Flinders Mines : Quarterly Activities and Cashflow Report

ASX ANNOUNCEMENT

28 October 2020

Quarterly Report

For the period ended 30 September 2020

HIGHLIGHTS

• All conditions precedent satisfied for the farm-in incorporated joint venture with BBIG
• Flinders Mines Limited and BBI Group Pty Ltd working together to advance the Pilbara Iron Ore Project

Pilbara Iron Ore Project (PIOP)

During the quarter ended 30 September 2020, Flinders Mines Limited (Flinders or the Company) achieved a fundamental milestone in relation to the development of its flagship Pilbara Iron Ore Project (PIOP), with all conditions precedent for its farm-in incorporated joint venture with BBI Group Pty Ltd (BBIG) being satisfied or waived. The announcement on 4 September 2020, followed BBIG's 'no-objection' approval from the Foreign Investments Review Board under the Foreign Acquisitions and Takeovers Act 1975 (Cth) for the farm-in incorporated joint venture with Flinders.

The first PIOP Mine Co NL, the 100% owned Flinders subsidiary that will oversee the BBIG JV, board meeting was held on 21 September 2020. Three of the four Directors of PIOP Mine Co NL are Flinders Directors.

Following completion of the conditions precedent to the farm-in agreement (FIA) in September 2020, BBIH Pty Limited (BBIH), a wholly owned subsidiary of BBIG was appointed as Manager of the PIOP.

During the quarter, BBIH, as Manager, carried out a range of activities associated with the advancement of the PIOP Feasibility Study including:

• developing further understanding of the PIOP ore body (resource definition);
• maturing the development of a preferred mine plan;
• laboratory based metallurgical test work to better determine ore product design specification and planning associated with a larger field based, next phase metallurgical test work program;
• continued development on determining the optimum location and layout of the ore processing facility at the PIOP; and
• updating safety management framework, plans and procedures in support of re-commencing field activities in early calendar year 2021 to incorporate requirements of the pending Work Health and Safety Bill 2019.

Resource Definition

BBIH, Flinders personnel and representatives from geological consultants undertook a site visit to PIOP during the quarter, to better understand the PIOP resource definition. This site visit provided BBIH with the opportunity to better understand the various geological settings and review existing metallurgical samples to assist in planning the next metallurgical test work program.

Mine Planning

BBIH commenced various work programs that will contribute to defining the PIOP mine plan. BBIH worked with various WA based specialist consultants on mine planning, scheduling and haulage optimisation, stockpile and blending management, tailings storage facility study and water management and diversion study.

Metallurgy

During the quarter, BBIH (along with specialist consultants) undertook the following related work programs:

• sample material composite selection and preparation for further test work, to simulate ore design product specification;

• microscopy analysis to further define the relationship and association of minerals in the ore; and
• small scale sinter test work carried out to initially assess the suitability of the product top size and alumina content on a typical sinter matrix as a pre-cursor to larger scale sinter test work;

Engineering and Project Delivery

BBIH undertook other engineering and project delivery activities to support the PIOP Feasibility Study including:

• further optimisation of the location and layout of the ore processing facility incorporating non-process infrastructure water management, pad levels, crushing hub layout, road and traffic management and the overall footprint of the plant;
• design and planning for an expansion to the current PIOP on site camp to accommodate the requirements of upcoming field-based programs; and
• further progression of planning / scoping and set-up in support of commencing the PIOP Feasibility Study.

Figure 1. PIOP and BBIG proposed infrastructure corridor.

Canegrass Project

To meet minimum expenditure requirements, CSA Global undertook soil sampling programs within E58/520 and E58/522, targeting potential gold bearing structural trends south of the Honeypot gold prospect. In addition, the soil sampling within E58/521 was designed to test for possible platinum group metals (PGM). Further work is required before appropriate insights can be obtained.

A drill program consisting of 8 x 100m depth Reverse Circulation Percussion (RCP) drill holes was also designed by CSA Global across E58/232, E58/236 and E58/282 to improve the definition of the higher-grade vanadium zones. This program commenced early October 2020 with drill results still pending at the date of this announcement.

Financial

As at 30 September 2020, the Company had $3.4 million in cash and an unsecured fully drawn loan of $3.0m due to be repaid on or before 30 June 2022.

Expenditure during the quarter was focused on progressing completion of the BBIG Transaction and no substantive mining exploration activities were undertaken.

The Company notes that during the quarter, a total of $317,000 was paid to related parties, including Directors and their associates. Of this, $35,000 in Non-executive Director fees was paid to TIO for Director services provided by Messrs Michael Wolley and Evan Davies and $282,000 was paid to the Company's independent Directors, Messrs Warburton, Gurry and Ms Edwardes.

Corporate Activities

On 23 September 2020, the Company released on ASX its 2020 Annual Report, Corporate Governance Statement and Appendix 4G.

Authorised by:

Board of Flinders Mines Limited

For further information please contact:

Investors and Shareholders

Andrew Whitehead

General Manager - [e-mail]

Media

Michael Weir

Citadel-MAGNUS - 0402 347 032

About Flinders Mines Limited

Flinders Mines Limited is an ASX-listed (ASX: FMS) exploration and development company focused on the commercialisation of the Pilbara Iron Ore Project (PIOP).The PIOP is located approximately 70km from Tom Price

in Western Australia's iron ore-rich Pilbara region.

Tenement Schedule

For the Quarter ending 30 September 2020

Tenement	Status	Tenement	Grant/	Expiry	Area	Registered Holder Interest	Related
		Name					Agreement
No.		Application	Date	(Sq Km)	/Applicant
			Date
WESTERN AUSTRALIA

Canegrass Project1

Pilbara Iron Ore Project (PIOP)2

R47/213

Granted

Anvil

30/01/2020

29/01/2023

44.4

PIOP Mine Co NL

100%

Prenti

Agreement

L47/728

Granted

PIOP Airstrip

29/05/2015

28/05/2036

3.0

PIOP Mine Co NL

100%

L47/730

Granted

PIOPVillage

29/05/2015

28/05/2036

0.1

PIOP Mine Co NL

100%

L47/731

Granted

Northern Road

18/11/2019

17/11/2040

4.9

PIOP Mine Co NL

100%

L47/734

Granted

Southern Road

29/05/2015

28/05/2036

4.2

PIOP Mine Co NL

100%

M47/1451

Granted

Blacksmith ML

26/03/2012

25/03/2033

111.6

PIOP Mine Co NL

100%

Prenti

Agreement

SOUTH AUSTRALIA

Jamestown Project

EL6430

Granted

Washpool

10/11/2019

9/11/2021

135.0

PNX Metals

Gold, Copper

Phoenix Copper

Limited

Agreement

1. E58/232 extension of term granted on 20 October 2020.
2. Tenements related to the PIOP were transferred to PIOP Mine Co NL, along with the relevant regulatory approvals.
3. E47/1560 was converted to a retention licence (R47/21) on 30/01/2020. R47/21 is not subject to any statutory minimum expenditure obligations which allows the Company to minimise activities and costs associated with the tenement.