AIC Mines : Quarterly Activities Report

ABOUT AIC MINES

AIC Mines is a growth focused

exploration projects in Western A stralia and New South Wales.

CAPITAL STRUCTURE Shares on Issue: 308,765,018

personalCORPORATE DIRECTORY Josef El-Raghy Non-ExecutiveChairman

Aaron Colleran Managing Director & CEO

Brett Montgomery

N n-Executive Director

Tony Wolfe

Non-Executive Director

Jon Young

Non-Executive Director

Linda Hale

Company Secretary

CORPORATE DETAILS ASX: A1M www.aicmines.com.au

ForABN: 11 060 156 452

P: +61 (8) 6269 0110

F: +61 (8) 6230 5176

E: inf @aicmines.com.au

A: A8, 435 Roberts Rd, Subiaco, WA, 6008 Share Register:

Computershare Investor Services

Quarterly Activities Report

for the Period Ending 30 June 2022

HIGHLIGHTS

Eloise Copper Mine

• On-targetproduction - 10,814dmt of concentrate produced containing 3,049t of copper at an AISC of A$4.70/lb Cu and AIC of A$5.64/lb Cu.
• Strong operating cashflow - sales of 2,880t Cu, 1,541oz Au and 27,918oz Ag generated net revenue of $34.6 million, operating cashflow of $14.4 million and net mine cashflow of negative $1.8 million. The lower than normal mine cashflow was due to major capital investment in construction of the new tailings storage facility which will provide 5 years of storage capacity.
• In the first 8 months of ownership Eloise generated $104.4 million in revenue post revenue deductions, $50.2 million in operating cashflow and $16.9 million in net mine cashflow at an AISC of A$4.33/lb Cu and AIC of A$4.82/lb Cu.

Lamil Project

• Diamond drilling to test high-priority targets at Lamil Dome, Goodenia and Firebush prospects commenced.

Marymia Project

• RC drilling expected to commence in September. Drilling will focus on the Copper Hills and Black Hills prospects.

Corporate

• At 30 June 2022, AIC held $28.1 million in cash plus $6.8 million on account for the Eloise performance bond. The final $2 million contingent payment for the Eloise acquisition was paid to FMR Investments during the Quarter.
• AIC is moving rapidly to respond to the recent lower copper price - focusing on reducing costs and improving productivity. As a result of its high-grade, the Eloise mine has significant optionality and hence ability to 'weather the storm'. With a 26-year operating history there is nothing that Eloise hasn't seen before.

For personal use only

PRODUCTION

Eloise Copper Mine

AIC Mines Limited ("AIC Mines" or "the Company") took ownership of Eloise on 1 November 2021. Current operations consist of an underground mine accessed via decline. The upper levels of the mine (above 1,190m below surface) are extracted by longhole open stoping and the lower levels are extracted by sublevel caving, together producing up to 700,000tpa ore. Eloise is an owner-miner operation with a mining contractor used for underground development.

Processing is via conventional crushing, grinding and sulphide flotation with capacity to treat 750,000tpa. Metallurgically the ore is very consistent as the ore mineralogy at Eloise is almost exclusively chalcopyrite. Processing achieves high copper recoveries and produces a clean concentrate. The concentrate has significant by-product credits from gold and silver.

Safety and Environment

The Total Recordable Injury Frequency Rate (12 month moving average) as at 30 June 2022 was 7.55 per one million hours worked. There was one lost-time injury during the Quarter; a chef cut the top of his thumb whilst filleting fish.

COVID-19 did not materially impact operations during the Quarter. AIC Mines has implemented preventative measures at Eloise to reduce the risk of employee exposure to COVID-19 and to limit its spread.

There were no reportable environmental incidents during the Quarter. Two new sustainability initiatives were commenced during the Quarter:

• A diesel fuel additive trial to reduce fuel consumption and greenhouse emissions.
• Flotation testwork to reduce sodium metabisulphite usage, a reagent used to depress pyrite flotation.

Production and Costs

Production in the June 2022 Quarter was in line with expectations - producing 10,814dmt of concentrate containing 3,049t of copper at an AISC of A$4.70/lb of copper sold after by-product credits.

Since AIC Mines took ownership on 1 November 2021 the mine has produced 8,266t Cu in concentrate at a C1 operating cost of A$2.61/lb Cu. So after 8 months of ownership the mine is achieving AIC Mines' annual production target rate of approximately 12,500t Cu and 6,500oz Au in concentrate at a C1 operating cost of approximately A$3.30/lb Cu.

Ore processed during the Quarter was drawn from the Chloe and Levuka orebodies and the z305 sub- level cave in the Deeps. The average mined grade of 2.25% Cu was above the average reserve grade of 2.10% Cu as a result of higher-grade ore sourced from the Deeps (+3% Cu).

Mine production was restricted due to low truck availability and difficult ground conditions impacting stoping in the Levuka orebody and development of the Deeps. Truck rebuilds scheduled over FY23 will address the truck availability issue. New stope designs for Levuka and access designs for the Deeps are expected to remedy the ground condition issues experienced during the Quarter.

Unit costs were negatively impacted by lower throughput and high diesel costs.

The mine continued to generate significant operating cashflow of $14.4 million although net mine cashflow was negative $1.8 million for the Quarter as a result of $4.1 million of accelerated capital expenditure related to excellent progress with construction of the new tailings storage facility (TD5).

For personal use only

139.2400

2.29%2.18%

95.7%94.7%

2.692.61

2.742.67

0.270.27

0.08(0.07)

1.611.46

4.704.33

0.940.49

5.644.82

1.080.80

For personal use only

Production and Cost Outlook

AIC has set a FY23 production target for Eloise of approximately 12,500t Cu and 6,000oz Au in concentrate at an AISC of approximately A$4.50/lb Cu and AIC of A$5.00/lb Cu.

Significant capital will be invested at Eloise in FY23 to underpin the next five years of production: Sustaining Capital

• $25.0 million for mine development
• $4.1 - $5.0 million for 17.5 - 25 kilometres of resource definition drilling to upgrade Inferred Resources and Mineral Inventory to Indicated Resource category

Growth Capital

• $5.0 million for long-term mine development in the Deeps
• $11.0 million to complete the new tailings storage facility (TD5) to provide 5 years of storage capacity

Depreciation for FY23 is expected to be in the range of $25.0 - $30.0 million.

In response to the recent precipitous fall in the copper price the Company has commenced a cost review aimed at conserving cash while also ensuring that important capital investment is maintained. As a result of its high-grade, the Eloise mine has significant optionality and hence ability to 'weather the storm'. With a 26-year operating history there is nothing that Eloise hasn't seen before.

In addition, ongoing productivity improvements are expected as mining fleet availability and mill availability are improved through the current rebuild, maintenance and replacement programs.

Exploration and Resource Drilling

A resource definition drilling program in the Eloise Deeps continued through the Quarter. The aim is to upgrade the resource confidence from inferred to indicated, up to 100 vertical metres below the lowest mining level at the z305mRL, representing the next four production levels of the sublevel cave.

The program is being drilled in two phases. Phase 1 provides 50 x 50m drill spacing down to z405mRL, and 25 x 25m spacing for the next production level, z330mRL. Phase 2 provides the remaining infill drilling to complete 25 x 25m drill spacing down to the z405mRL.

Phase 1 drilling is complete and Phase 2 is in progress. A drill spacing of 25 x 25m has been achieved down to the z380mRL, representing completion of drilling for the next three levels of the sublevel cave.

The results have confirmed the down plunge continuity of the high-grade mineralisation up to 75m below the base of the Indicated Resource (see Figure 1). Significant intercepts reported during the Quarter include:

• ED208 - 2.6m (2.5m ETW) grading 1.74% Cu and 0.34g/t Au
• ED208 - 3.0m (2.9m ETW) grading 2.21% Cu and 0.26g/t Au
• ED208 - 2.6 m (2.5m ETW) grading 2.72% Cu and 1.35g/t Au
• ED209 - 18.5m (18.0m ETW) grading 3.42% Cu and 0.60g/t Au
• ED209 - 4.9m (4.8m ETW) grading 3.46% Cu and 2.44g/t Au
• ED210 - 29.7m (28.9m ETW) grading 4.01% Cu and 1.03g/t Au
• ED210 - 4.7m (4.6m ETW) grading 3.21% Cu and 0.73g/t Au
• ED211 - 2.0m (1.9m ETW) grading 1.70% Cu and 0.43g/t Au
• ED212 - 4.8m (4.5m ETW) grading 3.44% Cu and 1.08g/t Au
• ED212 - 11.0m (10.7m ETW) grading 2.94% Cu and 0.76g/t Au
• ED212 - 10.1m (9.9m ETW) grading 2.18% Cu and 0.50g/t Au

For further details see AIC Mines ASX announcement "Drilling Results from Eloise Deeps" dated 24 June 2022.

For personal use only

More recently, further significant intercepts have been received:

• ED213 - 7.4m (7.3m ETW) grading 3.84% Cu and 1.72g/t Au
• ED213 - 2.0m (1.9m ETW) grading 3.53% Cu and 0.80g/t Au
• ED213 - 3.8m (3.7m ETW) grading 6.23% Cu and 1.08g/t Au

For further details see Appendix 1 (Table 1) and AIC Mines ASX announcement "Drilling Results from Eloise Deeps" dated 24 June 2022.

Figure 1. Plan view of Deeps drilling, sliced at z380m Level (±15m). All widths are reported as

estimated true widths.

Surface exploration drilling was completed at the Macy North target. Three holes for 1,936.5m have been completed. Assay results for these holes are pending.

Sulphide mineralisation (pyrrhotite and chalcopyrite) within zones of carbonate-silica-chlorite alteration was intersected. The mineralisation and alteration style are similar in character to the five lenses within the mineralised corridor that are being mined in the Macy resource area. For further details see AIC Mines ASX announcement "Drilling Results from Eloise Deeps" dated 24 June 2022.