Ann: Exercise of 85 million warrants and Appendix 3B, page-19

Aeon Metals Limited (AML)Funding for 2019 securedRecommendationBuy (unchanged)Price$0.245Valuation$0.55 (previously $0.58)RiskSpeculativeAnalystDavid Coates 612 8224 2887AuthorisationStuart Howe 613 9235 1856GICS SectorMaterialsExpected ReturnCapital growth 124.5%Dividend yield 0.0%Total expected return 124.5%Company Data & RatiosEnterprise value $168.9mMarket cap $164.9mIssued capital 673.1mFree float 58%Avg. daily val. (52wk) $287,00012 month price range $0.23-$0.45Price PerformanceBELL POTTER SECURITIES LIMITED Warrants exercised, loan drawnAML has negotiated the early exercise of 85m outstanding warrants held by majorshareholder, OCP Asia. The warrants had a maturity date of December 2019 andexercise price of $0.16 for a face value of $13.4m. The warrants were designed tooffset AML’s debt to OCP of $18m (including capitalised interest), also due inDecember 2019. In this context OCP’s exercise of the warrants has been paid byoffsetting the balance of AML’s debt with OCP, reducing it to ~$4.6m, as well asextending the maturity date of the loan to December 2020. In conjunction with thisOCP has advanced a further $8m cash loan to AML, also maturing December 2020. Inconsideration for the new loan and the maturity extension AML will pay OCP a $0.4mfee, due on maturity. Following the debt restructure, we estimate a gross debt positionof $13m for AML and a current cash position of ~$9.0m.Funded for CY2019 drill program and PFSThe good news is that this funding arrangement leaves AML well-funded to undertakeits 2019 drill program and advance the Pre-Feasibility Study (PFS) on its 100%-ownedWalford Creek copper-cobalt project in Queensland. These could be significantpositive catalysts for AML, particularly any extension drilling which may demonstratethe major potential scale of the deposit. In executing this latest funding arrangementAML has aimed to defer its next equity funding “until the value of the Walford Creekproject is better understood”. AML now has the opportunity to add value before its nextequity raise and potentially removed that immediate overhang from the share price. Itdoes however defer the repayment of its debt to OCP, in itself also an overhang on theshare price, albeit longer-dated.Investment thesis – Speculative Buy, valuation $0.55/shUpdating our assumptions for the latest capital structure and funding arrangementslowers our price target by 5% to $0.55/sh. We retain our Speculative Buy rating andour view that 2019 will see significant further Resource growth at Walford Creek.