Press Release: KARORA RESOURCES ANNOUNCES MERGER TRANSACTION WITH WESTGOLD RESOURCES

Under the terms of the Agreement, each Karora Share outstanding at the effective time of the Arrangement will be exchanged for the Offer Consideration comprising of:

   -- 2.524 new Westgold Shares, representing A$5.755 (C$5.1452) per Karora 
      Share held based Westgold's last closing share price on the ASX of A$2.28 
      on 5 April 2024; 
 
   -- A$0.680 (C$0.6082) in cash; and 
 
   -- 0.30 of a SpinCo share, with an implied value of A$0.164 (C$0.1472). 

The Offer Consideration represents an approximately A$6.60 (C$5.90(2) ) per Karora Share and a fully diluted equity value of A$1,233 million (C$1,103 million(2) ) based on Westgold's closing share price on the ASX of A$2.28 on 5 April 2024. The Offer Consideration represents a 10.1% premium to Karora's closing share price on the TSX of A$5.995 (C$5.360(2) ) of 5 April 2024 and a 25.3% premium to Karora's and Westgold's 20-day VWAP on the TSX of A$5.552 (C$4.964(2) ) and on the ASX of A$2.421 (C$2.164(2) ) up to and including 5 April 2024.

Upon completion of the Transaction, existing Westgold and Karora shareholders will own approximately 50.1% and 49.9% of Enlarged Westgold, respectively.

Westgold intends to make an application for a secondary listing on the TSX as part of the Transaction.

The Enlarged Westgold board will be comprised of the current directors of Westgold and two (2) directors from Karora. The Hon. Cheryl Edwardes AM will be the Chair of Enlarged Westgold and Wayne Bramwell will be Managing Director and Chief Executive Officer. Leigh Junk, currently Managing Director, Australia and Shirley In't Veld, a director of Karora, will be included on the Enlarged Westgold board. Paul Huet, Chairman & CEO of Karora, will continue with Enlarged Westgold in a special advisory role for six (6) months post-completion of the Transaction.

In connection with closing of the Transaction, Karora will spin-out certain assets to former Karora shareholders, being its shareholding in Kali, a 1% lithium royalty on certain mining interests held by Kali, the right to receive future payments related to the sale of the Dumont asset and cash of A$6 million (C$5 million(2) ) to a newly formed SpinCo. Under the Arrangement, Karora shareholders will receive 0.30 of a SpinCo share for each Karora Share held.

Strategic Rationale & Highlights

1. Creation of a leading mid-tier gold producer

   -- Top 5 Australian gold producer with a pro forma market capitalization of 
      A$2.2 billion (C$1.9 billion2).8 
 
   -- Positioned as one of the largest unhedged Australian gold producer 
      providing investors with full exposure to gold prices following 
      Transaction completion.9 
 
   -- Flexibility and optionality from a combined total of five (5) mills and 
      6.9Mtpa of processing capacity in Western Australia. 
 
   -- Significant exploration upside through highly prospective 3,200km2 land 
      package across two of Western Australia's most prolific goldfields. 
 
   -- Best-in-class team with extensive resources and complementary underground 
      mining and exploration expertise. 
 
   -- Tremendous platform for future organic growth and optionality over nickel 
      co-production at Beta Hunt. 

2. Diversified production in Tier 1 jurisdiction

   -- Diversification across four (4) production centres in Western Australia. 
 
   -- Leveraging Westgold's established management team that has significant 
      experience in Western Australia. 
 
   -- Westgold's operating hub model is well-suited to optimizing value of 
      Karora's two (2) strategically located mills. 

3. Exciting organic growth pipeline

   -- Significant near-mine and regional-scale exploration opportunities 
      across Karora's assets provides exciting potential to realize major 
      resource growth at Beta Hunt / Higginsville. 
 
   -- Creates a strong organic growth pipeline when combined with Westgold's 
      highly prospective exploration ground in the Murchison region. 
 
   -- Option for growing nickel by-product production from Karora's Beta Hunt 
      asset. 

4. Material synergies driving substantial value creation

   -- The merger delivers key strategic synergies including: 
 
          -- Increased mining and processing facilities offer operating 
             flexibility and optionality; 
 
          -- Ability to leverage and complement Westgold's sizable mining and 
             drilling fleet with an estimated replacement value of 
             approximately A$200 million10 (C$179 million2) with Karora's newly 
             purchased equipment; 
 
          -- Combined in-house expertise enables rapid development of new 
             projects (eg. Spargos); and 
 
          -- Increased ability to attract and retain talent as a larger and 
             more significant Western Australian employer. 
 
   -- Estimated A$490 million (C$438 million2) in total synergies available via 
      the business combination: 
 
          -- Estimated A$281 million (C$251 million2) of identified potential 
             cost benefits through elimination of duplicate corporate, 
             operational and administrative functions. 11 
 
          -- Estimated A$209 million (C$187 million2) in identified potential 
             operational savings in procurement and supply chain through 
             leveraging of increased scale. 12 

5. Financial resources to execute

   -- Enlarged Westgold will have financial resources of circa A$160 million 
      (C$143 million2) including Westgold's existing corporate revolving 
      facility (subject to requisite consents) and following the repayment of 
      Karora's existing A$44 million (C$39 million2) revolving facility, 
      combined with an outstanding forecast free cash flow profile. 
 
   -- Strong financial platform to continue investing in organic growth 
      opportunities. 
 
   -- Westgold's inaugural FY24 dividend policy will be enhanced by the 
      increased production and cash flow generation from Karora's assets. 

6. Enhanced capital market profile

   -- Enhanced profile of Enlarged Westgold to elevate the company's capital 
      markets' presence and value proposition to a wider range of global 
      investors. 
 
   -- Increased scale and diversity to enhance potential demand from index 
      funds tracking the GDX and GDXJ, amongst others. 

Transaction and the Plan of Arrangement

The Transaction will be effected by way of a court-approved plan of arrangement under the CBCA, requiring the approval of 662/3 % of the votes cast by Karora shareholders at the annual and special meeting of shareholders of Karora ("Shareholder Meeting"), and if required under Canadian law, a simple majority of the votes cast by Karora shareholders excluding for this purpose the votes held by any person required under Multilateral Instrument 61-101. Karora expects to call a Shareholder Meeting to be held in July 2024 to seek approval for the Transaction. Closing of the Transaction is currently expected to occur in late July 2024.

In addition to shareholder and court approvals, the Transaction is subject to applicable regulatory approvals, including those of FIRB, TSX and ASX, and the satisfaction of certain other closing conditions customary for a transaction of this nature, including, among others receipt of key third party consents, no material breaches of the representations, warranties and covenants of the parties, no material adverse effects being suffered by the parties and no more than 5% of Karora shareholders having exercised dissent rights provided for under the CBCA.

The Agreement also includes customary reciprocal deal protections, including fiduciary-out provisions, non-solicitation covenants, and a right to match any superior proposals. A mutual reciprocal break fee of A$45 million (C$40 million(2) ) is payable in certain circumstances and a reciprocal expense reimbursement fee of A$2.2 million (C$2 million(2) ).

The Agreement may be terminated in certain circumstances including (but not limited to) by either party if the Transaction is not approved by shareholders or if certain third party consents and approvals are not obtained, if the Transaction is not completed by 30 September 2024 (unless extended by the parties), if a party breaches its representations and warranties or fails to perform any covenants or a there has occurred a material adverse effect to the other party that is not capable of being cured by 30 September 2024, or if either party enters into a superior proposal.

The directors, members of senior management of Karora [and certain shareholders] holding approximately [--]% of the issued and outstanding Karora Shares have entered into VSAs pursuant to which they agreed to vote their Karora Shares in favour of the Transaction at the Shareholder Meeting.

Under the Agreement, all incentive securities of Karora shall be conditionally accelerated and redeemed or exercised immediately prior to closing of the Arrangement so that such holders may participate in the Transaction as Karora shareholders.

In connection with closing of the Transaction, Karora will spin-out certain assets to Karora shareholders, being its shareholding in Kali, a 1% lithium royalty on certain mining interests held by Kali, the right to receive future payments related to the sale of the Dumont asset and cash of A$6 million (C$5 million(2) ) to a newly formed SpinCo. Under the Arrangement, Karora shareholders will receive 0.30 of a SpinCo share for each Karora Share held.

Full details of the Transaction will be included in the meeting materials which are expected to be mailed to Karora shareholders in June 2024. The Agreement will be filed on SEDAR+ under Karora's profile.

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