EAGLE MOUNTAIN MINING LIMITED — Interim / Quarterly Report 2019

Jul 18, 2019

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Quarterly Report June 2019

HIGHLIGHTS

• Prospectivity of the Silver Mountain Project has been confirmed with highly anomalous assay values in the final drill hole along the Pacific Horizon Prospect and includes porphyry indicator minerals such as molybdenum and bismuth.

• “A characteristic epithermal gold chemical signature for mineralisation in the hydrothermal breccia and the meta-chert tuff of the exhalative Pacific Horizon” was identified by consulting geochemist, Dr Jeffrey Jaacks.

• Porphyry potential is enhanced by drilling at the Scarlett Prospect, in addition to the vectors from the Pacific Horizon drilling.

• Rare earth elements were encountered in pegmatites drilled at the Gold Vein target at Scarlett.

• Phase One drilling complete, now allowing a thorough review of data gathered from the first full season of field work.

• Entitlement Issue completed raising $1.69 million (before costs) from the issue of 11,289,439 New Shares and 5,644,716 unlisted attaching Options.

Eagle Mountain Managing Director, Charles Bass, commented:

“We have been intrigued by the first set of modern exploration results undertaken at the Pacific Horizon and Scarlett Prospects. The results to date have confirmed the complexity of mineralisation we believed was present. The geological indicators identified from the drilling contain certain characteristics that provide the team with a high level of confidence moving forward.

“The work of consultants Dr David Compston and Dr Jeff Jaacks strongly suggests that a mineralised porphyry could exist in our Silver Mountain Cu-Au Project.

“Alteration in the last few diamond drill holes certainly support this. Surprisingly, significantly elevated rare earth elements were encountered in pegmatites within the granites being drilled at the Gold Vein target at Scarlett. It is early days, but positive nonetheless, and we are looking closely at the rare earth potential.”

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OPERATIONS UPDATE

The preliminary drilling program at the Pacific Horizon, Red Mule and Scarlett areas was completed during the June quarter, with final assays currently being prepared. The Company’s drilling contractor together with Eagle Mountain staff completed all holes in compliance with regulatory requirements and de-mobilised from site.

Figure 1 below shows the various prospect locations and illustrates the various types of mineralisation targets within the Silver Mountain Project.

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Figure 1 Silver Mountain Project overview with landholding and unique mineralisation styles

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Quartz-carbonate breccia was encountered in all drill holes completed at the Pacific Horizon. The current interpretation suggests that there are two different quartz-carbonate breccias:

• The first occurs within the Volcanogenic Massive Sulphide (VMS) horizon itself and tends to be smaller intervals with lower values; and

• The second occurs below the horizon footwall and tend to be larger intervals with more significant and anomalous assays.

Figure 2 below shows a hypothetical long-section illustrating the different types of mineralisation targets at the Silver Mountain Project.

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Figure 2 Mineralisation targets at Silver Mountain

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Traditional VMS style mineralisation was not encountered in the northern section of the Pacific Horizon.

The relatively recently discovered VMS horizon near the Rhyolite target and south of Red Mule has a slightly different rock mineralogy that is similar to that of known VMS deposits in the district. This area requires more field work including mapping and sampling before drill targets can be established.

Mineralisation occurs abruptly with little anomalism either side of significant or anomalous intercepts. This may suggest that other “hidden” ore zones may occur near to or just off the drill holes. This type of discovery is referred to as “blind” as there is little indication of the mineralisation occurring outside if directly “hit” by drilling.

Interpretation of assays received to date from drilling, indicate that:

• 1) The VMS system along the Pacific Horizon has been overprinted with at least two phases of hydrothermal alteration. This is quite different to other VMS deposits in the region.

• 2) There are at least two mineralised systems intersected by drilling. Newspaper reports from the time of operation of the Pacific Mine talk about 4-5 veins being found.

• 3) The same newspaper reports talk about gold values increasing in veins moving to the west while copper grades decrease.

• 4) Increased molybdenum and bismuth values are indicators of a potential buried porphyry. As determined from a surface geochemistry report by Dr Jeffrey Jaacks (Refer Independent Geologist Report – Eagle Mountain’s Prospectus dated 23 January 2018), molybdenum and bismuth increase along the Pacific Horizon moving south-westwards from the Pacific Mine. The highest values encountered in the drilling were near the Buffalo mine and from holes that reached the lowest elevations.

• 5) A characteristic epithermal gold chemical signature occurs in the hydrothermal breccia and the meta-chert tuff of the Pacific Horizon.

Drilling at the Gold Vein target at the Scarlett Prospect area was designed to test the porphyry potential of the area. This is quite different to the mineralisation encountered along the Pacific Horizon.

The simplified types of alteration encountered in porphyry systems are illustrated below in Figure 3 including the shell-like alteration that occurs in porphyry systems both outside and below the main ore zone. The areal extent of the actual ore zone comprises only a small portion of the overall porphyry system.

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Figure 3 Simplified alteration model of porphyry deposits.

Porphyry-style alteration was observed in all holes drilled at the Gold Vein target, including:

• Propylitic alteration as chlorite disseminated in the hosting granodiorite and in vein selvedges. The overall intensity of the alteration increases with depth in the three holes completed 19SMDD014, 19SMDD015 and 19SMDD016.

• Thin quartz-carbonate-K-feldspar veins are widespread in the drill core and show alteration selvedges with white mica (sericite). Minor sulphides are associated with the veins. Alteration can be pervasive over several metres. This may represent the outer edge of a Phyllic zone.

The Company was very encouraged by the extent and style of alteration encountered in drilling. The current interpretation is that the drilling has intersected the barren outer alteration shell of the porphyry system. Further work is required to understand where the mineralised parts of the system could be found. A full summary of the drilling at the Gold Vein target will be completed once all assays are received and interpreted.

Rare Earth Potential

Drilling at the Scarlett prospect intersected pegmatites within the granite complex with highly anomalous, albeit non-economic, Rare Earth Elements ( REE ).

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Assay results received to date for the narrow (approx. 1 metre wide) pegmatites intersected in hole 19SMDD014 suggest the following:

• REE concentrations are highly anomalous but sub-economic.

• The REE concentrations encountered in the two narrow pegmatites are about 5 times greater than the background values.

• Heavy Rare Earth Oxides (HREO) are more abundant than Light Rare Earth Oxides (LREO) and between 60% and 80% of Total Rare Earth Oxides (TREO) for higher grade samples. This is a favourable distribution as HREO are more valuable than LREO.

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Figure 4 Pegmatite in hole 19SMDD014 with highly anomalous REE values. Note that the standard laboratory procedure does not guarantee full dissolution of REE-bearing minerals. Samples will be reassayed with a total dissolution method.

The laboratory technique used for the current set of assays does not ensure complete dissolution of REE-bearing minerals. While appropriate for an initial assessment of the REE prospectivity, a total dissolution method should be used to properly characterise the REE endowment of the pegmatites.

NEXT STEPS

The Company believes the most cost-effective way forward is to focus on better defining the porphyry system and determining the best location to test for the copper-gold mineralisation within the alteration system. The work will involve further mapping and fully assessing all information to optimise the search for the porphyry mineralisation.

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Once this is completed, a new drill hole program will be designed to specifically target the porphyry core.

Work planned for the coming quarter will include:

• An extensive review of all data and consultants’ reports

• Petrographic studies

• Age dating

• Continued and more detailed ground mapping and sampling.

In addition to better defining the porphyry system, additional work will be completed to assess the REE potential, which includes:

• Re-analyse the anomalous samples with a technique ensuring the complete dissolution of REE-bearing minerals.

• Further studies to be completed to understand which minerals are hosting the REE.

• A detailed exploration program will follow to assess the REE endowment of the pegmatites at Scarlett and the potential of the greater Silver Mountain Project. Exploration will focus on identifying areas likely to contain high-grade REE mineralisation.

CORPORATE

Entitlement Offer

On 6 May 2019 the Company announced a non-renounceable entitlement offer of approximately 18.5 million new shares at an issue price of $0.15 on the basis of 1 new share for every 5 ordinary shares held at the record date (the “ Entitlement Offer ”). Applicants also received a free attaching Option for every two New Shares taken up in the Entitlement Offer. Options are unlisted and are exercisable by payment of $0.20 each on or before 31 July 2021.

The Entitlement Offer closed on 7 June 2019 raising $1.69 million (before costs) from the issue.

Employee Options

The Company issued 2,130,000 unlisted options to employees of the Company on 6 May 2019 pursuant to the terms and conditions of the Eagle Mountain Mining Limited Employee Incentive Plan.

Cash

The Company had $1.89 million on hand at the end of the quarter.

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New Projects

Although the Company’s focus is on the highly prospective Silver Mountain Project, the Company has been made aware of advanced project opportunities within the Greater Arizona area that have the potential to complement the Silver Mountain Project. The Company is now progressing discussions in respect to an advanced project and will update the market as appropriate.

For further information please contact:

Charles Bass Mark Pitts BSc, MSc, FAusIMM, FAIG, FAICD B.Bus, FCA, GAICD Managing Director & CEO Company Secretary charlie@eaglemountain.com.au mark@eaglemountain.com.au

COMPETENT PERSON STATEMENT

Where the Company references results from previous ASX announcements, JORC Table 1 disclosures are included within them. The Company confirms that it is not aware of any new information or data that materially effects the information included in those announcements, and that the form and context in which the Competent Persons findings are presented have not been materially modified from the original reports.

EAGLE MOUNTAIN MINING LIMITED

Eagle Mountain is a copper-gold explorer focused on the strategic exploration and development of the highly prospective Silver Mountain Project located just outside of Phoenix, Arizona.

Arizona is at the heart of America’s mining industry and home to some of the world’s largest copper discoveries. Silver Mountain, which comprises three prospects, Pacific Horizon, Scarlett and Red Mule, lies on the same geological setting that hosts world-class porphyry copper mines such as Bagdad, Miami and Resolution, one of the largest undeveloped copper deposits in the world. It also lies on the southern extension of the metallogenic belt that hosts United Verde and Iron King.

The Company is undertaking an aggressive exploration drilling program which commenced in the first half of FY19.

Eagle Mountain is led by founder and Managing Director Charles Bass. Mr Bass has a proven track record in mining, having previously co-founded both Eagle Mining Corporation, a highly successful gold miner, and Aquila Resources, which was acquired by Baosteel and Aurizon Holdings for $1.4 billion in 2014.

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Schedule of interests in mining tenements

All of the Eagle Mountain mineral licences are presently located in the State of Arizona, United States of America, refer to the location map. (ASX Listing Rule 5.3.3)

(a) Interests in mining tenements as at 30 June 2019

Prospect & Tenure type	Claim Reference (Tenement)	Percentage held at beginning of quarter	Percentage held at end of quarter	Notes
Pacific Horizon
	Empire, Copper Ash, Palestine, Buffalo, Little
	Pittsburg, Austin, Wellington, Eagle, Number	100%	100%
Patented Claims (26 individual claims)	Ten, Number Eleven, Number Twelve, Number Thirteen, Noonday, South Noonday, Dudley, Comet, Alameda, Virginia, Mars,
	Ashland, Oakland, Sunnyside, Cuprite,
	Azurite, Yavapai and Jumbo
Unpatented Claims	SMM#1-14, SMM#17-145, SMM#147,	100%	100%
(150 individual claims)	SMM#149, SMM151, SMM#155, SMM#157,
	SMM#159, SMM#161
Exploration Permit	08-117371	100%	100%
(1 individual permit)
Scarlett
Unpatented Claims (92 individual claims)	SCA#1-15, SCA#57-133	100%	100%
Exploration Permit (2 individual permits)	08-117369, 08-117373	100%	100%
Red Mule
	SMM#146, SMM#148, SMM#150,	100%	100%
Unpatented Claims	SMM#152, SMM#153, SMM#154,
(98 individual claims)	SMM#158, SMM#160, SMM#162-207,
	SMM#210-212, SCA#16-56
Exploration Permit (2 individual permits)	08-117370, 08-117372	100%	100%
Rhyolite Target
Unpatented Claims (84 individual claims)	SMMSO#001 - #084	100%	100%
Exploration Permit (1 individual permit)	08-120101	100%	100%

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• (b) Tenements acquired and disposed of during the quarter

None

• (c) The beneficial percentage interests held in farm-in or farm-out agreements as the end of the quarter

None

• (d) The beneficial percentage interests in farm-in or farm-out agreements acquired or disposed of during the quarter

None

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Location map of the Silver Mountain Project with licence areas shown

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Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report

+Rule 5.5

Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report

Introduced 01/07/96 Origin Appendix 8 Amended 01/07/97, 01/07/98, 30/09/01, 01/06/10, 17/12/10, 01/05/13, 01/09/16

Name of entity

Eagle Mountain Mining Limited

ABN

Quarter ended (“current quarter”)

34 621 541 204 30 June 2019

Consolidated statement of cash flows	Current quarter $A’000	Year to date (12 months) $A’000
1. Cash flows from operating activities 1.1 Receipts from customers 1.2 Payments for (a) exploration & evaluation (b) development (c) production (d) staff costs_(administration and corporate)_ (e) administration and corporate costs 1.3 Dividends received (see note 3) 1.4 Interest received 1.5 Interest and other costs of finance paid 1.6 Income taxes paid 1.7 Research and development refunds 1.8 Other – rent incentive rebate 1.9 Net cash from / (used in) operating activities	- (1,311) - - (55) (36) - 2 - - - -	- (5,942) - - (227) (430) - 40 - - - -
	(1,400)	(6,559)
2. Cash flows from investing activities 2.1 Payments to acquire: (a) property, plant and equipment (b) tenements (see item 10) (c) investments (d) other non-current assets - bonds 2.2 Proceeds from the disposal of: (a) property, plant and equipment	- - - - -	(115) - - (127) -

• See chapter 19 for defined terms

1 September 2016

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Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report

Consolidated statement of cash flows	Current quarter $A’000	Year to date (12 months) $A’000
(b) tenements (see item 10) (c) investments (d) other non-current assets 2.3 Cash flows from loans to other entities 2.4 Dividends received (see note 3) 2.5 Other – cash on acquisition of subsidiary 2.6 Net cash from / (used in) investing activities	- - - - - -	- - - - - -
	-	(242)
3. Cash flows from financing activities 3.1 Proceeds from issues of shares and options 3.2 Proceeds from issue of convertible notes 3.3 Proceeds from exercise of share options 3.4 Transaction costs related to issues of shares, convertible notes or options 3.5 Proceeds from borrowings 3.6 Repayment of borrowings 3.7 Transaction costs related to loans and borrowings 3.8 Dividends paid 3.9 Other (provide details if material) 3.10 Net cash from / (used in) financing activities	1,693 - - (69) - (3) - - -	1,935 - - (148) (12) - - -
	1,621	1,775
4. Net increase / (decrease) in cash and cash equivalents for the period 4.1 Cash and cash equivalents at beginning of period 4.2 Net cash from / (used in) operating activities (item 1.9 above) 4.3 Net cash from / (used in) investing activities (item 2.6 above) 4.4 Net cash from / (used in) financing activities (item 3.10 above) 4.5 Effect of movement in exchange rates on cash held 4.6 Cash and cash equivalents at end of period	1,664 (1,400) - 1,621 6	6,795 (6,559) (242) 1,775 122
	1,891	1,891

• See chapter 19 for defined terms 1 September 2016

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Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report

5. Reconciliation of cash and cash equivalents at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts	Current quarter $A’000	Previous quarter $A’000
5.1 Bank balances 5.2 Call deposits 5.3 Bank overdrafts 5.4 Other (provide details) 5.5 Cash and cash equivalents at end of quarter (should equal item 4.6 above)	1,891 - - -	1,162 502 - -
	1,891	1,664
6. Payments to directors of the entity and their associates Current quarter $A'000 6.1 Aggregate amount of payments to these parties included in item 1.2 59 6.2 Aggregate amount of cash flow from loans to these parties included in item 2.3 - 6.3 Include below any explanation necessary to understand the transactions included in items 6.1 and 6.2
		Current quarter $A'000
		59
		-

Office Rent paid to an associated entity of Mr Bass, a director of the Company - $22,000. Director remuneration $37,000.

7. Payments to related entities of the entity and their Current quarter associates $A'000

7.1 Aggregate amount of payments to these parties included in item 1.2 - 7.2 Aggregate amount of cash flow from loans to these parties included - in item 2.3

7.3 Include below any explanation necessary to understand the transactions included in items 7.1 and 7.2

	8. Financing facilities available Add notes as necessary for an understanding of the position Total facility amount at quarter end $A’000 Amount drawn at quarter end $A’000 8.1 Loan facilities - - 8.2 Credit standby arrangements - - 8.3 Other (please specify) - - 8.4 Include below a description of each facility above, including the lender, interest rate and whether it is secured or unsecured. If any additional facilities have been entered into or are proposed to be entered into after quarter end, include details of those facilities as well.	Total facility amount at quarter end $A’000	Amount drawn at quarter end $A’000
		-	-
		-	-
		-	-

• See chapter 19 for defined terms 1 September 2016

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Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report

9. Estimated cash outflows for next quarter	$A’000
9.1 Exploration and evaluation 9.2 Development 9.3 Production 9.4 Staff costs 9.5 Administration and corporate costs 9.6 Other: Evaluation of new opportunities 9.7 Total estimated cash outflows*	(500) - - (60) (120) (200)
	(880)

• Estimated exploration outflows are discretionary and dependent on available cash. Directors are also reviewing new projects which may if pursued impact on expenditure for the upcoming quarter.

10. Changes in tenements (items 2.1(b) and 2.2(b) above)	Tenement reference and location	Nature of interest	Interest at beginning of quarter	Interest at end of quarter
10.1 Interests in mining tenements and petroleum tenements lapsed, relinquished or reduced	Nil
10.2 Interests in mining tenements and petroleum tenements acquired or increased	Nil

Compliance statement

• 1 This statement has been prepared in accordance with accounting standards and policies which comply with Listing Rule 19.11A.

• 2 This statement gives a true and fair view of the matters disclosed.

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Sign here: ............................................................ Date: 19 July 2019 Company secretary

Print name: Mark Pitts

Notes

1. The quarterly report provides a basis for informing the market how the entity’s activities have been financed for the past quarter and the effect on its cash position. An entity that wishes to disclose additional information is encouraged to do so, in a note or notes included in or attached to this report.

2. If this quarterly report has been prepared in accordance with Australian Accounting Standards, the definitions in, and provisions of, AASB 6: Exploration for and Evaluation of Mineral Resources and AASB 107: Statement of Cash Flows apply to this report. If this quarterly report has been prepared in accordance with other accounting standards agreed by ASX pursuant to Listing Rule 19.11A, the corresponding equivalent standards apply to this report.

3. Dividends received may be classified either as cash flows from operating activities or cash flows from investing activities, depending on the accounting policy of the entity.

4. • See chapter 19 for defined terms

1 September 2016

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