GENESIS RESOURCES LIMITED — Capital/Financing Update 2017

Feb 1, 2017

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Thursday 2 February 2017

Dear Shareholder

Genesis Resources Limited Pro-Rata Non-Renounceable Rights Issue

On Wednesday 1 February 2017, Genesis Resources Limited ACN 114 787 469 ( Genesis or the Company ) announced that it would undertake a pro-rata non-renounceable rights issue on a 3-for-8 basis ( Offer ) to persons who are registered as a holder of ordinary shares ( Shares ) in the Company ( Shareholders ) as at 7:00pm (Melbourne time) on Monday 6 February 2017 ( Record Date ).

The Company has prepared an Offer Document in relation to the Offer. The Offer Document was lodged with the Australian Securities Exchange ( ASX ) on Wednesday 1 February 2017, and a copy is available on the ASX website at www.asx.com.au (ASX: GES).

The Offer Document will be despatched to Shareholders on Thursday 9 February 2017.

Details of the Offer

Pursuant to the Offer, the Company will issue approximately 174,272,487 Shares ( New Shares ) in the capital of the Company (subject to fractional rounding) at an issue price of $0.017 each, to raise approximately $3 million (before costs of the Offer).

The rights issue offers Shareholders the right to take up 3 New Shares for every 8 Shares held as at the Record Date at an issue price of $0.017 per New Share ( Entitlement ). The right to subscribe for New Shares in accordance with an Entitlement under the Offer will be non-renounceable. Shareholders who subscribe for their full Entitlement will also be entitled to apply for additional New Shares in excess of their full Entitlement under a shortfall facility ( Additional Shares ), subject to the condition that no Shareholder may increase their total holding to above 20% through the acquisition of Additional Shares, and any Shareholder who holds more than 20% may not further increase their holding through the acquisition of Additional Shares.

The Company will only issue up to the aggregate number of New Shares that are offered under the Offer, being 174,272,487 Shares, therefore it may be necessary to scale-back applications for Additional Shares under the shortfall facility if all applications exceed this number.

The Offer is fully underwritten by S Active Holding Sdn Bhd ( Underwriter ) (an entity controlled by Genesis Non-Executive Director Mr Kim Heng Lim), on the terms and conditions of an underwriting agreement summarised in the Offer Document.

The New Shares issued under the Offer will be fully paid and will rank equally with the Company’s existing Shares. The Company will make an application to the ASX for official quotation of the New Shares.

The number of Shares on issue in the Company at the date of this letter and the total number of Shares that will be on issue in the Company following the Offer, are as follows:

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

EVENT	NO. OF SHARES
Shares on issue at date of Offer Document	464,726,632
New Shares issuedpursuant to the Offer	174,272,487
Total Shares on issue after completion of the Offer	638,999,119

Purpose of Offer and use of funds

Silgen Resources International Ltd, Kratovo ( Silgen ), the joint venture company owned by the Company and its joint venture partner RIK Sileks AD Kratovo ( Sileks ) in 62% and 38% proportions respectively, has been granted a 30 years exploitation (mining) licence for the Plavica tenement ( Licence ). As the joint venture party responsible for managing the Plavica Project, the Company is required to meet a number of obligations under its joint venture agreement with Sileks, including to undertake infill and extensional drilling and complete a feasibility study in respect of the exploitation licence area (as required to obtain funding for mine development). As part of its joint venture obligations, Genesis has agreed to commit up to US$7.5M for such activities.

The purpose of the fully-underwritten Offer is to raise funds of approximately $3 million. The Directors intend to apply the funds raised as follows:

Purpose	Amount(approximate)
Expenses associated with drilling and assays at PlavicaExpenses associated with feasibility studies on the Plavica Project, to beundertaken following the Company’s release of a JORC 2012 compliant mineralresource at the end of 2016. These studies will include metallurgical test-work,infill and extensional drilling, pit and infrastructure design and an upgrading ofthe resource to “indicated” status. The Company has appointed GolderAssociates to complete this work.Other expenses associated with further work on Plavica, including a LIDARSurvey andESIAStudyGeneral working capital requirements, and to pay for costs of the Offer	$750,000
	$500,000
	$500,000
	Balance(approximately$1,250,000)

Offer timetable

EVENT	DATE (2017)
Announcement of the Offer	Pre-marketWednesday1 February
Lodgement of the following documents with ASX:•an Appendix 3B;•the Offer Document; and•a cleansing notice under section 708AA(2)(f) of the Corporations Act	Pre-marketWednesday1 February
Notice sent to Shareholders containing ASX Appendix 3B details andindicative timetable	Thursday 2 February
“Ex” date where the Company’s existing shares will commence tradingwithout the entitlement to participate in the Offer	Friday 3 February
Record date to determine Entitlements under the Offer	7.00pm(Melbourne time)Monday 6 February

Opening Date for the Rights Issue	Thursday 9 February
Mailing of Offer Document and Entitlement and Acceptance Form toShareholders
Last day to extend Rights Issue Closing Date	Tuesday 21 February
Closing Date for the Rights Issue	5.00pm(Melbourne time)Friday 24 February
Shares quoted on a deferred settlement basis	Monday 27 February
ASX notified of under subscriptions	Wednesday 1 March
New Shares for which valid applications have been received and acceptedby the Company will be issued	Friday 3 March
Deferred settlement trading ends	Friday 3 March
Normal trading of New Shares on ASX expected to commence	Monday 6 March

This timetable is indicative only and subject to change. Subject to the Corporations Act and the ASX Listing Rules, the Company reserves the right to vary these dates, including the closing date of the Offer, without prior notice.

The Company also reserves the right not to proceed with the whole or part of the Offer at any time prior to the issue date. In that event, application monies will be refunded in full without interest.

Dealing with Entitlements

Shareholders have the following alternatives available in relation to the Rights Issue:

1. accept their Entitlement in full;

2. accept their Entitlement in full and apply for Additional Shares under the shortfall facility;

3. partially accept their Entitlement; or

4. allow their Entitlement to lapse.

To the extent that Shareholders do not take up their Entitlement, their interest in the Company will be diluted.

Full details of the terms and conditions of the Offer will be contained in the Offer Document lodged with ASX and to be despatched to Shareholders in accordance with the timetable set out above.

Yours faithfully Sophie Karzis Company Secretary