Flinders Mines : Quarterly Report For the period ending 30 June 2017

ASX ANNOUNCEMENT

27 July2017‌

Quarterly Report For the period ending 30 June 2017

Strategic Review and Entitlement Offer

As announced on 31 March 2017, the Company completed its independent strategic review (Strategic Review) of the Company's Pilbara Iron Ore Project (PIOP) during the March 2017 quarter. To support the path of action identified to unlock project value pursuant to the recommendations arising from the Strategic Review, on 9 May 2017 the Company commenced a non-renounceable entitlement offer (Entitlement Offer) to raise up to $16 million (before costs) through the offer of approximately 290 million new fully paid shares (New Shares) at an issue price of $0.055 per New Share and on the basis of 1 New Share for every 11 Shares held by eligible shareholders at the Record Date.

The Company received valid applications for and issued a total of 172,771,273 New Shares, raising a total of $9.5 million (before costs), leaving a shortfall of $6.5 million. A further 399,764 New Shares were issued to Euroz Securities as the Company's nominee for non-resident shareholders.

The proceeds of the Entitlement Offer have and are being used to implement the recommendations arising from the independent Strategic Review of the Company's PIOP, in particular, to implement a series of asset maturation programs. As the funds raised fell short of the total capital required to conduct the planned work, the Board of the Company is currently assessing the options for raising further capital to complete the planned work.

PIOP Maturation Work

During the June 2017 quarter, the Company commenced the implementation of a comprehensive drilling program at the PIOP to collect a range of drill core from different iron ore horizons for future testing to confirm and enhance a series of bases used in the Strategic Review. The Strategic Review utilised available metallurgical, geotechnical and hydrological data to determine the most viable options for the development of the PIOP. The Company is now focused on reducing the risks associated with this preliminary data by conducting a more thorough analysis of decision critical information that will guide the ultimate production rate, ore quality and mine planning. These factors are key determinants in quantifying the value of the PIOP and the optimum project delivery method. In this maturation work, significant focus is being applied to the drilling and sample collection of the detrital ore bodies. The quantity and characteristics of this ore type underpin the potential for reducing the Fe cut-off grade from 50% (currently used in Ore Reserve calculations) to 40% and the subsequent opportunity to increase the PIOP Ore Reserves through using an on-site beneficiation process to produce a combined circa 59% Fe marketable product.

The outcome of the maturation work is unknown and may result in an insufficient increase in PIOP Ore Reserves to justify further development. Should the maturation work result in a sufficient increase in PIOP Ore Reserves, the requirement for further equity capital will be significant and will likely result in a significant dilution for current shareholders who either don't or are unable to contribute further equity capital.

The initial maturation activities that occurred during the quarter included the re-establishment of the PIOP camp, tendering and award of key contracts covering camp management, diamond drilling (2 rigs), heritage surveys, environmental assessments, access tracks and drill pad establishment. Laboratory and pilot plant test work is to be conducted in the coming quarters. Results of this work will be collated and assessed during the December 2017 and March 2018 quarters.

During the quarter, the site drilling program commenced with mobilisation activities and the completion of 88 metres of the planned circa 6,500 metres total drilling, across the three programs. The Company anticipates completion of the drilling program before the end of the calendar year. Subsequent to the end of the quarter, the Company mobilised a sonic drill rig (third drill rig) to assist in detrital ore recovery to ensure quality samples are obtained.

Work has commenced on assessing the infrastructure solution opportunities complete with analysis of the relative strategies and the implications for the retention of future optionality. During the next two quarters, the Company expects to decide on the preferred option and to commence the development of necessary agreements to secure this vital part of the potential project.

Other Tenements

During the period, the Company assessed it portfolio of tenements and the Board opted to relinquish the Gawler Ranges tenements in South Australia due to their perceived limited potential. Work was reactivated on the Company's Canegrass tenements in Western Australia and subsequent to the end of the quarter, field exploration was initiated.

Corporate

During the quarter, the Company extended Mr David McAdam's term as Interim Executive Director until 31 December 2017. Mr McAdam receives a consultancy fee of $2,500 plus GST per day for a maximum of four days per week. Mr McAdam led the Board's Strategic Review Committee and successfully completed the detailed Strategic Review of PIOP during the March quarter.

As announced 6 June 2017, Mr Nicholas Smart resigned as Alternate Director to Mr Robert Kennedy, effective 5 June 2017.

Following the relocation of the Company's corporate headquarters from Adelaide to Perth, the Company restructured its management team and announced the appointment of Ms Shannon Coates as Company Secretary on 9 May 2017. Ms Coates replaced Mr Justin Nelson who had assisted the Company as Company Secretary for a number of years. The Company also appointed Ms Rebecca Broughton as Chief Financial Officer on 30 April 2017, replacing Mr Jim Panagopolous.

As announced on 3 May 2017, the Company's registered office and principal place of business is now: 45 Ventnor Avenue

West Perth, WA 6005 Telephone - [phone]

Facsimile - [phone]

Effective 30 June 2017 and as announced 23 June 2017, the Company advised that the location of its register of securities, which is maintained with Computershare Investor Services Pty Limited relocated to:

Level 11, 172 St Georges Terrace

Perth, WA 6000

Financial

At the quarter end, the Company had $10.07 million in cash and no debt. For further information please contact:

Shareholders

David McAdam

Interim Executive Director [phone]

Media

Kat Fremlin Brand One Investor Relations 0451 354 858

About Flinders Mines Limited

Flinders Mines Limited is an ASX-listed (ASX: FMS) exploration and development company focused on the commercialisation of its large, high quality hematite resource - the Pilbara Iron Ore Project (PIOP).

The PIOP is located approximately 70km from Tom Price in Western Australia's iron ore-rich Pilbara region. The project consists of two 100% owned tenements - M47/1451 (Blacksmith) and E47/1560 (Anvil) - and has a total (Inferred, Indicated and Measured) JORC-compliant resource of 1,042 million tonnes at 55.6% Fe using a 50% Fe cut-off grade. The project has received environmental approvals and the Company is currently determining the optimal development path.

Tenement Schedule

Forthe Quarterending 30June2017

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

WESTERN AUSTRALIA

Canegrass Project1

Pilbara Iron Ore Project

E47/1560	Granted	Anvil	6/09/2007	5/09/2017	44.5	Flinders Mines Ltd	100%	Prenti Agreement
L47/728	Granted	PIOPAirstrip	29/05/2015	28/05/2036	3.0	Flinders Mines Ltd	100%
L47/730	Granted	PIOPVillage	29/05/2015	28/05/2036	0.1	Flinders Mines Ltd	100%
L47/731	Application	Northern Road	1/09/2014	4.9	Flinders Mines Ltd	100%
L47/734	Granted	Southern Road	29/05/2015	28/05/2036	4.2	Flinders Mines Ltd	100%
M47/1451	Granted	Blacksmith ML	26/03/2012	25/03/2033	111.6	Flinders Mines Ltd	100%	Prenti Agreement

SOUTH AUSTRALIA

Jamestown Project

EL5557

Granted

Washpool

10/11/2009

9/11/2019

135.0

Diamonds, Phoenix Copper Ltd barium, talc and phosphate

Phoenix Copper Agreement

1. Canegrass Project tenements expiration is pending EOT application.