FEDERAL COURT OF AUSTRALIA

Sino Gold Mining Limited, in the matter of Sino Gold Mining Limited (No 2)
[2009] FCA  1472  

Corporations Act 2001 (Cth) s 411

IN THE MATTER OF SINO GOLD MINING LIMITED (ACN 093 518 579)

SINO GOLD MINING LIMITED (ACN 093 518 579)

NSD 1149 of 2009

LINDGREN J

9 December 2009

SYDNEY

IN THE MATTER OF SINO GOLD MINING LIMITED (ACN 093 518 579)

THE COURT ORDERS THAT:

1.         The Plaintiff be excused for its partial non-compliance with order 12 of the orders made by the Court on 28 October 2009, as described in the affidavit of Matthew Gerard McLennan sworn 3 December 2009.

2.         Pursuant to sections 411(4)(b) and 411(6) of the Corporations Act 2001 (Cth) (Act), the proposed scheme of arrangement between all holders of fully paid ordinary shares of the Plaintiff (other than Eldorado Gold Corporation (Eldorado) or any of its subsidiaries, or any person who holds ordinary shares of the Plaintiff on behalf of or for the benefit of Eldorado or any of its subsidiaries), and the Plaintiff be approved subject to the alteration of replacing the number "12,106,733" with "12,236,733" in clause 2(b)(2), the terms of the scheme of arrangement as so altered being as annexed hereto and marked "A".

3.         Pursuant to sections 411(4)(b) and 411(6) of the Act, the proposed scheme of arrangement between all holders of options issued by the Plaintiff to acquire shares and the Plaintiff be approved subject to the following alterations:

(a)       replacing the number "12,106,733" in clause 2(b)(2) with "12,236,733";

(b)      replacing the number "550,000" in the last column of the seventh row of schedule 1 with the number "640,000"; and

(c)       adding a new twentieth row in schedule 1 reading "EEOP   Employees 01/10/11   A$4.03   A$3.14   0.2407   40,000",

the terms of the scheme of arrangement as so altered being as annexed hereto and marked "B".

4.         Pursuant to section 411(12) of the Act, the Plaintiff be exempted from compliance with section 411(11) of the Act in relation to each Scheme.

5.         These orders be entered forthwith.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using eSearch on the Court’s website.

IN THE MATTER OF SINO GOLD MINING LIMITED (ACN 093 518 579)

REASONS FOR JUDGMENT (No 2)

(second court hearing)

1                     On 28 October 2009 I ordered pursuant to s 411(1) of the Corporations Act 2001 (Cth) (the Act) that there be convened:

(a)               a meeting of all holders of fully paid ordinary shares of the plaintiff (Sino Gold) (excluding Eldorado Gold Corporation (Eldorado) or any of its subsidiaries or any person who held shares on behalf of or for the benefit of Eldorado or any of its subsidiaries) for the purpose of their considering and, if thought fit, agreeing, with or without modification, to a scheme of arrangement between them and Sino Gold (the Share Scheme); and

(b)               a meeting of each of two classes of holders of options for the purpose of their considering and, if thought fit, agreeing, with or without modification, to a scheme of arrangement between the optionholders and Sino Gold (the Option Scheme): see Sino Gold Mining Limited, in the matter of Sino Gold Mining Limited [2009] FCA 1277.

2                     On the second court hearing on 4 December 2009 I made orders approving the two Schemes, for my earlier reasons and the reasons that appear below.  The orders themselves appear at the front of these reasons.

3                     On the second court hearing there was evidence that the three meetings had been convened and held in accordance with the orders of 28 October 2009, subject to certain matters noted below, and that overwhelming majorities, both by value and by number, voted to agree to the Share Scheme and the Option Scheme respectively.

4                     There was also evidence from the Australian Securities Investments Commission that it raised no objection to the schemes.

5                     The written submissions of Mr I M Jackman SC, who appeared for Sino Gold, identify the evidence that was before the Court on the second court hearing and I will ensure that a copy of his submissions is placed on the Court file so that it will be available to any interested person to read.  I accepted his submissions.

6                     The prospect of opposition by Kingsway Capital of Canada Inc (see the earlier reasons) did not eventuate.

7                     The following matters that are addressed in Mr Jackman’s written submissions call for special comment.

8                     First, Order 12 made on 28 October 2009 required Sino Gold to post to shareholders and optionholders the documents identified in paras  (a), (b), (c) and (d) of Order 9 made on that date.  The document referred to in para (c) of Order 9 was a “Share Election Form”.  The evidence showed, however, that the reference to that paragraph had been included in Order 12 by error.  The Share Election Form was a document by which an election might be made to receive Eldorado shares listed on the Toronto Stock Exchange and the New York Stock Exchange instead of Eldorado CHESS Depository Instruments listed on the Australian Stock Exchange.  It was explained at several places in the Scheme Booklet that the Share Election Form could be obtained from the Sino Gold Registry.

9                     Securityholders were not in fact sent the Share Election Forms, which were in fact made available from the Sino Gold Registry.  I was told that one or more securityholders did obtain the Share Election Form from that source.

10                  The solicitors for Sino Gold noticed the “irregularity” in Order 12 only on 2 December 2009.

11                  No securityholder claimed to have suffered any disadvantage by reason of not having been sent the Share Election Form.

12                  For the above reasons I made Order No 1 on 4 December 2009 excusing Sino Gold for partial non-compliance with Order 12 made on 28 October 2009.

13                  Another matter calling for special comment is that after the first court hearing, Sino Gold became aware of two additional sets of options that were issued to employees but which were not recorded on the Options Register.  Sino Gold had issued 90,000 Options in a series that expire on 31 December 2010 more than those in that series that had previously come to notice.  According to the Options Register, only 550,000 options in that series had been issued but in fact the true figure was 640,000.

14                  The additional 90,000 options in that series were held by two employees who also held other options and were therefore included among the persons to whom the Scheme Booklet and accompanying materials were sent.

15                  It also came to light that Sino Gold had issued a series of options to an employee that had not been recorded in the Options Register.  This was a series of 40,000 options expiring on 1 October 2011 with an exercise price of A$4.03.  Again, that employee held other options and was therefore included among the persons to whom the Scheme Booklet and accompanying materials were sent.

16                  It follows that the total number of options should have been 130,000 (90,000 + 40,000) greater than the 12,106,733 previously stated, that is to say, it should have been 12,236,733.

17                  I included in the order approving the Option Scheme made on 4 December 2009 a reference to alterations to the Option Scheme take into account the additional options to which I have referred at [13] to [16] above.  The existence of the additional 130,000 options was a minor matter in the context of over 12,000,000 options; a fortiori having regard to the fact that the holders of them were already optionholders to whom the Scheme Booklet and accompanying materials were sent.  Section 411(6) of the Act empowers the Court to grant approval to a scheme subject to minor alterations that do not affect the details of the scheme: see Re Investorinfo Ltd (2006) 24 ACLC 44 at [7] and cases there cited.

18                  It was for the above reasons and my earlier reasons of 28 October 2009 that I made the orders on 4 December 2009 which appear at the front of these reasons for judgment.

Associate:

Dated:         9 December 2009