Flinders Mines : Quarterly Activities and Cashflow Report

30 January 2017

Corporate

During the quarter the Company announced significant changes to the Board with the appointment of Mr Neil Warburton and Mr David McAdam as independent non-executive directors and Mr Michael Wolley and Mr Evan Davies as non-executive directors. Mr Kevin Malaxos and Mr Ewan Vickery retired as non- executive directors of the Company. Subsequent to his appointment to the Board, Mr Warburton was appointed as the Company's chairman with effect from 20 December 2016. Mr Robert Kennedy remains on the Board.

Strategic Review

As announced at the 2016 Annual General Meeting of the Company on 30 November 2016, Mr David McAdam, who has extensive project design and construction experience, was appointed to lead a detailed independent, strategic review of the Pilbara Iron Ore Project (PIOP) including to assess the various possible future development options for the PIOP, the likely economic viability and timing of such development options, sources and availability of funding for such development options and the development of a strategy to sell the PIOP products to Asian markets. Subsequent to the end of the quarter, on 25 January 2017, Flinders provided an update to shareholders on the status of the strategic review of the PIOP.

Funding

During the quarter Flinders completed a 1:10 non-renounceable entitlement offer (Entitlement Offer) successfully raising $4,184,989 (before issue costs). Subscribers to the Entitlement Offer included major shareholders TIO (NZ) Limited and OCJ Investment (Australia) Pty Ltd. Part of the proceeds raised by the Entitlement Offer was utilized to repay a loan (including interest) from PIO Mines Pty Ltd (a subsidiary of TIO (NZ) Limited). At the end of the quarter, Flinders held cash of $3.17m.

Projects Update

During the quarter the Federal Government Department of the Environment and Energy granted Flinders conditional approval for the development of an expanded operation at the PIOP. This approval allows the development of additional mine pits and infrastructure such as external access roads, airport, ore processing facility, power station, accommodation camp and tailings storage facility. These changes allow an increase in the production of iron ore from 15Mtpa to 25Mtpa. The approval, which has effect until 31 December 2037, is subject to certain conditions, all of which are acceptable to Flinders. The environmental approval, an important primary approval milestone for the project, demonstrates that the PIOP can be developed in an environmentally acceptable manner.

For further information contact:

Phone: 08 8132 7950

Email: info@flindersmines.com

Neil Warburton Chairman

Flinders Mines Limited ABN 46 091 118 044

www.flindersmines.com

Level 1, 135 Fullarton Road Rose Park

South Australia 5067

PO Box 4031

Norwood South South Australia 5067

telephone 61 8 8132 7950

facsimile 61 8 8132 7999 email info@flindersmines.com

Tenement Schedule

For the Quarter ending 31 December 2016

WESTERN AUSTRALIA

Canegrass Project

E58/232 Granted Boulder Well 29/07/2002 28/07/2017 16.1 Flinders Canegrass100%

Pty Ltd

E58/236 Granted Challa 22/03/2002 21/03/2017 16.1 FlindersCanegrass

Pty Ltd 100%

E58/282 Granted Honey Pot 3/05/2007 2/05/2017 27.2 FlindersCanegrass

Pty Ltd 100%

Pilbara Iron Ore Project

Prenti Agreement

SOUTH AUSTRALIA

Curnamona Project

Prenti Agreement

Gawler Ranges Project

Jamestown Project

+Rule 5.5

Introduced 01/07/96 Origin Appendix 8 Amended 01/07/97, 01/07/98, 30/09/01, 01/06/10, 17/12/10, 01/05/13, 01/09/16

Name of entity

Flinders Mines Limited

ABN Quarter ended ("current quarter")

46 091 118 044

31 December 2016

1. Cash flows from investing activities

2. Payments to acquire:

3. property, plant and equipment

4. tenements (see item 10)

5. investments

6. other non-current assets

7. Consolidated statement of cash flows	Current quarter $A'000	Year to date (6 months) $A'000
   2.2 Proceeds from the disposal of:	1
   (a) property, plant and equipment
   (b) tenements (see item 10)
   (c) investments
   (d) other non-current assets
   2.3 Cash flows from loans to other entities
   2.4 Dividends received (see note 3)
   2.5 Other (provide details if material)
   2.6 Net cash from / (used in) investing	1
   activities

8. Cash flows from financing activities

9. Proceeds from issues of shares

10. Proceeds from issue of convertible notes

11. Proceeds from exercise of share options

12. Transaction costs related to issues of shares, convertible notes or options

13. Proceeds from borrowings

14. Repayment of borrowings

15. Transaction costs related to loans and borrowings

16. Dividends paid

17. Other (provide details if material)

18. 3.10 Net cash from / (used in) financing activities

4,148

(2,000)

4,148

2,148

4,148

Net increase / (decrease) in cash and cash equivalents for the period Cash and cash equivalents at beginning of period Net cash from / (used in) operating activities (item 1.9 above) Net cash from / (used in) investing activities (item 2.6 above) Net cash from / (used in) financing activities (item 3.10 above) Effect of movement in exchange rates on cash held 4.6 Cash and cash equivalents at end of period	1,730 (712) 2,148	551 (1,534) 1 4,148
	3,166	3,166