CLASSIC MINERALS LTD — Capital/Financing Update 2022

Aug 11, 2022

CLASSIC MINERALS LIMITED

ACN 119 484 016

SUPPLEMENTARY PROSPECTUS

1.

IMPORTANT INFORMATION

This supplementary prospectus ( supplementary prospectus ) supplements, and must be read together with, the prospectus dated 15 July 2022 ( prospectus ) issued by Classic Minerals Limited ACN 119 484 016 ( company ).

This supplementary prospectus is dated 12 August 2022 and was lodged with ASIC on that date. ASIC, ASX and their respective officers take no responsibility for the contents of this supplementary prospectus or the investment to which the prospectus relates.

Other than as set out below, all details in relation to the prospectus remain unchanged.

Terms and abbreviations defined in the prospectus have the same meaning in this supplementary prospectus .

This supplementary prospectus will be issued as an electronic prospectus, copies of which can be downloaded from the website of the company at https://www.classicminerals.com.au/investor.php

This is an important document and should be read in its entirety. If you do not understand it, you should consult your professional advisers without delay.

2.

PURPOSE OF SUPPLEMENTARY PROSPECTUS

The purpose of this supplementary prospectus is:

• (a) to provide additional disclosure in respect of:

• (i) the use of funds that may be received on exercise of loyalty options ; and

1

• (ii) the effect of the receipt of funds on exercise of loyalty options on the company’s financial position; and

• (b) to correct references to the amounts to be raised if all loyalty options and piggyback options are exercised to, in each case, “approx. $5.15 million”.

• AMENDMENTS TO THE PROSPECTUS

3.1. Introduction

The prospectus is amended on the basis set out in this Section 3.

3.2. Section 4 – Details of the offers

• (a) Section 4.1.4 of the prospectus is amended to read:

“If all loyalty options are exercised, the company will receive approx. $5.15 million.”

• (b) Section 4.2.4 of the prospectus is amended to read:

“If all piggyback options are exercised, the company will receive approx. $5.15 million.”

3.3. Section 5 – Purpose and effect of the offers

• (a) Section 5.1.1 of the prospectus is amended to read:

“ Loyalty offer

The purpose of the loyalty offer is to reward shareholders for supporting the company and to provide the company with a potential source of additional capital if loyalty options are exercised. No funds will be raised through the issue of the loyalty options ; however, if all the loyalty options are exercised (at an exercise price of $0.05), the company will receive approximately $5.15 million (less expenses).

In the event all loyalty options are exercised, the funds raised will used for the following purposes:

Use of funds	$
Infill drilling at Kat Gap	1,000,000
Diamond drilling Kat Gap	200,000
Extension drilling at Kat Gap	400,000

2

Field costs	400,000
Plant assembly & infrastructure	500,000
Upgrade to plant	800,000
Water pump & pipeline to plant	500,000
Tailings dam	1,000,000
Relocate & upgrade camp	350,000
	5,150,000

• (b) Section 5.1.2 of the prospectus is amended to read:

“ Piggyback offer

The purpose of the piggyback offer is to encourage holders of loyalty options to exercise their loyalty options , generating approx. $5.15 million in fresh capital if all loyalty options are exercised. In addition, the company will raise a further approx. $5.15 million if all piggyback options are exercised (at an exercise price of $0.10).

Given the long-dated nature of the piggyback options , and the uncertainty regarding the timing and extent of exercise of piggyback options , the company is not in a position to make a forecast as to the use of funds raised by the exercise of piggyback options .”

• (c) Section 5.2.1 of the prospectus is amended to read:

“ Loyalty offer

• (a) The principal effect of the loyalty offer , assuming no existing options are exercised and converted into shares between the date of this prospectus and the record date , will be to increase the number of options on issue from 34,952,482 options as at the date of this prospectus to 138,367,970 options immediately after completion of the loyalty offer .

• (b) If all loyalty options are exercised, the effect will be to:

• (i) increase the company’s cash reserves by approx. $5.15 million (less expenses);

• (ii) increase the number of shares on issue from 206,830,978 shares as at the date of this prospectus to 310,246,367 shares ; and

3

• (iii) decrease the number of options on issue from 138,367,970 options to 86,660,226 options (comprised of existing options and the piggyback options ),

immediately following the issue of shares and piggyback options on exercise of the loyalty options .”

• (c) Section 5.2.2(a) is amended to read:

“If all piggyback options are exercised (and assuming all loyalty options had been exercised), the effect would be to:

• (a) increase the company’s cash reserves by approx. $5.15 million;”.

• (d) Section 5 of the prospectus is amended to include the following section:

3.4. Effect on financial position

The pro forma balance sheet for the company as at 30 June 2022 has been prepared based on the accounting policies normally adopted by the company and reflect the changes to its financial position.

The pro forma balance sheet has been prepared to reflect:

• the issue of convertible notes with a principal amount of $4,000,000 ( convertible notes )

• the exercise of approximately 103 million loyalty options with an exercise price of $0.05

• the estimated expenses in relation to the issue of convertible notes and the loyalty offer

The pro forma balance sheet has been prepared to provide investors with information on the assets and liabilities of the company and pro forma assets and liabilities of the company as noted below. The historical and pro forma financial information is presented in abbreviated form, insofar as it does not include all of disclosures required by the Australian Accounting Standards applicable to annual financial statements.

4

==> picture [444 x 460] intentionally omitted <==

----- Start of picture text -----

Unaudited
Balance Sheet Pro forma Pro forma
as at 30 Jun 22 Adjustments Balance Sheet
$'000 $'000 $'000
CURRENT ASSETS
Cash and cash equivalents 421 6,788 7,209
Trade and other receivables 108 108
Other current assets 120 120
TOTAL CURRENT ASSETS 649 6,788 7,437
NON-CURRENT ASSETS
Exploration and evaluation 3,660 3,660
Rights of use assets 376 376
Plant and equipment 6,485 6,485
TOTAL NON-CURRENT ASSETS 10,521 - 10,521
TOTAL ASSETS 11,170 6,788 17,958
CURRENT LIABILITIES
Trade and other payables 6,887 6,887
Advance for convertible notes 2,127 (2,127) -
Provisions 115 115
Lease liability - current 94 94
Borrowings - current 5,274 5,274
TOTAL CURRENT LIABILITIES 14,497 (2,127) 12,370
NON-CURRENT LIABILITIES
Convertible notes - 4,000 4,000
Lease liability - non-current 320 320
TOTAL NON-CURRENT LIABILITIES 320 4,000 4,320
TOTAL LIABILITIES 14,817 1,873 16,690
NET ASSETS/(LIABILITIES) (3,647) 4,915 1,268
EQUITY
Issued capital 60,974 5,510 66,484
Reserves 3,129 428 3,557
Accumulated losses (67,750) (1,023) (68,773)
TOTAL EQUITY (3,647) 4,915 1,268
----- End of picture text -----

Note:

The figures stated in this pro forma balance sheet are subject to the effects of rounding.

Basis of preparation

The basis of preparation for the Historical Financial Information is in accordance with the company’s accounting policies, as described in its financial report, and the recognition and measurement principles of the Australian Accounting Standards.

The Historical Financial Information is based on the unaudited balance sheet as of 30 June 2022.

The stated basis of preparation for the Pro Forma Historical Financial Information is in a manner consistent with the recognition and measurement principle of the Australian Accounting Standards applied to the Historical Financial Information and the events or transactions to which the pro forma adjustments relate, as described above, as if those events or transactions had occurred as of 30 June 2022.

5

4 DIRECTORS’ AUTHORISATION

This supplementary prospectus is issued by the company and its issue has been authorised by a resolution of the directors . In accordance with section 720 of the Corporations Act , each director has consented to the lodgement of this supplementary prospectus with ASIC .

==> picture [158 x 58] intentionally omitted <==

John Lester Director

for and on behalf of

Classic Minerals Limited

6