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REACH RESOURCES LIMITED Proxy Solicitation & Information Statement 2021

Apr 14, 2021

65731_rns_2021-04-14_f5d9b8ae-19a9-4f5e-951a-e8c756c2455c.pdf

Proxy Solicitation & Information Statement

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CERVANTES CORPORATION LTD ACN 097 982 235

NOTICE OF GENERAL MEETING

Notice is given that the Meeting will be held at:

TIME : 10:00am (WST) DATE : 17 May 2021 PLACE : The Offices of Steinepreis Paganin Level 4, The Read Buildings 16 Milligan Street Perth WA 6000

The business of the Meeting affects your shareholding and your vote is important.

This Notice of Meeting should be read in its entirety. If Shareholders are in doubt as to how they should vote, they should seek advice from their professional advisers prior to voting.

The Directors have determined pursuant to Regulation 7.11.37 of the Corporations Regulations 2001 (Cth) that the persons eligible to vote at the Meeting are those who are registered Shareholders at 10:00am (WST) on 15 May 2021.

BUSINESS OF THE MEETING

AGENDA

1. RESOLUTION 1 – APPROVAL TO ISSUE SHARES AND OPTIONS

To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution :

“That, for the purposes of Listing Rule 7.1 and for all other purposes, approval is given for the Company to issue up to 750,000,000 Shares, together with one (1) free attaching Option for every two (2) Shares subscribed for and issued, on the terms and conditions set out in the Explanatory Statement.”

A voting exclusion statement applies to this Resolution. Please see below.

2. RESOLUTION 2 – APPROVAL TO ISSUE OPTIONS

To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution :

“That, for the purposes of Listing Rule 7.1 and for all other purposes, approval is given for the Company to issue up to 625,000,000 Options on the terms and conditions set out in the Explanatory Statement.”

A voting exclusion statement applies to this Resolution. Please see below.

3. RESOLUTION 3 – ISSUE OF OPTIONS TO COLLIN VOST – PARTICIPATION IN OPTION PLACEMENT

To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution :

“That, for the purposes of section 195(4) and section 208 of the Corporations Act, Listing Rule 10.11 and for all other purposes, approval is given for the Company to issue up to 50,000,000 Options to Collin Vost (or his nominee) on the terms and conditions set out in the Explanatory Statement.”

A voting exclusion statement and voting prohibition statement applies to this Resolution. Please see below.

4. RESOLUTION 4 – ISSUE OF OPTIONS TO JUSTIN VOST - PARTICIPATION IN OPTION PLACEMENT

To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution :

“That, for the purposes of section 195(4) and section 208 of the Corporations Act, Listing Rule 10.11 and for all other purposes, approval is given for the Company to issue up to 50,000,000 Options to Justin Vost (or his nominee) on the terms and conditions set out in the Explanatory Statement.”

A voting exclusion statement and voting prohibition statement applies to this Resolution. Please see below.

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5. RESOLUTION 5 – ISSUE OF OPTIONS TO MARCUS FLIS - PARTICIPATION IN OPTION PLACEMENT

To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution :

“That, for the purposes of section 195(4) and section 208 of the Corporations Act, Listing Rule 10.11 and for all other purposes, approval is given for the Company to issue up to 5,000,000 Options to Marcus Flis (or his nominee) on the terms and conditions set out in the Explanatory Statement.”

A voting exclusion statement and voting prohibition statement applies to this Resolution. Please see below.

Dated: 15 April 2021

By order of the Board

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Collin Vost Chairman/Managing Director

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Voting Prohibition Statements

Resolution 3 – Issue of
Options to Collin Vost

In accordance with section 224 of the Corporations Act, a vote on this
Resolution must not be cast (in any capacity) by or on behalf of a related
party of the Company to whom the Resolution would permit a financial
benefit to be given, or an associate of such a related party (Resolution 3
Excluded Party). However, the above prohibition does not apply if the vote is
cast by a person as proxy appointed by writing that specifies how the proxy is
to vote on the Resolution and it is not cast on behalf of a Resolution 3
Excluded Party.
In accordance with section 250BD of the Corporations Act, a person
appointed as a proxy must not vote, on the basis of that appointment, on this
Resolution if:
(a)
the proxy is either:
(i)
a member of the Key Management Personnel; or
(ii)
a Closely Related Party of such a member; and
(b)
the appointment does not specify the way the proxy is to vote on
this Resolution.
Provided the Chair is not a Resolution 3 Excluded Party, the above prohibition
does not apply if:
(a)
the proxy is the Chair; and
(b)
the appointment expressly authorises the Chair to exercise the proxy
even though this Resolution is connected directly or indirectly with
remuneration of a member of the Key Management Personnel.

Resolution 4 – Issue of
Options to Justin Vost

In accordance with section 224 of the Corporations Act, a vote on this
Resolution must not be cast (in any capacity) by or on behalf of a related
party of the Company to whom the Resolution would permit a financial
benefit to be given, or an associate of such a related party (Resolution 4
Excluded Party). However, the above prohibition does not apply if the vote is
cast by a person as proxy appointed by writing that specifies how the proxy is
to vote on the Resolution and it is not cast on behalf of a Resolution 4
Excluded Party.
In accordance with section 250BD of the Corporations Act, a person
appointed as a proxy must not vote, on the basis of that appointment, on this
Resolution if:
(a)
the proxy is either:
(i)
a member of the Key Management Personnel; or
(ii)
a Closely Related Party of such a member; and
(b)
the appointment does not specify the way the proxy is to vote on
this Resolution.
Provided the Chair is not a Resolution 4 Excluded Party, the above prohibition
does not apply if:
(a)
the proxy is the Chair; and
(b)
the appointment expressly authorises the Chair to exercise the proxy
even though this Resolution is connected directly or indirectly with
remuneration of a member of the Key Management Personnel.

Resolution 5 – Issue of
Options to Marcus Flis

In accordance with section 224 of the Corporations Act, a vote on this
Resolution must not be cast (in any capacity) by or on behalf of a related
party of the Company to whom the Resolution would permit a financial
benefit to be given, or an associate of such a related party (Resolution 5
Excluded Party). However, the above prohibition does not apply if the vote is
cast by a person as proxy appointed by writing that specifies how the proxy is
to vote on the Resolution and it is not cast on behalf of a Resolution 5
Excluded Party.
In accordance with section 250BD of the Corporations Act, a person
appointed as a proxy must not vote, on the basis of that appointment, on this
Resolution if:
(a)
the proxy is either:

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(i)
a member of the Key Management Personnel; or
(ii)
a Closely Related Party of such a member; and
(b)
the appointment does not specify the way the proxy is to vote on
this Resolution.
Provided the Chair is not a Resolution 5 Excluded Party, the above prohibition
does not apply if:
(a)
the proxy is the Chair; and
(b)
the appointment expressly authorises the Chair to exercise the proxy
even though this Resolution is connected directly or indirectly with
remuneration of a member of the Key Management Personnel.

Voting Exclusion Statements

In accordance with Listing Rule 14.11, the Company will disregard any votes cast in favour of the resolution set out below by or on behalf of the following persons:

Resolution 1– Approval to issue Shares and Options	A person who is expected to participate in, or who will obtain a material benefit as a result of, the proposed issue (except a benefit solely by reason of being a holder of ordinary securities in the Company) (namely Placement recipients)or an associate of thatperson(or thosepersons).
Resolution 2 – Approval to issue Options	A person who is expected to participate in, or who will obtain a material benefit as a result of, the proposed issue (except a benefit solely by reason of being a holder of ordinary securities in the Company) (namely Option Placement recipients)or an associate of that person(or those persons).
Resolution 3 – Issue of Options to Collin Vost	Collin Vost (or his nominee) and any other person who will obtain a material benefit as a result of the issue of the securities (except a benefit solely by reason of being a holder of ordinary securities in the Company) or an associate of thatperson or thosepersons.
Resolution 4 – Issue of Options to Justin Vost	Justin Vost (or his nominee) and any other person who will obtain a material benefit as a result of the issue of the securities (except a benefit solely by reason of being a holder of ordinary securities in the Company) or an associate of that person or those persons.
Resolution 5 – Issue of Options to Marcus Flis	Marcus Flis (or his nominee) and any other person who will obtain a material benefit as a result of the issue of the securities (except a benefit solely by reason of being a holder of ordinary securities in the Company) or an associate of that person or those persons.

However, this does not apply to a vote cast in favour of the Resolution by:

(a) a person as a proxy or attorney for a person who is entitled to vote on the Resolution, in accordance with the directions given to the proxy or attorney to vote on the Resolution in that way; or
(b) the Chair as proxy or attorney for a person who is entitled to vote on the Resolution, in accordance with a direction given to the Chair to vote on the Resolution as the Chair decides; or
(c) a holder acting solely in a nominee, trustee, custodial or other fiduciary capacity on behalf of a beneficiary provided the following conditions are met:
(i) the beneficiary provides written confirmation to the holder that the beneficiary is not excluded from voting, and is not an associate of a person excluded from voting, on the resolution; and
(ii) the holder votes on the resolution in accordance with directions given by the beneficiary to the holder to vote in that way.

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Voting by proxy

To vote by proxy, please complete and sign the enclosed Proxy Form and return by the time and in accordance with the instructions set out on the Proxy Form.

In accordance with section 249L of the Corporations Act, Shareholders are advised that:

each Shareholder has a right to appoint a proxy;
the proxy need not be a Shareholder of the Company; and
a Shareholder who is entitled to cast two (2) or more votes may appoint two (2) proxies and may specify the proportion or number of votes each proxy is appointed to exercise. If the member appoints two (2) proxies and the appointment does not specify the proportion or number of the member’s votes, then in accordance with section 249X(3) of the Corporations Act, each proxy may exercise one-half of the votes.

Shareholders and their proxies should be aware that:

if proxy holders vote, they must cast all directed proxies as directed; and
any directed proxies which are not voted will automatically default to the Chair, who must vote the proxies as directed.

Voting in person

To vote in person, attend the Meeting at the time, date and place set out above.

You may still attend the meeting and vote in person even if you have appointed a proxy. If you have previously submitted a Proxy Form, your attendance will not revoke your proxy appointment unless you actually vote at the meeting for which the proxy is proposed to be used, in which case, the proxy’s appointment is deemed to be revoked with respect to voting on that resolution.

Please bring your personalised Proxy Form with you as it will help you to register your attendance at the meeting. If you do not bring your Proxy Form with you, you can still attend the meeting but representatives from the Company will need to verify your identity.

Should you wish to discuss the matters in this Notice of Meeting please do not hesitate to contact the Company Secretary on +61 8 6436 2300.

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EXPLANATORY STATEMENT

This Explanatory Statement has been prepared to provide information which the Directors believe to be material to Shareholders in deciding whether or not to pass the Resolutions.

1. BACKGROUND

1.1 General

The Company’s Shares have been suspended from trading on ASX since 30 May 2019 ( Suspension ) on the basis that ASX had determined that the Company’s financial condition was not adequate to warrant the continued quotation of its securities. The Suspension was stated to continue until the Company is able to demonstrate compliance with Listing Rule 12.2.

The Company has been liaising with ASX in recent weeks and has presented a recapitalisation strategy to ASX for the purposes of strengthening its balance sheet so that its financial condition is adequate for the purposes of ASX Listing Rule 12.2. Details of the proposal are set out below. ASX has confirmed that, if the recapitalisation strategy is implemented and subject to satisfaction of the reinstatement conditions set out in Section 1.4 of this Notice, it considers that the Company’s financial condition will be sufficient to warrant the lifting of the Suspension.

In order to recapitalise and strengthen its balance sheet, the Company proposes to raise a total of $3,366,512 as follows (the Recapitalisation Strategy ):

(a) $2,250,000 through a proposed placement of 750,000,000 Shares at an issue price of $0.003, together with one (1) free-attaching listed Option for every two (2) Shares issued, subject to Shareholder approval ( Placement );
(b) $312,500 through a proposed placement of 625,000,000 listed Options at an issue price of $0.0005 per Option, subject to Shareholder approval ( Option Placement ); and
(c) $804,012 through a proposed fully underwritten rights issue of approximately 268,004,155 Shares to eligible Shareholders on the basis of one (1) Share for every two (2) Shares held at an issue price of $0.003, together with one (1) free-attaching listed Option for every two (2) Shares issued ( Rights Issue ),

(together the Capital Raisings ).

The pro-forma balance sheet of the Company (assuming the Recapitalisation Strategy is completed) as at 31 December 2020 including proforma adjustments is set out in Schedule 4.

The terms of the Options referred to above are set out in Schedule 1. The Company intends on applying for quotation of the Options subject to compliance with Listing Rule requirements.

In addition, subject to Shareholder approval pursuant to Resolutions 3 to 5, Directors Collin Vost, Justin Vost and Marcus Flis propose to participate in the Option Placement for a total of $52,500 (being 105,000,000 Options).

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1.2 Use of Funds

Funds raised from the Capital Raisings will be used towards exploration and evaluation of the Primrose Project, payment of liabilities (including aged debtors/loans), assessing new projects, expenses of the Capital Raisings and working capital and corporate administration costs as set out below.

==> picture [420 x 446] intentionally omitted <==

----- Start of picture text -----

Amount
($3.336 m)
Activities Year 1 Year 2 Total
Data Compilation & Access costs $30,000 $50,000 $80,000
Geochem, geophysics and
$50,000 $65,000 $115,000
mapping - regional
Drilling & Assay – Blue Heaven $250,000 $65,000 $315,000
Drilling & Assay - Pansy $155,000 $50,000 $205,000
Pansy mine development $40,000 $80,000 $120,000
Tenement rates & rents $25,000 $30,000 $55,000
Tenement Reporting $25,000 $17,000 $42,000
Liabilities (aged creditors/loans) $820,000 $450,000 $1,270,000
Assessing new projects $75,000 $75,000 $150,000
Expenses of the Offers $337,000 $0 $337,000
Working capital and corporate
$332,000 $315,000 $647,000
administration
TOTAL EXPENDITURE $2,139,000 $1,197,000 $3,336,000
----- End of picture text -----

1.3 Pro-forma Capital Structure

Upon completion of the Capital Raisings (assuming full subscription under the Placement, Option Placement and Rights Issue), the capital structure of the Company will be as follows:

	Shares	Options
Current issued capital	536,008,309	43,750,0004
Securities to be issued pursuant to the Rights Issue	268,004,1551	134,002,075
Securities to be issued pursuant to the Placement	750,000,0002	375,000,000

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	Shares	Options
Securities to be issued pursuant to the Options Placement	Nil	625,000,0003
TOTAL	1,554,012,464	1,177,752,0754

Notes:

This assumes the Company raises a total of $804,012 under the Rights Issue at an issue price of $0.003 per Share.
This assumes the Company raises a total of $2,250,000 under the Placement at an issue price of $0.003 per Share.
This assumes the Company raises a total of $312,500 under the Option Placement at an issue price of $0.0005 per Option.
Comprising:
(i) 25,750,000 unlisted options exercisable at $0.01 per option with an expiry date of 31 December 2022; and
(ii) 18,000,000 unlisted options exercisable at $0.01 per option with an expiry date of 31 December 2023.

1.4 Reinstatement Conditions

ASX has confirmed that the securities of the Company will be reinstated to official quotation, subject to compliance with the following conditions precedent ( Reinstatement Conditions ):

(a) the Company’s shareholders approving all the resolutions the subject of this Notice;
(b) confirmation that all the conditions to the Recapitalisation Strategy (as per the terms of the Recapitalisation Strategy) have been satisfied. If any of the conditions have been waived, such waiver must be on terms acceptable to ASX;
(c) the Company releasing a full form prospectus pursuant to section 710 of the Corporations Act 2001 (Cth) in relation to the proposed Capital Raisings ( Prospectus );
(d) completion of the Capital Raisings, including closure of the Prospectus and confirmation that the Company has reached minimum subscription under the Rights Issue, the Placement and the Option Placement;
(e) confirmation that the previous rights issue to raise up to $2.144 million launched on 15 January 2021 has been cancelled and all funds returned to the subscribers;
(f) confirmation in a form acceptable to ASX that CVS has received cleared funds for the complete amount of the issue price of every security allotted and issued to every successful applicant for securities under the Capital Raisings;
(g) CVS demonstrating compliance with Listing Rules 12.1 and 12.2, to the satisfaction of the ASX including:
(i) providing a ‘working capital statement’ similar to that required by listing rule 1.3.3(a) to the effect that following completion of the Capital Raisings, CVS will have sufficient working capital at the time of reinstatement to carry out its activities; and

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(ii) satisfying the ‘working capital test’ of at least $1.5 million pursuant to Listing Rule 1.3.3(c);
(h) lodgement of all outstanding Appendices 3B and Appendices 2A with ASX for issues of new securities;
(i) lodgement of any outstanding reports for the period since CVS’s securities were suspended and any other outstanding documents required by Listing Rule 17.5;
(j) confirmation of the resignation of Collin Vost and Justin Vost from the board of CVS and the appointment of Robert Downey and Matthew O’Kane to the board of CVS;
(k) lodgement of Director’s Interest Notices, being either Appendix 3Xs, 3Ys, or 3Zs, as required;
(l) reinstatement of CVS’s CHESS sub-register (if applicable);
(m) confirmation that there are no legal, regulatory or contractual impediments to CVS undertaking the activities the subject of the commitments disclosed in the Prospectus;
(n) payment of any ASX fees, including listing fees, applicable and outstanding;
(o) confirmation the securities to be issued following the Meeting have been issued, and despatch of each of the following has occurred;
(i) in relation to all holdings on the CHESS subregister, a notice from CVS under ASX Settlement Operating Rule 8.9.1;
(ii) in relation to all other holdings, issuer sponsored holding statements; and
(iii) any refund money;
(p) provision of the following documents, in a form suitable for release to the market;
(i) a statement setting out the names of the 20 largest holders of each class of securities to be quoted, including the number and percentage of each class of securities held by those holders;
(ii) a distribution schedule of the numbers of holders in each class of security to be quoted, setting out the number of holders in the following categories:

1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 and over

(iii) a statement confirming completion of the Capital Raisings, closure of the Prospectus and that CVS has reached minimum subscription under the Rights Issue, the Placement and the Option Placement;

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(iv) a statement outlining CVS’s capital structure following the Meeting on a post-issue basis;
(v) CVS’s pro forma balance sheet based on actual funds raised;
(vi) CVS’s updated statement of commitments based on actual funds raised;
(vii) a consolidated activities report setting out the proposed business strategy for CVS (including an update on the status of CVS’s assets and the current activities with respect thereto);
(viii) full terms and conditions of all options on issue;
(ix) a statement confirming that there are no legal, regulatory or contractual impediments to CVS undertaking the activities the subject of the commitments disclosed in the Prospectus;
(x) any further documents and confirmations ASX may determine are required to be released to the market as pre-quotation disclosure;
(xi) full terms and conditions of all options on issue;
(xii) a statement confirming of the responsible person for the purposes of Listing Rule 1.1 condition 13;
(xiii) confirmation that CVS is in compliance with the listing rules and in particular listing rule 3.1; and
(xiv) provision of any other information required or requested by ASX including, but not limiting the generality of the foregoing, in relation to any issues that may arise (1) from ASX’s review of the Prospectus and (2) CVS’s financial reports.

The Company has until 21 May 2021 to comply with the Reinstatement Conditions set out above and have its securities reinstated to official quotation.

If the Company does not, or is unable to, comply with the Reinstatement Conditions by 21 May 2021, the Company’s Shares will not be reinstated to trading, and the Company will be removed from the official list of ASX on 21 May 2021 by virtue of the Company being a long term suspended entity.

1.5 Underwriter and Lead Manager

The Company has engaged the services of Westar Capital Limited (ACN 009 372 838) ( Westar Capital ), an authorised representative of (AFSL 255789), to act as lead manager and underwriter to the Capital Raisings.

The Company and Westar Capital have entered into an agreement to set out the terms of Westar Capital’s engagement ( Westar Mandate ).

Under the Westar Mandate:

(a) Westar Capital will act as sole and exclusive lead manager and underwriter to the Capital Raisings and will provide the Company with all necessary assistance in managing and arranging the Capital Raisings as is customary and appropriate in placements of the nature of the

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Capital Raising, including: developing and managing the Capital Raisings timetable in conjunction with the Company, co-ordinating and managing the Capital Raisings generally and establishing and facilitating demand for the Capital Raising securities.

(b) The Company has agreed to pay Westar Capital a fee of $201,991 (being, 6% of the amount raised under the Capital Raisings) (plus GST).
(c) If the Company terminates the Westar Mandate, or Westar Capital terminates the Westar Mandate for cause, if the Westar Mandate is terminated prior to completion of the Capital Raisings, a termination fee of A$50,000 (plus GST) will be payable by the Company.

A summary of the material terms of the Westar Mandate is set out in Schedule 2.

The Company and Westar Capital have entered into an underwriting agreement to set out the terms of Westar Capital’s underwriting ( Underwriting Agreement ).

Under the Underwriting Agreement:

(a) Westar Capital will fully underwrite the securities offered under the Capital Raisings;
(b) Westar Capital will be paid the fee referred to above, being $201,991, (6% of the underwritten amount) (exclusive of GST). For the avoidance of doubt, this is the sole fee payable to Westar Capital for its lead manager and underwriting services; and
(c) includes termination events and indemnification provisions from the Company, all of which are considered standard for an agreement of this kind.

A summary of the material terms of the Underwriting Agreement is set out in Schedule 3.

1.6 Indicative timetable

The indicative proposed timetable to complete the Recapitalisation Strategy is set out below:

==> picture [415 x 172] intentionally omitted <==

----- Start of picture text -----

Event Date
ASX announcement of the Capital Raisings and 1 April 2021
underwriting by Westar Capital
Prospectus lodged with ASIC/ASX for Capital 16 April 2021
Raisings
General Meeting (to approve resolutions 17 May 2021
relevant to the Recapitalisation Strategy)
Completion of the Capital Raisings and 21 May 2021
satisfaction of Reinstatement Conditions
Reinstatement to Official Quotation 25 May 2021
----- End of picture text -----

The above timetable is indicative only and subject to change .

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2. RESOLUTION 1 – APPROVAL TO ISSUE SHARES AND OPTIONS

2.1 General

The Company is proposing to issue up to 750,000,000 Shares at an issue price of $0.003 per Share, together with one (1) free attaching Option for every two (2) Shares subscribed for and issued (rounded down for fractional entitlements), to raise up to $2,250,000 ( Placement Securities ).

The Company has engaged the services of Westar Capital to act as lead manager and underwriter of the Placement Securities. Summaries of the Westar Mandate and Underwriting Agreement are set out in Section 1.4 above.

Broadly speaking, and subject to a number of exceptions, Listing Rule 7.1 limits the amount of equity securities that a listed company can issue without the approval of its shareholders over any 12 month period to 15% of the fully paid ordinary shares it had on issue at the start of that period.

The proposed issue of the Placement Securities does not fall within any of the exceptions set out in Listing Rule 7.2 and exceeds the 15% limit in Listing Rule 7.1. It therefore requires the approval of Shareholders under Listing Rule 7.1.

2.2 Technical information required by Listing Rule 14.1A

If Resolution 1 is passed, the Company will be able to proceed with the issue of the Placement Securities. In addition, the issue of the Placement Securities will be excluded from the calculation of the number of equity securities that the Company can issue without Shareholder approval under Listing Rule 7.1.

If Resolution 1 is not passed, the Company will not be able to proceed with the issue of the Placement Securities. The issue of the Placement Securities is part of the recapitalisation strategy that has been approved by the Board. If Resolution 1 is not passed, the Company will not be able to fulfill this limb of its recapitalisation strategy, meaning that the Company’s financial condition will not be adequate for the purposes of ASX Listing Rule 12.2, and the Company risks being de-listed.

Resolution 1 seeks Shareholder approval for the purposes of Listing Rule 7.1 for the issue of the Placement Securities.

2.3 Technical information required by Listing Rule 7.1

Pursuant to and in accordance with Listing Rule 7.3, the following information is provided in relation to Resolution 1:

(a) the Placement Securities will be issued to professional and sophisticated investors who are clients of Westar Capital. The recipients will be identified through a bookbuild process, which will involve Westar Capital seeking expressions of interest to participate in the capital raising from non-related parties of the Company;
(b) in accordance with paragraph 7.2 of ASX Guidance Note 21, the Company confirms that none of the recipients will be:
(i) related parties of the Company, members of the Company’s Key Management Personnel, substantial holders of the Company, advisers of the Company or an associate of any of these parties; and

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(ii) issued more than 1% of the issued capital of the Company;
(c) the maximum number of Shares to be issued is 750,000,000 and the maximum number of Options to be issued is equal to 50% of the number of Shares to be issued (being approximately 375,000,000 Options) as the Options will be issued free attaching with the Shares on a 1:2 basis;
(d) the Shares issued will be fully paid ordinary shares in the capital of the Company issued on the same terms and conditions as the Company’s existing Shares;
(e) the Options will be issued on the terms and conditions set out in Schedule 1;
(f) the Placement Securities will be issued no later than 3 months after the date of the Meeting (or such later date to the extent permitted by any ASX waiver or modification of the Listing Rules) and it is intended that issue of the Placement Securities will occur on the same date;
(g) the issue price will be $0.003 per Share and nil per Option as the Options will be issued free attaching with the Shares on a 1:2 basis. The Company will not receive any other consideration for the issue of the Shares and Options (other than in respect of funds received on exercise of the Options);
(h) the purpose of the issue of the Placement Securities is to raise $2,250,000. The Company intends to apply the funds raised from the issue in the manner set out in Section 1.1;
(i) the Placement Securities are not being issued under an agreement; and
(j) the Placement Securities are not being issued under, or to fund, a reverse takeover.

3. RESOLUTION 2 – APPROVAL TO ISSUE OPTIONS

3.1 General

The Company is proposing to issue up to 625,000,000 Options at an issue price of $0.0005 per Option to raise up to $312,500 ( Further Placement Options ).

The Company has engaged the services of Westar Capital to act as lead manager and underwriter of the Further Placement Options. Summaries of the Westar Mandate and Underwriting Agreement are set out in Section 1.4 above.

As summarised in Section 2.1 above, Listing Rule 7.1 limits the amount of equity securities that a listed company can issue without the approval of its shareholders over any 12 month period to 15% of the fully paid ordinary shares it had on issue at the start of that period.

The proposed issue of the Further Placement Options does not fall within any of the exceptions set out in Listing Rule 7.2 and exceeds the 15% limit in Listing Rule 7.1. It therefore requires the approval of Shareholders under Listing Rule 7.1.

3.2 Technical information required by Listing Rule 14.1A

If Resolution 2 is passed, the Company will be able to proceed with the issue of the Further Placement Options. In addition, the issue of the Further Placement

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Options will be excluded from the calculation of the number of equity securities that the Company can issue without Shareholder approval under Listing Rule 7.1.

If Resolution 2 is not passed, the Company will not be able to proceed with the issue of the Further Placement Options. The issue of the Further Placement Options is part of the recapitalisation strategy that has been approved by ASX. If Resolution 2 is not passed, the Company will not be able to fulfill this limb of its recapitalisation strategy, meaning that the Company’s financial condition will not be adequate for the purposes of Listing Rule 12.2, and the Company risks being de-listed.

Resolution 2 seeks Shareholder approval for the purposes of Listing Rule 7.1 for the issue of the Further Placement Options.

3.3 Technical information required by Listing Rule 7.3

Pursuant to and in accordance with Listing Rule 7.3, the following information is provided in relation to Resolution 2:

(a) the Further Placement Options will be issued to professional and sophisticated investors who are clients of Westar Capital. The recipients will be identified through a bookbuild process, which will involve Westar Capital seeking expressions of interest to participate in the capital raising from non-related parties of the Company;
(b) in accordance with paragraph 7.2 of ASX Guidance Note 21, the Company confirms that subject to Shareholder approval pursuant to Resolutions 3 to 5, Directors Justin Vost, Collin Vost and Marcus Flis intend to participate in the Option Placement;
(c) other than the parties identified above at Section 3.3(b), the Company confirms that none of the recipients will be:
(i) related parties of the Company, members of the Company’s Key Management Personnel, substantial holders of the Company, advisers of the Company or an associate of any of these parties; and
(ii) issued more than 1% of the issued capital of the Company;
(d) the maximum number of Further Placement Options to be issued is 625,000,000. The terms and conditions of the Further Placement Options are set out in Schedule 1;
(e) the Further Placement Options will be issued no later than 3 months after the date of the Meeting (or such later date to the extent permitted by any ASX waiver or modification of the Listing Rules) and it is intended that issue of the Further Placement Options will occur on the same date;
(f) the issue price will be $0.0005 per Further Placement Options. The Company will not receive any other consideration for the issue of the Further Placement Options (other than in respect of funds received on exercise of the Options);
(g) the purpose of the issue of the Further Placement Options is to raise $312,500. The Company intends to apply the funds raised from the issue in the manner set out in Section 1.1;

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(h) the Further Placement Options are not being issued under an agreement; and
(i) the Further Placement Options are not being issued under, or to fund, a reverse takeover.

4. RESOLUTIONS 3 TO 5 – ISSUE OF OPTIONS TO DIRECTORS - PARTICIPATION IN OPTION PLACEMENT

4.1 General

As detailed in Section 1.1, Directors, Messrs Collin Vost, Justin Vost and Marcus Flis ( Related Parties ) wish to participate in the Option Placement on the same terms as unrelated participants in the Placement ( Participation ).

Accordingly, Resolutions 3, 4 and 5 respectively seek Shareholder approval for the issue of:

(a) up to 50,000,000 Options to Mr Collin Vost (or his nominee);
(b) up to 50,000,000 Options to Mr Justin Vost (or his nominee); and (c) up to 5,000,000 Options to Mr Marcus Flis (or his nominee),

out of the 625,000,000 Options to be offered under the Option Placement (together, Director Placement Options ).

The Directors have entered into firm allocation letters with Westar Capital for the Director Placement Options under the following terms:

(a) Mr Collin Vost (or his nominee) agrees to subscribe for 50,000,000 Options for a total consideration of $25,000;
(b) Mr Justin Vost (or his nominee) agrees to subscribe for 50,000,000 Options for a total consideration of $25,000; and
(c) Mr Marcus Fils (or his nominee) agrees to subscribe for 5,000,000 Options for a total consideration of $2,500.

The firm allocation letters contain no other material terms.

4.2 Chapter 2E of the Corporations Act

For a public company, or an entity that the public company controls, to give a financial benefit to a related party of the public company, the public company or entity must:

(a) obtain the approval of the public company’s members in the manner set out in sections 217 to 227 of the Corporations Act; and
(b) give the benefit within 15 months following such approval,

unless the giving of the financial benefit falls within an exception set out in sections 210 to 216 of the Corporations Act.

The Participation will result in the issue of the Director Placement Options which constitutes giving a financial benefit and each of the Related Parties are related parties of the Company by virtue of being Directors.

15

As the Director Placement Options are proposed to be issued to all of the Directors, the Directors are unable to form a quorum to consider whether one of the exceptions set out in sections 210 to 216 of the Corporations Act applies to the issue of the Director Placement Options. Accordingly, Shareholder approval for the issue of Director Placement Options to the Related Parties is sought in accordance with Chapter 2E of the Corporations Act.

4.3 Listing Rule 10.11

Listing Rule 10.11 provides that unless one of the exceptions in Listing Rule 10.12 applies, a listed company must not issue or agree to issue equity securities to:

10.11.1 a related party;
10.11.2 a person who is, or was at any time in the 6 months before the issue or agreement, a substantial (30%+) holder in the company;
10.11.3 a person who is, or was at any time in the 6 months before the issue or agreement, a substantial (10%+) holder in the company and who has nominated a director to the board of the company pursuant to a relevant agreement which gives them a right or expectation to do so;
10.11.4 an associate of a person referred to in Listing Rules 10.11.1 to 10.11.3; or
10.11.5 a person whose relationship with the company or a person referred to in Listing Rules 10.11.1 to 10.11.4 is such that, in ASX’s opinion, the issue or agreement should be approved by its shareholders,

unless it obtains the approval of its shareholders.

The issue of Director Placement Options falls within Listing Rule 10.11.1 and does not fall within any of the exceptions in Listing Rule 10.12. It therefore requires the approval of Shareholders under Listing Rule 10.11.

Resolutions 3 to 5 seek the required Shareholder approval for the issue of the Director Placement Options under and for the purposes of Chapter 2E of the Corporations Act and Listing Rule 10.11.

4.4 Technical information required by Listing Rule 14.1A

If Resolutions 3 to 5 are passed, the Company will be able to proceed with the issue of the Director Placement Options to the Related Parties within one month after the date of the Meeting (or such later date as permitted by any ASX waiver or modification of the Listing Rules). As approval pursuant to Listing Rule 7.1 is not required for the issue of the Director Placement Options (because approval is being obtained under Listing Rule 10.11), the issue of the Director Placement Options will not use up any of the Company’s 15% annual placement capacity.

If Resolution 3 to 5 are not passed, the Company will not be able to proceed with the issue of the Director Placement Options.

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4.5 Technical Information required by Listing Rule 10.13 and section 219 of the Corporations Act

Pursuant to and in accordance with Listing Rule 10.13 and section 219 of the Corporations Act, the following information is provided in relation to Resolutions 3 to 5:

(a) the Director Placement Options will be issued to the following persons:
(i) Mr Collin Vost (or his nominee) pursuant to Resolution 3;
(ii) Mr Justin Vost (or his nominee) pursuant to Resolution 4; and
(iii) Mr Marcus Flis (or his nominee) pursuant to Resolution 5,

each of whom falls within the category set out in Listing Rule 10.11.1 by virtue of being a Director;

(b) the maximum number of Director Placement Options to be issued to the Related Parties (being the nature of the financial benefit proposed to be given) is 105,000,000 comprising:
(i) 50,000,000 Options to Mr Collin Vost (or his nominee) pursuant to Resolution 3;
(ii) 50,000,000 Options to Mr Justin Vost (or his nominee) pursuant to Resolution 4;
(iii) 5,000,000 Options to Marcus Flis (or his nominee) pursuant to Resolution 5,
(c) the terms and conditions of the Director Placement Options are set out in Schedule 1;
(d) the Director Placement Options will be issued no later than 1 month after the date of the Meeting (or such later date to the extent permitted by any ASX waiver or modification of the Listing Rules) and it is intended that issue of the Director Placement Options will occur on the same date;
(e) the issue price of the Director Placement Options will be $0.0005. The Company will not receive any other consideration in respect of the issue of the Director Placement Options (other than in respect of funds received on exercise of the Director Placement Options);
(f) the purpose of the issue of Director Placement Options is to raise $52,500 (before costs) under the Option Placement which the Company intends to use as set out in Section 1.1;
(g) the Director Placement Options are being issued under firm commitment letters. A summary of the material terms of the firm commitment letters are set out in Section 4.1;

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(h) the relevant interests of the Related Parties in securities of the Company as at the date of this Notice are set out below:

Related Party	Shares1	Options
Mr Collin Vost2	55,570,000	10,000,000
Mr Justin Vost3	19,362,223	7,000,000
Mr Marcus Flis4	Nil	5,000,000

Notes:

Fully paid ordinary shares in the capital of the Company (ASX: CVS).
Comprising 55,070,000 Shares and 10,000,000 Options held indirectly by New York Holdings Pty Ltd ATF the CV Superannualtion Fund and 500,000 Shares held directly by Collin Vost.
Comprising 19,362,223 Shares and 7,000,000 Options held directly by Justin Vost.
Comprising 5,000,000 Options held indirectly by M & S Superannuation Fund.
(i) if the Director Placement Options issued to the Related Parties are exercised, a total of 105,000,000 Shares would be issued. This will increase the number of Shares on issue from 1,554,012,464 (being the total number of Shares on issue assuming that the Placement the subject of Resolution 1 and the Rights Issue are completed) to 1,659,012,464 (assuming that no additional Shares are issued and no convertible securities vest or are exercised) with the effect that the shareholding of existing Shareholders would be diluted by an aggregate of 6.33%, comprising 3.01% by Collin Vost, 3.01% by Justin Vost and 0.31% by Marcus Flis;

The market price for Shares during the term of the Director Placement Options would normally determine whether the Director Placement Options are exercised. If, at any time any of the Options are exercised and the Shares are trading on ASX at a price that is higher than the exercise price of the Director Placement Options, there may be a perceived cost to the Company.

(j) the last trading price of the Shares on ASX was $0.004. The Company’s Shares have been suspended since 30 May 2019;
(k) each Director has a material personal interest in the outcome of Resolutions 3 to 5 on the basis that all of the Directors (or their nominees) are to be issued Director Placement Options should Resolutions 3 to 5 be passed. For this reason, the Directors do not believe that it is appropriate to make a recommendation on Resolutions 3 to 5 of this Notice; and
(l) the Board is not aware of any other information that is reasonably required by Shareholders to allow them to decide whether it is in the best interests of the Company to pass Resolutions 3 to 5.

18

GLOSSARY

$ means Australian dollars.

ASIC means the Australian Securities & Investments Commission.

ASX means ASX Limited (ACN 008 624 691) or the financial market operated by ASX Limited, as the context requires.

Board means the current board of directors of the Company.

Business Day means Monday to Friday inclusive, except New Year’s Day, Good Friday, Easter Monday, Christmas Day, Boxing Day, and any other day that ASX declares is not a business day.

Chair means the chair of the Meeting.

Company means Cervantes Corporation Ltd (ACN 097 982 235).

Constitution means the Company’s constitution.

Corporations Act means the Corporations Act 2001 (Cth).

Directors means the current directors of the Company.

Explanatory Statement means the explanatory statement accompanying the Notice.

General Meeting or Meeting means the meeting convened by the Notice.

Listing Rules means the Listing Rules of ASX.

Notice or Notice of Meeting means this notice of meeting including the Explanatory Statement and the Proxy Form.

Option means an option to acquire a Share with the terms and conditions set out in Schedule 1.

Optionholder means a holder of an Option.

Proxy Form means the proxy form accompanying the Notice.

Resolutions means the resolutions set out in the Notice, or any one of them, as the context requires.

Section means a section of the Explanatory Statement.

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

Shareholder means a registered holder of a Share.

WST means Western Standard Time as observed in Perth, Western Australia.

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SCHEDULE 1 – TERMS AND CONDITIONS OF OPTIONS

(a) Entitlement

Each Option entitles the holder to subscribe for one Share upon exercise of the Option.

(b) Exercise Price

Subject to paragraph (i), the amount payable upon exercise of each Option will be $0.01 ( Exercise Price ).

(c) Expiry Date

Each Option will expire at 5:00 pm (WST) 3 years from the date of issue ( Expiry Date ). An Option not exercised before the Expiry Date will automatically lapse on the Expiry Date.

(d) Exercise Period

The Options are exercisable at any time on or prior to the Expiry Date ( Exercise Period ).

(e) Notice of Exercise

The Options may be exercised during the Exercise Period by notice in writing to the Company in the manner specified on the Option certificate ( Notice of Exercise ) and payment of the Exercise Price for each Option being exercised in Australian currency by electronic funds transfer or other means of payment acceptable to the Company.

(f) Exercise Date

A Notice of Exercise is only effective on and from the later of the date of receipt of the Notice of Exercise and the date of receipt of the payment of the Exercise Price for each Option being exercised in cleared funds ( Exercise Date ).

(g) Timing of issue of Shares on exercise

Within five Business Days after the Exercise Date, the Company will:

(i) issue the number of Shares required under these terms and conditions in respect of the number of Options specified in the Notice of Exercise and for which cleared funds have been received by the Company;
(ii) if required, give ASX a notice that complies with section 708A(5)(e) of the Corporations Act, or, if the Company is unable to issue such a notice, lodge with ASIC a prospectus prepared in accordance with the Corporations Act and do all such things necessary to satisfy section 708A(11) of the Corporations Act to ensure that an offer for sale of the Shares does not require disclosure to investors; and
(iii) if admitted to the official list of ASX at the time, apply for official quotation on ASX of Shares issued pursuant to the exercise of the Options.

If a notice delivered under (g)(ii) for any reason is not effective to ensure that an offer for sale of the Shares does not require disclosure to investors, the Company

20

must, no later than 20 Business Days after becoming aware of such notice being ineffective, lodge with ASIC a prospectus prepared in accordance with the Corporations Act and do all such things necessary to satisfy section 708A(11) of the Corporations Act to ensure that an offer for sale of the Shares does not require disclosure to investors.

(h) Shares issued on exercise

Shares issued on exercise of the Options rank equally with the then issued shares of the Company.

(i) Reconstruction of capital

If at any time the issued capital of the Company is reconstructed, all rights of an Optionholder are to be changed in a manner consistent with the Corporations Act and the ASX Listing Rules at the time of the reconstruction.

(j) Participation in new issues

There are no participation rights or entitlements inherent in the Options and holders will not be entitled to participate in new issues of capital offered to Shareholders during the currency of the Options without exercising the Options.

(k) Change in exercise price

An Option does not confer the right to a change in Exercise Price or a change in the number of underlying securities over which the Option can be exercised.

(l) Transferability

The Options are transferable subject to any restriction or escrow arrangements imposed by ASX or under applicable Australian securities laws.

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SCHEDULE 2 – TERMS AND CONDITIONS OF THE WESTAR MANDATE

The Company has signed a mandate letter to engage Westar Capital Limited ( Westar ) to act as lead manager of the Capital Raisings ( Westar Mandate ), the material terms and conditions of which are summarised below:

==> picture [442 x 183] intentionally omitted <==

----- Start of picture text -----

Fees The Company has agreed to pay Westar a fee of $201,991
(being, 6% of the amount raised under the Capital Raisings) (plus
GST).
The Company is also obligated to pay any reasonable
disbursements and out of pocket expenses of Westar incurred
and associated with the Capital Raisings.
For the avoidance of doubt the fees payable to Westar detailed
above comprise all of the fees, costs and expenses payable to
Westar for its underwriting and lead manager services under the
Underwriting Agreement (defined below) and the Westar
Mandate.
----- End of picture text -----

Fees
The Company has agreed to pay Westar a fee of $201,991
(being, 6% of the amount raised under the Capital Raisings) (plus
GST).
The Company is also obligated to pay any reasonable
disbursements and out of pocket expenses of Westar incurred
and associated with the Capital Raisings.
For the avoidance of doubt the fees payable to Westar detailed
above comprise all of the fees, costs and expenses payable to
Westar for its underwriting and lead manager services under the
Underwriting Agreement (defined below) and the Westar
Mandate.

Fees
The Company has agreed to pay Westar a fee of $201,991
(being, 6% of the amount raised under the Capital Raisings) (plus
GST).
The Company is also obligated to pay any reasonable
disbursements and out of pocket expenses of Westar incurred
and associated with the Capital Raisings.
For the avoidance of doubt the fees payable to Westar detailed
above comprise all of the fees, costs and expenses payable to
Westar for its underwriting and lead manager services under the
Underwriting Agreement (defined below) and the Westar
Mandate.

Termination
Events

The Company may terminate the Westar Mandate if Westar fails
to rectify any material breach of the Westar Mandate having
been given 10 business days notice in writing by the Company of
such breach occurring.
Westar may terminate the Westar Mandate at any time if any of
the following events occur:
(a)
the Australian equity capital market conditions are such
that they are not, in the bona fide judgement of Westar,
conducive to the successful completion of the Westar
Mandate or other events beyond the control of Westar
are so material and adverse as to make it impracticable
or inadvisable to proceed with the new equity issue on
the terms and in the manner contemplated;
(b)
there is a material adverse effect including any adverse
change in the assets, liabilities, financial position or
prospects of the Company as disclosed to Westar, other
than for the costs incurred by the Company in relation to
the proposed Capital Raisings;
(c)
there is a false or a misleading statement, material
omission or misrepresentation in the information supplied
to Westar or the presentation materials;
(d)
any material adverse change or disruption occurs in the
existing
financial
markets,
political
or
economic
conditions of Australia, Japan, the United Kingdom, the
United States of America or the international financial
markets, or any material adverse change occurs in
national or international political, financial or economic
conditions, in each case the effect of which is that, it is
impractical to market the new issues or to enforce any
contract to issue and allot the new shares or that the
success of the new issues is likely to be adversely
affected;
(e)
there is introduced, or there is a public announcement of

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a proposal to introduce, into the parliament of Australia,
a new law, or the Reserve Bank of Australia, any federal
or state authority of Australia adopts or announces a
proposal to adopt a new policy (other than a law or
policy which has been announced before the date of
the Westar Mandate), any of which does or is likely to
prohibit or regulate financial institutions or credit
providers, capital issues or stock markets;
(f)
the Company defaults in relation to any material term of
the Westar Mandate;
(g)
any
representations
or
warranties
made
by
the
Company are or become materially untrue;
(h)
a director or proposed director of the Company is
charged with an indictable offence or any director or
proposed director of the Company is disqualified from
managing a corporation under the Corporations Act;
(i)
ASIC commences, or threatens to commence, a
proceeding, hearing or investigation in relation to the
Capital Raisings;
(j)
any government agency (including ASIC) commences
any public action, hearing or investigation against the
Company or any of its directors in their capacity as a
director of the Company or announces that it intends to
take such action; or
(k)
the conditions specified in section 1 of the Westar
Mandate are not satisfied, or waived by Westar, by 30
June 2021.

Termination Fee

If the Company terminates the Westar Mandate, or Westar
Capital terminates the Westar Mandate for cause, if the Westar
Mandate is terminated prior to completion of the Capital Raisings,
a termination fee of A$50,000 (plus GST) will be payable by the
Company.

The Westar Mandate otherwise contains provisions considered standard for an agreement of its nature (including representations, warranties and confidentiality provisions).

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SCHEDULE 3 – TERMS AND CONDITIONS OF THE UNDERWRITING AGREEMENT

The Company has entered into an underwriting agreement ( Underwriting Agreement ) with Westar Capital Limited ( Underwriter or Westar ), pursuant to which Westar has agreed to underwrite the Capital Raisings up to a value of $3,366,512 (the Underwritten Amount ) (being 100% of the funds to be raised under the Capital Raisings and equal to 2,152,006,230 Securities ( Underwritten Securities )).

The Underwriter may appoint sub-underwriters to sub-underwrite the Capital Raisings. The appointment of any sub-underwriter and the allocation of any Underwritten Securities is at the sole discretion of the Underwriter.

The material terms and conditions of the Underwriting Agreement are summarised below:

==> picture [457 x 152] intentionally omitted <==

----- Start of picture text -----

Fees Under the terms of this engagement, the Company will pay to Westar
(or its nominees) an underwriting fee of 6% of the Underwritten
Amount.
The Company is also obligated to pay any reasonable disbursements
and out of pocket expenses of the Underwriter incurred and
associated with the Capital Raisings.
For the avoidance of doubt the fees payable to Westar detailed
above comprise all of the fees, costs and expenses payable to the
Underwriter for its underwriting and lead manager services under the
Underwriting Agreement and the Westar Mandate (defined above).
----- End of picture text -----

Fees
Under the terms of this engagement, the Company will pay to Westar
(or its nominees) an underwriting fee of 6% of the Underwritten
Amount.
The Company is also obligated to pay any reasonable disbursements
and out of pocket expenses of the Underwriter incurred and
associated with the Capital Raisings.
For the avoidance of doubt the fees payable to Westar detailed
above comprise all of the fees, costs and expenses payable to the
Underwriter for its underwriting and lead manager services under the
Underwriting Agreement and the Westar Mandate (defined above).

Fees
Under the terms of this engagement, the Company will pay to Westar
(or its nominees) an underwriting fee of 6% of the Underwritten
Amount.
The Company is also obligated to pay any reasonable disbursements
and out of pocket expenses of the Underwriter incurred and
associated with the Capital Raisings.
For the avoidance of doubt the fees payable to Westar detailed
above comprise all of the fees, costs and expenses payable to the
Underwriter for its underwriting and lead manager services under the
Underwriting Agreement and the Westar Mandate (defined above).

Termination
Events

The Underwriter may terminate its obligations under the Underwriting
Agreement if:
(l)
(Indices fall): the S&P ASX 200 Index is at any time after the
date of this Agreement, for a period of not less than 3 trading
days, 10% or more below its respective level as at the close of
business on the Business Day prior to the date of this
Agreement;
(m)
(Offer Document): the Company does not lodge the Offer
Document with ASIC on the Lodgement Date or the Offer
Document or the Offer is withdrawn by the Company;
(n)
(Supplementary Offer Document):
(i)
the Underwriter, having elected not to exercise its right
to terminate its obligations under the Underwriting
Agreement, forms the view on reasonable grounds
that a Supplementary Offer Document should be
lodged with ASIC for any of the reasons referred to in
section 719 of the Corporations Act and the Company
fails to lodge a Supplementary Offer Document in
such form and content and within such time as the
Underwriter may reasonably require; or
(ii)
the
Company
lodges
a
Supplementary
Offer
Document without the prior written agreement of the
Underwriter;
(o)
(Non-compliance with disclosure requirements): it transpires
that the Prospectus does not contain all the information that
investors and their professional advisers would reasonably

24

==> picture [83 x 730] intentionally omitted <==

require to make an informed assessment of:

(i) the assets and liabilities, financial position and performance, profits and losses and prospects of the Company; and
(ii) the rights and liabilities attaching to the Underwritten Securities;

(p) ( Misleading Offer Document ): it transpires that there is a statement in the Offer Document that is misleading or deceptive or likely to mislead or deceive, or that there is an omission from the Offer Document (having regard to the provisions of Sections 711, 713 and 716 of the Corporations Act) or if any statement in the Offer Document becomes misleading or deceptive or likely to mislead or deceive or if the issue of the Offer Document is or becomes misleading or deceptive or likely to mislead or deceive;

(q) ( Restriction on issue ): the Company is prevented from issuing the Underwritten Securities within the time required by the Underwriting Agreement, the Corporations Act, the Listing Rules, any statute, regulation or order of a court of competent jurisdiction by ASIC, ASX or any court of competent jurisdiction or any governmental or semi-governmental agency or authority;

(r) ( ASIC or other prosecution ): ASIC gives notice of any deficiency in the Offer Document or related documents or ASIC gives notice of an intention to hold a hearing, examination or investigation, or it requires information to be disclosed in connection with the offer of the Company;

(s) ( Takeovers Panel ): the Takeovers Panel makes a declaration that circumstances in relation to the affairs of the Company are unacceptable circumstances under Pt 6.10 of the Corporations Act, or an application for such a declaration is made to the Takeovers Panel;

(t) ( Hostilities ): there is an outbreak of hostilities or a material escalation of hostilities (whether or not war has been declared) after the date of this agreement involving one or more of Australia, New Zealand, Indonesia, Japan, Russia, the United Kingdom, the United States of America, India, Pakistan, or the Peoples Republic of China, Israel or any member of the European Union, or a terrorist act is perpetrated on any of those countries or any diplomatic, military, commercial or political establishment of any of those countries anywhere in the world;

(u) ( Authorisation ): any authorisation which is material to anything referred to in the Offer Document is repealed, revoked or terminated or expires, or is modified or amended in a manner unacceptable to the Underwriter acting reasonably;

(v) ( Event of Insolvency ): an Event of Insolvency occurs in respect of the Company or its subsidiaries;

(w) ( Indictable offence ): a director or senior manager of the Company or its subsidiaries is charged with an indictable

25

==> picture [83 x 724] intentionally omitted <==

offence;

(x) ( Termination Events ) Subject always to clause 11.3 of the Underwriting Agreement, any of the following events occurs: (i) ( Default ): default or breach by the Company under the Underwriting Agreement of any terms, condition, covenant or undertaking;

(ii) ( Incorrect or untrue representation ): any representation, warranty or undertaking given by the Company is or becomes untrue or incorrect; (iii) ( Contravention of constitution or Act ): a contravention by the Company of any provision of its constitution, the Corporations Act, the Listing Rules or any other applicable legislation or any policy or requirement of ASIC or ASX;

(iv) ( Adverse change ): an event occurs which gives rise to a Material Adverse Effect or any adverse change or any development including a prospective adverse change after the date of the Underwriting Agreement in the assets, liabilities, financial position, trading results, profits, forecasts, losses, prospects, business or operations of the Company or its subsidiaries;
(v) ( Error in Due Diligence Results ): it transpires that any of the due diligence results or any part of the verification material was false, misleading or deceptive or that there was an omission from them;
(vi) ( Significant change ): a "new circumstance" as referred to in Section 719(1) of the Corporations Act arises that is materially adverse from the point of view of an investor;
(vii) ( Public statements ): without the prior approval of the Underwriter a public statement is made by the Company in relation to the Offer;
(viii) ( Change in Act or policy ): there is introduced, or there is a public announcement of a proposal to introduce, into the Parliament of Australia or any of its States or Territories any Act or prospective Act or budget or the Reserve Bank of Australia or any Commonwealth or State authority adopts or announces a proposal to adopt any new, or any major change in, existing, monetary, taxation, exchange or fiscal policy that has not been publicly disclosed or proposed as at the date of the Underwriting Agreement;
(ix) ( Misleading information ): any information supplied at any time by the Company or any person on its behalf to the Underwriter in respect of any aspect of the Offer or the affairs of the Company or its subsidiaries is or becomes misleading or deceptive or likely to

26

==> picture [83 x 738] intentionally omitted <==

mislead or deceive; (x) ( Prescribed Occurrence ): a Prescribed Occurrence occurs;

(xi) ( Judgment against the Company or its subsidiaries ): a judgment in an amount exceeding $100,000 is obtained against the Company or its subsidiaries and is not set aside or satisfied within 7 days;

(xii) ( Litigation ): litigation, arbitration, administrative or industrial proceedings are after the date of the Underwriting Agreement commenced against the Company or its subsidiaries, which have real prospects of resulting in a judgment against the Company or its subsidiaries exceeding $100,000 other than any claims foreshadowed in the Offer Document;

(xiii) ( Board and senior management composition ): there is a change in the composition of the Board or a change in the senior management of the Company before the date of issue of the Underwritten Securities without the prior written consent of the Underwriter;

(xiv) ( Change in shareholdings ): there is a material change in the major or controlling shareholdings of a Relevant Company or a takeover offer or scheme of arrangement pursuant to Chapter 5 or 6 of the Corporations Act is publicly announced in relation to the Company or its subsidiaries;
(xv) ( Timetable ): there is a delay in any specified date in the Timetable which is greater than 3 Business Days and the Underwriter has not given its prior written consent agreeing to a delay exceeding 3 Business Days;
(xvi) ( Force Majeure ): a Force Majeure affecting the Company's business or any obligation under the Underwriting Agreement lasting in excess of 7 days occurs;
(xvii) ( Certain resolutions passed ): the Company or its subsidiaries passes or takes any steps to pass a resolution under Section 254N, Section 257A or Section 260B of the Corporations Act or a resolution to amend its constitution without the prior written consent of the Underwriter;
(xviii) ( Capital Structure ): the Company or its subsidiaries alters its capital structure in any manner not contemplated by the Offer;
(xix) ( Breach of Material Contracts ): any of the contracts is terminated or substantially modified;
(xx) ( Investigation ): any person is appointed under any legislation in respect of companies to investigate the

27

	affairs of the Company or its subsidiaries; or (xxi) (Market Conditions): a suspension or material limitation in trading generally on ASX occurs or any material adverse change or disruption occurs in the existing financial markets, political or economic conditions of Australia, Japan, the United Kingdom, the United States of America or other international financial markets.

The Underwriting Agreement otherwise contains provisions considered standard for an agreement of its nature (including representations and warranties and confidentiality provisions).

28

SCHEDULE 4 - PRO-FORMA BALANCE SHEET AS AT 31 DECEMBER 2020

The audited statement of financial position as at 30 June 2020, the audit reviewed proforma statement of financial position as at 31 December 2020 shown below have been prepared on the basis of the accounting policies normally adopted by the Company and reflect the changes to its financial position.

The pro-forma statement of financial position has been prepared to provide an indication on the effect of the Capital Raisings on the financial position of the Company assuming Capital Raisings are Fully Subscribed and no other Shares are issued or Options are exercised prior to the Record Date of the Rights Issue. It has been prepared to provide investors with information on the assets and liabilities of the Company and proforma assets and liabilities of the Company as noted below. The historical and pro-forma financial information is presented in an abbreviated form, insofar as it does not include all of the disclosures required by Australian Accounting Standards applicable to annual financial statements.

	AUDITED	AUDIT REVIEWED	CAPITAL	AUDIT REVIEWED
				PRO-FORMA
	30/06/2020	31 /12/2020	RAISINGS
				31 /12/2020

Current assets
Cash	149,136	14,864	3,029,512	3,044,376
Financial assets	319,325	203,450	-	203,450
Total current assets	468,461	218,314	3,029,512	3,247,826

Non-current assets
Exploration and	1,684,888	1,830,945	-	1,830,945
evaluation expenditure
Total non-current assets	1,684,888	1,830,945	-	1,830,945

TOTAL ASSETS	2,153,349	2,049,259	3,029,512	5,078,771

Current liabilities
Trade and other	357,940	110,953	-	110,953
creditors
Financial liabilities	1,011,800	450,337	370,774	821,111
Total current liabilities	1,369,740	561,290	370,774	932,064

Non-current liabilities
Financial liabilities	-	820,774	(370,774)	450,000
Total non-current	-	820,774	(370,774)	450,000
liabilities

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TOTAL LIABILITIES	1,369,740	1,382,064	-	1,382,064

NET ASSETS	783,609	667,195	3,029,512	3,696,707

Equity
Contributed equity	14,115,475	14,115,475	3,029,512	17,144,987
Accumulated losses	(13,331,866)	(13,448,280)	-	(13,448,280)
TOTAL EQUITY	783,609	667,195	3,029,512	3,696,707

The pro-forma statement of financial position includes the following adjustments:

(a) $804,012 being raised under the Rights Issue at an issue price of $0.003 per Share;
(b) $2,250,000 being raised under the Placement at an issue price of $0.003 per Share;
(c) $312,500 being raised under the Options Placement at an issue price of $0.0005 per Option;
(d) $337,000 being the estimated expenses of the Offer and assuming maximum subscription and that no more Shares are issued or Options are exercised prior to the Record Date; and
(e) $370,774 has been re-classified from non-current liabilities to current liabilities as this amount is now payable immediately following the issue of the Shortfall Securities, under the Offers.

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PROXY FORM

CERVANTES CORPORATION LIMITED ACN 097 982 235

GENERAL MEETING

I/We

of:

==> picture [400 x 44] intentionally omitted <==

being a Shareholder entitled to attend and vote at the Meeting, hereby appoint:

Name:

OR: the Chair of the Meeting as my/our proxy.

or failing the person so named or, if no person is named, the Chair, or the Chair’s nominee, to vote in accordance with the following directions, or, if no directions have been given, and subject to the relevant laws as the proxy sees fit, at the Meeting to be held at 10:00am, on 17 May 2021 at Level 4, The Read Buildings, 16 Milligan Street, Perth WA 6000, and at any adjournment thereof.

CHAIR’S VOTING INTENTION IN RELATION TO UNDIRECTED PROXIES

The Chair intends to vote undirected proxies in favour of all Resolutions. In exceptional circumstances the Chair may change his/her voting intention on any Resolution. In the event this occurs an ASX announcement will be made immediately disclosing the reasons for the change.

Voting on business of the Meeting	Voting on business of the Meeting	FOR	AGAINST	ABSTAIN
Resolution 1	Approval to Issue Shares and Options
Resolution 2	Approval to issue Options
Resolution 3	Issue of Options to Collin Vost – Participation in Option Placement
Resolution 4	Issue of Options to Justin Vost – Participation in Option Placement
Resolution 5	Issue of Options to Marcus Flis – Participation in Option Placement

Please note : If you mark the abstain box for a particular Resolution, you are directing your proxy not to vote on that Resolution on a show of hands or on a poll and your votes will not be counted in computing the required majority on a poll.

If two proxies are being appointed, the proportion of voting rights this proxy represents is:

%

Signature of Shareholder(s): Individual or Shareholder 1 Sole Director/Company Secretary Date: Contact name: E-mail address:	Signature of Shareholder(s): Individual or Shareholder 1 Sole Director/Company Secretary Date: Contact name: E-mail address:	Shareholder 2 Shareholder 3 Director Director/Company Secretary Contact ph (daytime): Consent for contact by e-mail in relation to this Proxy Form: YES NO	Shareholder 3

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Instructions for completing Proxy Form

1.

Appointing a proxy

A Shareholder entitled to attend and cast a vote at the Meeting is entitled to appoint a proxy to attend and vote on their behalf at the Meeting. If a Shareholder is entitled to cast 2 or more votes at the Meeting, the Shareholder may appoint a second proxy to attend and vote on their behalf at the Meeting. However, where both proxies attend the Meeting, voting may only be exercised on a poll. The appointment of a second proxy must be done on a separate copy of the Proxy Form. A Shareholder who appoints 2 proxies may specify the proportion or number of votes each proxy is appointed to exercise. If a Shareholder appoints 2 proxies and the appointments do not specify the proportion or number of the Shareholder’s votes each proxy is appointed to exercise, each proxy may exercise one-half of the votes. Any fractions of votes resulting from the application of these principles will be disregarded. A duly appointed proxy need not be a Shareholder.

2.

Direction to vote

A Shareholder may direct a proxy how to vote by marking one of the boxes opposite each item of business. The direction may specify the proportion or number of votes that the proxy may exercise by writing the percentage or number of Shares next to the box marked for the relevant item of business. Where a box is not marked the proxy may vote as they choose subject to the relevant laws. Where more than one box is marked on an item the vote will be invalid on that item.

3. Compliance with Listing Rule 14.11

In accordance to Listing Rule 14.11, if you hold Shares on behalf of another person(s) or entity/entities or you are a trustee, nominee, custodian or other fiduciary holder of the Shares, you are required to ensure that the person(s) or entity/entities for which you hold the Shares are not excluded from voting on resolutions where there is a voting exclusion. Listing Rule 14.11 requires you to receive written confirmation from the person or entity providing the voting instruction to you and you must vote in accordance with the instruction provided.

By lodging your proxy votes, you confirm to the Company that you are in compliance with Listing Rule 14.11.

4. Signing instructions :

Individual : Where the holding is in one name, the Shareholder must sign.
Joint holding : Where the holding is in more than one name, all of the Shareholders should sign.
Power of attorney : If you have not already provided the power of attorney with the registry, please attach a certified photocopy of the power of attorney to this Proxy Form when you return it.
Companies : Where the company has a sole director who is also the sole company secretary, that person must sign. Where the company (pursuant to Section 204A of the Corporations Act) does not have a company secretary, a sole director can also sign alone. Otherwise, a director jointly with either another director or a company secretary must sign. Please sign in the appropriate place to indicate the office held. In addition, if a representative of a company is appointed pursuant to Section 250D of the Corporations Act to attend the Meeting, the documentation evidencing such appointment should be produced prior to admission to the Meeting. A form of a certificate evidencing the appointment may be obtained from the Company.

5. Attending the Meeting

Completion of a Proxy Form will not prevent individual Shareholders from attending the Meeting in person if they wish. Where a Shareholder completes and lodges a valid Proxy Form and attends the Meeting in person, then the proxy’s authority to speak and vote for that Shareholder is suspended while the Shareholder is present at the Meeting.

6. Lodgement of Proxy Form

Proxy forms can be lodged by completing and signing the enclosed Proxy Form and returning by:

(a) post to Cervantes Corporation Limited, PO Box 1196, South Perth WA 6951;
(b) facsimile to the Company on facsimile number +61 8 9367 2450;
(c) hand delivering to Cervantes Corporation Limited; or
(d) email to the Company at [email protected];

so that it is received not less than 48 hours prior to commencement of the Meeting. Proxy Forms received later than this time will be invalid.

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