GENESIS RESOURCES LIMITED — Capital/Financing Update 2016

Mar 23, 2016

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GENESIS RESOURCES LIMITED

(ASX: GES)

ASX and Media Release

24 March 2016

Placement Capacity and Extraordinary General Meeting

Genesis Resources Limited (ASX: GES ) ( Genesis or the Company ) refers to the Appendix 3B released by the Company on 26 February 2016 relating to the issue of 57,002,640 shares to retire debt owed to a lender under an existing loan facility ( February Shares ).

Background

At Genesis’ 2015 Annual General Meeting ( 2015 AGM ) , the Company sought and received shareholder approval in accordance with Listing Rule 7.3 for a placement of up to 100,000,000 ordinary shares ( Proposed Placement ) for the purposes of raising capital to fund Genesis’ joint venture commitments to undertake infill and extensional drilling and complete a feasibility study at the Plavica Project ( Approved Purpose ).

On 26 February 2016, Genesis issued the 57,002,640 February Shares on the following basis:

• (1) Genesis is party to a loan facility agreement with a lender, under which Genesis has available to it a total loan facility of $7M for draw down. As at 26 February 2016, Genesis was indebted to the lender in the total sum of $3.16M (being principal amounts drawn down under the facility plus interest accrued) ( Outstanding Debt ).

• (2) Prior to 26 February 2016, Genesis successfully negotiated an agreement with the lender under which the lender would accept shares in lieu of cash repayment of the Outstanding Debt.

• (3) The Board considered that the issue of the February Shares in retirement of the Outstanding Debt:

  • (a) was consistent with the Approved Purpose, as the funds the subject of the Outstanding Debt had been applied to the Approved Purpose, and the further $7M which would be made available to Genesis under the same loan facility after the issue of the February Shares was intended to be similarly applied to the Approved Purpose;

  • (b) would enable Genesis to conserve a significant amount of cash ($3.16M) at a time when it required capital in order to fund its joint venture commitments, and strengthen its balance sheet by extinguishing liabilities of $3.16M; and

  • (c) generally represented a favourable outcome in the best interests of all shareholders.

GENESIS RESOURCES LIMITED ACN 114 787 469 Level 1, 61 Spring Street, Melbourne, Victoria 3000, Australia T + 61 3 9286 7500 | F + 61 3 9662 1472 | www.genesisresourcesltd.com.au

Subsequent to the issue of the February Shares, ASX has informed the Company of its determination that the purpose of the issue of the February Shares is inconsistent with the Approved Purpose, and shareholder approval received at the 2015 AGM. As a result of ASX’s determination:

• (1) 45,111,480 of the February Shares will be taken to have been issued under the Company’s maximum capacity to issue shares under Listing Rule 7.1 as at 26 February 2016 ( 7.1 Shares );

• (2) The balance of the February Shares, being 11,891,160 shares ( Excess Shares ), will be taken to have been issued in excess of Genesis’ available capacity to issue shares under Listing Rule 7.1;

• (3) Ratification by Genesis shareholders of the issue of the Excess Shares will not refresh the Company’s capacity to issue securities without shareholder approval under Listing Rule 7.1, as ratification under Listing Rule 7.4 is only available where the securities are issued without breaching Listing Rule 7.1; and

• (4) The Company has provided the ASX with an undertaking not to issue any further equity securities without shareholder approval until 1 June 2016, unless the issue comes within an exception in Listing Rule 7.2 ( Undertaking ).

Capital Raising Placements under Mandate

The Company has secured a mandate agreement under which a Dealer’s Representative of RHB Investment Bank Berhad will act as lead manager for Genesis in relation to a proposed capital raising of approximately US$4M by way of progressive placements of shares ( Capital Raising Placements ).

As a result of the Undertaking, the Company is effectively constrained from issuing shares to raise further capital until 1 June 2016, unless it does so with shareholder approval or if the issue comes within an exception in Listing Rule 7.2.

In order for Genesis to issue shares under the Capital Raising Placements in an expedient manner and prior to 1 June 2016, the Company will be holding an Extraordinary General Meeting ( EGM ) on Friday 22 April 2016 at 1.30pm (Melbourne time), at RSM Australia, Level 21, 55 Collins Street, Melbourne, Victoria, 3000 to:

• seek approval for shares to be issued under the Capital Raising Placements, and such other placements that may be secured by the Board; and

• seek ratification of the 7.1 Shares under Listing Rule 7.4.

A Notice of EGM and explanatory statement will be lodged with ASX and despatched to all shareholders today.

-Ends-

For further information, please contact: Sophie Karzis Company Secretary T: +61 3 9286 7501 E: sk@ccounsel.com.au

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