REPORT BY ADMINISTRATORS 11 APRIL 2016 Queensland Nickel Pty Ltd (Administrators Appointed) ACN 009 842 068 Pursuant to Section 439A of the Corporations Act REPORT BY ADMINISTRATORS Queensland Nickel Pty Ltd (Administrators Appointed) Table of Contents 1. Introduction .............................................................................................................................................................. 4 2. Executive Summary .................................................................................................................................................. 4 2.1 Glossary ............................................................................................................................................................5 2.2 Disclaimer ........................................................................................................................................................5 3. Appointment of Administrators ................................................................................................................................ 6 3.1 Object of the Administration ............................................................................................................................6 3.2 Prior Involvement with the Company ..............................................................................................................6 3.3 First Meeting of Creditors ................................................................................................................................7 3.4 Second Meeting of Creditors ...........................................................................................................................7 4. Progress of Administration ....................................................................................................................................... 9 4.1 Structure of Appointment ................................................................................................................................9 4.2 Indemnities and Securities ..............................................................................................................................9 4.3 Summary of Trading by Administrators ........................................................................................................ 10 4.4 Employees ..................................................................................................................................................... 13 4.5 Occupational Health & Safety and Environmental Issues .......................................................................... 14 4.6 Administrators Funding Requests ................................................................................................................ 16 4.7 Change of Refinery Operational Manager ................................................................................................... 17 4.8 Sale of Assets ................................................................................................................................................ 18 4.9 Committee of Creditors Meetings ................................................................................................................ 19 4.10 Overview of Investigations ............................................................................................................................ 20 4.11 Joint Venture Call Notice .............................................................................................................................. 21 4.12 Pre-Existing Legal Actions ............................................................................................................................. 21 4.13 Receipts and Payments of the Administration ............................................................................................ 22 5. Company Background ........................................................................................................................................... 22 5.1 History of the Company ................................................................................................................................ 22 5.2 Personal Property Security Registrations .................................................................................................... 22 5.3 Director and Officers ..................................................................................................................................... 22 5.4 Related entities ............................................................................................................................................. 24 5.5 Events leading up to Administration ............................................................................................................ 25 5.6 Report as to Affairs ....................................................................................................................................... 25 5.7 Historical Financial Performance ................................................................................................................. 26 5.8 Searches........................................................................................................................................................ 27 6. Investigations ........................................................................................................................................................ 27 6.1 Administrators’ Investigations ...................................................................................................................... 27 6.2 Overview of Administrators’ Investigations .................................................................................................. 27 6.3 Approach to Preliminary Investigations ....................................................................................................... 27 6.4 Offences under the Act by Directors ............................................................................................................ 28 6.5 Auditors’ Conduct .......................................................................................................................................... 31 6.6 Potential Recovery Actions Available to a Liquidator .................................................................................. 32 2 • FTI Consulting, LLP. CRITICAL THINKING AT THE CRITICAL TIME ™ REPORT BY ADMINISTRATORS Queensland Nickel Pty Ltd (Administrators Appointed) 6.7 Director’s Personal Financial Position ......................................................................................................... 44 6.8 Limitation of investigations .......................................................................................................................... 45 6.9 Offences in relation to the Company – Section 438D ................................................................................ 45 7. Alternatives available to creditors ......................................................................................................................... 45 7.1 Explanation of alternatives available to creditors ....................................................................................... 45 7.2 Recommendation .......................................................................................................................................... 46 7.3 Reasons for recommendation ...................................................................................................................... 46 7.4 Financial Analysis of Alternatives ................................................................................................................. 46 8. Fair Entitlements Guarantee Scheme ................................................................................................................... 53 9. Estimated Return to Creditors .............................................................................................................................. 54 10. Remuneration of Administrators ........................................................................................................................... 54 11. Further information ............................................................................................................................................... 55 Annexure 1 – Glossary of Terms ....................................................................................................................................... 56 Annexure 2 – Summary of Receipts and Payments for the period of 18 January 2016 to 31 March 2016 .................. 60 Annexure 3 – Personal Property Security Registrations ................................................................................................... 62 Annexure 4 – Organisational Chart ................................................................................................................................... 68 Annexure 5 – Queensland Nickel Group Financial Report ............................................................................................... 69 Annexure 6 – Analysis of Historical Financial Performance ............................................................................................. 89 Annexure 7 – Property Search Results ............................................................................................................................. 93 Annexure 8 – Summary of Political Party Donations