ASX ANNOUNCEMENT‌

Alliance Resources Limited (Alliance or the Company) is pleased to announce that it has established a share sale facility (Facility) for holders of unmarketable parcels of shares in the Company. The Facility is subject to the terms and conditions set out in the attached documents.

An unmarketable parcel of shares is a parcel of shares that has a market value of less than $500. As at the market close on 25 May 2016 (Record Date) an unmarketable parcel of shares is any shareholding of 13,888 ordinary shares or less (Unmarketable Parcel) based on the closing price of 3.6 cents.

Currently, of the Company's 5,337 shareholders, 3,865 hold an Unmarketable Parcel. The Company is providing the Facility to allow investors with small holdings to dispose of their Unmarketable Parcel who might otherwise find it difficult to sell their shares due to the small size of their holding. The Company is also looking to reduce the administrative costs associated with maintaining a large number of small shareholders on its register.

A summary of the key dates in relation to the Facility are as follows:

Attached is a copy of the letter to shareholders, information sheet and share retention form which will be dispatched to all Alliance shareholders holding an Unmarketable Parcel of shares on the Record Date.

For further information, please contact: Bob Tolliday

Company Secretary

Email: [email protected]

Phone:+61 3 9697 9090

Fax:+61 3 9697 9091

1 June 2016

Dear Shareholder,

Suite 3, 51-55 City Road

Southbank VIC 3006

P + 61 3 9697 9090

F + 61 3 9697 9091

Notice of Intention to Sell Unmarketable Parcel of Shares in Alliance Resources Limited

We are writing to advise you that Alliance Resources Limited (Alliance or Company) has established a share sale facility (Facility) for holders of shares in the Company (Shares) valued at less than $500 (Unmarketable Parcel) as at 7:00pm (AEST) on 25 May 2016 (Record Date).

The Facility has been established in accordance with the ASX Listing Rules and the Company's Constitution to assist holders of Unmarketable Parcels to sell their Shares. Under the Facility, the Company has appointed Melbourne stockbroker Lodge Partners Pty Ltd to sell the Unmarketable Parcels on the ASX, at no cost to the shareholder. If your Shares are held in a CHESS Holding, the Company may, without further notice, move your Shares to an Issuer Sponsored Holding or a certified holding for the purposes of selling your Shares under the Facility.

Our records indicate that you held an Unmarketable Parcel of Shares on the Record Date. Unless you advise the Company that you do NOT wish to sell your Shares by 5pm on 18 July 2016, being more than six weeks from the date of this letter (Closing Date), Alliance intends to sell your Shares through the Facility as soon as practicable thereafter. Payment will be sent to you following settlement of the sale. Subject to the prevailing market conditions, it is intended that the Shares be sold at the price of no less than 3.25 cents per Share, being a 9% discount to the volume weighted average sale price of the Company's Shares on ASX during the five trading days immediately preceding the Record Date.

What are your options?

You have two options - you can either sell your Shares through the Facility or choose to retain your Shares.

1. Selling your Shares

   If you wish to sell your Shares through the Facility, you do not need to take any further action. By not taking any action by the Closing Date, you acknowledge and accept that:

2. you have irrevocably appointed the Company as your agent to sell your Unmarketable Parcel through the Facility and to deal with the proceeds of the sale of the Shares in accordance with the process outlined in this letter; and

3. if your Shares are in a CHESS Holding as at the Closing Date, the Company may move those Shares to an Issuer Sponsored Holding or a certificated holding without further notice.

4. Retaining your Shares

5. If you do NOT wish to sell your Shares through the Facility, you will need to complete and return the attached Share Retention Form so that it is received by the Company by the Closing Date, being 5pm on 18 July 2016. Please read the instructions on the Share Retention Form carefully before completing it.

   Sale Proceeds

   Subject to the Corporations Act 2001 (Cth), the Company will bear all costs, including brokerage and stamp duty, associated with the sale of any Shares under the Facility. The Company will pay you the sale proceeds following settlement of all Shares through the Facility. Where direct credit details have not been provided by you, you will receive a cheque for the sale proceeds.

   Summary of Key Dates

   Please note the below proposed key dates in relation to the sale of Unmarketable Parcels under the Facility:

   Unmarketable Parcels Record Date	7:00pm (AEST) on 25 May 2016
   Unmarketable Parcels Facility Announcement to ASX	26 May 2016
   Letters sent to shareholders holding Unmarketable Parcels	1 June 2016
   Closing Date for receipt of Share Retention Form	18 July 2016
   Estimated Unmarketable Parcels Payment Date	1 August 2016

   Important Information

   Please note that Alliance makes no recommendation as to whether you should sell your Unmarketable Parcel. Please read in full the attached Information Sheet providing further information about the terms and conditions of the Facility. If you are unsure regarding which option to choose, or if you require further information regarding the financial, legal or tax consequences of participating in the Facility, you should consult your legal, financial or taxation adviser.

   If you have any questions, please contact Alliance on (03) 9697 9090 between the hours of 8.30am and 5.30pm (AEST) Monday to Friday.

   Yours sincerely

   Bob Tolliday Company Secretary

   INFORMATION SHEET- ALLIANCE SHARE SALE FACILITY

   Suite 3, 51-55 City Road

   Southbank VIC 3006

   P + 61 3 9697 9090

   F + 61 3 9697 9091

   What is the Facility?

   The Facility is a share sale mechanism which will allow Alliance to sell Shares on behalf of shareholders who hold shares in the Company (Shares) valued at less than $500 (Unmarketable Parcel) as at 7:00pm (AEST) on 25 May 2016. Based on the Company's current Share price of 3.6 cents per Share, there are 3,865 shareholders that hold an Unmarketable Parcel.

   Why is the Facility being offered?

   As the Company incurs significant administrative costs in maintaining small shareholders on its register, the Facility will assist Alliance to reduce its administrative costs. The Company is providing the Facility to allow investors with small holdings to dispose of their Unmarketable Parcel who might otherwise find it difficult to sell their Shares due to the small size of their holding.

   Does Alliance have the right to sell my Shares?

   Yes, Alliance is entitled under rule 9 of its Constitution and ASX Listing Rule 15.13 to sell unmarketable parcels of Shares, unless those shareholders elect to retain their Shares.

   What are the benefits for me of selling through the Facility?

   Shareholders who utilise the Facility will have their Shares sold without incurring any brokerage costs or stamp duty. Any tax consequences from the sale of your Shares will be your responsibility.

   What if I don't want my Shares to be sold?

   If you wish to retain your Shares, you must complete the attached Share Retention Form and it must be received by the Company by 5pm (AEST) on 18 July 2016.

   When will my Shares be sold under the Facility?

   The sale of Shares under the Facility is expected to occur over a five business day period after 18 July 2016.

   What if the Share price changes between the Record Date and the Closing Date?

   If the ASX share price of Alliance Shares increases between the Record Date and the Closing Date, such that at the Closing Date the value of your Shares is no longer an Unmarketable Parcel, then Alliance will not sell your Shares under the Facility.

   What if I purchase more Shares?

   If you increase your holding in Shares so that it is valued at $500.00 or more at the Closing Date, the Company will not sell your Shares under the Facility.

   When and how will I receive my sale proceeds?

   The proceeds to which you are entitled from the sale of your Shares will be remitted to you as soon as practicable after the sale, using the payment method recorded for your holding. The proceeds of the sale will be deposited into your bank account if you have previously provided banking instructions to Alliance's share registry, or alternatively, a cheque will be sent to the address last recorded in the Company's share register.