HAMMER METALS LIMITED — Capital/Financing Update 2019

Feb 12, 2019

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ALLOTMENT AND ISSUE OF SECURITIES

13 February 2019

ASX Code: HMX : HMXOD

CAPITAL STRUCTURE:

Share Price (12/02/2019)	$0.026
Shares on Issue Market Cap Options Listed	314m $8.2m 183m
Options Unlisted	32m
Significant Shareholders Deutsche Rohstoff Resource Capital Fund VI	11.2% 8.0%
Management	7.8%

Further to the announcement dated 7 February 2019, Hammer Metals Limited (“ Hammer” or “the Company” ) (ASX: HMX), wishes to confirm the allotment and issue of the first Tranche of placement shares being 36,000,000 ordinary shares to sophisticated investors at $0.02 to raise $720,000 before costs, and 18,000,000 HMXOD free-attaching listed options exercisable at $0.03 on or before 30 September 2020. (the Placement )

The Company confirms it will seek shareholder approval to issue the remaining 14,000,000 shares and 7,000,000 options (Tranche 2) to those directors of the Company who wished to participate, to raise $280,000.

The Placement is made pursuant to the Company’s placement capacity under listing rules 7.1 and 7.1A as follows:

• 8,170,292 ordinary shares and 18,000,000 listed options issued under listing rule 7.1; and

• 27,829,708 ordinary shares issued under listing rule 7.1A.

HAMMER METALS LTD:

7.1A DISCLOSURE

ABN 87 095 092 158 Suite 1, 827 Beaufort Street Mt Lawley WA 6052

T: +61 8 6369 1195 E: info@hammermetals.com.au W: www.hammermetals.com.au

The following 7.1A disclosure is in respect of the issue of 27,829,708 ordinary fully paid shares, issued within the Company’s 7.1A placement capacity pursuant to the share placement announced to the ASX on 7 February 2019.

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.

DIRECTORS / MANAGEMENT:

Russell Davis Executive Chairman

Nader El Sayed Non–Executive Director

Ziggy Lubieniecki Non-Executive Director

Mark Pitts Company Secretary

Mark Whittle Chief Operating Officer

issue.
Number of shares held by existing shareholders before the Placement	278,297,082
Number of Shares on issue after the Placement (Issuedpursuant to LR 7.1A)	306,126,790
% dilutionary effect of Placement on existing shareholders before the Placement	10%

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	85.62%
Pre-placement security holders who did participate in the placement	10.66%
Participants in the placement who were not previously security holders	3.72%

• (a) 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 security holders 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.

(b) Details of any underwriting arrangement, including any fees payable to the underwriter.

No underwriting arrangements or underwriting fees are payable.

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

A Lead Management Fee of 2% was payable on the total amount raised under the placement, and an additional 4% was payable on the funds raised by the lead manager.

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

- ENDS –

For further information, refer to the Company’s Website ‘hammermetals.com.au’ or please contact:

Russell Davis | Executive Chairman M: +61 (0) 419195087 info@hammermetals.com.au

Hammer Metals Limited (ASX:HMX):

Hammer Metals Limited (ASX: HMX) holds a strategic tenement position covering approximately 2500km[2] within the Mount Isa mining district, with 100% interests in the Kalman (Cu-Au-Mo-Re) deposit, the Overlander North and Overlander South (Cu-Co) deposits and the Elaine (Cu-Au) deposit. Hammer also has a 75% interest in the Millennium (Cu-Co-Au) deposit and a 51% interest in the emerging Jubilee (Cu-Au) deposit. Hammer is an active mineral explorer, focused on discovering large copper-gold deposits of the Ernest Henry style and has a range of prospective targets at various stages of testing.

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 be issued 2 Number of+securities issued or to be issued (if known) or maximum number which may be issued 3 Principal terms of the+securities (e.g. if options, exercise price and expiry date; if partly paid +securities, the amount outstanding and due dates for payment; if +convertible securities, the conversion price and dates for conversion)	a) Listed Options b) Ordinary Shares
	a) 18,000,000 b) 36,000,000
	a) Listed options exercisable at $0.03 on or before 30 September 2020

• See chapter 19 for defined terms.

Appendix 3B Page 1

04/03/2013

Appendix 3B New issue announcement

4 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 5 Issue price or consideration 6 Purpose of the issue (If issued as consideration for the acquisition of assets, clearly identify those assets) 6a Is the entity an+eligible entity 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 resolution under rule 7.1A was passed 6c Number of+securities issued without security holder approval under rule 7.1	a) Listed options rank equally with existing quoted class of listed options (HMXOD). When options are exercised the fully paid ordinary shares issued will rank equally with the existing fully paid ordinary shares of the Company from the date of allotment. b) Ordinary shares rank equally with the existing fully paid ordinary shares of the Company.
	a) Nil – free attaching options b) Issued at $0.02 per share
	a) As free-attaching options to the placement. b) To raise funds to facilitate further exploration of the Company’s projects and for general working capital.
	Yes
	29 November 2018
	8,170,292 ordinary shares 18,000,000 listed options

• See chapter 19 for defined terms.

Appendix 3B Page 2

04/03/2013

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)	27,829,708 ordinary shares	27,829,708 ordinary shares
	N/A
	N/A
	Yes, 15-day VWAP provided by Orient capital is $0.0206
	N/A
	Rule 7.1 15,574,270 Rule 7.1A - Total: 15,574,270
	13 February 2019
	Number	+Class
	314,297,082 183,355,206	Fully Paid Ordinary Shares $0.03 option exp 30/9/2020

• See chapter 19 for defined terms.

Appendix 3B Page 3

04/03/2013

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) art 2 - Pro rata issue 11 Is security holder approval required? 12 Is the issue renounceable or non- renounceable? 13 Ratio in which the+securities will be offered 14 +Class of+securities to which the offer relates 15 +Record date to determine entitlements 16 Will holdings on different registers (or subregisters) be aggregated for calculating entitlements? 17 Policy for deciding entitlements in relation to fractions 18 Names of countries in which the 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. 19 Closing date for receipt of acceptances or renunciations	Number	+Class
	12,800,000 5,000,000 2,676,078 1,500,000 10,000,000	$0.06 option exp 30/6/2020 $0.075 option exp 29/6/2019 $0.07 option exp 31/08/2020 $0.07 option exp 30/11/2019 $0.032 option exp 30/11/2022
	N/A

Part 2 - Pro rata issue

• See chapter 19 for defined terms.

Appendix 3B Page 4

04/03/2013

Appendix 3B New issue announcement

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

• See chapter 19 for defined terms.

Appendix 3B Page 5

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Appendix 3B New issue announcement

33 +Issue date

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 N/A

• See chapter 19 for defined terms.

Appendix 3B Page 6

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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

04/03/2013

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: 13 February 2019 (Director/Company secretary)

Mark Pitts Print name: ......................................................... == == == == ==

• See chapter 19 for defined terms.

Appendix 3B Page 8

04/03/2013

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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Insert number of fully paid [+] ordinary 268,925,341
securities on issue 12 months before the
+ issue date or date of agreement to issue
Add the following:
• Number of fully paid [+] ordinary
securities issued in that 12 month
period under an exception in rule 7.2
• Number of fully paid [+] ordinary
securities issued in that 12 month 9,371,741
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 None
+ ordinary securities cancelled during that
12 month period
“A” 278,297,082
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• See chapter 19 for defined terms.

Appendix 3B Page 9

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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	41,744,562
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	8,170,292 ordinary shares issued 13 February 2019 18,000,000 listed options issued 13 February 2019
“C”	26,170,292
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	41,744,562
Subtract“C” Note: number must be same as shown in Step 3	26,170,292
Total[“A” x 0.15] – “C”	15,574,270 [Note: this is the remaining placement capacity under rule 7.1]

• See chapter 19 for defined terms.

Appendix 3B Page 10

04/03/2013

Appendix 3B New issue announcement

Part 2

art 2	art 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	278,297,082
Step 2: Calculate 10% of “A”
“D”	0.10 Note: this value cannot be changed
Multiply“A” by 0.10	27,829,708
Step 3: Calculate “E”, the amount 7.1A that has already been used	of placement capacity under rule
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	27,829,708 ordinary shares issued 13 February 2019
“E”	-

• See chapter 19 for defined terms.

Appendix 3B Page 11

04/03/2013

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	27,829,708
Subtract“E” Note: number must be same as shown in Step 3	27,829,708
Total[“A” x 0.10] – “E”	- Note: this is the remaining placement capacity under rule 7.1A

• See chapter 19 for defined terms.

Appendix 3B Page 12

04/03/2013

ASX Announcement (ASX: HMX)

13 February 2019

Notice under Section 708A (5)

The Company has today confirmed the issue of 36,000,000 fully paid ordinary shares together with 18,000,000 HMXOD listed options as the first tranche of a private placement to sophisticated investors at $0.02 per share to raise $720,000 before costs as announced on 7 February 2019.

The listed options have an exercise price of $0.03 and expire on 30 September 2020.

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

The shares and options 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

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Mark Pitts Company Secretary On behalf of the Board

Hammer Metals Limited. ABN 87 095 092 158 Suite 1/827 Beaufort Street, Mt Lawley WA 6052 | Phone + 618 6369 1195 | Email: info@hammermetals.com.au hammermetals.com.au

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