GENESIS RESOURCES LIMITED — Capital/Financing Update 2017

Jan 31, 2017

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GENESIS RESOURCES LIMITED (ASX : GES )

Wednesday 1 February 2017

To: Australian Securities Exchange Limited Filed by: Genesis Resources Limited

Pro-Rata Non-Renounceable Rights Issue Notice under section 708AA(2)(f) of the Corporations Act 2001 (Cth)

Genesis Resources Limited ( Genesis or the Company ) has announced a pro-rata non-renounceable rights issue on a 3-for-8 basis at an issue price of $0.017 per share ( Rights Issue or Offer ). The Offer is made to all holders of ordinary shares in the Company as at 7:00pm (Melbourne time) on Monday 6 February 2017 ( Record Date ) ( Shareholders ).

The Rights Issue offers Shareholders the right to take up three (3) new shares for every eight (8) Genesis shares held as at the Record Date ( Entitlement ). Pursuant to the Offer, the Company will issue approximately 174,272,487 fully paid ordinary shares in the capital of the Company ( New Shares ) (subject to fractional rounding) to raise approximately $3 million (before costs). The entitlement to subscribe for New Shares under the Offer will be non-renounceable.

The Offer will be fully underwritten by S Active Holding Sdn Bhd ( Underwriter ). There will also be a shortfall facility ( Shortfall Facility ) which will enable Shareholders to subscribe for New Shares in addition to their Entitlement ( 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 Underwriter is an entity controlled by Mr Kim Heng Lim, a Non-Executive Director of the Company. The Company gives notice under section 708AA(2)(f) of the Corporations Act 2001 (Cth) (the Act ) as follows:

• (a) the New Shares will be offered for issue without disclosure to investors under Part 6D.2 of the Act;

• (b) this notice is being given under section 708AA(2)(f) of the Act;

• (c) as at the date of this notice, Genesis has complied with:

• (i) the provisions of Chapter 2M of the Act as they apply to Genesis; and

• (ii) section 674 of the Act; and

• (d) as at the date of this notice, there is no excluded information of the type referred to in sections 708AA(8) and 708AA(9) of the Act.

Effect of Rights Issue on shareholder dilution and the control of Genesis

The effect of the Rights Issue on the control of Genesis will depend on a number of factors, including:

• the level of Shareholder participation in the Entitlement component of the Offer and the identity of Shareholders who participate in the Entitlement component of the Offer;

• if applicable, the level of Shareholder participation in the Shortfall Facility and the identity of Shareholders who participate in the Shortfall Facility;

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• the extent to which the underwriting or sub-underwriting is called upon; and

• the level of dispersion of Shortfall Shares (if any) to the Underwriter and any sub-underwriters of the Offer.

The potential effect of the Offer on the control of the Company is as follows:

• If all Shareholders take up their full Entitlements, there would be no effect on the control of Genesis, as the Offer is made pro-rata, and in that case no rights would lapse or revert to the shortfall for the Underwriter or sub-underwriters to take up.

• If Shareholders do not take up their full Entitlements under the Offer, then the interests of those Shareholders will be diluted.

If no Shareholder (other than the Underwriter) was to take up any of their Entitlement ( Lack of Shareholder Subscription ), the Underwriter would therefore be bound to subscribe for 174,272,487 shares (including its Entitlement). The Underwriter is a major shareholder of Genesis.

The table below sets out the final shareholding interests of the Underwriter (in the event that the Underwriter elects to directly subscribe for the underwritten shares instead of allocating shares to subunderwriters) upon completion of the Offer in the event that the Offer is fully subscribed, 75% subscribed, 50% subscribed, 25% subscribed, and in the event of Lack of Shareholder Subscription (in each case on the basis that the Underwriter will apply for its full Entitlement under the Offer as a Shareholder):

UNDERWRITER’S CURRENT SHAREHOLDING	UNDERWRITER’S CURRENT SHAREHOLDING
Number of Shares currently held by Underwriter in Genesis	88,784,597
Currentpercentage of Genesis’ issued capital(%)	19.10%
IF THE OFFER IS FULLY SUBSCRIBED (INCLUDING UNDERWRITER’S ENTITLEMENT)
Entitlement and Additional Shares taken upbyother Shareholders	140,978,263
Entitlement Shares to be taken upbythe Underwriter	33,294,224
Underwritten Shortfall Shares taken upbythe Underwriter	-
Total Shares acquired under the Offer bythe Underwriter	33,294,224
Underwriter’s total holding following the Offer	122,078,821
Percentage of Genesis’ issued capital held by Underwriter(%)	19.10%
IF THE OFFER IS 75% SUBSCRIBED(INCLUDING UNDERWRITER’S ENTITLEMENT)
Entitlement and Additional Shares taken upbyother Shareholders	97,410,141
Entitlement Shares to be taken upbythe Underwriter	33,294,224
Underwritten Shortfall Shares taken upbythe Underwriter	43,568,122
Total Shares acquired under the Offer bythe Underwriter	76,862,346
Underwriter’s total holding following the Offer	165,646,943
Percentage of Genesis’ issued capital held by Underwriter(%)	25.92%
IF THE OFFER IS 50% SUBSCRIBED(INCLUDING UNDERWRITER’S ENTITLEMENT)
Entitlement and Additional Shares taken upbyother Shareholders	53,842,019
Entitlement Shares to be taken upbythe Underwriter	33,294,224
Underwritten Shortfall Shares taken upbythe Underwriter	87,136,244
Total Shares acquired under the Offer bythe Underwriter	120,430,468
Underwriter’s total holding following the Offer	209,215,065
Percentage of Genesis’ issued capital held by Underwriter(%)	32.74%
IF THE OFFER IS 25% SUBSCRIBED(INCLUDING UNDERWRITER’S ENTITLEMENT)
Entitlement and Additional Shares taken upbyother Shareholders	10,273,898
Entitlement Shares to be taken upbythe Underwriter	33,294,224
Underwritten Shortfall Shares taken upbythe Underwriter	130,704,365
Total Shares acquired under the Offer bythe Underwriter	163,998,589
Underwriter’s total holding following the Offer	252,783,186

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Percentage of Genesis’ issued capital held by Underwriter(%)	39.56%
IF THE OFFER IS 0% SUBSCRIBED BY ANY SHAREHOLDER EXCEPT THE UNDERWRITER
Entitlement and Additional Shares taken upbyother Shareholders	0
Entitlement Shares to be taken upbythe Underwriter	33,294,224
Underwritten Shortfall Shares taken upbythe Underwriter	140,978,263
Total Shares acquired under the Offer bythe Underwriter	174,272,487
Underwriter’s total holding following the Offer	263,057,084
Percentage of Genesis’ issued capital held by Underwriter(%)	41.17%

The following can be said about the effect of the Offer on the control of Genesis:

• currently, the Underwriter does not control Genesis, though it is noted that the Underwriter holds 19.10% of the issued capital in Genesis and the Underwriter is controlled by Genesis Non-Executive Director Mr Kim Heng Lim;

• as noted above, if every Shareholder was to take up their full Entitlement, there would be no effect on the control of Genesis following the Offer;

• the Offer, as a result of Lack of Shareholder Participation could result in the Underwriter increasing its holding in Genesis from 19.10% to 41.17%, giving it significantly increased voting power (in the event that the Underwriter elects to directly subscribe for the underwritten shares instead of allocating shares to sub-underwriters);

• the Underwriter has advised Genesis that it does not currently intend to change its existing relationship with Genesis (other than the number of shares it holds directly); and

• in addition to the shares that may be issued to the Underwriter as a result of the underwriting, the Underwriter will also receive the underwriting fee as set out in section 8.4 of the Offer Document which was lodged with ASX on Wednesday 1 February 2017.

All Shareholders, along with the Underwriter and any sub-underwriters, will be permitted to acquire a relevant interest in the Company’s share capital that is in excess of 20% pursuant to item 10 of section 611 of the Corporations Act, but only if such interest is acquired as a result of the acquisition of Entitlement Shares (and, in the case of the Underwriter, underwritten shares), and not as a result of an acquisition of Additional Shares.

The current substantial shareholders of Genesis as at the date of this notice are as follows:

Substantial Shareholder	No. of shares	% of current issued **capital **
S Active HoldingSdn Bhd	88,784,597	19.10%
CiticorpNominees PtyLimited	88,397,827	19.02%
Kin Po Yu and Huahui GroupHoldings PtyLtd	36,000,000	7.75%
Spektra Jeotek Sanayi ve Ticaret A.S.	34,174,444	7.35%
Wintercrest Advisors LLC	33,002,561	7.10%
Chun Men Leo Yu	27,139,541	5.84%
Kar Ghee Ong	24,864,384	5.35%

Where the Rights Issue is significantly undersubscribed, the Underwriter could potentially acquire control of the Company.

Signed for Genesis Resources Limited

Sophie Karzis

Company Secretary

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