The debt, which has been acquired from KBL shareholder Capri Trading Pty Ltd ("Capri"),via a subsidiary company, is secured against all of KBL’s assets including the operating Mineral Hill base metals mine in central NSW and its interest in the Sorby Hills lead – silver deposit in the East Kimberley region of WA.

As part of the loan acquisition, Kidman has inherited from Capri a 9.7 per cent equity stake in KBL and will consider sellin g this shareholding at the appropriate time. Furthermore, the company has no intention of participating in KBL’s recently announced SPP.

Kidman and KBL have complementary mineral asset portfolios in the highly prospective southern Cobar Basin in NSW.

Kidman’s 100% – owned Browns Reef base metals project near Lake Cargelligo includes an emerging zinc – lead – copper – silver deposit for which a maiden JORC compliant resource is due this Quarter.

Kidman also has the 100% – owned Crowl Creek project, which includes a number of highly promising copper and gold prospects located on tenements immediately adjoining KBL’s Mineral Hill mine. These include the potentially open pittable Murray’s gold project as well as the Blind Calf, Wilmatha and Three Peaks prospects.

KBL’s Mineral Hill Project covers an area of 49km 2 and includes a state – of – the – art operating mine and mill which currently produces copper – in – concentrates. KBL has announced plans to expand the mine’s capa bilities to also produce gold and silver dore (bullion) and lead – zinc concentrates.

Key Agreement

Terms Under the terms of a binding Note Issuance and Share Sale Agreement between Kidman and Capri:

• Kidman has acquired all the shares in a subsidiary comp any of Capri which held a 2 – year $ 12.6 million (including interest at 13% p.a ) loan facility provided to KBL Mining under a note issuance deed on 6 March 2013. The facility is due for repayment on 15 March 2015;

• In consideration for taking over the loan, K idman will undertake a note issue for $12.6 million to Capri with an initial term up until 30 March 2015 where no interest is payable. At that time, the note would either be repaid or Kidman has the right to extend it on commercial terms.

• Kidman will also reassign the original security by providing a charge over the shares in the Kidman subsidiary company that will issue the notes back in favour of Capri.

• Kidman will immediately acquire 37,925,836 KBL shares held by Capri, representing a stake of 9.7 per cent. The purchase price for these shares is the deferred issue to Capri of 22,249,824 shares in Kidman. The deferred settlement date for the issue of the Kidman shares is 31 st March 2015, and is subject to any required shareholder approvals being obtained;

• If the Capri loan has been repaid in full by KBL on or before the settlement date, or alternatively at the election of Kidman at any time up to March 30 th 2015 the respective share issues will be reversed whereby Kidman will be obliged to re- transfer to Capri the KBL shares acquired from it, or pay cash in respect of any KBL shares that Kidman has disposed of and the deferred issue of Kidman shares to Capri will not proceed.

The $12.6 million debt which has been taken over by Kidman is secured by a first mortgage over all of KBL’s assets, which include the Mineral Hill Mine and its interest in the Sorby Hills lead-silver deposit in Western Australia. Kidman is now entitled to the benefit of th at security.

Kidman’s Managing Director, Martin Donohue, said: "As a new major shareholder and owner of KBL ‘s principal secured loan facility, we look forward to discussions with KBL’s management to get an update on Mineral Hill’s current production performance. We note this has been down over recent quarters and we will be seeking clarification on a number of matters including KBL’s im mediate financial position ."