RED MOUNTAIN MINING LIMITED — Capital/Financing Update 2017

Mar 20, 2017

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ASX : RMX Company Directors ASX ANNOUNCEMENT Jeremy King Lincoln Ho Robert Parton Company Secretary Shannon Coates

RED MOUNTAIN MINING LTD 21 March 2017

RED MOUNTAIN SIGNS TERM SHEET FOR MOKABE-KASIRI PROJECT

Highlights

• RMX to earn-in to high-grade Cobalt-Copper Project

• Project comprises 350km[2 ] in world-famous Central African Copperbelt of DRC

• Nearby to globally significant Cobalt-Copper operating mines

• Attractive Staged Deal Terms

• DRC Produces over half of global Cobalt supply

• Experienced local partners to provide in-country expertise

Red Mountain Mining Ltd ( RMX or the Company ) is pleased to advise that it has entered into a binding exclusivity and earn-in agreement ( Agreement ) with CoCu Metals Ltd ( CoCu ) which controls 100% of the Mokabe-Kasiri Cobalt-Copper project ( Mokabe Cobalt-Copper Project ) in the Katanga Province of the Democratic Republic of Congo ( DRC ), Africa.

Location

The Mokabe Cobalt-Copper Project is located in the Congolese part of the prolific Central African Copperbelt.

It lies approximately 50 km to the north of one of the world’s largest Copper-Cobalt mines, Tenke Fungurume ( Tenke ). Tenke is currently owned by a consortium which includes Toronto-based Lundin Mining and Phoenix-based Freeport McMoRan. The large Kamoto Copper-Cobalt Mine in the Kolwezi mining district is operated by a joint venture between Glencore and the state owned GECAMINES and is approximately 110 km southwest from the tenements.

The Mokabe Cobalt-Copper Project is well-located relative to infrastructure including roads, power and water.

Tenure and Historical Work

The Mokabe Cobalt-Copper Project comprises 8 artisanal exploitation licences ZEA: 556, 557, 558, 559, 560, 561, 562 and 563 leases covering approximately 350 km[2] (Figure 1). CoCu is in the process of converting the artisanal exploitation licenses to mining prospecting permits.

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Figure 1: Location of the Mokabe Project area.

Artisanal miners extract Copper-Cobalt oxide mineralisation (malachite and heterogenite) at several locations within the property area. During a recent reconnaissance site visit several grab samples were collected. Laboratory results have provided an average grade of Cobalt of between 1.6% and 2.9% and of Copper of 1.3% to 9.2% (Table 1).

In addition, regional prospecting and geological work carried out during the Colonial period has identified various Copper showings immediately to the north of the tenure.

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Figure 2: Rock chip sample from Project area.

Table: 1: Grab-sample analytical results

	Sample ID		Latitude		Longitude	Sample Depth	Cu%	Co%
	01202		26-16-48		-9-52-38	0.3m	1.3	2.9
	01207		26-14-45		-9-57-30	1.0	6.4	2.1
	01208		26-14-44		-9-57-31	1.0	9.2	1.6

Commercial Terms

Under the Agreement, RMX has an exclusivity period of 6 weeks in order to conduct initial due diligence on the Mokabe Cobalt-Copper Project, including tenure and technical due diligence.

Following the results of the initial due diligence RMX, solely at its election, has the option to proceed to earnin into the project by of incurring expenditure on the Mokabe Cobalt-Copper Project as follows:

Phase	Exploration Expenditure	CoCu Interest	RMX Interest
Commencement Date	Nil	100%	0%
First Earn-in	A$250,000	80%	20%
Second Earn-in	A$250,000	65%	35%
Third Earn-in	$500,000	49%	51%
Fourth Earn-in	A$1.5m	34%	66%
Fifth Earn-in	A$3.0m	20%	80%1

1 Upon RMX earning an 80% interest in the Project, the joint venture will be a customary pro rata contributing arrangement, provided that CoCu has the right to put its remaining 20% interest to the Company for A$3.5m and a 1% NSR over the Project.

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All expenditures incurred during the initial due diligence period shall count against the first earn-in phase requirement (should RMX elect to proceed). RMX is required to pay a A$50,000 non-refundable fee on execution of the Term Sheet. In the event RMX elects to earn-in to the Project, subject to having available placement capacity, RMX has agreed to issue up to 7.5m fully paid ordinary shares to CoCu and advisors or their nominees upon execution of formal acquisition agreements.

Mining consultants CSA Global Pty Ltd ( CSA Global ) have been mandated by CoCu and shall assist with the initial due diligence on the Mokabe Cobalt-Copper Project and shall work closely with the Company to develop an appropriate, structured exploration programme.

Director Jeremy King commented:

“The Mokabe Cobalt-Copper Project is an exciting opportunity for RMX and is consistent with the Company’s focus on the new energy metal sector.

The DRC can be challenging but it remains by far and away the global leader in Cobalt production. Importantly, the team we have transacted with has an established, local presence with geologists already on-site, and there is extensive Cobalt and Copper mining in the local region.

RMX continues to work to build a portfolio of quality opportunities and this staged deal allow us to diligence and test the Project in a manner which potentially provides significant benefits to RMX shareholders.”

Transaction advisors to CoCu Pty Ltd and RMX are, respectively, Mineral Intelligence Pty Ltd and Xcel Capital Pty Ltd.

-Ends

Competent Person Statement

Information in this report that relates to Exploration results has been compiled from historic data by Mr. Simon Dorling, who is a member of the Australian Institute of Geoscientists. Mr. Dorling is a consultant to Red Mountain, and has sufficient experience 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 by the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr. Dorling consents to the inclusion of the data in the form and context in which it appears.

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JORC Code, 2012 Edition – Table 1

Section 1 Sampling Techniques and Data

(Criteria in this section apply to all succeeding sections.)

Criteria	JORC Code explanation	Commentary	Commentary
Sampling	• Nature and quality of sampling (eg cut	•	Near surface mineralisation is extracted from the
techniques	channels, random chips, or specific specialised	property by artisanal miners. A small number of selected rock
	industry standard measurement tools appropriate	chip	samples were taken by the current owners from piles of
	to the minerals under investigation, such as down	extracted artisanal material and outcrop.
	hole gamma sondes, or handheld XRF instruments,	•	The rock chip samples were all submitted a to LAA
	etc). These examples should not be taken as	laboratories in Lubumbashi where they were analysed by AAS.
	limiting the broad meaning of sampling.	•	Photographic evidence, geological descriptions and
	• Include reference to measures taken to	geological context suggest that the samples reflect the nature
	ensure sample representivity and the appropriate	and	style of mineralisation exploited by artisanal miners.
	calibration of any measurement tools or systems
	used.
	• Aspects of the determination of
	mineralisation that are Material to the Public
	Report.
	• In cases where ‘industry standard’ work has
	been done this would be relatively simple (eg
	‘reverse circulation drilling was used to obtain 1 m
	samples from which 3 kg was pulverised to produce
	a 30 g charge for fire assay’). In other cases more
	explanation may be required, such as where there is
	coarse gold that has inherent sampling problems.
	Unusual commodities or mineralisation types (eg
	submarine nodules) may warrant disclosure of
	detailed information.

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Criteria	JORC Code explanation	Commentary	Commentary
Drilling techniques	• Drill type (eg core, reverse circulation, open-	•	Not applicable to this announcement.
	hole hammer, rotary air blast, auger, Bangka, sonic,
	etc) and details (eg core diameter, triple or
	standard tube, depth of diamond tails, face-
	sampling bit or other type, whether core is oriented
	and if so,bywhat method,etc).
Drill sample	• Method of recording and assessing core	•	Not applicable to this announcement.
recovery	and chip sample recoveries and results assessed.
	• Measures taken to maximise sample
	recovery and ensure representative nature of the
	samples.
	• Whether a relationship exists between
	sample recovery and grade and whether sample
	bias may have occurred due to preferential
	loss/gain of fine/coarse material.
Logging	• Whether core and chip samples have been	•	Not applicable to this announcement.
	geologically and geotechnically logged to a level of
	detail to support appropriate Mineral Resource
	estimation, mining studies and metallurgical
	studies.
	• Whether logging is qualitative or
	quantitative in nature. Core (or costean, channel,
	etc) photography.
	• The total length and percentage of the
	relevant intersections logged.

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Criteria	JORC Code explanation	Commentary	Commentary
Sub-sampling	• If core, whether cut or sawn and whether	•	Not applicable to this announcement.
techniques and	quarter, half or all core taken.	•	Sample preparation protocol unavailable.
sample preparation	• If non-core, whether riffled, tube sampled,
	rotary split, etc and whether sampled wet or dry.
	• For all sample types, the nature, quality and
	appropriateness of the sample preparation
	technique.
	• Quality control procedures adopted for all
	sub-sampling stages to maximise representivity of
	samples.
	• Measures taken to ensure that the sampling
	is representative of the in situ material collected,
	including for instance results for field
	duplicate/second-half sampling.
	• Whether sample sizes are appropriate to the
	grain size of the material beingsampled.
Quality of assay data	• The nature, quality and appropriateness of	•	Quality assurance data are not available for the
and laboratory tests	the assaying and laboratory procedures used and	sampling conducted.
	whether the technique is considered partial or total.	•	AAL Laboratories (Lubumbashi) was used for all analysis
	• For geophysical tools, spectrometers,	work carried out on the rock chip samples. The laboratory
	handheld XRF instruments, etc, the parameters	techniques below are for all samples submitted to AAL and are
	used in determining the analysis including	considered appropriate for the style of mineralisation defined
	instrument make and model, reading times,	at	the prospect:
	calibrations factors applied and their derivation, etc.	•	Samples were analysed using inductively coupled plasma
	• Nature of quality control procedures		atomic absorption spectroscopy (ICP-AAS) after a four acid
	adopted (eg standards, blanks, duplicates, external		digest.
	laboratory checks) and whether acceptable levels of
	accuracy (ie lack of bias) and precision have been

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Criteria	JORC Code explanation	Commentary	Commentary
	established.
Verification of	• The verification of significant intersections	•	Not applicable to this announcement.
sampling and	by either independent or alternative company
assaying	personnel.
	• The use of twinned holes.
	• Documentation of primary data, data entry
	procedures, data verification, data storage (physical
	and electronic) protocols.
	• Discuss anyadjustment to assaydata.
Location of data	• Accuracy and quality of surveys used to	•	Sample locations have UTM (WGS84) coordinates. Grid
points	locate drill holes (collar and down-hole surveys),	system	used is UTM (WGS84).
	trenches, mine workings and other locations used	•	Handheld GPS, accurate to 5m was utilized.
	in Mineral Resource estimation.
	• Specification of the grid system used.
	• Quality and adequacy of topographic
	control.
Data spacing and	• Data spacing for reporting of Exploration	•	Not applicable to this announcement.
distribution	Results.
	• Whether the data spacing and distribution
	is sufficient to establish the degree of geological
	and grade continuity appropriate for the Mineral
	Resource and Ore Reserve estimation procedure(s)
	and classifications applied.
	• Whether sample compositing has been
	applied.
Orientation of data	• Whether the orientation of sampling	•	Not applicable to this announcement.
in relation to	achieves unbiased sampling of possible structures
geological structure	and the extent to which this is known, considering

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Criteria	JORC Code explanation	Commentary
	the deposit type.
	• If the relationship between the drilling
	orientation and the orientation of key mineralised
	structures is considered to have introduced a
	sampling bias, this should be assessed and
	reported if material.
Sample security	• The measures taken to ensure sample	• Information on sampling security protocols are not
	security.	available.
Audits or reviews	• The results of any audits or reviews of	• The company has engaged consulting group CSA
	sampling techniques and data.	Global (AUS) to evaluate and comment on the validity,
		prospectively and geological context of the licence area and
		the datapresented to date.

Section 2 Reporting of Exploration Results

(Criteria listed in the preceding section also apply to this section.)

Criteria	JORC Code explanation	Commentary
Mineral tenement	• Type, reference name/number, location	• The proposed project area is currently covered
and land tenure	and ownership including agreements or material	under artisanal exploitation licences ZEA: 556, 557, 558,
status	issues with third parties such as joint ventures,	559, 560 , 561, 562 and 563. The Licences are currently in
	partnerships, overriding royalties, native title	the process of being converted to Prospecting Licences
	interests, Historical sites, wilderness or national	(PR) under the DRC Mining Law.
	park and environmental settings.
	• The security of the tenure held at the
	time of reporting along with any known
	impediments to obtaining a license to operate in
	the area.

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Criteria	JORC	Code explanation	Commentary
Exploration done	•	Acknowledgment and appraisal of	• Not applicable to this announcement.
by other parties	exploration by other parties.
Geology	•	Deposit type, geological setting and style	• The mineralisation in the project area is
	of mineralisation.		considered a typical example of a deeply weathered,
			sediment-hosted copper deposit typical for the
			Congolese part of the Central African Copper Belt.
			Primary sulphide mineralisation is osxidiesed and re-
			distributed during weathering in ex-dolomitic siltstones.
			The host rocks are weakly deformed and occur as
			tabular strata near the margin of the Lufilian Fold Belt.
			• Mineralisation appears to be preferentially hosted
			in stratiform sedimentary rocks of the Kundelungu
			Group of rocks.
			• Mineralisation is predominantly secondary, and is
			mostly stratabound. The principle copper oxide mineral
			is malachite, with minor amounts of azurite and
			chrysocolla. Cobalt occurs as heterogenite.
Drill hole	•	A summary of all information material to	• Not applicable to this announcement.
Information	the understanding of the exploration results
	including a tabulation of the following
	information for all Material drill holes:
	o	easting and northing of the drill hole
	collar
	o	elevation or RL (Reduced Level –

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Criteria	JORC Code explanation	Commentary	Commentary
	elevation above sea level in metres) of the drill
	hole collar
	o dip and azimuth of the hole
	o down hole length and interception depth
	o hole length.
	• If the exclusion of this information is
	justified on the basis that the information is not
	Material and this exclusion does not detract
	from the understanding of the report, the
	Competent Person should clearly explain why
	this is the case.
Data aggregation	• In reporting Exploration Results,	•	Not applicable to this announcement.
methods	weighting averaging techniques, maximum
	and/or minimum grade truncations (eg cutting
	of high grades) and cut-off grades are usually
	Material and should be stated.
	• Where aggregate intercepts incorporate
	short lengths of high grade results and longer
	lengths of low grade results, the procedure used
	for such aggregation should be stated and some
	typical examples of such aggregations should be
	shown in detail.
	• The assumptions used for any reporting
	of metal equivalent values should be clearly
	stated.

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Criteria	JORC Code explanation	Commentary	Commentary
Relationship	• These relationships are particularly	•	Not applicable to this announcement.
between	important in the reporting of Exploration
mineralisation	Results.
widths and	• If the geometry of the mineralisation with
intercept lengths	respect to the drill hole angle is known, its
	nature should be reported.
	• If it is not known and only the down hole
	lengths are reported, there should be a clear
	statement to this effect (e.g. ‘down hole length,
	true width not known’).
Diagrams	• Appropriate maps and sections (with	•	A map of the sample location has been provide in
	scales) and tabulations of intercepts should be	this release. There is insufficient information available to
	included for any significant discovery being	provide more detailed technical descriptions.
	reported These should include, but not be
	limited to a plan view of drill hole collar
	locations and appropriate sectional views.
Balanced reporting	• Where comprehensive reporting of all	•	There is insufficient information available to
	Exploration Results is not practicable,	provide detailed technical descriptions.
	representative reporting of both low and high
	grades and/or widths should be practiced to
	avoid misleading reporting of Exploration
	Results.
Other substantive	• Other exploration data, if meaningful and	•	The project area is located on the fringe of the
exploration data	material, should be reported including (but not	Lufilian Arc in an area of less intense deformed Katanga
	limited to): geological observations; geophysical	Basin sediments, near the basin margin. The area has not
	surveyresults; geochemical surveyresults;bulk	seen	the same level of historic exploration as otherparts

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Criteria	JORC Code explanation	Commentary
	samples – size and method of treatment;	of Katanga. However colonial geological maps show
	metallurgical test results; bulk density,	several copper occurrences in the region.
	groundwater, geotechnical and rock
	characteristics; potential deleterious or
	contaminatingsubstances.
Further work	• The nature and scale of planned further	• The Company and its technical advisors believe
	work (eg tests for lateral extensions or depth	the area warrants further reconnaissance work and
	extensions or large-scale step-out drilling).	systematic exploration targeting. Subject to further
	• Diagrams clearly highlighting the areas of	desktop due diligence the Company plans to undertake
	possible extensions, including the main	a reconnaissance site visit and develop subsequent work
	geological interpretations and future drilling	plans.
	areas, provided this information is not
	commerciallysensitive.

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