GROUP 6 METALS LIMITED - AGM Information 2021

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NOTICE OF ANNUAL GENERAL MEETING

Notice is hereby given that the Annual General Meeting of Shareholders of King Island Scheelite Limited ABN 40 004 681 734 (Company) will be held as a virtual meeting commencing 11.00AM Sydney Time on Monday 8 November 2021.

Due to Covid-19, in the interests of public health and safety, the Company’s 2021 AGM will be held entirely virtually – there will be no physical venue for Shareholders to attend.

To attend and participate in the meeting to be held via zoom please register in advance of the meeting by contacting the Company by email on [email protected]. Please register to attend the meeting via zoom at least 1 day in advance of the meeting to allow sufficient time for the Company to respond to your registration request.

Shareholders may vote on the meeting online via the Lumi platform (if using a computer to participate using your smartphone, tablet or computer. You will need the latest versions of Chrome, Edge or Firefox. Please ensure your browser is compatible.)

Even though the meeting is being held entirely online, you may still lodge a proxy or direct vote prior to the meeting or lodge a direct vote online during the meeting.

Refer to the details below.

If it becomes necessary or appropriate to make alternative arrangements for the Meeting to those set out in this Notice, the Company will notify shareholders accordingly via the Company’s website https://www.kingislandscheelite.com.au and the ASX announcement platform.

Shareholders are encouraged to vote online or appoint the chair of the Meeting as their proxy using the accompanying proxy form. Details on how to vote by proxy are set out in the notice and the accompanying proxy form. Shareholders may specify on their proxy form the way the proxy is to vote on each resolution to be considered at the Meeting.

1. VOTING VIRTUALLY ON THE DAY OF THE AGM

Shareholders who wish to vote virtually on the day of the AGM will need to login to the Computershare website https://web.lumiagm.com/329058284.

Shareholders will require their holder number (Securityholder Reference Number (SRN) or Holder Identification Number (HIN)) to login to the Lumi platform.

If you are an appointed proxy, contact Computershare on +61 3 9415 4024 within the online registration period which will open 1 hour before the meeting to obtain your username and password.

2. VOTING BY PROXY

Proxies may be lodged using any of the following methods:

Online

Lodge the Proxy Form online at https://www.investorvote.com.au following the instructions:

To use the online lodgment facility, Shareholders will need their holder number (Securityholder Reference Number (SRN) or Holder Identification Number (HIN)) and control number as shown on the front of the Proxy Form.

By post

Returning a completed Proxy Form by post using the pre‐addressed envelope provided with this Notice to Computershare Investor Services Pty Limited, GPO Box 242, Melbourne, Victoria, 3001

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Facsimile

Faxing a completed Proxy Form to 1800 783 447 (within Australia) +613 9473 2555 (outside Australia)

Custodians

For intermediary online subscribers only (custodians), submit your voting intentions via www.intermediaryonline.com.

Your Proxy instruction must be received not later than 48 hours before the commencement of the Meeting. To facilitate the conduct of the meeting during this pandemic, you are strongly encouraged to nominate the Chairman of the meeting as your proxy. Proxy Forms received later than this time will be invalid.

Refer to the Explanatory Notes for further information on the proposed Resolutions.

Date: 7 October 2021

By order of the Board of King Island Scheelite Limited

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Ian Morgan

Company Secretary

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NOTICE OF ANNUAL GENERAL MEETING	NOTICE OF ANNUAL GENERAL MEETING	1
1. VOTING VIRTUALLY ON THE DAY OF THE AGM		1
2. VOTING BY PROXY		1
3. ITEMS OF GENERAL BUSINESS		5
3.1.	Financial Reports	5
3.2.	Resolution 1: Adoption of the Remuneration Report	5
3.3.	Resolution 2: Re-Election of Director – Mr Johann Jacobs	6
4. ITEMS OF SPECIAL BUSINESS		6
4.1.	Resolution 3: Approval of 10% Placement Facility	6
4.2.	Resolutions 4(a), (b) and (c): Approval of issuance and allotment of Shares to certain unrelated
	Facility Lenders	6
4.3.	Resolutions 5(a), (b), (c) and (d): Approval of issuance of options to certain Facility Lenders	7
4.4.	Resolutions 6(a) and (b): Approval of issuance of Shares and Options to related party: Chris Ellis (via
	his nominated entity)	7
4.5.	Resolution 7: Approval of granting of security to certain Facility Lenders	8
4.6.	Resolution 8: Ratification of issue of Shares to professional and sophisticated investors under a
	Share placement	9
4.7.	Resolution 9: Approval of issuance of Shares to related party: Johann Jacobs (via his nominated
	entity)	9
4.8.	Resolution 10: Approval of issuance of shortfall Shares under SPP to a related party: Chris Ellis (via
	his nominated entity)	9
4.9.	Resolution 11: Approval of issuance of shortfall Shares under SPP to Elphinstone Holdings Pty Ltd 10
4.10.	Resolution 12: Approval of change of Company name	10
5. VOTING EXCLUSION STATEMENTS		11
6. VOTING RIGHTS AND PROXIES		11
7. VENUE AND VOTING INFORMATION		11
7.1.	Your Vote Is Important	11
7.2.	Voting at the Meeting	11
7.3.	Voting By Proxy	11
7.4.	Power Of Attorney	12
7.5.	Corporate Representatives	12
7.6.	How The Chairman of the Meeting Will Vote Undirected Proxies	12
7.7.	Date For Determining Holders of Shares	12
8. EXPLANATORY NOTES		14
8.1.	Financial Reports	14
8.2.	Resolution 1: Adoption of the Remuneration Report	14
8.3.	Resolution 2: Re-Election Of Director – Mr Johann Jacobs	15
8.4.	Resolution 3: Approval Of 10% Placement Facility	15
8.5.	Resolutions 4(a) to 8	20

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8.6.	Resolutions 4(a), (b) and (c): Approval of issuance and allotment of Shares to certain unrelated
	Facility Lenders	22
8.7.	Resolutions 5(a), (b), (c) and (d): Approval of issuance of options to certain Facility Lenders	24
8.8.	Resolutions 6(a) and (b): Approval of issuance of Shares and Options to related party: Chris Ellis (via
	his nominated entity)	26
8.9.	Resolution 7: Approval of granting of security to certain Facility Lenders	29
8.10.	Resolution 8: Ratification of issue of Shares to professional and sophisticated investors under a
	Share placement	32
8.11.	Resolution 9: Approval of issuance of Shares to related party: Johann Jacobs (via his nominated
	entity)	33
8.12.	Resolution 10: Approval of issuance of shortfall Shares under SPP to a related party: Chris Ellis (via
	his nominated entity)	35
8.13.	Resolution 11: Approval of issuance of shortfall Shares under SPP to Elphinstone Holdings Pty Ltd 36
8.14.	Resolution 12: Approval of change of Company name	37
8.15.	Interpretation	37
8.16.	Registered Office	38
9. GLOSSARY		39

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3. ITEMS OF GENERAL BUSINESS

3.1. Financial Reports

To receive and consider the Financial Statements, Directors’ Report and Auditor’s Report for the Company for the financial year ended 30 June 2021.

Note: There is no requirement for Shareholders to approve these reports.

The statutory annual report is available for Shareholders to access and download from

https://www.kingislandscheelite.com.au/investors/annual reports/

If you would like to receive a hard copy of the statutory annual report free of charge, you can contact the Company by telephoning +61 2 8622 1402 or emailing [email protected].

3.2. Resolution 1: Adoption of the Remuneration Report

To consider and if thought fit, to pass, with or without amendment, the following resolution in accordance with section 250R of the Corporations Act as a non-binding resolution :

“That the Company adopts the Remuneration Report for the financial year ended 30 June 2021.”

Notes:

(a) This Resolution 1 is advisory only and does not bind the Company or the Directors.
(b) The Directors will consider the outcome of the vote and comments made by Shareholders on the Remuneration Report at the meeting when reviewing the Company’s remuneration policies.
(c) The Chairman of the Meeting intends to vote all available proxies in favour of Resolution 1.
(d) If 25% or more votes that are cast are voted against the adoption of the Remuneration Report at two consecutive AGMs, Shareholders will be required to vote at the second of those AGMs on a resolution (a “spill resolution”) that another meeting be held within 90 days, at which all the Company’s directors must go up for re-election.

Voting Exclusion Statement : The Company will disregard any votes cast on Resolution 1 by or on behalf of Key Management Personnel whose remuneration is disclosed in the Remuneration Report and any Closely Related Party of such a member or an Associate of those persons. However, the Company need not disregard a vote cast on Resolution 1 by:

(a) a person as proxy or attorney for a person who is entitled to vote on the resolution, in accordance with directions given to the proxy or attorney to vote on the resolution in that way; or
(b) the Chair of the meeting as proxy or attorney for a person who is entitled to vote on the resolution, in accordance with a direction given to the Chairman to vote on the resolution as the Chair decides; or
(c) a holder acting solely in a nominee, trustee, custodial or other fiduciary capacity on behalf of a beneficiary provided the following conditions are met:
(i) the beneficiary provides written confirmation to the holder that the beneficiary is not excluded from voting, and is not an associate of a person excluded from voting, on the resolution; and
(ii) the holder votes on the resolution in accordance with directions given by the beneficiary to the holder to vote in that way.

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3.3. Resolution 2: Re-Election of Director – Mr Johann Jacobs

To consider and if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution :

“That Mr Johann Jacobs who retires from office and is eligible for re-election, is re-elected as a director of the Company.”

The Chairman of the Meeting intends to vote all available proxies in favour of Resolution 2.

Notes:

(a) Mr Jacobs has consented to be re-elected a director of the Company.
(b) The non-candidate Directors unanimously support the re-election of Mr Jacobs.
(c) The Chairman of the Meeting intends to vote all available proxies in favour of Resolution 2.

4. ITEMS OF SPECIAL BUSINESS

4.1. Resolution 3: Approval of 10% Placement Facility

To consider and, if thought fit, to pass with or without amendment, the following resolution as a special resolution :

“That for the purpose of ASX Listing Rule 7.1A and for all other purposes, Shareholders approve the issue of Equity Securities up to 10% of the issued capital of the Company (at the time of issue) calculated in accordance with the formula prescribed in ASX Listing Rule 7.1A.2 and on the terms and conditions in the accompanying Explanatory Notes.”

The Chairman of the Meeting intends to vote all available proxies in favour of Resolution 3.

Voting exclusion statement for Resolution 3 : The Company will disregard any votes cast in favour of Resolution 3 by or on behalf of a person who is expected to participate in, or who will obtain a material benefit as a result of, the proposed issue the subject of the Resolution (except a benefit solely by reason of being a holder of ordinary securities in the Company ) or an Associate of those persons.

4.2. Resolutions 4(a), (b) and (c): Approval of issuance and allotment of Shares to certain unrelated Facility Lenders

To consider and, if thought fit, to pass with or without amendment, the following resolutions as ordinary resolutions :

“That for the purpose of ASX Listing Rule 7.1 and for all other purposes, Shareholders approve the issue of:

(a) 7,142,857 fully paid ordinary Shares at a price of $0.14 per share to Elphinstone Holdings Pty Ltd;
(b) 35,714,286 fully paid ordinary Shares at a price of $0.14 per share to D.A.CH.S. Capital AG; and
(c) 25,000,000 fully paid ordinary Shares at a price of $0.14 per share to Abex Limited,

each a Facility Lender, in accordance with the terms and conditions of the Debt Facilities entered into between the Company and each of them and as set out in the accompanying Explanatory Notes.”

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The Chairman of the Meeting intends to vote all available proxies in favour of each of Resolution 4(a), (b) and (c).

Voting exclusion statement for Resolutions 4(a), (b) and (c) : The Company will disregard any votes cast in favour of Resolution 4(a), (b) or (c) by or on behalf of a person who is expected to participate in, or who will obtain a material benefit as a result of, the proposed issue (except a benefit solely by reason of being a holder of ordinary securities in the entity) or an Associate of those persons, including each of Elphinstone Holdings Pty Ltd, D.A.CH.S. Capital A G and Abex Limited in respect of the resolution that relates to them.

4.3. Resolutions 5(a), (b), (c) and (d): Approval of issuance of options to certain Facility Lenders

To consider and, if thought fit, to pass with or without amendment, the following resolutions as ordinary resolutions :

“That for the purpose of ASX Listing Rule 7.1 and for all other purposes, Shareholders approve the issue of:

(a) 46,428,571 Options at an exercise price of $0.21 per Option to PURE Asset Management Pty Ltd (for nil consideration and expiring on 31 December 2025);
(b) 26,785,714 Options at an exercise price of $0.196 per Option to Elphinstone Holdings Pty Ltd (for nil consideration with 4,464,285 Warrants expiring on the date of each scheduled repayment under the Debt Facility agreement (other than the last date for scheduled repayment on which 4,464,289 will expire));
(c) 16,071,429 Options at an exercise price of $0.196 per Option to D.A.CH.S. Capital A G (for nil consideration with 2,678,571 Warrants expiring on the date of each scheduled repayment under the Debt Facility agreement (other than the last date for scheduled repayment on which 2,678,574 will expire)); and
(d) 34,821,429 Options at an exercise price of $0.196 per Option to Abex Limited (for nil consideration with 5,803,571 Warrants expiring on the date of each scheduled repayment under the Debt Facility agreement (other than the last date for scheduled repayment on which 5,803,574 will expire)),

each a Facility Lender, in accordance with the terms and conditions of the Debt Facilities and Warrant Agreements entered into between the Company and each of them and as set out in the accompanying Explanatory Notes.”

The Chairman of the Meeting intends to vote all available proxies in favour of each of Resolution 5(a), (b), (c) and (d).

Voting exclusion statement for Resolutions 5(a), (b), (c) and (d) : The Company will disregard any votes cast in favour of Resolution 5(a), (b), (c) or (d) by or on behalf of a person who is expected to participate in, or who will obtain a material benefit as a result of, the proposed issue (except a benefit solely by reason of being a holder of ordinary securities in the entity) or an Associate of those persons, including each of PURE Asset Management Pty Ltd, Elphinstone Holdings Pty Ltd, D.A.CH.S. Capital A G and Abex Limited in respect of the resolution that relates to them.

4.4. Resolutions 6(a) and (b): Approval of issuance of Shares and Options to related party: Chris Ellis (via his nominated entity)

To consider and, if thought fit, to pass with or without amendment, the following resolutions as ordinary resolutions :

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“That for the purpose of ASX Listing Rule 10.11 and for all other purposes, Shareholders approve the issue of:

(a) 10,714,286 fully paid ordinary Shares at a price of $0.14 per Share; and
(b) 24,107,143 Options at an exercise price of $0.196 per Option (for nil consideration with 4,017,857 Warrants expiring on the date of each scheduled repayment under the Debt Facility agreement (other than the last date for scheduled repayment on which 4,017,858 will expire)),

to Director, Chris Ellis (via his nominated entity) in accordance with the terms and conditions of the Debt Facility and Warrant Agreement entered into between him (via his nominated entity) and the Company and as set out in the accompanying Explanatory Notes.”

The Chairman of the Meeting intends to vote all available proxies in favour of each of Resolution 6(a) and (b).

Voting exclusion statement for Resolutions 6(a) and (b) : The Company will disregard any votes cast in favour of Resolution 6(a) or (b) by or on behalf of the person who is to receive the securities in question and any other person who will obtain a material benefit as a result of the issue of the securities (except a benefit solely by reason of being a holder of ordinary securities in the entity) or an Associate of those persons, including Chris Ellis.

4.5. Resolution 7: Approval of granting of security to certain Facility Lenders

To consider and, if thought fit, to pass with or without amendment, the following resolution as an ordinary resolution :

“That for the purpose of ASX Listing Rule 10.1 and for all other purposes, Shareholders approve the granting of the Security to each of Abex Limited and Chrysalis Investments Pty Ltd in its capacity as trustee for The Ellis Family Trust (an entity controlled by Director, Chris Ellis) on the terms and conditions in the accompanying Explanatory Notes.”

An independent expert’s report considering whether the Security Transaction proposed for approval by Shareholders in accordance with Resolution 7 is fair and reasonable has been included with the Notice.

THE SECURITY TRANSACTION WAS DETERMINED ON AN ARM’S LENGTH BASIS. IN THE OPINION OF THE INDEPENDENT EXPERT, THE TRANSACTION IS FAIR AND REASONABLE TO NON‐ASSOCIATED SHAREHOLDERS.

The independent expert’s report is available for Shareholders to access and download from https://www.kingislandscheelite.com.au/.

If you would like to receive a hard copy of the independent expert’s report free of charge you can contact the Company by telephoning +61 2 8622 1402 or emailing [email protected].

The Chairman of the Meeting intends to vote all available proxies in favour of Resolution 7.

Voting exclusion statement for Resolution 7 : The Company will disregard any votes cast in favour of Resolution 7 by or on behalf of the person disposing of the substantial asset to, or acquiring the substantial asset from, the entity and any other person who will obtain a material benefit as a result of the transaction (except a benefit solely by reason of being a holder of ordinary securities in the entity) or an Associate of those persons, including each of Abex Limited and

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Chrysalis Investments Pty Ltd in its capacity as trustee for The Ellis Family Trust in respect of the resolution that relates to them.

4.6. Resolution 8: Ratification of issue of Shares to professional and sophisticated investors under a Share placement

To consider and, if thought fit, to pass with or without amendment, the following resolution as an ordinary resolution :

“That for the purpose of ASX Listing Rule 7.4 and for all other purposes, Shareholders ratify the issue of 102,238,220 fully paid ordinary Shares at a price of $0.14 per Share to unrelated professional and sophisticated investors under a Share placement expected to be issued on or around 7 October 2021 on the terms and conditions in the accompanying Explanatory Notes.”

The Chairman of the Meeting intends to vote all available proxies in favour of Resolution 8.

Voting exclusion statement for Resolution 8 : The Company will disregard any votes cast in favour of Resolution 8 by or on behalf of a person who is expected to participate in, or who will obtain a material benefit as a result of, the proposed issue (except a benefit solely by reason of being a holder of ordinary securities in the entity) or an Associate of those persons.

4.7. Resolution 9: Approval of issuance of Shares to related party: Johann Jacobs (via his nominated entity)

To consider and, if thought fit, to pass with or without amendment, the following resolution as an ordinary resolution:

“That for the purpose of ASX Listing Rule 10.11 and for all other purposes, Shareholders approve the issue of up to 1,050,000 fully paid ordinary Shares at a price of $0.14 per share to Director, to Johann Jacobs (via his nominated entity) on the same terms as Shares are proposed to be issued to professional and sophisticated investors under a Share placement undertaken by the Company and as set out in the accompanying Explanatory Notes.”

The Chairman of the Meeting intends to vote all available proxies in favour of Resolution 9.

Voting exclusion statement for Resolution 9 : The Company will disregard any votes cast in favour of Resolution 9 by or on behalf of the person who is to receive the securities in question and any other person who will obtain a material benefit as a result of the issue of the securities (except a benefit solely by reason of being a holder of ordinary securities in the entity) or an Associate of those persons, including Johann Jacobs.

4.8. Resolution 10: Approval of issuance of shortfall Shares under SPP to a related party: Chris Ellis (via his nominated entity)

To consider and, if thought fit, to pass with or without amendment, the following resolution as an ordinary resolution:

“That for the purpose of ASX Listing Rule 10.11 and for all other purposes, Shareholders approve the issue of up to 19,784,464 fully paid ordinary Shares at a price of $0.14 per share to Director, Chris Ellis (via his nominated entity) on the same terms as Shares are proposed to be issued to eligible shareholders under an SPP undertaken by the Company and as set out in the accompanying Explanatory Notes.”

The Chairman of the Meeting intends to vote all available proxies in favour of Resolution 10.

Voting exclusion statement for Resolution 10 : The Company will disregard any votes cast in favour of Resolution 10 by or on behalf of the person who is to receive the securities in question

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and any other person who will obtain a material benefit as a result of the issue of the securities (except a benefit solely by reason of being a holder of ordinary securities in the entity) or an Associate of those persons, including Chris Ellis.

4.9. Resolution 11: Approval of issuance of shortfall Shares under SPP to Elphinstone Holdings Pty Ltd

To consider and, if thought fit, to pass with or without amendment, the following resolution as an ordinary resolution:

“That for the purpose of ASX Listing Rule 7.1 and for all other purposes, Shareholders approve the issue of up to 19,784,464 fully paid ordinary Shares at a price of $0.14 per share to Elphinstone Holdings Pty Ltd on the same terms as shares are proposed to be issued to eligible shareholders under an SPP undertaken by the Company and as set out in the accompanying Explanatory Notes.”

The Chairman of the Meeting intends to vote all available proxies in favour of Resolution 11.

Voting exclusion statement for Resolution 11 : The Company will disregard any votes cast in favour of Resolution 11 by or on behalf of a person who is expected to participate in, or who will obtain a material benefit as a result of, the proposed issue (except a benefit solely by reason of being a holder of ordinary securities in the entity) or an Associate of those persons, including Elphinstone Holdings Pty Ltd.

4.10. Resolution 12: Approval of change of Company name

To consider and, if thought fit, to pass with or without amendment, the following resolution as a special resolution:

“'That, pursuant to and in accordance with section 157 of the Corporations Act and for all other purposes, approval is given for the name of the Company to be changed to ‘Group 6 Metals Limited’ with effect from the date that ASIC alters the details of the Company's registration.”

The Chairman of the Meeting intends to vote all available proxies in favour of Resolution 12.

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5. VOTING EXCLUSION STATEMENTS

Each Voting Exclusion Statement that applies to a Resolution as noted in the Notice, does not apply to a vote cast in favour of that Resolution by:

(a) a person as proxy or attorney for a person who is entitled to vote on the Resolution, in accordance with the directions given to the proxy or attorney to vote on the Resolution in that way; or
(b) the chair of the meeting as proxy or attorney for a person who is entitled to vote on the Resolution, in accordance with a direction given to the chair to vote on the Resolution as the chair decides; or
(c) a holder acting solely in a nominee, trustee, custodial or other fiduciary capacity on behalf of a beneficiary provided the following conditions are met:
(i) the beneficiary provides written confirmation to the holder that the beneficiary is not excluded from voting, and is not an associate of a person excluded from voting, on the Resolution; and
(ii) the holder votes on the Resolution in accordance with directions given by the beneficiary to the holder to vote in that way.

6. VOTING RIGHTS AND PROXIES

(a) A member who is entitled to attend and vote at the meeting has a right to appoint a proxy.
(b) This appointment may specify the proportion or number of votes that the proxy may exercise.
(c) The proxy need not be a member of the Company.
(d) A member who is entitled to cast two or more votes may appoint two proxies and may specify the proportion or number of votes that each proxy is appointed to exercise. If the member appoints two proxies and the appointment does not specify the proportion or number of the member’s votes that each proxy may exercise, each proxy may exercise half of the votes.

7. VENUE AND VOTING INFORMATION

The Annual General Meeting of the Shareholders to which this Notice of Meeting relates will be held at 11.00AM Sydney Time on Monday 8 November 2021.

7.1. Your Vote Is Important

The business of the Annual General Meeting affects your shareholding and your vote is important.

7.2. Voting at the Meeting

Due to Covid-19, in the interests of public health and safety, the Company’s 2021 AGM will be held entirely virtually – there will be no physical venue for Shareholders to attend. Shareholders may participate in the meeting online via the Lumi platform. Even though the meeting is being held entirely online, you may still lodge a proxy or direct vote prior to the meeting or lodge a direct vote online during the meeting.

Refer to the details below.

7.3. Voting By Proxy

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A proxy form is enclosed. You may exercise your right to vote at the meeting either by being present in person or by appointing a proxy to attend and vote in your place. You may appoint either an individual or a body corporate as your proxy. A proxy need not be a member of the Company. A proxy form must be signed by the Shareholder or the Shareholder’s attorney. Proxies given by corporations must be signed either under seal or in accordance with the Constitution of the Company. The Proxy Form and the power of attorney or other authority (if any) under which it is signed (or a certified copy of the power of attorney or authority) must be received not later than 48 hours before the time for holding the meeting

Proxies may be lodged using any of the following methods:

Online

Shareholders may lodge proxies online by visiting www.investorvote.com.au and following the prompts.

By post

Returning a completed Proxy Form by post using the pre‐addressed envelope provided with this Notice to Computershare Investor Services Pty Limited, GPO Box 242, Melbourne, Victoria, 3001

Facsimile

Faxing a completed Proxy Form to 1800 783 447 (within Australia) +613 9473 2555 (outside Australia)

Custodians

For intermediary online subscribers only (custodians), submit your voting intentions via www.intermediaryonline.com.

Your Proxy instruction must be received not later than 48 hours before the commencement of the Meeting. To facilitate the conduct of the meeting during this pandemic, you are strongly encouraged to nominate the chairman of the meeting as your proxy. Proxy Forms received later than this time will be invalid.

7.4. Power Of Attorney

If the proxy form is signed under a power of attorney on behalf of a Shareholder, then the attorney must make sure that either the original power of attorney or a certified copy is sent with the proxy form, unless the power of attorney has already provided it to the Share Registry.

7.5. Corporate Representatives

If a representative of a corporate shareholder or a corporate proxy will be attending the Annual General Meeting, the representative must have readily available adequate evidence of their appointment, unless this has previously been provided to the Share Registry.

7.6. How The Chairman of the Meeting Will Vote Undirected Proxies

The Chairman of the Meeting intends to vote undirected proxies in favour of each of the items of business.

7.7. Date For Determining Holders of Shares

For the purposes of regulation 7.11.37 of the Corporations Act and ASX Settlement Operating Rule 5.6.1, the Directors have set 7 PM Sydney Time Saturday 6 November 2021 as the time and date to

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determine holders of the Company’s ordinary fully paid shares for the purposes of determining entitlements to attend and vote at the Annual General Meeting.

Share transfers registered after that deadline will be disregarded in determining entitlements to attend and vote at the Annual General Meeting.

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8. EXPLANATORY NOTES

These Explanatory Notes are provided to the Shareholders of the Company to explain the Resolutions to be put to Shareholders at the Annual General Meeting to be held virtually commencing 11.00AM Sydney Time on Monday 8 November 2021.

The Board recommends that Shareholders read the accompanying Notice and these Explanatory Notes in full before making any decision in relation to the Resolutions.

8.1. Financial Reports

The Corporations Act requires the Financial Report (which includes the Financial Statements, Directors’ Report and Auditor’s Report) to be laid before the Meeting. There is no requirement for Shareholders to approve the report. However, the Chairman of the Meeting will allow a reasonable opportunity for Shareholders to ask questions about, or make comments on, the management of the Company.

Shareholders will be given a reasonable opportunity to ask the auditor questions about the conduct of the audit and the content of the Auditor’s Report.

8.2. Resolution 1: Adoption of the Remuneration Report

B ackground

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The Remuneration Report of the Company for the financial year ended 30 June 2021 is set out in the Company’s 2021 Annual Report which is available on the Company’s website - https://www.kingislandscheelite.com.au/investors/annual reports/

The Remuneration Report sets out the Company’s remuneration arrangements for Key Management Personnel. The Chairman of the Meeting will allow a reasonable opportunity for shareholders to ask questions about, or make comments on, the Remuneration Report at the meeting. In addition, Shareholders will be asked to vote on the Remuneration Report.

The Resolution is advisory only and does not bind the Company or its Directors. The Board will consider the outcome of the vote and comments made by Shareholders on the Remuneration Report at the meeting when reviewing the Company’s remuneration policies. Under the Corporations Act, if 25% or more of votes that are cast are voted against the adoption of the Remuneration Report at two consecutive annual general meetings, Shareholders will be required to vote at the second of those annual general meetings on a resolution (a “spill resolution”) that another meeting be held within 90 days at which all the Company’s Directors must go up for re-election.

The Company encourages all Shareholders to cast their votes on Resolution 1. Shareholders not attending the Meeting may use the enclosed Proxy Form to lodge their vote by appointing a Proxy. Any undirected proxies held by the Chairman of the Meeting, other Directors or other Key Management Personnel or any of their Closely Related Parties will not be voted on Resolution 1, unless the vote is cast by the Chairman of the Meeting pursuant to an express authorisation on the Proxy Form made by a Shareholder who is entitled to vote on Resolution 1.

Key Management Personnel of the Consolidated Entity are the directors of the Company and those other persons having authority and responsibility for planning, directing and controlling the activities of the Company, directly or indirectly. The Remuneration Report identifies the Company’s Key Management Personnel for the financial year ended 30 June 2021. Their Closely Related Parties are defined in the Corporations Act, and include certain of their family members, dependants, and companies they control. If you choose to appoint a Proxy, you are encouraged to direct your Proxy how to vote on Resolution 1 by marking either “For”, “Against” or “Abstain” on the Voting Form for that item of business.

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Recommendation

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The Board recommends that Shareholders vote in favour of Resolution 1.

8.3. Resolution 2: Re-Election Of Director – Mr Johann Jacobs

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Background

Under ASX Listing Rule 14.4, a director must not hold office without re-election past the third annual general meeting following the director’s appointment or three years, whichever is longer. A director who retires in accordance with these requirements is eligible for re-election.

Under ASX Listing Rule 14.5, an election of directors must be held each year.

Rule 19.3(b) of the Company’s constitution requires that no Director (who is not a managing director) may hold office without re-election beyond the third annual general meeting following the meeting at which the Director was last elected or re-elected.

The Directors to retire are those directors or director longest in office since last being elected.

The Directors to retire (both as to number and identity) is decided having regard to the composition of the board of Directors at the date of the notice calling the annual general meeting.

The Company may by resolution at an annual general meeting fill an office vacated by a Director by electing or re-electing an eligible person to that office.

The retirement of a Director from office under the Company’s constitution and the re-election of a Director or the election of another person to that office (as the case may be) takes effect at the conclusion of the meeting at which the retirement and re-election or election occurs.

Accordingly, Mr Jacobs is due to retire at the end of the meeting and offers himself for reelection to the Board.

Johann Jacobs (Executive Chairman)

B.Acc, MBL

Appointed 30 November 2012

Johann has over 40 years’ experience in the resources industry in Australia, South Africa and Indonesia. He resigned as a non-executive director of ASX listed Magnis Resources Ltd (ASX: MNS) (formerly Uranex Limited) on 31 May 2020.

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Recommendation

Messrs Ellis and Hancock unanimously recommend that Shareholders vote in favour of Resolution 2.

8.4. Resolution 3: Approval Of 10% Placement Facility

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Background

ASX Listing Rule 7.1A enables eligible entities to issue Equity Securities, of up to 10% of its issued share capital on issue at the commencement of the relevant period being:

(a) If the eligible entity has been admitted to the ASX’s official list for 12 months or more, the 12-month period before the issue date or date of agreement to issue; or
(b) If the eligible entity has been admitted to the ASX’s official list less than 12 months, the period from the date the entity was admitted to the ASX official list to the date immediately preceding the date of the issue or agreement ( Relevant Period ),

through placements over the Relevant Period after the annual general meeting ( 10% Placement Facility ). The 10% Placement Facility is in addition to the Company’s 15% placement capacity under ASX Listing Rule 7.1.

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An eligible entity for the purposes of ASX Listing Rule 7.1A is an entity that:

(a) is not included in the S&P/ASX 300 Index; and
(b) has a market capitalisation of $300 million or less (excluding restricted securities and securities quoted on a deferred settlement basis).

The Company is an eligible entity for the purposes of ASX Listing Rule 7.1A.

The Company is seeking Shareholders’ approval by way of a special resolution to have the ability to issue Equity Securities under the 10% Placement Facility in addition to its 15% placement capacity under ASX Listing Rule 7.1. The exact number of Equity Securities to be issued under the 10% Placement Facility will be determined in accordance with the formula prescribed in ASX Listing Rule 7.1A.2. Further information is set out in section 8.4.2 (c) of the Notice.

The effect of Resolution 3 will be to allow the Directors to issue the Equity Securities under ASX Listing Rule 7.1A during the 10% Placement Period (as defined below) without using the Company’s 15% placement capacity under ASX Listing Rule 7.1.

Resolution 3 is a special resolution and therefore requires approval of 75% of the votes cast by Shareholders present and eligible to vote (in person, by proxy, by attorney or, in the case of a corporate Shareholder, by a corporate representative).

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Description of ASX Listing Rule 7.1A

(a) Shareholder Approval

The ability to issue Equity Securities under the 10% Placement Facility is subject to shareholder approval by way of a special resolution at an annual general meeting.

(b) Equity Securities

Any Equity Securities issued under the 10% Placement Facility must be in the same class as an existing quoted class of Equity Securities of the Company.

The Company must rely on its ASX Listing Rule 7.1 (15%) placement capacity, or the issue must fall within an exception in ASX Listing Rule 7.2, for the Company to issue a new class of Equity Securities (quoted or unquoted) of the Company without approval of holders of ordinary securities.

ASX Listing Rule 7.1A.2 provides that eligible entities which have obtained shareholder approval at an annual general meeting may issue or agree to issue, during the 12-month period after the date of the annual general meeting, a number of Equity Securities calculated in accordance with the following formula:

(A x D) – E

A is the number of fully paid ordinary securities on issue at the commencement of the Relevant Period before the date of issue or agreement to issue:

(i) plus the number of fully paid ordinary securities issued in the Relevant Period under an exception in ASX Listing Rule 7.2 other than exception 9 (issue of Equity Securities as a result of conversion of convertible securities), exception 16 (issue of Equity Securities under an agreement to issue Equity Securities already approved under ASX Listing Rule 7.1) or exception 17 (an agreement to issue Equity Securities that is conditional on the holders of the Company’s ordinary securities approving the issue under ASX Listing Rules 7.1, and approval is obtained before issuing the Equity Securities);

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(ii) plus the number of partly paid ordinary securities that became fully paid in the Relevant Period;
(iii) plus the number of fully paid ordinary securities issued in the Relevant Period with approval of holders of ordinary securities under ASX Listing Rule 7.1 or 7.4. This does not include an issue of fully paid ordinary securities under the entity’s 15% placement capacity without shareholder approval;
(iv) less the number of fully paid ordinary securities cancelled in the Relevant Period.

Note that A has the same meaning in ASX Listing Rule 7.1 when calculating an entity’s 15% placement capacity.

D is 10%.

E is the number of Equity Securities issued or agreed to be issued under the ASX Listing Rule 7.1A.2 in the Relevant Period before the date of the issue or agreement to issue that are not issued with the approval of holders of ordinary securities under ASX Listing Rule 7.1 or 7.4.

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Number of Equity Securities on Issue

At the date of the Notice, the Company has 408,952,882 quoted Shares and 31,375,000 Unquoted Options on issue.

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Cash Only

Equity Securities can only be issued under ASX Listing Rule 7.1A for a cash amount which is not less than the prescribed minimum issue price described in section 8.4.5 below.

The Company must rely on its ASX Listing Rule 7.1 (15%) placement capacity, or the issue must fall within an exception in ASX Listing Rule 7.2, for the Company to issue Equity Securities for non-cash consideration, or for cash consideration that is lower than the prescribed minimum issue price, without approval of holders of ordinary securities.

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Minimum Issue Price

The issue price of Equity Securities issued under ASX Listing Rule 7.1A must be not less than 75% of the volume weighted average market price ( VWAP ) of Equity Securities in the same class calculated over the 15 Trading Days on which trades in that class were recorded immediately before:

(a) the date on which the price at which the Equity Securities are to be issued is agreed; or
(b) if the Equity Securities are not issued within 10 Trading Days of the date in paragraph (a) above, the date on which the Equity Securities are issued.

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Specific Information required by ASX Listing Rule 7.3A

In accordance with ASX Listing Rule 7.3A, the following information is provided in relation to the approval of the 10% Placement Facility:

(a) Shareholder approval of the 10% Placement Facility under ASX Listing Rule 7.1A is valid from the date of the annual general meeting at which the approval is obtained and expires the earlier to occur of:
(i) the date that is the 12 months after the date of the annual general meeting at which approval is obtained; or
(ii) the time and date of the Company’s next annual general meeting; or
(iii) the time and date of the approval by shareholders of a transaction under ASX Listing Rules 11.1.2 (a significant change to the nature or scale of activities) or 11.2 (disposal of main undertaking),

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( 10% Placement Period).

(b) the Equity Securities will be issued at an issue price of not less than 75% of the VWAP for the Company’s Equity Securities in the relevant class, calculated over the 15 Trading Days on which trades in that class were recorded immediately before:
(i) the date on which the price at which the Equity Securities are to be issued is agreed; or
(ii) if the Equity Securities are not issued within 5 Trading Days of the date in paragraph (i) above, the date on which the Equity Securities are issued.
(c) The Company may seek to issue the Equity Securities for cash consideration. In such circumstances, the Company intends to allocate the funds towards additional working capital while the Company progresses the Dolphin Project. Under ASX Listing Rule 7.1A, Equity Securities can only be issued for cash consideration.
(d) If Resolution 3 is approved by Shareholders and the Company issues Equity Securities under the 10% Placement Facility, the existing Shareholders’ economic and voting power in the Company will be diluted as shown in the below table (in the case of options, only if the options are exercised). There is a risk that:
(i) the market price for the Company’s Equity Securities in that class may be significantly lower on the date of the issue of the Equity Securities than on the date of the Meeting; and
(ii) the Equity Securities may be issued at a price that is at a discount to the market price for the Company’s Equity Securities on the issue date, which may have an effect on the amount of funds raised by the issue of the Equity Securities.
(e) Table 1 below shows the dilution of existing Shareholders on the basis of the current market price of Shares and the current number of ordinary securities for variable “A” calculated in accordance with the formula in ASX Listing Rule 7.1A.2 as at the date of this Notice.

The table also shows:

(i) two examples where variable “A” has increased, by 50% and 100%. Variable “A” is based on the number of ordinary securities the Company has on issue. The number of ordinary securities on issue may increase as a result of issues of ordinary securities that do not require Shareholder approval (for example, a pro rata entitlements issue or scrip issued under a takeover offer) or future specific placements under ASX Listing Rule 7.1 that are approved at a future Shareholders’ meeting; and
(ii) two examples of where the issue price of ordinary securities has decreased by 50% and increased by 100% as against the current market price.

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Table 1

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Variables
50% decrease in Issue Price Issue Price 100%
Increase in
Issue Price
Issue price examples $0.085 $0.170 $0.340
Variable ‘A’ in Number of
ASX Listing Rule Shares
7.1A.2 examples
Current Variable 10% Voting
40,895,288 40,895,288 40,895,288
A 408,952,882 Dilution
Funds raised $3,476,099 $6,952,199 $13,904,398
50% increase in 10% Voting
61,342,932 61,342,932 61,342,932
Current Variable 613,429,323 Dilution
A Funds raised $5,214,149 $10,428,298 $20,856,597
100% increase in 10% Voting
81,790,576 81,790,576 81,790,576
Current Variable 817,905,764 Dilution
A Funds raised $6,952,199 $13,904,398 $27,808,796
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(f) The table has been prepared on the following assumptions:
(i) The Company issues the maximum number of Equity Securities available under the 10% Placement Facility.
(ii) No options (including any options issued under the 10% Placement Facility) are exercised before the date of the issue of the Equity Securities.
(iii) The 10% voting dilution reflects the aggregate percentage dilution against the issued share capital at the time of issue. This is why the voting dilution is shown in each example as 10%.
(iv) The table does not show an example of dilution that may be caused to a particular Shareholder by reason of placements under the 10% Placement Facility, based on that Shareholder’s holding at the date of the Meeting.
(v) The table shows only the effect of issues of Equity Securities under ASX Listing Rule 7.1A, not under the 15% placement capacity under ASX Listing Rule 7.1.
(vi) The issue of Equity Securities under the 10% Placement Facility consists only of Shares. If the issue of Equity Securities includes options, it is assumed that those options are exercised into Shares for the purpose of calculating the voting dilution effect on existing Shareholders.
(vii) The issue price is 17.0 cents ($0.17), being the closing price of the Shares on the ASX on 1 October 2021.
(g) The Company will only issue and allot the Equity Securities during the 10% Placement Period. The approval under Resolution 3 for the issue of the Equity Securities will cease to be valid in the event that Shareholders approve a transaction under ASX Listing Rule 11.1.2 (a significant change to the nature or scale of activities) or ASX Listing Rule 11.2 (disposal of main undertaking).
(h) The Company will comply with the disclosure obligations under ASX Listing Rule 7.1A.4 upon the issue of any Equity Securities. The Company’s allocation policy is dependent on the prevailing market conditions at the time of any proposed issue pursuant to the 10% Placement Facility.

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(i) The identity of the allottees of Equity Securities will be determined on a case-bycase basis having regard to the factors including but not limited to the following:
(i) the methods of raising funds that are available to the Company, including but not limited to, a pro rata rights issue or other issue in which existing security holders can participate;
(ii) the effect of the issue of the Equity Securities on the control of the Company;
(iii) the financial situation and solvency of the Company; and
(iv) advice from corporate, financial and broking advisers (if applicable).
(j) The allottees under the 10% Placement Facility have not been determined as at the date of this Notice but may include existing substantial Shareholders and/or new Shareholders who are not related parties or Associates of a related party of the Company.
(k) The Company previously obtained Shareholder approval under ASX Listing Rule 7.1A at the Company’s Annual General Meeting held 8 January 2021.
(l) As required to be disclosed under Listing Rule 7.3A.6(a), the Company has not issued or agreed to issue any Equity Securities under ASX Listing Rule 7.1A.2 since 8 January 2021, being the commencement of the Relevant Period.
(m) A voting exclusion statement is included in the Notice. At the date of the Notice, the Company has not approached any particular existing Shareholder or security holder or an identifiable class of existing security holder to participate in the issue of the Equity Securities. No existing Shareholder’s votes will therefore be excluded under the voting exclusion in the Notice.

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Recommendation

The Directors unanimously recommend that Shareholders vote in favour of Resolution 3.

8.5. Resolutions 4(a) to 8

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Background

As announced by the Company on 6 September 2021, a group of lenders comprising a number of the Company’s major shareholders and an external party have committed to provide the Company with $33 million in debt funding to advance the redevelopment of the Dolphin Tungsten Project (subject to satisfaction of conditions) pursuant to debt facilities entered into with each lender ( Debt Facilities ). The lenders are:

(a) Abex Limited;
(b) Chrysalis Investments Pty Ltd in its capacity as trustee for The Ellis Family Trust (an entity controlled by Director, Chris Ellis) ( Chrysalis );
(c) D.A.CH.S Capital AG;
(d) Elphinstone Holdings Pty Ltd; and
(e) PURE Asset Management Pty Ltd,

(together, the Facility Lenders ).

A summary of the Debt Facilities entered into with the Facility Lenders are set out in Annexure A. In summary:

(a) the Debt Facilities are repayable between 3 and up to 6 years after drawdown and are at annual interest rates varying between 6.5% per annum ($19.0 million) and 8.25% per annum ($14.0 million);

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(b) subject to Shareholder approval being obtained under Resolutions 5(a), 5(b), 5(c), 5(d) and 6(b) the Facility Lenders will also be issued with 101,785,714 warrants that entitle them to convert some of the Debt Facilities into Shares at an exercise price of $0.196 per share for all Facility Lenders other than PURE, and $0.21 for PURE; and
(c) the Debt Facilities will be provided to a wholly-owned subsidiary of the Company, and the Company is required to provide a first ranking registered security over the assets of the Company and its wholly owned subsidiaries ( Security ) to the Facility Lenders (subject to shareholder approval under Resolution 7). Accordingly, in the event of default, the Facility Lenders will be entitled to recover the Debt Facilities through a potential sale of the Company or its underlying assets.

The key financing conditions under the Debt Facilities include:

(a) the Company obtaining shareholder approval under ASX Listing Rule 10.1 for the proposed Security arrangements (pursuant to Resolution 7);
(b) finalisation of the terms of proposed warrants/options to be issued to each Facility Lender;
(c) the Company achieving financial close for the Project with further funding of at least $20 million (in addition to the facilities referred to in this announcement) which will be achieved through completion of the Capital Raising; and
(d) finalisation and execution of the security and warrant documentation.

The Debt Facilities are otherwise subject to market standard events of default, warranties, undertakings and covenants.

On 4 October 2021, the Company announced a capital raising comprised of a share placement to professional and sophisticated investors at an offer price of $0.14 per Share to raise $14.3 million and a follow on securities purchase plan ( SPP ) at an offer price of $0.14 per Share to raise $5.7 million ( Capital Raising ).

Set out below is a summary of the historical financial information for the Company as at 30 June 2021 ( Historical Financial Information ) and a pro-forma historical statement of the financial position as at 30 June 2021 ( Pro Forma Historical Financial Information ) (collectively, Financial Information ). The Financial Information has been prepared to illustrate the effect of the receipt of funding by the Company under both the Debt Facilities and Capital Raising.

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King Island Scheelite Limited
Balance Sheet
As at 30 Proforma Balance
June 2021 Adjustments Sheet
$ $ $
Assets
Cash and cash equivalents 3,190,383 76,960,000 80,150,383
Prepayments and other
290,425 (100,000) 190,425
receivables
Borrowing costs - 123,374 123,374
Total Current assets 3,480,808 76,983,374 80,464,182
Deposits 24,600 24,600
Borrowing costs - 406,626 406,626.26
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Property, plant and
3,689,790 - 3,689,790
equipment
Right-of-use-assets 135,801 10,000,000 10,135,801
Total non-current assets 3,850,191 10,406,626 14,256,817
Total Assets 7,330,999 87,390,000 94,720,999
Liabilities
Trade and other payables 580,670 - 580,670
Lease liabilities 82,921 - 82,921
Total Current liabilities 663,591 - 663,591
Lease liabilities 16,787 10,000,000 10,016,787
Loans - 43,000,000 43,000,000
Total non-current liabilities 16,787 53,000,000 53,016,787
Total liabilities 680,378 53,000,000 53,680,378
Net Assets 6,650,621 34,390,000 41,040,621
Equity
Issued capital 69,849,763 34,390,000 104,239,763
Reserves 4,342,968 - 4,342,968
Accumulated losses (67,542,110) - (67,542,110)
Total equity 6,650,621 34,390,000 41,040,621
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Resolutions 4(a) to 8 are necessary for the implementation of the Debt Facilities and Capital Raising. If any of the Resolutions are not approved, the Directors reserve the right to reconsider the overall structure and size of the transaction.

8.6. Resolutions 4(a), (b) and (c): Approval of issuance and allotment of Shares to certain unrelated Facility Lenders

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Background

Resolutions 4(a), (b) and (c) seek shareholder approval under ASX Listing Rule 7.1 (and for all other purposes) for the issue of:

(a) 7,142,857 fully paid ordinary Shares at a price of $0.14 per share to Elphinstone Holdings Pty Ltd;
(b) 35,714,286 fully paid ordinary Shares at a price of $0.14 per share to D.A.CH.S. Capital AG; and
(c) 25,000,000 fully paid ordinary Shares at a price of $0.14 per share to Abex Limited,

each Facility Lenders, in accordance with the terms and conditions of the Debt Facilities the Company has entered into with each of them.

A summary of the Debt Facilities under which the Shares are proposed to be issued is set out in Annexure A.

ASX Listing Rule 7.1 prevents the Company from issuing more than 15% of its issued capital without shareholder approval. The allotment and issue of the Shares to the applicable Lenders (if made without shareholder approval) will count towards the 15% threshold. Resolutions 4(a), (b) and (c) therefore propose the approval of the allotment and issue of the shares for the purpose of satisfying the requirements of ASX Listing Rule 7.1.

Further details regarding the proposed issue of the shares are set out below.

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Resolution 4(a)
Maximum number of 7,142,857 fully paid ordinary shares
securities to be issued
Expected date of issue As soon as practicable, but in any event no later than 3
months, after the date of the Annual General Meeting
Issue price $0.14 per share
Terms of issue The Shares will be issued on the same terms as the
Company’s existing fully paid ordinary shares.
Allottees Elphinstone Holdings Pty Ltd
Intended use of funds To advance the redevelopment of the Company’s Dolphin
raised Tungsten Project
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Resolution 4(b)
Maximum number of 35,714,286 fully paid ordinary shares
securities to be issued
Expected date of issue As soon as practicable, but in any event no later than 3
months, after the date of the Annual General Meeting
Issue price $0.14 per share
Terms of issue The Shares will be issued on the same terms as the
Company’s existing fully paid ordinary shares.
Allottees D.A.CH.S. Capital AG
Intended use of funds To advance the redevelopment of the Company’s Dolphin
raised Tungsten Project
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Resolution 4(c)
Maximum number of 25,000,000 fully paid ordinary shares
securities to be issued
Expected date of issue As soon as practicable, but in any event no later than 3
months, after the date of the Annual General Meeting
Issue price $0.14 per share
Terms of issue The Shares will be issued on the same terms as the
Company’s existing fully paid ordinary shares.
Allottees Abex Limited
Intended use of funds To advance the redevelopment of the Company’s Dolphin
raised Tungsten Project
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Directors’ recommendation

The Directors unanimously recommend you vote in favour of each of Resolutions 4(a), (b) and (c).

8.7. Resolutions 5(a), (b), (c) and (d): Approval of issuance of options to certain Facility Lenders Background

Resolutions 5(a), (b), (c) and (d) seek shareholder approval under ASX Listing Rule 7.1 (and for all other purposes) for the issue of:

(a) 46,428,571 Options at an exercise price of $0.21 per Option to PURE Asset Management Pty Ltd (for nil consideration and expiring on 31 December 2025);
(b) 26,785,714 Options at an exercise price of $0.196 per Option to Elphinstone Holdings Pty Ltd (for nil consideration with 4,464,285 Warrants expiring on the date of each scheduled repayment under the Debt Facility agreement (other than the last date for scheduled repayment on which 4,464,289 will expire));
(c) 16,071,429 Options at an exercise price of $0.196 per Option to D.A.CH.S. Capital A G (for nil consideration with 2,678,571 Warrants expiring on the date of each scheduled repayment under the Debt Facility agreement (other than the last date for scheduled repayment on which 2,678,574 will expire)); and
(d) 34,821,429 Options at an exercise price of $0.196 per Option to Abex Limited (for nil consideration with 5,803,571 Warrants expiring on the date of each scheduled repayment under the Debt Facility agreement (other than the last date for scheduled repayment on which 5,803,574 will expire)),

each a Facility Lender, in accordance with the terms and conditions of the Warrant Agreements entered into between the Company and each of them.

A summary of the Warrant Agreements under which the Options are proposed to be issued is set out in Annexure A.

ASX Listing Rule 7.1 prevents the Company from issuing more than 15% of its issued capital without shareholder approval. The allotment and issue of the options to the applicable Lenders (if made without shareholder approval) will count towards the 15% threshold. Resolutions

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5(a), (b), (c) and (d) therefore propose the approval of the allotment and issue of the Options for the purpose of satisfying the requirements of ASX Listing Rule 7.1.

Further details regarding the proposed issue of the Options are set out below.

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Resolution 5(a)
Maximum number of 46,428,571 Options
securities to be issued
Expected date of issue As soon as practicable, but in any event no later than 3
months, after the date of the Annual General Meeting
Issue price Nil
Exercise price $0.21 per Option
Terms of issue As set out in the Warrant Agreement, a summary of which is
included in Annexure A
Allottees PURE Asset Management Pty Ltd
Intended use of funds To advance the redevelopment of the Company’s Dolphin
raised Tungsten Project
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Resolution 5(b)
Maximum number of 26,785,714 Options
securities to be issued
Expected date of issue As soon as practicable, but in any event no later than 3
months, after the date of the Annual General Meeting
Issue price Nil
Exercise price $0.196 per Option
Terms of issue As set out in the Warrant Agreement, a summary of which is
included in Annexure A
Allottees Elphinstone Holdings Pty Ltd
Intended use of funds To advance the redevelopment of the Company’s Dolphin
raised Tungsten Project
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Resolution 5(c)
Maximum number of 16,071,429 Options
securities to be issued
Expected date of issue As soon as practicable, but in any event no later than 3
months, after the date of the Annual General Meeting
Issue price Nil
Exercise price $0.196 per Option
Terms of issue As set out in the Warrant Agreement, a summary of which is
included in Annexure A
Allottees D.A.CH.S. Capital AG
Intended use of funds To advance the redevelopment of the Company’s Dolphin
raised Tungsten Project
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----- Start of picture text -----

Resolution 5(d)
Maximum number of 34,821,429 Options
securities to be issued
Expected date of issue As soon as practicable, but in any event no later than 3
months, after the date of the Annual General Meeting
Issue price Nil
Exercise price $0.196 per Option
Terms of issue As set out in the Warrant Agreement, a summary of which is
included in Annexure A
Allottees Abex Limited
Intended use of funds To advance the redevelopment of the Company’s Dolphin
raised Tungsten Project
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Directors’ recommendation

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The Directors unanimously recommend you vote in favour of each of Resolutions 5(a), (b), (c) and (d).

8.8. Resolutions 6(a) and (b): Approval of issuance of Shares and Options to related party: Chris Ellis (via his nominated entity)

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Background

Mr Chris Ellis, a Director, via his nominated entity, is a Facility Lender under the Debt Facilities.

The terms of the Debt Facility and Warrant Agreement entered into between him (via his nominated entity, Chrysalis) and the Company entitle him to receive Shares and Options on

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the same terms as other Facility Lenders, subject to shareholder approval being obtained under Resolutions 6(a) and (b).

Summaries of the Debt Facilities and Warrant Agreements are set out in Annexure A.

ASX Listing Rule 10.11 provides that unless one of the exceptions in Listing Rule 10.12 applies, an entity must not issue, or agree to issue, equity securities to:

(a) a related party;
(a) a person who is, or was at any time in the 6 months before the issue or agreement, a substantial (30%+) holder in the entity;
(b) a person who is, or was at any time in the 6 months before the issue or agreement, a substantial (10%+) holding in the entity and who has nominated a director to the board pursuant to a relevant agreement which gives them the right or expectation to do so;
(c) an associate of a person referred to in paragraphs (a), (b), or (c) above; or
(d) a person whose relationship with the entity or a person referred to in any of paragraphs (a) to (d) above is such that, in ASX’s opinion the issue or agreement should be approved by securityholders,

unless it obtains the approval of its ordinary security holders.

As the issue of Shares and Options to Mr Chris Ellis constitutes the issue of Equity Securities to a related party of the Company, Shareholder approval pursuant to ASX Listing Rule 10.11 is required unless an exception applies. It is the view of the Directors that the exceptions set out in ASX Listing Rule 10.12 do not apply in the current circumstances.

The Company therefore seeks the required Shareholder approvals for the issue of the Shares and Options to Mr Ellis, or his nominee, under and for the purposes of Listing Rule 10.11.

Under ASX Listing Rule 7.2 exception 14, approval pursuant to ASX Listing Rule 7.1 is not required for the issue of the Equity Securities to Mr Chris Ellis, or his nominee, if approval is obtained under ASX Listing Rule 10.11. Accordingly, the issue of the Equity Securities, if approved, will not be included in the use of the Company’s 15% annual placement capacity pursuant to ASX Listing Rule 7.1.

The board has formed the view that the issue of Shares and Options to Mr Chris Ellis does not require shareholder approval under section 208 of the Corporations Act, as the issue of the Shares and Options is being issued on arm’s length terms, given that they are being issued on the same terms as those securities are being issued to the other Facility Lenders in accordance with section 210 of the Corporations Act.

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Resolution 6(a)

Pursuant to and in accordance with ASX Listing Rule 10.13, the following information is provided in relation to the issue of the Shares the subject of Resolution 6(a):

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----- Start of picture text -----

The name of the person Mr Chris Ellis or his nominated entity
Which category in rules 10.11.1 – 10.11.5 Mr Ellis is a director, so a related party to
the person falls within and why the Company (Listing Rule 10.11.1)
The number and class of securities to be 10,714,286 Shares are to be issued. The
issued to the person Shares to be issued are all fully paid
ordinary shares in the capital of the
Company issued on the same terms and
conditions as the Company’s existing
Shares.
Date by which the Company will issue the The Company will issue the Shares no later
Shares than 1 month after the date of the
Meeting.
Issue price $0.14 per Share
The use (or intended use) of the funds To advance the redevelopment of the
raised Company’s Dolphin Tungsten Project
A voting exclusion statement A voting exclusion is included in the Notice
in relation to Resolution 6(a).
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Directors’ recommendation

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The Directors, with Chris Ellis abstaining, unanimously recommend you vote in favour of Resolution 6(a).

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Resolution 6(b)

Pursuant to and in accordance with ASX Listing Rule 10.13, the following information is provided in relation to the issue of the Options the subject of Resolution 6(a):

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----- Start of picture text -----

The name of the person Mr Chris Ellis or his nominated entity
Which category in rules 10.11.1 – 10.11.5 Mr Ellis is a director, so a related party to
the person falls within and why the Company (Listing Rule 10.11.1)
The number and class of securities to be 24,107,143 Options are to be issued. The
issued to the person Options to be issued are all issued on the
terms set out in the Warrant Agreement, a
summary of which is included in Annexure
A.
The Shares issued on exercise of the
Options shall be fully paid ordinary shares
in the capital of the Company issued on the
same terms and conditions as the
Company’s existing Shares.
Date by which the Company will issue the The Company will issue the Options no later
Shares than 1 month after the date of the
Meeting.
Issue price Nil
Exercise price $0.196 per Option
The use (or intended use) of the funds To advance the redevelopment of the
raised Company’s Dolphin Tungsten Project
A voting exclusion statement A voting exclusion is included in the Notice
in relation to Resolution 6(b).
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Directors’ recommendation

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The Directors, with Chris Ellis abstaining, unanimously recommend you vote in favour of Resolution 6(b).

8.9. Resolution 7: Approval of granting of security to certain Facility Lenders

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Background

ASX Listing Rule 10.1 provides that Shareholder approval must be obtained before the Company can acquire a substantial asset from, or dispose of a substantial asset to, persons including a substantial holder and a related party of the entity.

Abex Limited is a person who is a substantial holder in the Company for the purposes of Listing Rule 10.1.3.

Chrysalis is a related party of the Company by virtue of its being an entity controlled by Director and related party, Chris Ellis, for the purposes of Listing Rule 10.1.1.

ASX Listing Rule 10.2 provides that an asset is a substantial asset if its value, or the value of the consideration for it is, or in ASX’s opinion is, 5% or more of the equity interests of the Company as set out in the latest accounts given to ASX by the Company.

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The equity interests of the Company set out in the accounts of the Company for the financial year ended 30 June 2021 (being the latest accounts given to ASX) were $6,650,621.

The value of the Security therefore constitutes a substantial asset for the purposes of the ASX Listing Rules.

For the purposes of the ASX Listing Rules, a ‘disposal’ of an asset includes the granting of security under which that asset is collateral. Under the ASX Listing Rules the granting of the Security in favour of each of Chrysalis and Abex Limited by the Company and its child entities constitutes a disposal of a substantial asset to a related party of the Company.

Accordingly, the Independent Directors have commissioned Grant Thornton Corporate Finance to provide an independent expert’s report to assess whether the granting of the Security is fair and reasonable to the shareholders of the Company not associated with Chrysalis and Abex Limited (Non-Associated Shareholders) for the purposes of Chapter 10 of the ASX Listing Rules.

GRANT THORNTON CORPORATE FINANCE HAS CONCLUDED THAT THE GRANTING OF THE SECURITY IS FAIR AND REASONABLE TO THE NONASSOCIATED SHAREHOLDERS.

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The following information in relation to the Security the subject of Resolution 7, is provided to Shareholders for the purposes of Listing Rule 10.10:

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----- Start of picture text -----

Voting exclusion statement A voting exclusion statement has been
included in the Notice in relation to Resolution
7.
A report on the transaction from an independent An independent expert’s report has been
expert. The report must state the expert’s opinion as included with the Notice.
to whether the transaction is fair and reasonable to
holders of the entity’s ordinary securities whose votes
are not to be disregarded. The expert’s opinion as to
whether the transaction is fair and reasonable must
be displayed prominently in the notice of meeting and
on the covering page of any accompanying
documents.
The report on the transaction from an independent An independent expert’s report has been
expert must be given individually to each holder of the included with the Notice.
entity’s ordinary securities using the same method as
that used to give notice of the meeting.
Provided the report on the transaction from an An independent expert’s report has been
independent expert and notice of meeting have both included with the Notice, which is dated 7
been given to the holders of the entity’s securities, the October 2021 and mailed on or about 8
report on the transaction from an independent expert October 2021 to holders of the Company’s
is taken to have been given to the holder of the ordinary securities. The independent expert’s
entity’s ordinary securities at the same time that the report and Notice are taken to have been
notice of meeting is taken to have been given to the given to the holders of the Company’s
holder of its ordinary securities. ordinary securities within three calendar days
of mailing the Notice
Regardless of the method used to distribute the
report on the transaction from an independent
expert, the entity must:
(a) Ensure that the report on the transaction by an The independent expert’s report is available
independent expert is easily accessible on the for Shareholders to access and download from
entity’s website; www.kingislandscheelite.com.au
(b) Ensure that the address of the entity’s website The independent expert’s report is available
is provided to the holders of ordinary securities; for Shareholders to access and download from
www.kingislandscheelite.com.au
(c) If requested by a holder of ordinary securities, If you would like to receive a hard copy of the
send to the holder a hard copy of the report on independent expert’s report free of charge
the transaction from an independent expert, at you can contact the Company by telephoning
no cost to the holder, and ensure holders are +61 2 8622 1402 or emailing
notified of this option in the notice of meeting. [email protected].
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Directors’ recommendation

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Mr Ellis declines to make a recommendation about Resolution 7, as he has a material personal interest in the outcome of that Resolution as it relates to the Company and its child entities granting a Security, which is a financial benefit, to his related company.

Excluding Mr Ellis, Directors unanimously recommend that Shareholders vote in favour of Resolution 7.

8.10. Resolution 8: Ratification of issue of Shares to professional and sophisticated investors under a Share placement

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Background

On 4 October 2021, the Company announced a capital raising comprised of a share placement to professional and sophisticated investors ( Placement ) at an offer price of $0.14 per Share to raise $14.3 million and a follow-on SPP at an offer price of $0.14 per Share to raise $5.7 million.

Resolution 8 seeks shareholder approval under ASX Listing Rule 7.4 (and for all other purposes) for the issue of the Shares.

Broadly speaking, and subject to a number of exceptions, Listing Rule 7.1 limits the amount of equity securities that a listed company can issue without the approval of its shareholders over any 12 month period to 15% of the fully paid ordinary securities it had on issue at the start of that period. In addition, at its annual general meeting on 8 January 2021, the Company obtained shareholder approval to issue additional equity securities up to 10% of the issued capital of the Company under Listing Rule 7.1A.

The issue of shares under the Placement does not fit within any relevant exceptions and, as it has not yet been approved by the Company’s shareholders, it effectively uses up all of the 25% capacity limit in Listing Rules 7.1 and additional 10% capacity under Listing Rule 7.1A, reducing the Company’s capacity to issue further equity securities without shareholder approval under Listing Rules 7.1 and 7.1A for the 12 month period following the issue date.

Listing Rule 7.4 allows the shareholders of a listed company to approve an issue of equity securities after it has been made or agreed to be made. If they do, the issue is taken to have been approved under Listing Rules 7.1 and 7.1A and so does not reduce the Company’s capacity to issue further equity securities without shareholder approval under those rules.

The Company wishes to retain as much flexibility as possible to issue additional equity securities into the future without having to obtain shareholder approve for such issues under Listing Rules 7.1 and 7.1A.

To this end, Resolution 8 seeks shareholder approval to the issue of Shares under the Placement for the purposes of Listing Rule 7.4.

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Details of the issue are set out below:

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----- Start of picture text -----

Term Details
Issue date On or around 7 October 2021
Number of securities 102,238,220 fully paid ordinary Shares
Issue price $0.14 per Share
Terms of issue The Shares to be issued are all fully paid ordinary shares in
the capital of the Company issued on the same terms and
conditions as the Company’s existing Shares.
Allottees The Shares will be allotted by the Company to professional
and sophisticated investors selected by Canaccord Genuity
Limited under a private share placement
Use of funds raised To advance the redevelopment of the Company’s Dolphin
Tungsten Project
----- End of picture text -----

If Resolution 8 is passed, the issue will be excluded in calculating the Company’s 25% limit in Listing Rules 7.1 and 7.1A, effectively increasing the number of equity securities it can issue without shareholder approval over the 12 month period following the issue date.

If Resolution 8 is not passed, the issue will be included in calculating the Company’s 25% limit in Listing Rules 7.1 and 7.1A, effectively decreasing the number of equity securities it can issue without shareholder approval over the 12 month period following the issue date.

Directors’ recommendation

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The Directors unanimously recommend you vote in favour of Resolution 8.

8.11. Resolution 9: Approval of issuance of Shares to related party: Johann Jacobs (via his nominated entity)

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Background

Mr Johann Jacobs, a Director, via his nominated entity, wishes to participate in the Capital Raising, including the share placement, on the same terms as other investors.

ASX Listing Rule 10.11 provides that unless one of the exceptions in Listing Rule 10.12 applies, an entity must not issue, or agree to issue, equity securities to:

(a) a related party;
(b) a person who is, or was at any time in the 6 months before the issue or agreement, a substantial (30%+) holder in the entity;
(c) a person who is, or was at any time in the 6 months before the issue or agreement, a substantial (10%+) holding in the entity and who has nominated a director to the board pursuant to a relevant agreement which gives them the right or expectation to do so;
(d) an associate of a person referred to in paragraphs (a), (b), or (c) above; or
(e) a person whose relationship with the entity or a person referred to in any of paragraphs (a) to (d) above is such that, in ASX’s opinion the issue or agreement should be approved by securityholders,

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unless it obtains the approval of its ordinary security holders.

As the issue of Shares to Mr Johann Jacobs constitutes the issue of Equity Securities to a related party of the Company, Shareholder approval pursuant to ASX Listing Rule 10.11 is required unless an exception applies. It is the view of the Directors that the exceptions set out in ASX Listing Rule 10.12 do not apply in the current circumstances.

The Company therefore seeks the required Shareholder approvals for the issue of the Shares to Mr Jacobs, or his nominee, under and for the purposes of Listing Rule 10.11.

Under ASX Listing Rule 7.2 exception 14, approval pursuant to ASX Listing Rule 7.1 is not required for the issue of the Equity Securities to Mr Johann Jacobs, or his nominee, if approval is obtained under ASX Listing Rule 10.11. Accordingly, the issue of the Equity Securities, if approved, will not be included in the use of the Company’s 15% annual placement capacity pursuant to ASX Listing Rule 7.1.

The board has formed the view that the issue of Shares to Mr Jacobs does not require shareholder approval under section 208 of the Corporations Act, as the issue of the Shares is being issued on arm’s length terms, given that they are being issued on the same terms as those securities are being issued to the other Capital Raising participants in accordance with section 210 of the Corporations Act.

Pursuant to and in accordance with ASX Listing Rule 10.13, the following information is provided in relation to the issue of the Shares the subject of Resolution 9:

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----- Start of picture text -----

The name of the person Mr Johann Jacobs or his nominated entity
Which category in rules 10.11.1 – 10.11.5 Mr Jacobs is a director, so a related party to
the person falls within and why the Company (Listing Rule 10.11.1)
Maximum number and class of securities Up to 1,050,000 Shares are to be issued.
to be issued to the person The Shares to be issued are all fully paid
ordinary shares in the capital of the
Company issued on the same terms and
conditions as the Company’s existing
Shares.
Date by which the Company will issue the The Company will issue the Shares no later
Shares than 1 month after the date of the
Meeting.
Issue price $0.14 per Share
The use (or intended use) of the funds To advance the redevelopment of the
raised Company’s Dolphin Tungsten Project
A voting exclusion statement A voting exclusion is included in the Notice
in relation to Resolution 9.
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Directors’ recommendation

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The Directors, with Johann Jacobs abstaining, unanimously recommend you vote in favour of Resolution 9.

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8.12. Resolution 10: Approval of issuance of shortfall Shares under SPP to a related party: Chris Ellis (via his nominated entity)

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Background

Mr Chris Ellis, a Director, via his nominated entity, Chrysalis, has entered into an underwriting agreement with the Company pursuant to which Mr Ellis is obliged to subscribe for up to $2,769,825 of any shortfall arising under the SPP.

Mr Ellis’ underwriting obligation under the underwriting agreement is subject to a number of conditions (including shareholder approval under this Resolution 10), warranties, undertakings and termination events that are customary for an agreement of this nature. On completion of the SPP, the Company will be required to pay Mr Ellis an underwriting fee of $110,793.

ASX Listing Rule 10.11 provides that unless one of the exceptions in Listing Rule 10.12 applies, an entity must not issue, or agree to issue, equity securities to:

(a) a related party;
(b) a person who is, or was at any time in the 6 months before the issue or agreement, a substantial (30%+) holder in the entity;
(c) a person who is, or was at any time in the 6 months before the issue or agreement, a substantial (10%+) holding in the entity and who has nominated a director to the board pursuant to a relevant agreement which gives them the right or expectation to do so;
(d) an associate of a person referred to in paragraphs (a), (b), or (c) above; or
(e) a person whose relationship with the entity or a person referred to in any of paragraphs (a) to (d) above is such that, in ASX’s opinion the issue or agreement should be approved by securityholders,

unless it obtains the approval of its ordinary security holders.

As the issue of Shares to Mr Chris Ellis constitutes the issue of Equity Securities to a related party of the Company, Shareholder approval pursuant to ASX Listing Rule 10.11 is required unless an exception applies. It is the view of the Directors that the exceptions set out in ASX Listing Rule 10.12 do not apply in the current circumstances.

The Company therefore seeks the required Shareholder approvals for the issue of the Shares to Mr Ellis, or his nominee, under and for the purposes of Listing Rule 10.11.

The board has formed the view that the issue of Shares to Mr Chris Ellis does not require shareholder approval under section 208 of the Corporations Act, as the issue of the Shares is being issued on arm’s length terms, given that they are being issued on the same terms as those securities are being issued to the other eligible shareholders who may participate in the SPP in accordance with section 210 of the Corporations Act.

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Pursuant to and in accordance with ASX Listing Rule 10.13, the following information is provided in relation to the issue of the Shares the subject of Resolution 10:

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----- Start of picture text -----

The name of the person Mr Chris Ellis or his nominated entity
Which category in rules 10.11.1 – 10.11.5 Mr Chris Ellis is a director, so a related party
the person falls within and why to the Company (Listing Rule 10.11.1)
Maximum number and class of securities Up to 19,642,857 Shares are to be issued.
to be issued to the person The Shares to be issued are all fully paid
ordinary shares in the capital of the
Company issued on the same terms and
conditions as the Company’s existing
Shares.
Date by which the Company will issue the The Company will issue the Shares no later
Shares than 1 month after the date of the
Meeting.
Issue price $0.14 per Share
The use (or intended use) of the funds To advance the redevelopment of the
raised Company’s Dolphin Tungsten Project
A voting exclusion statement A voting exclusion is included in the Notice
in relation to Resolution 10.
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Directors’ recommendation

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The Directors, with Chris Ellis abstaining, unanimously recommend you vote in favour of Resolution 10.

8.13. Resolution 11: Approval of issuance of shortfall Shares under SPP to Elphinstone Holdings Pty Ltd

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Background

Resolution 11 seeks shareholder approval under ASX Listing Rule 7.1 (and for all other purposes) for the issue of up to 19,642,857 Shares at an issue price of $0.14 per Share to Elphinstone Holdings Pty Ltd on the same terms and conditions as Shares are to be issued to eligible shareholders under the SPP being undertaken by the Company.

On 1 October 2021, the Company and Elphinstone Holdings Pty Ltd entered into an underwriting agreement pursuant to which Elphinstone Holdings Pty Ltd is obliged to subscribe for up to $2,769,825of any shortfall arising under the SPP. Elphinstone Holdings Pty Ltd’s underwriting obligation under the underwriting agreement is subject to a number of conditions (including shareholder approval under this Resolution 11), warranties, undertakings and termination events that are customary for an agreement of this nature. On completion of the SPP, the Company will be required to pay Elphinstone Holdings Pty Ltd an underwriting fee of $110,793.

ASX Listing Rule 7.1 prevents the Company from issuing more than 15% of its issued capital without shareholder approval. The allotment and issue of the Shares to Elphinstone Holdings Pty Ltd (if made without shareholder approval) will count towards the 15% threshold (as the issuance of shares to the underwriter of a securities purchase plan is not covered by Exception

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5 of ASX Listing Rule 7.2). Resolution 11 therefore propose the approval of the allotment and issue of the Shares for the purpose of satisfying the requirements of ASX Listing Rule 7.1.

Further details regarding the proposed issue of the Shares are set out below.

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----- Start of picture text -----

Resolution 11
Maximum number of 19,642,857 Shares
securities to be issued
Expected date of issue As soon as practicable, but in any event no later than 3
months, after the date of the Annual General Meeting
Issue price $0.14
Terms of issue As set out in the underwriting agreement entered into
between the Company and Elphinstone Holdings Pty Ltd as
described above.
Allottees Elphinstone Holdings Pty Ltd
Intended use of funds To advance the redevelopment of the Company’s Dolphin
raised Tungsten Project
----- End of picture text -----

Directors’ recommendation

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The Directors unanimously recommend you vote in favour of Resolution 11.

8.14. Resolution 12: Approval of change of Company name

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Background

Section 157(1)(a) of the Corporations Act provides that a company may change its name if the company passes a special resolution adopting a new name.

Resolution 12 seeks the approval of Shareholders for the Company to change its name to 'Group 6 Metals Limited'.

It is proposed the Company’s ASX listing code will also be changed from ‘KIS’ to ‘G6M’, subject to ASX approval.

Resolution 12 is a special resolution and therefore requires approval of 75% of the votes cast by Shareholders present and eligible to vote (in person, by proxy, by attorney or, in the case of a corporate Shareholder, by a corporate representative).

The Board proposes the current change of name to Group 6 Metals Limited.

The proposed name has been reserved by the Company with ASIC. If Resolution 12 is passed the change of name will take effect when ASIC alters the details of the Company's registration.

Directors’ recommendation

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The Directors unanimously recommend you vote in favour of Resolution 12.

8.15. Interpretation

For the purposes of interpreting the Explanatory Notes and the Notice:

(a) the singular includes the plural and vice versa;
(b) words importing any gender include the other genders;

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(c) reference to any statute, ordinance, regulation, rule or other law includes all regulations and other instruments and all consolidations, amendments, re-enactments or replacements for the time being in force;
(d) all headings, bold typing and italics (if any) have been inserted for convenience of reference only and do not define, limit or affect the meaning or interpretation of the Explanatory Notes and the Notice;
(e) reference to persons includes bodies corporate and government authorities and in each and every case, includes a reference to the person’s executors, administrators, successors, substitutes (including without limitation persons taking by novation and assignment); and
(f) reference to cents, $, A$, Australian Dollars or dollars is a reference to the lawful tender for the time being and from time to time of the Commonwealth of Australia.

8.16. Registered Office

King Island Scheelite Limited ABN: 40 004 681 734

Suite 26.01 Level 26, Suncorp Place 259 George Street Sydney NSW 2000 Telephone: +61 2 8622 1402 Email: [email protected] Web: www.kingislandscheelite.com.au

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9. GLOSSARY

AGM or Annual General Meeting means the annual general meeting to commence 11.00AM Sydney Time on Monday 8 November 2021 and notified to the Company’s Shareholders by this Notice.

Associate has the meaning given to that term in Part 1.2, Division 2 of the Corporations Act.

ASX means ASX Limited ABN 98 008 624 691.

ASX Listing Rules means the official listing rules issued and enforced by the ASX, as amended from time to time.

Board or Board of Directors means the board of Directors of the Company.

Capital Raising means the share placement and SPP announced by the Company on 4 October 2021 and described in these Explanatory Notes.

Chrysalis means Chrysalis Investments Pty Ltd in its capacity as trustee for The Ellis Family Trust (an entity controlled by Director, Chris Ellis).

Closely Related Party of a member of the Key Management Personnel means:

(a) a spouse or child of the member;
(b) a child of the member’s spouse;
(c) a dependent of the member or the member’s spouse;
(d) anyone else who is one of the member’s family and may be expected to influence the member, or be influenced by the member, in the member’s dealing with the entity;
(e) a company the member controls; or
(f) a person prescribed by the Corporations Regulations 2001 (Cth) as amended from time to time.

Company means King Island Scheelite Limited ABN 40 004 681 734.

Consolidated Entity means the Company together with all the entities it is required by the accounting standards to include in consolidated financial statements.

Constitution means the constitution of the Company, as amended from time to time.

Corporations Act means the Corporations Act 2001 (Cth) as amended from time to time.

Debt Facilities means the Debt Facility Agreement entered into between the Company and each of:

(a) PURE Asset Management Pty Ltd
(b) Elphinstone Holdings Pty Ltd
(c) D.A.CH.S. Capital A G;
(d) Abex Limited; and
(e) Chrysalis.

Director means a director of the Company.

Equity Securities has the same meaning as in the ASX Listing Rules.

Explanatory Notes means the notes included in the Notice which convened this meeting.

Facility Lenders means each of:

(a) PURE Asset Management Pty Ltd
(b) Elphinstone Holdings Pty Ltd
(c) D.A.CH.S. Capital A G;
(d) Abex Limited; and
(e) Chrysalis Investments Pty Ltd in its capacity as trustee for The Ellis Family Trust (an entity controlled by Director, Chris Ellis).

Group means the Company’s group, including the Company and its wholly owned subsidiaries.

Independent Directors means each Director other than Mr Chris Ellis.

Key Management Personnel has the same meaning as in the accounting standards and broadly includes those persons having authority and responsibility for planning, directing and controlling the activities of the Consolidated Entity, directly or indirectly, including any director (whether executive or otherwise) of the Company.

Meeting means the AGM.

Non-Associated Shareholders means Shareholders other than Chrysalis and Abex Limited.

Notice means this notice of Annual General Meeting.

Option means an option providing the holder with the right to subscribe for one (1) Share for the exercise price during the option period.

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Remuneration Report means the remuneration report which forms part of the Directors’ Report of the Company for the financial year ended 30 June 2021 and which is set out in the 2021 Annual Report.

Trust (an entity controlled by Director, Chris Ellis).

Security means the Security the subject of Resolution 7.

Security Transaction means the granting of the Security by each of:

(a) Abex Limited; and
(b) Chrysalis Investments Pty Ltd in its capacity as trustee for The Ellis Family Trust (an entity controlled by Director, Chris Ellis).

Security Agreement means the general security agreement given by the Company and its child entities over all assets of each entity.

Share means a fully paid ordinary share in the issued capital of the Company and Shares has a corresponding meaning.

Shareholder means shareholder of the Company and Shareholders has a corresponding meaning.

Share Registry means the Company’s share registry - Computershare Investor Services Pty Ltd ABN 48 078 279 277, Yarra Falls, 452 Johnston Street, Abbotsford Vic 3067

SPP means the securities purchase plan announced by the Company on 4 October 2021.

Sydney Time means the current local time in Sydney NSW, Australia

Trading Day means a day determined by the ASX to be a Trading Day, notified to market participants, and otherwise as defined by the ASX Listing Rules .

Unquoted Options means the Company’s unquoted Options.

Warrant Agreements means the Warrant Agreements entered into between the Company and each of:

(a) PURE Asset Management Pty Ltd
(b) Elphinstone Holdings Pty Ltd
(c) D.A.CH.S. Capital A G;
(d) Abex Limited; and
(e) Chrysalis Investments Pty Ltd in its capacity as trustee for The Ellis Family

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ANNEXURE A –Dolphin Tungsten Project Debt Facilities

Summary of terms – Facility Agreements

1 Key terms

1.1 Facility amounts : The total $33m of debt funding being raised by King Island Scheelite Limited ( KIS ) for the Dolphin Tungsten Project ( Project ) comprises of the following:

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----- Start of picture text -----

Lender Debt Only ($) Convertible debt ($) Total ($)
Pure Asset Management
Pty Ltd in its capacity as -
10,000,000 10,000,000
trustee for the PURE
Resources Fund ( PureAM )
Chrysalis Investments Pty
Ltd in its capacity as trustee
4,000,000 4,500,000 8,500,000
for The Ellis Family Trust
( Chrysalis )
Elphinstone Holdings Pty -
5,000,000 5,000,000
Ltd ( Elphinstone )
D.A.CH.S. Capital AG -
3,000,000 3,000,000
( DACHS )
Abex Limited ( Abex ) - 6,500,000 6,500,000
Total $4,000,000 $29,000,000 $33,000,000
----- End of picture text -----

1.2 Borrower : the borrower under each facility is Australian Tungsten Pty Ltd, being a wholly owned subsidiary of KIS and the owner of the operational assets of the Project.
1.3 Guarantors : KIS and its wholly owned subsidiary, Scheelite Management Pty Ltd, are guarantors of each facility.
1.4 Purpose : the stated purpose for each facility is to assist the Borrower with re-development and recommencement of mining at the Project, including:
(a) fees and expenses in connection with the respective facility;
(b) working capital in connection with the Project; and

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(c) capitalisation of interest and fees.
1.5 Interest Rate : the interest rate applicable for each of these facilities (other than PureAM) is 6.5% per annum for convertible debt and 8.25% per annum for debt only. The interest payable under PureAM’s facility is 8.25% per annum. In each case Interest is payable quarterly.
1.6 Default Interest Rate : for each facility, is 5% per annum above the applicable Interest Rate.
1.7 Term : the term of the facility from PureAM is 3 years from drawdown date. The term of each facility from Chrysalis, Elphinstone, DACHS and Abex is 42 months after the Dolphin Tungsten Project has achieved ‘practical completion’.
1.8 Amortisation : the PureAM facility does not amortise and the full principal amount is payable at the end of its term. The facilities from Chrysalis, Elphinstone, DACHS and Abex will amortise by semiannual repayments of $750,000 commencing from the date that is 12 months after the Dolphin Tungsten Project has achieved ‘practical completion’.
1.9 Covenants : KIS and its subsidiaries give representations and warranties, undertakings and covenants on general market standard terms for facilities of this nature. The key covenants given relating to the Project are:
(a) to ensure ‘practical completion’ of the Project is achieved by 31 August 2023;
(b) to hold a minimum cash balance of the group of $2,000,000 at all times; and
(c) covenants regarding the level of WO3 recovered from the Project compared to the forecast model.
1.10 Conditions precedent : in addition to usual conditions precedent which are generally market standard for facilities of this nature, the facilities are conditional upon:
(a) shareholder approval for the granting of the security in accordance with Listing rule 10.1; and
(b) evidence that the group has raised additional funding (separate from the debt funding described in this summary) of not less than $20,000,000.

2 Documentation and Security

2.1 The facility from each lender is documented on a separate facility agreement, with each on similar terms.
2.2 The security is shared across all lenders, and consists of a general security agreement ( GSA ), given by KIS, the Borrower and Scheelite Management Pty Ltd over all assets of each entity. The GSA will be registered on the Personal Property and Securities Register.
2.3 All secured lenders will rank pari passi in respect of any proceeds from enforcement of the security.

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2.4 The GSA will be granted in favour of an independent third party security trustee, Global Loan Agency Services Australia Nominees Pty Ltd ( Security Trustee ), who will hold the security on behalf of each of the secured lenders governed by the terms of a security trust deed.
2.5 GLASAN will act as a security trustee for the Facility Lenders and will be responsible for enforcing the Security in the event of default in payment of an outstanding amount under the debt facility agreements (interest or principal or other amounts like taxes or fees).
2.6 The key features of the security trust deed between GLASAN and the Facility Lenders are as follows:
(a) The Security represents a fixed and floating charge over all the present and subsequently acquired assets held by the Company and its group companies excluding the mobile mining equipment acquired or to be acquired by Australian Tungsten Pty Ltd ( KISL Secured Assets ).
(b) GLASAN will be responsible for enforcing the Security upon instruction from Pure (to the extent that Pure does not exercise the warrants attached to its debt facility), or one or more Facility Lenders whose combined exposure is at least 51% of the total debt facility.
(c) In the event of receiving the above instruction, GLASAN can apply any cash, liquid assets or other assets included in the Security towards payment of outstanding amounts under the Debt Facilities agreements (i.e. principal, interest, fees, charges, taxes, duties or other costs, damages, losses, indemnities, guarantee obligations, costs or expenses).
(d) Upon realisation of the Company’s assets, the proceeds will be distributed in the following order:
- (i) First: to settle liabilities of GLASAN;
- (ii) Second: to settle the liabilities of the Facility Lenders;
- (iii) Third: to settle the liabilities of lenders are subordinated to the Facility; and
- (iv) Fourth: the surplus (if any) shall be returned to the Company (without interest).

3 Warrants

3.1 Under the terms of the Debt Facilities, the Facility Lenders will receive warrants which entitle the Facility Lenders to convert the majority (65% to 75%) of the outstanding Debt Facilities into equity shares of KIS to be issued at between $0.196 and $0.21 per share and ranking equally with existing shares. In this regard, we note the following:
(a) The number of warrants to be issued upon exercise (for the Facility Lenders other than Pure) is determined by the following formula:
- $ amount of facility * 75% / Issue Price

where

Issue Price = Issue Price under the Placement (i.e. $0.14 per share)

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(b) The number of warrants to be issued to Pure upon exercise is determined by the following formula:
$10 million * 65% / Issue Price

where

Issue Price is the lower of $0.22 and the Issue Price under the Placement (i.e. $0.14).

(c) The warrants are not transferrable or assignable without prior written consent from the Company, and the shares issued upon exercise of the warrants rank on par with the ordinary shares of the Company on issue.
(d) The warrants do not confer a right on the Facility Lenders to participate in new issues of shares unless the warrants have been exercised on or before the record dates for determining entitlements to such issues.
(e) Warrants which have not been exercised do not carry a dividend entitlement or voting rights. Further, the warrants will not be listed for quotation on the ASX or any other securities exchange.
(f) If the Company makes a bonus issue to shareholders, then the number of shares over which the warrant is exercisable will be increased by the number of shares which the Facility Lenders would have received under the bonus issue had the warrant been exercised prior to the record date for the bonus issue.

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ANNEXURE B – INDEPENDENT EXPERT’S REPORT

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King Island Scheelite Limited

Independent Expert’s Report and Financial Services Guide

8 October 2021

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The Independent Directors King Island Scheelite Limited Level 26, 259 George Street Sydney NSW 2000

8 October 2021

Grant Thornton Corporate Finance Pty Ltd ABN 59 003 265 987 AFSL 247140 Level 17, 383 Kent Street Sydney NSW 2000 PO Locked Bag Q800 QVB Post Office Sydney NSW 1230 T + 61 2 8297 2400 F + 61 2 9299 4445 E [email protected] W www.grantthornton.com.au

Dear Directors

Introduction

King Island Scheelite Limited (“KISL” or “the Company”) engages in the exploration, evaluation and development of tungsten in Australia. Its flagship asset is the Dolphin tungsten project located on King Island, Tasmania (“Dolphin Tungsten” or “the Project”). KISL owns 100% of the Project. The Company is listed on the Australian Securities Exchange (“ASX”) and had a market capitalisation of circa A$69.5 million[1] as at 30 September 2021.

On 6 September 2021, KISL announced that a number of major shareholders plus an external lender (collectively the “Facility Lenders”) had agreed to provide debt funding totalling $33 million for the development of the Project (“Debt Facilities”) subject to satisfaction of certain conditions precedent. The Facility Lenders comprise the following:

Abex Group – which owns 18.45% of the issued capital of the Company.
Chrysalis Investments Group – in its capacity as trustee for The Ellis Family Trust (an entity controlled by one of the Director, Chris Ellis) and hence considered a related party of the Company. It owns 16.84% of the issued capital.
D.A.CH.S. – which owns 5.92% of the issued capital.
Elphinstone Holdings Pty Ltd – which owns 1.43% of the issued capital.
Pure Asset Management Pty Ltd – which is an external investor and not currently a shareholder.

The Facilities Lenders have entered into individual agreements with slightly differing terms. Detailed terms are outlined in section 1.

The Debt Facilities are repayable between 3 and up to 6 years after drawdown and they bear an annual interest rate varying between 6.5% ($19.0 million) and 8.25% ($14.0 million).

Under the terms of the Debt Facilities, the Facility Lenders will also be issued with 148,214,286 warrants that entitle them to convert some of the Debt Facilities into shares of the Company at an exercise price ranging between $0.196 and $0.21 per share.

1 Based on a share price of A$0.17 as at 30 September 2021 in conjunction with 408,952,882 ordinary shares.

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The Debt Facilities will be provided to a wholly-owned subsidiary of the Company, and the Company is required to provide a first ranking registered security over the assets of the Company and its wholly owned subsidiaries (“Security”) to the Facility Lenders. Accordingly in the event of default, the Facility Lenders are entitled to recover the Debt Facilities through a potential sale of the Company or underlying assets.

As part of entering into the Debt Facilities, the Company is also in the process of renegotiating the terms of the $10 million loan from the Tasmanian Government (“Tas Government Loan”) announced in February 2021 as its ranking will need to become subordinated to the Debt Facilities.

In addition to the above, on or around the date of this Independent Expert’s Report (“IER”), the Company is in the process of finalising the following additional fund raisings (“Capital Raising”) as summarised below:

Leasing facilities of $10 million for its mobile mining fleet from a specialist leasing company. The terms of funding for the same are yet to be finalised.
A share placement (“Placement”) of $19.8 million, which involves raising $14.3 million from new external investors, and an additional $5.5 million from a Share Purchase Plan (“SPP”), at a price of $0.14 per share. The SPP is jointly underwritten by Chrysalis Investments Group and Elphinstone Holdings Pty Ltd.
Raising of $11.2 million by way of issue of circa 80 million ordinary shares in the Company to the major Facility Lenders[2] as detailed in section 1 at a price of $0.14 per share, and an additional $0.2 million being raised from Mr Johann Jooste-Jacobs (KISL’s Executive Chairman).

The finalisation of the amounts raised through issue of equity shares, other than the amount of $14.3 million from new external investors, are contingent, among others, on the shareholders’ approval.

Purpose of the report

Under the terms of the Debt Facilities, security over the assets of KISL is being granted to the Facility Lenders and Abex and Chrysalis are substantial shareholders and related party (Chrysalis only) of the Company. In accordance with the ASX listing rules, the granting of a security is considered the equivalent of a ‘disposal’ of material assets to a substantial shareholder (“Granting of the Security”).

Accordingly, the Independent Directors of KISL (“Independent Directors”) have commissioned Grant Thornton Corporate Finance to provide an independent expert’s report to assess whether the Granting of the Security is fair and reasonable to the shareholders of KISL not associated with Abex Group and Chrysalis Group (“Non-Associated Shareholders”) for the purposes of Chapter 10 of the ASX Listing Rules.

We have not been engaged to form an opinion and we have not formed an opinion on the terms of the Capital Raising or any transactions and resolutions included in the Notice of Meeting and explanatory memorandum, including transactions with related parties and substantial Shareholders.

2 Excluding Pure Asset Management Pty Ltd

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Summary of opinion

Grant Thornton Corporate Finance has concluded that the Granting of the Security is FAIR AND REASONABLE to the Non-Associated Shareholders.

Fairness Assessment

We are only forming an opinion on the Granting of the Security and accordingly, in forming our opinion, we have not assessed the terms of the Capital Raising or other transactions contemplated in the Notice of Meeting and Explanatory Memorandum.

We have concluded that the Granting of the Security is FAIR to Non-Associated Shareholders after considering that if the Facility Lenders call upon the Security, the disposal of the assets of KISL is required to be dealt with in a manner which attempts to realise market value as at the time of the sale having regard to the state of the assets at that time. The Facility Lenders will receive the following amounts under the following three alternative scenarios:

If the realised market value of KISL’s assets is less than the total amount owing to the Facility Lenders, then the Facility Lenders will receive the realised market value of the assets.
If the realised market value of KISL’s assets is the same as the total amount owing to Facility Lenders, then the Facility Lenders will receive the realised market value of the assets.
If the realised market value of KISL’s assets is more than the total amount owing to the Facility Lenders, then the Facility Lenders will only receive the amount owing to them.

Reasonableness Assessment

ASIC RG111 establishes that an offer is reasonable if it is fair. Given that our assessment of the Granting of the Security is fair it is also reasonable. However, we have also identified a number of advantages and disadvantages that Non-Associated Shareholders should review carefully before casting their votes on the resolution.

Advantages

KISL will be able to advance the financing and development of the Project

As set out in the updated feasibility study completed in late 2020[3] , for the development of the Project, a total capital expenditure of $129.2 million is required. This comprises start-up capital of $72.7 million (to be incurred towards developing a processing plant, obtaining open-cut mobile mining equipment, for site services and other items) and deferred capital expenditure of $56.5 million (for underground mining equipment, sustaining capital expenditure, additional open-cut mining equipment and other items).

If the Security is granted, the Company can raise circa $44 million of funds through the Capital Raising. Together with the loan from the Tasmanian government ($10 million), the leasing arrangement with the specialist leasing company ($10 million) and the Placement ($20 million), the

3 Refer ASX announcement dated 16 December 2020.

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Company will have raised $84 million of capital, including the Debt Facilities of $33 million, which can be used to fund the start-up capital and can be used to successfully launch the Project.

If the Security is not approved, the Company will need to procure alternative sources of financing, which may potentially carry higher costs and may be more dilutive to Non-Associated Shareholders and they may delay development of the Project.

Reduced dilution

In the absence of the Debt Facilities, it is likely that the Company would have been required to raise additional equity and seek alternative debt arrangements which may be less beneficial than the Debt Facilities. Any additional equity raising is also likely to be more dilutive for the Non-Associated Shareholders.

Ability to convert into equity

Under the terms of the Debt Facilities, the Facility Lenders will receive warrants which entitle the Facility Lenders to convert the majority (65% to 75%) of the outstanding Debt Facilities into equity shares of KISL to be exercised at $0.196-0.21 per share and ranking equally with existing shares. If the warrants are exercised, the debt burden of the Company will reduce and the cash resources can be redirected to other uses.

Disadvantages

The degree of influence on existing shareholders will increase

70% of the debt facilities and circa 77% of the total amount raised under the Capital Raising is from the existing substantial shareholders of KISL who collectively hold 42.64% of the Company’s issued share capital as at the date of this Report. The Debt Facilities will result in an increased reliance on the existing substantial shareholders which may be potential detrimental for the Non-Associated Shareholders and it will increase the ability of those shareholders to influence the strategic direction of the Company.

Financial risks attached to the Debt Facilities

The Debt Facilities are repayable between 3 and up to 6 years after drawdown and they bear an annual interest rate varying between 6.5% ($19.0 million) and 8.25% ($14.0 million). As set out in section 4.2, the Company does not generate any revenue and it has historically incurred significant costs. Whilst the interest payment on the Debt Facilities will be capitalised up to six months after the commissioning of the Project, the Debt Facilities will put additional pressure on the operating performance of the business and they will materially increase the gearing level (net debt/equity value).

Terms of the Debt Facilities

The Debt Facilities provide for limited flexibility in relation to certain key milestones for the Project. In particular, we note that KISL is required to commission the Project prior to 31 August 2023 and ensure the recovery of WO3 is not less than 65% of forecast in the first 12 months from Project

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commissioning, and not less than 70% in each six month period thereafter. Failure to do so will constitute an event of default under the facility terms.

In addition, if the development of the Project goes in accordance with plan and with the feasibility study, the trading prices of the Company may increase materially in conjunction with the transition of the Project from development to production. Under these circumstances, it is likely that the Facility Lenders will exercise the option to convert part of the Debt Facilities into equity which will cause dilution to the Non-Associated Shareholders.

Other factors

Independent Directors’ recommendations and intentions

In the absence of a superior proposal or alternative sources of funding and subject to the Independent Expert’s opinion that the Granting of the Security is fair and reasonable, the Independent Directors unanimously recommend that all Non-Associated Shareholders vote in favour of granting the Security.

Overall conclusion

In our opinion, the advantages of the granting of the Security outweigh the disadvantages, and accordingly the Granting of the Security is FAIR AND REASONABLE to the Non-Associated Shareholders.

Other matters

Grant Thornton Corporate Finance has prepared a Financial Services Guide in accordance with the Corporations Act. The Financial Services Guide is set out in the following section.

The decision of whether or not to vote in favour of the Granting of the Security is a matter for each Non-Associated Shareholder to decide based on their own views of value of KISL and expectations about future market conditions, KISL’s performance, risk profile and investment strategy. If NonAssociated Shareholders are in doubt about the action they should take in relation to the Granting of the Security, they should seek their own professional advice.

Yours faithfully

GRANT THORNTON CORPORATE FINANCE PTY LTD

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ANDREA DE CIAN Director

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JANNAYA JAMES Director

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8 October 2021

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Financial Services Guide

1 Grant Thornton Corporate Finance Pty Ltd

Grant Thornton Corporate Finance carries on a business, and has a registered office, at Level 17, 383 Kent Street, Sydney NSW 2000. Grant Thornton Corporate Finance holds Australian Financial Services Licence No 247140 authorising it to provide financial product advice in relation to securities and superannuation funds to wholesale and retail clients.

Grant Thornton Corporate Finance has been engaged by KISL to provide general financial product advice in the form of an independent expert’s report in relation to the Granting of the Security. This report is included in KISL’s Explanatory Memorandum.

2 Financial Services Guide

This Financial Services Guide (“FSG”) has been prepared in accordance with the Corporations Act, 2001 and provides important information to help retail clients make a decision as to their use of general financial product advice in a report, the services we offer, information about us, our dispute resolution process and how we are remunerated.

3 General financial product advice

In our report we provide general financial product advice. The advice in a report does not take into account your personal objectives, financial situation or needs.

Grant Thornton Corporate Finance does not accept instructions from retail clients. Grant Thornton Corporate Finance provides no financial services directly to retail clients and receives no remuneration from retail clients for financial services. Grant Thornton Corporate Finance does not provide any personal retail financial product advice directly to retail investors nor does it provide market-related advice directly to retail investors.

4 Remuneration

When providing the Report, Grant Thornton Corporate Finance’s client is the Company. Grant Thornton Corporate Finance receives its remuneration from the Company. In respect of the Report, Grant Thornton Corporate Finance will receive from KISL a fee of A$40,000 (plus GST) which is based on commercial rates, plus reimbursement of out-of-pocket expenses for the preparation of the report. Our directors and employees providing financial services receive an annual salary, a performance bonus or profit share depending on their level of seniority.

Except for the fees referred to above, no related body corporate of Grant Thornton Corporate Finance, or any of the directors or employees of Grant Thornton Corporate Finance or any of those related bodies or any associate receives any other remuneration or other benefit attributable to the preparation of and provision of this report.

5 Independence

Grant Thornton Corporate Finance is required to be independent of KISL in order to provide this report. The guidelines for independence in the preparation of independent expert’s reports are set out in RG 112 Independence of expert issued by ASIC. The following information in relation to the independence of Grant Thornton Corporate Finance is stated below.

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“Grant Thornton Corporate Finance and its related entities do not have at the date of this report, and have not had within the previous two years, any shareholding in or other relationship with KISL (and associated entities) that could reasonably be regarded as capable of affecting its ability to provide an unbiased opinion in relation the Granting of the Security.

Grant Thornton Corporate Finance has no involvement with, or interest in the outcome of the Capital Raising, other than the preparation of this report.

Grant Thornton Corporate Finance will receive a fee based on commercial rates for the preparation of this report. This fee is not contingent on the outcome of the Capital Raising. Grant Thornton Corporate Finance’s out of pocket expenses in relation to the preparation of the report will be reimbursed. Grant Thornton Corporate Finance will receive no other benefit for the preparation of this report.

Grant Thornton Corporate Finance considers itself to be independent in terms of RG 112 “Independence of expert” issued by the ASIC.”

6 Complaints process

Grant Thornton Corporate Finance has an internal complaint handling mechanism and is a member of the Financial Ombudsman Service (membership no. 11800). All complaints must be in writing and addressed to the Chief Executive Officer at Grant Thornton Corporate Finance. We will endeavour to resolve all complaints within 30 days of receiving the complaint. If the complaint has not been satisfactorily dealt with, the complaint can be referred to the Financial Ombudsman Service who can be contacted at:

Financial Ombudsman Service Limited GPO Box 3 Melbourne, VIC 3001 Telephone: 1800 367 287

Grant Thornton Corporate Finance is only responsible for this report and FSG. Complaints or questions about the General Meeting should not be directed to Grant Thornton Corporate Finance. Grant Thornton Corporate Finance will not respond in any way that might involve any provision of financial product advice to any retail investor.

7 Compensation arrangements

Grant Thornton Corporate Finance has professional indemnity insurance cover under its professional indemnity insurance policy. This policy meets the compensation arrangement requirements of section 912B of the Corporations Act, 2001.

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		Page
1	Overview of the funding arrangements	9
2	Purpose and scope of the report	14
3	Profile of the industry	17
4	Profile of KIS	24
5	Valuation methodologies	32
6	Fairness of granting the Amended Security	34
7	Sources of information, disclaimer and consents	35
Appendix A – Valuation methodologies		37
Appendix B – Glossary		38

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1 Overview of the funding arrangements

1.1 Capital Raising (equity and debt funding)

Equity raising

An amount of $11.2 million is proposed to be raised by way of issue of circa 80 million ordinary shares in the Company at a price of $0.14 per share to the following parties:

Abex Group (“Abex”): circa $3.5 million. We are instructed that Abex represents an entity associated with Mr Richard Chadwick, a substantial shareholder of KISL, holding 18.45% of the issued share capital as at 30 June 2021.
Chrysalis Group as trustee for the Ellis Family Trust (“Chrysalis”): circa $1.5 million. We are instructed that Chrysalis Investments Pty Ltd represents an entity associated with Mr Christopher Ellis. Further, we note that Chrysalis is a substantial shareholder and a Director of KISL holding circa 16.84% of the issued share capital as at 30 June 2021.
Elphinstone Holdings Pty Ltd (“Elphinstone”): circa $1 million. Elphinstone holds 1.43% of KISL’s issued share capital as at 30 June 2021.
D.A.CH.S. Capital AG (“DACHS”): circa $5 million. DACHS holds 5.92% of KISL’s issued share capital as at 30 June 2021.
Mr Johann Jooste-Jacobs (KISL’s Executive Chairman): $0.2 million.

Following the Capital Raising, the Placement and SPP, the Major Shareholders will increase their interest in issued share capital and fully diluted share capital of KISL as follows:

%	Ordinaryshares Fullydiluted Before the Capital Raising	Ordinaryshares Fullydiluted After the Capital Raising
Abex Chrysalis Elphinstone D.A.CH.S Pure Asset Management PtyLtd	18.5% 17.3% 16.8% 16.4% 1.4% 1.3% 5.9% 5.5% 0.0% 0.0%	15.9% 17.4% 15.5% 15.6% 4.9% 7.4% 9.5% 9.8% 0.0% 6.0%
Total Major Shareholders Other Non-Associated Shareholders	42.6% 40.6% 57.4% 59.4%	45.8% 56.1% 54.2% 43.9%
Total	100% 100%	100% 100%

Source: Management, GTCF calculations

The number of shares to be issued will be determined with reference to an issue price of $0.14 per share. The shares issued to the above mentioned parties will rank equally with the current ordinary shares on issue.

The equity raising is subject to additional funding being obtained, which is described in Section 1.2 below.

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Debt Facilities

Debt Facilities amounting to $33 million in total are proposed to be provided to Australian Tungsten Pty Ltd, a wholly owned subsidiary of KISL, by the Facility Lenders. Further, under each of the following facilities, KISL will provide a security over its assets to the respective Facility Lender under a security deed (described further in section 1.2). The facilities mentioned below also have attached warrants allowing for conversion of the majority of the debt facility (subject to a minimum of $1,000,000 per tranche) into equity shares of KISL.

Abex: $6.5 million at an interest rate of 6.5% p.a., to be repaid over 6 semi-annual instalments, commencing 12 months after commercial production.
Chrysalis: 2 facilities with the following terms:
$4 million at an interest rate of 8.25% p.a., to be repaid over 6 semi-annual instalments, commencing 12 months after commercial production.
$4.5 million at an interest rate of 6.5% p.a. with no attached warrants, to be repaid over 6 semiannual instalments, commencing 12 months after commercial production.
DACHS: $3 million at an interest rate of 6.5% p.a., to be repaid over 6 semi-annual instalments, commencing 12 months after commercial production.
Elphinstone: $5 million at an interest rate of 6.5% p.a., to be repaid over 6 semi-annual instalments, commencing 12 months after commercial production.
An external syndicate of investors led by Pure Asset Management Pty Ltd (“Pure”): $10 million at an interest rate of 8.25% p.a, to be repaid in 3 years. In the event of a default on repayment of principal or interest, the applicable interest rate increases to 13.25%.

Under the Debt Facilities, KISL is required to commission the Project prior to 31 August 2023 and ensure the recovery of WO3 is not less than 65% of forecast in the first 12 months from project commissioning, and not less than 70% in each six month period thereafter. Failure to do so will constitute an event of default under the facility terms.

Warrants

Under the terms of the Debt Facilities, the Facility Lenders will receive warrants which entitle the Facility Lenders to convert the majority (65% to 75%) of the outstanding Debt Facilities into equity shares of KISL to be issued at $0.14 per share and ranking equally with existing shares. In this regard, we note the following:

The number of warrants to be issued (for the Facility Lenders other than Pure) is determined by the following formula:

$ amount of facility * 75% / Issue Price

where

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Issue Price = Issue Price under the Placement (i.e. $0.14 per share)

The number of warrants to be issued to Pure is determined by the following formula:
$10 million * 65% / Issue Price

where

Issue Price is the lower of $0.30 and the Issue Price under the Placement (i.e. $0.14)

The issue of warrants is subject to receiving shareholder approval under ASX Listing Rule 7.1.
The warrants are not transferrable or assignable without prior written consent from the Company, and the shares issued upon exercise of the warrants rank on par with the ordinary shares of the Company on issue.
The warrants do not confer a right on the Facility Lenders to participate in new issues of shares unless the warrants have been exercised on or before the record dates for determining entitlements to such issues.
Warrants which have not been exercised do not carry a dividend entitlement or voting rights. Further, the warrants will not be listed for quotation on the ASX or any other securities exchange.
If the Company makes a bonus issue to shareholders, then the number of shares over which the warrant is exercisable will be increased by the number of shares which the Facility Lenders would have received under the bonus issue had the warrant been exercised prior to the record date for the bonus issue.

Conditions precedent for Debt Facilities

The Capital Raising (both the equity raising and Debt Facilities) is subject to various conditions which include among others the following key conditions:

Raising of additional funding under the Placement of at least $20 million (described further in Section 1.2 below), which is over and above other amounts raised.
The Company is in the process of finalising a further capital raise by way of a SPP, wherein circa $14.3 million is being raised from external investors, circa $0.2 million is being contributed by Mr Johann Jooste-Jacobs (KISL’s Executive Chairman) and circa $5.5 million is being raised by way of a share purchase programme which is jointly underwritten by Chrysalis and Elphinstone. The Company has engaged a broker to manage the Placement.
Receipt of mining permit and land lease agreement from the required authorities. We understand that these have been received as at the date of this Report.
Shareholder approvals required under ASX Listing Rule 10.1 (in relation to the Security)

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Finalisation of the terms of warrants to be issued to each Facility Lender (which will also be subject to shareholder approval).
Achieving financial close on the Project.

We have been instructed that there is no agreement between the Facility Lenders on how to vote their securities going forward, and hence they will not be ‘associated entities’ for the purposes of Section 611 of the Corporations Act, 2001.

Conditions precedent for Capital Raising

In addition to the amounts raised under the Capital Raising and the Placement, the Company is raising further capital from other sources:

The Company has secured a loan from the Tasmanian government, which will contribute an amount of $10 million in the form of a grant funding. This facility is expected to rank as subordinated to the Debt Facilities and the Company is currently renegotiating the terms.
The Company intends to fund its mobile mining fleet through a leasing arrangement with a specialist leasing company, for an amount of $10 million. Discussions in this regard are ongoing and Management expects to secure this facility in the near term.

1.2 Security

As mentioned in Section 1.1 above, under the terms of the Debt Facilities, KISL will provide the Security to Global Loan Agency Services Australia Nominees Pty Ltd (“GLASAN”). GLASAN will act as a security trustee for the Facility Lenders and will be responsible for enforcing the Security in the event of default in payment of an outstanding amount under the debt facility agreements (interest or principal or other amounts like taxes or fees).

The key features of the security trust deed between GLASAN and the Facility Lenders are as follows:

The Security represents a fixed and floating charge over all the present and subsequently acquired assets held by KISL and its group companies excluding the mobile mining equipment acquired or to be acquired by Australian Tungsten Pty Ltd (“KISL Secured Assets”).
GLASAN will be responsible for enforcing the Security upon instruction from Pure (to the extent that Pure does not exercise the warrants attached to its debt facility), or one or more Facility Lenders whose combined exposure is at least 51% of the total debt facility.
In the event of receiving the above instruction, GLASAN can apply any cash, liquid assets or other assets included in the Security towards payment of outstanding amounts under the Debt Facilities agreements (i.e. principal, interest, fees, charges, taxes, duties or other costs, damages, losses, indemnities, guarantee obligations, costs or expenses).
Upon realisation of the Company’s assets, the proceeds will be distributed in the following order:
First: to settle liabilities of GLASAN

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Second: to settle the liabilities of the Facility Lenders (described in detail in the point below)
Third: to settle the liabilities of lenders that are subordinated to the Facility Lenders (for example, to the Tasmanian government)
Fourth: the surplus (if any) shall be returned to KISL (without interest).

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2 Purpose and scope of the report

2.1 Purpose

Chapter 10 of the ASX Listing Rules

Chapter 10 of the ASX Listing Rules requires the approval from the non-associated shareholders of a company if the company proposes to acquire or dispose a substantial asset from a related party or a substantial holder.

ASX Listing Rule 10.2 states that an asset is substantial if its value, or the value of the consideration, is 5% or more of the equity interest of the entity as set out in the latest financial statement provided to the ASX (“Substantial Asset”). Based on ASX Listing Rule 10.1.3, a substantial holder is a person who has a relevant interest, or had a relevant interest at any time in the six months before the transaction, in at least 10% of the voting power of the company.

ASX Listing Rule 10.5.10 requires that the Notice of Meeting and Explanatory Memorandum be accompanied by a report from an independent expert stating whether the transaction is fair and reasonable to the non-associated shareholders.

It is noted that Christopher Ellis, Richard Chadwick and Gwenda Chadwick collectively hold 41.6% of the issued share capital in KISL.

Pursuant to ASX Listing Rule 19, the definition of ‘dispose’ includes using an asset as collateral. As a result, the granting of the Security over the assets of KISL is considered the disposition of material assets.

Accordingly, the Independent Directors have requested Grant Thornton Corporate Finance to prepare an independent expert’s report stating, whether in its opinion the granting of the Security is fair and reasonable to the Non-Associated Shareholders.

2.2 Basis of assessment

Grant Thornton Corporate Finance has had regard to RG 111 in relation to the content of independent experts reports and RG76 in relation to related party transactions. RG76 largely refers to RG111 in relation to the approach to related party transactions.

RG 111 establishes certain guidelines in respect of independent expert’s reports prepared for the purposes of the Corporations Act. RG 111 is framed largely in relation to reports prepared pursuant to Section 640 of the Corporations Act and comments on the meaning of “fair and reasonable” in the context of a takeover offer. RG 111 also regulates IERs prepared for related party transactions in clauses 52 to 63. RG 111 notes that an expert should focus on the substance of the related party transaction, rather than the legal mechanism and, in particular where a related party transaction is one component of a broader transaction, the expert should consider what level of analysis of the related party aspect is required.

We note that RG111 clause 56 states the following:

RG 111.56 Where an expert assesses whether a related party transaction is ‘fair and reasonable’ (whether for the purposes of Chapter 2E or ASX Listing Rule 10.1), this should not be applied as a composite test—

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that is, there should be a separate assessment of whether the transaction is ‘fair’ and ‘reasonable’, as in a control transaction. An expert should not assess whether the transaction is ‘fair and reasonable’ based simply on a consideration of the advantages and disadvantages of the proposal, as we do not consider this provides members with sufficient valuation information (See Regulatory Guide 76 Related party transactions (RG 76) at RG 76.106–RG 76.111 for further details).

Accordingly, in the consideration of the Proposal, the expert should undertake a separate test of the fairness and then analyse the advantages and disadvantages for the Non-Associated Shareholders.

RG 111 notes that a related party transaction is:

Fair, when the value of the financial benefit being offered by the entity to the related party is equal to or less than the value of the assets being acquired.
Reasonable, if it is fair, or, despite not being fair, after considering other significant factors, shareholders should vote in favour of the transaction.

We have assessed the fairness of the Granting of the Security by completing a comparison between the proceeds from the sale of the assets under the Security which would be provided to the Facility Lenders and the value of the outstanding liability which would be owing to the Facility Lenders in the event of a default.

In considering whether the Granting of the Security is reasonable to the Non-Associated Shareholders, we have considered a number of factors, including:

Whether the granting of the Security is fair.
The implications to KISL and the Non-Associated Shareholders if the granting of the Security is not approved.
Other likely advantages and disadvantages associated with the granting of the Security as required by RG111.
Other costs and risks associated with the granting of the Security that could potentially affect the NonAssociated Shareholders.

2.3 Independence

Prior to accepting this engagement, Grant Thornton Corporate Finance (a 100% subsidiary of Grant Thornton Australia Limited) considered its independence with respect to the granting of the Security with reference to RG 112 issued by ASIC.

Grant Thornton Corporate Finance has no involvement with, or interest in, the outcome of the approval of the Granting of the Security other than that of an independent expert. Grant Thornton Corporate Finance is entitled to receive a fee based on commercial rates and including reimbursement of out-of-pocket expenses for the preparation of this report.

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Except for these fees, Grant Thornton Corporate Finance will not be entitled to any other pecuniary or other benefit, whether direct or indirect, in connection with the issuing of this report. The payment of this fee is in no way contingent upon the success or failure of the granting of the Security.

In our opinion, Grant Thornton Corporate Finance is independent of KISL and its Directors and all other relevant parties of the granting of the Security.

2.4 Consent and other matters

Our report is to be read in conjunction with the Notice of Meeting and Explanatory Memorandum dated on or around 8 November 2021 in which this report is included, and is prepared for the exclusive purpose of assisting the Non-Associated Shareholders in their consideration of the granting of the Security. This report should not be used for any other purpose.

Grant Thornton Corporate Finance consents to the issue of this report in its form and context and consents to its inclusion in the Notice of Meeting and Explanatory Memorandum.

This report constitutes general financial product advice only and in undertaking our assessment, we have considered the likely impact of the granting of the Security to Non-Associated Shareholders as a whole. We have not considered the potential impact of the granting of the Security on individual Non-Associated Shareholders. Individual shareholders have different financial circumstances and it is neither practicable nor possible to consider the implications of the granting of the Security on individual shareholders.

The decision of whether or not to approve the granting of the Security is a matter for each Non-Associated Shareholder based on their views on the value of KISL and expectations about future market conditions, together with KISL’s performance, risk profile and investment strategy. If Non-Associated Shareholders are in doubt about the action they should take in relation to the granting of the Security, they should seek their own professional advice.

2.5 Compliance with APES 225 Valuation Services

This report has been prepared in accordance with the requirements of the professional standard APES 225 Valuation Services (“APES 225”) as issued by the Accounting Professional & Ethical Standards Board. In accordance with the requirements of APES 225, we advise that this assignment is a Valuation Engagement as defined by that standard as follows:

“An Engagement or Assignment to perform a Valuation and provide a Valuation Report where the Member is free to employ the Valuation Approaches, Valuation Methods, and Valuation Procedures that a reasonable and informed third party would perform taking into consideration all the specific facts and circumstances of the Engagement or Assignment available to the Member at that time.”

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3 Profile of the industry

KISL is an ASX-listed public company primarily focused on exploring and redeveloping the Dolphin Tungsten Project on King Island, Tasmania. The drill programs and Feasibility Study[4] undertaken by the Company have defined substantial potential for tungsten, through open-cut and underground mining. We have provided below an overview of the tungsten mining industry including recent and expected trends therein.

Tasmania has a long history as a significant mineral producer, exporting ores and concentrates of iron, copper, lead, zinc, tin, silica and tungsten. Currently, the major operating and proposed mines in Tasmania are set out as follows:

Mines	Type	Metal
Rosebery Mine	Operating mines	Silver, Lead, Zinc
Renison Mine	Operating mines	Tin
Savage River Mine	Operating mines	Magnetite (iron ore)
Henty Mine	Operating mines	Gold
Cornwall Coal	Operating mines	Coal
Avebury Mine	Proposed projects	Nickel
King Island	Proposed projects	Tungsten / Scheelite
Mount Lindsay	Proposedprojects	Iron and Tin-tungsten

Source: Mineral Resources Tasmania, Department of State Growth, Tasmania Government website.

3.1 Overview of tungsten

Tungsten is a rare metal found naturally and almost exclusively in the form of compounds with other elements. It is the second hardest mineral behind diamond, and may be used by itself (through extraction) or also be used along with other metals such as calcium and magnesium. The major sources of tungsten are wolframite and scheelite. We have illustrated the end-uses of tungsten below:

4 As announced to the ASX on 16 December 2020

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Tungsten end-uses in 2019

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----- Start of picture text -----

1%
7%
7% Transport
31% Mining & Construction
8% Industrial Use
Chemical petrochemical
Total Tungsten in end-use
in 2019: 106 Kt Consumer duables
10% Energy
Defence
Medical and pharmaceutical
12%
24%
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Source: King Island Scheelite website; SMR

Typical examples of above end-uses are, but not limited to, the following:

For use in specialty alloys for mobile phone handsets, military purposes, ballistics, automotive parts, aerospace components, and for cutting and manufacturing parts for combustion engines in traditional transport vehicles and race cars.
High-temperature applications in industrial uses, such as arc-welding electrodes and heating elements in high-temperature furnaces.
Manufacturing carbides or hard metals.
Drilling and cutting tools for the global mining industry.
Filaments of traditional light bulbs and fluorescent tubes, as well as in cell phones, televisions, microwaves and other electrical appliances.

Global demand historically peaked in 2017[5] as a result of rapid growth in global trade, advancing urbanisation, and favourable transport and consumer durables growth in emerging markets. However since the outbreak of COVID-19, numerous end-use sectors such as transport, mining and construction, and industrial sectors, have suffered from unexpected and disruptive lockdowns[6] . The consumption of tungsten in transport and automotive sector was estimated to have fallen 9%[7] year on year between 2019 and 2020.

5 Tungsten in 2017, Steel & Metals Market Research, published in December 2018

6 Tungsten Outlook to 2030, 15th Edition, published by Roskill dated 30 April 2021 7 Tungsten Outlook to 2030, 15th Edition, published by Roskill dated 30 April 2021

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3.1.1 Resource base in Australia and globally

Global tungsten reserves were estimated to be c. 3,400 kt in 2020[8] . Tungsten resources occur on each continent, however the most important and abundant tungsten deposits are located in Southeast China and the Southeast Asian belt. Australia held circa 12.6%[9] of the world’s tungsten resources as at December 2019, but its share of production is much smaller.

World estimated tungsten production in 2020

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2%
3%
2%
5%
6%
China
Vietnam
Mongolia
Total estimated production
of tungsten in 2020: c. 84 Kt Russia
Bolivia
Others
82%
Source: USGS; Geoscience Australia
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Tungsten has been identified in all Australian jurisdictions apart from Victoria and South Australia and all of Australia’s Economic Demonstrated Resources (“EDRs”) of tungsten are considered to be accessible.

We have set out below the advanced tungsten projects in Australia:

8 Mineral Commodity Summaries 2021, United States Geological Survey (“USGS”), published January 2021. 9 Geoscience Australia

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Advanced tungsten projects in Australia as at 30 June 2020

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300
257
250
200
150
100 77 86
51
50
26
20
13
0
Kara (TAS) Mt Carbine O'Callaghans Watershed (QLD) Mound Lindsay Molyhil (NT) Dolphin
(QLD) (WA) (TAS)
Operating / partial operating [1] FS or PFS [2] Pre-construction
Contained tungsten concentrates (Kt)
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Note:(1) Mt Carbine Mine is partially operating, as Hard Rock and LGO part of the Mt Carbine mine were still under construction as at 30 June 2020; (2) O’Callaghans Mine was at PFS stage as at 30 June 2020. Source: Geoscience Australia; Australian Critical Minerals Prospectus 2020

While O’Callaghans Mine in Western Australia has the highest EDR, the Kara mine in Tasmania and Mt Carbine mine in Queensland have been the only two operating tungsten mines in Australia since 2016 when Wolfram Camp in Queensland suspended its operations. The other tungsten projects in Australia are at varying stages of exploration and development.

3.2 Price and production trends over the last few years

Price trends

The global tungsten market is highly concentrated. Chinese tungsten production accounted for over 80% of mine output in 2020 and China has been the world’s largest tungsten producer for several decades. China’s tungsten output is not only fed to its domestic sectors, but also supports a sizable export to the rest of the world. As set out below, the price of tungsten has experienced volatility over the last five years primarily driven by China’s influence.

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Tungsten prices - Rotterdam APT (US$/ mtu)

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500.0
450.0
400.0
350.0
300.0
250.0
200.0
150.0
100.0
50.0
0.0
Source: Management
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The price experienced significant volatility between 2017 and 2018 when the Chinese government launched a widespread programme of environmental reforms, which impacted tungsten mines and smelter sites, and resulted in several tungsten mines shutting down. The resultant shortage in supplies caused an increase in prices. From mid-2018 onwards, production began to normalise as the existing mines produced a higher output, which resulted in prices reducing from a peak of US$350/t in 2018 to circa US$190/t in September 2019.
Price trends between February 2020 and July 2020 were mainly driven by the economic downturn and global recession caused by the outbreak of COVID-19. Prices have partially recovered from the trough in July 2020, closing out 2020 at circa US$290/t, as the economic outlook began to improve. This was also driven by a shortage of supply as a result of additional waves of the pandemic and associated lockdowns.

Supply and demand

The output of the major tungsten producing countries over the last five years is set out below:

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Major tungsten producing countries and their production: 2016 – 2020
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
-
2016 2017 2018 2019 2020e
China Vietnam Mongolia Russia Bolivia Other countries
Source: 2021 Mineral Commodity Summaries by USGS
Note: 2020 represents estimated figures
Mine production (metric tonnes)
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In 2020, the global tungsten output amounted to c. 84 kt, with China being the largest supplier. China was estimated to produce c. 82% of global tungsten production and accounted for 56% of global tungsten reserves. We note that although China has been in a dominant position for decades, since 2017, market participants have been shifting focus to new opportunities in other countries. The shift was mainly as a result of China’s pollution control measures which caused fluctuations in prices due to the reduction in supply[10] . Further, we note that China also did cut production in the second half of 2020, driven by COVID19 lockdown restrictions, heavy rainfall, and declining ore grades.

3.3 Industry outlook

The global tungsten market is projected to grow from US$3.5 billion in 2017 and reach US$6.7 billion by 2026[11] . The tungsten industry is expected to witness changes to the supply chain following the global economy normalising in a post-COVID environment. Global consumption is estimated to be c. 116 Kt by 2028, representing a CAGR of 1.8% from 2020[12] , and is expected to be driven by the following factors which are expected to play a large role in impacting the industry in near term:

Changes in end-use sectors, in particular transport and vehicle industry : Global vehicle production currently remains below pre-pandemic levels and significantly below the peak level in 2017. Furthermore, we note that electric vehicles are expected to increase their market share of the automotive sector compared to internal combustion engines, and therefore the usage of tungsten in the automotive sector is unlikely to recover to 2017 levels[13] . The usage of electric vehicles is expected to exceed traditional internal combustion engines by 2050.

10 Comprehensive Treatments of Tungsten Slags in China: A Critical View, Liu et.al, published in September 2020

11 KISL presentation dated 18 November 2020

12 KISL investor presentation dated 18 November 2020

13 Tungsten Outlook to 2030, 15th Edition, published by Roskill dated 30 April 2021

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Asia Pacific (“APAC”) to remain the dominant market : The APAC region, led by China, is expected to continue to dominate both tungsten supply and consumption in future. However, industry analysts[14] anticipate that the processed tungsten sourced from outside of China could be more attractive, as the labour costs in China in the future are expected to rise, and the use of tungsten scraps worldwide increases.
Output threat in China : The Chinese tungsten sector has suffered output cuts and suspensions in major production hubs of Jiangxi and Hunan provinces following a new round of environmental checks. The output cuts in these regions are likely to push Chinese price higher and international price are likely to follow the trend.
New opportunities: The industry has indicated potential new opportunities in relation to the exploration of new mines as well as the potential for other market participants apart from China. Several large mines in China and Russia are approaching the end of their mine lives[15] , and US as well as European end-users are looking to reduce their dependence on Chinese production[16] , which indicates an opportunity for new mine projects.
Potential rival in other Asian countries: Almonty Industries, a Canadian based tungsten explorer, announced a positive operational update for its South Korea Sangdong tungsten project, which is estimated to be the second largest mine by capacity outside of China. The Sandong project is anticipated to commence production in 2022[17] , which is slightly earlier than the Dolphin Project.

14 World Tungsten, Freedonia

15 Tungsten Outlook to 2030, 15th Edition, published by Roskill dated 30 April 2021

16 King Island investor presentation dated 18 November 2020

17 Almonty website and investor presentation date 11 August 2021

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4 Profile of KISL

KISL is a listed public company headquartered in Sydney, Australia, focusing on the exploration of tungsten. The Company’s current primary focus is to re-develop the Dolphin Project on King Island, Tasmania which is aiming to produce high grade tungsten concentrate.

Set out below is the location of the Dolphin Project, which is located in Bass Strait between Tasmania and mainland Australia:

Dolphin Project location

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Source: Company disclosure, Google Map

4.1 Dolphin Project

The Dolphin Project, together with the adjacent Bold Head Mine, was historically developed and mined tungsten at a grade of 0.67% WO3. It was conducted by both open-cut and underground methods, producing some 9.7 Mt of tungsten from 1917 to its closure in 1990 due to the low tungsten price. In 2009, as the price of tungsten was rising, the Dolphin Project was re-examined with underground mining proposed to extract high grade scheelite. KISL was granted the exploration and mining licences on these sites.

An updated feasibility study was completed by the Company in December 2020[18] . The key features of the study are as follows:

18 Refer ASX announcement dated 16 December 2020.

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Mining method: Combination of Open cut mining (initial 8 years) and Underground mining (year 8 to year 14)
Production over the life of mine (ore mined): 4,416.5 kt (2,933.2 kt under the open-cut method and 1,483.3 kt under the underground method)
Strip ratio: 10.3 (for open cut mining)
Total pre-production capital expenditure: $73 million
Key items of operational expenditure ($ per tonne of ore processed)
Mining cost: Average $43/t ($29/t for open-cut and $72/t for underground)
Processing cost: $29/t
Shipping cost: $3/t
Royalties: $17/t
Other costs: $3/t
Probable ore reserve: The Dolphin project hosts the highest grade known tungsten deposit outside China[19] , summarised as below.

	Dolphin Project - Probable ore reserve
	Category	Milliontonnes	WO3 %	Million metric tonne units
	Open-cut reserves (0.2% WO3cut-off)	2.93	0.76%	2.22
	Underground reserves(0.7%WO3cut-off)	1.50	1.24%	1.86
	Total	4.43	0.92	4.08
Note: N/d = not disclosed
Source: KISL presentation dated 18 October 2020

The current development plan of the Project anticipates an initial eight year open cut operation to mine c. 400,000 tonnes of ore per year at a grade of 0.73% WO3. At full production, the redeveloped Dolphin Mine is expected to mine 400,000 tonnes ore per annum[20] .

The Project also involves two offtake agreements with external parties. In April 2019, the Company announced an offtake agreement with Wolfram Bergbau und Hutten AG (“WBHAG”) (“Wolfram Agreement”), for a delivery of 140,000 metric tonne units or 1,400 tonnes of WO3 (equivalent to c. 2,200 tonnes of concentrate) over a four-year period. Wolfram Agreement represents c. 20% of the Project’s anticipated annual production and is equivalent to c. A$33 million[21] of revenue over the four years. In September 2021, the Company announced another offtake with Traxys Europe S.A (“Traxys”) for supply of tungsten concentrate of 90,000 metric tonne units of WO3 per annum, until 330,000 metric tonne units of

19 Australian Critical Minerals Prospectus 2020

20 The Company’s presentation dated 13 September 2021

21 Based on the tungsten price as at the time the contract was entered into, disclosed in the investor presentation dated 18 November 2020.

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WO3 concentrates has been delivered. Both offtake agreements have downside protection for the price of the tungsten concentrate[22] .

We note that the Company also entered into another offtake agreement with Kalon Resources. However, the termination of this agreement was announced due to certain conditions not having been met. There are no fees or any other penalties payable in respect of the termination.

4.2 Financial information

4.2.1 Financial performance

The following table sets out the historical financial performance for KISL as at 30 June 2020 (“FY20”) and 30 June 2021 (“FY21”):

Consolidated statements of financial performance	FY20	FY21
A$ unless otherwise stated	Audited	Audited
Other income	203,148	223,111
Total revenue and income	203,148	223,111
Key management personal expenses	(235,409)	(357,357)
Non-cash key management personal expenses	(107,890)	(1,686,113)
Administrative expenses	(876,812)	(1,104,366)
Depreciation	(172,488)	(232,004)
Exploration & evaluation expenses	(1,216,509)	(1,429,531)
Net finance costs	(340,524)	(289,078)
Net loss attributable to members of the parent company	(2,746,484)	(4,875,338)
Other comprehensive income for the financial year	-	-
Net profit / (loss)	(2,746,484)	(4,875,338)

Source: KISL FY21 annual report

In relation to the financial performance we note the following:

Other income in FY21 includes R&D refund of A$155,195, ATO Cash Boost Stimulus of A$55,102, rental income of A$10,900, and expense recovery from transport of drill core of A$1,914. The R&D refund was primarily tax incentives on research and development, representing a refundable tax offset that is available on eligible expenditures incurred by the Company.
Exploration and evaluation expenses pertains to the exploration and development activity being undertaken by the Company at the Project, and includes the costs of undertaking the feasibility study, running geological tests and other drilling activity.
The key management personal expenses include employee benefits related liabilities including wages and salaries, calculated at undiscounted amounts based on remuneration wage and salary rates that the Company expects to pay as at the reporting date[23] . The non-cash key management personal expenses were the expenses from granting of options to the Company’s directors.

22 As indicated in the investor presentation dated 13 September 2021.

23 Disclosed in the Company’s FY21 annual report

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4.2.2 Financial position

We have set out below the historical financial position of KISL as at 30 June 2020 and 30 June 2021:

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Consolidated statements of financial position as at 30-Jun-20 30-Jun-21
A$ unless otherwise stated Audited Audited
Assets
Cash and cash equivalents 651,163 3,190,383
Prepayments and other receivables 171,538 290,425
Deposit 50,000 -
Total current assets 872,701 3,480,808
Deposits 24,600 24,600
Property, plant and equipment 3,586,647 3,689,790
Right-of-use assets - 135,801
Total non-current assets 3,611,247 3,850,191
Total assets 4,483,948 7,330,999
Liabilities
Trade and other payables 282,127 580,670
Lease liabilities - 82,921
Loan interest payable 106,410 -
Total current liabilities 388,537 663,591
Lease liabilities - 16,787
Loans 5,200,000 -
Total non-current liabilities 5,200,000 16,787
Total liabilities 5,588,537 680,378
Net assets / (liability) (1,104,589) 6,650,621
Source: KISL FY21 annual report
Note: Refer to the notice of meeting for the pro-forma balance sheet.
----- End of picture text -----

In relation to the financial position we note the following:

The increase in cash and cash equivalents in FY21 was due to an increase in the call deposits from A$638,423 to c. A$3.2 million, which in turn was a result of a number of existing options being exercised.
The payment of deposit during FY21 was related to the Company’s purchase of Old Grassy School House from an unrelated party (“Old Grassy School Purchase”), announced on 17 February 2020. The consideration for Old Grassy School Purchase was A$250,000, with deposit totalling A$50,000 being paid on 9 October 2020.
The elimination of loan balance was as a result of repayment during FY21. As announced on 16 March 2021, the Company raised c. A$5.6 million under share placement to repay the debt of A$4.7 million and the accrued interest.
4.3 Share capital structure

As at the date of this Report, KISL has the following securities on issue:

#6268943v1 27

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408,952,882 ordinary shares
10,375,000 vested options issued to key managerial personnel[24]
21,000,000 performance rights issued to key managerial personnel
4.3.1 Share price and market analysis

Our analysis of the daily movements in the Company’s share price and volume for the period from 1 January 2020 to 25 August 2021 is set out below:

Historical share trading prices and volume for KIS

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----- Start of picture text -----

0.40 60,000
8
10
0.35
7 9 50,000
0.30
11
40,000
0.25
6
0.20 5 30,000
4
0.15
20,000
1 3
0.10
2
10,000
0.05
0.00 0
Jan-20 Apr-20 Jul-20 Oct-20 Jan-21 Apr-21 Jul-21
Source: S&P Global; GTCF analysis
Share price (A$) Volume ('000)
----- End of picture text -----

The table below illustrates the key events from January 2020 to August 2021, which had material impact on the share price and volume movements.


	Event	Date	Comment
	1	Feb-20	The Company released its cash flow report for December 2019 quarter, highlighted the following: - Continued laboratory testing - The Company initiated discussions regarding possible support from Australian Federal Government as tungsten had been identified as a critical mineral by the Government. - Global tungsten price increased by 17% over the December quarter. - Favourable variation secured to the Company's offtake contract with Wolfram and additional offtake discussions with other potential partners were on going. The Company later on announced 1H20 results for the half-year ended 31 December 2019, emphasising the follows: - 18% increase in the mineral resource estimate with Bold Head addition - Life of mine at Dolphin likely to extend beyond the 8 years as originally disclosed in the Feasibility Study.

24 These options though vested have not yet been exercised as at the date of this Report.

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Event	Date	Comment
2	Apr-20	The Company released its cash flow report for March 2020 quarter, highlighting the following: - The laboratory testing approached to final stages - Wolfram offtake contract amendment executed - Global tungsten prices remained stable - COVID-19 restrictions had not inhibited continuing activities on Dolphin - An A$500,000 loan was being negotiated and entered into with Abex Resource Holdings Pty Ltd, a company related to substantial shareholder Mr Richard and Mrs Gwenda Chadwick.
3	Jun-20	KISL updated to market regarding the offtake contract it entered with KISL in April 2019. Based on the original agreement, the offtake between KISL and Wolfram was subject to KISL entering committed funding facilities by 30 June 2020. Due to delays experienced this year by KIS, of which COVID-19 was a main disruptive factor, the Company did not manage to conclude committed financing by 30 June 2020. However, Wolfram decided not to terminate the contract.
4	Sep-20	The Company announced a substantial multi-year offtake agreement with Kalon Resources, an industrial metal specialist. The offtake agreement was for 1,500 tonnes per annum of tungsten concentrate for an initial period of 3 years, representing approximately 50% of annual expected production capacity. Based on the tungsten price as at the date of the agreement, this was equivalent to c. A$69 million over the three years.
5	1 October 2020 to 31 December 2020	The Company announced the following during this period: - On 20 October 2020, KISL announced its cash flow and activities updates for June quarter, indicating that the Company was reviewing and revising the extended project life and feasibility study. - On 23 October 2020, KISL announced a capital raise of A$2.5 million, through a share placement, to advance its Dolphin Mine redevelopment. The share placement resulted in issue of c. 47 million ordinary shares at A$0.055 per share, with one free attaching listed option for every two new shares issued in the placement. The attaching listed option would provide the holder with the right to be issued one fully paid share in the Company or an exercise price of A$0.10 each, on any date from the grant date to 1 August 2021. - The Company's share price was also benefitted from a general market trend in early November driven by the positive vaccine news. - On 8 December 2020, KISL announced metallurgical testwork results, indicating significant improvements in recoveries and grade.
6	Jan-21	KISL announced updates and cash flow reports to the market for December quarter 2020, highlighting the following: - APT market prices improved by c. 12% - Water quality management Plan approved by Tasmania EPA. - Discussions with State and Federal authorities were continuing
7	Feb-21	KISL announced that it secured loan funding from Tasmania government to support the redevelopment of Dolphin Project, as well as to aid the Company's commercial funding negotiations currently being conducted with financial institutions. The funding package was for A$10 million over a 10 year term.
8	Mar-21	KISL raised A$5.6 million through a share placement plan. The Company applied the proceeds to pay off term debt of A$4.7 million plus accrued interest, which KISL had previously incurred in acquiring fixed property adjacent to the Dolphin mine site and working capital to advance the Project. The remaining A$0.5 million debt would be converted to equity following FIRB approval.
9	May-21	KISL announced updates in relation to the Dolphin Mine. Full scale multi gravity separator confirmed results for Dolphin project. Revised feasibility study will also be required for full scaleproduction.
10	Aug-21	98.5% of listed options were exercised at A$0.10. The exercise of the option injected c. A$5.5millioncapitalto the Company.

Source: ASX announcements

The monthly share price performance of KISL prior to the Proposed Transaction is summarised below:

#6268943v1 29

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King Island Scheelite Limited	Average High Low Close weekly volume $ $ $ 000' Share Price
Month ended Jul 2020 31/07/2020 Aug 2020 31/08/2020 Sep 2020 30/09/2020 Oct 2020 31/10/2020 Nov 2020 30/11/2020 Dec 2020 31/12/2020 Jan 2021 31/01/2021 Feb 2021 28/02/2021 Mar 2021 31/03/2021 Apr 2021 30/04/2021 May 2021 31/05/2021 Jun 2021 30/06/2021 Jul 2021 31/07/2021 Week ended 7 May 2021 14 May 2021 21 May 2021 28 May 2021 4 Jun 2021 11 Jun 2021 18 Jun 2021 25 Jun 2021 2 Jul 2021 9 Jul 2021 16 Jul 2021 23 Jul 2021 30 Jul 2021 6 Aug 2021 13 Aug 2021 20 Aug 2021	0.068 0.056 0.068 264 0.070 0.055 0.055 157 0.135 0.056 0.058 4,071 0.100 0.058 0.099 1,932 0.130 0.075 0.095 3,732 0.120 0.094 0.100 1,669 0.155 0.094 0.130 5,501 0.285 0.115 0.220 28,536 0.355 0.200 0.290 12,806 0.325 0.250 0.260 3,688 0.275 0.220 0.270 2,525 0.310 0.230 0.235 3,266 0.250 0.215 0.225 2,336 0.260 0.220 0.230 3,541 0.240 0.225 0.230 2,634 0.260 0.230 0.245 1,568 0.267 0.240 0.265 2,518 0.310 0.265 0.280 5,560 0.280 0.245 0.250 2,434 0.275 0.245 0.250 1,997 0.250 0.230 0.240 3,373 0.245 0.230 0.245 2,016 0.250 0.235 0.235 1,417 0.240 0.225 0.235 2,586 0.235 0.215 0.220 3,502 0.235 0.220 0.225 2,109 0.225 0.187 0.205 5,053 0.210 0.190 0.195 1,895 0.185 0.160 0.170 4,932

King Island Scheelite Limited

Average
High
Low
Close
weekly volume
$ $ $ 000'
Share Price

Month ended
Jul 2020
31/07/2020
Aug 2020
31/08/2020
Sep 2020
30/09/2020
Oct 2020
31/10/2020
Nov 2020
30/11/2020
Dec 2020
31/12/2020
Jan 2021
31/01/2021
Feb 2021
28/02/2021
Mar 2021
31/03/2021
Apr 2021
30/04/2021
May 2021
31/05/2021
Jun 2021
30/06/2021
Jul 2021
31/07/2021
Week ended
7 May 2021
14 May 2021
21 May 2021
28 May 2021
4 Jun 2021
11 Jun 2021
18 Jun 2021
25 Jun 2021
2 Jul 2021
9 Jul 2021
16 Jul 2021
23 Jul 2021
30 Jul 2021
6 Aug 2021
13 Aug 2021
20 Aug 2021

0.068
0.056
0.068
264
0.070
0.055
0.055
157
0.135
0.056
0.058
4,071
0.100
0.058
0.099
1,932
0.130
0.075
0.095
3,732
0.120
0.094
0.100
1,669
0.155
0.094
0.130
5,501
0.285
0.115
0.220
28,536
0.355
0.200
0.290
12,806
0.325
0.250
0.260
3,688
0.275
0.220
0.270
2,525
0.310
0.230
0.235
3,266
0.250
0.215
0.225
2,336
0.260
0.220
0.230
3,541
0.240
0.225
0.230
2,634
0.260
0.230
0.245
1,568
0.267
0.240
0.265
2,518
0.310
0.265
0.280
5,560
0.280
0.245
0.250
2,434
0.275
0.245
0.250
1,997
0.250
0.230
0.240
3,373
0.245
0.230
0.245
2,016
0.250
0.235
0.235
1,417
0.240
0.225
0.235
2,586
0.235
0.215
0.220
3,502
0.235
0.220
0.225
2,109
0.225
0.187
0.205
5,053
0.210
0.190
0.195
1,895
0.185
0.160
0.170
4,932

Source: S&P Global

4.3.2 Top shareholders

We have set out below the top 10 shareholders of KISL as at 14 September 2021:

#6268943v1 30

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Top 10 beneficial shareholders	Top 10 beneficial shareholders
Rank	Name and Address Line 1	No. of ordinaryshares	Interest(%)
1	MR RICHARD CHADWICK AND MRS GWENDA CHADWICK	75,456,132	18.5%
2	MR CHRISTOPHER ELLIS (DIRECTOR)	68,875,504	16.8%
3	D.A.CH.S. CAPITAL AG	24,214,718	5.9%
4	MR ANTHONY JAMES HAGGARTY	14,998,952	3.7%
5	MRS CATHERINE JEANNE MORRITT	11,802,299	2.9%
6	MR GIUSEPPE CORONICA & MRS YVONNE PRICE	8,270,000	2.0%
7	INVIA CUSTODIAN PTY LIMITED	7,208,011	1.8%
8	CITICORP NOMINEES PTY LIMITED	5,894,871	1.4%
9	MR JOHANN JACOBS (DIRECTOR)	5,866,102	1.4%
10	ELPHINSTONE HOLDINGS PTY LTD	5,852,273	1.4%
Top 10 shareholders total		228,438,862	55.9%
Remaining shareholders		180,480,506	44.1%
Total shares outstanding		408,919,368	100.0%

Source: KISL FY21 annual report

#6268943v1 31

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5 Valuation methodologies

5.1 Introduction

In assessing the Granting of the Security, Grant Thornton Corporate Finance has considered the concept of fair market value. Fair market value is commonly defined as:

“the price that would be negotiated in an open and unrestricted market between a knowledgeable, willing but not anxious buyer and a knowledgeable, willing but not anxious seller acting at arm’s length.”

Fair market value excludes any special value. Special value is the value that may accrue to a particular purchaser. In a competitive bidding situation, potential purchasers may be prepared to pay part, or all, of the special value that they expect to realise from the acquisition to the seller.

5.2 Valuation methodologies

RG 111 outlines the appropriate methodologies that a valuer should generally consider when valuing assets or securities for the purposes of, amongst other things, share buy-backs, selective capital reductions, schemes of arrangement, takeovers and prospectuses. These include:

Discounted cash flow and the estimated realisable value of any surplus assets (“DCF Method”).
Application of earnings multiples to the estimated future maintainable earnings or cash flows of the entity, added to the estimated realisable value of any surplus assets (“FME Method”).
Amount available for distribution to security holders on an orderly realisation of assets (“NAV Method”).
Quoted price for listed securities, when there is a liquid and active market (“Quoted Security Price Method”).
Any recent genuine offers received by the target for any business units or assets as a basis for valuation of those business units or assets.

Further details on these methodologies are set out in Appendix A to this report. Each of these methodologies is appropriate in certain circumstances.

RG111 does not prescribe any above methodologies as the method(s) that an expert should use in preparing their report. The decision as to which methodology to use lies with the expert based on the expert’s skill and judgement and after considering the unique circumstances of the entity or asset being valued. In general, an expert would have regard to valuation theory, the accepted and most common market practice in valuing the entity or asset in question and the availability of relevant information.

5.3 Selected valuation methods

RG 111 suggests that a transaction with a related party or substantial shareholder is ‘fair’ if the value of the financial benefit to be provided by the entity to the related party is equal to or less than the value of the consideration being provided to the entity. This comparison should be made assuming a knowledgeable

#6268943v1 32

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and willing, but not anxious, buyer and a knowledgeable and willing, but not anxious, seller acting at arm‘s length.

Accordingly, we have assessed the fairness of the Granting of the Security by comparing the proceeds from the sale of the assets of KISL to the value of the liability which would be owing to the Facility Lenders in the event of default.

The granting of the Security is ‘fair’ if the value of the Security provided to the Facility Lenders (i.e. the value of the proceeds from the sale of the assets of KISL) is equal to or less than the value of the liabilities to be settled in the event of drawdown.

#6268943v1 33

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6 Fairness of granting the Amended Security

If the Granting of the Security is approved, the Facility Lenders will be able to call upon the Security if KISL defaults on its debt repayment obligations.

Accordingly, in analysing whether or not the Granting of the Security over KISL’s assets to the Facility Lenders is fair to the Non-Associated Shareholders we have considered the following:

If the Facility Lenders call upon the Security, the disposal of the assets of KISL is required to be dealt with in a manner which attempts to realise market value as at the time of the sale having regard to the state of the assets at that time. The Facility Lenders will receive the following amounts under the following three alternative scenarios:
If the realised market value of KISL’s assets is less than the total amount owing to the Facility Lenders, then the Facility Lenders will receive the realised market value of the assets.
If the realised market value of KISL’s assets is the same as the total amount owing to Facility Lenders, than the Facility Lenders will receive the realised market value of the assets.
If the realised market value of KISL’s assets is more than the total amount owing to the Facility Lenders, then the Facility Lenders will only receive the amount owing to them.
6.1 Conclusion – granting of the Security

Based on the above considerations, we have assessed the value of the Security provided to be less than or equal to the value of the liabilities to be settled.

#6268943v1 34

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7 Sources of information, disclaimer and consents

7.1 Sources of information

In preparing this report Grant Thornton Corporate Finance has used various sources of information, including:

KISL FY20 and FY21 annual reports as well as investor presentations.
Draft Notice of Meeting and Explanatory Memorandum in relation to the Proposed Transaction.
Press releases and ASX announcements by KISL in the public domain.
S&P Global.
Various industry commentary articles from public domain and brokers reports.
Other publicly available information.

In preparing this report, Grant Thornton Corporate Finance has also held discussions with, and obtained information from, Management of KISL and its advisers.

7.2 Limitations and reliance on information

This report and opinion is based on economic, market and other conditions prevailing at the date of this report. Such conditions can change significantly over relatively short periods of time.

Grant Thornton Corporate Finance has prepared this report on the basis of financial and other information provided by the Company, and publicly available information. Grant Thornton Corporate Finance has considered and relied upon this information. Grant Thornton Corporate Finance has no reason to believe that any information supplied was false or that any material information has been withheld. Grant Thornton Corporate Finance has evaluated the information provided by the Company through inquiry, analysis and review, and nothing has come to our attention to indicate the information provided was materially misstated or would not afford reasonable grounds upon which to base our report. Nothing in this report should be taken to imply that Grant Thornton Corporate Finance has audited any information supplied to us, or has in any way carried out an audit on the books of accounts or other records of the Company.

This report has been prepared to assist the Directors in advising the KISL Shareholders in relation to the Granting of the Security. This report should not be used for any other purpose. In particular, it is not intended that this report should be used for any purpose other than as an expression of Grant Thornton Corporate Finance’s opinion as to whether the Granting of the Security is fair and reasonable to the KISL Shareholders.

KISL has indemnified Grant Thornton Corporate Finance, its affiliated companies and their respective officers and employees, who may be involved in or in any way associated with the performance of services contemplated by our engagement letter, against any and all losses, claims, damages and liabilities arising out of or related to the performance of those services whether by reason of their negligence or otherwise, excepting gross negligence and wilful misconduct, and which arise from reliance on information provided by the Company, which the Company knew or should have known to be false and/or reliance on information, which was material information the Company had in its possession and which the Company knew or should have known to be material and which did not provide to Grant Thornton Corporate

#6268943v1 35

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Finance. The Company will reimburse any indemnified party for all expenses (including without limitation, legal expenses) on a full indemnity basis as they are incurred

7.3 Consents

Grant Thornton Corporate Finance consents to the issuing of this report in the form and context in which it is included in the Explanatory Memorandum to be sent to the KISL Shareholders. Neither the whole nor part of this report nor any reference thereto may be included in or with or attached to any other document, resolution, letter or statement without the prior written consent of Grant Thornton Corporate Finance as to the form and content in which it appears.

#6268943v1 36

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Appendix A – Valuation methodologies

Capitalisation of future maintainable earnings

The capitalisation of future maintainable earnings multiplied by appropriate earnings multiple is a suitable valuation method for businesses that are expected to trade profitably into the foreseeable future. Maintainable earnings are the assessed sustainable profits that can be derived by a company’s business and excludes any abnormal or “one off” profits or losses.

This approach involves a review of the multiples at which shares in listed companies in the same industry sector trade on the share market. These multiples give an indication of the price payable by portfolio investors for the acquisition of a parcel shareholding in the company.

Discounted future cash flows

An analysis of the net present value of forecast cash flows or DCF is a valuation technique based on the premise that the value of the business is the present value of its future cash flows. This technique is particularly suited to a business with a finite life. In applying this method, the expected level of future cash flows are discounted by an appropriate discount rate based on the weighted average cost of capital. The cost of equity capital, being a component of the WACC, is estimated using the Capital Asset Pricing Model.

Predicting future cash flows is a complex exercise requiring assumptions as to the future direction of the company, growth rates, operating and capital expenditure and numerous other factors. An application of this method generally requires cash flow forecasts for a minimum of five years.

Orderly realisation of assets

The amount that would be distributed to shareholders on an orderly realisation of assets is based on the assumption that a company is liquidated with the funds realised from the sale of its assets, after payment of all liabilities, including realisation costs and taxation charges that arise, being distributed to shareholders.

Market value of quoted securities

Market value is the price per issued share as quoted on the ASX or other recognised securities exchange. The share market price would, prima facie, constitute the market value of the shares of a publicly traded company, although such market price usually reflects the price paid for a minority holding or small parcel of shares, and does not reflect the market value offering control to the acquirer.

Comparable market transactions

The comparable transactions method is the value of similar assets established through comparative transactions to which is added the realisable value of surplus assets. The comparable transactions method uses similar or comparative transactions to establish a value for the current transaction.

Comparable transactions methodology involves applying multiples extracted from the market transaction price of similar assets to the equivalent assets and earnings of the company. The risk attached to this valuation methodology is that in many cases, the relevant transactions contain features that are unique to that transaction and it is often difficult to establish sufficient detail of all the material factors that contributed to the transaction price.

#6268943v1 37

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Appendix B – Glossary

$ or A$ Australian Dollar APES Accounting Professional and Ethical Standards APES110 Code of ethics for Professional Accounting APES225 Valuation Services ASIC Australian Securities Investment Commission ASX Australian Stock Exchange Corporations Act Corporations Act 2001 FY Calendar year ended 30 June DCF Discounted Cash Flow Directors Directors of KIS FSG Financial Services Guide GTCF, Grant Thornton, or Grant Thornton Corporate Finance Grant Thornton Corporate Finance Pty Ltd Management Key management personnel in KIS Non-Associated Shareholders KISL Shareholders not associated with Management NGM New Generation Minerals Limited Proposed Re-domiciliation Shifting of the domicile of KISL from Australia to UK RG Regulatory Guide RG111 ASIC Regulatory Guide 111 “Contents of expert reports” RG112 ASIC Regulatory Guide 112 “Independence of Experts” RG74 ASIC Regulatory Guide 74 “Acquisitions agreed to by shareholders” KISL or the Company King Island Scheelite Limited

#6268943v1 38

Need assistance?

Phone:

ABN 40 004 681 734

1300 850 505 (within Australia) +61 3 9415 4000 (outside Australia)

Online:

www.investorcentre.com/contact

KIS

MR SAM SAMPLE FLAT 123 123 SAMPLE STREET THE SAMPLE HILL SAMPLE ESTATE SAMPLEVILLE VIC 3030

King Island Scheelite Limited Annual General Meeting

The King Island Scheelite Limited Annual General Meeting will be held on Monday, 8 November 2021 at 11.00AM (AEDT). You are encouraged to participate in the meeting using the following options:

==> picture [47 x 47] intentionally omitted <==

MAKE YOUR VOTE COUNT

To lodge a proxy, access the Notice of Meeting and other meeting documentation visit www.investorvote.com.au and use the below information:

==> picture [38 x 38] intentionally omitted <==

Control Number: 999999 SRN/HIN: I9999999999 PIN: 99999

For Intermediary Online subscribers (custodians) go to www.intermediaryonline.com

For your proxy appointment to be effective it must be received by 11.00AM (AEDT) Saturday, 6 November 2021.

==> picture [48 x 39] intentionally omitted <==

ATTENDING THE MEETING VIRTUALLY

To view the live webcast and ask questions on the day of the meeting you will need to register in advance of the meeting by contacting the Company by email on [email protected]. Please register to attend the meeting via zoom at least 1 day in advance of the meeting to allow sufficient time for the Company to respond to your registration request.

To vote online during the meeting you will need to visit web.lumiagm.com/329058284

For instructions refer to the online user guide www.computershare.com.au/onlinevotingguide

Samples/000001/000001

Need assistance?

Phone:

ABN 40 004 681 734

1300 850 505 (within Australia) +61 3 9415 4000 (outside Australia)

Online:

www.investorcentre.com/contact

KIS

MR SAM SAMPLE FLAT 123 123 SAMPLE STREET THE SAMPLE HILL SAMPLE ESTATE SAMPLEVILLE VIC 3030

YOUR VOTE IS IMPORTANT

For your proxy appointment to be effective it must be received by 11.00AM (AEDT) Saturday, 6 November 2021.

Proxy Form

How to Vote on Items of Business

Lodge your Proxy Form:

XX

All your securities will be voted in accordance with your directions.

Online:

APPOINTMENT OF PROXY

Voting 100% of your holding: Direct your proxy how to vote by marking one of the boxes opposite each item of business. If you do not mark a box your proxy may vote or abstain as they choose (to the extent permitted by law). If you mark more than one box on an item your vote will be invalid on that item.

Voting a portion of your holding: Indicate a portion of your voting rights by inserting the percentage or number of securities you wish to vote in the For, Against or Abstain box or boxes. The sum of the votes cast must not exceed your voting entitlement or 100%.

Appointing a second proxy: You are entitled to appoint up to two proxies to attend the meeting and vote on a poll. If you appoint two proxies you must specify the percentage of votes or number of securities for each proxy, otherwise each proxy may exercise half of the votes. When appointing a second proxy write both names and the percentage of votes or number of securities for each in Step 1 overleaf.

Lodge your vote online at www.investorvote.com.au using your secure access information or use your mobile device to scan the personalised QR code.

Your secure access information is

==> picture [47 x 49] intentionally omitted <==

Control Number: 999999

SRN/HIN: I9999999999 PIN: 99999

For Intermediary Online subscribers (custodians) go to www.intermediaryonline.com

A proxy need not be a securityholder of the Company.

SIGNING INSTRUCTIONS FOR POSTAL FORMS

Individual: Where the holding is in one name, the securityholder must sign.

Joint Holding: Where the holding is in more than one name, all of the securityholders should sign.

Power of Attorney: If you have not already lodged the Power of Attorney with the registry, please attach a certified photocopy of the Power of Attorney to this form when you return it.

Companies: Where the company has a Sole Director who is also the Sole Company Secretary, this form must be signed by that person. If the company (pursuant to section 204A of the Corporations Act 2001) does not have a Company Secretary, a Sole Director can also sign alone. Otherwise this form must be signed by a Director jointly with either another Director or a Company Secretary. Please sign in the appropriate place to indicate the office held. Delete titles as applicable.

By Mail:

Computershare Investor Services Pty Limited GPO Box 242 Melbourne VIC 3001 Australia

By Fax:

1800 783 447 within Australia or +61 3 9473 2555 outside Australia

PARTICIPATING IN THE MEETING

Corporate Representative

If a representative of a corporate securityholder or proxy is to participate in the meeting you will need to provide the appropriate “Appointment of Corporate Representative”. A form may be obtained from Computershare or online at www.investorcentre.com/au and select "Printable Forms".

PLEASE NOTE: For security reasons it is important that you keep your SRN/HIN confidential.

Samples/000001/000002/i12

MR SAM SAMPLE FLAT 123 123 SAMPLE STREET THE SAMPLE HILL SAMPLE ESTATE SAMPLEVILLE VIC 3030

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Change of address. If incorrect, mark this box and make the correction in the space to the left.  Securityholders sponsored by a broker (reference number commences with ‘ X ’) should advise I 9999999999 I ND your broker of any changes.

I ND

Proxy Form

Appoint a Proxy to Vote on Your Behalf

Please mark to indicate your directions

XX

I/We being a member/s of King Island Scheelite Limited hereby appoint

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the Chairman of the Meeting

OR

 PLEASE NOTE: Leave this box blank if you have selected the Chairman of the Meeting. Do not insert your own name(s).

or failing the individual or body corporate named, or if no individual or body corporate is named, the Chairman of the Meeting, as my/our proxy to act generally at the meeting on my/our behalf and to vote in accordance with the following directions (or if no directions have been given, and to the extent permitted by law, as the proxy sees fit) at the Annual General Meeting of King Island Scheelite Limited to be held virtually on Monday, 8 November 2021 at 11.00AM (AEDT) and at any adjournment or postponement of that meeting.

Chairman authorised to exercise undirected proxies on remuneration related resolutions: Where I/we have appointed the Chairman of the Meeting as my/our proxy (or the Chairman becomes my/our proxy by default), I/we expressly authorise the Chairman to exercise my/our proxy on Resolution 1 (except where I/we have indicated a different voting intention in step 2) even though Resolution 1 is connected directly or indirectly with the remuneration of a member of key management personnel, which includes the Chairman.

Important Note: If the Chairman of the Meeting is (or becomes) your proxy you can direct the Chairman to vote for or against or abstain from voting on Resolution1 by marking the appropriate box in step 2.

Items of Business 

STEP 2 Items of Business PLEASE NOTE:If you mark theAbstainbox for an item, you are directing your proxy not to vote on your behalf on a show of hands or a poll and your votes will not be counted in computing the required majority.  To adopt the Remuneration Report To re-elect Johann Jacobs as a director of the Company To approve 10% Placement Facility (special resolution) Approval of issuance and allotment of Shares to Elphinstone Holdings Pty Ltd Approval of issuance and allotment of Shares to D.A.CH.S. Capital AG Approval of issuance and allotment of Shares to Abex Limited Approval of issuance of options to PURE Asset Management Pty Ltd Approval of issuance of options to Elphinstone Holdings Pty Ltd Approval of issuance of options to D.A.CH.S. Capital AG Approval of issuance of Shares to related party: Chris Ellis (via his nominated entity) Approval of issuance of Options to related party: Chris Ellis (via his nominated entity) Approval of granting of security to certain Facility Lenders Approval of issue and allotment of Shares to professional and sophisticated investors under a Share placement Approval of issuance of Shares to related party: Johann Jacobs (via his nominated entity) Approval of issuance of shortfall Shares under SPP to a related party: Chris Ellis (via his nominated entity) Approval of issuance of shortfall Shares under SPP to Elphinstone Holdings Pty Ltd 1 2 3 4(a) 4(b) 4(c) 5(a) 5(b) 5(c) 6(a) 6(b) 7 8 9 10 11	STEP 2 Items of Business PLEASE NOTE:If you mark theAbstainbox for an item, you are directing your proxy not to vote on your behalf on a show of hands or a poll and your votes will not be counted in computing the required majority.  To adopt the Remuneration Report To re-elect Johann Jacobs as a director of the Company To approve 10% Placement Facility (special resolution) Approval of issuance and allotment of Shares to Elphinstone Holdings Pty Ltd Approval of issuance and allotment of Shares to D.A.CH.S. Capital AG Approval of issuance and allotment of Shares to Abex Limited Approval of issuance of options to PURE Asset Management Pty Ltd Approval of issuance of options to Elphinstone Holdings Pty Ltd Approval of issuance of options to D.A.CH.S. Capital AG Approval of issuance of Shares to related party: Chris Ellis (via his nominated entity) Approval of issuance of Options to related party: Chris Ellis (via his nominated entity) Approval of granting of security to certain Facility Lenders Approval of issue and allotment of Shares to professional and sophisticated investors under a Share placement Approval of issuance of Shares to related party: Johann Jacobs (via his nominated entity) Approval of issuance of shortfall Shares under SPP to a related party: Chris Ellis (via his nominated entity) Approval of issuance of shortfall Shares under SPP to Elphinstone Holdings Pty Ltd 1 2 3 4(a) 4(b) 4(c) 5(a) 5(b) 5(c) 6(a) 6(b) 7 8 9 10 11	STEP 2 Items of Business PLEASE NOTE:If you mark theAbstainbox for an item, you are directing your proxy not to vote on your behalf on a show of hands or a poll and your votes will not be counted in computing the required majority.  To adopt the Remuneration Report To re-elect Johann Jacobs as a director of the Company To approve 10% Placement Facility (special resolution) Approval of issuance and allotment of Shares to Elphinstone Holdings Pty Ltd Approval of issuance and allotment of Shares to D.A.CH.S. Capital AG Approval of issuance and allotment of Shares to Abex Limited Approval of issuance of options to PURE Asset Management Pty Ltd Approval of issuance of options to Elphinstone Holdings Pty Ltd Approval of issuance of options to D.A.CH.S. Capital AG Approval of issuance of Shares to related party: Chris Ellis (via his nominated entity) Approval of issuance of Options to related party: Chris Ellis (via his nominated entity) Approval of granting of security to certain Facility Lenders Approval of issue and allotment of Shares to professional and sophisticated investors under a Share placement Approval of issuance of Shares to related party: Johann Jacobs (via his nominated entity) Approval of issuance of shortfall Shares under SPP to a related party: Chris Ellis (via his nominated entity) Approval of issuance of shortfall Shares under SPP to Elphinstone Holdings Pty Ltd 1 2 3 4(a) 4(b) 4(c) 5(a) 5(b) 5(c) 6(a) 6(b) 7 8 9 10 11
To adopt the Remuneration Report 1		Approval of issuance of Shares to related party: Chris Ellis (via his nominated entity) 6(a)
To re-elect Johann Jacobs as a director of the Company 2
		Approval of issuance of Options to related party: Chris Ellis (via his nominated entity) 6(b)
To approve 10% Placement Facility (special resolution) 3
		Approval of granting of security to certain Facility Lenders 7
Approval of issuance and allotment of Shares to Elphinstone Holdings Pty Ltd 4(a)
		Approval of issue and allotment of Shares to professional and sophisticated investors under a Share placement 8
Approval of issuance and allotment of Shares to D.A.CH.S. Capital AG 4(b)
Approval of issuance and allotment of Shares to Abex Limited 4(c)		Approval of issuance of Shares to related party: Johann Jacobs (via his nominated entity) 9
Approval of issuance of options to PURE Asset Management Pty Ltd 5(a)
		Approval of issuance of shortfall Shares under SPP to a related party: Chris Ellis (via his nominated entity) 10
Approval of issuance of options to Elphinstone Holdings Pty Ltd 5(b)
		Approval of issuance of shortfall Shares under SPP to Elphinstone Holdings Pty Ltd 11
Approval of issuance of options to D.A.CH.S. Capital AG 5(c)
Approval of issuance of options to Abex Limited 5(d)		Approval of change of Company name 12

The Chairman of the Meeting intends to vote undirected proxies in favour of each item of business. In exceptional circumstances, the Chairman of the Meeting may change his/her voting intention on any resolution, in which case an ASX announcement will be made.

SIGN Signature of Securityholder(s) This section must be completed.

Individual or Securityholder 1 Securityholder 2 Securityholder 3 Sole Director and Sole Company Secretary Director Director/Company Secretary Contact Contact Daytime Name Telephone Date / /

K I S

9 9 9 9 9 9 A

ABN 40 004 681 734

KISRM

MR RETURN SAMPLE 123 SAMPLE STREET SAMPLE SURBURB SAMPLETOWN VIC 3030

Dear Securityholder,

We have been trying to contact you in connection with your securityholding in King Island Scheelite Limited. Unfortunately, our correspondence has been returned to us marked “Unknown at the current address”. For security reasons we have flagged this against your securityholding which will exclude you from future mailings, other than notices of meeting.

Please note if you have previously elected to receive a hard copy Annual Report (including the financial report, directors’ report and auditor’s report) the dispatch of that report to you has been suspended but will be resumed on receipt of instructions from you to do so.

We value you as a securityholder and request that you supply your current address so that we can keep you informed about our Company. Where the correspondence has been returned to us in error we request that you advise us of this so that we may correct our records.

You are requested to include the following;

Securityholder Reference Number (SRN);

ASX trading code;

Name of company in which security is held;

Old address; and

New address.

Please ensure that the notification is signed by all holders and forwarded to our Share Registry at:

Computershare Investor Services Pty Limited GPO Box 2975

Melbourne Victoria 3001 Australia

Note: If your holding is sponsored within the CHESS environment you need to advise your sponsoring participant (in most cases this would be your broker) of your change of address so that your records with CHESS are also updated.

Yours sincerely

King Island Scheelite Limited

Samples/000002/000005/i12

AI assistant

GROUP 6 METALS LIMITED — AGM Information 2021

64959_rns_2021-10-07_803c53c0-0b3a-4cfb-bca4-9b17668f1735.pdf

NOTICE OF ANNUAL GENERAL MEETING

Refer to the details below.

1. VOTING VIRTUALLY ON THE DAY OF THE AGM

2. VOTING BY PROXY

Online

By post

Facsimile

Custodians

3. ITEMS OF GENERAL BUSINESS

3.1. Financial Reports

3.2. Resolution 1: Adoption of the Remuneration Report

3.3. Resolution 2: Re-Election of Director – Mr Johann Jacobs

4. ITEMS OF SPECIAL BUSINESS

4.1. Resolution 3: Approval of 10% Placement Facility

4.2. Resolutions 4(a), (b) and (c): Approval of issuance and allotment of Shares to certain unrelated Facility Lenders

4.3. Resolutions 5(a), (b), (c) and (d): Approval of issuance of options to certain Facility Lenders

4.4. Resolutions 6(a) and (b): Approval of issuance of Shares and Options to related party: Chris Ellis (via his nominated entity)

4.5. Resolution 7: Approval of granting of security to certain Facility Lenders

4.6. Resolution 8: Ratification of issue of Shares to professional and sophisticated investors under a Share placement

4.7. Resolution 9: Approval of issuance of Shares to related party: Johann Jacobs (via his nominated entity)

4.8. Resolution 10: Approval of issuance of shortfall Shares under SPP to a related party: Chris Ellis (via his nominated entity)

4.9. Resolution 11: Approval of issuance of shortfall Shares under SPP to Elphinstone Holdings Pty Ltd

4.10. Resolution 12: Approval of change of Company name

5. VOTING EXCLUSION STATEMENTS

6. VOTING RIGHTS AND PROXIES

7. VENUE AND VOTING INFORMATION

7.1. Your Vote Is Important

7.2. Voting at the Meeting

7.3. Voting By Proxy

Online

By post

Facsimile

Custodians

7.4. Power Of Attorney

7.5. Corporate Representatives

7.6. How The Chairman of the Meeting Will Vote Undirected Proxies

7.7. Date For Determining Holders of Shares

8. EXPLANATORY NOTES

8.1. Financial Reports

8.2. Resolution 1: Adoption of the Remuneration Report

B ackground

Recommendation

8.3. Resolution 2: Re-Election Of Director – Mr Johann Jacobs

Background

Johann Jacobs (Executive Chairman)

B.Acc, MBL

Recommendation

8.4. Resolution 3: Approval Of 10% Placement Facility

Background

Description of ASX Listing Rule 7.1A

Number of Equity Securities on Issue

Cash Only

Minimum Issue Price

Specific Information required by ASX Listing Rule 7.3A

( 10% Placement Period).

Table 1

Recommendation

8.5. Resolutions 4(a) to 8

Background

8.6. Resolutions 4(a), (b) and (c): Approval of issuance and allotment of Shares to certain unrelated Facility Lenders

Background

Directors’ recommendation

8.7. Resolutions 5(a), (b), (c) and (d): Approval of issuance of options to certain Facility Lenders Background

Directors’ recommendation

Background

Resolution 6(a)

Directors’ recommendation

Resolution 6(b)

Directors’ recommendation

8.9. Resolution 7: Approval of granting of security to certain Facility Lenders

Background

Directors’ recommendation

8.10. Resolution 8: Ratification of issue of Shares to professional and sophisticated investors under a Share placement

Background

Directors’ recommendation

8.11. Resolution 9: Approval of issuance of Shares to related party: Johann Jacobs (via his nominated entity)

Background

GROUP 6 METALS LIMITED AGM Information 2021