Altona Mining : Quarterly Report - September 2017

Quarterly Report September 2017‌

24 October 2017

ABOUT ALTONA Altona Mining Limited (ASX: AOH) is a cashed up ASX listed company with a record of shareholder returns. It is focussed on the Cloncurry Project in Queensland, Australia. The Cloncurry Copper Project has resources containing some 1.67Mt of copper and 0.43Moz of gold. The first development envisaged is the 7Mtpa Little Eva open pit copper-gold mine and concentrator. Major permits are in place with proposed annual production of 39,000t of copper and 17,200oz of gold for a minimum of 10 years. A Definitive Feasibility Study has been completed and updated in August 2017. Key metrics as at 30/09/2017: Shares on issue: 536,975,592 Share rights on issue: 9,715,800 Cash: A$33.7M Share price: 13.5 cents Market capitalisation: A$72.5M Altona Mining Limited ACN: 090 468 018 Level 1, 2 Kings Park Road West Perth Western Australia 6005 T: [phone] E: [e-mail] W: www.altonamining.com ASX: AOH Frankfurt: A20

Definitive Feasibility Update Completed, Engaging with Third Parties Cloncurry Copper Project: Altona is undertaking a process of engagement with third parties to realise value from the Cloncurry Project for shareholders. Definitive Feasibility Study: Altona has completed a major update to prior studies on the Cloncurry Copper Project. Key changes compared to the 2014 DFS are: Reserves up 14% from 375kt copper to 426kt copper. Mine life up 27% from 11 years to 14 years. Life of mine revenue up 24% from A$2.9 billion to A$3.6 billion. Drilling: Drilling has commenced at Cloncurry on both gold and copper targets. The programmes are part of routine exploration as required under tenement grant conditions. Cash Balance: At 30 September 2017 Altona's cash balance was A$33.7* million. Altona has US$23.6 million which was purchased at an average rate of AUD:USD of 0.754. * Assumes AUD:USD of 0.783.

Overview Overview

The Cloncurry Copper Project has a 14 year life as an open pit mine, and will produce 39,000 tonnes per annum copper and 17,200 ounces of gold each year once in production. The project is permitted and ready to build. The recently updated Definitive Feasibility Study highlighted numerous opportunities to improve the Project.

The project also host some 840,000 tonnes of contained copper in JORC Resources in deposits adjacent to the proposed mine. These are not yet incorporated into the Project mine plan.

The Cloncurry Project has attracted attention from a range of parties. With the assistance of advisors, Hartleys Limited, Altona assessing the merits of these and any future opportunities that might arise.

ASX Releases

Altona lodged eight ASX releases relating to its activities since the last Quarterly Report. These announcements provide a more detailed description of activities than this report.

26/07/17	Quarterly Reports - June 2017
03/08/17	The Cloncurry Copper Project JORC 2012 Disclosure
03/08/17	Updated DFS Delivers Bigger and Better Cloncurry Copper Project
29/08/17	Altona Corporate and Project Strategy Update
13/09/17	Appendix 3B
15/09/17	2017 Annual Report and Appendix 4G
20/09/17	Cloncurry Copper Project Update
27/09/17	Amendment to Updated DFS ASX Release

Corporate

A$ (millions)
Opening cash (1 July 2017)	36.28
Exploration, evaluation and licence fees	(1.47)
Corporate costs	(0.33)
Staff costs	(0.24)
Exchange rate movement and other	(0.49)
Closing cash (30 September 2017)	33.75

Altona maintains a strong cash balance

Altona had A$33.75 million of funds on deposit at 30 September 2017. A portion of these funds (US$23.68 million) is retained in US dollars. The exchange rate used to estimate AUD dominated cash is AUD:USD of 0.783.

Share Price Activity on ASX

Quarter open 13¢

High 14.5¢

Low 9¢

Quarter close 13.5¢

Average daily volume 229,254

Cloncurry Copper Project (Altona 100%): Development The Cloncurry Project offers a large resource of 290 million tonnes at 0.58% copper, 0.05g/t gold for 1.65 million tonnes contained copper and 0.4 million ounces gold and is close to infrastructure. It is located 90 kilometres north-east of Mt Isa and 9 kilometres north of MMG's Dugald River zinc mine which is in construction.
Permitted project with a DFS completed	The Little Eva copper-gold development is planned to be the first development at the Cloncurry Copper Project. The 2017 Definitive Feasibility Study ("DFS") for the development anticipates the construction of a 7 million tonne per annum open-pit mine and flotation plant capable of annual production of 39,000 tonnes copper and 17,200 ounces gold. Mine life is estimated to be 14 years. The project sits within granted mining licences with native title agreements and an Environmental Authority ("EA") in place. Altona completed an update of the Definitive Feasibility Study ("DFS") of the Cloncurry Copper Project ("Project"), 90 kilometres north-east of Mt Isa in Queensland, Australia.
Significant technical work since 2014 DFS	The study has been completed to provide an up to date status of the Project which consolidates and integrates all technical work of prior studies with a number of significant developments since the initial DFS in May 2012 and the update to the DFS in March 2014 that impact on costs, revenues and design. They include: New Resource estimates and geological/geotechnical models for the Little Eva and Bedford deposits. Please note these new estimates have not yet been used to generate new Ore Reserve estimates. Mineral Resource and Ore Reserve estimates for the Turkey Creek deposit Metallurgical testwork of Turkey Creek ore Inclusion of the Turkey Creek deposit in mine plan Re-design and re-location of infrastructure and waste dumps to accommodate Turkey Creek pit A reduction in engineering and construction costs Updated cost estimates Updated Environmental Authority to reflect inclusion of Turkey Creek Changes to macro-economic assumptions.
Opportunity to improve project	The study also identified a number of areas for improvement to be addressed in project optimisation: Reserve expansion through converting Inferred Resources below Little Eva pit to Indicated Resources RC drilling for better definition of grade control, dilution and ore loss Updated Little Eva Resource model Geotechnical model constructed indicating opportunity for improvement in mine design Little Eva pit optimisation and design using lower current mining costs and upgraded Resource model Resource upside at satellite pits Consideration of higher plant throughput if Reserve increase warrants expansion Increased water resources to support higher throughput.

The study also recommends examining the opportunity of expanding production by inclusion of copper-only deposits not considered in the DFS. Compared to the 2014 DFS, this study has delivered material improvements: Reserves up 14% from 375kt copper to 426kt copper Mine life up 27% from 11 years to 14 years Life of mine revenue up 24% from A$2.9 billion to A$3.6 billion The Project comprises a large scale open pit mine at Little Eva and five satellite pits; Turkey Creek, Bedford North and South, Lady Clayre and Ivy Ann. Ore will be processed at a 7 million tonnes per annum processing plant adjacent to Little Eva and Turkey Creek. The Little Eva pit has a low strip ratio of 1.8:1 (excluding pre-strip). The Project has an initial 14 year life. The Little Eva processing plant will have a technically simple crushing, grinding and flotation circuit resulting in the pre-production capital cost including pre-strip, processing plant and associated infrastructure being A$288 million. The operation will produce 150,000 tonnes per annum of readily marketable, clean copper-gold concentrate containing an average of 39,000 tonnes per annum copper and 17,200 ounces per annum gold for the first 5 years of full production. High metal recoveries of 96% copper and 85% gold are achievable at a coarse grind size of 212 microns. The mill feed grade averages 0.6% copper and 0.1g/t gold excluding marginal grade stockpiles.
Cloncurry Copper Project (Altona 100%): Exploration
Altona has taken advantage of the exploration downturn to amass a 3,800km2 landholding in the Cloncurry Project. Much of the ground remains largely underexplored. Across the portfolio of tenements there are scores of exploration targets, some with existing excellent drill results, some drill ready. Altona will undertake exploration to maintain its tenement holding and also conduct exploration that has potential to deliver a step change to the project.
Drilling underway	Drilling has commenced at a number of targets. The drill program is designed to meet tenement commitments whilst testing high priority targets. The planned reverse circulation drilling program consists of approximately 25 to 30 holes and up to 2,750 metres of drilling at Companion, Coolullah North and Quamby (Figure 2). Altona may also drill test one or two other prospects.
Copper-gold targets	The Companion and Coolullah North prospects are copper-gold targets similar to the deposits that make up the projects established 290 million tonne Mineral Resource base. The drill targets at Companion are based on previous widely spaced mineralised drillholes and new copper-in-soil anomalies generated by Altona. At Coolullah North, drilling targets a geophysical anomaly in an area masked by thin alluvium cover.