Octagonal Resources : 2nd Quarter Activity and Cashflow Report - 31 December 2015

TITLE

27 January 2016‌

No. of Pages: 10

ASX CODE: ORS

Market Cap.: $2.98m ($0.012 p/s) Shares on issue: 248,331,672

Cash: $0.03 m (31 December 2015)

Debt: $1.3 m (31 December 2015)

ASX Investments 169,672,726 AYC shares

56,557,576 AYCO options

DIRECTORS

Ian Gandel, Chairman

Anthony Gray, Managing Director Bob Tolliday, Director

MAJOR SHAREHOLDERS

Abbotsleigh - 41.1% Alliance Resources - 8.9%

PRINCIPAL OFFICE

Octagonal Resources Limited ABN 38 147 300 418

Suite 3, 51 - 55 City Road

Southbank VIC 3006

T +61 3 9697 9088 F +61 3 9697 9089

E info@octagonalresources.com.au

W www.octagonalresources.com.au

QUARTERLY REPORT - FOR THE PERIOD ENDED 31 DECEMBER 2015

DETAILS OF ANNOUNCEMENT

• Quarterly Activity Report for the period ending 31 December 2015 (4 pages)

  
  

• Appendix 5B for the period ending 31 December 2015 (5 pages)

  
  

  For and on behalf of the Board.

  
  

  Bob Tolliday Company Secretary OCTAGONAL RESOURCES LIMITED

  
  

  Additional information relating to Octagonal and its various mining and exploration projects can be found on the Company's website: www.octagonalresources.com.au

  
  

  www.octagonalresources.com.au

  Quarterly Report

  
  

  27 January 2016 No. of Pages: 4 ASX CODE: ORS Market Cap.: $2.98 m ($0.012 p/s) Shares on issue: 248,331,672 Cash: $0.03 m (31 December 2015) Debt: $1.3 m (31 December 2015) ASX Investments 169,672,726 AYC shares 56,557,576 AYCO options DIRECTORS Ian Gandel, Chairman Anthony Gray, Managing Director Bob Tolliday, Director MAJOR SHAREHOLDERS Abbotsleigh - 41.1% Alliance Resources - 8.9% PRINCIPAL OFFICE Octagonal Resources Limited ABN 38 147 300 418 Suite 3, 51 - 55 City Road Southbank VIC 3006 T +61 3 9697 9088 F +61 3 9697 9089 E info@octagonalresources.com.au W www.octagonalresources.com.au

  Quarterly Report for the period ended 31 December 2015 Corporate At 31 December 2015 Octagonal Resources Limited ("Octagonal" or "Company") had cash reserves of $0.03 million (unaudited), and $1.3 million debt fully drawn down from a standby credit facility. 78,658,946 unlisted options to acquire shares in the Company at 2.0 cents per share expired on 11 December 2015 without any options being exercised. Work during the quarter focussed on preparing documents to facilitate the convening of meetings to allow shareholders to consider and vote on a proposal by Gandel Shareholders to privatise the Company via a Scheme of Arrangement and Selective Capital Reduction. Details of the proposal are provided in the Scheme Booklet lodged with ASX on 21 December 2015 and briefly summarised below. Scheme of Arrangement and Selective Capital Reduction On 20 October 2015 Octagonal received a proposal from Gandel Metals Pty Ltd ("Gandel Metals"), a company associated with the Company's Chairman Ian Gandel, to privatise Octagonal via a Selective Capital Reduction. Following advice on the legal and regulatory requirements of the proposal and further discussions with Gandel Metals, Abbotsleigh Proprietary Limited ("Abbotsleigh"), Ian Gandel, and associated parties (collectively "Gandel Shareholders") a modified offer was received. Key Terms of the Offer Abbotsleigh agrees to loan Octagonal funds for the cash component of the Selective Capital Reduction consideration. The loan will only be made to the Company if the Scheme, Selective Capital Reduction and a resolution relating to the related party benefit given to the Gandel Shareholders, is approved by non-Gandel Shareholders.

• Shareholders of Octagonal will be asked to approve a Scheme of Arrangement and Selective Capital Reduction whereby the shares in Octagonal held by non-Gandel Shareholders will be cancelled in return for consideration comprising:

  • A cash payment of $0.0055 per Octagonal share, together with

  • Two (2) shares in A1 Consolidated Gold Limited ("A1 Gold") (ASX Ticker Code: AYC) for every five (5) Octagonal shares held.

• The Scheme of Arrangement is conditional on Court approval being obtained.

1. The proposed Scheme of Arrangement and Selective Capital Reduction will require 75% approval from non-Gandel Shareholders. The resolution for the financial benefit to be provided to Gandel Metals in facilitating the Scheme of Arrangement will require 50% approval from non-Gandel Shareholders.

2. Gandel Metals has agreed to:

3. extend the repayment date of funds loaned to the Company (currently $1.3 million) from 1 December 2015 to 5 February 2016; and

4. loan to Octagonal the funds for Octagonal to facilitate the Scheme, including corporate costs.

5. Shareholder approval will be sought for the Company to repay the funds loaned by Gandel Metals. This amount will be repaid via the transfer of a number of A1 Gold shares equal to the loaned funds on the basis of the 5 day VWAP up to the trading day immediately prior to transfer (as provided for in the original loan agreement).

Court approval for the convening of shareholder meetings to approve the transaction was received on 18 December 2015.

Meetings to approve the resolutions necessary to implement the Scheme will be held on 29 January 2016.

The Notice of Meetings and Scheme Booklet were sent to Octagonal shareholders on 29 December 2015, accompanied by a statement setting out all information material to the decision on how to vote and an Independent Expert Report.

Indicative Timetable

A copy of the indicative timetable to complete the transaction is provided below.

Friday 29 January 2016	Scheme Meeting held to approve Scheme, Non-Gandel Meeting held to approve Selective Capital Reduction, and General Meeting held to approve Selective Capital Reduction, Related Party Benefit, and Loan Repayment Resolution.
Friday 5 February 2016	Second Court Hearing to approve the proposed Scheme.
Monday 8 February 2016	Lodge with ASIC a copy of the court order approving the Scheme (Effective Date).
Monday 15 February 2016	Determine the entitlements to Scheme Consideration by reference to share register of ORS at that time (Record Date).
Monday 22 February 2016	Implement the court approved Scheme (Implementation Date).
Tuesday 23 February 2016	Delisting from ASX.

The above timetable is indicative only and may be subject to further changes.

Australian Taxation Office Application for Class Ruling

On 4 December 2015 Octagonal lodged an application for a Class Ruling with the Australian Taxation Office, pursuant to the early engagement process, in respect of the proposed Scheme of Arrangement.

Octagonal is seeking confirmation from the Australian Taxation Office that:

• The distribution of the Scheme Consideration is not a dividend;

• The CGT Event C2 happens when the Scheme is completed;

• The cost base of the A1 Gold shares is equal to the market value of the A1 Gold shares on the implementation date; and

• The Commissioner will not make a determination under section 45A(2) or section 45B(3) that section 45C of the Income Tax Assessment Act 1936 applies to the whole or part of the Scheme of Arrangement.

Shareholders will be advised on the outcome of the Class Ruling when it is received.

Hogan's Project - Western Australia (100% Octagonal)

Background

In Western Australia Octagonal holds 100% equity in the Hogan's Project where it is exploring beneath transported cover for gold, copper-gold, and nickel sulphide deposits in a highly prospective but underexplored area only 70 kilometres southeast of Kalgoorlie and 20 kilometres east of the world-class St Ives Goldfield (+13M oz Au) and Kambalda Nickel District (+1.4Mt Ni) (Figure 1).

Safety & Environment

No medically treated injuries (MTIs) or lost time injuries (LTIs) were recorded during the reporting period. There were no reportable environmental incidents.

Exploration

No new exploration work was completed at the Hogan's Project during the quarter.

Figure 1: Hogan's Project: Tenement location plan with gold and nickel deposits and Octagonal's exploration target areas

Legend-

Yellow dots: gold deposits

Grey dots: nickel sulphide deposits