the unique qualities of the Indonesian high grade low impurities manganese ore. Value adding ores is strongly encouraged by the Indonesian Government to enrich the country’s minerals endowment thereby enhancing the economy and creating employment. All initiatives to value add have full support from all levels of government and GMC will benefit from the Government’s Financial Incentives Programme which effectively will result in a 5 year tax holiday advantage. COMPANY DETAILS Company Head office: Shares currently on issue: Options currently on issue: NOTE DETAILS Gulf Minerals Corporation Limited ACN 059 954 317 ASX: GMC Level 2 78 Mill Point Road South Perth, Western Australia Issuer: Notes offered: Gulf Minerals Corporation Limited AUD $2,500,000 Denomination: AUD $10,000 per note Term: 3 years Coupon: 10% Interest: Paid quarterly in arrears Conversion: 85% 30 day VWAP 49,232,676 15,390,671 TERMS AND CONDITIONS Issuer Notes offered Coupon Term Interest payments Denominations Ranking of Notes Guarantees Conversion: Redemption: Governing law Gulf Minerals Corporation Limited (www.gulfmineralscorp.com) AUD $2,500,000 unsecured 10% 3 years from issue Quarterly in arrears 250 notes in denomination of AUD $10,000 per note Will rank senior in obligation of payment to any future indebtedness including dividends The issuer’s obligations under the Notes will be guaranteed by Gulf Minerals Corporation Limited and subject to all regulatory approvals Each note may be converted into Gulf shares at the rate of 85% of the 30 day VWAP at the Holders option after 12 months from issue Each note may be redeemed at the Holders option 12 months from issue or any time thereafter with 3 months notification and all outstanding notes will be redeemed in full 36 months from issue The Laws of Australia shall apply to the Notes USE OF FUNDS Finalise smelter engineering design and consulting costs Listing costs for GMC listing on the Singapore Stock Exchange (SQX) SMELTER OVERVIEW Capital cost of each furnace plus ancillaries $6.5M (total of 8 over 4 years) Full production 160,000 tonnes alloy and 180,000 tonnes ore per year Funding via AUD $15M listing of GMC on the Catalist Board of the SQX The above term sheet has been authorised by the Gulf Minerals Corporation Limited Board of Directors. Bruce Morrin – Chief Executive Officer 10 November 2014
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