Issuer

KBL Mining Limited (ACN 129 954 365)

Trustee

The Trust Company (Australia) Limited ACN 000 000 993.

Issue Price

The Issue price of the Notes is $0.38.

Issue Date

4 August 2011

Conversion Price

At conversion, holders may convert each Note, subject to the Conditions of Issue, into 1 Share.  Accordingly, for each Note, on conversion the Note holder will receive 1 Share.

Maturity Date

The Notes will be redeemed at their Issue Price on 5 August 2016 being 5 years after the Issue Date unless the holder elects to convert them to Shares.

Interest Rate

Until the Notes are converted into Shares or redeemed, the Notes will pay interest at 10% per annum. Interest will accrue from the Issue Date

Interest is payable in arrears on 30 June and 31 December of each calendar year until and including the Maturity Date.  The first interest payment date is 31 December 2011 with the first payment being accrued interest to that date.  Accrued interest will also be paid in the event of an early conversion.

Early Redemption Rights

If the Company’s ordinary shares trade for 45 consecutive business days at above $0.50, the Company will have the right to redeem some or all of the Notes.  The Company may not exercise this right for the first 2 years after the Issue Date.

The Company may only exercise its Early Redemption Rights after giving Note holders:

• prior written notice of its intention to redeem the Notes; and
• advising Note holders that they may convert their Notes into Shares at the Conversion Price, such notice period being no less than 15 business days from the date of such notice.

Conversion Rights

Notes may be converted into Shares at the rate of 1 Share for each Note on the last day of each quarter and at maturity or if the Company elects to exercise its Early Redemption Rights.

The Company may convert the Notes before the Maturity Date in the event of a Takeover Event as described in the Conditions of the Issue.

Notes must be converted in multiples of 5,000 or any remainder amount.

Conversion Notice

 A conversion notice form by which Note holders may exercise their conversion rights is available in the link below:

Conversion_Notice.docx

Key extracts regarding conversion from the Trust Deed are in the link at the bottom of this page.

Ranking on Conversion

Each Share issued on conversion will rank equally with all existing Shares then on issue, except that they will not be entitled to any dividend that has been declared or determined but not paid as at the Conversion Date.

Participation Rights

Before conversion, Note holders are not entitled to participate in rights issues, any return of capital, bonus issue or capital reconstruction.  However, the conversion ratio will be adjusted in the case of a rights issue, return of excess capital or bonus issue.  In the case of capital reconstructions, the Notes will be reconstructed in accordance with the ASX Listing Rules.

Voting Rights

Note holders are not entitled to vote at general meetings unless provided for by the Listing Rules or the Corporations Act.

Unsecured

The Notes are unsecured and rank ahead of all Shares in the Company.

Quotation on ASX

Quoted on the ASX under code KBLGA