23 Nov

Notice of general meeting and short form prospectus

Page 1 SWICK MINING SERVICES LIMITED ACN 112 917 905 Notice of General Meeting The General Meeting of the Company will be held at Aloft Perth at 27 Rowe Avenue, Rivervale, WA 6103 on Wednesday, 22 December 2021 at 10am (WST) The Notice of General Meeting should be read in its entirety. If Shareholders are in doubt as to how to vote, they should seek advice from their accountant, solicitor or other professional advisor prior to voting. Should you wish to discuss any matter, please do not hesitate to contact the Company Secretary by telephone on +61 8 9277 8800. Shareholders are urged to attend or vote by lodging the proxy form attached to the Notice Page 2 Swick Mining Services Limited ACN 112 917 905 (Company) Notice of General Meeting Notice is hereby given that the general meeting of Shareholders of Swick Mining Services Limited will be held at Aloft Perth at 27 Rowe Avenue, Rivervale, WA 6103 on Wednesday, 22 December 2021 at 10am (WST) ( Meeting ). The Explanatory Memorandum provides additional information on matters to be considered at the Meeting. The Explanatory Memorandum and the Proxy Form form part of the Notice. The Directors have determined pursuant to regulation 7.11.37 of the Corporations Regulations 2001 (Cth) that the persons eligible to vote at the Meeting are those who are registered as Shareholders on Monday, 20 December 2021 at 4:00pm (WST). Terms and abbreviations used in the Notice are defined in Schedule 1. Agenda 1 Resolution 1 - Approval to dispose of major asset To consider and, if thought fit, to pass with or without amendment, as an ordinary resolution the following: “That, subject to Resolution 2 being passed, for the purposes of Listing Rule 11.4.1(b) and for all other purposes, approval is given for the sale of the Orexplore Business to Orexplore Technologies Limited, a subsidiary entity of the Company, on the terms and conditions set out in the Explanatory Memorandum.” Voting Exclusion The Company will disregard any votes cast on this Resolution by or on behalf of Orexplore Technologies Limited and any other person who will obtain a material benefit as a result of the transaction (except a benefit solely by reason of being a holder of ordinary securities in the Company), and any person who is an associate of those parties. However, the Company need not disregard a vote cast in favour of this Resolution if it is cast by: (a) a person as a proxy or attorney for a person who is entitled to vote on the Resolution, in accordance with the directions given to the proxy or attorney to vote on the Resolution in that way; or (b) the Chair as proxy or attorney for a person who is entitled to vote on the Resolution, in accordance with a direction given to the Chair to vote on the Resolution as the Chair decides; or (c) a holder acting solely in a nominee, trustee, custodial or other fiduciary capacity on behalf of a beneficiary provided the following conditions are met: Page 3 (i) the beneficiary provides written confirmation to the holder that the beneficiary is not excluded from voting, and is not an associate of a person excluded from voting, on the Resolution; and (ii) the holder votes on the Resolution in accordance with directions given by the beneficiary to the holder to vote in that way. 2 Resolution 2 - Approval for a reduction of capital and in-specie distribution of Orexplore Shares To consider and, if thought fit, to pass with or without amendment, as an ordinary resolution the following: "That, for the purposes of sections 256B and 256C of the Corporations Act and for all other purposes, on the Record Date to determine the entitlements of Swick Shareholders to participate in the reduction of capital: (a) the issued share capital of the Company be reduced by the Company, without cancelling any Swick Shares, by an amount equal to the market value (as assessed by the Swick Directors) of all the fully paid ordinary shares in the capital of Orexplore less a Dividend Amount (if any) with effect as at the Record Date to determine entitlements to the distribution and transfer referred to in paragraph (b) of this Resolution; and (b) the reduction, and Dividend Amount (if any), be satisfied by the distribution and transfer of all fully paid ordinary shares in Orexplore to Swick Shareholders registered as such on the Record Date on a pro rata basis, to be effected in accordance with Swick's constitution, the Corporations Act, the Listing Rules and as otherwise determined by the Swick Directors, with the consequence that each Swick Shareholder on the Record Date shall be deemed to have consented to becoming a Orexplore Shareholder and being bound by its constitution, on the terms and conditions set out in the Explanatory Memorandum." BY ORDER OF THE BOARD Frank Campagna Company Secretary Swick Mining Services Limited Dated: 22 November 2021 Page 4 Chairman’s Letter Dear Swick Shareholders, On behalf of the Swick's Board of Directors, I am pleased to present this Notice of Meeting and Explanatory Memorandum which provides information in relation to the proposed demerger of Swick’s Mineral Technology business (i.e. Orexplore Business). This document only relates to the Orexplore demerger. Documents in relation to the proposed acquisition of Swick by DDH1 as announced on the ASX on 12 and 22 October 2021 will be contained in a Scheme Booklet to be sent separately to Swick Shareholders. Your Board believes that the Demerger is a significant milestone for Swick, having first invested in the Orexplore Business in 2013 and moving to full ownership in 2017. Since that time, significant progress has been made in the Orexplore Business including progression of commercialisation activities of its flagship product, the GeoCore X10®. Throughout the time of Swick’s involvement to the current day, the Swick Drilling and Orexplore businesses have been operated as standalone businesses within Swick. The Board’s view is that now is the logical time for Orexplore to be demerged as it is at the appropriate stage of its maturity, with a suitable management team, and therefore should operate independently to execute its business plan and commercialise the GeoCore X10® technology. To this end, as part of the Demerger, Swick has also committed an additional $12 million of equity funding to Orexplore to ensure its business plan is well funded. Swick first announced its intention to demerge the Orexplore Business in June 2020. After careful consideration of alternatives, the Board continues to be of the unanimous view that a demerger of the Orexplore Business is the appropriate course. It is now also an important step in unlocking value from the proposed acquisition of Swick by DDH1, as that transaction is conditional on the Demerger being approved by Swick Shareholders. Your Board unanimously recommends and strongly encourages that you support the Demerger and to vote in favour of all Resolutions, which will position both Swick and Orexplore for future success as two separate and distinctly unique businesses. Your Board also recommends Shareholders consider participating in the Orexplore Priority Offer discussed further in this letter. The Swick Board believes that the demerger of the Orexplore Business has the potential to unlock significant value for Swick Shareholders by creating two separate ASX-listed entities (Swick and Orexplore Technologies Limited (i.e. Orexplore), each being able to: - demonstrate greater financial transparency for shareholders and investors; - prioritise growth opportunities in their own target market; - tailor capital management to suit specific business objectives; - pursue and participate in corporate growth initiatives and corporate activity; - attract specialist management expertise and better aligned remuneration structure; and - attract and align the appropriate investor base with the business objectives and growth outlook. Page 5 The potential to unlock value for Swick Shareholders has already been demonstrated by the recent announcement of the proposed acquisition of Swick by DDH1 (by way of Scheme of Arrangement), which the Swick Board intends to recommend to shareholders in the absence of a superior proposal and subject to an independent expert concluding that the Scheme is in the best interests of shareholders. In effect, this is a proposed acquisition of the Swick Drilling Business at an enterprise value of $115 million. Consideration for Swick Shares will be 100% DDH1 Shares at a ratio of 0.2970 DDH1 Shares for each Swick Share. Based on the 5-day volume weighted average price for DDH1 Shares of $1.1793 1 , DDH1's offer values Swick Shares at $0.35 per Share, after allowing for Swick's seed funding payment to Orexplore of $12 million, committed by Swick as part of the Demerger. In addition to the consideration from DDH1's proposed acquisition of Swick, Swick Shareholders will also receive shares in Orexplore (upon implementation of the Demerger), which will trade as a separate entity on the ASX. As part of the demerger process, the Swick Board has obtained an independent assessment of the current fair market value of the Orexplore Business (on a controlling basis) from Deloitte Corporate Finance. Deloitte Corporate Finance has assessed the equity value of Orexplore to be in the range of $45.0 million to $55.0 million on a controlling basis (i.e. 100% ownership) and post the Swick seed funding to Orexplore of $12 million. It is proposed that Swick Shareholders will receive one Orexplore Share for every three Swick Shares held by them on the Record Date if the Demerger proceeds. The Deloitte Valuation therefore represents an implied value per Orexplore Share of $0.48 to $0.59 on a controlling basis, post the Swick seed funding to Orexplore of $12 million and prior to any new Orexplore Shares being issued pursuant to the Priority Offer (referred to below). On a per Swick Share basis, the Deloitte Valuation is equivalent to $0.16 to $0.20 per Swick Share on a controlling basis (i.e. 100% ownership) post the Swick seed funding to Orexplore of $12 million. A concise summary of the Independent Valuation Report is included in this Notice of Meeting. Further, as part of the listing of Orexplore on ASX, the Orexplore Board is undertaking a Priority Offer at an offer price of $0.25 per Orexplore Share. This offer is only open to Swick Shareholders (on the relevant record date) and has been priced broadly in line with the book value of Orexplore in Swick’s accounts at the time of lodging the Prospectus (post the Swick seed funding to Orexplore of $12 million). The offer price is a 48% to 57% discount to the Deloitte Valuation, although it should be noted that the valuation was prepared on a controlling basis (i.e. 100% ownership). The full details of the Priority Offer are contained in the Prospectus. An offer price of $0.25 per Orexplore Share is equivalent to $0.083 per Swick Share (on the basis that eligible Swick Shareholders will receive one Orexplore Share for every three Swick Shares held by them on the Record Date, if the Demerger proceeds). The Priority Offer provides an opportunity for Swick Shareholders to increase their shareholding in Orexplore at a discounted valuation and the Board encourages Shareholders to review the Orexplore Prospectus and consider subscribing for additional Orexplore Shares, particularly smaller Shareholders that may otherwise end up with a less than marketable parcel of Orexplore Shares. The Orexplore Business has achieved significant business milestones, which includes the continued commercialisation of its flagship product, the GeoCore X10®. Orexplore’s immediate focus is to transition its strong base of historical research and development activities into commercial engagements through field-based deployments and projects. Orexplore's growth strategy focuses on enhancing market adoption of its current and future product suite. Following the Demerger, Orexplore will be separately listed on the ASX, offering investors an exposure to the mineral technologies industry and a business with a mission to support the digital transformation of the mining industry. The Orexplore Board believes that the Company's technology platform 1 Based on DDH1’s volume weighted average price over the 5 trading days up and including 6 October 2021. Page 6 comprising its flagship product, the GeoCore X10®, and its user interface software, Orexplore Insight™, and the continuous improvement possible with these products, has the potential to add significant value to mining operations. If approved by Swick Shareholders, the Demerger will be implemented by way of an in-specie distribution to current Swick Shareholders. Following the Demerger, Swick Shareholders will have the choice to retain both their Swick Shares and their Orexplore Shares, or to sell either or both, providing investors a greater degree of choice. In relation to their Swick Shares, shareholders will need to decide whether to vote in favour of the proposed DDH1 transaction. Details regarding the DDH1 transaction, timetable and voting process are set out in a separate Scheme Booklet regarding the transaction. I encourage you to read this Notice of Meeting and the accompanying Prospectus in its entirety. It sets out important information that will assist you to make an informed decision about the Demerger, including the advantages and disadvantages of the Demerger in Section 3.4. If you have any questions about this Notice of Meeting, the accompanying Prospectus or the Demerger, please consult your financial, legal, taxation or other professional adviser or contact the Company Secretary on by telephone on +61 8 9277 8800. In order to proceed, the Demerger must be approved by Swick Shareholders and your vote is very important. I encourage you to vote on the Resolutions in person or by proxy at the Meeting to be held at Aloft Perth at 27 Rowe Avenue, Rivervale, WA 6103 on Wednesday, 22 December 2021 at 10am (WST). If you are voting by Proxy Form, it must be received by 10am (WST) on Monday, 20 December 2021. After considering all relevant factors, the Directors unanimously recommend that Shareholders vote in favour of the Resolutions for the reasons summarised in Sections 3.1, 3.2 and 3.4. Each of the Directors intend to vote in favour of the Resolutions in respect of all Shares they own or control. Yours faithfully, Andrew Simpson Chairman Swick Mining Services Limited 22 November 2021 Page 7 Swick Mining Services Limited ACN 112 917 905 Explanatory Memorandum 1. Introduction The Explanatory Memorandum has been prepared for the information of Shareholders in connection with the business to be conducted at the Meeting to be held at Aloft Perth at 27 Rowe Avenue, Rivervale, WA 6103 on Wednesday, 22 December 2021 at 10am (WST). The Explanatory Memorandum forms part of the Notice which should be read in its entirety. The Explanatory Memorandum contains the terms and conditions on which the Resolutions will be voted. The Explanatory Memorandum includes the following information to assist Shareholders in deciding how to vote on the Resolutions: Section 2 Action to be taken by Shareholders Section 3 Resolutions 1 and 2 - Approval for disposal of a major asset and a reduction of capital and in-specie distribution of Orexplore Shares 3.1 General Background 3.2 Rationale for the Demerger 3.3 Overview of the Demerger 3.4 Advantages and Disadvantages of the Demerger 3.5 Independent Valuation Report 3.6 Board recommendation 3.7 Pro forma financial position of Swick and Orexplore upon completion of the Demerger 3.8 Eligible Shareholders 3.9 Ineligible Shareholders and Sale Facility 3.10 Consequence of the receipt or non-receipt of Shareholder approval 3.11 Plans for Swick and Orexplore (assuming completion of Demerger) 3.12 Information about Orexplore 3.13 Directors' interests 3.14 Changes to capital structure 3.15 Information concerning shares 3.16 Taxation consequences of the Demerger 3.17 Section 256C of the Corporations Act 3.18 Capital reduction - general Page 8 3.19 Effect of Proposed Capital Reduction on the Company 3.20 Effect of the Proposed Capital Reduction of the Shareholders 3.21 ASX Listing Rule 7.17 3.22 ASX Listing Rule 11.4 3.23 ASX waiver and confirmation 3.24 Disclosure to ASX 3.25 Directors recommendation and voting intentions 3.26 Other material information Section 4 Enquiries Schedule 1 Definitions Schedule 2 Corporate structure post-Demerger Schedule 3 Key risk factors facing Orexplore Schedule 4 Swick pro forma consolidated statement of financial position as at 30 June 2021 Schedule 5 Orexplore pro forma consolidated statement of financial position as at 30 June 2021 Schedule 6 Rights and Liabilities attaching to Orexplore Shares Schedule 7 Independent Valuation Report Schedule 8 Short form prospectus Schedule 9 Orexplore's material contracts A Proxy Form is located at the end of the Explanatory Memorandum. 1.1 Purpose of this document The main purpose of this document is to: (a) explain the terms of the Demerger, and the manner in which the Demerger (or parts of the Demerger) will be implemented (if approved); and (b) to provide such information as is prescribed or otherwise material to the decision of Shareholders whether or not to approve the Resolutions required to give effect to the Demerger. This document includes a statement of all the information known to the Company that is material to Shareholders in deciding how to vote on Resolution 2, as required by Section 256C(4) of the Corporations Act. Page 9 1.2 ASIC and ASX A final copy of this Notice of Meeting and Explanatory Memorandum has been lodged with ASIC and ASX. Neither ASIC, ASX nor any of their respective officers takes any responsibility for the contents of this Notice or the merits of the transaction to which this Notice relates. If Resolution 2 is passed, the reduction of capital is required to take effect in accordance with a timetable approved by ASX. Please refer to Section 1.8 for the proposed indicative timetable for completion of the Demerger, which is subject to change by the Company and any requirements of the ASX Listing Rules and the Corporations Act. 1.3 Short Form Prospectus Under applicable ASIC guidelines, the invitation to Shareholders to vote on Resolution 2 of the Notice of Meeting constitutes an "offer" to transfer Orexplore Shares to Shareholders pursuant to the In-Specie Distribution under Chapter 6D of the Corporations Act and a prospectus is required unless an exemption applies or ASIC provides relief. As no exemptions apply and no relief was obtained, Swick has prepared a short form prospectus in accordance with section 712 of the Corporations Act that contains information in relation to Orexplore ( Short Form Prospectus ). The Short Form Prospectus accompanies this Notice of Meeting (included in Schedule 8) and was lodged with ASIC on 22 November 2021, being the same date as this Notice of Meeting. Swick recommends that all Shareholders read the Short Form Prospectus carefully and in conjunction with this Notice of Meeting. The Short Form Prospectus also facilitates the secondary trading of Orexplore Shares within the first 12 months of Shareholders receiving them without further disclosure. The Short Form Prospectus alone does not contain all the information that is generally required to satisfy the disclosure requirements of the Corporations Act. Rather, it incorporates all other necessary information by reference to information contained in this Notice of Meeting and certain information contained in the Prospectus. 1.4 Forward looking statements This Notice includes forward looking statements that have been based on current expectations about future acts, events and circumstances. These forward looking statements are, however, subject to risks, uncertainties and assumptions that could cause those acts, events and circumstances to differ materially from the expectations described in the forward looking statements. Actual events or results may differ materially from the events or results expressed or implied in any forward-looking statement and such deviations are both normal and to be expected. None of the Company, Orexplore, any of their respective officers or any person named in this document or involved in the preparation of this document make any representation or warranty (either express or implied) as to the accuracy or likelihood of fulfilment of any forward looking statement, or any events or results expressed or implied in any forward looking statement, and you are cautioned not to place undue reliance on those statements. The forward-looking statements in this document reflect views held only as at the date of this document. Page 10 1.5 No financial product advice This document does not constitute financial product, taxation or investment advice nor a recommendation in respect of Orexplore Shares. It has been prepared without taking into account the objectives, financial situation or needs of Shareholders or other persons. Before deciding how to vote or act, Shareholders should consider the appropriateness of the information, having regard to their own objectives, financial situation and needs and seek legal, taxation and financial advice appropriate to their circumstances. Neither the Company nor Orexplore is licensed to provide financial product advice. No cooling- off regime applies in respect of the acquisition of Orexplore Shares under the In-Specie Distribution (whether the regime is provided for by law or otherwise). 1.6 No internet site is part of this document No internet site is part of this Notice of Meeting and Explanatory Memorandum. The Company and maintains an internet site (www.swickmining.com). Any reference in this document to this internet site is a textual reference only and does not form part of this document. 1.7 Disclaimer regarding United States This Notice has not been filed with, or reviewed by, the US Securities and Exchange Commission or any US state securities authority and none of them has passed upon or endorsed the merits of the Demerger or the accuracy, adequacy or completeness of the Notice. Any representation to the contrary is a criminal offence. The Orexplore Shares have not been, and will not be, registered under the US Securities Act 1933 or the securities laws of any US state or other jurisdiction. The Demerger is not being made in any US state or other jurisdiction where it is not legally permitted to do so. US based Swick Shareholders should note that the Demerger is made of securities of an Australian company in accordance with the laws of Australia and the listing rules of the Australian Securities Exchange. The Demerger is subject to disclosure requirements of Australia that are different from those of the United States. It may be difficult for you to enforce your rights and any claim you may have arising under US federal securities laws, since Swick and Orexplore are located in Australia and most of their officers and directors are residents of Australia. You may not be able to sue their respective officers or directors in Australia for violations of the US securities laws. It may be difficult to compel Swick and Orexplore to subject themselves to a US court’s judgment. 1.8 Indicative timetable Event Date Orexplore lodges prospectus with ASIC 22 November 2021 Orexplore applies for admission to the Official List 26 November 2021 Orexplore opens Priority Offer 1 December 2021 General Meeting to approve the In-Specie Distribution of Orexplore Shares ASX informed of Shareholder approval 22 December 2021 Page 11 Orexplore closes Priority Offer 22 December 2021 Completion of acquisition of the Orexplore Business 23 December 2021 Record Date 30 December 2021 In-Specie Distribution to Shareholders of Orexplore Shares 7 January 2022 Dispatch of holding statements for In-Specie Distribution 7 January 2022 Orexplore admitted to the Official List 19 January 2022 Orexplore Shares commence trading on ASX 21 January 2022 These dates are indicative only and the Directors reserve the right to change these dates without notice. 2. Action to be taken by Shareholders Shareholders should read the Notice including the Explanatory Memorandum carefully before deciding how to vote on the Resolutions. 2.1 Voting in person To vote in person, attend the Meeting on the date and at the place set out above. In the event that restrictions on public gatherings in Western Australia due to the COVID-19 global pandemic are reintroduced and prevent a physical meeting from being held, the Meeting will be held as a virtual meeting. Details of any virtual meeting will be notified to Shareholders, including information and guidance on how to participate and vote at the Meeting. 2.2 Proxies (a) Voting by proxy A Proxy Form is included with the Notice. This is to be used by Shareholders if they wish to appoint a representative (a 'proxy') to vote in their place. All Shareholders are encouraged to attend the Meeting either in person or by signing and returning the Proxy Form to the Company in accordance with the instructions thereon. . Please note that: (i) a member of the Company entitled to attend and vote at the Meeting is entitled to appoint a proxy; (ii) a proxy need not be a member of the Company; and (iii) a member of the Company entitled to cast two or more votes may appoint two proxies and may specify the proportion or number of votes each proxy is appointed to exercise, but where the proportion or number is not specified, each proxy may exercise half of the votes. The Proxy Form provides further details on appointing proxies and lodging Proxy Forms. Page 12 (b) Proxy vote if appointment specifies way to vote Section 250BB(1) of the Corporations Act provides that an appointment of a proxy may specify the way the proxy is to vote on a particular resolution and, if it does: (i) the proxy need not vote on a show of hands, but if the proxy does so, the proxy must vote that way (i.e. as directed); (ii) if the proxy has two or more appointments that specify different ways to vote on the resolution – the proxy must not vote on a show of hands; (iii) if the proxy is the chair of the meeting at which the resolution is voted on – the proxy must vote on a poll, and must vote that way (i.e. as directed); and (iv) if the proxy is not the chair – the proxy need not vote on the poll, but if the proxy does so, the proxy must vote that way (i.e. as directed). (c) Transfer of non-chair proxy to chair in certain circumstances Section 250BC of the Corporations Act provides that, if: (i) an appointment of a proxy specifies the way the proxy is to vote on a particular resolution at a meeting of the Company's members; (ii) the appointed proxy is not the chair of the meeting; (iii) at the meeting, a poll is duly demanded on the resolution; and (iv) either the proxy is not recorded as attending the meeting or the proxy does not vote on the resolution, the chair of the meeting is taken, before voting on the resolution closes, to have been appointed as the proxy for the purposes of voting on the resolution at the meeting. (d) For an appointment of a proxy for the Meeting to be effective: (i) the proxy's appointment; and (ii) if the appointment is signed by the appointor's attorney – the authority under which the appointment was signed (i.e. a power of attorney) or a certified copy of it, must be received by the Company at least 48 hours before the start of the Meeting (i.e. by 10am (WST) on Monday, 20 December 2021). Proxy appointments received after this time will be invalid for the Meeting. The following methods are specified for the purposes of receipt of proxies: Online Vote online at https://investor.automic.com.au/#/loginsah By Mail Page 13 Automic Pty Ltd GPO Box 5193 Sydney NSW 2001 In Person Automic Pty Ltd Level 5 5, 126 Phillip Street Sydney NSW 2000 By Email meetings@automicgroup.com.au By Facsimile +612 8583 3040 2.3 Bodies corporate A shareholder which is a body corporate, may appoint an individual as its representative to exercise any of the powers the body may exercise at meetings of a company's members. The appointment must comply with section 250D of the Corporations Act. The appointment may be a standing one. Unless the appointment states otherwise, the representative may exercise all of the powers that the appointing body could exercise at a meeting or in voting on a resolution. The representative should bring to the Meeting evidence of his or her appointment, including any authority under which the appointment is signed, unless it has previously been given to the Company. Shareholders can download and fill out the Appointment of Corporate Representation form from Automic’s website at https://www.automicgroup.com.au . 2.4 Voting exclusions Pursuant to requirements of the Corporations Act and Listing Rules, certain voting exclusions apply to Resolution 1. Please refer to discussion of the relevant Resolutions below for details of the applicable voting exclusions. 2.5 Chair's voting intentions The Chair intends to exercise all available proxies in favour of all Resolutions, unless the Shareholder has expressly indicated a different voting intention. 2.6 Board recommendation After considering all relevant factors, the Directors unanimously recommend that Shareholders vote in favour of Resolutions 1 and 2 for the reasons summarised in Sections 3.1, 3.2 and 3.4. Each of the Directors intend to vote in favour of Resolutions 1 and 2 in respect of all Shares they own or control. Page 14 3. Resolutions 1 and 2 - Approval for disposal of a major asset and a reduction of capital and in-specie distribution of Orexplore Shares 3.1 General background Swick is an ASX listed, Australian based company, specialising in underground diamond coring and surface reverse circulation drilling for the hard rock mining industry. The Company currently comprises two distinct business units as follows: (a) Swick Drilling Business – Swick is the leading underground diamond driller in the Australian market, but also with operations in the USA and Europe. The Swick Drilling business generated revenues in excess of $150 million and EBITDA of c.$30 million in the year to 30 June 2021; and (b) Mineral Technology Business (Orexplore Business) – an emerging mineral technology business, comprising the Orexplore Business, which Swick moved to 100% ownership in 2017. Orexplore has a mission to support the digital transformation of the mining industry, through sensing mineral extraction in near-real-time and creating actionable insights to support decision making across the mining value chain. The Swick Drilling and the Orexplore businesses are standalone businesses within the Swick organisation and have distinctly different characteristics: Swick Drilling is a mature, cash generative mining services business; while the Orexplore Business is an emerging mining technology business. The Orexplore Business is a Swedish-Australian minetech group that aims to supply the global mining industry with mineral data. Orexplore AB, a Sweden incorporated entity, was originally founded in 2010 as a small research project in a Swedish incubator, with Swick having become a minority shareholder in 2013 and undertaking progressive investment to fund product development. In 2017, by which time the Company had acquired approximately 70% of the shares in Orexplore AB, Swick completed the purchase of the remaining minority shareholder interest to hold 100% of Orexplore AB. Following this initial acquisition, the Company has incorporated a number of entities as it started to commercialise this mineral analysis technology, being: (a) Orexplore Australia Pty Ltd; (b) Orexplore USA Inc; and (c) Orexplore Canada Inc, (together with Orexplore AB, the Orexplore Business ). The current corporate structure of the Company is shown below: Page 15 As reconfirmed to the ASX on 21 June 2021, the Company is proposing, subject to Shareholder approval, to transfer the Orexplore Business to a new, wholly owned subsidiary company, Orexplore ( Spin-Out ) (see Section 3.3(a) for further details), which will, in-turn, seek admission to the official list of ASX. As part of the Demerger, Swick also intends to undertake the In-Specie Distribution (see Section 3.3(b) for further details). Following the Spin-Out but prior to the In-Specie Distribution, Swick will hold 93,913,641 Orexplore Shares. Upon completion of the Demerger, the corporate structure of each of the Company and Orexplore will be as set out in Schedule 2. Further information on Orexplore and the Orexplore Shares are available in the Prospectus. 3.2 Rationale for the Demerger The Company's strategy in acquiring the Orexplore Business was to incubate and develop the initial products through to the commercialisation stage, after which the Orexplore Business could stand independently. The Company now believes it is an appropriate time to spin off the Orexplore Business as: (a) the Orexplore Business has developed its flagship product, the GeoCore X10®, and is in the commercialisation phase. Through a targeted business development and sales program, the GeoCore X10® is being actively presented to current trial and pilot & prospective customers, with the intent of converting to and executing medium-to long- term commercial contracts; (b) it is appropriate for the Orexplore Board to determine the Company’s future direction and operational strategy, and for Orexplore be free of the competing demands of the Swick Drilling Business. Conversely, the Demerger will enable a greater focus by Swick on the Swick Drilling Business in line with the Board's commitment to deliver value for Swick Shareholders. The Demerger will provide Swick and Orexplore with increased flexibility to implement independent operating strategies to drive long-term shareholder value and allow them to attract investors with different investment preferences and/or participate in corporate activity. In this regard, the Board notes the recently announced transaction whereby DDH1 proposes to acquire Swick; (c) there are significant differences between the two businesses which can create shareholder and market valuation issues. The Swick Drilling Business tends to appeal to traditional industrial and mining service investors; whereas the Orexplore Business Page 16 tends to appeal to growth investors seeking a higher risk profile but potentially a significantly greater return. The Demerger will allow Swick Shareholders to retain both Swick and Orexplore exposures via different shares, or to choose whether to directly invest in either of Swick and Orexplore after the Demerger based on their individual investment objectives, risk tolerance and desired sector exposures; and (d) Orexplore’s growth will require access to growth capital funding. In the absence of the Demerger, this funding would need to be covered by Swick and this could become a drag on the Swick Drilling Business’ cashflow and / or impede the Swick’s ability to reward Shareholders via capital management. Conversely, a lack of funding from Swick would constrain Orexplore’s ability to grow. In addition to the above, an important reason for the Demerger is to unlock the value of both the Orexplore Business and the Swick Drilling Business. This unlock of value has become immediately evident given the recently announced proposed acquisition of Swick by DDH1, which is conditional on the Demerger being approved by Swick Shareholders and will not proceed if the Demerger is not approved (unless this condition to the proposed DDH1 transaction is waived by DDH1). By listing on ASX, Orexplore aims to: (a) increase the profile and awareness of the Orexplore Business as a growing and successful technology business focused on the mineral technology market; (b) provide Swick Shareholders with a market-based valuation of their investment in Orexplore; (c) provide existing Swick Shareholders and future Orexplore Shareholders, who have an appetite for the specific risk profile of and opportunity presented by Orexplore, the opportunity to directly contribute to the growth of Orexplore; and (d) provide Orexplore with direct access to capital markets and improve financial flexibility for future growth opportunities. 3.3 Overview of the Demerger (a) Spin-Out - sale of Orexplore Business Swick intends to transfer the Orexplore Business to its newly incorporated wholly owned subsidiary company, Orexplore, by way of the sale of all of the shares in the capital of Orexplore AB and Orexplore Australia Pty Ltd (noting that Orexplore USA Inc and Orexplore Canada Inc are wholly owned subsidiaries of Orexplore Australia Pty Ltd) to Orexplore. As consideration for the sale of the Orexplore Business, Orexplore will issue Swick 93,913,541 Orexplore Shares. Swick intends to distribute and transfer all of its Orexplore Shares (being 93,913,641, comprising the 93,913,541 Orexplore Shares referenced above and 100 Orexplore Shares currently on issue and held by Swick as at the date of this Notice) to Swick Shareholders on the basis of one Orexplore Share for every three Swick Shares held by them at the Record Date, as an in-specie distribution). The Spin-Out will only proceed if the following conditions are met or waived on or before 12 August 2022 (together, the Spin-Out Conditions ): Page 17 (i) Swick obtaining shareholder approval under the Corporations Act and Listing Rules for the In-Specie Distribution; and (i) Orexplore receiving conditional ASX listing approval, on terms acceptable to the Orexplore Board which, once satisfied, will result in ASX admitting Orexplore to the Official List. (b) In-Specie Distribution Swick intends to distribute and transfer all of its Orexplore Shares to Swick Shareholders on the basis of one Orexplore Share for every three Swick Shares held by them at the Record Date, as an in-specie distribution ( In-Specie Distribution ). The In-Specie Distribution will occur subject to and as soon as reasonably practicable following completion of the Spin-Out. Should the Spin-Out Conditions be satisfied, the In-Specie Distribution will be effected by an equal reduction of Swick capital and (if so determined) partly by way of Dividend Amount on a pro rata basis. Eligible Shareholders that are registered as a Swick Shareholder as at 5.00pm (WST) on the Record Date will receive an in specie return of capital by way of the distribution of the Orexplore Shares held by Swick on the basis of one Orexplore Share for every three Swick Shares held by them at the Record Date. Any fractions of entitlement will be rounded up to the next whole number. Swick Shareholders will thereby retain direct ownership of Swick and will also receive direct ownership of the Orexplore Business. The Record Date for the In-Specie Distribution will be set by the Directors after the date that Resolution 2 is passed and depends on the satisfaction of the Spin-Out Conditions. See Section 3.16 for details in relation to the taxation consequences of the In-Specie Distribution. (c) Priority Offer In conjunction with the Spin-Out, Orexplore intends to seek admission to the Official List and undertake a Priority Offer to eligible Swick Shareholders with a minimum subscription of $2,000 per Swick Shareholder. The Priority Offer will be made by way of a prospectus to raise at least $1,000,000 (before costs) by the issue of at least 4,000,000 Orexplore Shares at $0.25 per Orexplore Share ( Minimum Subscription ) and up to $2,500,000 (before costs) by the issue of up to 10,000,000 Orexplore Shares at $0.25 per Orexplore Share ( Maximum Subscription ) ( Prospectus ). The Priority Offer is conditional upon the following events occurring: (i) Swick obtaining approval from Swick Shareholders for the Demerger; (ii) the Demerger Implementation Deed becoming unconditional; (iii) Orexplore raising the minimum subscription under the Priority Offer (being $1,000,000 (before costs)); (iv) to the extent required by ASX or the Listing Rules, certain persons entering into a restriction agreement imposing such restriction on trading on the securities issued under the Prospectus as mandated by the Listing Rules; and Page 18 (v) Orexplore receiving conditional ASX listing approval, on terms acceptable to the Orexplore Board which, once satisfied, will result in ASX admitting Orexplore to the Official List. Orexplore will not be undertaking a general public offer to raise capital from investors that are not Swick Shareholders. Pursuant to the Demerger Implementation Deed, Swick will also contribute an additional seed funding payment to Orexplore of $12,000,000 at completion of the Demerger. (d) Important note In order for the Orexplore Shares to commence trading on the ASX, Orexplore is required to lodge a prospectus in accordance with section 710 of the Corporations Act. The Prospectus was lodged on the date of this Notice and contains the Priority Offer (as set out above in Section 3.3(c)). An application for admission of the Orexplore Shares to quotation on the ASX will be made to ASX within 7 days after the date of the Prospectus (being the date of this Notice), however Swick Shareholders must note that the Orexplore Shares will not commence trading unless the conditions to the Priority Offer are satisfied. Shareholders should note that there is no guarantee that the conditions will be satisfied, and even if the above conditions are satisfied, there is no guarantee that the Orexplore Shares will commence quotation on the ASX. The Company notes that the Orexplore Shares will not be quoted on the ASX pursuant to the short-form prospectus lodged on the date of this Notice and included in Schedule 8. 3.4 Advantages and disadvantages of the Demerger Advantages: (a) Opportunity to unlock the value for Swick Shareholders Following the Demerger, Swick and Orexplore will be two separate ASX-listed businesses which will attract their own valuations. The Swick Directors believe that Swick’s market capitalisation and enterprise value (prior to the announcement of the proposed DDH1 transaction), did not reflect the value of the parts of Swick, namely, the Swick Drilling Business and the Orexplore Business. This was a key reason for the Board determining to proceed with the Demerger. Since announcing the re-commencement of the Demerger in June 2021, Swick has also announced the proposed acquisition of Swick by DDH1, by Scheme of Arrangement ( Scheme ), which is scheduled to complete after the Meeting (subject to satisfaction or waiver of all relevant conditions precedent). The Swick Directors intend to recommend the Scheme to Shareholders, in the absence of a superior proposal and subject to an independent expert concluding that the Scheme is in the best interests of Shareholders. Shareholders should note that the Scheme is conditional on the Demerger being approved by Swick Shareholders. In effect, this is a proposed acquisition of the Swick Drilling Business which values Swick’s Drilling Business at an enterprise value of $115 million. Consideration for Swick Shares will be 100% DDH1 Shares at a ratio of 0.2970 DDH1 Shares for each Swick Share. Based on the 5-day volume weighted average price for DDH1 Shares of Page 19 $1.1793 2 , DDH1's offer values Swick Shares at $0.35 per Share, after allowing for Swick's seed funding payment to Orexplore of $12 million, committed by Swick as part of the Demerger. The emergence of the proposed DDH1 transaction supports the Directors’ contention that Swick’s market capitalisation did not reflect the value of the two parts of Swick's Business. In addition to the consideration from DDH1's proposed acquisition of Swick, Swick Shareholders will also receive shares in Orexplore (upon implementation of the Demerger), which will trade as a separate entity on the ASX. The future trading of Orexplore Shares is uncertain. Under the Priority Offer, Orexplore is raising capital at a price of $0.25 per Orexplore share. A listing price of $0.25 per Orexplore Share is equivalent to $0.083 per Swick Share (on the basis that eligible Swick Shareholders will receive one Orexplore Share for every three Swick Shares held by them on the Record Date, if the Demerger proceeds). As part of the demerger process, the Swick Board has obtained an independent assessment of the current fair market value of the Orexplore Business (on a controlling basis) from Deloitte Corporate Finance. Deloitte Corporate Finance has assessed the equity value of Orexplore to be in the range of $45.0 million to $55.0 million on a controlling basis (i.e. 100% ownership) and post the Swick seed funding to Orexplore of $12 million. It is proposed that Swick Shareholders will receive one Orexplore Share for every three Swick Shares held by them on the Record Date if the Demerger proceeds. The Deloitte Valuation therefore represents an implied value per Orexplore Share of $0.48 to $0.59 on a controlling basis, post the Swick seed funding to Orexplore of $12 million and prior to any new Orexplore Shares being issued pursuant to the Priority Offer. On a per Swick Share basis, the Deloitte Valuation is equivalent to $0.16 to $0.20 per Swick Share on a controlling basis (i.e. 100% ownership) post the Swick seed funding to Orexplore of $12 million. A concise summary of the Independent Valuation Report is included in Schedule 7. The Independent Valuer has also prepared and applied their own Tech Rating for early stage technology, a copy of which is included within the Prospectus. As part of the listing of Orexplore on ASX, the Orexplore Board is undertaking a Priority Offer at an offer price of $0.25 per Orexplore Share. An offer price of $0.25 per Orexplore Share is equivalent to $0.083 per Swick Share (on the basis that eligible Swick Shareholders will receive one Orexplore Share for every three Swick Shares held by them on the Record Date (if the Demerger proceeds). The Demerger clearly enables the value of the Orexplore Business to be released from Swick and, while there is no certainty as to where Orexplore Shares will trade, it is clear the market valuation of Swick prior to announcement of the proposed DDH1 transaction did not reflect the sum-of-the-parts of Swick. A comparison of the value per Swick Share prior to announcement of the proposed DDH1 transaction, with the potential value outcome if both the Demerger and the DDH1 transaction are approved, is set out below. 2 Based on DDH1’s volume weighted average price over the 5 trading days up and including 6 October 2021. Page 20 Figure 1. Swick Valuation Waterfall (b) Facilitates the proposed DDH1 acquisition of 100% of Swick As announced on 22 October 2021, Swick has entered a scheme implementation agreement with DDH1 under which it is proposed that DDH1 will acquire 100% of the shares in Swick by way of a Scheme of Arrangement ( Scheme ). In effect, this is a proposed acquisition of the Swick Drilling Business which values Swick’s Drilling Business at an enterprise value of $115 million. Consideration for Swick Shares will be 100% DDH1 Shares at a ratio of 0.2970 DDH1 Shares for each Swick Share. Based on the 5-day volume weighted average price for DDH1 Shares of $1.1793 3 , DDH1's offer values Swick Shares at $0.35 per Share, after allowing for Swick's seed funding payment to Orexplore of $12 million, committed by Swick as part of the Demerger. The Swick Board intends to unanimously recommend the Scheme to Swick Shareholders, in the absence of a superior proposal and subject to an independent 3 Based on DDH1’s volume weighted average price over the 5 trading days up and including 6 October 2021. 26.5c 35.0c 43.3c 8.3c Swick Share price prior to DDH1 transaction announcement Value of Swick shares under proposed DDH1 offer Value of Orexplore at Priority Offer price of $0.25 (on a per Swick share basis, noting 1:3 ratio) Total value per Swick Share 63% uplift (1) Swick closing share price as at 6 October 2021, being the last trading day prior to Swick and DDH1 agreeing valuation terms. (2) Based on Scheme consideration of 0.2970 DDH1 shares for each Swick Share which equated to $0.35 per Swick Share based on DDH1’s 5-day volume weighted average price of $1.1793 over the 5 trading days to and including 6 October 2021. (3) Upon Demerger, Orexplore Shares will be distributed on the basis of one Orexplore Share for every three Swick Shares. Based on the Priority Offer price of $0.25 per Orexplore Share, this represents 8.3 cents per Swick Share on a pre-consolidation basis. Page 21 expert concluding that the Scheme is in the best interest of Swick Shareholders. However, the Scheme is also conditional on the Demerger being approved by Swick Shareholders. If the Demerger does not occur, the proposed DDH1 transaction will not proceed (unless this condition is waived by DDH1) and Swick will continue to operate as an independent listed entity holding both the Drilling Business and Orexplore Business. (c) Improved financial position for Swick and greater scope for capital management and shareholder returns The Demerger will result in an immediate improvement in the reported financial position of Swick (comprising only the Swick Drilling Business following the Demerger). While the historic investment in the Orexplore Business has grown the business to a stage that it can be demerged, it has adversely affected Swick’s reported earnings. In the financial year ended 30 June 2021, the Orexplore Business contributed an EBITDA loss of $4.3m and an EBIT loss of $5.9m to the Swick Group. Conversely, in the financial year ended 30 June 2021, the Drilling Business' contribution to the Swick Group was EBITDA of $30.4m (profit) and EBIT of $15.1m (profit) on a reported basis, or $17.3m on a pro-forma basis to reflect the change in depreciation policy to take effect from 1 July 2021. Following the Demerger (and if the proposed DDH1 transaction (or similar) does not proceed) Swick expects that its reported financial performance will be significantly improved (by no longer owning Orexplore or having to consolidate it within Swick’s financial statements) and make the comparison with other drilling and mining services companies more straight forward. (d) Accelerated funding and a capitalised Orexplore Upon completion of the Spin-Out, Orexplore will receive $12 million of additional funding from Swick and a minimum additional funding of $1m under the Priority Offer. This will result in Orexplore being appropriately capitalised as an independent entity and well positioned to execute its business development plans. (e) Enables existing Swick Shareholders to retain an exposure to each of Swick and Orexplore and to benefit from the future upside potential of both entities The Demerger will be completed by way of in-specie distribution, with current Swick Shareholders maintaining a direct exposure to the ASX-listed Orexplore Business. Following the Demerger, Swick and Orexplore Shareholders will have the opportunity to more effectively manage and determine their desired exposure to each entity. (f) Separate board and management teams empowered to pursue independent strategies and operational initiatives Following the Demerger, Swick and Orexplore will be two ASX-listed businesses facing different industry dynamics and opportunities. Each will be able to pursue their own strategies and operational initiatives after the Demerger to drive long-term shareholder value. In particular, potential initiatives that may not have been prioritised in Swick before the Demerger will be able to be pursued by the independent Orexplore and Swick post Demerger as a result of more focussed management attention on each business’ operations. The Demerger will enable Swick and Orexplore to: (i) demonstrate greater financial transparency for shareholders and investors; Page 22 (ii) prioritise growth opportunities in their own target market; (iii) tailor capital management to suit specific business objectives; (iv) pursue and participate in corporate growth initiatives and corporate activity; (v) attract specialist management expertise and better aligned remuneration structure; and (vi) attract and align the appropriate investor base with the business objectives and growth outlook. (g) Separate ASX-listed entities will appeal to investors with different investment strategies and preferences The operating characteristics and financial policies of each of the Orexplore Business and Swick Drilling Business differ and may appeal to different types of investors. If the Demerger is implemented, different investors will be able to invest in the entity that best suits their strategy; however, if the Demerger does not occur, investors who prefer an investment in one of the businesses over the other will not be able to choose which company to invest in. Once Orexplore and Swick are separate, ASX-listed companies on implementation of the Demerger, existing and future Swick Shareholders and Orexplore Shareholders will be able to evaluate the individual financial performance, strategies and other business characteristics of Orexplore and Swick, and will generally have greater investment choice and the opportunity to manage their exposure to the different investment opportunities of Orexplore and Swick depending on their own investment objectives. (h) Increased potential scope for corporate activity The inclusion of the Swick Drilling Business and Orexplore Business under the same structure is considered to be a disincentive to potential corporate activity as the logical acquirers of each business are unlikely to have any interest in the other. The Demerger will remove this obstacle. This point is aptly demonstrated by the announcement of the proposed DDH1 acquisition of Swick (effectively the Swick Drilling Business) which will only occur if the Demerger is approved (or DDH1 waives this approval requirement as a condition of the proposed acquisition) and Orexplore separated from the Swick structure. Disadvantages: (a) Taxation Consequences As a consequence of the timing of the proposed DDH1 acquisition of Swick, Demerger Relief from the Australian Taxation Office is unlikely to be obtained. As a result, there will be potential tax consequences for Swick Shareholders, the quantum of which will depend on their individual tax status and the cost-base of their Swick Shares. In the absence of Demerger Relief being obtained, a portion of the In-Specie Distribution may be deemed a dividend and will be taxable as such in the hands of Swick Shareholders. See Section 3.16 for further information regarding the potential tax consequences of the Demerger. (b) Separate entities will be less diversified Page 23 As a result of the Demerger, Swick will be split into two separate, ASX-listed companies. While this will simplify Swick, it means the Orexplore Business will lose the benefit of a financially strong parent, while Swick will lose the potential significant growth upside as Orexplore’s product suite is commercialised. As a result, Swick will be a less diversified business than it is at the date of this Notice. If the Demerger is implemented, Swick and Orexplore as separate, ASX-listed companies, may have increased exposure to fluctuations in financial markets as a result of their smaller size and reduced diversification. (c) There will be one-off transaction costs associated with the Demerger The Demerger will result in one-off transaction costs, expected to be approximately $2,010,000, of which $1,855,000 have already been incurred as at the date of this Notice. (d) Some Swick Shareholders will not be eligible to receive Orexplore Shares as part of the Demerger Swick Shareholders who are Ineligible Shareholders will not receive Orexplore Shares under the Demerger (and will not be permitted to participate in the Priority Offer). Instead, Orexplore Shares that would otherwise be transferred to Ineligible Shareholders on implementation of the Demerger will be transferred to the Sale Agent to be sold, with the proceeds of such sale to be paid to Ineligible Shareholders, as described in Section 3.9 below. (e) Additional ongoing corporate and operating costs and fundraising Following the completion of the Demerger, Orexplore will be a standalone, ASX-listed company, which will result in Orexplore incurring additional corporate and operating costs of approximately $1,400,000 per annum. These costs will include fees associated with the ASX Listing (and ongoing ASX listing fees), maintaining a separate board of directors and senior management team, and operating company secretarial, treasury and other corporate functions required as a result of Orexplore becoming a standalone ASX-listed company. In addition, there may be additional insurance costs and employee related costs. However, if the proposed DDH1 acquisition proceeds, Swick will become a wholly- owned subsidiary of DDH1 and will be delisted from the ASX. Accordingly, in these circumstances, costs associated with maintaining a listing on ASX would no longer be incurred by Swick. Orexplore may require further financing in the future, in addition to amounts raised pursuant to the Priority Offer. Any additional equity financing may be dilutive to Orexplore Shareholders, may be undertaken at lower prices than the current market price (or offer price under the Priority Offer) or may involve restrictive covenants which limit Orexplore's operations and business strategy. Debt financing, if available, may involve restrictions on financing and operating activities. No assurances can be made that appropriate capital or funding, if and when needed, will be available on terms favourable to Orexplore or at all. If Orexplore is unable to obtain additional financing as needed, it may be required to reduce the scope of its operations and this could have a material adverse effect on Orexplore's activities and could affect Orexplore's ability to continue as a going concern. Page 24 3.5 Independent Valuation Report As part of the demerger process, the Swick Board has obtained an independent assessment of the current fair market value of the Orexplore Business (on a controlling basis) from Deloitte Corporate Finance. Deloitte Corporate Finance has assessed the equity value of Orexplore to be in the range of $45.0 million to $55.0 million on a controlling basis (i.e. 100% ownership) and post the Swick seed funding to Orexplore of $12 million. This valuation represents an implied value per Orexplore Share of $0.48 to $0.59 on a controlling basis post the Swick seed funding to Orexplore of $12 million (and prior to any new Orexplore Shares issued pursuant to the Priority Offer) noting that eligible Swick Shareholders will receive one Orexplore Share for every three Swick Shares held by them on the Record Date, if the Demerger proceeds). On a per Swick Share basis, the Deloitte Valuation is equivalent to $0.16 to $0.20 per Swick Share on a controlling basis (i.e. 100% ownership) post the Swick seed funding to Orexplore of $12 million. A concise summary of the Independent Valuation Report is included in Schedule 7. The Independent Valuer has also prepared and applied their own Tech Rating for early stage technology, a copy of which is included within the Prospectus. 3.6 Board recommendation After considering all relevant factors, the Directors unanimously recommend that Shareholders vote in favour of Resolutions 1 and 2 for the reasons summarised in Sections 3.1, 3.2 and 3.4. Each of the Directors intend to vote in favour of Resolutions 1 and 2 in respect of all Shares they own or control. 3.7 Pro forma financial position of Swick and Orexplore upon completion of the Demerger Set out in Schedule 4 and Schedule 5 of this Notice are the unaudited pro-forma consolidated statements of financial position as at 30 June 2021, for each of Orexplore and Swick (excluding Orexplore). Schedule 4 shows the audited consolidated statement of financial position of the Company as at 30 June 2021, together with the pro-forma statement of financial position of the Company excluding Orexplore (i.e. as if the Demerger had occurred on 30 June 2021). A pro-forma consolidated statement of financial position for Orexplore, reflecting the indicative statement of financial position of Orexplore following completion of the Demerger is set out in Schedule 5. A more detailed review of the Orexplore’s financial position and historic profit and loss, and cashflow is contained in the Prospectus. Set out below is an unaudited pro-forma of the historic Swick profit and loss split between the Swick Drilling Business and Orexplore Business. The Swick Drilling Business' results are presented as if the Demerger had occurred on 1 July 2021 and 1 July 2020 respectively. Additional details on Orexplore’s financial performance are presented in the Prospectus. Unaudited Pro-Forma Profit and Loss 30 June 2021 and 30 June 2020 30-Jun-21 30-Jun-20 $'m Drilling and Other Orexplore Total Group Drilling and Other Orexplore Total Group Revenue 154.1 0.03 154.2 149.4 0.3 149.6 EBITDA 30.4 (4.3) 26.0 25.5 (4.5) 21.0 EBIT 15.1 (5.9) 9.2 4.2 (7.0) (2.8) Page 25 NPAT 10.0 (5.1) 4.9 0.3 (6.3) (6.0) 3.8 Eligible Shareholders No action has been taken to register or qualify the Orexplore Shares or otherwise permit a public offer of such securities in any jurisdiction outside Australia. Based on the information available to Swick, Swick Shareholders whose addresses are shown in Swick's register of members on the Record Date as being in Australia and have declared their tax file number ( TFN ), TFN exemption or Australian Business Number to the Swick Share Registry will be entitled to have Orexplore Shares transferred to them under the Demerger. It is not practicable for the Company to comply with the securities laws of any other overseas jurisdictions having regard to the number of overseas Swick Shareholders, the number and value of Orexplore Shares to be transferred and the cost of complying with regulatory requirements in each relevant jurisdiction. Nominees, custodians and other Swick Shareholders who hold Swick Shares on behalf of a beneficial owner resident outside Australia may not forward this Notice (or any accompanying document) to anyone outside these countries without the consent of Swick. 3.9 Ineligible Shareholders and Sale Facility (a) Ineligible Shareholders Ineligible Shareholders will participate in the In-Specie Distribution of the Orexplore Shares on the same basis as all Eligible Shareholders. However, Orexplore Shares will not be transferred to Ineligible Shareholders. Instead, each Ineligible Shareholder will be taken to have directed Swick to transfer the Orexplore Shares to which they would otherwise be entitled to the Sale Agent. The Orexplore Shares to which the Ineligible Shareholders would otherwise be entitled will be transferred to the Sale Agent on behalf of Ineligible Shareholders on the Record Date and will be dealt with as described in Section 3.9(b). (b) Sale Facility The Sale Facility will be used to sell Orexplore Shares that would otherwise have been received by Ineligible Shareholders. Such Orexplore Shares will be transferred to the Sale Agent on the Record Date to be sold on behalf of those Swick Shareholders under the Sale Facility. Under the Sale Facility, the Sale Agent will, as soon as reasonably practicable (and in any event not more than 20 Business Days after Orexplore is admitted to the Official List), sell, for the benefit of each Ineligible Shareholder, the Orexplore Shares on the ASX. The Sale Agent will sell those Orexplore Shares on the ASX at such price or prices and on such other terms as the Sale Agent determines in its discretion (and at the risk of the Ineligible Shareholders), acting in good faith with the objective of seeking to achieve the best price reasonably obtainable, having regard to, among other things: (i) the prevailing market conditions (including the prevailing price of Orexplore Shares on the ASX); (ii) the prevailing demand for Orexplore Shares; and (iii) the desire and requirement to maintain an orderly market in Orexplore Shares. Page 26 As the market price of Orexplore Shares will be subject to change from time to time (assuming a liquid market is available), neither the sale price of those Orexplore Shares nor the net proceeds of that sale can be guaranteed and the net proceeds may be more or less than the notional dollar value of the reduction of capital. After the ASX Listing, Ineligible Shareholders will be able to obtain information on the market price of Orexplore Shares on the ASX’s website (www.asx.com.au). The amount of money received by each Ineligible Shareholder, being the Sale Facility Proceeds, will be calculated on an averaged basis so that all Ineligible Shareholders receive the same price for each Orexplore Share sold on their behalf, subject to rounding down to the nearest whole Australian cent. Consequently, the amount received by an Ineligible Shareholder for each Orexplore Share may be more or less than the actual price that is received by the Sale Agent for that particular Orexplore Share. Any interest earned on the proceeds of the sale of Orexplore Shares by the Sale Agent will be retained by Swick. The Sale Facility Proceeds will be remitted to an Ineligible Shareholder (free of any brokerage costs or stamp duty, but after excluding any interest and deducting any applicable withholding tax) by (in Swick’s absolute discretion): (i) where an Ineligible Shareholder has, before the Record Date, made a valid election in accordance with the requirements of the Share Registry to receive payments from Swick by electronic funds transfer to a bank account nominated by the Ineligible Shareholder, paying, or procuring the payment of, the relevant amount in Australian dollars by electronic means in accordance with that election; or (ii) despatching, or procuring the despatch of, a cheque for the relevant amount in Australian dollars to the Ineligible Shareholder by prepaid post to their registered address (as at the Record Date), such cheque being drawn in the name of the Ineligible Shareholder. It is anticipated that the Sale Facility Proceeds will be despatched to Ineligible Shareholders by not more than 20 Business Days after Orexplore is admitted to the Official List. Ineligible Shareholders will not receive any interest on the Sale Facility Proceeds in respect of their Orexplore Shares. The payment of the Sale Facility Proceeds from the sale of Orexplore Shares will be in full satisfaction of the rights of Ineligible Shareholders under the Demerger. In addition, each Ineligible Shareholder appoints Swick as its agent to receive on its behalf any financial services guide or other notices which may be issued by the Sale Agent to that Ineligible Shareholder. 3.10 Consequence of the receipt or non-receipt of Shareholder approval (a) Resolutions 1 and 2 are passed In the event that Resolutions 1 and 2 are passed and the Demerger proceeds, the corporate structure of Swick and Orexplore will be as is set out in Schedule 2 (see Section 3.11 for further details of the plans for Swick and Orexplore, should Resolution 1 and 2 be passed). If Resolutions 1 and 2 are approved, Shareholders (as at the Record Date) will receive a pro rata beneficial entitlement to Orexplore Shares on the basis of one Orexplore Share for every three Swick Shares held by them at the Record Date. The reduction in Swick’s capital and the transfer and distribution of Orexplore Shares will become Page 27 effective from the Record Date (provided that after the Record Date has been set, the Directors have not provided a notice to ASX stating that the Company does not intend to proceed with the reduction of capital contemplated by Resolution 2). Any fractions of entitlement will be rounded up to the next whole number. See Section 3.3(b) for further information. In respect of each of the existing Options in Swick that are outstanding as at the date Resolutions are passed and in accordance with ASX Listing Rule 7.22.3, the exercise price of each such outstanding Option in Swick will be automatically reduced by the same amount as the amount returned in relation to each Swick Share. Please refer to Sections 3.19 and 3.20 for further details regarding the effect of the Demerger on the Company and Shareholders. The Board considers the proposed reduction of capital will have no material effect on the interests of Swick Shareholders, except as disclosed in the discussion of the advantages and disadvantages of the reduction set out in Section 3.4 above. (b) Resolutions are not passed Resolutions 1 and 2 are inter-conditional, meaning that each of them will only take effect if all of them are approved by the requisite majority of Shareholders' votes at the Meeting. If either of Resolutions 1 or 2 are not approved at the Meeting, neither Resolutions 1 and 2 will take effect and the Demerger will not proceed. In these circumstances, the Company will continue to focus its resources on developing all of its businesses. The Company will also need to raise further capital or source other funding to continue the development of the Orexplore Business. Furthermore, the recently announced proposed acquisition of Swick by DDH1 is conditional on the Demerger being approved by Swick Shareholders (pursuant to Resolutions 1 and 2) and will not proceed if the Demerger is not approved (unless this condition to the proposed DDH1 transaction is waived by DDH1). 3.11 Plans for Swick and Orexplore (assuming completion of Demerger) (a) Plans for Swick As announced on 22 October 2021, Swick has entered a scheme implementation agreement with DDH1 under which it is proposed that DDH1 will acquire 100% of the shares in Swick by way of a Scheme of Arrangement ( Scheme ). In effect, this is a proposed acquisition of the Swick Drilling Business which values Swick’s Drilling Business at an enterprise value of $115 million. Consideration for Swick Shares will be 100% DDH1 Shares at a ratio of 0.2970 DDH1 Shares for each Swick Share. Based on the 5-day volume weighted average price for DDH1 Shares of $1.1793 4 , DDH1's offer values Swick Shares at $0.35 per Share, after allowing for Swick's seed funding payment to Orexplore of $12 million, committed by Swick as part of the Demerger. 4 Based on DDH1’s volume weighted average price over the 5 trading days up and including 6 October 2021. Page 28 The Swick Board intends to unanimously recommend the Scheme to Swick Shareholders, in the absence of a superior proposal and subject to an independent expert concluding that the Scheme is in the best interest of Swick Shareholders. Swick Shareholders should review the Scheme Booklet when it is released by Swick which will continue all material information required by Swick Shareholders in determining how to vote in relation to the Scheme. Completion of the Scheme is subject to a number of conditions precedent being satisfied or waived, including the Demerger being approved by Swick Shareholders. Accordingly, the Scheme will not proceed if the Demerger is not approved (unless this condition is waived by DDH1). In the event the Scheme does not complete (and no other acquirers emerge with a superior proposal), Swick will continue to be an independent company on the ASX. In those circumstances, the Swick Board will continue to operate the Swick Drilling Business as it has in the past, with the aim of being to be a leading participant in the underground drilling business in Australia with additional operations in USA and Europe. The focus will be to grow the business and its revenues and to maximise profitability and generate free cashflows to fund capital expenditure and support future dividends and/or active capital management for Swick Shareholders in the future. (b) Plans for Orexplore Orexplore’s immediate focus is transitioning its strong base of historical research and development activities as well as lab trials into commercial engagements through field- based deployments and projects. Orexplore's growth strategy focuses on enhancing market adoption of its current and future product suite by converting current customer ‘trial and pilot’ arrangements and its customer pipeline into medium to long-term commercial agreements in targeted markets. In addition to commercialising the current product suite, Orexplore will continue with its research and development activities conducted out of the dedicated Research & Development ( R&D ) team in Stockholm, Sweden. Orexplore’s R&D focus will be on refinement and enhancement of the current product suite, as well as to identify technologies that improve the understandings of critical factors that promote efficiency and in turn reduce the environmental impacts of mining and extraction required to meet the continually increasing global demand for resources, particularly in the age of renewable energy. Additionally, Orexplore plans on continuing development activities on its gold & other precious metals focussed GeoCore X10+. 3.12 Information about Orexplore (a) Business Summary Orexplore was incorporated by Swick in October 2020, following a strategic review by the Swick Board of its business operations and the decision to demerge the Orexplore Business from Swick. Orexplore AB was founded in 2010, within a Swedish incubator called Sting (Stockholm Innovation and Growth), which backed a team of Swedish scientists and technology entrepreneurs to develop and bring-to-market ground-breaking technology. In 2013, Swick made its initial strategic investment in Orexplore AB, acquiring a 23% stake. Over the following two and a half years, Swick invested additional equity capital Page 29 in Orexplore AB, allowing the business to progress development of the GeoCore X10®, and continue to its path towards commercialisation. This investment saw Swick increase its shareholding in Orexplore AB to approximately 70.5%. In June 2017, Swick acquired the remaining 29.5% stake in Orexplore AB that it did not already own from management and a group of passive shareholders, taking its shareholding in Orexplore AB to 100%. Since that time, Swick has continued to invest in Orexplore AB to fund additional growth and capital programs. In 2018, Orexplore Australia Pty Ltd was established in Perth, Western Australia to house the Orexplore Group’s headquarters and a second laboratory facility. During the period 2018 – 2021, Orexplore has focused on continued product development, specifically on the GeoCore X10® product and the Orexplore Insight® software. This period saw the delivery of approximately 20 paid and in-kind laboratory- based small-scale scanning trials across the Stockholm and Perth facilities; one mid- scale scanning and analysis project with an Australian producer; two site-based in-kind pilot engagements; and one site-based paid engagement with a reputable international gold miner, to further develop and validate the technology. Today, Orexplore is a resource technology company with a mission to support the digital transformation of the mining industry. Orexplore has expert capabilities within its team covering the whole breadth of the business from theoretical physics, manufacturing, software engineering to operations. The Orexplore Board believes that the Orexplore Technology Platform is highly scalable and that the Orexplore Business has the capability to attract infield customers by significantly enhancing the creation of big data geological data sets, and extracting insights from these that can deliver value to customers across the value chain within the global mining industry. The Company’s first product, the GeoCore X10®, is a transportable scanning device that uses X-ray industrial computed tomography ( CT ) technology that is capable of quickly and non-destructively scanning through the internal structures of mineral cores and samples. The machine also uses multiple X-ray Fluorescence ( XRF ) instruments and techniques to assess estimated elemental concentrations on the surface of the core. Both of these technologies are interlaced together by Orexplore’s software, systems and modelling, to build estimated mineralogical models of the entire core, and estimated surface elemental concentrations. These models are delivered through the Orexplore Insight® software to enable user analysis and to support the delivery of the company’s Value Propositions. The Orexplore Insight® software reconstructs a three-dimensional “digital twin” of the physical core, allowing the user to interrogate the core at a current standard resolution of 200 microns and at a high resolution down towards 100 microns. In addition to the 3D reconstruction of the core and elemental concentration estimates, Orexplore Insight® provides valuable insights into the geological/physical characteristics of the core including estimates of structural features, lithology, texture, emerging geo- chemistry, density and rock mechanics indices including rock quality designation ( RQD ), recovery and joint sets, that otherwise would have to be obtained using a combination of separate techniques. The Orexplore Board is of the view that the specific methods and systems used in combination with the particular synthesis of CT and XRF technologies to generate 3D data, appears to be the first-of-its-kind in the market. The GeoCore X10® is easily transportable to mine-sites, designed to be easy to use, safe and robust, thereby Page 30 allowing a relatively non-technical operator to efficiently carry out the scanning. Additionally, rapidly after the scan has completed, the customer and Orexplore’s consulting geologists can review the data remotely either at site or across the globe by using the Orexplore Insight® software. (i) GeoCore X10®: The GeoCore X10® is a transportable scanning technology that can quickly and non-destructively scan mineral cores, converting mineral samples into a high resolution (typically around 200 microns with advancing capabilities down to 100 microns), three-dimensional data sets providing emerging through-the-rock estimated mineralogical models of internal composition, structures, bedding planes and mineral features. The GeoCore X10® additionally leverages the use of dual XRF spectrometers to determine estimated elemental concentrations on the surface, and also produces mass measurement data from embedded instrumentation. Key emerging insights under development that are modelled around information from the GeoCore X10® include: Resource information: • Estimated geochemistry / elemental concentrations : Approximate elemental concentrations are reported for any user-defined core section in 8mm flitches (125 summaries per metre). Orexplore is continuously improving the range and accuracy of elements detected and continues to improve its emerging mineralogical model. Importantly, the GeoCore X10® an also potentially identify a range of unwanted contaminants in the core where their elemental signatures are available on the surface, which may enable improved decision making in mine planning and processing plant configurations over time. • Coarse gold detection : The 3D imagery can be used to estimate the abundance of coarse gold particles within the entire core volume down to 200-micron particle sizes where sufficient supporting information on the geology and mineralogy is available. By combining data on volume, particle frequency and shape of ‘high attenuation particles’, it may be possible to infer and model the in-situ gold particle size distribution subject to the core composition. Better understanding and statistical support can potentially provide significant value to miners and explorers both in exploration and extraction of deposits with high proportion coarse gold (nugget effect). The methodology is currently under development and may provide a tool to help explain the variability between modelled ore grade and reconciled grade. Physical and geological information: • Rock mechanics : Understanding the physical characteristics of rock mass plays an important role in the design and execution of mining operations. The GeoCore X10® outputs can be used to help produce a variety of rock mass data that can be used for geotechnical and mining engineering applications, including rock quality designation ( RQD ) for volumes of rock and can provide detailed information and statistics on fracture abundance and orientation. This may support the assessment of joint orientation and infill. • Geological structures : Delivered using 3D imaging and analysed in the Orexplore Insight® software, structures such as bedding planes, foliations, fold axis and lineations can potentially be measured, classified and evaluated to support the creation of 3D geological models of the drilled rock mass, which is used to determine the direction of structures within the rock core. It may also help to identify bedding planes, folds and lineations and could assist geologists with their assessments of potential minerals on the structures. • Density : Each sample of the core is weighed during the scanning process and when combined with the volume derived from CT-scanning of the sample, an estimation of the bulk density is calculated automatically. In addition, inferred density can also be Page 31 calculated based on an emerging mineralogical model and reported in 8 mm flitches (125 estimations per metre). • Lithology/texture : Semi-automatic lithology identification is currently under development and logging of the entire core can be undertaken, augmenting the quality and consistency of geologist’s logging and interpretation. This collaborative human/ machine approach facilitates standardised logging conventions, whilst at the same time allowing geologists to capture and build on fresh insights delivered rapidly after the core is presented. Most data streams generated from a GeoCore X10® scan can be exported to standard geological software for further review, and additional data streams are under development. To date, a total of 12 GeoCore X10® machines have been manufactured, with a stocked inventory and additional production to be demand-based. Production durations are currently typically less than a week for each GeoCore X10® machine. (ii) Orexplore Insight® software: Orexplore's software system, Orexplore Insight®, provides users with the ability to interact and analyse the scan results obtained from the GeoCore X10®. It provides 3D-visualisation of the core and the ability to further analyse the resource and physical information outlined above, providing rich capability to understand, interpret and extract key information contained within the sample. The Orexplore Insight® software utilises a series of algorithms created by Orexplore's development team. Concept development pathways, include a focus on using specialist algorithms that may continue to increase in performance and functionality by leveraging ML. This approach may be able to partially capture user analysis and annotations to effectively “learn” over time and possibly enable future semi-automation of portions of the analysis process. The Orexplore Insight® software has been designed to be utilised either directly on site or remotely from any location globally. (iii) Orexplore Consulting Services: In addition to the Orexplore Technology Platform, Orexplore has an internal team of consulting geologists and project delivery experts. This team’s mission is to guide customers through technology adoption into their business and work with them to articulate how the technology can deliver insight and value to multiple operational and corporate processes and roles. Orexplore’s consulting geologists will assist customers in reviewing, interpreting, and analysing data produced from Orexplore scans (utilising the GeoCore X10®), working collaboratively with them to ensure insights are extracted to help them to further optimise their exploration, mining and processing activities. Orexplore’s consulting geologists are key to ensuring the Orexplore Technology Platform is easy to procure; easy to integrate; and immediately value accretive. As Orexplore continues to develop its technology and team, the consulting services provide a valuable conduit of customer feedback. In turn, this feedback will be used to define and enhance a broader set of Orexplore Value Propositions, underpinned by the unique technology portfolio. Currently, the consulting team's primary focus is to create market traction with customers and to generate value collaboratively with them within their business by embedding Value Propositions tailored to their requirements. (b) Customers Page 32 The Orexplore Board sees the Orexplore Technology Platform being targeted at three distinct end-users as follows: • Mining companies at operating mines: the GeoCore X10® can provide rapid data and analysis (subject to core presentation times) on the estimated elemental concentrations and mining engineering information (RQD, rock characteristics, structures) of a deposit as a customer progressively develops their mine and exploits their reserves. Significant volumes of brownfields exploration, resource definition and grade control drilling are undertaken by operating mines across all commodities to ensure reserves are maintained and that mining can be undertaken efficiently. The use of GeoCore X10® at operating mines may be considered to be valuable for the rapid, non-destructive analysis of the core, compilation of a more complete data set and a richer picture of geological and structural controls, in addition to mineralogical insights that may assist in the optimisation of a processing plant. The GeoCore X10® is particularly applicable to underground mines where the majority of underground mineral drilling is core sized =
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