ORA BANDA MINING LTD — Capital/Financing Update 2016

Mar 21, 2016

ASX ANNOUNCEMENT

22 MARCH 2016

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PRE-QUOTATION DISCLOSURE

Eastern Goldfields Limited ( Company ) (ASX:EGS) is pleased to provide the following information to ASX Limited ( ASX ) for release to the market in connection with the re-quotation of the Company’s securities to trading on the ASX.

1. SUCCESSFUL CAPITAL RAISING CLOSED OVERSUBSCRIBED

As announced to the ASX on 29 February 2016, the Company closed the offer to raise a minimum of $6 million and a maximum of $20 million with the ability to accept oversubscriptions for an additional $5 million ( Offer ), having received commitments in excess of the total $25 million sought under the Offer.

The Company issued the first tranche of shares, being 66,666,667 shares at $0.15 each to raise approximately $10 million before costs ( First Tranche ), second tranche of shares, being 33,333,333 shares at $0.15 each to raise approximately $5 million ( Second Tranche ), in each case before costs, on 8 March 2016.

The holding statements for the issue of shares under the First Tranche and Second Tranche were despatched to shareholders on 15 March 2016.

The issue of the third tranche of shares, being 66,666,667 shares at $0.15 each to raise an additional $10 million before costs ( Third Tranche ), was subject to shareholder approval which was obtained at the Company’s 2015 Annual General Meeting held on 16 March 2016.

The Third Tranche shares were issued on 21 March 2016, and holding statements despatched to shareholders on the same date.

2. DEBTS UNDER LOAN FACILITY AGREEMENT EXTINGUISHED

The Company refers to the loan facility agreement dated 14 April 2014 ( Loan Facility Agreement ) between the Company, Investmet Limited ( Investmet ), Stirling Resources Pty Ltd (formerly Stirling Resources Limited) ( Stirling ), M6 Securities Pty Ltd ( M6 Securities ) and others, under which certain debts of the Company were governed, and note as follows:

• (a) the secured debt of approximately $8,559,240 plus interest held by Investmet has been extinguished through the conversion into shares at $0.15 per share;

• (b) the secured debt of $9,515,000 plus interest held by M6 Securities on behalf of third party lenders who formed a debt syndicate has been extinguished through a combination of conversion into shares at $0.15 per share and repayment in cash;

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• (c) the unsecured debt of $4,200,000 plus interest held by Investmet pursuant to the debt purchased from DCM DECOmetal GmbH has been extinguished through the conversion into shares at $0.15 per share; and

• (d) the secured debt of $5,000,000 plus interest held by Stirling has been extinguished through a separate settlement agreement which included the buy-back of 8,623,822 shares held by its subsidiary Stirling Gold Pty Ltd;

• (e) the security in relation to the secured debts outlined above will be released as soon as practicable; and

• (f) there are no outstanding amounts (including any interest) owing under the Loan Facility Agreement.

3. UPDATE ON EXEMPTION APPLICATION – SIBERIA TENEMENTS

The Company refers to its wholly owned subsidiary Siberia Mining Corporation Pty Ltd, which on 3 July 2014, lodged an application for judicial review of the Warden’s Court decision of 31 January 2014 in relation to tenements M16/262, M16/263 and M16/264 whereby the Warden recommended the application for exemption for the expenditure year ending on 11 March 2011 be refused.

The judicial review application was heard by the Supreme Court on 13 – 14 October 2014. On 1 September 2015, Justice Allanson of the Supreme Court quashed the Warden’s decision on the basis that the Warden had made errors of law in recommending the refusal of the application for exemption.

The effect of the Supreme Court’s decision is that the original Warden’s recommendation is nullified, and so a Warden must now make a (new) recommendation to the Minister for Mines and Petroleum regarding the application for exemption. On 26 February 2016, the Warden ordered that the exemption application proceed by way of a hearing de novo, that is, a fresh hearing, so that the Warden can make a recommendation to the Minister regarding the application for exemption.

After hearing from the parties on 11 March 2016, the Warden adjourned the matter to this Friday, 18 March 2016, in order to consider the appropriate programming orders.

If Siberia succeeds in its application for an exemption from expenditure regarding M16/262 – 264, the exemption will be a complete defence to the applications for forfeiture. Otherwise the applications for forfeiture would proceed to a hearing (which may be later this year, but more likely to be early next year).

As noted in the prospectus issued by the Company dated 24 December 2015 (as supplemented) ( Prospectus ) if the hearing in the Warden’s Court in relation to the exemption application is unsuccessful, the Company will issue 3,750,000 Shares to Investmet for nil consideration. The issue of the shares will be subject to the Company obtaining shareholder approval at a time yet to be determined. In the event that shareholder approval is not obtained within 60 days of the decision of the hearing in the Warden’s Court (as applicable) is made against the Company, the Company will make a cash payment of approximately $750,000 to Investmet in lieu of issuing shares.

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4. CAPITAL STRUCTURE

The capital structure of the Company, at the date of this announcement is outlined below.

Shares	481,554,974 Shares
Options	11,100,000 Unlisted Options exercisable at $0.168 each on orbefore 8 March 201811,100,000 Unlisted Options exercisable at $0.189 each on orbefore 8 March 2020

The full terms of the Options are attached as Annexure A to this announcement.

5. PRO-FORMA BALANCE SHEET

An unaudited pro-forma balance sheet, based on the total of $25 million raised under the Offer, is attached as Annexure B to this announcement.

6. UPDATED STATEMENT OF COMMITMENTS

The Company intends to apply the funds raised from the Offer as follows:

Use of funds
	$
Reserve Definition Drilling	$3,000,000
Plant refurbishment	$8,500,000
Working capitalGeochemical auger drillingRAB drillingRC drillingRents & RatesCorporate overheadsTotal working capital	$500,000$500,000$3,614,562$500,000$720,000$5,834,562
Repayment to Stirling under Stirling Settlement Deed	$350,000
Repayment to creditors associated with Mr MichaelFotios	$2,750,000
Repayment to third party trade creditors	$3,065,438
Cost of Offer	$1,500,000
TOTAL	$25,000,000

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7. BUSINESS STRATEGY AND EXPLORATION INTERESTS

The proposed business strategy of the Company, and its exploration interests were set out in sections 1.6, and 2.3 – 2.6 of the Prospectus.

8. NO LEGAL, REGULATORY OR CONTRACTUAL IMPEDIMENTS

The Company confirms that there are not legal, regulatory or contractual impediments to the Company undertaking the activities the subject of the commitments disclosed in the Prospectus.

9. COMPLIANCE WITH ASX LISTING RULES

The Company confirms that it is in compliance with the ASX Listing Rules, and in particular, ASX Listing Rule 3.1.

Michael Fotios Executive Chairman T: +61 8 6241 1888 E: michael@deltaman.com.au

Michael Jardine General Manager Corporate & Investor Relations T: +61 424 615047 E: michael.jardine@deltaman.com.au

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ANNEXURE A – TERMS OF OPTIONS ON ISSUE

The terms of the Options of the Company on issue, which were issued under the Company’s employee share option plan ( Option Plan ) are outlined below.

1. Eligibility

The Board may, in its absolute discretion, invite an eligible employee to participate in the Option Plan. An eligible employee includes a director, senior executive or employee of the Company or an associated body corporate of the Company.

2. Terms of Options

• (a) Each Option will be granted to eligible employees under the Option Plan for nil consideration.

• (b) Each Option will entitle its holder to subscribe for and be issued, one fully paid ordinary share in the capital of the Company (upon vesting and exercise of that Option).

• (c) Options will not be listed for quotation on the ASX, however, the Company will apply for official quotation of the Shares issued upon the exercise of any vested Options.

• (d) The grant date and expiry date of an Option shall be as determined by the Board when an offer to participate in the Option Plan is made.

• (e) The exercise price of an Option shall be as determined by the Board when an offer to participate in the Option Plan is made.

• (f) A participant is not entitled to participate in or receive any dividend or other Shareholder benefits until its Options have vested and been exercised and Shares have been allocated to the participant as a result of the exercise of those Options.

• (g) There are no participating rights or entitlements inherent in the Options and participants will not be entitled to participate in new issues of securities offered to Shareholders of the Company during the currency of the Options.

• (h) Following the issue of Shares following exercise of vested Options, participants will be entitled to exercise all rights of a Shareholder attaching to the Shares, subject to any disposal restrictions advised to the participant at the time of the grant of the Options.

3. Performance conditions

When granting Options, the Board may make their vesting conditional on the satisfaction of a performance condition within a specified period. The Board may at any time waive or change a performance condition or performance period in accordance with the Option Plan rules if the Board (acting reasonably) considers it appropriate to do so.

4. Vesting

The Options will vest following satisfaction of the performance conditions or such other date as determined by the Board in its discretion.

Subject to the Option Plan rules, the Board may declare that all or a specified number of any unvested Options granted to a participant which have not lapsed immediately vest if, in the opinion of the Board a change of control in relation to the Company has occurred, or is likely to occur, having regard to the participant’s pro rata performance in relation to the applicable performance conditions up to that date.

Subject to the Option Plan rules, the Board may in its absolute discretion, declare the vesting of an Option where the Company is wound up or passes a resolution to dispose of its main undertaking.

If there is any internal reconstruction or acquisition of the Company which does not involve a significant change in the identity of the ultimate Shareholders of the Company, the Board may declare

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in its sole discretion whether and to what extent Options, which have not vested by the day the reconstruction takes place, will vest.

5.

Cashless Exercise Facility

Participants may, at their election, elect to pay the exercise price for an Option by setting off the exercise price against the number of Shares which they are entitled to receive upon exercise ( Cashless Exercise Facility ). By using the Cashless Exercise Facility, the participant will receive Shares to the value of the surplus after the exercise price has been set off.

If a Participant elects to use the Cashless Exercise Facility, the participant will only be issued that number of Shares equivalent in value to the number of Options exercised using the Cashless Exercise Facility, multiplied by the excess of the Share price on the exercise date (determined as the volume weighted average price of Shares on the ASX over the one week up to and including the exercise date) over the exercise price .

6.

Disposal restrictions

A participant may not transfer an Option granted under the Option Plan without the prior consent of the Board.

7.

Overriding restrictions

No issue or allocation of Options and/or Shares will be made to the extent that it would contravene the Constitution, Listing Rules, the Corporations Act or any other applicable law.

8. Lapse

• (i) An Option will immediately lapse upon the first to occur of:

  • (i) its expiry date;

  • (ii) the performance condition(s) (if any) not being satisfied prior to the end of the performance period(s);

  • (iii) the transfer or purported transfer of the Option in breach of the Option Plan rules;

  • (iv) if the Option has not vested, the day that is 30 days following the date the participant voluntarily or for a bona fide reason ceases to be employed or engaged by the Company or an associated body corporate;

  • (v) termination of the participant’s employment or engagement with the Company or an associated body corporate for cause; or

  • (vi) 6 months after an event which gives rise to a vesting under the Option Plan rules.

• (j) Where a participant ceases to be employed or engaged by the Company or an associated body corporate by reason of their death, disability, bona fide redundancy, and the Options have vested, they will remain exercisable by that participant’s estate or legal representative until the Options lapse in accordance with the Option Plan rules or if they have not vested, the Board will determine as soon as reasonably practicable after the date the participant ceases to be employed or engaged, how many (if any) of those participant’s Options will be deemed to have vested and will be exercisable by that participant’s estate or legal representative.

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ANNEXURE B – PRO-FORMA STATEMENT OF FINANCIAL POSITION

NoteCurrent assetsCash at bank3Trade and other receivables4InventoriesNon -current assetsReceivables4Plant and equipment5Deferred capitalised expenditure5Total assetsCurrent liabilitiesTrade and other payables6Provisions7Owing to Investmet and others (note 5)6Owing to SRE (note 5)6Non-current LiabilitiesRehabilitation provision7Total LiabilitiesNet Assets/(Deficiency)EquityIssued capital8Reserves9Accumulated losses10Net Equity/(Deficiency )	Audited30 June 2015$000’sUnaudited30 June 2015Pro-Forma$000’s5226,274198641111
	26126,349
	64-3,0003,000--
	3,0643,000
	3,32526,349
	4,940-525229,445-5,636-
	40,07352
	4,1484,148
	4,1484,148
	44,2214,200
	(40,896)22,149
	168,040234,0045,2936,266(214,229)(215,121)
	(40,896)25,149

The notes to the pro-forma statement of financial position above are references to notes in the audited balance sheet in the Annual Report for the financial year ending 30 June 2015.

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