Speciality Metals International Limited Annual Report 2019

Page | 9 REVIEW OF OPERATIONS F INANCING & S HARE P LACEMENTS The following 4-step capital raise was undertaken by the Company to finance the acquisition of Mt Carbine Quarries Pty Ltd: Tranche 1 Placement of 83,231,463 ordinary shares at $0.018 raising A$1,498,166 was completed on 16 May 2019; Tranche 2 Placement of 160,000,000 ordinary shares at $0.018 raising $2,880,000 was completed on 26 June 2019 following shareholder approval at the General Meeting held in Melbourne on 17 June 2019; Non-Renounceable Entitlements Issue (1 for 5 Basis) Pursuant to the Non-Renounceable Entitlement Offer Booklet lodged with the ASX dated 2 July 2019, 159,621,750 ordinary shares were placed on 2 August 2019 raising $2,873,191.50. This offer was fully underwritten by Rymill Global Venture Ltd. A total of 46,888,236 shortfall shares were issued and allotted by the underwriter in accordance with the terms of the underwriting agreement; and Offtake Advance A further US$3,500,000 was paid by Cronimet Asia Pte Ltd (“Cronimet”) on 26 June 2019. The balance of US$500,000 will be used to fund the Joint Venture. The Board welcomes its new Top 20 shareholders and thank them for their support. O FFTAKE A DVANCE & J OINT V ENTURE S ECURITIES As announced on 14 May 2019 the securities for the Offtake Advance are as follows: • General Security Deed from Mt Carbine Retreatment over all its present and after acquired assets; • General Security Deed from Cronimet Australia over all its present and after acquired assets; and • Mortgage from Mt Carbine Quarries Pty Ltd over Mining Leases 4867 and 4919. This mortgage also includes an interest over 'Featherweight Property' which is all other property of Mt Carbine Quarries other than the mining leases. However, the mortgage over the Featherweight Property only attaches in the event of the voluntary administration of the company and is simply a device used to avoid the moratorium imposed on lenders who do not have interests over all of the property of a company in administration. The mortgage is limited recourse, in that it is limited to the value of the mining leases. Securities in relation to the Joint Venture are as follows: • Deed of Cross Security between the Joint Venture Parties and the Manager which secures the performance of their obligations to each other under the Joint Venture. General Security Deed from Mt Carbine Quarries in favour of the Joint Venture Parties over all present and after acquired property of Mt Carbine Quarries including its rights under the Mining Leases. U NINCORPORATED J OINT V ENTURE Leading up to the Acquisition the Company announced on 14 May 2019 that it had signed the following the following transaction document: • Unincorporated Joint Venture between Speciality Metals and Cronimet for the development of the Mt Carbine Tungsten Tailings Retreatment and Stockpile Projects. Production is expected to commence during the 4 th quarter of 2019; Cronimet is a subsidiary of the privately owned Cronimet Holding GmbH which was founded in 1980 as a raw materials service provider and trader in Karlsruhe, Germany. The Cronimet Group has grown organically since then to become a diversified commodity group with over 5,200 employees and activities in over 50 countries. Further information can be found on the Cronimet website. Full details on the acquisition of Mt Carbine Quarries Pty Ltd and the unincorporated Joint Venture can be found in the Company’s ASX Announcement dated 14 May 2019 “Binding Agreement Executed for the Purchase of Mt Carbine Quarries Pty Ltd and Joint Venture with Cronimet Asia”. G ENERAL M EETING At the General Meeting held in Melbourne on 17 June 2019 approval was given for the Company to replace its Constitution a copy of which can be found on the Company’s website (www.specialitymetalsintl.com.au) . M T C ARBINE Q UARRIES P TY L TD On 28 June 2019, the Company completed the 100% acquisition of Mt Carbine Quarries Pty Ltd, an entity that owned and operated the Mt Carbine Quarry and Mining Leases, ML 4867 and ML 4919 (“Acquisition”). Mt Carbine Quarrying Operations Pty Ltd, commenced operating the quarry as from 1 July 2019 with the handover transitioning smoothly from both an operational and customer perspective (refer ASX Announcement “Mt Carbine Acquisition Update” dated 10 July 2019.