Ann: Shareholder Update - Voluntary Administration, page-18

Folks

A process needs to be followed regarding Takeover Panel and participants are required to remain confidential about proceedings, so as such I will....

In regard to the issues that are public knowledge or are outside of TO Panel, I would refer you below. However there is something each and ever person can do, write to your local member as to the following two points -

Federal
The full bench of the Federal Court agreed to the legal issues and concerns of May 2019, in which AusIndustry subsequently put our media releases welcoming the clarification and the ruling. Why then have AusIndustry still continued to resist the declaration of "Registered Activities" for Moreton Resources Limited. This matter has been ongoing since 2014 and some 2500 mum and dad investors sit back puzzled as to how can the Federal Court issue such a prescriptive and damming decision over a year ago, but AusIndustry still resist.

State Government
The Deputy President of the Land Court in QLD in about March 2020 stated MRV Metals is not liable for prior harm, upon that point alone, despite any remaining issues the State Government would have to concede that the bond held is in fact above the statutory legislative cap, and therefore the existing position of DES is unlawful and irreconcilable to the decisions already handed down. These matters have been ongoing since 2017 and to date MRV Metals has been successful and correct upon every position and interpretation, yet DES still hold critical funds that are essential to the Company survival.


Be aware that these issues still have minor points and concerns to be dealt with but both are acting contrary to the Courts views and rulings, but yet no accountability for the harm and determent.

The problem is these should have been closed out last year, but both matters through inept management have been allowed to continue to run and hence some Directors/Management and Legal advisors have significant consequences for that incompetence coming but the first agenda is to close them out. ATT could rule any day, but pressure must be on to more things forward urgently.


Receivers

By way of background when Texas Silver went into liquidation Pitcher Partners were engaged, they took about 3-6 months to seek to sell the assets and had multiple buyers north of 10M, however our bid was about 1M based upon the fact we were the only ones to understand the legislation and the fact the mining lease was breached so unable to be sold. Hence after we were knocked out early in the process, the entire process fell over as there was no ML.... These current administrators with increased resources, copper and zinc hits attempt to advertise the sale on the Friday on the ASX and close the process on the Monday..... Less than 48h to undertake a public sales process. I am lead to believe the private sales process was well underway if not already determined.

Why is appointment invalid (be aware this is irrelevant of any TO application, this issue is live and a significant issue for the Administrator, and hence I am currently in talks with a Firm as to a Class Action on behalf of shareholders)

RE: Legality of Appointment as Joint and SeveralAdministrators of the Companies

I write regarding your letter which was emailed to me upon the evening of 17 June 2020, at 6.19pm. I note the follow was included in that correspondence which states (highlighted for emphasis)-

“GrantSparks and I were appointed Joint and Several Administrators of the Companieson 10 June 2020 pursuant to Section436A of the Corporations Act 2001. We have commenced an urgent assessment of the financialposition of the Companies.”

Issue One

In regard to the relevant section to which you purport to rely upon undertaking this Joint and Several Administrations of the Companies, I note the following:

Division 2—Appointment of administrator and firstmeeting of creditors

436A Company may appoint administrator if board thinks it is orwill become insolvent

(1) A company may, by writing, appoint an administrator of the company if the board hasresolved to the effect that:

(a) in the opinion of the directors voting for the resolution, the company is insolvent, or is likely to become insolvent at some future time; and

(b) an administrator of the company should be appointed.

(2) Subsection (1) does not apply to a company if a person holds an appointment as liquidator, or provisional liquidator, of the company.

As you are aware through our conversation upon 11 June 2020, when your purported appointment occurred, being 10 June 2020, it was stated by yourself that the Directors of Moreton Resources Limited were John Hayley and Brett Garland. Further to this you stated Brett Garland was the sole Director upon majority of the subsidiaries and Phil Bryant was listed against one, sole subsidiary Company and hence the Board, resolved to appoint Deloitte to the head Company and all subsidiaries. This feedback from yourself is consistent with ASX announcement and ASIC records which indicate the only two Directors at the time of the purported appointment were as you have stated, Brett Garland and John Hayley. This is further supported by the fact that Tristan Garthe resigned as a Director and Company Secretary as at 26 May 2020. (see attached Company Search)

You will also note, as you are aware that there has been no additional Director appointed to Moreton Resources Limited since the time of 26 May 2020, to date 22 June 2020. Therefore you have no valid appointment as you have purported to the ASX upon 10 June 2020, or in your correspondence dated 15 June 2020, and distributed late upon the night of 17 June 2020.

The basis for this is the following:

a) Your appointment relies upon a resolution of the Board of Moreton Resources Limited, as required by Section 436A of the Corporations Act 2001, yet as you are aware and have acknowledged there were only 2 Directors of Moreton Resources Limited, therefore there was and is no legal board as defined by the following:

- Section 201A of the CorporationsAct 2001, prescriptively defines the minimum number of directors for a public company, which in s. 201A (2) it states, A public company, must have at least 3 directors.

- ASIC guidance notes also define minimum officeholders for public companies and they state “A public company must have at least three directors”.

b) Also the Company’s constitution is prescriptive upon the following

- 9 Directors

9.1 Appointment and removal of directors

(a) The minimum number of directors is 3. The maximum number of directors is to be fixed by the directors, but must not be more than 9 unless the company in general meeting determines otherwise. The directors must comply with any applicable requirements prescribed in the Corporations Act when fixing a maximum number of directors that is less than 9

- 9.10 Quorum at meetings ofdirectors

(a) No business may be transacted at a meeting of directors unless a quorum of directors is present at the time the business is dealt with.

(b) A quorum consists of half of the directors (where there are 3 directors the quorum will be 2) unless otherwise determined by the Board.

(c) If there is a vacancy in the office of a director then, subject to rule 9.10(d), the remaining director or directors may act.

(d) If the number of directors in office at any time is not sufficient toconstitute a quorum at a meeting of directors or isless than the minimum number of directors fixed under this constitution,the remaining director or directors must act as soon as possible:

(1)to increase the number of directors to a number sufficient to constitute a quorumand to satisfy the minimum number of directors required under this constitution;or

(2)to convene a general meeting of the company for that purpose, and, until that has happened, must only act if and to theextent that there is an emergency requiring them to act.

Obviously, this has significant ramifications for the Directors, whom have acted contrary to the ASIC Practice Note, the Corporations Act 2001 and the Company Constitution, however it must also be extremely embarrassing for Deloitte Financial Advisory Pty Ltd. Furthermore, the costs associated with and the liabilities incurred either directly or indirectly, including issues pertaining to the management of the sites, the legal processes, compliance and creditor management are all issue and onuses which may now be held against the two existing and still current Directors, but also Deloitte Financial Services Pty Ltd.

I do require an urgent response from Deloitte, as currently you still purport to be the assigned Joint and Several Company Administrator and this error should be corrected upon the ASX, ASIC advised and all creditors made aware immediately. I note by virtue of the Corporations Act 2001 the only way an appointment will be made without the required board in situ, will be by para (2) of the same section, to which you are currently not appointed under.

(2) Subsection (1) does not apply to acompany if a person holds an appointment as liquidator,or provisional liquidator, of the company.

Hence clearly your appointment is unlawful, as it is contrary to the defined process within the Corporations Act 2001.

Issue Two

I note several defects in the recent creditor meeting and also the notification of such meeting. Within the meeting you notified, that a nomination would be held as to who would like to be nominated against the relevant companies however in the literature and subsequent running of that meeting I note you failed to advise creditors of this intent. In fact, the documents and information only pertained to the voting of, if an Oversight Committee would be set up and at no stage had you asked for nominations for that committee.

Hence as you are aware, through your proxy nominations upon both counts you had sufficient votes that were in favour of setting up the required Committees. However, in regard to MRV Metals Pty Ltd, you sort to outline the intended committee had failed by way of lack of nomination for three parties to sit on that Committee. I note I believe that is a breach in your obligations as administrators in the conduct undertaken in that meeting. I also note that upon the video call there were 13 parties, of that several were Deloitte personnel and yet in the voting down of the proposed Moreton Resources Committee, you stated the votes were 5 for the Committee and 8 against. This would imply Deloitte staff whom are not creditors have voted or parties outside of the meeting where sent the electronic voting rights. Equally this would not be in keeping with your obligations as the administrator.

Further to this point I draw your attention to the following:

436E Purpose and timing of first meeting of creditors

(1) The administrator of a company under administration must convene a meeting of the company’s creditors in order to determine:

(a) whether to appoint a committee of inspection; and

(b) if so, who are to be the committee’s members.

(2) The meeting must be held within 8 business days after the administration begins.

(3) The administrator must convene the meeting by:

(a) giving written notice of the meeting to as many of the company’s creditors as reasonably practicable; and

(b) causing a notice setting out the prescribed information about the meeting to be published in the prescribed manner;

at least 5 business days before the meeting.

Note: Forelectronic notification under paragraph (a), see section 600G.

(3A) A notice under paragraph (3)(b) that relates to a company may be combined with a notice under paragraph 450A(1)(b) that relates to the company.

(4) At the meeting, the company’s creditors may also pass a resolution:

(a) removing the administrator from office; and

(b) appointing someone else as administrator of the company.

As you are aware, despite within the meeting purporting that creditors were notified by email on Monday the 15^th June 2020, you actually in fact notified creditors, or at least the three to whom I have spoken to, no earlier than outside business hours upon the Wednesday the 17^th June 2020. That is 2 clear business days prior to the meeting, not the legislatively required 5 days as per the Corporations Act 2001.

Therefore, I believe you have failed your statutory obligations as administrator and at the very least should either remove yourself from the administration process, as being unfit to run the appointment or re-run the creditors initial meeting, fixing these fatal errors.

Issue Three

I note your email dated 29 June 2020, whereby I outlined that the assets of Moreton Resources Limited and its subsidiaries are valuable and through the prior administration process and more recently there has been substantial interest in the assets. In your correspondence you highlighted that:

“I note the sale process started immediately upon ourappointment including advertisements starting from 17 June 2020.”

I must highlight that statement I find extremely alarming given the obligations and duties of an appointed administrator, and the role to ensure that if at all the Company survives and continues on. As you are aware and have been briefed by legal representatives, the prospects of positive outcomes in the relevant legal cases are high and as such the revenue due to the Company and a value of the assets would be questionable as to why upon appointment your immediate action was to seek to sell the assets.

For your information my concern with your statement and actions is that this could be perceived as a potential “Phoenixing Activity” to which the following persons maybe involved:

- Directors

- Phoenix operator

- Pre-insolvency advisers

- Friendly valuers

- Friendly liquidators

As you are or are not aware, a Phoenix Taskforce has been set up comprising of 36 Federal and State agencies to deal with such issues, and hence it would be exceptionally unfortunate if this is in fact what is transpiring here. I also note your statement about the sales process is contrary to the statements made to Shareholders, Creditors and Regulators in the ASX Announcements and your correspondence to the relevant creditors and interested parties.

As you are aware, each of the three issues above as a standalone are significant and concerning in nature, let alone together in the early stages of your appointment. I also note that whilst you have declared earlier interactions with the Company, my recollection of the events differ somewhat to those that you have portrayed in the notice of meeting and explanatory background information. In fact, given your relationship with the Company and the discussions and comments upon that day, I would be concerned you have acted as pre-appointment advisors to the Directors and Company and are significantly conflicted in this appointment.

I do require a response to this letter by 5.00pm tomorrow afternoon, otherwise I will progress matters pertaining to each of the matters highlighted above in the appropriate forums and through the associated reporting mechanisms.


STILL NO RESPONSE :-(