DGR GLOBAL LIMITED

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12 May 2020

DGR Global Update on SolGold

The Board of DGR Global Limited (DGR, the Company) would like to provide an update to shareholders and interested in investors regarding recent developments with LSE / TSX‐listed SolGold Plc, in which DGR currently holds a 10.6% interest.

Overnight in London, SolGold announced that it had entered into a US$100 million Net Smelter Returns Financing (“NSR Financing”) Agreement with Franco‐Nevada Corporation (“Franco‐Nevada”), with an option to upsize the financing to US$150m at SolGold’s election, in connection with its flagship Alpala copper‐gold project and the remainder of its Cascabel license in northern Ecuador.

Concurrently with the entering into of the NSR Financing Agreement, SolGold and Franco‐Nevada also entered into a US$15 million secured Bridge Loan Agreement (“BLA”) of immediately available funds as an initial advance (the “Advance”) prior to closing the NSR Financing Agreement. The Advance provides SolGold with short term funding at an interest rate of 12% per annum for a four‐month period, with an option to extend the maturity for another four months. The Advance is in any event repayable with interest upon closing of the NSR Financing.

Franco‐Nevada and SolGold have each received all required corporate approvals for entering into the transactions.

SolGold noted the following highlights of the NSR Financing Agreement:

SolGold and Franco‐Nevada have entered into a binding NSR Financing Agreement for up to $150 million.
For the first US$100 million, Franco‐Nevada will receive a perpetual 1% NSR interest from SolGold calculated with reference to Net Smelter Returns from the Cascabel licence area.
The NSR Financing Agreement can be upsized at SolGold’s election by US$50 million to a 1.5% NSR interest within eight months from the date of the Agreement.
For clarity, neither Exploraciones Novomining S.A. (“ENSA”; 85% owned by SolGold and holder of the Cascabel licence) nor the minority shareholder in ENSA will be liable for the royalty.
Key features of the NSR Financing Agreement include:
A 50% buy‐back option exercisable at SolGold’s election for six years from closing at a price delivering Franco‐Nevada a 12% internal rate of return;
A NPV neutral option in favour of Franco‐Nevada to convert the NSR interest into a gold‐only NSR interest, available for six years from two years after operation start;
Franco‐Nevada is entitled to receive certain minimum royalty payments of US$10 million from 2028;
The inclusion of an NSR interest top‐up mechanism in the event that actual mine production (measured on a copper equivalent basis) is less than 85% of planned production, as stated in SolGold’s most recent publicly filed technical report.
Conditions precedent to the NSR Financing are expected to be satisfied soon after COVID‐19 related travel restrictions are lifted.

DGR Global Limited ACN 052 354 837 street: Level 27, 111 Eagle Street post: GPO Box 5261 Brisbane QLD 4001 p +61 7 3303 0680 f +61 7 3303 0681 e [email protected] w www.dgrglobal.com.au

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Franco‐Nevada has indicated its interest, subject to further studies, to participate in the financing of SolGold’s share of the mine development at Alpala via a gold stream. SolGold expects that, due to the gold‐rich nature of the Alpala porphyry, the project can support up to US$1 billion of precious metals stream financing.

SolGold’s Executive General Manager of Corporate Finance, Mr Ingo Hofmaier commented: "SolGold received and considered a broad range of funding options and the decision to proceed with Franco‐Nevada is based on various factors, including the size of investment, the permanent nature of this financing, Franco‐ Nevada’s experience and understanding of Latin America and the competitive cost of capital. In SolGold’s opinion, a 1‐1.5% NSR will not constrain the debt capacity of the project; on the contrary, we believe this financing increases the confidence in SolGold’s ability to fund the development, further affirming the overall quality of the Alpala deposit.

With BHP, Newcrest and now Franco‐Nevada having exposure to the project, there should be no doubt as to the quality of Alpala or Ecuador as a sovereign mining destination for project development capital. Franco‐Nevada is the largest royalty and streaming company by market capitalisation, has a history of investing into world‐class assets and has invested US$3.1 billion in Latin America since 2015, with SolGold being Franco‐Nevada’s first financing in Ecuador”.

Proceeds of the NSR Financing will be used by SolGold to fund the costs to complete the Feasibility Study and any surplus will be used for SolGold’s share of the development of Alpala pursuant to agreements with the minority shareholder of ENSA, Cornerstone Capital Resources Inc. (“Cornerstone”).

Settlement of the NSR Financing Agreement is subject to a number of conditions, including:

Franco‐Nevada commenced due diligence on SolGold and Alpala in late 2019. Franco Nevada’s studies of the project have been competed satisfactorily, save for a site visit. Temporary COVID‐19 travel restrictions have delayed completion of Franco‐Nevada’s on‐site due diligence, which is the key condition precedent to closing the NSR Financing Agreement.
The site visit is expected to take place as soon as travel permits. Both parties will adhere to appropriate health and safety measures in order to mitigate potential risks of COVID‐19 infection to the personnel of Franco‐Nevada, SolGold employees as well as the communities in and around the project area.
As a backup measure, the parties are also investigating alternatives to a conventional site visit.
In the event that the conditions precedent are not fulfilled or waived by a long stop date, the NSR Financing Agreement will terminate.

The agreement announced with Franco‐Nevada follows the publication of SolGold’s third Mineral Resource Estimate for the Alpala Project on 7 April 2020, and the release of favourable independent metallurgical test work results on the Alpala ore, published on 29 April 2020.

Full details of these developments are available in SolGold’s market releases, which are available on its website ( www.solgold.com.au ).

DGR Global’s equity stake in SolGold is currently worth approximately $107 million based on the LSE closing price on Monday 11 May 2020.

Reference is made to DGR Global’s market release of 27 April 2020, which advised of the receipt of correspondence from ASIC which stated that in ASIC’s view, the Company should be accounting for its interest in SolGold on the basis of equity accounting . In its correspondence, ASIC further states that “[t]he adjustment should be treated as a prior period error in the Company’s financial report for the year ending 30 June 2020.”

DGR Global Limited ACN 052 354 837

street: Level 27, 111 Eagle Street post: GPO Box 5261 Brisbane QLD 4001

p +61 7 3303 0680 f +61 7 3303 0681 e [email protected] w www.dgrglobal.com.au

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By way of illustration only, if the equity method of accounting was adopted for DGR’s investment in SolGold plc in the half‐yearly financial statements for 31 December 2019, it would have resulted in a decrease in Other Financial Assets of $76,556,925, a decrease in Deferred Tax Liabilities of $19,042,418, an increase in Accumulated Losses of $13,082,198 and a decrease in Reserves of $44,432,309.

The Company disagrees with ASIC’s view, and has advised ASIC accordingly in a letter of response dated 8 May 2020. The Company continues to believe that its application of the relevant accounting standard is consistent with the law. Furthermore, its view is supported by the independent professional advice that it has received on the matter.

For clarity, the Company advises that the matter in dispute is purely related to one of professional judgement in the application of the particular accounting standard as it relates to the accounting treatment of Company’s interest in SolGold in its published financial statements. This is separate and distinct to the matter of the market value of the Company’s interest in SolGold, which remains unaffected.

This Announcement is Authorised by the Board of Directors. On behalf of the Board Karl Schlobohm Company Secretary

Electronic copies of all DGR market releases, together with more corporate and project related information is available on the Company website: www.dgrglobal.com.au

Email: [email protected]

Twitter: @DGRGlobal

For further information contact: Mr Nicholas Mather Karl Schlobohm Sarah Schuiringa Managing Director Company Secretary Marketing / PR Ph: 07 3303 0680 Ph: 07 3303 0680 Ph: 07 3303 0680

About DGR Global Limited

DGR Global’s business is the creation of resource exploration development and mining companies.

The business uses the skills of a core team of talented geoscientists to identify resource projects capable of yielding world class discoveries of attractive commodities. This is achieved through:

The identification of commodities with a favorable 20 year price outlook.
Geological terranes with:
A demonstrated strong endowment for that commodity;
An under‐explored history;
Opportunity for the application of recently developed exploration techniques;
Jurisdictions with improving socio‐economic and regulatory frameworks;
Extensive available tenures.

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DGR Global Limited ACN 052 354 837

street: Level 27, 111 Eagle Street post: GPO Box 5261 Brisbane QLD 4001 p +61 7 3303 0680 f +61 7 3303 0681 e [email protected] w www.dgrglobal.com.au

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DGR GLOBAL LIMITED Capital/Financing Update 2020

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