KUNIKO LIMITED — Capital/Financing Update 2021

Aug 19, 2021

==> picture [172 x 68] intentionally omitted <==

STATEMENT OF CONFIRMATIONS

Kuniko Limited (ACN 619 314 055) ( Company ) confirms that all conditions precedent to its public offer and priority offer ( Offers ) under the Company’s prospectus dated 11 June 2021 ( Prospectus ) have been satisfied. The Company has issued 39,431,064 Shares under the Offers to raise $7,886,213.

Capitalised terms in this announcement have the same meaning given under the Prospectus.

The Company confirms that:

1. All conditions precedent to the Offers have been satisfied, being:

2. (a) the Company raising the Minimum Subscription under the Offers; and

3. (b) the Company receiving conditional approval to be admitted to the official list of ASX; and

4. (c) the Company obtaining consent from the Directorate of Mining in Norway for a change in control of the Company to occur as a result of the Offers.

5. The Company confirms that 1,125,000 Lead Manager Options and 5,100,000 Performance Rights have been issued.

7. The following securities are subject to ASX imposed escrow:

Security	Number	Restriction Period
Shares	11,708,4351	Expiring 24 months from the date of quotation.
Options	1,125,000
Performance Rights	5,100,000

Notes:

1. Pursuant to a marketing mandate between the Company and S3 Consortium Pty Ltd, it is proposed that the Company will issue a further 1,875,000 Shares to S3 Consortium Pty Ltd at a deemed issue price of $0.20 per Share for the provision of marketing services to the Company post-listing. These Shares will be subject to ASX imposed escrow for a period of 24 months from the date of quotation.

1

1. Set out below is the Company’s capital structure:

Shares

Security	Number
Shares on issue at date of Prospectus	13,749,435
Shares issued pursuant to the Offers	39,431,0641
Total Shares on issue	53,180,499

Notes:

1. Pursuant to a marketing mandate between the Company and S3 Consortium Pty Ltd, it is proposed that the Company will issue a further 1,875,000 Shares to S3 Consortium Pty Ltd at a deemed issue price of $0.20 per Share for the provision of marketing services to the Company post-listing. These Shares will be subject to ASX imposed escrow for a period of 24 months from the date of quotation.

Options

Security	Number
Options currently on issue	Nil
Options exercisable at $0.40 on or before 17 August 2024 – this is the date which is three years from the date of issue (pursuant to the Lead Manager Mandate)	1,125,000
Total Options on issue	3,600,000

Performance Rights[1]

Security	Number
Performance Rights currently on issue	Nil
Class A Performance Rights	1,500,000
Class B Performance Rights	1,500,000
Class C Performance Rights	1,500,000
Class D Performance Rights	200,000
Class E Performance Rights	200,000
Class F Performance Rights	200,000
Total Performance Rights on issue	5,100,000

Notes:

1. Refer to Section 10.4 of the Prospectus for the full terms of these Performance Rights.

2. The Company has obtained a waiver from listing rule 1.1 condition 12 to the extent necessary to permit the Company to have on issue 5,100,000 Performance Rights with a nil exercise price on condition that the material terms and conditions of the Performance Rights are clearly disclosed in the Prospectus.

2

1. The following additional information is provided with respect to the Performance Rights issued to the Directors and the CEO (the Recipients ) (or their nominees):

2. (a) The number of Performance Rights issued to the Recipients (or their nominees) is as follows:

Holder	Number of Performance Rights
Vivien Enterprises Pte Ltd (nominee of Gavin Rezos)	2,400,0001
Antony Beckmand	1,200,0001
Borg Geoscience Pty Ltd (nominee of Brendan Borg)	900,0001
Scaraf Trust A/C (nominee of Maja McGuire)	300,0002
Birgit Liodden	300,0002
Total	5,100,000

Notes:

1. Comprising Class A Performance Rights (one third), Class B Performance Rights (one third) and Class C Performance Rights (one third).

2. Comprising Class D Performance Rights (one third), Class E Performance Rights (one third) and Class F Performance Rights (one third).

3. (b) The Performance Rights are being issued to the Recipients as part of their respective remuneration packages, in order to link part of the remuneration payable to the Recipients to specific performance milestones set out in Section 10.4(a) of the Prospectus. The Performance Rights are being issued to incentivise the Recipients and are not ordinary course of business remuneration securities.

4. (c) A summary of the consultancy agreement with Viaticus Capital Pty Ltd (a company controlled by Mr Gavin Rezos), the executive services agreement for Mr Antony Beckmand and the non-executive director appointment letters for Ms Maja McGuire, Ms Birgit Liodden and Mr Brendan Borg are included at Sections 9.2.1 and 9.3 and 9.32 of the Prospectus.

Each of the Recipients will play a key role in executing the Company’s business model (as set out in Sections 5.3 to 5.5 of the Prospectus), which is directly aligned with the performance milestones for the Performance Rights as follows:

• (i) as Directors, Mr Rezos, Ms McGuire, Ms Liodden and Mr Borg will be responsible for, among other things, directing the operations of the Company and providing recommendations of a strategic nature to board members.

• (ii) as the Company’s Chief Executive Officer, Mr Beckmand will be responsible for, among other things, the management of the organisation and operations of the Company.

(d) Details of the existing total remuneration packages of each of the Recipients are disclosed at Section 8.2 of the Prospectus.

3

• (e) On completion of the Offers, the Board (and their associates) hold the following securities in the Company:

Board Member	Shares	Performance Rights
Gavin Rezos	1,507,552	2,400,0001
Antony Beckmand	50,000	1,200,0001
Brendan Borg	500,000	900,0001
Maja McGuire	50,000	300,0002
Birgit Liodden	50,000	300,0002

Notes:

1. Comprising Class A Performance Rights (one third), Class B Performance Rights (one third) and Class C Performance Rights (one third).

2. Comprising Class D Performance Rights (one third), Class E Performance Rights (one third) and Class F Performance Rights (one third).

3. (f) The Performance Rights have been issued as part of the Recipients’ remuneration packages.

The Company considers it necessary and appropriate to further remunerate and incentivise the Recipients to achieve the applicable performance milestones for the following reasons:

• (i) the issue of Performance Rights to the Recipients will further align the interests of the Recipients with those of Shareholders;

• (ii) the Performance Rights are unlisted, therefore the grant of the Performance Rights has no immediate dilutionary impact on Shareholders;

• (iii) the issue of the Performance Rights is a reasonable and appropriate method to provide cost effective remuneration as the non-cash form of this benefit will allow the Company to spend a greater proportion of its cash reserves on its operations than it would if alternative cash forms of remuneration were given to the Recipients; and

• (iv) it is not considered that there are any significant opportunity costs to the Company or benefits foregone by the Company in granting the Performance Rights on the terms proposed.

• (g) The number of Performance Rights to be issued to each of the Recipients (or their nominees) was determined by the Board following arm’s length negotiations with each of the Recipients, and having regard to:

• (i) current market standards and/or practices of other ASX listed companies of a similar size and stage of development to the Company;

• (ii) the remuneration of the Recipients; and

• (iii) incentives to attract and retain the service of the Recipients, who have the desired knowledge and expertise, while maintaining the Company’s cash reserves.

4

• (h) The Board considers the number of Performance Rights to be appropriate and equitable for the following reasons:

• (i) the Performance Rights are consistent with ASX’s policy regarding the base requirements for performance securities, which are detailed in section 9 of ASX Guidance Note 19;

• (ii) the number of Shares into which the Performance Rights will convert if the milestones are achieved is fixed (one for one) which allows investors and analysts to readily understand and have reasonable certainty as to the impact on the Company’s capital structure if the milestones are achieved;

• (iii) there is an appropriate link between the milestones and the purposes for which the Performance Rights are being issued and the conversion milestones are clearly articulated by reference to objective criteria;

• (iv) there is an appropriate link to the benefit of Shareholders and the Company at large through the achievement of the milestones, which have been constructed so that satisfaction of the milestones will be consistent with increases in the value of Company’s business;

• (v) the Performance Rights which are proposed to be issued represent a small proportion of the Company's issued capital upon listing (less than 10% of issued Share capital); and

• (vi) the Performance Rights have an expiry date by which the milestones are to be achieved and, if the milestones are not achieved by that date, the Performance Rights will lapse.

• (i) If the applicable milestones are met, the Performance Rights will convert into 5,100,000 Shares. This will have the following impact on the Company’s capital structure:

	Offers ($7,886,213)
Performance Rights on issue	5,100,000
Shares on issue Post-Listing (fully diluted)	59,405,499

• (j) The full terms of the Performance Rights are disclosed at Section 10.4 of the Prospectus.

• The Company confirms that there are no legal, regulatory, statutory or contractual impediments to Company entering its tenements (as listed on page 20 of Annexure A to the Prospectus) and carrying out exploration activities such that KNI will be able to spend its cash in accordance with its commitments for the purposes of Listing Rule 1.3.2(b).

5

For further information, please contact:

Joel Ives Company Secretary + 61 (8) 6364 5095

info@kuniko.eu

6