Rockfire Regulatory News (ROCK)

Papua Mining plc

("Papua" or the "Company")

Proposed Placing of 26,200,000 Placing Shares to raise £262,000

Offer for Subscription

Related Party Transactions

and

Share Capital Reorganisation and Notice of General Meeting

· New financing of £400,000 raised via combination of conditional placing and loans to the Company

· Offer for subscription for up to a further £262,000

· Surface target confirmed at Mount Visi with drilling due to commence shortly

The Company announces today that it has conditionally agreed to raise up to £262,000 (before expenses) through the issue of 26,200,000 Placing Shares by way of the Placing at 1 penny per Placing Share to certain current Shareholders.

Michael Somserset-Leeke ("MSL"), who is a substantial shareholder in the Company is participating in the Placing, and has also agreed to provide an interest-free Short Term Loan of £50,000 to the Company. MSL has also agreed to make available a further £88,000 by way of the subscription for Convertible Loan Notes in the Company. The issue of the Convertible Loan Notes is subject to shareholder approval at the General Meeting and, subject to approval, the Short Term Loan will also be repaid by the Company and replaced by Convertible Loan Notes of the same amount so that an aggregate of £138,000 Convertible Loan Notes will be issued by the Company to MSL.

As a Substantial Shareholder, the participation of MSL in the Placing and the issue of Convertible Loan Notes to MSL constitute related party transactions under Rule 13 of the AIM Rules. The Directors consider that, having consulted with Cenkos, the participation of MSL in the Placing and the issue of Convertible Loan Notes are fair and reasonable in so far as Shareholders are concerned.

In addition, the Board of the Company are offering Qualifying Shareholders an opportunity to participate in an Offer for Subscription of the Company at the Offer Price which is the same as the Placing Price to raise up to £262,000 in addition to the funds raised from the Placing.

The Board feels strongly that existing Shareholders should, where it is practical for them to do so, have the opportunity to participate in the capital raising process at the same price as was offered to those participating in the Placing.

The Company has also agreed to issue 2,1000,000 New Ordinary Shares to John Benseman ("Benseman Shares") at the Placing Price, in lieu of £21,000 of rent invoiced and now payable for the Group's offices in Papua New Guinea for the period from October 2015 to March 2016.

The Company intends to use the net proceeds of the Placing (which are expected to be approximately £245,000), any additional funds received by way of the Offer for Subscription and the funds received pursuant to the subscription of the Convertible Loan Notes, to complete the geochemical sampling programme at Mount Visi and to carry out the initial phase of drilling.

In May 2014, the Company announced discovery of surface samples grading up to 35 grams per tonne gold and 9 per cent. copper in Mount Visi, at the eastern edge of the Group's licence EL2051 which straddles West New Britain and East New Britain provinces. The Group immediately made application for the adjacent ground to the east. The new licence EL2322 was granted in September 2015. The Group's exploration team commenced exploratory work in the new licence area and discovered an extensive area of intensive potassic alteration at surface approximately 1,000 metres east of the initial mineral discovery which also coincides with a circular feature visible in the aeromagnetic data from the area. Such potassic alteration is characteristic of the core zonation of copper porphyry deposits. The Group's geologists have confirmed significant copper mineralisation in several of the potassic alteration outcrops. Petrography work has demonstrated that these samples contain evidence of porphyry-style mineralisation in their alteration and vein assemblages (K-feldspar, quartz, magnetite, hematite, biotite), vein textures (M and A type veins) and hypogene copper and molybdenum minerals (chalcopyrite, bornite and molybdenite). The Group recently completed a soil geochemistry sampling grid over a four square kilometre area in Mount Visi and analysis of the samples is underway. Whilst the target area is already constrained by the mapped circular feature, the soil sampling results will define parts of the mineralised system for priority drilling which will follow immediately on this remote but exciting zone.

The Group will shortly be ready to test the Mount Visi target with a series of shallow drill holes and has secured a suitable light drill rig to commence an initial drilling programme. The target area is remote and inaccessible to vehicles and a light heli-portable drill rig with a depth capability of 250 metres will be utilised. The rig will be helicopter lifted over a distance of ten kilometres from our supply camp to the first drill target. Moves between drill sites will be effected by dismantling the rig and transporting the equipment by man power. The rig is scheduled to arrive at the port of Kimbe in early-December. It is expected that the drilling programme will commence in mid-December and will continue throughout February 2016.

Share Capital Reorganisation and Notice of General Meeting

English company law prohibits a public company from issuing its shares at a price that is less than its nominal value. In order to permit the Placing Shares and the Offer Shares to be subscribed for at 1 penny (and for the conversion rights contained in the Convertible Loan Notes to be exercised at the same price), which is lower than the current par value of the Existing Ordinary Shares, the Company is proposing to divide each issued Existing Ordinary Share into one New Ordinary Share and one Deferred Shares and to divide each unissued Existing Ordinary Share into 100 New Ordinary Shares as part of the Share Capital Reorganisation.

The Directors will require Shareholder authority to effect the Share Capital Reorganisation and to allot the Placing Shares and Offer Shares (if any). The Offer for Subscription is conditional, inter alia, on the Placing proceeding and Admission of the Placing Shares taking place and the Placing itself is conditional, inter alia, on the passing of the Placing Resolutions and the Share Capital Reorganisation Resolution at the General Meeting. As such, the Offer for Subscription will not proceed if either the Share Capital Reorganisation is not effected or the Placing is not completed and Admission of the Placing Shares does not become effective. In addition, it is noted that Shareholder authority is also required for the issue of the Convertible Loan Notes and will be subject to the passing of the Convertible Loan Note Resolutions at the General Meeting.

A General Meeting to consider the proposals in relation to the Fundraising and Share Capital Reorganisation will be held at the offices of Fasken Martineau LLP, Third Floor, 17 Hanover Square, London, W1S 1HU at 11.00 am on 21 December 2015.

Application will be made to the London Stock Exchange for the Placing Shares, the Offer Shares and the Benseman Shares to be admitted to trading on AIM. Subject to the passing of the Resolutions at the General Meeting, it is expected that Admission of the Placing Shares, the Benseman Shares and the Offer Shares will become effective and that dealings will commence at 8.00 a.m. on 22 December 2015.

The Circular will be posted today to Shareholders and sets out in more detail the background to and reasons for the Placing, Offer for Subscription, Loans to the Company and Share Capital Reorganisation. All capitalised terms in this announcement are as defined in the Circular which will be available free of charge on the Company's website: www.papuamining.com.

Hugh McCullough, Director of Papua Mining plc, said:

 "The Mount Visi target is particularly exciting, given its occurrence at surface and the coexistence of so many strong indicators of nearby mineralised porphyry development. We are eagerly awaiting the commencement of the preliminary drilling programme and thank our shareholders for showing their continued support to the business."

Enquires:

1. Introduction

The Company announces that it had conditionally agreed to raise up to £262,000 (before expenses) through the issue of 26,200,000 Placing Shares by way of the Placing at 1 penny per Placing Share to certain current Shareholders. The Placing Price represents a discount of approximately 53.0 per cent. to the Closing Price of 2.125 pence on 1 December 2015, this being the last practicable date prior to the publication of this Document.

The Company is also offering Qualifying Shareholders an opportunity to participate in an Offer for Subscription of the Company at the Offer Price which is the same as the Placing Price to raise up to £262,000 in addition to the funds raised from the Placing and the subscription for the Convertible Loan Notes.

The Board feels strongly that existing Shareholders should, where it is practical for them to do so, have the opportunity to participate in the capital raising process at the same price as was offered to those participating in the Placing.

English company law prohibits a public company from issuing its shares at a price that is less than its nominal value. In order to permit the Placing Shares and the Offer Shares to be subscribed for at 1 penny (and for the conversion rights contained in the Convertible Loan Notes to be exercised at the same price), which is lower than the current par value of the Existing Ordinary Shares, the Company is proposing to divide each issued Existing Ordinary Share into one New Ordinary Share and one Deferred Shares and to divide each unissued Existing Ordinary Share into 100 New Ordinary Shares as part of the Share Capital Reorganisation.

The Directors will require Shareholder authority to effect the Share Capital Reorganisation and to allot the Placing Shares and Offer Shares (if any). The Offer for Subscription is conditional, inter alia, on the Placing proceeding and Admission of the Placing Shares taking place and the Placing itself is conditional, inter alia, on the passing of the Placing Resolutions and the Share Capital Reorganisation Resolution at the General Meeting. As such, the Offer for Subscription will not proceed if either the Share Capital Reorganisation is not effected or the Placing is not completed and Admission of the Placing Shares does not become effective. In addition, it is noted that Shareholder authority is also required for the issue of the Convertible Loan Notes and will be subject to the passing of the Convertible Loan Note Resolutions at the General Meeting.

2. Background to and reasons for the Placing

Since the Company's admission to AIM in March 2012, the Group has expended approximately US$15 million on exploration and related activities with the aim of identifying gold and copper deposits in its licence areas in Papua New Guinea. Most of this expenditure has been on the licences held on New Britain Island.

Mount Visi target

In May 2014, the Company announced discovery of surface samples grading up to 35 grams per tonne gold and 9 per cent. copper in Mount Visi, at the eastern edge of the Group's licence EL2051 which straddles West New Britain and East New Britain provinces. The Group immediately made application for the adjacent ground to the east. The new licence EL2322 was granted in September 2015. The Group's exploration team commenced exploratory work in the new licence area and discovered an extensive area of intensive potassic alteration at surface approximately 1,000 metres east of the initial mineral discovery which also coincides with a circular feature visible in the aeromagnetic data from the area. Such potassic alteration is characteristic of the core zonation of copper porphyry deposits. The Group's geologists have confirmed significant copper mineralisation in several of the potassic alteration outcrops. Petrography work has demonstrated that these samples contain evidence of porphyry-style mineralisation in their alteration and vein assemblages (K-feldspar, quartz, magnetite, hematite, biotite), vein textures (M and A type veins) and hypogene copper and molybdenum minerals (chalcopyrite, bornite and molybdenite). The Group recently completed a soil geochemistry sampling grid over a four square kilometre area in Mount Visi and analysis of the samples is underway. Whilst the target area is already constrained by the mapped circular feature, the soil sampling results will define parts of the mineralised system for priority drilling which will follow immediately on this remote but exciting zone.

Tripela and other targets

Drilling took place throughout 2013, 2014 and the first quarter of 2015 in the Mount Nakru area of licence EL1462, totalling more than 9,000 metres, culminated in the intersection of extensive inner propylitic alteration at depth in each of the last four drill holes at the Tripela target. This alteration is diagnostic of proximity to a mineralised porphyry centre. While the Group believes that it is very close to the discovery of a mineralised porphyry at Tripela, given the target depth it has been decided to postpone further drilling until market conditions improve.

3. Use of Proceeds

The Company intends to use the net proceeds of the Placing (which are expected to be approximately £245,000), any additional funds received by way of the Offer for Subscription and the funds received pursuant to the subscription of the Convertible Loan Notes, to complete the geochemical sampling programme at Mount Visi and to carry out the initial phase of drilling.

The Group will shortly be ready to test the Mount Visi target with a series of shallow drill holes and has secured a suitable light drill rig to commence an initial drilling programme. The target area is remote and inaccessible to vehicles and a light heli-portable drill rig with a depth capability of 250 metres will be utilised. The rig will be helicopter lifted over a distance of ten kilometres from our supply camp to the first drill target. Moves between drill sites will be effected by dismantling the rig and transporting the equipment by man power.. The rig is scheduled to arrive at the port of Kimbe in early-December. It is expected that the drilling programme will commence in mid-December and will continue throughout February 2016.

The Offer for Subscription is conditional, inter alia, upon the Shareholders approving completion of the Placing and the Placing Shares being issued and Admission of the Placing Shares taking place and the Share Capital Reorganisation and the subscription of the Convertible Loan Notes. In the event that the Offer Resolutions are not passed but the Placing Resolutions, the Share Capital Reorganisation Resolutions and the Convertible Loan Note Resolutions are passed, then the Share Capital Reorganisation the Placing and the subscription for the Convertible Loan Notes would still proceed but the Offer for Subscription would not. If the Placing Resolutions, the Share Capital Reorganisation Resolutions and the Convertible Loan Note Resolutions are not passed by Shareholders at the General Meeting, the Fundraising (including the Offer for Subscription) would be unable to proceed. In this situation, the Company would not have cash resources to continue with its planned exploration programme and would need to consider alternative strategic options. These options could include raising finance from alternative sources, disposals of assets, further reducing the fixed costs of the Company or a sale of the Company at a price which the Directors believe would not recognise the potential long-term value of the business. Any one, or all, of these remedial actions could have a significant adverse or dilutive effect on the interests of Shareholders and in the valuation of the Company. Your attention is drawn to the risk factors in Part III of this Document.

4. Summary Financial Position

The summary financial information set out below is extracted from the audited accounts of the Group for the years ended on 31 December 2013 and 31 December 2014 and from the unaudited interim financial statements of the Group for the period ended 30 June 2015.

The audited consolidated financial statements for the Group for the year ended 31 December 2014 were published on 30 June 2015, in line with statutory requirements.

5. Terms of the Placing and Offer for Subscription

Placing

The Company announces it has conditionally placed 26,200,000 Placing Shares at the Placing Price per Placing Share with certain existing Shareholders to raise £262,000 before expenses. The Placing has not been underwritten and is conditional (among other things) upon the Placing Resolutions being passed at the General Meeting. The Placing Shares will, when issued, rank pari passu in all respects with the New Ordinary Shares.

Admission is expected to take place and dealings in the Placing Shares on AIM are expected to commence at 8.00 a.m. on 22 December 2015.

Offer for Subscription

The Company considers it important that Shareholders have an opportunity (where their circumstances permit) to participate in the Fundraising on equivalent terms and conditions to the Placing and accordingly, the Company is making the Offer for Subscription to Qualifying Shareholders. Application for Offer Shares pursuant to the Offer for Subscription must be for at least the Minimum Subscription. Applications for less than the Minimum Subscription will be rejected.

Admission is expected to take place and dealings in the Offer Shares on AIM are expected to commence at 8.00 a.m. on 22 December 2015.

The Offer for Subscription is not an open offer or rights issue and Qualifying Shareholders will not have an automatic entitlement to subscribe for a pro rata number of shares. However, each Qualifying Shareholder may apply for such number of Offer Shares as they wish (over the Minimum Subscription) up to the full number of 26,200,000 Offer Shares available in the Offer for Subscription. In the event that one or more Qualifying Shareholders apply for an aggregate amount that is greater than £262,000, the Directors will use their discretion to scale back such applications such that this maximum is not exceeded. The Directors will use this discretion to first scale back any Qualifying Shareholders who are participating in the Placing in the event that they also choose to apply for Offer Shares, so as to ensure that Qualifying Shareholders who are not participating in the Placing are able, to the fullest extent possible, to receive the maximum number of Offer Shares for which they have applied.  

In order to apply for Offer Shares, Qualifying Shareholders should complete the Application Form in accordance with the instructions set out on it and return it and the appropriate remittance, by post to Computershare, Corporate Actions Projects, Bristol BS99 6AH or by hand (during normal business hours only) to Computershare The Pavilions, Bridgwater Road, Bristol BS13 8AE, together, in each case, with payment in full, so as to be received no later than 11.00 a.m. on 17 December 2015.

Overseas Shareholders

Overseas Shareholders may not be permitted to subscribe for Offer Shares pursuant to the Offer for Subscription and should confirm their individual position first. Shareholders are also directed to the relevant paragraphs in Part IV of this Document including paragraph (e).

If you are a Qualifying Shareholder you will have received an Application Form which gives details of your Qualifying Shareholder's Entitlement under the Offer (as shown by the number of the Offer Entitlements allocated to you). If you wish to apply for Offer Shares under the Offer, you should complete the accompanying Application Form in accordance with the procedure for application set out on the Application Form. The completed Application Form, accompanied by full payment, should be returned by post or by hand (during normal business hours only) to Computershare Investor Services PLC, The Pavilions, Bridgewater Road, Bristol BS99 6ZY so as to arrive as soon as possible and in any event no later than 11.00 a.m. on 17 December 2015.

Dilutionary Impact of Fundraising

The proposed issue of Placing Shares pursuant to the Placing and the Benseman Shares will dilute existing shareholdings of Shareholders. Qualifying Shareholders will be able to mitigate the extent of this dilution by applying for Offer Shares in the Offer for Subscription (and assuming all Offer Shares and subscribed for).

The following table outlines the maximum dilution (excluding any potential future conversion of the Convertible Loan Notes) which a Shareholder will be subject to if he/she does not participate in the Placing or the Offer for Subscription:

Maximum Dilution

Following the Placing and the issue of the Benseman Shares 35.6%

Following the Fundraising 51.6%

6. Substantial Shareholder participation in the Fundraising

Substantial Shareholders

MSL is currently, prior to the Placing the Offer for Subscription and the issue of the Benseman Shares, interested in (in aggregate) 11,991,102 Existing Ordinary Shares, representing approximately 23.4 per cent. of the Existing Ordinary Share capital of the Company and is therefore regarded as a Substantial Shareholder under the AIM Rules. He has agreed to invest £112,000 in the Placing to subscribe for 11,200,000 Placing Shares. As a Substantial Shareholder, his participation in the Placing constitutes a related party transaction under Rule 13 of the AIM Rules.

The Directors consider that, having consulted with Cenkos, the terms of MSL's participation in the Placing are fair and reasonable in so far as Shareholders are concerned.

Following completion of the Placing and the issue of the Benseman Shares, and assuming nil take-up by Qualifying Shareholders under the Offer for Subscription, MSL will hold 23,191,102 Ordinary Shares, equivalent to 29.17 per cent. of the Enlarged Share Capital.

In order to regulate the continued relationship between the Company and MSL, as a significant shareholder of the Company, on 3 December 2015 the Company entered into a relationship agreement with MSL.

7. Short Term Loan from Substantial Shareholder and the Convertible Loan Note Instrument

In addition to his participation in the Placing, as set out in paragraph 6 above, MSL has also agreed to provide the Short Term Loan amounting to £50,000 to the Company on the condition that the funds provided shall be used to complete the geochemical sampling programme at Mount Visi and to carry out the initial phase of drilling there following completion of the geochemical survey and as working capital for the Company ahead of Completion. There is no interest payable on the Short Term Loan.

In addition, MSL has also agreed to make available a further £88,000 by way of the subscription for Convertible Loan Notes by the Company to MSL. The issue of the Convertible Loan Notes is subject to shareholder approval at the General Meeting and, subject to approval, the Short Term Loan will also be repaid by the Company and replaced by Convertible Loan Notes of the same amount so that an aggregate of £138,000 Convertible Loan Notes will be issued by the Company to MSL.

As a Substantial Shareholder, the issue of Convertible Loan Notes to MSL constitutes a related party transaction under Rule 13 of the AIM Rules. The Directors consider that, having consulted with Cenkos, the issue of Convertible Loan Notes to MSL is fair and reasonable in so far as Shareholders are concerned.

The Convertible Loan Note Instrument constitutes unsecured Convertible Loan Notes which are repayable on the Redemption Date unless previously converted into New Ordinary Shares (subject to the satisfaction of certain conditions) at the Conversion Price (being the same as the Placing Price). The New Ordinary Shares into which the Convertible Loan Notes can be converted will rank pari passu in all respects with the New Ordinary Shares then in issue, and application will be made for such New Ordinary Shares to be admitted to trading on AIM. However, the Convertible Loan Notes will not be admitted to trading on AIM or on any other recognised investment exchange.

Save as set out in the paragraph below, the Convertible Loan Notes are convertible into New Ordinary Shares at any time at the election of the MSL having given 10 Business Days' notice in writing. Until the Redemption Date, the price at which New Ordinary Shares will be issued on conversion of the Convertible Loan Notes will be the Conversion Price.

MSL may only convert his Loan Notes if the Board is satisfied that:

· the consent of the FCA is not required for such conversion or, if the consent of the FCA is required for such conversion, such consent has been obtained; and

· such conversion will not result in MSL being required under Rule 9 of the City Code (together with any person(s) acting in concert (as defined in the City Code) with such noteholder) to make a mandatory cash offer for all the shares in the Company that he and those acting in concert with him do not already own.

Save as set out below, any or all of the Convertible Loan Notes may be converted at the Company's election at any time having given 10 Business Days' notice in writing. In the event of such election, the Convertible Loan Notes will be converted into New Ordinary Shares at the Conversion Price.

 The Company will not be entitled to elect for automatic conversion if:

· the consent of the FCA would be required for such conversion or, if the consent of the FCA is required for such conversion, such consent has not been obtained; or

· such conversion will result in MSL being required under Rule 9 of the City Code (together with any person(s) acting in concert (as defined in the City Code) with MSL to make a mandatory cash offer for all the shares in the Company that he and those acting in concert with him do not already own.

The Convertible Loan Notes are not transferrable.

8. Further Issue of New Ordinary Shares

The Company has agreed to issue the Benseman Shares at the Placing Price, in lieu of £21,000 of rent invoiced and now payable for the period from October 2015 to March 2016 due to John Benseman, from whom the Group rents offices in Papua New Guinea, The Benseman Shares will, when issued, rank pari passu in all respects with the New Ordinary Shares.

Admission is expected to take place and dealings in the Benseman Shares on AIM are expected to commence at 8.00 a.m. on 22 December 2015.

9. Issue of Cenkos Warrants

In settlement of fees due to Cenkos, Papua will grant the Cenkos Warrants exercisable at the Placing Price immediately and for a period up to 5 years following the date of the Warrant Deed. The Warrants are transferable but will not be admitted to trading to AIM or on any of the recognised investment exchange.

The Company has at the date of this Document granted 4,622,536 warrants over Existing Ordinary Shares and shall issue the Cenkos Warrants to Cenkos on such terms as set out in the Warrant Deed.

10. Issue of Options to certain Directors and Management

The Company proposes to adopt a new unapproved share option plan incorporating the provisions set out in paragraph 3.3 of Part V but otherwise on the same terms as the Papua Mining 2011 Share Option Plan (which shall remain in place).

As set out in paragraph 4.1 of Part VI of this Document, and as stated in its Interim Results, the employment contracts for the Company's two Directors and management executives, Hugh McCullough and Kieran Harrington, and its Chief Geologist, Chris Muller, have not been renewed. Each of these individuals has been providing their services to the Group without payment. In addition, each of the Non-Executive Directors of the Company has waived the receipt of his fee until further notice. Therefore, in recognition of this and as an incentive for the Non-Executive Chairman and the management executives continuing to provide their services to the Company, the Company proposes to grant Michael Jolliffe, Hugh McCullough, Kieran Harrington and Chris Muller New Options as follows:

On 3 December 2015 each of Michael Jolliffe, Hugh McCullough, Kieran Harrington and Chris Muller agreed to surrender their existing options so that the New Options will subject to the passing of Resolutions set out in the Notice of General Meeting be the only options they hold in the Company.

11. Share Capital Reorganisation

The current issued capital of the Company is £5,121,553.4 divided into 51,215,534 Existing Ordinary Shares of a nominal value of 10 pence each. No other shares of the Company are in issue. In addition there are outstanding options and warrants over 19,069,924 Existing Ordinary Shares. The exercise price of these options and warrants ranges from 26.5 pence (the lowest) to 76.5 pence (the highest) (for the options) and 20 pence (for the warrants) and, as a result, the Company believes that, for the time being, exercise by the holders is unlikely.

English company law prohibits a public company from issuing a new share at a price less than its nominal value. In order to permit the Placing Shares and the Offer Shares to be subscribed for at 1 penny (and for the conversion rights contained in the Convertible Loan Notes to be exercised at the same price), which is lower than the current par value of the Existing Ordinary Shares, the Company is proposing to divide each issued Existing Ordinary Share into one New Ordinary Share and one Deferred Share, and to divide each unissued Existing Ordinary Share into 100 New Ordinary Shares. The Company proposes to implement the Share Capital Reorganisation, in respect of which it will require Shareholders' approval.

New share certificates will not be issued and the existing share certificates will continue to be valid following the Share Capital Reorganisation. Shareholders who hold their shares in the Company through CREST should note that the Company's ISIN number (GB 00B42TN250) will continue to be valid.

The Deferred Shares will have no income or voting rights. The only right attaching to the Deferred Shares will be to receive the amount paid up above on a winding-up of the Company once the holders of New Ordinary Shares have received £1,000,000 per New Ordinary Share held. The Deferred Shares will not be transferable and will be held by the secretary of the Company as trustee for the holders.

Resolutions to approve the Share Capital Reorganisation, amend the Articles, to grant to the Directors authorities to issue the New Ordinary Shares and securities in connection with the Fundraising and additional shares in the future without applying pre-emption rights in accordance with the Act will be proposed at the General Meeting to be held at the offices of Fasken Martineau LLP, Third Floor, 17 Hanover Square, London W1S 1HU at 11.00 a.m. on 21 December 2015.

The New Ordinary Shares will have the same rights and benefits as the Existing Ordinary Shares from which they are derived. Following the Share Capital Reorganisation, the number of New Ordinary Shares held by each Shareholder will be the same as the number of Existing Ordinary Shares held by them immediately before the Share Capital Reorganisation, but the Share Capital Reorganisation will allow the Fundraising and future fundraisings to take place, assuming that the share price of the Company does not fall below the new nominal value.

The Deferred Shares will not be admitted to trading on AIM, will have only very limited rights on a return of capital and will be effectively valueless and non-transferable. The Directors consider that the Deferred Shares will have no effect on the respective economic interests of the Shareholders.

Following the Share Capital Reorganisation and completion of the Fundraising (assuming full subscription for the Offer Shares) and the issue of the Benseman Shares, the issued share capital of the Company will be:

105,715,534 New Ordinary Shares aggregate nominal value of £105,715.53

51,215,534 Deferred Shares aggregate nominal value of £5,070,337.87

total nominal value of £5,176,053.40

Application will, assuming the passing of the Share Capital Reorganisation Resolution, be made for the New Ordinary Shares to be admitted to trading on AIM. Dealings in the Existing Ordinary Shares will cease at the close of business on the date of the General Meeting and dealings in the New Ordinary Shares are expected to commence on the following day. The ISIN and SEDOL number of the New Ordinary Shares will be the same as the Existing Ordinary Shares and any share certificates for the Existing Ordinary Shares will remain valid for the New Ordinary Shares.

The Share Capital Reorganisation will necessitate certain alterations to the Articles. Amendment of the Articles forms part of the proposed Resolution numbered 1 in the Notice and the alterations, including the limited rights proposed for the Deferred Shares to be created, are reflected in the amended Articles. The amended Articles proposed, along with a set highlighting the alterations and comparing the amended draft with the existing Articles, are available for inspection by Shareholders until the conclusion of the General Meeting on the Company's website, www.papuamining.com.

12. General Meeting

You will find set out at the end of this Document a notice convening the General Meeting to consider the proposals in relation to the Fundraising and Share Capital Reorganisation to be held at the offices of Fasken Martineau LLP, Third Floor, 17 Hanover Square, London, W1S 1HU at 11.00 am on 21 December 2015.

13. Action to be taken

Shareholders will find enclosed with this Document a Form of Proxy for use in connection with the General Meeting. The Form of Proxy should be completed and returned in accordance with the instructions thereon so as to be received by Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol BS99 6ZY as soon as possible and in any event not later than 11.00 a.m. on 17 December 2015. Completion and return of the Form of Proxy will not prevent a Shareholder from attending and voting at the meeting should he/she so wish.

Qualifying Shareholders wishing to participate in the Offer for Subscription should carefully read the Application Form and accompanying instructions and send completed Application Forms along with the appropriate remittance to Computershare at the address specified in the instructions.

14. Settlement and dealings

Application will be made to the London Stock Exchange for the Placing Shares, the Offer Shares and the Benseman Shares to be admitted to trading on AIM. It is expected that Admission of the Placing Shares and the Benseman Shares will become effective and that dealings will commence at 8.00 a.m. on 22 December 2015 and that Admission of the Offer Shares will become effective and that dealings will commence at 8.00 a.m. on 22 December 2015. The Company has agreed that one of the participants in the Placing can settle its investment of £50,000 on a trade date plus fifteen day basis.

15. Directors' Recommendation

The Board of Directors unanimously recommend Shareholders to vote in favour of the Resolutions, as they intend to do in respect of their beneficial shareholdings which amount in aggregate to 1,017,967 Existing Ordinary Shares, representing approximately 1.99 per cent. of the Existing Ordinary Shares in issue.

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

Record Date 5.00 p.m. on 3 December 2015

Posting of the Application Form and Form of Proxy 4 December 2015

Latest time and date for receipt of the Application Form 11.00 a.m. on 17 December 2015

Latest time and date for receipt of the Form of Proxy 11.00 a.m. on 17 December 2015

General Meeting 11.00 a.m. on 21 December 2015

Announcement of the results of the Placing 21 December 2015

Announcement of results of Offer for Subscription 21 December 2015

Admission and commencement of dealings of the Placing Shares 8.00 a.m. on 22 December 2015

Admission and commencement of dealings of the Offer Shares 8.00 a.m. on 22 December 2015

Admission and commencement of dealings of the Benseman Shares 8.00 a.m. on 22 December 2015

Placing Shares, Offer Shares and Benseman Shares credited to CREST

stock accounts for uncertificated holders 22 December 2015

Despatch of definitive share certificates for Placing Shares,

Offer Shares and Benseman Shares for certificated holders week commencing 28 December 2015

Notes:

(1) References to times are to London time (unless otherwise stated).

(2) The timing of the events in the above timetable and in the rest is indicative only and may be subject to change.

(3) If any of the above times or dates should change, the revised times and/or dates will be notified by an announcement to an RIS.

(4) In order to subscribe for Offer Shares under the Offer for Subscription, Qualifying Shareholders will need to complete the accompanying Application Form. If Qualifying Shareholders have any queries on the procedure for acceptance and payment, or wish to request another Application Form, they should contact Computershare between 9:00 a.m. to 5:00 p.m. Monday to Friday on 0370 703 0032 or, if calling from outside the United Kingdom, +44 370 703 0032.

Calls to the Computershare 0370 number are charged at 8p per minute from a BT landline. Other telephony costs may vary. These prices are for indication purposes only, if in doubt you should check with your phone line provider as to the exact cost involved for you to call this number. Calls may be recorded and monitored randomly for security and training purposes. Computershare cannot provide advice on the merits of the Fundraising nor give any financial, legal or tax advice.

The Company's SEDOL code is B42TN25 and ISIN code is GB00B42TN250.

PLACING AND OFFER FOR SUBSCRIPTION STATISTICS

Market price per Existing Ordinary Share (1) 2.125 pence

Number of Existing Ordinary Shares in issue (2) 51,215,534

Price of each Placing Share and Offer Share (3) 1 penny

Number of Placing Shares 26,200,000

Number of Offer Shares to be offered for subscription by the Company up to 26,200,000

Number of Benseman Shares 2,100,000

Proceeds of the Placing (before expenses) £262,000

Maximum proceeds of the Offer for Subscription (before expenses) £262,000

Percentage of Enlarged Share Capital represented by the Placing Shares (4) 24.78 per cent.

Percentage of Enlarged Share Capital represented by the Offer Shares (4) 24.78 per cent.

Enlarged Share Capital following the Fundraising (4) 105,715,534

Notes:

(1) Closing Price on AIM on 1 December 2015.

(2) As at 1 December 2015.

(3) After Share Capital Reorganisation.

(4) Assuming the Offer for Subscription is fully subscribed.

Technical Glossary

"Aeromagnetic data" data relating to the magnetic characteristics of rocks collected by a survey with an airborne magnetometer

"diamond drilling" a drilling technique using diamond tipped drill bits to extract cylindrical rock core for analysis

"Geochemical sampling" means the collection of soil or rock samples at surface, often on a grid basis, and the analysis of those samples for certain mineral elements which might be indicative of the enrichment of the sampled area in potentially economic minerals

"Hypogene" processes which occur deep below the earth's surface, and tend to form deposits of primary minerals, as opposed to supergene processes that occur at or near the surface, and tend to form secondary minerals

"M and A type veins" Quartz-sulphide vein types which are particularly associated with copper porphyry deposits as described by Gustafson and Hunt 1975

"Porphyry" refers to the texture of igneous rocks containing crystals in a fine groundmass

"Potassic alteration" alteration typical of porphyry copper and lode gold deposits which results in production of micaceous, potassic minerals such as biotite in iron-rich rocks, muscovite mica or sericite in felsic rocks, and orthoclase (adularia) alteration, often quite pervasive and producing distinct salmon-pink alteration vein selvages. Minerals commonly occurring in the Potassic alteration zone include bornite, chalcopyrite, magnetite, biotite and K-Feldspar

"Propylitic alteration" is the chemical alteration of a rock, caused by iron and magnesium bearing hydrothermal fluids, altering biotite or amphibole within the rock groundmass. It typically results in epidote-chlorite-albite alteration and veining or fracture filling with the mineral assemblage along with pyrite.