Mr. Alan Phillips reports

MACARTHUR MINERALS RECEIVES A$1.88M IN LEGAL COST RECOVERY

Macarthur Minerals Ltd. has recovered costs of:

• $1,428,370 (Australian) in relation to financing costs expended by the company in the action by the liquidator of First Strategic Development Corp. Ltd.;
• $451,515 (Australian) in relation to the legal proceedings with LPD Holdings (Australia) Pty. Ltd.

In summary, the company has been paid a total of $1,879,885 (Australian) in recovery of costs.

First Strategic Development (in liquidation)

The decision on the action by the liquidator of FSDC against the directors of FSDC for insolvent trading in the Queensland Supreme Court was handed down on Friday, April 4, 2014. The court ordered that:

1. The first and third defendants, Sing Chuck Charles Chan and Wai Tak (Edward) Kwok, pay to FSDC the sum of $1,349,131 (Australian);
2. The second defendant, Wai Lap Victor Chan, pay to FSDC the sum of $1,322,867 (Australian).

Legal costs were also awarded against the first, second and third defendant directors on an indemnity basis, which are expected to be in excess of $500,000.

The defendants appealed against the judgment on May 2, 2014. The Queensland Court of Appeal heard the appeal on Sept. 25, 2014, and handed down its decision on March 6, 2015, dismissing the defendants' appeal and ordering the defendants to pay the costs of the appeal.

In June, 2014, substantial funds were paid by the defendants into the liquidator's solicitor's trust account as part of an agreed stay on enforcement of the judgment. As the appeal was unsuccessful, some of those funds have been released to the liquidator to satisfy the judgment plus statutory interest. The balance of the funds will remain in the trust account until the liquidator's costs have been independently assessed.

Macarthur is a creditor of FSDC and owed approximately $460,000 (Australian). Macarthur and another creditor financed the liquidator of FSDC in an insolvent trading claim against the directors of FSDC. Under the financing arrangements, Macarthur is entitled to reimbursement of the legal costs it financed in removing the original liquidator appointed to FSDC, and legal costs associated with public examinations of the FSDC directors, the insolvent trading action, the enforcement of the judgment and the appeal. After payment of all legal costs awarded against the first, second and third defendant directors, and reimbursement of all financing costs to Macarthur, a dividend may be paid to creditors including Macarthur, depending on funds available.

The company has now received from the liquidator of FSDC the amount of $1,428,370 (Australian), for partial reimbursement of costs. This sum includes $11,864 recovered from Mr. Kwok in February, 2015, relating to the dismissal of his application to set aside a bankruptcy notice issued against him before the agreed stay on enforcement of the judgment. Further amounts to be received by the company will be subject to the outcome of an independent costs assessment.

Action by LPD Holdings (Australia)

In July, 2012, LPD Holdings (Australia) and Mayson Associates Ltd. brought proceedings against the company, and some of its directors and officers, alleging breaches of various provisions of the Australian Corporations Act 2001. These proceedings were dismissed in November, 2012, and the company was awarded costs on an indemnity basis. LPD and Mayson appealed the indemnity costs order in the Queensland Court of Appeal, and on Oct. 11, 2013, the appeal was dismissed with costs of the appeal being awarded to the company.

The appeal costs order was assessed at $105,426 and was paid by LPD to the company. The indemnity costs order was assessed at $281,556 and paid to the company.

LPD brought new proceedings against the company in November, 2012. On Nov. 26, 2013, the proceedings were stayed by consent, pending payment of the indemnity costs order and appeal costs order by LPD and Mayson. The company was also awarded costs up to and including Aug. 28, 2013, in respect of the company's strike-out application in the proceedings. The company was paid $64,533 against these costs.

In total, the company has recovered costs of $451,515 from LPD over the period from November, 2014, to March, 2015.

We seek Safe Harbor.