EX-99.2 3 tv510330_ex99-2.htm EXHIBIT 99.2

 

Exhibit 99.2

 

  

NOTICE OF SPECIAL MEETING

 

AND

 

MANAGEMENT INFORMATION CIRCULAR

  

December 21, 2018

 

 

Your Vote is Important. Please Vote Your Shares Today.

If you have questions or require assistance with voting, you may contact our proxy solicitation agent:

LAUREL HILL ADVISORY GROUP

 

North American Toll-Free Number: 1-877-452-7184

Collect Calls Outside North America: 416-304-0211

Email: assistance@laurelhill.com

 

 

No securities regulatory authority or stock exchange has expressed an opinion about, or passed upon the fairness or merits of the transaction described herein, the securities offered pursuant to this transaction or the adequacy of the information contained herein and it is an offense to claim otherwise.

 

 

 

  

 

December 21, 2018

 

Dear Great Panther Shareholders:

 

You are invited to attend a special meeting (the “Great Panther Meeting”) of the holders (“Great Panther Shareholders”) of common shares (the “Great Panther Shares”) of Great Panther Silver Limited (“Great Panther”) to be held in Terrace Room B located at the Terminal City Club, 837 West Hastings Street, Vancouver, British Columbia, at 9:00 a.m. (Vancouver time) on February 11, 2019.

 

Board Recommendations

 

 

The Great Panther Board of Directors (the “Great Panther Board”) has considered the Scheme and after considering, amongst other things: (a) advice from its financial and legal advisors; (b) the anticipated benefits of the Scheme; and (c) the risks associated with the Scheme, the Great Panther Board has unanimously determined that the Scheme is in the best interests of Great Panther and has approved the Scheme and the entering into of the Scheme Implementation Deed.

 

The Great Panther Board unanimously recommends that Great Panther Shareholders vote FOR the Great Panther Scheme Resolution and the Name Change Resolution. Each member of the Great Panther Board will vote, or procure the voting of, all Great Panther Shares held by him or her in favour of the Great Panther Scheme Resolution and the Name Change Resolution.

 

 

Reasons for the Scheme

 

After due consideration and consultation with Great Panther’s management and outside legal and financial advisors, the Great Panther Board unanimously approved the Scheme Implementation Deed and the transactions contemplated thereby and authorized the issuance of Great Panther Shares pursuant to the Scheme Implementation Deed. In doing so, the Great Panther Board considered the business, assets, development policies, liabilities, results of operations, financial performance, strategic direction and prospects of Great Panther and Beadell. Additionally, in making its determination, the Great Panther Board considered a number of factors, including, but not limited to, the following:

 

üCreation of New Emerging Intermediate Precious Metals Producer focused on the Americas
üExtensive Reserve & Resource Base
üStrong Balance Sheet to Support Complementary Assets
üDiversified Portfolio
üRobust Growth Portfolio
üAttractive Re-Rating Potential

 

The Scheme and the Name Change

 

The business of the Great Panther Meeting is the consideration of an ordinary resolution (the “Great Panther Scheme Resolution”) to approve the issuance of Great Panther Shares in connection with the Scheme Implementation Deed dated September 23, 2018 (the “Scheme Implementation Deed”) between Great Panther and Beadell Resources Limited (“Beadell”). Under the Scheme Implementation Deed, Great Panther will acquire 100% of the ordinary shares of Beadell (the “Beadell Shares”) pursuant to a scheme of arrangement in accordance with the laws of Australia (the “Scheme”). The Great Panther Scheme Resolution must be approved by greater than 50% of the votes cast by

 

 

 

 

Great Panther Shareholders at the Great Panther Meeting, present in person or by proxy, pursuant to the policies of the Toronto Stock Exchange (“TSX”).

 

In addition, Great Panther Shareholders will be asked to consider an ordinary resolution (the “Name Change Resolution”) to approve an amendment to the constating documents of Great Panther to change the name of Great Panther to “Great Panther Mining Limited” (the “Name Change”). The Name Change Resolution must be approved by greater than 50% of the votes cast by Great Panther Shareholders at the Great Panther Meeting, present in person or by proxy. The Name Change is anticipated to be implemented immediately following completion of the Scheme.

 

The Consideration

 

If the Scheme is implemented, each Beadell Scheme Shareholder (other than an Ineligible Foreign Shareholder or an Electing Small Shareholder) will receive 0.0619 Great Panther Shares for each Beadell Share (the “Exchange Ratio”) held by them (the “Scheme Consideration”).

 

The Scheme Consideration represents a value of A$0.086 per Beadell Share based on the closing price of the Great Panther Shares on NYSE (American) on September 21, 2018, the last full trading day prior to the date of the Scheme Implementation Deed and the announcement of the Scheme.

 

Based on the estimated number of Beadell Shares expected to be outstanding at the implementation of the Scheme, Great Panther expects to issue up to 141,136,911 Great Panther Shares in connection with the Scheme (representing up to 83.4% of the issued and outstanding Great Panther Shares), comprised of:

 

(a)103,594,861 Great Panther Shares (approximately 61.2% of the number of the Great Panther Shares outstanding) as consideration for the issued and outstanding Beadell Shares;

 

(b)up to 1,720,820 Great Panther Shares as consideration for Beadell Shares issued upon the exercise of outstanding Beadell Options prior to the completion of the Scheme;

 

(c)272,526 Great Panther Shares as consideration for Beadell Shares to be issued in exchange for the Beadell Performance Rights prior to the completion of the Scheme;

 

(d)up to 9,749,727 Great Panther Shares issuable on the exercise of the new Great Panther warrants to be issued in exchange for outstanding Beadell Warrants;

 

(e)up to 18,203,885 Great Panther Shares issuable in connection with certain indebtedness owing to MACA1; and

 

(f)up to 7,595,092 Great Panther Shares issuable in connection with the Beadell Debentures that are being assumed by Great Panther on completion of the Scheme.

 

Based on the estimated number of Great Panther Shares that are expected to be outstanding upon the implementation of the Scheme, Great Panther Shareholders will own approximately 62% of the outstanding Great Panther Shares after implementation of the Scheme (on an undiluted basis).

 

In the event Great Panther agrees to increase the Scheme Consideration, for example if a competing offer arises, the TSX will generally not require further approvals from Great Panther Shareholders for the issuance of up to an additional 35,284,228 Great Panther Shares, such number being 25% of the number of Great Panther Shares being approved for issuance by Great Panther Shareholders in connection with the Scheme at the Great Panther Meeting.

 

The Exchange Ratio is fixed and will not be adjusted to reflect changes in the price of Great Panther Shares, Beadell Shares or the Canadian dollar to Australian dollar exchange rate prior to the implementation of the Scheme. It is a condition precedent to the implementation of the Scheme that the Great Panther Shares issued in connection with the

 

 

1 Calculated for TSX approval purposes only based on (i) conversion by MACA of the maximum amount, (ii) current A$/C$ exchange rates, and (iii) a theoretical minimum conversion price based on 50% of the current trading price of Great Panther Shares on the TSX.

 

 

 

 

Scheme Implementation Deed are authorized for listing on: (a) the TSX; and (b) the NYSE (American). Great Panther has received the conditional approval of the TSX and has applied to the NYSE (American) for the listing of the Great Panther Shares to be issued pursuant to the Scheme, each subject to approval of the Great Panther Scheme Resolution and the filing of certain documents following implementation of the Scheme.

 

Please refer to the attached Management Information Circular for a more detailed description of the Scheme and the Name Change, including information about Beadell, the terms and conditions of the Scheme Implementation Deed, a detailed description of Great Panther’s reasons for the scheme, the opinion of Great Panther’s financial advisor, the text of the Great Panther Scheme Resolution and the Name Change Resolution and the risk factors relating to the completion of the Scheme and the acquisition of Beadell. Please give the Management Information Circular your careful consideration and, if you require assistance, consult your financial, tax or other professional advisors.

 

GMP Securities L.P. has acted as financial advisor to the special committee of the Great Panther Board (the “Great Panther Special Committee”) and has provided the Great Panther Special Committee with an opinion on the fairness of the Scheme Consideration, from a financial point of view, to Great Panther. The GMP Fairness Opinion is attached as Appendix G.

 

Shareholder Vote

 

Your vote is very important regardless of the number of Great Panther Shares that you own. Enclosed with this letter is the Notice of Special Meeting and Management Information Circular and a form of proxy or voting instruction form. If you are unable to attend the Great Panther Meeting in person please complete and deliver either the enclosed form of proxy or voting instruction form, as applicable, by mail or submit your vote via the Internet, phone or fax, prior to 9:00 a.m. (Vancouver time) on February 7, 2019, to ensure your representation at the Great Panther Meeting.

 

Shareholder Questions

 

If you require assistance with voting your Great Panther Shares, please contact Great Panther’s proxy solicitation agent, Laurel Hill Advisory Services, by telephone at 1 (877) 452-7184 toll-free in North America or at (416) 304-0211 for collect calls outside of North America or by email at assistance@laurelhill.com.

 

On behalf of Great Panther, I would like to thank all Great Panther Shareholders for their continuing support.

 

  Yours truly,
   
  (signed) “James M. Bannantine
   
  James M. Bannantine,
  President and Chief Executive Officer
  Great Panther Silver Limited

 

 

 

 

 

Vote using the following
methods prior to the
Meeting

 

 

Internet

 

Telephone or Fax

 

Mail

Registered Shareholders

 

Shares held in own name

 

 

Vote online at

www.investorvote.com

 

Telephone:
1 (866) 732-8683
(toll free in North America)
(312) 588-4290
(outside of North America)

 

Fax:
1 (866) 249-7775
(toll free in North America)
(416) 263-9524
(outside of North America)

 

Return the form of proxy in the enclosed postage paid envelope.

Non-Registered Shareholders

 

Shares held with a broker, bank or other intermediary.

 

 

Vote online at

www.proxyvote.com

 

Call or fax to the number(s) listed on your voting instruction form.

 

Return the voting instruction form in the enclosed postage paid envelope.

  

 

 

 

TABLE OF CONTENTS

 

  Page
   
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS 1
   
INFORMATION CONTAINED IN THIS MANAGEMENT INFORMATION CIRCULAR 3
   
Cautionary Statement regarding Forward-Looking Statements 4
   
Cautionary Note Concerning Estimates of Measured and Indicated Resources 6
   
Great Panther Mineral Resource Estimates 7
   
Beadell Reserve and Resource Estimates 8
   
United States Investors 8
   
Abbreviations 9
   
Currency 9
   
Currency Exchange Rate Data 9
   
QUESTIONS AND ANSWERS ABOUT THE SCHEME AND THE GREAT PANTHER MEETING 11
   
SUMMARY 18
   
The Great Panther Meeting 18
   
The Beadell Meeting and Beadell Shareholder Approval 19
   
The Scheme and the Scheme Implementation Deed 19
   
Scheme Consideration 20
   
Information about the Merged Group 20
   
Information about the Companies 21
   
Recommendation of the Great Panther Board 22
   
Reasons for the Scheme 22
   
Risk Factors 23
   
Opinion of Great Panther’s Financial Advisor 23
   
Listing of Great Panther Shares 24
   
Delisting and Deregistration of Beadell Shares 24
   
Third Party Approvals Required for the Scheme 24
   
Directors and Management of Great Panther After Giving Effect to the Scheme 25
   
Interests of Great Panther’s Directors and Executive Officers in the Scheme and Other Matters 25
 
Indicative Timetable 25
   
GENERAL INFORMATION FOR THE MEETING 26
   
Date, Time and Place of the Meeting 26
   
Record Date and Shareholders Entitled to Vote 26
   
Quorum 26
   
Purpose of the Meeting 26
   
Business of the Great Panther Meeting 27
   
Required Vote 28
   
Voting by Directors and Executive Officers 28

 

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Adjournment 29
   
Solicitation of Proxies 29
   
Notice and Access Process 29
   
Appointment and Revocation of Proxies 30
   
Advice to Beneficial Holders of Great Panther Shares 31
   
Voting of Proxies 32
   
Voting Shares and Principal Holders 32
   
THE SCHEME 33
   
Transaction Structure 33
   
Scheme Consideration 33
   
Background of the Scheme 34
   
Great Panther’s Reasons for the Scheme 36
   
Recommendation of the Great Panther Board 39
   
Great Panther Support Agreements 39
   
Beadell Support Agreements 39
   
Opinion of Great Panther’s Financial Advisor 40
   
Listing of Great Panther Shares 41
   
Delisting and Deregistration of Beadell Shares 41
   
Interests of Great Panther’s Directors and Executive Officers in the Scheme and Other Matters 41
   
The Beadell Meeting and Beadell Shareholder Approval 41
   
Third Party Approvals Required for the Scheme 41
   
THE SCHEME IMPLEMENTATION DEED 43
   
Scheme Implementation Deed 43
   
Scheme Deed Poll 43
   
Conditions Precedent 43
   
Covenants in Relation to the Scheme 48
   
Representations and Warranties 48
   
Provisions Regarding Exclusivity, Superior Proposals and Matching Rights 48
   
Termination Rights 50
   
Reimbursement Fees 52
   
Indemnification and Insurance 53
   
Governing Law 53
   
INFORMATION ABOUT THE COMPANIES 54
   
Great Panther Silver Limited 54
   
Beadell Resources Limited 54
   
INFORMATION CONCERNING THE MERGED GROUP 55
   
Summary 55
   
Direction of the Merged Group 55
   
Intentions of the Merged Group 56

 

ii

 

  

Ownership and Capitalization of the Merged Group 57
   
Financing Arrangements 59
   
Pro Forma Consolidated Financial Information for the Merged Group 60
   
Board and Management of the Merged Group 61
   
RISK FACTORS 65
   
Risks relating to the Scheme 65
   
Risks relating to the Merged Group 68
   
THE NAME CHANGE 72
   
Reasons for the Name Change 72
   
Board Discretion 72
   
Required Vote 72
   
Trading Symbols 72
   
EXPERTS 72
   
OTHER BUSINESS 73
   
APPROVAL 73

 

APPENDICES

 

Appendix A – Glossary of Terms
Appendix B – Great Panther Scheme Resolution
Appendix C – Name Change Resolution
Appendix D – Information Concerning Great Panther Silver Limited
Appendix E – Information Concerning Beadell Resources Limited
Appendix F – Pro Forma Consolidated Financial Statements
Appendix G – GMP Fairness Opinion
Appendix H – Scheme Implementation Deed

 

iii

 

 

GREAT PANTHER SILVER LIMITED

 

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

 

NOTICE IS HEREBY GIVEN that a special meeting (the “Great Panther Meeting”) of the holders (“Great Panther Shareholders”) of common shares (the “Great Panther Shares”) of Great Panther Silver Limited (“Great Panther” or the “Company”) will be held in Terrace Room B located at the Terminal City Club, 837 West Hastings Street, Vancouver, B.C., at 9:00 a.m. (Vancouver time) on February 11, 2019 for the following purposes:

 

2.to consider and pass, with or without variation, an ordinary resolution (the “Great Panther Scheme Resolution”), the full text of which is set out in Appendix B of the accompanying Management Information Circular (as defined below), authorizing and approving the issuance of the Great Panther Shares as consideration for the acquisition of all of the outstanding ordinary shares (the “Beadell Shares”) of Beadell Resources Limited (“Beadell”) pursuant to the terms of the Scheme Implementation Deed dated September 23, 2018 (the “Scheme Implementation Deed”) between Great Panther and Beadell;

 

3.to consider, and pass, with or without variation, an ordinary resolution (the “Name Change Resolution”), the full text of which is set out in Appendix C of the accompanying Management Information Circular, authorizing and approving the change of Great Panther’s name to “Great Panther Mining Limited” or such other name as may be determined and acceptable to the board of directors of Great Panther (the “Great Panther Board”) and the applicable regulatory authorities, as more fully described in the accompanying Management Information Circular; and

 

4.to transact such other business that may properly come before the Great Panther Meeting or any adjournment or postponement thereof.

 

This Notice of Meeting is accompanied by the management information circular dated December 21, 2018 (the “Management Information Circular”) and a form of proxy or a voting instruction form (as applicable). Great Panther Shareholders are referred to the Management Information Circular for more detailed information regarding the Great Panther Scheme Resolution and the Name Change Resolution.

 

The Great Panther Board has fixed January 2, 2019 as the record date (the “Great Panther Record Date”) for purposes of the entitlement to notice of and to vote at the Great Panther Meeting. Great Panther Shareholders of record at the close of business on the Great Panther Record Date are entitled to notice of the Great Panther Meeting and to vote thereat or at any adjournment or postponement thereof. To the extent a Great Panther Shareholder transfers the ownership of any of its Great Panther Shares after the Record Date and the transferee of those Great Panther Shares establishes that it owns those shares and requests at least 10 days before the Great Panther Meeting, to be included in the list of Great Panther Shareholders eligible to vote at such meeting, such transferee will be entitled to vote such shares at such meeting.

 

Each Great Panther Share entitled to be voted at the Great Panther Meeting will entitle the holder thereof to one vote on all matters to come before the Great Panther Meeting. This Notice of Meeting and the accompanying Management Information Circular are available on Great Panther’s website at www.greatpanther.com and on SEDAR at www.sedar.com.

 

The Great Panther Board unanimously recommends that Great Panther Shareholders vote FOR the Great Panther Scheme Resolution and the Name Change Resolution. Each member of the Great Panther Board will vote, or procure the voting of, all Great Panther Shares held by him or her in favour of the Great Panther Scheme Resolution and the Name Change Resolution.

 

If you are a registered holder of Great Panther Shares, in order to be valid and acted upon at the Great Panther Meeting, proxies must be received by Great Panther, c/o Computershare Investor Services Inc., the transfer agent of Great Panther, not later than 9:00 a.m. (Vancouver time) on February 7, 2019, or if the Great Panther Meeting is adjourned or postponed, no later than 48 hours (excluding weekends and statutory holidays in the Province of British Columbia)

 

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before the Great Panther Meeting is reconvened. Late proxies may be accepted or rejected by the chair of the meeting at his or her discretion and the chair of the meeting is under no obligation to accept or reject any particular late proxy. The deadline for the deposit of proxies may be waived or extended by the chair of the meeting at his or her discretion without notice. Proxies may be returned by: (a) mail in (i) the enclosed return envelope, or (ii) an envelope addressed to Computershare Investor Services Inc., 8th Floor, 100 University Avenue, Toronto, Ontario, M5J 2Y1, Attention: Proxy Department; or (b) fax at 1-866-249-7775 (toll-free in North America) or at 1-416-263-9524 (outside of North America). Registered holders may also vote their Great Panther Shares using a touch-tone telephone by calling 1 (866) 732-8683 (toll-free in North America) or (312) 588-4290 (outside of North America) or by the Internet at www.investorvote.com.

 

If you are a beneficial (non-registered) holder of the Great Panther Shares and receive these materials through a broker, bank, trust company or other intermediary or nominee, you must provide your voting instructions or complete, sign and return the voting instruction form in accordance with the instructions provided by your broker, bank, trust company or other intermediary or nominee well in advance of the Great Panther Meeting in order to have such Great Panther Shares voted at the Great Panther Meeting.

 

Your vote is very important, regardless of the number of the Great Panther Shares that you own. Whether or not you expect to attend in person, you should vote your Great Panther Shares or authorize a proxyholder to vote your Great Panther Shares as promptly as possible so that your Great Panther Shares may be represented and voted at the Great Panther Meeting.

 

Shareholder Questions

 

If you have any questions about the information contained in this Notice of Meeting and the accompanying Management Information Circular or if you require assistance with voting your Great Panther Shares, please contact Great Panther’s proxy solicitation agent, Laurel Hill Advisory Services, by telephone at 1 (877) 452-7184 toll-free in North America or at (416) 304-0211 for collect calls outside of North America or by email at assistance@laurelhill.com.

 

DATED at Vancouver, British Columbia, this 21st day of December, 2018.

 

  BY ORDER OF THE BOARD OF DIRECTORS
   
  (signed) “R.W. (Bob) Garnett
   
  R.W. (Bob) Garnett
  Chair of the Board
  Great Panther Silver Limited

 

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GREAT PANTHER SILVER LIMITED

MANAGEMENT INFORMATION CIRCULAR

 

Capitalized terms used in this Management Information Circular and not otherwise defined herein have the meanings set forth in the Glossary of Terms attached to this Management Information Circular as Appendix A.

 

INFORMATION CONTAINED IN THIS MANAGEMENT INFORMATION CIRCULAR

 

This Management Information Circular dated December 21, 2018 is furnished in connection with the solicitation by or on behalf of the Great Panther Board and management of Great Panther of proxies from Great Panther Shareholders for use at the Great Panther Meeting for the purposes set out in the accompanying Notice of Meeting. No person has been authorized to provide any information or make any representation in connection with the Scheme or any other matters described herein other than those statements and representations contained in this Management Information Circular. Information in this Management Information Circular is given as of the date hereof or, in the case of information in a document incorporated by reference, as of the date of such document, unless the information specifically indicates that another date applies.

 

If you have any questions about the information contained in this Management Information Circular or require assistance in voting your Great Panther Shares, please contact Great Panther’s proxy solicitation agent, Laurel Hill Advisory Group, by telephone at 1 (877) 452-7184 toll-free in North America or at (416) 304-0211 for collect calls outside of North America or by email at assistance@laurelhill.com.

 

Great Panther has supplied all information contained in or incorporated by reference into this Management Information Circular relating to the Great Panther Group, and Beadell has supplied all information contained in this Management Information Circular relating to the Beadell Group. With respect to information relating to Beadell Group, the Great Panther Board has relied exclusively upon Beadell, without independent verification by Great Panther. Although Great Panther does not have any knowledge that would indicate that such information is untrue or incomplete, neither Great Panther nor any of its directors or officers assumes any responsibility for the accuracy or completeness of such information including any of Beadell’s financial statements or technical reports, or for the failure by Beadell to disclose events or information that may affect the completeness or accuracy of such information. For further information regarding Beadell, please refer to Beadell’s filings on the ASX which may be viewed at www.asx.com.au. Except as otherwise expressly indicated herein, the information contained in, or that can be accessed through, the ASX’s website is not intended to be incorporated into this Management Information Circular.

 

Descriptions in this Management Information Circular of the terms of the Scheme Implementation Deed are summaries of the terms of such document and are qualified in their entirety by the full text of the Scheme Implementation Deed. Great Panther Shareholders should refer to the full text of the Scheme Implementation Deed for complete details thereof. The full text of the Scheme Implementation Deed is attached at Appendix H and may be viewed under Great Panther’s profile on SEDAR at www.sedar.com.

 

This Management Information Circular does not constitute the solicitation of an offer to purchase, or the making of an offer to sell, any securities or the solicitation of a proxy by any person in any jurisdiction in which such solicitation or offer is not authorized or in which the person making such solicitation or offer is not qualified to do so or to any person to whom it is unlawful to make such solicitation or offer.

 

Great Panther Shareholders should not construe the contents of this Management Information Circular as legal, tax or financial advice and should consult with their own professional advisors as to the relevant legal, tax, financial or other matters which pertain to their individual circumstances.

 

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Cautionary Statement regarding Forward-Looking Statements

 

This Management Information Circular and the other documents incorporated by reference into this Management Information Circular contain or may contain “forward-looking statements” or “forward-looking information” under applicable securities laws. Forward-looking terms such as “may,” “will,” “could,” ‘should,” “would,” “plan,” “potential,” “intend,” “anticipate,” “project,” “target,” “believe,” “estimate” or “expect” and other words, terms and phrases of similar nature are often intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Forward-looking statements are statements which are not historical fact and involve estimates, expectations, projections, goals, forecasts, assumptions, risks and uncertainties. Such forward-looking statements may include, but are not limited to, statements related to:

 

·the Scheme and the expected timing and satisfaction of conditions precedent to the implementation of the Scheme, including among others, shareholder approvals of both Great Panther and Beadell, regulatory, expert and court approvals and other customary closing conditions;

 

·the impact of the implementation of the Scheme on Great Panther’s earnings, mineral reserves and resources estimated enterprise value and growth rate;

 

·the expected strategic and integration opportunities and other synergies as a result of the implementation of the Scheme and the expected financial and other benefits therefrom;

 

·permitting, development and expansion at Beadell’s Tucano Gold Mine, including the preparation of any feasibility studies, preceding on a basis consistent with current expectations and obtaining of services necessary to operate the Tucano Gold Mine, in amounts and at prices to ensure the Tucano Gold Mine can be operated in an efficient manner;

 

·the future composition of the Great Panther Board;

 

·the future growth opportunities, expected earnings, expected capital expenditures, future financing requirements and estimated future dividends;

 

·that the exchange rate between the Canadian dollar and the Australian dollar will be approximately consistent with current levels set out in this Management Information Circular; and

 

·the expectation that Great Panther and its subsidiaries will remain compliant with its contractual obligations.

 

Forward-looking statements in this Management Information Circular are based on certain key expectations and assumptions made by Great Panther and Beadell. Although the management of each of Great Panther and Beadell believes that the expectations and assumptions on which such forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because Great Panther and Beadell can give no assurance that they will prove to be correct. Additionally, forward-looking statements are subject to various risks and uncertainties which could cause actual results and experience to differ materially from the anticipated results or expectations expressed in this Management Information Circular. Important factors that could cause actual results to differ materially from those indicated by such forward-looking statements include, without limitation, the risks and uncertainties set forth under the section entitled “Risk Factors”, as well as the other information and risks contained in documents incorporated herein by reference. Some of the key risks and uncertainties include statements related to:

 

·the nature of the mining industry as an inherently dangerous business subject to a number of operational risks;

 

·the risks associated with resource exploration and development including failure to discover mineral deposits or discovering mineral deposits that are insufficient in quantity and quality to return a profit from production;

 

·fluctuation in commodity prices;

 

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·financing the development and exploration of Great Panther projects;

 

·environmental hazards that exist on, or adjacent to, the Merged Group’s projects that may result in the Merged Group being liable for losses and may be forced to undertake extensive remedial clean-up action;

 

·the risks and hazards of the mining business may not be fully insurable, or coverage may not be available under the Merged Group’s insurance policies;

 

·the Merged Group will conduct operations in a number of jurisdictions whose laws differ significantly and are subject to change in a manner that could limit or adversely affect exploration, development and operations;

 

·potential cost overruns on any development;

 

·title to mineral properties and ongoing compliance may be disputed and the Merged Group’s interest in its properties may be subject to title defects, aboriginal land claims or claims of third parties;

 

·the Merged Group’s mineral resources and mineral reserves could be lower than estimated;

 

·competition in the mining industry;

 

·risks relating to global economic conditions; and

 

·volatility in the market price of the Great Panther Shares.

 

Additionally, there are also key risks and uncertainties that are inherent in the nature of the Scheme, including:

 

·fluctuation in value of the Scheme Consideration;

 

·the impact of the announcement and pendency of the implementation of the Scheme on Great Panther’s and Beadell’s businesses, results of operations, and financial conditions;

 

·the risks related to Great Panther and Beadell being restricted in their business activities while the Scheme Implementation Deed is in effect;

 

·risks regarding the integration of the two companies and that not all anticipated synergies or cost savings will be fully realized; and

 

·failure to obtain required shareholder, regulatory, stock exchange and other third party approvals in a timely manner or on conditions acceptable to the parties or the failure to satisfy other customary closing conditions or the failure of the Scheme to be implemented for any other reason (or to be implemented in a timely manner).

 

The foregoing lists are not intended to be exhaustive and there may be other key risks that are not listed above that are not presently known to Great Panther or that Great Panther currently deems immaterial. Should one or more of these or other risks or uncertainties materialize, or should any of the underlying assumptions prove incorrect, actual results may vary in material respects from those expressed or implied by the forward-looking statements contained in this Management Information Circular. As a result of the foregoing, readers should not place undue reliance on the forward-looking statements contained in this Management Information Circular.

 

The forward-looking statements contained in this Management Information Circular are expressly qualified in their entirety by the foregoing cautionary statements. All such forward-looking statements are based upon data available as of the date of this Management Information Circular or other specified date and speak only as of such date. Each of Great Panther and Beadell disclaims any intention or obligation to update or revise any forward-looking statements in

 

 5 

 

 

this Management Information Circular as a result of new information or future events, except as may be required under applicable securities law.

 

Cautionary Note Concerning Estimates of Measured and Indicated Resources

 

This Information Circular has been prepared in accordance with the requirements of Canadian provincial securities laws, which differ from the requirements of Australian and U.S. securities laws. Unless otherwise indicated, all reserve and resource estimates included in this Information have been prepared in accordance with NI 43-101 and the CIM Definition Standards adopted by the CIM. NI 43-101 is a rule developed by the Canadian Securities Administrators that establishes standards for all public disclosure an issuer makes of scientific and technical information concerning mineral projects.

 

The technical information in this Management Information Circular is derived from Great Panther’s technical reports and, where related to the Tucano Gold Mine, has also been reviewed by Mr. Robert Brown, P.Eng. Mr. Brown is a Professional Engineer registered with the Association of Professional Engineers and Geoscientists of British Columbia. He was the VP Exploration of Great Panther until December 31, 2016 and is currently a consultant to Great Panther.

 

Great Panther Shareholders are cautioned not to assume that any part of or all mineral deposits in the measured, indicated and inferred resource categories for Great Panther and Beadell will ever be converted into reserves.

 

The following definitions are reproduced from the latest version of the CIM Definition Standards, which were adopted by the CIM on May 10, 2014:

 

 

indicated mineral resource (also referred to as an indicated resource)

That part of a mineral resource for which quantity, grade or quality, densities, shape and physical characteristics are estimated with sufficient confidence to allow the application of modifying factors in sufficient detail to support mine planning and evaluation of the economic viability of the deposit.  Geological evidence is derived from adequately detailed and reliable exploration, sampling and testing and is sufficient to assume geological and grade or quality continuity between points of observation.  An indicated mineral resource has a lower level of confidence than that applying to a measured mineral resource and may only be converted to a probable mineral reserve.
inferred mineral resource (also referred to as an inferred resource) That part of a mineral resource for which quantity and grade or quality are estimated on the basis of limited geological evidence and sampling.  Geological evidence is sufficient to imply but not verify geological and grade or quality continuity.  An Inferred Mineral Resource has a lower level of confidence than that applying to an Indicated Mineral Resource and may not be converted to a Mineral Reserve.  It is reasonably expected that the majority of Inferred Mineral Resources could be upgraded to Indicated Mineral Resources with continued exploration.
measured mineral resource (also referred to as a measured resource) That part of a mineral resource for which quantity, grade or quality, densities, shape, and physical characteristics are estimated with confidence sufficient to allow the application of modifying factors to support detailed mine planning and final evaluation of the economic viability of the deposit.  Geological evidence is derived from detailed and reliable exploration, sampling and testing and is sufficient to confirm geological and grade or quality continuity between points of observation.  A measured mineral resource has a higher level of confidence than that applying to either an Indicated Mineral Resource or an Inferred Mineral Resource.  It may be converted to a proven mineral reserve or to a probable mineral reserve.
mineral reserve The economically mineable part of a measured and/or indicated mineral resource.  It includes diluting materials and allowances for losses, which may occur when the material is mined or extracted and is defined by studies at Pre-Feasibility or Feasibility level as appropriate that include application of modifying factors.  Such studies

 

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  demonstrate that, at the time of reporting, extraction could reasonably be justified.  The reference point at which Mineral Reserves are defined, usually the point where the ore is delivered to the processing plant, must be stated.  It is important that, in all situations where the reference point is different, such as for a saleable product, a clarifying statement is included to ensure that the reader is fully informed as to what is being reported.  The public disclosure of a mineral reserve must be demonstrated by a pre-feasibility study or feasibility study.
mineral resource A concentration or occurrence of solid material of economic interest in or on the Earth’s crust in such form, grade or quality and quantity that there are reasonable prospects for eventual economic extraction.  The location, quantity, grade or quality, continuity and other geological characteristics of a Mineral Resource are known, estimated or interpreted from specific geological evidence and knowledge, including sampling.
probable mineral reserve The economically mineable part of an indicated, and in some circumstances, a measured mineral resource.  The confidence in the modifying factors applying to a probable mineral reserve is lower than that applying to a proven mineral reserve.
proven mineral reserve The economically mineable part of a measured mineral resource.  A proven mineral reserve implies a high degree of confidence in the modifying factors.

 

Great Panther Mineral Resource Estimates

 

Full NI 43-101 disclosure of Great Panther’s mineral resource estimates can be found in Great Panther’s Annual Information Form for the year ended December 31, 2017, available on SEDAR, and incorporated herein by reference.

 

The mineral resource estimates for Great Panther’s Guanajuato Mine Complex in this Management Information Circular are based on the technical report entitled “NI 43-101 Mineral Resource Update Technical Report on the Guanajuato Mine Complex, Guanajuato Mine and San Ignacio Mine, Guanajuato State, Mexico”, dated February 28, 2018, (the “GMC Technical Report”), prepared by Matthew C. Wunder, P.Geo., a “Qualified Person” under NI 43-101. The San Ignacio and Guanajuato mineral resource estimates are derived from the GMC Technical Report and use an effective date of August 31, 2017. The GMC Technical Report used a metal price outlook of US$17.00/oz silver and US$1,300/oz gold. Silver equivalent calculations used the same metal pricing.

 

The mineral resource estimates for Great Panther’s Topia Mine in this Management Information Circular are based on the technical report entitled “NI 43-101 Report on the Topia Mine Mineral Resource Estimates, Topia Mine Mineral Resource Estimation, as of November 30th, 2014” prepared by Robert F. Brown, P.Eng., a “Qualified Person” under NI 43-101, dated July 6, 2015 (in this section, the “Topia Technical Report”). The Topia Technical Report uses an effective date of November 30, 2014. The Topia Technical Report used assumed metals prices of US$1,200 per ounce gold, US$17.00 per ounce silver, US$0.90 per pound lead, and US$0.95 per pound zinc. Silver equivalent calculations used the same metal pricing. Silver equivalent calculations for El Horcón include lead content but not zinc, as the zinc would not be recovered in the Guanajuato plant. Robert F. Brown, P. Eng. is designated as the Qualified Person under NI 43-101.

 

The resource estimates for Great Panther’s Coricancha project in this Management Information Circular are based on the technical report entitled “Resource Update Technical Report on the Coricancha Mine Complex, Huarochirí Province, Lima Region, Perú”, dated February 2, 2018 (the “Coricancha Technical Report”). The mineral resource update was submitted by Golder Associates Inc. as Report Assembler of the work prepared by or under the supervision of the following “Qualified Persons” named as authors: Ronald Turner, MAusIMM CP(Geo); Daniel Saint Don, P.Eng.; and Jeffrey Woods, P.E. The effective date of the Coricancha Technical Report is December 20, 2017.

 

The full texts of each of the GMC Technical Report, the Topia Technical Report and the Coricancha Technical Report are available for review on SEDAR located at www.sedar.com.

 

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Beadell Reserve and Resource Estimates

 

Beadell’s reserve and resource estimates for the Tucano Gold Project as at June 30, 2017 have been derived from the NI 43-101 compliant Tucano Technical Report and are presented in accordance with CIM Definition Standards. These estimates are summarized in Appendix E.

 

Beadell’s reserve and resource estimates for the Tucano Gold Project as at June 30, 2018 have been prepared in accordance with the 2012 JORC Code under the rules of the ASX. CIM definitions of the terms “mineral reserve”, “proven mineral reserve”, “probable mineral reserve”, “mineral resource”, “measured mineral resource”, “indicated mineral resource” and “inferred mineral resource”, are substantially similar to the 2012 JORC Code corresponding definitions of the terms “ore reserve”, “proved ore reserve”, “probable ore reserve”, “mineral resource”, “measured mineral resource”, “indicated mineral resource” and “inferred mineral resource”, respectively. Estimates of mineral resources and mineral reserves prepared in accordance with the 2012 JORC Code would not be materially different if prepared in accordance with the CIM Definition Standards. These estimates are summarized in Appendix E.

 

United States Investors

 

This Information Circular includes mineral reserve estimates for Great Panther and Beadell that have been calculated in accordance with NI 43-101 and CIM Standards, as required by Canadian securities regulatory authorities. The terms “mineral reserve”, “proven mineral reserve” and “probable mineral reserve” are Canadian mining terms as defined in accordance with NI 43-101 and CIM standards. These definitions differ from the definitions adopted by the SEC in the SEC’s Industry Guide 7.

 

In addition, this Information Circular uses the terms “measured mineral resources”, “indicated mineral resources” and “inferred mineral resources” to comply with the reporting standards in Canada. We advise investors that while those terms are recognized and required by Canadian regulations, these terms are not defined terms under SEC Industry Guide 7, are not recognized by the SEC and are normally not permitted to be used in reports and registration statements filed with the SEC. Investors are cautioned not to assume that any part or all of the mineral deposits in these categories for either Great Panther or Beadell will ever be converted into either NI 43-101 or SEC defined mineral reserves. These terms have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility.

 

Further, inferred resources have a great amount of uncertainty as to their existence and as to whether they can be mined legally or economically. Therefore, investors are also cautioned not to assume that all or any part of the inferred resources exist. In accordance with Canadian rules, estimates of “inferred mineral resources” cannot form the basis of feasibility or other economic studies, except in rare cases.

 

It cannot be assumed that all or any part of measured mineral resources, indicated mineral resources, or inferred mineral resources will ever be upgraded to a higher category. Investors are cautioned not to assume that any part of the reported measured mineral resources, indicated mineral resources, or inferred mineral resources in this Management Information Circular is economically or legally mineable.

 

Disclosure of “contained ounces” in a resource is permitted disclosure under Canadian regulations; however, the SEC normally only permits issuers to report mineralization that does not constitute “reserves” by SEC Industry Guide 7 standards as in place tonnage and grade without reference to unit measures.

 

For the above reasons, information contained in this Management Information Circular containing descriptions of Great Panther’s and Beadell’s mineral deposits may not be comparable to similar information made public by U.S. companies subject to the reporting and disclosure requirements under the United States federal securities laws and the rules and regulations thereunder.

 

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Abbreviations

 

The following abbreviations are used in this Management Information Circular:

 

Abbreviation

 

Meaning

 

Abbreviation

 

Meaning

Ag   silver   Moz   million ounces
AISC   all in sustaining cost   mRL   metres reduced level
Au   gold   Mt   million tonnes
CIL   carbon-in-leach   MVA   megavolt-ampere
COG   cut off grade   MW   mega watts
g/t   grams per tonne   RC   reverse circulation
koz   thousand ounces   SAG   semi-autogenous grinding
km   kilometre   t   tonne
km2   square kilometres   um   micrometre
kt   thousand tonnes        
kV   thousand volts        
lb   pound        
m   metre        
mbs   metres below surface        

 

Currency

 

All references in this Management Information Circular to “C$” are to Canadian dollars, to “US$” are to U.S. dollars, “A$” are to Australian dollars and “B$” are to Brazilian Reals.

 

Currency Exchange Rate Data

 

U.S. Dollar to Australian Dollar

 

The following table shows, for the periods and dates indicated, certain information regarding the U.S. dollar-to-Australian dollar exchange rate. The information is based on the United States Federal Reserve closing U.S. dollar-to-Australian dollar exchange rate. Such exchange rate on December 14, 2018 was US$1 = A$1.3935.

 

  Average(1)   Low   High
Year ended December 31, (A$ per US$1.00)          
2017 $1.3037   $1.2390   $1.3829
2016 $1.3433   $1.2793   $1.4588
2015 $1.3295   $1.2177   $1.4457

 

      Low   High
Month ended, (A$ per US$1.00) (1)        
September 2018   $1.3394   $1.4071
June 2018   $1.3026   $1.3596

 

 

Notes:

(1)The average of the daily exchange rates during the relevant period.

 

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Canadian Dollar to U.S. Dollar

 

The following table shows, for the periods and dates indicated, certain information regarding the Canadian dollar-to-U.S. dollar exchange rate. The information is based on the Bank of Canada closing Canadian dollar-to-U.S. dollar exchange rate. Such exchange rate on December 20, 2018 was C$1 = US$0.7410.

 

  Average(1)   Low   High
Year ended December 31, (US$ per C$1.00)          
2017 $0.7713   $0.7277   $0.8246
2016 $0.7551   $0.6853   $0.7983
2015 $0.7830   $0.7149   $0.8485
           
      Low   High
Month ended, (US$ per C$1.00)(1)        
September 2018   $0.7572   $0.7747
June 2018   $0.7504   $0.7735

 

 

Notes:

(1)The average of the daily exchange rates during the relevant period.

 

U.S. Dollar to Brazilian Real

 

The following table shows, for the periods and dates indicated, certain information regarding the U.S. dollar-to-Brazilian Real exchange rate. The information is based on the United States Federal Reserve closing U.S. dollar-to-Brazilian Real exchange rate. Such exchange rate on December 14, 2018 was US$1 = B$3.8970.

 

  Average(1)   Low   High
Year ended December 31, (B$ per US$1.00)          
2017 $3.1910   $3.0557   $3.3823
2016 $3.4839   $3.1142   $4.1299
2015 $3.3360   $2.5644   $4.1638

 

      Low   High
Month ended, (B$ per US$1.00) (1)        
September 2018   $3.7075   $4.2016
June 2018   $3.6745   $3.9294

 

 

Notes:

(1)The average of the daily exchange rates during the relevant period.

 

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QUESTIONS AND ANSWERS ABOUT THE SCHEME AND THE GREAT PANTHER MEETING

 

The following questions and answers are intended to briefly address some commonly asked questions regarding the Scheme and matters to be addressed at the Great Panther Meeting. These questions and answers may not address all questions that may be important to you. To better understand these matters, and for a description of the legal terms governing the Scheme, you should carefully read this entire Management Information Circular, including the attached appendices and schedules, as well as the documents that have been incorporated by reference into this Management Information Circular.

 

Q:Why am I receiving this Notice of Special Meeting and Management Information Circular?

 

You are receiving this Notice of Special Meeting and Management Information Circular in connection with the Great Panther Meeting to be held on February 11, 2019 and the solicitation by or on behalf of the Great Panther Board and management of Great Panther of proxies of Great Panther Shareholders to vote for the Great Panther Scheme Resolution and the Name Change Resolution. Additionally, Laurel Hill Advisory Services has been retained to assist with the solicitation of proxies, among other things.

 

Q:When and where will the Great Panther Meeting be held?

 

The Great Panther Meeting will be held at 9:00 a.m. (Vancouver time) on February 11, 2019 in Terrace Room B located at the Terminal City Club, 837 West Hastings Street, Vancouver, British Columbia.

 

Q:What is the Scheme?

 

On September 23, 2018, Great Panther entered into the Scheme Implementation Deed with Beadell. The Scheme Implementation Deed provides for, among other things, the acquisition of all of the Beadell Shares by Great Panther and the issue of the Great Panther Shares to Beadell Shareholders as consideration for such acquisition.

 

Q:Why is Great Panther Changing its Name?

 

The Transaction will create a new emerging and growth-oriented precious metals producer focused on the Americas with strong geographic diversity across three leading mining jurisdictions, and a diverse asset portfolio including three producing mines, an advanced stage project, and significant exploration potential. Management of Great Panther, together with the Great Panther Board, are of the view that a change of Great Panther’s name to “Great Panther Mining Limited” more accurately reflects the business objectives, asset base and operations of Great Panther after giving effect to the Scheme, particularly as the Merged Group will change from being a primary silver producer to having gold as its primary metal production by value, followed by silver. Precious metal production for the Merged Group is expected to remain in excess of 90% of production value, based on September 30, 2018 production numbers for Great Panther and Beadell.

 

Q:Why am I being asked to approve the Great Panther Scheme Resolution?

 

The TSX requires an acquiring company listed on the TSX to obtain shareholder approval if the number of shares to be issued as consideration exceeds 25% of its outstanding shares of such company. The Great Panther Shares to be issued by Great Panther to the Beadell Shareholders pursuant to the Scheme Implementation Deed will represent approximately 38% of Great Panther’s outstanding Great Panther Shares after giving effect to the acquisition of Beadell, on an undiluted basis. If approval of the Great Panther Scheme Resolution by the Great Panther Shareholders is not obtained, Great Panther will not be able to complete the Scheme.

 

Q:Who is Beadell?

 

Beadell is an ASX-listed gold mining company. Beadell owns and operates the Tucano Gold Mine, located in Amapá State, northern Brazil. Tucano has approximately 1.26 million ounces proven and probable gold reserves, approximately 2.05 million ounces of measured and indicated gold resources and 1.16 million ounces of inferred gold, with over 2,500 km2 of highly prospective contiguous gold exploration tenements. Tucano’s reserves and resources

 

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are presented as at June 30, 2018 in accordance with the 2012 JORC Code and are detailed in Appendix E – “Information Concerning Beadell Resources Limited”.

 

Q:Does the Great Panther Board recommend that I vote FOR the Great Panther Scheme Resolution and the Name Change Resolution?

 

Yes. The Great Panther Board unanimously recommends that Great Panther Shareholders vote FOR the Great Panther Scheme Resolution and the Name Change Resolution.

 

Q:How will Great Panther’s directors and executive officers vote?

 

Pursuant to Great Panther Support Agreements entered into with Beadell on or about September 23, 2018, all Great Panther Directors and certain executive officers who are Great Panther Shareholders have agreed to and will vote FOR the Great Panther Scheme Resolution.

 

As at the date hereof, Great Panther directors and executive officers had the right to vote approximately 1,488,296 Great Panther Shares, representing approximately 0.88% of the Great Panther Shares then outstanding and entitled to vote at the Great Panther Meeting.

 

In addition, it is expected that all Great Panther directors and executive officers will vote in favour of the Name Change Resolution.

 

Q:What are Great Panther’s reasons for the Scheme?

 

At a duly called meeting of the Great Panther Board held on September 22, 2018, after due consideration and consultation with the Great Panther Special Committee, Great Panther’s management and outside legal and financial advisors, the Great Panther Board unanimously approved the Scheme Implementation Deed and the transactions contemplated thereby and authorized the issuance of the Great Panther Shares pursuant to the Scheme Implementation Deed.

 

A detailed description of the factors that the Great Panther Board and the Great Panther Special Committee considered is included in the section entitled “The Scheme – Great Panther’s Reasons for the Scheme”.

 

Q:What will Beadell Shareholders receive if the Scheme is implemented?

 

Under the terms of the Scheme Implementation Deed, if the Scheme is implemented, each Beadell Share outstanding immediately prior to the implementation will automatically be acquired by Great Panther and each Beadell Shareholder (other than an Ineligible Foreign Shareholder or Electing Small Shareholder) will receive 0.0619 of a Great Panther Share. The Exchange Ratio is fixed and will not be adjusted to reflect changes in the price of the Great Panther Shares, Beadell Shares or the Canadian dollar to Australian dollar exchange rate prior to the implementation of the Scheme.

 

Ineligible Foreign Shareholders will not be entitled to receive Great Panther Shares in connection with the Scheme. Any Great Panther Shares to which an Ineligible Foreign Shareholder would otherwise be entitled to under the Scheme will be allotted to a Sale Agent, who will sell the Great Panther Shares on their behalf and at their risk as soon as reasonably practicable following the implementation of the Scheme. The Ineligible Foreign Shareholder will receive such proportion of the proceeds (after deducting any applicable brokerage, stamp duty and other taxes and charges, and selling costs) as the number of Great Panther Shares which would have been issued to them (if they were eligible to receive the Great Panther Shares) as a portion of all the Great Panther Shares which would have been issued to all Ineligible Foreign Shareholders (if they were eligible to receive the Great Panther Shares), in full satisfaction of their rights to the Scheme Consideration. In addition, Beadell Shareholders holding less than 10,000 Beadell Shares will be entitled to elect for all, but not some, of their Beadell Shares to be dealt with in the same manner as the Beadell Shares held by Ineligible Foreign Shareholders.

 

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Q:How many Great Panther Shares will be issued pursuant to the Scheme Implementation Deed?

 

Based on the estimated number of Beadell Shares expected to be outstanding at the implementation of the Scheme, Great Panther expects to issue up to 141,136,911 Great Panther Shares in connection with the Scheme (representing up to 83.4% of the issued and outstanding Great Panther Shares), comprised of:

 

(a)103,594,861 Great Panther Shares (approximately 61.2% of the number of the Great Panther Shares outstanding) as consideration for the issued and outstanding Beadell Shares;

 

(b)up to 1,720,820 Great Panther Shares as consideration for Beadell Shares issued upon the exercise of outstanding Beadell Options prior to the completion of the Scheme;

 

(c)272,526 Great Panther Shares as consideration for Beadell Shares to be issued in exchange for the Beadell Performance Rights prior to the completion of the Scheme;

 

(d)up to 9,749,727 Great Panther Shares issuable on the exercise of the Great Panther Replacement Warrants to be issued in exchange for outstanding Beadell Warrants;

 

(e)up to 18,203,885 Great Panther Shares issuable in connection with certain indebtedness owing to MACA2; and

 

(f)up to 7,595,092 Great Panther Shares issuable in connection with the Beadell Debentures that are being assumed by Great Panther on completion of the Scheme.

 

Based on the estimated number of Great Panther Shares that are expected to be outstanding upon the implementation of the Scheme, Great Panther Shareholders will own approximately 62% of the outstanding Great Panther Shares after implementation of the Scheme (on an undiluted basis).

 

In the event Great Panther agrees to increase the Scheme Consideration, for example if a competing offer arises, the TSX will generally not require further approvals from Great Panther Shareholders for the issuance of up to an additional 35,284,228 Great Panther Shares, such number being 25% of the number of Great Panther Shares being approved for issuance by Great Panther Shareholders in connection with the Scheme at the Great Panther Meeting.

 

Q:Following the implementation of the Scheme, what percentage of the outstanding shares of Great Panther will Great Panther Shareholders own?

 

As of December 20, 2018, Great Panther expects that, immediately following implementation of the Scheme, current Great Panther Shareholders will hold approximately 62% of the then outstanding Great Panther Shares and former Beadell Shareholders will hold approximately 38% of the then outstanding Great Panther Shares on an undiluted basis (without giving effect to the exercise or exchange of any Beadell Options or Beadell Performance Rights prior to the implementation of the Scheme).

 

Q:Is the obligation of each of Great Panther and Beadell to complete the Scheme subject to any conditions?

 

The Scheme will not become effective until and unless all of the conditions precedent set out in the Scheme Implementation Deed are satisfied or waived (if applicable), which include but are not limited to the following:

 

§no Material Adverse Change shall have occurred of either party as at 8:00 a.m. on the Second Court Date;

 

§no Beadell Regulated Event and no Great Panther Regulated Event shall have occurred as at 8:00 a.m. on the Second Court Date;

 

 

2 Calculated for TSX approval purposes only based on (i) conversion by MACA of the maximum amount, (ii) current A$/C$ exchange rates, and (iii) a theoretical minimum conversion price based on 50% of the current trading price of Great Panther Shares on the TSX.

 

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§no Beadell Prescribed Occurrence and no Great Panther Prescribed Occurrence shall have occurred as at 8:00 a.m. on the Second Court Date;

 

§the representations and warranties of each of Beadell and Great Panther shall be true and correct in all material respects as at 8:00 a.m. on the Second Court Date;

 

§the Independent Expert shall have issued the Independent Expert’s Report which concludes that the Scheme is in the best interests of Beadell Shareholders before the time when the Beadell Scheme Book is registered by ASIC and the Independent Expert does not change that conclusion or withdraw its report prior to 8:00 a.m. on the Second Court Date;

 

§Great Panther having received all necessary approvals from the TSX for the issuance of the Great Panther Shares to Beadell Shareholders, and the conditional listing of such Great Panther Shares on the TSX subject to the filing of required documentation;

 

§Beadell delivers a legal opinion of its Brazilian counsel to Great Panther respecting the Beadell mineral rights;

 

§the MACA Agreement remains in full force and effect, and there is no breach or threatened breach of the MACA Agreement, at all times between the date of the Scheme Implementation Deed and 8:00 a.m. on the Second Court Date;

 

§on or before 8:00 a.m. on the Second Court Date, Beadell shall have obtained consents and waivers of the lenders under the MACA Agreement, the Facility Agreement, and the ACCs for the transaction contemplated by the Scheme Implementation Deed, as further set out in the Scheme Implementation Deed;

 

§on or before 8:00 a.m. on the Second Court Date, the holders of the Beadell Convertible Debentures shall have agreed in writing to either: (a) accept the offer required to be made by Beadell under the Beadell Debenture Indenture to purchase those debentures upon the Effective Date; or (b) waive the obligation under the Beadell Debenture Indenture to make an offer to purchase those debentures upon the Effective Date and consent to entering into of a supplemental indenture in respect of the Beadell Convertible Debentures;

 

§Beadell has entered into binding agreements with the holders of 100% of the Beadell Warrants to accept the Warrant Consideration in exchange for their outstanding Beadell Warrants on the Scheme becoming Effective, or, if Beadell proposes the Warrant Scheme, such Warrant Scheme receives the required approval of the holders of Warrants and the Court; and

 

§on or before 8:00 a.m. on the Second Court Date, the Beadell Board has made a determination that all Beadell Convertible Securities will have been vested and exercised or terminated as provided in the Scheme Implementation Deed.

 

In addition, there are several Conditions Precedent that cannot be waived by either Beadell or Great Panther. These Conditions Precedent relate to: (i) Court approval of the Scheme; (ii) Beadell Shareholder approval of the Scheme; (iii) Great Panther Shareholders approval of the Great Panther Scheme Resolution; (iv) before 8:00 a.m. on the Second Court Date, the ASIC has issued or provided such consents, waivers or approvals or done such other things as are reasonably necessary to implement the Scheme; and (v) FIRB approval (or non-objection) of the transaction.

 

Great Panther and Beadell have been cooperating to satisfy the Conditions Precedent referred to above. Details of the status of certain of these conditions precedent are disclosed elsewhere in this Management Information Circular.

 

Q:Are there risks associated with the Scheme?

 

Yes. Before making a decision on whether and how to vote, you are urged to carefully read the section entitled “Risk Factors”, as well as the risk factors set out in Appendices D and E.

 

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Q:When will the Scheme be implemented?

 

Great Panther and Beadell are working to complete the Scheme as quickly as possible. In addition to regulatory, shareholder, court and third-party approvals, other important conditions precedent to the completion of the Scheme exist. Assuming the satisfaction or waiver of all necessary conditions precedent, Great Panther expects that the Scheme will be implemented in the first quarter of 2019. The Scheme Implementation Deed contains an End Date of March 23, 2019 for the completion of the Scheme. For a discussion of the Conditions Precedent to the completion of the Scheme, see the sections entitled “The Scheme – Third Party Required for the Scheme” and “The Scheme Implementation Deed – Conditions Precedent.”

 

Q:What happens if the Scheme is not completed?

 

If the Scheme is not completed for any reason, Beadell Shareholders will not receive any consideration for their Beadell Shares, and Great Panther and Beadell will each remain public companies independent of one another with the Great Panther Shares continuing to be traded on the TSX and the NYSE (American).

 

Q:Who is entitled to vote at the Great Panther Meeting?

 

Only Great Panther Shareholders of record at the close of business on January 2, 2019, which is the Great Panther Record Date for the Great Panther Meeting, are entitled to notice of the Great Panther Meeting and to vote thereat or at any adjournment or postponement thereof. As of the date hereof, 169,165,007 Great Panther Shares were issued and outstanding. Each issued and outstanding Great Panther Share on the Great Panther Record Date is entitled to one vote on the Great Panther Scheme Resolution and the Name Change Resolution to be considered and voted on at the Great Panther Meeting.

 

Q:What is the quorum for the Great Panther Meeting?

 

A quorum for the transaction of business at the Great Panther Meeting is at least two persons who are, or represent by proxy, Great Panther Shareholders entitled to be voted at the Great Panther Meeting. If you submit a properly executed form of proxy or vote by telephone or the Internet, you will be considered part of the quorum.

 

Q:What vote is required to approve the Great Panther Scheme Resolution?

 

Pursuant to the policies of the TSX and applicable corporate law, approval of the Great Panther Scheme Resolution and the Name Change Resolution requires the affirmative vote of greater than 50% of the votes cast in respect of such resolution by Great Panther Shareholders present in person or represented by proxy at the Great Panther Meeting.

 

For further information see the section entitled “General Information for the Meeting – Required Vote”.

 

Q:How do I vote my Great Panther Shares?

 

Registered Great Panther Shareholders (whose Great Panther Shares are registered in their names) may vote their Great Panther Shares in the following ways:

 

§Telephone: using a touch-tone telephone by calling 1 (866) 732-8683 (toll-free in North America) or (312) 588-4290 (outside of North America).

 

§Internet: by the Internet at www.investorvote.com.

 

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§Mail or Fax: by completing the enclosed form of proxy and signing, dating and returning the form of proxy using the enclosed return envelope or otherwise sending it to:

 

Computershare Investor Services Inc.

8th Floor, 100 University Avenue,

Toronto, Ontario, M5J 2Y1

Attention: Proxy Department

 

Fax: 1 (866) 249-7775 (toll-free in North America) or (416) 263-9524 (outside of North America).

 

§In Person: attending the Great Panther Meeting and voting in person.

 

If you are a Beneficial Great Panther Shareholder and your Great Panther Shares are not registered in your name, but are held in the name of a nominee (usually a broker, bank, trust company or other intermediary), you should have received a package of materials from your nominee and you should follow the instructions therein. Beneficial Great Panther Shareholders who wish to attend the Great Panther Meeting and indirectly vote their Great Panther Shares may only do so as proxyholder for the Registered Great Panther Shareholder.

 

Q:What is a proxy?

 

A proxy is your legal designation of another person, referred to as a “proxyholder,” to vote your Great Panther Shares. The document used to designate a proxyholder to vote your Great Panther Shares is called a “form of proxy”.

 

Q:Can I appoint someone other than the person(s) designated by management of Great Panther to vote my Great Panther Shares?

 

Yes. A Great Panther Shareholder who wishes to appoint some other person (who is not required to be a Great Panther Shareholder) as his, her or its proxyholder at the Great Panther Meeting may do so either by inserting such person’s name in the blank space provided in the form of proxy and deleting the names printed thereon or by completing a proper proxy. Such Great Panther Shareholder should notify the nominee of his or her appointment and instruct the nominee on how the Great Panther Shares are to be voted.

 

Q:If I am not going to attend the Great Panther Meeting, should I return my form of proxy or otherwise vote my Great Panther Shares?

 

Yes. Completing, signing, dating and returning the form of proxy by mail or fax, submitting a proxy by calling the toll-free number shown on the form of proxy or submitting a proxy by visiting the website shown on the form of proxy ensures that your shares will be represented and voted at the Great Panther Meeting, even if you otherwise do not attend.

 

Q:Can I change or revoke my vote?

 

Yes. If you are a Registered Great Panther Shareholder, you can change or revoke a previously delivered vote by:

 

§voting again on the Internet or by telephone, or completing a new form of proxy that is dated later than the form of proxy previously submitted and depositing it with Computershare Investor Services Inc. in accordance with the instructions set out above no later than 9:00 a.m. (Vancouver time) on February 7, 2019, or, if the Great Panther Meeting is adjourned or postponed, no later than 48 hours (excluding weekends and statutory holidays in the province of British Columbia) before the Great Panther Meeting is reconvened;

 

§depositing a written statement with Computershare Investor Services Inc. (executed by you or a person authorized to sign on your behalf) in accordance with the instructions set out above no later than 9:00 a.m. (Vancouver time) on February 7, 2019, or, if the Great Panther Meeting is adjourned or postponed, no later than 24 hours (excluding weekends and statutory holidays in British Columbia) before the Great Panther Meeting is reconvened;

 

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§depositing a written statement with the scrutineers of the Great Panther Meeting, addressed to the chair of the Great Panther Meeting, prior to the commencement of the Great Panther Meeting on the day of the Great Panther Meeting, or if the meeting is adjourned postponed, prior to the commencement of the reconvened or postponed meeting on the day of such reconvened or postponed meeting; or

 

§in any other manner permitted by law.

 

If your Great Panther Shares are owned by a corporation, your notice must be executed under corporate seal or by a duly authorized officer or attorney of the corporation.

 

If you are a Beneficial Great Panther Shareholder, contact your nominee for instructions on how to change or revoke your vote.

 

Q:What do I need to do now in order to vote on the Great Panther Scheme Resolution and the Name Change Resolution?

 

You should carefully read and consider the information contained in this Management Information Circular.

 

Registered Great Panther Shareholders should then complete, sign and date the enclosed form of proxy and return it by: (a) mail in (i) the enclosed return envelope, or (ii) an envelope addressed to Computershare Investor Services Inc., 8th Floor, 100 University Avenue, Toronto, Ontario, M5J 2Y1, Attention: Proxy Department; or (b) fax at 1 (866) 249-7775 (toll-free in North America) or (416) 263-9524 (outside of North America), so that your Great Panther Shares may be voted at the Great Panther Meeting. To vote by Internet, please access www.investorvote.com and follow the online voting instructions. To vote using the telephone voting services, call 1 (866) 732-8683 (toll-free in North America) or (312) 588-4290 (outside of North America). If you are unable to attend the Great Panther Meeting in person please complete and deliver either: (a) the enclosed form of proxy prior to 9:00 a.m. (Vancouver time) on February 7, 2019, in the case of Registered Great Panther Shareholders; or (b) the enclosed voting instruction form in accordance with the instructions provided by your nominee, in the case of Beneficial Great Panther Shareholders, to ensure your representation at the Great Panther Meeting.

 

Beneficial Great Panther Shareholders should follow the instructions provided by your nominee to ensure your vote is counted at the Great Panther Meeting.

 

Q:Who can answer my questions?

 

If you have any questions about the information contained in this Notice of Meeting and the accompanying Management Information Circular or if you require assistance with voting your Great Panther Shares, please contact Great Panther’s proxy solicitation agent, Laurel Hill Advisory Services, by telephone at 1 (877) 452-7184 toll-free in North America or at (416) 304-0211 for collect calls outside of North America or by email at assistance@laurelhill.com.

 

Q:Where can I find more information about Great Panther, Beadell and the Transaction.

 

You can find out more information about the transactions contemplated by the Scheme Implementation Deed by reading this Management Information Circular, including the documents incorporated herein by reference, and by reading the full text of the Scheme Implementation Deed, a copy of which is appended hereto as Appendix H.

 

Additional information about Great Panther can be found under its profile on SEDAR at www.sedar.com or its website at www.greatpanther.com. The information contained in, or that can be accessed through, Great Panther’s website is not intended to be incorporated by reference into this Management Information Circular unless expressly provided for herein. Additional information about Beadell can be found on the website of the ASX at www.asx.com.au or its website at www.beadellresources.com.au. The information contained in, or that can be accessed through, the website of the ASX or Beadell’s website is not intended to be incorporated into this Management Information Circular. In addition, Beadell is required to lodge various documents with ASIC. Copies of documents lodged with ASIC by Beadell may be obtained from an ASIC office.

 

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SUMMARY

 

The following is a summary of certain information contained elsewhere in this Management Information Circular. This summary is qualified in its entirety by the more detailed information appearing elsewhere in this Management Information Circular, including the appendices and schedules hereto and the documents incorporated by reference herein. It is recommended that Great Panther Shareholders read this Management Information Circular and consult with their own legal, tax, financial and other professional advisors with respect to the matters to be acted on at the Great Panther Meeting. Capitalized terms used but not otherwise defined in this summary have the meanings set forth in Appendix A.

 

The Great Panther Meeting

 

Time, Date and Place of Meeting

 

The Great Panther Meeting will be held in Terrace Room B located at the Terminal City Club, 837 West Hastings Street, Vancouver, British Columbia, at 9:00 a.m. (Vancouver time) on February 11, 2019.

 

Great Panther Record Date and Great Panther Shareholders Entitled to Vote

 

The Great Panther Board has fixed January 2, 2019 as the Great Panther Record Date for purposes of the entitlement to notice of and to vote at the Great Panther Meeting. Great Panther Shareholders of record at the close of business on the Great Panther Record Date are entitled to notice of the Great Panther Meeting and to vote thereat or at any adjournment or postponement thereof. To the extent a Great Panther Shareholder transfers the ownership of any of its Great Panther Shares after the Record Date and the transferee of those Great Panther Shares establishes that it owns those shares and requests at least 10 days before the Great Panther Meeting, to be included in the list of Great Panther Shareholders eligible to vote at such meeting, such transferee will be entitled to vote such shares at such meeting.

 

As at the date hereof, there were issued and outstanding a total of 169,165,007 Great Panther Shares. Each issued and outstanding Great Panther Share on the Great Panther Record Date is entitled to one vote on each of the resolutions to be considered and voted on at the Great Panther Meeting. See the section entitled “General Information for the Meeting – Record Date and Shareholders Entitled to Vote”.

 

Quorum

 

A quorum for the transaction of business at the Great Panther Meeting is at least two persons who are, or represent by proxy, Great Panther Shareholders entitled to be voted at the Great Panther Meeting. If you submit a properly executed form of proxy or vote by telephone or the Internet, you will be considered part of the quorum. See the section entitled “General Information for the Meeting – Quorum”.

 

Purpose of the Meeting

 

The Great Panther Meeting is being held for the following purposes:

 

1.to consider and pass, with or without variation, an ordinary resolution, the full text of which is set out in Appendix B of this Management Information Circular, authorizing and approving the issuance of the Great Panther Shares as consideration for the acquisition of Beadell and pursuant to the terms of the Scheme Implementation Deed;

 

2.to consider, and pass, with or without variation, an ordinary resolution, the full text of which is set out in Appendix C of the accompanying Management Information Circular, authorizing and approving the change of Great Panther’s name to “Great Panther Mining Limited” or such other name as may be determined and acceptable to the Great Panther Board and the applicable regulatory authorities, as more fully described in this Management Information Circular; and

 

3.to transact such other business that may properly come before the Great Panther Meeting or any adjournment or postponement thereof.

 

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Particulars of the subject matter of the Great Panther Scheme Resolution and the Name Change Resolution are described in this Management Information Circular.

 

Required Vote

 

The Scheme cannot be completed without Great Panther Shareholders approving the Great Panther Scheme Resolution in accordance with the policies of the TSX. Pursuant to the policies of the TSX, approval of the Great Panther Scheme Resolution requires the affirmative vote of greater than 50% of the votes cast in respect of such resolution by Great Panther Shareholders present in person or represented by proxy at the Great Panther Meeting.

 

In addition, pursuant to applicable corporate law, approval of the Name Change Resolution requires the affirmative vote of greater than 50% of the votes cast in respect of such resolution by Great Panther Shareholders present in person or represented by proxy at the Great Panther Meeting.

 

If, in the case of Registered Great Panther Shareholders, you submit a signed and dated blank form of proxy or, in the case of Beneficial Great Panther Shareholders, you submit a signed and dated blank voting instruction form, your Great Panther Shares will be voted for the Great Panther Scheme Resolution. If, in the case of Registered Great Panther Shareholders, you fail to submit a form of proxy or, in the case of Beneficial Great Panther Shareholders, you fail to submit voting instructions to your nominee, your Great Panther Shares will not be counted as present for purposes of a quorum, and it will have no effect on the Great Panther Scheme Resolution, assuming that a quorum is otherwise present at the Great Panther Meeting. For more information, see the section entitled “General Information for the Meeting – Required Vote”.

 

Voting by Directors and Executive Officers

 

As of the date hereof, Great Panther directors and executive officers had the right to vote approximately 1,488,296 Great Panther Shares, representing approximately 0.88% of the Great Panther Shares then outstanding and entitled to vote at the Great Panther Meeting. All of the Great Panther Directors and certain executive officers of Great Panther have entered into Great Panther Support Agreements and will vote for the Great Panther Scheme Resolution. In addition, it is anticipated that all directors and executive officers of Great Panther will vote in favour of the Name Change Resolution.

 

The Beadell Meeting and Beadell Shareholder Approval

 

The Beadell Meeting will be held at 10:00 a.m. (Perth time or WST), on February 12, 2019, at The Celtic Club, 48 Ord Street, West Perth, Western Australia. At the Beadell Meeting, Beadell Shareholders will be asked to consider and vote to approve the Scheme, pursuant to the Scheme Implementation Deed.

 

Approval of the Beadell Scheme Resolution requires the affirmative vote of a majority in number (more than 50%) of Beadell Shareholders (other than the Excluded Shareholders) who vote on the Beadell Scheme Resolution and at least 75% of the votes cast on the Beadell Scheme Resolution.

 

The Beadell Board unanimously recommended that Beadell Shareholders vote in favour of the Beadell Scheme Resolution to approve the Scheme, in the absence of a Superior Proposal, and on the basis that the Independent Expert has concluded that the Scheme is “not fair but reasonable in the absence of a higher offer, and therefore in the best interests of Beadell Shareholders”.

 

The Scheme and the Scheme Implementation Deed

 

The Scheme Implementation Deed provides that, upon the terms and subject to the conditions set forth in the Scheme Implementation Deed, on the Effective Date, Great Panther will acquire all of the Beadell Shares. Beadell will thereby become a wholly-owned subsidiary of Great Panther and will cease to be a publicly-traded company. The terms and conditions of the Scheme are contained in the Scheme Implementation Deed, which is described in this Management Information Circular and is attached in its entirety as Appendix H. You are encouraged to read the Scheme Implementation Deed carefully, as it is the legal document that governs the Scheme. All descriptions in this summary

 

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and elsewhere in this Management Information Circular of the terms and conditions of the Scheme are qualified by reference to the Scheme Implementation Deed.

 

Scheme Consideration

 

Beadell Shares

 

Under the terms of the Scheme Implementation Deed, each Beadell Share (other than Beadell Shares held by Ineligible Foreign Shareholders and Electing Small Shareholders) will be acquired by Great Panther in exchange for 0.0619 of a fully paid and non-assessable Great Panther Share.

 

Beadell Options and Beadell Performance Warrants

 

Prior to the Beadell Scheme Record Date, all outstanding Beadell Options will be exercised in exchange for Beadell Shares or will lapse or be terminated in accordance with the Beadell Option Plan and all outstanding Beadell Performance Rights will vest and be exchanged for Beadell Shares in accordance with the Beadell Performance Rights Plan. The holders of such Beadell Shares will receive Great Panther Shares at the Exchange Ratio.

 

Beadell Warrants

 

Beadell has entered into binding agreements with the holders of 100% of the Beadell Warrants to accept the Warrant Consideration in exchange for their outstanding Beadell Warrants on the Scheme becoming Effective. Under such binding agreements, each holder of Beadell Warrants will receive a number of Great Panther Replacement Warrants equal to the number of their Beadell Warrants multiplied by the Exchange Ratio at a price adjusted in accordance with the Exchange Ratio, and otherwise on substantially the same terms and conditions as the original Beadell Warrant.

 

Information about the Merged Group

 

The acquisition of Beadell by Great Panther will create a new emerging and growth oriented precious metals producer. Upon implementation of the Scheme, Great Panther will continue to be a company existing under the laws of the Province of British Columbia, Canada, and former Beadell Shareholders (other than Ineligible Foreign Shareholders and Electing Small Shareholders) will hold Great Panther Shares. The Great Panther Shares will continue to be quoted on the TSX and the NYSE (American).

 

The Merged Group will be focused on the Americas with strong geographic diversity across three leading mining jurisdictions, and a diverse asset portfolio including:

 

(a)Beadell’s Tucano Gold Mine located in Brazil;

 

(b)Great Panther’s Guanajuato Mine Complex located in Mexico;

 

(c)Great Panther’s Topia Mine located in Mexico;

 

(d)Great Panther’s Coricancha Mine in Peru

 

(e)Great Panther’s El Horcon, Santa Rosa, and Plomo exploration properties in Mexico; and

 

(f)Beadell’s Tartaruga Gold Exploration Project located in Brazil.

 

The foregoing assets are described in more detail in Appendices D and E of this Management Information Circular.

 

Additional information in respect of the Merged Group is set out in this Management Information Circular under the heading “Information Concerning the Merged Group”. Consolidated pro forma financial information in respect of the Merged Group is set out in Appendix F to this Management Information Circular.

 

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Information about the Companies

 

Great Panther Silver Limited

 

Great Panther was originally incorporated under the Company Act (British Columbia) in 1965 under the name “Lodestar Mines Ltd.” On June 18, 1980, the Great Panther Shares were listed on the TSX Venture Exchange. On March 22, 1996, Great Panther was continued under the Business Corporation Act (Yukon). On July 9, 2004, Great Panther was continued to British Columbia under the Business Corporations Act (British Columbia). On November 14, 2006, the Great Panther Shares began trading on the TSX. On February 8, 2011, the Great Panther Shares were listed on the NYSE (American), while Great Panther retained its listing on the TSX.

 

Great Panther is presently a primary silver mining and exploration company and its current business was effectively established on February 18, 2004 when the Company entered into an option agreement, which granted it the right and option to purchase 100% of the ownership rights to its current day Topia mine in the state of Durango, Mexico. The Company exercised its option to purchase the mine in in February 2005. Following this, on October 25, 2005, the Company signed a formal purchase agreement to purchase 100% of the ownership rights in a group of producing and non-producing silver-gold mines in the Guanajuato Mining District, which included the primary assets and concessions that comprise the Company’s current day Guanajuato Mine Complex, including the San Ignacio mining concessions and the Cata processing plant. In August 2012, the Company signed a definitive agreement for the purchase of a 100% interest in certain surface rights to a total of 19.4 hectares at the San Ignacio Mine, for the construction of a mine portal and ancillary surface facilities. On June 30, 2017, Great Panther purchased the Coricancha Mine in Peru.

 

Great Panther’s current activities are focused on the mining of precious metals from its two wholly-owned operating mines in Mexico: the Guanajuato Mine Complex and the Topia Mine. Great Panther is also advancing towards a decision to restart the Coricancha Mine in Peru with the initiation of a bulk sample program following the completion of a positive preliminary economic assessment in May 2018. Great Panther also continues to pursue the acquisition of additional mining operations or projects in the Americas.

 

Great Panther is a public company trading on the TSX under the ticker symbol “GPR” and on the NYSE (American) under the ticker symbol “GPL”. Great Panther’s principal executive offices are located at Suite 1330, 200 Granville Street, Vancouver, British Columbia V6C 1S4, and its telephone number is (604) 608-1766.

 

Additional information about Great Panther can be found under its profile on SEDAR at www.sedar.com or its website at www.greatpanther.com. The information contained in, or that can be accessed through, Great Panther’s website is not intended to be incorporated by reference into this Management Information Circular, except as expressly provided for herein.

 

For further information about Great Panther, see Appendix D.

 

Beadell Resources Limited

 

Beadell is a public company trading on the ASX under the ticker symbol “BDR”. Beadell was incorporated on May 3, 2007 in Western Australia, Australia under Australian Company Number ACN 125 222 291. Beadell operates the Tucano Gold Mine in mining-friendly Amapá State, northern Brazil. Tucano is located within 2,500 km2 of highly prospective and under-explored “Birimian age” greenstone terrane. The Tucano plant was recently upgraded to process approximately 3.5 million tonnes per year of oxide-sulphide ore feed in for a range of blends. There is a pipeline of high potential in-mine and near-mine prospects, anchored by several high-grade gold drill intervals over several metres, which represent a near-term opportunity to improve the head grade and prolong the mine life.

 

Additional information about Beadell can be found on the website of the ASX at www.asx.com.au or its website at www.beadellresources.com.au. The information contained in, or that can be accessed through, the website of the ASX or Beadell’s website is not intended to be incorporated into this Management Information Circular. In addition, Beadell is required to lodge various documents with ASIC. Copies of documents lodged with ASIC by Beadell may be obtained from an ASIC office.

 

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For further information about Beadell, including copies of its 2017 Annual Report, 2016 Annual Report, management’s discussion and analysis for the nine-month period ended September 30, 2018, and annual and interim financial statements for its most recently completed financial periods, see Appendix E.

 

Recommendation of the Great Panther Board

 

At its meeting held on September 22, 2018, having undertaken a review of, and carefully considered, information concerning Beadell, the Scheme and alternatives, including in-depth consultation with the Great Panther Special Committee, Great Panther’s management and Great Panther’s legal and financial advisors (including, among other things, a review and consideration of the GMP Fairness Opinion), and consideration of such other matters as the Great Panther Board considered relevant, the Great Panther Board unanimously: (a) determined that the Scheme Implementation Deed and the transactions contemplated thereby are in the best interests of Great Panther; (b) approved the Scheme Implementation Deed and the transactions contemplated thereby; and (c) resolved to unanimously recommend approval of the Great Panther Scheme Resolution to the Great Panther Shareholders.

 

Accordingly, the Great Panther Board unanimously recommends that Great Panther Shareholders vote FOR the Great Panther Scheme Resolution and the Name Change Resolution. Each member of the Great Panther Board will vote, or procure the voting of, all Great Panther Shares held by him or her in favour of the Great Panther Scheme Resolution and the Name Change Resolution.

 

Reasons for the Scheme

 

At its meeting held on September 22, 2018, after due consideration and consultation with Great Panther’s management and outside legal and financial advisors, the Great Panther Board unanimously approved the Scheme Implementation Deed and the transactions contemplated thereby and authorized the issuance of Great Panther Shares pursuant to the Scheme Implementation Deed. In doing so, the Great Panther Board considered the business, properties, development properties, assets, liabilities, strategic direction and prospects of Great Panther and Beadell. Additionally, in making its determination, the Great Panther Board considered a number of factors, including, but not limited to, the following:

 

Creation of a New Emerging Intermediate Precious Metals Producer focused on the Americas

 

The Scheme will result in significant pro forma gold and silver production, with Great Panther contributing approximately 4.0 million silver-equivalent ounces of production in 2018, and Beadell contributing approximately 120,000 gold ounces in 2018, with potential for further increase upon a positive decision to restart Coricancha. Coricancha has the potential to generate average annual production of 3.1 million ounces silver-equivalent based on the results of a preliminary economic assessment completed in May 2018. The Merged Group will also have an increased public float and broadened shareholder base, providing stronger liquidity and augmented scale in the capital markets.

 

Extensive Reserve and Resource Base

 

The Merged Group is anticipated to have attributable proven and probable reserves of approximately 1.3 million ounces of gold. Beadell will also contribute measured and indicated resources (exclusive of reserves) of approximately 0.8 million ounces of gold and inferred resources of approximately 1.5 million ounces of gold, supplementing Great Panther’s measured and indicated resources of approximately 49.4 million ounces silver-equivalent and inferred resources of approximately 48.5 million ounces silver-equivalent. From a Great Panther perspective, the Transaction would result in a Merged Group with reserves, when Great Panther previously had none, and would also be accretive to Measured, Indicated and Inferred Resources. Tucano’s reserves and resources are presented as at June 30, 2018 in accordance with the 2012 JORC Code and are detailed in Appendix E – “Information Concerning Beadell Resources Limited”.

 

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Strong Balance Sheet to Support Complementary Assets

 

The enhanced balance sheet of the Merged Group, with a pro forma cash and short-term deposits balance of approximately US$53.5 million as at September 30, 2018 (after giving effect to the Transaction and assuming acceptance of the Change of Control Purchase Offer in respect of the outstanding Beadell Convertible Debentures), will enable ongoing optimization initiatives at Tucano. Additionally, the additional cash available may provide some downside protection in the event of an operational delay or downward movement in the price of gold.

 

Cost Synergies and Efficiencies

 

The Merged Group will benefit from anticipated corporate and administrative cost synergies associated with consolidating under a single executive team and head office.

 

Diversified Portfolio

 

The Merged Group will have three mining operations in Mexico and Brazil along with the Coricancha project located in Peru. Operating risk is expected to be significantly diversified with the inclusion of Brazil as a new core jurisdiction, which will represent 38% of pro forma share capital.

 

Robust Growth Profile

 

The Coricancha project provides near-term optionality with a restart decision expected in early 2019. In addition, the Merged Group is expected to benefit from near-term resource growth opportunities with multiple in-mine lease discoveries at Tucano and longer-term exploration optionality from Beadell’s 2,500 km2 highly prospective land package.

 

Attractive Re-Rating Potential

 

With a diversified portfolio of producing assets, near-term growth opportunities backed by a strong balance sheet and a quality management team, the Merged Group is well positioned for a re-rating, to the benefit of both Great Panther and Great Panther Shareholders.

 

The foregoing discussion of factors considered by the Great Panther Board is not intended to be exhaustive and may not include all the factors considered by the Great Panther Board. In view of the wide variety of factors considered in connection with its evaluation of the Scheme and the complexity of these matters, the Great Panther Board did not attempt to quantify, rank or otherwise assign any relative or specific weights to the factors that it considered in reaching its determination to approve the Scheme and the Scheme Implementation Deed. In addition, individual members of the Great Panther Board may have given differing weights to different factors. The Great Panther Board conducted an overall review of the factors described above and other material factors, including through discussions with, and inquiry of, Great Panther’s management and outside legal and financial advisor.

 

Risk Factors

 

The Scheme and the transactions contemplated by the Scheme Implementation Deed involve risks, some of which are related to the Scheme and others of which are related to Great Panther’s business. In considering the Scheme and the transactions contemplated by the Scheme Implementation Deed, including whether to vote for the Great Panther Scheme Resolution, Great Panther Shareholders should carefully consider the information about these risks set forth under the section entitled “Risk Factors”, as well as the risk factors set out in Appendices D and E.

 

Opinion of Great Panther’s Financial Advisor

 

In connection with the Scheme, GMP, Great Panther’s financial advisor, delivered to the Great Panther Special Committee an opinion as to the fairness, from a financial point of view, of the Scheme Consideration to be paid by Great Panther in the Scheme. GMP’s opinion was only one of many factors considered by the Great Panther Special

 

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Committee and the Great Panther Board in evaluating the Scheme and was not determinative of the views of the Great Panther Special Committee and the Great Panther Board with respect to the Scheme or the Scheme Consideration.

 

GMP provided its opinion to the Great Panther Special Committee for the sole benefit and use of the Great Panther Board in connection with and for purposes of its evaluation of the Scheme Consideration to be paid by Great Panther in the Scheme, from a financial point of view. The GMP Fairness Opinion does not address any other aspect of the Scheme and no opinion or view was expressed as to the relative merits of the Scheme in comparison to other strategies or transactions that might be available and executable to Great Panther or in which Great Panther might engage or as to the underlying business decision of Great Panther to proceed with or effect the Scheme. The GMP Fairness Opinion does not constitute a recommendation to any Great Panther Shareholder as to how to vote or act in connection with the Scheme or any related matter.

 

Delivery of GMP Fairness Opinion

 

In connection with this engagement, GMP rendered to the Great Panther Special Committee its written opinion to the effect that, as of September 23, 2018, and based on and subject to the scope of review and approach to analysis, assumptions made, and limitations on the review undertaken as set forth therein, the consideration to be paid by Great Panther in connection with the Transaction, is fair, from a financial point of view, to Great Panther. A copy of the GMP Fairness Opinion is attached as Appendix G of this Management Information Circular.

 

Listing of Great Panther Shares

 

It is a condition precedent to Great Panther’s and Beadell’s obligation to effect the Scheme that the Great Panther Shares to be issued pursuant to the Scheme Implementation Deed are conditionally approved for listing on the TSX, subject only to the provision of such required documentation as is customary in the circumstances. Under the Scheme Implementation Deed, Great Panther is required to use its reasonable endeavours to obtain the listing and admission for trading of the Great Panther Shares on the TSX. Great Panther has received the conditional approval of the TSX and has applied to the NYSE (American) for the listing of the Great Panther Shares to be issued pursuant to the Scheme, each subject to approval of the Great Panther Scheme Resolution and the filing of certain documents following implementation of the Scheme.

 

Delisting and Deregistration of Beadell Shares

 

As promptly as practicable after the Effective Date, Beadell Shares currently listed on the ASX will cease to be listed and Beadell will be deregistered from the ASX.

 

Third Party Approvals Required for the Scheme

 

To complete the Scheme and the other transactions contemplated by the Scheme Implementation Deed, Great Panther and Beadell are required to use reasonable efforts to obtain all necessary authorizations, consents and approvals and to make all necessary notifications, registrations and filings, including any registrations, notifications and filings required to be made in connection with obtaining such approvals. Under the Scheme Implementation Deed, Beadell is required, among other actions, to obtain an opinion on the Scheme by the Independent Expert and seek the approval of the Scheme by the Court in accordance with the Australian Corporations Act. Beadell has obtained the opinion of the Independent Expert who has concluded that the Scheme is “not fair but reasonable in the absence of a higher offer, and therefore in the best interests of Beadell Shareholders”.

 

The Scheme Implementation Deed also includes a condition precedent that Great Panther obtain an approval of the Treasurer under the Foreign Acquisitions and Takeovers Act 1975 (Australia) or confirmation that it was not applicable. On November 2, 2018, the Treasurer issued a statement of “no objection”.

 

Great Panther and Beadell are not currently aware of any material governmental filings, authorizations, approvals or consents that are required prior to the parties’ completion of the Scheme other than those described in this Management Information Circular. There can be no assurance, however, if and when any of the approvals required to be obtained for the Scheme and the other transactions contemplated by the Scheme Implementation Deed will be obtained or as to

 

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the conditions or limitations that such approvals may contain or impose. For a more detailed description of the approvals required for the Scheme, see the section entitled “The Scheme Agreement – Conditions Precedent.”

 

Directors and Management of Great Panther After Giving Effect to the Scheme

 

Following completion of the Scheme, the Great Panther Board will be comprised of the same directors that currently serve on the Great Panther Board, with the addition of Dr. Nicole Adshead-Bell, who is presently the Chief Executive Officer and the Managing Director of Beadell. The current management team at Great Panther will continue to act in the same capacity as senior officers of Great Panther after giving effect to the Transaction. See the section entitled “Information Concerning the Merged Group – Board and Management of the Merged Group”.

 

Interests of Great Panther’s Directors and Executive Officers in the Scheme and Other Matters

 

To the best of our knowledge, except as otherwise disclosed herein, no person who has been a director or executive officer of Great Panther at any time since the beginning of Great Panther’s last completed financial year, proposed nominee for election as a director of Great Panther, other insiders of Great Panther nor any associate or affiliate of the foregoing persons, has any substantial or material interest, direct or indirect, by way of beneficial ownership of securities or otherwise, in any matter to be acted on at the Great Panther Meeting.

 

Indicative Timetable

 

The following are proposed dates with respect to implementation of the Scheme:

 

DATE

EVENT

9:00 a.m. (Vancouver time)

February 11, 2019

Great Panther Meeting

10:00 a.m. (Perth time)

February 12, 2019

Beadell Meeting
IF BEADELL SHAREHOLDERS APPROVE THE SCHEME AT THE SCHEME MEETING AND GREAT PANTHER SHAREHOLDERS APPROVE THE GREAT PANTHER SCHEME RESOLUTION
February 15, 2019 Second Court Date to approve the Scheme
February 18, 2019 Court order lodged with ASIC and announced on ASX
Effective Date – This is the date on which the Scheme comes into effect and is binding on Beadell Shareholders (other than Excluded Shareholders)
Beadell Shares will be suspended from trading on ASX at the close of trading on the Effective Date on ASX. If the Scheme proceeds, this will be the last day that Beadell Shares will trade on ASX

5:00 p.m. WST

February 25, 2019

Beadell Scheme Record Date – All Beadell Shareholders (other than Ineligible Foreign Shareholders and Electing Small Shareholders) who hold Beadell Shares on the Beadell Scheme Record Date will be entitled to receive the Scheme Consideration
March 5, 2019 Implementation Date – All Beadell Shareholders (other than Ineligible Foreign Shareholders and Electing Small Shareholders) will be issued the Scheme Consideration to which they are entitled on or around this date
Great Panther Shares issued in connection with the Scheme commence trading on TSX and NYSE (American)

 

All dates are indicative only and are subject to the Court approval process, ASX and TSX approval, and the satisfaction or, where applicable, waiver of the conditions precedent. See the section entitled “The Scheme Implementation Deed – Conditions Precedent”.

 

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GENERAL INFORMATION FOR THE MEETING

 

Date, Time and Place of the Meeting

 

The Great Panther Meeting will be held in Terrace Room B located at the Terminal City Club, 837 West Hastings Street, Vancouver, British Columbia, at 9:00 a.m. (Vancouver time) on February 11, 2019.

 

Record Date and Shareholders Entitled to Vote

 

The Great Panther Board has fixed January 2, 2019 as the Great Panther Record Date for purposes of the entitlement to notice of and to vote at the Great Panther Meeting. Great Panther Shareholders of record at the close of business on the Great Panther Record Date are entitled to notice of the Great Panther Meeting and to vote thereat or at any adjournment or postponement thereof. To the extent a Great Panther Shareholder transfers the ownership of any of its Great Panther Shares after the Record Date and the transferee of those Great Panther Shares establishes that it owns those shares and requests at least 10 days before the Great Panther Meeting, to be included in the list of Great Panther Shareholders eligible to vote at such meeting, such transferee will be entitled to vote such shares at such meeting.

 

As at the date hereof, there were issued and outstanding a total of 169,165,007 Great Panther Shares. Each issued and outstanding Great Panther Share on the Great Panther Record Date is entitled to one vote on each of the resolutions to be considered and voted on at the Great Panther Meeting.

 

As of the date of this Management Information Circular, there are no preferred shares issued and outstanding.

 

Quorum

 

A quorum for the transaction of business at the Great Panther Meeting is at least two persons who are, or represent by proxy, Great Panther Shareholders entitled to be voted at the Great Panther Meeting. If you submit a properly executed form of proxy or vote by telephone or the Internet, you will be considered part of the quorum.

 

Great Panther Shares held through a nominee with respect to which the Beneficial Great Panther Shareholder fails to give voting instructions to the nominee, and Great Panther Shares with respect to which the Beneficial Great Panther Shareholder otherwise fails to vote, will not be considered present for the purpose of determining the presence of a quorum.

 

If a quorum is not present or if there are not sufficient votes for the purposes of approval of the Great Panther Scheme Resolution, Great Panther expects that the Great Panther Meeting will be adjourned or postponed to solicit additional proxies. At any subsequent reconvening of the Great Panther Meeting, all proxies will be voted in the same manner as the manner in which such proxies would have been voted at the original convening of the Great Panther Meeting, except for any proxies that have been validly revoked or withdrawn prior to the subsequent meeting. See the section entitled “General Information for the Meeting – Adjournment”.

 

Purpose of the Meeting

 

The Great Panther Meeting is being held for the following purposes:

 

1.to consider and pass, with or without variation, an ordinary resolution, the full text of which is set out in Appendix B of this Management Information Circular, authorizing and approving the issuance of the Great Panther Shares as consideration for the acquisition of Beadell and pursuant to the terms of the Scheme Implementation Deed;

 

2.to consider, and pass, with or without variation, an ordinary resolution, the full text of which is set out in Appendix C of the accompanying Management Information Circular, authorizing and approving the change of Great Panther’s name to “Great Panther Mining Limited” or such other name as may be determined and acceptable to the Great Panther Board and the applicable regulatory authorities; and

 

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3.to transact such other business that may properly come before the Great Panther Meeting or any adjournment or postponement thereof.

 

The Scheme cannot be completed without Great Panther Shareholders approving the Great Panther Scheme Resolution.

 

Business of the Great Panther Meeting

 

Great Panther Scheme Resolution

 

Pursuant to Section 611(c) of the TSX Company Manual, security holder approval is required if the number of securities issued or issuable by a listed issuer in payment of the purchase price for an acquisition exceeds 25% of the number of securities of the listed issuer which are outstanding, on a pre-acquisition, non-diluted basis. Pursuant to the terms of the Scheme Implementation Deed and in connection with the Scheme, Great Panther has agreed to issue 0.0619 of a validly issued, fully paid and non-assessable Great Panther Share in exchange for each Beadell Share issued and outstanding on the Beadell Scheme Record Date (other than Excluded Shares).

 

Based on the estimated number of Beadell Shares expected to be outstanding at the implementation of the Scheme, Great Panther expects to issue up to 141,136,911 Great Panther Shares in connection with the Scheme (representing up to 83.4% of the issued and outstanding Great Panther Shares), comprised of:

 

(a)103,594,861 Great Panther Shares (approximately 61.2% of the number of the Great Panther Shares outstanding) as consideration for the issued and outstanding Beadell Shares;

 

(b)up to 1,720,820 Great Panther Shares as consideration for Beadell Shares issued upon the exercise of outstanding Beadell Options prior to the completion of the Scheme;

 

(c)272,526 Great Panther Shares as consideration for Beadell Shares to be issued in exchange for the Beadell Performance Rights prior to the completion of the Scheme;

 

(d)up to 9,749,727 Great Panther Shares issuable on the exercise of the Great Panther Replacement Warrants to be issued in exchange for outstanding Beadell Warrants;

 

(e)up to 18,203,885 Great Panther Shares issuable in connection with certain indebtedness owing to MACA3; and

 

(f)up to 7,595,092 Great Panther Shares issuable in connection with the Beadell Debentures that are being assumed by Great Panther on completion of the Scheme.

 

Based on the estimated number of Great Panther Shares that are expected to be outstanding upon the implementation of the Scheme, Great Panther Shareholders will own approximately 62% of the outstanding Great Panther Shares after implementation of the Scheme (on an undiluted basis).

 

In the event Great Panther agrees to increase the Scheme Consideration, for example if a competing offer arises, the TSX will generally not require further approvals from Great Panther Shareholders for the issuance of up to an additional 35,284,228 Great Panther Shares, such number being 25% of the number of Great Panther Shares being approved for issuance by Great Panther Shareholders in connection with the Scheme at the Great Panther Meeting.

 

At the Great Panther Meeting, Great Panther Shareholders will be asked to consider and pass with or without variation, the Great Panther Scheme Resolution, the text of which is attached as Appendix B, approving the issuance of the Great Panther Shares to Beadell Shareholders in connection with the Scheme.

 

 

3 Calculated for TSX approval purposes only based on (i) conversion by MACA of the maximum amount, (ii) current A$/C$ exchange rates, and (iii) a theoretical minimum conversion price based on 50% of the current trading price of Great Panther Shares on the TSX.

 

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In accordance with the terms of the Scheme Implementation Deed, it is a condition precedent to the completion of the Scheme that the Great Panther Scheme Resolution be approved by the Great Panther Shareholders.

 

The Great Panther Board unanimously recommends that Great Panther Shareholders vote FOR the Great Panther Scheme Resolution. Each member of the Great Panther Board will vote, or procure the voting of, all Great Panther Shares held by him or her in favour of the Great Panther Scheme Resolution.

 

Name Change Resolution

 

The Scheme will create a new emerging and growth-oriented precious metals producer focused on the Americas with strong geographic diversity across three leading mining jurisdictions, and a diverse asset portfolio including three producing mines, an advanced stage project, and significant exploration potential. Management of Great Panther, together with the Great Panther Board, are of the view that a change of Great Panther’s name to “Great Panther Mining Limited” more accurately reflects the business objectives, asset base and operations of Great Panther after giving effect to the Scheme, particularly as the Merged Group will change from being a primary silver producer to having gold as its primary metal production by value, followed by silver. Precious metal production for the Merged Group is expected to remain in excess of 90% of production value, based on September 30, 2018 production numbers for Great Panther and Beadell.

 

The Great Panther Board may determine not to implement the Name Change at any time after the Great Panther Meeting and after receipt of necessary regulatory approvals, but prior to the issuance of a certificate of amendment, without further action on the part of the Great Panther Shareholders.

 

Great Panther Shareholders will be asked to consider and, if thought appropriate, to pass, with or without variation, the Name Change Resolution authorizing the Great Panther Board, in its sole discretion, to effect the Name Change, the text of which resolution is attached in Appendix C hereto.

 

The Great Panther Board unanimously recommends that Great Panther Shareholders vote FOR the Name Change Resolution.

 

Required Vote

 

The Scheme cannot be completed without Great Panther Shareholders approving the Great Panther Scheme Resolution. Approval of the Great Panther Scheme Resolution requires the affirmative vote of a majority of the votes cast in respect of the resolution by Great Panther Shareholders present in person or represented by proxy at the Great Panther Meeting. The Name Change Resolution must be approved by the affirmative vote of greater than 50% of the votes cast by Great Panther Shareholders present in person or represented by proxy at the Great Panther Meeting.

 

If, in the case of Registered Great Panther Shareholders, you submit a signed and dated blank form of proxy or, in the case of Beneficial Great Panther Shareholders, you submit a signed and dated blank voting instruction form, your Great Panther Shares will be voted for the Great Panther Scheme Resolution and the Name Change Resolution. If, in the case of a Registered Great Panther Shareholders, you fail to submit a form of proxy or, in the case of Beneficial Great Panther Shareholders, you fail to submit voting instructions to your nominee, your Great Panther Shares will not be counted as present for purposes of a quorum, and it will have no effect on the Great Panther Scheme Resolution or the Name Change Resolution, assuming that a quorum is otherwise present at the Great Panther Meeting.

 

Voting by Directors and Executive Officers

 

As at the date hereof, Great Panther directors and executive officers had the right to vote approximately 1,488,296 Great Panther Shares, representing approximately 0.88% of the Great Panther Shares then outstanding and entitled to vote at the Great Panther Meeting. All of the Great Panther Directors and certain executive officers of Great Panther have entered into Great Panther Support Agreements and will vote for the Great Panther Scheme Resolution. In addition, it is anticipated that all directors and executive officers of Great Panther will vote in favour of the Name Change Resolution.

 

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As of the date hereof, the directors and executive officers of Beadell own no Great Panther Shares.

 

Adjournment

 

In accordance with Great Panther’s constating documents, the chair of a meeting of Great Panther Shareholders may, and if so directed by the meeting must, adjourn such meeting from time to time and from place to place, but no business may be transacted at any adjourned meeting other than the business left unfinished at the earlier meeting from which the adjournment took place.

 

In the case of the reconvening of any adjourned Great Panther Meeting, all proxies will be voted in the same manner as the manner in which such proxies would have been voted at the original convening of the Great Panther Meeting, except for any proxies that have been validly revoked or withdrawn prior to the reconvened meeting. See the section entitled “General Information for the Meeting – Appointment and Revocation of Proxies”.

 

Solicitation of Proxies

 

This Management Information Circular is furnished in connection with the solicitation of proxies by or on behalf of the Great Panther Board and management of Great Panther for use at the Great Panther Meeting, and at any adjournment or postponement thereof, for the purposes set forth in the Notice of Special Meeting. The Great Panther Board and management of Great Panther are soliciting proxies of all Registered Great Panther Shareholders and Beneficial Great Panther Shareholders primarily by mail and electronic means, supplemented by telephone or other contact by employees of Great Panther (who will receive no additional compensation) and all such costs will be borne by Great Panther. Great Panther has engaged Laurel Hill Advisory Group as its proxy solicitation agent and will pay it fees of C$35,000 in addition to certain out-of-pocket expenses. Great Panther may also reimburse brokers and other persons holding Great Panther Shares in their name or in the name of nominees for their costs incurred in sending proxy material to their principals in order to obtain their proxies.

 

The majority of brokers now delegate responsibility for obtaining instructions from clients to Broadridge Financial Services (“Broadridge”). Broadridge typically mails a scannable voting instruction form (“VIF”) in lieu of the form of proxy. Great Panther may use Broadridge’s QuickVote™ service to assist Beneficial Great Panther Shareholders with voting their Great Panther Shares. Certain Beneficial Great Panther Shareholders who have not objected to Great Panther knowing who they are may be contacted by Great Panther’s proxy solicitation agent, Laurel Hill Advisory Group, to conveniently vote directly over the telephone. Broadridge then tabulates the results of all instructions received and provides the appropriate instructions with respect to the Great Panther Shares to be represented at the Great Panther Meeting.

 

If you have any questions about the Scheme, the other transactions contemplated by the Scheme Implementation Deed, including the Great Panther Scheme Resolution or the Name Change Resolution, the Great Panther Meeting or the proxy materials or if you need assistance submitting your form of proxy or voting your Great Panther Shares or need additional copies of this document or the enclosed form of proxy, you should contact Great Panther’s proxy solicitation agent, Laurel Hill Advisory Group, by telephone at 1 (877) 452-7184 toll-free in North America or at (416) 304-0211 for collect calls outside of North America or by email at assistance@laurelhill.com.

 

This Management Information Circular does not constitute the solicitation of an offer to purchase, or the making of an offer to sell, any securities or the solicitation of a proxy by any person in any jurisdiction in which such solicitation or offer is not authorized or in which the person making such solicitation or offer is not qualified to do so or to any person to whom it is unlawful to make such solicitation or offer.

 

Notice and Access Process

 

Notice and Access means provisions concerning the delivery of proxy-related materials to Great Panther Shareholders found in Section 9.1.1 of NI 51-102, in the case of Registered Great Panther Shareholders, and section 2.7.1 of NI 54-101, in the case of Beneficial Great Panther Shareholders (collectively, the “Notice and Access Provisions”), which would allow an issuer to deliver an information circular forming part of proxy-related materials to shareholders via certain specified electronic means provided that the conditions of NI 51-102 and NI 54-101 are met.

 

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The Notice and Access Provisions are a mechanism which allows reporting issuers, other than investment funds, to choose to deliver proxy-related materials to registered holders and beneficial owners of securities by posting such materials on a non-SEDAR website (usually the reporting issuer’s website and sometimes the transfer agent’s website) rather than delivering such materials by mail. The Notice and Access Provisions can be used to deliver materials for both special and general meetings. Reporting issuers may still choose to continue to deliver such materials by mail, and beneficial owners will be entitled to request delivery of a paper copy of the information circular at the reporting issuer’s expense.

 

The use of the Notice and Access Provisions reduces paper waste and mailing costs of the issuer. In order for Great Panther to utilize the Notice and Access Provisions to deliver proxy-related materials by posting an information circular (and if applicable, other materials) electronically on a website that is not SEDAR, Great Panther must send a notice to Great Panther Shareholders, including Beneficial Great Panther Shareholders, indicating that the proxy-related materials have been posted and explaining how a Great Panther Shareholder can access them or obtain from Great Panther a paper copy of those materials. This Management Information Circular has been posted in full at www.greatpanther.com, at www.envisionreports.com/Great-Panther-Special and under the Great Panther’s profile at www.sedar.com.

 

In order to use Notice and Access Provisions, a reporting issuer must set the record date for notice of the meeting to be on a date that is at least forty days prior to the meeting in order to ensure there is sufficient time for the materials to be posted on the applicable website and other materials to be delivered to shareholders. The Notice and Access notification, which requires Great Panther to provide basic information about the Great Panther Meeting and the matters to be voted on, explains how a Great Panther Shareholder can obtain a paper copy of this Management Information Circular and any related materials. A Notice and Access notification has been delivered to Great Panther Shareholders by Great Panther, along with the applicable voting document (a form of proxy in the case of Registered Great Panther Shareholders or a voting instruction form in the case of Beneficial Great Panther Shareholders).

 

Great Panther is required to file a notification at least twenty-five days prior to the Great Panther Record Date indicating its intent to use the Notice and Access Provisions.

 

Great Panther will not rely upon the use of “stratification”. Stratification occurs when a reporting issuer using the Notice and Access Provisions provides a paper copy of the Management Information Circular with the notice to be provided to Great Panther Shareholders as described above. In relation to the Great Panther Meeting, all Great Panther Shareholders will have received the required documentation under the Notice and Access Provisions and all documents required to vote in respect of all matters to be voted on at the Great Panther Meeting. No Great Panther Shareholder will receive a paper copy of the Management Information Circular from Great Panther or any intermediary unless such Great Panther Shareholder specifically requests same.

 

Any Great Panther Shareholder who wishes to receive a paper copy of this Management Information Circular must make contact with Great Panther at Suite 1330, 200 Granville Street, Vancouver, British Columbia V6C 1S4, by telephone at (604) 608-1766, toll free: (888) 355-1766 or by fax: (604) 608-1768. In order to ensure that a paper copy of the Management Information Circular can be delivered to a requesting Great Panther Shareholder in time for such Great Panther Shareholder to review the Management Information Circular and return a proxy or voting instruction form prior to the proxy deadline, it is strongly suggested that a Great Panther Shareholder ensure their request is received by Great Panther no later than January 29, 2019.

 

All Great Panther Shareholders may call (888) 355-1766 (toll free) in order to obtain additional information relating to the Notice and Access Provisions or to obtain a paper copy of the Management Information Circular, up to and including the date of the Great Panther Meeting, including any adjournment thereof.

 

Appointment and Revocation of Proxies

 

Each of the persons named in the accompanying form of proxy or voting instruction form is a director or an executive officer of Great Panther. A Great Panther Shareholder who wishes to appoint some other person (who is not required to be a Great Panther Shareholder) as his, her or its proxyholder at the Great Panther Meeting may do so either by inserting such person’s name in the blank space provided in the form of proxy or voting instruction form and deleting the names printed thereon or by completing a proper form of proxy or voting

 

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instruction form. Such Great Panther Shareholder should notify the nominee of his or her appointment and instruct the nominee on how the Great Panther Shares are to be voted.

 

A proxy will not be valid for the Great Panther Meeting or any adjournment or postponement thereof unless it is signed by the Great Panther Shareholder or by the Great Panther Shareholder’s attorney authorized in writing or, if the Great Panther Shareholder is a corporation, it must be executed under corporate seal or by a duly authorized officer or attorney of the corporation and delivered to Great Panther, c/o Computershare Investor Services Inc., 8th Floor, 100 University Avenue, Toronto, Ontario, M5J 2Y1, Attention: Proxy Department or by fax at 1 (866) 249-7775 (toll-free in North America) or (416) 263-9524 (outside of North America), not later than 9:00 a.m. (Vancouver time) on February 7, 2019, or if the Great Panther Meeting is adjourned or postponed, no later than 48 hours (excluding weekends and statutory holidays in the province of British Columbia) before the Great Panther Meeting is reconvened. Late proxies may be accepted or rejected by the chair at his or her discretion and the chair is under no obligation to accept or reject any particular late proxy. The deadline for the deposit of proxies may be waived or extended by the chair at his or her discretion without notice.

 

Registered Great Panther Shareholders may also vote their Great Panther Shares using a touch-tone telephone by calling 1 (866) 732-8683 (toll-free in North America) or (312) 588-4290 (collect outside of North America) or by the Internet at www.investorvote.com. If voting by phone or on the Internet, please follow the instructions carefully and ensure that you have your form of proxy in hand as you will be required to enter the control number located on the form of proxy. Your vote must be received not later than 9:00 a.m. (Vancouver time) on February 7, 2019, or if the Great Panther Meeting is adjourned or postponed, no later than 48 hours (excluding weekends and statutory holidays in the Province of British Columbia) before the Great Panther Meeting is reconvened. If you wish to attend the Great Panther Meeting in person or appoint someone else to attend on your behalf, you must do so either by the Internet, mail or fax. The telephone voting service is not available for this purpose.

 

Only Registered Great Panther Shareholders can change or revoke a previously delivered vote by: (a) voting again on the Internet or by telephone, or completing a new form of proxy that is dated later than the form of proxy previously submitted and depositing it with Computershare Investor Services Inc. in accordance with the instructions set out above no later than 9:00 a.m. (Vancouver time) on February 7, 2019, or, if the Great Panther Meeting is adjourned or postponed, no later than 48 hours (excluding weekends and statutory holidays in the Province of British Columbia) before the Great Panther Meeting is reconvened; (b) depositing a written statement with: (i) Computershare Investor Services Inc. (executed by you or a person authorized to sign on your behalf) in accordance with the instructions set out above no later than 9:00 a.m. (Vancouver time) on February 7, 2019, or, if the Great Panther Meeting is adjourned or postponed, no later than 24 hours (excluding weekends and statutory holidays in British Columbia) before the Great Panther Meeting is reconvened or (ii) the scrutineers of the Great Panther Meeting, addressed to the chair of the Great Panther Meeting, prior to the commencement of the Great Panther Meeting on the day of the Great Panther Meeting, or if the meeting is adjourned postponed, prior to the commencement of the reconvened or postponed meeting on the day of such reconvened or postponed meeting; or (c) in any other manner permitted by law.

 

Beneficial Great Panther Shareholders who wish to change their vote must, in sufficient time in advance of the Great Panther Meeting, arrange for their respective intermediaries to change their vote and, if necessary, revoke their proxy in accordance with the revocation procedures set out above.

 

Advice to Beneficial Holders of Great Panther Shares

 

The information set forth in this section is of significant importance to many Great Panther Shareholders, as a substantial number of Great Panther Shareholders do not hold Great Panther Shares in their own name. Beneficial Great Panther Shareholders should note that only proxies deposited by Great Panther Shareholders whose names appear on the records of Great Panther as the registered holder of Great Panther Shares can be recognized and acted upon at the Great Panther Meeting. If Great Panther Shares are listed in an account statement provided to a Beneficial Great Panther Shareholder by a broker, then in almost all cases those Great Panther Shares will not be registered in the Great Panther Shareholder’s name on the records of Great Panther. In Canada, the majority of Great Panther Shares are registered under the name of CDS & Co. (the registration name for CDS Clearing and Depository Services Inc., which acts as nominee for many Canadian brokerage firms). Great Panther Shares held by brokers or their agents or nominees can only be voted upon the instructions of the Beneficial Great Panther Shareholder. Without specific instructions, brokers, banks, trust companies or other intermediaries or nominees are prohibited from voting

 

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Great Panther Shares for their clients. Therefore, Beneficial Great Panther Shareholders should ensure that the instructions regarding the voting of their Great Panther Shares are communicated to the appropriate person on a timely basis.

 

In Canada, brokers, banks, trust companies or other intermediaries or nominees are required to seek voting instructions from Beneficial Great Panther Shareholders in advance of shareholder meetings. Each nominee has its own mailing procedures and provides its own return instructions to clients, which should be carefully followed by Beneficial Great Panther Shareholders in order to ensure that their Great Panther Shares are voted at the Great Panther Meeting. In some cases, the VIF provided to Beneficial Great Panther Shareholders by their nominee is very similar, even identical, to the form of proxy provided to registered Great Panther Shareholders. However, its purpose is limited to instructing the registered Great Panther Shareholder (the nominee) on how to vote on behalf of the Beneficial Great Panther Shareholder. Most brokers now delegate responsibility for obtaining voting instructions from clients to Broadridge. Broadridge typically prepares a machine readable VIF which is mailed to Beneficial Great Panther Shareholders with a request that Beneficial Great Panther Shareholders complete and return the forms by mail or facsimile. Alternatively, Beneficial Great Panther Shareholders can call a toll-free number or vote online at www.proxyvote.com using the 16 digit control number provided on their VIF. Broadridge then tabulates the results of the voting instructions received and provides appropriate instructions regarding the voting of Great Panther Shares to be represented at the Great Panther Meeting. A Beneficial Great Panther Shareholder receiving a VIF from Broadridge cannot use that form to vote Great Panther Shares directly at the Great Panther Meeting. The VIF must be returned to Broadridge or voting instructions communicated to Broadridge well in advance of the Great Panther Meeting in order to have such Great Panther Shares voted at the Great Panther Meeting.

 

Although a Beneficial Great Panther Shareholder may not be recognized directly at the Great Panther Meeting for the purposes of voting Great Panther Shares registered in the name of his, her or its nominee, a Beneficial Great Panther Shareholder may attend the Great Panther Meeting as proxyholder for the registered Great Panther Shareholder and vote the Great Panther Shares in that capacity. Beneficial Great Panther Shareholders who wish to attend the Great Panther Meeting and indirectly vote their Great Panther Shares must do so as proxyholder for the registered Great Panther Shareholder. They should contact their nominee well in advance of the Great Panther Meeting for instructions on how to do so.

 

Voting of Proxies

 

All Great Panther Shares represented at the Great Panther Meeting by a properly executed proxy will be voted on any ballot that may be called for, and where a choice with respect to any matter to be acted upon has been specified in the form of proxy, the Great Panther Shares represented by the proxy will be voted or withheld from voting in accordance with such specification. In the absence of any such specification or instruction, the persons whose names appear on the form of proxy, if named as proxyholders, will vote in favour of the Great Panther Scheme Resolution.

 

The enclosed form of proxy confers discretionary authority upon the persons named therein with respect to amendments or variations to matters identified in the Notice of Special Meeting and any other matters which may properly come before the Great Panther Meeting. As of the date hereof, management of Great Panther is not aware of any amendments, variations or other matters to be presented for action at the Great Panther Meeting. If, however, amendments, variations or other matters properly come before the Great Panther Meeting, the persons designated in the form of proxy will vote thereon in accordance with their judgment pursuant to the discretionary authority conferred by such proxy with respect to such matters.

 

Voting Shares and Principal Holders

 

To the knowledge of the Great Panther Board and of the executive officers of Great Panther no person beneficially owns, or controls or directs, directly or indirectly, voting securities carrying 10% or more of the voting rights attached to any class of voting securities of Great Panther.

 

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THE SCHEME

 

This section of this Management Information Circular describes the various aspects of the Scheme and related matters. This section may not contain all of the information that is important to you. You should carefully read this entire Management Information Circular and the documents incorporated by reference into this Management Information Circular, including the full text of the Scheme Implementation Deed, which is attached as Appendix H hereto, for a more complete understanding of the Scheme. In addition, important business and financial information about each of Great Panther and Beadell is included in or incorporated by reference into this Management Information Circular.

 

Transaction Structure

 

The Scheme Implementation Deed provides that, subject to the terms and conditions of the Scheme Implementation Deed, on the Effective Date, Great Panther will acquire all of the Beadell Shares and Beadell will become a wholly-owned subsidiary of Great Panther. The terms and conditions of the Scheme are contained in the Scheme Implementation Deed, which is described in this Management Information Circular and attached in its entirety as Appendix H hereto. You are encouraged to read the Scheme Implementation Deed carefully, as it is the legal document that governs the Scheme. All descriptions in this summary and elsewhere in this Management Information Circular of the terms and conditions of the Scheme are qualified by reference to the Scheme Implementation Deed.

 

Scheme Consideration

 

Beadell Shares

 

Under the terms of the Scheme Implementation Deed, each Beadell Share (other than Beadell Shares held by Ineligible Foreign Shareholders and Electing Small Shareholders) will be acquired by Great Panther in exchange for 0.0619 of a fully paid and non-assessable Great Panther Share.

 

Beadell Options and Beadell Performance Rights

 

Prior to the Beadell Scheme Record Date, all outstanding Beadell Options will be exercised in exchange for Beadell Shares or will lapse or be terminated in accordance with the Beadell Option Plan and all outstanding Beadell Performance Rights will vest and be exchanged for Beadell Shares in accordance with the Beadell Performance Rights Plan. The holders of such Beadell Shares will receive Great Panther Shares at the Exchange Ratio.

 

Beadell Warrants

 

Beadell has entered into binding agreements with the holders of 100% of the Beadell Warrants to accept the Warrant Consideration in exchange for their outstanding Beadell Warrants on the Scheme becoming Effective. Under such binding agreements, each holder of Beadell Warrants will receive a number of Great Panther Replacement Warrants equal to the number of their Beadell Warrants multiplied by the Exchange Ratio at a price adjusted in accordance with the Exchange Ratio, and otherwise on substantially the same terms and conditions as the original Beadell Warrant.

 

Fractional Shares

 

Where the calculation of the number of Great Panther Shares to be issued to a particular Beadell Shareholder would result in such Beadell Shareholder becoming entitled to a fraction of a Great Panther Share, the fractional entitlement will be rounded down to the nearest whole number of Great Panther Shares.

 

Great Panther Shares issued in Connection with the Scheme

 

Based on the estimated number of Beadell Shares expected to be outstanding at the implementation of the Scheme, Great Panther expects to issue up to 141,136,911 Great Panther Shares in connection with the Scheme (representing up to 83.4% of the issued and outstanding Great Panther Shares), comprised of:

 

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(a)103,594,861 Great Panther Shares (approximately 61.2% of the number of the Great Panther Shares outstanding) as consideration for the issued and outstanding Beadell Shares;

 

(b)up to 1,720,820 Great Panther Shares as consideration for Beadell Shares issued upon the exercise of outstanding Beadell Options prior to the completion of the Scheme;

 

(c)272,526 Great Panther Shares as consideration for Beadell Shares to be issued in exchange for the Beadell Performance Rights prior to the completion of the Scheme;

 

(d)up to 9,749,727 Great Panther Shares issuable on the exercise of the Great Panther Replacement Warrants to be issued in exchange for outstanding Beadell Warrants;

 

(e)up to 18,203,885 Great Panther Shares issuable in connection with certain indebtedness owing to MACA4; and

 

(f)up to 7,595,092 Great Panther Shares issuable in connection with the Beadell Debentures that are being assumed by Great Panther on completion of the Scheme.

 

Based on the estimated number of Great Panther Shares that are expected to be outstanding upon the implementation of the Scheme, Great Panther Shareholders will own approximately 62% of the outstanding Great Panther Shares after implementation of the Scheme (on an undiluted basis).

 

In the event Great Panther agrees to increase the Scheme Consideration, for example if a competing offer arises, the TSX will generally not require further approvals from Great Panther Shareholders for the issuance of up to an additional 35,284,228 Great Panther Shares, such number being 25% of the number of Great Panther Shares being approved for issuance by Great Panther Shareholders in connection with the Scheme at the Great Panther Meeting.

 

Background of the Scheme

 

For several years, Great Panther has evaluated a number of strategic opportunities to grow Great Panther and maximize shareholder value. The focus has been on opportunities to acquire operating precious metals mining operations and/or advanced stage precious metals mining projects in the favorable mining jurisdiction in the Americas.

 

As a function of this process, Great Panther acquired the Coricancha Mine in the Central Andes of Peru on June 30, 2017 from Nyrstar NV, a polymetallic mine and processing plant which Nyrstar NV had placed on care and maintenance four years prior. Since acquiring Coricancha, Great Panther has completed a preliminary economic assessment to evaluate the restart of the mine, and is currently undertaking a bulk sample program to further test the assumptions in the preliminary economic assessment (the “Bulk Sample Program”). Great Panther expects to complete the Bulk Sample Program in the first quarter of 2019. Following a full evaluation of the results of the Bulk Sample Program, Great Panther expects to be able to make a decision in 2019 on whether to commence the restart of Coricancha.

 

Great Panther’s Board and executive team has held dedicated strategic planning sessions over the last three years to formulate and advance the strategic objectives of Great Panther and the Scheme is the result of this process.

 

Over the last three years, Great Panther has engaged in the evaluation of at least eight acquisition opportunities by entering into mutual confidentiality agreements and conducting a review of data and, in some cases, engaging in more in-depth reviews that included site visits and engagement of consultants and advisors to assist in the evaluation. In at least three cases, negotiations progressed to the point of acceptance of non-binding offers or letters of intent subject to further due diligence and negotiation of definitive agreements.

 

 

4 Calculated for TSX approval purposes only based on (i) conversion by MACA of the maximum amount, (ii) current A$/C$ exchange rates, and (iii) a theoretical minimum conversion price based on 50% of the current trading price of Great Panther Shares on the TSX.

 

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In the process of evaluating a number of opportunities and potential acquisition targets, Beadell was identified as a key target during the first quarter of 2018 based on its fit relative to a number of key criteria established through Great Panther’s strategic planning process.

 

On July 31, 2018, the Great Panther Board formed the Great Panther Special Committee to review and consider the proposed transaction that is now the subject of the Scheme. McCarthy Tétrault LLP was appointed as legal advisors and GMP was appointed the financial advisor to the Great Panther Special Committee. Between July 31 and September 22, 2018, the Great Panther Special Committee held a number of formal meetings, and regular discussions with Great Panther’s CEO and CFO in which they considered all aspects of the Transaction and received financial and legal advice from its financial and legal advisers. Great Panther retained McMillan LLP as its legal advisor and Scotia Global Banking and Capital Markets as its financial advisor.

 

The Scheme is the result of arm’s length negotiations conducted between representatives of Great Panther and Beadell and their respective legal and financial advisors. This includes key executives of the respective companies and special committees of each of their respective board of directors constituted to oversee such activities. The following is a summary of the principal events, meetings, negotiations and actions among the parties leading up to the execution and public announcement of the Scheme.

 

In March 2018, Great Panther’s President and CEO contacted Beadell’s VP of Corporate Development (the “VPCD”) expressing interest in a business combination. Beadell’s VPCD advised that Beadell was focussed on executing on operational changes and optimization and did not have the capacity to facilitate due diligence, but expressed that Great Panther could do its own due diligence of Beadell’s existing data hosted on an electronic data room, and that the companies could engage in further discussions and an information exchange in several months.

 

On March 22, 2018 the companies entered into a mutual confidentiality and standstill agreement and Beadell granted Great Panther access to its company data, and Great Panther commenced its review of Beadell’s data.

 

On June 22, 2018 Beadell announced that it had terminated its life of mine mining services contract with MACA. The event led Great Panther’s CEO to contact Simon Jackson, Beadell’s then CEO and Managing Director, and convey an expression of Great Panther’s interest in acquiring Beadell. Mr. Jackson then referred the expression of interest to the chair of Beadell’s special committee.

 

This was followed by an in-person meeting on July 1, 2018 between Mr. Bannantine and Dr. Nicole Adshead-Bell who, at the time, was serving as an independent director of Beadell and a member of its special committee. During the meeting it was agreed to further explore a combination of the two companies. On July 12, 2018, a non-exclusive letter of intent for Great Panther to acquire Beadell was signed between the parties. The letter of intent outlined high-level transaction terms, structure and conditions, with the exception of an exchange ratio, and allowed for more extensive mutual due diligence and reinforcing terms of confidentiality.

 

Great Panther completed its site visit of Beadell’s operations in July, and Beadell completed its site visits of Great Panther’s operating mines in Mexico and Coricancha in August. The site visits were followed up with a number of due diligence discussions and meetings to answer further questions on the part of each party.

 

In August 2018, the parties had a number of discussions on an exchange ratio and other terms. The CEO and CFO of Great Panther were the key personnel involved in these discussions and negotiations, and regularly consulted with the chair of the Great Panther Special Committee and Great Panther’s financial and legal advisors. In addition, Great Panther held a formal Board meeting on August 13, 2018 in which the CEO and CFO provided details of due diligence, an update on the status of negotiations, valuation and offer price considerations and estimates based on work with Great Panther’s financial advisor and an expected timeline to negotiate formal agreements. Following the Board meeting, there were further negotiations between the two parties, during which the CEO and CFO continued to regularly consult with the chair of the Great Panther Special Committee. A meeting with the Great Panther Special Committee was also held on August 16, 2018 to discuss key negotiation points, including offer price and advice from Great Panther’s financial advisors. Following this meeting, the CEO, CFO and chair of the Great Panther Special Committee had several calls to discuss the final agreement on an offer price or exchange ratio, and an acceptable range was agreed upon. Other terms of the letter of intent were also reviewed with the chair of the Great Panther Special Committee, who also consulted with the Great Panther Special Committee’s legal advisors. During this period, Great

 

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Panther engaged in regular consultation with its legal and financial advisors. The negotiations during this period culminated in the signing of an addendum to the letter of intent on September 3, 2018. This addendum provided for an exchange ratio range and a period of exclusivity to negotiate a definitive agreement.

 

Following this, the parties entered into detailed negotiation of the Scheme Implementation Deed with support from their respective legal and financial advisors. During this period, the CEO and CFO were in regular contact with the chair of the Great Panther Special Committee on key considerations in respect of the negotiation of the Scheme Implementation Deed and on continued due diligence with respect to the transaction. On September 22, 2018, the parties held respective board meetings to review the terms of the Transaction and each provided their approval. The Great Panther meeting was attended by Great Panther’s financial and legal advisors as well as those of the Great Panther Special Committee. The meeting was adjourned so that the Great Panther Special Committee could separately consider and formulate its recommendation in consultation with its advisors. After doing so, the Great Panther Board meeting was reconvened and the chair of the Great Panther Special Committee conveyed the recommendation to proceed with the transaction, and the Great Panther Board followed with its formal approval. On September 23, 2018, the parties announced the signing of the Scheme Implementation Deed.

 

Following the public announcement of the Transaction, the Great Panther Board and the Great Panther Special Committee continued to hold regular meetings and discussions with Great Panther management on transaction progress and key outstanding conditions with respect to the Scheme Implementation Deed, and ongoing monitoring of key operational and financial metrics of Beadell. These included meetings to consider the negotiations with Beadell’s largest creditor, MACA, and negotiations with Beadell for a bridge loan facility. These included formal Great Panther Special Committee meetings on October 30, 2018, November 17 and 18, 2018. In addition, formal Great Panther Board meetings were held on October 30, 2018 and December 7, 2018 for which the Transaction was a prominent part of the meeting agenda.

 

On November 19, 2018, Great Panther and MACA entered into the MACA Consent Agreement, pursuant to which MACA consented to the Transaction and the parties agreed to vary certain terms of the MACA Agreement, as more fully described under the heading “Information Concerning the Merged Group – Financing Arrangements”.

 

Subsequent to the execution of the Scheme Implementation Deed, Great Panther made a determination that it would waive the Conditions Precedent relating to the Beadell Convertible Debentures and would make the Change of Control Purchase Offer following completion of the Transaction in accordance with the terms of the Debenture Indenture. In connection with the Transaction, it is anticipated that Great Panther will enter into an amended and restated or supplemental Debenture Indenture pursuant to which Great Panther will expressly assume the obligations of Beadell under the Debenture Indenture (including funding for the Change of Control Purchase Offer) and the holders of Beadell Convertible Debentures will be entitled to receive Great Panther Shares on the conversion thereof.

 

Following execution of the Scheme Implementation Deed, Beadell’s working capital position weakened. As a result, on December 5, 2018, Great Panther and Beadell entered into the Loan Agreement, pursuant to which Great Panther agreed to advance to Beadell and Beadell Brasil, as joint and several borrowers, a non-revolving term loan in the principal amount of US$5,000,000, the proceeds of which are being used by Beadell for working capital purposes, as more fully described under the heading “Information Concerning the Merged Group – Financing Arrangements”.

 

Great Panther’s Reasons for the Scheme

 

At its meeting held on September 22, 2018, after due consideration and consultation with Great Panther’s management and outside legal and financial advisors, the Great Panther Board unanimously approved the Scheme Implementation Deed and the transactions contemplated thereby and authorized the issuance of Great Panther Shares pursuant to the Scheme Implementation Deed. In doing so, the Great Panther Board considered the business, assets, development policies, liabilities, results of operations, financial performance, strategic direction and prospects of Great Panther and Beadell. Additionally, in making its determination, the Great Panther Board considered a number of factors, including, but not limited to, the following:

 

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Creation of a New Emerging Intermediate Precious Metals Producer focused on the Americas

 

The Scheme will result in significant pro forma gold and silver production, with Great Panther contributing approximately 4.0 million silver-equivalent ounces of production in 2018, and Beadell contributing approximately 120,000 gold ounces in 2018, with potential for further increase upon a positive decision to restart Coricancha. Coricancha has the potential to generate average annual production of 3.1 million ounces silver-equivalent based on the results of a preliminary economic assessment completed in May 2018. The Merged Group will also have an increased public float and broadened shareholder base, providing stronger liquidity and augmented scale in the capital markets.

 

Extensive Reserve and Resource Base

 

The Merged Group is anticipated to have attributable proven and probable reserves of approximately 1.3 million ounces of gold. Beadell will also contribute measured and indicated resources (exclusive of reserves) of approximately 0.8 million ounces of gold and inferred resources of approximately 1.5 million ounces of gold, supplementing Great Panther’s measured and indicated resources of approximately 49.4 million ounces silver-equivalent and inferred resources of approximately 48.5 million ounces silver-equivalent. From a Great Panther perspective, the Transaction would result in a Merged Group with reserves, when Great Panther previously had none, and would also be accretive to Measured, Indicated and Inferred Resources. Tucano’s reserves and resources are presented as at June 30, 2018 in accordance with the 2012 JORC Code and are detailed in Appendix E – “Information Concerning Beadell Resources Limited”.

 

Strong Balance Sheet to Support Complementary Assets

 

The enhanced balance sheet of the Merged Group, with a pro forma cash and short-term deposits balance of approximately US$53.5 million as at September 30, 2018 (after giving effect to the Transaction and assuming acceptance of the Change of Control Purchase Offer in respect of the outstanding Beadell Convertible Debentures), will enable ongoing optimization initiatives at Tucano. Additionally, the additional cash available may provide some downside protection in the event of an operational delay or downward movement in the price of gold.

 

Cost Synergies and Efficiencies

 

The Merged Group will benefit from anticipated corporate and administrative cost synergies associated with consolidating under a single executive team and head office.

 

Diversified Portfolio

 

The Merged Group will have three mining operations in Mexico and Brazil along with the Coricancha project located in Peru. Operating risk is expected to be significantly diversified with the inclusion of Brazil as a new core jurisdiction, which will represent 38% of pro forma share capital.

 

Robust Growth Profile

 

Coricancha provides near-term optionality with a restart decision expected in early 2019. In addition, the Merged Group is expected to benefit from near-term resource growth opportunities with multiple in-mine lease discoveries at Tucano and longer-term exploration optionality from Beadell’s 2,500 km2 highly prospective land package.

 

Attractive Re-Rating Potential

 

With a diversified portfolio of producing assets, near-term growth opportunities backed by a strong balance sheet and a quality management team, the Merged Group is well positioned for a re-rating, to the benefit of both Great Panther and Great Panther Shareholders.

 

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Risks and other Considerations

 

In connection with its deliberations relating to the Scheme, the Great Panther Board also considered potential risks and negative factors concerning the Scheme and the other transactions contemplated by the Scheme Implementation Deed, including, but not limited to, the following:

 

·the risk that the Scheme might not be completed in a timely manner or at all;

 

·the effect that the length of time from announcement until closing could have on the market price of Great Panther Shares, Great Panther’s operating results (particularly in light of the significant costs incurred in connection with the Scheme) and the relationships with Great Panther’s employees, shareholders, customers, suppliers, regulators, partners and others that do business with Great Panther;

 

·the risk that the anticipated benefits of the Scheme will not be realized in full or in part, including the risk that expected synergies will not be achieved or will not be achieved in the expected time frame;

 

·the risk that the regulatory approval process could result in a rejection of the Scheme, the imposition of undesirable conditions or burdensome terms or increased pre-tax transaction costs;

 

·the fact that the Scheme Implementation Deed provides for a fixed Exchange Ratio with respect to the Scheme Consideration and that no adjustment will be made in the Scheme Consideration to reflect changes in currency exchange rates or the trading price of the Great Panther Shares or Beadell Shares;

 

·the risk of diverting the attention of Great Panther’s senior management from other strategic priorities to implement the Scheme and make arrangements for integration of Great Panther’s and Beadell’s operations and infrastructure following the Scheme;

 

·the risk of maintaining the Beadell management team necessary for the development of the Tucano Gold Mine or of having the team necessary in Brazil to develop the Tucano Gold Mine;

 

·the fact that the Scheme Implementation Deed provides for the ability of the Beadell Board to, under certain circumstances, in a manner adverse to Great Panther, hold, change, amend, modify or qualify its recommendation that Beadell Shareholders approve the Scheme;

 

·the potential impact on the market price of Great Panther Shares as a result of the issuance of the Scheme Consideration to Beadell Shareholders; and

 

·the risks described elsewhere in this Management Information Circular under the heading “Risk Factors”, as well as the other risks set out in Appendices D and E.

 

The foregoing discussion of factors considered by the Great Panther Board is not intended to be exhaustive and may not include all the factors considered by the Great Panther Board. In view of the wide variety of factors considered in connection with its evaluation of the Scheme and the complexity of these matters, the Great Panther Board did not attempt to quantify, rank or otherwise assign any relative or specific weights to the factors that it considered in reaching its determination to approve the Scheme and the Scheme Implementation Deed. In addition, individual members of the Great Panther Board may have given differing weights to different factors. The Great Panther Board conducted an overall review of the factors described above and other material factors, including through discussions with, and inquiry of, Great Panther’s management and outside legal and financial advisor.

 

The foregoing description of Great Panther’s consideration of the factors supporting the Scheme is forward- looking in nature. This information should be read in light of the factors discussed in the section entitled “Information Contained in Management Information Circular - Cautionary Statement regarding Forward-Looking Statements.”

 

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Recommendation of the Great Panther Board

 

At its meeting held on September 22, 2018, having undertaken a review of, and carefully considered, information concerning Beadell, the Scheme and alternatives, including in-depth consultation with the Great Panther Special Committee, Great Panther’s management and Great Panther’s legal and financial advisors (including, among other things, a review and consideration of the GMP Fairness Opinion), and consideration of such other matters as the Great Panther Board considered relevant, the Great Panther Board: (a) determined that the Scheme Implementation Deed and the transactions contemplated thereby are in the best interests of Great Panther; (b) approved the Scheme Implementation Deed and the transactions contemplated thereby; and (c) resolved to unanimously recommend approval of the Great Panther Scheme Resolution by the Great Panther Shareholders.

 

The Great Panther Board unanimously recommends that Great Panther Shareholders vote FOR the Great Panther Scheme Resolution and the Name Change Resolution. Each member of the Great Panther Board will vote, or procure the voting of, all Great Panther Shares held by him or her in favour of the Great Panther Scheme Resolution and the Name Change Resolution.

 

Notwithstanding the recommendation of the Great Panther Board that Great Panther Shareholders vote in favour of the Great Panther Scheme Resolution, Great Panther Shareholders should make their own decision whether to vote their Great Panther Shares in favour of the Great Panther Scheme Resolution and, if appropriate, should consult their own legal, financial and other professional advisors in making that decision.

 

For further information regarding Great Panther’s reasons for pursuing the Scheme, see the section entitled “The Scheme – Great Panther’s Reasons for the Scheme”.

 

Great Panther Support Agreements

 

Concurrently with and as a condition to Great Panther and Beadell’s entering into the Scheme Implementation Deed, on or about September 23, 2018, the Great Panther Directors and executive officers entered into Great Panther Support Agreements with Beadell, pursuant to which they agreed, among other things, to attend the Great Panther Shareholder Meeting, and at such meeting, vote or cause to be voted, by proxy or otherwise, all of the Great Panther Shares over which the director or executive officer exercises control or direction.

 

Further, those who entered into the Great Panther Support Agreements also agreed that until the earlier of the Effective Date and the date the Scheme Implementation Deed is terminated, such director or executive officer would: (i) not grant any proxy or other right to vote any of the Great Panther Shares except in a manner consistent with their obligations in the Great Panther Support Agreement; and (ii) not enter into any voting trust, vote pooling, or other agreement with respect to the right to vote, call meetings of shareholders, or give consents or approval of any kind.

 

The Great Panther Support Agreements will terminate upon the termination of the Scheme Implementation Deed in accordance with its terms.

 

As at the date hereof, Great Panther Directors and executive officers had the right to vote approximately 1,488,296 Great Panther Shares, representing approximately 0.88% of the Great Panther Shares then outstanding and entitled to vote at the Great Panther Meeting.

 

Beadell Support Agreements

 

Concurrently with and as a condition to Great Panther and Beadell’s entering into the Scheme Implementation Deed, on or about September 23, 2018, the directors and officers of Beadell, holding 1.07% of the outstanding Beadell Shares, and certain major shareholders holding 16.99% of Beadell Shares, entered into Beadell Support Agreements, pursuant to which they agreed, among other things, to attend the Beadell Meeting, and at such meeting, in the absence of a Superior Proposal, vote or cause to be voted, by proxy or otherwise, all of the Beadell Shares over which the director or officer exercises control or direction and which are entitled to be voted in connection with the Scheme, including any Beadell Shares issued or acquired on or following the date of the Beadell Support Agreement (which

 

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includes all Beadell Shares to be issued as a result of exercise or vesting of any Beadell Options, Beadell Warrants or Beadell Performance Rights held by such individual) (the “Beadell Subject Securities”).

 

Further, those who entered into a Beadell Support Agreement also agreed that until the earlier of the Effective Date and the date the Scheme Implementation Deed is terminated, such director or officer would: (i) not grant any proxy or other right to vote any of the Beadell Subject Securities except in a manner consistent with their obligations in the Beadell Support Agreement; and (ii) not enter into any voting trust, vote pooling, or other agreement with respect to the right to vote, call meetings of shareholders, or give consents or approval of any kind in connection with any of the Beadell Subject Securities.

 

The Beadell Support Agreements will terminate upon the termination of the Scheme Implementation Deed in accordance with its terms.

 

Opinion of Great Panther’s Financial Advisor

 

The Great Panther Special Committee engaged GMP pursuant to an engagement letter dated September 11, 2018 (the “GMP Engagement Letter”) to provide certain advice and advisory services to the Great Panther Special Committee with respect to a potential transaction with Beadell, including but not limited to, an assessment of and recommendation in respect of the fairness from a financial point of view of the consideration to be paid by Great Panther in connection with the Transaction.

 

Pursuant to the GMP Engagement Letter, GMP agreed to provide a written fairness opinion to the Great Panther Special Committee as to the fairness, from a financial point of view, of the Scheme Consideration to be paid by Great Panther pursuant to the Transaction.

 

In connection with this engagement, GMP rendered to the Great Panther Special Committee its written opinion to the effect that, as of September 23, 2018, and based on and subject to the scope of review and approach to analysis, assumptions made, and limitations on the review undertaken as set forth therein, the consideration to be paid by Great Panther pursuant to the Transaction, is fair, from a financial point of view, to Great Panther.

 

GMP’s opinion was only one of many factors considered by the Great Panther Special Committee and the Great Panther Board in evaluating the Transaction and was not determinative of the views of the Great Panther Special Committee and the Great Panther Board with respect to the Transaction or the consideration set forth in the Scheme Implementation Deed.

 

GMP provided its opinion for the sole benefit and use of the Great Panther Special Committee and the Great Panther Board in connection with and for purposes of its evaluation of the consideration to be paid by Great Panther pursuant to the Transaction, from a financial point of view. GMP’s opinion does not address the relative merits of the Scheme as compared to any strategic alternatives that may be available or executable to Great Panther. The opinion of GMP does not constitute a recommendation as to how any Great Panther Shareholder should vote or act on any matter relating to the Transaction.

 

GMP was not asked to prepare and have not prepared a valuation of Great Panther or Beadell or any of the securities or assets thereof and the GMP Fairness Opinion should not be construed as a “formal valuation” (within the meaning of Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions). Great Panther has agreed to pay GMP a fixed fee for providing the opinion, which shall be paid whether or not the Transaction is completed.

 

Great Panther has also agreed to reimburse GMP for its reasonable out-of-pocket expenses and to indemnify GMP against certain liabilities that might arise out of GMP’s engagement.

 

See Appendix G for the full text of the GMP Fairness Opinion.

 

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Listing of Great Panther Shares

 

It is a condition precedent to Great Panther’s and Beadell’s obligation to effect the Scheme that the Great Panther Shares to be issued pursuant to the Scheme Implementation Deed are conditionally approved for listing on the TSX, subject only to the provision of such required documentation as is customary in the circumstances. Under the Scheme Implementation Deed, Great Panther is required to use its reasonable endeavours to obtain the listing and admission for trading of the Great Panther Shares on the TSX.

 

Great Panther has received the conditional approval of the TSX and has applied to the NYSE (American) for the listing of the Great Panther Shares to be issued pursuant to the Scheme, each subject to approval of the Great Panther Scheme Resolution and the filing of certain documents following implementation of the Scheme.

 

Delisting and Deregistration of Beadell Shares

 

As promptly as practicable after the Effective Date, Beadell Shares currently listed on the ASX will cease to be listed and Beadell will be deregistered from the ASX.

 

Interests of Great Panther’s Directors and Executive Officers in the Scheme and Other Matters

 

To the best of our knowledge, except as otherwise disclosed herein, no person who has been a director or executive officer of Great Panther at any time since the beginning of Great Panther’s last completed financial year, other insiders of Great Panther nor any associate or affiliate of the foregoing persons, has any substantial or material interest, direct or indirect, by way of beneficial ownership of securities or otherwise, in any matter to be acted on at the Great Panther Meeting.

 

The Beadell Meeting and Beadell Shareholder Approval

 

The Beadell Meeting will be held at 10:00 a.m. (Perth or WST time), on February 12, 2019, at The Celtic Club, 48 Ord Street, West Perth, Western Australia. At the Beadell Meeting, Beadell Shareholders will be asked to consider and vote to approve the Beadell Scheme Resolution.

 

Approval of the Beadell Scheme Resolution requires the affirmative vote of a majority in number (more than 50%) of Beadell Shareholders (other than the Excluded Shareholders) who vote on the Beadell Scheme Resolution and at least 75% of the votes cast on the Beadell Scheme Resolution. If the Beadell Scheme Resolution is not passed, the Transaction will not proceed.

 

The Beadell Board unanimously recommended that Beadell Shareholders vote in favour of the Beadell Scheme Resolution to approve the Scheme, in the absence of a Superior Proposal, and on the basis that the Independent Expert has concluded that the Scheme is “not fair but reasonable in the absence of a higher offer, and therefore in the best interests of Beadell Shareholders”.

 

Third Party Approvals Required for the Scheme

 

To complete the Scheme and the other transactions contemplated by the Scheme Implementation Deed, Great Panther and Beadell are required to use reasonable efforts to obtain all necessary authorizations, consents and approvals and to make all necessary notifications, registrations and filings, including any registrations, notifications and filings required to be made in connection with obtaining such approvals. Under the Scheme Implementation Deed, Beadell is required, among other actions, to obtain an opinion on the Scheme by the Independent Expert and seek the approval of the Scheme by the Court in accordance with the Australian Corporations Act. Beadell has obtained the opinion of the Independent Expert who has concluded that the Scheme “not fair but reasonable in the absence of a higher offer, and therefore in the best interests of Beadell Shareholders”.

 

The Scheme Implementation Deed also includes a condition precedent that Great Panther obtain an approval of the Treasurer under the Foreign Acquisitions and Takeovers Act 1975 (Australia) or confirmation that it was not applicable. On November 2, 2018, the Treasurer issued a statement of “no objection”.

 

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Great Panther and Beadell are not currently aware of any material governmental filings, authorizations, approvals or consents that are required prior to the parties’ completion of the Scheme other than those described in this Management Information Circular. There can be no assurance, however, if and when any of the approvals required to be obtained for the Scheme and the other transactions contemplated by the Scheme Implementation Deed will be obtained or as to the conditions or limitations that such approvals may contain or impose.

 

For a more detailed description of the approvals required for the Scheme, see the section entitled “The Scheme Agreement – Conditions Precedent.”

 

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THE SCHEME IMPLEMENTATION DEED

 

The summary of the material provisions of the Scheme Implementation Deed below and elsewhere in this Management Information Circular is qualified in its entirety by reference to the Scheme Implementation Deed, which is attached as Appendix H hereto. This summary may not contain all of the information about the Scheme Implementation Deed that is important to you. You should read carefully the Scheme Implementation Deed in its entirety as it is the legal document governing the Scheme.

 

Scheme Implementation Deed

 

The Scheme Implementation Deed sets out each of Beadell’s and Great Panther’s rights and obligations in connection with the implementation of the Scheme. A scheme is a statutory process under the Australian Corporations Act between Beadell and its shareholders which becomes binding on the passage of the requisite shareholder approvals and court approval. The Scheme Implementation Deed sets out obligations up to and leading to the Scheme becoming effective.

 

Scheme Deed Poll

 

On September 22, 2018, Great Panther executed the Deed Poll (a draft of which was attached to the Scheme Implementation Deed) pursuant to which each party agreed, subject to the Scheme becoming Effective, to provide each Beadell Shareholder (other than Excluded Shareholders) with, or procure the provision to each Beadell Scheme Shareholder of, the Scheme Consideration to which it is entitled under the Scheme.

 

Conditions Precedent

 

Conditions Precedent to the Scheme

 

The Scheme Implementation Deed provides that certain conditions precedent be satisfied or waived prior to completion of the Transaction.

 

1.Regulatory Matters: Before 5:00 p.m. on the Business Day before the Second Court Date one of the following has occurred: (a) Great Panther has received written notice under the Foreign Acquisitions and Takeovers Act 1975 (Cth) (“FATA”), by or on behalf of the Treasurer of the Commonwealth of Australia (the “Treasurer”), advising that the Commonwealth Government has no objections to the Transaction either unconditionally or on terms that are acceptable to Great Panther in its absolute discretion; (b) the Treasurer becomes precluded by the passage of time from making an order or decision under Part 3 of the FATA in relation to the Transaction and the Transaction is not prohibited by section 82 of the FATA; or (c) where an interim order is made under section 68 of the FATA in respect of the Transaction, the subsequent period for making an order or decision under Part 3 of the FATA elapses without the Treasurer making such an order or decision.

 

2.Other Regulatory Matters: Before 5:00 p.m. on the Business Day before the Second Court Date, any other approvals, consents, waivers, exemptions or declarations that are required by law, or by any Government Agency, to implement the Transaction (including in respect of Canadian, United States, Mexican and Brazilian anti-trust approvals, as required) are granted, given, made or obtained on an unconditional basis (or on conditions acceptable to each party, acting reasonably) and remain in full force and effect in all respects, and have not been withdrawn, revoked, suspended, restricted or amended (or become subject to any notice, intimation or indication of intention to do any such thing) and all applicable review and waiting periods have expired or been waived before 8:00 a.m. on the Second Court Date.

 

3.Beadell Shareholder Approval: Beadell Shareholders agree to the Scheme at the Beadell Meeting by the requisite majorities under subparagraph 411(4)(a)(ii) of the Australian Corporations Act.

 

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4.Independent Expert: The Independent Expert issues an Independent Expert’s Report which concludes that the Scheme is in the best interest of Beadell Shareholders before the time when the Beadell Scheme Book is registered by ASIC.

 

5.Court Approval: The Court approves the Scheme in accordance with paragraph 411(4)(b) of the Australian Corporations Act.

 

6.Great Panther Shareholder Approval: Great Panther Shareholders approve the Great Panther Scheme Resolution in accordance with the requirements of the TSX.

 

7.Restraints: Between (and including) September 23, 2018 and 8:00 a.m. on the Second Court Date:

 

(a)there is not in effect any temporary, preliminary or final order, injunction, decision or decree issued by any court of competent jurisdiction or other Government Agency, or other material legal restraint or prohibition;

 

(b)no action or investigation is announced, commenced or threatened by any Government Agency; and

 

(c)no application is made to any Government Agency,

 

(d)in consequence of, or in connection with, the Scheme which:

 

(e)restrains, prohibits or otherwise materially adversely affects (or could reasonably be expected to restrain, prohibit or otherwise materially adversely affect) the Scheme, completion of the Transaction or the rights of Great Panther in respect of Beadell or the Beadell Shares to be acquired under the Scheme; or

 

(f)requires the divestiture by Great Panther of any Beadell Shares or the divestiture of any assets of the Great Panther Group or the Beadell Group,

 

unless such order, injunction decision, decree, action, investigation or application has been disposed of to the satisfaction of Great Panther acting reasonably, or is otherwise no longer effective or enforceable, by 8:00 a.m. on the Second Court Date.

 

8.Beadell Prescribed Occurrence or Beadell Regulated Event: No Beadell Prescribed Occurrence or Beadell Regulated Event occurs between (and including) September 23, 2018 and 8:00 a.m. on the Second Court Date.

 

9.Beadell Material Adverse Change: No Beadell Material Adverse Change occurs, or is discovered, announced, disclosed or otherwise becomes known to Great Panther, between (and including) September 23, 2018 and 8:00 a.m. on the Second Court Date.

 

10.Great Panther Prescribed Occurrence or Great Panther Regulated Event: No Great Panther Prescribed Occurrence or Great Panther Regulated Event occurs between (and including) September 23, 2018 and 8:00 a.m. on the Second Court Date.

 

11.Great Panther Material Adverse Change: No Great Panther Material Adverse Change occurs, or is discovered, announced, disclosed or otherwise becomes known to Beadell, between (and including) September 23, 2018 and 8:00 a.m. on the Second Court Date.

 

12.MACA Agreement: With respect to the MACA Agreement:

 

(a)the MACA Agreement remains in full force and effect, and there is no breach or threatened breach of the MACA Agreement, at all times between September 23, 2018 and 8:00 a.m. on the Second Court Date; and

 

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(b)on or before 8:00 a.m. on the Second Court Date, Beadell shall have obtained from all applicable parties to the MACA Agreement their agreement to: (i) consent to the “Change of Control” (as such term is defined in the MACA Agreement) of Beadell resulting from the completion of the Transaction; and (ii) enter into an amended and restated MACA Agreement reflecting the acquisition of Beadell by Great Panther, each on terms satisfactory to Great Panther, acting reasonably, without a requirement of Great Panther to guarantee any obligation of any member of the Beadell Group or to incur any financial obligation to MACA, except as otherwise agreed by Great Panther in its sole discretion; and, once obtained, such agreement shall remain in full force and effect, unamended without the prior written consent of Great Panther, at all times between the date of their execution and delivery and 8:00 a.m. on the Second Court Date.

 

13.Relevant Material Contracts: On or before 8:00 a.m. on the Second Court Date:

 

(a)the relevant counterparty to a Relevant Material Contract provides Beadell in writing (which, to avoid doubt, includes a document originally executed and transmitted by email) a binding, irrevocable and unconditional waiver or release of its rights under the Relevant Material Contract that are triggered as a result of the completion of the Transaction (“Relevant Release”) provided that, to the extent that the Relevant Release is subject to conditions, those conditions are acceptable to Great Panther, acting reasonably; and

 

(b)the Relevant Release is not varied, revoked or qualified (such that, with respect of a variation or qualification, the Relevant Release is not acceptable to Great Panther, acting reasonably) before that time.

 

14.Facility Agreement: On or before 8:00 a.m. on the Second Court Date, Beadell shall obtain from all applicable parties to the Facility Agreement:

 

(a)their consent, in writing, to the implementation of the Transaction, and a waiver of their rights to demand the early payment of the facilities under the pre-export agreement triggered by the change of control resulting from such implementation;

 

(b)their consent, in writing, to extend the repayment terms and maturity date for such facilities by 6 months;

 

(c)their waiver, in writing, of their rights to demand the early payment of the facilities under the Facility Agreement for failure by Beadell to maintain any of the financial covenants for the period extending from January 1, 2018 until the final maturity date, as amended as aforesaid; and

 

(d)such other waivers and amendments, in writing, as may be required by Great Panther, acting reasonably, to ensure that the facilities will continue to remain in place following implementation of the Transaction,

 

and, once obtained, such consents and waivers shall remain in full force and effect, unamended without the prior written consent of Great Panther (acting reasonably), at all times between the date of their execution and delivery and 8:00 a.m. on the Second Court Date.

 

15.ACC Agreement: on or before 8:00 a.m. on the Second Court Date, Beadell shall obtain from Banco Bradesco S.A. in connection with the short-term uncommitted facilities commonly referred to as ACCs with Beadell Brasil:

 

(a)their consent to the implementation of the Transaction, and the waiver of their rights to demand the early payment of such facilities; and

 

(b)such other waivers and amendments as may be required by Great Panther, acting reasonably, to ensure that the facilities will continue to remain in place following implementation of the

 

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 Transaction; and, once obtained, such consents and waivers shall remain in full force and effect, unamended without the prior written consent of Great Panther (acting reasonably), at all times between the date of their execution and delivery and 8:00 a.m. on the Second Court Date.

  

16.Beadell Convertible Debentures: before 8:00am on the Second Court Date, the holders of the Beadell Convertible Debentures on issue as at September 23, 2018 agreeing in writing to either:

 

(a)accept the offer required to be made by Beadell under the Debenture Indenture to purchase those debentures upon Implementation of the Transaction, unconditionally or on conditions satisfactory to the parties (each acting reasonably), or

 

(b)waive the obligation under the Debenture Indenture to make an offer to purchase those debentures upon Implementation of the Transaction and consent to the entering into of a supplemental indenture in respect of the Beadell Convertible Debenture to, among other things: (i) consenting to the “Change of Control”, as defined in the Debenture Indenture, resulting from the implementation of the Transaction; (ii) agreeing to accept the issue of Great Panther Shares in lieu of Beadell Shares on exercise of rights of conversion of the Beadell Convertible Debentures; (iii) agreeing that Great Panther is not a successor issuer for the purposes of Article 11 of the Debenture Indenture and is not required to assume the obligations of Beadell under the Debenture Indenture, (iv) waiving the requirement under Section 7.12 of the Debenture Indenture that Beadell maintain the listing of its common shares on the ASX; and (v) such other terms and conditions satisfactory to Great Panther, acting reasonably, without a requirement of Great Panther to assume the obligations of Beadell or otherwise act as an obligor or guarantor of the amounts owing under the Debenture Indenture.

 

17.Beadell Warrants: Either:

 

(a)Beadell has entered into binding agreements with 100% of the Beadell Warrantholders to accept the Warrant Consideration in exchange for their outstanding Beadell Warrants on the Scheme becoming Effective; or

 

(b)if Beadell proposes the Warrant Scheme under clause 4.8(b):

 

(i)the Beadell Warrantholders agree to the Warrant Scheme by the requisite majorities under subparagraph 411(4)(a)(ii) of the Australian Corporations Act; and

 

(ii)the Court approves the Warrant Scheme in accordance with paragraph 411(4)(b) of the Australian Corporations Act.

 

18.Beadell Convertible Securities: On or before 8:00am on the Second Court Date, the Beadell Board has made a determination that all Beadell Convertible Securities will have been vested and exercised or terminated as provided below:

 

(a)in the case of the Beadell Options, each outstanding Beadell Option will be exercised in exchange for Beadell Shares or will lapse or be terminated in accordance with the Beadell Option Plan by 5:00 p.m. on the Business Day before the Beadell Scheme Record Date; and

 

(b)in the case of the Beadell Performance Rights, each outstanding Beadell Performance Rights will vest and be exercised in exchange for Beadell Shares in accordance with the Performance Rights Plan by 5:00 p.m. on the Business Day before the Beadell Scheme Record Date, provided that any Great Panther Shares issued to employees of Beadell who will continue as employees of Beadell following completion of the Transaction in exchange for their Beadell Shares under the Scheme will be subject to a six month restriction on resale, provided the restriction will expire in the event of termination of their employment within the six month period.

 

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19.Great Panther Shares: The Great Panther Shares to be issued pursuant to the Scheme are approved for listing on the TSX by 8:00 a.m. on the Second Court Date (provided that any such approval may be subject to the customary conditions) and that approval remains in full force and effect in all respects (subject to those customary conditions), and has not been withdrawn, revoked, suspended, restricted or amended (or become subject to any notice, intimation or indication of intention to do any such thing) before 8:00 a.m. on the Second Court Date.

 

20.Brazilian Property Title Opinion: Beadell delivers a legal opinion of its Brazilian counsel to Great Panther respecting the Beadell Mineral Rights as of a date that is no earlier than five Business Days before the Second Court Date that contains no changes from the opinion delivered by Beadell to Great Panther respecting all material mineral interests and rights (including any mineral claims, mining claims, concessions, exploration licences, exploitation licences, prospecting permits, mining leases and mining rights, in each case, either existing under contract, by operation of law or otherwise) (collectively, the “Beadell Mineral Rights”) prior to and in connection with the execution of the Scheme Implementation Deed that amount to or evidence a breach of Beadell’s representations and warranties under the Scheme Implementation Deed that would give rise to an entitlement of Great Panther to terminate the Scheme Implementation Deed.

 

21.Beadell Officer’s Certificate: Beadell delivers to Great Panther a certificate of an officer of Beadell confirming that, as at 8:00 a.m. on the Second Court Date:

 

(a)there has been no breach of any Beadell representation and warranty under the Scheme Implementation Deed that would amount to or evidence a Beadell Material Adverse Change, or which could reasonably be expected to give rise to any loss, claim, damage or expense of A$2.5 million or more in aggregate; and

 

(b)Beadell has complied with its obligations under the Scheme Implementation Deed in all material respects.

 

22.Great Panther Officer’s Certificate: Great Panther delivers to Beadell a certificate of an officer of Great Panther confirming that, as at 8:00 a.m. on the Second Court Date:

 

(a)there has been no breach of any Great Panther representation and warranty under the Scheme Implementation Deed that would amount to or evidence a Great Panther Material Adverse Change, or which could reasonably be expected to give rise to any loss, claim, damage or expense of A$5.0 million or more in aggregate; and

 

(b)Great Panther has complied with its obligations under the Scheme Implementation Deed in all material respects.

 

Conditions Precedent for the Benefits of both Parties

 

The Conditions Precedent set out in 7 and 19 are for the benefit of both parties and may only be waived by written agreement between Great Panther and Beadell (in each case in their respective absolute discretion).

 

Conditions Precedent for the Benefit of Beadell

 

The Conditions Precedent set out in 4, 10, 11 and 22 are for the sole benefit of Beadell and may only be waived by Beadell (in its absolute discretion in writing).

 

Conditions Precedent for the Benefit of Great Panther

 

The Conditions Precedent set out in 8, 9, 12 through 18, 20 and 21 are for the sole benefit of Great Panther and may only be waived by Great Panther (in its absolute discretion in writing).

 

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Conditions Precedent that May Not be Waived

 

The Conditions Precedent set out in 1, 2, 3, 5 and 6 above may not be waived.

 

Covenants in Relation to the Scheme

 

Great Panther and Beadell have each given, in favour of the other party, usual and customary mutual covenants for an agreement of this nature including mutual covenants to conduct their respective businesses in the usual and ordinary course and consistent with past practices, to use their respective reasonable commercial efforts to satisfy or cause the satisfaction of the conditions precedent to their respective obligations under the Scheme Implementation Deed, to not take, or cause to be taken, any action or cause anything to be done that would cause such obligations not to be fulfilled in a timely manner and to take, or cause to be taken, all other actions and to do, or cause to be done, all other things necessary, proper or advisable to complete the Transaction.

 

Representations and Warranties

 

The Scheme Implementation Deed contains representations and warranties that the parties have made to each other as of specific dates which are customary to a transaction of this nature. The assertions embodied in the representations and warranties in the Scheme Implementation Deed were made solely for purposes of the Scheme Implementation Deed and the transactions and agreements contemplated thereby among the parties thereto and may be subject to important qualifications and limitations agreed to by the parties thereto in connection with negotiating the terms thereof. The representations and warranties may also be subject to a contractual standard of materiality different from those generally applicable to shareholders and reports and documents filed with the ASX or SEDAR, and the assertions embodied in the representations and warranties contained in the Scheme Implementation Deed (and summarized below) are qualified by information in disclosure schedules provided by Beadell to Great Panther and by Great Panther to Beadell in connection with the signing of the Scheme Implementation Deed and by certain information contained in certain of Beadell’s filings with the ASX and by certain information contained in certain of Great Panther’s filings on SEDAR. These disclosure schedules and ASX and SEDAR filings contain information that modifies, qualifies and creates exceptions to the representations and warranties set forth in the Scheme Implementation Deed. In addition, information concerning the subject matter of the representations and warranties may have changed or may change after September 23, 2018 and subsequent developments or new information qualifying a representation or warranty may have been included in this Management Information Circular.

 

In addition, if specific material facts arise that contradict the representations and warranties in the Scheme Implementation Deed, Great Panther and Beadell, as applicable, will disclose those material facts in the public filings that it makes with the ASX and the Canadian securities regulatory authorities in accordance with, and to the extent required by, applicable law. Accordingly, the representations and warranties in the Scheme Implementation Deed and the description of them in this Management Information Circular should not be read alone, but instead should be read in conjunction with the other information contained in the reports, statements and filings Great Panther and Beadell publicly file with the ASX or SEDAR. Such information can be found elsewhere in this Management Information Circular and in the public filings Great Panther makes on SEDAR and Beadell makes with the ASX.

 

Provisions Regarding Exclusivity, Superior Proposals and Matching Rights

 

Restrictive Covenants

 

Under the Scheme Implementation Deed, Beadell agreed to: (a) terminate any existing discussions or negotiations in relation to, or which may reasonably be expected to lead to, any Competing Proposal; (b) cease providing or making available to any Third Party any non-public information which might reasonably be expected to lead to any Competing Proposal, and to promptly exercise any rights under any confidentiality agreement with a Third Party to compel the return or destruction of such information; and (c) to not waive any confidentiality or standstill agreement with any Third Party, subject to certain fiduciary obligations as provided for in the Scheme Implementation Deed. In addition, Beadell is subject to ongoing exclusivity obligations including non-solicitation, no-talk and no-due diligence covenants, which provide for certain notification and counter proposal rights in favour of Great Panther.

 

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In summary, during the Exclusivity Period:

 

1.No solicitation. Beadell must not, and must ensure that its Related Persons and Related Bodies Corporate do not, directly or indirectly, solicit, invite, encourage or initiate (including by the provision of non-public information to any Third Party) any inquiry, expression of interest, offer, proposal or discussion by any person in relation to, or which would reasonably be expected to encourage or lead to the making of, an actual, proposed or potential Competing Proposal or communicate to any person an intention to do any of the foregoing;

 

2.No talk and no due diligence. Subject to clause 11.3 (Fiduciary Exception) of the Scheme Implementation Deed, Beadell must not, and must ensure that its Related Persons and Related Bodies Corporate do not, directly or indirectly:

 

(a)participate in or continue any negotiations or discussions with respect to any inquiry, expression of interest, offer, proposal or discussion by any person to make, or which would reasonably be expected to encourage or lead to the making of, an actual, proposed or potential Competing Proposal or participate in or continue any negotiations or discussions with respect to any actual, proposed or potential Competing Proposal;

 

(b)negotiate, accept or enter into, or offer or agree to negotiate, accept or enter into, any agreement, arrangement or understanding regarding an actual, proposed or potential Competing Proposal;

 

(c)disclose or otherwise provide or make available any material non-public information about the business or affairs of the Beadell Group to a Third Party (other than a Government Agency that has the right to obtain that information and has sought it) in connection with, with a view to obtaining, or which would reasonably be expected to encourage or lead to the formulation, receipt or announcement of, an actual, proposed or potential Competing Proposal (including, without limitation, providing such information for the purposes of the conduct of due diligence investigations in respect of the Beadell Group) whether by that Third Party or another person; or

 

(d)communicate to any person an intention to do anything referred in the preceding paragraphs.

 

Fiduciary Exceptions

 

The foregoing covenants do no prohibit any action or inaction by Beadell, any of its Related Bodies Corporate or any of their respective Related Persons, in relation to an actual, proposed or potential Competing Proposal if compliance with such covenants would, in the reasonable opinion of the Beadell Board, formed in good faith after receiving written legal advice from its external legal advisers, constitute, or would be reasonably likely to constitute, a breach of any of the fiduciary or statutory duties of the Beadell Board, provided that: (a) the actual, proposed or potential Competing Proposal was not directly or indirectly brought about by, or facilitated by, a breach of any of the foregoing covenants and is, or may reasonably be expected to result in, a Superior Proposal; (b) Beadell immediately notifies Great Panther of each action or inaction by it, any of its Related Bodies Corporate or any of their respective Related Persons in reliance on such fiduciary exceptions; and (c) prior to providing any information to the Third Party, Beadell enters into a confidentiality agreement on terms no less onerous to the Third Party (including as to dealings in Beadell Shares) than the Confidentiality Agreement.

 

Notification Obligations

 

During the Exclusivity Period, Beadell must as soon as possible notify Great Panther in writing if it, any of its Related Bodies Corporate or any of their respective Related Persons, becomes aware of any: (a) negotiations or discussions, approach or attempt to initiate any negotiations or discussions, or intention to make such an approach or attempt to initiate any negotiations or discussions in respect of any inquiry, expression of interest, offer, proposal or discussion in relation to an actual, proposed or potential Competing Proposal; (b) proposal made to Beadell, any of its Related Bodies Corporate or any of their respective Related Persons in connection with, or in respect of any exploration or completion of, an actual, proposed or potential Competing Proposal; or (c) provision by Beadell, any of its Related

 

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Bodies Corporate or any of their respective Related Persons of any material non-public information concerning the business or operations of Beadell or any of its Related Bodies Corporate to any to a Third Party (other than a Government Agency) in connection with an actual, proposed or potential Competing Proposal, whether direct or indirect, solicited or unsolicited, and in writing or otherwise.

 

Such notification must be provided as soon as reasonably practicable on a verbal basis an in writing within two Business Days, and shall accompanied by all relevant details of the relevant event, including the identity of the relevant person making or proposing the relevant actual, proposed or potential Competing Proposal, together with all material terms and conditions of the actual, proposed or potential Competing Proposal (including price and form of consideration, conditions precedent, proposed deal protection provisions and indicative timetable). If any letter, term sheet or similar document is provided to Beadell in connection with a Competing Proposal, such document shall be provided to Great Panther in its entirety and without redaction.

 

Matching Rights

 

If Beadell receives a Beadell Competing Proposal that it determines to be a Superior Proposal, and Beadell has provided Great Panther with the material terms and conditions of the actual, proposed or potential Competing Proposal, including price and the identity of the Third Party making the actual, proposed or potential Competing Proposal, and an outline of the basis on which the Beadell Board has formed the view that the Competing Proposal is or would be reasonably likely to be an actual, proposed or potential Superior Proposal, Beadell must give Great Panther at least five Business Days written notice to provide a matching or superior proposal to the terms of the actual, proposed or potential Competing Proposal (including by way of an increase or decrease in the Scheme Consideration) (a “Bidder Counterproposal”).

 

If Great Panther proposes a Bidder Counterproposal by the expiry of the five Business Day period, Beadell must procure that the Beadell Board consider the Bidder Counterproposal and if the Beadell Board, acting reasonably and in good faith, determines that the Bidder Counterproposal would provide an equivalent or superior outcome for Beadell Shareholders as a whole compared with the Competing Proposal, taking into account all of the terms and conditions of the Bidder Counterproposal, then: (a) both parties must use their best endeavours to agree the amendments to this deed, the Scheme and the Deed Poll (as applicable) that are reasonably necessary to reflect the Bidder Counterproposal and to implement the Bidder Counterproposal, in each case as soon as reasonably practicable; (b) Beadell must make an announcement as soon as reasonably possible recommending the Bidder Counterproposal and rejecting the Competing Proposal; and (c) Beadell must use its best endeavours to procure that each of its directors continue to recommend the Transaction (as modified by the Bidder Counterproposal) to the Beadell Shareholders.

 

Termination Rights

 

Mutual Termination Rights

 

Either party may terminate the Scheme Implementation Deed by written notice to the other party if:

 

1.other than in respect of a breach of a representation and warranty, at any time before 8:00 a.m. on the Second Court Date, if the other party has materially breached the Scheme Implementation Deed, the party entitled to terminate has given written notice to the party in breach of the Scheme Implementation Deed setting out the relevant circumstances and stating an intention to terminate the Scheme Implementation Deed, and the other party has failed to remedy the breach within five Business Days (or any shorter period ending at 5:00 p.m. on the Business Day before the Second Court Date) after the date on which the notice is given;

 

2.at any time before 8:00 a.m. on the Second Court Date if the Court or another Government Agency (including any other court) has taken any action permanently restraining or otherwise prohibiting or preventing the Transaction, or has refused to do anything necessary to permit the Transaction to be implemented by the End Date, and the action or refusal has become final and cannot be appealed or reviewed or the party, acting reasonably, believes that there is no realistic prospect of an appeal or review succeeding by the End Date;

 

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3.in the circumstances set out in, and in accordance with, clause 3.5 of the Scheme Implementation Deed (Termination on Failure of Condition Precedent); or

 

4.if the Effective Date for the Scheme has not occurred, or will not occur, on or before the End Date.

 

Great Panther Termination Rights

 

Great Panther may terminate the Scheme Implementation Deed by written notice to Beadell at any time before 8:00 a.m. on the Second Court Date if:

 

1.the Great Panther Board or a majority of the Great Panther Board has changed, withdrawn or modified its recommendation as permitted under clause 5.3(h) of the Scheme Implementation Deed and, if obliged to do, Great Panther has paid the Great Panther Reimbursement Fee to Beadell; or

 

2.any Beadell Board member fails to recommend the Scheme, withdraws, adversely revises or adversely modifies their recommendation that Beadell Shareholders (other than Excluded Shareholders) vote in favour of the Scheme, or makes a public statement indicating that they no longer recommend the Transaction or recommend, supports or endorses another transaction.

 

Great Panther may, at any time prior to 8:00 a.m. on the Second Court Date, terminate the Scheme Implementation Deed for a breach of Beadell’s representations and warranties only if: (a) Great Panther has given written notice to Beadell setting out the relevant circumstances and stating an intention to terminate or to allow the Scheme to lapse; (b) the relevant breach continues to exist five Business Days (or any shorter period ending at 5:00 p.m. on the Business Day before the Second Court Date) after the date on which the notice is given; and (c) the relevant breach amounts to or evidences a Beadell Material Adverse Change or could reasonably be expected to give rise to any loss, claim, damage or expense of A$2.5 million or more in aggregate.

 

Beadell Termination Rights

 

Beadell may terminate the Scheme Implementation Deed by written notice to Great Panther at any time before 8:00 a.m. on the Second Court Date if:

 

1.the Beadell Board or a majority of the Beadell Board has changed, withdrawn or modified its recommendation as permitted under clause 5.7 of the Scheme Implementation Deed and, if obliged to do so, Beadell has paid the Beadell Reimbursement Fee to Great Panther; or

 

2.any Great Panther Board member fails to recommend the Transaction, withdraws, adversely revises or adversely modifies its recommendation that Great Panther Shareholders vote in favour of the Transaction, or makes a public statement indicating that it no longer recommends the Transaction or recommends, supports or endorses another transaction.

 

Beadell may, at any time prior to 8:00 a.m. on the Second Court Date, terminate the Scheme Implementation Deed for a breach of Great Panther’s representations and warranties only if: (a) Beadell has given written notice to Great Panther setting out the relevant circumstances and stating an intention to terminate or to allow the Scheme to lapse; (b) the relevant breach continues to exist five Business Days (or any shorter period ending at 5:00 p.m. on the Business Day before the Second Court Date) after the date on which the notice is given; and (c) the relevant breach amounts to or evidences a Great Panther Material Adverse Change or could reasonably be expected to give rise to any loss, claim, damage or expense of A$5.0 million or more in aggregate.

 

If the Scheme Implementation Deed is terminated by either party, the Scheme Implementation Deed will become void and have no effect, other than clauses 1 (Definitions and Interpretations), 8 (Releases), 9 (Public Announcement), 10 (Confidentiality), 12 (Reimbursement Fee), 14 (Duty, costs and expenses), 15 (GST), 16 (Notices), 17 (General) and Schedule 2 (Definitions and Interpretation) which shall survive termination and in respect of any liability for an antecedent breach of the Scheme Implementation Deed.

 

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Reimbursement Fees

 

Beadell Reimbursement Fee

 

Under the Scheme Implementation Deed, Beadell must pay to Great Panther, without set-off or withholding, the Beadell Reimbursement Fee of A$2.2 million, subject to clause 12.6 (Compliance with law) of the Scheme Implementation Deed, if:

 

1.at any time during the Exclusivity Period, any Beadell Board member withdraws, adversely revises or adversely qualifies their support of the Scheme or their recommendation that Beadell Shareholders (other than Excluded Shareholders) vote in favour of the Scheme or fails to recommend that Beadell Shareholders (other than Excluded Shareholders) vote in favour of the Scheme, unless the Independent Expert concludes in the Independent Expert’s Report (or any update of, or revision, amendment or supplement to, that report) that the Scheme is not in the best interest of Beadell Shareholders (except where that conclusion is due wholly or partly to the existence, announcement or publication of a Competing Proposal);

 

2.during the Exclusivity Period, the Beadell Board or a majority of the Beadell Board recommends that Beadell Shareholders accept or vote in favour of, or otherwise supports or endorses (including support by way of accepting or voting, or by way of stating an intention to accept or vote, in respect of any Director Beadell Shares), a Competing Proposal of any kind that is announced (whether or not such proposal is stated to be subject to any pre-conditions) during the Exclusivity Period;

 

3.a Competing Proposal in respect of Beadell of any kind is announced during the Exclusivity Period (whether or not such proposal is stated to be subject to any pre-conditions) and, within six months of the date of such announcement, the Third Party or any Associate of that Third Party, completes the Competing Proposal;

 

4.the Court fails or refuses (taking into account all appeals) to approve the Scheme, or indicates that it is only willing to do so subject to amendments or modifications which are not consented to by Great Panther (in its absolute discretion), as a result of a material non-compliance by Beadell with any of its obligations under this deed or applicable law; or

 

5.Great Panther has terminated the Scheme Implementation Deed pursuant to clause 13.1(a)(1) or 13.2(a) of the Scheme Implementation Deed and the Transaction does not complete,

 

unless Beadell is, at that time, entitled to terminate the Scheme Implementation Deed pursuant to clause 13.1(a)(1), 13.1(a)(3) (as a result of the failure of the Condition Precedent in clause 3.1(l)), or 13.2(b) of the Scheme Implementation Deed.

 

Great Panther Reimbursement Fee

 

Under the Scheme Implementation Deed, Great Panther must pay to Beadell, without set-off or withholding, the Great Panther Reimbursement Fee of A$2.2 million, subject to clause 12.6 (Compliance with law) of the Scheme Implementation Deed, if:

 

1.at any time during the Exclusivity Period, any Great Panther Board Member withdraws, adversely revises or adversely qualifies their support of the Scheme or their recommendation that Great Panther Shareholders vote in favour of the Transaction and the issuance of the Scheme Consideration or fails to recommend that Great Panther Shareholders vote in favour of the Transaction and Great Panther Shareholders do not approve the Transaction by the requisite majorities or Great Panther terminates the Scheme Implementation Deed under clause 13.1(b)(1) of the Scheme Implementation Deed;

 

2.a Competing Proposal in respect of Great Panther of any kind is announced during the Exclusivity Period (whether or not such proposal is stated to be subject to any pre-conditions) and the Great Panther Shareholders do not approve the Transaction by the requisite majorities and, within six months after the date of the

 

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 announcement of the Competing Proposal, the Third Party or any Associate of that Third Party completes the Competing Proposal; or

  

3.Beadell has terminated the Scheme Implementation Deed pursuant to clause 13.1(a)(1) or 13.2(b) of the Scheme Implementation Deed and the Transaction does not complete,

 

unless Great Panther is, at that time, entitled to terminate the Scheme Implementation Deed pursuant to clause 13.1(a)(1), 13.1(a)(3) (as a result of the failure of the Condition Precedent in clause 3.1(i)), or 13.2(a) of the Scheme Implementation Deed.

 

Indemnification and Insurance

 

Under the Scheme Implementation Deed, each of Great Panther and Beadell have indemnified the other and its representatives against any loss suffered or incurred as a result of a breach of the warranties of the indemnifying party.

 

Under the Scheme Implementation Deed, Beadell is to maintain its directors’ and officers’ insurance coverage for a period of seven years following the Effective Date.

 

Governing Law

 

The Scheme Implementation Deed is governed, construed and enforced in accordance with the laws of Australia.

 

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INFORMATION ABOUT THE COMPANIES

 

Great Panther Silver Limited

 

Great Panther was originally incorporated under the Company Act (British Columbia) in 1965 under the name “Lodestar Mines Ltd.” On June 18, 1980, the Great Panther Shares were listed on the TSX Venture Exchange. On March 22, 1996, Great Panther was continued under the Business Corporation Act (Yukon). On July 9, 2004, Great Panther was continued to British Columbia under the Business Corporations Act (British Columbia). On November 14, 2006, the Great Panther Shares began trading on the TSX. On February 8, 2011, the Great Panther Shares were listed on the NYSE (American), while Great Panther retained its listing on the TSX.

 

Great Panther is presently a primary silver mining and exploration company and its current business was effectively established on February 18, 2004 when the Company entered into an option agreement, which granted it the right and option to purchase 100% of the ownership rights to its current day Topia mine in the state of Durango, Mexico. The Company exercised its option to purchase the mine in in February 2005. Following this, on October 25, 2005, the Company signed a formal purchase agreement to purchase 100% of the ownership rights in a group of producing and non-producing silver-gold mines in the Guanajuato Mining District, which included the primary assets and concessions that comprise the Company’s current day Guanajuato Mine Complex, including the San Ignacio mining concessions and the Cata processing plant. In August 2012, the Company signed a definitive agreement for the purchase of a 100% interest in certain surface rights to a total of 19.4 hectares at the San Ignacio Mine, for the construction of a mine portal and ancillary surface facilities. On June 30, 2017, Great Panther purchased the Coricancha Mine in Peru.

 

Great Panther’s current activities are focused on the mining of precious metals from its two wholly-owned operating mines in Mexico: the Guanajuato Mine Complex and the Topia Mine. Great Panther is also advancing towards a decision to restart the Coricancha Mine in Peru with the initiation of a bulk sample program following the completion of a positive preliminary economic assessment in May 2018. Great Panther also continues to pursue the acquisition of additional mining operations or projects in the Americas.

 

Great Panther is a public company trading on the TSX under the ticker symbol “GPR” and on the NYSE (American) under the ticker symbol “GPL”. Great Panther’s principal executive offices are located at Suite 1330, 200 Granville Street, Vancouver, British Columbia V6C 1S4, and its telephone number is 604-608-1766. Additional information about Great Panther can be found under its profile on SEDAR at www.sedar.com or its website at www.greatpanther.com. The information contained in, or that can be accessed through, Great Panther’s website is not intended to be incorporated by reference into this Management Information Circular, except as expressly provided for herein. For further information about Great Panther, see Appendix D.

 

Beadell Resources Limited

 

Beadell is a public company trading on the ASX under the ticker symbol “BDR”. Beadell was incorporated on May 3, 2007 in Western Australia, Australia under Australian Company Number ACN 125 222 291. Beadell operates the Tucano Gold Mine in mining-friendly Amapá State, northern Brazil. Tucano is located within 2,500 km2 of highly prospective and under-explored “Birimian age” greenstone terrane. The Tucano plant was recently upgraded to process approximately 3.5 million tonnes per year of oxide-sulphide ore feed in for a range of blends. There is a pipeline of high potential in-mine and near-mine prospects, anchored by several high-grade gold drill intervals over several metres, which represent a near-term opportunity to improve the head grade and prolong the mine life.

 

Additional information about Beadell can be found on the website of the ASX at www.asx.com.au or its website at www.beadellresources.com.au. The information contained in, or that can be accessed through, the website of the ASX or Beadell’s website is not intended to be incorporated into this Management Information Circular. In addition, Beadell is required to lodge various documents with ASIC. Copies of documents lodged with ASIC by Beadell may be obtained from an ASIC office. For further information about Beadell, including copies of its 2017 Annual Report, 2016 Annual Report, management’s discussion and analysis for the nine-month period ended September 30, 2018, and annual and interim financial statements for its most recently completed financial periods, see Appendix E.

 

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INFORMATION CONCERNING THE MERGED GROUP

 

Summary

 

The acquisition of Beadell by Great Panther will create a new emerging and growth oriented precious metals producer. Upon implementation of the Scheme, Great Panther will continue to be a company existing under the laws of the Province of British Columbia, Canada, and former Beadell Shareholders (other than Ineligible Foreign Shareholders and Electing Small Shareholders) will hold Great Panther Shares. The Great Panther Shares will continue to be quoted on the TSX and the NYSE (American).

 

Overview of the Merged Group’s Asset Portfolio

 

The Transaction will create a new emerging and growth oriented precious metals producer focused on the Americas with strong geographic diversity across three leading mining jurisdictions, and a diverse asset portfolio including:

 

(a)Beadell’s Tucano Gold Mine located in Brazil;

 

(b)Great Panther’s Guanajuato Mine Complex located in Mexico;

 

(c)Great Panther’s Topia Mine located in Mexico;

 

(d)Great Panther’s Coricancha Mine in Peru;

 

(e)Great Panther’s El Horcon, Santa Rosa, and Plomo exploration properties in Mexico; and

 

(f)Beadell’s Tartaruga Gold Exploration Project located in Brazil.

 

The foregoing assets are described in more detail in Appendices D and E of this Management Information Circular.

 

Direction of the Merged Group

 

Great Panther’s strategy for the Merged Group is to focus on the optimization of Beadell’s Tucano mine in Brazil, including enhancement of mining and processing operations, while maintaining and improving operations at Great Panther’s Guanajuato and Topia mines in Mexico and advancing the evaluation of a restart of the Coricancha mine in Peru. Great Panther plans to implement this strategy with a diligent focus on mining costs and conservative decision making in order to preserve the balance sheet of the Merged Group and minimize future financing requirements. To the extent that additional financing is required, the Merged Group will evaluate equity and debt financings, and potentially a combination of equity and debt financings, as required to continue its business plans for the Merged Group.

 

Over the last few years, Great Panther has grown and optimized its operations in Mexico and acquired and advanced its Coricancha project in Peru. Great Panther’s balance sheet strength and management team, who have experience in Brazil, are expected to facilitate Beadell’s Tucano improvement and other optimization initiatives and assisting in managing Beadell’s debt service obligations.

 

At September 30, 2018, Great Panther had approximately US$58 million in cash and short-term deposits, US$65 million in net working capital and no debt. However, after giving effect to the Transaction, Great Panther will assume Beadell’s indebtedness under the MACA Agreement, the Beadell Convertible Debentures, the ACCs and the Facility Agreement, as more fully described under the heading “Information Concerning the Merged Group – Financing Arrangements”. Such additional indebtedness may impact the ability of Great Panther to pursue its business objectives. See “Risk Factors” herein, as well as the additional risk factors included and incorporated by reference in Appendices D and E to this Management Information Circular.

 

After giving effect to the Transaction, it is anticipated that Great Panther’s cash and net-working capital will be sufficient to manage Tucano’s lower productivity in the first half of 2019 and later fund Tucano’s near-term

 

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exploration and growth initiatives aimed at increasing the Tucano life of mine and net present value. However, if production at Tucano does not increase as anticipated, it is possible that additional funds may be required in order to carry out Beadell’s business operations.

 

Intentions of the Merged Group

 

The statements of intention made in this section are based on the information concerning Beadell and Great Panther and the circumstances affecting the businesses of Beadell and Great Panther that are known to both companies at the date of this Management Information Circular.

 

Final decisions on these matters will only be made by the Merged Group Board in light of all material information, facts and circumstances at the relevant time if the Scheme is implemented. Accordingly, it is important to recognise that the statements set out in this section are statements of Beadell’s and Great Panther’s current intentions only, which may change as new information becomes available or circumstances change, and which will be superseded by the intentions, strategic focus, outlook and decisions of the Merged Group Board.

 

Business, Operations and Assets of the Merged Group

 

If the Scheme is implemented, the Merged Group’s principal assets will include:

 

(a)the Tucano Gold Mine (100% owned);

 

(b)the Tartaruga Gold Exploration Project (100% owned);

 

(c)the Guanajuato Mine Complex (100% owned);

 

(d)the Topia Mine (100% owned);

 

(e)the Coricancha Mine (100% owned); and

 

(f)exploration tenures in Mexico (100% owned).

 

The Merged Group plans to operate and manage these assets as described below:

 

Mexican Operations

 

The Merged Group will focus on continuing steady and efficient operations in Mexico, including seeking ways to optimize mining methods and control costs. The objective will be to assess expansion opportunities in the ordinary course with a view of maximizing revenues from operations and the value of these assets. The Merged Group will continue with existing exploration programs in order to extend the mine life of the Guanajuato Mine Complex and Topia mines, and to continue to advance the permitting applications at the Guanajuato Mine Complex, and satisfy both the PROFEPA and SEMARNAT process at Topia.

 

Brazil Operations

 

The Merged Group will continue the operations of the Tucano mine in Brazil. In addition, it is anticipated that the Merged Group will continue to carry out exploration of Beadell’s 2,500 km2 exploration package.

 

Coricancha

 

The Merged Group expects to advance the Coricancha project by completing the Bulk Sample Program early in 2019 and to make a decision shortly thereafter as to whether to commence the restart of Coricancha. The objective of the Bulk Sample Program is to confirm expectations regarding throughput, grades, and recoveries. If a decision is made to proceed with a restart, it is anticipated that the development and capital investments necessary to restart Coricancha will occur within a year of a restart decision. Although a preliminary economic assessment has been completed on the

 

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restart of Coricancha, the Merged Group does not currently plan to complete a feasibility study in connection with any production decision due to (i) the existing processing plant facility, (ii) the ability to continue on to development and production based on low initial capital costs, (iii) the Merged Group’s knowledge of the mine and resource base, and (iv) data and information that has been and will be gained from the Bulk Sample Program that will test and refine assumptions and plans in the completed preliminary economic assessment.

 

The Merged Group expects to continue the reclamation of certain legacy tailings facilities at Coricancha under a remediation plan approved by the MEM. Great Panther is seeking approval of a modification to the remediation plan from MEM in accordance with the recommendations of an independent consultant to preserve the stability of nearby areas. Great Panther has changed the scheduling of the reclamation work, pending a decision from the MEM regarding the proposal to modify the approved remediation plan. Great Panther has an agreement with the previous owner of Coricancha for the reimbursement of costs to execute reclamation activities up to an agreed maximum.

 

Employees

 

The Merged Group anticipates that the Beadell headquarters in Australia will be closed and Great Panther will assume the overall head office responsibilities from its headquarters in Vancouver, British Columbia, Canada. As a result, the senior management of Beadell will be terminated on completion of the Scheme as their services will not be required as part of the management team of the Merged Group. However, Dr. Nicole Adshead-Bell will join the board of directors of the Merged Group. The Merged Group anticipates that the existing management and operating team in Brazil will remain in place as they are required to continue the operations of the Tucano mine.

 

Other intentions

 

Other than as referred to in this Management Information Circular, it is the intention of Great Panther that the business of the Beadell Group will be conducted in substantially the same manner as at the date of this Management Information Circular.

 

Ownership and Capitalization of the Merged Group

 

Great Panther Shares

 

Based on the number of Beadell Shares outstanding as at the date hereof, pursuant to the Scheme Implementation Deed, Great Panther will issue up to approximately 105,588,208 Great Panther Shares to Beadell Shareholders at the implementation of the Scheme (including up to 1,993,346 Great Panther Shares to be issued as consideration for Beadell Shares issuable upon the exercise or exchange of outstanding Beadell Options and Beadell Performance Rights).

 

As at the date hereof, Great Panther expects that, immediately following implementation of the Scheme, there will be approximately 272,759,868 Great Panther Shares issued and outstanding and current Great Panther Shareholders will hold approximately 62% of the then outstanding Great Panther Shares and former Beadell Shareholders will hold approximately 38% of the then outstanding Great Panther Shares on an undiluted basis and without giving effect to the exercise or exchange of any Beadell Options or Beadell Performance Rights prior to the implementation of the Scheme.

 

Impact of Beadell Options and Beadell Performance Rights

 

Prior to the implementation of the Scheme, all outstanding Beadell Options will be exercised in exchange for Beadell Shares or will lapse or be terminated in accordance with the Beadell Option Plan and all outstanding Beadell Performance Rights will vest and be exchanged for Beadell Shares in accordance with the Beadell Performance Rights Plan. The holders of such Beadell Shares will receive Great Panther Shares at the Exchange Ratio.

 

As at the date hereof, there are 27,800,000 Beadell Options and 4,402,687 Beadell Performance Rights outstanding, which, at the Exchange Ratio, would result in the issuance of an additional 1,720,820 Great Panther Shares and

 

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272,526 Great Panther Shares, respectively, on the implementation of the Scheme; provided, however, that certain of the Beadell Options are “out of the money” and may not be exercised prior to the implementation of the Scheme.

 

Great Panther Replacement Warrants

 

Beadell has entered into binding agreements with in the holders of 100% of the Beadell Warrants to accept the Warrant Consideration in exchange for their outstanding Beadell Warrants on the Scheme becoming Effective. Under such binding agreements, each holder of Beadell Warrants will receive a number of Great Panther Replacement Warrants equal to the number of their Beadell Warrants multiplied by the Exchange Ratio at a price adjusted in accordance with the Exchange Ratio, and otherwise on substantially the same terms and conditions as the original Beadell Warrant.

 

After giving effect to the Scheme and assuming that all of the holders of Beadell Warrants will have entered into binding agreements to accept the Warrant Consideration, it is anticipated that there will be outstanding Great Panther Replacement Warrants exercisable into a total of: (a) 3,428,032 Great Panther Shares with an exercise price of US$1.317 and an expiry date of May 17, 2022; and (b) 6,321,695 Great Panther Shares with an exercise price of US$1.317 and an expiry date of June 27, 2022.

 

Beadell Convertible Debentures

 

Beadell has 10,000 Beadell Convertible Debentures outstanding with a principal amount of US$10,000,000. The implementation of the Scheme will constitute a “Change of Control” (as defined in the Debenture Indenture) of Beadell. In accordance with the terms of the Debenture Indenture, upon the occurrence of a Change of Control, Beadell is required to make a Change of Control Purchase Offer to purchase all Beadell Convertible Debentures on issue at a price per Beadell Convertible Debenture equal to 105% of the principal amount, plus accrued and unpaid interest (referred to herein as the “Change of Control Offer Price”). It is a condition precedent to completion of the Scheme that holders of Beadell Convertible Debentures agree in writing, before 8:00 a.m. on the Second Court Date, to either: (a) accept the Change of Control Purchase Offer; or (b) waive the obligation of Beadell to make the Change of Control Purchase Offer and consent to the entering into of a supplemental indenture in respect of the Beadell Convertible Debentures.

 

Notwithstanding the condition precedent, Great Panther has disclosed in its November 30, 2018 news release that it intends to: (i) enter into an amended and restated or supplemental Debenture Indenture pursuant to which Great Panther will expressly assume the obligations of Beadell under the Debenture Indenture (including funding for the Change of Control Purchase Offer), and the holders of Beadell Convertible Debentures will be entitled to receive Great Panther Shares on the conversion thereof, and (ii) make the Change of Control Purchase Offer following completion of the Transaction in accordance with the terms of the Debenture Indenture.

 

If not less than 90% of the Beadell Convertible Debentures are tendered to the Change of Control Purchase Offer, then Great Panther will have the right, but not the obligation, to redeem the remaining outstanding Beadell Convertible Debentures at the Change of Control Offer Price.

 

If fewer than 90% of the Beadell Convertible Debentures are tendered to the Change of Control Purchase Offer, then such outstanding debentures shall continue to represent debt obligations of Great Panther in accordance with the terms thereof.

 

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Financing Arrangements

 

General

 

As at September 30, 2018, Great Panther had approximately US$58 million in cash and short term deposits, US$65 million in net working capital and no debt. Immediately following the implementation of the Scheme, it is anticipated that the Merged Group will have pro forma outstanding borrowings as at September 30, 2018 of approximately US$69.4 million, as a result of the financial arrangements described below and the assumed repayment of the Beadell Convertible Debentures.

 

A number of the conditions precedent to the completion of the Scheme in favour of Great Panther are directed at securing the agreement of the creditors of Beadell to a restructuring of Beadell’s liabilities in order to help the Merged Group manage cash flows from Tucano. These key agreements are summarized as follows:

 

MACA

 

Great Panther has entered into the MACA Consent Agreement with MACA Limited and MACA Mineracao e Construcao Civil Limitada with respect to modifications to the MACA Agreement. Under the MACA Consent Agreement, MACA has agreed to consent to the change of control to Beadell resulting from the completion of the Scheme and keep the outstanding loan in place with a term to June 2022 and the following amendments with effect from the date of implementation of the Scheme:

 

 

Original Loan As Amended
Principal Amount A$54.7 million A$54.7 million
% of the net cash proceeds from any third-party debt or equity financing required to be paid to MACA and applied against the outstanding balance of the loan 30% 10%
% of the net proceeds from any exercise of warrants required to be paid to MACA and applied against the outstanding balance of the loan 30% 20%
Principal repayment of loan during 2019 A$12.0 million A$16.5 million
Ultimate parent guarantee Full balance First A$6.0 million of repayments
Principal repayment of loan during 2020 A$18.0 million A$18.0 million
Conversion right 100% of Loan into Beadell Shares(1) A$15.0 million into Great Panther Shares(2)

 

 

Notes:

(1)Conversion is subject to shareholder approval.

(2)MACA’s conversion right under the amended terms provides for a limit of A$5 million in each quarter following the Implementation Date at a 5% discount to the 20-day volume weighted average price. Any principal amount of the loan which is converted to Great Panther shares will reduce the outstanding balance of the loan, with 50% to be applied to reduce the remaining monthly payments on a pro-rata basis with the exception of the A$6 million guaranteed payments.

 

The Merged Group will otherwise continue to be liable for the payment of the amounts payable under the MACA Agreement.

 

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Bank Indebtedness

 

The Merged Group will continue to be liable for the payment of the following bank indebtedness of Beadell:

 

(a)Santander – Itaú Facility.  As of September 30, 2018 the Santander – Itaú Facility was US$12.5 million (A$17.3 million) and is scheduled to be repaid in full by April 2019, with scheduled repayments in October 2018 (US$2.5 million), January 2019 (US$5 million) and April 2019 (US$5 million).  In respect of the Santander – Itaú Facility, Beadell’s subsidiaries have provided security in the form of a fiduciary lien over the issued shares of Beadell Brasil Limitada and a pledge over the mineral rights at Tucano; and

 

(b)Unsecured Interest Bearing Bank Facilities.  As of September 30, 2018, Beadell had US$16.7 million (A$23.1 million) in unsecured interest bearing bank facilities, in the form of advances on currency exchange contracts, which were fully drawn as of September 30, 2018. These advances are due for repayment on November 19, 2019.

 

Loan Agreement

 

Great Panther and Beadell have entered into the Loan Agreement pursuant to which Great Panther has agreed to advance to Beadell and Beadell Brasil, as joint and several borrowers, a non-revolving term loan in the principal amount of US$5,000,000, the proceeds of which are being used by Beadell for working capital requirements.

 

Pursuant to the Loan Agreement, the outstanding balance of the loan bears interest at the rate of 14% per year in arrears until and including January 15, 2019 (which maturity date may be extended by mutual agreement for an additional 30 days). The loan is unsecured. In accordance with the Loan Agreement, Beadell and Beadell Brasil have agreed to prepay the outstanding principal balance of the loan (but not accrued and unpaid interest thereon) in an amount equal to 100% of all proceeds of PIS (Programas de Integração Social e de Formação do Patrimônio do Servidor Público) and COFINS (Contribuição para Financiamento da Seguridade Social) refunds, immediately upon receipt of such proceeds by Beadell or Beadell Brasil. In connection with the execution of the Loan Agreement, Beadell has agreed to pay to Great Panther a structuring fee in an amount equal to US$50,000, payable from the proceeds of the loan.

 

Other financing considerations

 

The Merged Group does not anticipate having any indebtedness following the Implementation Date, except as described above and trade creditors incurred in the ordinary course of business.

 

Pro Forma Consolidated Financial Information for the Merged Group

 

The pro forma condensed consolidated financial statements of the Merged Group are set out in Appendix F to this Management Information Circular and should be read in conjunction with the financial information concerning Great Panther that is incorporated by reference in to this Management Information Circular and the financial information concerning Beadell set out in Appendix E.

 

The pro forma condensed consolidated financial statements of the Merged Group included as Appendix F to this Management Information Circular are presented for illustrative purposes only and are not necessarily indicative of: (a) the financial results that would have occurred had the Scheme actually occurred at the times contemplated as disclosed in the notes to the unaudited pro forma condensed consolidated financial statements of the Merged Group; or (ii) the results expected in future periods.

 

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Board and Management of the Merged Group

 

Board of Great Panther

 

On implementation of the Scheme, the board of the Merged Group will be comprised of: R.W. (Bob) Garnett, Robert A. Archer, John Jennings, W.J. (James) Mullin, Elise Rees, James M. (Jim) Bannantine, Jeffrey R. Mason, and Dr. Nicole Adshead-Bell, Beadell’s current Chief Executive Officer and Managing Director.

 

Biographies of each are summarised below.

 

R.W. (Bob) Garnett, CPA, CA, ICD.D, Director. Mr. Garnett is a Chartered Professional Accountant in the Province of British Columbia (1973) and obtained a Bachelor of Arts (Commerce) from Simon Fraser University in 1972. In 2007, he completed the Certified Directors Program with the Institute of Corporate Directors with the designation of ICD.D. In 2012, he was appointed a Commissioner of the Financial Institutions Commission by the Lieutenant Governor in Council on the recommendation of the Minister of Finance of the Province of British Columbia, which appointment expired in June 2018. The Financial Institutions Commission is an agency of the provincial government, which administers nine statutes providing regulatory rules for the protection of the public in the province of British Columbia. Mr. Garnett also currently serves on the board of Media Valet Inc., a Vancouver based company that provides cloud based digital asset management software to many of the world’s leading brands. Mr. Garnett is also chair of the Audit Committee of Media Valet Inc. and has served as President of a world ranked golf facility located near Merritt, British Columbia from 2012 to 2015.

 

Robert A. Archer, P. Geo., Director. Mr. Archer has been a Director of Great Panther since 2004.  He also served as President and Chief Executive Officer of Great Panther from April 2004 to July 2012 and from May 2013 to August 2017.  Mr. Archer has a B.Sc. (Hons.) degree in Geology from Laurentian University in Ontario and is a registered Professional Geologist.  He has more than 15 years of experience working with major mining companies including Newmont Exploration Canada Ltd., Rio Algom Exploration Inc., Placer Dome Canada Ltd., and Noranda Exploration Inc.  In the past 22 years, he has held various positions at the senior management level of junior exploration and producing companies.  Mr. Archer also served as Chair of the Board of Directors and chair of the Audit Committee of Altair Gold Inc. from 2006 to 2014.  Altair Gold Inc. is a junior gold exploration company.  Mr. Archer was also the President and Chief Executive Officer and a Director of Cangold Limited, a junior mineral exploration company which was acquired by Great Panther on May 27, 2015. Since March 1, 2018, Mr. Archer has been a Director of Newrange Gold Corp., an exploration and development company focused on near to intermediate term gold production opportunities Since March 20, 2018, he has served as a Director of Prize Mining Corporation, a Calgary based junior mining issuer engaged in the acquisition, exploration and development of mining properties.

 

John Jennings, CFA, Director. Mr. Jennings is employed as Practice Lead, Director and Executive Search with WATSON Advisors Inc., a leading boutique focused on corporate governance and recruiting board directors and executive talent since October 2017. Previously, he was a Senior Client Partner with Korn Ferry International, a global organizational and people advisory firm and the world’s largest provider of executive search from March 2012 to May 2017.  Prior to that, his roles included executive leadership in real estate and in investment banking in Canada and the UK for twenty-six years.  He earned a Master of Business Administration degree from London Business School, and a Bachelor of Science degree in Chemistry from Western University.  He also holds the designation of Chartered Financial Analyst.

 

W.J. (James) Mullin, Director. Mr. Mullin is a retired Professional Engineer in the province of British Columbia. He is a graduate of Colorado School of Mines (Mining Engineering) and spent thirty-three years with Newmont Mining Corporation. After advancing through progressively senior roles at the Similkameen Mine in Princeton, BC (now Copper Mountain), he was appointed Vice President and General Manager of the operation. In 1989, he moved to Nevada where he managed several of Newmont’s operations. His career culminated in the position of Senior Vice President of North American Operations. His responsibilities included the management of open pit and underground mines, and processing plants in Canada, the United States and Mexico. He retired from Newmont in 2001. Mr. Mullin has a lengthy, successful history of establishing safety and production records, with particular emphasis on cost reduction, improving efficiencies and developing operating synergies between mine sites. Through a series of mergers and acquisitions, Mr. Mullin became skilled at the integration and reorganization of operations to achieve substantial improvements in processes and cost savings.

 

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During the six years prior to the date of this Information Circular he has acted as an independent consultant in the mining industry and owned and operated a mid-sized cattle ranch.

 

Elise Rees, FCPA, FCA, ICD.D, Director. Ms. Rees is an experienced director, having served on the boards of a number of profit and not-for profit organizations, including as board chair, treasurer, and audit and finance committee chair. She currently sits on the boards of Alcanna Inc., Enmax Corporation and Westland Insurance, as well as the Greater Vancouver Board of Trade. Ms. Rees retired in June 2016 after a thirty-five-year career in professional accountancy. She spent eighteen years as a partner with Ernst & Young, LLP with the last 14 years of her tenure focused on acquisitions, mergers and corporate reorganizations. She has a breadth of experience in a large variety of industries with specific focus on mining, infrastructure, transportation, technology, real estate, retail and distribution. Ms. Rees has been recognized for her leadership with the designation of Fellow Chartered Professional Accountant and Fellow Chartered Accountant in 2010; Community Builder Award, Association of Women in Finance (2012); Influential Woman in Business Award (2007); and the Ernst & Young Rosemarie Meschi Award for Advancing Gender Diversity (2007). She was also recognized as one of the Top 100 Most Powerful Women in Canada in 2015 by Women’s Executive Network. Ms. Rees has a B.A. (Hons) from the University of Strathclyde, Scotland and is a graduate of the ICD-Rotman Directors Education Program with the designation of ICD.D.

 

James M. (Jim) Bannantine, PE, MBA, Director, President & Chief Executive Officer. Mr. Bannantine has more than twenty years’ experience in senior management level roles in both private and public companies spanning several industries. Before joining Great Panther Silver, Mr. Bannantine served as President and Chief Executive Officer of Aura Minerals Inc., a mid-tier gold and copper production company focused on the development and operation of gold and base metal projects in the Americas, for six years. He was also the co-founder and Managing Partner of Atlantic Capital Group for five years. Prior to Atlantic Capital Group, Mr. Bannantine had served as President and Chief Operating Officer of Broadwing Corporation for four years and held several positions over ten years at Enron Corporation culminating as CEO of Enron South America. He holds a Master of Business Administration from the Wharton School of the University of Pennsylvania and a Bachelor of Science, Mechanical Engineering concentration, from West Point. He is a licensed Professional Engineer, fluent in Spanish and Portuguese, and has served twelve years in the US Army Corps of Engineers.

 

Jeffrey R. Mason, B Com., CPA, CA, ICD.D, Director. Mr. Mason is a Chartered Professional Accountant and holds an Institute of Corporate Directors designation. Over the past 25 years he served on over 20 public company’s boards. He is experienced in exploration, development, construction and operation for silver, gold, copper, nickel, lead, zinc, platinum group metals and diamond projects in the Americas, Asia and Africa.  In 2004 he was awarded the BC Ernst & Young Entrepreneur of the Year Award (Natural Resources Category). He also worked for 15 years for the Hunter Dickinson group, where he performed a variety of roles including Principal, Chief Financial Officer and Corporate Secretary. Mr. Mason served as Director and Audit Chair for eight years at Coastal Contacts Inc. (sold to Essilor International in 2014). He began his career with Deloitte LLP as a Chartered Accountant, followed by eight years at Homestake Mining Company (merged with Barrick Gold Corporation) and also served as Chief Financial Officer of Wellgreen Platinum Ltd. from 2012 to 2016. Mr. Mason also sits as an independent board member of one TSX company and three TSX Venture Exchange listed issuers, one of which is inactive. Although the activity levels of these TSX Venture Exchange issuers is limited relative to Great Panther, Mr. Mason’s independent directorship of these companies provides the benefits of his years of public company experience to guide their development. The balance of Mr. Mason’s professional activities is spent providing financial and operations advisory consulting services.

 

Dr. Nicole Adshead-Bell, Proposed Director. Dr. Adshead-Bell is a geologist with over 20 years of capital markets and natural resource sector experience. From 2015 to 2018, she was the President of Cupel Advisory Corp., an advisory firm focused on investments in the natural resource sector. From 2012 to 2015, Dr. Adshead-Bell was the Director of Mining Research at Sun Valley Gold LLC (SVG), a US-based Securities Exchange Commission registered investment advisor focused on the precious metals sector. Prior roles include: Managing Director, Investment Banking

 

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at Haywood Securities, where she concentrated on building the company’s M&A and financing business in the mining sector; sell-side analyst at Dundee Securities; and buy-side analyst at SVG.

 

Management of the Merged Group

 

The key management team of the Merged Group following implementation of the Scheme will include James M. Bannantine, Jim Zadra, Brian Peer, Samuel Mah, Mariana Fregonese, Christopher Richards, Aoife McGrath and Luis Pablo Diaz.

 

Biographies of each are summarised below.

 

James M. (Jim) Bannantine, PE, MBA, Director, President & Chief Executive Officer

 

See the biographical information for Mr. Bannantine above under the heading “Board of the Merged Group”.

 

Jim Zadra, CPA, CA, MBA, Chief Financial Officer

 

Mr. Zadra joined Great Panther in September 2011 and has responsibility for corporate finance, including financial reporting, planning & forecasting, taxation, and treasury. Mr. Zadra is a Chartered Professional Accountant and has over 15 years of experience in senior corporate finance roles with significant experience in the areas of financial reporting, taxation, strategic planning, capital markets, M&A and corporate governance.

 

Prior to joining Great Panther, Mr. Zadra served over three years as Chief Financial Officer and Corporate Secretary of DDS Wireless International Inc.). Prior to DDS he was Vice President of Finance, North America, at Sophos, (2003-2008) a leading global information technology security company with offices in 19 countries. Mr. Zadra has also held senior roles at ActiveState Corporation, Canaccord Capital and Deloitte LLP, and has served as a director for several venture stage public companies. Mr. Zadra holds a Master of Business Administration degree from Queen’s University and a Bachelor of Commerce degree from the University of British Columbia.

 

Brian Peer, B.A. Sc, Vice President Operations, Mexico

 

Mr. Peer was appointed Vice President of Operations, Mexico in August 2017 and has more than 30 years of mining experience including 19 years in senior management. Most recently, he was General Manager with Red Eagle Mining in Colombia, responsible for implementing new narrow vein mining methods. Previously, Mr. Peer held the position of Country Manager, Mexico for Alamos Gold, where he was responsible for the safe and efficient operation of two mines and the development of two additional underground mines. Mr. Peer also worked for Coeur Mining and for ten years at Barrick Gold. He is a graduate from the University of Texas El Paso with a Bachelor of Science degree in Geology and is fluent in Spanish.

 

Samuel Mah, P.Eng., M.A.Sc, Vice President, Technical Services

 

Mr. Mah joined Great Panther in April 2017 as Vice President Corporate Development with the responsibility of identifying and evaluating acquisition opportunities to meet Great Panther Silver’s growth objectives.

 

Mr. Mah has more than 20 years of experience in the mining industry and was most recently employed at Silver Wheaton Corp. as Senior Director Project Evaluations where he was a key player in conducting the technical appraisal and due diligence reviews for their streaming deals. During his tenure of more than eight years, he evaluated over 300 projects and mines spread across 43 countries. Prior to Silver Wheaton Corp., he held engineering roles with AMEC Americas (Metals and Mining), SRK Consulting (Canada) Inc., Goldcorp Inc. and Placer Dome Inc. (now Barrick Gold Corporation). Mr. Mah is a Registered Professional Engineer and holds a Bachelor of Applied Science in Mining and Mineral Process Engineering, and a Master of Applied Science degree, both from the University of British Columbia.

 

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Mariana Fregonese, Vice President, Social Responsibility

 

As Vice President, Social Responsibility Mrs. Fregonese leads Great Panther’s overarching social responsibility and stakeholder engagement strategy. Mrs. Fregonese joined Great Panther in 2007 and since 2014 has been committed to advancing social and sustainable development of the local communities in which Great Panther operates.

 

Mrs. Fregonese is responsible for a diverse portfolio, focused on building strategic partnerships and fostering relationships with communities, governments, public agencies, non-government organizations, and other stakeholders to maximize the benefits of mining locally, and to achieve effective and sustainable community development. Mrs. Fregonese holds a Bachelor’s Degree in Occupational Therapy (Hons) from the University of Buenos Aires, Argentina. She is a certified Sustainability Practitioner (CSR-P).

 

Christopher Richards, CPA, CA, Vice President Finance

 

With over 14 years in the mining industry and as a Chartered Professional Accountant, Mr. Richards brings broad experience in all aspects of financial management, reporting, technical accounting, risk advisory, corporate finance and tax management. Prior to joining Great Panther, Mr. Richards served as a senior financial consultant at various mining companies in Vancouver, providing his expertise to merging and newly formed project development-staged entities. Prior to that, he spent seven years as the Vice President Finance and Corporate Secretary of Kyzyl Gold Ltd., was Corporate Controller at NovaGold Resources and a Senior Manager at KPMG LLP.

 

Mr. Richards holds a Bachelor of Business Administration degree from Simon Fraser University and a Certificate in Mining Studies from the Norman B. Keevil Institute of Mining Engineering at the University of British Columbia.

 

Aoife McGrath, BScGeol, MScMinExpl, MScEngGeol, Vice President, Exploration

 

Ms. McGrath has 20 years of experience in the mining industry, having worked in multiple jurisdictions globally and predominantly in gold mining and exploration. Most recently, Ms. McGrath spent more than five years with Alamos Gold as Vice President Exploration and prior to that Director of Exploration and Corporate Development, being responsible for six exploration departments in four countries and managed annual budgets of up to US$36 million. Prior to joining Alamos, Ms. McGrath was Executive Director of Exploration at Carbine Resources, where she built the exploration team from scratch and directed the initial exploration programs in Burkina Faso. She also worked for Red Back Mining as Exploration Manager of the Chirano Mine in Ghana, where she led the team to the discovery of the Akwaaba Underground Deposit and as a Senior Exploration Geologist for AngloGold Ashanti at the Geita Gold Mine in Tanzania.

 

Luis Pablo Diaz, B.Sc.Eng, Country Manager, Brazil

 

Mr. Diaz is a mining engineer with over 18 years of international experience ranging from open pit and underground mine planning, production and management; advancing new projects through feasibility and into construction; contract mining and mining consulting. Mr. Diaz is a Brazilian national, nationalised Australian, resides in Brazil and speaks fluent Portuguese, English and Spanish.

 

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RISK FACTORS

 

You should consider carefully the following risk factors, as well as the risk factors identified elsewhere in this Management Information Circular and in the documents incorporated herein by reference before deciding whether to vote for the Great Panther Scheme Resolution. In particular, an extensive list of risk factors relating to the business of Great Panther is set forth in Great Panther’s annual information form, dated March 23, 2018, for the year December 31, 2017, and such risk factors are incorporated in this Management Information Circular by reference. Risk factors relating to the business of Beadell are set forth in Appendix E.

 

This section does not take into account the investment objectives, financial situation, position or particular needs of Great Panther Shareholders. Each Great Panther Shareholder should consult their legal, financial or other professional adviser if they have any queries.

 

Risks relating to the Scheme

 

Completion of the Scheme is subject to several conditions that must be satisfied or waived

 

The Scheme is subject to a number of conditions which are contained in clause 3 of the Scheme Implementation Deed. There can be no certainty, nor can Great Panther or Beadell provide any assurance, that these conditions will be satisfied or waived (where applicable), or if satisfied or waived (where applicable), when that will occur. In addition, several of the conditions precedent to the Scheme are beyond the control of Great Panther or Beadell, including, but not limited to, required regulatory and third-party approvals and consents.

 

If for any reason the conditions to the Scheme are not satisfied or waived (where applicable) and the Scheme is not completed, the market price of Great Panther Shares may be adversely affected.

 

The Scheme Implementation Deed may be terminated by Great Panther or Beadell in certain circumstances

 

Each of Great Panther and Beadell has the right to terminate the Scheme Implementation Deed in certain circumstances. See the section entitled “The Scheme Implementation Deed – Termination Rights”. Accordingly, there is no certainty that the Scheme Implementation Deed will not be terminated by either Great Panther or Beadell before the implementation of the Scheme.

 

If the Scheme Implementation Deed is terminated, there is no assurance that Great Panther will be able to find an acquisition that provides the benefits anticipated from the acquisition of Beadell.

 

Following the implementation of the Scheme, the Merged Group may not realize all of the anticipated benefits of the Scheme.

 

Great Panther believes that the Scheme will provide benefits to Great Panther as described elsewhere in this Management Information Circular. However, there is a risk that some or all of the expected benefits of the Scheme may fail to materialize, or may not occur within the time periods anticipated by Great Panther. The realization of such benefits may be affected by a number of factors, including tax and regulatory considerations and decisions, many of which are beyond the control of Great Panther and Beadell.

 

The challenge of combining previously independent businesses makes evaluating the business and future financial prospects of Great Panther following the Scheme difficult. Great Panther and Beadell have operated and, until completion of the Scheme, will continue to operate, independently. The past financial performance of each of Great Panther and Beadell may not be indicative of their future financial performance. Realization of the anticipated benefits in the Scheme will depend, in part, on the Merged Group’s ability to successfully integrate Great Panther and Beadell. The Merged Group will be required to devote significant management attention and resources to integrating its business practices and support functions. The diversion of management’s attention and any delays or difficulties encountered in connection with the Scheme and the coordination of the two companies’ operations could have an adverse effect on the business, financial results, financial condition or the share price of the Great Panther Shares following the Scheme. The coordination process may also result in additional and unforeseen expenses.

 

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Failure to realize all of the anticipated benefits of the Scheme may impact the financial performance of the Merged Group and the price of the Great Panther Shares.

 

The announcement and pendency of the Scheme could adversely affect Great Panther’s and Beadell’s business, results of operations and financial condition.

 

The announcement and pendency of the Scheme could cause disruptions in and create uncertainty surrounding Great Panther’s and Beadell’s business, including affecting Great Panther’s and Beadell’s relationships with its existing and future partners, financiers and employees, which could have an adverse effect on Great Panther’s and Beadell’s business, results of operations and financial condition, regardless of whether the Scheme is completed. In particular, Great Panther and Beadell could potentially lose important personnel as a result of the departure of employees who decide to pursue other opportunities in light of the Scheme. In addition, Great Panther and Beadell have expended, and continue to expend, significant management resources in an effort to complete the Scheme, which are being diverted from Great Panther’s and Beadell’s day-to-day operations.

 

If the Scheme is not completed, the price of the Great Panther Shares may fall to the extent that the current price of the Great Panther Shares reflects a market assumption that the Scheme will be completed. In addition, the failure to complete the Scheme may result in negative publicity or a negative impression of Great Panther in the investment community and may affect Great Panther’s relationship with employees and other partners in the business community.

 

Great Panther and Beadell will incur transaction fees and costs in connection with the Scheme.

 

Great Panther and Beadell have incurred and expect to incur additional material non-recurring expenses in connection with the Scheme and completion of the transactions contemplated by the Scheme Implementation Deed, obtaining required shareholder approval, as applicable, and regulatory approvals. Great Panther and Beadell have incurred significant legal, advisory and financial services fees in connection with the process of negotiating and evaluating the terms of the Scheme. Additional significant unanticipated costs may be incurred in the course of coordinating the businesses of Great Panther and Beadell after completion of the Scheme. Even if the Scheme is not completed, Great Panther and Beadell will need to pay certain costs relating to the Scheme incurred prior to the date the Scheme was abandoned, such as legal, accounting, financial advisory, filing and printing fees. Such costs may be significant and could have an adverse effect on the parties’ future results of operations, cash flows and financial condition.

 

Significant demands will be placed on the Merged Group as a result of the Scheme.

 

As a result of the pursuit and completion of the Scheme, significant demands will be placed on the managerial, operational and financial personnel and systems of the Merged Group. The future operating results of the Merged Group will be affected by the ability of its officers and key employees to manage changing business conditions and to implement and expand its operational and financial controls and reporting systems in response to the Scheme.

 

While the Scheme Implementation Deed is in effect, Great Panther and Beadell are subject to restrictions on their business activities.

 

Under the Scheme Implementation Deed, Great Panther and Beadell are subject to certain restrictions on the conduct of their business and generally must operate their business in the ordinary course prior to completing the Scheme (unless Great Panther or Beadell obtains the other’s consent, as applicable, which is not to be unreasonably withheld, conditioned or delayed), which may restrict Great Panther’s and Beadell’s ability to exercise certain of its business strategies. These restrictions may prevent Great Panther and Beadell from pursuing otherwise attractive business opportunities, making certain acquisitions or making changes to Great Panther’s and Beadell’s businesses prior to the completion of the Scheme or termination of the Scheme Implementation Deed, as applicable. In addition, these restrictions may prevent Great Panther and Beadell from making certain investments, selling assets, engaging in capital expenditures in excess of certain agreed limits and incurring indebtedness prior to the completion of the Scheme or termination of the Scheme Implementation Deed, as applicable. These restrictions could have an adverse effect on Great Panther’s and Beadell’s business, financial results, financial condition or stock price.

 

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Cautionary Statement regarding Technical Information

 

Information concerning the properties and operations of Great Panther have been prepared in accordance with the requirements of Canadian securities laws, which differ from the requirements of Australian securities laws. Unless otherwise indicated, all mineral reserve and mineral resource estimates included or incorporated by reference in this Information Circular have been prepared in accordance with NI 43-101 and the CIM definitions and classification system. NI 43-101 is a rule developed by the Canadian Securities Administrators which establishes standards for all public disclosure an issuer makes of scientific and technical information concerning mineral projects.

 

The scientific and technical information regarding the Tucano Gold Project included in the section titled “The Tucano Gold Project” of Appendix E of this Management Information Circular, including the reserve and resource estimates as of June 30, 2017, has been derived from the NI 43-101 compliant Tucano Technical Report. However, the scientific and technical information regarding the Tucano Gold Mine included in the section titled “Tucano Gold Mine’s key Ore Reserve and Mineral Resources as at June 30, 2018” in Appendix E of this Management Information Circular and presented elsewhere in this Management Information Circular as of June 30, 2018 is based upon Beadell’s ASX release dated December 4, 2018 entitled “Annual Resource and Reserve Statement Update” which has been prepared in accordance with the 2012 JORC Code. CIM definitions of the terms “mineral reserve”, “proven mineral reserve”, “probable mineral reserve”, “mineral resource”, “measured mineral resource”, “indicated mineral resource” and “inferred mineral resource”, are substantially similar to the 2012 JORC Code corresponding definitions of the terms “ore reserve”, “proved ore reserve”, “probable ore reserve”, “mineral resource”, “measured mineral resource”, “indicated mineral resource” and “inferred mineral resource”, respectively. Estimates of mineral resources and mineral reserves prepared in accordance with the 2012 JORC Code would not be materially different if prepared in accordance with the CIM definitions applicable under NI 43-101. There can be no assurance that those portions of mineral resources that are not mineral reserves will ultimately be converted into mineral reserves.

 

The technical information in this Management Information Circular is derived from Great Panther’s technical reports and, where related to the Tucano Gold Mine, has also been reviewed by Mr. Robert Brown, P.Eng. Mr. Brown is a Professional Engineer registered with the Association of Professional Engineers and Geoscientists of British Columbia. He was the VP Exploration of Great Panther until December 31, 2016 and is currently a consultant to Great Panther.

 

Except in specified circumstances, if the Scheme is not completed by the End Date, either Great Panther or Beadell may choose not to proceed with the Scheme.

 

Either Great Panther or Beadell may terminate the Scheme Implementation Deed if the Scheme has not been completed by the End Date. However, this right to terminate the Scheme Implementation Deed will not be available to Great Panther or Beadell if the failure of such party to fulfill any material obligation under the Scheme Implementation Deed has been the cause of or resulted in the failure of the Scheme to be completed on or before such time. For more information, see the section entitled “The Scheme Implementation Deed – Termination Rights.”

 

Resales of Great Panther Shares following completion of the Scheme may cause the market value of Great Panther Shares to decline.

 

As at the date hereof, Great Panther expects that it will issue approximately 103,594,861 Great Panther Shares to Beadell securityholders on the Implementation Date in connection with the Scheme (approximately 61.2% of the number of Great Panther Shares presently outstanding). In addition, Great Panther may issue up to an additional 37,542,050 Great Panther Shares in connection with the Scheme upon the exercise, exchange or conversion of the Beadell Options, Beadell Performance Rights, Great Panther Replacement Warrants, Beadell Convertible Debentures and the MACA Agreement (as amended by the MACA Consent Agreement). The issuance of these Great Panther Shares could have the effect of depressing the market value for Great Panther Shares. The increase in the number of Great Panther Shares may lead to sales of such Great Panther Shares or the perception that such sales may occur, either of which may adversely affect the market for, and the market value of, Great Panther Shares.

 

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The market value of Great Panther Shares may decline as a result of the Scheme.

 

The market value of Great Panther Shares may decline as a result of the Scheme if, among other things, the Merged Group is unable to achieve the expected growth in production, optimization and improvement in Beadell’s operations and other benefits outlined in the sections titled “Great Panther’s Reasons for the Scheme” are not realized. The Merged Group may also face integration challenges, expected benefits of the integration of Great Panther’s and Beadell’s businesses may not be realized, and transaction costs related to the Scheme my be greater than expected. The market value also may decline if the Merged Group does not achieve the perceived benefits of the Scheme as rapidly or to the extent anticipated by the market or if the effect of the Scheme on the Merged Group’s financial position, results of operations or cash flows is not consistent with the expectations of financial or industry analysts.

 

Risks relating to the Merged Group

 

The risk factors relating to: (a) the business of Great Panther as set forth in Great Panther’s annual information form, dated March 23, 2018, for the year December 31, 2017 and incorporated by reference into this Management Information Circular; and (b) the business of Beadell as set forth in Appendix E to this Management Information Circular, will be amongst the risk factors facing the Merged Group after giving effect to the Scheme. Where such risk factors address operational, commercial, legal or regulatory matters in Mexico and/or Peru, such risk factors should be read to also include Brazil.

 

In addition to the risk factors included or incorporated by reference into this Management Information Circular, the following are additional risk factors in respect of the Merged Group after giving effect to the Scheme that you should consider.

 

There can be no assurance that the Merged Group will be able to secure the funds necessary to finance the optimization and further development of the Tucano Gold Mine in a manner that will increase value to shareholders.

 

Upon completion of the Scheme, substantial expenditures will be required to optimize, develop and to continue with the exploration of the Tucano Gold Mine and near mine exploration targets. In order to explore and develop Tucano, the Merged Group may be required to expend significant amounts for, among other things, geological, geochemical and geophysical analysis, drilling, assaying, and, if warranted, further mining and infrastructure feasibility studies. The Merged Group may not benefit from any of these investments if it is unable to identify commercially exploitable mineralized material. If successful in identifying reserves, it will require significant additional capital to construct facilities necessary to extract recoverable metal from those reserves.

 

The ability of the Merged Group to achieve sufficient cash flows from internal sources and obtain necessary funding through equity financing, joint ventures, debt financing, or other means, depends upon a number of factors, including the state of the worldwide economy and the price of gold, silver and other metals. The Merged Group may not be successful in achieving sufficient cash flows from internal sources and obtaining the required financing as and when needed for these or other purposes on terms that are favorable to it or at all, in which case its ability to continue operating may be adversely affected. Failure to achieve sufficient cash flows and obtain such additional financing could result in delay or indefinite postponement of further exploration or potential development and may cause the Merged Group to forfeit rights in some or all of its properties or reduce or terminate some or all of its planned operations.

 

Exploration and Development Risks Associated with the Tucano Gold Mine.

 

Resource exploration and development is a speculative business, characterized by a number of significant risks including, among other things, unprofitable efforts resulting not only from the failure to discover mineral deposits but also from finding mineral deposits that, though present, are insufficient in quantity and quality to return a profit from production. The marketability of minerals acquired or discovered by the Merged Group with respect to the Tucano Gold Mine may be affected by numerous factors that are beyond the control of the Merged Group and that cannot be accurately predicted, such as market fluctuations, the proximity and capacity of milling facilities, mineral markets and processing equipment, and such other factors as government regulations, including regulations relating to royalties,

 

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allowable production, importing and exporting minerals and environmental protection, the combination of which factors may result in the Merged Group not receiving an adequate return of investment capital.

 

The business of exploration for minerals and mining involves a high degree of risk. Few properties that are explored are ultimately developed into producing mines. There is no assurance that the mineral exploration and development activities of the Merged Group will result in discoveries of commercial bodies of ore. The long-term profitability of the Merged Group’s operations will in part be directly related to the costs and success of its exploration programs, which may be affected by a number of factors.

 

Substantial expenditures are required to establish reserves through drilling and to develop the mining and processing facilities and infrastructure at any site chosen for mining. Although substantial benefits may be derived from the discovery of a major mineralized deposit, no assurance can be given that minerals will be discovered in sufficient quantities to justify commercial operations or that funds required for development can be obtained on a timely basis.

 

Changes to Beadell’s reserves and resources for the Tucano Gold Mine will be updated in the future and are likely to change during that process.

 

Beadell has advised Great Panther that the reserve and resource estimates for the Tucano Gold Mine will be updated in the future and are likely to change during that process. Factors that will influence these changes may include, but not be limited to, ongoing depletion from mining activities, changes to the reserve and resource modelling parameters, and additional drilling information. The overall impact of these updates is uncertain; however, Beadell and Great Panther anticipate that it may result in a reduction of the reserve and resource figures reported by Beadell to the ASX on December 4, 2018.

 

Great Panther may not have discovered undisclosed liabilities of Beadell.

 

In the course of the due diligence review of Beadell that Great Panther conducted prior to the execution of the Scheme Implementation Deed, Great Panther may not have discovered, or may have been unable to quantify, undisclosed liabilities of Beadell and its subsidiaries and the Merged Group will not be indemnified for any of these liabilities. If Beadell has undisclosed liabilities, the Merged Group as a successor owner may be responsible for such undisclosed liabilities. Such undisclosed liabilities could have an adverse effect on the business, results of operations, financial condition and cash flows of Great Panther and on the value of the Great Panther Shares after the consummation of the Scheme.

 

The consolidated pro forma financial information of Great Panther and Beadell is presented for illustrative purposes only and may not be indicative of the results of operations or financial condition of the Merged Group following the Scheme.

 

The consolidated pro forma financial information included in Appendix F to this Management Information Circular has been prepared using the consolidated historical financial statements of Great Panther and Beadell, is presented for illustrative purposes only and should not be considered to be an indication of the results of operations or financial condition of the Merged Group following the Scheme. In addition, the consolidated pro forma financial information included in this Management Information Circular is based in part on certain assumptions regarding the Scheme. These assumptions may not prove to be accurate, and other factors may affect the Merged Group’s results of operations or financial condition following the Scheme. Accordingly, the historical and pro forma financial information included in this Management Information Circular does not necessarily represent the Merged Group’s results of operations and financial condition had Great Panther and Beadell operated as a combined entity during the periods presented, or of the Merged Group’s results of operations and financial condition following completion of the Scheme. The Merged Group’s potential for future business success and operating profitability must be considered in light of the risks, uncertainties, expenses and difficulties typically encountered by recently combined companies.

 

In preparing the pro forma financial information contained in this Management Information Circular, Great Panther has given effect to, among other items, the completion of the Scheme and the payment of the Scheme Consideration. The consolidated pro forma financial information does not reflect all of the costs that are expected to be incurred by Great Panther and Beadell in connection with the Scheme. For more information, see the consolidated pro forma

 

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financial statements of the Merged Group, attached as Appendix F to this Management Information Circular.

 

Ability to service debt

 

Great Panther has historically not had any material debt. However, after giving effect to the Scheme Great Panther will assume certain indebtedness of Beadell as described elsewhere in this Management Information Circular. Great Panther’s ability to service this debt and other obligations will depend on its future performance and cash flows which to a certain extent are subject to general economic, financial, competitive, legislative, regulatory and other factors, including the price of gold, silver and other metals, many of which are beyond its control. Great Panther’s historical financial results (on a pro forma basis) have been, and it is anticipated that Great Panther’s future financial results will continue to be, subject to fluctuations. Cash flows can vary and the Merged Group’s business may not generate sufficient cash flow from operations to enable it to satisfy its debt and other obligations. Any inability to secure sufficient debt funding (including to refinance on acceptable terms) or to service its existing and new debt may have a material adverse effect on Great Panther’s financial performance and prospects.

 

Risks related to the Debenture Indenture

 

Beadell has 10,000 Beadell Convertible Debentures outstanding with an aggregate principal amount of US$10,000,000, the terms of which are governed by the Debenture Indenture. In accordance with the Scheme, Great Panther will assume the obligations of Beadell under the Debenture Indenture and the Beadell Convertible Debentures. The Debenture Indenture restricts the ability of Beadell, and will restrict the ability of Great Panther, to incur additional secured indebtedness. If Great Panther is unable to amend the terms of the Debenture Indenture, it may not be able to obtain additional secured debt financing on terms acceptable to it, or at all. In addition, following completion of the Transaction, Great Panther will be required to make the Change of Control Purchase Offer, which, if accepted, will require Great Panther to repurchase the Beadell Convertible Debentures in accordance with the terms of the Debenture Indenture.

 

Litigation risk

 

All industries, including the mining industry, are subject to legal claims, with and without merit. The Merged Group may become involved in legal disputes in the future. Defence and settlement costs can be substantial, even with respect to claims that have no merit. Due to the inherent uncertainty of the litigation process, the resolution of any particular legal proceeding may have a material effect on the Merged Group’s financial position or results of operations.

 

The Merged Group may be subject to governmental and regulatory investigations, civil claims, lawsuits and other proceedings in the ordinary course of its business. The results of these legal proceedings cannot be predicted with certainty due to the uncertainty inherent in regulatory actions and litigation, the difficulty of predicting decisions of regulators, judges and juries and the possibility that decisions may be reversed on appeal.

 

Management is committed to conducting business in an ethical and responsible manner, which it believes will reduce the risk of legal disputes. However, if the Merged Group is subject to legal disputes, there can be no assurances that these matters will not have a material adverse effect on the Merged Group’s business, financial condition, results of operations, cash flows or prospects.

 

Great Panther is currently not party to any material legal proceedings.

 

Beadell is subject to certain litigation with respect to environmental damages in Brazil. See the section entitled “Information Concerning Beadell Resources Limited – Legal Proceedings”.

 

Corruption and fraud in Brazil relating to ownership of real estate.

 

Under Brazilian law, real property ownership is normally transferred by means of a transfer deed, and subsequently registered at the appropriate real estate registry office under the corresponding real property record. There are uncertainties, corruption and fraud relating to title ownership of real estate in Brazil, mostly in rural areas. In certain cases, a real estate registry office may register deeds with errors, including duplicate and/or fraudulent entries, and,

 

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therefore, deed challenges frequently occur, leading to judicial actions. Property disputes over title ownership are frequent in Brazil, and, as a result, there is a risk that errors, fraud or challenges could adversely affect the Merged Group’s ability to operate, although ownership of mining rights are separate from ownership of land.

 

Restrictions to the acquisition of rural properties by foreign investors or Brazilian companies under foreign control

 

Non-resident individuals and non-domiciled foreign legal entities are subject to restrictions for the acquisition or lease for agricultural purpose, or arrendamento, of rural properties in Brazil. Limitations also apply to legal entities domiciled in Brazil controlled by foreign investors, such as the Merged Group’s subsidiaries through which the Merged Group will operate in Brazil. The limitations are set forth mainly in Law No. 5,709/1971 and in Decree No. 74,965/1974.

 

Until 2010, limitations imposed on the acquisition of rural property did not apply to Brazilian companies under foreign control. However, an opinion issued by the General Counsel of the Federal Government Office of Brazil significantly changed the interpretation of the applicable laws at the time. Accordingly, Brazilian companies that have the majority of their capital stock owned by foreign individuals and legal entities domiciled abroad are deemed “foreign investors” for the purposes of application of the restrictions on the acquisition of rural property in Brazil. The legality of such opinion has been and is currently being challenged, however prior challenges to the opinion have been unsuccessful.

 

A foreign investor or a Brazilian company under foreign control may only acquire rural property in Brazil without breaching the aforementioned opinion if certain conditions are met, including, among others, prior approval by the Brazilian Ministries or, in certain cases, by the Brazilian Congress. Pursuant to applicable legislation, any agreements regarding the direct or indirect ownership of rural properties by foreign individuals or entities may be considered null and void, as well as any agreements regarding corporate changes which might result in indirect acquisition or arrendamento of rural lands by foreign investors. Accordingly, the Merged Group’s ownership of any such rural properties in Brazil may be subject to legal challenges which could result in a material adverse effect on the Merged Group’s business, results of operations, financial condition and cash flows.

 

Termination of mining concessions

 

The Merged Group’s mining concessions may be terminated in certain circumstances. Under the laws of Brazil, mineral resources belong to the federal government and governmental concessions are required to explore for, and exploit, mineral reserves. The Merged Group will hold mining, exploration and other related concessions in each of the jurisdictions where the Merged Group operates and where it will carry on development projects and prospects. The concessions the Merged Group will hold in respect of its operations, development projects and prospects may be terminated under certain circumstances. Termination of any one or more of the Merged Group’s mining, exploration or other concessions could have a material adverse effect on the Merged Group’s financial condition or results of operations.

 

Inflation in Brazil

 

In the past, high levels of inflation have adversely affected the economies and financial markets of Brazil, and the ability of its government to create conditions that stimulate or maintain economic growth. Moreover, governmental measures to curb inflation and speculation about possible future governmental measures have contributed to the negative economic impact of inflation in Brazil and have created general economic uncertainty. As part of these measures, the Brazilian government has at times maintained a restrictive monetary policy and high interest rates that have limited the availability of credit and economic growth. Brazil may experience high levels of inflation in the future. Inflationary pressures may weaken investor confidence in Brazil and lead to further government intervention in the economy, including interest rate increases, restrictions on tariff adjustments to offset inflation, intervention in foreign exchange markets and actions to adjust or fix currency values, which may trigger or exacerbate increases in inflation, and consequently have an adverse impact on the Merged Group. In an inflationary environment, the value of uncollected accounts receivable, as well as of unpaid accounts payable, declines rapidly. If Brazil experiences high levels of inflation in the future and price controls are imposed, the Merged Group may not be able to adjust the rates the Merged Group charges the Merged Group’s customers to fully offset the impact of inflation on the Merged Group’s cost structures, which could adversely affect the Merged Group’s results of operations or financial condition.

 

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Risks related to the change of government in Mexico

 

On December 1, 2018, a new government took office in Mexico. This new government has demonstrated a drive towards social and environmental responsibility and has tabled bills containing proposed changes to the mining code in Mexico which include, among other things, environmental and indigenous community protections as well as the ability to revoke and rescind permits and existing mining concessions deemed to have a negative social impact. Management of Great Panther is closely monitoring the potential impacts the change in government will have on the mining industry, foreign investment and general economy in Mexico as it will relate to the Merged Group.

 

THE NAME CHANGE

 

Reasons for the Name Change

 

The Transaction will create a new emerging and growth-oriented precious metals producer focused on the Americas with strong geographic diversity across three leading mining jurisdictions, and a diverse asset portfolio including three producing mines, an advanced stage project, and significant exploration potential. Management of Great Panther, together with the Great Panther Board, are of the view that a change of Great Panther’s name to “Great Panther Mining Limited” more accurately reflects the business objectives and operations of Great Panther after giving effect to the Scheme, particularly as the Merged Group will change from being a primary silver producer to having gold as its primary metal production by value, followed by silver. Precious metal production for the Merged Group is expected to remain in excess of 90% of production value, based on September 30, 2018 production numbers for Great Panther and Beadell.

 

Board Discretion

 

The Board may determine not to implement the Name Change at any time after the Great Panther Meeting and after receipt of necessary regulatory approvals, but prior to the issuance of a certificate of amendment, without further action on the part of the Great Panther Shareholders.

 

Required Vote

 

Great Panther Shareholders will be asked to consider and, if thought appropriate, to pass, with or without variation, the Name Change Resolution authorizing the Great Panther Board, in its sole discretion, to effect the Name Change, the text of which resolution is attached in Appendix C hereto.

 

Pursuant to applicable corporate law, approval of the Name Change Resolution requires the affirmative vote of greater than 50% of the votes cast in respect of such resolution by Great Panther Shareholders present in person or represented by proxy at the Great Panther Meeting.

 

Trading Symbols

 

Following the name change, Great Panther does not expect to change the trading symbols of Great Panther on the TSX (“GPR”) or the NYSE (American) (“GPL”).

 

EXPERTS

 

GMP Securities L.P. was retained by Great Panther to provide a fairness opinion to the Great Panther Special Committee in respect of the Transaction. As of the date hereof, GMP Securities L.P. owns, directly or indirectly, in aggregate, less than 1% of the outstanding Great Panther Shares.

 

Deloitte Corporate Finance Pty Limited was retained by Beadell to provide the Independent Expert’s Report.

 

Certain financial statements relating to Great Panther are incorporated by reference in this Management Information Circular. KPMG LLP in Canada have confirmed that they are independent with respect to Great Panther within the meaning of the relevant rules and related interpretations prescribed by the relevant professional bodies in Canada and

 

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any applicable legislation or regulations and under all relevant US professional and regulatory standards, including PCAOB Rule 3520.

 

Certain financial statements relating to Beadell have been included in this Management Information Circular. KPMG in Australia has confirmed that they were independent to Beadell within the meaning of the applicable rules and regulations in Australia.

 

OTHER BUSINESS

 

The directors and management of Great Panther are not aware of any other business to come before the Great Panther Meeting or any adjournment or postponement thereof other than the matters referred to in the Notice of Special Meeting. However, if any other matter properly comes before the Great Panther Meeting or any adjournment or postponement thereof, the accompanying form of proxy confers discretionary authority to vote with respect to amendments or variations to matters identified in the Notice of Special Meeting and with respect to other matters that may properly come before the Great Panther Meeting or any adjournment or postponement thereof.

 

APPROVAL

 

The contents and sending of this Notice of Special Meeting and Management Information Circular have been approved by the Great Panther Board.

 

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APPENDIX A
GLOSSARY OF TERMS

 

Unless otherwise specified or if the context so requires, the following terms have the meanings set forth below for purposes of this Management Information Circular:

 

A$” or “Australian dollars” means Australian dollars;

 

ACCs” has the meaning ascribed to such term in Schedule 2 of the Scheme Implementation Deed;

 

ASIC” means the Australian Securities and Investments Commission;

 

Associate” has the meaning ascribed to such term in section 12 of the Australian Corporations Act, as if subsection 12(1) of the Australian Corporations Act included a reference to the Scheme Implementation Deed and Beadell was the designated body;

 

ASX” means ASX Limited (ACN 008 624 691) or the Australian Securities Exchange, as the context requires;

 

ASX Listing Rules” means the official listing rules of ASX;

 

Australian Corporations Act” means the Corporations Act 2001 (Cth) of Australia, as amended from time to time;

 

B$” means Brazilian Real;

 

Beadell” means Beadell Resources Limited (ACN 125 222 291), a corporation existing under the laws of Australia with its head office at Level 2, 16 Ord Street, West Perth, Western Australia 6005 Australia;

 

Beadell Board” means the board of directors of Beadell;

 

Beadell Brasil” means Beadell Brasil Ltda., a wholly-owned subsidiary of Beadell;

 

Beadell Competing Proposal” means any proposal, agreement, arrangement or transaction (whether or not publicly announced) which, if entered into or completed, would:

 

(a)means a Third Party (either alone or together with any Associate) would;

 

(i)directly or indirectly acquire a Relevant Interest in, or have a right to acquire, a legal, beneficial or economic interest in, or control of, 20% or more of the Beadell Shares or of the share capital of any material subsidiary of Beadell;

 

(ii)acquire control of Beadell or any material subsidiary of Beadell;

 

(iii)directly or indirectly acquire or become the holder of, or otherwise acquire or have a right to acquire, a legal, beneficial or economic interest in, or control of, all or a material part of Beadell’s business or assets or the business or assets of the Beadell Group;

 

(iv)otherwise directly or indirectly acquire or merge with Beadell or a material subsidiary of Beadell; or

 

(b)require Beadell to abandon, or otherwise fail to proceed with, the Transaction,

 

whether by way of takeover bid, members or creditors scheme of arrangement, shareholder approved acquisition, capital reduction, buy back, sale or purchase of shares, other securities or assets, assignment of assets and liabilities, incorporated or unincorporated joint venture, dual-listed company (or other synthetic merger), deed of company arrangement, any debt for equity arrangement or other transaction or arrangement;

 

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Beadell Convertible Debentures” means the debentures with rights of conversion into unissued Beadell Shares issued by Beadell prior to the date of the Scheme Implementation Deed, as further itemized in Schedule 5 to the Scheme Implementation Deed;

 

Beadell Convertible Securities” means the Beadell Options and Beadell Performance Rights;

 

Beadell Director” means a director of Beadell;

 

Beadell Group” means Beadell and each of its subsidiaries;

 

Beadell Material Adverse Change” has the meaning ascribed to such term in Schedule 2 of the Scheme Implementation Deed;

 

Beadell Meeting” means the meeting to be convened by the Court in relation to the Scheme pursuant to section 411(1) of the Australian Corporations Act;

 

Beadell Option” means an option to acquire one unissued Beadell Share as further itemized in Schedule 5 to the Scheme Implementation Deed;

 

Beadell Option Plan” means the Employee Option Scheme approved by Beadell Shareholders at the general meeting of Beadell Shareholders held on January 21, 2016;

 

Beadell Performance Rights” means the share rights to acquire Beadell Shares outstanding under the Beadell Performance Rights Plan;

 

Beadell Performance Rights Plan” means the Long Term Incentive Plan approved by Beadell Shareholders on May 18, 2016;

 

Beadell Prescribed Occurrence” has the meaning ascribed to such term in Schedule 2 of the Scheme Implementation Deed;

 

Beadell Regulated Event” has the meaning ascribed to such term in Schedule 2 of the Scheme Implementation Deed;

 

Beadell Reimbursement Fee” means a fee of A$2.2 million;

 

Beadell Scheme Book” refers to the scheme book of Beadell for the Beadell Meeting prepared in accordance with applicable laws in Australia;

 

Beadell Scheme Record Date” means the date which is five Business Days after the Effective Date;

 

Beadell Scheme Resolution” means a resolution of Beadell Scheme Shareholders (other than Excluded Shareholders) to approve the Scheme;

 

Beadell Scheme Shareholder” means a holder of Beadell Shares as at the Beadell Scheme Record Date (other than an Excluded Shareholder);

 

Beadell Scheme Shares” means all Beadell Shares held by Beadell Scheme Shareholders as at the Beadell Scheme Record Date;

 

Beadell Share” means a fully paid ordinary share in the capital of Beadell;

 

Beadell Shareholder” means each person who is registered as a holder of a Beadell Share;

 

 A-2 

 

 

Beadell Support Agreements” means the support deeds whereby Beadell Directors, Beadell officers and certain Beadell Shareholders agreed to vote in favour of the Scheme in the absence of a Superior Proposal for Beadell, subject only to the Independent Expert concluding that the Scheme is in the best interest of Beadell Shareholders;

 

Beadell Warrant” means a warrant to acquire one unissued Beadell Share as further itemized in Schedule 5 to the Scheme Implementation Deed;

 

Beadell Warrantholder” means a holder of Beadell Warrants as at the Beadell Scheme Record Date;

 

Beneficial Great Panther Shareholders” means Great Panther Shareholders who do not hold Great Panther Shares in their own name (i.e. non-registered Great Panther Shareholders);

 

Broadridge” refers to Broadridge Financial Solutions, Inc.;

 

Bulk Sample Program” has the meaning set out under the heading “The Scheme – Background of the Scheme”;

 

Business Day” is any day that is both a Business Day within the meaning given in the ASX Listing Rules and a day that banks in Perth, Western Australia and Vancouver and Toronto, Canada are open for business;

 

C$” and “Canadian dollars” means Canadian dollars;

 

Change of Control Purchase Offer” has the meaning given to it under the heading “Information Concerning the Merged Group – Ownership and Capitalization of the Merged Group – Beadell Convertible Debentures”;

 

CIM” means the Canadian Institute of Mining, Metallurgy and Petroleum;

 

CIM Definition Standards” means the CIM Definition Standards on Mineral Resources and Mineral Reserves;

 

Competing Proposal” means a Beadell Competing Proposal or a Great Panther Competing Proposal, as applicable;

 

Condition Precedent” means a condition precedent to the Scheme, as set out in section 3.1 and 3.2 of the Scheme Implementation Deed;

 

Confidentiality Agreement” means the confidentiality agreement between Great Panther and Beadell dated March 22, 2018;

 

Court” means the Federal Court of Australia (Perth registry) or such other court of competent jurisdiction under the Australian Corporations Act agreed to in writing by Great Panther and Beadell;

 

Debenture Indenture” means the debenture indenture between Beadell and Computershare Trust Company of Canada (as debenture trustee and collateral agent) dated May 17, 2018;

 

Deed Poll” means the deed poll entered into by Great Panther in favour of Beadell Scheme Shareholders to provide the Scheme Consideration in accordance with the terms of the Scheme;

 

Effective” means, when used in relation to the Scheme, the coming into effect, pursuant to section 411(10) of the Australian Corporations Act, of the order of the Australian Court made under section 411(4)(b) of the Australian Corporations Act in relation to the Scheme;

 

Effective Date” means the date on which the Scheme becomes Effective;

 

Electing Small Shareholder” means a holder of less than 10,000 Beadell Shares who elects for all, but not some, of their Beadell Shares to be dealt with in accordance with the Sale Facility

 

End Date” means March 23, 2019 or such later date agreed by Beadell and Great Panther in writing;

 

 A-3 

 

 

Exchange Ratio” means the ratio of Great Panther Shares issued for each outstanding Beadell shares pursuant to the terms of the Scheme, being 0.0619;

 

Excluded Shares” means any Beadell Shares held by a person who is a member of the Great Panther Group or who holds any Beadell Shares on behalf of, or for the benefit of, any member of the Great Panther Group and does not hold Beadell Shares on behalf of, or for the benefit of, any other person;

 

Excluded Shareholder” means any Beadell Shareholder who holds Excluded Shares;

 

Exclusivity Period” means the period commencing on the date of the Scheme Implementation Deed and ending on the earlier of:

 

(a)the date the Scheme Implementation Deed is lawfully terminated in accordance with its terms;

 

(b)the Effective Date; and

 

(c)the End Date;

 

Facility Agreement” means the Amended and Restated Export Prepayment Agreement between Banco Santander (Brasil) S.A., Grand Cayman Branch Itau BBA International PLC, Banco Santander S.A., Banco Santander (Brasil) S.a., Grand Cayman Branch, Banco Santander (Brasil) S.A. and Beadell Brasil Ltda, dated January 20, 2015, as amended pursuant to an amendment agreement dated as of June 22, 2017 and as further amended pursuant to a waiver letter dated July 11, 2018;

 

GMP” means GMP Securities L.P., financial advisors to Great Panther;

 

GMP Fairness Opinion” means the written fairness opinion of GMP provided to Great Panther Special Committee;

 

Government Agency” means (i) any federal, state, provincial, municipal, local or other governmental or public department, central bank, court, commission, commissioner, board, bureau, agency, tribunal or instrumentality; (ii) any quasi-governmental or private body exercising any regulatory, expropriation or taxing authority under or for the account of any of the above; or (iii) any applicable stock exchange;

 

Great Panther” or the “Company” refers to Great Panther Silver Limited, a company existing under the laws of British Columbia, with its head office at Suite 1330, 200 Granville Street, Vancouver, British Columbia, Canada V6C 1S4;

 

Great Panther Board” means the board of directors of Great Panther;

 

Great Panther Competing Proposal” means any proposal, agreement, arrangement or transaction (whether or not publicly announced) which, if entered into or completed, would:

 

(a)means a Third Party (either alone or together with any Associate) would:

 

(i)acquire control of Great Panther or any material subsidiary of Great Panther;

 

(ii)directly or indirectly acquire or become the holder of, or otherwise acquire or have a right to acquire, a legal, beneficial or economic interest in, or control of, all or greater than 50% of Great Panther’s business or assets or the business or assets of the Great Panther Group;

 

(iii)otherwise directly or indirectly acquire or merge with Great Panther or a material subsidiary of Great Panther; or

 

(b)require Great Panther to abandon, or otherwise fail to proceed with, the Transaction,

 

 A-4 

 

 

whether by way of takeover bid, members” or creditors” scheme of arrangement, shareholder approved acquisition, capital reduction, buy back, sale or purchase of shares, other securities or assets, assignment of assets and liabilities, incorporated or unincorporated joint venture, dual-listed company (or other synthetic merger), deed of company arrangement, any debt for equity arrangement or other transaction or arrangement;

 

Great Panther Director” means a director of Great Panther;

 

Great Panther Group” means Great Panther and each of its subsidiaries;

 

Great Panther Material Adverse Change” has the meaning ascribed to such term in Schedule 2 of the Scheme Implementation Deed;

 

Great Panther Meeting” means the special meeting of the Great Panther Shareholders to be held in Terrace Room B located at the Terminal City Club, 837 West Hastings Street, Vancouver, British Columbia at 9:00 a.m. (Vancouver time) on February 11, 2019, and any adjournments or postponements thereof to consider the Great Panther Scheme Resolution and the Name Change Resolution;

 

Great Panther Prescribed Occurrence” has the meaning ascribed to such term in Schedule 2 of the Scheme Implementation Deed;

 

Great Panther Record Date” refers to the close of business in Vancouver, British Columbia on January 2, 2019;

 

Great Panther Regulated Event” has the meaning ascribed to such term in Schedule 2 of the Scheme Implementation Deed;

 

Great Panther Reimbursement Fee” means a fee of A$2.2 million;

 

Great Panther Replacement Warrant” means a warrant issued by Great Panther conferring the right on the holder to be issued one new Great Panther Share on the following terms:

 

(a)the exercise price for the Great Panther Replacement Warrants will equal the exercise price of the Beadell Warrants divided by 0.0619;

 

(b)the expiry date of the Great Panther Replacement Warrants will be the same as the expiry date for the Beadell Warrants; and

 

(c)the Great Panther Replacement Warrants will otherwise be on substantially the same terms and conditions as the Beadell Warrants, with such modifications as are necessary to comply with Great Panther’s status as a British Columbia company and to comply with applicable Canadian securities laws and stock exchange requirements;

 

Great Panther Share” means a common share in the capital of Great Panther;

 

Great Panther Shareholder” means each person who is registered as a holder of Great Panther Shares;

 

Great Panther Scheme Resolution” refers to an ordinary resolution authorizing and approving the issuance by Great Panther of such number of Great Panther Shares as shall be necessary pursuant to the terms of the Scheme Implementation Deed, as more fully described in the section entitled “General Information for the Meeting – Great Panther Scheme Resolution”;

 

Great Panther Special Committee” means the special committee of independent Great Panther Directors formed for the purpose of considering the Transaction;

 

Great Panther Support Agreements” means the support agreements dated on or about September 23, 2018 whereby Great Panther Directors and Great Panther officers agreed to vote in favour of the Great Panther Scheme Resolution;

 

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Implementation Date” means the date which is five Business Days after the Beadell Scheme Record Date or such other day as Beadell and Great Panther agree in writing;

 

Independent Expert” means Deloitte Corporate Finance Pty Limited, the independent expert appointed by Beadell to prepare the Independent Expert’s Report;

 

Independent Expert’s Report” means the report prepared by the Independent Expert;

 

Ineligible Foreign Shareholder” means aa Scheme Shareholder whose address shown in the Beadell Share Register on the Beadell Scheme Record Date is a place outside Australia and its external territories, New Zealand, Canada or the United States, unless Great Panther, in consultation with Beadell, determines that it is lawful and not unduly onerous or impracticable to issue Great Panther Shares when the Scheme becomes Effective;

 

IFRS” means the International Financial Reporting Standards and interpretations issued by the International Accounting Standards Board from time to time;

 

JORC” or the “JORC Code” means the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (2012 edition) published by the Joint Ore Reserves Committee of the Australian Institute of Mining and Metallurgy, the Australian Institute of Geoscientists and the Minerals Council of Australia.

 

Loan Agreement” means the loan agreement, dated December 5, 2018, pursuant to which Great Panther has agreed to advance to Beadell and Beadell Brasil, as joint and several borrowers, a non-revolving term loan in the principal amount of US$5,000,000;

 

MACA” means MACA Limited and MACA Mineracao e Construcao, or any one of them, as the context requires;

 

MACA Agreement” means the Deed of Acknowledgement of Debt, Termination and Release of Open Pit Mining Services Contract entered into between Beadell, Beadell Brasil Ltda and MACA dated June 2018;

 

MACA Consent Agreement” means the Deed of Consent, Variation and Restatement entered into between Great Panther and MACA dated November 19, 2018;

 

Management Information Circular” means the management information circular dated December 21, 2018;

 

Material Adverse Change” means a Beadell Material Adverse Change or a Great Panther Material Adverse Change;

 

MEM” means the Ministry of Energy and Mines of Peru;

 

Merged Group” means the combination of the Great Panther Group and the Beadell Group, as comprised by Great Panther and its subsidiaries following implementation of the Scheme;

 

Name Change” means the change of Great Panther’s name to Great Panther Mining Limited, or such other name as is determined by the Great Panther Board, as described in this Management Information Circular;

 

Name Change Resolution” means the ordinary resolution of the Great Panther Shareholders to approve the Name Change;

 

NI 43-101” means National Instrument 43-101 Standards of Disclosure for Mineral Projects of the Canadian Securities Administrators;

 

NI 51-102” means National Instrument 51-102 Continuous Disclosure Obligations of the Canadian Securities Administrators;

 

NI 54-101” means National Instrument 54-101 Communication with Beneficial Owners of Securities of Reporting Issuers of the Canadian Securities Administrators;

 

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Notice and Access Provisions” has the meaning set out under the heading “General Information for the Meeting – Notice and Access Process”;

 

Notice of Special Meeting” refers to the notice regarding the Great Panther Meeting accompanying this Management Information Circular;

 

PROFEPA” means Procuraduría Federal de Protección al Ambiente, Mexico's federal environmental protection agency;

 

PST” means pacific standard time as recognized in Vancouver, British Columbia;

 

Registered Great Panther Shareholders” means Great Panther Shareholders who hold Great Panther Shares in their own name;

 

Relevant Interest” has the meaning given in section 9 of the Australian Corporations Act;

 

Related Bodies Corporate” has the meaning ascribed to such term in section 50 of the Corporations Act;

 

Related Person” means each director, officer, employee, adviser, agent or representative of Great Panther or Beadell, or their Related Bodies Corporate or financial advisers;

 

Relevant Interest” has the meaning ascribed to such term in sections 608 and 609 of the Australian Corporations Act;

 

Sale Agent” means the person chosen by Beadell and Great Panther and approved by ASIC (or any other applicable regulatory authority in Canada) to sell the Great Panther Shares that are attributable to Ineligible Foreign Shareholders and Electing Small Shareholders under the terms of this Scheme (or any nominee of such person);

 

Sale Facility” means the facility by which the Sales Agent disposes of certain Beadell Shares held by Ineligible Foreign Shareholders or Electing Small Shareholders;

 

Scheme” means the scheme of arrangement pursuant to Part 5.1 of the Australian Corporations Act proposed between Beadell and the Beadell Scheme Shareholders, pursuant to which all Scheme Shares will be transferred to Great Panther on the Implementation Date.

 

Scheme Consideration” means the consideration to be provided to Beadell Scheme Shareholders (other than Ineligible Foreign Shareholders and Electing Small Shareholders) under the terms of the Scheme, being 0.0619 fully paid Great Panther Shares for each Beadell Share issued and outstanding, to be issued in the form of Great Panther Shares, subject in all cases to section 4.6 of the Scheme Implementation Deed;

 

Scheme Implementation Deed” means the Scheme Implementation Deed dated September 23, 2018 between Beadell and Great Panther;

 

Scheme Meeting” means the meeting of Beadell Shareholders (other than Excluded Shareholders) ordered by the Court to be convened under subsection 411(1) of the Australian Corporations Act to consider and vote on the Scheme and includes any meeting convened following any adjournment or postponement of that meeting;

 

Scheme Record Date” means the date which is five Business Days after the Effective Date;

 

Second Court Date” means the first day of hearing of an application made to the Court for an order pursuant to section 411(4)(b) of the Australian Corporations Act approving the Scheme or, if the hearing of such application is adjourned for any reason, means the first day of the adjourned hearing, with such hearing being the Second Court Hearing;

 

SEC” means the United States Securities and Exchange Commission;

 

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SEMARNAT” means The Secretariat of Environment and Natural Resources;

 

SEDAR” means the System for Electronic Document Analysis and Retrieval described in National Instrument 13-101 System for Electronic Document Analysis and Retrieval (SEDAR) of the Canadian Securities Administrators available to the public for viewing at www.sedar.com;

 

subsidiary” has the meaning ascribed to it under the corporate laws applicable in the context in which the term is used;

 

Superior Proposal” means a bona fide written Competing Proposal:

 

(a)of the kind referred to in any of paragraphs (a)(i), (a)(ii) and (a)(iv) the definition of Beadell Competing Proposal;

 

(b)not resulting from a breach by Beadell of any of its obligations under the Scheme Implementation Deed;

 

(c)not subject to due diligence, financing or other conditions which are more onerous or uncertain as regards their satisfaction than the Conditions Precedent; and

 

(d)that the Beadell Board, acting in good faith, and after taking advice from its external legal advisers, determines: (i) is reasonably capable of being valued and completed within a reasonable timeframe (not exceeding six months) and in accordance with its terms; and (ii) would, if so implemented, result in a more favourable outcome for Beadell Shareholders (as a whole) than would result from the Transaction (as amended or varied following application of the matching right set out in the Scheme Implementation Deed), in each case taking into account all terms and conditions and other aspects of the Competing Proposal (including any timing considerations, any conditions precedent, the identity of the proponent or other matters affecting the probability of the Competing Proposal being completed) and of the Transaction;

 

Third Party” a person other than Great Panther, its Related Bodies Corporate and its other Associates;

 

Transaction” the acquisition of the Scheme Shares by Great Panther through implementation of the Scheme in accordance with the terms of the Scheme Implementation Deed;

 

TSX” means the Toronto Stock Exchange;

 

TSX Company Manual” means the Toronto Stock Exchange Company Manual, as amended from time to time;

 

Tucano” or “Tucano Gold Mine” means the Tucano Gold Mine of Beadell located in Amapá State, northern Brazil;

 

U&M” means Mineração e Construção S/A;

 

Warrant Consideration” means the consideration to be provided by Great Panther to each Beadell Warrantholder for exchange of each Beadell Warrant or the cancellation of each Beadell Scheme Warrant, as applicable, being for each Beadell Warrant, 0.0619 of a Great Panther Replacement Warrant;

 

Warrant Scheme” means the scheme of arrangement pursuant to Part 5.1 of the Australian Corporations Act between Beadell and the Beadell Warrantholders, substantially in the form of Attachment 5 to the Scheme Implementation Deed; and

 

WST” means western standard time as recognised in Perth, Western Australia.

 

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APPENDIX B
GREAT PANTHER SCHEME RESOLUTION

 

BE IT RESOLVED AS AN ORDINARY RESOLUTION OF THE HOLDERS OF COMMON SHARES OF GREAT PANTHER SILVER LIMITED ("GREAT PANTHER") THAT:

 

1.The issuance of: (a) up to 105,588,208 common shares (“Great Panther Shares”) in the capital of Great Panther in exchange for ordinary shares (“Beadell Shares”) in the capital of Beadell (“Beadell”), including Beadell Shares issued on the exercise of Beadell Options and Beadell Performance Rights prior to completion of the Scheme, pursuant to the scheme of arrangement under the provisions of the Corporations Act 2001 (cth) (Australia) (the “Scheme”); and (b) up to 35,548,704 Great Panther Shares pursuant to the exercise or conversion of the Great Panther Replacement Warrants, the Beadell Convertible Debentures and the MACA Agreement after giving effect to the Scheme;

 

2.Notwithstanding that this resolution has been duly passed, the board of directors of Great Panther may, without further notice to or approval of the securityholders of Great Panther, subject to the terms of the Scheme: (i) amend or terminate the Scheme Implementation Deed dated September 23, 2018 between Great Panther and Beadell or the Scheme of Arrangement; or (ii) revoke this resolution at any time prior to the implementation of the Scheme;

 

3.Any director or officer of Great Panther is hereby authorized, for and on behalf of Great Panther, to execute, with or without the corporate seal, and, if appropriate, deliver all other documents and instruments and to do all other things as in the opinion of such director or officer may be necessary or desirable to implement this resolution and the matters authorized hereby, such determination to be conclusively evidenced by the execution and delivery of any such document or instrument, and the taking of any such action; and

 

4.All actions heretofore taken by or on behalf of Great Panther in connection with any matter referred to in any of the foregoing resolutions which were in furtherance of the Scheme are hereby approved, ratified and confirmed in all respects.

 

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APPENDIX C
NAME CHANGE RESOLUTION

 

BE IT RESOLVED AS A SPECIAL RESOLUTION OF THE HOLDERS OF COMMON SHARES OF GREAT PANTHER SILVER LIMITED ("GREAT PANTHER") THAT:

 

1.Great Panther is hereby authorized to file a notice of alteration pursuant to the Business Corporations Act (British Columbia) to change its name from “Great Panther Silver Limited” to “Great Panther Mining Limited” or such other name as the Board, in its sole discretion, deems appropriate and as may be approved by the applicable regulatory authorities, if the Board considers it to be in the best interests of Great Panther to implement such a name change;

 

2.Any director or officer of Great Panther is hereby authorized, for and on behalf of Great Panther, to execute, with or without the corporate seal, and, if appropriate, deliver all other documents and instruments and to do all other things as in the opinion of such director or officer may be necessary or desirable to implement this resolution and the matters authorized hereby, such determination to be conclusively evidenced by the execution and delivery of any such document or instrument, and the taking of any such action; and

 

3.Notwithstanding approval of the shareholders of Great Panther as herein provided, the Board may, in its sole discretion, revoke the special resolution before it is acted upon without further approval of the shareholders of Great Panther.

 

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APPENDIX D
INFORMATION CONCERNING GREAT PANTHER SILVER LIMITED

 

The following information about Great Panther should be read in conjunction with the documents incorporated by reference into this Appendix D and the information concerning Great Panther appearing elsewhere in the Management Information Circular. Capitalized terms used but not otherwise defined in this Appendix D shall have the meaning ascribed to them in the Management Information Circular.

 

The terms “we,” “our,” “us” and “Great Panther” as used in this Appendix D refer collectively to Great Panther Silver Limited and its subsidiaries unless the context suggests otherwise. These terms are used for convenience only and are not intended as a precise description of any separate legal entity within Great Panther.

 

Corporate Overview

 

Great Panther was originally incorporated under the Company Act (British Columbia) in 1965 under the name “Lodestar Mines Ltd.” On June 18, 1980, the Great Panther Shares were listed on the TSX Venture Exchange. On March 22, 1996, Great Panther was continued under the Business Corporation Act (Yukon). On July 9, 2004, Great Panther was continued to British Columbia under the Business Corporations Act (British Columbia). On November 14, 2006, the Great Panther Shares began trading on the TSX. On February 8, 2011, the Great Panther Shares were listed on the NYSE (American), while Great Panther retained its listing on the TSX.

 

Great Panther is a public company trading on the TSX under the ticker symbol “GPR” and on the NYSE (American) under the ticker symbol “GPL”. Great Panther’s principal executive offices are located at Suite 1330, 200 Granville Street, Vancouver, British Columbia V6C 1S4, and its telephone number is (604) 608-1766.

 

Business of Great Panther

 

Great Panther is presently a primary silver mining and exploration company and its current business was effectively established on February 18, 2004 when the Company entered into an option agreement, which granted it the right and option to purchase 100% of the ownership rights to its current day Topia mine in the state of Durango, Mexico. The Company exercised its option to purchase the mine in in February 2005. Following this, on October 25, 2005, the Company signed a formal purchase agreement to purchase 100% of the ownership rights in a group of producing and non-producing silver-gold mines in the Guanajuato Mining District, which included the primary assets and concessions that comprise the Company’s current day Guanajuato Mine Complex, including the San Ignacio mining concessions and the Cata processing plant. In August 2012, the Company signed a definitive agreement for the purchase of a 100% interest in certain surface rights to a total of 19.4 hectares at the San Ignacio Mine, for the construction of a mine portal and ancillary surface facilities. On June 30, 2017, Great Panther purchased the Coricancha Mine in Peru.

 

Great Panther’s current activities are focused on the mining of precious metals from its two wholly-owned operating mines in Mexico: the Guanajuato Mine Complex and the Topia Mine. Great Panther is also advancing towards a decision to restart the Coricancha Mine in Peru with the initiation of a bulk sample program following the completion of a positive preliminary economic assessment in May 2018. Great Panther also continues to pursue the acquisition of additional mining operations or projects in the Americas.

 

Additional information about Great Panther can be found under its profile on SEDAR at www.sedar.com or its website at www.greatpanther.com. The information contained in, or that can be accessed through, Great Panther’s website is not intended to be incorporated into this Management Information Circular, except as expressly provided for herein.

 

Documents Incorporated by Reference

 

The following documents, filed with the securities commissions or similar regulatory authorities in Canada, are specifically incorporated by reference in, and form an integral part of, this Appendix D, provided that such documents are not incorporated by reference to the extent that their contents are modified or superseded by a statement contained

 

 D-1 

 

 

in Appendix D or in any other subsequently filed document that is also incorporated by reference in this Management Information Circular.

 

The following documents of Great Panther are specifically incorporated by reference into and form an integral part of this Appendix D:

 

1.Annual information form dated March 23, 2018 for the year ended December 31, 2017;

 

2.Consolidated financial statements for the year ended December 31, 2017, together with the notes thereto and the auditor’s report thereon;

 

3.Management’s discussion and analysis of financial condition and results of operations for the year ended December 31, 2017;

 

4.Condensed interim consolidated financial statements for the three and nine months ended September 30, 2018 and 2017;

 

5.Management’s discussion and analysis of financial condition and results of operations for the three and nine months ended September 30, 2018;

 

6.Management information circular, dated as at April 23, 2018, for the annual meeting of Great Panther Shareholders held on June 7, 2018;

 

7.Technical report entitled “NI 43-101 Mineral Resource Update Technical Report on the Guanajuato Mine Complex, Guanajuato Mine and San Ignacio Mine, Guanajuato State, Mexico”, dated February 28, 2018;

 

8.Technical report entitled “NI 43-101 Report on the Topia Mine Mineral Resource Estimates as of November 30, 2014”, dated July 6, 2015;

 

9.Technical report entitled “Resource Update Technical Report on the Coricancha Mine Complex, Huarochirí Province, Lima Region, Perú”, dated February 2, 2018;

 

10.Technical report entitled “NI 43-101 Technical Report Summarizing the Preliminary Economic Assessment of the Coricancha Mine Complex”, dated July 13, 2018; and

 

11.Material change report dated October 3, 2018 relating to the Scheme.

 

Any documents of the type referred to above, any audited annual consolidated financial statements, unaudited interim consolidated financial statements and related management’s discussion and analysis of financial condition and results of operations, any material change reports (except confidential material change reports) and business acquisition reports filed by Great Panther with the various securities commissions or similar authorities in Canada, which will subsequently be filed by Great Panther on SEDAR, after the date of the Management Information Circular and prior to the Effective Date, shall be deemed to be incorporated by reference into this Appendix D.

 

The foregoing documents may be viewed on SEDAR at www.sedar.com and are also available on request without charge from Great Panther Assistant Corporate Secretary by sending a written request to Suite 1330 – 200 Granville Street, Vancouver, British Columbia, V6C 1S4.

 

Selected Historical Financial Information

 

The following tables present selected historical consolidated financial data derived from the Great Panther financial statements prepared in accordance with IFRS or IFRS applicable to interim reporting, as applicable, for Great Panther as of and for the nine months ended September 30, 2018 and years ended December 31, 2017 and 2016. The statement of financial position data as of September 30, 2018, and the statement of income and comprehensive income data and the statement of cash flows data for the nine months ended September 30, 2018 have been derived from Great Panther’s

 

 D-2 

 

 

unaudited condensed consolidated interim financial statements for the nine months ended September 30, 2018, which are incorporated by reference into this Management Information Circular. The statement of financial position data as of December 31, 2017 and 2016, and the statement of income (loss) and comprehensive income (loss) data and the statements of cash flows data for the years ended December 31, 2017 and 2016 have been derived from Great Panther’s audited annual consolidated financial statements, which were audited by KPMG LLP, an independent registered public accounting firm, and which are incorporated by reference into this Management Information Circular.

 

You should read the following summary consolidated financial and other data in conjunction with the applicable consolidated financial statements of Great Panther and the notes, as well as the related Management’s Discussion and Analysis of Financial Condition and Results of Operations, for fiscal years ended December 31, 2017 and December 31, 2016, that Great Panther previously filed on SEDAR on February 22, 2018 and February 27, 2017, and the nine months ended September 30, 2018 filed on SEDAR on October 31, 2018.

 

 

 

Sep 30, 2018
US$’000
(unaudited)
Dec 31, 2017
US$’000
(audited)
Dec 31, 2016
US$’000
(audited)
ASSETS      
Current Assets      
Cash and Cash equivalents 35,343 36,797 41,642
Short-term deposits 22,593 20,091 15,020
Trade and other receivables 8,928 14,780 10,178
Inventories 5,200 5,294 5,744
Reimbursement rights 4,113 4,446 -
Derivative assets - - -
Other current assets 731 401 529
Total Current Assets 76,908 81,809 73,113
Non-current Assets      
Restricted cash 1,234 1,234 -
Inventories – non-current 1,547 1,580 -
Reimbursement rights 6,507 6,588 -
Mineral properties, plant and equipment 13,660 14,966 14,118
Exploration and evaluation assets 15,347 15,633 2,112
Deferred tax assets 69 70 98
Total Non-current Assets 38,364 40,071 16,328
Total Assets 115,272 121,880 89,441
LIABILITIES AND SHAREHOLDERS EQUITY      
Current Liabilities      
Trade payables and accrued liabilities 9,687 11,313 6,017
Derivative liabilities - 85 536
Reclamation and remediation provision – current 2,201 4,446 -
Total Current Liabilities 11,888 15,844 6,553
Reclamation and remediation provision 25,263 22,965 3,466
Deferred tax liabilities 1,928 1,930 2,134
Total Liabilities 39,079 40,739 12,153
Shareholders’ Equity      
Share capital 130,872 130,201 128,485
Reserves 19,847 18,962 18,115
Deficit (74,526) (68,022) (69,312)
Total Equity 76,193 81,141 77,288
Total Liabilities and Shareholders’ Equity 115,272 121,880 89,441

 

 D-3 

 

  

 

Notes:

(1)The information in these columns is derived from Great Panther’s unaudited financial statements as at September 30, 2018 and audited financial statements as at December 31, 2017 and December 31, 2016.

 

INCOME STATEMENTS:

 

 

 

Sep 30, 2018
US$’000 except per
share amount

(unaudited)
Dec 31, 2017
US$’000 except per
share amount

(audited)
Dec 31, 2016
US$’000 except per
share amount

(audited)
Revenue 45,787 63,746 61,881
Cost of sales 38,808 46,057 39,859
Mine operating earnings 6,979 17,689 22,022
General and administrative expenses 4,736 7,822 5,813
Exploration, evaluation and development expenses 9,284 9,524 6,127
Impairment - - 1,679
Finance and other income (expense) 1,089 2,413 (11,012)
Income (loss) before income taxes (5,952) 2,756 (2,609)
Income tax expense 552 1,466 1,509
Net income (loss) for the period (6,504) 1,290 (4,118)

Earnings (loss) per share

Basic and diluted

(0.04) 0.01 (0.03)

 

 

CASH FLOW STATEMENTS:

 

 

 

Sep 30, 2018
US$’000
(unaudited)
Dec 31, 2017
US$’000
(audited)
Dec 31, 2016
US$’000
(audited)
Net cash flows provided by operating activities 2,202 5,703 13,632
Net cash used in investing activities (3,969) (11,279) (19,715)
Net cash from financing activities 346 1,207 35,324
Cash and cash equivalents, end of period 35,343 36,797 41,642

 

Consolidated Capitalization

 

No material change in the consolidated capitalization of Great Panther has occurred since September 30, 2018.

 

Prior Sales

 

Great Panther has not sold or issued any Great Panther Shares, or securities convertible into Great Panther Shares, during the twelve-month period ending prior to the date hereof, except as follows:

 

 Date

Type of Security Issued Number of Securities Issued
2018
December(1) Common Shares 1,367(2)
November Common Shares 0
October Common Shares 31,367(2)
September Common Shares 4,800(2)

  

 D-4 

 

 

 Date

Type of Security Issued Number of Securities Issued
August Common Shares 95,833(2)
July Common Shares 12,199(2)
June Common Shares 175,767(2)
May Common Shares 109,215(2)
April Common Shares 104,184(2)
March Common Shares 148,050(2)
February Common Shares 58,034(2)
January Common Shares 64,434(2)
2017
December Common Shares 21,133(2)

 

 

Notes:

(1)Through December 20, 2018
(2)Issued from treasury upon exercise of previously issued options/warrants.

 

Trading Price and Volume

 

On September 21, 2018, the last trading day on which the Great Panther Shares traded prior to the announcement of the Transaction, the closing price of the Great Panther Shares on the TSX was C$1.22 and on the NYSE (American) was USD$1.01.

 

The table below sets forth, for the periods indicated, the price ranges (high and low) and aggregate traded volume for the Great Panther Shares for the prior 12 months as reported on the TSX. Numbers have been rounded to the nearest whole cent.

 

TSX Trading Activity

 

 Date

High (C$) Low (C$) Aggregate Volume
December 2017 $1.74 $1.39 2,083,781
January 2018 $1.86 $1.54 2,054,153
February 2018 $1.60 $1.40 1,164,736
March 2018 $1.64 $1.46 1,512,073
April 2018 $1.63 $1.45 1,587,059
May 2018 $1.68 $1.55 862,952
June 2018 $1.64 $1.50 1,164,883
July 2018 $1.53 $1.38 1,289,672
August 2018 $1.48 $1.02 1,082,935
September 2018 $1.30 $1.05 892,748
October 2018 $1.22 $0.82 2,238,313
November 2018 $0.87 $0.70 2,448,202
December 1 to 20 $0.84 $0.74 1,244,140

 

 D-5 

 

 

NYSE (American) Trading Activity

 

 Date

High (US$) Low (US$) Aggregate Volume
December 2017 $1.35 $1.06 16,027,190
January 2018 $1.45 $1.25 14,496,668
February 2018 $1.29 $1.11 9,041,271
March 2018 $1.28 $1.13 10,070,804
April 2018 $1.28 $1.14 8,678,165
May 2018 $1.32 $1.20 6,484,151
June 2018 $1.26 $1.11 8,145,066
July 2018 $1.17 $1.08 8,219,250
August 2018 $1.16 $0.78 7,243,165
September 2018 $1.01 $0.80 7,114,614
October 2018 $0.94 $0.63 11,285,966
November 2018 $0.67 $0.54 11,728,061
December 1 to 20 $0.63 $0.55 7,897,621

 

Dividends

 

Great Panther has not paid any dividends on the Great Panther Shares.

 

Risk Factors

 

Details concerning risk factors in respect of Great Panther, Great Panther’s business and the Scheme and other transactions contemplated by the Scheme Implementation Deed can be found under the heading “Risk Factors” in this Management Information Circular and in Great Panther’s annual information form dated March 23, 2018 for the year ended December 31, 2017.

 

Auditors, Transfer Agent and Registrar

 

The auditors of Great Panther are KPMG LLP, 777 Dunsmuir Street, Vancouver, British Columbia, Canada V7Y 1K3. The transfer agent and registrar for Great Panther Shares is Computershare Trust Company of Canada at its principal offices in Vancouver, British Columbia and Toronto, Ontario.

 

Additional Information

 

Great Panther files reports and other information with the securities commissions or similar authorities of each of the provinces and territories of Canada, except Québec, including the documents incorporated by reference herein. These reports, information and documents are available to the public free of charge electronically on SEDAR at www.sedar.com or may be obtained on request without charge by contacting Great Panther’s Assistant Corporate Secretary by sending a written request to Suite 1330, 200 Granville Street, Vancouver, British Columbia, Canada V6C 1S4.

 

 D-6 

 

 

APPENDIX E
INFORMATION CONCERNING BEADELL RESOURCES LIMITED

 

The following describes the business of Beadell and should be read together with the financial statements and reserves and resource information of Beadell included elsewhere in this Management Information Circular (including the Schedules to this Appendix E). Unless the context otherwise requires, all references in this appendix to Beadell means to Beadell Resources Limited and any subsidiaries thereof. Capitalized terms used but not otherwise defined in this Appendix E shall have the meaning ascribed to them in the Management Information Circular.

 

Corporate Overview

 

Name, Address and Incorporation

 

Beadell was incorporated on 3 May 2007 under the Corporations Act 2001 and is taken to be registered in Western Australia. (ACN 125 222 291). Beadell’s registered address is Level 2, 16 Ord Street, West Perth, Western Australia 6005.

 

Intercorporate Relationships

 

The following chart sets forth Beadell’s corporate structure, including each of its material subsidiaries and the jurisdiction in which they are organized, all of which are owned in the percentages set out below, as at the date of the Management Information Circular.

 

 

Key:      BDR: Beadell Resources Ltd.

BBL: Beadell Brasil Ltda

BDRB: Beadell (Brazil) Pty Ltd

BDRB 2: Beadell (Brazil 2) Pty Ltd

BDRH: Beadell Resources (Holdings) Ltd

BRM: Beadell Resources Mineração Ltda

BRMH: Beadell Resources Mineração (Holdings) Ltd

CANGA: Mineração Serra da Canga Ltda

MARINA NORTE: Marina Norte Empreendimentos de Mineração S.A.

MVR: Mineração Vale dos Reis Ltda

TML: Tartarugalzinho Mineração Ltda

 

 

 E-1 

 

 

Business of Beadell

 

Beadell Resources Limited is an ASX listed gold mining company. It owns and operates the Tucano Gold Mine, located in Amapá State, northern Brazil. Tucano has approximately 1.26 million ounces proven and probable gold reserves, approximately 2.05 million ounces of measured and indicated gold resources and 1.16 million ounces of inferred gold, with over 2,500 km2 of highly prospective contiguous gold exploration tenements. Tucano’s reserves and resources are presented as at June 30, 2018 in accordance with the 2012 JORC Code and are detailed below under “Tucano Gold Projects Ore Reserve and Mineral Resources as at June 30, 2018”.

 

Tucano sits in an underexplored greenstone belt. There is significant potential to increase reserve quantity and quality both at surface and underground.

 

Beadell is led by the Beadell Board and senior management comprised of experienced and proven mining professionals with a track record of successfully identifying and developing undervalued projects.

 

Overview of Tucano Gold Mine

 

The Tucano Gold Mine covers approximately 2,500 km2 of exploration licences and mining concessions. Tucano consists of open pits which deliver ore to a 3.6 million tonnes per annum processing plant located at the Tucano mine (the “Tucano Processing Plant”).

 

Gold production for the 2017 financial year was 129,764 ounces and a total of 21,253,363 tonnes of material was moved.

 

In May 2017, Beadell announced the results of a feasibility study completed on the upgrade to the Tucano Processing Plant. The feasibility student demonstrated the viability of upgrading the Tucano Processing Plant with an incremental estimate post tax present value of US$127,000,000 at a 5% discount rate, and estimated internal rate of return of 138% and a 14-month payback period. The estimated pre-production capital cost was US$27,600,000.

 

The Tucano Processing Plant upgrade project (the “Tucano Plant Upgrade Project”) is expected to deliver numerous benefits to Beadell including:

 

(a)the ability to process any mix of sulphide / oxide mill feed allowing the mine to be fully optimised;

 

(b)the ability to consistently process head grades in line with the reserve grade;

 

(c)an increase in forecast recoveries to 93%; and

 

(d)a stable gold production profile and more consistent cash flow.

 

On September 3, 2018, Beadell announced completion of the ball mill, approximately two weeks ahead schedule as guided by new management appointed in July 2018. The Tucano Plant Upgrade Project encompasses four key areas including installation of a ball mill (now complete), pre-leach thickener, CIL tank and oxygen plant that will increase sulphide ore processing capacity from ~30% to ~80% and recoveries from ~88% to ~93%.

 

Capital expenditure related to the Tucano Plant Upgrade Project as at September 30, 2018 was approximately B$75 million (US$22 million) with approximately B$35 million (US$10 million) remaining for a total capital expenditure of B$110 million (US$32 million), using the feasibility study US$/B$ exchange rate of 3.40. This is in line with the update provided in Beadell’s June 2018 quarterly report, which highlighted an additional US$2 million to US$4 million increase from the original budget of US$28 million.

 

Beadell has increased power usage from the grid to 8MW and is forecast to draw a total of 12MW from the grid in 2019.

 

 E-2 

 

 

On November 22, 2018, Beadell announced that construction of the pre-leach thickener, CIL tank and oxygen tank that comprise the final stages of the Tucano Plant Upgrade Project were complete and fully commissioned. Beadell also announced that issues with the effectiveness of the oxygen injection spargers were identified during the commissioning process that have resulted in limitations in the injection of oxygen into the leach tanks. Beadell’s initial assessment is that the sparger selection by the previous contractor managing the Tucano Plant Upgrade may not be ideal for the oxygen plant configuration.

 

Beadell also announced on November 22, 2018 that that U&M’s mining fleet has now been fully mobilized and commissioned, with Beadell’s owner-operated fleet being placed on care and maintenance. As a result, mining activities at Tucano are now being fully performed by U&M.

 

The Tucano Gold Mine

 

The following information regarding the Tucano Gold Mine is derived from the NI 43-101 technical report entitled “Mineral Resource and Reserve Update for the Tucano Gold Mine dated October 31, 2018” (the “Tucano Technical Report”) on the Tucano Gold Mine. The Tucano Technical Report was prepared by AMC Mining Consultants (Canada) Ltd. (“AMC”) in accordance with the requirements of NI 43-101. The Tucano Technical Report was dated October 31, 2018 with an effective date of May 11, 2018. Due to the May 11, 2018 effective date, the information included in the Tucano Technical Report does not account for depletion, as reflected in the reserve and resource update issued by Beadell on December 4, 2018 that is dated as of June 30, 2018.

 

The following is a summary only of the information regarding the Tucano Gold Mine and is supported by the Tucano Technical Report. This summary is qualified by reference to the entire Tucano Technical Report. Readers seeking additional detailed information on the Tucano Technical Report are encouraged to review the entire Tucano Technical Report filed on Great Panther’s SEDAR profile at www.sedar.com on November 6, 2018. References to the “Property” in the discussion below are to the Tucano Gold Project.

 

Qualified Persons for the Tucano Technical Report

 

AMC was responsible for managing and preparing the Tucano Technical Report with inputs from the following Qualified Persons: Mr. G. Methven, P.Eng from AMC Mining Consultants (Canada) Ltd., Mr. B. Wolfe, MAIG from International Resource Solutions Pty Ltd., Mr. N. Spicer, C.Eng from Minesure Pty Ltd., Mr. R. Lacourt, SME - RM from LOM Consultants, Mr. J. Moreno, MIEAust, CPEng from SRK Consultants, Mr P. O’Bryan, MAusIMM (CP) from Peter O’Bryan and Associates, Mr. R. Walton, P.Eng from Ray Walton Consulting Inc., and Mr. M. Batelochi, MAusIMM (CP) from Soluções em Geologia e Mineração Ltda.

 

Asset Summary

 

The Tucano Gold Mine is currently the second largest gold producer in Brazil, producing around 145,000 ounces per year from several open pit mines in the northern state of Amapá, Brazil. Formerly a heap leaching operation, it ran from late 2005 until January 2009, producing approximately 292,000 troy ounces of gold from 8.8 Mt of ore. The property was put under care and maintenance due to problems treating the increasingly transitional material. Beadell acquired the property in 2010 and the process plant was upgraded with the addition of a SAG mill and CIL infrastructure, capable of treating sulphide ore. From November 2012 to June 30, 2017, 17.0 Mt at 1.34 g/t gold containing 735,294 ounces of gold were processed, feed was made up of a blend of pit oxide ore, sulphide ore, spent ore, and historic stockpiles.

 

 E-3 

 

 

Location

 

The Tucano Gold Mine is located at latitude 0.85°N and longitude 52.90°W in Amapá, the most north-eastern state of Brazil, approximately 15 km from the town of Serra do Navio. The mine is approximately 200 km from Macapá, the state capital, and is accessible by the Brazilian federal highway BR-210, or by chartered aircraft. The location of the Tucano Gold Mine is presented in the following map:

 

 

 E-4 

 

 

Ownership

 

Beadell owns a 100% interest in the Tucano Gold Mine through its wholly-owned subsidiary, Beadell Brasil. Beadell commenced commercial production of the Tucano Gold Project in 2011 following the commissioning of its SAG mill and CIL process plant.

 

Beadell owns approximately 2,500 km2 of land in total, of which 3,971 hectares are in the mine permit area. The following figure shows the land tenure map, which includes Tucano mining concession coloured in red. Detail of the tenements is included in the Tucano Technical Report.

 

Beadell tenement ownership map with tenement status

 

 

 E-5 

 

 

Taxation

 

There are two corporate income taxes in Brazil which Beadell Brasil is subject to: (a) the Corporate Income Tax; and (b) the Social Contribution Tax on Profits.

 

Royalty overview

 

Beadell Brasil is subject to both federal and state royalties and other royalty agreements in relation to mineral product sales from the Tucano Gold Mine.

 

In summary these are: (a) the Compensation for Exploitation of Mineral Resources (“CFEM”); (b) the Control, Monitoring and Supervision of Research Activities, Mining, Exploration and Exploitation of Mineral Resources Fee (“TFRM”); (c) the Social and Community Development Funds; and (d) a Commodities Royalty, each of which are further described below.

 

CFEM

 

CFEM is a federal royalty and is calculated over the amount of gross revenue obtained in the sale of mineral products. In respect of gold sales, Beadell Brasil is liable to pay a royalty of 1.5% on gross revenue from production at its Tucano Gold Mine.

 

TFRM

 

TFRM is a state royalty levied by the state of Amapá, in which the Tucano Gold Mine is located. TFRM is currently calculated based on the grams of gold produced multiplied by the state index rate of B$2.25 multiplied by a factor of 0.4. The Company has recently finalised negotiations with the state of Amapá to reduce the factor applied; 0.1 for the 2018 and 2019 years and 0.25 for the years 2020 and beyond. The reduced factors have not yet been enacted into law.

 

Social and Community Development Funds

 

The Social and Community Development funds have resulted from various agreements with the state of Amapá and the municipalities of Pedra Branca do Amapari and Serra do Navio. The municipalities of Pedra Branca do Amapari and Serra do Navio are located nearby the Tucano Gold Mine.

 

Under the terms of the agreements Beadell Brasil will pay a maximum 1% royalty over the gross proceeds from gold sales from the Tucano Gold Mine to support the socio-economic and community development of the municipalities of Pedra Branca do Amapari and Serra do Navio.

 

Commodities Royalty

 

The Commodities Royalty is payable to the previous holders of 13 tenements acquired by Beadell Brasil. The Commodities Royalty is levied at 0.75% of commodity sales revenue arising from those 13 tenements minus taxes, transport and insurance expenses and royalties payable.

 

BDR exploration tenements

 

Outside of the mining concession, Beadell holds a 2,500 km2 area of prospective exploration tenements at a grassroots level of exploration spanning a length of 100 km of Paleoproterozoic greenstones and is 100% Beadell owned with the exception of four tenements with iron ore concessions currently held by Zamin Ferrous (“Zamin”). Within Zamin’s leases, Beadell has 100% gold rights whereas Zamin retains the iron ore rights. In 2017, Beadell reached an agreement with joint venture partner Mineração Vale dos Reis Ltda to convert its interest from 70% to 100%.

 

 E-6 

 

 

Accessibility

 

The Tucano Gold Mine is located at latitude 0.85°N and longitude 52.90°W, approximately 200 km northwest of Macapá, the capital of Amapá state in northeast Brazil. Access to the site is made via road or by chartered aircraft.

 

Road access to the Tucano Gold Mine is made using Brazilian federal highway BR-210 from Macapá. The first 100 km of the highway from Macapá is sealed - the balance of the road is unsealed. Total driving time from Macapá to the site is approximately four to six hours, depending on the season and road conditions.

 

The Tucano Gold Mine site is also serviced by a 1,100 m airstrip located approximately 800 m from the main gate. Charter flights from Macapá to the mine take about 50 minutes.

 

The nearest accessible community to the Tucano Gold Mine is the town of Serra do Navio, with a population of approximately 3,300. It is located adjacent to the Amapari River and is approximately 200 km from Macapá. Macapá has a population of approximately 474,000 and lies on the equator on the north side of the Amazon River. Most of the workforce are transported by bus from Serra do Navio, Pedra Branca and other small surrounding towns. Professional staff commute from either Macapá or other cities in Brazil on a fly-in-fly-out basis.

 

Geology

 

The Tucano mineral deposits are located within the Guyana Craton, described by several authors as the Maroni – Itacaiunas mobile belt. This belt runs from Pará and Amapá States of northern Brazil through the Guyanas and into Venezuela. The regional structure is marked by a north-western trending foliation parallel to the main lithologic contacts. The western part of the Tucano property (about 25% of the area) is underlain by basement gneiss. The balance of the property area is underlain by ortho-amphibolite and meta-sedimentary rocks of the Vila Nova Group (1.75 to 1.9 billion years old), composed essentially of gneisses, granites, amphibolites, carbonates / calc-silicates, banded iron formations, schists, and quartzite. These units are intruded by granitic pegmatites, diabase dykes, and gabbro bodies.

 

Mineralization

 

Mineralization at Tucano is controlled by a major north-south shear zone. The texture and mineralogy along the shear zone indicate high-temperature hydrothermal alteration. This zone exhibits intense hydrothermal alteration, particularly silicification and sulfidation, bearing auriferous pyrrhotite, and pyrite. The alteration is most intense in the proximity of reactive meta-sediments such as banded iron formations and carbonate and, to a lesser extent in calc-silicates, schists, and amphibolites. Late cross cutting intrusions are typically barren.

 

The mineralization at Tucano occurs in a series of deposits over a 7 km strike length associated with a north-south trending shear zone occurring coincident with a north-south line of topographic ridges. From south to north, these deposits have been named Tap A, B, C, and Urucum. Tap D is a separate structure in the west. The locations of the deposits are shown in the following figure. Higher grades are associated with the more intensely hydrothermally-altered rocks.

 

 E-7 

 

 

Tucano deposit location map – circled areas show key near mine exploration targets

 

 

History

 

Anglo American discovered a mineralized shear zone in 1994 and undertook extensive exploration between 1995 and 2002. AngloGold completed the initial feasibility study of the oxide resources in October 2002 and from this time until the acquisition of the project by Beadell in 2010, regional exploration outside of the Tucano mining concession involved ground IP surveys, mapping, stream, soil, and auger sampling. In 2008 – 2009 a campaign of diamond drilling was undertaken in some of the regional exploration targets using a man-portable modular diamond drill rig.

 

The property was acquired by Beadell in 2010 and the plant upgraded with the addition of SAG mill and CIL infrastructure capable of treating sulphide ore. From November 2012 to June 30, 2017, 17.0 Mt at 1.34 g/t gold containing 735,294 gold ounces was processed made up of a blend of pit oxide ore, sulphide ore, spent ore, and historic stockpiles.

 

Drilling and exploration

 

After acquisition of the Tucano Gold Mine, Beadell undertook an extensive resource delineation diamond drilling within the mining concession to improve and expand the resource base as part of the feasibility study for the CIL plant expansion. In 2012 Beadell acquired a new T60 Schramm RC rig from Australia which was later sold to McKay drilling and continued operating on site under contract. The T60 Schramm is the main tool used for grade control drilling and resource extension holes, up to 400 m deep, and until now, has only been used to a limited extent to test

 

 E-8 

 

 

regional exploration targets. Shallow testing of regional targets is currently done using motor driven auger drills and a track mounted blasthole rig that is very effective in penetrating the laterite profiles. Beadell has undertaken an extensive review of geophysical, geochemical, and mapping datasets to generate a list of ranked targets which are the focus of the 2018 near mine and regional exploration program.

 

Sample preparation and analysis

 

All sample preparation is done on site using separated sample preparation areas (one for mine grade control samples and one for resource infill and exploration samples). Grade control samples are analysed at the mine laboratory by 30 g fire assay with an atomic absorption spectrometer finish. Exploration and resource holes were analysed at SGS Geosol Laborator’s in Belo Horizonte using 30 g fire assay with an atomic absorption spectrometer finish. An auditable chain of custody was established for the sample handling, data reporting, and data capturing using a Datashed SQL database. The reliability of the gold assay results was based on a well designed and implemented quality assurance and quality control protocol that includes the analysis of blanks, duplicates, and certified reference materials. Pulps from the Beadell mine laboratory are routinely sent to SGS Geosol to monitor its performance. Overall the laboratories returned acceptable results for the certified reference materials and blanks.

 

Mineral Resources

 

The Tucano Project contains an estimated measured and indicated resource of 40.7 Mt at 1.71 g/t gold containing 2.24 Moz gold and an Inferred Resource of 16.4 Mt at 2.19 g/t gold containing 1.15 Moz gold, as summarized in the table below.

 

The mineral resources for the Tucano Project have been estimated by Mr Brian Wolfe, Principal Resource Geologist of International Resource Solutions Pty Ltd, who takes responsibility for the Tap AB and Urucum estimates of the open pit multiple indicator kriging models and Mr Marcelo Batelochi, Principal Resource Geologist of Soluções em Geologia e Mineração Ltda, who takes responsibility for the remaining estimates.

 

The mineral resources were modelled by a combination of multiple indicator kriging and ordinary kriging.

 

For the purpose of reporting open pit mineral resources, the Qualified Persons tabulated the mineral resources within pit shells optimized using a gold price of US$1,500 per ounce of gold for the Tap AB and Urucum deposits.

 

The mineral resources have been estimated in accordance with NI 43-101 and Definition Standards for Mineral Resources and Mineral Reserves adopted by the CIM on May 2014. Measured and indicated mineral resources are inclusive of those mineral resources modified to produce the Mineral Reserves. A summary of the mineral resources as of June 30, 2017 are reported in the following table.

 

It should be noted that mineral resources that are not Mineral Reserves do not have demonstrated economic viability.

 

Summary of Mineral Resources as of June 30, 2017

 

 

Classification

Tonnes (kt) Au grade (g/t) Contained Au
metal (koz)
Measured 18,448 1.41 835
Indicated 22,293 1.96 1,405
Measured and Indicated 40,742 1.71 2,240
Inferred 16,351 2.19 1,150

 

 

Notes:

(1)The June 2017 Tap AB UG Resource includes 173 kt at 4.68 g/t Au of Inferred Oxide in the Inferred Fresh Category.
(2)CIM Definition Standards (2014) were used for reporting the Mineral Resources.

 

 E-9 

 

 

(3)Mr B. Wolfe, MAIG is the Qualified Person under NI 43-101 and takes responsibility for the mineral resource estimate for the Tap AB Open Pit and Urucum Open Pit Resource. Mr M. Batelochi, MAusImm (CP) is the Qualified Person under NI 43-101 and takes responsibility for all remaining resources.
(4)Tap AB and Urucum open pit mineral resources are constrained by an optimized pit shell at a gold price of US$1,500 oz and using Measured, Indicated, and Inferred categories. The COG applied to the open pit resources is 0.5 g/t Au. The COG applied to ore stockpiles is 0.5 g.t with the exception of Marginal ore which has a COG of 0.3 g/t Au.
(5)The underground COG is 1.2 g/t Au.
(6)Drilling results are up to the June 30, 2017 for the Tap AB Open Pit resource. For all other deposits, drilling results up to the December 31, 2016, excluding the Urucum North Underground resource which has drilling results up to September 2015.
(7)Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.
(8)Mineral Resources are inclusive of their derived Mineral Reserves.
(9)The numbers may not compute exactly due to rounding.

 

The Qualified Persons of the Tucano Technical Report are not aware of any known environmental, permitting, legal, title, taxation, socioeconomic, marketing, political, or other similar factors that could materially affect the stated Mineral Resource estimates.

 

Mineral Reserves

 

Tucano Mineral Reserve estimates as of June 30, 2017 stated in this report are based on the mineral resources reported above and updated by Nigel Spicer of Minesure Pty Ltd. The Urucum underground Mineral Reserve was restated by AMC Consultants based on the PFS study completed in 2016 and in line with NI 43-101 guidelines. COG used for the underground Mineral Reserves at Urucum was 1.6 g/t gold. The key modifying parameters upon which the June 30, 2017 open pit mineral reserve estimates were made are summarized in the following table.

 

Reserve key modifying parameters for the optimized pit shells constraining the open pit reserves
as at June 30, 2017 

 

Based on the updated Measured and Indicated mineral resources for the various mineral deposits at Tucano, the total proved and probable mineral reserves using a gold price of US$1,200 per ounce for the open pit reserves and US$1,120 per ounce for the Urucum underground reserves, inclusive of stockpiles and as of June 30, 2017 is estimated to be 24.5 Mt at 1.79 g/t Au for 1.41 Moz of gold (see the following table). Open pit reserves for Tap AB and Urucum have been reported within pit designs optimized at a gold price of US$1,150 per ounce and US$1,100 per ounce, respectively. The Mineral Reserves have been estimated in accordance with NI 43-101 and Definition Standards for Mineral Resources and Mineral Reserves adopted by the CIM on May 2014.

 

Exchange rates of US$ to B$ used for the estimation of Mineral Reserves presented below.

 

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Tucano gold operation – Mineral Reserves as at June 30, 2017

 

 

 

Notes:

(1)2018 Open Pit Mineral Reserves are stated as of June 30, 2017 based on the COGs as detailed in Table 1.3 above. Mineral Reserves are reported within open pit designs based on pit optimized shells using the following optimization COGs; Tap AB Oxide: 0.66 g/t Au, Tap AB Fresh: 0.82 g/t, Urucum Oxide 0.74 g/t Au, Urucum Fresh 0.94 g/t Au, Tap C Oxide 0.66 g/t Au, Tap C Fresh 0.86 g/t Au, Urucum East Oxide 0.74 g/t Au, and Urucum East Fresh 0.94 g/t Au. The COG is based on total costs per pit (inclusive of processing, G&A, tech services and haulage, exclusive of mining costs) and averages US$12.8 for oxide and US$16.8 for fresh. Metallurgical recoveries are 95% for oxide and 93% for sulphides. The gold price used for the open pit optimizations was US$1,150/oz for Tap AB and US$1,100 for Tap C and Urucum. The gold price used to calculate the COGs for the reserves reported within the optimized pit designs was US$1,200 per ounce. An exchange rate of US$:B$ of 1:3.2 for Tap AB and 1:3.4 for Urucum was used. Open Pit Mining Recoveries of 100% for oxide and fresh were used at Urucum, 90% for oxide and fresh at Tap C and Tap AB and 90% oxide, 100% fresh at Urucum East. Dilution used for all pits was 15% for oxide and 20% for fresh.
(2)2018 Underground Mineral Reserves are stated as of June 30, 2017 and based on a COG of 1.6 g/t Au. The COG is based on an incremental mining and processing cost of US$50/t, metallurgical recovery of 90%, a gold price of US$1,120/oz and an exchange rate of US$:B$ of 1:3.8.
(3)A 0.5 m dilution skin was assumed for the HW and FW side of the underground production stopes making the total dilution 1.0 m in width. Ore losses were assumed to be 8% for the Benching method, 14% for the Up-Hole retreat method, and ore losses for the recovery of the sill pillars were assumed to be 35%.
(4)The JORC reserve released on December 19, 2017 to the ASX ("Interim Mineral Resource and Ore Reserve Update as at June 30, 2017") stated the total Urucum Underground Reserve was 2,972 kt at 3.61 g/t Au for 345 koz Au. This reserve was reported by AMC inclusive of Inferred resource blocks captured inside the stope designs that were optimized on Measured and Indicated Resources in the 2016 PFS. The Inferred Resources falling within the stope designs was removed from the calculations and reporting of the NI 43-101 compliant Urucum Underground Reserves by AMC Vancouver in 2018 and has been quoted in the Table 1.3 above.

 

Mining

 

The Tucano mine commenced operations in 2005 and continued as a heap leach operation until 2009 when it was placed on care and maintenance following processing problems caused by increasingly transitional ore. In 2010 Beadell acquired the project and commenced construction of a CIL plant to add onto the existing process infrastructure. Mining and stockpiling of ore commenced in 2011 and the CIL plant was commissioned in November 2012. From November 2012 until June 30, 2017, 17.0 Mt at 1.34 g/t gold containing 735,294 oz gold had been processed made up of a blend of pit oxide ore, sulphide ore, spent ore, and historic low-grade stockpiles. Tucano uses a conventional open pit selective mining method, employing two principal mining contractors – MACA and U&M.

 

Underground mine

 

Access to site is well established as open pit mining operations commenced in 2012. The journey from the port town of Macapa takes approximately four hours by car during the dry season and up to six hours during the wet season.

 

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Access to the Urucum North underground mine would be via a portal located at the north end of the Urucum North pit.

 

Beadell has undertaken a program of resource infill drilling below the Urucum North Pit. Most of these holes have been geotechnically logged for structural data. The geotechnical data logged from these holes has been analysed to provide preliminary estimates of stable stope development and pillar dimensions, using industry standard empirical techniques.

 

The mine layout is based on the following criteria:

 

·Twin declines (north and south based on orebody strike length of >800 m.

 

·Single access portal located at the northern end of the mine.

 

·North and south exhaust raises.

 

·Level interval of 20 m (based on 15 m production blastholes and the narrow width of some lodes).

 

·Crosscuts between the decline and the mineralization, every 20 vertical meters.

 

·Access for decline development available in the Urucum North pit in January 2019.

 

·Targeting Measured and Indicated mineral resources down to 500 mRL (750 mbs). The basis for the scheduling includes:

 

oFocus on mining higher grade areas in 2021 and 2022.

 

oAssume a top-down stope extraction sequence in upper levels to allow early production.

 

oAssumes early development to the higher-grade areas in the lower levels where down-hole benching commences in a bottom-up orientation.

 

The Project sits below the Urucum North open pit and power is already available for the Urucum North underground mine. The underground mine will make use of the open pit mine’s existing explosives magazines and warehouse.

 

Underground mine economics

 

Project capital is estimated at US$44 million; pre-production capital (Year 1) is estimated to be US$10 million. Sustaining capital (US$34 million) is defined as all capital following pre-production and includes ongoing mine development after production commences, and fixed equipment replacements and rebuilds over the mine life.

 

Total site operating costs have been estimated at US$88.67/t milled. The unit costs are broken down as follows:

 

·Mining: US$71.67/t milled

 

·Milling and General and Administration: US$17.00/t milled

 

The cost estimate and projected revenue were prepared with a base date of Year 1 and use constant Year 1 dollars (no inflation). For net present value estimation, all costs and revenues are discounted at 5% from the base date. An exchange rate of US$:B$ of 1:3.8 and a royalty of 2% has been assumed, changes to the exchange rate affect labour costs only.

 

Revenues from gold production have been based on:

 

 E-12 

 

 

·Metallurgical recovery of 90%

 

·Gold royalty of 2%

 

AMC has conducted a pre-tax economic assessment of the Urucum North underground. Over an eight-year operating life, the mine is projected to generate approximately US$25.5 million pre-tax net present value at a 5% discount rate, with a pre-tax internal rate of return of 19.9%.

 

Metallurgy and process plant

 

The Tucano processing plant uses a conventional CIL gold recovery process. The comminution circuit of the process plant is comprised of a primary jaw crusher, followed by a SAG mill. The milled product is processed in the CIL circuit where gold contained in the ore is leached and adsorbed onto activated carbon. The CIL tails slurry undergoes cyanide destruction prior to disposal in the tailings dam. Loaded carbon is rinsed prior to elution. A Pressure Zadra elution circuit is used to remove the gold from the loaded carbon and after which the rich solution flows through a bank of two electrowinning cells where the gold in the solution is deposited on the cathodes within the cells.

 

Following elution, the carbon is re-generated in the carbon re-generation kiln prior to being returned to the CIL circuit. The sludge containing the gold (which is weakly adhered to the cathodes) is dislodged with a high-pressure water spray and the sludge is dried in a drying oven before being direct smelted with fluxes in a furnace. The doré metal and slag separate in the furnace, the slag is poured off to slag pots and the doré metal is poured into bars. Doré bars are cleaned, weighed, stamped, sampled, and then stored in a safe, contained within a strong room, while awaiting dispatch.

 

With the current configuration of the grinding circuit, the plant can process up to 3.6 Mt per annum and a blend ratio of 80:20, oxide:sulphide. Increasing sulphide feed in future years meant that this blend ratio was not sustainable and in 2017 work commenced to expand the CIL plant to include a 6 MW ball mill, extra CIL tank, oxygen plant, and pre-leach thickener. The aim of this was to accommodate the planned 20:80, oxide:sulphide ratio planned for future years as well as maintain a consistent 75 um grind size. With the ball mill in conjunction with the extra CIL tank and oxygen plant, recoveries are expected to increase from 88% to 93%.

 

Infrastructure

 

The site is connected to the national electrical grid by a 69 kV, 20 MVA power line via Companhia de Eletricidade do Amapá, the local supply authority. Power is also provided by an independent 11 MW continuous rated Aggreko diesel-powered generation system. Water is provided from recycled process water and water storage dams. The mine currently employs a total of 1,202 persons, of whom 680 are Beadell Brasil employees and 522 contractors. Approximately 99% are Brazilian nationals with the majority of the workforce from local towns in proximity to the mine. Accommodations for senior and junior staff members are provided by a camp located 2 km from the plant which is capable of housing 85 persons. The plant area contains major infrastructure including, sample preparation and assay laboratory’s, tailing storage, power distribution infrastructure, and plant consumables storage. The main administration area contains major heavy machinery workshops, administration and technical services offices, stores warehouse, core yard, mess facility, and medical centre.

 

Market studies and contracts

 

Gold output from Tucano is in the form of doré bars which are shipped to Sao Paulo for refining by Umicore, the contract refiner. A number of operational duties have been contracted out to suppliers, most notably MACA and U&M as the principal mining contractors. SGS Geosol operates the offsite certified laboratory in Belo Horizonte, Minas Gerais and McKay operates a Schramm RC rig for grade control and resource drilling. The various contracts were awarded following a competitive bidding process, prices are within the industry range and comparable to other operations in Brazil.

 

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Environmental and social

 

In 2011 SRK Consultores do Brasil Ltda produced an Environmental Control Plan (“PCA”) to present changes implemented to the project’s environmental controls as a condition for the renewal of the Operating Licence issued by the State Secretariat of Environment, Amapá. This followed a period of care and maintenance from 2009 until Beadell acquired the project in 2010. The PCA reviewed changes to the proposed process plant configuration (from heap leach to CIL) and ways of minimizing the environmental impact of the plant up-grade. The PCA also covered the environmental aspects of mining and plans to monitor and manage these as well as implementing various programs for the local community.

 

Capital and operating costs

 

Major capital expenditures for 2018 will include US$16.4 million for the process plant upgrade (which has now been completed), US$2.7 million for the tailings storage facility, US$1.5 million for the powerline upgrade, and US$0.7 million for clearing and hydro seeding. Capitalized stripping or miscellaneous minor capital requirements have not been reported. In 2017 cash operating costs for Tucano was US$1,100 per ounce of gold sold, which includes all mining, treatment, inventory adjustments and site general, and administrative costs. It excludes depreciation, amortization, sustaining capital, and corporate general and administration costs.

 

Conclusions

 

The Tucano Technical Report concluded that the Tucano Gold Project is a successfully operating gold mine that started commercial production by Beadell in January 2011 following a period of care and maintenance by the former owners, New Gold (operating as Mineração Pedra Branca do Amapari). Beadell added a CIL circuit to the existing heap leach plant and commissioned it in November 2012. The operation is projected to continue until 2023 based on currently available open pit Mineral Reserves. The exploration database for Tucano is reliable for the purpose of resource estimation. The mineral resources and Mineral Reserves have been updated to June 30, 2017.

 

As from the end of 2017, a total of 23.3 Mt of ore will be mined at an overall strip ratio of 5.6 to 1. Grade control reconciliation has confirmed the mineral resources and Mineral Reserves as previously stated for Tucano. The Tucano Technical Report concluded that the results of this update to the Mineral Resource and Mineral Reserve evaluation confirm the continued economic viability of exploiting the Tucano Gold Deposit. The current open pit LOM production schedule 2018 to 2023 considers 23.3 Mt of ore at an average grade of 1.43 g/t gold containing a total of 1.07 Moz of gold. In 2017, Tucano produced 129,764 oz gold at an AISC of US$1,100 per ounce. which includes all mining, treatment, general and administrative costs, sustaining capital, and royalties which are incurred at the mine site. The mine level AISC costs exclude depreciation, amortization, and corporate general and administrative costs.

 

Recommendations

 

The Tucano Technical Report recommended that near mine exploration and resource definition drilling be completed on key targets within and near the Urucum pit. This could have the potential to add low strip, near surface ounces to the reserves for 2018. Continued regional exploration on the established ranked list of targets is recommended to discover and define significant new gold deposits outside the mine corridor. Regional exploration work will involve stream and soil geochemistry with follow up diamond and RC drilling for the advanced projects. Total budget for Near Mine Exploration, Resource Confirmation, and Regional Exploration in 2018 is US$6.0 million. The proposed work includes 25,200 m of RC and 5,500 m of diamond core, 5,700 m of Rotary Air Blast and Auger, and 9,290 soil samples.

 

Tucano Gold Mine’s Ore Reserve and Mineral Resources as at June 30, 2018

 

Beadell announced a depletion only update of its resources and reserves on December 4, 2018 in its ASX release entitled “Annual Resource and Reserve Statement Update” in accordance with the requirements of the ASX. The release updated the reserves and resources of the Tucano Gold Project to June 30, 2018 in accordance with the 2012 JORC Code, as presented below and with comparative numbers to Beadell’s reserves and resources as at June 30, 2017, also calculated in accordance with the JORC Code. Readers are cautioned that the updated reserves and

 

 E-14 

 

 

resources have not been included in any updated NI 43-101 technical report. The Company’s Qualified Person, Mr. Robert Brown, P.Eng, has reviewed the 2012 JORC Code reserve and resource estimates and confirmed that the estimates would not be materially different if the estimates had been prepared in accordance with the CIM definitions under NI 43-101. The updated reserve and resource statement is not considered to be a “material change” for Great Panther.

 

The annual resource and reserve statement update for the Tucano Gold Project was released by Beadell on December 4, 2018. Due to budget constraints (resulting from the Tucano Plant Upgrade Project and change in mining contractor) and recent changes in management, Beadell did not undertake sufficient drilling to add to its mineral resources and ore reserves estimates in 2018. The Ore Reserves and mineral resources set out below are a re-statement of the Annual Ore Reserve and Mineral Resource statement as at June 30, 2017, as included in the Tucano Technical Report, after depletion by mining and processing activities from July 1, 2017 through to June 30, 2018. Initial limited drilling has indicated promising results, but Beadell is not able to report exploration results until further drilling and analysis has occurred. Beadell expects to be in a position to undertake this further work throughout 2019 upon completion of the Scheme. Beadell plans infill and step out drilling to convert inferred resources to measured and indicated resources and to further define the four discoveries along the Tucano mine trend. The highest priority step-out target will be the Neo lodes as they occur in the current Tap AB pit outline in an area classified as waste.

 

Beadell Ore Reserves

 

Total Ore Reserves as at June 30, 2018 were 21.67 million tonnes at 1.81 g/t gold for 1.26 million ounces compared to 25.06 million tonnes at 1.83 g/t gold for 1.47 million ounces as at June 30, 2017. This is a decrease of 145,000 ounces due to depletion over the second half of 2017 and the first half of 2018 and 67,000 ounces due to a revision of the Urucum underground Reserve.

 

Total Open Pit Reserves are 16.52 million tonnes at 1.74 g/t gold for 924,000 ounces compared to 18.45 million tonnes at 1.77 g/t gold for 1.05 million ounces as at June 30, 2017.

 

Total Stockpile Reserves are 2.77 million tonnes at 0.66 g/t gold for 59,000 ounces compared to 3.64 million tonnes at 0.66 g/t gold for 77,000 ounces as at June 30, 2017.

 

Total Underground Reserves as at June 30, 2018 were 2.38 million tonnes at 3.64 g/t gold for 278,000 ounces compared to 2.97 million tonnes at 3.61 g/t gold for 345,000 ounces as at June 30, 2017. This is a decrease of 67,000 ounces resulting from a revision of the Urucum Underground Reserve by AMC, which revision was originally reflected in the Tucano Technical Report, as summarized above.

 

BRAZIL

PROVEN PROBABLE TOTAL ORE RESERVE

CUT-

OFF

Tonnes

(‘000)

Grade
(g/t)

Ounces

(‘000)

Tonnes

(‘000)

Grade
(g/t)

Ounces

(‘000)

Tonnes

(‘000)

Grade
(g/t)

Ounces

(‘000)

(g/t)
Urucum Open Pit Oxide 177 1.15 7 122 1.14 4 299 1.14 11 0.7
Urucum East Open Pit Oxide 0 0 0 151 1.71 8 151 1.71 8 0.7
Tap AB Open Pit Oxide 1,450 2.2 102 1,723 1.74 97 3,173 1.95 199 0.6
Tap C Open Pit Oxide 206 0.95 6 168 0.85 5 374 0.9 11 0.6
Total Oxide 1,832 1.96 115 2,165 1.64 114 3,998 1.78 229  
Urucum Open Pit Primary 4,311 1.63 227 5,504 1.76 311 9,815 1.7 537 0.8
Urucum East Open Pit Primary 0 0 0 16 1.5 1 16 1.5 1 0.9
Tap AB Open Pit Primary 952 2.14 66 1,094 1.77 62 2,047 1.95 128 0.8
Tap C Open Pit Primary 248 1.34 11 401 1.4 18 648 1.38 29 0.8
Total Primary 5,511 1.71 303 7,015 1.74 392 12,525 1.72 695  
Urucum Open Pit Total 4,488 1.62 233 5,626 1.74 315 10,114 1.69 548  
Urucum East Open Pit Total 0 0 0 167 1.69 9 167 1.69 9  
Tap AB Open Pit Total 2,402 2.18 168 2,818 1.76 159 5,220 1.95 327  

 

 E-15 

 

 

BRAZIL

PROVEN PROBABLE TOTAL ORE RESERVE

CUT-

OFF

Tonnes

(‘000)

Grade
(g/t)

Ounces

(‘000)

Tonnes

(‘000)

Grade
(g/t)

Ounces

(‘000)

Tonnes

(‘000)

Grade
(g/t)

Ounces

(‘000)

(g/t)
Tap C Open Pit Total 453 1.16 17 569 1.24 23 1,022 1.2 40  
Total Oxide and Primary 7,343 1.77 418 9,180 1.71 506 16,523 1.74 924  
Open Pit Stockpile 1,994 0.66 42 0 0 0 1,994 0.66 42 0.5
Spent Ore Stockpile 307 0.61 6 0 0 0 307 0.61 6 0.5
ROM Expansion Stockpile 470 0.7 11 0 0 0 470 0.7 11 0.5
Total Stockpiles 2,771 0.66 59 0 0 0 2,771 0.66 59 0.5
TOTAL TUCANO OPEN PIT & STOCKPILES 10,115 1.47 477 9,180 1.71 506 19,294 1.58 983  
Urucum Underground Primary 0 0 0 2,378 3.64 278 2,378 3.64 278  
Urucum Underground Primary Total* 0 0 0 2,378 3.64 278 2,378 3.64 278  
TOTAL BRAZIL 10,115 1.47 477 11,558 2.11 784 21,672 1.81 1,261  

  

Beadell Mineral Resources

 

Beadell’s measured, indicated and inferred resources as at June 30, 2018 in accordance with the 2012 JORC Code are summarized below.

 

 

BRAZIL

MEASURED RESOURCES INDICATED RESOURCES TOTAL MEASURED & INDICATED INFERRED RESOURCES CUT-
OFF
Tonnes
(‘000)
Grade
(g/t)
Ounces
(‘000)
Tonnes
(‘000)
Grade
(g/t)
Ounces
(‘000)
Tonnes
(‘000)
Grade
(g/t)
Ounces
(‘000)
Tonnes
(‘000)
Grade
(g/t)
Ounces
(‘000)
(g/t)
Urucum Open Pit Oxide 360 1.07 12 278 1.03 9 638 1.05 22 69 0.96 2 0.5
Urucum East Open Pit Oxide 0 0 0 200 1.88 12 200 1.88 12 9 1.58 0 0.5
Tap AB Open Pit Oxide 1,854 2.23 133 3,376 1.79 195 5,230 1.95 327 663 1.26 27 0.5
Tap C Open Pit Oxide 370