ORA BANDA MINING LTD — Governance Information 2016

Mar 20, 2016

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EMPLOYEE OPTION PLAN RULES

SWAN GOLD MINING LIMITED ACN 100 038 266

File Ref: SR: 140618 Doc Ref.:1889834_4

50 Kings Park Road West Perth WA 6005 T: +61 8 9216 7100

Perth|Sydney www.allionlegal.com

CONTENTS

1.	DEFINITION AND INTERPRETATION .................................................................................... 1
1.1	Definition................................................................................................................................... 1
1.2	Interpretation ............................................................................................................................ 2
2.	GRANT OF OPTIONS .............................................................................................................. 3
2.1	General Eligibility ...................................................................................................................... 3
2.2	Price of Options ........................................................................................................................ 3
2.3	Grant of Options ....................................................................................................................... 3
2.4	Information to be provided at the time of Offer......................................................................... 3
2.5	Performance Conditions ........................................................................................................... 3
2.6	Options previously granted....................................................................................................... 3
2.7	Overriding restrictions on grant and exercise........................................................................... 3
2.8	Administrative errors ................................................................................................................ 4
3.	ACCEPTANCE ......................................................................................................................... 4
4.	MAXIMUM NUMBER OF OPTIONS ......................................................................................... 4
4.1	5% limit ..................................................................................................................................... 4
4.2	Exceptions ................................................................................................................................ 4
5.	TERMS OF OPTIONS .............................................................................................................. 4
5.1	Essential terms ......................................................................................................................... 4
5.2	Variation of terms ..................................................................................................................... 4
6.	AMENDMENT OF RULES ....................................................................................................... 5
6.1	Board’s powers ......................................................................................................................... 5
6.2	Restrictions on amendments .................................................................................................... 5
7.	COMPANY’S RIGHTS NOT WAIVED ...................................................................................... 5
8.	SUSPENSION OR TERMINATION OF THE PLAN ................................................................. 5
9.	ADMINISTRATION OF THE PLAN .......................................................................................... 5
9.1	Delegation ................................................................................................................................ 5
9.2	Procedures ............................................................................................................................... 5
9.3	Covenant or exercise of discretion ........................................................................................... 5
10.	GENERAL ................................................................................................................................ 6
10.1	Waiver of terms and conditions ................................................................................................ 6
10.2	Non-Australian residents .......................................................................................................... 6
10.3	Governing law .......................................................................................................................... 6
10.4	Severance ................................................................................................................................ 6
10.5	Notices...................................................................................................................................... 6
10.6	Right to accounts ...................................................................................................................... 6

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10.7 No Representation as to Share price ....................................................................................... 6
10.8 ASIC instruments and Listing Rules ......................................................................................... 6
SCHEDULE 1: TERMS OF GRANT OF OPTIONS ................................................................................. 8
ATTACHMENT TO SCHEDULE 1: FORM OF NOTICE OF EXERCISE ............................................... 13
SCHEDULE 2: SWAN GOLD MINING LIMITED EMPLOYEE OPTION PLAN OFFER LETTER ......... 14

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1. DEFINITION AND INTERPRETATION

1.1 Definition

In these Rules, unless the contrary intention appears:

Associated Body Corporate means a:

• (a) related body corporate of the Company under section 50 of the Corporations Act;

• (b) body corporate that has voting power in the Company of not less than 20%; or

• (c) body corporate in which the Company has voting power of not less than 20%.

• ASX means ASX Limited ACN 008 624 691.

Board means all or some of the directors of the Company acting as a board.

Business Day means any day that is not Saturday, Sunday or a public holiday in Western Australia.

Cashless Exercise Facility has the meaning given to that term in clause 6 of Schedule 1.

Change of Control means:

• (a) in the case of a Takeover Bid, an offeror who previously had voting power of less than 50% in the Company obtains voting power of more than 50%;

• (b) a Court approves under Section 411(4)(b) of the Corporations Act, a proposed compromise or arrangement for the purposes of or in connection with a scheme for the reconstruction of the Company or its amalgamation with any other company or companies;

• (c) any person becomes bound or entitled to acquire shares in the Company under:

• (i) section 414 of the Corporations Act (compulsory acquisition following a scheme or contract); or

• (ii) Chapter 6A of the Corporations Act (compulsory acquisition of securities);

• (d) a selective capital reduction is approved by shareholders of the Company pursuant to section 256C(2) of the Corporations Act which results in a person who previously had voting power of less than 50% in the Company obtaining voting power of more than 50%; or

• (e) in any other case, a person obtains voting power in the Company which the Board (which for the avoidance of doubt will comprise those directors holding office immediately prior to the person acquiring that voting power) determines, acting in good faith and in accordance with their fiduciary duties, is sufficient to control the composition of the Board.

Class Order means a class order published by the Australian Securities and Investments Commission.

Company means Swan Gold Mining Limited ACN 100 038 266.

Constitution means the constitution of the Company.

Control has the meaning given to that term in section 50AA of the Corporations Act.

Corporations Act means the Corporations Act 2001 (Cth).

Eligible Employee means a director, senior executive, contractor, consultant or employee of the Company or an Associated Body Corporate, who is invited by the Board to participate in the Plan and is granted Options under the Plan.

Essential Terms means the terms of grant of Options set out in Schedule 1 and in an Offer.

Exercise Price means in relation to a Share to be issued upon exercise of an Option the amount payable to acquire that Share as set out in an Offer.

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Expiry Date means in relation to an Option the date determined by the Board and advised by the Board in an Offer.

Grant Date means the date determined by the Board as the date on which an Option is granted.

Holding Lock has the meaning given to that term in the Listing Rules.

Listing Rules means the Listing Rules of ASX and any other rules of ASX which are applicable while the Company is admitted to the Official List of ASX, each as amended or replaced from time to time, except to the extent of any waiver by ASX.

Offer means an invitation made under Rule 2 to an Eligible Employee by the Board to participate in the Plan and substantially in the form set out in Schedule 2.

Official List means the official list of entities that ASX has admitted and not removed.

Option means an option to subscribe for Shares which:

• (a) are granted under this Plan; or

• (b) the Board resolves to bring under the terms of the Plan in accordance with Rule 2.6.

Participant means an Eligible Employee to whom an Option has been granted or, following the death or bankruptcy of the Eligible Employee, his or her personal representative or trustee in bankruptcy.

Performance Condition means one or more conditions (if any) which must be satisfied or circumstances which must exist before an Option vests, as determined by the Board and set out in an Offer.

Performance Period means the period in respect of which a Performance Condition is to be satisfied.

Plan means the Employee Option Plan of the Company as in force and amended from time to time.

Relevant Interest has the meaning set out in sections 608 and 609 of the Corporations Act.

Rules means these rules as altered or added to from time to time and a reference to a provision of these rules is a reference to that provision as altered or added to from time to time, and for the avoidance of doubt, includes the Essential Terms.

Schedule means the schedules to, and forming part of, these Rules.

Share means a fully paid ordinary share in the capital of the Company.

Takeover Bid has the meaning given to that term in section 9 of the Corporations Act.

Takeover Period means in relation to a Takeover Bid in respect of Shares the period referred to in section 624 of the Corporations Act, provided that where a Takeover Bid is publicly announced prior to the service of a bidder’s statement on the Company in relation to that Takeover Bid, the takeover period shall be deemed to have commenced at the time of that announcement.

Vesting Date means the date of vesting set by the Board.

1.2 Interpretation

For the purposes of these Rules, unless the contrary intention appears:

• (a) the singular includes the plural and vice-versa;

• (b) words denoting a gender include all genders;

• (c) if a word or phrase is defined cognate words and phrases have corresponding definitions;

• (d) a reference to a related body corporate of the Company is a reference to a body corporate which is so related within the meaning of the Corporations Act;

• (e) a reference to a statute, ordinance, code or other law includes regulations and other statutory instruments under it and consolidations, amendments, re-enactments or replacements or any of them; and

• (f) any power, authority or discretion vested in the Company or the Board may be exercised at any time and from time to time and unless expressed otherwise, in their absolute discretion.

2. GRANT OF OPTIONS

2.1 General Eligibility

At any time and from time to time, the Board may in its absolute discretion invite an Eligible Employee to participate in the Plan, by making an Offer having regard, in each case, to:

• (a) the contribution to the Company which has been made by the Eligible Employee;

• (b) the period of employment or engagement of the Eligible Employee with the Company, including (but not limited to) the years of service by that Eligible Employee;

• (c) the potential contribution of the Eligible Employee to the Company; and

• (d) any other matters which the Board considers in its absolute discretion, to be relevant.

2.2 Price of Options

Options are to be granted to Eligible Employees at a price the Board considers to be appropriate, as specified in the Offer, but in any case must be for no more than nominal consideration.

2.3 Grant of Options

Each Option must be granted on the terms of these Rules, including the Essential Terms, and each Eligible Employee will be taken to have agreed to be bound by these Rules on acceptance by that Participant of an Offer.

2.4 Information to be provided at the time of Offer

The Board must determine and advise each Eligible Employee at the time an Offer is made, of the following:

• (a) the number of Options the subject of the Offer (each entitling its holder to be issued one Share upon vesting and exercise of that Option);

• (b) the Expiry Date;

• (c) the Grant Date as determined by the Company, following receipt of the signed and completed Offer from you by the Company;

• (d) details of the applicable Vesting Date or Dates;

• (e) the Exercise Price;

• (f) whether the vesting of the Options will be subject to a Performance Condition, and if so, details of the Performance Condition and its Performance Period; and

• (g) any other information, terms or conditions the Company considers to be relevant to the Offer (including any post exercise restrictions on dealing with Shares granted to the Participant under this Plan).

2.5 Performance Conditions

When granting Options the Board may make its vesting conditional on the satisfaction of a Performance Condition within a Performance Period. The Board may at any time waive a Performance Condition in accordance with Rule 10.1 or, subject to Rule 6, change a Performance Condition or a Performance Period if anything happens which causes the Board (acting reasonably) to consider it appropriate to do so.

2.6 Options previously granted

At any time and from time to time, the Board may, with the consent of a Participant, resolve to bring under this Plan, options previously granted to that Participant, provided that the terms of the options previously granted are consistent with the terms of this Plan.

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2.7 Overriding restrictions on grant and exercise

Notwithstanding anything else in these Rules or in the terms of any Option, an Option may not be offered, granted or exercised if to do so:

• (a) would contravene the Corporations Act or the Listing Rules; or

• (b) would contravene the local laws of, or the rules or requirements of any regulatory or statutory body in, a Participant’s country of residence or in the opinion of the Board compliance with those local laws, rules or requirements would be impractical or result in any unnecessary or unreasonable expense in the circumstances.

2.8 Administrative errors

If the Board grants an Option which is inconsistent with these Rules, the Company’s Constitution, the Listing Rules or any law of a jurisdiction in which a Participant resides, the Option will lapse immediately to the extent of the inconsistency.

3. ACCEPTANCE

• (a) An Offer may only be accepted by an Eligible Employee completing, signing and returning the Offer, by no later than the date specified in the Offer.

• (b) An Offer lapses if it is not accepted by the Eligible Employee to whom the Offer is made as required under Rule 3(a).

• (c) By accepting an Offer, the Eligible Employee agrees to become a Participant under the Plan and to be bound by these Rules, the Constitution and the terms of the Offer.

4. MAXIMUM NUMBER OF OPTIONS

4.1 5% limit

Subject to Rule 4.2, an Option may not be granted if, immediately following its grant, the Shares to be received on exercise of the Option when aggregated with:

• (a) the number of shares in the same share class which would be issued if each unvested Option granted under the Plan (provided that such Option has not lapsed) or any other employee incentive plan of the Company were to vest and be exercised; and

• (b) the number of shares in the same class issued during the previous five years under the Plan or any other employee incentive plan of the Company,

exceeds 5% of the total number of issued shares in that share class of the Company at the time the Option is granted, provided that the Board may, in its absolute discretion, increase this percentage, subject to any applicable Corporations Act, Listing Rule (including the conditions and restrictions on issuing securities in Listing Rule 7.1) or Class Order requirements.

4.2 Exceptions

When aggregating the number of shares for the purposes of Rule 4.1, the Company may disregard any offer made, option acquired or share issued by way of or as a result of:

• (a) an offer to a person situated at the time of receipt of the offer outside of Australia;

• (b) an offer that did not need disclosure to investors because of section 708 of the Corporations Act; or

• (c) an offer made under a disclosure document in accordance with Chapter 6D of the Corporations Act.

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5. TERMS OF OPTIONS

5.1 Essential terms

An Option must be granted on the Essential Terms and may be granted on such other additional terms, conditions or restrictions, not being inconsistent with these Rules or the Essential Terms, as the Board determines either generally or in relation to particular Options.

5.2 Variation of terms

• (a) Despite anything to the contrary in these Rules, to the full extent permissible by the Listing Rules and the law, the Board may from time to time vary the terms and conditions to which an Option is subject to or any of them.

6. AMENDMENT OF RULES

6.1 Board’s powers

Subject to this Rule 6, the Listing Rules and the law, the Board may at any time by resolution amend or add to all or any of the provisions of the Plan (including this Rule 6.1).

6.2 Restrictions on amendments

• (a) Subject to Rule 6.2(b), Participant consent is required for any change to the Rules or terms of any Options which prejudicially affects the rights of the Participant in relation to the Options.

• (b) The Board may change the Rules and/or the terms of any Options and need not obtain Participant consent for any changes:

• (i) to benefit the administration of the Plan;

• (ii) to comply with or take account of the provisions of any proposed or existing legislation, Listing Rules, or regulatory practice;

• (iii) to take account of any changes to legislation or the Listing Rules; or

• (iv) to obtain or maintain favourable tax, exchange control or regulatory treatment of the Company, any Associated Body Corporate or any present or future Participant.

7. COMPANY’S RIGHTS NOT WAIVED

The Company’s right to terminate or vary the terms of employment or engagement of any Participant shall not be prejudiced in any way by the Company or any Participant participating in the Plan or anything contained in these Rules or both. Further, participation in the Plan and the rights or benefits of a Participant under these Rules or the inability or restricted ability of a Participant to exercise an Option or any of them, shall not be used as grounds for granting or increasing damages in any action brought by any Participant against the Company whether in respect of any alleged wrongful dismissal or otherwise.

8. SUSPENSION OR TERMINATION OF THE PLAN

The Board may suspend or terminate the Plan at any time, in which case the Company will not make any further grants of Options under the Plan during the suspended period or following termination. However, during the suspended period or following termination the Board will otherwise continue to administer the Plan in accordance with these Rules until all Options have vested or lapsed.

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9. ADMINISTRATION OF THE PLAN

9.1 Delegation

The Plan will be in all respects administered under the directions of the Board or a committee of the Board. The Board or committee may appoint, for the proper administration and management of the Plan, such secretarial or executives or staff or other persons as it considers desirable and may delegate to those persons such powers and authorities (other than this power of delegation) as may be necessary or desirable for the administration and management of the Plan.

9.2 Procedures

Subject to these Rules, the Board may make such regulations and establish such procedures for the administration and management of the Plan as it considers appropriate. If any disagreement or dispute with respect to the interpretation of these Rules or the terms of grant of any Option arises, such disagreement or dispute will be referred to the Board and the decision of the Board will, in the absence of manifest error, be final and binding upon all parties.

9.3 Covenant or exercise of discretion

The Company or an Associated Body Corporate or the Board may, subject to any express provision in these Rules, the Listing Rules or the law to the contrary:

• (a) do any act, matter or thing or make any decision, determination or resolution; or

• (b) conditionally or unconditionally give or withhold any consent or approval,

as contemplated by these Rules in its absolute uncontrolled and unexaminable discretion and is not obliged to give reasons for so doing.

10. GENERAL

10.1 Waiver of terms and conditions

Notwithstanding any other provisions of the Plan, the Board may at any time waive in whole or in part any terms or conditions (including any Performance Condition) in relation to any Option granted to any Participant. The Company will notify the Participant in writing as soon as practicable of any such waiver.

10.2 Non-Australian residents

When an Option is granted under the Plan to a person who is not a resident of Australia, the provisions of the Plan apply subject to such alterations or additions as the Board determines having regard to any applicable or relevant laws, matters of convenience and desirability and similar factors which may have application to the Participant or to any Associated Body Corporate in relation to the Option.

10.3 Governing law

This Plan and these Rules will in all respects be governed by and shall be construed in accordance with the laws of Western Australia.

10.4 Severance

If any provision in these Rules is void, voidable by any party or illegal, it will be read down so as to be valid and enforceable or, if it cannot be so read down, the provision (or where possible, the offending words) will be severed from these Rules without affecting the validity, legality or enforceability of the remaining provisions (or parts of those provisions) of these Rules which will continue in full force and effect.

10.5 Notices

Notices must be given by the Company to the Participant in the manner prescribed by the Constitution of the Company for the giving of notices to members of the Company and the relevant provisions of the Constitution of the Company apply with all necessary modification to notices to Participants.

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10.6 Right to accounts

The Company is not obliged to give a Participant copies of any notices, circulars and other documents sent by the Company to its shareholders until that Participant becomes a shareholder by the exercise of any vested Options.

10.7

No Representation as to Share price

None of the Company, its directors, officers or employees represents that the Company’s share price will attain, maintain or exceed the Exercise Price. A Participant who chooses to exercise any Option does so at his own risk in that he may suffer financial detriment if the Company’s share price falls.

10.8 ASIC instruments and Listing Rules

• (a) Notwithstanding any other provisions of the Plan, every covenant or other provision set out in an exemption or modification granted from time to time by the Australian Securities and Investments Commission in respect of employee share plans pursuant to its power to exempt or modify the Corporations Act and required to be included in the Plan in order for that exemption or modification to have full effect, is deemed to be contained in the Plan.

• (b) To the extent these Rules are inconsistent with the Listing Rules, the Listing Rules will prevail.

• (c) To the extent that any covenant or other provision which is deemed by this Rule 10.8 to be contained in the Plan is inconsistent with any other provision in the Plan, the deemed covenant or other provision will prevail.

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SCHEDULE 1: TERMS OF GRANT OF OPTIONS

1. ENTITLEMENT

• (a) Upon the grant of Options, a certificate or an uncertified holding statement for the Options will be issued by the Company to the Participant.

• (b) Each Option will entitle its holder to subscribe for and be issued, credited as fully paid, one Share (upon vesting and exercise of that Option).

• (c) The Exercise Price of an Option will be as determined by the Board (in its discretion) on or before the Grant Date.

• (d) Subject to these Rules, the Company must allot and issue Shares on the exercise of Options which have vested to the Participant in accordance with the Listing Rules and in any event no later than 30 days after the date of exercise of the Option and shall either issue a certificate, or cause a holding statement to be issued, for Shares so issued within five Business Days after the date the Shares are issued.

• (e) Shares issued on the exercise of Options will be issued on the same terms and conditions and rank equally in all respects as the existing Shares in the capital of the Company from the date of issue of those Shares, subject to the restrictions on transfer set out in clause 7(b) of this Schedule. They will not rank for any rights attaching to Shares by reference to a record date preceding the date of issue.

2. OPTION CONDITIONS

2.1 Option conditions

The Board may, in its absolute discretion, determine:

• (a) the time periods (if any) after which the Options granted will vest in the Participant and the percentage of Options granted which will vest at each particular time; and

• (b) any Performance Conditions which must be satisfied before the Options vest in the Participant or are otherwise exercisable by the Participant.

2.2 Performance Conditions

Where the vesting of an Option is subject to a Performance Condition, as soon as reasonably practicable after the end of the Performance Period the Board will determine whether and to what extent any Performance Condition has been satisfied or waived, subject to the Participant’s continued employment until the Vesting Date.

3. LAPSE OF OPTIONS

• (a) An unvested 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) specified by the Board in accordance with Rule 2.4(f) by which the Performance Conditions were required to be satisfied;

• (iii) the transfer or purported transfer of the Option in breach of clause 7(a) of this Schedule;

• (iv) the day that is 30 days following the date the Participant ceases to be employed or engaged by the Company or an Associated Body Corporate by virtue of the Participant resigning voluntarily and the Participant has not recommenced employment with the Company or an Associated Body Corporate before the expiration of those 30 days;

• (v) subject to clause 3(c)(ii) of this Schedule, the day which is 30 days following the date the Participant ceases to be employed or engaged by the Company or an Associated Body Corporate by reason of his or her death, disability,

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bona fide redundancy, or any other reason with the approval of the Board and the Participant has not recommenced employment with the Company or an Associated Body Corporate before the expiration of those 30 days;

• (vi) termination of the Participant’s employment or engagement with the Company or an Associated Body Corporate on the basis that the Participant acted fraudulently, dishonestly, in breach of the Participant’s obligations or otherwise for cause; and

• (vii) the day which is six months after an event which gives rise to a vesting under clauses 4(a) to 4(d) of this Schedule.

• (b) An Option which has vested but has not been exercised will immediately lapse upon the first to occur of:

• (i) close of business on the Expiry Date;

• (ii) the transfer or purported transfer of the Option in breach of clause 7(a) of this Schedule;

• (iii) termination of the Participant’s employment or engagement with the Company or an Associated Body Corporate on the basis that the Participant acted fraudulently, dishonestly, in breach of the Participant’s obligations or otherwise for cause; and

• (iv) the day which is six months after an event which gives rise to a vesting under clauses 4(a) to 4(d) of this Schedule.

• (c) Where a Participant ceases to be employed or engaged by the Company or an Associated Body Corporate by reason of his or her death, disability, bona fide redundancy, or other reason with the approval of the Board, then:

• (i) if any of the Participant’s Options have vested but have not been exercised, they will remain exercisable by that Participant’s estate or legal representative who has been recognised by the Company as the holder of the Participant’s Options in accordance with clause 7(a)(ii) of this Schedule until the Options lapse in accordance with clause 3(b) of this Schedule;

• (ii) if any of the Participants’ Options 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 Participants’ Options will be deemed to have vested; and

• (iii) to the extent to which, under clause 3(c)(ii) of this Schedule, the Participants’ Options:

  • (A) are deemed to have vested, they will be exercisable by that Participant’s estate or legal representative who has been recognised by the Company as the holder of the Participant’s Options in accordance with clause 7(a)(ii) of this Schedule until the Options lapse in accordance with clause 3(b) of this Schedule; and

  • (B) are not deemed to have vested, they will lapse immediately upon the Board making its determination.

• (d) Where an Option lapses, the Company will repay to the Participant the price paid for the grant (if any) of the Options.

4. CHANGE OF CONTROL AND RECONSTRUCTION

• (a) The Board may declare that all or a specified number of any unvested Options granted to a Participant which have not lapsed under clause 3(a) of this Schedule immediately vest if, in the opinion of the Board:

• (i) a Change of Control has occurred, or is likely to occur; and

• (ii) the Participant’s pro-rata performance is in line with the Performance Conditions applicable to those Options (if any) during the period from the

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Grant Date to the date the Change of Control event occurred or the date the Board becomes aware that a Change of Control Event is likely to occur.

• (b) The Board may declare that all or a specified number of any unvested Options granted to a Participant which have not lapsed under clause 3(a) of this Schedule immediately vest if in the opinion of the Board:

• (i) any person or corporation has a Relevant Interest in more than 90% of the Shares; and

• (ii) the Participant’s pro-rata performance is in line with the Performance Conditions applicable to those Options (if any) during the period from the Grant Date to the date when the person or corporation has a Relevant Interest in more than 90% of the Shares.

• (c) Subject to clause 4(d) of this Schedule, the Board may in its absolute discretion declare the vesting of an Option during such period as the Board determines where:

• (i) the Company passes a resolution for the voluntary winding up of the Company;

• (ii) an order is made for the compulsory winding up of the Company; or

• (iii) the Company passes a resolution in accordance with Listing Rule 11.2 to dispose of its main undertaking.

• (d) If there is any internal reconstruction, reorganisation or acquisition of the Company which does not involve a significant change in the identity of the ultimate shareholders of the Company, this clause applies to any Option which has not vested by the day the reconstruction takes effect. The Board may declare in its sole discretion whether and to what extent Options will vest. The Board may amend (or waive) any Performance Condition as it considers appropriate, subject to all applicable laws.

• (e) The Company will notify the Participant in writing as soon as practicable after the Board declares an Option to vest pursuant to clauses 4(a) to 4(d) of this Schedule and the Company shall confirm in the notice to the Participant the extent to which the Options held by the Participant have vested or otherwise.

5. EXERCISE OF OPTIONS

• (a) Subject to clause 3 of this Schedule, an Option is exercisable by the holder lodging with the Company Secretary of the Company:

• (i) a notice of exercise of that Option in the form attached to this Schedule;

• (ii) a cheque for the Exercise Price for each Share to be issued upon the exercise of that Option (subject to clause 6 of this Schedule); and

• (iii) the holding statement or certificate for that Option issued under clause 1(a) of this Schedule.

In the event of the death of a holder of Options, those Options that are not transmitted in accordance with clause 7(a)(ii) of this Schedule are exercisable by the executor of the estate of the holder in the same manner as set out above.

• (b) A Participant may, subject to this clause 5, only exercise its Option:

• (i) subject to clauses 4(a) to 4(d) of this Schedule, if the Option was subject to a Performance Condition, to the extent the Performance Condition was satisfied or waived, in accordance with clause 2.2 of this Schedule and Rule 10.1;

• (ii) after the Vesting Date;

• (iii) before its Expiry Date; and

• (iv) if the Option has not lapsed in accordance with these Rules.

• (c) The exercise of some Options only does not affect the Participant’s right to exercise other Options at a later time. If the Participant exercises less than all Options

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represented by the certificate then the Company will cancel the certificate and issue a new certificate for the balance.

• (d) The lapse conditions imposed on the Option under these Rules cease to apply to the Shares transferred or allotted to the Participant upon exercise of the Options in accordance with these Rules.

6. CASHLESS EXERCISE FACILITY

• (a) If a Participant wishes to exercise some or all of their Options, it may elect to pay the Exercise Price by using the cashless exercise facility provided for under this clause 6 ( Cashless Exercise Facility ).

• (b) The Cashless Exercise Facility entitles a Participant to set-off the Exercise Price against the number of Shares which the Participant is entitled to receive upon exercise of the Participant’s Options. By using the Cashless Exercise Facility, the Participant will receive Shares to the value of the surplus after the Exercise Price has been setoff.

• (c) If a Participant elects to use the Cashless Exercise Facility, the Participant will only be issued that number of Shares (rounded down to the nearest whole number) as are equal to the value to the difference between the Exercise Price otherwise payable for the Options and the then market value of the Shares at the time of exercise (determined as the volume weighted average price of Shares on the ASX over the five trading days prior to exercise).

7. TRANSFER

• (a) A Participant may only transfer an Option granted under the Plan:

• (i) with the consent of the Board; or

• (ii) by force of law upon death to the Participant’s legal personal representative or upon bankruptcy to the Participant’s trustee in bankruptcy.

• (b) A Participant may not transfer any Shares issued under the Plan without the prior consent of the Board until the expiration of the period (if any) advised to the Participant under Rule 2.4(g) at the time of grant of the Option.

• (c) The Company may make such arrangements as it considers necessary to enforce any restriction on the disposal of Shares under clause 7(b) of this Schedule and Participants must agree to such arrangements.

• (d) Without limiting clause 7(c) of this Schedule, and subject to the Listing Rules, the Company may procure that a Holding Lock be put on those Shares while the Shares are subject to any restriction under clause 7(b) of this Schedule.

• (e) As soon as reasonably practicable after the restriction on disposal of Shares under clause 7(b) of this Schedule no longer applies, the Company must procure that any restriction on dealing with that Share no longer applies and will procure that any Holding Lock on that Share is removed.

8. QUOTATION OF OPTIONS AND SHARES

• (a) 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 to ASX and to each other stock exchange on which Shares are listed at that time.

• (b) Notwithstanding clause 8(a) of this Schedule, the Shares issued on the exercise of vested Options will be subject to any transfer restrictions set out in clause 7(b) of this Schedule and may not be traded on the ASX while those transfer restrictions apply.

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9. FUTURE ISSUES OF SECURITIES

9.1 New issues

There are no participating rights or entitlements inherent in the Options and Participants will not be entitled to participate in new issues of capital offered to shareholders during the currency of the Options. However, the Company will ensure that the record date for determining entitlements to any such issue will be at least four Business Days after the issue is announced so as to afford Participants the opportunity to exercise all Options which they are entitled to exercise pursuant to these Rules prior to the date for determining entitlements to participate in any such issue.

9.2 Rights issues

If the Company is listed on the ASX and offers a pro rata issue of securities to holders of Shares, the Exercise Price in respect of any unexercised Options may be adjusted in accordance with the adjustment formula for pro rata issues set out in the Listing Rules at the time when the Options were granted under this Plan. If the Company is not listed on the ASX at the time of the pro rata issue, the Exercise Price will be adjusted in such manner determined as fair by the Board in its absolute discretion.

9.3 Bonus issues

If the Company makes a bonus issue of securities to holders of Shares, the rights of a Participant in respect of an unexercised Option will be modified such that the Participant will receive, upon exercise of an Option, one Share plus such additional securities which the Participant would have received had the Participant been entitled to participate in the bonus issue by virtue of its holding of an Option.

10. RECONSTRUCTION OF CAPITAL

If there is a reconstruction (including a consolidation, subdivision, reduction or return) of the issued capital of the Company prior to the expiry of any Options, the number of Options to which each Participant is entitled or the exercise price of his or her Options or both or any other terms will be reconstructed in a manner determined by the Board which complies with the provisions of the Listing Rules.

11. NATURE OF RIGHTS

A Participant does not have a legal or beneficial interest in any Shares by virtue of acquiring or holding an Option. A Participant’s rights under the Options are purely contractual and personal. In particular, 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 issued to the Participant as a result of the exercise of those Options.

12. ASSIGNMENT OF OPTIONS DURING TAKEOVER PERIOD

Subject to clause 7(a) of this Schedule, a Participant may not assign or transfer an Option except during a Takeover Period, in which case the Options may only be transferred by the Participant to the bidder or the bidder’s nominees in accordance with the Corporations Act.

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ATTACHMENT TO SCHEDULE 1: FORM OF NOTICE OF EXERCISE

The Company Secretary Swan Gold Mining Limited Level 1 24 Mumford Place BALCATTA WA 6021

Dear Sir/Madam

[Name of Optionholder] ( Optionholder ) hereby gives notice of the exercise of [number of Options] granted pursuant to the Company’s Employee Option Plan ( Plan ) and exercisable at $[*].

The certificate for these Options is enclosed and the Optionholder:

• ---

• encloses a cheque made payable to “Swan Gold Mining Limited” for $[ ] (being the total of the exercise price payable on the exercise of [*Number of Options] Options); and/or

• confirms that they wish to exercise [*Number of Options] Options using the Cashless Exercise Facility in accordance with clause 6 of Schedule 1 of the Plan.

By lodging this Notice of Exercise the Optionholder hereby:

1. applies for the number of Shares equivalent to the number of Options exercised;

2. agrees to be bound by the Constitution of the Company; and

3. acknowledges that they have received a copy of the Company’s Employee Option Plan attached to this Notice of Exercise before exercising their Options.

Capitalised terms used in this letter have the same meaning as in the Company’s Employee Option Plan Rules.

[Note: if signed by an individual use the following:]

Signed by [*OPTION HOLDER] in the presence

of:

______ ______ Signature of Witness

_________ Name of Witness (print)

_________ Occupation

_________ Address

[Note: if signed by a corporation use the following:]

EXECUTED by [] (ACN []) in accordance with section 127 of the Corporations Act by:

_________ Director

_________ Director/Secretary

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______ ______ Name of Director (print) Name of Director/Secretary (print)

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SCHEDULE 2: SWAN GOLD MINING LIMITED EMPLOYEE OPTION PLAN OFFER LETTER

[insert date]

[Name and Address]

Via email: [email address]

Swan Gold Mining Limited Employee Option Plan Offer

Dear [*]

Offer

As recognition of your efforts and continuing commitment to Swan Gold Mining Limited ( Company ), the Company would like to invite you to participate in the Company’s Employee Option Plan ( Plan ). By participating in the Plan, you will be issued [*] Options.

This offer is made on the general terms and conditions contained in the rules of the Plan ( Rules ) and on the specific terms and conditions of this offer, which are detailed below. This offer is accompanied by a copy of the Plan relating to this offer.

To ensure compliance with the Corporations Act 2001 (Cth) ( Corporations Act ), no Options will be granted unless shareholder approval is received (if required).

Except where a capitalised term is defined in this offer, a capitalised term that is used in this offer has the meaning given to it in the Rules.

Terms and Conditions

You are invited to participate in the Plan on the terms and conditions of the Rules and the following terms and conditions:

1. Grant Date

The date determined by the Company upon acceptance of the offer from you by the Company.

2. Conditions to Offer

Notwithstanding any other term of this offer letter, the Company will only grant the Options to you upon:

• (a) acceptance of the offer from you by the Company;

• (b) publication of a prospectus by the Company in relation to an equity capital raising to raise between approximately $8.5-25 million by the issue of fully paid ordinary shares at an issue price between $0.15-0.20 per share; [and]

• (c) [receipt of shareholder approval in accordance with the Corporations Act (if required).] [for Directors only]

3. Price of Options

The Options will be granted to you at no cost.

4. Exercise Price, Vesting Date and Expiry date

The Exercise Price, Vesting Date and Specified Expiry Date of each Option are as follows:

Number of Options	Exercise Price	Vesting Date	Specified Expiry Date
[insert number of options]	18% premium to the market value of the Company’s shares on the grant date.	Immediately	1 year from Grant
[insert number of options]	34% premium to the marketvalue ofthe	Immediately	2 years from Grant

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	Company’s shares on the grant date.
[insert number of options]	45% premium to the market value of the Company’s shares on the grant date.	Immediately	3 years from Grant

5. Disposal restrictions

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

A Participant may not transfer a Share issued under the Plan for a period of [two] years after the date of issue without the prior consent of the Board.

6. Taxation

Appendix ‘A’ to the Plan contains a general overview of the taxation implications of participating in the Plan.

Please note:

• (a) the information contained in Appendix ‘A’ is only a guide and should not be regarded as specific tax advice to you; and

• (b) it is strongly recommended that you seek, and only rely upon, your own professional independent tax advice in this regard.

7. Financial advice

Any advice given by, or on behalf of, the Company in connection with this offer is general advice only. You should consider obtaining your own financial product advice from an independent person who is licensed to give that advice.

8. Rules

Any acquisition of Options to which this offer relates is subject to the specific terms and conditions of this offer and the terms and conditions of the Rules and the Constitution of the Company. You should read the Rules in conjunction with this offer.

9. Confidentiality

The contents of this offer and the Plan are confidential and must not be disclosed to any other party other than your financial, accounting or tax adviser. If you breach this condition the Company reserves its rights to withdraw the offer and not accept your acceptance.

10. Acceptance of the Offer

If you wish to accept the offer to participate in the Plan for which this offer relates, please sign below. This letter is an invitation to participate in the Plan only. The Company will only grant the Options to you upon acceptance of the offer from you by the Company.

By accepting the offer, you agree to become a Participant under the Plan and agree to be bound by the Plan Rules, constitution of the Company and the terms of the offer. You also acknowledge that no issue of Options or Shares will be made to you to the extent that it would contravene the constitution of the Company, the ASX Listing Rules, the Corporations Act or any other applicable law.

11. [Representations and warranties ( for contractors and consultants only)

By signing and returning this offer form you will have or be deemed to have represented and warranted to the Company that you;

(a) qualify as a sophisticated or professional investor as defined in the Corporations Act and the Company is not required to provide a prospectus or other disclosure document for the issue of the Options [and Plan Shares] to you; and

• (b) qualify as a wholesale client within the meaning of 761G of the Corporations Act.]

12. Offer close date

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You should note that the offer is expected to close on [*] 2014. If you wish to accept the offer, you should endeavour to return your signed acceptance prior to this date.

Please return your signed acceptance to the following [*address/email] by the date the offer closes.

Yours sincerely

Swan Gold Mining Limited

Executed as a deed by:

Signed:

Name: Date:

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APPENDIX A - TAX TREATMENT OF OPTIONS RECEIVED BY AUSTRALIAN RESIDENT PARTICIPANTS IN THE SWAN GOLD MINING LIMITED EMPLOYEE SHARE OPTION PLAN

Participation in the Swan Gold Mining Limited ( Swan Gold ) Employee Share Option Plan ( Option Plan ) means that you will be granted Options by Swan Gold for free, entitling you to acquire an equivalent number of fully paid ordinary shares in Swan Gold ( Shares ), subject to certain conditions.

The purpose of this tax note is to provide you with a general outline of the likely tax implications for you as a result of participating in the Option Plan. In particular, this tax note considers the impact of the Employee Share Scheme ( ESS ) tax laws contained in Division 83A of the Income Tax Assessment Act 1997 ( Div 83A ) on the Options, and other related tax matters.

Please note:

• The information contained in this tax note is general in nature and should not be regarded as specific tax advice to you.

• It is strongly recommended that you seek, and only rely upon, your own professional independent tax advice in this regard.

General operation of Div 83A

Where an employee receives shares or rights under an ESS at a discount to the market value of those shares or rights on the acquisition date, the employee will be taxed on this discount under Div 83A.

Generally, if an employee has no risk of forfeiting the shares or rights, he or she will be taxed ‘upfront’ on any discount in the income year in which he or she acquires the interest in the shares or rights. When there is a real risk that an employee could forfeit or lose the shares or rights acquired under an ESS and this forfeiture or loss is outside of his/her control, Div 83A operates to ensure that the employee does not include the ESS discount in his/her assessable income upfront on the acquisition date and instead the ESS taxing point of the shares or rights is deferred to a later time.

In determining whether unlisted ESS rights such as your Options are acquired at a discount for Div 83A purposes, the ESS tax laws allow an employee to value them on the grant date at either:

1. Their market value at this time (having regard to ordinary valuation principles), or

2. An amount determined by application of specific valuation rules contained in Division 83A of the Income Tax Assessment Regulations 1997 (‘ESS Regulations’), which operate to value ESS rights at the greater of:

3. i. The difference between the underlying share price at this time and the exercise price of the ESS rights; and

4. ii. The value determined according to certain market value calculation tables in the ESS Regulations, which broadly ascertain the market value of an ESS right, having regard to the prevailing share price, exercise price and the remaining exercise period at the ESS taxing point.

In a situation where the exercise price of unlisted ESS rights is set at such a premium to the underlying share price as to have a $Nil market value on the grant date under the calculation tables in the ESS Regulations, the ESS rights are not considered to be acquired at a discount for ESS tax purposes. Therefore, in these circumstances, the ESS rights are not subject to Div 83A and are taxed under the capital gains tax ( CGT ) provisions like any other investment in shares or rights.

Div 83A tax treatment of the Option Plan

Will the Options I acquire from Swan Gold be acquired at a discount?

No. In accordance with the current Offer letters, the Exercise Price of the Options provided to you under the Swan Gold Plan will be set at significant premium to the market value of the Options at the Grant Date. Therefore, the Options with have a $Nil value under the ESS Regulations on the Grant date and accordingly, you will not acquire them at a discount. As a result your Options will not be taxed under the ESS rules in Div 83A.

Will there be any Capital Gains Tax implications from the Options?

Yes. As they will not fall within Div 83A, the CGT provisions will apply to the Options from the Grant Date like any other investment in shares or rights.

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The CGT acquisition date of your Options will be their Grant Date and they will have an opening CGT cost base of $Nil. No CGT implications will arise for you in the event that the Options expire without exercise.

You will not be liable for CGT as a result of exercising the Options including by way of a ‘Cashless Exercise’ (discussed further below). On the exercise date you will acquire separate CGT assets, in the form of Shares, having an opening CGT cost base equal to the amount of cash (if any) you actually pay to exercise any of your Options.

If you hold the Shares for at least 12 months after the exercise date of your Options, any capital gain you make on the subsequent disposal of the Shares will be discounted by 50%.

Cashless Exercise – how does it work?

Swan Gold is offering a Cashless Exercise Facility ( CEF ) to Participants under the terms and conditions of the Option Plan.

The CEF allows you to exercise some, or all, of your Options without having to physically pay the Exercise Price. In effect, the value of the Options on the exercise date will be utilised by you to meet your obligation to pay the Exercise Price for some or all of your Options. Broadly, by using the CEF you will receive Shares equivalent in value to the number of Options exercised using the CEF, 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 (ie. you will receive less Shares than if you choose to exercise your Options in the traditional manner and pay a cash amount to Swan Gold equal to the Exercise Price of each Option). The following example illustrates how the CEF works:

Assumptions

1. You are granted 1,000,000 Options by Swan Gold on 1 July 2014 with an expiry date of 30 June 2017.

2. The Options have an Exercise Price of 35 cents, representing a premium of 75% to the Share price of 20 cents on the Grant Date.

3. On 29 June 2017 the Share price has risen to 70 cents, resulting in each of your Options being worth approximately 35 cents and you decided to exercise all of your vested Options at this time using the CEF.

Tax Treatment

ESS

• As your Options will have a $Nil value under the ESS Regulations on the Grant Date, they will not be acquired by you at a discount and therefore, Div 83A will not apply to your Options.

CGT

• On the Grant Date you acquire 1,000,000 Options for CGT purposes with an opening CGT cost base of $Nil.

• On the Exercise Date of 29 June 2017, by using the CEF to exercise all your 1,000,000 Options, you receive 500,000 Shares, calculated as follows, without the need to pay cash to exercise your Options:

• [1,000,000 Options x $0.35 (value of each Option on the Exercise Date)] = $350,000

• [$350,000/$0.70 (Share price on the Exercise Date)] = 500,000 Shares

• On the Exercise Date you acquire 500,000 Shares for CGT purposes with an opening CGT cost base of $Nil (as you did not pay any cash to exercise your 1,000,000 Options).

Other Issues / Disclaimer:

Please note: This tax note has been prepared on the assumption that you are, and will remain, an Australian resident for taxation purposes and your work for Swan Gold (or a subsidiary company) is, and will continue to be, solely performed in Australia, at all relevant times.

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