HAWTHORN RESOURCES LIMITED — Capital/Financing Update 2012

Oct 29, 2012

ABN 44 009 157 439

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30 October 2012

Level 2, 90 William St Melbourne Victoria 3000 Australia

Telephone: +61 3 9605 5950 Facsimile: +61 3 9605 5999 Email: info@hawthornresources.com Website : www.hawthornresources.com

First Tranche received in landmark Hawthorn Resources strategic relationship with Chinese Investor Group

Issue of Shares

The recently announced strategic relationship between Hawthorn Resources Limited (ASX:HAW) ( Hawthorn or the Company ) and a consortium of Chinese investors through Feng Hua Mining Investment Holding (HK) Limited ( Feng Hua ) has taken a significant step forward with the first tranche of shares issued today. The Company has today issued a total of 320,616,224 new ordinary fully paid shares at A$0.013 a share to raise A$4,168,010.91.

Hawthorn Chairman Mark Kerr said that “…the issue of the first tranche of shares takes Hawthorn a step closer to becoming a gold and iron ore producer...”

Hawthorn shareholders will be provided with an independent expert’s report regarding the second part of the transaction prior to Hawthorn seeking shareholder approval for the second tranche equity raising of A$10,794,079.53 million.

The issue price for the second Tranche of shares is A$0.01116 a share for 967,211,427 shares.

Directorate

Pursuant to the terms of the Share Subscription Agreement Feng Hua has exercised its ability to nominate two directors to the Board of Directors and has nominated Messrs Liao, Yongzhong and Li, Yijie each of whom has now been formally appointed to the Hawthorn Board of Directors.

Mr Liao and Mr Li each has an extensive industry and business background:

Mr Liao, Yongzhong:

Mr Liao, aged 43, has acted as the Chairman of the Board of Guangdong Fenghua Semiconductor Technology Co., Ltd. since January, 2011 and has concurrently held the post of the Chief Financial Officer of the Company since March, 2011. He also holds the posts of Chairman of the Board of Guangzhou Fenghua Venture Investment Co., Ltd, Chairman of the Board of Fenghua Advanced Technology (Hong Kong) Ltd, Deputy Chairman of the Board of Changchun Up Optotech Co., Ltd, Director of Taiyuan Fenghua Information Equipment Co., Ltd and Chairman of the Board of Shine Advance Holding Limited.

He previously held the post of Secretary of the Board of Directors of the Company from October, 2003 to July, 2007 and Director of the Company from January, 2007 to August, 2008. He has been the Vice General Manager of the Company since October, 2003.

Mr Li, Yijie:

Mr Li, aged 49, is currently the President of Lite Smooth Investment Ltd (since 2012) and the Guangdong Carrington Real Estate Co., Ltd (since 2001).

Prior to 2001 Mr Li developed an extensive industry background in the aerotechnics and electronic import and export industries.

Investment Consortium

The Consortium through Feng Hua Mining Investment Holding (HK) Limited comprises:

• (a) Guangdong Fenghua Advanced Technology (Holding) Co., Ltd. ( Fenghua );

• (b) Guangdong Rising Assets Management Co., Ltd ( GRAM );

• (c) Guangdong Corporation of Geology and Mineral ( GGM ); and

• (d) Lite Smooth Investment Limited ( LSI ).

(together, the Subscribers ).

GRAM, Fenghua and GGM are deemed state-owned enterprises of the People’s Republic of China

The relative, respective percentages of the Consortium Subscribers being:

• (a) 42.857% held by Fenghua through HK subsidiary;

• (b) 14.286% held by GRAM;

• (c) 14.286% held by GGM; and

• (d) 28.57% held by LSI

Details of each of the Subscribers are set out in the Footnotes to this announcement

Exploration & Development

Hawthorn has five primary gold prospects in the Eastern Goldfields of Western Australia – the Anglo Saxon, Edjudina, Deep South, Yundamindera and Whiteheads projects - all located in close proximity to existing mining and milling infrastructure with potential for near term exploitation.

Mr Kerr said “Hawthorn is confident that over the next 12 months the Company will continue to expand existing resources and make further discoveries of gold which can be mined economically”.

Appendix 3B Notice

Attached for a release to the market is an Appendix 3B New Issue Announcement Notice covering the additional new 320,616,224 ordinary shares.

END

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For further information contact:

Mourice Garbutt, Company Secretary James Aanensen Hawthorn Resources Limited PRX + 61 3 9605 5917 +61 410 518 590 info@hawthornresources.com jaanensen@prx.com.au www.hawthornresources.com

Footnotes:

About the Subscribers

The four Subscribers will bring their respective expertise to the Proposed Transaction:

• GRAM has significant experience in investing in Australia and trading in various metals,

• Fenghua is a listed company with extensive resources,

• GGM has technical expertise to assisting the development of Hawthorn’s projects.

FENGHUA

Fenghua is a publicly listed company on the Shenzen Stock Exchange (Stock No, 000636) and is one of the largest electronic component producers in the People’s Republic of China.

For the 2011 financial year, Fenghua made a net profit of RMB 165,063,163.27 from gross revenue of RMB 2,081,893,700.76.

The Proposed Transaction would represent Fenghua’s first investment in the mining industry, and its first investment in Australia. Its motivations include an opportunity to diversify its investment base as well as to have exposure to the gold market which is one of its key raw materials in its industry.

GRAM

GRAM is a wholly state-owned limited liability company established on 23 December 1999, with a registered capital of RMB 1 billion, which is under the supervision of the Guangdong Provincial Government’s arm of the State-Owned Assets Supervision and Administration Commission.

GRAM’s role is that of a provincial asset portfolio manager. It is one of three asset management companies created by the Guangdong Provincial Government for the purpose of holding various investments which the provincial government historically owned or inherited from the central government. As of 2011, GRAM has total assets of over US$11.5 billion.

GRAM’s recent activities have been primarily focused on the mining sector, which has become the core business of GRAM. In addition, GRAM also engages in the business of electronic information, hotel and tourism, as well as engineering and real estate. GRAM’s mining activities are mainly carried out through the following affiliates and subsidiaries:

• (a) Shenzen Zhongjin Lingnan Nonferrous Metal Co Ltd ( Zhongjin Lingnan ), a company listed on the Shenzen Stock Exchange (ticker:00060) and chiefly engaged in the mining and processing of lead, zinc and other nonferrous metals (approximately 39.2318%);

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• (b) Guangdong Rising Nonferrous Metals Co., Ltd, a company listed on the Shanghai Stock Exchange (ticker:600259) and chiefly engaged in the mining and processing of tungsten, rare earths, copper, silver and tin (approximately 50.02%);

• (c) Guangdong Guangsheng Metallurgy Co., Ltd, a company chiefly engaged in the mining of iron and rare earths and the production of various alloys and crystals (100%);

• (d) Guangdong Dabaoshan Mine Co., Ltd., a company chiefly engaged in the mining and dressing of iron ore and copper-sulphur ore (100%);

• (e) Guangdong Rising Mining Investment Co., Ltd (100%); and

• (f) Guangdong Rising HK (Holding) Limited (100%) which holds approximately a 20.5% interest in PanAust Limited, a company listed on the ASX (ASX:PNA); and

• (g) Guangdong Rising Energy Investments HK Limited (100%) which holds 100% interest in Caledon Resources Plc, a company previously listed on AIM but subsequently delisted following its acquisition by GRAM.

Among Chinese Resource companies, GRAM is one of the pioneers in outbound investment. So far, GRAM has successfully made investments in mining resources in six countries from four continents. GRAM and its affiliates have previously made three successful substantial investments in Australia:

• (a) In October 2010 GRAM acquired a 100% stake in Caledon Resources Plc, which holds substantial Coal interests in the Bowen Basin of Queensland.

• (b) In 2009 GRAM acquired a 19.9% interest in PanAust Limited (ASX:PNA). GRAM currently holds a 26.25% interest in PanAust.

• (c) In February 2009 Zhongjin Lingnan (an affiliate of GRAM) acquired a 50.1% interest in Perilya Limited (ASX:PEM).

GGM

GGM is a wholly state-owned limited liability company established in 1988, which is under the direct supervision of the Guangdong Bureau of Geology. The registered capital of GGM is RMB 10,511,000. The business and operations of GGM includes sales of mineral products, precious stones and products, sales and purchase of products made of gold, silver and platinum, development and consultancy concerning geological and mineral prospecting technology, hydrological geology and engineering geology prospecting, environmental geology prospecting and geological exploration engineering, mining investment, metal and non metal mineral products trading, import and export of goods and technology.

GGM specializes in exploration and development of gold, silver, precious metals and precious stones.

As an investment platform of the Guangdong Bureau of Geology for mineral exploration and development, GGM has made successful investments in domestic mining companies in Guangdong, Guizhou and Jiangxi province, and holds interest in coal mines, fluorite mines, gold mines and silver mines.

LSI

LSI is a limited liability company incorporated in Hong Kong on 28 February 2012. LSI is 100% owned by Mr. Li Yijie, who is also the chairman of the board in LSI. Mr. Li has been the President of Guangdong Carriton Real Estate Co., Ltd. since 2001, which is focusing on real estate development and operation, with a total asset of RMB 5 billion.

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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

Name of entity

HAWTHORN RESOURCES LIMITED

ABN

44 009 157 439

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 ORDINARY FULLY PAID SHARES be issued 2 Number of[+] securities issued or 320,616,224 ORDINARY FULLY to be issued (if known) or PAID SHARES maximum number which may be issued 3 Principal terms of the THE SHARES REFERRED TO IN +securities (eg, if options, PART 1.2 HAVE BEEN ALLOTTED exercise price and expiry date; if partly paid +securities, the AS TRANCHE 1 PURSUANT TO THE SHARE SUBSCRIPTION amount outstanding and due dates for payment; if AGREEMENT, AS ANNOUNCED TO +convertible securities, the THE ASX ON 31 AUGUST 2012 conversion price and dates for BETWEEN THE COMPANY AND conversion) FENG HUA MINING INVESTMENT HOLDING (HK) LIMITED

• 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 in all respects from the date of allotment 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 6d Number of+securities issued with security holder approval under rule 7.1A	YES
	A$0.013 A SHARE TO RAISE A$4,168,010.91
	ALL FUNDS RAISED THROUGH THIS ISSUE OF SECURITIES WILL BE APPLIED TO THE EXPLORATION AND DEVELOPMENT OF THE COMPANY’S MINING TENEMENT INTERESTS
	NO
	NOT APPLICABLE
	NOT APPLICABLE
	NOT APPLICABLE

• See chapter 19 for defined terms.

Appendix 3B Page 2

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Appendix 3B New issue announcement

6e Number of[+] securities issued NOT APPLICABLE with security holder approval under rule 7.3, or another specific security holder approval (specify date of meeting) 6f Number of securities issued NOT APPLICABLE under an exception in rule 7.2 6g If securities issued under rule NOT APPLICABLE 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 NOT APPLICABLE 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 NIL issue capacity under rule 7.1 and rule 7.1A – complete Annexure 1 and release to ASX Market Announcements 7 Dates of entering +securities 30 OCTOBER 2012 into uncertificated holdings or despatch of certificates Number +Class 8 Number and +class of all 2,458,057,717 ORD (HAW) +securities quoted on ASX ( including the securities in 165,084,231 OPTIONS (HAWOB) section 2 if applicable) – 10 CENT 28 02 2013

• See chapter 19 for defined terms.

Appendix 3B Page 3

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Appendix 3B New issue announcement

Number +Class 9 Number and +class of all +securities not quoted on ASX (including the securities in section 2 if applicable) 10,000,000 2,500,000 OPTIONS (HAWAM) - 10 CENT 25 01 2018 OPTIONS (HAWAI) - 10 CENT 30 06 2018 10 Dividend policy (in the case of a trust, distribution policy) on the increased capital (interests) Part 2 - Bonus issue or pro rata issue	Number	+Class
	10,000,000 2,500,000	OPTIONS (HAWAM) - 10 CENT 25 01 2018 OPTIONS (HAWAI) - 10 CENT 30 06 2018

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 issue
	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

• See chapter 19 for defined terms.

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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 prospectus or Product
	Disclosure Statement 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?

• See chapter 19 for defined terms.

Appendix 3B Page 5

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Appendix 3B New issue announcement

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

• 33 +Despatch 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

• 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 date of allotment 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 not available now, 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.

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30 OCTOBER 2012
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Sign here: ............................................................ Date: ......................... Company Secretary MOURICE R GARBUTT Print name: ......................................................... h\asx\3b 30 10 12

== == == == ==

• 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

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 29/10/2011
securities on issue 12 months before date
of issue or agreement to issue 1,775,595,897
Add the following:
• Number of fully paid ordinary securities
361,845,596
issued in that 12 month period under an
exception in rule 7.2 (SPP)
• 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 NIL
securities cancelled during that 12 month
period
“A” 2,137,441,493
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• See chapter 19 for defined terms.

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Appendix 3B New issue announcement

Appendix 3B New issue announcement	Appendix 3B New issue announcement
Step 2: Calculate 15% of “A”2,137,441,493
“B”	0.15 [Note: this value cannot be changed]
Multiply“A” by 0.15	= 320,616,224
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	NIL NIL NIL
“C”	NIL
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	320,616,224
Subtract“C” Note: number must be same as shown in Step 3	NIL
Total[“A” x 0.15] – “C”	320,616,224 [Note: this is the remaining placement capacity under rule 7.1]

• See chapter 19 for defined terms.

Appendix 3B Page 10

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Appendix 3B New issue announcement

Part 2

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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
Step 2: Calculate 10% of “A”
“D” 0.10
Note: this value cannot be changed
Multiply “A” by 0.10
Step 3: Calculate “E”, the amount of placement capacity under rule
7.1A that has already been used
Insert number 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
“E”
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• See chapter 19 for defined terms.

Appendix 3B Page 11

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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 “A” x 0.10 Note: number must be same as shown in Step 2 Subtract “E” Note: number must be same as shown in Step 3 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

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