AUSQUEST LIMITED — Capital/Financing Update 2014

Jan 12, 2014

January 13, 2014 ASX Release

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FRASER RANGE DRILLING RE-STARTS

Three key EM targets still to be tested as part of New Year drilling campaign

Key Points:

• Drilling resumes at Lambda prospect with second diamond hole now underway.

• Lambda conductor improves east of and below reported sulphide intercept.

• New drilling will test EM conductors at the Alpha and Beta prospects.

AusQuest Limited (ASX: AQD) is pleased to advise that drilling has re-started at its 100%owned Dundas Nickel-Copper Project , located ~80km south of the Nova and Bollinger nickel-copper deposits in the Fraser Range belt of Western Australia.

Diamond drilling is now underway at the Lambda prospect , where a second drill-hole has been sited to test the deeper of the two previously modelled electromagnetic (EM) conductors ( Figure 1 ). Modelling shows that this conductor has a shallow northerly plunge and is at least 800m long and up to 150m wide .

Two of the seven planned drill-holes (~2,000m) at the Dundas Project were completed prior to the Christmas/New Year break, comprising initial drill-holes at the Omega and Lambda prospects. Assay results from these holes are pending.

Drilling at the Alpha and Beta prospects ( Figure 2 ) will also be undertaken as part of the current drilling programme.

Drilling is expected to take approximately two weeks to complete with samples from each drill-hole to be sent to Perth for analysis. All assay results are expected to be available within three weeks of completing the programme.

Down-hole electromagnetic surveys (DHEM) completed prior to the Christmas break were limited to the first drill-hole (13DSDD035) at the Lambda prospect. A strong conductor was associated with the narrow massive sulphide (pyrrhotite) intersection previously reported ( see ASX Release – 20 December 2013 ), with the main part of the anomaly located below and to the east of the current drill-hole intercept.

The conductors are located within a structurally complex area adjacent to a large dome-like feature and/or intrusion which is evident in the detailed aeromagnetic data (see Figure 3 ).

Ground-based geophysics, together with surface geochemistry, played an important role in the discovery of the Nova and Bollinger nickel-copper-cobalt deposits by Sirius Resources NL (ASX: SIR) in 2012/13.

AusQuest Limited 8 Kearns Crescent Ardross WA 6153 (T): 08 9364 3866 (F): 08 9364 4892 www.ausquest.com.au

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Figure 1: FLTEM Target – Lambda showing drill hole locations

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Figure 2: FLTEM Targets – Alpha, Beta, and Omega prospects showing planned drill sites

Graeme Drew Managing Director

AusQuest Limited 8 Kearns Crescent Ardross WA 6153 (T): 08 9364 3866 (F): 08 9364 4892 www.ausquest.com.au

COMPETENT PERSON’S STATEMENT

The details contained in this report that pertain to exploration results are based upon information compiled by Mr Graeme Drew, a full-time employee of AusQuest Limited. Mr Drew is a Fellow of the Australasian Institute of Mining and Metallurgy (AUSIMM) and has sufficient experience in the activity which he is undertaking to qualify as a Competent Person as defined in the December 2012 edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves” (JORC Code). Mr Drew consents to the inclusion in the report of the matters based upon his information in the form and context in which it appears.

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Figure 3: FLEM Target Locations on Magnetic Image

AusQuest Limited 8 Kearns Crescent Ardross WA 6153 (T): 08 9364 3866 (F): 08 9364 4892 www.ausquest.com.au

JORC Code, 2012 Edition – Table 1 report, AusQuest Diamond Drilling Results Section 1 Sampling Techniques and Data

(Criteria in this section apply to all succeeding sections.)

Criteria	JORC Code explanation	Commentary
Sampling	• Nature and quality of sampling (eg cut channels, random chips, or specific specialised	• Where there is visible mineralization, half core is sampled
techniques	industry standard measurement tools appropriate to the minerals under investigation,	at 1m intervals up to geological boundaries or
	such as down hole gamma sondes, or handheld XRF instruments, etc). These examples	mineralization zones are selectively sampled by the on-
	should not be taken as limiting the broad meaning of sampling.	site geologist to ensure sample representivity.
	• Include reference to measures taken to ensure sample representivity and the appropriate	• Where there is no visible mineralization a 20cm half core
	calibration of any measurement tools or systems used.	sample is collected at ~5m intervals.
	• Aspects of the determination of mineralisation that are Material to the Public Report.	• Core is cut in half with half sent for analysis and half
	• In cases where ‘industry standard’ work has been done this would be relatively simple	retained for geological and quality control purposes
	(eg ‘reverse circulation drilling was used to obtain 1 m samples from which 3 kg was	• Sample intervals are measured by tape from depth
	pulverised to produce a 30 g charge for fire assay’). In other cases more explanation	intervals shown on core blocks labeled by the drillers, as
	may be required, such as where there is coarse gold that has inherent sampling	per standard industry practice.
	problems. Unusual commodities or mineralisation types (eg submarine nodules) may
	warrant disclosure of detailed information.
Drilling techniques	• Drill type (eg core, reverse circulation, open-hole hammer, rotary air blast, auger,	• Diamond Drilling with an RC pre-collar.
	Bangka, sonic, etc) and details (eg core diameter, triple or standard tube, depth of	• NQ2 drill rods used to produce 50mm diameter core. The
	diamond tails, face-sampling bit or other type, whether core is oriented and if so, by	RC pre-collar is drilled with a face sampling bit and is
	what method, etc).	~132mm in diameter.
		• Down-hole surveys are read at ~ 30m intervals.
		• Drill core from angled holes is “oriented” using a Reflex
		orientation tool to identify the underside of the hole.
Drill sample	• Method of recording and assessing core and chip sample recoveries and results	• Core recovery is determined by comparing core lengths
recovery	assessed.	measured against drilled intervals shown on core blocks
	• Measures taken to maximise sample recovery and ensure representative nature of the	and recorded on the logs.
	samples.	• Experienced diamond drillers are engaged to ensure
	• Whether a relationship exists between sample recovery and grade and whether sample	maximum core recovery.
	bias may have occurred due to preferential loss/gain of fine/coarse material.	• Sample recovery is high negating any sample bias due to
		recovery.
Logging	• Whether core and chip samples have been geologically and geotechnically logged to a	• Drill core and sample chips are logged by experienced
	level of detail to support appropriate Mineral Resource estimation, mining studies and	geologists to identify key rock types and mineralisation
	metallurgical studies.	styles.
	• Whether logging isqualitative orquantitative in nature. Core(or costean, channel, etc)	• Core loggingisqualitative with visual estimates of

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Criteria	JORC Code explanation	Commentary
	photography.	mineralisation made for later comparison with assay
	• The total length and percentage of the relevant intersections logged.	results.
		• All core is photographed.
		• All core is logged.
Sub-sampling	• If core, whether cut or sawn and whether quarter, half or all core taken.	• Samples are collected by sawing the core in half along its
techniques and	• If non-core, whether riffled, tube sampled, rotary split, etc and whether sampled wet or	length and using the sample interval determined by the
sample preparation	dry.	geologist. In sections where core cannot be cut,
	• For all sample types, the nature, quality and appropriateness of the sample preparation	representative core chips are collected for assay.
	technique.	• For the RC pre-collar, samples are composited at 4m
	• Quality control procedures adopted for all sub-sampling stages to maximise	intervals, by pushing a sampling scoop into the side of
	representivity of samples.	each sample pile to provide a representative composite
	• Measures taken to ensure that the sampling is representative of the in situ material	sample for assay.
	collected, including for instance results for field duplicate/second-half sampling.	• No duplicate core samples or company standards have
	• Whether sample sizes are appropriate to the grain size of the material being sampled.	been used at this stage.
		• The sample sizes are appropriate for the geological
		materials sampled.
Quality of assay	• The nature, quality and appropriateness of the assaying and laboratory procedures used	• N/A for this report – Sample analysis has not yet been
data and	and whether the technique is considered partial or total.	completed by assay laboratory.
laboratory tests	• For geophysical tools, spectrometers, handheld XRF instruments, etc, the parameters
	used in determining the analysis including instrument make and model, reading times,
	calibrations factors applied and their derivation, etc.
	• Nature of quality control procedures adopted (eg standards, blanks, duplicates, external
	laboratory checks) and whether acceptable levels of accuracy (ie lack of bias) and
	precision have been established.
Verification of	• The verification of significant intersections by either independent or alternative company	• N/A for this report – No results have been received to
sampling and	personnel.	date.
assaying	• The use of twinned holes.
	• Documentation of primary data, data entry procedures, data verification, data storage
	(physical and electronic) protocols.
	• Discuss any adjustment to assay data.
Location of data	• Accuracy and quality of surveys used to locate drill holes (collar and down-hole	• Drill hole collars are located by hand held GPS to an
points	surveys), trenches, mine workings and other locations used in Mineral Resource	accuracy of approximately 5m.
	estimation.	• Down hole surveys on angled holes are carried out every
	• Specification of the grid system used.	30m down hole, and at the end of the hole.
	• Quality and adequacy of topographic control.	• All surface location data are in GDA94 datum, UTM zone
		51. At this stage drill collar elevations are derived from

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Criteria	JORC Code explanation	Commentary
		DTM data.
Data spacing and	• Data spacing for reporting of Exploration Results.	• Diamond drill-holes were positioned to intersect EM
distribution	• Whether the data spacing and distribution is sufficient to establish the degree of	targets. No systematic drilling of targets has been done
	geological and grade continuity appropriate for the Mineral Resource and Ore Reserve
	estimation procedure(s) and classifications applied.
	• Whether sample compositing has been applied.
Orientation of data	• Whether the orientation of sampling achieves unbiased sampling of possible structures	• Bias due to the orientation of the drilling is unknown at
in relation to	and the extent to which this is known, considering the deposit type.	this early stage of exploration.
geological	• If the relationship between the drilling orientation and the orientation of key mineralised
structure	structures is considered to have introduced a sampling bias, this should be assessed and
	reported if material.
Sample security	• The measures taken to ensure sample security.	• Samples are collected into securely tied bags and placed
		into cable-tied plastic bags for transport to the laboratory.
		Each sample batch has a sample submission sheet that
		lists the sample numbers and the work required to be done
		on each sample.
		• Reputable freight companies are used to transport samples
		to the laboratory.
		• Sample pulps (after assay) are held by the laboratory and
		returned to the company after 90 days.
Audits or reviews	• The results of any audits or reviews of sampling techniques and data.	• No reviews or audits of the sampling techniques or data
		have been carried out to date.

Section 2 Reporting of Exploration Results

(Criteria listed in the preceding section also apply to this section.)

Criteria	JORC Code explanation	Commentary
Mineral tenement	• Type, reference name/number, location and ownership including agreements or material	• The Dundas Project is centered at 122 degrees 40 minutes
and land tenure	issues with third parties such as joint ventures, partnerships, overriding royalties, native	East and 32 degrees 36 minutes South, approximately 100
status	title interests, historical sites, wilderness or national park and environmental settings.	km ESE of Norseman, Western Australia.
	• The security of the tenure held at the time of reporting along with any known	• Tenement holdings include 5 granted exploration licences
	impediments to obtaining a licence to operate in the area.	(E63/1000, 1001, 1002, 1003, 1004) and three exploration
		licence applications (E63/1680, 1681 and E69/3246).
		• All tenements are held 100% byAusQuest Limited.

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Criteria	JORC Code explanation	Commentary
		• The majority of the tenement area falls within the Dundas
		Nature Reserve for which the company has an accepted
		Conservation Management Plan with DPaW
		• Aboriginal heritage and flora surveys are routinely
		completed ahead of ground disturbing activities.
Exploration done	• Acknowledgment and appraisal of exploration by other parties.	• Very limited open file data were found over the
by other parties		company’s area of interest.
Geology	• Deposit type, geological setting and style of mineralisation.	• The exploration model is based upon copper and nickel
		sulphides hosted in mafic rocks of the Albany Fraser
		Orogen.
Drill hole	• A summary of all information material to the understanding of the exploration results	• All relevant drill hole data are tabulated in the ASX
Information	including a tabulation of the following information for all Material drill holes:	release.
	o easting and northing of the drill hole collar	• No RL data have been collected at this stage.
	o elevation or RL (Reduced Level – elevation above sea level in metres) of the drill hole
	collar
	o dip and azimuth of the hole
	o down hole length and interception depth
	o hole length.
	• If the exclusion of this information is justified on the basis that the information is not
	Material and this exclusion does not detract from the understanding of the report, the
	Competent Person should clearly explain why this is the case.
Data aggregation	• In reporting Exploration Results, weighting averaging techniques, maximum and/or	• N/A for this report – Drilling will continue until early
methods	minimum grade truncations (eg cutting of high grades) and cut-off grades are usually	January, no results have been received to date.
	Material and should be stated.
	• Where aggregate intercepts incorporate short lengths of high grade results and longer
	lengths of low grade results, the procedure used for such aggregation should be stated
	and some typical examples of such aggregations should be shown in detail.
	• The assumptions used for any reporting of metal equivalent values should be clearly
	stated.
Relationship	• These relationships are particularly important in the reporting of Exploration Results.	• All intervals reported are down-hole lengths. True widths
between	• If the geometry of the mineralisation with respect to the drill hole angle is known, its	are unknown at this stage.
mineralisation	nature should be reported.
widths and	• If it is not known and only the down hole lengths are reported, there should be a clear
intercept lengths	statement to this effect (eg ‘down hole length, true width not known’).
Diagrams	• Appropriate maps and sections (with scales) and tabulations of intercepts should be	• All drill holes are shown on appropriate plans and
	included for any significant discovery being reported These should include, but not be	included in the ASX release.

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Criteria	JORC Code explanation	Commentary
	limited to aplan view of drill hole collar locations and appropriate sectional views.
Balanced reporting	• Where comprehensive reporting of all Exploration Results is not practicable,	• All significant results are reported.
	representative reporting of both low and high grades and/or widths should be practiced
	to avoid misleading reporting of Exploration Results.
Other substantive	• Other exploration data, if meaningful and material, should be reported including (but	• The relationship between current drill results and
exploration data	not limited to): geological observations; geophysical survey results; geochemical survey	previously reported exploration data is discussed in the
	results; bulk samples – size and method of treatment; metallurgical test results; bulk	report with particular reference to EM data used to site the
	density, groundwater, geotechnical and rock characteristics; potential deleterious or	drill holes.
	contaminating substances.
Further work	• The nature and scale of planned further work (eg tests for lateral extensions or depth	• Drilling of EM targets reported in previous ASX releases
	extensions or large-scale step-out drilling).	is continuing.
	• Diagrams clearly highlighting the areas of possible extensions, including the main	• Exact drill hole locations for future work are still to be
	geological interpretations and future drilling areas, provided this information is not	determined and await detailed review of the current
	commercially sensitive.	results.

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