ALARA RESOURCES LIMITED — Capital/Financing Update 2016

Jul 11, 2016

==> picture [113 x 54] intentionally omitted <==

Alara Resources Limited A.B.N. 27 122 892 719 Level 11, 216 St Georges Tce Perth WA 6000, Australia GPO Box 2517 Perth WA 6831

Telephone | +61 8 9481 0389 Facsimile | +61 8 9463 6103 Web | www.alararesources.com Email | info@alararesources.com

12 July 2016

Dear Shareholder

Renounceable Rights Issue

On 6 July 2016, Alara Resources Limited (the Company ) announced a renounceable pro rata entitlement offer to raise $1.45 million.

The offer will be made on the basis of 1 new share for every 7 existing shares held by shareholders with a registered address in Australia or New Zealand as at 7:00pm (AEST) on 14 July 2016 ( Eligible Shareholders ), at an offer price of $0.02 per share ( Offer ). Shareholders will be given the opportunity to apply for additional shares in excess of their entitlement. Funds raised from the Offer will be used primarily to:

• help secure a mining licence for the Al Hadeetha Copper-Gold project in Oman by providing bridge finance to meet pre-operating expenses prior to commencement of mine and plant construction at Washihi;

• incorporate the recently announced high grade copper and gold mineralisation into the existing Resource Model for the Company’s Al Hadeetha Copper-Gold project; and

• continue pursuing other licences/projects, including meeting commitments on Al Ajal, Mullaq and Daris with the aim of increasing mining inventory to feed a concentration plant at Washihi, and concluding legal action before the Board of Grievances in regard to the Khnaiguiyah Zinc-Copper Project and (if necessary) judgement enforcement in Saudi Arabia.

New shares to be issued under the Offer will rank equally with existing shares. The Company has applied to ASX for the new shares to be listed. Fractional entitlements will be rounded up to the nearest whole number.

A prospectus for the Offer has been lodged with ASIC on 8 July 2016 which will be available on both the ASX website and the Company’s website ( Prospectus ). Full details of the Offer will be contained in the Prospectus and accompanying personalised entitlement and acceptance form ( Entitlement and Acceptance Form ) to Eligible Shareholders following the Record Date.

Shareholders should consider the Prospectus in deciding whether to acquire new shares under the Offer and will need to complete the Entitlement and Acceptance Form to take up their entitlement. As an Eligible Shareholder, you may:

• (a) take up all or part of your entitlement;

• (b) take up all of your entitlement and apply for shortfall securities;

• (c) sell all of your entitlement;

• (d) take up part of your entitlement and sell the balance of your entitlement;

• (e) allow all or part of your entitlement to lapse.

==> picture [53 x 52] intentionally omitted <==

ASX Code | AUQ

==> picture [113 x 54] intentionally omitted <==

Alara Resources Limited Telephone | +61 8 9481 0389 A.B.N. 27 122 892 719 Facsimile | +61 8 9463 6103 Level 11, 216 St Georges Tce Web | www.alararesources.com Perth WA 6000, Australia Email | info@alararesources.com GPO Box 2517 Perth WA 6831

Assuming that no shares are issued prior to the Record Date, at the close of the Offer, the capital structure of the Company following the Offer will be:

SharesNumber%Existing Fully Paid Shares506,015,00087.50New Shares offered under this Prospectus72,287,85712.50Total Shares578,302,857100.00The indicative timetable for the Offer is set out below:Prospectus lodged with ASIC and ASX8 July 2016Ex date – shares trade ex entitlement13 July 2016Rights trading commences13 July 2016Record date to determine entitlement (Record Date)14 July 2016Prospectus with Entitlement and Acceptance Form dispatched15 July 2016Offer opens for receipt of applications15 July 2016Rights trading ends26 July 2016Closing date for acceptances (Closing Date)2 August 2016Issue of new securities9 August 2016Deferred settlement trading ends9 August 2016Dispatch of shareholding statements9 August 2016Normal trading of new securities expected to commence10 August 2016	Shares
		Number%
	Existing Fully Paid SharesNew Shares offered under this Prospectus	506,015,00087.5072,287,85712.50
	Total Shares	578,302,857100.00

The timetable above is indicative only and may be subject to change. The Company reserves the right to amend any or all of these dates and times subject to the Corporations Act, the ASX Listing Rules and other applicable laws.

Yours faithfully

==> picture [104 x 35] intentionally omitted <==

Elizabeth Hunt Company Secretary

==> picture [53 x 52] intentionally omitted <==

ASX Code | AUQ