ALARA RESOURCES LIMITED — Capital/Financing Update 2017

Jan 23, 2017

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

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ASX/MEDIA RELEASE

Tuesday, 24 January 2017

Oman Activities Update

Alara Resources Limited (ASX: AUQ) (Alara or Company) provides updates on the recent Oman Minerals and Mining Conference held in Muscat, and also the Al Hadeetha feasibility study findings previously announced.

Oman Minerals & Mining Conference & Exhibition

Oman Minerals & Mining Conference & Exhibition was held in Muscat last week. The conference was held in partnership with Sultanate of Oman Public Authority for Mining and was directed toward leveraging the increasing demand for minerals, discussing and addressing topics and issues relevant to the expansion of the industry, and attracting investment.

Alara’s CEO, Mr Justin Richard, delivered a presentation on Alara’s project investments, including the Al Hadeetha Copper Gold Project in Oman, the potential to reignite the Sultanates’ 4000+ year history of copper mining, and re-establish the mining sector as a pillar of the Omani economy (see Annexure A).

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Above: Alara’s CEO, Mr Justin Richard presents to the Oman Minerals & Mining Conference in Muscat.

The “Project Opportunities” session was chaired by a representative of Mining Development Oman, and also included presentations from Gulf Mining Group (Gold Sponsor), Savannah Resources, Kunooz Oman Holding (Main Sponsor) and Oman Mining Company other presentation was followed by other Mining Investment Middle East & Central Asia Conference in Muscat. The session was very

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ASX Code | AUQ

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

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well attended and followed by an enthusiastic question answer session which revealed a keen interest in copper.

Alara board members Atmavireshwar Sthapak and Vikas Jain also attended the conference and meetings with key figures, including H.E. Eng. Hilal Al Busaidi, Chief Executive Officer, Public Authority for Mining, who was a guest of honour at an Indian Embassy function the same week.

Feasibility Study Update

Further to the Al Hadeetha feasibility study findings previously announced[1] , this update takes account of 1) the new mining schedule prepared following the last mineral resource upgrade[2] , 2) the maiden ore reserve statement[3] , and 3) copper price forecast trends.

Key Financials

Base Case financial modelling on the Feasibility study for the Al Hadeetha Copper Gold Project (“the Project”) indicate robust returns as follows:

• Forecast Revenue US$ 452 million over 10.4 years.

• Forecast EBITDA over the same period US$ 159 million

• Pre-Start Capital Expenditure of US$ 49.74 million

• FCFF – Free Cash flow available in 10.4 years US$ 96 million

• Project NPV of US$ 39 million

• Forecast IRR over the same period 26%

Resource Base

The Project findings are underpinned by Mineral Inventory, comprising in-pit JORC Probable Reserves which account for 96.5% of the in pit Resource. An additional 3.5% of Inferred Resources that is mined during the process of accessing the Reserves has been included for financial projections, but does not have a material impact on the value of the Project.

A summary of the In-Pit Mineral Reserves and Resources are given in Table 14.1 below.

1 Refer Alara’s ASX Announcement dated 31 March 2016.

2 Refer Alara’s ASX Announcement dated 19 September 2016.

3 Refer Alara’s ASX Announcement dated 15 December 2016.

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ASX Code | AUQ

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

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Table 14.1 In Pit Mineral Inventory

In Pit Resources JORC 2012 Category	Tonnes millions	Cu %	Au g/t
Probable Reserves	9.70	0.88	0.22
Inferred Resource	0.35	0.65	0.22
Total	10.05	0.87	0.22

Project Fundamentals

The Al Hadeetha Project study has concluded a technically feasible and financially robust mining operation. The process plant is designed to process 1,000,000 tonnes of copper and gold bearing mineralised material per annum. A 12-month construction and a-month ramp up period is envisaged to reach full capacity. Project life is anticipated to be 10.4 years. Key Project parameters are summarised in Table 14.2 below.

Table 14.2: Key Parameters

	DFS Fundamentals
Pre-production Capex	$49.74 million
Mining method	Open pit, 10.4 years
Project construction	1 year
First production	Q4 CY 2017
Final production	2028
Processing rate	1 Mtpa
Average annual concentrate production	35,000 (wmt)
Total Tonnes Copper metal production	79,297(t)
Total Gold ounces	21,825 ounces
Unit Operating Costs ($US/ t of processed material)	$26.95/ tonne of processed material
Cash Cost	US$3,428.25 per tonne of Copper or US$1.56/lb of Copper

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ASX Code | AUQ

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

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Financial Modelling Assumptions

The assumptions used for financial modelling produce a:

Base Case;

Market Case; and

High Case.

The variable parameters used in each case are Copper prices. The gold price is fixed at $1,200/oz for all three cases.

Table 14.3 Variable copper prices used for Base Case, Market Case and High Case

Base Case Market Case High Case	Case Scenario	Cu	Au US$/oz
		**US$/t **
	World Bank forecast copper metal price (nominal) for 2019 fixed for Life of Mine. This is below current copperprice.	5,593 for Life of Mine	$1,200/ oz
	Economist Intelligence Unit forecast price for Copper until 2019 and thereafter flat.	Minimum 5,907 and maximum 6,171	$1,200/ oz
	Higher of Economist Intelligence Unit and World Bank Copper price forecast until 2025, thereafter flat for remaining Project life	Minimum 5,593 and maximum 7,000	$1,200/ oz

A summary of financial returns for each of the above three cases is summarised below.

Table 14.4 Financial Summary of Base Case, Market Case and High Case.

Case Scenario	Total Revenue US$ millions	Total Opex US$ millions	EBITDA US$ millions	NPV US$ millions*	IRR
Base Case	452	271	159	39	26%
Market Case	479	271	186	55	33%
High Case	521	271	228	73	37%
*NPV is based on a discount rate of 8.92%

The relative NPV between the Base Case, Market and the High Case (varying from US$ 39 million to US$ 73 million) show the Project may do much better than predicated if referenced copper price forecasts are the underlying supply deficits are realised.

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ASX Code | AUQ

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

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Going Forward

The Company set itself an ambitious target to commence construction in Q4 2016. Construction was unable to proceed absent the mining licence. However, recent positive feedback from the mining authority provided sufficient assurance on the licence application for the Company to announce a maiden reserve statement last month.

The project implementation schedule provides for production ramp up nine months after construction begins, and six months before reaching full production in 2018.

A number of recent media reports have covered the new mining law, drafted by the Public Authority for Mining (PAM), which is expected to be announced soon. It is also understood the new law will include provisions aimed at making the application process more streamlined. The Company welcomes these improvements and based on feedback from the mining authority, does not expect the introduction of the new law to be the cause of delay for the Al Hadeetha mining application.

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ASX Code | AUQ

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

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Competent Person Statements

The information in this announcement that relates to the feasibility study of the Al Hadeetha Copper-Gold project is based on information compiled by Mr Shanker Madan, who is a Member of the Australasian Institute of Mining and Metallurgy, and consultant to Alara Resources. Mr Madan 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 Madan consents to the inclusion in the announcement of the matters based on his information in the form and context in which it appears.

The information in this announcement that relates to JORC Resources of the Al Hadeetha Copper-Gold Project (Oman) is based on, and fairly represents, information and supporting documentation prepared by Mr Ravi Sharma, who is a Chartered Member of The Australasian Institute of Mining and Metallurgy, and a consultant to Alara Resources. 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, 2012 edition. Mr Sharma approves and consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

The information in this announcement that relates to Ore Reserve of the Al Hadeetha Project was compiled by Mr Harry Warries, who is a Fellow of the Australasian Institute of Mining and Metallurgy, and a consultant to Alara Resources. Mr Warries has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration, and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves.’ In assessing the appropriateness of the Ore Reserve estimate, Mr Warries has relied on various reports, from both internal and external sources, in either draft or final version, which form part of or contribute to the Al Hadeetha Project Feasibility Study. These reports are understood to be compiled by persons considered by Alara to be competent in the field on which they have reported. Mr Warries consents to the inclusion in the report of the information in the form and context in which it appears.

For further information, please contact: Justin Richard T | +61 8 9481 0389 Managing Director E | jrichard@alararesources.com Elizabeth Hunt T | +61 8 9481 0389 Company Secretary E | cosec@alararesources.com

About Alara Resources

Alara Resources Limited (ASX: AUQ) is an Australian minerals exploration company with a portfolio of projects in Saudi Arabia and Oman. Alara has completed a Definitive Feasibility Study on the Khnaiguiyah Zinc-Copper Project in Saudi Arabia, an Advanced Scoping Study on the Daris and Al Hadeetha Copper-Gold Projects in Oman and a Feasibility Study for the Al Hadeetha Project, Washihi deposit. The Company is transitioning to establish itself as a base and precious metals mine development and production company. For more information, please visit: www.alararesources.com

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ASX Code | AUQ

APPENDIX A – Oman Minerals & Mining Conference, 17 January 2017

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OMAN MINERALS AND MINING CONFERENCE, MUSCAT, OMAN 17 JANUARY 2017

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Company profile

Board of Directors

Company Data

James Phipps

Chairman

Mr Phipps is a strategic advisor, business executive, and lawyer with extensive international and Middle East experience. He previously served as an Alternate Director to HRH Prince Abdullah bin Mosaad bin Abdulaziz Al Saud and was appointed Chairman of the Company in July 2015.

ASX Code AUQ Issued Capital - Shares 592M - Options 234M

ASX Code

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Justin Richard

CEO & Managing Director

Joined Alara in 2011 and became CEO in May 2015. Previously worked as Alara’s Country Manager for Saudi Arabia and Oman, and in mining construction with UGL Resources, Baterman Engineering and Minter Ellison Lawyers.

Atmavireshwar Sthapak

Executive Director

20+ years mining industry experience , specializing in mineral resource exploration and evaluation studies. Has worked on world class deposits, including Mt. Isa copper deposits in Australia. Rio Tinto Discovery Award in 2009

Vikas Jain

Non-Executive Director

15 years in the field of mineral exploration and allied activities, including open cast mining. Managing Director and CEO of the South West Pinnacle Exploration P/L, founded by him in 2006.

Top 10 Shareholders

	MENG MENG	6.501
	VIKAS JAIN	5.786
	METALS CORNERS HOLDING CO	5.148
	CITICORP NOMINEES PTY LTD	4.903
	MUL CHAND MALU	4.822
	VIKAS MALU	4.822
	JUSTIN RICHARD	4.406
	PIYUSH JAIN	3.858
	WHITECHURCH DEVELOPMENTS	3.473
	HSBC CUSTODY NOMINEES(AUSTRALIA)	2.787

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Project locations

Moving from Exploration into Development and Production

Alara is an Australian minerals exploration and development company, with its registered office located in Perth, Western Australia.

Alara has established itself in the Middle East with a portfolio of advanced development and early stage exploration projects as listed below.

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Washihi & Daris
Khnaiguiyah Project
Projects
(Saudi Arabia)
(Oman)
Perth
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Project Resources Interest Location Status Khnaiguiyah Zinc-Copper 50% Saudi Arabia Feasibility complete Judgement hearing in March Al Hadeetha Copper-Gold 70% Oman Feasibility complete Awaiting Mining Licence - Daris Copper Gold 50% (70% option) Oman Advanced Scoping Study www.alararesources.com 3 © Alara Resources Limited

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Alara Oman Portfolio

Alara Resources Ltd (AUQ) Alara Oman Operations Alara Alara Pty Ltd (AOOPL) Saudi Op Other Op

Al Hadeetha Resources LLC AHRL 70%-AOOPL; 30%-Al Hadeetha (Al Naba Services) 3 Exploration Licences, (Washihi, Mullaq, Al Ajal) 3 Mining License Applications. Alara Resources (Oman) LLC 70%-AOOPL; 30%-Sur United LLC ARL Cu Exploration License applied, none granted Daris Resources LLC DRL 50%-AOOPL (with right to own up to 70%); 50%- Al Tamman Trading (Muscat Overseas) 1 Exploration Licence (Block 7), 2 MLs applied

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Oman Copper Gold Exploration Licenses

The Oman Copper Gold Projects are located in a region with several examples of VMS Copper Deposits and within reasonable proximity to a Copper Smelter and port at Sohar

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Al Hadeetha Feasibility Study Findings

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• Project revenue: US$452M

• Project costs : US$270m

• Capex: US$59 million, including $9m owners’ capitalised expense, plus working capital and contingency

• EBITDA: US$142M

• Project free cash flow: US$96m (after Capex paid)

• Project NPV: US$39m at an IRR of 26%

• Payback: <4 years

• First production 2018

• Production of >321,000 dmt copper concentrate over first10 years

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Copper Price Forecasts

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Source – World Bank Commodity Forecast Price Data, January 2016

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Copper Price Forecasts

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Source – Wood Mackenzie, Rio Tinto, mining.com

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Copper Price Forecasts

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Source: CommodityIntelligence.com

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JORC Cu deposits in Oman

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Cu Resources in MT
18
0.9% Cu
16
14
12
10
2.0% Cu
1.9% Cu
1.4% Cu
8
1.1% Cu
6
4
2 2.2% Cu
0
Source: Published information & Govt reports
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Infrastructure – Power Supply

• Sultanate of Oman Electricity Supply (SAOC) – Mazoon Electricity Company

• Connection at Khadra Bin Daffa

• Mains Power Reticulation Equipment

• 2 x 8MVA Substations

• 33Kv Line extension – Consisting of 2 Km Overhead line

• 4 x 2MVa Transformers on site

• Site Power Reticulation Equipment

• 11KVA High Voltage transformers and cables

• .400 KVA Low Voltage Transformer and cables

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Infrastructure – Water Supply

• Water from Nizwa treatment plant to mine site

• PDO well / groundwater options

• Water storage tank and reticulation

• Bore field and potable water supply and reticulation

• Process water tanks

• Pressurised ring Fire protection system

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Employment

• Construction workforce Estimated 80 (Peak)

• Construction work force – approx. 70 including management

• Mining workforce 40 to 50

• Permanent work force – Total = 175

• Mining – 58

• Process – 73

• Administration

• Management and support staff – 44

• Site Services

• Village catering and cleaning

• Village Maintenance

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EIA / EMP

Receptor	Emission/Activity	Magnitude	Permanence	Reversibility	Cumulative
Air Quality	Digging, Blasting & Extraction and Transportation of Mined Materials	1	2	2	2
	Combustion Emissions from DG & Mining Equipment	1	1	1	1
Noise	Blasting, Extraction and Hauling of Mined Materials	1	2	2	2
Soil & Groundwater	Accidental Spills, Dewatering, Deeper Excavation, tailing pond	2	2	2	2
Loss of Habitat	Uprooting of trees and Grasses	2	3	2	3
Mining Staff & Public	Risk and Safety	1	1	1	2
Socio-Economic	Labour and Economy	+	+	+	+

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Washihi Discovery Timeline

2011 Alara Resources JV with Al Haditha Pilatus Resources Early Oman 1997 National Mining Company (NMC) 1990’s World Geoscience Corporation (WCG) Early 1980’s BRGM 1975 – 1976 Prospection Ltd

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TN1 Key Steps Forward The Al Hadeetha Project helps write the next page of the Sultanate’s 4000+ year history of copper mining, as the mining sector re-establishes its rightful place as a pillar of the Omani economy.

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Slide 16

TN1 Edit original schedule - 'Commissioning' is missing an N Tina Newbon, 25/08/2016

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Project Implementation Schedule

	2107				2018				2019	2020	2021	2022	2023	2024	2025	2026	2027	2028	2029
	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
Mining License Appoint EPC Design Procurement Construction Commissioning Mining Ramp up Production Ramp up Full production

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Disclaimer and Statements

FORWARD LOOKING STATEMENTS

This Presentation has been prepared as a summary only and does not contain all information about the Company’s assets and liabilities, financial position and performance, profits and losses, prospects and rights and liabilities. The information in this Presentation and made to you verbally is subject to updating, completion, revision, further verification and amendment without notice. The information contained in this Presentation or subsequently provided to the Recipient of this Presentation whether orally or in writing by or on behalf of Alara Resources Limited or its respective vendors, employees, agents or consultants ("Information") is provided to the Recipients on the terms and conditions set out in this notice. The purpose of this Presentation is to provide Recipients with Information relating to Alara Resources Limited. Each Recipient must make his/her own independent assessment and investigation of Alara Resources Limited and its business and assets and should not rely on any statement or the adequacy and accuracy of any Information contained in this Presentation. Alara Resources Limited makes no representation or warranty (express or implied) as to the accuracy, reliability or completeness of the Information. Alara Resources Limited and its respective directors, vendors, employees, agents and consultants shall have no liability (including liability to any person by reason of negligence or negligent misstatement) for any statements, opinions, information or matters (express or implied) arising out of, contained in or derived from, or for any omissions from the Presentation, except liability under statue that cannot be excluded. The Presentation contains reference to certain intentions, expectations and plans of Alara Resources Limited. These intentions are based on certain assumptions which may not be met or on which views may differ. No representation or warranty, express or implied, is made by Alara Resources Limited or any of its respective directors, officers, employees, advisers or agents that any intentions, expectations or plans will be achieved either totally or partially or that any particular rate of return will be achieved. This Presentation does not constitute in any way an offer or invitation to subscribe for securities in Alara Resources Limited pursuant to the Corporations Act.

COMPETENT PERSON STATEMENTS

The information in this announcement that relates to the feasibility study of the Al Hadeetha Copper-Gold project is based on information compiled by Mr Shanker Madan, who is a Member of the Australasian Institute of Mining and Metallurgy, and consultant to Alara Resources. Mr Madan 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 Madan consents to the inclusion in the announcement of the matters based on his information in the form and context in which it appears.

The information in this announcement that relates to JORC Resources of the Al Hadeetha Copper-Gold Project (Oman) is based on, and fairly represents, information and supporting documentation prepared by Mr Ravi Sharma, who is a Chartered Member of The Australasian Institute of Mining and Metallurgy, and a consultant to Alara Resources. 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, 2012 edition. Mr Sharma approves and consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. The information in this announcement that relates to Ore Reserve of the Al Hadeetha Project was compiled by Mr Harry Warries, who is a Fellow of the Australasian Institute of Mining and Metallurgy, and a consultant to Alara Resources. Mr Warries has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration, and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves.’ In assessing the appropriateness of the Ore Reserve estimate, Mr Warries has relied on various reports, from both internal and external sources, in either draft or final version, which form part of or contribute to the Al Hadeetha Project Feasibility Study. These reports are understood to be compiled by persons considered by Alara to be competent in the field on which they have reported. Mr Warries consents to the inclusion in the report of the information in the form and context in which it appears.

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Resource Developer
to Mine Builder
and Operator
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ABN: 27 122 892 719 Level 11 London House, 216 St Georges Terrace, Perth WA 6000, Australia Telephone +61 8 9481 0389 I Facsimile +61 8 6323 5999 ASX Code: AUQ info@alararesources.com I www.alararesources.com

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