Merlin Diamonds : issue of shares – 01/09/2016

Name of entity

Merlin Diamonds Limited

ABN

86 009 153 119

1

+Class of +securities issued or to be issued

Ordinary shares

2

Number of +securities issued or to be issued (if known) or maximum number which may

be issued

56,317,090

3

Principal terms of the +securities (eg, if options, exercise price and expiry date; if partly paid

+securities, the amount outstanding and due dates for payment; if +convertible securities, the conversion price and dates for conversion)

Fully paid ordinary shares on conversion of convertible notes

4

Do the +securities rank equally in all respects from the date of allotment with an existing +class of quoted +securities?

If the additional securities do not rank equally, please state:

• the date from which they do

• the extent to which they participate for the next dividend, (in the case of a trust, distribution) or interest payment

• the extent to which they do not rank equally, other than in relation to the next dividend, distribution or interest payment

All shares allotted rank pari passu with existing ordinary shares on issue.

5

Issue price or consideration

$867,084

6

Purpose of the issue

(If issued as consideration for the acquisition of assets, clearly identify those assets)

Working capital, corporate promotional work and technical services

6a

Is the entity an +eligible entity that has obtained security holder approval under rule 7.1A?

If Yes, complete sections 6b - 6h in relation to the +securities the subject of this Appendix 3B, and comply with section 6i

Yes

6b

The date the security holder resolution under rule 7.1A was passed

27/11/2015

6c

Number of +securities issued without security holder approval under rule 7.1

12,317,090

6d

Number of +securities issued with security holder approval under rule 7.1A

44,000,000

6e

Number of +securities issued with security holder approval under rule 7.3, or another specific security holder approval (specify date of meeting)

N/A

6f

Number of securities issued under an exception in rule 7.2

N/A

6g

If securities issued under rule 7.1A, was issue price at least 75% of 15 day VWAP as calculated under rule 7.1A.3? Include the issue date and both values. Include the source of the VWAP calculation.

Yes. VWAP 1.907 cents @75% equals 1.43 cents. Issue date 1/9/2016. Information supplied by Novus Capital.

6h

If securities were issued under rule 7.1A for non-cash consideration, state date on which valuation of consideration was released to ASX Market Announcements

N/A

6i

Calculate the entity's remaining issue capacity under rule 7.1 and rule 7.1A - complete Annexure 1 and release to ASX Market Announcements

See attached

7

Dates of entering +securities into uncertificated holdings or despatch of certificates

1/09/2016

Number

+Class

8

Number and +class of all

+securities quoted on ASX (including the securities in section 2 if applicable)

507,574,809

Ordinary Shares

Number

+Class

23,200,000

10,000,000

10,000,000

Incentive Options Convertible Notes Options

11

Is security holder approval required?

N/A

12

Is the issue renounceable or non- renounceable?

N/A

13

Ratio in which the +securities will be offered

N/A

14

+Class of +securities to which the offer relates

N/A

15

+Record date to determine entitlements

N/A

16

Will holdings on different registers (or subregisters) be aggregated for calculating entitlements?

N/A

17

Policy for deciding entitlements in relation to fractions

N/A

18

Names of countries in which the entity has +security holders who will not be sent new issue documents

Note: Security holders must be told how their entitlements are to be dealt with.

Cross reference: rule 7.7.

N/A

19

Closing date for receipt of acceptances or renunciations

N/A