ASX ANNOUNCEMENT

02 December 2015

Metro to Make Takeover Offer to Gulf Alumina

Transaction to Create Leading Independent Cape York Bauxite Company

Highlights

Compelling financial, operational and strategic rationale for combination

Opportunity to create significant value by developing adjacent and complementary projects on a combined rather than stand-alone basis

Ability to leverage Metro's proven board and management team across an enlarged project to maximise shareholder value

Enhanced scale and market relevance, increased financial strength and simplified permitting process

Support from Gulf's largest and key founding shareholder, with Metro having secured 20% interest in Gulf

Metro Mining Limited (ASX: MMI) (Metro) is pleased to announce its intention to make a takeover offer (the Offer) to acquire all of the issued shares in unlisted company Gulf Alumina Limited (Gulf), after having gained the support from Gulf's largest and key founding shareholder and having secured a 20% interest in Gulf.

Under the Offer, Gulf shareholders will receive 3.3 new Metro shares for every 1 Gulf share held and will own approximately 44% of the combined group1.

1 Based on the number of Metro and Gulf shares currently on issue and Metro acquiring 100% of the Gulf shares

ASX Announcement | 02 December 2015 | Page 1

Transaction Rationale

The transaction will create a leading independent Australian bauxite company, well positioned to capitalise on the positive outlook for the Australian seaborne bauxite sector and provide an attractive investment proposition for existing and new shareholders.

Key benefits of the transaction include:

Creation of an attractively scaled and long life development project, well located in western Cape York, Queensland

Significant reserve base in excess of 96.6Mt at 39.4% THA and 6.3% RxSi2 (Refer Table below) Ability to realise significant operational and development synergies through economies of scale,

improved efficiency and the removal of duplicated costs

Increased production potential post permitting, with permitting process expected to be simplified under a combined development scenario

Enhanced scale of the combined projects and consolidated ownership provides stronger position to secure product sales on improved terms

Pro-forma market capitalisation of approximately $42 million3 (prior to any re-rate), increasing the scale and market relevance of the combined group in the ASX resources sector, which should result in improved liquidity and investment appeal

Operational advantages will enable optimisation of development funding in order to minimise shareholder dilution and maximise shareholder value

Ability to leverage Metro's proven Board and management team across an enlarged project to maximise shareholder value

Metro Chairman, Stephen Everett says the logic of the combination is clear and compelling.

'Metro's and Gulf's adjacent bauxite development projects at Skardon River are complementary given their similar scale, mining and export methods. By combining the two projects we will create value well in excess of what is achievable on a stand-alone basis', Mr Everett said.

'Opportunities include the removal of duplicated capital and operating costs, operational efficiencies, a simplified permitting process and an enhanced position for the combined group to secure product sales and financing on improved terms'.

'It is pleasing that the merits of our Offer have been recognised by Gulf's largest and key founding shareholder, and we look forward to formally making our Offer to Gulf shareholders in due course.'

'The transaction will create an attractive company and investment proposition for both existing and new shareholders.' Mr Everett said.

2 Based on Metro reserve of 48.2Mt at 38.4% THA and 6.4% RxSi released 2 June 2015 and Gulf reserve of 48.3Mt at 40.3% THA and 6.3% RxSi as reported in Gulf's letter to Gulf shareholders dated 27 July 2015. THA is trihydrate available alumina at 1500C. RxSi is reactive silica at 1500C 3 Based on the 20 day volume weighted average price (VWAP) of Metro shares of 6.5 cents, the number of Metro and Gulf shares currently on issue, and Metro acquiring 100% of the Gulf shares

Transaction Details

The Offer will be implemented by way of an off-market takeover offer under the Corporations Act 2001 (Cth). The Offer is for Gulf shares currently on issue and for Gulf shares that come to be issued as a result of the exercise of options on issue at the date of this announcement.

The Offer is subject to a number of conditions, including:

50.1% minimum acceptance; no Regulatory Action;

no Material Adverse Change; no Prescribed Occurrence;

no material acquisitions, disposals or commitments; and other customary conditions

The full conditions of the Offer are attached to this announcement.

Metro Interest in Gulf

Metro has entered into pre‐bid acceptance agreements with Joyday Pty Limited and Equity & Permanent Investment Capital Limited in relation to 17.1% of the shares in Gulf.

The pre-bid acceptance agreements require the shareholder to accept the Offer, within three business days of it being open for acceptance, subject to there being no superior proposal within five business days of the date of the agreement, in which case Metro would have an opportunity to increase the Offer consideration, in the absence of which, the pre-bid acceptance agreements would lapse. The pre-bid acceptance agreements contain customary warranties and restraints on the shareholder dealing in the shares the subject of the pre-bid acceptance agreement until the agreement terminates.

Metro has also entered into acquisition agreement with Equity & Permanent Investment Capital Limited in relation to 2.5 million shares in Gulf (representing 2.9% of Gulf's shares on issue) on the same terms as the Offer.

Timetable

Metro expects its bidder's statement, which will contain further information about the Offer, will be despatched to Gulf shareholders later this month. The Offer will open for acceptance around that time and will be open for at least one month (unless withdrawn during that period under section 652B of the Corporations Act).

Advisers

Metro Mining's advisers are Argonaut as Financial Adviser and McCullough Robertson as Legal Adviser

For Further Information Please Contact:

Simon Finnis | Chief Executive Officer | Ph: +61 7 3009 8000

Defeating Conditions

To the offers under the proposed off-market takeover bid by Metro Mining Limited for all the ordinary shares in Gulf Alumina Limited

The Offer and any contracts resulting from acceptance of the Offer are subject to fulfilment of the following conditions:

1. Minimum Acceptance

   The Bidder has a relevant interest in more than 50% of the Target Shares at or before the end of the Offer Period.

2. No Regulatory Action

   Between the Announcement Date and the end of the Offer Period:

3. no preliminary or final decision, order or direction is made or issued by any Regulatory Authority;

4. no action, proceeding or investigation is announced, commenced or threatened by any Regulatory Authority; and

5. no application is made to any Regulatory Authority (other than by the Bidder or any associate of the Bidder),

   which is likely to or purports or threatens to restrain, prohibit, impede or otherwise adversely affect the making of the Offer, the acquisition of Target Shares by the Bidder, the rights of the Bidder in respect of the Target or the Target Shares or the progress of the 'Skardon River' bauxite project of the Target or its subsidiaries (other than any action or decision by or application to ASIC or the Takeovers Panel in exercise of the powers or discretions conferred by the Corporations Act).

6. No Target Prescribed Occurrences

   Between the Announcement Date and the end of the Offer Period, there is no occurrence of a Target Prescribed Occurrence.

7. No Material Adverse Change

   Between the Announcement Date and the end of the Offer Period, there is no occurrence of any Material Adverse Change.

8. Third Party Consents

   If the Target, or a subsidiary of the Target, is a party to, is bound by, or is subject to, an agreement, arrangement or understanding which as a result of or in connection to the acquisition of Target Shares under the Offer entitles another person (Third Party) to exercise any rights (including termination rights or pre-emptive rights).

9. No Material Acquisitions, Disposals or Commitments

   Between the Announcement Date and the end of the Offer Period, none of the following events occurs, are announced or become known to the Bidder:

10. any member of the Target Group acquires, offers to acquire or agrees to acquire one or more companies, businesses or assets (or any interest therein) for an amount in aggregate greater than $200,000, other than in the ordinary course of business;

11. any member of the Target Group disposes of, offers to dispose of or agrees to dispose of one or more companies, businesses or assets (or any interest therein) for an amount, or in respect of