Announcement PDF KINGSTON RESOURCES LIMITED ABN 44 009 148 529 (Kingston or Company) OFFER BOOKLET Accelerated Non-Renounceable Pro-Rata Entitlement Offer 1 New Share for every 6 Shares held at an issue price of $0.065 to raise up to approximately $5,394,596 Last date for acceptance and payment: 5.00pm (AEST) on Wednesday, 8 May 2024 This is an important document. Please consider it carefully and contact your professional adviser if you have any queries. This document is not a prospectus and does not contain all of the information that a prospective investor would find in a prospectus or which may be required to make a decision regarding an application for New Shares offered by this document. NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS 240768_3459-1620-4588_1 CONTENTS Table of contents CHAIRMAN’S LETTER ...................................................................................................................... 4 SUMMARY OF THE ENTITLEMENT OFFER ................................................................................... 5 KEY DATES ....................................................................................................................................... 5 CAPITAL STRUCTURE ..................................................................................................................... 6 SECTION 1 – OPTIONS AVAILABLE TO YOU ................................................................................. 7 SECTION 2 – HOW TO APPLY ......................................................................................................... 8 SECTION 3 – ASX ANNOUNCEMENT AND INVESTOR PRESENTATION .................................. 10 SECTION 4 – KEY RISKS ............................................................................................................... 11 SECTION 5 – SHAREHOLDER INFORMATION ............................................................................. 16 SECTION 6 – AUSTRALIAN TAXATION CONSEQUENCES ......................................................... 27 SECTION 7 – GLOSSARY OF TERMS ........................................................................................... 30 CORPORATE DIRECTORY ............................................................................................................ 32 240768_3459-1620-4588_1 IMPORTANT NOTICES This Offer Booklet and enclosed personalised Entitlement and Acceptance Form have been prepared by the Company. The information in this document is dated 8 April 2024 (other than the ASX Releases and Investor Presentation in Section 3). No party other than the Company has authorised or caused the issue of the information in this document, or takes any responsibility for, or makes, any statements, representations or undertakings about the information in this document. You should read the information in this document carefully and in its entirety before deciding whether to invest in New Shares. In particular, you should consider the risk factors outlined in Section 4. You should also consider the Company’s other periodic and continuous disclosure announcements, annual reports and full year statutory accounts, current and historical share price, and any other Company announcements. This information may be obtained from sources including the Company’s website at: www.kingstonresources.com.au or the ASX website at www.asx.com.au. Not investment advice This document is not a prospectus, nor other document regulated, under the Corporations Act and has not been lodged with ASIC. The information in this document does not constitute financial product advice and has been prepared without taking into account your particular investment objectives, financial circumstances or needs. The Company is not licensed to provide financial product advice in respect of the New Shares. The information in this document does not purport to contain all the information that you may require to evaluate a possible application for New Shares. Before deciding whether to apply for New Shares, you should consider whether they are a suitable investment for you, in light of your own investment objectives and financial circumstances and having regard to the merits or risks involved. If, after reading the information in this document, you have any questions about the Entitlement Offer, you should contact your stockbroker, accountant or other independent professional adviser. Disclaimer of representations No person is authorised to give any information, or to make any representation, in connection with the Entitlement Offer that is not contained in this document. Any information or representation that is not in this document may not be relied on as having been authorised by the Company in connection with the Entitlement Offer. Except as required by law, and only to the extent so required, none of the Company, or any other person, warrants or guarantees the future performance of the Company or any return on any investment made pursuant to the information in this document. Taxation There will be tax implications associated with participating in the Entitlement Offer and receiving New Shares. Section 6 provides for a general guide to the Australian income tax, goods and services tax and stamp duty implications of the guide does not take account of the individual circumstances of particular Eligible Shareholders and does not constitute tax advice. The Company recommends that you consult your professional tax adviser in connection with the Entitlement Offer. Information availability Eligible Shareholders in Australia and New Zealand can obtain a copy of the information in this document during the period of the Entitlement Offer on the Kingston website at www.kingstonresources.com.au or by calling +61 2 8021 7492. Persons who access the electronic version of this document should ensure that they download and read the entire document. The electronic version of this document on the Company’s website will not include an Entitlement and Acceptance Form. A replacement Entitlement and Acceptance Form can be requested by contacting the Share Registry or the Company Secretary. Past Performance Investors should note that the Company’s past performance, including past share price performance, cannot be relied upon as an indicator of (and provides no guidance as to) the Company’s future performance including the Company’s future financial position or share price performance. Future performance statements and forward-looking Neither the Company nor any other person associated with or representing the Company warrants or guarantees the future performance of the New Shares or any return on any investment made pursuant to the Entitlement Offer. Forward looking statements, opinions and estimates provided in the information in this document are based on assumptions and contingencies which are subject to change without notice, as are statements about market and industry trends, Page 1 240768_3459-1620-4588_1 which are based on interpretations of current market conditions. applicable securities laws of any state or other jurisdiction in the United States. Forward looking statements are provided as a general guide only and should not be relied upon as an indication or guarantee of future performance. They are subject to known and unknown risks, uncertainties and assumptions, many of which are outside the control of the Company and the Board, which could cause actual results, performance or achievements to differ materially from future results, performance or achievements expressed or implied by any forward-looking statements in this document. Foreign exchange control restrictions or restrictions on remitting funds form your country to Australia may apply. Your application for New Shares is subject to all requisite authorities and clearances being obtained for Kingston to lawfully receive your application monies. Governing law This document, the Entitlement Offer and the contracts formed on acceptance of the Entitlement and Acceptance Forms are governed by the laws applicable in New South Wales, Australia. Each applicant for New Shares submits to the nonexclusive jurisdiction of the courts of New South Wales, Australia. Foreign jurisdictions This offer Booklet and the accompanying Entitlement and Acceptance Form do not constitute an offer or invitation in any place in which, or to any person to whom, it would not be lawful to make such an offer or invitation. This Offer Booklet does not constitute an offer to Ineligible Shareholders. This Offer Booklet is not to be distributed in, and no offer of New Shares is to be made, in any jurisdiction in which, or to any person to whom, it wold not be lawful to make such an offer. No action has been taken to register or qualify the Entitlement Offer, the Entitlements or the New Shares, or otherwise permit the public offering of the New Shares, in any jurisdiction other than Australia and New Zealand. The distribution of this Offer Booklet (including an electronic copy) outside Australia and New Zealand, is restricted by law. If you come into possession of the information in this document, you should observe such restrictions and should seek your own advice on such restrictions. Any non-compliance with these restrictions may contravene applicable securities laws. United States The Entitlements and the New Shares have not been and will not be, registered under the US Securities Act 1933 (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, except in a transaction exempt form, or not subject to, the registration requirements of the Securities Act and New Zealand The New Shares are not being offered or sold to the public within New Zealand other than to existing Shareholders with registered addresses in New Zealand to whom the offer of New Shares is being made in reliance on the Financial Markets Conduct (Incidental Offers) Exemption Notice 2021. This document has been prepared in compliance with Australian law and has not been registered, filed with or approved by any New Zealand regulatory authority. This document is not an investment statement or prospectus under New Zealand law and is not required to, and may not, contain all the information that an investment statement or prospectus under New Zealand law is required to contain. It is a term of the Entitlement Offer that the offer of New Shares is made in compliance with the law of the country, state, territory, or province in which ASX is situated and any code, rules, or other requirements relating to the Entitlement Offer that may apply in that country, state, territory, or province. Germany This Offer Booklet has not been, and will not be, registered with or approved by any securities regulator in Germany or the broader European Union. Accordingly, this Offer Booklet may not be made available, nor may the New Shares be offered for sale, in Germany except in circumstances that do not require a prospectus under Article 1(4) of Regulation (EU) 2017/1129 of the European Parliament and the Council of the European Union (the “Prospectus Regulation”). In accordance with Article 1(4) of the Prospectus Regulation, an offer of New Shares in Germany is limited to persons who are “qualified investors” (as defined in Article 2(e) of the Prospectus Regulation); to fewer than 150 natural or legal persons (other than qualified investors) or in Hong Kong WARNING: This document has not been, and will not be, registered as a prospectus under the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) of Hong Kong, nor has it been authorised by the Securities and Page 2 240768_3459-1620-4588_1 Futures Commission in Hong Kong pursuant to the Securities and Futures Ordinance (Cap. 571) of the Laws of Hong Kong (the “SFO”). Accordingly, this document may not be distributed, and the New Shares may not be offered or sold, in Hong Kong other than to “professional investors” (as defined in the SFO and any rules made under that ordinance). No advertisement, invitation or document relating to the New Shares has been or will be issued, or has been or will be in the possession of any person for the purpose of issue, in Hong Kong or elsewhere that is directed at, or the contents of which are likely to be accessed or read by, the public of Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to New Shares that are or intended to be disposed of only to persons outside Hong Kong or only to professional investors. No person allotted New Shares may sell, or offer to sell, such securities in circumstances that amount to an offer to the public in Hong Kong within six months following the date of issue of such securities. The Contents of this document have not been reviewed by any Hong Kong regulatory authority. You are advised to exercise caution in relation to the offer. If you are in doubt about any contents of this document, you should obtain independent professional advice. Notice to nominees and custodians Nominees and custodians that hold Shares should note that the Entitlement Offer is available only to Eligible Shareholders. Accordingly, only nominees and custodians with registered addresses in Australia or New Zealand (or who contact or are contacted by the Company and can demonstrate to the satisfaction of the Company that their participation in the Entitlement Offer would not constitute a violation of securities laws in their jurisdiction) will be entitled to participate. With respect to the underlying beneficial holders of nominees and custodians, they may participate (wherever they reside) except to the extent that those underlying holders are: • in the United States or US Persons (as defined in the Securities Act of 1933) or are acting for the account or benefit of any US Person except in a transaction exempt from, or not subject to, the registration requirements of the Securities Act and applicable securities laws of any state or other jurisdiction in the United States; or • not eligible or permitted under any applicable securities laws to receive the Entitlement Offer. The Company takes no responsibility for advising on the securities laws of any jurisdiction, or the legality of providing the Entitlement Offer to any person for whom nominees and custodians may hold Shares in the Company beneficially, or those persons acquiring a beneficial interest in New Shares as a result of the Entitlement Offer. Nominees and custodians will need to assess whether the participation (whether direct or indirect) of a beneficiary is compatible with applicable foreign laws. Key Risk factors An investment in Kingston involves general risks associated with an investment in securities quoted on a share market or securities exchange. Refer to the ‘Key Risks’ section of the Investor Presentation included in Section 4 of this Offer Booklet for a summary of the general and specific risk factors before deciding to invest in Kingston. Quotation and trading of New Shares The Company has applied for the grant by ASX of official quotation of the New Shares. It is expected that normal trading of the New Shares will commence on Wednesday, 15 May 2024. The Company will have no responsibility and disclaims all liability (to the maximum extent permitted by law) to persons who trade New Shares they believe will be issued to them before they receive their holding statements, whether on the basis of confirmation of the allocation provided by the Group or the Share Registry or otherwise, or who otherwise trade or purport to trade New Shares in error or which they do not hold or are not entitled to. Investors should consider these factors carefully and if they are in any doubt, should obtain their own professional advice. Page 3 240768_3459-1620-4588_1 CHAIRMAN’S LETTER Shareholders On behalf of the Board of KSN I am pleased to invite you to participate in a 1:6 accelerated nonrenounceable Entitlement Offer, priced at 6.5 cents per share to raise up to $5.4 million. The Entitlement Offer will comprise: • an institutional entitlement offer; to raise approximately $730k; and • a retail entitlement offer, to raise up to approximately $4.6 million. The institutional component of the Entitlement Offer will be settled along with the Placement offer on 8 April 2024. The retail component of the Entitlement Offer is fully underwritten by Deutsche Balaton Aktiengesellschaft, an associate of Delphi Unternehmensberatung Akteingesellschaft, an existing shareholder and a sophisticated investor. We determined to pursue an Entitlement Offer with the price of 6.5 cents in order to reward and encourage our loyal shareholder base. This price is a 20.4% discount to recent trading in our shares as reflected in the 30 day VWAP of approximately 8.2 cents. In addition, Eligible Shareholders who take up their full Entitlement may also participate in the Shortfall by applying for additional New Shares in excess of their Entitlement. The price is also consistent with that being paid by incoming shareholders who have taken placements totalling $8.1m. These new shareholders add depth to our share register and our financial resources, as well as demonstrating support for the Company. Funds raised under the Entitlement Offer will be used for: • accelerating the transition to open pit mining at Pearse • underground resource development drilling • commissioning of the Mineral Hill processing plant for concentrate production • general working capital. For more information on the commencement of works at Mineral Hill, please see the Capital Raising Presentation announced on the ASX on 28 March 2024. Yours sincerely Mick Wilkes Page 4 240768_3459-1620-4588_1 SUMMARY OF THE ENTITLEMENT OFFER Ratio 1 New Share for every 6 Shares held by Eligible Shareholders on the Record Date Issue price $0.065 per New Share Size Issue of up to 82,993,790 New Shares1 Gross Proceeds $5,394,596 KEY DATES Event Date (2024) Announcement of Entitlement Offer Thursday, 28 March 2024 Record date for the Entitlement Offer (7.00pm AEDT) Wednesday, 3 April 2024 Offer Booklet and Entitlement and Acceptance Form dispatch Monday, 8 April 2024 Entitlement Offer opens Monday, 8 April 2024 Settlement and allotment of New Shares under the Institutional Entitlement Offer and Placement Monday, 8 April 2024 Entitlement Offer closes (5.00pm AEST) Wednesday, 8 May 2024 Results of Entitlement Offer announced Wednesday, 15 May 2024 Allotment of New Shares issued under the Entitlement Offer Wednesday, 15 May 2024 Normal ASX trading for New Shares commences Thursday, 16 May 2024 Dispatch of holding statements for New Shares Thursday, 16 May 2024 This timetable is indicative only and subject to change. The Company may vary these dates subject to the ASX listing Rules. The last day for extension of the closing date is Friday, 3 May 2024. An extension of the closing Date will delay the anticipated date for issue of the New Shares. The Company also reserves the right not to proceed with the whole or part of the entitlement Offer any time prior to the issue of the New Shares. In that event, the relevant application Monies (without interest) will be returned in full to the Applicants. 1 This assumes no existing Options are exercised prior to the Record Date. Page 5 240768_3459-1620-4588_1 CAPITAL STRUCTURE The capital structure of the Company following the issue of New Shares is expected to be as follows. Shares on issue as at the Record Date 497,961,834 New Shares to be issued under the Entitlement Offer 82,993,790 New Shares to be issued under the Placement 124,490,458 Maximum number of Shares on issue after the Entitlement Offer and Placement 705,446,082 Underwriting Deutsche Balaton Aktiengesellschaft (Underwriter) is appointed as the exclusive underwriter to the Retail Entitlement Offer. The Company has entered into an underwriting agreement with the Underwriter in respect of the Entitlement Offer (Underwriting Agreement). The Underwriting Agreement is on usual terms and the fees and termination events for the Underwriting Agreement are set out in section 5.11. Enquiries If you have any queries, please contact the Company or consult your stockbroker, accountant or other independent professional adviser. Website: www.kingstonresources.com.au Phone: +61 2 8021 7492 Page 6 240768_3459-1620-4588_1 SECTION 1 – OPTIONS AVAILABLE TO YOU If you are an Eligible Shareholder, you may take one of the following actions in response to the Entitlement Offer: • take up all of your Entitlement and apply for Shortfall Shares; • take up part of your Entitlement and allow the balance to lapse; or • do nothing, in which case your Entitlement will lapse and you will not be allocated any New Shares. If you are an Ineligible Shareholder (refer to Section 5.3), you are not entitled to participate in the Entitlement Offer. Option available to Eligible Shareholder Key Consideration Take up all of your Entitlement and apply for Shortfall Shares You may elect to take up all of your Entitlement (See Section 2 “How to Apply” for instructions on how to take up your Entitlement). The New Shares will rank equally in all respects with existing Shares (including rights to dividends and distributions). Eligible Shareholders (excluding directors and all other Related Parties of the Company) may, in addition to applying for their Entitlement, apply for Shortfall Shares (see section 5.4). In addition, you may apply for Shortfall Shares (see section 5.4) Take up part of your Entitlement If you only take up part of your Entitlement, the part not taken up will lapse, and you will not receive any payment or value for those Entitlements not taken up. If you do not take up your Entitlement in full, you will have your percentage holding in the Company reduced as a result of the dilution by the New Shares issued under the Entitlement Offer. Do nothing, in which case your Entitlement will lapse and you will receive no value for those lapsed Entitlements If you do not take up your Entitlement, you will not be allocated New Shares and your Entitlements will lapse. Your Entitlement to participate in the Entitlement Offer is non-renounceable, which means it is non-transferrable and cannot be sold, traded on ASX or any other exchange, nor can they be privately transferred. If you do not take up your Entitlement, you will have your percentage holding in the Company reduced as a result of dilution by the New Shares issued under the Entitlement Offer. Page 7 240768_3459-1620-4588_1 SECTION 2 – HOW TO APPLY 1. Entitlement Offer Eligible Shareholders are offered the opportunity to subscribe for 1 New Share for every 6 Shares held at 7.00pm (AEDT) on Wednesday, 3 April 2024 at the Issue Price of $0.065 per New Share. The Entitlement Offer is non-renounceable which means that the Entitlements do not trade on ASX, nor can they be sold, transferred or otherwise disposed of. The Entitlement Offer is being made pursuant section 708AA of the Corporations Act (as modified by ASIC Corporations (Non-Traditional Rights Issues) Instrument 2016/84) which allow entitlement offers to be offered without a prospectus or other regulated offer booklet, provided certain conditions are satisfied. As a result, it is important for Eligible Shareholders to read and understand the information on Kingston and the Entitlement Offer made publicly available, prior to taking up all or part of their Entitlement. In particular, please refer to this document, Kingston’s interim and annual reports and other announcements made available at www.kingstonresources.com.au and www.asx.com.au. 2. Your Entitlement Your Entitlement is set out on the accompanying Entitlement and Acceptance Form and has been calculated as 1 New Share for every 6 Shares you hold as at the Record Date, with fractions of 0.5 or more rounded up to the nearest whole New Share. If you have more than one holding of Shares, you will be sent more than one personalised Entitlement and Acceptance Form and you will have separate Entitlements for each separate holding. New Shares issued under the Entitlement Offer will rank pari passu with issued Shares. 3. Options available to you The number of New Shares to which Eligible Shareholders are entitled is shown on the Entitlement and Acceptance Form that will accompany this offer Booklet when it is dispatched to you. Eligible Shareholders may: • take up their Entitlement in full and apply for Shortfall Shares; • take up part of their Entitlement, in which case the balance of the Entitlement would lapse; or • allow their Entitlement to lapse. Payment by BPAY® Please follow the instructions on the personalised Entitlement and Acceptance Form. You can only make a payment via BPAY® if you are the holder of an account with an Australian financial institution that supports BPAY® transactions. Please note that should you choose to pay by BPAY®: Page 8 240768_3459-1620-4588_1 • you do not need to submit the personalised Entitlement and Acceptance Form but are taken to make the declarations on that Entitlement and Acceptance Form; and • if you do not pay for your full Entitlement and Shortfall Shares applied for, you are deemed to have taken up your Entitlement and Shortfall Shares in respect of such whole number of New Shares which is covered in full by your application monies. It is your responsibility to ensure that your BPAY payment is received by the share registry by no later than 5.00pm (AEST) on 8 May 2024. You should be aware that your financial institution may implement earlier cut-off times with regards to electronic payment, and you should therefore take this into consideration when making payment. Any application monies received for more than your final allocation of New Shares will be deemed to be an application for Shortfall Shares under Section 5.4. Any application monies left over after the allocation of Shortfall Shares will be refunded by the Company in accordance with the Corporations Act where applicable. No interest will be paid to Applicants on any application monies received or refunded. If payment is made by BPAY® the Entitlement and Acceptance Form is not required to be completed as the payment of the application money is deemed to be acceptance by the Shareholder. The Directors’ decision as to whether to treat the acceptance as valid and how to construe, amend or complete the Entitlement and Acceptance Form is final. Overseas Eligible Investors who cannot make payment by BPAY may pay by direct credit. Instructions for payment by direct credit are located in the Acceptance Form. Cash payments, Cheque, bank draft or money order will not be accepted. Receipts for payment will not be issued. 4. Delivery To participate, your payment must be received no later than the close of the Entitlement Offer, on 5.00pm (AEST) on Wednesday, 8 May 2024. 5. Entitlement and Acceptance Form is binding Returning a completed Entitlement and Acceptance form or paying any application monies for New Shares via BPAY will be taken to constitute a representation by the Eligible Shareholder that they: 6. • have received a copy of this Offer Booklet accompanying the Entitlement and Acceptance Form and have read them in their entirety; • have made the Eligible Shareholder declarations set out in section 5.19 of this Offer Booklet; and • acknowledge that once the Entitlement and Acceptance Form is returned, or a BPAY payment instruction is given in relation to any application monies, the Application may not be varied or withdrawn except as required by law. Consider the Entitlement Offer in light of your particular investment objectives and circumstances Please consult with your stockbroker, accountant or other independent professional adviser if you have any queries or are uncertain about any aspects of the Entitlement Offer. Page 9 240768_3459-1620-4588_1 SECTION 3 – ASX ANNOUNCEMENT AND INVESTOR PRESENTATION Please refer to the Company’s ASX announcement of 2 April 2024 and the Investor Presentation released on 28 March 2024, which can be found on the Company’s website at www.kingstonresources.com.au or the ASX website at www.asx.com.au. Page 10 240768_3459-1620-4588_1 SECTION 4 – KEY RISKS 4.1 Introduction The New Shares offered under this Offer Document should be considered speculative because of the nature of the Company’s business. There are a number of risk factors, both specific to the Company or the Offer, and of a general nature, which could adversely impact the Company’s performance and financial position and the value of its Shares. Some of these risks can be mitigated by the use of safeguards and appropriate systems and controls, however, many are outside the control of the Company and cannot be mitigated. Accordingly, an investment in the Company carries no guarantee with respect to the payment of dividends, return of capital or price at which securities will trade. This section describes certain specific areas that are believed to be the material risks associated with an investment in the Company. The following is a summary only and the risks in this section are not exhaustive of the risks faced by a potential investor in the Company but they are considered by the Directors to be the more material risks that potential investors should be aware of. These risks in respect of the Company together with the general risks applicable to all investments in listed securities may affect the value of the Shares in the future. You should consider carefully the risks described in this section and read this Offer Document in its entirety, and consult your accountant, broker, financial or other professional adviser before making an investment decision and applying for New Sh