Coppermoly : Quarterly Activities and Cashflow Reports

30 January 2023	ASX Code: COY
	December 2022 Quarterly Activities Report

The following report details the operating and corporate activities of Coppermoly Ltd (Coppermoly or the Company) for the quarter ended 31 December 2022.

SUMMARY

• Agreement to Sell Papua New Guinea Projects.
• Coppermoly is well capitalised with cash reserves of $1.4 million as of 31 December 2022.

Exploration Projects

Papua New Guinea Exploration Projects

The Company advised in December that it has entered into a legally binding share purchase deed (SPA) for the sale of all of the shares in its wholly owned subsidiary, Copper Quest PNG Limited (Sale Shares) (Copper Quest), the holder of the Company's exploration licences in West New Britain in the Independent State of Papua New Guinea (PNG), to Ever Leap Services Limited (Buyer) (the Company's largest shareholder) (Proposed Sale).

The Proposed Sale follows the outbreak of COVID-19 and resulting restrictions on travel and disruption to exploration activities over the last few years and will enable the Company to focus on its highly prospective grounds for copper gold and critical minerals in the Eastern Successions of Mt Isa, Northwest Queensland where management can more effectively progress exploration activities.

The consideration for the Proposed Sale comprises the buy-back and cancellation by the Company of approximately 1,955,024,388 fully paid ordinary shares in the Company (Shares) held (or to be held) by the Buyer and certain other major Shareholders and directors (Buyback), together with a cash payment to the Company of $500,000.

As such, the Proposed Sale will also help to address any perceived concentration of voting power in the Company, with the hope that this will facilitate greater interest and financial support of the Company from the Australian financial community, reducing financial reliance on a few key shareholders.

The Proposed Sale is subject to, among, other things, Shareholder approval and other usual regulatory approvals, further details of which are contained in the Key Term Summary contained in this announcement and will be further documented in a notice of meeting seeking Shareholder approval for the Proposed Sale, which is expected to be dispatched in late February/ early March.

The Company currently has an interest in the following mineral exploration licenses in PNG:

Papua New Guinea

EL 1043 Mt Nakru1	7 December 20222	47km2	West New Britain
EL 2379 Simuku1	10 September 20212	122km2	West New Britain
EL 2514 Mak Mak	11 September 20212	61km2	West New Britain
EL 2578 Kori River	24 February 2023	396km2	West New Britain
EL 2638 Metelen River	17 May 20222	246km2	West New Britain

The Company's exploration territory in PNG is highly prospective for large, porphyry style and shallow felsic dome hosted, copper-molybdenum-gold deposits with substantial mineral resources already defined at Mt Nakru and Simuku, which are two of the Company's most advanced projects.

Key Terms of Proposed Sale

The SPA is between, among others, the Company, the Buyer and a number of the Company's major shareholders (Major Shareholders) and several directors of the Company (Directors), and contains the following terms:

1. Consideration: The purchase price comprises:
2. 1. $500,000 payable to the Company on Completion (Cash Amount);
   2. the Buyer, the Major Shareholders and the Directors buying back and cancelling their Shares.
3. Conditions Precedent: Completion is subject to various conditions precedent being satisfied before 30 April 2023 (or such later date as the parties agree in writing), including:
4. 1. the Company having obtained shareholder approval for:
   2. 1. the acquisition and cancellation of all of the Shares held by the Major Shareholders and the Directors (Buy-backShares);
      2. the transfer of the Sale Shares to the Buyer, including for the purpose of Listing Rule 10.1; and
      3. the variation to the number of Shares to be issued to Jade Triumph International Limited (Jade Triumph) under the terms of the convertible note held by it Jade Convertible Note Agreement) (from 60,000,000 to 170,000,000) (the Jade Triumph Conversion Shares);
   3. various regulatory approvals, including:
   4. 1. Copper Quest having obtained shareholder approval for the transaction under section 110 of the Companies Act (PNG);
      2. the Deed and this transaction being approved by the Minister for Mining in PNG for the purposes of the Mining Act (PNG);
      3. the Company being satisfied that ASIC and ASX have issued or provided consents or approvals, or have done other acts or things, which have not been withdrawn or revoked before Completion, that the Company considers necessary or desirable to give effect to this transaction and the Deed;

1. As at the date of this Notice, Coppermoly has a 72% interest in EL 1043 Mt Nakru and EL 2379 Simuku, together known as the West New Britain Projects (WNB Projects), which were previously subject to a farm-in agreement with Barrick, and for which Barrick still holds a nominal 28% interest, which Coppermoly has a binding agreement to acquire, completion of which will be affected on the payment of a further $4.5 million to Barrick within 6 months following the commencement of commercial production at the WNB Projects.
2. As at the date of this Notice, Coppermoly has submitted renewal applications for these tenements in accordance with the regulatory processes prescribed by the PNG Mining Act.

1. 1. 1. such other consents and approvals from government agencies that the Company and Buyer agree are desirable; and
   2. the Company, the Buyer and Barrick (PNG Exploration) Limited (Barrick) entering into a deed of novation to novate the Company's obligations and interest in the re-acquisition deed between the Company, Copper Quest and Barrick, to the Buyer, pursuant to which the Company guaranteed Copper Quest's obligation to pay Barrick $4,500,000 on the commencement of production.
2. Resignation: As part of the Completion obligations, Mr Jian Xuan is expected to resign as a Director of the Company.

The SPA also contains various representations, warranties and negative covenants usual for a transaction of this sort. To facilitate implementation of the Proposed Sale, Jade Triumph has agreed to a six (6) month extension of the Jade Triumph Convertible Note, to facilitate the calling of the necessary meeting to convert the Jade Triumph Convertible Notes into Shares.

Effect on Capital Structure

The number of Shares to be bought back include approximately 1,769,570,023 Shares on issue as at the date of this announcement, together with the 170,000,000 Jade Triumph Shares to be issued as part of the conversion of the Jade Triumph Convertible Note and any further Shares to be issued to the Directors (expected to be 5,151,455 in lieu of Directors fees per Director, subject to Shareholder approval) which are held as follows:

	Shareholder Name			Buy-back Shares			% Pre Conversion			Buy-back Shares			% Post Conversion
			(Pre-Conversion)					(Post-Conversion)
	Ever Leap Services	924,742,508		42.15%		924,742,508		38.86%
	Limited
	Shanghai Fuyuan	404,170,658		18.42%		404,170,658		16.99%
	Investments Limited
	Shenzhen Beilite Jades	364,444,444		16.61%		364,444,444		15.32%
	Limited
	Jade Triumph	40,000,000		1.82%		210,000,000		8.83%
	International Ltd
	Mr Jincheng Yao	16,109,075		0.73%		21,260,5303		0.89%
	Mr Zule Lin	14,345,057		0.65%		19,496,5123		0.82%
	Mr Jian Xuan	5,758,281		0.26%		10,909,7363		0.56%

The primary effect of the Proposed Sale is to reduce the number of Shares on issue and to increase the proportionate interest of Coppermoly's remaining Shareholders.

3 Includes 5,151,455 Shares expected to be issued in lieu of Directors fees, subject to Shareholder approval.

The below table sets out the effect of the Proposed Sale on Coppermoly's capital structure if Completion of the Proposed Sale occurs, including the number and percentage of Shares on issue as at the date of this announcement and in the event that Completion occurs.

Description	As at 12 December 2022	Post Proposed Sale
Coppermoly Shares Total	2,193,956,929	424,386,906
Coppermoly Shares (excluding Buyback Shares)	424,386,906 (19.34%)	424,386,906 (100%)
Coppermoly Options	Nil.	Nil.
Coppermoly Convertible Notes	170,000,0004	Nil.

Substantial Shareholders of Coppermoly

As at the date of this Notice, the Major Shareholders hold the following fully paid ordinary shares in Coppermoly (Shares):

Major Shareholder	Coppermoly Shares Held	%
Ever Leap Services Limited	924,742,508	42.150%
Shanghai Fuyuan Investments Limited	404,170,658	18.422%
Shenzhen Beilite Jades Limited	364,444,444	16.611%
Jade Triumph5	40,000,000	1.823%
Total securities held	1,733,357,610	79.006%

As noted above, the consideration payable for the Proposed Sale is the cancellation of Shares held by the Buyer and certain other major shareholders and directors by the Company, and a payment to Company of the Cash Amount.

As a result, immediately following Completion, it is believed that the following Shareholders will have Voting Power in the Company of five percent (5%) or more in the Company:

Holder of Voting Power	Coppermoly Shares Held	%
Dr Wanfu Huang	108,580,702	25.59%
Barrick Australia Pty Ltd	73,201,447	17.25%
Mr Ma Piwu	52,737,609	12.43%
Mr Joseph Tullio	33,417,627	7.87%

Other

The ASX has previously advised the Company that, based solely on the information provided to it, and on the basis that Shareholder approval will be required pursuant to Listing Rule 10.1 and the relevant provisions of the Corporations Act, which, in turn, requires the preparation and provision of an Independent Expert's Report opining as to whether the Proposed Sale is fair and reasonable to the shareholders whose votes are not to be disregarded, Listing Rules 11.1.2, 11.1.3 and 11.2 do not apply to the Proposed Sale.

1. The Jade Convertible Notes have a face value of $1,200,000 and have accrued interest of approximately $625,000 as at 30 June 2022, which convertible notes are proposed to be converted to 170,000,000 Shares (and bought-back) as a condition of the SPA.
2. As per footnote 4 above.

Exploration Projects in Australia

During the March quarter, the Queensland Department of Natural Resources, Mines and Energy ("DNR"). granted exploration license EPM 27836 (Mount Tracey Project) to the Company. Thus the Company holds substantial prospective ground for copper gold mineralisation in the Eastern Succession, Mount Isa Inlier, northwest Queensland. Ongoing data reviewing and modelling on geophysical anomies are planned to be completed in the first quarter of 2023.

EPM 27836 (Mount Tracey Project)

EPM27836 covers an area of approximately 294 km2, and lies immediately to the south of the previously granted EPM27835 (Fox Creek Project), which comprises an area of approximately 320 km2.

The Queensland Mineral database records numerous Cu-Au occurrences within the Eastern Succession. The most significant occurrences include Ernest Henry (167 Mt @ 1.1% Cu; 0.54 g/t Au), Eloise (3.2 Mt @5.8% Cu; 1.5g/t Au; 19g.t Ag), Osborne (11.2 Mt @ 3.51% Cu; 1.49 g/t Au), Mt Elliot (3.3 Mt @ 3.6% Cu; 1.8 g/t Au), Starra (6.9 Mt @ 1.65% Cu; 4.8 g/t Au) (Figure 1).

Extensive research on mineralisation model and implication in exploring for those Cu-Au deposits highlighted several key elements: (1) contact zones across major stratigraphic packages such as the Corella/Staveley Formation and Soldiers Cap Group; (2) the district scale basement structure such as the Cloncurry Fault; (3) presence of mafic intrusives / extrusives; (4) spatial proximity to significant granitoids such as the Williams-Naraku Granite.

The Cloncurry Fault is a significant structural zone in the Eastern Succession, striking north-westerly over 150 km in length and extending continuously to at least 20km depth. This fault is broadly associated with a major lithological contact, separating cover sequence units in the Soldiers Cap and Corella/Staveley Formation. It is spatially associated with a series of plutons such as the Saxby Granite and Squirrel Hills Granite. It is recognised to have been a major fluid channel over a significant period of time. Numerous Cu-Au occurrences occur along this fault zone (Figure 2).

EPM27835, contains a significant portion of the Cloncurry Fault (Figure 2).

The tenement area is deemed highly prospective for base metal and gold mineralisation with geological resemblances to the Eloise Cu-Au and Starra Cu-Au deposits.

There are numerous historic copper workings in the tenement area. Three of those areas, are Mount Kalkadoon Cu-Au Zone, Lorna Miss Hit Cu-Au Zone and Fox Extension Cu-Au Zone. Preliminary modelling of historic data warrants further exploration on those zones (Figure 2).