ALARA RESOURCES LIMITED - Capital/Financing Update 2014

Alara Resources Limited A.B.N. 27 122 892 719

Level 3, 35 Havelock Street West Perth, Western Australia 6005 AUSTRALIA PO Box 1890

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West Perth, Western Australia 6872

Telephone | +61 8 6323 5900 Facsimile | +61 8 6323 5999 Web | www.alararesources.com Email | [email protected]

ASX/MEDIA RELEASE

Friday, 13 June 2014

Oman Project Update Positive Options Analysis Study Outcomes

Perth: Alara Resources Limited (ASX: AUQ) ( Alara or Company ) is pleased to inform the market of the successful outcomes of an ‘Options Analysis Study’ to evaluate six development options identified for the Washihi and Daris Copper-Gold Projects in Oman.

Highlights

Six development options have been evaluated for the combined Washihi and Daris CopperGold Projects namely:
(1) Conventional flotation circuit
(2) Heavy media separation followed by a smaller scale conventional flotation circuit
(3) Heavy media separation followed by a larger scale (x2) conventional flotation circuit
(4) Off-site ore toll treatment
(5) Heap leach of Daris oxide ore
(6) Continuous Vat Leach (CVL) of Daris oxide ore
All options returned positive economic outcomes with Options #2 and #3 being the most attractive
Options #2 and #3 have progressed into an upgraded Scoping Study (due for completion in July 2014)
Option #4 provides the lowest capital cost alternative however results in a reduced overall return from the assets and thus will not be progressed at this time
Options #5 and #6 provide incremental value to Options #1, #2 and #3 however are not sufficiently valuable to progress as stand-alone options
Initial results from the upgraded Scoping Study are positive with the study to be completed in July 2014. Results inclusive of economic outcomes for the study will be announced at this time

Project and Study Background and Context

The Daris and Washihi Copper-Gold sites are located approximately 185km apart (refer Figure 1). The formal evaluation work to date (previous Scoping Study completed in July 2012) has been based on a processing plant being located at the Washihi site (due to its long life and more significant resource base and potential expansion based on exploration targets) with the Daris resource (being a smaller tonnage but with high grade Copper/Gold) being a potential feed source to the plant. Details of both assets and their JORC Mineral Resources (based on the 2004 edition of the JORC Code) are in Annexure A.

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ASX Code | AUQ

AL A RA RESOURC E S LIMITED OMAN PROJ E CT UPDATE – POSITIVE OPTIONS ANAL Y SIS STUDY O UTCOMES

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Figure 1: Location Map of Alara’s Exploration Licence Areas in Oman

Following the com p letion of the previous scoping st u dy (completed in July 2012) the following addition a l Project in f ormation became available - an upgraded Washihi JORC R e source wa s defined[1] (now th e largest co p per JORC R esource in Oman), additional metallurgical test work was c o mpleted on the o re and a te c hnological b reakthroug h identified w ith the potential for He a vy Media S e paration ( HMS ) t o increase t h e effective feed grade o f the Was h ihi deposit from 0.8 - 0. 9 % Cu to 1 . 6 - 1.8% Cu.[2]

As a re s ult of thes e positive upsides (outli n ed above) a process fl o w sheet th a t includes H MS has been de f ined and a n upgraded S coping Stu d y initiated (r e fer Figure 2 ).

1 R e fer Alara’s ASX m arket announce m ent dated 16 Jul y 2013: Upgrade to JORC Resourc e at Washihi Coppper-Gold Project in Oman Pr o viding Strategic O ptions for the A s set

2 R e fer Alara’s ASX m arket announce m ent dated 18 Fe b ruary 2014: Oman Project Breakthrough – Ore Upgrrade Heavy Medi a Separation Te s ts Successful

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AL A RA RESOURC E S LIMITED OMAN PROJ E CT UPDATE – POSITIVE OPTIONS ANAL Y SIS STUDY O UTCOMES

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Figure 2: HMS Plant + Conventional Flotation Circuit (Options 2 and 3)

During t h e upgrade d scoping study it was re a lised that there were ot h er value ad d ing options for these assets t h at were no t previously considered and as suc h (and in parallel) an O p tions Analy s is Study was initiated to as s ess both t h e value a n d viability o f these va r ious appro a ches to th e asset’s develop m ent.

Options Analysis Study Overview

The Options Analysis Study wa s undertaken by RMDSTEM Limited u sing an ad v anced data b ase and a struct u red and det a iled analyti c al approac h .

The O p tions Anal y sis Study evaluated s ix potenti a l develop m ent option s for the c ombined Daris/W a shihi Proje c t centred o n the Washi h i site as the central hub.

(1) C o nventional c opper/gold sulphide flo t ation circuit;
(2) H M S plant followed by a smaller scale convention a l flotation ci r cuit; (3) H M S plant followed by a l a rger scale ( 2 x) conventi o nal flotatio n circuit; (4) O f f-site toll treatment for higher grade primary ore s ; (5) On-site conventional heap leach of ne a r surface o x ide ores; and (6) On-site Conti n uous Vat L e ach (CVL) o f near surfa c e oxide ore s .

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ALARA RESOURCES LIMITED OMAN PROJECT UPDATE – POSITIVE OPTIONS ANALYSIS STUDY OUTCOMES

The study was based on a comparative review of options using benchmark data and assumptions from other similar projects. Capital and operating cost estimates were derived from the following sources:

(1) A 2010 Scoping Study (undertaken by a reputable Perth based engineering group) for a 1.65Mtpa conventional flotation plant and open pit mine in Oman;
(2) A 2002 Pre-Feasibility Study for an Oman property involving an open pit and conventional flotation flowsheet, which compared 0.75Mtpa and 1Mtpa mill capacities;
(3) Scaled estimates from Alara’s 2013 Khnaiguiyah Zinc-Copper Project Definitive Feasibility Study;
(4) Operating and capital costs for the Continuous Vat Leach (CVL) plant from INNOVAT, the owners of the CVL process; and
(5) A benchmark database and associated algorithms to scale capital and operating costs from similar international projects.

In turn the study outcomes were subjected to a Monte Carlo evaluation process relative to outcome sensitivity and overall assumption and parameter range analysis.

The study was underpinned by JORC classified Mineral Resources of Measured, Indicated and Inferred categories (refer Tables 1 and 2 in the JORC Statements in Annexure A) with additional modelling based on the addition of Exploration Targets.

Study Conclusions

The study has concluded that the three stand-alone concentrator options (Options #1, #2 and #3) are operationally and economically attractive. All options have been based on assumed copper prices of US$7,000/t and gold prices of US$1,300/oz.

Project modelling also clearly demonstrated that options #1 to #3 were materially enhanced with an increased mining inventory profile. This was supported by additional work undertaken that evaluated and identified Exploration Targets across prospects in both the Daris and Washihi Project areas. This work indicated there was significant upside in this area at equivalent grades to the current JORC Mineral Resources.

In turn the evaluation of Options #4, #5, and #6 resulted in the following summary outcomes:

Option #4 offered the lowest initial capital cost with positive cash flow however the overall value derived from the resource was not as attractive as Options #1 to #3;
Option #5 did not result in an acceptable standalone option but could add incremental value as a Project enhancement following the commencement of any/all of Options #1 to #3;
Option #6 was not attractive as a stand-alone approach but also offered material Project enhancement when used incrementally with any/all of Options #1 to #3; and
The addition of Option #6 (as an incremental addition) was preferable to Option #5 due to high evaporation rates (not ideal for heap leaching) and the ability to produce a fully neutralised tailings from this process and contained acid flows.

Next Steps - Scoping Study/Commercial Plan

The Options Analysis Study has concluded that there is sufficient justification to advance the Washihi and Daris Copper-Gold Projects to the next level. In doing so there are a number of key parameters that have been identified for both Options #2 and #3 which will require further investigation.

Alara is currently proceeding with the completion of the upgraded Scoping Study (due for completion in July 2014) on Options #2 and #3. The parameters of this upgraded Scoping Study include insights identified by the Options Analysis Study in order to present technically robust cases and thus provide sufficient confidence to allow Alara to progress to a Pre-Feasibility Study if and as warranted.

In parallel with the upgraded Scoping Study (and in anticipation of its positive outcomes based on the completed Options Analysis Study and the Scoping Study outcomes to date) Alara is reviewing the commercial options to potentially move the Project through to the next stage of a Pre-Feasibility Study. The outcome of this review will be completed in line with the completion of the upgraded scoping study.

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ALARA RESOURCES LIMITED OMAN PROJECT UPDATE – POSITIVE OPTIONS ANALYSIS STUDY OUTCOMES

Khnaiguiyah Project Update (Saudi Arabia)

As announced (4 June 2014) the activity associated with the Heads of Agreement (HoA) that will increase Alara’s equity to 60% in the Khnaiguiyah Project Joint Venture (JV) company, Khnaiguiyah Mining Company LLC (KMC), has not progressed according to the projected timeline due to a delay in the JV partner taking action to have the Mining Licences transferred to KMC. The resolution of this matter remains a key focus for the Company and actions are being progressed both within the HoA and associated Road Map guidelines, as well as externally to ensure that this agreement is concluded as agreed and the Khnaiguiyah Project can progress.

– ENDS –

For further information, please contact:

Philip Hopkins T | +61 8 6323 5900 Managing Director E | [email protected] Elle Macdonald T | +61 8 6323 5900 Corporate Affairs Manager E | [email protected]

About Alara Resources

Alara Resources Limited (ASX: AUQ) is an Australian-based minerals exploration and mine development company with a diverse portfolio of projects in Saudi Arabia and Oman. Alara has recently completed a Definitive Feasibility Study (DFS) on its flagship Khnaiguiyah Zinc-Copper Project in Saudi Arabia and is upgrading a Scoping Study (SS) on its Daris/Washihi Copper-Gold Projects in Oman. The Company is now transitioning towards establishing itself as an emerging base and precious metals mine development and production company.

For more information, please visit Alara’s new website: www.alararesources.com.

Forward Looking Statements and Disclaimer

This announcement contains certain forecasts and forward-looking information including possible or assumed future performance, costs, production levels or rates, prices, reserves and resources or potential growth of the Company, industry growth or other trend projections. Such forecasts and information are not a guarantee of future performance and involve unknown risks and uncertainties, as well as other factors, many of which are beyond the control of the Company. Actual results and developments may differ materially from those expressed or implied by these forward-looking statements depending on a variety of factors. Neither the Company, nor any other person makes or gives any representation, assurance or guarantee, that the occurrence of an event expressed or implied in any forward looking statements in this announcement, will actually occur. Investors are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date they are made. The information in this announcement does not take into account the objectives, financial situation or particular needs of any person. Nothing contained in this announcement constitutes investment, legal, tax or other advice.

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ALARA RESOURCES LIMITED OMAN PROJECT UPDATE – POSITIVE OPTIONS ANALYSIS STUDY OUTCOMES

ANNEXURE A

Oman Project Details and JORC Statements

Washihi-Mullaq-Al Ajal Copper-Gold Project (Oman)

(Alara 70%, Al Hadeetha Investments LLC 30%, of Al Hadeetha Resources LLC)

Comprises 3 prospects/exploration licences (Washihi, Mullaq and Al Ajal) totalling ~105km2 located ~80 to 160km east and south-east of Alara’s Daris Copper-Gold Prospect
3 Mining Licence applications covering 3km2 at Washihi, 1km2 at Mullaq and 1.5km2 at Al Ajal have been filed

Table 1: Washihi JORC Mineral Resources[3]

Cu % Cut off	Indicated Resource	Indicated Resource	Indicated Resource	Inferred Resource	Inferred Resource	Inferred Resource
	Tonnes	Copper (Cu)	Gold (Au)	Tonnes	Copper (Cu)	Gold (Au)
	(Million)	%	g/t	(Million)	%	g/t
0	7.16	0.87	0.17	7.77	0.67	0.2
0.25	6.84	0.9	0.17	7.27	0.71	0.2
0.5	5.66	1.01	0.18	5	0..85	0.21
0.75	4.04	1.17	0.18	2.57	1.07	0.23
1	2.39	1.37	0.2	1.24	1.31	0.27

Daris Copper-Gold Project (Oman)

(Alara 50% with right to increase to 70%+, Al Tamman Trading Establishment LLC 50%, of Daris Resources LLC)

Located ~150km west of Muscat (capital city) and comprises one exploration licence (Block 7) of ~587km
2 Mining Licence applications covering 3.2km2 at the Daris East and 1.3km2 at the Daris 3A-5 prospects have been filed

Table 2: Daris-East JORC Mineral Resources

Ore type	Cut-off grade Cu%	Measured	Measured	Measured	Indicated	Indicated	Indicated	Measured and Indicated	Measured and Indicated	Measured and Indicated	Inferred	Inferred	Inferred

		Tonnes	Cu%	Gold (Au) g/t	Tonnes	Cu%	Gold (Au) g/t	Tonnes	Cu%	Gold (Au) g/t	Tonnes	Cu%	Gold (Au) g/t
Sulphides	0.5	129,155	2.48	0.23	110,870	2.24	0.51	240,024	2.37	0.43	30,566	2.25	0.55
Oxides	0.5	96,526	0.77	0.03	86,839	0.66	0.14	183,365	0.72	0.08	1,712	0.61	0.97

The information in these JORC Resource tables was prepared and first disclosed under the JORC Code 2004. It has not been updated since to comply with the JORC Code 2012 on the basis that the information has not materially changed since it was last reported.

JORC Competent Persons’ Statement

(1) The information in this announcement that relates to Mineral Resources (and ancillary Exploration Results) in relation to the Washihi Copper-Gold Project (Oman) and the Daris Copper-Gold Project (Oman) is based on information compiled by Mr Ravindra Sharma, who is a Chartered Professional Member of The Australasian Institute of Mining and Metallurgy and Registered Member of The Society for Mining, Metallurgy and Exploration. Mr Sharma was a principal consultant to Alara Resources Limited. Mr Sharma has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration, and to the activity he is undertaking to qualify as a Competent Person as defined in the JORC Code, 2004 edition. Mr Sharma consents to the inclusion in the announcement of the matters based on his information in the form and context in which it appears.
(2) The information in this announcement that relates to Exploration Targets (and ancillary Exploration Results) in relation to the Washihi Copper-Gold Project (Oman) and the Daris Copper-Gold Project (Oman) is based on information compiled by Mr Philip Hopkins, who is a Member of The Australasian Institute of Mining and Metallurgy. Mr Hopkins is the Managing Director of Alara Resources Limited. Mr Hopkins has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration, and to the activity he is undertaking to qualify as a Competent Person as defined in the JORC Code, 2012 edition. Mr Hopkins consents to the inclusion in the announcement of the matters based on his information in the form and context in which it appears.

3 - Refer Alara’s ASX market announcement dated 16 July 2013: Upgrade to JORC Resource at Washihi Copper Gold Project in Oman Providing Strategic Options for the Asset

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AI assistant

ALARA RESOURCES LIMITED Capital/Financing Update 2014

64461_rns_2014-06-12_a24fba4e-2c5a-4a64-ba68-6447d7b235ad.pdf

ASX/MEDIA RELEASE

Oman Project Update Positive Options Analysis Study Outcomes

Highlights

Project and Study Background and Context

Options Analysis Study Overview

Study Conclusions

Next Steps - Scoping Study/Commercial Plan

Khnaiguiyah Project Update (Saudi Arabia)

– ENDS –

About Alara Resources

Forward Looking Statements and Disclaimer

Oman Project Details and JORC Statements

Washihi-Mullaq-Al Ajal Copper-Gold Project (Oman)

Daris Copper-Gold Project (Oman)

JORC Competent Persons’ Statement

AI assistant

ALARA RESOURCES LIMITED — Capital/Financing Update 2014

64461_rns_2014-06-12_a24fba4e-2c5a-4a64-ba68-6447d7b235ad.pdf

ASX/MEDIA RELEASE

Oman Project Update Positive Options Analysis Study Outcomes

Highlights

Project and Study Background and Context

Options Analysis Study Overview

Study Conclusions

Next Steps - Scoping Study/Commercial Plan

Khnaiguiyah Project Update (Saudi Arabia)

– ENDS –

About Alara Resources

Forward Looking Statements and Disclaimer

Oman Project Details and JORC Statements

Washihi-Mullaq-Al Ajal Copper-Gold Project (Oman)

Daris Copper-Gold Project (Oman)

JORC Competent Persons’ Statement

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ALARA RESOURCES LIMITED Capital/Financing Update 2014