Mr. Blair Way reports

FLINDERS BOARD APPROVES PRODUCTION PLAN FOR THE WOXNA GRAPHITE PROJECT

Flinders Resources Ltd. is providing an update on its production plan for the Woxna graphite project in Sweden. If successful, the updated plan would permit Flinders to maintain its strategic advantage in becoming the first public company to produce graphite on a commercial scale.

Blair Way, president and chief executive officer, stated: "After joining the board and management, my focus has been to transition Flinders from engineering work to re-establishing production at a capital cost within the company's means. This would allow us to develop cash flow in the short term, and form strong and lasting relationships with customers. We have reviewed all aspects of the recently published preliminary economic assessment on the Woxna project to define a staged implementation of the PEA. There is no material change to the PEA as it defines the path to production. The implementation plan allows for staged production rates and capital cost spending such that the initial start-up requires less than half the total capital cost estimated in the PEA. The balance of the PEA capital cost will be invested in stages as sales and subsequent production levels demand. With more than $11-million in cash and zero debt, in combination with expected revenue from graphite sales from mid-2014, we believe the company is well positioned to incrementally increase to production levels outlined in the PEA. Our aim is to be in production by the end of second quarter 2014. With stabilized graphite prices, this is an exciting time for the company and I look forward to providing regular updates on the progress at site."

The company advises that it has not based its production decision on a feasibility study of mineral reserves, demonstrating economic and technical viability, and, as a result, there may be an increased uncertainty of achieving any particular level of recovery of minerals or the cost of such recovery, including increased risks associated with developing a commercially mineable deposit. Historically, such projects have a much higher risk of economic and technical failure. There is no guarantee that production will begin as anticipated or at all or that anticipated production costs will be achieved. Failure to commence production would have a material adverse impact on the company's ability to generate revenue and cash flow to finance operations. Failure to achieve the anticipated production costs would have a material adverse impact on the company's cash flow and future profitability.

The company further cautions that the PEA is preliminary in nature. No mining study has been completed. Mineral resources are not mineral reserves and do not have demonstrated economic viability. There is no certainty that the PEA will be realized.

The fully permitted and past-producing Woxna project remains unique in terms of the low start-up capital, a high-quality coarse-graphite-flake product and proximity to Europe, one of the world's dominant graphite markets. After the finalization of the PEA in October, 2013, and deterioration in the capital markets, the challenge has been to initiate production at a capital cost within the company's means.

The Flinders board recently approved the staged production plan for commencing production of graphite from Woxna. This staged plan spreads the PEA capital cost over the next four years based as sales contracts are established but permits for lower production levels and costs until the sales warrant capacity expansion.

The open-pit mine has been dewatered and is ready to put in service. The front-end (grinding) and back-end of the plant (drying/sorting/packing) are in servicable condition, however the middle floatation section requires some additional equipment to enable optimized production according to the improved flow sheet defined in the PEA. Procurement of equipment (new and used) and design work has commenced. The company currently exceeds all environmental statutory requirements and has established water balance control measures at site that will be upgraded to match the staged production plan to ensure all discharges are within environmental requirements.

The company believes that the staged production plan will facilitate marketing of its products and allow the Woxna project to re-establish its former position as a key supplier of graphite to Europe. Flinders aims to position itself as the supplier of choice in terms of price, supply security and quality to the European graphite market. The production model being implemented will ensure the company has developed an adequate customer base before ramping up to larger-scale production, and that the graphite products consistently meet end-user specifications. Through the sale of reprocessed graphite over the last 12 months the company has made substantial marketing inroads and is confident the Woxna brand will continue to be well received throughout Europe.

Michael Hudson, FAusIMM, MSEG, MAIG, director of the company, qualified person as defined under National Instrument 43-101, has reviewed the scientific and technical disclosure in this news release.

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