Gascoyne Resources : New Gold Discovery at Dalgaranga - Sly Fox, 7.1 MB

December 15th 2016

Australian Securities Exchange Limited Via Electronic Lodgement

57 139 522 900

• Aircore drilling has returned significant gold intersections at a new discovery "Sly Fox", only 600m south of the Gilbeys deposit and 500m south east of Gilbeys South Prospect; 4m composite results include:
  • 36m @ 2.3 g/t gold from 16m including 16m @ 4.2 g/t
  • 39m @ 1.1 g/t gold from 8m to EOH
  • 47m @ 0.5 g/t gold from surface to EOH
• Intersections highlight the potential for significant further resource growth at the Dalgaranga Gold Project.
• New results from Gilbeys South resource drill out include:
  • 22m @ 2.5 g/t gold from 79m
  • 23m @ 1.2 g/t gold from 71m
• Due to significant delays at the Assay Laboratory; results are pending for more than 60 RC holes from Gilbeys South and 300 Aircore holes from regional and sterilisation drilling, with results expected in January 2017.
• Resource update expected Q1 2017, including maiden Resource estimate for the Gilbeys South deposit
• Aggressive resource extension and regional exploration efforts will continue throughout 2017
• Significant progress towards development of the Dalgaranga Gold Project continues, including finalisation of permitting and acquisition of long lead time items funded by Gascoyne's existing strong cash position

Gascoyne Resources Limited ("Gascoyne" or "Company") is pleased to report the discovery of a new gold propspect ("Sly Fox")and further assay results received from exploration drilling activities at its 80% owned Dalgaranga Gold Project in the Murchison region of Western Australia. The Dalgaranga Gold Project already contains a Measured, Indicated and Inferred Resource of 25.7Mt @ 1.4 g/t gold for 1.12 million ounces of contained gold including Proved and Probable Ore Reserve of 552,000 ounces of gold (see Figures 1 & 2 & Tables 6 & 7 below) , and is to be updated in Q1 CY2017 following announcement of a maiden Resource for the Gilbeys South deposit.

Sly Fox Discovery

Aircore drilling focused on testing structural targets has intersected very near surface and significant downhole thicknesses of gold mineralisation some 600m south of the Gilbeys deposit and 500m south east of the Gilbeys South prospect, at the newly named Sly Fox prospect. Lengthy zones of gold mineralisation have been intersected in 3 consecutive Aircore holes on a single line, with holes approximately 50m apart. Results from 4m composite sampling include 36m @2.3 g/t gold from 16m in DGAC1160 including 16m @ 4.2g/t gold, 39m @ 1.1g/t gold from 8m to EOH in DGAC1159 and 47m @ 0.5g/t gold from surface to EOH in DGAC1158 (Table 1).

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

Mineralisation is hosted in saprolitic clays - with the clays interpreted to be altered porphyry-volcanic schists and shales similar to the stratigraphic package that hosts the Gilbeys and Gilbeys South gold deposits to the north west (See Figure 3 and 4).

At this stage the trend of the mineralised zone is unknown, and further results are required to better understand the true thickness of the mineralised zones. It is possible that the drilling maybe oblique to the strike trend of the mineralisation in what is interpreted from aeromagnetics as a structurally complex area. A significant number of results from Aircore drilling immediately south and east of this zone are pending. Once they have been received a better understanding of the orientation of this potentially significant mineralised zone will be known. Planning is underway for follow up RC testing of this exciting new gold discovery as early as posible in 2017. See the Figures and tables below for drilling details.

Dalgaranga Drilling Update and Gilbeys South

There have been significant delays at the Assay Laboratory; with results outstanding from more than 60 RC holes from the Gilbeys South area and over 300 Aircore holes from regional and sterilisation drilling. Therefore all drilling results are not expected to be received until January 2017. These results will feed into the data set used to estimate the maiden Mineral Resource for the Gilbeys South area, which is likely to be completed in the first quarter of calendar 2017.

Significant new results have been received from resource drilling at Gilbeys South which include the following intersections:

• 22m @ 2.5 g/t gold from 79m in DGRC207;

• 23m @ 1.2 g/t gold from 67m in DGRC215;

• 7m @ 1.1 g/t gold from 111m in DGRC182;

• 12m @ 0.8 g/t gold from 15m in DGRC190;

• 16m @ 1.0 g/t gold from 25m in DGRC205;

• 5m @ 2.3 g/t gold from 21m in DGRC208

• 10m @ 0.8 g/t gold from 34m in DGRC206

  Regional Aircore Drilling

  More recent Aircore drilling has focussed on sterilisation drilling over areas around the project that may be impacted by proposed site infrastructure - predominantly waste dumps. Drilling was also conducted south and east of the Gilbeys and Gilbeys South trend, Tanqueray and the Gordons prospect areas. As discussed above results from more than 300 Aircore drill holes are awaited.

  Aside from the new discovery at the Sly Fox prospect numerous elevated gold anomalies have been received from the completed Aircore program. Some of the better results have been returned along a trend to the south and east from modelled ore zones along the southern edge of the Gilbeys deposit (Figure 5 and Table 3). Better results include.

• DGAC759 32m @ 0.62 g/t gold from 32m

• DGAC763 28m @ 0.62 g/t gold from 4m

• DGAC 764 5m @ 0.56 g/t gold from 48m (EOH)

• DGAC 768 16m @ 0.77 g/t gold from 20m

• DGAC777 16m @ 0.63 g/t gold from 32m

• DGAC786 28m @ 0.61 g/t gold from 16m

• DGAC1143 5m @ 0.44g/t gold from 40m

• DGAC1144 6m @ 2.9 g/t gold from 56m (EOH)

  Significant Newsflow over the Coming Months

  As announced to the ASX on the 25th November, 2016 the Gascoyne Board has approved the Feasibility Study and subject to obtaining a suitable financing arrangement, has approved the project to proceed to construction.

  Whilst financing is progressed over the coming months, the Company expects to deliver significant and regular newsflow as it continues to make strong progress on early development activities and continues to progress an extensive exploration programme, with key newsflow to be reported including:

• Completion of project permitting and securing of long lead time items required for construction of the plant;

• Release of a large number of drill results that are pending in the assay laboratory that are expected to be received in January 2017, including:

  • More than 60 RC holes from Gilbeys South and

  • Approximately 300 Aircore holes from regional and sterilisation drilling

• Release of results from ongoing drilling at near-resource drill targets and regional drill targets at Dalgaranga

• Mineral Resource update at Gilbeys, including a maiden resource at Gilbeys South;

• An update to the Ore Reserve, Open Pit Mine Designs and Mine Schedule; and

• Updates in respect of the progress at Gascoyne's second +1.0 million ounce WA gold development project at Glenburgh

Gascoyne's strong cash position will ensure Gascoyne can continue pressing on with these activities and maintain an aggressive exploration programme, with regular significant newsflow to be reported over the coming months.

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

Figure Two: Dalgaranga Gold Project Deposit and Prospect Layout