Dear Sir Flinders Mines Limited (“FMS”)ASX refers to your recent...

Dear Sir Flinders Mines Limited (“FMS”)ASX refers to your recent correspondence to ASX raising concerns about the proposed delisting of FMS. A number of FMS shareholders have raised concerns about that and related matters (including the trading halt that occurred on the day FMS announced its proposed delisting). This letter addresses all of those concerns, and not just those raised in your correspondence.The framework applying to applications to de-listUnder the ASX Listing Rules, a listed company has the right to apply to ASX at any time to be removed from the official list (Listing Rule 17.11).ASX’s policy with respect to applications for removal from the official list is set out in Listing Rules Guidance Note 33 Removal of Entities from the ASX Official List. A copy of that Guidance Note is available online at:https://www.asx.com.au/documents/rules/gn33_removal_of_entities.pdfThat policy was the subject of public consultation before it was adopted. It reflects a number of legal considerations, including potential anti-trust issues that could arise if ASX were to force a company to remain on the official list when its directors and shareholders had good commercial reasons for it to be removed.Considerations taken into account by ASXFMS’s application to be removed from ASX’s official list was carefully assessed by ASX in accordance with Guidance Note 33. This assessment included an analysis of whether the application fell within the two examples given in Guidance Note 33 of when ASX might decline an application to be removed from the official list. Those two examples are where the company is seeking: (1) to avoid the application of chapter 10 of the Listing Rules (related party transactions) to a particular transaction; or (2) to coerce shareholders into accepting a takeover offer from the controlling shareholder. As to these points, ASX would note: FMS has a number of times, including most recently in its ASX announcement of 10 December 2018, confirmed to the market that it does not have any existing commercial arrangements in place with the BBI Group Pty Ltd in relation to potential transportation infrastructure solutions for FMS’s Pilbara Iron Ore Project. In the absence of any evidence to the contrary, ASX cannot assume that the FMS proposal to de-list from ASX is motivated, as some shareholders have speculated, by a desire to enter into such arrangements without seeking shareholder approval under listing rule 10.1. ASX further notes that such arrangements would likely constitute a related party transaction under the Corporations Act and therefore any such arrangements FMS may enter into in the future as an unlisted public company would be regulated by the related party provisions in that Act. FMS is not currently the subject of a takeover offer by its controlling shareholder, nor has it been within the past 12 months. If FMS’s controlling shareholder decides to make such an offer or enter into any other control transaction in the future while FMS is an unlisted public company with more than 50 shareholders, it will still be regulated by the takeover provisions in the Corporations Act. ASX Limited ASX Customer Service Centre 131 279 | asx.com.au Accordingly, there is no proper basis for ASX to apply either of these two examples to FMS and deny its application to be removed from the official list.Consistent with Guidance Note 33, ASX imposed a condition that the shareholders of FMS approve its removal from the official list by ordinary resolution and that the removal not take place until at least one month after that approval is obtained, to give shareholders an opportunity to exit their investment on ASX after the outcome of the shareholder vote is known.ASX also notes FMS’s current proposal to conduct an on-market buyback of up to 10% of its issued shares, as well as a buy-back of unmarketable parcels, each of which provides further liquidity options for FMS shareholders – both of which are relevant considerations in terms of the application of Guidance Note 33.Corporations Act issuesAs an ASX listed company, FMS has agreed to abide by ASX’s listing rules. The listing rules govern specific matters that are considered relevant to a company’s access to the ASX market and do not address all aspects of a listed company’s conduct. In particular, breaches of director’s duties, market manipulation, oppressive conduct towards shareholders, misleading and deceptive conduct or unacceptable conduct in control transactions are all regulated by the Corporations Act, which is administered by the Australian Securities and Investments Commission (“ASIC”). For a more detailed explanation of those matters which are regulated by ASIC and those which are regulated by ASX, see:https://www.asx.com.au/documents/about/corporations-act-vs-listing-rules-matters.pdf.If you believe that by pursuing the de-listing proposal the directors of FMS are not fulfilling their statutory duties as directors or are engaging in conduct of the type referenced in the preceding paragraph, then we would encourage you to raise the matter with ASIC, the regulator responsible for enforcing the Corporations Act. You can access the ASIC complaint service at:http://www.asic.gov.au/about-asic/contact-us/how-to-complain/report-misconduct-to-asic/ASX would note that, as an unlisted public company, FMS and its directors will still be required to comply with the applicable provisions in the Corporations Act and if it or they breach that Act, shareholders will be able to pursue their remedies at law.The trading haltFMS lodged its announcement about the proposed de-listing prior to market open on 13 December. At ASX’s instigation, FMS went into a pause in trading at 12.49 PM AEDT and then subsequently a trading halt for the balance of the trading day. The reason ASX took this action was because of some confusion regarding the timetable included with FMS’s original announcement for a proposed rights issue to fund the buy-back. It had nothing to do with the de-listing proposal itself. The trading halt was lifted when FMS put out a clarificatory announcement about the timetable for the rights issue after market close.ASX acknowledges that in the approximately 3 hours that FMS traded that day, its share price dropped from $0.07 to $0.035. However, that share price drop alone does not warrant a reversal of the trades undertaken during this period, as some shareholders who sold during that period have requested.In conclusion, I appreciate that the proposed FMS delisting is not to your satisfaction, but ASX has to act in accordance with its listing rules and its published policies. I hope this has helped to explain the position.Yours sincerelyBen SecrettPrincipal Adviser, Listings Compliance (Perth) 2/2