Announcement PDF Share Purchase Plan Hastings Rare Metals Limited ABN 43 122 911 399 This is an important document. The Offer does not take into account the individual investment objectives, financial situation or particular needs of each Eligible Shareholder. Accordingly, before making a decision on whether or not to accept the Offer, you should consult your financial or other professional adviser. If you have any questions in relation to the Offer or how to complete the Application Form, please call the Company’s Share Registry, Security Transfer Registrars Pty Limited on +61 8 9315 2333 or Mr Guy Robertson – Company Secretary on +61 2 8268 8689. This document is not a prospectus or other disclosure document under the Corporations Act. The distribution of this document (including electronic copies) outside Australia and New Zealand may be restricted by law. NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO US PERSONS. This Offer is made in reliance on the exemption under section 272A(1) of the Singapore Securities and Futures Act (SFA). It is not made in or accompanied by prospectus that is registered by the Monetary Authority of Singapore. New Shares shall not be subsequently sold to any person in Singapore, unless the offer resulting in such subsequent sale is made: • in compliance with Subdivisions (2) and (3) of Division 1, Part XIII of the SFA; • in reliance on subsection (8)(c) or any other exemption under any provision of Subdivision 4 of Division 1, Part XIII of the SFA (other than subsection 272A(1) of the SFA); or • where at least 6 months have elapsed from the date the securities were acquired under the initial offer, in reliance on the exemption under this subsection Important Notice The Offer contained in this document is not a recommendation to purchase Shares. If you are in any doubt about what to do with the Offer, you should consult your financial or other professional adviser. If you apply to participate in the Offer by making a BPay® payment (using an Australian bank account) or completing and returning the Application Form with a cheque or bank draft, you are accepting the risk the market price of Shares may change between the date of the Offer and the Issue Date for the New Shares. This means it is possible that, up to or after the Issue Date, you may be able to buy Shares at a lower price than the Offer Price. Equator Star Holdings Limited and Dr Choon Huat Lee have agreed to severally underwrite the Offer, subject to Shareholder approval. They have not authorised or caused the issue of this Offer Document or the making of the Offer under this Offer Document, and make no representation regarding, and to the extent permitted by law excludes any responsibility for, any statements in or omissions from any part of this Offer Document. Participation in the Offer is not being offered, directly or indirectly, in the United States or to any person that is, or is acting for the account or benefit of, a US Person. The New Shares to be offered and sold in the Share Purchase Plan have not been, and will not be, registered under the U.S. Securities Act of 1933, as amended, or under the securities laws of any state or other jurisdiction of the United States. This document and any related documents including the Application Form must not be mailed or otherwise transmitted or distributed in or into the United States or to any person that is, or is acting for the account or benefit of, a US Person. Directors recommend you monitor the Company’s announcements, which can be found on its website at www.hastingsraremetals.com and on the ASX website at www.asx.com.au (ASX: HAS). The Company’s Share price can also be found on its website and the ASX or in the financial pages of major Australian metropolitan newspapers. Timetable to the Offer Record Date - Date for determination of Eligible Shareholders 7.00pm AEDT 5 December 2014 Announcement of Share Purchase Plan 8 December 2014 Opening Date for receipt of acceptances - Offer documents and Application Forms mailed to Eligible Shareholders 19 December 2014 Closing date for acceptances to be received by the Company 5.00pm AEDT 16 January 2015 Issue Date of New Shares under the Share Purchase Plan 20 January 2015 Date on which the New Shares are expected to commence trading on ASX 21 January 2015 Dispatch of holding statements for New Shares issued under the Share Purchase Plan 21 January 2015 This timetable is indicative only and subject to change. The Company reserves the right to vary the above dates, subject to the ASX Listing Rules and the Corporations Act, without notice. Letter to Shareholders re SPP (offer booklet) (KPC00080378-007) Page 2 Key steps Step 1: Step 2: Read the terms and conditions of the Share Purchase Plan in full. • There is no requirement to participate in the Share Purchase Plan. • Participation in the Share Purchase Plan is entirely voluntary. Are you an Eligible Shareholder? (see section 3) You are eligible to apply for the New Shares if: • your registered address in the Company’s registered members is in Australia, New Zealand or Singapore; and • you were registered as a holder of Shares as at 7:00pm (AEDT) on 5 December 2014 (Record Date). The Offer is not being extended to any Shareholder, as at the Record Date, whose registered address is not situated in Australia, New Zealand or Singapore. Neither these terms and conditions nor the Application Form constitutes an offer to buy securities in the United States (or to, or for the account or benefit of, US Persons). Step 3: If you choose to participate in the Share Purchase Plan, you must choose to purchase a parcel of New Shares for one of the following amounts (see section 6): $1,050 $7,000 $1,750 $10,500 $3,500 $15,000 $5,250 Step 4: To apply for New Shares under the Share Purchase Plan, Eligible Shareholders must (see section 11): • complete the Application Form attached to these terms and conditions; or • make a BPay® payment by using the personalised reference number shown on your Application Form, which is required to identify your holding. Questions If you have any in relation to the Offer or how to complete the Application Form, please call the Company’s Share Registry, Security Transfer Registrars Pty Limited on +61 8 9315 2333 or Mr Guy Robertson – Company Secretary on +61 2 8268 8689 or email guy@hastingsraremetals.com, or consult your financial or other professional adviser. Letter to Shareholders re SPP (offer booklet) (KPC00080378-007) Page 3 Letter to Shareholder Dear Shareholder, Offer to participate in Hastings Rare Metals Limited Share Purchase Plan The Directors of Hastings Rare Metals Limited (Hastings or Company) are pleased to extend an invitation to Eligible Shareholders to participate in the Company's Share Purchase Plan (Plan or SPP). The Plan allows Eligible Shareholders to purchase up to $15,000 worth of fully paid ordinary shares in the Company (Shares) without any brokerage or transaction costs. The Plan was announced by the Company to the Australian Securities Exchange (ASX) on 9 December 2014+. The Shares under the Plan will be issued at 7 cents per Share, representing a 15% discount to the closing price of the Company's Shares on the ASX on 8 December 2014. The offer of Shares under the Plan is open to all Eligible Shareholders (as defined in the attached Offer) as at 7:00pm (AEDT) on 5 December 2014 (Record Date), and is an opportunity for them to participate in the future growth of the Company as it enters the next stage of its development. The Plan is capped at 28,571,428 Shares, to raise a maximum of $2 million (Offer Amount), and the Directors will scale back (on a pro rata basis) excess applications for Shares. Subject to Shareholder approval, the Offer is fully underwritten by Equator Star Holdings Limited, a company associated with the Company’s Chairman, Mr Charles Lew (up to $1,500,000) and Dr Choon Huat Lee (up to $500,000). Participation in the Plan is entirely voluntary. Offers under the Plan are non-renounceable, meaning that you are not permitted to transfer your rights to subscribe for Shares under the Plan. If after reading the attached Offer you wish to participate in the Plan, you must complete and return the attached personalised Application Form, together with a cheque and return it to the Company’s Share Registry on or before 5.00pm (AEDT) on 16 January 2015. Alternatively you may use the BPAY® facility described later in this documentation. Funds raised under the Plan will be used for a Pre-Feasibility Study of the Yangibana rare earths project. The Pre-Feasibility Study will incorporate the following: • Mining Lease application(s) • Further drilling to achieve target tonnage • Mine design and scheduling • Metallurgical test work and detailed flow sheet design • Processing plant design and costing (capital and operating costs) • Infrastructure review • Government regulatory approvals • Environmental study • Pilot plant confirmation • Indigenous Culture and Heritage Agreements Further details of the Plan are set out below. Letter to Shareholders re SPP (offer booklet) (KPC00080378-007) Page 4 The Plan allows Eligible Shareholders, irrespective of the size of their shareholding, to apply for one of the following parcels of Shares: Offer Value Number of Shares A $1,050 15,000 B $1,750 25,000 C $3,500 50,000 D $5,250 75,000 E $7,000 100,000 F $10,500 150,000 G $15,000 214,285 Exploration Hastings has two JORC compliant rare earths projects in Western Australia –the Yangibana project and the Brockman project (formerly Hastings). Yangibana – Significant progress has been made on the project during the year: • The Company expanded its tenement holding acquiring an additional 10% interest (now 70%) in the joint venture (tenements E09/1043, E09/1049, E09/1703, E09/1704, E09/1705 and E09/1706), a 100% interest in Bald Hill (tenement E09/2007) and a 95% interest in Frasers (tenements E09/1943, E09/1944, E09/2018, E09/1700 and P09/467). It was also granted E09/1989, E09/2084, E09/2086, P09/480, P09/481, and P09/482. The Company also has applications for E09/2095 and P09/484. • Following two reverse circulation (RC) drilling programmes the project achieved a JORC resource of 6.79m tonnes (Indicated 3.96m tonnes and 2.83m tonnes inferred)1 • Total project resources contain approximately: • o 23,500 tonnes of Nd2O3; o 6,600 tonnes of Pr2O3; o 360 tonnes of Dy2O3; and o 625 tonnes of Eu2O3. Scoping Study completed by independent mining consultants Snowden, confirming economic viability of project. For further information on the Yangibana project see presentation lodged with the ASX on 10 November 2014. 1 These JORC estimates were previously announced to the market via an ASX Announcement on 10 December 2014 and the Company is not aware of any new information or data that would materially affect the information included in that announcement. Further, all material assumptions and technical parameters underpinning those estimates continue to apply and have not materially changed. Letter to Shareholders re SPP (offer booklet) (KPC00080378-007) Page 5 Brockman – During the year the Company drilled additional prospects - Southern Extension, Levon and Haig - to the main zone. While the Southern Extension revealed grades 20% higher than the main zone, the mineralisation continues to be fine grained. Further metallurgy is to be undertaken in the period ahead to determine whether beneficiation can improve the economics of the project. In summary, given successful exploration at the Yangibana project this year, and positive results of the Scoping Study undertaken by Snowden, the Company has decided to proceed with a Pre-Feasibility Study which will incorporate the steps outlined above and involve significant expenditure over a 15 to 24 month period. Corporate Hastings has recently announced a share placement issuing 93,500,000 new shares raising $6.5 million. This Share Purchase Plan seeks to raise up to $2 million (28,571,428 new shares at 7 cents each) which will enable the Company to fully fund the Pre-Feasibility Study at the Yangibana Rare Earths Project through to completion. Should you have any questions in relation to this offer please contact the company secretary, Guy Robertson on +61 2 8269 8689. Yours faithfully, Guy Robertson Company Secretary Letter to Shareholders re SPP (offer booklet) (KPC00080378-007) Page 6 Hastings Rare Metals Limited ABN 43 122 911 399 Share Purchase Plan - Terms and Conditions 1 THE OFFER 1.1 The Offer The Offer is an invitation to all Eligible Shareholders to subscribe for New Shares at the Offer Price of 7 cents per New Share, up to a maximum subscription of 214,285 New Shares ($15,000) per Eligible Shareholder. You may choose not to accept the Offer. The Offer to each Eligible Shareholder is made on the same terms and conditions. The Offer is non-renounceable (i.e. you may not transfer your right to acquire a New Share to anyone else). The number of New Shares you receive will depend on the value of the parcel of New Shares you apply for and on the total number of New Shares applied for by all Eligible Shareholders. The Company reserves the right to scale back Applications or (subject to the Listing Rules) accept oversubscriptions where the total value of New Shares applied for by all Eligible Shareholders exceeds $2 million (see section 7 below). The Offer Price is fixed regardless of any changes in the market price of Shares during the Offer period. 1.2 Offer not taken up If you are an Eligible Shareholder and do not wish to subscribe for New Shares, you are not obliged to do anything. You will not receive any benefits or New Shares. The number of Shares you hold as at the Record Date and the rights attached to those Shares will not be affected if you choose not to participate in the Share Purchase Plan. All New Shares not subscribed for under the Share Purchase Plan will, subject to Shareholder approval, be taken up by the Underwriters at the Offer Price. 2 OPENING AND CLOSING DATES The Offer will open on 19 December 2014 and close on 16 January 2015. The Directors reserve the right to close the Offer early or extend the Closing Date (as the case may be) at their absolute discretion without any notice to you, subject to the Corporations Act and the Listing Rules. New Shares not subscribed for under the Plan will, subject to Shareholder approval, be taken up by the Underwriters at the Offer Price. Letter to Shareholders re SPP (offer booklet) (KPC00080378-007) Page 7 3 ELIGIBILITY 3.1 Eligibility You are eligible to apply for the New Shares if: 3.2 (a) your registered address in the Company’s register of members is in Australia, New Zealand or Singapore; and (b) you were registered as a holder of Shares in the Company as at 7.00pm (AEDT) on 5 December 2014 (Record Date). Individual Shareholders If you are the sole registered Shareholder of a holding of Shares, but you receive more than one Offer under the Share Purchase Plan (for example, because you have multiple individual holdings of Shares), you may only apply for one parcel of New Shares with a value of up to $15,000. 3.3 Joint Shareholders If you are recorded with one or more other persons as the joint Shareholder of a holding of Shares, that joint Shareholding is considered to be a single registered Shareholding for the purpose of the Share Purchase Plan. The joint Shareholders are entitled to participate in the Share Purchase Plan for the single holding only. If the same joint Shareholders receive more than one offer under the Share Purchase Plan (i.e. due to joint Shareholders having multiple registered holdings), the joint Shareholders may only apply for one parcel of New Shares up to $15,000. 3.4 Custodians If you are a Custodian (as defined below) and hold Shares on behalf of one or more persons resident in Australia, New Zealand or Singapore (each a Participating Beneficiary), you may be entitled to apply for up to $15,000 worth of Shares for each Participating Beneficiary provided each Participating Beneficiary is not in the United States and is not acting for the account or benefit of a person in the United States and subject to you providing a certificate to the Company containing the information prescribed by ASIC Class Order 09/425 as modified by ASIC Class Orders 10/105, 10/789, 11/162, 13/762, 13/854, 14/757 and 14/977 (Custodian Certificate). If you are a Custodian and would like a Custodian Certificate or further information on how to apply, you should contact the share registry, Security Transfer Registrars Pty Limited (within Australia) on 1300 850 505 or (outside Australia) on +61 3 9415 4000. In providing the Custodian Certificate under this section 3.4, the Custodian may rely on information provided to it by the Participating Beneficiary and any person who holds beneficial interests in the Shares held by the Custodian. If you are a Custodian and you hold Shares on the Record Date jointly on behalf of 2 or more persons: (a) the $15,000 limit applies in relation to that joint holding as if you held the Shares on behalf of a single person; and Letter to Shareholders re SPP (offer booklet) (KPC00080378-007) Page 8 (b) you are taken to have been instructed to apply for Shares on behalf of those persons if: (i) you have received such an instruction in accordance with the terms on which the Shares are held; or (ii) where the terms on which the Shares are held do not cover the giving of instructions of this kind, you have received such an instruction from any of those persons. If you, as a Custodian, are not able to provide the Custodian Certificate, then the maximum you, as an eligible Custodian, may invest under the Share Purchase Plan in all capacities is A$15,000. 3.5 Trustee or nominee If you hold Shares as a trustee or nominee for another person, but are not a Custodian, you cannot participate for beneficiaries in the manner described in section 3.4. In this case, the rules for multiple single holdings set out in sections 3.2 and 3.3 apply. 3.6 Directors and employees Directors and employees of the Company who hold Shares and are Eligible Shareholders may participate in the Offer in accordance with its terms. 3.7 Treatment of overseas Shareholders The Offer is not being extended to any Shareholder, as at the Record Date, whose registered address is not situated in Australia, New Zealand or Singapore and no action has been taken to register the New Shares or the Offer or otherwise to permit an offering of the New Shares in any jurisdiction outside those jurisdictions. Recipients may not send or otherwise distribute this document or the Application Form to any person outside Australia (other than to Eligible Shareholders or Participating Beneficiary). Shareholders who hold Shares on behalf of persons who reside outside Australia, New Zealand or Singapore, are in the United States, or are acting for the account or benefit of a person in the United States are not entitled to participate in the Share Purchase Plan on behalf of those persons. A trustee, nominee or custodian must not participate in the Share Purchase Plan on behalf of, nor distribute this document or any other document relating to the Share Purchase Plan to, any person in the United States. Failure to comply with these restrictions may result in violations of applicable securities law. (a) New Zealand The Offer to Eligible Shareholders with registered addresses in New Zealand is made in reliance on the Securities Act (Overseas Companies) Exemption Notice 2013 (New Zealand). In accordance with relevant New Zealand securities law, a person who, on the Record Date, was on the register as a Shareholder but on the Opening Date no longer holds Shares, is not eligible to participate in the Share Purchase Plan. Letter to Shareholders re SPP (offer booklet) (KPC00080378-007) Page 9 (b) Singapore This Offer is made in reliance on the exemption under section 272A(1) of the Singapore Securities and Futures Act (SFA). This document and any other materials relating to the New Shares have not been, and will not be, lodged or registered as a prospectus in Singapore with the Monetary Authority of Singapore. Accordingly, this document and any other document or materials in connection with the offer or sale, or invitation for subscription or purchase, of New Shares, may not be issued, circulated or distributed, nor may the New 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 except pursuant to and in accordance with exemptions in Subdivision (4) Division 1, Part XIII of the SFA, or as otherwise pursuant to, and in accordance with the conditions of any other applicable provisions of the SFA. The New Shares under the Offer shall not be subsequently sold to any person, unless the offer resulting in such subsequent sale is made: (c) (i) in compliance with Subdivisions (2) and (3) of Division 1, Part XIII of the SFA; (ii) in reliance on subsection (8)(c) or any other exemption under any provision of Subdivision 4 of Division 1, Part XIII of the SFA (other than subsection 272A(1) of the SFA); or (iii) where at least 6 months have elapsed from the date the securities were acquired under the initial offer, in reliance on the exemption under this subsection. United States Neither these terms and conditions nor the Application Form constitutes an offer in the United States (or to, or for the account or benefit of, US Persons). This document is not for publication or distribution, directly or indirectly, in or into the United States of America (including its territories and possessions, any state of the US and the District of Columbia). This document is not an offer of securities for sale into the United States or to, or for the account of benefit of, US Persons. The securities referred to in this document have not been and will not be registered under the US Securities Act and may not be offered or sold in the United States or to, or for the account or benefit of, US Persons. No public offering of New Shares is being made in the United States. 3.8 Representation by Applicants By returning a completed Application Form or paying the Offer Price for New Shares by BPay®, you will be taken to represent, warrant and agree: (a) you, and each person for whose account or benefit you are acting, are an Eligible Shareholder and eligible under all securities law to receive an Offer and represent and warrant you are not: (i) in the United States and are not acting for the account or benefit of a person in the United States; or Letter to Shareholders re SPP (offer booklet) (KPC00080378-007) Page 10 (ii) 4 otherwise a person to whom it would be illegal to make an offer or issue of Shares under the Share Purchase Plan; (b) you have read and understood these terms and conditions and you subscribe for New Shares in accordance with, and subject to, these terms and conditions; (c) you accept you will not be able to withdraw or revoke your Application or BPAY® payment once you have sent it in; (d) you authorise the Company to correct minor errors in the Application Form if required, and to complete the Application Form by inserting any minor missing details; (e) the Company may at any time determine your Application Form is valid, in accordance with these Terms and Conditions, even if the Application Form is incomplete, contains errors or is otherwise defective; (f) you are responsible for any dishonour fees or other costs the Company may incur in presenting a cheque for payment which is dishonoured; (g) the Company has not provided you with taxation, investment advice or financial product advice, and it does not have any obligation to provide this advice, concerning your decision to apply for and buy New Shares; (h) you acknowledge the Company is not liable for any exercise of its discretions referred to in these terms and conditions; (i) the market price of Shares may rise or fall between the date of this Offer and the Issue Date and the Offer Price paid for the New Shares may exceed the market price of the New Shares on the Issue Date; (j) the New Shares have not been, and will not be, registered under the US Securities Act or the securities laws of any state or other jurisdiction in the US, or in any other jurisdiction outside Australia, New Zealand or Singapore, and may not be offered, sold, transferred or otherwise disposed of except in accordance with an available exemption form, or in a transaction not subject to, the registration requirements of the US Securities Act and any other applicable securities laws; (k) you have not and will not send this document or the Application Form to any person in the United States or that is, or is acting for the account or benefit of, a US Person; and (l) if in the future you decide to sell or otherwise transfer their New Shares, you will only do so in transactions conducted in the ordinary course on ASX where neither you nor any person acting on your behalf knows, or has reason to know, the sale has been pre-arranged with, a purchaser which is in the United States or is a US Person. OFFER PRICE The Company is inviting Eligible Shareholders to apply for up to a total of 28,571,428 New Shares at the Offer Price to raise up to $2 million before costs. The Offer Price of 7 cents represents an approximate 15% discount to the volume weighted market price for Shares traded on ASX calculated over the last five days on which sales in Letter to Shareholders re SPP (offer booklet) (KPC00080378-007) Page 11 Shares were recorded on or before 8 December 2014 (the day of the Company announcing the Share Purchase Plan). 5 RIGHTS The rights and obligations of the New Shares are contained in the constitution of the Company which is available for inspection at the registered office of the Company during the Offer period. The New Shares will be issued with the same terms as all existing Shares and the New Shares will rank equally with existing Shares quoted on ASX. The Company will apply for the New Shares to be quoted on ASX. 6 NUMBER OF NEW SHARES Each Eligible Shareholder has the right to apply for up to a maximum of 214,285 New Shares for a consideration of $15,000. Eligible Shareholders may select one of the following alternatives: Offer Value Number of Shares A $1,050 15,000 B $1,750 25,000 C $3,500 50,000 D $5,250 75,000 E $7,000 100,000 F $10,500 150,000 The maximum New Shares purchased by each Eligible Shareholder (including through joint holdings, multiple share accounts or any holding in which they have a beneficial interest) must not exceed the value of $15,000. The Directors reserve the right to issue to an Eligible Shareholder less New Shares than the number specified in the Application Form (scaled back as set out below) including the possible subscription of over $15,000 worth of New Shares by an Eligible Shareholder through multiple Applications or joint holdings. No fractions of New Shares will be issued. Any fraction of a New Share will be rounded down to the nearest whole number of New Shares. 7 SCALE BACK AND OVERSUBSCRIPTION If the Company receives valid Applications for more than $2 million of New Shares under the Share Purchase Plan, it may in its absolute discretion undertake a scale-back pro-rata to applications and allocate an Eligible Shareholder a smaller number of New Shares than an Eligible Shareholder has applied for. The Company also reserves the right to accept Letter to Shareholders re SPP (offer booklet) (KPC00080378-007) Page 12 oversubscriptions, subject to compliance with all laws, regulations, ASIC class orders, requirements or policies or any ASX Listing Rule. If there is a scaleback, you may not receive all the New Shares for which you have applied. If a scaleback produces a fractional number when applied to your Application, the number of New Shares you will be issued will be rounded down to the nearest whole number of New Shares. Where the number of New Shares issued to an Eligible Shares is less than the number applied for, surplus moneys will be refunded by cheque as soon as practicable after the Issue Date. Interest will not be paid on moneys refunded. If the Offer is oversubscribed, the Directors reserve the right to close the Offer early. 8 UNDERWRITING Equator Star Holdings Limited, a company associated with the Company’s Chairman, Mr Charles Lew, and Dr Choon Huat Lee have agreed to severally underwrite the Offer by agreeing to take up (or have sub-underwriters take up) shortfall Shares at the Offer Price up to $1,500,000 and $500,000 respectively, subject to: (a) prior Shareholder approval being obtained at the General Meeting for the purposes of Listing Rules 10.11 and 7.1 (respectively); and (b) the terms of the Underwriting Agreement. A fee of 6% on the underwritten amounts is payable to the Underwriters. The Directors (other than Mr Lew) have determined that the fee payable to Equator Star Holdings Limited is reasonable in the circumstances if the Company and Equator Star Holdings Limited were dealing at arm’s length). The Underwriting Agreement is conditional upon Shareholder approval. The Underwriting Agreement contains customary conditions, warranties and undertakings and is subject to various termination events exercisable by the Underwriter. Should the Underwriting Agreement for any reason not be approved or be terminated, the Company intends to proceed with the SPP, accepting all valid Applications. 9 PARTICIPATION COSTS You must pay the Offer Price and any fees or charges incurred by you in completing the Application Form (for example, bank fees or fees of professional advisers). The Company will pay any broker