TURNSTONE RESOURCES LTD — Capital/Financing Update 2017

Jan 18, 2017

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DAVENPORT RESOURCES LIMITED

ABN 64 153 414 852

REPLACEMENT PROSPECTUS

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For an initial public offer (IPO) of between 25,000,000 and 30,000,000 fully paid ordinary shares at an issue price of $0.20 (20 cents) per share to raise between $5,000,000 and $6,000,000 before costs (“the Equity Offer”).

This Prospectus also contains offers of 36,458,333 fully paid ordinary shares, 33,854,167 first milestone shares and 33,854,167 second milestone shares as part of the consideration for the acquisition of 100% of the issued shares of East Exploration Pty Ltd (“the Vendor Offer”) and offers of up to 10 million options having an exercise price of $0.25 (25 cents) expiring three years after Listing to recipients determined by the Company , including to Australian financial service licence (“AFSL”) holders or others in connection with the Equity Offer (“the Options Offer”).

The Equity Offer is not underwritten.

THE SECURITIES OFFERED UNDER THIS PROSPECTUS SHOULD BE CONSIDERED SPECULATIVE

IMPORTANT INFORMATION: This is an important document that you should read in full. If you do not understand it, consult your professional advisor.

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THIS IS A REPLACEMENT PROSPECTUS DATED 24 OCTOBER 2016. IT REPLACES A PROSPECTUS DATED 31 AUGUST 2016 RELATING TO SHARES, MILESTONE SHARES AND OPTIONS OF DAVENPORT RESOURCES LIMITED.

IMPORTANT NOTICE

General

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THIS REPLACEMENT PROSPECTUS (“this Prospectus”) is dated 24 October 2016 and was lodged with the Australian Securities and Investments Commission (“ASIC”) on that date. This Prospectus replaces a prospectus dated 31 August 2016 (“the Prospectus Date”) relating to shares, milestone shares and options of Davenport Resources Limited (“Davenport” or “the Company”). ASIC and its officers take no responsibility for the contents of this Prospectus or the merits of the investment to which this Prospectus relates. This replacement prospectus has been issued to provide for the following:

• Further financial disclosure including audited financial reports of Davenport for the years ended 30 June 2014, 2015 and 2016, audited financial reports of East Exploration Pty Ltd (“East Exploration”) for the years ended 31 December 2014 and 2015 and East Exploration’s reviewed half year financial report to 30 June 2016, an updated pro forma consolidated statement of financial position, and a replacement investigating accountant’s report;

• A general meeting of Davenport shareholders (the “General Meeting”) having been held and shareholder approvals for the issue of shares and milestone shares to the vendors of East Exploration shares, the election of Mr Patrick McManus as a Director who will take office upon and subject to completion of the acquisition of East Exploration, adoption of a maximum nonexecutive Director remuneration amount, and the adoption of an employee incentive scheme have been received. As a consequence, receiving the shareholder approvals are no longer a condition of the Offers;

• The opening date of the Equity Offer having been deferred to 26 October 2016, after the date of lodgement of this Replacement Prospectus at ASIC;

• The closing date of the Equity Offer having been extended to 25 November 2016. The dates by which Listing and the minimum subscription are required to be achieved have been extended to 3 months and 4 months after the date of this Replacement Prospectus (respectively). Any applicant who lodged applications before the lodgement of this Replacement Prospectus at ASIC is being given 1 month to withdraw their application.

For the purposes of this document this replacement prospectus will be referred to as either the Prospectus or the Replacement Prospectus.

As at the date of this replacement prospectus, no applications for shares, milestone shares or options have been received.

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No person is authorised to give information or to make any representation in connection with the Offers which is not contained in the Prospectus. Any information or representation not so contained may not be relied on as having been authorised by Davenport in connection with this Prospectus.

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It is important that you read this Prospectus in its entirety and seek professional advice where necessary. The shares, milestone shares and options the subject of this Prospectus should be considered highly speculative.

Defined terms

Unless the contrary intention appears or the context otherwise requires, words and phrases contained in this Prospectus have the same meaning and interpretation as given in the Corporations Act and capitalised terms have the meaning given in the Glossary in Section 15.

~~-~~ No Cooling Off Rights

Cooling-off rights do not apply to any investment in shares under the Equity Offer in this Prospectus. This means that, in most circumstances, you cannot withdraw your application to acquire shares under the Equity Offer once it has been made.

Exposure Period

A fourteen day exposure period during which the Company was prohibited from processing applications applied to the Offers, which has expired.

No applications were received during the exposure period and no preference would have been given to applications if they had been received during the exposure period.

Investment Advice

This Prospectus does not provide investment advice and has been prepared without taking account of your financial objectives, financial situation or particular needs (including financial or taxation issues). You should seek professional investment advice before subscribing for shares under this Prospectus.

Expiry Date

No securities may be issued on the basis of this Prospectus later than 13 months after the Prospectus Date.

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~~-~~ Forward looking statements

This Prospectus contains forward-looking statements which are identified by words such as ‘may’, ‘could’, ‘believes’, ‘estimates’, ‘targets’, ‘expects’, or ‘intends’ and other similar words that involve risks and uncertainties.

These statements are based on an assessment of past and present economic and operating conditions, and on a number of assumptions regarding future events and actions that, as at the date of this Prospectus, are expected to take place.

Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties, assumptions and other important factors, many of which are beyond the control of the Company, its Directors and management.

Although the Company believes that the expectations reflected in the forward looking statements included in this Prospectus are reasonable, none of the Company, its Directors or officers, or any person named in this Prospectus, can give, or gives, any assurance that the results, performance or achievements expressed or implied by the forward-looking statements contained in this Prospectus will actually occur or that the assumptions on which those statements are based will prove to be correct or exhaustive beyond the date of its making. Investors are cautioned not to place undue reliance on these forward-looking statements. Except to the extent required by law, the Company has no intention to update or revise forward-looking statements, or to publish prospective financial information in the future, regardless of whether new information, future events or any other factors affect the information contained in this Prospectus.

The forward looking statements contained in this Prospectus are subject to various risk factors that could cause our actual results to differ materially from the results expressed or anticipated in these statements. The key risk factors of investing in the Company are set out in Section 5.

Privacy statement

By completing and returning an application or acceptance form, you will be providing personal information directly or indirectly to the Company, the Share Registry, and other brokers involved in the Offers and related bodies corporate, agents, contractors and third party service providers of the foregoing (“Collecting Parties”). The Collecting Parties collect, hold and will use that information to assess your application, service your needs as a shareholder or option holder and to facilitate distribution payments and corporate communications to you as a shareholder or option holder.

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By submitting an application form, you authorise the Company to disclose any personal information contained in your application (“Personal Information”) to the Collecting Parties where necessary, for any purpose in connection with the Offers, including processing your acceptance of the Offers and complying with applicable law, the ASX Listing Rules, the ASX Settlement Operating Rules and any requirements imposed by any public authority.

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If you do not provide the information required in respect of your application, the Company may not be able to accept or process your acceptance of the relevant Offer. If the Offers are successfully completed, your Personal Information may also be used from time to time and disclosed to persons inspecting the registers of shareholders or option holders, including bidders for your shares or options in the context of takeovers, public authorities, authorised securities brokers, print service providers, mail houses and the Share Registry.

Any disclosure of Personal Information made for the above purposes will be on a confidential basis and in accordance with the Privacy Act 1988 (Cth) and all other legal requirements. If obliged to do so by law or any public authority, Personal Information collected from you will be passed on to third parties strictly in accordance with legal requirements. Once your Personal Information is no longer required, it will be destroyed or de-identified.

Subject to certain exemptions under law, you may have access to Personal Information that the Collecting Parties hold about you and seek correction of such information. Access and correction requests, and any other queries regarding this privacy statement, must be made in writing to the Share Registry at the address set out in the Corporate Directory at the end of this Prospectus. A fee may be charged for access.

~~–~~ Web Site Electronic Prospectus

A copy of this Prospectus can be downloaded from the website of the Company at www.davenportresources.com.au/prospectus.

The Corporations Act prohibits any person passing onto another person an application or acceptance form unless it is attached to a hard copy of this Prospectus or it accompanies a complete and unaltered version of this Prospectus. You may obtain a hard copy of this Prospectus free of charge by contacting the Company.

The Company reserves the right not to accept an application or acceptance from a person if it has reason to believe that when that person was given access to the application or acceptance form,

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it was not provided together with the Prospectus and any relevant supplementary or replacement Prospectus or any of those documents were incomplete or altered.

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Foreign offer restrictions

This Prospectus may not be distributed outside Australia. Shares, milestone shares and options may not be offered outside Australia. If you are outside Australia it is your responsibility to obtain any necessary approvals for the Company to allot and issue shares, milestone shares and options to you pursuant to this Prospectus.

Time

All references to time this Prospectus are references to Australian Eastern Standard Time in Melbourne, Victoria (“AEST”).

Photographs and Diagrams

Photographs used in this Prospectus which do not have descriptions are for illustration only and should not be interpreted to mean that any person shown in them endorses the Prospectus or its contents or that the assets shown in them are owned by the Company. Diagrams used in this Prospectus are illustrative only and may not be drawn to scale.

ASX Bookbuild

The Company may elect to utilise ASX BookBuild and make a certain percentage of its shares available via the facility during the period of the Equity Offer. If the Company does proceed to use the ASX BookBuild facility, it will announce this (together with all relevant parameter information and other details as required by the ASX Operating Rules and the Corporations Act) on its website (www.davenportresources.com.au) when the Equity Offer opens. That announcement will also be issued via the ASX Market Announcements Platform.

Enquiries

If you are in any doubt as to how to deal with any of the matters raised in this Prospectus, you should consult your broker or legal, financial or other professional adviser without delay.

Should you have any questions about any of the Offers or how to accept any of the Offers, please call the proposed Managing Director, Christopher Bain, on +61 413 275 756 or the Company Secretary, Mr Rajan Narayanasamy, on +61 415 065 280.

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CONTENTS

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|||
|---|---|
|IMPORTANT NOTICE|2|
|INDICATIVE TIMETABLE FOR THE EQUITY OFFER|8|
|SUMMARY CAPITAL STRUCTURE|10|
|GENERAL MEETING|12|
|THE OFFERS|12|
|LETTER FROM THE PROPOSED CHAIRMAN|16|
|KEY INVESTMENT RISKS|18|
|SUMMARY OF THE OFFERS|22|
|1 CORPORATE OVERVIEW|35|
|2 PURPOSE OF THE EQUITY OFFER|38|
|3 USE OF FUNDS|39|
|4 THE COMPANY AND PROJECT OVERVIEW|43|
|5 RISK FACTORS|50|
|6 BOARD AND MANAGEMENT|59|
|7 CORPORATE GOVERNANCE|66|
|8 FINANCIAL INFORMATION|70|
|9 INVESTIGATING ACCOUNTANT’S REPORT|99|
|10 INDEPENDENT TECHNICAL REPORTS|104|
|11 TENEMENT REPORTS|201|
|12 DETAILS OF THE OFFERS|210|
|13 HOW TO APPLY|221|
|14 ADDITIONAL INFORMATION|229|
|15 GLOSSARY|264|
|GENERAL OFFER APPLICATION FORM|268|
|CORPORATE DIRECTORY|270|

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INDICATIVE TIMETABLE FOR THE EQUITY OFFER

Initial lodgement of prospectus	31 August 2016
Record Date for Priority Offers	8 September 2016
Lodgement of this replacement prospectus	24 October 2016
Opening date	26 October 2016
Priority Offers and General Offer Closing Date (5pm)	25 November 2016
Broker Firm Offer Closing Date (5pm) ^	25 November 2016
Shares are expected to be allotted	6 December 2016
Expected Despatch of holding statements	8 December 2016
Expected date of quotation of shares on ASX (subject to ASX approval)	14 December 2016

^ Broker Firm Offer - An earlier date than the Broker Firm Offer Closing Date may be specified by Brokers for returning applications for allocations under the Broker Firm Offer.

Dates may change - The above dates are subject to change and are indicative only. The Company reserves the right to vary the dates and times of the Equity Offer, including to extend the Equity Offer or accept late applications, without notifying any recipient of this Prospectus or any applicants. Investors are encouraged to submit their applications as early as possible.

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MINIMUM SUBSCRIPTION AND QUOTATION CONDITIONS

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The Closing Date of the Equity Offer has been extended to 25 November 2016 (which date may be further extended).

This Replacement Prospectus is a “refresh document” under ASIC Corporations (Minimum Subscription and Quotation Conditions) Instrument 2016/70. The dates by which Listing and the minimum subscription are required to be achieved are extended to 3 months and 4 months after the date of this Replacement Prospectus (respectively).

As at the date of this Replacement Prospectus:

• no applications for securities have been received and no amount has been raised;

• there have been no changes to the minimum subscription applicable to the Offers;

• the date by which the minimum subscription is required to be have been satisfied is 24 February 2017, being 4 months after the date of this Replacement Prospectus;

• application was made to ASX for admission to quotation of the shares offered under the Equity Offer within 7 days after the initial prospectus was lodged;

• the shares offered under the Equity Offer have not been admitted to quotation;

• ASX has not indicated that the shares offered under the Equity Offer will not be admitted to quotation, and has not indicated that shares offered under the Equity Offer will be admitted to quotation subject to certain conditions being satisfied;

• there have been no changes to the condition that shares offered under the Equity Offer are admitted to quotation (“the quotation condition”); and

• the date by which the quotation condition is required to be have been satisfied is 24 January 2017, being 3 months after the date of this Replacement Prospectus.

Applicants who wish to withdraw their application and be repaid have 1 month from the date of this Replacement Prospectus (“the withdrawal period”) to do so, and the Offers will remain open at least until the end of the withdrawal period.

Applicants can withdraw their application and be repaid by email, facsimile or mail to the Company’s Share Registry, Security Transfer Australia Pty Ltd, at registrar@securitytransfer.com.au, by facsimile to (08) 9315 2233 or by mail to PO Box 52, Collins Street West, Vic, 8007. The last day of the withdrawal period is 24 November 2016, being 1 month after the date of this Replacement Prospectus.

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SUMMARY CAPITAL STRUCTURE

The anticipated capital structure of Davenport at the time of completing the acquisition of East Exploration and Listing, if the Equity Offer and conditions for the acquisition and Listing are successfully completed or satisfied, will be as follows:

Shares

DAVENPORT SHARES	MINIMUM SUBSCRIPTION ($5 million)	MINIMUM SUBSCRIPTION ($5 million)	MAXIMUM SUBSCRI ($6 million)	MAXIMUM SUBSCRI ($6 million)	PTIO	N
	Number	%	Number		%
Existing shares	12,000,262	16.4%	12,000,262		15.3%
Consideration shares for the acquisition of East Exploration ^	36,458,333	49.6%	36,458,333	46.5%
Equity Offer shares offered under this Prospectus (at 20 cents each)	25,000,000	34.0%	30,000,000		38.2%
TOTAL SHARES	73,458,595	100%	78,458,595	100%
Anticipated approximate market capitalisation at the Equity Offer price (20 cents)	14.69 million		15.69 million

^ Plus the two tranches of milestone shares (a total of 67,708,334 milestone shares – see following).

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If the milestones applicable to both tranches of milestone shares are achieved, assuming no further shares are issued in the interim, the effect of the conversion of the milestone shares to ordinary shares would be as follows:

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|---|---|---|---|---|
|MINIMUM SUBSCRIPTION|MAXIMUM SUBSCRIPTION|
|DAVENPORT SHARES|
|($5 million)|($6 million)|
|Number|%|Number|%|
|Existing shares|12,000,262|8.5%|12,000,262|8.2%|
|Consideration shares|
|for the acquisition of|
|East Exploration|104,166,667|73.8%|104,166,667|71.3%|
|(including converted|
|milestone shares)|
|Equity Offer shares|
|offered under this|
|25,000,000|17.7%|30,000,000|20.5%|
|Prospectus|
|(at 20 cents each)|
|TOTAL SHARES|141,166,929|100%|146,166,929|100%|

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The terms of the milestone shares including the milestones applicable to each are set out in Section 14.7.

Options

Davenport may also issue up to 10 million options having an exercise price of at $0.25 (25 cents) and an expiry date three years after Listing to recipients determined by the Company, including to AFSL holders or others in connection with the Equity Offer.

The terms of the options are set out in Section 14.8.

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GENERAL MEETING

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Davenport held a general meeting (“the General Meeting”) on 28 September 2016 at which shareholder approvals required for the issue of shares and milestone shares to the vendors of East Exploration shares (and/or their respective nominees) as part of the consideration for the acquisition of East Exploration and for related matters including the election of a new Director, Mr Patrick McManus, who will take office upon and subject to completion of the acquisition of East Exploration, the adoption of a maximum non-executive Director remuneration amount and adoption of an employee incentive scheme were received.

The notice of the General Meeting with an accompanying explanatory memorandum and an independent expert’s report were sent to Davenport shareholders. A copy of the notice, memorandum, report will be available on the Company’s website at www.davenportresources.com.au/meeting.

THE OFFERS

The Offers contained in this Prospectus are:

• a. the Equity Offer which is an invitation to apply for a total of between 25,000,000 and 30,000,000 fully paid ordinary shares in the capital of Davenport Resources Limited (“Davenport” or “the Company”) at an issue price of $0.20 (20 cents) per share to raise between $5,000,000 and $6,000,000 before costs. The Equity Offer is made up of:

• a. the Priority Offers, made to existing shareholders of Davenport (“the Davenport Priority Offer”) and shareholders of Potash West NL [ACN 147 346 334] (“the Potash West Priority Offer”), which are only open to shareholders of Davenport and Potash West NL (respectively) as at 8 September 2016 (“the Record Date”);

• b. the Broker Firm Offer which is only open to clients of brokers who receive a firm allocation from their broker; and

• c. the General Offer which is open to all eligible investors; and

• b. the Vendor Offer which is an offer of 36,458,333 fully paid ordinary shares, 33,854,167 first milestone shares (fully paid non-transferrable, non-voting ordinary shares in the Company) and 33,854,167 second milestone shares as part of the consideration for the acquisition of 100% of the issued shares of East Exploration. Only vendors of East Exploration and/or their respective nominee(s) are eligible to accept the Vendor Offer;

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• c. the Options Offer which is an offer of up to 10 million options having an exercise price of $0.25 (25 cents) expiring three years after Listing to recipients determined by the Company, including to AFSL holders or others in connection with the Equity Offer. Only recipients determined by the Company are eligible to accept the Vendor Offer.

The Equity Offer, the Vendor Offer and the Options Offer are collectively referred to in this Prospectus as “the Offers”.

All of the Offers are conditional upon:

• a. completion of the acquisition of East Exploration including a director determined by the vendors of East Exploration being appointed to the Board of Davenport with effect at completion of the acquisition of East Exploration (Mr Patrick McManus was elected at the General Meeting, with effect at completion of the acquisition of East Exploration, to fulfil this condition), East Exploration issuing Melbourne Capital Limited [ACN 055 638 438] (a company associated with a Director of Davenport, Mr Angus Edgar) 27,780 shares upon or before completion of the Offers, which shares will be part of the East Exploration shares acquired by Davenport, and ASX giving its approval for Listing;

• b. the Company receiving applications and application monies for at least 25 million shares ($5 million, being the minimum subscription amount under the Equity Offer);

• c. ASX giving its conditional approval for admission of the Company to the Official List.

The Offers will not proceed, no shares, milestone shares or options will be issued pursuant to this Prospectus and application monies will be refunded to applicants in full (without interest) in accordance with the Corporations Act if:

• a. the acquisition of East Exploration is not able to be completed;

• b. the minimum subscription is not received within 4 months of the date of this Replacement Prospectus (or any longer period as ASIC and ASX may permit); or

• c. ASX’s approval for admission of the Company to the Official List is not received within 3 months of the date of this Replacement Prospectus (or any longer period as ASIC and ASX may permit).

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HOW TO APPLY

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Equity Offer

Instructions on how to apply under the Equity Offer are set out in Sections 13.1, 13.2, 13.3 and 13.4. Except for applications under the Davenport Priority Offer to “top up” existing holdings to 10,000 shares, applications under the Equity Offer must be for at least 10,000 shares ($2,000) and thereafter in multiples of 2,500 shares ($500).

Applications for shares under the Equity Offer can only be made by:

• a. completing and lodging the applicable application form (a Davenport Priority Offer Form, a Potash West Priority Offer Form, a Broker Firm Offer Form or a General Offer Form) which was attached to or accompanied a copy of this Prospectus; or

• b. in the case of accepting the Davenport Priority Offer, the Potash West Priority Offer or the Broker Firm Offer, by making payment by BPAY®1 in accordance with the BPAY® instructions in the applicable application form;

• c. on a paper copy of the electronic General Offer application form which accompanied an electronic copy of this Prospectus, which can be found at and downloaded from www. davenportresources.com.au/prospectus; or

• d. an electronic General Offer application form submitted using the Share Registry’s on-line application facility at www.securitytransfer.com.au, in accordance with the instructions for use of the facility and only after downloading and confirming having received an electronic copy of this Prospectus.

To receive priority, a Davenport Priority Offer Form or Potash West Priority Offer Form (as applicable) must be returned with payment and received, or payment of the applicable amount by BPAY® must be received, before the date and time specified for the return of priority forms (which date may change as referred to above). Late forms or payments may be treated as applications under the General Application.

Broker Firm Application forms are to be returned, and payments made, in accordance with and by the date specified in the instructions issued by the applicable broker. Only recipients of an invitation and Broker Firm Application form from their broker may apply under the Broker Firm Offer. Late forms or payments may be treated as applications under the General Application.

Further details of how to apply for shares under the Equity Offer are set out in Sections 13.1, 13.2, 13.3 and 13.4.

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Vendor Offer

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The Vendor Offer is made solely to and is capable of acceptance only by vendors of East Exploration shares (or their nominees). Instructions for completing and returning the Vendor Offer Form will be set out in the form.

Further details about how vendors of East Exploration shares (or their nominees) are to apply for shares and milestone shares under the Vendor Offer are set out in Section 13.5.

Options Offer

The Options Offer is made solely to and is capable of acceptance only by recipients of a personalised invitation from the Company attached to or accompanied by a copy of this Prospectus. Instructions for completing and returning the Options Offer Form will be set out in the form.

Further details about how recipients of personalised invitation from the Company are to apply for options under the Options Offer are set out in Section 13.6.

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LETTER FROM THE PROPOSED CHAIRMAN

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Dear Investor:

On behalf of the Board of Directors, I invite you to become a shareholder of Davenport Resources Limited (“Davenport” or “the Company”) through this Prospectus.

Davenport aims to be a developer of potash mines, focussed on the South Harz potash field in the province of Thuringia, in Central Germany, which has been the site of potash production for over 100 years.

Potash is the source of potassium, which is one of the three key fertiliser elements, along with nitrogen and phosphorous, that are essential to the productivity of modern agriculture. Without these minerals, agricultural productivity would be much lower and the imperative to feed the growing and increasingly sophisticated population of the world would not be met.

Potash is a circa $25 billion per annum business, with most of the worlds production coming from Western Canada, Belarus and the Perm Basin in Russia. Germany was the site of the first potash mines, and has been an established producer for over 150 years. The South Harz region has been in continuous production since 1898 and produced over 130 million tonnes of potash between 1960 and 1990, under the former German Democratic Republic. Potash mining is still carried on close to our exploration ground.

The exploration licences held by East Exploration Pty Ltd, which will become owned by Davenport after the IPO, have been drilled prior to 1990 and a remarkable amount of exploration data is available for both licence areas. The most advanced project, the Küllstedt licence, has more than 30 exploration holes drilled on it, which has allowed the identification of an Exploration Target, as described in Section 4.1.

We seek to raise $5,000,000 by the issue of shares at an issue price of $0.20 each. The Company may accept oversubscriptions of up to $1,000,000, to raise a maximum of $6,000,000. The majority of the funds raised under this Prospectus will principally be used to drill confirmatory holes in the Küllstedt licence. As described in Section 4.1, the high quality of previous work done on the deposit, and the continuous stewardship provided by our consultants should allow a rapid and low cost route to a JORC compliant resource. Funds will also be used to evaluate the Gräfentonna licence, by collating

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and reviewing previous drilling data, evaluating the prospectivity of other areas in the South Harz region.

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The Southern Cross Bore copper-gold project, 75 km north-east of Alice Springs, in the Arunta Mineral Province of the Northern Territory is also a valuable asset in the Davenport portfolio. The Company holds 600 sq km of exploration licences, the most advanced being Johnnies Reward, an iron-oxide copper-gold (IOCG) prospect where drilling has identified broad zones of gold mineralisation grading between 0.4g/t and 2g/t, as discussed in Section 4.2.

The Company has a Board of Directors which is well qualified and experienced in exploration and development activities. We believe that with the Board and the executive team, we have the right mix of skills to ensure successful execution of our business, corporate and operational plans.

This Prospectus provides details of the Offers, the Company, the Projects and proposed operations, together with an outline of potential risks associated with investing in the Company. Potential investors should consider that an investment in the Company is speculative. I recommend you read this document carefully and seek independent professional advice before investing in the Company.

On behalf of the Board of Directors I recommend the Offers to you and look forward to welcoming you as a fellow shareholder.

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Patrick McManus

Proposed Non-Executive Chairman

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KEY INVESTMENT RISKS

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Mineral exploration and development is an inherently speculative activity subject to many risks and uncertainties.

Section 5 describes and refers to some of the potential risks associated with an investment in the Company which may have a material adverse impact on the viability and financial performance of the Company and the market price of its shares, should they arise.

This summary should not be relied on. Greater detail is provided in Section 5. It is strongly recommended that you read Section 5 in full.

Risks associated with East Exploration

Risks identified in the Independent Technical Assessment South Harz Project report:

Including technical challenges and other risks specific to the East Exploration’s German tenements, to the region or to global potash mining regions, which are described in Section 4 “Potential Risks” on page 44 of CSA Global Pty Ltd’s “Independent Technical Assessment South Harz Project” report which is included in Section 10.

Risks identified in Section 5:

Additional Capital Requirements

Including that exploration costs and pursuit of Davenport’s business plan will require further financing and may seek additional capital. If additional funding is not obtained the scope of operations may be reduced or business plans scaled back.

Exploration Resource Definition Stage

Including that East Exploration’s tenements are generally at the exploration and resource definition drilling stage only. Insufficient exploration has been undertaken to define a JORC compliant resource. There can be no assurance that exploration of the South Harz Project will result in the discovery of a resource that can be economically exploited. Weather, mechanical difficulties, shortages or delays may affect drilling and other activities.

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Accidents

Including unexpected events. These risks may result in legal proceedings, substantial losses, damage to or destruction of property, natural resources or equipment, pollution or other environmental damage, clean- up responsibilities, regulatory investigation, and penalties or suspension of operations.

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Risks Associated with Operating in Germany

Including that the tenements located in Germany will be subject to the various political, economic and other risks and uncertainties associated with operating in that country such as economic, social or political change, changes of law, taxation, working conditions, rates of exchange, exploration licensing, environmental protection, mine safety, labour relations as well as differing Federal and State government regulations over mineral properties.

Tenement Title

Including that the licences are for specific terms, are subject to periodic renewal and carry work program and reporting commitments, as well as other conditions requiring compliance. Davenport could lose title to or its interest in tenements if not renewed, if the licence conditions are not met or new obligations are imposed, or if insufficient funds are available to meet expenditure commitments as and when they arise, in line with the German legislation.

Environmental and Other Regulatory Risks

Including strict environmental laws in Germany. Environmental laws are dynamic and can change over time. There are certain risks inherent to the Company’s activities, such as accidental spills, leakages or other unforeseen circumstances, which could subject the Company to environmental liability.

Competition Risk

Including that the potash industry globally is competitive and may make it difficult for the Company to attract additional funding for the further exploration of the Projects or to grow or maintain revenues if production were to commence.

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Reliance on Key Management

Including that the Company will depend substantially on the ability of its executives, senior management and key consultants to operate effectively.

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Delays in Exploration

Including additional costs such as administration overheads before commencing exploration which will reduce the cash reserves of the Company. Delays and additional costs may result in some or all of the Projects not proceeding or defaults in licences or permits which, if not remedied, could result in forfeiture.

Risks associated with the Company’s continuing operations

Risks Associated with Operating in Australia

Including that changes in government regulations and policies may adversely affect the financial performance of the operations of the Company.

Exploration and Evaluation Risk

Including that exploration contains risks by its very nature. There can be no assurance that exploration of the Southern Cross Bore Project will result in the discovery of an economic resource. Even if an apparently viable deposit or economic resource is identified, there is no guarantee that it can be viably or commercially exploited. Weather, mechanical difficulties, shortages or delays may affect drilling and other activities.

Liquidity and realisation risk

Including that there being no guarantee of an active market in shares or that the price of the shares will increase. Restriction obligations (escrow) will reduce the “free float” which may increase volatility of the market price of the Company’s shares. Once escrow periods end there may be a significant sell down by the holders of those shares. The potential limited free float (tradeable shares during any restriction period) and potential sell down may affect the prevailing market price at which shareholders are able to sell their shares.

20

General risks

Risks that apply to companies generally may affect the performance of the Company or value its securities, include those set out in Section 5.4 including:

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• Share Market Conditions

• Occupational Health and Safety

• Economic Risks

• The speculative nature of the investment.

The above is not intended to be an exhaustive list of the risk factors to which the Company or investors in the Company are or may be exposed. The factors not specifically referred to above may in the future materially affect the viability, or performance of the Company and the value of its securities.

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SUMMARY OF THE OFFERS

TOPIC	SUMMARY	FO INFO	R MO RMA	RE TION
1.1 Davenport, East Exploration and the acquisition of East Exploration
Who is the issuer of this Prospectus?	Davenport Resources Limited [ABN 64 153 414 852] (“Davenport” or “Company”).	Section 14.1
Who are Davenport and East Exploration?	Davenport is a mineral exploration company that currently holds the Southern Cross Bore copper-gold project. The Southern Cross Bore Project covers an area of 600km2 about 75kms north-east of Alice Springs in the Northern Territory. Davenport proposes acquiring 100% of the issued capital of East Exploration Pty Ltd (“East Exploration”). East Exploration is a private Australian company which holds two exploration licenses in Germany, referred to as the South Harz Project, through a wholly owned and controlled German subsidiary.	Section 4
What will be the Company’s business after the acquisition of East Exploration?	From completion of the acquisition of East Exploration, Davenport’s business will be holding and exploration of the South Harz Project and Southern Cross Bore Project tenements.	Section 4
What is the acquisition, what will Davenport pay for East Exploration shares, and what are the pre- conditions to the acquisition?	The purchase by Davenport of all issued share capital in East Exploration from the shareholders of East Exploration (as vendors). The consideration for the acquisition of East Exploration is: • $250,000 cash, already paid to East Exploration as an option fee ($100,000) and an exclusivity fee ($150,000); • the issue to vendors of East Exploration shares (or their nominees) of: • 36,458,333 fully paid ordinary shares in the Company at a deemed issue price of AUD$0.20 (20 cents) per share; • 33,854,167 first milestone shares; • 33,854,167 second milestone shares.	Sections 14.3(a) and 14.7

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FOR MORE INFORMATION

TOPIC

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SUMMARY

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The first and second milestone shares automatically convert to fully paid ordinary shares upon achievement of the respective milestones.

The milestones are, in summary:

• for the first milestone shares: announcement within four (4) years after acquisition of East Exploration of the first JORC Code compliant inferred resources of one of the following:

• a. 250 million tonnes of potash at or above 11.0% K2O by content, or

• b. 150 million tonnes of potash at or above 12.0% K2O by content, or

• c. 100 million tonnes of potash at or above 13.0% K2O by content, or

• d. 75 million tonnes of potash at or above 15.0% K2O by content, or

• e. 50 million tonnes of potash at or above 18.0% K2O by content.

• for the second milestone shares: announcement within six (6) years after acquisition of East Exploration of Completion of satisfaction of all mining approvals and utility contracts required to construct and operate a minimum 500,000 tonnes per annum potash mine on the South Harz Project (including all government approvals, water and energy contracts necessary to operate the mine).

The full terms of the milestone shares and the milestones applicable to each of the first and second milestone shares are set out in Section 14.7.

The acquisition of East Exploration is subject to the following conditions being fulfilled:

• The Company lodging a prospectus for a public offer of at least 25 million new shares at twenty cents (20 cents) each to raise, and successfully raising, between $5 million and $6 million (before costs) (the Equity Offer is made to satisfy this condition);

• East Exploration issuing Melbourne Capital Limited [ACN 055 638 438], (a company associated with a Director of Davenport, Mr Angus Edgar) 27,780 shares upon or before satisfaction or waiver of the capital raising condition (above) and listing condition (below), which shares will be part of the East Exploration shares acquired by Davenport;

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TOPIC	SUMMARY	FOR MORE INFORMATION	FOR MORE INFORMATION
	• Davenport receiving conditional approval for Listing. The above conditions may be waived jointly by Davenport and East Exploration. It is also a condition for completion of the acquisition (subject to the above being satisfied or waived) that a Director determined by the vendors of East Exploration is appointed to the Board of Davenport with effect at completion of the acquisition of Davenport. Mr Patrick McManus was elected at the General Meeting, with effect at completion of the acquisition of East Exploration, to fulfil this condition.
Why has this Prospectus been issued?	The purpose of the Prospectus is to make the Equity Offer to provide the Company with funding, to make the Vendor Offer and Option Offer, and to assist the Company to comply with the requirements of ASX for Listing.	Sections 2 and 3
Are the Offers conditional?	Yes. Shares, milestone shares and options will only be issued if, in summary: • the Equity Offer raises at least $5 million; • the acquisition of East Exploration (including satisfaction or waiver of the conditions of the acquisition described above) is completed; and • Davenport becomes listed. Further detail is set out in Section 12.6. If the conditions of the Offers are not fulfilled, applicants will be refunded their application monies in full without interest in accordance with the Corporations Act.	Page 13 an Section 12.	d 6
Why is the Equity Offer being conducted?	The Equity Offer is being conducted to provide funds for Davenport’s proposed activities and as part of satisfying the requirements of ASX for Listing Davenport.	Sections 2	and 3
What is Davenport’s business model?	To conduct exploration activities at the South Harz Project and Southern Cross Projects with the objective of delineating and in the long term potentially exploiting minerals at those Projects.	Sections 2, 3 and 4

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TOPIC	SUMMARY	FOR MORE INFORMATION	FOR MORE INFORMATION
How and where will the Company generate its revenue after completion of the acquisition of East Exploration?	It is not anticipated that Davenport will generate income in the near future. Any future generation of income will depend on delineating and in the long term potentially exploiting minerals at those Projects.	Sections 2, and 4	3
What will be the Company’s strategy after completion of the acquisition of East Exploration?	After completion of the acquisition of East Exploration, Davenport will pursue the South Harz Project and Southern Cross Project as described in Section 4.	Section 4
Where can I find details of Davenport’s and East Exploration’s Projects?	Section 4 of this Prospectus includes details of the Projects. Section 10 contains expert consultant reports on the Projects, including details of the tenements. Tenement reports are contained in Section 11.	Sections 4, and 11	10
Where can I find details of Davenport’s and East Exploration’s historical performance?	Section 8 of this Prospectus includes summarised historical financial information for Davenport and East Exploration, including (for each) a Statement of Profit or Loss and Other Comprehensive Income. An Investigating Accountant’s Report is contained in Section 9.	Sections 8	and 9
What is the Company’s dividend policy?	No dividends are expected to be declared in respect of the 2016 or 2017 financial years. Subject to the performance of the Company in subsequent years, the Directors will review the dividend policy.	Section 14.1	0

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TOPIC	SUMMARY	FOR MORE INFORMATION	FOR MORE INFORMATION	FOR MORE INFORMATION
1.2 Summary of Key Risks
Are there risks?	Yes. The Company is subject to a number of risks, both specific to it and of a general nature, which may either individually or in combination adversely affect the future operating and financial performance of the Company after completion of the acquisition of East Exploration, its investment returns, and the value of its shares. Section 5 describes some of the potential risks associated with East Exploration and the Company’s continuing operations and the business and the industry in which the Company operates, and risks associated with an investment in shares which may have a material adverse impact on the viability and financial performance of the Company and the market price of its shares, should they arise. The risks are also summarised on page 17. These summaries should not be relied on. Greater detail is provided in Section 5. It is strongly recommended that you read Section 5 in full.	Section 5 a page 17		nd
1.3 Directors
Who are the existing and proposed Directors?	Current Board of Directors • Christopher Bain – currently a Non-Executive Director, proposed Managing Director • Rory Luff - Non-Executive Director • Angus Edgar - Non-Executive Director Proposed Director • Patrick McManus - Non-Executive Chairman Mr McManus was elected at the General Meeting, with effect upon completion of the acquisition of East Exploration.	Section 6

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FOR MORE INFORMATION

TOPIC

SUMMARY

Existing and proposed Director’s interests in shares, milestone shares and options

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Existing and proposed Directors’ post-acquisition direct and Sections 6.4 indirect interests in shares, milestone shares and options:

Director or proposed Director (or associated entity)	Ordinary shares	First milestone shares	Second milestone shares
Patrick McManus	Nil	Nil	Nil
Rory Luff^	6,109,986	5,557,487	5,557,487
Christopher Bain	Nil	Nil	Nil
Angus Edgar	3,238,804	1,354,272	1,354,272

Mr Luff’s direct and indirect interests in Davenport shares would represent 8.32% of the Company’s issued ordinary shares at the minimum subscription ($5 million) or 7.79% at the maximum subscription ($6 million). Mr Edgar’s direct and indirect Davenport shares would represent 4.41% at the minimum subscription or 4.13% at the maximum subscription.

None of the Existing and proposed Directors will hold any post-acquisition direct and indirect interests in the above options.

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FOR MORE INFORMATION

TOPIC

Existing and proposed Directors’ remuneration

SUMMARY

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The proposed remuneration of each current and proposed Section 6.5 Director commencing upon completion of the acquisition is as follows:

^ Mr Bain will be appointed as Managing Director with efect upon the acquisition. Director or proposed Director Patrick McManus Rory Luff^ Christopher Bain Angus Edgar Director’s Fees / Salary / Consulting Fees (per annum) (plus GST if applicable) $45,000 $30,000 $140,000 $45,000

* Mr Edgar will receive director’s fees at the rate of $30,000 per annum, and for the first 6 months after Listing he (or a company associated with him) will also receive $2,500 per month for providing corporate advisory consulting services to the Company.

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FOR MORE INFORMATION

TOPIC

SUMMARY

1.4 Key Offer Statistics

TOPIC	SUMMARY	FOR MORE INFORMATION	FOR MORE INFORMATION	FOR MORE INFORMATION
1.4 Key Offer Statistics
What are the key Offer statistics?	The expected capital structure of the Company immediately following completion of the acquisition of East Exploration and the Equity Offer and Options Offer, is summarised below: SHARES ^ Plus the two tranches of milestone shares (a total of 67,708,334 milestone shares – see following). _ Calculated as total ordinary shares multiplied by the Equity_ Ofer price (20 cents). Shares: Existing shares Consideration shares for the acquisition of East Exploration ^ Equity Offer shares offered under this Prospectus (at 20 cents each) Anticipated approximate market capitalisation at the Equity Offer price (20 cents): Total Shares Minimum subscription ($5 million) Number % 12,000,262 16.4% 36,458,333 49.6% 25,000,000 34.0% 14.69 million 73,458,595 100% Maximum subscription ($6 million) Number % 12,000,262 15.3% 36,458,333 46.5% 30,000,000 38.2% 15.69 million 78,458,595 100%	Sectio	n 12.	9(b)

Section 12.9(b)

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FOR MORE INFORMATION

TOPIC	SUMMARY	FO INFO	R MORE RMATION
	SHARES IF ALL MILESTONE SHARES CONVERT OPTIONS Shares: Existing shares Consideration shares for the acquisition of East Exploration (including converted milestone shares) Equity Offer shares offered under this Prospectus (at 20 cents each) Total Shares Minimum subscription ($5 million) Number % 12,000,262 8.5% 104,166,667 73.8% 25,000,000 17.7% 141,166,929 100% Maximum subscription ($6 million) Number % 12,000,262 8.2% 104,166,667 71.3% 30,000,000 20.5% 146,166,929 100% Options Existing options Options offered under this Prospectus Total options Number Nil Up to 10 million Up to 10 million Exercise Price - 25 cents - Expiry Date - 3 years after Listing -	Sectio	n 12.9(b)

Section 12.9(b)

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TOPIC	SUMMARY	FOR MORE INFORMATION	FOR MORE INFORMATION
Are there any escrow arrangements.	Shares issued under the Equity Offer will not be escrowed. Some or all of the shares and milestone shares issued under the Vendor Offer and options issued under the Options Offer may be subject to escrow determined by ASX.	Section 12.1	1
1.5 Summary of the Equity Offer
What is the Equity Offer?	Davenport is offering to issue a minimum of 25,000,000 and up to 30,000,000 fully paid ordinary shares to raise a minimum of $5 million and up to $6 million before costs. The Equity Offer issue price is $0.20 (20 cents) per ordinary share. Ordinary shares issued pursuant to this Prospectus will, from the time they are issued, rank equally with all existing ordinary shares. No milestone shares or options are offered under the Equity Offer.	Section 12.	2
How is the Equity Offer structured?	The Equity Offer comprises: • the Priority Offers to Davenport shareholders and Potash West NL shareholders (respectively); • the Broker Firm Offer which is only open to clients of Brokers who receive a firm allocation from their Broker; and • the General Offer which is open to all eligible investors.	Sections 12 13.1, 13.2 an	.2, d 13.3

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TOPIC	SUMMARY	FOR MORE INFORMATION
How will the proceeds of the Equity Offer be used?	The proceeds of the Equity Offer are intended to be used: • to pursue and in particular to conduct exploration activities at the South Harz potash project and existing Southern Cross Bore Project; • to determine potential extension, development and exploitation of Projects, if feasible; • to undertake geological review and target generation; and • for administrative costs, working capital, and to pay costs of the Offers and acquisition of East Exploration. A detailed breakdown of the proposed use of funds is set out in Section 3.	Sections 2 and 3
Will the Shares be listed?	The Company applied to ASX for Official Quotation of the Shares offered under the Equity Offer on 31 August 2016. The Offers are conditional on ASX approving the application. If approval is not given within three months after the date of this Replacement Prospectus (or any longer period as ASIC and ASX may permit) the Offers will be withdrawn and all application monies received will be refunded without interest as soon as practicable in accordance with the requirements of the Corporations Act. Listing of milestone shares and options offered under this Prospectus is not being applied for and is not a condition of the Offers.	Section 12.10
Is the Equity Offer underwritten?	No. The Offer is not underwritten.	Section 12.15
What is the Equity Offer allocation policy?	Shareholders of Davenport as at the Record Date (8 September 2016) will receive priority shares first to top up holdings of less than 10,000 shares to 10,000 shares, then Davenport Priority Offer applicants who applied for more shares than required to top up their holding will receive shares up to the balance of the 2.5 million priority shares at the discretion of the Directors. Shareholders of Potash West NL as at the Record Date will receive priority shares first to allocate 10,000 shares to the maximum number of Potash West Priority Offer applicants, then Potash West Priority applicants who applied for more than 10,000 shares will receive shares up to the balance of the 5 million priority shares at the discretion of the Directors.	Sections 13.1(b), 13.2(d) and 13.3

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TOPIC	SUMMARY	FOR MORE INFORMATION	FOR MORE INFORMATION	FOR MORE INFORMATION
	If there are insufficient Priority Offer shares to top up Davenport shareholders’ holdings or issue at least 10,000 shares to Potash West NL shareholder applicants, the Directors will allocate shares in their discretion. Shares offered under the General Offer may be applied to Priority Offer applications at the Directors’ discretion. It will be a matter for each broker as to how they allocate shares under the Broker Firm Offer among their clients. If oversubscriptions are received the Company may at its discretion reject General Offer applications and/or scale back General Offer applications and issue fewer shares than an applicant applied for under the General Offer. Excess application monies will be refunded without interest.
Is there any brokerage, commission or stamp duty payable by applicants?	No brokerage, commission or stamp duty is payable by applicants on acquisition of shares under the Equity Offer.	Section 12.1		6
What are the tax implications of investing in shares?	Potential investors should consult their professional taxation adviser before deciding whether to apply for shares pursuant to this Prospectus as any tax liability may vary depending on their individual circumstances.	Sectio	n 14.1	1
When will I receive confirmation that my application has been successful?	It is expected that initial holding statements will be despatched on or about 8 December 2016.	Section 12.7
How can I apply for shares under the Equity Offer?	Priority Offers: Apply by completing the applicable, personalised Priority Offer application form attached to or accompanying this Prospectus, or pay by BPAY® in accordance with the instructions on the personalised Priority Offer application form. Broker Offer: Applicants under the Broker Firm Offer must apply, and pay their application monies, to their broker in accordance with instructions provided by their broker. Your broker may require the application form and/or payment earlier than the Closing Date.	Sections 12 13.1, 13.2 an		.2, d 13.3

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TOPIC	SUMMARY	FOR MORE INFORMATION	FOR MORE INFORMATION
	General Offer: Apply by completing a General Offer application form attached to or accompanying this Prospectus. Applications may be made using the applicable electronic application form submitted using the Share Registry’s on- line application facility at www.securitytransfer.com.au, in accordance with the instructions for use of the facility and only after downloading and confirming having received an electronic copy of this Prospectus Applications may also be made using Electronic copies of the relevant form. Electronic copies of forms may only be used if you received a copy of this Prospectus before applying. To the extent permissible by law, an application by an applicant under the Offers is irrevocable.
Can the Offers be withdrawn?	The Company reserves the right not to proceed with the Offers at any time before completion of the acquisition of East Exploration and the issue of Shares under the Equity Offer. If the Offers do not proceed, application monies will be refunded by the Share Registry, your broker or the Company. No interest will be paid on any application monies refunded as a result of the withdrawal of the Offers.	Section 12.1	4

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TOPIC	SUMMARY	FOR MORE INFORMATION	FOR MORE INFORMATION	FOR MORE INFORMATION
1.6 Further Information
Where can I find more information?	Please call the proposed Managing Director, Christopher Bain, on +61 413 275 756 or the Company Secretary, Mr Rajan Narayanasamy, on +61 415 065 280, or your broker, if you require assistance to complete the applicable application form or require additional copies of this Prospectus. All enquiries in relation to the Broker Firm Offer should be directed to your Broker. If you are unclear in relation to any matter or are uncertain as to whether obtaining shares in the Company is a suitable investment for you, you should seek professional advice from your solicitor, stock broker, accountant or other independent and qualified professional advisor before deciding whether to invest.	Section 14.1		9

1 CORPORATE OVERVIEW

The information in this section is a selective overview only. Prospective investors should read this Prospectus in its entirety before making any investment decision.

On 26 February 2016, Davenport demerged from Arunta Resources Limited [ACN 089 224 402] (which has subsequently changed its name to Spirit Telecom Limited) (“Arunta”), becoming a separate entity. Eligible Arunta shareholders were issued a total of 6,000,262 shares in Davenport on the basis of 0.328415 Davenport shares for every 100 Arunta shares held on the Record Date. Following the demerger from Arunta, Davenport raised $480,000 through a placement of 6,000,000 shares at $0.08 (8 cents) per share (“the Placement”). As at the date of this Prospectus Davenport has 12,000,262 shares on issue. Arunta is no longer associated with Davenport and is referred to for the purposes of historical identification only.

The Equity Offer is being made to raise a minimum of $5,000,000 through the issue of 25,000,000 shares at $0.20 (20 cents) per share and a maximum of up to $6 million by issuing up to 30,000,000 shares.

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East Exploration Pty Ltd is a private Australian company that holds two potash project licences (substantially equivalent to mining exploration tenements in Australia) in Küllstedt and Gräfentonna areas in Central Germany through a wholly owned and controlled German subsidiary, East Exploration GmbH. Further information about East Exploration and the licences is provided in Section 4.1. Terms of the acquisition of East Exploration are set out in Section 14.3(a).

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In addition to the proposed acquisition of East Exploration, Davenport retains an Australian exploration project. At the date of this Prospectus the Company holds the Southern Cross Bore project located approximately 75km north of Alice Springs in Australia’s Northern Territory. Southern Cross Bore is prospective for IOCG (Iron Oxide Copper Gold) style mineralisation and comprises exploration licences (ELs) 30090, 28045 and 29827. Further information about the Southern Cross Bore project is provided in Section 4.2.

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2 PURPOSE OF THE EQUITY OFFER

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The purpose of the Equity Offer is to raise funds:

• to pursue the Projects described in this Prospectus, in particular to conduct exploration activities including drilling at the German potash Project and Davenport’s existing Southern Cross Bore Project;

• to determine the potential for extension, development and exploitation of the Projects, if feasible;

• to undertake geological review and target generation activities ; and

• for administrative costs, working capital, and to pay costs of the Offers and acquisition of East Exploration.

The Equity Offer is detailed in section 12.2. Further detail about the proposed use of funds raised is set out in the following Section 3.

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3 USE OF FUNDS

Funds raised by the Equity Offer together with other funds shown below are intended to be applied as follows:

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

||||||
|---|---|---|---|---|
|MINIMUM SUBSCRIPTION|MAXIMUM SUBSCRIPTION|
|SOURCES OF FUNDS|
|($5 million)|($6 million)|
|Year 1 $ 000’s|Year 2 $ 000’s|Year 1 $ 000’s|Year 2 $ 000’s|
|Adjusted Cash at|932|-|932|-|
|31 July 2016*|
|-|-|
|Equity Offer|5,000|6,000|
|(before costs)|
|-|-|
|Previous year working|2,324|3,196|
|capital balance|
|TOTAL|5,932|2,324|6,932|3,196|

----- End of picture text -----

* Cash at 31 July 2016 adjusted for expenses incurred (but not yet paid) up to 31 July 2016, other than expenses incurred in respect of the acquisition (which are part of the costs of the Offers & acquisition in the expenditure table below), and includes consideration of $500,000 for the sale of the Company’s former

interest in the Hatches Creek project..

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EXPENDITURE	MINIMUM SUBSCRIPTION ($5 million)	MINIMUM SUBSCRIPTION ($5 million)	MINIMUM SUBSCRIPTION ($5 million)	MAXIMUM SUBSCRIPTION ($6 million)	MAXIMUM SUBSCRIPTION ($6 million)	MAXIMUM SUBSCRIPTION ($6 million)	MAXIMUM SUBSCRIPTION ($6 million)
	Year 1 $ 000’s	Year 2 $ 000’s	Total $ 000’s	Year 1 $ 000’s	Year 2 $ 000’s	To $ 0	tal 00’s
SOUTH HARZ PROJECT (GERMANY) Küllstedt
Site preparation & logistics	400	200	600	400	200	6	00
Drill rig mobilisation, drilling & consumables	1,240	800	2,040	1,240	800	2,	040
Technical services - geology, logging, wireline logging, assays	250	100	350	250	100	3	50
Site rehabilitation	210	110	320	210	110	3	20
SUB-TOTAL KüLLSTEDT	2,100	1,210	3,310	2,100	1,210	3,	310
Gräfentonna
Geological review and Target generation	50	50	100	100	125	2	25
SUB-TOTAL SOUTH HARZ	2,150	1,260	3,410	2,200	1,335	3,	535

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EXPENDITURE	MINIMUM SUBSCRIPTION ($5 million)	MINIMUM SUBSCRIPTION ($5 million)	MINIMUM SUBSCRIPTION ($5 million)	MAXIMUM SUBSCRIPTION ($6 million)	MAXIMUM SUBSCRIPTION ($6 million)	MAXIMUM SUBSCRIPTION ($6 million)	MAXIMUM SUBSCRIPTION ($6 million)
	Year 1 $ 000’s	Year 2 $ 000’s	Total $ 000’s	Year 1 $ 000’s	Year 2 $ 000’s	To $ 0	tal 00’s
SOUTHERN CROSS BORE (AUSTRALIA)
Tenement Rent & fees	14	19	33	14	19	3	3
Exploration & Rehabilitation	90	125	215	105	250	3	55
SUB-TOTAL SOUTHERN CROSS BORE	104	144	248	119	269	3	88
SUB-TOTAL EXPLORATION PROJECTS	2,254	1,404	3,658	2,319	1,604	3,	923
ADMINISTRATION	507	490	997	507	490	9	97
WORKING CAPITAL	2,324	430	430	3,196	1,102	1,1	02
COSTS OF THE OFFERS & ACQUISTION OF EAST EXPLORATION^	847	-	847	890	-	9	10
TOTAL	5,932	2,324	5,932	6,932	3,196	6,	932
^ Costs of the acquisition of East Exploration are transaction costs, not the consideration pay the acquisition which is set out in Section 14.3(a). A detailed breakdown of the costs of the Off acquisition (excluding GST) is set out in Section If more than the minimum subscription and less than the maximum subscription is raised, funds above $5 million after costs will be applied primarily to accelerate target generation at Gräfento including purchase of historic drilling information and seismic data if a review shows that the

^ Costs of the acquisition of East Exploration are transaction costs, not the consideration payable for the acquisition which is set out in Section 14.3(a). A detailed breakdown of the costs of the Offers and acquisition (excluding GST) is set out in Section 14.16.

If more than the minimum subscription and less than the maximum subscription is raised, funds above $5 million after costs will be applied primarily to accelerate target generation at Gräfentonna including purchase of historic drilling information and seismic data if a review shows that the information will assist the interpretation of the potash seam. In addition at Southern Cross Bore a

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shallow drilling program to test extensions of mineralisation if the field and geophysical surveys identify a suitable target. Any residual balance will be allocated as working capital for application to other opportunities as they are identified from exploration and evaluation.

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Further detail about East Exploration’s intended activities, to which funds allocated to the South Harz Project in the above table will be applied, are included in Section 4.

The Directors believe that following completion of the Equity Offer the Company will have sufficient funds available from the cash proceeds of the Equity Offer to fulfil the purposes of the Offers and meet the Company’s stated business objectives.

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4 THE COMPANY AND PROJECT

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4 ~~.~~ 1 German Potash Project

• (a) Overview of East Exploration and its Projects

Davenport intends acquiring 100% of the issued capital of East Exploration. A wholly owned and controlled German subsidiary of East Exploration is the holder of an exploration licence area of approximately 450km2 on the southwestern edge of the South Harz Potash District within the Republic of Germany.

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Davenport views this as a unique opportunity to acquire a greenfield potash project within an established potash mining district that is well supported by infrastructure.

The South Harz Potash District has a history of producing Muriate of Potash (MOP) from both Sylvinite and Carnallitite ores. Within the district both Sylvinite and Carnallitite ores have been mined by both conventional underground and solution mining operations. Prior to the re-unification of Germany the district (in the former German Democratic Republic) produced approximately 3.5 million tonnes of K2O annually (approx. 4.4 million tonnes of MOP).

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The project area is located in the northern part of the Federal State of Thuringia, situated approximately halfway between Frankfurt and Berlin. The area is well serviced with infrastructure including rail, power and road networks. Potash mining continues in the broader Harz region so knowledge and experience of potash mining is still available.

The project comprises two exploration licenses covering a total area of approximately 457km2. The Küllstedt license was granted on the 12 Jan 2015, and covers an area of 241km2, and the Gräfentonna license which was also granted on the 12 Jan 2015, covers an area of 216km2. Under the German Mining Law the exploration licenses are granted for a term of 5 years with an option to renew for a further 3 years. Within the Küllstedt license there is an excised area covering the Hupstedt-Beberstedt and Felsenfest potash mines which closed in the 1920’s. Ultimately the shafts were filled and capped in 2000.

The Company’s Independent Technical Expert, CSA Global Pty Ltd, compiled the ” Independent Technical Assessment Report South Harz Potash Project ” in April 2016. A copy of the report is included Section 10.1. The report covers regional geology, mining history as well as past exploration completed on and around the license areas. Investors should read the report in its entirety.

East Exploration had previously engaged German based geological consultants ERCOSPLAN Ingenieurgesellschaft Geotechnik und Bergbau (ERCOSPLAN) who are internationally recognized potash specialist and are based in Erfurt, close to the project area. The results of ERCOSPLAN’s preliminary work on the Küllstedt license has been released to ASX by East Exploration’s 55% shareholder Potash West Limited (ASX:PWN) (refer ASX announcement PWN 4th March 2015 “Significant Exploration Target Identified at Küllstedt, within South Harz Project Germany”).

The project lies within the north-western part of the Thuringian Basin that contains a potash rich evaporite sequence which is of Permian age. These so-called Zechstein evaporites have historically been an important source of salts, potassium fertilizers and hydrocarbons in the region. Due to the extensive mining and exploration history in the area, the geology of the project area and potash mineralisation is reasonably well known. The evaporite sequence containing the potash seams within the South Harz area occur at a depth of between 500m and 1,000m below surface. The overlying rocks consist of a marine sequence of sandstones, mudstones, marl, dolomite and siltstones.

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Within the Küllstedt license the potash mineralisation is hosted by the Permian Stassfurt Formation which ranges in thickness between 32m and 255m. Within the Stassfurt Formation the Kalifloez Stassfurt unit (z2KSt) contains the potash seam which underlies the entire Küllstedt license area. Here, the z2KSt unit is up to 58 metres thick, and appears to be richer in Carnallite potash mineral in the north and Sylvite mineral in the south. Underlying the z2KSt unit is a relatively thick basal rock salt layer (Stassfurt rock salt, z2NA), and the Stassfurt basal anhydrite (z2ANa). The base of the Stassfurt Formation is a dolomite unit (z2D) that has been of interest to hydrocarbon explorers in the past.

Past mining and exploration within the Küllstedt license has included three vertical shafts which operated up to 1924 (excised from the tenement), as well as a number of potash exploration drill holes and oil wells that have drilled through the potash formations of interest as detailed in Table 7 of the Independent Technical Assessment Report South Harz Potash Project report in Section 10.1. ERCOSPLAN have obtained geological data and some assay data for the majority of the drill holes and have created a 3D geological model of the potash seam. This work has allowed ERCOSPLAN to calculate an Exploration Target for potash within the license of between 4,055 million tonnes and 5,141 million tonnes with a grade ranging between 7.2% K2O and 25% K2O. The potential quantity and grade of the Exploration Target is conceptual in nature, there has been insufficient exploration to estimate a mineral resource and it is uncertain if further exploration will result in the estimation of a mineral resource.

The Exploration Target underlying the Küllstedt license area is based solely on historical drill data. The Company’s immediate priority on Listing is to complete a series of confirmation drill holes in order to confirm the thickness and grade of the potash intersected in the historical holes, and to acquire existing seismic data over the area to confirm the continuity of the underlying stratigraphy. Upon successful completion of this program the Company believes it will be in a position to convert

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a part of the Exploration Target into a JORC compliant Inferred Resource. This will allow the Company to advance its plans to develop a profitable potash mining operation.

Little geological information is available on the Gräfentonna license, though the stratigraphy is expected to be broadly similar to the Küllstedt license. Based on preliminary data there appears to be a Sylvinite dominated seam running down the central part of the license area and Carnallitite dominated seam towards the eastern side of the license. Once Listed, the Company will commence a detailed geological review and geological model of the potash seam using the available drilling and geological information. It is anticipated that this work will allow an Exploration Target to be calculated that can be confirmed by further drilling.

(b) Proposed Exploration Program

The Company has planned a two year exploration program post listing with the objective of upgrading the existing Exploration Target on the Küllstedt license to a JORC compliant Inferred Resource as well as completing a thorough geological review of the Gräfentonna license that may lead to an Exploration Target for potash being identified that will also require drill testing.

The proposed initial program is to drill two confirmation holes on the Küllstedt license twinning existing exploration holes that have intersected potash.

Confirmation Hole 1: This hole is testing a recorded intersection in hole Felsenfest 13 from 600.5m depth of 58 metres of Carnallite and Sylvite mineralisation recorded. The planned check hole is approximately 1.7km north of the historical Felsenfest potash mine. The hole is planned to be drilled to a depth of between 650m and 700m.

Confirmation Hole 2: This hole is to be drilled on the western side of the license area testing a zone of high grade Sylvinite mineralisation. The hole will be twinning Küllstedt 2/164 that intersected approximately 7 metres of Sylvite and Carnallite mineralisation from a depth of 932.5m. The hole is planned to be drilled to a depth of 980m.

A third drill hole has been proposed in year two of the program. A final decision to drill it will in part be dictated by the results of the Year 1 program.

Confirmation Hole 3: This hole is proposed to be drilled to test a previously recorded high grade Sylvinite lens on the western side of the Küllstedt license. A hole drilled to a depth of approximately 980m would be required, but the exact location has not been defined as yet.

In addition, the Company will be sourcing any other relevant historic drill hole or seismic data that may assist with modelling the structure and continuity of the potash deposit.

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East Exploration’s German geological consultants ERCOSPLAN have been involved in the planning and location of the drill holes. Discussions with the Mining Authority for the Thuringia Region to seek the necessary permits required have commenced.

Due to the depth of the holes, the program will utilize specialist deep drilling equipment. Work will be contracted to a drilling company experienced in drilling potash deposits and allowance has been made for environment and rehabilitation conditions the mining authority typically impose on drilling programs. Final drill permit requirements will not be known in detail until the permit has been issued.

The work program on the Gräfentonna license will undertake a thorough review of past exploration drilling that has intersected the potash horizon. If sufficient information is available Davenport anticipates it may be possible to estimate an Exploration Target for Potash on the license. This is expected to lead to developing drill targets, however, drilling on the license is not planned in the current budget period.

The estimated cost to undertake the described work is set out in the table below; it is planned to commence immediately after completion of the acquisition and ASX listing.

		YEAR 1	YEAR 2
Küllstedt	Site preparation & logistics	400,000	200,000
	Drill rig mobilisation, drilling	1,240,000	800,000
	& consumables
	Technical services -geology, logging,	250,000	100,000
	wireline logging, assays
	Site rehabilitation	210,000	110,000
SUBTOTAL		2,100,000	1,210,000
Gräfentonna	Geological review and exploration	50,000	50,000
	target generation
SUBTOTAL		50,000	50,000
TOTAL		2,150,000	1,260,000

Note: All costs are shown in in Australian Dollars.

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Further detailed information about the South Harz Project is contained in the Independent Technical Assessment South Harz Project by CSA Global Pty Ltd in Section 10.1 and the Expert Mining License Report by CMS Hasche Sigle Partnerschaft von Rechtsanwälten und Steuerberatern mbB in Section 11.1.

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(c) Information about East Exploration

The Information about East Exploration contained in this Prospectus has been prepared in part based on information provided by East Exploration or its representatives.

Information about East Exploration has also been released to ASX in announcements by Potash West NL (the holding company of a vendor of East Exploration shares). Copies of Potash West NL’s ASX announcements can be obtained from the ASX website under the code PWN.

~~-~~ 4 ~~.~~ 2 Australian Project Southern Cross Bore

Davenport’s Southern Cross Bore Project, comprising ELs 30090, 28045 and 29827 covering an area of 600km2 is located about 75kms north-east of Alice Springs in Australia’s Northern Territory. Access to the project is via the Stuart Highway north of Alice Springs for 49kms, then east along the Arltunga Tourist Road then north on the Bins Track. Station roads provide access within the licence area.

The project is prospective for Iron Oxide Copper Gold style (IOCG) mineralisation and is located within the high grade metamorphic rocks of the Central Block of the Arunta Province a Palaeo to Mesoproterozoic mobile belt. Within the project area the Arunta Province is represented by the Strangways Range Metamorphic Complex, originally a sequence of sedimentary and volcanic rocks of early Proterozoic age, that was deformed and metamorphosed 1700 to 1800 million years ago by regional metamorphism associated with igneous intrusion.

A north trending zone of intense tectonism bisects the eastern part of the project - called the Pinnacles Shear Zone it hosts numerous quartz – copper veins to the east and the Johnnies Reward prospect to the west. Local geology is dominated by protolithic carbonate in the east which transitions abruptly to a pelite-psammite-acid volcanic sequence in the west assigned to the 1810 – 1800Ma Cadney metamorphics, Aileron Province, Strangways Metamorphic Complex, southeast Arunta Inlier.

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Johnnies Reward is a mature prospect discovered in 1964. Davenport’s exploration has included an RC drilling program, soil-sampling, rock sampling, a second drilling program including both RC and diamond drilling and a heliborne VTEM and magnetics survey. Mineralisation is interpreted as at least two zones of mineralisation striking north-south with an easterly dip. The down plunge extent of the mineralisation remains untested.

Detailed interpretation of the VTEM data from the October 2013 heliborne geophysical survey identified 152 anomalies of which two were classified as high priority, twenty-seven as moderate priority and sixty eight as low priority. The high and moderate priority anomalies fall within four priority areas the two high priority anomalies being associated with the Johnnies Reward mineralisation. Selected anomalies were modelled using thin plates to estimate discrete conductor orientations and strengths and drill holes were designed to intersect the modelled plates.

Davenport plans to review all past exploration data including the more recent VTEM data with a view to prioritising targets. It is anticipated that field work will include soil and rock chip sampling over untested targets in particular across the lightly explored parts of EL30090 where splay structures from the Pinnacles Shear zone suggest enhanced prospectivity. In addition it is proposed to undertake additional geophysical surveys across the extended area of the Johnnies Reward prospect and over key structural and magnetic targets to the west of Johnnies Reward within EL30090. The work is expected to better refine targets for future drilling, however, no drilling is planned in the exploration budget based on the minimum $5 million subscription level.

Further detailed information about the Southern Cross Bore Project is contained in the Davenport Resources – Southern Cross Bore, Cu-Au, Independent Expert Report by John Collier (Conarco Consulting) in Section 10.2 and the Report on Northern Territory Exploration Licences 28045, 29827 & 30090 by AMETS (Australian Mining and Exploration Title Services) in Section 11.2.

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5 RISK FACTORS

Davenport is a mineral exploration company. The effect of the acquisition of East Exploration will be to refocus exploration activity to East Exploration’s German tenements with known potash mineralisation with the view to developing commercially viable mining operations. Due to the nature of Davenport’s business, investment in Davenport carries with it risks reasonably expected of an investment in a mineral exploration company. There are a number of risks associated with investing in exploration companies generally and associated with investing in Davenport specifically. The business, assets and operations of Davenport are subject to risk factors that may affect the operating and financial performance of Davenport in the future.

The Risk Factors include, but are not limited to those set out below.

5 ~~.~~ 1 Risks associated with East Exploration

There are risks which could have a material adverse impact on the Company’s operating and financial performance and the price or value of its shares after completion of the acquisition.

Key risks applying after completion of the acquisition identified by the present Board of East Exploration are set out below. It should be noted that the description of risks is not intended to be an exhaustive list of the risk factors to which the Company is or may be exposed.

Technical challenges the potash operations at the East Exploration’s German tenements have faced and dealt with in the past and other risks specific to the East Exploration’s German tenements, to the region or to global potash mining regions are described in Section 4 “Potential Risks” on page 44 of CSA Global Pty Ltd’s “ Independent Technical Assessment South Harz Project ” report which is included in Section 11.1. Shareholders should read and have regard to those technical challenges and other risks, in addition to the following.

(a) Additional Capital Requirements

Exploration costs and pursuit of its business plan will use the Company’s current cash reserves and the funds raised under the proposed Equity Offer. Therefore Davenport will require further financing and may seek additional capital whether through equity, debt or joint venture financing, to support long-term exploration and evaluation of its projects. The Directors can give no assurances as to the level of future borrowings or further capital raisings that will be required to meet the aims to develop the Exploration Licences. No assurance can be given that Davenport will be able to procure sufficient funding at the relevant times on the terms acceptable to it.

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Any additional equity financing will dilute shareholdings, and debt financing, if available, may involve restrictions on Davenport’ operating activities and business strategy. If Davenport is unable to obtain additional funding as needed, it may be required to reduce the scope of its operations or scale back its business plans.

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(b) Exploration Resource Definition Stage

East Exploration’s exploration tenements as described in this Prospectus are generally at the exploration and resource definition drilling stage only. They are not yet at the stage where a development plan is capable of being determined. Potential investors should understand that mineral exploration and subsequent development are high-risk undertakings. The prospects of Davenport after the acquisition should be considered in light of the risks, expenses and difficulties frequently encountered by companies in their early stage of development.

While the exploration licences are considered by the Board to be highly prospective, insufficient exploration has been undertaken to define a JORC compliant resource. There is no guarantee that a JORC compliant resource in relation to any of these exploration licences will be identified in the future. Davenport proposes to utilise funds raised in the Equity Offer to undertake a drilling program to demonstrate the economic potential of the exploration licences.

Any resource delineated is an estimate only. An estimate is an expression of judgement based on knowledge, experience and industry practice. Estimates which were valid when originally calculated may alter significantly when new information or techniques become available. In addition, by their very nature, resource estimates are imprecise and depend to some extent on interpretations, which may prove to be inaccurate. As further information becomes available through additional fieldwork and analysis, the estimates are likely to change. This may result in alterations to development and mining plans which may, in turn, adversely affect Davenport’ operations.

Exploration costs described in this Prospectus are based on certain estimates and assumptions with respect to the method and timing of exploration. While based on industry practice, judgment and experience, these estimates and assumptions are by their nature, subject to significant uncertainties and actual costs may materially differ from these estimates and assumptions. Accordingly, no assurance can be given that the cost estimates and the underlying assumptions used will be realised in practice, which may materially and adversely affect Davenport’s viability.

The business of mineral exploration, project development and production, by its nature, contains elements of significant risk with no guarantee of success. Ultimate and continuous success of these activities is dependent on many factors such as:

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• i. the discovery and/or acquisition of economically recoverable reserves;

• ii. access to adequate capital for project development;

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• iii. design and construction of efficient development and production infrastructure within capital expenditure budgets;

• iv. securing and maintaining title to interests;

• v. obtaining consents and approvals necessary for the conduct of mineral exploration, development and production; and

• vi. access to competent operational management and prudent financial administration, including the availability and reliability of appropriately skilled and experienced employees, contractors and consultants.

There can be no assurance that exploration of the exploration licences currently held by East Exploration will result in the discovery of an economic potash deposit. Even if a potash deposit is identified, there is no certainty that it can be economically exploited. If exploration is successful, there will be additional costs and processes involved in transitioning to the development phase.

Drilling activities carry risk and as such, activities may be curtailed, delayed or cancelled as a result of weather conditions, mechanical difficulties, shortages or delays in the delivery of drill rigs or other equipment.

(c) Accidents

The operations of the Company may be affected by unexpected events arising from errors, omission or natural disasters. These risks include fire, explosions, industrial disputes, unexpected shortages or increases in the costs of consumables, spare parts, plant and equipment, mechanical failure or breakdown, and environmental hazards such as accidental spills or leakage of liquids or geological uncertainty.

The occurrence of any of these risks could result in legal proceedings against the Company and substantial losses to the Company due to injury or loss of life, damage to or destruction of property, natural resources or equipment, pollution or other environmental damage, clean-up responsibilities, regulatory investigation, and penalties or suspension of operations. Damage occurring to third parties as a result of such risks may give rise to claims against the Company.

(d) Risks Associated with Operating in Germany

The East Exploration tenements are located in Germany and will be subject to the various political, economic and other risks and uncertainties associated with operating in that country. There are risks

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attached to exploration and mining operations in Germany that are not necessarily the same as those in Australia. These risks and uncertainties vary from country to country and include, but are not limited to, economic, social or political change, changes of law, taxation, working conditions, rates of exchange, exploration licensing, environmental protection, mine safety, labour relations as well as differing Federal and State government regulations over mineral properties.

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Failure to comply strictly with applicable laws, regulations and local practices relating to mineral exploration and environmental protection, could result in the loss, or reduction of entitlements. The occurrence of these various factors adds uncertainties that cannot be accurately predicted and could have an adverse effect on the Company’s operations or profitability.

There can be no guarantee that Davenport will be able to generate a positive return for its shareholders if an event occurs in Germany which materially adversely affects the value of Davenport, its assets and/or its business.

(e) Tenement Title

Rights in relation to exploration in Germany are governed by both Federal and State legislation. They are evidenced by the granting of licences. Each licence is for a specific term and carries with it work program and reporting commitments, as well as other conditions requiring compliance. Consequently, Davenport could lose title to or its interest in tenements if the licence conditions are not met or if insufficient funds are available to meet expenditure commitments as and when they arise, in line with the German legislation.

Tenements granted to the Company are subject to periodic renewal. Renewal is not automatic, and is subject to approval, which approval can be denied for various reasons, including failure to comply with the stated conditions. Renewal may include additional or varied expenditure or work commitments or compulsory relinquishment of the areas comprising projects. The imposition of new conditions or the inability to meet those conditions may adversely affect the operations, financial position and/or performance of Davenport. If any of the Exploration Licences are not renewed, Davenport may suffer significant damage through loss of the opportunity to develop any mineral resources on that licence.

(f) Environmental and Other Regulatory Risks

Environmental laws in Germany are strict when it comes for the protection of environment. Every activity from exploration through to development and mining require compliance with the regulations for environmental protection. It is expected that the Company’s activities will have an impact on the environment, particularly at the time of advanced exploration and any mine development.

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It is in Davenport’s interest to conduct its activities to the highest standard of environmental obligation, including compliance with all environmental laws, in order to minimise damage to the environment and risk of liability. In a normal situation, it is expected that despite diligently observing the applicable environmental laws and regulations, there are certain risks inherent to the Company’s activities, such as accidental spills, leakages or other unforeseen circumstances, which could subject the Company to environmental liability.

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The Company will require other various governmental approvals and permits in Germany from time to time in connection with various aspects of its activities. To the extent such approvals or permits are required and not obtained, or are delayed, Davenport may experience delays affecting its scheduled exploration program and project development.

Environmental laws are dynamic and can change over time. The Company is unable to predict the effect of additional environmental laws and regulations that may be adopted in the future. Additional laws or regulations may materially increase the Company’s cost of doing business or affect its operations. The cost and complexity of complying with any additional environmental laws and regulations may prevent the Company from being able to develop potentially economically viable mineral deposits.

Further, environmental legislation is evolving in a manner which will likely require stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessments of proposed projects and a heightened degree of responsibility for companies and their officers, directors and employees. There can be no assurance that future changes in environmental regulation in Germany, if any, will not materially and adversely affect Davenports business, prospects, financial condition and results of operations.

(g) Competition Risk

The potash industry globally is competitive. The actions of an existing producer or the entry of new competitors into the potash mining industry may make it difficult for the Company to attract additional funding for the further exploration of the Projects. If the Company is successful in developing the Projects, the actions of an existing producer, or the entry of a new competitor, may make it difficult for the Company to grow or maintain its revenues, which in turn, may have a material adverse effect on the Company’s profitability.

(h) Reliance on Key Management

Davenport’s prospects and ability to carry on its business will depend substantially on the ability of its executives, senior management and key consultants to operate effectively. To manage its growth,

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Davenport must attract and retain additional highly qualified personnel. Investors must be willing to rely to a significant extent on management’s discretion and judgement, as well as the expertise and competence of outside contractors. There can be no assurance that there will be no detrimental impact on Davenport if one or more key employees cease their employment at some stage.

(i) Delays in Exploration

Exploration and development costs (including, without limitation, administration overheads if the Company continues to incur these costs for a significant period before it can commence any exploration) will reduce the cash reserves of the Company, which may not be replaced through the successful development of mining operations. The Company would then be dependent on seeking exploration capital elsewhere, through equity, debt or joint venture financing, to support long term exploration and evaluation of the Projects. There is no guarantee that the Company will be able to find exploration capital on satisfactory terms or at all. Inability to find exploration capital may result in some or all of the Projects not proceeding or defaults in licences or permits which, if not remedied, could result in forfeiture.

5 ~~.~~ 2 Risks associated with the Company’s continuing operations

There are risks associated with Davenport’s existing Southern Cross Bore Project which could have an adverse impact on the Company’s operating and financial performance and the price or value of its shares. The materiality of these risks is somewhat mitigated by the low level of exploration activity planned for these tenements, amounting to approximately 5% of the total company budget over the first 2 years following completion of the acquisition.

Key risks associated with Davenport’s existing Southern Cross Bore Project identified by the present Board of Davenport are set out below. It should be noted that the description of risks is not intended to be an exhaustive list of the risk factors to which the Company is or may be exposed.

(a) Risks Associated with Operating in Australia

The availability and rights to explore and mine, as well as resource industry profitability generally, can be affected by changes in government policy. Changes in government regulations and policies may adversely affect the financial performance of the operations of the Company. The impact of actions by governments may affect the Company’s activities, including in relation to access to infrastructure, compliance with environmental regulations, taxation and royalties. Davenport holds rights to Northern Territory tenements, the responsible government authority will conduct reviews from time to time of policies in connection with the granting and administration of exploration licences. At present the Company is not aware of any proposed changes to policy that would affect the tenements. Changing

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attitudes to environmental, land care, cultural heritage and indigenous land rights issues, together with the nature of the political process, provide the possibility of future policy changes. There is a risk that such changes may affect the Company’s exploration plans or, indeed, its rights and/or obligations with respect to the Northern Territory tenements.

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(b) Exploration and Evaluation Risk

The business of exploration contains risks by its very nature. Successful exploration requires competent operation and managerial performance. In particular, exploration is a speculative endeavour. There can be no assurance that exploration of the Southern Cross Bore Project will result in the discovery of an economic resource. Even if an apparently viable deposit or economic resource is identified, there is no guarantee that it can be viably or commercially exploited.

The exploration costs of the Company identified in Sections 3 (and 4.1(b)), and the Company’s preliminary evaluation of the merit of continuing exploration at the project, is based on assumptions relating to exploration, the method and timing of exploration and other technical and market related assumptions. By their nature, these estimates and assumptions are subject to significant uncertainties and, accordingly, the costs and results may materially differ from the estimates and assumptions. No assurance can be given that the estimates and assumptions will be realised in practice, which may adversely affect the Company’s performance.

5 ~~.~~ 3 Liquidity and realisation risk

There can be no guarantee that an active market in the shares will develop or that the price of the shares will increase. There may be relatively few potential buyers or sellers at any given time and this may increase the volatility of the market price of the shares.

Restriction obligations (escrow) that may be applied to the Company’s shares by ASX including ordinary shares issued under the Placement completed in May 2016 and/or as consideration for the acquisition will reduce the “free float” (shares which are tradable during any restriction period), resulting in there being relatively fewer active or potential sellers or buyers at a given time, which may increase the volatility of the market price of the Company’s shares.

As referred to in Section 12.11, while the Company is not presently aware of what restriction obligations will be imposed, and will not know the extent of escrow until determined by ASX, if Placement shares are escrowed in proportion to the ratio the cash amount paid per share (8 cents) under the Placement bears to the Equity Offer price and all shares issued as consideration for the acquisition of East Exploration were to be restricted, restricted ordinary shares would represent approximately 54.5% of the issued ordinary shares of the Company at the minimum subscription level or 51.1% at

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the maximum subscription level. This would leave only between approximately 45.5% and 48.9% (respectively) of the Company’s ordinary shares free trading until the escrow period(s) ended. If more shares were to be restricted, fewer shares would be free trading, and if fewer shares were to be restricted, more shares would be free trading.

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Further, there is a risk that once the shares subject to escrow or trading restrictions are released from the restrictions attaching to them, there may be a significant sell down by the holders of those shares.

The potential limited free float (tradeable shares during any restriction period) and potential sell down may affect the prevailing market price at which shareholders are able to sell their shares.

5 ~~.~~ 4 General risks

The future prospects of the Company’s business may be affected by circumstances and external factors beyond the Company’s control. Financial performance of the Company may be affected by a number of business risks that apply to companies generally and may include economic, financial, market or regulatory conditions.

(a) Share Market Conditions

The market price of the Company’s shares can fall as well as rise and may be subject to varied and unpredictable influences on the market for equities in general and resource exploration stocks in particular. Neither Davenport nor the Directors warrant the future performance of Davenport or any return on an investment in Davenport.

(b) Occupational Health and Safety

The mining industry has become subject to increasing occupational health and safety responsibility and liability. There is potential for liability under occupational health and safety regulations.

(c) Economic Risks

General economic conditions, movements in interest and inflation rates and currency exchange rates may have an adverse effect on Davenport’s exploration, development and production activities, as well as on its ability to fund those activities. If activities cannot be funded, there is a risk that tenements may have to be surrendered or not renewed. General economic conditions may affect the value of Davenports quoted securities regardless of operating performance. Share market conditions are affected by many factors such as:

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i. general economic outlook;

• ii. interest rates and inflation rates;

• iii. currency fluctuations;

• iv. changes in investor sentiment toward particular market sectors;

• v. the demand for, and supply of, capital; and

• vi. terrorism or other hostilities.

(d) Investment Speculative

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The risk factors set out in this Section 5 ought not to be taken as an exhaustive list of the risks faced by Davenport or by potential investors in Davenport.

The proposed exploration expenditure on the Projects may be adversely affected by any unforeseen expenses which arise in the future and which have not been considered in this Prospectus. While the Company is not aware of any expenses that may need to be incurred that have not been taken into account, if such expenses were incurred, the expenditure proposals of the Company may be adversely affected. Any combination of the above factors may materially affect any individual mineral project assets, operations or the financial performance of the Company and the value of its securities. To that extent the acquisition is subject to significant risk and uncertainty with respect to return or preservation of capital.

There is no guarantee with respect to the payment of dividends, returns of capital or the market value of Davenport shares. Shareholders should consider that their investment in Davenport is speculative and should read this Prospectus in full and consult their professional adviser if they are unsure about the effect of the acquisition.

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6 BOARD AND MANAGEMENT

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6 ~~.~~ 1 Current and Proposed Board

As at the date of this Prospectus, the Board of the Company consists of Mr Christopher Bain (proposed Managing Director), Mr Rory Luff (Non-Executive Director) and Mr Angus Edgar (NonExecutive Director).

Mr Patrick McManus was elected at the General Meeting on the basis that he will take office upon and subject to completion of the acquisition of East Exploration.

The Board at Listing will therefore consist of three current directors and Mr McManus.

Mr McManus will become the new Chairman.

~~-~~ (a) Proposed Director & Non Executive Chairman

Patrick McManus - BSc (Hons), MBA, FAusIMM, FAICD

Patrick McManus has a degree in mineral processing from Leeds University and an MBA from Curtin University. A mining professional for more than 30 years, his work has taken him to many sites within Australia and overseas, including Eneabba and the Murray Basin in Australia, and Madagascar, Indonesia and the United States. During that time, Patrick has worked in operational, technical and corporate roles for RioTinto, RGC Limited and Bemax Resources Limited. He was a founding director and, from January 2007 to March 2010, managing director of ASX-listed Corvette Resources Limited. Patrick McManus is the Managing Director of Potash West NL.

Mr McManus is proposed to become the new Non-Executive Chairman of the Board when the acquisition of East Exploration is completed.

(b) Current Directors

Christopher Bain - B App Sc (App Geol), Dip Geo Sc, MAusIMM, GAICD

Mr Christopher Bain is a current Non-Executive Director of Davenport and will be appointed as Managing Director upon completion of the acquisition of East Exploration. Mr Bain is a geologist and mineral economist, with over 35 years experience including underground mining and exploration throughout Australia. He has lead mining research teams on both the buy and sell side and successfully managed a boutique resource equity investment fund. As a corporate advisor he has

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been instrumental in mining project divestitures and acquisitions, valuations, capital raisings and managed several initial public offers (IPOs) and ASX listings. Mr Bain is a non-executive director of ASX listed KGL Resources Ltd and Metalicity Ltd.

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Rory Luff – BCom

Mr Rory Luff is a current Non-Executive Director of Davenport. He is the founder of BW Equities, a specialist Melbourne equities advisory firm and has over 15 years experience in the financial services industry. Rory has spent most of his career in the financial markets advising resources companies on capital raisings and financial markets strategy.

Angus Edgar

Mr Angus Edgar is a current Non-Executive Director of Davenport. He has been employed in the finance/stockbroking industry since 1985. During that time he has provided corporate advisory services to private and ASX listed companies and has been instrumental in the listing of several new companies onto the ASX. Mr Edgar has agreed to a six-month engagement as a Director following ASX listing of Davenport.

6 ~~.~~ 2 Company Secretary

Rajan Narayanasamy - B Bus (Acct), CPA (Aust)

Mr Rajan Narayanasamy has served more than 20 years in the resources industry, having engaged with both listed mineral exploration companies and producers. His experience covers finance, accounting and secretarial; and was previously CFO/Company Secretary of Saracen Mineral Holdings, a listed gold producer.

6 ~~.~~ 3 Proposed Management Appointment

Jason Wilkinson - MSc, BSc, CSci, MIMMM - Project Director

A geologist with over 25 years experience, he has worked in Australia, USA, Middle East, Turkey and Greece. His most recent role was as in-country MD for a potash project in Ethopia where he established the exploration team taking the project through a full resource drill-out and feasibility study. He is currently acting as consultant geologist and project manager to East Exploration GmbH. Mr Wilkinson resides in Europe and will be responsible for planning and implementing Davenport’s potash exploration program.

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6 ~~.~~ 4 Interests of Directors and Proposed Director

The current and proposed members of the Board of Davenport or entities associated with them currently hold the following Davenport shares:

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

||||
|---|---|---|
|Director or proposed Director (or|Number of Davenport|% of|
|associated entity)|ordinary shares|existing shares|
|Patrick McManus|Nil|Nil|
|Rory Luff|125,000|1.04%|
|Christopher Bain|Nil|Nil|
|Angus Edgar|1,780,357|14.84%|

----- End of picture text -----

The following current and proposed members of the Board of Davenport or entities associated with them will receive Davenport shares and milestone shares as part of the consideration for the acquisition of East Exploration shares, as follows:

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

||||||
|---|---|---|---|---|
|Director or|Number of East|Number of|Number of|Number of|
|proposed Director|Exploration|Davenport|Davenport first|Davenport second|
|(or associated|ordinary shares|ordinary shares|milestone shares|milestone shares|
|entity)|
|Patrick McManus*|Nil|Nil|Nil|Nil|
|Rory Luff^|114,000|5,984,986|5,557,487|5,557,487|
|Christopher Bain|Nil|Nil|Nil|Nil|
|Angus Edgar+|27,780|1,458,447|1,354,272|1,354,272|

----- End of picture text -----

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The total combined holdings of current and proposed members of the Board of Davenport or entities associated with them after receipt of Davenport shares and milestone shares as part of the consideration for the acquisition of East Exploration shares, are as follows:

Director or	Number of	% of total	%	of total	Number of	Number of
proposed	Davenport	issued	issued shares		Davenport	Davenport
Director (or	ordinary	shares at the		at the	first milestone	second
associated	shares	minimum	maximum		shares	milestone
entity)		subscription	subscription			shares
		($5 million)#	($6	million)#
Patrick	Nil	Nil	Nil		Nil	Nil
McManus*
Rory	6,109,986	8.32%	7.79%		5,557,487	5,557,487
Luff^
Christopher	Nil	Nil	Nil		Nil	Nil
Bain
Angus	3,238,804	4.41%	4.13%		1,354,272	1,354,272
Edgar+

# Excludes milestone shares

If both milestones are achieved:

• Mr Luff and/or his associated entities would hold 12.20% of the Company’s then issued shares at the minimum subscription level ($5 million), or 11.78% at the maximum subscription level,

• Mr Edgar and/or his associated entities would hold 4.21% of the Company’s then issued shares at the minimum subscription level ($5 million), or 4.07% at the maximum subscription level,

• assuming they do not acquire or dispose of any shares and no further shares are issued by the Company.

Notes:

• Mr McManus is a director of Potash West NL, an ASX listed company which is the ultimate holding company of an East Exploration shareholder, East Exploration Holdings Pty Ltd. Mr McManus does not control Potash West NL or East Exploration Holdings Pty Ltd and will have no relevant interest in the Davenport shares received by Potash West NL or East Exploration Holdings Pty Ltd.

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^ An entity associated with a relative of Mr Rory Luff also holds 144,000 East Exploration shares and will receive 7,559,983 Davenport ordinary shares, 7,019,984 Davenport first milestone shares and 7,019,984 Davenport second milestone shares. The relative and their associated entity are not associates of Mr Rory Luff, and Mr Rory Luff will have no relevant interest in the Davenport shares received by the relative or their associated entity.

• An entity associated with Mr Edgar, Melbourne Capital Limited (or its nominee), will receive East Exploration shares prior to completion of the acquisition. Neither Mr Edgar nor his associated entities currently hold any East Exploration shares.

Directors and their associates may also apply for Shares under the Equity Offer at the Offer Price, which would increase their holdings.

6 ~~.~~ 5 Board Remuneration

The proposed maximum aggregate remuneration for non-executive Directors is $500,000 (see Section 6.6, below). Initially the amount payable to non-executive Directors will not be greater than $160,000 per annum, divided between the directors as agreed. When appropriate the Board will undertaking a review process and may seek advice from external consultants on fees paid to non-executive directors of comparable companies. Directors who are called upon to perform extra services beyond the director’s ordinary duties may be paid additional fees for those services.

The proposed remuneration of each current and proposed Director commencing upon completion of the acquisition is as follows:

Director or proposed Director	Director’s Fees / Salary / Consulting Fees	Director’s Fees / Salary / Consulting Fees
		(per annum) (plus GST if applicable)
Patrick McManus	$45,000
Rory Luff	$30,000
Christopher Bain^	$140,000
Angus Edgar*	$45,000*

^ Mr Bain will be appointed as Managing Director (an executive Director positon) with effect upon the acquisition. Mr Bain’s remuneration is not included in the non-executive Director remuneration pool.

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• Mr Edgar has agreed to a six-month engagement as a Director following ASX listing of Davenport. Mr Edgar will receive director’s fees at the rate of $30,000 per annum, and for the first 6 months after Listing he (or a company associated with him) will also receive $2,500 per month for providing corporate advisory consulting services to the Company.

Remuneration received by or agreed to be paid to the current Directors from the Company in the past two years is set out in the table below:

Director		October 2014 to September 2015	October 2015 to September 2016
Rory Luff	Nil		$10,000
Christopher Bain	Nil		$25,000
Angus Edgar*	Nil		$10,000

• Mr Edgar received remuneration from Davenport’s former parent entity for services to the group which included Davenport, but did not receive remuneration from Davenport prior to May 2016.

~~-~~ 6 ~~.~~ 6 Proposed Non Executive Director Remuneration Pool

The Constitution of the Company provides for a maximum aggregate amount that may be paid to non-executive directors (referred to as a “non-executive director’s remuneration pool”) to be determined by shareholders at a general meeting. ASX requires the non-executive director’s remuneration pool amount to be specified.

A maximum non-executive director’s remuneration pool amount of $500,000 per annum was adopted at the General Meeting.

The non-executive director’s remuneration pool is a maximum and does not mean that nonexecutive directors will be paid a total of $500,000 per annum. In the first two years following listing the non-executive directors remuneration pool will be limited to no more than $160,000 per annum. The amount of each non-executive director’s remuneration and allocations among nonexecutive directors within the pool limit are determined by the Board, and after listing the process of determining non-executive directors’ remuneration will be subject to compliance with corporate governance policies to be adopted as part of listing. The proposed remuneration of each current and proposed Director commencing upon completion of the acquisition is set out in Section 6.5.

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Payments to non-executive directors for specific services beyond the ordinary role of a non-executive director, such as consulting or professional services, are excluded from the total pool amount, as is reimbursement of expenses.

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Any future change to the non-executive director’s remuneration pool will require a further shareholder approval.

6 ~~.~~ 7 Proposed Employee Security Ownership Plan

An employee incentive scheme (“the Employee Security Ownership Plan” or “the Plan”) was adopted at the General Meeting. The Employee Security Ownership Plan will take effect after Listing. The purpose of the Employee Security Ownership Plan is to enable eligible directors, officers and employees (including executive and non-executive directors of the Company or its subsidiaries) to receive shares, options to acquire shares in the Company or other securities or interests such as performance rights.

The objects of the Plan are to:

• provide participants (eligible persons within the meaning of the Plan) with an additional incentive to work to improve the performance of the Company;

• attracting and retaining eligible persons essential for the continued growth and development of the Company;

• to promote and foster loyalty and support amongst eligible persons for the benefit of the Company; and

• to enhance the relationship between the Company and eligible persons for the long term mutual benefit of all parties.

There is no current proposal to issue any shares, options, other securities or interests such as performance rights under the Plan. While the Plan makes provision for participation by directors and their associates (subject always to further shareholder approval) the Plan is only being adopted to enable shares or options to be issued to non-director employees if the Board decided to do so after Listing. No directors or their associates can or will participate in the Plan or receive any shares, options, other securities or interests such as performance rights unless and until further shareholder approval of specific issues to them is obtained.

The terms of the Plan are set out in Section 14.9

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7 CORPORATE GOVERNANCE

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7 ~~.~~ 1 ASX Corporate Governance Council Principles and Recommendations

The Company has adopted comprehensive systems of control and accountability as the basis for the administration of corporate governance. The Board is committed to administering policies and procedures to meet shareholder expectations, and that the Company, its Directors, officers and employees operate in an appropriate environment of corporate governance commensurate with the Company’s needs.

To the extent applicable, the Company has adopted The Corporate Governance Principles and Recommendations (3rd Edition) as published by the ASX Corporate Governance Council (“the Recommendations”).

Given the Company’s size and nature, the Board considers that the current board and policies are a cost effective and practical method of directing and managing the Company. As the Company’s activities develop in size, nature and scope, the size of the Board and the implementation of additional corporate governance policies and structures will be reviewed.

The Company’s main corporate governance policies and practices as at the date of this Prospectus are outlined below and the Company’s full Corporate Governance Plan is available in the corporate governance information section of the Company’s website ( www.davenportresources.com.au).

7 ~~.~~ 2 Board of directors

The Board is responsible for corporate governance of the Company. The Board develops strategies for the Company, reviews strategic objectives and monitors performance against those objectives. The goals of the corporate governance processes are to:

• a. maintain and increase shareholder value;

• b. ensure a prudential and ethical basis for the Company’s conduct and activities; and

• c. ensure compliance with the Company’s legal and regulatory objectives.

Consistent with these goals, the Board assumes the following responsibilities:

• Overseeing and approving the Company’s strategic and operating objectives;

• Reviewing and approving the Company’s financial position, systems of risk management and

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internal compliance and control, codes of conduct and legal compliance;

• Approving and monitoring the progress of major capital expenditure, the budget, capital management and acquisitions and divestments;

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• Ensuring the integrity of the Company’s financial reporting (with the assistance of the Audit Committee, if applicable) and other reporting through approval and monitoring;

• Being responsible for the Company’s senior management and personnel including appointing and, where appropriate, removing the Chairman;

• Evaluating the performance of the executive Directors and the senior management team and determining their remuneration through an appropriate remuneration framework, determined by the Remuneration Committee;

• Delegating appropriate powers to the executive Directors and senior management to ensure the effective day-to-day management of the business and monitoring the exercise of these powers;

• Ensuring that policies and procedures are in place consistent with the Company’s objectives, and that the Company and its officers act legally, ethically and responsibly in all matters.

• Ensuring corporate accountability to the shareholders primarily through adopting an effective shareholder communications strategy, encouraging effective participation at general meetings and, through the Chairman, being the key interface between the Company and its shareholders;

• Overseeing the Company’s process for making timely and balanced disclosure of all material information concerning the Company that a reasonable person would expect to have a material effect on the price or value of the entity’s securities; and

• Monitoring the effectiveness of the Company’s governance practices.

The Company is committed to the circulation of relevant materials to Directors in a timely manner to facilitate Directors’ participation in the Board discussions on a fully-informed basis.

7 ~~.~~ 3 Composition of the Board

A Board Charter has been adopted which sets out the responsibilities of the Board. It provides that the Board should comprise a minimum of three Directors, and that the Directors’ should have the appropriate mix of skills, experience and expertise which are relevant to the Company’s business and the Directors responsibilities.

The Board Charter allows the Board to delegate powers and responsibilities to committees to assist the Board discharge its duties.

The Company shall also develop and implement a formal induction program for Directors which allows new directors to participate fully and actively in Board decision-making at the earliest opportunity, and enable new Directors to gain an understanding of the Company’s policies and procedures.

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7 ~~.~~ 4 Identification and management of risk

The Board’s collective experience will enable accurate identification of the principal risks that may affect the Company’s business. Key operational risks and their management will be recurring items for deliberation at Board meetings.

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7 ~~.~~ 5 Ethical standards

The Board is committed to the establishment and maintenance of appropriate ethical standards.

7 ~~.~~ 6 Independent professional advice

Subject to the Chairman’s approval (not to be unreasonably withheld), the Directors, at the Company’s expense, may obtain independent professional advice on issues arising in the course of their duties.

7 ~~.~~ 7 Remuneration arrangements

The remuneration of an executive Director will be decided by the Board, without the affected executive Director participating in that decision-making process.

The total maximum remuneration of non-executive Directors initially set by, and any subsequent variation is made by, an ordinary resolution of shareholders in general meeting in accordance with the Constitution, the Corporations Act and the ASX Listing Rules, as applicable. The determination of non-executive Directors’ remuneration within that maximum will be made by the Board having regard to the inputs and value to the Company of the respective contributions by each non-executive Director.

In addition, a Director may be paid fees as the Directors determine where a Director performs special duties or otherwise performs services outside the scope of the ordinary duties of a Director.

Directors are also entitled to be paid reasonable travelling, hotel and other expenses incurred by them respectively in or about the performance of their duties as Directors.

The Board reviews and approves the remuneration policy to enable the Company to attract and retain executives and Directors who will create value for Shareholders having consideration to the amount considered to be commensurate for a company of its size and level of activity as well as the relevant Directors’ time, commitment and responsibility. The Board is also responsible for reviewing

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any employee incentive and equity-based plans including the appropriateness of performance hurdles and total payments proposed.

7 ~~.~~ 8 Trading policy

The Board has adopted a policy that sets out the guidelines on the sale and purchase of securities in the Company by its directors, officers, employees and contractors. The policy generally provides that for directors, the written acknowledgement of the Chair (or the Board in the case of the Chairman) must be obtained prior to trading.

7 ~~.~~ 9 External audit

The Company in general meetings is responsible for the appointment of the external auditors of the Company, and the Board from time to time will review the scope, performance and fees of those external auditors.

7 ~~.~~ 10 Audit committee

The Company will not have a separate audit committee until such time as the Board is of a sufficient size and structure, and the Company’s operations are of a sufficient magnitude for a separate committee to be of benefit to the Company. In the meantime, the full Board will carry out the duties that would ordinarily be assigned to that committee under the written terms of reference for that committee, including but not limited to, monitoring and reviewing any matters of significance affecting financial reporting and compliance, the integrity of the financial reporting of the Company, the Company’s internal financial control system and risk management systems and the external audit function.

7 ~~.~~ 11 Shareholder Communication

The Board’s aim is to ensure that shareholders are informed of all major developments affecting the Company. Information will be communicated to shareholders through various methods including once listed the lodgement of information with the ASX as required by the Company’s continuous disclosure obligations and inclusion of the information on the Company’s website.

7 ~~.~~ 12 Departures from Recommendations

Under the ASX Listing Rules the Company will be required to provide a statement in its annual financial report or on its website disclosing the extent to which it has followed the Recommendations

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during each reporting period. Where the Company has not followed a Recommendation, it must identify the Recommendation that has not been followed and give reasons for not following it.

The Company’s departures from the Recommendations will also be announced prior to admission to the official list of the ASX.

8 FINANCIAL INFORMATION

~~-~~ 8 ~~.~~ 1 Pro forma Consolidated Statement of Financial Position

The information set out below consists of the Historical Statements of Financial Position derived from the audited financial statements of Davenport Resources Limited (the Company) and the reviewed consolidated financial statements of East Exploration Pty Ltd and its subsidiary as at 30 June 2016, the directors’ estimate of subsequent events from this date to completion of the Transaction and the pro-forma adjustments associated with completion of the Offer at the minimum and maximum capital raising amounts and the Transaction (collectively referred to as the Pro-Forma Financial Information ). Footnotes including assumptions are included at the end of the pro-forma Consolidated Statement of Financial Position.

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The Prospectus has provision for capital raising scenarios of $5m and $6m as detailed below.

Davenport Resources Limited Pro-forma Consolidated Balance Sheet	Davenport Consolidated Audited	Davenport Pro-forma Adjustments	Pro-forma Post Adjustments	EE Consolidated Reviewed	Pro-forma Adjustments	Minimum Raising $5m less costs	Pro-forma Post Acquisition $5m raised	Pro-forma Post Acquisition $5m raised	Pro-forma Post Acquisition $6m raised	Pro-forma Post Acquisition $6m raised
		1		2	3	4
	30 Jun 2016		30 Jun 2016	30 Jun 2016
	$	$	$	$	$	$	$			$
CURRENT ASSETS
Cash and cash equivalents	395,005	0	395,005	154,838	0	4,670,000	5,219,843		6,1	53,843
Trade and other receivables	25,809	0	25,809	15,851	0	76,400	118,060		12	2,860
Prepayments	14,157	0	14,157		0	0	14,157		1	4,157
TOTAL CURRENT ASSETS	434,971	0	434,971	170,689	0	4,746,400	5,352,060		6,2	90,860
NON- CURRENT ASSETS
Trade and other receivables	141,981		141,981		0	0	141,981		14	1,981
Other financial assets	250,000		250,000		(250,000)	0	0			0
Property, plant and equipment	11,817		11,817		0	0	11,817		1	1,817
Deferred exploration expenditure	261,245		261,245	14,928	0	0	276,173		27	6,173
TOTAL NON- CURRENT ASSETS	665,043	0	665,043	14,928	(250,000)	0	429,971		42	9,971
TOTAL ASSETS	1,100,014	0	1,100,014	185,617	(250,000)	4,746,400	5,782,031		6,7	20,831

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Davenport Resources Limited Pro-forma Consolidated Balance Sheet	Davenport Consolidated Audited	Davenport Pro-forma Adjustments	Pro-forma Post Adjustments	EE Consolidated Reviewed	Pro-forma Adjustments	Minimum Raising $5m less costs	Pro-forma Post Acquisition $5m raised	Pro-forma Post Acquisition $5m raised	Pro-forma Post Acquisition $6m raised	Pro-forma Post Acquisition $6m raised
		1		2	3	4
	30 Jun 2016		30 Jun 2016	30 Jun 2016
	$	$	$	$	$	$	$			$
CURRENT LIABILITIES
Trade and other payables	232,599	(111,037)	121,562	108,031		592,900	822,493		82	5,793
Provisions	28,318		28,318		0	0	28,318		2	8,318
TOTAL CURRENT LIABILITIES	260,917	(111,037)	149,880	108,031	0	592,900	850,811		8	54,111
NON-CURRENT LIABILITIES
Provisions	12,000	0	12,000	0	0	0	12,000		12	,000
Deferred tax liabilities	7,410	0	7,410	0	0	0	7,410		7	,410
TOTAL NON- CURRENT LIABILITIES	19,410	0	19,410	0	0	0	19,410		1	9,410
TOTAL LIABILITIES	280,327	(111,037)	169,290	108,031	0	592,900	870,221		87	3,521
NET ASSETS	819,687	111,037	930,724	77,586	(250,000)	4,153,500	4,911,810		5,8	47,310
EQUITY
Issued capital	917,05		917,054	300,007	1,469,328	4,692,500	7,392,559		8,3	31,059
Reserves			0	-1,307	0	0	-1,307		-1,307

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Davenport Resources Limited Pro-forma Consolidated Balance Sheet	Davenport Consolidated Audited	Davenport Pro-forma Adjustments	Pro-forma Post Adjustments	EE Consolidated Reviewed	Pro-forma Adjustments	Minimum Raising $5m less costs	Pro-forma Post Acquisition $5m raised	Pro-forma Post Acquisition $5m raised	Pro-forma Post Acquisition $6m raised	Pro-forma Post Acquisition $6m raised
Accumulated losses	(97,367)	111,037	13,670	(221,114)	(1,719,328)	(539,000)	(2,479,442)		(2,4	82,442)
TOTAL EQUITY	819,687	111,037	930,724	77,586	(250,000)	4,153,500	4,911,810		5,8	47,310

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Footnotes:

1. Costs associated with the Offers and acquisition accrued as at 30 June 2016 are excluded from ‘trade and other payables’. These costs have been provided for in the costs of the Offers referred to in Note 4.

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1. Pro-forma assets and liabilities of East Exploration acquired. Based on 30 June 2016 reviewed consolidated financial statements.

2. A share based payment listing expense of $1,469,318 is recorded representing a deemed issue price of shares by East Exploration, equivalent to shareholders interest in Davenport post the acquisition. The $250,000, payment of the Option and Exclusivity fee paid prior to 30 June by Davenport to East Exploration is a consolidation elimination upon completion of the acquisition of East Exploration by Davenport.

3. Funds raised less estimated costs required to be paid to legal and other advisors and experts for capital raising and transaction costs. The portion of GST expected to be claimed is $76,400 for the minimum raising.

8 ~~.~~ 2 Basis of preparation

~~-~~ (a) Pro forma adjustments

The Pro Forma Financial Information has been prepared on the basis of adjusting the Company’s and East Exploration’s Historical Statements of Financial Position as at 30 June 2016 for the financial effects of the following transactions:

• Acquisition of all issued shares of East Exploration Pty Ltd;

• Capital raising of between $5 million and $6 million before costs of the issue from the placement of between 25,000,000 and 30,000,000 shares;

• A share based payment listing expense of $1,469,328 is recorded representing a deemed issue of shares by East Exploration, equivalent to the existing shareholders interest in Davenport post the acquisition; and

• Funds raised less estimated costs required to be paid to legal and other advisors and experts for capital raising and transaction costs incurred. Based on the minimum raising of $5m expected costs are $922,900 (inclusive of 10% GST). The portion of GST expected to be able to claimed is $76,400 for the minimum raising.

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(b) Statement of Compliance

The Financial Information has been prepared:

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• i. in accordance with the recognition and measurement principles of Australian Accounting Standards, Australian Accounting Interpretations and other authoritative pronouncements of the Australian Accounting Standards Board (‘AASB’), which are consistent with International Financial Reporting Standards as issued by the International Accounting Standards Board (‘IASB’), as outlined in the significant accounting policies disclosed below, which the directors have determined are appropriate to meet the needs of members; and

• ii. on an accruals basis; and

• iii. based on historical cost unless otherwise stated in the notes; and

• iv. the amounts presented in the Pro Forma Consolidated Statement of Financial Position has been rounded to the nearest dollar; and

• v. is presented in Australian Dollars.

The Financial Information set out in the Prospectus is presented in an abbreviated form and does not contain all the disclosures and other mandatory professional reporting requirements that are applicable to a general purpose financial report prepared in accordance with the Corporations Act 2001 (Cth).

(c) Use of Estimates and Judgements

The preparation of the Pro Forma Financial Information requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected

(d) Going concern

The Financial Information has been prepared on a going concern basis, which contemplates continuity of normal business activities and the realisation of assets and discharge of liabilities in the normal course of business. .

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(e) Basis of Consolidation

Reverse acquisition accounting

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The proposed acquisition of East Exploration (the legal subsidiary) by the Company (the legal parent) is deemed to be a reverse acquisition, since the substance of the transaction is such that the existing shareholders of East Exploration will obtain substantial control of the Company.

AASB 3 Business combinations (‘AASB 3’) sets out the accounting principles to be followed in a reverse acquisition transaction. However, the Directors have concluded that the Company does not meet the definition of a business as prescribed in AASB 3 and, as such. It has been deemed that the Acquisition cannot be accounted for in accordance with the guidance set out in AASB 3.

Therefore, consistent with the accepted practice for transactions similar in nature to the acquisition, the Company has accounted for the acquisition of East Exploration in the Pro Forma Financial Information of the legal acquirer (the Company) as a continuation of the financial statements of the legal acquired entity (East Exploration), together with a share based payment measured in accordance with AASB 2 Share based payments (‘AASB 2’) , which represents a deemed issue of shares by the legal acquired entity (East Exploration), equivalent to the current shareholders in the Company post the acquisition. The excess of the assessed value of the share based payment over the pro forma net assets of the Company as at acquisition date has been expensed to the income statement as a listing fee.

(f) Principles of consolidation

The Pro Forma Financial Information incorporate the assets and liabilities of all subsidiaries of the Company and East Exploration (‘the Group’) as at 30 June 2016.

Subsidiaries are all those entities over which the Group has the power to govern the financial and operating policies, generally accompanying a shareholding of more than one-half of the voting rights. The effects of potential exercisable voting rights are considered when assessing whether control exists. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.

Intergroup transactions, balances and unrealised gains on transactions between entities in the Group are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

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The acquisition of subsidiaries is accounted for using the acquisition method of accounting. Refer to the ‘business combinations’ accounting policy for further details. A change in ownership interest, without the loss of control, is accounted for as an equity transaction, where the difference between the consideration transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity attributable to the parent.

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Where the Group loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and non-controlling interest in the subsidiary together with any cumulative translation differences recognised in equity. The Group recognises the fair value of the consideration received and the fair value of any investment retained together with any gain or loss in profit or loss.

(g) New accounting standards and interpretations

Certain new accounting standards and IFRIC interpretations have been published that are not mandatory for current reporting periods. The Company’s assessment of the impact of these new standards and interpretations is that there would be no material impact on the pro forma financial information.

8 ~~.~~ 3 Significant accounting policies

(a) Revenue recognition

Revenue is recognised when it is probable that the economic benefit will flow to the consolidated entity and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable after taking into account any trade discounts and volume rebates allowed. For this purpose, deferred consideration is not discounted to present values when recognising revenue.

Interest

Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset.

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Other revenue

Other revenue is recognised when it is received or when the right to receive payment is established.

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All revenue is stated net of the amount of goods and services tax (GST).

(b) Income tax

The income tax expense or benefit for the period is the tax payable on that period’s taxable income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and unused tax losses and the adjustment recognised for prior periods, where applicable.

Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for:

• When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting nor taxable profits; or

• When the taxable temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, and the timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

The carrying amount of recognised and unrecognised deferred tax assets are reviewed each reporting date. Deferred tax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for the carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is probable that there are future taxable profits available to recover the asset.

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Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable authority on either the same taxable entity or different taxable entity’s which intend to settle simultaneously.

(c) Cash and cash equivalents

Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short- term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

Bank overdrafts are shown within borrowings in current liabilities on the balance sheet.

(d) Trade and other receivables

Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less any provision for impairment. Trade receivables are generally due for settlement within 30 days.

Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectable are written off by reducing the carrying amount directly. A provision for impairment of trade receivables is raised when there is objective evidence that the consolidated entity will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation and default or delinquency in payments (more than 60 days overdue) are considered indicators that the trade receivable may be impaired. The amount of the impairment allowance is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. Cash flows relating to short-term receivables are not discounted if the effect of discounting is immaterial.

Other receivables are recognised at amortised cost, less any provision for impairment.

(e) Investments and other financial assets

Investments and other financial assets are measured at either amortised cost or fair value depending on their classification. Classification is determined based on the purpose of the acquisition and subsequent reclassification to other categories is restricted. The fair values of quoted investments are

79

based on current bid prices. For unlisted investments, the consolidated entity establishes fair value by using valuation techniques. These include the use of recent arm’s length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis, and option pricing models.

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Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the consolidated entity has transferred substantially all the risks and rewards of ownership.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are carried at amortised cost using the effective interest rate method. Gains and losses are recognised in profit or loss when the asset is derecognised or impaired.

Available-for-sale financial assets

Available-for-sale financial assets are non-derivative financial assets, principally equity securities that are either designated as available-for-sale or not classified as any other category. After initial recognition, fair value movements are recognised directly in the available-for-sale reserve in equity. Cumulative gain or loss previously reported in the available-for-sale reserve is recognised in profit or loss when the asset is derecognised or impaired.

Impairment of financial assets

The Company assesses at the end of each reporting period whether there is any objective evidence that a financial asset or group of financial assets is impaired. Objective evidence includes significant financial difficulty of the issuer or obligor; a breach of contract such as default or delinquency in payments; the lender granting to a borrower concessions due to economic or legal reasons that the lender would not otherwise do; it becomes probable that the borrower will enter bankruptcy or other financial reorganisation; the disappearance of an active market for the financial asset; or observable data indicating that there is a measurable decrease in estimated future cash flows.

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The amount of the impairment allowance for loans and receivables carried at amortised cost is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. If there is a reversal of impairment, the reversal cannot exceed the amortised cost that would have been had the impairment not been recognised and is reversed to profit or loss.

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Available-for-sale financial assets are considered impaired when there has been a significant or prolonged decline in value below initial cost. Subsequent increments in value are recognised directly in the available- for-sale reserve.

(f) Property, plant and equipment

Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Depreciation commences from the time the asset is available for its intended use. Leasehold improvements are depreciated over the shorter of either the period of the issue or the estimated useful lives of the improvements.

Depreciation is calculated on a diminishing value basis to write off the net cost of each item of property, plant and equipment (excluding land) over their expected useful lives as follows:

Leasehold improvements 10 years

The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date to ensure it is not in excess of the assets recoverable amount. The recoverable amount is assessed on the basis of the expected net cash flows that will be received from the asset’s employment and subsequent disposal. The expected net cash flows have not been discounted in determining recoverable amounts.

An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to the consolidated entity. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss.

(g) Leases

The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset.

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A distinction is made between finance leases, which effectively transfer from the lessor to the lessee substantially all the risks and benefits incidental to ownership of leased assets, and operating leases, under which the lessor effectively retains substantially all such risks and benefits.

Finance leases are capitalised. A lease asset and liability are established at the fair value of the leased assets, or if lower, the present value of minimum lease payments. Lease payments are allocated between the principal component of the lease liability and the finance costs, so as to achieve a constant rate of interest on the remaining balance of the liability.

Leased assets acquired under a finance lease are depreciated over the asset’s useful life or over the shorter of the asset’s useful life and the lease term if there is no reasonable certainty that the consolidated entity will obtain ownership at the end of the lease term.

Operating lease payments, net of any incentives received from the lessor, are charged to profit or loss on a straight-line basis over the term of the lease.

(h) Exploration and evaluation assets

Exploration and evaluation expenditure in relation to separate areas of interest for which rights of tenure are current is carried forward as an asset in the statement of financial position where it is expected that the expenditure will be recovered through the successful development and exploitation of an area of interest, or by its sale; or exploration activities are continuing in an area and activities have not reached a stage which permits a reasonable estimate of the existence or otherwise of economically recoverable reserves. Where a project or an area of interest has been abandoned, the expenditure incurred thereon is written off in the year in which the decision is made.

(i) Trade and other payables

These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year and which are unpaid. Due to their short-term nature they are measured at amortised cost and are not discounted. The amounts are unsecured and are usually paid within 30 days of recognition.

(j) Borrowings

Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs. They are subsequently measured at amortised cost using the effective interest method.

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Where there is an unconditional right to defer settlement of the liability for at least 12 months after the reporting date, the loans or borrowings are classified as non-current.

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(k) Provisions

Provisions are recognised when the Group has a present (legal or constructive) obligation as a result of a past event, it is probable the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation. If the time value of money is material, provisions are discounted using a current pre-tax rate specific to the liability. The increase in the provision resulting from the passage of time is recognised as a finance cost.

(l) Employee benefits

Wages and salaries, annual leave and sick leave

Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be settled within 12 months of the reporting date are recognised in current liabilities in respect of employees’ services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled. Non-accumulating sick leave is expensed to profit or loss when incurred.

Share-based payments

Equity-settled and cash-settled share-based compensation benefits are provided to employees.

Equity-settled transactions are awards of shares, or options over shares that are provided to employees in exchange for the rendering of services. Cash-settled transactions are awards of cash for the exchange of services, where the amount of cash is determined by reference to the share price.

The costs of equity-settled transactions are measured at fair value on grant date. Fair value is independently determined using either the Binomial or Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option, together with non-vesting conditions that do not determine whether the Group receives the services that entitle the employees to receive payment. No account is taken of any other vesting conditions.

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The costs of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the best estimate of the number of awards that are likely to vest and the expired portion of the vesting period. The amount recognised in profit or loss for the period is the cumulative amount calculated at each reporting date less amounts already recognised in previous periods.

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The cost of cash-settled transactions is initially, and at each reporting date until vested, determined by applying either the Binomial or Black-Scholes option pricing model, taking into consideration the terms and conditions on which the award was granted. The cumulative charge to profit or loss until settlement of the liability is calculated as follows:

• during the vesting period, the liability at each reporting date is the fair value of the award at that date multiplied by the expired portion of the vesting period.

• from the end of the vesting period until settlement of the award, the liability is the full fair value of the liability at the reporting date.

All changes in the liability are recognised in profit or loss. The ultimate cost of cash-settled transactions is the cash paid to settle the liability.

Market conditions are taken into consideration in determining fair value. Therefore any awards subject to market conditions are considered to vest irrespective of whether or not that market condition has been met, provided all other conditions are satisfied.

If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made. An additional expense is recognised, over the remaining vesting period, for any modification that increases the total fair value of the share-based compensation benefit as at the date of modification.

If the non-vesting condition is within the control of the consolidated entity or employee, the failure to satisfy the condition is treated as a cancellation. If the condition is not within the control of the Group or employee and is not satisfied during the vesting period, any remaining expense for the award is recognised over the remaining vesting period, unless the award is forfeited.

If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining expense is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and new award is treated as if they were a modification.

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(m) Issued capital

Ordinary shares are classified as equity.

Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

(n) Goods and Services Tax (‘GST’) and other similar taxes

Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part of the expense.

Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the tax authority is included in other receivables or other payables in the statement of financial position.

Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the tax authority, are presented as operating cash flows.

Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to the tax authority.

8 ~~.~~ 4 Other financial assets

The pro-forma other financial assets comprise other financial assets and adjustments as at 30 June 2016;

Other financial assets	$		$
Other financial assets - Davenport	250,000
Other financial assets – East Exploration	-	250,000
The following subsequent events and pro-forma adjustments
Elimination of the East Exploration option and exclusivity fee		(250,000)
Other financial assets – Pro-forma		-

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8 ~~.~~ 5 Trade and other payables

The pro-forma trade and other payables comprise trade and other payables and adjustments as at 30 June 2016;

The pro-forma trade and other payables comprise trade and other payables and adjustme 30 June 2016;			nts as
Trade and other payables	$		$
Trade and other payables – Davenport	232,599
Trade and other payables – East Exploration	108,031	340,63	0
The following subsequent events and pro-forma adjustments
Elimination of the offer and transaction costs accrued		(111,037	)
Capital raising costs		596,200
Trade and other payables – Pro-forma		825,793

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8 ~~.~~ 6 Contributed Equity

The pro-forma issued share capital as at completion of the acquisition of East Exploration and the Equity offer as at 30 June 2016 assuming the maximum capital raising of $6 million:

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

Share Capital $ $
Davenport issued capital at 30 June 2016 917,054
East Exploration issued capital at 30 June 2016 300,007 1,217,061
The following subsequent events and pro forma adjustments
Capital raising – Davenport 6,000,000
Elimination of issued share capital in Davenport (917,054)
Deemed fair value of payment to Davenport shareholders on 2,400,052
reverse acquisition
Cost associated with the acquisition and the Offer (369,000)
Total subsequent events and pro-forma adjustments 7,113,998
Post East Exploration transactions and capital raising 8,331,059
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The Prospectus has provision for the subscription of between of between 25,000,000 and 30,000,000 shares to raise between $5 million and $6 million. Should the minimum $5 million be raised, the share issue cost would decrease to $307,500, and the share capital balance would decrease by $938,500 to $7,392,559

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~~-~~ 8 ~~.~~ 7 Pro forma Listing Expenses

The proposed acquisition of East Exploration by the Company is deemed to be a reverse acquisition as the substance of the transaction is such that the existing shareholders of East Exploration will obtain substantial control of the Company. However, the Company is not considered to meet the definition of a business under AASB 3 Business Combinations (‘AASB 3’) and, as such, it has been concluded that the acquisition cannot be accounted for in accordance with the guidelines set out in AASB 3. Therefore consistent with the accepted practice for transactions similar in nature to the acquisition, the acquisition is accounted for in the pro forma financial information as a continuation of the financial statements of the legal acquiree (East Exploration), together with a share based payment measured in accordance with AASB 2 Share Based Payments (‘AASB 2’), which represents a deemed issue of shares by the legal acquiree (East Exploration), equivalent to current shareholders interest in the Company post the acquisition. The excess of the assessed fair value is of the share based payment over the net assets has been expensed to the income statement as a listing fee.

Consequently, a listing expense of $1,469,328 has been expensed on the acquisition, which represents the excess of the deemed fair value of the Company shares on issue less the pro-forma net assets of the Company on completion of the settlement of all transactions, as set out below:

Fair value of East Exploration at completion date	No of Shares	$
Fair value of East Exploration on acquisition		7,291,667
East Exploration pre-acquisition shares on issue	694,446
Assessed fair value of pro-forma listing expense
Deemed post-consolidation East Exploration shares issued	228,577
Deemed price of shares issued	$10.50
Deemed fair value of share-based payment, assessed in accordance with AASB 2		2,400,052
Adjustment for transaction and share issue costs accrued at 30 June 2016		(111,037)
Elimination of net assets of Davenport at acquisition		(819,687)
Pro-forma listing expense recognised on reverse acquisition		1,469,328

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8 ~~.~~ 8 Accumulated losses

The Pro-forma accumulated losses as at the completion of the acquisition of East Exploration is as follows assuming the maximum capital raising of $6 million:

Accumulated losses	$	$
Per Davenport as at 30 June 2016	(97,367)
Per East Exploration as at 30 June 2016	(221,114)	(318,481)
The following subsequent events and pro forma adjustments
Elimination of pre-acquisition losses on consolidation	97,367
Elimination of exclusivity and option fee	(250,000)
Pro-forma listing expense recognised on reverse acquisition	(1,469,328)
Legal, accounting, printing and administration transaction costs	(542,000)
Total subsequent events and pro-forma adjustments		(2,163,961)
Accumulated losses – Pro-forma		(2,482,442)

8 ~~.~~ 9 Historical Financial Information

The pro-forma consolidated balance sheet is based on actual, audited Financial Statements of Davenport Resources Limited and the reviewed consolidated Financial Statements of East Exploration Pty Ltd and its subsidiary for the period ended 30 June 2016 and has been prepared to provide shareholders with information on the assets and liabilities of the Company and pro-forma assets and liabilities of the Company following the Capital Raising and Acquisition of East Exploration. The historical actual Statement of Profit or Loss and Other Comprehensive Income are set out below for Davenport Resources Limited - audited (for 12 months) and East Exploration Pty Ltd consolidated - reviewed (for 6 months) for the period ended 30 June 2016. 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

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Davenport Resources Limited Statement of Profit or Loss and Other Comprehensive Income

Davenport Resources Limited Statement of Profit or Loss and Other Comprehensive Income	Davenport Resources Limited Statement of Profit or Loss and Other Comprehensive Income	Davenport Resources Limited Statement of Profit or Loss and Other Comprehensive Income	Davenport Resources Limited Statement of Profit or Loss and Other Comprehensive Income	Davenport Resources Limited Statement of Profit or Loss and Other Comprehensive Income	Davenport Resources Limited Statement of Profit or Loss and Other Comprehensive Income
	Year ended 30 June 2016, Audited Actual	Year ended 30 June 2015, Audited Actual	Year ended 30 June 2014, Audited Actual
Revenue from continuing operations	48,599	-	-
Other income	3,138,726	-	-
Administration and corporate expenses	(44,552)	(19,667)	(46,933)
Legal and professional fees	(177,546)	-	-
Depreciation and amortisation expense	(622)	-	-
Impairment of assets	(52,502)	(2,756,873)	(6,923)
Director fees	(25,000)	-	-
Occupancy costs	(104,458)	-	-
Operating profit/(loss) before income tax	2,782,645	(2,776,540)	(53,856)
Income tax attributable to operating profit/(loss)	(7,410)	-	-
Operating profit/(loss) after tax	2,775,235	(2,776,540)	(53,856)

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Other Comprehensive Income	Other Comprehensive Income
		Year ended 30 June	Year ended 30 June	Year ended 30 June
		2016, Audited Actual	2015, Audited Actual	2014, Audited Actual
Other comprehensive		-	-	-
income or loss:
Total other comprehensive		-	-	-
income for the period, net
of tax
Total comprehensive profit/		2,775,235	(2,776,540)	(53,856)
(loss) for the period

Other Comprehensive Income	Other Comprehensive Income	Other Comprehensive Income	Other Comprehensive Income	Other Comprehensive Income	Other Comprehensive Income
	Year ended 30 June 2016, Audited Actual	Year ended 30 June 2015, Audited Actual	Year ended 30 June 2014, Audited Actual
Other comprehensive income or loss:	-	-	-
Total other comprehensive income for the period, net of tax	-	-	-
Total comprehensive profit/ (loss) for the period	2,775,235	(2,776,540)	(53,856)
Davenport Resources Limited Statement of Financial Position
	As at 30 June 2016, Audited Actual	As at 30 June 2015, Audited Actual	As at 30 Ju Audited Ac	ne 20 tual	14,
Assets Current assets
Cash and cash equivalents	395,005	3,328	1,358
Trade and other receivables	25,809	134	741
Other assets	14,157	-	-
Total current assets	434,971	3,462	2,099
Non-current assets
Trade and other receivables	141,981	-	-
Other financial assets	250,000	-	-
Property, plant and equipment	11,817	-	-

Continued on next page.

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Exploration and evaluation	261,245	245,320	910,950	910,950	910,950
Total non-current assets	665,043	245,320	910,950
Total Assets	1,100,014	248,782	913,049
	As at 30 June 2016, Audited Actual	As at 30 June 2015, Audited Actual	As at 30 Ju Audited Ac	ne 20 tual	14,
Liabilities Current Liabilities
Trade and other payables	232,599	18,748	8,587
Loan – related entity	-	2,665,582	563,470
Provisions	28,318	-	-
Total current liabilities	260,917	2,684,330	572,057
Non-Current Liabilities
Provisions	12,000	-	-
Deferred tax liabilities	7,410	-	-
Total non-current liabilities	19,410	-	-
Total Liabilities	280,327	2,684,330	572,057
Net Assets	819,687	(2,435,548)	340,992
Continued o				n nex

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Equity
Issued capital	917,054	437,054	437,054
Accumulated losses	(97,367)	(2,872,602)	(96,062)
Total Equity	819,687	(2,435,548)	340,992
East Exploration Pty Ltd and its controlled entity Statement of Profit or Loss and Other Comprehensive Income
	6 Months to 30 June 2016, Reviewed Actual	Year ended 31 December 2015, Audited Actual	10 months ende 31 December 20 Audited Actual		d 14,
Other income	150,000	100,000	-
Corporate expenses	(72,684)	(103,254)	(29,828)
Exploration and evaluation expenses	-	(154,599)	(110,749)
Operating income/(loss) before income tax	77,316	(157,853)	(140,577)
Income tax attributable to operating profit/(loss)	-	-	-
Operating income/(loss) after tax	77,316	(157,853)	(140,577)

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|||||
|---|---|---|---|
|Other Comprehensive Income|
|6 Months to 30 June|Year ended 31|10 months ended|
|2016, Reviewed Actual|December 2015,|31 December 2014,|
|Audited Actual|Audited Actual|
|Other comprehensive|
|income or loss:|
|Foreign exchange|1,122|1,010|(1,419)|
|translation reserve|
|Total other comprehensive|1,122|1,010|(1,419)|
|income for the period, net|
|of tax|
|Total comprehensive|78,438|(158,863)|(141,996)|
|income/(loss) for the period|

----- End of picture text -----

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

|||||
|---|---|---|---|
|East Exploration Pty Ltd and its controlled|
|entity Statement of Financial Position|
|As at 30 June 2016,|As at 31 December|As at 31 December|
|Reviewed Actual|2015, Audited Actual|2014, Audited Actual|
|Assets|
|Current assets|
|Cash and cash equivalents|154,838|40,224|54,942|
|Trade and other receivables|15,851|6,370|28,443|
|Total current assets|170,689|46,594|83,385|

----- End of picture text -----

Continued on next page.

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Non-current assets
Exploration and evaluation	14,928	14,993	-
Total non-current assets	14,928	14,993	-
Total Assets	185,617	61,587	83,385
Liabilities Current Liabilities
Trade and other payables	108,031	62,439	25,381
Total current liabilities	108,031	62,439	25,381
Total Liabilities	108,031	62,439	25,381
Net Assets	77,586	(852)	58,004
Equity Contributed equity	300,007	300,007	200,000
Reserves	(1,307)	2,429	(1,419)
Accumulated losses	(221,114)	(298,430)	(140,577)
Total Equity	77,586	(852)	58,004
The following historical financial information has been lodged with ASIC and is taken to be incl in this Prospectus by operation of Section 712 of the Corporations Act:

The following historical financial information has been lodged with ASIC and is taken to be included in this Prospectus by operation of Section 712 of the Corporations Act:

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Davenport Resources

~~– –~~ (a) Davenport Resources Limited Annual Report 30 June 2016:

Davenport Resources Limited’s financial information for the period ended 30 June 2016 is contained in its audited Financial Report. The Annual Financial Report for the period ended 30 June 2016 comprises a Directors’ Report, statement of profit or loss and other comprehensive income, statement of financial position, statement of changes in equity, statement of cash flows, notes to financial statements and an Independent Auditor’s Report. The Independent Auditor’s Report contains an unmodified conclusion. The Independent Auditor’s Report states the financial information for the period ending 30 June 2016 (in particular, that Davenport continued to incur negative cash flows throughout the period ending 30 June 2016) indicates the existence of a material uncertainty that may cast doubt on Davenport’s ability to continue as a going concern;

~~– –~~ (b) Davenport Resources Pty Ltd Special Purpose Financial Report 30 June 2015:

As a non-public company for the period ended 30 June 2015, the Davenport Resources Pty Ltd financial information is provided in the form of an audited Special Purpose Financial Report. The Special Purpose Financial Report for the period ending 30 June 2015 contains financial information in addition to the financial information in this section 8. The financial information contained in the Special Purpose Financial Report for the year ending 30 June 2015 comprises a statement of profit or loss and other comprehensive income, statement of financial position, statement of changes in equity, statement of cash flows, notes to consolidated financial statements and an Independent Auditor’s Report. The Independent Auditor’s Report contains an unmodified conclusion. The Independent Auditor’s Report states the financial information for the period ending 30 June 2015 (in particular, the total comprehensive loss of $2,776,540 and Davenport’s liabilities exceeding its assets by $2,680,868) indicates the existence of a material uncertainty that may cast doubt on Davenport’s ability to continue as a going concern;

~~– –~~ (c) Davenport Resources Pty Ltd Special Purpose Financial Report 30 June 2014:

As a non-public company for the period ended 30 June 2014, the Davenport Resources Pty Ltd financial information is provided in the form of an audited Special Purpose Financial Report. The Special Purpose Financial Report for the year ended 30 June 2014 contains financial information in addition to the financial information in this section 8. The financial information contained in the Special Purpose Financial Report for the year ended 30 June 2014 comprises a statement of profit or

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loss and other comprehensive income, statement of financial position, statement of changes in equity, notes to the financial statements and an Independent Auditor’s Report. The Auditor’s Report states the financial information for the period ending 30 June 2014 (in particular, the total comprehensive loss of $53,856 and Davenport’s liabilities exceeding its assets by $569,958) indicates the existence of a material uncertainty that may cast doubt on Davenport’s ability to continue as a going concern;

East Exploration

~~– - –~~ (a) East Exploration Pty Ltd Half Year Financial Report 30 June 2016:

East Exploration Pty Ltd’s financial information for the half-year period ended 30 June 2016 is provided in the form of a reviewed Financial Report. The Financial Report for the half-year ended 30 June 2016 contains financial information in addition to the financial information in this section 8. The financial information contained in the Financial Report for the half-year ended 30 June 2016 comprises a consolidated statement of comprehensive income, consolidated balance sheet, consolidated statement of changes in equity, consolidated statement of cash flows, notes to consolidated financial statements and an Independent Auditor’s Review Report. The Independent Auditor’s Review Report contains an unmodified review conclusion and there is no emphasis of matter or other qualification;

~~– –~~ (b) East Exploration Pty Ltd Financial Report 31 December 2015:

East Exploration Pty Ltd’s financial information for the period ended 31 December 2015, is provided in the form of an audited Financial Report. The Financial Report for the year ended 31 December 2015 contains financial information in addition to the financial information in this section 8. The financial information contained in the Financial Report for the year ended 31 December 2015 comprises a consolidated statement of comprehensive income, consolidated balance sheet, consolidated statement of changes in equity, consolidated statement of cash flows, notes to consolidated financial statements and an Independent Auditor’s Report. The Independent Auditor’s Report contains an unmodified conclusion. The Independent Auditor’s Report states the financial information for the period ending 31 December 2015 (in particular, the comprehensive loss of $158,863, working capital deficiency of $15,845 and deficit net assets of $852) indicates the existence of a material uncertainty that may cast doubt on East Exploration’s ability to continue as a going concern;

~~– –~~ (c) East Exploration Pty Ltd Financial Report 31 December 2014:

East Exploration Pty Ltd’s financial information for the period ended 31 December 2014 is provided in the form of an audited Financial Report. East Exploration Pty Ltd was incorporated in March 2014

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and therefore the Financial Report considers the 10 month period from the date of incorporation to 31 December 2014. The Financial Report for the year ended 31 December 2014 contains financial information in addition to the financial information in this section 8. The financial information contained in the Financial Report for the year ended 31 December 2014 comprises a consolidated statement of comprehensive income, consolidated balance sheet, consolidated statement of cash flows, notes to consolidated financial statements and an Independent Auditor’s Report. The Independent Auditor’s Report contains an unmodified conclusion and there is no emphasis of matter or other qualification;

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Any person may request a copy of any of the financial information referred to above during the application period of this Prospectus, which Davenport will provide free of charge. A copy of each of the above documents can also be downloaded from Davenport’s website at www.davenportresources.com.au/accounts.

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9 INVESTIGATING ACCOUNTANT’S REPORT

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10 INDEPENDENT TECHNICAL REPORTS

10 ~~.~~ 1 Independent Technical Assessment South Harz Project

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~~– -~~ 10 ~~.~~ 2 Davenport Resources Southern Cross Bore, Cu Au, Independent Expert Report

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11 TENEMENT REPORTS

~~–~~ 11 ~~.~~ 1 Expert Mining License Report South Harz Project

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11 ~~.~~ 2 Report on Northern Territory Exploration Licences 28045, 29827 & 30090

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12 DETAILS OF THE OFFERS

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12 ~~.~~ 1 The Offers

The Offers comprise the Equity Offer, the Vendor Offer and the Options Offer.

12 ~~.~~ 2 The Equity Offer

This Prospectus invites investors to apply for a minimum of 25,000,000 and up to 30,000,000 shares in the Company at the Offer Price of $0.20 (20 cents) per share to raise a minimum of $5,000,000 and a maximum of $6,000,000 before costs of the Offers.

The Equity Offer is made on the terms, and is subject to the conditions, set out in this Prospectus.

Details of how to apply for shares under the Equity Offer are set out in Sections 12.1, 12.2, 12.3 and 12.4.

The Equity Offer comprises:

• the Davenport Priority Offer – of up to 2,500,000 shares ($500,000) made to and which is only open to shareholders of Davenport as at 8 September 2016 (“the Record Date”);

• the Potash West Priority Offer - of up to 5,000,000 shares ($1,000,000) made to and which is only open to shareholders of Potash West NL as at the Record Date;

• the Broker Firm Offer – open to Australian resident clients of Brokers who have received a firm allocation from their Broker; and

• the General Offer – an invitation to eligible investors to apply for shares.

Details of the allocation policies under the two Priority Offers, Broker Firm Offer and the General Offer are described in Sections 13.1(b), 13.2(d) and 13.3.

Investors wishing to apply under the General Offer or Davenport or Potash West NL shareholders wishing to apply for additional shares above their priority entitlement will be satisfied to the extent that Davenport or Potash West NL shareholders do not take up all of the Priority Offers.

12 ~~.~~ 3 Vendor Offer

This Prospectus contains an offer 36,458,333 fully paid ordinary shares, 33,854,167 first milestone shares (fully paid non-transferrable, non-voting ordinary shares in the Company) and 33,854,167 second milestone shares to the vendors of East Exploration and/or their respective nominee(s) as

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consideration for the acquisition of 100% of the issued shares of East Exploration. Only Vendors of East Exploration and/or their respective nominee(s) are eligible to accept the Vendor Offer.

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No funds will be raised through the Vendor Offer.

12 ~~.~~ 4 Options Offer

This Prospectus contains an offer up to 10 million options having an exercise price of $0.25 (25 cents) expiring three years after Listing to recipients determined by the Company, including to AFSL holders or others in connection with the Equity Offer. Only recipients determined by the Company are eligible to accept the Options Offer.

No funds will be raised through the issue of Options under the Options Offer. Funds received upon exercise of options (if exercised) will be applied to the Company’s working capital requirements at the time.

12 ~~.~~ 5 Shares, Milestone Shares and Options

All shares offered under this Prospectus will, once issued, rank equally with the Company’s currently issued shares. A summary of the rights attaching to shares is set out in Section 14.6.

The milestone shares are fully paid non-transferrable, non-voting ordinary shares in the Company which convert to fully paid ordinary shares having the same terms as the Company’s existing ordinary shares upon achievement of the applicable milestone. The full terms of the milestone shares, including the respective milestones applicable to the 33,854,167 first milestone shares and the 33,854,167 second milestone shares are set out in Section 14.7. The milestone shares will not be quoted (listed), and admission of the milestone shares to quotation is not a condition of the Offers. The Company will apply for quotation of ordinary shares into which the first or second milestone shares (as applicable) convert if the respective milestone is achieved.

Each option will entitle the holder to be issued one fully paid ordinary share upon exercise and payment of the exercise price. The options have an exercise price of $0.25 (25 cents) and expire three years after Listing. The full terms of the options are set out in Section 14.8. The options will not be quoted (listed) at the time of issue, and admission of the options to quotation is not a condition of the Offers. The Company will apply for quotation of shares issued upon valid exercise of the options.

Shares issued upon valid exercise of an option will rank equally with and have the same terms as the shares currently on issue.

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12 ~~.~~ 6 Conditions of the Offers

Completion of the Offers is conditional upon:

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• a. completion of the acquisition of East Exploration, including a director determined by the vendors of East Exploration being appointed to the Board of Davenport with effect at completion of the acquisition of East Exploration (Mr Patrick McManus, who was elected at the General Meeting and will take office at completion of the acquisition), East Exploration issuing Melbourne Capital Limited (a company associated with a Director of Davenport, Mr Angus Edgar) 27,780 shares upon or before completion of the Offers, which shares will be part of the East Exploration shares acquired by Davenport, and ASX giving its approval for Listing;

• b. the Company receiving applications and application monies for at least 25 million shares ($5 million, being the minimum subscription amount under the Equity Offer);

• c. ASX giving its conditional approval for admission of the Company to the Official List.

If:

• a. the acquisition of East Exploration is not able to be completed;

• b. the minimum subscription is not received within 4 months of the date of this Replacement Prospectus (or any longer period as ASIC and ASX may permit); or

• c. ASX’s approval for admission of the Company to the Official List is not received within 3 months of the date of this Replacement Prospectus (or any longer period as ASIC and ASX may permit),

the Offers will not proceed, no shares, milestone shares or options will be issued pursuant to this Prospectus and all application monies received will be refunded to applicants (without interest) in accordance with the Corporations Act.

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12 ~~.~~ 7 Important Dates

Prospectus lodged with ASIC and ASX	31 August 2016
Record Date for Priority Offers	8 September 2016
Lodgement of this replacement prospectus	24 October 2016
Opening date	26 October 2016
Priority Offers and General Offer Closing Date (5pm)	25 November 2016
Broker Firm Offer Closing Date (5pm) ^	25 November 2016
Shares are expected to be allotted	6 December 2016
Expected Despatch of holding statements	8 December 2016
Expected date of quotation of Shares on ASX	14 December 2016
(subject to ASX approval)

• ^ Broker Firm Offer - An earlier date than the Closing Date may be specified by Brokers for returning

• applications and payment of application monies for allocations under the Broker Firm Offer.

Dates may change - The above dates are subject to change and are indicative only. The Company reserves the right to vary the dates and times of the Equity Offer, including to extend the Equity Offer or accept late applications, without notifying any recipient of this Prospectus or any applicants. Investors are encouraged to submit their applications as early as possible.

12 ~~.~~ 8 Use of funds raised by the Equity Offer

The Company is intending to apply the funds raised under the Equity Offer in the manner detailed in Section 3.

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12 ~~.~~ 9 Effect of the Offers

a. Pro-Forma Consolidated Statement of Financial Position

The Company’s Pro-Forma Consolidated Statement of Financial Position following completion of the acquisition of East Exploration and Equity Offer, including details of the pro-forma adjustments, is set out in Section 8.

b. Share, milestone share and option structure

The anticipated capital structure of Davenport at the time of completing the acquisition and Listing, if the Equity Offer and conditions for the acquisition and Listing are successfully completed or satisfied, will be as follows:

Shares

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

||||||
|---|---|---|---|---|
|MINIMUM SUBSCRIPTION|MAXIMUM SUBSCRIPTION|
|DAVENPORT SHARES|
|($5 million)|($6 million)|
|Number|%|Number|%|
|Existing shares|12,000,262|16.4%|12,000,262|15.3%|
|Consideration shares for|
|the acquisition of East|36,458,333|49.6%|36,458,333|46.5%|
|Exploration ^|
|Equity Offer shares offered|
|25,000,000|34.0%|30,000,000|38.2%|
|under this Prospectus|
|TOTAL SHARES|73,458,595|100%|78,458,595|100%|

----- End of picture text -----

^ Plus the two tranches of milestone shares (a total of 67,708,334 milestone shares – see following).

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If the milestones applicable to both tranches of milestone shares are achieved, assuming no further shares are issued in the interim, the effect of the conversion of the milestone shares to ordinary shares would be as follows:

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

||||||
|---|---|---|---|---|
|MINIMUM SUBSCRIPTION|MAXIMUM SUBSCRIPTION|
|DAVENPORT SHARES|
|($5 million)|($6 million)|
|Number|%|Number|%|
|Existing shares|12,000,262|8.5%|12,000,262|8.2%|
|Consideration shares for|
|the acquisition of East|104,166,667|73.8%|104,166,667|71.3%|
|Exploration (including|
|converted milestone|
|Equity Offer shares offered|
|25,000,000|17.7%|30,000,000|20.5%|
|under this Prospectus|
|TOTAL SHARES|141,166,929|100%|146,166,929|100%|

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The terms of the milestone shares including the milestones applicable to each are set out in Section 14.7.

Options

Davenport may also issue up to 10 million options having an exercise price of 25 cents and an expiry date three years after Listing. These options may be issued as determined by the Company, including to AFSL holders or others in connection with the Equity Offer.

The terms of the options are set out in Section 14.8

Escrow restrictions which may be applied by ASX to all or some of the shares and milestone shares to be issued to vendors of East Exploration or their nominees and options are described in Section 12.11.

No shares issued under the Equity Offer will be subject to escrow.

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(c) Other control implications of the Offers

Details of shares to be issued to vendors of East Exploration or their nominees, and the percentages of Davenport’s shares that will be held by each are set out in Section 14.5.

The current Board of Davenport will remain and Mr Patrick McManus will join the Board as NonExecutive Chairman upon completion of the acquisition. Mr Edgar has agreed to a six-month engagement as a Director following ASX listing of Davenport. Details of the proposed Board and their direct and indirect interests in Davenport shares are set out in Section 6.

12 ~~.~~ 10 ASX Application

Application was made to ASX on 31 August 2016 for the Company to be admitted to the Official List of ASX, and for Official Quotation of the Company’s fully paid ordinary shares including the shares offered under the Equity Offer. The ASX and its officers take no responsibility for the contents of this Prospectus or the merits of investment to which it relates. Acceptance of the application by ASX or the fact that the ASX may admit the Company to the Official List or any of its securities to Official Quotation is not to be taken as an indication of the merits of the Company, East Exploration, the Company’s shares, milestone shares or options.

If (other than as provided below) permission is not granted for the Official Quotation of shares on ASX within three months after the date of this Replacement Prospectus (or such longer period as ASIC and ASX may permit), all application monies will be refunded (without interest) to the applicant in accordance with the requirements of and within the time prescribed by the Corporations Act. Shares, and shares into which milestone shares convert or shares issued upon exercise of options, upon which restriction (escrow) obligations are imposed by ASX may not be quoted until the escrow period ends. The admission of those shares to quotation before the end of the applicable escrow period is not a condition of the Offers, and it is expressly not stated or implied that permission will be sought for the Official Quotation of those shares, or of milestone shares or options, or will be granted within three months or any other period after the date of this Replacement Prospectus.

12 ~~.~~ 11 ASX Escrow (Restriction)

None of the shares offered under the Equity Offer will be subject to restriction (escrow).

ASX may restrict (escrow) some of the Company’s existing ordinary shares and/or all or some ordinary shares issued as consideration for the acquisition of East Exploration. The Company is not presently aware of what, if any, restriction obligations will be imposed on the ordinary shares, and will not know the extent of escrow of ordinary shares until determined by ASX. However, subject to that proviso:

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• a. it is expected that shares distributed in specie by Arunta under the demerger in February 2016 will not be escrowed;

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• b. the 6 million shares issued under the Placement completed in May 2016 may be partly or fully escrowed. The proportion escrowed is expected to be determined by the ratio the cash amount paid per share (8 cents) bears to the Equity Offer price (20 cents), so that 60% (or 3.6 million shares) would be escrowed and 40% (or 2.4 million shares) free trading;

• c. shares issued to acquire East Exploration shares for which cash payments (if any) were made may be excluded from escrow, in the proportion that the cash amount paid for East Exploration shares bears to the Equity Offer issue price (20 cents), depending on demonstrating to ASX’s satisfaction that funds were expended on developing the East Exploration projects;

• d. it is expected that the milestone shares to be issued as consideration for the acquisition of East Exploration will be fully escrowed. If a milestone applicable to performance shares is achieved during the escrow period, the ordinary shares into which the performance shares convert would be escrowed for the remainder of the escrow period that applied to the converted performance shares.

Restriction periods are usually two years from Listing for shares that were issued to or are held by related parties (principally directors and their associates), or one year from the issue of shares if not issued to or held by related parties.

If the above proportion of Placement shares and all ordinary shares issued as consideration for the acquisition of East Exploration were to be restricted, the restricted ordinary shares would represent approximately 54.5% of the issued ordinary shares of the Company at the minimum subscription level or 51.1% at the maximum subscription level.

The up to 10 million options offered under the Options Offer would be expected to be fully escrowed for 2 years from Listing. Ordinary shares issued if options are exercised during the escrow period would be escrowed for the remainder of the escrow period that applied to the options.

The Company draws attention to the risks described in Section 5.3 regarding the potential effect of escrow on liquidity and of the release of shares from escrow.

The Company will announce details of what, if any, restrictions are applied before Official Quotation commences.

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12 ~~.~~ 12 ASX Waivers and ASIC modifications or exemptions

As at the date of this Prospectus the Company has not applied to ASX for any waivers of the Listing Rules or to ASIC for any modifications of or exemptions from the Corporations Act or other legislation.

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The Company is relying on ASIC Corporations (Minimum Subscription and Quotation Conditions) Instrument 2016/70. Under that Instrument, the dates by which Listing and the minimum subscription are required to be achieved are extended to 3 months and 4 months after the date of this Replacement Prospectus (respectively).

12 ~~.~~ 13 Issue

Subject to the conditions of the Offers being fulfilled, allotment of the shares offered under the Equity Offer in this Prospectus and despatch of initial holding statements are expected to take place as soon as practicable after the Closing Date.

It is the responsibility of each person who seeks to trade in shares on ASX to confirm their holding before trading in shares. Any person who sells shares before receiving a holding statement does so at their own risk. The Company and the Share Registry disclaim all liability, whether in negligence or otherwise, if a person sells shares before receiving a holding statement, even if that person obtained holding details of holding through their Broker.

All dates are subject to change – see Section 12.7 for further information.

12 ~~.~~ 14 Discretion regarding the Offers

The Company may withdraw the Offers at any time before the issue of shares, milestone shares or options to successful applicants. If the Offers, or any part of them, do not proceed, application monies will be refunded to applicants (without interest) in accordance with the Corporations Act.

The Company also reserves the right to extend the Offers or any part of them, accept late applications either generally or in particular cases, reject any application (other than a valid Priority Offer or Broker Firm Offer application), allocate any applicant under the Equity Offers fewer shares than applied for, determine a person to be eligible or ineligible to participate in the Equity Offer, or amend or waive the application procedures or requirements, in its discretion subject to compliance with applicable laws.

12 ~~.~~ 15 Not underwritten

The Equity Offer is not underwritten.

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12 ~~.~~ 16 Commissions payable

The Company may agree to pay broker handling fees of up to 6% of the amount of successful applications submitted by the broker. Broker handling fees will only be paid where a broker claim form and schedule is submitted to the Share Registry no later than 5pm on the Broker Firm Offer Closing Date. The broker claim form and schedule is available from the Share Registry during the Broker Firm Offer period.

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No brokerage, commission or stamp duty is payable by applicants.

12 ~~.~~ 17 CHESS

Prior to listing, the Company will apply to participate in the ASX’s Clearing House Electronic Subregister System (CHESS) and will comply with the ASX Listing Rules and ASX Settlement Operating Rules. CHESS is an electronic transfer and settlement system for transactions in securities quoted on the ASX under which transfers are effected in electronic form.

Electronic sub-registers mean that the Company will not be issuing certificates to investors. Instead, investors will be provided with holding statements (similar to a bank account statement) that set out the number of shares, milestone shares or options issued to them under this Prospectus. The holding statements will also advise holders of their Holder Identification Number (if the holder is broker sponsored) or Security Holder Reference Number (if the holder is issuer sponsored) and explain, for future reference, the sale and purchase procedures under CHESS and issuer sponsorship.

Electronic sub-registers also mean ownership of shares or options (subject to any restriction obligations imposed by ASX and the terms of the options) can be transferred without having to rely upon paper documentation. Further, monthly statements will be provided to holders if there have been any changes in their security holding in the Company during the preceding month. Security holders may request a holding statement at any other time, however a charge may be made for such additional statements.

12 ~~.~~ 18 Foreign selling restrictions

This Prospectus does not, and is not intended to, constitute an offer in any place or jurisdiction, or to any person to whom, it would not be lawful to make such an offer or to issue this Prospectus. The distribution of this Prospectus in jurisdictions outside Australia may be restricted by law and persons who come into possession of this Prospectus should seek advice on and observe any of these restrictions. Any failure to comply with such restrictions may constitute a violation of applicable securities law.

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No action has been taken to register or qualify the shares, milestone shares or options, or otherwise permit an offer of the shares, milestone shares or options the subject of this Prospectus in any jurisdiction outside Australia. Applicants who are resident in countries other than Australia should consult their professional advisors as to whether any governmental or other consents are required or whether any other formalities need to be considered and followed.

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If you are outside Australia it is your responsibility to obtain all necessary approvals for the Company to allot and issue the shares, milestone shares or options to you pursuant to this Prospectus. The return of a completed application or acceptance form will be taken by the Company to constitute a representation and warranty by you that you are a person whom the Company’s securities can be offered and issued lawfully, that all relevant laws have been complied with and that all relevant approvals have been obtained.

This Prospectus has not been registered, filed with or approved by any New Zealand regulatory authority under or in accordance with the Securities Act 1978 (New Zealand). The shares are not being offered or sold in New Zealand, or allotted with a view to being offered for sale in New Zealand, and no person in New Zealand may accept an offer or placement of shares unless otherwise permitted by law.

The shares, milestone shares or options have not been, and will not be, registered under the U.S. Securities Act or the securities laws of any state or other jurisdiction of the United States and may not be offered or sold, directly or indirectly, in the United States.

Each applicant will be taken to have represented, warranted and agreed as follows:

• it understands that the shares, milestone shares or options have not been, and will not be, registered under the US Securities Act or the securities laws of any state of the United States and may not be offered, sold or resold in the United States;

• it is not in the United States;

• it has not and will not send this Prospectus or any other material relating to the Offers to any person in the United States; and

it will not offer or sell the shares, milestone shares or options in the United States or, unless permitted by the laws of the applicable place (without requiring any action by the Company), in any other jurisdiction outside Australia.

12 ~~.~~ 19 Enquiries in relation to the Offers

This Prospectus provides information for potential investors in Davenport, and should be read in its entirety. If, after reading this Prospectus, you have any questions about any aspect of an investment in Davenport, please contact your accountant, stockbroker, lawyer or other professional adviser.

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13 HOW TO APPLY

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13 ~~.~~ 1 Priority Offers

(a) Who may apply

The Davenport Priority Offer of up to 2,500,000 shares ($500,000) is only open to shareholders of Davenport as at 8 September 2016 (“the Record Date”).

The Potash West Priority Offer of up to 5,000,000 shares ($1,000,000) is only open to shareholders of Potash West NL as at the Record Date.

(b) How will Priority Offer shares be allocated

Under the Davenport Priority Offer, shares will be allocated to existing Davenport shareholders (as at the Record Date):

• first to increase (“top up”) share holdings of less than 10,000 shares to 10,000 shares;

• thereafter, any balance of the Davenport Priority Offer shares will be allocated to Davenport Priority Offer applicants who applied for more shares than required to top up their holding at the discretion of the Directors.

Under the Potash West Priority Offer, shares will be allocated to Potash West NL shareholders (as at the Record Date):

• first to allocate 10,000 shares to the maximum number of Potash West Priority Offer applicants;

• thereafter, any balance of the Potash West Priority Offer shares will be allocated to Potash West Priority Offer applicants who applied for more than 10,000 shares at the discretion of the Directors.

If there are insufficient Priority Offer shares (as applicable) to top up Davenport shareholders’ holdings to 10,000 shares or to issue at least 10,000 shares to Potash West NL shareholders who apply under the respective Priority Offer, the Directors will allocate shares in their discretion. The Directors may but are not obliged to take into account the order that applications and payments were received provided that no preference is given to applications or payments received during an exposure period. The Directors may but are not obliged to allocate shares from the General Offer to Priority Offer applications.

If valid applications for fewer than all the shares offered under the Davenport Priority Offer or Potash West Priority Offer (respectively) are received, the balance of the respective Priority Offer will form part

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of the shares available for issue to applicants under the other Priority Offer, the Broker Offer or the General Offer at the discretion of the Directors.

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(c) How to apply under the Priority Offers

Applications under the Priority Offers may only be made, and will only be accepted, in one of the following forms:

• on the applicable personalised Priority Offer application form which was attached to or accompanied a copy of this Prospectus;

• by making payment by BPAY® in accordance with the instructions on the applicable personalised Priority Offer application form which was attached to or accompanied a copy of this Prospectus;

• an applicable electronic Priority Offer application form submitted using the Share Registry’s on-line application facility at www.securitytransfer.com.au, in accordance with the instructions for use of the facility and only after downloading and confirming having received an electronic copy of this Prospectus; or

• on a paper copy of the applicable electronic personalised Priority Offer application form which accompanied an electronic copy of this Prospectus.

Instructions for completing and lodging the applicable Priority Offer application form and paying application monies, or making payment by BPAY® are set out in the applicable Priority Offer application form. Completed Priority Offer application forms and payments should be sent to:

Davenport Resources Limited c/ Security Transfer Australia Pty Ltd PO Box 52

COLLINS STREET WEST VIC 8007

Payments are to be made in Australian currency by a cheque (made payable to “Davenport Resources Ltd” and crossed “Not Negotiable”) drawn on an Australian branch of an Australian bank (accompanied by the completed personalised Priority application form), in accordance with the instructions in the on-line application facility, or by BPAY®. Do not send cash.

The Priority Offers are expected to open at noon (AEST) on 26 October 2016 and are expected to close at 5pm (AEST) on 25 November 2016. The Company may elect to close either or both of the Priority Offers early or extend either or both of the Priority Offers, or accept late applications either generally or in particular cases. The Priority Offers General Offer may be closed at any earlier date and time, without further notice. Eligible shareholders are therefore encouraged to submit their Priority Offer applications as early as possible.

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Applications for shares under the Davenport Priority Offer must be for a minimum of the number of new shares required to increase (“top up”) the applicant’s holding of Davenport shares to 10,000 shares (up to $2,000) and thereafter in multiples of 2,500 shares ($500). Payment for all the shares applied for must be made in full at the Offer Price of $0.20 (20 cents) per share. The personalised Davenport Priority Offer application form will set out the number of new shares required to top up the shareholder’s holding of Davenport shares to 10,000 shares and the amount payable for the “top up” shares. Further shares can be applied for on the same form.

Applications for shares under the Potash West Priority Offer must be for a minimum of 10,000 shares ($2,000) and thereafter in multiples of 2,500 shares ($500) and payment for all the shares applied for must be made in full at the Offer Price of $0.20 (20 cents) per share.

Application monies paid for shares not issued will be refunded (without interest) in accordance with the Corporations Act.

The Company reserves the right to reject at its absolute unfettered discretion any Priority Offer application which is submitted by a person who it believes is or may be ineligible to participate in that Priority Offer.

13 ~~.~~ 2 Broker Firm Offer

(a) Who may apply

The Broker Firm Offer is open to persons who have received a firm allocation from their broker. The Broker Firm Offer is expected to close at 5pm on 25 November 2016. Your broker may require the Broker Firm Offer application form and/or payment to be received earlier. Please contact your broker for instructions.

Applicants under the Broker Firm Offer must pay their application monies in accordance with instructions from their broker. The allocation of shares to brokers will be determined by the Company. Shares that are allocated to brokers for allocation to their Australian resident clients will be issued to the applicants who have received a valid allocation of shares from those brokers. It will be a matter for the brokers how they allocate shares among their clients, and they (and not the Company) will be responsible for ensuring that clients who have received an allocation from them, receive the relevant shares.

The Company and Share Registry take no responsibility for any acts or omissions by your broker in connection with your application, application form and application monies (including, without limitation, failure to submit application forms by the close of the Broker Firm Offer).

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Please contact your broker if you have any questions.

(b) How to apply

If you have received an allocation of shares from your broker and wish to apply for those shares under the Broker Firm Offer, you should contact your broker for information about how to submit your Broker Firm Offer application form and for payment instructions.

Applicants under the Broker Firm Offer must not send their application forms or payment to the Share Registry or the Company. Applicants under the Broker Firm Offer should contact their broker to request a copy of this Prospectus and application form. An earlier date than the Closing Date may be specified by brokers for returning applications and making payment for allocations under the Broker Firm Offer. Your broker will act as your agent and it is you and your broker’s responsibility to ensure that your application form and application monies are received before 5pm (AEST) on the Broker Firm Offer Closing Date or any earlier closing date as determined by your Broker.

Applications for shares under the Broker Firm Offer must be for a minimum of 10,000 shares ($2,000) and thereafter in multiples of 2,500 shares ($500) and payment for the shares must be made in full at the Offer Price of $0.20 (20 cents) per share.

The Broker Firm Offer is expected to open at noon (AEST) on 26 October 2016 and is expected to close at 5pm (AEST) on 25 November 2016. The Company may elect to extend the Broker Firm Offer, or accept late applications either generally or in particular cases. The Broker Firm Offer may be closed at any earlier date and time, without further notice. Investors invited to participate in the Broker Firm Offer are therefore encouraged to submit their applications as early as possible.

If you are an investor applying under the Broker Firm Offer, you should complete and lodge your broker Firm Offer application form with the Broker from whom you received your firm allocation. Broker Firm Offer application forms must be completed in accordance with the instructions given to you by your broker and the instructions set out in the application form.

The Company and the Share Registry take no responsibility for any acts or omissions committed by your Broker in connection with your Application.

(c) Payment

Applicants under the Broker Firm Offer must pay their application monies to their broker in accordance with instructions provided by their broker.

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(d) Allocation policy under the Broker Firm Offer

The Company will determine the allocation policy to brokers under the Broker Firm Offer.

Shares that have been allocated to brokers for allocation to their Australian resident retail clients will be issued to the applicants nominated by those brokers. It will be a matter for each broker as to how they allocate shares among their retail clients, and brokers (and not the Company) will be responsible for ensuring that their retail clients who have received a firm allocation from them receive the relevant shares.

(e) Rejection of Applications

The Company, reserves the right to reject any Broker Firm Offer application which is not correctly completed or which is submitted by a person who they believe is or may be ineligible or not appropriate to participate in the Broker Firm Offer. The Company may treat a Broker Firm Offer application by an applicant who does not have a registered address in Australia as an application under the General Offer. A Broker Firm Offer application for more than the number of shares allocated to the applicant by their broker will be treated as an application under Broker Firm Offer for the allocated number of shares and an application under the General Offer for the additional shares. The application for the additional shares may be accepted in respect of the full amount, or any lesser amount lower, without further notice to the applicant.

13 ~~.~~ 3 General Offer

Applications under the General Offer may be made, and will only be accepted, in one of the following forms:

• on a General Offer application form which was attached to or accompanied a copy of this Prospectus;

• on a paper copy of the electronic General Offer application form which accompanied an electronic copy of this Prospectus, which can be found at and downloaded from www. davenportresources.com.au/prospectus; or

• an electronic General Offer application form submitted using the Share Registry’s on-line application facility at www.securitytransfer.com.au,in accordance with the instructions for use of the facility and only after downloading and confirming having received an electronic copy of this Prospectus.

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Instructions for completing and lodging General Offer application forms and paying application monies are set out in the General Offer application form. Unless you have made arrangements with your broker or the Company, the completed General Offer Application Form and payment by cheque should be sent to:

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Davenport Resources Ltd c/ Security Transfer Australia Pty Ltd PO Box 52 COLLINS STREET WEST VIC 8007

Payments are to be made in Australian currency by a cheque (made payable to “Davenport Resources Ltd” and crossed “Not Negotiable”) drawn on an Australian branch of an Australian bank, unless otherwise specified for applications made using on-line application facility, or by prior arrangement with the Company. Applications under the General Offer cannot otherwise be made by BPAY®. Do not send cash.

The General Offer is expected to open at noon (AEST) on 26 October 2016 and is expected to close at 5pm (AEST) on 25 November 2016. The Company may elect to extend the General Offer, or accept late applications either generally or in particular cases. Investors are therefore encouraged to submit their applications as early as possible.

Applications for shares under the General Offer must be for a minimum of 10,000 shares ($2,000) and thereafter in multiples of 2,500 shares ($500) and payment for all the shares applied for must be made in full at the Offer Price of $0.20 (20 cents) per share.

If subscriptions above the maximum subscription level amount are received (oversubscriptions), the Company may at its discretion reject General Offer applications and/or scale back General Offer applications and issue fewer shares than an applicant applied for under the General Offer. Application monies paid for shares not issued will be refunded (without interest) in accordance with the Corporations Act.

The Company reserves the right to reject at its absolute unfettered discretion any General Offer application which is submitted by a person who it believes is or may be ineligible to participate in the General Offer.

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13 ~~.~~ 4 All Equity Offer Applications

It is your responsibility to ensure that your application form(s) and payment(s) are mailed in time or bank transfer payment initiated in time to allow for receipt before the date specified by your broker or the Broker Firm Offer Closing Date or Closing Date (as applicable). It is also your responsibility to ensure sufficient funds are available upon presentation of cheques and/or for DvP settlement, if and as applicable. If returning your application form to your broker, please allow sufficient time for your broker to receive and process your application. The Company and the Share Registry take no responsibility for lost or delayed mail, or misprocessed acceptances and payments, or errors or delays by brokers. The Company may, but is not obliged to, accept late applications.

An application under the Equity Offer is an offer by the applicant to the Company for the number of shares specified in the application form at the Offer Price, or by dividing the amount paid by bank transfer by the Offer Price, on the terms and conditions set out in this Prospectus (including any supplementary or replacement Prospectus) and the relevant application form.

To the extent permitted by law, an application under the Equity Offer is irrevocable. If the amount received as application amount is less than the amount payable for the shares applied for, the Company may (but is not obliged to) treat the application as being for the number of shares represented by the amount received and issue fewer shares than were applied for. The Company may correct or fill in any application form and/or treat as valid and give effect to an application form or payment notwithstanding any error or that any information is incomplete. The Company may reject an application where payment of the application monies is not received or a cheque or funds transfer is not honoured, or without prejudice to its rights, issue shares in response to the application and recover outstanding application amount from the applicant.

Acceptance of an Equity Offer application will give rise to a binding contract upon issue of shares to a successful applicant.

There is no guarantee that applicants will receive any number of shares applied for. Where the number of shares allotted is fewer than the number applied for, surplus application monies will be refunded to the applicant without interest.

There is no maximum number or value of shares that may be applied for under the Equity Offer, provided that an applicant alone or with its associates (as that terms is defined in the Corporations Act) may not acquire an interest in more than 20% of the issued voting shares of the Company unless permitted by the Corporations Act without further action by the Company.

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13 ~~.~~ 5 Vendor Offer

The Vendor Offer of shares and milestone shares is made solely to and is capable of acceptance only by East Exploration vendors and their approved nominees. East Exploration vendors (and/ or their nominees, as applicable) must complete a Vendor Offer application form attached to or accompanying a copy of this Prospectus and return it to the Company or as specified in the Vendor Offer application form by the time specified in the Vendor Offer application form. Instructions for completing and returning the Vendor Offer application form are set out in the Vendor Offer application form.

13 ~~.~~ 6 Options Offer

The Options Offer is made solely to and is capable of acceptance only by recipients determined by the Company, including to AFSL holders or others in connection with the Equity Offer to whom a personalised Options Offer application form attached to or accompanying a copy of this Prospectus is given. Recipients of a personalised Options Offer application form must complete the form and return it to the Company or as specified in the Vendor Offer application form by the time specified in the Options Offer application form. Instructions for completing and returning the Options Offer application form are set out in the Options Offer application form.

13 ~~.~~ 7 All Offers

By making an application, you declare that you were given access to a copy of this Prospectus, together with the applicable application form. The Corporations Act prohibits any person from passing an application form to another person unless it is attached to, or accompanied by, a hard copy of this Prospectus or the complete and unaltered electronic version of this Prospectus.

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14 ADDITIONAL INFORMATION

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14 ~~.~~ 1 Registration

Davenport was incorporated on 26 September 2011 and converted to a public company on 21 August 2015.

14 ~~.~~ 2 Corporate Structure

Davenport demerged from Arunta (which has since changed its name to Spirit Telecom Limited) on 26 February 2016 following Arunta shareholder approval obtained on 19 February 2016. As part of the demerger Arunta shareholders were issued 0.328415 Davenport shares for every 100 Arunta shares held on 25 February 2016. Arunta is no longer associated with Davenport and is referred to for the purposes of historical identification only.

Upon completion of the acquisition, East Exploration Pty Ltd will become a 100% owned and controlled subsidiary of Davenport Resources Limited. East Exploration Pty Ltd’s wholly owned and controlled subsidiary East Exploration GmbH will therefore also become a 100% indirectly owned and controlled subsidiary of Davenport Resources Limited.

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

Davenport Resources Limited Southern Cross Bore Project (100%)
East Exploration Pty Ltd
(100% upon completion)
East Exploration GmbH (100%) South Harz Project (100%)
----- End of picture text -----

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14.3 Material Contracts

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(a) Share Sale Agreement

On 6 June 2016 Davenport, East Exploration and the shareholders of East Exploration entered into a sale of shares agreement (“the Share Sale Agreement”). The Share Sale Agreement sets out the terms and conditions upon which the Company proposes to acquire East Exploration.

The consideration paid or payable in respect of the acquisition of East Exploration is:

• $250,000 cash, already paid to East Exploration as an option fee ($100,000) and an exclusivity fee ($150,000);

• the issue to vendors of East Exploration shares (or their nominees) of:

• 36,458,333 fully paid ordinary shares in the Company at a deemed issue price of AUD$0.20 (20 cents) per share;

• 33,854,167 first milestone shares;

• 33,854,167 second milestone shares.

The terms of the milestone shares and the milestones applicable to each of the first and second milestone shares are set out in Section 14.7.

The Share Sale Agreement contains a number of pre-completion covenants agreed by the parties. These include East Exploration providing the Company with information, East Exploration conducting its business in a manner that protects and maintains its assets and uses reasonable endeavours to maintain the South Harz Project and its revenues and profitability, and the Company conducting its business in a manner that protects and maintains its assets including the Southern Cross Bore Project and uses reasonable endeavours to maintain its profitability.

As at the date of this Prospectus, under the terms of the Share Sale Agreement completion of the acquisition of East Exploration is conditional upon satisfaction or waiver of the following conditions which are yet to be fulfilled or waived:

• East Exploration issuing Melbourne Capital Limited (a company associated with a Director of Davenport, Mr Angus Edgar) 27,780 shares upon or before completion of the Offers, which shares will be part of the East Exploration shares acquired by Davenport, and ASX giving its approval for Listing;

• the Company securing subscriptions from investors of not less than $5 million under the Equity Offer made through this Prospectus; and

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• ASX giving its conditional approval for admission of the Company to the Official List.

Completion is also conditional on:

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• a director determined by the vendors of East Exploration being appointed to the Board of Davenport with effect at completion of the acquisition of East Exploration. Mr Patrick McManus was elected at the General Meeting, with effect at completion of the acquisition of Davenport, to fulfil this condition); and

• the non-occurrence of any event having an unremedied material adverse effect on the Company or East Exploration prior to completion of the acquisition of East Exploration.

The Share Sale Agreement includes warranties by the Company, East Exploration and the vendors typical for agreements of a similar kind, including warranties regarding the provision and accuracy of all relevant material to the Company. The Share Sale Agreement also contains warranties from the vendors including warranties regarding ownership of and title to equity interests that are to be acquired by the Company.

Various post-completion covenants are mutually given by the parties, including the promise to do all things and execute all documents that may be required to effect completion of the acquisition of East Exploration.

Where a party is in default under the terms of the Share Sale Agreement the other party may serve a notice to remedy the default. If the default remains un-remedied for seven days following notice then the party not in default may choose to either proceed with specific performance of the Share Sale Agreement or terminate the Share Sale Agreement. Where the Share Sale Agreement is terminated all other rights the party not in default has remain unaffected.

The Share Sale Agreement otherwise contains general terms pertaining to confidentiality, the Share Sale Agreement forming the entirety of the transaction between the parties, governing law, severance and provision of notice to all parties.

(b) ERCOSPLAN Consultancy Services Agreement

On 30 September 2015 East Exploration entered into a client/consultant services agreement with ERCOSPLAN Ingenieurgesellschaft Geotechnik und Bergbau mbH (“ERCOSPLAN”) for the provision of consulting services in respect of East Exploration’s South Harz Project in the Republic of Germany (“the Consulting Agreement”).

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ERCOSPLAN will complete tasks including defining possible drill hole locations within the project (Task 1), preparation of a drilling request for proposals (Task 2), provision of an evaluation of the proposals received and assisting with drilling preparation (Task 3). ERCOSPLAN shall exercise all due care, skill and diligence in the performance of its obligations under the Consulting Agreement.

East Exploration has agreed to pay ERCOSPLAN €91,400 (“the Sum”) (excluding taxes) for completion of Tasks 1, 2 and 3. Payment is directly attributable to completion of defined milestones in respect of the Tasks. East Exploration was required to pay 25% of the Sum on the date of execution of the Consulting Agreement. A further 20% of the Sum is payable upon ERCOSPLAN providing East Exploration maps and a memorandum upon completion of Task 1. A further 25% of the Sum is payable upon a detailed design and request for proposals in respect of the project being provided to East Exploration. The final 30% is payable upon completion and distribution of proposals to potential drilling contractors. Each of the aforementioned amounts become payable 10 banking days after the occurrence of each milestone.

The Consulting Agreement allows East Exploration to engage ERCOSPLAN to complete services beyond the scope of those set out within the Consulting Agreement (defined in as Additional Services and Exceptional Services). The engagement and completion of any further services is subject to the scope and cost of such further services being agreed between East Exploration and ERCOSPLAN. Where a breach of the terms of the Consulting Agreement is established against a party, that party is liable to pay compensation to the other party. The compensation payable is capped at the total payable under the Consulting Agreement, plus any additional expense for efforts expended proved by the affected party.

East Exploration may terminate the Consulting Agreement where ERCOSPLAN is shown to have offered, given, received or solicited anything of value or misrepresented facts with a view of influencing the behaviour or action of anyone in the selection process or conduct of the Consulting Agreement.

East Exploration may also terminate the Consulting Agreement where it receives written notice from ERCOSPLAN that the scope or duration services to be provided must be increased or that it would be irresponsible or impossible for ERCOSPLAN to complete the services or where completion of the services is delayed by longer than 30 calendar days. Where East Exploration terminates the Consulting Agreement it is liable to pay ERCOSPLAN only for work completed up to termination.

The Consulting Agreement otherwise contains terms consistent with similar arrangements such as provisions relating to confidentiality, the independent status of both parties, the retention of copyright rights by East Exploration over all data and documents prepared by ERCOSPLAN in completing the services under the Consulting Agreement, disputes being determined under German law and the

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right of ERCOSPLAN to reference the project and the work it completes under the Consulting Agreement.

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(c) Proposed Executive Employment Contract

As Managing Director, Mr Christopher Bain will receive remuneration of $140,000 per annum plus superannuation. Mr Bain’s contract is terminable by either party on three (3) months’ notice, and Mr Bain will dedicate 70% of his available time to the Company. Subject to the unanimous approval of the Board of Directors and compliance with the Listing Rules and Corporations Act, additional remuneration to Mr Bain in the form of options may be granted from time to time under the employee security ownership plan described in Section 14.9 at the discretion of the Board.

(d) Proposed Project Director Employment Contract

As Project Director, Mr Jason Wilkinson will receive remuneration of $200,000 per annum. Mr Wilkinson’s contract is terminable by either party on six (6) months’ notice, and Mr Wilkinson will dedicate 100% of his available time to the Company. Following completion of the acquisition of East Exploration Mr Wilkinson will be appointed a Director of East Exploration GmbH, the German subsidiary that holds the Küllstedt and Gräfentonna tenements. Subject to the unanimous approval of the Board of Directors and compliance with the Listing Rules and Corporations Act, additional remuneration to Mr Wilkinson may be granted from time to time under the employee security ownership plan described in Section 14.9 at the discretion of the Board.

(e) Proposed Deeds of Access, Indemnity and Insurance

It is proposed to enter into a Deed of Access, Indemnity and Insurance with each current and proposed Director prior to Listing. This will entitle each Director to access Board papers, be indemnified from liability, and to have Davenport take out directors and officers insurance to the extent Davenport is able to obtain it. Each Director of Davenport may obtain independent professional advice at Davenport’ expense in accordance with the guidelines adopted by the Board from time to time or if the Board has given its prior approval. Each such deed applies to the extent permitted by law and is on a conventional basis.

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14 ~~.~~ 4 Top 20 Existing Shareholders

Shareholder	Number of shares	%	%	%
Oceanic Capital Pty Ltd	1,936,279	16.14%
Melbourne Capital Ltd	1,000,000	8.33%
SEREC Pty Ltd	650,026	5.42%
Philip Anthony Feitelson	625,000	5.21%
Biddle Partners Pty Ltd Biddle Superannuation Fund A/C	422,444	3.52%
Mikado Corporation Pty Ltd Jfc Superannuation FundA/C	383,516	3.20%
Scintilla Capital Pty Ltd	312,500	2.60%
Drawone Superannuation Fund	312,500	2.60%
Northern Star Nominees Pty Ltd	268,300	2.24%
Peter Wright	250,000	2.08%
Dennis Bell	250,000	2.08%
Maram Nominees Pty Ltd	187,500	1.56%
Steda Nominees Pty Ltd Steda Superannuation Fund A/C	187,500	1.56%
Australian Heritage Group Pty Ltd Australian Heritage A/C	163,130	1.36%

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14 ~~.~~ 4 Top 20 Existing Shareholders

Shareholder	Number of shares	%	%	%
Timothy David Horgan	156,250	1.30%
St Barnabas Investments Pty Ltd Melvista Family A/C	155,887	1.30%
Owen Barry & Joanne Ross Merrett Merrett Family A/C	133,211	1.11%
Mungala Investments Pty Ltd	129,008	1.08%
R L Holdings Pty Ltd Rory Luff Superannuation Fund A/C	125,000	1.04%
AWD Consultants Pty Ltd	125,000	1.04%
Top 20 total	7,773,051	64.77	%
Other shareholders	4,227,211	35.23	%
TOTAL	12,000,262	100%
14~~.~~5 Vendors of East Exploration The following tables set out the number of Davenport shares and milestone shares to be receiv by vendors of East Exploration (or their nominees), and percentages based on the minimum an maximum Equity Offer subscriptions. No issue will be made to a nominee if that nominee (alone or with its associates) would obtain relevant interest in 20% or more of the issued voting shares of the Company unless permitted b resolution passed at the General Meeting. On the basis of information provided by the vendors, other than RL Holdings Pty Ltd and ITA Nominees Pty Ltd being associated, the Company is not aware of any of the vendors of East

14 ~~.~~ 5 Vendors of East Exploration

The following tables set out the number of Davenport shares and milestone shares to be received by vendors of East Exploration (or their nominees), and percentages based on the minimum and maximum Equity Offer subscriptions.

No issue will be made to a nominee if that nominee (alone or with its associates) would obtain a relevant interest in 20% or more of the issued voting shares of the Company unless permitted by a resolution passed at the General Meeting.

On the basis of information provided by the vendors, other than RL Holdings Pty Ltd and ITA Nominees Pty Ltd being associated, the Company is not aware of any of the vendors of East Exploration being associates of each other for the purposes of the Corporations Act.

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MINIMUM SUBSCRIPTION ($5 million)

MINIMUM SUBSCRIPTION ($5 million)	MINIMUM SUBSCRIPTION ($5 million)	MINIMUM SUBSCRIPTION ($5 million)	MINIMUM SUBSCRIPTION ($5 million)	MINIMUM SUBSCRIPTION ($5 million)	MINIMUM SUBSCRIPTION ($5 million)	MINIMUM SUBSCRIPTION ($5 million)
Vendor (and/or nominee(s))	Number of Davenport shares*	% of Davenport shares upon issue*	Number of Davenport milestone shares (both tranches)	Total held of all Dave shares if b mileston achieve		as % nport oth es d
Bishopstone Proprietary Limited	629,999	0.86%	1,169,998	1.28%
Lufgan Nominees Pty Ltd	7,559,983	10.29%	14,039,968	15.30%
RL Holdings Pty Ltd	3,149,992	4.29%	5,849,986		6.38%
I.T.A. Nominees Pty Ltd	2,834,994	3.86%	5,264,988		5.74%
Taurus Corporate Services Pty Ltd	1,574,996	2.14%	2,924,994	3.19%
East Exploration Holdings Pty Ltd	19,249,922	26.21%	35,749,856	38.96%
Melbourne Capital Limited	1,458,447	1.99%	2,708,544		2.95%
SUBTOTAL	36,458,333	49.63%	67,708,334	7	3.79%
Existing shares	12,000,262	16.34%	8.50%
Equity Offer shares	25,000,000	34.03%	17.71%
TOTAL	73,458,595	100.00%	100.00%
* Excludes milestone

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MAXIMUM SUBSCRIPTION ($6 million)

MAXIMUM SUBSCRIPTION ($6 million)	MAXIMUM SUBSCRIPTION ($6 million)	MAXIMUM SUBSCRIPTION ($6 million)	MAXIMUM SUBSCRIPTION ($6 million)	MAXIMUM SUBSCRIPTION ($6 million)	MAXIMUM SUBSCRIPTION ($6 million)	MAXIMUM SUBSCRIPTION ($6 million)
Vendor (and/or nominee(s))	Number of Davenport shares*	% of Davenport shares upon issue*	Number of Davenport milestone shares (both tranches)	Total held of all Dave shares if b mileston achieve		as % nport oth es d
Bishopstone Proprietary Limited	629,999	0.80%	1,169,998	1.23%
Lufgan Nominees Pty Ltd	7,559,983	9.64%	14,039,968	14.78%
RL Holdings Pty Ltd	3,149,992	4.01%	5,849,986		6.16%
I.T.A. Nominees Pty Ltd	2,834,994	3.61%	5,264,988		5.54%
Taurus Corporate Services Pty Ltd	1,574,996	2.01%	2,924,994	3.08%
East Exploration Holdings Pty Ltd	19,249,922	24.54%	35,749,856	37.63%
Melbourne Capital Limited	1,458,447	1.86%	2,708,544		2.85%
SUBTOTAL	36,458,333	46.47%	67,708,334	7	1.27%
Existing shares	12,000,262	15.30%	8.21%
Equity Offer shares	30,000,000	38.24%	20.52%
TOTAL	78,458,595	100.00%	100.00%
* Excludes milestone

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The associates of each vendor, who will also acquire the same relevant interest in Davenport shares as the respective vendor acquires, are as follows:

Vendor	Associate(s)
Bishopstone Proprietary Limited	Eugen Tong and Michal Tong
Lufgan Nominees Pty Ltd	Royden Euan Luff and Rosemary Luff
RL Holdings Pty Ltd	Rory Luff
I.T.A. Nominees Pty Ltd	Rory Luff
Taurus Corporate Services Pty Ltd	Benjamin Kay
East Exploration Holdings Pty Ltd	Potash West NL (the ASX listed parent of East
	Exploration Holdings Pty Ltd)
Melbourne Capital Limited	Mungala Investments Pty Ltd, Serec Pty Ltd and
	Angus Edgar

Details of shares and milestone shares to be issued to by Directors or the proposed Director, or their respective associates, and their respective existing holdings, are set out in Section 6.4

14 ~~.~~ 6 Rights and liabilities attaching to ordinary shares

The shares to be issued under the Equity Offer are all fully paid ordinary shares.

A total of 36,458,333 fully paid ordinary shares are to be issued under the Vendor Offer.

The shares offered under this Prospectus will be fully paid ordinary shares in the issued capital of the Company and will, upon issue, rank equally with all other shares then on issue.

The rights and liabilities attaching to shares are regulated by the Company’s Constitution, the Corporations Act, the ASX Listing Rules, the ASX Settlement Rules and common law. The following is a summary of the more significant rights and obligations attaching to the shares. This summary is not

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exhaustive and does not constitute a definitive statement of the rights and liabilities of shareholders. To obtain such a statement, persons should seek independent legal advice.

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Further details of the rights attaching to shares are set out in the Constitution, a copy of which is available for inspection at the Company’s registered office during normal business hours. A copy can also be downloaded from the Company’s website at (www.davenportresources.com.au/constitution)

General meetings

Shareholders are entitled to attend and vote at general meetings of the Company, in person, or by proxy, attorney or representative.

For so long as the Company remains a listed entity, shareholders will be entitled to receive at least 28 days’ prior written notice of any proposed general meeting.

Shareholders may requisition meetings in accordance with Section 249D of the Corporations Act and the Constitution.

Voting rights

Subject to any rights or restrictions for the time being attached to any class or classes of shares, at a general meeting of shareholders or a class of shareholders:

• On a show of hands, every person present who is a shareholder or a proxy, attorney or representative of a shareholder has one vote; and

• On a poll, every person present who is a shareholder or a proxy, attorney or representative of a shareholder shall, in respect of each fully paid share held by him or her, or in respect of which he or she is appointed a proxy, attorney or representative, have one vote for the share, but in respect of partly paid shares shall have such number of votes as bears the same proportion to the total ofsuch shares registered in the shareholder’s name as the amount paid (not credited) bears to the total amounts paid and payable (excluding amounts credited).

Dividend rights

Subject to the rights of any preference shareholders and to the rights of the holders of any shares created or raised under any special arrangement as to dividend, the Board may from time to time declare a dividend to be paid to the shareholders entitled to the dividend which shall be payable on all shares according to the proportion that the amount paid (not credited) is of the total amounts paid and payable (excluding amounts credited) in respect of such shares.

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No dividend shall carry interest as against the Company. The Board may set aside out of the profits of the Company any amounts that they may determine as reserves, to be applied at the discretion of the Board, for any purpose for which the profits of the Company may be properly applied.

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Subject to the ASX Listing Rules and the Corporations Act, the Company may implement a dividend reinvestment plan which provides for any dividend which the Board may declare from time to time, less any amount which the Company shall either pursuant to the Constitution or any law be entitled or obliged to retain, be applied by the Company to the payment of the subscription price of shares to be issued to the relevant shareholder.

Winding-up

If the Company is wound up, the liquidator may, with the authority of a special resolution of the Company, divide among the shareholders in kind the whole or any part of the property of the Company, and may for that purpose set such value as he or she considers fair upon any property to be so divided, and may determine how the division is to be carried out as between the shareholders or different classes of shareholders.

The liquidator may, with the authority of a special resolution of the Company, vest the whole or any part of any such property in trustees upon such trusts for the benefit of the contributories as the liquidator thinks fit, but so that no shareholder is compelled to accept any shares or other securities in respect of which there is any liability.

Shareholder liability

As the shares offered this Prospectus are fully paid shares, they are not subject to any calls for money by the Company and will therefore not become liable for forfeiture.

Transfer of Shares

Generally, shares are freely transferable, subject to formal requirements, the registration of the transfer not resulting in a contravention of or failure to observe the provisions of a law of Australia and the transfer not being in breach of the Corporations Act or the ASX Listing Rules.

Variation of rights

The rights attaching to shares may only be varied or cancelled by the sanction of a special resolution passed at a meeting of shareholders or with the written consent of holders of three quarters of all

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shares on issue. A special resolution is passed only where approved by at least 75% of all votes cast (and entitled to be cast) on the resolution at the meeting.

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If at any time the share capital is divided into different classes of shares, the rights attached to any class (unless otherwise provided by the terms of issue of the shares of that class), whether or not the Company is being wound up, may be varied or abrogated with the authorisation by a special resolution passed at a separate meeting of the holders of the shares of that class.

Alteration of Constitution

The Constitution can only be amended by a special resolution passed by at least three quarters of shareholders present and voting at the general meeting.

14 ~~.~~ 7 Milestone share terms

The following are the proposed common terms of the first milestone shares and the second milestone shares, subject to modification to the extent, if any, required by ASX.

The Applicable Milestone for the first milestone shares is Milestone 1. The Applicable Milestone for the second milestone shares is Milestone 2. The Milestones are set out below.

• a. (Milestone Shares): A milestone share is a share in the capital of the Company (being Davenport Resources Limited) (Milestone Shares).

• b. (General Meetings): A milestone share shall confer on the holder (a Holder) the right to receive notices of general meetings and financial reports and accounts of the Company that are circulated to shareholders. The Holder of a milestone share has the right to attend general meetings of shareholders of the Company.

• c. (No Voting Rights): A milestone share does not entitle the Holder to vote on any resolutions proposed at a general meeting of shareholders of the Company.

• d. (No Dividend Rights): A milestone share does not entitle the Holder to any dividends.

• e. (Rights on Winding Up): The Holder of a milestone share is not entitled to participate in the surplus assets or profits of the Company in a winding up.

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• f. (Not Transferable): A milestone share is not transferable.

• g. (Issues and Reorganisation of Capital): A milestone share does not entitle the Holder to participate in any bonus issue, pro rata issue or any other issue or rights to subscribe for fully paid ordinary shares or any other securities issued by the Company. Further, if at any time the issued capital of the Company is reconstructed, all rights of a Holder will be changed as if each milestone share held by the Holder was a fully paid ordinary share, to the extent necessary to comply with the applicable ASX Listing Rules at the time of reorganisation.

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• h. (No Other Rights): A milestone share gives the Holder no rights other than those expressly provided by these terms and those provided at law where such rights at law cannot be excluded by these terms.

• i. (Conversion): Subject to paragraph (m) below, a milestone share will convert into one fully paid ordinary share in the Company (a Share ) upon the achievement of the milestone applicable to that Milestone Share (the Applicable Milestone ). The Applicable Milestone for a milestone share will be specified in the terms of issue of or invitation to apply for the milestone share. Milestone shares which have not lapsed will convert automatically (without the achievement of the Applicable Milestone) in the event of a takeover or change of control of the Company.

• j. (Conversion Procedure): The Company will issue the Holder with a new holding statement for the Shares as soon as practicable following the conversion of Milestone Shares into Shares under paragraph (i).

• k. (Lapse): If the Applicable Milestone for a milestone share is not achieved within the time or by the event specified for and as part of the Applicable Milestone, all milestone share for which that milestone is the Applicable Milestone will lapse and be deemed to have been cancelled without payment or other compensation to the Holder.

• l. (Quotation – Application to ASX): Milestone share will not be quoted on the ASX. If milestone shares convert into Shares the Company must within seven (7) days of the date of conversion apply for official quotation on ASX of the Shares.

• m. (Compliance with Law): The conversion of milestone shares is subject to compliance at all times with the Corporations Act and the Listing Rules of ASX.

• n. (Ranking of Shares): The Shares into which the milestone share will convert will rank pari passu in all respects with existing Shares.

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• o. (Amendment to comply with ASX requirements): These terms and the Applicable Milestone(s) of milestone shares may be amended by the Board of the Company before or after the issue of milestone shares as necessary in order to comply with the ASX Listing Rules, or any direction or requirement of ASX.

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Milestone 1

The Milestone for the first milestone shares is as follows:

The announcement to ASX by Davenport within four (4) years after Completion (or such lesser period as is satisfactory to ASX) of the first JORC Code compliant inferred resources of one of the following:

• f. 250 million tonnes of potash at or above 11.0% K2O by content, or

• g. 150 million tonnes of potash at or above 12.0% K2O by content, or

• h. 100 million tonnes of potash at or above 13.0% K2O by content, or

• i. 75 million tonnes of potash at or above 15.0% K2O by content, or

• j. 50 million tonnes of potash at or above 18.0% K2O by content.

“Completion” means completion of the acquisition of all the shares of East Exploration Pty Ltd by Davenport.

Milestone 2

The Milestone for the second milestone shares is as follows:

The announcement to ASX by Davenport within six (6) years after Completion (or such lesser period as is satisfactory to ASX) of satisfaction of all mining approvals and utility contracts required to construct and operate a minimum 500,000 tonnes per annum potash mine on the South Harz Project (including all government approvals, water and energy contracts necessary to operate the mine).

“Completion” means completion of the acquisition of all the shares of East Exploration Pty Ltd by Davenport.

“South Harz Project” means the mineral exploration project targeting potash in central Germany including the Küllstedt and Gräfentonna exploration licences and all ground within 50 kilometres of the Küllstedt and Gräfentonna tenements.

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14 ~~.~~ 8 Option terms

The options (“Options”) offered under the Options Offer will entitle the holder to subscribe for fully paid ordinary shares of the Company (“Shares”) on the following terms and conditions:

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• Each Option gives the Optionholder the right to subscribe for one Share. To obtain the right given by each Option, the Optionholder must exercise the Options in accordance with these terms and conditions.

• The Options will expire at 5:00pm (AEST in Melbourne, Victoria) on the date which is the third anniversary of admission of Listing (the admission of the Company to the Official List) (Expiry Date) . Any Option not exercised before the Expiry Date will automatically lapse on the Expiry Date.

• The amount payable upon exercise of each Option will be $0.25 (25 cents) (Exercise Price) .

• The Options may be exercised in whole or in part, and if exercised in part, multiples of 500 must be exercised on each occasion.

• Optionholders may exercise their Options by lodging with the Company, before the Expiry Date:

• a written notice of exercise of Options specifying the number of Options being exercised; and

• a cheque or electronic funds transfer for the Exercise Price for the number of Options being exercised;

• An Exercise Notice is only effective when the Company has received the full amount of the Exercise Price in cleared funds.

• Within 10 Business Days of receipt of the Exercise Notice accompanied by the Exercise Price, the Company will allot the number of Shares required under these terms and conditions in respect of the number of Options specified in the Exercise Notice.

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

• All Shares allotted upon the exercise of Options will upon allotment rank pari passu in all respects with other Shares.

• If admitted to the official list of ASX at the time, the Company will apply for quotation of all Shares allotted pursuant to the exercise of the Options on ASX within 10 Business Days after the date of

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allotment of those Shares. The Company is entitled but not obliged to apply for quotation of the Options on ASX at its discretion.

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

• Thereare noparticipatingrightsorentitlements inherent intheOptionsandthe Optionholder will not be entitled to participate in new issues of capital offered to Shareholders during the currency of the Options. However, the Company will ensure that for the purposes of determining entitlements to any such issue, the record date will be at least three (3) Business Days after the issue is announced.

• 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.

• Shares issued upon the exercise of New Options will be fully paid ordinary shares and will have the same voting and other rights as the existing shares of the Company.

14 ~~.~~ 9 Employee Security Ownership Plan terms

The Company adopted an employee security ownership plan having the following terms at the General Meeting.

PURPOSE, COMMENCEMENT AND INTERPRETATION

1 PURPOSE OF THIS PLAN

• 1.1 The Board of the Company has adopted this Employee Security Ownership Plan (“this Plan”) described in this Plan for the purpose of:

• a. providing Eligible Persons with an additional incentive to work to improve the performance of the Company;

• b. attracting and retaining Eligible Persons essential for the continued growth and development of the Company;

• c. to promote and foster loyalty and support amongst Eligible Persons for the benefit of the Company; and

• d. to enhance the relationship between the Company and Eligible Persons for the long term mutual benefit of all parties.

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2 COMMENCEMENT

This Plan shall commence upon the day it is adopted by the Board, or such later date as the Board may specify.

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3 INTERPRETATION

3.1 In this Plan, unless the context otherwise requires:

“Associated Body Corporate” means a body corporate (whether incorporated in Australia or elsewhere) in which the Company holds a relevant interest (as defined in the Corporations Act and as if the body corporate was incorporated in Australia) of at least 30%;

“ASX” means (as the context requires) ASX Limited or the prescribed financial market known as ASX operated by ASX Limited and/or its subsidiaries;

“Board” means the board of directors of the Company from time to time (but does not imply a requirement that any act be authorised by a unanimous decision of the Board);

“Company” means Davenport Resources Limited [ABN 64 153 414 852]; “Corporations Act” means the Corporations Act 2001 (Cth);

“Director” means a director from time to time of the Company;

“Eligible Person” means a person who is:

• i. (i) an employee of;

ii. (ii) a consultant to; or

iii. (iii) a director or other officer of,

the Company or an Associated Body Corporate and, in the case of consultants, includes bodies corporate;

“Option” means an Option issued under this Plan to subscribe for a Share;

“Other Interest” means a security (within the meaning of the Corporations Act) or other right, interest or entitlement (which may be a conditional right, interest or entitlement) to acquire or receive Shares or to receive or participate in a benefit referrable to Shares or the activities of the Company, and without limitation may include a preference share, a performance right, a beneficial interest in shares held by a trustee or to the proceeds of the sale of shares held by a trustee, or an entitlement

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to receive amounts calculated as if shares were issued or held by or on behalf of a person (whether alone or with others) and sold;

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“Plan” means the Employee Security Ownership Plan as comprised by and contained in this document, as amended from time to time;

“Option holder” means a person who holds Unexercised Options;

“Security” means Shares, Options or Other Interests, as the case requires, and notwithstanding that an Other Interest may not be a security within the meaning of the Corporations Act;

“Share” means an ordinary fully paid share in the capital of the Company; and

“Unexercised Options” means Options issued under this Plan from time to time which have not lapsed and have not been exercised.

3.2 The word “offer” is used in this plan and any document under or referring to this Plan for convenience only, and an offer referred to or under this Plan is an invitation to apply for Securities and is expressly not capable of creating a binding contract to issue Securities merely by acceptance.

3.3 In this Plan, unless the context otherwise permits and requires, the singular shall include the plural and vice versa.

3.4 A reference to an Act or other legislation includes a reference to that Act or legislation as amended, re-enacted or replaced from time to time, and in the case of an Act includes a reference to any applicable subordinate legislation.

3.5 Nothing in this Plan will apply to permit or authorise, or be interpreted as permitting or authorising, any act (including an omission) prohibited by law of which is contrary to the constitution of the Company. Acts ancillary to the exercise of powers under this Plan including acts to comply with the law or the constitution of the Company in order to give effect to the purpose and intention of this Plan are acts under this Plan.

3.6 If at any relevant time any securities of the Company are admitted to official quotation on ASX this Plan shall be interpreted and applied in accordance with and subject to all applicable listing rules.

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SECURITIES AND OTHER INTERESTS

4 NUMBER OF SECURITIES

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4.1 The total number of Securities which may be issued under this Plan from time to time is the number which is 10% (ten percent) of the number of Shares on issue at the time of issue of the Security.

4.2 For the purposes of clause 4.1 a Share issued on exercise of an Option or exercise or conversion of an Other Interest is not to be counted in determining the number of Securities issued under this Plan.

4.3 For the purposes of clause 4.1 an Option or an Other Interest which has been exercised or converted, or which has lapsed or been cancelled, is not to be counted in determining the number of Securities issued under this Plan after the Option or Other Interest is exercised, lapses or cancelled.

4.4 For the purposes of clause 4.1 a Security which lapses before vesting is not to be counted in determining the number of Securities issued under this Plan after the Security lapses.

4.5 For the purposes of clause 4.1 where the invitation or offer in respect of a Security specified the proposed issue of the Security would not occur or wold be deferred until or unless an event occurred, a condition (which may be the non-occurrence of an event) was satisfied and/or a period of time passed and the proposed issue was cancelled or be deemed to have been cancelled in accordance with the terms of the invitation or offer and/or this Plan, the Security is not to be counted in determining the number of Securities issued under this Plan.

4.6 For the purposes of clause 4.1 the number of Securities represented by an Option or an Other Interest is the number of Shares to be issued upon exercise or conversion of the Option or Other Interest. If the terms of issue of an Other Interest do not provide for a fixed number of Shares to be issued or it is otherwise not possible to establish at the time of the applicable invitation or offer the exact number of Shares that would be issued upon exercise or conversion of the Other Interest:

• a. the maximum number of Shares which may be issued if all conditions of exercise or conversion of the Other Interest were to be satisfied shall be counted for the purposes of clause 4.1; and

• b. the Directors may specify a number of Shares for the purposes of clause 4.1, on the basis of a reasonable estimate of the factor to be included in the calculation of the number of Shares which would be issued (for example, if the price of Shares at the time of exercise or conversion is a factor in the calculation, by using a price representing the price of Shares current at the time

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an invitation or offer is made in the absence of a minimum price or other determinant of price affecting the calculation).

5 TYPES OF SECURITIES

5.1 The Company may issue Securities of any type provided for in this Plan. The choice of the type of Security or Securities for which an invitation or offer is made, or which is issued to an Eligible Person, shall be at the Board’s discretion.

5.2 The type of Security which is the subject of an invitation or offer shall be specified in the applicable invitation or offer.

6 LOANS

6.1 Subject to the Corporations Act, the Company may, at its discretion and without being obliged to do so, offer or make loans to Eligible Persons to assist acquiring or for the purpose of acquiring Securities under the Plan.

6.2 The terms of any loan offered under clause 6.1 will be set out or incorporated by reference into the invitation or offer of the Securities (provide that if the terms of the loan are incorporated by reference, without limiting the other ways a copy may be made available, the Board will make a copy available to the named recipient of the invitation or offer within a reasonable period of a written request to do so). Unless the invitation or offer includes provision for an election by the recipient to acquire the Securities without the loan (for example by making payment for the Securities from the recipient’s own funds) and the recipient so elects including fulfilling any requirement of such election, acceptance of the issue of Securities to which the invitation or offer applied will constitute acceptance of and an agreement to be bound by the terms of the loan.

6.3 Each certificate for Securities issued under this Plan or other document (if any) shall include a statement or be endorsed with a statement that this Plan apply to the Securities evidenced by the document, but this Plan shall still apply despite any failure to include or endorse such a statement on a certificate or other document where an invitation or offer made under this Plan is accepted.

PARTICIPATION IN THIS PLAN

7 ELIGIBILITY AND ENTITLEMENT

7.1 Subject to the listing rules of ASX (if applicable) and this Plan, the Board (with the advice of the remuneration committee, if any) shall determine from time to time:

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• a. the number and type of Securities (if any) an Eligible Person be made an invitation or offer to apply for and acquire under this Plan;

• b. the terms of issue of the Securities;

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• c. whether any sum is to be payable for the issue of the Securities, whether prior to, at the time of or after the issue of the Securities;

• d. whether any loan will be proposed or made in connection with the acquisition; and

• e. (where applicable) the expiry date, any applicable vesting date or dates, and the exercise price of Options or Other Interests to be offered.

7.2 If the Board determines that Securities are to be offered to an Eligible Person, that Eligible Person shall be invited to apply in his or her name or in the name of his or her nominee (provided such nominee is approved by the Board) for all or part of the Securities offered to that person. The Company shall issue the agreed number of Securities following receipt (within the time, if any, specified in the invitation) of the application and, if applicable, payment of any sum specified for the issue of the Securities.

7.3 An invitation or offer of Securities may specify that the proposed issue of the Securities will not occur or will be deferred until or unless an event occurs, a condition (which may be the nonoccurrence of an event) is satisfied and/or a period of time passes. Until the issue of the Securities the Eligible Person has no claim to the Securities or any Shares that would be issued upon exercise or conversion of an Option or Other Security, and the proposed issue will be deemed to have been cancelled in accordance with the terms of the invitation or offer and/or this Plan.

7.4 The Board of Directors retains the right to withdraw an invitation or offer at any time prior to receiving an application from the person to whom the invitation or offer was made, or that person’s nominee.

7.5 It is a term of any invitation or offer that it may not be accepted by a person who is not an Eligible Person or who is a person to whom securities cannot be offered or issued without disclosure under the Corporations Act. The making or acceptance of an invitation or offer, or the issue of Securities, does not result in or deem a person to be an Eligible Person or to be a person to whom securities cannot be offered or issued without disclosure under the Corporations Act.

8 ACCEPTANCE

8.1 The Company shall accept and treat as valid any application or acceptance in response to an invitation or offer provided that the application accords, in all respects, with this Plan, is for the number of Securities to which the Eligible Person is entitled, the recipient has performed or otherwise satisfied all requirements under or applicable to the invitation or offer, and the invitation or offer has

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not been withdrawn. The Company is not otherwise bound to issue Securities notwithstanding that a person may have received an invitation or offer.

8.2 Upon acceptance of application the Company shall deliver a certificate or other record of holding in respect of the Securities granted to the Eligible Person within 20 business days unless the Eligible Person has agreed to the Company or third party retaining or receiving the certificate or record of holdings.

8.3 Each Eligible Person (and, if applicable, his or her nominee) will be taken to agree to be bound by this Plan upon the acceptance of an invitation or offer from the Board to take up Securities under this Plan.

8.4 If the Company is admitted to the official list of ASX, the recipient of Securities issued under this Plan agrees to complete, execute and comply with any restriction agreement necessary to satisfy the requirements of ASX.

SHARES

9 TERMS OF ISSUE

9.1 Shares issued under this Plan are fully paid ordinary shares in the capital of the Company but may be subject to restrictions, special requirements or other terms of issue without necessarily forming a distinct class of securities for the purposes of the Corporations Act.

9.2 The Board may determine the restrictions, special requirements or other terms of issue of any Share which may be issued under this Plan, provided such is described in the invitation to apply for or offer of that Share. The description may be by way of reference to this Plan (which in any event is deemed to incorporated in any such invitation or offer as if set out in the invitation or offer in full) or any other document provided that, without limiting the other ways a copy may be made available, the Board will make a copy available to the named recipient of the invitation or offer within a reasonable period of a written request to do so.

9.3 Without limitation, the terms of issue of a Share may specify that the Share is not able to be transferred, disposed of or encumbered until one or more conditions (which may include the passage of time to the occurrence or non-occurrence of an event) are fulfilled or an amount is paid to the Company, or that (subject to the Corporations Act) Shares must be transferred as directed by the Company or sold back, whether or not for any consideration or compensation, upon the occurrence of an event or if an event does not occur (whether by a particular date or otherwise).

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9.4 This clause 9 does not limit the nature, class or terms of issue of shares which may be issued under this Plan as Other Securities.

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OPTIONS

10 TERMS OF OPTIONS ISSUED UNDER THIS PLAN

10.1 Unless otherwise specified in the terms of an offer under this Plan, no amount is payable for a grant of Options.

10.2 Each Option shall carry the right in favour of an Option holder to subscribe for one fully paid ordinary Share in the capital of the Company.

10.3 Each Option expires at 5.00 pm (Melbourne, Victoria time) on the expiry date specified in the terms of issue of that Option, subject to earlier expiration, lapse or cancellation in accordance with the terms of this Plan.

10.4 Options may only be exercised if permitted by this Plan and on the terms of issue. Options cannot be exercised unless vested in accordance with the terms of issue.

10.5 The exercise price of each Option shall be as specified in the terms of issue of that Option. The exercise price shall be payable in full on exercise of the Option by the Holder.

10.6 The Company may permit cashless exercise of options, at the discretion of the Board.

10.7 Options shall be exercisable by the delivery to the registered office of the Company of a notice in writing stating the intention of the Option holder to exercise all or a specified number of Options, accompanied by the relevant Option certificate (if any) and a cheque made payable to the Company for the exercise price of all the Options exercised, or by such other method as the Company may specify (whether at the time of issue or otherwise).

10.8 An exercise of only some Options shall not affect the rights of the Option holder under the balance of the Options held by him or her.

10.9 If an Option is exercised in accordance with this Plan and its terms of issue, the Company shall issue the resultant Share and deliver notification of shareholding within forty (40) business days of the exercise of an Option or such longer time as may be permitted under the listing rules of ASX (if applicable) and the Company’s Constitution.

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10.10 Shares issued pursuant to the exercise of Options shall rank equally with existing Shares of the Company in all respects from the date of issue of the Share. If admitted to the official list of ASX at the time of issue of the Share, the Company will apply for official quotation by ASX of the Shares issued upon exercise of an Option, subject to any restriction obligations imposed by ASX.

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10.11 Options may not be transferred, assigned or otherwise dealt with except in accordance with clause 12 of this Plan.

10.12 The Company is not bound to recognise any transfer or assignment of Options unless made in accordance with clause 12 of this Plan and then only if a copy of the duly executed instrument of assignment or transfer is lodged with the Company.

10.13 Holders of Options which have vested will be permitted to participate in any new pro-rata issue of securities of the Company subject to the prior exercise of the Options and any restriction obligations. The Company will ensure that Option holders will be allowed at least seven business days notice to allow for the conversion of Options prior to the record date in relation to any offer of securities made to shareholders.

10.14 In the event of any reconstruction (including consolidation, subdivision, reduction or return) of the issued capital of the Company:

• a. if at the time of the reconstruction any securities of the Company are admitted to quotation by the ASX or another stock exchange, the Options will be reorganised in accordance with the listing rules or their equivalent applying at the time of the reorganisation; or

• b. if at the time of the reconstruction no securities of the Company are admitted to quotation by the ASX or other stock exchange, the Options will be reorganised in the same proportion as the underlying ordinary shares (in such a way as not to cause a change in the total exercise price for a post reconstruction holding of Options, disregarding the effect of any fractions or rounding).

Note: That is, in the case referred to in clause 10.14(b), if ordinary shares are reconstructed by each share being divided into four shares, if a pre-reconstruction Option to acquire one ordinary share was exercisable at two dollars, it will be divided into four Options each to acquire one post-reconstruction ordinary share at an exercise price of 50 cents each. The other terms and conditions of the Options will remain unchanged.

10.15 The Options will not give any right to participate in dividends until Shares are issued pursuant to the exercise of the relevant Options.

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10.16 Options issued under this Plan do not confer upon the holder a right to receive notices of general meetings (except as may be required by law), nor any right to attend, speak at or vote at general meetings of the Company.

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10.17 If offered and issued after the Company is admitted to the official list of ASX, any Options offered and issued shall:

• a. have an exercise price of not less than the average closing trading price of the Company’s listed Shares on the five trading days prior to issuing invitations or offers to accept Options under this Plan;

• b. have an expiry date not later than five years after the date of issue; and

• c. vest at such times as the Board (with the advice of the remuneration committee) may specify in the applicable invitation to accept an offer of the Options, each of which shall be deemed to form part of the terms of issue of the Options.

11 EXERCISE PERIOD & LAPSE OF OPTIONS

11.1 Options lapse and cannot be exercised after the earlier of the expiry date specified in their terms of issue or the date determined in accordance with clause 13 of this Plan in respect of the applicable Eligible Person.

11.2 If the Company is admitted to the official list of ASX, Options may only be exercised during a restriction period in accordance with the terms of the restriction and the ASX listing rules.

12 LIMITED TRANSFERABILITY & DEALINGS

12.1 Save as otherwise provided in this clause 12, Options are personal to the Eligible Person and are not transferable or assignable and may only be exercised in accordance with this Plan. No Option issued under this Plan shall be capable of being mortgaged, pledged or encumbered in any way whatsoever.

12.2 Subject to clause 12.3 of this Plan and provided that the prior written consent of the Board is obtained (such consent not to be unreasonably withheld), clause 12.1 shall not prevent an Option from being transferred or assigned:

• a. by will or by operation of the laws of succession following the Eligible Person’s death; or

• b. in accordance with a direction of the Board upon the incapacity of the Eligible Person; or

• c. to a spouse or an associated trust or company within the meaning of former section 26AAB(14) of the Income Tax Assessment Act 1936.

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12.3 Before an Option is transferred or assigned, the transferee must execute a covenant with the Company whereby the transferee agrees to be bound by the terms of this Plan.

12.4 A transferred Option may only be exercised in accordance with this Plan and the terms of issue of the Options.

13 TERMINATION OF RIGHT TO EXERCISE OPTION

13.1 Subject to clauses 13.2 and 13.3 of this Plan, an Option holder’s right to exercise Options under this Plan shall terminate within one month of the Option holder ceasing to be an Eligible Person (or, if the Option holder is a nominee of an Eligible Person, the Eligible Person who nominated the nominee ceasing to be an Eligible Person) provided that:

• a. where an Eligible Person dies and at the date of his or her death that Eligible Person (and his or her nominees) held any Unexercised Options, such Options may be exercised by the legal personal representatives of the Option holder (or, if applicable, his or her nominees) within 12 months of the date of the Eligible Person’s death (subject to the earlier expiry or lapse of the Options); or

• b. where an Eligible Person ceases to be an Eligible Person by reason of the cessation of employment or their engagement as a consultant for whatever reason, other than the circumstances referred to in clause 13.1(e) of this Plan and on the date the Eligible Person ceases to be an Eligible Person, the Eligible Person (and his or her nominees) held any Unexercised Options (subject to the earlier expiry or lapse of the Options), such Options may be exercised at any time within 90 days or such other period, being not less than 90 days, as determined by the Board (in its absolute discretion) prior to, at or following the date upon which the Eligible Person so ceased to be an Eligible Person; or

• c. where an Eligible Person ceases to be an Eligible Person by reason of:

• A. the retirement of the Eligible Person at or after attaining the age of 65 years;

• B. retirement of the Eligible Person before age 65 years with the consent of the Board;

• C. ill health of, or accident affecting, the Eligible Person; or

• D. redundancy by reason of participation in a voluntary redundancy scheme of the Company or an Associated Body Corporate or being made redundant or being retrenched by the Company or an Associated Body Corporate,

and on the date the Eligible Person ceases to be an Eligible Person, the Eligible Person (and his or her nominees) held any Unexercised Options, such Options may (subject to the earlier expiry or

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lapse of the Options) be exercised at any time before the expiry of six months from the date upon which the Eligible Person ceased to be an Eligible Person; or

• d. where an Eligible Person is declared bankrupt or becomes subject to Part X of the Bankruptcy Act 1966 (Cth) (as amended) and upon such date the Eligible Person held any Unexercised Options, those Unexercised Options shall immediately lapse and cease to be exercisable;

• e. where an Eligible Person ceases to be an Eligible Person by reason of the Company terminating the Eligible Person’s contract of service in circumstances where the Eligible Person has committed gross misconduct, gross negligence, wilful disobedience or due to any other cause or matter which entitles the Company to dismiss the Eligible Person without notice and on the date the Eligible Person ceases to be an Eligible Person, the Eligible Person (and his or her nominees) held any Unexercised Options, such Options shall immediately and automatically lapse and the right of the Eligible Person (and his or her nominees) to exercise those Unexercised Options shall terminate immediately upon dismissal of the Eligible Person; or

• f. where Options have been assigned in accordance with the terms of this Plan and an event has occurred in respect of the original Option holder (or, in the event that the original Option holder was a nominee of an Eligible Person, then that Eligible Person) of the nature referred to in the foregoing paragraphs of this clause 13.1, the person then the Option holder at that time shall only be entitled to exercise the Unexercised Options within the same time limits (if any) specified in the respective paragraph of this clause 13.1, and otherwise the Unexercised Options shall lapse.

13.2 If at the relevant time any securities of the Company are admitted to quotation by the ASX or other stock exchange, subject to compliance with the listing rules (particularly but not only listing rule 6.23 or its equivalent, if applicable), the Board may, in its discretion, extend the time periods in, or waive the application of any provision of, clause 13.1 of this Plan, but not so as to extend the expiry date of an Option beyond the expiry date specified in its terms of issue.

13.3 Nothing in clauses 13.1 and 13.2 of this Plan shall be taken to permit an Option to be exercised after its expiry date specified in its terms of issue and any reference to a date in those clauses shall be taken to be a reference to the earlier of that date or the expiry date of the relevant option or options.

OTHER INTERESTS

14 NATURE AND TERMS OF OTHER INTERESTS

14.1 The Board may determine the nature, rights and liabilities attaching to, and terms of issue of any Other Interest which may be issued under this Plan.

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14.2 The terms of issue of any Other Interest issued under this Plan may include that the Other Interest may be lapse or be cancelled on such terms as the Board determines. An Eligible Person or other holder of an Other Interest shall have no claim against the Company or any other person if the Other Interest lapses or is cancelled as provided for in its terms of issue.

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14.3 The Board may adopt rules subordinate to this Plan for the terms of and administration of particular Other Interests, which subordinate rules will apply to those Other Interests as terms of issue of those Other Interests. Clauses 15 to 19 of this Plan (both inclusive, with such amendments as the context requires and permits) will apply to such subordinate rules as if set out in the subordinate rules.

MISCELLANEOUS

15 AMENDMENT OF THIS PLAN

This Plan may only be amended with the prior approval by resolution of the shareholders of the Company in general meeting. If the Company is admitted to the official list of ASX, this Plan may only be amended in accordance with the listing rules of ASX.

16 RIGHTS OF EMPLOYEES OR CONSULTANTS

This Plan shall not form part of any contract of employment between the Company and any of its employees or consultants and shall not confer directly or indirectly on any employee or consultant any legal or equitable rights.

17 GOVERNING LAW

This Plan, any Securities issued under this Plan and any invitation, offer or application under this Plan shall be governed by the laws applying in the State of Victoria, Australia. Each person who accepts an invitation or offer of Securities made under this Plan, or who applies for or receives Securities issued under this Plan, or to whom this Plan otherwise applies submits to the non- exclusive jurisdiction of the Courts of the State of Victoria and the Courts of appeal therefrom.

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18 POWERS OF DIRECTORS

18.1 This Plan shall be administered by the Board who shall have the power to:

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• a. determine procedures from time to time for administration of this Plan consistent with this Plan;

• b. subject to clause 15 of this Plan and (if applicable) the listing rules, amend or modify this Plan; and

• c. resolve conclusively all questions of fact or interpretation arising in connection with this Plan.

18.2 The Board may delegate any of its powers under this Plan other than the powers in clauses 13.1(b), 13.1(c) and 14. An act by a delegate in accordance with a delegation of powers by the Board will be as good, effective and binding as if it were an act of the Board.

19 TERMINATION AND SUSPENSION OF PLAN

19.1 This Plan may at any time be terminated by the Board but such termination shall not, in and of itself, affect the rights of holders of Securities issued or the terms of Securities issued prior to such termination.

19.2 The Board may suspend the operation of this Plan for any period it considers desirable, but such suspension will not affect holders of Securities issued or the terms of Securities issued prior to such suspension.

14 ~~.~~ 10 Dividends and forecasts of future earnings

The Directors do not envisage that Davenport will be in a position to declare dividends for the foreseeable future.

The Directors have considered the matters set out in ASIC Regulatory Guide 170 and believe that they do not have a reasonable basis to forecast future earnings beyond the expected listing date on the basis that the anticipated operations of the Company after the completion of the acquisition of East Exploration are inherently uncertain. Any forecast or projection information would contain such a broad range of potential outcomes and possibilities that it is not possible to prepare a reliable best estimate forecast or projection.

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14 ~~.~~ 11 Taxation

The acquisition and disposal of shares in Davenport will have tax consequences, which will differ depending on the individual financial affairs of each investor. All potential investors in Davenport are urged to obtain independent financial advice about the consequences of acquiring shares from a taxation viewpoint and generally. If you are in doubt as to the course you should follow, you should consult your accountant, stockbroker, lawyer or other professional adviser. To the maximum extent permitted by law, Davenport, its officers and each of their respective advisors accept no liability or responsibility with respect to the taxation consequences of subscribing for shares under this Prospectus.

14 ~~.~~ 12 Litigation

Davenport is not involved in any litigation or arbitration proceedings, nor, so far as the Directors are aware, are any such proceedings pending or threatened against Davenport.

14 ~~.~~ 13 Competent Persons’ Statements

The Independent Technical Assessment South Harz Project report by CSA Global Pty Ltd and the Davenport Resources – Southern Cross Bore, Cu-Au, Independent Expert Report by John Collier (Conarco Consulting) set out in Section 10 each contain statements by competent persons as defined in the JORC Code. The information contained in Section 4 that relates to exploration results of the respective Projects is based on, and fairly represents, information compiled or reviewed by the persons named as competent persons in those reports. The persons named as competent persons in those reports have consented to this statement and to references in this Prospectus to each of them and to their reports or statements in their reports (respectively) in the form and context in which those references appear, and have not withdrawn their respective consents before lodgement of this Prospectus with ASIC.

14 ~~.~~ 14 Interests of advisors

The Company has engaged the following professional advisors in relation to the Offers:

• Advantage Advisors Corporate Pty Ltd has acted as the Investigating Accountant. Advantage Advisors Corporate Pty Ltd is associated with the Company’s auditor, Advantage Advisors Audit Partnership. The Company has paid, or has agreed to pay, approximately $18,000 (excluding disbursements and GST) to Advantage Advisors Corporate Pty Ltd and approximately $15,000 (excluding disbursements and GST) to Advantage Advisors Audit Partnership in the two years prior to the date of this Prospectus. Further amounts may be paid to Advantage Advisors Corporate Pty Ltd in accordance with normal charge out rates.

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• John Collier (trading as Conarco Consulting) has acted as an independent expert. The Company has paid, or agreed to pay, approximately $19,100 (excluding disbursements and GST) to Mr Collier in the two years prior to the date of this Prospectus. Subsequently, fees will be charged in accordance with normal charge out rates.

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• CSA Global Pty Ltd has acted as an independent geologist. The Company has paid, or agreed to pay, approximately $49,200 (excluding disbursements and GST) to CSA Global Pty Ltd in the two years prior to the date of this Prospectus. Subsequently, fees will be charged in accordance with normal charge out rates.

• CMS Hasche Sigle Partnerschaft von Rechtsanwälten und Steuerberatern mbB has acted as legal advisors in relation to its Expert Mining License Report. The Company has paid, or agreed to pay, approximately €4,285 to CMS Hasche Sigle Partnerschaft von Rechtsanwälten und Steuerberatern mbB in the two years prior to the date of this Prospectus. Subsequently, fees will be charged in accordance with normal charge out rates.

• AMETS (Australian Mining and Exploration Title Services) has acted as a tenement consultant. The Company has paid, or agreed to pay, approximately $23,450 (excluding disbursements and GST) to AMETS (Australian Mining and Exploration Title Services) in the two years prior to the date of this Prospectus. Subsequently, fees will be charged in accordance with normal charge out rates.

• Quinert Rodda and Associates Pty Ltd has acted as legal advisor to the Company. The Company has paid, or agreed to pay, approximately $125,000 (excluding disbursements and GST) to Quinert Rodda and Associates Pty Ltd in the two years prior to the date of this Prospectus. Subsequently, fees will be charged in accordance with normal charge out rates.

East Exploration has paid, or agreed to pay approximately €245,505 (excluding disbursements and taxes) to ERCOSPLAN Ingenieurgesellschaft Geotechnik und Bergbau mbH in the two years prior to the date of this Prospectus. Further amounts may be paid to ERCOSPLAN Ingenieurgesellschaft Geotechnik und Bergbau mbH by East Exploration in accordance with the terms of its engagement of ERCOSPLAN Ingenieurgesellschaft Geotechnik und Bergbau mbH, and at normal charge out rates for any additional work, as summarised in Section 14.3(b).

These amounts, and other expenses of the Offers, to the extent not paid by the Company or East Exploration prior to completion of the acquisition of East Exploration and the Equity Offer will be paid out of funds raised under the Equity Offer or available cash. Further information on the use of proceeds and costs of the Equity Offer is set out in Sections 3 and 14.16.

14 ~~.~~ 15 Consents

Each of the parties listed below (each a “Consenting Party”) has given its written consent and has not, before lodgement of this Prospectus with ASIC, withdrawn its consent to being named in this

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Prospectus in the form and context in which it is named and, where applicable, to the inclusion in this Prospectus of his or its report specified below and/or statements by him or it (and to references to or statements based on his or its report and/or statements) in the form and context in which his or its report or statements and references to or statements based on his or its report and/or statements appear:

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• the Proposed Director, Mr Patrick McManus;

• Advantage Advisors Corporate Pty Ltd as Investigating Accountant and the inclusion of its Investigating Accountant’s Report in this Prospectus;

• Advantage Advisors Audit Partnership as auditor;

• ERCOSPLAN Ingenieurgesellschaft Geotechnik und Bergbau mbH as consultants to East Exploration;

• CMS Hasche Sigle Partnerschaft von Rechtsanwälten und Steuerberatern mbB as legal advisors in relation to its Expert Mining License Report and the inclusion of its report in this Prospectus;

• John Benjamin Collier (trading as Conarco Consulting) as an independent expert and the inclusion of his Davenport Resources – Southern Cross Bore, Cu-Au, Independent Expert Report in this Prospectus;

• CSA Global Pty Ltd as an independent geologist and the inclusion of its Independent Technical Assessment South Harz Project report in this Prospectus;

• AMETS (Australian Mining and Exploration Title Services) as a tenement consultant and the inclusion of its Report on Northern Territory Exploration Licences 28045, 29827 & 30090 in this Prospectus;

• Quinert Rodda and Associates Pty Ltd as legal advisors in relation to the Offers; and

• Security Transfer Australia Pty Ltd as the Share Registry.

Each of the Consenting Parties, to the maximum extent permitted by law, severally expressly disclaims all liabilities in respect of, makes no representations regarding and takes no responsibility for any statements in or omissions from this Prospectus, other than the reference to its name in the form and context in which it is named and the statements, a report or references to either included in this Prospectus with its consent as set out above.

Davenport’s former parent company, Arunta Resources Limited (which has changed its name to Spirit Telecom Limited) is no longer associated with Davenport and is referred to in this Prospectus for the purposes of historical identification only. Spirit Telecom Limited has not prepared any part of or authorised any statement in this Prospectus and has not authorised or consented to the issue of this Prospectus.

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14 ~~.~~ 16 Costs of the Offers

A detailed breakdown of the approximate costs of the Offers and acquisition (excluding GST) is set out below.

Item of expenditure	Minimum subscription ($5 million) $	Maximum subscription ($6 million) $
Broker commissions (up to:)	300,000	360,000
ASX listing & ASIC lodgement fees	80,000	83,000
Legal fees	280,000	280,000
Experts reports	126,000	126,000
Share Registry costs	6,000	6,000
Investor relations costs	10,000	10,000
Design & printing	20,000	20,000
Other	25,000	25,000
Total	847,000	910,000

14 ~~.~~ 17 Continuous disclosure obligations

The Company, upon listing, will be a “disclosing entity” (as defined in Section 111AC of the Corporations Act) and, as such, will be subject to regular reporting and disclosure obligations. Specifically, like all listed companies, the Company will be required to continuously disclose any information it has to the market which a reasonable person would expect to have a material effect on the price or the value of the Company’s shares.

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14 ~~.~~ 18 Governing Law

The Offers and the contracts formed on acceptance of an application are governed by the laws applicable in Victoria, Australia. Each person who applies for shares or options pursuant to this Prospectus (including by payment by BPay®) submits to the non-exclusive jurisdiction of the courts of Victoria, Australia, and the relevant appellate courts.

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14 ~~.~~ 19 Enquiries

Please call the proposed Managing Director, Christopher Bain, on +61 413 275 756 or the Company Secretary, Mr Rajan Narayanasamy, on +61 415 065 280, or your broker, if you require assistance to complete the applicable application form or require additional copies of this Prospectus.

All enquiries in relation to the Broker Firm Offer should be directed to your Broker.

If you are unclear in relation to any matter or are uncertain as to whether obtaining shares in the Company is a suitable investment for you, you should seek professional advice from your solicitor, stock broker, accountant or other independent and qualified professional advisor before deciding whether to invest.

No person is authorised to give information or to make any representation in connection with the Offers, which is not contained in the Prospectus. Any information or representation not so contained may not be relied on as having been authorised by Davenport in connection with this Prospectus.

14 ~~.~~ 20 Directors’ authorisation

This Prospectus is issued by the Company and its issue has been authorised by a resolution of the Directors.

Each of the Directors has consented to the lodgement of this Prospectus with ASIC in accordance with section 720 of the Corporations Act and as at the date of this Prospectus has not withdrawn that consent.

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GLOSSARY	GLOSSARY	GLOSSARY	GLOSSARY
$	Australian dollars
€	Euros
AASB	Australian Accounting Standards Board
ABN	Australian Business Number
ACN	Australian Company Number
AST	Australian Eastern Standard Time in Melbourne, Victoria
AFSL	Australian financial services licence
Arunta	Arunta Resources Limited [ACN 089 224 402] (the former pa of Davenport, which has changed its name to Spirit Telecom	rent e Limit	ntity ed)
ASIC	The Australian Securities and Investments Commission
ASX	ASX Limited [ACN 008 624 691] or its applicable subsidiary, or the Australian Securities Exchange, as operated by ASX Limited [ACN 624 691], as the case requires		008
ASX Book Build	The automated on-market bookbuild facility operated by ASX
Australian Accounting Standards	Australian Accounting Standards and other authoritative pronouncements issued by the Australian Accounting Stand Board and Urgent Issues Group Interpretation	ards
Board or Board of Directors	The directors of the Company from time to time
Broker Firm Offer	The offer of shares to Australian resident clients of brokers (ASX participating organisations) who have received a firm allocation as part of the Equity Offer under this Prospectus
Broker Firm Offer Closing Date	5pm (AST), 25 November 2016 or such other date and time determined by the Company

264

CHESS	Clearing House Electronic Sub-register System, operated in accordance with the Corporations Act	Clearing House Electronic Sub-register System, operated in accordance with the Corporations Act	Clearing House Electronic Sub-register System, operated in accordance with the Corporations Act
Closing Date	the date by which applications must be received by the Share Registry being 5pm (AST), 25 November 2016 or such other date and time determined by the Company
Collecting Party	The Company, the Share Registry and other brokers involved in th Equity Offer and their respective related bodies corporate, agents, contractors and third party service providers		e
Company	Davenport Resources Limited [ABN 64 153 414 852]
Consenting Party	A person or entity which has given its consent to being nam Prospectus, identified in Section 14.15	ed in	this
Constitution	The Constitution of the Company
Corporations Act	The Corporations Act 2001 (Cth)
Davenport	The Company (Davenport Resources Limited)
Davenport Priority Offer	The offer of up to 2,500,000 shares ($500,000) made to and only open to shareholders of Davenport as at the Record Da	which te	is
Director	A director of the Company from time to time
DvP	“Delivery versus payment”, a method of settlement where payme made simultaneously with or in anticipation of the delivery of the security)		nt is
East Exploration	East Exploration Pty Ltd [ACN 168 560 647]
Equity Offer	The offer of a minimum of 25,000,000 and up to 30,000,000 share under this Prospectus, comprising the Priority Offers, the Broker Fi Offer and the General Offer		s rm
ERCOSPLAN	German based geological consultants Ercosplan Ingenieurgesells Geotechnik und Bergbau mbH		chaft
General Meeting	The general meeting of the shareholders of Davenport held on 28 Sep- tember 2016

265

General Offer	An invitation to eligible investors to apply for shares as part of the Equity Offer	An invitation to eligible investors to apply for shares as part of the Equity Offer	An invitation to eligible investors to apply for shares as part of the Equity Offer
Group	In Section 8 means the Company and East Exploration and their subsidiaries
GST	Goods and Services Tax
Historical Statements of Financial Position	The historical statements of financial position derived from the rev financial statements of Davenport Resources Limited (the Compan the reviewed consolidated financial statements of East Exploration Ltd and its subsidiary as at 31 December 2015		iewed y) and Pty
IASB	International Accounting Standards Board
IFRIC	International Financial Reporting Interpretations Committee
Investigating Accountant’s Report	the report dated 21 October 2016 prepared by Advantage Advisors Corporate Pty Ltd in Section 9 of this replacement prospectus
JORC or JORC Code	The Australasian Code for Reporting of Exploration Results, Resources and Ore Reserves (2012 Edition)	Miner	al
Listing	Admission to the Official List
Listing Rules	The listing rules of ASX
Offers	The Equity Offer, the Vendor Offer and the Options Offer
Offer Price	$0.20 (20 cents) per share offered under the Equity Offer
Official List	The official list of ASX
Official Quotation	Official quotation by ASX in accordance with the ASX Listing Rules
Options Offer	The offer of options to acquire shares of the Company made und this Prospectus		er
Personal Information	Any personal information contained in an application
Placement	The placement by the Company of 6,000,000 shares at $0.08 (8 cents) per share completed in May 2016

266

Potash West Priority Offer	The offer of up to 5,000,000 shares ($1,000,000) made to and which is only open to shareholders of Potash West NL as at the Record Date	The offer of up to 5,000,000 shares ($1,000,000) made to and which is only open to shareholders of Potash West NL as at the Record Date	The offer of up to 5,000,000 shares ($1,000,000) made to and which is only open to shareholders of Potash West NL as at the Record Date
Priority Offers	The Davenport Priority Offer and the Potash West Priority Offer (as applicable)
Pro-Forma Consolidated Statement of Financial Position	The Company’s pro-forma consolidated statement of financial po following completion of the acquisition of East Exploration and th Equity Offer, including details of the pro-forma adjustments, set ou Section 8		sition e t in
Pro-Forma Financial Information	Has the meaning set out in Section 8.1
Projects	The South Harz Project and the Southern Cross Bore Project
Prospectus	This document (including the electronic form of the Prospec any supplementary or replacement prospectus in relation to document	tus) a this	nd
Recommendations	ASX Corporate Governance Principles and Recommendations (Th Edition)		ird
Record Date	8 September 2016
Share Registry	Security Transfer Australia Pty Ltd [ACN 008 894 488]
Share Sale Agreement	Means the Sale of Shares Agreement between the Company, the vendors, and East Exploration for the purchase of all the shares of East Exploration dated 8 June 2016, as amended
South Harz Project	East Exploration’s mineral exploration project targeting potash in c Germany including the Küllstedt and Gräfentonna exploration lice held through its wholly owned and controlled German subsidiary, Exploration GmbH and all ground within 50 kilometres of the Külls and Gräfentonna tenements		entral nces East tedt
South Cross Bore Project	The Company’s project located approximately 75km north of Alice Springs in Australia’s Northern Territory comprising and comprises exploration licences (ELs) 30090, 28045 and 29827
Vendor Offer	the offer of shares and milestone shares to the vendors made und Prospectus		er this

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GENERAL OFFER APPLICATION FORM

268

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CORPORATE DIRECTORY

Directors

Christopher Bain (Proposed Managing Director) Rory Luff (Non-Executive Director)

Angus Edgar (Non-Executive Director)

Proposed Director and

Non-Executive Chairman

Patrick McManus

Company Secretary

Rajan Narayanasamy

Registered Office

Level 14, 31 Queen Street Melbourne VIC 3000

Contact Details

Christopher Bain Telephone: +61 413 275 756 Facsimile: +61 3 8610 8666 Website: www.davenportresources.com.au

Australian Legal Adviser

Quinert Rodda & Associates Pty Ltd Solicitors

Level 6, 50 Queen Street MELBOURNE VIC 3000

Investigating Accountant

Advantage Advisors Corporate Pty Ltd

German Lawyer in relation to

Share Registry

Security Transfer Australia Pty Ltd PO Box 52 COLLINS STREET WEST VIC 8007 Telephone: (08) 9315 2333 Fax: (08) 9315 2233 Email: registrar@securitytransfer.com.au Website: www.securitytransfer.com.au

South Harz tenements

CMS Hasche Sigle Partnerschaft von Rechtsanwälten und Steuerberatern mbB

Tenement consultant for NT Tenements

AMETS (Australian Mining and Exploration Title Services)

Independent Geologist –

Auditor

Advantage Advisors Audit Partnership

Proposed ASX code

DAV

South Harz Project

CSA Global Pty Ltd

Independent Geologist – Southern Cross Bore Project

John Collier, Conarco Consulting

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