Australian Pacific Coal : Share Subscription Agreement & EGM Supplementary Materials

ASX RELEASE

29 March 2017

Share Subscription Agreement and EGM Supplementary Materials

Australian Pacific Coal Limited ('AQC', or 'the Company') (ASX Code: AQC) is pleased to announce that it has agreed to issue 500,000,000 fully paid Ordinary Shares at an issue price of $0.010 per share to an unrelated sophisticated investor to raise a total of $5,000,000 in accordance with approval granted by shareholders under Resolution 7 of the Company's Annual General Meeting held on 13 January 2017. The funds raised will be used by the Company for working capital, with additional working capital being required prior to the completion of the Dartbrook acquisition.

The Company anticipates that the share issue will be completed on or before Friday 31 March 2017 with further announcements to be lodged on completion of the share issue.

For completeness, the Company provides the attached Supplementary Materials to the Notice of Extraordinary General Meeting and Explanatory Memorandum dated 13 March 2017 which is being despatched to all Shareholders.

For further information, please contact:

Australian Pacific Coal Limited Tel: [phone]

Email: [e-mail]

Australian Pacific Coal Limited ABN 49 089 206 986

Level 7, 10 Felix Street, Brisbane QLD 4000 ∙ PO Box 16330, City East QLD 4002

Tel: [phone] ∙ Fax: [phone] ∙ Web: www.aqcltd.com

Australian Pacific Coal Limited ABN 49 089 206 986

Supplementary Materials

to the Notice of Extraordinary General Meeting and Explanatory Memorandum dated 13 March 2017

Date of Meeting: Thursday, 13 April 2017 Time of Meeting: 9.00am Brisbane time Place of Meeting: Level 7, Waterfront Place,

1 Eagle Street, Brisbane Qld 4000 Australia

These Supplementary Materials dated 29 March 2017 and addendum to the Independent Expert's Report are supplementary to, and should be read in conjunction with, the Notice of Extraordinary General Meeting, Explanatory Memorandum and Independent Expert's Report dated 13 March 2017. All materials should be read in their entirety. If Shareholders are in doubt as to how they should vote, they should seek advice from their accountant, solicitor or other professional adviser without delay.

The Independent Expert, BDO Corporate Finance (Qld) Ltd, has concluded that the Relevant Interest Acquisition, including having regard to the matters set out in these supplementary materials, is not fair but reasonable to the Non-Associated Shareholders.

The Independent Expert, BDO Corporate Finance (Qld) Ltd, has concluded that the granting of the Security, including having regard to the matters set out in these supplementary materials, is fair and reasonable to the Non-Associated Shareholders.

If you have already submitted a proxy form, that proxy form will remain valid unless revoked or a replacement proxy form is lodged in accordance with the details set out below.

1. Background

   These materials (Supplementary Materials) relate to and provide supplementary disclosure in respect of the Notice of Extraordinary General Meeting and Explanatory Memorandum for the

   Extraordinary General Meeting of Australian Pacific Coal Limited ABN 49 089 206 986 (the Company) to be held at 9:00am Brisbane time on Thursday, 13 April 2017.

   The Supplementary Materials are supplementary to, and do not affect the validity of, the original Notice of Extraordinary General Meeting and Explanatory Memorandum (Original Notice). Unless otherwise specified, terms defined in the Original Notice have the same meaning in the Supplementary Materials.

2. Placement and exercise of options

   On 29 March 2017 the Company announced it successfully secured an unconditional placement of 500,000,000 Shares to an unrelated sophisticated investor at an issue price of $0.010 per Share (Placement), which raised $5,000,000. These funds will be used by the Company for working capital, with additional working capital being required prior to the completion of the Dartbrook acquisition, at which point working capital under the Trepang Convertible Loan Deed may be available.

   The Shares to be issued pursuant to the Placement (Placement Shares) are expected to be issued on or about 31 March 2017. On issue of the Placement Shares, along with an exercise of existing options announced on 22 March 2017, there will be a change to the number of shares on issue in the Company from the number disclosed in the Original Notice. This will also change the calculations of Voting Power set out in the Original Notice if those calculations were to be undertaken as at the date of these Supplementary Materials (assuming the Placement Shares have been issued). Upon issue of the Placement Shares there will be 4,893,434,264 Shares on issue. There are currently 25,000,000 existing options on issue expiring on 31 March 2017.

3. Change to potential Voting Power

   Upon completion of the Placement, the overall effect of these changes will be to reduce the maximum Voting Power of Mr Nicholas Paspaley, Mr John Robinson (Snr) and Trepang Services Pty Ltd (and their Associates) pursuant to the Convertible Loan Deeds and the Secured Loan Deed to that which was disclosed in the Original Notice from a maximum of 84.90% down to a maximum of 82.18%.

   As at the date of these Supplementary Materials, Trepang, together with its Associates (which include Mr Robinson (Snr) and Mr Paspaley), are the registered holder of 1,806,166,667 Shares. This will represent 36.91% of the issued Shares in the Company upon issue of the Placement Shares.

   Accordingly, upon completion of the Placement Trepang, together with its Associates, will have Voting Power of 36.91% in the Company.

   While this change in circumstances will not result in a variation to Resolution 1, to ensure Shareholders are fully informed in respect of Resolution 1, the Company provides these Supplementary Materials.

   Set out in Schedules 1, 2 and 3 below are updated tables which show the following based on the number of Shares on issue upon completion of the Placement (assuming none of the existing options on issue are exercised):

4. Schedule 1 - Substantial Shareholder's Interest

5. Schedule 2 - Directors' interest in Shares in the Company

6. Schedule 3 - Dilutionary effect of the issue of the Conversion Shares and the Interest Shares

   Upon issue of the Placement Shares, the maximum direct and indirect holdings of each of Trepang, Mr Robinson (Snr) and Mr Paspaley would be as follows if the maximum number of Conversion

   Shares, and Interest Shares (as noted in the Notice and Explanatory Memorandum) were issued, based on the number of Shares on issue at completion of the Placement (assuming none of the existing options on issue are exercised):

   Issue price1	Trepang	John Robinson Snr	Nicholas Paspaley	Total - Direct	Escrow Shares2	Total - Direct and Indirect2
   $0.015	3,056,310,773 37.97%	888,309,382 11.04%	1,017,476,049 12.64%	4,962,096,203 61.65%	196,713,334 2.44%	5,158,809,537 64.09%
   $0.013	3,268,512,431 39.38%	907,960,897 10.94%	1,037,127,564 12.49%	5,213,600,891 62.81%	196,713,334 2.37%	5,410,314,225 65.18%
   $0.011	3,557,878,328 41.16%	934,758,417 10.81%	1,063,925,084 12.31%	5,556,561,828 64.28%	196,713,334 2.28%	5,753,275,162 66.56%
   $0.009	3,975,851,288 43.50%	973,465,947 10.65%	1,102,632,614 12.06%	6,051,949,848 66.22%	196,713,334 2.15%	6,248,663,182 68.37%
   $0.0025	9,952,864,632 61.35%	1,526,983,615 9.41%	1,656,150,282 10.21%	13,135,998,528 80.97%	196,713,334 1.21%	13,332,711,862 82.18%

   Note:

7. It is noted that the conversion price for the Robinson and Paspaley Convertible Notes is fixed at

   $0.015. However, the conversion price for the Trepang Convertible Note and the issue price for the Interest Shares is not fixed and this table assumes the price set out above is used as the conversion price or the issue price. The conversion price for the Trepang Convertible Note will be a minimum of $0.0025 per Share. The issue price for the Interest Shares may well be significantly different to that set out above, however, Resolution 1 only seeks approval for a maximum of 3,808,682,792 Interest Shares (which assumes the issue price is $0.0025 per Share). Mr John Robinson (Jnr) is an Associate of Trepang, Mr Robinson (Snr) and Mr Paspaley. Trepang, Mr Robinson (Snr) and Mr Paspaley have advised that they have no associates other than as specified in the Notice and the Explanatory Memorandum.

8. It is noted that the number of Shares the subject of the Escrow Deeds is not yet known as the Escrow Deeds apply to the number of Shares held by relevant parties at the commencement date of the Trepang Convertible Loan Deed and as may be issued under future incentive arrangements with the Company. For the purposes of this table, it is assumed that the number of Shares the subject of the Escrow Deeds is the same number as those currently held by the parties to the Escrow Deeds, however, this may well significantly change in the future.

9. Upon issue of the Placement Shares and assuming Resolution 1 is passed, Trepang, Mr Paspaley and Mr Robinson (Snr) will move to a Share holding at least 75% in circumstances where the Conversion Price for the Trepang Convertible Note and all Interest Shares is $0.0036 or less and they will hold less than 75% of the issued Shares in the Company if the Conversion Price for the Trepang Convertible Note and all Interest Shares is $0.09, $0.011, $0.013, $0.015 or higher.

   Shareholders are referred to Schedule 3 below for detailed information on the potential Voting Power of Trepang, Mr Robinson (Snr) and Mr Paspaley (and their Associates) under various scenarios based on the number of Shares on issue upon completion of the Placement (assuming none of the existing options on issue are exercised).