For personal use only. Martin Place Securities Corporate Advisor and Lead Manager to the Issue

Transcription

1 Kimberley Metals Limited ACN Prospectus For a non-renounceable rights issue of 1 Convertible Note, earning 10% interest p.a., for every 6 Shares at an issue price of 38 cents per Convertible Note 1 August 2011 Martin Place Securities Corporate Advisor and Lead Manager to the Issue Important Information The Securities offered by this Prospectus are complex and this document should be read in its entirety. If you do not understand the information contained in this Prospectus you should consult your professional advisers without delay. The Securities offered by this Prospectus should be considered speculative.

2 CONTENTS 1. INVESTMENT SUMMARY DETAILS OF THE OFFER HOW TO APPLY KEY TERMS OF THE NOTES FINANCIAL INFORMATION RISK FACTORS CONDITIONS OF ISSUE OF NOTES SUMMARY OF AUSTRALIAN TAXATION ISSUES ADDITIONAL INFORMATION DEFINITIONS AND GLOSSARY CORPORATE DIRECTORY It is the responsibility of overseas applicants to ensure compliance with all laws of any country relevant to their application. A number of terms and abbreviations used in this Prospectus have defined meanings, which are explained in the Glossary. Money as expressed in this Prospectus is in Australian dollars or else as indicated. Key Dates for Investors under the Rights Issue* Announcement of Offer...27 July 2011 Date of Prospectus...1 August 2011 Ex date 4 August 2011 Record Date to determine entitlements under Offer August 2011 Despatch of Prospectus and Entitlement and Acceptance Forms...15 August 2011 Opening Date for Acceptances...15 August 2011 Closing Date for Acceptances...31 August 2011 Notes traded on a deferred delivery basis...1 September 2011 Notification of any shortfall in subscriptions...5 September 2011 Despatch date for Notes...8 September 2011 Normal trading expected to commence for Notes...9 September 2011 Offer Statistics Approximate number of Notes to be Issued pursuant to Rights of Issue**:... 25,114,127 Maximum number of Notes to be issued pursuant to Placement:... 10,000,000 Issue Price:... $0.38 * These dates are indicative only and subject to change. Kimberley reserves the right, subject to the Corporations Act, ASX Listing Rules and other applicable laws to vary the dates of the Rights Issue. ** This figure is subject to the effects of rounding and the possible exercise of certain employee options. Fractions will be rounded up.

3 - 2 - Important Notice This Prospectus is dated 1 August 2011 and was lodged with the Australian Securities and Investments Commission (ASIC) on that date. Neither the ASIC nor Australian Stock Exchange Limited (ASX) take any responsibility for the contents of this Prospectus. No securities will be issued on the basis of this Prospectus later than 13 months after the date of this Prospectus. Applications may only be submitted in respect of an Entitlement before the Closing Date and can only be submitted on an original Entitlement and Acceptance Form which accompanies this Prospectus. Investors under the Placement will be determined by the Directors of the Company in consultation with the Lead Manager and the Directors of the Company reserve the right to accept or reject applications for Notes under the Placement in their absolute discretion. The Offer is being made in Australia and New Zealand only. This Prospectus does not constitute an offer in any overseas jurisdiction where it would be unlawful to make such an offer. No person named in this Prospectus, nor any other person, guarantees the performance of Kimberley Metals Limited (Kimberley or Company), the repayment of capital or the payment of a return on the Notes. The Trustee has not authorised or caused the issue of this Prospectus, does not make or purport to make any statement in the Prospectus and takes no responsibility for any part of this Prospectus. This Prospectus provides information to Eligible Shareholders to decide if they wish to take up their Entitlement and any Additional Notes. It also contains information for investors intending to participate in the Placement. Please read this document carefully and in its entirety before you make a decision to invest. An investment in the Company has specific risks which you should consider before making a decision to invest. An investment in these Notes may not be suitable for all shareholders. Shareholders should seek professional advice regarding this investment. The Notes are classified as unsecured notes for the purposes of section 283BH of the Corporations Act. This Prospectus has been prepared having regard 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 who potential investors may consult.

4 - 3 - CHAIRMAN S LETTER Dear Shareholder, Kimberley Metals Limited Non-renounceable Rights Issue of Convertible Notes to raise up to $9.543 million and further Placement to raise up to $3.8 million On behalf of the Company I am pleased to invite you to participate in a non-renounceable pro rata rights issue which gives you the opportunity (an Entitlement or Right) to subscribe for 1 Convertible Note for every 6 existing Kimberley ordinary shares (Shares) you hold at the Record Date, at an issue price of $0.38 (Rights Issue). The Notes are an unsecured 5 year loan to the Company with a 5 year option to convert each Note to 1 new Share (New Share). The Notes bear interest at the rate of 10% per annum. The Offer was announced on 27 July 2011 when the Company also announced that it intended to offer further Notes, primarily to institutional, professional and sophisticated investors in Australia, to raise up to a further $3.8 million before costs (Placement). Before costs, the Rights Issue and the Placement will provide some $ million to the Company. Kimberley intends to use these funds as working capital primarily for expansion of its processing facilities at the Company s Mineral Hill mine and bringing forward resource and exploration drilling in highly prospective areas in close proximity to the Company s Pearse and Parkers Hill projects. Kimberley also intends to advance production of the Sorby Hills project to commence in 2013 with fresh drilling and geological interpretation of the substantial silver project at Manbarrum, 30 kilometres east of the Sorby Hills. Most of these initiatives would otherwise have to be deferred until sufficient cash flows were available from copper concentrate production at Mineral Hill. ASX quotation of these Notes will be sought and holders will have the option to convert their Notes to New Shares at $0.38 per New Share at quarterly points in the next five years. Noteholders will therefore have an opportunity to benefit from any increase in the Share price above $0.38. The Company may redeem the Notes during the last 3 years of the 5 year term on a pro rata basis and only if the price of the Company s shares has traded in excess of $0.50 for at least 45 consecutive Business Days. If notice of early redemption is given by the Company, Noteholders will have the opportunity to elect to convert their Notes to Shares instead of having their Notes redeemed. The Directors intend to take up their full entitlements. We believe that the interest rate, ASX quotation and conversion features of these Notes will make them attractive to most Shareholders. To the extent Entitlements are not taken up by some Shareholders, those Notes will be allocated to Shareholders who have expressed interest in taking up more than their Entitlement on a pro rata basis based on each applicant s entitlement to Notes under the Offer. Any shortfall then remaining will be placed at the discretion of the Board The Offer closes at 5.00pm (Sydney time) on 31 August To participate you need to ensure that your completed Entitlement and Acceptance Form (with your Application Moneys) is received by Kimberley OR that you have paid your Application Moneys via BPAY prior to the Closing Date and time, in line with the instructions that are set out on the Entitlement and Acceptance Form. Please refer to the instructions on How to Apply in section 3 of this Prospectus for further information. Full details of the Convertible Note issue are set out in this Prospectus. Please ensure you read this Prospectus in its entirety, including in particular section 6 relating to risks, before participating in this

5 - 4 - Offer. Before making an investment decision it would be prudent to seek advice from your investment adviser. We look forward to your consideration of the Rights Issue and your continued support. Yours sincerely Kimberley Metals Limited Jim Wall Executive Chairman

6 INVESTMENT SUMMARY The information set out in this section is not intended to be comprehensive and should be read in conjunction with the full text of this Prospectus. 1.1 The Offer The Company is offering: a non-underwritten, non-renounceable Rights Issue to Eligible Shareholders of approximately 25,114,127 Notes (depending on the effects of rounding and the possible exercise of certain employee options) on the basis of 1 Note for every 6 Shares at an issue price of $0.38 per Note to raise up to $9.543 million; and a Placement of up to 10,000,000 Notes at an issue price of $0.38 per note to raise up to $3,800,000, The number of Notes that may be issued pursuant to the Placement will be reduced to the extent that the Company issues any Notes to institutional, sophisticated or professional investors other than pursuant to this Prospectus together to raise up to $ million (before costs). 1.2 Interest Rate The Notes bear an interest rate of 10% per annum, payable bi-annually on 31 December and 30 June each year. The first interest payment will be paid on 31 December 2011 and the last interest payment on the Maturity Date or the Conversion Date, whichever is applicable. 1.3 Applications for Notes under the Rights Issue Applications for Notes under the Rights Issue can only be made by Eligible Shareholders completing and lodging the Entitlement and Acceptance Form accompanying this Prospectus. Instructions on how to complete the Entitlement and Acceptance Form are set out on the Form and in section 3 of this Prospectus. If you do not take up your Entitlement, it will lapse at 5.00pm (Sydney time) on the Closing Date. 1.4 Application for Notes under the Placement The Placement will be placed by the Company in conjunction with Martin Place Securities Pty Limited, as Lead Manager. Only complete the Placement Offer Application Form if you are directed to do so by the Company or Lead Manager. The Directors of the Company reserve the right, in consultation with the Lead Manager, to accept or reject submitted Placement Offer Application Forms and to issue Notes under the Placement in their absolute discretion. 1.5 Proceeds of the Issue The expenses of the Issue, including the legal and accounting fees and fees of ASX and the Trustee, are expected to be approximately $500,000. If all Entitlements are taken up, the net proceeds for investment are estimated to be $ million. 1.6 Purpose of the Issue The Directors intend to apply the net proceeds from the Issue as working capital primarily for expansionary work at its Mineral Hill mine, including bringing forward resource and exploration drilling, and to advance work to bring the Sorby Hills project into production in 2013 with fresh drilling and geological interpretation of the substantial silver project at Manbarrum, 30 kilometres east of the Sorby Hills These drilling and expansion initiatives would otherwise have to be deferred until sufficient cash flows are available from copper concentrate production at Mineral Hill

7 Risk factors Investors should read this entire Prospectus and, in particular, consider the risk factors that could affect the financial performance of the Company before deciding to invest. A summary of risks applying to an investment in the Notes is set out in section 6 of this Prospectus.

8 DETAILS OF OFFER 2.1 Important Dates for Investors The following dates apply to the Rights Issue: Announcement of Offer 27 July 2011 Date of Prospectus 1 August 2011 Ex Date 4 August 2011 Record Date 7.00pm on 10 August 2011 Despatch of Prospectus and Entitlement and Acceptance Forms 15 August 2011 Opening Date for Acceptance 15 August 2011 Closing Date for Acceptance** 5.00pm on 31 August 2011 Notes traded on a deferred delivery basis ** 1 September 2011 Notification of any short fall in subscriptions 5 September 2011 Despatch Date for Notes ** 8 September 2011 Normal trading of Notes expected to commence 9 September 2011 ** Note: The Directors of the Company reserve the right to extend the period for which the Rights Issue is open for acceptance. The issue of Notes pursuant to the Placement may be made on one or more dates. It is expected that Notes issued pursuant to the Placement will be issued on 4 August 2011 but the Directors of the Company reserve the right to issue Notes pursuant to the Placement after this date. The information set out in this section is not intended to be comprehensive and should be read in conjunction with the full text of this Prospectus. 2.2 The Rights Issue Approximately 25,114,127 Notes, depending on the effects of rounding and the possible exercise of certain employee options, on the basis of 1 Note for every 6 Shares held at the Record Date at an issue price of $0.38 per Note will be offered for subscription pursuant to the Rights Issue. The Rights Issue will raise approximately $9.543 million (before the deduction of related expenses) and result in the issue of up to 25,114,127 Notes (subject to rounding). The Rights Issue offer is non-renounceable and is made on the following basis: each Shareholder with a registered address in Australia or New Zealand is entitled to subscribe for 1 Note for every 6 Shares held as at 7.00 pm (Sydney time) on the Record Date. The number of Notes to which you are entitled is shown on the accompanying Entitlement and Acceptance Form; the application price of $0.38 for each Note is payable in full on application; and the Closing Date and time for acceptance and payment is 5.00 pm (Sydney time) on 31 August 2011.

9 - 8 - Where fractions arise in the calculation of Entitlements, they will be rounded up to the nearest whole number of Notes. Investors may convert their Notes on the last day of each calendar quarter and at certain other times set out in more detail in Section 7. Notes not converted by the 5 th anniversary of the issue date (Maturity Date) will be redeemed by the Company. 2.3 The Placement Up to a further 10,000,000 Notes will be offered primarily to financial institutions and professional and sophisticated investors in Australia to raise up to $3.8 million. Investors under the Placement will be determined by the Directors of the Company in consultation with the Lead Manager. The Directors of the Company reserve the right, in consultation with the Lead Manager, to accept or reject submitted Placement Offer Application Forms and to issue Notes under the Placement in their absolute discretion. The number of Notes that may be issued pursuant to the Placement will be reduced to the extent that the Company issues any Notes to institutional, sophisticated or professional investors other than pursuant to this Prospectus. 2.4 Interest Rate The Notes bear an interest rate of 10% per annum. Interest is payable bi-annually on 31 December and 30 June each year. The first interest payment will be paid on 31 December 2011 and the last interest payment will be made on the Maturity Date or the Conversion Date, whichever is applicable. 2.5 Applications for Notes under Rights Issue Applications for Notes under the Rights Issue can only be made by Eligible Shareholders completing and lodging the Entitlement and Acceptance Form accompanying this Prospectus. Instructions on how to complete the Entitlement and Acceptance Form are set out on the Form and in section 3 of this Prospectus. If you do nothing If you do not take up your Entitlement, it will lapse at 5.00pm (Sydney time) on the Closing Date. 2.6 Implications of Shareholders not taking up their Entitlements under Rights Issue Existing Shareholders interests will be diluted on conversion of Notes to New Shares if they do not take up their Entitlements under the Offer and elect not to convert their Notes to New Shares. 2.7 Exposure Period No Application can or will be processed until after the period of 7 days from the date of lodgement of the Prospectus with the ASIC or if that period is extended by the ASIC by notice in writing, 14 days from the date of lodgement (Exposure Period). No preference will be conferred on Applications received during the Exposure Period. The purpose of the Exposure Period is to enable this Prospectus to be examined by market participants prior to the raising of funds. Examination during the Exposure Period may result in the identification of deficiencies in this Prospectus and, in those circumstances, any Application that has been received may need to be dealt with in accordance with section 724 of the Corporations Act.

10 Eligible Shareholders for Rights Issue The Rights Issue offer is being made only to Eligible Shareholders, being those holders of Shares who: are registered as a holder of Shares as at 7.00 pm (Sydney time) on 10 August 2011 (the Record Date); have a registered address in Australia or New Zealand; are not in the United States and are not U.S. persons (as defined under Regulation S under the United States Securities Act of 1933, as amended) (U.S. Persons) or acting for the account or benefit of U.S. Persons; and are otherwise eligible under all applicable securities laws to receive an offer under the Offer. 2.9 Your Entitlement under the Rights Issue Your Entitlement is set out on the accompanying personalised Entitlement and Acceptance Form and has been calculated as 1 Convertible Note for every 6 Existing Shares you held as at the Record Date, rounded up to the nearest whole Note. If you have more than 1 holding of Shares, you will be sent more than 1 personalised Entitlement and Acceptance Form and you will have separate Entitlements for each separate holding. The key terms of the Notes are set out in section 4 and full details and terms are set out in section Right to Apply for Additional Notes under Rights Issue Eligible Shareholders may also apply for Notes in excess of their Entitlement (Additional Notes). If there are Applications for Additional Notes in excess of available Notes after allocation of accepted Entitlements, then the available Notes will be allocated on a pro rata basis based on each applicant s entitlement to Notes under the Offer Shortfall under Rights Issue If any of the Notes offered under this Offer are not taken up by Shareholders, the Directors reserve the right to issue those Notes at their discretion to any party, provided the issue price is a minimum of $0.38 and the Notes are issued within three months of the Closing Date No Underwriting The Rights Issue and Placement are not underwritten Taxation Investors should seek and rely on their own taxation advice regarding an investment in the Company. Refer to section 8 for general information regarding taxation issues Trustee and Note Deed The Trust Company (Australia) Limited has agreed to act as the Trustee for the Noteholders. The Notes are issued subject to the terms and conditions contained in the Note Deed. A summary of this Deed is set out in section 4 and full details of the terms and conditions are set out in section 7. A copy of the Note Deed is available on the Company s website Proceeds of the Issue The expenses of the Placement and Rights Issue, including the legal and accounting fees and fees of ASX and the Trustee, are expected to be approximately $500,000. If all Entitlements

11 are taken up and all Notes offered under the Placement are issued, the net proceeds for investment are estimated to be $ million Company Share Price The value of the Notes will be affected by the prevailing price of the Company s Shares on the ASX. Since ASX trading commenced in the Company s Shares on 25 February 2010, the lowest closing sale price has been $0.16 most recently on 15 June 2010 and the highest sale closing price has been $0.37 most recently on 3 June The closing price on the last business day prior to the issue of this Prospectus (being 29 July 2011) was $0.315.

12 HOW TO APPLY UNDER THE RIGHTS ISSUE 3.1 Consider the Rights Issue in light of your particular investment objectives and circumstances Please consult with your stockbroker, accountant, solicitor or other independent professional adviser if you have any queries or are uncertain about any aspects of the Rights Issue. You should also refer to the Risks disclosed in section 6 of this Prospectus. 3.2 Acceptance of all or part of your Entitlement A duly completed and lodged Entitlement and Acceptance Form will constitute an offer by the Applicant to subscribe for the number of Notes applied for on the terms set out in this Prospectus pursuant to the Entitlement and Acceptance Form and an agreement to be bound by the terms of the Note Deed. The Application list will open at 9.00 am on the Opening Day and will remain open until 5.00 pm (Sydney time) on the Closing Day. No brokerage or stamp duty is payable by Applicants in respect of their applications for Notes under this Prospectus. The amount payable on application will not vary during the period of the Rights Issue and no further amount is payable on allotment. Application money will be held in trust in a subscription account until allotment. The subscription account will be established and kept by the Company on behalf of the Applicants. If you decide to take up all or part of your Entitlement then you must complete and return the personalised Entitlement and Acceptance Form with the requisite Application Moneys or pay your Application Moneys via BPAY by following the instructions set out on the personalised Entitlement and Acceptance Form. Kimberley will treat you as applying for as many Notes as your payment will pay for in full. Amounts received by the Company in excess of your Entitlement may be treated as an application to apply for as many Additional Notes as this excess amount will pay for in full. If you decide to take up all or part of your Entitlement then you must ensure that you submit your personalised Entitlement and Acceptance Form with the requisite Application Moneys or pay via BPAY before the close of the Offer at 5.00 pm Sydney time on 31 August Notes will be issued on or about 8 September Payment Methods You may make payment of your Application Moneys by BPAY or by cheque, bank draft or money order. Payment by BPAY For payment by BPAY, please follow the instructions on the personalised Entitlement and Acceptance Form (which includes the Biller Code and your unique Reference Number). 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 : you do not need to submit the personalised 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 full Entitlement, you are deemed to have taken up your Entitlement in respect of such whole number of Notes which is covered in full by your Application Moneys. Please make sure to use the specific Biller Code and unique Reference Number on your personalised Entitlement and Acceptance Form. If you receive more than one personalised Entitlement and Acceptance Form, please only use the Reference Number specific to the Entitlement on that form. If you have a daily limit on the amount you may pay by BPAY and

13 your subscription amount is in excess of that limit, you can make several BPAY payments using the same Biller Code and your unique Reference Number. If you inadvertently use the same Reference Number for more than one of your Entitlements, you will be deemed to have applied only for Notes on the Entitlement to which that Reference Number applies. It is your responsibility to ensure that your BPAY payment is received by the Registry by no later than 5.00 pm (Sydney time) on 31 August 2011 (subject to any variation). 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 Moneys received for more than your final allocation of Notes (only where the amount is $2.00 or greater) will be refunded as soon as practicable. No interest will be paid to applicants on any Application Moneys received or refunded. Payment by cheque, bank draft or money order You should complete your personalised Entitlement and Acceptance Form in accordance with the instructions on the form and return it accompanied by a cheque, bank draft or money order in Australian currency for the amount of the Application Moneys, payable to Kimberley Metals Limited - Notes Issue Account and crossed Not Negotiable. Your cheque, bank draft or money order must be: for an amount equal to $0.38 multiplied by the number of Notes that you are applying for; and in Australian currency drawn on an Australian branch of a financial institution. You should ensure that sufficient funds are held in relevant account(s) to cover the Application Moneys. If the amount of your cheque for Application Moneys (or the amount for which the cheque clears in time for allocation) is insufficient to pay in full for the number of Notes you have applied for in your personalised Entitlement and Acceptance Form, you will be taken to have applied for such lower number of whole Notes as your cleared Application Moneys will pay for (and to have specified that number of Notes on your personalised Entitlement and Acceptance Form). Alternatively, your application may not be accepted. Please note that post dated cheques may not be accepted. Any Application Moneys received for more than your final allocation of Notes (only where the amount is $2.00 or greater) will be refunded as soon as practicable. No interest will be paid on any Application Moneys received or refunded. Cash payments will not be accepted. Receipts for payment will not be issued. To participate in the Issue, your payment must be received by the Registry no later than the close of the Issue, at 5.00 pm (Sydney time) on 31 August 2011 (subject to any variation). Shareholders who make payment via cheque, bank draft or money order should mail their completed personalised Entitlement and Acceptance Form together with Application Moneys to: Kimberley Metals Limited c/- Boardroom Pty Limited Level 7, 207 Kent Street Sydney NSW 2000 A reply paid envelope is enclosed for the convenience of Eligible Shareholders based in Australia. Eligible shareholders in New Zealand will need to affix the appropriate postage. Completed Entitlement and Acceptance Forms and cheques for the relevant amount should be posted or delivered to Boardroom Pty Limited, Level 7, 207 Kent Street, Sydney NSW 2000

14 (formerly Registries Limited) or GPO Box 3993, Sydney NSW A pre-addressed, reply paid envelope is provided with the Entitlement and Acceptance Form. 3.4 Applications in Excess of Entitlement Shareholders may apply for Additional Notes in excess of their Entitlement in multiples of 5,000. Applications must be made by completing the appropriate part of the Entitlement and Acceptance form accompanied by payment in full for all the Notes applied for. Additional Notes will be allocated on a pro rata basis based on each applicant s entitlement to Notes under the Offer. Subscription moneys for applications which are not met will be promptly returned without interest. 3.5 Shortfall If any of the Notes offered under the Rights Issue are not taken up by Shareholders, the Directors reserve the right to issue those Notes at their discretion to any party, provided the issue price is a minimum of $0.38 and the Notes are issued within three months of the Closing Date 3.6 Non-renounceable The Rights Issue is non-renounceable, which means Eligible Shareholders who do not take up their Entitlement cannot sell their Entitlement on the ASX. 3.7 ASX Listing Within 7 Business Days after the date of issue of the Prospectus, the Company intends to apply for a listing and quotation of its Notes on the ASX. If granted, quotation of the Notes will commence in accordance with the timetable set out in section 2.1. It is the responsibility of the Applicants to determine their allocation of Notes prior to trading. Should the Notes not be granted Official Quotation on ASX within 3 months after the date of this Prospectus, none of the Notes offered under this Prospectus will be issued and all Application Money will be refunded without interest to Applicants within the time prescribed by the Corporations Act. 3.8 Non-qualifying Shareholders The Rights Issue is being made only to Eligible Shareholders with registered addresses in Australia or New Zealand. In accordance with the ASX Listing Rules and the Corporations Act, the Company has decided that it would be unreasonable to extend the Offer to Shareholders in countries other than Australia and New Zealand, having regard to: the number of Shareholders with a registered address in those countries; the number and value of Notes that would be issued under the Issue to Shareholders with a registered address in those countries; and costs of complying with legal and other regulatory requirements in those countries. 3.9 Investment risks Investors should carefully read the section on risk factors outlined in section 6. An investment of this kind involves a number of risks, a number of which are specific to the Company and the industry in which it operates CHESS Kimberley will apply to the ASX for the Notes to participate in the Securities Clearing House Electronic Subregister System known as CHESS. CHESS is operated by the ASX Settlement Pty Ltd in accordance with the ASX Listing Rules and the ASX Settlement Operating Rules.

15 After allotment of Notes, Noteholders who are issuer sponsored holders will receive an issuer sponsored statement and those who are CHESS holders will receive an allotment advice. The CHESS advice will set out the number of Notes allotted to each Noteholder pursuant to this Prospectus and advise holders of their holder identification number. Further statements will be provided to Noteholders which reflect any changes in their Note holding in the Company during a particular month Representations by Acceptance By completing and returning your personalised Entitlement and Acceptance Form with Application Moneys or making a payment by BPAY, you will be deemed to have represented that you are an Eligible Shareholder. You will also be deemed to have represented on behalf of each person on whose account you are acting that: (c) you are not in the United States and are neither a U.S. Person nor acting for the account or benefit of a U.S. Person; you acknowledge that the Notes have not been, and will not be, registered under the United States Securities Act of 1933, as amended, or the securities laws of any state or other jurisdiction in the United States, or in any other jurisdiction outside Australia or New Zealand and accordingly, the Notes (and any Additional Notes) may not be offered, sold or otherwise transferred except in accordance with an available exemption from, or in a transaction not subject to the registration requirements of the Securities Act and any other applicable securities laws; and you have not and will not send any materials relating to the Offer to any person in the United States, who is or who is acting for the account or benefit of, a U.S. Person.

16 KEY TERMS OF THE NOTES The Conditions of the Issue of the Notes are reproduced in section 7. This is only a summary of the material terms of the Notes. Issuer Kimberley Metals Limited ACN Trustee The Trust Company (Australia) Limited ACN Issue Price The Issue price of the Notes is $0.38. Conversion Price Maturity Date Interest Rate At conversion, holders may convert each Note, subject to the Conditions of Issue, into 1 Share. Accordingly, for each Note, on conversion the Note holder will receive 1 Share. The Notes will be redeemed at their Issue Price 5 years after the Issue Date unless the holder elects to convert them to Shares. Until the Notes are converted into Shares or redeemed, the Notes will pay interest at 10% per annum. Interest is payable in arrears on 30 June and 31 December of each calendar year until and including the Maturity Date. The first interest payment date is 31 December 2011 with the first payment being accrued interest to that date. Accrued interest will also be paid in the event of an early conversion. Early Redemption Rights If the Company s ordinary shares trade for 45 consecutive business days at above $0.50, the Company will have the right to redeem some or all of the Notes. The Company may not exercise this right for the first 2 years after the issue date. The Company may only exercise its Early Redemption Rights after giving Noteholders: prior written notice of its intention to redeem the Notes; and advising Noteholders that they may convert their Notes into Shares at the Conversion Price, such notice period being no less than 15 business days from the date of such notice. Conversion Rights Notes may be converted into Shares at the rate of 1 Share for each Note on the last day of each quarter and at maturity or if the Company elects to exercise its Early Redemption Rights. The Company may convert the Notes before the Maturity Date in the event of a Takeover Event as described in the Conditions of the Issue. Notes must be converted in multiples of 5,000 or any remainder amount. Ranking on Conversion Participation Rights Each Share issued on conversion will rank equally with all existing Shares then on issue, except that they will not be entitled to any dividend that has been declared or determined but not paid as at the Conversion Date. Before conversion, Noteholders are not entitled to participate in rights issues, any return of capital, bonus issue or capital reconstruction. However, the conversion ratio will be adjusted in the case of a rights issue, return of excess capital or bonus issue. In the case of capital reconstructions, the Notes will be reconstructed in accordance with the Listing Rules.

17 Voting Rights Unsecured Quotation on ASX Noteholders are not entitled to vote at general meetings unless provided for by the Listing Rules or the Corporations Act. The Notes are unsecured and rank ahead of all Shares in the Company. The Company will, within 7 days of the date of this Prospectus, apply for the Notes to be quoted on the ASX.

18 FINANCIAL INFORMATION 5.1 Pro-forma Statement of Financial Position To illustrate the effect of the Issue on the Company, the pro-forma Statement of Financial Position has been prepared based on the Company s Statement of Financial Position. The Statement of Financial Position as provided shows the effect of the Rights Issue and Placement as if the offers under this Prospectus had been made on 31 December The pro-forma assumes that the Rights Issue is fully subscribed and that all Notes which may be offered under the Placement are issued. The pro-forma Statement of Financial Position as at 31 December 2010 has been adjusted and prepared from the Statement of Financial Position adjusted for the following: offer of Convertible Notes as outlined in the Prospectus; net proceeds after costs, from the Rights Issue and Placement, of $ million; and as if the Issue and Placement had taken place on 31 December The accounting policies adopted in preparation of the pro-forma Statement of Financial Position are consistent with the policies adopted and as described in the Company s Statement of Financial Position for the half year ended 31 December 2010.

19 # The cash position of the Company shown in the above pro forma Statement of Financial Position is $22.9m increasing to $36.2 million after the effect of the Placement, Rights Issue and payment of associated costs. It is important to note that as at 30 June 2011 the actual cash position of the Company was $10.5m, as shown in the Company s Appendix 5B Report, (lodged with the ASX on 19 July 2011). This means that a 30 June 2011 pro forma cash position after the effect of the Placement, Offer and payment of associated costs would have been $23.8m,

20 ## The Notes meet the definition of a compound financial instrument in accordance with AASB 132 Financial Instruments: Presentation and Disclosure. Accordingly, the Notes will be valued and split between their equity and liability components but this has not been undertaken in this pro-forma Statement of Financial Position and it is estimated that the equity allocation will be approximately $1.1 million. 5.2 Capital Structure of the Company The capital structure of the Company immediately following the Issue will be as follows # : Shareholder Pre Offer Offer Total Shares 187,906, ,906,042 ## Options cents exp 27 August 2013 cents exp 31 December 2011 cents exp 20 July , ,000 1,650, , ,000 1,650,000 Notes pursuant to prior Placement 10,000,000 Notes pursuant to Rights Issue 25,114,127 35,114,127 # These numbers are subject to the effects of rounding and assume the Rights Issue is fully subscribed and that all Notes which may be offered under the Placement are issued. # # Of the 187,906,042 Shares, 24,453,064 are in escrow.

21 RISK FACTORS 6.1 Introduction An investment in the Company involves a degree of risk particularly having regard to the stage of the Company s business development. The Company is in the process of transitioning from a company solely with exploration and development interests to a company with these interests plus a production operation at Mineral Hill, NSW. There are a number of factors that could have a material adverse effect on the Company s future operating and financial performance and these are described below. While some of these risks can be mitigated by the use of appropriate safeguards and systems, many are outside the control of the Company and cannot be mitigated. Prospective investors should consider the risk factors described below, together with information contained elsewhere in this Prospectus, before deciding whether to apply for Notes. The following is not intended to be an exhaustive list of the risk factors to which the Company is exposed. 6.2 Mineral Hill risk Successful establishment and operation of the production operation at the Mineral Hill mine involves: (c) (d) (e) completion of underground development at Parkers Hill and, initially, the mining of sufficient high grade copper ore to support the processing plant (mining risk); timely, budgeted completion of refurbishment of the processing plant (construction risk); successful commissioning and operation of the processing plant to produce a marketable copper concentrate (processing risk); hiring and retention of required professional and other staff (administration risk); and moving copper concentrates to customers, likely to be in China (logistics risk). These risks have been mitigated through management initiatives but cannot be entirely eliminated. The establishment of the production operation at Mineral Hill requires significant capital expenditure and the assumption of fixed costs in anticipation of production, and thereby cash flow, commencing. To the extent that the above risks, particularly mining risk, construction risk and processing risk operate to delay generation of cash flow, then there is a risk that the remaining cash resources of the Company may be insufficient to fund a protracted deferment of cash flow, or that working capital otherwise earmarked for exploration and development drilling must be diverted to replacing lost or delayed cash flow. 6.3 General market risk The price of Notes may fall as well as rise. In particular, the trading price of Notes at any given time may be higher or lower than the price paid to acquire Notes under this Offer. Further, there can be no assurance that an active trading market will develop in the Notes. Many other factors will also affect the price of the Notes, including general fluctuations in the performance of local and international stock markets, movements in interest and inflation rates, exchange rates and investor sentiment. General economic conditions, including those outlined above, may also have an adverse effect on the Company s exploration, development and production activities, as well as on its ability to fund those activities.

22 Further, 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: (c) (d) (e) (f) general economic outlook; interest rates and inflation rates; current fluctuations; changes in investor sentiment toward particular market sectors; the demand for, and supply of, capital; and terrorism or other hostilities. Neither the Company nor the Directors warrant the future performance of the Company or any return on an investment in the Company. 6.4 Risks related to the Notes Notes have rights which differ substantially from those of Shares. Investors should therefore consider whether the Notes are a suitable investment in the light of their investment objectives, financial circumstances and the risk factors set out in this Prospectus. 6.5 Rights of redemption and conversion before maturity The Notes may be converted by the Company at a rate of 1 Share for every Note before the Maturity Date or upon the occurrence of a Takeover Event as defined in the Conditions of Issue. In certain circumstances the Notes may also be redeemed at the election of the Company prior to maturity. 6.6 Unsecured Nature of the Notes The Notes are not secured over any assets of the Company. They are unsecured liabilities of the Company and in the event of winding up Noteholders would rank behind all secured creditors of the Company. On winding up there is a risk that Noteholders would not receive a full return of capital or any accrued interest entitlement. The Company may enter financing arrangements subsequent to the Issue which may rank ahead of, or equally with the Notes issued under this Prospectus. 6.7 Taxation considerations A general outline of the taxation consequences of investing in Notes is set out in section 8. This discussion is in general terms and is not intended to provide specific advice in relation to the circumstances of any particular investor. Accordingly, investors should seek independent advice in relation to their own individual taxation position. 6.8 General risk factors The Company is exposed to a number of general risks that could affect its assets and liabilities, financial position, profits and losses and prospects. In common with other enterprises undertaking business in the mining sector, some risks are substantially outside the control of the Company. These include, in no particular order of priority, the following: changes in the general economic outlook both in Australia and globally may have an impact upon the performance of the Company. Such changes may include: (i) contractions in the Australian economy or increases in the rate of inflation resulting from domestic or international conditions (including movements in domestic interest rates and reduced economic activity);

23 (ii) (iii) (iv) increases in expenses including costs of goods and services used by the Company; new or increased government taxes or duties or changes in taxation laws including imposts such as royalties, charges and taxes affecting mining activities; and strength of the equity and share markets in Australia and throughout the world; (c) (d) (e) (f) (g) (h) (i) (j) (k) increases in capital expenditure requirements and/or operating costs; failure of customers and counter parties to meet their obligations under sales contracts; operating cash flows may be insufficient to generate a surplus for funding mine improvements; sales proceeds may be diminished due to lower than expected metal prices and/or a stronger Australian dollar so that operating cash is not available to sustain operations; the Mineral Hill mine may not operate profitably and may be temporarily or permanently closed; international smelter treatment charges which are a key cost for the Company may increase significantly; road, rail and ocean shipping costs and the costs/shortage of critical inputs such as diesel fuel, electricity and water may increase beyond the capacity of the Company to reduce these costs by other efficiencies or economies; geotechnical failure may occur in the Mineral Hill mine which sterilises otherwise economically recoverable ore or which adversely impacts on mining access, sequencing or mining methods; critical equipment in the Mineral Hill mine or processing plant may breakdown, adversely impacting on the continuity or costs of production; and damage to facilities or interruption of access to facilities due to fire, flood or storm. 6.9 Other Risks Specific to an investment in Kimberley Speculative Nature of Mineral Exploration and Development Development of the Company s mineral exploration properties is contingent upon obtaining satisfactory exploration results. Mineral exploration and development involves substantial expenses and a high degree of risk, which even a combination of experience, knowledge and careful evaluation may not be able to adequately mitigate. The degree of risk increases substantially when a company s properties are in the exploration as opposed to the development phase. There is no assurance that commercial quantities of ore will be discovered on any of the Company s exploration properties. There is also no assurance that, even if commercial quantities of ore are discovered, a mineral deposit will be brought into commercial production. The discovery of mineral deposits is dependent upon a number of factors not the least of which is the technical skill of the exploration personnel involved. The commercial viability of a mineral deposit, once discovered, is also dependent upon a number of factors, some of which are the particular attributes of the deposit, such as size, grade and proximity to infrastructure, metal prices and government regulations, including regulations relating to royalties, allowable production, importing and exporting of minerals, and environmental protection. In addition, assuming discovery of a commercial ore-body, depending on the type of mining operation involved, several years can elapse from the initial phase of drilling until commercial operations are commenced. Most of the above factors are beyond the control of the Company.

24 Additional Requirements for Capital and Future Financing 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. There is no assurance that the Company will be successful in obtaining financing required as and when needed. Further exploration and development of the various mineral properties in which Kimberley holds interests may depend upon the Company s ability to obtain financing through joint ventures, debt financing, equity financing or other means. Volatile markets for mineral commodities may make it difficult or impossible for the Company to obtain debt financing or equity financing on favourable terms or at all. Failure to obtain additional financing on a timely basis may cause the Company to postpone its development plans, dispose of rights in some or all of its properties or joint ventures, scale back its exploration programs or reduce the scope of or terminate some or all of its operations. Further, the Offer is not underwritten and it is possible that insufficient funds will be raised by the Company to meet all of its objectives as outlined in this Prospectus. If the Company does not raise the maximum subscription under this Prospectus it will need to scale back some of its proposed plans. In turn, this may mean that the Company will need to seek to raise further funds earlier than would be the case if the maximum subscription of Notes is achieved. (c) Mineral Resources and Ore Reserves No assurance can be given that the anticipated tonnages and grades of ore will be achieved during production or that any level of metal recovery will be realised. 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. By their very nature, resource estimates are imprecise and depend to some extent on interpretations, which may prove to be inaccurate. In addition, commodity price fluctuations, as well as increased production costs or reduced recovery rates, may render ore reserves containing relatively lower grades uneconomic and may ultimately result in a restatement of such ore reserves. Moreover, short-term operating factors relating to ore reserves, such as the need for sequential development of ore bodies and the processing of new or different ore types or grades may cause a mining operation to be unprofitable in any particular accounting period. (d) Uncertainty Relating to Inferred Mineral Resources Inferred mineral resources that are not mineral reserves do not have demonstrated economic viability. Due to the uncertainty which may attach to inferred mineral resources, there is no assurance that inferred mineral resources will be upgraded to measured or indicated resources or proven or probable mineral reserves as a result of continued exploration. (e) Security of Tenure Interests in mineral tenements in Australia are governed by State legislation and are evidenced by the granting of licenses 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 tenements if license conditions are not met or if insufficient funds are available to meet expenditure commitments. All tenements in which the Company has interests are subject to renewal conditions or are yet to be granted, which will be at the discretion of the relevant State governmental department. The maintaining of tenements, obtaining renewals, or getting tenements granted, often depends on the Company being successful in