Federal Court of Australia

QGold Pty Ltd v Woods [2025] FCA 1201

ORDERS

THE COURT ORDERS THAT:

1.    The plaintiff’s acquisition of all of the ordinary shares in Carawine Resources Limited (Carawine) not already held by the plaintiff is approved on the terms set out in the notice of compulsory acquisition dated 21 March 2024 (the Compulsory Acquisition Notice).

2.    The time for the plaintiff to comply with ss 664C(2)(b) and (3) of the Corporations Act 2001 (Cth) (the Act) is extended to:

(a)    25 March 2024, in respect of all shareholders of Carawine except those referred to in sub-paragraphs (b) and (c) below;

(b)    11 April 2024, in respect of the 71 shareholders referred to at paragraph [42] of the affidavit of Ann Hunyh (filed 20 May 2024) (the Huynh Affidavit); and

(c)    16 May 2024, in respect of the 3 shareholders identified at paragraph [62] of the Huynh Affidavit.

3.    Notwithstanding that the Compulsory Acquisition Notice contravenes s 664C(1)(d) of the Act, neither the notice nor this proceeding are invalidated per s 1322(4) of the Act.

4.    Notwithstanding that the list of objectors that was lodged with the Australian Securities and Investments Commission on 30 April 2024 contravenes s 664E(3)(a) of the Act, neither the list nor this proceeding are invalidated per s 1322(4) of the Act.

5.    To the extent that the reports prepared by Sherif Andrawes of BDO Corporate Finance (WA) Pty Ltd (dated 26 February 2024) and Lynda Burnett of Valuation and Resource Management Pty Ltd (dated 26 February 2024) (together, the Reports) contravene the Act, neither the Reports, the Compulsory Acquisition Notice nor this proceeding are invalidated per s 1322(4) of the Act.

6.    The parties are to be heard on the question of costs.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

DERRINGTON J:

Introduction

1    On 20 November 2023, QGold Pty Ltd (QGold) became the “90% holder” – as that phrase is defined by ss 664A(1) and (2) of the Corporations Act 2001 (Cth) (the Act) – of ordinary shares in Carawine Resources Limited (Carawine). It now seeks, by an Amended Originating Process filed 28 April 2025, the Court’s approval of the acquisition of all remaining ordinary shares in that company on the terms set out in a notice of compulsory acquisition (dated 21 March 2024) (the Compulsory Acquisition Notice). Such imprimatur is necessary because, despite QGold’s submission that it has “followed” the relevant processes prescribed by Division 1 of Part 6A.2 of the Act, persons who hold at least 10% of the securities that are the subject of the proposed acquisition – being represented by the thirty-sixth defendant, Mr Robert Catto (as per Order 1 of the Orders of 9 August 2024) – object to the terms of such acquisition: s 664F of the Act.

2    In general terms, the nub of the defendants’ objection is that QGold neither complied with the procedural requirements of the Act nor offered a “fair value” for the shares in question. It is, however, somewhat difficult to ascertain precisely all of that of which the defendants complain. For instance, while there was substantial cross-examination about the veracity of the underlying technical valuations that ultimately informed the terms of the Compulsory Acquisition Notice, no relevant criticism appeared in the representative defendant’s written outline of submissions.

3    For the purposes of parsing that which follows, it is important to keep in mind the observations of the Western Australian Court of Appeal in Batoka Pty Ltd v Conocophillips WA-248 Pty Ltd (2006) 198 FLR 93 at 104 [39] (Batoka) (Steytler P, with whom McLure JA and Murray AJA agreed), namely that the scheme of the legislation under consideration has the object “only of ensuring that the shares are acquired at a fair value”. That overarching purpose serves to colour the application of the procedural requirements that the Act impresses upon entities desirous to compulsorily acquire the property of another and, indeed, tends against an understanding that any non-compliance, no matter how inconsequential, should have the result that the relevant processes and procedures must start over. That is, as will be seen, most important.

4    Unless otherwise indicated, all references to Chapters, Parts, Divisions and Sections throughout the course of these reasons should be taken to be references to the Act.

The relevant legislative regime

5    Division 1 of Part 6A.2 concerns the manner in which the 90% holder of securities in a subject entity may compulsorily acquire the residual, minority securities in that entity. The scheme of that Division was helpfully surveyed by Warren J in Capricorn Diamonds Investments Pty Ltd v Catto (2002) 5 VR 61 (Capricorn Diamonds) in the following terms (at 65 [9]):

… The legislative scheme provides that within a specified period of six months after becoming that holder, a 90% holder can give a notice of compulsory acquisition setting out a cash price for the minority securities: see ss 664AA(6), 664C(1). The price must only be cash and not differentiate between minority holders: see s 664B. No benefit outside the price formally notified can be offered to any individual holder at any time: see s 664D. Under the statutory regime, minority holders are entitled to object to the acquisition: see s 664E. Where persons who hold at least 10% of the minority securities object to the acquisition then the acquisition can proceed only if the court gives approval: see ss 664F, 664A(3)(b). The court must approve the acquisition if the 90% holder establishes that the terms set out in the notice “give a fair value for the securities”: see s 664F(3). Where fair value is not established the court must confirm that the acquisition will not take place: see s 664F(3).

6    Self-evidently, such scheme has, as a primary subject, the so-called “90% holder”. That phrase is defined by ss 664A(1) and (2) in the following terms:

90% holder — holder of 90% of securities in particular class

(1)    A person is a 90% holder in relation to a class of securities of a company if the person holds, either alone or with a related body corporate, full beneficial interests in at least 90% of the securities (by number) in that class.

90% holder — holder with 90% voting power and 90% of whole company or scheme

(2)     A person is also a 90% holder in relation to a class of securities of a company if:

(a)    the securities in the class are shares or convertible into shares; and

(b)    the person’s voting power in the company is at least 90%; and

(c)     the person holds, either alone or with a related body corporate, full beneficial interests in at least 90% by value of all the securities of the company that are either shares or convertible into shares.

Note:     Subsection 667A(2) provides that the expert’s report that accompanies the compulsory acquisition notice must support the paragraph (c) condition.

7    Such a person may compulsorily acquire the minority securities in the relevant subject entity in those circumstances prescribed by ss 664A(3) and (4):

90% holder may acquire remainder of securities in class

(3)     Under this section, a 90% holder in relation to a class of securities of a company may compulsorily acquire all the securities in that class in which neither the person nor any related bodies corporate has full beneficial interests if either:

(a)     the holders of securities in that class (if any) who have objected to the acquisition between them hold less than 10% by value of those remaining securities at the end of the objection period set out in the notice under paragraph 664C(1)(b); or

(b)    the Court approves the acquisition under section 664F.

If subsection (2) applies to the 90% holder, the holder may compulsorily acquire securities in a class only if the holder gives compulsory acquisition notices in relation to all classes of shares and securities convertible into shares of which they do not already have full beneficial ownership.

Note:    Subsection 92(3) defines securities for the purposes of this Chapter.

(4)     This section has effect despite anything in the constitution of the company whose securities are to be acquired.

8    Section 664A(3)(b) relevantly refers to s 664F which, in turn, provides as follows:

664F     The Court’s power to approve acquisition

(1)    If people who hold at least 10% of the securities covered by the compulsory acquisition notice object to the acquisition before the end of the objection period, the 90% holder may apply to the Court for approval of the acquisition of the securities covered by the notice.

(2)     The 90% holder must apply within 1 month after the end of the objection period.

(3)     If the 90% holder establishes that the terms set out in the compulsory acquisition notice give a fair value for the securities, the Court must approve the acquisition of the securities on those terms. Otherwise it must confirm that the acquisition will not take place.

Note: See section 667C on valuation.

(4)    The 90% holder must bear the costs that a person incurs on legal proceedings in relation to the application unless the Court is satisfied that the person acted improperly, vexatiously or otherwise unreasonably. The 90% holder must bear their own costs.

9    The power of the Court to approve an acquisition under s 664F(3) is premised upon the terms of the relevant compulsory acquisition notice. The obligations which are imposed upon a 90% holder with respect to the drafting and distribution of such a notice are set out in s 664C:

664C    Compulsory acquisition notice

Compulsory acquisition notice

(1)     To compulsorily acquire securities under section 664A, the 90% holder must prepare a notice in the prescribed form that:

(a)     sets out the cash sum for which the 90% holder proposes to acquire the securities; and

(b)     specifies a period of at least 1 month during which the holders may return the objection forms; and

(c)     informs the holders about the compulsory acquisition procedure under this Part, including:

(i)     their right to obtain the names and addresses of the other holders of securities in that class from the company register; and

(ii)     their right to object to the acquisition by returning the objection form that accompanies the notice within the period specified in the notice; and

(d)     gives details of the consideration given for any securities in that class that the 90% holder or an associate has purchased within the last 12 months; and

(e)    discloses any other information that is:

(i)     known to the 90% holder or any related bodies corporate; and

(ii)     material to deciding whether to object to the acquisition; and

(iii)     not disclosed in an expert’s report under section 667A.

(2)     The 90% holder must then:

(a)     lodge the notice with ASIC; and

(b)     give each other person (other than a related body corporate) who is a holder of securities in the class on the day on which the notice is lodged with ASIC:

(i)     the notice; and

(ii)     a copy of the expert’s report, or of all experts’ reports, under section 667A; and

(iii)     an objection form; and

(c)     give the company copies of those documents; and

(d)     give copies of those documents to the relevant market operator if the company is listed.

Note:     Everyone who holds the securities on the day on which the notice is lodged with ASIC is entitled to notice. Under subsection 664E(1), anyone who acquires the securities during the objection period may object to the acquisition.

Time for dispatching notice to holders

(3)     The 90% holder must dispatch the notices under paragraph (2)(b) on the day the 90% holder lodges the notice with ASIC or on the next business day.

…

10    Section 664C(2)(b)(ii) relevantly refers to the preparation of an “expert’s report” under s 667A. That latter section provides as follows:

667A    Expert’s report

(1)     An expert’s report under section 663B, 664C or 665B must:

(a)     be prepared by a person nominated by ASIC under section 667AA; and

(b)     state whether, in the expert’s opinion, the terms proposed in the notice give a fair value for the securities concerned; and

(c)     set out the reasons for forming that opinion.

Note:    See section 667C on valuation.

(2)     If the person giving the compulsory acquisition notice is relying on paragraph 664A(2)(c) to give the notice, the expert’s report under section 664C must also:

(a)     state whether, in the expert’s opinion, the person (either alone or together with a related body corporate) has full beneficial ownership in at least 90% by value of all the securities of the company that are shares or convertible into shares; and

(b)     set out the reasons for forming that opinion.

(3)     If the person giving the compulsory acquisition notice obtains 2 or more reports, each of which were obtained for the purposes of that notice, a copy of each report must be given to the holder of the securities.

(4)    An offence based on subsection (3) is an offence of strict liability.

Note:     For strict liability, see section 6.1 of the Criminal Code.

11    In the first Note to the above section, reference is made to s 667C. In broad terms, that section is concerned with the valuation of securities for the purposes of Chapter 6A. It provides:

667C    Valuation of securities

(1)     To determine what is fair value for securities for the purposes of this Chapter:

(a)    first, assess the value of the company as a whole; and

(b)     then allocate that value among the classes of issued securities in the company (taking into account the relative financial risk, and voting and distribution rights, of the classes); and

(c)     then allocate the value of each class pro rata among the securities in that class (without allowing a premium or applying a discount for particular securities in that class).

(2)     Without limiting subsection (1), in determining what is fair value for securities for the purposes of this Chapter, the consideration (if any) paid for securities in that class within the previous 6 months must be taken into account.

Uncontentious background matters

12    There are a number of uncontentious matters in relation to that which has transpired.

13    First, Carawine is an exploration company listed on the Australian Stock Exchange (the ASX). It is said to be primarily focused on gold, copper and base metal deposits, and owns projects in Victoria and Western Australia (in which it relevantly holds several 100% owned tenements).

14    Second, QGold is the “90% holder” of ordinary shares in Carawine. On 20 November 2023, QGold was issued 38,901,620 ordinary shares which (a) increased its shareholding in Carawine from 88.94% to 90.61% of all shares on issue; and (b) were acquired for $0.11 per share.

15    Third, QGold lodged the Compulsory Acquisition Notice with the Australian Securities and Investments Commission (ASIC) on 21 March 2024. Amongst other things, that document (a) gave notice that QGold proposed to acquire the remaining ordinary shares in Carawine for the cash amount of $0.11 per share; and (b) was lodged within six months of QGold becoming the “90% holder” in relation to that class of securities (see ss 664AA(b) and 664C(2)(a)).

16    It appears also to be common ground that such notice was in the prescribed form and, generally, in compliance with s 664C(1). That being said, it did, however, contain certain irregularities. For instance, the notice included, as Annexure A, a list of transactions between 18 May and 20 November 2023 by which QGold had acquired its shareholding in Carawine and at what price. That annexure contained an error: it recorded QGold as having acquired 38,928,477 ordinary Carawine shares on 20 November 2023; in reality, it had only acquired 38,901,620 such shares.

17    Fourth, and also on 21 March 2024, QGold provided to both Carawine and the ASX:

(1)    the Compulsory Acquisition Notice;

(2)    an Independent Expert’s Report prepared by a Mr Sherif Andrawes of BDO Corporate Finance (WA) Pty Ltd dated 26 February 2024 (the Andrawes Report), which, amongst other things, appended an Independent Technical Assessment Report of Mineral Assets Owned by Carawine Resources Ltd prepared by a Ms Lynda Burnett of Valuation and Resource Management Pty Ltd (VRM) dated 26 February 2024 (the VRM Report); and

(3)    a shareholder objection form,

(collectively, the Compulsory Acquisition Documents).

18    For context, it is noted that Mr Andrawes was one of three persons nominated by ASIC for the purposes of preparing an expert’s report (see ss 667AA and 667A(1)(a)). He was engaged by QGold in December 2023. On his recommendation, QGold subsequently engaged VRM as an independent technical specialist to value the mineral assets of Carawine.

19    In the Andrawes Report, Mr Andrawes relevantly concluded that:

(1)    “the terms of the Compulsory Acquisition give a fair value to Shareholders”; and

(2)    QGold “has full beneficial interests in approximately 90.61% of Carawine’s shares”.

20    Fifth, between March and May 2024, QGold provided copies of the Compulsory Acquisition Documents to persons who held ordinary shares in Carawine. As discussed below, the issuance of those documents did not occur in accordance with the time period specified by s 664C(3).

21    Sixth, between 31 March and 28 April 2024, QGold received various signed objections vis-à-vis the notice. It lodged each such objection with ASIC and, on 30 April 2024, it lodged a list of relevant objectors (see ss 664E(2) – (3)). It is noted that that list omitted one objector.

22    QGold received objections from persons holding some 16.47% of the securities covered by the Compulsory Acquisition Notice. As such, QGold must seek the Court’s approval of the terms set out in the notice before it may proceed (see ss 664A(3)(b) and 664F).

23    Seventh, QGold has notified Carawine, the shareholders of Carawine, ASIC and the ASX, that it has applied to the Court for approval of the Compulsory Acquisition Notice under s 664F.

The issues for determination

24    Having noted both the statutory and factual contexts that undergird this dispute, it is appropriate to return to the issues that are presently before the Court for determination.

25    At the heart of this matter lies s 664F(3). It is binary in its terms: the Court must approve the Compulsory Acquisition Notice if QGold establishes its terms give a fair value for the securities in question. Otherwise, the Court must confirm the proposed acquisition will not take place. In this context, it was said by Mr Bennett (on behalf of the representative defendant) that QGold had “failed to discharge the onus” impressed upon it by the terms of s 664F(3) because:

(1)    the Andrawes Report was inconsistent with the Act or otherwise deficient; and

(2)    the price at which the Compulsory Acquisition Notice proposed to acquire the residual ordinary shares in Carawine (being $0.11 per share) did not accord them “fair value”.

26    No comment was passed as to the various irregularities which underlay the plaintiff’s handling of the Compulsory Acquisition Documents and list of relevant objectors. As has been noted:

(1)    the Compulsory Acquisition Notice incorrectly identified, at Annexure A, the number of ordinary shares in Carawine that had been acquired by QGold on 20 November 2023 (in breach of s 664C(1)(d)).

(2)    copies of the Compulsory Acquisition Documents were not delivered to all holders of affected securities on the day they were filed or the next business day (21 and 22 March 2024) (in breach of 664C(3)). Instead, 254 copies were sent on 25 March 2024, 71 copies were sent between 4 and 11 April 2024 and 3 copies were sent on 16 May 2024.

(3)    the list of objectors that was filed with ASIC on 30 April 2024 omitted reference to the details of one objector, a Mr Salvatore Aquilia (in breach of s 664E(3)).

27    A preliminary issue for determination is, therefore, whether it is appropriate, as QGold submits, for the Court to remediate such irregularities pursuant to the power conferred by s 1322(4).

The preliminary question: Is relief under s 1322(4) appropriate?

The relevant provisions

28    Section 1322 is titled “Irregularities”. At subsection (4), it relevantly provides:

(4)    Subject to the following provisions of this section but without limiting the generality of any other provision of this Act, the Court may, on application by any interested person, make all or any of the following orders, either unconditionally or subject to such conditions as the Court imposes:

(a)    an order declaring that any act, matter or thing purporting to have been done, or any proceeding purporting to have been instituted or taken, under this Act or in relation to a corporation is not invalid by reason of any contravention of a provision of this Act or a provision of the constitution of a corporation;

…

(d)    an order extending the period for doing any act, matter or thing or instituting or taking any proceeding under this Act or in relation to a corporation (including an order extending a period where the period concerned ended before the application for the order was made) or abridging the period for doing such an act, matter or thing or instituting or taking such a proceeding;

and may make such consequential or ancillary orders as the Court thinks fit.

29    The exercise of that power is subject to the conditions identified by s 1332(6):

(6)    The Court must not make an order “unless it is satisfied” that:

(a)    in the case of an order referred to in paragraph (4)(a):

(i)    that the act, matter or thing, or the proceeding, referred to in that paragraph is essentially of a procedural nature;

(ii)     that the person or persons concerned in or party to the contravention or failure acted honestly; or

(iii)     that it is just and equitable that the order be made; and

…

(d)    in every case—that no substantial injustice has been or is likely to be caused to any person.

30    The principles to be applied when considering an application under s 1322(4) are well known to the Court: see, eg, Re Helios Energy Ltd (2017) 122 ACSR 174, 176 – 177 [20].

31    For instance, it is settled that the power enumerated within s 1322(4) reflects a legislative policy that the Act should not inflict unnecessary liability or inconvenience or invalidate transactions as a consequence of non-compliance with its requirements where such non-compliance is the product of honest error or inadvertence and if the Court can avoid its effects without prejudice to third parties or to the public interest in compliance with the law: Re Wave Capital Ltd (2003) 47 ACSR 418, 426 [29]; see also Blaze Asset Pty Ltd v Target Energy Ltd (2009) 177 FCR 488, 492 – 493 [30] – [35]; Weinstock v Beck (2013) 251 CLR 396, 419 – 420 [53] – [56].

Consideration

32    The written outline of submissions for the representative defendant records the following:

The plaintiff, by one of its originating affidavits, namely the affidavit of Ann Huynh affirmed 20 May 2024 admits procedural errors contrary to the requirements of the Corporations Act 2001. As such, the plaintiff seeks to rely on an amended originating process seeking orders pursuant to section 1322(4) of the Corporations Act 2001.

The representative defendant makes no submissions in respect of the plaintiffs application for relief for its procedural errors

33    That silence, it may be observed, gives colour to the prejudice, if any, that the aforementioned irregularities (at supra [26]) may have occasioned. Indeed, there is no hint of a suggestion that they were other than of a procedural nature, that they were not honest or that their remediation would not be just and equitable. Nor is there any suggestion that substantial injustice has been, or is likely to be, caused to any person by the irregularities or by an order validating them.

34    First, the overstatement in Annexure A to the Compulsory Acquisition Notice as to the number of shares acquired by QGold on 20 November 2023 is of little moment. The magnitude of the overstatement concerns approximately 27,000 shares out of a total of 39,000,000 (i.e., an error of 0.07%) and it is not easily understandable how such error could be of material consequence. Indeed, there is no suggestion that it occurred other than by inadvertence or that any injustice, substantial or otherwise, could have been caused to any party by reason of it.

35    Second, and similarly, the delay in the provision of the Compulsory Acquisition Documents to shareholders is also of little moment. There is no suggestion that it occasioned any prejudice.

36    It appears that, in early March 2024, a printing firm (MBE Brisbane CBD (MBE)) was engaged, by QGold, to print and issue copies of the documents to Carawine’s shareholders based upon the company’s share register as at 29 February 2024 (which identified 1,154 shareholders). On 6 March 2024, MBE was (a) provided with copies of the Andrawes Report and a shareholders’ objection form; and (b) instructed to commence production (which was estimated to take 8 to 10 business days). On 21 March 2024, the Compulsory Acquisition Notice was given to MBE; that day, the notice was also lodged with ASIC such that, pursuant s 664C(3), the Compulsory Acquisition Documents were to have been sent to all relevant shareholders of Carawine on that date or the next business day (being Friday, 22 March 2024). That did not occur.

37    By close of business on 22 March 2024, 900 copies of the Compulsory Acquisition Documents had been lodged with Australia Post for posting. The evidence suggests that those notices were sent on that day. The remaining 254 copies of the documents were dispatched on Monday, 25 March 2024 (being the first business day after 22 March 2024), such that a mail out to all 1,154 shareholders identified on Carawine’s share register (at 29 February 2024) was then completed.

38    Some one week later, on 3 April 2024, an updated version of Carawine’s share register (as at 29 February 2024) was provided to QGold. It was accompanied by an explanation, appended to the affidavit of a Ms Ann Huynh (filed 20 May 2024), that the earlier version of the register “excluded shareholders with return mail notifications”. A further 71 shareholders were thereby identified; they received copies of the Compulsory Acquisition Documents by 11 April 2024.

39    On 15 May 2024, a further version of the share register (as at 21 March 2024) was provided to QGold by Carawine. It contained an additional three shareholders (compared to the register as at 29 February 2024); accordingly, copies of the Compulsory Acquisition Documents were sent to them by express mail (and, in some cases, email) on 16 May 2024.

40    In the circumstances, it may be said that QGold’s failure to send the Compulsory Acquisition Documents to all intended recipients within the time stipulated by s 664C(3) was unintentional and the product of unforeseen events. There was no lack of honesty in the way in which the provision of the material occurred. Further, there is no hint that any injustice might have been caused by the delay that has transpired. Nor will it follow an order remediating the oversight.

41    In short, it may be said that the delays which occurred were, in context, minimal and, thereby, did not obfuscate the purpose of the communications required by the Act (being, ostensibly, to ensure prompt and contemporaneous communication between the 90% holder, ASIC and the minority shareholders so as to protect the latter’s interests and enhance transparency and market integrity: see Explanatory Memorandum, Corporate Law Economic Reform Bill 1998 (Cth) 41 [7.11]). It follows that it is appropriate to extend the time limits imposed by ss 664C(2)(b) and (3), such that the issuance of the Compulsory Acquisition Documents is not rendered invalid.

42    Third, a further instance of negligible non-compliance with the procedures defined by the Act occurred in relation to QGold’s lodgement of a list of objectors with ASIC on 30 April 2024 (see s 664E(3)). That list was required to set out (a) the names of people who held securities covered by the Compulsory Acquisition Notice and had objected to the acquisition; and (b) the details of the securities that they held (s 664E(3)(a)). It failed to do so in respect of Mr Aquilia.

43    That minor inconsistency has caused no harm to any party nor has the contrary been suggested. The omission of Mr Aquilia was not the result of any lack of honesty and it has not, at least on the evidence before the Court, caused hardship or injustice. Therefore, it is appropriate that an order be made that the filing of a list of objectors with ASIC on 30 April 2024 was not invalid.

44    It must be kept steadily in mind that the length of time between the issuance of the Compulsory Acquisition Notice and the hearing of this application has been substantial (being at least some 12 months). Any person who might have suffered any prejudice by any of the aforementioned procedural irregularities could have come forward to identify whatever damage might have been inflicted upon them by the failings of the plaintiff. As it is, no person did so, nor was it suggested that there exists any inhibition upon them from doing so if they were so minded.

45    In light of that which has been canvassed above, it is plain that these irregularities in QGold’s observance of the Act are appropriately remedied by an exercise of the power under s 1322(4). They are of a procedural character, and occurred without any lack of honesty on the part of any person involved. No injustice has been, or is likely to have been, caused to any party as a result of the errors. In each case, it is just and equitable that a remediating order be made.

Objection (1): the Andrawes Report is deficient in several respects

46    To compulsorily acquire securities under s 664A, the 90% holder must prepare a compulsory acquisition notice in the form prescribed by s 664C(1) and “then”, inter alia, give each person who is a holder of the relevant securities the Compulsory Acquisition Documents (s 664C(2)). Here, those documents include the Andrawes Report. Amongst other things, that report was required to (a) state whether, in Mr Andrawes’ opinion, the terms proposed in the Compulsory Acquisition Notice gave a “fair value” for the securities concerned (as per the procedure in ss 667C(1)); and (b) set out Mr Andrawes’ reasons for forming that opinion (ss 667A(1)(b) – (c)).

47    The defendants submit that the Andrawes Report did not do so for the following reasons – it:

(1)    valued the relevant shares at the incorrect date;

(2)    did not comply with s 667C(1)(b), because it failed to consider or attribute any value to certain tranches of options which had been issued by Carawine;

(3)    did not comply with s 667C(2), because it failed to consider the consideration paid for ordinary shares in Carawine within the previous six months;

(4)    did not comply with s 667C(1)(c), because it applied a control premium to the shares;

(5)    did not comply with s 667A(1)(c), because it did not disclose Mr Andrawes’ reasoning;

(6)    contained technical data that had been incorrectly reported; and

(7)    attached an annexure that was ineligible.

Objection (1.1): The Andrawes Report did not value the shares at or about 21 March 2024

48    In the written outline of submissions for the representative defendant, it was said that:

The affidavit of Ann Huynh affirmed 20 May 2024 evidences that the Compulsory Acquisition Notice was dated 21 March 2024. Accordingly the date for valuation by Mr Andrawes ought have been on or about 21 March 2024 and not 26 February 2024.

The [Andrawes Report] does not explicitly state the date at which the valuation is carried out but in cross examination Mr Andrawes confirmed that the valuation was as at the date of the [Andrawes Report] and not the date of the compulsory acquisition notice.

49    That submission appears to rest upon the assertion that the Andrawes Report was required to have undertaken an assessment of the “fair value” of the residual ordinary shares in Carawine having regard, not to the circumstances existing as at the time of the preparation of the report (being formalised on 26 February 2024), but instead the circumstances that may have existed as at the time of the lodgement of the Compulsory Acquisition Notice (being 21 March 2024).

50    Under the framework of Division 1 of Part 6A.2, whether the terms of a compulsory acquisition notice give “fair value” to the relevant class of securities is a question to be answered by both the Court (s 664F(3)) and the expert’s report (s 667A(1)(b)). With respect to the former, and as made clear by Warren J in Capricorn Diamonds, the Court’s task is to be undertaken having regard to the circumstances existing “at or about” the date upon which the relevant compulsory acquisition notice was lodged with ASIC. Specifically, her Honour observed (at 85 [89]):

The independent expert, Appleyard, made the determination of fair value in early May 2001 in the May report, immediately prior to the date on which Capricorn lodged its compulsory acquisition notice with ASIC. Whether the terms set out in the compulsory acquisition notice give fair value for the securities covered by the notice must be assessed at or about the date the compulsory acquisition notice was lodged with ASIC and the notice was dispatched to unit holders as at or about 9 May 2001. Such proposition is supported by the construction of the provisions of Pt 6A of the Corporations Act. It seems to me that the new provisions would be unworkable if it were otherwise.

(Emphasis added).

51    That is, the Court is to determine whether the notice offers a fair price for the relevant securities at or about the time of its lodgement – here, 21 March 2024: Dolby Australia Pty Ltd v Catto (2004) 52 ACSR 204, 206 [4] (Dolby); Re Australian Water Holdings Pty Limited (2016) 306 FLR 40, 42 [2]; In the matter of Navalo Financial Services Group Limited [2025] NSWSC 317 [26], citing BG & E Management Pty Ltd v de Abolitz [2016] FCA 1368 [16] – [21] (de Abolitz).

52    Further comment was passed by Warren J as to the correlation between the issue that the Court is to decide under s 664F(3), being whether “the terms set out in the compulsory acquisition notice give a fair value for the securities”, and the subject of the expert’s report under s 667A(1)(b), being whether “the terms proposed in the compulsory acquisition notice give a fair value for the securities concerned”. In her Honour’s opinion (at 85 [90]):

… Because the inquiry as to fair value is directed to the terms set out in the compulsory acquisition notice both in the case of the expert’s report and in the case of the court’s determination, the time of the notice is the time at which the issue of “fair value” is to be tested. It is the preparation of the notice that initiates the procedure for compulsory acquisition under s 664A(3), and it is the securities to be acquired outstanding at that time that comprise “the securities covered by the compulsory acquisition notice”. The fair value inquiry is in relation to those securities.

53    Though the nature of the task imposed upon the Court and relevant expert are, prima facie, indistinguishable, there are, however, important differences. For instance, the subject of the Court’s assessment – being the compulsory acquisition notice which is lodged with ASIC – as well as its nature – being retrospective – is different from that of the expert. In this respect, it is appropriate to recall the content of s 664C(3), which requires the Compulsory Acquisition Documents, including, relevantly, the expert’s report, to be sent to security holders “on the day the 90% holder lodges the [compulsory acquisition] notice with ASIC or on the next business day”. In this way, the Act does not afford the expert’s report time to opine on the terms of the particular notice that is lodged with ASIC. Instead, it may necessarily only offer an opinion upon the terms that are proposed to be included in such notice; self-evidently, those terms may differ from those which are lodged with ASIC and issued to security holders by the 90% holder.

54    Such conclusion is consistent with the language of s 667A(1)(b), which requires the expert’s report to opine upon whether the terms that are “proposed in the notice give a fair value for the securities concerned” (emphasis added) (cf the subject of s 664F(3): “the terms set out in the [notice]” (emphasis added)). That drafting presumes that the terms “proposed” in the notice will be available to the expert, even if the terms “set out” in the notice lodged with ASIC are not. In other words, Part 6A.2 is structured in such a way so that the drawing of the expert’s opinion is, necessarily, to precede lodgement of any compulsory acquisition notice with ASIC.

55    The following question therefore arises: is the expert’s assessment of the terms proposed to be included in a compulsory acquisition notice to be undertaken by reference to the circumstances that are then before them or the circumstances that they foresee will exist at the time the notice is lodged with ASIC (and dispatched to security holders)? In this regard, it is important to keep steadily in mind the ostensible purpose of an expert’s opinion: to inform and assist, in the first instance, the 90% holder in its assessment of the value of a security and, in the second instance, the relevant security holder(s) in their assessment of the strength of offers made to acquire that security. Necessarily, the former element requires the opinion to be provided before any offer is made (in a compulsory acquisition notice), whereas the latter element calls for some temporal proximity as between the currency of the opinion and the making of the offer.

56    Though it might be thought that such purposes are best achieved by obliging the relevant expert to assess whether the terms proposed will give “fair value” at the time at which the 90% holder intends to lodge the compulsory acquisition notice – as the representative defendant seemingly contends – there are several reasons why that is not a pragmatic construction. First, and most importantly, an expert is no soothsayer. They are not to know when the 90% holder will lodge the notice with ASIC nor can they foresee what vicissitudes might arise between the giving of their opinion and lodgement of the notice, such as delays caused by unforeseen circumstances or changes in markets that affect the company’s value (see, eg, ConocoPhillips WA-248 Pty Ltd v Batoka Pty Ltd (2005) 193 FLR 424, 432 [57] – [58] (ConocoPhillips: being the first instance decision in Batoka)). In this respect, they are in a wholly different position to that of the Court when opining upon fair value (under s 664F(3)), for they do not have the benefit of hindsight. Second, the terms of s 667A(1)(b) are clear: an expert must state whether, in their opinion, the terms proposed in a notice give a fair value for the securities. Cast in the present tense, that provision does not suggest, expressly or implicitly, that an expert is to assess whether the terms will give fair value at some later date or time.

57    That being so, it is quite plainly in the interests of the 90% holder to ensure that the compulsory acquisition notice is lodged (and dispatched to security holders) as soon as reasonably possible following finalisation of the expert’s report. Self-evidently, adoption of such a practice ensures that the opinions of the expert are current when put before the relevant security holders; a lapse of time will, for instance, be particularly poignant in relation to securities which are known to be susceptible to significant fluctuations over short periods of time. Indeed, it might be thought to be a matter of common sense that the greater the discord between the date of (a) finalisation of the expert’s report; and (b) lodgement of the compulsory acquisition notice with ASIC, the more likely it is that the security holders will seek to exercise their right of objection. In doing so, they are expressing disquiet as to the veracity of the expert’s opinion by seeking a secondary opinion – namely, that of the Court. That is entirely consistent with the framework of the Act.

58    The foregoing is consistent with the observations in Batoka, where it was recognised that the relevant expert (GSA) did not have to consider the acquisition price offered in the compulsory acquisition notice lodged with ASIC, but merely the terms proposed in the notice that had been given to it. That case involved the following facts: (a) in July 2003, the 90% holder (CPWA-248) communicated its intent to GSA to acquire certain shares at a price of 78 cents (per share); (b) on 4 August 2003, GSA gave its report to CPWA-248 which identified a valuation range of between 63 to 89 cents and expressed an opinion as to whether 78 cents was fair value; (c) on 7 August 2023, CPWA-248 lodged a compulsory acquisition notice with ASIC that sought to acquire the relevant shares at a price of 89 cents; and (d) on 8 August 2003, CPWA-248 sent the expert’s report and compulsory acquisition notice (of 4 and 7 August 2003, respectively) to the shareholders (see Batoka at 97 – 98 [11] – [14]; ConocoPhillips at 431 – 432 [50] – [60]).

59    As the observations of Steytler P (with whom McLure JA and Murray AJA agreed) make clear, the expert’s report to be sent with the compulsory acquisition notice does not have to express an opinion as to whether the price ultimately offered by the 90% holder is “fair value” (see 103 – 104 [36] – [41]). Their task is to express and explain, in their opinion, whether the terms that are proposed in a notice give fair value for the securities concerned: ss 667A(1)(b) – (c). They may, for example, consider that “fair value” is higher or lower than the acquisition price then proposed; if so, the 90% holder is at liberty to lodge and issue a notice with a term as to price equivalent to the expert’s opinion of “fair value”. Or, as in the case then before the Court, the 90% holder may wish to lodge and issue a notice that offers a price in excess of the expert’s estimation of “fair value” in an effort to dissuade potential objectors: ConocoPhillips 432 [59]. The Court’s acceptance that such a course was open tends to support an understanding of Part 6A.2 that the expert’s report need only express a view upon the terms proposed to be set out in a compulsory acquisition notice having regard to the circumstances that are then before them (it then falling to the 90% holder to promptly act upon such opinion); they need not attempt to do so having regard to the circumstances which may or may not exist at some time in the future.

60    The above construction also accords with the regime of Part 6A.2, for it must be kept in mind that the expert’s opinion about fair value is neither the end of the process nor determinative of it. On the contrary, if more than 10% of eligible shareholders object to a proposed acquisition, it is for the Court to approve the acquisition and, to that end, the applicant must establish the terms set out in the compulsory acquisition notice give a fair value of the securities (s 664F(3)). So, whereas the expert is to express an opinion when completing their report about the terms proposed in a notice for the purposes of the security holders considering the offer of acquisition, where the relevant objection has occurred, the acquisition cannot take place unless the Court is satisfied, as a matter of fact, that the terms of the notice actually issued, do provide fair value.

61    The position may be summarised thus. An expert’s opinion must opine on the terms proposed to be included in a compulsory acquisition notice; that is different to the task of the Court under s 664F(3) which, instead, must assess the terms set out in the notice lodged with ASIC. So as to avoid unnecessary speculation and ambiguity, and having regard to the drafting of s 667A(1), the opinion is to be formed having regard to the circumstances that are then before the relevant expert. It is prudent for a 90% holder to minimise the temporal difference between the date on which the expert formalises their opinion and lodgement of their compulsory acquisition notice (so as to satisfy security holders of the currency of the factual basis on which the expert purports to rely); however, there is no obligation to do so under the Act. That being so, such construction is largely semantic. As an expert’s opinion, within the framework of Part 6A.2, is (a) intended to do no more than allow the reader (be it the 90% holder or some security holder) to rationalise whether a price which is offered for a security accords it “fair value”; and (b) not determinative of whether the terms set out in a compulsory acquisition notice will be endorsed by a Court, it can be accepted that the only tangible consequence of a stale valuation opinion is that security holders will, necessarily, be more likely to object to the compulsory acquisition process. That is appropriate and can be dealt with, by the Court, in its assessment of the notice under s 664F.

Did the Andrawes Report express an opinion upon whether the terms proposed in the notice provided to it gave a “fair value” for the residual ordinary shares in Carawine?

62    The Andrawes Report is dated 26 February 2024. Item 1 is titled “Introduction”. It identifies:

QGold has advised that it intends to proceed with the Compulsory Acquisition. QGold is offering $0.11 cash per share for each Carawine share (‘Consideration’).

The notice of compulsory acquisition to minority shareholders of Carawine is to be accompanied by this independent expert’s report.

(Emphasis in original).

63    In this way, Mr Andrawes identified the terms proposed in the compulsory acquisition notice then before him to be to the effect that the price which QGold intended to offer for the residual ordinary shares in Carawine was $0.11 cash per share. He was, thereby, obliged to express an opinion as to whether that proposed acquisition cost gave “fair value” (per s 667A(1)(b)).

64    Item 2 is titled “Summary and opinion”. It defines the “Requirement for the report” as follows:

2.1    Requirement for the report

The directors of QGold have requested that BDO Corporate Finance (WA) Pty Ltd (‘BDO’) prepare an independent expert’s report (‘our Report’) to express an opinion as to whether the terms of the Compulsory Acquisition notice (‘Notice of Compulsory Acquisition’) give a ‘fair value’ for the securities, to the minority shareholders of Carawine (‘Shareholders’).

Our Report is prepared pursuant to Chapter 6A of the Corporations Act and is to be included in the Notice of Compulsory Acquisition for Carawine in order to assist the Shareholders in their assessment of the terms of the Compulsory Acquisition.

(Emphasis in original).

65    Item 2.2 (“Approach”) notes the report was prepared having regard to various regulatory guides published by ASIC and provides that:

In arriving at our opinion, we have assessed the terms of the Compulsory Acquisition as outlined in the body of this report. To determine if the terms of the Compulsory Acquisition offer a ‘fair value’ for the securities, we have:

•    compared the value of a Carawine share (including a premium for control) with the Consideration; and

•    set out the reasons for our opinion.

66    The report proceeds to set out the applicable statutory procedures and the requirement for the valuation to be given to the shareholders with the compulsory acquisition notice (see Item 3).

67    At Item 2.3, the Andrawes Report expresses Mr Andrawes’ “Opinion” in the following terms:

2.3    Opinion

We have considered the terms of the Compulsory Acquisition as outlined in the body of this report. We have concluded that the terms of the Compulsory Acquisition give a fair value to Shareholders as the Consideration per share within the range of our assessed value per Carawine share.

68    That Item plainly states the opinion of Mr Andrawes as to whether the terms then proposed by QGold (being, namely, to acquire the residual ordinary shares of Carawine for “$0.11 cash per share”) gave a fair value for the securities at 26 February 2024. That satisfied the requirement imposed upon Mr Andrawes by the terms of s 667A(1)(b). He does not attempt to hypothesise when QGold would lodge a compulsory acquisition notice with ASIC nor does he express any opinion as to whether $0.11 would reflect the “fair value” of an ordinary share in Carawine at that time. There is nothing in the Act to suggest that he was required to do so. If anything, the discord between the date of lodgement of the Compulsory Acquisition Notice and valuation in the Andrawes Report suggests, for the purposes of the Court’s assessment of “fair value” under s 664F(3), that the opinions expressed by Mr Andrawes may carry diminished weight for want of currency at or about 21 March 2024 (but see infra [87], [156] – [157]); it also gives a cogent reason for why the defendants now seek an additional assessment of “fair value” by the Court.

A valuation “at or about” the time of lodgement of the Compulsory Acquisition Notice

69    In any event, and for the avoidance of doubt, it may be said that the Andrawes Report expressed an opinion of value “at or about” the date upon which the Compulsory Acquisition Notice was lodged with ASIC. Necessarily, that which might be said to be proximate to the date of the lodgement of such notice will vary with the circumstances of the case. Where the environment in which the securities that are sought to be acquired are of a nature that price fluctuations occur or are likely to occur, the timing of a valuation which can be described as “at or about the time” of the notice will be shorter than where such fluctuations do not occur or are not likely to.

70    In the present case, some three weeks elapsed between the date of the valuation in the Andrawes Report and the lodgement of the notice. There is no evidence before the Court to suggest either (a) the market for the subject matter of Mr Andrawes’ valuation; or (b) the price of an ordinary Carawine share, exhibited any degree of significant fluctuation during that particular time.

71    It follows that the date of the giving of Mr Andrawes’ opinion is sufficiently proximate to the lodging and issuing of the Compulsory Acquisition Notice. Therefore, the date of the valuation which informed the opinion that was stated in the expert’s report and sent with the Compulsory Acquisition Notice (pursuant to s 664C(2)(b)) undoubtedly met the conditions of s 667A(1)(b).

72    As an aside, in the absence of evidence that there was some significant difference in the value of an ordinary Carawine share between the date of the valuation and lodging of the Compulsory Acquisition Notice, it follows that, even if valuation in the Andrawes Report was stale and did not comply with the Act, no damage or prejudice could possibly have flowed from it.

Objection (1.2): No part of the value of the company was attributed to extant options

73    Section 667C specifies the method for determining what is “fair value” for securities. One step in that methodology is prescribed by subsection (1)(b): the value of Carawine as a whole must be allocated amongst the classes of issued securities (taking into account the relative financial risk, and voting and distribution rights, of the different classes). In relation to this requirement, it is accepted that options granted by Carawine fall within the meaning of “security”: s 92(3)(f).

74    In short, the defendants allege that the valuation contained within the Andrawes Report does not satisfy the requirement in s 667C(1)(b) because Mr Andrawes failed to consider or attribute a value to certain options which Carawine had issued. That objection is misplaced.

75    In his oral evidence, Mr Andrawes indicated that he had considered the existence of the options (indeed, they are contemplated in his report at Item 5.10) but attributed no value to them on the basis that the prices at which they were exercisable were so far in excess of the shares’ market value that it was not foreseeable that they would be exercised. Thus, a nil value was attributed to them and the total value of the company was ascribed to the existing shares. In his words:

HIS HONOUR: Could you just slow down a bit and say that again?---The options that were on issue were reflected in my report and mentioned. However, they were very far out of the money. Had they been in the money, ie, had the – had the exercise price been less than the value I had – I – I had arrived at per share, then I would have taken account of them on a diluted basis.

What do you mean, “out of the money” - - -?---Out of the money means the exercise price is more than the value, so they wouldn’t be exercised.

I see?---And they were quite – they were quite far out of the – out of the money as well.

Right. I see?---And so they had negligible value, if any. And so, in that respect, there was no value to be attributed to them. Had they been – the exercise price been below my value, then I would have taken them into account in terms of attributing value to them. But in this case, it wasn’t appropriate.

76    Mr Andrawes’ evidence on this particular topic should be accepted. It was given in a forthright and considered manner, and no reason was exposed for doubting the veracity of it.

77    Moreover, the logic of his approach is undeniable. As Item 5.10 of the Andrawes Report makes clear, the exercise price per share of the options in question was $0.40 (in respect of 3,000,000 shares) and $0.60 (in respect of 2,250,000 shares). Those prices were, and are, so far above what Mr Andrawes considered to be representative of their “most likely” market value ($0.104 per share; see infra [106] – [107]), that he understood there to be no real chance that they would be exercised. He was not significantly challenged on his evidence in this respect. Accepting his belief that the options would not be exercised, there would be no additional shares in respect of which the value of Carawine could be apportioned. That approach is rational and consistent with s 667C(1)(b). After all, that section is directed to ascertaining what is a “fair value” for the relevant shares by attributing the value of the company to the shareholding. It is not intended to attribute the value among shares which have no real chance of being issued.

78    It was suggested in the written submissions for the representative defendant that at least some part of the value of Carawine should have been attributed to the options given that, as they did not expire until December 2025, there existed at least some potential for their being exercised. That submission is unfortunate in circumstances where it was not put to Mr Andrawes that the length of the option period should have acted as an indicator of the potential for the options, or at least some of them, being exercised. Had that question been put, he may have had a response. That may have been based on the known circumstances, the historical value of the share price or any combination of those matters. In any event, the defendants had the opportunity to examine Mr Andrawes on the topic and did not do so. It is now inappropriate to indirectly criticise him without affording him a chance to explain it: Browne v Dunn (1893) 6 R 67.

79    To that, it might be added that no scenario was postulated in which it might reasonably be suggested that the market price of an ordinary Carawine share would approach $0.40, let alone $0.60, such that the option holders might exercise them. Instead, the evidence established that (a) between 18 May and 17 November 2023, the quoted daily market price of a Carawine share did not exceed $0.1477; and (b) from 17 November 2023, that price did not waver significantly from $0.11. In such circumstances, there was nothing to suggest any error in Mr Andrawes’ approach of assuming that there was no reasonable prospect of the options being exercised.

80    In sum, no error has been shown to exist in the Andrawes Report on the basis that the value of the company was not appropriately allocated among the classes of issued securities.

81    It is a matter worthy of remark that the defendants would seek to rely upon this alleged defect, given that Mr Andrawes’ decision to attribute a nil value to the options necessarily inflated the value to be attributed to the ordinary shares that were the subject of the Compulsory Acquisition Notice. That is a decision which would have plainly enured to the benefit of persons from who the shares were sought to be acquired (the defendants). Moreover, it follows that the price of $0.11 would be even higher than the market price of the shares than Mr Andrawes had believed.

Objection (1.3): Consideration of prior six months trading in the relevant shares

82    It is also alleged that the Andrawes Report did not comply with s 667C(2) which requires that, in any assessment of fair value, the consideration (if any) paid for securities in the class sought to be acquired within the previous 6 months “must be taken into account” (see also Capricorn Diamonds 79 – 80 [72]).

83    The requirement under s 667C(2) is of a procedural character; a matter (the consideration paid for securities in the relevant class within the previous 6 months) must be “taken into account” by the relevant expert(s) in their assessment of “fair value”, though precisely the weight that it carries is a matter for their discretion (Capricorn Diamonds 78 [65]; see also Teh v Ramsay Centauri Pty Ltd (2002) 42 ACSR 354, 360 [27] (Teh)). Thus, to assess whether the Andrawes Report took such a matter “into account” in its determination of “fair value”, regard must be paid to the manner in which the report sought to value the residual ordinary Carawine shares.

84    In this respect, it is noted that Mr Andrawes relied upon an array of valuation methodologies – namely, (a) a “Sum-of-Parts” (SoP) analysis (Item 10.1); (b) a “Quoted Market Price” (QMP) analysis (Item 10.2); and (c) a consideration of the so-called “Subscription Price” (Item 10.3). These reasons will traverse such methodologies, and their differing logics, where appropriate.

The QMP analysis

85    Mr Bennett, in his outline of submissions, took the Court to evidence of the trading of ordinary Carawine shares which “show[ed] consistent trading above 11 cents, including trades on 6 July 2023 and 10 July 2023 at 14 cents per share” and was said to buttress the following assertion:

The legislature [by s 667C(2)] seeks to protect the minorities from precisely what occurred in this matter, that is, the acquisition by the plaintiff of securities at an upper range between 13.5 and 14 cents in the previous 6 months then offering the minority shareholders 11 cents per share.

86    Although the thrust of such characterisation of s 667C(2) may, indeed, be apposite, it does not appear to have any direct bearing upon the present case. It is, with respect, rather pellucid that Mr Andrawes did take into account evidence of historical trading in ordinary Carawine shares. Principally, he did so by considering the quoted market prices for those shares in the six months prior to 20 November 2023, being the date QGold became the 90% holder in Carawine (at Item 10.2). Such a timeframe was nominated to cater for the fact that QGold’s acquisition of a 90% holding could reasonably be expected to artificially distort the market price of Carawine shares thereafter (given that it would then be in a position to compulsorily acquire the residual shares) (at Item 10.2). It is noted that no criticism was made of the decision to confine Mr Andrawes’ analysis of the consideration paid for ordinary Carawine shares to the six months that preceded 20 November 2023 (and not the six months prior the date of his valuation (26 February 2024)).

87    In any event, a supplementary report prepared by Mr Andrawes (and dated 27 February 2025) revealed there to be no significant difference in the consideration paid for a Carawine share in the six months that preceded (a) 20 November 2023; and (b) 21 March 2024 (and, by extension, 26 February 2024). If anything, the effect of QGold acquiring 90% of the shareholding was to exert a downward pressure on the market price for the remaining ordinary shares (e.g., compare the weighted average market price for the six months to 17 November 2023 ($0.132; Item 10.2 of the Andrawes Report) and 21 March 2024 ($0.108; Item 5 of the supplementary report)).

88    The Andrawes Report explained the QMP approach in the following terms (at Appendix 2):

2    Quoted Market Price Basis (‘QMP’)

A valuation approach that can be used in conjunction with (or as a replacement for) other valuation methods is the quoted market price of listed securities. Where there is a ready market for securities such as the ASX, through which shares are traded, recent prices at which shares are bought and sold can be taken as the market value per share. Such market value includes all factors and influences that impact upon the ASX. The use of ASX pricing is more relevant where a security displays regular high volume trading, creating a liquid and active market in that security.

89    Item 10.2 of that report is titled “Quoted Market Prices for Carawine Securities”. It begins by noting that Mr Andrawes’ assessment of the quoted market price of an ordinary Carawine share had been prepared in two parts: “The first part is to assess the quoted market price on a minority interest basis. The second part is to add a premium for control to the minority interest value”. In relation to the former, the Andrawes Report first sets out a chart. It is titled “Carawine share price and trading volume history” and represents the quoted market price of ordinary Carawine shares as between 18 May 2023 to 17 November 2023. It revealed the following information:

(1)    the daily price of a Carawine share was at its lowest on 9 June 2023 ($0.0975);

(2)    the daily price of a Carawine share was at its highest on 2 October 2023 ($0.1477);

(3)    the volume of trading was low, with the largest trade being the acquisition of 2,262,864 shares by QGold on 6 July 2023 (at a price of $0.14 per share).

90    Further analysis followed, including that of the volume of trading in Carawine shares for the six-month period between 18 May 2023 and 17 November 2023. In this respect, the Andrawes Report observed that only 2.06% of Carawine’s current issued capital was traded in that period (being, at least on Mr Andrawes’ view, influenced by QGold’s status as the 90% holder).

91    In the result, Item 10.2 offered the following conclusion:

In the case of Carawine, we consider the shares to display a low level of liquidity, on the basis that less than 1% of securities have been traded weekly on average, with 2.06% of Carawine’s current issued capital being traded over a six-month period and 21.94% when excluding the shares held by QGold. Across the period assessed, there were 62 trading days where there was no trading in the Company’s shares.

Our assessment is that a range of values for Carawine shares based on market pricing is between $0.105 and $0.125.

92    The Andrawes Report then turned to address the QMP value of a Carawine share if a premium for control were to be added and found, in short, that the appropriate range of values for such shares would be between $0.131 and $0.169 (see infra [109]). However, it cautioned against “placing too much reliance on these values … due to the low liquidity of the shares” in question.

Consideration of the Subscription Price

93    In October 2023, Carawine offered all shareholders the opportunity to participate in a pro-rata renounceable entitlement offer of two fully paid ordinary shares for every nine shares (at a price of $0.11 per share (the Subscription Price)) (the 2023 Entitlement Offer). For present purposes, it suffices to observe that Mr Andrawes accounted for such offering in his assessment of the historical market price of Carawine’s shares (at Item 10.3). In so doing, he discounted much of what had transpired in relation to the rights’ issue because, “substantively”, it was only QGold who had subscribed for shares under the 2023 Entitlement Offer. This was said to indicate that the Subscription Price was in excess of that at which other shareholders were willing to transact at and that, had the price been closer to the market price, it would have been reasonable to expect a greater degree of participation from shareholders other than QGold. On that basis, he found that the Subscription Price, of itself, did not reflect a fair market value.

Identification of appropriate methodology to assess “fair value”

94    In its assessment of the value of Carawine shares, Item 10.4 of the Andrawes Report compared the (a) SoP approach; (b) QMP approach; and (c) Subscription Price. In short, Mr Andrawes determined that it was the former which provided the best foundation to identify “fair value”:

The values derived from our Sum-of-Parts and QMP approaches and the Subscription Price are reasonably consistent with one another. Given that the shares of Carawine display a low level of liquidity and that the 2023 Entitlement Offer was only substantively taken up by QGold, we have elected to rely on the value derived from our Sum-of-Parts approach.

Did Mr Andrawes comply with the requirements of s 667C(2)?

95    It is undoubted that Mr Andrawes took into account, in his preparation of the Andrawes Report, evidence pertaining to the historical price paid for ordinary Carawine shares. He did so in the course of his QMP analysis (Item 10.2), as well as in his consideration of the 2023 Entitlement Offer (Item 10.3). Having done so, he discounted it as of utility to an assessment of “fair value” in the circumstances of the case (Item 10.4). He was wholly entitled to do so under the Act.

96    The defendants assert that evidence of such shares being sold for prices in excess of $0.11 (e.g., $0.135 and $0.14) in the six-month period preceding 20 November 2023 had the consequence that the “fair value” of an ordinary Carawine share should have been higher than as determined by Mr Andrawes. That submission, however, fails to appreciate the assessment process and that, whilst s 667C(2) requires that historical prices be taken into account, that evidence is not determinative of “fair value”. Here, the prices received were taken into account; their relevance was, however, considered to have been diminished by reason of the circumstances of the market when the shares were sold and, in particular, the low liquidity of share transactions. It is plain Mr Andrawes gave active, intelligent consideration to the evidence of the historical price of the shares, but it is also clear his reasons for discounting such were substantive and compelling.

97    In the result, there is no substance in this criticism of the Andrawes Report.

Objection (1.4): Use of a “premium for control”

98    Pursuant to s 667C(1)(c), the valuation prepared by the relevant expert is to “allocate the value of each class pro rata among the securities in that class”. Importantly for present purposes, that allocation must not allow a premium, or apply a discount, for particular securities in that class (see Explanatory Memorandum, Corporate Law Economic Reform Bill 1998 (Cth) 42 [7.13]).

99    As has been alluded to, the Andrawes Report undertook an assessment as to the “fair value” of the relevant securities by reference to a “control premium” (see supra [65] and [92]; see also Item 2.4, which identifies the low, preferred and high values of an ordinary Carawine share upon “a control basis (per share)”). It is noted that (a) in his evidence, Mr Andrawes clarified that use of the expression “control basis” was a reference to a “premium for control”; and (b) the valuations set out in Item 2.4 incorporated, in part, assessments undertaken by reference to the Australasian Code for Public Reporting of Technical Assessments and Valuation of Mineral Assets (2015 ed) (VALMIN Code) (per Item 9), such that a reference to “preferred value” may be understood as a reference to a “most likely” market value (VALMIN Code at 30 [8.6]).

100    The defendants submitted that the inclusion of such a premium for control was impermissible, in that it was inconsistent with a regulatory guide that had been published by ASIC – namely, Regulatory Guide 111 (Content of Expert Reports) (RG111) – and contrary to s 667C(1)(c).

101    It is not entirely clear what was sought to be made of this alleged non-compliance with RG111. It appeared to be advanced on the footing that a valuation that did not comply with the guidance set out in RG111 would not be a “valuation” for the purposes of s 667C, with the consequence that, if non-compliance was made out, the section would not be satisfied. No basis for that conclusion was identified and it should be rejected when cast at such a high level of generality. In any event, even if the proposition was correct, there was no non-compliance with RG111.

The SoP analysis (includes an inherent premium for control)

102    Mr Andrawes indicated that his valuation was prepared in accordance with certain regulatory guidelines issued by ASIC, including RG111, for the purposes of assessing the “fair value” of the securities. Indeed, he extracts [RG111.48] – [RG111.49] of RG111 at Item 3.2. Thereafter, he notes RG111 states that a transaction will be “fair” if the value of the offer price is equal to (or greater than) the value of the securities which are the subject of the offer. In turn, this was said to require a comparison between the value of a Carawine share “on a control basis” prior to the compulsory acquisition and the value of consideration being offered per share by QGold.

103    As noted above, Mr Andrawes purported to do so by reference to multiple valuation methods. One such method was the SoP approach. Item 9 of the Andrawes Report relevantly explains:

… In our assessment of the value of a Carawine share we have chosen to employ the following methodologies:

•    Sum-of-parts method … which estimates the market value of a company by separately valuing each asset and liability of the company. The value of each asset may be determined using different methods and the component parts are then aggregated using the NAV [Net Asset Value] methodology.

…

104    Item 10.4 provides further clarity as to what such methodology entailed:

[The valuation achieved by the SoP methodology] represents the amount that would be distributed to shareholders if all the Company’s assets and liabilities were sold and settled on an orderly basis.

105    The manner in which Mr Andrawes used the SoP methodology to value an ordinary Carawine share is set out in Item 10.1 (titled “Sum-of-Parts valuation”). That Item begins by noting:

We have employed the Sum-of-Parts methodology in estimating the fair market value of a Carawine share by aggregating the estimated fair market values of its underlying assets and liabilities, having consideration of the following:

•    Value of Carawine’s mineral assets; and

•    Value of Carawine’s other assets and liabilities.

106    The value of those assets and liabilities (at a “low”, “preferred” and “high” range), as well as the value that would be distributed to shareholders if those assets and liabilities were sold and settled on an orderly basis, were set out by Mr Andrawes in the following table:

107    That data informed the following conclusion:

We have assessed the value of a Carawine share (on a controlling interest basis) to be in the range of $0.064 to $0.141, with a preferred value of $0.104.

108    Critically, and unlike the QMP method, no “premium” was subsequently added to the assessed value of a Carawine share (cf supra [92]). Indeed, all that occurred within the SoP process was that the assessed asset value of the company was divided by the number of issued shares.

109    For the purposes of comparison and assessment, Mr Andrawes undertook a QMP valuation of the relevant Carawine shares (Item 10.2). There, he considered the quoted market price of the shares for the six months preceding QGold’s ascendency to 90% holder on a “minority interest basis”, as well as by adding a premium for control. The results of that analysis were as follows:

110    However, and as has been noted, Mr Andrawes cautioned against placing too much reliance on the values obtained under such approach due to the “low liquidity of the shares” (Item 10.2).

111    Ultimately, the Andrawes Report preferred the results of the SoP method. At Item 10.4, it said:

We consider the sum-of-parts value, which is a control value, to represent the fair value of Carawine’s shares to Shareholders. This represents the amount that would be distributed to shareholders if all the Company’s assets and liabilities were sold and settled on an orderly basis. In our opinion no premium would be received in excess of the net asset value by selling 100% of the Company noting that RG111.11 requires that any special value of the target to a particular bidder should not be taken into account in the assessment of fairness.

Based on the results above we consider the value of a Carawine share to be between $0.064 and $0.141, with a preferred value of $0.104.

(Emphasis added).

112    The emphasised portion of that conclusion is important in the current context.

Alleged contravention of RG111 and s 667C(1)(c)

113    It was put to Mr Andrawes that the identification of a value of a Carawine share on a “control basis” contradicted RG111 at [RG111.48(c)]. That guidance relevantly provides:

To determine what is ‘fair value’, s667C requires that an expert:

(a)     first assess the value of the entity as a whole;

(b)     then allocate that value among the classes of issued securities in the company (taking into account the relative financial risk and the voting and distribution rights of the classes); and

(c)     then allocate the value of each class pro rata among the securities in that class (without allowing any premium or applying a discount for particular securities or interest in that class).

(Emphasis added).

114    It is a matter worthy of comment that [RG111.48] is not a strict recitation of s 667C(1), for it adds the words “or interest” to subparagraph (c) which seemingly seeks to expand the operation of s 667C(1)(c). The legislative requirement is to the effect that, in the allocation of the value attributed to a class of securities, no premium is to be allowed or discount to be applied vis-à-vis “particular securities in that class”. In other words, all securities within the one class are to be treated equally: Capricorn Diamonds 79 [69] (in this vein, see eg, Winpar Holdings Ltd v Goldfields Kalgoorlie Ltd (2000) 176 ALR 86, 100 [68] – [69] and Re Goodyear Australia Ltd (2002) 167 FLR 1, 20 – 21 [85] – [86]). By contrast, ASIC’s reformulation of s 667C(1) in [RG111.48] has the appearance of attempting to expand subparagraph (1)(c), so as to prevent a premium or discount being applied by reason of a party having an interest in the class of securities as a whole. Experience reveals this instance of overstatement to not be uncommon; indeed, it is most unfortunate that such guides often contain unreliable recitations of the law.

115    In light of the foregoing, if one returns to the objection under consideration – being that the Andrawes Report allowed a premium in its valuation of an ordinary Carawine share – the reference point is, and can only be, the terms of s 667C(1)(c). In his evidence, Mr Andrawes denied acting in contrivance of such provision. This was because he understood s 667C(1)(c) to forbid the addition of any premium “over and above the inherent value of the shares” (it is noted that whilst such comments were made with reference to the terms of [RG111.48], they apply with equal measure to s 667C(1)(c)) and that the valuation methodology adopted by him, being the SoP process, did not include any such additional premium for control (such a control value was instead said to be “inherent in the value of [that] methodology”) (cf supra [109]).

116    Mr Andrawes evidence in the above regard, being his explanation for why the SoP method did not contravene s 667C(1)(c), was not challenged in any way. That is not surprising given that his analysis was clearly explained in Item 10.1 and it is plain that he followed the stipulations of s 667C(1). He assessed the value of the company as a whole, allocated the value amongst the relevant classes of securities (namely, the ordinary shares) and then allocated the value of the company pro rata to those shares. At Item 10.4, he expressed the opinion that “no premium would be received in excess of the net asset value by selling 100% of [Carawine]”. As is self-evident from the report, he did not allow a premium for any particular securities in that class.

117    Absent the prohibition in s 667C(1)(c), it might have been possible to increase the value of the remaining shares to be acquired as they were of special value to QGold (in its quest to obtain 100% ownership). Indeed, so much was adverted to by Mr Andrawes in his QMP analysis:

An acquirer could be expected to pay a premium for control due to the advantages they will receive should they obtain 100% control of another company. These advantages include the following:

•    control over decision making and strategic direction;

•    access to underlying cash flows;

•    control over dividend policies; and

•    access to potential tax losses.

118    As it was, such a premium was of no relevance to the SoP methodology and, as made pellucid by Item 10.1 of the Andrawes Report, all of the relevant shares were accorded the same value.

119    There is also much force in the view that the SoP methodology includes some inherent premium for control. A share value that is a product of the capital value of the company divided by the number of relevant shares, reflects the value that is available to a party who has control of the company in the sense it is only a person with sufficient control who would be able to secure a sale of the company’s assets and distribution to shareholders. A minority shareholder does not have that ability and it therefore follows that the value of the share in their hands would be less.

120    It is also to be observed that s 667C(1)(c) is concerned with the allowance of a premium or application of a discount in relation to particular securities within a wider class of securities. Here, all of the ordinary shares in Carawine were treated in the same manner. The assessed value of the net assets was divided amongst all issued shares. Plainly, no special treatment was given to any of the shares in that class, either positively or negatively: see, eg, Teh 360 [26].

121    Ultimately, as is made clear by the above, the SoP valuation undertaken by Mr Andrawes was entirely consistent with the dictates of s 667C(1)(c) and there is no rational basis for concluding that the valuation produced did not comply with the statutory requirements in this respect.

Objection (1.5): Failure to set out reasons

122    Section 667A(1) is concerned with the expert’s report. Subsection (1)(c) requires that such a report must “set out the reasons for forming [an] opinion” upon whether the terms proposed in a compulsory acquisition notice give a fair value for the securities concerned. This requirement was considered in Batoka (at 113 – 114 [75]), where Steytler P (with whom McLure JA and Murray AJA agreed) observed that its purpose was to “ensure that the recipient of the notice is able to understand, and evaluate, the opinion” therein. Accepting the expression of an opinion is not always susceptible to “an exact exposition of reasons for the conclusions arrived at”, the Court recognised that it was important that the relevant shareholder(s) should know, generally, how the valuation has been arrived at and what factors have been taken into account. Were it to be otherwise, it would be nigh “impossible” for them to know whether or not to lodge an objection. That being so, it was held that:

… In each case, what is required is that the reader be furnished with an explanation of “the basis of theory or experience” upon which the expert’s conclusions rest (R v Jenkins; Ex parte Morrison [1949] VLR 277 at 303 per Fullagar J), encompassing criteria enabling evaluation of the validity of the expert’s conclusions (Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705 at 729 per Heydon JA). The authority, experience and qualifications of the expert may add weight to the opinions expressed, but cannot diminish the obligation to provide adequate reasons. If, at the end of the hearing, the report is so deficient as to make it impossible to determine whether or not the price offered was fair, then no reliance can be placed upon it. …

123    Whilst so much can be accepted, it must be kept in mind that the observations of Steytler P did not suggest that a “valid” valuation, at least for the purposes of ss 664C and 667A, must be beyond criticism in every respect, or that it need to set out every consideration possibly relevant to an assessment of “fair value” in exhaustive detail (see, eg, Bromley Investments Pty Ltd v Elkington (2003) 47 ACSR 273, 278 – 279 [18]). Rather, the security holders must be furnished with sufficient information and explanation so that they can understand, in general terms, how the valuation has been reached and able to critically evaluate the opinion which is expressed. It is also relevant that his Honour did not suggest that the valuation had to be completely understandable or comprehensible to a layman without assistance from third parties. No doubt, such a requirement would be unworkable in cases such as the present where certain elemental aspects of the value are dependent upon highly specialised technical considerations.

124    Though the defendants contended that Mr Andrawes’ valuation failed to satisfy the requirement in s 667A(1)(c), there was a decided lack of specifics to this criticism. All that was said appears at paragraphs [13] – [15] of the representative defendants’ closing submissions:

[Paragraph [75] of Batoka] picks up the statutory requirement in section 667A(1)(c), that the expert report must set out the reasons for forming that opinion. By the reference in Batoka to the principles in Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705 at 729 (Makita), Batoka emphasises the need for the independent expert to set out clearly the process of reasoning see in particular the dicata adopted by Heydon JA at [86] of Makita.

The 26 February 2024 expert report of Mr Andrawes (First Andrawes Report)9 fails to disclose his reasoning for arriving at a preferred value of 10.4 cents or fair value of 11 cents.

Mr Andrawes conceded during cross examination that his report did not expressly set out his reasoning for arriving at fair value10.

(Emphasis in original).

125    Two observations might be made vis-à-vis such submission. First, this is not the first time that the representative defendant has sought to impugn the reasoning employed by an expert, in the context of a compulsory acquisition proposal, pursuant to the reasoning in Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705. That observation is not intended to be pejorative, but simply to note that this issue has arisen in a similar context before. For instance, in Dolby, Campbell J considered a submission that the relevant expert’s report had impermissibly “relied on a range of material reported to them or provided by others, and [failed to make] explicit the authors’ own reasoning processes in deciding whether to adopt, and if so in what fashion to use, that material”. Further critique was made of the report’s failure to set out the “intellectual basis” of the expert’s opinion (at 220 [60]). His Honour held (at 220 – 221 [62] – [63]):

Bromley Investments Pty Ltd (ACN 001 109 628) v Elkington (2003) 47 ACSR 273; [2003] QCA 407 is a decision of the Queensland Court of Appeal. In that case, at [18], Williams JA (with whom Jerrard JA and Holmes J agreed) considered a submission which Mr Catto (who also appeared in that case) advanced, that a judge at first instance in a trial such as the present “had an inquisitorial role and was obliged to investigate fully all aspects of the expert’s report in order to be satisfied that the price offered for the shares was fair”. Williams JA said, concerning that submission (at [18]):

Even though the minority shareholders do not bear any onus of proof, the role of the judge is not inquisitorial. The essential task of the judge is to determine whether the price offered is fair and that decision must largely be based on the report of the expert furnished pursuant to s 667AA. Of course, if at the end of the hearing the judge was of the view that there were such deficiencies in the report that it made it impossible to determine whether or not the price offered was fair, approval would be refused. But that does not mean that the report must be beyond criticism before the judge could act on it and conclude that the price offered was fair.

I have set out at some length the structure of the report. That structure is a clear one. It makes clear that the experts were addressing the questions which they are required to address by s 667C of the Corporations Act 2001 (Cth) (and which is also the question which the court must address for the purpose of s 664F(3)). The nature of the valuation process is inherently one which does not permit of strict deductive proof and involves assessment, judgment, and some degree of approximation. In my view, the report makes clear the basis upon which it proceeds. Further, the basis upon which it proceeds is one which is of a type often encountered in business valuations.

(Emphasis removed).

126    In the context of the present case, such comments and conclusions retain a high degree of force.

127    Second, footnote 10 to Mr Bennett’s submission made reference to the following transcript (ts) references: ts [43] at line 35; ts [53] at line 40; and ts [56] at lines 25 – 30. It is difficult, on any view, to appreciate how such evidence comprises some concession, by Mr Andrawes, that his report failed to set out his reasoning for assessing “fair value”. Like much of the defendants’ objections, such submission overstates the effect of the evidence to the point of inaccuracy.

128    In relation to the first reference (ts [43] at line 35), reliance was placed on Mr Andrawes alleged acknowledgment that the Andrawes Report did not specifically identify how he had identified the “preferred value” of the shares to be $0.104 per share. Specifically, reference was made to the following exchange between Messrs Andrawes and Bennett after the attention of the former had been drawn to Item 10.1 and the table setting out his SoP valuation (see supra [106]):

Now, can I get you to help me with this? Where, in reading your report, do I find an explanation as to why you prefer 10.4 cents per share?---It doesn’t specifically say that I prefer 10.4 cents per share, but what it does say is that I’ve considered the range, and, based on that, I believe it to be fair.

129    The defendants’ reliance on the above is a flimsy basis on which to attack the manner in which Mr Andrawes formed and communicated his opinion. In my view, the reasons that underlie the identification of the “preferred value” are self-evident from the drafting of the Andrawes Report. Such valuation is a product of the SoP methodology. That methodology involved one variable – the value of Carawine’s mineral assets – and two constants – the value of Carawine’s other assets and liabilities ($4,777,904) and the total number of ordinary Carawine shares on issue (236,125,449) (recall supra [106]; see also infra [131]). As identified by Item 10.1.1, the Andrawes Report’s valuation of Carawine’s mineral assets relied upon the conclusions reached in the VRM Report. That report was included as Annexure 4 to the Andrawes Report and, in short, undertook an extensive valuation of the mineral assets controlled by Carawine. Amongst other things, it provided a range of values for the mineral resources, as is unremarkable in relation to mining and exploration tenements. That range included a “lower”, “preferred” and “upper” valuation. In this respect, Item 10 of the VRM Report provided the following:

10.    Preferred Valuations

Based on the valuation techniques detailed above, Table 15 provides a summary of the valuations derived for the Mineral Resources and the exploration potential within the projects by the various techniques. Figure 44 graphically shows the valuation range and preferred valuation for the Mineral Resources and exploration potential within the projects and the combined valuation range and preferred valuation for the mineral assets.

…

Based on the rationale outlined in the body of this Report, VRM is of the view that the [Mineral Resource estimates] is most appropriately valued considering a comparable transaction approach, while the exploration potential is most appropriately valued applying a Geoscientific or Kilburn valuation method.

On this basis in VRM’s opinion, as detailed in Table 15 the likely market value of the Carawine projects is between $10.3 million and $28.5 million with a preferred valuation of $19.8 million. This range is determined based on the primary valuations of the Mineral Resources and the primary valuation of the Exploration potential as highlighted in bold in Table 15 below.

130    It is unnecessary to extract “Table 15” at this juncture, for it is reproduced at Item 10.1.1 of the Andrawes Report and summarised in the Executive Summary to the VRM Report as follows:

VRM’s considers the Mineral Resources within the Carawine projects have a market value, based on comparable transactions, of between $2.3 million and $4.7 million with a preferred valuation of $3.9 million. The exploration potential on the tenements adjacent to Mineral Resources and the other exploration projects have a market value of between $8.0 million and $23.8 million with a preferred value of $15.9 million.

Considering the Mineral Resources, and exploration potential of the Carawine projects, in VRM’s opinion, the Mineral Assets owned by Carawine have a combined market value of between $10.3 million and $28.5 million with a preferred valuation of $19.8 million.

(Emphasis in original).

131    The figures identified in bold in the second paragraph above were used as the variables in the SoP assessment set out in Item 10.1 of the Andrawes Report; that is to say, they were taken to represent the value of Carawine’s mineral assets for the purposes of undertaking that analysis. They were added, independently of each other, to the value of Carawine’s “other assets and liabilities” to calculate a “Low”, “Preferred” and “High” value vis-à-vis Carawine’s net assets. Each was then divided by the total number of Carawine ordinary shares on issue so as to render a “Low”, “Preferred” and “High” value per Carawine share (for instance, the “Preferred” value per Carawine share was calculated thus: ($19,800,000 + $4,777,904) / 236,125,449 = $0.104). Such process is self-evident from the table set out in Item 10.1 of the report (see supra [106]).

132    Even on a casual reading of the Andrawes Report, which annexes the VRM Report, the manner in which the “preferred value” of an ordinary Carawine share is calculated is self-evident. In context (see, eg, Items 9, 10.1 and 10.4 (and Appendix 2)), it is plain that the Andrawes Report (a) identified its reliance upon the SoP methodology in order to estimate the fair market value of an ordinary Carawine share; (b) noted that such method was predicated upon, in effect, one variable and two constants; (c) identified its reliance on the logic set out in the VRM Report to calculate a “low”, “preferred” and “high” estimate of the relevant variable (being, namely, the value of Carawine’s mineral assets) which were then used to calculate a “low”, “preferred” and “high” value per Carawine share; and, (d) assessed whether the price that was proposed in the Compulsory Acquisition Notice gave “fair value” for an ordinary Carawine share by reference to the different valuations which had been calculated using the SoP methodology. Relevantly, the price so proposed ($0.11 cash per share) was in excess of the “preferred” value per ordinary Carawine share ($0.104) by $0.006 (being a roughly 5.45% increase) and within the identified range of “low” and “high” values per share (being $0.064 and $0.141, respectively).

133    Those were matters of significance to Mr Andrawes. At Item 10.2, he noted that as “the value of the Consideration [proposed by QGold] is within our range of values for a Carawine share … we consider that the terms of the Compulsory Acquisition give a fair value to shareholders” (see also Item 2.4). That conclusion was seemingly reinforced by (a) acknowledgment that a “transaction is fair if the value of the offer price or consideration is equal to or greater than the value of the securities which are the subject of the offer” (at Item 3.3); and (b) the fact that the offer price ($0.11 per share) was greater than the preferred value ($0.104) of Carawine’s shares.

134    The defendants’ reliance upon the exchange between Mr Andrawes and Mr Bennett at ts [53] at line 40, is also misplaced. There, the following occurred:

You didn’t think it appropriate to go back to VRM and say, in a compulsory acquisition, where a range of values is provided, the preferred value should be on the more liberal side. In other words, the higher side?---No. No. Because there was no guidance on what that means.

135    There is nothing in Mr Andrawes’ response to the question that was posed which is indicative of any admission that the Andrawes Report did not expressly set out his reasoning for arriving at fair value. Indeed, as made clear by the report, he did not conclude that the “preferred value” ($0.104) was “the fair value”. Rather, he considered that the price proposed by QGold – being higher than the “preferred value” – fell within a range of values that he considered to be “fair”.

136    Lastly, reference was made to ts [56] at lines 25 – 30, where the following exchange appears:

And again, nowhere do you explain to a shareholder why you have a preferred value of 11 cents?---I don’t explicitly say that, but - - -

Well, you don’t say, “The reason I’ve adopted 11 rather than 14 are as follows”, do you?---No, I don’t.

137    That excerpt of the transcript provides neither a full nor accurate description of Mr Andrawes’ evidence. That which immediately follows the aforementioned exchange reads:

So the reasoning behind your selection of 11 cents is not revealed by your report, your second report; is that right?---It is explained insomuch – insofar as it’s in the table. One can read that it’s above the preferred value.

Sorry, it’s in the table above as the preferred value?---To the extent that it’s in the table, it shows the value range and comparison to the consideration for share in section 2. One can see that 11 cents is more than 10.4 cents.

138    In light of the foregoing, it is pellucid that Mr Andrawes made clear the reasoning on which he relied to assess whether $0.11 represented fair value for an ordinary Carawine share. From the outset, he outlined the view that a valuation would be “fair” if it exceeded the market value of the relevant share (Item 3.3) and, having ascertained the “preferred” (or “most likely”) market value of an ordinary Carawine share ($0.104: Item 10.1), he considered that a “fair value” for such a share would be one in excess of, albeit proximate to, that market value (Item 12.1). In this respect, it is appropriate to bear steadily in mind the statutory obligation of Mr Andrawes under s 667A – to assess whether an offer of $0.11 per ordinary Carawine share gives fair value for those securities. That task does not require, as Mr Bennett’s line of questioning seemed to imply, Mr Andrawes to identify the fair value of an ordinary Carawine share. As the Andrawes Report makes plain, Mr Andrawes identified a range of values which he understood to represent a fair market value of a Carawine share and, after noting that the offer price proposed by QGold fell within that range and, indeed, was in excess of the most likely market value, found that the “terms of the Compulsory Acquisition [gave] a fair value to Shareholders” (at Item 12.1). That conclusion is entirely comprehensible and wholly consistent with the requirements of the Act.

139    In the result, the manner in which Mr Andrawes reached his conclusions vis-à-vis “fair value” is fully exposed in the Andrawes Report. It is fulsome and provides explanations of the steps taken. There is no substance to the allegation that the report lacked the requisite reasoning.

Objection (1.6): Error in the identification of basic acquisition costs in the VRM Report

140    It should be recalled that the Andrawes Report attached the VRM Report as an annexure. The VRM Report is a “technical review and valuation opinion of the mineral assets of Carawine” (such valuation being relevant to the SoP method) (VRM Report, Executive Summary). The report valued such assets by adding the value of the mineral resources within Carawine projects with the exploration potential of tenements adjacent to those resources (Exploration Potential) (VRM Report, Item 10). The Exploration Potential of each relevant tenement was valued using the “Geoscientific” method (VRM Report, Items 8.3 and 10). In short, that method requires one to (a) multiply the “base acquisition cost” of a tenement (the BAC) by four “Basic Factors” (to render a “technical value”); and then (b) multiply the technical value of a tenement by two “Adjustment Factors” (in order to render a “market value”) (VRM Report, Items 7.6.1 and 8.3). Relevantly, Appendix C of the VRM Report sets out a table that, inter alia, records, for each relevant tenement, (a) the BAC; (b) the values attributed to the Basic Factors; (c) a technical value; (d) the values attributed to the Adjustment Factors; and (e) a market value.

141    Much was made of the formatting of Appendix C during the course of the hearing on 6 and 8 May 2025. For instance, it was noted, on several occasions, that the copy of the VRM Report that was annexed to the Andrawes Report and provided to the relevant shareholders, omitted, at Appendix C, the final digit of the BAC for certain tenements. At the hearing, a substitute Appendix C was tendered, purporting to correct such errors. Ms Burnett offered the following explanation for such error in an exchange with Mr Ananian-Cooper for the plaintiff:

Are there any further corrections that you wish to make?---The only other correction was a replacement for appendix C, which had - - -

If I could ask the witness to be provided with a copy of the .....?---That – the information in the appendix and the conclusions that come from that are exactly the same. The issue is that in the BAC column, which is a central column - - -

HIS HONOUR: Yes?--- - - - the size of the column is too narrow. And in some of the summing up of the valuations, those numbers in the BAC column were two – one digit short. So that column now – that column now is 100 per cent correct. However, it does not – it does not bear any – it doesn’t change any of the values.

So it was simply in the presentation of the figures – the column in the schedule wasn’t wide enough to accommodate the figures in - - -?---Correct.

142    It is undoubted that this error in the production of Appendix C to the VRM Report rendered it more difficult to understand. That said, if read with an eye to attempting to understand it in light of the explanations that had been provided, it would be readily apparent from the technical values given to the affected tenements that some errors had occurred and that they were most likely in the identification of the relevant BAC (being the factor which exhibited the greatest degree of variability between tenements). Although the errors in the presentation of some of the figures in Appendix C is unfortunate, they do not undermine the report’s overall validity or veracity. That is, whilst the presentation was faulty, the underlying logic and calculated market value was not. The manner in which the values were ascertained and the value identified is apparent. The misstatement of the numbers would cause a concerned reader to question what had happened with the calculation, but that does not render the value identified faulty.

143    Had it been necessary, it would have been appropriate to remediate these errors pursuant to s 1322. It is apparent that no dishonesty occurred in the preparation of the valuation for sending to shareholders and, despite the error, the valuation opinion expressed was not shown to be erroneous. It is a matter worthy of remark that there was no evidence that any shareholder who received the VRM Report even noticed the error in the presentation of the data. That tends to underscore the lack of importance that any error played in the shareholders’ appreciation of the views expressed. It also supports the conclusion that no real injustice flowed from the error.

Objection (1.7): A fanciful criticism concerning the legibility of the VRM Report

144    It will be recalled that (a) the VRM Report, being prepared in accordance with the VALMIN Code, was required to determine a range of values (high/most likely/low) in its valuation of the Exploration Potential for each relevant tenement; and (b) Appendix C of the VRM Report sets out a table that identifies the information required to assess the market value of tenements using the “Geoscientific” method. For present purposes, it is important to note that that information included, amongst other things, the values attributed to the Basic Factors for each tenement.

145    The table in Appendix C is formatted so that the title of each Basic Factor (“Off Property”, “On Property”, “Anomaly”, “Geology”) is contained in a horizontal header. Under the title of each factor lies two columns. The top-most row of such is shaded grey and, in the version of the VRM Report posted to Carawine shareholders, can be seen to contain a white “L” and “H” (in the left- and right-hand columns, respectively). Per Appendix C, ““L” in the column heading is the lower ranking, “H” is the higher ranking”. Consistently with this annotation, the data recorded in the column beneath the left “L” heading identifies the lower figure for the relevant Basic Factor for each tenement (e.g., 1.5 for “Off Property” for tenement E28/2374-I), whereas the data recorded in the column beneath the right “H” heading contains the higher figure for that Basic Factor and tenement (e.g., 2.0 for “Off Property” for tenement E28/2374-I).

146    That being so, it was rather unfortunate that the documents prepared for use in the proceedings did not reproduce the table in the VRM Report with sufficient clarity, with the consequence being that the headings “L” and “H” were not clearly legible. This illegibility was latched onto by Mr Bennett, who seemed to suggest that it had the consequence that the valuation that had been sent to the shareholders did not meet the requirements imposed by Part 6A.2 (because it was not capable of being considered by them). After some time, QGold belatedly produced an original of the Andrawes Report (and annexed VRM Report) that was printed by MBE and sent to security holders. It nullified any suggestion of illegibility. The headings to the two columns – “H” and “L” – clearly appeared such that there is no substance to the defendants’ complaint.

147    It can be legitimately assumed that the raising of the issue of the valuation’s alleged illegibility was done upon the defendants’ instructions. That is important because it is also apparent that they would each have had, in their possession, a copy of the valuation that was sent to them under s 664C(2)(b). It follows that it would have been clear to them that the valuations recorded in Appendix C of the VRM Report and actually distributed with the Andrawes Report were not illegible in the manner alleged. It is unfortunate to observe that the raising of this false issue by the defendants is consistent with the general tenor of their defence in these proceedings.

148    To the above, it might be added that, even if the “L” and “H” markings were not legible, any reasonable person engaging in a serious manner with Appendix C would have been able to ascertain the arithmetic import of the columns in quick time. In consequence, there is no substance in the defendant’s complaint that the valuation was illegible in the manner claimed.

If necessary, can the alleged defects in the Andrawes Report be regularised?

149    If, contrary to the foregoing conclusions, any of the errors alleged were made out, it would be appropriate to excuse them under s 1322. That section is applicable to defects in a valuation sent to interested security holders under s 664C (to the extent to which it does not comply with that section or s 667A): Espasia Pty Ltd v Barbarry Pty Ltd (2009) 262 ALR 639 (Espasia). In Espasia, concerns had been raised that the relevant expert opinion did not state clearly, or at all, the opinion of the expert, or their reasons for forming an opinion, vis-à-vis, whether the company (Espasia) that was desirous to acquire the shares in, and convertible notes issued by, another company (FBN) had full beneficial ownership of any of the securities that were shares, or convertible into shares, of FBN (the Securities), whether Espasia held at least 90% of the Securities, the value of the Securities, and the calculation for determining “90% by value” of securities held by Espasia that were the Securities (at 650 – 651 [56]).

150    Her Honour found such breaches of s 667A(2) (non-compliance not then in dispute: 651 [58]) to be capable of rectification to the extent required pursuant to the terms of s 1322. Specifically, it was held (at 651 – 652 [61] – [62]) that:

Second, the failure to directly address those matters in the report, in my view, was a procedural irregularity under s 1322(2) or 1322(4)(a) of the Act which does not invalidate the proceeding. As explained earlier (see [29] above), the omission was not an irregularity which affected a security holder’s decision to object. Ultimately, all security holders did object. Moreover, as the defendants’ counsel properly conceded, the defendants suffered no injustice or prejudice, let alone substantial injustice or prejudice, by reason of the failure of the report to address the matters prescribed in s 667A(2)(a) and (b) of the Act: Austrim Nylexat [81]–[99] and cases there cited; Elderslie Finance Corp Ltd v Australian Securities Commission (1993) 11 ACSR 157 at 160; Whitehouse v Capital Radio Network Pty Ltd (2004) 13 Tas R 27; 48 ACSR 569; [2004] TASSC 12; Cordiant Communications (Australia) Pty Ltd v Communications Group Holdings Pty Ltd (2005) 55 ACSR 185; [2005] NSWSC 1005 at [103]; Capricorn Diamonds at [258]–[261] and Markopoulos v Wedlock (2008) 26 ACLC 129; [2008] WASC 3 at [56].

What then is the appropriate relief? In the circumstances, it is appropriate the court grant Espasia a declaration under s 1322(2) and (4) of the Act that notwithstanding the report did not satisfy s 667A(2)(a) and (b) of the Act, the report and the notices of compulsory acquisition given to the defendants under s 664C of the Act and this proceeding are not invalidated.

151    The same approach would apply in the present case. As described by Gordon J, the preparation of the Andrawes Report was a procedural matter. Moreover, to the extent that there was any failure to comply with the requirements of the Act (namely ss 667A and 667C), any such failure appears to have been honest; at no point was the contrary suggested. It is also evident that the object of the provisions under consideration is to ensure that the relevant security holders have the opportunity to consider an independent valuation so as to assist them to determine whether to accept the offer made by the 90% holder, by identifying a “fair value” for the security and explaining how that opinion is reached. As the preceding discussion reveals, the Andrawes Report met that description. It can be added that, as is identified subsequently in these reasons, that report did identify a fair value for an ordinary Carawine share. That being so, if it contained any of the errors alleged by the defendants, it would be just and equitable in the circumstances to exercise the power under s 1322 to excuse them. Necessarily, neither the existence of any error nor the making of a remedial order will cause substantial injustice to any party.

152    It is not to the point that not all of those to whom the Compulsory Acquisition Notice was sent are objectors and defendants before the Court (as in Espasia). Having received the notice with the Andrawes Report, those entities had the right to object, but have nonetheless chosen not to. Presumably, they are content with the price offered and the content of the supporting valuation.

Objection (2): Does the valuation reflect the “fair value” of the shares?

153    The second limb of the defendants’ objection to the Compulsory Acquisition Notice was set out in their written outline of submissions in the following terms: “the plaintiff has failed to discharge its onus of satisfying the Court that the offer price represents fair value” (under s 664F(3)). It will be recalled the “offer price” in the relevant notice was “$0.11 cash per share”.

154    Pursuant to s 664F(3), the Court must approve the acquisition of securities on the terms set out in a compulsory acquisition notice if the holders of 10% or more of the securities sought to be acquired object to the acquisition before the end of the objection period, the 90% holder applies for approval of the acquisition of the securities covered by the notice within one month after the objection period, and the 90% holder establishes the terms of the notice give a “fair value” for the securities. There is no doubt that the first and second considerations are satisfied here.

155    The third consideration is to be assessed at or about 21 March 2024 (Capricorn Diamonds 85 [89]). Relevant to, but not determinative of, that inquiry is the manner in which Mr Andrawes undertook his valuation. As has been noted, Mr Andrawes evaluated a number of approaches to ascertaining the fair value of ordinary Carawine shares before settling on the SoP approach. The logic and orthodoxy of that method is plain and no substantive challenge to it was made.

156    It is also relevant that nothing in the drafting of s 664F(3) limits the Court’s consideration of whether a compulsory acquisition notice accords “fair value” to an examination of the material sent to security holders. Indeed, the 90% holder may adduce additional material at the hearing to establish the relevant factual issue. Here, QGold relied upon a supplementary valuation that had been undertaken by Mr Andrawes (and dated 27 February 2025). Therein, Mr Andrawes purported to re-value Carawine as at 21 March 2024 “based on the initial and new sources of information” (per Item 1). The commission of such report was ostensibly promoted by the defendants’ assertion that the initial valuation in the Andrawes Report was not sufficiently co-ordinate with the date on which the Compulsory Acquisition Notice was lodged. As has been noted, Mr Andrawes’ supplementary report affirmed the veracity of the Andrawes Report:

We have compared the value of a Carawine share on a control basis (per share) as at the date of QGold’s compulsory acquisition of Carawine (being 21 March 2024) with the Consideration (being $0.110). For the reasons set out in this Supplementary Report, our opinion in relation to the Compulsory Acquisition remains unchanged.

(Emphasis added).

157    In addition, an updated version of the VRM Report was prepared (dated 27 February 2025) to buttress the supplementary report of Mr Andrawes. That revision concluded (cf supra [130]):

The Valuation of Carawine’s mineral assets as of 21 March 2024 and based on the information available at that time results in a low value of $A10.43M and a high value of $A28.78M and a preferred value of $A19.93M. An increase in value of $210,000 or 1.06% from the preferred value of $19.72M determined in the Initial Report [being the VRM Report]. The increase in value is due to an increase in the Mn price of 2.9% and an increase in the gold price of 6.3% with no material difference in the exploration market or outlook. The valuation difference is not considered material.

(Emphasis in original; Emphasis added).

158    Taking into account the foregoing, it appears to me that, in the context of this case, the question of whether the terms of the Compulsory Acquisition Notice give a “fair value” for the residual ordinary Carawine shares turns upon the following matters:

(1)    What is the preferable method(s) to value ordinary Carawine shares?

(2)    If the SoP approach is such a method:

(a)    is it appropriate, in assessing the market value of the mineral assets of Carawine (being the variable input in the SoP approach), to rely upon the “Geoscientific” method to value the Exploration Potential of tenements adjacent to the mineral resources within Carawine projects?

(b)    if so, was the manner in which the VRM Report relied upon and used the “Geoscientific” method attended by sufficient doubt or error?

(c)    was the manner in which the Andrawes Report relied upon and used the SoP method attended by sufficient doubt or error?

(3)    To what extent, if any, should a liberal approach be taken when assessing the value of ordinary Carawine shares?

(4)    What is the weight, if any, to be accorded to the 2023 Entitlement Offer?

Appropriate methodologies of valuation

159    As Item 9 of the Andrawes Report makes plain, various methodologies may be used to value a business or the shares in a company. For the reasons set out in that Item, Mr Andrawes adopted the SoP and QMP methodologies in order to make the assessment in this case. Those reasons are cogent and were not the subject of objection; as such, I accept that the “fair value” of an ordinary Carawine share may be assessed by reference to the aforementioned approaches.

The veracity of the manner in which the Andrawes Report applied the SoP methodology

160    Much of the hearing was concerned with the SoP method and, in particular, the validity of the “Geoscientific” valuation that was adopted by Ms Burnett in the VRM Report and underlay the conclusions drawn in the Andrawes Report. Curiously, no part of the final submissions of the defendants addressed any part of the cross-examination of Ms Burnett, save for where it stated:

The issues with the valuation methodology applied by Ms Burnett (and to some degree Mr Dunbar) in their VRM Report were dealt with during the cross examination of those witnesses and highlights the inability of a shareholder to understand how the preferred value has been arrived at and accordingly whether or not to lodge an objection.

161    If that is intended to raise, for the purposes of address, inadequacies in the VRM Report, it is insufficient to do so. It does not raise any matter going to the veracity of the report, but merely that it might be difficult for a layperson to understand the intricacies of the valuation of mineral exploration rights and the like. Submissions in this form should be discouraged, for they should express the issues in dispute between the parties in an articulate and comprehensive manner. This particular submission gives an appearance of obfuscation, rather than illumination.

162    In any event, and as developed below, the VRM Report is reasonably comprehensible to any reader who is prepared to take the time to consider it. In short compass, I am satisfied that the reasoning and conclusions of Ms Burnett supply a suitable foundation for the assessment of the value of the mineral assets of Carawine and, in turn, the SoP methodology that was adopted by the Andrawes Report to value an ordinary Carawine share (see, eg, supra [106], [129] – [132]).

163    As has been noted, the VRM Report provides a technical review and valuation of the mineral assets of Carawine. It did so in accordance with the stipulations of the VALMIN Code, which identifies several methodologies by which to value mineral assets (VRM Report, Item 7). The VRM Report used two such methods to value the Exploration Potential of various tenements: (a) the Geoscientific methodology as the primary valuation technique; and (b) the Prospectivity Enhancement Multiplier methodology as a supporting valuation technique.

164    Item 7.6.1 of the VRM Report offers a summation of the utility of the Geoscientific method. It is a method that is “somewhat subjective and open to interpretation”, given its reliance upon the relevant valuer assessing a series of factors within a project for their “potential” (being the Basic Factors) and ascribing them an arbitrary rating between 0.1 and 5.0 (as well as applying certain evaluative discounts; i.e., the Adjustment Factors). Such a process is liable to “generate a very wide range in valuations, especially when the ranking criteria are assigned to a large tenement”. Notwithstanding such pitfalls, the report suggested that the Geoscientific method, “when applied correctly by a suitably experienced specialist”, is robust, transparent and enables an “accurate estimate of the value of the project”. It concluded that for “early-stage Projects (where there are no Mineral Resources estimated), VRM considers the Geoscientific … Valuation method to be the most robust and is commonly the primary valuation method used for the surrounding exploration potential”. On the evidence available, that can be accepted.

165    In relation to the indicators of value, Ms Burnett identified the BAC (being the cost to acquire and continue to retain the tenement being valued) and the four Basic Factors, namely the “Off Property Factors” (being the proximity to both adjacent to and along strike of a major deposit), the “On Property Factors” (being the occurrence of a mineral system on the tenement), the “Anomaly Factors” (being the success of previous exploration within the tenement), and the “Geological Factors” (being the geological prospectivity of the geological terrain covered by the mineral claims or tenements). As she explained, when values are attributed to those factors for a tenement, and multiplied by its BAC, the technical valuation of the tenement is reached.

166    Adjustments are then frequently made to reflect the geopolitical or execution risks associated with the tenement, as well as prevailing market conditions (i.e., the Adjustment Factors). When values are attributed to such Adjustment Factors for a tenement, and multiplied by its technical valuation, the market valuation of the tenement is reached (to be used in the SoP methodology).

167    This process is explained at Item 8.3 of the VRM Report and was used, by Ms Burnett, to assess the market value of each of the relevant tenements. She did so in two different circumstances: first, where she ascribed, for each tenement, a value at the “low” end of the spectrum for each of the Basic Factors; and, second, where she ascribed, for each tenement, a value at the “high” end of the spectrum for each of the Basic Factors. By doing so, Ms Burnett derived “Lower” and “Upper” market valuations for each tenement. She also identified a “Preferred” valuation, being the mid-point between the “Lower” and “Upper” market valuations; this was because, as explained in her evidence, she considered it to be fair and reasonable not to err on either side.

168    The market values for each of the individual tenements were then aggregated to identify a range of market values for the Exploration Potential of Carawine projects, being “Lower” ($8.00m), “Preferred” ($15.9m) and “Upper” ($23.8m). These values, when aggregated with the market value of mineral resources within Carawine projects, rendered a combined market value for the mineral assets owned by Carawine; in turn, such values were fed into the SoP calculation.

169    A detailed analysis of each of the tenement interests is set out in Appendix C to the VRM Report. There, each is identified and the BAC and Basic Factors are applied with relevant discounts or premiums added (as required). The general process by which this was done was explained in the text of the report. As Ms Burnett conceded in the course of cross-examination, she did not provide a written description of the analysis of each and every tenement, but rather grouped several tenements together. That being said, it is perfectly possible to identify from Appendix C the manner in which Ms Burnett ascribed a value in respect of the Basic Factors to each tenement and the manner in which she applied the discount or premium. In response to the tacit criticism of the lack of a written explanation, Ms Burnett explained that the provision of an explanation in relation to each tenement interest would render the report unduly long. For instance, she said in response to the allegation that she had not explained in writing how she dealt with the tenement that was colloquially referred to as “Red Bull”:

I haven’t explained every single tenement in every single case, because it’s a matter of trying to bulk things together for conciseness, so the report doesn’t end up being a thousand pages long

170    There is much force in that answer. There are numerous tenements which are the subject of the report, and it would have taken an exorbitant amount of time to provide a written critique of each. Nevertheless, Appendix C provides a clear explanation as to how each was valued. There, the tenements are identified; Carawine’s interest in them noted; a low and high range rating given for each of the Basic Factors, which are then applied to the relevant BAC; technical valuations identified for each tenement at “low”, “mid” and “high” values. These were then adjusted by reference to a market or geographical adjustment to produce “low”, “mid” and “high” market values. It can be acknowledged that, while the precise reason for each and every subjective judgment by Ms Burnett across the numerous tenements does not appear, the steps that she took are sufficiently apparent. Further, and as mentioned above, the general approach to the groups of tenements was clearly articulated in writing in the body of her report.

171    During cross-examination, Ms Burnett was taken to several of the tenement valuations and questioned about them. Her responses to the questions posed were both direct and logical, and demonstrated a clear understanding of the variabilities that might affect the ascertainment of the relevant value of each. For instance, she was pressed, to some extent, on why discounts were applied to certain tenements on the basis of their geography; her explanation – that the discount applied because remote tenements were more difficult and expensive to develop – was self-evidently logical. It was put to her that there exist many remote mining tenements within Western Australia (being where the majority of the relevant Carawine tenements lay); whilst that may be true, it does not mean additional expense is not required to develop them. Further, the fact that there exist developed mines in relative proximity to a particularly remote tenement does not inexorably mean that questions of accessibility do not arise.

172    Albeit missing from the representative defendant’s written submissions, in the course of final addresses, Mr Bennett submitted that Ms Burnett’s valuation was erroneous because it applied a uniform discount (of 20%) for remoteness across the entirety of the tenements within the so-called “Fraser Range Project” and “Fraser Range Joint Venture” (the Fraser Range Tenements):

MR BENNETT: Well, Ms Burnett determined that, for remoteness of the Paterson/Fraser Range tenements, a discount should be applied uniformly. She didn’t suggest she got to 20 per cent by, in her mind, averaging 40 per cent, 60 per cent, 10 per cent.

HIS HONOUR: No, no, no. That’s right.

MR BENNETT: ..... she picked 20 per cent as there, but then couldn’t justify why the discount was applied to tenements that were in close proximity to existing infrastructure. Having conceded that it’s all accessible – so it’s – that’s the proposition I’m advancing. It may be that if it had been done in a different way, she may have said there’s part of it that will be inaccessible economically forever. But the blanket discount is the averaging down. It produces, in our respectful submission, an issue that goes to whether or not fair value has been established by these reports.

173    In Item 4 of the VRM Report, it is recorded that the Fraser Range tenements are located in the Albany-Fraser Province in Western Australia, “approximately 200km south of Kalgoorlie. Access is via unsealed roads”. In her evidence, Ms Burnett added that though the Fraser Range was 200 kilometres south of Kalgoorlie, that is a “straight line” description and the distance by road was longer. Kalgoorlie itself is some 600 kilometres east of Perth. On any view, these tenements are to be found in a remote location and any development would be required to overcome the inherent difficulties of travel and distance (and their associated costs). It is, with respect, disingenuous to suggest that exploration and mining in this area will not necessarily encounter difficulties and additional costs associated with the remoteness of the location.

174    Although it was submitted that, under cross-examination, Ms Burnett was unable to justify her conclusions in this regard, that should not be accepted. She accepted that, in the general locality of the Fraser Range tenements, some mining activity existed but, nevertheless, “in an area like that … it quickly becomes inaccessible”. In this respect, she noted that whatever roadworks may already exist in the area, would, in the usual course, lead only to existing mines, and not to the tenements in question; as such, further access roads would need to be constructed through difficult terrain (which included sand dunes and the like). Quite plainly, the negative impacts of the tenements being some 800 kilometres travel from Perth by road are self-evident. There is the obvious additional cost of substantial transport, not only in relation to vehicles and fuel, but in relation to additional employment and contingencies. The latter is particularly relevant given access is by unsealed roads which may not always be passable. Ms Burnett expressed the view (ts [71] at lines 35 – 40) that the discount she applied was justified because where the tenement is remote, it is more difficult and more expensive to explore. That should be accepted.

175    In totality, Ms Burnett justified the conclusion that a discount of 20% should apply (as an Adjustment Factor) to the Fraser Range tenements consequent upon their remote geography.

176    Though questioned extensively on her appreciation of the variabilities that affected the value of the particular tenements, Ms Burnett’s responses to this line of cross-examination were logical, thoughtful and understandable. Neither the veracity of her report nor her professional credibility was shaken, and it is perhaps unsurprising that no submissions to the contrary appear in the representative defendants’ final outline of submissions.

177    It is appropriate not to lose sight of the fact that the subject of Ms Burnett’s valuations were mostly mining tenements or tenement applications and that which was sought to be ascertained was the extent of their potential productive capacity. This is far from the valuation of existing mining operations, as it concerns the potential that might be reached if mining operations were to be developed, constructed and carried on. In such a task, the valuer is required to address the many and varied contingencies that may be encountered over a significant period of time. Such an exercise is markedly different from land valuation, where the existence of comparable sales provides evidence of market value. As the “Geoscientific” method reveals, it is necessary to address a number of variables relating to future contingencies based upon generalised mining industry data, as well as more specific information (often related to neighbouring tenements or land). In such a context, it is axiomatic that the weighing of the range of variabilities is subjective and heavily dependent upon one’s expertise and experience acquired over time. It is undoubted that Ms Burnett had that expertise and experience. Moreover, within any such analysis, a valuer would appropriately postulate a range of values given that adjustments to any or some combination of the relevant factors could substantially alter any projected value.

178    Returning to the VRM Report, though the analysis is not simple, a reasonable person prepared to take the time to read and peruse the information with care could reasonably be expected to understand how the values for the tenements were identified. That conclusion stands despite there not being a written explanation about the rationale for each and every step in the process for each and every tenement. In any event, the underlying foundations for making judgments one way or the other appear in the general discussion of the valuation methodology and in the written analysis in relation to the several groups of tenements which were the subject of in-depth consideration.

179    It is true that Ms Burnett’s valuation by the application of the “Geoscientific” method, involves not uncomplicated analysis of the data before her (though that is hardly surprising given the subject matter). On a careful reading, the VRM Report reveals the steps taken to value the tenements, as well as the manner in which the several considerations were applied. It tells the reader how and why the values ascribed to each tenement were reached.

180    Some criticism was made of the evidence of Mr Dunbar, who undertook a peer review of the VRM Report. He too identified the justification for the blanket 20% discount in relation to the Fraser Range tenements was that the location was remote (and particularly so in relation to the tenements which were further to the north). It is true that, at one point, he said that he was not able explain why Ms Burnett had applied a blanket 20% discount; however, it must be kept in mind that it was Ms Burnett who prepared the report, and his role was only that of a reviewer. Ultimately, he endorsed the proposition that the remoteness of the Fraser Range tenements justified a discount and his inability to elaborate upon that proposition is not of great concern.

181    From the foregoing, it may be concluded that the VRM Report sufficiently explains the method and reasoning of Ms Burnett in her valuation of Carawine’s mineral assets. It also explicates the manner in which value was ascribed to each of the tenements under consideration. Overall, it supplies a suitable foundation for the assessment of Carawine’s mineral assets.

182    That conclusion gives credence to the manner in which the Andrawes Report employed the SoP methodology to value an ordinary Carawine share. That method relied upon one variable – the “Lower”, “Preferred” and “Upper” valuation of Carawine’s mineral assets calculated in the VRM Report – and two constants. Noting such methodology is cogent, as are its inputs (in this specific case), there is no reason to doubt its application or the results which it produced.

Liberal estimate

183    It was put to Mr Andrawes, by Mr Bennett, that the “preferred” value of the shares valued “should be on the more liberal side” (ts [53] at line 35). In terms, that assertion was erroneous.

184    In Capricorn Diamonds, Warren J (at 77 [61]) made the following observation:

Finally, the eighth principle to be extracted from the cases is that fair value may require a more liberal estimate of value within a range of possible values where there is a compulsory acquisition of property: Commissioner of Succession Duties (SA) v Executor Trustee & Agency Co of SA Ltd. Nevertheless, it does not permit or require a premium for forcible taking: Holt v Cox. The Australian authorities have not adopted the Canadian concept of a forcing out premium (instead applying a more liberal estimate of value), and indeed that concept has more recently lost support in Canada.

(Emphasis added).

185    Her Honour’s view (that there is no hard and fast rule that some higher value must be adopted) is entirely correct and, as is the case with valuations, much will depend on the circumstances of the particular case. So much is consistent with what was said in Holt v Cox (1997) 23 ACSR 590, where the New South Wales Court of Appeal (at 603 – 604) approved the following passage from the reasons of the trial Judge (Santow J):

He [the valuer] finally needed to value this prospect from the viewpoint of the function of a willing but not anxious vendor, who in reality is forced to give up this prospect by selling. While I would not go so far as to hold that this justifies an additional premium in compensation for the forcible taking, the very notion of a fair price in such circumstances of expropriation requires that the valuer, in having regard to what is equitable and just, make his estimate on the liberal side in assessing that chance, within a range of possible values.

(Emphasis in original).

186    The proposition advanced by Mr Bennett involved two submissions: first, Mr Andrawes ought to have assessed the value of an ordinary Carawine share by reference to the QMP methodology (as it returned a more liberal valuation than its SoP counterpart); second, Mr Andrawes did not, when applying the SoP methodology, give a more liberal estimate to the “Preferred” value of the relevant shares. Though the factual underpinning of the former submission is correct – the QMP methodology did render more liberal valuations (compare the data set out at supra [106] and [109]) – it overlooks the utility of such approach. As Item 9 of the Andrawes Report makes clear, “for the QMP methodology to be considered appropriate, the listed shares should be liquid and the market should be fully informed of the Company’s activities”. In light of Mr Andrawes’ conclusion that the shares of Carawine displayed a low level of liquidity (at Items 10.2 and 10.4), it was wholly appropriate to discount the results rendered by the QMP approach.

187    With respect to the latter submission, in the course of his evidence, Mr Andrawes accepted the general proposition that, in cases of a compulsory acquisition, it may be appropriate to adopt a more liberal approach to the ascertainment of “fair value” (see, eg, ts [41] at line 25 and [58] at line 40). In so doing, he identified that it was difficult to apply such proposition in the present case and that there was little guidance as to how such a task should be approached. In this case, he indicated he had taken a “more liberal view” because, had the offer price “been at the bottom end of the range”, he would not have accepted it as being fair (ts [58] – [59]). However, as that offer price was above the “preferred” value, he had accepted it as being fair; indeed, he adopted a value which was 5.45% above the “preferred” value of an ordinary Carawine share ($0.104).

188    I accept the evidence of Mr Andrawes that he adopted a liberal approach by accepting, as “fair value”, an offer price which was from the upper half of the range of valuations and in excess of the “preferred” value (see supra [132] – [133]). As made clear in Capricorn Diamonds (as well as the drafting of s 667C(1)(c)), a liberal approach to valuation does not require providing the person, whose shares are proposed to be compulsorily acquired, some additional premium, such as by valuing the shares towards the top end of the range. All that it requires is a tendency to err on the side of the security holder who is being compelled to part with their property.

189    To that end, I accept that the offer price in the Compulsory Acquisition Notice ($0.11 per share) is of a “liberal” character, having regard to the “preferred” value of an ordinary Carawine share.

The take up of the $0.11 share offer (the 2023 Entitlement Offer)

190    An additional factor in the assessment of “fair value” in this case, was the consideration of the take up of the 2023 Entitlement Offer. As the Andrawes Report shows (at Item 10.3), in October 2023, Carawine offered all shareholders the opportunity to participate in a pro-rata renounceable entitlement offer of two fully-paid ordinary shares for every nine shares, at an issue price of $0.11 per share. That process resulted in the raising of approximately $4.32m and subscriptions were made for a total of 39,307,982 shares. Of those, 38,901,620 new shares were subscribed for by QGold (being some 98.97% of those acquired). Only 406,361 shares were subscribed for by other shareholders and their issuing raised only approximately $45,000. From this, Mr Andrawes reasoned that the subscription price under the entitlement offer ($0.11 per share) did not reflect a price at which shareholders were generally prepared to transact, and that, had the subscription price reflected a market value for the shares or otherwise been below a fair value, it would have been reasonable to expect a greater level of participation from shareholders other than QGold. In addition, it was considered that QGold was motivated to protect its substantial investment in Carawine as the largest shareholder.

191    That logic – to the extent it suggests that a valuation of $0.11 per ordinary Carawine share may, perhaps, be in excess of market value – is persuasive and buttresses the conclusion that a price of $0.11 cash per share represents at least “fair value” for an ordinary Carawine share.

Conclusion as to “fair value”

192    The Compulsory Acquisition Notice proposed to offer $0.11 cash per ordinary Carawine share. Section 664F(3) directs attention to whether that offer gives “fair value” for the relevant shares.

193    The SoP methodology is a cogent mechanism by which to assess the value of a security. Here, that method was used to calculate the value of an ordinary Carawine share; the manner in which it was relied upon in the Andrawes Report, and the calculations undertaken by the VRM Report to ascertain the value of Carawine’s mineral assets, have not been shown to be either inherently flawed or incorrect. Ultimately, the SoP method identified the value of a Carawine share to be between $0.064 and $0.141, with a preferred value of $0.104. In light of the fact that the offer price proposed in the Compulsory Acquisition Notice falls within the range of estimated values of a Carawine share, and is $0.006 or 5.45% greater than the “preferred” (or most likely) market value, it can be accepted that the terms set out in that notice give a fair value for the securities in question. To that end, QGold has discharged its onus under s 664F(3) and, as such, the Court is obliged to approve the acquisition of the ordinary shares in Carawine on the terms proposed.

Costs

194    Section 664F(4) provides that the 90% holder “must” bear the costs of the other parties in the litigation unless the Court is satisfied the parties “acted improperly, vexatiously or otherwise unreasonably”. It is not self-evident that the conduct of the defendants in this case could not be so characterised, such that it is appropriate that the parties be heard on the question of costs.

Associate:    

Dated:    2 October 2025

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