AUSQUEST LIMITED — Capital/Financing Update 2017

Oct 8, 2017

October 9[th] , 2017 ASX Release

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LARGE COPPER-GOLD TARGET IDENTIFIED AT CERRO DE FIERRO, SOUTHERN PERU

Strong IP anomalies suggest potential for Manto-style IOCG target at least 1km long and 500m wide

AusQuest Limited (ASX: AQD) is pleased to advise that it has identified a significant ironoxide copper-gold (IOCG) target at the Cerro de Fierro Project , located ~40km from the coastal town of Chala in southern Peru, based on results from a recent successful geophysical survey.

Induced Polarisation (IP) Surveys conducted over the project have located strong chargeability anomalies coincident with a magnetic anomaly that was being tested as a potential IOCG target. Earlier geological mapping and sampling completed by the Company in 2016 had located extensive copper mineralisation proximal to the magnetic target, with numerous copper values in excess of 1,000ppm Cu and many samples returning values in excess of 1% Cu ( Figure 1 ).

Computer modelling of the IP and magnetic data has confirmed that the target is at least 1,000m long and 500m wide with relatively flat dips suggesting the potential for significant amounts of sulphide and magnetite mineralisation within permeable layers (volcaniclastics) in the volcanic sequence, a similar setting to the Candelaria copper deposit in Chile.

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Figure 1: Cerro de Fierro IP/Magnetic Target and rock geochemistry

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

The Cerro de Fierro Project is one of three projects in Peru that were selected by the Company’s alliance partner, South32 (ASX: S32), as ‘exploration opportunities’ under the Strategic Alliance Agreement (SAA). South32 can elect to progress the Project to joint venture status once a drilling program has been agreed. Under the joint venture, South32 would spend US$4.0 million to earn a 70% interest in the project.

The Cerro de Fierro prospect was originally identified from the Company’s aeromagnetic data as a potential IOCG target, extending over an area several square kilometres in size. The prospect is located at the southern end of a recognised IOCG metallogenic belt within 150km of the Mina Justa (~475Mt @ 0.68% Cu) and Pampa de Pongo (945Mt @ 44.7% Fe, 0.12% Cu, 0.09 gt Au) deposits.

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Figure 2: Section G-H showing relationship between IP and Magnetic Models

Geochemical data over the prospect identified a range of metal associations and metal patterns, suggesting that the buried magnetic target could be central to a large-scale redistribution of metals (Cu, Ag) within the volcanic sequence, reflecting the potential for IOCG (manto)-style mineralisation at depth.

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

The pole-dipole IP survey (200m dipoles, n=1 to 6, line spacing 400m) completed by Valdor SudAmerica, was designed to identify potential drill targets associated with the magnetic and geochemical anomalies.

Strong IP responses (chargeability >20mv/v) were detected on several lines coincident with the magnetic target, indicating the potential for buried mineralisation at depths ranging from ~150m to 300m and extending over a strike length of at least 1,000m. The relatively flat-lying nature of the IP target is compatible with the flat dips inferred for the volcanic (andesitic) sequence, suggesting that mineralisation may occur in layers (volcaniclastics) within the volcanic sequence ( Figure 2 ).

The IP anomalies are thought to reflect a combination of iron sulphide and iron oxide mineralisation with potential for copper oxide and/or sulphide mineralisation throughout the target section, which may be up to several hundred metres thick. The NNW trend of the target parallels mapped structures in the area, implying a possible relationship between structure, sulphides and the magnetic target.

AusQuest Managing Director Graeme Drew said the identification of a large-scale IPmagnetic target at the Cerro de Fierro IOCG Prospect was another highly significant development for the Company.

“This is the second strong drill target to be identified in Peru under our Strategic Alliance with South32,” he said.

“We are confident that we will be able to present the Cerro de Fierro Project to South32 as a drill-ready target under our Strategic Alliance Agreement,” he said. “In the meantime, survey work is continuing at the Alliance’s other prospects both in Peru and Australia and we remain confident that further drilling opportunities will be forthcoming in the not too distant future.”

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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 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.

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, Cerro de Fierro Induced Polarisation Survey

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,	•Pole -dipole induced
techniques	random chips, or specific specialised industry	polarisation surveys used a
	standard measurement tools appropriate to the	Walcer 10KW transmitter,
	minerals under investigation, such as down hole	GDD Elrec Pro receiver,
	gamma sondes, or handheld XRF instruments,	and a 0.125Hz duty cycle.
	etc). These examples should not be taken as	Mode of measurement –
	limiting the broad meaning of sampling.	Cole-Cole.
	• Include reference to measures taken to ensure
	sample representivity and the appropriate
	calibration of any measurement tools or systems
	used.
	• Aspects of the determination of mineralisation that
	are Material to the Public Report.
	• In cases where ‘industry standard’ work has been
	done this would be relatively simple (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	• Drill type (eg core, reverse circulation, open-hole	•Not applicable
techniques	hammer, rotary air blast, auger, Bangka, sonic,
	etc) and details (eg core diameter, triple or
	standard tube, depth of diamond tails, face-
	sampling bit or other type, whether core is oriented
	_and ifso, by what method, etc). _
Drill sample	• Method of recording and assessing core and chip	•Not applicable
recovery	sample recoveries and results assessed.
	• Measures taken to maximise sample recovery and
	ensure representative nature of the samples.
	• Whether a relationship exists between sample
	recovery and grade and whether sample bias may
	have occurred due to preferential loss/gain of
	fine/coarse material.
Logging	• Whether core and chip samples have been	•Not applicable
	geologically and geotechnically logged to a level of
	detail to support appropriate Mineral Resource
	estimation, mining studies and metallurgical
	studies.
	• Whether logging is qualitative or quantitative in
	nature. Core (or costean, channel, etc)
	photography.
	• The total length and percentage of the relevant
	_intersections logged. _
Sub-sampling	• If core, whether cut or sawn and whether quarter,	• Not applicable
techniques and	half or all core taken.
sample	• If non-core, whether riffled, tube sampled, rotary
preparation	split, etc and whether sampled wet or dry.
	• For allsample types, the nature, quality and

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Criteria	JORC Code explanation	Commentary
	appropriateness of the sample preparation
	technique.
	• Quality control procedures adopted for all sub-
	sampling stages to maximise representivity of
	samples.
	• Measures taken to ensure that the sampling is
	representative of the in situ material collected,
	including for instance results for field
	duplicate/second-half sampling.
	• Whether sample sizes are appropriate to the grain
	_size of the material being sampled. _
Quality of	• The nature, quality and appropriateness of the	•Not applicable.
assay data and	assaying and laboratory procedures used and
laboratory	whether the technique is considered partial or
tests	total.
	• 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	•Not applicable
sampling and	either independent or alternative company
assaying	personnel.
	• 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	• Accuracy and quality of surveys used to locate drill	•All transmitter and receiver
data points	holes (collar and down-hole surveys), trenches,	stations for the IP are
	mine workings and other locations used in Mineral	located by hand held GPS
	Resource estimation.	to an accuracy of ~5m.
	• Specification of the grid system used.	•Sample locations are
	• Quality and adequacy of topographic control.	recorded using GPS to ~5m
		accuracy.
Data spacing	• Data spacing for reporting of Exploration Results.	•Dipole size a= 200m with
and distribution	• Whether the data spacing and distribution is	dipole separations of n=1 to
	sufficient to establish the degree of geological and	6
	grade continuity appropriate for the Mineral	•IP traverse spacing was
	Resource and Ore Reserve estimation	400m with 200m infill lines
	procedure(s) and classifications applied.	where required. This was
	• Whether sample compositing has been applied.	considered sufficient for the
		scale of target being tested.
Orientation of	• Whether the orientation of sampling achieves	•Survey lines were oriented
data in relation	unbiased sampling of possible structures and the	orthogonal to the main
to geological	extent to which this is known, considering the	structures taking local
structure	deposit type.	topography into account to
	• If the relationship between the drilling orientation	optimize efficiency.
	and the orientation of key mineralised structures is
	considered to have introduced a sampling bias,
	this should be assessed and reported if material.

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Criteria	JORC Code explanation	Commentary
Sample	• The measures taken to ensure sample security.	•Results were transmitted
security		electronically from the
		contractor to the Company.
Audits or	• The results of any audits or reviews of sampling	•Data quality was reviewed
reviews	techniques and data.	on an ongoing basis.

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,	•The Cerro de Fierro project is located
and land tenure	location and ownership including	approximately 40 km east of the town
status	agreements or material issues with	of Chala in the south of Peru.
	third parties such as joint ventures,	•The Cerro de Fierro project
	partnerships, overriding royalties,	comprises 3 granted mineral
	native title interests, historical sites,	concessions.
	wilderness or national park and	•The tenements are held by Questdor
	environmental settings.	which is a 100% subsidiary of
	• The security of the tenure held at the	AusQuest Limited and are included
	time of reporting along with any	under the Strategic Alliance with
	known impediments to obtaining a	South32.
	licence to operate in the area.	•There are no major heritage issues to
		prevent access to the tenements
		during surface exploration activities.
		Permits to drill are required including
		environmental, water and land access
		involving community consultations.
Exploration done	• Acknowledgment and appraisal of	•No reported exploration has been
by other parties	exploration by other parties.	completed over the prospect being
		tested. There is no public reporting of
		exploration results in Peru.
Geology	• Deposit type, geological setting and	•Exploration is targetting an IOCG
	style of mineralisation.	deposit which is a large scale
		disseminated copper (and gold)
		deposit often found within orogenic
		belts that surround the Pacific Rim.
		These deposits are vertically
		extensive and areally large requiring
		significant drilling to evaluate.
Drill hole	• A summary of all information material	•Not applicable
Information	to the understanding of the
	exploration results including a
	tabulation of the following information
	for all Material drill holes:
	o easting and northing of the drill
	hole collar
	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.

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Criteria	JORC Code explanation	Commentary
	• 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,	•Not applicable
methods	weighting averaging techniques,
	maximum and/or minimum grade
	truncations (eg cutting of high grades)
	and cut-off grades are usually
	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	•Not applicable
between	important in the reporting of
mineralisation	Exploration Results.
widths and	• If the geometry of the mineralisation
intercept lengths	with respect to the drill hole angle is
	known, its nature should be reported.
	• If it is not known and only the down
	hole lengths are reported, there
	should be a clear statement to this
	effect (eg ‘down hole length, true
	_width not known’). _
Diagrams	• Appropriate maps and sections (with	•Relevant IP plans are included in the
	scales) and tabulations of intercepts	ASX release.
	should be included for any significant
	discovery being reported These
	should include, but not be limited to a
	plan view of drill hole collar locations
	_and appropriate sectional views. _
Balanced	• Where comprehensive reporting of all	•All relevant results are reported.
reporting	Exploration Results is not practicable,
	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	•The relationship between the IP
exploration data	and material, should be reported	results and previously reported
	including (but not limited to):	exploration data is discussed in the
	geological observations; geophysical	report.
	survey results; geochemical survey
	results; bulk samples – size and
	method of treatment; metallurgical
	test results; bulk density,
	groundwater, geotechnical and rock
	characteristics; potential deleterious
	or contaminating substances.

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Criteria	JORC Code explanation	Commentary
Further work	• The nature and scale of planned	•Further work will depend on a full
	further work (eg tests for lateral	assessment of the IP results and
	extensions or depth extensions or	evaluation by the Strategic Alliance
	large-scale step-out drilling).	partners.
	• Diagrams clearly highlighting the
	areas of possible extensions,
	including the main geological
	interpretations and future drilling
	areas, provided this information is not
	commercially sensitive.

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