COBRE LIMITED — Capital/Financing Update 2020

Dec 15, 2020

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Cobre Limited A.C.N. 626 241 067 ( ASX: CBE Level 7/151 Macquarie Street SYDNEY NSW 2000 Tel: + 61 2 9048 8856 www.cobre.com.au

16 December 2020

ASX Limited - Company Announcements Platform

COBRE SIGNS SHARE PURCHASE AGREEMENT IN RESPECT OF ITS ACQUISITION OF A CONTROLLING INTEREST IN KALAHARI METALS LIMITED

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Cobre Limited (ASX: CBE , Cobre or Company ) is pleased to announce that it has signed the Share Purchase Agreement ( SPA ) for the scrip-based acquisition of up to 51% of the equity of UK based company, Kalahari Metals Limited ( KML ), ( Transaction ).

The terms of the SPA are generally consistent with the binding Heads of Agreement previously entered into by the parties in respect of the Transaction. This announcement is a further update to Cobre's announcements on 24 August 2020, 22 October 2020 and 20 November 2020 in respect of the Transaction.

KML is a copper exploration JV company in the highly prospective Kalahari Copper Belt ( KCB ) in Botswana. KML owns the second largest tenure holding in the Botswana portion of the KCB after ASX listed company, Sandfire Resources Limited ( ASX : SFR).

The KCB is regarded as one of the world's most prospective areas for yet-to-be discovered sedimenthosted copper deposits by the US Geological Survey. Exploration drilling of KML's tenements is currently underway by the existing owners, with future exploration activities to be jointly funded under a new shareholders agreement (effective on completion of the Transaction) entered into by Metal Tiger plc ( LON : MTR) ( MTR ), Cobre, Cobre Kalahari Pty Ltd ( Cobre Kalahari ) (being a new wholly owned subsidiary of Cobre nominated by Cobre under the SPA to acquire the shares in KML) and KML.

KML is currently owned by seven shareholders, including Cobre's largest shareholder, MTR and six other shareholders ( KML Vendors ). The KML Vendors and Cobre are parties to the SPA. Other than MTR, none of the KML Vendors are related parties of Cobre. Upon completion of the Transaction, MTR will hold approximately 21% of the issued shares of CBE.

Further information on KML and the KCB are included in Cobre's announcement of 24 August 2020.

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Comments from Cobre Executive Chairman & Managing Director:

Cobre's Executive Chairman and Managing Director, Martin Holland, said in relation to the Transaction:

" We are pleased to announce that Cobre has signed the Share Purchase Agreement to acquire up to a 51% interest Kalahari Metals Limited.

Kalahari Metals Limited owns approximately 8,100 km² of tenements within the Kalahari Copper Belt in Botswana, which is regarded as one of the most prospective areas globally for copper exploration by the US Geological Survey. We believe in the untapped potential of the Kalahari Copper Belt, and the ability of experienced local operators to deliver substantial exploration success.

This transaction not only gives Cobre exposure to the second largest package of Kalahari Copper Belt tenements in Botswana, but also expands and diversifies Cobre's copper exploration activities beyond Western Australia. We believe the acquisition will create a stronger and more diversified company poised for domestic and international growth."

Key Terms of the SPA:

Key terms of the SPA include:

• ➢ Consideration:

The KML Vendors will collectively be issued approximately 21.4 million CBE shares in consideration for the 51% interest in KML ( Consideration Shares ). CBE will initially acquire a 49.99% interest in KML, and subject to obtaining change in control approval from the Minister of Mineral, Energy and Water Resources of the Republic of Botswana, will increase its shareholding in KML to 51% immediately thereafter.

The Consideration Shares will be voluntarily escrowed until 31 January 2022 in accordance with the terms of the SPA ( Escrow Period ).

• ➢ Conditions to completion of the Transaction:

Completion of the Transaction is expected to occur no later than 6 months from the date of this announcement and is conditional upon:

• the passing, at an Extraordinary General Meeting of Cobre (expected to occur in early 2021), of resolutions to authorise Cobre to complete the Transaction in compliance with its constitution, the Corporations Ac t 2001 (Cth) and the ASX Listing Rules;

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• receipt by MTR of a no objection notification from the Treasurer under the Foreign Acquisitions and Takeovers Act 1975 (Cth) in respect of its acquisition of an increased interest in Cobre as a result of the issuance of the Consideration Shares;[1] and

• consent and approval from the Minister of Mineral, Energy and Water Resources of the Republic of Botswana to the change in control occurring in respect of KML and its subsidiaries incorporated in Botswana as a result of the Transaction ( Botswana Consent ).

The parties have agreed that if all the above conditions have been satisfied (or waived) and the only condition outstanding is the Botswana Consent, then the parties may proceed to completion in respect of Cobre's acquisition of 49.99% interest in KML.

Provided that completion has occurred in respect of Cobre's initial 49.99% interest in KML, upon the receipt of the Botswana Consent, Cobre must proceed to acquire the additional number of KML shares from MTR to bring its total shareholding in KML to 51%. If the transaction proceeds in this manner, on completion of Cobre's acquisition of the additional shares in KML, MTR will be issued approximately an additional 450,000 CBE shares (noting that this amount is included in the total Consideration Shares abovementioned).

Completion of the acquisition by Cobre, and issue to MTR of the additional shares, is subject to approval by Cobre's shareholders and approval by the Treasurer under the Foreign Acquisitions and Takeovers Act 1975 (Cth) (to the extent that such approvals have expired).

Further details regarding the conditions, and their status, will be set out in the Notice of Meeting to be dispatched to all Cobre shareholders.

Shareholders Agreement:

On completion of the Transaction, MTR's current interest in KML will be reduced to an amount not less than 49%.

MTR, Cobre, Cobre Kalahari and KML have entered into a new shareholders agreement (effective on completion of the Transaction) in respect of KML to provide for, amongst other things, the governance and continued funding of the exploration activities in the KCB.

In respect of funding, following completion of the Transaction, once the existing cash balances of KML are exhausted, Cobre Kalahari and MTR have agreed to commit their relevant proportion of A$3.5 million to fund further exploration activities in the KCB for the following two years.

Cobre Kalahari will be appointed as the initial JV manager on completion. Certain of its obligations as JV manager under the SHA will be guaranteed by Cobre.

1 We are pleased to announce that prior to entry into the SPA MTR advised CBE that this condition had been satisfied.

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Other key terms of the Transaction:

➢ Deferred Consideration Deed

In connection with the Transaction, on completion, Cobre, MTR, KML and another of the KML

Vendors, Resource Exploration & Development Limited ( RED Projects ) have also agreed to enter into a Deferred Consideration Deed.

RED Projects and KML are parties to a share purchase agreement dated 9 April 2019 in respect of KML's acquisition of Kitlanya (Proprietary) Limited ( Kitlanya ). Kitlanya is the holder of the following prospecting licences in Botswana ( Prospecting Licences ):

• Prospecting Licence Number 342 / 2016

• Prospecting Licence Number 343 / 2016

• Prospecting Licence Number 070 / 2017

• Prospecting Licence Number 071 / 2017

• • Prospecting Licence Number 072 / 2017

Originally under this arrangement, following a maiden JORC Resource Declaration in respect of the Prospecting Licences, RED Projects was entitled to a discovery bonus that may have been satisfied by way of an issue of KML shares to it.

The parties have agreed to amend that arrangement, pursuant to the Deferred Consideration Deed, so that MTR and Cobre (in place of KML) must each satisfy a portion of the obligation to pay RED Projects the discovery bonus by either electing to pay its relevant proportion of the discovery bonus in cash or to issue shares in itself to RED Projects (subject to a cap so that RED Projects will not hold more than 19.99% shares in Cobre). The amount of the bonus will be calculated with reference to the value of the copper contained in the JORC Resource Declaration at a price of US$5.00 per tonne of such copper.

The amount of Cobre shares that may be issued to RED Projects will be determined by dividing Cobre's relevant proportion of the discovery bonus by the volume weighted average market price (as that term is defined in the ASX Listing Rules) of an ordinary share in the capital of Cobre on the ASX over the 10 trading day period immediately following the date of JORC Declaration.

If Cobre elects to satisfy its liability to RED Projects by issuing shares in itself to RED Projects, completion of that issue will be conditional on approval by Cobre's shareholders, receipt of any other regulatory and ASX Listing Rules approvals necessary to complete the issue and, if required by RED Projects, approval by the Treasurer under the Foreign Acquisitions and Takeovers Act 1975 (Cth).

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Next Steps and Indicative Timetable

A Notice of Meeting will be sent to Cobre Shareholders containing further detail on the Transaction. That Notice of Meeting will include, or be accompanied by, all information the Directors consider is necessary by shareholders to allow them to make an informed decision in respect of the Transaction, including an independent expert's report prepared by BDO Australia. The Directors recommend that shareholders read the Notice of Meeting and accompanying documents in full once received.

The currently anticipated transaction timetable is:

Item	Date
Dispatch Notice of Meeting and Independent Expert's Report	January 2021
Shareholder meeting	February 2021
Completion	Q1 2021

Cobre looks forward to providing further updates in respect of the material developments on the Transaction.

This ASX release was authorised on behalf of the Cobre Board by: Martin C Holland, Executive Chairman and Managing Director.

For more information about this announcement, please contact:

Martin C Holland

Executive Chairman and Managing Director

holland@cobre.com.au