RED MOUNTAIN MINING LIMITED — Capital/Financing Update 2022

Dec 6, 2022

ASX ANNOUNCEMENT

7 December 2022

RED MOUNTAIN MINING LTD

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Red Mountain Acquires Strategic Lithium Projects in Nevada, USA

HIGHLIGHTS

• Acquisition of two highly prospective and strategic lithium projects in Nevada, USA

• Located in an emerging district hosting recently discovered lithium deposits and aggressive lithium exploration

• Projects in close proximity to potential offtake partners and positioned to benefit from domestic supply development initiatives in the United States

• Oversubscribed capital raising completed to fully fund upcoming lithium exploration campaign

Red Mountain Mining Limited (“ RMX ” or the “Company ”) is pleased to announce it has entered into a purchase agreement (the “ Purchase Agreement ”) with Lithic Lithium LLC (“ LLL ”), a US subsidiary of Chariot Corporation Limited (“ Chariot ”), to acquire the Lithic Lithium Project (“ Lithic ”) and the Mustang Lithium Project (“ Mustang ”) (collectively, “the Projects”) , consisting of 153 claims covering 1,178 ha prospective for claystone hosted lithium in Nevada, the dominant claystone hosted lithium region in the United States of America (“ USA ”).

PROJECT LOCATION

The Projects are in the prolific Big Smoky and Monte Cristo Basins of Esmeralda County, Central Nevada. This region currently hosts the only operating lithium mine in the USA (Silver Peak Lithium Mine NYSE: ALB) and is the nexus of claystone hosted lithium exploration and development in the USA. RMX’s peers in central Nevada have defined significant Lithium Carbonate Equivalent (LCE) mineral resources to NI 43-101 standards

The Projects are in close proximity infrastructure, power, mining services and future offtake partners. Nevada is a top ranked jurisdiction for mining according to the Fraser Institute 2021 annual survey.

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Figure 1: Location map showing RMX’s two projects relative to its neighbours in Nevada

Regional Geology

In the mid-Tertiary period, the region underwent crustal extension and elevated thermal activity, developing the basin and range physiography and hydrologic closed basins throughout the district. This physiography combined with the abundance of volcanic activity depositing lithium-rich source rocks allowed for the containment and concentration of the lithium within the closed basins. The lithium-rich strata may represent several million years of lithium input and concentration within the basins that host the Lithic and Mustang properties.

LITHIC LITHIUM PROJECT

Lithic is located 29 km north of Silver Peak, the only operational lithium producing mine in the United States. The property consists of 115 claims (961 ha) and adjoins Jindalee’s ( ASX: JRL ) Clayton North Project and Victory Resource’s Smokey Lithium Project.

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Figure 2: Location map showing RMX’s Lithic project relative to its neighbours

The Lithic claim block has not been the subject of extensive exploration activities to date. However, Jindalee’s maiden exploration drilling program (announced to ASX 18 November 2021) determined a northeast trending fault crosses the northern part of their claim block, resulting in a Quaternary gravel cover over the principal lithium target. The Lithic claim block is underlain by this same host lithology but is not covered by extensive Quaternary gravel.

Exploration Plans for Lithic

RMX intends to undertake additional sampling, geological mapping and reconnaissance of the Lithic property and surrounding areas of interest.

RMX also intends to conduct a line of shallow trenches, over a 2,000 m, northeast trending line through the centre of the claim block. Representative samples within the trench line will then be collected from the underlying volcaniclastic sediments and claystone and assayed to identify suitable exploration targets for RC drilling.

MUSTANG LITHIUM PROJECT

Mustang is located on the south-eastern flank of the hydrologically closed Monte Cristo Valley, 9 km south of Belmont Resources Kibby Lake project and 40 km east of American Lithium’s TLC deposit.

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Figure 3: Location map showing RMX’s Mustang project relative to the Kibby Lake Project

The Mustang project consists of 38 claims (217 ha) of a generally flat alluvial outwash plane with well exposed fines-dominant sediments and lithic tuffs. The outcrops are finely laminated mudstone beds and volcanic tuff and ash layers. This mixed unit of lacustrine sedimentary beds with minor volcanics is similar to host rocks found at American Lithium’s TLC deposit and Cypress’ Clayton Valley deposit. This claim area is within a mapped caldera with the Monte Cristo Valley containing a significant area of volcanic rock capable of supplying lithium to the closed basin. Andesite and basalt flows are exposed in all directions within 2 – 6 km of the project in erosional windows through the alluvium.

Exploration Plans for Mustang

The Company intends to conduct additional geological mapping and surface sampling within the Mustang property. These results will inform the RC drilling program which is expected to comprise wide-spaced drilling of approximately ten drill holes seventy metres deep. It is expected that the results from this drilling will provide information on the lithium mineralization to vector further drilling.

WHY LITHIUM, WHY NEVADA IN USA?

Lithium is considered a critical mineral around the globe as a result of a number of factors playing into importance, including:

• Macroeconomic Factors – Favourable short, medium and long-term market fundamentals.

• Environmental Factors – Lithium is an indispensable component of electric vehicle batteries and other energy storage solutions required to achieve an electrified and clean energy future.

• Policy Factors – A global policy initiative transitioning to a clean energy future.

The United States, in particular Nevada, is a Tier-1 mining jurisdiction due to the following reasons:

• Mining Friendly – Nevada was ranked the top jurisdiction for mining according to the Fraser Institute 2020 annual survey.

• Geological Setting – Nevada hosts the world’s largest known lithium deposits including:

• Lithium America’s Thacker Pass, with large pervasive lithium mineralisation in closed basins

• American Lithium Corp.’s TLC Lithium Project

• Cypress Development Corp.’s Clayton Valley Project

• Defence Production Act – The USA has recently invoked the Defence Production Act in an effort to encourage and secure domestic production of battery materials.

• Offtake Partners – Close proximity to gigafactories and manufacturers with substantial lithium supply requirements.

• Security – Nevada enjoys a legal framework characterized by clear laws and reliable enforcement.

• Policy – In the United States there is bipartisan support and funding for promoting clean energy and fostering clean energy investment.

• Minimal Outlays – Nevada has no minimum annual expenditure requirements.

Red Mountain Chairman Troy Flannery commented:

“RMX view this very significant transaction as an excellent opportunity for the Company, as it increases our lithium exposure in Nevada, USA; with the aid of Chariot’s US based expert claystone lithium geologists we look forward to efficiently advancing these highly prospective lithium projects.”

Chariot Corporation Limited- CEO Shanthar Pathmanathan commented:

“We are extremely pleased to have entered into this transaction with Red Mountain, and moreover, to partner with the Red Mountain team, who we believe will be great custodians of these projects, going forward. Mr Foster Wilson, who is the geologist on our team to have discovered these projects, will continue to be involved with these projects as a consultant to Red Mountain. Foster Wilson is one of the most experienced claystone hosted lithium geologists in Nevada and will be invaluable to Red Mountain’s efforts to develop these projects.”

TERMS OF PURCHASE AGREEMENT

Red Mountain previously paid LLL an option fee of US$35,000 for an exclusive 45-day option period and subsequently elected to purchase the Projects for the following consideration:

• (a) US$150,000 cash;

• (b) 179,487,179 fully paid ordinary shares, subject to shareholder approval at an upcoming General Meeting;

• (c) 102,564,103 performance rights that will vest and convert into one (1) share upon the Company’s determination that the Property contains lithium mineralization of an average lithium grade of 900 parts per million (ppm) determined from not more than 200 metres of drilling on the Property over not less than ten (10) drill holes during the period commencing on the effective date and ending on the 12-month anniversary of the effective date (Expiry Date);

• (d) 102,564,103 performance rights that will vest and convert into one (1) share upon the Company’s determination that the Property contains lithium mineralization of an average lithium grade of 900 parts per million (ppm) determined from not more than 400 metres of drilling on the Property over not less than twenty (20) drill holes during the period commencing on the effective date and ending on the 24-month anniversary of the effective date (Expiry Date); and

• (e) a Net Smelter Royalty (“NSR”) in favour of LLL of 2%.

LLL has agreed to a voluntary 6 month escrow period upon issuance of consideration shares.

CAPITAL RAISING COMPLETED TO FULLY FUND LITHIUM EXPLORATION

Red Mountain advises it has received firm commitments from institutional and sophisticated investors to raise $1.8 million (before costs) via a share placement of 450,000,000 fully paid ordinary shares at an issue price of $0.004 per share (“ Placement ”).

The Placement shares will be placed in two tranches. Tranche 1 shares will be placed in accordance with the Company’s available placement capacity pursuant to Listing Rule 7.1 and 7.1A, comprising:

• a. 181,748,611 shares under the Company’s Listing Rule 7.1 15% placement capacity; and

• b. 164,236,386 shares under the Company’s additional Listing Rule 7.1A placement capacity.

The issue of the Tranche 1 Placement shares is expected to be on or around 16 December 2022.

The remaining 104,015,003 shares ( Tranche 2 ) will be issued subject to shareholder approval at an upcoming General Meeting, anticipated to be held early to mid-February 2023.

In addition, the Board of Red Mountain has committed to support the Placement as part of Tranche 2 subject to shareholder approval at the General Meeting ( Tranche 2 ). Approval will be sought from shareholders for director participation in the Placement being:

Troy Flannery: $40,000 at $0.004 Lincoln Ho: $20,000 at $0.004

The issue price represents a circa 25% discount to the 15-day VWAP (Volume Weighted Average Price) immediately prior to the raising. The shares issued under the Placement will rank equally with existing shares.

Xcel Capital Pty Ltd (“ Xcel ”) has been engaged to act as the Lead Manager for the Placement. Fees payable are 6% across all funds raised and a management fee of $30,000. Subject to shareholder approval, Xcel shall also receive 10m unquoted options (exercisable at $0.011 expiring 3 years from the date of issue) as part of facilitating the Project transaction.

Funds raised will be primarily directed for the maiden exploration campaign at the Lithic and Mustang lithium projects, as well as general working capital purposes.

Red Mountain anticipates the opportunity to work collaboratively with a seasoned exploration team associated with LLL that has expertise in both the area and claystone-hosted lithium deposits to ensure the rapid and seamless development of the Projects.

Authorised for and on behalf of the Board,

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Mauro Piccini, Company Secretary