Gascoyne Resources : Dalgaranga Pre-Feasibility Update, 1.4 MB

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January 19th, 2016

Australian Securities Exchange Limited Via Electronic Lodgement

57 139 522 900

DALGARANGA PRE-FEASIBILITY UPDATE

• PFS Pit optimisations indicate a production target far larger than anticipated in the 2015 Scoping Study
  • Production Target of between 584,000 and 712,000 ounces of contained gold
  • Projected Project Life of between 6-7 years
  • Average Annual Production of between 80,000 and 115,000 ounces is sustainable
  • Optimal production rate of ~100,000 ozpa through a 2.5Mtpa processing facility
• The Dalgaranga Pre-Feasibility Study is continuing on schedule for completion in Q1 2016.

Gascoyne Resources Limited ("Gascoyne" or "Company") is pleased to advise on progress of the Pre-Feasibility Study for the Company's 80% owned Dalgaranga Gold Project in the Murchison region of Western Australia. The Dalgaranga Gold Project contains a recently upgraded (ASX announcement November 4th, 2015) Measured, Indicated and Inferred Resource of 23.0Mt @ 1.4 g/t gold for 1.02 million ounces of contained gold (see Figure 1&2).

Following the positive Scoping Study completed for Dalgaranga in June 2015 (See the Detailed Scoping Study ASX announcement 23rd June 2015), a Pre-Feasibility study commenced on the project. Substantial progress has been made on a number of key aspects of the project including pit optimisations and process plant design.

Pit Optimisation Update:

CSA Global Pty Ltd (CSA Global), an independent mining consultancy, has undertaken a number of pit optimisations to determine the prefered production rate as well as to provide a guide for overall project economics.

The opimisation study has identified that the project can sustain a substantially larger production rate than the 1.5Mtpa throughput originally anticipated in the Scoping Study, which supports the Company's belief that Dalgaranga could produce between 80,000 and 100,000 ounces per annum for between 6 and 7 years.

As expected, with larger production rates the operating costs and cutoff grades decrease, which in turn increases the amount of the resource that falls within the optimised pit shell and increases the returns. See Table 1 and Figures 3-4 for a breakdown of the optimisation results.

The optimisations were run at 2.0, 2.5, 3.0 and 3.5 Mtpa using a A$1,500 gold price and preliminary costs adjusted for scale, based on the recently updated Gilbeys Resource and the existing (soon to be updated) Golden Wings Resource. The optimisations have also taken into account the geotechnical data recently obtained from the historical Dalgaranga mine and historical production records.

The optimisations indicate that the project can sustain a production rate of between 2.0 and 3.0Mtpa, which results in between 584,000 and 712,000 ounces falling within the A$1,470 pit shell, with projected production betweeen 80,000 and 115,000 ounces per annum for between 6.0 and 7.0 years.

Although on first glance it appears that a 3.5Mtpa process plant produces greater returns at a lower cost, it is CSA Global's belief that this production rate is too rapid, with the mining sequence and vertical advance required to achieve this production rate above what is considered best practice.

A production rate around 2.5Mtpa is considered by CSA Global to be most appropriate for the project.

P.O. Box 1449, West Perth, Western Australia 6872 Rust House, Level 2, 33 Ord Street, West Perth, Western Australia 6005 Telephone +61 8 9481 3434, Facsimile +61 8 9481 0411

Email: admin@gascoyneresources.com.au, Web: www.gascoyneresources.com.au

Table 1 Summary of Dalgaranga Pit Optimisation Results

Production Rate	Resource in Pit Optimisation (Mt)	Grade G/t Gold	Contained Ounces	Strip Ratio	Projected Mine Life	Annual Production Target	Discounted Cash Flow (A$M)	Measured Resource in Optimisation	Indicated Resource Within Optimisation	Inferred Resource Within Optimisation
Scoping Study (1.5Mtpa)	7.5	1.4	330,000	6.9	6.0	60,000	142	-	80%	20%
2.0 MTPA	13.6	1.3	584,000	6.2	6.8	80,000	210	20%	65%	15%
2.5 MTPA	15.5	1.3	646,000	6.4	6.2	100,000	266	18%	60%	22%
3.0 MTPA	17.6	1.3	712,000	6.6	5.9	115,000	312	16%	56%	28%
3.5 MTPA	19.6	1.2	773,000	6.8	5.6	130,000	356	15%	53%	32%

Note: The resources for Scoping Study contained no Measured Resources, Discounted cash flow based on an 8% discount rate and excludes project establishment costs

Figure 3: Contained Ounces within Pit Optimisation Vs Process Plant Capacity

Figure 4: Change in Projected Discounted Cashflow and Projected Costs with Process Plant Capacity

Process Plant Studies

The Company has also appointed Mintrex as process plant engineers for the Pre Feasibility Study. Mintrex are working on the design as well as the capital and operating cost models for the project.

Mintrex has a history with Dalgaranga with a number of the key team members being involved in modifications to the original 1990's process plant design and its move to Kirkalocka. Additionally Mintrex has a history of designing simple process plants that have proven themselves to operate efficiently while also being considerably less capital intensive than other designs. As evidenced by the design and construction of the process plants for Regis Resources. Mintrex have designed all three of Regis' process plants with a combined capacity of around 10Mtpa.

The plant design for Dalgaranga will be based on Regis' Moolart Well and Rosemount processing plants.

Future Programme:

In addition to the process plant design work that is ongoing, open pit mine designs and mine schedules (based on the pit optimisations outlined above) as well as a hydrogeological assessment, tailings storage studies and work on additional site infrastructure requirements are all underway.

Results from the recent Golden Wings Resource drilling are also expected to be received within two weeks. These will then be fed into an updated Golden Wings Resource model which will be included in the PFS which remains on scheule for completion in the current quarter.

In addition to the PFS activities, exploration results are still pending with around 50% of the aircore drilling results yet to be received. These are expected within two weeks.

For further information please refer to the Company's website or contact the Company directly. On behalf of the board of

Gascoyne Resources Limited

Michael Dunbar Managing Director

Figure One: Gascoyne Resources Project Locations in the Gascoyne and Murchison Regions