RED MOUNTAIN MINING LIMITED — Capital/Financing Update 2012

Mar 4, 2012

ASX ANNOUNCEMENT

5 March, 2012

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Company Update

• Red Mountain Mining Limited has undertaken drilling campaigns at the Zhongqu Project that have confirmed the presence of high grade gold mineralisation that exists as a series of lenses. The Company is reviewing the mineralisation tonnage and overall resource potential of the project and the economics associated with the resource.

• The Company has entered negotiations with the Chinese vendors of the Zhongqu Project to revise the Framework Agreement to acquire 51% of the project on new terms that will better align the interests of both parties.

• The Company has completed a review of the Diebu Project from a technical and commercial perspective and has elected to withdraw from the Diebu Framework Agreement.

• Red Mountain Mining remains in a strong financial position with over $5.2 million in cash and no debt.

• The Company is advancing negotiations on other significant projects within China.

ZHONGQU PROJECT, GANSU

The Zhongqu Project is subject to a specific Framework Agreement that is independent of the decision to withdraw from the Diebu Project.

The Company has undertaken two stages of confirmatory drilling as part of the exploration program to assess the resource potential prior to exercising its option under the Zhongqu Framework Agreement.

The drilling results to date from Stage I and Stage II underground exploration have confirmed the existence of high grade gold lenses within the main target zones. The results indicate that these lenses are not contiguous and will require a review of project resources and associated economics. The high grade lenses may be commercially viable using an alternative mining method to that currently employed within the mine.

Following initial Stage II drilling, the Company has entered negotiations with the Chinese vendors to align both parties’ interests to achieve a commercially viable outcome for both parties at Zhongqu.

Zhongqu Exploration Update

As summarised below and reported in previous announcements, the drilling by the Company at the Zhongqu mine returned a number of high grade results but also showed the mineralisation to be less continuous than previously indicated (Table 1, Figure 1). This confirmed the view reached after detailed structural mapping by the Company that gold

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mineralisation existed as a series of high grade lenses controlled by north east and north west oriented structures.

Table 1: Zhongqu Stage II drilling - Summary of significant drill intercepts

Table 1: Zhongqu Stage II drilling - Summary of significant drill intercepts	Table 1: Zhongqu Stage II drilling - Summary of significant drill intercepts	Table 1: Zhongqu Stage II drilling - Summary of significant drill intercepts	Table 1: Zhongqu Stage II drilling - Summary of significant drill intercepts	Table 1: Zhongqu Stage II drilling - Summary of significant drill intercepts	Table 1: Zhongqu Stage II drilling - Summary of significant drill intercepts	Table 1: Zhongqu Stage II drilling - Summary of significant drill intercepts	Table 1: Zhongqu Stage II drilling - Summary of significant drill intercepts	Table 1: Zhongqu Stage II drilling - Summary of significant drill intercepts
		From (m)		Interval (m)			Interval (m)
Hole	Target		To (m)		Au (g/t)			Au (g/t)
ZQ6L018	OB#3	128	130	2.00	1.92
ZQ6L019	OB#3	110	113	3.00	4.33	including	1.00	12.05
ZQ6L020	OB#3	163.0	171.75	8.75	4.62	including	2.10 0.55	7.99 15.10
ZQ6L021	OB#3	26.00 52.25	31.40 57.40	2.48 2.20	1.87 7.16	including	1.70	8.13
ZQ6L022	OB#1	76.6	83.9	7.30	16.01	including	3.00	28.11
ZQ6L023	OB#1			NSI	NSI
ZQ6L024	OB#3			NSI	NSI
ZQ6L025	OB#3			NSI	NSI
ZQ6L026	OB#3	Not drilled to date
ZQ6L027	OB#3	55.0	81.0	26.0	17.65	including	3.00 5.00 6.00 4.00	38.30 14.96 26.92 20.59
		86.0	89.0	3.0	1.62
ZQ6L028	OB#3			NSI	NSI

Preliminary modelling of the underground drill intercepts suggests that the Xinqu deposit at the Zhongqu Project is likely to comprise a lesser resource to a vertical depth of 200 metres below the current workings than was originally considered. It is possible that additional lenses might be encountered with further exploratory drilling around this target area.

Since listing, the Company has concentrated exploration efforts at the Xinqu underground area of the Zhongqu Project. No work has been undertaken at the Xiaruo or Zhongqu deposits within the Zhongqu Project where additional Chinese classified mineralisation exists as described in the Company’s prospectus.

While there is potential for the Xiaruo and Zhongqu areas to provide resource upside, Red Mountain Mining considers there is insufficient resource potential at Xingqu alone to justify the original purchase price under the current Framework Agreement. Consequently the Company has entered negotiations with the vendors of the Zhongqu Project to revise the Framework Agreement to acquire 51% of the project on more commercially viable terms that will align the interests of both parties.

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Figure 1: Oblique 3D section (looking NE) of mapped and modelled ore bodies #1 and #3 which have been exploited at Xinqu mine. The red lines show the traces of the initial drillholes testing Ore Body #3 below Level 6 (in blue) and the proposed extension of Ore Body #1 above Level 6 (in purple).

Table 2. Details of Zhongqu Stage II drill holes	Table 2. Details of Zhongqu Stage II drill holes	Table 2. Details of Zhongqu Stage II drill holes	Table 2. Details of Zhongqu Stage II drill holes
HoleNo	EastBJ3	NorthBJ3	Elev	TDepth	Azim	Dip	Rationale
XQ6L018	515265.500	3773173.000	3579.42	155.3	025	-14.0	Test mineralisation up dip of hole 014
XQ6L019	515265.500	3773173.000	3579.42	140.4	008	-15.0	Test mineralisation extent and west of 014
XQ6L020	515265.500	3773173.000	3579.42	230.2	008	-40.0	Test mineralisation immediatelywest of 014
XQ6L021	515345.520	3773257.500	3578.78	124.0	010	-38.0	Test continuation of GRD/LMST contact and minz
XQ6L022	515345.000	3773256.000	3578.50	146.9	060	30.0	Test down plunge mineralisation of OB#1
XQ6L023	515345.000	3773256.000	3578.50	150.0	048	0.0	Test projected down plunge position OB#1. 40m below 022.
XQ6L024	515265.500	3773173.000	3579.42	178.3	025	-53.0	Test mineralisation between holes 13 and 14
XQ6L025	515265.500	3773173.000	3579.42	180.0	025	10.0	Test up dip mineralisation from hole 018
XQ6L026	515265.500	3773173.000	3579.42	130.0	040	-30.0	Test mineralisation to east of 014 and updipof hole 015
XQ6L027	515345.000	3773256.000	3578.50	88.6	345.0	-10.0	Test mineralisation to the west of hole 010
XQ6L028	515345.000	3773256.000	3578.50	121.7	010	15.0	Test up dip mineralisation from hole 010

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DIEBU PROJECT, GANSU

Red Mountain Mining has withdrawn from the Diebu Project for which the Company has a binding Framework Agreement over three granted Exploration Licences at Diebu, Gansu Province, China. As part of that Agreement, the Company through its Hong Kong subsidiary, is required to complete a deposit payment by the payment of US$1.5 million by 31 March 2012 in addition to sole funding of ongoing exploration costs. The Framework Agreement is binding until 15 August 2012 if the US$1.5 million deposit is paid after which additional payments of US$4.2 million are required to acquire 90% of the three Exploration Licences via a new Cooperative Joint Venture Company (“CJV”).

The Diebu Project has been reviewed by Red Mountain Mining and downgraded on a technical and commercial basis. Consequently the Company has elected to withdraw from the Framework Agreement and not make any further payments towards this Deposit.

This decision has been made so as to conserve shareholder funds which the Company considers would be better applied to more advanced projects with a lower risk profile in line with the Company’s strategy. This strategy is one of minimising risk which includes the acquisition of advanced stage, undervalued projects that can be expanded using modern mining methods in the short to medium term.

The Company is currently assessing a number of advanced resource projects in China that are consistent with this strategy.

COMPANY STATUS AND OUTLOOK

At all times Red Mountain Mining has acted to ensure shareholder funds are applied to advanced projects with a relatively lower risk profile. The Diebu Project after review does not now fit with the Company’s strategy.

Red Mountain Mining is currently reviewing a number of advanced stage projects in China that look very encouraging and will advise the market in due course.

Red Mountain Mining remains in a very strong financial position with over $5.2 million in cash and no debt, a strong technical team, and a pipeline of projects to assess.

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For further information about Red Mountain Mining please visit www.redmm.com.au or contact:

Company Investors Andrew Richards Ronn Bechler Chief Executive Officer Market Eye (+61) 423044879 (+61) 400 009 774 (+61 8) 9226 5668 (+61 3) 9591 8901

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About Red Mountain Mining Limited

Red Mountain Mining (ASX: RMX) is a gold explorer incorporated in Australia in May 2006 and which listed on the ASX in September 2011 with options to acquire projects in China. The Company’s strategy is to unlock the potential of ‘under-developed’ gold projects in China by introducing Australian mining methods and improving efficiencies to gain significant production and exploration upside. It has spent more than five years examining potential project acquisitions in China.

Competent Person Statement

The information in this report that relates to Exploration Results is based on information compiled by Andrew Richards, who is a member of The Australasian Institute of Mining and Metallurgy. He is a full time employee of Arc Resources Pty Ltd which is providing consulting services to Red Mountain Mining Ltd.

Andrew Richards 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 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Andrew Richards consents to the inclusion in the report of the matters based on their information in the form and context in which it appears.

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