CAPRICORN METALS LTD — Proxy Solicitation & Information Statement 2019

Aug 22, 2019

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CAPRICORN METALS LTD ACN 121 700 105

NOTICE OF GENERAL MEETING

Notice is given that the Meeting will be held at:

TIME : 10.30 am WST DATE : Tuesday, 24 September 2019 PLACE : The Country Women’s Association 1176 Hay Street West Perth WA 6005

The business of the Meeting affects your shareholding and your vote is important.

This Notice of Meeting should be read in its entirety. If Shareholders are in doubt as to how they should vote, they should seek advice from their professional advisers prior to voting.

The Directors have determined pursuant to Regulation 7.11.37 of the Corporations Regulations 2001 (Cth) that the persons eligible to vote at the Meeting are those who are registered Shareholders at 4:00pm WST on Sunday, 22 September 2019.

CONTENTS

Business of the Meeting (setting out the proposed Resolutions)	3
Explanatory Statement (explaining the proposed Resolutions)	4
Glossary	8
IMPORTANT INFORMATION

Time and place of Meeting

Notice is given that the Meeting will be held at 10.30 am (WST) on Tuesday, 24 September 2019 at: The Country Women’s Association, 1176 Hay Street, West Perth WA 6005

Your vote is important

The business of the Meeting affects your shareholding and your vote is important.

Voting eligibility

The Directors have determined pursuant to Regulation 7.11.37 of the Corporations Regulations 2001 (Cth) that the persons eligible to vote at the Meeting are those who are registered Shareholders at 4:00pm (WST) on Sunday, 22 September 2019.

Voting in person

To vote in person, attend the Meeting at the time, date and place set out above.

Voting by proxy

To vote by proxy, please complete and sign the separately provided, personalised, Proxy Form and return by the time and in accordance with the instructions set out on the Proxy Form.

In accordance with section 249L of the Corporations Act, Shareholders are advised that:

• each Shareholder has a right to appoint a proxy;

• the proxy need not be a Shareholder of the Company; and

• a Shareholder who is entitled to cast 2 or more votes may appoint 2 proxies and may specify the proportion or number of votes each proxy is appointed to exercise. If the Shareholder appoints 2 proxies and the appointment does not specify the proportion or number of the Shareholder’s votes, then in accordance with section 249X(3) of the Corporations Act, each proxy may exercise one-half of the votes.

Shareholders and their proxies should be aware that:

• if proxy holders vote, they must cast all directed proxies as directed; and

• any directed proxies which are not voted will automatically default to the Chair, who must vote the proxies as directed.

Should you wish to discuss the matters in this Notice of Meeting please do not hesitate to contact the Company Secretary on +61 8 9212 4600.

CAPRICORN METALS LTD

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BUSINESS OF THE MEETING

AGENDA

1. RESOLUTION 1 – RATIFICATION OF PRIOR ISSUE UNDER LISTING RULE 7.1

To consider and, if thought fit, to pass the following resolution as an ordinary resolution :

“That for the purposes of ASX Listing Rule 7.4 and for all other purposes, Shareholders ratify the prior issue of 31,772,793 Shares to professional and sophisticated investors on the terms and conditions described in the Explanatory Statement.”

Voting Exclusion :

The Company will disregard any votes cast in favour of the Resolution by or on behalf of a person who participated in the issue or any associates of those persons. However, the Company need not disregard a vote if it is cast by a person as a proxy for a person who is entitled to vote, in accordance with the directions on the Proxy Form, or, it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

2. RESOLUTION 2 – RATIFICATION OF PRIOR ISSUE UNDER LISTING RULE 7.1A

To consider and, if thought fit, to pass the following resolution as an ordinary resolution :

“That for the purposes of ASX Listing Rule 7.4 and for all other purposes, Shareholders ratify the prior issue of 93,653,334 Shares to professional and sophisticated investors on the terms and conditions described in the Explanatory Statement.”

Voting Exclusion :

The Company will disregard any votes cast in favour of the Resolution by or on behalf of a person who participated in the issue or any associates of those persons. However, the Company need not disregard a vote if it is cast by a person as a proxy for a person who is entitled to vote, in accordance with the directions on the Proxy Form, or, it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

3. RESOLUTION 3 – APPROVAL TO ISSUE PLACEMENT SHARES

To consider and, if thought fit, to pass the following resolution as an ordinary resolution :

“That, for the purpose of Listing Rule 7.1 and for all other purposes, approval is given for the Company to issue up to 280,823,873 Shares to professional and sophisticated investors on the terms and conditions described in the Explanatory Statement.”

Voting Exclusion :

The Company will disregard any votes cast in favour of the Resolution by or on behalf of a person who is expected to participate in, or who will obtain a material benefit as a result of, the proposed issue (except a benefit solely by reason of being a holder of ordinary securities in the Company) or any associates of that person (or those persons). However, the Company need not disregard a vote if it is cast by a person as a proxy for a person who is entitled to vote, in accordance with the directions on the Proxy Form, or, it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

Dated: 20 August 2019 By order of the Board

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Natasha Santi Company Secretary

CAPRICORN METALS LTD

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EXPLANATORY STATEMENT

This Explanatory Statement has been prepared to provide information which the Directors believe to be material to Shareholders in deciding whether or not to pass the Resolutions.

1. BACKGROUND TO RESOLUTIONS

On 13 August 2019, the Company announced a total capital raising of up to $65.0 million, through the issue of a maximum of 406,250,000 Shares at an issue price of $0.16 per share ( Placement ). The Placement is being undertaken in two tranches.

The Shares issued pursuant to Tranche 1 ( Tranche 1 Placement Shares ) were issued on 20 August 2019 without Shareholder approval, to the following persons:

• (i) 113,387,305 Shares to sophisticated and professional investors; and

• (ii) 12,038,822 Shares to Hawke's Point Holdings I Limited ( Hawke's Point ).

The Shares issued to Hawke's Point were issued pursuant to an existing top up right Hawke's Point has pursuant to a subscription agreement entered into with the Company and in accordance with a waiver granted by the ASX to ASX Listing Rule 6.18 ( Top-Up Right ).

The Shares to be issued pursuant to Tranche 2 of the Placement ( Tranche 2 Placement Shares ) are subject to Shareholder approval (which the Company is seeking Shareholder approval for, pursuant to Resolution 3 of this Notice) and will comprise the offer of:

• (i) 253,869,451 Shares to sophisticated and professional investors; and

• (ii) 26,954,422 Shares to Hawke's Point (pursuant to the Hawke's Point Top-Up Right).

2. RESOLUTION 1 & 2 – RATIFICATION OF PRIOR ISSUE UNDER LISTING RULES 7.1 AND 7.1A

2.1 General

On 20 August 2019, the Company issued 125,426,127 Shares under the Placement to raise $20.07 million.

The allotments were made without Shareholder approval, with 31,772,793 Placement Shares being issued under Listing Rule 7.1, which allows up to 15% of eligible capital to be issued without shareholder approval, and with 93,653,334 Placement Shares being issued under Listing Rule 7.1A, which allows up to 10% of eligible capital to be issued under prior approval gained at the preceding annual general meeting.

Resolutions 1 and 2 seek Shareholder ratification pursuant to ASX Listing Rule 7.4 for the issue of the Tranche 1 Placement Shares.

Resolution 1 and 2 are ordinary resolutions.

The Chairman intends to exercise all available proxies (which grant him a voting discretion) in favour of Resolutions 1 and 2.

2.2 Listing Rules 7.1 and 7.1A

Resolution 1

ASX Listing Rule 7.1 provides that a company must not, subject to specified exceptions, issue or agree to issue more Equity Securities during any 12-month period than that amount which represents 15% of the number of fully paid ordinary securities on issue at the commencement of that 12-month period.

ASX Listing Rule 7.4 sets out an exception to ASX Listing Rule 7.1. It provides that where a company in general meeting ratifies the previous issue of securities made pursuant to ASX Listing Rule 7.1 (and provided

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that the previous issue did not breach ASX Listing Rule 7.1) those securities will be deemed to have been made with shareholder approval for the purpose of ASX Listing Rule 7.1.

By shareholders ratifying the issue which is the subject of Resolution 1, the Company will retain the flexibility to issue Equity Securities in the future up to the 15% placement capacity set out in ASX Listing Rule 7.1 without the requirement to obtain prior Shareholder approval.

Resolution 2

ASX Listing Rule 7.1A provides that, in addition to issues permitted without prior shareholder approval under Listing Rule 7.1, an entity which is eligible and obtains approval under ASX Listing Rule 7.1A may, during the period for which the approval is valid, issue or agree to issue a number of equity securities, in an existing class of quoted equity securities, which represents 10% of the number of fully paid ordinary securities on issue at the commencement of that 12 month period as adjusted in accordance with the formula in Listing Rule 7.1A.2.

The Company obtained the requisite shareholder approval under Listing Rule 7.1A at its 2018 annual general meeting.

Where an eligible entity obtains shareholder approval to increase its placement capacity under ASX Listing Rule 7.1A then any ordinary securities issued under that additional placement capacity:

• (i) will not be counted in variable “A” in the formula in ASX Listing Rule 7.1A; and

• (ii) are counted in variable “E”,

until their issue has been ratified under ASX Listing Rule 7.4 (and provided that the previous issue did not breach ASX Listing Rule 7.1A) or 12 months has passed since their issue.

The issue of securities made relying on ASX Listing Rule 7.1A can, after they have been made, be ratified under ASX Listing Rule 7.4

By shareholders ratifying the issue of the 93,653,334 Placement Shares issued under Listing Rule 7.1A by passing Resolution 2, the Company will retain the flexibility to issue equity securities (in an existing class of quoted equity securities) in the future up to the 10% placement capacity set out in ASX Listing Rule 7.1A without the requirement to obtain further Shareholder approval (subject to the Listing Rules and the Corporations Act). It would also have the effect of increasing the base figure upon which the Company’s 15% placement capacity is calculated earlier than would otherwise be the case.

2.3 Technical information required by ASX Listing Rule 7.5

Resolution 1

Pursuant to and in accordance with ASX Listing Rule 7.5, the following information is provided in relation to Resolution 1:

• (i) 31,772,793 Shares were issued on 20 August 2019 (being part of the Tranche 1 Placement Shares) at an issue price of $0.16 per Share;

• (ii) all Tranche 1 Placement Shares issued were fully paid ordinary shares and rank equally with all other Shares on issue;

• (iii) the 31,772,793 Shares were issued to professional and sophisticated investors (none of whom were a related party of the Company), including to Hawke’s Point pursuant to the Hawke’s Point Top-Up Right;

• (iv) this portion of Tranche 1 of the Placement raised a total of $5.08 million. It is proposed these funds, together with the funds raised under the remaining portion of Tranche 1 ($14.99 million) and the funds to be raised under Tranche 2 of the Placement will be used to:

• Optimise the previously announced development plans for Karlawinda;

• Completion of other pre-development and infrastructure activities;

CAPRICORN METALS LTD

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• Pre-production mining works and deposits for long lead capital items;

• Construction of processing plant and associated infrastructure, targeted for commencement in the March 2020 quarter; and

• Ongoing exploration and working capital requirements; and

(v) a voting exclusion statement is included in this Notice for Resolution 1.

Resolution 2

Pursuant to and in accordance with ASX Listing Rule 7.5, the following information is provided in relation to Resolution 2:

• (i) 93,653,334 Shares were issued on 20 August 2019 (being part of the Tranche 1 Placement Shares) at an issue price of $0.16 per Share;

• (ii) all Tranche 1 Placement Shares issued were fully paid ordinary shares and rank equally with all other Shares on issue;

• (iii) the 93,653,334 Shares were issued to professional and sophisticated investors (none of whom were a related party of the Company), including to Hawke’s Point pursuant to the Hawke’s Point Top-Up Right;

• (iv) this portion of Tranche 1 of the Placement raised a total of $14.99 million. It is proposed these funds, together with the funds raised under the remaining portion of Tranche 1 ($5.08 million) and the funds to be raised under Tranche 2 of the Placement will be used to:

• Optimise the previously announced development plans for Karlawinda;

• Completion of other pre-development and infrastructure activities;

• Pre-production mining works and deposits for long lead capital items;

• Construction of processing plant and associated infrastructure, targeted for commencement in the March 2020 quarter; and

• Ongoing exploration and working capital requirements; and

(v) a voting exclusion statement is included in this Notice for Resolution 2.

2.4 Board recommendation

The Directors unanimously recommend that Shareholders vote in favour of Resolutions 1 and 2.

3. RESOLUTION 3 – APPROVAL TO ISSUE PLACEMENT SHARES

3.1 General

The Company proposes to issue up to 280,823,873 Tranche 2 Placement Shares under the Placement to raise up to $44.93 million. The allotments will be made subject to Shareholder approval under Listing Rule 7.1. Further details are contained in Section 1.

Resolution 3 seeks approval pursuant to ASX Listing Rule 7.1 for the issue of the Tranche 2 Placement Shares.

None of the subscribers of the Tranche 2 Placement Shares will be related parties of the Company or an associate of a related party of the Company.

Resolution 3 is an ordinary resolution.

CAPRICORN METALS LTD

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The Chairman intends to exercise all available proxies (which grant him a voting discretion) in favour of Resolution 3.

3.2 Listing Rule 7.1

ASX Listing Rule 7.1 provides that a company must not, subject to specified exceptions, issue or agree to issue more Equity Securities during any 12-month period than that amount which represents 15% of the number of fully paid ordinary securities on issue at the commencement of that 12-month period.

By shareholders approving the issue which is the subject of Resolution 3, the Company will retain the flexibility to issue Equity Securities in the future up to the 15% placement capacity set out in ASX Listing Rule 7.1 without the requirement to obtain prior Shareholder approval.

3.3 Technical information required by ASX Listing Rule 7.3

Pursuant to and in accordance with ASX Listing Rule 7.3, the following information is provided in relation to Resolution 3:

• (i) the maximum number of Shares to be issued under this portion of the Placement is 280,823,873 Shares (being the Tranche 2 Placement Shares) and they will be issued at an issue price of $0.16 per Share;

• (ii) the Tranche 2 Placement Shares will be issued as soon as possible following the passing of Resolution 3, but no later than 3 months after the date of the Meeting (or such later date to the extent permitted by an ASX waiver or modification of the ASX Listing Rules);

• (iii) the Tranche 2 Placement Shares will be issued to professional and sophisticated investors (none of whom will be a related party of the Company), including to Hawke’s Point pursuant to the Hawke’s Point Top-Up Right;

• (iv) the Tranche 2 Placement Shares will be fully paid ordinary shares which will rank equally with all other Shares on issue;

• (v) the Tranche 2 Placement Shares will raise up to $44.93 million and it is proposed the funds raised together with the funds raised under Tranche 1 of the Placement will be used to:

• Optimise the previously announced development plans for Karlawinda;

• Completion of other pre-development and infrastructure activities;

• Pre-production mining works and deposits for long lead capital items;

• Construction of processing plant and associated infrastructure, targeted for commencement in the March 2020 quarter; and

• Ongoing exploration and working capital requirements; and

• (vi) the Shares to be issued pursuant to Resolution 3 are proposed to be issued all on the same date; and

(vii) a voting exclusion statement is included in the Notice for Resolution 3.

3.4 Board recommendation

The Directors unanimously recommend that Shareholders vote in favour of Resolution 3.

CAPRICORN METALS LTD

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GLOSSARY

$ means Australian dollars.

ASX means ASX Limited (ACN 008 624 691) or the financial market operated by ASX Limited, as the context requires. ASX Listing Rules means the Listing Rules of ASX.

Board means the current board of Directors of the Company.

Chair means the chair of the Meeting. Company means Capricorn Metals Ltd (ACN 121 700 105).

Corporations Act means the Corporations Act 2001 (Cth).

Directors means the current directors of the Company.

Equity Securities includes a Share, a right to a Share or Option, an Option, a convertible security and any security that ASX decides to classify as an Equity Security.

Explanatory Statement means the explanatory statement accompanying the Notice.

General Meeting or Meeting means the meeting convened by the Notice. Hawke's Point has the meaning given to that term in Section 1.

Notice or Notice of Meeting means this notice of meeting including the Explanatory Statement and the Proxy Form. Option means an option to acquire a Share.

Placement has the meaning given to that term in Section 1. Proxy Form means the personalised proxy form accompanying the Notice. Resolutions means the resolutions set out in the Notice, or any one of them, as the context requires. Section means a section of the Explanatory Statement. Share means a fully paid ordinary share in the capital of the Company. Shareholder means a registered holder of a Share. Top-Up Right has the meaning given to that term in Section 1. Tranche 1 Placement Shares has the meaning given to that term in Section 1. Tranche 2 Placement Shares has the meaning given to that term in Section 1. WST means Western Standard Time as observed in Perth, Western Australia.

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