Announcement PDF RareX Limited ACN 105 578 756 Options Prospectus This Prospectus is being issued for up to up to approximately 44,444,474 quoted options exercisable at $0.0675 each and expiring 2 years from the date of issue (Quoted Options) on the basis of 1 free attaching Quoted Option for every 2 Shares subscribed for under the Placement (Offer). The Offer under this Prospectus closes at 5.00pm (WST) on 26 May 2023* THIS IS AN IMPORTANT DOCUMENT AND REQUIRES YOUR IMMEDIATE ATTENTION. IT SHOULD BE READ IN ITS ENTIRETY. IF YOU ARE IN DOUBT ABOUT WHAT TO DO, YOU SHOULD CONSULT YOUR SUITABLY QUALIFIED PROFESSIONAL ADVISER WITHOUT DELAY. The Options offered under this Prospectus are of a speculative nature. *The Company reserves the right, subject to the Corporations Act and Listing Rules to extend the Closing Date for the Offer. Hamilton Locke Table of Contents Important Information 2 Corporate Directory 3 Indicative Timetable 4 Investment Overview 5 1. Details of the Offer 9 2. Application for Quoted Options 13 3. Effect of the Offer 14 4. Risk Factors 16 5. Additional information 23 6. Directors’ Statement and Consent 34 7. Definitions 35 Hamilton Locke Options Prospectus 1 Important Information This Prospectus is dated 24 May 2023 and was lodged with the ASIC on that date with the consent of all Directors. Neither ASIC nor ASX nor their respective officers take any responsibility for the contents of this Prospectus. No Quoted Options will be issued on the basis of this Prospectus any later than 13 months after the date of this Prospectus (being the expiry date of this Prospectus). The Prospectus will be made available in electronic form. Persons having received a copy of this Prospectus in its electronic form may obtain an additional paper copy of this Prospectus (free of charge) from the Company’s registered office by contacting the Company as detailed in the Corporate Directory. The Company will also provide copies of other documents on request (see Section 5.3). The Quoted Options offered by this Prospectus should be considered speculative. Please refer to Section 4 for details relating to investment risks. Applications for Quoted Options will only be accepted on an Application Form attached to or provided by the Company with a copy of this Prospectus either in paper or electronic form. The Corporations Act prohibits any person from passing on to another person an Application Form unless it is accompanied by a complete and unaltered copy of this Prospectus. Revenues and expenditures disclosed in this Prospectus are recognised exclusive of the amount of goods and services tax, unless otherwise disclosed. No person is authorised to give any information or to make any representation in connection with the Offer which is not contained in this Prospectus. Any information or representation not so contained may not be relied on as having been authorised by the Company in connection with the Offer. The Offer constituted by this Prospectus in electronic form is only available to persons receiving an electronic version of this Prospectus and accompanying Application Form within Australia. Hamilton Locke Options Prospectus No action has been taken to permit the offer of Quoted Options under this Prospectus in any jurisdiction other than Australia. The distribution of this Prospectus in jurisdictions outside Australia may be restricted by law and therefore persons into whose possession this document comes should seek advice on 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 Quoted Options in any jurisdiction where, or to any person to whom, it would be unlawful to issue this Prospectus except to the extent permitted below. In accordance with the design and distribution obligations under the Corporations Act, the Company has determined the target market for the offer of Quoted Options issued under this Prospectus. The Company will only distribute this Prospectus to those investors who fall within the target market determination (TMD) as set out on the Company’s website (https://www.rarex.com.au/). By making an application under the Offer, you warrant that you have read and understood the TMD and that you fall within the target market set out in the TMD. This document is important and should be read in its entirety before deciding to participate in the Offer. This does not take into account the investment objectives, financial or taxation, or particular needs of any particular Applicant. Before making any investment in the Company, each Applicant should consider whether such an investment is appropriate to their particular needs, and considering their individual risk profile for speculative investments, investment objectives and individual financial circumstances. Each Applicant should consult their stockbroker, solicitor, accountant or other professional adviser without delay. Definitions of certain terms used in this Prospectus are contained in Section 7. All references to currency are to Australian dollars and all references to time are to the time in Perth, Western Australia unless otherwise indicated. 2 Corporate Directory Directors Jeremy Robinson Non-Executive Chairman Danny Goeman Non-Executive Director Shaun Hardcastle Non-Executive Director Cameron Henry Non-Executive Director John Young Non-Executive Director CEO and Company Secretary James Durrant Chief Executive Officer Oonagh Malone Company Secretary Registered and Principal Office Share Registry Level 1, 338 Barker Road Automic Pty Ltd Subiaco, WA 6008 Level 5, 191 St Georges Terrace Perth, WA 6000 Email: info@rarex.com.au Telephone: 1300 288 664 (within Australia) Website: https://www.rarex.com.au/ +61 2 9698 5414 (outside Australia) Auditor* Joint Lead Managers SW Audit Bell Potter Securities Limited Level 18, 197 St Georges Terrace Level 37, Exchange Plaza 2, The Esplanade Perth, WA 6000 Perth WA, 6000 Phone: +61 8 6383 6593 Canaccord Genuity (Australia) Limited Level 4, 60 Collins Street Melbourne, VIC 3000 Solicitors Hamilton Locke ASX Code: REE Central Park Building Level 48, 152 - 158 St Georges Terrace Perth WA 6000 * These entities are included for information purposes only. They have not been involved in the preparation of this Prospectus. Hamilton Locke Options Prospectus 3 Indicative Timetable Event Date Lodgement of Prospectus with ASIC Opening Date of Offer Wednesday, 24 May 2023 Thursday, 25 May 2023 Issue of Quoted Options offered under this Prospectus Friday, 26 May 2023 Appendix 2A – Quoted Options Friday, 26 May 2023 Closing Date of Offer Friday, 26 May 2023 Commencement of trading on a normal settlement basis of the Quoted Options issued under the Prospectus Monday, 29 May 2023 Note: * The dates and times noted above are indicative only and subject to change. Any material changes will be notified by the Company to ASX. The Company reserves the right to amend any or all of these dates and times, including amending the Closing Date of the Offer, without prior notice subject to the Corporations Act, the Listing Rules and other applicable laws. Hamilton Locke Options Prospectus 4 Investment Overview This Section is intended to highlight key information for potential investors. It is an overview only, and is not intended to replace the Prospectus. Potential investors should read the Prospectus in full before deciding to invest in Quoted Options. Key Information Transaction specific prospectus Further Information Section 5.4 This Prospectus is a transaction specific prospectus for an offer of options to acquire continuously quoted securities (as defined in the Corporations Act) and has been prepared in accordance with section 713 of the Corporations Act. It does not contain the same level of disclosure as an initial public offering prospectus. In making representations in this Prospectus regard has been had to the fact that the Company is a disclosing entity for the purposes of the Corporations Act and certain matters may reasonably be expected to be known to investors and professional advisers whom potential investors may consult. Offer This Prospectus contains an offer of up to approximately 44,444,474 Quoted Options to subscribers under the Placement, on the basis of 1 free attaching Quoted Option for every for every 2 Shares subscribed for under the Placement. Sections 1.1 and 1.2 The Quoted Options will have an exercise price of $0.0675 each and will expire two (2) years from the date of issue. The issue of Placement Shares raised approximately $4.0 million (before costs). The issue of the Tranche 2 Placement Shares will raise an additional $500,000 (before costs). The Tranche 2 Placement Shares and Tranche 2 Quoted Options are subject to Shareholder approval at an upcoming general meeting to be convened shortly (Meeting). Subject to Shareholder approval at the Meeting for the Tranche 2 Quoted Options, the Tranche 2 Quoted Options are expected to be offered to the Tranche 2 Participants under a separate prospectus. No additional funds will be raised through the issue of Quoted Options under the Offer. Eligibility The Offer is limited to participants of the Placement. Sections 1.2 and 1.3 What is the purpose of the Offer? Section 1.3 The primary purpose of the Offer is to remove the need for an additional disclosure document to be issued upon the sale of any Shares that are issued upon conversion of any Quoted Options that are issued under the Offer and to facilitate the quotation of the Quoted Options. Section 4 Risk factors Potential investors should be aware that subscribing for Shares in the Company involves a number of risks. The key risk factors of which investors should be aware are set out in Section 4, including (but not limited to) risks in respect of: (a) Resource Risk: There is inherent uncertainty with mineral resource and ore reserve estimates. Regardless of JORC Code or other Hamilton Locke Options Prospectus 5 Key Information Further Information status, there is a risk that actual mining performance will not deliver performance in line with mineral resource and ore reserve estimates. (b) Exploration & Development Risks: Mineral exploration and development are high-risk undertakings. Even if an apparently viable deposit is identified, there is no guarantee that it can be economically exploited. The future exploration and development activities of the Company may be affected by a range of factors, including geological conditions, limitations on activities due to seasonal weather patterns, unanticipated operational and technical difficulties, industrial and environmental accidents, native title process, changing government regulations and many other factors beyond the control of the Company. (c) Future capital and funding requirements: The Company has no operating revenue and is unlikely to generate any operating revenue unless and until its projects are successfully developed and production commences. The future capital requirements of the Company will depend on many factors including its business development activities. Should the Company require additional funding, there can be no assurance that additional financing will be available on acceptable terms or at all. Any inability to obtain additional financing, if required, would have a material adverse effect on the Company's business, financial condition and results of operations. (d) Environmental Risk: Mining operations have inherent risks and liabilities associated with safety and damage to the environment and the disposal of waste products occurring as a result of mineral exploration and production. The occurrence of any such safety or environmental incident could delay production or increase production costs. Events, such as unpredictable rainfall or bushfires may impact on the Company’s ongoing compliance with environmental legislation, regulations and licences. Significant liabilities could be imposed on the Company for damages, clean-up costs or penalties in the event of certain discharges into the environment, environmental damage caused by previous operations or noncompliance with environmental laws or regulation. (e) General market risks: Share market conditions may affect the value of the Company's Securities regardless of the Company's operating performance. The Company is exposed to general market and economic condition risks including adverse changes in levels of economic activity, exchange rates, interest rates, commodity prices, government policies, employment rates and industrial disruption. Use of funds Section 3.2 No funds will be raised as a result of the Offer. Funds raised from the Placement and any funds raised from the exercise of the Quoted Options will be applied towards: (a) resource definition drilling; Hamilton Locke Options Prospectus 6 Further Information Key Information (b) completion of a definitive feasibility study for Stage 1 phosphate DSO development; (c) completion of a pre-feasibility study for the fully-staged Cummins Range Project; and (d) general working capital. Effect on control of the Company Section 3.5 It is not expected that the Offer will have any effect on the control of the Company. Indicative capital structure Section 3.1 The indicative capital structure upon completion of the Offer is set out below: Existing Maximum Securities to be issued under the Offer Total Shares Quoted Options Unquoted Options Performance Rights 668,275,462 - 21,500,000 58,500,000 - 44,444,474 - - 668,275,462 44,444,474 21,500,000 58,500,000 Directors’ and management personnel participation Section 1.1 Shareholder approval is being sought at the Meeting for the Directors and certain management personnel (or their respective nominees) (Tranche 2 Participants) to subscribe for approximately $500,000 in Placement Shares in aggregate under the Placement, resulting in the issue of 11,111,111 Placement Shares (Tranche 2 Placement Shares) and approximately 5,555,556 free attaching Quoted Options to the Tranche 2 Participants (Tranche 2 Quoted Options). The Tranche 2 Placement Shares and Tranche 2 Quoted Options (together, the Tranche 2 Securities) comprise the following issues: Tranche 2 Placement Shares Tranche 2 Quoted Options Jeremy Robinson and Cameron Henry 6,666,667 3,333,334 John Young 1,266,667 633,334 Shaun Hardcastle 555,556 277,778 Danny Goeman 555,556 277,778 James Durrant 811,112 405,556 Other management personnel 1,255,553 627,777 Director / Management The Tranche 2 Quoted Options are not being included in the total number of Quoted Options being offered under this Prospectus. Subject to Shareholder approval at the upcoming Meeting, the Company intends to issue a separate Hamilton Locke Options Prospectus 7 Key Information Further Information prospectus in connection with an offer to Tranche 2 Participants for the Tranche 2 Quoted Options. Forward looking statements Section 4 This Prospectus contains forward-looking statements which are identified by words such as ‘may’, ‘could’, ‘believes’, ‘estimates’, ‘targets’, ‘expects’, or ‘intends’ 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 considered reasonable. 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 the management. The Directors cannot and do not give any assurance that the results, performance or achievements expressed or implied by 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. The Directors have 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. These forward looking statements are subject to various risk factors that could cause the Company’s actual results to differ materially from the results expressed or anticipated in these statements. These risk factors are set out in Section 4. Hamilton Locke Options Prospectus 8 1. Details of the Offer 1.1 Background to the Offer On 5 May 2023, the Company announced a capital raising of approximately $4.5 million (before costs) (Placement). The Placement is comprised of the following two tranches: (a) the issue of 88,888,886 Shares at an issue price of $0.045 per Share (Placement Shares or Tranche 1 Placement Shares), with one free-attaching Quoted Option for every 2 Shares subscribed for under the Placement (Quoted Options) raising approximately $4.0 million (before costs); and (b) the issue of up to 11,111,111 Shares to the Directors and certain management personnel (or their respective nominees) (Tranche 2 Participants) at an issue price of $0.045 per Share (Tranche 2 Placement Shares), with one free-attaching Quoted Option for every 2 Tranche 2 Placement Shares subscribed for under the Placement (Tranche 2 Quoted Options) (collectively, the Tranche 2 Securities) raising up to approximately $500,000 (before costs). The Tranche 2 Securities comprise the following issues: Tranche 2 Placement Shares Tranche 2 Quoted Options Jeremy Robinson and Cameron Henry(1) 6,666,667 3,333,333 John Young 1,266,667 633,333 Shaun Hardcastle 555,556 277,778 Danny Goeman 555,556 277,778 James Durrant 811,112 405,556 Other management personnel 1,255,553 627,777 Director / Management Note: 1. Subject to Shareholder approval, Mr Robinson and Mr Henry’s Tranche 2 Securities will be held jointly via Churchill SIG Pty Ltd, of which both Mr Robinson and Mr Henry are shareholders and Mr Robinson is the sole director. The Placement Shares were issued on 11 May 2023 using the Company’s available 15% placement capacity under ASX Listing Rule 7.1 and 10% placement capacity under ASX Listing Rule 7.1A. The Placement Shares issued under the Placement were offered to sophisticated and professional investors without disclosure under the Corporations Act. The Tranche 2 Securities to be issued to the Directors (or their respective nominees) are subject to Shareholder approval pursuant Listing Rule 10.11 at an upcoming general meeting to be convened shortly (Meeting). The Tranche 2 Securities to be issued to certain key management personnel (or their respective nominees) are subject to Shareholder approval at the Meeting pursuant Listing Rule 7.1. The Tranche 2 Quoted Options are not being included in the total number of Quoted Options being offered under this Prospectus. Subject to Shareholder approval at the upcoming Hamilton Locke Options Prospectus 9 Meeting, the Company intends to issue a separate prospectus in connection with an offer to Tranche 2 Participants for the Tranche 2 Quoted Options. The Company expects the issue of the Quoted Options to occur on or around 26 May 2023. 1.2 The Offer The Company is offering pursuant to this Prospectus, up to approximately 44,444,474 Quoted Options exercisable at $0.0675 per Quoted Option and expiring two (2) years from the date of issue (Offer). Only parties that were issued Placement Shares may apply for Quoted Options under the Offer. No funds are payable under the Offer. An Application Form in relation to the Offer will be issued to the person eligible to receive Quoted Options under the Offer (or their nominees) together with a copy of this Prospectus in electronic form. Applications for Quoted Options under the Offer must be made on the Application Form accompanying this Prospectus and received by the Company on or before the relevant Closing Date. No funds will be raised as a result of the Offer as the Quoted Options are offered on a freeattaching basis to the Shares issued under the Placement. The Company will apply for quotation of the Quoted Options (see Section 1.8). 1.3 Purpose of the Offer The primary purpose of the Offer is to remove the need for an additional disclosure document to be issued upon the sale of any Shares that are issued upon conversion of any Quoted Options that are issued under the Offer and to facilitate the quotation of the Quoted Options. The Offer is being made such that the relief provided under ASIC Corporations (Sale Offer That Do Not Need Disclosure) Instrument 2016/80 with respect to the on-sale provisions of section 707 of the Corporations Act is available. Specifically, if the Quoted Options are issued with disclosure under this Prospectus, then the Shares issued upon the exercise of any of the Quoted Options can be on-sold within 12 months of their issue, without a disclosure document for the on-sale offer. 1.4 Opening and Closing Dates The Company will accept Application Forms from 25 May 2023 (Opening Date) until 5.00pm (WST) on 26 May 2023 or such other date as the Directors in their absolute discretion shall determine, subject to the requirements of the Listing Rules (Closing Date). 1.5 Minimum subscription There is no minimum subscription for the Offer. 1.6 Withdrawal of Offer The Company reserves the right not to proceed with the Offer at any time before the issue of Quoted Options. Hamilton Locke Options Prospectus 10 1.7 Issue date The Quoted Options will be issued only after ASX has granted permission for the Quoted Options to be quoted. It is expected that Quoted Options will be issued on 26 May 2023 and trading of the Quoted Options on the ASX is expected to commence on 29 May 2023. It is the responsibility of Applicants to determine their allocation prior to trading in the Quoted Options. Applicants who sell Quoted Options before they receive their holding statements do so at their own risk. 1.8 ASX quotation An initial application has been made to the ASX for Official Quotation of the Quoted Options by the way of an Appendix 3B announced on the ASX market announcements platform on 5 May 2023. The Company intends to submit an Appendix 2A for Official Quotation of the Quoted Options on or around 26 May 2023. The Quoted Options offered under this Prospectus will only be admitted to quotation by ASX if the conditions for quotation of a new class of securities are satisfied, which include (amongst other things): (a) there being a minimum of 100,000 of the Quoted Options on issue; and (b) there are at least 50 holders with a marketable parcel (within the meaning of the Listing Rules). If the Quoted Options to be issued under this Prospectus are not admitted to quotation within a period of three months from the date of this Prospectus, any Quoted Options issued will be void in accordance with section 723 of the Corporations Act. 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 Quoted Options offered pursuant to this Prospectus. ASX takes no responsibility for the contents of this Prospectus. 1.9 CHESS The Company participates in the Clearing House Electronic Sub-register System, known as CHESS. ASX Settlement Pty Limited, a wholly owned subsidiary of ASX, operates CHESS in accordance with the Listing Rules and the ASX Settlement Operating Rules. Under CHESS, Applicants will not receive a certificate but will receive a statement of their holding of Quoted Options. If you elect to hold your Securities on the CHESS sub-register, ASX Settlement Pty Limited will send you a CHESS statement. If you elect to hold your Securities on the Issuer Sponsored sub-register, your statement will be despatched by the Share Registry. The statements will set out the number of existing Securities held (where applicable) and the number of new Quoted Options allotted under this Prospectus and provide details of a Shareholder's holder identification number (for Shareholders who elect to hold Securities on the CHESS sub-register) or Shareholder reference number (for Shareholders who elect to hold their Securities on the Issuer Sponsored sub-register). A CHESS statement or Issuer Sponsored statement will routinely be sent to Shareholders at the end of any calendar month during which the balance of their Shareholding changes. Shareholders may request a statement at any other time; however, a charge may be made for additional statements. Hamilton Locke Options Prospectus 11 1.10 International Offer Restrictions The distribution of this Prospectus in jurisdictions outside Australia may be restricted by law and persons who come into possession of this Prospectus 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, and any accompanying Application Form, do not, and is not intended to, constitute an offer of Quoted Options in any jurisdiction in which it would be unlawful. In particular, this Prospectus, and any accompanying Application Form, may not be distributed to any person, and the Quoted Options may not be offered or sold, in any country outside Australia. 1.11 Risk factors An investment in Securities should be regarded as speculative. In addition to the general risks applicable to all investments in listed securities, there are certain specific risks associated with an investment in the Company which are detailed in Section 4. 1.12 Taxation implications The Directors do not consider it appropriate to give Applicants advice regarding the taxation consequences of subscribing for Quoted Options. The Company, its advisers and its officers do not accept any responsibility or liability for any such taxation consequences to Applicants. As a result, Applicants should consult their professional tax adviser in connection with subscribing for Quoted Options. 1.13 Major activities and financial information A summary of the major activities and financial information relating to the Company, for the financial year ended 30 June 2022, can be found in the Company’s Annual Report announced on ASX on 31 October 2022. Copies of this document are available free of charge from the Company. The Company’s continuous disclosure notices (i.e. ASX announcements) since 30 June 2022 are listed in Section 5.3. The Directors strongly recommend that Applicants review the Annual Report and all other announcements prior to deciding whether to participate in the Offer. 1.14 Privacy If you complete an application for Quoted Options, you will be providing personal information to the Company (directly or by the Share Registry). The Company collects, holds and will use that information to assess the Application, service your needs as a Security holder, facilitate distribution payments and corporate communications to you as a Security holder, and carry out administration. The information may also be used from time to time and disclosed to persons inspecting the register, bidders for your Securities in the context of takeovers, regulatory bodies, including the Australian Taxation Office, authorised securities brokers, print service providers, mail houses and the Share Registry. 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 set out in this privacy disclosure 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. Hamilton Locke Options Prospectus 12 If you do not provide the information required on the Application Form, the Company may not be able to accept or process your Application. An Applicant has an entitlement to gain access to the information that the Company holds about that person subject to certain exemptions under law. A fee may be charged for access. Access requests can be made in accordance with Principle 12 of the Australian Privacy Principles and may be made in writing to the Company’s registered office. Collection, maintenance and disclosure of certain personal information is governed by legislation including the Privacy Act 1988 (Cth) (as amended), the Corporations Act and certain rules such as the ASX Settlement Operating Rules. 1.15 Enquiries concerning Prospectus Enquiries relating to this Prospectus should be directed to the Company by telephone on +61 8 6383 6593 or by email via info@rarex.com.au. For general shareholder enquiries, please contact the Share Registry on 1300 288 664 (within Australia) or +61 2 9698 5414 (outside Australia). 2. Application for Quoted Options 2.1 Application Form Persons entitled to apply for Quoted Options under the Offer should complete and submit an Application Form, in accordance with the instructions on the Application Form. Please read the instructions carefully. Please complete the Application Form by filling in the details in the spaces provided. Completed Application Forms must be lodged at any time after the issue of this Prospectus and on or before the Closing Date. 2.2 Acceptance of Application Acceptance of a completed Application Form by the Company creates a legally binding contract between the Applicant and the Company for the number of Quoted Options accepted by the Company. The Application Form does not need to be signed to be a binding acceptance of Quoted Options. If the Application Form is not completed correctly it may still be treated as val