CARNABY RESOURCES LIMITED — Capital/Financing Update 2019

Mar 11, 2019

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ASX ANNOUNCEMENT

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12 M arch 2019

Golden upside for shareholders in Tick Hill sale to Berkut

• Diatreme executes binding Heads of Agreement with ASX‐listed Berkut Minerals Limited (ASX:BMT) for sale of non‐core Tick Hill Gold Project, Qld

• Consideration comprises fully paid ordinary shares in BMT worth $562,500 upon issue; shares subject to 12‐month escrow and replacement of Diatreme’s associated tenement bonds totaling $336,844.

• Deal gives DRX shareholders exposure to upside in BMT’s Australian gold assets in WA and Qld amid rising AUD price of yellow metal; allows DRX to focus on key heavy mineral and silica sands projects

Emerging miner a l and silica s ands miner Diatreme R e sources Li m ited ( Diatreme , or Company ) (ASX: D RX) announced today an agree m ent with AS X ‐listed Ber k ut Minerals Limited ( Berkut ) (ASX:BMT) concer n ing the sale of Diatrem e ’s non ‐ core Tick Hi l l Gold Project ( Tick Hill ) near Moun t Isa, Qld, gi v ing Diatrem e sharehold e rs exposur e to Berkut’s Australian gold a ssets amid r ising Austra l ian dollar g o ld prices.

Und e r the legall y binding, c o nditional H e ads of Agre e ment (HOA) with Berkut, Diatreme h as agreed t he sale of it s thre e related mi n ing tenem e nts (ML709 4 , ML7096 and ML7097 – see Figure 1) and asso c iated minin g information to a Berkut nomin e e. Consider a tion for the sale is the i s sue of fully paid ordinary shares in B MT to the value of $56 2 ,500 upo n issue, with the shares s ubject to v o luntary escrow for a 12‐month peri o d from thei r date of iss u e.

Upo n settlemen t , Diatreme’ s joint venture with Sup e rior Resour c es Limited ( Superior ) ( A SX:SPQ) co n cerning Tic k Hill will b e terminat e d, in additi o n to Diatre m e’s term sheet with Ca r naby Resou r ces Limited ( Carnaby ) ( r efer ASX ann o uncement 5 June 2018).

Diat r eme’s CEO, Neil McIntyre, said the a greement o ffered DRX s hareholder s the potent i al for furth e r growth in mar k et value at z ero cost.

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“Thi s deal is a win‐win for Di a treme and Berkut, givi n g Diatreme shareholders exposure t o Berkut an d its promising gold assets in W e stern Australia and no w also Quee n sland, whil e allowing us to continue our focus on our key h e avy min e ral and silic a sand projects,” Mr Mc I ntyre said.

“Tic k Hill is historically one of Australia’s richest gold mines and w ith Berkut’ s experience in gold exploration along with rising gold p rices offers great potential to deliv e r value for the sharehol d ers of both companies. ”

Ber k ut’s Managi n g Director, Neil Inwood commente d : “We welc o me this agreement wit h Diatreme, w hich will cem e nt our gold portfolio in Australia with the highl y prospectiv e Tick Hill D e posit and s u rrounds. Th e gold secto r is enjoying rising i n vestor interest due to high prices a n d solid consumption gr o wth in Asia, and we loo k forward to expl o ring these p rojects as r a pidly as po s sible for th e benefit of o ur shareholders.”

Transaction overview

Diat r eme currently holds a 100% legal in t erest and a 75% benefi c ial interest i n the asset s forming th e Tick Hill G o ld Proj e ct, with its m ining leas e s containin g one of the h ighest‐gra d e gold deposits in Austr a lia’s recent gold produ c ing hist o ry.

Diat r eme acquir e d its intere s t in the ass e ts in March 2015, trigg e ring the co m mencement of the DR X Farm‐In an d Join t Venture A g reement wi t h Superior o ver Tick Hill (refer SPQ a nnouncem e nt 24 Marc h 2015).

The T ick Hill gol d deposit was previously mined bet w een 1991 a n d 1995 by Carpentaria G old Pty Ltd (a subsidiar y of MI M Holdings Li m ited), pro d ucing 513,3 3 3 ounces o f gold from 7 05,000 ton n es of ore at a recovere d grade of 2 2 .6 g/t g old (source: MIM Holdi n gs).

Sinc e being acq u ired by Diat r eme, SPQ has conduct e d further exploration to earn an int e rest in the p roject and curr e ntly holds the remaining 25% bene f icial interes t in the mini n g tenemen t s.

Ber k ut has ente r ed into a se r ies of inter d ependent a g reements w hereby it will first acqu i re Carnaby, and then through Carnab y (as its nom i nee) will fu r ther acquir e 100% of th e legal and b eneficial in t erest in the assets, thro u gh:

• ( a) the HO A with Diatre m e – under w hich it will acquire the 100% legal interest in t h e assets, in c luding a 75 % benefici a l interest in the mining t enements; a nd

• ( b) a separate agreeme n t with SPQ, under whic h it will acquire the rem a ining 25% b e neficial int e rest in the mining t e nements.

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Upo n settlemen t of these a g reements, t h e Superior J V between Diatreme and SPQ will a l so be termi n ated. Both Ber k ut and Carn a by are part i es to the H O A. Neither B MT or Carnaby are rela t ed parties o f Diatreme.

BM T is also plan n ing to und e rtake a capi t al raising t o raise up to A$1,600,00 0 in connection with the transaction s , at an a p proximate issue price o f A$0.078.

BM T will also, as a condition of settleme n t and title t ransfer, rep l ace existing tenement e nvironmental bonds held by the r egulatory a u thority (De p artment of Natural Res o urces Min e s and Energ y ) totalling $ 336,844. These bonds a r e curr e ntly suppo r ted by cash equivalent security ($336,844) deposited by Dia t reme, whic h will be ref u nded to Diat r eme on dis c harge.

Consideration

As c o nsideratio n for the sale, Diatreme w ill be issue d with that number of fu l ly paid ordi n ary shares in the capita l of BM T (‘Consideration Shares’), at the finally determined capital r a ise price su c h that the v a lue of the C onsideration Shares upon iss u e is A$562, 5 00.

Diat r eme has ag r eed that th e Considera t ion Shares w ill be subje c t to voluntary escrow f o r a period of 12 months fro m their date o f issue. Up o n receipt of the Consid e ration Shar e s, Diatreme expects tha t it will become a substantial shareholder of B MT holding greater tha n 5% of its then issued c a pital.

Conditions

The s ale of Diatr e me’s inter e sts is conditional upon a number of conditions b eing met o n or before 30 April 2019 (‘En d Date’), including:

• ( i) BMT’s s imultaneo u s acquisitio n of Carnab y ; ( ii) Carna b y’s simultaneous acquis i tion of SPQ’s interests i n the mining tenements; ( iii) Indicative approval to the tran s fer of the mining tenements by the r elevant Mi n ister; ( iv) BMT c o nfirming its satisfaction with its leg a l due dilige n ce enquirie s ; ( v) BMT o b taining all n ecessary sh a reholder a n d regulator y approvals r equired to c omplete th e transactio n , incl u ding under t he ASX Listing Rules an d the Corporations Act;

• ( vi) termin a tion of the Superior JV w ith effect from settlement; and ( vii) Carna b y agreeing t o be bound b y all third‐ p arty dealin g s which impact the asse t s (including the gold pro d uction roya l ty and copper processing benefits i n favour of M IM, all com p ensation a g reements a n d simi l ar dealings) .

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Other key terms

Diat r eme has al s o granted e x clusivity to BMT and Carnaby in res p ect of the sale of the a s sets and su b ject to con d itions bein g met, expec t s the transaction to co m plete in early May 2019.

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Figu r e 1: Tick Hill M ine

Diat r eme’s Mr M cIntyre added: “We are focused on unlocking v a lue from our minerals p o rtfolio for t he benefit o f shareholders as t his latest d e al demonst r ates. Diatr e me’s Cyclone Zircon Pro j ect in West e rn Australi a and our emerging Galala r Silica Project in North Q ueensland a re rapidly g aining momentum, ami d an environment of risi n g pric e s and const r ained supply, and we look forward t o deliverin g even more shareholde r value in 20 1 9.”

Neil McIntyre Greg Starr Chief Executive O fficer Chairman

Cont a ct – Mr Neil McIntyre ‐ Ph – 0 7 33972222 Web s ite ‐ diatreme. c om.au

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E‐ma i l ‐ manager@ d iatreme.com. a u

Forward looking statements: Thi s document ma y contain forwa r d looking state m ents. Forwar d looking state m ents are often, but not alway s , identified by the use of words such a s “seek”, “indi c ate”, “target”, “ a nticipate”, “for e cast”, “believe ” , “plan”, “estim a te”, “expect” a n d “intend” and state m ents that an e v ent or result “ m ay”, “will”, “sh o uld”, “could” or “might” occur o r be achieved a nd other simil a r expressions. Indications of, a nd inter p retations on, future expected e xploration results or technical o utcomes, pro d uction, earning s , financial pos i tion and perfor m ance are also forward-looking stat e ments. The fo r ward-looking s t atements in thi s presentation a re based on c u rrent interpret a tions, expectat i ons, estimates, assu m ptions, foreca s ts and projecti o ns about Diatr e me, Diatreme’ s projects and a ssets and the industry in whic h it operates as well as other f a ctors that m anagement believes to be rel e vant and reas o nable in the ci r cumstances at the date that s u ch statements a re made. The forward-lookin g state m ents are subj e ct to technical, business, economic, competit i ve, political an d social uncerta i nties and conti n gencies and m ay involve kno w n and u nknown risks a n d uncertaintie s . The forward - looking statem e nts may prove to be incorrect. Many known a nd unknown f a ctors could ca u se actual events or res u lts to differ materially from the estimated or a n ticipated even t s or results expressed or impli e d by any forw a rd-looking state m ents. All forw a rd-looking statements made i n this presentat i on are qualifie d by the foregoi n g cautionary s t atements.

Disclaimer: Diatre m e and its relat e d bodies corporate, any of the i r directors, offi c ers, employee s , agents or co n tractors do not make any repre s entation or wa r ranty (either e x press or implied) as to the ac c uracy, correctness, completeness, adequacy, reliability or lik e lihood of fulfil m ent of any f o rward-looking s tatement, or a n y events or re s ults expressed or implied in a n y forward looking statement, e xcept to the extent required b y law. Diatr e me and its rel a ted bodies cor p orate and eac h of their respe c tive directors, o fficers, employ e es, agents an d contractors di s claims, to the maxi m um extent per m itted by law, a ll liability and r e sponsibility for any direct or indirect loss or d a mage which m ay be suffered by any person (including because of fault or neglig e nce or otherwise) through us e or reliance on anything conta i ned in or omitt e d from this presentation. Oth e r than as re q uired by law a n d the ASX Listing Rules, Diat r eme disclaims a ny duty to up d ate forward looking statement s to reflect new developments.

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