PEPPERMINT INNOVATION LIMITED — Capital/Financing Update 2015

May 20, 2015

CHRYSALIS ENTERS OPTION TO ACQUIRE PEPPERMINT INNOVATION LIMITED; A MOBILE BANKING AND PAYMENT PLATFORM

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ASX Announcement
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21[st] May 2015

HIGHLIGHTS

Chrysalis Resources Limited (ASX: CYS) is pleased to announce that it has been granted an option to acquire all the issued share capital in Peppermint Innovation Limited ("Peppermint") subject to due diligence and shareholder approval. Peppermint operates a proven Mobile Banking, Payments and Remittance Platform (“Platform”) in the Philippines which it intends to expand throughout Asia, Australia, the Middle East, Europe and Tunisia.

• The Mobile Banking, Payments and Remittance market is a rapidly expanding industry with significant market potential as the prevalence and reliance on mobile telecommunication continues to increase. Globally there are 7.3 billion mobile phone SIM connections which are estimated to increase to 10 billion by 2020.

• Peppermint operate an established Platform beyond the development, adoption, compliance and integration stage, and develop new and innovative mobile phone applications aimed at improving business efficiency and deriving revenue for commercial clients and agent networks.

• A key aspect of the Platform is to provide a mechanism, via a mobile phone, to the global unbanked population to bridge the financial inclusion gap. It is estimated that 2.5 billion working age adults, over half the world’s adult population, do not have an account at a formal financial institution.

• Peppermint is raising capital to fund marketing and incentive programs to accelerate the subscriber base build out and Platform usage, initially in the Philippines and then throughout specifically targeted countries and regions .

• The commercial marketing phase has been de‐risked by the work done with clients with well‐ established customer bases and proven channels to market over the last four years in the Philippines.

• Peppermint has a highly qualified and experienced technical development and management team.

• Chrysalis has entered into a Binding Term Sheet Agreement comprised of an option to acquire Peppermint Innovation Limited via Chrysalis script consolidation and subsequent share issue. The Agreement is subject to due diligence, shareholder approval and the acceptance of a Definitive Agreement.

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Chrysalis Resources Limited Company Snapshot Company Structure Board & Management
A.B.N 58 125 931 964 Listed on ASX 27 May 2008 No of Shares on Issue 345,484,128 Dr Neale Fong – Non-Executive Chairman
Level 1, Suite 20 (at 31st Dec 2014)
7 The Esplanade ASX Share Code CYS Mr Jian Hua Sang – Non-Executive Director
MT. PLEASANT WA 6153 Cash (at 31st March 2015) $0.39M Mr Leigh Ryan – Managing Director
Sector Exploration
Mr Kevin Hart – Company Secretary
Phone: 618 6180 9290
Fax: 618 9316 1314
E: info@chrysalisresources.com.au
www.chrysalisresources.com.au
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CHRYSALIS RESOURCES OPTION TO ACQUIRE PEPPERMINT INNOVATION

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Background on Peppermint Innovation Limited

Peppermint Innovation Limited is an Australian public unlisted company focused on the commercialisation of a proprietary Mobile Banking, Payments and Remittance technology designed for banks, mobile money operators, money transfer & funds remittance companies, payment processors, retailers/merchants, credit card companies, and microfinance institutions.

The focus of Peppermint's initial efforts is in the Philippines, a country with 105 million mobile phones in use across a population of almost 100 million people (of which up to 75% are estimated to be unbanked), where over four years circa $9.5 million has been raised to support development and commercialisation of the technology.

The current bank‐grade end to end encrypted Mobile Banking, Payments and Remittance Platform in operation in the Philippines and is in use by 3 of the top 10 deposit taking banks, as well as a leading Microfinance Institution in the country.

Peppermint aims to leverage a successful commercialisation strategy in the Philippines and build on established relationships in order to develop a commercial presence utilising the mobile banking and payment platform further across Asia and beyond.

Key Markets‐ Developing World Economies

Mobile banking and payment processing in the Developing World equals financial inclusion, a state wherein there is effective access to wide range of financial services. Financial services (savings accounts, credit facilities, debt payments, remittance and insurance), especially for the unbanked population empowers them to manage their finances and reduce their vulnerability to financial distress, debt and poverty.

Financial inclusion (a government agenda in Developing World economies) supports broad‐based economic development that can contribute to inclusive growth within a country.

Worldwide approximately 2.5 billion people lack access to basic formal financial services. Up to three quarters of the world’s poor do not have a bank account due to costs, travel distance and paper work involved. Access to affordable financial services, such as those provided via a mobile phone, is linked to overcoming poverty, reducing income disparities, and increasing economic growth.

The Mobile Banking, Payments and Remittance Industry

Mobile commerce is a transformational enabler of financial interdependence across the globe and is particularly strong in the Developing World.

Significant advances in the telecommunication industry are the major facilitator in the mobile banking and payments market especially in areas outside of urban centres in the Developing World. The emergence of 3G networks throughout the world has helped increase the prevalence of mobile technology and increased the numbers of mobile telecommunication devices.

There are 7.3 billion mobile phone SIM connections globally which are estimated to grow to 10 billion by 2020.

The number of people living outside their country of birth is continually increasing as evidenced by The World Bank who estimates that remittances sent by migrants to Developing World countries grew by 5% in 2014 to reach US $435 billion.

Industry research estimates that by the end of 2015 the value of mobile payments across the globe may reach USD$1trillion.

Key Acquisition Terms and Conditions Precedent

The principal terms of the legally binding conditional agreement are as follows:

• Chrysalis has entered into a legally binding Term Sheet Agreement comprised of an option to acquire all the issued share capital of Peppermint Innovation Limited (“Acquisition”).

CHRYSALIS RESOURCES OPTION TO ACQUIRE PEPPERMINT INNOVATION

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• The Agreement is subject to Due Diligence, to be completed during a 45 day exclusivity period prior to finalisation and acceptance of a Definitive Agreement.

• Chrysalis is to obtain shareholder and other approvals to consolidate its share capital on a ratio of no less than five for one basis (every 5 shares to be consolidated into 1 share) prior to the Acquisition of all the remaining shares of Peppermint.

• Chrysalis is to obtain all regulatory approvals for the Acquisition, including in particular ASX approval for the readmission of Chrysalis to the official list of the ASX in connection with its change in nature and scale of activities.

• In consideration for the post consolidation Acquisition, Chrysalis shall allot and issue to the Peppermint Shareholders 70,000,000 Acquisition Shares and 94,440,000 Performance Shares. The Performance Shares shall not vest until the Milestones to which they attach are achieved and the Acquisition Shares shall be escrowed in accordance with ASX requirements.

• Chrysalis must successfully complete a capital raising under a prospectus to raise sufficient funds to meet the ASX Chapter 1 and 2 readmission requirements and satisfactorily deliver the business plan and objectives of PEP in connection with its readmission. The capital required is currently estimated at $3,500,000.

Performance Shares:

A total of 94,440,000 Performance Shares will be issued. Each (1) Performance Share shall be issued on completion and is convertible into one (1) ordinary share in the capital of Chrysalis, upon the following milestones being achieved:

• Milestone 1: 10 million Performance shares will vest upon Chrysalis or its subsidiaries generating cumulative revenue of $15,000,000 from the Mobile Banking, Payments and Remittance Business MBPRB within 5 years of the date of this Term Sheet.

• Milestone 2: 10 million Performance shares will vest upon Chrysalis or its subsidiaries generating cumulative revenue of $50,000,000 from the MBPRB within 5 years of the date of this Term Sheet.

• Milestone 3: 74.44 million Performance shares will vest upon Chrysalis achieving a share price of AUD 0.75 cents or more (based on volume weighted average market price over 20 consecutive trading days during which the shares have actually traded) post completion within 5 years of the date of this Term Sheet.

• If a change of control occurs before Chrysalis has a chance to achieve Milestone 1 or Milestone 2, the Milestone shares to be awarded on achieving those Milestones shall vest. In the event a change of control occurs which attributes a value of $0.75 cents or more per CYS share, the Milestone 3 shares shall vest.

Public Offer

Subject to the receipt of shareholder approval, Chrysalis will undertake a capital raising under a prospectus to raise sufficient funds to meet the ASX Chapter 1 and 2 readmission requirements and deliver the business plan and objectives of Peppermint in connection with its readmission. The current estimated funding required is A$3,500,000. The majority of the funds will be used to establish and expand the existing Peppermint subscriber base.

Board Composition

On completion of the Acquisition of Peppermint and readmission of Chrysalis, the Board of Chrysalis shall comprise three directors nominated by PEP and a maximum of one existing director of Chrysalis.

CHRYSALIS RESOURCES OPTION TO ACQUIRE PEPPERMINT INNOVATION

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The indicative timetable for completion of the acquisition and Chrysalis’ re‐compliance with the ASX Listing Rules is outlined below:

Day	Event
0	Term Sheet between PEP and Chrysalis Announcement of Option by Chrysalis
45	Completion of Due Diligence by Chrysalis Option Exercise
52	Definitive Agreement signed Chrysalis Notice of Meeting issued
60	Lodge Prospectus with ASIC and ASX
82	Prospectus offer period opens
85	Chrysalis General Meeting Suspension of trading of Chrysalis Securities
100	Prospectus offer period closes
105	Consolidation record date for Chrysalis
110	Issue Chrysalis Shares on satisfaction of Peppermint Loan Issue Chrysalis Shares under Prospectus Completion of Acquisition of Peppermint (issue Consideration Shares to the Peppermint Shareholders)
113	Expected Date for Re‐quotation of shares on ASX
115	Transaction Sunset Date

The indicative effect of the Acquisition on the capital structure of Chrysalis is expected to be as follows:

	Shares
Existing Shares(post‐consolidation)	69,096,826
Acquisition Shares (NB – In the main escrowed in accordance with ASX requirements)	70,000,000
Shares issued under Prospectus	35,000,000
TOTAL	174,096,826

• 94,440,000 Performance Shares to vest if Milestones 1,2 and 3 are achieved.

ASX Listing Rules Re‐compliance and Financial Information

The Acquisition of Peppermint will result in a change to the nature and scale of Chrysalis (“the Company”) and will require shareholder approval under Chapter 11 of the ASX Listing Rules and will also require the Company to re‐comply with Chapters 1 and 2 of the ASX Listing Rules. The Company will dispatch a notice of meeting to shareholders seeking all of the relevant approvals in line with the timetable outlined above, with such notice to include detailed information on Peppermint, including detailed financial information showing the effect of the Transaction on the Company.

CHRYSALIS RESOURCES OPTION TO ACQUIRE PEPPERMINT INNOVATION

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Chrysalis’ Exploration Assets

Chrysalis is continuing to monitor its exploration progress in Zambia, with a 2 month extension to the six month option period of the FQM Joint Venture Option Agreement requested and approved this week in order to allow time for the receipt of the 51% of the Shikila and Kabwima projects soil sample assay results that are still outstanding. The remaining assays should be available in the next 2 to 3 weeks in readiness for geochemical interpretation and evaluation prior to FQM making a decision to execute the option and enter into the first earn‐in period.

Chrysalis’ West Angelas Iron Ore Project Purchase Option Agreement with the Fortescue Metals Group (FMG) remains active and the first anniversary option payment is due in August this year. Additional drilling and historical rehabilitation work is planned.

For further information please contact:

Dr Neale Fong Non‐Executive Chairman +61 411 550 560 Leigh Ryan Managing Director +61 427 093 043