Finders Resources : Quarterly Activities and Cashflow Report 30 September 2016

For ASX Market Release: 31 October 2016

Quarterly Activities Report - September 2016

HIGHLIGHTS

Wetar Copper Project

• Copper cathode produced for the quarter was 3,987 tonnes with sales of 2,587 tonnes at an average price of US$2.18/lb

• September C1 cash costs of US$1.11/lb

• 25,000 t.p.a. copper cathode SX-EW plant continued to successfully ramp up towards nameplate capacity - achieving daily nameplate in October.

• 12 month rolling LTIFR and Injury Severity rates remain at zero

  Corporate

• Copper hedge book restructured releasing proceeds of US$42.5m which were applied to debt reduction

• Debt reduced to US$101 million

• Restructured hedge book (copper and diesel fuel) slightly out of the money (US$3.3 million) as at 30 September 2016

• Cash on hand at quarter end was AU$7.9 million

Managing Director Barry Cahill commented: "This landmark quarter not only saw the successful ramp up of the new 25,000 t.p.a. SX-EW plant but also a significant reduction in our debt position following the close out of our copper hedge book. The December quarter should see us achieving a steady state production rate of 28,000 t.p.a. copper cathode at which time there will be more visibility on actual financial metrics including production costs, thus completing the transformation of Finders to a significant and profitable copper cathode producer."

Contacts: Mr Gary Comb

Non-Executive Chairman

Mr Barry Cahill Managing Director Mr James Wentworth Chief Financial Officer

Phil Retter Investor Relations NWR Communications

phil@nwrcommunications.com.au

T: +61 407 440 882

Perth Office: Level 1, 5 Ord 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

WETAR COPPER PROJECT (FINDERS 72%)

3,000 t.p.a. and 25,000 t.p.a. SX-EW Plant Production Report

The 3,000 t.p.a. plant operated in line with expectations during the quarter, while the 25,000 t.p.a. plant continued to ramp up copper cathode production following the successful commissioning in the June quarter as summarised in the following table:

Table 1: Wetar Quarterly Copper Production

Note 1: includes ore stacked to heap and stockpile leach pads.

Ore mining continued in the Kali Kuning Open Pit with production increasing following the arrival of another excavator and truck fleet. This fleet has been mobilised to site to accelerate the production profile and ensure that the build up of heap irrigated tonnes is maintained according to schedule.

The blasting process also transitioned from ANFO to an emulsion product with immediate improved results in the fragmentation of the ore (Image 1). This improvement has in turn increased the throughput rate of the crushing and stacking circuit.

Image 1 - Excavating blasted material in Kali Kuning pit

A failure in the north and east wall of the Kali Kuning pit resulted in the neccesity for remedial excavation to stabilise the wall. Ore production has not been affected and following a geotechnical review the remedial work is being scheduled into the mining plan. Minimum disruption was experienced due to the increased mining fleet.

Ore stacking continued on the Gold Pit Leach Pad (GPLP) and the Kali Kuning Valley (KKV) heap leach pads. In addition to fragmentation improvements, the performance of the crushing and stacking circuit increased markedly during the quarter as the operation of the circuit was further refined. The crushing circuit is now achieving forecast throughput with work progressing on further improvements.

Stockpiled run of mine ore has also been placed under irrigation in advance of crushing and stacking when capacity becomes available.

The 25,000 t.p.a. SX-EW plant continued to ramp up to nameplate capacity. Minor ramp up issues were encountered and rectified with steady state nameplate production expected during the December quarter. Nameplate was achieved in October and the focus is now on maintaining steady state.

Image 2 - Stacked tonnes on the Gold Pit Heap Leach Pad

The copper cathode produced experienced some visual quality and specification issues during ramp up however all cathode was sold at or about the LME copper price with a proportion sold at a premium as LME Grade A. Over 97% of copper cathode currently produced is LME Grade A.

The C1 cash costs for the month of September 2016 were US$1.11 per pound of copper produced on effectively 75% of nameplate production, which reflects well for the forecast costs of US$1.05 per pound of copper produced. There will be more visibility on the actual cost metrics from the results of the December quarter when the project is scheduled to be at steady state production.

Project Construction Progress

Construction work carried out during the quarter included the KKV leach pad construction with Cell 6 nearing completion.

The new neutralisation plant was successfully commissioned and is operating as planned.

Image 3 - Stacker on KKV leach pad cell 5

The new explosives magazine was completed and permitted and is now operating in association with the new emulsion plant.

Image 4 - Primary leach solution flowing from the KKV heap leach pads

Construction of the warehouse and workshop area was completed with the fit out of lighting, storage racking and the office continuing.

Demobilisation of construction personnel was ongoing commensurate with the wind down of major construction activities.

OH&S

There were no serious injuries recorded during the quarter, with the Lost Time Injury Frequency Rate (LTIFR) remaining at zero. The 12 month rolling LTIFR is 0.00 and the Injury Severity Rate is 0.00. The Total Recordable Injury Frequency rate for the project is 3.5. This is the total rate of first aid, medically treated and lost time injuries recorded which was an increase from last quarter. Management are focussed on reducing this lag indicator, particularly the rate of medically treated injuries.