ASX AND MEDIA ANNOUNCEMENT 9 April 2014 THE SOLÉO ORGANIC SUNSCREEN BRAND KEY POINTS Minrex Resources NL to acquire 100% of Skin Elements Pty Ltd for $8.4M Skin is an existing operating business based in Australia with a strong portfolio of all natural skincare products with sales in Australia and internationally Proposed New Board and Management Team Subject to due diligence and Minrex shareholder and regulatory approvals ACQUSITION OF SKIN ELEMENTS Minrex Resources NL (Minrex or the Company) is pleased to advise that it has entered into a conditional agreement (Agreement) to acquire 100% of the issued share capital of Skin Elements Pty Ltd (Skin) (Transaction). Minrex has been granted a 20 business day exclusivity period in which it is to complete its due diligence. Once Minrex notifies Skin in writing of the satisfactory completion of its due diligence, Minrex and Skin will formalise the Agreement in a Share Purchase Agreement (SPA). Skin has obtained its requisite board and shareholder approval for the Transaction. Skin has developed a strong proprietary intellectual property portfolio of all natural and organic skin care products. Its Soléo Organics all natural Sunscreen has regulatory approvals in place and is ready for full scale market launch. It is proposed that following completion of the Transaction the Company will focus on the development and expansion of the natural skincare product range. 1
OVERVIEW OF SKIN ELEMENTS Over an 8 year period, Skin has developed a strong intellectual property portfolio of 100% all natural & organic skin care products including Soléo Organics Sunscreen and skincare range, and Elizabeth Jane Natural Cosmetics Skin has spent over $8 million on a research and development program to date Soléo Organics Sunscreen is 100% natural and has already won three major international awards Sales to date of natural sunscreen and skincare product range have exceeded $3 million over the pre-market release stage with distributors in more than 15 countries Soléo Organics Sunscreen has key regulatory approvals in place with the Therapeutic Goods Administration (TGA), Food and Drug Administration (FDA), Health Canada and Japanese Ministry of Health Elizabeth Jane natural cosmetic products have been pre-market launched and test marketed and is planned to be further developed for future release. Experienced management and technical team responsible for the development of Skins product range. Further information on Skin products is available from the website www.soleoorganics.com MATERIAL TERMS OF THE TRANSACTION Upon execution of the SPA and Minrex giving notice of satisfaction of all remaining Conditions, Minrex will pay and assume existing liabilities of an aggregate amount equal to $8,400,000 comprising the following: $7,400,000 satisfied by the issue of 46,250,000 fully paid ordinary shares in Minrex (Shares); and $1,000,000 of assumed current liabilities (Creditors). Skin shareholders have given an undertaking that the Creditors will participate in the Capital Raising of an amount equal to $800,000. In addition, Skin shareholders will be issued with 25 million 3 year call options in Minrex, exercisable at 20 cents. The Transaction is subject to the following conditions (Conditions):
Satisfactory completion of due diligence; Minrex obtain all necessary regulatory, Shareholder approvals pursuant to the ASX Listing Rules, Corporations Act 2001 (Cth) or any other law to allow Minrex to lawfully complete the Transaction, convert Minrex from a no liability company to a company limited by shares, complete the Capital Raising, and satisfy all other requirements of the ASX for the reinstatement to official quotation of Minrex s Shares on the ASX; Consolidation of the current 17,500,000 partly paid (to 1 cent) shares in Minrex into 875,000 Shares, and then issue of 17,500,000 3 year, call options exercisable at 20 cents in the public company limited by shares; A minimum capital raising of $1,500,000 in fresh funds (Capital Raising); and Minrex receiving written confirmation from the ASX that it will reinstate Minrex s Shares to official quotation on ASX on conditions satisfactory to Minrex. In addition, Minrex will: Appoint Mr Peter Malone as Non-Executive Chairman and Mr Luke Martino as a Non- Executive Director; and Messrs Durack and Bome will remain on the board of Minrex as Non-Executive Directors, such that the Board post Transaction will consist of four Board members (two from Skin and two from Minrex). Mr Durack will remain as Company Secretary. The proceeds from the Capital Raising will be used for working capital, and the development and expansion of the natural skincare product range. On completion of the Transaction, Minrex proposes to change its name to Skin Elements Limited. The Transaction with Skin constitutes a change to the nature and scale of Minrex s activities. The Company will therefore need to re-comply with Chapters 1 and 2 of the ASX Listing Rules. As part of satisfying its requirements to re-comply, the Transaction must be approved by Minrex shareholders (Shareholders) at a general meeting (Meeting). Shareholders will receive a notice of meeting setting out various resolutions and further information relating to the proposed Transaction (Notice of Meeting). A detailed explanatory statement will accompany the Notice of Meeting and will be distributed to all Shareholders prior to the Meeting. The Executive Director of Minrex, Mr Simon Durack, said that the Board is delighted with the proposed Transaction. Skin has the potential to fulfil growing consumer demand for all natural
skin and health care products. The Board believes Skin s range of all natural ingredients providing uncompromised care effectiveness compared to conventional skin care products based on synthetic chemical ingredients will allow the company to become a relevant player in an increasingly health conscious consumer market. The acquisition of Skin offers great potential to deliver significant shareholder value from greater international market penetration and new product development. The Board is looking forward to concluding its due diligence and seeking shareholder support in due course to approve the Transaction. PROPOSED NEW DIRECTORS & MANAGEMENT TEAM Following completion of the Transaction, Minrex will appoint the following: Mr Peter Malone (Executive Chairman) 30+ years experience Proven track record in managing technology development programs Previously developed a wide range of technology programs, from idea stage to reality Responsible for strategic direction of Skin Elements Experienced in global financial markets & responsible for raising AU$100m+ for technology development companies Previous CEO to listed companies with market cap > $1bn Masters degree from UWA & has taught & consulted in Australia, USA, Europe & Asia in business and management. Mr Luke Martino (Non-Executive Director) 20+ years experience at partner and board level with major accounting firms. Proven director of several private and public companies. Has an entrepreneurial passion for nurturing business and specialises in corporate & growth consulting. Significant experience and established credibility in the mining& resources, property, biotechnology and hospitality industries. Non-executive Director of Pan Asia Corporation Limited (ASX: PZC), alternate Director of Central Asia Resources Limited (ASX: CVR), as well as the Company Secretary for South East Asia Resources Limited (ASX:SXI) and Blackgold International Holdings Limited (ASX: BGG). Fellow of the Institute of Chartered Accountants in Australia and the Australian Institute of Company Directors.
Mr Leo Fung (Chief Technical Officer) Founder of the Soleo skin care IP and extensive natural products background. 15 years experience in running successful companies Experience in managing research and development projects and commercialisation of technologies Degree in Naturopathy / Applied Science. Key role to identify potential areas for market growth & develop new products to meet demand. Manages team of chemists & production staff along with cutting edge research & development team. Significant experience successfully dealing with government regulatory bodies such as TGA, FDA & Health Canada. Experience includes development, sourcing unique natural ingredients & packaging, and dealing with manufacturing, and Quality Assurance areas. Mr Craig Piercy (Financial Manager) 23 years experience in corporate, accounting & finance. Worked extensively in development of technology ventures into successful commercial businesses. Chartered Accountant with proven experience in: o Corporate structuring o Budgeting, accounting systems & reporting o Technology protection & valuation o Equity raising & structured financing o Grant & government assistance programs Previously responsible for listing & ongoing management of public companies in Australia & USA. INDICATIVE CAPITAL STRUCTURE The table below details the Company s current capital structure and its proposed indicative capital structure after completion of the Transaction*. Current Post-acquisition* Shares on issue 17,500,001 64,625,001 Partly Paid Shares on issue 17,500,000 - Options on issue - 42,500,000^ *Excludes any proposed capital raisings and any share consolidations ^3 year call options exercisable at 20 cents per share
INDICATIVE TIMETABLE An indicative timetable for the completion of the Transaction set out below: Event *Date Last date for satisfaction of due diligence 8 May 2014 Notice of Meeting sent to shareholders 14 May 2014 Minrex shareholder meeting and suspension of Minrex s securities from trading 14 June 2014 Lodgement of Prospectus with ASIC 30 June 2014 Prospectus Closes 31 July 2014 Completion of Transaction 8 August 2014 Anticipated date the suspension of trading is lifted and Minrex securities commence trading again on the ASX 10 August 2014 *These dates are indicative only and subject to change ABOUT SKIN Skin Elements Pty Ltd is an Australian registered private company with a program to commercialise a range of 100% natural organic skin care products including the Soléo Organics sunscreen and the Elizabeth Jane Natural Cosmetics brand to local and international markets. Soléo Organics is a revolutionary sunscreen using only natural ingredients, formulated with special plant extracts and naturally occurring minerals. The Soléo Organics 100% natural and organic sunscreen has won three major awards including rated number one by the prestigious Environmental Working Group out of over 1,700 sunscreen brands in North America. Skin Elements commenced its stage 3 development of the Soleo Organics natural sunscreen in 2007 in Australia. Commencing with TGA approval in Australia, followed by FDA (USA), Health Canada (Canada) and the Ministry of Health (Japan) saw the test marketing phase begin. This program completed in 2013. The Company is well positioned with distributors in over 15 countries with key regulatory approvals in place and further approvals planned.
The Soléo Organics sunscreen products are manufactured in Melbourne, Victoria, which is conveniently located for raw ingredient & packaging supply as well as distribution nationally. Our production team works on a contract basis in brand new production facilities. The TGA accredited factory has capacity to manufacture cream, lotions and serums and fill tubes, bottles and jars with automated production lines capable of millions of units of sunscreen and other products per year. The Transaction is planned to provide Skin with the necessary working capital to undertake its business development program including the commercialisation of its natural and organic skin care ranges. The Company mission is to continue the commercial expansion of the product ranges in local and international key markets. SKIN CARE INDUSTRY The need for skin care The latter half of the 20th Century has seen the widespread documentation and acceptance of the relationship between ultraviolet (UV) radiation, the environment and skin damage. Unprotected exposure to sunlight is a major cause of skin cancer, wrinkles, skin blemishes, inflammation, sunburn and immune suppression. This knowledge has also seen a significant increase in the use of sunscreen and sun care products. In Australia an estimated 74% of the population regularly use sunscreen, and this trend is being followed in the USA and Europe. These products have traditionally used a range of synthetic chemical combinations to block or absorb UV radiation along with chemical preservatives in the formulation. Evolution of natural skin care There is a fast growing group of consumers now seeking natural and organic skincare products and sunscreen for everyday usage. Establishing Skin Elements Skin Elements Pty Ltd was established to formulate, develop, produce, and market internationally a range of natural skin care products. Skin Element s Soléo sunscreen was designed to meet the performance of the mass market sunscreens while only using plant extracts and naturally occurring minerals. These formulas incorporate advanced micronised active ingredients to achieve broad spectrum UV protection, natural oils to achieve water resistance and moisturize the skin and natural stabilizers and preservatives to ensure product acceptance by the wider consumer population.
Competitive marketplace According to an international personal care products report, sun care is expected to contribute the highest growth. Natural skin care products are now considered one of the most important factors in safeguarding skin from the hazards of the environment particularly ultraviolet radiation (sun) and pollution. Development of Soleo 2007-08 Regulatory approvals by Australian TGA Formulation completed for laboratory manufacturing scale up to commence 2009 FDA approval & Initial market testing of final Soléo Organics sunscreen (Aus & NZ) 2010 Awarded #1 sunscreen by division of Washington Post (Sprig.com) USA market testing begins Awarded #1 best sunscreen in two other major awards out of 1700+ brands (EWG) and ELLE Magazine Regulatory approvals granted by Japanese Ministry of Health and market testing begins Regulatory approvals granted by Health Canada and market testing begins 2011 International market testing begins in Singapore, Hong Kong, Indonesia, Portugal and United Kingdom Distributors (Aus, UK, Singapore & others) -pre-launch sales 2012-13 More pre-release market testing through distributors across Australia and Internationally For all enquiries, please contact: Simon Durack Executive Director Minrex Resources NL Peter Malone CEO Skin Elements Pty Ltd Ph: (08) 9486 8806 Ph: (08) 9486 4792