Avanco Resources : Quarterly Activities Report 27 Apr 2017

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Avanco Resources (ASX: AVB)

27 April 2017

Suite 3, 257 York Street

Subiaco, WA 6008 Australia.

PO Box 1726

West Perth, WA 6872, Australia

Tel: +61 8 9324 1865

Fax: +61 8 9200 1850

Contacts:

Nicholas Bias

Head of Corporate Affairs nbias@avancoresources.com Tel: +61 (0)497 888 227

+44 (0)7771 450 679

For the latest news:

www.avancoresources.com

Directors: Colin Jones Tony Polglase Simon Mottram Luis Azevedo Vern Tidy

Luiz Ferraz

Management: Wayne Phillips Scott Funston Nicholas Bias Otávio Monteiro

Avanco Resources Limited ("Avanco" or "the Company") is pleased to present its First

Quarter 2017 Activities Report for the period ending 31 March 2017.

During the quarter the Antas Mine produced copper and gold above guidance, with positive cash flows resulting in cash balances increasing to $23.1 million at quarter end. The Company remains debt free.

• Excellent safety performance with no reported lost-time injuries

• Strong start to 2017 with quarterly copper and gold production ahead of guidance; 3,506t of copper (Q4 2016: 4,010t) and 2,783oz of gold (Q4 2016: 2,839oz)

• Quarterly concentrate sales increased to 14,409t (Q4 2016: 13,868t) and provisional sales revenue (excluding costs) increased to US$26.1m (Q4 2016: US$23.0m)

• C1 unit cash costs US$1.52/lb (Q4 2016: US$1.22/lb)

• Cash increased to US$23.1m after capital expenditure of US$1.9m at 31 March 2017

  - the Company continues to be debt-free

• Renewed exploration focus with $10.6 million budget to advance projects

During the quarter, the Company committed to an enhanced exploration drive, with the approval of a $10.6 million budget to advance reserve drilling at Antas, exploration and development to support a full-scale standalone operation at the Pedra Branca East Project and additional commitments to CentroGold and regional exploration, all funded from Antas cash flows.

On the corporate front, the Company is demonstrating its transition to becoming a mid- tier copper producer with the appointment of a Head of Corporate Affairs, initiation of research by Euroz Securities, and subsequent to the period end, a move towards greater board independence with the announcement of a new Independent Non-Executive Director commencing 1 May 2017.

1

The Antas Mine had a strong start to 2017 with an excellent safety performance, and copper and gold production above guidance. This performance is exceptional when it is considered that the plant also completed an extended maintenance shutdown.

This did however, mean that costs for the quarter were higher than the previous quarter due to processing plant maintenance being brought forward, in addition to a drawdown of inventory stockpiles because of a higher strip ratio, lower payable copper production and a negative impact from movements in the foreign exchange rate (strengthening of the Brazilian Real).

The Antas Mine continued with the excellent safety performance with no lost time injuries reported for the quarter. A total 1,871,959 man hours without a lost time injury have now been achieved on the project to date.

The Antas Mine achieved the Company's First Quarter guidance with 3,506 tonnes of copper metal in concentrate produced and beat the upper-end of guidance for gold production in concentrate with 2,783oz produced. These results aligned well with the Company's expectations, especially considering that the period covers the first wet season since commissioning.

Mining

With the Stage One pit close to depletion, Quarter 1 2017 saw transition to the majority of ore production being sourced from the top of the Stage Two cut back. The Stage Two pit goes behind and underneath the Stage One pit, which aligns with the continuation of the same high-grade zone that was mined in the Stage One pit. Mining during the quarter focused on the Stage Two cut back, with pre-stripping of overburden preparing the mine for transition to Stage Two.

Mining total tonnage movement was similar to the previous quarter, with the slight negative variance attributable to unforeseen premature mechanical failures with the primary excavator, which have been resolved. Ore tonnage movement was significantly reduced as per the mine plan, with material moved being mostly overburden associated with Stage Two pre-stripping.

High grade massive sulphide ore from Stage Two

Ore grades were as expected for the top of the Stage Two cut back, and are not comparable to the previous quarter when mining concentrated on high grade ore at the bottom of the Stage One pit. In comparison with expectations (reserve) for the top of the Stage Two cut back, grade was slightly better than anticipated for this part of the orebody. Material stockpiled from the previous quarter was designed to buffer production (mill feed) during the Stage Two cut back.

Grade control drilling shows the continuity and robustness of the high-grade zone continuing in the Stage Two pit, from the Stage One pit high grade zone.

During the quarter, there was a modest negative reconciliation between copper production and reserves, while gold continued to show positive reconciliation. The variance in copper metal tonnes is attributed to mining focused on the Stage 2 cut back. Following pre-stripping of overburden at the top of the Stage 2 cut back, low and medium grade ores in and around the transition zone, from oxide to fresh rock, were more variable. This is a feature specific to the transition zone from oxide to fresh rock, and this variance was anticipated in the mine plan.

In keeping with the short term mine plan, mining production was buffered by the large ROM stockpile from the previous quarter (see updated reserve statement below) that was accumulated for this purpose, to smooth out production demands while maintaining guidance for copper production.

Grade Control Drilling in the Stage Two pit

Antas Mine Mineral Reserves

The Antas Mine JORC Mineral Reserve was revised for depletion at the end of the financial year 31 December 2016, in accordance with reporting requirements.

Depletion was carried out in accordance with accepted practices, via the removal of material (including tonnes and grade) based on accurate survey measurement of the pit floor and surrounds