$2m fully funded open offer for challenger

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ASXANNOUNCEMENT 7December2015

$2mFULLYFUNDEDOPENOFFERforChallenger

OpenoffertoKingsgate(ASX:KCN)

KeyNewPoints

• FULLYFUNDEDofferMarmota’sofferfortheChallengerGoldMine(andrelatedassets)isnowfullyfunded

• Byrnecutannouncedaspreferredoperator

FullyFundedofferMarmotaEnergyLimited(ASX:MEU)(“Marmota”)hasenteredintoabindingHeadsofAgreementwithAsymmetricInvestmentManagementPtyLtd(aWA-basedhedgefund)toeffectthatMarmota’sAUD$2mofferfortheChallengerGoldMine(andrelatedassets)isnowfullyfunded.IntheeventthatMarmota’sofferissuccessful,anaccountwillbeestablishedforsettlingtheacquisition,withtheAUD$2mfundslodgedtobeusedexclusivelytopayKingsgateConsolidatedLtdfortheChallengerGoldMine.IntheeventthatMarmota’sfullyfundedbiddoesnotproceed,Marmotadoesnotincuranycosts.

TermsofMarmotaOffer Price:$2millionFULLYFUNDED (TWICEthepriceofferedbyWPG)

AllothertermsIDENTICALtoWPGoffer(asdisclosed).

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PreferredoperatorannouncedMarmotaisalsopleasedtoannounceundergroundminingspecialists,ByrnecutAustraliaPtyLtd,aspreferredcontractoperatortooperatethemine,contingentonMarmota’sbidbeingsuccessful.•ByrnecutaretheexistingoperatorforKingsgateoftheundergroundmine

atChallenger,andsobringwiththemunparalleledknowledgeandexperienceoftheexistingoperations.

•MarmotaandByrnecutbelievethattherearefurthersynergiestobe

obtainedbyByrnecutrunningboththeundergroundoperationsandtheabovegroundplant.

DrColinRose,Marmota’sChairman,said:

“Byrnecutarethecurrentoperatorsofthemineandsoknowthemineintimately.Byrnecutarealreadythere…upandrunning.ByutilisingByrnecutasoperator,asuccessfulMarmotaofferwillensurethatanyminedowntimeduringthetransitionofownershipwillbeminimized:themachineryisthere,thestaffarethere—allalreadyoperational.Marmota’sofferwillminimizeunemployment,minimiseredundancies,minimizeunnecessarycosts,minimiseanydowntime:itisanelegantcombination.AddtothatthepotentialofMarmota’sWestpointHilljust25kmtothewest,andtheattractionofMarmota’sofferiseasytosee.”

WhyisMarmotaofferingmore?

• MarmotahasrecentlyidentifiedaNEW,LARGEGOLDanomalyintheGawlerCraton,just25kmwestoftheChallengergoldmine,nearWestpointHill[seeASXrelease:26October2015]

• ThediscoveryoftheexceptionalanomalismatWestpointHillcloselymirrorshowChallengerwasdiscovered.

• MarmotaseekstoexploitthepotentialsynergyfromWestpointHillandtheChallengergoldmine(just25kmapart)…apotentialupliftthatonlyMarmotaisabletooffer.1

1 Bycontrast,WPG’sTarcoolaandTunkilliatenementsarelocatedover100kmawayfromChallenger—

morethan4timesthedistance.

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Whyanopenoffer?PriortotheannouncementbyKingsgate(30Oct2015)ofan‘exclusiveoption’toWPG:

1) FollowingadiscussionbetweenthechairsofKingsgateandMarmota,Marmotaformallyengagedtheservicesofhighlyrespectedfinancialbroker,EmpireSecurities,on28October2015,toactonbehalfofMarmota,topurchaseChallengerfromKingsgate.ThefinancialbrokeriswellknowntoKingsgate,andwasresponsibleforthefloatsthattookKingsgatefroma10ccompanytosubsequentsuccess.

2) KingsgateChairman,RossSmyth-Kirk,advisedthebrokerthatMarmota’sinteresttoacquireChallengerwasacknowledged,andhadbeenpassedontoKingsgateCEO,GregFoulis.

3) EmpireSecuritiesformallyadvisedKingsgatethatMarmotawouldbetteranyofferonthetable.Marmotacandothisbecause,overandabovetheintrinsicvalueofChallengeritself,MarmotaalsohasthepotentialsynergyofitsnewWestpointHillprospectjust25kmawayfromChallenger.

4) Kingsgate’slettertotheASXof4November2015confirmsthattheywereformallyapproachedpriortoKingsgateenteringintoanoptionwithWPG.

5) KingsgatedidnotgetbacktothebrokerorMarmota.Instead,itannouncedon30October2015thatithadenteredintoan“exclusiveoption”withWPGfor$25,000––anoptionwhichdoesnotlockinanyobligationsforKingsgateorKingsgateshareholders,butdoesservetolockoutallotherinterestedparties.

6) Nordoesthegrantingofsuchoptionon30October2015negatethefactthatMarmota’soffer(tobetterallotheroffers)wasmadepriortoKingsgateenteringintotheoptionagreementwithWPG.

AninvitationtoKingsgateshareholders: …toshareinthepotentialofWestpointHillTheWPGoffer(30October2015)providesalmostnoupsidepotentialtoKingsgateshareholders.Kingsgatehastopayallthecostsofputtingthemineintocareandmaintenance(inthemillions);Kingsgatereceivesnopaymentbeyondtheinitial$100,000optionanddepositfeesuntiltheminere-opens(ifitdoes);KingsgategetsnoroyaltyfromorefromthemainChallengerarea;noroyaltyfromorefromChallengerWest;noroyaltyfromanyoreminedfromanyofKingsgate’ssurroundingtenements(bundledindealtoo);noroyaltyfromanyoreprocessedfromanyneighbouringcompany’stenements:theonlyroyaltyis$25perouncefromtheChallengerSSWZone,shoulditeverbedeveloped,andeventhen,onlyafter30,000ounceshavebeenproduced.Bycontrast,MarmotaishappytoextendtoKingsgateshareholdersaninvitationtoshareinthepotentialofboththeChallengermine(whichis,afterall,yourasset)

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andfromthepotentialofMarmota’sexcitingnewWestpointHilldiscoveryofexceptionalgold-in-calcreteanomalism,withstrongparallelstothediscoveryofChallengeritself.WhileMarmotaishappytomakeapurecashdeal,Marmotaisalternativelyalsowillingtomakeacombinationcash(minimum$1mtomatchWPGoffer)+equityofferingtoKingsgateshareholders,sothatKingsgateshareholderscanjoininandbenefitfromanyupliftfromasuccessfulrejuvenationofChallenger,andalsoprosperfromthepotentialoftheexceptionalanomalismatMarmota’sWestpointHill.Eitherway,inMarmota’sopinion,Marmota’sfullyfundedofferisunequivocallysuperior.

LocationoftheWestpointHilltargetMarmota’sWestpointHilltargetislocatedabout25kmwestoftheChallengerGoldMine,inMarmota’s100%ownedLakeAnthonytenement(EL5060),intheWoomeraProhibitedDefenceArea,inthehighlyprospectiveandsignificantlyunderexploredGawlerCraton[seeFigure1].

Figure1: Marmota’sGawlerCratonGoldProject

WestpointHillislocatedabout25kmwestofChallenger

[TheWPGtenementslieoutsidethemaparea,totheSouthEast]

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COMPARISONTODISCOVERYOFCHALLENGERHowChallengerwasdiscoveredChallengerwasdiscoveredbyacalcretesamplingprogramona1.6kmx1.6kmgrid.Thisprogramyieldedastand-outsamplepointof180ppbAu,surroundedonallsidesbygridpointsyieldingbelow10ppbAu[seeFigure2a].The180ppbAupointwasapproximately400mawayfromwheretheChallengergolddepositwasultimatelydiscovered.

Figure2a:HowChallengerwasfound:gold-in-calcreteAdaptationofdiagramfromWillsandEdgecombe(2014)2

HowtheanomalyatWestpointHillwasfoundMarmotahasadoptedthesamecalcretesamplingmethodologythatwasusedtofindChallenger.However,insteadofusingacoarse1.6kmx1.6kmgrid(whichcaneasilymissanomalies),Marmotaimplementeda800mx800mgridatWestpointHill.LikeChallenger,highlyanomalousgold-in-calcretesamplesstandoutatWestpointHillrelativetothesurroundinggrid[seeFigure2b],includingaresultof107pbbAu.Importantly,thestand-outresultsatWestpointHillcovernotjustonegridpoint,butthreecontiguousgridpoints,spanningapproximately2km.[seeASXrelease:26October2015]

Figure2b:AnomalyatWestpointHill

(gold-in-calcreteppb)

2Wills,K.andEdgecombe,D.(2014),DiscoveryoftheChallengerGoldMine,Presentation6June2014,

AdelaideConference(SouthAustraliaBranch:AustralianInstituteofGeoscientists).

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Forfurtherinformation,pleasecontact:

AboutMarmotaEnergyLimitedMarmota Energy Limited (ASX:MEU) is a South Australian mining exploration company,focused on gold, copper and uranium. Gold exploration is centred on the Company’sdominant tenement holding in the highly prospective and significantly underexploredGawlerCraton,near theChallengergoldmine, in theWoomeraProhibitedDefenceArea.The Company’s cornerstone copper project is based at theMelton project on the YorkePeninsula. The Company’s largest uranium project is at Junction Dam adjacent to theHoneymoonmine.Formoreinformation,pleasevisit:www.marmotaenergy.com.au

MarmotaEnergyLimitedDavidWilliamsManagingDirectorEmail:info@marmotaenergy.com.au

Level30,WestpacHouse91KingWilliamStreetAdelaideSA5000ABN:38119270816T:(618)70884883F:(618)70884884www.marmotaenergy.com.au