ASX Announcement

Monday, 18 November 2013

Carnegie completes $4 million capital raise to accelerate CETO 6 development

Carnegie completes $4 million capital raising Capital raised via a convertible note issue Conversion price equivalent to a 30% premium to last traded share price

Wave energy developer Carnegie Wave Energy Limited (ASX: CWE) is pleased to announce that it has completed a capital raise of $4 million by issuing convertible notes to provide early access to the expected R&D tax refund for the financial year ended 30 June 2014. The funds will be used to fast track the design of the CETO 6 project and for general working capital purposes. The notes will be repaid with the proceeds from the expected R&D tax refund for the year ended 30 June 2014 unless otherwise converted to equity. CETO 6 will be a next generation CETO unit with at least twice the capacity of the current CETO 5 unit being manufactured for the Perth Wave Energy Project. A further update on the details of the CETO 6 Project will be released in the coming months. The capital raising comprises a placement of 4,000 convertible notes at an issue price of $1,000 each (Notes). The Notes have a 24 month expiry, pay a non-cash coupon of 6% p.a. and are convertible at any time at 5.5 cents per share which represents a 30% premium to the last closing share price. A summary of the key terms of the Notes are set out in Annexure 1. Allotment of the Notes will occur over the next 10 days.The private placement of the Notes was undertaken with a select group of sophisticated investors in accordance with section 708 of the Corporations Act 2001. Carnegie was advised on the transaction by Perth-based corporate advisory firm Azure Capital Limited. The Company is not aware of any reason why the ASX would not allow trading to recommence immediately.

About Carnegie Carnegie Wave Energy Limited is an ASX-listed (ASX:CWE) wave energy technology developer. Carnegie is the 100% owner and developer of the CETO Wave Energy Technology intellectual property. About CETO

CETO Power & Water

The CETO system is different from other wave energy devices because it operates under water and is anchored to the ocean floor. Several fully submerged buoys are tethered to seabed pump units. The buoys move with the motion of the passing waves and drive pumps. The pumps pressurise water which is delivered onshore via an underwater pipe. Onshore, high-pressure water is used to drive hydroelectric turbines, generating zero-emission electricity. The high-pressure water can also be used to supply a reverse osmosis desalination plant, replacing or reducing the reliance on greenhouse gas-emitting, electrically-driven pumps usually required for such plants. The technology is also capable of generating power offshore should the specific characteristics of a project site require it. CETO technology characteristics include: Converts ocean wave energy into zero-emission electricity and desalinated water. Environmentally friendly, has minimal visual impact and attracts marine life. Fully-submerged in deep water, away from breaking waves and beachgoers, and unaffected by storms.

Perth Wave Energy Project (PWEP) Fact File Upon completion, PWEP will be Australias first commercial-scale CETO grid-connected wave energy project. The project is supported by $13.1m in Australian Government funding through the Australian Renewable Energy Agencys Emerging Renewables Program. PWEP is supported by $7.3 million from the Government of Western Australia's Low Emissions Energy Development (LEED) Fund. This is part of a larger $10 million LEED grant, awarded to Carnegie by the Western Australian Government, to support the development of the CETO technology from concept through to completion of PWEP. The Desalination Pilot is supported by a $1.27m AusIndustry grant from the Clean Technology Innovation Program. Utilising Carnegies fully submerged and commercial proven CETO wave energy device. Providing clean, renewable energy to Australias largest naval base, HMAS Stirling, on Garden Island in Western Australia. Providing potable desalinated water.

For more information: Dr Michael Ottaviano CEO & Managing Director Carnegie Wave Energy Limited +61 8 9486 4466 enquiries@carnegiewave.com Website: www.carnegiewave.com

Annexure 1

Issue Size Maturity Coupon

A$4.0 million November 2015 6% per annum, accrued daily and paid quarterly in Carnegie fully paid ordinary shares (Shares) at the prevailing 20 day volume weighted average price A$0.055 / share Convertible at any time during the term of the Notes at the Noteholders election If Carnegie trades for 15 consecutive trading days at a price which is greater than A$0.071, the Company may force conversion of a portion (or all) of the Notes to Carnegie Shares Carnegie may redeem all or part of the Notes outstanding for cash on the date which is 18 months after the Issue Date

Conversion Price Conversion Rights Mandatory Conversion

Mandatory Redemption