AUSQUEST LIMITED — Capital/Financing Update 2019

Oct 15, 2019

16 October 2019 ASX Release

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CAPITAL RAISING TO ADVANCE EXPLORATION PROGRAMS

Highlights

• AusQuest to raise up to approximately A$2.4 million (before costs) to advance its exploration programs on the Company’s 100% owned properties and to identify and investigate new acquisition and/or exploration opportunities both in Australia and Peru that might be of further interest to the Company’s strategic alliance partner South32, or be retained as 100% owned AusQuest projects.

• Capital Raising to consist of:

• a Placement to sophisticated and institutional investors to raise up to A$0.5M; and

• a 1-for-4 non-renounceable pro-rata Rights Offer to raise up to a further approximately A$1.9M (before costs).

• AusQuest’s largest shareholder, Chrysalis Investments Pty Ltd, an entity controlled by AusQuest’s non-executive Director Chris Ellis, which currently has a 22.7% holding in the Company, proposes to provide cornerstone support by taking up its full Entitlement under the Rights Offer.

• Drilling at the Company’s Balladonia and Cerro de Fierro Projects to follow-up encouraging assay results from earlier drilling (ASX release 11 September 2019), is expected to commence in late November 2019.

AusQuest Limited (ASX code : AQD) (“ AusQuest” or the “ Company ”) is pleased to announce that it has secured firm commitments to raise up to A$0.5 million through a placement of up to approximately 35,714,286 fully paid ordinary shares (“ Shares ”) at an issue price of A$0.014 per Share to qualified sophisticated and professional investors, with each Share having a free attaching option (exercisable at $0.025 on or before 30 November 2021) (“ New Options ”) (“ Placement ”).

The Company is also pleased to announce that it will undertake a 1 for 4 pro-rata rights offer to the Company’s eligible shareholders on the same terms, including the same issue price of A$0.014 per Share and with each new Share issued having attached a New Option, to raise approximately A$1.9 million (before costs) (“ Rights Offer ”). Further details of the Placement and the Rights Offer are set out below.

AusQuest’s Managing Director, Graeme Drew, commented that AusQuest welcomes the support demonstrated for this Placement by new investors to the Company and is very pleased to be able to offer existing eligible shareholders the same opportunity, at a time when the Company is about to embark on a busy period of exploration drilling at two of its more

AusQuest Limited 8 Kearns Crescent Ardross WA 6153 (T): 08 9364 3866 (F): 08 9364 4892 www.ausquest.com.au

advanced projects – Balladonia in the Fraser Range of WA and Cerro de Fierro in southern Peru.

‘The Capital Raising will position AusQuest in a strong financial position especially in light of our Strategic Alliance with South32, and provides our shareholders with the right to maintain their relative shareholding in AusQuest at this exciting time in the Company’s history’ he said.

Hartleys Limited is acting as Lead Manager to the Placement and Rights Offer.

Use of Proceeds

Funds raised by the Placement and Rights Offer together with existing cash reserves, will be used to carry out exploration programs on the Company’s 100% owned projects, and to identify and investigate new acquisition and/or exploration opportunities both in Australia and Peru that might be of further interest to the Company’s strategic alliance partner South32 or be retained as 100% owned AusQuest projects, plus for working capital purposes.

Placement

The Company has secured firm commitments to raise up to A$0.5 million under the Placement to qualified sophisticated and professional investors.

The Company will utilise its existing placement capacity under ASX Listing Rule 7.1 (up to 35,714,286 Shares and 35,714,286 New Options) for the Placement with Shares expected to be issued by 25 October 2019, which is 3 days post the Record Date for the Rights Offer.

Rights Offer

The Rights Offer issue price of A$0.014 per Share is the same issue price as under the Placement, representing a discount of approximately 13% to the 5 day volume weighted average price (VWAP) of Shares for days in which trading occurred period to the date of this announcement. Each Share issued under the Rights Offer will have a free attaching New Option.

AusQuest’s largest shareholder, Chrysalis Investments Pty Ltd, an entity controlled by nonexecutive Director Mr Chris Ellis, which currently has a 22.7% holding in the Company, has indicated that it proposes to subscribe for its full entitlement under the Rights Offer (subject to the provisions of the Corporations Act).

The Rights Offer is being extended to all AusQuest shareholders who are registered holders of Shares at 5.00pm AWST on 22 October 2019 (“ Record Date ”) and have a registered address in Australia or New Zealand. The Rights Offer is not being extended to overseas AusQuest shareholders who, on the Record Date, have a registered address outside Australia or New Zealand.

The Rights Offer is expected to open on 25 October 2019 and close at 5.00pm AWST on 8 November 2019, subject to extension.

AusQuest Limited 8 Kearns Crescent Ardross WA 6153 (T): 08 9364 3866 (F): 08 9364 4892 www.ausquest.com.au

Shortfall Offer

Any Entitlement not taken up under the Rights Offer will be included as part of an offer for the shortfall under which eligible shareholders who take up their full entitlement, and other members of the public, can apply for additional Shares in the Company at the same price and on the same terms as for the Rights Offer (“ Shortfall Offer ”). There is no guarantee that applicants under the Shortfall Offer will receive all or any of the Shares that they apply for. Shares under the Shortfall Offer will be issued at the discretion of the Directors, in consultation with the Lead Manager.

Indicative Timetable

An indicative timetable for the Placement and Rights Offer is set out below.

Event	Target Date
Announcement of Offers and Placement and Appendix 3B lodged	16 October 2019
with ASX
Prospectus lodged with ASIC	17 October 2019
Prospectus lodged with ASX	17 October 2019
Notice of Rights Offer sent to Option Holders	17 October 2019
Notice of Rights Offer sent to Shareholders	18 October 2019
Ex-date	21 October 2019
Record Date for determiningEntitlements	22 October 2019
Prospectus and Entitlement and Acceptance Form sent to Eligible	25 October 2019
Shareholders
OpeningDate	25 October 2019
Placement Issue Date	25 October 2019
Last dayto extend the ClosingDate	5 November 2019
ClosingDate (if not extended)	8 November 2019
Securitiesquoted on a deferred settlement basis	11 November 2019
Notice to ASX of Shortfall	13 November 2019
Issue date of New Shares and New Options under the Rights	15 November 2019
Offer
Normal tradingcommences	18 November 2019
Despatch of holdingstatements	19 November 2019

Note: The above Timetable is indicative only. Subject to the Listing Rules and the Corporations Act, the dates may change. The Directors may extend the Closing Date by giving at least three Business Days’ notice to ASX prior to the Closing Date.

The Company intends to lodge a prospectus with ASIC on or about 17 October 2019 and a copy will be mailed to eligible shareholders on or about 25 October 2019. The Prospectus will also include a personalised Entitlement and Acceptance Form, showing the entitlement for each shareholder and providing instructions on how to participate in the Rights Offer and the Shortfall Offer. Those shareholders who the Company determines to be ineligible to participate will be notified of that fact.

AusQuest Limited 8 Kearns Crescent Ardross WA 6153 (T): 08 9364 3866 (F): 08 9364 4892 www.ausquest.com.au

An Appendix 3B notice in respect of the Placement and Rights Offer accompanies this announcement.

The Directors of AusQuest encourage all eligible shareholders to consider this investment opportunity carefully in light of the Company’s upcoming exploration drill programs, and thank you for your ongoing support.

This announcement is intended to release the Company from its trading halt.

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Graeme Drew Managing Director

COMPETENT PERSON’S STATEMENT

The details contained in this report that pertain to exploration results are based upon information compiled by Mr Graeme Drew, a full-time employee of AusQuest Limited. Mr Drew is a Fellow of the Australasian Institute of Mining and Metallurgy (AUSIMM) and has sufficient experience in the activity which he is undertaking to qualify as a Competent Person as defined in the December 2012 edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves” (JORC Code). Mr Drew consents to the inclusion in the report of the matters based upon his information in the form and context in which it appears.

FORWARD LOOKING STATEMENT

This report contains forward looking statements concerning the projects owned by AusQuest Limited. Statements concerning mining reserves and resources may also be deemed to be forward looking statements in that they involve estimates based on specific assumptions. Forward-looking statements are not statements of historical fact and actual events and results may differ materially from those described in the forward looking statements as a result of a variety of risks, uncertainties and other factors. Forward looking statements are based on management’s beliefs, opinions and estimates as of the dates the forward looking statements are made and no obligation is assumed to update forward looking statements if these beliefs, opinions and estimates should change or to reflect other future developments.

AusQuest Limited 8 Kearns Crescent Ardross WA 6153 (T): 08 9364 3866 (F): 08 9364 4892 www.ausquest.com.au

Rule 2.7, 3.10.3, 3.10.4, 3.10.5

Appendix 3B

New issue announcement, application for quotation of additional securities and agreement

Information or documents not available now must be given to ASX as soon as available. Information and documents given to ASX become ASX’s property and may be made public.

Introduced 01/07/96 Origin: Appendix 5 Amended 01/07/98, 01/09/99, 01/07/00, 30/09/01, 11/03/02, 01/01/03, 24/10/05, 01/08/12, 04/03/13

Name of entity

AusQuest Limited (‘Company’)

ABN

35 091 542 451

We (the entity) give ASX the following information.

Part 1 - All issues

You must complete the relevant sections (attach sheets if there is not enough space).

1 +Class of+securities issued or to be issued 2 Number of+securities issued or to be issued (if known) or maximum number which may be issued	1. Fully paid ordinary shares 2. Fully paid ordinary shares 3. Listed options 4. Listed options
	Up to 1. 35,714,286 shares pursuant to a placement 2. 137,326,265 shares pursuant to a 1 for 4 non- renounceable rights issue 3. 35,714,286 free attaching options 4. 137,326,265 free attaching options with the exact number to be issued subject to rounding, shareholder acceptances and the Company’s ability to place any shortfall

• See chapter 19 for defined terms.

Appendix 3B Page 1

04/03/2013

3 Principal terms of the +securities (e.g. if options, exercise price and expiry date; if partly paid+securities, the amount outstanding and due dates for payment; if +convertible securities, the conversion price and dates for conversion) 4 Do the+securities rank equally in all respects from the+issue date with an existing+class of quoted+securities? If the additional+securities do not rank equally, please state:  the date from which they do  the extent to which they participate for the next dividend, (in the case of a trust, distribution) or interest payment  the extent to which they do not rank equally, other than in relation to the next dividend, distribution or interest payment 5 Issue price or consideration 6 Purpose of the issue (If issued as consideration for the acquisition of assets, clearly identify those assets)	1. Fully paid ordinary shares issued at $0.014 each on the same terms as other ordinary shares currently on issue 2. Fully paid ordinary shares issued at $0.014 each on the same terms as other ordinary shares currently on issue 3. Listed options exercisable at $0.025 expiring on 30 November 2021 4. Listed options exercisable at $0.025 expiring on 30 November 2021
	1. Yes, rank equally with existing fully paid ordinary shares 2. Yes, rank equally with existing fully paid ordinary shares 3. No, however on exercise of options, ordinary shares will rank equally with quoted fully paid ordinary shares 4. No, however on exercise of options, ordinary shares will rank equally with quoted fully paid ordinary shares
	1. $0.014 per ordinary share 2. $0.014 per ordinary share 3. Nil (free-attaching) 4. Nil (free-attaching)
	The Company intends to apply the funds raised by the Placement and Rights Offer, together with existing cash reserves, to carry out exploration programs on the Company’s 100% owned projects, and to identify and investigate new acquisition and/or exploration opportunities both in Australia and Peru that might be of further interest to the Company’s strategic alliance partner South32 or be retained as 100% owned AusQuest projects, plus for working capital purposes

6a Is the entity an+eligible entity that has obtained security holder approval under rule 7.1A? If Yes, complete sections 6b – 6h in relation to the+securities the subject of this Appendix 3B, and comply with section 6i 6b The date the security holder resolution under rule 7.1A was passed 6c Number of+securities issued without security holder approval under rule 7.1 6d Number of+securities issued with security holder approval under rule 7.1A 6e Number of+securities issued with security holder approval under rule 7.3, or another specific security holder approval (specify date of meeting) 6f Number of+securities issued under an exception in rule 7.2 6g If+securities issued under rule 7.1A, was issue price at least 75% of 15 day VWAP as calculated under rule 7.1A.3? Include the +issue date and both values. Include the source of the VWAP calculation. 6h If+securities were issued under rule 7.1A for non-cash consideration, state date on which valuation of consideration was released to ASX Market Announcements 6i Calculate the entity’s remaining issue capacity under rule 7.1 and rule 7.1A – complete Annexure 1 and release to ASX Market Announcements	Yes
	21 November 2018
	Up to 71,428,572 (comprising 35,714,286 shares and 35,714,286 options)
	Nil
	Nil
	Up to 137,326,265 Fully paid ordinary shares Up to 137,326,265 Listed options
	Not applicable
	Not applicable
	Refer to Annexure 1

• See chapter 19 for defined terms.

Appendix 3B Page 3

04/03/2013

7 +Issue dates 1. 25 October 2019 2. 15 November 2019 Note: The issue date may be prescribed by ASX (refer to the definition of issue date in 3. 25 October 2019 rule 19.12). For example, the issue date for a 4. 15 November 2019 pro rata entitlement issue must comply with the applicable timetable in Appendix 7A. Cross reference: item 33 of Appendix 3B.

Number + Class 8 Number and +class of all 722,345,612 Fully paid ordinary +securities quoted on ASX shares, of which: ( including the +securities in section 2 if applicable) 500,000 fully paid ordinary shares are escrowed until the earlier of 30 May 2020 or until the Company issues a prospectus, cleansing statement or some other form of disclosure document 173,040,551 Listed options exercisable at $0.025 each, expiring on 30 November 2021

Number +Class 9 Number and +class of all 39,500,000 Unlisted options +securities not quoted on ASX exercisable at $0.05 ( including the +securities in each, expiring on 30 section 2 if applicable) November 2020 10 Dividend policy (in the case of a Currently no policy trust, distribution policy) on the increased capital (interests)

Part 2 - Pro rata issue

art 2 - Pro rata issue
11 Is security holder approval required? 12 Is the issue renounceable or non- renounceable? 13 Ratio in which the+securities will be offered	No
	Non-renounceable
	1 new share for every 4 shares held with 1 free attachingoption for everyshare issued

14 +Class of+securities to which the offer relates 15 +Record date to determine entitlements 16 Will holdings on different registers (or sub registers) be aggregated for calculating entitlements? 17 Policy for deciding entitlements in relation to fractions 18 Names of countries in which the entity has security holders who will not be sent new offer documents Note: Security holders must be told how their entitlements are to be dealt with. Cross reference: rule 7.7. 19 Closing date for receipt of acceptances or renunciations 20 Names of any underwriters 21 Amount of any underwriting fee or commission 22 Names of any brokers to the issue 23 Fee or commission payable to the broker to the issue 24 Amount of any handling fee payable to brokers who lodge acceptances or renunciations on behalf of security holders 25 If the issue is contingent on security holders’ approval, the date of the meeting 26 Date entitlement and acceptance form and offer documents will be sent to persons entitled	Fully paid ordinary shares Listed options (new class)
	22 October 2019
	No
	Rounded down to the nearest whole number
	All countries other than Australia and New Zealand where it is determined that it will be unlawful to make the offer, specifically including Laos, Thailand, United States of America, Singapore, Papua New Guinea, Malaysia, Ghana and the United Kingdom of Great Britain and Northern Ireland
	8 November 2019
	N/A
	Nil
	Hartleys Limited
	6% on funds raised other than those raised from directors
	Not applicable
	Not applicable
	25 October 2019

• See chapter 19 for defined terms.

Appendix 3B Page 5

04/03/2013

27 If the entity has issued options, and the terms entitle option holders to participate on exercise, the date on which notices will be sent to option holders 28 Date rights trading will begin (if applicable) 29 Date rights trading will end (if applicable) 30 How do security holders sell their entitlements_in full_through a broker? 31 How do security holders sell_part_ of their entitlements through a broker and accept for the balance? 32 How do security holders dispose of their entitlements (except by sale through a broker)? 33 +Issue date	17 October 2019
	Not applicable
	Not applicable
	Not applicable
	Not applicable
	Not applicable
	15 November 2019

Part 3 - Quotation of securities

You need only complete this section if you are applying for quotation of securities

• 34 Type of[+] securities ( tick one )

• (a) +Securities described in Part 1

• (b)[All other ][+][securities ]

Example: restricted securities at the end of the escrowed period, partly paid securities that become fully paid, employee incentive share securities when restriction ends, securities issued on expiry or conversion of convertible securities

Entities that have ticked box 34(a)

Additional securities forming a new class of securities

Tick to indicate you are providing the information or documents (To be provided once available)

35

If the[+] securities are[+] equity securities, the names of the 20 largest holders of the additional[+] securities, and the number and percentage of additional[+] securities held by those holders

36 If the[+] securities are[+] equity securities, a distribution schedule of the additional +securities setting out the number of holders in the categories 1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 and over

37 A copy of any trust deed for the additional[+] securities

Entities that have ticked box 34(b)

38 Number of[+] securities for which Not applicable +quotation is sought 39 +Class of +securities for which Not applicable quotation is sought 40 Do the[+] securities rank equally in Not applicable all respects from the[+] issue date with an existing[+] class of quoted +securities? If the additional[+] securities do not rank equally, please state:  the date from which they do  the extent to which they participate for the next dividend, (in the case of a trust, distribution) or interest payment  the extent to which they do not rank equally, other than in relation to the next dividend, distribution or interest payment 41 Reason for request for quotation Not applicable now Example: In the case of restricted securities, end of restriction period (if issued upon conversion of another[+] security, clearly identify that other[+] security) Number + Class 42 Number and +class of all Not applicable +securities quoted on ASX ( including the[+] securities in clause 38)

• See chapter 19 for defined terms.

Appendix 3B Page 7

04/03/2013

Quotation agreement

• 1 Quotation of our additional securities is in ASX’s absolute discretion. ASX may quote the[+] securities on any conditions it decides.

• 2 We warrant the following to ASX.

• The issue of the[+] securities to be quoted complies with the law and is not for an illegal purpose.

• There is no reason why those[+] securities should not be granted[+] quotation.

• An offer of the[+] securities for sale within 12 months after their issue will not require disclosure under section 707(3) or section 1012C(6) of the Corporations Act.

  • Note: An entity may need to obtain appropriate warranties from subscribers for the securities in order to be able to give this warranty

• Section 724 or section 1016E of the Corporations Act does not apply to any applications received by us in relation to any[+] securities to be quoted and that no-one has any right to return any[+] securities to be quoted under sections 737, 738 or 1016F of the Corporations Act at the time that we request that the[+] securities be quoted.

• If we are a trust, we warrant that no person has the right to return the +securities to be quoted under section 1019B of the Corporations Act at the time that we request that the[+] securities be quoted.

• 3 We will indemnify ASX to the fullest extent permitted by law in respect of any claim, action or expense arising from or connected with any breach of the warranties in this agreement.

• 4 We give ASX the information and documents required by this form. If any information or document is not available now, we will give it to ASX before +quotation of the +securities begins. We acknowledge that ASX is relying on the information and documents. We warrant that they are (will be) true and complete.

Sign here: [ signed electronically ] Print name: Henko Vos (Company Secretary)

Date: 16 October 2019

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Appendix 3B – Annexure 1

Calculation of placement capacity under rule 7.1 and rule 7.1A for eligible entities

Introduced 01/08/12 Amended 04/03/13

Part 1

Rule 7.1 – Issues exceeding 15% of capital

Step 1: Calculate “A”, the base figure from which the placement capacity is calculated

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Insert number of fully paid [+] ordinary 526,565,756
securities on issue 12 months before the
+ issue date or date of agreement to issue
Add the following: 20,239,305
• Number of fully paid [+] ordinary securities 137,326,265
issued in that 12 month period under an
exception in rule 7.2
• Number of fully paid [+] ordinary securities
issued in that 12 month period with
shareholder approval
• Number of partly paid [+] ordinary
securities that became fully paid in that
12 month period
Note:
• Include only ordinary securities here –
other classes of equity securities cannot
be added
• Include here (if applicable) the securities
the subject of the Appendix 3B to which
this form is annexed
• It may be useful to set out issues of
securities on different dates as separate
line items
Subtract the number of fully paid [+] ordinary Nil
securities cancelled during that 12 month
period
“A” 684,131,326
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• See chapter 19 for defined terms.

Appendix 3B Page 9

04/03/2013

Step 2: Calculate 15% of “A”

Step 2: Calculate 15% of “A”	Step 2: Calculate 15% of “A”
“B”	0.15 [Note: this value cannot be changed]
Multiply“A” by 0.15	102,619,698
Step 3: Calculate “C”, the amount of placement capacity under rule 7.1 that has already been used
Insertnumber of+equity securities issued or agreed to be issued in that 12 month period_not counting_those issued: • Under an exception in rule 7.2 • Under rule 7.1A • With security holder approval under rule 7.1 or rule 7.4 Note: • This applies to equity securities, unless specifically excluded – not just ordinary securities • Include here (if applicable) the securities the subject of the Appendix 3B to which this form is annexed • It may be useful to set out issues of securities on different dates as separate line items	2,000,000 (22 Nov 2018) 500,000 (30 May 2019) 71,428,572 (25 October 2019)
“C”	73,928,572
Step 4: Subtract “C” from [“A” x “B”] to calculate remaining placement capacity under rule 7.1
“A” x 0.15 Note: number must be same as shown in Step 2	102,619,698
Subtract“C” Note: number must be same as shown in Step 3	73,928,572
Total[“A” x 0.15] – “C”	28,691,126 Note: this is the remaining placement capacity under rule 7.1

“A” x 0.15 102,619,698 Note: number must be same as shown in Step 2 Subtract “C” 73,928,572 Note: number must be same as shown in Step 3 Total [“A” x 0.15] – “C” 28,691,126 Note: this is the remaining placement capacity under rule 7.1

Part 2

Rule 7.1A – Additional placement capacity for eligible entities

Part 2	Part 2
Rule 7.1A – Additional placement capacity for eligible entities
Step 1: Calculate “A”, the base figure from which the placement capacity is calculated
“A” Note: number must be same as shown in Step 1 of Part 1	684,131,326
Step 2: Calculate 10% of “A”
“D”	0.10 Note: this value cannot be changed
Multiply“A” by 0.10	68,413,132
Step 3: Calculate “E”, the amount of placement capacity under rule 7.1A that has already been used
Insertnumber of+equity securities issued or agreed to be issued in that 12 month period under rule 7.1A Notes: • This applies to equity securities – not just ordinary securities • Include here – if applicable – the securities the subject of the Appendix 3B to which this form is annexed • Do not include equity securities issued under rule 7.1 (they must be dealt with in Part 1), or for which specific security holder approval has been obtained • It may be useful to set out issues of securities on different dates as separate line items	Nil
“E”	Nil

• See chapter 19 for defined terms.

Appendix 3B Page 11

04/03/2013

Step 4: Subtract “E” from [“A” x “D”] to calculate remaining placement capacity under rule 7.1A

Step 4: Subtract “E” from [“A” x “D”] to calculate remaining placement capacity under rule 7.1A	Step 4: Subtract “E” from [“A” x “D”] to calculate remaining placement capacity under rule 7.1A
“A” x 0.10 Note: number must be same as shown in Step 2	68,413,132
Subtract“E” Note: number must be same as shown in Step 3	Nil
Total[“A” x 0.10] – “E”	68,413,132 Note: this is the remaining placement capacity under rule 7.1A