Press Release

OZEQUITIES NEWSLETTER Tel. 613 9748 5033 Fax 613 9748 5463 ozequities@mail.smartchat.net.au Australia’s most comprehensive daily digest of equity news Tel 613 9748 5033 Fax 613 9748 5463 ozequities@pacific.net.au FEATURE Week’s Special NSX: KEEN INVESTOR INTEREST PLUS CORPORATE SPECULATION By Jenny Prabhu and Gerald Stanley Investor interest in the Newcastle Stock Exchange has been keen since its gala debut on the ASX on January 13, with the 50c float price never seen again – closing at 72c on the first day and currently 99c. Stock Exchanges that focus on smaller stocks interest retail investors as well as being of interest to small private companies, often highly successful niche operators - just as the Second Board did in its time in Australia and similar to regional exchanges and the OTC board in the US, Xetra in Germany and the resoundingly successful Alternative Investment Market (AIM) in London – quoted as a role model by the NSX and the APX (the AIM also has the advantage of UK government incentives for individual investors in stocks long term). Hard on the heels of the NSX listing has been the opening for business of Australian Pacific Exchange Ltd (APX) in Melbourne, which has also had a fairly long gestation period and which will specialise in smaller companies including co-ops on three separate boards -Property Hybrids & Debt Board and Equity Board, following on from Austock’s Exempt Markets that operated between 1996 and 2004 (with around 17 stocks). A Tasmanian Stock Exchange has been mooted from time to time. There is the strong likelihood of corporate interest in the NSX – from its big competitor the ASX with which it already has strong links and perhaps also from overseas exchanges. The NSX itself is involved in an agreed takeover of the Bendigo Stock Exchange which was established as a strategic alliance between Bendigo Bank and Computershare in 1999. (The Bendigo Stock Exchange has much older antecedents than the NSX’s 1937 start up. The BSX was founded in the 19th century, with its heyday in 1871 when there were 1,100 listed companies – closing in 1954 after a slump in world gold prices led to a decline in the Victorian gold industry). Meanwhile, Sir Ron’s Guinness Peat Group plc has lifted its stake from 6.76 pct to 8.04 pct in the fortnight since NSX listed. Sir Ron is the doyen of value investors and GPG’s significant stake has further inflamed the market with corporate speculation. Indeed, the German Stockmarket’s takeover offer for the London Stock Exchange, cross border shareholdings of various Stock Exchanges in each other and merger attempts in Australia (ASX and SFE, Computershare bid for SFE etc) are examples of the acquisitive nature of the Stock Exchanges and their satellite service providers. . NSX is headed by savvy and tenacious businessmen – and given ongoing listing interest by appropriate smaller companies - the NSX is heavily dependent on listing fees for its income – it is difficult to see the NSX, which now has recourse to equity raisings through its ASX listing, failing to be profitable. NEWCASTLE STOCK EXCHANGE – A SNAPSHOT The Newcastle Stock Exchange was first established in 1937, then fell dormant after World War II. In its heyday there were more than 300 companies listed, including Brambles, Coal & Allied and Steggles. In 1972 it was incorporated and was active up until the 1980s. Efforts to re-activate the NSX, headed by Steven Pritchard, a Newcastle based accountant, began in 1996. The NSX was re-launched on September 8 1999 and officially opened on December 2000 when the base index (NSXAEI) was 100, currently just below the 200 mark. In September 2001 the holding company of the Newcastle Stock Exchange completed a $2.4 million capital raising. At that stage there were 2 companies listed on the Exchange. On January 13 2005 following the issue of 24 million shares at 50c each, the Newcastle Stock Exchange Ltd listed on the ASX. The 28 listed companies operating on the NSX Exchange on the day of listing has lifted to 30 with another 7 in process of floating. The Newcastle Stock Exchange seeks to establish itself as the premier market for small, medium or prominent regional businesses and sub exchanges like the Australian Wine Exchange. It seeks to provide a forum for emerging new businesses, as the AIM does in the UK, or the OTC and regional exchanges do in the US or Xetra in Germany. The NSX operates a trading engine licensed from the ASX based on SEATS called NETS. All securities listed on the NSX are fully transferable and registered with CHESS. Firms seeking to list on the Newcastle Stock Exchange need only 50 shareholders vs 400 for the ASX and a minimum market capitalisation of $500,000 vs $10 million for the ASX. The NSX is looking to take over the Bendigo Stock Exchange over the next three months – for 10 million NSX shares – transferring some of the companies trading on the BSX to the NSX but with the BSX continuing to operate separately as a forum for companies like the 84 Bendigo community bank franchises. In 2002 the NSX still had only two stocks on its board (Winpar Holdings and Pegmont Mines) and almost no turnover vs 30 listed stocks currently with another 7 in the process of floating while the BSX in 2001 had one listed stock (The Victorian Livestock Exchange) vs several community banks and others listed currently. Winpar Holdings, an investment company was one of the first two listings on the NSX in 2001 along with Pegmont Mines, a Queensland based mineral exploration company. The Australian Wine Exchange, with 13 affiliated companies, also joined the NSX in 2001. NSX Financials Last Traded price 99 cents Shares Issued 39.42 mln Partly paid shares 1.5 mln paid to 1 cent Options 2.925 mln 1.5 @50 cents, 0.22 @ 0.35 and 1.2 @ $1 Market Cap $41.4 mln Year ended June 30, Values in Millions$ INCOME 2004 2003 Op Revenue 0.3 0.1 Net (loss) (0.2) (0.5) BALANCE SHEET Proforma2004 Current Assets 12.0 Non Current Assets.. 0.5 Current Liabilities 0.1 Non Current Liabilities - Net Assets & Shareholders' Funds 12.4 Intangibles 0.5 Net Tangible Assets 11.9 Gearing (Net of Cash) % Nil NTA per share (cents) 30.3 Shares Issued (Millions) 39.42 Options Issued 2.9 Current Assets includes cash of $11.2 mln. Earning Capacity: Fee Structure: Upon Application Annual Brokers $5,000 $6,000 Advisers $2,500 $1,000 Companies: With market Cap upto $2 mln $5,000 $5,000 $10 mln $13,000 $7,500 $50 mln $25,000 $9,900 The NSX has issued no forecasts and will not pay a dividend in the first year. Directors: Raymond Whitten, chair, the principal of Whittens Solicitors. Is also chairman of Benitec Ltd. Was founder of Queensland Opals Ltd. Michael Cox, CEO, formerly a director of other public companies including Benitec and Queensland Opals Ltd. Mark Menzies, non exec director and company secretary. A senior partner in stockbroking firm Tonkin Scorer Menzies and a director of several private companies. Paul Seymour, non exec. Was formerly Director of Operations at Salomon Smith Barney Australia Ltd and formerly a member of the ASX’s National Adjudicatory Tribunal and the National Settlement Advisory Committee. Kevin Arthur Clarke, non exec. Long career within the heavy engineering industry in Australia and was CEO/MD of major Australian companies. Also a director of Uniserve Corporation Ltd and on the Trustee Board of NSF Superannuation Fund. Major shareholders Bell Potter Nominees Ltd 8.6 pct Guinness Peat Group Plc 8.3 pct Wilson HTM (WAM and WIT) together over 5 pct Steve Pritchard 2.79 pct (was founding CEO and one of the two founding brokers of the NSX). Rattoon Holdings 2.5 pct (Several others with over 2 pct) TRADING ON THE NSX Trading on the NSX is through its listed brokers. Brokers currently include : ABN Amro Morgans Ltd Bell Potter SecuritiesLtd Cameron Stockbrokers Ltd Citigroup Global Markets Australia Pty Ltd Findlay & Co Stockbrokers Ltd Macquarie Equities Ltd Martin Place Securities Pty Ltd Pritchard & Partners Pty Ltd (a founding broker) Reynolds & Company Pty Ltd Tonkin Scorer Menzies Westpac Broking Nominated Advisers: Nominated Advisers facilitate the listing process onto the NSX. Nominated advisers currently include: Allens Arthur Robinson Athans & Taylor Joondalup BKR Walker Wayland Services Pty Ltd Clayton Utz Cameron Stockbrokers Ltd Gilshenan and Luton Lawyers Hall Chadwick – Sydney Partnership Hopgood Ganim Lawyers Hunt & Hutn Lawyers McCullough Robertson Lawyers PricewaterhouseCoopers Securities Ltd Pritchard & Partners Corporate Finance Salmon Giles Pty Ltd Sparke Helmore Solicitors Taylor Collison Ltd Venture Axess Walker Herceg Lawyers Westpac Institutional Bank WHI Securities Pty Ltd Whittens Lawyers & Consultants Facilitators do not have a legal responsibility to NSX but consult to companies seeking access to the NSX. Facilitators currently: Sibco Australia Pty Ltd NSX LISTED COMPANIES: Florin Mining Investment Co Ltd (FMI) which invests in companies at the smaller end of the resources market, listed on Thursday February 3 after raising in excess of $1 million. The stock failed to trade on the first day, closing bid 18c/offer 25c. Also has series a and b options. *APO: Australian Property Systems Ltd Market cap: $12.51m Shares on issue: 25 million. Australian Property Systems Ltd (APSL) is based in Brisbane and provides property development management services utilising a proprietary Patented system under licence which substantially reduces the risks associated with property development. Traditionally strata title properties have been offered through real estate agents. APSL’s competitive edge over traditional property developers is that it delivers a defined return to the land owner, a defined return to the end purchaser and also a better quality building to the end purchaser. This is achieved by eliminating the development profit that would normally accrue to the developer of the project and the elimination of the incentive to try for extra profit by cutting corners during construction. APO recently traded at 50c *ARD: A-Cap Resources Ltd Market Cap: $3.26 mln A-Cap Resources Ltd was formerly a 100 pct owned subsidiary of Cardia Technologies Ltd formed to acquire Cardia’s mineral exploration projects and interests in Botswana and Australia. A-Cap Resources has advised Gallery Gold Ltd, that has earned a 60 per cent interest in the Jim’s Luck tenement in Botswana that it will maintain its 20 per cent interest. Mineral Holding Botswana Pty Ltd also has an interest. Several exploration leases held at Magagophate expired on June 30 2003 and are under renewed application, along with new applications for exploration ground. Cardia can earn up to 95 per cent on the current tenements. Cardia has a 40 pct interest in a joint venture with Gateway Mining Ltd in the Hodgkinson Basin in Northern Queensland where minimal expenditure has been made. Patrick John Volpe is executive chairman, directors include Desmond Kong-man Wan and Peter Pena. John Howden Wilson is company secretary. APO recently traded at 46c *BSZ: Betta Stores Ltd Market Cap: $18.73mln Betta Stores Ltd has retail subsidiaries including Buy Rite Stores Pty Ltd which operates 9 retail sores in Victoria and the Northern Territory as well as Boyd’s Betta Electrical Aspley, Morayfield Chandlers, Peninsula Betta Electrical and Kippa-Ring Chandlers in Queensland with a combined annual turnover of approximately $20 million and more than 95 years electrical retailing experience. Betta’s Buy Rite Stores Pty Ltd has entered into a j/v with three of its top performing Brisbane retailers with the j/v to be conducted through a new company, Buy Rite Stores (Northern) Pty Ltd which will focus on electric retailing within the greater Brisbane northern area. The latest venture will increase the turnover of BSL’s overall company owned retail businesses to $120million with significant growth opportunities ahead. BSZ recently traded at 38c *CCT: Concentrated Capital Ltd Market Cap: $6.35 mln Concentrated Capital Ltd is an oil and gas explorer, principally in Colorado and Illinois in the USA. The company raised $717,914 last year through a placement of shares. CCT has invested $599,809 in Middle East Petroleum Services Ltd (MEPS) that proposes to float on AIM in February/March 2005. MEPS raised $2.5 million by way of Convertible Notes and is seeking to raise a further 3 million pounds before the float which plans to raise a further 12 million pounds. Meanwhile the company wrote off $250,000 last year on the West Pine Ridge Project which was a costly failure. The investment is held at a written down value of $120,000. During the year the company relinquished its Pooled Development Fund licence. Chairman is Hamish Giles, directors are Christopher KG R owe and Peter Reilly. Peter Reilly and Richard Baker are company secretaries. CCT recently traded at 60c *CMA: Cosmedics Australia Ltd Market Cap: $3.15 mln Cosmedics Australia Ltd is a medical services company specialising in laser skin care treatments and related appearance medical services and general medical practice. Chairman and managing director is Dr Bronte Douglass. Other directors are Robin Mitchell, Ms Vicki Forge, Dr Koko Swe. Anil Sharma is company secretary. CMA recently traded at 15c. The options (CMAO) recently traded at .1c. *DRL: Diatreme Resources Ltd Market Cap: $8.07 mln Diatreme Resources is a Brisbane based mineral explorer. Projects include the Georgetown River gold project, the Numbool gold project, the Bellfield base metal project and the Warialda diamond project. Directors: Anthony J Fawdon Chairman and MD, David Hugh Hall and Lawrence James Litzow.. Company secretary Lawrence Litzow. DRL recently traded at 18c *FMI: Florin Mining Investment Co Ltd (FMI) Market cap: $1.3 mln. Florin Mining Investment Co Ltd listed on February 3 2005. It is an investment company focussed on the smaller end of the resources market. The stock failed to trade on the first day, closing bid 18c/offer 25c. Also has series A and B options. Florin’s investment portfolio will be managed by Cameron Stockbrokers Ltd. Directors: Victor Burley, Robert Cameron, Steven Pritchard and Daniel Di Stefano, director and Co Sec. *HDL: Hindmarsh Resources Ltd Market Cap: $1.51 mln Hindmarsh Resources Ltd is an investment company pursuing resource and energy opportunities in China and Australia and a property management opportunity in Australia. To date it has not identified an investment opportunity on terms that it believes warrants the investment of shareholder funds. The company will only invest once it is satisfied with the quality and potential returns of such investments. Chairman Francis Creagh H O’Connor, directors Robert Greenslade and Simon O’Loughlin. Co Sec is Peter Eric Cox. HDL recently traded at 21c, the options traded at 1c *HGD: Heritage Gold NZ Ltd Market Cap: $8.18 mln Heritage Gold NZ listed on both the Newcastle Stock Exchange and the ASX in 2002, later removed itself from the ASX Board but maintained its NSX listing. The company was incorporated in 1985. It currently explores for gold in the Coromandel region of New Zealand and for cobalt near Broken Hill in Australia. Chairman and MD is Peter Atkinson. Directors are David Williams, Geoffrey G Hill, Murray McKee and Ralph Stagg. Susan Sangster is company secretary. HGD recently traded at 8c. The warrants (HGDXHA) also traded at 8c. *IIC: Illuminator Investment Co Ltd Market Cap: $590,000. Illuminator Investment Co Ltd is an investment company, formed to invest principally in listed Australian securities and managed funds. Directors include Steven Pritchard, chair, Daniel Di Stefano, MD/CEO and Darval W Thomas. IIC recently traded at 47c. The options IICO traded at 6c *KSL: Klondike Source Ltd Market Cap: $1.01 mln Klondike Source Ltd was founded in May 1999 by Colin Thomas and Ray Soper to look for gold deposits in the Klondike Goldfield in the Yukon Territory of Canada. The company raised $1.841 million through the issue of 18.410 million shares and listed on the Newcastle Stock Exchange on March 19 2004. Klondike owns 100 per cent of the Klondike Goldfield exploration interests. There has been only limited exploration in the modern era, where over 12 million ozs of reported production was mined, the site of the last great gold rush of the 19th century in 1897-98. KSL says it is the first company to develop detailed regional structural and geological maps (up until 1996 explorers were working with basic maps drawn in 1905) and intends to test a hypotheses for flat lying deposits known elsewhere – including Sukhoi Log and Muruntau in Russia, Macraes in New Zealand and Morobe/Hidden Valley in PNG. KSL sees the Klondike as almost certainly the largest producing alluvial goldfield still lacking a major hard rock gold discovery. Directors include Patrick JD Elliot chair, Robert G Adamson MD and CEO (geologist), Raymond J Soper (mining engineer), Colin M Thomas (geologist) and technical director. Robert J Waring is company secretary. KSL recently traded at 5c *NMD: New Millenium Publications Ltd Market Cap: $2.45 mln New Millenium Publications Ltd produces and distributes hard copy publications for the tourist industry in Australia, New Zealand and Singapore. Directors include Nathan Nissen, chair, Daniel Nissen, MD and CEO and Robert Brett. Julian Millman is company secretary. NMD recently traded at 22c *OCT: Octanex NL Market Cap: $6.24 mln Octanex NL is an oil and gas explorer. It holds interests in two joint ventures with exploration activities located on the North West Shelf offshore from Western Australia: the Exmouth j/v and the Dampier j/v. Directors include EG Albers, chair, CR Hart, AP Armitage, GA Menzies and PJ Albers. David B Hill is Co Sec. OCT recently traded at 18c. The options OCTOB traded at 8c *PBS: Pioneer Permanent Building Society Ltd Market Cap: $30.66 million Pioneer Permanent Building Society Ltd provides a broad range of banking and lending products and services to meet the needs of individuals, households and small businesses. Since establishing in Mackay in 1968, it now has 56 outlets around Queensland. Chair is Clifford Flor, directors are Allan Richardson, MD and CEO, Other directors are Anthony P F Ghusn, Richard C Deguara, Vasiliki B Cimino. PBS recently traded at $3.02. PBSHA (Pioneer Income Notes) recently traded at $98. The Notes have a market cap of $7.55 mln. PBSHB Pioneer Term Subordinated Capital Notes recently traded at $1. The Notes have a market cap of $9.72 mln. *PMI: Pegmont Mines NL Market Cap: $3.89 mln Pegmont Mines NL was one of the first two companies to list on the NSX after it re-opened for business in 2001. The Pegmont lead-zinc deposit is located about 180 km south of Cloncurry connected by road and track and 25 km west of the Cannington silver-lead-zinc mine. The deposit is covered by 12 mining leases. Current inferred and indicated resource estimates total 8.3 million tonnes of 7.75 pct Pb, 3.46 pct Zn in the Main Lode and a further 0.3 million tonnes of 5.22 pct Pb, 3.77 pct Zn in the Gossan Lode. Exploration targets include the possibility of other mineralised lenses at depth below the Main Lode. The mineralised system extends over a total strike length of at least 8km of which only 2km has been drill tested in detail. Under an agreement signed in 2000, BHP can farm in to earn up to 70 per cent interest in each of three targets of the Pegmont deposit for a Cannington-style target beneath the currently defined lead-zinc resource. Directors are John M Armstrong, non exec chair, Malcolm A Mayger, MD, Michael D Leggo, non exec. Company Secretary is Christopher D Leslie. PMI recently traded at $1. *QPTXXI: Quantum Property Trust No 9 Market Cap: $6.58 mln Quantum Property Trust No 9 has an interest in a retail and commercial property at 155 Queen Street, Brisbane. The principal activity during the year was to invest funds in accordance with the provision of the Scheme Constitution. The Scheme invests in Managed Investments, Schemes that hold direct property, money market securities and fixed interest securities in accordance with the provisions of the constitution. Chairman is Geoffrey Hodgkinson. MD/CEO is Peter Gribble other directors are Jonathan Martin and James Maitland who is also Co Sec. QPTXXI recently traded at $1 *QPTXXK: Quantum Property Trust No 11 Market Cap: $3.12 mln Quantum Property Trust No 11 has an interest in a commercial office property at 370 Queen St, Brisbane. The principal activity of the Scheme during the year was to invest funds in accordance with the provisions of the Scheme Constitution (similar to Quantum Property Trust No 9, above). QPTXXK recently traded at $1 *RTN: Rattoon Holdings Ltd Market Cap: $23.51 mln Rattoon Holdings Ltd removed itself from the ASX in June 2004 to list on the Newcastle Stock Exchange. Rattoon has an investment in the Estate of the Late George Adams which in turn owns 0.5 per cent of the share capital of Tattersall’s Holdings Pty Ltd. Founded by George Adams in 1881, Tattersall’s has grown to become Australia’s largest privately owned entity. Rattoon is distributing its stake in Tattersall’s to its shareholders. Rattoon is continuing to seek investments in unlisted Australian entities that meet Rattoon’s investment criteria. (Said to then be re-listing as a niche investment company on the ASX). Michael Naphtali is chairman, Hugh Robertson, Gordon Moffatt and Hugh Henderson are directors. Matthew Jackson is company secretary. RTN recently traded at 62c *SUG: Sugar Terminals Ltd Market Cap: $64.22 mln Sugar Terminals Ltd was formed to represent the growers and millers who now own the seven bulk sugar terminals in Queensland, located at the ports of Cairns, Mourilyan, Lucinda, Townsville, Mackay, Bundaberg and Brisbane that can store up to two million tonnes of bulk raw sugar. Ownership of the terminals was originally vested in the Queensland Government through the respective Port Authorities and was managed by the Queensland Sugar Corporation. The terminals are now managed by Queensland Sugar Ltd under a leasing arrangement with Sugar Terminals Ltd. Directors are Michael Douglas Brown, chair, Richard Farquhar MD and CEO, Mark Day, John Grasso, Stephen Guazzo and Alfio Musumeci. Richard Farquhar is also company secretary. SUG recently traded at 27c *SWP: SwepDri Ltd Market Cap: $7.44 mln SwepDri International Pty Ltd was incorporated in 1993 and is a product distribution company to the ASEAN region, importing and distributing Swepco Bituminous Roofing and Drizoro Cementicious Waterproofing Products for Australasia. SwepDri Ltd is the sole Australian distributor for Drizoro Cementicious Waterproofing products. Directors are Hans Eberhand Graf, chairman, MD and CEO, Ms Anne Muriel Jensen, Tanvanth Singh Sandhu. Ms Jensen is company secretary. SWP recently traded at 20c *VBL: Vet Biotechnology Ltd Market Cap: $4.42 mln Vet Biotechnology Ltd, an Adelaide based company is a veterinary biotechnology product marketer. On December 232004 VBL announced it is negotiating an exclusive licence to commercialise the equine applications of the Sucrose Breath Test with Veterinary Research Synergies Pty Ltd, for diagnosis of equine gastrointestinal ulceration. Chairman is Douglas Peter Le Messurier. MD and CEO is Hugo LeMessurier. Other directors include Lusia Halina Guthrie, Paul Andrew Mariani and Paul Lawrence Kerr. Paul James Mansfield is company secretary. VBL recently traded at 40c. The options, VBLO traded at 10c. *WPH: Winpar Holdings Ltd Market Cap: $2.66 mln Winpar Holdings Ltd was, along with Pegmont Mines, one of the first two companies to list on the NSX in 2001. It is an investment, share trading and underwriting company. Chairman is John Mackenzie, managing director CEO is Robert Cameron. Other directors include Dr Gordon B Elkington, John David Honan and Steven Pritchard. WPH recently traded at $1 There are three boards listed which in turn form sub-indices for their member companies. *Agriculture and Agri Business Board *National Property Securities Exchange (QuantumXXI Property Trust No 9 and QPT XXK Quantum Property Trust No 11 are also listed on the National Property Securities Exchange) *The Cooperatives, Mutuals and Community Board ends