KORAB RESOURCES LIMITED — Capital/Financing Update 2017

Apr 9, 2017

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10 April 2017

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Dear Share h older

NON-RENOUNCEABLE RIGHTS ISSUE

On 7 April 2 017 Korab Resources Limited ( Korab or Company ) ann o unced a parti a lly underwritte n pro-rata entitlement share issue to eligible sharehold e rs.

Terms of Rights Issue

Shareholde r s who are registered with a n address in A u stralia or Ne w Zealand at 5 .00 pm AWST on 12 April 2 0 17 ( Eligible Shareholders as at Record Date ) will b e eligible to pa r ticipate in a pro-rata non-ren o unceable righ t s issue on the basis of one fully paid or d inary share in the Company ( New Share ) f o r every six (6) shares held at an issue price o f $0.019 per s hare ( Rights Issue ).

The Rights I ssue will resul t in the issue o f up to approx i mately 37.6 m i llion New Sha r es to raise up t o $715,013 b e fore costs of the Rights I s sue.

The Rights I ssue is partly u nderwritten u p to $300,000 b y Rheingold Investments Corporation Pty Lt d ( Underwriter ) which is an associated e ntity of Mr An d rej K. Karpins k i, a director of t he Company.

Proceeds r e ceived from th e Rights Issue will be applied to the costs of the Rights Iss u e, the Compa n y’s ongoing w o rking capital requirements, consistent w ith its strateg y disclosed to d ate and to r e duce the Company’s debt ( c urrently appro x imately $1.8 million). Ko r ab’s strategy i ncludes progr e ssing Winche s ter magnesit e deposit towa r ds developm e nt as a direct shipping ore quarry, sec u ring offtake a n d sale agreements for Winchester magnesi t e quarry and e xploration and evaluation of o ther Korab’s properties. T he Directors r e serve the dis c retion in resp e ct of this. The exact allocation of amounts w ill depend on how much is raised unde r the Offer and how much is u nderwritten (a s the Underwri t er may offset s ubscription m o nies against t h e debt owed to it).

In accordan c e with the requirements of the ASX Listing R ules, the follo w ing informati o n on the Right s Issue and th e Company is provided:

PrincipalT of securitie erms of issue s	New Share shares on i s will rank equa ssue. lly in all respec ts with the exis ting class of qu oted fully paid ordinary
Record Da te	The record date for determ ining entitleme nts is 5:00pm (AWST) on We dnesday, 12A pril 2017
Fractional entitlements	Any fraction al entitlements will be rounde d up to the nea rest whole num ber.
Non Renou nceable	The Rights do not take Issue is non-re up your Entitle nounceable.A ment, it will lap ccordingly, the se and will be re will be no tra dealt with as pa ding of the rig rt of the shortf hts. If you all.
Eligibility	Only share will be eligi holders with reg ble to participat istered addres e in the Rights ses in Australia Issue. or New Zeala nd as at the re cord date
Fees	• The U under • No ha holder nderwriter willr the Rights Issu ndling fees will s. eceive a fee of e. be paid to brok 1.0% of the un ers who lodge derwritten port acceptanceso ion of the amo n behalf of sec unt raised urity

KORAB RESOURCES LIMITED

KORAB HOUSE

20 PR O WSE STREET, W EST PERTH, 600 5 , WESTERN AUSTRALIA PO BOX 1958, WEST PERTH, WA, 6872, AUSTRALI A , Tel (08) 94 7 4 6166 Fax (0 8 ) 9322 6333

www.korabresources. c om.au

ACN 082 140 25 2

Maximum number of securities to be issued	The maximum number of new shares to be issued under the Rights Issue is 37,632,267. This means that following the Rights Issue, the maximum number of shares on issue will be 263,423,718 (based on the issued share capital of Korab as at the date of this letter) and the number of options on issue will be 4,000,000.
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 Thursday 6 April 2017

Timetable

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

Date	Action
Friday, 7 April 2017	Announcement of Rights Issue Offer Memorandum, ASX Appendix 3B and Cleansing Notice lodged with ASX
Tuesday, 11 April 2017	Ex Date– the date on which Shares commence trading without the entitlement to participate in the Rights Issue.
5:00pm AWST on Wednesday, 12 April 2017	Record Date– the date for determining entitlements of Eligible Shareholders
Wednesday, 19 April 2017	Despatch of Offer Memorandum Rights Issue Opens
Wednesday, 26 April 2017	Last day to extend Closing Date
5:00pm AWST on Monday, 1 May 2017	Closing Date
Tuesday, 2 May 2017	New Shares quoted on a deferred settlement basis
Thursday, 4 May 2017	New Shares issued
Friday, 5 May 2017	Expected commencement of normal trading in New Shares
Monday, 8 May 2017	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 Friday, 7 April 2017. 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 19 April 2017.

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

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