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ASX CODE: NTU Northern Minerals Limited ABN 61 119 966 353

Directors: Kevin Schultz Non-exec Chairman George Bauk Managing Director / CEO Adrian Griffin Non-exec Director Colin McCavana Non-exec Director

Management: Robin Wilson Exploration Manager Robert Sills Commercial Manager Robin Jones Project Manager Mark Tory CFO / Company Secretary

Registered and Principal Office: Level 1 675 Murray Street West Perth WA 6005 PO Box 669 West Perth WA 6872 Tel: +61 8 9481 2344 Fax: +61 8 9481 5929 Email: [email protected] Website: www.northernminerals.com.au

QUARTERLY ACTIVITIES REPORT For the quarter ended 31 March 2013

HIGHLIGHTS

Browns Range Heavy Rare Earths Project

Major 2013 drilling program underway, with 20,000m targeting an expansion of the initial JORC resource.

Metallurgical studies confirm ability to produce a high value, 92% mixed rare earth oxide – which enhances the marketing options and will command a premium in the market.

Location study establishes that the Browns Range site is the optimum

location for the hydrometallurgical plant.

Environmental studies continuing, with follow up surveys of subterranean and short range endemic fauna completed this quarter.

Submission of the Referral document to the Environmental Protection Authority is due to be submitted in the second quarter, with series of community meetings in May.

New airborne survey results identify geophysical anomalies (possible heavy rare earth targets) on recently granted tenements on the Northern Territory side of the Browns Range Dome.

Corporate

$58 million funding package announced (subject to shareholder approval), providing certainty and security for the future of the Browns Range project, which comprises: o Sale of a 16% stake in Browns Range to Australia Conglin International Investment Group Pty Ltd

(ACIIG) to raise $26 million, with an offtake agreement for an additional 20% of Browns Range production on commercial terms, subject to shareholder approval

o Sale of the Northern Minerals Gardiner-Tanami gold assets to ACIIG to raise an initial $2 million, subject to shareholder approval

o A placement of 18,800,000 shares to sophisticated investors at 20c a share to raise $3.76 million which has been completed

o A rights issue, fully underwritten by ACIIG, to raise approximately $26.5m and currently scheduled to close on 17 May 2013

Short term funding secured, with additional $4m interest free loan to commence drilling program, while long term funding package completed.

Substantial interest in Browns Range at Asian Metal International Rare Earths Conference, Chengdu, China with high-profile consumers from the wind turbine and lighting industries informing attendees that additional supplies of dysprosium and yttrium are critical for their sustainable development.

http://www.northernminerals.com.au/

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EXECUTIVE SUMMARY Northern Minerals delivered a major funding initiative during the quarter, announcing a finance package to raise $58 million, subject to shareholder approval. The package provides full funding for the next two years of development at Browns Range, which will take the project through to the completion of feasibility studies, and to decision to invest. The funding solution is backed by the Company’s major shareholder Conglin Yue, and his investment Company, Australian Conglin International Investment Group (ACIIG). It delivers a comprehensive funding solution, providing security and certainty for the Browns Range project. The funding package involves a number of elements, some of which the Company will be seeking shareholder approval for in the coming quarter. The funding announcement follows the outstanding operational success achieved during the past 12 months. This includes delivery of an initial JORC resource, an agreement for offtake with a major international supplier and highly encouraging results from metallurgical test work. Each of these milestones has progressively de-risked the project and advanced it along its pathway to production by 2016. During the reporting period the Company also further advanced its hydrometallurgical studies, with results confirming the ability to produce a high value mixed rare earth oxide (REO). The ability to produce the mixed REO significantly enhances the marketing options for Browns Range and markedly increases the value of the end product. The revised Pathway to Production with production targeted for 2016 has been delayed from the original target of 2015, due largely to the significant change in scope, whereby the Company will now produce a mixed Heavy Rare Earth (HRE) oxide which is more valuable and marketable than the original scope of producing a mineral concentrate. This decision was made by the Board of Northern Minerals for many reasons including the successful generation of a high purity product with relatively low capital and operating costs. Whilst this decision delays potential revenue for approximately 12 months, it enhances the project economics by producing a more marketable and valuable product.

Browns Range – Pathway to Production by 2016

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BROWNS RANGE PROJECT Resource definition drilling In December, Northern Minerals announced its initial JORC compliant resource estimate for the Wolverine deposit at Browns Range. The Total Mineral Resource at Wolverine is estimated at 1.44Mt @ 0.73% TREO comprising 10,500t TREO using a cut-off grade of 0.15% TREO. The independent estimate was produced by AMC Consultants Pty Ltd. Details of the classification of the total resource into Indicated and Inferred resource categories are as follows:

Category Mt TREO %

Dy2O3 ppm

Y2O3 ppm

HREO %

TREO Tonnes

Indicated 0.90 0.82 728 4,739 89 7,400

Inferred 0.54 0.57 495 3,185 81 3,100

Total1 1.44 0.73 640 4,153 84 10,500

There is significant further potential to increase the Wolverine resource, with the initial resource restricted in many aspects by drilling and not the extent of mineralisation. Northern Minerals has commenced a program of more than 20,000 meters of RC and diamond drilling for 2013, which aims to build on the existing resource at Wolverine, and deliver a maiden resource at the Gambit West, Gambit and Area 5 prospects. RC drilling commenced in April at Gambit West, a new and exciting prospect discovered late last year, and located approximately 200m west of the central Gambit prospect. With high grade intersections of HRE and geological similarities to Wolverine, it will be a priority target for resource drilling in 2013, and a maiden resource estimate is targeted later in the year. Drilling will also take place at Gambit Central and Area 5, where the Company is also aiming to delineate TREO resources. The drilling program at Wolverine will focus on extensions at depth, as depicted in the section to the right. The current resource is predominantly based on modelling to 150m, with subsequent drill results confirming high grade HREE to depths of 250m. The 2013 program will include drilling to 400m to test extensions below 150m, targeting a wider, high grade central zone.

Wolverine resource Long section – 7914710N – resource expansion targets

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Exploration Pipeline In late 2012, Northern Minerals commenced first pass exploration across its recently granted tenements in the Northern Territory side of the Browns Range Dome (BRD). The exploration program featured airborne magnetic, radiometric and hyperspectral surveys across a number of new tenements, including a number under the Toro Energy Joint Venture, and also around the previously identified Boulder Ridge HRE prospect. The airborne surveys have identified a number of radiometric anomalies across the region. These anomalies are currently being prioritised for future examination. A Heritage Survey is expected to be undertaken this month, and ground work is planned for later in the year. The results confirm the significant potential on the eastern side of the BRD, which comprises over 2,000km² but has been largely untested to date. Historical rock chip samples collected by PNC Exploration in the 1980s include several anomalous yttrium values greater than 400ppm in the vicinity of the BRD (see Figure below).

Browns Range Dome region – Northern Minerals & Toro JV tenements and 2012 airborne radiometric

survey data (uranium channel)

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The results further add to the Company’s pipeline of prospects (see figure below), which it is developing at Browns Range. In addition to the JORC resource definition drilling, Northern Minerals will continue to undertake work on defining and advancing some of the earlier stage prospects in order to ultimately build a significant mineral inventory in the region.

Pipeline of Prospects

Scoping Study Northern Minerals is well advanced with its Scoping Study for the Browns Range project. The Study is based on the initial JORC compliant resource estimate for Wolverine, which will provide an initial basis for detailed mine planning studies. The Company engaged AMC Consultants to complete the resource estimate for Wolverine and to complete a scoping level pit optimisation, mine schedule and mining cost estimate for Wolverine. The Study is also incorporating the recent hydrometallurgical studies, which have confirmed the ability to produce a high purity mixed REO. The studies indicated the Browns Range product could produce a mixed REO with 92% Total Rare Earth Oxide (TREO) and a dominance of Heavy Rare Earths. The Company commissioned Tenova to undertake a scoping study for a hydrometallurgical process plant to treat 10,000tpa of Browns Range mineral concentrate containing 30% TREO. The study was based on the flowsheet depicted below and based on locating this facility at the Browns Range site. The estimated capital cost for this facility is A$40 million (±35%) and the operating cost is estimated at A$4.40/kg of mineral concentrate feed. In addition, the Company has recently completed a substantial economic and environmental study to investigate potential location options for the hydrometallurgical plant in Australia. The assessment considered a range of potential locations, short-listing nine potential locations ranging from Darwin in the NT to Pinjarra in WA, and determined there are compelling social, environmental and economic advantages in locating the hydrometallurgical plant on site at Browns Range.

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Completion of this study represents another milestone in the development planning being conducted for Browns Range and provides a clear path forward for further studies including environmental assessment and approvals. The data from this work together with that from the beneficiation plant and infrastructure scoping studies will contribute to the project Scoping Study which is expected to be delivered in the June quarter.

Metallurgical Test work In March, Northern Minerals metallurgical studies confirmed the ability to produce a high value, 92% mixed REO. The results validated the preliminary studies completed in 2012, and indicated the Browns Range mineral concentrate can be processed into a high purity mixed REO using conventional unit processing techniques. Mixed REO is conducive to more efficient processing by end users and can command a significantly higher value in the market. The ability to produce the oxide significantly enhances the value of the Browns Range end product and expands the Company’s marketing options. The decision to produce the mixed REO will require a further 12 months to advance the hydrometallurgical test work and pilot plant, with an estimated first production of mixed REO in 2016. The value generated from the enhanced economics and the improved marketability of the product is significant, and warrants the additional time to develop the mixed REO path. The hydrometallurgical flowsheet includes conventional unit processes of sulphation bake, water leaching, impurity removal, oxalate precipitation and calcination to produce the high purity mixed REO. Following the results from earlier testing, the company engaged Tenova Mining and Minerals to develop and manage a detailed hydrometallurgical test work program. The first stage of this program has now been completed with the confirmation test work undertaken at both ALS and Nagrom laboratories in Perth.

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The results from both laboratories confirmed that the Browns Range mineral concentrate can successfully be processed to produce a high value and high purity mixed REO. The key results are:

Extraction efficiency in the acid bake and water leach step exceeded 85%

The precipitation efficiency of the oxalate precipitation step exceeded 99%

The product purity of the final calcined exceeded the target of 92% TREO in the mixed REO

Heavy Rare Earths dominate the mixed REO The test work also confirmed the rejection of most of the silica (>90%) contained in the mineral concentrate during the acid bake/water leach step, which is an attractive aspect of this process given the significant amount of silica in the mineral concentrate. The chart below indicates the composition of the final calcined mixed REO which shows the dominance of HRE in the product.

Hydrometallurgical Test Work Plan With the first phase of confirmation hydrometallurgical test work program completed, the Company has commenced the optimisation phase of the test work program, which will test key variables for each stage of the process to determine the optimal operating criteria. This work will commence with optimising the sulphation bake and water leach step. Following this, sufficient leach liquor will be produced to test and optimise the purification step which will also establish criteria for the removal of low levels of uranium and thorium to obtain customer specifications. This will be followed by a series of continuous flowsheet runs increasing in size and throughput, and culminating in a pilot plant operation.

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Beneficiation Flowsheet Test Work Three PQ diamond holes were drilled down dip through the centre of the mineralisation at Wolverine in late 2012, to depths of 183, 195 and 163 metres. The three holes, yielding more than 7 tonnes of core, were delivered to Nagrom for sample preparation for the next stage of metallurgical test work. DRA Pacific was engaged to develop and manage the detailed test work program for the beneficiation flowsheet. The beneficiation program includes whole of ore flotation optimisation test work by Kwan Wong in Adelaide, and magnetic separation optimisation test work at Nagrom in Perth. This work commenced at these laboratories in late December and has continued to progress during the quarter. It is envisaged that pilot plant scale test will be run to produce a bulk sample of mineral concentrate for the hydrometallurgical test work.

Stakeholder Engagement Northern Minerals continues to engage with various stakeholders in the Browns Range project, including state and local government, community and local businesses. During the period, the Company held ongoing discussions with government regulatory bodies and local industry stakeholders in order to progress and further define the Browns Range project, and to gain necessary approvals to progress it toward production. In May 2013, two community forums will be held to share information about the Browns Range project and seek community feedback. The meetings will be held in Ringer Soak and Halls Creek, and will provide a formal opportunity for all interested community members to hear the about the project and to raise any questions.

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Northern Minerals has also engaged the Kimberley Language and Resource Centre to implement a cultural awareness training program in the first half of 2013. The training program will be specifically designed for employees working on the Browns Range project and will be delivered in conjunction with the traditional owners of the land. In April, the first on-country cross cultural awareness session was held at Browns Range with representatives from the Jaru group and all senior executives and many employees of Northern Minerals.

Environmental Studies and Approvals The Company’s environmental consultants Outback Ecology have continued to progress the environmental baseline studies for the Browns Range project with a number of environmental surveys completed and others planned for 2013. In 2012, the Company’s environmental surveys and studies included:

o Baseline flora and fauna; o Preliminary ground water and surface water; o Baseline soil; o Waste rock geochemical characterisation; o Baseline air quality; and o Meteorological characterisation.

During the quarter follow up subterranean and short range endemic fauna surveys were undertaken with a follow up flora/vegetation survey planned for May. A number of additional studies are planned including baseline radiation surveys, water quality and surface hydrology studies, hydrogeological studies and geotechnical assessments.

The Company is targeting the submission of the Referral document for Browns Range to the WA Environmental Protection Authority in the June quarter 2013 and is aiming to submit its final environmental approval document towards the end of the year.

Strategic Alliance Partner Engagement Northern Minerals decision to proceed downstream with hydrometallurgy and produce a more pure mixed REO product has been very well received by potential strategic offtake partners and has improved traction and interest with a wider number of rare earth consumers due to the increased marketability. Preliminary feedback indicates that this widening of opportunities is largely attributable to a reduction in the technical hurdles associated with further processing and ease of transport, mitigating any regulatory issues within the end-users’ jurisdictions. In the previous quarter, the Company announced it had signed a non-binding MOU for future offtake of HRE concentrate from Browns Range. The MOU is with a major global mining and chemical company, which has proven expertise in the development, processing and supply chain integration of key commodities – including Rare Earth Elements (REE). Importantly, the MOU allows for supply of product as either a 30% TREO mineral concentrate or a 92% mixed REO. The Company also announced an additional offtake agreement as part of the funding package announced in February. As part of the transaction, Northern Minerals is proposing the sale of a 16% stake in its Browns Range project to ACIIG. This agreement includes an entitlement to 16% of product offtake at cost, plus an offtake agreement for an additional 20% of production on commercial terms. The sale and associated offtake agreement require shareholder approval, and an independent value assessment, which is currently being progressed.

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The previously announced MOU requires the parties to negotiate an offtake arrangement for a term of five years commencing on commercial production, involving up to 1,500 tonnes TREO of product per annum at a price that is pre-determined in the MOU. Since the establishment of the MOU both parties have been actively exchanging information in the interests of the accelerated development of the Browns Range project. Further dialogue is planned for the next quarter including a site visit by the party to the Browns Range site and hydrometallurgical test work site in Perth. In the light of the improved marketability of the mixed REO product Northern Minerals remains committed to exploring all options for maximum return from the proposed product due to the non-exclusive nature of the MOU, but will continue to act in the spirit of the MOU by leveraging the expertise and access to markets of the MOU partner.

John Galt Project

Northern Minerals has also continued work at the John Galt project, which displays similar geology and high grade HRE mineralisation to Browns Range. The Company has commenced planning for a diamond drilling program at John Galt in 2013, with a Program of Work application submitted to the WA DMP during the quarter for a 1,500m (approximately,) diamond drill program. Heritage surveys have already been successfully completed for the proposed drilling program. The Company has also successfully applied for and received a $150,000 grant from the WA State Government’s Exploration Incentive Scheme (EIS) for the John Galt program. In the previous quarter, the Company undertook further ground work at John Galt, with the collection of rock chip and soils samples to help identify new targets for future drilling. The John Galt program will target mineralisation identified by soil and rock chip sampling and historical drilling. Based on preliminary test work, the mineralised material at the Company’s Browns Range and John Galt projects exhibit similar characteristics and are therefore likely to provide similar process outcomes within the current beneficiation flowsheet.

John Galt Main Zone Schematic Section

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THE REE MARKET The March quarter of 2013 commenced with the normal level of modest activity attributable to the Christmas and New Year’s holidays followed by Chinese New Year holidays. Nevertheless during the quarter Northern Minerals has been actively engaging market participants in key markets to constantly raise the company profile and source information directly regarding events and trends affecting the wider market to establish a more reliable view of the market. Generally sentiment is improving with the ongoing success of non-China rare earths sources such as Molycorp and Lynas Corporation progressively transitioning to full production operations. A change of leadership at these companies signals shifting from a development stage into a production stage. However, despite their success there is no substantial improvement in the heavy rare earths global supply situation and Northern Minerals remains as one of the few heavy rare earth dominant projects with a funding strategy. At the Asian Metal International Rare Earths Conference held in Chengdu, Southern China in March high-profile dysprosium and yttrium consumers from the wind turbine and lighting industries informed attendees that additional supplies of dysprosium and yttrium are critical for the sustainable development of the industries. Subsequently there was substantial interest in the Browns Range project. Japan’s demand for the strategically significant heavy rare earths is evident in the release of several announcements during the quarter documenting Japan’s exploration effort in identifying heavy rare earth potential on the ocean beds of the Pacific. While this activity has received much criticism in terms of extreme costs and impossible logistics it signals an amenability for investment in Northern Minerals at an appropriate risk profile. In what is viewed as a positive view of the market, the “Big Four” producers of China recommenced rare earths production after suspension in late 2012. The conglomerates include Inner Mongolia Baotou Steel Rare-Earth (Group) Hi-Tech Co. (REHT), China Minmetals, Chinalco and Gangzhou Rare Earth Minerals. Despite the resistance from provincial governments these conglomerates were formed under the direction of the China central government in early 2012 to obtain better control of the China rare earths industry and reign in illegal exports and environment damage caused by unregulated “cottage producers.” So far these objectives appear to be partially successful with confirmed reports of unregulated producers being compulsorily acquired or shutdown. Product availability through informal channels from China indicates that smuggling continued during the quarter but with no reliable figures it is difficult to quantify. The China Ministry of Industry and Information Technology has introduced tough penalties including imprisonment. Until the lure of exceptional profits is discouraged by the penalties, the illegal export of rare earth products from China is likely to continue, distorting the real level of demand at least into the short-term. In addition to smuggling, the current demand situation indicates that downstream producers are drawing on inventory built up during the peak prices of 2011 and early 2012. On a macro level this is due to industry output remaining strong in key manufacturing centres in the Japan, Europe and North America. For example with respect to automobile sales Toyota Motor has reported it sold 2.43 million vehicles during the January-March period, outpacing U.S. automaker General Motors Co. at 2.36 million vehicles and Volkswagen AG of Germany at 2.27 million vehicles.

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The key question remains when will inventory drawdown cease and buyers return to the market for significant sales? There are numerous opinions but the general consensus for Japan is that with the start of the new Japanese financial year in April, Japanese consumers will have successfully adjusted their inventory valuations that will allow them to return to the market in the June quarter 2013.

CORPORATE

Capital Raising In February, Northern Minerals announced a major funding package to raise up to $58 million for the development of the Browns Range project. The initiative provides sufficient capital for the next two years of operations and to take the project through to the completion of feasibility studies. The funding package includes the following elements:

Sale of a 16% stake in the Browns Range project to ACIIG to raise $26 million, with an offtake agreement for an additional 20% of Browns Range production on commercial terms, subject to shareholder approval:

Sale of the Northern Minerals Gardiner-Tanami gold assets to ACIIG to raise an initial $2 million, subject to shareholder approval:

A placement of 18,800,000 shares to sophisticated investors at 20c to raise $3.76 million which has been completed: and

A rights issue, fully underwritten by ACIIG, to raise approximately $26.5m which is currently open to shareholders.

The funding package has been backed by Northern Minerals’ largest shareholder Conglin Yue, and his investment and trading Company, ACIIG. Mr Yue has been a long term shareholder in Northern Minerals, and supporter of the Company’s plan to bring the Browns Range HRE project into production as soon as possible. Completion of the sale agreements and rights issue will mean Northern Minerals will be fully funded through to completion of a Feasibility Study for Browns Range, providing certainty and security for the project. The application of the funds will include exploration activities at Browns Range to increase the resources to the Company’s target of between 22,000 and 29,000 tonnes TREO. The potential quantity of TREO targeted at the Wolverine, Gambit Central, Gambit West and Area 5 Prospects is based on existing drill results from 2011 and 2012, but is still conceptual in nature. There has been insufficient exploration at Gambit Central, Gambit West and Area 5 to define a Mineral Resource and it is uncertain if further exploration will result in the determination of a Mineral Resource at these prospects.

Funding will also cover fully project pre development including resource, geotechnical, mine planning and related studies, environmental studies and approvals, hydrogeological and hydrological studies, metallurgical test work and flowsheet development, pre-feasibility and feasibility studies including engineering and infrastructure studies, aboriginal heritage and access agreements, grant of Mining Licence, corporate and marketing costs.

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Short term debt funding of $4m secured In late March, Northern Minerals announced it was extending the rights issues in order to maximise the opportunity to all shareholders to participate. Following the extension of the right issues, in early April Northern Minerals announced it had secured $4 million of interim funding through an interest free, non-recourse loan from ACIIG. The loan provides a short-term funding bridge to allow commencement of Northern Minerals’ 2013 drilling program ahead of the completion of the $58m funding package. The interest free loan reaffirmed the commitment of the Company’s funding partner to the development of the Browns Range project, and the share focus on getting Browns Range project into production as soon as possible. The loan funds were received ahead of schedule in early April. Subsequent to this, in April, the Company announced it would further extend the rights issue until 17 May 2013. Relevant dates for the rights issues include:

Closing date - 17 May 2013.

New Shares and Options are quoted for ASX trading on a deferred settlement basis now 20 May 2013.

Issue of New Shares and Options and dispatch to shareholders of Holding Statements for New Shares and Options now 27 May 2013.

Competent Persons Declaration The information in this report accurately reflects information prepared by competent persons (as defined by the Australasian Code for Reporting of Mineral Resources and Ore Reserves). It is compiled by Mr R Wilson, an employee of the Company who is a Member of The Australasian Institute of Mining and Metallurgy with the requisite experience in the field of activity in which he is reporting. Mr Wilson has sufficient experience which is relevant to the style of mineralisation and the type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent person as defined in the 2004 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Mr Wilson consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

The information in this report relating to Mineral Resources was compiled by Mr John Tyrrell who is a Member of the Australasian Institute of Mining and Metallurgy. Mr Tyrrell is a full time employee of AMC and has sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code). Mr Tyrrell consents to the inclusion of this information in the form and context in which it appears.

For more information:

Name Company Contact

George Bauk Ryan McKinlay

Managing Director/CEO Northern Minerals Cannings Purple Communications

+61 8 9481 2344 +61 8 6314 6300 +61 408 347 282

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About Northern Minerals Northern Minerals Limited (ASX: NTU) is focused on development of rare earth elements (REE), with a large and prospective landholding in Western Australia and the Northern Territory. The Company’s flagship project is Browns Range, where it has a number of prospects with high value, heavy rare earth elements (HREE), in xenotime mineralisation. In particular, the mineralisation includes high levels of dysprosium and yttrium, which are in short supply globally. Following outstanding results from its drilling and metallurgical programs, the Company has delivered its maiden JORC compliant resource at the end of 2012, advancing Browns Range toward production, using a relatively simple and low cost processing flowsheet to produce a high grade concentrate. Northern Minerals also has a HREE exploration program underway at the geologically similar John Galt project. For more information: www.northernminerals.com.au

http://www.northernminerals.com.au/

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