ASX: AZS 30 April 2015

QUARTERLY ACTIVITIES REPORT

FOR PERIOD ENDED 31 MARCH 2015

The Board of Azure Minerals Limited (“Azure” or “the Company”) is pleased to provide its

Quarterly Activities Report for the period ended 31 March 2015.

HIGHLIGHTS:

Oversubscribed Share Purchase Plan (SPP) successfully completed,

raising $2.24m with strong support from underwriters

Execution of agreement with Teck securing the right to acquire 100%

ownership of the Alacrán Copper Project, subject to a back-in right

Commencement of exploration activity at Alacrán

High grade precious and base metal assays returned from sampling

at La Morita, San Simon, Palo Seco and El Alacrán prospects

IP and resistivity survey commenced over La Morita and San Simon

Drilling planned for June/July

Exploration commences at Promontorio under Kennecott Agreement

First comprehensive modern exploration over the entire Promontorio

project area commenced

Extensive, district-scale airborne geophysical surveys in progress

Acquisition of Telix Graphite Project

Low cost, strategically important landholding in proven graphite

producing district

Adjoins Mexico’s only commercial producer of high quality, large

flake graphite

Azure’s Managing Director Mr Tony Rovira said, “It’s very pleasing to receive such strong

support from the shareholders, and the result of the SPP is a strong endorsement of the

Company’s direction. I thank our shareholders for their support and I look forward to updating

them with good results as we continue to advance our Alacrán and Promontorio projects.

While challenging market conditions persist, this has been a very significant Quarter for Azure,

and we are confident that we have two projects where quality exploration is likely to result in

more discoveries. The outlook for Azure is very positive.”

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SHARE PURCHASE PLAN

During the Quarter, the Company was pleased to successfully complete a Share Purchase

Plan (SPP) which raised $2.24m (after all costs) at a price of $0.0132 per share. Despite

challenging market conditions the SPP was well supported, with strong demand leading to a

top-up share placement of $100,000 being completed on the same terms.

The funds provide Azure with a strong working capital position and will allow the company to

make significant progress at the newly acquired Alacrán Copper Project.

ALACRÁN COPPER PROJECT

(Azure to earn 100% ownership from Teck)

During the Quarter, Azure finalised an agreement with Minera Teck S.A. de C.V. (“Teck”), a

Mexican subsidiary of Teck Resources Limited, Canada’s largest diversified resource

company, whereby Azure can acquire 100% ownership of the Alacrán Copper Project, subject

to an underlying back-in right for Teck.

Alacrán Background

Alacrán is located in northern Mexico approximately 50km south of the border with the USA.

It is situated in the middle of the Laramide Copper Province, North America’s major copper-

molybdenum-gold producing district that extends from northern Mexico into Arizona. This is

the most prolific copper-producing district in Mexico, and numerous large scale copper mines

are currently operating near to Alacrán, including the world class, giant Cananea Copper Mine.

The Project has excellent access via 200km of sealed highway from Hermosillo, capital of the

state of Sonora and has existing mine roads and ranch tracks providing good access

throughout the property. The nearby town of Cananea is a mining-friendly jurisdiction with

experienced exploration and mining services.

Exploration

Azure undertook a busy but relatively low cost exploration program during the March Quarter,

with activities including geological mapping, surface and underground mine sampling,

geophysics, an airborne LiDAR survey, and historical data research and compilation.

Mapping and sampling was undertaken in and around the historical mine sites of Palo Seco,

El Alacrán, La Morita and San Simon (see Figure 1), returning significant and very

encouraging results.

Polymetallic mineralisation containing high grades of silver and zinc, with anomalous gold,

copper and lead assays, was identified in outcrop around the historical Palo Seco and El

Alacrán mine workings (refer ASX release dated 19/01/15).

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Figure 1: Geology of Alacrán with locations of prospects, old mines and drill holes

The historical mine workings at La Morita and San Simon range from small producing

operations to exploratory diggings, including vertical shafts and adits (horizontal tunnels).

Extensive zones of strongly altered rocks, gossans and vuggy silica containing visible copper

oxide and copper sulphide mineralisation are common in the area.

Sampling, comprising channels across defined mineralised zones in the underground mine

workings and selective grabs from the mine dumps, returned strong copper, gold and silver

grades (refer ASX releases dated 03/03/15 and 15/04/15).

A helicopter-borne aeromagnetic survey was undertaken over the Alacrán project area in 2001

by a major international mining company. Azure recently acquired the digital survey data and

all background technical specifications of the survey, at no cost to the Company.

A large body of copper oxide and chalcocite mineralisation was identified in drilling undertaken

by Grupo Mexico in the 1990’s at Cerro Alacrán (refer ASX release dated 07/01/15). This

mineralised body is coincident with a singular bullseye magnetic high (refer ASX release dated

23/04/15; see Figure 2). The mineralisation is not constrained along strike and remains open

at depth.

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Figure 2: Aeromagnetic image with locations of prospects, old mines and drill holes

Other similar magnetic highs occur within the project area, some spacially associated with

historical workings that exploited near-surface copper oxide mineralization; for example the

Santa Barbara and El Caiman prospects in the northern part of the property. No drilling or

other modern exploration techniques have tested these anomalies, and Azure has now

commenced first pass surface exploration at these prospects.

In addition, an airborne survey using the LiDAR system to produce a digital terrain model and

aerial photographs was completed over the entire Alacrán project area. LiDAR, which stands

for Light Detection and Ranging, is a remote sensing method that uses light in the form of a

pulsed laser to measure distances to the surface of the Earth from an airborne source. These

light pulses—combined with other data recorded by the airborne system— will generate

precise, three-dimensional information about the surface characteristics of the Alacrán

property.

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Next Steps

The La Morita and San Simon prospects are the current high priority targets for Azure, and

near-term work will include additional mapping and sampling, together with geophysical

surveying and drilling of identified targets.

An Induced Polarisation (IP) geophysical survey has commenced, covering a 9km2 area in the

western part of the property, including La Morita and San Simon.

This area was previously covered by an IP survey undertaken by the Mexican Geological

Survey in 1981. Although rudimentary in comparison to modern IP technology, this survey did

identify chargeability and resistivity anomalies in the vicinity of the La Morita and San Simon

mine workings (see ASX release dated 03/03/15).

The presence of copper mineralisation and strong silica alteration in the old mine workings,

together with the historical IP anomalies, indicate good potential for significant copper sulphide

and epithermal gold-silver mineralisation in this area. Based upon these results, together with

possible chargeability and resistivity anomalies from the current IP survey, the Company

expects to identify targets for diamond drill testing, scheduled to be carried out mid-year 2015.

In addition, following the successful sampling of the old mine workings at La Morita and San

Simon, Azure has shifted the focus of its surface exploration to in and around the old mine

workings at the Santa Barbara and El Caiman prospects, located in the northern part of the

project area (see Figure 1).

Azure will release exploration results to the market as they become available.

History and Potential of Alacrán

The Alacrán property has seen only limited exploration to date, and its potential for hosting

large porphyry copper deposits and smaller high grade deposits remains largely untested.

Industrial-scale commercial mining and small-scale artisanal mining commenced within the

project area in the early 20th century, and ended shortly after the start of the Mexican

Revolution in 1913. After the Revolution ended in the 1920’s, the property was explored only

intermittently.

The Anaconda Copper Mining Company undertook exploration on the property in the period

from the 1930’s to the 1960’s. Data relating to this work has been located in the Anaconda

Geological Documents Collection, part of the American Heritage Centre in the University of

Wyoming. Azure has visited the library and retrieved copies of numerous reports and maps.

Between the 1960’s and the early 1980’s, the Consejo de Recursos Minerales (Mexican

Geological Survey) carried out occasional exploration programs, including drilling 6 holes at

the Cerro Alacrán prospect in 1970 and undertaking geophysical (IP and resistivity) surveys

over the Palo Seco and La Morita prospects in 1981.

Grupo Mexico then acquired the project and drilled an additional 26 holes at Cerro Alacrán in

two phases, with 24 holes drilled in 1991 and an additional two holes drilled in 1997 and 1998.

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This drilling was restricted to an area of approximately 1,000m x 500m, outlining a large body

of copper oxide and chalcocite (copper sulphide) mineralisation. The size, grade and the

extent of this mineralised body is yet to be defined as a mineral resource to JORC standards.

Minera Teck S.A. de C.V., a Mexican subsidiary of Canadian company Teck Resources

Limited, acquired the property in 2013 and undertook data compilation and limited surface

exploration.

Azure Minerals acquired the rights to the project in December 2014 through its fully owned

Mexican subsidiary Minera Piedra Azul S.A. de C.V.

The identification of porphyry-style copper mineralisation at Cerro Alacrán, together with

historical production from the high grade mines at Palo Seco, El Alacrán, La Morita and San

Simon, in a district where there are many large copper mines and deposits, confirms the

potential for Alacrán to host major economic copper deposits.

The Agreement with Teck

Azure and Teck reached agreement whereby Azure can acquire 100% ownership of the

Alacrán Project, subject to certain back-in rights to Teck.

Key terms of the Agreement:

1. Azure can acquire 100% ownership of Alacrán by:

a) Spending US$5 million on the project within 4 years (“Required Expenditure”);

b) Issuing 100,000 Azure shares to Teck on signing the formal documentation (this

has been completed); and

c) Issuing 400,000 Azure shares to Teck on completing the Required Expenditure.

2. Azure must spend US$2 million within the first 2 years before it can withdraw from the

project (“Minimum Expenditure”).

3. Teck retains a back-in right to re-acquire a 51% interest by sole funding US$10 million

of expenditure, including a US$0.5 million cash reimbursement to Azure.

4. Additionally, Teck may increase its interest to 65% by sole funding a further US$5

million of expenditure, including a US$1.5 million cash reimbursement to Azure.

5. Grupo Mexico, owner of the adjoining Cananea Copper Mine, retains a 2% Net Smelter

Royalty over future mineral production from Alacrán.

PROMONTORIO COPPER PROJECT

(Azure 100%; Kennecott may earn up to an 80% interest)

Field work under the Earn-In and Joint Venture Agreement between Kennecott Exploration

Mexico S.A. de C.V. (“Kennecott”) and Azure commenced at Promontorio in February.

Exploration, which is undertaken by Azure’s personnel under the guidance and direction of

Kennecott, comprised regional geological mapping and sampling, detailed re-logging of the

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drill core, and airborne programs consisting of a LiDAR survey and an aeromagnetic,

radiometric and electromagnetic survey.

Completion of the LiDAR survey was delayed until mid-April due to unseasonal snowfalls. The

production of a Digital Terrain Model (DTM) and aerial photographs have provided precise,

three-dimensional information about the surface characteristics of the entire Promontorio

project area.

The helicopter-borne geophysical survey was scheduled to be undertaken during the March

Quarter, but was delayed due to logistical and transport issues. This survey has now

commenced and will provide detailed magnetic, radiometric and electromagnetic data

completely covering the entire Promontorio project area.

In addition, geological mapping and surface sampling to cover the entire project area was

commenced, along with a re-logging of historical drill core. The purpose of this work is to

identify and characterise alteration and mineralisation patterns that may have been formed

during the intrusion of a porphyry copper system.

Azure will release exploration results to the market as they become available.

TELIX GRAPHITE PROJECT ACQUISITION

During the Quarter, Azure was successful in securing uncontested applications for three

mineral concessions to form the Telix Graphite Project (“Telix”). While the focus for Azure

remains on progressing the Promontorio and Alacrán project, Telix presented a low cost and

highly attractive opportunity for the Company to acquire a strategic landholding in Mexico’s

premier graphite mining district

The Telix Graphite Project covers 12.6km2 of highly prospective ground, located adjacent to

Mexico’s only commercial graphite mine, El Tejon. Having operated for 21 years, El Tejon was

closed in 2002 due to low graphite prices and, since then, the mine and processing plant have

been on care and maintenance. In 2014 Canadian company Big North Graphite Corp acquired

the project and announced its intention to refurbish the plant and restart mining and processing

operations

Several historical graphite mines, including Curva 25, Zopilote and Temescal, are hosted

within Azure’s concessions, with these deposits reported to be high quality flake graphite

similar to that mined at the adjacent La Cucharita Central deposit, which was a principal source

of ore for the El Tejon Graphite Mine and Mill. There is excellent local infrastructure with good

roads including the Pan American Highway, a major railroad, and mains electrical power and

water all passing through the project area.

Azure believes the Telix Project may have attractive development synergies with the proposed

recommencement of operations at El Tejon

-ENDS-

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For further information, please contact:

Tony Rovira

Managing Director

Azure Minerals Limited

Ph: +61 8 9481 2555

Media & Investor Relations

Rupert Dearden

MAGNUS Investor Relations

Ph:+61 8 6160 4903

Mob: +61 422 209 889

or visit www.azureminerals.com.au

Competent Person Statement Information in this report that relates to previously reported Exploration Results has been crossed-referenced in

this report to the date that it was reported to ASX. Azure Minerals Limited confirms that it is not aware of any

new information or data that materially affects information included in the relevant market announcement.

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Appendix 5B Mining Exploration Entity Quarterly Report

Appendix 5B Page 1

Appendix 5B

Mining Exploration Entity Quarterly Report

Name of entity

Azure Minerals Limited

ABN Quarter ended (“current quarter”)

46 106 346 918 31 March 2015

Consolidated statement of cash flows

Cash flows related to operating activities

Current quarter

$A’000

Year to date (9 months)

$A’000 1.1 Receipts from product sales and related debtors

- -

1.2 Payments for (a) exploration and evaluation (b) development (c) production (d) administration

(420) - -

(529)

(1,220) - -

(1,143) 1.3 Dividends received - - 1.4 Interest and other items of a similar nature

received 2 10

1.5 Interest and other costs of finance paid - - 1.6 Income taxes paid - - 1.7 Other – Income Tax Refund 201 201

Net Operating Cash Flows

(746)

(2,152)

Cash flows related to investing activities

1.8 Payment for purchases of:(a) prospects (b) equity investments (c) other fixed assets

(73) - -

(283) -

(1) 1.9

Proceeds from sale of: (a) prospects (b) equity investments (c) other fixed assets

- - -

308

- -

1.10 Loans to other entities - - 1.11 Loans repaid by other entities - - 1.12 Other (provide details if material) - -

Net investing cash flows (73) 24

1.13 Total operating and investing cash flows (carried forward)

(819) (2,128)

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Appendix 5B Mining Exploration Entity Quarterly Report

Appendix 5B Page 2

1.13 Total operating and investing cash flows

(brought forward) (819) (2,128)

Cash flows related to financing activities

1.14 Proceeds from issues of shares, options, etc. 2,226 3,154 1.15 Proceeds from sale of forfeited shares - - 1.16 Proceeds from borrowings - - 1.17 Repayment of borrowings - - 1.18 Dividends paid - - 1.19 Other - - Net financing cash flows 2,226 3,154

Net increase (decrease) in cash held

1,407

1,026

1.20 Cash at beginning of quarter/year to date 585 979 1.21 Exchange rate adjustments to item 1.20 4 (9)

1.22 Cash at end of quarter 1,996 1,996

Payments to directors of the entity and associates of the directors Payments to related entities of the entity and associates of the related entities Current quarter

$A'000 1.23

Aggregate amount of payments to the parties included in item 1.2

135

1.24

Aggregate amount of loans to the parties included in item 1.10

-

1.25

Explanation necessary for an understanding of the transactions

-

Non-cash financing and investing activities 2.1 Details of financing and investing transactions which have had a material effect on consolidated

assets and liabilities but did not involve cash flows

N/A

2.2 Details of outlays made by other entities to establish or increase their share in projects in which the

reporting entity has an interest During the quarter Kennecott Exploration Mexico S.A. de C.V. advanced US$746,000 towards

exploration costs at the Promontorio project.

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Appendix 5B Mining Exploration Entity Quarterly Report

Appendix 5B Page 3

Financing facilities available Add notes as necessary for an understanding of the position.

Amount available $A’000

Amount used $A’000

3.1 Loan facilities

NIL NIL

3.2 Credit standby arrangements

NIL NIL

Estimated cash outflows for next quarter

$A’000 4.1 Exploration and evaluation

295

4.2 Development

-

4.3 Production

-

4.4 Administration

280

Total

575

Reconciliation of cash Reconciliation of cash at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts is as follows.

Current quarter $A’000

Previous quarter $A’000

5.1 Cash on hand and at bank 1,938 527

5.2 Deposits at call 58

58

5.3 Bank overdraft

5.4 Other (provide details)

Total: cash at end of quarter (item 1.22) 1,996

585

Changes in interests in mining tenements Refer to Annexure 1 for full list of mining tenements Tenement reference Nature of

interest (note (2))

Interest at beginning of quarter

Interest at end of quarter

6.1 Interests in mining tenements relinquished, reduced or lapsed

Pozo de Nacho Pozo de Nacho 2 La Tortuga La Tortuga 2

Owned Owned Owned Owned

100% 100% 100% 100%

- - - -

6.2 Interests in mining tenements acquired or increased

-

-

-

-

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Appendix 5B Mining Exploration Entity Quarterly Report

Appendix 5B Page 4

Issued and quoted securities at end of current quarter Description includes rate of interest and any redemption or conversion rights together with prices and dates. Total number Number

quoted Issue price per

security (see note 3) Amount paid up per security (see note 3)

7.1 Preference +securities (description)

7.2 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buy-backs, redemptions

995,020,107

995.020,107

7.3 +Ordinary securities

7.4 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buy-backs

177,462,238

177,462,238

$0.0132

$0.0132

7.5 +Convertible debt securities (description)

7.6 Changes during quarter (a) Increases through issues (b) Decreases through securities matured, converted

7.7 Options (description and conversion factor)

25,000,000 25,924,075

Nil Nil

Exercise price $0.058 $0.045

Expiry date 30/06/17 30/11/16

7.8 Issued during quarter

7.9 Exercised during quarter

7.10 Expired during quarter

7.11 Debentures (totals only)

7.12 Unsecured notes (totals only)

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Appendix 5B Mining Exploration Entity Quarterly Report

Appendix 5B Page 5

Compliance statement 1 This statement has been prepared under accounting policies which comply with accounting

standards as defined in the Corporations Act or other standards acceptable to ASX (see note 4).

2 This statement does give a true and fair view of the matters disclosed.

Sign here: ............................................................ Date: 30 April 2015

(Director/Company secretary) Print name: Brett Dickson Notes 1 The quarterly report provides a basis for informing the market how the entity’s activities

have been financed for the past quarter and the effect on its cash position. An entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this report.

2 The “Nature of interest” (items 6.1 and 6.2) includes options in respect of interests in

mining tenements acquired, exercised or lapsed during the reporting period. If the entity is involved in a joint venture agreement and there are conditions precedent which will change its percentage interest in a mining tenement, it should disclose the change of percentage interest and conditions precedent in the list required for items 6.1 and 6.2.

3 Issued and quoted securities The issue price and amount paid up is not required in items

7.1 and 7.3 for fully paid securities. 4 The definitions in, and provisions of, AASB 1022: Accounting for Extractive Industries and

AASB 1026: Statement of Cash Flows apply to this report. 5 Accounting Standards ASX will accept, for example, the use of International Accounting

Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with.

== == == == ==

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Appendix 5B Mining Exploration Entity Quarterly Report

Appendix 5B Page 6

Annexure 1

Schedule of interests in mining tenements

Project Common Name Tenement Percentage held / earning

El Tecolote El Tecolote All Minerals 230771 100% El Tecolote III All Minerals 234586 100% Promontorioᶾ Hidalgo All Minerals 235270 100%1 Promontorio All Minerals 235269 100% El Magistral All Minerals 218881 100% Promontorio Regional All Minerals 234447 100% Panchita Panchita All Minerals 212767 100% Dona Panchita All Minerals 192097 100% Loreto Loreto All Minerals TBA 100% Alacran2 Kino 3 All Minerals 166312 - Kino 2 All Minerals 166313 - Kino 4 All Minerals 166314 - Kino 8 All Minerals 166315 - Kino 9 All Minerals 166316 - Kino 10 All Minerals 166317 - Kino 11 All Minerals 166318 - Kino 15 All Minerals 166365 - Hidalgo No. 4 All Minerals 166366 - Kino 16 All Minerals 166367 - Hidalgo No. 3 All Minerals 166368 - Hidalgo No. 2 All Minerals 166369 - Hidalgo No. 5 All Minerals 166370 - Hidalgo No. 6 All Minerals 166371 - Hidalgo No. 8 All Minerals 166372 - Hidalgo No. 7 All Minerals 166373 - Hidalgo All Minerals 166374 - Hidalgo No. 9 All Minerals 166375 - San Simon All Minerals 166376 - San Simon No. 2 All Minerals 166377 - El Alacran All Minerals 201817 - 1. Azure has an option to purchase 100% 2. Azure has acquired an option to purchase 100% 3. Kennecotte Exploration Mexico S.A. de C.V. has an option to earn up to an 80% interest in the Promontorio

project.

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