MGV: Exceptional Metallurgical Test Work Results at Break

ASX RELEASE 31 March 2017

• Excellent total gold recovery confirmed by initial metallurgical test work on the Break of Day prospect
• 96% (average) recoverable gold from conventional gravity and cyanide leach processing
• Exceptionally gravity recoveries (average 84.2%) were achieved - very high in comparison to typical Yilgarn gold ores

Musgrave Minerals Ltd ("Musgrave" or "the Company") (ASX: MGV) is pleased to announce that it has completed initial metallurgical test work at the Break of Day prospect on the Cue Project in the Murchison region of Western Australia (Figure 1). The Cue Project is a joint venture with Silver Lake Resources (ASX: SLR) where Musgrave holds a 60% interest and has elected to increase its interest to 80%.

Musgrave Managing Director Rob Waugh said, "This is an excellent result at Break of Day and will enable the Company to assess multiple processing options going forward. The exceptionally high gravity recovery will enable flexible processing and potentially reduce capital and operating costs".

Three composite fresh rock samples were collected from nine representative drill holes across the strike of the gold lodes at Break of Day. The samples were representative of the various gold lodes, ore types and feed grades for potential future mining and processing activities. The samples were composited from reverse circulation "RC" drill samples recently completed at the prospect with the results confirming excellent gold recoveries utilising conventional gravity and cyanide techniques.

Metallurgical recovery tests were completed on the three samples at a grind size of 80% passing 75μm. The gravity recoverable component was initially concentrated using a conventional laboratory scale bench top Knelson concentrator, followed by intensive cyanide leaching of the concentrate to replicate typical gravity gold intensive leach reactors.

A conventional 48hr cyanide leach was then carried out on the residual material from the Knelson concentrator with readings taken every two hours to determine leach kinetics of the samples.

The test work has demonstrated very rapid leaching kinetics for all three samples and overall recovery of between 95.7% and 96.3% (average 96.0%) to produce a maximum leaching of gold after the first 8 hours.

In addition, exceptionally high gravity recoveries of between 80.8% and 86.1% (average 84.2%) were achieved from a single pass through the Knelson concentrator. The gravity recoveries are very high in comparison to typical Yilgarn gold ores.

Cyanide consumption from the tests ranged from 0.63kg/t to 1.22kg/t (average consumption 0.98kg/t). All recovery test work was completed at an established grind size of 80% passing 75µm.

The test work was undertaken by ALS Metallurgical Laboratories in Balcatta, Western Australia and managed and reviewed by CPC Project Design.

Further metallurgical test work is currently being planned for the Lena gold deposit with samples being provided from the current RC drill program.

Figure 1: Plan of Break of Day Metallurgical test work sample locations

Figure 2: Graph showing metallurgical gold extraction and recovery curve over time at Break of Day

Musgrave has currently drilled 44 holes for a total of 4,006m in the current program. Assay results have been received for 6 drill holes with results for the remaining 38 drill holes expected over the next four week period.

There is significant potential to continue to improve the grade and increase the gold resources at Lena and Break of Day with further drilling.

Musgrave is currently planning an additional RC drilling program to continue to infill and extend the gold mineralisation at both Break of Day and Lena in preparation for a new resource upgrade expected in June 2017. The new resource estimate will underpin studies to demonstrate a viable path to near term development.

The Cue Project ("the Project") is a Farm-In and Joint Venture Agreement with Silver Lake Resources Limited ("Silver Lake") (ASX: SLR). Musgrave has met the Stage 1 Earn-In holding a 60% Joint Venture interest in the Project and has elected to progress to Stage 2 and increase its equity to 80%. The Project consists of the Moyagee Gold and Hollandaire Copper Resources (see ASX announcement 25 November 2015, "Musgrave Secures Advanced Gold and Copper Project") and surrounding tenure in the highly prospective Murchison province of Western Australia (Figure 3).

The Cue Project is in a well-endowed historical gold producing district in the Murchison region of Western Australia with three currently operating gold plants within trucking distance of the Moyagee Gold Project (Figure 4).

The Company believes there is significant potential to extend existing mineralisation and also discover new high grade mineralisation within the Project area, shown by the recent drilling success at Break of Day and Lena.

Enquiries:

Rob Waugh Managing Director

Musgrave Minerals Limited

+61 8 9324 1061

Figure 3: Cue Project location plan