Nagambie Resources : Cleansing Notice - Series 10 Convertible Notes

For personal use only

25 July 2022

Company Announcements Office

Australia Securities Exchange

CLEANSING NOTICE

Issued under section 708(12C)(e) of the Corporations Act 2001 (Cth) (as inserted by ASIC Corporations (Sale Offers: Securities Issued On Conversion of Convertible Notes) Instrument 2016/82)

1. INTRODUCTION

This Cleansing Notice has been prepared by Nagambie Resources Limited (ACN 111 587 163) (Company) for the purposes of section 708A(12C)(e) of the Corporations Act 2001 (Cth) (Corporations Act) (as inserted by ASIC Corporations (Sale Offers: Securities Issued On Conversion of Convertible Notes) Instrument 2016/82). Issuing this Cleansing Notice enables the fully paid ordinary shares in the capital of the Company (Shares), issued on the conversion of the convertible notes issued by the Company on the terms described below, to be on-sold to retail investors without further disclosure.

This Cleansing Notice is important and should be read in its entirety.

2. BACKGROUND AND CONTENTS OF CLEANSING NOTICE

2.1 Issue of Convertible Notes

On 25 July 2022, the Company redeemed 18,000,000 Series 6 Convertible Notes with a face value of $1,800,000 into 22,500,000 new Series 10 Convertible Notes with a face value of $1,800,000, alongside issuing 15,712,500 convertible notes to investors who are sophisticated, experienced or professional investors for the purposes of section 708 of the Corporations Act, in respect of $1,257,000 in funding received (Series 10 Convertible Notes).

The terms of the Series 10 Convertible Notes are set out in a convertible note deed poll (Deed Poll) executed by the Company and binding on the subscribing noteholders (Noteholders), and include the key terms summarised below:

1

For personal use only

2.2 The rationale for the convertible note raising

The Company's directors (Directors) consider that the raising of capital by the issue of the Series 10 Convertible Notes is in the best interests of the Company as it will:

1. enable the redemption of all the Series 6 Convertible Notes that were otherwise due to mature on 17 November 2022;
2. continue the successful drilling program for Costerfield-Mine-style,antimony-gold mineralisation at the Nagambie Mine; and
3. add to the working capital of the Company.

This Cleansing Notice sets out the following:

1. in relation to the issue of the Series 10 Convertible Notes:
2. 1. the effect of the issue on the Company;
   2. a summary of the rights and liabilities attaching to the Series 10 Convertible Notes; and
   3. a summary of the rights and liabilities attaching to the Shares that will be issued on conversion of the Series 10 Convertible Notes; and
3. any information that:
4. 1. has been excluded from continuous disclosure notice in accordance with the ASX Listing Rules;
   2. is information that investors and their professional advisors would reasonably require for the purpose of making an informed assessment of:
   3. 1. the assets and liabilities, financial position and performance, profits and losses and prospects of the Company; and
      2. the rights and liabilities attaching to the Shares; and
   4. any other information relating to the Company's status as a disclosing entity and where documents may be obtained.

3. THE EFFECT OF THE ISSUE ON THE CAPITAL STRUCTURE OF THE COMPANY

3.1 Effect of the issue on the Company

The principal effects of the issue of the Series 10 Convertible Notes on the Company will be to:

1. increase the Company's cash reserves by $1,257,000 (before any expenses associated with the issue of the Series 10 Convertible Notes);
2. decrease current liabilities by $1,800,000 via the reinvestment of all the Convertible Notes Series 6;
3. increase the number of Shares on issue in the Company by up to 38,212,500 Shares on conversion of the Series 10 Convertible Notes; and
4. give rise to the Company having liability for the amount of the face value of the Series 10 Convertible Notes being $3,057,000.

3

For personal use only

3.2 Pro forma balance sheet of the Company taking into account issue of the Convertible Security

1. Set out below is a pro forma consolidated Statement of Financial Position as at 31 December 2021 for the Company based on the consolidated Statement of Financial Position as at 31 December 2021 for the Company.
2. The pro forma financial information is presented in an abbreviated form in so far as it does not include all of the disclosures required by Australian Accounting Standards applicable to annual financial statements. The pro forma financial information is not audited. The classification of the allocations between debt and equity for the Convertible Notes may change in the future.

Pro-forma statement of Financial Position (Consolidated)

For personal use only

3.3 Potential effect on Share Structure

1. As at the date of this Cleansing Notice the issued capital of the Company comprises of 513,146,176 issued ordinary shares.
2. The capital structure of the Company will be affected by the conversion of the Series 10 Convertible Notes, which will result in up to an additional 38,212,500 Shares being issued and the liability position of the Company decreasing accordingly. The actual effect on the share capital of the Company will depend on how many Series 10 Convertible Notes are converted.
3. The Series 10 Convertible Notes can be converted at any time prior to the maturity date at the request of the Noteholder.

4. RIGHTS AND LIABILITIES ATTACHING TO THE CONVERTIBLE NOTES

A summary of the key terms of the Series 10 Convertible Notes is set out in Section 2.1 above.

5. RIGHTS AND LIABILITIES ATTACHING TO SHARES ISSUED ON CONVERSION OF CONVERTIBLE NOTES

The Shares to be issued to Noteholders on the conversion of the Series 10 Convertible Notes will rank equally in all respects with all of the Company's existing Shares. The rights attaching to the Company's Shares are set out in the Company's constitution (Constitution) and, in certain circumstances, regulated by the Corporations Act, the ASX Listing Rules and the general law. A copy of the Constitution can be inspected, free of charge, at the Company's registered office during normal business hours, and is available via the Company's website.

Full details of the rights and liabilities attaching to Shares are set out in the Constitution.

The following is a general description of the more significant rights and liabilities attaching to the Shares and is not an exhaustive summary.

Voting Rights

Subject to any special rights or restrictions (at present there are none), at any meeting each member present in person or by proxy has one vote on a show of hands, and on a poll has one vote for each Share held.

Dividend Rights

Subject to any special rights (at present there are none), any dividends that may be declared by the Company are payable on all Shares in proportion to the amount paid up.

Variation of Rights

The rights attaching to the Shares may only be varied by the consent in writing of the holders of three-quarters of the Shares, or with the sanction of a special resolution passed at a general meeting.

Transfer of Shares

Subject to the Company's Constitution, the Corporations Act or any other applicable laws of Australia and the Listing Rules, the Shares are freely transferable. The Directors may refuse to register a transfer of Shares only in limited circumstances, such as where the Company has a lien on those Shares.

5