DRAFT

Cabral Resources Limited (Administrators Appointed)(“Cabral”) Second meeting of creditors 14 January 2015

2

Formalities

Voting

Purpose of the meeting

Administrators’ Report to creditors

Administrators’ remuneration

Vote on the Company’s future

Liquidators’ remuneration

Committee of Inspection

Questions

Agenda

Formalities

3

Open meeting

Administrator Chairman: Corporations Regulation 5.6.17(1)

Introductions:

Barry Kogan (Administrator)

Damien Pasfield (Senior Manager)

Michael Bogue (Director)

Quorum: Corporations Regulation 5.6.16 (2)

Attendance register

Time and place convenient: Corporations Regulation 5.6.14

Proofs of debt and proxies

Formalities (cont.)

4

Voting on voices unless poll demanded: Corporations Regulation 5.6.19

Poll can be demanded by:

Chairperson; or

2 persons present and entitled to vote; or

Creditors representing at least 10% of claims

When a poll is conducted, a resolution is passed if:

more than half the creditors (in number) vote in favour of the resolution; and

more than half the creditors (in value) vote in favor of the resolution

If there is a deadlock, the Chairperson may use their casting vote

Purpose of Meeting

5

Convened under Section 439A of the Corporations Act to:

report to creditors on the Company’s business, property, affairs and financial circumstances

set out the Administrators’ opinion on the courses of action available to the Company

vote on the Company’s future:

• return Company to its Directors; or

• execute a Deed of Company Arrangement (“DOCA”); or

• enter into liquidation; or

• meeting be adjourned for up to 45 business days

Consider and (if thought fit) approve the Administrators’ and Liquidators’ remuneration

Consider the appointment of a Committee of Inspection

Report to creditors - background

6

Listed iron ore explorer with a tenement portfolio in Bahia, Brazil

Incorporated in July 1994 and initially listed on ASX in June 1995

Acts as a holding company with investments in:

Subsidiaries with interests in over 100 iron ore tenements in Brazil; and

A joint venture with China Railway Materials Commercial Corporation Group

Provided extensive funding (c.$20 million) to subsidiaries in relation to exploration activities and securing tenements

Expected future funding in excess of $10 million required to progress projects to commercial scale mining stage

Attempts to raise capital failed to provide sufficient funding to Cabral to continue to fund the operations of its subsidiaries, ultimately leading to our appointment

Causes of failure:

Difficulties in securing funding; and

No commercialized operations that generated an income stream

Report to creditors – organisational structure

7 7

Trust relationship for Sincorá tenements

Legal owner of Brumado

Complex and Sincorá Area

tenements

Beneficial owner of

Sincorá Area

tenements

Under external administration

Cabral Mineração Ltda

(incorporated in Brazil))

(“Mineração”)

Northern Yeelirrie

Pty Limited

ACN 128 458 757

(“NY”)

Cabral Resources Limited

(Administrators Appointed)

ACN 064 874 620

CRMSC (Australia)

Pty Limited

ACN 108 972 676

(“the JV”)

50% 100% 100%

100%

100%

Cabral Brazil Pty Limited

(Administrators

Appointed)

ACN 144 001 043

(“Cabral Brazil”)

China Railway Materials

Commercial Corporation Group

(through subsidiary)

Cabral Metias Ltda

(incorporated in Brazil)

(“Metias”)

50%

Mining tenements

Key:

Non-group entity

Group entity

Cabral traded at a loss throughout the period reviewed

Revenue consists of interest on funds held in bank accounts and reimbursement of expenses from the JV under a cost sharing agreement

Expenses relate to employees, occupancy expenses, general administrative expenses and travel for the Directors to visit the offices and tenements of the Brazilian subsidiaries

Report to creditors – financial performance

8

Statement of Financial Performance

30 June 2012 30 June 2013 30 June 2014

$m's $m's $m's

Income

Revenue 0.73 0.31 0.13

Total revenue 0.73 0.31 0.13

Expenses

Operational expenses (2.07) (1.35) (1.20)

Depreciation and amortisation (0.01) (0.04) (0.03)

Impairment expense1 - - (0.88)

Share of JV profit / (loss) (0.43) (0.40) (0.06)

Total expenses (2.51) (1.79) (2.17)

Operating profit / (loss) (1.78) (1.48) (2.04)

Source: FY12, FY13 and FY14 management accounts1 Relates to expenses historically capitalised (e.g. travel)

Year Ended

Report to creditors – financial position

9

Over the period reviewed, Cabral’s most significant liability was employee entitlements, with no secured creditors and minimal unsecured creditors

Assets comprised cash (including term deposits), loans to and investments in subsidiaries (mainly Cabral Brazil), and an investment in the JV

Assets

30 June 2012

$m's

30 June 2013

$m's

30 June 2014

$m's

Cash at bank (incl term deposits) 9.59 2.85 0.65

Bonds / trust funds 0.10 0.10 0.10

Loans to subsidiaries

- Cabral Brazil 11.07 16.62 17.77

- NY 0.15 0.15 0.15

Investments in subsidiaries

- Cabral Brazil 1.25 1.25 1.25

- JV 0.90 0.69 0.63

- NY1 0.00 0.00 0.00

Other assets 0.22 1.00 0.08

Total assets 23.28 22.66 20.63

Liabilities

Employees (0.22) (0.27) (0.28)

Other liabilities (0.08) (0.12) (0.08)

Total liabilities (0.30) (0.39) (0.36)

Net assets 22.98 22.27 20.27

Source: Management Accounts1 Equity invested - $1.00

Statement of Financial Position

Year ended

Report as to Affairs (“RATA”)

10

Loans to and investments in Cabral Brazil represent the most significant assets of Cabral at $18.57m and $1.25m, respectively

Employee entitlements disclosed in Directors RATAs total approx. $688k. Administrators estimate outstanding liabilities to be approx. $708k, of which approx. $50k relates to preferential employee entitlements

Summary of Financial Position and Directors' RATAs

Assets $m's

Cash at bank (incl term deposits and bonds) 0.14

Loans to subsidiaries

- Cabral Brazil 18.57

- NY 0.15

Investments in subsidiaries

- Cabral Brazil 1.25

- JV 0.63

- NY1 0.00

Other assets 0.09

Total assets 20.83

Liabilities

Employees (0.69)

Unsecured creditors (0.18)

Total liabilities (0.87)

Net assets 19.96

Source: Management Accounts1 Equity invested - $1.00

Investigations

11

Insolvent trading:

Net assets: Positive net asset position throughout entire period reviewed (c. $20m) however, we note no impairment of loans in management accounts, despite impairment of underlying assets in the consolidated accounts.

Cash flow: May have been cash flow insolvent since September 2014. Limited fresh liabilities incurred following this time

Conclusions: Various defences available to Directors which makes claim for insolvent trading difficult to pursue

Voidable transactions:

Transactions totalling $45k identified which may constitute preferences (relatively small amounts to multiple parties)

Breach of Directors’ duties:

At this stage, no matters identified cause concern surrounding the discharge of the Directors’ duties and responsibilities under the Corporations Act 2001

Any potential recoveries are only available to a Liquidator

Further investigations to be undertaken if Liquidator appointed

Sale process

12

Initial discussions held with parties who had previously expressed (or likely to have) an interest in Cabral and/or its assets

Advertised in the Australian Financial Review

Engaged with over 40 parties to date, with formal EOIs received from 11 parties, and a number of non-binding indicative offers received

Timetable:

Expressions of Interest period: 8 December 2014 to 15 December 2014;

Completion of stage 1 due diligence: 19 December 2014;

Submission of non-binding first round offers: 19 December 2014; and

Commencement of stage 2 due diligence for short-list bidders: 12 January 2015

Most of these offers contemplate a DOCA structure to acquire the listed shell

Our overall objective is for final offers to be received and assessed in January 2015 and an agreement to be executed in February 2015

Anticipated return to creditors

13

‘High’ scenario: Sufficient funds to pay preferential employee entitlements in full, some funds for unsecured creditors and no funds for shareholders

‘Low’ scenario: Insufficient funds to meet the costs of the administration/liquidation and no funds available for creditors (including preferential creditors) or shareholders

The above analysis does not include recoveries from Cabral’s business/assets as disclosure of preliminary views could jeopardise the sale outcome. Potential recoveries from voidable transactions are also excluded

Estimated return to creditors in a liquidation

Particulars High $ Low $

Assets

Cash at bank 37,052 37,052

Rental bond 77,532 -

JV 250,000 200,000

Sale of business/assets Unknown Unknown

Voidable transaction recoveries Unknown Unknown

Less costs

Staff, asset maintenance and operational costs (30,000) (50,000)

Administrators' fees to 2 January 2015 (125,476) (125,476)

Estimated Administrators' fees from 3 January to 14 January 2015 (30,000) (36,000)

Estimated Liquidators' fees (70,000) (80,000)

Legal and other professional costs (30,000) (50,000)

Amount available for preferential creditors 79,108 -

Employee entitlements (less non-priority claims from employees) (50,588) (50,588)

Estimated return to preferential creditors 100.00% 0.00%

Amount available for unsecured creditors 28,520 -

Unsecured creditor claims (including non-priority claims from employees) 819,935 819,935

Estimated return to unsecured creditors 3.48% 0.00%

Residual funds available to shareholders Nil Nil

Source: McGrathNicol analysis

Resolutions – Administrators’ remuneration

14

Resolution – remuneration incurred from 1 December 2014 to 2 January 2015

I now put the following resolution to the meeting:

“That the remuneration of the Administrators for the period from 1 December 2014 to 2 January 2015, calculated on hours spent at the rates detailed in the Schedule of Remuneration Methods and Hourly Rates provided to creditors, in the amount of $125,475.50 (excluding GST), is hereby approved for payment.”

Resolutions – Administrators’ remuneration (cont.)

15

Resolution – estimated remuneration incurred from 3 January 2015 to 14 January 2015

I now put the following resolution to the meeting:

“That the Administrators’ remuneration for the period from 3 January 2015 to 14 January 2015 shall be a sum equal to the time cost spent by the Administrators, their partners and their staff, calculated at the rates detailed in the Schedule of Remuneration Methods and Hourly Rates provided to creditors, in the amount of $35,376.50 (exclusive of GST).

Creditors acknowledge that if actual costs incurred are below the amount approved, the Administrators are only authorised to draw the amount incurred. Creditors also acknowledge that if actual costs incurred exceed the amount approved, the Administrators will seek further approval from creditors.

The Administrators are approved to draw their remuneration as and when it is incurred from funds under their control.”

Resolutions – Administrators’ remuneration for Cabral Brazil

16

Cabral is the overwhelming largest creditor of Cabral Brazil (only one other creditor for $124)

Accordingly, we consider it useful that the creditors of Cabral consider passing a resolution noting their support for the following resolutions passed by creditors of Cabral Brazil:

“That the remuneration of the Administrators for the period from 1 December 2014 to 2 January 2015, calculated on hours spent at the rates detailed in the Schedule of Remuneration Methods and Hourly Rates provided to creditors, in the amount of $24,758.00 (excluding GST), is hereby approved for payment.”

and

“That the Administrators’ remuneration for the period from 3 January 2015 to 14 January 2015 shall be a sum equal to the time cost spent by the Administrators, their partners and their staff, calculated at the rates detailed in the Schedule of Remuneration Methods and Hourly Rates provided to creditors, in the amount of $9,054.50 (exclusive of GST).

Creditors acknowledge that if actual costs incurred are below the amount approved, the Administrators are only authorised to draw the amount incurred. Creditors also acknowledge that if actual costs incurred exceed the amount approved, the Administrators will seek further approval from creditors.

The Administrators are approved to draw their remuneration as and when it is incurred from funds under their control.”

Resolutions – Administrators’ remuneration for Cabral Brazil

17

Resolution – regarding remuneration from 1 December 2014 to 14 January 2015 for Cabral Brazil

I now put the following resolution to the meeting:

“That the creditors of Cabral are supportive of the remuneration resolutions passed by creditors of Cabral Brazil, and payment of these amounts as and when incurred from funds on hand.”

Resolutions – Cabral Brazil’s future

18

We also request that the creditors of Cabral consider the following resolutions put to creditors of Cabral Brazil:

“That the second meeting of creditors be adjourned for a period of up to 45 business days”

Resolution – adjourn Cabral Brazil meeting for up to 45 business days

I now put the following resolution to the meeting:

“That the creditors of Cabral are supportive of the adjournment resolutions passed by creditors of Cabral Brazil.”

Vote on Cabral’s future: Administrators’ recommendations

19

Administration to end

As Cabral is insolvent, control of the company should not be returned to the Directors

DOCA

No final/binding DOCA has been proposed, therefore not recommended

Cabral to be wound up

As there is no DOCA and Cabral is insolvent, in the event that creditors wish to immediately resolve the future of the company, the Administrators’ recommendation is that creditors vote in favour of the company being placed into liquidation

Adjourn meeting for up to 45 business days

Various bidders are proposing to transact via a DOCA structure

In order to leave this option open for creditors (which may ultimately increase the proceeds received and therefore the return to creditors), we recommend that creditors resolve to adjourn the meeting for a period of up to 45 business days

Vote on Cabral’s future – resolution

20

Adjourn meeting for up to 45 business days

I now put the following resolution to the meeting:

“That the second meeting of creditors be adjourned for a period of up to 45 business days”

Liquidation

I now put the following resolution to the meeting:

“That Cabral be Wound Up and Barry Kogan and Joseph Hayes be appointed Joint and Several Liquidators”

Resolutions – Liquidators’ remuneration

21

I now put the following resolution to the meeting:

“That the remuneration of the Liquidators, for the period of the liquidation, shall be a sum equal to the time cost spent by the Liquidators, their partners and their staff, calculated at the rates detailed in the Schedule of Remuneration Methods and Hourly Rates provided to creditors, in the amount of $75,006.00 (exclusive of GST).

Creditors acknowledge that if actual costs incurred are below the amount approved, the Liquidators are only authorised to draw the amount incurred. Creditors also acknowledge that if actual costs incurred exceed the amount approved, the Liquidators will seek further approval from creditors.

The Liquidators are approved to draw their remuneration as and when it is incurred from funds under their control.”

Resolutions – Liquidators’ remuneration for Cabral Brazil

22

Cabral is the overwhelming largest creditor of Cabral Brazil (only one other creditor for $124)

Accordingly, we request that the creditors of Cabral consider the following resolutions put to creditors of Cabral Brazil:

“That the remuneration of the Liquidators, for the period of the liquidation, shall be a sum equal to the time cost spent by the Liquidators, their partners and their staff, calculated at the rates detailed in the Schedule of Remuneration Methods and Hourly Rates provided to creditors, in the amount of $20,370 (exclusive of GST).

Creditors acknowledge that if actual costs incurred are below the amount approved, the Liquidators are only authorised to draw the amount incurred. Creditors also acknowledge that if actual costs incurred exceed the amount approved, the Liquidators will seek further approval from creditors.

The Liquidators are approved to draw their remuneration as and when it is incurred from funds under their control.”

Resolution – regarding Liquidators’ remuneration for Cabral Brazil

I now put the following resolution to the meeting:

“That the creditors Cabral are supportive of these resolutions put to creditors of Cabral Brazil, and payment of these amount as and when incurred from funds on hand.”

Resolutions – Committee of Inspection

23

I now put the following resolution to the meeting:

“That a committee of inspection be formed, with the following to be members:

………………………… representing …………………………

………………………… representing …………………………

………………………… representing …………………………

………………………… representing …………………………

………………………… representing …………………………”

Q & A