SHREE MINERALS LIMITED ACN ENTITLEMENT ISSUE PROSPECTUS. Sanjay Loyalka Director 12 October 2018

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1 Sanjay Loyalka Director 12 October 2018 SHREE MINERALS LIMITED ACN ENTITLEMENT ISSUE PROSPECTUS For a non-renounceable entitlement issue of 1 Share for every 1 Share held by those Shareholders registered at the Record Date at an issue price of $0.005 per Share to raise up to $1,421,842 (based on the number of Shares on issue as at the date of this Prospectus) (Offer). The Offer is fully underwritten by DJ Carmichael Pty Limited (Underwriter). Section 8.4 for details regarding the terms of the Underwriting Agreement. Refer to IMPORTANT NOTICE This document is important and should be read in its entirety. If after reading this Prospectus you have any questions about the securities being offered under this Prospectus or any other matter, then you should consult your stockbroker, accountant or other professional adviser. The Shares offered by this Prospectus should be considered as speculative.

2 T AB LE OF CONTENTS 1. CORPORATE DIRECTORY TIMETABLE IMPORTANT NOTES DETAILS OF THE OFFER PURPOSE AND EFFECT OF THE OFFER RIGHTS AND LIABILITIES ATTACHING TO SHARES RISK FACTORS ADDITIONAL INFORMATION DIRECTORS AUTHORISATION GLOSSARY _1 i

3 1. CORPORATE DIRECTORY Directors Sanjay Loyalka Director Andy Lau Non-Executive Director Amritlal Shah Non-Executive Director Davide Bosio Non-Executive Director Registered Office Unit Stirling Highway Nedlands WA 6009 Telephone: Facsimile: info@shreeminerals.com Website: Company Secretary Sanjay Loyalka Share Registry* Boardroom Pty Limited Level George Street Sydney NSW 2000 Solicitors Steinepreis Paganin Lawyers and Consultants Level 4, The Read Buildings 16 Milligan Street Perth WA 6000 Telephone: Facsimile: Auditor* Stantons International Level 2 1 Walker Avenue West Perth WA 6005 Underwriter and Lead Manager DJ Carmichael Pty Limited Level St Georges Terrace Perth WA 6000 *This entity is included for information purposes only. It has not been involved in the preparation of this Prospectus and has not consented to being named in this Prospectus _1 1

4 2. TIMETABLE Lodgement of Prospectus with the ASIC 12 October 2018 Lodgement of Prospectus & Appendix 3B with ASX 15 October 2018 Notice sent to Shareholders 15 October 2018 Ex date 17 October 2018 Record Date for determining Entitlements 18 October 2018 Prospectus sent out to Shareholders & Company announces this has been completed 22 October 2018 Last date to extend the Closing Date 16 November 2018 Closing Date* 21 November 2018 Shares quoted on a deferred settlement basis 22 November 2018 ASX notified of under subscriptions 26 November 2018 Issue date/shares entered into Shareholders security holdings 28 November 2018 Quotation of Shares issued under the Offer* 29 November 2018 *The Directors may extend the Closing Date by giving at least 3 Business Days notice to ASX prior to the Closing Date. As such the date the Shares are expected to commence trading on ASX may vary / _1 2

5 3. IMPORTANT NOTES This Prospectus is dated 12 October 2018 and was lodged with the ASIC on that date. The ASIC, ASX and their respective officers take no responsibility for the contents of this Prospectus or the merits of the investment to which this Prospectus relates. No Shares may be issued on the basis of this Prospectus later than 13 months after the date of this Prospectus. No person is authorised to give information or to make any representation in connection with this Prospectus, which is not contained in the Prospectus. Any information or representation not so contained may not be relied on as having been authorised by the Company in connection with this Prospectus. It is important that investors read this Prospectus in its entirety and seek professional advice where necessary. The Shares the subject of this Prospectus should be considered highly speculative. Applications for Shares offered pursuant to this Prospectus can only be submitted on an original Entitlement and Acceptance Form or Shortfall Application Form. This Prospectus is a transaction specific prospectus for an offer of continuously quoted securities (as defined in the Corporations Act) and has been prepared in accordance with section 713 of the Corporations Act. It does not contain the same level of disclosure as an initial public offering prospectus. In making representations in this Prospectus regard has been had to the fact that the Company is a disclosing entity for the purposes of the Corporations Act and certain matters may reasonably be expected to be known to investors and professional advisers whom potential investors may consult. 3.1 Investment Advice This Prospectus does not provide investment advice and has been prepared without taking account of your financial objectives, financial situation, or particular needs (including financial or taxation issues). You should seek professional investment advice before subscribing for Shares under this Prospectus. 3.2 Risk factors Potential investors should be aware that subscribing for Shares in the Company involves a number of risks. The key risk factors of which investors should be aware are set out in Section 7 of this Prospectus. These risks together with other general risks applicable to all investments in listed securities not specifically referred to, may affect the value of the Shares in the future. Accordingly, an investment in the Company should be considered highly speculative. Investors should consider consulting their professional advisers before deciding whether to apply for Shares pursuant to this Prospectus. 3.3 Forward-looking Statements This Prospectus contains forward-looking statements which are identified by words such as may, could, believes, estimates, targets, expects, or intends and other similar words that involve risks and uncertainties / _1 3

6 These statements are based on an assessment of present economic and operating conditions, and on a number of assumptions regarding future events and actions that, as at the date of this Prospectus, are expected to take place. Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties, assumptions and other important factors, many of which are beyond the control of our Company, the Directors and our management. We cannot and do not give any assurance that the results, performance or achievements expressed or implied by the forward-looking statements contained in this prospectus will actually occur and investors are cautioned not to place undue reliance on these forward-looking statements. We have no intention to update or revise forward-looking statements, or to publish prospective financial information in the future, regardless of whether new information, future events or any other factors affect the information contained in this prospectus, except where required by law. These forward-looking statements are subject to various risk factors that could cause our actual results to differ materially from the results expressed or anticipated in these statements. These risk factors are set out in Section 7 of this Prospectus. 3.4 Disclaimer No person is authorised to give information or to make any representation in connection with the Offer described in this Prospectus, which is not contained in this Prospectus. Any information or representation not so contained may not be relied on as having been authorised by the Company in connection with the Offer. You should rely only on information in this Prospectus. 3.5 Website No document or information included on the Company s website is incorporated by reference into this Prospectus. 3.6 Persons in the People s Republic of China The information in this Prospectus does not constitute a public offer of Shares, whether by way of sale or subscription, in the People's Republic of China (PRC) (excluding, for the purposes of this paragraph, Hong Kong Special Administrative Region, Macau Special Administrative Region and Taiwan). The Shares may not be offered or sold directly or indirectly in the PRC to legal or natural persons other than directly to "qualified domestic institutional investors " / _1 4

7 4. DETAILS OF THE OFFER 4.1 The Offer The Offer is being made as a non-renounceable entitlement issue of 1 Share for every 1 Share held by Shareholders registered at the Record Date at an issue price of $0.005 per Share. Fractional entitlements will be rounded up to the nearest whole number. Based on the capital structure of the Company as at the date of this Prospectus, a maximum of 284,368,446 Shares will be issued pursuant to this Offer to raise up to $1,421,842. All of the Shares offered under this Prospectus will rank equally with the Shares on issue at the date of this Prospectus. Please refer to Section 6 for further information regarding the rights and liabilities attaching to the Shares. The purpose of the Offer and the intended use of funds raised are set out in Section 5.1 of this Prospectus. 4.2 Minimum subscription There is no minimum subscription. 4.3 Acceptance Your acceptance of the Offer can be made by following the instructions outlined on the Entitlement and Acceptance Form accompanying this Prospectus. Your acceptance must not exceed your Entitlement as shown on that form. If it does, your acceptance will be deemed to be for the maximum Entitlement. You may participate in the Offer as follows: (a) (b) (c) accept your full Entitlement; or accept part of your Entitlement; or if you do not wish to accept all or part of your Entitlement, you are not obliged to do anything. The Offer is non-renounceable. Accordingly, a Shareholder may not sell or transfer all or part of their Entitlement. 4.4 Payment By cheque/bank draft All cheques must be drawn on an Australian bank or bank draft made payable in Australian currency to Shree Minerals Limited Entitlement Issue Account and crossed Not Negotiable. Your completed Entitlement and Acceptance Form and cheque must reach the Company s share registry no later than 5:00 pm WST on the Closing Date / _1 5

8 By BPAY For payment by BPAY, please follow the instructions on the Entitlement and Acceptance Form. You can only make a payment via BPAY if you are the holder of an account with an Australian financial institution that supports BPAY transactions. Please note that should you choose to pay by BPAY : (a) (b) you do not need to submit the Entitlement and Acceptance Form but are taken to have made the declarations on that Entitlement and Acceptance Form; and if you do not pay for your Entitlement in full, you are deemed to have taken up your Entitlement in respect of such whole number of Shares which is covered in full by your application monies. It is your responsibility to ensure that your BPAY payment is received by the share registry by no later than 4:00 pm (WST) on the Closing Date. You should be aware that your financial institution may implement earlier cut-off times with regards to electronic payment and you should therefore take this into consideration when making payment. Any application monies received for more than your final allocation of Shares (only where the amount is $1.00 or greater) will be refunded. No interest will be paid on any application monies received or refunded. 4.5 Lead Manager and Underwriting DJ Carmichael Pty Limited (DJ Carmichael) has been appointed as the Lead Manager and Underwriter. Refer to Section 8.4 of this Prospectus for summaries of these respective agreements and fees payable to DJ Carmichael. In addition, the Board notes that new Director, Mr Davide Bosio is the Managing Director of DJ Carmichael, although Mr Bosio does not control DJ Carmichael. 4.6 Effect on control of the Company The Offer will result in the issue of new Shares and is fully underwritten by the Underwriter. Shareholders should be aware that the extent to which Shares are issued under the Underwriting Agreement could result in the Underwriter acquiring a voting power in the Company. The Underwriter is not a related party of the Company for the purpose of the Corporations Act. The Underwriter s present relevant interest and changes under several scenarios are set out in the table below: Event Shares held by Underwriter Voting power of Underwriter Date of Prospectus Nil Nil Completion of Offer 1 Fully subscribed by Shareholders Nil Nil 75% subscribed by Shareholders 71,092, % 50% subscribed by Shareholders 142,184, % / _1 6

9 25% subscribed by Shareholders 213,276, % 0% subscribed by Shareholders 284,368, % Notes: 1. The above table assumes that fees payable by the Company to the Underwriter are paid in cash and not via the issue of Shares. In the event the Company issues Shares in satisfaction of fees payable to the Underwriter, then the voting power of the Underwriting would increase by a corresponding amount depending on the amount of the fees payable. The number of shares held by the Underwriter and its voting power in the table above show the potential effect of the underwriting of the Offer. However, Shareholders should note the following: (a) (b) (c) (d) the Offer is being extended and made available to jurisdictions covering approximately 96% of all Shareholders as at the date of this Prospectus; the Offer has been priced at a price that is attractive to all eligible Shareholders to participate in the Offer; the Underwriter has confirmed to the Company that it has entered into sub-underwriting agreements for all of its underwriting commitment under the Underwriting Agreement. Where any sub-underwriters fail to meet their sub-underwriting commitments, the Underwriter will be contractually obligated to subscribe for those Shares, however it is not reasonably anticipated that such numbers of sub-underwriters would fail to meet their sub-underwriting commitments such that it could impact on the control of the Company by virtue of the Underwriter acquiring an interest greater than 20%; and it is a term of the Underwriting Agreement that the Underwriter will ensure that no sub-underwriter will acquire a voting power in the Company greater than 20% as a result of sub-underwriting the Offer. 4.7 Dilution In addition to the potential control impacts, Shareholders should note that if they do not participate in the Offer, their holdings are likely to be diluted by approximately 50% (as compared to their holdings and number of Shares on issue as at the date of the Prospectus). Examples of how the dilution may impact Shareholders is set out in the table below: Holder Holding as at Record date % at Record Date Entitlements under the Offer Holdings if Offer not taken Up % post Offer Shareholder 1 10,000, % 10,000,000 10,000, % Shareholder 2 5,000, % 5,000,000 5,000, % Shareholder 3 1,500, % 1,500,000 1,500, % Shareholder 4 400, % 400, , % Shareholder 5 50, % 50,000 50, % Total 284,368, ,368, ,736, / _1 7

10 Notes: 1. The dilutionary effect shown in the table is the maximum percentage on the assumption that those Entitlements not accepted are placed under the Shortfall Offer. In the event all Entitlements are not accepted and some or all of the resulting Shortfall was not subsequently placed, the dilution effect for each Shareholder not accepting their Entitlement would be a lesser percentage. 4.8 Shortfall Offer Any Entitlement not taken up pursuant to the Offer will form the Shortfall Offer. The Shortfall Offer is a separate offer made pursuant to this Prospectus and will remain open for up to three months following the Closing Date. The issue price for each Share to be issued under the Shortfall Offer shall be $0.005, being the price at which Shares have been offered under the Offer. The placement of the Shortfall will be at the discretion of the Directors, in consultation with the Underwriter and subject to the terms and conditions of the Underwriting Agreement. 4.9 ASX listing Application for Official Quotation of the Shares offered pursuant to this Prospectus will be made in accordance with the timetable set out at the commencement of this Prospectus. If ASX does not grant Official Quotation of the Shares offered pursuant to this Prospectus before the expiration of 3 months after the date of issue of the Prospectus, (or such period as varied by the ASIC), the Company will not issue any Shares and will repay all application monies for the Shares within the time prescribed under the Corporations Act, without interest. The fact that ASX may grant Official Quotation to the Shares is not to be taken in any way as an indication of the merits of the Company or the Shares now offered for subscription Issue of Shares Shares issued pursuant to the Offer will be issued in accordance with the ASX Listing Rules and timetable set out at the commencement of this Prospectus. Shares issued pursuant to the Shortfall Offer will be issued on a progressive basis. Where the number of Shares issued is less than the number applied for, or where no issue is made surplus application monies will be refunded without any interest to the Applicant as soon as practicable after the closing date of the Shortfall Offer. Pending the issue of the Shares or payment of refunds pursuant to this Prospectus, all application monies will be held by the Company in trust for the Applicants in a separate bank account as required by the Corporations Act. The Company, however, will be entitled to retain all interest that accrues on the bank account and each Applicant waives the right to claim interest. Holding statements for Shares issued under the Offer will be mailed in accordance with the ASX Listing Rules and timetable set out at the commencement of this Prospectus and for Shortfall Shares issued under the Shortfall Offer as soon as practicable after their issue / _1 8

11 4.11 Overseas shareholders This Offer does not, and is not intended to, constitute an offer in any place or jurisdiction in which, or to any person to whom, it would not be lawful to make such an offer or to issue this Prospectus. It is not practicable for the Company to comply with the securities laws of overseas jurisdictions having regard to the number of overseas Shareholders, the number and value of Shares these Shareholders would be offered and the cost of complying with regulatory requirements in each relevant jurisdiction. Accordingly, the Offer is not being extended and Shares will not be issued to Shareholders with a registered address which is outside Australia, New Zealand, Singapore or the Peoples Republic of China. New Zealand The Shares are not being offered to the public within New Zealand other than to existing shareholders of the Company with registered addresses in New Zealand to whom the offer of these securities is being made in reliance on the transitional provisions of the Financial Markets Conduct Act 2013 (New Zealand) and the Securities Act (Overseas Companies) Exemption Notice 2013 (New Zealand). This Prospectus has been prepared in compliance with Australian law and has not been registered, filed with or approved by any New Zealand regulatory authority. This document is not a product disclosure statement under New Zealand law and is not required to, and may not, contain all the information that a product disclosure statement under New Zealand law is required to contain. Singapore This Prospectus and any other materials relating to the Shares have not been, and will not be, lodged or registered as a prospectus in Singapore with the Monetary Authority of Singapore. Accordingly, this document and any other document or materials in connection with the offer or sale, or invitation for subscription or purchase, of Shares, may not be issued, circulated or distributed, nor may these securities be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore except pursuant to and in accordance with exemptions in Subdivision (4) Division 1, Part XIII of the Securities and Futures Act, Chapter 289 of Singapore (SFA), or as otherwise pursuant to, and in accordance with the conditions of any other applicable provisions of the SFA. This Prospectus has been given to you on the basis that you are (i) an existing holder of the Company s Shares, (ii) an "institutional investor" (as defined in the SFA) or (iii) a "relevant person" (as defined in section 275(2) of the SFA). In the event that you are not an investor falling within any of the categories set out above, please return this document immediately. You may not forward or circulate this document to any other person in Singapore. Any offer is not made to you with a view to Shares being subsequently offered for sale to any other party. There are on-sale restrictions in Singapore that may be applicable to investors who acquire Shares. As such, investors are advised to acquaint themselves with the SFA provisions relating to resale restrictions in Singapore and comply accordingly / _1 9

12 China The information in this Prospectus does not constitute a public offer of Shares, whether by way of sale or subscription, in the People's Republic of China (PRC) (excluding, for purposes of this paragraph, Hong Kong Special Administrative Region, Macau Special Administrative Region and Taiwan). The Shares may not be offered or sold directly or indirectly in the PRC to legal or natural persons other than directly to "qualified domestic institutional investors". If you are in the People's Republic of China, you are a "qualified domestic institutional investor" as approved by the relevant PRC regulatory authorities to invest in overseas capital markets. Nominees and custodians Nominees and custodians may not submit an Entitlement and Acceptance Form on behalf of any Shareholder resident outside Australia and New Zealand without the prior consent of the Company, taking into account relevant securities law restrictions. Return of a duly completed Entitlement and Acceptance Form will be taken by the Company to constitute a representation that there has been no breach of those regulations Enquiries Any questions concerning the Offer should be directed to Sanjay Loyalka, Company Secretary, on / _1 10

13 5. PURPOSE AND EFFECT OF THE OFFER 5.1 Purpose of the Offer The purpose of the Offer is to raise up to $1,421,842 before costs. The funds raised from the Offer are planned to be used in accordance with the table set out below: Item Proceeds of the Offer Full Subscription ($) % 1. Funding for Nelson Bay River Iron project 2 Exploration and new opportunities evaluation 1 250, , Expenses of the Offer 2 120, Working capital 801, Total 1,421, Notes: 1. This figure includes $10,000 to be paid to Carmichael Prospecting Company Pty Limited for the option agreement over the Golden Chimney project and Karramindie Gold project exploration licence applications as announced by the Company on 4 October Refer to Section 8.8 of this Prospectus for further details relating to the estimated expenses of the Offer. This amount includes fees payable to the Lead Manager and Underwriter. The above table is a statement of current intentions as of the date of this Prospectus. As with any budget, intervening events (including exploration success or failure) and new circumstances have the potential to affect the manner in which the funds are ultimately applied. The Board reserves the right to alter the way funds are applied on this basis. 5.2 Effect of the Offer The principal effect of the Offer, assuming all Entitlements are accepted and no Options are exercised prior to the Record Date, will be to: (a) (b) increase the cash reserves by $1,301,436 (after deducting the estimated expenses of the Offer) immediately after completion of the Offer; and increase the number of Shares on issue from 284,368,446 as at the date of this Prospectus to 568,736,892 Shares. 5.3 Pro-forma balance sheet The audited balance sheet as at 30 June 2018 and the unaudited pro-forma balance sheet as at 12 October 2018 shown below have been prepared on the basis of the accounting policies normally adopted by the Company and reflect the changes to its financial position. The pro-forma balance sheet has been prepared assuming all Entitlements are accepted and including expenses of the Offer / _1 11

14 The pro-forma balance sheet has been prepared to provide investors with information on the assets and liabilities of the Company and pro-forma assets and liabilities of the Company as noted below. The historical and pro-forma financial information is presented in an abbreviated form, insofar as it does not include all of the disclosures required by Australian Accounting Standards applicable to annual financial statements. Notes AUDITED 30 JUNE 2018 PROFORMA 12 OCTOBER 2018 CURRENT ASSETS Cash and cash equivalents 1,2,3,4 1,101,614 2,393,050 Receivables 24,089 24,089 TOTAL CURRENT ASSETS 1,125,703 2,417,139 NON-CURRENT ASSETS Exploration ,000 Other 838, ,700 TOTAL NON-CURRENT ASSETS 838, ,700 TOTAL ASSETS 1,964,403 3,265,839 CURRENT LIABILITIES Trade and other payables 962, ,779 Provisions 8,538 8,538 TOTAL CURRENT LIABILITIES 971, ,317 NON-CURRENT LIABILITIES Rehabilitation provision 827, ,000 TOTAL NON-CURRENT LIABILITIES 827, ,000 TOTAL LIABILITIES 1,798,317 1,798,317 NET ASSETS (LIABILITIES) 166,086 1,467,522 EQUITY Contributed equity 1,2,3 17,897,567 19,109,003 Reserves 284, ,587 Retained profits (losses) (18,016,068) (18,016,068) TOTAL EQUITY 166,086 1,467,522 Notes: 1. Assuming the Company raises $1,421,842 before costs under the Offer. 2. Assuming other costs of the Offer are $35, Assuming the fees payable to the Lead Manager and Underwriter are $85, Assuming payment to Carmichael Prospecting Company Pty Limited for the option agreement over the Golden Chimney project and Karramindie Gold project exploration licence applications is $10,000 is made immediately upon completion of the Offer / _1 12

15 5.4 Effect on capital structure The effect of the Offer on the capital structure of the Company, assuming all Entitlements are accepted and no Options are exercised prior to the Record Date, is set out below. Shares Number Shares currently on issue 284,368,446 Shares offered pursuant to the Offer 284,368,446 Total Shares on issue after completion of the Offer 568,736,892 No Shares on issue are subject to escrow restrictions, either voluntary or ASX imposed. The Company does not currently have any listed or unlisted Options on issue. 5.5 Details of substantial holders Based on publicly available information as at 12 October 2018, those persons which (together with their associates) have a relevant interest in 5% or more of the Shares on issue are set out below: Shareholder Shares % RB Investments Pte Ltd 172,621, % Sanjay Loyalka 1 26,474, % China Alliance International Holdings Group 2 23,223, % Oceania Coal Resources NL 15,000, % Notes: 1. Sanjay Loyalka s relevant interest includes his direct interest in 565,000 Shares which Mr Loyalka holds personally and his indirect interest in IACG Pty Ltd, a company which Mr Loyalka s wife controls, which holds 25,809,078 Shares and his indirect interest in 100,000 Shares held by Mr Loyalka s wife personally, Rashmi Loyalka. 2. A company of which Andy Lau is Vice President and nominee of the board. In the event all Entitlements are accepted there will be no change to the substantial holders on completion of the Offer. 5.6 Future Issues of Shares and Options post-completion of the Offer As announced by the Company on 4 October 2018, subject to Shareholder approval, the Company: (a) (b) has agreed to issue 13,000,000 Shares to Carmichael Prospecting Company Pty Limited, a wholly owned subsidiary of the Underwriter, upon exercise of the option agreement over the Golden Chimney project and the Karramindie Gold project exploration licence applications; and has agreed to issue 30,000,000 Shares to Sanjay Loyalka, Andy Lau, Amritlal Shah and Rajesh Bothra (a previous Director), pursuant to these / _1 13

16 parties agreeing to convert existing outstanding remuneration owing to them to Shares in addition to a cash payment of $100,000. In addition to the above, pursuant to the Mandate with the Lead Manager, as detailed in Section 8.4, the Company has agreed to offer 142,184,223 unlisted Options to the Lead Manager (or its nominees) which the Lead Manager can subscribe for at an issue price of $ per Option to raise approximately $14,218 (Lead Manager Options). The Lead Manager Options will be exercisable at $0.01 within 12 months from the date of issue. The Company anticipates that details of the above Share issues and Lead Manager Options issue will be set out in the Company s notice of annual general meeting for Shareholders to consider at the Company s 2018 annual general meeting / _1 14

17 6. RIGHTS AND LIABILITIES ATTACHING TO SHARES The following is a summary of the more significant rights and liabilities attaching to Shares being offered pursuant to this Prospectus. This summary is not exhaustive and does not constitute a definitive statement of the rights and liabilities of Shareholders. To obtain such a statement, persons should seek independent legal advice. Full details of the rights and liabilities attaching to Shares are set out in the Constitution, a copy of which is available for inspection at the Company s registered office during normal business hours. 6.1 General meetings Shareholders are entitled to be present in person, or by proxy, attorney or representative to attend and vote at general meetings of the Company. Shareholders may requisition meetings in accordance with section 249D of the Corporations Act and the Constitution of the Company. 6.2 Voting rights Subject to any rights or restrictions for the time being attached to any class or classes of shares, at general meetings of shareholders or classes of shareholders: (a) (b) (c) each Shareholder entitled to vote may vote in person or by proxy, attorney or representative; on a show of hands, every person present who is a Shareholder or a proxy, attorney or representative of a Shareholder has one vote; and on a poll, every person present who is a Shareholder or a proxy, attorney or representative of a Shareholder shall, in respect of each fully paid Share held by him, or in respect of which he is appointed a proxy, attorney or representative, have one vote for each Share held, but in respect of partly paid shares shall have such number of votes as bears the same proportion to the total of such Shares registered in the Shareholder s name as the amount paid (not credited) bears to the total amounts paid and payable (excluding amounts credited). 6.3 Dividend rights Subject to the rights of any preference Shareholders and to the rights of the holders of any shares created or raised under any special arrangement as to dividend, the Directors may from time to time declare a dividend to be paid to the Shareholders entitled to the dividend which shall be payable on all Shares according to the proportion that the amount paid (not credited) is of the total amounts paid and payable (excluding amounts credited) in respect of such Shares. The Directors may from time to time pay to the Shareholders any interim dividends as they may determine. No dividend shall carry interest as against the Company. The Directors may set aside out of the profits of the Company any amounts that they may determine as reserves, to be applied at the discretion of the Directors, for any purpose for which the profits of the Company may be properly applied / _1 15

18 Subject to the ASX Listing Rules and the Corporations Act, the Company may, by resolution of the Directors, implement a dividend reinvestment plan on such terms and conditions as the Directors think fit and which provides for any dividend which the Directors may declare from time to time payable on Shares which are participating Shares in the dividend reinvestment plan, less any amount which the Company shall either pursuant to the Constitution or any law be entitled or obliged to retain, be applied by the Company to the payment of the subscription price of Shares. 6.4 Winding-up If the Company is wound up, the liquidator may, with the authority of a special resolution, divide among the Shareholders in kind the whole or any part of the property of the Company, and may for that purpose set such value as he considers fair upon any property to be so divided, and may determine how the division is to be carried out as between the Shareholders or different classes of Shareholders. The liquidator may, with the authority of a special resolution, vest the whole or any part of any such property in trustees upon such trusts for the benefit of the contributories as the liquidator thinks fit, but so that no Shareholder is compelled to accept any shares or other securities in respect of which there is any liability. 6.5 Shareholder liability As the Shares issued will be fully paid shares, they will not be subject to any calls for money by the Directors and will therefore not become liable for forfeiture. 6.6 Transfer of shares Generally, shares in the Company are freely transferable, subject to formal requirements, the registration of the transfer not resulting in a contravention of or failure to observe the provisions of a law of Australia and the transfer not being in breach of the Corporations Act and the ASX Listing Rules. 6.7 Future increase in capital The issue of any new Shares is under the control of the Directors of the Company. Subject to restrictions on the issue or grant of securities contained in the ASX Listing Rules, the Constitution and the Corporations Act (and without affecting any special right previously conferred on the holder of an existing share or class of shares), the Directors may issue Shares as they shall, in their absolute discretion, determine. 6.8 Variation of rights Under section 246B of the Corporations Act, the Company may, with the sanction of a special resolution passed at a meeting of Shareholders vary or abrogate the rights attaching to shares. If at any time the share capital is divided into different classes of shares, the rights attached to any class (unless otherwise provided by the terms of issue of the shares of that class), whether or not the Company is being wound up, may be varied or abrogated with the consent in writing of the holders of three quarters of the issued shares of that class, or if authorised by a special resolution passed at a separate meeting of the holders of the shares of that class / _1 16

19 6.9 Alteration of constitution In accordance with the Corporations Act, the Constitution can only be amended by a special resolution passed by at least three quarters of Shareholders present and voting at the general meeting. In addition, at least 28 days written notice specifying the intention to propose the resolution as a special resolution must be given / _1 17

20 7. RISK FACTORS 7.1 Introduction The Shares offered under this Prospectus are considered highly speculative. An investment in the Company is not risk free and the Directors strongly recommend potential investors to consider the risk factors described below, together with information contained elsewhere in this Prospectus and to consult their professional advisers before deciding whether to apply for Shares pursuant to this Prospectus. There are specific risks which relate directly to the Company s business. In addition, there are other general risks, many of which are largely beyond the control of the Company and the Directors. The risks identified in this Section, or other risk factors, may have a material impact on the financial performance of the Company and the market price of the Shares. The following is not intended to be an exhaustive list of the risk factors to which the Company is exposed. 7.2 Company specific (a) Potential for significant dilution Upon implementation of the Offer, assuming all Entitlements are accepted and no Options are exercised prior to the Record Date the number of Shares in the Company will increase from 284,368,446 currently on issue to 568,736,892. This means that each Share will represent a significantly lower proportion of the ownership of the Company. It is not possible to predict what the value of the Company or a Share will be following the completion of the Offer being implemented and the Directors do not make any representation as to such matters. The last trading price of Shares on ASX prior to the prospectus being lodged of $0.025 is not a reliable indicator as to the potential trading price of Shares after implementation of the Offer. (b) Option Agreement and Grant of Exploration Licence Applications As announced by the Company on 4 October 2018, the Company has been granted an option to acquire the Golden Chimney project and the Karramindie Gold project exploration licence applications (Option Agreement). The exercise of the option under the Option Agreement is first subject to the granting of the relevant tenements by the Western Australian Department of Mines and Petroleum. Subject to the granting of the tenements, there is also no guarantee that the Company will exercise its option and this will be decided after the Company has undertaken due diligence during the 6 month option period. If the tenements are not granted or the Company does not exercise the option, the Company would not proceed with this acquisition / _1 18

21 (c) Status of existing iron ore project The Company s existing Nelson Bay Iron Ore Project has been on care and maintenance for the past few years, caused as a result of the project becoming uneconomic due to the drop in the price of iron ore from its historical high levels a few years ago. The continuation of this project in the future is dependent upon many factors which are outside of the control of the Company including the price of iron ore in the open market, the costs associated with the re-commencement of mining and shipping of ore from the project site and any potential requirements or policies of the prevailing State Government in Tasmania at the relevant time. (d) Environmental Risks The operations and proposed activities of the Company are subject to State and Federal laws and regulations concerning the environment. The Company may be unable to obtain and renew the approvals and licenses necessary for its operations, which would reduce its production, cash flow and profitability. Mining companies must obtain and renew (among other things) numerous approvals licenses, operating permits and management plans that impose strict regulations on various environmental and safety matters in connection with ore mining. These include approvals and licenses issued by various agencies and regulatory bodies. The Company has experienced production delays, in the past, as a result of delays in obtaining operating permits. The approving rules are complex and may change over time, making its ability to comply with the applicable requirements more difficult or even impossible, thereby precluding continuing or future mining operations. Private individuals and the public have certain rights to comment upon, submit objections to, and otherwise engage in the approval process, including through court intervention. Accordingly, the approvals and licenses the Company need may not be issued, maintained or renewed, or may not be issued or renewed in a timely fashion, or may involve requirements that restrict its ability to conduct its mining operations. Additionally, these approvals, licenses and operating permits may be amended, or additional approvals, licenses and operating permits may be required imposing costly compliance conditions. An inability to conduct its mining operations pursuant to applicable approvals would reduce its production, cash flow, and profitability. As set out in the Company s annual report for the year ended 30 June 2018, the current Tasmanian environmental permit is non-compliant and it is not practical to comply with current permit conditions relating to storage of potentially acid forming waste rock. In consultation and advice from Tasmanian government authorities, the Company is pursuing a new permit. The Tasmanian Environmental Protection Authority has also advised the Company to assess whether re-approval may necessitate a re-approval under the Environment Protection and Biodiversity Conservation Act There are uncertainties with the process for re-approval. As with most exploration projects and mining operations, the Company s activities are expected to have an impact on the environment, particularly if advanced exploration or mine development / _1 19

22 proceeds. It is the Company s intention to conduct its activities to the highest standard of environmental obligation, including compliance with all environmental laws. In this regard, the regulatory bodies from time to time review the environmental bonds that are placed on tenements. The Directors are not in a position to state whether the outcome of such periodic reviews would be detrimental to the funding needs of the Company. (e) Iron Ore Production The Company s iron ore mining production and delivery is subject to conditions and events beyond its control, which could result in higher operating expenses and/or decreased production and sales. The level of its production at these mines is subject to operating conditions and events beyond its control that could disrupt operations, affect production and the cost of mining and have a significant impact on the Company s operating results. Adverse operating conditions which could curtail or adversely impact its operations include: (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) delays and difficulties in acquiring, maintaining or renewing operating permits, licenses or mining rights; changes or variations in geologic conditions, such as the presence of faults, intrusions, changes in the thickness of the ore deposits and their quality, along with changes in the waste rock surrounding the ore body including changes in quantum of potentially acid forming (PAF) rock and changes in geotechnical conditions; mining and processing equipment failures and unexpected maintenance problems; limited availability of mining and processing equipment and parts from suppliers; interruptions due to transportation delays or disruptions in the transport chain, whether road, rail, port, infrastructure or ocean freight; adverse weather and natural disasters, such as strong winds, heavy rains and flooding; the unavailability of qualified labour; shortages or delays in the availability of mining equipment; strikes and other labour-related interruptions; and unexpected mine safety accidents. 7.3 Mining Industry specific (a) Commodity Price Volatility and Exchange Rate Risks The revenue the Company will derive through the sale of commodities exposes the potential income of the Company to commodity price and / _1 20

23 exchange rate risks. Commodity prices fluctuate and are affected by many factors beyond the control of the Company. Such factors include supply and demand fluctuations for various commodities, technological advancements, forward selling activities and other macro-economic factors. Furthermore, international prices of various commodities are denominated in United States dollars, whereas the income and expenditure of the Company are and will be taken into account in Australian currency, exposing the Company to the fluctuations and volatility of the rate of exchange between the United States dollar and the Australian dollar as determined in international markets. Currently, the operations at the Company s Nelson Bay River Project are suspended and on care and maintenance as a consequence of the general decrease in the price of iron ore over recent years from its previous highs. If the current iron ore prices continue and do not improve, this will have an adverse impact on the Company s ability to recommence operations. There is a risk that the iron ore prices may not improve and may further deteriorate. (b) Tenement applications and license renewal The Company cannot guarantee additional applications for tenements made by the Company will ultimately be granted, in whole or in part. Further the Company cannot guarantee that renewals of valid tenements will be granted on a timely basis, or at all. The Company has yet to receive regulatory and environmental approval to convert its exploration licences into production concessions. There is a risk that these approvals may not be obtained. (c) Resource Estimates Resource estimates are expressions of judgement based on knowledge, experience and industry practice. Estimates which were valid when originally calculated may alter significantly when new information or techniques become available. In addition, by their very nature, resource estimates are imprecise and depend to some extent on interpretations, which may prove to be inaccurate. As further information becomes available through additional fieldwork and analysis, the estimates are likely to change. This may result in alterations to development and mining plans which may, in turn, adversely affect the Company s operations. (d) Operating Risks The operations of the Company may be affected by various factors, including failure to locate or identify mineral deposits; failure to achieve predicted grades in exploration and mining; operational and technical difficulties encountered in mining; difficulties in commissioning and operating plant and equipment; mechanical failure or plant breakdown; unanticipated metallurgical problems which may affect extraction costs; adverse weather conditions; industrial and environmental accidents; industrial disputes; continued availability of port storage and ship loading facilities which may be impacted due to capacity constraints; and unexpected shortages or increases in the costs of consumables, spare parts, plant and equipment / _1 21

24 (e) Ocean Freight Volatility The Company s net revenues are exposed to the prevailing ocean freight rates. Ocean freight rates fluctuate and are affected by many factors beyond the control of the Company. (f) Exploration, development, mining and processing risks The tenements of the Company are at various stages of exploration, and potential investors should understand that exploration and developments are high-risk undertakings. There can be no assurance that exploration of these tenements, or any other tenements that may be acquired in the future, will result in the discovery of an economic deposit. Even if an apparently viable deposit is identified, there is no guarantee that it can be economically exploited. The future exploration activities of the Company may be affected by a range of factors including geological conditions, limitations on activities due to seasonal weather patterns, unanticipated operational and technical difficulties, industrial and environmental accidents, native title process, changing government regulations and many other factors beyond the control of the Company. The success of the Company will also depend upon the Company having access to sufficient development capital, being able to maintain title to its tenements and obtaining all required approvals for its activities. In the event that exploration programmes prove to be unsuccessful this could lead to a diminution in the value of the tenements, a reduction in the base reserves of the Company and possible relinquishment of the tenements. The exploration costs of the Company are based on certain assumptions with respect to the method and timing of exploration. By their nature, these estimates and assumptions are subject to significant uncertainties and, accordingly, the actual costs may materially differ from these estimates and assumptions. Accordingly, no assurance can be given that the cost estimates and the underlying assumptions will be realised in practice, which may materially and adversely affect the Company s viability. (g) Failure to satisfy Expenditure Commitments Interests in tenements are governed by the mining acts and regulations that are current in those States and are evidenced by the granting of licences or leases. Each licence or lease is for a specific term and carries with it annual expenditure and reporting commitments, as well as other conditions requiring compliance. Consequently, the Company could lose title to or its interest in its tenements if licence conditions are not met or if insufficient funds are available to meet expenditure commitments / _1 22

25 7.4 General risks (a) Competition Risk The industry in which the Company will be involved is subject to domestic and global competition. Although the Company will undertake all reasonable due diligence in its business decisions and operations, the Company will have no influence or control over the activities or actions of its competitors, which activities or actions may, positively or negatively, affect the operating and financial performance of the Company s projects and business. (b) Rising energy and commodity costs The Company has significant commodity (diesel) and energy (gas and electricity) requirements and it relies on being able to fulfil those requirements at a cost which does not negatively impact on its cash flows. A number of factors (particularly the strength of the US dollar) may lead to an increase in commodity and energy costs, which may materially adversely affect the earnings of the Company. (c) Economic General economic conditions, movements in interest and inflation rates and currency exchange rates may have an adverse effect on the Company s exploration, development and production activities, as well as on its ability to fund those activities. (d) Market conditions Share market conditions may affect the value of the Company s quoted securities regardless of the Company s operating performance. Share market conditions are affected by many factors such as: general economic outlook; introduction of tax reform or other new legislation; interest rates and inflation rates; changes in investor sentiment toward particular market sectors; the demand for, and supply of, capital; and terrorism or other hostilities. The market price of securities can fall as well as rise and may be subject to varied and unpredictable influences on the market for equities in general and resource exploration stocks in particular. Neither the Company nor the Directors warrant the future performance of the Company or any return on an investment in the Company. (e) Additional requirements for capital The Company s capital requirements depend on numerous factors. Depending on the Company s ability to generate income from its operations, the Company may require further financing in addition to amounts raised under the Offer. Any additional equity financing will / _1 23