RED MOUNTAIN MINING LIMITED — Capital/Financing Update 2011

Aug 29, 2011

22 August 2011

Ms Fiona Murphy Adviser, Listings (Perth) Australian Securities Exchange Level 8, Exchange Plaza 2 The Esplanade PERTH WA 6000

Dear Ms Murphy

ASX LISTING OF RED MOUNTAIN MINING LIMITED – DIEBU AGREEMENT AND ZHONGQU AGREEMENT

We refer to the letter of 19 August 2011 from ASX providing conditional approval to admit Red Mountain Mining Limited ("Company") to the Official List of the ASX on various conditions.

In accordance with the ASX decision the Company below sets out information and confirmations in respect of the two agreements providing the Company with various rights over the Diebu and Zhongqu projects in China.

The two project agreements are firstly an agreement dated 1 May 2010 between Red Mountain Mining (Hong Kong) Holdings Limited ("RMMHK"), a wholly owned subsidiary of the Company, Lingbao Xuanrui Mineral Resources Company Limited ("Xuanrui") and Gansu Diebu Xuanrui RMM Mining Co Limited ("GXRMM") as amended ("Diebu Agreement") and secondly an agreement dated 1 May 2010 between RMMHK, Xuanrui, Mr Meng Fanrui and Ms Ma Xianting as amended ("Zhongqu Agreement").

1. Written confirmations in respect of the Diebu Agreement

The Company confirms in respect of the Diebu Agreement that:

• (a) it has received the transfer documents under the Diebu Agreement in respect of the transfer from No. 3 Institute of Geological Survey of Gansu Mine Bureau ("Third Brigade") to GXRMM of 3 tenements held by the Third Brigade in the Diebu gold district of China ("Diebu Tenements") in a form satisfactory to the Company;
• (b) payment of US$2,000,000 ("Deposit") has been paid into an escrow account in Hong Kong pending receipt of Chinese regulatory approvals to permit payment of the Deposit to Xuanrui in China; and
• (c) the conditions precedent in clause 3.3 (RMMHK satisfaction to the Diebu transfer documents) and clause 4.1 (initial GXRMM restructuring) of the Diebu Agreement have been satisfied.

2. Title details of 3 Exploration Licence Applications

Under the Diebu Agreement, RMMHK has an option to require Xuanrui to submit and be primarily responsible for progressing applications for 3 exploration licences so that GXRMM will be the registered owner of these 3 licences. The 3 licence applications are known as the Chabu Exploration Licence Application, the Daozha West Exploration Licence Application and the Daozha East Exploration Licence Application. The boundary coordinates for the applications and their approximate area are as set out in the attached Boundary Coordinates document. As stated in the prospectus, the exploration licence applications have currently been withdrawn by Xuanrui and are awaiting re-application. The Company will keep the market informed of any re-application and progress of the 3 exploration licence applications.

3. Possible additional payment under Diebu Agreement

If during the exploration of the 3 granted Diebu licences the subject of the Diebu Agreement (being the Heba licence, the Kama licence and the Qiaotou-Shari licence), RMMHK achieves a JORC Indicated Resource of greater than 600,000 ounces, then RMMHK shall pay to Xuanrui an additional US$2,000,000.

4. Status of Diebu Agreement

The Diebu Agreement is in good standing. The Company has paid the Deposit payment of US$2,000,000 into an escrow account in Hong Kong pending receipt of Chinese regulatory approvals to be obtained by Xuanrui to permit payment of the Deposit payment to Xuanrui in China. Our China based solicitors are working with Xuanrui in respect of obtaining the approvals in China. It is anticipated this may take a number of weeks (ranging from possibly 4 weeks to 16 weeks). As stated in the prospectus, RMMHK has until 12 months after payment of the Deposit payment to exercise options under the Diebu Agreement including committing the Company to pay US$4,200,000 upon completion of necessary approvals for a 90% interest in a Chinese cooperative joint venture concerning the 3 granted Diebu licences. In the event of the re-application of the 3 exploration licence applications (referred to at paragraph 2 above), RMMHK will have an option to require Xuanrui to progress these applications.

5. Status of Zhongqu Agreement

The Zhongqu Agreement is in good standing. As stated in the prospectus, RMMHK has until 30 April 2012 to exercise the option under the Zhongqu Agreement which will commit the Company to pay US$45,000,000 upon completion of necessary approvals for a 51% interest in a Chinese cooperative joint venture concerning the Zhongqu licence. The Company estimates that the necessary approvals for a Chinese cooperative joint venture is likely to take between 9 months to 12 months. Thereby, the Company estimates it will have until January 2013 to April 2013 to pay US$45,000,000.

Yours faithfully

Keith Rowe Executive Director Red Mountain Mining Limited

Boundary Coordinates

Chabu tenement application boundary (approx 2.5km2 )

Longitude	Latitude
103º48'00"	34 º3'00"
103 º48'00"	34 º3'30"
103 º49'00"	34 º3'00"
103 º49'00"	34 º3'30"

Daozha West tenement application boundary (approx 3km2 )

Longitude	Latitude
103º50'00"	34 º2'30"
103 º50'00"	34 º3'15"
103 º51'00"	34 º2'30"
103 º51'00"	34 º3'15"

Daozha East tenement application boundary (approx 2km2 )

.

Longitude	Latitude
103º52'00"	34 º1'30"
103º52'00"	34 º2'30"
103 º53'00"	34 º1'30"
103 º53'00"	34 º2'30"