PATERSON RESOURCES LTD — Capital/Financing Update 2020

Jan 7, 2020

Rule 2.7, 3.10.3, 3.10.4, 3.10.5

Appendix 3B

New issue announcement, application for quotation of additional securities and agreement

Information or documents not available now must be given to ASX as soon as available. Information and documents given to ASX become ASX's property and may be made public.

Introduced 01/07/96 Origin: Appendix 5 Amended 01/07/98, 01/09/99, 01/07/00, 30/09/01, 11/03/02, 01/01/03, 24/10/05, 01/08/12, 04/03/13

Name of entity

PATERSON RESOURCES LTD

ABN

45 115 593 005

We (the entity) give ASX the following information.

Part 1 - All issues

You must complete the relevant sections (attach sheets if there is not enough space).

1 +Class of +securities issued or to be issued

Convertible Notes

2 Number of +securities issued or to be issued (if known) or maximum number which may be issued

150,000 Convertible Notes

+ See chapter 19 for defined terms.

3 Principal terms of the +securities (e.g. if options, exercise price and expiry date; if partly paid +securities, the amount outstanding and due dates for payment; if +convertible securities, the conversion price and dates for conversion)

Face Value: $1 per Note Maturity Date: The maturity date is 12 months after the date of issue of the Notes Redemption: Any unconverted Notes are to be redeemed by the Company on the Maturity Date. If an "event of default" occurs, the Noteholder may require the immediate redemption of the Notes.

Conversion: A Noteholder may convert their Shares at any time after the opening date of the upcoming proposed Entitlement Offer and ending 10 business days before the maturity date.

Conversion Price: The Notes will be convertible at a deemed issue price equal to the price at which Shares are offered under the Entitlement Offer. To provide the required certainty to Shareholders, the Company has determined to set a floor price for the Entitlement Offer of $0.001 per Share. Interest: Interest accrues at a rate of 12% per annum, commencing from the date of issue. The interest is to be calculated up to the date of conversion or redemption of the Notes and paid at the same time. The interest is to be paid as follows:

• if the Notes are redeemed before the opening date of the Entitlement Offer: in cash;

• if the Notes are redeemed or converted after the opening date of the Entitlement Offer, at the election of the Noteholder:

• in cash; or
• by the issue of Shares, at a deemed issue price equal to the Conversion Price.

Security: The Notes will be unsecured. Events of default: Typical events of default will apply.

Representations and warranties: Customary representations and warranties have been provided by the Company.

Quotation: The Notes will not be quoted on the ASX.

Transferability: The Noteholder may transfer the Notes, subject to the prior written consent of the Company.

+ See chapter 19 for defined terms.

No – Shares issued on conversion of Convertible Notes will rank equally with existing class of fully

paid shares on issue

• See chapter 19 for defined terms. • the extent to which they participate for the next dividend, (in the case of a trust, distribution) or interest payment • the extent to which they do not rank equally, other than in relation to the next dividend, distribution or interest payment 5 Issue price or consideration $1.00 per Note (If issued as consideration for the acquisition of assets, clearly identify those assets) 6a Is the entity an +eligible entity that has obtained security holder approval under rule 7.1A? If Yes, complete sections 6b – 6h in relation to the +securities the subject of this Appendix 3B, and comply with section 6i Yes 6b The date the security holder resolution under rule 7.1A was passed 9 December 2019 6c Number of +securities issued without security holder approval under rule 7.1 Nil

04/03/2013 Appendix 3B Page 3

Funds raised from the issue of the Convertible Notes will be used to provide the Company with general working capital, as well as funding exploration activities on the Company's current projects and corporate administration and management. The issue of the Convertible Notes was approved by shareholders at the AGM held 9 December 2019. Refer to Notice of Meeting lodged with ASX on 5 November 2019 (Resolution 8).

4 Do the +securities rank equally in all respects from the +issue date with an existing +class of quoted +securities?

If the additional +securities do not rank equally, please state:

• the date from which they do

6 Purpose of the issue

• 6d Number of +securities issued with security holder approval under rule 7.1A Nil
• 6e Number of +securities issued with security holder approval under rule 7.3, or another specific security holder approval (specify date of meeting)
• 6f Number of +securities issued under an exception in rule 7.2
• 6g If +securities issued under rule 7.1A, was issue price at least 75% of 15 day VWAP as calculated under rule 7.1A.3? Include the +issue date and both values. Include the source of the VWAP calculation.
• 6h If +securities were issued under rule 7.1A for non-cash consideration, state date on which valuation of consideration was released to ASX Market Announcements
• 6i Calculate the entity's remaining issue capacity under rule 7.1 and rule 7.1A – complete Annexure 1 and release to ASX Market Announcements

7 +Issue dates

Note: The issue date may be prescribed by ASX (refer to the definition of issue date in rule 19.12). For example, the issue date for a pro rata entitlement issue must comply with the applicable timetable in Appendix 7A.

Cross reference: item 33 of Appendix

8 Number and +class of all +securities quoted on ASX (including the +securities in section 2 if applicable)

150,000 Convertible Notes

Approved by shareholders at the Annual General Meeting held 9 December 2019

N/A

N/A

7.1: 251,771,564

N/A

7.1A: 167,847,709

Total: 419,619,273

8 January 2020

Number	+Class
1,678,477,092	Fully paid ordinary shares
930,154,097	Listed Options ($0.02; 30 April2020) (HDYOC)

• See chapter 19 for defined terms.

		Number	+Class
9	+classNumberandofall+securities not quoted on ASX+securities(includingtheinsection 2 if applicable)	45,525,000	Options exercisable at$0.06centseachexpiring 19 August 2020
		3,401,578	Options exercisable at$0.044 each expiring 1October 2020
		150,000	Convertible Notes
10	Dividend policy (in the case of atrust, distribution policy) on theincreased capital (interests)	Company	There is currently no dividend policy for the

Part 2 - Pro rata issue

11	Is	security	holder	approval
		required?

• 12 Is the issue renounceable or nonrenounceable?
• 13 Ratio in which the +securities will be offered
• 14 +Class of +securities to which the offer relates
• 15 +Record date to determine entitlements
• 16 Will holdings on different registers (or subregisters) be aggregated for calculating entitlements?
• 17 Policy for deciding entitlements in relation to fractions

+ See chapter 19 for defined terms.

18	Names of countries in which theentity has security holders whowillnotbesentnewofferdocuments
	Note: Security holders must be told how theirentitlements are to be dealt with.Cross reference: rule 7.7.
19	Closingdateforreceiptofacceptances or renunciations
20	Names of any underwriters
21	Amount of any underwriting feeor commission
22	Names of any brokers to the issue
23	Fee or commission payable to thebroker to the issue
24	Amountofanyhandlingfeepayable to brokers who lodgeacceptances or renunciations onbehalf of security holders
25	If the issue is contingent onsecurityholders' approval, thedate of the meeting
26	Date entitlement and acceptanceform and offer documents will besent to persons entitled
27	If the entity has issued options,and the terms entitle optionholders to participate on exercise,the date on which notices will besent to option holders
28	Date rights trading will begin (ifapplicable)
29	Date rights trading will end (ifapplicable)
30	How do security holders sell theirentitlements in fullthrough abroker?
31	How do security holders sell partof their entitlements through a

+ See chapter 19 for defined terms.

	brokerandacceptforthebalance?
32	How do security holders disposeof their entitlements (except bysale through a broker)?
33	+Issuedate

Part 3 - Quotation of securities

You need only complete this section if you are applying for quotation of securities

• 34 Type of +securities (tick one)
• (a) +Securities described in Part 1
• (b) All other +securities

Example: restricted securities at the end of the escrowed period, partly paid securities that become fully paid, employee incentive share securities when restriction ends, securities issued on expiry or conversion of convertible securities

Entities that have ticked box 34(a)

Additional securities forming a new class of securities

Tick to indicate you are providing the information or documents

• 35 If the +securities are +equity securities, the names of the 20 largest holders of the additional +securities, and the number and percentage of additional +securities held by those holders – To be advised when issued
• 36 If the +securities are +equity securities, a distribution schedule of the additional +securities setting out the number of holders in the categories – To be advised when issued 1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 and over

37 A copy of any trust deed for the additional +securities

+ See chapter 19 for defined terms.

Entities that have ticked box 34(b)

• 38 Number of +securities for which +quotation is sought
• 39 +Class of +securities for which quotation is sought
• 40 Do the +securities rank equally in all respects from the +issue date with an existing +class of quoted +securities?

If the additional +securities do not rank equally, please state:

• the date from which they do
• the extent to which they participate for the next dividend, (in the case of a trust, distribution) or interest payment
• the extent to which they do not rank equally, other than in relation to the next dividend, distribution or interest
• 41 Reason for request for quotation now

Example: In the case of restricted securities, end of restriction period

(if issued upon conversion of another +security, clearly identify that other +security)

42 Number and +class of all +securities quoted on ASX (including the +securities in clause 38)

+Class

+ See chapter 19 for defined terms.

Quotation agreement

• 1 +Quotation of our additional +securities is in ASX's absolute discretion. ASX may quote the +securities on any conditions it decides.
• 2 We warrant the following to ASX.
  • The issue of the +securities to be quoted complies with the law and is not for an illegal purpose.
  • There is no reason why those +securities should not be granted +quotation.
  • An offer of the + securities for sale within 12 months after their issue will not require disclosure under section 707(3) or section 1012C(6) of the Corporations Act.

Note: An entity may need to obtain appropriate warranties from subscribers for the securities in order to be able to give this warranty

• Section 724 or section 1016E of the Corporations Act does not apply to any applications received by us in relation to any +securities to be quoted and that no-one has any right to return any +securities to be quoted under sections 737, 738 or 1016F of the Corporations Act at the time that we request that the +securities be quoted.
• If we are a trust, we warrant that no person has the right to return the +securities to be quoted under section 1019B of the Corporations Act at the time that we request that the +securities be quoted.
• 3 We will indemnify ASX to the fullest extent permitted by law in respect of any claim, action or expense arising from or connected with any breach of the warranties in this agreement.
• 4 We give ASX the information and documents required by this form. If any information or document is not available now, we will give it to ASX before +quotation of the +securities begins. We acknowledge that ASX is relying on the information and documents. We warrant that they are (will be) true and complete.

Sign here:	Company secretary	Date: 08 January 2020
Print name:	Sarah Smith
	== == == == ==

+ See chapter 19 for defined terms.

Appendix 3B – Annexure 1

Calculation of placement capacity under rule 7.1 and rule 7.1A for eligible entities

Introduced 01/08/12 Amended 04/03/13

Part 1

Rule 7.1 –Issues exceeding 15% of capital
Step 1: Calculate "A", the base figure from which the placement capacity iscalculated
Insert number of fully paid +ordinary securitieson issue 12 months before the +issue date ordate of agreement to issue	2,649,315,830
Add the following:
Number of fully paid +ordinary securities•issued in that 12 month period under anexception in rule 7.2
•Number of fully paid +ordinary securitiesissued in that 12 month period withshareholder approval
Number of partly paid +ordinary securitiesthat became fully paid in that 12 monthperiod
Note:•Include only ordinary securities here –other classes of equity securities cannot beadded•Include here (if applicable) the securitiesthe subject of the Appendix 3B to whichthis form is annexed•It may be useful to set out issues ofsecurities on different dates as separateline items
Subtract the number of fully paid +ordinarysecurities cancelled during that 12 monthperiod	(970,838,738) shares cancelled in December2019
"A"	1,678,477,092

Step 2: Calculate 15% of "A"
"B"	0.15
	[Note: this value cannot be changed]

+ See chapter 19 for defined terms.

Multiply "A" by 0.15	251,771,564
Step 3: Calculate "C", the amount of placement capacity under rule7.1 that has already been used
Insert number of +equity securities issuedor agreed to be issued in that 12 monthperiod not counting those issued:
•Under an exception in rule 7.2
•Under rule 7.1A
•With security holder approval underrule 7.1 or rule 7.4
Note:•This applies to equity securities, unlessspecifically excluded – not just ordinarysecurities•Include here (if applicable) thesecurities the subject of the Appendix3B to which this form is annexed•It may be useful to set out issues ofsecurities on different dates asseparate line items
"C"	-
Step 4: Subtract "C" from ["A" x "B"] to calculate remainingplacement capacity under rule 7.1
"A" x 0.15	251,771,564
Note: number must be same as shown inStep 2
Subtract "C"	-
Note: number must be same as shown inStep 3
Total ["A" x 0.15] – "C"	251,771,564
	Note: this is the remaining placementcapacity under rule 7.1

+ See chapter 19 for defined terms.

Part 2

Rule 7.1A –Additional placement capacity for eligible entities
Step 1: Calculate "A", the base figure from which the placementcapacity is calculated
"A"Note: number must be same as shown inStep 1 of Part 1	1,678,477,092
Step 2: Calculate 10% of "A"
"D"	0.10Note: this value cannot be changed
Multiply "A" by 0.10	167,847,709
Step 3: Calculate "E", the amount of placement capacity under rule7.1A that has already been used
Insert number of +equity securities issuedor agreed to be issued in that 12 monthperiod under rule 7.1ANotes:•This applies to equity securities – notjust ordinary securities•Include here – if applicable – thesecurities the subject of the Appendix3B to which this form is annexed•Do not include equity securities issuedunder rule 7.1 (they must be dealt within Part 1), or for which specific securityholder approval has been obtained•It may be useful to set out issues ofsecurities on different dates asseparate line items
"E"	Nil

+ See chapter 19 for defined terms.

Step 4: Subtract "E" from ["A" x "D"] to calculate remainingplacement capacity under rule 7.1A
"A" x 0.10	167,847,709
Note: number must be same as shown inStep 2
Subtract "E"	Nil
Note: number must be same as shown inStep 3
Total ["A" x 0.10] – "E"	167,847,709
	Note: this is the remaining placementcapacity under rule 7.1A

+ See chapter 19 for defined terms.