HIGHFIELD RESOURCES LIMITED — Proxy Solicitation & Information Statement 2023

May 22, 2023

HIGHFIELD RESOURCES LIMITED

ACN153 918 257

NOTICE OF EXTRAORDINARY GENERAL MEETING

EXPLANATORY MEMORANDUM

PROXY FORM

Date of Meeting

Wednesday, 21 June 2023

Time of Meeting

3.30pm (Adelaide time)

Place of Meeting

HLB Mann Judd Level 1, 169 Fullarton Road ADELAIDE South Australia 5065

and via webcast (details to follow via subsequent ASX announcement)

THE DIRECTORS WHO DO NOT HAVE AN INTEREST IN THE OUTCOME OF RESOLUTION 1 UNANIMOUSLY RECOMMEND THAT SHAREHOLDERS VOTE IN FAVOUR OF RESOLUTION 1 PROPOSED IN THIS NOTICE OF EXTRAORDINARY GENERAL MEETING

THE DIRECTORS UNANIMOUSLY RECOMMEND THAT SHAREHOLDERS VOTE IN FAVOUR OF RESOLUTION 2 PROPOSED IN THIS NOTICE OF EXTRAORDINARY GENERAL MEETING

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

This Notice and Explanatory Memorandum should be read in its entirety. If Shareholders are in doubt as to how they should vote, they should seek advice from their professional advisors prior to voting.

The Company strongly encourages all shareholders to lodge a directed proxy vote prior to the cut-off date for proxy voting as set out in the Notice. To lodge your proxy, please follow the directions on your personalised proxy form, delivered to you by email or post (depending on your communication preferences).

Should you wish to discuss the matters in this Notice, please contact the Company Secretary on k_adams@geoalcali.com.

Notice of Extraordinary General Meeting

Notice is hereby given that an Extraordinary General Meeting of shareholders of Highfield Resources Limited ( Meeting ) will be at HLB Mann Judd Level 1, 169 Fullarton Rd, Adelaide, South Australia 5065 and via webcast at 3.30 pm (Adelaide time) on Wednesday, 21 June 2023.

Resolution 1 – Approval of issue of convertible notes

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

'That, for the purposes of ASX Listing Rule 10.11 and for all other purposes, approval is given for the Company to issue 1,224 secured convertible loan notes to the EMR Subscribers and to issue ordinary shares to holders of such notes on conversion of the secured convertible loan notes on the terms and conditions of the convertible note deed described in the Explanatory Memorandum which is attached to and forms part of this Notice.'

Resolution 2: Approval of previous issue of convertible notes under ASX Listing Rule 7.1

To consider and, if thought fit, 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, approval is given to the previous issue by the Company of 714 secured convertible loan notes to the Other Subscribers on the terms and conditions of the convertible note deed described in the Explanatory Memorandum which is attached to and forms part of this Notice.’

DATED 23 MAY 2023 BY ORDER OF THE BOARD HIGHFIELD RESOURCES LIMITED

==> picture [146 x 51] intentionally omitted <==

Katelyn Adams COMPANY SECRETARY

Page 2

NOTES:

1. Explanatory Memorandum

The Explanatory Memorandum accompanying this Notice of Extraordinary General Meeting is incorporated in and comprises part of this Notice of Extraordinary General Meeting and should be read in conjunction with this Notice of Extraordinary General Meeting.

Shareholders are specifically referred to the Glossary in the Explanatory Memorandum which contains definitions of capitalised terms used in both this Notice of Extraordinary General Meeting and the Explanatory Memorandum.

2. Voting Exclusion Statements

Resolution 1

For the purposes of the Listing Rules, the Company will disregard any votes cast in favour of Resolution 1 by or on behalf of:

• each EMR Subscriber;

• any person who is expected to participate in, or who will obtain a material benefit as a result of, the proposed issue of convertible notes (except a benefit solely by reason of being a holder of ordinary securities in the Company); or

• any associates of the EMR Subscribers.

However, this does not apply to a vote case in favour of a resolution by:

• 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

• 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

• an EMR Subscriber acting solely in a nominee, trustee, custodial or other fiduciary capacity on behalf of a beneficiary provided the following conditions are met:

• the beneficiary provides written confirmation to the EMR Subscriber that the beneficiary is not excluded from voting, and is not an associate of a person excluded from voting, on the resolution; and

• the EMR Subscriber votes on the resolution in accordance with directions given by the beneficiary to the EMR Subscriber to vote in that way.

Resolution 2

For the purposes of the Listing Rules, the Company will disregard any votes cast in favour of Resolution 2 by or on behalf of any:

• persons who participated in the issue of Notes; or

• any associates of those persons.

However, this does not apply to a vote cast in favour of a resolution by:

• 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

Page 3

• 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

• a holder acting solely in a nominee, trustee, custodial or other fiduciary capacity on behalf of a beneficiary provided the following conditions are met:

  • 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

  • the holder votes on the resolution in accordance with directions given by the beneficiary to the holder to vote in that way.

• Proxies

A shareholder entitled to attend this Meeting and vote is entitled to appoint a proxy to attend and vote for the shareholder at the Meeting. A proxy need not be a shareholder. If the shareholder is entitled to cast two or more votes at the Meeting the shareholder may appoint two proxies and may specify the proportion or number of votes which each proxy is appointed to exercise. A form of proxy accompanies this Notice.

To record a valid vote, a shareholder will need to take the following steps:

• 3.1 cast the shareholder’s vote online by visiting www.advancedshare.com.au/investor-login or, if using a mobile device, by scanning the QR code on the shareholder’s proxy form and entering the shareholder’s registered postcode; or

• 3.2 complete and lodge a validly completed and signed paper proxy form at the share registry of the Company, Advanced Share Registry Services:

• (a) in person at the following address:

Advanced Share Registry 110 Stirling Highway NEDLANDS WA 6009

OR

• (b) by post at the following address:

Advanced Share Registry PO Box 1156 NEDLANDS WA 6909

OR

• (c) by facsimile on (08) 6370 4203 (within Australia) or +61 8 6370 4203 (outside Australia); or

• 3.3 for Intermediary Online subscribers only (custodians), cast the shareholder’s vote online by visiting www.advancedshare.com.au/investors.aspx,

so that it is received no later than 3.30 pm (Adelaide time) on Monday, 19 June 2023.

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

1. ‘Snap Shot’ Time

The Company may specify a time, not more than 48 hours before the Meeting, at which a ‘snapshot’ of shareholders will be taken for the purposes of determining shareholder entitlements to

Page 4

vote at the Meeting. The Directors have determined that all shares of the Company that are quoted on ASX as at 7:00 pm (Adelaide time) on Monday, 19 June 2023 shall, for the purposes of determining voting entitlements at the Meeting, be taken to be held by the persons registered as holding the shares at that time.

5. Corporate Representative

Any corporate shareholder who has appointed a person to act as its corporate representative at the Meeting should provide that person with a certificate or letter executed in accordance with the Corporations Act authorising him or her to act as that company’s representative. The authority may be sent to the Company and/or registry in advance of the Meeting or handed in at the Meeting when registering as a corporate representative.

Page 5

EXPLANATORY MEMORANDUM

This Explanatory Memorandum forms part of a Notice convening the Extraordinary General Meeting of shareholders of Highfield Resources Limited to be held on Wednesday, 21 June 2023. This Explanatory Memorandum is to assist shareholders in understanding the background to and the legal and other implications of the Notice and the reasons for the resolutions proposed. Both documents should be read in their entirety and in conjunction with each other.

Other than the information set out in this Explanatory Memorandum, the Directors believe that there is no other information that could reasonably be required by shareholders to consider Resolutions 1 to 2 (inclusive).

1. RESOLUTION 1: APPROVAL OF ISSUE OF CONVERTIBLE NOTES

• 1.1 Overview

On 23 May 2023, the Company announced that it had entered into a convertible note deed with the Subscribers ( CND ) under which the Company will raise capital of approximately A$25 million[1] (before costs) by way of the issuance of secured convertible loan notes ( Notes or Convertible Notes ) to the EMR Subscribers[2] and the Other Subscribers ( Equity Raising ). Under the Equity Raising the Company has agreed to issue 1,224 Notes (with a face value of US$10,000 per Note) to the EMR Subscribers and 714 Notes (with a face value of A$10,000 per Note) to the Other Subscribers (in each case, including Notes issuable in respect of the arrangement fees under the CND).

As explained in the ASX announcement dated 23 May 2023, the Equity Raising will assist the Company to build on the substantial progress the Company has made in recent months by providing vital funding for essential costs associated with advancing the Project and allowing it to progress discussions with strategic and financial investors to fully finance the project. Accordingly, the Directors that do not have an interest in the outcome of Resolution 1, recommend that Shareholders vote in favour of Resolution 1.

The Convertible Notes are to convert into Shares at the lower of:

• A$0.515, being the VWAP of the Shares as traded on ASX over the 20 trading days prior to the date of the CND;

• if a Change of Control Trigger Date (defined at Item 18 in the table in Section 10.2 below) occurs, a 25% discount to the implied valuation per Share from the relevant Change of Control transaction; and

• if the Company undertakes any new issue of Shares while any Notes remain on issue, a 10% discount to the lowest issue price of the new Shares in question, subject to a floor price of A$0.2575. This limb can operate on more than one occasion

If the Company does undertake an issue of new Shares (which is the case that is covered by the third limb) above, and such issuance triggers an adjustment to the conversion price (given the operation of the third limb above) which is significantly lower than A$0.515 subject to a floor price of A$0.2575, this would have a dilutionary impact on Shareholders, as illustrated in the table below (with calculations made in relation to the total amount of Notes of A$25 million).

1 Foreign exchange rate for conversion is US$1.00 to A$1.30.

2 Funds managed by EMR Capital Management Limited, a Cayman Islands exempted company and a specialist resources focused private equity manager. One of the EMR Subscribers has a right to appoint, and has appointed, a nominee to the board of directors of the Company and, the EMR Subscribers therefore, are parties which would be caught by the ambit of ASX Listing Rule 10.11.3.

Page 6

Share price implied by ´potential new issue of shares (A$)	Conversion price (A$)	Shares on issue as at the date of this document	Shares issued on conversion of Notes1	Total Shares on issue following conversion of Notes1	Dilutionary effect1,2,3,4
0.567	0.515	389,162,216	48,543,689	437,705,905	-11.1%
0.440	0.400	389,162,216	62,500,000	451,662,216	-13.8%
0.284	0.258 (floor price)	389,162,216	96,899,225	486,061,441	-19.9%

Notes :

1. The above calculations do not include the impact of the new share issue that would need to occur to trigger a conversion price lower than A$0.515 nor do they contemplate conversion of any accrued interest as may be payable to the Subscribers (but does include the capitalisation of the arrangement fee described below). The Company will ensure that any further conversion of accrued interest is conducted in accordance with all applicable laws. The calculations assume a spot A$:US$ exchange rate of US$0.67 to A$1.00.

2. The issue of Shares on the conversion of any accrued interest will have a further dilutionary effect on Shareholders. 3. The above calculations do not contemplate conversion of existing unquoted options of the Company currently on issue and no other shares are issued prior to conversion.

3. The Notes are all converted in full.

Similarly, if there is a Change of Control and such a transaction triggers an adjustment to the conversion price (given the operation of the second limb above) which is lower than the other limbs´ conversion price, this would have a dilutionary impact on Shareholders, as illustrated in the table below (with calculations made in relation to the total amount of Notes of A$25 million).

Share price implied by Change of Control (A$)	Conversion price (A$)	Shares on issue as at the date of this document	Shares issued on conversion of Notes1	Total Shares on issue following conversion of Notes1	Dilutionary effect1,2,3,4
0.644	0.515	389,162,216	48,543,689	437,705,905	-11.1%
0.500	0.400	389,162,216	62,500,000	451,662,216	-13.8%
0.323	0.2585	389,162,216	96,899,225	486,061,441	-19.9%

Notes :

1. The above calculations do not contemplate conversion of any accrued interest as may be payable to the Subscribers (but does include the capitalisation of the arrangement fee described below). The Company will ensure that any further conversion of accrued interest is conducted in accordance with all applicable laws. The calculations assume a spot A$:US$D exchange rate of US$0.67 to A$1.00.

2. The issue of Shares on the conversion of any accrued interest will have a further dilutionary effect on Shareholders.

3. The above calculations do not contemplate conversion of existing unquoted options of the Company currently on issue.

4. The Notes are all converted in full.

5. To enable comparison with the table above, this conversion price is the same as the floor price for the third limb of the conversion mechanism, despite the absence of a floor price in the case of this second limb being the lowest of the three.

1.2 Key terms of Notes

The key terms of the Notes (and the agreement under which they are to be issued) are set out in the below table. The table below is not exhaustive and does not constitute a definitive statement of the rights and liabilities of the Subscribers.

	Term	Description
1.	Amount to be raised	Approximately A$25 million comprising US$12 million from the EMR Subscribers and A$7 million from the Other Subscribers (Loan Amount) to be paid in full (in US$ by the EMR Subscribers and A$ by the Other Subscribers) on the relevant issue date for the Notes.

Page 7

	Term		Description
2.	Condition precedent to issuance of Notes		In the case of the issuance of the Notes to the EMR Subscribers, the issuance of the Notes will be conditional on receipt of shareholder approval for issuance of the Notes to the EMR Subscribers.
3.	Condition precedent to the grant by the Company of an EMR Subscriber’s right to Convert		Receipt of approval from the Foreign Investment Review Board (FIRB) for the issuance of Shares on conversion Notes to the EMR Subscribers. If FIRB approval is not received, the Notes issued to the EMR Subscribers will be cash-settled by the Company.
4.	Class and status of security to be issued to Noteholders		Subject to the satisfaction of the conditions in Item 5 below, the Notes will be secured convertible notes which are convertible into Shares, and redeemable, as set out below. Shares issued on conversion of the Notes will be fully paid and will rank pari passu in all respects with the Shares on issue in the Company as at the date of conversion.
5.	Security to be granted		The Notes will be secured by way of a pledge over all of the shares and shareholder loans which the Company indirectly holds (via its wholly owned subsidiary KCL) in its wholly-owned subsidiary Geoalcali (which owns the Muga Muriate of Potash Project (Project)) (Security Condition). The pledge must be provided to the Noteholders within 4 months of the date of issue of the Notes to the EMR Subscribers (subject to receipt of approval from the senior lenders of the Company to issue the pledge and the Company obtaining a waiver from the requirements of ASX Listing Rule 10.1 for the issuance of the pledge). You should note that the waiver from the requirements of ASX Listing Rule 10.1 for the issuance of the pledge has not yet been sought by the Company and there is no guarantee it will be granted. If the waiver is not granted, the pledge will not be issued and the Interest Rate is increased as noted in Item 9 below.
6.	Use of proceeds		The Loan Amount must be used by the Company for: ■ pre-development costs such as long lead-time items and technical studies; ■ project finance costs; ■ corporate G&A / working capital costs of the Company; and ■ transaction and financingcosts.
7.	Maturity date		24 months after the date of issuance of the Notes to the EMR Subscribers.
8.	Arrangement fee		The Company will pay 2% of the Loan Amount (in kind via the issue of more Notes) on the Issue Date as an arrangement fee.
9.	Interest payable		Each Note will bear interest at the rate of 14% per annum (p.a.) provided that: ■ additional default interest of 4% p.a. will be payable while an Event of Default (defined in Item 20 below) subsists; ■ additional interest of 4% p.a. will also be payable if the Security Condition is not satisfied or waived by the date which is 4 months after the date of issuance of the Notes to the EMR Subscribers (End Date),

Page 8

	Term	Description
		(together theInterest Rate). Interest will: ■ accrue at the relevant Interest Rate(s) from the Issue Date up to and including the date on which the Notes are converted or redeemed; ■ be calculated and capitalised and added to the total amount outstanding by the issue of new Notes on a quarterly basis; and ■ be payable in kind on conversion or redemption (to the extent not already paid).
10.	Voluntary pre-payment	The Company may prepay the Loan Amount (together with all outstanding interest) (Outstanding Amount) in full prior to the Maturity Date with at least 20 business days' notice to the Noteholders and payment of the applicable Prepayment Make-Whole Amount (as defined in Item 11 below) (Voluntary Prepayment). The Noteholders may choose to forgo any election by the Company to prepay the Outstanding Amount and instead elect to convert the Outstanding Amount to Shares at the Conversion Price (defined at Item 15 below).
11.	Pre-payment make-whole amount	If the Loan Amount is repaid: ■ prior to the date which is 18 months following the date of issuance of the Notes to the EMR Subscribers, the Company must repay the Noteholders an amount equivalent to the Outstanding Amount that would have been outstanding if the Loan Amount had been in place for 18 months; or ■ during the period of 18 months and 24 months following the date of issuance of the Notes to the EMR Subscribers will incur a 1% prepayment fee on the Outstanding Amount at the time of prepayment, (together,thePrepayment Make-Whole Amount).
12.	Redemption	Repayment in full of any Outstanding Amount owing (Redemption Amount) must be made at the Maturity Date, provided that the Noteholders have not elected to convert the Notes (or notified the Company of its intention to do so) prior to the Maturity Date.
13.	Conversion of Notes	Subject to Item 14 below, the Noteholders may choose to convert all or some of their Notes into Shares at any time from the date of issue of the Notes until the Outstanding Amount has been repaid in full.
14.	Restrictions on conversion of Notes	If all or some of a conversion of Notes issued to the EMR Subscribers is not possible for regulatory reasons (including FIRB approval not having been received and the EMR Subscribers not being able to rely on the 'creep' provisions in item 9 of section 611 of the Corporations Act) (Creep Capacity)), that part of a conversion will be cash-settled by the Company such that the EMR Subscribers will receive the equivalent value in cash that they would have realised if Shares had been issued to the EMR Subscribers on conversion of their Notes at the Conversion Price (defined at Item 15 below) and sold immediately at the applicable Conversion Price, provided that, in such circumstances, the EMR Subscribers may only voluntarily convert on an Event of Default (defined at Item 20 below), a Change of Control (defined at Item

Page 9

	Term	Description
		18 below) or on the Maturity Date (Conversion Restriction). The Conversion Restriction will not apply if the EMR Subscribers do not have sufficient Creep Capacity but Chapter 6 Approval (defined below) has been obtained. The EMR Subscribers may at any time request that the Company seek Chapter 6 Approval and the Company will convene a meeting of its Shareholders to seek such approval. Chapter 6 Approvalmeans approval by Shareholders of the conversion of the Notes into Shares under item 7 of section 611 of the Corporations Act.
15.	Conversion price	The conversion price will be equal to the Outstanding Amount attributable to the Notes being converted divided by the lower of: ■ A$0.515, being the VWAP of the Shares as traded on ASX over the 20 trading days prior to the date of the CND; ■ if a Change of Control (defined at Item 18 below) occurs, a 25% discount to the implied valuation per Share from the relevant Change of Control transaction; and ■ if the Company undertakes any new issue of Shares while any Notes remain on issue, a 10% discount to the lowest issue price of the new Shares in question, subject to a floor price of A$0.2575. This limb can operate on more than one occasion, (theConversion Price).
16.	Mandatory conversion of Convertible Notes	If any Outstanding Amount balance remains owing at the time of first drawdown under the Company’s senior debt facility financing for the Project (Project Financing), the Outstanding Amount (excluding any Prepayment Make Whole Amount) will mandatorily convert into Shares at the Conversion Price, unless, in respect of the EMR Subscribers, the Conversion Restriction applies in which case the Notes held by the EMR Subscribers will be redeemed to the extent not able to be converted because of the Conversion Restriction.
17.	Adjustment provisions	The Notes contain standard adjustment provisions to the Conversion Price to deal with rights issues, placements, buybacks, share splits or consolidations, and other corporate events.
18.	Change of Control	If a Change of Control Trigger Date occurs, the Noteholders may (if they have not converted all of their Notes prior to then), by not less than 15 days' notice to the Company require repayment of Outstanding Amount. If a Change of Control (as defined below) occurs prior to 18 months from the date of issuance of the Notes to the EMR Subscribers , the Prepayment Make-Whole Amount is payable. Change of Controlmeans (i) the Company ceases to own, indirectly, at least 50% of Geoalcali; and/or (ii) ceases to own at least 50% of the Project; and/or (iii) any person acquires a relevant interest of more than 50% in the Shares.
19.	Covenants	The Company will be subject to limited covenants in connection with the Notes including that no dividends

Page 10

	Term	Description
		are payable by the Company while the Notes are outstanding. No financial covenants are proposed.
20.	Events of default	Events of default include: ■ insolvency of the Company, KCL or Geoalcali; ■ any payment default under the CND; ■ material breach (after relevant cure period exhausted) of other obligations under the CND (provided that failure to satisfy the Security Condition shall not be an Event of Default); ■ cross default of any financial indebtedness of the Company or its subsidiaries where the amount owed under the financial indebtedness exceeds US$1,000,000; ■ the Company's senior facility agreement is cancelled or terminated; ■ the Company takes any action that is designed to have the effect of terminating its listing on ASX; ■ the key Project permit is revoked; ■ the Company, Geoalcali or both make a final decision to discontinue the Project; ■ the Company receives any written notification from ASX that ASX is contemplating terminating its listing; ■ an Issuer Group Member (as defined in the CND) breaches in a material respect any representation or warranty given in a Transaction Document (as defined in the CND); ■ a Transaction Document is or becomes void or unenforceable in any material respect; ■ Geoalcali ceases to be a wholly-owned direct subsidiary of KCL or KCL ceases to be a wholly- owned direct Subsidiary of the Company; ■ compulsory acquisition of all or a material part of the assets of the Company by a government agency; and ■ any event or circumstance occurs which has or would have a Material Adverse Effect (as defined in the CND), (theEvents of Default).
21.	Quotation	The Notes will not be listed on ASX.
22.	Voting rights	The Notes will not confer the right to vote at any board or Shareholder meeting of the Company.
23.	Participation	The Notes do not confer a right on the holder of the Notes to participate in any issue of securities of the Company.
24.	Failure to satisfy Security Condition	Failure to (i) satisfy the Security Condition on or before the End Date and/or (ii) obtain any other consent, approval, permission, permit, licence, waiver or other authorisation required to provide, perfect or enforce the security on or before the End Date (including any approval from senior lenders, if required and subject to the ASX Listing Rules), will result in the additional interest noted above.
25.	Transfers of Notes	The Noteholders shall not assign or transfer any of its rights or obligations under the CND and associated documentation without the Company’s consent (such consent not to be unreasonably withheld) except in case of an Event of Default which is continuing or a transfer to an affiliate, in which case no such consent will be required.

Page 11

1.3 Other information

By way of further background to the commercial rationale for the issuance of the Notes, the Company notes the following:

Item	Details
Why the Company needs to issue the Notes on the terms described in this Explanatory Memorandum	The Company requires bridging finance for a period which is expected to be in the order of six to nine months in order to finance its efforts to reach certain customary milestones relating to the Project which it must meet in order to be able to draw down under its Project Financing.
The alternative funding raising options (if any) that were considered by the Company before it decided to enter into the CND	The Company considered raising equity by way of an offering of its Shares (by way of a placement, share purchase plan or entitlement offer) and non-convertible debt.
If alternative funding raising options were considered, the reasons why the Notes were determined by the Company to be preferable to other funding options	In the Company's view, any equity raising may (i) have involved an unattractive discount and (ii) not have been underwritten and so involve a degree of uncertainty. Accordingly, the Convertible Notes, under which financial accommodation is being provided by existing Shareholders, was considered to be preferable to an equity raising because of the certainty of the commitment of funds and the fact that the most likely scenario involves conversion at the current market price, meaning that dilution is minimised as the Noteholders will not receive the benefit of conversion at a discount. The Convertible Notes are superior to 'pure' debt because they are mandatorily convertible into Share upon drawdown under the Project Financing. This will assist the Company to comply with its obligations under the Project Financing and effectively eliminates the risk of cross- default beyond that point. In addition, 'pure' debt for bridging finance in connection with a project such as the Project would be more expensive for the Company than the Convertible Notes.

1.4 ASX Listing Rule 10.11

ASX Listing Rule 10.11 provides that unless one of the exceptions in ASX Listing Rule 10.12 applies, a listed company must not issue or agree to issue equity securities to a related party or an associate of a related party unless it obtains the approval of its shareholders.

Because the EMR Subscribers are associated with EMR Fund 1 which is a substantial (10%+) holder of Shares in the Company and has nominated a director to the board pursuant to a relevant agreement with the Company which gives EMR Fund 1 a right or expectation to do so, the EMR Subscribers will be regarded by the ASX as persons in a position of influence over the Company for the purposes of ASX Listing Rule 10.11.3. As a result, the issue of the Notes without first obtaining Shareholder approval is prohibited under ASX Listing Rule 10.11 as it does not fall within any of the exceptions to that rule as set out in ASX Listing Rule 10.12. The issuance of the Notes to the EMR Subscribers therefore requires approval of Shareholders under ASX Listing Rule 10.11.

Resolution 1 seeks Shareholder approval to the issue of the Notes to the EMR Subscribers for the purposes of ASX Listing Rule 10.11 and for all other purposes.

If Resolution 1 is passed, the Company will be able to proceed with the issue of the Notes and raise the Loan Amount. If Resolution 1 is not passed, the Company will not be able to proceed with the issue of the Notes to the EMR Subscribers and will be unable to use the funds proposed to be raised from the issue of the Notes for purposes set out in Item 6 of the table above.

The issue of the Notes does not require Shareholder approval under ASX Listing Rule 7.1. If Shareholder approval is obtained under ASX Listing Rule 10.11 for the issue of the Notes, that issue will fall within an exception to ASX Listing Rule 7.1 set out in ASX Listing Rule 7.2 and will not reduce the Company’s placement capacity under ASX Listing Rule 7.1.

Page 12

1.5 Technical information required by ASX Listing Rule 10.13

ASX Listing Rule 10.13 requires the following information to be provided to Shareholders:

• Notes are proposed to be issued to each of the EMR Subscribers who, as stated above, will be regarded by the ASX as persons in a position of influence over the Company for the purposes of ASX Listing Rule 10.11.3;

• the number of Notes proposed to be issued to the EMR Subscribers, in aggregate, is 1,224 Notes. Assuming, the Conversion Price for the Notes remains at A$0.515 being the volume weighted average price of the Shares as traded on ASX over the 20 trading days prior to the date of the CND converted into US$ at a AUD:USD exchange rate ofUS$0.67 to A$1.00, the maximum number of Shares which may be issued were the Notes to be converted in full would be approximately 34,679,611 Shares;

• a summary of the material terms of the Notes is set out above under the heading 'Key terms of the Notes';

• the Company will issue Notes to the EMR Subscribers as soon as practicable after the date of the Extraordinary General Meeting (and in any event within 1 month after the date of the Extraordinary General Meeting);

• the face value of each Note to be issued the Notes to the EMR Subscribers is US$10,000 and therefore the Company will receive US$12 million in aggregate (before costs) from the issue of the Notes to the EMR Subscribers; and

• the purpose of the issue of the Notes and use of funds raised under the issue of Notes is set out in Item 6 in the table above under the heading 'Key terms of the Notes'.

A voting exclusion statement has been included for the purposes of Resolution 1.

Resolution 1 is an ordinary resolution.

The Directors that do not have an interest in the outcome of Resolution 1, recommend that Shareholders vote in favour of Resolution 1. Mr Brian Jamieson (a non-executive director nominated to the board by EMR Capital) abstained from voting on the board resolution to enter into the agreement to issue the Notes and from the voting recommendation to Shareholders.

Each of the Directors who does not have an interest in the outcome of Resolution 1 intend to vote all Shares held or controlled by them in favour of Resolution 1.

The chair intends to vote undirected proxies in favour of Resolution 1.

2. RESOLUTION 2: APPROVAL OF PREVIOUS ISSUE OF CONVERTIBLE NOTES

2.1 Overview and terms of Notes

The terms and conditions of the Notes issued to the Other Subscribers are the same as the terms and conditions of the Notes issued to EMR Subscribers as described in paragraph 1.2 of this Explanatory Memorandum. See paragraphs 1.1 and 1.2 of this Explanatory Memorandum.

2.2 ASX Listing Rule 7.1

Broadly speaking, ASX 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.

The issue of the 714 Notes to the Other Subscribers does not fit within any of the exceptions to ASX Listing Rule 7.1 and, as the issue of such Notes has not yet been approved by Shareholders, it is effectively using up the Company’s 15% limit in ASX Listing Rule 7.1, reducing the Company’s capacity to issue further equity securities without Shareholder approval under ASX Listing Rule 7.1 for the 12-month period following the issue of the 714 Notes.

Page 13

2.3 ASX Listing Rule 7.4

ASX 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 ASX Listing Rule 7.1 and so does not reduce the Company’s capacity to issue further equity securities without shareholder approval under that rule.

The Company wishes to retain as much flexibility as possible to issue additional equity securities in the future without having to obtain Shareholder approval for such issues under ASX Listing Rule 7.1.

To this end, Resolution 2 seeks Shareholder approval for the issue of the 714 Notes to the Other Subscribers under and for the purposes of ASX Listing Rule 7.4.

Resolution 2 seeks Shareholder approval and ratification pursuant to ASX Listing Rule 7.4 for the prior issue of the 714 Notes to the Other Subscribers which were issued without Shareholder approval in reliance on the Company’s available placement capacity under ASX Listing Rule 7.1) for the purposes of ASX Listing Rule 7.4, so as to 'refresh' the Company's 15% placement capacity under ASX Listing Rule 7.1

If Resolution 2 is not passed, the 714 Notes issued to the Other Subscribers will be included in calculating the Company’s 15% limit in ASX Listing Rule 7.1, effectively decreasing the number of equity securities the Company can issue under ASX Listing Rule 7.1 without Shareholder approval over the 12-month period following the issue of the 714 Notes to the Other Subscribers.

2.4 ASX Listing Rule 7.5

ASX Listing Rule 7.5 sets out a number of items which must be included in a notice of meeting proposing a ratification of securities under ASX Listing Rule 7.4. The following information is provided in accordance with ASX Listing Rule 7.5:

• 714 Notes have been issued under the Company’s 15% placement capacity.

• The 714 Notes issued to the Other Subscribers were issued for aggregate cash proceeds of A$7 million.

• The 714 Notes issued to the Other Subscribers were issued on 23 May 2023.

• The 714 Notes issued to the Other Subscribers were issued under the CND, the terms of which are summarised in this Explanatory Memorandum.

• The terms and conditions of the Notes are as described in this Explanatory Memorandum. In particular, see Item 6 in the table above under the heading 'Key terms of the Notes'.

• The Other Subscribers, being funds managed by Tectonic Investment Management, and certain of its related parties, are institutional, professional or sophisticated investors. None of the Other Subscribers were:

• A related party of the Company;

• A member of the key management personnel of the Company

• ▪ A substantial holder in the Company;

• An adviser of the Company; or

• ▪ An associate of any of the above

• the purpose of the issue of the Notes and use of funds raised under the issue of Notes is set out in Item 6 in the table above under the heading 'Key terms of the Notes'.

A voting exclusion statement has been included for the purposes of Resolution 2.

Resolution 2 is an ordinary resolution.

The recommend that Shareholders vote in favour of Resolution 2.

Page 14

The Directors do not have an interest in the outcome of Resolution 2 and recommend that Shareholders vote in favour of Resolution 2.

The chair intends to vote undirected proxies in favour of Resolution 2.

DEFINED TERMS

CND means the convertible note deed entered into between the Company and each Subscriber dated 22 May 2023.

EMR Fund 1 means EMR Capital Investment (No. 2B) Pte Ltd.

EMR Fund III means EMR Capital GP III Limited in its capacity as general partner of EMR Capital Resources Fund III, LP.

EMR Subscribers means EMR Fund 1 and EMR Fund III.

Geoalcali means Geoalcali S.L.U.

KCL means KCL Resources Limited ACN 150 161 658.

Noteholders means holders of the Notes.

Other Subscribers means certain funds managed by Tectonic Investment Management, and certain of its related parties.

Subscribers means the EMR Subscribers and the Other Subscribers.

Page 15

==> picture [188 x 69] intentionally omitted <==

LODGE YOUR PROXY APPOINTMENT ONLINE

==> picture [10 x 11] intentionally omitted <==

ONLINE PROXY APPOINTMENT

www.advancedshare.com.au/investor-login

==> picture [10 x 10] intentionally omitted <==

MOBILE DEVICE PROXY APPOINTMENT

Lodge your proxy by scanning the QR code below, and enter M:\MSOFFICE\WINWORD\CLIENT LOGO\HFRLogo JP your registered postcode. It is a fast, convenient and a secure way to lodge your vote. Important Note: The Company will be holding the EGM both in person and virtually. The Company will decide the outcome of voting on the resolutions in the Notice by proxy voting, submitted ahead of the Meeting, and via in-person and online poll voting. Please refer to the Notice of Meeting for the webcast information. The Company strongly encourages all shareholders to lodge a directed proxy vote prior to the cut-off date for proxy voting as set out in the Notice. EXTRAORDINARY GENERAL MEETING PROXY FORM I/We being shareholder(s) of Highfield Resources Limited and entitled to attend and vote hereby: APPOINT A PROXY The Chair of  PLEASE NOTE: If you leave the section blank, the OR the Meeting Chair of the Meeting will be your proxy. or failing the individual(s) or body corporate(s) named, or if no individual(s) or body corporate(s) named, the Chair of the Meeting, as my/our proxy to act generally at the Meeting on my/our behalf, including 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 Extraordinary General Meeting of the Company to be held at HLB Mann Judd Level 1, 169 Fullarton Rd, Adelaide, South Australia 5065 and virtually on Wednesday, 21 June 2023 at 3.30pm (Adelaide time) and at any adjournment or postponement of that Meeting. Chair’s voting intentions in relation to undirected proxies: The Chair intends to vote all undirected proxies in favour of all Resolutions. In exceptional circumstances, the Chair may change his/her voting intentions on any Resolution. In the event this occurs, an ASX announcement will be made immediately disclosing the reasons for the change. VOTING DIRECTIONS Resolutions For Against Abstain* 1 Approval of issue of Convertible Notes ◼◼ ◼ 2 Approval of previous issue of Convertible Notes under ASX Listing Rule 7.1 ◼◼ ◼  * If you mark the Abstain box for a particular Resolution, you are directing your proxy not to vote on your behalf on a show of hands or on a poll and your votes will not be counted in computing the required majority on a poll. SIGNATURE OF SHAREHOLDERS – THIS MUST BE COMPLETED Shareholder 1 (Individual) Joint Shareholder 2 (Individual) Joint Shareholder 3 (Individual) Sole Director and Sole Company Secretary Director/Company Secretary (Delete one) Director This form should be signed by the shareholder. If a joint holding, all the shareholders should sign. If signed by the shareholder’s attorney, the power of attorney must have been previously noted by the registry or a certified copy attached to this form. If executed by a company, the form must be executed in accordance with the company’s constitution and the Corporations Act 2001 (Cth). Email Address

Please tick here to agree to receive communications sent by the Company via email. This may include meeting notifications, dividend remittance, and selected announcements.

==> picture [15 x 16] intentionally omitted <==

HIGHFIELD RESOURCES LIMITED - EXTRAORDINARY GENERAL MEETING

The Company will be holding the EGM both in person and virtually. The Company will decide the outcome of voting on the resolutions in the Notice by proxy voting, submitted ahead of the Meeting, and via in-person and online poll voting.

The Company strongly encourages all shareholders to lodge a directed proxy vote prior to the cut-off date for proxy voting as set out in the Notice. To lodge your proxy, please follow the directions on your personalised proxy form delivered to you by email or post (depending on your communication preferences).

The Company is happy to answer questions prior to the close of proxy voting via email, such questions should be sent to the following email address k_adams@geoalcali.com .

An online poll voting www.advancedshare.com.au/virtual-meeting will be offered to allow Shareholders to vote online during the Meeting. Please refer to the Meeting ID and Shareholder ID on your personalised proxy form to login to the website. HOW TO COMPLETE THIS SHAREHOLDER PROXY FORM IF YOU WOULD LIKE TO ATTEND AND VOTE AT THE MEETING, PLEASE BRING THIS FORM WITH YOU. THIS WILL ASSIST IN REGISTERING YOUR ATTENDANCE. CHANGE OF ADDRESS CORPORATE REPRESENTATIVES This form shows your address as it appears on Company’s share register. If this If a representative of a nominated corporation is to attend the Meeting the information is incorrect, please make the correction on the form. Shareholders appropriate “Certificate of Appointment of Corporate Representative” should sponsored by a broker should advise their broker of any changes. be produced prior to admission in accordance with the Notice of Meeting. A APPOINTMENT OF A PROXY Corporate Representative Form may be obtained from Advanced Share Registry. If you wish to appoint the Chair as your proxy, mark the box in Step 1. If you SIGNING INSTRUCTIONS ON THE PROXY FORM wish to appoint someone other than the Chair, please write that person’s name in the box in Step 1. A proxy need not be a shareholder of the Company. A proxy Individual: may be an individual or a body corporate. Where the holding is in one name, the security holder must sign. DEFAULT TO THE CHAIR OF THE MEETING Joint Holding: Where the holding is in more than one name, all of the security holders should If you leave Step 1 blank, or if your appointed proxy does not attend the sign. Meeting, then the proxy appointment will automatically default to the Chair of Power of Attorney: the Meeting. If you have not already lodged the Power of Attorney with Advanced Share VOTING DIRECTIONS – PROXY APPOINTMENT Registry, please attach the original or a certified photocopy of the Power of You may direct your proxy on how to vote by placing a mark in one of the boxes Attorney to this form when you return it. opposite each resolution of business. All your shares will be voted in Companies: accordance with such a direction unless you indicate only a portion of voting Where the company has a Sole Director who is also the Sole Company rights are to be voted on any resolution by inserting the percentage or number Secretary, this form must be signed by that person. If the company (pursuant of shares you wish to vote in the appropriate box or boxes. If you do not mark to section 204A of the Corporations Act 2001) does not have a Company any of the boxes on a given resolution, your proxy may vote as they choose to Secretary, a Sole Director can sign alone. Otherwise this form must be signed the extent they are permitted by law. If you mark more than one box on a by a Director jointly with either another Director or a Company Secretary. resolution, your vote on that resolution will be invalid. Please sign in the appropriate place to indicate the office held. PLEASE NOTE: If you appoint the Chair as your proxy (or if they are appointed by default) but do not direct them how to vote on a resolution (that is, you do LODGE YOUR PROXY FORM not complete any of the boxes “For”, “Against” or “Abstain” opposite that This Proxy Form (and any power of attorney under which it is resolution), the Chair may vote as they see fit on that resolution. signed) must be received at an address given below by 3.30pm APPOINTMENT OF A SECOND PROXY (Adelaide time) on 19 June 2023, being not later than 48 hours before the commencement of the Meeting. Proxy Forms received You are entitled to appoint up to two persons as proxies to attend the Meeting after that time will not be valid for the scheduled Meeting. and vote on a poll. If you wish to appoint a second proxy, an additional Proxy Form may be obtained by telephoning Advanced Share Registry Limited or you ONLINE PROXY APPOINTMENT may copy this form and return them both together. www.advancedshare.com.au/investor-login To appoint a second proxy you must: (a) on each Proxy Form state the percentage of your voting rights or number BY MAIL of shares applicable to that form. If the appointments do not specify the Advanced Share Registry Limited percentage or number of votes that each proxy may exercise, each proxy 110 Stirling Hwy, Nedlands WA 6009; or may exercise half your votes. Fractions of votes will be disregarded; and PO Box 1156, Nedlands WA 6909 (b) return both forms together. BY FAX COMPLIANCE WITH LISTING RULE 14.11 +61 8 6370 4203 In accordance to Listing Rule 14.11, if you hold shares on behalf of another person(s) or entity/entities or you are a trustee, nominee, custodian or other BY EMAIL fiduciary holder of the shares, you are required to ensure that the person(s) or admin@advancedshare.com.au entity/entities for which you hold the shares are not excluded from voting on resolutions where there is a voting exclusion. Listing Rule 14.11 requires you to IN PERSON receive written confirmation from the person or entity providing the voting Advanced Share Registry Limited instruction to you and you must vote in accordance with the instruction 110 Stirling Hwy, Nedlands WA 6009 provided.

By lodging your proxy votes, you confirm to the company that you are in compliance with Listing Rule 14.11.

==> picture [11 x 11] intentionally omitted <==

ALL ENQUIRIES TO Telephone: +61 8 9389 8033