Mamba/Champion -- summary under Exchangeable Share Acquisitions

Overview

Under a proposed OBCA plan of arrangement, a wholly-owned Ontario subsidiary (Canco) of Mamba, an Australian corporation listed on the ASX, will acquire (directly, except as described below) all of the common shares of Champion, an Ontario TSX- and Frankfurt-listed corporation focusing on the exploration and development of iron deposits in Quebec and Labrador and implicitly valued on a fully-diluted basis at $Cdn.60M, in consideration for Mamba ordinary shares on the basis of an Exchange Ratio of 0.733333 (i.e., 11 Mamba ordinary shares for each 15 Champion common shares) - provided that Canadian-resident taxable shareholders who are not financial institutions may elect to receive their share consideration as exchangeable shares of Canco. The Mamba ordinary shares will be listed on the TSX.

Exchangeable shares

The exchangeable shares are retractable by their holders on a one-for one basis for Mamba shares, subject to Mamba exercising its "Retraction Call Right" to purchase the retracted shares in exchange for Mamba shares (which presumably would occur in order to avoid Part VI.1 tax to Canco). Mamba issues a special voting share to a voting trustee for the exchangeable holders, with the number of votes equaling the number of outstanding voting shares. On a date to be determined by the Canco directors which is between January 1, 2015 and the 3rd anniversary of issue of the exchangeable shares, Canco will redeem all such shares through the delivery of Mamba ordinary shares, subject to Mamba exercising its call right. In a Support Agreement, Mamba agrees not to pays dividends on Mamba ordinary shares without corresponding dividends being paid on exchangeable shares, and not to engage in potentially dilutive transactions without approval of the exchangeable holders.

Options/Warrants

As preliminary steps in the Plan of Arrangement, Champion warrants are amended to be exercisable for Mamba ordinary shares, and stock options are exchanged for options on Mamba shares, in each case based on the Exchange Ratio.

Canadian tax consequences

Champion considers the voting rights granted on the issue of the exchangeable shares, and the Mamba call rights, to have a nominal fair market value. Eligible Champion shareholders who wish a potential rollover under s. 85(1) (or 85(2) if a partnership) must provide a signed and completed election form (in duplicate) to Canco within 90 days of the effective date of the Arrangement. Retraction of the exchangeable shares, but not their acquisition by Mamba pursuant to the Retraction Call Right, will give rise to deemed dividend treatment. Standard taxable Canadian property disclosure.

Australian tax consequences

Champion shareholders who are not Australian residents and who do not hold their Champion (or exchangeable) shares as part of a business in Australia should not be subject to Australian tax in respect of the disposal of their Champion shares (and should not be subject to Australian tax in respect of distributions received on their exchangeable shares or on a disposal of those shares). Mamba shareholders who are not Australian residents and who do not hold their Mamba shares as part of a business in Australia should not be subject to Australian tax on a disposal of their Mamba shares provided that, in the case of ordinary income tax, any profit does not have an Australian source (a facts and circumstances test) and, in the case of capital gains tax, the holder and its associates do not at any time hold or have the right to acquire 10% or more of the voting rights in or rights to distribution of income or capital from Mamba.