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1 Flinders Mines Limited ABN 46 091 118 044 | Quarterly Report for the period ending 30 June 2013 Quarterly Report For the quarter ending 30 June 2013 HIGHLIGHTS CORPORATE The key focus of the Flinders’ Board and executive team remains on realising the strong economic potential of the large, high quality Pilbara Iron Ore Project (PIOP) orebodies for the benefit of our shareholders. Entering into agreements with potential third party providers of critical rail and port infrastructure remains pivotal to achieving these goals. Flinders has made significant progress in dialogue with interested parties regarding moving forward with the development of the PIOP, with continuing discussions advancing to the due diligence phase. The dialogue has centred on access to rail and port infrastructure, as well as the provision of project funding and off-take contracts. Discussions undertaken during the quarter resulted in the execution of a Memorandum of Understanding between Flinders and Brockman Mining Australia Pty Ltd post the end of June Quarter to work towards an Aggregation Agreement covering their respective iron ore interests and export aspirations in the Pilbara region of Western Australia. An aggregation of iron ore tonnage potentially places both groups in a strong position to move forward to deliver ore to market. During the quarter, the Company made significant moves to reduce project and administrative expenditure with a number of redundancies at head office and on site and a repositioning of exploration initiatives to focus more closely on value accretive targets. It remains the Board’s intent to appoint a new Managing Director as soon as circumstances permit. Perth Port Hedland WA 500km Canegrass Project Pilbara Iron Ore Project  Additional drilling program commenced at Pilbara Iron Ore Project targeting BID mineralisation  Memorandum of Understanding executed with Brockman Mining to work towards an Aggregation Agreement post June Quarter  Further mine planning completed showing potential for 60% Fe DSO ore production with low Capex  Available funds of $6.0 million at 30 June, 2013 For personal use only

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Page 1: Quarterly Report For the quarter ending 30 June 2013 For ... fileFlinders has made significant progress in dialogue ... 2 Flinders Mines Limited Quarterly Report for the period ending

1Flinders Mines Limited ABN 46 091 118 044 | Quarterly Report for the period ending 30 June 2013

Quarterly ReportFor the quarter ending 30 June 2013

HIGHLIGHTS

CORPORATEThe key focus of the Flinders’ Board and executive team remains on realising the strong economic potential of the large, high quality Pilbara Iron Ore Project (PIOP) orebodies for the benefit of our shareholders. Entering into agreements with potential third party providers of critical rail and port infrastructure remains pivotal to achieving these goals.

Flinders has made significant progress in dialogue with interested parties regarding moving forward with the development of the PIOP, with continuing discussions advancing to the due diligence phase. The dialogue has centred on access to rail and port infrastructure, as well as the provision of project funding and off-take contracts.

Discussions undertaken during the quarter resulted in the execution of a Memorandum of Understanding

between Flinders and Brockman Mining Australia Pty Ltd post the end of June Quarter to work towards an Aggregation Agreement covering their respective iron ore interests and export aspirations in the Pilbara region of Western Australia. An aggregation of iron ore tonnage potentially places both groups in a strong position to move forward to deliver ore to market.

During the quarter, the Company made significant moves to reduce project and administrative expenditure with a number of redundancies at head office and on site and a repositioning of exploration initiatives to focus more closely on value accretive targets. It remains the Board’s intent to appoint a new Managing Director as soon as circumstances permit.

Perth

Port Hedland

WA

500km

Canegrass Project

Pilbara Iron Ore Project

  Additional drilling program commenced at Pilbara Iron Ore Project targeting BID mineralisation

  Memorandum of Understanding executed with Brockman Mining to work towards an Aggregation Agreement post June Quarter

  Further mine planning completed showing potential for 60% Fe DSO ore production with low Capex

  Available funds of $6.0 million at 30 June, 2013

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2 Flinders Mines Limited Quarterly Report for the period ending 30 June 2013

PROJECTS

PILBARA IRON ORE PROJECT (PIOP) - WA

During the June 2013 quarter project based activities were restricted in order to reduce project expenditure, but did include work with the ongoing marketing strategy and value improvement and conceptual mine production studies.

Key activities for the quarter are summarised below.

Mining, Processing And InfrastructureFlinders conducted a number of studies that can demonstrate alternative means to commence production whilst minimising capex and reducing operating costs. In summary, Flinders is able to deliver DSO product at a grade of 60% Fe from its D1 and D6 pits within the Delta deposit at a production rate of 5Mtpa for the first 8 years of mining (Figure 1, Table 1).

This shows there is potential to produce high quality DSO ore (60% + Fe) for an initial 5 to 10 year timeframe. This concept has potential to add significant value to the PIOP project, not only by reducing start up Capex but by also producing a higher value product at a greatly reduced Opex as a result of being able to mine at lower strip ratios than previously anticipated.

Environment And ApprovalsA revised Groundwater Operating Strategy was prepared in accordance with feedback from key stakeholders. The revised GOS will be submitted to the Department of Water in Q3, 2013. Flinders is seeking a Section 5C Licence (to take water and manage its use per the Rights in Water and Irrigation Act 1914) for four (4) Gigalitres per annum (GL/a). The Section 5C Licence is for the purpose of on-tenement (M47/1451) dewatering and water supply for PIOP mining and associated activities.

Future Work ProgramDFS level activities remain on hold and are not expected to recommence until infrastructure access has been finalised. The in-house team will continue to investigate opportunities that improve project value through reduction in start-up capital expenditure, or operating cost, or both.

Exploration And Evaluation ActivitiesThe Board approved a small program of drilling to commence in the September 2013 quarter. This drilling is aimed at extending the resource of Brockman Iron Deposit (BID) mineralisation, which is high grade and shallow, leading to reduced strip ratios.

The drilling will primarily target the margin of the Delta deposit in two ways. Extending areas of known open mineralisation from previous drilling campaigns and testing new targets identified on the flanks of the valley as part of the mapping and geological modelling undertaken by company geologists.

D1

13.9 Mt, strip ratio 1.9:1Fe 60%, Si 5.8%,Al 3.8%, P 0.06%

Proposed Delta Pit

M47/1451

D6

28.0 Mt, strip ratio 1.1:1Fe 60%, Si 5.6%,Al 3.2%, P 0.08%

7,550,000 mN

550,

000

mE1 km0

Figure 1 Location of conceptual D1 and D6 pits in Delta deposit.

YEAR 1 2 3 4 5 6 7 8Pit Delta Delta Delta Delta Delta Delta Delta Delta

Area Inferred D6 D6 D6 D6 D6 D6/D1 D1 D1

Ore Tonnes (Mt) 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0

Strip Ratio (W:O) 1.1:1 1.1:1 1.1:1 1.1:1 1.1:1 1.4:1 1.9:1 1.9:1

Fe % 60.0 60.0 60.0 60.0 60.0 60.0 60.0 60.0

SiO2 % 5.57 5.57 5.57 5.57 5.57 5.68 5.84 5.84

Al2O3 % 3.20 3.20 3.20 3.20 3.20 3.45 3.83 3.83

P % 0.08 0.08 0.08 0.08 0.08 0.08 0.06 0.06

Table 1 Pilbara Iron Ore Project conceptual DSO production plan.

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3Flinders Mines Limited Quarterly Report for the period ending 30 June 2013

Contact us

Forward-looking statementsThis release may include forward-looking statements. These forward-looking statements are based on management’s expectations and beliefs concerning future events as of the time of the release of this document. Forward-looking statements are necessarily subject to risks, uncertainties and other factors, some of which are outside the control of Flinders Mines Limited, that could cause actual results to differ materially from such statements. Flinders Mines Limited makes no undertaking to subsequently update or revise the forward-looking statements made in this release to reflect events or circumstances after the date of this release.Investment decisions should not be made based on production estimates for the Pilbara Iron Ore Project. Financial viability to be confirmed following further Mineral Resource conversion, consideration of the Modifying Factors in the JORC Code and final feasibility studies.

Exploration TargetsExploration Targets are reported according to Clause 18 of the JORC Code. This means that the potential quantity and grade is conceptual in nature and that considerable further exploration, particularly drilling, is necessary before any Identified Mineral Resource can be reported. It is uncertain if further exploration will lead to a larger, smaller or any Mineral Resource.

Competent PersonsThe information in this report that relates to Exploration Results is based on information compiled by Mr Nick Corlis who is a member of the Australian Institute of Geoscientists and a full-time employee of Flinders Mines Limited. Nick Corlis has sufficient experience that is relevant to the styles of mineralisation and types of deposits 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’. Nick Corlis consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.The information in this report that relates to Mineral Resources is based on information compiled by Dr Graeme McDonald who is a member of the Australian Institute of Mining and Metallurgy and a full-time employee of Flinders Mines Limited. Graeme McDonald has sufficient experience that is relevant to the styles of mineralisation and types of deposits 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. Graeme McDonald consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

Robert KennedyExecutive Chairman Ph: (08) 8132 7950 Email: [email protected]

Duncan GordonExecutive Director - Adelaide Equity Partners Ph: (08) 8232 8800 or 0404 006 444 Email: [email protected]

Head OfficeLevel 1, 136 Frome Street Adelaide, South Australia

PO Box 3065 Rundle Mall SA 5000

Ph: (08) 8132 7950 Fax: (08) 8132 7999Email: [email protected]

www.flindersmines.com

Qualifying Statements

Robert KennedyExecutive Chairman

30 July 2013

118°

-28°30'

118°

30' -28°

Mt Magnet

WindimurraVanadiumMine

E

20 km0

Tenure (granted)Tenure (application)

Figure 2 Canegrass Project located near Mt Magnet, WA.

Assays for a small diamond drilling program completed during the first quarter have now been received. The program consisted of 3 diamond drill holes designed to test electromagnetic (EM) anomalies identified by Down Hole Electromagnetic (DHEM) surveys undertaken in RC holes drilled in 2012. Although no economic intersections were observed the Company believes the potential for base metals discovery remains in the area.

Future ActivitiesThere is no intention to carry out any exploration at Canegrass in the latter half of 2013 with the Company’s key focus remaining on the Pilbara Iron Ore Project.

SOUTH AUSTRALIA/ NORTHERN TERRITORY

During the quarter, the Company withdrew from the Strangways and Adelaide Hills joint ventures. This is in line with Flinders’ ongoing strategy to divest all diamond projects.

CANEGRASS PROJECT – WAExploration And Evaluation Activities

During the quarter, the Company continued to explore for base metals and gold at its wholly owned Canegrass Project, located 60km southeast of Mount Magnet, in Western Australia’s Mid-West region (Figure 2).

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Mining exploration entity and oil and gas exploration entity quarterly report

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Page 8: Quarterly Report For the quarter ending 30 June 2013 For ... fileFlinders has made significant progress in dialogue ... 2 Flinders Mines Limited Quarterly Report for the period ending

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