Finders Resources : Confirmation of Release - Finders Takeover Offer Update (2)

Finders Resources Limited ("Finders" or "the Company") is aware of the attached press release from Eastern Field Developments Limited in relation to its unsolicited off-market cash offer of $0.23 per Finders share.

Shareholders are advised to TAKE NO ACTION in relation to this release.

The Company's Target Statement will be dispatched to shareholders on or before 5 December 2017. The Target Statement will contain further information, including an Independent Expert's Report as to whether the Offer is fair and reasonable for Finders shareholders and a formal recommendation by the Independent Finders Directors in respect of the Offer and the reasons for that recommendation.

ENDS

Contacts: Mr Gary Comb

Non-Executive Chairman

Mr Barry Cahill Managing Director Mr Wayne Apted Chief Financial Officer

Phil Retter Investor Relations NWR Communications

phil@nwrcommunications.com.au

T: +61 407 440 882

Perth Office:

25 Colin Street West Perth WA 6005 T: +61 8 6555 3996

F: +61 8 6555 3998

E: info@findersresources.com

ASX Code: FND

www.findersresources.com

28 November 2017

Press Release & Open Letter to Finders Resources Shareholders

For Immediate Release

1. Two production and cost guidance downgrades by Finders since late October 2017
2. Weak cash position and cashflow limits ability to deliver crucial mine life extensions
3. Significant uncertainty on recoveries undermines future production levels

Eastern Field Developments Limited (Eastern Field) wishes to alert fellow shareholders of Finders Resources Limited (ASX: FND) (Finders) to the operational and financial downgrades and future uncertainties that have emerged since Eastern Field announced its 23c-per-share all-cash takeover offer (Offer) for Finders on 24 October 2017.

These ASX statements by Finders, ahead of the release of the Target's Statement, raise serious questions about Finders' ability to achieve its long-stated production goals and extend mine life. The statements also confirm Eastern Field's view of the significant operational challenges at the Wetar Copper Project (Wetar) facing Finders and support Eastern Field's view that its 23¢-per-share all-cash proposal offers Finders shareholders compelling and certain value.

Eastern Fields Director David Fowler said:

"Given Finder's heavy indebtedness, minimal cash reserves and short remaining mine life, Eastern Field is deeply concerned by the Wetar production downgrades and adverse cost guidance unveiled since we announced our takeover proposal. As an example, the latest low end of production guidance is approximately 43% lower than original nameplate guidance.

"It is usual for takeover targets to pull out all stops and deliver an above-expectation performance. Finders is doing the opposite with its production downgrades and adverse cost guidance.

"Claims of share value increase from unrepresentative Lerokis recoveries of 88% are not based on reasonable assumptions and should simply be ignored. Finders' own competent person concluded that no change should be made to average metallurgical recoveries of 62.9% in their Reserve Report on Lerokis.

"We would expect that Finders' independent experts will address these and other concerns about the Wetar project in the Independent Expert's Report, to be included in Finders' Target Statement. We also respectfully request that Finders provides further detailed disclosure on production and recoveries for the benefit of all shareholders as soon as possible.

"Given the material changes since lodging our all-cash Offer, we intend to closely review this additional information, particularly in light of the Offer's Material Adverse Change condition, to determine its implications for the Offer."

The Eastern Field Bidder's Statement dated 24 October 2017 clearly highlighted Wetar's underperformance relative to the original nameplate guidance of 28,000 tonnes and the risks of further downgrades. Finders has since reported two successive production and cost downgrades1 for Wetar. These downgrades show Wetar is underperforming at a rate far worse than previously anticipated.

Figure 1: 2017 Finders Historical and Forecast Copper Cathode Production

Figure 2: 2017 Finders Historical and Forecast Copper Cathode Costs

1 On 31 October 2017, Finders released a "Wetar Production Update" announcement (Wetar Production Update) confirming that nameplate production guidance of 28,000tpa would not be met and that the September 2017 C1 and AISC had significantly increased. The revised 2017 forecast copper cathode production guidance was 24,500t - 25,000t with a revised C1 cash cost forecast to be between US$1.15 - 1.25/lb (Production Downgrade). On 17 November 2017, Finders released a "Wetar Production Update" announcement confirming that the Production Downgrade guidance for 2017 would not be met.

The revised 2017 forecast copper cathode production guidance was restated as 23,000t - 24,000 tonnes with a revised C1 cash cost forecast to be between US$1.40 - 1.80/lb (Second Production Downgrade).

The latest downgrade represents lower production of approximately 29% to 43% (versus original nameplate guidance) and estimated "lost" revenue of US$13 to US$19 million in the December 2017 Quarter alone.2

A brief summary of Eastern Field's analysis of the major technical reasons given by Finders for the two downgrades is set out in Appendix A of this announcement.

Based on the limited public disclosures to date, Eastern Field has no confidence that the underlying operational issues at Wetar have been resolved. Eastern Field is concerned that these material operational issues will continue into 2018.

On behalf of all Finders shareholders, Eastern Field respectfully requests further detailed disclosure (as set out in Appendix A) to enable shareholders to properly assess the current and likely future impact of these downgrades on the value of Finders and its Wetar project.

Finders' material operational underperformance is occurring at a time of short mine life, heavy indebtedness (A$86.8 million), minimal cash reserves (A$3.6 million), an out-of-the-money hedge book (A$23.6 million)3 and significant last-reported outstanding trade creditors of A$31.5 million4.

Shareholders should be aware that Finders' ongoing reference to EBITDA ignores the fact that minimal net cash flow is being generated after, inter alia, debt and trade creditor repayment obligations. As a consequence, minimal net cash flow has been available for re-investment in the first nine months of the 2017 calendar year.

Figure 3: Finders Adjusted 2017 Net Cash Flow (A$'000) (calendar year to date)5

Eastern Field notes the forecast debt repayment in the December Quarter is A$9.6 million with hedging payments expected to be similar to the September 2017 quarter.

Wetar continues to have a remaining period of mining operations of approximately only 3 years based on unmined JORC Reserves, despite its latest JORC Reserve update.6 Finders' weak financial position

2 The production deterioration calculation is based on the difference between quarterly nameplate production of 7kt and the latest guidance of 4kt - 5kt for the December quarter. The "lost" revenue estimate is based on the realised copper price in the September quarter of US$2.88/lb multiplied by the difference between quarterly nameplate production of 7kt and the latest guidance of 4kt - 5kt for the December quarter.

3 Latest debt, cash and hedge-book position all sourced from Finders Quarterly Activities and Cashflow Report as at 30 September 2017. The reported hedge-book position of US$17.9 million has been converted to A$ at an AUDUSD rate of 0.7600.

4 Sourced from Finders Half Year Financial Report as at 30 June 2017.

5 Sourced from Finders Quarterly Activities and Cashflow Reports released on ASX

6 As at 30 June 2016, unmined JORC Reserves totalled 8.01Mt as per Finders Announcement "Wetar Copper Project Resource Update" released to ASX 16 December 2016 and "Lerokis Ore Reserve Upgrade - Amended" released to ASX 23 November