Report of the Securities Commission on Aspects of the Affairs of Max Resources Limited

Appendix B

ANALYSIS OF INFORMATION RELATING TO SECURITY HOLDINGS

This appendix sets out the general basis for the Commission's conclusions in respect of the disclosure of relevant interests in Max's listed securities. The person named in Max's Annual Report as the registered holder of the shares as at 30 October 1997 is shown below in underlined italics, with the number of shares held by that person shown in brackets.

SBC Warburg NZ (7,553,400)

These shares were held by SBC Warburg on behalf of (amongst others) the following persons:

NZ Central Securities Depository (4,434,286)

The following persons had interests in this holding:

Gybson Pty Ltd (3,000,000)

Hendry Nominees Ltd a/c 486 (2,794,815)

This parcel of shares was held by Hendry Nominees on behalf of Eyres Reed Limited. Eyres Reed held this parcel on behalf of 34 persons. The following would appear to be of relevance to our inquiry.

Forbar Nominees Ltd (2,567,900)

Forbar Nominees is a nominee company owned by Forsyth Barr Limited. Forsyth Barr have informed us that they hold these shares for, and acquired these shares on the instructions of, Hartley Poynton Limited (sharebrokers), Perth. Hartley Poynton have informed us that the shares are held on behalf of Grosvenor (179,900), Gybson (225,000), Pine Valley (853,000), TPIC Ltd (1,000,000) and others (310,000).

Hampton Snow Limited (2,135,000)

Hampton Snow is incorporated in the Channel Islands. The shareholders of the company are Weighbrew Administration Limited and Weighbrew Trust Limited. The shareholders and directors of both these companies are William Stephen Cairns and Claire Carver Cairns.

Included in the documents provided to us by McLernon Group are documents and correspondence relating to the purchase by Max, in January 1997, of a fertilizer plant in Ohio from a US company, J.G. Turner Inc. These documents show that Hampton Snow had originally agreed to purchase the Ohio plant from J.G. Turner Inc in December 1996. It would appear that Hampton Snow entered into this agreement on behalf of WRS Pacific Limited (controlled by Briggs). It would also appear that in November 1996, at Briggs' and Lunt's request, Cairns of Hampton Snow wrote to J.G. Turner's New York lawyers advising that Hampton Snow had decided not to proceed with the acquisition of the Ohio plant but understood that another party (presumably, Max) was immediately ready to proceed with the purchase.

The McLernon files also contain correspondence between Briggs, Lunt and Cairns and others relating to the purchase of the Ohio plant by Hampton Snow, and subsequently Max, namely:

1. A copy of a letter from W S Cairns (director of Hampton Snow) to Lunt (managing director of WRS Pacific), dated 19 November 1996, enclosing a copy of an executed agreement for the sale of the Ohio plant. This letter states that the sale agreement was to be held in escrow by Lunt.

2. A copy of a joint letter from Briggs and Lunt to Cairns of Hampton Snow, dated 28 November 1996, instructing Cairns to write a letter (in the same terms as an attached draft letter) to J G Turner's New York lawyers, advising that Hampton Snow had decided not to proceed with the acquisition of the Ohio plant but understood that another party was immediately ready to proceed with the purchase.

3. A copy of a letter from Briggs, on behalf of WRS Pacific, dated 20 June 1997, to the directors of Max concerning the sale of assets of WRS Pacific to Max in consideration for 5,000,000 Max shares. The letter directs the Max shares to be issued as follows (although this was not the actual disposition):

   Interbac Australasia Limited	2,000,000
   Capital Resources Pty Limited	325,000
   Natural Resources Finance Pty Limited	540,000
   Hampton Snow Limited	2,135,000

4. A copy of a handwritten letter from Briggs to Lunt, dated 24 April 1997, under the name of Essex Properties Pty Limited, which states "If and when we receive any shares in Max Resources they will be distributed respective to our shareholdings".

5. A handwritten letter, dated 20 February 1998, from Lunt to McShane referring to an asset sale between Max and WRS Pacific. The letter states "despite the protest from Rob and I, Michael issued 4,500,000 shares (in Max) to Interbac Aust Ltd and Hampton Snow Ltd, companies owned by Peter Briggs and 500,000 to our Indonesian partners. To this day, neither Rob, Peter nor myself have received any shares. Peter's shares are held by Michael".

6. A letter, dated 6 March 1998, from Lunt to McShane stating that Lunt has documents signed by Briggs which demonstrate that "our" [Lunt and Robert Skidmore's] shares [in Max] were to come out of the purchase consideration [for WRS Pacific's assets] of 5,000,000. The letter states that the agreement was for the shares to be issued to WRS Pacific and then WRS Pacific would transfer in accordance with their respective shareholdings in WRS Pacific. "Despite protests from us Jeffrey, Michael and Peter arranged for the shares to be issued to Peter's [Brigg's] nominee companies Interbac Australia and Hampton Snow".

7. Briggs, in submissions to us, said that the shares were never issued to WRS Pacific but to various companies that had loaned $2m to WRS Pacific Limited to invest in the project. "Some of these companies were mine, ie Interbac Australasia Pty Limited, Natural Resources Finance Pty Limited and Capital Resources Limited, but Hampton Snow Limited and PT Eltro Machino I have never owned or controlled."

We believe the above correspondence gives reasonable grounds to suspect that Briggs had a relevant interest in the Max shares held by Hampton Snow. Briggs has told us he has "... never owned or controlled ..." Hampton Snow.

Interbac Australasia Pty Ltd (2,000,000)

Interbac Australasia Pty Ltd is incorporated in Australia. The records of the ASIC show that the shareholders of this company are Capital Resources Pty Ltd, Natural Resource Finance Pty Ltd, Peter Briggs and Varactor Holding BV. The records of the ASIC show that Peter Briggs and his wife, Robin Yvonne Briggs, are directors and shareholders of Capital Resources Pty Ltd and Natural Resource Finance Pty Ltd.

Fidelity Mutual Funds Management Inc (928,572)

On the basis of correspondence in our files (see pages 7 & 8) we believe there are reasonable grounds to suspect that Jeff Verheggen has a relevant interest in securities held by this entity. See also our comments related to the "European Fund" on page 3. Jeff Verheggen "disputes that he has a holding" in Fidelity Mutual.

Zurich Capital Management (758,715)

On the basis of correspondence in our files (see pages 7 & 8) we believe there are reasonable grounds to suspect that Jeff Verheggen has a relevant interest in securities held by this entity. See also our comments related to the "European Fund" on page 3. Jeff Verheggen "disputes that he has a holding" in Zurich Capital Management.

Hendry Nominees Ltd a/c 263 (681,143)

Held on behalf of Merrill Lynch (Australia) Limited. Persons interested in this holdings include Leeward Trading Limited ("Leeward") with 405,000 shares.

Leeward has a Channel Islands correspondence address. We are advised by the United Kingdom, Australian and Channel Islands regulatory authorities that they have no record of an entity of this name being incorporated in their respective jurisdictions. Notwithstanding this, the given address of Leeward is known to the Channel Islands authorities. It is the address of the Mercator Trust Company and Mr Richard Rowe. The information in our possession shows that in the past Richard Rowe has acted as Jeff Verheggen's broker in relation to transfers of Max shares. In this regard, we refer to our observations on page 3 of this Appendix in relation to European Fund.

Wilbur Nominees Ltd (511,700)

This parcel was held by Wilbur Nominees on behalf of Paterson Ord Minnett, Perth, (80,000) and Montagu Stock Brokers, Perth (431,700). We are informed by the ASIC that Paterson Ord Minnett held 80,000 shares on behalf of Grosvenor Securities Limited and that Montagu Stock Brokers held 381,700 shares on behalf of Grosvenor Securities Limited. As already noted in this report, Grosvenor Securities Limited appears to be associated with Verheggen.

Isseka Ltd (400,000)

This is a company owned by Paul Charles Blackman, a partner in the law firm of Clayton Utz, who has previously acted as legal adviser to Max. We assume that Isseka Pty Limited is the entity referred to in Max's Annual Report as Isseka Limited.

Note that this company also held 171,429 shares in Max via Hendry Nominees a/c 486 (see above) which gives it a total holding of 571,429 shares.

Further correspondence relevant to Jeff Verheggen's interests in Max's voting securities

We have the following documents indicating that Jeff Verheggen may have relevant interests in securities held by some of the companies named in the documents:

1. A letter, dated 2 March 1995, from Barry Panos under the letterhead of Transcontinental Resources Limited, to Jeff Verheggen. The letter relates to a transaction or transactions concerning a company called Inovax Limited. The letter states:

   "In the event that there is a loss on either of the two transactions, we shall be entitled to hold as a security (and to sell if we deem fit) 32,000,000 shares and options in Max Resources NL and we shall be entitled to recover from you 100% of such losses.

   We confirm your undertaking to provide us with executed blank off market transfers within the next 7 days

   Would you please sign the duplicate of this letter acknowledging your agreement to its contents."

   The letter is duly signed in acknowledgement by Jeff Verheggen.

2. A letter, dated June 6 1996, on the letterhead of Cole & Co, Lawyers and Consultants, addressed to Mr Tony Trevisan of Transcontinental Resources Group, referring to "Verheggen", and signed by "Simon Trevisan" to which was attached a draft letter of the same date (to be signed by Simon Trevisan) addressed to Jeffrey Verheggen, and copied to Josephus Verheggen, referring to the "Inovax Settlement". The draft letter included:

   "As you are aware settlement was due on 15 May 1996 but did not occur because of your and Pine Valley Enterprises Pty Ltd's inability to produce the required form of deed of release.
   ...
   "For settlement to occur, we will require a fully executed copy of the deed of release and authority to release the $100,000 currently held in trust. We will release all securities provided by Pine Valley Enterprises, yourself, Gybson Pty Ltd and your father at the settlement."

3. A letter, dated 21 March 1995, from Rowe of Mercator Trust Company to Panos which states "On Mr Verheggen's instructions we have completed 5 stock transfer forms for Max Resources. These will be dispatched to you on 22 March 1995".

4. A letter, dated 24 March 1995, from Rowe of Mercator Trust Company, to Panos. The letter contains no message, but has attached a number of Australian Standard Transfer Forms in respect of fully paid Max shares. The forms identify the sellers of the shares but not the purchasers. The details are:

   Sellers	No of shares
   Standard Investments Limited	5,300,000
   Zurich Capital Management Limited	5,500,000
   Fidelity Mutual Funds Management Inc	6,500,000
   Grosvenor Securities Limited	7,700,000
   European Fund Managers B.V.	7,000,000
   	32,000,000 shares

   McLernon Group has been told by Lunt that Rowe of the Mercator Trust Company, was Verheggen's "London broker" through whom Verheggen controlled and managed his off-shore companies and trusts. McLernon Group advises that Lunt has personally met and had dealings with Rowe.

5. A letter, dated 1 May 1995, from Deloittes to Panos. This advises Panos that, further to his facsimile request, "blocks" had been placed on certain securities and would remain in force until further instructions had been received from Panos. The blocks relate to securities in Laverton Gold NL ("Laverton") held by Gybson Pty Limited, Pine Valley Enterprises Limited and Ann Marie Verheggen. These persons are all associated with Verheggen.

6. A letter, dated 11 May 1995, from Jeff Verheggen to Eyres Reed advising that Eyres Reed holds parcels of shares for Max in Laverton. The letter requests that both the holdings be put on a share certificate and to telephone Mr Barry Panos when these certificates were available.

7. A letter, dated 7 August 1995, from Paul Tottle & Associates, Barristers & Solicitors, of Perth, to Panos, as company secretary of Laverton, headed "J Verheggen-Gybson Pty Ltd". This stated that in March 1995 Jeff Verheggen gave Marina Village Fremantle Pty Limited ("Marina") scrip for 98,000 shares in Laverton as security for money owed by Jeff Verheggen to Marina. The letter states "During our conversation you indicated that you were aware of the transfer for 6 or 7 days and that you tried to obtain instructions from Mr Verheggen with no success."

8. A letter, dated 8 August 1995, from Louise Bridger of Deloittes to Barry Panos, of Laverton, attaching a copy of a letter from Paul Tottle and Associates, solicitors, to Deloittes, dated the same day, concerning an off-market transfer for Gybson Pty Limited, and asking for advice as to what action should be taken. The Paul Tottle letter states that Tottle acted for Marina. Presented with the Tottle letter were share certificates for 98,000 certificates in Laverton and a transfer form of those shares from Gybson Pty Ltd to Marina. The Tottle letter stated that Marina was entitled to and demanded immediate transfer of the scrip into its name.

On the basis of this correspondence, it appears that in 1995 Jeff Verheggen entered into certain transactions with Transcontinental Resources Limited (Panos) and Marina. It appears that, for the purposes of these transactions, shares in Max and Laverton held by Jeff Verheggen and entities associated with him were used as collateral to secure the performance of Jeff Verheggen's obligations. It appears that the Max shares used as collateral by Jeff Verheggen were held by:

Standard Investments Limited
Zurich Capital Management Limited
Fidelity Mutual Funds Management Inc
Grosvenor Securities Limited
European Fund Managers BV.

It appears that Jeff Verheggen had arranged with Transcontinental Resources Limited (Panos) for five blank off-market transfer forms in the names of the above entities as sellers of Max shares (the names of the purchasers to be filled in) to be provided to Panos as part of Verheggen's undertaking to Transcontinental Resources Limited. It also appears that Jeff Verheggen gave Rowe of Mercator Trust Limited instructions in relation to the provision of these five blank off-market transfer forms to Panos.

On the basis of the above, we believe there are reasonable grounds to suspect that Jeff Verheggen has a relevant interest in securities held by Standard Investments Limited, Zurich Capital Management Limited, Fidelity Mutual Funds Management Inc, European Fund Managers BV and Grosvenor Securities Limited. Jeff Verheggen "disputes that he has holdings" in these entities.

Elements of the Inovax settlement, referred to in paragraphs (a) and (b), appear to indicate that Jeff Verheggen had the ability to control the disposition of securities held in the name of Pine Valley Enterprises Pty Limited, a company owned by Verheggen Snr. On this basis we believe there are reasonable grounds to suspect that Jeff Verheggen has a relevant interest in other share holdings in the name of Pine Valley. Jeff Verheggen "disputes he has a holding" in Pine Valley. Verheggen Snr "categorically denies" that Jeff Verheggen has an interest in shares held by Pine Valley.