Shareholder Presentation - Alcyone Resources

INVESTOR PRESENTATION – MAY 2013ASX Code: AYNPaul D’Sylva – ChairmanMichael Reed - Managing Director

CAUTIONARY STATEMENTDisclaimerThis presentation has been prepared by the Directors of Alcyone Resources Ltd (“Alcyone” or the “Company”) from currentlyavailable public domain information to provide background information to enable recipients to review the business activities ofAlcyone. It is not intended as an offer, invitation, solicitation or recommendation with respect to the purchase or sale of anysecurities.This presentation should not be relied upon as a representation of any matter that a potential investor should consider inevaluating Alcyone. Alcyone and its respective affiliates or any of its directors, agents, officers or employees do not make anyrepresentation or warranty, express or implied, as to or endorsement of, the accuracy or completeness of any information,statements, representations or forecasts contained in this presentation, and they do not accept any liability for any statementmade in, or omitted from, this presentation.Prospective investors should make their own independent evaluation of an investment in Alcyone including, without limitation,seeking professional advice.Forward-Looking StatementsCertain statements made during or in connection with this communication, including, without limitation, those concerningexploration targets, contain or comprise certain forward-looking statements regarding Alcyone’s exploration operations,economic performance and financial condition. Although Alcyone believes that the expectations reflected in such forwardlookingstatements are reasonable, no assurance can be given that such expectations will prove to have been correct.Accordingly, results could differ materially from those set out in the forward-looking statements as a result of, among otherfactors, changes in economic and market conditions, success of business and operating initiatives, changes in the regulatoryenvironment and other government actions, fluctuations in metals prices and exchange rates and business and operational riskmanagement. Alcyone undertakes no obligation to update publicly or release any revisions to these forward-looking statementsto reflect events or circumstances after today's date or to reflect the occurrence of unanticipated events.

CURRENT SITUATIONALCYONE (ASX:AYN) IS A SILVER PRODUCER BASED IN SOUTH-EAST QUEENSLAND.The Company is seeking to raise up to $14M to refinance and implement operational improvements.HISTORICAL ISSUES (October 2012 – March 2013)• Throughput capacity limitations in the crushing circuit limiting capacity to 70,000t per month• Weather• 2 floods within 6 months during 2013 severely effected operational output• Adverse impact on mining rate, mill throughput and heap leach performancePROGRESS• New Board and management team appointed• Extensive operational review completed• Restructured balance sheet• Incentive Shares for new Directors and Senior Management linked to performance• Employee Performance Rights Scheme in place to incentivise and reward employee loyaltyUSE OF FUNDS FROM PROPOSED RAISING• Repay outstanding debt• Fund key operational improvements including:• upgrade of the crushing circuit to allow greater throughput• construction of a new power line to access cheap grid power• purchase of key mining equipment; and• additional working capital.Slide: 3

TEXAS SILVER PROJECTTexas Silver Project (100% owned) located 350 kmSSW from Brisbane and 10km from the town of TexasJORC compliant (Measured, Indicated and Inferred)resource of:• 3.28mt @ average grading 54 g/t Ag for 23.0 mozAg at two prospects Twin Hills and Mt Gunyan1.2M oz of silver produced from heap leach operationsduring the ramp up phase between June 2011 and 31March 20138 year mine life with nameplate capacity of 1.1MtpaSlide: 4

ENTITLEMENT OFFER3 for 2 non renounceable pro rata Entitlement Offer at an issue price of 0.6¢ps to raise up to $14.6 million.Subscribers to receive a 1 for 2 free attaching option exercisable at 1.0¢ on or before 31 July 2015.Theoretical ex rights price (“TERP”) of 0.84¢ps based on a last sale price of 1.2¢.Issue price of 0.6¢ps represents an approximate 29% discount to the TERP (excluding option value).A Black Scholes valuation utilising a risk free rate of 3.0% and volatility of 70% implies a valuation of approximately 0.29 cents peroption (i.e. 0.145¢ attributable to each new share subscribed)Market Cap,12 month turnover, number of shareholders and pricing suggests capacity for the issue to be absorbed by shareholders.Slide: 5

USE OF FUNDSUse of Funds $MRedeem Convertible Notes $2.3Repay Promissory Notes/Bridging Facility $1.8Payout Creditors $3.5Plant and equipment upgrades $3.0Working Capital / Costs $3.4Total Required $14.0FUNDING SOURCES $MSilver Prepay Facility $10.0Entitlements Offer $4.0 – $14.6Total to be Secured $14.0 – $24.6Funds raised over the $14M minimum will be used to further reduce debt, enable a review of the company's exploration program andstrengthen the company’s working capital position.Slide: 6

REDUCING COSTSCrushing CircuitITEM UPGRADE EST. IMPLEMENTATION COST FINANCIAL BENEFITStage One – Upgradeprimary crushing circuitInstall an additional cone crusher which willact as tertiary crusher and surge bin tocontrol product flow. This will provide anincrease in tonnages by reducing thereduction ratio from 7:1 to 3:1. Theadditional crusher has already beenpurchased$80KFirst stage of an overall increase from700,000 tonnes to 1.1M tonne p/aStage Two – Fines BypassProjectRemoves or scalps the sub 4mm particlefrom the Quad Rolls crusher feed.The result of this upgrade will be a 30% –35% increase in capacity to achieve thetargeted1.14 m tpa, representing aconservative 95% of nameplate capacity$100KWill deliver cost savings for reagents andmanganese usage in the second half ofthe circuit.Construction of a newpower lineWill provide the operation with access togrid power. Approved by all relevant Stateregulatory bodies Will reduce power costsfrom 0.39c per kW/hr to 0.18c per kW/hr$1M Monthly ongoing cost saving of $100kMining EquipmentPurchase key mining equipment currentlyhired.$1MReduction in overheads of 125K permonthConstruction of a cyanidemixing facilityEnables Company to directly purchasecyanide from Asia.Will reduce costs per tonne from $4,900 toan average of $3,200 - $3,800 per tonne.$800KCost saving of over 100K per month or$1.2M per yearEXPECTED NET IMPACT ON ALL IN CASH COST OF PRODUCTION : $2 – $3 PER OUNCESlide: 7

COST ANALYSISASSUMPTIONS – 2013/2014ProductionMine LifeSpot Silver Price(1 May)1.28Mt ozs8 YearsUS$23.56COSTS - 2013/2014ITEM $ COST/ozMining 8,106,513 6.34Processing 12,024,048 9.40Site Administration 2,749,600 2.15C1 Cash Cost 22,880,161 17.89Corporate 2,601,873 2.03Exploration - Base 960,000 0.75Exploration - Drilling 1,000,000 0.78C3 Cash Cost 27,442,034 21.45Slide: 8

INDICATIVE TIMELINEEVENT 2013Announce Transaction to the ASXAnnounce Closure of Hedge facilityLodge ProspectusNotice of Meeting Dispatched“Ex Date”Record DateGeneral Meeting to approve Entitlements OfferClosing DateAnticipated date of allotment and issue of new sharesSuspension ends (trading recommences)15 April18 April10 May15 May16 May20 May17 June21 June27 June1 JulySlide: 9

PERFORMANCE SUMMARY1H FY2013 1H FY2012 CHANGE (%)ANNUALISEDTARGETSilver production (oz) 439,431 274,301 60% 1.28MSilver production for theHY increased by 60% to439,431ozMined Grade 65 g/t 64 g/t 2% 81 g/tSilver inventory (oz) 614,187 236,738 159% 700,000Recovery 58% 58% No change 58%Mining (t) 426,946 189,361 125% 1.2MtpaOre processed increasedby 102% to 392,211tonnesDespite the challengesexperienced during 1HFY2013, AYN delivered a4,547% increaserevenues to $13.3MProcessing (t) 392,211 194,343 102% 1.14MtpaRevenue $13,331,168 $286,883 4,547% $33MModeled at the mediumterm historical average of$28/oz AUDNet profit/(Loss) inc noncash amortisation($1,240,599) ($2,539,324) 51% ($1.9M)Slide: 10

NEXT STEPSComplete Capital Raising’sRestructure financing arrangements and retire shortterm debtUpgrade crushing circuitScalp fines from Quad Rolls CrusherPurchase mining equipment to replace hired gearBuild power line to connect to grid powerRamp up to full productionSlide: 11

INVESTMENT HIGHLIGHTSA successful capital raising will enable the company to repay outstanding debt and restructure the balance sheet.Strengthen the Company’s working capital position.Upgrades will provide key operational improvements reducing C1 cash costs to $17.89 per ounce.Enable Company to unlock the full potential of the Texas Silver Project and achieve targets representing aconservative 95% of nameplate capacity production at 1.14Mtpa and 1.28m oz per year..Slide: 12

CONTACTASX Code: AYNPaul D’Sylva - ChairmanFOR FURTHER INFORMATION:Michael Reed – Managing DirectorP: +61 8 9476 3000 P: +61 7 4653 0090www.alyconeresources.com.au

Slide: 14APPENDICES

COMPETENT PERSONS STATEMENTThe information in this report that relates to data used for and the resultant Mineral Resources for the Texas Silver project is based on informationcompiled by Mr Peter Ball who is a Member of the Australasian Institute of Mining and Metallurgy and Director of DataGeo a mining and explorationconsultancy.Mr Ball has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which theyare 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 Ball consents to the inclusion in this Report of the information compiled in the form and context in which they appear.The information in this Report that relates to Exploration is based on information also compiled by Mr Ball.The information in this report that relates to data used for and the resultant Ore Reserve for the Texas Silver project is based on information compiledby Mr Ian Huitson who is a Member of the Australasian Institute of Mining and Metallurgy and Director of Mining Solutions Pty Ltd a mining andmanagement consultancy.Mr Huitson is a mining engineer with over 25 years experience in underground and open pit environments and has sufficient experience which isrelevant to this type of mineral deposit and mining methodology to qualify as a "Competent Person" as defined in the 2004 Edition of the “AustralasianCode for Reporting of Exploration Results, Mineral Resources and Ore Reserves”.Mr Huitson consents to the inclusion in this Report of the information compiled in the form and context in which they appearSlide: 15

MINERAL RESOURCE INVENTORYDeposit Category Tonnes Ag g/tContainedAg MozTwin Hills Measured 2,151,000 80 5.5Indicated 6,152,000 44 8.7Inferred 1,045,000 51 1.7Total 9,348,000 53 16.0Mt Gunyan Measured 754,000 56 1.3Indicated 2,884,000 56 5.2Inferred 302,000 48 0.5Total 3,940,000 55 7.0Total All Categories 13,288,000 54 23.0• The Twin Hills Mineral Resource model is as declared at 29 March 2012; is inclusive of the Ore Reserve and depleted for mining tothe end of July 2012• The Mt Gunyan Mineral Resource model is as declared at 28 th August 2012.• Twin Hills is reported above a 26.5g/t Ag cut-off; Mt Gunyan above a 30g/t Ag cut-off.(Numbers are rounded and thus may not reflect accurately individual calculations within the table.)Slide: 16

PRO FORMA BALANCE SHEETConsolidated Balance Sheet(Post Capital Raising)Current AssetsCashInventoryOtherUnaudited April’13$M0.46.80.7Unaudited April ’13(Pro Forma)(Minimum raising)$MUnaudited April ’13(Pro Forma)(Maximum raising)$MTotal Current Assets 7.9 21.9 32.5Non-Current assets 25.8 25.8 25.8Total Assets 33.7 47.7 58.3Current LiabilitiesTrade PayablesConvertible & Promissory NotesPrepay liabilityOther5.34.100.9Total Current Liabilities 10.3 20.3 20.3Non Current Liabilities 4.1 4.1 4.1Total Liabilities 14.4 24.4 24.4Net Assets 19.3 23.3 33.9Shareholder Equity 19.3 23.3 33.914.46.80.75.34.1100.925.06.80.75.34.1100.9Slide: 17

BOARD & MANAGEMENTDr Paul D’Sylva(Chairman)Appointed March 2013Dr D'Sylva, PhD is a Partner for Empire Equity Ltd, a boutique corporate advisory group. Dr D’Sylva has led andarranged over A$500M in funding transactions since 2008 for a diverse range of resource and energy companies inequity, debt and structured financings on a proprietary basis as well as from a network of institutional funding partners.Mr Michael Reed(Managing Director)Appointed May 2011Mr Reed has managed Alcyone’s Texas Silver Mine for last two years and is a metallurgist with over 20 years’experience within the Australian mining industry, both in process facilities and mining operations. He has held seniortechnical, operational and corporate positions and has a diversified background in gold and alumina. Prior to joiningAlcyone, Michael spent 6 years with Norseman Gold in senior roles, including Mill Superintendent, General Managerand Principal Metallurgist.Mr Timothy Morrison(Non-executiveDirector)Appointed March 2013Mr. Morrison is a Partner at Empire Equity, a boutique corporate advisory group. Mr. Morrison has extensive experiencein structuring equity debt financing for mid-tier ASX listed companies. Prior to this role, Mr. Morrison was CEO andExecutive Chairman for a listed and unlisted companies and has previously served as a member of the investmentcommittee for a superannuation funded private equity investment vehicles.Trevor Harris(CFO)Appointed March 2011Mr Harris has over 20 years experience in financial management in a wide variety of industry sectors. As well as beinga CPA qualified Accountant, Trevor holds a postgraduate qualification in Commercial Law and is a Chartered CompanySecretary. He has filled multi-disciplinary roles within companies such as BGC Australia and Toll Holdings. Trevor’smining experience includes senior financial roles in the West African Gold and Iron Ore sectors with Shield MiningLimited (ASX : SHX) and Sphere Minerals Limited ( ASX: SPH).Slide: 18

INCENTIVE PLANSIncentive Shares for New Directors and Senior Management (Post EntitlementIssue)Share based payments equivalent to 10% of post entitlement issue issued capital allocated across Directors and SeniorManagement in 3 tranches, linked to performance as follows :- 50% on the successful closure of the Entitlement issue- 25% on the first achievement of 100,000oz production in one (1) calendar month.- 25% on the achievement of 500,000oz production in any six (6) month period.Employee Share SchemeImplementation of the Employee Performance Rights Scheme for all employees as announced to the market on 31 January2013 as part of the overall Long Term Incentive Scheme. This is in accordance with the Scheme previously approved byshareholders at the AGM on 25th November 2010. No members of the Board are participants in the current allocations.The Scheme is designed to incentivise and reward employee loyalty and commitment and appropriately align the goals andobjectives of the Company with those of its employees. The Scheme allocates various levels of Performance Rights subject tothe achievement of agreed targets by both the employee and the Company.Slide: 19