Ann: Response to ASX Price & Volume Query, page-4

3. If the answer to question 1 is “no”, is there any other explanation that AUZ may have for the recent trading in its securities?

Australian Mines’ Managing Director, Benjamin Bell, is currently participating in the 121 Mining Investment conference in Hong Kong, where he is holding general briefing sessions with current and potential investors based on information already disclosed to the market.

Australian Mines notes that Macquarie Research, part of Macquarie Bank Limited, recently announced a 12-month price target of $2.10 for Clean TeQ Holding Limited, which would value their sole mining asset (being the Syerston Project) at $1.2 billion. As the Company has reported to the market (via the ASX platform), including most recently on 6 September 2017, Australian Mines’ Sconi Project is similar to Clean TeQ Holding’s Syerston Project including in terms of their resource tonnage, expected cobalt- nickel-scandium feed grade, geology, metallurgy and expected metal recoveries. Despite Australian Mines’ Sconi Project and Clean TeQ’s Syerston project being very similar, Australian Mines’ market capitalisation is currently about 10% of Clean TeQ Holdings.

The significant disparity between Australian Mines and Clean TeQ’s market capitalisation appears to have created an arbitrage situation whereby investors can gain exposure to the cobalt-nickel market via Australian Mines at a material discount to its peers.

Based on discussions with investors attending the 121 Mining Investment conference in Hong Kong, it is this disparity in the two companies’ market capitalisations that is attracting new investors into Australian Mines (and for current shareholders to accumulate more AUZ stock), which in turn could explain the significant increase in the volume of Australian Mines’ securities traded today as well as the increase in the price of AUZ’s securities from an opening price of $0.025 to a closing price of $0.034 today (Tuesday, 17 October 2017).