Ann: Court Orders Convening Scheme Meetings, page-44

Dear All

As we approach the close of the voting period, I writeto you having further considered the proposed merger, and having had multipleconversations with key individuals.

I still cannot see the benefit to KWR Shareholders,and I remain committed to voting ‘against’ the proposed merger.

I’ve taken the time to review the entire SchemeBooklet dated 6 April 2023 (Scheme Booklet) and highlight someinteresting sections for those of you that may still be undecided, or have nothad the time (or inclination) to review the entire Scheme Booklet.

The Value is in Kingwest

1. Section 9 of the Scheme Booklet, in particular page 76, identifies what steps the proposed merged entity intends to take over the next 24 month - conduct drilling at depth to increase the resource at three KWR deposits, Stirling, Pericles and Yunndaga. The merged entity proposes to focus on KWR’s resources for the first 24 months, which is something that KWR can do itself, without giving up 50% of the company to BTR.

1. At page 76 of the Scheme Booklet, it is also stated that the proposed merged entity will advance KWR’s projects through its existing funds or potential future capital raising activities. According to their respective quarterlies, BTR has less cash on hand as at the end of the March 2023 quarter than KWR does!

a.KWR has$1.328m cash and cash equivalents.

b.BTRhas $1.253m cash and cash equivalents.

1. Further down on page 76 of the Scheme Booklet, there is the subtle mention that KWR is assessing potential third party involvement at Lake Goongarrie – sounds like the company (and potentially others) still consider that there is value in Lake Goongarrie.

1. In addition to this, at section 9.5 of the Scheme Booklet (page 77), the merged entity plans to retain all KWR employees and carry on KWR’s existing business. (There is no drastic cost saving for KWR by merging with BTR).

1. The Investor Presentation dated 19 April 2023 also highlights the KWR value (see for instance bottom of slide 3) “Organic cash flow – Menzies Joint Venture for mining the Selkirk deposit in 2H 2023 and processing at Gwalia Processing Plant in Q1 2024”.

1. Then see bottom of slide 7 of the Investor Presentation “In parallel with strategy outlined above, the Merged Group will continue to assess and advance early-stage small scale mining opportunities at Menzies with third-party processing plants in the region in order to organically fund operation activities and the potential re-start of the Laverton Processing Plant.” Interestingly, slide 17 of the Investor Presentation suggests that there is limited 3^rd party processing optionality.

1. KWR is essentially funding BTR, for limited apparent benefits. Again, I refer KWR Shareholders to page 60 of the Scheme Booklet, where it is stated that the defunct Laverton Mill, even if brought back up to spec for milling at Laverton, would most likely be inappropriate to mill the ore from the Menzies deposits.

1. Slide 13 of the Investor Presentation highlights that Menzies has deposits across a 16km strike length (see also page 33 of the Scheme Booklet). There has been limited drilling at any significant depth at Menzies. See for instance the images on slide 15, which highlight just how little drilling has been done below 100m. Menzies was historically been mined to a depth of 600m. Slide 15 even states as much, going further to say “Opportunities to find virgin discoveries along Northern Trend and resource additions in Southern Trend – blue sky upside”.

1. The pages 14 – 16 of the VRM Report contained in the Scheme Booklet highlights that KWR’s potential Nickel deposits on the east of Lake Goongarrie. Further the VRM Report refers to Ardea Resources Limited (ARL), which has a substantial Nickel deposit at Goongarrie, see ARL presentation from 5 October 2022 (in particular slide 12).

Lake Goongarrie (GGP)

1. Lake Goongarrie includes the “Sir Laurence Gold Discovery”.

1. The entire Investor Presentation has neglected to include any discussion of the Sir Laurence Discovery, or of the other potential blue-sky upside at Lake Goongarrie, including the potential Nickel deposits. In this respect, I refer back to the KWR Corporate Presentation dated 22 May 2022.

1. Page 13 of the BDO report (at page 152 / 379 of the Scheme Booklet) states “Kingwest have written down the value of the Goongarrie Project in the December 2023 half year reviewed accounts due to the above factors”. Essentially, the proposed merger value attributes the extensive drilling and Sir Laurence Gold Discovery zero value. This appears most unusual.

1. Section 5.5 of the Scheme Booklet (page 28) states that there was a draft report issued by BDO to KWR on 8 March 2023.

1. Section 6.4 (Page 35 of the Scheme Booklet) states “The carry value of the GGP was fully impaired in Kingwest’s interim financial position as at 31 December 2022”. However, the very next sentence states “Kingwest is pursuing potential third party interest in the GGP in order to support future exploration and/or realise value for Kingwest shareholders. The process to facilitate third party discussions commenced in this quarter with any potential outcome remaining highly uncertain.”

1. Notably, the VRM report attributed a value of between $1.5m and $6.4m for KWR’s exploration potential, “which primarily relates to the Goongarrie Project”. See page 59 of the BDO Report, and pages iii and 22 - 29 of the VRM Report. The VRM Report states that the additional valuation determined within the Goongarrie exploration tenements is significant with a preferred value of $4.7m

1. Page 25 of the VRM Report contains the following paragraph:

1. 1. Further to the south at Target A9 aircore results of up to 38m at 3.1 g/t Au including 6m at 17.2 g/t Au in KGA0038 and in KGR001 20m at 2.6 g/t Au including 8m at 4.9 g/t Au (Figure 14). The A9 target is approximately 1km north of Ardea Resources (ASX: ARL) Aphrodite North prospect and 9km northwest along geological and structural strike of the 1.7Moz Aphrodite gold deposit (ASX: SBM, BDC 20 December 2021). Previous open file drilling in the Target A9 area also shows highly anomalous gold in Aircore drilling over a wide area and open to the south

1. Page 27 of the VRM Report contains the following paragraphs:

1. 1. Kingwest targeted the Highway ultramafic unit for Nickel with around 9 lines of close spaced aircore holes drilled across the interpreted position of the ultramafic over where it occurs on the tenements over 11km of strike. Results up to 24m at 0.42% Ni from 4m were returned within semi to fresh bedrock with lake coversediments as shallow as 4m. The northern nickel anomaly extends over 2km and three regional lines (Figure 16).

1. 1. As described in section 3.2, the unit is prospective for Kambalda style nickel sulphides such as at Saints and Scotia to the south. The Southern Nickel anomaly is 2km north of the Saints nickel sulphide deposits with historic drilling by WMC and Breakaway on the Goongarrie tenements returning results such as 10m at 0.42 % Ni (Figure 17).

1. Page 28 of the VRM Report states:

1. 1. The tenement package contains 7 strike km of the Bardoc Tectonic Zone and a further 11 strike kilometres of the St Laurence structure/contact zone. Due to the lake sediment cover the area is poorly explored and has strong potential for medium to high grade orogenic gold deposits.

1. Page 29 of the VRM Report states:

1. 1. The Goongarrie tenements also contain around 11 strike kilometres of the nickel sulphide prospective Highway Ultramafic horizon where known deposits such as Saints and Scotia have already been defined. The trend has been poorly explored due to lake cover. EM surveying would be useful in defining targets along this trend rather than expensive reconnaissance lake drilling

Lack of value derived from BTR

1. There remains to be seen any real tangible value from BTR.

1. The suggested ‘infrastructure’ relates to an old mill (hasn’t been in use since 2014) which is designed for a very particular purpose. To restore the mill will take significant capital, it will require even more capital to upgrade this mill to be able to properly mill most of the ore from the Menzies deposit. (Page 60 of the Scheme Booklet).

1. At page 47 of the VRM Report, VRM has the following to state regarding BTR and the BTR Mill:

1. 1. The exploration potential at all deposits described over Brightstar’s tenements is for modest tonnages of medium grade >1.5 g/t fresh mineralisation in shallowly to moderately plunging shoots below the oxide resources. It is important to note that the Brightstar mill, and proposed upgrade as currently described only contemplates the treatment of oxide material hence any new down plunge resources would not be able to be treated within the Brightstar Mill. It is not known what tonnages of oxide material remain.

1. KWR is far closer to multiple mills that (1) do not need to be refurbished, and (2) can adequately treat Menzies ore. KWR also already has a toll milling agreement with St Barbara for some of its ore.

1. At the end of December 2022, even after the complete write down of GGP, KWR’s Net Assets were valued at $19.2m, while BTR’s Net Assets were valued at $10.2m (see Page 39 and 57 of the Scheme Booklet, respectively).

1. An easier place to review this is on page 71 of the Scheme Booklet. Reviewing this, also highlights that KWR has no non-current liabilities. BTR has $3.5m non-current liabilities (largely relating to the rehabilitation of BTR held tenements – see BDO Report page 22).

1. BTR tenements are subject to royalties (see for instance Scheme Booklet BDO Report page 24):

1. 1. In the half year ended 31 December 2022, the debt forgiven relates to the extinguishment of the deferred payment of $5.40 million in exchange for the grant of a 1.5% NSR royalty on six tenements which are not covered by the original DECA.

1. At page iii of the VRM Report contained in the Scheme Booklet states following is included:

1. 1. There are also significant environmental liabilities associated with the rehabilitation requirements for the Brightstar Projects including rehabilitation of the tailings storage facility, waste dumps, access roads, open pits and associated disturbances.

1. 1. The value of the processing plant at Brightstar is considered to be outweighed by or similar to the rehabilitation liabilities notwithstanding that most of the resources defined are within deeper transitional and bedrock levels below surface (the oxide having already been mined). During the time the mill operated in 2011, it treated only oxide material and is therefore mismatched to much of the potential mill feed discovered to date.

1. The above information regarding BTR’s facilities is expanded on substantially at page 47 of the VRM Report.

1. Page 61 of the VRM Report contains even further detail regarding BTR’s Processing Infrastructure Valuation

1. 1. VRM has used a comparable transaction multiple that included a processing plant and associated infrastructure (and liabilities) to value the Brightstar Mineral Assets it is VRM’s opinion that the value of the plant and infrastructure is included in the comparable transaction valuation detailed above. This valuation assumes that the value of the Processing Plant and equipment (and associated infrastructure) (PPE) is broadly equal to the environmental liabilities associated with the project. These environmental liabilities include the rehabilitation requirements for the site including waste dumps, tailing storage facilities, roads, the airstrip, and the overall rehabilitation of the site.

1. 1. After presenting the Draft Report to BDO, Brightstar and Kingwest for factual accuracy testing, additional information was provided to VRM to assess the value of the PPE and the rehabilitation liabilities as determined by the company and external consultants. A high-level assessment of the likely value of the PPE was undertaken by an associate of VRM who specialises in PPE valuation and assessments. The associate reviewed photographs of the PPE from a site visit that Kingwest conducted in January 2023, equipment lists and plans and reports provided by Brightstar and Kingwest.

1. 1. Overall, the estimated value of the PPE on site is estimated at between $2 million and $3 million, this is based on a percentage of the expected as new replacement cost of the PPE. The environmental liabilities associated with the site has been estimated at approximately $2.8 million.

1. After all is said and done, VRM, the independent valuation expert, attributes a valuation for BTR’s Processing Plant and equipment (and associated infrastructure) of only $2m - $3m.

Capital Raising

1. The last paragraph of page 76 in section 9 indicates that the merged entity may well be looking at conducting a capital raising – which should be of no surprise. This, however, is unnecessary for KWR ‘going it alone’. There is $1.3m in cash in KWR at the end of the quarter. Which allows KWR 3 quarters on reduced costs, and until the funds from the BML JV start flowing. These funds can be expanded and increased with either (1) further expansion of the JV(s) with BML, or (2) KWR carrying out its own operations.

1. The Future capital requirements section at 10.2 of the Scheme Booklet (page 79) highlights that there is a very real risk of a substantial capital raise should the proposed merger go through, thereby diluting KWR Shareholder’s equity even more significantly.