Heemskirk Consolidated : First Supplementary Bidder's Statement

KING&WGDD Level61

Governor Phillip Tower

MALLESONS 1 Farrer Place

Sydney NSW 2000

Australia

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www.kwm.com

The Manager

Company Announcements Office Australian Securities Exchange Level 4, 20 Bridge Street

Sydney NSW 2000

7 April 2017

Electronic lodgement

Dear Sir/Madam

Northern Silica Corporation - off market takeover bid for the entire issued share capital of Heemskirk Consolidated Limited ("Takeover")

In accordance with section 647(3) of the Corporations Act, please find attached a copy of Northern Silica Corporation's first supplementary bidder's statement ("First Supplement") in relation to the Takeover.

The First Supplement was lodged with the Australian Securities & Investments Commission and Heemskirk Consolidated Limited earlier today.

David Eliakim Partner

JE£*HR, IKsfrifiSt www.kwm.com

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Member firm of the King & Wood Mallesons network. See www.kwm.com for more information Asia Pacific | Europe | North America | Middle East

32156717 1

FIRST SUPPLEMENTARY BIDDER'S STATEMENT in respect of the offer by Northern Silica Corporation for the ordinary shares in Heemskirk Consolidated Limited ACN 106 720 138

Legal Adviser:

This document is the first supplementary bidder's statement ("First Supplement") to the Bidder's Statement dated 13 March 2017 ("Bidder's Statement") issued by Northern Silica Corporation and lodged with the Australian Securities and Investments Commission ("ASIC") on 13 March 2017, in relation to the offer by Northern Silica Corporation ("Offer") for the ordinary shares in Heemskirk Consolidated Limited.

Unless the context requires otherwise, defined terms in the Bidder's Statement have the same meaning in this First Supplement. This First Supplement prevails to the extent of any inconsistency with the Bidder's Statement.

A copy of this First Supplement was lodged with ASIC on 7 April 2017. Neither ASIC nor any of its officers takes any responsibility for the contents of this First Supplement.

1. Background

   The Bidder's Statement was lodged with ASIC on 13 March 2017 and was sent to the Heemskirk Shareholders along with an Offer dated 15 March 2017.

   This First Supplement sets out some information about the Offer and clarifies some of the disclosures in the Bidder's Statement.

2. Receipt of Independent Expert Report

   On 28 March 2017, Heemskirk released its Target's Statement which included an

   independent expert's report ("Independent Expert's Report"). In that Target's Statement, the Heemskirk Directors confirmed that they unanimously recommend that Heemskirk Shareholders accept the offer in return for the Cash Consideration component of the Offer in the absence of a Superior Proposal. The independent expert has also opined that the Cash Consideration under the Offer is fair and reasonable to Heemskirk Shareholders in the absence of a Superior Proposal but that the Share Consideration is neither fair nor reasonable.

   Heemskirk Shareholders should refer to the Target's Statement for a full explanation as to why the Heemskirk Directors have formed this opinion and the Independent Expert's Report for the reasons for its opinion.

3. Extension of the offer

   Heemskirk Shareholders should note that on 6 April 2017, the Bidder determined to extend the Offer Period so as to change the close of the Offer Period from 7.00pm (Sydney Time) on 18 April 2017 to 7.00pm (Sydney Time) on 16 May 2017.

   The new date for giving notice of status of conditions under section 630(3) of the Corporations Act has also been extended to 8 May 2017.

   Attached to this First Supplement is the notice of variation giving effect to the extension.

4. Clarifications in relation to certain statements in the Bidder's Statement

5. Entry into the Unanimous Shareholders Agreement and Deed of Adherence

   As described in section 2.3 of the Bidder's Statement, the Bidder is operated and governed in accordance with the Business Corporations Act (Alberta) and the Bidder's charter documents which include the Unanimous Shareholders Agreement. A summary of the key terms of the

   Unanimous Shareholders Agreement is set out in section 2.3 of the Bidder's Statement. A full copy of the Unanimous Shareholders Agreement can be found at www.northernsilica.com.

   In order for the Unanimous Shareholders Agreement to be effective, all holders of Bidder Shares must sign and return a duly executed adherence deed to the Unanimous Shareholders Agreement ("Deed of Adherence").

   Under paragraph 6.7 of the Offer Terms, any Heemskirk Shareholder who elects to receive the Share Consideration also appoints the Bidder as their attorney for the purpose of executing the Unanimous Shareholders Agreement on their behalf.

   Notwithstanding this attorney appointment, the Bidder has determined that all Heemskirk Shareholders who elect to accept the Share Consideration and receive the Share Consideration will be also required to sign and return an original duly executed Deed of Adherence within 20 Business Days of being issued Bidder Shares.

   Clause 16.11 of the Unanimous Shareholders Agreement provides that if a Heemskirk Shareholder receives Bidder Shares as part of the Offer, they must sign a Deed of Adherence within 20 Business Days of being issued the Bidder Shares. If the relevant Heemskirk Shareholder does not return a duly signed Deed of Adherence within this time frame, then the shareholder of the Bidder Shares will be deemed to be a "Defaulting Shareholder". Under the Unanimous Shareholders Agreement, for so long as a shareholder is a Defaulting Shareholder, subject to the provisions of the Business Corporation Act (Alberta), its rights as a holder of Bidder Shares, including voting rights and rights to information, shall be suspended until they cease to be a Defaulting Shareholder. A Defaulting Shareholder remains obligated for all its liabilities as a shareholder that accrue prior to and during the period of time such shareholder is a Defaulting Shareholder, including any liabilities arising after but originating from actions taken before the period.

6. Bidder's intention to undertake capital raising

   As described in section 4.8 of the Bidder's Statement, Taurus has entered into a term sheet for the Taurus Working Capital Facility under which it may be called on to advance up to C$10 million.

   The Bidder intends to utilise the Taurus Working Capital Facility to cover working capital needs required to achieve completion of Moberly Stage 1 development, including but not limited to:

   • additional capital costs;

   • operating costs during commissioning;

   • funding required to support a build-up of finished product inventory that may be required to support Moberly off-take arrangements;

   • funding required to support Moberly logistics arrangements;

   • general corporate costs; and

   • debt servicing requirements under the Taurus Senior Facility.

7. Taking into account these potential funding requirements and based on the Bidder's current understanding of Moberly Stage 1 development, the Bidder expects that up to C$10 million of additional funding from the Taurus Working Capital Facility will be required. The amount of additional funding required will ultimately be a function of the outcome of remaining construction activity, commissioning performance and arrangement of formal off-take contracts. The following key assumptions have been used by the Bidder to derive its estimate