HAMMER METALS LIMITED — Capital/Financing Update 2016

Jun 14, 2016

ASX Announcement (ASX: HMX)

15 June 2016

ALLOTMENT AND ISSUE OF SECURITIES

Further to the announcement released 23[rd] May 2016 , Hammer Metals Limited (Hammer or the Company) (ASX: HMX) wishes to confirm the allotment and issue of 18,923,075 ordinary shares to sophisticated investors at $0.065 to raise $1,230,000 (before costs).

The placement was made pursuant to the Company’s placement capacity under listing rule 7.1 and 7.1A as follows:

• 5,521,886 ordinary shares pursuant to listing rule 7.1; and

• 13,401,189 ordinary shares pursuant to listing rule 7.1A

In addition, Hammer has also issued 9,000,000 unlisted options with an exercise price of $0.06 expiring 30 June 2020. The options have been issued to Directors following the approval of members at the General Meeting held on 10[th] June 2016.

7.1A DISCLOSURE

The following 7.1A disclosure is in respect of 13,401,189 ordinary fully paid shares, issued within the Company’s 7.1A placement capacity pursuant to the share placement announced to the ASX on 23[rd] May 2016.

The Company provides the following information in accordance with Listing Rule 3.10.5A:

a) Details of the dilution to the existing holders of ordinary securities caused by the issue.

Number of shares held by existing shareholders before the Placement	134,511,886
Number of Shares on issue after the Placement (Issued pursuant to LR7.1A)	153,434,961
% dilutionary effect of Placement on existing shareholders before the Placement	12.33%

Further details of the approximate percentage of the issued capital post the 7.1A placement held by the pre-placement security holders and new security holders is as follows:

Pre-placement security holders who did not participate in the placement	98.09%
Pre-placement security holders who did participate in the placement	1.91%
Participants in the placement who were not previously security holders	1.48%

1

• b) Where the equity securities are issued for cash consideration, a statement of the reasons why the eligible entity issued the equity securities as a placement under rule 7.1A and not as (or in addition to) a pro rata issue or other type of issue in which existing ordinary shareholders would have been eligible to participate.

It was the Company’s view that a pro rata issue would not deliver the necessary capital in the required timeframe and in addition it was considered that the level of support likely to be received from existing shareholders would not be sufficient.

• c) Details of any underwriting agreement, including any fees payable to the underwriter.

No underwriting arrangements or underwriting fees are payable.

• d) Any other fees or costs incurred in connection with the issue.

Reimbursable expenses and fees payable to non-related parties in respect of the arrangement of the share placement – approximated 6% on gross placement funds where applicable.

An Appendix 3B and section 708A notice are attached for immediate release.

-ENDS-

For further information, please contact:

Alex Hewlett | Executive Director

For more information about Hammer Metals and its projects please visit our website www.hammermetals.com.au

Hammer Metals Limited (ASX:HMX), is an advanced exploration company with a major land position (2600km[2] ) in the Mount Isa Mineral Province in NW Queensland. The tenement package is sandwiched between several large resource houses including Glencore; BHP and Chinova. Hammer is focused on developing base and precious metal resources in the district through targeted and carefully planned exploration and project acquisition activities.

2

Appendix 3B New issue announcement

Rule 2.7, 3.10.3, 3.10.4, 3.10.5

Appendix 3B

New issue announcement, application for quotation of additional securities and agreement

Information or documents not available now must be given to ASX as soon as available. Information and documents given to ASX become ASX’s property and may be made public.

Introduced 01/07/96 Origin: Appendix 5 Amended 01/07/98, 01/09/99, 01/07/00, 30/09/01, 11/03/02, 01/01/03, 24/10/05, 01/08/12, 04/03/13

Name of entity

Hammer Metals Limited

ABN

87 095 092 158

We (the entity) give ASX the following information.

Part 1 - All issues

You must complete the relevant sections (attach sheets if there is not enough space).

1 +Class of +securities issued or to Fully Paid Ordinary Shares be issued Unlisted options with exercise price of $0.06 expiring 30 June 2020. 2 Number of[+] securities issued or 18,923,075 Fully Paid Ordinary Shares to be issued (if known) or 9,000,000 Unlisted options maximum number which may be issued 3 Principal terms of the +securities (e.g. if options, Unlisted options are issued with an exercise exercise price and expiry date; if price of $0.06 and expiry date of 30 June partly paid +securities, the 2020. amount outstanding and due dates for payment; if +convertible securities, the conversion price and dates for conversion)

• See chapter 19 for defined terms.

Appendix 3B Page 1

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Appendix 3B New issue announcement

4 Do the[+] securities rank equally Ordinary shares rank equally with the existing in all respects from the[+] issue fully paid ordinary shares of the Company date with an existing[+] class of from the date of allotment. quoted[+] securities? Unlisted Options do not rank equally. When If the additional[+] securities do options are exercised the fully paid ordinary not rank equally, please state: shares issued will then rank equally with the • the date from which they do existing fully paid ordinary shares of the • the extent to which they Company from the date of allotment. participate for the next dividend, (in the case of a trust, distribution) or interest payment • the extent to which they do not rank equally, other than in relation to the next dividend, distribution or interest payment 5 Issue price or consideration Ordinary shares issued at 6.5 cents per share Unlisted options issued for no consideration 6 Purpose of the issue Shares issued pursuant to terms of a placement (If issued as consideration for to raise funds for exploration and working the acquisition of assets, clearly capital. identify those assets) Options issued to Directors in accordance with approval by members at General Meeting on 10 June 2016, granted as incentive to Directors. 6a Is the entity an[+] eligible entity Yes that has obtained security holder approval under rule 7.1A? If Yes, complete sections 6b – 6h in relation to the[+] securities the subject of this Appendix 3B , and comply with section 6i 6b The date the security holder 20 November 2015 resolution under rule 7.1A was passed 6c Number of[+] securities issued 5,521,886 fully paid ordinary shares without security holder approval under rule 7.1

• See chapter 19 for defined terms.

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Appendix 3B New issue announcement

6d Number of+securities issued with security holder approval under rule 7.1A 6e Number of+securities issued with security holder approval under rule 7.3, or another specific security holder approval (specify date of meeting) 6f Number of+securities issued under an exception in rule 7.2 6g If+securities issued under rule 7.1A, was issue price at least 75% of 15 day VWAP as calculated under rule 7.1A.3? Include the +issue date and both values. Include the source of the VWAP calculation. 6h If+securities were issued under rule 7.1A for non-cash consideration, state date on which valuation of consideration was released to ASX Market Announcements 6i Calculate the entity’s remaining issue capacity under rule 7.1 and rule 7.1A – complete Annexure 1 and release to ASX Market Announcements 7 +Issue dates Note: The issue date may be prescribed by ASX (refer to the definition of issue date in rule 19.12). For example, the issue date for a pro rata entitlement issue must comply with the applicable timetable in Appendix 7A. Cross reference: item 33 of Appendix 3B. 8 Number and +class of all +securities quoted on ASX (_including_the +securities in section 2 if applicable)	13,401,189 fully paid ordinary shares	13,401,189 fully paid ordinary shares
	None
	None
	The placement offer price was 6.5 cents and is 81.90% of the 15 day VWAP from the issue date. The VWAP calculation was provided by Orient Capital Pty Ltd
	N/A
	Rule 7.1 14,079,897 Rule 7.1A Nil Total: 14,079897
	14 June 2016
	Number	+Class
	153,434,961	Fully Paid Ordinary Shares

• See chapter 19 for defined terms.

Appendix 3B Page 3

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Appendix 3B New issue announcement

9 Number and +class of all +securities not quoted on ASX (_including_the +securities in section 2 if applicable) 10 Dividend policy (in the case of a trust, distribution policy) on the increased capital (interests)	Number	+Class
	14,300,000 1.000.000 1,000,000 300,000 7,100,000 3,811,953 8,338,334 500,000 1,000,000 9,000,000	$0.20 option exp 30/06/2017 $0.20 option exp 26/05/2017 $0.20 option exp 11/09/2017 $0.30 option exp 11/09/2016 $0.135 option exp 30/11/2017 $0.15 option exp 6/2/2018 $0.10 option exp 30/7/2017 $0.10 option exp 6/8/2017 $0.10 option exp 30/11/2017 $0.06 option exp 30/06/2020
	N/A

Part 2 - Pro rata issue

11 Is security holder approval N/A required? 12 Is the issue renounceable or nonN/A renounceable? 13 Ratio in which the[+] securities N/A will be offered 14 +Class of +securities to which the N/A offer relates 15 +Record date to determine N/A entitlements 16 Will holdings on different N/A registers (or subregisters) be aggregated for calculating entitlements? 17 Policy for deciding entitlements N/A in relation to fractions 18 Names of countries in which the N/A entity has security holders who will not be sent new offer documents Note: Security holders must be told how their entitlements are to be dealt with. Cross reference: rule 7.7.

• See chapter 19 for defined terms.

Appendix 3B Page 4

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Appendix 3B New issue announcement

19 Closing date for receipt of acceptances or renunciations 20 Names of any underwriters 21 Amount of any underwriting fee or commission 22 Names of any brokers to the issue 23 Fee or commission payable to the broker to the issue 24 Amount of any handling fee payable to brokers who lodge acceptances or renunciations on behalf of security holders 25 If the issue is contingent on security holders’ approval, the date of the meeting 26 Date entitlement and acceptance form and offer documents will be sent to persons entitled 27 If the entity has issued options, and the terms entitle option holders to participate on exercise, the date on which notices will be sent to option holders 28 Date rights trading will begin (if applicable) 29 Date rights trading will end (if applicable) 30 How do security holders sell their entitlements_in full_through a broker? 31 How do security holders sell_part_ of their entitlements through a broker and accept for the balance?	N/A
	N/A
	N/A
	N/A
	N/A
	N/A
	N/A
	N/A
	N/A
	N/A
	N/A
	N/A
	N/A

• See chapter 19 for defined terms.

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Appendix 3B New issue announcement

• 32 How do security holders dispose of their entitlements (except by sale through a broker)?

N/A

33 +Issue date

N/A

Part 3 - Quotation of securities

You need only complete this section if you are applying for quotation of securities

34 Type of[+] securities ( tick one ) (a) +Securities described in Part 1

(b)[All other ][+][securities ]

Example: restricted securities at the end of the escrowed period, partly paid securities that become fully paid, employee incentive share securities when restriction ends, securities issued on expiry or conversion of convertible securities

Entities that have ticked box 34(a)

Additional securities forming a new class of securities

Tick to indicate you are providing the information or documents

35 If the[+] securities are[+] equity securities, the names of the 20 largest holders of the additional[+] securities, and the number and percentage of additional[+] securities held by those holders

36 If the[+] securities are[+] equity securities, a distribution schedule of the additional +securities setting out the number of holders in the categories

1 - 1,000

1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 and over

37 A copy of any trust deed for the additional[+] securities

• See chapter 19 for defined terms.

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Appendix 3B New issue announcement

Entities that have ticked box 34(b)

38 Number of[+] securities for which +quotation is sought 39 +Class of +securities for which quotation is sought 40 Do the[+] securities rank equally in all respects from the[+] issue date with an existing[+] class of quoted +securities?

• If the additional[+] securities do not rank equally, please state: • the date from which they do • the extent to which they participate for the next dividend, (in the case of a trust, distribution) or interest payment

• • the extent to which they do not rank equally, other than in relation to the next dividend, distribution or interest payment

• 41 Reason for request for quotation now Example: In the case of restricted securities, end of restriction period (if issued upon conversion of another[+] security, clearly identify that other[+] security)

Number +Class 42 Number and +class of all +securities quoted on ASX ( including the[+] securities in clause 38)

• See chapter 19 for defined terms.

Appendix 3B Page 7

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Appendix 3B New issue announcement

Quotation agreement

• 1 +Quotation of our additional +securities is in ASX’s absolute discretion. ASX may quote the[+] securities on any conditions it decides.

• 2 We warrant the following to ASX.

• The issue of the[+] securities to be quoted complies with the law and is not for an illegal purpose.

• There is no reason why those[+] securities should not be granted +quotation.

• An offer of the[+] securities for sale within 12 months after their issue will not require disclosure under section 707(3) or section 1012C(6) of the Corporations Act.

Note: An entity may need to obtain appropriate warranties from subscribers for the securities in order to be able to give this warranty

• Section 724 or section 1016E of the Corporations Act does not apply to any applications received by us in relation to any[+] securities to be quoted and that no-one has any right to return any[+] securities to be quoted under sections 737, 738 or 1016F of the Corporations Act at the time that we request that the[+] securities be quoted.

• If we are a trust, we warrant that no person has the right to return the +securities to be quoted under section 1019B of the Corporations Act at the time that we request that the[+] securities be quoted.

• 3 We will indemnify ASX to the fullest extent permitted by law in respect of any claim, action or expense arising from or connected with any breach of the warranties in this agreement.

• 4 We give ASX the information and documents required by this form. If any information or document is not available now, we will give it to ASX before +quotation of the +securities begins. We acknowledge that ASX is relying on the information and documents. We warrant that they are (will be) true and complete.

Sign here: Date: 15 June 2016 (Director/Company secretary)

Mark Pitts

Print name: ......................................................... == == == == ==

• See chapter 19 for defined terms.

Appendix 3B Page 8

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Appendix 3B New issue announcement

Appendix 3B – Annexure 1

Calculation of placement capacity under rule 7.1 and rule 7.1A for eligible entities

Introduced 01/08/12 Amended 04/03/13

Part 1

Rule 7.1 – Issues exceeding 15% of capital

Step 1: Calculate “A”, the base figure from which the placement capacity is calculated

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

Insert number of fully paid [+] ordinary 101,825,401
securities on issue 12 months before the
+ issue date or date of agreement to issue
Add the following:
• Number of fully paid [+] ordinary securities 1,600,000
issued in that 12 month period under an
exception in rule 7.2
30,586,485
• Number of fully paid [+] ordinary securities
issued in that 12 month period with
shareholder approval
• Number of partly paid [+] ordinary
securities that became fully paid in that
12 month period
Note:
• Include only ordinary securities here –
other classes of equity securities cannot
be added
• Include here (if applicable) the securities
the subject of the Appendix 3B to which
this form is annexed
• It may be useful to set out issues of
securities on different dates as separate
line items
Subtract the number of fully paid [+] ordinary None
securities cancelled during that 12 month
period
“A” 134,011,886
----- End of picture text -----

• See chapter 19 for defined terms.

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Appendix 3B New issue announcement

Step 2: Calculate 15% of “A”

Step 2: Calculate 15% of “A”	Step 2: Calculate 15% of “A”
“B”	0.15 [Note: this value cannot be changed]
Multiply“A” by 0.15	20,101,783
Step 3: Calculate “C”, the amount of placement capacity under rule 7.1 that has already been used
Insertnumber of+equity securities issued or agreed to be issued in that 12 month period_not counting_those issued: • Under an exception in rule 7.2 • Under rule 7.1A • With security holder approval under rule 7.1 or rule 7.4 Note: • This applies to equity securities, unless specifically excluded – not just ordinary securities • Include here (if applicable) the securities the subject of the Appendix 3B to which this form is annexed • It may be useful to set out issues of securities on different dates as separate line items	500,000 (17 May 2016) 5,521,886 (14 June 2016)
“C”	6,021,886
Step 4: Subtract “C” from [“A” x “B”] to calculate remaining placement capacity under rule 7.1
“A” x 0.15 Note: number must be same as shown in Step 2	20,101,783
Subtract“C” Note: number must be same as shown in Step 3	6,021,886
Total[“A” x 0.15] – “C”	14,079,897 [Note: this is the remaining placement capacity under rule 7.1]

• See chapter 19 for defined terms.

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Appendix 3B New issue announcement

Part 2

Part 2	Part 2
Rule 7.1A – Additional placement capacity for eligible entities
Step 1: Calculate “A”, the base figure from which the placement capacity is calculated
“A” Note: number must be same as shown in Step 1 of Part 1	134,011,886
Step 2: Calculate 10% of “A”
“D”	0.10 Note: this value cannot be changed
Multiply“A” by 0.10	13,401,189
Step 3: Calculate “E”, the amount of placement capacity under rule 7.1A that has already been used
Insertnumber of+equity securities issued or agreed to be issued in that 12 month period under rule 7.1A Notes: • This applies to equity securities – not just ordinary securities • Include here – if applicable – the securities the subject of the Appendix 3B to which this form is annexed • Do not include equity securities issued under rule 7.1 (they must be dealt with in Part 1), or for which specific security holder approval has been obtained • It may be useful to set out issues of securities on different dates as separate line items	13,401,189 (14 June 2016)
“E”	13,401,189

• See chapter 19 for defined terms.

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Appendix 3B New issue announcement

Step 4: Subtract “E” from [“A” x “D”] to calculate remaining placement capacity under rule 7.1A

Step 4: Subtract “E” from [“A” x “D”] to calculate remaining placement capacity under rule 7.1A	Step 4: Subtract “E” from [“A” x “D”] to calculate remaining placement capacity under rule 7.1A
“A” x 0.10 Note: number must be same as shown in Step 2	13,401,189
Subtract“E” Note: number must be same as shown in Step 3	13,401,189
Total[“A” x 0.10] – “E”	Nil Note: this is the remaining placement capacity under rule 7.1A

• See chapter 19 for defined terms.

Appendix 3B Page 12

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ASX Announcement (ASX: HMX)

15 June 2016

Notice under Section 708A (5)

The Company has today confirmed the issue of 18,923,075 fully paid ordinary shares as a private placement to sophisticated investors at $0.065 per share to raise $1,230,000 before costs, as announced on 23 May 2016.

The Company gives this notice pursuant to Section 708A(5)(e) of the Corporations Act 2001 (Cth) (“Act”).

The shares were issued without disclosure to investors under Part 6D.2 of the Act.

The Company as at the date of this notice has complied with

• a) the provisions of Chapter 2M of the Act as they apply to the Company; and

• b) section 674 of the Act.

As at the date of this notice, there is no excluded information for the purposes of sections 708A(7) and 708A(8) of the Act.

Yours faithfully

By Order of the Board

==> picture [145 x 51] intentionally omitted <==

Mark Pitts Company Secretary Hammer Metals Limited

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