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NORTHERN MINERALS LIMITED ABN 61 119 966 353

NOTICE OF MEETING OF SHAREHOLDERS

AND

EXPLANATORY MEMORANDUM TO SHAREHOLDERS

AND

PROXY FORM

THE INDEPENDENT EXPERT HAS CONCLUDED THAT THE TRANSACTION IS FAIR AND REASONABLE TO SHAREHOLDERS

MEETING TO BE HELD AT 10.00 AM PERTH TIME ON FRIDAY 28 JUNE 2013

AT

LEVEL 1, 675 MURRAY STREET, WEST PERTH WESTERN AUSTRALIA 6005

Please read the Notice and Explanatory Memorandum carefully. If you are unable to attend the meeting please complete and return the enclosed proxy form in accordance with the specified instructions.

NORTHERN MINERALS LIMITED

Notice is hereby given that a Meeting of Shareholders of Northern Minerals Limited ACN 119 966 353 (" Northern " or " Company ") will be held at Level 1, 675 Murray Street, West Perth, Western Australia 6005 at 10am (Perth time) on Friday 28 June 2013 .

AGENDA FOR MEETING

Resolution 1 – Approval under Item 7 of section 611 of the Corporations Act and Chapter 2E of the Corporations Act for issue of shares and options to Australia Conglin International Investment Group Pty Ltd, a related party of the Company, in its capacity as underwriter of the Rights Issue and payment of underwriting fee

To consider and, if thought fit, to pass the following resolution as an ordinary resolution:

"That for the purposes of Item 7 of section 611 of the Corporations Act 2001 (Cth) and Chapter 2E of the Corporations Act 2001 (Cth) and for all other purposes, shareholders of Northern Minerals Limited (“ Company ”) approve:

(a) the issue of up to 133,180,226 new shares and the issue of up to 66,590,113 new options to Australia Conglin International Investment Group Pty Ltd (ACN 133 767 665) (“ Underwriter ”), under the terms of an underwriting agreement dated 11 February 2013 between the Company and Underwriter as amended on 22 February 2013, 25 March 2013, 24 April 2013 and 9 May 2013, and the payment of the underwriting fee to the Underwriter under the underwriting agreement;
(b) the Underwriter’s acquisition of a “relevant interest” (as defined in the Corporations Act 2001 (Cth)) in the Company’s voting shares from the issue of the new shares, where the Underwriter’s maximum “voting power” (as defined in the Corporations Act 2001 (Cth)) from the issue of the new shares would be 46.30%; and
(c) the Underwriter’s acquisition of a “relevant interest” (as defined in the Corporations Act 2001 (Cth)) in the Company’s voting shares which would result from the exercise of all of the new options by the Underwriter, where the Underwriter’s maximum “voting power” (as defined in the Corporations Act 2001 (Cth)) from the issue of the new shares and the exercise of all of the new options would be 53.93%,

where the Underwriter is:

(i) an entity controlled by Mr Conglin Yue, who is a shareholder in the Company; and
(ii) a “related party” of the Company for the purposes of Section 228(6) of the Corporations Act 2001 (Cth); and
(d) both Mr Conglin Yue’s and Mrs Yanchun Wang’s (who is Mr Conglin Yue’s spouse) acquisition of a “relevant interest” (as defined in the Corporations Act 2001 (Cth)) in:
(i) the Company’s voting shares from the issue of the new shares to the Underwriter, where Mr Yue is an associate (as defined in sections 12 and 16 of the Corporations Act 2001 (Cth)) of the Underwriter and Mr Yue’s maximum “voting power” (as defined in the Corporations Act 2001 (Cth)) from the issue of the new shares would be 46.30%; and

NORTHERN MINERALS LIMITED

(ii) the Company’s voting shares which would result from the exercise of all of the new options by the Underwriter, where Mr Yue is an associate (as defined in sections 12 and 16 of the Corporations Act 2001 (Cth)) of the Underwriter and Mr Yue’s maximum “voting power” (as defined in the Corporations Act 2001 (Cth)) from the issue of the new shares and the exercise of all of the new options would be 53.93%,

in the manner, and on the terms, set out in the Explanatory Memorandum accompanying the Notice of Meeting.”

VOTING EXCLUSIONS

For the purposes of Section 224 of the Corporations Act 2001 (Cth) the Company will disregard any votes cast on Resolution 1 by, or on behalf of, Australia Conglin International Investment Group Pty Ltd (ACN 133 767 665) or any of its associates (as defined in the Corporations Act 2001 (Cth)) which includes the directors of Australia Conglin International Investment Group Pty Ltd, Mr Conglin Yue and Mrs Yanchun Wang.

Under sub-section 224(2) of the Corporations Act 2001 the restriction above does not prevent the casting of a vote if:

(a) it is cast by a person as a proxy appointed by writing that specifies how the proxy is to vote on the proposed resolution; and
(b) it is not cast on behalf of Australia Conglin International Investment Group Pty Ltd or any of its associates (as defined in the Corporations Act 2001). The associates of Australia Conglin International Investment Group Pty Ltd for the purposes of Section 224 of the Corporations Act 2001 include Mr Yue and Mrs Yanchun Wang as directors of Australia Conglin International Investment Group Pty Ltd.

For the purposes of Item 7 of section 611 of the Corporations Act 2001 (Cth), Australia Conglin International Investment Group Pty Ltd (ACN 133 767 665) and any of its Associates will not be entitled to cast votes in favour of Resolution 1. The Associate of Australia Conglin International Investment Group Pty Ltd for the purposes of Item 7 of section 611 of the Corporations Act 2001 is Mr Conglin Yue.

OTHER BUSINESS

To transact any other business that may be legally brought before the meeting.

EXPLANATORY MEMORANDUM

Shareholders should read the Explanatory Memorandum which accompanies this Notice of Meeting. The Explanatory Memorandum explains the resolutions which are to be put to Shareholders at the Meeting.

Capitalised terms in this Notice of Meeting and in the Explanatory Memorandum are defined in the Glossary for the Explanatory Memorandum.

ENTITLEMENT TO VOTE

For the purposes of Regulation 7.11.37 of the Corporations Regulations 2001 (Cth), it has been determined that, for the purposes of the Meeting, Shares will be taken to be held by the persons who are registered holders of Shares in the Company’s share register at 5.00pm Perth time on 26 June 2013. Share transfers registered after that time will be disregarded in determining entitlements to vote at the Meeting.

NORTHERN MINERALS LIMITED

Holders of options issued by the Company who are not also Shareholders but who wish to vote as Shareholders at the Meeting are requested to lodge valid option exercise notices with the Company no later than 1 week before the Meeting, to allow sufficient time for the Shares to be issued by the Company.

CHAIR OF THE MEETING

It is proposed that the Chair of the Meeting be the Chairman of the Board of Directors, Mr Kevin Schultz. It is the Chairman’s intention to vote undirected proxies (ie. open proxies) which he holds as proxy in favour of Resolution 1.

PROXIES

In accordance with Section 249L(d) of the Corporations Act, members are advised:

each member has a right to appoint a proxy;
the proxy need not be a member of the Company;
a member who is entitled to cast two or more votes may appoint two proxies and may specify the proportion or number of votes each proxy is appointed to exercise. If no proportion or number is specified then in accordance with section 249X(3) of the Corporations Act each proxy may exercise one half of the votes.

In accordance with Section 250BA of the Corporations Act the Company specifies the following for the purposes of receipt of proxy appointments:

Share Registry	PO BOX 535,
(Security Transfer Registrars Pty	APPLECROSS
Ltd):	WA 6953
	OR
	770 Canning Highway,
	APPLECROSS
	WA 6153
Facsimile Number:	+61 8 9315 2233
Company’s Registered Office:	LEVEL 1
	675 MURRAY STREET
	WEST PERTH WA 6005
Facsimile Number:	+61 8 9481 5929

The instrument appointing the proxy must be received by the Company, as provided in its constitution, no later than 48 hours prior to the time of the commencement of the Meeting. This proxy form may be sent by facsimile transmission to the number identified on the proxy form.

Notes

If a proxy form is signed or authenticated by an appointer's power of attorney, the power of attorney or a certified copy thereof (if any) under which it is signed must accompany the proxy form and be received by Northern Minerals Limited, Level 1, 675 Murray Street, West Perth WA 6005, not later than 48 hours before the appointed time of the Meeting.
Proxy forms executed by a corporation must be in accordance with the requirements of the Corporations Act or under the hand of its attorney. In the case of a sole director/secretary company, please indicate “sole director” in the space provided.

NORTHERN MINERALS LIMITED

Should you desire to direct your proxy on how to vote, place a cross in the appropriate box for the resolution, otherwise your proxy may vote as your proxy thinks fit or abstain from voting.
If two proxies are appointed, you may delete “all” and insert the relevant number or proportion of shares in respect of which each such appointment is made. A separate proxy appointment form must be completed for each proxy. Additional proxy forms may be obtained from the Registry.

If you need any further information about the Meeting, please contact the Company Secretary on (08) 9481 2344 during business hours.

By order of the Board

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______ Mark Tory Company Secretary 24 May 2013

NORTHERN MINERALS LIMITED

EXPLANATORY MEMORANDUM TO SHAREHOLDERS NORTHERN MINERALS LIMITED

ABN 61 119 966 353

	Table of Contents:		Page:
	Part 1 – Introduction		5
	Part 2 – Information about Total Funding Package		6
	Part 3 – Frequently Asked Questions		8
	Part 4 – Timetable for Transaction		10
	Part 5 – Shareholder Approval of Resolution 1		10
	Part 6 – Chapter 2E of the Corporations Act 2001		10
	Part 7 – Item 7 of Section 611 of the Corporations Act 2001		18
	Part 8 – Impact of Transaction on Company if Resolution 1 passed		22
	Part 9 – Advantages and Disadvantages of Resolution 1 being passed, as well as Resolution 1 not being passed		25
	Part 10 – Summary of Material Agreements		27
	Part 11 – General Information		30
	Glossary		31
	Annexure 1 – Location of Browns Range Project		34
	Annexure 2 – The Gold Tenements		35
	Annexure 3 – Terms of Issue of New Options		36
	Annexure 4 – The Independent Experts Report

1. Introduction

This Explanatory Memorandum has been prepared to assist Shareholders to understand the business to be put to Shareholders at the Meeting.

This Explanatory Memorandum should be read in conjunction with the accompanying Notice of Meeting. Shareholders should read this Explanatory Memorandum in full before making any decision in relation to Resolution 1.

The Glossary at the end of this Explanatory Memorandum contains the definitions of the capitalised terms in the Notice of Meeting and this Explanatory Memorandum.

If any Shareholder is in doubt as to how they should vote, then they should seek advice from their professional adviser before voting.

NORTHERN MINERALS LIMITED

2. Information about Total Funding Package

2.1 General

On 1 February 2013 the Company announced that it had entered into a Term Sheet with its major Shareholder, Mr Conglin Yue, via an entity controlled by Mr Yue named Australia Conglin International Investment Group Pty Ltd.

Under the terms of the Term Sheet, the Company and Australia Conglin International Investment Group Pty Ltd (the “ Underwriter ”) have agreed (in general terms) as follows:

(1) the Company and the Underwriter (or a newly incorporated wholly owned subsidiary) (the "Buyer" ) will formalise the terms of an agreement under which the Company will sell and the Buyer will buy a 16% interest in the Browns Range Project for A$26,000,000;
(2) the Company and the Buyer will formalise the terms of an agreement under which the Company will sell and the Buyer will buy the Gold Tenements for A$2,000,000, with the potential for a further A$5,000,00 to be payable; and
(3) the Underwriter will fully underwrite a non-renounceable rights issue by the Company, as announced by the Company on 25 February 2013.

Completion of the sale of the 16% interest in the Browns Range Project is not dependent on completion of the sale of the Gold Tenements and vice versa .

Completion of the sale of each of the 16% interest in the Browns Range Project and the Gold Tenements will be subject to:

(a) Shareholder approval under Listing Rule 10.1, which must be obtained on or before the date that is 60 days after the execution of the formal documents;
(b) Shareholder Approval of the Transaction under Resolution 1; and
(c) any Ministerial approval necessary to effect the transfer of any tenements from the Company as seller to the Buyer.

2.2 Transactions are part of a Funding Package

The Browns Range Transaction, the Gold Tenements Transaction and the Rights Issue are part of a proposed four stage process for the Company to raise a total of $58 million in funding, comprising:

	Transaction:	Amount To Be Raised:

1.	Browns Range Transaction	$26,000,000
2.	Gold Tenements Transaction	$2,000,000
3.	Placement of ordinary shares (completed on 22 February 2013)	$3,760,000
4.	Fully underwritten rights issue (announced on 25 February 2013)	$26,500,000
	Total:	$58,260,000

The Company believes that the above funding will be adequate to complete a feasibility study for the Browns Range Project.

2.3 Browns Range Project

Subject to formalisation of formal documentation and satisfaction of the conditions referred to above, the Company will sell, and the Buyer will buy, a 16% interest in the Browns Range Project in consideration of the payment of A$26,000,000 by the Buyer to the Company in the following instalments and on the terms set out below:

NORTHERN MINERALS LIMITED

(a) 30 October 2013 – A$5,000,000;
(b) 31 December 2013 – A$5,000,000;
(c) 31 March 2014 – A$5,000,000;
(d) 30 June 2014 – A$5,000,000;
(e) 30 September 2014 – A$3,000,000; and
(f) 30 October 2014 – A$3,000,000.
(together the “ Instalments ”).

On the payment of each of the first 4 Instalments, the Company will transfer a 3.2% participating interest in the Browns Range Project to the Buyer. On the payment of each of the 5[th] and 6[th] Instalment, the Company will transfer a 1.6% participating interest in the Browns Range Project to the Buyer.

As a condition precedent to the sale the Buyer and Company will enter into:

(a) a General Security Deed to secure the Buyer’s obligation to pay the Instalments to the Company; and
(b) a Browns Range Unincorporated Joint Venture Agreement.

In general terms, the Browns Range Unincorporated Joint Venture Agreement will govern the relationship of the parties as joint venture participants in relation to the Browns Range Project. The agreement will provide that the Buyer will be “ free carried ” by the Company through to commencement of production at Browns Range, meaning that the Buyer is not required to contribute financing or capital to the Joint Venture or its activities until commencement of commercial production.

The Buyer will be entitled to take its 16% participating interest of product in kind.

The Company will be manager of the joint venture. The agreement will include standard restrictions on assignment, including pre-emptive rights.

The Buyer and the Company will also enter into an offtake agreement, which will provide for the Company to sell to the Buyer (or the Buyer’s nominee) 20% of the rare earth product produced from the joint venture, which market price will be determined with regard to agreed rare earth price indices.

2.4 Sale of Gold Tenements

Subject to formalisation of formal documentation and satisfaction of the conditions referred to above, the Company will sell, and the Buyer will buy, the Gold Tenements in consideration of the payment of A$2,000,000 from the Buyer to the Company in the following instalments:

(a) 30 September 2013 – A$1,000,000; and
(b) 31 December 2013 – A$1,000,000.

The General Security Deed referred to in paragraph 2.3 will also secure payment of the instalments above.

All rights to explore for and mine rare earths will be retained by the Company.

The Boulder Ridge Tenement (EL29594) will be retained by the Company and the rights to explore for and mine commodities other than rare earths will be granted to the Buyer.

The parties will enter into a Co-ordination Deed to regulate their activities on the Gold Tenements and the Boulder Ridge Tenement and to provide for co-operation in relation to exploration activities, and if mining commences, then mining activities.

If a JORC-compliant mineral resource estimate equal to or greater than the equivalent of 1,000,000 ounces of gold is discovered within the Gold Tenements then

NORTHERN MINERALS LIMITED

an additional A$5,000,000 will be payable by the Buyer to the Company within 90 days after the JORC-compliant mineral resource estimate being defined.

2.5 Rights Issue to raise A$26.6 million

The Company’s announcement to the ASX on 1 February 2013 included the announcement of a fully underwritten rights issue.

The terms of the Rights Issue are set out in the Company’s Prospectus dated 8 March 2013. Under the terms of the Rights Issue, Eligible Shareholders are offered the right to subscribe for 1 New Share for every 2 existing Shares held on the Record Date, together with 1 New Option for every 2 New Shares issued as part of the Rights Issue.

Mr Conglin Yue has agreed to underwrite 100% of any shortfall under the Rights Issue, via the Underwriter, being an Australian incorporated company which he controls, namely Australia Conglin International Investment Group Pty Ltd.

The Company has been advised by the Underwriter that the Underwriter and D J Carmichael Pty Ltd (an Australian stockbroking company) (“ DJC ”) have entered into an agreement whereby DJC will on a best endeavors basis commit to place 20% of the amount of the underwritten securities under the Rights Issue. The obligation of DJC under the agreement is on a best endeavors basis only and not an obligation to sub-underwrite. If DJC places securities under this agreement, then the placement of securities will reduce the number of New Shares and New Options which the Underwriter will subscribe for in the Rights Issue under the terms of the Underwriting Agreement.

Mr Conglin Yue has stated to the Company that, if Resolution 1 is passed, Mr Yue will elect not to subscribe for his entitlements under the Rights Issue and that such entitlements will need to be subscribed for by the Underwriter. This is because the Underwriter (an entity controlled by Mr Yue) has an obligation to subscribe for those entitlements as part of the shortfall under the Underwriting Agreement. The overall effect is that the Underwriter (an entity controlled by Mr Yue) will subscribe for the securities representing Mr Yue’s entitlement as an Eligible Shareholder under the Rights Issue, as opposed to Mr Yue himself subscribing for those securities as an Eligible Shareholder.

However, if Resolution 1 is not passed, then the Underwriter will not take up any shortfall under the Rights Issue and Mr Yue will consider and decide at that point in time, after the resolution has not been passed, whether or not he will subscribe for his entitlement under the Rights Issue as an Eligible Shareholder.

3. Frequently Asked Questions

The Company has prepared the following general answers to general questions which it believes some Shareholders may have in relation to the Transaction and Resolution 1 to be put to Shareholders for approval.

The answers are general only and Shareholders should read this Explanatory Memorandum in full.

3.1 Why is Shareholder Approval being sought?

The Board has determined that in light of the Company’s share price and likelihood of Mr Yue’s interest in the Company’s shares increasing above 19.9%, it is appropriate that Shareholders have the opportunity to vote on the underwriting proposal.

The Board continues to believe the transactions announced on 1 February 2013 to raise a total of $58 million are overwhelmingly in the best interests of Shareholders.

NORTHERN MINERALS LIMITED

This view has only been reinforced by the market conditions we have seen since the announcement in February.

3.2 Has the Board considered alternative ways to raise adequate finance in order to complete a Feasibility Study?

The Company conducted an extensive process before announcing the $58 million funding package, which the Board strongly believes is the best option available to the Company.

It is worth pointing out that access to capital for exploration and development companies has deteriorated significantly since this deal was announced.

The terms of this deal have not altered and the Board remains firmly of the view that it is in the best interests of Shareholders.

3.3 Why weren’t Shareholders given the opportunity to vote on the underwriting in the first place?

When the transactions were announced, the Board’s view was that the Company’s share price would react strongly based on the $162 million see through value of the Browns Range Project as implied by the sale agreement with Australia Conglin International Investment Group Pty Ltd.

The Board felt the pricing was appropriate and attractive enough that there would be strong participation in the Rights Issue by Shareholders.

In light of the muted share price reaction and ongoing headwinds in equity markets for all rare earth companies, the Board felt it was appropriate to put the underwriting component of the Rights Issue to a Shareholder vote due to the likelihood of Mr Yue’s interest in the Company’s shares increasing materially above 19.9%.

3.4 Why has the pricing of the Rights Issue not been changed in light of market conditions?

If the pricing of the Rights Issue were to change to reflect the current market conditions, it would result in a material increase in the number of new shares to be offered under that rights issue in order to raise the same amount, namely $26.6M and this would result in greater dilution for Shareholders who choose not take up their rights under the Rights Issue or are unable to do so for some reason.

The current proposal provides Shareholders with the opportunity to avoid dilution by participating in the Rights Issue at the same time as the Company’s major shareholder provides funding to the Company at a premium to current prices.

3.5 Why has Australia Conglin International Investment Group Pty Ltd now linked the underwriting and the sale of a 16% stake in the Browns Range Project?

This was a term negotiated as part of the Company altering the existing agreements to allow for a Shareholder vote on the underwriting.

The Board recommends Shareholders support all aspects of the $58 million funding package and so believe the underwriting of the Rights Issue and sale of the Browns Range transaction are both initiatives that Shareholders should support.

3.6 What will happen if Resolution 1 is not passed?

If Resolution 1 is not passed then the underwriting under the Rights Issue will not be able to proceed. If the underwriting does not proceed this will be a material event under the Rights Issue and the Company will issue a Supplementary Prospectus to all shareholders advising them that the underwriting is not able to proceed. Applicants who have applied for securities under the Rights Issue will be given an

NORTHERN MINERALS LIMITED

opportunity to consider this change and will have the right to withdraw their application for securities, on the terms set out in the Supplementary Prospectus, should they wish to do so.

4. Timetable for Transaction

If Shareholders approve the Transaction by passing Resolution 1, then the following timetable will apply:

Event:	Date:
Meeting of Shareholders to consider Resolution 1	28 June 2013
Closing Date for Rights Issue (extended from the earlier closing date of 17 May 2013)	5 July 2013 (5pm Perth time)
Shortfall Notification given to Underwriter	8 July 2013
Issue date for Eligible Shareholders	15 July 2013
If Resolution 1 is passed, Underwriter subscribes for any shortfall under Rights Issue (see Note 1 below)	19 July 2013
Issue date for Underwriter	22 July 2013
ASX grants Official Quotation to New Shares and New Options	By 24 July 2013

Note 1: If Resolution 1 is not passed, the Underwriter will not take up the shortfall under the Rights Issue.

The above timetable is indicative only and may change.

5. Shareholder Approval of Resolution 1

Shareholder approval is sought under Resolution 1 for the purposes of Item 7 of section 611 of the Corporations Act, Chapter 2E of the Corporations Act and for all other purposes, for the Company to issue up to 133,180,226 New Shares and 66,590,113 New Options to the Underwriter under the terms of the Underwriting Agreement, and for the Company to pay the underwriting fee to the Underwriter under the terms of the Underwriting Agreement.

The Underwriter is an entity controlled by Mr Conglin Yue, who is a shareholder in the Company.

The Underwriter is a “ related party ” of the Company for the purposes of SubSections 228(1) and 228(6) of the Corporations Act.

6. Chapter 2E of the Corporations Act

6.1 Chapter 2E of the Corporations Act

Chapter 2E of the Corporations Act regulates the provision by a public company of a “financial benefit” to a “related party”. Section 208 of the Corporations Act prohibits:

(1) a public company giving a financial benefit to a related party; or
(2) a company which is controlled by the public company giving a financial benefit to a related party,

unless one of a number of exceptions applies, or shareholder approval is obtained.

NORTHERN MINERALS LIMITED

A “financial benefit” is defined in the Corporations Act in broad terms and includes a company issuing shares to a person or granting options to a person.

(a) Related party

A related party is defined in Section 228 of the Corporations Act.

Sub-Section 228(1) of the Corporations Act provides:

An entity that controls a public company is a related party of the public company.

Sub-Section 228(6) of the Corporations Act provides:

An entity is a related party of a public company at a particular time if the entity believes or has reasonable grounds to believe that it is likely to become a related party of the public company of a kind referred to in Sub-Sections 228(1), (2), (3) or (4) of the Corporations Act, at any time in the future.

At the date of this document, the take-up under the current Rights Issue is 0.76%. Based on the current take-up to date and the number of securities which would be shortfall securities and be taken up by Australia Conglin International Investment Group Pty Ltd, Australia Conglin International Investment Group Pty Ltd may be deemed a related party of the Company.

(b) Arm's length terms exception

Section 210 of the Corporations Act provides an exemption to the requirement to obtain shareholder approval for the giving of a financial benefit to a related party, where the financial benefit is given on terms that:

(1) would be reasonable in the circumstances if the company and the related party were dealing at arm's length terms; or
(2) are less favourable to the related party than the terms referred to in paragraph (1) above.

It is the Company's view that the Transaction is on arm's length terms, however out of an abundance of caution, the Company is seeking shareholder approval for the purposes of Chapter 2E.

6.2 Information Provided to Shareholders in relation to Resolution 1

The following information is provided to Shareholders in relation to Resolution 1 in accordance with the requirements of Section 219 of the Corporations Act:

(a) The related party under Resolution 1

The related party is Australia Conglin International Investment Group Pty Ltd, which is a company controlled by Mr Conglin Yue.

The directors of Australia Conglin International Investment Group Pty Ltd are Mr Conglin Yue, Mrs Yanchun Wang and Mr Bin Cai. Mrs Yanchun Wang is Mr Conglin Yue’s spouse.

The shareholders of Australia Conglin International Investment Group Pty Ltd are Mr Conglin Yue and Mrs Yanchun Wang.

(b) The proposed financial benefits

The proposed financial benefits are for the Company to:

(1) issue up to 133,180,226 New Shares and 66,590,113 New Options to Australia Conglin International Investment Group Pty Ltd under the terms of the Underwriting Agreement. The ASX closing price of the Shares on the last day before the date of the Notice of Meeting was $0.125 (as at 23 May 2013); and

NORTHERN MINERALS LIMITED

(2) pay the underwriting fee to the Underwriter under the terms of the Underwriting Agreement.

The following tables show the number of New Shares and New Options which the Underwriter will subscribe for, depending on various levels of take up by Eligible Shareholders under the Rights Issue:

	Take Up Level by Eligible Shareholders under the Rights Issue	Number of New Shares to be issued to Underwriter	Number of New Options to be issued to Underwriter


1.	100% take up byall Shareholders	There will not be a 100% take up by all shareholders if Mr Yue does not take up his entitlement as an Eligible Shareholders under the Rights Issue.	There will not be a 100% take up by all shareholders if Mr Yue does not take up his entitlement as an Eligible Shareholder under the Rights Issue.
2.	100% take up by all Shareholders *other* *than*Mr Yue	26,490,134	13,245,067
3.	75% take up (with no take up by Mr Yue)	33,295,057	16,647,529
4.	50% take up (with no take up by Mr Yue)	66,590,113	33,295,057
5.	25% take up (with no take up by Mr Yue)	99,885,170	49,942,585
6.	0.76% take up (current take up at date of this document) (with no take up by Mr Yue)	132,163,279	66,081,640
7.	Zero % take up (with no take up by Mr Yue)	133,180,226	66,590,113

Note 1: As Mr Yue has stated that he will not take up his entitlement as an Eligible Shareholder if Resolution 1 is passed, his shares and options will go to the Underwriter as part of the shortfall under the Rights Issue. This is because the Underwriter (being Mr Yue’s controlled entity) has an obligation to subscribe for those securities as part of the shortfall under the Underwriting Agreement.

Note 2: The calculations above assume that no sub-underwriter is appointed by the Underwriter that takes up any securities under the Rights Issue. At the date of this document, the Underwriter has not appointed any sub-underwriter or sub-underwriters that have obligations to take up securities under the Rights Issue.

(c) Consideration

The Underwriter is required to subscribe for the New Shares at an issue price which is the same as the issue price under the Rights Issue, namely $0.20 per share. The New Shares are not issued free to the Underwriter. The Underwriter is entitled to receive an underwriting fee of 5 % of the total underwritten amount (plus GST), being a total fee of $1,331,802.26 (plus GST) (" Underwriting Fee ").

NORTHERN MINERALS LIMITED

The New Options are offered to all Eligible Shareholders with an issue price of nil, so the Underwriter will subscribe for the New Options at the same issue price under the Rights Issue, namely nil per option.

The following table shows the total subscription monies to be provided by the Underwriter to the Company, depending on various levels of take up by Eligible Shareholders under the Rights Issue:

	Take Up Level by Eligible Shareholders under the Rights Issue	Number of New Shares to be issued to Underwriter	Subscription Monies provided by Underwriter to Company (see Note 1)


1.	100% take up byall Shareholders	There will not be a 100% take up by all shareholders if Mr Yue does not take up his entitlement as an Eligible Shareholders under the Rights Issue.	There will not be a 100% take up byallshareholders if Mr Yue does not take up his entitlement as an Eligible Shareholder under the Rights Issue.
2.	100% take up by all Shareholdersother *than*Mr Yue)	26,490,134	$5,298,026.80
3.	75% take up (with no take up by Mr Yue)	33,295,057	$6,659,011.40
4.	50% take up (with no take up by Mr Yue)	66,590,113	$13,318,022.60
5.	25% take up (with no take up by Mr Yue)	99,885,170	$19,977,034.00
6.	0.76% take up (current take up at date of this document) (with no take up by Mr Yue)	132,163,279	$26,432,655.80
7.	Zero % take up (with no take up by Mr Yue)	133,180,226	$26,636,045.20

Note 2 : On 3 April 2013 the Underwriter made an interest free loan of $4 million to the Company under the Loan Agreement. Pursuant to the terms of the Loan Agreement, the Underwriter will have the right to set-off the $4 million payable by the Company under the Loan Agreement against the Subscription Monies.

NORTHERN MINERALS LIMITED

(d) Reasons for giving the financial benefits

The reasons for giving the financial benefits are that:

(1) the Company wished for the Rights Issue to be 100% underwritten in order to provide certainty that the Company would receive the total subscription amount sought under the Rights Issue in full, namely $26.6 million;
(2) in order for the Rights Issue to be 100% underwritten the Company and the Underwriter entered into the Underwriting Agreement;
(3) under the Underwriting Agreement the Underwriter must subscribe for the shortfall (if any) under the Rights Issue; and
(4) the giving of the financial benefit is the Company issuing the New Shares and the New Options which comprise the shortfall under the Rights Issue; and
(5) the giving of the financial benefit is also the payment of the Underwriting Fee and the Underwriting Fee was agreed as 5% of the subscription amount of the underwritten securities, with 5% being based on market practice for underwritings.

The reason why Australia Conglin International Investment Group Pty Ltd was chosen as the Underwriter was that the Company conducted lengthy and extensive investigations over many months seeking to raise the amount sought under the Rights Issue ($26.6 million) at an acceptable share issue price, including proposed share placements and proposed underwritten rights issues. Australia Conglin International Investment Group Pty Ltd was the only party which the Company was able to identify during those investigations who was willing to underwrite a rights issue totalling $26.6 million.

(e) Reasons for specific number of shares and options and for amount of fee

The reasons for the specific number of New Shares and New Options to be issued to the Underwriter are:

(1) under the Underwriting Agreement, the Underwriter must subscribe for the shortfall (if any) under the Rights Issue;
(2) the amount of the shortfall (if any) will determine the exact number of New Shares and New Options which the Underwriter must take up under the Underwriting Agreement; and
(3) set out above is a table showing the number of New Shares and New Options which the Underwriter would take up under the Underwriting Agreement based on different take-up levels by all Eligible Shareholders.

The reason for the specific amount of the Underwriting Fee of 5% is that this fee is within the normal market range for underwritings.

(f) Recommendation of each director

The directors of the Company are George Bauk (Managing Director), Kevin Schultz (Chairman), Adrian Griffiths (Non- Executive Director) and Colin McCavana (NonExecutive Director).

Each of the directors recommends that Shareholders vote in favour of Resolution 1, for the reasons set out below under Heading 9.1 entitled “Advantages of Resolution 1 being passed”.

NORTHERN MINERALS LIMITED

(g) Interests of directors in outcome of Resolution 1

Each Director has no interest in the outcome of Resolution 1 other than in their capacity as a Shareholder.

Each Director has the right to participate in the Rights Issue as an Eligible Shareholder, notwithstanding the outcome of Resolution 1.

The number of Shares and options in which each Director has an interest is set out below (as at the date of the Notice of Meeting):

Table 2: Directors’ Interests

Director	Shares Held Directly or Indirectly	Options Held Directly or Indirectly	Performance Rights


Kevin Schultz George Bauk Adrian Griffin Colin McCavana	62,500 ordinary shares held directly 810,000 ordinary shares held by Dorothy Margaret Schultz (spouse) and The Oakridge Superannuation Fund (beneficiary) 1,890,238 ordinary shares 1,000,000 ordinary shares subject to terms and conditions of the Northern Uranium Share Plan 2,626,950 ordinary shares held directly 580,379 ordinary shares (Adrian Christopher Griffin & Josephine Dawn Norman atf Global Super Fund) 725,000 ordinary shares (Bell Bay Investments Pty Ltd – Director and Shareholder) 2,475,000 ordinary shares (Colin McCavana Super Fund)	Nil Nil Nil Nil	Up to 1,000,000 performance rights exercisable at $Nil (500,000 expire should the performance condition not be met by 31 December 2014 and 500,000 expire should the performance condition not be met by 30 June 2015) held by Dorothy Margaret Schultz (spouse) and The Oakridge Superannuation Fund (beneficiary) Up to 1,000,000 performance rights exercisable at $Nil (500,000 expire should the performance condition not be met by 31 December 2014 and 500,000 expire should the performance condition not be met by 30 June 2015) Up to 1,000,000 performance rights exercisable at $Nil (500,000 expire should the performance condition not be met by 31 December 2014 and 500,000 expire should the performance condition not be met by 30 June 2015) Up to 1,000,000 performance rights exercisable at $Nil (500,000 expire should the performance condition not be met by 31 December 2014 and 500,000 expire should the performance condition not be met by 30 June 2015)

NORTHERN MINERALS LIMITED

(h) Effect on Voting Power

The following tables show the effect of issuing New Shares to the Underwriter on the Voting Power of the Underwriter, depending on various levels of take-up by Eligible Shareholders under the Rights Issue:

	Take Up Level by Eligible Shareholders under the Rights Issue	Number of New Shares to be issued to Underwriter	Effect on Voting Power


1.	100% take up byall shareholders	There will not be a 100% take up by all shareholders if Mr Yue does not take up his entitlement as an Eligible Shareholders under the Rights Issue.	There will not be a 100% take up by all shareholders if Mr Yue does not take up his entitlement as an Eligible Shareholder under the Rights Issue.
2.	100% take up by all shareholders other than Mr Yue	26,490,134 (see Note 1 below)	No increase at all (see Note 1 below).
3.	75% take up (with no take up by Mr Yue)	33,295,057	Increase from 19.71% to 21.46%
4.	50% take up (with no take up by Mr Yue)	65,590,113	Increase from 19.71% to 29.74%
5.	25% take up (with no take up by Mr Yue)	99,885,170	Increase from 19.71% to 38.02%
6.	0.76% take up (current take up at date of this document) (with no take up by Mr Yue)	132,163,279	Increase from 19.71% to 46.05%
7.	Zero % take up (with no take up by Mr Yue)	133,180,226	Increase from 19.71% to 46.30%

(i) Date of Issuing New Shares and New Options to Underwriter and payment of Underwriting Fee to Underwriter

If Resolution 1 is passed by Shareholders, then the Company intends to issue the New Shares and the New Options to the Underwriter in accordance with the timetable set out under Heading 4 above, namely by 22 July 2013.

If Resolution 1 is passed by Shareholders, the Company intends to pay the Underwriting Fee to the Underwriter within 3 business days after the issue of the underwriting securities, in accordance with the terms of the Underwriting Agreement.

NORTHERN MINERALS LIMITED

(j) Intended Use of Funds Raised from Issue of New Shares and New Options

The intended use of the funds raised from the issue of the New Shares is set out in Section 1.4 of the Prospectus and is repeated below:

	Use of funds	A$million
1.	Resource Definition / Exploration – Browns Range	11.0
2.	Engineering, Infrastructure and Mining Studies – Browns Range	5.6
3.	Mineral Processing and Metallurgy – Beneficiation – Browns Range	3.2
4.	Mineral Processing and Metallurgy – Hydrometallurgy – Browns Range	1.4
5.	Costs of the issue	1.4
6.	Capital expenditure – Browns Range	2.0
7.	Corporate and administration expenses	2.0
	TOTAL	26.6

(k) Company’s Trading History

The highest and lowest market sale prices of the Company’s Shares on the ASX during the 12 months immediately preceding the date of the Notice of Meeting (and the respective dates of those sales) were:

Highest: $0.36 (on 15 August 2012). Lowest: $0.115 (on 23 May 2013).

The latest available market sale price of the Company’s Shares on the ASX prior to the date of the Notice of Meeting was $0.125 on 23 May 2013.

(l) Tax Consequences

The Company believes that there would no tax consequences resulting from the issue of the New Shares and New Options to the Underwriter under the terms of the Underwriting Agreement.

(m) Opportunity Costs and Benefits Foregone

The Company does not consider that there are any opportunity costs to the Company, or benefits forgone by the Company, as a result of issuing the New Shares or the New Options to the Underwriter.

The issue of the New Shares and New Options to the Underwriter will result in a dilution of existing Shareholders who do not take up their rights under the Rights Issue. This point is discussed below under Heading 9.2 entitled “Disadvantages of the Transaction”.

(n) Listing Rule 7.1 and 10.11

Under the terms of the Listing Rules, Shareholder Approval is not required for the purposes of Listing Rules 7.1, nor Listing Rule 10.11, because an issue of securities to an underwriter under a pro-rata issue is a permitted exception.

NORTHERN MINERALS LIMITED

7. Item 7 of Section 611 of the Corporations Act

7.1 Item 7 of Section 611 of the Corporations Act

Section 606(1) of the Corporations Act provides that a person must not acquire a " relevant interest " in issued voting shares of a listed company if the person acquiring the interest does so through a transaction in relation to the securities entered into by or on behalf of the person and, because of the transaction, that person’s or someone else’s Voting Power in the listed company increases:

(a) from 20% or below to more than 20%; or
(b) from a starting point that is above 20% and below 90%.

Under section 608(1) of the Corporations Act, a person will have a relevant interest in securities if they are the holder of those shares. Under section 608(3) of the Corporations Act, a person will have a relevant interest in securities held by a body corporate if that person’s Voting Power in the body corporate is above 20%.

Section 606(1A) of the Corporations Act provides that a person may acquire a relevant interest under one of the exceptions set out in section 611 of the Corporations Act without contravening section 606(1) of the Corporations Act.

Under Item 7 of section 611, an acquisition that was approved by a resolution passed at a general meeting of shareholders of the listed company in which the acquisition is made is exempt from section 606(1).

7.2 Relevant Interest of the Underwriter, Mr Conglin Yue and Mrs Yanchun Wang

The Underwriter will have a relevant interest in the New Shares that are issued to it under the Underwriting Agreement.

Mr Conglin Yue has a relevant interest in the 52,980,267 Shares he currently holds. Mr Conglin Yue will have a relevant interest in the New Shares issued to the Underwriter under the Underwriting Agreement, as Mr Conglin Yue’s Voting Power in the Underwriter is above 20% and he controls the Underwriter. Mr Yue has informed the Company that his only Associate is the Underwriter.

Mrs Yanchun Wang will also have a relevant interest in the New Shares issued to the Underwriter under the Underwriting Agreement, as Mrs Wang’s Voting Power in the Underwriter is above 20%. Mrs Wang has informed the Company that she does not have any Associates.

7.3 Information required by Item 7 of Section 611 of the Corporations Act and ‘ASIC Regulatory Guide 74 – Acquisitions approved by members’

In accordance with Item 7 of section 611 of the Corporations Act and ‘ASIC Regulatory Guide 74 – Acquisitions approved by members’, the Company provides the following information to shareholders:

(a) The identity of person proposing to subscribe for New Shares and New Options and their Associates

The identity of the entity proposing to subscribe for New Shares and New Options is Australia Conglin International Investment Group Pty Ltd in its capacity as Underwriter under the Underwriting Agreement, a company in which Mr Conglin Yue holds a 70% interest and Mrs Yanchun Wang holds a 30% interest.

The Underwriter has informed the Company that, as at the date of this document, it's only Associate is Mr Yue.

NORTHERN MINERALS LIMITED

(b) The maximum extent of increase in the Underwriter’s, Mr Yue’s and Mrs Wang’s Voting Power in the Company that would result from the subscription of New Shares

The maximum extent of the increase in the Underwriter’s Voting Power in the Company that would result from the subscription for the New Shares is as follows:

(1) if Resolution 1 is passed, an increase in Voting Power from 19.71 % to 46.30%; and
(2) if Resolution 1 is not passed, no increase in Voting Power at all.

The maximum extent of the increase in Mr Yue’s Voting Power in the Company that would result from the subscription for the New Shares is as follows:

(1) if Resolution 1 is passed, an increase in Voting Power from 19.71% to 46.30%; and
(2) if Resolution 1 is not passed, no increase in Voting Power at all.

The maximum extent of the increase in the Mrs Wang’s Voting Power in the Company that would result from the subscription for the New Shares is as follows:

(1) if Resolution 1 is passed, an increase in Voting Power from zero % to 33.13%; and
(2) if Resolution 1 is not passed, no increase in Voting Power at all.

(c) The Maximum Voting Power that the Underwriter, Mr Yue and Mrs Wang would have as a result of exercising all of the New Options

The maximum extent of the increase in the Underwriter’s Voting Power in the Company that would result from the subscription and exercise of all of the New Options is as follows:

(1) if Resolution 1 is passed, an increase in Voting Power from 19.71% to 53.93%; and
(2) if Resolution 1 is not passed, no increase in Voting Power at all.

The maximum extent of the increase in Mr Yue’s Voting Power in the Company that would result from the subscription and exercise of all of the New Options is as follows:

(1) if Resolution 1 is passed, an increase in Voting Power from 19.71% to 53.93% (see Note 1); and
(2) if Resolution 1 is not passed, no increase in Voting Power at all.

The maximum extent of the increase in Mrs Wang’s Voting Power in the Company that would result from the subscription and exercise of all of the New Options is as follows:

(1) if Resolution 1 is passed, an increase in Voting Power from zero % to 42.63% (see Note 1); and
(2) if Resolution 1 is not passed, no increase in Voting Power at all.
Note : The calculations in this subsection 7.3(c) assume that Australia Conglin International Investment Group Pty Ltd exercises all of the New Options it receives as underwriter of the Rights Issue and that no other person exercises any New Options received under the Rights Issue.

(d) The Voting Power that the Underwriter, Mr Yue and Mrs Wang would have as a result of the subscription of New Shares

The Underwriter’s Voting Power in the Company that would result from the subscription of New Shares is as follows:

NORTHERN MINERALS LIMITED

(1) if Resolution 1 is passed, Voting Power of 46.30%; and
(2) if Resolution 1 is not passed, Voting Power of 19.71%.

Mr Yue’s Voting Power in the Company that would result from the subscription of New Shares is as follows:

(1) if Resolution 1 is passed, Voting Power of 46.30%; and
(2) if Resolution 1 is not passed, Voting Power of 19.71%.

Mrs Wang’s Voting Power in the Company that would result from the subscription of New Shares is as follows:

(1) if Resolution 1 is passed, Voting Power of 33.13%; and
(2) if Resolution 1 is not passed, Voting Power of zero %.

(e) The Voting Power that the Underwriter, Mr Yue and Mrs Wang would have as a result of the subscription of New Shares and exercise of all New Options

The Underwriter’s Voting Power in the Company that would result from the subscription for the New Shares and the exercise of all of the New Options is as follows:

(1) if Resolution 1 is passed, Voting Power of 53.93%; and
(2) if Resolution 1 is not passed, Voting Power of 19.71%.

Mr Yue’s Voting Power in the Company that would result from the subscription for the New Shares and the exercise of all of the New Options is as follows:

(1) if Resolution 1 is passed, Voting Power of 53.93%; and
(2) if Resolution 1 is not passed, Voting Power of 19.71%.

Mrs Wang’s Voting Power in the Company that would result from the subscription for the New Shares and the exercise of all of the New Options is as follows:

(1) if Resolution 1 is passed, Voting Power of 42.63%; and
(2) if Resolution 1 is not passed, Voting Power of zero %.
Note : The calculations in this subsection 7.3(e) assume that Australia Conglin International Investment Group Pty Ltd exercises all of the New Options it receives as underwriter of the Rights Issue and that no other person exercises any New Options received under the Rights Issue.

(f) The Maximum Increase in Voting Power, and the Voting Power, that each of the Underwriter’s Associates, Mr Yue’s Associates and Mrs Wang’s Associates would have as a result of subscription

The Underwriter has informed the Company that the Associates of the Underwriter are Mr Conglin Yue.

Mr Yue has informed the Company that the Associates of Mr Yue are the Underwriter.

Mrs Wang has informed the Company that she has no Associates.

The Voting Power that the Underwriter’s Associates, Mr Yue, would have as a result of subscription is 53.93%. The maximum extent of the increase in Voting Power that the Underwriter’s Associates, Mr Yue, would have as a result of subscription is from 19.71% to 53.93%.

The Voting Power that Mr Yue’s Associates, the Underwriter, would have as a result of subscription is 53.93%. The maximum extent of the increase in Voting Power that

NORTHERN MINERALS LIMITED

Mr Yue’s Associates, the Underwriter, would have as a result of subscription is from 19.71% to 53.93%.

(g) The reasons for proposed subscription

The reasons for the proposed subscription are set out above under Heading 2.5 entitled “Rights issue to raise A$26.6 million” and below under Heading 10.1 entitled “Underwriting Agreement”.

(h) When proposed subscription will occur

The timing for the proposed subscription is set out above under Heading 4 entitled “Timetable for Transaction”.

(i) The material terms of proposed subscription

The material terms of the proposed subscription are set out above under Heading 6.2(c) entitled “Consideration”.

The material terms of the Underwriting Agreement are summarised below under Heading 10.1 entitled “Underwriting Agreement”.

(j) Details of terms of the Term Sheet

The material terms of the Term Sheet are summarised below under Heading 10.2 entitled “Term Sheet”.

(k) Statement of the intentions of Mr Conglin Yue and the Underwriter regarding future of Company if shareholders pass Resolution 1

The Company requested Mr Conglin Yue and the Underwriter to provide to the Company the following information regarding their current intentions in relation to the Company and issues relating to control of the Company.

Any intention to change the business of the Company

Each of Mr Yue and the Underwriter do not have any intention to change the business of the Company.

Any intention to inject further capital into the Company

Each of Mr Yue and the Underwriter do not have any current intention to inject further capital into the Company (over and above the further capital which is the subject of Resolution 1 in the Notice of Meeting).

Intentions regarding future employment of present employees

Each of Mr Yue and the Underwriter do not have any current intention to change the employment of present employees of the Company.

Any proposal where assets will be transferred between the Company and Mr Yue or Underwriter or their Associates

Each of Mr Yue and the Underwriter do not have any current intention to transfer any asset or assets of the Company between the Company and Mr Yue or the Underwriter or their Associates.

Any intention to otherwise redeploy fixed assets of the Company

Each of Mr Yue and the Underwriter do not have any current intention to redeploy any asset or assets of the Company including fixed assets.

NORTHERN MINERALS LIMITED

(l) Any intention of Mr Conglin Yue and Underwriter to significantly change the financial or dividend distribution policies of the Company

Each of Mr Yue and the Underwriter do not have any current intention to change the financial or dividend distribution policies of the Company.

(m) Interests of Directors in Transaction or any relevant agreement

Each Director has no interest in the outcome of Resolution 1 other than in their capacity as a Shareholder.

Each Director has no interest in the Term Sheet, the Underwriting Agreement nor the Loan Agreement, all of which are summarised under Heading 10 below.

(n) Details of any person who is intended to become a director if Shareholders approve the subscription

If Resolution 1 is passed, Mr Yue has the right to request the Board to appoint up to two directors to the Board. Once appointed these directors will be directors until the Company’s next Annual General Meeting, at which time they must resign and offer themselves for re-election, as required by the Company’s constitution. After that Annual General Meeting has taken place, Mr Yue does not have an ongoing right to request the Board to continually appoint up to two directors to the Board.

Mr Yue has not identified any particular person or persons who would be appointed to the Board at his request under the above right.

(o) Recommendation of each Director and reasons for recommendation

The recommendations of each Director and the reasons for their recommendation in relation to Resolution 1, are set out above under Heading 6.2(f) entitled “Recommendation of each director”.

(p) Independent Experts Report

The Company obtained a report from an independent expert in relation to the Transaction which reports whether the Transaction is fair and reasonable to Shareholders.

In a report dated 2 May 2013, Stantons International Audit and Consulting Pty Ltd trading as Stantons International Securities reported that the Transaction is fair and reasonable to Shareholders.

The Independent Experts Report is set out in Annexure 4.

8. Impact of Transaction on Company if Resolution 1 is passed

Set out below is the impact on the Company if Resolution 1 is passed.

8.1 Impact on Company’s Financial Position

If Shareholders approve the Transaction by passing Resolution 1, then the impact of the Transaction on the Company will be as set out below.

Set out below is an audit reviewed (not audited) balance sheet (Statement of Financial Position) of the Company as at 31 December 2012 adjusted for:

NORTHERN MINERALS LIMITED

(a) the subsequent issue of 10,000,000 shares at 20 cents each to Conglin Yue to raise a gross $2,000,000,
(b) the exercise of 1,000,000 share options at 10.8 cents each to raise a gross $108,000
(c) exploration, corporate and administration costs post 31 December 2012 to 28 February 2013 estimated at $2,315,000 (but not including the proceeds of a placement to raise $3,760,000 completed on 22 February 2013, as this item is included in the adjustments referred to immediately below).

In addition, set out below is a “pro-forma” balance sheet assuming the above adjustments and also assuming:

(a) completion of a placement (completed on 22 February 2013) to raise a gross $3,760,000 and incurring capital raising costs of $100,000;
(b) the borrowing of $4,000,000 from the Underwriter and repayment of such loan out of the proceeds of the Rights Issue;
(c) completion of the Rights Issue to raise a gross $26,726,045 and incurring of capital raising costs estimated at $1,400,000;
(d) incurring of further administration, corporate and exploration costs to 30 June 2013 of an estimated $3,500,000; and
(e) the issue of 2,505,000 shares to employees at a deemed cost of $338,175.

Table 1: Consolidated Statement of Financial Position if Resolution 1 is passed

	Unaudited Adjusted 31 December 2012 $000 Pro-forma adjustments Unaudited Adjusted Pro-forma 31 December 2012 $000

Current Assets Cash assets Trade and other receivables Total Current Assets Non Current Assets Property, plant and equipment Other financial assets Capitalised exploration and evaluation costs Total Non Current Assets Total Assets Current Liabilities Trade and other payables Provisions Total Current Liabilities Non Current Liabilities	2,027 25,486 27,513 596 - 596
	2,623 25,486 28,109
	1,305 - 1,305 1,250 - 1,250 - -
	2,555 - 2,555
	5,178 25,486 30,664
	2,648 - 2,648 178 - 178
	2,826 - 2,826
	-

NORTHERN MINERALS LIMITED

	Unaudited Adjusted 31 December 2012 $000 Pro-forma adjustments Unaudited Adjusted Pro-forma 31 December 2012 $000

Provisions Total Non Current Liabilities Total Liabilities Net Assets Equity Issued Capital Reserves Accumulated Losses Total Equity	92 - 92
	92 - 92
	2,918 - 2,918
	2,260 25,486 27,746
	44,794 29,324 74,118 2,115 - 2,115 (44,649) (3,838) (48,487)
	2,260 25,486 27,746

Notes to pro-forma balance sheet:

(a) Accounting policy on exploration: – exploration, evaluation and acquisition costs are expenses incurred.

8.2 Impact on Company’s Capital Structure

If Shareholders approve the Transaction by passing Resolution 1, then the impact on the Company’s capital structure would be as follows:

	Existing Securities:	New Securities Issued:	Total after issue:	Percentage Increase:


Shares:	268,865,451	133,180,226	402,045,677	49.53%
Options:	1,800,000	66,590,113	68,390,113	3,699.45%
Performance Rights with exercise price:	2,535,000	0	2,535,000	0%
Performance Rights without exercise price:	8,000,000	0	8,000,000	0%

8.3 Impact on Company’s Prospects

If Resolution 1 is passed the Company will receive the full amount of $26.6m sought under the Rights Issue.

The Company intends to use the $26.6m as set out above under Heading 6.2(j) entitled “Intended Use of Funds Raised from Issue of New Shares and New Options”.

NORTHERN MINERALS LIMITED

This will enable the company to complete the following key milestones:

(a) Increase Resource Definition for Browns Range: The application of the funds raised under the Rights Issue will include exploration activities at Browns Range with the goal of increasing the resources to the Company’s target of between 22,000 and 29,000 tonnes TREO. The potential quantity of TREO targeted at the Wolverine, Gambit Central, Gambit West and Area 5 Prospects is based on existing drill results from 2011 and 2012, but is still conceptual in nature. There has been insufficient exploration at Gambit Central, Gambit West and Area 5 to define a Mineral Resource and it is uncertain if further exploration will result in the determination of a Mineral Resource at these prospects.
(b) Progress Pre-Feasibility Study: The funds raised under the Rights Issue will progress the Pre-Feasibility Study, focusing on:
(1) Engineering, Infrastructure and Mining Studies at Browns Range;
(2) Mineral Processing and Metallurgy - Beneficiation at Browns Range;
(3) Mineral Processing and Metallurgy - Hydrometallurgy at Browns Range;
(4) Environmental studies and approvals;
(5) Hydrogeological and hydrological studies;
(6) Aboriginal heritage and access agreements;
(7) Capital Expenditure including camp extension and airstrip at Browns Range;
(c) Complete Environmental Studies: The funds raised under the Rights Issue will enable the Company to progress environmental studies for the Browns Range Project.
(d) Complete Offtake Sale Agreements: The funds raised under the Rights Issue will enable the Company to progress the negotiation and execution of offtake sale agreements for the Browns Range Project.

All of the above tasks are essential to the overall task of obtaining a completed Feasibility Study.

9. Advantages and Disadvantages of Resolution 1 being passed, as well as Resolution 1 not being passed

Set out below are the key advantages and disadvantages of Resolution 1 being passed, for consideration by Shareholders.

9.1 Advantages of Resolution 1 being passed

The key advantages to Shareholders of Resolution 1 being passed are:

(a) the Company will receive in full the amount of $26.6m sought under the Rights Issue, enabling the Company to complete the key objectives set out above under Heading 8.3 above entitled “Impact on Company’s Prospects”. This in turn will assist the Company to maintain momentum in light of its goal of completing a Feasibility Study as quickly as possible and before 31 December 2014;
(b) the subscription price per share, being $0.20, to be paid by the Underwriter and by Mr Yue is higher than the closing ASX market price on the trading day immediately before the date of this document (being $0.125 as at 23 May 2013), resulting in the Company receiving a materially greater amount of funding than it would if it were to conduct a placement of shares at the current ASX market price;

NORTHERN MINERALS LIMITED

(c) If Resolution 1 is passed, and subject to formal documentation being agreed and Shareholder approval being obtained at a subsequent meeting of Shareholders, the Browns Range Transaction and Gold Tenements Transaction will proceed. If Resolution 1 is not approved then the Browns Range Transaction and the Gold Tenements Transaction may not proceed.
(d) If Resolution 1 is passed, the funds raised from the Rights Issue will provide funds to the Company to enable it to repay the loan owed to the Underwriter under the Loan Agreement.
(e) If Resolution 1 is passed it will enable to Company to progress the Company’s business model of being a “first mover” in the development and production of heavy rare earths (“ HRE ”). The HRE market currently has limited supply capacity, and will potentially change with increase in geographically diversified production. The timely development of a HRE resource will assist in giving HRE users confidence in security of supply and price stability, mitigating any drive for product substitution.

9.2 Disadvantages of Resolution 1 being passed

The key disadvantages to Shareholders of Resolution 1 being passed are:

(a) Shareholders who do not take up their entitlement under the Rights Issue will be diluted by the issue of new shares; and
(b) that control of the Company is likely to pass to the Underwriter (an entity controlled by Mr Yue) following completion of the Rights Issue based on the current level of take up by Eligible Shareholders under the Rights Issue as at the date of this document.

Set out below are the key advantages and disadvantages of Resolution 1 not being passed, for consideration by Shareholders.

9.3 Advantages of Resolution 1 not being passed

The key advantage to Shareholders of Resolution 1 not being passed is control of the Company will not pass to the Underwriter (an entity controlled by Mr Yue) under the Rights Issue.

The above advantage needs to be considered in light of the disadvantages below under Heading 9.4.

9.4 Disadvantages of Resolution 1 not being passed

The key disadvantages to Shareholders of Resolution 1 not being passed are:

(a) If Resolution 1 is not passed then it will materially delay the completion of the Feasibility Study;
(b) If Resolution 1 is not passed, then the Company will be forced to seek alternative equity capital at a lower issue price than the fully underwritten rights issue price of $0.20. The alternative equity capital is likely to be sought at a 20% to 50% discount to the Company current market share price, which was $0.125 (as at 23 May 2013); and
(c) If Resolution 1 is not passed then the Company may lose corporate/management knowledge and project knowledge through the reduction of the Company’s management team due to the Company’s lack of funding.

NORTHERN MINERALS LIMITED

10. Summary of Material Agreements

The Company has entered into the Underwriting Agreement in relation to the Transaction and the Term Sheet in relation to the Browns Range Transaction, the Gold Tenements Transaction and the Rights Issue, the material terms of which are summarised below.

10.1 Underwriting Agreement

The Company has entered into an agreement with the Underwriter under which the Company appoints the Underwriter to act as underwriter for the Rights Issue.

The Underwriter may at any time appoint a sub-underwriter or sub-underwriters.

The Underwriting Agreement applies to ordinary shares which the Company offers under the Rights Issue (“ Rights Issue Shares ”) and the options to subscribe for fully paid, ordinary shares in the Company that the Company offers under the Rights Issue (“ Rights Issue Options ”), for which the Company has not received valid applications by 5pm on the Closing Date (“ Underwritten Securities ”). Provided that the Company has complied with its obligations under the Underwriting Agreement and the Underwriter is not relieved of its obligations, the Underwriter must cause applications for the Underwritten Securities to be lodged with the Company together with the application money.

The Underwriter has the absolute right to terminate the Underwriting Agreement if any of the following events occur:

(a) the Company withdraws the Rights Issue;
(b) the Company ceases to be admitted to the official list of the ASX;
(c) the ASX makes an official statement to any person or indicates to the Company or the Underwriter that official quotation of the Rights Issue Shares or Rights Issue Options will not be granted;
(d) ASIC makes an order because the Prospectus is not worded and presented in a clear, concise or effective manner, or it contains a misleading or deceptive statement, or it has a material omission;
(e) a court makes an order under section 1324A or 1324B of the Corporations Act in relation to the Rights Issue;
(f) there is a declaration of a general moratorium on commercial banking activities in Australia, the United States of America or the United Kingdom by the relevant banking authority that has the effect of making it, in the reasonable judgment of the Underwriter, materially more difficult to promote the Rights Issue or to enforce contracts to issue and allot the Rights Issue Shares and Rights Issue Options;
(g) a suspension of the trading in all securities quoted or listed on the ASX, the London Stock Exchange and/or the New York Stock Exchange in a material respect for 2 or more consecutive trading days that has the effect of making it, in the reasonable judgment of the Underwriter, materially more difficult to promote the Rights Issue or to enforce contracts to issue and allot the Rights Issue Shares and Rights Issue Options;
(h) any director of the Company is charged with an indictable offence, or is disqualified from managing a corporation, or commits an act of fraud in connection with any aspect of the Rights Issue or the Company;
(i) the Company fails to give the Underwriter a Closing Certificate or if the Closing Certificate contains a statement that is not true.

The Underwriter may terminate the Underwriting Agreement if any of the following events, in the opinion of the Underwriter, has, or is likely to have, a material adverse effect on the marketing success of the Rights Issue, renders it impracticable to effect

NORTHERN MINERALS LIMITED

acceptances under the Rights Issue, or leads, or is likely to lead, to a liability for the Underwriter under any law:

(a) a default by the Company in the performance of any of its obligations under the Underwriting Agreement or a representation or warranty given by the Company under the Underwriting Agreement being not true or correct;
(b) any material adverse change in the assets, liabilities, financial position or performance, profits, losses or prospects of the Company;
(c) the Prospectus, or any public statement made by the Company in relation to the Company or the Rights Issue, containing a statement that is misleading or deceptive, or likely to mislead or deceive, omitting material required to be contained within it, or constituting conduct by any person that is misleading or deceptive or likely to mislead or deceive;
(d) any Parliament in Australia, the Reserve Bank of Australia or a Commonwealth or State Authority introducing, or making a public announcement that it will introduce or adopt a policy, that does or is likely to prohibit or regulate the Rights Issue, capital issues or security markets;
(e) any Government agency commencing any public action against the Company or any of its directors;
(f) an outbreak of hostilities or a major escalation in hostilities in countries including Australia, New Zealand, the United States of America, the United Kingdom, any member state of the European Union, Japan, Indonesia, North Korea, South Korea or the People’s Republic of China.

The Company must pay the Underwriter an underwriting commission calculable from 5% multiplied by the issue price of $0.20 multiplied by the number of Rights Issue Shares. The Company must reimburse all expenses incurred by the Underwriter in connection with the Rights Issue up to a maximum of A$10,000, with the Underwriter being required to obtain the Company’s prior approval for expenses above that maximum.

The Company indemnifies the Underwriter, its Related Bodies Corporate and each of their officers, employees, agents and advisers from all loss sustained in relation to the Rights Issue, the distribution of the Prospectus, the subscription for and issue of the Rights Issue Shares and Rights Issue Options, the Company failing to perform its obligations under the Underwriting Agreement, a breach of warranty, any announcement, advertisement or publicity approved by the Company and distributed by or on behalf of the Underwriter in relation to the Rights Issue, and any claim that the Underwriter has a liability under any applicable law in relation to the Rights Issue.

10.2 Term Sheet

On 29 January 2013 the Company and the Underwriter entered into the Term Sheet, which constituted a binding obligation of each entity. Under the Term Sheet, the Company and the Underwriter are required to negotiate in good faith the terms of the Browns Range Transaction, the Gold Tenements Transaction and the underwriting of the Rights Issue by the Underwriter.

Pursuant to the Term Sheet, the completion of the Browns Range Transaction and the Gold Tenements Transaction is conditional on:

(1) Shareholder approval under Listing Rule 10.1, which must be obtained on or before the date that is 60 days after the execution of the formal documents for the Browns Range Transaction and the Gold Tenements Transaction; and
(2) any Ministerial approval necessary to effect the transfer of any tenements from the Company as seller to the Underwriter ( Conditions ).

NORTHERN MINERALS LIMITED

(a) Browns Range Transaction

In relation to the Browns Range Transaction, the Company and the Underwriter agreed under the Term Sheet that, subject to the satisfaction of the Conditions, the Company will sell, and the Underwriter will buy, a 16% interest in the Browns Range Project in consideration of the payment of $26,000,000 by the Underwriter to the Company in the following instalments and on the terms set out below:

(1) 30 October 2013 – A$5,000,000;
(2) 31 December 2013 – A$5,000,000;
(3) 31 March 2014 – A$5,000,000;
(4) 30 June 2014 – A$5,000,000;
(5) 30 September 2014 – A$3,000,000; and
(6) 30 October 2014 – A$3,000,000.

(together the “ Instalments” ).

On the payment of each of the first 4 Instalments, the Company will transfer a 3.2% participating interest in the Browns Range Project to the Underwriter. On the payment of each of the 5[th] and 6[th] Instalment, the Company will transfer a 1.6% participating interest in the Browns Range Project to the Underwriter.

As a condition precedent to the sale the Underwriter and Company will enter into:

(1) a General Security Agreement to secure the Underwriter’s obligation to pay the Instalments to the Company; and
(2) a Browns Range Unincorporated Joint Venture Agreement.

In general terms the Browns Range Unincorporated Joint Venture Agreement will govern the relationship of the parties as joint venture participants in relation to the Browns Range Project. The agreement will provide that the Underwriter will be “ free carried ” by the Company through to commencement of production at Browns Range, meaning that the Underwriter is not required to contribute financing or capital to the Joint Venture or its activities until commencement of commercial production.

The Underwriter will be entitled to take its 16% participating interest of product in kind.

The Company will be manager of the joint venture. The agreement will include standard restrictions on assignment, including pre-emptive rights.

The Underwriter and the Company will also enter into an offtake agreement, which will provide for the Company to sell to the Underwriter (or the Underwriter’s nominee) 20% of the rare earth product produced from the joint venture, which market price will be determined with regard to agreed rare earth price indices.

(b) Gold Tenements Transaction

In relation to the Gold Tenements Transaction, the Company and the Underwriter agreed under the Term Sheet that, subject to the satisfaction of the Conditions, the Company will sell, and the Underwriter will buy, the Gold Tenements for $2,000,000, which is payable by the Underwriter to the Company in the following instalments and on the terms set out below:

(a) 30 September 2013 – $1,000,000; and
(b) 31 December 2013 – $1,000,000.

All rights to explore for and mine rare earths will be retained by the Company.

The Boulder Ridge Tenement (EL29594) will be retained by the Company and the rights to explore for and mine commodities other than rare earths will be granted to the Underwriter.

NORTHERN MINERALS LIMITED

The Company and the Underwriter will also enter into a Co-ordination Deed to regulate their activities on the Gold Tenements and the Boulder Ridge Tenement. The Co-ordination Deed will provide for co-operation in relation to exploration activities, and if mining commences, then mining activities.

If a JORC-compliant mineral resource estimate equal to or greater than the equivalent of 1,000,000 ounces of gold is discovered within the Gold Tenements then an additional $5,000,000 will be payable by the Underwriter to the Company within 90 days after the JORC-compliant mineral resource estimate is defined.

(c) Underwriting of the Rights Issue

In relation to the underwriting of the Rights Issue by the Underwriter, the Company and the Underwriter agreed that the Underwriter will underwrite the Rights Issue. The terms of the Underwriting Agreement entered into in accordance with the Term Sheet are detailed under Heading 10.1 above entitled “Underwriting Agreement”.

10.3 Loan Agreement

On 28 March 2013 the Company entered into the Loan Agreement. Through the Loan Agreement the Underwriter made available to the Company a maximum of $4,000,000. On 3 April 2013 the Underwriter advanced the full $4,000,000 available under the Loan Agreement to the Company.

Under the terms of the Loan Agreement no interest will accrue on the $4,000,000 advanced by the Underwriter. However, the $4,000,000 advanced to the Company under the Loan Agreement must only be used for general corporate purposes.

The Company must repay to the Underwriter the $4,000,000 by 4 October 2013 or if the Company is in default of the Loan Agreement, immediately on demand by the Underwriter. The Company will be in default of the Loan Agreement if:

(1) the Company convenes a meeting of its creditors or proposes to, or does, enter into a scheme of arrangement or composition with its creditors;
(2) the Company is wound up or a person makes an application to a court for an order to have it wound up and that application is not withdrawn or dismissed within 14 days;
(3) a receiver or receiver and manager is appointed to wind the Company up or a person makes an application to a court for an order to appoint a receiver or a receiver and a manager to the Company and that application is not withdrawn or dismissed within 14 days;
(4) a person who holds a security interest over all, or substantially all, of the Company’s assets takes possession of those assets; and
(5) an administrator is appointed to the Company under Part 5.3A of the Corporations Act or a person makes an application to a court for an order to appoint an administrator and that application is not withdrawn or dismissed within 14 days.

At any time while the $4,000,000 remains payable by the Company, the Underwriter may elect to set off against the $4,000,000 owing to it any amount that becomes payable by it to the Company.

11. General Information

Shareholders who require further information regarding the Meeting should contact the Company Secretary prior to the Meeting on (61) (8) 9481 2344 during normal business hours in Western Australia.

NORTHERN MINERALS LIMITED

GLOSSARY

In the Notice of Meeting and in this Explanatory Memorandum:

ASX means ASX Limited ACN 008 624 691 or the securities exchange operated by it, as the context requires.

Australia Conglin International Investment Group Pty Ltd means Australia Conglin International Investment Group Pty Ltd ABN 87 133 767 665 of Level 24, 71 Eagle Street, Brisbane, Queensland, 4000.

Associate has the meaning given to the term “associate” in Section 12 and Section 16 (only) of the Corporations Act.

associate has the meaning given to the term “associate” in Section 10 to Section 16 inclusive of the Corporations Act.

Board means the Board of Directors of the Company.

Browns Range Project means the Company’s rare earths exploration and early development project which is located in Western Australia and Northern Territory, situated within:

(1) the tenements of E80/3547, E80/3548, E80/4393, E80/4479, EL24193, EL24174 and EL24941; and
(2) the tenement applications of Application E80/4725 and Application E80/4726; and
(3) the Toro Tenements (to the extent of the Company’ interest in the Toro Tenements,

and the location of the project is shown in the diagram set out in Annexure 1 .

Browns Range Transaction means the transaction whereby, if approved by Shareholders, the Company sells 16% of the Browns Range Project to an entity controlled by Mr Conglin Yue, a shareholder in the Company with an interest in the Company of greater than 10%, in the manner, and on the terms, referred to in this Explanatory Memorandum.

Company means Northern Minerals Limited ABN 61 119 966 353.

Corporations Act means the Corporations Act 2001 (Cth).

Director means a director of the Company.

Eligible Shareholder has the meaning given to the term “Eligible Shareholder” in the Prospectus, namely a registered holder of the Ordinary Shares on the Record Date whose registered address is in Australia or New Zealand or Singapore or Switzerland.

Explanatory Memorandum means this Explanatory Memorandum accompanying the Notice of Meeting.

Feasibility Study means, in relation to the Browns Range Project, a study which will enable the Board to decide whether to make a decision to mine, including detailed engineering studies, estimate of recoverable ore reserves and their average composition and content, metallurgy, mine pit design, estimates of operating costs and capital costs, economic analysis, legal reports and risk assessment.

Gold Tenements means the tenements listed in Annexure 2 but does not include the rights to relating to rare earths.

Gold Tenements Transaction means the transaction whereby, if approved by Shareholders, the Company sells the Gold Tenements to an entity controlled by Mr Conglin Yue, a shareholder in the Company with an interest in the Company of greater than 10%, in the manner, and on the terms, referred to in this Explanatory Memorandum.

HRE means heavy rare earths.

Independent Expert means Stantons International Audit and Consulting Pty Ltd trading as Stantons International Securities.

NORTHERN MINERALS LIMITED

Independent Expert’s Report means the report of the Independent Export on whether each Transaction is fair and reasonable to Shareholders.

Listing Rules means the listing rules published by the ASX.

Loan Agreement means the loan agreement between the Company and Australia Conglin International Investment Group Pty Ltd dated 28 March 2013 for the loan of up to $4,000,000 from Australia Conglin International Investment Group Pty Ltd to the Company.

Meeting means the meeting of the Shareholders convened for the purposes of considering Resolution 1 contained in the Notice of Meeting (and any adjournment of the meeting).

New Shares means Ordinary Shares which are offered to be issued under the Rights Issue to Eligible Shareholders at an issue price of $0.20 per share.

New Options means options to subscribe for shares in the Company with an option exercise price of $0.30 and an option expiry date of 31 March 2015, the terms of issue of which are set out in Annexure 3.

Northern Minerals means Northern Minerals Limited ABN 61 119 966 353

Notice of Meeting means the notice convening the Meeting and which accompanies this Explanatory Memorandum.

Ordinary Share means a fully paid, ordinary Share in the Company.

Prospectus means the replacement prospectus for the Rights Issue which is dated 8 March 2013 and which was lodged with ASIC and ASX on 8 March 2013.

Proxy Form means the proxy form accompanying the Notice of Meeting.

Record Date means, in relation to the Rights Issue, 5pm Perth time on 6 March 2013.

Rights Issue means the rights issue referred to in the Prospectus, being the offer by the Company to Eligible Shareholders to subscribe for 1 New Share at $0.20 per New Share for every 2 existing shares held on the Record Date, together with 1 New Option for every 2 New Shares issued as part of the Rights Issue.

Share means a fully paid ordinary share in the Company and Shares has a corresponding meaning.

Shareholder means a person recorded in the Company’s register as a holder of a Share or Shares.

Shareholder Approval means, the approval sought in Resolution 1 as set out in the Notice of Meeting.

Subscription Monies means the money payable by the Underwriter to the Company under the terms of the Underwriting Agreement in relation to the Rights Issue.

Term Sheet means the term sheet dated 29 January 2013 executed by the Company and the Underwriter relating to the Browns Range Transaction, Gold Tenements Transaction and underwriting of the Rights Issue by the Underwriter.

Toro Tenements means EL26271, EL26270 and EL26286.

Transaction means the issue of up to 133,180,226 New Shares and 66,590,113 New Options to Australia Conglin International Investment Group Pty Ltd, being an entity which:

(1) is controlled by Mr Conglin Yue, who is a shareholder in the Company; and
(2) may be deemed a “related party” of the Company for the purposes of Section 228(6) of the Corporations Act 2001,

together with the payment of an underwriting fee of $1,331,802.26 (plus GST) to the Underwriter, in the manner, and on the terms, set out in this Explanatory Memorandum.

TREO means Total Rare Earth Oxides.

Underwriter means Australia Conglin International Investment Group Pty Ltd.

NORTHERN MINERALS LIMITED

Underwriting Agreement means the underwriting agreement between the Company (as issuer of the New Shares and New Options under the Rights Issue) and Australia Conglin International Investment Group Pty Ltd (as underwriter) dated 11 February 2013 (as amended by deeds of variation dated 22 February 2013, dated 25 March 2013, dated 24 April 2013 and dated 9 May 2013), pursuant to which the Underwriter agrees to underwrite 100% of any shortfall under the Rights Issue.

Voting Power has the meaning given to the term “voting power” in the Corporations Act .

NORTHERN MINERALS LIMITED

’ Annexure 1 – Location of the Brown s Range Project

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NORTHERN MINERALS LIMITED

Annexure 2 - The Gold Tenements

Project:	ID:
Gardiner-Tanami WA	E 80/3404 E 80/3405 E 80/3414 E 80/3530 E80/3914 E80/3915 E80/3682 E80/4214 E80/4213 E80/4242 E80/4652
Gardiner-Tanami NT	EL23934 EL27368 EL25009 EL25171 EL23932 EL29592 EL29593 EL29594 EL29595 EL24177 EL26498 EL26541 EL27367 EL23933 EL24179 EL24849 EL24935 EL24947 EL25003 EL25004 EL25172 EL28868 EL29619 EL29620 EL29621 EL29622 EL29630
Manhattan Gardner Range JV	E80/1735 E80/3275 E80/3817 E80/4081
Rabbit Flats	EL25157 EL25158 EL25159 EL25160 EL23935

NORTHERN MINERALS LIMITED

Annexure 3 – Terms of Issue of New Options

The terms of issue of the New Options are:

(a) The Options are granted for nil consideration.
(b) The Company will make an application to have the Options granted official quotation by the ASX.
(c) Each Option will have an exercise price of $0.30
(d) Each Option will automatically lapse on 31 March 2015 (“Option Expiry Date”).
(e) Each Option will entitle the holder to subscribe for and be allotted one Share upon exercise of the Option and payment to the Company of the exercise price.
(f) An Option may be exercised by the option holder at any time prior to the Option Expiry Date.
(g) Ordinary shares allotted pursuant to the exercise of the Options will rank equally with the then issued capital of the Company.
(h) There will be no participating entitlements inherent in the Options to participate in new issues of capital which may be offered to shareholders. Prior to any pro rata issue of securities to shareholders, holders of Options will be notified by the Company and will be afforded 7 Business Days before the relevant record date to exercise the Options.
(i) In the event of any reorganisation (including consolidation, subdivision, cancellation, reduction or return) of the issued capital of the Company before the expiry of the Options, all rights of the option holder will be changed to the extent necessary to comply with the Listing Rules applying to a reorganisation of capital at the time of the reorganisation.
(j) If, from time to time before the expiry of the Options, the Company makes an issue of Shares to shareholders by way of a bonus issue, other than in lieu of a dividend payment, then upon exercise of an Option, the option holder will be entitled to have issued to it (in addition to the ordinary shares which it is otherwise entitled to have issued to it upon such exercise) additional ordinary shares in the Company. The number of additional ordinary shares is the number of ordinary shares which would have been issued to the option holder if the Options had been exercised before the record date for the bonus issue.
(k) The Options do not confer the right to a change in exercise price, or a change to the number of underlying securities over which it can be exercised, other than under the paragraphs above.

NORTHERN MINERALS LIMITED

Annexure 4 – Independent Experts Report

PO Box 1908 West Perth WA 6872 Australia

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Annexure 4

2 May 2013

Level 2, 1 Walker Avenue West Perth WA 6005 Australia Tel: +61 8 9481 3188 Fax: +61 8 9321 1204

ABN: 84 144 581 519 AFS Licence No: 418019 www.stantons.com.au

The Directors Northern Minerals Limited Level 1 675 Murray Street WEST PERTH WA 6005

The Independent Expert has concluded that the transaction relating to the potential issue of up to 133,180,226 Rights Issue Shares and 66,590,113 Rights Issue Options to the Conglin Group (as defined below) via an underwriting and allowing the Rights Issue Options to be exercised, the subject of resolution 1 outlined in the Notice of General Meeting is fair and reasonable to the shareholders of the Company (not associated with the Conglin Group) as at the date of this report.

Dear Sirs

Re: NORTHERN MINERALS LIMITED (ABN 61 119 966 353) (“NTU” OR “THE COMPANY”) ON THE PROPOSAL TO ALLOW THE CONGLIN GROUP TO TAKE UP TO 133,180,226 RIGHTS ISSUE SHARES AND UP TO 66,590,113 RIGHTS ISSUE OPTIONS UNDER AN UNDERWRITING AGREEMENT AND ALLOWING THE RIGHTS ISSUE OPTIONS TO BE EXERCISED BY THE CONGLIN GROUP - SHAREHOLDERS MEETING PURSUANT TO SECTION 611 (ITEM 7) OF THE CORPORATIONS ACT 2001

1. Introduction

1.1 We have been requested by the Directors of NTU to prepare an Independent Expert’s Report to determine the fairness and reasonableness as noted in resolution 1 to a Notice of Meeting of Shareholders of NTU (“Notice”) and the accompanying Explanatory Memorandum to Shareholders (“EMS”) to be forwarded to shareholders in May 2013 for a meeting of shareholders in June 2013. On 1 February 2013, the Company announced a $58,000,000 funding package comprising of four components to advance its Browns Range Rare Earth Project in northern Australia to completion of a Feasibility Study.
A Sale of a 16% stake in the Browns Range Project to Australian Conglin International Investment Group Ltd (“ACIIG”), a company controlled by a substantial shareholder in NTU being Conglin Yue (collectively, the Conglin Group) to raise $26,000,000, with an offtake agreement for an additional 20% of the Browns Range Project production on commercial terms - subject to shareholder approval. The payment of the funds will be over six instalments commencing 30 October 2013 and completing on 30 October 2014. On the payment of each instalment, NTU will transfer a relevant interest in the Browns Range Project to the Conglin Group. This will follow a flow of funding to NTU which will support the developments outlined in its two year business plan. The parties will also enter into an Unincorporated Joint Venture Agreement for the Browns Range Project which will provide that the Conglin Group is free-carried through to commencement of

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Liability limited by a scheme approved under Professional Standards Legislation

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commercial production at Browns Range. NTU will be the manager of the Joint Venture. The Conglin Group will be entitled to 16% of product offtake at cost, plus an offtake agreement for an additional 20% of Browns Range production on commercial terms;

B Sale of NTU’s Gardiner-Tanami gold assets (“Gold Assets”) to the Conglin Group to raise an initial $2,000,000 – subject to shareholder approval. The payment will be made in two instalments – the first instalment of $1,000,000 on 30 September 2013 and the second instalment of $1,000,000 on 31 December 2013. All rights to explore for and mine Heavy Rare Earth Elements (“HREE’s”) will be retained by NTU. The Boulder Ridge Tenement (EL29594) will be retained by NTU, with the rights for commodities other than rare earths granted to the Conglin Group. If a JORC compliant resource (at least indicated status) equal to or greater than the equivalent of 1,000,000 ounces of gold is discovered within the Gardiner-Tanami project tenements, an additional $5,000,000 will be payable to NTU within 90 days of a JORC compliant resource being defined;

C A placement of 18,800,000 shares to sophisticated investors (to include Conglin Yue, so Conglin Yue may maintain an approximate 19.89% interest in NTU) at an issue price of 20 cents each to raise $3,760,000 (the “Placement”). These funds have been received by 22 February 2013 and 18,800,000 shares have been issued pursuant to the Placement of which Conglin Yue took up 3,800,000 shares;
D NTU will undertake a non-renounceable rights issue which will be fully underwritten by ACIIG. The rights issue will consist of one new share for every two shares at a price of 20 cents each (approximately 133,180,226 shares may be issued- the “Rights Issue Shares”) and one share option for every two new shares issued at an exercise price of 30 cents each with a term of two years from issue date (now set to expire on 31 March 2015) (“Rights Issue”) (66,590,113 share options may be issued (“Rights Issue Options”)). An underwriting fee will be payable to ACIIG by NTU. The estimated gross amount to be received by NTU is $26,636,045 and capital raising costs are estimated at $1,400,000. A Replacement Prospectus was issued by NTU on 8 March 2013 and was mailed out to all shareholders on 12 March 2013. The Rights Issue was planned to close on 3 April 2013 but has had several extensions with the last extension to 5 July 2013. Further details are noted below.
1.2 Under Paragraph 606 of the Corporations Act 2001 (‘TCA”), a person must not acquire a relevant interest in issued voting shares in a company if because of the transaction, that persons’ or someone else’s voting power in the company increases:
(a) from 20% or below to more than 20%; or
(b) from a starting point that is above 20% and below 90%.

Under Section 611 (Item 7) of TCA, Section 606 does not apply in relation to any acquisition of shares in a company by resolution passed at a general meeting at which no votes were cast in favour of the resolution by the acquirer or the disposer or their respective associates. An independent expert is required to report on the fairness and reasonableness of the transactions noted pursuant to a Section 611 (Item 7) meeting.

1.3 Due to unavoidable delays, the Company, on or around 3 April 2013 has borrowed $4,000,000 from ACIIG on an interest free, non-recourse basis. The monies will be repaid out of the proceeds of the Rights Issue. At the date of finalising this report, the Rights Issue Shares have not been issued as the issue of such Rights Issue Shares (and Rights Issue Options) is subject to shareholders’ approval to allow ACIIG as underwriter to the Rights Issue to take up shortfall Rights Issue Shares and Rights Issue Options (and allow such

NOR1638A/IER Re underwriting and Rights Issue with Conglin Group

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Rights Issue Options to be exercised) as the Conglin Group’s shareholding will probably exceed 20%. Approval from shareholders is pursuant to a Section 611 (Item 7) meeting under TCA and the meeting. Conglin Yue who controls ACIIG is a substantial shareholder of NTU in that Conglin Yue holds 52,980,267 shares in NTU that represents approximately 19.71% of the issued shares on issue in NTU as at 2 May 2013. If shareholders approve resolution 1 in the May 2013 Notice, the Conglin Group’s shareholding in NTU may range between approximately 19.77% and up to 46.30%. Assuming Conglin Yue takes up his full entitlement of 26,490,134 shares and ACIIG is obliged to take up 100%, 75%, 50% or 25% of the shortfall as the underwriter, the Conglin Group’s shareholding in NTU post the Rights Issue may fall in the range of approximately 46.30% (100% of the shortfall), 39.67% (75% of the shortfall), 33.03% (50% of the shortfall) and 26.40% (25% of the shortfall). The shortfall of shares for the purposes of this report is the difference between 133,180,226 Rights Issue Shares and the 26,490,134 Rights Issue Shares that Conglin Yue is entitled to take up although technically the total Shortfall Shares could be 133,180,226 if Conglin Yue did not take up his entitlement. These percentages assume there will be 402,045,677 shares on issue post the completion of the Rights Issue. The final shareholding of the Conglin Group post the Rights Issue is thus not yet determinable but may well exceed 20%. Potentially, the Conglin Group could be issued up to a further 66,590,113 Rights Issue Options exercisable at 30 cents each on or before 31 March 2015. If ACIIG and Conglin Yue acquired a relevant interest in 100% of the Rights Issue Shares and 100% of the Rights Issue Options via the Rights Issue and all such Rights Issue Options were exercised, the Conglin Group would own 252,750,606 shares or approximately 53.93% of the expanded issued capital of NTU (468,635,790 shares may be on issue if all Rights Issue share options were exercised). If Conglin Yue took up his full entitlement of 26,490,134 Rights Issue Shares and ACIIG was required to take up 75%, 50% or 25% of the shortfall and ACIIG exercised the shortfall in Rights Issue Options, the Conglin Group’s shareholding after exercising the shortfall in Rights Issue Options and assuming all other Rights Issue Options are exercised would approximate 45.40%, 36.86% or 28.32% respectively. If 66,590,113 Rights Issue Options were issued to the Conglin Group, the Conglin Group, if they decided to exercise all of the Rights Issue Options would be required to pay NTU the sum of approximately $19,970,034 (by 31 March 2015).

1.4 The NTU directors have requested Stantons International Securities to prepare an Independent Expert’s Report to determine whether the potential issue of any Rights Issue Shares (up to 133,180,226 Rights Issue Shares) in NTU to the Conglin Group and allowing the Conglin Group to be issued up to 66,590,113 Rights Issue Options via the Rights Issue and underwriting agreement and allow the Conglin Group to exercise up to 66,590,113 Rights Issue Options is fair and reasonable to the non associated shareholders of NTU. Resolution 1 (the only resolution) refers to the issue of up to 133,180,226 Rights Issue Shares and 66,590,113 Rights Issue Options and allowing such Rights Issue Options to be exercised by the Conglin Group and further details are included in the EMS attached to the Notice.

If shareholders approve resolution 1, shareholders at a later stage (probably in July 2013) will be asked to approve the sale of a 16% stake in the Browns Range Project and the sale of the Gold Assets to ACIIG as noted above and obtain an additional independent expert’s report from us as to whether such proposals are fair and/or reasonable to the shareholders of NTU not associated with Conglin Yue and the Conglin Group. For the purposes of this report, we have referred to the sale of a 16% stake in the Browns Range Project and the sale of the Gold Assets to ACIIG as the Sales and the 16% stake in Browns Range and the Gold Assets as the Sale Assets. However, we are not reporting in this report on the fairness and/or reasonableness of the sale of the Sale Assets to the Conglin Group.

NOR1638A/IER Re underwriting and Rights Issue with Conglin Group

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1.5 Apart from this introduction, this report considers the following:
Summary of opinion
Implications of the proposals pursuant to the Underwriting
Corporate history and nature of business of NTU
Future direction of NTU
Basis of technical valuation of NTU
Premium for control
Fairness and reasonableness of the proposed Rights Issue and the issue of potential Shortfall Rights Issue Shares and Shortfall Rights Issue Options to the Underwriter and allowing Conglin Yue to take up his entitlements under the Rights Issue
Conclusion as to fairness and reasonableness
1.6 In determining the fairness and reasonableness of the potential issue of up to 133,180,226 Rights Issue Shares, 66,590,113 Rights Issue Options (and allowing such Rights Issue Options to be exercised) to the Conglin Group pursuant to the underwriting obligation and Conglin Yue’s entitlement under the Rights Issue, we have had regard for the definitions set out by the Australian Securities and Investments Commission (“ASIC”) in its Regulatory Guide 111, “Content of Expert Reports”. Regulatory Guide 111 states that an opinion as to whether an offer is fair and/or reasonable shall entail a comparison between the offer price and the value that may be attributed to the securities under offer (fairness) and an examination to determine whether there is justification for the offer price on objective grounds after reference to that value (reasonableness). The concept of “fairness” is taken to be the value of the offer price, or the consideration, being equal to or greater than the value of the securities in the above mentioned offer. Furthermore, this comparison should be made assuming 100% ownership of the “target” and irrespective of whether the consideration is scrip or cash. An offer is “reasonable” if it is fair. An offer may also be reasonable, if despite not being ”fair”, there are sufficient grounds for security holders to accept the offer in the absence of any higher bid before the close of the offer. Although in this case the proposed issue of Rights Issue Shares to ACIIG and Conglin Yue do not relate to a takeover offer, we have considered the general principals noted above to determine our opinions on fairness and reasonableness of the potential issue of the Rights Issue Shares and Rights Issue Options (and allowing the exercise of the Rights Issue Options) to ACIIG and Conglin Yue.
1.7 In our opinion, taking into account the factors noted in this report, the proposal to allow ACIIG the right to enter into the underwriting agreement and take up 100% of the Rights Issue Shares and Rights Issue Options being issued under the Rights Issue under the underwriting obligation and Conglin Yue’s entitlement under the Rights Issue (and allowing up to 66,590,113 Rights Options to be exercised) as outlined in paragraph 1.3 and resolution 1, is on balance, taking into account the factors referred to in sections 6 and 8 below and elsewhere in this report, considered to be fair and reasonable to the shareholders of NTU (not associated with the Conglin Group) as at the date of this report.
1.8 The opinions expressed above must be read in conjunction with the more detailed analysis and comments made in this report. Each shareholder will need to form its own opinion on whether to vote in favour of the resolutions. Each shareholder needs to examine the share price of NTU, and market conditions at the time of exercise of vote to ascertain the impact, if any, on resolution 1.

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2. Implications of the Proposals

2.1 As at 18 February 2013, there were 247,560,451 ordinary fully paid shares on issue in NTU. On 22 February 2013 the Placement was completed and thus NTU issued 18,800,000 shares at 20 cents each to raise a gross $3,760,000 (Conglin Yue took up 3,800,000 of the shares under the Placement). Thus the number of shares on issue as at 31 March 2013 was 266,360,451, however a further 2,505,000 shares were issued to various employees on 2 May 2013, so that as at 2 May 2013 there are 268,865,451 shares on issue. The top 20 shareholders list as at 24 April 2013 disclosed the following:

Shareholder Conglin Yue Lynas Services Pty Ltd HBSC Custody Nominees Australia Limited Kong Dejing HBSC Custody Nominees Australia Limited	No. of fully paid shares % of issued shares 52,980,267 19.89 15,014,564 5.64 14,701,564 5.52 10,000,000 3.75 9,320,393 3.50
	102,016,788 38.30

The top 20 shareholders as per the top 20 shareholders list at 24 April 2013 owned approximately 55.72% (148,402,904 fully paid shares) of the ordinary issued capital of the Company. The shareholding of Conglin Yue was approximately 19.89% but has now been reduced to approximately 19.71% as a result of the shares issued on 2 May 2013.

As at 2 May 2013, there are 1,800,000 share options on issue with exercise price of 10.8 cents for 900,000 options and 30 cents for a further 900,000 options all expiring on 16 June 2013. In addition there are 300,000 performance rights exercisable at 50 cents each, on or before 31 December 2013 and a total of 2,235,000 performance rights with exercise priced ranging between 26.5 cents and 63.0 cents and expiry dates between 10 January 2014 and 7 December 2015. There are also 8,000,000 performance rights (with no exercise prices) expiring 30 June 2015 with various performance hurdles.

2.2 The number of shares on issue as at 2 May is 268,865,451. The estimated number of shares offered under the underwritten Rights Issue is approximately 133,180,226. If 133,180,226 shares are issued under the Rights Issue at 20 cents per share, the Company would raise a gross $26,636,045 before any capital raising costs that may approximate $1,400,000. It is noted that Conglin Yue took up 3,800,000 shares under the Placement so that his approximate 19.89% shareholding in NTU would be maintained (reduced to approximately 19.71% as at 2 May 2013). If shareholders approve resolution 1 in the May 2013 Notice, the Conglin Group’s shareholding in NTU may range between approximately 19.77% and up to 46.30%. Assuming Conglin Yue takes up his full entitlement of 26,490,134 shares and ACIIG is obliged to take up 100%, 75%, 50% or 25% of the shortfall as the underwriter, the Conglin Group’s shareholding in NTU post the Rights Issue may fall in the range of approximately 46.30% (100% of the shortfall), 39.67% (75% of the shortfall), 33.03% (50% of the shortfall) and 26.40% (25% of the shortfall). These percentages assume there will be 402,045,677 shares on issue post the completion of the Rights Issue. The final shareholding of the Conglin Group post the Rights Issue is thus not yet determinable but may well exceed 20%. Potentially, the Conglin Group could be issued up to a further 66,590,113 Rights Issue Options exercisable at 30 cents each on or before 31 March 2015. If ACIIG and Conglin Yue acquired a relevant interest in 100% of the Rights Issue Shares and 100% of the Rights Issue Options via the Rights Issue and all such Rights Issue Options were exercised, the Conglin Group would own 252,750,606 shares or approximately 53.93% of the expanded issued capital of NTU (468,635,790 shares may be on issue if all Rights Issue share options were exercised). If Conglin Yue took up his full entitlement of 26,490,134 Rights Issue Shares and ACIIG was required to take up 75%, 50% or 25% of the shortfall and ACIIG exercised the shortfall in Rights Issue Options, the

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Conglin Group’s shareholding after exercising the shortfall in Rights Issue Options and assuming all other Rights Issue Options are exercised would approximate 45.40%, 36.86% or 28.32% respectively. If 66,590,113 Rights Issue Options were issued to the Conglin Group, the Conglin Group would be required to pay NTU the sum of approximately $19,970,034 (by 31 March 2015).

Post the Placement and Rights Issue, the estimated number of shares on issue in NTU is expected to be 402,045,677 (assumes no existing share options are exercised). Using the Rights Issue price of 20 cents per share would result in a market capitalisation of around $80,409,000 (assuming 402,045,677 shares are on issue).

2.3 The current Board of Directors is expected to change in the near future as a result of the Rights Issue and Sales. As at 2 May 2013, the Board comprised of Kevin Schultz (nonexecutive Chairman), George Bauk (Managing Director and Chief Executive Officer), Adrian Griffin (non-executive Director) and Colin McCavana (non-executive Director). The Company Secretary and Chief Financial Officer is Mark Tory. It is expected that the Conglin Group will request two Conglin Group representatives be appointed to the Board of NTU in the near future and the current Board has agreed to this proposal.
2.4 In the event that resolution 1 is passed and shareholders vote at a later meeting to approve the Sales, NTU’s current 100% interest in the Browns Range Project will reduce by 16% to 84% but NTU will receive $26,000,000 for the sale of the 16% interest. The payment of the funds will be over six instalments commencing 30 October 2013 and completing on 30 October 2014. It is planned that $5,000,000 will be received on each of 30 October 2013, 31 December 2013, 31 March 2014 and 30 June 2014 and $3,000,000 on each of 30 September 2014 and 30 October 2014. No interest is to be charged. On the payment of each instalment, NTU will transfer a relevant interest (approximately transfer of 3.077% per $5,000,000 instalment and approximately1.846% per $3,000,000 instalment) in the Browns Range Project to ACIIG. This will follow a flow of funding to NTU which will support the developments outlined in its two year business plan. Thus, if all funds are received the final instalment will be received in October 2014. The parties will also enter into an Unincorporated Joint Venture Agreement for the Browns Range Project which will provide that ACIIG is free-carried through to commencement of production at Browns Range. NTU will be the manager of the Joint Venture. ACIIG will be entitled to 16% of product offtake at cost, plus an offtake agreement for an additional 20% of Browns Range production on commercial terms.
2.5 In the event that resolution 1 is passed and shareholders vote at a later meeting to approve the Sales NTU’s current interest in the Gold Assets reduces from 100% to nil% but NTU will receive $2,000,000 for such sale of the Gold Assets. The payment will be made in two instalments – the first instalment of $1,000,000 on 30 September 2013 and the second instalment of $1,000,000 on 31 December 2013. No interest is to be charged. All rights to explore for and mine HREE’s will be retained by NTU. The Boulder Ridge Tenements (EL29594) will be retained by NTU, with the rights for commodities other than rare earths granted to ACIIG. If a JORC compliant resource (at least indicated status) equal to or greater than the equivalent of 1,000,000 ounces of gold is discovered within the GardinerTanami project tenements, an additional $5,000,000 will be payable by ACIIG to NTU within 90 days of a JORC compliant resource being defined.
2.6 The net effect to the cash position of the Company in relation to the proposed dealings with the Conglin Group and the recently completed Placement and soon to be completed Rights Issue (subject to shareholders’ approval to allow the Conglin Group to exceed a 20% shareholding in NTU as noted above) is over a period commencing from late February 2013 (the Placement proceeds) to October 2014, NTU will receive gross cash funds of approximately $58,396,045 and capital raising costs may be around $1,400,000 but forego the Sale Assets. The proceeds from the Rights Issue in early July 2013 are expected to total

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a gross $26,636,045 and there is the distinct possibility that the Conglin Group may fund a large proportion via the Rights Issue and underwriting obligations.

3. Corporate History and Nature of Businesses

3.1 Principal Activities and Significant Assets

NTU is an ASX listed mineral exploration and evaluation company having achieved an ASX listing on 15 November 2006. Its most significant mineral interests are as follows:

The Browns Range Project (16% to be sold to the Conglin Group, subject to shareholder approval) in the WA/NT area of Australia comprising heavy rare earth elements (“HREE’s) where a high number of prospects with high value heavy HREE’s in xenotime mineralisation. In particular, the mineralisation includes high levels of dysprosium and yttrium, which are in short supply globally. Following results from its drilling and metallurgical programmes, the Company has delivered a maiden JORC resource at the end of 2012, advancing Browns Range towards production, using a relatively simple and low cost processing flow sheet to produce high grade concentrate. Initial scoping studies indicate capital costs of approximately $40,000,000 for only the hydrometallurgical facility however further substantial capital costs will be incurred on the beneficiation plant and other plant/mine development items. NTU has signed a Memorandum of Understanding (“MOU”) with an international partner whereby the MOU allows for supply of product as either 30% TREO mineral concentrate or a 92% mixed RE oxide. The Company has already commenced the optimisation phase of the test work programme, which will test key variables for each stage of the process to determine the optimal operating criteria. Three of the tenements in the Browns Range Project are subject to the terms of the Toro Energy Limited (‘Toro”) joint venture as outlined below. Toro has subsequently waived pre-emptive rights it had over certain tenement areas. NTU has entered into a farm-in arrangement with Toro in December 2011 where NTU is earning an up to 80% interest in non-uranium minerals on 7 tenements with a total area of approximately 1,403 square kilometres in the TanamiUranta Gold Region in the Northern Territory. NTU may earn a 51% interest by spending $4,000,000 within 3 years and a further 19% (to 70%) by spending a further $2,000,000 within a further 2 years and NTU may elect to earn an 80% interest by completing a BFS or Definitive Feasibility Study (“DFS”) in the event that Toro chooses not to contribute.
The John Galt Project that is in Western Australia and is also a heavy rare earth project but not as advanced as the Browns Range Project. NTU has an option to acquire the John Galt HREE Project by the payment of $250,000, the issue of ordinary shares in NTU to the value of $500,000 and a 1% net smelter return royalty on all minerals on the tenements.
The Gardiner-Tanami Gold Project in the Northern Territory. NTU holds a 100% interest in the Gardiner- Tanami Gold Project. In addition, there is a Gardner Range Joint Venture on various tenements prospective for gold and uranium whereby NTU holds a 60% interest with Manhattan Corporation Limited (“Manhattan”) holding a 40% interest. However, Manhattan has elected not to contribute and thus NTU will obtain an 80% interest by spending all funds to the pre-feasibility stage. On completion of the pre-feasibility, Manhattan has the right to contribute to expenditures in accordance with its then interest or be free carried to Bankable Feasibility Stage (“BFS”) and thus reduce its interest on completion of the BFS to 10%. Thereafter, Manhattan may elect to contribute 10% of expenditures, elect to be carried under a loan agreement or sell its interest. Manhattan has subsequently waived pre-emptive rights it had over certain tenement areas.

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Boulder Ridge Project. This comprises certain tenements near the Brown Range Project that are prospective for REE’s.

Shareholders should also read announcements made to the ASX by the Company in 2012 and in 2013 to the date of this report

Basis of technical valuation of NTU

4.1 In considering the proposal with the Underwriter (that includes the ability to take up a maximum of 133,180,226 Rights Issue Shares and up to 66,590,113 Rights Issue Options (106,690,092 Shortfall Rights Issue Shares and 53,345,046 Shortfall Rights Issue Options assuming Conglin Yue took up his full entitlement to the Rights Issue Shares and Rights Issue Options), we have sought to determine if the 20 cents issue price under the Rights Issue and the exercise price (30 cents each) of the Rights Issue Options is in excess of the current fair value of the shares in NTU on issue and then conclude whether the proposals are fair and reasonable to the existing non-associated shareholders of NTU (not associated with the Conglin Group). To do so, we need to consider the fairness and reasonableness of the Rights Issue itself.
4.1.1 The proposals with the Conglin Group would be fair to the existing non associated shareholders if the issue price under the Rights Issue and the exercise price of the Rights Issue Options is greater than or equal to the implicit value of the shares in NTU currently on issue. Accordingly, we have sought to determine a theoretical value that could reasonably be placed on NTU shares for the purposes of this report.
4.1.2 The valuation methodologies we have considered in determining the current technical value of a NTU share are:
Capitalised maintainable earnings/discounted cash flow;
Takeover bid - the price which an alternative acquirer might be willing to offer;
Adjusted net asset backing and windup value; and
The market value price of NTU shares.

4.2 Capitalised Maintainable Earnings / Discounted Cash Flows

4.2.1 NTU currently does not have a reliable cash flow or profit history from a business undertaking and therefore this methodology is not appropriate. The Company needs funds to further enhance the Browns Range Project. Currently, NTU does not have sufficient funds and thus any perceived technical values of the Browns Range Project and any other mineral assets of NTU are theoretical as without funds the Browns Range Projects could not be progressed. Notwithstanding the excellent prospectivity of the Browns Range Project, without cash the Company cannot continue to enhance the Project and conduct further exploration, evaluation and development on the Browns Range Project.

4.3 Takeover Bid

We have been advised by management of NTU that the directors believe that there always could be an entity with an interest in taking over 100% of the Company by way of a formal takeover bid. To our knowledge, there are no current bids in the market place and the directors of NTU and ourselves have formed the view that there is unlikely to be any takeover bids made for NTU in the immediate future. In the event that ACIIG subscribed for all of the NTU Shortfall Rights Issue Shares up to a maximum of 106,690,092 (assumes Conglin Yue subscribed for 100% of his entitlement), the maximum percentage owned by

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the Conglin Group could approximate 46.30% of the expanded issued capital of the Company (the Conglin Group could own up to 186,160,493 shares) (up to 402,045,677 shares could be on issue). Potentially, ACIIG if it took up all of the Shortfall Rights Issue Shares would be issued 53,345,046 Shortfall Rights Issue Options, exercisable at 30 cents each, on or before 31 March 2015. Along with Conglin Yue’s potential shareholding (79,470,401 shares after the Rights Issue), the Conglin Group could own up to 66,590,113 Rights Issue Share Options and if exercised at 30 cents each, on or before 31 March 2015, the Conglin Group’s shareholding could be up to 252,750,606 shares representing an approximate 53.93% shareholding in NTU (assuming no other share issues are undertaken). The Conglin Group would need to pay NTU approximately $19,070,034 to exercise such share options.

4.4 Net Asset Backing and Wind-Up Value

We set out below an audit reviewed (not audited) balance sheet (statement of financial position) of NTU as at 31 December 2012 adjusted for the subsequent issue of 10,000,000 shares at 20 cents each to Conglin Yue to raise a gross $2,000,000, the exercise of 1,000,000 share options at 10.8 cents each to raise a gross $108,000 and assuming exploration, corporate and administration costs post 31 December 2012 to 28 February 2013 estimated at $2,315,000 (but ignoring the proceeds of the Placement completed in February 2013).

In addition, we set out below a pro-forma balance sheet assuming the above adjustments and also assuming:

completion of the Placement (completed) to raise a gross $3,760,000 and incurring capital raising costs of $100,000;
the borrowing of $4,000,000 from ACIIG and repayment of such loan out of the proceeds of the Rights Issue;
completion of the Rights Issue to raise a gross $26,726,045 and incurring of capital raising costs estimated at $1,400,000;
Incurring of further administration, corporate and exploration costs to 30 June 2013 of an estimated $3,500,000; and
The issue of 2,505,000 shares to employees at a deemed cost of say $338,175.

	Unaudited Adjusted 31 December 2012 NTU $000 Unaudited Adjusted Pro-forma 31 December 2012 NTU $000

Current Assets Cash assets Trade and other receivables Total Current Assets Non Current Assets Property, plant and equipment Other financial assets Capitalised exploration and evaluation costs Total Non Current Assets Total Assets	2,027 27,513 596 596
	2,623 28,109
	1,305 1,305 1,250 1,250 - -
	2,555 2,555
	5,178 30,664

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	Unaudited Adjusted 31 December 2012 NTU $000 Unaudited Adjusted Pro-forma 31 December 2012 NTU $000

Current Liabilities Trade and other payables Provisions Total Current Liabilities Non Current Liabilities Provisions Total Non Current Liabilities Total Liabilities Net Assets Equity Issued Capital Reserves Accumulated Losses Total Equity	2,648 2,648 178 178
	2,826 2,826
	92 92
	92 92
	2,918 2,918
	2,260 27,746
	44,794 74,118 2,115 2,115 (44,649) (48,487)
	2,260 27,746

The net asset (book value) backing per fully paid ordinary NTU share as at 31 December 2012 (as adjusted) based on the unaudited consolidated balance sheet and 247,560,451 fully paid ordinary shares on issue was approximately 0.91 cents. However, it is noted that all exploration, evaluation and acquisition costs pertaining to mineral interest have been expensed in accordance with NTU’s accounting policy. Taking into account the $3,760,000 received from the Placement in February 2013, the adjusted net assets would equate to approximately $6,020,000 or approximately 2.26 cents per share (266,360,451 shares on issue). Based on the pro-forma consolidated statement of financial position, the net book value totals $27,746,000 or approximately 6.9 cents per issued share (402,045,577 shares on issue).

We note that the market has been informed of all of the current projects, joint ventures and farm in/farm out arrangements entered into between NTU and other parties. We also note it is not the present intention of the Directors of NTU to liquidate the Company and therefore any theoretical value based upon wind up value or even net book value, is just that, theoretical. The shareholders, existing and future, must acquire shares in NTU based on the market perceptions of what the market considers an NTU share to be worth.

4.5 Market Price of NTU Shares

Share prices in NTU as recorded on the ASX since 1 July 2012 up to and including 31 January 2013 (the last trading day before the announcement of the Funding Package proposals noted in paragraph 1.1 A to D above) have been as follows:

	High	Low	Closing Price	Volume
	Cents	Cents	Cents	000’s
July 2012	28.0	23.6	24.5	2,794
August 2012	35.0	24.0	28.0	4,429
September 2012	31.5	25.5	26.0	4,699
October 2012	28.0	19.5	24.0	4,277
November 2012	24.0	17.5	18.0	6,413
December 2012	21.0	16.0	17.5	4,643
January2013	20.5	17.0	17.5	5,117

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Subsequent to the announcement of the Funding Package proposals, the shares in NTU traded on ASX had been between 11.5 cents and 20.5 cents with a last sale on 1 May 2013 of 12.5 cents. Most sales from 15 April 2013 to 1 May 2013 were in the range of 11.5 cents (low) to 14.0 cents (high).

Preferred value of NTU fully paid shares (range) to arrive at fairness conclusion

It is noted that over the past several years, the vast majority of mineral exploration companies listed on the ASX are trading at significant discounts (but some at a premium) to appraised technical values and in some cases have traded at a discount to cash asset backing. In the case of NTU, the monthly volume of trades on the ASX is transparent enough to argue that an orderly market exists for the Company’s shares. The “market” arguably is fully informed of the Company’s activities.

The future value of an NTU share will depend upon, inter alia:

the future prospects of its mineral assets (and in particular, the possible 84% remaining interest in the Browns Range Project if the Sales proceed);
the state of the HREE’s and metal markets (and prices) in Australia and overseas;
the state of Australian and overseas stock markets;
the strength and performance of the Board and management and/or who makes up the Board and management;
foreign exchange rates;
general economic conditions;
the liquidity of shares in NTU;
possible ventures and acquisitions entered into by NTU; and
the ability to continue to raise capital and/or loan funds to assist in commercialising the Browns Range Project.

Future Directions of NTU

5.1 We have been advised by the directors and management of NTU that:
There are no proposals currently contemplated either whereby NTU will dispose any further properties or assets to the Conglin Group (however NTU will sell the Sale Assets to ACIIG, subject to shareholder approval and only if resolution 1 in the Notice is approved, ACIIG is acting as underwriter to the Rights Issue expected to be completed in early July 2013 and Conglin Yue participated in the Placement and is participating in the Rights Issue as outlined above) or where NTU will acquire any property or assets from the Conglin Group;
The composition of the Board is expected to change in the short term as noted above;
The Company may raise further capital and/or loan funds in 2015/16 as the needs arise and subject to market conditions (over and above the proceeds from the Placement and Rights Issue and proceeds from the sale of the Sale Assets);
No dividend policy has been set; and
The Company will endeavour to evaluate and commercialise its current mineral interests that includes the Browns Range Project (that will eventually be 84% as Conglin is proposing to acquire a 16% interest as noted above by October 2014).

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6. Premium for Control

6.1 Premium for control for the purposes of this report, has been defined as the difference between the price per share, which a buyer would be prepared to pay to obtain or improve a controlling interest in the Company and the price per share which the same person would be required to pay per share, which does not carry with it control or the ability to improve (increase) control of the Company. It is generally accepted that the premium for control is 20% or above (recognising that some acquirers will attempt to acquire companies as cheaply as possible with premiums below 20%) but normally premiums for control in the junior mineral company space are 20% to 40%. Not paying a premium for control (deemed to be over 20% of the shares in a company) of at least 20% does not necessarily make a proposal to take control not fair.
6.2 Under TCA, control may be deemed to occur when a shareholder or group of associated shareholders control more than 20% of the issued capital. In this case, if the Conglin Group subscribed for Rights Issue Shares (including any Shortfall Rights Issue Shares) at 20 cents each, the Conglin’s Group shareholding in NTU could increase from approximately 19.71% (as at 2 May 2013) to up to a maximum of approximately 46.30% of the expanded issued capital of NTU (but may fall in the range of 19.77% to 46.30% as noted in paragraph 1.3 above). Furthermore, if the Conglin Group took up to 66,590,113 Rights Issue Options and exercised such Rights Issue Options at 30 cents each, on or before 31 March 2015, the Conglin Group’s shareholding may be up to approximately 53.93%. Accordingly, we have addressed whether a premium for control will be paid.
6.3 The market value of a NTU share pre announcement of the proposals with the Conglin Group lay in the range of approximately 16 cents to 21 cents, with a preferred value of 17.5 cents per share, with the net book asset backing disclosing a significantly lower value. The value of the up to 133,180,226 Rights Issue Shares that could be issued to the Conglin Group at 20 cents per share would lie in the range of $21,308,836 to $27,967,847 (preferred value $23,306,539) compared with the Rights Issue value of 20 cents per share ($26,636,045). The Rights Issue price of the Rights Issue Shares of 20 cents each is more than the last traded price of 17.5 cents on 31 January 2013 (last sale before the announcement of the proposals with the Conglin Group which is at a premium to the last sale price of a NTU share. Subsequent to the announcement on 1 February 2013, the shares in NTU as traded on ASX have mainly been between 11.5 cents and 20.5 cents with sales from 15 April 2013 to 1 May 2013 at between 11.5 cents and 14.0 cents. Therefore, the Conglin Group is considered to be paying a premium for potential control on a post announcement basis but the premium for control on a pre announcement basis would be less than 20%. It is noted that on an un-audited net asset backing basis the Conglin Group again would be paying a premium for control.

The Rights Issue Options are exercisable at 30 cents per each on or before 31 March 2015. The exercise price is well in excess of December 2012 and January 2103 pre-announcement share prices and well in excess of post announcement share prices (to 1 May 2013). It is noted that the theoretical value of a Rights Issue Option may fall between 1.397 cents and 3.096 cents if we assumed a 11.5 cents market price of an NTU share (price on 26 April 2013), an interest rate of 2.85%, an expiry date of 31 March 2015, an issue date of 1 July 2013 and volatility factors of 70.86% (volatility for year to 26 April 2013) and 100% respectively.

6.4 We note that currently the Conglin Group does not have Board control of NTU and following the passing and consummation of resolution 1 and the proposed Sales (subject to shareholder approval probably in July or August 2013), the Conglin Group will have two Board representatives out of a total Board membership of six.

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7. Conclusion on the Fairness of the proposals pursuant to resolution 1

7.1 In our opinion, taking into account the factors noted in this report, the proposal to allow ACIIG the right to enter into the underwriting agreement and take up 100% of the Rights Issue Shares and Rights Issue Options being issued under the Rights Issue under the underwriting obligation and Conglin Yue’s entitlement under the Rights Issue (and allowing up to 66,590,113 Rights Options to be exercised) as outlined in paragraph 1.3 and resolution 1 is, on balance, taking into account the factors referred to in sections 6 and 8 below and elsewhere in this report, considered to be fair to the shareholders of NTU (not associated with the Conglin Group) as at the date of this report.
Matters considered in arriving at our conclusions as to Reasonableness of the proposals under resolution 1
8.1 In addition to the matters noted in section 6 above, we set out below some of the advantages and disadvantages and other factors pertaining to the proposals with the Conglin Group in relation to the Rights Issue. In addition, we considered the overall Funding Package in forming our opinion on the proposals under resolution 1.

Advantages

8.2 By entering into the Rights Issue and underwriting proposals with the Conglin Group, NTU increases its cash reserves (it will raise $26,636,045 from the underwritten Rights Issue). Obtaining access to a significant amount of cash funds in the current environment is difficult and thus the Company and its shareholders should benefit. This should alleviate cash flow concerns in the immediate future, and position the Company to fund its operations (refer paragraph 8.4 below).
8.3 In the event that the Rights Issue is not completed or the Company cannot raise adequate working capital from other sources, there is the likelihood that the participation of NTU in the Brown Range Project may be curtailed until such time as new funds are raised. In the current market it is still difficult for exploration companies such as NTU to raise equity. To raise equity at a premium to market price in the current environment is extremely difficult. It is not uncommon to have capital raisings at discounts to market and such discounts can be as high as 50% (and on occasions, more) but generally in the range of 20% to 50% for junior mineral companies. It is noted that share prices in the six weeks to 1 May 2013 have traded well below the Rights Issue price of 20 cents and have traded in the range of 11.5 cents to 16.5 cents with a last sale on 1 May 2013 of 12.5 cents. Raising funds at a premium to pre-announcement share prices (December 2012/January 2013) and post announcement share prices (11.5 cents to 14 cents between 15 April 2013 and 1 May 2013) ensures on a technical basis shareholders are not diluted, however in this case, non Conglin Group shareholders in NTU may be diluted if they do not take up Rights Issue Shares (or only part thereof).
8.4 The net effect to the cash position of the Company in relation to the proposed dealings with the Conglin Group and the Placement ($3,760,000 received by 22 February 2013) and Rights Issue (is being underwritten by ACIIG, and due for completion in late June 2013 or early July 2013) is over a period commencing from 22 February 2013 to October 2014, NTU will receive gross cash funds of approximately $58,396,045 and capital raising costs are estimated to be $1,400,000 but forego the Sale Assets. Notwithstanding the excellent prospectivity of the Browns Range Project, without cash the Company cannot continue to enhance the Project and conduct further exploration, evaluation and development on the Browns Range Project. Also without cash for exploration, evaluation and development on the Browns Range Project, the share price may fall below current levels. The Funding Package as noted above will alleviate the poor cash position of the Company (as at 31

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December 2012 as adjusted $2,027,000 well down from the $9,215,000 as at 30 June 2012). As noted above, the Company completed the Placement (as part of the Funding Package) by 22 February 2013 and received a gross $3,760,000 and is expected to complete the Rights Issue and raise a gross $26,636,045 (of which the Conglin Group may contribute up to a maximum of $26,636,045 as a shareholder and underwriter if there is a 100% shortfall to the Rights Issue).

8.5 There is an incentive to NTU and the Conglin Group, to successfully exploit the Browns Range Project (NTU’s interest may reduce to 84% if at a later stage shareholders approve the sale of the Sale Assets) as the Conglin Group will have significant shareholding interest in NTU. Conglin Yue owned approximately 19.89% of NTU as at 18 February 2013 and on 20 February 2013 subscribed for a further 3,800,000 shares in NTU via the Placement at 20 cents per share at a cost to Conglin Yue of $760,000 to now (2 May 2013) hold an approximate 19.71% interest in the Company. The 20 cents per share paid was in the main at a premium of between 1.0 cents and 2.5 cents to the share price of an NTU share traded on ASX in the five business days before the announcement of the Funding Package. However, in the event that ACIIG is required to take up shares in NTU as part of its underwriting of the Rights Issue, the Conglin Group may increase its shareholding (at a cost of 20 cents per share) to up to approximately 46.30% and possibly up to approximately 53.93%.
8.6 If all of the Rights Issue Options are exercised, NTU will receive a total of approximately $19,770,034 on or before 31 March 2015.

Disadvantages

8.7 The number of fully paid ordinary shares on issue rose by 18,800,000 to 266,360,451 after the Placement (this has occurred) and rose to 268,865,451 after the issue of 2,505,000 shares on 2 May 2013 and may rise by up to approximately 133,180,226 after completion of the Rights Issue to approximately 402,045,677. This could represent an overall approximate 62.40% increase in the ordinary shares of the Company from that on hand as at 18 February 2013. However, as noted above, the Company will raise approximately $30,396,045 ($3,760,000 already raised via the Placement completed in February 2013) before capital raising costs. It is noted that the Placement and Rights Issue is at a premium to the share price of an NTU share trading on ASX in December 2012 and January 2013 (except for several trades at a small premium to the 20 cent issue price under the Placement (completed) and the proposed Rights Issue. It is not uncommon to have capital raisings at discounts to market and such discounts can be as high as 50% (and on occasions, more). It is noted that share prices in the six weeks to 1 May 2013 have traded well below the Rights Issue price of 20 cents and have traded in the range of 11.5 cents to 16.5 cents with a last sale on 1 May 2013 of 12.5 cents.
8.8 In the event that ACIIG is required to take up shares in NTU as part of its underwriting of the Rights Issue, the Conglin Group may increase its shareholding (at a cost of 20 cents per share). The maximum shareholding of the Conglin Group if no other shareholder takes up shares under the Rights Issue and ACIIG took up all of the Shortfall Rights Issue shares may approximate 46.30% (approximately 39.67% if a 25% take up of original entitlement by other shareholders, approximately 33.03% if a 50% take up of original entitlement by other shareholders and approximately 26.40% if a 75% take up of original entitlement by other shareholders). Potentially, the Conglin Group could be issued up to a further 66,590,113 Rights Issue Options exercisable at 30 cents each on or before 31 March 2015. If ACIIG and Conglin Yue acquired a relevant interest in 100% of the Rights Issue Shares and 100% of the Rights Issue Options via the Rights Issue and all such Rights Issue Options were exercised, the Conglin Group would own 252,750,606 shares or approximately 53.93% of the expanded issued capital of NTU (468,635,790 shares may be on issue if all Rights Issue share options were exercised). If Conglin Yue took up his full entitlement of

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26,490,134 Rights Issue Shares and ACIIG was required to take up 75%, 50% or 25% of the shortfall and ACIIG exercised the shortfall in Rights Issue Options, the Conglin Group’s shareholding after exercising the shortfall in Rights Issue Options and assuming all other Rights Issue Options are exercised would approximate 45.40%, 36.86% or 28.32% respectively. If 66,590,113 Rights Issue Options were issued to the Conglin Group, the Conglin Group, if they exercised all such Rights Issue Options would be required to pay NTU the sum of approximately $19,970,034 (by 31 March 2015).

Other Factors (including relating to the assumed sale of the Sale Assets that may occur if shareholders approve resolution 1 in the Notice and later approve the sale of the Sale Assets at a later stage)

8.9 The Company by selling the Sale Assets reduces its exposure to cash flows and profits from the Browns Range Project. If the Browns Range Project continues to development and is a financial success, NTU’s share of future profits and cash flows would be 16% less. In addition, the Gold Assets being sold for $2,000,000 may also be commercially developed and NTU will miss out on cash flows and profits. However, there may be some upside consideration to NTU in that if a JORC compliant resource (at least indicated status) equal to or greater than the equivalent of 1,000,000 ounces of gold is discovered within the Gardiner-Tanami project tenements, an additional $5,000,000 will be payable by ACIIG to NTU within 90 days of a JORC compliant resource being defined.
8.10 The Consideration payable totalling $26,000,000 (between October 2013 and October 2014) may end up being significantly lower than 16% the value of the Browns Range Project on a developed basis. It would be expected that the longer term developed value will far exceed the $26,000,000 payable by ACIIG however NTU may not have raised sufficient funds from other sources to assist NTU in moving to development and production of the Browns Range Project. The raising of risk funds by exploration companies such as NTU in the current market is difficult. The overall funding package of over $58,000,000 gross, including the receipt of $28,000,000 over a period from October 2013 to October 2014 (approximately $30,690,000 net of costs will be raised by the end of 2013 of which approximately net $28,996,000 will be raised by the end of July 2013) is planned to match planned evaluation and development expenditures on the Browns Range Project as based on NTU’s two year business plan.
8.11 The actual undiscounted Consideration payable by ACIIG in relation to the Sale Assets is significantly greater than 16% the market capitalisation of NTU in the six months to 29 January 2013 and to 14 March 2013 (post the Placement).
8.12 Notwithstanding prospectivity of the Gold Assets, the Company has had insufficient funds to spend any meaningful monies on the Gold Assets and also focus over the past few years has been predominantly on the Browns Range Project (as can be seen from the numerous announcements made by NTU to the ASX over the past two years. Obtaining $2,000,000 will assist NTU on its enhancing of the Browns Range Project. There may be upside consideration to NTU in that if a JORC compliant resource (at least indicated status) equal to or greater than the equivalent of 1,000,000 ounces of gold is discovered within the Gardiner-Tanami project tenements, an additional $5,000,000 will be payable to NTU within 90 days of a JORC compliant resource being defined.
8.13 By selling the Sale Assets for a gross undiscounted $28,000,000, the NTU Group will disclose a profit on sale equal to the Consideration received as the costs relating to the Sale Assets have to date been expensed to the statement of financial performance (income statement). However, some tax losses will be used up and the estimated tax loss benefit will reduce by approximately $8,400,000.

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8.14 The Company still retains (via an option to acquire 100%) its promising John Galt Project that is prospective for HREE’s as noted above in paragraph 3.1.
8.15 The timings of the receipt of funds from the Placement (completed), Rights Issue and Sales of the Sale Assets are to coincide with the planned expenditures under the 2013/2014 Business Plan. No interest is being charged. On the payment of each instalment, NTU will transfer a relevant interest in the Browns Range Project to ACIIG. This will follow a flow of funding to NTU which will support the developments outlined in its two year business plan. Thus, if all funds are received the final instalment will be received in October 2014. The parties will also enter into an Unincorporated Joint Venture Agreement for the Browns Range Project which will provide that ACIIG is free-carried through to commencement of production at Browns Range. NTU will be the manager of the Joint Venture. ACIIG will be entitled to 16% of product offtake at cost, plus an off-take agreement for an additional 20% of Browns Range production on commercial terms.
8.16 The underwriting fee of 5% of the amount to be raised from the Rights Issue is in line with fees charged by other financiers who enter into underwriting arrangements. Recent underwriting fees noted have been between 4% and 8%. In addition the general terms are similar to other underwriting agreements noted by us in recent times.
8.17 The share price of a NTU share at the date of exercise of the Rights Issue Options may be in excess of the exercise price of the Rights issue Options.
8.18 Having a cornerstone investor such as the Conglin Group has advantages but it may also limit the opportunity for other parties to bid for all or part of the shares in NTU in the future. However, a takeover bid for the Company cannot be completely ruled out.
Conclusion as to Reasonableness
9.1 In our opinion, taking into account the factors noted in this report, the proposal to allow ACIIG the right to enter into the underwriting agreement and take up 100% of the Rights Issue Shares and Rights Issue Options being issued under the Rights Issue under the underwriting obligation and Conglin Yue’s entitlement under the Rights Issue (and allowing up to 66,590,113 Rights Options to be exercised) as outlined in paragraph 1.3 and resolution 1 is, on balance, taking into account the factors referred to in sections 6 and 8 below and elsewhere in this report, considered to be reasonable to the shareholders of NTU (not associated with the Conglin Group) as at the date of this report.
Sources of Information
10.1 In making our assessment as to whether the proposed underwriting and Rights Issue dealings with the Conglin Group as noted in resolution 1 and the EMS is fair and reasonable, we have reviewed relevant published available information and other unpublished information of the Company and the Sales Assets that is relevant to the current circumstances. In addition, we have held discussions with the management of NTU about the present and future operations of the Company. Statements and opinions contained in this report are given in good faith but in the preparation of this report, we have relied in part on information provided by the directors and management of NTU.
10.2 Information we have received includes, but is not limited to:
a) Notice and the EMS of NTU to 2 May 2013;
b) Discussions with management of NTU;
c) Details of historical market trading of NTU ordinary fully paid shares recorded by ASX for the period 1 January 2012 to 1 May 2013;

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d) Shareholding details of NTU as at 24 April 2013;
e) Audited balance sheet of NTU as at 30 June 2012 and unaudited balance sheet as at 31 December 2012;
f) Announcements made by NTU to the ASX from 1 January 2012 to 2 May 2013;
g) The HOA between NTU and the Conglin Group dated 31 January 2013;
h) The cash flow forecasts of NTU for to 31 December 2013 and the 2013/14 Business Plan; and
i) Drafts of the Sale Agreement relating to the Sales, off-take agreement and other documents relating to the overall Funding Package.

10.3 Our report includes Appendix A and our Financial Services Guide attached to this report.

Yours faithfully

STANTONS INTERNATIONAL AUDIT AND CONSULTING PTY LTD (Trading as Stantons International Securities)

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J P Van Dieren - FCA Director

NOR1638A/IER Re underwriting and Rights Issue with Conglin Group

APPENDIX A

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AUTHOR INDEPENDENCE AND INDEMNITY

This annexure forms part of and should be read in conjunction with the report of Stantons International Securities dated 2 May 2013, relating to the dealings with the Conglin Group on the underwriting and Rights Issue as outlined in resolution 1 in the Notice of Meeting to Shareholders and the EMS proposed to be distributed to the NTU shareholders in May 2013.

At the date of this report, Stantons International Securities does not have any interest in the outcome of the proposals. There are no relationships with NTU and the Conglin Group other than acting as an independent expert for the purposes of this report. Before accepting the engagement Stantons International considered all independence issues and concluded that there were no independence issues in accepting the assignment to prepare the Independent Experts Report. There are no existing relationships between Stantons International Securities and the parties participating in the transaction detailed in this report which would affect our ability to provide an independent opinion. To 30 June 2012, Stantons International Audit and Consulting Pty Ltd were the auditors of NTU but we resigned as auditors in November 2012. The fee to be received for the preparation of this report is based on the time spent at normal professional rates plus out of pocket expenses and is estimated at a maximum of $35,000. The fee is payable regardless of the outcome. With the exception of the fee, neither Stantons International Securities nor John P Van Dieren have received, nor will, or may they receive, any pecuniary or other benefits, whether directly or indirectly, for or in connection with the making of this report.

Stantons International Securities does not hold any securities in NTU or ACIIG. There are no pecuniary or other interests of Stantons International Securities that could be reasonably argued as affecting its ability to give an unbiased and independent opinion in relation to the proposal. Stantons International Securities and Mr J Van Dieren have consented to the inclusion of this report in the form and context in which it is included as an annexure to the Notice.

QUALIFICATIONS

We advise Stantons International Securities is the holder of an Australian Financial Services Licence (no 418019) under the Corporations Act 2001 relating to advice and reporting on mergers, takeovers and acquisitions that involve securities. The directors of Stantons International Audit and Consulting Pty Ltd are the directors of Stantons International Securities. Stantons International Securities has extensive experience in providing advice pertaining to mergers, acquisitions and strategic for both listed and unlisted companies and businesses.

Mr John P Van Dieren, FCA, the person responsible for the preparation of this report, has extensive experience in the preparation of valuations for companies and in advising corporations on takeovers generally and in particular on the valuation and financial aspects thereof, including the fairness and reasonableness of the consideration offered.

The professionals employed in the research, analysis and evaluation leading to the formulation of opinions contained in this report, have qualifications and experience appropriate to the task they have performed.

DECLARATION

This report has been prepared at the request of the Directors of NTU in order to assist NTU shareholders to assess the merits of the proposed underwriting and dealings with the Rights Issue as they relate to the Conglin Group as outlined in resolution 1 the EMS to which this report relates. This report has been prepared for the benefit of NTU’s shareholders and does not provide a general expression of Stantons International Securities opinion as to the longer term value of NTU and its

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assets (including the Browns Range Project). Stantons International Securities does not imply, and it should not be construed, that is has carried out any form of audit on the accounting or other records of the NTU Group. Neither the whole nor any part of this report, nor any reference thereto may be included in or with or attached to any document, circular, resolution, letter or statement, without the prior written consent of Stantons International Securities to the form and context in which it appears.

DUE CARE AND DILEGENCE

This report has been prepared by Stantons International Securities with due care and diligence. The report is to assist shareholders in determining the fairness and reasonableness of the proposals set out in resolution 1 to the Notice and each individual shareholder may make up their own opinion as to whether to vote for or against resolution 1.

DECLARATION AND INDEMNITY

Recognising that Stantons International Securities may rely on information provided by NTU and its officers (save whether it would not be reasonable to rely on the information having regard to Stantons International Securities experience and qualifications), NTU has agreed:

(a) To make no claim by it or its officers against Stantons International Securities (and Stantons International Audit and Consulting Pty Ltd) to recover any loss or damage which NTU may suffer as a result of reasonable reliance by Stantons International Securities on the information provided by NTU; and
(b) To indemnify Stantons International Securities (and Stantons International Audit and Consulting Pty Ltd) against any claim arising (wholly or in part) from NTU or any of its officers providing Stantons International Securities any false or misleading information or in the failure of NTU or its officers in providing material information, except where the claim has arisen as a result of wilful misconduct or negligence by Stantons International Securities.

A draft of this report was presented to NTU directors for a review of factual information contained in the report. Comments received relating to factual matters were taken into account, however the valuation methodologies and conclusions did not alter.

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FINANCIAL SERVICES GUIDE FOR STANTONS INTERNATIONAL AUDIT AND CONSULTING PTY LTD (Trading as Stantons International Securities) Dated 2 May 2013

Stantons International Securities ABN 84 144 581 519 and Financial Services Licence 418019 (“SIS” or “we” or “us” or “ours” as appropriate) has been engaged to issue general financial product advice in the form of a report to be provided to you.

2. Financial Services Guide

In the above circumstances we are required to issue to you, as a retail client a Financial Services Guide (“FSG”). This FSG is designed to help retail clients make a decision as to their use of the general financial product advice and to ensure that we comply with our obligations as financial services licensees.

This FSG includes information about:

who we are and how we can be contacted;
the services we are authorised to provide under our Australian Financial Services Licence, Licence No: 418019;
remuneration that we and/or our staff and any associated receive in connection with the general financial product advice;
any relevant associations or relationships we have; and
our complaints handling procedures and how you may access them.

3. Financial services we are licensed to provide

We hold an Australian Financial Services Licence which authorises us to provide financial product advice in relation to:

Securities (such as shares, options and notes)

We provide financial product advice by virtue of an engagement to issue a report in connection with a financial product of another person. Our report will include a description of the circumstances of our engagement and identify the person who has engaged us. You will not have engaged us directly but will be provided with a copy of the report as a retail client because of your connection to the matters in respect of which we have been engaged to report.

Any report we provide is provided on our own behalf as a financial services licensee authorised to provide the financial product advice contained in the report.

4. General Financial Product Advice

In our report we provide general financial product advice, not personal financial product advice, because it has been prepared without taking into account your personal objectives, financial situation or needs. You should consider the appropriateness of this general advice having regard to your own objectives, financial situation and needs before you act on the advice. Where the advice relates to the acquisition or possible acquisition of a financial product, you should also obtain a product disclosure statement relating to the product and consider that statement before making any decision about whether to acquire the product.

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5. Benefits that we may receive

We charge fees for providing reports. These fees will be agreed with, and paid by, the person who engages us to provide the report. Fees will be agreed on either a fixed fee or time cost basis.

Except for the fees referred to above, neither SIS, nor any of its directors, employees or related entities, receive any pecuniary benefit or other benefit, directly or indirectly, for or in connection with the provision of the report.

6. Remuneration or other benefits received by our employees

All our employees receive a salary. Our employees are eligible for bonuses based on overall productivity but not directly in connection with any engagement for the provision of a report.

7. Referrals

We do not pay commissions or provide any other benefits to any person for referring customers to us in connection with the reports that we are licensed to provide.

8. Associations and relationships

SIS is ultimately a wholly division of Stantons International Audit and Consulting Pty Ltd a professional advisory and accounting practice. Stantons International Audit and Consulting Pty Ltd also trades as Stantons International that provides audit, corporate services, internal audit, probity, management consulting, accounting and IT audits.

From time to time, SIS and Stantons International Audit and Consulting Pty Ltd and/or their related entities may provide professional services, including audit, accounting and financial advisory services, to financial product issuers in the ordinary course of its business.

9. Complaints resolution

9.1 Internal complaints resolution process

As the holder of an Australian Financial Services Licence, we are required to have a system for handling complaints from persons to whom we provide financial product advice. All complaints must be in writing, addressed to:

The Complaints Officer Stantons International Securities Level 2 1 Walker Avenue WEST PERTH WA 6005

When we receive a written complaint we will record the complaint, acknowledge receipt of the complaints within 15 days and investigate the issues raised. As soon as practical, and not more than 45 days after receiving the written complaint, we will advise the complainant in writing of our determination.

9.2 Referral to External Dispute Resolution Scheme

A complainant not satisfied with the outcome of the above process, or our determination, has the right to refer the matter to the Financial Ombudsman Service Limited (“FOSL”). FOSL is an independent company that has been established to provide free advice and

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assistance to consumers to help in resolving complaints relating to the financial services industry.

Further details about FOSL are available at the FOSL website www.fos.org.au or by contacting them directly via the details set out below.

Financial Ombudsman Service Limited PO Box 3 MELBOURNE VIC 8007 Toll Free: 1300 78 08 08 Facsimile: (03) 9613 6399

Contact details

You may contact us using the details set out above.

Telephone 08 9481 3188 Fax 08 9321 1204 Email [email protected]

NOR1638A/IER Re underwriting and Rights Issue with Conglin Group

PROXY FORM THIS DOCUMENT IS IMPORTANT. IF YOU ARE IN DOUBT AS TO HOW TO DEAL WITH IT, PLEASE CONTACT YOUR STOCK BROKER OR LICENSED PROFESSIONAL ADVISOR.

NORTHERN MINERALS LIMITED

REGISTERED OFFICE: LEVEL 1 675 MURRAY STREET WEST PERTH WA 6005

ABN : 61 119 966 353

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SHARE REGISTRY: Security Transfer Registrars Pty Ltd All Correspondence to: PO BOX 535, APPLECROSS WA 6953 AUSTRALIA 770 Canning Highway, APPLECROSS WA 6153 AUSTRALIA T: +61 8 9315 2333 F: +61 8 9315 2233 E: [email protected] W: www.securitytransfer.com.au

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Code: NTU Holder Number:

SECTION A: Appointment of Proxy

I/We, the above named, being registered holders of the Company and entitled to attend and vote hereby appoint:

OR

The meeting Chairperson The name of the person you are appointing (mark with an "X") (if this person is someone other than the Chairperson of the meeting).

or failing the person named, or if no person is named, the Chairperson of the Meeting, as my/our Proxy to act generally at the meeting on my/our behalf and to vote in accordance with the following directions (or if no directions have been given, as the Proxy sees fit) at the General Meeting of the Company to be held at 10.00am WST on Friday 28 June 2013 at the Level 1, 675 Murray Street West Perth, WA and at any adjournment of that meeting.

SECTION B: Voting Directions to your Proxy

Please mark "X" in the box to indicate your voting directions to your Proxy.

Resolution

For Against Abstain*

1. Approval of issue of shares and options to Australia Conglin International Investment Group Pty Ltd as underwriter under the Underwriting Agreement and payment of underwriting fee to underwriter

If no directions are given my proxy may vote as the proxy thinks fit or may abstain.

If you mark the Abstain box for a particular item, 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.

SECTION C: Please Sign Below

SECTION C: Please Sign Below	SECTION C: Please Sign Below	SECTION C: Please Sign Below
This section must be signed in accordance with the instructions overleaf to enable your directions to be implemented. Individual or Security Holder Sole Director and Sole Company Secretary Security Holder 2 Director Security Holder 3 Director / Company Secretary
	1 Reference Number: NTU 1 4433035765

My/Our contact details in case of enquiries are:

TELEPHONE NUMBER

NAME

( )

NOTES

1. Name and Address

This is the name and address on the Share Register of NORTHERN MINERALS LIMITED. If this information is incorrect, please make corrections on this form. Shareholders sponsored by a broker should advise their broker of any changes. Please note that you cannot change ownership of your shares using this form.

2. Appointment of a Proxy

If you wish to appoint the Chairperson of the Meeting as your Proxy please mark "X" in the box in Section A.

If the person you wish to appoint as your Proxy is someone other than the Chairperson of the Meeting please write the name of that person in Section A. If you leave this section blank, or your named Proxy does not attend the meeting, the Chairperson of the Meeting will be your Proxy. A Proxy need not be a Shareholder of NORTHERN MINERALS LIMITED.

3. Directing your Proxy how to vote

To direct the Proxy how to vote place an "X" in the appropriate box against each item in Section B. Where more than one Proxy is to be appointed and the proxies are to vote differently, then two separate forms must be used to indicate voting intentions.

5. Signing Instructions Individual: where the holding is in one name, the Shareholder must sign.

Joint Holding: where the holding is in more than one name, all of the Shareholders must sign.

Power of Attorney: to sign under Power of Attorney you must have already lodged this document with the Company's share registry. If you have not previously lodged this document for notation, please attach a certified photocopy of the Power of Attorney to this form when you return it.

Companies: where the Company has a Sole Director who is also the Sole Company Secretary, this form must be signed by that person. If the Company (pursuant to section 204A of the Corporations Act 2001) does not have a Company Secretary, a Sole Director may sign alone. Otherwise this form must be signed by a Director jointly with either another Director or Company Secretary. Please indicate the office held in the appropriate place.

If a representative of the corporation is to attend the meeting the appropriate "Certificate of Appointment of Corporate Representative" should be lodged with the Company before the meeting or at the registration desk on the day of the meeting. A form of the certificate may be obtained from the Company's share registry.

6. Lodgement of Proxy

4. Appointment of a Second Proxy

You are entitled to appoint up to two (2) persons as proxies to attend the meeting and vote on a poll. If you wish to appoint a second Proxy, an additional Proxy form may be obtained by telephoning the Company's share registry +61 8 9315 2333 or you may photocopy this form.

To appoint a second Proxy you must:

(a) On each of the Proxy forms, state the percentage of your voting rights or number of securities applicable to that form. If the appointments do not specify the percentage or number of votes that each Proxy may exercise, each Proxy may exercise half of your votes; and
(b) Return both forms in the same envelope.

Proxy forms (and any Power of Attorney under which it is signed) must be received by Security Transfer Registrars Pty Ltd no later than 10.00am WST on Wednesday 26 June 2013 being 48 hours before the time for holding the meeting. Any Proxy form received after that time will not be valid for the scheduled meeting.

Security Transfer Registrars Pty Ltd PO BOX 535 Applecross, Western Australia 6953

Street Address: Alexandrea House, Suite 1 770 Canning Highway Applecross, Western Australia 6153

Telephone +61 8 9315 2333

Facsimile +61 8 9315 2233 Email [email protected]

PRIVACY STATEMENT

Personal information is collected on this form by Security Transfer Registrars Pty Ltd as the registrar for securities issuers for the purpose of maintaining registers of securityholders, facilitating distribution payments and other corporate actions and communications. Your personal details may be disclosed to related bodies corporate, to external service providers such as mail and print providers, or as otherwise required or permitted by law. If you would like details of your personal information held by Security Transfer Registrars Pty Ltd or you would like to correct information that is inaccurate please contact them on the address on this form.

8035035767

AI assistant

NORTHERN MINERALS LIMITED — Proxy Solicitation & Information Statement 2013

65451_rns_2013-05-28_a176c2e8-bb84-4213-9f56-3772dd481f4a.pdf

NORTHERN MINERALS LIMITED ABN 61 119 966 353

NOTICE OF MEETING OF SHAREHOLDERS

EXPLANATORY MEMORANDUM TO SHAREHOLDERS

PROXY FORM

THE INDEPENDENT EXPERT HAS CONCLUDED THAT THE TRANSACTION IS FAIR AND REASONABLE TO SHAREHOLDERS

AT

LEVEL 1, 675 MURRAY STREET, WEST PERTH WESTERN AUSTRALIA 6005

AGENDA FOR MEETING

VOTING EXCLUSIONS

OTHER BUSINESS

EXPLANATORY MEMORANDUM

ENTITLEMENT TO VOTE

CHAIR OF THE MEETING

PROXIES

Notes

EXPLANATORY MEMORANDUM TO SHAREHOLDERS NORTHERN MINERALS LIMITED

ABN 61 119 966 353

1. Introduction

2. Information about Total Funding Package

2.1 General

2.2 Transactions are part of a Funding Package

2.3 Browns Range Project

2.4 Sale of Gold Tenements

2.5 Rights Issue to raise A$26.6 million

3. Frequently Asked Questions

3.1 Why is Shareholder Approval being sought?

3.2 Has the Board considered alternative ways to raise adequate finance in order to complete a Feasibility Study?

3.3 Why weren’t Shareholders given the opportunity to vote on the underwriting in the first place?

3.4 Why has the pricing of the Rights Issue not been changed in light of market conditions?

3.5 Why has Australia Conglin International Investment Group Pty Ltd now linked the underwriting and the sale of a 16% stake in the Browns Range Project?

3.6 What will happen if Resolution 1 is not passed?

4. Timetable for Transaction

5. Shareholder Approval of Resolution 1

6. Chapter 2E of the Corporations Act

6.1 Chapter 2E of the Corporations Act

(a) Related party

(b) Arm's length terms exception

6.2 Information Provided to Shareholders in relation to Resolution 1

(a) The related party under Resolution 1

(b) The proposed financial benefits

(c) Consideration

(d) Reasons for giving the financial benefits

(e) Reasons for specific number of shares and options and for amount of fee

(f) Recommendation of each director

(g) Interests of directors in outcome of Resolution 1

(h) Effect on Voting Power

(i) Date of Issuing New Shares and New Options to Underwriter and payment of Underwriting Fee to Underwriter

(j) Intended Use of Funds Raised from Issue of New Shares and New Options

(k) Company’s Trading History

(l) Tax Consequences

(m) Opportunity Costs and Benefits Foregone

(n) Listing Rule 7.1 and 10.11

7. Item 7 of Section 611 of the Corporations Act

7.1 Item 7 of Section 611 of the Corporations Act

7.2 Relevant Interest of the Underwriter, Mr Conglin Yue and Mrs Yanchun Wang

7.3 Information required by Item 7 of Section 611 of the Corporations Act and ‘ASIC Regulatory Guide 74 – Acquisitions approved by members’

(a) The identity of person proposing to subscribe for New Shares and New Options and their Associates

(b) The maximum extent of increase in the Underwriter’s, Mr Yue’s and Mrs Wang’s Voting Power in the Company that would result from the subscription of New Shares

(c) The Maximum Voting Power that the Underwriter, Mr Yue and Mrs Wang would have as a result of exercising all of the New Options

(d) The Voting Power that the Underwriter, Mr Yue and Mrs Wang would have as a result of the subscription of New Shares

(e) The Voting Power that the Underwriter, Mr Yue and Mrs Wang would have as a result of the subscription of New Shares and exercise of all New Options

(f) The Maximum Increase in Voting Power, and the Voting Power, that each of the Underwriter’s Associates, Mr Yue’s Associates and Mrs Wang’s Associates would have as a result of subscription

(g) The reasons for proposed subscription

(h) When proposed subscription will occur

(i) The material terms of proposed subscription

(j) Details of terms of the Term Sheet

(k) Statement of the intentions of Mr Conglin Yue and the Underwriter regarding future of Company if shareholders pass Resolution 1

Any intention to change the business of the Company

Any intention to inject further capital into the Company

Intentions regarding future employment of present employees

Any proposal where assets will be transferred between the Company and Mr Yue or Underwriter or their Associates

Any intention to otherwise redeploy fixed assets of the Company

(l) Any intention of Mr Conglin Yue and Underwriter to significantly change the financial or dividend distribution policies of the Company

(m) Interests of Directors in Transaction or any relevant agreement

(n) Details of any person who is intended to become a director if Shareholders approve the subscription

(o) Recommendation of each Director and reasons for recommendation

(p) Independent Experts Report

NORTHERN MINERALS LIMITED Proxy Solicitation & Information Statement 2013