RED MOUNTAIN MINING LIMITED — Capital/Financing Update 2019

Mar 12, 2019

ASX ANNOUNCEMENT RED MOUNTAIN MINING LTD ASX : RMX Company Directors Jeremy King Lincoln Ho Robert Parton Company Secretary Mauro Piccini

RED MOUNTAIN MINING LTD 13 March 2019

RMX TO ACQUIRE HIGH-GRADE COPPER OPPORTUNITY

• RMX agrees terms to acquire right to develop and process Copper slag deposit in Uganda
• Due Diligence to date has demonstrated significantly elevated copper grades – 6.8% copper for 20kg grab sample
• Preliminary metallurgical testwork shows path to conventional production of copper concentrate
• Potential for near term, low capex copper project development in a location well served by roads, power and English speaking workforce
• Attractive acquisition terms: no equity dilution, RMX fully funded for transaction
• Uganda has stable government, a British based legal system, and a transparent mining code to attract foreign investment
• RMX to conduct extension of sampling programme at Mukabe Kasari, DRC
• RMX continues review of additional gold and base metal projects

RMX is pleased to advise that it has entered into an exclusive joint-venture agreement with Uganda registered Crane Copper Mining (Crane Mining) in relation to a Copper-Cobalt slag dump located in Jinja, Uganda.

Over recent months, Crane Mining has been in negotiations with Kilembe Mining Ltd (KML). KML is the owner of the Kilembe Copper-Cobalt mine. This mine was a formerly globally significant copper-cobalt mine which operated from the mid 1950s to the early 1970s. The ore or concentrate from the Kilembe Copper-Cobalt mine was processed at a copper smelter at Jinja, an industrial town situated approximately 80 kms to the east of Uganda's capital, Kampala (see Figure 1).

Figure 1: Location of Jinja, Uganda

Transaction Terms

The board of KML have formally approved terms by which Crane has the exclusive right to conduct due diligence and to acquire the right to develop and process minerals from the smelter slag in place at Jinja (Jinja Copper Project).

By way of its joint-venture agreement, RMX may acquire 70% of Crane in exchange for funding due diligence and the consideration payable to KML. The consideration payable to KML varies according to the grade of the Jinja Copper Project as determined during due diligence, as follows:

Copper grade of between 1.5%to4.9%:	US$450,000
Copper grade of between 5% to7.49%:	US$700,000;
Copper grade of between 7.5%to9.9%:	US$900,000
Copper grade greater than 10%:	US$1.35m

Should RMX elect to proceed with the transaction, Crane Mining shall be free carried in respect of its ownership interest, provided that RMX shall be repaid first for all due diligence, acquisition and capital expenditure (including sustaining capital expenditure) costs together with any project debt out of the revenues and/or sale proceeds of the Jinja Copper Project.

RMX has 120 days from entry into formal documentation to conduct due diligence activities, and elect whether it wishes to proceed with the transaction.

Director Jeremy King commented:

"This is a unique opportunity RMX now has in front of it. While further due diligence is required, the Jinja Copper Project has the potential to be a near term, low capex copper production play. The copper market looks an attractive place to be in the coming years in terms of production. We intend to move swiftly to due diligence which is likely to involve a drill programme together with continued metallurgical testwork. Local drill contractors are already engaged, and we have a technical team ready to conduct a further site visit shortly to ensure that we collate all the right data."

Due Diligence and Path Forward

The reprocessing of copper slag by way of crush, grind and flotation is a relatively standard process carried out by copper operations globally. Crane and RMX have already carried out preliminary due diligence including multiple site visits and grab sampling and assaying. All grab samples taken thus far have shown elevated levels of copper.

In addition, METS Engineering Group were engaged to analyse a 20kg sample from the Jinja Copper Project. Overall, the program delivered excellent results for flotation and indicated the high potential for selective copper leaching. Further to this, indications are that significant improvements can be made to overall process recovery with a combination of standard industry processes.

It is envisaged that during the due diligence period, in order to test consistency across the Jinja Copper Project a drill programme together with semi-bulk sampling will be undertaken. The intent is to conduct a formal survey to approximate the volume and the tonnage of the Jinja Copper Project.

Figure 2: Part of the Jinja Copper Project. See Appendix I for further project photographs.

Metallurgical Testwork Details

The metallurgical testwork program was developed and supervised by METS Engineering Group and performed at ALS laboratories, Balcatta, Western Australia. Testwork was run on a 20 kg grab sample from the Jinja copper slag deposit. The assayed grade for the sample was 6.83% copper and 0.08% cobalt (Figure 3).

Figure 3: Jinja Copper Slag Sample (20kg)

Handpicked rocks were submitted for Scanning Electron Microscopy (SEM) and X-Ray Diffraction (XRD) tests. The remaining sample mass was control crushed to 100% passing 3.35 mm and split for Quantitative Evaluation of Materials by Scanning Electron Microscopy (QEMSCAN), flotation and leaching tests. QEMSCAN, SEM and XRD analyses identified that copper is predominately present as sulfides with the remainder as oxides and native copper. The QEMSCAN mineralogy revealed that the copper sulfides were relatively well liberated at a grind size of 106 µm, a positive outcome for the viability of sulfide flotation.

Two sighter rougher flotation tests were run on the sample which was prepared by grinding to P80 106 µm and screening at 212 µm to separate any coarse native copper (Figure 4). The copper recoveries and grades in the concentrate are summarised in Table Error! No text of specified style in document..1. Test BF1435 yielded the best result, recovering 69.1% of the copper to a concentrate grading 31%. The unrecovered copper is attributed to the presence of copper oxide minerals. QEMSCAN analysis found ~73.5% of the copper was associated with sulfide minerals, indicating that a large percentage of the copper in sulfides was recovered. Further analysis of the flotation products is expected to confirm this.

	BF1385		BF1435
Cu Grade (%)	Cu Rec (%)	Cu Grade (%)	Cu Rec (%)
34.7	36.9	31.0	69.1

Table Error! No text of specified style in document..1: Flotation Results

Float BF1385 yielded a lower copper recovery as the sulfide collector dosage was found to be too low for the high grade copper feed. The dosage was increased for the subsequent test BF1435 resulting in higher recovery.

Figure 4: Native Copper Identified in the Stage Grind

Leach Results

The sample was processed in two sighter leach tests at atmospheric conditions with an alkali lixiviant for 24 hours. The purpose of the tests was to assess both copper recovery and the influence of particle size on recovery. Test HY6982 had a feed P100 of 3.35 mm with 52% copper recovery and test HY6983 had a feed P80 of 106 µm and a copper recovery of 65%. Both tests were highly selective for copper, a positive indicator for effective and simple downstream processing. Kinetic sampling for the two tests shows that copper recovery is still increasing at an appreciable rate at 24 hours indicating that recoveries can be further improved with longer residence times (Figure ). Test HY6982 was considered to be a success despite the low recovery, indicating that capital and operating cost savings can be made by leaching at a coarser grind size.

Figure 5: Copper Leach Extraction

Further Metallurgical Testing

The sighter level testwork successfully demonstrated the potential for high copper recovery from Jinja copper slag with sulfide flotation and leaching; both standard industry processes. There is considerable scope for process improvement with a number of processing options and tests identified for future works.

Mukabe-Kasari Update

RMX has recently initiated a targeted programme at its Mukabe Kasari Copper-Cobalt project which is designed to better delineate the more encouraging sampling results received there to date.

Business Development

Consistent with its heritage of gold and base metal exploration and development, RMX continues to identify and assess opportunities in this sector. The Company will update the market as and when required in this regard.

For and on behalf of the Board Mauro Piccini Company Secretary

Appendix I – Jinja Copper Project Photos

Appendix II – JORC Table

The information in this anouncement that relates to the Processing and Metallurgy for the Jinja Copper Slag Project is based on and fairly represents, information and supporting documentation compiled by Damian Connelly who is a Fellow of The Australasian Institute of Mining and Metallurgy and a full time employee of METS Engineering Group. Damian Connelly 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 in the 2012 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Damian Connelly consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

Jorc Code, 2012 Edition – TABLE 1

Section 1: Sampling Techniques and Data

Criteria	Jorc Code Explanation	Commentary
	Nature and quality of sampling (eg cut channels,random chips, or specific specialised industrystandard measurement tools appropriate to theminerals under investigation, such as down holegamma sondes, or handheld XRF instruments,etc). These examples should not be taken aslimiting the broad meaning of sampling.	Rock samples were hand selected on a qualitative basisand combined to form a composite
	Include reference to measures taken to ensuresample representivity and the appropriatecalibration of any measurement tools or systemsused.	Not applicable
SamplingTechniques	Aspects of the determination of mineralisationthat are Material to the Public Report. In caseswhere 'industry standard' work has been donethis would be relatively simple (eg 'reversecirculation drilling was used to obtain 1 msamples from which 3 kg was pulverised toproduce a 30 g charge for fire assay'). In othercases more explanation may be required, suchas where there is coarse gold that has inherentsampling problems. Unusual commodities ormineralisation types (eg submarine nodules)may warrant disclosure of detailed information.	A single rock sub-sample from the copper slag wasselected for XRD and SEM-EDS analysis. The samplewas cut, a small piece kept for SEM and the bulk wascrushed and pulverised for XRD according to ALSstandard practices.The remaining composite was control crushed to P1003.35 mm, homogenised, blended and sub-samples wererotary split for head assay and QEMSCAN analysis.Head assay sample preparation performed as perstandard ALS practices for ICP.QEMSCAN sample preparation consisted of:•Grinding to P80 106 µm•Sub-sample by riffle splitQEMSCAN field scan was performed at 6 µm pixelspacing. Selected particles were analysed by SemiQuantitative SEM-EDS method and a sub-sampleanalysed using XRD.
Drillingtechniques	Drill type (eg core, reverse circulation, open-holehammer, rotary air blast, auger, Bangka, sonic,etc) and details (eg core diameter, triple orstandard tube, depth of diamond tails, facesampling bit or other type, whether core isoriented and if so, by what method, etc).	Not applicable
	Method of recording and assessing core andchip sample recoveries and results assessed.	Not applicable
Drill SampleRecovery	Measures taken to maximise sample recoveryand ensure representative nature of thesamples.	Not applicable
	Whether a relationship exists between samplerecovery and grade and whether sample biasmay have occurred due to preferential loss/gainof fine/coarse material.	Not applicable
Logging	Whether core and chip samples have beengeologically and geotechnically logged to a levelof detail to support appropriate Mineral Resourceestimation, mining studies and metallurgicalstudies.	Not applicable
	Whether logging is qualitative or quantitative innature. Core (or costean, channel, etc)	Not applicable

Criteria	Jorc Code Explanation	Commentary
	photography.
	The total length and percentage of the relevantintersections logged.	Not applicable
Sub-samplingtechniquesand samplepreparation	If core, whether cut or sawn and whetherquarter, half or all core taken.	Not applicable
	If non-core, whether riffled, tube sampled, rotarysplit, etc and whether sampled wet or dry.	Dry samples were rotary split from the composite forelemental and mineralogical analysisLeach samples were extracted as $~20$ g aliquots from theslurry at specific time intervals, filtered and the solutioncollected for assay analysis. The final leach solution wasfiltered, washed with Perth tap water and filtered, dried at75°C and riffle split for assay analysis.Flotation products were filtered, dried at 75°C and rifflesplit for assay analysis.
	For all sample types, the nature, quality andappropriateness of the sample preparationtechnique.	Standard Western Australian sampling techniquesapplied
	Quality control procedures adopted for all sub-sampling stages to maximise representivity ofsamples.	Standard ALS protocols applied regarding sampling
	Measures taken to ensure that the sampling isrepresentative of the in situ material collected,including for instance results for fieldduplicate/second-half sampling.	Adequate sample size for the material collected
	Whether sample sizes are appropriate to thegrain size of the material being sampled.	Sample sizes were appropriate to the grain size of thematerial being sampled.
Quality ofassay dataand laboratorytests	The nature, quality and appropriateness of theassaying and laboratory procedures used andwhether the technique is considered partial ortotal.	Composite analysed by ICP-OES/ICP-MS (ICP) for Ag,Al, As, Ba, Be, Bi, Ca, Cd, Co, Cr, Cu, Fe, K, Li, Mg, Mn,Mo, Na, Ni, P, Pb, SiO 2 , Sr, Ti, V, Y, Zn, for S by methodCS2000, as well as loss on ignition (1000°C)Flotation products analysed by fusion XRF and ICP for$Al_2O_3$ , As, CaO, Co, Cu, Fe, K 2 O, MgO, Na, Ni, S, SiO 2 ,as well as loss on ignition (1000°C)Leach solids analysed by fusion XRF and ICP for $Al_2O_3$ ,As, CaO, Co, Cu, Fe, K 2 O, MgO, Mn, Na, Ni, S, SiO 2 , aswell as loss on ignition (1000°C). Leach liquors analysedby ICP for AI, Co, Cu, Fe, Mg and Mn
	For geophysical tools, spectrometers, handheldXRF instruments, etc, the parameters used indetermining the analysis including instrumentmake and model, reading times, calibrationsfactors applied and their derivation, etc.	Handheld instruments have not been reported
	Nature of quality control procedures adopted (egstandards, blanks, duplicates, externallaboratory checks) and whether acceptablelevels of accuracy (ie lack of bias) and precisionhave been established.	Standard ALS protocols applied regarding blanks,standards, duplicates and QA/QC
	The verification of significant intersections byeither independent or alternative companypersonnel.	Not applicable
Verification ofsampling and	The use of twinned holes.	Not applicable
assaying	Documentation of primary data, data entryprocedures, data verification, data storage(physical and electronic) protocols.	All information used in the preparation of this report isstored on the company server
	Discuss any adjustment to assay data.	No adjustments have been carried out
Location ofdata points	Accuracy and quality of surveys used to locatedrill holes (collar and down-hole surveys),trenches, mine workings and other locationsused in Mineral Resource estimation.	Not applicable
	Specification of the grid system used.	Not applicable
	Quality and adequacy of topographic control.Data spacing for reporting of ExplorationResults.	Not applicableNot applicable
Data spacinganddistribution	Whether the data spacing and distribution issufficient to establish the degree of geologicaland grade continuity appropriate for the MineralResource and Ore Reserve estimation	Not applicable
	procedure(s) and classifications applied.Whether sample compositing has been applied.	Not applicable
Orientation of	Whether the orientation of sampling achieves	Not applicable
data in	unbiased sampling of possible structures and the

Criteria	Jorc Code Explanation	Commentary
relation to	extent to which this is known, considering the
geological	deposit type.
structure	If the relationship between the drilling orientationand the orientation of key mineralised structuresis considered to have introduced a samplingbias, this should be assessed and reported ifmaterial.	Not applicable
Samplesecurity	The measures taken to ensure sample security.	Samples were packaged on-site and delivered by airfreight to ALS Balcatta, Western Australia for assaying.Sample preparation and assaying was completed underthe supervision of the independent laboratory
Audits orreviews	The results of any audits or reviews of samplingtechniques and data.	All results in relation to the metallurgical testwork werereviewed by METS Engineering Group Pty Ltd personnelincluding the Principal Consulting Engineer, DamianConnelly. No negative issues were identified from thesereviews

Section 2: Reporting of Exploration Results

Criteria	Jorc Code Explanation	Commentary
Mineraltenement andland tenure	Type, reference name/number, location andownership including agreements or material issueswith third parties such as joint ventures,partnerships, overriding royalties, native titleinterests, historical sites, wilderness or national parkand environmental settings.	Not applicable
status	The security of the tenure held at the time ofreporting along with any known impediments toobtaining a licence to operate in the area.	Not applicable
Explorationdone by otherparties	Acknowledgment and appraisal of exploration byother parties.	Not applicable
Geology	Deposit type, geological setting and style ofmineralisation.	Not applicable
	A summary of all information material to theunderstanding of the exploration results including atabulation of the following information for allMaterial drill holes:•easting and northing of the drill hole collar	Not applicable
Drill holeinformation	•elevation or RL (Reduced Level – elevationabove sea level in metres) of the drill holecollar•dip and azimuth of the hole•down hole length and interception depth•hole length.
	If the exclusion of this information is justified on thebasis that the information is not Material and thisexclusion does not detract from the understanding ofthe report, the Competent Person should clearlyexplain why this is the case.	Not applicable
	In reporting Exploration Results, weighting averagingtechniques, maximum and/or minimum gradetruncations (eg cutting of high grades) and cut-offgrades are usually Material and should be stated.	Not applicable
Dataaggregationmethods	Where aggregate intercepts incorporate shortlengths of high grade results and longer lengths oflow grade results, the procedure used for suchaggregation should be stated and some typicalexamples of such aggregations should be shown indetail.	Not applicable
	The assumptions used for any reporting of metalequivalent values should be clearly stated.	Not applicable
Relationship	These relationships are particularly important in thereporting of Exploration Results.	Not applicable
betweenmineralisationwidths and	If the geometry of the mineralisation with respect tothe drill hole angle is known, its nature should bereported.	Not applicable

Criteria	Jorc Code Explanation	Commentary
intercept	If it is not known and only the down hole lengths are	Not applicable
depths	reported, there should be a clear statement to this
	effect (eg 'down hole length, true width not known').
	Appropriate maps and sections (with scales) and	Not applicable
	tabulations of intercepts should be included for any
Diagrams	significant discovery being reported These should
	include, but not be limited to a plan view of drill hole
	collar locations and appropriate sectional views.
	Where comprehensive reporting of all Exploration	Not applicable
Balanced	Results is not practicable, representative reporting of
reporting	both low and high grades and/or widths should be
	practiced to avoid misleading reporting of
	Exploration Results.
	Other exploration data, if meaningful and material,	Not applicable
	should be reported including (but not limited to):
Other	geological observations; geophysical survey results;
substantive	geochemical survey results; bulk samples - size and
exploration	method of treatment; metallurgical test results; bulk
data	density, groundwater, geotechnical and rock
	characteristics; potential deleterious or
	contaminating substances.
	The nature and scale of planned further work (eg	Further work is required including a likely drill and/or bulk
	tests for lateral extensions or depth extensions or	sampling programme.
	large-scale step-out drilling).
Further work	Diagrams clearly highlighting the areas of possible	All relevant diagrams and inferences have been provided
	extensions, including the main geological	in this announcement.
	interpretations and future drilling areas, provided
	this information is not commercially sensitive.