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1KALIUM LAKES LIMITED I PROSPECTUS

LAKESKalium

Kalium Lakes Limited I ACN 613 656 643

This Prospectus has been issued to provide information on the offer of 15,000,000 Shares to be issued at a price of A$0.20 per Share to raise A$3,000,000 (before costs). Oversubscriptions of up to 15,000,000 Shares may be accepted (to raise an additional A$3,000,000).

It is proposed that the Offer will close at 5.00pm (WST) on 12 December 2016. The Directors reserve the right to close the Offer earlier or to extend this date without notice. Applications must be received before that time.

FOR AN OFFER OF 15,000,000 SHARES AT AN ISSUE PRICE OF A$0.20 EACH TO RAISE A$3,000,000

This is an important document and requires your immediate attention. It should be read in its entirety. Please consult your professional adviser(s) if you have any questions about this document. Investment in the Shares offered pursuant to this Prospectus should be regarded as highly speculative in nature, and investors should be aware that they may lose some or all of their investment. Refer to Section 8 for a summary of the key risks associated with an investment in the Shares.

LEAD MANAGER

PROSPECTUS

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CORPORATE DIRECTORYLAWYERSDLA Piper AustraliaLevel 31, Central Park152-158 St Georges TerracePerth WA 6000 Australia

AUDITOR*RSM Australia Partners8 St Georges TerracePerth WA 6000

INVESTIGATING ACCOUNTANTRSM Corporate Australia Pty Ltd8 St Georges TerracePerth WA 6000

INDEPENDENT EXPERTSnowden Mining Industry Consultants Pty LtdLevel 6, 130 Stirling StreetPerth WA 6000

LEAD MANAGERSBurnVoir Corporate Finance LimitedABN 84 097 814 134Level 12, 28 O’Connell StreetSydney NSW 2000

* These entities are included for information purposes only. They have not been involved in the preparation of this Prospectus.

DIRECTORSMr Malcolm Randall - Non-Executive ChairmanMr Brett Hazelden – Managing DirectorMr Rudolph van Niekerk – Non-Executive DirectorMr Brendan O’Hara – Non-Executive Director

COMPANY SECRETARYMr Gareth Widger

PRINCIPAL PLACE OF BUSINESSUnit 3, 70 Wittenoom StreetEast Perth WA 6004

Phone: +61 (0)8 9443 1100Email: [email protected]

SHARE REGISTRY*Computershare Investor Services Pty LtdLevel 11, 72 St Georges TerracePerth WA 6000

Phone (within Australia): 1300 850 505Phone (outside Australia): +61 3 9415 4000

PROPOSED STOCK EXCHANGE LISTINGAustralian Securities Exchange (ASX)Proposed ASX Code: KLL

WEBSITEwww.kaliumlakes.com.au

ONLINE APPLICATIONwww.kaliumlakesshareoffer.com.au

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CONTENTS

IMPORTANT NOTICE ..................................................................................................... 3

LETTER FROM THE CHAIRMAN ................................................................................... 6

KEY OFFER INFORMATION .......................................................................................... 8

INDICATIVE TIMETABLE ............................................................................................... 9

INVESTMENT OVERVIEW ............................................................................................ 10

1. Details of Offer ....................................................................................................... 20

2. Company Overview ............................................................................................... 29

3. Industry Overview ................................................................................................. 47

4. Board, Management and Corporate Governance ............................................... 52

5. Investigating Accountant's Report ...................................................................... 59

6. Independent Expert's Report ................................................................................ 60

7. Legal Report ......................................................................................................... 148

8. Risk Factors ......................................................................................................... 173

9. Material Contracts ............................................................................................... 183

10. Additional Information ........................................................................................ 189

11. Authorisation ....................................................................................................... 204

12. Glossary of Terms ............................................................................................... 205

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3 KALIUM LAKES LIMITED I PROSPECTUS

Kalium Lakes Limited PROSPECTUS 3

IMPORTANT NOTICE This Prospectus is dated, and was lodged with ASIC on, 4 November 2016. Neither ASIC nor ASX (or their respective officers) take any responsibility for the contents of this Prospectus or the merits of the investment to which this Prospectus relates. The expiry date of this Prospectus is 5.00pm (WST) on that date which is thirteen (13) months after the date this Prospectus was lodged with ASIC. No Shares will be issued on the basis of this Prospectus after that expiry date.

Application will be made to ASX within seven (7) days of the date of this Prospectus for Official Quotation of the Shares the subject of the Offer.

No person is authorised to give any information or to make any representation in connection with the Offer, other than as is contained in this Prospectus. Any information or representation not contained in this Prospectus should not be relied on as having been made or authorised by the Company or the Directors in connection with the Offer.

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

Exposure Period

This Prospectus will be circulated during the Exposure Period. The purpose of the Exposure Period is to enable this Prospectus to be examined by market participants prior to the raising of funds. You should be aware that this examination may result in the identification of deficiencies in this Prospectus. In such circumstances, any Application that has been received may need to be dealt with in accordance with section 724 of the Corporations Act. Applications under this Prospectus will not be processed by the Company until after the Exposure Period. No preference will be conferred upon Applications received during the Exposure Period.

Electronic Prospectus and Application Forms

This Prospectus will generally be made available in electronic form by being posted on the Company's website at www.kaliumlakes.com.au or at www.kaliumlakesshareoffer.com.au. Persons having received a copy of this Prospectus in its electronic form may obtain an additional paper copy of this Prospectus and the relevant Application Form (free of charge) from the Company's registered office during the Offer Period by contacting the Company. Contact details for the Company and details of the Company's registered office are detailed in the Corporate Directory. The Offer constituted by this Prospectus in electronic form is only available to persons receiving an electronic version of this Prospectus and relevant Application Form within Australia.

Applications will only be accepted by applying online at www.kaliumlakesshareoffer.com.au or on the relevant Application Form attached to, or accompanying, this Prospectus or in its paper copy form as downloaded in its entirety from www.kaliumlakes.com.au or www.kaliumlakesshareoffer.com.au. The Corporations Act prohibits any person from passing on to another person the Application Form unless it is accompanied by or attached to a complete and unaltered copy of this Prospectus.

Prospective investors wishing to subscribe for Shares under the Offer should complete the Application Form. If you do not provide the information required on the Application Form, the Company may not be able to accept or process your Application.

Website

No document or information included on the Company’s website is incorporated by reference into this Prospectus.

Foreign Investors

No action has been taken to register or qualify the Shares the subject of this Prospectus, or the Offer,

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or otherwise to permit the public offering of the Shares, in any jurisdiction outside Australia. The distribution of this Prospectus in jurisdictions outside of Australia may be restricted by law and persons who come into possession of this Prospectus outside of Australia should seek advice on and observe any such restrictions. Any failure to comply with such restrictions may constitute a violation of applicable securities laws. This Prospectus does not constitute an offer of Shares in any jurisdiction where, or to any person to whom, it would be unlawful to issue this Prospectus. The Offer is not being extended to any investor outside Australia, other than to certain sophisticated and institutional investors in certain jurisdictions detailed in Section 1.14.

Refer to Section 1.14 for details on selling restrictions that apply to the Offer and sale of Shares in jurisdictions outside Australia.

Speculative Investment

The Shares offered pursuant to this Prospectus should be considered highly speculative. There is no guarantee that the Shares offered pursuant to this Prospectus will make a return on the capital invested, that dividends will be paid on the Shares or that there will be an increase in the value of the Shares in the future.

Prospective investors should carefully consider whether the Shares offered pursuant to this Prospectus are an appropriate investment for them in light of their personal circumstances, including their financial and taxation position. Refer to Section 8 for details relating to the key risks applicable to an investment in the Shares.

Using this Prospectus

Persons wishing to subscribe for Shares offered by this Prospectus should read this Prospectus in its entirety in order to make an informed assessment of the assets and liabilities, financial position and performance, profits and losses, and prospects of the Company and the rights and liabilities attaching to the Shares offered pursuant to this Prospectus. If persons considering subscribing for Shares offered pursuant to this Prospectus have any questions, they should consult their stockbroker, solicitor, accountant or other professional adviser for advice.

Privacy Statement

To apply for Shares you will be required to provide certain personal information to the Company and the Share Registry. The Company and the Share Registry will collect, hold and use your personal information in order to assess your Application, service your needs as an investor, provide facilities and services that you request and carry out appropriate administration. The Corporations Act and taxation law requires some of this personal information to be collected. If you do not provide the information requested, your Application may not be able to be processed efficiently, or at all.

By submitting an Application Form, each Applicant agrees that the Company may use the information provided by an Applicant on the Application Form for the purposes detailed in this Privacy Statement and may disclose it for those purposes to the Share Registry, the Company's related bodies corporate, agents, contractors and third party service providers, including mailing houses and professional advisers, and to ASX and regulatory authorities.

If an Applicant becomes a Shareholder, the Corporations Act requires the Company to include information about the Shareholder (including name, address and details of the Shares held) in its public register. The information contained in the Company's public register must remain there even if that person ceases to be a Shareholder. Information contained in the Company's register is also used to facilitate distribution payments and corporate communications (including the Company's financial results, annual reports and other information that the Company may wish to communicate to its Shareholders) and compliance by the Company with its legal and regulatory requirements.

Competent Persons Statement

The information in this Prospectus that relates to the Beyondie Potash Project Mineral Resource estimation and Exploration Targets are based on information compiled by Mr Jeremy Peters of Snowden Mining Industry Consultants Pty Ltd (Snowden). The reporting consistent with the

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guidelines of the 2012 JORC Code. Mr Peters is a qualified Geologist and Mining Engineer and a Fellow and Chartered Professional Geologist and Chartered Professional Mining Engineer of the Australasian Institute of Mining and Metallurgy. Mr Peters is a Principal Consultant of Snowden and has sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person, as defined in the JORC Code. Mr Peters consents to the inclusion in this Prospectus of the matters based on his information and has reviewed all statements pertaining to this information in the form and context in which it appears. Mr Peters has not withdrawn his consent prior to the lodgement of this Prospectus with the ASIC.

Forward-Looking Statements

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

These statements are based on an assessment of 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, the Directors and management of the Company. Key risk factors associated with an investment in the Company are detailed in Section 8. These and other factors could cause actual results to differ materially from those expressed in any forward-looking statements.

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, except where required by law.

The Company cannot and does not give assurances that the results, performance or achievements expressed or implied in the forward-looking statements contained in this Prospectus will actually occur and investors are cautioned not to place undue reliance on these forward-looking statements.

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 endorses this 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. Unless otherwise stated, all data contained in charts, graphs and tables is based on information available at the date of this Prospectus.

Currency

All financial amounts contained in this Prospectus are expressed as Australian currency unless otherwise stated. All references to "$" or "A$" are references to Australian dollars.

Time

All references to time in this Prospectus are references to WST, being the time in Perth, Western Australia, unless otherwise stated.

Glossary

Defined terms and abbreviations used in this Prospectus are detailed in the glossary in Section 12.

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LETTER FROM THE CHAIRMAN Dear Investor

On behalf of the board of Directors of Kalium Lakes Limited (Kalium Lakes or the Company), I am delighted to present you with this Prospectus and invite you to become a shareholder in our Company.

Since its establishment in 2014, Kalium Lakes has made exceptional progress and is now seeking to become Australia’s first Sulphate of Potash (SOP) producer.

SOP is a premium potassium fertiliser, a source of one of the three major nutrients that plants require for healthy plant metabolism, and development of strong roots, stalks and stems, whilst also enhancing the appearance, taste, nutritional value and shelf life of harvested crops.

As the demand for key agribusiness products continues to increase, driven by this planet’s growing population and the need to ensure that every food crop and the soil in which it is cultivated is carefully managed to deliver the highest possible yield, Kalium Lakes considers that it is well positioned to capitalise on this growing demand.

Kalium Lakes is seeking to develop a sub-surface brine (a solution containing potassium metal and sulphate ions, or Brine) deposit to produce a saleable SOP product, by establishing an evaporation and processing operation at its Beyondie Potash Project, located 160km southeast of Newman, in Western Australia’s Pilbara region. The Beyondie Potash Project is ideally located, only 78km from the Goldfields gas pipeline and the Great Northern Highway, with sealed road access to the Port of Geraldton.

A recent forum discussion within the Australian agricultural sector highlighted that Australia has a genuine competitive advantage in relation to agricultural markets, particularly in light of recent free trade agreements with nations such as China, Japan, Korea and Malaysia. The Board considers that Kalium Lakes is well positioned to tap into many of these agricultural markets and respond to the unremitting need to increase global food supply.

Kalium Lakes also plans to utilise Australia’s ability to deliver robust agricultural supply chains and this attribute goes hand in hand with the Beyondie Potash Project's close proximity to transport infrastructure (providing access to rail, roads and port) and the capacity to effectively transport products across the nation and around the world.

Both the Board and the Kalium Lakes management team consist of highly qualified, experienced personnel that bring together a broad range of exploration, project development, management, commercial and technical skills. In addition, the Board and management team understand the obligations of a public organisation and are prepared to work diligently, within a focussed and disciplined business culture, to deliver a satisfactory return to Kalium Lakes’ shareholders.

The Board believes Kalium Lakes’ major asset, the Beyondie Potash Project, is ideally located in the right place, with the right people, to be able to deliver the right product, at the right time.

Under this Prospectus, the Company is seeking to raise $3,000,000 (before costs) by the issue of 15,000,000 Shares under the Offer at a price of $0.20 per Share with the ability to accept oversubscriptions for a further $3,000,000.

This Prospectus contains information about the Company, the Offer and the industry in which the Company operates. It also contains detailed information in Section 8 about the potential risks of investing in the Company. The Shares the subject of this Prospectus should be considered a speculative investment. I urge you to read this Prospectus carefully and thoroughly, as well consulting with your professional advisers, as required.

The Directors are pleased to present this Prospectus and invite you to take part in this exciting investment opportunity in the agribusiness sector. I look forward to warmly welcoming you as a shareholder of Kalium Lakes.

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Yours faithfully

Malcolm Randall Non-Executive Chairman

6

LETTER FROM THE CHAIRMANDear Investor

On behalf of the board of Directors of Kalium Lakes Limited (Kalium Lakes or the Company), I amdelighted to present you with this Prospectus and invite you to become a shareholder in our Company.

Since its establishment in 2014, Kalium Lakes has made exceptional progress and is now seeking to become Australia’s first Sulphate of Potash (SOP) producer.

SOP is a premium potassium fertiliser, a source of one of the three major nutrients that plants require for healthy plant metabolism, and development of strong roots, stalks and stems, whilst also enhancing the appearance, taste, nutritional value and shelf life of harvested crops.

As the demand for key agribusiness products continues to increase, driven by this planet’s growing population and the need to ensure that every food crop and the soil in which it is cultivated is carefullymanaged to deliver the highest possible yield, Kalium Lakes considers that it is well positioned to capitalise on this growing demand.

Kalium Lakes is seeking to develop a sub-surface brine (a solution containing potassium metal and sulphate ions, or Brine) deposit to produce a saleable SOP product, by establishing an evaporation and processing operation at its Beyondie Potash Project, located 160km southeast of Newman, in Western Australia’s Pilbara region. The Beyondie Potash Project is ideally located, only 78km from the Goldfields gas pipeline and the Great Northern Highway, with sealed road access to the Port ofGeraldton.

A recent forum discussion within the Australian agricultural sector highlighted that Australia has a genuine competitive advantage in relation to agricultural markets, particularly in light of recent free trade agreements with nations such as China, Japan, Korea and Malaysia. The Board considers thatKalium Lakes is well positioned to tap into many of these agricultural markets and respond to the unremitting need to increase global food supply.

Kalium Lakes also plans to utilise Australia’s ability to deliver robust agricultural supply chains and thisattribute goes hand in hand with the Beyondie Potash Project's close proximity to transportinfrastructure (providing access to rail, roads and port) and the capacity to effectively transportproducts across the nation and around the world.

Both the Board and the Kalium Lakes management team consist of highly qualified, experienced personnel that bring together a broad range of exploration, project development, management,commercial and technical skills. In addition, the Board and management team understand the obligations of a public organisation and are prepared to work diligently, within a focussed and disciplined business culture, to deliver a satisfactory return to Kalium Lakes’ shareholders.

The Board believes Kalium Lakes’ major asset, the Beyondie Potash Project, is ideally located in the right place, with the right people, to be able to deliver the right product, at the right time.

Under this Prospectus, the Company is seeking to raise $3,000,000 (before costs) by the issue of15,000,000 Shares under the Offer at a price of $0.20 per Share with the ability to acceptoversubscriptions for a further $3,000,000.

This Prospectus contains information about the Company, the Offer and the industry in which the Company operates. It also contains detailed information in Section 8 about the potential risks of investing in the Company. The Shares the subject of this Prospectus should be considered a speculative investment. I urge you to read this Prospectus carefully and thoroughly, as well consulting with your professional advisers, as required.

The Directors are pleased to present this Prospectus and invite you to take part in this exciting investment opportunity in the agribusiness sector. I look forward to warmly welcoming you as a shareholder of Kalium Lakes.

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KEY OFFER INFORMATION

Public Offer

Price per Share A$0.20

Shares offered for subscription:

• Assuming minimum subscription (A$3,000,000) • Assuming maximum subscription (A$6,000,000)

15,000,000

30,000,000

General

Total Shares on issue as at the date of this Prospectus 91,494,741

Advisor Shares on issue after completion of the Offer1 300,000

Total Shares on issue after completion of the Offer (assuming minimum subscription)

106,794,741

Performance Rights on issue as at the date of this Prospectus2 20,000,000

Management Options on issue after completion of the Offer3 7,500,000

Advisor Options4

• Assuming minimum subscription (A$3,000,000) • Assuming maximum subscription (A$6,000,000)

750,000 1,500,000

Note: 1. 300,000 Advisor Shares to be issued to the Corporate Advisor as detailed in Section 9.12. 2. Up to 20,000,000 Performance Rights granted to Messrs Brett Hazelden, Rudolph van Niekerk and Brent Smoothy (or

their related entities) as detailed in Section 10.2; 3. 7,500,000 Management Options to be issued to certain key management personnel (including the company secretary

and certain Non-Executive Directors of the Company) as detailed in Section 10.7; and 4. Up to 1,500,000 Advisor Options to be issued to the Lead Manager as detailed in Section 9.12.

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INDICATIVE TIMETABLE

Lodgement of Prospectus with ASIC 4 November 2016

Opening Date of the Offer 14 November 2016

Closing Date of the Offer 12 December 2016

Issue of Shares under the Offer 15 December 2016

Despatch of holding statements 16 December 2016

Expected date for quotation of the Shares on the Official List 19 December 2016

The above dates are indicative only and may change without notice. The Company reserves the right to amend the timetable at any time. In particular, the Company reserves the right to vary the Closing Date without prior notice, which may have a consequential effect on the other dates. Applicants are therefore encouraged to lodge their Application Form as soon as possible after the Opening Date if they wish to invest in the Company.

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INVESTMENT OVERVIEW This Section is not intended to provide full information for investors intending to apply for Shares offered pursuant to this Prospectus. Investors should read and consider this Prospectus in its entirety.

Topic Summary More Information

A. Company and Business Overview

Who is issuing this Prospectus?

Kalium Lakes Limited (Kalium Lakes or the Company) is a public company incorporated in Australia with Australian Company Number 613 656 643.

Kalium Lakes was recently incorporated on 14 July 2016 as part of a restructure of Kalium Lakes Potash Pty Ltd (KLP) which has been operating since October 2014. As a result of the restructure, KLP is now a wholly owned subsidiary of the Company.

Section 2

What does the Company do?

The Company is an exploration and development company focused on developing the Beyondie Potash Project in Western Australia in respect to which it is aiming to produce SOP for sale domestically and internationally.

The Beyondie Potash Project is comprised of 15 granted exploration licences and a miscellaneous licence which cover an area of approximately 2,400km2.

Kalium Lakes is seeking to develop a sub-surface Brine deposit to produce a SOP product, by undertaking an evaporation and processing operation at the Beyondie Potash Project, which is located 160km south east of Newman, in Western Australia’s Pilbara region.

The Beyondie Potash Project is already well progressed and has:1

• an Inferred Mineral Resource of 18.84Mt drainable Brine SOP;

• an Indicated Mineral Resource of 0.94Mt drainable Brine SOP; and

• has defined an Exploration Target2.

The Beyondie Potash Project is amongst Australia’s highest grade SOP deposits and is located close to key infrastructure.

In respect to the Beyondie Potash Project, the Company has completed detailed technical reports, completed initial pump testing of five (5) million litres of brine, undertaken environmental and heritage surveys, negotiated a Native Title agreement covering the initial project development area (with a second being negotiated) and has approvals in place from the WA Department of Mines and Petroleum (DMP), the WA Department of Environmental Regulation (DER) and the WA

Section 2

1 Details of the Mineral Resource should be read in conjunction with Table 7.1 and 7.2 and Annexure A of the Independent Expert's Report (refer to Section 6). 2 An Exploration Target is not a Mineral Resource. An explanation of the basis of the Exploration Target, including relevant information on which it is based, is detailed in and should be read in conjunction with Appendix A in the Independent Expert's Report (refer to Section 6).

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Department of Water (DOW).

How does the Company generate revenue?

Kalium Lakes is seeking to explore and develop a prospective potash project, being the Beyondie Potash Project. Kalium Lakes is seeking to generate revenue through the development, production and sale of SOP domestically and internationally. As at the date of this Prospectus, the Company has no operating revenue and is unlikely to generate any operating revenue unless and until the Beyondie Potash Project is successfully developed.

As there is currently no Australian production of SOP, Kalium Lakes is seeking to become Australia’s first SOP producer.

Section 2

What are the key strengths and competitive advantages of the Company?

The Board considers that the key strengths and competitive advantages of the Company are as follows:

• Global demand for fertiliser – global demand for fertiliser (including SOP products) is strong as the world population continues to grow, with arable land per capita continuing to decrease which places greater emphasis on the use of fertilisers that play a significant role in improving agricultural yields and productivity;

• Premium SOP fertiliser – demand for SOP is increasing and given it has minimal chloride content and a lower salinity index (which minimises salt build up in soils). When compared to MOP, SOP currently sells at a premium;

• SOP Resource – the Beyondie Potash Project has:3 (a) an Inferred Mineral Resource of 18.84Mt drainable

Brine SOP; and (b) an Indicated Mineral Resource of 0.94Mt drainable

Brine SOP; • High quality Brine at the Beyondie Potash Project –

the Brine chemistry (grade) at the Beyondie Potash Project is one of the highest recorded in Australia and has a superior sodium to potassium (Na:K) ratio of 9.4:1 compared to peer ratios of around 15 to 25:1 (i.e. lower impurities and less waste);

• Close proximity to road, gas pipeline and port infrastructure – the Beyondie Potash Project is located in close proximity to existing transport infrastructure providing access to local, national and international transport routes, as follows: (a) close proximity to sealed road (78km to Great

Northern Highway); (b) close proximity to gas (78km to Goldfields Gas

Pipeline); (c) close to a port (700km from Port Hedland or

862km from Geraldton); and (d) easy trucking distance to the important agricultural

hub of Geraldton; • Well defined strategy with a phased development

program – the Company intends to implement a staged

Section 2.5

3 Details of the Mineral Resource should be read in conjunction with Table 7.1 and 7.2 and Annexure A of the Independent Expert's Report (refer to Section 6).

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approach to development of the Beyondie Potash Project which will assist it to manage technical and capital requirements (which is an important consideration to enable the Company to determine the best ongoing financing arrangements for the project);

• Well advanced project that is being progressively de-risked – the Beyondie Potash Project is well progressed with the Company having already completed the following: (a) various technical reports and studies involving

Brine extraction, metallurgy, processing, infrastructure, environment, Native Title, heritage, permitting, approvals and potential capital and operating costs for a range of operational sizes;

(b) approvals received - key approvals have been obtained from the DMP, DER and DOW associated with pumping testing, site investigations and pond trials; and

(c) successful bore tests - bore tests have been undertaken with five million litres of brine pumped, from the basal sand unit, the primary productive unit of a playa lake and palaeochannel system which will be supplemented with Brine extracted from surface trenches;

• Initial development agreements are in place in relation to Native Title and land access – the Company has entered into land access agreements with both the Gingirana People and Birriliburu People and has a Native Title access agreement in place with the Gingirana People (with discussions progressing with the Birriliburu People); and

• Experienced project development team – experienced Board and management team with a broad range of exploration, project development, management, commercial and technical skills in the resources industry.

Why is the Company seeking to raise funds?

The Company is seeking to raise funds in order to continue exploration and development of the Beyondie Potash Project in accordance with the exploration and development work plan detailed in Section 2.3. In particular, the funds raised under the Offer will be used to fund the Company's main objectives to:

• Increase confidence of Mineral Resources – continue hydrogeological definition with the aim of increasing confidence in the current Mineral Resource for the Beyondie Potash Project;

• Pump Tests of Bores – conduct short term pump testing to verify the Company's resource estimates in accordance with the JORC Code and CIM Code;

• Install supporting infrastructure – construct access roads, a camp, workshops, utilities and buildings;

• Regulatory and other approvals – continue environmental, Native Title and regulatory approvals and agreement processes; and

• Meet corporate and working capital requirements.

If the Company accepts the maximum number of oversubscriptions, then the Company will also seek to undertake further drilling, install a relocatable camp, undertake

Sections 1.4 and 2.3

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further pump tests at additional drilling locations, further progress studies and engineering associated with brine extraction, processing, infrastructure requirements, capital and operating costings, environmental applications and Native Title agreement processes.

What are the Company's financial prospects and position?

Assuming the Company raises $3,000,000 (refer to Section 1.2), the Company's pro forma consolidated statement of financial position as at 30 June 2016 has net assets of $3,889,038.

This takes into account a range of subsequent events and transactions (as detailed in Section 5) and comprises total assets of $4,147,669 (including cash of $4,103,966) and total liabilities of $269,732.

Relevant financial information in respect to the Company, including a pro forma consolidated statement of financial position detailing the effect of the Offer, is detailed in Section 5.

Section 5

What are the Company's major assets?

The Company has, or will have upon completion of the Offer, the following major assets and interests which relate to the Beyondie Potash Project:

• 15 granted exploration licences; and • one granted miscellaneous licence for the construction of

an access road, gas pipeline, water supply, accommodation village, communications and other associated infrastructure.

The Company has also applied for additional exploration licences that could introduce two new prospective areas for potash exploration activities, namely the Carnegie and Dora/Blanche projects.

Section 2.2

How will the Company report to Shareholders on the performance of its activities?

The Company will send to Shareholders an annual report and will also release information to Shareholders in accordance with the continuous and periodic disclosure requirements of the Listing Rules.

Further information regarding the Company will be available on the ASX announcements platform at www.asx.com.au and will also be available on the Company's website at www.kaliumlakes.com.au.

Section 10.14

Will the Company pay dividends?

The extent, timing and payment of any dividends in the future will be determined by the Directors based on a number of factors, including future earnings and the financial performance and position of the Company.

While it is the aim of the Company that, in the longer term, its financial performance and position will enable the payment of dividends, at the date of this Prospectus, the Company does not intend, or expect, to declare or pay any dividends in the immediately foreseeable future, given that its focus will be on long term growth.

Section 2.7

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B. Key Risks

What are the key risks of investing in the Company?

Some of the key risks of investing in the Company are detailed below. The list of risks is not exhaustive and further details of these risks and other risks associated with an investment in the Company are detailed in Section 8.

• Resource estimates and classification: The resource estimates for the Beyondie Potash Project are estimates only and no assurances can be given that any particular level of recovery of potash will in fact be realised. Mineral Resource estimates are expressions of judgement based on knowledge, experience and industry practice. Estimates which are valid when originally calculated may change significantly when new information or techniques become available. In addition, by their very nature, resource estimates are necessarily imprecise and depend to some extent on interpretations, which may prove to be inaccurate.

• Inability to abstract brine volume: The Company has

utilised a number of specialist consultants in determining its ability to abstract brine consistently from the deposits but there is a risk that the Company will be unable to abstract the brine in volumes required to meet project timetables and production. This can occur due to low permeability of aquifer material, variability in the deposit and continuity of the various aquifer layers. As a result pumping rates may be lower than expected, or require additional bores and/or trenches. Each bore is likely to have a specific life expectancy and will eventually run dry as brine is extracted. This life expectancy maybe be variable and shorter than expected.

• Variability in brine: The brine deposit may be variable

due to the geological layering of the host rock, the location within the paleo channel, inflows of other waters carrying other impurities or fresh all of which will affect the brine chemistry across the deposit. Added to this there is also the potential for dilution after rainfall which may influence changes in the chemistry of brine recovery. The variability may cause different evaporation rates, alternative salt evaporites being formed in the evaporation ponds, require additional pumping volumes due to lower grades.

• Purification facility design, operation, recovery and

product specification: The Company is using internationally recognised consultants in the design of the process and selection of suitable equipment to achieve production capacity and specification to market requirements. However, project development remains inherently risky due to the number of variables that need to be managed. This could lead to equipment not performing as required or expected, resulting in difficulty maintaining product specification, not achieving name plate design capacity, not achieving expected potassium

Section 8

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recoveries, increased maintenance and overall operating costs.

• Evaporation Pond Design: The Company will need to confirm the construction methodology, evaporation rates, leakage rates and other potential performance parameters of the brine. There is a scale up risk that, in the construction and operation of the evaporation ponds, these performance parameters could vary to the current pond and pump testing findings and therefore may impact the basis of design and operation, and potentially the capital and operating cost, of the full size project. There is also a risk of structural failures or leakage.

C. Summary of the Offer

What is the Offer and what are its key terms?

The Company is offering 15,000,000 new Shares at an issue price of A$0.20 each to raise $3,000,000 (before associated costs).

Oversubscriptions for up to a further 15,000,000 Shares (at an issue price of A$0.20 per Share) to raise an additional $3,000,000 may be accepted.

Section 1.1

What is the effect of the Offer on the capital structure of the Company?

The Shares issued under the Offer will represent approximately 14.05% of the issued share capital of the Company following the Offer (on an undiluted basis) and 11.11% of the issued share capital of the Company following the Offer (on a fully diluted basis).

If the Company accepts oversubscriptions of 15,000,000 Shares, the Shares issued under the Offer will represent approximately 24.63% of the issued share capital of the Company following the Offer (on an undiluted basis) and 19.89% of the issued share capital of the Company following the Offer (on a fully diluted basis).

Section 1.7

Minimum subscription to the Offer?

The minimum total aggregate subscription under the Offer is 15,000,000 Shares to raise $3,000,000 (before associated costs).

Section 1.2

Is the Offer underwritten?

The Offer is not underwritten. Section 1.16

D. Directors and Related Party Interests and Arrangements

Who are the Directors?

The Directors are:

• Mr Malcolm Randall - Non-Executive Chairman; • Mr Brett Hazelden – Managing Director; • Mr Rudolph van Niekerk – Non-Executive Director; and • Mr Brendan O’Hara – Non-Executive Director.

Section 4

What qualifications do the Directors have?

Mr Malcolm Randall – B.Chem, FAICD – an experienced company director and chairman with extensive experience in corporate management and marketing in the resources sector.

Section 4

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Mr Brett Hazelden – B.Sc, MBA, GAICD – a metallurgist who brings more than 19 years of experience in project management, engineering design and operations in the resources industry. Mr Rudolph van Niekerk – B.Eng, GAICD – a mechanical engineer with more than 12 years’ experience in project management, operations, construction, commissioning, production ramp-up and project hand-over. Mr Brendan O’Hara – B.Juris, LLB, SF Fin, – a former legal practitioner of the Supreme Court of Western Australia, member of the Business Law Section of the Law Council of Australia and former State Executive Director of the ASX.

Further information about the experience and background of each Director is detailed in Section 4.

What are the remuneration and benefits being paid to Directors?

The Directors are entitled to the following annual remuneration and fees (exclusive of superannuation):

• Mr Malcolm Randall – $60,000; • Mr Brett Hazelden – $275,000; • Mr Rudolph van Niekerk – $45,000; and • Mr Brendan O'Hara – $45,000.

The following Directors have been or will be, granted Performance Rights and Management Options as follows:

• Mr Malcolm Randall - 4,000,000 Management Options each having an exercise price of $0.25 and expiring in December 2019;

• Mr Brett Hazelden - 4,200,000 Performance Rights expiring in September 2021;

• Mr Rudolph van Niekerk - 1,200,000 Performance Rights expiring in September 2021; and

• Mr Brendan O'Hara - 2,000,000 Management Options each having an exercise price of $0.25 and expiring in December 2019.

Section 10.8

What contracts and/or arrangements with related parties is the Company a party to?

The Company and/or KLP is party to the following related party agreements:

• Royalty Deed – pursuant to which KLP has granted a royalty of 1.9% of the gross revenue from the sale of potash and/or other minerals produced from the Beyondie Potash Project to an entity which is the trustee for a unit trust whose beneficiaries include two Directors, namely Messrs Brett Hazelden and Rudolph van Niekerk, and a past director of KLP and substantial shareholder of the Company, namely Mr Brent Smoothy;

• the following arrangements with Mr Smoothy (who is substantial shareholder of the Company) and/or his associates: (a) Services Agreement – with Rachlan Holdings Pty

Ltd (Rachlan) for the provision of helicopter support services to KLP;

(b) Access and Compensation Agreement – with Mr Smoothy pursuant to which KLP is granted

Section 9 and 10.10

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access to specified land that overlaps the Company's miscellaneous licences for the construction of an access road, gas pipeline and other approved activities;

(c) Declaration of Trust – with Rachlan pursuant to certain exploration licence applications are held by Rachlan for the benefit of KLP; and

(d) Consultancy Agreement - with Mr Smoothy in relation to exploration and operational services in respect of the Bevondie Potash Project;

• Survey Services Agreement – pursuant to which

Inceptioneer Pty Ltd (an entity controlled by Mr Hazelden) provides surveying and mapping for KLP in respect to the Beyondie Potash Project;

• Executive Services Agreement – with Mr Hazelden; • Deeds of Indemnity and Insurance – with each Director;

and • Deed of Indemnity - with entities associated with Messrs

Hazelden, van Niekerk and Smoothy in respect to the corporate restructure involving the Company and KLP.

What interests do Directors have in the securities of the Company?

The direct and indirect interests of the Directors in securities of the Company following completion of the Offer, are expected to be as follows:

• Mr Malcolm Randall holds 445,375 Shares and 4,000,000 Management Options each having an exercise price of $0.25 and expiring in December 2019, comprising 0.42% of the issued capital of the Company on an undiluted basis and 3.29% on a fully diluted basis*;

• Mr Brett Hazelden holds 13,609,544 Shares and 4,200,000 Performance Rights expiring in September 2021, comprising 12.74% of the issued capital of the Company on an undiluted basis and 13.19% on a fully diluted basis*;

• Mr Rudolph van Niekerk holds 3,315,600 Shares and 1,200,000 Performance Rights expiring in September 2021, comprising 3.10% of the issued capital of the Company on an undiluted basis and 3.34% on a fully diluted basis*; and

• Mr Brendan O'Hara holds 2,000,000 Management Options each having an exercise price of $0.25 and expiring in December 2019, comprising 1.48% on a fully diluted basis*.

* Assumes a Minimum Subscription and that all Performance Rights, Management Options and Advisor Options have vested (as applicable) and been converted and/or exercised.

Section 10.6

Who are the significant existing shareholders of the Company and what will their

As at the date of this Prospectus, the following persons (including their associates) have an interest in 5% or more of the Shares on issue:

• Mr Smoothy holds 53,558,305 Shares and 14,600,000

Section 10.13

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interests be after Completion?

Performance Rights expiring in September 2021, comprising 58.54% of the issued capital of the Company on an undiluted basis and 61.13% on a fully diluted basis*; and

• Mr Hazelden holds 13,609,544 Shares and 4,200,000 Performance Rights expiring in September 2021, comprising 14.87% of of the issued capital of the Company on an undiluted basis and 15.97% on a fully diluted basis*.

On Completion of the Offer, the following persons (including their associates) have an interest in 5% or more of the Shares on issue:

• Mr Brent Smoothy will hold 53,558,305 Shares and 14,600,000 Performance Rights expiring in September 2021, comprising 50.15% of the issued capital of the Company of the issued capital of the Company on an undiluted basis and 50.47% on a fully diluted basis*; and

• Mr Brett Hazelden will hold 13,609,544 Shares and 4,200,000 Performance Rights expiring in September 2021, comprising 12.74% of the issued capital of the Company on an undiluted basis and 13.19% on a fully diluted basis*.

* Assumes a Minimum Subscription and that all Performance Rights, Management Options and Advisor Options have vested (as applicable) and been converted and/or exercised.

What escrow arrangements will be in place as at completion of the Offer?

Certain of the Shares, Management Options and Performance Rights held by certain Existing Shareholders immediately prior to completion of the Offer will be subject to escrow arrangements in the period immediately following completion of the Offer.

Section 10.7

E. Applications and Other Information

Who is eligible to participate in the Offer?

The Offer is open to all investors with a registered address in Australia and certain qualifying investors in Hong Kong, Singapore and the United States.

Sections 1.9 and 1.14

How do I apply for Shares?

Applications under the Offer can be made by completing the Application Form, in accordance with the instructions accompanying the Application Form.

Section 1.9

What is the allocation policy?

The Directors, in consultation with the Lead Manager, will allocate Shares at their sole discretion with a view to ensuring an appropriate Shareholder base for the Company going forward.

Section 1.12

What is the cost of the Offer?

The expenses of the Offer are estimated to be approximately A$456,200. If the Company accepts oversubscriptions of 15,000,000 Shares, the expenses of the Offer are estimated to be approximately A$639,300.

Section 10.12 F

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19 KALIUM LAKES LIMITED I PROSPECTUSKalium Lakes Limited PROSPECTUS 19


F. Further Information

How can I obtain further information?

Further information can be obtained by reading this Prospectus and consulting your professional advisors. You can also contact the Company Secretary on +61 (0)8 9443 1100.

Corporate Directory

Company contact You can contact the Company Secretary on +61 (0)8 9443 1100.

Corporate Directory

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1. Details of Offer

1.1 The Offer

This Prospectus invites investors to apply for 15,000,000 Shares at an issue price of A$0.20 per Share to raise A$3,000,000 (before associated costs).

Oversubscriptions of up to 15,000,000 Shares may be accepted by the Company (refer to Section 1.3 for further details).

All Shares offered under this Prospectus will rank equally with the existing Shares on issue. Refer to Section 10.1 for details of the rights attaching to Shares.

Refer to Section 1.9 for details on how to apply for Shares under the Offer.

1.2 Minimum Subscription

The minimum total subscription under the Offer is 15,000,000 Shares to raise A$3,000,000 (before associated costs) (Minimum Subscription).

None of the Shares offered under this Prospectus will be issued if Applications are not received for the Minimum Subscription. Should Applications for the Minimum Subscription not be received within three months from the date of this Prospectus, the Company will either repay the Application Monies (without interest) to Applicants or issue a supplementary prospectus or replacement prospectus and allow Applicants one month to withdraw their Applications and have their Application Monies refunded to them (without interest).

1.3 Oversubscriptions

Oversubscriptions of up to 15,000,000 Shares (at an issue price of A$0.20 per Share) may be accepted by the Company.

If the Company accepts the maximum number of oversubscriptions, then the number of Shares issued under this Prospectus will be 30,000,000 and the amount that will be raised under this Prospectus will be A$6,000,000 (before associated costs).

1.4 Objectives of the Company

The Company's main objective upon completion of the Offer is to continue to develop the Beyondie Potash Project which will focus on the following:

(a) Increase confidence of Mineral Resource - continue hydrogeological definition to increase confidence in the Mineral Resource for the Beyondie Potash Project with an aim of enabling conversion of the Mineral Resource to an Ore Reserve;

(b) Pump tests of Bores - conduct short term pump testing to verify the Company's resource estimates in accordance with the JORC Code and CIM Code;

(c) Install supporting infrastructure - including access roads, camp, workshops, utilities and buildings; and

(d) Regulatory and other approvals - continue environmental, Native Title and regulatory approval and agreement processes.

The above objectives will be pursued if the Company achieves the Minimum Subscription. If the Company accepts the maximum number of oversubscriptions, then the Company will also seek to undertake further drilling, install a relocatable camp, undertake further pump tests at additional drilling locations, further progress studies and engineering associated with

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brine extraction, processing, infrastructure requirements, capital and operating costings, environmental applications and Native Title agreement processes.

Refer to Section 2.3 for further details of the above activities.

The funds raised from the Offer will also permit the Company to meet its corporate and working capital requirements.

1.5 Purpose of Prospectus The purpose of this Prospectus is to:

(a) raise A$3,000,000 (before associated costs) pursuant to the Offer, with the potential to raise an additional A$3,000,000;

(b) assist the Company to meet the requirements of ASX and satisfy Chapters 1 and 2 of the Listing Rules, as part of the Company's application for admission to the Official List; and

(c) position the Company to seek to achieve the objectives detailed in Section 1.4.

1.6 Funding Allocation As at the date of this Prospectus the Company has cash reserves of approximately A$600,000.

The Board believes that its current cash reserves and the funds raised from the Offer will provide the Company with sufficient working capital to achieve its stated objectives as detailed in this Prospectus.

The following table shows the expected use of funds in the two year period following admission of the Company to the Official List:

Item

A$3M Raised

% A$6M Raised1

%

Cash reserves as at the date of this Prospectus2 600,000 20% 600,000 10%

Funds raised from the Offer 3,000,000 80% 6,000,000 90%

Total Funds Available 3,600,000 100% 6,600,000 100%

Mineral Resource Drilling3 910,415 25.29% 1,600,000 24.24%

Pump Testing3 340,000 9.44% 665,000 10.07%

Infrastructure Costs3 239,500 6.65% 639,500 9.69%

Studies & Engineering Consultants 50,000 1.39% 1,050,000 15.91%

Rents & Rates, Environmental, Native Title & Approvals3 351,096 9.75% 581,096 8.80%

Corporate & Admin Costs 1,242,527 34.52% 1,242,527 18.83%

Costs of the Offer 456,200 12.67% 639,300 9.69%

Working Capital 10,262 0.29% 182,577 2.77%

Total funds allocated 3,600,000 100% 6,600,000 100% Note: 1. Assuming the Offer is fully subscribed to raise $3,000,000 and the Offer is also fully oversubscribed to raise an

additional $3,000,000. 2. During the period between 30 June 2016 (being the balance date on which the Financial Information, detailed in

Section 6, is based) to the date of this Prospectus, the Company incurred in the ordinary course of its business, an expenditure of approximately $338,000.

3. Refer to Section 2.3.

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Shareholders should note that the above estimated expenditures will be subject to modification on an ongoing basis depending on the progress of the Company's activities. Due to market conditions and/or any number of other factors (including the risk factors detailed in Section 8), actual expenditure levels may differ significantly to the above estimates.

1.7 Capital Structure

On the basis that the Company completes the Offer on the terms in this Prospectus, the Company's capital structure will be as follows:

Shares Options Performance

Rights

On issue as at the date of this Prospectus 91,494,741 Nil 20,000,0001

Management Options to be issued N/A 7,500,0002 N/A

Advisor Shares to be issued 300,0003 N/A N/A Advisor Options to be issued (assuming Minimum Subscription)

N/A 750,0004 N/A

Shares issued under the Offer (assuming Minimum Subscription)

15,000,000 N/A N/A

Total 106,794,740 8,250,000 20,000,000 Additional Shares issued under the Offer (assuming A$3,000,000 of oversubscriptions)

15,000,000 N/A N/A

Additional Advisor Options issued under the Offer (assuming A$3,000,000 of oversubscriptions)

N/A 750,0004 N/A

Total 121,794,741 9,000,000 20,000,000 Note: 1. Refer to Section 10.2 for details of the terms and conditions of the Performance Rights. 2. Refer to Section 10.2(b) for details of the terms and conditions of the Management Options. 3. Refer to Section 10.1 for details of the terms and conditions of the Advisor Shares. 4. Refer to Section 10.4 for details of the terms and conditions of the Advisor Options.

1.8 Forecasts

Due to the nature of the Company's business activities and the market in which it operates, there are significant uncertainties associated with forecasting future revenues (if any) from the Company's proposed activities.

The Directors have considered the matters detailed in ASIC Regulatory Guide 170 and believe that they do not have a reasonable basis to forecast future earnings on the basis that the operations of the Company are inherently uncertain. Accordingly, 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.

The Directors consequently believe that, given these inherent uncertainties, it is not possible to include reliable forecasts in this Prospectus.

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Refer to Section 2 for further information in respect to the Company's existing and proposed activities.

1.9 How to Apply

If you wish to apply for Shares under the Offer, you may:

(a) apply online at www.kaliumlakesshareoffer.com.au and pay the Application Monies electronically; or

(b) complete a paper-based Application using an Application Form attached to, or accompanying this Prospectus or a printed copy of the Application Form attached to the electronic version of the Prospectus.

You may apply online by following the instructions at www.kaliumlakesshareoffer.com.au and completing a BPAY® payment. Follow the instructions below to complete your payment. If you do not make a BPAY or direct credit payment, your Application will be incomplete and will not be accepted. Your online Application Form and BPAY/direct credit payment must be completed and received by no later than 5.00pm (WST) on the Closing Date.

Australian applicants paying for online Applications

If you are applying online using an online Application Form and making your application payment by BPAY, you will be given a BPAY biller code and unique customer reference number for your Application once you have completed your online Application Form.

BPAY payments must be made from an Australian dollar account of an Australian financial institution. Using these BPAY details, you must:

(a) access your participating BPAY financial institution either through telephone or internet banking;

(b) select to use BPAY and follow the prompts; enter the supplied biller code and unique customer reference number;

(c) enter the total amount to be paid which corresponds to the value of Kalium Lakes Shares you wish to apply for under each Application;

(d) select which account you would like your payment to come from;

(e) schedule your payment to occur on the same day that you complete your online Application Form. Applications without payment will not be accepted; and

(f) record and retain the BPAY receipt number and date paid.

Please note that your bank, credit union or building society may impose a limit on the amount which you can transact on BPAY and payment cut-off times may vary between different financial institutions.

You must check with your financial institution about their BPAY closing time, to ensure that your payment will be received together with your Application Form prior to the Closing Date and time.

Australian applicants completing an Application Form

Accompanying and forming part of this Prospectus is an Application Form for use if you wish to apply for Shares under the Offer. To participate in the Offer, the Application Form must be completed and received, together with the Application Monies, in accordance with the instructions on its reverse side. Completed Application Forms should be received by the

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Company, together with the Application Monies in full, prior to 5.00pm (WST) on the Closing Date at the relevant address as follows:

In the case of Applicants applying from within Australia:

By Post To: Or Delivered To:

Kalium Lakes Limited C/- Computershare Investor Services Pty Ltd GPO Box 52 MELBOURNE VIC 3001

Kalium Lakes Limited C/- Computershare Investor Services Pty Ltd GPO Box 52 MELBOURNE VIC 3001

Applicants resident in Australia should make their cheques payable in A$, based on an issue price of A$0.20 per Share. All cheques should be made payable to "Kalium Lakes Limited" and be crossed "Not Negotiable".

Applications must be for a minimum of 10,000 Shares (i.e. A$2,000) and, thereafter, in multiples of 2,500 Shares (i.e. A$500). Applications for less than the minimum accepted Application of 10,000 Shares will not be accepted.

An original completed and lodged Application Form (or a paper copy of the Application Form from the Electronic Prospectus), together with a cheque for the Application Monies, constitutes a binding and irrevocable offer to subscribe for the number of Shares specified in the Application Form. The Application Form does not have to be signed to be a valid Application. An Application will be deemed to have been accepted by the Company upon allotment of the Shares.

The Offer may be closed at an earlier date and time at the discretion of the Directors, without prior notice. Applicants are therefore encouraged to submit their Application Forms as early as possible. However, the Company reserves the right to extend the Offer or accept late Applications.

1.10 CHESS

The Company will apply to participate in the Clearing House Electronic Sub register System (CHESS), which is the ASX electronic transfer and settlement system in Australia, in accordance with the Listing Rules and ASX Operating Rules. Settlement of trading of quoted securities on the ASX market takes place on CHESS. CHESS allows for and requires the settlement of transactions in securities quoted on ASX to be effected electronically. On admission to CHESS, the Company will operate an electronic issuer-sponsored sub-register and an electronic CHESS sub-register. The two sub-registers together will make up the Company's register of Shareholders.

The Company will not issue certificates of title to Shareholders. Instead, as soon as is practicable after allotment, successful Applicants will receive a holding statement which sets out the number of Shares issued to them, in much the same way as the holder of shares in an Australian incorporated ASX-listed entity would receive a holding statement in respect of shares. A holding statement will also provide details of a Shareholder's Holder Identification Number (HIN), in the case of a holding on the CHESS sub-register, or Security holder Reference Number (SRN), in the case of a holding on the issuer sponsored sub-register.

Following distribution of these initial holding statements, an updated holding statement will only be provided at the end of any month during which changes occur to the number of Shares held by Shareholders. Shareholders may also request statements at any other time (although the Company may charge an administration fee).

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1.11 ASX Listing and Official Quotation

Within 7 days after the date of this Prospectus, the Company will apply to ASX for admission to the Official List and for the Shares, including those offered by this Prospectus, to be granted Official Quotation (apart from any Shares that may be designated by ASX as Restricted Securities).

If ASX does not grant permission for Official Quotation within 3 months after the date of this Prospectus (or within such longer period as may be permitted by ASIC) none of the Shares offered by this Prospectus will be allotted and issued. If no allotment and issue is made, all Application Monies will be refunded to Applicants (without interest) as soon as practicable.

ASX takes no responsibility for the contents of this Prospectus. The fact that ASX may grant Official Quotation is not to be taken in any way as an indication of the merits of the Company or the Shares offered pursuant to this Prospectus.

1.12 Allotment

Application Monies will be held in trust for Applicants until the allotment of the Shares. Any interest that accrues will be retained by the Company. No allotment of Shares under this Prospectus will occur unless:

(a) the Minimum Subscription is achieved (refer to Section 1.2); and

(b) ASX grants conditional approval for the Company to be admitted to the Official List (refer to Section 1.11).

The Company reserves the right to reject any Application or to issue a lesser number of Shares than those applied for. Where the number of Shares issued is less than the number applied for, surplus Application Monies will be refunded (without interest) as soon as reasonably practicable after the Closing Date.

Subject to the matters in Section 1.11, Shares under the Offer are expected to be allotted on the Allotment Date. It is the responsibility of Applicants to determine their allocation prior to trading in the Shares issued under the Offer. Applicants who sell Shares before they receive their holding statements do so at their own risk.

1.13 Risk Factors of an Investment in the Company

Prospective investors should be aware that an investment in the Company should be considered highly speculative and involves a number of risks inherent in the business activities of the Company. Section 8 details the key risk factors which prospective investors should be aware of. It is recommended that prospective investors consider these risks carefully before deciding whether to invest in the Company.

This Prospectus should be read in its entirety as it provides information for prospective investors to decide whether to invest in the Company. If you have any questions about the desirability of, or procedure for, investing in the Company please contact your stockbroker, accountant or other independent adviser.

1.14 Overseas Applicants

No action has been taken to register or qualify the Shares, or the Offer, or otherwise to permit the public offering of the Shares, in any jurisdiction outside of Australia.

The distribution of this Prospectus within jurisdictions outside of Australia may be restricted by law. This Prospectus does not constitute an offer in any place in which, or to whom it would not be lawful to make such an offer. Persons into whose possession this Prospectus

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comes should inform themselves about and observe, any such restrictions. Any failure to comply with these restrictions may constitute a violation of those laws.

This Prospectus does not constitute an offer of Shares in any jurisdiction where, or to any person to whom, it would be unlawful to issue this Prospectus. In particular, this Prospectus may not be distributed to any person, and the Shares may not be offered or sold in any country outside Australia except to the extent permitted below.

It is the responsibility of any overseas Applicant to ensure compliance with all laws of any country relevant to his or her Application. The return of a duly completed Application Form will be taken by the Company to constitute a representation and warranty that there has been no breach of such law and that all necessary approvals and consents have been obtained.

United States

The Shares have not been and will not be registered under the United States Securities Act of 1933 (the Securities Act) or under the securities laws of any state or other jurisdiction of the United States and may not be offered, sold or delivered, directly or indirectly, within the United States except pursuant to an applicable exemption from, or a transaction not subject to, the registration requirements of the Securities Act and in compliance with any applicable securities laws of any state or other jurisdiction of the United States. The Shares: (i) are being offered, sold or delivered in offshore transactions as defined in and in reliance on Regulation S under the Securities Act (Regulation S) and (ii) may be offered, sold or delivered in the United States in reliance on the exemption from the registration requirements of the Securities Act under Regulation D thereunder (Regulation D) to a limited number of “accredited investors” (as defined in Regulation D) who provide to the Company and the Lead Manager a signed investor representation letter in a form prescribed by and which letter is accepted by the Company and the Lead Manager.

Any purchaser of Shares in the United States understands and agrees that the Shares are “restricted securities” within the meaning of Rule 144(a)(3) under the Securities Act and such purchaser agrees, on its own behalf and on behalf of any accounts for which it may be acting, that for so long as the Shares are “restricted securities”, such purchaser will not offer, resell, pledge or otherwise transfer any Shares it may acquire, or any beneficial interests therein, except in an offshore transaction complying with Rule 904 of Regulation S (including sale conducted on the ASX) or pursuant to another exemption from registration under the Securities Act or pursuant to an effective registration statement under the Securities Act.

Hong Kong

This Prospectus 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 Futures Commission in Hong Kong pursuant to the Securities and Futures Ordinance (Cap. 571) of the Laws of Hong Kong (the SFO). No action has been taken in Hong Kong to authorise or register this Prospectus or to permit the distribution of this Prospectus or any documents issued in connection with it. The Shares have not been and will not be offered or sold in Hong Kong other than to "professional investors" (as defined in the SFO and any rules made under the SFO) or in other circumstances which do not result in this document being a "prospectus" as defined in the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) or which do not constitute an offer to the public within the meaning of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) or the Companies Ordinance (Cap. 622) of Hong Kong.

No advertisement, invitation or document relating to the 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 Shares that are or are intended to be disposed of only

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to persons outside Hong Kong or only to "professional investors" (as defined in the SFO and any rules made under the SFO). No person allotted 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.

Singapore

This Prospectus or any other offering material relating to the Shares has not been and will not be registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this Prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of Shares may not be issued, circulated or distributed, nor may the Shares be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than to an "institutional investor", as defined in Section 4A(1) of the Securities and Futures Act, Chapter 289 of Singapore (SFA), in accordance with and pursuant to Section 274 of the SFA, or otherwise pursuant to, and in accordance with the conditions of, any other applicable provisions of the SFA.

Any offer is not made to you with a view to the Shares being subsequently offered for sale to any other party. Investors should note there are certain on-sale restrictions (set out in, among others, Section 257 and Section 276 of the SFA) applicable to all investors who acquire the Shares pursuant to the exemptions in Section 274 of the SFA. As such, investors are advised to acquaint themselves with the SFA provisions relating to on-sale restrictions in Singapore or to consult their own professional advisers as to such on-sale restrictions, and to comply accordingly.

The contents of this Prospectus have not been reviewed by any regulatory authority in Singapore. This Prospectus may not contain all the information that a Singapore registered prospectus is required to contain. In the event of any doubt about any of the contents of this Prospectus or as to your legal rights and obligations in connection with the Offer, please obtain appropriate professional advice.

1.15 Restricted Securities

Chapter 9 of the Listing Rules prohibits holders of Restricted Securities from or agreeing to disposing of those securities or an interest in those securities for the relevant restriction periods.

In summary, it is expected that 56,890,229 Shares held by Directors and related parties will be classified as Restricted Securities by ASX subject to a 24 month escrow period from the date of Official Quotation. For unrelated Shareholders who invested in the Company, it is anticipated that 129,999 Shares will be subject to a 12 month escrow period from the date of issue of these Shares.

The total number of 57,020,228 Shares that are expected to be subject to ASX imposed escrow restrictions represent approximately 53.39% of the Shares on Admission (assuming a Minimum Subscription).

None of the Shares issued pursuant to the Offer will be subject to any ASX imposed escrow restrictions.

1.16 Underwriting

The Offer is not underwritten.

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1.17 Commission

The Company reserves the right to pay a commission of up to 6% (exclusive of GST) of amounts subscribed through any Australian financial services licensee in respect of any Applications lodged and accepted by the Company and bearing the stamp of the Australian financial services licensee. Payment will be made subject to the receipt of a proper tax invoice from the Australian financial services licensee.

1.18 Withdrawal

The Directors may at any time decide to withdraw this Prospectus and the Offer in which case the Company will return all Application Monies (without interest) in accordance with the requirements of the Corporations Act.

1.19 Paper Copies of Prospectus

The Company will provide paper copies of this Prospectus (including any supplementary or replacement document) and the applicable Application Form to investors upon request and free of charge. Requests for a paper copy from Australian resident investors should be directed to the Company Secretary on +61 (0)8 9443 1100 for further details.

1.20 Enquiries

This Prospectus provides information for potential investors in the Company, and should be read in its entirety. If, after reading this Prospectus, you have any questions about any aspect of an investment in the Company, please contact your stockbroker, accountant or independent financial adviser. Enquiries from Australian resident investors relating to this Prospectus, or requests for additional copies of this Prospectus, should be directed to the Company Secretary on +61 (0)8 9443 1100.

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2. Company Overview

2.1 Background

Kalium Lakes Limited (Kalium Lakes or the Company) is a public company incorporated in Australia with Australian Company Number 613 656 643.

Kalium Lakes was recently incorporated on 14 July 2016 as part of a restructure of Kalium Lakes Potash Pty Ltd (KLP) which has been operating since October 2014. As a result of the restructure, KLP is now a wholly owned subsidiary of the Company. KLP is the sole subsidiary of the Company.

The Company is focused on developing its wholly owned Beyondie Potash Project located 160km south-southeast of Newman.

Figure 2.1 – Beyondie Potash Project Location

Kalium Lakes proposes to develop the Beyondie Potash Project for the purpose of producing SOP for sale domestically and internationally. As there is currently no Australian production of SOP, Kalium Lakes is seeking to become Australia’s first SOP producer.

The Company's aim is to meet its objective to sell and distribute SOP products throughout Australia and internationally via the Port of Geraldton or the Port of Fremantle.

The Company has completed various technical reports and studies in respect to the Beyondie Potash Project such reports and studies concerning Brine extraction, metallurgy,

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processing, infrastructure, environment, Native Title, heritage, permitting, approvals, potential capital and operating costs.

The Offer is being conducted predominately to raise funds to continue the exploration and development of the Beyondie Potash Project. The Company's main objectives upon completion of the Offer are to:

(a) Increase confidence of Mineral Resource - continue hydrogeological definition to increase confidence in the Mineral Resource for the Beyondie Potash Project with an aim of enabling conversion of the Mineral Resource to an Ore Reserve;

(b) Pump tests of Bores - conduct short term pump tests at the Beyondie Potash Project to verify key assumptions in relation to Brine extraction from the main aquifers;

(c) Install supporting infrastructure - including access roads, temporary camp, utilities and buildings;

(d) Studies and Engineering – expand on and update existing studies, pond trials and site investigations; and

(e) Regulatory and other approvals - continue to progress environmental, Native Title and regulatory approval and agreement processes.

The above objectives will be pursued if the Company achieves the Minimum Subscription. If the Company accepts the maximum number of oversubscriptions, then the Company will also seek to undertake:

(a) Additional drilling and pump testing - infill drilling and pump testing to achieve an increased confidence in the Mineral Resource plus initial drill targeting in the eastern tenement areas inclusive of geophysical works;

(b) Purchase and install a relocatable camp - purchase and install a 10 to 20 man relocatable camp with utilities;

(c) Studies and Engineering - expand on and update existing studies, pond trials, infrastructure requirements, capital and operating costs and site investigations; and

(d) Regulatory and other approvals - environmental applications and second Native Title mining agreement to be progressed.

Refer to Section 2.3 for details of the above activities.

2.2 The Beyondie Potash Project

(a) Tenements

The Beyondie Potash Project:

(i) comprises a portfolio of 15 mineral exploration licences which together cover an area of approximately 2,400km2 located at the eastern margin of the east Pilbara region of Western Australia (together with one miscellaneous licence) (together the Tenements); and

(ii) is located within 78km of state sealed roads and a domestic gas pipeline providing close proximity and ease of access to existing infrastructure.

The Company (via KLP) owns 100% of the interests in the Tenements.

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Table 2.1 – Tenements

Tenement Name Mining Act Tenure Company's

Ownership Interest1 Tenement Status

Yanneri-Terminal E69/3306 Granted 100%

Beyondie - 10-Mile E69/3309 Granted 100%

West Central E69/3339 Granted 100%

White E69/3340 Granted 100%

West Yanneri E69/3341 Granted 100%

Aerodrome E69/3342 Granted 100%

T Junction E69/3343 Granted 100%

Northern E69/3344 Granted 100%

Wilderness E69/3345 Granted 100%

NE Beyondie E69/3346 Granted 100%

South 10 Mile E69/3347 Granted 100%

North Yanneri-Terminal E69/3348 Granted 100%

East Central E69/3349 Granted 100%

Sunshine E69/3351 Granted 100%

Beyondie Infrastructure E69/3352 Granted 100%

Access Road L52/162 Granted 100% Note: 1. Via KLP, the registered holder of all Tenements.

Figure 2.2 – Beyondie Potash Project Tenure

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(b) Climate

The Beyondie Potash Project is located in an arid desert climate zone, characterised by hot summers and warm to cold winters with low annual rainfall. A nearby weather station to the project area is at Three Rivers, approximately 127km to the east-southeast of the site.

Table 2.2 outlines the meteorological conditions for Three Rivers as reported by the Bureau of Meteorology (BOM). The maximum daily temperature (average) at the operation site rises to 39°C in January, the minimum average temperature is measured at 5°C with extremes to -5°C during June. Mean annual rainfall is 238 mm. The climate and evaporation rates in the area of the Beyondie Potash Project have been demonstrated to be suitable for Brine evaporation via solar ponds.

Table 2.2 – Summary meteorological conditions for Three Rivers Station (Latitude: 25.13°S • Longitude: 119.15°E • Elevation 520 m) reported by BOM

Statistic Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Annual

Mean max temp (°C) 39.3 36.8 35.4 30.3 25.3 21.1 21.0 23.4 27.8 31.9 35.2 38.0 30.5

Mean min temp (°C) 24.1 22.9 20.6 15.7 10.1 6.6 4.8 6.6 9.7 14.0 18.1 22.0 14.6

Mean rainfall (mm) 34.9 43.5 36.1 21.2 22.8 23.5 11.4 7.3 2.1 5.7 10.0 18.7 238.4

Mean monthly evaporation (mm)

547 473 430 304 186 144 157 203 271 397 451 537 4,100.0

Figure 2.3 – Australian continental evaporation reported by BOM

(c) Geological Setting

The playa lakes within the Beyondie Potash Project are located at the southwestern edge of the northwest Officer Basin and are underlain by rocks

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comprising mainly sandstones, siltstones, conglomerates and shales. Doleritic dykes and sills intrude the basement while paleochannels have been incised into the bedrock. The playa lakes are all part of the Ilgarari Palaeochannel System which joins the larger Disappointment Palaeochannel System about 200km to the northeast.

Within the lakes, Quaternary lacustrine deposits are mainly clay, mud and silt which are usually saline and commonly gypsiferous. This region also contains a mixed sequence of Quaternary lacustrine and eolian deposits, characterised by saline clay, mud, silt and sand with gypsiferous (kopi) dunes. Surrounding the lakes are expanses of Quaternary eolian sand and sand sheets. Longitudinal (seif), chain and net dunes are abundant and there are some areas of ironstone pebble veneer. Areas of valley calcrete, sheet carbonate and opaline silica are also present, especially to the southeast and west of Ten Mile.

(d) Palaeochannel Geology

The palaeochannel geology generally consists of poorly sorted sandstone, claystone, conglomerate, tillite and sandstone, all deposited in glacial, lacustrine, to fluvioglacial environments. The composition of the Tertiary palaeochannel infill is generally consist of fluvial sand overlain by lacustrine, fine-grained sediments (clays), underlain by a basal horizon of fluvial sands/conglomerates/gravels. The basal gravels/sands are usually carbonaceous with lignites and finer-grained interbeds representing swamp and valley lacustrine deposits. Basal sands can be up to 40m thick.

Recent drilling has shown that the palaeochannel of the Beyondie Lakes area is filled with an upper alluvium, an intermediate clay layer and a basal sand horizon (in the main thalweg of the palaeochannel).

Figure 2.4 shows an overview of the complete palaeochannel in the Beyondie Lakes area.

Figure 2.4 – Full Palaeochannel Extension

(e) Deposit Type and Mineralisation

The Beyondie deposit is a Brine, containing the target potassium and sulphate ions that could form a potassium sulphate salt. The Brine is contained within saturated

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sediments in at least two separate horizons below the lake surface and in sediments adjacent to the lake. The deposit generally comprises three zones, including:

(i) an upper zone – the lake bed alluvial sediments form the upper aquifer and host the first Brine horizon;

(ii) a mid zone – an intermediate thick clay layer. This clay hosts parts of the Brine and can be treated as the second Brine horizon. Tests need to be conducted to determine if the Brine is extractable from the clay. From other published test results it is expected that the extraction rate will be low; and

(iii) a lower zone - the third Brine horizon is connected to the lower aquifer within the sediments at the base of the palaeochannel, the basal sands.

Figure 2.5 shows the geological profile at 10 Mile lake associated with the upper aquifer in blue, mid zone in green and the lower aquifer in light yellow.

Figure 2.5 – Geological Profile

(f) Recent Exploration

A 2015 drilling and augering program with sampling of Brine and soil material, geophysical fieldwork, laboratory analysis and pumping tests have already been undertaken at the Beyondie Potash Project area. Sampling indicates that the Beyondie Potash Project deposit is a Brine, containing the target potassium and sulphate ions that could form a potassium sulphate salt used in the production of SOP products.

Boreholes have been prepared, resulting in 5 million litres pumped, with the likelihood that the aquifer could deliver more with larger diameter, properly constructed production boreholes.

Recent exploration has involved a complex data collection programme, covering augering, geophysics, drilling, water and soil sampling and aquifer testing. It comprises the following:

(i) nine boreholes drilled (diamond core) to collect representative geological samples;

(ii) augering at 336 locations across all of the lakes up to a depth of 1.5m, to collect information on the geology and collection of groundwater samples;

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(iii) six gravity geophysical traverses were run around Ten Mile Lake and a further 22 between Ten Mile Lake and the north and west of T Junction Lake to assist in defining the position of the palaeochannel;

(iv) installation of 20 monitoring boreholes;

(v) installation of four test boreholes;

(vi) grain size analysis of eight sand samples from six boreholes, two clay samples from two boreholes and 12 lake bed alluvium samples from three different lakes;

(vii) 13 mini aquifer tests (1 hr pumping / 1 hr recovery);

(viii) three constant rate / recovery tests; and

(ix) laboratory analysis of water samples collected from augering (400), drilling (87) and during the aquifer testing (26).

The potassium concentration data for all auger hole samples obtained to date are presented in Figure 2.6.

Figure 2.6 – Overview Map of the Potassium Concentrations of Auger Hole Samples

(g) Mineral Resources

Kalium Lakes has adopted both a JORC Code and a Canadian Institute of Mining, Metallurgy and Petroleum (CIM) NI 43-101 standard of disclosure for the reporting of Mineral Resources and Reserves.

The CIM has developed best practice guidelines for mineral resource and reserve estimation of Brines which requires the following to be determined:

(i) the extent of the Brine body and aquifer geometry;

(ii) Brine elemental chemistry and variability;

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(iii) total porosity (Pt) and effective (drainable) porosity (Pe);

(iv) specific yield (Sy) = yield of drainable fluid obtained under gravity flow conditions Pe = Sy + Sr (where specific retention (Sr) = retained fluid in aquifer material);

(v) permeability, hydraulic conductivity and transmissivity of sediment lithology;

(vi) only specific yield should be used as the measure of total brine endowment not total porosity. This requires pump tests of sufficient duration to determine parameters;

(vii) Ore Reserves need to consider bore field engineering, evaporation parameters and suitable process flowsheets for cost effective recovery of the target metal ions; and

(viii) Brine resources and Brine reserves are to be reported as available cubic meters of Brine with a grade for the valuable elements (e.g., K and Mg).

Based on data from the fieldwork and laboratory analyses an assessment of the Mineral Resource has been undertaken. The Mineral Resource4 and the Exploration Target5 for SOP at the Beyondie Potash Project are detailed in Table 2.3.

Table 2.3 – Mineral Resource and Exploration Target3 – Drainable Brine (JORC Code)

Level Drainable Brine

Volume

(106 m3)

K Grade

(mg/l)

K

(106 tonnes)

SO4

(106 tonnes)

SOP

(106 tonnes)

Indicated Mineral Resource

58.7 7,145 0.42 1.38 0.94

Inferred Mineral Resource

1,396.3 6,051 8.45 24.06 18.84

Exploration Target 1,440 – 3,518 1,100 – 4,515 1.58 – 15.89 2.72 – 46.06 3.53 – 35.43

Measured Mineral Resources and Ore Reserves cannot be estimated until further work is completed.

Note that the above Exploration Target is conceptual in nature, as there is insufficient exploration to define a Mineral Resource. It is uncertain if further exploration will convert an Exploration Target to a Mineral Resource.

Refer to the Independent Expert's Report for details of the JORC Code Modifying Factors applicable to the Mineral Resources detailed in the above tables.

4 Details of the Mineral Resource should be read in conjunction with Table 7.1 and 7.2 and Annexure A of the Independent Expert's Report (refer to Section 6). 5 An Exploration Target is not a Mineral Resource. An explanation of the basis of the Exploration Target, including relevant information on which it is based, is detailed in and should be read in conjunction with Appendix A in the Independent Expert's Report (refer to Section 6).

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(h) Brine Extraction

There are two principal methods applicable to extract the Brine from the surrounding sediments at the Beyondie Potash Project:

(i) pumping from wells in the basal sands (lower aquifer) plus leakage from potential Brine bearing segments within the clays; and

(ii) pumping from trenches inside the alluvial sediments (upper aquifer).

It is likely that both methods will be utilised by the Company due to the properties of the different aquifers. The design of the bore field will be based on the Brine demand and aquifer conditions.

(i) Metallurgy

To date, three discrete phases of metallurgical test work have been undertaken including:

(i) bench-scale evaporation testing in Australia;

(ii) a small pilot scale evaporation trial was conducted during 2015 with 26,000 litres of Brine to determine seasonal effects on evaporation rates, provide a concentrated Brine sample for raw salt preparation and purification test work in Germany, as well as confirm the Brine's ability to evaporate to dryness; and

(iii) Kalium Lakes engaged K-UTEC in Germany to carry out test work and engineering studies to verify the evaporation pond and purification process design requirements to produce potential saleable products including SOP. Two cubic metres of partially evaporated Brine at a density of 1.28 g/cm3 were sent to K-UTEC’s facilities in Sondershausen, Germany, in order to perform a higher level of pilot evaporation and processing test including:

(i) solar evaporation of Brine in a custom built evaporation chamber;

(ii) pre-treatment of raw Kainite Type Mixed Salt (KTMS) in order to separate NaCl and MgCl2;

(iii) decomposition of raw KTMS to primary schoenite;

(iv) cooling crystallization of secondary Schoenite from the SOP mother liquor;

(v) conversion of schoenite to SOP;

(vi) cooling crystallization of epsomite from the bittern; and

(vii) crystallization of bischofite by further evaporation of the bittern.

(j) Processing

The general mineral processing concept is comprised of Brine winning, Brine concentration and crystallization of solid raw materials for the processing plant.

The process begins with Brine entering evaporation ponds whereby water is removed by solar evaporation. This causes gypsum, halite and astrakanite to

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crystallise subsequently in the first two sets of ponds. Unless determined economical to process, these compounds are left within the ponds, and will be harvested once full. The remaining Brine crystallises producing a KTMS comprising leonitic, schoenitic and carnallitic mixed salts in the next set of ponds. These salts are harvested and stored separately prior to mixing, pre-crushing and transferral to the SOP purification plant. The resultant bittern from the solar evaporation process may be transferred to Epsomite and Brine treatment plants.

The SOP plant converts the mixed salt into schoenite and halite through mixing with water and internal recycling of the Brines. The resultant slurry is processed through reverse flotation to remove the halite, the resultant schoenite salts are decomposed into SOP. The halite is discarded to tailings unless otherwise economical to process.

(k) Infrastructure

The Beyondie Potash Project is located in close proximity to existing transport infrastructure providing access to local, national and international transport routes. The Beyondie Potash Project is in close proximity to the following:

(i) sealed roads - approximately 78km to Great Northern Highway;

(ii) gas pipeline - approximately 78km to Goldfields Gas Pipeline;

(iii) to a port - approximately 700km from Port Headland or 862km from Geraldton; and

(iv) easy trucking distance to the important agricultural hub of Geraldton.

Supporting infrastructure for the Beyondie Potash Project is expected to include offices, ancillary buildings, maintenance facilities, accommodation, diesel fuel, water, power, communications and information technology systems. Accommodation facilities will be required to house the workforce. It is the intention of the Company that fuel for power generation will be sourced initially from diesel supplied by road train, then gas supplied from a 78km gas spur from the Goldfields Gas Pipeline.

A Miscellaneous Licence (L52/162) has been granted for a 78km site access road, gas pipeline, water supply, accommodation village, communications and other associated infrastructure purposes for the Beyondie Potash Project.

(l) Environment

Kalium Lakes has initiated and substantially completed an extensive range of baseline environmental studies and investigations which have been conducted in consultation with government agencies and regulators including DMP, the WA Environmental Protection Agency (EPA), the WA Department of Parks and Wildlife (DPAW) and the WA Department of Water (DoW). The survey programme has been based on a future requirement to refer the full scale project to the EPA for formal assessment. To date, a number of biological flora and fauna surveys in respect to the Beyondie Potash Project have been undertaken by Phoenix Environmental Sciences.

Work to characterise the environment is ongoing, but to date there have been no significant issues identified that could not be managed through proper planning or appropriate environmental management systems. The salt lake systems are reasonably common and extensive, however may offer a unique habitat for some species.

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(m) Native Title and Heritage

Kalium Lakes has successfully negotiated two land access and mineral exploration agreements with the underlying Native Title groups, Birriliburu (MNR) people and the Gingirana people, which have enabled Kalium Lakes to undertake ground disturbing and non-ground disturbing exploration activities. Refer to Section 9.3 for further details.

Kalium Lakes and Gingirana have also executed a mining land access agreement for the Beyondie Potash Project. This agreement notably consents to mining at the Beyondie Potash Project’s commencement areas of Beyondie Lake and 10 Mile Lake. Refer to Section 9.4 for further details. It is envisaged that a similar agreement will be negotiated with MNR which will consent to mining to the east of the Gingirana claim area.

A number of ethnographic and archaeological heritage surveys were completed during 2015, enabling access for exploration activities. Isolated heritages sites have been identified but to date have minimal impact on the Beyondie Potash Project.

(n) Permitting and Approvals

The Company's approvals strategy is based on a staged approach to allow progressive and timely approvals for each development phase of the Beyondie Potash Project. Kalium Lakes has reviewed the legislative requirements and has compiled a register of the environmental, heritage and planning approvals and permits necessary to scope, develop, construct and operate the project for each development phase. Each development phase will require new specific approvals and will utilise approvals granted in the prior phase or seek to modify existing approvals. Approvals for pump testing and pond trials (refer to Section 2.3) are currently in place with the Department of Mines and Petroleum (DMP), the Department of Environmental Regulation (DER) and the Department of Water (DoW).

2.3 Strategy and Development Plans

The Company’s strategy is to advance the exploration and development of the Beyondie Potash Project through a number of distinct and practical development phases that de-risk the project and manage cash expenditure. The Company is seeking to develop the Beyondie Potash Project for the purpose of producing SOP for sale domestically and internationally. As there is currently no Australian production of SOP, the Company is aiming to become Australia’s first SOP producer.

The exploration and development activities undertaken in an SOP operation, such as that proposed to be undertaken by the Company, encompass the following key stages:

(a) Brine Pumping: Brine is pumped from basal sands (or lower aquifer) from submersible bores plus trenches from the upper aquifer;

(b) Brine Solar Evaporation: Brine is pumped to solar evaporation ponds where it sequentially precipitates Calcium, Sodium, Potassium and potentially magnesium mixed salts in separate ponds;

(c) Salt Harvesting: the mixed potassium salts that have crystallized from the solar evaporation ponds is mechanically harvested and stockpiled;

(d) Purification: the mixed potassium salts are fed into a purification plant facility where the salts are converted into schoenite and halite through a conversion and recycling process. The resultant slurry undergoes flotation where the halite is discarded and the schoenite undergoes thermal decomposition into SOP; and

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(e) SOP Fertiliser: after drying and compaction in a purification plant, the SOP is ready to be used as a final product and marketed accordingly.

Figure 2.7 - SOP Operation

The Company’s immediate priority, based on achieving the Minimum Subscription, is to complete the next development phase which involves:

(a) continuing to explore the Tenements and continuing hydrogeological definition to increase confidence in the Mineral Resource for the Beyondie Potash Project with an aim of enabling conversion of the Mineral Resource to an Ore Reserve;

(b) conducting short term pump tests to verify key assumptions in relation to Brine extraction from the main aquifers;

(c) installing supporting infrastructure including access roads, camp, utilities and buildings;

(d) expand on and update existing studies, pond trials and site investigations; and

(e) continuing environmental, Native Title and regulatory approval and agreement processes.

Refer to Section 1.6 for the funding allocation for each of the activities.

Further information regarding each of the above are as follows:

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(a) Increase confidence of Mineral Resource

The Company intends to focus on increasing the confidence in the current Mineral Resource with the aim of defining further Indicated Mineral Resources with an aim of enabling conversion of the Mineral Resource to an Ore Reserve. This would involve continuing hydrogeological definition including:

(i) a further 15 to 25 aircore holes to confirm local site geology and aquifer configuration;

(ii) three to six large diameter water bores to assess the ability of the aquifer to support pumping;

(iii) a further 10 to 20 monitoring piezometers for water drawdown and environmental monitoring purposes;

(iv) installation of five to seven test trenches to confirm extraction and inflow rates;

(v) further assessment of aquifer hydraulic properties (permeability and specific yield) from aquifer tests and/or grain size analysis;

(vi) collection and analysis of more brine samples from a selection of bores to confirm brine concentrations;

(vii) duplicate 10% of all Brine samples to be analysed by a second (independent) certified laboratory;

(viii) further pump tests for sufficient duration, according to accepted standards;

(ix) development of a hydrogeological model based on measured data; and

(x) further geophysical assessment to continue to identify and target the paleochannel feature, location and profile.

(b) Pump Tests of Bores

Following a review of the CIM guidelines (refer to Section 2.2(g)), the Company has determined that short term pump testing is required in order to verify the Company's Mineral Resource with an aim of enabling conversion of the Mineral Resource to an Ore Reserve in accordance with the guidelines of the JORC Code and a mineral reserve in accordance with the guidelines of the CIM Code. At present, Kalium Lakes has obtained approval from the DoW for up to 1.5 GL of brine dewatering for its pump test works; and approvals from the DMP and has DER for various site investigations and pond trials.

Pump testing of bores will include:

(i) use of water bores and piezometers installed as part of the Mineral Resource and Ore Reserve estimation activities detailed above;

(ii) short term pump tests over a number of hours and days to determine aquifer properties and the drain-ability of the Brine from the host lithology;

(iii) assessment of bore and trench drawdown characteristics at various flowrates and recharge rates on cessation of pumping;

(iv) review of the effects on seasonal pumping rate requirements and the benefits of borefield rotation and resting at specific time intervals; and

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(v) review of environmental impacts.

(c) Installation of Supporting Infrastructure

To support the works undertaken detailed in Section 2.3(a) and 2.3(b) an upgrade of current access roads is required plus the installation of an acceptable standard temporary camp, utilities and buildings. These items will be progressively installed and maintained as the activities detailed in Section 2.3(a) and 2.3(b) progress.

(d) Studies and Engineering

Once the drilling and pump testing is complete, the Company will assess the outcomes with the view to expand on and update existing studies, pond trials and site investigations.

(e) Environmental, Native Title and Regulatory Approval

The works undertaken detailed in Sections 2.3(a), 2.3(b) and 2.3(c) will enable the continuation of environmental, Native Title and regulatory approvals and agreement processes.

If the Company accepts the maximum number of oversubscriptions, then the Company will also seek to undertake further drilling, undertake further pump tests at new drilling locations, purchase a relocatable camp, further progress studies and engineering associated with brine extraction, processing, infrastructure requirements, capital and operating costings, and environmental applications and Native Title agreement processes.

Refer to Section 1.6 for the funding allocation for each of the activities.

Further information regarding each of the above are as follows:

(a) Additional Drilling and Pump testing

The Company would conduct further infill drilling and pump testing to achieve an increased confidence in the Mineral Resource plus initial drill targeting in the eastern tenement areas inclusive of geophysical works. This would involve continuing hydrogeological definition including:

(i) a further 10 to 15 aircore holes to confirm local site geology and aquifer configuration;

(ii) two to three large diameter water bores to assess the ability of the aquifer to support pumping;

(iii) additional monitoring piezometers where required for water drawdown and environmental monitoring purposes;

(iv) further assessment of aquifer hydraulic properties (permeability and specific yield) from aquifer tests and/or grain size analysis;

(v) collection and analysis of more brine samples from a selection of bores to confirm brine concentrations;

(vi) further pump tests of sufficient duration, according to accepted standards; and

(vii) further geophysical assessment to continue to identify and target the paleochannel feature, location and profile.

PurificationProcessing

SOPFertiliser

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(b) Purchase and Install a Relocatable Camp

Purchase and installation of a 10 to 20 man relocatable camp with power water, sewage and other services and utilities, required to support the exploration operations. The facility would be located at the already approved DMP camp areas. These facilities would be relocated for either construction works or exploration around the eastern tenements.

(c) Studies and Engineering

Expand on and update existing studies and engineering works including:

(i) bore field and trench design;

(ii) further metallurgical testing in Perth and Germany;

(iii) pond construction trials and initial leakage determination ;

(iv) further evaporation trials;

(v) progress road, gas pipeline, support infrastructure, and processing facility design and engineering;

(vi) various site investigations; and

(vii) update capital and operating cost estimates.

(d) Regulatory and other approvals

(i) Continuation of baseline environmental studies in consultation with the EPA, DPaW, DMP and DoW;

(ii) Progress and where required obtain timely approvals as required for the Beyondie Potash Project per identified register of approvals; and

(iii) Work towards obtaining a mining land access agreement for the eastern areas of the Beyondie Potash Project with MNR.

2.4 Potential Additional Projects

The Company has also applied for exploration licences that could introduce two new prospective areas for potassium exploration, namely the Carnegie and Dora/Blanche projects, (and has recently been granted an exploration licence in respect to Carnegie, being E38/2995). Refer to Figure 2.8 for the location of these potential projects.

Potential investors should be aware that the remaining exploration licence applications may not be granted and as such are not considered as assets or projects of the Company.

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Figure 2.8 – Other mineral exploration licences application locations

2.5 Key Strengths

The Board considers that Kalium Lakes has a number of competitive strengths as follows:

(a) Global demand for fertiliser

Global demand for fertiliser (including SOP products) is strong as the world population continues to grow, with arable land per capita continuing to decrease which places greater emphasis on the use of fertilisers that play a significant role in improving agricultural yields and productivity.

(b) Premium SOP fertiliser

Demand for SOP is increasing and given it has minimal chloride content and a lower salinity index (which minimises salt build up in soils). When compared to MOP, SOP currently sells at a premium.

(c) Portfolio of tenements

The Beyondie Potash Project comprises 15 granted exploration mining tenements and a miscellaneous licence which cover an area of approximately 2,400km2.

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45 KALIUM LAKES LIMITED I PROSPECTUS Kalium Lakes Limited PROSPECTUS 45

(d) High quality Brine at the Beyondie Potash ProjectThe Brine chemistry (grade) at the Beyondie Potash Project is one of the highest recorded in Australia and has a superior sodium to potassium (Na:K) ratio of 9.4:1 compared to peer ratios of around 15 to 25:1 (i.e. lower impurities and less waste), as determined from publically available information.

(e) Close Proximity to road, gas pipeline and port infrastructureThe Beyondie Potash Project is located in close proximity to existing transport infrastructure providing access to local, national and international transport routes, as follows (a) close proximity to sealed road (78km to Great Northern Highway) (b) close proximity to gas (78km to Goldfields Gas Pipeline) (c) close to a port (700km from Port Hedland or 862km from Geraldton) (d) easy trucking distance to the important agricultural hub of Geraldton.

(f) Well defined strategy with staged development phasesThe Company implements a staged approach to development which enables it to manage technical and capital requirements which is an important consideration to enable the Company to determine the best ongoing financing arrangements for the Project.

(g) Well advanced project that is being progressively de-riskedThe Beyondie Potash Project is well progressed with Kalium Lakes having already completed the following:

(i) Completion of various technical reports and studies - Kalium Lakes has conducted various technical reports and studies involving Brine extraction, metallurgy, processing, infrastructure, environment, Native Title, heritage, permitting, approvals, potential capital and operating costs for a range of operational sizes;

(ii) Government approvals received - Government approvals have been obtained from DMP, DER and DoW associated with pumping tests, site investigations and pond trials;

(iii) Successful bore tests - Bore tests have been undertaken with 5,000,000 litres of Brine pumped from the basal sand unit, the primary productive unit of a playa lake system which will be supplemented with surface trenches.

(h) Initial development agreements are in place in relation to Native Title and land accessKalium Lakes has entered into two land access and mineral exploration agreements with both the Gingirana People and Birriliburu People and has a Native Title mining land access agreement in place with the Gingirana People with discussions progressing with the Birriliburu People.

(i) Experienced project development teamExperienced Board and management team with a broad range of exploration, project development, management, commercial and technical skills in the resources industry. In particular, the Board and management has significant experience and track record in the Western Australian mining industry with a comprehensive understanding of permitting and approval requirements and ability

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to take the Beyondie Potash Project from discovery and design through to construction, commissioning and operations.

2.6 Taxation

The acquisition and disposal of Shares will have tax consequences, which will differ depending on the individual financial affairs of each investor. All potential investors in the Company are urged to obtain independent financial advice about the consequences of acquiring Shares, pursuant to the Offer, from a taxation viewpoint and generally.

To the maximum extent permitted by law, the Company, 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.

2.7 Dividend Policy

The extent, timing and payment of any dividends in the future will be determined by the Directors based on a number of factors, including future earnings and the financial performance and position of the Company.

At the date of this Prospectus, the Company does not intend to declare or pay any dividends in the immediately foreseeable future. However, it is the aim of the Company that, in the longer term, its financial performance and position will enable the payment of dividends.

Any future determination as to the payment of dividends by the Company will be at the sole discretion of the Directors and will depend on the availability of distributable earnings and operating results and financial condition of the Company, future capital requirements and general business and other factors considered relevant by the Directors. No assurance in relation to the payment of dividends or franking credits attaching to dividends can be given by the Company.

2.8 Corporate Social Responsibility

The Company recognises the importance of managing and developing human capital and that a positive work environment would attract, motivate and retain talent. The Company is an equal opportunity employer that adopts fair employment practices in our recruitment.

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3. Industry Overview

3.1 Introduction

Fertilisers are compounds of nutrients given to plants in order to promote growth. The three primary macronutrients essential for plant growth are nitrogen (N), phosphorus (P), and potassium (K). Secondary macronutrients include calcium (Ca), magnesium (Mg) and sulphur (S). There are also micronutrients which benefit plant growth, including boron (B), copper (Cu), chlorine (Cl), cobalt (Co), manganese (Mn), molybdenum (Mo), nickel (Ni) and zinc (Zn). These nutrients, or fertilisers, are applied through the soil for uptake by plant roots or by foliar spraying for uptake through leaves. These key nutrients are illustrated in Figure 3.1.

Figure 3.1 – Key Plant Nutrients

Agronomists have labelled potassium the regulator because of the key role it plays in controlling critical plant processes such as photosynthesis, protein formation, enzyme activation and starch formation. Potassium is vital for healthy plant metabolism and promotes the development of strong roots, stalks and stems. It is also understood to regulate the plant’s water content and expansion. As a consequence, potassium increases the resilience of a plant to weather stressors such as variable temperatures, drought and high winds. Potassium also boosts disease and pest resistance and is often called the quality nutrient because it enhances the appearance, taste, nutritional value and shelf life of the harvested crop.

Fertilisers are coming into focus as higher yields are required from cropping in order to feed the global population. This is driven by population growth, and an associated decline in arable land.

The United Nations publication, World Population Prospects: The 2012 Revision, predicts that the global population is expected to rise from a world population of 7 billion to 9.6 billion by 2050 and to around 11 billion by 2100.

This rapid expansion is expected to place an increasing demand for food production on an already overburdened agricultural industry. Further, as the population rises and urban areas expand, a reduction in arable land per person available for agriculture ensues.

To meet this decrease in arable land per capita and increased demand from a rising world population, farmers are required to apply more fertilisers to increase crop yields and replace

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nutrients used during the cropping cycle. This equates to increased demand for fertilisers in the near future and continuing for the long term.

3.2 Potash Products

Potash products come in four main forms with a corresponding global consumption per annum shown in Figure 3.2.

Figure 3.2 – Potash Consumption Per Annum by Form

(a) Potassium Chloride (KCl or MOP)

Potassium Chloride, commonly known as MOP, is the most abundant form of potash and thus is the most commonly utilised potassium fertiliser. It consists of 60% K2O and 47% Cl. It is particularly effective when used in the commercial cultivation of the carbohydrate crops including wheat, oats, and barley. MOP is composed of potassium and chloride in the forms of charged atoms, and therefore in the form of a salt which is soluble in water. Chloride can however be harmful to some sensitive crops and detrimental in acidic soils. MOP has a total global market size of approximately 55-60 million tonnes per annum.

(b) Potassium Sulphate (K2SO4 or SOP)

Potassium Sulphate, commonly known as SOP, is the second major form of potash. It consists of 50% K2O and 17.5% S. It is particularly effective in the cultivation of fruits, vegetables, berries, potatoes, beans, cocoa, tobacco and tree nuts. SOP contains less than 1% chloride, but importantly does contain sulphur which is a secondary macronutrient utilised by the plant for growth. Sulphur deficient soils are a growing problem within the agriculture sector. As such SOP attracts a price premium over MOP of between 40% to 100%. SOP has a total global market size of approximately 6 million tonnes per annum.

(c) Potassium Nitrate (KNO3)

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Potassium Nitrate is a speciality form of potash. It consists of 44% K2O and 13% N. It is used in crops that are sensitive to chloride and require the addition of nitrogen. Potassium Nitrate has a total global market size of approximately 1.4 million tonnes per annum.

(d) Sulphate of Potash Magnesia (SOPM)

Sulphate of Potash Magnesia is a speciality fertiliser. It consists of 28% K2O and 10% MgO, and 16% S. It is used in high value crops. Sulphate of Potash Magnesia has a total global market size of approximately 1.3 million tonnes per annum.

(e) MOP vs SOP

SOP is superior to MOP because it does not contain chloride, which has a toxic impact on many food plants, especially fruits and vegetables. When MOP is used, soils have increasing levels of chloride salt which impact plant yields. Chloride-free fertiliser enhances plant health, so the demand for SOP is increasing. In addition, SOP has a lower salinity index than MOP. The higher salinity of MOP can cause plants to have difficulty absorbing water and nutrients from the soil thereby diminishing the quality and yield of the crop. SOP has a salinity index of 46, the lowest of the potassium fertilisers, while MOP has a salinity index of 116. For these reasons, producers of high value crops prefer and use SOP over MOP.

3.3 SOP Production

SOP is not a naturally occurring mineral and primary SOP production requires extracting potassium and sulphate ions from naturally occurring complex ores or Brines, via evaporation and/or chemical methods. There are three primary methods for production:

(a) Salt Lake Brine Processing

Processing of natural Brines is a relatively low-cost option, but is limited because of the small number of salt lakes in the world that contain both potassium and sulphate. There are Brine operations in Utah (Great Salt Lake Minerals Corporation, owned by Compass Minerals International), Chile (Salar de Atacama, owned by SQM), and China (with the largest producer being SDIC Xinjiang Luobupo Potash).

This method requires Brines with high sulphate levels such as those found within these salt lakes. The sulphate is typically present in the harvest salts in the form of the double salt kainite, which is converted to schoenite by leaching with sulphate Brine. The leach process is hampered by sodium chloride content in the harvest salts and the halite is first removed by flotation. After thickening, the schoenite is decomposed by simply adding hot water, whereupon the magnesium sulphate enters the solution leaving SOP crystals. This process is currently the lowest cost method to make SOP. As lakes with sufficient Brine mineral levels are rare, this method only accounts for 15% to 20% of global supply. The average cost of production from salt lakes is approximately US$200 per tonne.

(b) Potassium Chloride and Sulphate Salts Reaction

Potassium chloride can be reacted with various sulphate salts to form a double salt that can be decomposed to yield potassium sulphate. The most common raw material employed for this purpose is sodium sulphate. Sodium sulphate, either in the form of mirabilite (also known as Glauber's Salt) or sulphate Brine, is treated with Brine saturated with MOP to produce glaserite. The glaserite is separated and treated with fresh MOP Brine, decomposing into potassium sulphate and sodium chloride. There are only a few operations in the world with K+S Kali and Rusal being the key producers utilising this method. These methods of production are the second greatest source of global supply at 25% to 30%. The average cost of

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production via the sulphate salts reaction method is approximately US$300 per tonne.

(c) Mannheim Process

The most common method of producing potassium sulphate is the Mannheim process, which is the reaction of potassium chloride with sulphuric acid at high temperatures. The raw materials are poured into the centre of a muffle furnace heated to above 600ºC. Potassium sulphate is produced, along with hydrochloric acid, in a two-step reaction via potassium bisulphate. There are a number of operations in the world with Tessenderlo Group and Chinese private producers being the key producers utilising this method.

This method for creating SOP accounts for 50% to 60% of global supply. The Mannheim process is also the most expensive of the processing techniques due to the high input costs associated with purchasing MOP and sulphuric acid. The biggest variable influencing the long-term viability of the Mannheim process remains a long-term economic off-take for the hydrochloric acid. Around 70-80% of Mannheim production costs is the cost of MOP. Average production cost via the Mannheim process is approximately US$400-550 per tonne.

3.4 Opportunities

Kalium Lakes has conducted a review of the potash market utilising leading industry market research reports and has formed the view that whilst the MOP market is well supplied, the premium SOP market remains undersupplied.

It is notable that there is no commercial production in Australia which consumes a combined total of ~300ktpa MOP and SOP with the most recent figures for 2014/15 totalling 454kt. Given these factors, Kalium Lakes is of the view that an opportunity exists to capture the Australian supply market for SOP with opportunities to extend into South East Asia, the Americas and Africa. Current retail pricing in Australia is over A$950/t SOP.

It is noted that existing Brine hosted SOP producers are comparatively low cost when compared to secondary Mannheim SOP producers as detailed in leading industry market research reports. Refer to the Independent Expert's Report for further information.

With an ongoing increase in world population, an ever decreasing arable land per capita, continued economic growth in developing economies and degradation of soils worldwide, a continuing demand for the key plant nutrients of Nitrogen, Phosphorous and Potassium, supports the supposition that world fertiliser demand is forecast to continue to rise.

Based on this outlook, the Board is of the view that it is likely to see strong demand for its SOP product with potential market upside from by-products including Magnesium Sulphate (MgSO4 or Epsom Salts) and Magnesium Chloride (MgCl2 or Bischofite) and Magnesium Hydroxide (Mg(OH)2) which Kalium Lakes believes could be produced from the Beyondie Potash Project Brine.

3.5 Barriers to entry

There are a number of potential barriers to entry which may limit a new market participant to enter the SOP production market. These potential barriers to entry include:

(a) in order to utilise the lower cost SOP producing method of Salt Lake Brine Processing, a new market participant must discover or have access to natural Brine lakes that contain both potassium and sulphate, in a climate suitable for evaporation;

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(b) if Salt Lake Brine Processing is not an option, new market participants will be subject to the increased operating cost of the Mannheim process, noting that most furnaces produce on average 10-20ktpa of SOP, thus requiring multiple furnaces to produce large volumes. Additional requirements or restrictions will also apply such as, the availability of sulphate salts to react with MOP, the ability to dispose of residual salts and restrictions relating to hydrochloric acid disposal;

(c) requirement to obtain relevant licences, permits and approvals, including appropriate exploration tenements and licences, environmental approvals and land access agreements;

(d) location to key transport infrastructure, and agricultural markets; and

(e) capital cost and lead time to first production for natural Brine lakes.

3.6 Regulation

There is currently no regulation of the industry. The product does not currently have a recognised spot market and is generally traded based on individually negotiated outcomes.

3.7 Competition

The premiums that are currently achievable on speciality potash fertilizers over MOP are a strong incentive for investment in new capacity, especially new capacity from salt lake brines. Margins are higher for primary producers (based on natural Brine lakes) than for secondary producers (based on purchased MOP), but natural sulphate and nitrate resources are smaller and more scarce than deposits hosting potassium chloride.

Most of the exploration activity is aimed at producing potassium sulphate, with most projects being in Ethiopia/Eritrea, the United States and Australia. Another major project is Sirius Minerals’ plan to mine polyhalite in the UK.

Despite the numerous greenfield projects currently under consideration, very few have progressed sufficiently to be included in future supply forecasts. Expansion of secondary capacity given the low capex and short lead times required to build Mannheim furnaces are still possible if a high price premium over MOP persists.

Given potential expansion it is potentially likely that higher cost secondary production could be shut down or the SOP market could follow a similar expansion path that China has seen, taking over MOP market share through a combination of promotions and pricing incentives. It is feasible that if SOP were to be priced competitively with MOP, new consumers outside its core demographic could be convinced to adopt SOP.

As Kalium Lakes’ focus is on a staged development to capture the Australian supply market with opportunities to extend into South East Asia, Kalium Lakes’ key competitors are considered to be Australian based. The falling Australian dollar also limits the ability of overseas supply which is generally based around US$ production and supply costs, thus insulating potential Australian producers.

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52KALIUM LAKES LIMITED I PROSPECTUS52

4. Board, Management and Corporate Governance

4.1 Directors' Profiles

The names and details of the Directors in office at the date of this Prospectus are:

(a) Mr Malcolm (Mal) Randall – Non-Executive Chairman

Mr Malcolm Randall (Dip Applied Chem, FAICD) holds a Bachelor of Applied Chemistry Degree and has more than 45 years’ of extensive experience in corporate, management and marketing in the resources sector, including more than 25 years with the Rio Tinto group of companies.

His experience has covered a diverse range of commodities including iron ore, base metals, uranium, mineral sands and coal.

Mr Randall has held the position of chairman and director of a number of ASX listed companies. Past directorships include Consolidated Minerals Limited, Titan Resources Limited, Northern Mining Limited, Iron Ore Holdings Limited and United Minerals Corporation NL. Current directorships include MZI Resources Limited, Thundelarra Limited, Summit Resources Limited and Magnetite Mines Limited.

(b) Mr Brett Hazelden – Managing Director & CEO

Mr Brett Hazelden (B.Sc. MBA GAICD) is a Metallurgist who brings more than 19 years’ experience in project management, engineering design and operations servicing the Australasian resources industry. His previous responsibilities include project management, feasibility study evaluation, engineering and design, estimating, financial evaluation, cost control, scheduling, contracts and procurement, business risk and strategic development.

Mr Hazelden has studied, managed and executed projects from small scale works up to multi-billion dollar complex developments. He has been responsible for environmental permitting and approvals, heritage, native title negotiations, external relations, as well as tenure management. Brett has also been involved in numerous mergers, acquisitions and due diligence reviews in recent years.

(c) Mr Rudolph van Niekerk – Non-Executive Director

Mr Rudolph van Niekerk (B.Eng. Mechanical GAICD) is a professional in the mining and resources industry with more than 12 years’ experience in project and business management.

During his career Mr van Niekerk has held a range of different roles in the management of projects and operations. His various responsibilities have included

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financial evaluation, risk review and management, project management, study management, development of capital and operating cost estimates, budget development and cost control, design management, planning, reporting, contract administration, quality control, expediting, construction, commissioning, production ramp-up and project hand-over to operations.

(d) Mr Brendan O’Hara – Non-Executive Director

Mr Brendan O'Hara (BJuris, LLB, SF Fin) holds a Bachelor of Jurisprudence (Hons) and Bachelor of Laws. He is a Senior Fellow of FINSIA, a former legal practitioner of the Supreme Court of WA and former member of the Business Law Section of the Law Council of Australia.

Mr O'Hara has many years’ experience as a director of Australian listed companies, including eight years as Executive Chairman of an ASX listed company (Summit Resources Limited).

His earlier roles with the ASX (as State Executive Director and Manager – Listings), underpin a wealth of experience involving international transactions, corporate governance, risk management systems, contract negotiation / execution and government relations.

4.2 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 the Company's policies and procedures with openness and integrity, pursuing the true spirit of corporate governance commensurate with the Company's needs.

To the extent applicable, the Company has adopted the ASX Corporate Governance Council's Corporate Governance Principles and Recommendations (Recommendations).

In light of the Company’s size and nature, the Board considers that the current Board composition and structure is 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 detailed below. The Company’s full Corporate Governance Plan is available in a dedicated corporate governance information section of the Company’s website at www.kaliumlakes.com.au.

(a) Board of Directors

The Board is responsible for the corporate governance of the Company. The Board develops strategies for the Company, reviews strategic objectives and monitors performance against those objectives. The Company recognises that effective corporate governance is a critical element contributing to the longer term success of the Company. The Board and all levels of management are fully committed to maintaining and enhancing its corporate governance. The objectives of the corporate governance processes are to:

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(i) maintain and increase Shareholder value;

(ii) ensure that an ethical and prudent basis for the Company’s conduct and activities; and

(iii) ensure compliance with the Company’s legal and regulatory objectives.

Consistent with the above objectives, the Board has established a division of responsibilities between the Board and management to assist in managing expectations and avoiding misunderstandings about their respective roles and accountabilities.

In general, the Board assumes (amongst others) the following responsibilities:

(i) providing leadership and setting the strategic objectives of the Company;

(ii) appointing and when necessary replacing the Executive Directors and the Managing Director and/or Chief Executive Officer;

(iii) approving the appointment and when necessary replacement, of other senior executives;

(iv) undertaking appropriate checks before appointing a person, or putting forward to security holders a candidate for election, as a Director;

(v) overseeing management's implementation of the Company's strategic objectives and its performance generally;

(vi) approving operating budgets and major capital expenditure;

(vii) overseeing the integrity of the Company's accounting and corporate reporting systems including the external audit;

(viii) 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 Company's securities;

(ix) ensuring that the Company has in place an appropriate risk management framework and setting the risk appetite within which the Board expects management to operate; and

(x) monitoring the effectiveness of the Company's governance practices.

The Company is committed to ensuring that appropriate checks are undertaken before the appointment of a Director and has in place written agreements with each Director which detail the terms of their appointment.

(b) Composition of the Board

The Board currently consists of one Executive Director and three Non-Executive Directors (two of whom are independent). As the Company’s activities develop in size, nature and scope, the composition of the Board and the implementation of additional corporate governance policies and structures will be reviewed.

(c) Ethical standards

The Board is committed to the establishment and maintenance of appropriate ethical standards. The Company has adopted a Code of Conduct which sets out

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standards of ethical behaviour that the Company expects from its Directors, officers and employees.

(d) Nomination Committee

The Nomination Committee is responsible for identifying and evaluating suitable candidates for appointment to the Board, making recommendations to the Board in relation to the appointment and removal of Directors and regularly reviewing the composition of the Board. The Nomination Committee is currently comprised of two Non-Executive Directors and one Executive Director, being Malcolm Randall, Brendan O'Hara and Brett Hazelden. The role and responsibilities of the Nomination Committee as set out in the Nomination Committee Charter.

(e) Remuneration Committee

The remuneration of any Executive Director will be decided by the Board following the recommendation of the Remuneration Committee, without the affected Executive Director participating in that decision-making process. The Remuneration Committee is currently comprised of two Non-Executive Directors and an Executive Director, being Malcolm Randall, Brendan O'Hara and Brett Hazelden. The role and responsibilities of the Remuneration Committee are set out in the Remuneration Committee Charter.

The Constitution provides that the Non-Executive Directors will be paid by way of remuneration for their services as Directors a sum not exceeding such fixed sum per annum as may be determined by the Directors prior to the first annual general meeting of the Company or pursuant to a resolution passed at a general meeting of the Company (subject to complying with the Listing Rules). The aggregate amount that may be paid to Non-Executive Directors as remuneration is A$250,000 per annum and any change to the aggregate sum will need to be approved in general meeting in accordance with the Listing Rules.

In addition, subject to any necessary Shareholder approval, a Director may be paid fees or other amounts as the Directors determine where a Director performs special duties or otherwise performs services outside the scope of the ordinary duties of a Director (e.g. non-cash performance incentives such as options).

Directors are also entitled to be paid reasonable travel and other expenses incurred by them in the course of the performance of their duties as Directors.

The Remuneration Committee reviews and approves the Company's remuneration policy in order to ensure that the Company is able to attract and retain executives and Directors who will create value for Shareholders, having regard to the amount considered to be commensurate for an entity of the Company’s size and level of activity as well as the relevant Directors’ time, commitment and responsibility.

The Board is also responsible for reviewing any employee incentive and equity-based plans including the appropriateness of performance hurdles and total payments proposed.

(f) Continuous Disclosure Policy

Once listed on the ASX, the Company will need to comply with the continuous disclosure requirements of the Listing Rules and the Corporations Act to ensure the Company discloses to ASX any information concerning the Company which is not generally available and which a reasonable person would expect to have a material effect on the price or value of the Shares. This policy sets out certain procedures and measures which are designed to ensure that the Company complies with its continuous disclosure obligations.

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(g) Securities Trading policy

The Company has adopted a formal policy for dealing with the Company’s securities by Directors and employees and their related entities (in accordance with Listing Rule 12.9). The securities Trading Policy regarding allowable dealings is that those persons should:

(a) Not deal in the Company’s securities while in possession of price sensitive, non-public information; and

(b) Only trade in the Company’s securities after receiving clearance to do so from a designated clearance officers, where clearance may not be provided in defined ‘blackout periods”.

The securities trading policy is available on the Company’s website at www.kaliumlakes.com.au

(h) Diversity policy

The Board values diversity and recognises the benefits it can bring to the organisation’s ability to achieve its goals. Accordingly, the Company has adopted a diversity policy. This policy outlines the Company’s diversity objectives in relation to gender, age, cultural background and ethnicity. It includes requirements for the Board to establish measurable objectives for achieving diversity, and for the Board to assess annually both the objectives, and the Company’s progress in achieving them.

(i) Audit and Risk Committee

The Company has established an Audit and Risk Committee which operates under an Audit and Risk Committee Charter which includes, but is 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 the Company's risk management systems, the identification and management of business, economic, environmental and social sustainability risk. The Audit and Risk Committee is also responsible for reviewing the performance and terms of engagement of the Company's external auditor and is generally responsible for monitoring and advising the Board on risk management policies and procedures. The Audit Committee is currently comprised of three Non-Executive Directors, being Mr Malcolm Randall, Mr Brendan O'Hara and Mr Rudolph van Niekerk.

(j) Identification and management of risks

The Company has adopted a Risk Management Framework which is designed to assist the Company to identify, evaluate and mitigate risks affecting the Company. The Board has established the Audit and Risk Committee (discussed above) to provide focussed support in key areas.

In addition, regular internal communication between the Company's management and Board supplements the Company's quality system, compliance handling processes, employee policies and standard operating procedures which are all designed to address various forms of risks.

(k) Shareholder Communications Policy

The Company's Shareholder Communications Policy sets out practices which the Company will implement to ensure effective two way communication with its Shareholders. The Board uses various forms of communication with its Shareholders including electronic communication and encouraging Shareholders to

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attend the Company's annual general meetings, to ensure that its communication with Shareholders is frequent, clear and accessible.

4.3 Departures from Recommendations

Following admission to the Official List, the Company will be required to report any departures from the Recommendations in its annual financial report.

The Company's compliance and departures from the Recommendations as at the date of this Prospectus are detailed in the table below.

Principles and Recommendations Explanation for Departure Principle 1: Lay a solid foundation for management and oversight

Item 1.5:

A listed entity should: (a) Have a diversity policy which

includes requirements for the Board to set measurable objectives for achieving gender diversity and to assess annually both the objectives and the entity’s progress in achieving them;

(b) Disclose that policy; (c) Disclose at the end of each

reporting period the measurable objectives for achieving gender diversity and its progress in achieving them.

Partly Adopted.

The Company has a Diversity Policy but is yet to set measurable objectives for achieving gender diversity.

The Company’s HR Management Plan is in draft stages and includes an Equal Opportunity, Anti-Discrimination, Anti-Harassment and Bullying Policy. These are to be finalised by the Managing Director and then submitted to the Board. It is anticipated that these will be adopted over the following 12 months.

Principle 2: Structure the Board to Add Value

Item 2.4

The majority of the Board should be independent Directors.

Departure. KLL currently has two (2) independent Directors and two (2) Directors made up of the founding shareholders. This includes the Managing Director. As a start-up company this is considered acceptable given that the Board believes that collectively the Directors have a diverse and relevant range of skills, backgrounds, knowledge and experience to ensure effective governance of the business at this time. The Company intends to comply with this principle as the Company grows and develops.

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Principles and Recommendations

Explanation for Departure

Principle 4: Safeguard integrity in corporate reporting

Departure. The Company does not yet have a CFO but has engaged RSM as its independent auditors who currently audit the Company’s Financial records each 6 months. The intention is to adopt this practice following the IPO. In the interim, the declaration will be provided by the Managing Director and the External Auditors.

Item 4.2:

The Board of a listed entity should, before it approves the entity’s financial statements, receive from its Managing Director and Chief Financial Officer (CFO) a declaration that, in their opinion, the financial records of the entity have been properly maintained and that the financial records of the entity have been properly maintained and that the financial statements comply with the appropriate accounting standards and give a true and fair view of the financial position and the performance of the entity and that the opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively.

Principle 7: Recognise and Manage Risk

Item 7.3

A listed entity should disclose: (a) If it has an internal audit

function, how it is structured and what role it performs;

(b) If it does not, that fact and the processes it employs for evaluating and continually improving the effectiveness of its risk management and internal control processes.

Departure. As the Company grows a robust and risk based internal audit function will be established. Assistance will be sought from appropriate advisors for this purpose. Budget has been allowed for these activities.

The Company’s Audit and Risk Management Committee will have responsibility for the roll-out of the internal audit processes and timetable including monitoring of action items proposed by management to address any shortcomings identified as part of the implementation.

Principle 8: Remunerate Fairly and Responsibly

Item 8.2

A listed entity should separately disclose its policies and practices regarding the remuneration of non-executive Directors and the remuneration of executive Directors and other senior executives.

Departure. While the Company has adopted a Remuneration Committee Charter, its policies and practices regarding remuneration are yet to be finalised. A draft HR Management Plan has been developed which includes a conventional salary banding system. The bands overlap, following conventional practice, enabling some flexibility between bands. It will be role of the Remuneration Committee to finalise this and seek Board approval over the coming months. F

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5. Investigating Accountant's Report

RSM Corporate Australia Pty Ltd

8 St Georges Terrace Perth WA 6000 GPO Box R 1253 Perth WA 6844

T +61 (0) 8 9261 9100 F +61 (0) 8 9261 9199

www.rsm.com.au

2 November 2016 The Directors Kalium Lakes Limited Unit 3, 70 Wittenoom Street East Perth, WA, 6004 Dear Directors

Independent Limited Assurance Report (“Report”) on Kalium Lakes Limited Historical and Pro Forma Historical Financial Information

Introduction We have been engaged by Kalium Lakes Limited (“Kalium” or the “Company”) to report on the historical financial information of Kalium for the nine months ended 30 June 2015 and year ended 30 June 2016 and pro forma financial information of the Company as at 30 June 2016 for inclusion in the prospectus (“Prospectus”) of Kalium dated on or about 2 November 2016 in connection with Kalium’s proposed initial public offering and listing on the Australian Securities Exchange (“ASX”), pursuant to which the Company is offering 15,000,000 ordinary Kalium shares at an issue price of $0.20 per share to raise $3.0 million before costs (the “Offer”). Oversubscriptions of up to 15,000,000 shares may be accepted (to raise an additional $3.0 million before costs).

Expressions and terms defined in the Prospectus have the same meaning in this Report.

The future prospects of the Company, other than the preparation of Pro Forma Historical Financial Information, assuming completion of the transactions summarised in Note 1 of the Appendix of this Report, are not addressed in this Report. This Report also does not address the rights attaching to the shares to be issued pursuant to this Prospectus, nor the risks associated with an investment in shares in the Company.

Background Kalium is a public company which was incorporated in Western Australia on 14 July 2016 as part of a restructure of Kalium Lakes Potash Pty Ltd (“KLP”) which has been operating since October 2014. As a result of a restructure, KLP is now a wholly owned subsidiary of the Company following a share for share exchange, with each fully paid ordinary share in KLP being exchanged for one fully paid ordinary share in the Company.

The Company is an exploration and development company focused on developing the Beyondie Potash Project in Western Australia which it proposes will produce sulphate of potash (SOP) for sale domestically and internationally. F

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The Company is seeking to raise funds in order to continue exploration and development of the Beyondie Potash Project.

Scope

Historical financial information

You have requested RSM Corporate Australia Pty Ltd (“RSM”) to review the following historical financial information of the Company included in the Prospectus at the Appendix to this Report:

The notionally consolidated statements of financial performance of the Company and its controlled entities for the nine months ended 30 June 2015 and the year ended 30 June 2016; and

The notionally consolidated statement of financial position of the Company and its controlled entities as at 30 June 2016.

(together the “Historical Financial Information” attached at the Appendix A to this Report for reference).

The Historical Financial Information has been prepared in accordance with the stated basis of preparation, being the recognition and measurement principles of the International Financial Reporting Standards and the Company’s adopted accounting policies.

The Historical Financial Information for the nine months ended 30 June 2015 and the financial year ended 30 June 2016 represents that of the controlled entity, KLP, which was acquired by the Company on 3 September 2016, being a wholly owned subsidiary of the Company subsequent to 3 September 2016.

The Historical Financial Information has been extracted from the financial statements of KLP for the nine months ended 30 June 2015 and the year ended 30 June 2016, which were audited by RSM Australia Partners in accordance with International Auditing Standards. The audit reports issued for the nine months ended 30 June 2015 and year ended 30 June 2016 were unqualified opinions.

The Historical Financial Information is presented in the Prospectus in an abbreviated form, insofar as it does not include all of the presentation and disclosures required by International Financial Reporting Standards and other mandatory professional reporting requirements applicable to general purpose financial reports prepared in accordance with the Corporations Act 2001.

Pro forma historical financial information

You have requested RSM to review the pro forma historical consolidated statement of financial position as at 30 June 2016, referred to as “the Pro Forma Historical Financial Information”.

The Pro Forma Historical Financial Information has been derived from the Historical Financial Information of the Company after adjusting for the effects of the subsequent events and pro forma adjustments described in Note 1 of the Appendix to this Report. The stated basis of preparation is the recognition and measurement principles of the International Financial Reporting Standards applied to the Historical Financial Information and the events or transactions to which the subsequent events and pro forma adjustments relate, as described in Note 1 of the Appendix to this Report, as if those events or transactions had occurred as at the date of the Historical Financial Information. Due to its nature, the Pro Forma Historical Financial Information does not represent the Company’s actual or prospective financial position or statement of financial performance.

Directors’ responsibility The Directors of the Company are responsible for the preparation of the Historical Financial Information and Pro Forma Historical Financial Information, including the selection and determination of pro forma adjustments made to the Historical Financial Information and included in the Pro Forma Historical Financial Information. This includes responsibility for such internal controls as the Directors determine are necessary to enable the preparation of Historical Financial Information and Pro Forma Historical Financial Information that are free from material misstatement, whether due to fraud or error.

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Our responsibility

Our responsibility is to express a limited assurance conclusion on the Historical Financial Information and Pro Forma Historical Financial Information based on the procedures performed and the evidence we have obtained. We have conducted our engagement in accordance with the Standard on Assurance Engagement ASAE 3450 Assurance Engagements involving Corporate Fundraisings and/or Prospective Financial Information.

A review consists of making such enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. Our procedures included:

A consistency check of the application of the stated basis of preparation, to the Historical and Pro Forma Historical Financial Information;

A review of the Company’s and its auditors’ work papers, accounting records and other documents;

Enquiry of directors, management personnel and advisors;

Consideration of subsequent events and pro forma adjustments described in Note 1 of the Appendix to this Report; and

Performance of analytical procedures applied to the Pro Forma Historical Financial Information.

A review is substantially less in scope than an audit conducted in accordance with International Auditing Standards and consequently does not enable us to obtain reasonable assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusions Historical Financial Information Based on our review, which is not an audit, nothing has come to our attention that causes us to believe that the Historical Financial Information, as described in the Appendix to this Report, and comprising:

The notionally consolidated statement of financial performance of the Company and its controlled entities for nine months ended 30 June 2015 and year ended 30 June 2016; and

The notionally consolidated statement of financial position as at 30 June 2016 of the Company and its controlled entities,

are not presented fairly, in all material respects, in accordance with the stated basis of preparation, as described in Note 2 of the Appendix to this Report.

The Company did not trade in the period from incorporation to 30 June 2016 and as such no financial performance was recorded.

Pro Forma Historical Financial Information

Based on our review, which is not an audit, nothing has come to our attention that causes us to believe that the Pro Forma Historical Financial Information, as described in the Appendix to this Report, and comprising the consolidated statements of financial position as at 30 June 2016 of the Company and its controlled entities are not presented fairly in all material respects, in accordance with the stated basis of preparation, as described in Note 1 of the Appendix of this Report.

Restriction on Use Without modifying our conclusions, we draw attention to the purpose of the financial information, being for inclusion in the Prospectus. As a result, the financial information may not be suitable for use for another purpose. F

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Responsibility RSM has consented to the inclusion of this assurance report in the Prospectus in the form and context in which it is included. RSM has not authorised the issue of the Prospectus. Accordingly, RSM makes no representation regarding, and takes no responsibility for, any other documents or material in, or omissions from, the Prospectus.

Disclosure of Interest RSM does not have any pecuniary interest that could reasonably be regarded as being capable of affecting its ability to give an unbiased conclusion in this matter. RSM will receive a professional fee for the preparation of this Report.

Yours faithfully

A J GILMOUR Director

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Appendix A – Historical and Pro Forma Financial Information

KALIUM LAKES LIMITED STATEMENT OF FINANCIAL PERFORMANCE

FOR THE YEAR ENEDED 30 JUNE 2016 AND THE NINE MONTHS ENDED 30 JUNE 2015

Year ended 9 months

ended 30-Jun-16 30-Jun-15 Audited Audited $ $

Other income 849,748 849,765 Expenses Consultants (1,840,623) (450,680) Drilling (597,717) (547,160) Environment (167,325) (214,265) Freight and Cartage (9,809) (525) Native Title (454,903) (179,295) Site General (477,020) (594,170) Tenements (452,237) (208,429) Travelling Expenses (71,869) (16,030) Salaries and Wages (44,142) - Other Expenses (381,172) (103,325) Loss before income tax expense (3,647,069) (1,464,114) Income tax expense - - Loss after income tax expense for the year attributable to the owners of Kalium Lakes Potash Pty Ltd

(3,647,069) (1,464,114)

Other comprehensive income for the year, net of tax - - Total comprehensive loss for the year attributable to the owners of Kalium Lakes Potash Pty Ltd

(3,647,069) (1,464,114)

Investors should note that past results are not a guarantee of future performance.

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KALIUM LAKES LIMITED CONSOLIDATED PRO FORMA STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2016

Kalium Subsequent

events Pro forma

adjustments Pro forma Audited Unaudited Unaudited Unaudited Note 30-Jun-16 30-Jun-16 30-Jun-16 30-Jun-16 $ $ $ $

Assets Current assets Cash and cash equivalents 3 621,707 938,459 2,543,800 4,103,966 Trade and other receivables 4 879,162 (835,459) - 43,703 Total current assets 1,500,869 103,000 2,543,800 4,147,669

Non-current assets Property, plant & equipment 11,101 - - 11,101 Total non-current assets 11,101 - - 11,101 Total assets 1,511,970 103,000 2,543,800 4,158,770

Liabilities Current liabilities Trade and other payables 269,732 - - 269,732 Total current liabilities 269,732 - - 269,732 Total liabilities 269,732 - - 269,732 Net assets 1,242,238 103,000 2,543,800 3,889,038

Equity Issued capital 5 6,353,421 103,000 2,473,300 8,929,721 Reserves 6 - - 738,000 738,000 Accumulated losses 7 (5,111,183) - (667,500) (5,778,683) Total equity 1,242,238 103,000 2,543,800 3,889,038

The consolidated pro forma statement of financial position represents the audited statement of financial position of the Company as at 30 June 2016 adjusted for the subsequent events and pro forma transactions outlined in Note 1 of this Appendix. It should be read in conjunction with the notes to the historical and pro forma financial information.

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1. Introduction The financial information set out in this Appendix consists of the notionally consolidated statement of financial position as at 30 June 2016 and the notionally consolidated statement of financial performance for the year ended 30 June 2016 and the nine months ended 30 June 2015 (“Historical Financial Information”) together with a pro forma consolidated statement of financial position as at 30 June 2016, reflecting the Directors’ pro forma adjustments (“Pro Forma Historical Financial Information”). The Pro Forma Historical Financial Information has been compiled by adjusting the consolidated statements of financial position of the Company for the impact of the following subsequent events and pro forma adjustments. Adjustments adopted in compiling the Pro Forma Historical Financial Information The Pro Forma Historical Consolidated Information has been prepared by adjusting the Historical Financial Information to reflect the financial effects of the following subsequent events which have occurred in the period since 30 June 2016 and the date of this Report:

(i) A restructure of the Company being completed whereby the Company acquires KLP via a common control transaction through the issue of 91,494,741 ordinary shares in the Company to existing KLP shareholders;

(ii) The issue of 20,000,000 performance rights to the founding shareholders of KLP and management of the Company (“Performance Rights”) which convert into ordinary shares subject to performance targets being achieved within five years of issue, as follows:

5 million Performance Rights vesting upon completion of a Definitive Feasibility Study;

5 million Performance Rights vesting upon securing funding for the development and construction of the commercial SOP product operation; and

10 million Performance Rights vesting upon achievement of the first commercial production of SOP;

(iii) Receipt of funds from research and development (R&D) income tax return of $835,459; and

(iv) The issue of 686,665 ordinary Kalium shares at $0.15 each to raise $103,000, on 4 August 2016;

and the following pro forma transactions which are yet to occur, but are proposed to occur immediately before or following completion of the Offer:

(v) The issue of 15,000,000 ordinary Kalium shares at $0.20 each to raise $3,000,000 before costs pursuant to the Offer;

(vi) The issue of 7,500,000 options to directors and officers of the Company, exercisable at $0.25 each with an expiry date three years from the date of grant (“Options”);

(vii) The payment of cash costs related to the Offer estimated to be $456,200; and

(viii) The issue of 300,000 shares (“Advisor Shares”) and 750,000 options to advisors in relation to the Offer, exercisable at $0.25 each with a 3-year expiry (“Advisor Options”);

The Pro Forma Historical Financial Information has been presented in abbreviated form and does not contain all the disclosures usually provided in an Annual Report prepared in accordance with the Corporations Act 2001.

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2. Statement of significant accounting policies

(a) Basis of preparation

The Historical Financial Information has been prepared in accordance with the recognition and measurement requirements of the International Financial Reporting Standards (“IFRS”), adopted by the International Accounting Standards Board and the Corporations Act 2001. The Company was incorporated on 14 July 2016 and has not undertaken any trading activities up until it acquired KLP on 3 September 2016. The financial information presented in the Prospectus has been notionally consolidated for the nine months ended 30 June 2015 and the financial year ended 30 June 2016 to reflect the Company's acquisition of KLP that occurred post 30 June 2016 (together, KLP and Kalium are referred to as the “Kalium Group”). The acquisition of KLP has not resulted in a substantive change to the operations of the Kalium Group or its assets and liabilities and accordingly the presentation of the notionally consolidated financial information reflects the historical financial performance and financial position of the Kalium Group. This acquisition of KLP is considered a common control transaction with the Company being considered the accounting acquirer and the transaction accounted for at book value rather than fair value. In adopting this approach the Directors note that there is an alternate view that it could be accounted for as a business combination. If this view is taken, the net assets of the group would have been uplifted to fair value, with consequential impacts on the Income Statement and Statement of Financial Position. The Directors anticipate that the excess of fair value compared to the book value of net assets would primarily be allocated to exploration, evaluation and development costs and would be subject to future amortisation expenses. The significant accounting policies that have been adopted in the preparation and presentation of the historical and the Pro forma Historical Financial Information are: (b) Basis of measurement

The historical and pro forma financial information has been prepared on the historical cost basis except for financial instruments classified at fair value through profit or loss, which are measured at fair value. (c) Functional and presentation currency

These historical and pro forma financial information has been presented in Australian dollars which is the Group’s functional currency. (d) Principles of consolidation

The historical and pro forma financial information incorporates the assets, liabilities and results of entities controlled by the Company at the end of the pro forma reporting period. A controlled entity is any entity over which the Company has the ability and right to govern the financial and operating policies so as to obtain benefits from the entity’s activities. Control will generally exist when the parent owns, directly or indirectly through subsidiaries, more than half of the voting power of an entity. In assessing the power to govern, the existence and effect of holdings of actual and potential voting rights are also considered. Where controlled entities have entered or left the consolidated entity during the year, the financial performance of those entities is included only for the period of the year that they were controlled. In preparing the consolidated financial statements, all intragroup balances and transactions between entities in the consolidated entity have been eliminated in full on consolidation. Accounting policies of subsidiaries have been charged where necessary to ensure consistency with those adopted by the parent entity. (e) Use of estimates and judgements

The preparation of financial statements in conformity with IFRS 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.

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(f) Going concern

The historical and pro forma 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. (g) Revenue recognition

Revenue is recognised when it is probable that the economic benefit will flow to the company and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable. 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. Other revenue

Other revenue is recognised when it is received or when the right to receive payment is established. (h) 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. (i) 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 company 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 (j) 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 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: Plant and equipment

Office Equipment

5 years

3 years

The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to the company. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss.

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(k) Exploration, evaluation and development expenditure

Exploration and evaluation are written off as incurred. The group’s policy is that such costs will only be carried forward when development of the area indicates that recoupment will occur or where activities in the area have reached an advanced stage which permits reasonable assessment of the existence of economically recoverable reserves. Exploration, evaluation and development costs comprise acquisition costs, direct exploration and evaluation costs and an appropriate portion of related overhead expenditure but do not include general overhead expenditure which has no direct connection with a particular area of interest. Revenue received from the sale or disposal of product, materials or services during the exploration and evaluation phase of operation is offset against expenditure in respect of the area of interest concerned. When an area of interest is abandoned or the Directors decide that it is not commercially viable, any accumulated costs in respect of that area are written off in the financial period the decision is made. Each area of interest is also reviewed at the end of each accounting period and accumulated costs written off to the extent that they will not be recoverable in the future. Restoration costs arising from exploration activities are provided for at the time of the activities which give rise to the need for restoration. Amortisation is not charged on costs carried forward in respect of areas of interest in the development phase until production commences. When production commences, carried forward exploration, evaluation and development costs are amortised on a units of production basis over the life of the economically recoverable reserves.

(l) Trade and other payables

These amounts represent liabilities for goods and services provided to the Company 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. (m) Share-based payment transactions

The Company provides benefits to employees and other parties in the form of share based payments, whereby the employees and parties provide services in exchange for shares and other securities in the Company. The cost of the equity settled share based payment transactions is determined by reference to the fair value of the equity instruments granted.

The fair value of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance/ and or service conditions are fulfilled (“vesting period”).

The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects:

(i) The grant date fair value;

(ii) The extent to which the vesting period has expired; and

(iii) The number of equity instruments that, in the opinion of the Directors of the Company, will ultimately vest.

This opinion is formed based on the best available information at reporting date. No adjustment is made for the likelihood of market performance conditions being met as the effect of these conditions is included in the determination of fair value at grant date.

No expense is recognised for equity instruments that do not ultimately vest, except for equity instruments where vesting is conditional upon a market condition.

(n) Goods and services Tax

Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Tax Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item 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. Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority.

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3. Cash and cash equivalents

Note Audited Unaudited Pro-forma

30-Jun-16 30-Jun-16 $ $

Cash and cash equivalents 621,707 4,103,966

Kalium cash and cash equivalents as at 30 June 2016 621,707

Subsequent events are summarised as follows:

Receipt of R&D tax receivable balance 1(iii) 835,459 Seed capital raising through the issue of 686,665 shares issued at $0.15 per share 1(iv) 103,000

938,459 Adjustments arising in the preparation of the pro forma statement of financial position are summarised as follows:

Proceeds from the Public Offer pursuant to the Prospectus 1(v) 3,000,000 Capital raising costs 1(vii) (456,200)

2,543,800

Pro-forma cash and cash equivalents 4,103,966

The Prospectus has provision for subscriptions of between 15,000,000 and 30,000,000 shares to raise between $3 million and $6 million (before capital raising costs) wherein the pro forma statement of financial position assumes the minimum $3 million is raised. Should the maximum $6 million be raised, the share issue cash costs would increase to $639,300 and the cash at bank balance would increase by $2,816,900 to $6,920,866.

4. Trade and other receivables


30-Jun-16 30-Jun-16 $ $

Trade and other receivables 879,162 43,703

Kalium receivables as at 30 June 2016 879,162

Subsequent events are summarised as follows: Receipt of R&D tax return funds 1(iii) (835,459)

Pro-forma trade and other receivables 43,703

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5. Issued capital

Note Number of

shares $

Kalium issued share capital as at 30 June 2016 90,808,076 6,353,421

Subsequent events are summarised as follows:

Seed capital raising through the issue of 686,665 shares issued at $0.15 per share 1(iv) 686,665 103,000

Adjustments arising in the preparation of the pro forma statement of financial position are summarised as follows:

Fully paid ordinary shares issued at $0.20 pursuant to this Prospectus 1(v) 15,000,000 3,000,000 Advisor Shares issued to in relation to the Offer 1(viii) 300,000 60,000 Cash costs associated with the share issue pursuant to this Prospectus 1(vii) - (456,200) Cost of Advisor Options issued to in relation to the Offer 1(viii) - (70,500) Cost of Advisor Shares issued to in relation to the Offer 1(viii) - (60,000)

15,300,000 2,473,300

Pro-forma issued share capital 106,794,741 8,929,721

The Prospectus has provision for subscriptions of between 15,000,000 and 30,000,000 shares to raise between $3 million and $6 million (before capital raising costs) wherein the pro forma statement of financial position assumes the minimum $3 million is raised. Should the maximum $6 million be raised, the share issue cash costs would increase to $639,300, the cost of the Advisor Options would increase to $141,000 and the issued capital would increase by $2,746,400 to $11,676,121.

(a) Restructure

The Company was not incorporated until after 30 June 2016, however as the Restructure has been treated as a common control transaction, the pro forma opening share capital balance has been shown as a continuation of the issued share capital of KLP as at 30 June 2016 whilst the number of shares on issue is the number of shares on issue in the Company after completion of the Restructure.

(b) Performance Rights

In addition to the ordinary shares issued to the shareholders of KLP in the Restructure, the Company issued 20,000,000 Performance Rights to the founding shareholders of KLP and management of the Company. The pro forma fair value of the Performance Rights is $0.20 per right totalling $4,000,000 which assumes the required performance milestone will be achieved.

The Performance Rights convert into ordinary shares subject to performance targets being achieved within five years of issue, as follows:

5 million Performance Rights vesting upon completion of a Definitive Feasibility Study;

5 million Performance Rights vesting upon securing funding for the development and construction of the commercial sulphate of potash (SOP) product operation; and

10 million Performance Rights vesting upon achievement of the first commercial production of SOP.

The cost of the Performance Rights will be recognised over the vesting periods for the performance targets above to the extent they vest.

For full terms of the Performance Rights refer to section 10.2 of the Prospectus.

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6. Reserves


30-Jun-16 30-Jun-16 $ $

Reserves - 738,000

Kalium reserves as at 30 June 2016 -


Options issued to directors and officers of the Company for services provided 1(vi) 667,500 Advisor Options issued to in relation to the Offer 1(viii) 70,500

Pro-forma reserves 738,000

(a) Options and Advisor Options

Pursuant to the Offer, the Company will issue 7,500,000 Options to management and 750,000 Advisor Options (assuming the minimum $3 million capital raising; up to 1,500,000 Advisor Options will be issued if the maximum $6 million capital raising is achieved). The pro forma fair value of the Options and Advisor Options are $0.668 million and $0.071 million respectively. Should the maximum $6 million be raised, the pro forma fair value of the Advisor Options would increase to $0.141 million and the reserves would increase by $70,500 to $808,500.

All options have been valued using a standard binomial pricing model based on the fair value of a Company share at the grant date, assuming minimum subscription of the Offer using the following assumptions:

Assumptions Options Advisor Options

Stock price $ 0.20 $ 0.20 Exercise price $ 0.25 $ 0.25 Expiry period 2.8 years 3 years Expected future volatility 80% 80% Risk free rate 1.5% 1.5% Dividend yield 0% 0%

The terms and conditions for each set of Options and Advisor Options are set out in sections 10.3 and 10.4 of the Prospectus.

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7. Accumulated losses


30-Jun-16 30-Jun-16 $ $

Accumulated losses (5,111,183) (5,778,683)

Kalium accumulated losses as at 30 June 2016 (5,111,183)


Cost of Options issued to directors and officers of the Company for services provided 1(vi) (667,500)

Pro-forma accumulated losses (5,778,683)

8. Related party disclosure

Following completion of the Offer and Restructure, the Directors of Kalium will be Malcolm Randall, Brett Hazleden, Rudolph van Niekerk and Brendan O’Hara. Directors’ holdings of shares, directors’ remuneration and other directors’ interests are set out in Section 11.3 of the Prospectus.

9. Commitments and contingent liabilities

The company had $184,647 worth of rental and rates expenditure commitments as at 30 June 2016 relating to its tenements.

The company has no contingent liabilities as at 30 June 2016.

10. Controlled entities

Consolidated Entities Country of Incorporation Pro forma interest held

Kalium Lakes Limited Australia Parent

Kalium Lakes Potash Pty Ltd Australia 100%

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Appendix B – Audited Financial Statements

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Kalium Lakes Potash Pty LtdABN 92 601 436 060

Annual Report –30 June 2016

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Kalium Lakes Potash Pty LtdDirectors' report30 June 2016

1

The directors present their report, together with the financial statements on the company, for the year ended 30 June 2016. The company was incorporated on 1 October 2014. As such, the comparative information presented in the statement of profit or loss and other comprehensive income, statement of changes in equity, statement of cash flows and the accompanying notes is for a period of 9 months.

DirectorsThe following persons were directors of the company during the whole of the financial year and up to the date of this report, unless otherwise stated:

Mr Brett William Hazelden Mr Brent Ronald Smoothy Mr Philippus Rudolph Van Niekerk Mr Malcolm Roger Joseph Randall (appointed 11 March 2016) Mr Brendan Wayne O’Hara (appointed 11 March 2016)

Principal activitiesDuring the financial year the principal continuing activities of the company consisted of exploration and prefeasibility study into the Beyondie Potash Project.

DividendsThere were no dividends paid, recommended or declared during the current financial year.

Review of operationsThe loss for the company for the year ending 30 June 2016 amounted to $3,647,069 (9 months to 30 June 2015: $1,464,114).

Significant changes in the state of affairsThere were no significant changes in the state of affairs of the company during the financial year.

Matters subsequent to the end of the financial yearNo matter or circumstance has arisen since 30 June 2016 that has significantly affected, or may significantly affect the company's operations, the results of those operations, or the company's state of affairs in future financial periods.

Likely developments and expected results of operationsInformation on likely developments in the operations of the company and the expected results of operations have not been included in this report because the directors believe it would be likely to result in unreasonable prejudice to the company.

Environmental regulationThe company is not subject to any significant environmental regulation under Australian Commonwealth or State law.

Shares under optionThere were no unissued ordinary shares of the company under option outstanding at the date of this report.

Shares issued on the exercise of optionsThere were no ordinary shares of the company issued on the exercise of options during the year ended 30 June 2016 and up to the date of this report.

Indemnity and insurance of officersThe company has indemnified the directors and executives of the company for costs incurred, in their capacity as a director or executive, for which they may be held personally liable, except where there is a lack of good faith.

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Kalium Lakes Potash Pty LtdDirectors' report30 June 2016

2

During the financial year, the company paid a premium in respect of a contract to insure the directors and executives of the company against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium.

Indemnity and insurance of auditorThe company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of the company or any related entity against a liability incurred by the auditor.

During the financial year, the company has not paid a premium in respect of a contract to insure the auditor of the company or any related entity.

Proceedings on behalf of the companyNo person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the company, or to intervene in any proceedings to which the company is a party for the purpose of taking responsibility on behalf of the company for all or part of those proceedings.

Auditor's independence declarationA copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out on the following page.

On behalf of the directors

________________________________Brett Hazelden Director

2 September 2016 Perth

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THE POWER OF BEING UNDERSTOOD AUDIT | TAX | CONSULTING

RSM Australia Partners is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the RSM network is an independent accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction.

RSM Australia Partners ABN 36 965 185 036

Liability limited by a scheme approved under Professional Standards Legislation

RSM Australia Partners

8 St Georges Terrace Perth WA 6000 GPO Box R1253 Perth WA 6844

T +61 (0) 8 9261 9100 F +61 (0) 8 9261 9111

www.rsm.com.au

AUDITOR’S INDEPENDENCE DECLARATION As lead auditor for the audit of the financial report of Kalium Lakes Potash Pty Ltd., for the year ended 30 June 2016, I declare that, to the best of my knowledge and belief, there have been no contraventions of: (i) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and (ii) any applicable code of professional conduct in relation to the audit. RSM AUSTRALIA PARTNERS Perth, WA D J WALL Dated: 2 September 2016 Partner

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Kalium Lakes Potash Pty LtdContents30 June 2016

4

Contents

Statement of profit or loss and other comprehensive income 5Statement of financial position 6 Statement of changes in equity 7 Statement of cash flows 8Notes to the financial statements 9Directors' declaration 17Independent auditor's report to the members of Kalium Lakes Potash Pty Ltd 18

General information

The financial statements cover Kalium Lakes Potash Pty Ltd as an individual entity. The financial statements are presented in Australian dollars, which is Kalium Lakes Potash Pty Ltd’ functional and presentation currency.

Kalium Lakes Potash Pty Ltd is a company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business are:

Registered office

Ground Floor RSM Australia 8 St George’s Terrace Perth, WA 6000

A description of the nature of the company's operations and its principal activities are included in the directors' report, which is not part of the financial statements.

The financial statements were authorised for issue, in accordance with a resolution of directors, on 2 September 2016. The directors have the power to amend and reissue the financial statements.

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Kalium Lakes Potash Pty LtdStatement of profit or loss and other comprehensive incomeFor the year ended 30 June 2016

(9 months)Note 2016 2015

$ $

The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes

5

Revenue

Other income 3 849,748 849,765

ExpensesConsultants (1,840,623) (450,680)Drilling (597,717) (547,160)Environment (167,325) (214,265)Freight and Cartage (9,809) (525)Native Title (454,903) (179,295)Site General (477,020) (594,170)Tenements (452,237) (208,429)Travelling Expenses (71,869) (16,030)Salaries and Wages (44,142) -Other Expenses (381,172) (103,325)

Loss before income tax expense (3,647,069) (1,464,114)

Income tax expense - -

Loss after income tax expense for the year attributable to the owners of Kalium Lakes Potash Pty Ltd (3,647,069) (1,464,114)

Other comprehensive income for the year, net of tax - -

Total comprehensive loss for the year attributable to the owners of Kalium Lakes Potash Pty Ltd (3,647,069) (1,464,114)

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Kalium Lakes Potash Pty LtdStatement of financial positionAs at 30 June 2016

Note 2016 2015$ $

The above statement of financial position should be read in conjunction with the accompanying notes 6

Assets

Current assetsCash and cash equivalents 4 621,707 599,556Trade and other receivables 5 879,162 1,883,874Total current assets 1,500,869 2,483,430

Non-current assetsProperty, plant & equipment 6 11,101 -Total non-current assets 11,101 -

Total assets 1,511,970 2,483,430

Liabilities

Current liabilitiesTrade and other payables 7 269,732 612,023Borrowings 8 - 479,320Total current liabilities 269,732 1,091,343

Total liabilities 269,732 1,091,343

Net assets 1,242,238 1,392,087

EquityIssued capital 9 6,353,421 2,856,201Accumulated losses (5,111,183) (1,464,114)

Total equity 1,242,238 1,392,087

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Kalium Lakes Potash Pty LtdStatement of changes in equityFor the year ended 30 June 2016

The above statement of changes in equity should be read in conjunction with the accompanying notes 7

Issued Accumulated Totalcapital losses equity

$ $ $

Balance at 1 October 2014 - - -

Shares issued during the period 2,856,201 - 2,856,201

Loss after income tax expense for the period - (1,464,114) (1,464,114)

Other comprehensive income for the period, net of tax - - -

Transaction costs - - -

Total comprehensive loss for the period - (1,464,114) (1,464,114)

Balance at 30 June 2015 2,856,201 (1,464,114) 1,392,087

Issued Accumulated Totalcapital losses equity

$ $ $

Balance at 1 July 2015 2,856,201 (1,464,114) 1,392,087

Shares issued during the year 3,576,875 - 3,576,875

Loss after income tax expense for the year - (3,647,069) (3,647,069)

Other comprehensive income for the year, net of tax - - -

Transaction costs (79,655) - (79,655)

Total comprehensive loss for the year - (3,647,069) (3,647,069)

Balance at 30 June 2016 6,353,421 (5,111,183) 1,242,238

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Kalium Lakes Potash Pty LtdStatement of cash flowsFor the year ended 30 June 2016

(9 months)Note 2016 2015

$ $

The above statement of cash flows should be read in conjunction with the accompanying notes 8

Cash flows from operating activitiesReceipts from operations 849,766 - Payments to suppliers and employees (3,612,212) (1,005,237)

Net cash (used in) operating activities 14 (2,762,446) (1,005,237)

Cash flows from investing activitiesPayments for property, plant and equipment (12,485) -Interest received 13,843

Net cash provided by investing activities 1,358 -

Cash flows from financing activitiesProceeds from related party loans - 293,593Proceeds from issue of shares 2,862,894 1,311,200 Transaction costs - IPO (79,655) -

Net cash provided by financing activities 2,783,239 1,604,793

Net increase in cash and cash equivalents 22,151 599,556 Cash and cash equivalents at the beginning of the financial year 599,556 -

Cash and cash equivalents at the end of the financial year 4 621,707 599,556

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Kalium Lakes Potash Pty LtdNotes to the financial statements30 June 2016

9

Note 1. Significant accounting policies

The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated.

New, revised or amending Accounting Standards and Interpretations adoptedThe company has adopted all of the new, revised or amending Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting year.

Any new, revised or amending Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.

Basis of preparationIn the directors' opinion, the company is not a reporting entity because there are no users dependent on general purpose financial statements.

These are special purpose financial statements that have been prepared for the purposes of complying with the Corporations Act 2001 requirements to prepare and distribute financial statements to the owners of Kalium Lakes Potash Pty Ltd. The directors have determined that the accounting policies adopted are appropriate to meet the needs of the owners of Kalium Lakes Potash Pty Ltd.

These financial statements have been prepared in accordance with the recognition and measurement requirements specified by the Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') and the disclosure requirements of AASB 101 'Presentation of Financial Statements', AASB 107 'Statement of Cash Flows', AASB 108 'Accounting Policies, Changes in Accounting Estimates and Errors', AASB 1031 'Materiality', AASB 1048 'Interpretation of Standards' and AASB 1054 'Australian Additional Disclosures', as appropriate for for-profit oriented entities.

Comparatives The financial statements provide comparative information in respect of the previous period. The company was incorporated on 1 October 2014. As such, the comparative information presented in the statement of profit or loss and other comprehensive income, statement of changes in equity, statement of cash flows and the accompanying notes is for a period of 9 months.

Historical cost convention The financial statements have been prepared under the historical cost convention.

Critical accounting estimates The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the company's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 2.

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Note 1. Significant accounting policies (continued)

10

Going Concern

The financial statements have been prepared on the 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.

As disclosed in the financial statements, the company incurred losses of $3,647,069 and had net cash outflows from operating activities of $2,762,446 for the year ended 30 June 2016.

The Directors believe that it is reasonably foreseeable that the company will continue as a going concern and that it is appropriate to adopt the going concern basis in the preparation of the financial report after consideration of the following factors:

- The company is completing a prospectus for listing on the Australian Securities Exchange on or around October 2016. In the event that the listing is delayed, the company has the ability to issue additional shares to raise further working capital. The company has been successful in doing this previously as disclosed in the statement of cash flows, with net proceeds from issue of shares of $2,783,239 for the current financial year and $1,311,200 for the previous financial year; and

- The company has the ability to scale down its operations in order to save costs, in the event insufficient cash is available to meet future expenditure commitments.

Revenue recognitionRevenue is recognised when it is probable that the economic benefit will flow to the company and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable.

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.

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

Current and non-current classificationAssets and liabilities are presented in the statement of financial position based on current and non-current classification.

An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12 months after the reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period. All other assets are classified as non-current.

A liability is classified as current when: it is either expected to be settled in normal operating cycle; it is held primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All other liabilities are classified as non-current.

Deferred tax assets and liabilities are always classified as non-current.

Cash and cash equivalentsCash 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.

Trade and other receivablesTrade 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. F

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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 company 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.

Impairment of non-financial assetsNon-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount.

Recoverable amount is the higher of an asset's fair value less costs of disposal and value-in-use. The value-in-use is the present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or cash-generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to form a cash-generating unit.

Property, plant and equipmentPlant 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 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:

Plant and equipment Office Equipment

5 years 3 years

The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date.An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to the company. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss.

Exploration, evaluation and development expenditure

Exploration and evaluation are written off as incurred. The group’s policy is that such costs will only be carried forward when development of the area indicates that recoupment will occur or where activities in the area have reached an advanced stage which permits reasonable assessment of the existence of economically recoverable reserves.

Exploration, evaluation and development costs comprise acquisition costs, direct exploration and evaluation costs and an appropriate portion of related overhead expenditure but do not include general overhead expenditure which has no direct connection with a particular area of interest.

Revenue received from the sale or disposal of product, materials or services during the exploration and evaluation phase of operation is offset against expenditure in respect of the area of interest concerned.

When an area of interest is abandoned or the Directors decide that it is not commercially viable, any accumulated costs in respect of that area are written off in the financial period the decision is made. Each area of interest is also reviewed at the end of each accounting period and accumulated costs written off to the extent that they will not be recoverable in the future. Restoration costs arising from exploration activities are provided for at the time of the activities which give rise to the need for restoration.

Amortisation is not charged on costs carried forward in respect of areas of interest in the development phase until production commences. When production commences, carried forward exploration, evaluation and development costs are amortised on a units of production basis over the life of the economically recoverable reserves.

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Trade and other payables These amounts represent liabilities for goods and services provided to the company prior to the end of the financial period 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.

Fair value measurementWhen an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date; and assumes that the transaction will take place either: in the principal market; or in the absence of a principal market, in the most advantageous market.

Fair value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming they act in their economic best interests. For non-financial assets, the fair value measurement is based on its highest and best use. Valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, are used, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

Foreign currency translationThe financial statements are presented in Australian dollars, which is Kalium Lakes Pty Ltd.’s functional and presentation currency.

Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the year-end exchange rate. Non-monetary items measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair value are reported at the exchange rate at the date when fair values were determined.

Exchange differences arising on the translation of monetary items are recognised in profit or loss, except where deferred in equity as a qualifying cash flow or net investment hedge.

Exchange differences arising on the translation of non-monetary items are recognised directly in other comprehensive income to the extent that the underlying gain or loss is directly recognised in other comprehensive income, otherwise the exchange difference is recognised in profit or loss.

Issued capitalOrdinary 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.

Goods and Services Tax ('GST') and other similar taxesRevenues, 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.

New Accounting Standards and Interpretations not yet mandatory or early adoptedAustralian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory, have not been early adopted by the company for the annual reporting year ended 30 June 2016. The company has not yet assessed the impact of these new or amended Accounting Standards and Interpretations.

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Note 2. Critical accounting judgements, estimates and assumptions

The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and assumptions on historical experience and on other various factors, including expectations of future events, management believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal the related actual results. The judgements, estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the next financial year are discussed below.

Impairment of non-financial assets other than goodwill and other indefinite life intangible assets The company assesses impairment of non-financial assets other than goodwill and other indefinite life intangible assets at each reporting date by evaluating conditions specific to the company and to the particular asset that may lead to impairment. If an impairment trigger exists, the recoverable amount of the asset is determined. This involves fair value less costs of disposal or value-in-use calculations, which incorporate a number of key estimates and assumptions.

Research & Development tax rebate The receivable and corresponding revenue recognised at the reporting date is based on estimates made by R&D tax specialists from the utilisation of historical cost data.

Note 3. Revenue (9 months)

2016 2015$ $

Other income Foreign exchange gain 446 - Interest 13,843 - Research & Development Tax Offset 835,459 849,765

849,748 849,765

Revenue 849,748 849,765

Note 4. Current assets - cash and cash equivalents

2016 2015$ $

Cash at bank 621,707 599,556

621,707 599,556

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Note 5. Current assets - trade and other receivables (9 months)

2016 2015$ $

GST Refundable 43,705 184,705Research & Development Tax Offset Receivable 835,457 849,765Other receivables - 849,404

879,162 1,883,874

Note 7. Current liabilities - trade and other payables

2016 2015$ $

Accounts Payable 257,484 432,266 Other payables 6,134 179,757 Credit card 6,114 -

269,732 612,023

Note 8. Current liabilities - borrowings

2016 2015$ $

Related party borrowings - 479,320

- 479,320

Note 6. Non-current assets - property, plant and equipment

2016 2015$ $

Plant and equipment - at cost 11,350 - Less: Accumulated depreciation (1,351) -Office Equipment – at cost 1,135 -Less: Accumulated depreciation (33) -

11,101 -

11,101 -

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Note 9. Equity - issued capital

2016 2015 2016 2015Shares Shares $ $

Ordinary shares - fully paid 126,631,507 112,324,004 6,353,421 2,856,001

Ordinary shares Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the company in proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and the company does not have a limited amount of authorised capital.

On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote.

Note 10. Remuneration of auditors

During the financial period the following fees were paid or payable for services provided by RSM Australia Partners, the auditor of the company:

(9 months)2016 2015

$ $

Audit services - RSM Australia Partners Audit of the financial statements 18,000 5,000

Other services - RSM Australia Pty Ltd RSM Tax Services – Research & Development Tax 51,131 - RSM Business Advisory – other financial services 46,972 2,376

106,103 7,376

Note 11. Contingent liabilities

The company has no contingent liabilities as at 30 June 2016.

Note 12. Commitments

The company had $184,647 worth of rental and rates expenditure commitments as at 30 June 2016 relating to its tenements.

Note 13. Events after the reporting period

No matter or circumstance has arisen since 30 June 2016 that has significantly affected, or may significantly affect the company's operations, the results of those operations, or the company's state of affairs in future financial years. F

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Note 14. Reconciliation of profit after income tax to net cash from operating activities (9 months)

2016 2015$ $

Loss after income tax expense for the year (3,647,069) (1,464,114)

Adjustments for: Depreciation and amortisation 1,384 - Interest income (13,843) -Invoices paid via related party loan - 185,727Invoices paid via issue of equities 904,309 632,360

Change in operating assets and liabilities: Decrease/(Increase) in trade and other receivables 155,307 (971,233)(Decrease)/increase in trade and other payables (162,534) 612,023

Net cash (used in)/provided by operating activities (2,762,446) 1,005,237

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Kalium Lakes Potash Pty LtdDirectors’ Declaration30 June 2016

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In the directors' opinion:

● the company is not a reporting entity because there are no users dependent on general purpose financial statements. Accordingly, as described in note 1 to the financial statements, the attached special purpose financial statements have been prepared for the purposes of complying with the Corporations Act 2001 requirements to prepare and distribute financial statements to the owners of Kalium Lakes Potash Pty Ltd;

● the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards as described in note 1 to the financial statements, the Corporations Regulations 2001 and other mandatory professional reporting requirements;

● the attached financial statements and notes give a true and fair view of the company's financial position as at 30 June 2016 and of its performance for the financial year ended on that date; and

● there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.

Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001.

On behalf of the directors

________________________________Mr Brett William Hazelden Director 2 September 2016 Perth

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THE POWER OF BEING UNDERSTOOD AUDIT | TAX | CONSULTING

RSM Australia Pty Ltd is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the RSM network is an independent accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction.

RSM Australia Pty Ltd ACN 009 321 377 atf Birdanco Practice Trust ABN 65 319 382 479 trading as RSM

Liability limited by a scheme approved under Professional Standards Legislation

RSM Australia Partners

8 St Georges Terrace Perth WA 6000 GPO Box R1253 Perth WA 6844

T +61 (0) 8 9261 9100 F +61 (0) 8 9261 9111

www.rsm.com.au

INDEPENDENT AUDITOR’S REPORT

TO THE MEMBERS OF

KALIUM LAKES POTASH PTY LTD We have audited the accompanying financial report, being a special purpose financial report, of Kalium Lakes Potash Pty Ltd (“the company”), which comprises the statement of financial position as at 30 June 2016, the statement of profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory notes and the directors' declaration. Directors’ Responsibility for the Financial Report The directors of the company are responsible for the preparation of the financial report and have determined that the basis of preparation described in Note 1 to the financial report is appropriate to meet the requirements of the Corporations Act 2001 and is appropriate to meet the needs of the members. The directors' responsibility also includes such internal control as the directors determine is necessary to enable the preparation of a financial report that is free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation of the financial report that gives a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

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Independence In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of Kalium Lakes Potash Pty Ltd, would be in the same terms if given to the directors as at the time of this auditor's report. Auditor’s Opinion In our opinion the financial report of Kalium Lakes Potash Pty Ltd is in accordance with the Corporations Act 2001, including: (a) giving a true and fair view of the entity’s financial position as at 30 June 2016 and of its performance for the

year ended on that date; and (b) complying with Australian Accounting Standards to the extent described in Note 1 and the Corporations

Regulations 2001. Basis of Accounting Without modifying our opinion, we draw attention to Note 1 to the financial report, which describes the basis of accounting. The financial report has been prepared for the purpose of fulfilling the directors’ financial reporting responsibilities under the Corporations Act 2001. As a result, the financial report may not be suitable for another purpose. RSM AUSTRALIA PARTNERS Perth, WA D J WALL Dated: 2 September 2016 Partner

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6. Independent Expert's Report

Kalium Lakes Limited

Independent Expert’s Report

Project Number AU9636

October 2016

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Kalium Lakes Limited Independent Expert's Report

Final August 2016 Page 2 of 42

OFFICE LOCATIONS

Perth Level 6, 130 Stirling Street Perth WA 6000 AUSTRALIA

Tel: +61 8 9213 9213 ABN: 99 085 319 562 [email protected]

Brisbane 104 Melbourne Street South Brisbane QLD 4101 AUSTRALIA

Tel: +61 7 3026 6666 Fax: +61 7 3026 6060 ABN: 99 085 319 562 [email protected]

Johannesburg Technology House, Greenacres Office Park, Cnr. Victory and Rustenburg Roads, Victory Park Johannesburg 2195 SOUTH AFRICA

PO Box 2613, Parklands 2121 SOUTH AFRICA

Tel: +27 11 782 2379 Fax: +27 11 782 2396 Reg. No. 1998/023556/07 [email protected]

Website www.snowdengroup.com

This report has been prepared by Snowden Mining Industry Consultants Pty Ltd (Snowden) for exclusive use by Kalium Lakes Limited pursuant to the Scope of Services contemplated and agreed between Snowden and Kalium Lakes Limited. Snowden makes no representation or warranty as to the suitability of the contents of this report for any third party use or reliance and Snowden denies any liability for any such third party reliance (whether in whole or in part) on the contents of this report.

2016

All rights are reserved. No part of this document may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior written permission of Snowden.

Prepared by: Jeremy Peters BSc, BEng, FAusIMM CP (Min, Geo)

Principal Consultant Kathryn McGuckin

BSc (Hons) BEc, MAusIMM Principal Consultant

Reviewed by: John Elkington MSc (Min Econ) FAusIMM

GM Mining Corporate Services

Issued by: Perth Office Doc ref: 161031 Final AU9636 Kalium Lakes

CPR Last edited: 31/10/2016 2:48 PM

Number of copies:

Snowden: 2 Kalium Lakes Limited: 2

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Table of Contents

1 EXECUTIVE SUMMARY ....................................................................................................... 6

1.1 Sulphate of potash fertiliser...................................................................................................6 1.2 Hydrogeology and mineralisation ..........................................................................................6 1.3 Processing .............................................................................................................................7 1.4 Further work ..........................................................................................................................7 1.5 Snowden’s opinion ................................................................................................................8

2 INTRODUCTION ................................................................................................................... 9

2.1 Sources of information and site visit .....................................................................................9 2.2 Limitations .............................................................................................................................9 2.3 Reliance on information ........................................................................................................9 2.4 Declaration ......................................................................................................................... 10

2.4.1 Consent ................................................................................................................... 10 2.4.2 Copyright.................................................................................................................. 10

2.5 Reliance on other experts .................................................................................................. 10

3 BACKGROUND .................................................................................................................. 11

3.1 Detailed technical reports................................................................................................... 11 3.2 KLL and tenure ................................................................................................................... 11

4 LOCATION AND INFRASTRUCTURE ................................................................................ 14

4.1 Product haulage routes ...................................................................................................... 14 4.2 Port of Geraldton ................................................................................................................ 15 4.3 Mining activities in the project region ................................................................................. 16 4.4 Adjacent properties ............................................................................................................ 16

5 HYDROLOGY ...................................................................................................................... 17

5.1 Exploration ......................................................................................................................... 18 5.1.1 Drilling ...................................................................................................................... 18 5.1.2 Aquifer tests ............................................................................................................. 19 5.1.3 Sampling .................................................................................................................. 19 5.1.4 Geophysical surface exploration ............................................................................... 19 5.1.5 Sample preparation, analyses and security ............................................................... 20 5.1.6 Data verification ....................................................................................................... 21

5.2 Hydrogeology ..................................................................................................................... 21 5.2.1 Brine chemistry ........................................................................................................ 21 5.2.2 Variability with depth................................................................................................. 22

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6 METALLURGICAL TESTWORK ......................................................................................... 23

7 MINERAL RESOURCE ESTIMATES .................................................................................. 24

7.1 Measured Resources ......................................................................................................... 26 7.2 Indicated Resource ............................................................................................................ 26 7.3 Inferred Resource............................................................................................................... 26 7.4 Exploration Target .............................................................................................................. 26

8 ORE RESERVES ................................................................................................................ 28

9 MINING METHODS ............................................................................................................. 29

10 RECOVERY METHODS ...................................................................................................... 30

11 PROJECT INFRASTRUCTURE .......................................................................................... 32

11.1 Supporting site infrastructure ............................................................................................. 32 11.2 Site access and product haulage ....................................................................................... 32

12 MARKET STUDIES AND CONTRACTS ............................................................................. 33

13 ENVIRONMENTAL STUDIES, PERMITTING AND SOCIAL IMPACT ................................ 34

13.1 Environmental studies ........................................................................................................ 34 13.2 Stakeholders ...................................................................................................................... 34 13.3 Native title and heritage ..................................................................................................... 35 13.4 Permitting and approvals ................................................................................................... 35

14 ECONOMIC ANALYSIS ...................................................................................................... 37

15 EXPLORATION STRATEGY AND BUDGET ...................................................................... 38

16 INTERPRETATION AND CONCLUSIONS .......................................................................... 40 16.1 Recommendations ............................................................................................................. 40

17 REFERENCES .................................................................................................................... 42

Figures

Figure 3.1 KLL location and access ....................................................................................................... 12 Figure 4.1 Project footprint .................................................................................................................... 14 Figure 4.2 Mine to Distribution Centre haulage routes ............................................................................ 15 Figure 5.1 Project area climate .............................................................................................................. 17 Figure 5.2 Schematic geological section ................................................................................................ 18 Figure 5.3 Gravity traverses across Ten Mile and Beyondie Lake .......................................................... 20 Figure 5.4 K concentrations returned by auger drilling ........................................................................... 22 Figure 7.1 K-UTEC Mineral Resource classification ............................................................................... 26 Figure 10.1 Simplified process scheme ................................................................................................... 31 Figure 14.1 Marketing cost curve ............................................................................................................. 37 F

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Tables

Table 1.1 Comparable brine ................................................................................................................... 7 Table 1.2 KLL Mineral Resources and Exploration Target....................................................................... 7 Table 2.1 Responsibilities of each author ............................................................................................... 9 Table 3.1 KLL’s tenement status .......................................................................................................... 13 Table 7.1 Indicated Resource ............................................................................................................... 27 Table 7.2 Inferred Resource ................................................................................................................. 27 Table 7.3 Exploration Target ................................................................................................................ 27 Table 13.1 List of approvals ................................................................................................................... 36 Table 15.1 Development program and budget ........................................................................................ 38

Appendix

Appendix A JORC Code Table 1

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1 EXECUTIVE SUMMARY Snowden Mining Industry Consultants (Snowden) has been commissioned by Kalium Lakes Limited (KLL) to provide an Independent Expert’s Report (IER) on the Kalium Lakes Project (Kalium Lakes or “the Project”), a mineral development located 78 kilometres (km) east of Kumarina Roadhouse on the eastern margin of the Western Australian Pilbara region. Kalium Lakes Potash is a wholly-owned subsidiary of KLL and holds the Mineral Tenements that comprise the Project. Snowden understands that this IER will be used for commercial purposes related to the listing of KLL on the Australian Securities Exchange (ASX). Snowden has provided its consent to the inclusion of this IER in the prospectus to be issued by KLL in respect to its initial public offering and its listing in the ASX.

KLL has completed various technical reports and studies that examine brine extraction, metallurgy, processing, infrastructure, environment, Native Title, heritage, permitting, approvals, capital and operating costs for a range of operational throughputs. KLL’s focus is now on technical and commercial verification of the results of these studies. KLL proposes construction and operation of a pilot scale plant to confirm technical and economic parameters before progressing to full-scale production.

1.1 Sulphate of potash fertiliser Sulphate of potash (SOP) is an effective fertiliser that attracts a price premium of between 40% and 100% over other forms of potash fertiliser. SOP has a total global market size of approximately 6 million tonnes per annum (Mt/a). There is no commercial production of SOP in Australia, and KLL has identified an opportunity to capture market share in the Australasian region.

The listing is being conducted predominately to raise funds to continue the exploration and development of the Project. KLL's main objectives upon completion of the listing are to:

Increase confidence of the Mineral Resource estimate - through hydrogeological definition with the intention of enabling conversion of the Mineral Resource to an Ore Reserve;

Pump tests of bores - conduct short term pump tests to verify key assumptions in relation to brine extraction from the main aquifers;

Install supporting infrastructure - including access roads, temporary camp, utilities and buildings;

Studies and Engineering – expand on and update existing studies, pond trials and site investigations; and

Regulatory and other approvals - continue to progress environmental, Native Title and regulatory approval and agreement processes.

The above objectives will be pursued if KLL achieves the minimum subscription of $3.0 million Australian dollars, before costs. If KLL accepts the maximum number of oversubscriptions of $6.0 million Australian dollars, before costs, then it intends to undertake further drilling, install a relocatable camp, undertake further pump tests at additional drilling locations, further progress studies and engineering associated with brine extraction, processing, infrastructure requirements, capital and operating costings, environmental applications and Native Title agreement processes.

1.2 Hydrogeology and mineralisation KLL’s hydrogeological studies have consisted of site visits, desktop reviews, water sampling from 336 auger holes and 33 diamond holes for monitoring and test bores, three constant rate pump tests, 13 aquifer tests, 28 geophysical traverses, grainsize lithology and groundwater analysis. This work has identified a subterranean palaeochannel that connects 30,000 hectares (ha) of lakes. The average potassium grade of brine samples from the lake beds is 6.09 kg/m3, with sodium to potassium ratio of 9.4:1, which is considered to be low when compared to other SOP brine producers (Table 1.1). F

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Table 1.1 C omparable brine

Company Lake Country K(kg/m3)

Mg (kg/m3)

Na (kg/m3)

Na:K ratio

Kalium Lakes Potash Beyondie / Ten Mile Australia 6.1 6.6 54.2 8.9 : 1

Reward Minerals Lake Disappointment Australia 6.1 5.9 93.6 15.2 : 1

Rum Jungle Lake Hopkins Australia 3.8 - - -

Rum Jungle Lake Mackay Australia 3.8 - - -

Agrimin Lake Mackay Australia 3.7 3.0 - -

Goldphyre Lake Wells Australia 3.6 8.6 63.4 17.6 : 1

Salt Lake Potash Lake Wells Australia 3.9 7.0 84.3 21.5 : 1

Great Salt Lake Minerals Company Great Salt Lake USA 4.5 8.0 85.7 18.8 : 1

The Kalium Lakes potassium grade values compare favourably to potential Australian and international peers (Table 1.1). An Indicated Mineral Resource has been estimated in accordance with the guidelines of the JORC Code and informed by the Canadian Institute of Mining, Metallurgy and Petroleum guidelines relating to brines1 (Table 1.2).

Table 1.2 K LL Mineral Resources and Exploration Target

Mineral Resource Quantity SOP (Mt)

Indicated 0.94

Inferred 18.83

Exploration Target From 3.5 To 35

1.3 Processing KLL has engaged K-UTEC, a German company with more than 60 years’ salt processing experience, to carry out testwork and engineering studies to verify the process design requirements to produce potential saleable products of SOP, epsomite, bischofite and magnesium hydroxide.

K-UTEC has developed a process flowsheet for the Project that involves pumping the subsurfacepotassium-rich brine to evaporation ponds, harvesting the resultant mixed potassium salt andprocessing into saleable products, using established technology and techniques.

K-UTEC recommends commissioning a pilot scale operation to precede full-scale production to confirmtechnical and economic parameters.

1.4 Fur ther work The work undertaken by K-UTEC and other independent consultants has been completed to what Snowden considers to be a high standard. This has resulted in an encouraging assessment of the Project that justifies KLL continuing to commit to the next stage of exploration and development. Snowden has reviewed an exploration plan and budget in respect to the project that it considers to be fair and reasonable. The key recommendations, among others, are to undertake further drilling and complete pilot scale pump and evaporation testing to enable an Ore Reserve to be estimated,a Production Target nominated and forecast financial information derived.

1 http://web.cim.org, Best Practice Guidelines for Resource and Reserve Estimation for Lithium BrinesFor

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1.5 Snowden’s opinion Snowden considers that KLL has completed its technical work to a high standard, based on its experience and observation of the Australian mining industry. KLL has prudently sought the advice of competent and reputable technical advisers to develop the Project and Snowden consequently has confidence that the technical assumptions made to date are sound and justified.

Snowden’s opinion is that the Project is of such technical merit to warrant further development, subject to those risks normally associated with mineral exploration and development projects.

KLL has explained to Snowden its proposed exploration and development program and the budget attached to that program (refer Section 15 below). Snowden considers that this budget and program is appropriate, technically prudent and achievable.

Snowden understands that KLL has sufficient working capital to carry out its stated objectives2 and that the distribution of expenditure in the budget satisfies ASX Listing Rules 1.3.2(b) and 1.3.3(b).

2 In accordance with ASX listing Rule 1.3.3(a) F

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2 INTRODUCTION This IER has been prepared by Snowden for KLL, and describes the development of a subsurface brine deposit to produce saleable SOP product from the Project via evaporation and processing. This IER is prepared to support the listing of KLL on the ASX following completion by KLL of technical studies in April 2016.

Unless otherwise stated, the information and data contained in this report or used in its preparation has been provided by KLL and is current up to and including 30 September 2016.

2.1 Sources of information and site visit The Competent Person for preparation of the report is Mr Jeremy Peters, FAusIMM CP (Mining, Geology), who visited the project in February 2016. Mr Peters has professional experience in and has extensively studied the geology of the Pilbara.

In preparing this report, Mr Peters has relied on information collated by other parties. Mr Peters has critically examined this information, made his own enquiries and applied his general geological competence to conclude that the information presented in this IER complies with the definitions and guidelines of the CIM, JORC and VALMIN codes.

The responsibility of the author is provided in Table 2.1.

Table 2.1 Responsibilities of each author

Author Responsible for sections

Jeremy Peters, FAusIMM CP (Min, Geo) 1 to 17

Unless otherwise stated, all currencies are expressed in Australian Dollars (A$) and units of measurement are metric.

Snowden is responsible for this report as part of KPL’s public documentation and declares that it has taken all reasonable care to ensure that the information contained in this report is to the best of its knowledge, in accordance with the facts and contains no material omissions.

2.2 Limitations To the full extent permitted by law, Snowden does not assume any responsibility and will not accept any liability to any other person other than the addressees for any loss suffered by any such other person as a result of, arising out of, or in connection with this IER or statements contained therein.

KPL has confirmed in writing to Snowden that, to its knowledge, the information provided by it is complete and not incorrect or misleading in any material respect. Snowden has no reason to believe that any material facts have been withheld.

2.3 Reliance on information Snowden believes that its opinion must be considered as a whole and that selection of portions of the analysis or factors considered by it, without considering all factors and analyses together, could create a misleading view of the process underlying the opinions presented in this IER. The preparation of an IER is a complex process and does not lend itself to partial analysis or summary. F

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2.4 Declaration Snowden will receive a fee for the preparation of this report in accordance with normal professional consulting practice. This fee is not contingent on the result of the report and Snowden will receive no other benefit for its preparation. Snowden does not have any pecuniary or other interests that could reasonably be regarded as capable of affecting its ability to provide an unbiased opinion in relation to the assets and the projections and assumptions included in the various technical studies completed by KPL, opined upon by Snowden and reported herein.

Neither Snowden, the Competent Person, Mr Peters, who is responsible for authoring this IER, nor any Directors of Snowden have at the date of this report, nor have had within the previous two years, any shareholding in KPL or any of its advisors. Consequently, Snowden, Mr Peters and the Directors of Snowden consider themselves to be independent of KPL.

2.4.1 Consent

Snowden has given and has not withdrawn its written consent to the publishing of this IER and to the inclusion of any extracts from the report in KPL’s regulatory announcements and has confirmed in writing that the information presented is accurate, balanced, complete and not inconsistent with the report.

Where any information in the IER has been sourced from a third party, such information has been accurately reproduced and no facts have been omitted that would render the reproduced information inaccurate or misleading.

2.4.2 Copyright

Copyright of all text and other matter in this document, including the manner of presentation, is the exclusive property of Snowden.

It is an offence to publish this document or any part of the document under a different cover, or to reproduce and/or use, without written consent, any proprietary technical procedure and/or technique contained in this document. The intellectual property reflected in the contents resides with Snowden and shall not be used for any activity that does not involve Snowden, without the written consent of Snowden.

2.5 Reliance on other experts The technical reports and studies that inform this report have been prepared by KLL, which commissioned leading industry specialists including K-UTEC, AQ2, PDC Engineering, Shawmac, Wyntak and Preston Consulting as the principal technical consultants, as well as other commercial and legal advisors. Snowden considers these consultants to be of an appropriate standard.

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3 BACKGROUND KLL commenced detailed technical reports in April 2015, after completion of a preliminary study in the same month. The preliminary study concluded that the Project was economically robust and had the potential to generate returns for its owners, with identified risks that relate to exchange rates, product pricing, capital, operating costs and production rates. The subsequent detailed technical reports draw on the preliminary study and present information at a higher level of definition and accuracy. This allows the owners and potential investors to consider the financial viability and future development potential of the Project.

3.1 Detailed technical reports KLL is considering development of a subsurface brine deposit to produce SOP product via evaporation and processing at the Project.

The detailed technical reports examine construction of pilot test facilities for ponds, pump testing and pilot purification plant trials, prior to a full-scale purification facility, roadworks and infrastructure for a SOP operation. The full-scale purification facility contemplates evaporation and crystalliser ponds, additional to the ponds developed during the pilot work. The primary market is the Western Australian agricultural industry and the Port of Geraldton facilities are contemplated for access to export markets in Asia and Australia’s east coast.

KLL identifies an opportunity to expand SOP production, with the development of additional evaporation and crystalliser ponds, associated bores and infrastructure at its additionally held tenement areas.

3.2 KLL and tenure KLL is a privately-owned company with about 2,400 km2 of granted tenements near Kumarina. KLL also has a granted tenement at Lake Carnegie and four additional tenement applications at Lakes Carnegie, Dora and Blanche (Figure 3.1). The tenements were originally applied for by Rachlan Holdings Pty Ltd with an agreement in place to transfer tenure to KLL as soon as practicable after grant, which has occurred for all granted tenements to date (Table 3.1).

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Figure 3.1 KLL location and access

Source: KLL

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Table 3.1 KLL’s tenement status

Tenement name Mining Act tenure Transfer completed from

Rachlan to KLL Tenement Status

Yanneri-Terminal E69/3306 Granted Complete

Beyondie – 10-Mile E69/3309 Granted Complete

West Central E69/3339 Granted Complete

White E69/3340 Granted Complete

West Yanneri E69/3341 Granted Complete

Aerodrome E69/3342 Granted Complete

T Junction E69/3343 Granted Complete

Northern E69/3344 Granted Complete

Wilderness E69/3345 Granted Complete

NE Beyondie E69/3346 Granted Complete

South 10 Mile E69/3347 Granted Complete

North Yanneri-Terminal E69/3348 Granted Complete

East Central E69/3349 Granted Complete

Sunshine E69/3351 Granted Complete

Beyondie Infrastructure E69/3352 Granted Complete

Access Road L52/162 Granted Applied for by KLL

Carnegie East E38/2995 Granted Complete

Carnegie Central E38/2973 Pending No

Carnegie West E38/2982 Pending No

Dora E45/4436 Pending No

Blanche E45/4437 Pending No

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4 LOCATION AND INFRASTRUCTURE The Project is convenient to the Great Northern Highway, access road, the Goldfields Gas Pipeline and the Kumarina Roadhouse (Figure 4.1). Initial brine extraction is proposed for the Beyondie and Ten Mile Lake areas expanding northeast to Lake Sunshine, with a further expansion to the east at White, Aerodrome and Central Lakes.

Figure 4.1 Project footprint

Source: KLL

4.1 Product haulage routes The Beyondie Potash Project proposes to use road-trains on private and public roads to transport product. The Great Northern Highway provides the main logistical supply link between the supply and distribution centres of Geraldton (862 km), Port Hedland (700 km), Perth (1,088 km) and Kalgoorlie (1,030 km, Figure 4.2).

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Figure 4.2 Mine to Distribution Centre haulage routes

Source: KLL

4.2 Port of Geraldton In September 2015, KLL signed a Memorandum of Understanding with the Mid West Ports Authority (MWPA), the authority for the Port of Geraldton, which contemplates KLL’s export of potash products from the Port. KLL has agreed to work closely with MWPA to investigate the Port's capacity to handle, load and export potash products.

The Port of Geraldton is strategically located near existing agricultural distribution assets in Western Australia and provides access to Asian markets and the east coast of Australia (Figure 4.2). KLL proposes to utilise existing sea container and bulk cargo facilities at the Port. Some modification and expansion of these facilities will be required.

KLL is investigating a shed for product storage at the Port of Geraldton, or the Narngulu Industrial Area, large enough to accommodate a mixture of bulk loose SOP, 1 tonne to 2 tonne “bulka” bags and 25 kg bags. F

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4.3 Mining activities in the project region The Project is located approximately 160 km south-southeast of the major iron ore producing town of Newman and 200 km north of the base metals and gold mining areas of Wiluna.

Existing and proposed mining related activities in the region provide leverage to existing facilities and services including the Newman Airport and potential customers for the sale of supplementary by-products.

4.4 Adjacent properties The Project tenements were chosen because of the outlines of geological formations and the brine hosting sediments. Two adjoining properties overlap with the Beyondie area. The adjacent tenement E69/3202 is held by Kronos Gold LLC, which affects freshwater feed points to Lake Yanneri and E69/3247 is held by Cosmopolitan Minerals, which affects freshwater feed to Lake Beyondie/Ten Mile Lake and half of Ten Mile Lake. Neither company is currently exploring for potash.

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5 HYDROLOGY The Project is located on the edge of and extends into the Little Sandy Desert, which is characterised by dry salt lakes, extensive sand dunes and flat plains. The regional climate is arid desert, with hot summers and warm to cold winters, with low annual rainfall (Figure 5.1; Three Rivers is around 125 km from the Project area).

Rainfall is strongly seasonal, mostly occurring between December and June and occurs over short periods associated with thunderstorms and cyclonic lows.

Figure 5.1 Project area climate

Source: BoM

Of greatest importance to the Project is the hydrology of the salt lakes, which may fill with water when a cyclonic low passes over the region. Such events may occur annually or at intervals of several years. This water percolates through the lake sediments at varying rates, dissolving salts. The lake sediments are not particularly porous and the key to the project is the presence of an aquifer in the form of a palaeochannel at the base of the lake. This palaeochannel represents a geological period of a higher energy environment, with correspondingly coarse sand forming a favourable channel for water flow (Figure 5.2).

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Figure 5.2 Schematic geological section

Source: KLL

5.1 Exploration KLL has completed auger and diamond drilling, commissioned geophysics and conducted water, soil and aquifer testing and sampling for:

Nine diamond core drillholes to collect representative geological samples

336 x 1.5 m deep auger holes across the lakes to collect groundwater and geological samples

Six gravity geophysical traverses around Ten Mile Lake and a further 22 between Ten Mile Lake and the north and west of T-Junction Lake

Installation of 20 monitoring boreholes

Installation of four test boreholes

Grain size analysis of eight sand samples from six boreholes, two clay samples from two boreholes and 12 lake bed alluvium samples from three different lakes

13 aquifer tests

Three constant rate/recovery tests

Laboratory analysis of water samples collected from augering (400 samples), drilling (87 samples) and aquifer testing (26 samples).

5.1.1 Drilling

Throughout 2015, several drilling techniques were utilised, including air percussion for the installation of surface casing; mud rotary drilling with either tricone or blade bit; blade or tricone drilling with brine as drilling fluid.

From September 2015, nine HQ (60 mm) diamond core holes were completed, returning core for laboratory analysis. Brine samples were collected during the diamond drilling, pumping from within the casing after flushing drilling mud from the hole. The sample collected is considered representative of the aquifer at the base of the hole, although flow down the outside of the casing from shallow aquifers cannot be discounted and it is possible that multiple aquifer zones were collected and analysed.

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Where basal sands were encountered, the diamond holes were reamed to 300 mm and 200 mm gravel packed casing was installed. This has been completed on bores WB09, WB10, WB11 and WB12.

KLL proposes further drilling to enable a borehole spacing of 1 km to 3 km over the main palaeochannel area. The number of these holes will be determined during the proposed pilot scale studies, but the concept is that diamond drilling, currently at approximately 3 km centres is to be closed to a spacing that allows Mineral Resource estimation to a higher degree of confidence. Part of this exercise will encompass longer duration pump tests, which are intended to similarly provide information that will increase confidence in the Mineral Resource estimation.

All geological samples collected have been qualitatively logged at 1 m intervals to gain an understanding of the variability in the sediments hosting the brine and appropriate samples have been collected and stored in chip trays for future reference. Snowden considers that there is no drilling, sampling or recovery factors noted to date that could materially impact the accuracy and reliability of the results.

5.1.2 Aquifer tests

In December 2015, several pumping tests were conducted to obtain information on aquifer parameters such as permeability and specific yield. Longer duration constant rate tests were carried out at WB 12_TB as well as WB11_TB, while a shorter test at WB10_TB was undertaken. WB9_TB is yet to be tested.

Constant rate tests (one-hour pumping/one-hour recovery) were performed at holes WB10_MBI, WB10_MBD, WB11_MBS, WB11_MBI, WB_MB12I, WB12_MBD, WB07, WB06, SDHTM 09, WB19, WB23 and WB25.

Extended constant rate tests were conducted on WB10_TB, WB11_TB and WB12_TB to assess changes in brine chemistry during pumping. The length of these tests ranged from two hours to two days. Water samples were collected, as appropriate, given the duration of each individual test, at intervals of 1, 2, 4, 16, 32 and 72 hours from the start of the constant rate tests. The intent of these tests was to demonstrate the viability of pumping from the palaeochannel aquifer.

5.1.3 Sampling

Additional water samples have been collected from shallow auger holes in the lake bed and surrounding areas. Auger samples are considered representative of the upper aquifer at each lake surface, drilled to a maximum depth of 1.5 m below surface level at approximately 1 km spacing intervals. From these holes, 336 samples were collected under the supervision of KLL’s hydrology adviser and submitted for laboratory analysis to determine the chemistry of the brine.

Diamond core holes were cased and the samples returned are considered by KLL’s hydrology adviser to be representative of the lower aquifer at Ten Mile Lake. All diamond holes were drilled to the palaeochannel, with samples taken at regular intervals and a selection submitted for laboratory grain size distribution analysis. Spacing between the four test boreholes is 1.8 km to 2.5 km.

5.1.4 Geophysical surface exploration

Gravity surveys were undertaken during 2015 (Figure 5.3), traversing from shore to shore and are considered successful in identifying the location and extension of the palaeochannel. The geological target within the palaeochannel is the high-energy coarse sand basal material.

This approach does not measure an absolute depth of the palaeochannel, but can give an indication of the deepest part of the palaeochannel (minimum) and the highest point of the surrounding bedrock (maximum). The results will be used to identify the location of the basal layers of coarse sand, which are the most productive. F

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Figure 5.3 Gravity traverses across Ten Mile and Beyondie Lake

Source: KLL

Snowden recommends that KLL contemplate further geophysical surface surveys and seek geophysical advice on possible methods to reliably identify and quantify palaeochannels. Snowden is aware of Tromino®3 high resolution seismic techniques and that this technology may be applicable to identifying and mapping palaeochannels at the Project. Kalium advises that it is in the process of trialling this technique.

5.1.5 Sample preparation, analyses and security

Brine samples were transported by KLL personnel to Perth and presented to Bureau-Veritas (BV) for analysis. The samples were kept cool (<20°C) until delivery to the laboratory in Perth and sample pH was measured in the field. Soil samples (sands) were sent to Soil Water Group Laboratories, of Perth, for grain size analysis.

BV is certified to Quality Management Systems standard ISO 9001 and has internal standards and procedures for the regular calibration of equipment and quality control, calibrated with standard solutions.

Duplicate samples, comprising around ~10% of all samples taken, were assayed at ALS Laboratory in Malaga. ALS is certified to ISO 17025 for testing and calibration of equipment.

Brine sample analyses included Inductively Coupled Plasma Optical Emission Spectrometry (ICP-OES), Ion Selective Electrode (ISE), and Inductive Coupled Plasma Mass Spectroscopy (ICP-MS). All samples have been analysed for Ca, K, Mg, Na, SO4, Cl. Selected samples were analysed for a suite of 62 elements, including Au, Ag, As, Ba, Be, Bi, Br, Cd, Ce, Co, Cs, Cu, Dy, Er, Eu, Ga, Gd, Ge, Hf, Hg, Ho, In, La, Li, Lu, Mo, Nb, Ni, Pb, Pd, Pr, Pt, Rd, Re, Sb, Sc, Se, Sm, Sn, Sr, Ta, Tb, Te, Th, Tl, Tm, U, W, Y, Yb, Zn, Zr, Al, B, Ca, Cr, Fe, K, Mg, Mn, Na, P, S, Si, Ti, and V.

3 http://moho.world/en/ F

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Snowden considers that the sample collection preparation and security as well as analytical procedures are appropriate.

5.1.6 Data verification

The result of the duplicate sampling indicates a good correlation amongst major ions (less than 10%) at both laboratories except for sulphate, which BV returned on average about 21% lower than ALS. Upon review of this discrepancy, BV conducted an internal check and found no reason to suggest that its sulphate assay was erroneous; however, ALS advises that its analysis technique is gravimetric and not comparable to the approach used by BV. KLL’s advisers considered that a gravimetric analysis is not appropriate in this situation and these results were discarded.

For Mineral Resource estimation purposes, the lower sulphate results were taken into account by K-UTEC as a worst-case scenario. K-UTEC consider the results to be adequate for Mineral Resource estimates for the Project and recommends that the chemical results be refined at the Feasibility Study stage.

5.2 Hydrogeology The SOP is dissolved in brine contained in sediments below and around the salt lakes, which is affected by:

Capacity of the sediments to retain brine

Variability of the brine chemistry throughout the aquifer system

Ability of the sediments to release brine during abstraction

Viability of abstracting the brine at the required rates

Effect of brine abstraction on the regional hydrogeology and environment.

5.2.1 Brine chemistry

KLL collected brine samples during augering, drilling and aquifer testing and found the groundwater to be hypersaline, varying from twice to nine-times that of seawater and that the pH is relatively neutral, implying that the construction cost of infrastructure will be reduced in relation to corrosion-resistant components.

Potassium (K) and sulphur (S) are the most important elements that affect potash generation from brine. The average K concentration of all the auger water samples collected is 5,996 mg/L, with a variation between 1,180 mg/L K4 at Beyondie Lake and 11,300 mg/L K at White Lake.

A limited number of holes were drilled to the east of Ten Mile Lake and this is the extent of samples that were collected away from the lakes themselves. Bores centred on WB13 have a K concentration in a range of 1,110 mg/L to 4,515 mg/L, which is lower than the concentrations below the lake surface.

The result of this work has identified that the surface of the lake returns the highest K grades and a relatively consistent set of chemical ratios support the model that the lakes are connected by a palaeovalley.

4 This sample was taken on the edge of Beyondie Lake, which was flooded at the time F

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Of importance to SOP production, there is a low Na:K ratio of 9.4:1, indicating favourable minimisation of Na-salt by-products. When compared to other projects, a high SO4:K level of 3:1 is favourable for SOP production, which requires a minimum ratio of 1.23:1. Similarly, balanced Cl:Na ratios of 1.8:1 exceed the minimum ratio of 1.54:1, which K-UTEC advise is required for efficient SOP production.

Low Ca levels of 790 mg/L and a high SO4:Ca ratio of 22:1 favours SOP production, which requires a minimum of 2.4 to 1.

Figure 5.4 K concentrations returned by auger drilling

Source: KLL

5.2.2 Variability with depth

Information returned by pumping of the diamond drillholes indicates consistency of the brine from the lakes’ surface to the floor. There is some variability between lakes (Figure 5.4) but brine concentrations remain consistent within each lake itself. The average potassium concentration of all the auger water samples collected is 5,996 mg/l, with a variation of between 1,180 mg/l, on the edge of Beyondie Lake at a time of flooding by seasonal rain to 11,300 mg/l at White Lake.

The brine quality observed in the shallow sample locations appears to extend to the full palaeochannel depth, as the samples collected from the aquifer tests on the basal aquifer indicate the same brine characteristics at depth as identified in adjacent shallow drilling. Snowden considers that the brine concentration extends through the full sediment profile. F

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6 METALLURGICAL TESTWORK K-UTEC, of Germany, was engaged by KLL to provide advice on evaporative ponds, metallurgical processing and other requirements for Ore Reserve estimation.

KLL has commissioned three phases of testwork to date:

1) During the preliminary study, KLL engaged Australian consultants, CQG Consulting (CQG), to assist with conducting bench-scale evaporation testing.

2) A pilot scale evaporation trial was conducted during 2015, with 26,000 litres of brine to determine seasonal effects on evaporation rates; provide a concentrated brine sample for raw salt preparation and purification testwork in Germany and confirm the brine’s ability to evaporate to dryness.

3) KLL engaged K-UTEC to carry out testwork and engineering studies to verify the evaporation pond and purification process design for production of saleable products including SOP, epsomite, bischofite and magnesium hydroxide. Two cubic metres of partially evaporated brine was sent to K-UTEC’s German facilities at Sondershausen to perform a higher level of pilot evaporation and processing including:

Solar evaporation of brine

Pre-treatment of raw salt to separate NaCl and MgCl2

Decomposition of raw salt to primary schoenite

Cooling crystallization of secondary schoenite from the SOP liquor

Conversion of Schoenite to SOP

Cooling crystallization of epsomite from the bittern

Crystallization of bischofite by further evaporation of the bittern.

The K-UTEC solar evaporation testwork was performed over a period of six months. Mineralogical investigation took place concurrently with chemical analysis of brines and harvested salts. Test results confirmed K-UTEC’s assumptions, in particular for the solar evaporation and processing of the Beyondie brine.

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7 MINERAL RESOURCE ESTIMATES K-UTEC staff are Competent Persons, as defined by the CIM and JORC codes, and have estimated Mineral Resources for KLL. K-UTEC’s Competent Persons are Thomas Schicht and Anke Penndorf, both are Members of the European Federation of Geologists and are registered European Geologists. Both Thomas Schicht and Anke Penndorf are full-time employees of K-UTEC and have sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the JORC Code. Snowden supports this determination.

Snowden considers that the Mineral Resource estimated by K-UTEC’s Competent Persons satisfies the “prospects for eventual economic extraction”5 test, as evidenced by the results of KLL’s economic analysis.

In K-UTEC’s opinion, Measured Resources can be estimated where:

Drilling has confirmed local site geology and aquifer configuration and the ability of the aquifer to support pumping.

Aquifer hydraulic properties (permeability and specific yield) have been estimated from aquifer tests and/or grain size analysis.

A number of brine samples have been collected from a selection of bores to confirm brine concentrations.

Duplicate samples of all samples taken (10% of all brine samples) have been analysed by a second (independent) certified laboratory. The analysis showed comparable results within an error range of less than 10%.

The laboratories have described their analysis methods.

Long term pumping tests have been performed in accordance with accepted standards (ISO 5667 or AS/NZ 5667, ISO/DIS 22282-4).

Monitoring boreholes surround the test boreholes, depending on aquifer conditions and catchment area.

A hydrogeological model that identifies the aquifer and aquitard is based on measured data, including seismic data, drilling data and well-logging data.

K-UTEC considers that the data collected to date does not meet all of these criteria and has not estimated a Measured Resource.

In K-UTEC’s opinion, Indicated Resources can be estimated where:

Drilling has confirmed local site geology and aquifer configuration and the ability of the aquifer to support pumping

Aquifer hydraulic properties (permeability and specific yield) have been estimated from aquifer tests and/or grain size analysis

A number of brine samples have been collected from a selection of bores to confirm brine concentrations

5 JORC Clause 20 F

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Duplicate samples of all samples taken (10% of all brine samples) have been analysed by a second (independent) certified laboratory

The laboratories have described their analysis methods

Long term pumping tests have been performed in accordance with accepted standards (ISO 5667 or AS/NZ 5667, ISO/DIS 22282-4).

In K-UTEC’s opinion, Inferred Resources can be estimated where:

No drilling has occurred, but geophysics data has been able to confirm a palaeochannel extent that is contiguous with other areas of palaeochannel for which drilling data are available

Aquifer properties can be inferred from tests undertaken in other, contiguous areas of the same palaeochannel

Brine concentrations have been measured from shallow auger holes and the presence of brine extending through sediments to depth, can reasonably be inferred

Augering has identified a shallow, permeable layer of lake bed alluvium/silts/gypsum sands with elevated K concentrations and where trenching could allow abstraction of the brine.

In K-UTEC’s opinion, Exploration Targets can be estimated where:

No brine chemistry data exists to confirm the brine quality, but some brine aquifer continuity may be expected on the basis of geophysics

Shallow augering has provided evidence of high K concentrations which may be expected to occur throughout the sequence, but there is no drilling or geophysics data to provide any geological context to the brine occurrence.

K-UTEC has used these criteria to classify its estimates of KLL’s Mineral Resource (Figure 7.1) and Snowden agrees with this approach.

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Figure 7.1 K-UTEC Mineral Resource classification

7.1 Measured Resources Currently, no Measured Resource is estimated and Snowden concurs with this opinion.

7.2 Indicated Resource K-UTEC estimates an Indicated Resource based on its criteria (Table 7.1) and Snowden concurs with this classification and estimate.

7.3 Inferred Resource K-UTEC estimates an Inferred Resource based on its criteria (Table 7.2) and Snowden concurs with this classification and estimate.

7.4 Exploration Target K-UTEC estimates an Exploration Target based on its criteria (Table 7.3) and Snowden concurs with this classification and estimate. Commentary is provided against Table 1 of the JORC Code in Appendix A below.

The Project Exploration Target is based on a number of assumptions and limitations and is conceptual in nature. It is not an indication of a Mineral Resource estimate in accordance with the JORC Code and it is uncertain if future exploration will result in the determination of a Mineral Resource. F

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8 ORE RESERVES There are no Ore Reserves estimated and Snowden recommends that further trials, mainly extended duration pump and evaporation testing, are undertaken to confirm technical and economic parameters prior to completing an Ore Reserve statement.

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9 MINING METHODS There are two principal methods applicable to extract the brine from the surrounding sediments:

Pumping from wells in the basal sands (lower aquifer) and leakage from overlying brine bearing clays

Pumping from trenches inside the alluvial sediments (upper aquifer).

It is likely that both methods will be used because of the properties of the different aquifers. The design of the borefield will be based on the brine demand and aquifer conditions.

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10 RECOVERY METHODS The general mineral processing concept comprises:

Brine winning

Brine concentration and crystallisation of solid raw materials for the processing plant

Processing plant

Utilities.

K-UTEC’s process design considers the recovery of SOP as the principal product, with the potential for producing the by-products including epsomite, magnesium hydroxide and bischofite.

Brine enters the evaporation ponds whereby water is removed by solar evaporation and gypsum, halite and astrakainite to crystallise in the first two sets of ponds. Unless determined economic to process, these compounds are left within the ponds, to be harvested when full.

The remaining brine crystallises in the next set of ponds, producing a Kainite Type Mixed Salt (KTMS), consisting of leonitic, schoenitic and carnallitic mixed salts. These salts are harvested and stored separately, prior to mixing, pre-crushing and transferral to the SOP plant. The resultant bittern from the solar evaporation process may be transferred to the epsomite and brine treatment plants.

The SOP plant converts the mixed salt into schoenite and halite through mixing with water and internal recycling of the brines. The resultant slurry is processed through reverse flotation to remove the halite, the resultant schoenite salts are decomposed into SOP. The halite is discarded to tailings, unless otherwise economical to process.

The bitterns from the solar evaporation process contain a high magnesium sulphate content and is economic to process to epsomite for sale, performed through cooling crystallisation of the slurry to produce epsomite. A solution high in magnesium chloride remains, which undergoes an evaporation step to remove carnallitic mixed salt, which is returned to the SOP plant and then undergoes de-sulphatisation by means of calcium chloride solution. This produces gypsum, which is discharged as tailings and leaves behind a concentrated brine of magnesium chloride. This stream is then split, magnesium hydroxide is precipitated from the solution by the addition of quicklime (CaO) and bischofite is produced from simple evaporation concentration.

K-UTEC has provided a simplified flowsheet (Figure 10.1) and typical layouts, block flow and process flow diagrams.

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Figure 10.1 Simplified process scheme

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11 PROJECT INFRASTRUCTURE The Project is located in an isolated an unpopulated area and infrastructure will require construction. The project does enjoy good proximity to State roads, and transport of material will not present difficulty. Snowden considers that KLL has estimated its requirements and capital costs in its work to an appropriate level.

11.1 Supporting site infrastructure Supporting site infrastructure includes offices, ancillary buildings, maintenance facilities, accommodation, diesel fuel, water, power, communications and information technology systems.

KLL intends to source fuel for power generation from diesel supplied by road-train, eventually converting to gas supplied from a 78 km gas spur from the Goldfields Gas Pipeline. Snowden notes that a Miscellaneous Licence (L52-162) has been granted for to cover the 78 km site access road, gas pipeline, communications and other infrastructure purposes.

11.2 Site access and product haulage The Project site is approximately 78 km east of the Great Northern Highway. KLL’s studies have preferred road haulage for transporting product from the process plant site at Beyondie to the various distribution centres via the public road network.

Snowden concurs, based on the close proximity to existing public road infrastructure, the relatively low product haulage requirements and diversity of delivery locations. Trucking options for the Project includes a combination of bulk loaded trailers, bulk loaded containers and bulk bags loaded on flat top trailers.

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12 MARKET STUDIES AND CONTRACTS KLL has commissioned a review of the potash market utilising leading industry market research reports and considers that, whilst the potassium chloride (KCl or MOP) market is well supplied, the premium potassium sulphate (K2SO4 or SOP) market is undersupplied.

Global SOP demand is estimated at just over 6.1 Mt (3.015 Mt K2O) in 2015, which represents a significant rise in demand, mainly due to a substantial rise in consumption in China. It is notable that there is no potash production in Australia, which consumes a combined total of ~230 Kt/a of MOP and ~70 Kt/a SOP.

Globally, five companies have the capacity to produce greater than 350 Kt/a of SOP and account for approximately 60% of global supply. Chinese exports account for the largest percentage of supply and has seen a rapid increase in recent years.

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13 ENVIRONMENTAL STUDIES, PERMITTING AND SOCIAL IMPACT

The Modifying Factors of the JORC Code require consideration of environmental, legal and social factors in the estimation of an Ore Reserve.

13.1 Environmental studies KLL has substantially completed extensive baseline environmental studies and investigations around its proposed commencement area of production. These have been conducted in consultation with government agencies and regulators including the Department of Mines and Petroleum (DMP), Environmental Protection Authority (EPA), Department of Parks and Wildlife and Department of Water. The survey program has been based on a future expectation to refer the full scale project to the EPA for formal assessment.

Biological surveys in support of the Project have been undertaken by Phoenix Environmental Sciences:

Aquatic invertebrate and waterbird surveys of Beyondie Lake and Ten Mile Lake

Level 2 terrestrial fauna survey associated with Beyondie Lake, Ten Mile Lake, haul road and evaporation ponds

Level 1 terrestrial fauna survey associated with the proposed evaporation pond area

Level 1 terrestrial fauna survey associated with Lake Sunshine and affiliated access tracks

Level 2 flora and vegetation survey at Beyondie Lake and Ten Mile Lake, haul road and evaporation ponds

Level 2 flora and vegetation survey associated with the proposed evaporation pond area

Level 2 flora and vegetation survey associated with Lake Sunshine and affiliated access tracks

A subterranean fauna desktop review investigating the likelihood of occurrence of stygofauna and troglofauna within calcrete associated with Beyondie Lake and Ten Mile Lake was also completed.

Environment characterisation work continues, but no significant issues have been identified that could not be managed through proper planning or appropriate environmental management systems. The salt lake systems are reasonably common and extensive, but may offer unique habitat for some species.

13.2 Stakeholders The KLL consultation strategy identifies key external stakeholders and determines how they will be impacted by the Project and what influence they have over the Project. The consultation strategy has been developed to secure the approvals necessary for the construction and operation of the mine, road and port facilities, including:

Local Government

State Government

Commonwealth Government

Mining companies in the Western Pilbara

Aboriginal groups with a connection to the Project lands

Other community stakeholders, e.g. pastoralists. For

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13.3 Native title and heritage KLL has successfully negotiated two Land Access and Mineral Exploration Agreements with the underlying native title groups, Birriliburu and the Gingirana people, which has enabled KLL to undertake ground disturbing and non-ground disturbing exploration activities.

KLL and Gingirana have also executed a Mining Land Access Agreement for the Project. This agreement notably consents to mining at the project’s commencement areas of Beyondie Lake and Ten Mile Lake. A similar agreement will be negotiated with MNR which will consent to future brine abstraction and processing to the east of the Gingirana claim area extending from Lake Sunshine to Lake Aerodrome.

A number of ethnographic and archaeological heritage surveys were completed by Central Desert Native Title Services, of Perth, during 2015, enabling access for exploration activities. Isolated heritages sites have been identified.

13.4 Permitting and approvals The Approvals Strategy is based on a staged approach to allow progressive and timely approvals for each development phase of the base case for the Project. The development phases are:

Pilot Scale Development – Ponds and Pump Testing

Pilot Scale Development – Purification Plant (optional6)

Full Scale Project Development

Project Expansion and Enhancement.

KLL has compiled a register of the environmental, heritage and planning approvals and permits necessary to scope, develop, construct and operate the Project for each development phase. Each development phase will require new specific approvals or utilise or modify approvals granted in the prior phase.

Approvals for the Pilot Scale Development Ponds and Pump Testing are currently in place and further approvals will be required (Table 13.1).

It is a condition of Western Australian licensing that, at the completion of mining operations, disturbed areas are rehabilitated and KLL had included this in its capital and operating cost estimates.

6 K-UTEC advises that at this stage, a pilot purification plant is not essential, as adequate results can be obtained from third part laboratories or site bench scale testing. F

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Table 13.1 List of approvals

Approval Nature of approval

Environmental Protection Act 1986 – Part IV Part IV approval – API level of Assessment

Environmental Protection and Biodiversity Conservation Act 1999 EPBC Act approval – bilateral approval via EPA

Aboriginal Heritage Act 1972 Heritage Surveys Section 18 consent (if required)

Mining Act 1978 Mining Lease Approval Mining Proposal and Closure Plan

Dangerous Goods Safety Act Dangerous Goods Licence for diesel storage facilities Dangerous Goods Site Licence Security Risk Substance Storage Licence

RIWI Act 5C Licence for dewatering 26D Bore construction

Mines Safety and Inspection Act Project Management Plan Equipment Registration Registration of Principal Employer Registration of Mine Manager and nominated site safety

representatives

Environmental Protection Act (Part V) Works Approval Application – Evaporation Ponds (Cat 14 Solar Salt) Works Approval Application – Processing (Cat 5 Processing facility) Works Approval Application – Power Station (Cat 52 Electric power

generation) Works Approval Application – Village (Cat 85 Sewage facility) Works Approval Application – Dewatering (Cat 6 Mine dewatering) Works Approval Application – Road (Cat 80 Crushing and screening) Licence Application for all of above categories

Petroleum Pipelines Act 1969 Pipeline Licence to Construct Pipeline Licence to Operate

Health Regulation 1974 Approval to construct or install an apparatus for the treatment of sewage

Port Authority Act MWPA Port Authority Leases and approval to export

Main Roads Act Heavy Haulage Approval

Building Approvals Shire Building Licence

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14 ECONOMIC ANALYSIS Economic analysis results are positive for a number of scenarios and Snowden considers that these results justify KLL continuing to commit to further work. Central to this is completion of pilot- scale pump and evaporation testing to enable a Feasibility Study to be completed to support estimation of an Ore Reserve, a Production Target nominated and forecast financial information derived.

Given recent guidance by ASIC and the absence of an Ore Reserve, Snowden considers that there are not reasonable grounds for KLL to publicly state a production target, forecast financial information or income-based valuations, although the Company may internally prepare these types of forward looking statements for management purposes.

Key sensitivities are likely to include discount rate, financial exchange rate, SOP pricing, operating expenditure, capital expenditure and project delays.

Snowden observes that existing brine-hosted SOP producers are comparatively low cost when compared to secondary (derived from MOP) SOP producers as drawn from leading industry market research reports. Figure 14.1 shows a simplified summary of the operating cost for various SOP production methods in US$.

Snowden also understands that SOP production costs are higher for SOP produced by the secondary Mannheim process, with primary brine based productions costs being the lowest.

Figure 14.1 Marketing cost curve

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15 EXPLORATION STRATEGY AND BUDGET KLL has presented and explained to Snowden a base case technical program and budget (Table 15.1) of exploration and process testwork that is directed toward:

The listing is being conducted predominately to raise funds to continue the exploration and development of the Project. KLL's main objectives upon completion of the listing are to:

Increase confidence of Mineral Resource estimate - through hydrogeological definition with the intention of enabling conversion of the Mineral Resource to an Ore Reserve;

Pump tests of bores - conduct short term pump tests to verify key assumptions in relation to brine extraction from the main aquifers;

Install supporting infrastructure - including access roads, temporary camp, utilities and buildings;

Studies and Engineering – expand on and update existing studies, pond trials and site investigations; and

Regulatory and other approvals - continue to progress environmental, Native Title and regulatory approval and agreement processes.

The above objectives will be pursued if KLL achieves the minimum subscription of $3.0 million. If KLL accepts the maximum number of oversubscriptions to raise $6.0 million, then it intends to undertake further drilling, install a relocatable camp, undertake further pump tests at additional drilling locations, further progress studies and engineering associated with brine extraction, processing, infrastructure requirements, capital and operating costings, environmental applications and Native Title agreement processes.

Table 15.1 Development program and budget

Source of Funds Minimum raising (A$M) Maximum raising (A$M) Capital Raising 3.0 6.0 Kalium Current Cash 0.6 0.6

Total Available Funds 3.6 6.6

Use of Funds (A$) Mineral Resource Drilling 0.9 1.6 Pump Testing 0.3 0.7 Infrastructure Costs 0.2 0.6 Studies & Engineering Consultants 0.1 1.1 Rents & Rates, Environmental, Native Title & Approvals 0.4 0.6 Corporate & Admin Costs 1.2 1.2 Costs of the Offer 0.4 0.6

Working Capital 0.0 0.2

Total Expenses 3.6 6.6

Snowden has reviewed both the proposed base case development programme and budget for the Project, which contemplates the raising of $3.0 million, before costs and considers it to be fair and reasonable and commensurate with good practice. Snowden has also reviewed the proposed expanded scope development programme and budget for the Project, which contemplates the raising of $6.0 million, before costs and Snowden similarly considers it to be fair and reasonable and commensurate with good practice. Snowden observes that the intended use of funds falls within the bounds mandated by Chapter 1 of the ASX Listing Rules. F

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Snowden cautions that any mineral exploration venture is a process of discovery and that estimated expenditures are subject to modification depending on progress, market conditions and other factors. Actual expenditure levels may differ significantly to the above estimates.

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16 INTERPRETATION AND CONCLUSIONS All brine deposits present a risk that the quantity and grade of brine produced is less than expected, highly variable or is unable to be abstracted from subsurface at the required rates. This may be due to:

Variability in the deposit that could affect brine recovery

Inaccurate brine volume and extraction assessment

Inability to abstract brine volumes due to low permeability of the aquifer material

Weather conditions

Aquifer lithology.

KLL has developed existing and ongoing mitigation strategies to reduce risk:

Planned pilot scale testing program

Porosity, permeability and specific yield testing

Duplicate assay results, cross-check at different laboratories

Assess pumping options and develop best option for each area

Create a numerical model and brine extraction program to minimise variability

Conduct further hydrogeological drilling to understand sediment layers and connectivity

Benchmarking against other systems

Exploration results indicate that while there are depth and lateral differences in chemical composition of the brine over the overall lake system, but chemical composition is consistent within each lake itself, implying that uniform parameters can be applied to each production area.

The Indicated Resource and Inferred Resource estimates are informed by chemical analyses of the brine, constant rate pumping tests, grain size analysis, borehole tests, and geophysical exploration. An Exploration Target can be extrapolated from the existing data and knowledge of the lake system and palaeochannel. As exploration work continues, Snowden expects that the database as well as the classification of the Mineral Resource and size of the Mineral Resource will be increased.

Snowden identifies two possible mining methods to supply the production facility; trenching and bore-field pumping. The recovery method recommended by K-UTEC demonstrates potential production of SOP.

The composition of the deposit brine informs the current process design, which considers the recovery of SOP as the principal product, with the potential for producing by-products.

16.1 Recommendations Snowden has reviewed the proposed exploration program and budget and considers it to be fair and reasonable and commensurate with good practice. Snowden makes the following recommendations based on its knowledge of the Project and its reading of the Project’s consultants’ reports:

Snowden strongly recommends that the Project proceed to a Feasibility Study capable of supporting an estimation of Ore Reserves, based on its understanding of the results to date.

Snowden considers that time is of the essence in relation to the Project, irrespective of its highly advanced state. Snowden observes that there are other Australian projects in development but that these are significantly less technically developed.

A hydrogeological numerical model should be developed to increase the knowledge of the complete brine systemData of the replenishment of the aquifers should be obtained and monitored.

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Several parameters require closer definition with ongoing exploration work, such as long term pumping tests and monitoring of a wider area or test trenches.

Geophysical exploration should be combined with borehole exploration including geophysical borehole logging, in-situ tests of permeability, porosity and hydrogeological flow rates. This will improve local knowledge for the different lakes in the tenement area.

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17 REFERENCES JORC, 2012: Australasian Code for Reporting of Mineral Resources and Ore Reserves – The JORC Code 2012 Edition The Joint Ore Reserves Committee of the Australasian Institute of Mining and Metallurgy and the Australian Institute of Geoscientists and the Minerals Council of Australia. 20 December 2012.

CIM Best Practice Guidelines for Resource and Reserve Estimation for Lithium Brines, Prepared by the Sub-Committee on Best Practice Guidelines for Resource and Reserve Estimation for Lithium Brines.

Kalium Lakes Limited, 2015: Beyondie Potash Project - Concept Study. April 2015.

Bureau of Meteorology (BOM): Meteorological Data.

BULLEN Geological Survey of Western Australia, 1995: Australia 1: 250.000 Geological Series. Sheet SG 51 – 1. Second Edition. 1995.

Kalium Lakes Limited, 2015: unpublished charts, figures or pictures.

English PE, Bastrakov EN, Bell JG, Woltmann M, Kilgour PL and Stewart G., 2012: ‘Paterson demonstration site report – Palaeovalley groundwater project’, record 2012/07, Geoscience Australia, Canberra.

Magee JW, 2009: Palaeovalley groundwater resources in arid and semi-arid Australia – A literature review, record 2009/03, Geoscience Australia, Canberra, 224p.

Johnson, S. L., Commander, D. P. & O’Boy, C. A., 1999: Groundwater resources of the Northern Goldfields.

Berry, K., 1994: Groundwater exploration at Albion Downs and South Lake Way Basin. Update of numeric flow model: Western Mining Corporation, Exploration Division, Report No. HYD T036 (unpublished).

Heath, R.C., 1983: Basic Ground-Water Hydrology, US Geological Survey Water-Supply Paper 2220.

Reward Minerals, 2014b: Dora West Potash Project Drilling Results, ASX Release, 10 November 2014.

Schicht, T., Penndorf, A., 2015: Report of the site visit to the Salt Lakes of the Beyondie Potash Project and the visit to the company AQ2 from August 17 to August 21, 2015, unpublished, 31 August 2015.

Schicht, T., Penndorf, A., 2016: Technical Report for the Beyondie Potash Project, Australia, JORC (2012) and NI43-101 Technical Report, unpublished, 23 May 2016.

Grey, K. et al, 2005: Lithostratigraphic nomenclature of the Officer Basin and correlative parts of the Paterson Orogen. Western Australia Geological Survey of Western Australia. Report 93, 95p.

Kalium Lakes Limited, 2016: unpublished charts, figures or pictures.

AQ2, 2016: Assessment of the hydrogeology of Beyondie Project Saline Lake System, Pre-Feasibility Study Report. February 2016.

Kalium Lakes Limited, 2015: Beyondie Potash Project – Technical Studies. April 2016.

K-UTEC AG, 2016: PreFeasibility Study for the Beyondie lakes potash project, Australia; Part Crystalisers, Processing. unpublished draft, April 2016

K-UTEC AG, 2016: PreFeasibility Study for the Beyondie lakes potash project, Australia; Part Geology and Resources. unpublished draft, April 2016

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Appendix A JORC Code Table 1

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Section 1 – Sampling Techniques and Data

(Criteria in this section apply to all succeeding sections.)

Criteria JORC Code explanation Commentary

Sampling techniques

Nature and quality of sampling (eg cut channels, random chips, or specific specialised industry standard measurement tools appropriate to the minerals under investigation, such as down hole gamma sondes, or handheld XRF instruments, etc). These examples should not be taken as limiting the broad meaning of sampling.

Include reference to measures taken to ensure sample representivity and the appropriate calibration of any measurement tools or systems used.

Aspects of the determination of mineralisation that are Material to the Public Report.

In cases where ‘industry standard’ work has been done this would be relatively simple (eg ‘reverse circulation drilling was used to obtain 1 m samples from which 3 kg was pulverised to produce a 30 g charge for fire assay’). In other cases more explanation may be required, such as where there is coarse gold that has inherent sampling problems. Unusual commodities or mineralisation types (eg submarine nodules) may warrant disclosure of detailed information.

The sampling program involved the collection of brine samples and samples of the aquifer material. Brine was obtained during augering, during drilling and after drilling (by sample collection from installed monitoring bores and sample collection during aquifer testing).

During diamond drilling, it was possible to pump brine samples out of the hole, when the core barrel was removed. These samples are interpreted to come from the base of the hole, although the possibility of downhole flow outside of the casing from shallower aquifer cannot be excluded.

Brine samples could not be collected from other forms of drilling (tricone or blade bit with mud rotary, blade bit with brine, air percussion with foam additives).

50 mm piezometers and 100 mm to 300 mm test bores have been installed, with screens covering the different aquifer horizons. Sampling of each of these piezometers has allowed the collection of a representative brine sample from that aquifer zone only. Sample collection from the piezometers follows the AS/NZ 6667 guideline on groundwater sampling. The lack of gravel pack and seal in seven out of 21 bores equipped with casing introduces the possibility of contamination from areas in the bore that were not screened.

Diamond drilling has allowed collection of the aquifer material encountered in the palaeovalley system. Representative core samples have been submitted to a laboratory (Soil Water Group) to assess porosity and specific yield.

An auger hole drilling program (to 1.5 m depth) has allowed the collection of representative brine samples from the first 1.5 m of the upper aquifer system. Holes were installed using a motorised, handheld auger and brine samples collected after the hole was allowed to fill with brine (generally within five minutes). After the sediment had settled in the bottle, a clean sample was decanted to a 250 ml bottle, which was then kept cool until delivery to the laboratory.

Sediment samples have also been collected for grain size analysis and laboratory analysis of the aquifer’s porosity and specific yield – eight sand samples from six bores, two clay samples from two bores, and 12 lake bed alluvium samples from three different lakes (Lake Beyondie, Ten Mile Lake and Lake Sunshine).

Drilling techniques

Drill type (e.g. core, reverse circulation, open-hole hammer, rotary air blast, auger, Bangka, sonic, etc) and details (e.g. core diameter, triple or standard tube, depth of diamond tails, face-sampling bit or other type, whether core is oriented and if so, by what method, etc).

A number of drilling techniques have been utilised. Diamond drilling (HQ) was initially undertaken to allow the collection of core for laboratory analysis. Current drilling has included air percussion (to install surface casing), mud rotary drilling (with a tricone and/or blade bit), as well as and blade/tricone drilling with a brine as the drilling fluid, aircore drilling and augering.

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Drill sample recovery

Method of recording and assessing core and chip sample recoveries and results assessed.

Measures taken to maximise sample recovery and ensure representative nature of the samples.

Whether a relationship exists between sample recovery and grade and whether sample bias may have occurred due to preferential loss/gain of fine/coarse material.

Brine samples have been collected during diamond drilling, by pumping from within the casing using the rig’s Bean pump. The brine sample is collected after pumping has removed all possible drilling mud from the hole. With casing to the base of the hole, the sample collected is considered to be representative of the aquifer at the base of the hole, although flow down the outside of the casing from shallow aquifers cannot be discounted.

Sediment samples were taken in some cases by coring and in some cases by cuttings.

Samples were also collected from 12 pilot aquifer tests (one-hour pumping) and 16 samples collected during the constant rates tests on two bores. During the constant rate tests, samples were collected at 1, 2, 4, 18, 16, 32, 72 hours (where possible).

Geologic Logging

Whether core and chip samples have been geologically and geotechnically logged to a level of detail to support appropriate Mineral Resource estimation, mining studies and metallurgical studies.

Whether logging is qualitative or quantitative in nature. Core (or costean, channel, etc.) photography.

The total length and percentage of the relevant intersections logged.

All geological samples collected during all forms of drilling are qualitatively logged at 1 m intervals, to gain an understanding of the variability in aquifer materials hosting the brine. During mud rotary and brine fluid drilling, samples are collected and washed and stored in chip trays for future reference.

The best sample quality was obtained from diamond core drilling.

Core samples have been archived by photographic images as a permanent record.

Subsampling techniques and sample preparation

If core, whether cut or sawn and whether quarter, half or all core taken.

If non-core, whether riffled, tube sampled, rotary split, etc and whether sampled wet or dry.

For all sample types, the nature, quality and appropriateness of the sample preparation technique.

Quality control procedures adopted for all sub-sampling stages to maximise representivity of samples.

Measures taken to ensure that the sampling is representative of the in situ material collected, including for instance results for field duplicate/ second-half sampling.

Whether sample sizes are appropriate to the grain size of the material being sampled.

All samples collected are kept cool (<20ºC), until delivery to the laboratory in Perth.

Brine samples were collected in 500 ml bottles with little to no air.

Sample pH was measured in the field. Fields brine duplicates have been taken at a 1:10 ratio.

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Quality of assay data and laboratory tests

The nature, quality and appropriateness of the assaying and laboratory procedures used and whether the technique is considered partial or total.

For geophysical tools, spectrometers, handheld XRF instruments, etc, the parameters used in determining the analysis including instrument make and model, reading times, calibrations factors applied and their derivation, etc.

Nature of quality control procedures adopted (e.g. standards, blanks, duplicates, external laboratory checks) and whether acceptable levels of accuracy (i.e. lack of bias) and precision have been established.

Elemental analysis of brine samples are performed by a reputable Perth laboratory, the Burea-Veritas (BV) (formerly Amdel) mineral processing laboratories. BV is certified to the Quality Management Systems standard ISO 9001. Additionally they have internal standards and procedures for the regular calibration of equipment and quality control methods.

Laboratory equipment are calibrated with standard solutions

Analysis methods for the brine samples used are inductively coupled plasma optical emission spectrometry (ICP OES), Ion Selective Electrode (ISE), Inductive coupled plasma mass spectroscopy (ICP-MS), volumetrically and colourimetrically. Elements analysed for all samples included – Ca, K, Mg, Na, P, S, Cl. Selected samples have been analysied for a full 62 suite of elements including Au, Ag, As, Ba, Be, Bi, Br, Cd, Ce, Co, Cs, Cu, Dy, Er, Eu, Ga, Gd, Ge, Hf, Hg, Ho, In, La, Li, Lu, Mo, Nb, Ni, Pb, Pd, Pr, Pt, Rd, Re, Sb, Sc, Se, Sm, Sn, Sr, Ta, Tb, Te, Th, Tl, Tm, U, W, Y, Yb, Zn, Zr, Al, B, Ca, Cr, Fe, K, Mg, Mn, Na, P, S, Si, Ti, and V.

The assay method and results are suitable for the calculation of a resource estimate.

Check lab assays at a 1:10 ratio have been sent to an external lab (ALS Malaga).

Verification of sampling and assaying

The verification of significant intersections by either independent or alternative company personnel.

The use of twinned holes. Documentation of primary data, data

entry procedures, data verification, data storage (physical and electronic) protocols.

Discuss any adjustment to assay data.

In a number of bores samples have been collected during both drilling and aquifer testing.

Multiple samples have also been taken from nearby locations during the sampling regime.

During the auger sampling programme, 36 duplicate samples were collected and sent to two different laboratories (BV and ALS).

Data concerning sample location was obtained out in the field, data entry then performed back in the Perth office to an electronic database.

Assay data remains unadjusted. Results have been verified by AQ2 and K-UTEC.

Location of data points

Accuracy and quality of surveys used to locate drill holes (collar and down-hole surveys), trenches, mine workings and other locations used in Mineral Resource estimation.

Specification of the grid system used. Quality and adequacy of topographic

control.

Hole location coordinates obtained from Rover GPS Trimble R1 (<1 m accuracy) by a qualified mines surveyor. Reduced levels are to be surveyed with a more accurate method in the future.

The grid system used was MGA94, Zone 51.

Data spacing and distribution

Data spacing for reporting of Exploration Results.

Whether the data spacing and distribution is sufficient to establish the degree of geological and grade continuity appropriate for the Mineral Resource and Ore Reserve estimation procedure(s) and classifications applied.

Whether sample compositing has been applied.

The auger program has allowed a 1 km sample grid over the lake surface (where the water level is shallower than 1.5 m below surface).

Drilling ensured a bore spacing of between 1 km and 3 km over the main palaeochannel area. This is better than the recommendations by Houston et al (2011) of 5 km spacing for an Indicated Resource.

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Orientation of data in relation to geological structure

Whether the orientation of sampling achieves unbiased sampling of possible structures and the extent to which this is known, considering the deposit type.

If the relationship between the drilling orientation and the orientation of key mineralised structures is considered to have introduced a sampling bias, this should be assessed and reported if material.

Not applicable, considering the deposit type. All drillholes are vertical given the flat lying structure of

a salt lake

Sample security

The measures taken to ensure sample security.

Samples are labeled and transported by KLL personnel to Perth. They are then hand delivered to BV laboratories by KLL personnel.

Audits or reviews

The results of any audits or reviews of sampling techniques and data.

No audits or reviews have been conducted at this point in time.

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Section 2 – Reporting of Exploration Results

(Criteria listed in the preceding section also apply to this section.)


Mineral tenement and land tenure status

Type, reference name/number, location and ownership including agreements or material issues with third parties such as joint ventures, partnerships, overriding royalties, native title interests, historical sites, wilderness or national park and environmental settings.

The security of the tenure held at the time of reporting along with any known impediments to obtaining a licence to operate in the area.

The Beyondie Potash Project is 100% owned by Kalium Lakes Limited (KLL or Kalium Lakes) with project tenure held under granted exploration licences: E69/3306, E69/3309, E69/3339, E69/3340, E69/3341, E69/3342, E69/3343, E69/3344, E69/3345, E69/3346, E69/3347, E69/3348, E69/3349, E69/3351, E69/3352.

KLL has a land access and mineral exploration agreement with the Mungarlu Ngurrarankatja Rirraunkaja Aboriginal Corporation over tenures E69/3339, E69/3340, E69/3342, E69/3343, E69/3344, E69/3345, E69/3348, E69/3349 and E69/3351.

KLL has an exploration and prospecting deed of agreement, and a Mining Land Access Agreement with the Gingirana Native Title Claim Group over tenures E69/3341, E69/3346, E69/3347 and E69/3352.

Exploration done by other parties

Acknowledgment and appraisal of exploration by other parties.

There has been no previous exploration at the Beyondie Potash Project.

Geology Deposit type, geological setting and style of mineralisation.

The deposit is a brine containing potassium and sulphate ions that could form a potassium sulphate salt. The brine is contained within saturated sediments below the lake surface and in sediments adjacent to the lake. The lake sits within a broader palaeochannel system that extends over hundreds of kilometres.

Drill hole Information

A summary of all information material to the understanding of the exploration results including a tabulation of the following information for all Material drillholes: easting and northing of the drillhole

collar elevation or RL (Reduced Level –

elevation above sea level in metres) of the drillhole collar

dip and azimuth of the hole downhole length and interception

depth hole length. If the exclusion of this information is justified on the basis that the information is not Material and this exclusion does not detract from the understanding of the report, the Competent Person should clearly explain why this is the case.

Information has been included in drill collar tables and bore logs appended to this report.

All holes are vertical.

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Data aggregation methods

In reporting Exploration Results, weighting averaging techniques, maximum and/or minimum grade truncations (eg cutting of high grades) and cut-off grades are usually Material and should be stated.

Where aggregate intercepts incorporate short lengths of high grade results and longer lengths of low grade results, the procedure used for such aggregation should be stated and some typical examples of such aggregations should be shown in detail.

The assumptions used for any reporting of metal equivalent values should be clearly stated.

Not applicable due to exploration results being applicable to a brine and not a solid.

No low or high grade cut-off grade has been implemented due to the consistent grade of the brine assay data.

Relationship between mineralisation widths and intercept lengths

These relationships are particularly important in the reporting of Exploration Results.

If the geometry of the mineralisation with respect to the drillhole angle is known, its nature should be reported.

If it is not known and only the down hole lengths are reported, there should be a clear statement to this effect (e.g. ‘downhole length, true width not known’).

Not applicable due to exploration results being applicable to a brine and not a solid.

Diagrams Appropriate maps and sections (with scales) and tabulations of intercepts should be included for any significant discovery being reported These should include, but not be limited to a plan view of drill hole collar locations and appropriate sectional views.

Refer to figures/tables in the report.

Balanced reporting

Where comprehensive reporting of all Exploration Results is not practicable, representative reporting of both low and high grades and/or widths should be practiced to avoid misleading reporting of Exploration Results.

All pertinent results have been reported.

Other substantive exploration data

Other exploration data, if meaningful and material, should be reported including (but not limited to): geological observations; geophysical survey results; geochemical survey results; bulk samples – size and method of treatment; metallurgical test results; bulk density, groundwater, geotechnical and rock characteristics; potential deleterious or contaminating substances.

Approximately 150 km of gravity and seismic geophysical surveys have been completed. The tests were performed to define the deepest parts of the palaeochanel, with 28 traverses undertaken across the channel, extending from Ten Mile Lake to T-Junction Lake.

Eight sand samples, two clay samples and 12 lake alluvium samples were collected during drilling and submitted to a laboratory for porosity and specific yield analysis.

Metallurgical and mineral processing testwork has included bench scale solar evaporation tests, milling, floatation and conversion. The results of the testwork have enabled preliminary process plant design for the Beyondie brine.

Other companies have regionally performed exploration on for similar brine deposits.

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Further work The nature and scale of planned further work (eg tests for lateral extensions or depth extensions or large-scale step-out drilling).

Diagrams clearly highlighting the areas of possible extensions, including the main geological interpretations and future drilling areas, provided this information is not commercially sensitive.

More extensive drilling may confirm the occurrence of basal sands throughout the whole palaeochannel system, and increase the certainty related to the continuity in sand horizons around existing bores in the Ten Mile Lake area.

Further geophysical surface exploration of the palaeochannels will determine stratification as well as the exact vertical and horizontal extension of the channels.

Geophysical downhole logging will return in-situ parameters of porosity, permeability and electrical conductivity. These measurements will be used to locate the pumping tests.

Short term permeability contemplate piezometer installation to gain an understanding of the hydraulic conductivity of the different aquifer layers.

Long duration aquifer testing is planned in four to six test bores, to understand aquifer parameters, especially hydraulic conductivity and specific yield.

Isotopic assays will be carried out to determine the possible different ages of the aquifers as well as the connection of the aquifers.

A long term hydrodynamic trial is planned, pumping a wellfield around the current test bores at Ten Mile Lake, with the aim of measuring the aquifer response to pumping and to observe the operation of evaporation ponds.

Data from the hydrodynamic trial will be used to help establish and calibrate a numerical model which can be used to predict long term abstraction potential, wellfield design, drawdown impacts and changes to brine quality.

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Section 3 – Estimation and Reporting of Mineral Resources

(Criteria listed in section 1, and where relevant in section 2, also apply to this section.)


Database integrity

Measures taken to ensure that data has not been corrupted by, for example, transcription or keying errors, between its initial collection and its use for Mineral Resource estimation purposes.

Data validation procedures used.

The database has been checked to ensure the integrity of results.

Site visits Comment on any site visits undertaken by the Competent Person and the outcome of those visits.

If no site visits have been undertaken indicate why this is the case.

Three site visits ohave been undetrtaken by KLL’s consultants, including a continuous one-week period of drilling supervision.

The hydrogeologist has confirmed drilling practices, geologic logging protocols and brine sampling procedures.

Results have been verified by the Competent Persons who visited site in August 2015 to observe KLL’s diamond drilling, auger drilling and geophysics activities.

Geological interpretation

Confidence in (or conversely, the uncertainty of ) the geological interpretation of the mineral deposit.

Nature of the data used and of any assumptions made.

The effect, if any, of alternative interpretations on Mineral Resource estimation.

The use of geology in guiding and controlling Mineral Resource estimation.

The factors affecting continuity both of grade and geology.

A preliminary degree of confidence is assigned to the geological interpretation of the mineral deposit due to the brine hosted potash being located in a palaeochannel system. Western Australian palaeochannel systems have been extensively studied and although there is some heterogeneity in layering, the general depositional environments are well understood. Palaeochannels generally consist of an upper layer of lake sediments/alluvium, an intermediate zone of thick clays and a basal zone of alternating clays/sands/silts and gravels.

The interpretation of the brine host aquifer dimensions has been based on previous geological mapping of the area, geophysical traverses and exploration drilling logs.

Dimensions The extent and variability of the Mineral Resource expressed as length (along strike or otherwise), plan width, and depth below surface to the upper and lower limits of the Mineral Resource.

The Mineral Resource is defined by the Company’s tenement boundaries, which consider the margins of the salt lake/riverine system. Where the tenement boundary is wider than the palaeochannel system, the palaeochannel boundaries have been defined by geophysical traverses.

The thickness of the aquifer holding the brine mineral resources is estimated from groundwater elevation measured as depth below surface and sediment thickness above the impermeable bedrock.

The brine extends laterally outside of KLL tenement boundaries in some cases.

The volume of brine that can be abstracted has been based on laboratory analysis of the porosity and specific yield of core samples collected from holes drilled.

Information on the specific yield of similar palaeochannel deposits has been obtained from press releases of other potash exploration companies working in the region and laboratory tests. F

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Estimation and modelling techniques

The nature and appropriateness of the estimation technique(s) applied and key assumptions, including treatment of extreme grade values, domaining, interpolation parameters and maximum distance of extrapolation from data points. If a computer assisted estimation method was chosen include a description of computer software and parameters used.

The availability of check estimates, previous estimates and/or mine production records and whether the Mineral Resource estimate takes appropriate account of such data.

The assumptions made regarding recovery of by-products.

Estimation of deleterious elements or other non-grade variables of economic significance (e.g. sulphur for acid mine drainage characterisation).

In the case of block model interpolation, the block size in relation to the average sample spacing and the search employed.

Any assumptions behind modelling of selective mining units.

Any assumptions about correlation between variables.

Description of how the geological interpretation was used to control the resource estimates.

Discussion of basis for using or not using grade cutting or capping.

The process of validation, the checking process used, the comparison of model data to drill hole data, and use of reconciliation data if available.

Potassium tonnage was estimated by multiplying the spatially averaged K concentration by the volume of recoverable brine utilising the relevant specific yield for that aquifer horizon.

There are no previous Mineral Resource estimates. Selective mining units have not been considered. There are no assumptions about correlation

between variables. The geological interpretation was used to define

the extent of the Indicated Resource, between bores where sands were encountered and where either aquifer tests or laboratory tests for specific yield were positive.

The homogeneity of data negates the use of capping or grade cut-offs.

Moisture Whether the tonnages are estimated on a dry basis or with natural moisture, and the method of determination of the moisture content.

Tonnages of potassium have been estimated on a dry, weight volume basis (%w/v).

Cut-off parameters

The basis of the adopted cut-off grade(s) or quality parameters applied.

The homogeneity of data negated the use of capping or grade cut-offs.

Mining factors or assumptions

Assumptions made regarding possible mining methods, minimum mining dimensions and internal (or, if applicable, external) mining dilution. It is always necessary as part of the process of determining reasonable prospects for eventual economic extraction to consider potential mining methods, but the assumptions made regarding mining methods and parameters when estimating Mineral Resources may not always be rigorous. Where this is the case, this should be reported with an explanation of the basis of the mining assumptions made.

Mining factors have not been applied. The mining method is likely to be recovery of brine

from the underground salt lake by submersible bore pumps targeting the lower aquifer and shallow trenches targeting the upper aquifer.

It is not possible to extract all of the contained brine with these methods, due to the natural porosity, permeability and recharge dynamics of the aquifer.

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Metallurgical factors or assumptions

The basis for assumptions or predictions regarding metallurgical amenability. It is always necessary as part of the process of determining reasonable prospects for eventual economic extraction to consider potential metallurgical methods, but the assumptions regarding metallurgical treatment processes and parameters made when reporting Mineral Resources may not always be rigorous. Where this is the case, this should be reported with an explanation of the basis of the metallurgical assumptions made.

Metallurgical testwork undertaken by K-UTEC on brine water has been carried out in both small scale lab benchtop trials and larger scale evaporation pilot ponds indicating the efficacy of standard metallurgical recovery methods.

Environmen-tal factors or assumptions

Assumptions made regarding possible waste and process residue disposal options. It is always necessary as part of the process of determining reasonable prospects for eventual economic extraction to consider the potential environmental impacts of the mining and processing operation. While at this stage the determination of potential environmental impacts, particularly for a greenfields project, may not always be well advanced, the status of early consideration of these potential environmental impacts should be reported. Where these aspects have not been considered this should be reported with an explanation of the environmental assumptions made.

The Project is expected to have a limited, localised environmental impact, with minor impacts on surface disturbance associated with pond construction and stockpiles.

The Project is located in a very remote area and is not expected to produce significant quantities of waste tailings.

Acid mine drainage is not expected to be an issue.

Bulk density Whether assumed or determined. If assumed, the basis for the assumptions. If determined, the method used, whether wet or dry, the frequency of the measurements, the nature, size and representativeness of the samples.

The bulk density for bulk material must have been measured by methods that adequately account for void spaces (vugs, porosity, etc.), moisture and differences between rock and alteration zones within the deposit.

Discuss assumptions for bulk density estimates used in the evaluation process of the different materials.

As the resource is a brine, bulk density is not applicable.

Classification The basis for the classification of the Mineral Resources into varying confidence categories.

Whether appropriate account has been taken of all relevant factors (i.e. relative confidence in tonnage/grade estimations, reliability of input data, confidence in continuity of geology and metal values, quality, quantity and distribution of the data).

Whether the result appropriately reflects the Competent Person’s view of the deposit.

This Mineral Resource estimate has been classified the Competent Person, taking into account the amount of data available.

The CIM Best Practice Guidelines for Resource and Reserve Estimation for Lithium Brines were used to inform classification.

Audits or reviews

The results of any audits or reviews of Mineral Resource estimates.

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Discussion of relative accuracy/ confidence

Where appropriate a statement of the relative accuracy and confidence level in the Mineral Resource estimate using an approach or procedure deemed appropriate by the Competent Person. For example, the application of statistical or geostatistical procedures to quantify the relative accuracy of the resource within stated confidence limits, or, if such an approach is not deemed appropriate, a qualitative discussion of the factors that could affect the relative accuracy and confidence of the estimate.

The statement should specify whether it relates to global or local estimates, and, if local, state the relevant tonnages, which should be relevant to technical and economic evaluation. Documentation should include assumptions made and the procedures used.

These statements of relative accuracy and confidence of the estimate should be compared with production data, where available.

The Mineral Resource is a lacuistrine brine that contains aqueous potassium, sulfate and other ions. The relative accuracy of the estimated Mineral Resource considers the geological uncertainties of dealing with a brine lake, informed byCIM Best Practice Guidelines for Resource and Reserve Estimation for Lithium Brines.

Recovery factors have not been applied to the Mineral Resource and it is not possible to extract all of the contained brine with the proposed methods, due to the natural porosity, permeability and recharge dynamics of the aquifer.

Production data is unavailable for this Mineral Resource.

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DLA Piper Australia Level 31, Central Park 152-158 St Georges Terrace Perth WA 6000 PO Box Z5470 Perth WA 6831 Australia DX 130 Perth T +61 8 6467 6000 F +61 8 6467 6001

W www.dlapiper.com

DLA Piper Australia is part of DLA Piper, a global law firm, operating through various separate and distinct legal entities. A list of offices and regulatory information can be found at www.dlapiper.com

The Directors Kalium Lakes Limited c/- RSM Bird Cameron 8 St Georges Terrace PERTH WA 6000

Your reference

Our reference AGJ/UKDP/369480/3

AUM/1214391344.1

1 November 2016 Dear Sirs

INDEPENDENT SOLICITOR'S REPORT ON MINING TENEMENTS KALIUM LAKES POTASH PTY LTD This report is prepared for inclusion in a prospectus for the initial public offer of 15,000,000 fully paid ordinary shares in the capital of Kalium Lakes Limited (Company) at an issue price of A$0.20 each to raise A$3,000,000, with provision to accept oversubscriptions of up to 15,000,000 fully paid ordinary shares to raise an additional A$3,000,000.

INTRODUCTION

Purpose

1 The directors of the Company have requested that we provide a report in relation to:

1.1 the interests held by Kalium Lakes Potash Pty Ltd (KLP), a wholly owned subsidiary of the Company, in the mining tenements set out in Part A of Schedule 1 and together comprising the Beyondie Potash Project (together Beyondie Assets), being:

1.1.1 15 granted exploration licences (E69/3306, E69/3309, E69/3339 to E69/3349, E69/3351 and E69/3352); and

1.1.2 one granted miscellaneous licence (L52/162) for the purpose of an access road, gas pipeline, water supply, accommodation village, communications and other infrastructure;

1.2 KLP's interests in other mining tenements and applications for mining tenements set out in Part B of Schedule 1 (together Non-Core Assets), being:

1.2.1 one granted exploration licence (E38/2995); and


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1.2.2 four applications for exploration licences (E38/2973, E38/2982, E45/4436 and E45/4437);

1.3 any matters relevant to the exercise of KLP's interests in the Beyondie Assets or the Non-Core Assets, including:

1.3.1 material agreements relating to those interests (together Material Agreements);

1.3.2 concurrent interests in the land the subject of the Beyondie Assets or the Non-Core Assets, including other mining tenements, pastoral leases and native title, and agreements reached with the holders of those interests (together Land Access Agreements); and

1.3.3 material statutory approvals.

2 The Beyondie Assets are the Company's primary assets and, on that basis, the focus of this report. Less detail is provided in relation to the Non-Core Assets, which are peripheral to the Company's business.

3 Specifically, this report considers the Company's ability to rely on KLP's interests in the Beyondie Assets to conduct:

3.1 exploration activities directed at increasing confidence in the mineral resource for the Beyondie Potash Project and continuing to progress environmental approvals, specifically:

3.1.1 the drilling of up to 114 auger, reverse circulation and/or diamond drill holes on land the subject of, or adjacent to, Ten Mile Lake (E69/3309 and E69/3347), including stygofauna monitoring holes; and

3.1.2 the drilling of up to 72 auger, reverse circulation and/or diamond drill holes on land the subject of, or adjacent to, Lake Sunshine (E69/3351);

3.2 proposed pilot scale pump and pond test, comprising:

3.2.1 installation of production bores and initial 12 month test pump of up to 1,500,000 kilolitres (1.5 gigalitres) of groundwater from the land the subject of Ten Mile Lake (E69/3309 and E69/3347);

3.2.2 development of up to seven trenches to test shallow groundwater feed on the surface of Ten Mile Lake (E69/3309) and up to three trenches for the same purpose on the surface of Lake Sunshine (E69/3351);

3.2.3 installation of up to 150 hectares of evaporation and crystalliser ponds;

3.2.4 installation of connecting pipework from bores and trenches to evaporation ponds; and F

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3.2.5 installation of supporting infrastructure, including access roads, camp, workshops, utilities and buildings.

4 This report does not consider the development and operation of a commercial sulphate of potash production facility.

Scope

5 In preparing this report, we have relied upon:

5.1 the searches of the public databases identified in Schedule 2 (Searches), the results of which are included in Schedule 1;

5.2 copies of the Material Agreements, being:

5.2.1 the Declaration of Trust dated 27 March 2015 between Rachlan Holdings Pty Ltd and KLP (Trust Deed); and

5.2.2 the Royalty Deed dated 5 August 2016 between KLP and Kalium Corporate Pty Ltd as trustee for the Kalium Founders Unit Trust (Royalty Deed);

5.3 copies of the Land Access Agreements, being:

5.3.1 the following agreements with holders of concurrent mining tenements:

(a) the Access Agreement relating to L52/162, E52/2943 and E69/3247 dated 30 October 2015 between KLP and Cosmopolitan Minerals Limited (Cosmopolitan Access Agreement); and

(b) the Access Agreement relating to L52/162 and E52/3088 dated 19 January 2016 between KLP and Drillabit Pty Ltd (Drillabit Access Agreement);

5.3.2 the following agreements with holders of concurrent pastoral leases:

(a) the Access and Compensation Agreement relating to L52/162 and Marymia Pastoral Lease dated 13 December 2015 between KLP and Victor James Gleeson (Marymia Access and Compensation Agreement); and

(b) the Access and Compensation Agreement relating to L52/162 and Kumarina Pastoral Lease dated 14 December 2015 between KLP, Brent Ronald Smoothy and Rachel Mary Burn (Kumarina Access and Compensation Agreement);

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5.3.3 the following agreements with holders, or claimants of, concurrent native title:

(a) the Land Access and Mineral Exploration Agreement dated 10 March 2015 between Mungarlu Ngurrarankatja Rirraunkaja (Aboriginal Corporation) RNTBC and Rachlan Holdings Pty Ltd dated 10 March 2015, as subsequently assigned to KLP (MNR Land Access and Mineral Exploration Agreement);

(b) the Exploration & Prospecting Deed of Agreement dated 11 March 2015 between the Gingirana Native Title Claim Group and Rachlan Holdings Pty Ltd, as subsequently assigned to KLP (Gingirana Exploration & Prospecting Deed of Agreement); and

(c) the Beyondie Potash Project Gingirana Land Access Agreement dated 22 March 2016 between the Gingirana Signatories for and on behalf of the Gingirana People and KLP (Gingirana Land Access Agreement); and

5.3.4 material statutory approvals relevant to the conduct of the proposed activities referred to at 3.2 above, as summarised below.

6 We are instructed that the agreements referred to at 5.2 and 5.3 above are the only agreements relating to KLP's interests in the Beyondie Assets and the Non-Core Assets to which the Company or KLP are party.

7 We have not relied upon any other documents or information for the purposes of this report. We are not aware of any other material documents or information.

8 Schedule 1 to this report forms an essential part of this report and must be read in conjunction with this report.

9 This report must be read subject to the assumptions and qualifications in Schedule 4.

PART A – MATERIAL AGREEMENTS

Trust Deed

10 Each of the Beyondie Assets (other than L52/162) and the Non-Core Assets was or is applied for in the name of Rachlan Holdings Pty Ltd (Rachlan). Rachlan is owned and controlled by Mr Brent Smoothy, a former director of KLP.

11 The Trust Deed records that:

11.1 Rachlan holds the benefit of the applications for the relevant Beyondie Assets and the Non-Core Assets, and any exploration licences granted pursuant to those applications, on trust for KLP; and F

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11.2 Rachlan must transfer any exploration licence granted pursuant to an application for the Beyondie Assets and the Non-Core Assets, together with the benefit of any contract relating to those exploration licences entered into at the request of KLP, to KLP as and when directed by KLP.

12 Each of the granted mining tenements, including the Beyondie Assets and E38/2995 (being part of the Non-Core Assets), have been transferred to KLP in accordance with the Trust Deed.

13 As set out at 80 below, each of the remaining applications for mining tenements (being the balance of the Non-Core Assets) are held by Rachlan in trust for KLP in accordance with the Trust Deed.

Royalty Deed

14 Each of the Beyondie Assets and the Non-Core Assets is subject to the Royalty Deed.

15 The Royalty Deed provides, with effect on and from the date on which the ordinary shares of KLP or its ultimate holding company (being the Company) becomes admitted to quotation on the Australian Securities Exchange, for:

15.1 the termination of the Royalty Deed dated 27 March 2015 between KLP and Kalium Corporate Pty Ltd as trustee for the Kalium Founders Unit Trust; and

15.2 the payment by KLP to Kalium Corporate Pty Ltd as trustee for the Kalium Founders Unit Trust (Payee) of a royalty of 1.9% of gross proceeds received by KLP, less any refunds, claims, or discounts, for the sale or disposal of all minerals, within the meaning given in the Mining Act 1978 (WA), derived from the Beyondie Assets or the Non-Core Assets (or successor and replacement tenements), including potassium salts, potassium compounds and potassium bearing materials that are saleable as fertiliser.

16 The Royalty Deed also:

16.1 entitles the Payee to audit KLP's records in relation to the payment of the royalty referred to at 15.2 above and provides for adjustment and dispute mechanisms in the event of a discrepancy;

16.2 requires KLP to keep the Beyondie Assets and the Non-Core Assets valid and in full force and effect, including by paying all rents, royalties, taxes and other payments, meeting minimum expenditure requirements and making applications for renewal;

16.3 requires KLP to give 60 days' notice of any intention to relinquish, surrender, not renew or extend any of the Beyondie Assets or the Non-Core Assets and confers upon the Payee a right to have any such mining tenement conveyed to it, together with relevant mining information, for no consideration; and

16.4 records KLP's consent to the lodgement, by the Payee, of a caveat against the Beyondie Assets and the Non-Core Assets. F

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17 The Royalty Deed terminates with respect to a particular mining tenement (including successor and replacement tenements) in the event of either:

17.1 the conveyance of that tenement to the Payee; or

17.2 the relinquishment, surrender or non-renewal following an election by the Payee not to exercise its right at 16.3 above,

except to the extent that KLP, its related bodies corporate, related parties or associated entities procure the grant of or otherwise acquire a mining tenement in respect of the same land within three years of the relevant relinquishment, surrender or non-renewal (as applicable).

PART B – BEYONDIE ASSETS

Ownership

18 As set out at 10 above, the applications for the Beyondie Assets (other than L52/162) were made by Rachlan in accordance with the Trust Deed.

19 Under the Mining Act 1978 (WA), a legal or equitable interest in or affecting an exploration licence may not be transferred or dealt with directly or indirectly during the first year of that licence, without the consent in writing of the Minister.

20 Following grant of the Beyondie Assets, ministerial consent to the transfer from Rachlan to KLP of the relevant exploration licences was received on:

20.1 in respect of E69/3306 and E69/3309, 30 April 2015; and

20.2 in respect of E69/3339 to E69/3349, E69/3351 and E69/3352, 8 December 2015.

21 KLP is the registered holder of the Beyondie Assets. Details of the Beyondie Assets are set out in Schedule 1.

22 We are instructed that:

22.1 KLP is the full beneficial owner of the Beyondie Assets; and

22.2 the Beyondie Assets are unencumbered and not to subject to any mortgage, charge or other security interest.

Exploration licences – rights and obligations

23 Subject to certain statutory approvals, an exploration licence under the Mining Act 1978 (WA) authorises the registered holder:

23.1 to enter the land the subject of the licence;

23.2 to explore that land;

23.3 to remove mineral bearing substances from that land to a prescribed limit; and

23.4 to take and divert water from that land.

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24 Exploration licences are granted by the Minister for an initial term of five years. The Minister may, if satisfied that any one of several prescribed grounds for extension exist, extend the term of an exploration licence:

24.1 by one period of five years; and

24.2 by a further period or periods of two years.

25 The prescribed grounds for extension are set out in the Mining Regulations 1981 (WA) and include:

25.1 difficulties or delays occasioned by law, arising from governmental or other authority administrative, political and environmental requirements, the conduct of an Aboriginal heritage survey on the land or in obtaining requisite consents or approvals or in gaining access to the land;

25.2 that the land the subject of the licence has been unworkable for the whole or a considerable part of any year of the term; and

25.3 that the work carried out under the exploration licence justifies further exploration.

26 The holder of an exploration licence has the right to apply for, and have granted, one or more mining leases or general purposes leases in respect of the land the subject of the licence. The right to grant of a mining lease is subject to the Mining Act 1978 (WA), which gives the Minister a residual discretion to refuse a mining lease application, including on public interest grounds.

27 Where the holder of an exploration licence applies for a mining lease or general purpose lease over that land, the exploration licence continues in force until the application for a lease has been determined.

28 The holder of an exploration licence is obliged:

28.1 to pay an annual rent;

28.2 unless exempt, to expend a minimum amount in connection with exploration on the exploration licence in excess of the prescribed annual expenditure commitment; and

28.3 to surrender 40% of the number of blocks subject to the exploration licence within six years after the date of grant.

29 Failure to comply with these obligations may result in forfeiture of the exploration licence or the imposition of a penalty.

30 Exploration licences are subject to various other conditions, including standard conditions for the protection of the environment and certain third party interests in land.

31 Details of the rent and minimum expenditure commitments for each of the exploration licences comprising part of the Beyondie Assets are set out in Schedule 1. For

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32 The Searches indicate that the annual rent for each of the exploration licences has been paid in full. As set out in Schedule 1, KLP has met or exceeded its minimum expenditure commitments on all the Beyondie Assets in relation to which it has been required to report, or has reported, to date.

33 On the basis of the Searches, we are not aware of any non-compliance with the conditions of the exploration licences.

Miscellaneous licences – rights and obligations

34 A miscellaneous licence under the Mining Act 1978 (WA) authorises the holder to use the land for prescribed purposes which are directly connected with mining.

35 Miscellaneous licences are granted by the mining register or the Mining Warden for an initial term of 21 years with a renewal as of right for a second period of 21 years. Further renewals of up to 21 years may also be granted, however this is at the discretion of the Minister.

36 The holder of a miscellaneous licence is obliged to pay annual rent. Failure to comply with this requirement may result in forfeiture of the miscellaneous licence or the imposition of a penalty.

37 Miscellaneous licences are subject to various other conditions, including standard conditions restricting the use of the licence for the purposes granted, an obligation not to transfer or mortgage a legal interest in the licence without prior written consent of the Minister and a requirement for the lodgement of periodical reports.

38 The prescribed purposes for which L52/162 was granted comprise a bore, a bore field, a bridge, a communications facility, a drainage channel, a meteorological, station, a minesite accommodation facility, a pipeline, a power generation and transmission facility, a power line, a pump station, a road, a search for groundwater, a storage or transportation facility for minerals or mineral concentrate, a water management facility, a workshop and storage facility taking water.

39 Details of the rent for L52/162 is set out in Schedule 1.

40 The Searches indicate that the annual rent has been paid in full.

41 On the basis of the Searches, we are not aware of any non-compliance with the conditions of L52/162.

Concurrent interests

42 Mining tenements under the Mining Act 1978 (WA) are exclusive only for the purposes for which they are granted and, where granted in respect of Crown land (as is the case for both the Beyondie Assets and the Non-Core Assets), are capable of co-existing:

42.1 in the case of miscellaneous licences, with other mining tenements; and

42.2 in all cases, with pastoral leases, native title, Crown reserves and public infrastructure. F

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Mining tenements

43 Under the Mining Act 1978 (WA), where two mining tenements coexist, the subsequent tenement is deemed to be granted subject to a reservation of the rights of the prior tenement.

44 In practice, in the absence of agreement to the contrary, this means that activities under the prior tenement are entitled to priority in the event of any conflict or interference.

45 Except for L52/162, the Beyondie Assets do not coexist with any other mining tenements.

46 L52/162 includes land the subject of the following prior tenements:

46.1 E52/1998 and E52/2930 held by Murchison Copper Mines Pty Ltd (Murchison Copper); and

46.2 E52/2943 and E69/3247 held by Cosmopolitan Minerals Limited (Cosmopolitan).

47 The land the subject of L52/162 is the subject of application E52/3088 by Drillabit Pty Ltd (Drillabit) which, if granted, will be granted subsequent to L52/162.

48 As referred to at 5.3.1 above, KLP has entered into the Cosmopolitan Access Agreement and the Drillabit Access Agreement for the purposes of:

48.1 procuring consent to the grant of L52/162, including acknowledgements in relation to the construction of gas pipeline infrastructure; and

48.2 providing a framework for coordination of activities in the affected area.

49 Detailed summaries of the Cosmopolitan Access Agreement and the Drillabit Access Agreement are included in Schedule 3.

50 We are instructed that there is no agreement between KLP and Murchison Copper in respect of the grant of L52/162 over the land the subject of E52/1998 and E52/2930. As L52/162 was granted subsequent to E52/1998 and E52/2930, any activities by Murchison Copper on land the subject of E52/1998 and E52/2930 will take priority in the event of any conflict or interference with KLP's proposed activities on L52/162.

Pastoral leases

51 Under the Mining Act 1978 (WA), the rights of a tenement holder generally have priority over the rights of a pastoral lessee. A pastoral lessee has an entitlement to:

51.1 withhold consent to the conduct of activities within 400 meters of the outer edge of any water works, race, dam, well or bore not being an excavation previously made and used for mining purposes by a person other than the pastoral lessee; and

51.2 compensation for damage to improvements or loss of earnings from interference with pastoral activities.

52 The provision of consent (if required) and payment of compensation (if applicable) is often dealt with by an agreement which also provides for the consent of the pastoral lessee to the grant of the mining tenement.

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53 L52/162, which comprises part of the Beyondie Assets, includes land the subject of the:

53.1 Marymia pastoral lease, held by Victor James Gleeson; and

53.2 Kumarina pastoral lease, held by Brent Ronald Smoothy and Rachel Mary Burn.

54 Areas of three exploration licences comprising part of the Beyondie Assets, being E69/3309, E69/3347, and E69/3352, also include land the subject of Marymia Pastoral Lease.

55 As referred to at 5.3.2 above, KLP has entered into the Marymia Access and Compensation Agreement and the Kumarina Access and Compensation Agreement for the purposes of:

55.1 procuring consent to the grant of L52/162; and

55.2 settling any compensation liability arising in relation to the conduct of its activities pursuant to L52/162.

56 Detailed summaries of the Marymia Access and Compensation Agreement and the Kumarina Access and Compensation Agreement are included in Schedule 3.

Native title and Aboriginal heritage

57 The common law of Australia recognises the proprietary rights and interests of Aboriginal and Torres Strait Islander people arising under traditional laws and customs in relation to their traditional lands and waters.

58 These rights and interests will be recognised where the persons claiming to hold those rights and interests can establish that they have maintained a continuous connection with the land in accordance with traditional laws and customs since non-Indigenous settlement and those rights and interests have not been lawfully extinguished by the grant of rights and interests to other persons.

59 The Native Title Act 1993 (Cth) codifies much of this common law and establishes a framework pursuant to which:

59.1 persons claiming to hold native title in land and waters, excluding freehold land andcertain other specified categories of land, can have their claims determined by the Federal Court;

59.2 persons whose claim demonstrates a prima facie case to hold native title are entitled to certain procedural rights in respect of the grant of future rights and interests, including mining tenements, to other persons over that land and waters; and

59.3 persons found to hold native title are entitled to compensation in respect of the effect on that native title of the grant to other persons over that land and waters of any rights and interests after the commencement of the Racial Discrimination Act 1975 (Cth), including any future rights and interests.

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60 In relation to the grant of mining tenements, the procedural rights referred to at 59.2 above include:

60.1 in respect of the proposed grant of exploration licences, a right to object to the application of the expedited procedure under the Native Title Act 1993 (Cth) which, unless an objection is upheld, has the effect of permitting the grant of mining tenements without requiring negotiation in the same manner as for mining leases (described at 60.3 below) and to have that objection heard and determined by the National Native Title Tribunal;

60.2 in respect of the proposed grant of miscellaneous licences for specified infrastructure, a right to object in relation to the impact on native title of the activities proposed to be conducted under that licence, to be consulted in relation to that impact and to have that objection heard and determined by an independent person (in practice, the Chief Magistrate of Western Australia); and

60.3 in respect of the proposed grant of mining leases, an obligation to negotiate in good faith with the tenement applicant and the State of Western Australia with a view to reaching agreement in relation to the grant of that mining lease, failing which any party to those negotiations may, no earlier than six months after notification of proposed grant, apply to the National Native Title Tribunal for a determination as to whether or not the leases should be granted in the absence of agreement.

61 Under the Native Title Act 1993 (Cth) and the Mining Act 1978 (WA), liability for payment of compensation referred to at 59.3 above in respect of the grant of a mining tenement falls upon the tenement holder at the time the compensation is determined except:

61.1 if the amount is to be paid and held in trust, in which case the liability falls upon the tenement holder at the time payment is required; and

61.2 in the event that, at the relevant time, the tenement has been surrendered, forfeited or expired, in which case the liability falls upon the tenement holder immediately prior to that surrender, forfeiture or expiry (as applicable).

62 In addition to rights and interests recognised by the Native Title Act 1993 (Cth), the Aboriginal Heritage Act 1972 (WA) and the Aboriginal and Torres Strait Islander Heritage Protection Act 1984 (Cth) protect places and objects of significance to Aboriginal and Torres Strait Islander people in accordance with their traditional laws and customs.

63 The Aboriginal Heritage Act 1972 (WA) provides that it is an offence for a person to damage or in any way alter an Aboriginal site protected by that Act, except with the consent of the Minister for Aboriginal Affairs.

64 The Registrar of Aboriginal Sites maintains a non-exhaustive register of Aboriginal sites protected by the Aboriginal Heritage Act 1972 (WA), as well as a record of other heritage places which may have cultural significance to Aboriginal people but either have not yet been assessed for the purposes of the Act or do not satisfy the criteria specified under the Act. For

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65 The practical effect of both the Aboriginal Heritage Act 1972 (WA) and the Aboriginal and Torres Strait Islander Act 1984 (WA) is to require due diligence to be carried out prior to ground-disturbing works for the purposes of identifying whether or not those works may impact on an Aboriginal site. Due diligence will require, at a minimum, a search of the register of Aboriginal sites and, in most cases where the area has not been subject to previous disturbance, conduct of an Aboriginal heritage survey.

66 The consent of the Minister must be obtained prior to the conduct of ground-disturbing works that cannot be conducted without disturbing an Aboriginal site.

67 As recorded in Schedule 1, native title in the land the subject of the Beyondie Assets is:

67.1 in respect of six exploration licences, held by Mungarlu Ngurrarankatja Rirraunkaja (Aboriginal Corporation) RNTBC as trustee for the Birriliburu native title holders (MNR);

67.2 in respect of three exploration licences, part held by MNR and part claimed by the Gingirana native title claim group; and

67.3 in respect of the remaining six exploration licences, claimed by the Gingirana native title claim group.

68 The native title held by MNR in the relevant parts of the land the subject of the Beyondie Assets comprises the right to possess, occupy, use and enjoy the land, waters and resources to the exclusion of all others, subject to certain exclusions including any minerals, petroleum or geothermal energy resources.

69 The Gingirana native title claim group claim to hold rights to possess, occupy, use and enjoy the land to the exclusion of all others, in the relevant parts of the land the subject of the Beyondie Assets comprises, except in relation to minerals, petroleum or gas and subject to prior whole or partial extinguishment (in particular, partial extinguishment resulting from the grant of pastoral leases).

70 As referred to at 5.3.3 above, KLP has entered into:

70.1 the MNR Land Access and Mineral Exploration Agreement and the Gingirana Exploration & Prospecting Deed of Agreement for the purposes of procuring consent to the grant of the exploration licences that comprise part of the Beyondie Assets, including the withdrawal of objections to the application of the expedited procedure (as described at 60.1 above); and

70.2 the Gingirana Land Access Agreement for the purposes of procuring consent to the grant of L52/162, including the withdrawal of objections to the independent person (as described at 60.2 above), and for the purposes of procuring consent to the grant of future applications for mining leases; and

70.3 in each case:

70.3.1 discharging, in part or in whole, any compensation liability; and For

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70.3.2 agreeing a process for the identification of, and agreement of mitigation and management measures in relation to, any Aboriginal sites or other areas of other cultural heritage significance within the land the subject of the Beyondie Assets.

71 Detailed summaries of the MNR Land Access and Mineral Exploration Agreement, the Gingirana Exploration & Prospecting Deed of Agreement and the Gingirana Land Access Agreement are included in Schedule 3.

72 The results of the Searches in relation to Aboriginal sites, including any other heritage places, are included in Schedule 1.

Statutory approvals

73 As referred to at 5.3.4 above, KLP has obtained various statutory approvals relevant to the exercise of rights under the Beyondie Assets for the purposes of the proposed activities referred to at 3.2 above.

74 These approvals include:

74.1 several approved programmes of work under the Mining Act 1978 (WA) and the Mining Regulations 1981 (WA), as required to be approved by the Department of Mines and Petroleum prior to the conduct of any ground-disturbing works on the land the subject of a mining tenement in the absence of a mining proposal, for the purposes of:

74.1.1 drilling adjacent to, and trenching on, Ten Mile Lake (E69/3309 and E69/3347), including as referred to at 3.1.1 and 3.2.2 above;

74.1.2 drilling adjacent to, and trenching on, Lake Sunshine (E69/3351), including as referred to at 3.1.2 above; and

74.1.3 construction of a road and a campsite on L52/162 and disturbance of up to 150 hectares adjacent to Ten Mile Lake (E69/3009), including for the purposes of a pilot scale pump and pond test referred to at 3.2 above;

74.2 approval under the Mining Act 1978 (WA) and the Mining Regulations 1981 (WA) to extract material from the land the subject of an exploration licence in excess of the prescribed limit (1,000 tonnes), specifically:

74.2.1 approval granted on 16 December 2015 for an additional 8,000 tonnes from the land the subject of E69/3351 (Lake Sunshine) for the purposes of trenching; and

74.2.2 approval granted on 1 February 2016 for an additional 469,013 tonnes from the land the subject of E69/3309 (Ten Mile Lake) for the purposes of the pilot scale pump and pond test programme;

74.3 two licences under section 26D of the Rights in Water and Irrigation Act 1914 (WA) to construct an unlimited number of exploratory wells on Ten Mile Lake (E69/3309) and an unlimited number of non-artesian wells adjacent to Ten Mile Lake (E69/3347);

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74.4 a licence under section 5C of the Rights in Water and Irrigation Act 1914 (WA) to draw 1,500,000 kilolitres of water per annum from land the subject of Ten Mile Lake (E69/3309 and E69/3347); and

74.5 a works approval under Part V of the Environmental Protection Act 1986 (WA) for development of a premises for solar salt manufacturing with a design capacity of up to 25,000 tonnes per annum.

75 Subject to minor ancillary approvals, we consider that KLP holds all approvals necessary to undertake:

75.1 the further exploration activities described at 3.1 above; and

75.2 the proposed pilot scale pump and pond test described at 3.2 above.

PART C – NON-CORE ASSETS

Ownership

76 As set out at 1.2 above, the Non-Core Assets comprise:

76.1 one granted exploration licence; and

76.2 four applications for exploration licences.

77 KLP is the registered holder of the granted exploration licence, E38/2995, over the easternmost part of Lake Carnegie.

78 We are instructed that:

78.1 KLP is the full beneficial owner of E38/2995; and

78.2 E38/2995 is unencumbered and not subject to any mortgage, charge or other security interest.

79 Rachlan is the applicant in respect of the four applications for exploration licences, being applications for E38/2973, E38/2982, E45/4436 and E45/4437.

80 The applications have priority under the Mining Act 1978 (WA), with the result that they are entitled to be processed in priority to any competing applications. We express no view as to whether the applications will be granted.

81 As referred to in Part A above, under the Trust Deed:

81.1 Rachlan holds the benefit of these applications on trust for KLP; and

81.2 Rachlan must transfer any exploration licence granted pursuant to these applications to KLP as soon as practicable after grant. F

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Exploration licences – rights and obligations

82 Details of the rent and expenditure commitments for E38/2995 are set out in Schedule 1.

83 The Searches indicate that the annual rent for E38/2995 has been paid in full. The annual expenditure commitment for E38/2995 was not met for the first year. KLP has sought an exemption from the expenditure requirement in respect of the full amount of minimum expenditure, which has yet to be determined.

84 On the basis of the Searches and subject to the outcome of the application for exemption referred to at 83 above, we are not aware of any non-compliance with any tenement conditions in respect of E38/2995.

Concurrent interests

Mining tenements

85 The Non-Core Assets do not coexist with any other mining tenements.

Pastoral leases

86 Except for parts of the land the subject of E38/2995 and the applications for E38/2973 and E38/2982, which include land the subject of Prenti Downs, Niminga, Windidda and Wongawol pastoral leases respectively, the Non-Core Assets do not include land the subject of any pastoral leases.

87 We are instructed that KLP does not have any Land Access Agreements in place with the lessees of Prenti Downs, Niminga, Windidda or Wongawol pastoral leases.

Native title and Aboriginal heritage

88 Native title in the land the subject of E38/2995 and the applications for E38/2973 and E38/2982 (all Lake Carnegie) is held by Tarlka Matuwa Piarku Aboriginal Corporation RNTBC as trustee for the Wiluna native title holders (TMPAC).

89 Except for part of the application for E45/4437 (which we are instructed will be excised upon grant), native title has been extinguished in the land the subject of the applications for E45/4436 (Lake Dora) and E45/4437 (Lake Banche) as a consequence of Karlamiyli National Park.

90 TMPAC's objection to the application of the expedited procedure (as described at 60.1 above) to the applications for E38/2973 and E38/2982 was upheld by the National Native Title Tribunal, with the result that those applications are subject to the obligation to negotiate in good faith (as described at 60.3 above).

91 We are instructed that KLP does not have a Land Access Agreement in place with TMPAC.

For

per

sona

l use

onl

y


92 Searches of the register maintained by the Department of Aboriginal Affairs under the Aboriginal Heritage Act 1972 (WA) indicate that:

92.1 there are Aboriginal sites registered under the Act located within the boundaries of the applications for E38/2982, E45/4436 and E45/4437; and

92.2 the entirety of Lake Carnegie, which is the subject of E38/2995 and the applications for E38/2973 and E38/2982, is recorded as an other heritage place, being a place which may be an Aboriginal site under the Act.

93 KLP will need to seek to engage with Aboriginal persons with appropriate traditional knowledge of the land the subject of the Non-Core Assets in order to ensure that any proposed works will not interfere with any Aboriginal sites. In certain circumstances, particularly in the event that the entirety of Lake Carnegie is found to be an Aboriginal site for the purposes of the Aboriginal Heritage Act 1972 (WA), KLP may need to seek the consent of the Minister prior to the conduct of any ground-disturbing works on the surface of the lake.

Karlamilyi National Park

94 Each of the applications for E45/4436 (Lake Dora) and E45/4437 (Lake Blanche) are, with the exception of the area to be excised upon grant (referred to at 89 above) are the subject of Karlamilyi National Park.

95 Under the Mining Act 1978 (WA), any fossicking, prospecting, exploring or mining is subject to a requirement to obtain the written consent of the Minister for Mines, who must first consult with and obtain the concurrence of the Minister for the Environment. In practice, applicants are required to develop a conservation management plan demonstrating, among other things, proposed measures to manage the impacts of exploration and mining activities on the conservation values of the relevant land.

96 We are instructed that KLP has prepared a conservation management plan and is in the process of seeking, but has not yet obtained, the consent of the Minister.

97 We note that in the event that an exploration licence were granted and KLP sought the grant of a mining lease within Karlamilyi National Park, the Mining Act 1978 (WA) provides that the mining lease may not be granted without the consent, by resolution, of both Houses of Parliament.

CONCLUSION

98 DLA Piper Australia has given its written consent to the issue of the prospectus with this report in the form and context in which it is included, and has not withdrawn its consent prior to the lodgement of the prospectus with the Australian Securities and Investment Commission. This report has been prepared only for the purposes of the prospectus and is not to be relied on for any other purposes.

99 This report is given solely for the benefit of the Company and the directors of the Company in connection with the issue of the prospectus and is not to be relied on or used for any other purpose or quoted or referred to in any public documents or filed with any government body or other person without our prior consent. For

per

sona

l use

onl

y


100 DLA Piper Australia will be paid its normal and usual professional fees for the preparation of this report. Except in respect of its professional fees and otherwise disclosed in the prospectus, DLA Piper Australia has no interest in the promotion of the Company.

Yours sincerely

ALEX JONES Partner DLA PIPER AUSTRALIA Direct +61864676204 [email protected]

For

per

sona

l use

onl

y


SCH

ED

UL

E 1

: T

EN

EM

EN

TS

Tene

men

t/ A

pplic

atio

n N

ame

Hol

der/

A

pplic

ant

Shar

es

Are

a (b

lock

s)

Gra

nt d

ate

(App

licat

ion

date

)

Exp

iry

Dat

e

Ann

ual

Ren

t ex-

GST

Form

5

Due

Yea

r 1

Expe

nditu

re

Com

mitm

ent

(Rep

orte

d)

Yea

r 2

Expe

nditu

re

Com

mitm

ent

Min

ing

Reh

abili

tatio

n Fu

nd

Secu

rity

Sect

ion

29

notic

e (s

ectio

n 24

HA

(7)

& se

ctio

n 24

MD

(6B

no

tices

)

Com

plet

ion

of fu

ture

ac

t pro

cess

Nat

ive

Titl

e D

eter

min

atio

n (C

laim

) A

bori

gina

l Her

itage

Part

A –

Bey

ondi

e A

sset

s

E69/

3306

Y

anne

ri/Te

rmin

al

KLP

10

0 34

.00

17-M

ar-1

5 16

-Mar

-20

$4,4

03.5

0 15

-May

-16

$34,

000.

00

($88

,459

.68)

$3

4,00

0.00

MR

F-81

2-14

977

subm

itted

13

June

20

16 c

onfir

min

g no

levy

pay

able

$5,0

00

24-S

ep-1

4 16

-Mar

-15

(Gin

gira

na) /

M

NR

N

o re

gist

ered

site

s or

othe

r her

itage

pla

ces

E69/

3309

B

eyon

die/

10

Mile

K

LP

100

48.0

0 17

-Apr

-15

16-A

pr-2

0 $6

,216

.00

15-J

un-1

6 $4

8,00

0.00

($

3,87

3,75

5.55

) $4

8,00

0.00

MR

F-81

2-14

977

subm

itted

13

June

20

16 c

onfir

min

g no

levy

pay

able

$5,0

00

24-S

ep-1

4 16

-Mar

-15

(Gin

gira

na)

No

regi

ster

ed si

tes o

r ot

her h

erita

ge p

lace

s

E69/

3339

W

est C

entra

l K

LP

100

60.0

0 22

-Jun

-15

21-J

un-2

0 $7

,770

.00

20-A

ug-1

6 $6

0,00

0.00

($

60,2

65.4

8)

$60,

000.

00

MR

F-81

2-14

977

subm

itted

13

June

20

16 c

onfir

min

g no

levy

pay

able

$5,0

00

20-M

ar-1

5 22

-Jun

-15

MN

R

No

regi

ster

ed si

tes o

r ot

her h

erita

ge p

lace

s

E69/

3340

W

hite

K

LP

100

63.0

0 22

-Jun

-15

21-J

un-2

0 $8

,158

.50

20-A

ug-1

6 $6

3,00

0.00

($

63,0

26.8

2)

$63,

000.

00

MR

F-81

2-14

977

subm

itted

13

June

20

16 c

onfir

min

g no

levy

pay

able

$5,0

00

20-M

ar-1

5 22

-Jun

-15

MN

R

Oth

er h

erita

ge

plac

es: P

unat

j (26

94)

E69/

3341

W

est Y

anne

ri K

LP

100

40.0

0 11

-Aug

-15

10-A

ug-2

0 $5

,180

.00

9-O

ct-1

6 $4

0,00

0.00

($

46,7

05.6

4)

$40,

000.

00

MR

F-81

2-14

977

subm

itted

13

June

20

16 c

onfir

min

g no

levy

pay

able

$5,0

00

25-M

ar-1

5 10

-Aug

-15

(Gin

gira

na)

No

regi

ster

ed si

tes o

r ot

her h

erita

ge p

lace

s

E69/

3342

A

erod

rom

e K

LP

100

74.0

0 22

-Jun

-15

21-J

un-2

0 $9

,583

.00

20-A

ug-1

6 $7

4,00

0.00

($

74,0

80.1

5)

$74,

000.

00

MR

F-81

2-14

977

subm

itted

13

June

20

16 c

onfir

min

g no

levy

pay

able

$5,0

00

20-M

ar-1

5 22

-Jun

-15

MN

R

No

regi

ster

ed si

tes o

r ot

her h

erita

ge p

lace

s

E69/

3343

T

Junc

tion

KLP

10

0 66

.00

22-J

un-1

5 21

-Jun

-20

$8,5

47.0

0 20

-Aug

-16

$66,

000.

00

($66

,647

.13)

$6

6,00

0.00

MR

F-81

2-14

977

subm

itted

13

June

20

16 c

onfir

min

g no

levy

pay

able

$5,0

00

20-M

ar-1

5 22

-Jun

-15

MN

R

No

regi

ster

ed si

tes o

r ot

her h

erita

ge p

lace

s

E69/

3344

N

orth

ern

KLP

10

0 50

.00

22-J

un-1

5 21

-Jun

-20

$6,4

75.0

0 20

-Aug

-16

$50,

000.

00

($50

,003

.16)

$5

0,00

0.00

MR

F-81

2-14

977

subm

itted

13

June

20

16 c

onfir

min

g no

levy

pay

able

$5,0

00

20-M

ar-1

5 22

-Jun

-15

MN

R

No

regi

ster

ed si

tes o

r ot

her h

erita

ge p

lace

s

E69/

3345

W

ilder

ness

K

LP

100

87.0

0 22

-Jun

-15

21-J

un-2

0 $1

1,26

6.50

20

-Aug

-16

$87,

000.

00

($87

,065

.11)

$8

7,00

0.00

MR

F-81

2-14

977

subm

itted

13

June

20

16 c

onfir

min

g no

levy

pay

able

$5,0

00

20-M

ar-1

5 22

-Jun

-15

MN

R

No

regi

ster

ed si

tes o

r ot

her h

erita

ge p

lace

s

E69/

3346

N

orth

Eas

t B

eyon

die

KLP

10

0 9.

00

11-A

ug-1

5 10

-Aug

-20

$1,1

65.5

0 9-

Oct

-16

$20,

000.

00

($22

,854

.83)

$2

0,00

0.00

MR

F-81

2-14

977

subm

itted

13

June

20

16 c

onfir

min

g no

levy

pay

able

$5,0

00

25-M

ar-1

5 10

-Aug

-15

(Gin

gira

na)

No

regi

ster

ed si

tes o

r ot

her h

erita

ge p

lace

s

E69/

3347

So

uth

10 M

ile

KLP

10

0 47

.00

11-A

ug-1

5 10

-Aug

-20

$6,0

86.5

0 9-

Oct

-16

$47,

000.

00

($51

,056

.43)

$4

7,00

0.00

MR

F-81

2-14

977

subm

itted

13

June

20

16 c

onfir

min

g no

levy

pay

able

$5,0

00

25-M

ar-1

5 10

-Aug

-15

(Gin

gira

na)

No

regi

ster

ed si

tes o

r ot

her h

erita

ge p

lace

s

E69/

3348

N

orth

Y

anne

ri/Te

rmin

al

KLP

10

0 17

.00

11-A

ug-1

5 10

-Aug

-20

$2,2

01.5

0 9-

Oct

-16

$20,

000.

00

($25

,542

.94)

$2

0,00

0.00

MR

F-81

2-14

977

subm

itted

13

June

20

16 c

onfir

min

g no

levy

pay

able

$5,0

00

25-M

ar-1

5 10

-Aug

-15

(Gin

gira

na) /

M

NR

N

o re

gist

ered

site

s or

othe

r her

itage

pla

ces

E69/

3349

Ea

st C

entra

l K

LP

100

53.0

0 22

-Jun

-15

21-J

un-2

0 $6

,638

.50

20-A

ug-1

6 $5

3,00

0.00

($

55,1

56.6

2)

$53,

000.

00

MR

F-81

2-14

977

subm

itted

13

June

20

16 c

onfir

min

g no

levy

pay

able

$5,0

00

20-M

ar-1

5 22

-Jun

-15

MN

R

No

regi

ster

ed si

tes o

r ot

her h

erita

ge p

lace

s

For

per

sona

l use

onl

y


Tene

men

t/ A

pplic

atio

n N

ame

Hol

der/

A

pplic

ant

Shar

es

Are

a (b

lock

s)

Gra

nt d

ate

(App

licat

ion

date

)

Exp

iry

Dat

e

Ann

ual

Ren

t ex-

GST

Form

5

Due

Yea

r 1

Expe

nditu

re

Com

mitm

ent

(Rep

orte

d)

Yea

r 2

Expe

nditu

re

Com

mitm

ent

Min

ing

Reh

abili

tatio

n Fu

nd

Secu

rity

Sect

ion

29

notic

e (s

ectio

n 24

HA

(7)

& se

ctio

n 24

MD

(6B

no

tices

)

Com

plet

ion

of fu

ture

ac

t pro

cess

Nat

ive

Titl

e D

eter

min

atio

n (C

laim

) A

bori

gina

l Her

itage

E69/

3351

Su

nshi

ne

KLP

10

0 80

.00

31-A

ug-1

5 30

-Aug

-20

$10,

360.

00

29-O

ct-1

6 $8

0,00

0.00

($

107,

777.

19)

$80,

000.

00

MR

F-81

2-14

977

subm

itted

13

June

20

16 c

onfir

min

g no

levy

pay

able

$5,0

00

8-A

pr-1

5 24

-Aug

-15

(Gin

gira

na) /

M

NR

N

o re

gist

ered

site

s or

othe

r her

itage

pla

ces

E69/

3352

B

eyon

die

Infr

astru

ctur

e K

LP

100

45.0

0 31

-Aug

-15

30-A

ug-2

0 $5

,827

.50

29-O

ct-1

6 $4

5,00

0.00

($

54,7

50.2

0)

$45,

000.

00

MR

F-81

2-14

977

subm

itted

13

June

20

16 c

onfir

min

g no

levy

pay

able

$5,0

00

8-A

pr-1

5 24

-Aug

-15

(Gin

gira

na)

No

regi

ster

ed si

tes o

r ot

her h

erita

ge p

lace

s

L52/

162

Bey

ondi

e Po

tash

K

LP

100

876.

00

HA

30

-Mar

-16

29-M

ar-3

7 $1

3,22

7.60

n/

a n/

a n/

a

MR

F-81

2-14

977

subm

itted

13

June

20

16 c

onfir

min

g no

levy

pay

able

$5,0

00

(21-

Aug

-15

) 29

-Mar

-16

(Gin

gira

na)

No

regi

ster

ed si

tes o

r ot

her h

erita

ge p

lace

s

Part

B -

Non

-Cor

e A

sset

s

E38/

2973

* C

arne

gie

Cen

tral

Rac

hlan

* 10

0 19

9 (2

2-A

ug-1

4)

$2

4,29

7.90

n/

a n/

a n/

a n/

a $5

,000

5-

Nov

-14

Ref

erre

d to

rig

ht to

ne

gotia

te

proc

ess

Wilu

na

Oth

er h

erita

ge

plac

es:

Lake

C

arne

gie

(256

71)

E38/

2982

*

Car

negi

e W

est

Rac

hlan

* 10

0 18

1 (1

-Sep

-14)

$22,

100.

10

n/a

n/a

n/a

n/a

$5,0

00

19-N

ov-1

4

Ref

erre

d to

rig

ht to

ne

gotia

te

proc

ess

Wilu

na

Reg

iste

red

site

s:

Wat

jirra

ngar

ri (2

714)

O

ther

her

itage

pl

aces

: Lak

e C

arne

gie

(256

71) a

nd

Mar

lam

indi

e (2

5676

)

E38/

2995

C

arne

gie

East

K

LP

100

181.

00

31-J

ul-1

5 30

-Jul

-20

$23,

439.

50

28-S

ep-1

6

$181

,000

.00

($67

,086

.76

-ex

empt

ion

4919

76

pend

ing

for

$181

,000

.00)

$181

,000

.00

MR

F-81

2-14

977

subm

itted

13

June

20

16 c

onfir

min

g no

levy

pay

able

$5,0

00

11-M

ar-1

5 27

-Jul

y-15

W

iluna

Oth

er h

erita

ge

plac

es: L

ake

Car

negi

e (2

5671

) and

W

ell S

prin

gs (2

5675

)

E45/

4436

* La

ke D

ora

Rac

hlan

* 10

0 31

(1

3-A

ug-1

4)

$3

,785

.10

n/a

n/a

n/a

n/a

$5,0

00

10-S

ep-1

4 22

-Jan

-15

NA

Reg

iste

red

site

s:

Lake

Eva

Bro

adhu

rst

(104

79) a

nd L

ake

Dor

a (1

0480

)

E45/

4437

* La

ke B

lanc

he

Rac

hlan

* 10

0 42

(1

3-A

ug-1

4)

$5

,128

.20

n/a

n/a

n/a

n/a

$5,0

00

10-S

ep-1

4 3-

Jun-

15

Mar

tu &

N

gurr

ara

Reg

iste

red

site

s:

War

nkar

rpa

(104

82)

and

Tarlp

a (1

0484

) *

deno

tes a

pplic

atio

n/ap

plic

antFor

per

sona

l use

onl

y


SCHEDULE 2: PUBLIC SEARCHES

Search Date(s)

1. Mining tenement searches obtained from the register maintained by the Department of Mines and Petroleum

27 October 2016

2. Quick Appraisal searches obtained from the TENGRAPH system maintained by the Department of Mines and Petroleum

27 October 2016

3. Searches of the Register of Native Title Claims and National Native Title Register maintained by the National Native Title Tribunal

27 October 2016

4. Search of the Native Title Vision system maintained by the National Native Title Tribunal

27 October 2016

5. Searches of the Aboriginal Heritage Inquiry System maintained by the Department of Aboriginal Affairs

27 October 2016

For

per

sona

l use

onl

y


AGJ/UKDP/369480/3 AUM/1214391344.1

Page 21 1 November 2016

SCHEDULE 3: LAND ACCESS AGREEMENTS

MINING TENEMENTS

Cosmopolitan Access Agreement

1 Consent – KLP and Cosmopolitan each consent to the grant of L52/162, E52/2943 and E69/3247.

2 Construction of gas pipeline – Cosmopolitan consents to KLP's construction of a pipeline on land common to L52/162, E52/2943 and E69/3247.

3 Access – KLP consent to Cosmopolitan's use of KLP's access track to the extent that use does not interfere with KLP's use or any other infrastructure required for the purposes of L52/162 and KLP has consented to Cosmopolitan's road access plan.

4 Relocation of infrastructure – Cosmopolitan may notify KLP to relocate any infrastructure within land common to L52/162, E52/2943 and E69/3247 and the parties must negotiate in good faith to agree on an alternative site to the extent Cosmopolitan has a bona fide, detailed and economically feasible proposal to conduct mining operations on the area exists and KLP has not previously located any infrastructure in accordance with the terms of the Access Agreement.

Drillabit Access Agreement

1 Consent – KLP and Drillabit each consent to the grant of L52/162 and E52/3088.

2 Construction of gas pipeline – Drillabit consent to KLP's construction of a pipeline on land common to L52/162 and E52/3088.

3 Access – KLP consent to Drillabit's use of KLP's access track to the extent that use does not interfere with KLP's use or any other infrastructure required for the purposes of L52/162 and KLP has consented to Drillabit's road access plan.

4 Relocation of infrastructure – Drillabit may notify KLP to relocate any infrastructure within land common to L52/162 and E52/3088 and the Parties must negotiate in good faith to agree on an alternative site to the extent Drillabit has a bona fide, detailed and economically feasible proposal to conduct mining operations on the area and KLP has not previously located any infrastructure in accordance with the terms of the Access Agreement.

PASTORAL LEASES

Marymia Access and Compensation Agreement

1 Consent – Pastoralist consent to the grant of L52/162, any supplementary miscellaneous licence required by KLP for the purpose of realigning KLP's access track and to the conduct of activities that may lawfully be conducted pursuant to L52/162 and any approval necessary for the conduct of KLP's activities.

2 Access – KLP consent to Pastoralist use of KLP's access track and Pastoralist consent to KLP's use of any access track which is on land the subject of the Marymia Pastoral Lease.

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3 Priority of activities – KLP's activities to take priority over pastoral activities.

4 Impact management – KLP to use reasonable endeavours to rectify any adverse impacts to the Pastoralist's reasonable satisfaction, or replace any pastoral bore or pay compensation if the impacts cannot be rectified or modified.

5 Procurement – Pastoralist may submit a proposal to provide any required services on land the subject of the Kumarina Pastoral Lease and KLP may accept the Pastoralist's proposal (at KLP's sole discretion).

6 Compensation – annual payment of $25,000, subject to the commencement of construction.

Kumarina Access and Compensation Agreement

1 Consent – Pastoralist consent to the grant of L52/162, the conduct of activities that may lawfully be conducted pursuant to L52/162 and any approval necessary for the conduct of KLP's activities.

2 Access – KLP consent to Pastoralist use of KLP's access track and Pastoralist consent to KLP's use of any access track which is on land the subject of the Kumarina Pastoral Lease.

3 Priority of activities – KLP's activities to take priority over pastoral activities.

4 Impact management – KLP to use reasonable endeavours to rectify any adverse impacts to the Pastoralist's reasonable satisfaction, or replace any pastoral bore or pay compensation if the impacts cannot be rectified or modified.

5 Procurement – Pastoralist may submit a proposal to provide any required services on land the subject of the Kumarina Pastoral Lease and Marymia Pastoral Lease and KLP may accept the Pastoralist's proposal (at KLP's sole discretion).

6 Compensation – annual payment of $25,000, subject to the commencement of construction.

NATIVE TITLE

MNR Land Access and Mineral Exploration Agreement

1 Consents – MNR consents to the grant of E69/3306, E69/3339, E69/3340, E69/3342, E69/3343, E69/3344, E69/3345, E69/3348, E69/3349 and E69/3351.

2 Heritage surveys – KLP to provide MNR with a work programme prior to undertaking any activities. MNR to advise KLP if the work programme requires the conduct of any heritage survey in order to identify and avoid heritage sites. Alternatively, a heritage monitoring team may be required to monitor, assist, advise and direct KLP to avoid any Aboriginal sites.

3 Aboriginal Heritage Act approvals – KLP to consult with MNR prior to making an application under Section 16 or 18 of the Aboriginal Heritage Act 1972 (WA) for the purposes of potash activities. Applications for other activities require MNR's prior written consent.

4 Employment and training – KLP to give preference to a Birriliburu native title holder or Birriliburu entity if that person's application or entity's tender is equivalent to or better than other applicants or tenderers.

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5 Cultural awareness – Cultural awareness training to be provided to all KLP personnel.

6 Compensation – KLP to pay an amount equivalent to the greater of:

6.1 5% of the annual exploration expenditure; or

6.2 20% of the annual rental payable to the State of Western Australia,

in respect of E69/3306, E69/3339, E69/3340, E69/3342, E69/3343, E69/3344, E69/3345, E69/3348, E69/3349 and E69/3351.

7 Costs – KLP to pay MNR's specified negotiation, legal and implementation costs.

Gingirana Exploration & Prospecting Deed of Agreement

1 Consent – Gingirana to the grant of E69/3306, E69/3309, E69/3341, E69/3346, E69/3347, E69/3348, E69/3351 and E69/3352.

2 Heritage surveys – KLP to provide the Gingirana native title claimants with details of Non-Ground Disturbing and Ground Disturbing activities. Where required, parties to conduct Heritage Surveys in order to identify and avoid heritage sites. Alternatively, a heritage monitoring team may be required to monitor, assist, advise and direct KLP to avoid any Aboriginal sites.

3 Aboriginal Heritage Act approvals – KLP to consult with the Gingirana native title claimants prior to making an application under Section 16 or 18 of the Aboriginal Heritage Act 1972 (WA) for the purposes of potash activities. Other activities require the Gingirana native title claimants prior written consent.

4 Cultural awareness – Cultural awareness training to be provided to all KLP personnel.

5 Compensation – KLP to pay an amount equivalent to 10% of the annual rental payable to the State of Western Australia in relation to E69/3306, E69/3309, E69/3341, E69/3346, E69/3347, E69/3348, E69/3351 and E69/3352.

6 Costs – KLP to pay a Gingirana's specified amount for negotiation, legal and implementation costs.

Gingirana Land Access Agreement

1 Consent – Gingirana consent, for the purposes of developing deposits of any salts derived from brine, to:

1.1 the grant of any mining lease, general purpose lease or any miscellaneous licences for infrastructure or services necessary or desirable for the purposes of exercising rights under the mining leases within the Gingirana claim area; and

1.2 any necessary government approvals after provision of submission documents for comment other than approvals under the Aboriginal Heritage Act 1972 (WA). F

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2 Cultural Heritage Management Plan – KLP must adhere to an agreed Cultural Heritage Management Plan for the management of areas of identified cultural heritage sensitivity, including requirements for further Aboriginal heritage surveys prior to the conduct of work in specified areas.

3 Aboriginal Heritage Act approval – Prior to making any application under the Aboriginal Heritage Act 1972 (WA), KLP to:

3.1 give notice to, and consult with, Gingirana in respect of any proposed operations within specified priority areas;

3.2 obtain the prior written consent of Gingirana (which must not be unreasonably withheld) in relation to any land the subject of Beyondie Lake East, Ilgarari Creek or Yanneri Lake (North); and

3.3 obtain the prior written consent of Gingirana (which must not be unreasonably withheld) in relation to any "Non-Priority Areas" and agree management strategies to avoid, minimise and mitigate the impact of Beyondie Potash Project operations on any areas of cultural concern.

4 Cultural awareness – Cultural awareness training required for all KLP's employees and contractors.

5 Employment opportunities – KLP to use best endeavours to provide training, employment, contracting and development opportunities to Gingirana People and preference must be given to Gingirana applicants or contractors if the Gingirana person's application is equivalent to or better than other applicants or the entity's tender is within 10% of the most commercially competitive tenderer.

6 Compensation – KLP to pay:

6.1 milestone payments on commencement of gas pipeline construction ($250,000), commencement of commercial production ($50,000) and first commercial sale ($50,000); and

6.2 production payment of 0.75% of the mine gate value attributable to any quantity of potassium or magnesium salts derived from Gingirana claim area within any product shipment.

7 Costs – KLP to meet Gingirana's reasonable costs, to specified limits, for the development of a cultural awareness training programme, independent advice for review of any primary project approval, annual implementation costs from the commencement of construction, and in connection with any meeting of the relationship committee.

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SCHEDULE 4: ASSUMPTIONS AND QUALIFICATIONS

Assumptions

This report is subject to the following assumptions (in addition to any assumptions expressed elsewhere in this report):

1 we have assumed that information provided by third parties, including various government departments, in response to searches and enquiries made by us is accurate, complete and up to date as at the date of its receipt by us;

2 we have assumed that the contracts referred to in this report were within the capacity and powers of, and were validly authorised, stamped or lodged for stamping (where necessary), executed, delivered by and are legally binding on and enforceable against the parties to them and comprise the entire agreement of the parties to each of them with respect to their respective subject matters;

3 we have assumed that the signatures on the contracts referred to in this report are authentic;

4 we have assumed that there are no material documents or information to be provided other than the contracts referred to in this report;

5 we have assumed that the parties to each of the contracts referred to in this report are complying with and will continue to comply with and fulfil the terms of each of the contracts referred to in this report; and

6 we have assumed the completeness and the conformity to original documents of all copies reviewed.

Qualifications

This report is subject to the following qualifications (in addition to any qualifications expressed elsewhere in this report):

1 in relation to any statement relating to whether a mining tenement is in good standing, such statement is only based on the information contained in the relevant search on the instrument of title for that tenement; and

2 where compliance with the terms and conditions of any mining tenements and the provisions of the Mining Act 1978 (WA) including requirements necessary to maintain the tenements in good standing, or a possible claim in relation to the tenements by third parties is not disclosed on the face of the searches referred to above, we express no opinion as to such compliance or claim.

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8. Risk Factors The Shares are considered highly speculative. An investment in the Company is not risk free. The proposed future activities of the Company are subject to a number of risks and other factors which may impact its future performance. Some of these risks can be mitigated by the use of safeguards and appropriate controls. However, many of the risks are outside the control of the Directors and management of the Company and cannot be mitigated.

The risks described in this Section 8 is not an exhaustive list of the risks faced by the Company or by investors in the Company. It should be considered in conjunction with other information in this Prospectus. The risk described in, and others not specifically referred to, this Section 8 may in the future materially affect the financial performance and position of the Company and the value of the Shares offered under this Prospectus. The Shares to be issued pursuant to this Prospectus carry no guarantee with respect to the payment of dividends, return of capital or the market value of those securities. The risk described in this Section 8 also necessarily include forward looking statements. Actual events may be materially different to those described and may therefore affect the Company in a different way.

Investors should be aware that the performance of the Company may be affected and the value of its Shares may rise or fall over any given period. None of the Directors or any person associated with the Company guarantee the Company's performance, the performance of the Shares the subject of the Offer or the market price at which the Shares will trade. The Directors strongly recommend that potential investors consider the risks detailed in this Section 8, together with information contained elsewhere in this Prospectus, and consult their professional advisers, before they decide whether or not to apply for Shares.

8.1 Company Specific Risks

(a) Resource estimates and classification

The resource estimates for the Beyondie Potash Project are estimates only and no assurances can be given that any particular level of recovery of potash will in fact be realised. Mineral Resource estimates are expressions of judgement based on knowledge, experience and industry practice. Estimates which are valid when originally calculated may change significantly when new information or techniques become available. In addition, by their very nature, resource estimates are necessarily imprecise and depend to some extent on interpretations, which may prove to be inaccurate.

A significant proportion of the Company's Mineral Resource estimates are in the Inferred Mineral Resources category, which is the lowest of the three Mineral Resource categories defined by the JORC Code, reflecting limited sampling and a relatively low degree of geological certainty. While material may only be included in a Mineral Resource calculation if there are reasonable prospects of eventually economically extracting it, investors should be aware that the inclusion of a material in a Mineral Resource estimate does not require a conclusion that a material may be economically extracted at the yield indicated or at all. Mineralisation only qualifies to be categorised as an Ore Reserve once it has been demonstrated to be economically recoverable.

Mineral Resources are delineated, in order of increasing confidence, into Inferred, Indicated and Measured Mineral Resources. The JORC Code defines an Inferred Mineral Resource as: “that part of a Mineral Resource for which quantity and grade (or quality) are estimated on the basis of limited geological evidence and sampling. Geological evidence is sufficient to imply but not verify geological and grade (or quality) continuity. It is based on exploration, sampling and testing information

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gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes”.

According to the commentary accompanying the JORC Code: “the Inferred category is intended to cover situations where a mineral concentration or occurrence has been identified and limited measurements and sampling completed, but where the data are insufficient to allow the geological and/or grade continuity to be confidently interpreted. While it would be reasonable to expect that the majority of Inferred Mineral Resources would upgrade to Indicated Mineral Resources with continued exploration, due to the uncertainty of Inferred Mineral Resources, it should not be assumed that such upgrading will always occur. Confidence in the estimate of Inferred Mineral Resources is not sufficient to allow the results of the application of technical and economical parameters to be used for detailed planning in pre-feasibility or feasibility studies. For this reason, there is no direct link from an Inferred Mineral Resource to any category of Ore Reserves. Caution should be exercised if this category is considered in technical and economic studies such as scoping studies".

Only Mineral Resources in the Measured or Indicated Mineral Resources categories can be converted to the status of an Ore Reserve. As a result, any future development of the Company’s Inferred Mineral Resources will depend on the Company being able to further upgrade the Inferred Mineral Resources to the Measured or Indicated categories, and/or discover additional resources in the Measured or Indicated categories, and subsequently convert them to Ore Reserves by demonstrating that they can be economically extracted under reasonably assumed operating conditions.

As further information becomes available through additional fieldwork and analysis, the Company's resource estimates are likely to change. This may result in alterations to development and mining plans which may, in turn, adversely affect the Company's operations.

(b) Inability to abstract brine volume

The Company has utilised a number of specialist consultants in determining its ability to abstract brine consistently from the deposits but there is a risk that the Company will be unable to abstract the brine in volumes required to meet project timetables and production. This can occur due to low permeability of aquifer material, variability in the deposit and continuity of the various aquifer layers. As a result pumping rates may be lower than expected, or require additional bores and/or trenches. Each bore is likely to have a specific life expectancy and will eventually run dry as brine is extracted. This life expectancy maybe be variable and shorter than expected.

(c) Variability in brine

The brine deposit may be variable due to the geological layering of the host rock, the location within the palaeochannel, inflows of other waters carrying other impurities or fresh water all of which will affect the brine chemistry across the deposit. Added to this there is also the potential for dilution after rainfall which may influence changes in the chemistry of brine recovery. The variability may cause different evaporation rates, alternative salt evaporites being formed in the evaporation ponds, require additional pumping volumes due to lower grades.

(d) Purification facility design, operation, recovery and product spec

The Company is using internationally recognised consultants in the design of the process and selection of suitable equipment to achieve production capacity and specification to market requirements. However, project development remains inherently risky due to the number of variables that need to be managed. This

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could lead to equipment not performing as required or expected, resulting in difficulty maintaining product specification, not achieving name plate design capacity, not achieving expected potassium recoveries, increased maintenance and overall operating costs.

This risk also applies to non-process plant equipment and facilities, recognising that the Beyondie Potash Project by its nature is operating with corrosive fluids and subject to environmental impacts of salinity which may result in premature or otherwise unexpected failure of critical equipment such as bore pumps.

(e) Evaporation Pond Design

The Company will need to confirm the construction methodology, evaporation rates, leakage rates and other potential performance parameters of the brine. There is a scale up risk that, in the construction and operation of the evaporation ponds, these performance parameters could vary to the current pond and pump testing findings and therefore may impact the basis of design and operation, and potentially the capital and operation costs, of the full size project. There is also a risk of structural failures or leakage.

(f) Commodity price volatility

If the Company achieves success leading to mineral production, the revenue the Company will derive through the sale of commodities exposes the Company to commodity price and exchange rate risk. Commodity prices fluctuate and are affected by numerous factors beyond the control of the Company. Such factors include the supply and demand for commodities such as potash, forward selling activities, technological advancements and other macro-economic factors.

(g) Shortage of available fuel and fresh water

The Company intends to run a gas supply pipeline from the Goldfields Gas Transmission Pipeline. However, at this stage there is no guarantee that the required agreements will be in place in time for production commencement affecting cost estimates. The fall-back position is to run the entire site on diesel fuel brought in by bulk tanker.

There is a risk that such supply of diesel may be disrupted for a number of reasons, including inclement weather, which will impact the Company’s ability to continue running the process plant and all other energy reliant equipment on site, which will impact production.

Additionally, the process plant is reliant on fresh water for the production of significant volumes of steam. A potentially suitable source of water has been identified however, the total volume, extraction rate and quality of water is yet to be proved, which poses a risk to project development and operation, and may incur additional costs in the sourcing and development of other bore fields.

(h) Project delays and cost overruns

The Company's strategy includes a staged approach to development of its Beyondie Potash Project. The Company's ability to successfully develop and potentially commercialise its Beyondie Potash Project on schedule may be affected by factors including project delays and costs overruns.

The Company's ability to develop and potentially commercialise the Beyondie Potash Project also depends on the successful implementation of the pump tests and the effective migration of knowledge gained from pump test work into the full scale operating plant to achieve a satisfactory ramp up to full scale production as per the project schedule.

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If the Company experiences project delays or cost overruns, this could result in the Company not realising its operational or development plans or result in such plans costing more than expected or taking longer to realise than expected.

(i) Inclement Weather and Natural Disasters

The Company's operational activities are subject to a variety of risks and hazards which are beyond its control, including hazardous weather conditions such as excessive rain, flooding and fires.

Severe storms and high rainfall leading to flooding and associated damage may result in disruption to the evaporation process in the ponds, scouring damage to trenches, roadways and pond walls. Flood waters within the pond areas will increase the total evaporation time and impact the production schedule.

Additionally, as some of the brine production is from surface trenches, these trenches may become flooded during severe weather. This may impact the quality and consistency of the brine and the ability to continue surface extraction by trenches within the lakes areas, until the flood waters subside.

Any of the above occurrences will impact profitability.

(j) Statutory Approvals

The Company’s project and operations are subject to Commonwealth and State laws, regulations and specific conditions regarding approvals to explore, construct and operate. There is a risk that such laws, regulations and specific conditions may impact the profitability of the project and the ability for the project to be satisfactorily permitted. Key approvals from the Environmental Protection Authority (EPA), Department of Mines and Petroleum (DMP), Department of Water (DoW) plus many other agencies may take longer to be obtained or may not be obtainable at all. The Company has identified that the process will have disturbances associated with ponds, purification facility, pipelines, bores, trenches, roads, waste NaCl, residue bitterns which may be subject to specific disposal conditions.

(k) Failure to secure Native Title Agreement for Eastern Tenements

The Company has only partially completed the process of obtaining native title mining agreements and will be required to obtain a further approval to enable mining to occur on its central and eastern tenements. The completion of this process may have schedule and cost impacts on the project or may not be achieved which may result in the deposit not being able to be mined.

(l) New operational commodity and lack of experience

The Company recognises that as a potential leader in the Australian production of potash products there may initially be a lack of suitably trained operators for the overall project which has been explicitly designed for the extraction and treatment of brine to produce this group of products to market specifications.

Furthermore, this risk could manifest itself during the commissioning stage for the same reasons expressed above which could lead to increased capital costs and delays in achieving operational ramp up.

(m) Liquidity Risk and Concentration of Shareholding

On completion of the Offer, and assuming the Offer is fully subscribed, the existing Shareholders of the Company will hold 75.12% of the total issued Share capital of the Company on an undiluted basis, and 77.59% on a fully diluted basis (assuming existing Shareholders do not participate in the Offer). Under Chapter 9 of the

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Listing Rules, a number of the Shares held by the existing Shareholders will be subject to escrow periods which may cause a liquidity risk, as some of these shares may not be traded for up to a period of 24 months. Furthermore, there is no guarantee that there will be an ongoing liquid market for Shares. If illiquidity arises, there is a risk that Shareholders will be unable to realize their investment in the Company.

(n) Title Risk

The Company's granted Tenements permit the Company to undertake exploration. Each Tenement carries with it annual expenditure and reporting commitments, as well as other conditions requiring compliance. Consequently, the Company could lose title to or its interest in a Tenement if the conditions are not met or if there are insufficient funds available to meet expenditure commitments.

Exploration tenements are subject to periodic renewal. The renewal of the term of a granted tenement is also subject to the discretion of the relevant Minister. Various conditions may also be imposed as a condition of renewal. Renewal conditions may include increased expenditure and work commitments or compulsory relinquishment of the tenements comprising the Company's projects. The Company makes no assurance that the renewal applications will be granted or applications approved.

The Company has also applied for four exploration licences in relation to proposed Carnegie and Dora/Blanche projects. There is no guarantee that these tenements will be granted and as such they should not be considered as current assets or projects of the Company. Various conditions may also be imposed as a condition of grant of any of these tenements.

(o) Exploitation, exploration and mining licences

The Tenements that have been granted only permit the Company to undertake exploration on the Tenements. In the event that the Company successfully delineates economic deposits on any of the Tenements, it will need to apply for a mining lease to undertake development and mining on the Tenement. There is no guarantee that the Company will be granted a mining lease if one is applied for.

Potential investors should understand that mineral exploration is a high-risk undertaking. There can be no assurance that exploration of the Beyondie Potash Project exploration tenements, or any other tenements that may be acquired in the future, will result in the discovery of an economic deposit. Even if an apparently viable deposit is identified, there is no guarantee that it can be economically exploited.

(p) Nature of mineral exploration and mining

Possible future development at the Beyondie Potash Project is dependent on a number of factors including, but not limited to, the acquisition and/or delineation of economically recoverable mineralisation, favourable geological conditions, receiving the necessary approvals from all relevant authorities and parties, seasonal weather patterns, unanticipated technical and operational difficulties encountered in extraction and production activities, mechanical failure of operating plant and equipment, shortages or increases in the price of consumables, spare parts and plant and equipment, cost overruns, access to the required level of funding and contracting risk from third parties providing essential services.

If the Company commences production, its operations may be disrupted by a variety of risks and hazards which are beyond its control, including environmental hazards, industrial accidents, technical failures, labour disputes, unusual or unexpected rock formations, flooding and extended interruptions due to inclement

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of hazardous weather conditions and fires, explosions or accidents. No assurance can be given that the Company will achieve commercial viability through the exploration or development of its projects and treatment of deposits.

The success of the Company will also depend upon the Company having access to sufficient capital, being able to maintain permits and obtaining all required approvals for its activities. In the event that exploration programmes prove to be unsuccessful this could lead to a diminution in the value of the permits, a reduction in the cash reserves of the Company and possible relinquishment of the Tenements.

(q) Change in Regulations

Adverse changes in Federal or Western Australia government policies or legislation may affect ownership of mineral interests, taxation, royalties, land access, labour relations and mining and exploration activities of the Company. It is possible that the current system of exploration and mine permitting in Western Australia may change resulting in impairment of rights and possibly expropriation of the Company's properties without adequate compensation.

(r) Commercial risks of mineral exploration and extraction

The Tenements are at various stages of exploration and potential investors should understand that mineral exploration and development are a high-risk undertakings. There can be no assurance that exploration of the Tenements or any other tenements that may be acquired in the future, will result in the discovery of any economic deposits. Even if the Company identifies a viable deposit at the Beyondie Potash Project or elsewhere, there is no guarantee that the ore deposit can be economically exploited.

(s) Currency volatility

International prices of various commodities are denominated in United States dollars, whereas the income and expenditure of the Company are and will be taken in account in Australian Dollars, consequently exposing the Company to the fluctuations and volatility of the rate of exchange between the United States Dollar and the Australian Dollar as determined in international markets.

(t) Dependence on key personnel

The responsibility of overseeing the day-to-day operations and the strategic management of the Company depends substantially on the efforts of senior management and its key personnel. There can be no assurance that there will be no detrimental impact on the Company if one or more of these employees cease their employment. The loss of key personnel could cause a significant disruption to the business and could adversely affect our operations.

(u) New projects and acquisitions

The Company may make acquisitions in the future as part of future growth plans. In addition to the Tenements comprising the Beyondie Potash Project, the Company has applied for additional tenements in relation to the Carnegie and Dora/Blanche projects, and may evaluate and acquire other interests in new potash projects, by way of acquisition or investment. The Directors of the Company will use their expertise and experience in the resources sector to assess the value of potential projects that have characteristics that are likely to provide returns to shareholders.

There can be no guarantee that any new project acquisition or investment will eventuate from these pursuits, or that any acquisitions will result in a return for

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Shareholders. Such acquisitions may result in use of the Company's cash resources and issuances of equity securities, which might involve a substantial dilution to Shareholders.

(v) Environmental risk

The operations and proposed activities of the Company are subject to State and Federal laws and regulations concerning the environment. As with most exploration projects, the Company's activities including the Beyondie Potash Project are expected to have an impact on the environment. It is the Company's intention to conduct its activities to the required standard of environmental obligation, including compliance with all environmental laws.

Although the Company believes that it is in compliance in all material respects with all applicable environmental laws and regulations, there are certain risks inherent to its activities, such as accidents or other unforeseen circumstances, which could subject the Company to extensive liability.

(w) Additional funds

The funds raised under the Offer are considered sufficient to meet the exploration and evaluation objectives of the Company as disclosed in Section 1.6. Additional funding may be required by the Company to undertake or continue its exploration activities. In particular, additional funding may be required by the Company in the event exploration costs exceed the Company's estimates and will be required once those funds are depleted. To effectively implement its business and operations plans in the future, to take advantage of opportunities for acquisitions, joint ventures or other business opportunities, and to meet any unanticipated liabilities or expenses which the Company may incur, additional equity or other finance will be required. Further to this, if commercial quantities of minerals are discovered and the Company commences mining activities then further funding may be required.

The Company may seek to raise further funds through equity or debt financing, joint ventures, production sharing arrangements or other means. Failure to obtain sufficient financing for the Company's activities may result tin delay and indefinite postponement of exploration, development or production on the Tenements or even loss of a Tenement interest.

There can be no assurance that the Company will be able to obtain further financing on a timely basis, on favourable terms or that such further funding will be sufficient to enable the Company to implement its planned commercial strategy. These factors may adversely affect the financial performance of the Company. Further, if additional funds are raised by issuing equity securities, this may result in dilution for some or all of the Shareholders.

(x) Insurance

The Company intends to insure its operations in accordance with industry practice. However, in certain circumstances, the Company’s insurance may not be available or of a nature or level to provide adequate insurance cover. The occurrence of an event that is not covered or fully covered by insurance could have a material adverse effect on the business, financial condition and results of the Company. In addition, there is a risk that an insurer defaults in the payment of a legitimate claim by the Company.

(y) Contractual Disputes

As with any contract, there is a risk that the business could be disrupted in situations where there is a disagreement or dispute in relation to a term of the

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contract. Should such a disagreement or dispute occur, this may have an adverse impact on the Company's operations and performance generally. It is not possible for the Company to predict or protect itself against all such risks.

(z) Third Party Risk

The operations of the Company require the involvement of a number of third parties, including suppliers, contractors and clients.

Financial failure, default or contractual non-compliance on the part of such third parties may have a material impact on the Company's operations and performance. It is not possible for the Company to predict or protect the Company against all such risks.

(aa) Competition

Although there is currently no Australian production of SOP, there are other mining exploration companies in Australia that are currently seeking to explore, develop and produce SOP. The Company will have no influence or control over the activities or actions of its competitors and other industry participants, whose activities or actions may positively or negatively affect the operating and financial performance of the Company's projects and business. Competitors may have significant additional experience and / or resources to explore, develop and product competing products, which may adversely affect the Company's financial position or prospects.

8.2 General Risks

(a) Securities investments

Applicants should be aware that there are risks associated with any securities investment.

Prior to the Offer, there was no public market for the Shares. There is no guarantee that an active trading market in the Shares will develop or that the price of the Shares will increase. The prices at which the Shares trade may be above or below the Offer price and may fluctuate in response to a number of factors.

Further, the stock market is prone to price and volume fluctuations. There can be no guarantee that trading prices will be sustained. These factors may materially affect the market price of the Shares, regardless of Company's operational performance.

(b) Economic risk

Changes in the general economic climate in which Company operates may adversely affect the financial performance of Company. Factors that may contribute to that general economic climate include the level of direct and indirect competition against the Company, include, but not are but not limited to:

(i) general economic conditions;

(ii) changes in Government policies, taxation and other laws;

(iii) the strength of the equity and share markets in Australia and throughout the world;

(iv) movement in, or outlook on, exchange rates, interest rates and inflation rates;

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(v) industrial disputes in Australia and overseas;

(vi) changes in investor sentiment toward particular market sectors;

(vii) financial failure or default by an entity with which the Company may become involved in a contractual relationship; and

(viii) natural disasters, social upheaval or war.

(c) Dilution

In certain circumstances, the Directors may issue equity securities without any vote or action by Shareholders. If the Company were to issue any equity securities the percentage ownership of Shareholders may be reduced and diluted.

(d) Share market

Share market conditions may affect the value of the Company’s quoted securities regardless of the Company’s operating performance. The market price of the Securities may be subject to fluctuation and may be affected by many factors including, but not limited to, the following:

(i) general economic outlook;

(ii) interest rates and inflation rates;

(iii) currency fluctuations;

(iv) commodity price fluctuations;

(v) changes in investor sentiment toward particular market sectors;

(vi) the demand for, and supply of, capital; and

(vii) terrorism or other hostilities.

There is also no guarantee that an active market in the Securities will develop or that the price of the Securities will increase. There may be relatively few buyers or sellers of Securities on the ASX at any particular time.

(e) Legal Proceedings

Legal proceedings may arise from time to time in the course of the business of the Company. Legal proceedings brought by third parties including but not limited to customers, business partners or employees could negatively impact the business in the case where the impact of such litigation is greater than or outside the scope of the Company’s insurance. As at the date of this Prospectus, there are no material legal proceedings affecting the Company and the Directors are not aware of any legal proceedings pending or threatened against or affecting the Company.

(f) Unforeseen expenses

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 subsequently incurred, the expenditure proposals of the Company may be adversely affected.

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(g) Macro-economic risks

Changes in the general economic outlook in Australia and globally may impact the performance of the Company and its projects. Such changes may include:

(i) uncertainty in the Australian economy or increases in the rate of inflation resulting from domestic or international conditions (including movements in domestic interest rates and reduced economic activity);

(ii) increases in expenses (including the cost of goods and services used by the Company);

(iii) new or increased government taxes, duties or changes in taxation laws; and

(iv) fluctuations in equity markets in Australia and internationally.

A prolonged and significant downturn in general economic conditions may have a material adverse impact on the Company’s trading and financial performance.

(h) Broader general risks

There are also a number of broader general risks which may impact the Company’s performance. These include:

(i) abnormal stoppages in normal business operations due to factors such as war, political or civil unrest, infrastructure failure or industrial disruption; and

(ii) higher than budgeted costs associated with the provision of service offerings.

(i) Currency risk

In the future the Company may operate in multiple international jurisdictions, which exposes the Company to multiple currencies and their future currency fluctuations, which may affect future profitability of the Company.

(j) Taxation risk

The acquisition and disposal of Shares will have tax consequences which will differ for each investor depending on their individual financial circumstances. All potential investors in the Company are urged to obtain independent financial advice regarding the tax and other consequences of acquiring Shares. To the maximum extent permitted by law, the Company, its officers and each of their respective advisers accept no liability or responsibility with respect to any tax consequences of applying for Shares under this Prospectus.

(k) Accounting standards

Changes to any applicable accounting standards or to any assumptions, estimates or judgments applied by management in connection with complex accounting matters may adversely impact the Company’s financial statements, results or condition.

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9. Material Contracts The Directors consider that the material contracts described below are those which an investor would reasonably regard as material and which investors and their professional advisors would reasonably expect to find described in this Prospectus for the purpose of making an informed assessment of an investment in the Company under the Offer.

This section contains a summary of the material contracts and their substantive terms which are not otherwise disclosed elsewhere in the Prospectus.

9.1 Royalty Deed

KLP has entered into a royalty deed with Kalium Corporate Pty Ltd (Kalium Corporate) as trustee for Kalium Founder Unit Trust (Royalty Deed) pursuant to which it was agreed that:

(a) KLP is required to pay Kalium Corporate a royalty of 1.9% of the quarterly gross revenue from the sale of potash and/or other minerals derived from all or part of the tenements relating to the Beyondie Potash Project, Carnegie and Dora/Blanche projects;

(b) KLP's obligation to pay the 1.9% royalty continues for the full term of the Tenements (including any successor or replacement tenements);

(c) KLP must give Kalium Corporate 60 days prior notice if it intends to relinquish, surrender or fail to renew the whole or any part of any tenement which is covered by the Royalty Deed;

(d) upon receiving notice of relinquishment, Kalium Corporate will have 60 days to request that the relevant tenement be relinquished and conveyed to Kalium Corporate free of encumbrances and for no consideration; and

(e) the Royalty Deed will no longer apply and KLP will no longer be obliged to pay the royalty in relation to the whole or any part of any tenement, upon the occurrence of the following:

(i) conveyance of a relinquished tenement to Kalium Corporate;

(ii) Kalium Corporate does not exercise its right to acquire a relinquished tenement and KLP proceeds to relinquish, surrender or fail to renew the tenement; or

(iii) KLP is required by law to relinquish or surrender part of any tenement.

The beneficiaries of the Kalium Founder Unit Trust include Messrs Brett Hazelden and Rudolph van Niekerk (each a Director) and Mr Brent Smoothy (a substantial shareholder of the Company).

9.2 Access and Compensation Agreements

KLP has entered into access and compensation agreements with the registered holders of pastoral leases (Pastoralists) which overlap the Tenements (Access and Compensation Agreements):

(a) On 13 December 2015, KLP entered into an Access and Compensation Agreement with Mr Victor James Gleeson.

(b) On 14 December 2015, KLP entered into an Access and Compensation Agreement with Mr Brent Smoothy (a substantial shareholder of the Company) and his spouse, Ms Rachel Mary Burn.

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Each Access and Compensation Agreement includes the following key terms:

(c) KLP is required to pay to the Pastoralist an annual fee of $25,000 on each anniversary of the commencement of the agreement; and

(d) KLP is required to pay compensation to the Pastoralist, as set out in the agreement for any injury or death of any livestock.

9.3 Access Agreements

KLP has entered into a two access agreements with the registered holders of mining tenements which overlap the Tenements (Access Agreements). On 30 October 2015, KLP entered into the Access Agreement with Cosmopolitan Minerals Limited, the holder of E52/2943 and E69/3247, which overlap land the subject of L52/162 held by KLP. On 19 January 2016, KLP entered into an Access Agreement with Drillabit Pty Ltd, the holder of E52/3088, which also overlaps land the subject of L52/162 held by KLP.

Each Access Agreement includes the following key terms:

(a) counterparty consent to the grant of L52/162 and to the construction of a gas pipeline on land the subject of L52/162; and

(b) an obligation to negotiate in good faith to agree an alternative site for relocation of any infrastructure constructed pursuant to L52/162 where the counterparty has a bona fide, detailed and economically feasible proposal to conduct mining operations on the area of that infrastructure.

9.4 Native Title Agreement

KLP is party to three agreements with the registered holders of, or claimants for, native title in the land the subject of the Tenements.

On 11 March 2015, Rachlan Holdings Pty Ltd (Rachlan) entered into an exploration and prospecting deed of agreement with specified signatories on behalf of the Gingirana native title claim group (Gingirana Exploration Agreement). The Gingirana Agreement applies to the Tenements within the area of the Gingirana native title claim, other than L52/162 (all of E69/3309, E69/3341, E69/3346, E69/3347, E69/3352 and part of E69/3306, E69/3348, E69/3351).

On 10 March 2015, Rachlan entered into a land access and mineral exploration agreement with Mungarlu Ngurrarankatja Rirraunkaja (Aboriginal Corporation) RNTBC, the registered native title body corporate for the Birriliburu native title holders (MNR Exploration Agreement). The MNR Exploration Agreement applies to the Tenements within the Birriliburu native title determination area (E69/3339, E69/3340, E69/3342, E69/3343, E69/ 3344, E69/3345, E69/3349 and part of E69/3306, E69/3348 and E69/3351).

Rachlan subsequently assigned to KLP all of its rights and interests in relation to the Tenements under both the Gingirana Exploration Agreement and the MNR Exploration Agreement, in accordance with the Declaration of Trust referred to in section 9.6 below.

The Gingirana Exploration Agreement and the MNR Exploration Agreement include (amongst other things) the following key terms:

(a) native title consent to the grant of the Tenements;

(b) KLP is required to give notice to the counterparty prior to undertaking any activity on the relevant Tenements;

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(c) in the case of the Gingirana Exploration Agreement, KLP is required to pay the counterparty an annual amount equivalent to 10% of the annual rental payable to the State of Western Australia in respect of the relevant Tenements to be set-off against any native title compensation liability arising from the relevant exploration activities; and

(d) in the case of the MNR Exploration Agreement, KLP is required to pay the counterparty an annual amount equivalent to the greater of 20% of the annual rental payable to the State of Western Australia in respect of, or 5% of the annual expenditure on, the relevant Tenements in full and final satisfaction of any native title compensation liability arising from the relevant exploration activities.

On 22 March 2016, KLP entered into the Beyondie Potash Project Gingirana land access agreement (Gingirana Land Access Agreement) with specified signatories for and on behalf of the Gingirana people.

The Gingirana Land Access Agreement includes (amongst other things) the following key terms:

(a) native title consent to the grant of any mining leases and general purpose leases under the Mining Act 1978 (WA) within the land the subject of E69/3309 and specified areas of E69/3346, E69/3351 and E69/3352;

(b) native title consent to the grant of L52/162, to miscellaneous licences for specified purposes over the land the subject of the Tenements and to miscellaneous licences or other tenure required for the purposes of project operations anywhere with the Gingirana native title claim;

(c) KLP is required to pay specified amounts on specified milestones, being:

(i) $250,000 on the commencement of construction of the gas pipeline;

(ii) $50,000 on commencement of commercial production; and

(iii) $50,000 on first sale of product; and

(d) KLP is required to pay, during production, a production payment of 0.75% of the mine gate value of any quantity of salt products sold that are derived from the area of the Gingirana native title claim which, together with the milestone payments referred to above, are in full and final satisfaction of any native title compensation liability arising from the relevant mining activities.

Refer to Section 7 for further details regarding the above agreement.

9.5 Memorandum of Understanding - Port of Geraldton

On 20 August 2015, KLP entered into a memorandum of understanding with respect to the Port of Geraldton with Mid West Ports Authority (ABN 73 384 989 178) (MWPA) (MoU) pursuant to which it was agreed that:

(a) the parties will work together to investigate the Port of Geraldton's capability to handle and load the 250,000 tpa of Potash Products (as defined in the MoU) for export from the Port of Geraldton;

(b) the parties will work together to investigate how MWPA might provide up to 250,000 tpa of export capacity for Potash Products (as defined in the MoU);

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(c) the parties will share relevant information to the extent required to enable a detailed diligence to be carried out in relation to each party's proposals and capabilities for the purposes of the investigation; and

(d) the parties will develop a schedule setting out the responsibilities of each party, the tasks to be completed by each party and the date by which that task is to be completed.

The MoU was extended to 30 June 2017 by agreement of the parties and will end on the earlier of:

(a) 30 June 2017;

(b) the date of signing a Port Agreement (being, a lease, port service agreement or other similar agreement between the parties); or

(c) the date exports of Potash Products (as defined in the MoU) commence from the Port of Geraldton.

9.6 Declaration of Trust

On 27 March 2015, KLP entered into a declaration of trust with Rachlan Holdings Pty Ltd (Rachlan) (Declaration of Trust) pursuant to which it was agreed that:

(a) Rachlan (as bare trustee) will hold for the benefit of KLP certain exploration licence applications and any exploration licences granted in respect to those applications;

(b) KLP will pay any costs and expenses in relation to the applications (and any exploration licences granted in respect to those applications);

(c) Rachlan is required to deal with the applications (and any exploration licences granted in respect to those applications) as directed by KLP (including transferring title as directed by KLP); and

(d) KLP may remove Rachlan as the trustee of the trust and appoint another trustee.

Mr Brent Smoothy (a substantial shareholder of the Company) is the sole director and sole shareholder of Rachlan.

9.7 Executive Service Agreement

The Company has entered into an executive services agreement with Mr Brett Hazelden in respect to his employment as the Managing Director of the Company (Executive Service Agreement). The principal terms of the Executive Service Agreement are as follows:

(a) Mr Hazelden will receive an annual salary of $275,000 (excluding superannuation);

(b) Mr Hazelden may terminate the agreement by giving 6 months' notice in writing to the Company;

(c) the Company may terminate the agreement (without cause) by giving 12 months' notice in writing to Mr Hazelden (or make payment in lieu of notice), unless the Company is terminating as a result of serious misconduct (or on other similar grounds) by Mr Hazelden, in which case no notice is required; and

(d) Mr Hazelden is subject to non-compete restrictions during his employment and for a maximum period of 6 months following termination of his employment.

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9.8 Non-Executive Director Appointments

The Company has entered into non-executive director appointment letters with each of Messrs Malcolm Randall, Rudolph van Niekerk and Brendan O'Hara on the following key terms:

(a) each of Messrs van Niekerk and O'Hara will receive an annual remuneration of $45,000 (excluding superannuation);

(b) Mr Randall will receive an annual remuneration of $60,000 (excluding superannuation); and

(c) appointment shall cease if the non-executive director:

(i) resigns;

(ii) is disqualified under the Corporations Act or the Constitution from being a company director; or

(iii) is removed as a director in accordance with the Corporations Act or the Constitution.

9.9 Consultancy Agreement

The Company has entered into a consultancy agreement with Mr Brent Smoothy on the following key terms:

(a) Mr Smoothy will provide exploration and operational services in respect to the Beyondie Potash Project which includes but is not limited to the following:

(i) provision of site management and day to day supervision of the Company and contractor workforce;

(ii) materials control and logistics associated with deliveries to the project;

(iii) project management services;

(iv) assisting the Company with investor relation site visits;

(v) helicopter surveillance and transportation services; and

(vi) emergency response assistance;

(b) Mr Smoothy will receive a fee at a daily rate of $1,650 (based on a 10 hour day) for the provision of his services to the Company;

(c) the services will be provided as and when required and when notified by the Company, acting reasonably; and

(d) the agreement shall cease on 31 December 2017, unless extended by the Company.

9.10 Deeds of Indemnity, Access and Insurance

The Company has entered into standard deeds of indemnity, access and insurance with each of the Directors. Pursuant to those deeds, the Company has undertaken, consistent with the Corporations Act, to indemnify each Director in certain circumstances and to maintain directors’ and officers’ insurance cover in favour of the Director during the period of their appointment and for seven years after the Director has ceased to be a Director. The

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Company has further undertaken with each Director to maintain a complete set of the Company’s board papers and to make them available to the Director for seven years after the Director has ceased to be a Director.

9.11 Deed of Indemnity (Restructure)

The Company has entered into a deed of indemnity with the entities associated with Mr Brett Hazelden, Mr Brent Smoothy and Mr Rudolph van Niekerk (Founding Shareholders). Pursuant to the deed of indemnity, the Company has undertaken, to indemnify each Founding Shareholder against certain advisory fees (including those of legal advisers, financial advisers, accountants and taxation advisers) incurred by a founding shareholder in connection with the restructure of KLP. The indemnity is limited to advisory fees incurred by a founding shareholder in connection with:

(a) a founding shareholder responding to, defending, or otherwise dealing with any complaints, audits, investigations, applications or proceedings brought by any government agency in relation to the restructure; and

(b) any claim, action or demand made by a government agency requiring the founding shareholder to make a payment (including in relation to a tax liability) to any government agency as a result of the restructure.

9.12 Lead Manager Mandate

The Company has appointed BurnVoir to act as the Lead Manager to the Offer. In consideration for their services, BurnVoir will receive a fee of 6.0% of the total amount raised under the Offer and an advisory fee of $25,000 per month for 3 months, with the balance payable in full on the Opening Date (exclusive of GST). BurnVoir will also be issued in aggregate Advisor Options equivalent to 5.0% of the total amount raised under the Offer. In addition, BurnVoir will be entitled to be reimbursed for reasonable out of pocket expenses incurred in connection with the Offer.

BurnVoir will also be entitled to receive a fee of $10,000 per month for a period of 6 months from the Opening Date for post-Offer corporate advisory services. In lieu of payment of the cash consideration, the Company may elect to instead issue and allot 300,000 Advisor Shares in full consideration for the post-Offer corporate advisory services. The Company intends to issue the Advisor Shares and will do so as soon as possible after the Opening Date.

Pursuant to the mandate, BurnVoir will have a right of first refusal to act as:

(a) lead manager to any capital raising or similar corporate transaction that the Company undertakes; and

(b) corporate advisor in respect of any offers received by the Company from a third party to acquire an interest greater than 20% in the issued share capital of the Company or the Beyondie Potash Project,

in the 12 months following completion of the Offer.

The mandate contains covenants, warranties, representations and indemnities that are customary for such an agreement.

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10. Additional Information

10.1 Rights attaching to Shares

A summary of the rights attaching to the Shares under the Offer and Advisor Shares is detailed below. This summary is qualified by the full terms of the Constitution (a full copy of the Constitution is available from the Company on request free of charge) and does not purport to be exhaustive or to constitute a definitive statement of the rights and liabilities of Shareholders. These rights and liabilities can involve complex questions of law arising from an interaction of the Constitution with statutory and common law requirements. For a Shareholder to obtain a definitive assessment of the rights and liabilities which attach to the Shares in any specific circumstances, the Shareholder should seek legal advice.

(a) General meetings

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

Shareholders may requisition meetings in accordance with section 249D of the Corporations Act.

(b) Voting rights

Subject to any rights or restrictions for the time being attached to any class or classes of Shares, at general meetings of Shareholders or classes of Shareholders:

(i) each Shareholder entitled to vote may vote in person or by proxy or attorney;

(ii) on a show of hands, every person present who is a Shareholder or a representative of a Shareholder has one vote in respect of each Share carrying the right to vote; and

(iii) on a poll, every person present who is a Shareholder or a proxy, attorney or representative of a Shareholder shall, in respect of each Share held by him, or in respect of which he is appointed a proxy, attorney or representative, have one vote for each Share held, but in respect of partly paid shares shall have a fraction of a vote equivalent to the proportion which the amount paid up bears to the total issue price for the share.

(c) Dividend rights

The Directors alone may declare a dividend to be paid to shareholders. The dividend is payable at a time determined in the Directors' discretion. No dividend may be declared or paid except as allowed by the Corporations Act. No interest is payable in respect of unpaid dividends. The Directors may set aside the Company's profit any amount that they consider appropriate. This amount may be used in any way that profits can be used, and can be invested or used in the Company's business in the interim.

(d) Winding-up

If the Company is wound up, the liquidator may, with the authority of a special resolution, divide among the Shareholders in kind the whole or any part of the property of the Company, and may for the purpose set such value as he 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.

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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 liability.

(e) Shareholder liability

As the Shares to be issued under the Offer contained in this Prospectus are fully paid shares, they are not subject to any calls for money by the Directors and will therefore not become liable for forfeiture.

(f) Transfer of Shares

Generally, Shares in the Company 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 and the Listing Rules.

(g) Variation of rights

Pursuant to section 246B of the Corporations Act, the Company may, with the sanction of a special resolution passed at a meeting of Shareholders vary or abrogate the rights attaching to Shares.

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 consent in writing of the holders of three quarters of the issued shares of that class, or if authorised by a special resolution passed at a separate meeting of the holders of the shares of that class.

(h) 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. In addition, at least 28 days’ written notice specifying the intention to propose the resolution as a special resolution must be given.

10.2 Terms of Performance Rights

At the date of this Prospectus, there are 20,000,000 Performance Rights on issue. A summary of the material terms and conditions of the Performance Rights, is detailed below:

(a) Milestone Conversion

Each Performance Right will be satisfied by the issuance of one Share.

Number of Performance Rights

Performance Criteria Performance Period

5 million Completion and announcement to the ASX of a Definitive Feasibility Study

5 years

5 million Securing funding for the development and construction of the commercial SOP product operation

5 years

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Number of Performance Rights

Performance Criteria Performance Period

10 million Achievement of the first commercial production of SOP which shall be deemed to have occurred when SOP is delivered to a client under a contract of sale

5 years

(b) Change in Control

Upon the occurrence of a Change of Control of the Company:

(i) where, at the date of the Change of Control, the satisfaction of all Performance Rights will result in the issue of less than or equal to 10% of the total number of Shares on issue, each Performance Right will automatically entitle the holder to one Share; and

(ii) where, at the date of the Change of Control, the satisfaction of all Performance Rights will result in the issue of greater than 10% of the total number of Shares on issue:

A. the total number of Performance Rights to be satisfied through the issuance of Shares in exchange therefor must be equal to 10% of the total number of Shares on issue;

B. the number of Shares to be issued with respect to each class of Performance Rights shall be on an equal basis between each such class; and

C. any Performance Rights that are not satisfied through the issuance of Shares in accordance with paragraph (1) and (2) above will continue to be held by the holder on the same terms and conditions set out herein.

(c) Expiry Date

If the Performance Rights have not been satisfied by 5.00pm (WST) on the date that is five years from the date of grant of the relevant Performance Right, the Performance Rights shall not be capable of satisfaction and shall immediately lapse.

(d) Shares issued on satisfaction of Performance Criteria

Shares issued upon satisfaction of a Performance Criteria rank equally with the then Shares of the Company.

(e) Escrow Restrictions

The holder of Performance Rights:

(i) acknowledges that the Performance Rights and the Shares issued on satisfaction of Performance Rights may be escrowed or restricted for a period prescribed by ASX pursuant to the Listing Rules;

(ii) agrees to be bound by any escrow period prescribed by ASX; and

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(iii) agrees to enter into any agreement as may be required by the Company and ASX to give effect to any escrow prescribed by ASX pursuant to the Listing Rules.

(f) Reconstruction

In the event of any reconstruction, consolidation or division of the issued capital of the Company, the Performance Rights and their terms of satisfaction through the issuance of Shares in exchange therefor will be reconstructed, consolidated or divided in the same manner such that no additional benefits are conferred on the holder by virtue of such reconstruction, consolidation or division.

(g) Winding up

If the Company is wound up before satisfaction of all of the Performance Rights by the issuance of Shares in exchange therefor, the holders will have no right to participate in surplus assets or profits of the Company on winding up in respect of their Performance Rights.

(h) Dividends

Holders of Performance Rights are not entitled to receive any dividends on their Performance Rights.

(i) Non-Transferable and No Quotation

The Performance Rights are non-transferable and are unquoted securities.

(j) Voting Rights

Holders of the Performance Rights will have no right to vote in respect of their Performance Rights.

(k) Participation in new issue

There are no participation rights or entitlements inherent in the Performance Rights and holders of the Performance Rights will not, in respect of their Performance Rights, be entitled to participate in new issues of capital offered to Shareholders.

10.3 Management Options

(a) Entitlement

Each Management Option entitles the holder to subscribe for one Share upon exercise of the Management Option. The Management Options are not subject to any vesting conditions.

(b) Exercise Price and Expiry Date

The Management Options have an exercise price of A$0.25 each (Management Option Exercise Price) and will expire at 5.00pm (WST) on the date that is three years after the date of grant (Management Option Expiry Date).

A Management Option not exercised before the Management Option Expiry Date will automatically lapse on the Management Option Expiry Date.

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(c) Exercise Period

The Management Options are exercisable at any time and from time to time on or prior to the Management Option Expiry Date.

(d) Quotation of the Management Options

The Management Options will be unquoted.

(e) Notice of Exercise

The Management Options may be exercised by notice in writing to the Company in the manner specified on the Management Option certificate (Management Option Notice of Exercise) and payment of the Management Option Exercise Price for each Option being exercised.

(f) Shares Issued on Exercise

Shares allotted pursuant to the exercise of the Management Options will rank equally in all respects with existing Shares from the date of allotment.

(g) Timing of Issue of Shares and Quotation

As soon as practicable after a Management Option Notice of Exercise is given in accordance with these terms and conditions and payment of the Management Option Exercise Price for each Management Option being exercised, the Company will:

(i) issue the Shares pursuant to the exercise of the Management Options; and

(ii) apply for official quotation on ASX of Shares issued pursuant to the exercise of the Management Options.

(h) Participation in New Issues

There are no participation rights or entitlements inherent in the Management Options and holders will not be entitled to participate in new issues of capital offered to shareholders during the currency of the Management Options and prior to the exercise of the Management Options.

(i) Adjustment for Bonus Issue

If the Company makes a bonus issue of Shares or other securities to existing Shareholders (other than an issue in lieu or in satisfaction of dividends or by way of dividend reinvestment):

(i) the number of Shares which must be issued on the exercise of an Management Option will be increased by the number of Shares which the holder would have received if they had exercised the Management Option before the record date for the bonus issue; and

(ii) no further consideration will be payable by the holder.

(j) Adjustment for Pro Rata Issue

If the Company makes a pro rata issue (except bonus issue) of Shares the Management Option Exercise Price of each Management Option will be reduced according to the formula detailed in Listing Rule 6.2.2.

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(k) Adjustment for Reorganisation

If there is any reorganisation of the issued share capital of the Company, the rights of the holder will be varied in accordance with the Listing Rules.

(l) Transferability

Save as otherwise determined by the Board, the Management Options are not transferable.

10.4 Advisor Options

(a) Entitlement

Each Advisor Option entitles the holder to subscribe for one Share upon exercise of the Advisor Option. The Advisor Options are not subject to any vesting conditions.

(b) Exercise Price and Expiry Date

The Advisor Options have an exercise price of A$0.25 each (Advisor Option Exercise Price) and will expire at 5.00pm (WST) on the date that is three years after the date of grant (Advisor Option Expiry Date).

An Advisor Option not exercised before the Advisor Option Expiry Date will automatically lapse on the Advisor Option Expiry Date.

(c) Exercise Period

The Advisor Options are exercisable at any time and from time to time on or prior to the Advisor Option Expiry Date.

(d) Quotation of the Advisor Options

The Advisor Options will be unquoted.

(e) Notice of Exercise

The Advisor Options may be exercised by notice in writing to the Company in the manner specified on the Advisor Option certificate (Advisor Option Notice of Exercise) and payment of the Advisor Option Exercise Price for each Advisor Option being exercised.

(f) Shares Issued on Exercise

Shares allotted pursuant to the exercise of the Advisor Options will rank equally in all respects with existing Shares from the date of allotment.

(g) Timing of Issue of Shares and Quotation

As soon as practicable after an Advisor Option Notice of Exercise is given in accordance with these terms and conditions and payment of the Advisor Option Exercise Price for each Option being exercised, the Company will:

(i) issue the Shares pursuant to the exercise of the Advisor Options; and

(ii) apply for official quotation on ASX of Shares issued pursuant to the exercise of the Advisor Options.

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(h) Participation in New Issues

There are no participation rights or entitlements inherent in the Advisor Options and holders will not be entitled to participate in new issues of capital offered to shareholders during the currency of the Advisor Options and prior to the exercise of the Advisor Options.

(i) Adjustment for Bonus Issue

If the Company makes a bonus issue of Shares or other securities to existing Shareholders (other than an issue in lieu or in satisfaction of dividends or by way of dividend reinvestment):

(i) the number of Shares which must be issued on the exercise of an Advisor Option will be increased by the number of Shares which the holder would have received if they had exercised the Advisor Option before the record date for the bonus issue; and

(ii) no further consideration will be payable by the holder.

(j) Adjustment for Pro Rata Issue

If the Company makes a pro rata issue (except bonus issue) of Shares the Advisor Option Exercise Price of each Advisor Option will be reduced according to the formula detailed in Listing Rule 6.2.2.

(k) Adjustment for Reorganisation

If there is any reorganisation of the issued share capital of the Company, the rights of the holder will be varied in accordance with the Listing Rules.

(l) Transferability

The Advisor Options are not transferable.

10.5 Management Plan

The Company has adopted a management incentive plan (Management Plan) (being the plan pursuant to which 7,500,000 Management Options are proposed to be issued prior to the close of the Offer) the key terms of which are as follows:

(a) Eligibility: A person who has been determined by the Board to be eligible to participate in the Management Plan (Eligible Person).

(b) Invitation: The Board may, from time to time, in its absolute discretion, invite any Eligible Person to apply for up to a specified number of Options, upon the terms set out in the Management Plan (Invitation).

(c) Issue Price: Options will be issued for no consideration and shall have an exercise as determined by the Board.

(d) Grant of Options: Once the Company has received and accepted a duly signed and completed application form for Options from an Eligible Person, the Company will grant Options to such person (the Participant), with effect from grant date, upon the terms set out in the Invitation and the Management Plan.

(e) Determination of Performance Condition: An Option that is granted subject to service-based conditions and/or performance hurdles (Performance Conditions) vests when both of the following have occurred:

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(i) the Performance Conditions applicable to that Option have been determined by the Board (acting reasonably) to be satisfied, are waived by the Board, or are deemed to have been satisfied under the Management Plan; and

(ii) the Company notifying a Participant informing him or her that the Option has vested.

(f) Exercise on Vesting: A vested Option may be exercised by a Participant at any time from the date of vesting until such time as the vested Performance Rights lapse in accordance with the Management Plan.

(g) Disposal Restrictions: A Participant agrees that any Shares issued upon exercise of a vested Option will be subject to any disposal restrictions as set out in the Initiation and determined by the Board.

(h) Lapsing of Option: An Option will lapse upon the earlier to occur of:

(i) the date determined by the Board and specified in the Invitation as the expiry date; or

(ii) if the Invitation does not specify an expiry date, the date which is 15 years from the date of grant.

(i) Issue of Shares: Subject to the Corporations Act, the Listing Rules and the Management Plan, the Company must issue to, or procure the transfer to, the Participant the number of Shares the Participant is entitled to be issued in respect of vested Options that are exercised.

(j) Share ranking: All Shares issued under the Options will rank equally with all other issued Shares, and will be entitled in full to those dividends which have a record date for determining entitlements after the date of issue.

(k) Listing of Shares on ASX: The Company will apply for official quotation of all Shares issued under the Management Plan on ASX.

(l) Change of Control: If a Change of Control event occurs the Board may in its absolute discretion determine the manner in which any or all of the Options (whether vested or unvested) will be dealt with. Unless otherwise specified in the Invitation.

(m) Adjustment for bonus issues: If Shares are issued pro rata to Shareholders generally by way of bonus issue, the number of Options to which each Participant is entitled shall be increased by that number of securities which the Participant would have been issued if the Options then held by the Participant were exercised immediately prior to the record date of the bonus issue.

(n) Pro rata issues: A Participant will not be entitled to any adjustment to the number of Shares issued under the Management Plan that he or she is entitled to or adjustment to any Performance Condition which is based, in whole or part, on the Company's share price, as a result of the Company undertaking a rights issue.

(o) Adjustment for reorganisation: In the event of any reconstruction (including consolidation, sub-division, reduction or return) of the issued capital of the Company, the number of Options shall be reconstructed (as appropriate) in accordance with the Listing Rules (applying at that time) and in a manner which is fair as between the Participants and the holder of Shares

(p) Amendments: Subject to the Management Plan and the Listing Rules, the Board may from time to time amend or supplement the Management Plan rules in any

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respect. However, no amendment may be made by the Board to the rules which reduces the rights of Participants without their prior written consent, other than an amendment introduced primarily:

(i) for the purpose of complying with, or conforming to, the Listing Rules, any class order on which the Company is relying or present or future State or Commonwealth legislation governing or regulating the maintenance or operation of the Management Plan or like plans;

(ii) to correct any manifest error or mistake; or

(iii) to take into consideration possible adverse tax implications in respect of the Management Plan arising from, amongst others, adverse rulings from the Commissioner of Taxation, changes to tax legislation (including an official announcement by the Commonwealth of Australia) and/or changes in the interpretation of tax legislation by a Court of competent jurisdiction.

10.6 Interests of Directors

No Director (or entity in which they are a director and/or a shareholder) has, or has had in the two years before the date of this Prospectus, any interests in:

(a) the formation or promotion of the Company; or

(b) property acquired or proposed to be acquired by the Company in connection with its formation or promotion of the Offer; or

(c) the Offer, and

no amounts have been paid or agreed to be paid and no value or other benefit has been given or agreed to be given to:

(d) any Director to induce him or her to become, or to qualify as, a Director; or

(e) any Director for services which he or she (or an entity in which they are a partner or director) has provided in connection with the formation or promotion of the Company or the Offer,

except as disclosed in this Prospectus.

10.7 Director Holdings

The Directors and their related entities have the following interests in Securities as at the date of this Prospectus:

Director Shares Options Performance Rights

Mr Malcolm Randall 445,375 4,000,0001 Nil

Mr Brett Hazelden 13,609,544 Nil 4,200,000

Mr Rudolph van Niekerk 3,315,600 Nil 1,200,000

Mr Brendan O'Hara Nil 2,000,0001 Nil

Note:

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1. Each having an exercise price of $0.25 and an expiry date 3 years from the date of grant.

Based on the intentions of the Directors at the date of this Prospectus in relation to the Offer, the Directors and their related entities will have the following interests in Securities on Admission:





Mr Brendan O'Hara Nil 2,000,0001 Nil Note:

1. Each having an exercise price of $0.25 and an expiry date of 3 years from the date of grant.

10.8 Remuneration of Directors

The Directors will receive the following remuneration (excluding superannuation):

Director Financial Year 2016/17 A$

Mr Malcolm Randall A$60,000

Mr Brett Hazelden A$275,000

Mr Rudolph van Niekerk A$45,000

Mr Brendan O'Hara A$45,000

The maximum aggregate non-executive director fees is $250,000. The Executive Directors are eligible to participate in the Management Plan, subject to any requisite regulatory and Shareholder approval. As at the date of this Prospectus, there is no intention for any Executive Director or key management personnel of the Company to be offered an opportunity to participate in the Management Plan or to issue any Options under the plan to other parties, other than as detailed in this Prospectus.

10.9 Interests of Promoters, Experts and Advisers

No promoter or other person named in this Prospectus as having performed a function in a professional, advisory or other capacity in connection with the preparation or distribution of the Prospectus (or entity in which they are a partner or director) holds, has, or has had in the two years before the date of this Prospectus, any interest in:

(a) the formation or promotion of the Company;

(b) property acquired or proposed to be acquired by the Company in connection with its formation or promotion or the Offer; or

(c) the Offer,

and no amounts have been paid or agreed to be paid and no value or other benefit has been given or agreed to be paid to a promoter or any person named in this Prospectus as having performed a function in a professional, advisory or other capacity in connection with the preparation or distribution of this Prospectus (or entity in which they are a partner or director), provided in connection with the formation or promotion of the Company or the Offer, except as follows and as disclosed in this Prospectus.

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respect. However, no amendment may be made by the Board to the rules which reduces the rights of Participants without their prior written consent, other than an amendment introduced primarily:

(i) for the purpose of complying with, or conforming to, the Listing Rules, any class order on which the Company is relying or present or future State or Commonwealth legislation governing or regulating the maintenance or operation of the Management Plan or like plans;

(ii) to correct any manifest error or mistake; or

(iii) to take into consideration possible adverse tax implications in respect of the Management Plan arising from, amongst others, adverse rulings from the Commissioner of Taxation, changes to tax legislation (including an official announcement by the Commonwealth of Australia) and/or changes in the interpretation of tax legislation by a Court of competent jurisdiction.

10.6 Interests of Directors

No Director (or entity in which they are a director and/or a shareholder) has, or has had in the two years before the date of this Prospectus, any interests in:

(a) the formation or promotion of the Company; or

(b) property acquired or proposed to be acquired by the Company in connection with its formation or promotion of the Offer; or

(c) the Offer, and

no amounts have been paid or agreed to be paid and no value or other benefit has been given or agreed to be given to:

(d) any Director to induce him or her to become, or to qualify as, a Director; or

(e) any Director for services which he or she (or an entity in which they are a partner or director) has provided in connection with the formation or promotion of the Company or the Offer,

except as disclosed in this Prospectus.

10.7 Director Holdings

The Directors and their related entities have the following interests in Securities as at the date of this Prospectus:





Mr Brendan O'Hara Nil 2,000,0001 Nil

Note:

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10.10 Related Party Transactions

Other than as detailed below or disclosed elsewhere in this Prospectus, there are no existing agreements or arrangements and there are currently no proposed transactions in which the Company was, or is to be, a participant, and in which any related party has or will have a direct or indirect material interest:

(a) KLP and Rachlan Holdings Pty Ltd entered into a service agreement dated 13 November 2014 under which Rachlan Holdings Pty Ltd agrees to provide helicopter support services to KLP in return for fees, comprising a daily fee of between $4,500 - $7,000 per day. This agreement terminates on 31 December 2016. Mr Brent Smoothy (a substantial shareholder of the Company) is the sole director and sole shareholder of Rachlan Holdings Pty Ltd; and

(b) KLP and Inceptioneer Pty Ltd entered into a service agreement dated 1 June 2015 under which Inceptioneer Pty Ltd provides surveying services in relation to the Beyondie Potash Project to KLP. Under this agreement, Inceptioneer Pty Ltd also provides mapping services and ad hoc survey services in return for hourly fees. The agreement terminates on 31 December 2016. Mr Brett Hazelden (a Director) is a director of Inceptioneer Pty Ltd.

All future related party arrangements (if any) will be determined by the Board, having regard to their duties as Directors, and, where required, all requisite approvals, including but not limited to, shareholder approval will be obtained.

10.11 Ownership restrictions

The sale and purchase of Shares in Australia are regulated by a number of laws that restrict the level of ownership or control by any one person (either alone or in combination with others). This Section 10.11 contains a general description of these laws.

(a) Foreign Acquisitions and Takeovers Act 1975 (Cth)

Generally, the Foreign Acquisitions and Takeovers Act 1975 (Cth) (FATA) applies to acquisitions of shares and voting power in a company of 20% or more by a single foreign person and its associates, or 40% or more by two or more unassociated foreign persons and their associates, where the acquisition meets a threshold value (which varies by investor type and industry).

In addition, FATA applies to acquisitions of a direct interest in an Australian company by foreign governments and their related entities irrespective of the acquisition value. A 'direct interest’ is an interest of 10% in the entity but may also include an interest of less than 10% where the investor has entered into business arrangements with the entity or the investor is in a position to influence or participate in the management and control or policy of the entity. There are exemptions which can apply to certain acquisitions.

Where FATA applies to the acquisition, the acquisition may not occur unless notice of it has been given to the Federal Treasurer and the Federal Treasurer has either notified that there is no objection the proposed acquisition (with or without conditions) or a statutory period has expired without the Federal Treasurer objecting. An acquisition to which the FATA applies may be the subject of a divestment order by the Federal Treasurer unless the process of notification, and either a non-objection notification or expiry of a statutory period without objection, has occurred. Criminal offences and civil penalties can apply to failing to give notification of certain acquisitions, undertaking certain acquisitions without a no objection notification or contravening a condition in a no objection notice.

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(b) Corporations Act

The takeover provisions in Chapter 6 of the Corporations Act restrict acquisitions of relevant interests in issued voting shares in listed companies, and unlisted companies with more than 50 members, if, as a result of the acquisition, the acquirer's (or another party's) voting power in that company would increase from 20% or below to more than 20%, or would increase from a starting point that is above 20% and below 90%, unless certain exceptions apply. The Corporations Act also imposes notification requirements on persons having voting power of 5% or more in the Company either themselves or through an associate.

10.12 Expenses of Offer

The total expenses of the Offer payable by the Company are:

A$3M Raised A$6M Raised

Legal fees $100,000 $100,000

Investigating Accountant’s Report $10,000 $10,000

Independent Expert’s Report $10,000 $10,000

ASX Listing Fee $76,200 $79,300

Lead Manager Advisory Fee1 $75,000 $75,000

Miscellaneous Costs $5,000 $5,000

Brokers Commission2 $180,000 $360,000

TOTAL $456,200 $639,300

Note:

1. Refer to Section 9.12. 2. Refer to Section 0.

10.13 Effect of the Offer on control and substantial Shareholders

Those Shareholders holding an interest in 5% or more of the Shares on issue as at the date of this Prospectus are as follows:

Name Number of Shares Percentage of Shares (undiluted basis)

Mr Brent Smoothy1 53,558,305 58.54%

Mr Brett Hazelden2 13,609,544 14.87%

Note:

1. 13,218,505 Shares held by Kumarina Holdings Pty Ltd ATF Smoothy Investment Trust and 40,339,800 Shares held by Vince Smoothy Super Pty Ltd ATF Vince Smoothy Superannuation Fund, being entities associated with Mr Brent Smoothy.

2. 7,254,644 Shares are held by Hazelden Corporate Pty Ltd ATF The Hazelden Investment Trust and 6,354,900 Shares are held by Brett Hazelden and Tanya Hazelden ATF the Bozden Super Fund, being entities associated with Mr Brett Hazelden.

Based on the information known as at the date of this Prospectus, on Admission, the following persons will have an interest in 5% or more of the Shares on issue:

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Name

A$3M Raised

A$6M Raised

Number of Shares

Percentage of Shares

Number of Shares

Percentage of Shares

New Shareholders 15,000,000 14.05% 30,000,000 24.63% Mr Brent Smoothy1 53,558,305 50.15% 53,558,305 43.97% Mr Brett Hazelden2 13,609,544 12.74% 13,609,544 11.17%

Note:

1. 13,218,505 Shares held by Kumarina Holdings Pty Ltd ATF Smoothy Investment Trust and 40,339,800 Shares held by Vince Smoothy Super Pty Ltd ATF Vince Smoothy Superannuation Fund, being entities owned and controlled by Mr Brent Smoothy.

2. 7,254,644 Shares are held by Hazelden Corporate Pty Ltd ATF The Hazelden Investment Trust and 6,354,900 Shares are held by Brett Hazelden and Tanya Hazelden ATF the Bozden Super Fund, being entities owned and controlled by Mr Brett Hazelden.

10.14 Continuous Disclosure Obligations

Following Admission, the Company 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 to the market 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 Shares (unless a relevant exception to disclosure applies). Price sensitive information will be publicly released through ASX before it is otherwise disclosed to Shareholders and market participants. Distribution of other information to Shareholders and market participants will also be managed through disclosure to ASX. In addition, the Company will post this information on its website after ASX confirms that an announcement has been made, with the aim of making the information readily accessible to the widest audience.

The Company has a financial year end of 30 June.

10.15 Litigation and Claims

So far as the Directors are aware, there is no current or threatened civil litigation, arbitration proceedings or administrative appeals, or criminal or governmental prosecutions of a material nature in which the Company is directly or indirectly concerned which is likely to have a material adverse effect on the business or financial position of the Company.

10.16 Consents

Each of the following parties has given and has not, before the issue of this Prospectus, withdrawn its written consent to being named in the Prospectus and to the inclusion, in the form and context in which it is included, of any information described below as being included with its consent:

(a) BurnVoir Corporate Finance Limited has consented to being named in the Prospectus as Lead Manager to the Offer;

(b) RSM Corporate Australia Pty Ltd has consented to being named in the Prospectus as the Company’s Investigating Accountant and to the inclusion of its Investigating Accountant’s Report in Section 5;

(c) RSM Australia Partners has consented to being named in the Corporate Directory of this Prospectus as the Company’s Auditor;

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(d) DLA Piper Australia has consented to being named in the Corporate Directory of this Prospectus as the Australian legal advisor to the Company in relation to the Offer;

(e) Snowden Mining Industry Consultants Pty Ltd has consented to being named in the Corporate Directory and elsewhere in this Prospectus as the Independent Expert; and

(f) Computershare has consented to being named in the Corporate Directory and elsewhere in this Prospectus as the Share Registry for the Company.

Chapter 6D of the Corporations Act imposes a liability regime on the Company (as the offeror of the Shares), the directors of the Company, persons named in the Prospectus with their consent as proposed directors of the Company, any underwriters, persons named in the Prospectus with their consent as having made a statement in the Prospectus and persons involved in a contravention in relation to the Prospectus, with regard to misleading or deceptive statements made in the Prospectus. Although the Company bears primary responsibility for the Prospectus, other parties involved in the preparation of the Prospectus can also be responsible for certain statements made in it.

In light of the above, each of the parties referred to below, to the maximum extent permitted by law, expressly disclaims and takes no responsibility for any part of this Prospectus other than the reference to its name and any statement or report included in this Prospectus with the consent of that party as described above.

10.17 Electronic Prospectus

Pursuant to Regulatory Guide 107 ASIC has exempted compliance with certain provisions of the Corporations Act to allow distribution of an Electronic Prospectus on the basis of a paper Prospectus lodged with ASIC and the issue of Shares in response to an electronic application form, subject to compliance with certain provisions. If you have received this Prospectus as an Electronic Prospectus please ensure that you have received the entire Prospectus accompanied by the Application Form. If you have not, please email the Company and the Company will send to you, for free, either a hard copy or a further electronic copy of this Prospectus or both.

The Company reserves the right not to accept an Application Form from a person if it has reason to believe that when that person was given access to the electronic Application Form, it was not provided together with the Electronic Prospectus and any relevant supplementary or replacement prospectus or any of those documents were incomplete or altered. In such a case, the Application moneys received will be dealt with in accordance with section 722 of the Corporations Act.

10.18 Documents Available for Inspection

Copies of the following documents are available for inspection during normal business hours at the registered office of the Company at Unit 3, 70 Wittenoom Street, East Perth WA 6004:

(a) this Prospectus;

(b) the Constitution; and

(c) the consents referred to in Section 10.16 of this Prospectus.

10.19 Statement of Directors

The Directors report that after due enquiries by them, in their opinion, since the date of the financial statements in the financial information in Section 5 there have not been any circumstances that have arisen or that have materially affected or will materially affect the

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assets and liabilities, financial position, profits or losses or prospects of the Company, other than as disclosed in this Prospectus.


(d) DLA Piper Australia has consented to being named in the Corporate Directory of this Prospectus as the Australian legal advisor to the Company in relation to the Offer;

(e) Snowden Mining Industry Consultants Pty Ltd has consented to being named in the Corporate Directory and elsewhere in this Prospectus as the Independent Expert; and

(f) Computershare has consented to being named in the Corporate Directory and elsewhere in this Prospectus as the Share Registry for the Company.

Chapter 6D of the Corporations Act imposes a liability regime on the Company (as the offeror of the Shares), the directors of the Company, persons named in the Prospectus with their consent as proposed directors of the Company, any underwriters, persons named in the Prospectus with their consent as having made a statement in the Prospectus and persons involved in a contravention in relation to the Prospectus, with regard to misleading or deceptive statements made in the Prospectus. Although the Company bears primary responsibility for the Prospectus, other parties involved in the preparation of the Prospectus can also be responsible for certain statements made in it.

In light of the above, each of the parties referred to below, to the maximum extent permitted by law, expressly disclaims and takes no responsibility for any part of this Prospectus other than the reference to its name and any statement or report included in this Prospectus with the consent of that party as described above.

10.17 Electronic Prospectus

Pursuant to Regulatory Guide 107 ASIC has exempted compliance with certain provisions of the Corporations Act to allow distribution of an Electronic Prospectus on the basis of a paper Prospectus lodged with ASIC and the issue of Shares in response to an electronic application form, subject to compliance with certain provisions. If you have received this Prospectus as an Electronic Prospectus please ensure that you have received the entire Prospectus accompanied by the Application Form. If you have not, please email the Company and the Company will send to you, for free, either a hard copy or a further electronic copy of this Prospectus or both.

The Company reserves the right not to accept an Application Form from a person if it has reason to believe that when that person was given access to the electronic Application Form, it was not provided together with the Electronic Prospectus and any relevant supplementary or replacement prospectus or any of those documents were incomplete or altered. In such a case, the Application moneys received will be dealt with in accordance with section 722 of the Corporations Act.

10.18 Documents Available for Inspection

Copies of the following documents are available for inspection during normal business hours at the registered office of the Company at Unit 3, 70 Wittenoom Street, East Perth WA 6004:

(a) this Prospectus;

(b) the Constitution; and

(c) the consents referred to in Section 10.16 of this Prospectus.

10.19 Statement of Directors

The Directors report that after due enquiries by them, in their opinion, since the date of the financial statements in the financial information in Section 5 there have not been any circumstances that have arisen or that have materially affected or will materially affect the

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204KALIUM LAKES LIMITED I PROSPECTUSKalium Lakes Limited PROSPECTUS 93

11. AuthorisationThis Prospectus is authorised by the Company and lodged with ASIC pursuant to section718 of the Corporations Act.

Each of the Directors has consented to the lodgement of this Prospectus with ASIC, inaccordance with section 720 of the Corporations Act and has not withdrawn that consent.

This Prospectus is signed for and on behalf of the Company by:

Malcolm Randall

Dated: 4 November 2016

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12. Glossary of Terms These definitions are provided to assist persons in understanding some of the expressions used in this Prospectus.

A$ or $ Australian dollars.

Admission Admission of the Company to the Official List, following completion of the Offer.

Advisor Options Options having the terms and conditions detailed in Section 10.4.

Advisor Option Exercise Price

Has the meaning given in Section 10.4(b).

Advisor Option Expiry Date


Advisor Option Notice of Exercise

Has the meaning given in Section 10.4(e).

Advisor Shares Shares having the terms and conditions details in section 10.1.

Allotment Date The date, as determined by the Directors, on which the Shares offered under this Prospectus are allotted, which is anticipated to be the date identified in the Indicative Timetable.

Applicant A person who submits an Application Form.

Application A valid application for Shares under the Offer made pursuant to an Application Form.

Application Form The application form attached to this Prospectus.

Application Monies Monies received from persons applying for Shares pursuant to the Offer under this Prospectus.

ASIC Australian Securities and Investments Commission.

Associates has the meaning given to that term in the Corporations Act.

ASX Australian Securities Exchange Limited ACN 008 624 691 or, where the context requires, the financial market operated by it.

ASX Settlement Rules ASX Settlement Operating Rules of ASX Settlement Pty Ltd (ABN 49 008 504 532).

Beyondie Potash Project or Project

The Beyondie Potash Project.

Board The board of Directors of the Company.

BOM Bureau of Meteorology.

Brine Liquid solution containing the target potassium metal and sulphate ions that could form potassium sulphate salt.

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BurnVoir BurnVoir Corporate Finance Limited.

Change of Control Change of Control means:

(a) the offeror under a Takeover Bid in respect of all Shares has achieved acceptances in respect of more than 50.01% of Shares and that Takeover Bid has become unconditional;

(b) the announcement by the Company that its Shareholders have, at a Court convened meeting of Shareholders, voted in favour, by the necessary majority, of a proposed scheme of arrangement under which all securities of the Company are to be either:

(i) cancelled; or

(ii) transferred to a third party,

and the Court, by order, approves the proposed scheme of arrangement; or

(c) any person, individually or together with their Associates, acquires a Relevant Interest in 50.01% or more of the total number of Shares on issue by any other means.

CHESS Clearing House Electronic Sub register System.

CIM Canadian Institute of Mining, Metallurgy and Petroleum.

Closing Date The date the Offer closes.

Company or Kalium Lakes

Kalium Lakes Limited ACN 613 656 643.

Constitution The constitution of the Company from time to time.

Corporations Act Corporations Act 2001 (Cth).

Declaration of Trust Has the meaning given in Section 9.6.

DER The WA Department of Environmental Regulation.

Directors The directors of the Company.

DMP The WA Department of Mines and Petroleum.

DoW The WA Department of Water.

DPAW The WA Department of Parks and Wildlife.

Electronic Prospectus The electronic copy of this Prospectus located at the Company's website at www.kaliumlakes.com.au and at www.kaliumlakesshareoffer.com.au.

Eligible Person Has the meaning given in Section 10.5(a).

EPA The WA Environmental Protection Agency.

Executive Service Has the meaning given in Section 9.7.

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Agreement

Exposure Period In accordance with section 727(3) of the Corporations Act, the period of 7 days (which may be extended by ASIC to up to 14 days) after lodgement of this Prospectus with ASIC during which the Company must not process Applications.

FOB Free on board.

GST Goods and Services Tax.

HIN Holder Identification Number.

Independent Expert Snowden Mining Industry Consultants Pty Ltd.

Independent Expert’s Report

The report contained in Section 6.

Indicated Mineral Resource

Has the meaning given to that term in the JORC Code.

Indicative Timetable The indicative timetable for the Offer on page 9 of this Prospectus.

Inferred Mineral Resource


Invitation Has the meaning given in Section 10.5(b).

Investigating Accountant RSM Corporate Australia Pty Ltd.

Investigating Account's Report

The report in Section 5.

JORC Code Means the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves, 2012 edition.

KLP Kalium Lakes Potash Pty Limited ACN 601 436 060.

KTMS Kainite type mixed salts.

K-UTEC K-UTEC AG Salt Technologies.

Listing Rules The listing rules of ASX.

Magnesium Hydroxide Mg(OH)2.

Magnesium Sulphate MgSO4 or Epsom Salts.

Management Options Options having the terms and conditions detailed in Section 10.2(b).

Management Option Exercise Price


Management Option Expiry Date


Management Option Has the meaning given in Section 10.3(e).

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Notice of Exercise

Management Plan Has the meaning given in Section 10.5.

Measured Mineral Resource


Mineral Resource Has the meaning given to that term in the JORC Code.

Minimum Subscription Has the meaning given in Section 1.2.

MOP Muriate of potash or potassium chloride (KCl).

MoU Memorandum of understanding.

Na:K Sodium to potassium ratio.

N-P-K The three primary macro-nutrients essential for plant growth including nitrogen-phosphate-potassium.

Offer The offer by the Company, pursuant to this Prospectus, of 15,000,000 Shares at an issue price of A$0.20 each to raise A$3 million. Oversubscriptions of up to 15,000,000 Shares may be accepted by the Company.

Offer Period The period commencing on the Opening Date and ending on the Closing Date.

Official List The official list of ASX.

Official Quotation or Quotation

Official quotation by ASX in accordance with the Listing Rules.

Opening Date The date specified as the opening date of the Offer in the Indicative Timetable.

Options An option to subscribe for a Share.

Ore Reserve Has the meaning given to that term in the JORC Code.

Performance Rights A performance right having the terms and conditions detailed in Section 10.2.

Performance Conditions Has the meaning given in Section 10.5(e).

Prospectus This prospectus dated 4 November 2016.

Rachlan Has the meaning given in Section 9.6.

Relevant Interest Has the meaning given in the Corporations Act.

Restricted Securities Refers to the Shares that are subject to mandatory restrictions from trading imposed by the ASX as referred to in Section 1.15.

Section A section of this Prospectus.

Security A Share, Option or Performance Right, as the context requires.

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Share A fully paid ordinary share in the capital of the Company.

Share Registry Computershare Investor Services Pty Ltd.

Shareholder Any person holding Shares.

SOP Sulphate of potash or K2SO4.

SOPM SOP magnesia.

SRN Security holder Reference Number.

Tenements Means the tenements granted to the KLP and utilised in relation to the Beyondie Potash Project as detailed in Table 2.1.

WBS Work breakdown structure.

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The following chemical abbreviations may also be utilised in this Prospectus:

Abbreviation for chemical Name of chemical

B Boron

Ca Calcium

Cl Chlorine

Co Cobalt

Cu Copper

K Potassium

KCI Potassium Chloride or MOP

KNO3 Potassium Nitrate

K2SO4 Potassium Sulphate or SOP

Mg Magnesium

MgCl2 Magnesium Chloride or Bischofite

Mg(OH)2 Magnesium Hydroxide

Mo Molybdenum

N Nitrogen

Ni Nickel

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APPLICATION FORMThis Application Form is important. If you are in doubt as to how to deal with it, pleasecontact your stockbroker or professional advisor without delay.You should read the Prospectus dated 4 November 2016 and any relevant supplementaryProspectus (if applicable), carefully before completing this Application Form. TheCorporations Act prohibits any person from passing on this Application Form (whether inpaper or electronic form) unless it is attached to or accompanies a complete and unalteredcopy of the Prospectus and any relevant supplementary Prospectus (whether in paper orelectronic form).

I/we apply for

.A$

I/we lodge full Application Money

Number of Shares in Kalium Lakes Limited at A$0.20 perShare or such lesser number of Shares which may beallocated to me/us.

Individual/Joint applications - refer to naming standards overleaf for correct forms of registrable title(s)

Title or Company Name Given Name(s) Surname

Joint Applicant 2 or Account Designation

Joint Applicant 3 or Account Designation

Enter the postal address - include State and Postcode

Unit Street Number Street Name or PO Box/Other information

City/Suburb/Town State Postcode

Enter your contact details

Contact Name

)(Telephone Number - Business Hours

CHESS Participant

Holder Identification Number (HIN)

XPlease note that if you supply a CHESS HIN but the name and address details on your form do not correspond exactly with the registration details held at CHESS, yourapplication will be deemed to be made without the CHESS HIN, and any issued as a result of the will be held on the Issuer Sponsored subregister.

Payment details - Please note that funds are unable to be directly debited from your bank account

Drawer Cheque Number BSB Number Account Number Amount of cheque

A$Make your cheque, money order or bank draft payable to 'Kalium Lakes Limited'

By submitting this Application Form:• I/we declare that this application is complete and lodged according to the Prospectus, and any relevant supplementary Prospectus, and the declarations/

statements on the reverse of this Application Form,• I/we declare that all details and statements made by me/us (including the declaration on the reverse of this Application Form) are complete and accurate, and• I/we agree to be bound by the Constitution of the Company.

See overleaf for completion guidelines

Samples/000001/000001/i12

*S00000112Q01*

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How to complete this form

Note that ONLY legal entities are allowed to hold securities. Application Forms must be in the name(s) of a natural person(s), companies or other legal entities acceptable to the Company. Atleast one full given name and the surname is required for each natural person. Application Forms cannot be completed by persons less than 18 years of age. Examples of the correct form ofregistrable title are set out below.

Correct forms of registrable title(s)

Type of Investor Correct Form of Registration Incorrect Form of Registration

Individual: Use given names in full, not initials Mr John Alfred Smith JA Smith

Company: use the company’s full title, not abbreviations ABC Pty Ltd ABC P/L or ABC Co

Joint Holdings: use full and complete names Mr Peter Robert Williams &Ms Louise Susan Williams

Peter Robert &Louise S Williams

Trusts: use the trustee(s) personal name(s) Mrs Susan Jane Smith<Sue Smith Family A/C>

Sue Smith Family Trust

Deceased Estates: use the executor(s) personal name(s) Ms Jane Mary Smith &Mr Frank William Smith<Est John Smith A/C>

Estate of late John SmithorJohn Smith Deceased

Minor (a person under the age of 18): use the name of a responsible adult with anappropriate designation

Mr John Alfred Smith<Peter Smith A/C>

Master Peter Smith

Partnerships: use the partners personal names Mr John Robert Smith &Mr Michael John Smith<John Smith and Son A/C>

John Smith and Son

Long Names Mr John William AlexanderRobertson-Smith

Mr John W A Robertson-Smith

Clubs/Unincorporated Bodies/Business Names: use office bearer(s) personalname(s)

Mr Michael Peter Smith<ABC Tennis Association A/C>

ABC Tennis Association

Superannuation Funds: use the name of the trustee of the fund Jane Smith Pty Ltd<Super Fund A/C>

Jane Smith Pty Ltd Superannuation Fund

Shares applied forEnter the number of Shares you wish to apply for. The application must be for aminimum of 10,000 Shares (i.e. A$2,000). Applications for greater than 10,000Shares must be in multiples of multiples of 2,500 Shares (i.e. A$500).Application MoniesEnter the amount of Application Monies. To calculate the amount, multiply thenumber of Shares by the issue price per Share.Applicant Name(s)Enter the full name you wish to appear on the statement of Shareholding. Thismust be either your own name or the name of a company. Up to 3 jointApplications may register. You should refer to the table below for the correctforms of registrable title. Applications using the wrong form of names may berejected. Clearing House Electronic Subregister System (CHESS) particpantsshould complete their name identically to that presently registered in the CHESSsystem.Postal AddressEnter your postal address for all correspondence. All communications to youfrom the Registry will be mailed to the person(s) and address as shown. Forjoint Applicants, only one address can be entered.

Contact DetailsEnter your contact details. These are not compulsory but will assist us if weneed to contact you regarding this application.CHESSThe Company participates in CHESS. If you are a CHESS participant (or aresponsored by a CHESS participant) and you wish to hold allotted to you underthis Application on the CHESS Subregister, enter your CHESS HIN. Otherwise,leave this section blank and on allotment, you will be sponsored by theCompany and allocated a Securityholder Reference Number (SRN).

PaymentMake your cheque, money order or bank draft payble to 'Kalium Lakes Limited'in Australian currency and cross it 'Not Negotiable'. Your cheque, money orderor bank draft must be drawn on an Australian Bank.Complete the cheque details in the boxes provided. The total amount mustagree with the amount shown in box B. Please note that funds are unable tobe directly debited from your bank account.Cheques will be processed on the day of receipt and as such, sufficientcleared funds must be held in your account as cheques returned unpaidmay not be re-presented any may result in your Application being rejected.Paperclip (do not staple) your cheque(s) to the Shortfall Application Form.Cash will not be accepted.Receipt for payment will not be forwarded.

Before completing the Application Form the applicant(s) should read this prospectus to which this application relates. By lodging the Application Form, the applicant agrees thatthis application for Shares in Kalium Lakes Limited is upon and subject to the terms of the prospectus and the Constitution of Kalium Lakes Limited, agrees to take any numberof Shares that may be allotted to the Applicant(s) pursuant to the prospectus and declares that all details and statements made are complete and accurate. It is not necessary tosign the Application Form.

Lodgement of ApplicationApplication Forms must be received by Kalium Lakes Limited by no later than 5.00pm (WST) on 12 December 2016. You should allow sufficient time for this to occur. Return the ApplicationForm with cheque(s) attached to:Computershare Investor Services Pty LimitedGPO Box 52MELBOURNE VIC 3001The Company accepts no responsibility if you lodge the Application Form at any other address or by any other means.Privacy NoticeThe personal information you provide on this form is collected by CIS, as registrar for the securities issuers (the issuer), for the purpose of maintaining registers of securityholders, facilitating distributionpayments and other corporate actions and communications. In addition, the issuer may authorise us on their behalf to send you marketing material or include such material in a corporate communication.You may elect not to receive marketing material by contacting CIS using the details provided overleaf or emailing [email protected]. We may be required to collect your personal informationunder the Corporations Act 2001 (Cth) and ASX Settlement Operating Rules. We may disclose your personal information to our related bodies corporate and to other individuals or companies who assistus in supplying our services or who perform functions on our behalf, to the issuer for whom we maintain securities registers or to third parties upon direction by the issuer where related to the issuer’sadministration of your securityholding, or as otherwise required or authorised by law. Some of these recipients may be located outside Australia, including in the following countries: Canada, India, NewZealand, the Philippines, the United Kingdom and the United States of America. For further details, including how to access and correct your personal information, and information on our privacycomplaints handling procedure, please contact our Privacy Officer at [email protected] or see our Privacy Policy at http://www.computershare.com/au.

If you have any enquiries concerning your application, please contact Kalium Lakes Limited on +61 (0)8 9443 1100.

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www.kaliumlakes.com.au

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KALIUM LAKES LIMITED Unit 3, 70 Wittenoom StreetEast Perth WA 6004

Phone: +61 (0)8 9443 [email protected]

ACN 613 656 643

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