770fcef1-8123-4ed4-b78c-d71a04d0b55c.pdf Quarterly Report - March 2016

ASX Code: VAR

ACN: 003 254 395

Issued Shares: 376M Listed Options: 131M Unlisted Options: 57M VAR Cash Balance: $0.45M VAR Investments: $1.7M

Directors Pat Elliott Greg Jones Jack Testard

Kwan Chee Seng Dr Foo Fatt Kah Michael Moore

Top Shareholders Kwan Chee Seng Acorn Capital

Chris and Betsy Carr

Dr Foo Fatt Kah

Head Office

Variscan Mines Limited Level 1, 80 Chandos Street St Leonards NSW 2065

Postal

PO Box 956

Crows Nest NSW 1585

T +61 (0)2 9906 5220

F +61 (0)2 9906 5233

E info@variscan.com.au

www.variscan.com.au

Highlights

Merléac - PAM

Electronic conversion of previous exploration and mine development data from the high grade Porte-aux-Moines (PAM) zinc deposit completed

Generation of a revised mineralisation model and wireframes for Resource estimation completed

Resource modelling by independent consultancy to commence shortly Maiden JORC 2012 Resource Estimate expected around late May

Drilling anticipated to commence mid-year to follow-up former BRGM intersections including -

  • PAM5 - 31.0 metres @ 10.4% zinc, 2.1% lead, 1.2% copper,

    105.5 g/t silver, 1.0 g/t gold (21.1% Zn Eq*)

    PAM14 - 27.0 metres @ 14.0% zinc, 3.3% lead, 0.8% copper,

    161.4 g/t silver, 0.8 g/t gold (25.7% Zn Eq*)

    Merléac - Regional Exploration

    Confirmation of two main trends of VMS mineralisation containing seven distinct mineralised centres over a total strike length of 22 kilometres

    Highlights the strong potential for new VMS deposits in the same rock units that host the Porte-Aux-Moines deposit

    Assays from sampling returned highly anomalous geochemical results including:

  • 800ppm zinc, 6.1% lead, and 1840ppm copper

  • 1521ppm zinc, 2304ppm lead, and 1031ppm copper

Some prospects are in close proximity to 'Tier 1' targets identified in VTEM survey, indicating good potential for buried VMS deposits

Follow up work in progress for drill targeting

St Pierre Gold Project

Planning for commencement of drill programme nearing finalisation

Drilling to test targets where sampling has recorded up to 21.5g/t gold in float sampling and 2.4g/t gold in soils

Corporate

At the end of the quarter, Variscan held $0.45 million in cash. Liquid investments held in ASX resource companies totalled $1.7 million

Exploration FRANCE

MERLÉAC - PORTE-AUX-MOINES

During the reporting period work by Variscan centred on the high-grade Porte-aux-Moines (PAM) zinc-lead-copper-silver-gold volcanogenic massive sulphide (VMS) deposit within its Merléac licence, Brittany, France.

Former exploration by the BRGM (Bureau de Recherches Géologiques et Minières - the French geological survey) at PAM from 1976-1984 included approximately ten kilometres of surface and underground drilling and two kilometres of underground mine development. This work defined zones of high grade mineralization up to 20 metres thick from near surface to a depth of about 300 metres within a stacked massive sulphide system.

Variscan previously sampled the three remaining preserved surface core holes drilled into PAM announcing a number of outstanding, high grade, zinc-dominant, polymetallic intersections (see ASX announcements dated 19 May, 20 and 29 July 2015). In November, 2015 the Company received a comprehensive two gigabyte dataset from the BRGM containing scanned copies of all available technical information generated by the BRGM exploration work at PAM including drill hole logs, assays, mine development, mapping data and metallurgical work.

Variscan has now completed converting the majority of the drill and development data to electronic formats and has generated a revised mineralisation model for this deposit (Figure 1). Wireframes of the interpreted high grade mineralisation envelopes have been completed and have been sent to QG Australia Pty Ltd, an independent consultancy group to undertake a Resource estimation of PAM to 2012 JORC standards. This work is expected to be completed in late May.

Figure 1 - Plan view of PAM geology and interpreted mineralisation at 150 metres below the surface showing underground development by the BRGM

PAM DRILL TARGETS

Although mineralisation within the deposit has been comparatively well defined by the large number of surface and underground drill holes (plus underground development), Variscan has identified areas within the deposit which justify additional surface drilling to potentially expand tonnages and increase the volume of Indicated Resource that could be defined.

The targets for near-term drilling are within the Main and Hangingwall zones, notably towards the interpreted base and eastern extension of the high grade, thickened Main zone (see Figures 1 and 2) where former coarse-spaced drilling by the BRGM intersected high grade mineralisation (often >15% Zn Eq*) (see ASX announcement 14 December 2015), in some holes with estimated true widths in excess of 20 metres.

Examples include -

PAM5 - 31.0 metres @ 10.4% zinc, 2.1% lead, 1.2% copper, 105.5 g/t silver, 1.0 g/t gold (21.1% Zn Eq*) - estimated true width 21 metres

PAM14 - 27.0 metres @ 14.0% zinc, 3.3% lead, 0.8% copper, 161.4 g/t silver, 0.8 g/t gold (25.7% Zn Eq*) - estimated true width 18 metres

  • PAM16 - 34.5 metres @ 5.3% zinc, 0.9% lead, 1.2% copper, 86.0 g/t silver, 0.9 g/t gold (14% Zn Eq*) - estimated true width 23 metres

SF25 - 18.8 metres @ 7.0% zinc, 1.7% lead, 2.1% copper, 125.1 g/t silver (15.7% Zn Eq*) - estimated true width 16 metres

Figure 2 - Vertical long section at PAM of the Main surface showing the interpreted thickened zone and flanking mineralisation. Proposed deeper drilling pierce points shown as well as the target area for shallow drilling (hatched)

Deeper drilling (at least 2-3 holes) is planned to test this area and confirm the geological interpretation during the French summer period (Figures 2 and 3), once programme designs are finalised, local approvals gained and access agreements signed.

In addition, drilling may also test the thinner, but shallower section of the Main zone close to the surface which has had little exploration in the past (Figure 2 - hatched area). There is good potential in this area to expand the Resource above the level of the former underground development.

Outside the area defined for Resource estimation, additional strike potential is evident, notably to the west where former drilling by the BRGM (e.g. PAM15 - 1.0 metre @ 10.4% zinc, 5.5% lead, 0.1% copper, 103.0 g/t silver) and the results from the VTEM survey indicated a possible extension of the mineralised system (ASX announcement 28 September 2015).

Figure 3 - Cross section through PAM at 260440mE showing interpreted mineralised zones (at 4% Zn Eq cut-off) and proposed deeper core drilling.

Note: * The Zinc Equivalent value (Zn Eq) is based on zinc (US$1,800 per tonne), lead (US$1,800 per tonne), copper (US$5,600 per tonne), silver (US$15 per ounce) and gold (US$1,150 per ounce). The zinc equivalent calculation represents the total metal value for each metal, multiplied by a price based conversion factor, summed and expressed in equivalent zinc percent per tonne. These results are exploration results only and no allowance is made for recovery losses that may occur should mining eventually result. Nevertheless, it is the Company's opinion that all the elements included in the metal equivalents calculation have good potential to be recovered as is commonly the case for similar VMS deposits

Variscan Mines Limited issued this content on 02 May 2016 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 02 May 2016 00:23:03 UTC. Original document available at http://www.variscan.com.au/components/com_reports/rfiles/ANNOUNCE-887 qtrlyrepmarch.pdf