(ASX: SPX) ASX ANNOUNCEMENT 25 February 2020

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TARGET STATEMENT IN RESPECT TO AN OFF-MARKET TAKEOVER BID

Spectrum Metals Limited (“ Spectrum ” or the “ Company ”) confirms that further to the announcement dated 10 February 2020 noting the execution of a Bid Implementation Agreement between Ramelius Resources Limited (“ Ramelius” ) and the Company, it has today received a Bidder’s Statement from Ramelius pursuant to its off-market takeover bid under Chapter 6 of the Corporations Act 2001 (Cth).

Spectrum has today lodged its Target’s Statement with the Australian Securities and Investments Commission and sent a copy to Ramelius as required under the Corporations Act.

A copy of the Target’s Statement is attached for immediate release.

For further information:

Shareholder Contact

Alex Hewlett Chairman

Telephone: +61 8 6369 1195

Email: [email protected]

This Announcement has been approved for release by Mr Alex Hewlett, Chairman of Spectrum Metals Limited

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Registered Office: Suite 2/827 Beaufort Street Mt Lawley WA 6052 | T: 08 6369 1195 ABN: 94 115 770 226 | [email protected] | www.spectrummetals.com.au

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M E T A L S L I M I T E D

ABN 94 115 770 226

Target’s Statement

in response to the offer by Ramelius Resources Limited ABN 51 001 717 540 through its wholly-owned subsidiary Mt Magnet Gold Pty Ltd ABN 68 008 669 556 for all of the ordinary shares in Spectrum Metals Limited

The directors of Spectrum Metals Limited unanimously recommend that you

ACCEPT the offer from Ramelius in the absence of a Superior Proposal

THIS IS AN IMPORTANT DOCUMENT AND REQUIRES YOUR IMMEDIATE ATTENTION.

IF YOU ARE IN ANY DOUBT ABOUT HOW TO DEAL WITH THIS DOCUMENT, YOU SHOULD CONSULT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER AS SOON AS POSSIBLE.

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Im ortant Notices p

Nature of this document

This document is a Target’s Statement issued by Spectrum Metals Limited ABN 94 115 770 226 under Part 6.5 Division 3 of the Corporations Act. This Target’s Statement is given in response to the off-market takeover bid made by Mt Magnet Gold Pty Ltd ABN 66 008 669 556, a wholly-owned subsidiary of Ramelius Resources Limited ABN 51 001 717 540, for all the ordinary shares in the capital of Spectrum Metals Limited.

ASIC and ASX disclaimer

A copy of this Target’s Statement has been lodged with ASIC and given to ASX on 25 February 2020. Neither ASIC nor ASX nor any of their respective officers take responsibility for the contents of this Target’s Statement.

Definitions and interpretation

A number of defined terms are used in this Target’s Statement. These terms are explained in Section 13 of this Target’s Statement. The rules of interpretation that apply to this Target’s Statement are also set out in Section 13. In addition, unless the contrary intention appears or the context requires otherwise, words and phrases used in this Target’s Statement and defined in the Corporations Act have the same meaning and interpretation as in the Corporations Act.

Investment decisions

Nothing in this Target’s Statement constitutes investment, legal, tax or other advice. This Target’s Statement does not take into account your individual objectives, financial situation or particular needs. It does not contain personal advice. You should seek your own independent legal, financial and taxation advice before deciding whether to accept or reject the Offer.

Forward looking statements

Some of the statements appearing in this Target’s Statement may be in the nature of forward looking statements. You should be aware that such statements are only predictions and are subject to inherent risks and uncertainties. Those risks and uncertainties include factors and risks specific to Spectrum and the industry in which Spectrum operates as well as general economic conditions, conditions in the financial markets, exchange rates and interest rates and regulatory changes, many of which are outside the control of Spectrum and its Board. Actual events or results may differ materially from the events or results expressed or implied in any forward looking statement.

None of Spectrum, Spectrum’s officers and employees, any persons named in this Target’s Statement with their consent or any person involved in the preparation of this Target’s Statement, makes any representation or warranty (either express or implied) as to the accuracy or likelihood of fulfilment of any forward looking statement, or any events or results expressed or implied in any forward looking statement, except to the extent required by law. You are cautioned not to place undue reliance on any forward looking statement. The forward looking statements in this Target’s Statement reflect views held only as at the date of this Target’s Statement.

Ramelius information in this Target’s Statement

Except where disclosed otherwise in this Target’s Statement, the information on Ramelius contained in this Target’s Statement has been prepared by Spectrum using publicly available information including the Bidder’s Statement, which has not been independently verified by Spectrum. Accordingly Spectrum does not, subject to the Corporations Act, make any representation or warranty, expressed or implied, as to the accuracy or completeness of such information.

SPECTRUM METALS LIMITED | Target’s Statement in response to Ramelius’ Offer

Maps, diagrams and rounding

Any diagrams, charts, maps, graphs and tables appearing in this Target’s Statement are illustrative only and may not be drawn to scale. Unless stated otherwise, all data contained in diagrams, charts, maps, graphs and tables is based on information available at the date of this Target’s Statement. In addition, any numerical information may not add up due to rounding.

Notice to foreign shareholders

The release, publication or distribution of this Target’s Statement may, in some jurisdictions, be restricted by law or regulation and persons who come into possession of it should seek advice on and observe any such restrictions. Any failure to comply with such restrictions may constitute a violation of applicable laws or regulations. This Target’s Statement has been prepared in accordance with Australian law and the information contained in the Target’s Statement may not be the same as that which would have been disclosed if this Target’s Statement had been prepared in accordance with the laws and regulations outside of Australia.

References to the Bidder and Ramelius

Ramelius, through the Bidder (a wholly-owned subsidiary of Ramelius), is making the Offer for the Spectrum Shares. While this Target’s Statement makes references to both companies in relation to the Offer, Ramelius is the parent company of the Bidder. In accordance with the Bid Implementation Agreement, Ramelius has guaranteed the performance of Bidder with respect to the Offer. For further information please refer to Section 12.1 of this Target’s Statement.

Privacy

Spectrum has collected your information from the Spectrum register of shareholders for the purpose of providing you with this Target’s Statement. The type of information Spectrum has collected about you includes your name, contact details and information on your holding of Spectrum Securities (as applicable) in Spectrum. Without this information, Spectrum would be hindered in its ability to issue this Target’s Statement. The Corporations Act requires the name and address of shareholders to be held in a public register. Your information may be disclosed on a confidential basis to Spectrum’s related bodies corporate and external service providers (such as the share registry of Spectrum and print and mail service providers) and may be required to be disclosed to regulators such as ASIC.

Date of this document

This document is dated 25 February 2020.

SPECTRUM METALS LIMITED | Target’s Statement in response to Ramelius’ Offer

iii

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Important Notices ii
Table of Contents iv
Important Dates v
Chairman’s Letter vi
1. 1
How to accept the Offer
2. Directors’ recommendation 2
3. 3
Why you should accept the Offer
4. Frequently asked questions 11
5. Information about Spectrum 17
6. Information relating to your Directors 28
7. Information about Ramelius 30
8. Information about Ramelius Shares 32
9. 34
Key features of the Offer
10. Other important matters 43
11. Your choices as a Spectrum Shareholder 47
12. Additional information 48
13. Glossary 55
14. Approval of Target’s Statement 59
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SPECTRUM METALS LIMITED | Target’s Statement in response to Ramelius’ Offer

Im ortant Dates p

Announcement Date	10 February 2020
Date of the Bidder’s Statement	25 February 2020
Date of this Target’s Statement	25 February 2020
Commencement of Ofer Period	28 February 2020
Close of Ofer
(unless extended or withdrawn)	5:00pm (WST) 30 March 2020

Further information

If you have any questions in relation to the Offer or this Target’s Statement, a toll-free information line has been established which Spectrum Shareholders can contact on 1300 352 261 (within Australia) or +61 3 9415 4301 (from outside of Australia), Monday to Friday between 8:30am to 5:30pm (AEDT).

SPECTRUM METALS LIMITED | Target’s Statement in response to Ramelius’ Offer

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Chairman’s Letter

25 February 2020

Dear fellow Spectrum Shareholder

On 10 February 2020, Spectrum Metals Limited (Spectrum) announced that it had entered into a bid implementation agreement with Ramelius Resources Limited (Ramelius) pursuant to which Ramelius has agreed to make an off-market takeover bid for Spectrum.

Under the Offer, Spectrum Shareholders are being offered 1 new Ramelius Shares for every 10 Spectrum Shares they hold as well as cash consideration of A$0.017 per Spectrum Share, representing a total value of A$0.15 per Spectrum Share based on Ramelius’ 1-day VWAP on 7 February 2020, being the last day Ramelius Shares traded before the Offer was announced.

The implied value of the Offer will change with fluctuations in the market price of Ramelius Shares, and based on the 1-day VWAP of Ramelius Shares on the day prior to the date this Target’s Statement was lodged with ASIC of A$1.41, the Offer represented a value of A$0.158 per Spectrum Share.

At the time it was announced, the Offer valued Spectrum at approximately A$231 million (on a fully diluted basis) or A$650 per resource ounce, demonstrating the significant value that Ramelius ascribes to Spectrum and the Penny West Gold Project. I am confident that this transaction with Ramelius will unlock the value of Penny West for the benefit of all Spectrum Shareholders. Upon successful completion of the Offer, Spectrum Shareholders (including option holders upon scrip conversion) may own approximately 18% of Ramelius.

Your Directors unanimously intend to accept and recommend that Spectrum Shareholders ACCEPT the Offer in the absence of a Superior Proposal.

Your Directors believe that the Offer provides Spectrum Shareholders with an attractive opportunity to realise value for their investment in Spectrum by receiving an immediate cash payment whilst retaining ongoing ownership of Spectrum’s exciting Penny West Gold Project as well as ownership in Ramelius, a profitable financially secure Australian based gold producer targeting over 200,000 ounces of gold production during FY2020. We consider that the combination of Penny West with Ramelius’ existing assets will build a gold business capable of delivering strong returns for our shareholders.

The key reasons for your Directors recommendation to ACCEPT the Offer in the absence of a Superior Proposal are summarised below:

Spectrum Shareholders will benefit from the Penny West Gold Project being able to utilise Ramelius’ existing infrastructure at the nearby Mt Magnet operation, as well as Ramelius’ greater financial capacity and strong operational and technical expertise to advance development and exploration activities at the Penny West Gold Project;
Spectrum Shareholders will become shareholders in a leading ASX listed Australian gold producer with a stable diversified platform of established Western Australian gold mines managed by a proven high-quality team. Further details of Ramelius’ operational and financial performance and financial position is set out in Section 4 of the Bidder’s Statement;

SPECTRUM METALS LIMITED | Target’s Statement in response to Ramelius’ Offer

the Offer will reduce the dilution risk for Spectrum Shareholders associated with any potential future fundraising that would likely be required to be undertaken by Spectrum to fund future exploration and expected project development activities;
Spectrum Shareholders will not only remain exposed to all of the upside from exploration and development of Penny West but will benefit from having access to Ramelius cash flow generating assets at Edna May, Mt Magnet, Vivien and Marda, while gaining exposure to the Tampia Hill development project through being a shareholder of the enlarged combined group;
the Offer represents an attractive and a significant premium to trading levels of Spectrum Shares leading up to the Announcement Date:
52% to Spectrum’s closing price of A$0.0990 on 7 February 2020;
61% to Spectrum’s 10-day VWAP of A$0.0931, up to and including 7 February 2020; and
70% to Spectrum’s 30-day VWAP of A$0.0882, up to and including 7 February 2020;
the value of Spectrum Shares may fall if the Offer is not successful; and
as at the date of this Target’s Statement, the Spectrum Directors are not aware of any Superior Proposal

This Target’s Statement details matters that may be relevant to your decision whether to ACCEPT the Offer, including a detailed explanation of the reasons why you should ACCEPT the Offer in Section 3 of this Target’s Statement. You should read this Target’s Statement and the Bidder’s Statement carefully in full, including the taxation implications of the Offer in Section 10.5, and if necessary seek your own legal, financial and taxation or other professional advice.

To ACCEPT the Offer, you should carefully follow the instructions in Sections 2 and 13.3 of the Bidder’s Statement. The Offer is scheduled to close at 5:00pm (WST) on 30 March 2020, unless withdrawn or extended.

I encourage you to consider the merits of the Offer as described in this Target’s Statement and if you have any questions in relation to the Offer, a toll-free information line has been established for the purposes of the Offer which Spectrum Shareholders can contact on 1300 352 261 (within Australia) or +61 3 9415 4301 (from outside of Australia), Monday to Friday between 8:30am to 5:30pm (AEDT).

Yours sincerely

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Mr Alexander Hewlett

Executive Chairman

SPECTRUM METALS LIMITED | Target’s Statement in response to Ramelius’ Offer

vii

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1. How to acce t the Offer p

Please refer to Section 13.3 of the Bidder’s Statement and your personalised Acceptance Form (which accompanies the Bidder’s Statement) for full details on how to accept the Offer.

You may only accept the Offer for all of your Spectrum Shares.

How you accept this Offer depends on whether your Spectrum Shares are held in an Issuer Sponsored Holding or a CHESS Holding. This information is shown on your personalised Acceptance Form.

For Issuer Sponsored Holdings of Spectrum Shares (such holdings will be evidenced by an ‘I’ appearing next to your holder number on your Acceptance Form):

To accept the Offer, complete and sign the Acceptance Form in accordance with the instructions on it and return it to the address indicated on the form before the Offer closes.

For CHESS Holdings of Spectrum Shares (such holdings will be evidenced by an ‘X’ appearing next to your holder number on the Acceptance Form):

To accept the Offer, either complete and sign the enclosed Acceptance Form in accordance with the instructions on it and return it to the address indicated on the form or instruct your Controlling Participant (normally your broker) to accept the Offer on your behalf before the Offer closes.

For Participants:

If you are a Participant, acceptance of this Offer must be initiated in accordance with Rule 14.14 of the ASX Settlement Operating Rules before the Offer closes.

Your acceptance must be received by no later than 5.00 pm (WST) on 30 March 2020, unless the Offer is extended or withdrawn.

For any further information on acceptance of the Offer, including who may accept, please refer to the Offer itself in Section 13 of the Bidder’s Statement.

SPECTRUM METALS LIMITED | Target’s Statement in response to Ramelius’ Offer

2. Directors’ recommendation

2.1. Summary of Offer

Ramelius, through its wholly-owned subsidiary Mt Magnet Gold Pty Ltd, is offering Spectrum Shareholders 1 Ramelius Share for every 10 Spectrum Shares that they hold and A$0.017 cash for every 1 Spectrum Share that they hold. The Offer is subject to a number of conditions. Those conditions are summarised in Section 9.5 of this Target’s Statement and set out in full in Section 13 of the Bidder’s Statement.

You may only accept the Offer in respect of all of your Spectrum Shares.

2.2. Directors of Spectrum

As at the date of this Target’s Statement, the directors of Spectrum are:

Mr Alexander Hewlett – Chairman;
Mr Paul Adams – Managing Director;
Mr James Croser – Technical Director;
Mr Nader El Sayed – Non-Executive Director; and
Mr Les Davis – Non-Executive Director.

2.3. Directors’ recommendations

Your Directors unanimously recommend that you accept the Offer (in the absence of a Superior Proposal) for the reasons set out in Section 3 of this Target’s Statement.

In considering whether to accept the Offer, your Directors encourage you to:

read this Target’s Statement and the Bidder’s Statement in their entirety;
consider the alternatives noted in Section 11 of this Target’s Statement;
refer to Section 9.10 of this Target’s Statement for information regarding the effect of acceptance of the Offer;
have regard to your individual risk profile, portfolio strategy, tax position and financial circumstances; and
obtain independent professional advice in relation to the Offer.

2.4. Intentions of your Directors in relation to the Offer

Each of your Directors intends to accept the Offer in respect of all Spectrum Shares that they, or any Associate, hold within 7 days of the Offer Period commencing, in the absence of a Superior Proposal.

The Spectrum Shares which are held by your Directors and their Associates represent approximately 2.9%, in aggregate, of all of the Spectrum Shares on issue as at the date of this Target’s Statement.

The Spectrum Directors also own a total of 76,500,000 Options with various maturity dates and exercise prices (refer to Sections 5.6 and 6.1 for more information).

SPECTRUM METALS LIMITED | Target’s Statement in response to Ramelius’ Offer

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. Wh ou should acce t the Offer 3 y y p

The key reasons for your Directors’ recommendation to ACCEPT the Offer in the absence of a Superior Proposal are listed below. Further explanation of each reason is provided in the remainder of Section 3.

3.1 You will benefit from the Penny West Gold Project being able to utilise Ramelius’ existing infrastructure, which reduces the execution risk of its development
3.2 You will benefit from Ramelius’ greater fnancial capacity to advance exploration activities at Penny West
3.3 You will reduce the risk of dilution associated with potential future exploration and development fundraisings
3.4 You will become a shareholder in Ramelius, a leading ASX listed Australian gold producer and you will have improved ASX share trading liquidity
3.5 You will become a shareholder in a larger and well capitalised company with improved access to capital to better fund the growth of Spectrum’s assets
3.6 You will receive attractive value and a signifcant premium for your Spectrum Shares
3.7 The Spectrum Board unanimously recommends that you accept the Offer, in the absence of any Superior Proposal
3.8 No Superior Proposal has emerged to date
3.9 Spectrum’s share price may fall if the Ofer is unsuccessful or in the absence of a Superior Proposal emerging
3.10 Spectrum Shareholders may be entitled to CGT rollover relief
3.11 The Offer is subject to limited commercial conditions , including 50.1% minimum acceptance by Spectrum Shareholders
3.12 There are risks in not accepting the Ofer

Your Directors unanimously recommend that you ACCEPT the Ramelius Offer in the absence of a Superior Proposal

In deciding to recommend the Offer, your Directors have had regard to each of the matters in this Target’s Statement and the Bidder’s Statement. A more detailed overview of the principal reasons for your Directors’ recommendation to accept the Offer, in the absence of a Superior Proposal, follows.

3.1. You will benefit from the Penny West Gold Project being able to utilise Ramelius’ existing infrastructure, which reduces the execution risk of its development

Spectrum’s Penny West Gold Project provides Ramelius with a high-grade near-term development opportunity to introduce an additional ore source to its Mt Magnet processing facility, 150km north-west of Penny West. This proximity means that the Offer provides Spectrum Shareholders with the potential opportunity to benefit from capital cost savings and operational synergies in Ramelius’ development of Penny West. Ramelius’ Mt Magnet processing facility comprises a 1.9 Mtpa mill that during FY19 processed ore from 5 open pit and 2 underground mining operations.

Ramelius has advised Spectrum that, subject to attaining control of Spectrum, the Board of Ramelius intends to undertake a comprehensive review which will be an important step in informing and determining Ramelius’ approach to its investment in Spectrum.

SPECTRUM METALS LIMITED | Target’s Statement in response to Ramelius’ Offer

Given the location of the Ramelius owned Mt Magnet processing facility and associated infrastructure (see map below), the most likely outcome of the review is confirming whether the viability of trucking the ore from the Penny West Gold Project to Mt Magnet is financially sound.

This outcome would remove the need for the construction of a new processing plant for Penny West through the use of Ramelius’ existing infrastructure at Mt Magnet, which would remove the need for significant capital expenditure as well as likely enabling the Penny West Gold Project to be mined and generate cashflow earlier than Spectrum could achieve on a standalone basis.

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Figure 3.1.1: Ramelius’ operations and Penny West Gold Project locations

3.2. You will benefit from Ramelius’ greater financial capacity to advance exploration activities at Penny West

Penny West offers significant exploration potential at depth and along strike and Ramelius has the financial resources and operational capability to accelerate exploration activities at Penny West.

Ramelius has stated that following the successful completion of the Offer, it intends to quickly undertake a comprehensive review of Penny West to determine the optimal pathway to first cash flow from Penny West, whilst continuing with exploration programs at Penny West. Further information on the exploration potential identified by Spectrum at Penny West is included in Section 5.4 of this Target’s Statement, which includes further exploration potential at Penny North as shown in Figure 3.2.1.

If successful, the Offer will reduce execution risks for Spectrum Shareholders in relation to the continued exploration of the Penny West Gold Project from both a funding and operational perspective by leveraging Ramelius’ stronger balance sheet, existing infrastructure as well as its significant operational and technical expertise.

SPECTRUM METALS LIMITED | Target’s Statement in response to Ramelius’ Offer

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SPECTRUM METALS LIMITED | Target’s Statement in response to Ramelius’ Offer

3.3. You will reduce the risk of dilution associated with potential future exploration and development fundraisings

Spectrum currently does not have the capital to fully fund development of Penny West and additional capital would be required to fund future exploration and project development activities. There can be no guarantee that Spectrum will be able raise the required capital, or that the terms of such a fundraising would be attractive to Spectrum Shareholders.

To the extent that some or all of fundraising is in the form of equity, if Spectrum Shareholders do not accept the Offer, Spectrum Shareholders would need to contribute proportionately to their existing shareholding to avoid having their interest in Spectrum diluted. Accepting the Offer will reduce the dilution risk for Spectrum Shareholders associated with funding the development of Penny West on a standalone basis.

3.4. You will become a shareholder in Ramelius, a leading ASX listed Australian gold producer and you will have improved ASX share trading liquidity

The Offer provides Spectrum Shareholders with the benefit of Ramelius’ proven ability to successfully explore, develop and operate both open pit and underground gold mines.

Since Ramelius is listed on ASX and Ramelius is offering to issue Ramelius Shares as part consideration for your Spectrum Shares, you will, if you accept the Offer and should the Offer be successful, receive a shareholding in Ramelius, a leading ASX listed gold producer, which provides many advantages to Spectrum Shareholders, through being a shareholder of the enlarged combined group.

Ramelius has a stable diversified portfolio of established gold mines, including the cash flow generating assets at Edna May, Mt Magnet, Vivien and Marda, and the advanced development project at Tampia Hill, that has enabled it to become a profitable and financially secure Australian gold producer.

In FY2019, Ramelius achieved full year gold production of 196,679 ounces at an AISC of A$1,192/oz and generated A$137.0 million of operating cash flow. Ramelius expects FY2020 production to be in the range of 205,000225,000 ounces at an AISC of A$1,225-A$1,325/oz (refer Ramelius ASX announcements 26 August 2019 and 30 January 2020).

If the Offer is successful, the board of directors of the Combined Entity and its executive management personnel will initially comprise the persons referred to in Sections 4.6 and 4.7 of the Bidder’s Statement. These directors and management personnel have significant expertise and skills in the exploration, development and operation of Western Australian open pit and underground gold projects, which will be applied for the benefit of the combined projects of the Combined Entity.

Since Ramelius is listed on ASX and Ramelius is offering to issue Ramelius Shares as part consideration for your Spectrum Shares, you will, if you accept the Offer, gain the ability to trade the Ramelius Shares that you receive as Offer Consideration, should the Offer be successful, on ASX. Ramelius Shares will likely have greater liquidity as compared to the recent liquidity of Spectrum Shares. During the 20 trading days prior to the Announcement Date, the average daily value of Ramelius Shares traded on ASX was approximately A$4.8 million as compared to approximately A$0.3 million for Spectrum Shares in the same period.

Refer to further information regarding Ramelius in Section 7.

SPECTRUM METALS LIMITED | Target’s Statement in response to Ramelius’ Offer

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3.5. You will become a shareholder in a larger and well capitalised company with improved access to capital to better fund the growth of Spectrum’s assets

Ramelius is a significantly larger company than Spectrum with a market capitalisation of A$958 million (as at 24 February 2020) and is currently in the ASX300, which provides enhanced scale, greater market relevance and increased liquidity.

As at 31 December 2019, Ramelius had cash and bullion of A$87.7 million. If Ramelius is successful in acquiring 100% of Spectrum, it will have pro-forma cash and bullion of approximately A$69.7 million (as at 31 December 2019) and will be in a stronger financial position than Spectrum on a standalone basis, which will greatly assist the Combined Entity to quickly progress the exploration and development of Spectrum’s assets.

Ramelius paid its shareholders a fully franked dividend of 1.0 cent per share in October 2019 in accordance with the dividend policy announced at its November 2018 Annual General Meeting which includes a target maximum payout of 30% of free cash flow and a minimum 1.0 cent per share dividend each year, subject to maintaining a mining reserve life of at least 5 years and a minimum cash and gold balance of A$50 million.

If Ramelius is successful in acquiring 100% of Spectrum, existing Ramelius shareholders and Spectrum Shareholders will have a Relevant Interest in approximately 82% and 18%, respectively (on an undiluted basis), of Ramelius Shares.

3.6. You will receive attractive value and a significant premium for your Spectrum Shares

The implied value of the Offer is A$0.15 per Spectrum Share based on Ramelius’ 1-day VWAP on 7 February 2020 (being the last day Ramelius Shares traded on ASX prior to the Announcement Date) of A$1.33.

The implied offer price represents an attractive premium of:

52% to Spectrum’s closing price of A$0.0990 on 7 February 2020;
61% to Spectrum’s 10-day VWAP of A$0.0931, up to and including 7 February 2020; and
70% to Spectrum’s 30-day VWAP of A$0.0882, up to and including 7 February 2020.

The chart below demonstrates the implied value of the Offer at the time the Offer was announced, which is significant relative to the trading range of Spectrum Shares over the 12 months prior to the Announcement Date.

SPECTRUM METALS LIMITED | Target’s Statement in response to Ramelius’ Offer

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Spectrum share price vs implied value of the Offer
(at time of announcement)
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Figure 3.6.1: Spectrum 12 month share price performance compared to the implied value of the Offer based on Ramelius 1-day VWAP on 7 February 2020. Source: Iress. As permitted by ASIC Corporations (Consents to Statements) Instrument 2016/72, this chart contains ASX trading information sourced from Iress Limited without its consent.

3.7. The Spectrum Board unanimously recommends that you accept the Offer, in the absence of a Superior Proposal

All Spectrum Directors have indicated that they intend to accept the Offer in respect of all Spectrum Shares they, or any Associate hold, within 7 days of the Offer Period commencing, in the absence of a Superior Proposal.

The Spectrum Shares which are held by your Directors and their Associates, represent approximately 2.9%, in aggregate, of all of the Spectrum Shares on issue as at the date of this Target’s Statement.

3.8. No Superior Proposal has emerged to date

The proposed Offer was announced to the market on 10 February 2020. As at the date of this Target’s Statement, no Competing Proposal or Superior Proposal has emerged.

The Bid Implementation Agreement with Ramelius restricts Spectrum from soliciting alternative offers or proposals or responding and negotiating with respect to a Competing Proposal. However, these restrictions do not in any way prevent or restrict a third party from putting forward a Competing Proposal, and the restrictions do not apply in respect of a Competing Proposal where the Spectrum Board, acting in good faith and having obtained advice from its financial and legal advisers, reasonably determines that the Competing Proposal is a Superior Proposal and failing to respond would be likely to constitute a breach of its legal obligations or fiduciary duties.

In the event that the Spectrum Board does determine that a Competing Proposal is a Superior Proposal, Ramelius has a right to be notified of the Competing Proposal and a right to match any Superior Proposal.

Further information on other alternatives to the Offer is contained in Section 11.

SPECTRUM METALS LIMITED | Target’s Statement in response to Ramelius’ Offer

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3.9. Spectrum’s share price may fall if the Offer is unsuccessful or in the absence of a Superior Proposal emerging

Whilst the Spectrum Share price on ASX is impacted by a range of factors, if the Offer is unsuccessful or an alternative proposal does not emerge, there is a risk that the Spectrum Share price may fall to a lower price than the price at which it has traded since the Offer was announced on 10 February 2020.

The Spectrum Share price both prior to and after the Offer was announced is shown in the chart below along with the range in the implied value of the Offer between the Announcement Date and the day prior to the date this Target’s Statement was lodged with ASIC, based on the daily closing price of Ramelius Shares during that period.

The implied value of the Offer will change with fluctuations in the market price of Ramelius Shares.

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Spectrum share price vs implied value of the Offer
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Figure 3.9.1: Spectrum share price performance compared to the implied value of the Offer Source: Iress. As permitted by ASIC Corporations (Consents to Statements) Instrument 2016/72, this chart contains ASX trading information sourced from Iress Limited without its consent.

3.10. Spectrum Shareholders may be entitled to CGT rollover relief

If Ramelius acquires more than 80% of the Spectrum Shares on issue under the Offer, accepting Spectrum Shareholders who are Australian tax residents may be entitled to partial CGT rollover relief in respect of the capital gains they would have otherwise made as a result of the effective sale of their Spectrum Shares under the Offer. In summary, rollover relief means that the effective sale of your Spectrum Shares will not crystallise a taxation event for the market value of the Ramelius Shares you receive, and any potential tax liability on that gain will be deferred until such time as you sell the Ramelius Shares issued to you under the Offer. No CGT rollover relief is available for the cash consideration of A$0.017 per Spectrum Share that you will receive.

Spectrum Shareholders should refer to Section 14 of the Bidder’s Statement and consult their professional advisers in relation to how accepting the Offer will affect their individual circumstances.

SPECTRUM METALS LIMITED | Target’s Statement in response to Ramelius’ Offer

3.11. The Offer is subject to limited commercial conditions, including 50.1% minimum acceptance by Spectrum Shareholders

The Offer is subject to the fulfilment or waiver of a number of conditions before the end of the Offer Period, which are summarised in Section 9.5 of this Target’s Statement and set out in full in Section 13.8 of the Bidder’s Statement.

The key commercial conditions that the Offer is subject to are:

at the end of the Offer Period, Ramelius having a relevant interest (as defined in the Corporations Act) in at least 50.1% of Spectrum Shares then on issue; and
the spot gold price as quoted by Bloomberg does not fall below A$2,000 per ounce at any time during a day for 3 consecutive days between Announcement Date and the end of the Offer Period (each inclusive). Ramelius has agreed to free the Offer from this condition if the Offer is extended.

3.12. There are risks in not accepting the Offer

If you do not accept the Offer and Ramelius closes the Offer after acquiring more than 50.1% of all Spectrum Shares, but before it receives acceptances resulting in it being entitled to at least 90% of all Spectrum Shares, then you would remain a minority Spectrum Shareholder.

The possible implications of being a minority shareholder following closure of the Offer include:

it is unlikely the Spectrum Share price would include any takeover premium;
the liquidity of Spectrum Shares may be lower than at present; and
Ramelius may seek the removal of Spectrum from the official list of ASX.

For further information on the implications of Ramelius acquiring less than 90% (being the threshold in which a compulsory acquisition would be made) of all Spectrum Shares, refer to Section 10.3 of this Target’s Statement and Section 8.5 of the Bidder’s Statement.

SPECTRUM METALS LIMITED | Target’s Statement in response to Ramelius’ Offer

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. Fre uentl asked uestions 4 q y q

This Section answers some commonly asked questions about the Offer. It is not intended to address all relevant issues for Spectrum Shareholders. This Section should be read together with all other parts of this Target’s Statement.

Question	Question	Answer	Further Information
1.	Who is Ramelius?	Ramelius is a leading ASX listed gold producer. It has a	Section 4 of the Bidder’s
		stable diversifed portfolio of established gold mines,	Statement
		including the cash fow generating assets at Edna May, Mt
		Magnet, Vivien and Marda, and the advanced development
		project at Tampia Hill that has enabled it to become a
		proftable and fnancially secure Australian gold producer.
		In FY2019, Ramelius achieved full year gold production of
		196,679 ounces at an AISC of A$1,192/oz and generated
		A$137.0 million of operating cash fow. Ramelius expects
		FY2020 production to be in the range of 205,000-225,000
		ounces at an AISC of A$1,225-A$1,325/oz. (Refer Ramelius
		ASX announcements 26 August 2019 and 30 January 2020).
2.	What is the Ofer for my Spectrum Shares?	The Bidder has made an ofer of 1 Ramelius Share for every 10 Spectrum Shares held by you and A$0.017 cash for every 1 Spectrum Share held by you. The Ofer extends to any Spectrum Shares that are issued during the Ofer Period due to the conversion of Spectrum Options, on the terms set out in the Bidder’s Statement. You may only accept the Ofer in respect of all of your Spectrum Shares. If the calculation of the number of Ramelius Shares you are to receive as part of the Ofer Consideration results in an entitlement to a fraction of a Ramelius Share, that fraction will be rounded up to the next whole number of Ramelius Shares. The Ofer is subject to the satisfaction or waiver of the conditions to the Ofer.	Sections 9.2 and 9.3
3.	What is the implied value	The implied value of the Ofer is A$0.15 per Spectrum	Section 3.6
	of the Ofer?	Share based on Ramelius’ 1-day VWAP on 7 February 2020
		(being the last day Ramelius Shares traded on ASX prior to
		the Announcement Date) of A$1.33.
		The implied value of the Ofer will change with fuctua-
		tions in the market price of Ramelius Shares, and based
		on the 1-day VWAP of Ramelius Shares on the day prior
		to the date this Target’s Statement was lodged with ASIC
		of A$1.41, the Ofer represented a value of A$0.158 per
		Spectrum Share.

SPECTRUM METALS LIMITED | Target’s Statement in response to Ramelius’ Offer

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Question Answer Further Information
4. What is the Bidder’s The Bidder’s Statement was prepared by Ramelius and N/A
Statement? describes the terms of the Offer for your Spectrum Shares and
other information that Ramelius considers relevant to your
decision as to whether or not to accept the Offer made to you.
You should read the Bidder’s Statement together with this
Target’s Statement in their entirety and seek your own legal,
financial and taxation or other professional advice.
5. What is this Target’s This Target’s Statement was prepared by Spectrum in response N/A
Statement? to the Bidder’s Statement and sets out your Directors’
recommendations in relation to the Offer, the reason for that
recommendation and other information that may be material
to your decision as to how to respond to the Offer.
6. What choices do I have as As a Spectrum Shareholder, you have the following choices Section 11
a Spectrum Shareholder? in respect of your Spectrum Shares:
• accept the Offer;
• sell some or all your Spectrum Shares (unless you have
previously accepted the Offer and you have not validly
withdrawn your acceptance); or
• do nothing.
There are implications in relation to each of the above
choices. A summary of these implications is set out in
Section 11 of this Target’s Statement.
7. What is the Spectrum Your Directors unanimously recommend that you accept the Section 2
Board recommending? Offer, in the absence of a Superior Proposal.
8. Why is the Spectrum Section 3 of this Target’s Statement sets out the reasons why Section 3
Board recommending your Directors are recommending you accept the Offer, in
that I accept the Offer (in the absence of a Superior Proposal.
the absence of a Superior However, you are encouraged to read this Target’s Statement
Proposal)? in its entirety.
9. What do the Spectrum Each of your Directors has advised that he intends to accept Section 2.4
Directors intend to do the Offer in respect of all Spectrum Shares that he, or his
with any Spectrum Associates, hold, in the absence of a Superior Proposal.
Shares that they hold?
10. How are the Spectrum The Bidder is not offering to acquire the Spectrum Options Section 7.2 of the
Options treated under the under the Offer but intends to make separate offers to Bidder’s Statement
Offer? acquire any unexercised Spectrum Options.
The Bidder has confirmed that it is offering to buy any
Spectrum Shares issued during the Offer Period due to the
conversion of Spectrum Options on the terms set out in the
Bidder’s Statement.
11. How do I accept the Offer? Details of how to accept the Offer are set out in Section 1 of Section 1
this Target’s Statement.
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SPECTRUM METALS LIMITED | Target’s Statement in response to Ramelius’ Offer

Question

Answer Further Information

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12. How do I reject the Offer? If you do not wish to accept the Offer, you should do nothing N/A
with the documents you have received from Ramelius.
13. What happens if Ramelius If the Bidder increases the Offer Consideration, you will Section 9.13
increases the Offer obtain the benefit of that higher consideration even if you
Consideration? have already accepted the Offer.
14. What are the conditions The outstanding conditions to the Offer, as at the date of this Section 9.5
to the Offer? Target’s Statement, are in summary:
• at the end of the Offer Period, Ramelius has a relevant
interest (as defined in the Corporations Act) in at least
50.1% of Spectrum Shares then on issue;
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the spot gold price as quoted by Bloomberg does not fall below A$2,000 per ounce at any time during a day for 3 consecutive days between Announcement Date and the end of the Offer Period (each inclusive). Ramelius will free the Offer from this condition if the Offer is extended. For further information please refer to Section 13.10 of the Bidder’s Statement;
the receipt of any regulatory approvals required for the Offer to be lawfully made and accepted are granted;
no order, investigation or application is made which restrains, prohibits or impedes the Offer;
the Tenements are maintained in their current form;
no Prescribed Occurrences occur in relation to Spectrum;
no material disposals, cancellations or new commitments are made by Spectrum before the end of the Offer Period;
no material adverse change occurring in relation to Spectrum before the end of the Offer Period; and

15.	What are the consequences of accepting the Ofer now?	• compliance by Spectrum with restrictions on the conduct its business before the end of the Ofer Period. In addition, there is a statutory condition (see Section 13.11 of the Bidder’s Statement) relating to ASX quotation of Ramelius Shares to be issued under the Ofer. If this condition is not fulflled, the Ofer will lapse and not proceed (i.e. you will retain your Spectrum Shares). If you accept the Ofer, unless withdrawal rights are available (detailed below), you will give up your right to sell your Spectrum Shares or otherwise deal with your Spectrum Shares while the Ofer remains open.	Section 9.10
16.	If I accept the Ofer, can I	You may only withdraw your acceptance if Ramelius varies	Section 9.11
	withdraw my acceptance?	the Ofer in a way that postpones the time when Ramelius is
		required to satisfy its obligations by more than 1 month.

SPECTRUM METALS LIMITED | Target’s Statement in response to Ramelius’ Offer

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Question Answer Further Information
17. Will I get any warning Ramelius has indicated in its Bidder’s Statement that it will Section 9.6
when the Minimum give a notice of status of Conditions to ASIC and Spectrum
Acceptance Condition is on 23 March 2020 unless the Offer Period is extended prior
about to be satisfied? to that date.
18. Does satisfaction of the All conditions of the Offer must be satisfied or waived Section 9.5
Minimum Acceptance for the Offer to become Unconditional and for the Offer
Condition mean that I Consideration to be provided to you.
will definitely receive the
Even if the Minimum Acceptance Condition is satisfied
Offer Consideration if I
or waived, other conditions may still be unsatisfied, and
accept?
satisfaction (or waiver) of those conditions may take some
time or may not occur at all.
19. What happens if the If the conditions are not satisfied or waived on or before Section 9.14
conditions of the Offer the end of the Offer Period (or in the case of Prescribed
are not satisfied or Occurrences within 3 Business Days thereafter), the Offer
waived? will lapse, your Spectrum Shares will not be transferred
to Ramelius and you will not be provided with your Offer
Consideration (even if you had accepted the Offer as your
acceptance will be void). However, you would then be free
to deal with your Spectrum Shares.
20. Did Spectrum engage an Spectrum is not required under section 640 of the N/A
independent expert to Corporations Act to commission an independent expert’s
opine on the Offer? report in connection with the Offer. In deciding not to
engage an independent expert to assess the merits of
the Offer, your Directors considered a range of factors,
including:
• the significant premium of the Offer compared to the
Spectrum Share price prior to the announcement of the
Offer;
• the current alternatives available to Spectrum to fund
Spectrum’s upcoming work programs;
• your Directors’ understanding of the value of Spectrum’s
prospects and the fact that the Offer provides Spectrum
Shareholders with the ability to continue to retain
exposure to all (or a majority of) Spectrum’s existing
assets; and
• that Ramelius is listed on ASX with a fully informed and
liquid market for its shares.
Given these factors, your Directors decided not to engage
an independent expert to assist them in assessing
the Offer, and have recommended that Spectrum
Shareholders accept the Offer for the reasons set out in
Section 3 of this Target’s Statement.
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SPECTRUM METALS LIMITED | Target’s Statement in response to Ramelius’ Offer

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Question Answer Further Information
21. When will I receive my If you accept the Offer, you will have to wait for the Offer to Section 9.12
Offer Consideration if I become Unconditional before you will receive your Offer
accept the Offer? Consideration from Ramelius.
In the usual case, you will be issued with your consideration
on or before the later of:
• 1 month after the date the Offer becomes Unconditional;
and
• 1 month after the date you accept the Offer if the Offer is,
at the time of acceptance, Unconditional,
but, in any event (assuming the Offer becomes
Unconditional), no later than 21 days after the end of the
Offer Period.
22. Can I accept the Offer If the Ramelius Shares that would have been issued to you Section 9.3
if I would receive an if accept the Offer do not constitute a Marketable Parcel
unmarketable parcel of (the value of which is less than A$500), you will not receive
Ramelius Shares? Ramelius Shares. Instead, the Ramelius Shares to which
you would otherwise be entitled will be issued to a sale
nominee approved by ASIC who will sell those Ramelius
Shares on ASX and provide you with the net sale proceeds.
This amount will be in addition to the cash component of
the Offer Consideration you will receive.
23. What if I am a Foreign Generally speaking, if your address on Spectrum’s register Section 9.4
Shareholder? of shareholders is in a jurisdiction other than Australia
or New Zealand you will be considered to be a Foreign
Shareholder.
If you are a Foreign Shareholder you are entitled to accept
the Offer just like any other Spectrum Shareholder.
However, you will not be entitled to receive Ramelius
Shares as a result of acceptance. Instead, the Ramelius
Shares to which you would otherwise be entitled will be
issued to a sale nominee approved by ASIC who will sell
those Ramelius Shares on ASX and provide you with the net
sale proceeds. This amount will be in addition to the cash
component of the Offer Consideration you will receive.
24. What are the tax If Ramelius acquires more than 80% of the Spectrum Shares Section 14 of the Bidder’s
implications of accepting on issue under the Offer, accepting Spectrum Shareholders Statement
the Offer? who are Australian tax residents may be entitled to partial
CGT rollover relief in respect of the capital gains they would
have otherwise made as a result of the effective sale of their
Spectrum Shares under the Offer.
No CGT rollover relief is available for the cash consideration
of A$0.017 per Spectrum Share that you will receive.
A general outline of the tax implications of accepting the
Offer is set out in Section 14 of the Bidder’s Statement.
As the outline is a general outline only, you are encouraged
to seek your own specific professional advice as to the
taxation implications applicable to your circumstances.
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SPECTRUM METALS LIMITED | Target’s Statement in response to Ramelius’ Offer

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Question Answer Further Information
25. What happens if the If the Offer is successful and Ramelius acquires more than Section 10.3
Offer is successful but 50.1% of all Spectrum Shares, but less than 90% of all
Ramelius does not Spectrum Shares, then Spectrum Shareholders who do
acquire 90% of Spectrum not accept the Offer will remain as minority shareholders
Shares. in Spectrum.
The possible implications of being a minority Spectrum
shareholder are summarised in Section 10.3.
26. Can I be forced to sell my You cannot be forced to sell your Spectrum Shares unless Section 9.15
Spectrum Shares? Ramelius acquires a Relevant Interest in at least 90% of
all Spectrum Shares by the end of the Offer Period, and
proceeds to compulsory acquisition. If that happens, you
will be forced to sell your Spectrum Shares to Ramelius.
27. Will I pay brokerage if I If your Spectrum Shares are registered in an Issuer N/A
accept the Offer? Sponsored Holding in your name and you deliver them
directly to Ramelius, you will not incur any brokerage fees
or be obliged to pay stamp duty in connection with your
acceptance of the Offer.
If your Spectrum Shares are registered in a CHESS Holding,
or if you are a beneficial owner whose Spectrum Shares
are registered in the name of a broker, bank custodian or
other nominee, you will not be obliged to pay stamp duty
by accepting the Offer, but you should ask your Controlling
Participant (usually your broker) or that nominee whether
it will charge any transactional fees or service charges in
connection with acceptance of the Offer.
28. When does the Offer The Offer is presently scheduled to close at 5:00pm (WST) Sections 9.7 and 9.8
close? on 30 March 2020, but the Offer Period can be extended in
certain circumstances.
See Section 9.8 of this Target’s Statement for details of the
circumstances in which the Offer Period can be extended.
29. What happens if the Offer Assuming there is no other offer for Spectrum Shares, N/A
fails? Spectrum will seek to continue to develop its assets and
business opportunities and your Directors will continue to
work to generate value for Spectrum Shareholders.
30. Who do I contact if I have If you have any further queries in relation to the Offer, a N/A
further queries in relation toll-free information line has been established which you
to the Offer? can contact on 1300 352 261 (within Australia) or +61 3
9415 4301 (from outside of Australia), Monday to Friday
between 8:30am to 5:30pm (AEDT).
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SPECTRUM METALS LIMITED | Target’s Statement in response to Ramelius’ Offer

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5. Information about Spectrum

5.1. Overview

Spectrum is an ASX listed (ASX:SPX), Western Australian gold exploration company that is pursuing a domestic high-grade gold strategy, focussed on the exploration and development of its key asset, being the 100% owned Penny West Gold Project located in the Murchison District of Western Australia, 25km south of the Youanmi mining centre, approximately 150km south east of Mt Magnet and approximately 120km south west of Sandstone.

The Penny West Gold Project was acquired by Spectrum in December 2018, with the original open pit having been mined in the early 1990s. Spectrum’s exploration activities at Penny West have focussed primarily on an area to the north of the original open pit and in March 2019 Spectrum announced the discovery of the Penny North deposit.

Spectrum announced in October 2019 an updated JORC 2012 Mineral Resource at the Penny West Gold Project of 355,500 ounces at 13.8g/t gold, including a maiden resource estimate of the Penny North deposit grading 16.8 g/t Au for 306,800 ounces gold. Penny North has emerged, since its discovery by Spectrum as one of the highestgrade new discoveries in Western Australia in recent times.

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Figure 5.1.1: Location of the Penny West Gold Project

SPECTRUM METALS LIMITED | Target’s Statement in response to Ramelius’ Offer

5.2. History

Spectrum was incorporated on 15 August 2005 and listed on ASX on 23 April 2007 (at the time named Territory Uranium Company Limited) and was previously focussed on uranium and then rare earths exploration before changing its focus in 2018 to the exploration for high-grade brownfields gold opportunities. After the withdrawal from its option to purchase a North American gold project in 2018, Spectrum returned its focus to Western Australia.

On 4 October 2018, Spectrum announced the acquisition of the First Hit Gold Project. Situated at the northern end of the Riverina District in the northern Goldfields, the First Hit project comprised a previous underground gold operation completed in 2002.

On 16 October 2018, Spectrum announced the acquisition of the Penny West Gold Project located in the Murchison District of Western Australia. Following the discovery of Penny North in March 2019, Spectrum has fast tracked its exploration activity at the Penny West Gold Project, funded by two capital raisings:

A$5.0 million placement at 2.4 cents per share in April 2019; and
A$7.25 million placement at 6.25 cents per share in August 2019.

In October 2019, Spectrum reached a landmark by publishing an updated JORC 2012 estimate for the Penny West Gold Project and importantly, its maiden JORC 2012 resource estimate of the newly discovered Penny North deposit.

5.3. Spectrum Directors

As at the date of this Bidder’s Statement, the Spectrum Directors are:

Mr Alexander Hewlett – Chairman;
Mr Paul Adams – Managing Director;
Mr James Croser – Technical Director;
Mr Nader El Sayed – Non-Executive Director; and
Mr Les Davis – Non-Executive Director.

It is not expected that a Spectrum Director will become a director of Ramelius upon the Offer becoming Unconditional.

Brief profiles of the Spectrum Directors are set out below:

Alexander Hewlett

Executive Chairman

Mr Hewlett is a qualified Geologist graduating from the University of Western Australia. Mr Hewlett is highly skilled at project identification and acquisition and has a flair for company and investor communications. He has raised significant funds for both domestic and international projects in the mining and exploration sector and has served on several boards of ASX listed companies. Mr Hewlett is a member of the Australasian Institute of Mining and Metallurgy and is currently a director of Fraser Range Metals Group Ltd and Black Cat Syndicate Limited.

SPECTRUM METALS LIMITED | Target’s Statement in response to Ramelius’ Offer

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Paul Adams

Managing Director

Mr Adams is a qualified Geologist. Mr Adams was recently the Director – Head of Research and Natural Resources with DJ Carmichael Pty Limited, where he gained considerable experience in equity capital markets and equity research with a focus in small to midcap resource companies across a large range of commodities. Prior to DJ Carmichael Pty Limited, Mr Adams held technical and senior roles with Metana Minerals, Dominion Mining, Australian Goldfields and Placer Dome, where he held senior technical roles at the giant mesothermal-epithermal Porgera gold mine in Papua New Guinea and as Chief Mine Geologist and Development Manager at the Granny Smith Mine in Western Australia. Mr Adams also holds a Graduate Diploma in Applied Finance and Investment from the Financial Securities Institute of Australia. Mr Adams is currently a director of Kalamazoo Resources Limited.

James Croser

Technical Executive Director

Mr Croser is a qualified mining engineer, with 20 years of operations, technical and management experience in the Australian mining sector. Mr Croser is currently a director of Vaportrail Pty Ltd, a privately-owned mining consultancy business. Mr Croser has served previously on the boards of ASX listed mining companies Kalgoorlie Mining Company Ltd and Resources & Energy Group Ltd, while also founding and developing several private mining companies across Western Australia in recent years. Mr Croser has held statutory mine management positions for Perilya Ltd and La Mancha Resources Ltd, including as inaugural underground manager for the definitive feasibility study and construction of the 1 million ounce Frog’s Leg Gold Mine.

Mr Croser holds a Bachelor’s degree from the Western Australian School of Mines and is a holder of a Western Australian First Class Mine Managers’ Certificate.

Nader El Sayed

Non-Executive Director

Mr El Sayed is currently the Chief Executive Officer of Multiplant Holdings, a mining and civil services business in Western Australia. His previous roles include a senior management position with KPMG providing assurance, capital markets and other advisory services to key Australian and international resource companies. Mr El Sayed brings a wealth of risk management, corporate governance, strategic and financial experience to the Spectrum Board. Mr El Sayed holds a Bachelor of Commerce (Banking & Finance), Masters (Accounting) and has completed the Australian Institute of Chartered Accountants program. He is a non-executive director of Hammer Metals Limited.

Les Davis

Non-Executive Director

Mr Davis was the founding Managing Director of Silver Lake Resources Ltd an ASX200 listed gold producing company and is a founding director of gold explorer Black Cat Syndicate Limited.

Mr Davis has over 40 years industry experience including 17 years hands-on experience in mine development and narrow vein mining and has developed numerous new open pit and underground mines. Prior to listing Silver Lake Resources in 2007, Mr Davis’ career incorporated 13 years senior management experience including roles as Mine Manager, Technical Services Manager, Concentrator Manager, Resident Manager and General Manager Expansion Projects with organisations including WMC Resources Ltd, Reliance Mining Ltd and Consolidated Minerals Ltd.

SPECTRUM METALS LIMITED | Target’s Statement in response to Ramelius’ Offer

5.4. Overview of Spectrum’s activities and projects

Background

The Penny West open pit mine was completed in 1992 and is famous in Western Australia’s mining history as being one of the highest-grade open pit mines in the modern era up to that point with a reconciled grade through the Youanmi processing plant of 21.8 grams per tonne gold. Spectrum announced the acquisition of the Penny West Gold Project in October 2018.

Location and tenements

The Penny West Gold Project is located in the Murchison District of Western Australia, 25km south of the Youanmi mining centre, approximately 150km south east of Mt Magnet and approximately 120km south west of Sandstone.

Spectrum’s tenement package covers approximately 1,324Ha across two Mining Leases (M57/180 and M57/196) acquired in December 2018 and one Exploration License (E57/1087) that was acquired in January 2019. The Youanmi Shear zone (YSZ), which is an important structure at the Youanmi mining centre 25km to the north, is interpreted to lie along the lease boundary between M57/180 and E57/1087

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Figure 5.4.1: Location of the Penny West Gold Project tenements

SPECTRUM METALS LIMITED | Target’s Statement in response to Ramelius’ Offer

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Set out below is a summary of the tenements held by Spectrum:

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Spectrum
Project / Prospect Tenure Tenement Status
interest
First Hit Gold Project Mining Licence M30/91 Granted 100%
First Hit Gold Project Mining Licence M30/99 Granted 100%
First Hit Gold Project Prospecting Licence P30/1125 Granted 100%
First Hit Gold Project Exploration Permit P30/1137 Granted 100%
Penny West Gold Mining Licence M57/180 Granted 100%
Project
Penny West Gold Mining Licence M57/196 Granted 100%
Project
Penny West Gold Exploration Permit E57/1087 Granted 100%
Project
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Mineral Resource

Spectrum recently published an updated JORC 2012 estimate for the Penny West Gold Project and importantly a maiden JORC 2012 resource estimate of the recently discovered Penny North deposit, as set out below:

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Mineral Resource estimate Tonnes (t) Au Grade (g/t) Contained Au (Oz)
Indicated 414,000 18.6 247,000
Inferred 155,000 12.0 59,800
Penny North 569,000 16.8 306,800
Indicated 54,000 12.1 21,100
Inferred 93,000 5.1 15,400
Penny West 147,000 7.7 36,400
Indicated - - -
Inferred 82,000 4.6 12,300
Minor Zones 82,000 4.6 12,300
Total 799,000 13.8 355,500
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Table 5.4.2: JORC 2012 estimate for the Penny West Gold Project and maiden JORC 2012 resource estimate of the Penny North deposit

SPECTRUM METALS LIMITED | Target’s Statement in response to Ramelius’ Offer

Other key attributes from the resource estimate include:

High confidence: ~75% of Mineral Resources at an Indicated status (Indicated resources total 268,000 oz Au at a grade of 17.8 g/t Au, with the Penny North Indicated component grading 18.6 g/t gold for 247,000 oz.)
Resource is shallow, delineated from 80m to 320m (below surface).
Resource indicates 1,480 ounces per vertical metre.
Any future mining of the Mineral Resource is likely to be via underground mining and therefore the resource has been modelled with a 2.0 g/t Au cut-off.
Initial metallurgical test work indicates that the Mineral Resources are free milling with average recoveries of > 99%.
Mineralisation is open at depth and along strike and has very strong extension potential.
Recent extensional drilling is not included in the Mineral Resource shown in Table 5.4.2. Results are pending and may form the basis for future Mineral Resource growth.

For further information regarding the Mineral Resource Estimate for the Penny West Gold Project and details of the Competent Person’s consent, material assumptions and technical parameters underpinning the Mineral Resource Estimate, please refer to Section 12.8 of this Target’s Statement and Spectrum’s ASX announcement made on 24 October 2019.

Exploration potential

Penny North

Spectrum recently completed an initial diamond drilling program at Penny North to provide further confidence to the resource area and at depth to test extensions to mineralisation which was completed in the December 2019 Quarter with only two of those holes incorporated into the maiden Mineral Resource (refer ASX announcement 24 October 2019).

Spectrum has also recently completed several reverse circulation and diamond drill holes at Penny North aimed at extending gold mineralisation below the existing JORC resource envelope. Drilling has been successful at extending the known gold mineralisation which is expected to extend the mineralised envelope in an anticipated JORC resource update (refer ASX announcement 3 December 2019).

Magenta Prospect

The Magenta prospect is located 1.5km to the north of Penny North and along strike within the Penny West Shear.

Recent RC holes have extended the known mineralised structure down dip to a vertical depth of circa 170m and included hole SPWRC125 which intersected the highest gold grade so far in Spectrum’s drilling campaign to the north of the Penny North deposit, demonstrating that a high-grade gold system with depth potential is present at the Magenta and confirms that the Penny West Shear structure continues to be an important mineralised structure well to the north of the high-grade Penny North deposit.

SPECTRUM METALS LIMITED | Target’s Statement in response to Ramelius’ Offer

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Figure 5.4.3: RC holes at the Magenta prospect (ASX announcement 18 October 2019)

Other prospects

Other prospects currently being investigated by Spectrum include Youangarra and Columbia, where Spectrum intends to conduct further exploration drilling. There is also a ‘Gap Zone’, approximately 1.4km to the north of Penny North that is a virtually unexplored highly prospective shear zone having only undergone limited widespaced reconnaissance air-core drilling in the early 1990s.

5.5. Spectrum financial information

(a) The historical consolidated statements of financial position of Spectrum are set out below and have been extracted from the audited consolidated statements of financial position as at the end of the financial years ended 30 June 2018 and 30 June 2019, being the last two audited consolidated statements of financial position prior to the date of this Target’s Statement, together with the unaudited consolidated statements of financial position as at 31 December 2019.

SPECTRUM METALS LIMITED | Target’s Statement in response to Ramelius’ Offer

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31 December
30 June 2018 30 June 2019
Financial position as at 2019
A$ A$
A$ (Unaudited)
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CURRENT ASSETS
Cash and cash equivalents	1,544,566	4,165,015	5,696,365
Trade and other receivables	20,747	52,649	85,522
Prepayment	-	-	-
Security bonds	3,492	-	-
TOTAL CURRENT ASSETS	1,568,805	4,217,664	5,781,887
NON-CURRENT ASSETS
Security bonds	-	14,480	31,197
Exploration and evaluation Expenditure	72,764	3,192,012	7,499,124
Property, plant and equipment	-	124,042	364,507
TOTAL NON-CURRENT ASSETS	72,764	3,330,534	7,894,828
TOTAL ASSETS	1,641,569	7,548,198	13,676,715
CURRENT LIABILITIES
Trade and other payables	44,857	507,561	867,460
Borrowings	-	-	-
TOTAL CURRENT LIABILITIES	44,857	507,561	867,460

TOTAL LIABILITIES	44,857	507,561	867,460
NET ASSETS	1,596,712	7,040,637	12,809,255
EQUITY
Issued capital	20,918,029	27,279,289	34,255,054
Reserves	426,326	1,074,830	2,443,730
Accumulated losses	(19,747,643)	(21,313,482)	(23,889,529)
TOTAL EQUITY	1,596,712	7,040,637	12,809,255

(b) The historical consolidated statements of comprehensive income of Spectrum are set out below and have been extracted from the audited consolidated statements of comprehensive income for the financial years ended 30 June 2018 and 30 June 2019, being the last 2 audited consolidated statements of financial performance prior to the date of this Target’s Statement, together with the unaudited consolidated statements of financial performance for the 6 months ended 31 December 2019.

SPECTRUM METALS LIMITED | Target’s Statement in response to Ramelius’ Offer

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12 months to 12 months to 6 months to
30 June 2018 30 June 2019 31 December
Financial performance for the A$ A$ 2019
A$ (Unaudited)
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Income
Interest received	3,855	14,264	63,631
Proft on disposal of assets	29,324	-	-
Other income	606	477	-
Total Income	33,785	14,741	63,631
Expenses
Directors remuneration	(162,334)	(214,288)	(119,277)
Depreciation	-	(1,578)	(1,546)
Exploration and evaluation expense	-	(121,635)	-
Project evaluation expense	(306,572)	(43,692)	-
Employee benefts expense	-	(1,366)	(8,634)
Professional services expense	(218,849)	(380,394)	(873,738)
Share-based payment expense	(216,076)	(648,504)	(1,453,000)
Other expenses	(82,611)	(169,123)	(183,483)
Total Expenses	(986,442)	(1,580,580)	(2,639,678)
Loss before income tax expense	(952,657)	(1,565,839)	(2,576,047)
Income tax expense	-	-	-
Loss for the year	(952,657)	(1,565,839)	(2,576,047)
Other comprehensive income	-	-	-
Total comprehensive loss attributable to members of the entity	(952,657)	(1,565,839)	(2,576,047)

(c) The full year financial statements for the financial years ended 30 June 2018 and 30 June 2019 were audited by KPMG, who issued an unqualified audit opinion for each financial year. A copy of Spectrum’s consolidated financial statements can be found on its website (at www.spectrummetals.com.au).

5.6. Spectrum Securities

As at the date of this Target’s Statement the following Spectrum Securities are on issue:

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Class of security Number
Spectrum Shares 1,405,515,165
Spectrum Options 136,000,000
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SPECTRUM METALS LIMITED | Target’s Statement in response to Ramelius’ Offer

The Spectrum Options are comprised as follows:

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Number of Spectrum Options Exercise price Expiry date
15,000,000 A$0.01 4 May 2023
42,500,000 A$0.015 30 June 2021
10,000,000 A$0.015 31 May 2023
6,500,000 A$0.015 30 June 2023
13,333,332 A$0.025 26 March 2022
13,333,332 A$0.030 26 March 2022
13,333,336 A$0.035 26 March 2022
15,000,000 A$0.081 9 August 2022
2,000,000 A$0.10 30 November 2022
2,500,000 A$0.11 30 November 2022
2,500,000 A$0.12 30 November 2022
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The Bidder is not offering to acquire the Spectrum Options under the Offer but intends to make separate offers to acquire or cancel any unexercised Spectrum Options.

5.7. Recent Spectrum announcements

The following announcements have been made to ASX concerning Spectrum since the release of its annual financial report for the year ended 30 June 2019 on 30 October 2019:

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Announcement Date
Appendix 4G 30 October 2019
Corporate Governance Statement 30 October 2019
Spectrum provides update on VMC claim 1 November 2019
Spectrum Defends Claim on Multiple Fronts 12 November 2019
Results of Meeting 21 November 2019
2019 Annual General Meeting Presentation to Shareholders 21 November 2019
Securities to be released from Voluntary Escrow 28 November 2019
Replacement Constitution 28 November 2019
Director appointment and Appendix 3B 2 December 2019
Drilling extends mineralisation at Penny West and Magenta 3 December 2019
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SPECTRUM METALS LIMITED | Target’s Statement in response to Ramelius’ Offer

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Announcement Date
Initial Director’s Interest Notice 4 December 2019
VMC Claim Listed for Trial in Supreme Court 11 December 2019
Penny West Exploration Update 14 January 2020
Change of Share Registry 20 January 2020
Quarterly Activities and Cash Flow Report 31 January 2020
VMC: Settlement btw Venus Metal Spectrum + Zebra Minerals 7 February 2020
Pause in Trading 7 February 2020
Trading Halt 7 February 2020
Settlement of VMC Claim 10 February 2020
RMS: Ramelius makes Recommended T/O Offer for Spectrum Minerals 10 February 2020
Ramelius and Spectrum Metals Bid Implementation Agreement 10 February 2020
Performance Rights Exercised 14 February 2020
Change in substantial holding 20 February 2020
Change in Director’s Interest Notice x3 20 February 2020
Correction to Appendix 3Y 20 February 2020
Penny West Exploration Update 21 February 2020
RMS: Corporate Presentation 25 February 2020
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5.8. Spectrum website

Spectrum maintains a website, www.spectrummetals.com.au, which contains further information about Spectrum and its operations.

5.9. Publicly available information about Spectrum

Spectrum is a listed disclosing entity for the purposes of the Corporations Act and as such is subject to regular reporting and disclosure obligations. Spectrum is subject to the ASX Listing Rules which require continuous disclosure of any information Spectrum has concerning itself that a reasonable person would expect to have a material effect on the price or value of its securities.

Spectrum is also required to lodge various documents with ASIC. Copies of documents lodged with ASIC by Spectrum may be obtained from, or inspected at, an ASIC office.

SPECTRUM METALS LIMITED | Target’s Statement in response to Ramelius’ Offer

6. Information relatin to our Directors g y

6.1. Interests of Directors in Spectrum

As at the date of this Target’s Statement, your Directors have a Relevant Interest in the number of Spectrum Securities set out in the table below:

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Spectrum Nature of
Director Number
Securities interest
Spectrum Shares 16,866,666 Indirect
Mr Alexander Hewlett
Spectrum Options 20,000,000 Indirect
Spectrum Shares 8,484,848 Indirect
Mr Paul Adams Spectrum Options 10,000,000 Direct
Spectrum Options 10,000,000 Indirect
Spectrum Shares 11,115,757 Indirect
Mr James Croser
Spectrum Options 15,000,000 Indirect
Spectrum Shares N/A N/A
Mr Nader El Sayed
Spectrum Options 14,500,000 Indirect
Spectrum Shares 4,000,000 Indirect
Mr Les Davis
Spectrum Options 7,000,000 Indirect
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6.2. Dealings by Directors in Spectrum Securities

On 14 February 2020, Spectrum issued 19,999,998 Spectrum Shares to those executive Directors who held performance rights which had previously vested on satisfaction of non-market related operating hurdles.

Mr Les Davis was issued 7,000,000 Spectrum Options on 2 December 2019.

Other than the above, none of your Directors have acquired or disposed of a Relevant Interest in any Spectrum Securities in the 4 month period ending on the date immediately before the date of this Target’s Statement.

6.3. Interest and dealings in Ramelius Shares

As at the date of this Target’s Statement:

neither Spectrum, nor any of your Directors, have a Relevant Interest in any Ramelius Shares or the shares of any related body corporate of Ramelius; and
there have been no acquisitions or disposals of Ramelius Shares by any of your Directors in the 4 months ending on the date of this Target’s Statement.

SPECTRUM METALS LIMITED | Target’s Statement in response to Ramelius’ Offer

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6.4. Benefits and agreements

Save as disclosed:

no person has been or will be given any benefit (other than a benefit which can be given without member approval under the Corporations Act) in connection with the retirement of that person, or someone else, from a board or managerial office of Spectrum or Related Body Corporate of Spectrum, as a result of the Offer;
there are no agreements made between any of your Directors and any other person in connection with, or conditional upon, the outcome of the Offer, other than in their capacity as a holder of Spectrum Securities;
none of your Directors have agreed to receive, or are entitled to receive any benefit from Ramelius which is conditional on, or related to, the Offer, other than in their capacity as a holder of Spectrum Securities; and
none of your Directors have any interest in any contract entered into by Ramelius.

SPECTRUM METALS LIMITED | Target’s Statement in response to Ramelius’ Offer

. Information about Ramelius 7

7.1. Disclaimer

All information concerning Ramelius contained in this Target’s Statement has been prepared by Spectrum using publicly available information.

The information in this Target’s Statement concerning Ramelius has not been independently verified. Spectrum does not, subject to any applicable laws, make any representation or warranty, express or implied, as to the accuracy or completeness of this information. The information on Ramelius is not considered to be comprehensive.

7.2. Overview of Ramelius

For information about Ramelius, refer to Section 4 of the Bidder’s Statement.

Ramelius is a listed disclosing entity for the purposes of the Corporations Act and as such is subject to regular reporting and disclosure obligations. Ramelius is subject to the ASX Listing Rules which require continuous disclosure of any information Ramelius has concerning itself that a reasonable person would expect to have a material effect on the price or value of its securities.

Ramelius separately has disclosure obligations in relation to the progress of the Offer under the Corporations Act. Ramelius must issue a substantial holding notice to Spectrum and ASX, including details of its and their Associates’ Relevant interests in Spectrum Shares, and consideration paid for such shares (where relevant) at the commencement of the Offer Period, and each time acceptance by Spectrum Shareholders under the Offer increases Ramelius’ holding by 1%.

Ramelius is also required to lodge various documents with ASIC. Copies of documents lodged with ASIC by Ramelius may be obtained from, or inspected at, an ASIC office.

On request to Ramelius and free of charge, Spectrum Shareholders may obtain a copy of:

the annual financial report of Ramelius for the year ended 30 June 2019 lodged by Ramelius with ASX on 26 August 2019 (being the annual financial report most recently lodged with ASIC before lodgement of the Bidder’s Statement with ASIC); and
any half-year financial report lodged with ASIC by Ramelius after the lodgement of that annual financial report for Ramelius referred to above and before lodgement of this Bidder’s Statement with ASIC; and
any continuous disclosure notice given to ASX by Ramelius since the lodgement with ASIC of the annual financial report for Ramelius referred to above and before lodgement of the Bidder’s Statement with ASIC.

A list of the announcements Ramelius has lodged with ASX since 26 August 2019 (being the date of lodgement of the annual financial report referred to above) is set out in Attachment 2 to the Bidder’s Statement.

A substantial amount of information about Ramelius is available in electronic form from www.rameliusresources. com.au and on the ASX website.

7.3. Information about the Combined Entity and Ramelius’ intentions

For information about the Combined Entity and Ramelius’ intentions regarding Spectrum and the Combined Entity if the Offer becomes Unconditional, refer to Sections 8 and 9 of the Bidder’s Statement.

SPECTRUM METALS LIMITED | Target’s Statement in response to Ramelius’ Offer

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7.4. Relationship with Spectrum

As at the date of this Target’s Statement and the date of the Offer, the Bidder has a Relevant Interest in 68,541,238 Spectrum Shares and a voting power of 4.88% in Spectrum.

Subject to the above, prior to signing the Bid Implementation Agreement, Ramelius had no existing relationship with Spectrum.

7.5. Corporate governance

The Ramelius Board seeks to provide accountability levels that meet or exceed the ASX Corporate Governance Council’s Principles for Good Corporate Governance and Best Practice Recommendations.

Details on Ramelius’ corporate governance procedures, policies and practices can be obtained at Ramelius’ website www.rameliusresources.com.au.

SPECTRUM METALS LIMITED | Target’s Statement in response to Ramelius’ Offer

8. Information about Ramelius Shares

8.1. Capital structure

As at the date of the Bidder’s Statement, Ramelius has the following securities on issue:

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Class of security Number
Ramelius Shares currently on issue [1] 658,470,383
Ramelius performance shares currently on issue 12,834,577 [2]
Ramelius options currently on issue 1,500,000 [3]
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Notes:

The rights attaching to the Ramelius Shares are summarised in Section 5.4 of the Bidder’s Statement.
The rights attaching to the Ramelius performance shares are summarised in Section 5.6 of the Bidder’s Statement.
Comprising 1,500,000 unlisted options each exercisable at A$0.20 on or before 11 June 2020. See Section 5.5 of the Bidder’s Statement.

8.2. Recent performance of Ramelius Shares

Set out below is a table showing relevant trading prices of Ramelius Shares on ASX:

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Price of
Comparative Trading Period
Ramelius Shares
Highest trading price in the 4 months prior to the date this Target's Statement A$1.475
was lodged with ASIC, was on 24 February 2020
Lowest trading price in the 4 months prior to the date this Target's Statement A$0.895
was lodged with ASIC, was on 13 December 2019
Closing trading price on the last trading day (being 7 February 2020) before the A$1.325
Announcement Date
Last available closing sale price (as at 24 February 2020) on ASX prior to the date A$1.455
this Target's Statement was lodged with ASIC
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The implied value of the Offer will change as a consequence of changes in the market price of Ramelius Shares from time to time.

8.3. Quotation of Ramelius Shares comprising Offer Consideration

Ramelius will lodge an application for admission to quotation of the Ramelius Shares comprising part of the Offer Consideration to trading on ASX within 7 days of the start of the Offer Period. The Offer is conditional on quotation being granted.

SPECTRUM METALS LIMITED | Target’s Statement in response to Ramelius’ Offer

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8.4. Ramelius Shares

The Ramelius Shares offered are fully paid ordinary shares in the capital of Ramelius, and from the date of their issue will rank equally with existing Ramelius ordinary shares and will have the same rights and liabilities attaching to them. The rights and liabilities attaching to Ramelius Shares are governed by the constitution of Ramelius, the Corporations Act, ASX Listing Rules, ASX Settlement Operating Rules and the general law of Australia.

Under section 140(1) of the Corporations Act, the constitution of Ramelius has effect as a contract between Ramelius and each member and between a member of Ramelius and each other member. Accordingly, if you accept the Offer and receive Ramelius Shares as consideration you will, as a result, become liable to comply with the constitution of Ramelius.

A summary of the rights and liabilities attaching to Ramelius Shares is set out in Section 5.4 of the Bidder’s Statement. Full details of the rights and liabilities attaching to Ramelius Shares are set out in the constitution of Ramelius, a copy of which is available for inspection at Ramelius’ registered office during normal business hours.

SPECTRUM METALS LIMITED | Target’s Statement in response to Ramelius’ Offer

. Ke features of the Offer 9 y

9.1. The Offer

Ramelius announced its intention to make its takeover bid for Spectrum on 10 February 2020 following the execution of the Bid Implementation Agreement on 9 February 2020. The terms of the Offer are contained in Section 13 of the Bidder’s Statement and the terms of the Bid Implementation Agreement are summarised in Section 12.1 of the Bidder’s Statement and Section 12.1 of this Target’s Statement.

9.2. Consideration payable to Spectrum Shareholders who accept the Offer

The consideration being offered by Ramelius is 1 Ramelius Share for every 10 Spectrum Shares held by a Spectrum Shareholder and A$0.017 cash for every 1 Spectrum Share held by a Spectrum Shareholder.

9.3. Unmarketable parcels

If the Ramelius Shares that would have been issued to you if you accepted the Offer do not constitute a Marketable Parcel (the value of which is less than A$500), you will not receive Ramelius Shares. Instead, the Ramelius Shares to which you would otherwise be entitled will be issued to a sale nominee approved by ASIC who will sell those Ramelius Shares on ASX and provide you with the net sale proceeds.

Please see Sections 12.15 and 13.7 of the Bidder’s Statement for further information.

9.4. Foreign Shareholders

If you are a Foreign Shareholder you are entitled to accept the Offer just like any other Spectrum Shareholder. However, you will not be entitled to receive Ramelius Shares as part of the Offer Consideration. Instead, the Ramelius Shares to which you would otherwise be entitled will be issued to a sale nominee approved by ASIC who will sell those Ramelius Shares on ASX and provide you with the net sale proceeds. This amount will be in addition to the cash component of the Offer Consideration you will receive.

Please see Sections 12.15 and 13.7 of the Bidder’s Statement for further information.

9.5. Conditions to the Offer

The Offer is subject to the fulfilment or waiver number of a number of conditions before the end of the Offer Period. Those conditions are set out in full in Section 13.8 of the Bidder’s Statement, which is substantially replicated below:

(a) Minimum acceptance

At the end of the Offer Period, the Bidder has a Relevant Interest in at least 50.1% of Spectrum Shares then on issue.

(b) Gold price

The spot gold price for gold as quoted on Bloomberg does not fall below A$2,000 per ounce at any time during a day for 3 consecutive days between the Announcement Date and the end of the Offer Period (each inclusive).

Ramelius had agreed to waive this condition if it extends the Offer Period beyond 30 March 2020.

SPECTRUM METALS LIMITED | Target’s Statement in response to Ramelius’ Offer

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(c) Regulatory approvals and consents

Before the end of the Offer Period, all approvals or consents that are required by law, by any Government Agency, or by any other third party as are necessary to permit:

(i) the Offer to be lawfully made to and accepted by the Spectrum Shareholders;
(ii) the transactions contemplated by the Bidder’s Statement to be completed; and
(iii) Spectrum to be in material compliance with each of its and its Subsidiaries’ contracts, permits, licences and other agreements,

are granted, given, made or obtained on an unconditional basis, remain in full force and effect in all respects, and do not become subject to any notice, intimation or indication of intention to revoke, suspend, restrict, modify or not renew the same.

(d) No regulatory action

Between the Announcement Date and the end of the Offer Period (each inclusive):

(i) there is not in effect any preliminary or final decision, order or decree issued by any Government Agency;
(ii) no action or investigation is announced, commenced or threatened by any Government Agency; and
(iii) no application is made to any Government Agency (other than by the Bidder or any Associate of the Bidder),

in consequence of or in connection with the Offer (other than an application to, or a decision or order of, ASIC or the Takeovers Panel in exercise of the powers and discretions conferred by the Corporations Act) which restrains, prohibits or impedes, or threatens to restrain, prohibit or impede, or materially impact upon, the making of the Offer and the completion of any transaction contemplated by the Bidder’s Statement or which requires the divestiture by the Bidder of any Spectrum Shares or any material assets of Spectrum or any of its Subsidiaries (including any Tenement).

(e) No persons exercising rights under certain agreements or instruments

Between the Announcement Date and the end of the Offer Period, no person exercises any rights under any provision of any agreement or other instrument to which a member of the Spectrum Group is a party, or by or to which a member of the Spectrum Group or any of its assets may be bound or be subject to which:

(i) require monies borrowed by, or other financial accommodation provided to, a member of the Spectrum Group to be paid or repaid immediately or earlier than the repayment or maturity date stated in such agreement or other instrument;
(ii) terminate or modify any such agreement or instrument or require that any action be taken thereunder (including the acceleration of the performance of any obligation thereunder);
(iii) terminate or modify the interest of a member of the Spectrum Group in any farm-in, farm-out, partnership, join venture, trust, corporation or other entity (or any arrangements relating to such interest); or
(iv) require that any assets, shares or business of a member of the Spectrum Group be sold, transferred or offered for sale or transfer, including under any pre-emptive rights or similar provisions, as a result of the acquisition of Spectrum Group Shares by the Bidder.

SPECTRUM METALS LIMITED | Target’s Statement in response to Ramelius’ Offer

(f) No change of control rights

Between the Announcement Date and the end of the Offer Period, no person has or will have any right as a result of the Bidder making the Offer or announcing its intention to make the Offer, or acquiring Spectrum Shares under the Offer, to:

(i) acquire, or require the disposal of, or require any entity within the Spectrum Group to offer to dispose of, any assets, shares or business of any entity within the Spectrum Group;
(ii) terminate, or vary the terms of performance of, any agreement with any entity within the Spectrum Group; or
(iii) terminate, or vary the terms of any material approvals, licenses or permits issued by any Government Agency to any entity within the Spectrum Group.
(g) Material adverse change
(i) Between the Announcement Date and the end of the Offer Period (each inclusive), none of the following occurs (whether or not becoming public):
- (A) an event, change, condition, matter or thing occurs or will or is reasonably likely to occur;
- (B) information is disclosed or announced by Spectrum concerning any event, change, condition, matter or thing that has occurred or is reasonably likely to occur; or
- (C) information concerning any event, change, condition, matter or thing that has occurred or is reasonably likely to occur becomes known to the Bidder (whether or not becoming public),

(each of (A) and (B) and (C) a Specified Event) which, whether individually or when aggregated with all such events, changes, conditions, matters or things of a like kind that have occurred or are reasonably likely to occur, has had or would be considered reasonably likely to have:

(D) a material adverse effect on the business, assets (including the Tenements), liabilities, financial or trading position, profitability or prospects of the Spectrum Group taken as a whole; or
(E) without limiting the generality of (D) above, the effect of a diminution in the value of the consolidated net assets of the Spectrum Group, taken as a whole, by at least A$500,000 against what it would reasonably have been expected to have been but for such Specified Event;

other than:

(F) an event, matter, change or circumstance caused, or materially contributed to, by the Bidder;
(G) anything required or permitted to be done or not done under Bid Implementation Agreement or otherwise required to be done in connection with the legal obligations for the implementation of the Offer;
(H) any event, matter, change or circumstance:
a. fairly disclosed by Spectrum to the Bidder or any Related Person of the Bidder;
b. disclosed in public filings by Spectrum to ASX or ASIC; or
c. otherwise known by the Bidder or any Related Person of the Bidder,

SPECTRUM METALS LIMITED | Target’s Statement in response to Ramelius’ Offer

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at any time prior to the date of the Bidder’s Statement provided that the event, matter, change or circumstances (as the case may be) continues to be, in all material respects, as disclosed or otherwise known to the Bidder at that time;

(I) an event, matter, change or circumstance in or relating to:
a. economic, business, regulatory or political conditions in general;
b. credit, financial or currency markets in general, or the state of securities markets in general (including any reduction in market indices);
c. any change affecting the industry in which Spectrum operates generally;
(J) the portion of any event, matter, change or circumstances which is as a consequence of losses, expenses, damages or other costs covered by insurance which Spectrum’s insurers have agreed to pay; or
(K) anything done with the prior written consent of the Bidder.

(h) No material acquisitions, disposals, cancellations or new commitments

Except for any proposed transaction or item fully and fairly disclosed by Spectrum on ASX within 6 months prior to the Announcement Date and to the extent included in the Budget and Work Program, none of the following events occur between the Announcement Date and the end of the Offer Period:

(i) Spectrum or any of its Subsidiaries disposes of, offers to dispose of or agrees to dispose of one or more companies, businesses, Tenements or assets (or any interest in one or more companies, businesses, Tenements or assets) either:
(A) for an amount or consideration in excess of A$150,000 (either alone or in aggregate) arising after the Announcement Date; or
(B) relating in any way to the Penny West Gold Project;
(ii) a member of the Spectrum Group enters into or agrees to enter into any purchase, sale, farmin, farm-out, joint venture or partnership or other agreement (or series of agreements) that requires or is reasonably likely to involve payments, expenditure or the foregoing of revenue, by a member of the Spectrum Group in excess of A$250,000 in aggregate with other such matters arising after the Announcement Date; or
(iii) a Tenement granted to or held by any member of the Spectrum Group is revoked, surrendered, relinquished or terminated or a member of the Spectrum Group agrees to the same without there being a reasonable likelihood of such tenement, permit or licence being allowed to continue, renewed or extended on terms which are no less favourable to the member of the Spectrum Group.

(i) Prescribed occurrences

Between the Announcement Date and the end of the Offer Period (each inclusive), none of the following prescribed occurrences (being the occurrences listed in section 652C of the Corporations Act) happen:

(i) Spectrum converting all or any of the Spectrum Shares into a larger or smaller number of shares under section 254H of the Corporations Act;
(ii) Spectrum or any of its Subsidiaries resolving to reduce its share capital in any way;
(iii) Spectrum or any of its Subsidiaries entering into a buyback agreement or resolving to approve the terms of a buyback agreement under section 257C(1) or 257D(1) of the Corporations Act;

SPECTRUM METALS LIMITED | Target’s Statement in response to Ramelius’ Offer

(iv) Spectrum or any of its Subsidiaries making an issue of Spectrum Shares (other than the issue of Spectrum Shares on the exercise of Spectrum Convertibles) or granting an option over the Spectrum Shares or agreeing to make such an issue or grant such an option;
(v) Spectrum or any of its Subsidiaries issuing, or agreeing to issue, convertible notes (including any issue or grant of any Spectrum Convertible);
(vi) Spectrum or any of its Subsidiaries disposing or agreeing to dispose, of the whole, or a substantial part, of its business or property;
(vii) Spectrum or any of its Subsidiaries granting, or agreeing to grant, a security interest in the whole, or a substantial part, of its business or property;
(viii) Spectrum or any of its Subsidiaries resolving that it be wound up;
(ix) the appointment of a liquidator or provisional liquidator of Spectrum or any of its Subsidiaries;
(x) the making of an order by a court for the winding up of Spectrum or any of its Subsidiaries;
(xi) an administrator of Spectrum or any of its Subsidiaries being appointed under section 436A, 436B or 436C of the Corporations Act;
(xii) Spectrum or any of its Subsidiaries executing a deed of company arrangement; or
(xiii) the appointment of a receiver, receiver and manager, other controller (as defined in the Corporations Act) or similar official in relation to the whole, or a substantial part, of the property of Spectrum or any of its Subsidiaries.

(j) No untrue statements to ASX

Between the Announcement Date and the end of the Offer Period (each inclusive), there not having occurred or been announced or become known to the Bidder or Spectrum that information announced by Spectrum to ASX prior to the Announcement Date is, or is likely to be, incomplete, incorrect, untrue or misleading in a material respect (including by omission) such that the Bidder might reasonably be expected to have not proceeded with the Offer at all or would have proceeded with the Offer on materially different terms.

(k) Conduct of business

Between the Announcement Date and the end of the Offer Period (each inclusive) neither Spectrum nor any of its Subsidiaries:

(i) makes any changes to its constitution or passes any special resolution or amends the terms of issue of any shares, options, performance rights or other convertible securities;
(ii) borrows or agrees to borrow any money, other than in the ordinary course of business, under the Loan Agreement or as otherwise agreed to in writing by both parties;
(iii) provides a guarantee or indemnity or both to a third party;
(iv) other than to the extent included in the Budget and Work Program (if at all) does any of the following:
(A) enters or agrees to enter into any contract of service or varies or agrees to vary any existing contract of service with any director or employee;
(B) makes or agrees to make any substantial change in the basis or amount of remuneration of any director, employee or consultant;
(C) except as provided under any superannuation, provident or retirement scheme or

SPECTRUM METALS LIMITED | Target’s Statement in response to Ramelius’ Offer

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contract in effect on the Announcement Date, pays or agrees to pay any retirement benefit or allowance to any director or employee;

(D) make or agree to make any payments to any third party (either alone or in aggregate) that is above A$100,000, including to any employee, director or consultant to Spectrum that is contingent on the Offer or the outcome of the Offer (or a similar transaction); and
(E) amends or agrees to amend in any material respect any arrangement with its advisers, or enter into arrangements with any new advisers, in respect of the Offer or a similar transaction;
(v) other than to the extent included in the Budget and Work Program (if at all) or as otherwise agreed to in writing by both parties, acquires, offers to acquire, agrees to acquire or acquires any one or more businesses, assets, entities or undertakings valued at, or involving a financial commitment of more than A$250,000 (individually or when aggregated with all other such matters arising after the Announcement Date), or makes an announcement or enters into an agreement in relation to such an acquisition, undertaking or financial commitment; or
(vi) incurs or commits to incur an amount of capital expenditure in excess of A$250,000 (either alone or in aggregate) other than:
(A) capital expenditure that has been announced by Spectrum before the Announcement Date as intended to be incurred or committed;
(B) capital expenditure in the day to day operating activities of the business of Spectrum and its Subsidiaries conducted in the same manner as before the Announcement Date;
(C) to the extent included in the Budget and Work Program; or
(D) as otherwise agreed to in writing by both parties.

(l) No litigation on foot or pending

Between the Announcement Date and the end of the Offer Period (each inclusive) no litigation against Spectrum that may impact on the Penny West Gold Project or reasonably result in a judgement of A$500,000 or more is commenced, is threatened to be commenced, is announced, or is made known to the Bidder (whether or not becoming public) or Spectrum regardless of whether the subject of prior resolution or otherwise.

(m)

Tenements

Between the Announcement Date and the end of the Offer Period (each inclusive), otherwise than in the ordinary course of business, neither Spectrum nor any of its Subsidiaries:

(i) enters into, agrees to enter into or announces any agreement to enter into any contract, commitment or arrangement (including without limitation any ore sale, ore processing, split commodity, joint venture, partnership, farm-in, royalty, marketing or off-take agreement) in relation to any of the Tenements;
(ii) relinquishes, sells or disposes of any interest or creates any security interest over any of the Tenements;
(iii) takes any action or omits to take any action that results in or may reasonably be expected to result in a disposal of, or a breach of the terms of any of the authorisations in connection with any Tenement; or
(iv) takes any action or omits to take any action that results in or may reasonably be expected to result in the surrender of any of the Tenements or any authorisation relating to any Tenements,

SPECTRUM METALS LIMITED | Target’s Statement in response to Ramelius’ Offer

including announcing an intention to do any of the above matters.

(a) Equal access

Between the Announcement Date and the end of the Offer Period, Spectrum promptly, and in any event within 2 Business Days, provides to the Bidder a copy of all information that is not generally available (within the meaning of the Corporations Act) relating to the Spectrum Group, or their respective Tenements, assets, liabilities or operations, that has been provided by Spectrum or any of its directors, officers, agents or representatives to any third party other than in the ordinary course of ordinary business, for the purposes of soliciting, encouraging or facilitating any proposal with respect to:

(i) a takeover bid for, or scheme of arrangement proposed by, Spectrum, under the Corporations Act;
(ii) the acquisition by a third party or an Associate of any interest (including directly or indirectly by way of farm-in, farm-out, joint venture, partnership or similar) in either the Penny West Project or any of the assets (including Tenements) and operations of Spectrum or any of its Subsidiaries; or
(iii) any transaction having a similar economic effect.
(o) No distributions

Between the Announcement Date and the end of the Offer Period (each inclusive), Spectrum does not announce, make, declare or pay any distribution to its Spectrum Shareholders (whether by way of dividend, capital reduction or otherwise and whether in cash or in specie).

9.6. Notice of status of Conditions

The terms of the Offer set out in Section 13 of the Bidder’s Statement indicate that Ramelius will give a notice of status of Conditions to ASX and Spectrum on 23 March 2020.

Ramelius is required to set out in its notice of status of Conditions:

whether the Offer is free of any or all of the Conditions;
whether, so far as Ramelius knows, any of the Conditions have been fulfilled; and
Ramelius’ voting power in Spectrum.

If the Offer Period is extended before the time by which the notice of status of Conditions is to be given, the date for giving the notice of status of Conditions will be taken to be postponed for the same period.

In the event of such an extension, Ramelius is required, as soon as practicable after the extension, to give a notice to ASX and Spectrum that states the new date for the giving of the notice of status of Conditions.

If a Condition is fulfilled (so that the Offer becomes free of that Condition) during the Offer Period, but before the date on which the notice of status of Conditions is required to be given, Ramelius must, as soon as practicable, give ASIC and Spectrum a notice that states that the particular Condition has been fulfilled.

9.7. Offer Period

Unless the Offer is extended or withdrawn, it is open for acceptance from 28 February 2020 until 5:00pm (WST) on 30 March 2020.

The circumstances in which Ramelius may extend or withdraw the Offer are set out in Sections 9.8 and 9.9 respectively of this Target’s Statement.

SPECTRUM METALS LIMITED | Target’s Statement in response to Ramelius’ Offer

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9.8. Extension of the Offer Period

Ramelius may extend the Offer Period at any time before giving the notice of status of Conditions (referred to in Section 9.6 in this Target’s Statement) while the Offer is subject to Conditions. However, if the Offer is Unconditional (that is, all the Conditions are fulfilled or waived), Ramelius may extend the Offer Period at any time before the end of the Offer Period.

In addition, there will be an automatic extension of the Offer Period if, within the last 7 days of the Offer Period:

Ramelius improves the Offer Consideration; or
Ramelius’ voting power in Spectrum increases to more than 50%.

If either of these 2 events occurs, the Offer Period is automatically extended so that it ends 14 days after the relevant event occurs.

9.9. Withdrawal of Offer

Ramelius may not withdraw the Offer if you have already accepted it. Before you accept the Offer, Ramelius may withdraw the Offer with the written consent of ASIC and subject to the conditions (if any) specified in such consent.

9.10. Effect of acceptance

The effect of acceptance of the Offer is set out in detail in Section 13.5 of the Bidder’s Statement. You should read these provisions in full to understand the effect that acceptance will have on your ability to exercise the rights attaching to your Spectrum Shares and the things which you are deemed to have done by accepting of the Offer.

You should note that, if you accept the Offer, unless you are able to withdraw your acceptance in the circumstances described in Section 9.11 of this Target’s Statement, you will forgo the opportunity to benefit from any Competing Proposal (including any Superior Proposal) which may be put forward by another party, unless the Offer does not become Unconditional at the end of the Offer Period and the Competing Proposal remains open for acceptance. As at the date of this Target’s Statement, your Directors are not aware of any Competing Proposal.

9.11. Your ability to withdraw your acceptance

You only have limited rights to withdraw your acceptance of the Offer.

You may only withdraw your acceptance of the Offer if Ramelius varies the Offer in a way that postpones, for more than 1 month, the time when Ramelius needs to meet its obligations under the Offer. This will occur if Ramelius extends the Offer Period by more than 1 month and the Offer is still subject to Conditions.

9.12. Payment of your Offer Consideration if you accept the Offer

In the usual case, you will be issued your Offer Consideration on or before the later of:

1 month after the date the Offer becomes Unconditional; and
1 month after the date you accept the Offer if the Offer is, at the time of acceptance, Unconditional,

but, in any event (assuming the Offer becomes Unconditional), no later than 21 days after the end of the Offer Period.

Section 13.6 of the Bidder’s Statement sets out full details of when you will be issued with your Offer Consideration.

SPECTRUM METALS LIMITED | Target’s Statement in response to Ramelius’ Offer

9.13. Effect of an improvement in Offer Consideration on shareholders who have already accepted the Offer

If Ramelius improves the Offer Consideration offered under the Offer, all Spectrum Shareholders who accept the Offer, whether or not they have accepted the Offer before that improvement, will be entitled to the benefit of that improved Offer Consideration.

9.14. Lapse of Offer

The Offer will lapse if the Conditions are not satisfied or waived by Ramelius by the end of the Offer Period or in the case of Prescribed Occurrences within 3 Business Days after the end of the Offer Period, in which case, all contracts resulting from acceptance of the Offer and all acceptances that have not resulted in binding contracts are void. In that situation, you will be free to deal with your Spectrum Shares as you see fit.

9.15. Compulsory acquisition

Ramelius has indicated in Section 8.4 of the Bidder’s Statement that if it satisfies the required 90% threshold it intends to compulsorily acquire any outstanding Spectrum Shares. Spectrum Shareholders should read these sections in full to understand the compulsory acquisition rights Ramelius may acquire under the Corporations Act and, if it acquires them, how Ramelius intends to exercise them.

SPECTRUM METALS LIMITED | Target’s Statement in response to Ramelius’ Offer

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10. Other im ortant matters p

10.1. Ramelius’ intentions with respect to the Offer and Spectrum

Ramelius has indicated its intentions regarding Spectrum and the Combined Entity if the Offer becomes Unconditional in Section 8 of the Bidder’s Statement.

10.2. Future employment of Spectrum current employees

Ramelius has indicated in Section 8.4 of the Bidder’s Statement that pending the outcome of its review of the Penny West Gold Project and except as otherwise set out in the Bidder’s Statement, it intends to retain certain Spectrum employees who are responsible for the day-to-day management and operations of the Penny West Gold Project. Should the review result in the need for fewer Spectrum employees not linked to the Penny West Gold Project, Ramelius will seek to redeploy those Spectrum employees into other parts of the Ramelius business, where practicable.

10.3. Minority ownership consequences

If Ramelius closes the Offer after acquiring more than 50.1% of all Spectrum Shares, but before it receives acceptances resulting in it being entitled to at least 90% of all Spectrum Shares, then Ramelius will acquire a majority shareholding in Spectrum and Spectrum Shareholders who do not accept the Offer will remain as minority shareholders in Spectrum. This has a number of possible implications, including:

Ramelius will be in a position to cast the majority of votes at a general meeting of Spectrum. This will enable it to control the composition of the Spectrum Board and senior management, determine Spectrum’s dividend policy and control the strategic direction of the businesses of Spectrum and its Subsidiaries;
the value perceived in Spectrum Shares may be significantly reduced as any potential investor may prefer to acquire an interest in Ramelius which will control Spectrum. The Spectrum Share value may no longer contain any takeover premium;
the liquidity of Spectrum Shares may be lower than at present;
if Ramelius acquires 75% or more of the Spectrum Shares it will be able to ensure the passing of special resolutions of Spectrum at general meetings. This will enable Ramelius to, among other things, change the constitution of Spectrum; and
Ramelius may seek the removal of Spectrum from the official list of ASX.

10.4. Other alternatives to the Offer

Before recommending the Offer, your Directors considered other options to best fund the growth of Spectrum’s exploration and development assets and to maximise value for Spectrum Shareholders. After careful consideration of these other alternatives, your Directors formed the view that the Offer provides Spectrum Shareholders with an attractive opportunity to realise value for their investment in Spectrum.

Your Directors will keep Spectrum Shareholders informed in a timely manner should any material developments occur in this regard.

SPECTRUM METALS LIMITED | Target’s Statement in response to Ramelius’ Offer

10.5. Taxation consequences

The taxation consequences of accepting the Offer depend on a number of factors and will vary depending on your particular circumstances.

A general outline of the Australian taxation considerations of accepting the Offer are set out in Section 14 of the Bidder’s Statement. Spectrum Shareholders should refer to this outline and consult their professional advisers in relation to how accepting the Offer will affect their individual circumstances.

10.6. Risk factors in investing in Ramelius Shares

If you accept the Offer, unless withdrawal rights are available and you exercise them (refer to Section 9.11 of this Target’s Statement), you will become a shareholder in Ramelius if the Offer becomes Unconditional. Section 11 of the Bidder’s Statement outlines the risks that you may face when investing in Ramelius Shares. If you require further information regarding such risks in order to make a decision as to whether or not to accept the Offer, you should consult your legal, taxation, accounting or other professional advisers.

10.7. Risk factors in continuing to hold Spectrum Shares

There are various risks associated with continuing to hold Spectrum Shares that you should be aware of before deciding whether or not to accept the Offer. A summary of some of those risks is set out below. They are not exhaustive and are relevant to Spectrum Shareholders as at the date of this Target’s Statement and will continue to be relevant to Spectrum Shareholders who remain Spectrum Shareholders following completion of any successful Offer. However, you should note that many of these risks are similar to the risks you may face when investing in Ramelius Shares as outlined in Section 11.2 of the Bidder’s Statement.

In addition, if you do not accept the Offer during the Offer Period (and the Offer becomes Unconditional), you may remain as a minority Spectrum Shareholder. Section 10.3 of this Target’s Statement sets out a summary of some of the risks associated with being a minority shareholder in Spectrum.

You should have regard to your own personal investment objectives and financial circumstances, and should consult your professional advisers, before deciding whether or not to accept the Offer.

(a) Mining and exploration risks

Mineral exploration, mining and development are speculative and high risk undertakings and there can be no assurances that the tenements currently held by Spectrum or acquired by Spectrum in the future will result in the discovery of an economic ore deposit. There is no certainty that Spectrum’s activities will reveal mineable mineralisation or that such mineralisation will be commercially viable.

The success of Spectrum’s business depends on successful exploration and/or acquisition of reserves, securing and maintaining title to tenements and consents, successful design, construction, commissioning and operating of mining and processing facilities, successful development and production in accordance with forecasts and successful management of the operations. Exploration and mining may be adversely impacted by force majeure circumstances, land claims and unforeseen mining problems. There is no assurance that Spectrum’s attempts to develop and exploit its exploration projects will be successful.

SPECTRUM METALS LIMITED | Target’s Statement in response to Ramelius’ Offer

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(b)

The economic realisation of successful discoveries also involves obtaining the necessary licences or clearances from relevant authorities that may require conditions to be satisfied and the exercise of discretion by such authorities.

Ore reserve and mineral resource estimates

Ore reserve and mineral resource estimates are expressions of judgement based on drilling results, knowledge, past experience, industry practice and many other factors. Estimates which are valid when made may change substantially when new information becomes available. Ore estimation is an interpretive process based on available data and interpretations and, thus, estimations may prove to be inaccurate.

The actual quality and characteristics of ore deposits cannot be known until mining takes place, and will almost always certainly differ from the assumptions used to develop reserves. Further, ore reserves are valued based on future costs and future prices and, consequently, the actual ore reserves and mineral resources may differ from those estimated, which may result in either a positive or negative effect.

Inferred mineral resources that are not ore reserves do not have demonstrated economic viability. Due to the uncertainty which may attach to inferred mineral resources, there is no assurance that inferred mineral resources will be upgraded to measured or indicated resources or proven or probable ore reserves as a result of continued exploration.

Spectrum may require further financing to develop projects or to meet future objectives. There is no assurance that Spectrum will be successful in obtaining the financing required as and when needed. Volatile markets for mineral commodities may make it difficult or impossible for Spectrum to secure financing in the form of debt or equity at favourable terms, or to obtain financing entirely. Failure to obtain additional financing on a timely basis may cause Spectrum to postpone its exploration or development activities, forfeit rights in some or all of its properties.

(d) Geological and geotechnical

There is a risk that unforeseen geological and geotechnical difficulties may be encountered when exploring, developing and mining ore reserves. In this event, a loss of revenue may be caused due to the lower than expected production and/or higher than anticipated operation and maintenance costs and/ or on-going unplanned capital expenditure in order to meet production targets.

(e) Environmental risks

Mining and exploration involves a risk of environmental damage. Spectrum may be required to comply with certain environmental management issues from time to time. The potential for liability is an everpresent risk. Spectrum intends to ensure that it conducts its operations to comply with all relevant applicable environmental legislation. Despite this endeavour, certain environmental risks are inherent in Spectrum’s operations.

(f) Share market conditions

Spectrum is listed on ASX, as such its share price is subject to the numerous influences that may affect both the trends in the share market and the share prices of individual companies, including movements in international and local stock markets, changes in the outlook for commodities (more specifically, gold), inflation, interest rates, general economic conditions and changes in government, fiscal, monetary and regulatory policies. In the future, these factors may cause Spectrum Shares to trade below its current price.

SPECTRUM METALS LIMITED | Target’s Statement in response to Ramelius’ Offer

(g) General legal and taxation matters

Future earnings, asset values and the relative attractiveness of Spectrum Shares may be affected by changes in law and government policy. In addition, accepting the Offer may involve tax considerations that may differ for each Spectrum Shareholder. Each Spectrum Shareholder is encouraged to seek professional tax advice in connection with accepting the Offer (see also Section 10.5 of this Target’s Statement in respect of Australian tax considerations).

(h) Government policy

Industry profitability can be affected by changes in government, which are not within the control of Spectrum. Spectrum’s activities are subject to extensive legislation, regulation and various approvals controlling the exploration for mineral properties, but also the possible effects of such activities upon the environment and upon interests of native and/or indigenous peoples. Permits from a variety of regulatory authorities are required for many aspects of Spectrum’s operations.

There is no assurance that permits will be obtained when sought or that unfavourable conditions will not be imposed.

The introduction of new regulations, or alteration of current legislation and regulations could cause additional expense, restrictions and delays in the exploration and development of Spectrum’s tenements, the extent of which cannot be predicted.

(i) Weather and climatic conditions

The current and future operations of Spectrum may be affected by limitations on activities due to seasonal weather patterns and heavy rain.

SPECTRUM METALS LIMITED | Target’s Statement in response to Ramelius’ Offer

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11. Your choices as a Spectrum Shareholder

The choices that are available to you as Spectrum Shareholders are set out below. Your Directors encourage you to consider your personal risk profile, investment strategy, tax position and financial circumstances before making any decision in relation to your Spectrum Shares.

11.1. Accept the Offer

The consequences of accepting the Offer are described in Section 9.10 of this Target’s Statement. In particular, if you accept the Offer and the Offer becomes Unconditional:

you will receive 1 Ramelius Share for every 10 Spectrum you hold and A$0.017 cash for every 1 Spectrum Share you hold; and
you will not be able to sell your Spectrum Shares to anyone else, including by accepting any Competing Proposal (including a Superior Proposal) that might emerge, unless either the Offer does not become Unconditional or you are able to withdraw your acceptance in the circumstances described in Section 9.11 of this Target’s Statement.

11.2. Reject the Offer

If you do not wish to accept the Offer and wish to retain your Spectrum Shares, no action is required.

However, if you do not accept the Offer and Ramelius becomes entitled to compulsorily acquire your Spectrum Shares under the Corporations Act, you may be provided with your Offer Consideration later than Spectrum Shareholders who chose to accept the Offer.

Ramelius has stated in its Bidder’s Statement that if it becomes entitled to 90% of all Spectrum Shares it intends to progress to compulsory acquisition. Further details on compulsory acquisition are provided in Section 9.15 of this Target’s Statement.

If the Offer becomes Unconditional, but Ramelius does not become entitled to compulsorily acquire your Spectrum Shares, you will be a minority shareholder in Spectrum. Some of the implications of becoming a minority Spectrum shareholder are described in Section 10.3 of this Target’s Statement.

11.3. Sell your Spectrum Shares

You may decide to try to sell your Spectrum Shares otherwise than by way of the Offer. If you do:

you will receive payment based on the price at which you privately negotiate with a third party and will not be able to accept the Offer or any Competing Proposal that may emerge; and
depending on the sale price achieved, you may receive more or less for your Spectrum Shares than the value of the Offer Consideration.

The taxation implications of privately selling your Spectrum Shares depend on a number of factors and will vary according to your particular circumstances.

You should seek your own specific professional advice regarding the taxation consequences for you of privately selling your Spectrum Shares relative to accepting the Offer.

SPECTRUM METALS LIMITED | Target’s Statement in response to Ramelius’ Offer

12. Additional information

12.1. Bid Implementation Agreement

On 10 February 2020, Ramelius announced that it and Spectrum had entered into the Bid Implementation Agreement in relation to the Offer by Ramelius for all of the Spectrum Shares

A copy of the Bid Implementation Agreement was lodged with the ASX on 10 February 2020 and can be obtained from Spectrum’s website (at www.spectrummetals.com.au) or under Spectrum’s profile on www.asx.com.au.

A break fee of A$750,000 is payable by Spectrum to Ramelius in limited circumstances, which are set out in the summary below.

A summary of the key terms of the Bid Implementation Agreement is set out below. It is not an exhaustive summary and does not constitute a definitive statement of the rights and liabilities of Spectrum and Ramelius under the agreement.

(a) ( Bid conditions ) The Offer is subject to several conditions. These conditions are detailed in full at Section 9.5 of this Target’s Statement.
(b) ( Spectrum convertible securities ) Prior to the Offer becoming unconditional Ramelius must make an offer to acquire all of the Spectrum securities that are convertible into Spectrum Shares or seek consent for the cancellation of such convertibles on terms materially consistent with the Offer.
(c) ( Board appointment ) Subject to Ramelius declaring the Offer (or the Offer otherwise becoming) Unconditional and Ramelius having acceptances of at least 50.1% of all Spectrum Shares, Ramelius will have the right to appoint such number of directors so as to comprise a majority on the Spectrum Board.
(d) ( Conduct of business ) During the Exclusivity Period, Spectrum must conduct its business in the ordinary course, in accordance with all applicable laws and regulations and consistent with the Budget and Work Program.
(e) ( Variation ) The Bid Implementation Agreement provides that Ramelius may vary the Offer in any manner permitted by the Corporations Act so far as the terms are no less favourable to Spectrum Shareholders than the Agreed Bid Terms (detailed in Schedule 3 to the Bid Implementation Agreement). Further, Ramelius may declare the bid unconditional and extend the Offer Period.
(f) ( Compensating Amount ) Spectrum has agreed to compensate Ramelius A$750,000 where, among other things, Spectrum enters into, approves or recommends, any agreement regarding a Competing Proposal, the Spectrum Directors fail to unanimously recommend that, in the absence of a Superior Proposal, Spectrum Shareholders accept the Offer or is in breach of the Bid Implementation Agreement.
(g) ( Exclusivity ) Subject to the fiduciary exception referred to in section 12.1(i) below, Spectrum has agreed to exclusivity obligations. The Bid Implementation Agreement contains no shop, no talk and no due diligence restrictions on Spectrum. During the Exclusivity Period, Spectrum warrants that, amongst other things:
(i) it is not, other than the discussions with Ramelius, in respect of the Offer, in negotiations or discussions in respect of any:
- (A) actual, proposed or potential Competing Proposal; or
- (B) transaction that would, or would reasonably be expected to, reduce the likelihood of success of the Offer with any third party and has ceased any such discussions or negotiations to the extent that they were on foot prior to the date of Bid Implementation Agreement;

SPECTRUM METALS LIMITED | Target’s Statement in response to Ramelius’ Offer

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(ii) will not solicit, invite, encourage or initiate any inquiry, expression of interest, offer, proposal or discussion by any third party in relation to, or which would reasonably be expected to encourage or lead to the making of, an actual, proposed or potential Competing Proposal;
(iii) will not directly or indirectly engage in or participate in any discussions or negotiations, communicate any intention to do any of these things, with any third party in relation to (or which may reasonably be expected to lead to) a Competing Proposal, even if that Competing Proposal was not directly or indirectly solicited, invited, encouraged or initiated by Spectrum or any of its Related Persons or that third party has publicly announced the Competing Proposal; and
(iv) will not directly or indirectly solicit, invite, initiate or encourage or facilitate, enable or permit any third party to undertake due diligence investigations or make available to any third party (or permit any such third party to receive) any non-public information, in respect of or relating to Spectrum, its Subsidiaries, or any of their businesses, Tenements, assets and operations, in connection with such third party formulating, developing or finalising, or assisting in the formulation, development or finalisation of, an actual, proposed or potential Competing Proposal.
(h) ( Notification of approaches ) During the Exclusivity Period, Spectrum must, within 2 Business Days, with all material details of the relevant event, provide to Ramelius information regarding:
(i) any approach, inquiry or proposal made by any third party to Spectrum or any of its related persons, to initiate any discussions or negotiations that concern, or that could reasonably be expected to lead to, a Competing Proposal;
(ii) any request made by any third party to Spectrum or any of its related persons for any information relating to Spectrum, its Subsidiaries, or any businesses, Tenements, assets or operations, in connection with such third party formulating, developing or finalising, or assisting in the formulation, development or finalisation of, an actual, proposed or potential Competing Proposal; or
(iii) the provision by Spectrum or any of its related persons of any information relating to Spectrum or any of its Subsidiaries or any of their businesses, Tenements, assets or operations to any third party in connection with or for the purposes of any actual, proposed or potential Competing Proposal.
(i) ( Fiduciary exception ) The restrictions detailed at paragraph (g) above do not apply extent that it restricts Spectrum from responding to a written bona fide actual, proposed or potential Competing Proposal, provided the Spectrum Board has determined in good faith based on the information then available and after consultation from its independent financial and legal advisers, that:
(i) the Competing Proposal is, or may reasonably be expected to lead to a Superior Proposal; and
(ii) failing to respond with respect to the Competing Proposal would be reasonably likely to constitute a breach of any of the legal obligations or fiduciary duties of the members of the Spectrum Board.

Before Spectrum can rely on this fiduciary exception, the Spectrum Board must obtain a written opinion from a legal adviser confirming that failing to take action which is proposed to be taken with respect to the relevant Competing Proposal would, or would be likely to, involve a breach of the legal obligations or fiduciary duties of each Spectrum Director.

(j) ( Warranties ) Both Ramelius and Spectrum have provided standard warranties to one another.
(k) ( Termination ) Standard termination clauses have been agreed to in the Bid Implementation Agreement. Further, Ramelius may terminate the Bid Implementation Agreement:

SPECTRUM METALS LIMITED | Target’s Statement in response to Ramelius’ Offer

(i) a Superior Proposal is made or publicly announced by a third party;
(ii) Spectrum accepts or enters into or offers to accept or enter into, any agreement arrangement or understanding regarding a Competing Proposal;
(iii) any Spectrum Director fails to make, withdraws or adversely modifies the unanimous recommendation of the Spectrum Directors;
(iv) any Spectrum Director fails to accept or procure the acceptance of the Offer in respect of all Spectrum Shares that they hold or in which they have a Relevant Interest in; or
(v) any Spectrum Director fails to make, withdraws or adversely modifies the public statement to be made.

12.2. Loan Agreement

As announced to ASX on 10 February 2020, Ramelius and Spectrum entered into a Loan Agreement pursuant to which Ramelius has agreed to provide an interest free unsecured loan of A$3 million to be used exclusively for working capital purposes in accordance with the Budget and Work Program and on the following terms and conditions ( Loan ):

(a) ( Repayment of Loan ) Subject to Section 12.2(b) below, Spectrum must repay the Loan on the earlier
of:
(i) 4 months from the date of the Bid Implementation Agreement, being 9 February 2020, or such later date as the parties agree, acting reasonably; and
(ii) an Event of Default occurring.
(b) ( Early Repayment ) If Spectrum issues securities (including any instrument capable of conversion into securities or any securities issued upon the exercise of any existing securities) then Spectrum will immediately apply any and all funds received from the issue of such securities in repayment or reduction of the Loan.
(c) ( Voluntary Repayment ) Spectrum may repay all or part of the Loan on any date with Ramelius’ prior written consent.
(d) ( Event of Default ) The following are Events of Default under the Loan Agreement:
(i) ( Misrepresentation ) Any warranty or statement made or repeated in or in connection with the Loan Agreement by Spectrum or in relation to the Spectrum Group is untrue or misleading when taken as a whole;
(ii) ( Winding Up ) An application or order is made, or resolution is passed, for the winding up of any member of the Spectrum Group or for the appointment of a liquidator;
(iii) ( Receiver ) A receiver, controller or analogous person is appointed to, or takes possession of all, or any part of the assets of any member of the Spectrum Group;
(iv) ( Insolvency ) Any member of the Spectrum Group:
- (A) suspends payments to creditors generally;
- (B) becomes an externally-administered body corporate within the meaning of the Corporations Act;
- (C) becomes subject to administration under Part 5.3A of Chapter 5 of the Corporations Act, or steps are taken which could reasonably be expected to result in Spectrum becoming so subject; or

SPECTRUM METALS LIMITED | Target’s Statement in response to Ramelius’ Offer

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  - (D) is or states that it is, or is deemed by applicable law to be, unable to pay its debts as and when they fall due;

(v) ( Suspension ) The shares of Spectrum are suspended by ASX under Listing Rule 17.2 or 17.3 for a period of more than 5 trading days (as defined by ASX) in aggregate between the date of the Loan Agreement and the repayment date;
(vi) ( Reduction of capital ) Any member of the Spectrum Group taking action to reduce its capital or buy back any of its shares or other securities;
(vii) ( Further indebtedness ): Any member of the Spectrum Group incurring or agreeing to incur any further indebtedness other than creditors in the ordinary course of ordinary business and not incurring or agreeing to incur any indebtedness (either under one document or a series of similar agreements) for an aggregate amount of greater than A$250,000 except to the extent included in the Budget and Work Program;
(viii) ( Encumbrance ) Other than in the ordinary course of ordinary business, any member of the Spectrum Group granting or creating any encumbrance, mortgage or similar over any or all of its assets;
(ix) ( Remuneration ): Without the prior written consent of Ramelius, any member of the Spectrum Group paying or agreeing to pay any bonus or redundancy amount to any director or officer except to the extent required by law and in any event consistent with the ASX Listing Rules and the Corporations Act;
(x) (G ood standing ) Any member of the Spectrum Group not maintaining any or all of its assets in good standing;
(xi) ( Disposal of assets ) Without the prior consent of Ramelius, any member of the Spectrum Group selling, disposing or granting to any third party, (including by way of joint venture or similar) any interest in any of its assets (or agreeing to do any of those things) except to the extent included in the Budget and Work Program;
(xii) ( Payment limit ) Without the prior written consent of Ramelius, any member of the Spectrum Group pays to any party an amount exceeding A$250,000 either in one transaction or a series of transactions except to the extent included in the Budget and Work Program;
(xiii) ( Breach of agreement ) Spectrum is in material breach of the Loan Agreement and (if capable of being rectified) Spectrum fails to rectify that breach within 5 Business Days of written notice from Ramelius; or
(xiv) ( Bid Implementation Agreement ) Ramelius being entitled to terminate the Bid Implementation Agreement for any reason, other than where the Offer is prohibited or restrained permanently by a Government Agency or where Ramelius withdraws the Offer or the Offer lapses for any reason, provided that in the latter case, Ramelius did not withdraw the Offer or allow the Offer to lapse as a result of the actions or otherwise of Spectrum (including the breach of or failure to satisfy a Condition).
(e) ( Representations and Warranties ) The Loan Agreement is subject to several standard representations and warranties.

At the date of this Target’s Statement the loan is undrawn.

SPECTRUM METALS LIMITED | Target’s Statement in response to Ramelius’ Offer

12.3. Due diligence

Due diligence on Spectrum was conducted on behalf of Ramelius prior to execution of the Bid Implementation Agreement. The due diligence was a process undertaken under obligations of confidentiality.

12.4. Effect of the takeover on Spectrum’s material contracts

None of the material contracts to which Spectrum is a party contain change of control provisions that may be triggered as a result of, or as a result of acceptances of, the Offer.

12.5. Material litigation

Spectrum is not involved in any ongoing litigation that is material in the context of Spectrum and its Subsidiaries taken as a whole.

12.6. ASX waivers

Ramelius is not offering to acquire the Spectrum Options under the Offer but intends to make separate offers to acquire any unexercised Spectrum Options.

Spectrum intends to apply to ASX to seek a waiver from Listing Rules 6.23.2 and 6.23.4 to the extent necessary to allow for the transfer or cancellation of the unexercised Spectrum Options.

12.7. Consents

The following persons have given, and have not, before the date of this Target’s Statement (being the date this Target’s Statement is lodged with ASIC), withdrawn their consent to be named in this Target’s Statement in the form and context in which they are so named:

Bennett + Co as Spectrum’s legal adviser for the Offer; and
Hartleys Limited as Spectrum’s financial adviser for the Offer.

Other than as specifically outlined above, each party referred to in this Section 12.7 has not caused or authorised the issue of this Target’s Statement and does not make or purport to make any statement in this Target’s Statement or any statement on which a statement in this Target’s Statement is based and takes no responsibility for any part of this Target’s Statement other than any reference to its name.

The reference to KPMG appears for information purposes only.

This Target’s Statement also includes statements which are made in, or based on statements made in, documents lodged with ASIC or given to ASX. Under the terms of ASIC Class Order 13/521, the parties making those statements are not required to consent to, and have not consented to, inclusion of those statements in this Target’s Statement. Any Spectrum Shareholder who would like to receive a copy of any of those documents may obtain a copy (free of charge) during the Offer Period and within 2 Business Days of the request, by contacting Spectrum by email at [email protected].

As permitted by ASIC Corporations (Consents to Statements) Instrument 2016/72, this Target’s Statement may include or be accompanied by certain statements:

fairly representing a statement by an official person; or
from a public official document or a published book, journal or comparable publication.

In addition, as permitted by ASIC Corporations (Consents to Statements) Instrument 2016/72, this Target’s Statement contains share price trading data sourced from lress Limited without its consent.

SPECTRUM METALS LIMITED | Target’s Statement in response to Ramelius’ Offer

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12.8. Competent Persons’ statements

The information in this Target’s Statement that relates to Spectrum Exploration Results, Mineral Resources and Ore Reserves is extracted from the ASX announcements entitled ‘Penny West Exploration Update’, ‘Maiden Mineral Resource Estimate for Penny West’ and ‘Drilling extends mineralisation at Penny West and Magenta’ made on 18 October 2019, 24 October 2019 and 3 December 2019 respectively.

The information in this Target’s Statement that relates to Spectrum Mineral Resources and Ore Reserves is based on information compiled by Mr Paul Payne, a Competent Person who is a Fellow of the Australasian Institute of Mining and Metallurgy. Mr Payne is a full-time employee of Payne Geological Services. Mr Payne has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Payne consents to the inclusion in this Target’s Statement of the matters based on his information in the form and context in which it appears.

The information in this report that relates to Spectrum Exploration Results is based on information compiled and reviewed by Mr John Downing, a Competent Person who is a Member of the Australian Institute of Geoscientists and a consultant to Spectrum. Mr Downing, who is also a Spectrum Shareholder, has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he has undertaken to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for the Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Downing consents to the inclusion in this Target’s Statement of the matters based on his information in the form and context in which it appears. The inclusion of intercepts from historic drilling by Eastmet at the Magenta and Columbia prospects is designed to lend context to exploration intercepts from current drilling by Spectrum (refer ASX Announcement 14 January 2020 for JORC table 1 disclosures relating to the differences in the methodology and level of data capture for the historic drilling).

Spectrum is not aware of any new information or data that materially affects the information and, in the case of estimates of Mineral Resources or Ore Reserves, considers that all material assumptions and technical parameters underpinning the estimates continue to apply and have not materially changed.

12.9. Dispatch of takeover documents

Spectrum agreed in the Bid Implementation Agreement that Ramelius could send the Bidder’s Statement to Spectrum Shareholders earlier than would otherwise be permitted under item 6 of section 633(1) of the Corporations Act.

SPECTRUM METALS LIMITED | Target’s Statement in response to Ramelius’ Offer

12.10. No other material information

This Target’s Statement is required to include all the information that Spectrum Shareholders and their professional advisers would reasonably require to make an informed assessment whether to accept the Offer, but:

only to the extent to which it is reasonable for investors and their professional advisers to expect to find this information in this Target’s Statement; and
only if the information is known to any Spectrum Director.

Your Directors are of the opinion that the information that Spectrum Shareholders and their professional advisers would reasonably require to make an informed assessment whether to accept the Offer is:

the information contained in the Bidder’s Statement (to the extent that the information is not inconsistent or superseded by information in this Target’s Statement);
the information contained in Ramelius’ releases to ASX, and in the documents lodged by Spectrum with ASX before the date of this Target’s Statement; and
the information contained in this Target’s Statement.

Your Directors have assumed, for the purposes of preparing the Target’s Statement, that the information in the Bidder’s Statement is accurate (unless they have expressly indicated otherwise in this Target’s Statement). However, your Directors do not take any responsibility for the contents of the Bidder’s Statement and are not to be taken as endorsing, in any way, any or all statements contained in it.

In deciding what information should be included in this Target’s Statement, your Directors have had regard to:

the nature of the Spectrum Shares;
the matters that Spectrum Shareholders may reasonably be expected to know;
the fact that certain matters may reasonably be expected to be known to Spectrum Shareholders’ professional advisers; and
the time available to Spectrum to prepare this Target’s Statement.

SPECTRUM METALS LIMITED | Target’s Statement in response to Ramelius’ Offer

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1 . Glossar 3 y

In this Target’s Statement, unless the context otherwise requires:

Acceptance Form means the form with that title that accompanies the Bidder’s Statement.

AEDT means Australian Eastern Daylight Time.

AISC means All in Sustaining Costs.

Announcement Date means 10 February 2020, being the date the Offer was announced on ASX.

ASIC means the Australian Securities and Investments Commission.

ASX means ASX Limited ACN 008 624 691 or the Australian Securities Exchange (as the context requires).

ASX Settlement Operating Rules means the operating rules of ASX Settlement which govern the administration of the Clearing House Electronic Sub-register System.

ASX Listing Rules means the official listing rules of ASX, as amended from time to time.

Associate has the meaning in section 12(2) of the Corporations Act

Bid Implementation Agreement means the bid implementation agreement between Ramelius and Spectrum dated 9 February 2020.

Bidder means Mt Magnet Gold Pty Ltd ABN 66 008 669 556, a wholly-owned subsidiary of Ramelius.

Bidder’s Statement means the bidder’s statement of Ramelius under Part 6.5 Division 2 of the Corporations Act relating to the Offer dated 25 February 2020 (including the Attachments).

Budget and Work Program means the expenditure budget and project work plan for Spectrum as approved by the Spectrum Directors.

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

Combined Entity means Ramelius and its Subsidiaries following the acquisition by Ramelius of all, or a portion of, Spectrum Shares.

Competing Proposal means any expression of interest, proposal (including a scheme of arrangement), offer or transaction (or series of transactions) that would, if completed substantially in accordance with its terms, result in:

(a) any person or persons other than Ramelius, the Bidder or one of Ramelius’ Associates acquiring:
(i) an interest in all or a substantial part of the Tenements or assets of Spectrum or any of its Subsidiaries;
(ii) a Relevant Interest in more than 15% of the voting shares of Spectrum or any of its Subsidiaries;
(iii) control of Spectrum or any of its Subsidiaries within the meaning of section 50AA of the Corporations Act; or

(b) Spectrum and another person or persons (other than Spectrum or one of Spectrum’s Associates) operating under a dual listed company, or similar structure.

Conditions means the conditions of the Offer set out in Section 13.8 of the Bidder’s Statement.

Controlling Participant means in relation to your Spectrum Shares, has the same meaning as in the ASX Settlement Operating Rules.

SPECTRUM METALS LIMITED | Target’s Statement in response to Ramelius’ Offer

Corporations Act means the Corporations Act 2001 (Cth).

Exclusivity Period means the period commencing from the date of the Bid Implementation Agreement, being 9 February 2020, to the earlier of:

(a) expiry of the Offer Period; or
(b) the date that the Bid Implementation Agreement is terminated.

Foreign Shareholder means a Spectrum Shareholder whose address shown in the register of members of Spectrum is a place outside of Australia and its external territories or New Zealand.

Government Agency means any foreign or Australian government or governmental, semi-governmental, administrative, fiscal or judicial body, department, commission, authority, tribunal, agency or entity or any minister of the Crown in right of the Commonwealth of Australia or any State, and any other federal, state, provincial, or local government, whether foreign or Australian.

JORC Code means the 2012 edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’.

Loan Agreement means the loan agreement dated 9 February 2020 made between Ramelius and Spectrum.

Marketable Parcel has the meaning given in the ASX Operating Rules Procedures which, among other things, includes a parcel of shares, the value of which is not less than A$500.

Mineral Resources has the meaning given to that term in the JORC Code.

Minimum Acceptance Condition means at the end of the Offer Period Ramelius has a Relevant Interest in at least 50.1% of Spectrum Shares then on issue.

Offer means the off market takeover offer by Ramelius to acquire Spectrum Shares on the terms and conditions set out in Section 13 of the Bidder’s Statement.

Offer Consideration means 1 Ramelius Share for every 10 Spectrum Shares held by a Spectrum Shareholder and A$0.017 cash for every 1 Spectrum Share held by a Spectrum Shareholder.

Offer Period means the period during which the Offer is open for acceptance.

Ore Reserves has the meaning given to that term in the JORC Code.

Participant means an entity admitted to participate in the Clearing House Electronic Sub-register System under Rule 4.3.1 and 4.4.1 of the ASX Settlement Operating Rules.

Penny West Gold Project or Penny West means the project known as the Penny West Gold Project and comprising Tenements M57/180, M57/196 and E57/1087.

Prescribed Occurrence means the occurrence of an event referred to in Section 13.8(n) of the Bidder’s Statement.

Ramelius means Ramelius Resources Limited ABN 51 001 717 540 and, where the context requires, includes the Bidder.

Ramelius Board means the board of directors of Ramelius.

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

Related Body Corporate has the meaning given in section 50 of the Corporations Act.

Relevant Interest has the meaning given in section 9 of the Corporations Act.

Spectrum means Spectrum Metals Limited ABN 94 115 770 226.

Spectrum Board means the board of directors of Spectrum.

SPECTRUM METALS LIMITED | Target’s Statement in response to Ramelius’ Offer

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Spectrum Convertible means an option or some other form of instrument (for instance performance right or share) permitting the holder to subscribe for a Spectrum Share.

Spectrum Directors or Directors means the directors of Spectrum.

Spectrum Group means Spectrum and each of its Subsidiaries.

Spectrum Option means an option to acquire a Spectrum Share.

Spectrum Share means an ordinary share in the capital of Spectrum.

Spectrum Shareholder means a holder of a Spectrum Share.

Subsidiary has the meaning in section 46 of the Corporations Act.

Superior Proposal means a bona fide Competing Proposal that in the determination of the directors of Spectrum Directors acting in good faith:

(a) is reasonably capable of being valued and completed, taking into account all aspects of the transaction or proposed transaction, including the nature of the Competing Proposal, the conditions associated with the Competing Proposal and the likelihood of those conditions being satisfied within a reasonable period of time and the person or persons making it; and
(b) is more favourable to Spectrum Shareholders than the Offer, taking into account all terms and conditions of the Competing Proposal,

provided that a financial adviser, independent of the Board, has provided a written opinion to the Spectrum Board which supports the determination of the matters in paragraphs (a) and (b) above.

Target’s Statement means this document being the statement of Spectrum under Part 6.5 Division 3 of the Corporations Act.

Tenements means any and all tenements that Spectrum or its Subsidiaries have a direct or indirect interest in from time to time (including as holder, owner, operator or joint venturer), including the Penny West Gold Project and any tenement that is a successor, renewal, modification, extension or substitute for the whole or part of any such tenement.

Unconditional means Ramelius issuing a notice in accordance with section 630(3) of the Corporations Act, declaring that the Offer is free or freed (as the case may be) from all defeating conditions otherwise applicable to the Offer, subject to compliance with section 650F(1)(a) of the Corporations Act.

VWAP means volume weighted average price.

WST means Australian Western Standard Time.

SPECTRUM METALS LIMITED | Target’s Statement in response to Ramelius’ Offer

13.1. Interpretation

In this Target’s Statement, unless the context otherwise requires:

(a) other words and phrases have the same meaning (if any) given to them in the Corporations Act;
(b) words of any gender include all genders;
(c) words indicating the singular include the plural and vice versa;
(d) an expression indicating a person includes any company, partnership, joint venture, association, corporation or other body corporate and vice versa;
(e) a reference to a section, clause, attachment and schedule is a reference to a section of, clause of and an attachment and schedule to this Target’s Statement as relevant;
(f) a reference to any legislation includes all delegated legislation made under it and amendments, consolidations, replacements or re-enactments of any of them;
(g) headings and bold type are for convenience only and do not affect the interpretation of this Target’s Statement;
(h) a reference to time is a reference to Perth time in Western Australia; and
(i) a reference to dollars, $, A$, AUD, cents, ¢ and currency is a reference to the lawful currency of the Commonwealth of Australia.

SPECTRUM METALS LIMITED | Target’s Statement in response to Ramelius’ Offer

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14. Approval of Target’s Statement

This Target’s Statement has been approved by a resolution passed by the Spectrum Directors. All Spectrum Directors voted in favour of that resolution.

Signed for and on behalf of Spectrum.

25 February 2020

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Mr Alexander Hewlett Executive Chairman

SPECTRUM METALS LIMITED | Target’s Statement in response to Ramelius’ Offer

Cor orate Director p y

Directors

Mr Alexander Hewlett – Chairman

Mr Paul Adams – Managing Director

Mr James Croser – Technical Director

Mr Nader El Sayed – Non-Executive Director

Mr Les Davis – Non-Executive Director

Company Secretary

Mr Mark Pitts

Registered Office & Principal Place of Business

Suite 2/827 Beaufort Street Inglewood WA 6052 Email: [email protected]

Share Registry

Security Transfer Registrars Pty Ltd 770 Canning Highway Applecross WA 6153

Website

www.spectrummetals.com.au

Financial Adviser

Legal Adviser

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SPECTRUM METALS LIMITED | Target’s Statement in response to Ramelius’ Offer

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M E T A L S L I M I T E D

ABN 94 115 770 226

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AI assistant

RAMELIUS RESOURCES LIMITED — Merger & Acquisition 2020

65718_rns_2020-02-24_7fb8cf5c-57c6-42e9-a0f2-817130bbb2a6.pdf

TARGET STATEMENT IN RESPECT TO AN OFF-MARKET TAKEOVER BID

Shareholder Contact

M E T A L S L I M I T E D

Target’s Statement

Im ortant Notices p

Nature of this document

ASIC and ASX disclaimer

Definitions and interpretation

Investment decisions

Forward looking statements

Ramelius information in this Target’s Statement

Maps, diagrams and rounding

Notice to foreign shareholders

References to the Bidder and Ramelius

Privacy

Date of this document

Table of Contents

Im ortant Dates p

Further information

Chairman’s Letter

25 February 2020

1. How to acce t the Offer p

For Issuer Sponsored Holdings of Spectrum Shares (such holdings will be evidenced by an ‘I’ appearing next to your holder number on your Acceptance Form):

For CHESS Holdings of Spectrum Shares (such holdings will be evidenced by an ‘X’ appearing next to your holder number on the Acceptance Form):

For Participants:

Your acceptance must be received by no later than 5.00 pm (WST) on 30 March 2020, unless the Offer is extended or withdrawn.

2. Directors’ recommendation

2.1. Summary of Offer

2.2. Directors of Spectrum

2.3. Directors’ recommendations

2.4. Intentions of your Directors in relation to the Offer

. Wh ou should acce t the Offer 3 y y p

Your Directors unanimously recommend that you ACCEPT the Ramelius Offer in the absence of a Superior Proposal

3.1. You will benefit from the Penny West Gold Project being able to utilise Ramelius’ existing infrastructure, which reduces the execution risk of its development

3.2. You will benefit from Ramelius’ greater financial capacity to advance exploration activities at Penny West

3.3. You will reduce the risk of dilution associated with potential future exploration and development fundraisings

3.4. You will become a shareholder in Ramelius, a leading ASX listed Australian gold producer and you will have improved ASX share trading liquidity

3.5. You will become a shareholder in a larger and well capitalised company with improved access to capital to better fund the growth of Spectrum’s assets

3.6. You will receive attractive value and a significant premium for your Spectrum Shares

3.7. The Spectrum Board unanimously recommends that you accept the Offer, in the absence of a Superior Proposal

3.8. No Superior Proposal has emerged to date

3.9. Spectrum’s share price may fall if the Offer is unsuccessful or in the absence of a Superior Proposal emerging

3.10. Spectrum Shareholders may be entitled to CGT rollover relief

3.11. The Offer is subject to limited commercial conditions, including 50.1% minimum acceptance by Spectrum Shareholders

3.12. There are risks in not accepting the Offer

. Fre uentl asked uestions 4 q y q

5. Information about Spectrum

5.1. Overview

5.2. History

5.3. Spectrum Directors

Alexander Hewlett

Executive Chairman

Paul Adams

Managing Director

James Croser

Technical Executive Director

Nader El Sayed

Non-Executive Director

Les Davis

Non-Executive Director

5.4. Overview of Spectrum’s activities and projects

Background

Location and tenements

Mineral Resource

Exploration potential

Penny North

Magenta Prospect

Other prospects

5.5. Spectrum financial information

5.6. Spectrum Securities

5.7. Recent Spectrum announcements

5.8. Spectrum website

5.9. Publicly available information about Spectrum

6. Information relatin to our Directors g y

6.1. Interests of Directors in Spectrum

6.2. Dealings by Directors in Spectrum Securities

6.3. Interest and dealings in Ramelius Shares

RAMELIUS RESOURCES LIMITED Merger & Acquisition 2020