AUSQUEST LIMITED — Capital/Financing Update 2017

Oct 4, 2017

October 5, 2017 ASX Release

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BLUE BILLY ZINC PROSPECT – DRILLING UPDATE

Favourable host rocks for sediment-hosted zinc intersected in maiden drill program

AusQuest Limited (ASX: AQD) is pleased to announce the completion of its first drilling program under its strategic alliance with South32 (ASX: S32). The initial reconnaissance diamond drilling program was completed at the Blue Billy Zinc Joint Venture Project, located ~100km south-west of Paraburdoo, within the Edmund Basin in Western Australia.

All four drill holes intersected thick intervals (up to 285m) of pyritic and carbonaceous shales, which are considered to be favourable host rocks for sediment-hosted zinc mineralisation, similar to those found in north-west Queensland.

The drilling program was designed to provide an initial test of the prospective stratigraphy close to the Talga Fault in order to identify potential vectors to mineralisation. Drill-holes were spaced between 4km and 10km apart to test a 15km strike length of the target horizon for indicators of nearby base metal mineralisation (see Figure 1 ).

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Figure 1: Blue Billy JV geology showing wide spaced drill-hole locations

Traces of sphalerite (Zn) and galena (Pb) plus thicker pyritic shale sequences that were evident in the two northern-most drill-holes (BB03 and BB04), suggest the presence of base

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

metal bearing fluids within the basin and the potential for nearby structures which may have helped to concentrate mineralisation in this area.

Core has been cut and sampled on a 1 metre basis with half core samples (~2,150) dispatched for analysis. Assay data for the four drill-holes are expected around the end of October. Geochemical indicators will be identified and vectors to mineralisation determined once all the assay data have been received.

The Blue Billy Zinc Project is subject to a joint venture agreement with South32 whereby South32 can earn a 70% interest in the project by spending US$4.0 million. This was the first drilling program to be commissioned under the Company’s Strategic Alliance with South32.

AusQuest’s Managing Director Graeme Drew said the indications from the drilling to date were in line with expectations given the highly reconnaissance nature of the initial drilling program.

“The proof of concept will be in the geochemical data once it has been received and processed, as this will help us to vector into potential accumulations of mineralisation – which will likely be the focus of future drilling,” he said.

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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, Diamond Drilling at Blue Billy Project 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 core was continuously sampled on a 1 metre basis
techniques	industry standard measurement tools appropriate to the minerals under investigation,	throughout the target horizon and within the immediate
	such as down hole gamma sondes, or handheld XRF instruments, etc). These examples	footwall and hangingwall sequences.
	should not be taken as limiting the broad meaning of sampling.	• Core was cut in half with half sent for analysis and half
	• Include reference to measures taken to ensure sample representivity and the appropriate	retained for geological and quality control purposes
	calibration of any measurement tools or systems used.	• Sample intervals were 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 with an RC pre-collar.
	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 were read at ~ 30m intervals.
Drill sample	• Method of recording and assessing core and chip sample recoveries and results	• Core recovery was 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 were 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 was 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 were 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 was logged and photographed.
Sub-sampling	• If core, whether cut or sawn and whether quarter, half or all core taken.	• Samples were collected by cutting 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 1 metre intervals.
sample preparation	dry.	• The sample sizes are appropriate for the geological
	• For all sample types, the nature, quality and appropriateness of the sample preparation	materials being sampled.
	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 thegrain size of the material being 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 been
data and	and whether the technique is considered partial or total.	undertaken.
laboratory tests	• For geophysical tools, spectrometers, handheld XRF instruments, etc, the parameters	• The Company inserts standards within each batch of
	used in determining the analysis including instrument make and model, reading times,	samples on a 1 in 20 basis.
	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 – Assay results are pending.
sampling and	personnel.
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 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 are carried out every 30m down hole,
	• Specification of the grid system used.	and at the end of the hole.
	• Quality and adequacy of topographic control.	• All surface location data are in GDA 94 datum, zone 50S.
Data spacing and	• Data spacing for reporting of Exploration Results.	• Diamond drill-holes were widely spaced located between
distribution	• Whether the data spacing and distribution is sufficient to establish the degree of	3,000m and 10,000m apart to test prospectivity of the
	geological and grade continuity appropriate for the Mineral Resource and Ore Reserve	target stratigraphy. No systematic drilling of targets has
	estimationprocedure(s) and classifications applied.	been undertaken.

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Criteria	JORC Code explanation	Commentary
	• 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 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	• The Blue Billy Prospect is centered at 7401000N and
and land tenure	material issues with third parties such as joint ventures, partnerships, overriding	456000E (GDA94 Zone 50), approximately 200 km
status	royalties, native title interests, historical sites, wilderness or national park and	north east of Gascoyne Junction in Western Australia.
	environmental settings.	• Tenement holdings include one granted Exploration
	• The security of the tenure held at the time of reporting along with any known	Licence (E08/2754) and one application (E08/2904).
	impediments to obtaining a licence to operate in the area.	• The Blue Billy Prospect is subject to a joint venture
		agreement with South32 who can earn 70% by spending
		US$4.0M.
		• Aboriginal heritage surveys are routinely completed
		ahead of ground disturbing activities..

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Criteria	JORC Code explanation	Commentary
Exploration done	• Acknowledgment and appraisal of exploration by other parties.	• Previous exploration drilling completed by Pasminco
by other parties		(1991-96) and Alcoa (1979-82) intersected 20 to 50m of
		anomalous zinc (0.1 to 0.5%Zn) immediately down dip
		from surface occurrences of the Blue Billy Formation
		highlighting the areas prospectivity. Aurora Minerals
		completed soil sampling and geophysical surveys along
		the Talga Fault (2008-11) but did not drill any holes.
Geology	• Deposit type, geological setting and style of mineralisation.	• The Blue Billy project is targeting sediment hosted zinc
		mineralisation similar to NW Queensland. The Blue
		Billy Formation black shale horizon within the Edmund
		Basin in WA is the target horizon.
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.
	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.
	• 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 explainwhy this is the case.
Data aggregation	• In reporting Exploration Results, weighting averaging techniques, maximum and/or	• N/A for this report – Assay results are pending.
methods	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 important in the reporting of Exploration Results.	• N/A for this report. Assays are pending
between	• If the geometry of the mineralisation with respect to the drill hole angle is known, its
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 aplanview of drill hole collar locations and appropriate sectionalviews.
Balanced reporting	• Where comprehensive reporting of all Exploration Results is not practicable,	• N/A for this report. Assays are pending
	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	reported exploration data is shown in the report.
	survey 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	• Future drilling will be dependent on results from the
	extensions or large-scale step-out drilling).	current programme.
	• Diagrams clearly highlighting the areas of possible extensions, including the main
	geological interpretations and future drilling areas, provided this information is not
	commercially sensitive.

Hole No	Easting	Northing	RL	Azimuth	Inc	Total Depth
17BBDD001	463598	7399009	294.0	30	-80	751.0
17BBDD002	460215	7397610	291.0	210	-80	649.0
17BBDD003	455955	7400333	287.0	210	-70	424.0
17BBDD004	448066	7407636	252.0	220	-75	744.8

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