The Company has been successful in the past in raising small tranches of equity funding of around US$1.0 million from equity investors. However, the Independent Directors believe that the Company's near term funding requirements are such that a larger raise is necessary to allow management to commit to reaching a construction decision. The Greenstone Placing:

-- secures US$1.2 million in the relative short term, subject to Shareholder approval and satisfaction or waiver of the Conditions, which will allow management to progress project development whilst the Placing and Open Offer is prepared and launched;

   --      provides certainty as to the proceeds of the Placing and Open Offer; and

-- demonstrates the confidence that the Independent Directors and Greenstone have in the Namib Project, which the Independent Directors hope will encourage other investors to take up the US$2.8 million to be offered in the Placing and Open Offer.

Accordingly, the Independent Directors consider, having consulted with Strand Hanson, that the terms of the Greenstone Placing are fair and reasonable insofar as Shareholders are concerned.

   6.        Consequences of failure to approve the Resolution

If the Resolution is not approved and/or the Conditions are not satisfied or waived, the Greenstone Placing will not proceed. Without access to the funds from the Greenstone Placing, the Company would immediately need to seek to secure alternative sources of funds to enable it to fund its corporate activities in the period immediately following the General Meeting. The Independent Directors are unable to provide any assurance that any alternative financing could immediately be secured or, that if it were secured, it would be on terms as favourable to the Company or would not result in a substantial dilution of Shareholders' interests. If no funds were immediately available, it is highly likely that the Company would cease to be able to trade, in which circumstances it is unlikely that there would be any value attributable to Shareholders. The Independent Directors have, before entering negotiations with Greenstone, considered alternative sources of financing (including both debt and equity funding) and believe it is highly unlikely that the Company could secure funding on as favourable terms on a timely basis in such circumstances particularly given the recent downturn in commodity prices. Even if financing were immediately available and the Company were able to continue trading, the Independent Directors believe that the circumstances of such financing could result in a material adverse effect on the share price of the Company.

   7.        Update on the Company

As set out in the announcement made by the Company on 22 July 2015, the Company submitted its application for a Mining Licence in April 2014 while working through the final phase of the DFS, which was announced in November 2014. The results of the DFS, in combination with a detailed Board-level review, identified key additional studies on the mine development plan and mining process flow sheet that would be required ahead of the Company being in a position to take an investment decision on the Namib Project.

The Company advanced these studies during the first half of 2015, announcing the results of the metallurgical test work programme on 22 July 2015. This positions the Company to commence FEED on an optimised processing plant as well as providing the catalyst to progress early mine development work. Subject to receipt of up to US$4.0 million of funding, the Company expects to be in a position to complete these phases of work during the fourth quarter of 2015, which will be sufficient to support an investment decision on the Namib Project.

The Company is cognisant that the above constitutes a revised timeline to project development of the Namib Project. The requirement to complete these additional studies, alongside discussions with the Ministry of Mines and Energy in Namibia (the "Ministry") on the award of the Mining Licence, have delayed the originally scheduled commencement of construction of the Namib Project. As regards the Mining Licence, the Company is pleased to have hosted the newly appointed Minister of Mines and Energy, the Honourable Obeth Kandjoze, as well as a ministerial delegation on a recent site visit at the Namib Project. The Company looks forward to continuing to work with the Ministry on the Mining Licence application and remains confident that the Mining Licence will be granted in due course, but this cannot be guaranteed.

In light of the above, the Company has devised a revised funding strategy for the Namib Project. Subject to timing of commencing construction and the definitive capital requirement estimate post completion of early engineering and design, the Company estimates a total funding requirement of between US$25 million and US$30 million through to expected project commissioning of the Namib Project. It is the Company's intention that this financing will be structured in two phases:

(a) an initial equity fundraising of US$4.0 million to cover the short term working capital required for initial FEED, early development of the Namib Project's North decline, sourcing of plant and equipment, and the ongoing underground development programme required to establish access for the next phase of resource expansion drilling (being the Phase One Fundraising). This is intended to finance the Company to take the Namib Project through to the end of 2015 and a construction decision, assuming that the Mining Licence is issued and Phase Two Fundraising is achieved without undue delay (it being noted that the current Work Programme nominally assumes that the Mining Licence will be issued on or before 31 October 2015); and

(b) a second fundraising, subject to the formal grant and issue of the Mining Licence by the Namibian authorities, which will comprise both debt and equity, and which will cover the cost of construction and an ongoing resource expansion drilling programme ("Phase Two Fundraising").

Should the Resolution be approved by Shareholders and the Conditions be satisfied or waived, the Greenstone Placing and the Open Offer and Placing will together comprise the Phase One Fundraising.

As noted above, the Company has an immediate funding requirement which it aims to address through the issue of the Tranche One Notes pursuant to the Greenstone Placing (conditional on Shareholders approving the Resolution and the Conditions being satisfied or waived).

Subject to Shareholders approving the Resolution, the balance of the funds required under the Phase One Fundraising will be raised pursuant to the Open Offer and Placing, which itself is being conditionally fully underwritten by the Underwriting Facility pursuant to the Greenstone Placing. It is the Company's intention that the Open Offer and Placing will be launched during September 2015. The Company looks forward to updating Shareholders in due course as to the terms of, and definitive timetable for, the Open Offer and Placing.

Assuming the Open Offer and the Placing proceed to raise US$2.8 million, the Tranche One Notes will be converted either fully or in part (depending on the Issue Price and the FT Exchange Rate) such that Greenstone will hold no more than 29.99 per cent. of the Issued Share Capital following the Open Offer and the Placing and such conversion, and no further Convertible Loan Notes will be issued.

While the Company believes that the total amount of US$4.0 million proposed to be raised pursuant to the Open Offer and the Placing, including the Greenstone Placing, should be sufficient for the Phase One Fundraising provided that the Mining Licence is issued and Phase Two Fundraising is achieved without undue delay, it is possible that additional working capital may be required if there are delays or unexpected costs and/or if the Company is not permitted to disburse funds raised pursuant to the Greenstone Placing (which are limited to purposes stated in the Work Programme) in respect of any of its costs. It is noted that the Company has been engaging with multiple parties in order to prepare for the inclusion of a debt package into the Namib Project's Phase Two Fundraising package at the point of a construction decision. While conversations with debt providers continue to progress, it is clear that the availability of debt for the sector is becoming tougher to obtain due to weak commodity prices, even for commodities with positive fundamentals such as zinc and lead. The Company is conscious that there is no guarantee that debt finance will be available at the relevant time and as such is aware of the need to make the necessary provisions for this in its financing strategy. On completion of the FEED phase the Company intends to progress debt discussions as a priority and will update its Shareholders on the outcomes of this process, as well as the other financing instruments that are being considered. The Company is therefore proposing to obtain additional authority pursuant to the Resolution to raise further equity of up to a further US$2.0 million for working capital purposes free from statutory pre-emption rights.

   8.        Information regarding Greenstone
North River (LSE:NRRP)
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