QX RESOURCES LIMITED — Capital/Financing Update 2011

Aug 22, 2011

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23 August 2011

Manager of Company Announcements Australian Securities Exchange Level 6, 20 Bridge Street Sydney NSW 2000

By E‐Lodgement

Black Mountain to acquire 70% Interest in US Silver Projects

Black Mountain Resources Limited (ASX: BMZ) is pleased to announce that the Company has entered into heads of agreement to acquire a 70% interest in 3 Projects which are highly prospective former producing silver and gold mines in Northwestern USA.

The Projects have extensive historical data, independent geological reports and significant production and exploration upside. The mines were closed down when silver hit historical lows (approx. US$5/oz – currently US$39/oz) and have only recently become available through a private vendor.

Of key importance is the fact that the Projects contain certain 'patented claims' which allows for immediate re‐entry and production as well as being in close proximity to nearby milling and toll treatment facilities which potentially will see one of the Projects in production by November 2011.

Summary of Projects

– New Departure Mine Beaverhead County, Montana

The New Departure Project consists of 7 patented mining claims and 20 unpatented mining claims in Beaverhead County, Montana. The property was discovered in the 1880's and has had small production of extremely high grade silver by several small operators since. The ore deposits occur as veins and replacements within a dolomitic limestone host (analogous to the deposits in Leaderville, CO) and are comprised of high grade silver minerals such as tetrahedrite and high grade silver bearing galena.

An independent report completed in 1998 outlined 6 separate ore blocks to a depth of only 90 feet (27.4 metres) below the level of existing workings. The current plan with New Departure is to commence small scale mining activities and mine approximately 80,000 tonnes over the next 3 years starting late 2011. Raw ore can be trucked to a nearby Bi‐Metallic Mill with excess capacity. Current budgets are looking at approximately US$2m to bring the mine back into production.

– Conjecture Project Lakeview Mining District, Idaho

The Conjecture Project consists of 5 patented mining claims and 40 unpatented mining claims in the Lakeview Mining District at the southeast end of Pend Oreille Lake in Bonner County, Idaho. The property has significant production and development history going back over 100 years, although there has been no significant activity since the 1970's. The producing rocks are the same group of rocks which host the major ore deposits of the Coeur d’Alene District some 35 mile to the east of the Conjecture mine. The Coeur d’Alene District has the distinction of being the most productive silver district in North America having produced in excess of 1.2 billion ounces of silver over a period from 1885 to present. The similarities between the Lakeview District where the Conjecture Mine is located and the neighbouring Coeur d’Alene District have been the subject of numerous professional reports.

Black Mountain Resources Limited ACN 147 106 974 945 Wellington Street, West Perth WA 6005 Telephone: +61 8 9322 7600 www.blackmountainresources.com.au | info@blackmountainresources.com.au

By way of background the Conjecture Project was acquired by Federal Uranium in 1956 and encouraged by the high grade ore which had been produced to date, a 2,000 foot (609.6 metres), three compartment, vertical shaft was sunk at a present day equivalent of approximately US$35m. Exploration drifts were then developed at the 700 ft level (213.3 metres), 1,000 ft level (304.8 metres), 1,600 ft level (487.7 metres)and the 2,000 ft level (609.6 metres).

The initial program to be undertaken, subject to completion of the Transaction, would include inspection and evaluation of this shaft by a camera survey, followed by further drilling to test the downward extensions of the ore shoots which have been developed to the 2,000 ft level (609.6 metres). Given that no significant exploration work has been undertaken at Conjecture for over 30 years, Black Mountain believes that the full extent and potential of the Conjecture Mine (and surrounding areas) generally remain undiscovered with significant indicators pointing towards a high chance of exploration success.

Tabor Project

The Tabor is located in the historic mining town of Virginia City, Montana and consists of 12 patented mining claims and 10 unpatented mining claims. The claims include the historic workings of 8 past producing mines (named by the actual rock vein mined) the Jayhill, Pearl, Nellie Bay, St. John, Don‐A‐Vera, Eagle Black, Shenandoah and Fortuna. The workings were the subject of an in depth technical feasibility study in the early 80’s which analysed the production potential of each vein.

The underground workings are generally shallow and are/would be developed from mountain side adits. The priority target is the Pearl Vein which has both gold and silver running at a ratio of approximately 1 oz of gold for every 8 ozs of silver. Confirmatory work on production grades would be undertaken following on from the previous feasibility study with a targeted production rate of 100‐150 tons per day for a minimum 5 year mine life. Similar to the New Departure Mine, nearby toll treatment facilities are available for ore processing. In conjunction with the Pearl vein development, an exploration program consisting of 25 holes (20,000 feet (6096 metres)) would be undertaken on the St John vein with an aim of doubling the targeted production rate.

Transaction Details

The general terms and conditions of the Transaction are as follows:

• completion of due diligence investigations in respect of the Projects and the vendor by the Company within 60 days;

• the Company will commit to an initial US$500,000 due diligence program which will include preliminary feasibility work and an independent geological report required which is required as part of the Transaction;

• the consideration for the Transaction includes:

• (i) expenditure of US$1,500,000 on each Project or US$4,500,000 in total across the Projects within 3 years. In the event that the Transaction proceeds, then the funds already paid by the Company will be offset against its expenditure commitments. In the event that the Transaction does not proceed and is terminated, then the funds already paid by the Company will convert into a 10% equity interest in the vendor. If the Transaction does not proceed due to misrepresentation or gross negligence by the vendor, then the funds already paid by the Company are repayable in full;

• (ii) issue 25,000,000 fully paid ordinary shares in the capital of the Company to the existing shareholders of the vendor;

Black Mountain Resources Limited ACN 147 106 974 945 Wellington Street, West Perth WA 6005 Telephone: +61 8 9322 7600 www.blackmountainresources.com.au | info@blackmountainresources.com.au

• (iii) issue 25,000,000 performance shares convertible into fully paid ordinary shares in the capital of Company where the expenditure outlined above has been completed and upon the production of not less than 2,000 ounces of gold or gold equivalent (net smelter) are produced on any one mine within 5 years, and on such other terms as acceptable to ASX; and

• (iv) the grant of a 3% net smelter royalty to the existing shareholders of the vendor.

• the Transaction is subject to the parties executing formal agreements;

• the Transaction is subject to the passing of such resolutions as may be necessary to give effect to the transaction at a meeting of the Company's shareholders convened in accordance with the Corporations Act and the Listing Rules. The Company intends to seek shareholder approval for the issue of securities to the Vendor's existing shareholders pursuant to the Transaction; and

• on completion of the Transaction, all members of the current Board will resign and nominees of the vendor will be appointed to the Board. Following execution of the heads of agreement, the Company has appointed Mr Peter Landau as an executive director of the Company, as nominated by the vendor.

Re‐compliance with Chapters 1 and 2 of the ASX Listing Rules

The ASX has advised that the Company is required to re‐comply with Chapters 1 and 2 of the ASX Listing Rules. This involves obtaining shareholder approval and meeting the new listing requirements as if the Company were undergoing a new initial public offer. The Company also advises that it intends to raise at least $1 million as part of the re‐compliance ( Capital Raising ). As part of this process, the Company will issue a full form prospectus in relation to the Capital Raising.

In addition the Company's securities will be suspended until such time as the Company releases a notice of meeting to convene a meeting of shareholders to approve the Transaction. The Company will remain in suspension until the meeting documents are dispatched to Shareholders, expected within the next 8 weeks. The Board will concurrently conduct its due diligence assessment on the Projects and will provide Shareholders with a further update on the Projects in due course.

On the day of the Shareholders meeting to approve the Transaction, ASX will put the Company's securities into a trading halt session pending the outcome of the meeting. If the Transaction is approved by the Company's shareholder then the ASX will again suspend the Company until successful completion of the re‐ compliance of Chapters 1 & 2 of the ASX Listing Rules.

The Company's decision to acquire a 70% interest in the Projects is a great opportunity to build value to Shareholders. In the meantime, the Company will undertake work on its existing projects and continue with its corporate strategy to implement a growth strategy and to seek out further exploration, acquisition and joint venture opportunities.

Black Mountain Resources Limited ACN 147 106 974 945 Wellington Street, West Perth WA 6005 Telephone: +61 8 9322 7600 www.blackmountainresources.com.au | info@blackmountainresources.com.au

Capital Structure

The capital structure of the Company following completion of the Transaction and the Capital Raising is set out below:

Proposed Capital Structure	Proposed Capital Structure
Securities	Shares	Options	Performance Shares
On issue	27,812,501	2,000,0001	‐
To be issuedpursuant to Transaction	25,000,000	‐	25,000,0002
To be issuedpursuant to the Capital Raising 3	5,000,000
Total	57,812,501	2,000,000 1	25,000,000 2

Notes:

1. Exercisable at $0.30 on or before 14 November 2014.

2. Convertible to 25,000,000 fully paid ordinary shares in the capital of Company where the expenditure outlined above has been completed and upon the production of not less than 2,000 ounces of gold or gold equivalent (net smelter) are produced on any one mine within 5 years, and on such other terms as acceptable to ASX. 3. Assuming an issue price of $0.20 for a raising of $1 million.

Indicative Timetable

The Company intends to convene a general meeting of its shareholders in the near future to seek all necessary approvals for, amongst other things, the Transaction and the Capital Raising. Set out below is an indicative timetable for the Transaction:

Event	Date
Suspension of the Company's securities from date of the announcement	23 August 2011
Dispatch of Notice of Meeting	14 October 2011
Tradingin securities reinstated byASX followingdispatch of notice of meeting	14 October 2011
Lodgement of Prospectus	26 October 2011
Company's securities will be put into a trading halt pending the outcome of the General Meeting	8 November 2011
General Meetingto approve Acquisition and other matters	8 November 2011
If shareholders approve the Transaction, then the Company's securities will be suspended from trading on ASX until the Company re‐complies with requirements of Chapters 1 and 2 of ASX ListingRules	8 November 2011
Issue of Securities under the Capital Raisingand completion of Acquisition	8 November 2011
Trading in securities reinstated by ASX (subject to satisfaction of Chapters 1 and 2 of the ASX ListingRules).1	29 November 2011
Note: 1. Trading in securities will only be reinstated by ASX after the Company has complied with Chapters 1 and 2 of the ASX Listing Rules. The Company will endeavour to minimise the period of suspension as much as possible. 2. The above timetable is indicative onlyand maybe varied in consultation with the ASX.

Full details of the proposed the Transaction, the Capital Raising and the Notice of Meeting will be forwarded to shareholders in due course.

For and on behalf of the Board

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Stephen Anastos Director

Black Mountain Resources Limited ACN 147 106 974 945 Wellington Street, West Perth WA 6005 Telephone: +61 8 9322 7600 www.blackmountainresources.com.au | info@blackmountainresources.com.au