Flinders Mines : Recommends Acceptance of Improved TIO Cash Offer

Blue - bid implementation agreement - 6 May 2016

9 May 2016

ASX ANNOUNCEMENT Flinders recommends acceptance of improved 2.5 cents per share TIO cash offer HIGHLIGHTS

• Improved all-cash unconditional takeover offer of $0.025 (two and a half cents) cash per Flinders Share

• Improved offer price is best and final and will not be increased in the absence of an alternative proposal or competing proposal from a third party

• The Flinders Board recommends Shareholders ACCEPT the offer in the absence of a Superior Proposal

• Improved offer is 92% higher than TIO's initial takeover offer price

• Represents a significant premium to the closing price and the VWAPs of Flinders before TIO announced its initial takeover offer

• Provides certainty and prompt payment for Flinders Shareholders

• Improved offer will close at 7.00pm (Sydney time) on 6 June 2016 (unless extended or withdrawn)

  INCREASED CASH OFFER

  Flinders Mines Limited (ASX:FMS) ("Flinders") is pleased to announce that it has entered into a bid implementation agreement ("Implementation Agreement") with TIO (NZ) Limited ("TIO") (a wholly- owned subsidiary of Todd Corporation), under which TIO has agreed to vary its offer to increase the cash consideration initially offered from $0.013 ("Initial Offer") to $0.025 per Flinders Share ("Improved Offer").

  The Directors of Flinders unanimously recommend that Flinders Shareholders ACCEPT the Improved Offer and intend to accept, or procure the acceptance of, the Improved Offer in respect of any Flinders Shares that they own or control, in the absence of a Superior Proposal.

  Your Directors recommend acceptance of the Improved Offer for the following reasons:
• The Improved Offer represents a significant premium for control of Flinders

  TIO has significantly improved its Initial Offer by 92%. The Improved Offer represents a premium of 213% to the 16 March 2016 closing price (being the last trading day before the Initial Offer was announced) of $0.008 per Flinders Share.

  Price (A$ per share)

  The Improved Offer price also represents a significant premium to the VWAPs of Flinders before TIO announced the Initial Offer.

  0.030

  12 Month Trading Chart

  Improved Offer

  0.025

  0.020

  0.015

  12 Month VWAP

  Initial Offer

  0.005

  0.000

  Closing Price

  12 Month VWAP

  Initial Offer

  Improved Offer

  0.010

  Mar-15

  Apr-15

  May-15

  Jun-15

  Jul-15

  Aug-15

  Sep-15

  Oct-15

  Nov-15

  Dec-15

  Jan-16

  Feb-16

  Mar-16

  Specifically, the Improved Offer represents a premium of:

  • 233% to the 30 day VWAP to 16 March 20161 of $0.0075 per Flinders Share;

  • 225% to the 60 day VWAP to 16 March 2016 of $0.0077 per Flinders Share; and

  • 81% to the 12 month VWAP to 16 March 2016 of $0.0138 per Flinders Share.

    1 VWAPs are calculated on the basis of all trading data sourced from Australian exchanges and are calculated over the specified number of calendar days.

    Your Directors note that Flinders Shares have not traded above the Improved Offer price since 17 September 2014.

• The Improved Offer is best and final

  TIO confirms that the Improved Offer price of $0.025 per Flinders Share is best and final and will not be increased, in the absence of an alternative proposal or competing proposal from a third party.

• The Improved Offer provides certainty to Flinders Shareholders

The Improved Offer provides Flinders Shareholders with an opportunity to realise certain cash consideration for their shares.

Your Directors have made significant effort in progressing all possible opportunities with respect to third party infrastructure access and independent development of the PIOP. These discussions have not resulted in any proposal being made to Flinders to purchase the PIOP ore or provide infrastructure access to the PIOP. Your Directors therefore believe the Improved Offer is compelling and recommend acceptance.

A copy of the Implementation Agreement is annexed to this announcement. Unless the context otherwise requires, terms defined in the Implementation Agreement have the same meaning as in this announcement.

Fo r f u rth er i nf or mation, p l ease d on 't h esi tate to co n tact:

Ian Gordon Duncan Gordon

Managing Director Executive Director

Flinders Mines Limited Adelaide Equity Partners Limited

Mob: 0427 306 947 Mob: 0404 006 444

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

ANNEXURE - BID IMPLEMENTATION AGREEMENT