Federal Court of Australia

Hammer Metals Limited, in the matter of Hammer Metals Limited [2026] FCA 1466

ORDERS

THE COURT ORDERS THAT:

1.    Pursuant to s 411(1) of the Corporations Act 2001 (Cth) (Act):

(a)    the plaintiff must convene and hold a meeting (Scheme Meeting) of the holders of its fully paid ordinary shares (Shareholders) to consider and, if thought fit, agree to (with or without amendment) a scheme of arrangement (Scheme) proposed to be made between the plaintiff and the Shareholders, the terms of which are contained in Annexure B to the Scheme Booklet, a copy of which is contained at Annexure "HVA-04" to the affidavit of Hendrik Christoffel van Aswegen sworn on 1 October 2026 (Second van Aswegen Affidavit); and

(b)    the Scheme Meeting must be held on Monday 9 November 2026, commencing at the later of 11.00 am AWST or the conclusion of the Demerger Meeting (as defined in the Scheme Booklet) at the Park Business Centre, 45 Ventnor Avenue, West Perth, WA 6005.

2.    Subject to these orders, and pursuant to s 1319 of the Act, the Scheme Meeting must be convened, held and conducted in accordance with:

(a)    the provisions of Part 2G.2 of the Act that apply to a meeting of the members of the plaintiff and the provisions of the plaintiff’s constitution that apply relating to meetings of members that are not inconsistent with Part 2G.2 of the Act; and

(b)    the arrangements for attending, participating and voting described in the notice of Scheme Meeting contained in Annexure D to the Scheme Booklet.

3.    Pursuant to s 1319 of the Act, at the Scheme Meeting:

(a)    the Shareholders who are eligible to vote will be those whose names are recorded in the register of members of the plaintiff at 5.00 pm AWST on Saturday 7 November 2026 (Voting Time);

(b)    two Shareholders, present and entitled to vote, in person or by proxy or power of attorney, shall constitute a quorum;

(c)    each Shareholder, present and entitled to vote, will be entitled to one vote for each fully paid ordinary share in the capital of the plaintiff that the Shareholder is registered as holding at the Voting Time; and

(d)    voting on the resolution to agree to the Scheme must be conducted by way of poll.

4.    Pursuant to s 1319 of the Act:

(a)    Michael Phillip Bowen, or failing him Michael Choon Ming Ng, must be chairperson of the Scheme Meeting; and

(b)    in respect of the Scheme Meeting, the chairperson has the power to adjourn or postpone the meeting in their absolute discretion to such time, date and place that they consider appropriate and, in that event, despite any other part of these orders:

(i)    if the Scheme Meeting is postponed:

A.    only Shareholders whose names are recorded in the register of members of the plaintiff at 5.00 pm AWST on the date which is two calendar days before the date of the postponed meeting will be eligible to vote at the Scheme Meeting;

B.    a proxy in respect of the Scheme Meeting will be valid and effective if a proxy form is completed and delivered in accordance with its terms or a proxy is lodged online in accordance with the instructions at least 48 hours before the time scheduled for the postponed meeting; and

C.    a reference in these orders to the Scheme Meeting is taken to include a reference to the postponed meeting.

5.    Pursuant to s 411(1) of the Act, the following documents are approved for distribution to Shareholders:

(a)    the Scheme Booklet, which contains the explanatory statement required by s 412(1)(a) of the Act, substantially in the form of pages 154 to 645 of Annexure "HVA-04" to the Second van Aswegen Affidavit (which Scheme Booklet be and is hereby approved for the purposes only of s 411(1) of the Act); and

(b)    the Proxy Form in respect of the Scheme Meeting substantially in the form at Annexure "RJD-07" to the affidavit of Russell John Davis sworn on 24 September 2026 (First Davis Affidavit),

each subject to:

(c)    the correction of any typographical or grammatical errors and final typesetting and page numbering;

(d)    the correction or update of relevant dates or references to (or which are based on) market prices, capital structure, any similar updates and consequential amendments;

(e)    any amendments requested or approved by the Australian Securities and Investments Commission (ASIC) for registration under s 412(6) of the Act; and

(f)    any other amendments approved by the Court.

6.    Subject to registration of the Scheme Booklet with ASIC pursuant to s 412(6) of the Act, by Thursday 8 October 2026, the Scheme Meeting must be convened by the plaintiff dispatching to each Shareholder whose name is recorded in the plaintiff’s register of members at 5.00 pm AWST on Friday 2 October 2026 (Register Time):

(a)    in the case of each Shareholder who has nominated an email address for the purposes of receiving meeting communications from plaintiff (Electing Email Holders), an email substantially in the form at Annexure "RJD-10" to the affidavit of Russell John Davis sworn on 1 October 2026 (Second Davis Affidavit) with instructions regarding accessing the Scheme Booklet online,

(b)    instructions to lodge proxy appointments and instructions to access and complete the opt-out notice to opt out of the sale facility process, if applicable; in the case of each Shareholder who has elected to receive meeting documents from the plaintiff in a physical form (Electing Postal Holders), and whose registered address is in Australia, the following documents by pre-paid post to the address recorded in the register:

(i)    a letter substantially in the form at Annexure "RJD-12" to the Second Davis Affidavit with instructions to lodge proxy appointments, voting at the Scheme Meeting and instructions to access and complete the opt- out notice to opt out of the sale facility process, if applicable;

(ii)    a copy of the Scheme Booklet; a personalised Proxy Form; and

(iii)    a self-addressed reply-paid envelope for return of completed documents (for use within Australia only),

(together, the Hardcopy Meeting Materials);

(c)    in the case of Electing Postal Holders whose registered address is outside of Australia, the Hardcopy Meeting Materials, except for the reply-paid envelope, by pre-paid airmail post to the relevant address recorded in the register, along with a self-addressed envelope which is not reply-paid;

(d)    in the case of each Shareholder who has made no election as to the manner in which they receive meeting documents from the plaintiff (the Non-Electing Holders), and whose registered address is in Australia, the Hardcopy Meeting Materials, except for the Scheme Booklet, by pre-paid post to the address recorded in the register;

(e)    in the case of Non-Electing Holders whose registered address is outside of Australia, the Hardcopy Meeting Materials, except for the Scheme Booklet and reply-paid envelope, by pre-paid airmail post to the relevant address recorded in the register, along with a self-addressed envelope which is not reply-paid.

7.    Dispatch of the documents referred to above, in accordance with the terms of these orders, is to be taken to be sufficient notice of the Scheme Meeting.

8.    The plaintiff is not obliged to send documents in accordance with paragraph 6 above to any person who becomes a shareholder of the plaintiff after the Register Time.

9.    Pursuant to rr 5.04(1) and (3) (Item 23(a)) of the Federal Court Rules 2011 (Cth), evidence of the dispatch of the Scheme Booklet in accordance with these orders may be given by way of statement on oath or affirmation on information and belief, at the hearing on 13 November 2026 of an application under s 411(4)(b) of the Act and, if necessary, s 411(6) of the Act, for approval of the Scheme.

10.    A proxy form, appointment of a corporate representative, or power of attorney to act on behalf of a Shareholder in respect of the Scheme Meeting will be valid and effective if, and only if, it is completed and delivered by 11.00 am AWST on Saturday 7 November 2026.

11.    The board of directors of the plaintiff have the power to approve for lodgement on the plaintiff’s Australian Securities Exchange (ASX) platform announcements regarding corrections, clarifications or changes to the arrangements for the Scheme Meeting where, in the board’s discretion, such corrections, clarifications or changes are necessary to ensure that Shareholders as a whole will have a reasonable opportunity to participate in the Scheme Meeting, and such announcements will be taken to be sufficient notice of any corrections, clarifications or changes to the meeting arrangements, provided they are made by 5.00 pm AWST on Friday 6 November 2026 and are explained by the chairperson at the commencement of the Scheme Meeting.

12.    The plaintiff must publish an announcement via the ASX containing the substance of the matters set out in Form 6 of the Federal Court (Corporations) Rules 2000 (Cth) (Corporations Rules) substantially in the form at Annexure "RJD-08" to the First Davis Affidavit, by no later than 6 November 2026.

13.    Pursuant to r 1.3 of the Corporations Rules, compliance with the following requirements of the Corporations Rules is dispensed with:

(a)    r 2.4(1), to the extent that rule requires the affidavit filed with the originating process to state the facts in support of the process;

(b)    r 2.15; and

(c)    r 3.4 and Form 6.

14.    The proceeding is adjourned to 10.15 am AWST on Friday 13 November 2026 for the hearing of any application under s 411(4)(b) and, if necessary, s 411(6) of the Act to approve the Scheme.

15.    The plaintiff must lodge an office copy of these orders with ASIC as soon as practicable after they are made.

16.    the plaintiff has liberty to apply upon giving 24 hours’ notice to ASIC.

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

REASONS FOR JUDGMENT

JACKSON J:

1    The plaintiff, Hammer Metals Limited, proposes a scheme of arrangement (Scheme) which requires the Court’s approval under Part 5.1 of the Corporations Act 2001 (Cth). On 2 October 2026, I made orders under s 411(1) of the Act convening a meeting of the shareholders of Hammer Metals to consider and vote on whether to approve the Scheme. These are the reasons for those orders.

Key features of Hammer Metals and of the proposed Scheme

2    Hammer Metals is an Australian public company limited by shares and listed on the Australian Securities Exchange (ASX). It was incorporated in 2000 as Midas Resources Limited and listed on the ASX in 2003, changing its name to Hammer Metals Limited in 2014. It is an exploration company headquartered in West Perth, which targets copper, gold and critical minerals. The Scheme Booklet to be issued to shareholders describes the company’s primary focus as ‘its ~3,400 km² tenement portfolio in Queensland’s highly mineral endowed Mount Isa district, alongside the Yandal Gold Project in Western Australia.’

3    On 11 August 2026, Hammer Metals announced that it had entered into a Scheme Implementation Deed (SID) with Austral Resources Australia Ltd, under which it is proposed that Austral will acquire all the shares in Hammer Metals by way of the Scheme.

4    Austral is an Australian public company limited by shares listed on the ASX and headquartered in Brisbane. It is described in the Scheme Booklet as a pure-play copper producer and consolidator operating across North-West Queensland, near Mount Isa.

5    Under the terms of the SID, each Hammer Metals shareholder will receive 1.2903 new ordinary shares in Austral for each Hammer Metals share they hold on the Record Date, which is currently expected to be 7.00 pm AEDT on 18 November 2026.

6    Ineligible foreign shareholders and holders of small parcels of shares who do not elect to receive the Scheme consideration as new Austral shares will instead receive cash consideration from the sale of the new Austral shares by a sale agent under a standard sale facility.

7    Following the implementation of the Scheme, Hammer Metals will become a wholly owned subsidiary of Austral and will be delisted from the ASX. Hammer Metals shareholders will end up together holding about 30.4% of the issued shares in Austral. The existing Hammer Metals board will resign, and it will be reconstituted according to Austral’s instructions.

8    According to the letter to Hammer Metals shareholders from Russell Davis in his capacity as Hammer Metals’ Non-Executive Chairman, which is to be included in the Scheme Booklet, the commercial rationale for the Scheme includes that:

by receiving Austral Shares, Hammer Metals Shareholders retain ongoing exposure to the development of the Mount Isa Project, and immediate exposure to Austral’s existing oxide production, established regional operating capability and ownership of two strategically located processing facilities …

9    Similarly, Austral’s Non-Executive Chairman, David Newling, notes in his letter to shareholders that:

Hammer Metals’ Kalman copper deposit is approximately 60 kilometres from Austral’s Rocklands operations, making it a natural candidate as a viable source of feed. We have the infrastructure to process the ore and by adding the feed, can extract the full economic benefits from this feed.

10    According to the Scheme Booklet, if the Scheme does not proceed, Hammer Metals (which is essentially a minerals exploration company) will probably need further near-term capital raisings to proceed to exploit its deposits, which may dilute the holdings of existing shareholders.

11    Concurrently with the Scheme, Hammer Metals proposes to spin off the Yandal Gold Project assets in Western Australia. That project is comprised of approximately 690km2 of tenements within the Yandal greenstone belt, and includes the prospective and unexplored projects Bronzewing South, Orelia North and Weebo, and the Mount Sefton Gold project option. Hammer Metals currently holds the tenements through its wholly owned subsidiary Carnegie Exploration Pty Ltd.

12    Carnegie Resources Limited (SpinCo) was incorporated on 2 September 2026 for the purposes of this transaction and is a wholly owned subsidiary of Hammer Metals. It will demerge from the Hammer Metals group by way of an equal capital reduction and in-specie distribution of shares to Hammer Metals shareholders. Immediately following the implementation of this Demerger, SpinCo will be an unlisted public company. The Demerger is subject to Hammer Metals transferring 100% of its interest in Carnegie Exploration to SpinCo.

13    The result of the Demerger will be that Hammer Metals shareholders will own shares in SpinCo, which will own the Western Australian gold assets through Carnegie Exploration.

14    This Demerger will not occur by way of the Scheme; instead, it will be put to a general meeting of shareholders for their approval under s 256B and s 256C of the Corporations Act. But the Demerger meeting will be held immediately before the Scheme meeting, and implementation of the Demerger and implementation of the Scheme are effectively conditional on each other. Hammer Metals has the capacity to waive the Demerger as a condition of the Scheme.

Materials relied on

15    Hammer Metals relied on the following affidavits in support of its application for orders under s 411(1) of the Corporations Act:

(a)    first affidavit of Hendrik van Aswegen, a solicitor for Hammer Metals, sworn on 31 August 2026;

(b)    affidavit of Michael Bowen, another solicitor for Hammer Metals, sworn on 16 September 2026;

(c)    first affidavit of Mr Davis sworn on 24 September 2026;

(d)    affidavit of Michael Hansel, a Director of Austral, affirmed on 29 September 2026;

(e)    second affidavit of Mr Davis sworn on 1 October 2026; and

(f)    second affidavit of Mr van Aswegen sworn on 1 October 2026.

Principles

16    The principles governing the establishment of a scheme of arrangement are well-established. I adopt, without repeating, the summary given in Re Essential Metals Ltd [2023] FCA 1101 at [8]-[13].

The prerequisites for convening a meeting were satisfied

17    I will now address each of the necessary formal and procedural prerequisites for the making of orders convening the Scheme meeting under s 411(1) of the Corporations Act.

The Scheme is within the scope of Part 5.1

18    An ASIC search in evidence confirms that Hammer Metals is an Australian public company registered under the Corporations Act, making it a ‘Part 5.1’ body as required by s 411.

The Scheme is an arrangement within the meaning of s 411(1)

19    The present Scheme proposes an arrangement for the acquisition of all the shares in Hammer Metals for the consideration of new shares in Austral. It is clearly a ‘compromise or arrangement’ concerning the rights and obligations of members for the purposes of s 411(1): see NRMA Insurance Ltd [2000] NSWSC 82 at [20] (Santow J).

The meeting will be appropriately constituted by shareholders as a single class

20    There will only be one class of shareholders voting at the Scheme meeting, as all of the shareholders have the same right to receive the Scheme consideration, being 1.2903 new ordinary shares in Austral for every Hammer Metals share held at the Record Date.

21    That is so even when considering any ineligible foreign shareholders or small shareholders who will not receive the scrip consideration, as the standard sale processes set out in respect of those shareholders are not class creating: Re Excelsior Gold Ltd [2018] FCA 2064 at [37]-[43] (McKerracher J).

22    I was also satisfied that the ownership of certain other unquoted securities in Hammer Metals is not class creating, as the holders of those securities are not treated differently under the Scheme on account of holding the securities. Those unquoted securities will be dealt with as is about to be described.

Hammer Metals options

23    Some 29,500,000 unlisted options to acquire fully paid shares in Hammer Metals are on issue. They are all held by Hammer Metals directors. There are six classifications of these options, differing by exercise price and expiry date.

24    It is a condition precedent to the Scheme that by 8.00 am AEDT on the date of the second scheme hearing, Hammer Metals has taken all necessary steps to ensure that all of the options are exercised or otherwise lapse before the Record Date, other than those options subject to option cancellation deeds.

25    It is a requirement of the SID that Hammer Metals use reasonable endeavours to enter into a cancellation deed with each option holder by 8.00 am AEDT on the date of the second scheme hearing. Under the cancellation deeds, each option holder may, subject to the Scheme becoming effective, exercise their options and receive Hammer Metals shares prior to the Record Date. If the options are not exercised before the Record Date, under the deeds the holder agrees to their options being cancelled in exchange for cash consideration to be provided by Austral, with such cancellation taking place on the Implementation Date, subject to the Scheme becoming effective. The cash consideration payable is set out in a schedule to the SID and has been calculated using a Black-Scholes valuation methodology.

26    Hence the options will all be exercised or otherwise terminated by agreement, and this will take effect outside the terms of the Scheme, although conditional on its implementation. This is not class creating.

Hammer Metals performance rights

27    There are also some 7,000,000 unquoted performance rights on issue, of which 4,000,000 are ordinary performance rights and 3,000,000 are ‘Management Performance Rights’. They are all held by the Managing Director of Hammer Metals, Daniel Thomas. Each performance right gives Mr Thomas the right to acquire a new Hammer Metals share for nil consideration, subject to the satisfaction of certain performance milestones, which have not yet been satisfied.

28    The ordinary performance rights will automatically vest upon approval of the Scheme. In that event, the ordinary performance rights will be replaced by Hammer Metals shares, and those shares will then be acquired by Austral under the proposed Scheme.

29    In accordance with the SID, Hammer Metals, Austral and Mr Thomas intend to enter into a cancellation deed in respect of Mr Thomas’ Management Performance Rights. Under the deed those rights will be cancelled in exchange for such fractional number of new Austral shares per Management Performance Right as would have been issued to Mr Thomas had they been converted into Austral shares prior to the Record Date.

30    As is the case with the options, the performance rights are not class creating.

The disclosure effected by the Scheme Booklet

31    I reviewed a draft of the Scheme Booklet and was satisfied that it will give suitable disclosure to shareholders.

Principles

32    The Court must be prima facie satisfied that the scheme booklet provides proper disclosure, with nothing misleading or deceptive in any material sense. I respectfully adopt, without repeating Vaughan J’s summary of the standard and extent of disclosure required in Re Wesfarmers Ltd [2018] WASC 308 at [54]-[55].

The independent expert report

33    The Scheme Booklet will include an independent expert’s report on the transaction prepared by BDO Corporate Finance Australia Pty Ltd. The report sets out a number of factors relevant to the shareholders’ consideration of the Scheme. It concludes that ‘in the absence of a superior proposal, the Scheme is fair and reasonable and in the best interests of Shareholders’.

34    BDO considers that the Scheme is fair for shareholders because the value of the Scheme consideration (being 1.2903 new Austral shares per Hammer Metals share) on a minority interest and diluted basis, is greater than BDO’s assessed valuation range of a Hammer Metals share prior to the Scheme on a controlling interest and diluted basis.

35    In considering whether the Scheme is reasonable, BDO has had regard to the advantages and disadvantages of the Scheme, in addition to the position of shareholders if the Scheme does not proceed and the consequences of not approving the Scheme. The various advantages of the Scheme identified by BDO include that the Scheme’s implementation would create a larger and more diversified company and that the shareholders will gain exposure to Austral’s existing operations, such as processing facilities, while retaining exposure to Hammer Metals’ ‘non-core’ Western Australian gold assets. BDO also identifies a number of disadvantages of the Scheme. They are: the dilution of shareholders’ interests and exposure to the Mount Isa Project; that exposure to the ‘non-core’ assets will be held in a public unlisted company (SpinCo); that the Scheme may not align with shareholders’ risk preferences; and that the Scheme consideration is entirely scrip.

36    I considered that two of these disadvantages should receive more prominent disclosure in the Chairman’s letter and summary of advantages and disadvantages that appear near the beginning of the Scheme Booklet, namely the fact that the Scheme consideration is entirely scrip and the fact that the Demerger will mean that the ‘non-core’ assets are to be held in an unlisted public company. It is notable that the Scheme Booklet says that there is no current intention to list that company, that is SpinCo. At the hearing, Hammer Metals agreed to changes to the Scheme Booklet to disclose these matters more prominently.

37    In view of all of the advantages and disadvantages identified in the report, BDO observes that the position of shareholders if the Scheme is approved is more advantageous than the position if the Scheme is not approved. Accordingly, BDO considers in the absence of any other relevant information or any superior proposal the Scheme is reasonable for shareholders.

Verification

38    The first affidavit of Mr Davis and the affidavit of Mr Hansel go through the verification of the Scheme Booklet, a process overseen by two committees which included the solicitors for each of Hammer Metals and Austral. I was satisfied that this suitably addressed the risk that any aspect of the Scheme Booklet might prove to be misleading or deceptive.

The Scheme is bona fide and properly proposed

39    On the face of the materials, the Scheme has been proposed for the legitimate and straightforward commercial purpose of the acquisition of all of the shares in Hammer Metals in return for the Scheme consideration of 1.2903 new ordinary shares in Austral per Hammer Metals share. There is nothing to suggest that the Scheme has been proposed other than in good faith.

Notice to ASIC

40    In a letter annexed to Mr van Aswegen’s second affidavit, ASIC confirms that it received at least 14 days’ notice of the hearing of the application as required by s 411(2)(a) of the Corporations Act. The first draft of the Scheme Booklet was served on ASIC on 16 September 2026, and a revised version was provided on 29 September 2026. The letter confirms ASIC considered that it had reasonable opportunity to examine the terms of the Scheme and the Scheme Booklet, and to make submissions to the Court, as required by s 411(2)(b).

41    Several amendments to the Scheme Booklet were made to take account of comments from ASIC. ASIC did not appear at the first hearing or seek to make any submissions to the Court.

Procedural requirements

42    The various procedural requirements under the Federal Court (Corporations) Rules 2000 (Cth) have been satisfied.

43    An ASIC search for Hammer Metals is annexed to Mr van Aswegen’s first affidavit, satisfying r 2.4(2).

44    It is proposed that Michael Phillip Bowen be the chairperson of the Scheme meeting, with Michael Ng as his alternate. The affidavit of Mr Bowen provides the disclosure of matters such as conflicts of interest (or lack thereof) that is required by r 3.2.

45    In accordance with r 3.3(2), the orders convening the Scheme meeting make it clear that the meeting is to be conducted in accordance with the provisions of Part 2G.2 of the Corporations Act, as modified by the orders.

46    The orders have dispensed with the requirement in r 3.4 for the application for approval of the Scheme to be publicised in newspapers and the requirement in r 2.4(1) for the affidavit filed with the originating process to state all the facts in support of the application. The orders have also dispensed with r 2.15 in respect of the application of Division 75 of the Insolvency Practice Schedule (Corporations) to the Scheme meeting.

Other matters relevant to the exercise of discretion

47    The Court will not generally make orders to convene a scheme meeting unless satisfied that approval of the scheme would likely be granted on an unopposed petition. If an arrangement is a commercially sound proposition and seems fit for consideration by a meeting of members, then leave should generally be given. However, the Court retains a discretion to intervene in circumstances where the scheme appears on its face to be ‘blatantly unfair or otherwise inappropriate that it should be stopped in its tracks before going any further’: Re Foundation Healthcare Ltd [2002] FCA 742 at [44] (French J), see also at [36] and see also Re Xplore Wealth Ltd [2020] FCA 1868 at [24] (Markovic J).

48    With those principles in mind, it is appropriate to address several matters to which counsel for Hammer Metals directed the Court’s attention.

Directors’ recommendations

49    The Scheme Booklet says that each director of Hammer Metals considers the Scheme to be in the best interests of Hammer Metals shareholders, and recommends that shareholders vote in favour of the Scheme in the absence of any superior proposal and subject to the independent expert continuing to conclude that the Scheme is in shareholders’ best interests. Subject to those same qualifications, the Scheme Booklet says that each director intends to vote their shares in favour of the Scheme (or cause shares controlled by them to be voted in favour).

50    As I said in Re Matrix Composites & Engineering Ltd [2026] FCA 705 at [55]:

It is common for directors of a scheme company to recommend that shareholders vote in favour of a scheme, subject to the absence of a superior proposal and to the independent expert maintaining a favourable view. The presence of a directors’ recommendation does not of itself raise any concern, provided that the interests of the directors in the scheme, including any shares, options or performance rights they hold, are prominently and fully disclosed in the scheme booklet, and that those interests are not of a nature or extent as to lead to apprehensions of bias: Re Wellcom Group Ltd [2019] FCA 1655 at [59] (O’Bryan J); Re ThinkSmart Ltd [2022] FCA 1314 at [50]-[54]. As O’Bryan J explained in Re Wellcom Group, the question of substance is whether the circumstances are such that ‘it is unrealistic to consider that a director can bring an unbiased mind to the voting recommendation, and it would be unfair to members to sanction such a recommendation being made in the context of a scheme meeting’. If so, then disclosure alone may not be sufficient.

51    There was no reason to think that such circumstances have arisen here. I have already described the manner in which options held by the directors and performance rights held by one director are to be addressed alongside the Scheme (but not as part of it). These conventional arrangements provide no reason to think that any of the directors are recommending the Scheme out of some partiality to their own interests or that they stand to benefit from the Scheme other than in their capacity as ordinary shareholders. It is appropriate for their recommendation to be included in the Scheme Booklet.

Voting intention statements

52    Shareholders controlling in total some 15.7% of the issued shares in Hammer Metals have given statements that they intend to vote in favour of the Scheme, provided that no superior proposal emerges and the independent expert continues to hold the opinion that the Scheme is in shareholders’ best interests.

53    Voting intention statements of this kind do not provide any reason not to proceed with the Scheme meeting, provided that: they are appropriately disclosed in the Scheme Booklet; they are subject to qualifications of the kind just noted; and there is evidence that they have not been procured by the offer of any collateral benefit: see Re Tawana Resources NL [2018] FCA 1456 [53]-[55] (Banks-Smith J); Re NTM Gold Ltd [2021] WASC 22 at [70]-[75] (Vaughan J); Technology Metals Australia Ltd v Australian Vanadium Ltd [2024] WASC 26 at [53]-[57] (Lundberg J).

54    Those requirements were satisfied here, so I was satisfied that the statements of voting intention did not provide any basis to not make the orders convening the second Scheme meeting.

Break fees and exclusivity provisions

55    The SID provides for Hammer Metals to pay a break fee of $731,863 to Austral in certain circumstances. That figure is approximately 1% of the equity value of Hammer Metals, having regard to the value of the Scheme consideration as at the date of the SID. It is in line with Takeovers Panel guidance. Importantly, the break fee does not become payable in the event that shareholders do not approve the Scheme.

56    The break fee is accompanied by standard exclusivity provisions, including ‘no shop’, ‘no talk’ and ‘no due diligence’ obligations. These obligations operate for a period of 4.5 months from the date of the SID. They include an appropriate carve out for situations in which the fiduciary duties of the directors would compel them to recommend an alternative transaction.

57    The break fee and the relevant circumstances are all appropriately disclosed in the Scheme Booklet, and I was satisfied that they did not provide any reason not to allow the Scheme to be put to shareholders: see generally Re Global Uranium and Enrichment Ltd [2025] FCA 1684 at [57] (Vandongen J), citing Re Latin Resources Ltd; Ex parte Latin Resources [2024] WASC 513 at [160] (Strk J).

Performance risk

58    In substance, the Scheme addresses the risk that Austral might not perform its obligations under the Scheme by ensuring that shareholders receive their Scheme consideration before the transfer of their shares.

59    In addition, Austral has executed a deed poll in respect of the Scheme. Under the deed poll, Austral submits to the non-exclusive jurisdiction of the courts of Western Australia, and authorises Hammer Metals and its directors, officers and secretaries to act as agent and attorney to enforce the deed poll.

60    These features of the Scheme appropriately minimise the risk that shareholders will not receive the consideration to which they are entitled, in the event that they vote to approve the Scheme but for some reason it is not implemented.

Deemed warranties

61    The Scheme contains standard deemed warranty provisions. These provide that, if the Scheme is implemented, shareholders are taken to have warranted to Austral that: the shares are free of encumbrances; the shareholders have full power and capacity to sell and transfer their shares to Austral; and shareholders have no existing right to be issued shares or other securities in Hammer Metals. Such provisions do not constitute a reason not to proceed, provided that they have been drawn to the attention of shareholders: Re Atlassian Corporation Pty Ltd [2013] FCA 1451 at [36] (Yates J). I was satisfied that the deemed warranties are appropriately disclosed in the Scheme Booklet here.

Shareholder communications

62    The manner in which communications with shareholders about the Scheme will be managed is disclosed in the two affidavits of Mr Davis. It is proposed to be managed in the conventional way, whereby a shareholder relations company, Automic Pty Ltd, will be appointed to provide an inbound line for shareholder questions. Hammer Metals has not ruled out also making outbound calls to shareholders. In any event, the personnel who will be receiving (or making) the shareholder calls will be instructed not to say anything inconsistent with, or additional to, the information found in the Scheme Booklet. I considered that this was an appropriate way to proceed.

Loan Agreement

63    Hammer Metals and Austral are parties to an unsecured Loan Agreement, under which Austral has agreed to lend Hammer Metals up to $6,000,000 for working capital and expenses in connection with the SID. Hammer Metals has drawn down approximately $3,000,000 under the Loan Agreement, including to repay a break fee that became payable by Hammer Metals to a previous bidder, Larvotto Resources Limited, when Hammer Metals terminated that previous scheme proposal and entered into the current SID with Austral.

64    If the SID is terminated in circumstances where the break fee does not become payable to Austral by Hammer Metals, such as where there has been no superior proposal or any breach on the part of Hammer Metals, Austral has agreed to bear the amount drawn down by Hammer Metals to repay the Larvotto break fee without recourse to Hammer Metals for that amount.

65    At the hearing, counsel otherwise satisfied me that the terms of the Loan Agreement in the event the Scheme does not proceed are not coercive to the shareholders. If the SID is terminated in circumstances where the break fee does not become payable, such as in the event the shareholders vote against the Scheme, Hammer Metals will be required to repay the outstanding amount under the loan within a period of four months, which is a reasonable repayment period. Interest will not be payable on the loan repayments until the repayment date arrives, at which point interest will accrue at 9% per annum. If Hammer Metals terminates the SID in circumstances not permitted by the terms of the SID, then interest will accrue at 15% per annum from the date of that termination.

Demerger

66    As mentioned above, concurrently with the Scheme, Hammer Metals proposes to transfer all of its fully paid ordinary shares in Carnegie Exploration to SpinCo, and to demerge SpinCo from the Hammer Metals group by way of an equal capital reduction and an in-specie distribution of fully paid ordinary shares in SpinCo to Hammer Metals shareholders.

67    Upon successful implementation of the Demerger, each shareholder will receive one SpinCo share for every 35 shares in Austral held at the Demerger Record Date, which is currently expected to be 7.00 pm AEDT on 18 November 2026.

68    At the hearing counsel for Hammer Metals drew to my attention the treatment that holders of small parcels and some other ineligible shareholders will receive under the Demerger. SpinCo will not initially be listed and the sale agent will have no obligation to sell the shares in SpinCo and pay the net proceeds to those shareholders unless and until a liquidity opportunity or event occurs. This is defined to include a public listing on the ASX or the winding up of SpinCo. But there is no guarantee that such an event will occur, or when it might occur. In the result, those shareholders may receive nothing in the Demerger.

69    However, this is disclosed in the Scheme Booklet. And whether it functions in an oppressive manner to those small shareholders is to be assessed in light of the transaction as a whole, including the fact that it is the Scheme and not the Demerger as such, which requires the Court’s approval. The Demerger is part of a larger transaction from which the shareholders, including those ineligible Demerger shareholders, will receive a tangible benefit. The issue needs to be assessed in light of the proportionality between the Demerger and the Scheme as a whole, which can be observed from the ratio of one SpinCo share to be provided for every 35 Hammer Metals shares.

70    I therefore took the view that this concern was not an impediment to putting the Scheme to shareholders, and any oppressive effect on those shareholdings is a matter that can be assessed at the second hearing for approval of the Scheme, if it is passed.

Conclusion

71    For the reasons set out above, the Scheme fulfils the necessary conditions in s 411 of the Corporations Act, and in the absence of any discretionary reason as to why it should not be put to a vote of shareholders, I made the orders that appear at the commencement of this judgment.

Associate:

Dated:    6 October 2026