Arrow Minerals : Non-Binding Term Sheet to Acquire 60.5% in Simandou Project

onlyASX: AMD

usepersonalDIRECTORS / OFFICERS Frazer Tabeart

Chairman

Hugh Bresser

Managing Director

Tommy McKeith

Non-Executive Director

Catherine Grant-Edwards & Melissa Chapman

Joint Company Secretary

For

WEBSITE

www.arrowminerals.com.au

Email

[e-mail]

ASX Announcement

13 July 2022

NON-BINDING TERM SHEET TO ACQUIRE 60.5%

IN THE SIMANDOU NORTH IRON PROJECT

Highlights

• Three-monthexclusive due diligence period to assess the Simandou North Iron Project in Guinea, West Africa.
• Simandou North Iron Project covers the northern extension of the Simandou Range, host to the largest undeveloped high-grade iron ore province in the world.
• The iron rich Simandou stratigraphy has been confirmed to continue into the Simandou North Iron Project area.
• Construction of shared purpose rail and port infrastructure to support development of iron ore projects in the region has commenced.

Arrow Minerals Limited (ASX: AMD) (Arrow, or the Company) is pleased to announce that it has executed a non-binding term sheet to acquire up to a 60.5% controlling interest in Amalgamated Minerals Pte. Ltd. (Amalgamated), a private Singaporean registered company, which holds a 100% interest in the Simandou North Iron Project in Guinea, West Africa (Proposed Transaction).

Figure 1. Location map of Guinean Iron Ore Projects including the Simandou North Project.

Arrow Minerals Limited	Suite 5, 63 Hay Street, Subiaco WA 6008	Tel [phone]	Page 1
ABN 49 112 609 846

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The Simandou North Iron Project is an exceptional early-stage opportunity that provides Arrow with access to the premium iron belt in West Africa at a time where significant infrastructural improvements are underway.

SIMANDOU NORTH

The Simandou North Iron Project (Figure 1) consists of exploration permit 22967 (Figure 2 & Appendix 2) which lies at the northern end of the Simandou Range and forms an extension of the stratigraphy that hosts one of the largest undeveloped high-grade iron deposits in the world, including Rio Tinto's Simandou Project with a total measured, indicated and inferred mineral resource estimate of 2 billion tonnes grading 65.5% iron (Rio Tinto Annual Report 2021).

PROSPECTIVITY AND REGIONAL DEVELOPMENT

Historical exploration work undertaken in the wider area by BSGR and Vale through the early to mid 2000's, including airborne magnetic geophysical surveys, geological mapping and completion of 4 diamond drill holes (157m) confirmed the continuation of the iron hosting Simandou Group stratigraphy into the Simandou North permit.

Figure 2. Simandou North Permit map showing airborne magnetic geophysical image and historical drillhole locations within

interpreted Simandou Group stratigraphy and proposed rail line route (Datum WGS84-29N).

Importantly, major capital investment is set to deliver shared purpose infrastructure to the area, expected to be completed by December 2024, enabling commercial production from mines in the area by 2025.

This resulted from the signing of a framework agreement on 25 March 2022 by the government of Guinea with Rio Tinto (Rio) and Winning Consortium Simandou (WCS) for a $US 12bn investment, which included the construction of a 670km railway from Beyla to Forécariah and a deep-water port at Moribayah, Forécariah.

China Railway 18th Bureau Group began building the railway line in 2021 under contract from WCS, and the line is planned to traverse through and in close proximity to the Simandou North Permit.

Arrow Minerals Limited	Suite 5, 63 Hay Street, Subiaco WA 6008	Tel [phone]	Page 2
ABN 49 112 609 846

For personal use only

The Guinean mines minister recently ordered all work to be halted on the development of the Simandou mining and infrastructural project after both Rio and WCS missed an extended deadline to agree on a joint venture. The framework agreement signed in March 2022 guaranteed the Guinean State 15 percent of the Simandou iron product as well as a free and non-dilutable 15 percent stake in the railway and port joint venture. The Guinean mining laws mandate the Guinean State retains a 15 per cent stake in these two mining operations, however, Rio and WCS are seeking clarity over the State's stake in the infrastructure component of Simandou - a rail and port development.

The Guinean Government has stated the Simandou Iron Project would be developed.

The emergence of a combined commitment between Government and Industry opens the way for Arrow to potentially establish itself as a major West African mining company. Simandou North Iron Project allows Arrow to participate in the development of an area where, until now, mineral wealth has been locked up due to infrastructural constraints.

KEY INDICATIVE TERMS OF THE PROPOSED TRANSACTION

It should be noted that the current agreement is in the form of a non-binding term sheet. Whilst the parties have entered into this non-binding term sheet willingly and in good faith, there are no guarantees final definitive agreements will be executed or that the Proposed Transaction will proceed.

The commercial terms upon which Arrow will look to acquire up to a 60.5% interest in Amalgamated under the Proposed Transaction are detailed in Appendix 1. A summary of key terms are outlined as follows.

• Arrow will issue 81,250,000 fully paid ordinary Arrow shares for three-month exclusivity option to acquire up to a 60.5% interest in the Simandou North Project through Amalgamated (Exclusivity Consideration Shares)
• Subject to satisfactory due diligence and certain conditions precedent, including Arrow obtaining all necessary shareholder approvals, Arrow may purchase a 33.3% interest in Amalgamated from Ropa Investments (Gibraltar) Limited for 500,000,000 fully paid ordinary Arrow shares (Stage 1)
• Arrow will look to provide, by way of an unsecured, interest-free shareholder loan, $2.5 million of exploration expenditure funding for the Simandou North Iron Project within 24 months from Stage 1 completion (Expenditure Commitment), which will be repayable in cash by Amalgamated on or before the date that is 15 years after the date on which any part of the loan is first advanced to Amalgamated or such other date as agreed between Arrow and Amalgamated (Loan). The Loan will not be convertible into additional shares in Amalgamated
• If the Expenditure Commitment is satisfied by Arrow and subject to certain conditions precedent, including Arrow obtaining all necessary shareholder approvals, Arrow may purchase a further 27.2% interest in Amalgamated for $1,000,000, either through the issue of Arrow shares based on a 10-day VWAP or cash, at the sole discretion of Arrow, to receive a controlling 60.5% interest in Amalgamated (Stage 2)
• Arrow and the other Amalgamated shareholders will enter into a shareholders deed to govern, amongst other things, the terms on which future exploration on the Simandou North Iron Project may be progressed and funded.

Any acquisition of an interest in Amalgmated will not affect the Company's proposed exploration activities on its projects in Burkina Faso. Arrow today announced the divestment of its non-core Strickland Copper Gold Project (ASX:AMD announcement 13 July 2022) for $600,000. These funds will be used to advance these projects.

Arrow Minerals Limited	Suite 5, 63 Hay Street, Subiaco WA 6008	Tel [phone]	Page 3
ABN 49 112 609 846

For personal use only

In addition, the Company intends to undertake a placement to sophisticated and professional investors at an issue price of $0.006 per share to raise approximately $350,000 (before costs), for the purposes of providing further funds towards the Company's Burkina Faso projects as well as for general working capital purposes, including funding the Company's due diligence investigations in relation to Amalgamated (Placement).

If Arrow decides to proceed with the Proposed Transaction following its successful and satisfactory completion of the due diligence investigations of Amalgamated and the Simandou North Iron Project, and having entered into definitive binding agreements, Arrow may need to raise additional capital to provide the $2.5 million Expenditure Commitment and associated Loan. Arrow anticipates that such capital raise will be undertaken in late October 2022 either via an equity placement to professional or sophisticated investors (to which shareholder approval under Listing Rule 7.1 will be sought) or via a shareholder supported rights issue, in both cases and subject to market conditions, at an anticipated issue price of at least $0.006 per share, being the same issue price as the Placement (Capital Raise). Subject to all applicable laws (including any necessary shareholder approvals), existing Amalgamated shareholder Ropa Investments (Gibraltar) Limited, may potentially look to underwrite the Capital Raise.

Whilst the Company is still in the process of undertaking its due diligence investigations on Amalgamated, it has conducted preliminary due diligence investigations in relation to Amalgamated and its shareholders, including a preliminary review of their respective financial accounts and Amalgamated's interest in the Simandou North Iron Project through its wholly-owned subsidiary, Societe Mineralfields Guinea Sarlu. These preliminary investigations have not indicated any material issues. Arrow will update the market once it has completed its due diligence investigations and the outcome of those enquiries.

Managing Director Hugh Bresser said:

"We are excited to be able to provide shareholders with exposure to this extraordinary opportunity. Global demand for high-grade iron ore continues to grow and the Simandou Range hosts the world's largest undeveloped high-grade iron deposits.

Simandou North Iron Ore Project allows Arrow to participate in the development of an area where until now mineral wealth has locked up due to infrastructural constraints. The emergence of a combined commitment between Government and Industry opens the way for Arrow to potentially establish itself as a major West African mining company."

Arrow engaged the services of CH-Qorum GmbH (an unrelated party) (Facilitator) to introduce and engage Amalgamated in relation to the Simandou North Project and act as an exclusive facilitator to Arrow in connection with the proposed transaction. For purposes of facilitating an introduction to Amalgamated and assisting in securing a successful transaction and investment by Arrow in the Simandou North Project, the Facilitator will be issued 81,250,000 fully paid ordinary shares in Arrow (Facilitator Fee Shares).

The Facilitator Fee Shares and Exclusivity Consideration Shares will be issued under the Company's existing placement capacity pursuant to ASX Listing Rule 7.1. Shareholder approval for the issue of Stage 1 consideration shares and any Arrow shares that may be issued under Stage 2 will be sought in due course.

ARROW MINERALS STRATEGY

This Proposed Transaction is a key component to Arrow's strategy of delivering long-term value to shareholders through the discovery and development of economic mineral deposits in West Africa. Arrow will continue to advance the Vranso Project in Burkina Faso in addition to the Simandou North Iron Project.

Arrow Minerals Limited	Suite 5, 63 Hay Street, Subiaco WA 6008	Tel [phone]	Page 4
ABN 49 112 609 846

For personal use only

INDICATIVE TRANSACTION TIMETABLE*

The indicative timetable for the Proposed Transaction is anticipated to be as follows:

	Event			Indicative Date
	Enter into Non-binding term sheet		12 July 2022
	Finalise definitive binding agreements		early September 2022
	Hold general meeting to obtain shareholder approval for Stage 1		late September 2022
	Acquisition and Capital Raise (to the extent required)
	Complete Stage 1 Acquisition (33.3%)		mid October 2022
	Conduct Capital Raise		late October 2022
	Complete Stage 2 Acquisition (60.5%)		mid to late October 2024

* The above dates are indicative only and may change without notice.

POTENTIAL FUTURE CAPITAL STRUCTURE

The anticipated effect of the Proposed Transaction on the Company's issued share capital is shown in the following table:

	Ordinary Shares Issued			Number
	Existing shares on issue	1,823,931,760
	Facilitation Fee Shares	81,250,000
	Exclusivity Consideration Shares	81,250,000
	Placement	58,333,334
	Share 1 consideration shares	500,000,000
	Capital Raise 1, 2	416,666,667
	Share 2 consideration shares 1, 3	166,666,667
	Total on completion of Proposed Transaction (undiluted basis)	3,128,098,428

Notes:

1. Assumes that shares will be issued at a deemed issue price of $0.006, being the same issue price as the Placement. However, the number of shares that may be issued under the Capital Raising and/or the Stage 2 Acquisition will be dependent upon the share price at the relevant time.
2. Assumes no options, performance rights or convertible notes are exercised prior to the record date of the Capital Raise (if applicable).
3. Assumes that Arrow elects to issue shares in connection with the Stage 2 Acquisition.

The Proposed Transaction will not result in any change to the number of options, performance rights or convertible notes in Arrow.

Announcement authorised for release by Mr Hugh Bresser, Managing Director of Arrow Minerals.

For further information visitwww.arrowminerals.com.auor [e-mail]

Competent Persons Statement

The information in this report that relates to Exploration Results is based on information compiled by Mr Hugh Bresser who is a Member of the Australian Institute of Geoscientists and Australasian Institute of Mining and Metallurgy. Mr Bresser is an employee of Milagro Ventures which provides executive and technical consultancy services to Arrow Minerals, Mr Bresser is in the role of Managing Director of Arrow Minerals, he has sufficient experience that is 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 2012 Edition of the "Australasian Code for Reporting of Exploration Results, Minerals Resources and Ore Reserves". Mr Bresser consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

Arrow Minerals Limited	Suite 5, 63 Hay Street, Subiaco WA 6008	Tel [phone]	Page 5
ABN 49 112 609 846