FORTUNA METALS LTD — Capital/Financing Update 2017

Feb 16, 2017

ADDRESS Unit 5, Ground Floor 1 Centro Ave, Subiaco WA, 6005 Australia

PHONE EMAIL +61 (8) 9486 4036 pmcneil@frontierresources.com.au ABN WEBSITE 96 095 684 389 www.frontierresources.com.au

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ASX: FNT

Market Announcements Platform

17[th ] February 2017

Placement of Shortfall Shares and Update

Frontier Resources Limited ( Frontier ) is very pleased to advise that it has placed a total of 5,794,947 new fully paid shares in the Company to raise $173,848 (before costs), representing the shortfall from its recent Entitlement offer together with an additional placement of shares. The new shares were issued at 3¢ per share, being the same issue price as under the Entitlement Offer.

This placement increases the total funds raised from the Entitlement Offer that closed on 16 January 2017 to over $500,000.

Commenting on the placement, Frontier’s Managing Director, Mr Peter McNeil said:

The Board of Frontier is very pleased with the support shown by the Company’s shareholders and some new investors in a difficult market for junior exploration companies.

The Frontier drilling team was anticipated to undertake the general mobilisation to Bulago this Sunday for a 2 ½ to 3-month program, with multiple holes drilling including substantial drilling of the high-grade gold at the Swit Kai Prospect and at high priority porphyry copper -gold targets in the Bulago Valley. However, scheduling issues have delayed this to Wednesday 22/2/2017 and nonavailability of the helicopter to shuttle the equipment and supplies to site will likely result in a further short delay.

Funds raised from this placement issue will also be used to initiate exploration along strike and at the nearby highly porphyry copper -gold prospective Muller EL as soon as possible. Senior Frontier personnel will immediately commence the groundwork required to gain access into the Tingi region of the Muller EL and establish fly camps for possible Joint Ventures with Frontier. A detailed Summary Report regarding the Muller EL was released to the ASX on 31 January 2017 and interested readers are referred it for additional information.

I travel to PNG next Thursday and will meet with Sinivit landowners for several meetings, then undertake the Gazelle/ former Sinivit Mine Exploration Licence Application’s Wardens Court Hearing scheduled for March 2[nd] . I will announce the results of the Hearing late that day.

I will travel to Kiunga on March 3[rd] and anticipate mobilising to Bulago (subject to weather) the same day to supervise the initial drilling.

A further update will be released next week regarding the proposed Muller Exploration.

All releases and several Summary and Sinivit Resource reports are available on the website at www.frontierresources.com.au

FRONTIER RESOURCES LTD

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P.A. McNeil, M.Sc., MAIG Chairman and Managing Director

Appendix 3B New issue announcement

Rule 2.7, 3.10.3, 3.10.4, 3.10.5

Appendix 3B

New issue announcement, application for quotation of additional securities and agreement

Information or documents not available now must be given to ASX as soon as available. Information and documents given to ASX become ASX’s property and may be made public.

Introduced 01/07/96 Origin: Appendix 5 Amended 01/07/98, 01/09/99, 01/07/00, 30/09/01, 11/03/02, 01/01/03, 24/10/05, 01/08/12, 04/03/13

Name of entity

FRONTIER RESOURCES LIMITED

ABN

96 095 684 389

We (the entity) give ASX the following information.

Part 1 - All issues

You must complete the relevant sections (attach sheets if there is not enough space).

1 +Class of+securities issued or to be issued 2 Number of+securities issued or to be issued (if known) or maximum number which may be issued 3 Principal terms of the+securities (e.g. if options, exercise price and expiry date; if partly paid +securities, the amount outstanding and due dates for payment; if +convertible securities, the conversion price and dates for conversion)	Fully Paid Ordinary Shares
	5,794,947
	Fully Paid Ordinary Shares

• See chapter 19 for defined terms.

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Appendix 3B New issue announcement

4 Do the+securities rank equally in all respects from the+issue date with an existing+class of quoted +securities? If the additional+securities do not rank equally, please state:  the date from which they do  the extent to which they participate for the next dividend, (in the case of a trust, distribution) or interest payment  the extent to which they do not rank equally, other than in relation to the next dividend, distribution or interest payment 5 Issue price or consideration 6 Purpose of the issue (If issued as consideration for the acquisition of assets, clearly identify those assets) 6a Is the entity an+eligible entity that has obtained security holder approval under rule 7.1A? If Yes, complete sections 6b – 6h in relation to the+securities the subject of this Appendix 3B, and comply with section 6i 6b The date the security holder resolution under rule 7.1A was passed 6c Number of+securities issued without security holder approval under rule 7.1	Yes.
	$0.03 per Share
	Placement and Issue of Shortfall Shares of Entitlements Issue announced 30/11/2016
	Yes
	23 November 2016
	1,137,083

• See chapter 19 for defined terms.

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6d Number of+securities issued with security holder approval under rule 7.1A 6e Number of+securities issued with security holder approval under rule 7.3, or another specific security holder approval (specify date of meeting) 6f Number of+securities issued under an exception in rule 7.2 6g If+securities issued under rule 7.1A, was issue price at least 75% of 15 day VWAP as calculated under rule 7.1A.3? Include the +issue date and both values. Include the source of the VWAP calculation. 6h If+securities were issued under rule 7.1A for non-cash consideration, state date on which valuation of consideration was released to ASX Market Announcements 6i Calculate the entity’s remaining issue capacity under rule 7.1 and rule 7.1A – complete Annexure 1 and release to ASX Market Announcements 7 +Issue dates Note: The issue date may be prescribed by ASX (refer to the definition of issue date in rule 19.12). For example, the issue date for a pro rata entitlement issue must comply with the applicable timetable in Appendix 7A. Cross reference: item 33 of Appendix 3B. 8 Number and +class of all +securities quoted on ASX (_including_the +securities in section 2 if applicable)	N/A
	N/A
	4,657,864
	N/A
	N/A
	See Annexure 1
	17 February 2017
	Number	+Class
	70,451,737	Ordinary Shares

• See chapter 19 for defined terms.

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9 Number and +class of all +securities not quoted on ASX (_including_the +securities in section 2 if applicable) 10 Dividend policy (in the case of a trust, distribution policy) on the increased capital (interests)	Number	+Class
	900,000 500,000 2,800,000 2,000,000	Non-transferable Director Options exercisable at $1.22 cents, expiring 1/11/2017 Options exercisable at $0.22, expiring 2/12/2017 Options exercisable at $0.03, expiring 30/12/2019 Options exercisable at $0.034, expiring 10/02/2020
	N/A

Part 2 - Pro rata issue

11 Is security holder approval N/A required? 12 Is the issue renounceable or nonN/A renounceable? 13 Ratio in which the[+] securities will N/A be offered 14 +Class of +securities to which the N/A offer relates 15 +Record date to determine N/A entitlements 16 Will holdings on different N/A registers (or subregisters) be aggregated for calculating entitlements?

• See chapter 19 for defined terms.

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17 Policy for deciding entitlements in relation to fractions 18 Names of countries in which the entity has security holders who will not be sent new offer documents Note: Security holders must be told how their entitlements are to be dealt with. Cross reference: rule 7.7. 19 Closing date for receipt of acceptances or renunciations 20 Names of any underwriters 21 Amount of any underwriting fee or commission 22 Names of any brokers to the issue 23 Fee or commission payable to the broker to the issue 24 Amount of any handling fee payable to brokers who lodge acceptances or renunciations on behalf of security holders 25 If the issue is contingent on security holders’ approval, the date of the meeting 26 Date entitlement and acceptance form and offer documents will be sent to persons entitled 27 If the entity has issued options, and the terms entitle option holders to participate on exercise, the date on which notices will be sent to option holders 28 Date rights trading will begin (if applicable)	N/A
	N/A
	N/A
	N/A
	N/A
	N/A
	N/A
	N/A
	N/A
	N/A
	N/A
	N/A

• See chapter 19 for defined terms.

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29 Date rights trading will end (if applicable) 30 How do security holders sell their entitlements_in full_through a broker? 31 How do security holders sell_part_ of their entitlements through a broker and accept for the balance? 32 How do security holders dispose of their entitlements (except by sale through a broker)? 33 +Issue date	N/A
	N/A
	N/A
	N/A
	N/A

Part 3 - Quotation of securities

You need only complete this section if you are applying for quotation of securities

34 Type of[+] securities ( tick one ) (a) +Securities described in Part 1 (b)[All other ][+][securities ]

Example: restricted securities at the end of the escrowed period, partly paid securities that become fully paid, employee incentive share securities when restriction ends, securities issued on expiry or conversion of convertible securities

Entities that have ticked box 34(a)

Additional securities forming a new class of securities

Tick to indicate you are providing the information or documents

35 If the[+] securities are[+] equity securities, the names of the 20 largest holders of the additional[+] securities, and the number and percentage of additional[+] securities held by those holders

36 If the[+] securities are[+] equity securities, a distribution schedule of the additional +securities setting out the number of holders in the categories 1 - 1,000

• See chapter 19 for defined terms.

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Appendix 3B New issue announcement

1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 and over

37 A copy of any trust deed for the additional[+] securities

• See chapter 19 for defined terms.

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Appendix 3B New issue announcement

Entities that have ticked box 34(b)

38 Number of+securities for which +quotation is sought 39 +Class of+securities for which quotation is sought 40 Do the+securities rank equally in all respects from the+issue date with an existing+class of quoted +securities? If the additional+securities do not rank equally, please state:  the date from which they do  the extent to which they participate for the next dividend, (in the case of a trust, distribution) or interest payment  the extent to which they do not rank equally, other than in relation to the next dividend, distribution or interest payment 41 Reason for request for quotation now Example: In the case of restricted securities, end of restriction period (if issued upon conversion of another+security, clearly identify that other+security) 42 Number and +class of all +securities quoted on ASX (_including_the+securities in clause 38)
	Number	+Class

• See chapter 19 for defined terms.

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Quotation agreement

• 1 +Quotation of our additional +securities is in ASX’s absolute discretion. ASX may quote the[+] securities on any conditions it decides.

• 2 We warrant the following to ASX.

• The issue of the[+] securities to be quoted complies with the law and is not for an illegal purpose.

• There is no reason why those[+] securities should not be granted +quotation.

• An offer of the[+] securities for sale within 12 months after their issue will not require disclosure under section 707(3) or section 1012C(6) of the Corporations Act.

Note: An entity may need to obtain appropriate warranties from subscribers for the securities in order to be able to give this warranty

• Section 724 or section 1016E of the Corporations Act does not apply to any applications received by us in relation to any[+] securities to be quoted and that no-one has any right to return any[+] securities to be quoted under sections 737, 738 or 1016F of the Corporations Act at the time that we request that the[+] securities be quoted.

• If we are a trust, we warrant that no person has the right to return the +securities to be quoted under section 1019B of the Corporations Act at the time that we request that the[+] securities be quoted.

• 3 We will indemnify ASX to the fullest extent permitted by law in respect of any claim, action or expense arising from or connected with any breach of the warranties in this agreement.

• 4 We give ASX the information and documents required by this form. If any information or document is not available now, we will give it to ASX before +quotation of the +securities begins. We acknowledge that ASX is relying on the information and documents. We warrant that they are (will be) true and complete.

Sign here: ( lodged electronically ) Date: 17 February 2017 (Company secretary)

Print name: Matthew Foy

== == == == ==

• See chapter 19 for defined terms.

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Appendix 3B New issue announcement

Appendix 3B – Annexure 1

Calculation of placement capacity under rule 7.1 and rule 7.1A for eligible entities

Introduced 01/08/12 Amended 04/03/13

Part 1

Rule 7.1 – Issues exceeding 15% of capital

Step 1: Calculate “A”, the base figure from which the placement capacity is calculated

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Insert number of fully paid [+] ordinary 32,569,646
securities on issue 12 months before the
+ issue date or date of agreement to issue
Add the following:
• Number of fully paid [+] ordinary 22,492,880
securities issued in that 12 month
period under an exception in rule 7.2
1,697,128
• Number of fully paid [+] ordinary
securities issued in that 12 month
period with shareholder approval
• Number of partly paid [+] ordinary Nil
securities that became fully paid in that
12 month period
Note:
• Include only ordinary securities here –
other classes of equity securities
cannot be added
• Include here (if applicable) the
securities the subject of the Appendix
3B to which this form is annexed
• It may be useful to set out issues of
securities on different dates as
separate line items
Subtract the number of fully paid Nil
+ ordinary securities cancelled during that
12 month period
56,759,654
“A”
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• See chapter 19 for defined terms.

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Appendix 3B New issue announcement

Step 2: Calculate 15% of “A”

“B” 0.15 [Note: this value cannot be changed] Multiply “A” by 0.15 8,513,948

Step 3: Calculate “C”, the amount of placement capacity under rule 7.1 that has already been used

Insert number of[+] equity securities issued 8,481,904 or agreed to be issued in that 12 month period not counting those issued: • Under an exception in rule 7.2

• Under rule 7.1A

• With security holder approval under rule 7.1 or rule 7.4

Note:

• This applies to equity securities, unless specifically excluded – not just ordinary securities

• • Include here (if applicable) the securities the subject of the Appendix 3B to which this form is annexed

• • It may be useful to set out issues of securities on different dates as separate line items

• “C” 8,481,904

Step 4: Subtract “C” from [“A” x “B”] to calculate remaining placement capacity under rule 7.1

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“A” x 0.15 8,513,948
Note: number must be same as shown in
Step 2
Subtract “C” 8,481,904
Note: number must be same as shown in
Step 3
Total [“A” x 0.15] – “C” 32,044
[Note: this is the remaining placement
capacity under rule 7.1]
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• See chapter 19 for defined terms.

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Appendix 3B New issue announcement

Part 2

Rule 7.1A – Additional placement capacity for eligible entities

art 2	art 2
Rule 7.1A – Additional placement capacity for eligible entities
Step 1: Calculate “A”, the base figure from which the placement capacity is calculated
“A” Note: number must be same as shown in Step 1 of Part 1	56,759,654
Step 2: Calculate 10% of “A”
“D”	0.10 Note: this value cannot be changed
Multiply“A” by 0.10	5,675,965
Step 3: Calculate “E”, the amount 7.1A that has already been used	of placement capacity under rule
Insertnumber of+equity securities issued or agreed to be issued in that 12 month period under rule 7.1A Notes: • This applies to equity securities – not just ordinary securities • Include here – if applicable – the securities the subject of the Appendix 3B to which this form is annexed • Do not include equity securities issued under rule 7.1 (they must be dealt with in Part 1), or for which specific security holder approval has been obtained • It may be useful to set out issues of securities on different dates as separate line items	5,210,179
“E”	5,210,179

• See chapter 19 for defined terms.

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Step 4: Subtract “E” from [“A” x “D”] to calculate remaining placement capacity under rule 7.1A

Step 4: Subtract “E” from [“A” x “D”] to calculate remaining placement capacity under rule 7.1A	Step 4: Subtract “E” from [“A” x “D”] to calculate remaining placement capacity under rule 7.1A
“A” x 0.10 Note: number must be same as shown in Step 2	5,675,965
Subtract“E” Note: number must be same as shown in Step 3	5,210,179
Total[“A” x 0.10] – “E”	465,786 Note: this is the remaining placement capacity under rule 7.1A

Confirmation under section 708(5)(e) of the Corporations Act (Act)

The Company hereby notifies ASX under section 708A(5)(e) of the Act in compliance with the requirements of section 708A(6) of the Act. The Company also advises that as at the date of this notice:

1. the Conversion Issue was issued without disclosure to investors under Part 6D.2 of the Act;

2. the Company has complied with the provisions of Chapter 2M of the Act as they apply to the Company;

3. the Company has complied with section 674 of the Act; and

4. As at the date of this notice, there is no information:

5. a. That has been excluded from a continuous disclosure notice in accordance with the ASX Listing Rules;

6. b. That investors and their professional advisers would reasonably require for the purpose of making an informed assessment of:

   • i. The assets and liabilities, financial position and performance, profits and losses and prospects of the Company; or

   • ii. The rights and liabilities attaching to the shares.

• See chapter 19 for defined terms.

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