RED MOUNTAIN MINING LIMITED — Capital/Financing Update 2014

Jan 20, 2014

Chairman's Letter

21 January 2014

Dear Shareholder

Red Mountain Mining Ltd Share Purchase Plan

On behalf of the Board of Red Mountain Mining Ltd (ACN 119 568 106) (Red Mountain or Company), I am pleased to offer you the opportunity to purchase fully paid, ordinary shares in Red Mountain (Shares) under a Share Purchase Plan (SPP or Plan).

As announced on 15 January 2014, Red Mountain is offering Shareholders in Australia and New Zealand as at the Record Date of 5:00pm (WST) on 14 January 2014 (Eligible Shareholders) the opportunity to subscribe under the Plan for up to A$15,000 worth of Shares (subject to scale back at Red Mountain's absolute discretion) at A$0.017 per Share, being 81% of the average market price of Shares over the last 5 days on which sales in the Shares were recorded on the financial market operated by ASX Limited (ASX) immediately prior to the announcement date of the Offer, being 15 January 2014 (Offer). The SPP is capped at $700,000 and is partially underwritten by Patersons Securities Limited (Underwriter) to the value of A$250,000.

Application for the Shares under the SPP will be made on the enclosed Application Form that will be supplied with this Offer and Shareholders may apply for Shares under the SPP at any time between 21 January 2014 and 5:00pm (WST) on 7 February 2014.

The offer of Shares under the SPP is made in accordance with ASIC Class Order 09/425 and therefore does not require a prospectus for the purposes of Chapter 6D of the Corporations Act.

Use of Funds

The funds raised from the SPP (and any Shortfall that is placed) will be used to:

• (a) commence the initial drilling program under and along strike from Trench 7 and Trench 13 at Lobo;
• (b) continue detailed trenching of the South West Breccia lode structure; and
• (c) provide general working capital.

Details of the Company's current activities are set out in the announcements made by Red Mountain to the ASX and are available from the ASX or Red Mountain's website (http://www.redmm.com.au).

How much can you invest?

Eligible Shareholders may only acquire a maximum of up to A$15,000 worth of Shares under the Plan.

How to Apply

If you are an Eligible Shareholder who would like to participate in the Plan, you may apply to acquire a parcel of Shares valued at A$1,700, A$3,400, A$6,800, A$10,200 or A$15,000.

You can apply by either:

• (a) completing the enclosed Application Form as instructed and returning it to the address indicated on the form, together with your payment; or
• (b) making the payment directly by BPAY® in accordance with the details on the Application Form. If you choose to pay via BPAY® you are not required to submit your Application Form.

BPAY® payments must be made from an Australian dollar account of an Australian financial institution.

Indicative Timetable*

Record Date (5:00pm WST)	14 January 2014
Announcement Date of Plan	15 January 2014
Opening Date of Plan	21January 2014
Closing Date of Plan (5:00pm WST)	7 February 2014
Issue of Shares under the Plan	13 February 2014
Quotation of Shares	13 February 2014
Dispatch of holding Statements	17February 2014

*These dates are indicative only. The Company may vary the dates and times of the Offer by lodging a revised notice with ASX.

Scale Back

The Plan is capped at $700,000, however the Company reserves absolute discretion regarding the final amount raised under the Plan (subject to the maximum permitted under the ASX Listing Rules) and if necessary the Directors may, in their absolute discretion, scale-back applications.

If there is a scale back, your application monies may be greater than the value of Shares issued to you under the Plan, in which case the excess application monies will be refunded to you without interest.

Shortfall

In the event that the Plan is not subscribed to the underwritten amount , the shortfall will subscribed by the Underwriter in accordance with the terms of the underwriting agreement.

Valuation of Shares

On the date immediately prior to the date of this Offer, the closing price of Shares as traded on ASX was A$0.022.

Shareholders should be aware that the value of the Shares will fluctuate with changes in the market price for the Shares, which may increase or decrease the number of Shares that a Shareholder may apply for under the Offer.

For the purposes of ASIC Class Order 09/425, the specified period is the period of 5 ASX trading days immediately prior to the announcement date of the Offer. The average market price over that period was A$0.017 and the VWAP over the same period was A$0.021. Accordingly, the issue price of A$0.017 per Share is equal to the average market price and represents a 19% discount to the Company's Shares during the specified period.

Important Information

Details of the Plan are set out in the enclosed SPP Terms and Conditions. The Board urges you to read these Terms and Conditions carefully and in their entirety before deciding whether to participate in the Plan. If you are uncertain whether Shares are a suitable investment for you, you should consult your financial or other professional adviser.

Enquiries

If you have any enquiries in relation to your Application Form or the Plan, please call Computershare Investor Services Pty Limited on 1300 55 70 10 (within Australia).

Yours faithfully

Neil Warburton Non-Executive Chairman RED MOUNTAIN MINING LTD

RED MOUNTAIN MINING LTD ACN 119 568 106

SHAREHOLDER SHARE PURCHASE PLAN - TERMS AND CONDITIONS

Purpose

The Share Purchase Plan (Plan) offers shareholders of Red Mountain Mining Ltd (Company) the opportunity to apply for fully paid ordinary shares in the Company (Shares), up to a maximum of A$15,000 (when combined with any shares issued under any share purchase plan in the 12 months preceding the date of the Plan), at A$0.017 per Share, without the need to pay brokerage costs and without the need for the Company to issue a prospectus, upon such terms and conditions as the board of directors of the Company, in its absolute discretion, sees fit.

Offer

An Offer may, at the discretion of the directors of the Company (Directors), be made under the Plan once a year. The maximum amount, which any shareholder may subscribe for in any consecutive 12 month period, is A$15,000. The Directors of the Company may also determine in their discretion the minimum amount for participation, the multiple of Shares to be offered under the Plan and the period the offer is available to Eligible Shareholders.

Shareholders eligible to participate in the Plan

Holders of Shares that are registered with an address in Australia or New Zealand at the relevant Record Date are eligible shareholders (Eligible Shareholders) and may participate in the Plan.

If you hold Shares on behalf of persons who reside outside Australia or New Zealand, or are in the United States, you are not an Eligible Shareholder and are not entitled to participate in the Plan.

Details of how custodians, trustees and beneficiaries are treated under the Plan are provided further below.

Participation in the Plan is optional and is subject to these terms and conditions (Terms and Conditions). Offers made under the Plan are non-renounceable (i.e. Eligible Shareholders may not transfer their rights to any Shares offered under the Plan).

Foreign offer restrictions

The Plan may not be released or distributed in any country other than Australia or New Zealand. The Plan does not constitute an offer to sell, or a solicitation of an offer to buy, securities in any other country. In particular, any securities described in this document have not been, and will not be, registered under the US Securities Act of 1933 (as amended) and may not be offered or sold in the United States except in transactions exempt from, or not subject to, registration under the US Securities Act and applicable US state securities laws.

New Zealand

The Shares offered under the Plan are not being offered or sold to the public within New Zealand other than to existing shareholders of the Company with registered addresses in New Zealand and to whom the Offer is being made in reliance on the Securities Act (Overseas Companies) Exemption Notice 2013 (New Zealand).

This document has not been registered, filed with or approved by any New Zealand regulatory authority under the Securities Act 1978 (New Zealand). This document is not an investment statement or prospectus under New Zealand law and is not required to, and may not, contain all the information that an investment statement or prospectus under New Zealand law is required to contain.

How much can you invest?

The minimum application under the SPP is A$1,700. Under ASIC Class Order 09/425, Eligible Shareholders may only acquire a maximum of A$15,000 worth of Shares under a share purchase plan in any 12 months period. This limitation applies even if you receive more than one Application Form, or if you hold Shares in more than one capacity.

Subject to the above, Eligible Shareholders may participate by selecting one of the following offers to purchase Shares under the Plan.

Subscriptions	Shares to be allotted
A$	Number
$1,700	100,000
$3,400	200,000
$6,800	400,000
$10,200	600,000
$15,000	882,353

Note: The Directors reserve the right to scale back the amount of Shares to be allotted. Accordingly the actual amount of Shares you receive under the Offer may vary from the above table in the event of oversubscription (excess money will be returned without interest).

The maximum investment any Eligible Shareholder may apply for will remain $15,000 even if a Shareholder receives more than one Offer (whether in respect of a joint holding or because the Shareholder has more than one holding under a separate account).

How do you apply?

If you would like to participate in the Offer, the following application and payment options are available:

(a) Application Form and Accompanying Cheque

Eligible Shareholders wishing to pay by cheque must follow the instructions on the Application Form and complete the Application Form, provide a cheque that is payable to "Red Mountain Mining Limited" and crossed "Not Negotiable" and return the completed Application Form and cheque to:

Computershare Investor Services Pty Ltd GPO Box 505 Melbourne VIC 3001

to be received by the share registry no later than 5.00pm (AEDT) on the Closing Date under the Offer.

(b) Payment by BPAY®1

Eligible Shareholders wishing to pay by BPAY® must use the specific biller code and customer reference numbers detailed on their personalised Application Form. Any Eligible Shareholder that chooses to pay by BPAY® is deemed to represent to the Company that the amount of Shares subscribed for pursuant to the Plan, or any other arrangement similar to the Plan in the prior 12 months, does not exceed $15,000 (including joint or any other beneficial interests).

If you choose to pay via BPAY® you are not required to submit your Application Form. Your payment will not be accepted after 5:00pm (AEDT) on the Closing Date and no Shares will be issued to you in respect of that application. If you have multiple holdings you will have multiple BPAY® customer reference numbers. To ensure you receive your Shares under the Offer in respect of that holding, you must use the specific biller code and the customer reference number shown on each personalised Application Form when paying for any Shares that you wish to apply for in respect of that holding. If you inadvertently use the same Customer Reference Number for more than one of your applications, you will be deemed to have applied only for the application to which that Customer Reference Number applies and any excess amount will be refunded.

Applicants should be aware that their own financial institution may implement earlier cut off times with regards to electronic payment, and should therefore take this into consideration when making payment. You may also have your own limit on the amount that can be paid via BPAY®. It is your responsibility to check that the amount you wish to pay via BPAY® does not exceed your limit.

Once an application under the Plan has been made or your BPAY® payment made, it cannot be revoked.

Raising Amount and Scaleback

The Plan is capped at $700,000, however the Company reserves absolute discretion regarding the final amount raised under the Plan (subject to the maximum permitted under the ASX Listing Rules) and if necessary the Directors may, in their absolute discretion, scale-back applications. Scale back for Shares held by a Custodian will be applied at the level of the underlying Beneficiaries.

If the Company rejects or scales-back an application or purported application, the Company will promptly return to the shareholder the relevant application monies, without interest.

Issue and Quotation of Shares

Shares to be issued under the Plan will be issued as soon as reasonably practicable after the closing date specified by the Directors in the Offer.

Shares issued under the Plan will rank equally in all respects with all other fully paid ordinary shares in the Company from the date of issue.

1 ® Registered to BPAY Pty Ltd, ABN 69 079 137 518

Shareholding statements or CHESS notification will be issued in respect of all Shares issued under the Plan.

The Company will, promptly after the issue of Shares under the Plan, make application for those Shares to be listed for quotation on the official list of ASX.

Underwriting

The Offer is partially underwritten to the value of A$250,000. In the event that Eligible Shareholders do not subscribe for Shares under the Plan to the value of $250,000 then the resultant shortfall will, subject to the terms of the underwriting agreement, be placed with the Underwriter or its nominees. The underwriting agreement contains customary conditions, warranties and undertakings and is subject to various termination events exercisable by the Underwriter. The Underwriter is entitled to a management fee of 1% on the total amount raised under the Plan and a 5% underwriting fee on the underwritten amount.

Custodians, trustees and nominees

If you are an Eligible Shareholder and hold Shares as a custodian (as defined in ASIC Class Order 09/425 (refer below) (Custodian) or in any more specific ASIC relief granted to the Company in relation to the Plan), you may apply for up to the maximum of new Shares for each beneficiary for whom you act as custodian provided you annexe to your Plan application form (Application Form) a certificate to the Company (Custodian Certificate) with the following information:

• that you held Shares in the Company on behalf of one or more other persons who are resident in Australia or New Zealand (each a Participating Beneficiary) at 5:00pm (WST) on 14 January 2014 who have subsequently instructed you to apply for Shares under the Plan on their behalf;
• the number of Participating Beneficiaries and their names and addresses;
• the number of Shares that you hold on behalf of each Participating Beneficiary;
• the dollar amount of Shares that each Participating Beneficiary has instructed you, either directly or indirectly through another custodian, to apply for on their behalf;
• that the application price for Shares applied under the Offer for each Participating Beneficiary for whom you act plus the application price for any other Shares issued to you as custodian for that Participating Beneficiary under any arrangement similar to the Plan in the prior 12 months does not exceed A$15,000;
• that a copy of the written offer document was given to each beneficiary; and
• where you hold shares on behalf of a beneficiary indirectly, through one or more interposed custodians, the name and address of each interposed custodian.

For the purposes of ASIC Class Order 09/425 you are a 'custodian' if you are a registered holder that:

holds an Australian financial services licence that allows you to perform custodian or depositary services or operate IDPS accounts;

• is exempt from holding an Australian financial services licence by virtue of Class Order 03/184 or by relying on the Australian financial services licence of your master custodian under regulation 7.1.06(k) of the Corporations Regulations 2001;
• is a trustee of a self managed superannuation fund;
• is a trustee of superannuation master trusts;
• is a responsible entity of IDPS like schemes; and
• is noted on the Company's register of members as holding the shares on account of another person.

If you hold Shares as a trustee or nominee for another person or persons but are not a Custodian as defined above, you cannot participate for beneficiaries in the manner described above. In this case, the rules for multiple single holdings (above) apply.

Custodians should request a Custodian Certificate when making an application on behalf of Participating Beneficiaries. To request a Custodian Certificate and if you would like further information on how to apply, you should contact Computershare Investor Services Pty Limited on 1300 55 70 10 (within Australia) from 8:30am to 5:00pm (WST) Monday to Friday during the Offer period.

The Company reserves the right to reject any application for Shares to the extent it considers that the application (whether alone or in conjunction with other applications) does not comply with these requirements. The Company reserves the right to reject applications in accordance with these Terms and Conditions.

Indicative Timetable*

Record Date (5:00pm WST)	14 January 2014
Announcement Date of Plan	15 January 2014
Opening Date of Plan	21 January 2014
Closing Date of Plan (5:00pm WST)	7 February 2014
Issue of Shares under the Plan	13February 2014
Quotation of Shares	13February 2014
Dispatch of holding Statements	17February 2014

*These dates are indicative only. The Company may vary the dates and times of the Offer by lodging a revised notice with ASX.

Modification and Termination of the Plan

The Company may modify or terminate the Plan, or waive strict compliance with any of the Terms and Conditions, at any time and any modification, waiver or termination is binding on all Eligible Shareholders even where the Company does not notify you of that event. In the event the Plan is terminated before the issue of Shares, all application monies will be returned to you, without interest, by direct credit to your nominated account as recorded on the Company's share register or cheque to your address as shown on the Company's share register as soon as practicable.

Without limiting the above, the Company may issue to any person fewer Shares than the person applied for under the Plan if the issue of the Shares applied for would contravene any applicable law or the Listing Rules of ASX or ASIC Class Order 09/425.

Application Form

The Application Form forms part of the Terms and Conditions for the purposes of the Plan and the Offer.

Dispute Resolution

The Company may, in any manner it thinks fit, settle any difficulties, anomalies or disputes which may arise in connection with or by reason of the operation of the Plan, whether generally or in relation to any participant, application or Shares. The decision of the Company in this respect will be conclusive and binding on all shareholders and other persons to whom that determination relates.

The Company reserves the right to waive strict compliance with any provision of these Terms and Conditions. The powers of the Company under these conditions may be exercised by the Directors or any delegate of the Directors.

Governing Law

The Terms and Conditions and the Offer under the Plan are governed by the laws of Western Australia.

Disclaimer

Before you apply for Shares under the Plan, you should consider obtaining professional financial and/or taxation advice to assist you in determining whether or not, and the extent to which, you wish to participate in the Plan (taking into account your own financial situation, needs and objectives). The Company and its officers make no recommendation about whether or not you should apply for Shares under the Plan and nothing these Terms and Conditions (including the Application Form) or any other accompanying documentation constitutes investment or financial product advice or is intended to influence your decision whether or not to participate in the Plan.

Questions and Contact Details

If you have any questions regarding the Plan or how to deal with this Offer, please contact your stockbroker or professional adviser, or Ms Shannon Coates, Company Secretary on +61 8 9322 1587.