Lakes Blue Energy NL : Replacement Prospectus

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LAKES BLUE ENERGY NL

ACN 004 247 214

REPLACEMENT PROSPECTUS

For the Offer of up to 5,428,512,971 Shares at an Offer Price of $0.0008 per New Share, to raise up to approximately $4,342,810 before costs (Offer).

The Offer comprises

• a General Offer to members of the general public (including Shareholders and Noteholders) who have a registered address in Australia;
• an Institutional Offer to certain Institutional Investors in Australia and certain other eligible jurisdictions; and
• a Compliance Offer of 10 Shares to certain employees of the Company.

The Offer is scheduled to close at 5.00 pm (Sydney time) on 31 January 2022.

Important Notice

This document is a prospectus issued in accordance with section 710 of the Corporations Act 2001 (Cth). This Prospectus contains important information about the Offer. It should be read in its entirety (including the 'Risk Factors' in section 7) before deciding whether or not to apply for New Shares. If, after reading this Prospectus, you have any questions about the Offer, this Prospectus or any other matter you should consult your stockbroker, accountant or other professional adviser.

The New Shares offered by this Prospectus should be considered highly speculative.

For personal use only

The Offer

This Prospectus is a replacement prospectus issued by Lakes Blue Energy NL (ACN 004 247

1. (Lakes or Company) for the purposes of Chapter 6D of the Corporations Act 2001 (Cth) (Corporations Act). It replaces the Prospectus dated 7 January 2022. The Offer contained in this Prospectus is an offering to acquire fully paid ordinary shares (New Shares) in the Company (Offer).

The key differences between this replacement prospectus, and the original prospectus dated

7 January 2022 which it replaces are:

• removal of references to the Company exploring new or sustainable energy initiatives in the future;
• clarification that generation of income from the Wellesley-2 well is subject to tenement renewal, drilling success, and the grant of necessary government approvals and licences;
• expansion on, and the addition of emphasis on particular, risks that are faced by the Company, such as climate change risk, native title risk, and the R&D rebate risk;
• the inclusion of audited financial figures for the financial year ended 30 June 2021 and an explanation of why audited financial figures were not included in the original prospectus;
• additional detail regarding the regulatory setting in which the Company operates in each jurisdiction, Royalty Units, issue of Convertible Notes to related parties, and the status of the conditionality of the Escrowed Shares;
• explanation of the use of EBITDAX figures;
• removal of references to the potential mop-up of unmarketable parcels; and
• other minor and tidy-up amendments.

Lodgement and Listing

This replacement Prospectus is dated 20 January 2022 (Prospectus Date) and a copy was lodged with the Australian Securities and Investments Commission on that date. The Company will apply to ASX Limited within seven days after the Prospectus Date for reinstatement of the Shares to official quotation. None of ASIC, ASX or their respective officers take any responsibility for the contents of this Prospectus or the merits of

the investment to which this Prospectus relates.

Expiry Date

This Prospectus expires on the date that is 13 months after the Prospectus Date (Expiry Date) and no Shares will be issued or transferred on the basis of this Prospectus after the Expiry Date.

Note to Applicants

The information in this Prospectus is not financial product advice and does not take into account your investment objectives, financial situation or particular needs. It is important that you read this Prospectus carefully and in its entirety before deciding whether to invest in the Company.

In particular, you should consider the risk factors that could affect the performance of the Company. You should carefully consider these risks in light of your personal circumstances (including financial and tax issues) and seek professional guidance from your stockbroker, solicitor, accountant or other independent professional adviser before deciding whether to invest in the Company. Some of the key risk factors that should be considered by prospective investors are set out in Section 7. There may be risk factors in addition to these that should be considered in light of your personal circumstances.

Except as required by law, and only to the extent required, no person named in this Prospectus, nor any other person, warrants or guarantees the performance of the Company or the repayment of capital by the Company or any return on investment made pursuant to this Prospectus.

This Prospectus includes information regarding past performance of the Company. Investors should be aware that past performance is not indicative of future performance.

No person is authorised to give any information or to make any representation in connection with the Offer described in this Prospectus that is not contained in this Prospectus. Any information not so contained may not be relied upon as having been authorised by the Company, the Lead Managers or any other person in connection with the Offer. You should rely only on information contained in this Prospectus.

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Financial Information Presentation

Section 6 sets out in detail the Financial Information referred to in this Prospectus and the basis of preparation of that information is set out in Section 6.2.

The Historical Financial Information has been prepared and presented in accordance with the recognition and measurement principles of Australian Accounting Standards (including the Australian Accounting Interpretations) issued by the Australian Accounting Standards Board (AASB), which are consistent with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board.

All financial amounts contained in this Prospectus are expressed in Australian currency, unless otherwise stated. Any discrepancies between totals and sums of components in tables and figures contained in this Prospectus are due to rounding.

The Historical Financial Information in this Prospectus should be read in conjunction with, and are qualified by reference to, the information contained in Section 6.

Forward-looking Statements

This Prospectus contains forward-looking statements that are identified by words such as 'may', 'could', 'believes', 'estimates', 'expects', 'intends' and other similar words that involve risks and uncertainties.

Any forward-looking statements involve known and unknown risks, uncertainties, assumptions and other important factors that could cause actual events or outcomes to differ materially from the events or outcomes expressed or anticipated in these statements, many of which are beyond the control of the Company. The forward-looking statements should be read in conjunction with, and qualified by reference to, the risk factors as set out in Section 7, and other information contained in this Prospectus.

The Directors cannot and do not give any assurance that the results, performance or achievements expressed or implied by the forward-looking statements contained in this Prospectus will actually occur and investors are cautioned not to place undue reliance on such forward-looking statements. The Company does not intend to update or revise forward- looking statements, or to publish prospective financial information in the future, regardless of whether new information, future events or any other factors affect the information contained in this Prospectus, except where required by law.

Foreign Jurisdictions

This Prospectus does not constitute an offer or invitation to apply for Shares in any place in which, or to any person to whom, it would be unlawful to make such an offer or invitation. No action has been taken to register or qualify the Shares or the Offer, or to otherwise permit a public offering of the Shares, in any jurisdiction outside Australia.

The taxation treatment of Australian securities may not be the same as those for securities in foreign jurisdictions.

The distribution of this Prospectus outside Australia may be restricted by law, and persons who come into possession of this Prospectus outside Australia should seek advice on and observe any such restrictions. Any failure to comply with such restrictions may constitute a violation of applicable securities laws.

In particular, the Shares have not been, and will not be, registered under the United States Securities Act of 1933, as amended (US Securities Act) or any state securities laws in the United States and may not be offered, sold, pledged or transferred in the United States, or to United States persons, unless the shares are registered under the US Securities Act, or an exemption from the registration requirements of the US Securities Act and applicable US state securities laws is available.

See Section 9.9.2 for more details on selling restrictions that apply to the Offer and sale of Shares in jurisdictions outside Australia.

Exposure Period

The Corporations Act prohibits the Company from processing acceptances for Shares in the seven-day period after the original Prospectus Date (being 7 January 2022). ASIC may extend this period by up to a further seven days (that is, up to a total of 14 days) (Exposure Period). The purpose of the Exposure Period is to enable the Prospectus to be examined by market participants prior to the raising of the funds. The examination may result in the identification of certain deficiencies in this Prospectus in which case any Acceptance may need to be dealt with in accordance with section 724 of the Corporations Act. Acceptances received during the Exposure Period will not be processed until after the expiry of the Exposure Period. No preference will be given to Acceptances received during the Exposure Period.

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Prospectus Availability

This Prospectus will generally be made available in electronic form by being posted on

Lakes'websiteat www.lakesblueenergy.com.au. Persons having received a copy of this Prospectus in its electronic form may obtain an additional paper copy of this Prospectus and the relevant Application Form (free of charge) by contacting Lakes. Contact details for Lakes and details of Lakes' registered office are detailed in the Corporate Directory. The Offer constituted by this Prospectus in electronic form is only available to persons receiving an electronic version of this Prospectus and relevant Application Form within Australia.

Applications

Applications for an allocation of Shares may be made only during the Offer Period using the Application Form attached to, or accompanying, this Prospectus in its paper copy form, or in its electronic form, which must be downloaded in its entirety from www.lakesblueenergy.com.au. By making an application, you represent and warrant that you were given access to the Prospectus, together with an Application Form. The Corporations Act prohibits any person from passing on to another person an Application Form unless it is attached to, or accompanied by, the complete and unaltered version of this Prospectus.

No cooling-off Rights

Cooling-off rights do not apply to an investment in Shares issued or transferred under the Prospectus. This means that, in most circumstances, you cannot withdraw your Application once it has been accepted.

Definitions and Abbreviations

Defined terms and expressions used in this Prospectus are explained in the Glossary at the end of this Prospectus. Unless otherwise stated or implied, references to times in this Prospectus are to Australian Eastern Standard Time.

Privacy

By filling out an Application Form to apply for Shares, you are providing personal information to the Company and the Share Registry, which is contracted by the Company to manage Applications. The Company and the Share Registry on their behalf, may collect, hold and use that personal information in order to

process your Application, service your needs as a Shareholder, provide facilities and services that you request and carry out appropriate administration. Some of this personal information is collected as required or authorised by certain laws including the Income Tax Assessment Act 1997 (Cth) and the Corporations Act.

Your personal information may also be used from time to time to inform you about other products and services offered by the Company, that it considers may be of interest to you.

Your personal information may also be provided to the Company's agents and service providers on the basis that they deal with such information in accordance with the Company's privacy policy. The agents and service providers of the Company may be located outside Australia where your personal information may not receive the same level of protection as that afforded under Australian law. The types of agents and service providers that may be provided with your personal information and the circumstances in which your personal information may be shared are:

• the Share Registry for ongoing administration of the register of members;

• printers and other companies for the purpose of preparation and distribution of statements and for handling mail;
• market research companies for the purpose of analysing the Shareholder base and for product development and planning; and
• legal and accounting firms, auditors, contractors, consultants and other advisers for the purpose of administering, and advising on, the Shares and for associated actions.

The Corporations Act requires the Company to include information about the Shareholder (including name, address and details of the Shares held) in its public register of members.

The information contained in the Company's register of members must remain there even if a person ceases to be a Shareholder. Information contained in the Company's register of members is also used to facilitate

dividend payments and corporate communications (including financial results, annual reports and other information that the Company may wish to communicate to its Shareholders) and compliance by the Company with legal and regulatory requirements. An Applicant has a right to access and correct the information that the Company and the Share

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Registry hold about that person, subject to certain exemptions under law.

Shareholders can obtain a copy of the Company's privacy policy by visiting the

Company'swebsite www.lakesblueenergy.com.au. The privacy policy contains further details regarding access, correction and complaint rights and procedures. The Share Registry's privacy

policies can be found at https://www.computershare.com/au/privacy- policies.

Photographs and Diagrams

Photographs and diagrams used in this Prospectus that do not have descriptions are for illustration only and should not be interpreted to mean that any person shown in them endorses this Prospectus or its contents. Diagrams used in this Prospectus are illustrative only and may not be drawn to scale. Unless otherwise stated, all data contained in charts, graphs and tables is based on information available at the date of this Prospectus.

Questions

If you have any questions about how to apply for Shares, please call Lakes on [phone] from 9.00 am to 5.00 pm (AEST), Monday to Friday (excluding public holidays). Instructions on how to apply for Shares are set out in Section 9 of this Prospectus and on the back of the Application Form.

If you have any questions about whether to invest in the Company, you should seek professional advice from your accountant, financial adviser, stockbroker, lawyer or other professional adviser.

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