QUANTUM GRAPHITE LIMITED — Capital/Financing Update 2018

Sep 25, 2018

MARKET RELEASE For Immediate Release 25 September 2018

Capital Structure (as announced on 3 September 2018)

In anticipation of the reinstatement for quotation of the Company's securities, the Company's capital structure as announced on 3 September 2018, is again set out in this announcement and includes the following:

(a) the Top 20 Investors Report;

(b) the Investor Ranges Report;

(c) the terms of issue of the options; and

(d) the Appendix 3B.

Sal Catalano Company Secretary Quantum Graphite Limited e: scatalano@qgraphite.com

TOP 20 INVESTORS REPORT

INVESTOR	SHARES BALANCE
CHIMAERA CAPITAL LIMITED	1,776,339,123
ZIZIPHUS PTY LTD	419,039,273
SELSO PTY LTD	331,553,268
INSYNC INVESTMENTS PTY LTD	325,470,262
LYCOPODIUM LIMITED	256,030,821
MICHAEL JAMES MADDOX	198,367,579
ACN 112 940 057 PTY LTD	194,364,157
GOLDER ASSOCIATES PTY LTD	169,084,069
G & N LORD SUPERANNUATION PTY LTD	164,770,131
ASYMMETRIC CREDIT PARTNERS PTY LTD	161,970,131
RUSSELL HOWARD PTY LTD	161,970,131
FUDDY PTY LTD	155,605,664
CHIMAERA CAPITAL LIMITED	150,000,000
PETER FAULKNER INVESTMENTS PTY LTD	143,654,232
NEXT AUSTRALIA PTY LTD	143,600,943
VALENCE INDUSTRIES SERVICES PTY LTD <(IN LIQUIDATION) A/C>	115,388,438
GETCO PTY LTD	99,183,789
MR IAN DAVID PATTISON + MS KATHERINE MARGARET FORREST <sylvan f<="" s="" td="">
A/C>	96,680,306
MR DAVID JOHN HEBBERMAN + MS JOSEPHINE NORA HALL <david hebberman<="" td="">
FAM S/F A/C>	93,312,422
HATCH EGGS PTY LTD	81,697,218
TUKE INVESTMENTS PTY LTD	80,266,745

INVESTOR	OPTIONS BALANCE
CHIMAERA CAPITAL LIMITED	1,000,000,000

INVESTOR RANGES REPORT

RANGE	NO. INVESTORS	NO. SHARES	% ISSUED CAPITAL
1 to 1000	173	69,337	0.00%
1001 to 5000	1,268	4,029,158	0.05%
5001 to 10000	761	6,097,765	0.08%
10001 to 100000	1,574	53,258,177	0.71%
100001 and Over	461	7,423,333,995	99.15%
Total 4,237		7,486,788,432	100.00%

TERMS OF ISSUE OF OPTIONS

• (a) The options shall have a term of 5 years and can be exercised at any time until their expiry date upon the fifth anniversary of their issue.
• (b) The exercise price of the options shall be nil. The options shall be allocated on the basis that their value is \$0.00252 per option.
• (c) Should the exercise of any of the options result in the relevant shareholder increasing its interest in the Company beyond 20%, the exercise of those options will require shareholder approval (unless the exercise is otherwise permitted under any applicable law).
• (d) In the event that the shareholder approval referred to in paragraph (c) is not obtained, the option holder shall be entitled to receive payment of an amount equal to the notional principle amount (calculated as the product of the option value referred in paragraph (b) and the number of options for which approval has been sought), plus compound interest at the rate of 20% per annum.

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

Quantum Graphite Limited

ABN

41 008 101 979

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	Ordinary Shares
2	Number of +securities issued or to be issued (if known) or maximum number which may be issued	(a) 177,243,000 (b) 108,000,000 Total - 285,243,000
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)	Ordinary Shares: Fully paid

⁺ See chapter 19 for defined terms.

4	Do the +securities rank equally in all respects from the +issue date with an existing +class of quoted +securities?	Ordinary Shares: Yes
	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 payment
5	Issue price or consideration	(a) Issued pursuant to shareholder resolutions passed at the Annual General Meeting of shareholders on 22 June 2018. (b) Directors' remuneration as approved at the Annual General Meetings of shareholders on 18 December 2017 and 22 June 2018.
6	Purpose of the issue (If issued as consideration for the acquisition of assets, clearly identify those assets)	See sections 5(a) and 5(b) above.
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	22 June 2018
6c	Number of +securities issued without security holder approval under rule 7.1	Nil
6d	Number of +securities issued with security holder approval under rule 7.1A	Nil

• 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 3B.

Not applicable

Not applicable

Not applicable

Not applicable

The entity's issue capacity under rule 7.1 and rule 7.1A is unaffected by the issue described above.

28 August 2018

		Number	+Class
8	Number and +class of all +securities quoted on ASX (including the +securities in section 2 if applicable)	199,016,214	Ordinary

9 Number and ⁺class of all ⁺securities not quoted on ASX (including the ⁺securities in section 2 if applicable)

Number	+Class
7,287,772,218	Ordinary
1,000,000,000	Options to acquire ordinary shares, exercise price \$0.00, expiry date 20 July 2023

10 Dividend policy (in the case of a trust, distribution policy) on the increased capital (interests)

Part 2 - Pro rata issue

11	Is security holder approval required?
12	Is the issue renounceable or non renounceable?
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
18	Names of countries in which the entity has security holders who will not be sent new offer documents
	Note: Security holders must be told how their entitlements are to be dealt with.
	Cross reference: rule 7.7.
19	Closing date for receipt of acceptances or renunciations

20	Names of any underwriters
21	Amount of any underwriting fee or commission
22	Names of any brokers to the issue
23	Fee or commission payable to the broker to the issue
24	Amount of any handling fee payable to brokers who lodge acceptances or renunciations on behalf of security holders
25	If the issue is contingent on security holders' approval, the date of the meeting
26	Date entitlement and acceptance form and offer documents will be sent to persons entitled
27	If the entity has issued options, and the terms entitle option holders to participate on exercise, the date on which notices will be sent to option holders
28	Date rights trading will begin (if applicable)
29	Date rights trading will end (if applicable)
30	How do security holders sell their entitlements in full through a broker?
31	How do security holders sell part of their entitlements through a broker

and accept for the balance?

• 32 How do security holders dispose of their entitlements (except by sale through a broker)?
• 33 ⁺Issue date

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
36	If the +securities are +equity securities, a distribution schedule of the additional +securities setting out the number of holders in the categories 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 payment
• 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)

Number	+Class

Quotation agreement

1 +Quotation of our additional +securities is in ASX's absolute discretion. ASX may quote the +securities on any conditions it decides.

⁺ See chapter 19 for defined terms.

• 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 noone 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: ............................................................ Date: 29 August 2018 (Director/Company secretary)

Print name: SAL CATALANO

== == == == ==

⁺ 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 is calculated
Add the following:
Number of fully paid +ordinary securities • issued in that 12 month period under an exception in rule 7.2
Number of fully paid +ordinary securities • issued in that 12 month period with shareholder approval
Number of partly paid +ordinary • securities that became fully paid in that 12 month period
Note: • Include only ordinary securities here – other classes of equity securities cannot be added • Include here (if applicable) the securities the subject of the Appendix 3B to which this form is annexed • It may be useful to set out issues of securities on different dates as separate line items
Subtract the number of fully paid +ordinary securities cancelled during that 12 month period
"A"

⁺ See chapter 19 for defined terms.

Step 2: Calculate 15% of "A"
"B"	0.15
	[Note: this value cannot be changed]
Multiply "A" by 0.15
Step 3: Calculate "C", the amount of placement capacity under rule 7.1 that has already been used
Insert number of +equity securities issued or agreed to be issued in that 12 month period not counting those issued:
• Under an exception in rule 7.2
• Under rule 7.1A
• With security holder approval under rule 7.1 or rule 7.4
Note: • This applies to equity securities, unless specifically excluded – not just ordinary securities • Include here (if applicable) the securities the subject of the Appendix 3B to which this form is annexed • It may be useful to set out issues of securities on different dates as separate line items
"C"
Step 4: Subtract "C" from ["A" x "B"] to calculate remaining placement capacity under rule 7.1
"A" x 0.15
Note: number must be same as shown in Step 2
Subtract "C"
Note: number must be same as shown in Step 3
Total ["A" x 0.15] – "C"
	[Note: this is the remaining placement capacity 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 placement capacity is calculated
"A"
Note: number must be same as shown in Step 1 of Part 1
Step 2: Calculate 10% of "A"
"D"	0.10
	Note: this value cannot be changed
Multiply "A" by 0.10
Step 3: Calculate "E", the amount of placement capacity under rule 7.1A that has already been used
Insert number of +equity securities issued or agreed to be issued in that 12-month period under rule 7.1A
Notes: • This applies to equity securities – not just ordinary securities • Include here – if applicable – the securities the subject of the Appendix 3B to which this form is annexed • Do not include equity securities issued under rule 7.1 (they must be dealt with in Part 1), or for which specific security holder approval has been obtained • It may be useful to set out issues of securities on different dates as separate line items "E"

⁺ See chapter 19 for defined terms.

Step 4: Subtract "E" from ["A" x "D"] to calculate remaining placement capacity under rule 7.1A
"A" x 0.10
Note: number must be same as shown in Step 2
Subtract "E"
Note: number must be same as shown in Step 3
Total ["A" x 0.10] – "E"
	Note: this is the remaining placement capacity under rule 7.1A

⁺ See chapter 19 for defined terms.