Gascoyne Resources : September 2016 Quarterly Report, 8.2 MB

DALGARANGA PROJECT:

57 139 522 900

During the quarter significant progress was made on the Feasibility study, as well as an aggressive exploration and resource drilling programme on the project.

Three drill rigs were active at Dalgaranga for most of the quarter targeting resource extensions and infilling the Inferred Resources as well as regional exploration. RC and diamond resource drilling intersections include:

• 28m @ 3.5 g/t gold from 105m, including 16m @ 5.1 g/t gold
• 17m @ 3.2 g/t gold from 73m, including 6m @ 7.0 g/t gold
• 35m @ 1.2 g/t gold from 94m
• 21m @ 1.4 g/t gold from 117m and 15m @ 1.3 g/t gold from 149m o 29m @ 1.0 g/t gold from 146m and 8m @ 2.0 g/t gold from 192m o 43m @ 1.0 g/t gold from 262m
• 22m @ 1.2 g/t gold from 182m and 14m @ 1.3 g/t gold from 215m
• 13.54m @ 1.4 g/t gold from 256

  As a result of the resource drilling, the Golden Wings and Gilbeys Resource estimates were updated during the quarter. The new resource estimate resulted in a 40% increase in the Measured and Indicated Mineral Resource at Dalgaranga. The highlights of the resource estimate include:

• The total Dalgaranga Mineral Resource has grown to 25.7Mt @ 1.4 g/t gold for 1,116,000 ounces
• Dalgaranga Measured and Indicated Mineral Resource increased to 708,000 ounces of gold (16.4Mt @ 1.34 g/t gold)
• Over 95% of the Resource within PFS pit designs is now classified as Measured and Indicated Exploration drilling on the project has intersected numerous significant intersections on the project. Of particular note are the high grade intersections at Gilbeys South, where significant extensions to the main Gilbeys ore zone have been

  discovered. Intersections include:

• 22m @ 5.7 g/t gold, including 6m @ 18 g/t gold
• 5m @ 10.7 g/t gold
• 12m @ 1.9 g/t gold, including 6m @ 3.1g/t gold
• 10m @ 1.5 g/t gold
• 6m @ 2.6g/t gold
• 12m @ 2.0 g/t gold, including 4m @ 5.5 g/t gold
• 8m @ 4.9 g/t gold (Gilbeys North)

The Feasibility study continues to progress well, and remains on schedule for completion in mid Q4 CY2016.

GLENBURGH PROJECT:

Exploration recommenced on the project after a two year hiatus with a small drill programme completed. The drilling intersected significant mineralisation at the Apollo East prospect including 24m @ 0.8 g/t gold including 12m @ 1.0 g/t gold. Exploration is ongoing on the project with a number of regional surface sampling programmes underway.

CORPORATE:

During the quarter 700,000 unlisted employee options were exercised.

At the end of the quarter, the Company's cash reserves were $12.0 million.

CORPORATE DETAILS

ASX Code: GCY

Shares: 253M Share Price: 58.5c

Market Cap: $148 M

ASSETS

Cash: $12.0M

Glenburgh (100%) 1.0M oz Gold Dalgaranga (80%) 1.12M oz Gold Egerton (100%) 24,000oz Gold

BOARD

Non-Executive Chairman Mike Joyce

Managing Director Michael Dunbar

Non-Executive Directors John den Dryver Gordon Dunbar Graham Riley

Stan Macdonald

CONTACT DETAILS

Telephone: +61 8 9481 3434

Facsimile: +61 8 9481 0411

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

REVIEW OF OPERATIONS

Details of the exploration progress during the quarter include:

DALGARANGA PROJECT

Figure 1: Gascoyne Resources Project Locations in the Gascoyne and Murchison Regions

E59/1709, 1904, 1905, 1906, M59/749 & L 59/141, 142, 151 & 153, ELA21/195, LA59/152 - 80% Gascoyne &

ELA59/2150 - 100% Gascoyne

Activities at the Dalgaranga gold project have accelerated with three drill rigs active on the project for most of the quarter. This has resulted in a substantial increase to the Mineral Resource, and most importantly a significant increase in the confidence in the resource classification. There has also been a significant exploration effort during the quarter. This has resulted in the discovery of significant widths and grades of gold mineralisation being intersected at the Gilbeys South prospect. The Feasibility study has also progressed smoothly during the quarter, with completion expected mid- way through the December quarter.

DRILLING UPDATE

Three drill rigs have been actively drilling at Dalgaranga for most of the quarter with the drilling designed to infill the Inferred Resources, extend the existing Resources, to test known prospects and further regional exploration. As announced on the 7th of July, 1st and 17th of August and the 7th of October, drilling has intersected significant widths and grades of gold mineralisation (see Figure 2 - 10). The drilling is summarised below:

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Gilbeys Drilling:

A substantial amount of resource definition drilling has been completed during the quarter to better define the Inferred portion of the Mineral Resource (to allow conversion to Measured and Indicated). As released to the ASX on 1st and 17th of August, intersections have included:

• DGRC089; 28m @ 3.5 g/t gold from 105m, including 16m @ 5.1 g/t gold

• DGRC093; 17m @ 3.2 g/t gold from 73m, including 6m @ 7.0 g/t gold

• DGRC094; 35m @ 1.2 g/t gold from 94m

• DGRC095; 21m @ 1.4 g/t gold from 117m

• DGRC098-DT; 29m @ 1.0 g/t gold from 146m and 8m @ 2.0 g/t gold from 192m

• DGDH004; 43m @ 1.0 g/t gold from 262m

• DGDH006; 22m @ 1.2 g/t gold from 182m and 14m @ 1.3 g/t gold from 215m

  o DGDH009; 13.54m @ 1.4 g/t gold from 256.19

  As announced to the ASX on 17th of August, exploration East of the Gilbeys Deposit also intersected significant shallow mineralisation including:

• 6m @ 1.1 g/t gold from 8m to EOH in DGAC700
• 25m @ 0.5 g/t gold from 8m to EOH, including 8m @ 1.0 g/t in DGAC727
• 12m @ 0.6 g/t gold from 16m in DGAC706
• 11m @ 0.5 g/t gold from 4m to EOH in DGAC685

The exploration and resource drilling results (excluding DGRC098-DT) at the Gilbeys deposit have now been incorporated in an Updated Mineral Resource (see below for details).

In addition to the Gilbeys resource definition drilling, exploration aircore and RC drilling at Gilbeys South has been undertaken to test a 550 metre extension to the Gilbeys Deposit (see ASX announcements dated 7th of July, 17th of August and 7th of October). This drilling has intersected high grade and wide zones of mineralisation.

RC drill Intersections include:

• 22m @ 5.7 g/t gold from 102m including 6m @ 18.0 g/t in DGRC139;
• 2m @ 9.0 g/t gold from 57m in DGRC133;
• 29m @ 1.0 g/t gold from 146m and 8m @ 2.0 g/t gold from 192m in DGRC098 - DT;
• 10m @ 1.5 g/t gold from 65m in DGRC138;
• 9m @ 1.3 g/t gold from 21m in DGRC137
• 12m @ 1.9 g/t gold from 19m, including 6m @ 3.1g/t from 25m in DGRC116
• 10m @ 1.5 g/t gold from 58m in DGRC105
• 16m @ 1.3 g/t gold from 11m and 5m @ 10.7 g/t gold from 33m in DGRC099
• 13m @ 1.4 g/t gold from 8m in DGRC097
• 15m @ 1.3 g/t gold from 149m in DGRC095 o 19m @ 1.1 g/t gold from 87m in DGRC109 o 24m @ 1.0 g/t gold from 26m in DGRC115 o 6m @ 2.6g/t gold from 21m in DGRC120

  The initial discovery at Gilbeys South area was made by aircore drilling. This drilling intersected significant shallow mineralisation, now followed up with RC drilling (above). Discovery aircore intersections included:

• 12m @ 2.0 g/t gold from 16 metres (incl. 4m @ 5.5 g/t gold) in DGAC513
• 4m @ 3.4 g/t gold from 8m in DGAC520
• 8m @ 1.9 g/t gold from 28m in DGAC504
• 16m @ 1.2 g/t gold from 4m, including 4m @ 4.2 g/t gold in DGAC547
• 38m @ 0.9 g/t gold from 12m to EOH including 10m @ 1.5 g/t gold to EOH in DGAC548
• 16m @ 1.1 g/t gold from 32m in DGAC523

In addition to the exploration drilling, a programme of sterilisation drilling has been completed at the proposed process plant site (see Figure 4). This drilling has confirmed that there is no significant mineralisation within the area and the area is considered to be sufficiently sterilised to allow the site to be used for the processing plant.

Figure 2: Dalgaranga Site Layout