AUSQUEST LIMITED — Capital/Financing Update 2016

Aug 22, 2016

August 23[rd] , 2016 ASX Release

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DRILLING UNDERWAY AT ALL FOUR COPPER-GOLD PROSPECTS IN THE SOUTH OF PERU

AusQuest Limited (ASX: AQD) is pleased to advise that initial drilling has now commenced at all four prospects in the Ilo area of southern Peru under the Cardonal-Ventana and PuiteColorada Joint Ventures with Compania Minera Zahena SAC (“Zahena”).

Three drill rigs are currently operating in the area with two now working at the Ventana prospect and one at the Colorada prospect. A total of ~8,000m out of a possible 20,000m have been completed to date with 13 holes (out of a possible 38) drilled within the four prospect areas (Puite – 6; Colorada – 3; Cardonal – 2; and Ventana – 2).

Drill-hole separations vary from ~400m to 800m, highlighting the reconnaissance nature of this program (see Figure 1).

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Figure 1: Prospect and drill-hole locations in the Ilo area

Preliminary drill logs for 11 of the 13 holes completed and assay results for 7 of the holes completed have been received to date, suggesting that a porphyry deposit(s) could occur within the general joint venture area.

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

This conclusion is supported by the varying styles and intensity of alteration intersected by the initial drilling, including more distal sub-propylitic alteration and the more proximal propylitic and potassic (weak) phases in some drill-holes.

Copper oxides and copper sulphides have so far been found at two of the prospects (Ventana and Puite) in trace amounts, with maximum grades up to 0.16% Cu where sulphides have been reported, and anomalous values up to ~500ppm Cu where copper oxides are visible along fractures.

At the Puite Prospect , preliminary geological reports from the six drill-holes (PUT01, 02, 03, 05, 06 and 08) indicate the presence of porphyry-style alteration (weak sub-propylitic to strong propylitic) within diorite host rocks, suggesting the potential for a porphyry copper system located nearby.

Visual copper minerals were reported in trace amounts within veinlets and on fracture surfaces within the altered diorite. Assays from the first five holes (PUT01, 02, 03, 05 and 06) indicate the presence of elevated levels of copper in holes PUT02 and 05 with average values of up to 0.12% Cu over thicknesses of ~15m associated with propylitic alteration within the dioritic host rock.

Drill-holes PUT05 and 06, which were sited to test a magnetic target associated with anomalous copper in soils, intersected disseminated and vein magnetite which appears to be part of an alteration assemblage, and trace amounts of pyrite and chalcopyrite within altered diorite in drill-hole PUT05.

Drill-hole PUT08 located ~800m to the west of hole PUT05 intersected similar alteration to that found in hole 05, suggesting that the alteration could extend over a strike length of at least 1000m. Assay results for PUT08 are still pending. A more complete assessment of the Puite prospect will be possible once all drill results are available.

Drilling at the remaining three prospects is still at an early stage, with two holes completed at Cardonal (CAR01 and 04) and Ventana (VEN07 and 13) and three holes completed at Colorada (COL11, 15 and 19). Porphyry-style alteration has been intersected at each prospect with trace amounts of copper oxide and sulphide evident within drill-hole VEN07 at Ventana. A full complement of drill logs and assay results are awaited and drilling is continuing.

The Company is pleased that drilling has now commenced at all four copper-gold prospects in the Ilo area and is progressing at a steady pace. The Company looks forward to providing updates on the drilling programme as further information becomes available and a more complete assessment is possible.

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Graeme Drew Managing Director

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

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

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.

FORWARD LOOKING STATEMENT

This report contains forward looking statements concerning the projects owned by AusQuest Limited. Statements concerning mining reserves and resources may also be deemed to be forward looking statements in that they involve estimates based on specific assumptions. Forward-looking statements are not statements of historical fact and actual events and results may differ materially from those described in the forward looking statements as a result of a variety of risks, uncertainties and other factors. Forward looking statements are based on management’s beliefs, opinions and estimates as of the dates the forward looking statements are made and no obligation is assumed to update forward looking statements if these beliefs, opinions and estimates should change or to reflect other future developments.

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Drilling at Ventana –Drill-hole VEN 13

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Drilling at Colorada –Drill-hole COL 11

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, Diamond Drilling in southern Peru 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	• The entire cored hole is sampled. Composite samples are
techniques	industry standard measurement tools appropriate to the minerals under investigation,	collected over 3 metre intervals.
	such as down hole gamma sondes, or handheld XRF instruments, etc). These examples	• Core is cut in half using a hydraulic press with half sent
	should not be taken as limiting the broad meaning of sampling.	for analysis and half retained for geological and quality
	• Include reference to measures taken to ensure sample representivity and the appropriate	control purposes
	calibration of any measurement tools or systems used.	• Sample intervals are measured by tape from depth
	• Aspects of the determination of mineralisation that are Material to the Public Report.	intervals shown on core blocks labeled by the drillers, as
	• In cases where ‘industry standard’ work has been done this would be relatively simple	per standard industry practice.
	(eg ‘reverse circulation drilling was used to obtain 1 m samples from which 3 kg was
	pulverised to produce a 30 g charge for fire assay’). In other cases more explanation
	may be required, such as where there is coarse gold that has inherent sampling
	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 to produce continuous core.
	Bangka, sonic, etc) and details (eg core diameter, triple or standard tube, depth of	• HQ and NQ drill rods used to produce 63.5mm and
	diamond tails, face-sampling bit or other type, whether core is oriented and if so, by	47.6mm diameter core respectively. The hole starts with
	what method, etc).	HQ core and changes to NQ at the appropriate depth
		depending on drilling conditions.
		• Down-hole surveys are read at ~ 50m intervals.
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, alteration and
	metallurgical studies.	mineralisation 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 logged and photographed.
Sub-sampling	• If core, whether cut or sawn and whether quarter, half or all core taken.	• Samples are collected by splitting the core in half along
techniques and	• If non-core, whether riffled, tube sampled, rotary split, etc and whether sampled wet or	its length and sampling over 3 metre intervals. In sections
sample preparation	dry.	where core cannot be split, representative core chips are
	• For all sample types, the nature, quality and appropriateness of the sample preparation technique.	collected for assay. • Duplicate samples are collected from the core every 40th
	• Quality control procedures adopted for all sub-sampling stages to maximise	sample for quality control. The duplicated sample is split
	representivity of samples.	from the same length as the original sample with 30% of
	• Measures taken to ensure that the sampling is representative of the in situ material	the core used as the original and 30% used as the
	collected, including for instance results for field duplicate/second-half sampling.	“duplicate”. 40% is retained in the core box.
	• Whether sample sizes are appropriate to the grain size of the material being sampled.	• The sample sizes are appropriate for the geological
		materials being sampled.
Quality of assay	• The nature, quality and appropriateness of the assaying and laboratory procedures used	• Assaying of the drill samples is by standard industry
data and	and whether the technique is considered partial or total.	practice.
laboratory tests	• For geophysical tools, spectrometers, handheld XRF instruments, etc, the parameters	• The samples are sorted, dried, crushed then split to obtain
	used in determining the analysis including instrument make and model, reading times,	a representative sub-sample which is then pulverized.
	calibrations factors applied and their derivation, etc.	• A portion of the pulverized sample is digested using a
	• Nature of quality control procedures adopted (eg standards, blanks, duplicates, external	four acid digest (Hydrofluoric, Nitric, Hydrochloric and
	laboratory checks) and whether acceptable levels of accuracy (ie lack of bias) and	Perchloric) which approximates a total digest for most
	precision have been established.	elements. Some refractory minerals are not completely
		dissolved.
		• Inductively Coupled Plasma Atomic Emission
		Spectroscopy (ICP-AES) was used to measure Ag, Al, As,
		Ba, Be, Bi, Ca, Cd, Co, Cr, Cu, Fe, K, La, Li, Mg, Mn,
		Mo, Na, Ni, P, Pb, S, Sb, Sc, Sn, Sr, Ti V, W, Y, Zn, Zr.
		• Assays are provided by SGS del Peru in Lima which is a
		certified laboratory for mineral analyses. Analytical data
		is transferred to the company via email.
		• Data from the laboratory’s internal quality procedures
		(standards, repeats and blanks) are provided to check data
		quality.
		• The Company inserts duplicate samples on a 1 in 40 basis,
		and blind standards within each batch on a 1 in 20 basis.
		• Blanks are inserted asper standard industry practice

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Criteria	JORC Code explanation	Commentary
Verification of	• The verification of significant intersections by either independent or alternative company	• N/A for this report.
sampling and	personnel.	• No twinned holes were completed.
assaying	• The use of twinned holes.	• All data are entered into Excel spreadsheets and stored in
	• Documentation of primary data, data entry procedures, data verification, data storage	the company’s database.
	(physical and electronic) protocols.	• No adjustments have been made to the assay data.
	• 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 including elevation are located by hand
points	surveys), trenches, mine workings and other locations used in Mineral Resource	held GPS to an accuracy of approximately 5m.
	estimation.	• Down hole surveys on angled holes are carried out every
	• Specification of the grid system used.	50m down hole, and at the end of the hole.
	• Quality and adequacy of topographic control.	• All surface location data are in WGS 84 datum, UTM
		zone 19S.
Data spacing and	• Data spacing for reporting of Exploration Results.	• Diamond drill-holes were positioned to test targets
distribution	• Whether the data spacing and distribution is sufficient to establish the degree of	identified by various ground surveys. No systematic
	geological and grade continuity appropriate for the Mineral Resource and Ore Reserve	drilling of targets has been undertaken.
	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	• Any bias due to the orientation of the drilling is unknown
in relation to	and the extent to which this is known, considering the deposit type.	at 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 security is managed by the operator of the JV.
		Procedures match with Industry best practice.
		• 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.

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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 Ilo Prospects (Puite, Colorad, Cardonal, and Ventana)
and land tenure	issues with third parties such as joint ventures, partnerships, overriding royalties, native	are centered at 8044500N and 279500E (PSAD56 Zone
status	title interests, historical sites, wilderness or national park and environmental settings.	19S), approximately 20 km east of Ilo, Peru.
	• The security of the tenure held at the time of reporting along with any known	• The Prospects are subject to joint venture agreements with
	impediments to obtaining a licence to operate in the area.	Compania Minera Zahena SAC which includes Mineral
		concessions Pampa de Las Pulgas J, K ,O, P, S, W, V,
		AB, AC, AD, AF.
		• All tenements are held 100% by Questdor SAC a 100%
		owned subsidiary of AusQuest Limited.
		• Drill permits (AIA) have been provided by INGEMMET
		for the drilling programme following environmental, and
		community approvals.
Exploration done	• Acknowledgment and appraisal of exploration by other parties.	• No historic exploration data is available.
by other parties
Geology	• Deposit type, geological setting and style of mineralisation.	• The Ilo Prospects are targeting a porphyry copper-gold
		resource associated with diorite intrusions along the
		coastal belt of southern Peru.
Drill hole	• A summary of all information material to the understanding of the exploration results	• All relevant drill hole data and information are provided
Information	including a tabulation of the following information for all Material drill holes:	below. All surface location data are in WGS 84 datum,
	o easting and northing of the drill hole collar	UTM zone 19S
	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.
methods	minimum grade truncations (eg cutting of high grades) and cut-off grades are usually
	Material and should be stated.

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Criteria	JORC Code explanation	Commentary
	• 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.
	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,	• N/A for this report.
	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 drilling and previously
exploration data	not limited to): geological observations; geophysical survey results; geochemical survey	reported exploration data is shown in the report.
	results; bulk samples – size and method of treatment; metallurgical test results; bulk
	density, groundwater, geotechnical and rock characteristics; potential deleterious or
	contaminating substances.
Further work	• The nature and scale of planned further work (eg tests for lateral extensions or depth	• Drilling is continuing to test a range of targets associated
	extensions or large-scale step-out drilling).	with the various prospects in the Ilo area as reported in
	• Diagrams clearly highlighting the areas of possible extensions, including the main	previous ASX releases.
	geological interpretations and future drilling areas, provided this information is not	• Future drill hole locations are shown on the plans
	commercially sensitive.	included within the ASX report

HoleNo.	Easting	Northing	Azimuth	Inclination	Depth
PUT 01	280747	8042827	0	-90	500
PUT02	280571	8043193	70	-60	670
PUT 03	280347	8043157	70	-60	719
PUT 05	279397	8042837	0	-60	588
PUT 06	279397	8043237	0	-60	610
PUT 08	278597	8042737	270	-60	682
COL 11	282697	8050239	180	-60	686
COL 15	282706	8051335	0	-60	597
COL 19	283300	8050760	0	-90	470

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CAR 01	269476	8044834	330	-70	500
CAR 04	270213	8044910	15	-70	500
VEN07	274150	8049500	180	-60	616
VEN 13	274400	8049000	0	-60	645

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