MTR.L Regulatory News (MTR)

Immediate release 21 May 2014

Brady Exploration plc

("Brady" or the "Company")

Proposed subscription for new ordinary shares to raise £400,000 (before expenses)

Proposed issue of warrants

Proposed Share Capital Reorganisation

Proposed adoption of New Investing Policy

(together, the "Proposals")

The Board of Brady announces that, further to the announcement of 13 May 2014, the Company has conditionally raised £400,000 (before expenses) through a subscription at 0.5 pence per share (the "Subscription") in the Company. As part of the Proposals the Company will adopt a new investing policy that will continue to focus on the natural resources sector, but with a greater emphasis on opportunities in South East Asia. In the event that the Proposals are passed, it is the intention of the Company to change its name to Metal Tiger plc.

A general meeting of the Company is to be held at 9:00am on 16 June 2014 at the offices of Allenby Capital Limited, 3 St Helen's Place EC3A 6AB (the "General Meeting") to seek approval from Brady shareholders of the Proposals.

A circular in relation to the Proposals (the "Document") is expected to be posted to Brady shareholders tomorrow, together with a notice convening the General Meeting. The Document will also be made available on the Company's website, www.bradyexploration.com.

The purpose of the Document is to provide background on and set out the reasons for the Proposals, to explain why the Directors of Brady consider the Proposals to be in the best interests of the Company and its shareholders as a whole and to set out the resolutions to be considered at the General Meeting.

Set out below are edited extracts from the text of the letter from Alex Borrelli (Chairman of Brady), which is included in the Document.

Further announcements will be made in due course.

For further information on the Company, visit: www.bradyexploration.com or contact:

EDITED EXTRACTS FROM THE DOCUMENT

All defined terms used in this announcement shall have the meaning given to them in the Document unless otherwise defined herein.

Introduction

The Company announced on 21 May 2014 that it proposes to raise £400,000 (before expenses) by way of a conditional subscription of the Subscription Shares at the Subscription Price to qualified investors. The net proceeds of the Subscription will be used by the Company to pursue opportunities in accordance with the Company's New Investing Policy, to repay existing creditors and to fund the Company's general working capital requirements.

The Company is prohibited by the Act from issuing new Ordinary Shares at a price below their nominal value. The price at which the Company has been able to raise additional equity capital in the Subscription is 0.5 pence per share, being less than the current nominal value of its Existing Ordinary Shares. Accordingly, to enable the Subscription to proceed, it is necessary to reorganise the Company's share capital so that the Subscription Shares can be subscribed for at or above their nominal value. The Directors are therefore proposing a sub-division of each Existing Ordinary Share and unissued ordinary share of 1 pence each, into one New Ordinary Share of 0.01 pence each and one Deferred Share of 0.99 pence each. The Deferred Shares will effectively have no value will not be quoted and no share certificates will be issued in respect of the same. The Deferred Shares are required to be issued in order for the aggregate nominal value of a Deferred Share and a New Ordinary Share to remain at 1 pence. Following the Share Capital Reorganisation, each New Ordinary Share will have a nominal value of 0.01 pence.

Conditional on the Proposals being approved by Shareholders at the General Meeting, Nicholas Lee will step down from the Board with effect from Completion. It is intended that Cameron Parry and Paul Johnson will join the Board as Chief Executive Officer and Non-Executive Director respectively on Completion.

Pursuant to the Proposals the Company is also proposing, subject to shareholder approval, to adopt a New Investing Policy to reflect the new strategic direction of the Company. The Company will remain focused on investment opportunities in the natural resources sector primarily in the mining sector but with a revised geographical focus on South East Asia and its New Investing Policy will also cover mining projects that are in production. The New Investing Policy is summarised in below. It is also the intention of the Company to change the Company's name to Metal Tiger plc immediately following the passing of the Resolutions to reflect the proposed change in the Company's investing policy.

The Concert Party comprises certain of the Subscribers, being Michael Joseph, Goldbondsuper Pty Ltd, Goldfire Enterprises Pty Ltd, Steve Stone, Mineral Administration Services Pty Ltd, Roger Theaker, Andrew Cracknell and BlackStar, who, along with BlackStar's shareholders, are deemed to be acting in concert with each other for the purposes of the City Code. On Admission the Concert Party will be interested in 93,000,000 New Ordinary Shares representing 55.72 per cent. of the Enlarged Share Capital. This is by virtue of the issue of 68,000,000 of the Subscription Shares to the Subscribers who are deemed to be acting in concert with each other and the issue of the 25,000,000 BlackStar Shares to BlackStar. BlackStar has also subscribed for 2,000,000 Subscription Shares at the Subscription Price.

In addition, following Completion, the Company will issue BlackStar with the 40,000,000 BlackStar Warrants. As detailed in the Document it is also the intention of the BlackStar board to conduct a distribution of the BlackStar Shares and BlackStar Warrants to its existing shareholders, who are part of the Concert Party, prior to 31 July 2014. In the event of full conversion of the BlackStar Warrants the Concert Party could increase its stake to 64.28 per cent. of the voting rights of the Company. Without a waiver of the obligations under Rule 9 of the Code, the Proposals would require the Concert Party to make a Rule 9 Offer to acquire all the Ordinary Shares not already owned by it.

On Admission BlackStar will be interested in 27,000,000 New Ordinary Shares representing 16.18 per cent. of the Enlarged Share Capital and 40,000,000 warrants to subscribe for New Ordinary Shares. As detailed above it is the intention of the BlackStar board to conduct a distribution of the BlackStar Shares and BlackStar Warrants to its existing shareholders, who are part of the Concert Party, prior to 31 July 2014. Following this distribution, and the distribution of the 2,000,000 Subscription Shares subscribed for by BlackStar, BlackStar would have no remaining interest in the share capital of Brady. BlackStar has undertaken not to exercise the BlackStar Warrants prior to the distribution. However in the event that this distribution did not take place and BlackStar were to, in the future, exercise the BlackStar Warrants in full BlackStar would become interested in 67,000,000 New Ordinary Shares representing 32.38 per cent. of the issued share capital as enlarged by the exercise of the BlackStar Warrants. The exercise by BlackStar of the BlackStar Warrants would require BlackStar to make a Rule 9 Offer to acquire all the Ordinary Shares not already owned by it.

The Panel has approved a waiver of the obligations of the Concert Party to make a Rule 9 Offer without the requirement for the waiver to be approved by the Independent Shareholders at a general meeting following receipt of written confirmations agreeing to such waiver given by the Majority Shareholders, as Shareholders holding, in aggregate, in excess of 50 per cent. of the shares of the Company capable of being voted at a general meeting of the Independent Shareholders.

On Completion of the Subscription the Concert Party will hold more than 50 per cent. of the Company's voting share capital and may be able to increase its aggregate shareholding in the Company without incurring any obligation under Rule 9 to make a general offer to the Company's other Shareholders. Under the Takeover Code, whilst each member of the Concert Party continues to be treated as acting in concert, each member will be able to increase further his respective percentage shareholding in the voting rights of the Company without incurring an obligation under Rule 9 to make a general offer to Shareholders to acquire the entire issued share capital of the Company. However, individual members of the Concert Party will not be able to increase their percentage shareholding through or between a Rule 9 threshold, without the consent of the Panel.

On 7 June 2013 the Company released its audited accounts for the year ended 31 December 2012. These accounts revealed that the Company's net assets had fallen to £227,160 as at 31 December 2012, the sum of which was less than half of the £619,058 nominal value of its issued share capital at that date. Under the provisions of Section 656 of the Act such a position constitutes a serious loss of capital, which requires Shareholders to be informed and a general meeting of the Company to be convened.

The purpose of this letter is: (i) to provide you with the background to and to set out the reasons for, and details of, the Proposals; (ii) to explain why the Directors consider the Proposals to be in the best interests of the Company and its Shareholders as a whole; and (iii) to seek Shareholder approval for the Proposals. The Document also contains the Directors' recommendation that you vote in favour of the Resolutions to be proposed at the General Meeting, notice of which is set out at the end of the Document.

If the Resolutions set out in the Notice of General Meeting are not passed by Shareholders and/or the Subscription does not become unconditional, the Directors believe it is unlikely that the Company would be able to secure sufficient funding from other sources in the short term and would have to consider seeking the appointment of a receiver or administrator in the event that the Company was unable to recover the balance of the costs from EER in a timely manner.

Further details of the Subscription as well as the further details of the Share Capital Reorganisation are set out in the Document. The Subscription is conditional, inter alia, upon the passing of the Resolutions at the General Meeting. Irrevocable undertakings to vote in favour of the Resolutions have been received in respect of 33,002,836 Existing Ordinary Shares representing 53.31 per cent. of the existing issued share capital of the Company.

Set out at the end of the Document is a notice convening a General Meeting of the Company to be held at 9.00 a.m. on 16 June 2014 at the offices of Allenby, 3 St Helen's Place, London, EC3A 6AB at which the Resolutions will be proposed, the passing of which will enable the Share Capital Reorganisation and the Subscription to proceed.

Background to, and reasons for, the Subscription and use of funds

Following the announcement on 12 December 2013 of the termination of discussions between Brady and EER with regard to the acquisition of EER by Brady and associated fundraising, the Directors have considered several options for the future direction of the Company. Whilst the Board is confident that the Company will receive the full reimbursement of their costs associated with the EER acquisition as announced on 22 January 2014, there can be no guarantee as to the timing for the recovery of such costs. As at the date of the Document, the Company has recovered £50,000 of the amount owed to the Company by EER and is currently owed £171,000. In the event that such costs were recovered in a timely manner it would result in the Company having a positive net cash position. Notwithstanding this, the Company is currently cash constrained and has insufficient working capital to implement its business strategy without seeking additional financing.

The Directors have considered several options for equity financing and are pleased to announce today the proposed Subscription, amongst other proposals, which if approved would see the Company provided with sufficient working capital together with a new management team led by Cameron Parry as Chief Executive Officer of the Company. As part of the Proposals, Nicholas Lee will resign as a Director of Brady with effect from Admission and Cameron Parry and Paul Johnson, further details on both of whom can be found in the Document, will be appointed to the Board with effect from Admission.

The Directors believe that the net proceeds of the Subscription will provide the Company with the working capital required to pursue future opportunities in accordance with the New Investing Policy as well as repay existing creditors and to fund the Company's general working capital requirements going forward. Furthermore, the Directors believe that the new management is well placed to access new opportunities, in line with Brady's New Investing Policy.

Details of the Subscription

The Company is proposing to raise gross proceeds of £400,000 (approximately £340,000 net of estimated expenses) pursuant to the Proposals through the issue to qualified investors of the Subscription Shares at the Subscription Price.

The Subscription is not being made on a pre-emptive basis and Existing Shareholders will not have the right to participate in the Subscription. The Directors have decided to effect the fundraising by way of the Subscription rather than by offering all Shareholders the opportunity to acquire further shares. The Directors believe that the additional cost and delay incurred in connection with any such offer would not have been in the best interests of the Company. The Subscription is not being underwritten.

The Subscription Price represents a discount of approximately 9.09 per cent. to the closing middle market price of an Existing Ordinary Share of 0.55 pence on 21 May 2014, being the latest practicable date prior to the publication of the Document. The Subscription Shares will represent approximately 47.93 per cent. of the Enlarged Share Capital.

The Subscription Shares will be issued credited as fully paid and will rank pari passu in all respects, including the rights to receive all dividends and other distributions on or after the date on which they are issued.

Proposed Board Changes

Upon Admission, Cameron Parry and Paul Johnson will join the Board in the roles of Chief Executive Officer and Non-Executive Director respectively and Nicholas Lee will step down from the Board. I will remain on the Board as Non-Executive Chairman. Following Admission, the Board will consider the appointment of further Directors with specialised mining experience. Summary biographies on Cameron Parry and Paul Johnson, as new appointees to the Board, are set out below.

Cameron Parry, (aged 39), Proposed Chief Executive Officer

Cameron has over 12 years' experience in public company management, corporate finance, business development and project acquisition. He has been involved in the development of start-ups, pre-IPO and post-IPO companies across various industries including agribusiness, biotechnology, mining and IT. Cameron studied business administration at the University of Western Australia and is a member of British Mensa. Cameron will be responsible for implementing the Company's strategy in line with the New Investing Policy following Admission.

Cameron John Parry is or has been a director or partner of the following companies during the previous five years:

Current Directorships/Partnerships Directorships/Partnerships held in the past five years

Black Star Gold Pty Limited None

Buzz Central Limited

Mayfairex Limited

Biohealth Pty Limited

Bionosis Group Limited

Bionosis Technology Limited

In December 2006, Cameron Parry became a director of an Australian biotechnology company called Astop Biohealth Limited which was put into administration in June 2007 and subsequently liquidated in September 2007.

By virtue of his role as executive director of BlackStar, Cameron Parry will be deemed to be interested in the 25,000,000 Blackstar Shares, the 2,000,000 Subscription Shares subscribed for by BlackStar as well as the 40,000,000 BlackStar Warrants to be held by BlackStar on Admission. On Admission BlackStar will be interested in 27,000,000 New Ordinary Shares representing 16.18 per cent. of the Enlarged Share Capital.

Paul Johnson, (aged 44), Proposed Non-Executive Director

Paul is a co-founder of MiningMaven, an investor communications service focused on the natural resources sector. Paul is a Chartered Accountant in England and Wales, an Associate of the Chartered Institute of Loss Adjusters (2000) and of the Chartered Insurance Institute (2005). Paul holds a BSc (Hons) in Management Science from UMIST School of Management in Manchester.

Paul Johnson is or has been a director or partner of the following companies during the previous five years:

Current Directorships/Partnerships Directorships/Partnerships held in the past five years

Value At Risk Limited The Vitiligo Society

Value Generation Limited Catalyst Information Services Limited

Strathmore Accountants Limited

Open 2 Barter Limited

Commercial Assure Limited

Catalyst Strategies Limited

ECR Minerals plc

Save as set out above there are no other disclosures in respect of the appointments of Cameron Parry and Paul Johnson that fall to be made under Rule 17 or paragraph (g) of Schedule Two of the AIM Rules.

Adoption of New Investing Policy

The strategy of the Directors at the time of the adoption of the Existing Investing Policy was to pursue investments in a company or companies operating in the natural resources sector with a focus mainly but not exclusively on the mining sector. Opportunities in the wider natural resources sector formed part of this investing policy. The Company was reclassified as an Investing Company on 26 October 2011 and the Existing Investing Policy was adopted at this time.

In September 2012 the Company announced it had substantially implemented its Existing Investing Policy and satisfied the requirements of Rule 15 of the AIM Rules. Following the termination of the discussions in December 2013 between Brady and EER with regard to the acquisition of EER by Brady, the Company's remaining asset for the purposes of Rule 15 of the AIM Rules for Companies is the balance of the unsecured receivable of £171,000 due from EER.

Following the completion of the Proposals the Board intend to pursue potential investments that are covered by the Existing Investing Policy. However the Board considers it appropriate to now adopt a more specific investing policy.

The Directors are, as set out below and in Resolution 5 of the Notice of General Meeting, proposing to amend the Company's Existing Investing Policy to reflect its focus on investments in the mining sector in South East Asia and to cover mining projects in production.

The proposed investments to be made by the Company may be either quoted or unquoted; made by direct acquisition or through farm-ins; may be in companies, partnerships, joint ventures; or direct interests in mining projects. Target investments will generally be involved in projects in the exploration and/or development stage and/or producing mines. The Company's equity interest in a proposed investment may range from a minority position to 100 per cent. ownership.

The Company will initially focus on projects located in South East Asia but will also consider investments in other geographical regions.

The Directors will identify and assess potential investment targets and, where they believe further investigation is required, intend to appoint appropriately qualified advisers to assist. They believe they have a broad range of sources of potential opportunities.

The Company proposes to carry out a comprehensive and thorough project review process in which all material aspects of any potential investment will be subject to appropriate due diligence. It is likely that the Company's financial resources will be invested in a small number of projects or potentially in just one investment, which may be deemed to be a reverse takeover under the AIM Rules.

Where this is the case, the Board intends to mitigate risk by undertaking an appropriate due diligence process. Any transaction constituting a reverse takeover under the AIM Rules will require Shareholder approval and the publication by the Company of an admission document meeting the requirements of the AIM Rules. The Board has not, however, excluded the possibility of building a broader portfolio of investment assets.

The Company intends to deliver Shareholder returns principally through capital growth rather than income distribution via dividends. Given the nature of the New Investing Policy, the Company does not intend to make regular periodic disclosures or calculations of net asset value. The Board considers that, in due course, the Company may require additional funding as investments are made and new investment opportunities arise.

The Company will consider raising additional funds, either in the form of equity or debt, to help implement the New Investing Policy, if and when required. The net proceeds of the Subscription will enable the Company to take initial steps to implement this new strategy.

BlackStar and the BlackStar Shares

BlackStar is a non-trading private company registered and incorporated in Australia in 2010 for the purpose of expending private capital creating and pursuing various mining opportunities in Thailand. To date it has spent approximately £150,000 over three years investigating Thailand for precious metals exploration potential and has identified multiple exploration and mining opportunities in Thailand and has formed a considerable network of contacts and infrastructure. BlackStar's executive director Cameron Parry is to be appointed CEO of Brady. BlackStar has agreed to introduce Subscribers to take part in the Subscription, inject its key executive management, identified targets, branding and business strategy and will be issued with 25,000,000 New Ordinary Shares at 0.01 pence per New Ordinary Share as well as the BlackStar Warrants.

On Admission BlackStar will be interested in 27,000,000 New Ordinary Shares representing 16.18 per cent. of the enlarged issued share capital of the Company including the 2,000,000 Subscription Shares for which it has subscribed.

As BlackStar will cease to have a purpose following Admission, it is the intention of the BlackStar board to wind down BlackStar following Completion and to conduct a distribution of the BlackStar Shares and BlackStar Warrants to its existing shareholders and management and take steps for the company to be subsequently wound up. It is the intention of the board of BlackStar that this exercise will commence prior to 31 July 2014.

BlackStar has undertaken not to exercise the BlackStar Warrants prior to the distribution. However in the event that this distribution did not take place and BlackStar were to, in the future, exercise the BlackStar Warrants in full, BlackStar would become interested in 67,000,000 New Ordinary Shares representing 32.38 per cent. of the issued share capital as enlarged by the exercise of the BlackStar Warrants. The exercise by BlackStar of the BlackStar Warrants would require BlackStar to make a Rule 9 Offer to acquire all the Ordinary Shares not already owned by it.

Articles of Association

The existing articles refer to the Companies Acts 1985 and 1989. The Company is proposing to adopt the Articles to remedy this and bring the existing articles up to date and in line with the Companies Act 2006. The Articles shall also take into account the proposed Deferred Shares that shall come into issue should the Share Capital Reorganisation be approved.

In addition, under the existing articles, Brady is required to have a minimum of three directors at all times; however, since 26 October 2011, the Board has comprised two directors only. Conversely the quorum for Board decisions, however, requires only two directors and so there has been no impact on the validity of decisions made by the Board. The existing articles are therefore clearly contradictory and by adopting the Articles this anomaly will be corrected. Also for good order, resolution 2 is being proposed at the General Meeting to ratify all acts of the Company carried out whilst the Board comprised only two directors (not including acts of negligence, default, breach of duty or breach of trust in relation to the Company).

Issue of BlackStar Warrants and Brady Warrants

Following Completion, the Company will issue 40,000,000 BlackStar Warrants exercisable at 0.5 pence per warrant for a period of three years to BlackStar who in turn shall transfer the warrants to BlackStar's shareholders.

The Company has an unsecured receivable of £221,000 due from EER of which £50,000 has already been received by the Company. Following Completion the Company will create 61,905,803 Brady Warrants. The number of Brady Warrants which become "exercisable warrants" depends on the monies received by the Company from EER in cleared funds. Only once the Company receives at least £100,000 of the Unsecured Receivable in cleared funds will any of the Brady Warrants become exercisable. Any further Brady Warrants becoming "exercisable warrants" is dependent on the Company receiving at least 50% of the balance of the Unsecured Receivable once the initial conversion into "exercisable warrants" has occurred.

The Brady Warrants shall lapse after five years from the date of the General Meeting if the conditions in the warrant instrument have not been satisfied. The terms of the Brady Warrants and the calculation to determine the exercise price for the same are summarised in the Document.

Following the issue of the Brady Warrants and the BlackStar Warrants there will be a total of 101,905,803 warrants in issue.

No application will be made to the London Stock Exchange for admission of the Brady Warrants or the BlackStar Warrants to trading on AIM nor will any such application be made to any other exchange. The two warrant instruments will be constituted following the passing of the Resolutions at the General Meeting.

The exercise of the Brady Warrants by Existing Shareholders could give rise to a taxable benefit for Existing Shareholders and each Existing Shareholder should take their own, independent tax advice.

The Options held by myself and Nicholas Lee have been cancelled with immediate effect and there are no other options over Existing Ordinary Shares in issue as at the date of the Document.

Takeover Code

The Subscription, the issue of the BlackStar Shares, the issue of the BlackStar Warrants and the future distribution by BlackStar of the BlackStar Shares and BlackStar Warrants to its existing shareholders, gives rise to certain considerations under the City Code. Brief details of the Panel, the City Code and the protections they afford are described below.

The City Code is issued and administered by the Panel. The City Code applies to all takeover and merger transactions, however effected, where the offeree company is, amongst other things, a listed or unlisted public company resident in the United Kingdom (and to certain categories of private limited companies). The Company is a listed public company and its Shareholders are entitled to the protections afforded by the City Code.

Under Rule 9 of the City Code, where any person acquires, whether by a series of transactions over a period of time or not, an interest in shares which (taken together with shares already held by him and an interest in shares held or acquired by persons acting in concert with him) carry 30 per cent. or more of the voting rights of a company which is subject to the City Code, that person is normally required to make a general offer to all the holders of any class of equity share capital or other class of transferable securities carrying voting rights in that company to acquire the balance of their interests in the company.

Rule 9 of the City Code also provides that, among other things, where any person who, together with persons acting in concert with him, is interested in shares which in aggregate carry not less than 30 per cent., but not more than 50 per cent. of the voting rights of a company which is subject to the City Code, and such person, or any person acting in concert with him, acquires an additional interest in shares which increases the percentage of shares carrying voting rights in which he is interested, then such person is normally required to make a general offer to all the holders of any class of equity share capital or other class of transferable securities carrying voting rights of that company to acquire the balance of their interests in the company.

An offer under Rule 9 of the City Code must be in cash (or with a cash alternative) and at the highest price paid within the preceding 12 months for any shares in the company by the person required to make the offer or any person acting in concert with him.

Under the City Code, a concert party arises when persons who, pursuant to an agreement or understanding (whether formal or informal), co-operate through the acquisition by any of them of shares in a company in order to obtain or consolidate control of that company. Under the City Code, control means an interest or interest in shares carrying in aggregate 30 per cent. or more of the voting rights of a company, irrespective of whether such interest or interests give de facto control.

Rule 9 of the City Code further provides, amongst other things, that where any person who, together with persons acting in concert with him holds over 50 per cent. of the voting rights of a company, acquires an interest in shares which carry additional voting rights, then they will not generally be required to make a general offer to the other shareholders to acquire the balance of their shares.

The Panel has approved a waiver of the obligations of the Concert Party or BlackStar to make a Rule 9 Offer without the requirement for the waiver to be approved by the Independent Shareholders at a general meeting following receipt of written confirmations agreeing to such waiver given by the Majority Shareholders, as Shareholders holding, in aggregate, in excess of 50 per cent. of the shares of the Company capable of being voted at a general meeting of the Independent Shareholders.

The Concert Party comprises certain of the Subscribers, being Michael Joseph, Goldbondsuper Pty Ltd, Goldfire Enterprises Pty Ltd, Steve Stone, Mineral Administration Services Pty Ltd, Roger Theaker, Andrew Cracknell and BlackStar, who, along with BlackStar's shareholders, are deemed to be acting in concert with each other for the purposes of the City Code. Following the issue of 68,000,000 of the Subscription Shares to these subscribers and the issue of the 25,000,000 BlackStar Shares, the Concert Party will be interested in 93,000,000 New Ordinary Shares representing 55.72 per cent. of the Enlarged Share Capital on Admission.

In addition following Completion the Company will issue BlackStar with the 40,000,000 BlackStar Warrants. As detailed in paragraph 8 of Part I of the Document it is also the intention of the BlackStar board to conduct a distribution of the BlackStar Shares and BlackStar Warrants to its existing shareholders, who are part of the Concert Party, prior to 31 July 2014. In the event of full conversion of the BlackStar Warrants the Concert Party could increase its stake to 64.28 per cent. of the voting rights of the Company. Without a waiver of the obligations under Rule 9 of the Code, the Proposals would require the Concert Party to make a Rule 9 Offer to acquire all the Ordinary Shares not already owned by it.

On Admission BlackStar will be interested in 27,000,000 New Ordinary Shares representing 16.18 per cent. of the Enlarged Share Capital and 40,000,000 warrants to subscribe for New Ordinary Shares. As detailed above it is the intention of the BlackStar board to conduct a distribution of the BlackStar Shares and BlackStar Warrants to its existing shareholders, who are part of the Concert Party, prior to 31 July 2014. Following this distribution, and the distribution of the 2,000,000 Subscription Shares subscribed for by BlackStar, BlackStar would have no remaining interest in the share capital of Brady. BlackStar has undertaken not to exercise the BlackStar Warrants prior to the distribution. However in the event that this distribution did not take place and BlackStar were to, in the future, exercise the BlackStar Warrants in full BlackStar would become interested in 67,000,000 New Ordinary Shares representing 32.38 per cent. of the issued share capital as enlarged by the exercise of the BlackStar Warrants. The exercise by BlackStar of the BlackStar Warrants would require BlackStar to make a Rule 9 Offer to acquire all the Ordinary Shares not already owned by it.

Dispensation from General Offer

Under Note 1 on the Notes on the Dispensations from Rule 9 of the City Code, the Panel will normally waive the requirement for a Rule 9 Offer if, amongst other things, the shareholders of a company who are independent of the person who would otherwise be required to make an offer and any person acting in concert with him pass an ordinary resolution on a poll at a general meeting approving such a waiver. The Panel may waive the requirement for a resolution to be considered at a general meeting (and for a circular to be prepared in accordance with Section 4 of Appendix 1 to the City Code) if independent shareholders holding more than 50 per cent. of the company's shares capable of being voted on such a resolution confirm in writing that they would vote in favour of the waiver were such a resolution to be put to the shareholders of the company at a general meeting.

The Company has obtained such written confirmation from the Majority Shareholders who are Independent Shareholders and the Panel has accordingly waived the requirement for a resolution to be put to a meeting of Independent Shareholders. Accordingly, the Subscription and the issue of the BlackStar Shares may be effected without the requirement for the Concert Party to make a Rule 9 Offer.

On Completion of the Subscription the Concert Party will hold more than 50 per cent. of the Company's voting share capital and may be able to increase its aggregate shareholding in the Company without incurring any obligation under Rule 9 to make a general offer to the Company's other Shareholders. Under the Takeover Code, whilst each member of the Concert Party continues to be treated as acting in concert, each member will be able to increase further his respective percentage shareholding in the voting rights of the Company without incurring an obligation under Rule 9 to make a general offer to Shareholders to acquire the entire issued share capital of the Company. However, individual members of the Concert Party will not be able to increase their percentage shareholding through or between a Rule 9 threshold, without the consent of the Panel.

Related party transactions

Variation to terms of existing loan agreement with Paternoster Resources

On 29 April 2013 the Company entered into a loan agreement with Paternoster Resources, the Company's largest shareholder with an interest in 27.4 per cent. of the Company's issued share capital, for an amount of £60,000. Nicholas Lee, a Non-Executive Director of the Company, is Executive Chairman of Paternoster Resources. The Loan was for a term of 12 months and bears interest at the rate of 10 per cent per annum which accrues and is payable, along with the principal, on expiry of the term of the Loan.

The Company and Paternoster Resources have today entered into a variation to the existing loan agreement to extend the term of the loan to 31 October 2014. All other terms of the Loan remain unchanged.

The variation to the loan agreement with Paternoster Resources is classified as a related party transaction under the AIM Rules for Companies. Alex Borrelli, the independent director for the purposes of the Loan, having consulted with Allenby, the Company's nominated adviser, considers the terms of the variation of the Loan to be fair and reasonable insofar as the shareholders of Brady are concerned.

Issue of Brady Warrants to Paternoster Resources and Paul Jackson

Under the AIM Rules, Paternoster Resources is classified as a substantial shareholder in the Company and the issue of Brady Warrants to Paternoster Resources constitutes a related party transaction. Alex Borrelli, the independent Director for the purposes of the issue of the Brady Warrants to Paternoster Resources, having consulted with the Company's nominated adviser, Allenby, considers that the issue of the Brady Warrants to Paternoster Resources is fair and reasonable insofar as Shareholders are concerned.

Under the AIM Rules, Paul Jackson is classified as a substantial shareholder in the Company and the issue of Brady Warrants to Paul Jackson constitutes a related party transaction. The Directors, having consulted with the Company's nominated adviser, Allenby, consider that the issue of the Brady Warrants to Paul Jackson is fair and reasonable insofar as Shareholders are concerned.

General Meeting

You will find set out at the end of the Document a notice convening the General Meeting to be held at the offices of Allenby, 3 St Helen's Place, London, EC3A 6AB at 9.00 a.m. on 16 June 2014 as well as a Form of Proxy. The terms of the Resolutions are set out in the Notice of General Meeting.

The following resolutions will be proposed at the General Meeting:

Special resolutions to:

a) adopt new articles of association to update certain provisions and recent changes pursuant to the Act;

b) ratify all acts carried out by the Directors since 26 October 2011 due to the inadvertent technical breach of one article of its existing articles of association; and

c) disapply statutory pre-emption rights under Section 561 of the Act.

Ordinary resolutions to:

d) consider what if any steps should be taken to deal with the fact that the net assets of the Company are one half or less of its called up share capital;

e) approve the Share Capital Reorganisation;

f) adopt the New Investing Policy; and

g) authorise the Board to allot relevant equity securities under Section 551 of the Act.

Irrevocable undertakings

Paternoster Resources, Paul Jackson, Ken Dulieu and Ian Jefferson have irrevocably undertaken to vote in favour of the Resolutions in respect of their aggregate beneficial holdings of 33,002,836 Existing Ordinary Shares representing approximately 53.31 per cent. of the Existing Ordinary Shares.

Recommendation

Having consulted with the Company's advisers, the Directors consider the Proposals to be fair and reasonable and in the best interests of Shareholders and the Company as a whole.

Accordingly, the Directors unanimously recommend that all Shareholders vote in favour of the Resolutions at the General Meeting.

If the Resolutions set out in the Notice of General Meeting are not passed by Shareholders and/or the Subscription does not become unconditional, the Directors believe it is unlikely that the Company would be able to secure sufficient funding from other sources in the short term and would have to consider seeking the appointment of a receiver or administrator in the event that the Company was unable to recover the balance of the costs from EER in a timely manner.