Greenfields Exploration Limited

Crowd-sourced Funding Closed


Issuer

Greenfields Exploration Limited, ACN 619 328 442

Intermediary

Billfolda Pty Limited, AFSL 503322

Risk Warning

Crowd-sourced funding is risky. Issuers using this facility include new or rapidly growing ventures. Investment in these types of ventures is speculative and carries high risks.

You may lose your entire investment, and you should be in a position to bear this risk without undue hardship.

Even if the company is successful, the value of your investment and any return on the investment could be reduced if the company issues more shares.

Your investment is unlikely to be liquid. This means you are unlikely to be able to sell your shares quickly or at all if you need the money or decide that this investment is not right for you.

Even though you have remedies for misleading statements in the offer document or misconduct by the company, you may have difficulty recovering your money.

There are rules for handling your money. However, if your money is handled inappropriately or the person operating the platform on which this offer is published becomes insolvent, you may have difficulty recovering your money.

Ask questions, read all information given carefully, and seek independent financial advice before committing yourself to any investment.

Information about the Company

Company Details

This offer of shares is made by Greenfields Exploration Limited ACN 619 328 442 (the Company). The Company was incorporated on 9 June 2017.

Principal place of business and Registered Office

14/197 St Georges Terrace

Perth WA 6000

Phone : 08 6270 6318

Email: basecamp@gexpl.com

Nature of the Business

Greenfields Exploration Limited is an early stage mineral exploration incubator company based in Perth, Australia, currently focused on a project in Greenland:

Six Greenland Exploration Tenements

  • Exploration tenements covering 12,975 square km granted December 2017.

The Company’s main asset is the Frontier Project (the Project), which it considers to be prospective for copper, cobalt, nickel and tungsten, among other minerals. The Company is encouraged by positive historical results that have not been adequately followed up, as described in the Independent Technical Assessment.

Greenfields Exploration Limited proposes to undertake a wide-ranging exploration program with the aim of discovering major deposits of copper, cobalt, nickel and potentially other minerals.

In conjunction with this offer document, investors should read the attached Independent Technical Assessment report, which contains additional information on the Project.

Executive Summary

Company Name Greenfields Exploration Limited Exit Strategy Trade/IPO
Registered Address and Principal Place of Business 14/197 St Georges Terrace Perth WA 6000 Price Per Share $0.12
Entity Type Australian Public Company Limited by Shares Minimum Investment $999.96
8,333 shares - 12 cents each
Closing Date 29 June 2018 Maximum Investment for retail investors $9,999.96
83,333 shares - 12 cents each
Minimum Fundraising $1,200,000 Valuation $5,250,002
Pre-investment valuation
Maximum Fundraising $4,900,000 Type of Shares Ordinary Fully Paid Shares

Business Strategy

Greenfields Exploration Ltd Mining tenements in Greenland 12,975km to explore, Mining Incubator, Mining stocks, First Public Offer, Equity Crowdfunding, Billfolda

Greenfields is employing a ‘project incubator’ business model which is intended to help address an imbalance between the supply and demand for high quality mineral assets. The incubator model differs from business models utilised by conventional mineral exploration companies in that it will focus on opportunities often overlooked by these companies due to a perception of a higher risk of exploring them. With the incubator model, Greenfields intends to focus on highly prospective, largely underexplored, frontier geological terranes that can be opened up as new mineral exploration provinces; or on individual projects that have the potential to host economic mineral deposits.

In the directors’ experience, many established prospective areas have been extensively explored in the past, with exploration becoming more challenging with time and maybe less rewarding. Even though these areas were likely established with large, economic discoveries at the start, subsequent discoveries are likely to be smaller, lower grade, less economic and increasingly rely on more expensive methods such as drilling. It is also the directors’ opinion that this bias for ‘brownfield’ projects is a contributor to the declining rate, and quality, of mineral deposit discoveries. Consequently, the Company opines that the potential risk-reward of exploring greenfield areas is more favourable than it would be in brownfields areas.

Greenfields also observes that as an exploration project evolves, the culture and skill set within a company has to equally evolve. During the exploration phase of a project, the company’s focus is on harbouring technical skillsets revolving around the core principles of geoscience (geology, geochemistry, geophysics, etc). As a project evolves, with the discovery and definition of a deposit, the importance of engineering (mining engineering, metallurgy, etc) capability within the company grows. This leads to a reduced focus on the core technical capability required for future organic growth – exploration.

Greenfields’ solution is to use the incubator business model as it offers a means of managing risk while maintaining exposure to the upside potential associated with a first-mover discovery. To do so, the Company intends to build up a portfolio of minority holdings in the projects that it incubates. This business model is well established in other industry sectors and when applied in mineral exploration, may provide multiple passive revenue streams while allowing the company to maintain its core skill set (i.e. exploration, not mining) and company culture.

As part of the incubator model, the Company used a third-party vetting process. For the Frontier project, the Company commissioned Dr Jon Hronsky, a high-profile, industry respected geologist to independently validate its exploration concept and refine the areas selected in Eastern Greenland. The Company has then prepared its own geological report - prepared to international standards of reporting - with a level of citation typical of peer reviewed academic journals. The Company’s report is publicly available on its website. Furthermore, Greenfields commissioned Dr Oliver Kreuzer to review the Company’s work and prepare the Independent Technical Assessment report attached to this offer. In the opinion of the Company’s directors, this level of rigour and public disclosure is of a standard higher than most Australian explorers and is intended to attract and gain the confidence of potential partners for its projects. External vetting and high levels of transparency are part of the Company’s business strategy.

The Company intends to improve its mineral assets through exploration in the short term and generate revenue through, for example, transactions, joint ventures, trade sales, spin-outs, royalty streams or carried minority interests in any targets it identifies long before an operational mine is constructed. The company plans to generate revenue by retaining minority interests in the projects it generates. The Company has selected this strategy to diversify project risk, help maximise returns, and potentially reduce the shareholder dilution typically associated with exploration companies that try to take a project from exploration through to production. Furthermore, it allows for each partnered project to have a dedicated exploration team and program, thereby allowing the Company to focus its efforts on its majority owned projects while benefiting from diversification (Figure 2). In the Company’s opinion, the concentration of effort should improve the efficiency, effectiveness and timeliness of the exploration process.

Beyond the current project and licenses the Company holds, it reserves the right to in the future, acquire new exploration licenses, adjust existing licences, or renew licences as its sees fit based on its findings and market conditions. Additional exploration opportunities for early-stage licences in Greenland and abroad are already being contemplated.


Figure 1: Hypothetical benefits and cycle of an incubator business

Mining incubator, Exploration,  Greenfields Exploration, early stage exploration, minerals exploration, project generator, mining joint venture

Figure 2: Potential technical benefits of holding a portfolio of minority interests under the Incubator Model as opposed to a conventional model

mining project generator, Mining partnerships, Exploration partner,  Greenfields Exploration, minerals exploration, project generator, mining joint ventures

Exploration Rationale

Greenfields intends to identify and explore projects that are of interest to major mining companies, while aiming to remain nimble like a junior explorer. Therefore, it intends to primarily focus on acquiring large areas that are prospective for hosting large deposits. The rationale behind targeting large areas is that the scale of the project provides cost efficiencies, increases the probability of encompassing a deposit by casting a wide net, and allows the Company to focus on a core competency – target generation. By focussing its exploration efforts on large deposit types, the Company is of the opinion that smaller opportunities of interest to the broader market may also arise from the process.

In addition to focussing on low-cost but impactful knowledge generation, the company proposes to operate on a progressive modern business model: openly engaging with multiple vendors (academia, government, service providers, etc) and utilising ‘crowd-sourced’ solutions in its exploration activities. By working in shared work spaces that may be frequented by entrepreneurs, the company intends to maintain an exposure to lateral, dynamic-thinking environments that may positively influence the Company culture and operations. The Company intends to collaborate with academic institutions, relevant governmental departments and service providers in its exploration cycle; and using the wisdom of the crowd by hosting ‘crowd-sourced’ competitions for interpreting its exploration results. Additionally, the Company also proposes to sponsor research into helping it understand and verify the results of the crowd-sourced competition – which are expected to have a broad range of results and will require some analysis to understand the relevance of the results (Figure 3). The rationale behind this approach is that the Company can benefit from these type of collaborations and will allow the Company to maximise the knowledge to be gained from the data it collects and leverage expertise beyond the limitations of the people within the company - which in turn may maximise the value of the work that it does and the opportunities that it explores.

Figure 3: Conceptual exploration cycle, prior to transactions

exploration cycle, Greenfields Exploration, crowd sourced minerals research, minerals exploration services, minerals exploration, project generator, mining joint ventures, Mining tenements

Proposed Exploration Strategy

The Frontier project in Eastern Greenland is the Company’s first exploration project. It is Greenfield’s opinion that the Frontier Project fits the criteria needed for its incubator model to thrive. The key attributes of the Project are:

  • ~13,000 square kilometres of largely contiguous licences (Figure 4) that are largely under-explored through modern exploration methods;
  • Aside from the technical merits of the project validated in the independent reviews undertaken, the company believes that a large licence area should improve the probability of locating a deposit. The scale of the tenement holding is more than twenty times larger than the median area held by Australian exploration companies that debuted on the Australian Securities Exchange in 2017;
  • In the Company’s view, each of the licences have enough merit to warrant future work programs that may establish them as suitable stand-alone projects in the eyes of our potential customers.
  • The combination of the scale of the Frontier Project and its largely adjoining licences holding also creates the potential opportunity to generate substantial economies of scale by employing regional exploration methods;
  • The low density, and limited amount of historical exploration work means that large portions of the Project have not already been the subject of significant geological work, for decades, as may be the case with brownfield projects;
  • The limited historical data empirically demonstrates the presence of a diverse range of commodities associated with a range of different deposit types. Much of the historical exploration was conducted 30 to 40 years ago, as set out in the Independent Technical Assessment report. The historical exploration yielded high-grade results of cobalt and copper in surface sampling of rocks (i.e. rock chips); and tungsten in drill hole intersections. Details and quantitative analysis are set out in the Company’s Technical Assessment report. The Company cautions that rock chip results should not be treated in the same light as drill hole intersections, and should be interpreted as favourable signs for follow up rather than direct indication of a deposit. However, in the Company’s opinion, the majority of the historical anomalies were not adequately followed up and represent an opportunity for additional exploration work;
  • The project area has been identified by various government agencies as being highly prospective for copper, nickel, tungsten, lead and zinc (Geological Survey of Denmark, 2005, 2011,2012 2013, 2014; United States Geological Survey, 2010). The majority of the world’s cobalt supply is a by-product of mining the copper and nickel deposit types being targeted within the Frontier project;
  • Much of the historical exploration for copper was done prior to the development of techniques considered commonplace in modern mineral exploration. Similarly, the conceptual nickel potential has not been adequately investigated despite the project being located, in the Company’s opinion, in a setting analogous to one of the great nickel sulphide districts on Earth, Noril’sk, as more fully described in the Company’s Technical Assessment report;
  • The low-density of historical data, and the absence of modern exploration datasets over much of the project area may provide a first-mover advantage that can be exercised by using modern exploration technology and techniques;
  • Prior low-density, labour-intensive reconnaissance exploration (i.e. historical geochemical surface sampling) returns results that demonstrate the mineral potential of the district. This potential has not been followed up adequately with more targeted exploration methods (e.g. drilling), aside from what was focussed on small but high-grade historical estimates of some tungsten occurrences (refer to the Independent Technical Assessment); and
  • The project is located within a safe, stable, mining-friendly jurisdiction, where there is potential for seasonal deep-water access to major international markets. This may help ensure that high-quality geology translates to high-class economics (e.g. reduced risk of a ‘stranded’ deposit).

Given the points above, the company considers the Frontier project to meet the criteria for its incubator business model. Furthermore, as there is seasonal access to the Project due to the Arctic night and winter snow-cover, the off-season provides the Company with an inherent time-window work-flow for carrying out its data analyses, planning subsequent field programs, and identifying market opportunities.

Figure 4: Frontier licence holdings

Greenfields Exploration Ltd, equity crowdfunding, Greenland mining, Exploration Licence, Tenements, Naalakkersuisut Mineral Licences,  number 2018/01 expires 2020 area 4,850sqkm, 2018/02 expires 2020 area 1,830sqkm, 2018/03 expires 2020 area 2,433sqkm, 2018/04 expires 2020 area 1,637sqkm , 2018/05 expires 2020 area 2,155sqkm 2018/19 expires 2023 area 70sqkm

The Company’s initial exploration plan for the Frontier Project involves collecting large scale, reconnaissance datasets. Initially this will mostly involve using remote geophysical surveys. These offer an opportunity to carry out simple, and cost-effective exploration, rapidly over large areas. Greenfields envisions the predominant use of remote sensing exploration methods that are bolstered by on ground visits.

The remote sensing may be carried out using satellite or airborne platforms, depending on the weather and timing of securing the funds. The airborne geophysical method involves instruments mounted to or dragged behind a small aircraft. The instruments measure the gravitational, magnetic and radiation response of the ground over which the aircraft is flown, and when combined with accurate GPS measurements, a map of these responses can be created. Different geological features have a combination of gravitational, magnetic and radioactive characteristics, so this data helps to identify anomalous areas which may have higher concentrations of particular minerals – which can provide a guide to targeting various types of mineral deposits.

Satellite methods may include analysing light within and beyond the visual spectrum to help characterise the minerals within rocks; and surface mapping that can be used to model the geological structures that are important in controlling the location of some deposit types.

In the Company’s view, the main benefits of remote sensing methods are their safety, low-impact, speed and cost. Where there is limited data available (as in the Project), airborne surveys allow geologists to get an accurate overall picture of an area which can be used to identify prospective areas for follow up work using more precise, but slower and more expensive, techniques such as drilling. The focus is to create a complete picture of the entire 12,975 square kilometres of the under-explored territory, and focus on identifying the most prospective areas, rather than exhausting capital obtaining precise data in a few, potentially incorrect places.

Exploring in this way should create substantial quantities of quality data which the company intends to use for its crowd-sourcing proposal. In addition to the technical merit, the proposed program and research approach should help to build interest in its Project, that may ultimately assist in generating leads for transaction or spin-out opportunities.

Founders

Greenfields has a Board of Directors that combines industry knowledge and experienced oversight with a progressive mindset and appetite for innovation.

Jonathan Bell, Jon Bell, Managing director of Greenfields Exploration Ltd, Geologist, Mineral Economist, mining project development, geological targeting, mining joint ventures
Jonathan Bell ( Managing Director )

Geologist and Mineral Economist with 17 years industry experience with an emphasis on evaluating the technical and economic merits of a project. Jon’s key responsibilities are enacting the board’s strategy, which includes overall project development, geological targeting and partner relationships.

Matthew Longworth, matt longworth, geologist, CEO and Chairman, Greenfields Exploration Ltd, Corporate Governance, Mineral exploration strategy
Mathew Longworth ( Chairperson )

Geologist with more than 30 years industry experience which includes roles as a CEO, managing director and non-executive director. Mat is currently a director for Metalicity Limited.Mat’s key responsibilities are corporate oversight, governance and strategic direction.

Lindsay Dick, L Dick solicitor, Greenfields Lawyer and general council, non executive director Greenfields Exploration Limited
Lindsay Dick ( Non-executive Director )

Startup and alternative finance lawyer. Formerly of Allens Linklaters, current General Counsel at Power Ledger. Lindsay’s key responsibilities are corporate oversight with an emphasis on compliance and fostering a progressive culture that is consistent with social expectation.

Opportunity and Context

The Company believes that a forecast increase in global demand for copper, cobalt and nickel will be paired with a decreasing supply of high-quality mineral assets in the future. Existing miners will likely require new assets, rather than continue to rely on the depletion of ‘brownfields’ areas. However, ‘greenfield’ assets are less certain, albeit potentially more lucrative. The Company believes that by conducting large-scale exploration programs in under explored areas, and partnering with other companies, it can reduce the inherent risk inherent in exploration while maintaining exposure to the upside potential. The Company believes that the Frontier Project is its first demonstration of how to benefit from this dynamic.

The Frontier Project is prospective for copper, cobalt, and nickel, among other minerals. The Company has received external validation of the prospectivity of the region. Investors are encouraged to refer to the Independent Technical Assessment available on the Billfolda platform, and the company’s website.

Barriers to Entry: The key barriers to entry identified by the Company are securing exploration licences, raising sufficient capital to conduct an exploration program, and establishing relationships with third parties for joint ventures and other arrangements. In this way the barriers to entry largely mirror those which apply to junior exploration mining companies.

Key Competitors: The Company’s key competitors are traditional exploration companies which seek to hold and develop their exploration tenements into functioning mines. However, these companies may also be potential partners for Greenfields projects in incubation.

External threats: Risks to the Company are outlined in 2.22 below. The key threats to the Company’s business are a downturn in demand for the relevant minerals, or alternatively a thriving exploration market which reduces availability of unlicensed areas that meet the Company’s selection criteria. Country risk may include modifications or rescinded licences due to changes in the political sentiment. At the early stage of the Company, the occurrence of any of these events would be likely to endanger the viability of Company and the Project. The Company is committed to monitoring and pre-empting these threats to the extent possible, primarily focussing on jurisdictions it considers to be low-risk, and diversifying the risk in future.

Details of current business activities: The Company’s current operations are centred around planning an exploration program and liaising with potential transaction partners. The Company has prepared fieldwork budgets and plans for the first two exploration seasons which are scalable depending on the success of the raise. The Company has been speaking with a number of service providers in relation to geophysics, geochemistry and analysis of data obtained.

Greenfields holds six exploration licences in eastern Greenland. Their details are set out in the glossary. The Company understands that the licences operate as follows based on the information made available to it:

Exploration licences give Greenfields the right to prospect for all mineral resources except hydrocarbons and radioactive elements. These licences are eligible to convert to an exploitation licence provided certain conditions are met.

One of these licences is a ‘mineral exploration licence’. This licence is granted for five years. At the expiry of the first period, Greenfields is entitled to be granted a new licence over the same area for five years. At the expiry of this second licence period, Greenfields may be granted additional new three-year licences for the same area (in whole or in part) provided that Greenfields have complied with the terms of the licence and regulatory approval is gained. Greenfields is not automatically entitled to these extensions. During the licence period, Greenfields is obliged to spend a fixed minimum of exploration expenses per year.

The other five licences are ‘special exploration licences’. These are a particular class of exploration licences which are available for large (at least 1,000sqkm) areas in East and North Greenland, and have lower expenditure requirements than mineral exploration licences. These licences are granted for three years. During the licence period a licensee is entitled to be granted, upon application, an exploration licence on normal terms for the licence area, wholly or partly.

Should Greenfields find prospective results in one or more of these, the company has rights under the terms of the licence to pursue: further exploration, development or sale of those discoveries, however such rights are not any assurance of revenue. The company must meet amongst other things annual minimum expenditure obligations. A full copy of the licences available on the offer platform or Greenland government website.

Prospective Customer Channels

The Company is the licensee of 6 tenements with exploration rights for all minerals (and rights to apply for mining) with the exception of uranium, oil, and gas. However, the Company does not have any existing signed up customer(s) or an intent to become a mine operator in its own right.

As such the Company’s prospective customers are mining and exploration companies looking for projects. These companies may be large multinational miners, smaller entities or new special-purpose corporations.

Greenfields believes that our customers will be motivated by an interest in the Frontier Project and its prospective potential for copper, cobalt, nickel, and tungsten. Alternatively such third party companies may wish for an overarching alliance with our project incubator, gaining access to our capability, skillset and de-risked prospective projects.

Where advantageous to our shareholders, the Company may also spin out assets into new listings. In both joint venture and spin-out scenarios, Greenfields sees its role as taking early-stage projects and add value to the point they appeal to the boarder market. The Company believes it has the skillset and experience required to do so, and this constitutes an alternative investment to a normal junior explorer offering.

The end consumers of the minerals may be smelting and refining plants. As an incubator, the Company does not expect to play any active role in a producing mine but may be entitled to a share of profits from sales to these end customers. This share may take the form of minority interests, royalties, scrip, and cash payments.

Early Milestones

The company is in an early stage, though it has already marked down a series of events in the roll out of its business model, including;

  • Registration of six substantial exploration licences in the territory of Greenland.
  • Peer review by experts in mineral exploration, including Dr Jon Hronsky.
  • Commissioning and delivery of internal technical assessment to JORC/VALMIN standards.
  • Securing of over $166,000 worth of seed stage investment.
  • Completion of an Independent Technical Assessment on the Frontier Project by Dr Oliver Kreuzer (available on the Billfolda platform here).
  • Securing of over $166,000 worth of seed stage investment.

Independent technical assessment report summary

Greenfields commissioned an Independent Technical Assessment Report from Dr Oliver Kreuzer in relation to the Frontier Project. Its introduction and summary are copied below, with edits for context in square brackets. Tables, reference hyperlinks and footnotes have been removed for clarity. We recommend all investors review the full Independent Technical Assessment Report.

1. Introduction

Context and Scope

Greenfields Exploration Limited (“Greenfields” or “Company”) is an Australian public company limited by shares. Greenfields, a project generator-type company, holds a 100% unencumbered interest in five (5) granted minerals special exploration licences and one (1) granted minerals exploration licence (“Exploration Licences” or “Licences”) covering a total area of 12,975 km2 located in central East Greenland (see Fig. 1, Table 1 in the ITAR). The Licences are collectively referred to as the Frontier project (“Frontier Project”, “Project” or “Mineral Asset”). In March 2018, X-plore Geoconsulting (“X-plore”) was requested by Greenfields to perform an Independent Technical Assessment (“ITA” or “Review”) of the Company’s non-independent Technical Assessment Report (“NiTAR”) authored by Greenfields’ Managing Director Mr Jonathan Bell and technical advisor Mr Ahmad Saleem (Bell and Saleem, 2018). This report provides a detailed account of the Frontier Project and information about the exploration program proposed by the Company.

The principal objectives of [the Independent Technical Assessment Report] (“ITAR” or “Report”) are to:

  1. Confirm the reasonableness of the opinions expressed in Greenfields’ NiTAR in the context of the available information;
  2. express an opinion on the exploration potential of the Project and Company’s exploration approach; and
  3. consider the appropriateness of the exploration budget proposed by the Company.

Importantly, this ITAR does not constitute a valuation report, nor does it express any opinion as to the value of Greenfields’ Mineral Asset. It is X-plore’s understanding that the ITAR is to be included in an offer document issued by Greenfields in relation to a placement of new shares to sophisticated and retail investors. The funds raised will primarily be used for the purpose of exploring and evaluating the Company’s Frontier Project.

Compliance with the VALMIN and JORC Codes

[The ITAR] has been prepared in accordance with:

  1. The 2015 Edition of the Australasian Code for Public Reporting of Technical Assessments and Valuations of Mineral Assets (“VALMIN Code”);
  2. the 2012 Edition of the Australasian Code for the reporting of Exploration Results, Mineral Resources and Ore Reserves; and
  3. the relevant rules and guidelines issued by such bodies as the Australian Securities and Investments Commission (“ASIC”) and the Australian Securities Exchange (“ASX”) pertaining to ITARs.

Information Sources and Reliance on Other Experts

X-plore did not rely on any other experts in preparing [the] ITAR. However, the Review was based entirely on third party materials. In support of this Review, Greenfields made available all technical data in its possession relating to the Frontier Project. These data include relevant reports by consultants, previous exploration licence holders and government agencies as well as scientific research articles. X-plore endeavoured, by making all reasonable enquiries, to confirm the authenticity, accuracy, and completeness of the supplied data and the Company’s NiTAR, which is based on this information.

Furthermore, Greenfields warranted to X-plore that full disclosure was made of all relevant material in the Company’s possession and that the information is complete, accurate and true.

Unless otherwise stated, any technical information contained in or used in the preparation of [the] ITAR was provided by Greenfields. Any statements in [the] ITAR that are attributable to third parties are based upon statements that are publicly available. These statements are included in accordance with ASIC Regulatory Guide 55.

Greenfields was provided a final draft of this Report and requested to identify any material errors or omissions prior to its lodgement.

Site Inspection

No site visit was made to the Frontier Project. An inspection was not considered material to this Report as the Mineral Asset is at an early stage and impracticable because at the time of this Review the Project area was covered by ice and snow.

Note on Mineral Resources

Greenfields’ Frontier Project holds small historical estimates at the Ymer Ø tungsten, Sernander Bjerg silver, Bredehorn barite and Ladderbjerg copper prospects (Bell and Saleem, 2018). The historical estimates are not reported in accordance with the JORC Code and historic work was insufficient to classify the historic estimates in accordance with the JORC Code. It is uncertain that, following evaluation and/or further exploration work, it will be possible to report the historic estimates as mineral resources or ore reserves in accordance with the JORC Code. Whilst reported in Greenfields’ NiTAR (Bell and Saleem, 2018), the historical estimates are not discussed in this Report on the basis that the information is neither material nor relevant given the Company’s focus on large, potentially economic copper deposits.

Note on Tenement Status

X-plore is not qualified to comment on the ownership and legal standing of the Exploration Licences subject to Greenfield’s NiTAR and this ITAR. Instead, X-plore relied on information provided by Greenfields and public information available from the Government of Greenland Mineral Resource Authority. X-plore prepared this ITAR on the understanding that the Exploration Licences subject to this ITAR are currently in good standing. A list of current Greenland mineral and petroleum licences updated on the 1st and the 16th day of every month (except during the months of July and August) is available from [https://www.govmin.gl/en/current-licences-andactivities/current-licences].

Author of the Report

This ITAR was authored by Dr Oliver Kreuzer who is responsible for all sections of this Report. Dr Kreuzer is trading as X-plore Geoconsulting [ABN 76 926 052 463] (“Xplore”), an independent Australia-based geological consultancy that provides a broad range of exploration services to clients worldwide. X-plore’s core business consists of project assessments and geological framework, targeting and project generation studies. Dr Kreuzer holds a Dipl.-Geol. (M.Sc. in Geology) from the University of Freiburg, Germany, and a Ph.D. in Economic Geology from James Cook University, Townsville, Queensland.

Dr Kreuzer is a structural geologist with a broad skill set in ore deposit, generative and corporate geology honed during a 19+ year career in applied research and mineral exploration across a wide range of gold, base metals and uranium projects in Australia, Africa, North America, Europe and Asia. In the past 10 years he has completed numerous assessments and due diligence of early exploration and development projects in a variety of geological terrains, commodities, and mineralisation styles within Australia and internationally, and contributed to several independent geologist reports for ASX-listed companies.

Dr Kreuzer is a Registered Professional Geologist and Member of the Australian Institute of Geoscientists (AIG) (Member ID 2762) and a Member of The Australasian Institute of Mining and Metallurgy (AusIMM) (Member ID 208656). By virtue of his education, experience and professional associations, Mr Kreuzer qualifies as both a Competent Person as defined in the 2012 Edition of the JORC Code and Practitioner as defined in the 2015 Edition of the VALMIN Code.

Effective Date

The effective date of this ITAR is 30 April 2018 (“Effective Date”). The technical information contained in this ITAR is valid and current as at the Effective Date.

Warranties and Indemnities

Greenfields warranted in writing to X-plore that full disclosure was made of all information material to the matters considered in this ITAR, and that, to the best of its knowledge and understanding, such information is complete, accurate and true. As recommended by the VALMIN Code, X-plore obtained an indemnity from Greenfields under which the Company agrees to indemnify X-plore for any liability and/or any additional work or expenditure resulting from or relating to any consequential additional workload resulting from:

  1. X-plore's reliance on information Independent Technical Assessment Report 17 May 2018 Document Reference XPC-GEL-ITAR-01 Page 7 of 26 provided by Greenfields;
  2. Greenfields not having provided material information; or
  3. queries, questions or public hearings arising from this ITAR, provided that X-plore does not undertake any additional work without the prior consent of Greenfields.

Independence and Consulting Fees

X-plore is an independent geological consultancy and X-plore’s relationship with Greenfields is solely one of professional association between client and independent consultant. Neither X-plore nor Dr Oliver Kreuzer, X-plore’s sole trader and sole author of this ITAR, have or previously have had any material or contingent interest in Greenfields or the Frontier Project in which the Company has an interest. Dr Oliver Kreuzer has never had any shareholding in Greenfields and has never been or is intended to be a director, officer or direct employee of Greenfields. No agreement exists between Xplore and Greenfields as to the Company providing any further work for X-plore. In addition, X-plore has not prepared any prior reports relating to the Mineral Asset that is subject to this ITAR. Consequently, X-plore considers itself independent of the Company, its directors, and senior management. Fees for the preparation of this report are being charged to Greenfields at a commercial rate. Payment of these fees is not contingent upon the conclusions of the report. The agreed fee for the preparation of this short-form report is A$5,000.

SUMMARY AND CONCLUSIONS

Greenfields holds a 100% unencumbered interest in a very large (12,975 km2 ), early stage exploration Project consisting of five (5) granted Licences. The Project is located in central East Greenland, a remote yet prospective frontier region that has received very little in terms of systematic modern exploration.

The geology of central East Greenland is complex, attributable to the region having recorded a diverse and nearly 1,000-million-year history of rifting and basin formation, mountain building and magmatism. The geological diversity is reflected in the region’s diverse metallogeny, encompassing a variety of known mineral deposit types such as (i) stratiform copper, (ii) Mississippi Valley (MVT), (iii) epithermal lead-zinc, (iv) porphyry molybdenum, and (v) vein- and breccia-hosted tungsten. In addition, experts of the Geological Survey of Denmark and Greenland (GEUS) deem the region prospective for orthomagmatic nickel, sedimentary exhalative (SEDEX), and orogenic and intrusion-related gold deposits.

Greenfields’ principal exploration target is stratiform copper. The Company’s Frontier Project covers two large search spaces that are prospective for this mineral deposit type: (i) The Neoproterozoic Eleonore Bay Basin, which shares certain similarities with the African Copperbelt, and (ii) the Permian to Triassic East Greenland Basin, which is an interpreted extension of the Zechstein sea and contains black shales that share similarities with the European Kupferschiefer.

The target zones proposed by Greenfields have been carefully selected. They comprise known stratiform copper occurrences and widespread surface geochemical copper anomalism that are coincident in space with interpreted anoxic (reduced) sub-basins, fundamental basin-controlling faults, major cross faults, and basin margin settings where the sedimentary basin successions are juxtaposed against crystalline basement rocks.

Whilst early-stage, X-plore believes that Greenfields’ Frontier Project contains all ingredients required in the formation and has good potential for discovery of potentially economic stratiform copper deposits. As a result, X-plore considers the Project worthy of further exploration expenditure, to the extent being proposed by the Company.

Why Greenfields?

The problem being faced by the mining industry is a combination of rising demand for copper, cobalt and nickel paired with declining quality of new deposit discoveries. Lower quality deposits tend to consume more energy, have lower recoveries and are generally ‘dirtier’ than higher-quality deposits.

In part, the cause of the problem is that over the last decade, much of the exploration was focussed on brownfields areas which have higher probabilities of success, but at the cost of lower quality or value. Market commentators lament that there are few ‘new’ greenfields exploration opportunities.

It is the directors experience that it can be difficult to raise capital willing to invest in an exploration program when the only potential return on that investment will come from a producing mine in many years’ time, or a mid-stage acquisition. This acts as an impediment to quality new assets being developed and brought to market.

Greenfields’ solution is to use the incubator business model as it is well established concept in other industry sectors and offers a means of managing risk while maintaining exposure to a disproportionately large upside potential.

The incubator model also offers a solution to the problem as early-stage opportunities require less capital to reduce uncertainty, than more advanced projects that rely on more expensive techniques such as drilling. In the event of a transaction, there is also potential to re-invest cash proceeds in new projects, thereby reducing the need for equity investments and associated shareholder dilution.

Using the incubator model, Greenfields believes it can benefit from a demand for new exploration projects that are prospective for increasingly important commodities, while managing inherent risk through diversification.

Organisation Structure

Greenfields has no subsidiaries at this time and carries on the business. It enters into all contracts in its own capacity.


Greenfields Exploration Corporate Structure, organisational structure Greenfields Exploration Ltd, Greenfields team, Greenfields leadership

Figure 1: Organisational structure

Mr Jonathan Bell is the Managing Director of the Company. He has responsibility for enacting the board’s strategy, overall product development, geological targeting and partner relationships. Mr Mathew Longworth is the non-executive chairperson of the Company. Mr Lindsay Dick is a Non-Executive Director. Mr Longworth and Mr Dick provide independent oversight to the management and culture of the company.

The Company has relationships with a number of advisor contractors:

  • Ahmad Saleem is the Company’s in-house advisor. He advises the company on geological targeting, exploration program design and marketing;
  • Dr Jon Hronsky is an external advisor to the Company. He advises on geological targeting and overall project design; and
  • Dr Oliver Kreuzer is an independent expert working with the Company. He has reviewed and verified the Company’s Independent Technical Assessment.

Greenfields holds all intellectual property of the business but does not consider this to be a material asset at this time.

Rights associated with shares

Refer to section Shareholders of this Offer Document to understand the rights associated with shares of Greenfields Exploration Limited.

Key Risks

By its nature, risk is uncertain and broad ranging. The Company has identified key areas of potential risk, as detailed below.

  1. General
    • Any investment in shares should be considered speculative. There are certain general risks and certain specific risks which relate directly to the Company’s business and are largely beyond the control of the Company and the Directors because of the nature of the business of the Company.
    • The risks described below are not to be taken as exhaustive. The specific risks considered below and other risks and uncertainties not currently known to the Company, or that are currently considered immaterial, may materially and adversely affect the Company’s business operations and the financial performance of the Company.
    • There is no guarantee that the Company will be successful in achieving its intended goals or strategies.
  2. Mineral Exploration
    • Mineral exploration is inherently risky. There is no guarantee that exploration and development of the Frontier Project or any projects that Greenfields may secure in the future can be profitably exploited.
    • A very low fraction of exploration projects proceed to an active mine.
  3. Reliance on key contracts
    • The Company is intending to enter into joint ventures in relation to the Project. If a formal agreement is not reached this may significantly reduce the exploration budget available to the Company and present difficulties in the Company monetising its assets. In the event of entering into a contract over all or substantially all of the Project assets, the Company will use the proceeds of this capital raising to identify and secure additional exploration projects for incubation.
    • Joint venture agreements may require that a Company is contractually required to pay commission to an intermediary. This commission may be paid out of the Company’s exploration management fee.
    • The Company may engage contractors who will receive payment in part or full in Company shares. If such an arrangement proceeds all shareholders will have their interests diluted.
  4. Reliance on key personnel
    • The Company’s success depends on key personnel. The loss of the services of such key personnel may have a material adverse effect on Greenfields’ business, financial condition, results of operations and prospects.
    • The contributions of the existing management team to short term operations are likely to be of central importance. There can be no assurance that the Company will be able to continue to attract and retain all personnel necessary for the development and operation of its business.
  5. Operating risks
    • Any future operations of the Company may be delayed or adversely affected by factors which are beyond the control of the Company including but not limited to surface access restrictions, compliance with current and new governmental requirements, technical issues, access to equipment and transportation, delays in the commissioning of plant and equipment, adverse weather conditions, environmental hazards, labour disputes or industrial accidents.
    • Some risks may be exacerbated by the Project‘s remote location. In particular, Greenland has highly variable, seasonal daylight hours which may impact the timing of fieldwork. Unseasonal snow cover may affect airborne/satellite exploration programs.
  6. Ongoing expenditure requirements:
    • Each of the licences which make up the Project is subject to an annual minimum expenditure requirement, which the Company is obliged to spend in developing the licences. The amount is set by regulations, and increases annually. A failure to meet the expenditure requirement for a particular licence is likely to result in the Company being required to relinquish that licence, renegotiate with the Greenlandic government, or commit to further expenditure in the next calendar year. Because of the latitude of the region, there is a limited period each year in which the Company can conduct its exploration program on the ground. The company must spend the entire amount during this time.
    • The minimum raise for this Offer is less than the sum of the expenditure requirements for each of the licences comprising the Project. The total expenditure requirement is approximately AUD2.2 million. As such, if less than this amount is raised the Company will be required to raise additional funding to ensure it can meet its minimum expenditure for all of the licences, or divest some licences to ensure that it can meet the minimum expenditure for the remainder. These arrangements must be made before the 'field season' in which it is practical to complete work on the ground in the Project. If required to divest any licences, the Company intends to retain the most prospective licences, and it will also actively engage with the Greenlandic government to retain as many licences as possible.
  7. Country risks
    • Greenland is a developing mining jurisdiction. Laws and procedures around mining laws are not as developed as elsewhere. There is no double-taxation agreement between Greenland and Australia.
  8. Geological risks
    • There are a number of assumptions and caveats associated with the Company’s geological modelling. Potential investors are encouraged to refer to our Independent Technical Assessment report available on the Billfolda platform.
  9. Fundraising risk
    • Given timing, exploration and contractual considerations the company may be required to take on debt, or make future calls for capital. There are no guarantees that additional capital, and or that the price of future calls and capital will be at the current or higher levels. Any additional equity financing will dilute shareholdings, and debt financing, if available, may involve restrictions on financing and operating activities. If the Company is unable to obtain additional financing as needed, it may be required to reduce the scope of its operations and scale back its exploration programmes as the case may be. There is however no guarantee that the Company will be able to secure any additional funding or be able to secure funding on terms favourable to the Company.
  10. Transaction risk
    • Potential joint venture partners may encounter financial distress, fall into dispute or seek to exit an agreement or agreements.
    • New or replacement partners may not be secured, and the company may not be in a position to complete the project(s) in a timely manner without them should there be a sudden withdrawal.
    • Market sentiment may not be conducive to spinning out assets into a new entity.
    • Lower mineral prices may result in potential joint ventures becoming uneconomic and unprofitable, or the Company may be unable to fund to its proportional interest in such projects (if applicable) and or fail to find partners or buyers for its assets.
  11. Going concern risk
    • To effectively implement its business model and take advantage of the opportunities listed within, and to meet any liabilities or expenses, will depend on the company’s ability to raise capital, achieve revenue, and control costs in developing the model. Failure to secure capital and or revenue may result in the Board approving dilution of investment for existing shareholders, taking on debt, sale of assets or ultimately the closure of the company. Many of the costs in the forecast are variable and can be adjusted based on the outcome of exploration, cost pressures and plans to renew, dispose or acquire licences from time to time.

Risk mitigation

The Company intends to use a range of measures to limit some of the risks identified in the preceding section:

  • Mineral exploration: Mineral exploration is risky, so Greenfields proposes to mitigate this risk by holding a very large licence area (casting a wide net) and focussing on improving accuracy before precision by using relatively cheap regional scale surveys. Once it is satisfied that there is sufficient accuracy in the targeting process, the Company proposes to partner with third parties who may conduct more precise, expensive exploration methods such as drilling.
  • Key personnel: To help reduce the risk associated with relying on key personnel, the Company proposes to use a decentralized business model. This model draws on third party experts as part of the targeting and vetting process associated with identifying, securing and evaluating exploration projects. The Company also envisages the use of crowd-sourcing campaigns and data mining methods to create a business process that is less reliant on key personnel than the traditional exploration company model.
  • Country risk: Greenfields’ view is that the Greenlandic government is taking pro-active steps to encourage mining in the country, and that Greenland is a low-risk, highly stable destination.
  • Minimum expenditure: Greenfields’ view is that the expenditure requirements are low compared to other jurisdictions. The minimum expenditure requirement is a function of the size of the area licenced. The area of each licence can be reduced, or licences can be relinquished to manage requirements. If the amount raised under this offer is less than approximately AUD2.2 million, the Company may not be able to meet its minimum expenditure requirements for one or more of its licences. The Company understands, based on the information made available to it, that if this occurs the Company will need to negotiate with the Greenlandic government about the future of its licence holdings. The Greenlandic government has a range of options in this situation under the terms of the licences. It may demand half of the outstanding minimum expenditure be paid as a lump sum, or roll the payments over and require the Company to give security that the difference will be made up in payments made in future years. As the minimum expenditure is a term of the licence, the Greenlandic government may seek to revoke one or more of the Company’s licences. If this occurs the Company will aim to negotiate an arrangement with the Greenlandic government to retain some of all of its licences. If Greenfields does not raise enough money under this Offer to meet expenditure requirements for all of the licences, the Company will seek alternative investment to ensure that these commitments can be met. If it becomes apparent that minimum expenditure requirements cannot be met despites these efforts, the Company plans to focus its exploration efforts on the most prospective licences to maximise its chances of a successful exploration campaign.

Financial Information

The attached are Greenfields Audited Financial Statements, including the balance sheet (statement of financial position), profit and loss statement, cash flow statement and statement of changes in equity, for the nine months ending 31st March 2018.

The company was incorporated on 9 June 2017 and did not trade up and until the 2018 financial year.

The company’s full financial report is attached as an annexure and material information contained in the notes to the financial statements noted below.

STATEMENT OF FINANCIAL POSITION
AS at 31 March 2018

Note 2018
$
CURRENT ASSETS
Cash and cash equivalents  5 7,964
Prepayments   1,488
Receivables  6 3,906
Total Current Assets 13,358
Non-Current Assets  
Exploration Costs   7 47,825
Total Non-Current Assets   47,825
Total Assets   61,183
LIABILITIES
CURRENT LIABILITIES
Trade and other payables   8 3,000
Borrowings 9 14,024
TOTAL CURRENT LIABILITIES 17,024
Net Assets 44,159
Equity 1,748,242
EQUITY EQUITY
Issued capital 10 93,750
Retained earnings 11 (49,591)
TOTAL EQUITY 44,159
STATEMENT OF COMPREHENSIVE INCOME
For the nine months ending 31 March 2018
Note 2017
$
Revenue -
Other income -
Total income -
Expenses
Advertising expenses 15,988
Consultancy expenses 20,605
Other expenses 3 12,998
Total Expenses 49,591
Income tax expense 4 -
Loss after income tax expense 49,591
STATEMENT OF
CHANGES IN EQUITY FOR THE
PERIOD ENDED 31 MARCH 2018
Issued Capital Reserves Accumulated losses Total equity
Balance at 1 April 2017 - - - -
Loss for the period - - (49,591) (49,591)
Contributions of equity 93,750 - - 93,750
Balance at 31 March 2018 93,750 - (49,591) 44,159
STATEMENT OF CASH FLOWS FOR THE PERIOD
for the nine months ended 31 March 2018
Note 2018
$
Cash flows from operating activities
Interest received -
Payments to suppliers and employees (51,985)
Net cash used in operating activities (51,985)
Cash flows from investing activities
Exploration expenditure (47,826)
Net cash used in investing activities (47,826)
Cash flows from financing activities -
Proceeds from issue of shares 93,750
Proceeds of borrowings 14,025
Net cash generated by financing activities 107,775
Net increase in cash and cash equivalents held 7,964
Cash and cash equivalents at beginning of financial period -
Cash and cash equivalents at end of financial period 5 7,964

Material notes to the accounts

The auditor and note 1 to the accounts describes the company’s net operating cashflow up and loss until 31 March 2018 and reliance upon future debt or equity raising as conditions which indicate a material uncertainty that cast significant doubt about the ability of the company to continue as a going concern and therefore the company may be unable to realise its assets and discharge its liabilities in the normal course of business.


Directors notes to the Accounts

  • Management Personnel Compensation: The Board are currently not receiving any Director’s fees. The existing Shareholders have approved maximum Board remuneration to be paid following the completion of the crowdfunding, when, in the Board’s discretion, the Company is able to pay them:
    • Managing Director: $210,000 (excluding superannuation)
    • Chairman: $60,000 (excluding superannuation)
    • Non-executive Director: $50,000 (excluding superannuation).

In addition, Jonathan Bell is the beneficial holder of 36,096,423 shares in the Company as founder. Mathew Longworth is the beneficial holder of 676,364 shares in the Company as a financial investor on the same terms as contemporaneous investors. Lindsay Dick is the beneficial holder of 1,032,344 shares in the Company; 391,579 of which were purchased as a financial investor on the same terms as contemporaneous investors and 640,765 of which will vest on the date of this Offer as payment for work in relation to the Offer.

Capital Structure

The Company is currently entirely funded through equity funding. The Company expects to receive further funding through additional equity placements (including this Offer). The Company does not intend to raise any debt in the foreseeable future. 

Billfolda will be paid entirely in shares for intermediation of the offer at a rate of 6% of funds raised. As such the company will be in receipt of the full amount of funds raised, including any interest and the total equity on issue will increase proportionately. Please see the offer FAQ for further detail.

Debt, Director Loans and Grants 

The Company has no debt outstanding or Director Loans , other than current trade payables.

Greenfields Exploration Ltd has not received any grants.

Shareholdings

As at the date of this CSF offer document, the Company has 43,750,015 ordinary shares on issue, as set out in Table 1 below. There are no shares on issue other than ordinary shares. There are no options on issue.

Table 1: Issued capital of the Company before the Offer
Shareholder Shares
Jonathan Bell 36,096,423
Lindsay Dick 1,032,344
Mat Mining Pty Ltd 676,364
Seed investors (nine investors) 5,944,884
Total 43,750,015

The capital structure of the Company following completion of the Offer is summarised below:

Subscription Minimum Subscription Maximum Subscription
Shares Proportion
(%)
Shares Proportion
(%)
Jonathan Bell  36,096,423 66.41 36,096,423 41.47
Lindsay Dick 1,032,344 1.90 1,032,344 1.19
Mat Mining Pty Ltd  676,364 1.24 676,364 0.78
Seed investors 5,944,884 10.94 5,944,884 6.83
Offer shareholders 10,000,000 18.40 40,833,333 46.92
Billfolda Shares 600,000 1.10 2,450,000 2.82
Total Shareholders 54,350,015 100.00 87,033,348 100.00

 

All shares in the Company are fully paid ordinary shares.

A maximum of 40,833,333 ordinary shares (plus those issued to Billfolda) may be issued under the Offer.

No previous CSF offers have been made by the Company, its officers, or related parties.

Information About the offer

Terms of the offer

The Company is offering up to 40,833,333 shares at an issue price of 12 cents per share to raise up to $4,900,000. The key terms and conditions of the Offer are set out in Table 4 below.

Table : Terms of the offer

Term Details
Shares Fully-paid ordinary shares
Price 12 cents per share
Minimum Subscription $1,200,000
Maximum Retail Investor Subscription $4,900,000
Opening date 20 May 2018
Offer Closing date 29 June 2018

A description of the rights associated with the shares is set out in Section 3.3 below. To participate in the Offer, you must create and verify a Billfolda account, accept the Investor Agreement and Terms and Conditions, and pay the subscription amount via the Billfolda’s platform. This process commences with actioning the ‘invest’ button within the online offer.

Billfolda must close the Offer early in certain circumstances. For example, if the offer maximum of $4,900,000 is reached, the Offer must be closed. If the Minimum Subscription is not reached or the Offer is closed but not completed, you will be refunded your application money.

Retail investors may withdraw their application during the Cooling-off Period. Further information on investor cooling-off rights can be found in Section 4 of this CSF offer document.

The Offer is not underwritten.

Use of funds

The Company will use the funds to progress the Project’s exploration strategy and identify prospective locations. Initial exploration in the first season will focus on large-scale exploration with a goal to improve the overall picture of the prospectivity of the region. The Company intends to conduct an exploration campaign which meets the minimum expenditure requirements imposed by the Greenlandic government (subject to a successful raising under this Offer). The Company’s view is that given the size and prospectivity of the Project and the lack of existing information, the best investment of funds will be to produce a large amount of data about the Project. This can then be analysed during the northern winter months when exploration fieldwork is not practical.

Subsequent exploration campaigns will conduct more precise, granular exploration to assess individual prospects. Throughout the process, the Company will seek third-party investors in the Project to either acquire assets outright, or to partner with Greenfields to develop assets further. The Company does not intend to be responsible for operations at any producing mines that may be developed but may retain a trailing stake.

The proposed exploration campaign is scalable based on how much capital is raised under the Offer. An indicative work budget is included in this Offer Document. The proposed use of Minimum and Maximum funds raised is as follows:

Minimum:

Program Activity Total Budget
Million AUD
Year 01
Million AUD
Year 02
Million AUD
Airborne Geophysics Surveys & Data Processing 0.60 0.60 -
Petrophysics 0.00 0.00 -
Sub-Total 0.60 0.60 -
Geology Historical Data Review 0.01 0.01 -
Field Reconnaissance 0.50 0.50 -
Surface Geochemistry 0.00 0.00 -
Sub-Total 0.51 0.51 -
Crowdsourcing Competition Data Interpretation & Targeting 0.00 0.00 -
Administration Office, Travel, Salaries, Misc 0.09 0.09 -
Sub-Total 0.09 0.09
Grand Total 1.20 1.20 -

Maximum:

Program Activity Total Budget
Million AUD
Year 01
Million AUD
Year 02
Million AUD
Airborne Geophysics Geophysical Surveys & Data Processing 3.00 3.00 0.00
Petrophysics 0.05 0.05 0.00
Sub-Total 3.05
Geology Historical Data Review 0.10 0.10 0.00
Field Reconnaissance 0.55 0.55 0.00
Surface Geochemistry 0.40 0.00 0.40
Sub-Total 1.05 0.65 0.50
Crowdsourcing Competition Data Interpretation & Targeting 0.50 0.50 0.00
Administration Office, Travel, Salaries, Misc 0.30 0.20 0.10
Sub-Total 0.80 4.40 0.60
Grand Total 4.90 4.40 0.60

Key activities include:

  • Acquisition: Acquisition of airborne geophysical data as described in this Offer Document.
  • Crowdfunded Interpretation: Establish a system for interpretation and analysis of the airborne geophysical dataset, in order to identify prospective areas. The process is out-sourced and completed by external worldwide experts, who are incentivised through either prizes, scholarships or ongoing royalty payments. The Company intends to then complete adjacent research into the veracity and validity of the interpretations provided.
  • Historical Data Review: Further review of existing company and open-file (i.e. publicly available) data within the Project area, including potentially outsourcing parts of this task to industry experts.
  • Field Reconnaissance: Boots-on-ground sampling and prospecting of areas of high potential based on the location of existing prospects. Involves significant logistical planning.
  • Petrophysical Data Acquisition: Collection and analysis of surface rock samples to establish baseline geophysical characteristics of rock types within the project area to refine processing of airborne geophysical data and subsequent interpretation.
  • Surface geochemistry: sampling and analysis of surface material (soils, rocks, etc) in areas of high prospectivity to determine further testing of these areas.
  • Administration: Office, travel, salaries (when sustainable) and miscellaneous expenses.

We note that the Independent Technical Assessment report commissioned by Dr Oliver Kreuzer contains an exploration plan with a minimum expenditure of AUD2.2 million. If less than this amount is raised under the Offer, the Company will need to obtain alternative sources of funds or revise its proposed exploration strategy with a more localised exploration campaign.

Constitution and rights of shareholders

The Board is committed to maintaining an active and transparent relationship with all shareholders.

Rights associated with the shares

Rights associated with ordinary shares

Immediately after issue and allotment, the Shares will be fully paid Shares. There will be no liability on the part of shareholders for any calls and the Shares will rank pari passu with the Share currently on issue.

Detailed provisions relating to the rights attaching to the Shares are set out in the Company’s constitution and the Corporations Act. A copy of the constitution can be inspected during office hours at the registered office of the Company and is available for subscribers here.

A summary of the rights attaching to Shares under the Constitution is set out below. This summary is qualified by the full terms of the Constitution (copies of the Constitution may be inspected at the registered office of the Company during normal business hours by appointment with the Company Secretary) and does not purport to be exhaustive or to constitute a definitive statement of the rights and liabilities of Shareholders. These rights and liabilities can involve complex questions of law arising from an interaction of the Constitution with statutory and common law requirements. For an investor to obtain a definitive assessment of the rights and liabilities which attach to Shares in any specific circumstances, that investor should seek legal advice.

General

Subject to the Constitution and any applicable CSF governance concession the terms of issue of a Share, attached to each Share is the right to receive notice of, attend and vote at all meetings of Shareholders, to receive dividends, and in a winding up to participate equally in the distribution of assets of the Company subject only to the amounts unpaid on any Share.

Voting

At a meeting of Shareholders, subject to the Constitution, the Corporations Act and (if applicable) the ASX Listing Rules, on a show of hands each Shareholder present in person or by proxy has one vote. At the taking of a poll, each Shareholder present in person or by proxy has one vote for each fully paid Share, and for each partly paid Share a fraction of a vote equivalent to the proportion which the amount paid (not credited) bears to the total amount paid and payable (excluding amounts credited). A Shareholder is entitled to be counted in a vote only in respect of Shares on which all calls due and payable have been paid. A resolution put to vote at a meeting must be decided on a show of hands unless a poll is demanded.

General meetings and notices

A Director of the Company may call a general meeting. Shareholders may request or call and arrange to hold a general meeting in accordance with the Constitution and the Corporations Act or applicable CSF Governance concession.

Each Shareholder is entitled to receive notice of, attend and vote at general meetings of the Company and to receive all notices, financial statements and other documents required to be sent to Shareholders under the Company’s Constitution, the Corporations Act and (if applicable) the ASX Listing Rules. The quorum for a meeting of Shareholders is two Shareholders entitled to vote at the meeting.

The company may be exempted from its obligation to hold Annual General Meetings and its obligation to directly provide shareholders copies of the Annual Financial Statements for up to 5 years from conversion to a public company, by way of its use of the equity crowdfunding regime. These measures are known as the ‘corporate governance concessions’.

Dividends and share plans

The Directors may pay to Shareholders any interim and final dividends as they see fit. The Directors may fix the amount, the time for payment and the method of payment. The Directors may establish and make rules for a dividend reinvestment plan/or a dividend election plan in relation to any dividend payable by the Company.

The Directors may declare dividends on a class of Shares to the exclusion of and in different amounts than other classes. Dividends on partly paid shares must not exceed the proportion which the amount paid (not credited) bears to the total amount paid and payable (excluding amounts credited) on that Share.

Issue of Shares

Subject to the Constitution, the Corporations Act, the ASX Listing Rules (if applicable) and any special rights conferred on holders of existing Shares or a class of Shares, the Directors may issue or otherwise dispose of, or grant options in respect of, shares to such persons on such terms as they think fit. In particular, the Directors may issue shares with preferred, deferred or special rights or restrictions in relation to dividends, voting, return of capital and payment of calls.

The Company may issue preference shares which are or at the option of the Company are to be, liable to be redeemed. Holders of preference shares will only have the right to vote at a meeting convened for the purpose of reducing capital, in certain circumstances upon winding up, where the resolution effects the rights attached to the preference shares, when a dividend on the preference shares are in arrears or on a resolution to approve the terms of a buy-back.

Transfer of Shares

Generally, all Shares are freely transferable subject to the procedural requirements of the Constitution, and to the provisions of the Corporations Act, the ASX Listing Rules (if applicable) and the operating rules of ASX Settlement Pty Limited (if applicable). The Directors may decline to register an instrument of transfer received where refusal is permitted under the Constitution and (if applicable) the ASX Listing Rules or if the transfer would result in the transferee or associates a combined interest of 19.99% or more. If the Company is admitted to the official list of the ASX, the Directors must refuse to register the transfer of "restricted securities" (as defined in the ASX Listing Rules) during the relevant escrow period (except as permitted by the ASX Listing Rules or the ASX) or any other transfer as required by the ASX Listing Rules(if applicable). If the Directors decline to register a transfer the Company must give reasons for the refusal.

Intention to Ipo

The Company intends to improve the marketability and liquidity of its shares through an initial public offering on a stock exchange.

Funding received from this IPO may be used to develop the Company’s existing Project or incubate new project opportunities. Depending on initial results and capital requirements, a further round of crowdfunding may occur prior to IPO.

Cooling-off rights

Retail investors have the right to withdraw your application under this Offer and to be repaid your application money. If you wish to withdraw your application for any reason (including if you change your mind about investing in the Company), you must do so within five business days of making your application (the Cooling-off Period).

You must withdraw your application via Billfolda’s platform profile section. After your withdrawal has been processed, Billfolda will refund the application money to your bank account as soon as practicable. A cooling-off notice is non-cancellable.

Offer forum (communications)

You can ask questions about the Offer on the communication facility available on Billfolda’s platform and may use the communication facility to communicate with other investors, with the Company and Billfolda about this Offer.

You will be able to post comments and questions about the Offer and see the posts of other investors on the communication facility. The Company and/or the Billfolda will also be able to respond to questions and comments posted by investors.

Officers, employees or agents of the Company, and related parties or associates of the Company or Billfolda, may participate in the facility and must clearly disclose their relationship to the Company and/or Billfolda when making posts on the facility.

Any comments made in good faith on the communication facility are not subject to the advertising restrictions in the Corporations Act. Comments and reply may be subject to delay, and Billfolda reserves the right to moderate posts in accordance with our policy, the Terms and Conditions, the investor agreement and our FSG.

Please see the offer FAQ for further detail on communications.

Effect of the Corporate Governance Concessions

The company is relying on the temporary concessions from certain audit, reporting and corporate governance obligations of public companies, including relief from holding Annual general meetings and electronic notice of Annual reports.

Annual general meetings

The Company is not required to hold an annual general meeting (AGM) for up to five years from its registration/conversion to a public company – being 21 March 2018 (assuming the Company continues to meet the eligibility requirements).

This means that shareholders will not be provided with an opportunity to directly question the directors and management in an open forum about the management, business operations, financial position or performance of the Company at the AGM.

However, the directors of the Company may still be required to hold a general meeting in other circumstances, for example, where requested to by shareholders with at least 5% of the votes that may be cast at a general meeting.

If shareholders have any queries or concerns about the Company, they should contact the company at basecamp@gexpl.com or on the offer page.

Distribution of annual report

Provided the Company continues to meet the eligibility requirements under the CSF regime, the Company is not required to notify shareholders in writing of the options to receive or access the annual report.

Shareholders will not be able to elect to receive a copy of the annual report by way of email or post. However, shareholders can access the annual report on the Company’s website https://www.gexpl.com/ or from ASIC, free of charge.

Annual report

The Company has appointed PKF Mack as independent company auditors and will not seek to apply the audit concession (should that apply).

Glossary
Term Meaning in this document
Accounting Standards Standards issued by the Australian Accounting Standards Board under s334 of the Corporations Act
AFS licence An Australian financial services licence under s913B of the Corporations Act that authorises a person who carries on a financial services business to provide financial services
Note: This is a definition contained in s761A.
AFS licensee A person who holds an AFS licence under s913B of the Corporations Act
Note: This is a definition contained in s761A
Greenfields means Greenfields Exploration Limited ACN 619 328 442
Communication Facility A facility provided by Billfolda in relation to a CSF offer that can be used by investors, the company making the offer and Billfolda to communicate about the CSF offer
Company Greenfields Exploration Limited ACN 619 328 442
Cooling-off Period The period ending five business days after an application is made under this Offer, during which a retail investor has an unconditional right to withdraw their application and be repaid their application money.
Corporations Act Corporations Act 2001, including any regulations made for the purposes of that Act
Corporate governance concessions The company may be eligible for temporary concessions, for up to five years, that exempt if from; the requirements to hold an annual general meeting (AGM) and distribute hard copies or electronic copies of its annual reports to shareholders.
Crowd-funding service Has the meaning given in s766F of the Corporations Act
CSF Crowd-Sourced Funding
CSF Intermediary Billfolda Pty Limited AFSL TBA
CSF offer An offer of ordinary shares that is made under the CSF regime in Pt 6D.3A of the Corporations Act
Note: See s738B of the Corporations Act.
CSF offer document A document setting out the terms of a CSF offer that complies with s738J of the Corporations Act
CSF regime The statutory regime for crowd-sourced funding in Pt 6D.3A of the Corporations Act regulating CSF offers
Eligible CSF company A company that meets the requirements in s738H of the Corporations Act to be eligible to make a CSF offer
Exploration Licence / Tenements Naalakkersuisut Mineral Licences:
2018/01 expires 2020 area 4,850sqkm
2018/02 expires 2020 area 1,830sqkm
2018/03 expires 2020 area 2,433sqkm
2018/04 expires 2020 area 1,637sqkm
2018/05 expires 2020 area 2,155sqkm
2018/19 expires 2023 area 70sqkm
Exploration Licences
Greenfields Geo Report The Company's own report on Project 1.
Maximum Subscription $4,900,000 AUD
The amount specified in this CSF offer document as the maximum amount sought to be raised by the Offer
Minimum Subscription $1,200,000 AUD
The amount specified in this CSF offer document as the minimum amount sought to be raised by the Offer
Offer An offer of fully-paid ordinary shares by the Company under this CSF offer document
Offer Document The printable version of the crowd sourced funding offer made by Greenfields Exploration Ltd attached. Click here for Printable Offer Document
Platform A website or other electronic facility provided by Billfolda to host a CSF offer
Related party Has the meaning given in s738G(3) of the Corporations Act
Retail investor Has the same meaning as ‘retail client in relation to a CSF offer’ in s738D of the Corporations Act
Senior manager A person who is concerned in, or takes part in, the management of the company (regardless of the person’s designation and whether or not the person is a director or secretary of the company) 

Conclusion

Thank you for taking the time to review this Offer Document. The Company is excited to begin the Project, unlock the potential of a new mineral province, and change the perception of what a mineral explorer can be.

Further information about the Offer and Company is located on the Offer website and at www.gexpl.com. If you have any questions, please continue to the Question and Answer platform located on the Billfolda offer page.

Frequently Asked Questions

What are the open and close dates for Greenfields offer ?

The Greenfields Offer will Open on : 23 May 2018 Close on : 29 June 2018

What is the minimum and maximum amount a retail investor can invest in the Greenfields offer ?

Minimum : $999.96 Maximum: $9,999.96 Wholesale investments which will result in any one entity or its associates holding greater than 19.99% of the shares in the Company are subject to board approval.

What are the key risks of investing in Greenfields?

Please refer to the Risk section in the Offer Document as well as the General Risk Warning.

Does Greenfields plan to list on a Stock Exchange?

Greenfields is considering a listing on a stock exchange. The timing of the listing is uncertain at this point and there is no guarantee a listing will eventuate.

When does the company plan to commence exploration?

Greenfields intends to commence exploration during the Greenlandic field season in July – September 2018.

What crowd sourcing process or platform will you use to analyse the data?

Greenfields has identified and received quotes from its preferred crowd sourcing platform. The Company has also identified highly credentialed judges who will perform a review of the entries. In addition, the Company is in discussion with a University about sponsoring a PhD student to research the results of the competition for the purpose of identifying future prospects.

Does the company plan to issue further shares? and if so, what would be the likely impact on crowd investors?

The Board has general control over the share capital of the Company, subject to the Corporations Act and other applicable laws. There are two foreseeable circumstances in which the Company is likely to issue further shares: 1. The Company may issue scrip as part payment for contractors involved in the exploration program; 2. The Company intends to issue further shares as part of an ASX listing in the future. In both of these circumstances, existing shareholders will have their holdings diluted proportionally to the scale of the offering.

The company says it has an intention to IPO. When would that happen?

The Company intends to list on a stock exchange within the next 1-3 years. The exact timing and nature of this listing, should it occur, will be dependent on a number of factors, including exploration results, resource prices and market sentiment. The Company currently cannot confirm if or when this will occur.

The offer document only lists three people? Who else works for the company and what do they do?

Greenfields intends to engage with a range of contractors in relation to the Project including:

  • Airborne Geophysics acquisition and data processing providers
  • Field Logistics Providers (i.e. camp and operational support)
  • Helicopter Service providers in Greenland
  • various consultants (with expertise in GIS data compilation, local operational knowledge in Greenland, completing independent due diligence of project area, review of exploration strategy, etc.)
  • Remote sensing data acquisition and processing.
  • Crowdsourcing platforms.
  • General safety and medical field support.
  • independent expert geologists
  • And others

Can you give similar examples of projects the founders have been involved in previously?

The Board has a track record of working with startups, mid-tier and major mining companies. This experience includes assessing and developing mineral projects, bringing companies to IPOs, and conducting wide-scale exploration. With that said, in the Board’s view, the Frontier Project and business model are unusual and in the Australian context, are in relatively “uncharted territory”. The Company is choosing to embrace this uncertainty and will develop and confirm its methodology as the business and project evolve.

Does Greenfields own the land that it is exploring ?

No, it does not. The land is owned by the Greenland government. Greenfield has a licence to explore the land.

Is there a lock in period before I can sell my shares ?

Retail investors are not allowed to sell shares for 12 months from allotment. This is a legal requirement for shares acquired via equity crowdfunding.

Where can I get a copy of an independent JORC report ?

A copy of the JORC report can be found here on Billfolda’s website.-

Does Greenfields intend to mine minerals if they are found?

No. Greenfields is an exploration company not a mining company. Greenfields intends to use aerial surveys and other methods on areas that are prospective for minerals such as cobalt, nickel and copper and then find customers who wish to take the project(s) further, potentially to a producing mine(s). The logic is to develop a portfolio of minority interests in mineral projects. The intent is to retain exposure to the upside potential associated with a discovery, while improving the odds of a discovery in one of the projects. This allows the Company to specialise and focus on greenfield exploration.

How big is the area for exploration for the licenses held by Greenfields ?

The area is approximately 13,000 square kilometres. The exploration licences are attached to the offer document glossary.

What guarantee can Greenfields provide that the minerals will be found will be valuable?

Mineral economics is a complex field, and high-grade deposits can often be uneconomical to mine due to factors outside of the rocks themselves. There is no guarantee commercially exploitable minerals will be found.

What will Greenfields use the money raised in crowdfunding for ?

Please refer to the ‘Use of Funds’ section in the Offer Document for details on how the funds will be used.

How is Greenfields different to other mineral exploration companies in the market ?

Greenfields is using the incubator model, targeting early stage projects and using methods such as aerial survey to potentially take them to the next stage before targeting partnerships and/or divestment of projects. Typically, mineral exploration is done by the same companies which intend to operate a mine on a project. Operating a mine requires a different set of capabilities to exploration. Greenfields intends to focus solely on exploration. Greenfields also intends to use crowd-sourcing of data analysis to gain a range of interpretations of data collected. The Company intends to offer prizes for identification of particularly prospective areas within the Project.

How do I ask questions to the founders of the company ?

Please use the Forum (Communication facility) provided by Billfolda.

Can the close date of the Offer change?

Yes it can, Billfolda may close an offer at any of the following times:

  • When the offer has met or exceeded the minimum subscription
  • When the offer is fully subscribed (to the maximum subscription)
  • Closing date mentioned in the offer document
  • If the company making the offer withdraws the offer
  • Billfolda / the company become aware of compliance issues with the company

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