Gascoyne Resources : Secures 100% of the Dalgaranga Gold Project, 1.3 MB

December 22nd 2016

Australian Securities Exchange Limited Via Electronic Lodgement

57 139 522 900

• Gascoyne has consolidated the ownership of the 1.12Moz Dalgaranga Gold Project, after purchase of minority JV Partner's 20% interest
• Consideration for the 20% interest includes:
  • $4.5 million in cash (fully funded by Gascoyne's existing cash reserves)
  • Issue of 11.0 million Gascoyne Shares (escrowed for 12 months)
  • Deferred cash payment of $1.5 million after 30,000oz of gold has been produced from the project
• Dalgaranga Gold Project is now 100% owned by Gascoyne, with no private royalty
• Significant progress towards development of the Dalgaranga Gold Project continues, including finalisation of permitting and acquisition of long lead time items, and ongoing resource extension drilling funded by Gascoyne's existing cash position
• Securing 100% ownership of Dalgaranga will simplify and accelerate project financing

Gascoyne Resources Limited ("Gascoyne" or "Company") is pleased to advise that it has moved to 100% ownership of the Dalgaranga Gold Project in the Murchison region of Western Australia, through aquistion of the minority joint venture partner's 20% interest in the Mining Lease and miscellaneous licences. 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 1 & 2 below) , which will be updated in Q1 CY2017 following completion of a maiden Resource estimate for the Gilbeys South discovery.

The consideration for the 20% interest in the Dalgaranga Gold Project, is $4.5 million in cash, 11 million Gascoyne shares (escrowed for 12 months) and a deferred cash payment of $1.5 million after 30,000 ounces have been produced from the project. Based on the recently completed Feasibility Study (see ASX announcement 25th November 2016), the Dalgaranga project has an NPV8 of $177 million, so the acquisition of the remaining 20% of the project has been achieved at a considerable discount.

The holder of the minority joint venture interest elected to receive a large proportion of the consideration in Gascoyne shares, and has agreed to a 12 month escrow on the consideration shares, reflecting his belief in the substantial upside in the Dalgaranga project, and the more general benefits of exposure through long term share ownership in Gascoyne. Gascoyne welcomes this vote of confidence from our partner in not only the project but also in the way in which we undertake exploration through careful targeted and aggressive exploration, and the confidence he has in Gascoyne to successfully deliver the Dalgaranga Gold Project into production and ultimately strong cashflow.

Given the current cash position of the Company of ~$9.7 million, the cash position post the acquisition will be ~$5.2 million, which will comfortably fund the aggressive exploration effort ongoing at both of the Company's 100% owned +1.0 million ounce gold projects in Western Australia and the ongoing early development activities at Dalgaranga.

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

Commenting on the acquisition, Gascoyne's Managing Director, Mike Dunbar said;

"The move to 100% ownership of the Dalgaranga project is a very significant milestone for the Company and greatly simplifies the development of the project as currently planned and provides greater exposure to the exploration potential on the Mining Lease.

Gascoyne now has two 100% owned +1.0 millon ounce gold projects (Dalgaranga and Glenburgh) in Western Australia on granted Mining Leases, which are highly prospective and remain underexplored. This puts the Company in a fantastic position in having not only the near term development ~100,000ozpa Dalgaranga Project, but also a growth project in Glenburgh which could, over time, see development of a second project increasing production towards 200,000ozpa.

The current cash reserves (post acquisition of the 20% interest at Dalgaranga) of over $5 million will allow not only an ongoing exploration effort in 2017, which recently resulted in the discovery at "Sly Fox" at Dalgaranga, but also early development activities at Dalgaranga, which includes detailed engineering, securing long lead time items and project permitting."

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 near-resource regional and sterilisation drilling

• Release of results from ongoing drilling at near-resource drill targets including Sly Fox discovery, and regional drill targets at Dalgaranga

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

• Results from initial metallurgical testwork at Gilbeys South; and

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

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

Managing Director

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

Figure Two: Dalgaranga Gold Project Deposit and Prospect Layout

BACKGROUND ON GASCOYNE RESOURCES

Gascoyne Resources Limited was listed on the ASX in December 2009 and is focused on exploration and development of a number of gold projects in Western Australia.

The Company's two main gold projects combined have 2.1 million ounces of contained gold on granted Mining Leases:

The Dalgaranga project is located approximately 65km by road NW of Mt Magnet in the Murchison gold mining region of Western Australia and covers the majority of the Dalgaranga greenstone belt. After discovery in the early 1990's, the project was developed and from 1996 to 2000 produced 229,000 oz's of gold with reported cash costs of less than $350/oz.

The project contains a JORC Measured, Indicated and Inferred Resources of 25.7 Mt @ 1.4g/t Au for 1,116,000 ounces of contained gold (Table 1). The Dalgaranga project has a Proved and Probable Ore Reserve of 552,000 ounces of gold (Table 2).

The FS study that has been completed has highlighted a robust development case for the project.

The FS investigated the development of two open pits feeding a 2.5Mtpa processing facility resulting in production of around 100,000ozpa for 6 years and concluded that the operation would be a low cost, high margin and long life operation with high operating margins.

Significant exploration potential also remains outside the known resources with numerous historical geochemical prospects only partly tested.

Table 1 - Dalgaranga September 2016 Mineral Resource Estimate

(0.5 g/t Cut-off Above 120 mRL, 1.0 g/t Cut-off Below 120 mRL)

Table 2 Ore Reserve Statement - Dalgaranga Project November 2016 (100% basis)

Note: Rounding errors may occur

The Glenburgh Project in the Gascoyne region of Western Australia, has a Measured, Indicated and Inferred resource of: 21.3 Mt @ 1.5g/t Au for 1.0 million oz gold from several prospects within a 20km long shear zone (see Table 3)

A preliminary feasibility study on the project has been completed (see announcement 5th of August 2013) that showed a viable project exists, with a production target of 4.9mt @ 2.0g/t for 316,000oz (70% Indicated and 30% Inferred resources) within 12 open pits and one underground operation. There is a low level of geological confidence associated with inferred mineral resources and there is no certainty that further exploration work will result in the determination of indicated mineral resources or that the production target itself will be realised. The study showed attractive all in operating costs of under A$1,000/oz and indicated a strong return with an operating surplus of ~ A$160M over the 4+ year operation. The study included approximately 40,000m of resource drilling, metallurgical drilling and testwork, geotechnical, hydro geological and environmental assessments. Importantly the study has not included the drilling completed during 2013, which intersected significant shallow high grade zones at a number of the known deposits.

Table 3: Glenburgh Deposits - Area Summary 2014 Mineral Resource Estimate (0.5g/t Au Cut-off)

Note: Discrepancies in totals are a result of rounding