HOT CHILI LIMITED ACN 130 955 725

BEFORE DOWNLOADING, PRINTING OR VIEWING THE PROSPECTUS, YOU MUST CAREFULLY READ THE TERMS SET OUT IN THIS NOTICE

Important information

This is an important document that should be read in its entirety.  If you do not understand it or are in doubt as to the course you should follow, you should consult your stockbroker, accountant or professional adviser. 

Hot Chili Limited ACN 130 955 725 (Company) has lodged a Replacement Prospectus dated 23 March 2010 (Prospectus) with the Australian Securities and Investments Commission (ASIC) for an offer of 30,000,000 shares at an issue price of 20 cents each to raise $6,000,000 with provisions to accept over-subscription for up to a further 10,000,000 shares to raise up to a further $2,000,000, to raise a maximum of $8,000,000 (Offer).

Lodgement of Prospectus with ASIC

The paper form of the Prospectus has been lodged with ASIC.

Application pursuant to Application Form only

An Application for Shares (as defined in the Prospectus) offered under the Prospectus can only be made by completing the Application Form attached to or accompanying the Prospectus and then lodging the Application Form and the Application Monies in accordance with the instructions set out in the Prospectus and the Application Form.  

Warnings

The Corporations Act prohibits any person from passing onto another person an Application Form unless it is attached to a hard copy of the Prospectus or it accompanies the complete and unaltered version of the Prospectus (whether in paper or electronic form).  The Company will not accept a completed Application Form if it has reason to believe that you have not received a complete and unaltered copy of the Prospectus or if it has reason to believe that Application Form has been altered or tampered with in any way.  If you are accessing an electronic copy of the Prospectus, please ensure that you have received the entire Prospectus accompanied by the Application Form.  If not, please contact the Company. 

For legal reasons, the information and electronic Prospectus provided by this website is only available to persons accessing this website from within AUSTRALIA ONLY.  If you are accessing this website from anywhere outside Australia, please DO NOT download the electronic Prospectus accessible through this website.

This Prospectus does not constitute an offer of securities in any jurisdiction where, or to any person to whom, it would not be lawful to issue the Prospectus or make the offer.  It is the responsibility of any applicant outside Australia to ensure compliance with all laws of any country relevant to their applications, and any such applicant should consult their professional advisers as to whether any government or other consents are required, or whether any formalities need to be observed to enable them to apply for and be allotted any securities.

No action has been taken to register, qualify or otherwise permit the offer in any jurisdiction outside Australia.

No person is authorised to give information or to make any representation in relation to the Offer which is not contained in the Prospectus and such information may not be relied upon as having been authorised by the directors of the Company.  D.J. Carmichael Pty Limited and Carmichael Corporate Pty Ltd (jointly referred to as DJ Carmichael) are the joint lead managers, sponsoring brokers and corporate advisers to the Company.  Neither DJ Carmichael nor any of its officers accept any liability or responsibility in respect of the Prospectus or the Offer.

Acknowledgements

By accessing the Prospectus (by clicking on the link below) you acknowledge that you:

• have read, understood and agreed to the terms and conditions set out above; and
• are an Australian resident and that you are downloading the Prospectus in Australia.

You have read, understood and agreed to the above terms and conditions, and acknowledge that you are an Australian resident downloading the Prospectus in Australia?

Hot Chili Limited

Prospectus

5. Independent Geologist's Report

 

4 BOARD, MANAGEMENT AND CORPORATE GOVERNANCE 4.5 CORPORATE GOVERNANCE – EXCEPTIONS TO ASX RECOMMENDATIONS THE COMPANY SETS OUT BELOW ITS “IF NOT WHY NOT” REPORT IN RELATION TO THOSE MATTERS OF CORPORATE GOVERNANCE WHERE THE COMPANY’S PRACTICE DEPARTS FROM THE ASX CORPORATE GOVERNANCE COUNCIL’S CORPORATE GOVERNANCE PRINCIPLES AND RECOMMENDATIONS (2ND EDITION) (RECOMMENDATIONS) TO THE EXTENT THAT THEY ARE CURRENTLY APPLICABLE TO THE COMPANY. RECOMMENDATIONS 1.2 AND 2.5 (PROCESS FOR EVALUATION) THE COMPANY DOES NOT HAVE IN PLACE A FORMAL PROCESS FOR EVALUATION OF THE BOARD, ITS COMMITTEES, INDIVIDUAL DIRECTORS AND KEY EXECUTIVES. THE SMALL SIZE OF THE BOARD AND THE NATURE OF THE COMPANY’S ACTIVITIES MAKE THE ESTABLISHMENT OF A FORMAL PERFORMANCE EVALUATION STRATEGY UNNECESSARY. PERFORMANCE EVALUATION IS A DISCRETIONARY MATTER FOR CONSIDERATION BY THE ENTIRE BOARD AND, IN THE NORMAL COURSE OF EVENTS, THE BOARD WILL REVIEW PERFORMANCE OF THE MANAGEMENT, DIRECTORS AND THE BOARD AS A WHOLE. RECOMMENDATION 2.1 (INDEPENDENT DIRECTORS) AT PRESENT, THE BOARD DOES NOT COMPRISE A MAJORITY OF “INDEPENDENT DIRECTORS”. THERE ARE NO DIRECTORS WHO SATISFY THE CRITERIA FOR INDEPENDENCE AS OUTLINED IN RECOMMENDATION 2.1. HOWEVER, GIVEN THE SIZE AND SCOPE OF THE COMPANY’S OPERATIONS, THE BOARD CONSIDERS THAT IT HAS THE RELEVANT EXPERIENCE IN THE EXPLORATION AND MINING INDUSTRY, AND IS APPROPRIATELY STRUCTURED, TO DISCHARGE ITS DUTIES IN A MANNER THAT IS IN THE BEST INTERESTS OF THE COMPANY AND ITS SHAREHOLDERS FROM BOTH A LONG-TERM STRATEGIC AND OPERATIONAL PERSPECTIVE. THE BOARD INTENDS TO APPOINT FURTHER INDEPENDENT NON-EXECUTIVE DIRECTORS AS SUITABLY QUALIFIED CANDIDATES ARE IDENTIFIED, AND THE SIZE AND SCALE OF THE COMPANY’S OPERATIONS DETERMINE. RECOMMENDATION 2.2 (INDEPENDENT CHAIRMAN) THE CHAIRMAN OF THE COMPANY, MR MURRAY BLACK, IS NOT AN INDEPENDENT DIRECTOR IN ACCORDANCE WITH THE CRITERIA FOR INDEPENDENCE AS OUTLINED IN RECOMMENDATION 2.1. HOWEVER, GIVEN THE SIZE AND SCOPE OF THE COMPANY’S OPERATIONS, THE BOARD CONSIDERS THAT MR BLACK HAS THE RELEVANT EXPERIENCE IN THE EXPLORATION AND MINING INDUSTRY AND HIS APPOINTMENT AS CHAIRMAN IS IN THE BEST INTERESTS OF THE COMPANY AND ITS SHAREHOLDERS. RECOMMENDATION 2.4 (NOMINATION COMMITTEE) THERE IS NO NOMINATION COMMITTEE. THE FULL BOARD, WHICH COMPRISES TWO NON-EXECUTIVE DIRECTORS AND ONE EXECUTIVE DIRECTOR, CONSIDERS THE MATTERS AND ISSUES THAT WOULD FALL TO THE NOMINATION COMMITTEE. THE BOARD CONSIDERS THAT, GIVEN THE CURRENT SIZE AND SCOPE OF THE COMPANY’S OPERATIONS, NO EFFICIENCIES OR OTHER BENEFITS WOULD BE GAINED BY ESTABLISHING A SEPARATE NOMINATION COMMITTEE. THE BOARD INTENDS TO RECONSIDER THE REQUIREMENT FOR, AND BENEFITS OF, A SEPARATE NOMINATION COMMITTEE AS THE COMPANY’S OPERATIONS GROW AND EVOLVE. RECOMMENDATIONS 4.1, 4.2, 4.3 AND 4.4 (AUDIT COMMITTEE) THERE IS NO AUDIT COMMITTEE. THE ROLE OF THE AUDIT COMMITTEE IS UNDERTAKEN BY THE FULL BOARD, WHICH COMPRISES TWO NON-EXECUTIVE DIRECTORS AND ONE EXECUTIVE DIRECTOR. THE BOARD CONSIDERS THAT, GIVEN THE CURRENT SIZE AND SCOPE OF THE COMPANY’S OPERATIONS AND THAT ONLY ONE DIRECTOR HOLDS AN EXECUTIVE POSITION IN THE COMPANY, NO EFFICIENCIES OR OTHER BENEFITS WOULD BE GAINED BY ESTABLISHING A SEPARATE AUDIT COMMITTEE AT PRESENT. AS THE COMPANY’S OPERATIONS GROW AND EVOLVE, THE BOARD WILL RECONSIDER THE APPROPRIATENESS OF FORMING A SEPARATE AUDIT COMMITTEE. RECOMMENDATION 8.1 (REMUNERATION COMMITTEE) THE COMPANY HAS NOT ESTABLISHED A SEPARATE REMUNERATION COMMITTEE AND DOES NOT HAVE A FORMAL REMUNERATION POLICY IN PLACE. THE ROLE OF THE REMUNERATION COMMITTEE IS UNDERTAKEN BY THE FULL BOARD. THE BOARD CONSIDERS THAT, GIVEN ITS CURRENT SIZE AND THAT ONLY ONE DIRECTOR HOLDS AN EXECUTIVE POSITION IN THE COMPANY, NO EFFICIENCIES OR OTHER BENEFITS WOULD BE GAINED BY ESTABLISHING A SEPARATE REMUNERATION COMMITTEE. AS THE COMPANY’S OPERATIONS GROW AND EVOLVE, THE BOARD WILL RECONSIDER THE APPROPRIATENESS OF FORMING A SEPARATE REMUNERATION COMMITTEE. 26

27 HOT CHILI LIMITED PROSPECTUS

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