The Al Hadeetha Copper Gold Project consists of one mining license (Al Wash-hi - Majaza) and three exploration licenses (Al Wash-hi - Majaza, Mullaq and Al Ajal).

Preparatory work for plant construction continued during the quarter. Key activities included:

Project Engineering & Procurement:

Alara JV company Al Hadeetha Resources LLC (AHRL) halted work with CGM as project EPC contractor due to the impacts of Covid-19, including airport closure, domestic travel restrictions, shipping and other related concerns.

The Company has since investigated having the engineering outsourced, procurement ownermanaged and the construction contractor managed by an AHRL team, together with Project Management Consultant, Progesys. AHRL is in discussions with Progesys to extend its contract by four months.

Mining Contractor

Following the entry of a preliminary commercial agreement in the previous quarter, AHRL and Alara Resources LLC (ARL) agreed terms for a ten-year mining contract by way of a letter of intent (LOI). Execution of this mining contract is expected to follow shortly.

Project site metallurgical drilling

Drilling has continued at the project site to obtain metallurgical samples for processing plant design work. Drilling progress has continued throughout the period with 2000m of HQ/NQ samples collected with 98% core recovery. Potential for further optimisation of copper recoveries may also be investigated. ALS Global has been engaged to conduct the geochemical analysis and Wardell Armstrong Lab in UK will conduct the metallurgical test work.

Project Finance:

AHRL previously agreed to proceed with project finance offers from local Omani banks:

OMR 10m (AUD 42m) finance facility1 with Alizz Islamic Bank, and

OMR 10m (AUD 42m) finance facility2 with Bank Nizwa, were approved during the period, under a 'club deal' between those banks.

Oman Copper Consolidation

The Company is continuing to pursue opportunities to extend its project portfolio in Oman.

AHRL Management Appointment

AHRL appointed Mr Avigyan Bera (formerly with McNally Bharat Engineering) as CEO. The role includes management of the Engineering and Construction contractors, procurement processes (in connection with the Project Management Consultant) and project budgeting and scheduling. Mr Bera is a mechanical engineer with over 12 years' project experience, including project planning, execution, commissioning and process engineering. Due to Covid-19 restrictions Mr Bera has commenced his service from home until he is able to relocate to Oman.

COVID-19 impacts

Oman has reported over 78,000 COVID-19 cases, 412 deaths and 60,000 recoveries.

Government officials in Oman have now resumed work, with 50% attendance in Government offices from 31 May 2020. Lockdown measures across Muscat, which have been in place since early April, were temporarily lifted. Protective measures, such as wearing face masks in public remain in place

The Muscat Airport remains closed for incoming passenger flights, with limited outbound chartered flights. Aside from the staff working on site, the majority of the staff continue to work from home. There have been no COVID-19 cases reported among the Company's staff, including its JV entities.

Off-take agreements

The advance payment under a 2017 off-take agreement between a Company controlled entity and commodities trader Statdrome Pte Ltd has been returned in full. Under the retired agreement, Statdrome advanced USD1.2 million on account of its future entitlement to payments for copper concentrate to be delivered. The Company has executed a term sheet for a new offtake and is discussing terms for further advance payments.

Alara Resources LLC (ARL)

ARL's first mining contract is with Al Hadeetha Resources LLC, as detailed above. Tender proposals have been prepared and submitted to other prospective clients. A response to ARL's first tender submission to a major Omani industrial mineral company has been postponed with many Omani businesses being temporarily closed or with reduced staff due to Covid-19 restrictions.

Alara Operations LLC (AOL)

Management Services Agreements between Al Hadeetha Resources LLC and Alara Resources LLC has now been transferred to Alara Operations LLC. The purpose of this transfer was to bring the Management Services Agreement back within the consolidated entity.

Expenditure Summaries

Mining production and development

During the quarter, the consolidated entity incurred expenditure of $1,674,000 on mining production and development activities.

Mining exploration

During the quarter, the consolidated entity incurred expenditure of $nil on mining exploration activities.

Related-Party Payments

Director's remuneration

During the Quarter, the consolidated entity made payments totalling $162,000 to related parties, as disclosed in item 6.1 in the Company's Appendix 5B. These payments were for Directors' remuneration. No other payment was made to any related party or the associate of a related party. In addition, $79,190 was paid to Alara Resources LLC (ARL). ARL is not a related party, or an associate of a related party, of the Alara Resources Limited consolidated group. This payment is noted on the basis that ARL makes some payments to Alara Resources Limited Directors.

Next Quarter Expected developments in the next Quarter include:

Looking to see COVID-19 restrictions lifted and options analysis completed.

Progress with laboratory test work.

LOI with ARL converted into a mining contract.

Tenement Status

Oman Copper-Gold Projects

Alara has joint venture interests in five copper-gold deposits located within five Exploration Licences in Oman extending over 1,200km2 . The Al Wash-hi - Majaza/Mullaq3 prospects are located 160km south-southwest of Muscat (the capital of Oman) and the Al Ajal Prospect is located about 65 km southwest of the capital. The Daris Copper-Gold Project4 is located 150km west of Muscat. Both projects are located very close to high-quality bitumen roads.

Saudi Arabia - Khnaiguiyah Zinc-Copper Project

The Khnaiguiyah Zinc-Copper Project5 is located approximately 170km south-west of the Saudi Arabian capital city of Riyadh. The mining licence (held by a former JV partner) was cancelled in December 2015. Alara, as sole funder of the Definitive Feasibility Study, is poised to restart the project once the licence is re-issued and is working with relevant parties in both the private and public sectors to prepare for this. The Minister of Industry and Mineral Resources bandar Bin Ibrahim Al-Khorayef recently announced the allocation of 54 mining reserve sites, including five zinc sites with one in Al Khnaiguiyah.

Additional Tenement Information

Mining tenement disposals and acquisitions

The consolidated entity did not acquire or dispose of any interest in any mineral tenement during the quarter.

Farm-in and farm-out agreements

The consolidated entity did not enter or terminate any farm-in or farm-out agreement during the quarter. The consolidated entity holds its percentage interests in the mineral tenements disclosed under the heading Daris and Awtad Copper-Gold Projects under farm-in agreements with the respective Licence Owners disclosed there.

Disclaimer

This report contains 'forward-looking statements' and 'forward-looking information', including statements and forecasts which include without limitation, expectations regarding future performance, costs, production levels or rates, mineral resources, and studies. Often, but not always, forward-looking information can be identified by the use of words such as 'plans', 'expects', 'is expected', 'is expecting', 'budget', 'scheduled', 'estimates', 'forecasts', 'intends', 'anticipates', 'believes' or variations (including negative variations) of such words and phrases, or state that certain actions, events or results 'may', 'could', 'would', 'might', or 'will' be taken, occur or be achieved. Such information is based on assumptions and judgements of management regarding future events and results.

The purpose of forward-looking information is to provide readers with information about management's expectations and plans. Readers are cautioned that forward-looking information involves known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Alara and/or its subsidiaries to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information. Such factors include, among others, changes in market conditions, future prices of gold and copper, the actual results of current production, development and/or exploration activities, changes in project parameters as plans continue to be refined, variations in grade or recovery rates, plant and/or equipment failure and the possibility of cost overruns.

Forward-looking information and statements are based on the reasonable assumptions, estimates, analysis and opinions of management made in light of its experience and its perception of trends, current conditions and expected developments, as well as other factors that management believes to be relevant and reasonable in the circumstances at the date such statements are made, but which may prove to be incorrect. Alara believes that the assumptions and expectations reflected in such forward-looking statements and information are reasonable. Readers are cautioned that the foregoing list is not exhaustive of all factors and assumptions which may have been used. Alara does not undertake to update any forward-looking information or statements, except in accordance with applicable securities laws.

About Alara Resources

Alara Resources Limited (ASX: AUQ) is an Australian minerals exploration company with a portfolio of projects in the Middle East. Alara has completed Bankable Feasibility Studies for the Al Hadeetha Copper Project in Oman and the Khnaiguiyah Zinc-Copper Project in Saudi Arabia and an Advanced Scoping Study on the Daris Copper-Gold Project in Oman. In June 2018, Al Hadeetha Resources became the first international joint venture company to be awarded a copper mining licence in the Sultanate of Oman. The Company is now establishing itself a mine developer and producer of base and precious metals.

Contact:

Tel: +61 8 9240 4211

Email: info@alararesources.com

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