Orion Gold NL : Significant Zinc-Copper Mineralisation confirmed - Masiqhame (31/05/16)

Microsoft Word - 20160531 ORN ASX Kantienpan v5 clean.docx ASX Announcement / Media Release

31 May 2016

ASX Code: ORN Issued Capital:

Ordinary Shares: 421M Options: 91M

Directors: Denis Waddell

Chairman

Errol Smart

Managing Director, CEO

Bill Oliver

Technical Director

Alexander Haller

Non-Executive Director

Management: Martin Bouwmeester

Company Secretary &

Business Development Manager

Suite 2

64 Thomas Street West Perth WA 6005 ABN 76 098 939 274

T: +61 8 9485 2685

E: info@oriongold.com.au

Significant Zinc-Copper Mineralisation Confirmed on Recently Secured Masiqhame Prospecting Right, South Africa

Due diligence investigations confirm presence of Kantienpan zinc- copper deposit on Prospecting Right recently optioned by Orion

Highlights:

• Several occurrences of significant zinc-copper mineralisation confirmed during due diligence investigations carried out on the Masiqhame Prospecting Right, over which Orion recently secured an option to earn a 73% interest.
• These areas of mineralisation include the Kantienpan Deposit, a virgin VMS-style zinc-copper deposit first discovered in 1998 by Iscor Ltd (Iscor).
• Historical drilling at Kantienpan intersected mineralised zones which returned assay results including 8.84m at 6.32% zinc and 1.02% copper.
• Work is currently underway to investigate other recorded mineralised occurrences on the Prospecting Right area.

Orion Gold NL (ASX: ORN) is pleased to advise that ongoing due diligence activities being undertaken on a recently secured Prospecting Right located 80km north of the Prieska Copper Project in South Africa has confirmed the presence of significant occurrences of VMS-style zinc-copper mineralisation.

The due diligence program is currently being undertaken by Orion following the recently announced Option Agreement relating to Masiqhame Trading 855 Pty Ltd (Masiqhame) (refer ASX Release 29 April 2016). Under this agreement, Orion has an exclusive option to acquire up to 73% of an area covering 984km2 located approximately 80km north of the Prieska Copper Project - further expanding its strategic footprint in this prospective region.

Kantienpan Deposit

Compilation of available data relating to the Masiqhame Option Agreement has confirmed that the Kantienpan Zinc-Copper Deposit lies within the Masiqhame Prospecting Right.

The Kantienpan Deposit is one of a number of Volcanogenic Massive Sulphide (VMS) hosted zinc-copper occurrences within the Masiqhame Prospecting Right (Figure 1). The deposit was discovered by combination of magnetic and time-domain electromagnetic (TDEM) ground surveys, following up on alteration identified by rock-chip sampling (Rossouw, 2003)1.

W: www.oriongold.com.au

A total of 14 diamond core holes for 3,199m were drilled at the Kantienpan Deposit by Iscor (Figures 2 and 3). Significant intersections are detailed in Appendix 1 including the following results:

• 8.84 metres at 6.32% zinc and 1.02% copper (KN005); o 6.15 metres at 4.74% zinc and 0.49% copper (KN010); o 7 metres at 3.15% zinc and 0.57% copper (KN007);
• 13 metres at 3.96% zinc and 0.36% copper (KN003); and
• 2.6 metres at 6.59% zinc and 0.35% copper (KN011).

Drilling has confirmed the presence of significant mineralisation extending from 80 metres - 250 metres below surface and along 800 metres of strike. Mineralisation at the Kantienpan Deposit remains open both along strike and at depth.

Drilling at the Kantienpan Deposit was curtailed soon after discovery, due to a corporate decision by Iscor to stop all exploration and focus on Iron ore production. A number of additional litho-geochemical and geophysical targets remain to be tested on the Prospecting Right Area.

Orion believes that the integration of geochemical and geophysical methods may quickly enable new targets to be identified within the Masiqhame Prospecting Right, which overlies a highly prospective VMS horizon extending over more than 30km of strike. This horizon contains numerous published occurrences of copper, zinc, copper-zinc and zinc-copper mineralisation associated with massive sulphides.

Figure 1: Plan showing location of the Kantienpan Deposit and other mineral occurrences within the Masiqhame Prospecting Right (du Toit, 1998)2.

1. Rossouw, D, 2003. A technical risk evaluation of the Kantienpan volcanic-hosted massive sulphide deposit and its financial viability. M.Sc. thesis, University of Pretoria, 118 pp.

1. Du Toit, M.C, 1998. The metallogeny of the Upington-Kenhardt Area. Explanation: Metallogenic Sheets 2820 and 2920, South African Council for Geoscience, 108p.

   B

   A

   Figure 2: Geology map of the Kantienpan Deposit area showing Iscor drilling.

   A B

   7m at 3.15%Zn+0.57%Cu

   13m at 3.96%Zn+0.57%Cu

   2.97m at 5.09%Zn+0.30%Cu

   0.88m at 7.42%Zn+0.26%Cu

   Figure 3: Cross section through Kantienpan Deposit (refer Figure 2 for location of A - B).

   Orion has contracted Mr Deon Rossouw, who led the discovery team at the Kantienpan Deposit, to produce a project review and design a follow-up exploration program for the area overlain by the Masiqhame Prospecting Rights.

   Locality and Infrastructure

   The Kantienpan Deposit site is located in easily accessible flat-lying countryside and is well situated with regional grid power and rail lines within 10km of the site. A good all-weather dirt road passes within 800m of the deposit.

   Key Terms of Masiqhame Option Agreement

   • Orion has the opportunity to earn up to a 73% interest in Masiqhame.

   • Masiqhame is a privately owned South African company with 100% Historically Disadvantaged South African ownership. Masiqhame is therefore black economic empowerment (BEE) compliant from the outset and Orion will earn in to an incorporated joint venture, partnering with a BEE partner via Masiqhame.

   • Orion will have an exclusive option to undertake due diligence on the corporate entity and the prospecting right until no later than 30 September 2016 (Option), failing which the parties will be released from their obligations under the Option agreement.

   • Following the successful completion of due diligence, should Orion elect to exercise the Option: