Announcement PDF DY6 Metals Ltd ACN 663 592 318 OPTIONS PROSPECTUS This Prospectus is being issued for the following offers: (a) A non-renounceable pro-rata issue of 29,250,000 Loyalty Options on the basis of one (1) unquoted Loyalty Option for every two (2) Shares held on the Record Date at an issue price of $0.007 to raise approximately $204,750 (before costs) (Loyalty Options Offer); and (b) Any shortfall under the Loyalty Options Offer on the terms set out in Section 1.2 of the Prospectus (Shortfall Offer), (together, the Offers). The Loyalty Options Offer closes at 5:00pm (WST) on 14 January 2025.* The Loyalty Options Offer is fully underwritten. Refer to Section 5.9 of the Prospectus for details regarding the terms of the underwriting. 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 professional adviser without delay. An investment in the Loyalty Options offered in connection with this Prospectus should be considered of a speculative nature. * The Company reserves the right, subject to the Corporations Act, Listing Rules and other applicable laws to extend the Offer Closing Date without prior notice. DOC ID 1265158133/V6 IMPORTANT INFORMATION This Prospectus is dated 19 December 2024 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 Loyalty 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). A copy of this Prospectus is available for inspection at the registered office of the Company at Level 8, 99 St Georges Terrace, Perth WA 6000 during normal business hours. The Prospectus will be made available in electronic form on the Company's website at https://dy6metals.com/ and the ASX markets platform. 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. The Company will not apply for Official Quotation by ASX of the Loyalty Options offered by this Prospectus. The Loyalty Options offered by this Prospectus should be considered speculative. Please refer to Section 4 for details relating to investment risks. Applications for Loyalty Options will only be accepted on an Entitlement and Acceptance 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 Entitlement and Acceptance Form unless it is accompanied by a complete and unaltered copy of this Prospectus. No person is authorised to give any information or to make any representation in connection with the Offers 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 Offers. No action has been taken to permit the offer of Loyalty Options under this Prospectus in any jurisdiction other than Australia and New Zealand, except to the extent below. The distribution of this Prospectus in jurisdictions outside Australia and New Zealand 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 Loyalty Options in any jurisdiction where, or to any person to whom, it would be unlawful to issue this Prospectus. In particular, this document may not be distributed to any person, and the Securities may not be offered or sold, in any country outside Australia, except to the extent permitted below. New Zealand The Loyalty Options are not being offered to the public within New Zealand other than to existing shareholders of the Company with registered addresses in New Zealand to whom the offer of these securities is being made in reliance on the Financial Markets Conduct (Incidental Offers) Exemption Notice 2021. This Prospectus has been prepared in compliance with Australian law and has not been registered, filed with or approved by any New Zealand regulatory authority under the Financial ii DOC ID 1265158133/V6 Markets Conduct Act 2013. This Prospectus is not a product disclosure statement under New Zealand law and is not required to, and may not, contain all the information that a product disclosure statement under New Zealand law is required to contain. In accordance with the design and distribution obligations under the Corporations Act, the Company has determined the target market for the offer of Loyalty 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://dy6metals.com/). By making an application under the Offers, 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 Offers. This does not take into account the investment objectives, financial or taxation, or particular needs of any Applicant. Before making any investment in the Company, each Applicant should consider whether such an investment is appropriate to his/her particular needs, and considering their individual risk profile for speculative investments, investment objectives and individual financial circumstances. Each Applicant should consult his/her stockbroker, solicitor, accountant or other professional adviser without delay. Some of the risk factors that should be considered by potential investors are outlined in Section 4. 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 WST unless otherwise indicated. iii DOC ID 1265158133/V6 CORPORATE DIRECTORY Existing Board of Directors Mr Daniel Smith Non-Executive Chairman Mr Myles Campion Non-Executive Director Mr John Kay Non-Executive Director Dr Nannan He Non-Executive Director Company Secretary Mr John Kay Registered and Principal Office Share Registry* Level 8, 99 St Georges Terrace Perth WA 6000 Computershare Investor Services Pty Limited Phone: +61 8 9486 4036 Level 17, 221 St Georges Terrace Perth, WA, Australia Email: info@dy6metals.com Website: https://dy6metals.com/ Telephone: +61 8 9415 4000 Corporate Lawyers HWL Ebsworth Lawyers Level 20, 240 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. iv DOC ID 1265158133/V6 INDICATIVE TIMETABLE EVENT Lodgement of Prospectus with ASIC Announcement of Loyalty Options Offer and lodgement of Appendix 3B with ASX Notice to Option holders Ex-date Record Date for the Loyalty Options Offer Notice to ineligible shareholders Despatch of Prospectus and Entitlement and Acceptance Form Opening date of Loyalty Options Offer (9.00am Perth time) Last date to extend the closing date of Loyalty Options Offer (before noon Sydney time) Closing date of Loyalty Options Offer (5.00pm Perth time)* ASX and Underwriters notified of under subscriptions Underwriters subscribe for Shortfall under terms of Underwriting Agreement Issue date and lodgement of Appendix 3G for New Options offered under the Offer (before noon Sydney time) Issue date and lodgement of Appendix 3G for New Options offered under the Shortfall Offer Expected date for despatch of new holding statements DATE 19 December 2024 20 December 2024 20 December 2024 27 December 2024 30 December 2024 3 January 2025 3 January 2025 3 January 2025 9 January 2025 14 January 2025 17 January 2025 21 January 2025 21 January 2025 22 January 2025 22 January 2025 Note * The Directors may extend the Offer Closing Date by giving at least three (3) Business Days' notice to ASX. As such the date the Loyalty Options issued under the Offers are expected to commence trading on ASX may vary. v DOC ID 1265158133/V6 TABLE OF CONTENTS Section Page No. 1. Details of the Offer ................................................................................................................. 1 2. Action required by Eligible Shareholders ........................................................................... 8 3. Effect of the Offers .............................................................................................................. 11 4. Risk factors .......................................................................................................................... 14 5. Additional information ........................................................................................................ 28 6. Directors' Statement and Consent ..................................................................................... 44 7. Definitions ............................................................................................................................ 45 vi DOC ID 1265158133/V6 LETTER FROM THE BOARD Dear Shareholders, On behalf of the Directors, I am pleased to offer you the opportunity to participate in this Loyalty Options Offer for Loyalty Options. Eligible Shareholders who hold Shares on the Record Date are offered the opportunity to subscribe for 1 unquoted Loyalty Option for every 2 Shares held on the Record Date. The Loyalty Options are offered at a nominal issue price of $0.007 each, and will be exercisable at $0.08 each and expire 4 years from the date of issue. The full terms and conditions of the Loyalty Options are in Section 5.1 of this Prospectus. This Prospectus also contains a Shortfall Offer of Shortfall Options to Eligible Shareholders who subscribe for their full Entitlement under the Loyalty Options Offer. Any Shortfall Options issued pursuant to the Shortfall Offer will be issued on the same terms and conditions as the Loyalty Options. The Loyalty Options Offer is fully underwritten. Details regarding the terms of the underwriting are set out in Section 5.9 of this Prospectus. Please read in full the details on how to submit your application for Loyalty Options and the Shortfall, which are set out in Section 2 of this Prospectus. Enquiries relating to this Prospectus should be directed to the Company Secretary by telephone on +61 8 9486 4036. You should also consult your stockbroker, solicitor, accountant or other professional adviser to evaluate whether or not to participate in the Loyalty Options Offer. This Prospectus contains detailed information about the Offers and the current and proposed operations of the Company, as well as the risks pertaining to an investment in the Company. Potential investors in the Company should carefully consider those risks (see Section 4). On behalf of the Board, I look forward to your continued support and on updating you on the Company’s progress. Yours faithfully Daniel Smith Non-Executive Chairman vii DOC ID 1265158133/V6 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 Loyalty Options. Key Information Further Inform ation Transaction specific prospectus 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. Risk factors Section 4 Potential investors should be aware that subscribing for Loyalty Options 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: • • • • • • Limited operating history; Operating in Malawi; Grant and renewal of Tenements; Mineral rights and licences and uncertainty of acquiring or extending the necessary mining licence, permit and access rights in Malawi; Early-stage exploration; and Future capital needs and additional funding. Refer to Section 4.1 for further details. Loyalty Options Offer and underwriting Section 1.1 The Loyalty Options Offer is a non-renounceable loyalty offer of one (1) unquoted Loyalty Option for every two (2) Shares held on the Record Date, at an issue price of $0.007 per Loyalty Option. The Loyalty Options will have an exercise price of $0.08 each and will expire 4 years from the date of issue. The Loyalty Options Offer will raise approximately $204,750 (before costs). The Loyalty Options Offer is fully underwritten. Details regarding the terms of the underwriting are set out in Section 5.9 of this Prospectus. Shortfall Offer Any Entitlement not taken up pursuant to the Loyalty Options Offer (if any) will form the Shortfall Offer. Eligible Shareholders will be entitled to apply for Loyalty Options under the Shortfall Offer. Sections 1.2 and 5.9 viii DOC ID 1265158133/V6 Key Information Further Inform ation The Shortfall Offer is a separate offer made pursuant to this Prospectus and will remain open for up to three (3) months following the Offer Closing Date (or such shorter period as determined by the Directors). All Shortfall Options issued under the Shortfall Offer shall be issued on the same terms as the Loyalty Options being offered under the Loyalty Options Offer (including the issue price). Eligible Shareholders The Loyalty Options Offer is made to Eligible Shareholders only. Eligible Shareholders are those holders of Shares who: • • Sections 1. 15 and 1.16 are the registered holder of the Shares as at 5.00pm (WST) on the Record Date; and have a registered address in Australia or New Zealand or, subject to the offer restrictions in Section 1.15, a jurisdiction where it would be lawful to participate in the Loyalty Options Offer. Use of funds Section 3.2 It is currently intended that any funds raised as a result of the Offers (including pursuant to the exercise of any Loyalty Options) will be used towards the expenses of the Offers, continued development of the Company's existing business strategies and for working capital purposes. Effect on control of the Company Section 1.7 No investor or existing Shareholder is anticipated to hold a voting power of 20% or more as a result of the Offers or the Underwriting Agreement. ix DOC ID 1265158133/V6 Key Information Further Inform ation Indicative capital structure and pro-forma statement of financial position Sections 3.1 and 3.3 The indicative capital structure upon completion of the Offers is set out below: Shares Loyalty Options Unquoted Options Unquoted Performance Rights Balance at the date of this Prospectus 58,500,000 Nil 9,000,000 5,300,000 Maximum to be issued pursuant to the Loyalty Options Offer Nil 29,250,000 Nil Nil 58,500,000 29,250,000(1) 9,000,000 5,300,000 Total Notes: 1. Assumes the Loyalty Options Offer is fully subscribed. The pro-forma statement of financial position showing the effect of the Offers is in Section 3.3. Directors' participation Sections 1.4 and As at the date of this Prospectus, Directors eligible to participate have indicated that they (or their respective nominees) intend to take up all of their Entitlement 5.10(b) under the Loyalty Options Offer. As set out in Section 1.4, the Company has entered into an Underwriting Agreement with the Underwriters (each Directors), pursuant to which Mr Daniel Smith (or his nominees), Dr Nannan He (or her nominees), and Mr Myles Campion (or his nominees) have agreed to fully underwrite the Loyalty Options Offer in the following proportions: • • • Mr Daniel Smith (or his nominees): 65%; Dr Nannan He (or her nominees): 20%; and Mr Myles Campion (or his nominees): 15%. Forward looking statements Important Information This Prospectus contains forward-looking statements which are identified by and Section words such as 'may', 'could', 'believes', 'estimates', 'targets', 'expects', or 4 '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. x DOC ID 1265158133/V6 Key Information Further Inform ation 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. xi DOC ID 1265158133/V6 1. Details of the Offers 1.1 Loyalty Options Offer The Company is making a non-renounceable pro rata offer of Loyalty Options at an issue price of $0.007 each to Eligible Shareholders on the basis of one (1) unquoted Loyalty Option for every two (2) Shares held at 5:00pm (WST) on the Record Date. Each Loyalty Option will have an exercise price of $0.08 each and expire 4 years from the date of issue. As at the date of this Prospectus, the Company has on issue 58,500,000 Shares (of which 8,089,167 are escrowed), 9,000,000 unquoted Options (all of which are escrowed) and 5,300,000 unquoted Performance Rights (500,000 of which are escrowed). Assuming no Options are exercised into Shares and no Performance Rights vest prior to the Record Date, the Loyalty Options Offer is for a maximum of approximately 29,250,000 Loyalty Options to raise approximately $204,750 (before costs). Where the determination of the entitlement of any Eligible Shareholder results in a fraction of a Loyalty Option, such fraction will be rounded down to the nearest whole Loyalty Option. Refer to Section 5.1 for a summary of the terms and conditions of the Loyalty Options under the Loyalty Options Offer. Shares issued upon exercise of the Loyalty Options will be fully paid and will rank equally with the Company's existing Shares on issue at the date of this Prospectus. A summary of the rights and liabilities attaching to Shares is in Section 5.2. Please refer to Section 2 for details on how to apply for Loyalty Options under the Loyalty Options Offer. 1.2 Shortfall Offer Any Entitlement not taken up pursuant to the Loyalty Options Offer (if any) will form the Shortfall under the Shortfall Offer. The Shortfall Offer is a separate offer made pursuant to this Prospectus and will remain open for up to three (3) months following the Offer Closing Date (or such shorter period as determined by the Directors). All Shortfall Options shall be issued on the same terms as the Loyalty Options being offered under the Loyalty Options Offer (including the issue price). Eligible Shareholders who take up their full Entitlement under the Loyalty Options Offer may apply for Shortfall Options under the Shortfall Offer by completing the prescribed section on the Entitlement and Acceptance Form designated to the Shortfall Offer and paying the appropriate Application Monies in accordance with the instructions set out on the Entitlement and Acceptance Form. Separate application forms will be provided, together with a copy of this Prospectus, to other investors who are not currently Eligible Shareholders who are invited to participate in the Shortfall Offer (Shortfall Application Form). DOC ID 1265158133/V6 1 The Board may elect to cap the number of Shortfall Options that are to be allotted to Applicants under the Shortfall Offer, having regard to: (a) the number of Loyalty Options that an Applicant is entitled to subscribe for pursuant to its Entitlement relative to the number of Shortfall Options that it has applied for; (b) the total number of Shortfall Options available for subscription; and (c) the number of Securities held by an Eligible Shareholder after the completion of the Loyalty Options Offer. The Directors otherwise reserve the right to issue the Shortfall at their absolute discretion, subject to the policy above and any restrictions imposed by the Corporations Act and the Listing Rules. As such there is no guarantee that Applicants under the Shortfall Offer will receive any Shortfall Options applied for under the Shortfall Offer. The Directors reserve the right to issue to an Applicant a lesser number of Shortfall Options than the number for which the Applicant applies, or to reject an Application for Shortfall Options, or to not proceed with placing the Shortfall Options. In that event, Application Monies will be refunded by the Company (without interest) in accordance with the provisions of the Corporations Act. It is however a term of the Shortfall Offer that, should the Company scale back applications for Shortfall Options in accordance with the allocation policy described above, the Applicant will be bound to accept such lesser number allocated to them. Acceptance of a completed Application for Shortfall Options by the Company creates a legally binding contract between the relevant Applicant and the Company for the number of Shortfall Options accepted by the Company. The Application for Shortfall Options does not need to be signed to be a binding acceptance of Loyalty Options. If the Application for Shortfall Options is not completed correctly it may still be treated as valid. The Directors' decision as to whether to treat an Application for Shortfall Options as valid and how to construe, amend or complete the Application, is final. The Shortfall Options will be issued to Mr Daniel Smith (or his nominees), Mr Myles Campion (or his nominees) and Dr Nannan He (or her nominees) in accordance with their obligation to subscribe for the Shortfall Options under their Underwriting Commitments subject to the discretion of the Directors to allocate Shortfall Options to Shareholders who apply for Shortfall Options. The Directors note that no Securities will be issued to an applicant under this Prospectus if the issue of Securities would contravene the takeover prohibition in section 606 of the Corporations Act. 1.3 Opening and Closing Dates In terms of the Loyalty Options Offer, the Company will accept Entitlement and Acceptance Forms from 3 January 2025 until 5:00pm (WST) on 14 January 2025 or such other date as the Directors in their absolute discretion shall determine, subject to the requirements of the Listing Rules (Offer Closing Date). The Shortfall Offer will remain open for up to three (3) months following the Offer Closing Date unless closed earlier at the Directors' discretion. DOC ID 1265158133/V6 2 1.4 Underwriting Three of the Directors of the Company, being Mr Daniel Smith, Dr Nannan He and Mr Myles Campion (Underwriters), have agreed to underwrite the Loyalty Options Offer in the following proportions: (a) Mr Daniel Smith (or his nominees): 65%; (b) Dr Nannan He (or her nominees): 20%; and (c) Mr Myles Campion (or his nominees): 15%, (Underwriting Commitment) pursuant to an underwriting agreement between the Company, Mr Daniel Smith, Dr Nannan He, and Mr Myles Campion (Underwriting Agreement), resulting in the Loyalty Options Offer being fully underwritten. If the Underwriters are not required to subscribe for a total of 33% of their Underwriting Commitment due to the take up of the Loyalty Options Offer by Shareholders, being a total of 9,652,500 Loyalty Options, it is proposed that a meeting of shareholders be called to approve the grant to the Underwriters of additional Loyalty Options. Refer to Section 5.9 of the Prospectus for further details in relation to the Underwriting Agreement. 1.5 Minimum subscription There is no minimum subscription for the Offers. 1.6 Withdrawal of Offers The Company reserves the right not to proceed with the Offers at any time before the issue of Loyalty Options. If the Offers do not proceed, the Company will return all Application Monies, without interest, as soon as practical after giving notice of its withdrawal. 1.7 Effect on control of the Company The Company is of the view that the Offers will not affect the control (as defined by section 50AA of the Corporations Act) of the Company. No investor or existing Shareholder will have a voting power greater than 20% as a result of the completion of the Offers or the Underwriting Agreement. Where Loyalty Options are exercised into Shares, the voting power of the Shareholders who exercise the Loyalty Options will increase. The likelihood of Loyalty Options being exercised is dependent on the price of Shares from time to time until the Loyalty Options expire. 1.8 Substantial shareholders Based on available information as at the date of this Prospectus, those persons which together with their associates have a voting power in 5% or more of the Shares on issue are set out below: DOC ID 1265158133/V6 3 Substantial Shareholder 1.9 Number of Shares Voting power Zhenshi Group (Hk) Heshi Composite Materials Co Limited 7,500,000 12.82% Chung Nam New Material Company Limited 5,000,000 8.55% Bridge The Gap Trading Pty Ltd & Orwellian Investments Pty Ltd 4,499,227 7.69% First Arrow Investments Pty Ltd <The First Arrow A/C> 3,605,000 6.16% Potential dilution Shareholders should note that if they do not participate in the Loyalty Options Offer, their holdings are likely to be diluted if the Loyalty Options are issued and subsequently exercised (as compared to their holdings and number of Shares on issue as at the date of the Prospectus). Examples of how the dilution from the Loyalty Options Offer, may impact Shareholders are set out in the table below: Holder Holding as at Record Date % at Record Date Entitlement under the Loyalty Options Offer % holding % holdings if if Entitlement Entitlement not taken taken up(1) up(2) Shareholder 1 7,500,000 12.82% 3,750,000 12.82% 8.55% Shareholder 2 5,000,000 8.55% 2,500,000 8.55% 5.70% Shareholder 3 1,000,000 1.71% 500,000 1.71% 1.14% Shareholder 4 500,000 0.85% 250,000 0.85% 0.57% Shareholder 5 250,000 0.43% 125,000 0.43% 0.28% Notes: 1.10 1. The table assumes that all Loyalty Options are issued and exercised and that no other Shares are issued or Options exercised. 2. The dilutive effect shown in the table is the maximum percentage on the assumption that those Entitlements not accepted are placed under the Shortfall Offer. In the event all Entitlements are not accepted and some or all of the resulting Shortfall was not subsequently placed, the dilution effect for each Shareholder not accepting their Entitlement would be a lesser percentage. No rights trading The entitlements to Loyalty Options under the Offers are non-renounceable. Accordingly, there will be no trading of rights on ASX and you may not dispose of your Entitlement to any other party. If you do not take up your Entitlement to Loyalty Options under the Offers by the Offer Closing Date, the offer to you will lapse. DOC ID 1265158133/V6 4 1.11 Issue date The Loyalty Options will be issued only after all Application Monies have been received. It is expected that Loyalty Options will be issued under the Loyalty Options Offer on 21 January 2025 and under the Shortfall Offer on 22 January 2025. Security holder statements will be dispatched at the end of the calendar month following the issue of the Loyalty Options under the Offers. 1.12 Application Monies held on trust All Application Monies received for the Loyalty Options will be held on trust in a bank account maintained solely for the purpose of depositing Application Monies received pursuant to this Prospectus until the Loyalty Options are issued. All Application Monies will be returned (without interest) if the Loyalty Options are not issued. 1.13 ASX quotation Application will not be made for Official Quotation of the Loyalty Options offered pursuant to this Prospectus as the Loyalty Options will be unlisted options. 1.14 CHESS The Company participates in the Clearing House Electronic Sub-register System, known as CHESS. ASX Settlement, 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 Loyalty Options. If you are broker sponsored, ASX Settlement will send you a CHESS