Finders Resources : Confirmation of Release - Quarterly Activities Report - September 2018

For ASX Market Release: 31 October 2018

Quarterly Activities Report - September 2018

Wetar Copper Project

HIGHLIGHTS

• § 4,459 tonnes of copper produced, up 4.4% on last quarter.

• § 4,611 tonnes of copper sold at an average price of US$2.82/lb.

• § US$1.62/lb C1 cash cost for the quarter.

• § High free acid levels continue to impact the SX circuit efficiency. Plans to expand the neutralization plant in Q1 2019.

• § Lerokis haul road development commenced in September, with mining scheduled for April 2019.

• § Exploration drilling underway at Partolang and Barmanu. An airborne geophysics survey is scheduled for November 2019.

• § A second major slip at the Kali Kuning pit of around 300,000 bcm occurred on 1 October.

Corporate

• § US$9.8 million EBITDA.

• § US$14.5 million debt repayment made in September 2018.

• § US$29.0 million total debt outstanding at 30 September 2018

• § US$15.6 million cash at 30 June 2018, including US$9.0 million restricted cash in the Debt Service Reserve Account.

• § 3,429 tonnes of copper hedges at an average price of US$4,781 per tonne remaining at 30 September 2018.

• § The takeover bid by EFDL remains open and has been extended until 19 November 2018. Acceptances for 96.97% comprising 763,264,671 shares have been received. Acceptances from Taurus for 87,339,525 shares equivalent to 11% of issued capital are in dispute.

Quarterly Activities Report September 2018

WETAR COPPER PROJECT (FINDERS 74.1%)

OH&S

At the end of the September quarter Wetar operations achieved 1.8 million hours without a lost time injury resulting in the twelve-month rolling Lost Time Injury Frequency Rate (LTIFR) at the end of the September 2018 quarter falling to 0.36 versus 0.70 in the corresponding September 2017 quarter. There were no lost time injuries recorded during the quarter and the Total Injury Frequency Rate (TRIFR) has reduced to 1.07, versus 4.20 in the corresponding September 2017 quarter.

Production

Mining and stacking of fresh ore increased over the quarter as remining of existing heaps tapered down in August and September in particular. This has resulted in an increase of 78% of total copper metal mined over the previous quarter (15,846 versus 8,903 contained tonnes of copper). Higher copper grades than anticipated in the lower levels of the Kali Kuning pit have positively contributed to this increase in contained metal mined. While there was a 4.4% increase in the recovered copper to 4,459 tonnes it does not correspond to the increase in stacking due to the longer leaching time and more complex metallurgy of the deeper ore. Mining and processing production data for the Wetar Copper Project is summarised in the following table:

Table 1: Wetar - Key Production Statistics

Note 1: There are minor variations to previously released figures due to adjustments in the calculation method.

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Finders Resources Limited, 25 Colin Street, West Perth WA 6005

Quarterly Activities Report September 2018

Mining

During the quarter, ore supply from the Kali Kuning open pit totalled 497,230 tonnes at a grade of 3.19% copper. The increase in ore supply represents the reduction of heap leach pad re-mining activities and the prioritisation of crushing and stacking of fresh ore as discussed further below.

A second major slip occurred on the north wall of the Kali Kuning pit (ASX announcements 3 October 2018 and 18 June 2018). Remediation works to remove approximately 300,000 bcm of waste have commenced and are expected to be completed over the fourth quarter. This additional waste movement may reduce the ore mined over the December quarter by 10%, however, it is not expected to lead to any delays to the commencement of the 2019 mine plan. No injuries were sustained during this incident. The Stage 6 cutback of the Kali Kuning western wall has commenced to facilitate access to ore in the Kali Kuning pit during the slip remediation works.

Figure 1 - View of the Kali Kuning pit as at 7 October with pit wall failure remediation works in progress

An updated Mineral Resource and Ore Reserve Estimate as at 30 June 20181 on a 100% owned basis was released to the ASX on 22 October 2018 and included:

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198kt of copper metal contained in a 9.39 million tonnes mineral resource estimate at an average grade of 2.11% copper; and

1 Refer to the ASX release dated 22 October 2018 titled "Mineral Resource and Ore Reserve Update" and the Technical Report and Competent Person Statement attached to the release. This release is located on the Finders Resources Ltd website at:http://findersresources.com/wp-content/uploads/2018/10/Confirmation-of-Release-Mineral-Resource-Ore-Reserve-Update.pdf

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Finders Resources Limited, 25 Colin Street, West Perth WA 6005

Quarterly Activities Report September 2018

§

188kt of copper metal contained in 9.06 million tonnes ore reserve estimate at an average grade of 2.08% copper.

The previous estimate was effective as at 1 December 2017 update. No additional data has been collected or recalculated since this last estimate, with changes reflecting mining depletion only. The Ore Reserve to actual ore mined reconciliation continues to remain positive. As at 30 September 2018 an additional 10.7% ore (551,830 tonnes) and 20.8% copper metal (24,041 tonnes) have been extracted from the pit and placed on the heap leach pads compared to the Ore Reserve. Competent person statements for this Ore Reserve update is available on the findersresources.com website.

Heap Leaching Operations

The rate of leaching is slower than projected by the feasibility study leach curve. Studies and analysis are ongoing to understand the reasons for this and whether terminal recoveries will be achieved. To compensate for slower leach rates the rate of stacking is being accelerated. Approximately 440,231 tonnes of fresh ore was crushed and stacked during the quarter, placing 14,739 tonnes of copper on the heap pads, up 60% from the previous quarter. Copper metal leached totalled 5,090 tonnes, being 91% of the previous quarter, due to heap re-mining activities. The daily leaching rate for the quarter was 55 tonnes per day. Accelerated stacking rates are expected to result in higher copper leach rates in the coming quarters.

Works have also commenced to extend the heap pads in the Kali Kuning Valley at KK1/2 and KK06 areas.

Figure 2 - Kali Kuning Valley leach pads with extension works underway.

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Finders Resources Limited, 25 Colin Street, West Perth WA 6005

Quarterly Activities Report September 2018

SX-EW Plant Production

Copper stripped was 4,459 tonnes versus 4,273 tonnes in the June 2018 quarter. This represents a slow but steady increase on the low of 4,100 realised in the December 2017 quarter. These improvements are attributable to better availability of the neutralisation plant and some benefits through optimising the neutralisation process.

However, the key constraint to increasing copper plating rates continues to be the level of free acid, which impacts SX plant extraction efficiencies. The average efficiency of the solvent extraction plant remains around 46% (vs budget 80%) as the free acid level continues to be persistently above 40 g/L. Neutralising plant capacity remains insufficient to reduce this free acid level and a major upgrade to the neutralising plant is scheduled for the first quarter of 2019.

As noted above an increase in the rate of mining, crushing and stacking fresh ore to increase the leached copper inventory has been undertaken. The resulting higher PLS copper grade should gradually improve production at higher acid levels, albeit at lower plant efficiency.

Costs

Costs for the Wetar Copper Project are summarised in Tables 2 & 3 below:

Table 2: Wetar Project - Cash Costs per tonne of Ore Crushed and Stacked

Table 3: Wetar Copper Project Quarterly Unit Costs

Note 1: Corporate costs include management fees

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Finders Resources Limited, 25 Colin Street, West Perth WA 6005