TORQUE METALS LIMITED.. — Capital/Financing Update 2021

Jun 22, 2021

Torque Metals Limited

ACN 621 122 905

Supplementary Prospectus

IMPORTANT INFORMATION

This is a supplementary prospectus ( Supplementary Prospectus ) intended to be read with the prospectus dated 14 April 2021 ( Prospectus ), issued by Torque Metals Limited ACN 621 122 905 ( Company ) in respect of the offer an offer of a minimum of 25,000,000 Shares and a maximum of 35,000,000 Shares to be issued at a price of $0.20 per Share to raise a minimum of $5,000,000 and a maximum of $7,000,000 (before costs) ( Public Offer ).

This Supplementary Prospectus is dated 28 May 2021 and was lodged with ASIC on that date. Neither ASIC nor ASX take any responsibility as to the contents of this Supplementary Prospectus.

This Supplementary Prospectus should be read together with the Prospectus. Other than the changes set out in this Supplementary Prospectus, all other details in relation to the Prospectus remain unchanged. To the extent of any inconsistency between this Supplementary Prospectus and the Prospectus, the provisions of this Supplementary Prospectus will prevail. Unless otherwise indicated, terms defined and used in the Prospectus have the same meaning in this Supplementary Prospectus.

The Company has issued a printed and electronic version of this Supplementary Prospectus and the Prospectus. Any person may obtain an electronic or hard copy of this Supplementary Prospectus and the Prospectus free of charge by downloading it from the Company’s website www.torquemetals.com or contacting the Company by telephone on +61 8 6323 6826.

This Supplementary Prospectus and the Prospectus are important documents that should be read in their entirety. If you are in any doubt as to the contents of this Supplementary Prospectus or the Prospectus, you should consult your stockbroker, lawyer, accountant or other professional adviser without delay.

1. BACKGROUND

1.1 Reasons for this Supplementary Prospectus

The purpose of this Supplementary Prospectus is to provide additional information to investors as set out in sections 2 to 4 below.

2. VARIATION OF NM SERVICES AGREEMENT

As disclosed as section 8.9.4 of the Prospectus, the Company entered into the NM Services Agreement with Neil McKay to document the terms and conditions of his engagement as Chief Financial Officer and Company Secretary of the Company.

On 14 May 2021, the Company entered into an agreement to vary the terms of the NM Services Agreement to clarify and confirm that Mr McKay is to receive an annual salary that shall not exceed $175,000 per annum (plus superannuation). Any increase in Mr McKay’s fees as determined by the Board will be subject to obtaining Shareholder approvals required under the Company’s constitution, the Corporations Act and ASX Listing Rules.

This is a Supplementary Prospectus intended to be read with the Prospectus dated 14 April 2021 issued by Torque Metals Limited.

3. CANCELLATION OF PERFORMANCE RIGHTS

As set out in section 7.5.3 of the Prospectus, the Company had issued 2,000,000 Performance Rights to Directors Ian Finch and Neil McKay in 2017 and 1,000,000 Performance Rights to Antony Lofthouse in 2020 in recognition of their ongoing efforts to date and to further incentivise them.

The Performance Rights were not issued in association with the Company’s Public Offer and, following consultation with ASX, the Company has resolved to cancel the Performance Rights to facilitate the Company’s admission to the Official List.

By this Supplementary Prospectus, the Company hereby cancels the Performance Rights on issue and all references to Performance Rights in the Prospectus be removed.

The Directors believe that the changes in this Supplementary Prospectus are not materially adverse from the point of view of an investor. Accordingly, no action needs to be taken if you have already subscribed for Shares under the Prospectus.

4. VARIATION OF TERMS OF PERFORMANCE PAYMENTS TO AUSTRAL PACIFIC

On 20 May 2021, the Company entered into a deed of variation with Austral Pacific to vary clause 4 and 5 of the Austral Acquisition Agreement in relation to the milestone / performance payments to Austral Pacific to be cash only payments ( Variation of Austral Acquisition Agreement ).

Pursuant to the Variation of Austral Acquisition Agreement, Austral will not be issued any Shares in the Company and instead will be awarded cash only payments upon satisfaction of the performance milestones as outlined by Section 8.3.1(e) to (f) of the Prospectus.

The Directors believe that the changes in this Supplementary Prospectus are not materially adverse from the point of view of an investor. Accordingly, no action needs to be taken if you have already subscribed for Shares under the Prospectus.

5. AMENDMENTS TO PROSPECTUS

5.1

Key Offer Details

Key financial information	Minimum Subscription	Full Subscription
Existing Shares on issue	35,318,519	35,318,519
Shares to be issued under the Public Offer	25,000,000	35,000,000
Issue price per Share under the Public Offer	$0.20	$0.20
Amount to be raised under the Public Offer (before costs)	$5,000,000	$7,000,000
Shares on issue upon completion of the Offers	60,318,519	70,318,519
Lead Manager Options	8,500,000	12,000,000
Existing Options	3,250,000	3,250,000
Indicative market capitalisation upon completion of the Offers1	$12,063,704	$14,063,704

Notes:

1. Market capitalisation is determined by multiplying the total number of Shares on issue by the price at which the Shares trade on the ASX from time to time. In the table above, the market capitalisation is calculated at the issue price of each Share under the Offers, being $0.20. Please note that there is no guarantee that the Shares will be trading at $0.20 upon the issue of New Shares under the Public Offer.

2. Please refer to Section 1.6 for further details relating to the proposed capital structure of the Company.

This is a Supplementary Prospectus intended to be read with the Prospectus dated 14 April 2021 issued by Torque Metals Limited.

5.2 Capital Structure

The table below provides a summary of the capital structure of the Company at the date of this Supplementary Prospectus and upon completion of the Offers:

Capital structure	Existing	Upon completion	Upon completion
		Minimum Subscription	Full Subscription
Existing Shares	35,318,519	35,318,519	35,318,519
Shares under the Offers1	-	25,000,000	35,000,000
Total Shares	35,318,519	60,318,519	70,318,519
Lead Manager Options2	-	8,500,000	12,000,000
Seed Capital Options3	2,250,000	2,250,000	2,250,000
MPS Options4	1,000,000	1,000,000	1,000,000
Fully diluted share capital	38,568,519	72,068,519	85,568,519

Notes:

1. See Section 1.1 for an overview of the Offers.

2. See Section 9.3 for the terms and conditions of the Lead Manager Options.

3. The Company issued 2,250,000 Seed Capital Options, exercisable at $0.25 each, and an expiry of 3 years from their date of issue. Refer to Section 9.3 for the terms and conditions of the Seed Capital Options.

4. The Company issued 1,000,000 MPS Options to MPS, exercisable at $0.30 each and will expire within 3 years of issue. Refer to Section 9.3 for the terms and conditions of the MPS Options.

5.3

Milestone / Performance payments to Austral Pacific

Section 8.3.1(e) and (f) of the Prospectus is to be removed and replaced with the following:

• (e) The Company will pay Austral Pacific the following amounts upon reporting a Resource in any JORC category in excess of 24,558 oz.:

• (i) the first 25,000 oz. in excess of 24,558 oz. - $50,000 in cash;

• (ii) the next 25,000 oz. - $50,000 in cash;

• (iii) the next 50,000 oz. - $200,000 in cash;

• (iv) the next 100,000 oz. - $400,000 in cash; and

• (v) the next 300,000 oz. - $1,000,000 in cash.

• (f) upon commencement of mining at either of the HHH and/or Paris deposits, the Company will pay to Austral Pacific a $100,000 production bonus in cash.

6.

CONSENTS

Price Sierakowski Corporate has given, and not before lodgement of this Supplementary Prospectus withdrawn its consent to the amendments to the Prospectus in the form and context in which they are included. Price Sierakowski Corporate has not authorised or caused the issue of this Supplementary Prospectus and takes no responsibility for any part of this Supplementary Prospectus other than to the amendments to the Prospectus.

7. DIRECTORS’ AUTHORISATION

This Supplementary Prospectus is issued by the Company and its issue has been authorised by a resolution of the Directors. The Directors believe that the Prospectus when read together with this

This is a Supplementary Prospectus intended to be read with the Prospectus dated 14 April 2021 issued by Torque Metals Limited.

Supplementary Prospectus contains all the information that would be required by sections 710 and 711 of the Corporations Act and does not contain any material statement that is misleading or deceptive.

In accordance with section 720 of the Corporations Act, each Director has consented to the lodgement of this Supplementary Prospectus with ASIC and has not withdrawn that consent prior to lodgement.

Signed for and on behalf of the Company on 28 May 2021.

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Ian Finch Executive Director

This is a Supplementary Prospectus intended to be read with the Prospectus dated 14 April 2021 issued by Torque Metals Limited.