GBM RESOURCES LIMITED. — Capital/Financing Update 2022

Sep 8, 2022

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ASX Announcement 9 September 2022

Suite 8, 7 The Esplanade, Mt Pleasant, WA 6153

E info@gbmr.com.au P +61 (8) 9316 9100 F +61 (8) 9315 5475

www.gbmr.com.au ABN 91 124 752 745

$10m+ Funding to Advance Drummond Basin Exploration

KEY POINTS

• GBM has entered into an agreement to issue secured convertible notes ( Note Raise ) up to $10m, which is convertible at a substantial premium to the current share price. The notes are to be issued to the Collins Street Convertible Note Fund (Fund), managed by Collins Street Asset Management, an Australian wholesale investment management company based in Melbourne, Australia.

Key components of the convertible notes are:

• Term 3 years

• • Amount $5,000,000 First Note , $5,000,000 Second Note (subject to shareholder approval)
• • Interest Rate 10.5% payable monthly in advance - Conversion Price 8.75 cents - Establishment Fee 3.0%

• GBM has also received firm commitments to raise $305,000 pursuant to a share placement at 5 cents per share ( Equity Raise ).

• Collectively, the Note Raise and Equity Raise ( Funding Package ) coupled with continued realisation of value from non-core assets will enable an accelerated exploration schedule at GBM’s highly prospective gold projects in the Drummond Basin, QLD, notably at Twin Hills (and region).

GBM Resources Limited (ASX: GBM) ( GBM or the Company ) is pleased to advise it has entered into a Funding Package with funds to be used to continue exploration and mineral resource upgrade activities at its highly prospective Drummond Basin Tenements in Queensland, Australia.

The Funding Package consists of:

• Note Raise

• Signed binding Term Sheet for up to for up to $10m via a secured Convertible Note instrument with Conversion Price at a substantial premium to the current share price.

• Assuming successful completion of conditions precedent, settlement of First Note of the Note Raise ($5 million before costs) is expected in late September 2022.

• First Note of the Note Raise is to be issued pursuant to ASX Listing Rule 7.1, and if fully converted into shares will result in the issue of 57,142 857 ordinary fully paid shares.

• Settlement of Second Note of the Note Raise ($5 million before costs, convertible into up to a further 57,142,857 ordinary fully paid shares) is subject to shareholder approval at the Company’s annual general meeting in November 2022.

A summary of the material terms and conditions of the Convertible Notes are attached in Appendix 1

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• Equity Raise

• $305,000 placement to institutional and sophisticated investors, pursuant to a book build undertaken by the Company, in respect of the proposed issue of approximately 6.1 million fully paid ordinary shares ( Placement Shares ).

The Placement Shares will be issued under the Company’s placement capacity under ASX Listing Rule 7.1A

The Equity Raise is expected to settle on Tuesday, 13 September 2022.

The Placement was undertaken at an offer price of $0.05 per new share, representing discount of:

• 12.3% to the last close price on 6 September 2022 of $0.057; and

• 14.0% to 10-day VWAP of $0.058.

Use of Funds

Funds raised under the funding package will be used to:

• Accelerate exploration drilling and resource expansion at Twin Hills following the review of the recent drilling program results and upgrade of geological models;

• Advance Mineral Resource Estimates updates at Yandan, Illamahta and Twin Hills;

• Initial feasibility work to assess resource extraction options (Open Pit vs UG) to focus future

• drilling programs at Twin Hills; and

• Advancing regional exploration target prioritisation and assessing potential Joint Venture options across various parts of the Drummond Basin tenement package to maximise value creation.

In addition to the funding package, GBM continues discussions with select parties in relation to the realisation of value from non-core assets, notably White Dam.

GBM Managing Director & CEO, Peter Rohner, commented: “This funding package, along with receivables and liquid securities provides GBM sufficient funds to continue to advance its flagship Drummond Basin gold project. Key deliverables over the next 12 months include, continued value realisation of non-core assets and accelerated exploration in the Drummond Basin by GBM to continue to substantial grow our JORC resource position.”

CSVF co-founder and chief investment officer Vas Piperoglou, commented : “We are proud to fund GBM via a friendly convertible note. With our current and further potential future funding, our team is extremely excited to help add and grow shareholder wealth via systematic value add initiatives to be conducted by the team at GBM.”

Appendix 3B’s will be lodged with ASX following release of this announcement in respect of the proposed issue of Note Raise and Equity Raise securities.

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This ASX announcement was approved and authorised for release by:

Peter Rohner, Managing Director

For further information please contact:

Investor enquiries Media enquiries Peter Rohner Michael Vaughan Managing Director Fivemark Partners +61 8 9316 9100 +61 422 602 720 peter.rohner@gbmex.com.au michael.vaughan@fivemark.com.au

About GBM Resources

GBM Resources Limited ( ASX: GBM) is a Queensland based mineral exploration and development company focused on the discovery of world-class gold and copper deposits in Eastern Australia. The company has a high calibre project portfolio, hosting district scale mineral systems, located in several premier metallogenic terrains.

Its 100% owned flagship project in the Drummond Basin (QLD) holds ~1.6 Moz of gold in JORC resources (Mt Coolon, Yandan and Twin Hills). 2022 will see an expanded drilling program which is aiming to \support GBM’s transition into a mid-tier Australian gold company.

Separately it also holds tenements in the Mt Morgan district (subject to a vend into a TSX company) and in the Mt Isa Inlier in Queensland (JV with Nippon Mining Australia - ~54%), and the Malmsbury Project (JV with Novo Resources Corp. - 50%, earning additional 10%) in the prolific Victorian Goldfields. This is complemented by the cash generating White Dam Gold-Copper Project in South Australia in which GBM now holds a 100% interest. Divestment of non-core assets will continue.

About Collins St Asset Management

Founded by Michael Goldberg and Vasilios Piperoglou in 2014, Collins St Asset Management operates several funds including a concentrated Australian equities fund, a Special Situations Fund, and a Convertible Notes Fund.

Having opened their flagship Value Fund to the public in 2016, the team has regularly featured among the best performing Australian equity mandates in the country. Mercer Insights ranked them as the No.1 performing fund across all Australian equity mandates for FY2020, and 2nd for FY2021.

More information on the Collins St Asset Management funds can be found at www.csvf.com.au.

COMPETENT PERSON STATEMENT

The Company confirms that it is not aware of any new information or data that materially affects the information included in the respective announcements and all material assumptions and technical parameters underpinning the resource estimates within those announcements continue to apply and have not materially changed.

The Company confirms that the form and context in which the Competent Persons findings are presented have not been materially modified from the original market announcements.

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APPENDIX 1: Terms and Conditions of Convertible Notes

Issuer	GBM Resources Limited (ACN 124 752 745) (GBMor the Company)
Subscriber	Collins St Convertible Notes Pty Ltd (ACN 657 773 754) (CSCN)
Convertible Note Issue	Convertible notes to be issued by GBM pursuant to a convertible note agreement (CNA) whereby CSCN will agree to subscribe for, and the Company will agree to issue, convertible notes convertible into fully paid ordinary shares in GBM (Shares) for an aggregate subscription amount of $10,000,000 (the first note being $5,000,000 (First Note) and second note being $5,000,000 (Second Note) (together, theConvertible Notes).
Use of Funds	Except as otherwise agreed in writing by CSCN, GBM will not, until the outstanding face value of the Convertible Notes has been unconditionally repaid in full or has been fully converted into Shares, use the funds other than in accordance with any budget agreed in writing with CSCN or as set out in the CNA.
Repayment Date	The earlier of: (a) either: i. in respect of the First Note, 3 years from the date of issue of the First Note, being the date nominated in writing by CSCN which must be no later than 6 weeks after the satisfaction or waiver of the First Conditions (defined below) (First Issue Date); ii. in respect of the Second Note, 3 years from the date of issue of the Second Note, being the date nominated in writing by CSCN which must be no later than 60 days after the satisfaction or waiver of the Second Conditions (defined below) (Second Issue Date); (b) the date that CSCN becomes entitled to exercise its rights under the CNA following an event of default; or (c) any other date as agreed between the parties. (Repayment Date).
Issue size	First Note: $5 million Second Note: $5 million
Conditions precedent	CSCN’s obligation to subscribe for the First Note is subject to the following being satisfied or waived before 30 September 2022: (a) GBM making available to CSCN all documents necessary to enable CSCN to determine whether there are any obligations which materiallyrestrict GBM or anysubsidiaryof

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GBM ( Transaction Party ) from performing their obligations under the transaction; (b) the result and satisfaction of CSCN’s due diligence investigations; (c) GBM obtaining any consents required from any third party to give effect to the CNA and security documents; (d) GBM delivering to CSCN the relevant security documents executed by GBM and any other Transaction Party, an officer's certificate in a form reasonably acceptable to CSCN given in respect of each Transaction Party and each title document and chattel paper required to be lodged with CSCN under the CNA; and (e) the Board resolving that GBM is not subject to an insolvency event and no change has occurred since 30 June 2021 that has a material adverse effect on GBM; (together, the First Conditions ). CSCN’s obligation to subscribe for the Second Note is subject to the following being satisfied or waived before 30 November 2022: (a) GBM obtaining approval from its shareholders for the issue of the Second Note, obtaining any consents required from any third party to give effect to the CNA and security documents and delivering to CSCN the relevant security documents; (b) GBM providing additional security over certain assets of GBM (if required in accordance with the CNA); and (c) the Board resolving that the Company is not subject to an insolvency event and no change has occurred since the First Issue Date that has a material adverse effect on GBM. (together, the Second Conditions ). Interest (a) GBM must pay interest on the outstanding face value of the First Note and Second Note at the following rates: (i)10.5% per annum commencing on the First Issue Date (in respect of the First Note) and the Second Issue Date (in respect of the Second Note); or (ii)17.5% per annum, if: (A) an event of default is subsisting which is not capable of remedy; or (B) an event of default is subsisting which is capable of remedy, and such event of default is not remedied within 5 business days after the occurrence of the event of default. (b) Interest payable as follows:

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	(i) in advance in respect of the First Note for the period commencing 12 months from the First Issue Date and ending on the date which is 3 years from the First Issue Date; (ii) in advance in respect of the Second Note for the period commencing 12 months from the Second Issue Date and ending on the date which is 3 years from the Second Issue Date; and (iii) monthly in advance for the first 12 months of the First Note and Second Note. (c) The amount of interest payable by GBM will be deducted from the applicable subscription amount in respect of the First Note on the First Issue Date and the Second Note on the Second Issue Date.
Conversion	(a) CSCN may elect to convert the Convertible Notes into Shares at any time immediately preceding the relevant Repayment Date for each respective Convertible Note by giving a conversion notice to GBM. (b) To the extent that any portion of the outstanding face value of a Convertible Note remains unconverted, more than one conversion notice may be issued in respect of the same Convertible Note.
Conversion Price	$0.0875 (as adjusted) per Convertible Note (Conversion Price).
Conversion Ratio	On conversion, the number of Shares to be issued for each Convertible Note (or a portion of any Convertible Note) must be calculated by applying the following formula: A = B C Where: A = the number of ordinary shares to be issued; B = the portion of the outstanding face value of the Convertible Note specified in the conversion notice; and C = the Conversion Price.
Adjustment	If GBM issues or agrees to issue any Shares (other than in accordance with the CNA) then, subject to the ASX listing rules, the Conversion Price will be adjusted by applying a discount equivalent to the value of the Shares issued or agreed to be issued as a proportion of GBM’s market capitalisation.

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Redemption on Repayment Date	GBM must redeem the Convertible Notes on: (a) in respect of the First Note, the date which is 3 years from the First Issue Date and must pay the outstanding face value plus any accrued but unpaid interest on the First Note to CSCN; and (b) in respect of the Second Note, the date which is 3 years from the Second Issue Date and must pay the outstanding face value plus any accrued but unpaid interest on the Second Note to CSCN.
Redemption prior to Repayment Date	GBM may in respect of the First Note or the Second Note, at any time after the first anniversary of the relevant issue date (and before the relevant Repayment Date) deliver to CSCN one or more notices of its intention to redeem all of the outstanding face value of the relevant Convertible Notes.
Ranking on conversion	Shares issued on conversion will rank equally with, and have all rights, benefits and obligations identical with, the existing Shares on issue.
Security	(a) The Convertible Notes will be secured by way of two tranches of security agreements in respect of certain assets held by GBM. (b) The parties must work together in good faith to facilitate the negotiation and execution of: (i) the first tranche of security documents in respect of the First Note, before 30 September 2022; and (ii) the second tranche of security documents in respect of the Second Note, before 30 November 2022.
Dividends	The Shares issued on conversion will participate in full in any dividend payment or other entitlement in respect of Shares where CSCN gives a conversion notice on or before the entitlement date for the dividend payment or other entitlement.
ASX Listing	The Convertible Notes will not be listed on the ASX.
Right of first refusal	If GBM intends to issue any Shares (other than in connection with a share purchase plan, pro-rata offer, the conversion of any of GBM’s convertible securities currently on issue or any Shares issued to a third party as consideration under an agreement) (Proposed Issue) at any time prior to the Repayment Date, then GBM must provide CSCN with reasonable details of the Proposed Issue and CSCN may subscribe for up to one third of the total Shares or securities to be issued.

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APPENDIX 2: GBM Mineral Resource Estimate for the Drummond Basin Projects (Mt Coolon, Yandan and Twin Hills) along with other company interests

Deposit		Re	Re	source Category	source Category	000' t Aug/t Au oz Total	Cut-off
	000' t	Aug/t Au oz Measured	000' t	Aug/t Au oz Indicated	000' t Aug/t Au oz Inferred
				Koala
Open Pit UG Extension Tailings	114	1.7 6,200	670 50 9	2.6 55,100 3.2 5,300 1.6 400	440 1.9 26,700 260 4 34,400	1,120 2.3 81,800 320 3.9 39,700 124 1.6 6,600	0.4 2.0 1.0
Sub Total	114	1.7 6,200	729	2.6 60,800	700 2.7 61,100	1,563 2.5 128,100
				Eugenia
Oxide - Open Pit Sulphide - Open Pit			885 905	1.1 32,400 1.2 33,500	597 1.0 19,300 1,042 1.2 38,900	1,482 1.1 51,700 1,947 1.2 72,400	0.4 0.4
Sub Total			1,790	1.1 65,900	1,639 1.1 58,200	3,430 1.1 124,100
				Glen Eva
Sub Total - Open Pit			1,070	1.6 55,200	580 1.2 23,100	1,660 1.5 78,300	0.4
				Yandan
East Hill - Open Pit South Hill - Open Pit					20,600 0.8 505,000 900 0.6 16,000	20,060 0.8 505,000 900 0.6 16,000	0.3 0.3
Sub Total					21,500 0.8 521,000	21,500 0.8 521,000
				Twin Hills
309 - Open Pit 309 - UG Lone Sister - UG	586	2.7 50,300	5,470 110	1.4 253,200 4.8 16,800	4,165 0.9 120,200 510 3.7 60,100 2,010 4.0 260,100	10,220 1.3 423,700 620 3.9 76,900 2,010 4.0 260,100	0.4 2.0 2.0
Sub Total	586	2.7 50,300	5,580	1.5 270,000	6,685 2.0 440,400	12,850 1.8 760,700
Drummond Basin Total	700	2.5 56,500	9,169	1.5 451,900	31,104 1.1 1,103,800	41,003 1.2 1,612,200
				White Dam
Hannaford - Open Pit Vertigo - Open Pit White Dam North - Open Pit			700 300 200	0.7 16,400 1.0 9,400 0.5 2,800	1,000 0.8 26,900 1,400 0.6 29,000 1,000 0.6 17,600	1,700 0.8 43,300 1,700 0.7 38,400 1,200 0.5 20,400	0.2 0.2 0.2
Sub Total			1,200	0.7 28,600	3,400 0.7 73,500	4,600 0.7 101,900
cut-off grade is 0.20 g/t Au for a	ll, Vertigo i	s restricted to above 150RL (~70m b		elow surface)
				Malmsbury
Sub Total - UG					820 4.0 104,000	820 4.0 104,000	2.5
Sub Total - UG - GBM Share					410 4.0 52,000	410 4.0 52,000	2.5
GBM Total				1,766,100

The announcements containing the Table 1 Checklists of Assessment and Reporting Criteria relating to the 2012 JORC compliant Resources are:

• Koala/Glen Eva and Eugenia – GBM ASX Announcements, 4 December 2017, Mt Coolon Gold Project Scoping Study

• Yandan – GBM ASX Announcement, 23 December 2020, Mt Coolon and Yandan Combined Resources Total 852,000 oz, following completion of Yandan acquisition

• Twin Hills – GBM ASX Announcement, 18 January 2019, Mount Coolon and Twin Hills Combined Resource Base Approaches 1 Million Ounces and 2 February 2022, Significant Resource Upgrade at Twin Hills Project

• White Dam - GBM ASX Announcement, 18 August 2020, White Dam Maiden JORC 2012 Resource of 102 koz

• Malmsbury – GBM ASX Announcement, 4 July 2019, Malmsbury Resource Upgraded to JORC 2012

• Including this announcement

• a) The preceding statements of Mineral Resources conforms to the “Australasian Code for Reporting Exploration Results, Mineral Resources and Ore Reserves (JORC Code) 2012 Edition”

• b) All tonnages are dry metric tonnes

• c) Data is rounded to (‘000 tonnes, 0.0 g/t and ‘000 ounces). Discrepancies in totals may occur due to rounding d) Resources have been reported as both open pit and underground with varying cut-off based off several factors as discussed in the corresponding Table 1 which can be found with the original ASX announcement for each Resources.

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