Lotus Resources Plans to Issue 66.3 Million Unlisted Warrants Under AUD$35 Million Convertible Note Facility with CVI Investment Inc

Convertible Note Facility Structure and Warrant Issuance Details

Lotus Resources Limited has arranged an AUD$35 million Convertible Note facility with CVI Investment Inc, incorporating the issuance of unlisted warrants as a key component. These warrants are being issued for nil consideration to investors participating in the facility, providing additional conversion options and aligning investor interests with potential equity appreciation. The warrants offer upside participation beyond the conversion rights embedded in the convertible notes themselves.

The full terms of the warrants are outlined in the Prospectus dated 23 July 2026, lodged with the ASX on the same day. These warrants form a new security class distinct from the company’s ordinary shares and will remain unquoted on the ASX. All warrants carry identical rights and economic exposure, consistent with standard convertible debt warrant instruments in the Australian capital markets.

Exercise Price, Expiration, and Conversion Mechanics

The 66,287,879 warrants each have an exercise price set at AUD$0.85. Upon exercising, holders will receive one fully paid ordinary share per warrant at this fixed price. The warrants expire on 7 September 2031, providing a five-year window for holders to exercise and benefit from any share price appreciation above the exercise price. This duration aligns with typical terms for warrants issued alongside convertible note financings in the mining and exploration sector.

The AUD$0.85 exercise price enables warrant holders to convert their interests into equity at a potentially discounted rate if the company’s share price rises above this level. If the share price remains below AUD$0.85, holders may opt not to exercise, limiting their loss to the initial nil consideration. The extended exercise period supports alignment between warrant holders and existing shareholders by allowing time for company growth to influence share price.

Nil Consideration Warrant Issuance and Investor Allocation

The warrants are issued for nil consideration, meaning Lotus Resources receives no direct cash payment for them. Instead, the warrants are embedded within the overall terms of the AUD$35 million Convertible Note facility. This approach is standard in convertible debt arrangements where warrants are attached without separate fees, integrating their value into the debt instrument pricing. Investors in the facility receive warrants as part of their investment package.

Although issued for nil consideration, the warrants hold economic value incorporated into the convertible notes’ overall investment profile. This structure is economically equivalent to pricing notes at a discount and charging separately for warrant attachment. Issuing warrants without direct payment supports the financing goals while offering investors enhanced equity participation opportunities.

Shareholder Approval and Meeting Schedule

Issuance of the 66,287,879 warrants requires shareholder approval under ASX Listing Rule 7.1. Lotus Resources has scheduled a shareholder meeting for 2 September 2026 to seek authorization for the warrant issuance. This approval accounts for the significant number of securities issued and the potential dilution if warrants are exercised. The meeting date precedes the proposed issuance date by five days, facilitating timely completion of the financing once approved.

If shareholders approve the resolution and all conditions precedent are satisfied or waived by 2 September 2026, the company will issue the warrants on 7 September 2026. Comprehensive disclosure has been provided in the Prospectus to enable shareholders to make informed decisions about the warrant issuance and associated financing.

Conditions Precedent and CVI Investment Inc’s Role

The warrant issuance is subject to conditions precedent identical to those governing the AUD$35 million Convertible Note facility, as detailed in Section 7.2 of the Prospectus dated 23 July 2026. These conditions protect both Lotus Resources and CVI Investment Inc by ensuring the transaction proceeds only when all requirements are met.

CVI Investment Inc acts as the facility provider and warrant recipient, holding economic rights from both the convertible notes and warrants. The secured nature of the facility indicates CVI Investment Inc has security interests in company assets, providing creditor protection. CVI Investment Inc’s involvement underscores the credibility of this capital source for Lotus Resources’ strategic funding needs.

Lotus Resources’ Uranium Exploration Focus and Strategic Implications

Lotus Resources Limited is an ASX-listed company specializing in uranium exploration and development, targeting key uranium jurisdictions. The AUD$35 million Convertible Note facility supports exploration, feasibility studies, and project advancement. Market dynamics, nuclear energy regulations, and global demand for low-carbon energy underpin the company’s strategic positioning.

This financing reflects confidence in the company’s portfolio amid growing investor interest in uranium as governments emphasize nuclear energy’s role in decarbonization. The warrant component signals investor conviction by offering equity upside alongside fixed income returns, enabling Lotus Resources to access capital while aligning investor returns with operational and share price performance.

New Security Class and ASX Quotation Status

The 66,287,879 warrants constitute a new security class for ASX purposes and will not be listed on the ASX. The company has applied for ASX classification and recording of these securities, which will be reflected in the company’s security register with details on exercise price, expiry, and terms. This approach ensures transparency regarding outstanding equity-equivalent securities and potential dilution.

Non-quotation of the warrants aligns with market norms for privately placed warrants attached to convertible debt facilities. This simplifies administrative requirements while maintaining full disclosure. Existing shareholders and investors can evaluate dilution risk through publicly available warrant terms, while CVI Investment Inc holds the warrants without separate market trading.

Capital Raise Purpose and Fund Utilization

The warrant issuance forms part of the AUD$35 million Convertible Note facility aimed at supporting Lotus Resources’ capital needs and project development. While specific fund allocation is not detailed, proceeds are expected to finance exploration, development, and corporate activities. The capital raise addresses the high funding demands of uranium project advancement toward feasibility and production decisions.

Securing committed capital reduces refinancing risk and allows management to focus on operational execution rather than capital markets. The convertible note and warrant structure offer potential upside through share price appreciation, while providing CVI Investment Inc fixed income plus equity optionality.

Risks of Warrant Exercise and Share Dilution

Exercising all 66,287,879 warrants at AUD$0.85 would result in issuing an equivalent number of new shares, causing significant dilution to existing shareholders’ ownership and earnings per share. Dilution depends on market conditions, share price relative to the exercise price, and warrant holder decisions. If share price exceeds AUD$0.85, warrant exercise incentives increase, maximizing dilution; if below, holders may abstain, avoiding dilution.

The five-year expiry extends the period during which dilution risk persists, creating uncertainty for shareholders. Exercise proceeds will generate cash inflows that management must deploy effectively to enhance shareholder value. Failure to do so could lead to dilution without commensurate value creation, adversely affecting shareholders. The risk magnitude depends on company performance and market conditions over the warrant term.

Regulatory Compliance and ASX Listing Rule Adherence

The warrant issuance complies with ASX Listing Rules, with the company applying for classification and adhering to disclosure and approval requirements. No confirmation regarding Listing Rule 6.1 equity terms was indicated at the update time. The issuance excludes related-party involvement under Listing Rule 10.11 and does not impose escrow restrictions, allowing CVI Investment Inc to trade warrants freely subject to any contractual terms.

No lead manager, broker, or underwriting arrangements were disclosed, suggesting direct negotiation with CVI Investment Inc. This reduces intermediary fees and reflects a bilateral financing relationship. Material fees and costs are disclosed in the Announcement, Presentation, and Prospectus dated 23 July 2026, enabling stakeholders to assess the capital’s economic cost.