KORAB RESOURCES LIMITED — Capital/Financing Update 2015

May 26, 2015

==> picture [81 x 73] intentionally omitted <==

27 May 2015

==> picture [209 x 87] intentionally omitted <==

Dear Shareholder

NON-RENOUNCEABLE RIGHTS ISSUE

On 26 May 2015 Korab Resources Limited ( Korab or Company ) announced a partially underwritten pro-rata entitlement share issue to eligible shareholders.

Terms of Rights Issue

Shareholders who are registered with an address in Australia or New Zealand at 5.00 pm AWST on Monday, 1 June 2015 ( Eligible Shareholders as at Record Date ) will be eligible to participate in a pro-rata non-renounceable rights issue on the basis of one fully paid ordinary share in the Company ( New Share ) for every three (3) shares held at an issue price of $0.03 per share ( Rights Issue ).

The Rights Issue will result in the issue of up to approximately 50.75 million New Shares to raise up to $1.522 million before costs of the Rights Issue.

The Rights Issue is partly underwritten up to $600,000 by Rheingold Investments Corporation Pty Ltd ( Underwriter ) which is an associated entity of Mr Andrej K. Karpinski, a director of the Company.

Proceeds received from the Rights Issue will be applied to the costs of the Rights Issue, the Company’s ongoing working capital requirements, consistent with its strategy disclosed to date and to reduce the Company’s debt (currently approximately $2.3 million). Korab’s strategy includes progressing Winchester magnesite deposit towards development as a direct shipping ore quarry, securing offtake and sale agreements for Geolsec phosphate quarry and exploration and evaluation of other Korab’s properties. The Directors reserve the discretion in respect of this. The exact allocation of amounts will depend on how much is raised under the Offer and how much is underwritten (as the Underwriter may offset subscription monies against the debt owed to it).

In accordance with the requirements of the ASX Listing Rules, the following information on the Rights Issue and the Company is provided:

Principal Terms of issue of securities	New Shares will rank equally in all respects with the existing class of quoted fully paid ordinary shares on issue.
Record Date	The record date for determining entitlements is 5:00pm (AWST) on Monday, 1 June 2015
Fractional entitlements	Any fractional entitlements will be rounded up to the nearest whole number.
Non Renounceable	The Rights Issue is non-renounceable. Accordingly, there will be no trading of the rights. If you do not take up your Entitlement, it will lapse and will be dealt with as part of the shortfall.
Eligibility	Only shareholders with registered addresses in Australia or New Zealand as at the record date will be eligible to participate in the Rights Issue.
Fees	 The Underwriter will receive a fee of 1.0% of the underwritten portion of the amount raised under the Rights Issue.  No handling fees will be paid to brokers who lodge acceptances on behalf of security holders.

KORAB RESOURCES LIMITED

KORAB HOUSE

20 PROWSE STREET, WEST PERTH, 6005, WESTERN AUSTRALIA PO BOX 1958, WEST PERTH, WA, 6872, AUSTRALIA,

Tel (08) 9474 6166 Fax (08) 9322 6333

www.korabresources.com.au

ACN 082 140 252

Maximum number of securities to be issued	The maximum number of new shares to be issued under the Rights Issue is 50,750,435. This means that following the Rights Issue, the maximum number of shares on issue will be 203,000,435 and the number of options on issue will be 5,100,000.
Dividend Policy	The Company does not have a dividend policy and does not intend to declare a dividend in the near future.
Shareholder approval	No shareholder approval will be required for the Rights Issue.
Notification to optionholders	Optionholders were notified of the Rights Issue on Monday, 25 May 2015

Timetable

The Rights Issue is being conducted in accordance with the following timetable:

Date	Action
Tuesday, 26 May 2015	Announcement of Rights Issue Offer Memorandum, ASX Appendix 3B and Cleansing Notice lodged with ASX
Thursday, 28 May 2015	Ex Date– the date on which Shares commence trading without the entitlement to participate in the Rights Issue.
5:00pm AWST on Monday, 1 June 2015	Record Date– the date for determining entitlements of Eligible Shareholders
Thursday, 4 June 2015	Despatch of Offer Memorandum Rights Issue Opens
Thursday, 11 June 2015	Last day to extend Closing Date
5:00pm AWST on Tuesday, 16 June 2015	Closing Date
Wednesday, 17 June 2015	New Shares quoted on a deferred settlement basis
Monday, 22 June 2015	New Shares issued
Tuesday, 23 June 2015	Expected commencement of normal trading in New Shares
Friday, 26 June 2015	Statements for New Shares Despatched

All of the abovementioned dates may be subject to change. The Company reserves the right to amend this timetable subject to the underwriting agreement, the Act and the ASX Listing Rules, including to extend the closing date.

Full details of the Rights Issue are set out in the Offer Memorandum and Appendix 3B released on ASX on Tuesday, 26 May 2015. The Offer Memorandum is available to download from ASX website (at www.asx.com.au) and is expected to be sent out to shareholders on 4 June 2015.

You are encouraged to read the Offer Memorandum in full before making a decision in respect of the Rights Issue. To accept all or part of your entitlement under the Rights Issue you will need to complete the acceptance form that will accompany the Offer Memorandum to be sent to shareholders.

The Company will not be sending an offer under the Rights Issue to any shareholder who does not have a registered address in Australia or New Zealand as at the record date.

If you have any questions in relation to the Rights Issue, please do not hesitate to contact the Company on (08) 9474 6166.

Yours sincerely

Mr Andrej K Karpinski FAICD FFin Executive Chairman

3142431/v1

2