CORPORATE HIGHLIGHTS
· $601,000 raised under Share Purchase Plan and subsequent placement of shortfall
· Cash at hand $935,000 as at December year end
· Total shares on issue now 287,449,326 (after cancellation, refer below)
· Shareholders approved the cancellation of 78,947,731 shares in exchange for surplus
Queensland Exploration Permits
· EPC 1949 60:40 Joint Venture established - A$1.5m farmin commitment negotiated
· Board size reduced to 3 (post Quarter)
· Fixed costs reduced by a further $200,000 per annum recently
OPTION TO BUY CIRRUS NETWORKS
· Option agreement to acquire 100% of IT solutions integrator Cirrus Networks Pty Ltd ("Cirrus")
· Cirrus was recognized as Australia's second fastest growing technology company
· Cirrus recorded audited revenue of $5.9million to end of June 2014
· Cirrus appoints Andrew Milner and Matt Sullivan to its Board
· Liberty exercised the option to buy Cirrus in January 2015
EXPLORATION ACTIVITIES
· Liberty commenced a conditional sale process of its exploration assets. Sale will occur subject to all necessary approvals and completion of the Cirrus Networks acquisition.
· In Western Australia, Exploration Licence Application 66/89 was mapped and sampled for Graphite near the old mining centre of Northampton
· Ajana hosts a number of undrilled graphite occurrences in addition to recorded mined coarse sized graphite
· Grab Samples from shallow pits with 40-50% by volume of graphite returned encouraging petrological results - confirming Jumbo Flake and lump graphite
· Sizing analysis shows about 90% of the graphite reports to the +250 micron fraction.
CORPORATE UPDATE
Share Purchase Plan
On 18 September 2014, the Company announced a Share Purchase Plan ("SPP") for shareholders registered as at 17 September at an issue price of 1.5 cents per share, representing a discount of 20% to the then 5 day "Volume Weighted Average Price" of the Company's shares.
The SPP gave eligible shareholders the opportunity to apply for up to $15,000 worth of shares without incurring brokerage or transaction costs. The SPP was not underwritten.
On closure of the SPP on 21 October 2014 the Company had received valid applications from shareholders representing $71,000, and as a result 4,733,324 shares were issued to those shareholders.
As approval for the placement of any shortfall under the SPP was obtained at the 3 November 2014 EGM, a further 35,333,333 shares were issued at 1.5 cents in December, raising an additional $530,000.
Selective Capital Reduction
Approval was obtained at a meeting of Shareholders held on 3 November 2014 to cancel 78,947,731 Liberty shares (approximately 24% of the total) by a selective reduction of capital under the Corporations Act, in exchange for the transfer to the parties holding those shares of all the issued shares in Liberty subsidiary Walloon Energy Pty Ltd ("Walloon").
At the date of the transfer, Walloon held the following Queensland tenements:
· EPC 1373
· EPC 1818
· EPC 1698
· EPC 1736
· EPC 1737
· EPC 1739
· MDL 483
· EPC 1386
The shareholders whose shares were cancelled include Auto Investment International Limited ("Auto") who convened the Corporations Act section 249F meeting held in February 2014 year, to replace the then Board with its representatives. While that attempt by Auto did not succeed, Liberty is pleased to have reached an amicable outcome for the benefit of all stakeholders.
EPC 1949 Joint Venture
As part of this transaction with Auto and the other unrelated parties, Liberty has signed a joint venture with Walloon (then owned by these parties) in relation to coal tenement EPC 1949, pursuant to which Walloon will be transferred 60% of that EPC, in exchange for:
1. An expenditure commitment of $1.5million over the first 3 years for exploration and related studies (which will include a JORC resource); and
2. Walloon being required to keep EPC 1949 in good standing under the Queensland Mineral Resources Act 1989.
If Walloon does not satisfy the $1.5million exploration commitment then it must re-transfer the 60% interest in EPC 1949 back to Liberty. Further, within 5 years of the commencement of the 1949 JV, Walloon must complete a full feasibility study on EPC 1949 having spent at least $5million.
All transfers related to the transaction with the Auto parties are currently being attended to.
Board of Directors
The 2014 Annual General Meeting was held on 28 November and all resolutions dealing with the ability of the Company to issue further shares were passed, giving the Company flexibility in pursuing opportunities that may present in a short frame.
Charles Thomas and Patrick Glovac were elected to the Board, but unfortunately Jim Becke was not re-elected on rotation. The Board thanks Mr Becke for his many years of service to the Company and wishes him well in his future endeavors.
Notwithstanding that the 2014 Remuneration Report was approved on a show of hands at the AGM, as it received less than 25% support based on proxy votes and the same had occurred at the 2013 AGM, the Contingent Business relating to the holding of a spill meeting was required to be dealt with, with that resolution being passed, also solely on proxy votes.
As a consequence, the Company has subsequently held a "Spill Meeting", on Wednesday 14 January 2015. The Chairman Ian Smith, and non-executive director Horst Hueniken were not re-elected and the Board wishes to thank them for the years of service to the Company and wishes both Ian and Horst well in future endeavors.
Option Agreement to Acquire 100% of Cirrus Networks Pty Ltd
On 28 October 2014 Liberty entered into a 3 month Option Agreement to acquire 100% of the issued capital of information technology company Cirrus Networks Pty Ltd ("Cirrus"), subject to all shareholder and other required approvals.
The acquisition of Cirrus will constitute a change to the nature and scale of Liberty's activities and as a result Liberty will be required to obtain the approval of its Shareholders to these changes. Liberty will also be required to re-comply with Chapters 1 and 2 of the Listing Rules.
As a subsequent event, the Option was exercised and announced on 27 January 2015 and the Company will now convene the required Shareholders meeting and commence preparation of the re-compliance Prospectus, and all other related matters.
About Cirrus
Cirrus is a Western Australian based Information Technology ("IT") solutions integrator which assists both corporations and governments reduce costs and improve services. Cirrus provides and implements state of the art hardware and software systems for its clients.
From commencement of operations in 2012, Cirrus recorded audited revenue of $5.9m in its first full year of operation (to June 2014). Cirrus' rapid growth is driven by its expertise in enabling clients to do "more with less" through innovative, leading edge technology solutions that drive efficiency and profits.
Cirrus has contracts in place with some $22m worth of work "in pipe" with some of Australia's premier companies including;
· Argyle Diamonds
· Western Australia Police
· Roy Hill Iron Ore
· LandCorp
· Independence Group NL
· Tronox Ltd
· Emeco Holdings Ltd; and
· Keystart Home Loans
Cirrus has identified revenue and profit growth opportunities across Australia with current and potential clients, who are primarily corporations and government agencies who strive to reduce operating costs and increase profits or services through better use of technology.
Terms of the Acquisition
There is no cash consideration involved in the purchase, with the proposed transaction involving the following:
1. Cirrus shareholders initially being issued that number of Liberty shares that equates to 55.34% of Liberty's then issued capital ("Initial Shares");
2. The number of Initial Shares being conditional on Liberty having a cash balance of at least $3,000,000 (net of all fees associated with a capital raising and re-compliance costs, at completion), but with the 55.34% shareholding to reduce proportionally in the event that Liberty has a greater cash balance at that time;
3. The issue of further shares to Cirrus shareholders upon the meeting of certain milestones, namely:
a. If Cirrus achieves AUD$12,000,000 in gross revenue with a minimum Gross Profit of 10% within a period of 2 years from the settlement date ("Milestone 1"), then $1.5 million worth of ordinary shares in Liberty based on a VWAP over the 30 trading days prior to the date of achievement of Milestone 1;
b. If Cirrus achieves AUD$2,000,000 in EBIT during any rolling period of 12 months within a period of 3 years from the Settlement Date ("Milestone 2"), then $1.5 million worth of Ordinary Shares in LBY based on a VWAP over the 30 trading days prior to the date of achievement of Milestone 2; and
c. If Cirrus achieves AUD$4,000,000 in EBIT during any rolling period of 12 months within a period of 3 years from the Settlement Date ("Milestone 3"), then $1.5 million worth of Ordinary Shares in LBY based on a VWAP over the 30 trading days prior to the date of achievement of Milestone 3.
The transaction includes the appointment of three new Directors, being Cirrus founder, Frank Richmond (as Managing Director), Andrew Milner (as Non-Executive Chairman) and Matthew Sullivan (as a Non-Executive Director), with Charles Thomas and Andrew Haythorpe stepping down from the Board. Patrick Glovac will remain as a Non-Executive Director.
Information on the proposed new Directors is as follows:
Frank Richmond
Frank Richmond has over 17 years' experience in the technology business, having started his career in the UK, where he had success in both large and small Network Integrators, helping drive strategy and delivering exceptional growth to revenues.
Latterly in the UK he was part of the management team for Scalable Communications in the role of director for Strategic and New Business and was responsible for evolving the business into one of the most successful Juniper Networks partners in the UK with revenue growth of over 100%. In that role he was also instrumental in initiating negotiations that eventuated in the successful buyout of the business by Alternative Networks (LSE code AN.)
From there Frank forged a successful sales career at F5 Networks that brought him to Australia in
2011 before moving to Dell to run their Large Enterprise business in 2012 and achieving its Top
Achiever award in his first year.
Frank is a customer focused sales expert and a natural leader and has taken Cirrus from an embryonic idea and founding in 2012 to one of the fastest growing Technology Solutions providers in Australia, coming 2nd in the Deloitte Fast 50 Tech Companies- Rising Star category in its first full year of trading.
As a consequence of his post roles in both the UK and in Australia, Mr Richmond has strong relationships throughout the industry with a proven ability to develop and sustain key relationships up to board level. He is an innovative and effective team builder who delivers world class customer service.
Andrew Milner
Andrew Milner is a veteran of the Australian Information Communications Technology industry and has more than 20 years experience in managing successful high-growth technology businesses.
Founding Wantree Internet ("Wantree") in 1995 (which became one of Australia's first commercial Internet Service Providers ("ISPs"), he was appointed to the iiNet board when Wantree was vended into the iiNet IPO in 1999. Mr Milner spent 9 years with that company in a variety of executive and non-executive roles. iiNet has grown to a $1.4billion market capitalization with over 2,000 staff and
$1 billion in annual revenue, and is now the second largest ADSL broadband supplier in the
Australian market after Telstra.
From 2004 Mr Milner was co-founder and non-executive Chairman of L7 Solutions, one of WA's fastest growing systems integrators, with a turnover of $55m at the time of its acquisition by Amcom Telecommunications in 2011.
Mr Milner is currently non-executive Chairman of digital marketing business Roobix Pty Ltd.
Matthew Sullivan
Matthew Sullivan has more than 20 years experience in the Information Technology ("IT") industry and has held various executive roles within strong performing and high growth IT organisations in Australia and was CEO and co-founder (with Mr Milner) of L7 Solutions in 2004 until its 2011 acquisition by Amcom.
During this time the company was awarded numerous industry accolades including:
· 5th fastest growing WA company in 2007 (WA Business News);
· 18th fastest growing Australian company in 2008 (BRW Fast 100);
· 2005 Cisco A/NZ Partner of the Year; and
· 2010 EMC WA partner of the Year.
Mr Sullivan was also a 2005 and 2008 winner of the WA Business News "40 under 40" and Western
Region finalist in the 2010 Ernst & Young Entrepreneur of the Year. Most recently Mr Sullivan has been Chief Solutions Officer of Amcom. Liberty's Mining Assets
Subject to completion of the Cirrus acquisition, Liberty intends (subject to shareholder approval) to
sell the Liberty subsidiaries:
· Urea Corp of Australia Pty Ltd - Proposed low cost gas and fertiliser projects
· Rhodes Resources Pty Ltd - Western Australian Exploration Licence Application
· Boab Energy Pty Ltd - EPC 1949 Coking coal JV in Queensland'
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