Celsius Resources Limited — Capital/Financing Update 2013

Sep 25, 2013

26 September 2013

The Manager Companies Announcements Office Australian Securities Exchange

NOTICE UNDER SECTION 708A(12C)(e)

This notice is given by Celsius Coal Limited (ACN 009 162 949) ( Celsius or the Company ) (ASX:CLA) pursuant to Section 708A(12C)(e) of the Corporations Act 2001 (Cth) ( Corporations Act ).

As announced on 7 February 2013, Celsius has in place a strategic financing arrangement ( Arrangement ) with Blumont Group Limited, a Singapore-based company listed on the Singapore Exchange ( Blumont ), to the value of A$10m.

The key elements of the Arrangement include:

• Share Placement – a placement of 227,272,727 fully paid ordinary shares in the capital of Celsius ( Shares ) to Blumont for an aggregate subscription of A$5 million (at an issue price of A$0.022 per share) ( Share Placement ). The Share Placement was completed in March this year.

• Convertible Note Facility – the Company may drawdown between A$3 million to A$5 million (at the Company’s option) after 30 June 2013 from Blumont and in return Blumont will be issued Convertible Notes from the Company ( Convertible Notes ) ( Convertible Note Facility ). The first A$3 million in aggregate is to be drawn down prior to 31 December 2013. The Convertible Notes will carry interest at the rate of 12.5% per annum payable halfyearly. The Convertible Notes will be convertible into Shares based at the 20 trading day VWAP prior to conversion and subject to a floor price of A$0.025 per Share and a cap of A$0.030 per Share. Blumont will have the right to call conversion anytime after issuance and the Company will have the right to call conversion anytime from 12 months after issuance, with any conversion subject to the condition that it does not result in a voting interest exceeding 20% of Celsius.

• Strategic Alliance – Blumont and Celsius will cooperate to review other potential projects in Central Asia. Blumont will nominate one director to the board of Celsius (subject to it maintaining a shareholding in excess of 10%) and Celsius will nominate Alexander Molyneux to the board of Blumont.

The Company wishes to advise that it has now raised, and in return has issued, that number of Convertible Notes to Blumont with an aggregate face value of A$2,000,000.

The Company hereby gives notice that:

• (a) the Convertible Notes were issued without a disclosure document under Part 6D.2 of the Corporations Act; and

• (b) this notice has been given in accordance with Section 708A(12C)(e) of the Corporations Act as inserted by Class Order [CO 10/322] (on-sale for convertible notes issued to wholesale investors).

1. EFFECT OF THE ISSUE ON THE COMPANY

• (a) The intended use of the funds raised (A$2m) will be allocated towards advancing the Company’s 2013 exploration and development programme on its Uzgen Basin Coking Coal Project located in the Kyrgyz Republic and towards the review of other potential projects in Central Asia, together with its strategic partner, Blumont.

The current status of the Company’s 2013 exploration and development programme is set out in its recent Quarterly Activities Report dated 31 July 2013.

A summary of the rights and liabilities attaching to the Convertible Notes issued to Blumont are set out in Section 2 below.

(b) The effect on the issued share capital of the Company on conversion of the Convertible Notes is set out in the table below. This is based on a floor price of $0.025 and does not account for any accrued interest.

	Number
Shares currently on issue	1,989,976,397
Shares issued on conversion of the Convertible Notes1	80,000,000
Total Shares on issue following conversion of the Convertible Notes	2,069,976,397

Notes:

1. This is based on a floor price of $0.025 and does not account for any accrued interest under the Convertible Note Facility.

2. Please note, the Company also has a total of 282,000,000 options, 927,000,000 performance shares and 25,000,000 performance rights on issue.

3. The Company has the ability to issue additional Convertible Notes to the value of A$3m pursuant to the Convertible Note Facility by no later than 1 July 2023.

(c) Blumont currently holds a total of 227,272,727 Shares equating to a voting power of 11.4% in the Company. On the basis that the Convertible Notes convert into Shares (excluding any accrued interest) and no other Shares are issued, Blumont’s voting power in the Company will increase to 14.9%. Based on these calculations, upon conversion, shareholders holdings would be diluted by 3.9%.

In the unlikely event that interest was to accrue per annum until July 2023, and as such no Convertible Notes are converted until maturity, this would equate to an additional $3.75m in accrued interest. However, in the event that Convertible Notes are converted (in part) during this period, the overall amount of accrued interest will thereupon be reduced. In any event, Blumont will be prohibited from obtaining an overall voting interest in the Company exceeding 20%.

• (d) Blumont is not a related party of the Company.

2. RIGHTS AND LIABILITIES ATTACHING TO THE CONVERTIBLE NOTES

The following is a summary of the rights and liabilities attaching to the Convertible Notes:

• (a) Facility Limit

A$5,000,000.

• (b) Minimum Drawdown

A$3,000,000 prior to 31 December 2013.

• (c)

Term

Beginning 1 July 2013 and ceasing on the earlier of:

• (i) that date which is ten (10) years from the date of issue of the first Convertible Note; and

• (ii) that date upon which an event of default occurs in accordance with the terms of the Convertible Note Facility ( Repayment Date ).

• (d) Interest

• (i) 12.5% per annum payable in 6 monthly instalments (on the 6 month and 12 month anniversary of the issue date).

• (ii) Prior to each interest payment date, the noteholder ( Noteholder ) may elect for interest to be paid in cash or Shares, but if no election is made, the Company may make the determination on the Noteholder’s behalf.

(e) Security

Unsecured and will rank equally with all other unsecured creditors of the Company.

• (f)

Conversion

• (i) The Noteholder will be entitled to convert all or a portion of the Convertible Notes together with any accrued interest (if applicable) into Shares by delivering a conversion notice to the Company at any time prior to the Repayment Date.

• (ii) The Company will apply for quotation of the Shares issued on conversion of the Convertible Notes. The Convertible Notes themselves will not be quoted on the ASX.

• (iii) Shares issued on conversion (including in respect of accrued interest) will rank equally with all other Shares on issue in the Company.

• (iv) Each Convertible Note and, where applicable, any accrued interest will convert into Shares at the following conversion price:

(A) with respect to the face value of each Convertible Note, the 20 trading day VWAP, subject to a floor price of $0.025 per Share and a cap of $0.03 per Share; and

• (B) in respect of any accrued interest, $0.0275 per Share;

(v) Following the date which is 12 months from the date the Minimum Drawdown has occurred, the Company may elect for the Noteholder to convert any or a portion of the outstanding Convertible Notes (and accrued interest) into Shares.

(g)

Voting Power Restriction

The Noteholder will not be entitled to convert any Convertible Notes (or accrued interest) into Shares to the extent that the voting power of the Noteholder would exceed 20% in the Company.

(h)

Transferability

Convertible Notes can be transferred but will not be quoted on ASX.

(i)

Bonus Issues

The Convertible Notes will entitle the Noteholder to participate in any pro-rata bonus issues undertaken by the Company, such additional Shares to be issued to the Noteholder (the subject of the bonus issue) following the conversion of the respective Convertible Notes.

(j)

Reconstructions

In the event of a reconstruction of the capital of the Company, such as a consolidation, subdivision, reduction, return or scheme of arrangement, a proportionate adjustment will be made to the Convertible Notes on that same basis.

(k) Participation in New Issues

A Convertible Note does not confer any rights to participate in new issues of Shares without converting that Convertible Note.

(l) Redemption

Any Convertible Notes outstanding at the maturity date, and which are not then subject to a conversion notice, are to be redeemed. The redemption payment is to be in Australian dollars, inclusive of capitalised interest.

3. RIGHTS AND LIABILITIES ATTACHING TO THE SHARES ISSUED ON CONVERSION

The following is a summary of the more significant rights attaching to Shares. This summary is not exhaustive and does not constitute a definitive statement of the rights and liabilities of shareholders of the Company ( Shareholders ). To obtain such a statement, persons should seek independent legal advice.

Full details of the rights attaching to Shares are set out in the Company’s Constitution, a copy of which is available for inspection at the Company’s registered office during normal business hours.

(a) General meetings

Shareholders are entitled to be present in person, or by proxy, attorney or representative to attend and vote at general meetings of the Company.

Shareholders may requisition meetings in accordance with Section 249D of the Corporations Act and the Constitution.

(b) Voting rights

Subject to any rights or restrictions for the time being attached to any class or classes of Shares, at general meetings of Shareholders or classes of Shareholders:

• (i) each Shareholder entitled to vote may vote in person or by proxy, attorney or representative;

• (ii) on a show of hands, every person present who is a Shareholder or a proxy, attorney or representative of a Shareholder has one vote; and

• (iii) on a poll, every person present who is a Shareholder or a proxy, attorney or representative of a Shareholder shall, in respect of each fully paid Share held by him, or in respect of which he is appointed a proxy, attorney or representative, have one vote for the Share, but in respect of partly paid Shares shall have such number of votes as bears the same proportion to the total of such Shares registered in the Shareholder’s name as the amount paid (not credited) bears to the total amounts paid and payable (excluding amounts credited).

(c) Dividend rights

Subject to the rights of any preference Shareholders and to the rights of the holders of any shares created or raised under any special arrangement as to dividend, the Directors may from time to time declare a dividend to be paid to the Shareholders entitled to the dividend which shall be payable on all Shares according to the proportion that the amount paid (not credited) is of the total amounts paid and payable (excluding amounts credited) in respect of such Shares.

The Directors may from time to time pay to the Shareholders any interim dividends as they may determine. No dividend shall carry interest as against the Company. The Directors may set aside out of the profits of the Company any amounts that they may determine as reserves, to be applied at the discretion of the Directors, for any purpose for which the profits of the Company may be properly applied.

Subject to the ASX Listing Rules and the Corporations Act, the Company may, by resolution of the Directors, implement a dividend reinvestment plan on such terms and conditions as the Directors think fit and which provides for any dividend which the Directors may declare from time to time payable on Shares which are participating Shares in the dividend reinvestment plan, less any amount which the Company shall either pursuant to the Constitution or any law be entitled or obliged to retain, be applied by the Company to the payment of the subscription price of Shares.

(d) Winding-up

If the Company is wound up, the liquidator may, with the authority of a special resolution of the Company, divide among the shareholders in kind the whole or any part of the property of the Company, and may for that purpose set such value as he considers fair upon any property to be so divided, and may determine how the division is to be carried out as between the Shareholders or different classes of Shareholders.

The liquidator may, with the authority of a special resolution of the Company, vest the whole or any part of any such property in trustees upon such trusts for the benefit of the contributories as the liquidator thinks fit, but so that no Shareholder is compelled to accept any Shares or other securities in respect of which there is any liability.

(e) Shareholder liability

As the Shares under the Prospectus are fully paid shares, they are not subject to any calls for money by the Directors and will therefore not become liable for forfeiture.

(f) Transfer of Shares

Generally, Shares are freely transferable, subject to formal requirements, the registration of the transfer not resulting in a contravention of or failure to observe the provisions of a law of Australia and the transfer not being in breach of the Corporations Act or the ASX Listing Rules.

(g)

Variation of rights

Pursuant to Section 246B of the Corporations Act, the Company may, with the sanction of a special resolution passed at a meeting of Shareholders vary or abrogate the rights attaching to Shares.

If at any time the share capital is divided into different classes of Shares, the rights attached to any class (unless otherwise provided by the terms of issue of the shares of that class), whether or not the Company is being wound up, may be varied or abrogated with the consent in writing of the holders of three-quarters of the issued shares of that class, or if authorised by a special resolution passed at a separate meeting of the holders of the shares of that class.

(h) Alteration of Constitution

The Constitution can only be amended by a special resolution passed by at least three quarters of Shareholders present and voting at the general meeting. In addition, at least 28 days written notice specifying the intention to propose the resolution as a special resolution must be given.

4. COMPLIANCE WITH REGULAR REPORTING AND DISCLOSURE OBLIGATIONS

The Company is a “disclosing entity” (as defined in section 111AC of the Corporations Act) for the purposes of the Corporations Act and, as such, is subject to regular reporting and disclosure obligations. Specifically, like all listed companies, the Company is required to continuously disclose any information it has to the market which a reasonable person would expect to have a material effect on the price or the value of the Company’s securities.

The Company, as a disclosing entity under the Corporations Act states that:

• (a) it is subject to regular reporting and disclosure obligations;

• (b) copies of documents lodged with the ASIC in relation to the Company (not being documents referred to in section 1274(2)(a) of the Corporations Act) may be obtained from, or inspected at, the offices of the ASIC; and

• (c) it will provide a copy of each of the following documents, free of charge, to any person on request:

• (A) the annual financial report most recently lodged by the Company with the ASIC;

• (B) any half-year financial report lodged by the Company with the ASIC after the lodgement of the annual financial report referred to in (i) and before the lodgement of this notice with the ASIC; and

• (C) any continuous disclosure documents given by the Company to ASX in accordance with the ASX Listing Rules as referred to in section 674(1) of the Corporations Act after the lodgement of the annual financial report referred to in (i) and before the lodgement of this notice with the ASIC.

Copies of all documents lodged with the ASIC in relation to the Company can be inspected at the registered office of the Company during normal office hours.

Details of documents lodged by the Company with ASX since the date of lodgement of the Company’s latest annual financial report and before the lodgement of this notice with the ASIC are set out in the table below:

Date	Description of Announcement
19/09/2013	Hartleys Updated Research – September 2013
11/09/2013	Appendix 3B – Exercise of Options
10/09/2013	Company Presentation – Post Site Visit August 2013
09/08/2013	Hartleys updated research on Celsius Coal - August 2013
07/08/2013	Appendix 3B - exercise of options
07/08/2013	Appendix 3B - Exercise of options
31/07/2013	Quarterly Cashflow Report
31/07/2013	Quarterly Activities Report
23/07/2013	Company Insight - Exploration, Project Timeline & Quality
10/07/2013	Multi Rig Drilling Announcement with Amended CP Statement
09/07/2013	Multi Rig Drilling to Commence at Uzgen Basin Coking Project
05/07/2013	Celsius Site Visit - Date Changed

Date	Description of Announcement
25/06/2013	Hartleys Updated Research on Celsius
20/06/2013	Change of Share Registry
14/06/2013	Celsius Hosts Site Visit
11/06/2013	Xinjiang Coking Coal Market Study
20/05/2013	Appendix 3B
17/05/2013	Results of Meeting
09/05/2013	Initial Director's Interest Notice
09/05/2013	Final Director's Interest Notice
06/05/2013	Board & Mgt Changes Announcement - Additional Information
06/05/2013	Board & Mgt Changes Position CLA for Next Phase of Growth
02/05/2013	Change of Director's Interest Notice
01/05/2013	Quarterly Activities Report
01/05/2013	Quarterly Cashflow Report
18/04/2013	Notice of General Meeting/Proxy Form
11/04/2013	Company Insight Interview
10/04/2013	Appendix 3B
27/03/2013	Kyrgyz Republic wins AMC's Mining Country of the year.
22/03/2013	Company Presentation - March 2013
18/03/2013	Half Year Accounts
15/03/2013	Celsius Establishes Maiden JORC Resource at Uzgen Basin
15/03/2013	Trading Halt Request
15/03/2013	Trading Halt
12/03/2013	Becoming a substantial holder
11/03/2013	$5m Received from Blumont / Appendix 3B / Cleansing Notice
28/02/2013	Change of Director's Interest Notice
28/02/2013	Change of Director's Interest Notice x 2
25/02/2013	Secondary Trading Notice
25/02/2013	Appendix 3B
12/02/2013	Washability Tests Confirm Potential to Beneficiate Coal
07/02/2013	Celsius Secures A$10m in Strategic Funding from Blumont

Date	Description of Announcement
31/01/2013	Quarterly Cashflow Report
31/01/2013	Quarterly Activities Report
31/01/2013	Additional Confirmation of Coking Coal at Kargasha
30/01/2013	Hartleys Initiates Research Coverage
24/01/2013	Results of Meeting
22/01/2013	Trans-Asia Railway Feasibility Study Complete
15/01/2013	Company Presentation - January 2013
04/01/2013	Appendix 3B & Cleansing Notice
21/12/2012	Notice of General Meeting/Proxy Form
11/12/2012	Analyses Confirm Coking Coal
04/12/2012	Initial Director's Interest Notice
29/11/2012	Mr Alexander Molyneux Appointed Executive Chairman
28/11/2012	Results of Meeting
12/11/2012	Ceasing to be a substantial holder
09/11/2012	Initial Director's Interest Notice
09/11/2012	Final Director's Interest Notice
08/11/2012	Completion of Drilling / Further Significant Intersections
05/11/2012	Director Appointment/Resignation
01/11/2012	Appendix 3B
31/10/2012	Quarterly Activities Report
31/10/2012	Quarterly Cashflow Report

ASX maintains files containing publicly available information for all listed companies. The Company’s file is available for inspection at ASX during normal office hours.

The announcements are also available through the Company’s website www.celsiuscoal.com.au.

5. INFORMATION EXCLUDED FROM CONTINUOUS DISCLOSURE NOTICES

The market is fully informed of the Company’s activities and the Company is not aware of any other information that:

(a) has been excluded from a continuous disclosure notice in accordance with the ASX Listing Rules; and

• (b) is information that investors and their professional advisers would reasonably require for the purposes of making an informed assessment of:

• (i) the assets and liabilities, financial position and performance, profits and losses and prospects of the body; and

• (ii) the right and liabilities attaching to the Convertible Notes being offered.

Yours faithfully,

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Ranko Matic Company Secretary