GALAN LITHIUM LIMITED — Capital/Financing Update 2013

May 20, 2013

ACN 149 349 646

ASX ANNOUNCEMENT

21 May 2013

Contingent Entitlement Issue

It is important that you read this letter carefully and, if in any doubt, consult with your professional advisor.

We refer to the Company’s Prospectus dated 13 April 2011 in relation to its initial public offering ( Prospectus ), an electronic copy of which is available at www.dempseyminerals.com.au. Section 1.4 of the Prospectus refers to the Company’s proposal to distribute contingent entitlement shares ( Contingent Entitlement Issue ) under which eligible shareholders are entitled to share in a pool of 6,250,000 fully paid ordinary shares in the Company for nil consideration.

The material terms of the Contingent Entitlement Issue are as follows:

1. Barclay Wells Limited (Trustee) holds 6,250,000 shares on trust for the eligible shareholders.

2. An eligible shareholder is a person or entity registered as the holder of at least 10,000 shares in the Company on the date of listing (I.e. 6 June 2011) ( Listing Date ) and at least 1 share on the business day after the shares are issued under the Prospectus cease to be escrowed (i.e. 10 June 2013) ( Entitlement Date ).

3. The trustee will distribute the shares to the eligible shareholders in accordance with the following formula:

A/B x C = X

Where:

A = the number of shares in the Company held by an eligible shareholder as at the Entitlement Date

B = the total number of shares in the Company held by all of the eligible shareholders as at the Entitlement Date

C = the total number of Contingent Entitlement Shares

X = the amount of Contingent Entitlement Shares which the eligible shareholder is entitled to receive on the Entitlement Date

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Level 2, 38 Richardson Street, West Perth, WA 6005 PO Box 396, West Perth, WA, 6872 Ph. +61 8 9322 6283 Fax. +61 8 9322 6398

www.dempseyminerals.com.au

ACN 149 349 646

1. Any fractional entitlements will be rounded down. Any shares leftover after rounding down will be transferred to the eligible shareholder with the largest single parcel of shares.

2. Once entitlements have been confirmed, the Trustee will transfer the shares to the eligible shareholders by way of an off-market transfer.

3. The shares will be distributed for nil consideration and therefore no amount is payable by eligible shareholders for their entitlements.

Therefore, shareholders will only be eligible to participate in the Contingent Entitlement Issue if they were the registered holder of at least 10,000 shares at the Listing Date and are the registered holder of at least 1 share at the Entitlement Date. For the purposes of the Contingent Entitlement Issue, a transfer of shares to another person or entity (even to the beneficial owner of the shares or to a nominee holder where beneficial ownership does not change) will result in a change in the registered ownership of those shares and, accordingly, may affect eligibility.

Please be aware that shareholders are solely responsible for any taxation liabilities that they may incur in connection with receiving any shares under the Contingent Entitlement Issue.

If you have any general queries in relation to the Contingent Entitlement Issue then please contact the Company on +61 8 9322 6283.

Yours faithfully

Julie Hill

Company Secretary

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Level 2, 38 Richardson Street, West Perth, WA 6005 PO Box 396, West Perth, WA, 6872 Ph. +61 8 9322 6283 Fax. +61 8 9322 6398 www.dempseyminerals.com.au