AUSQUEST LIMITED — Interim / Quarterly Report 2013

Apr 29, 2013

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Quarterly Report – 31[st] March 2013

HIGHLIGHTS

AUSTRALIA – BASE METALS (Ni, Cu, Mn)

• Potential massive sulphide targets identified by a VTEMMax survey at the Dundas Nickel Project (WA), located ~80km south-west of the new Nova nickel-copper discovery.

• Ground EM surveys and surface geochemistry currently underway over four of the targets to identify sites for possible drilling later this year.

• Several potential manganese targets located by a VTEM survey over the Stanley Project, located ~170km east of Wiluna (WA) within the Earaheedy Basin.

PERU – COPPER-GOLD (JV with Cliffs Natural Resources Exploration Inc “CNRE”)

• Potential IOCG and porphyry copper-gold targets identified in four areas during initial reconnaissance exploration over the Company’s tenement holdings.

• At least two prospects within the Pampa de las Pulgas area exhibit widespread anomalous copper (+/- gold) and propylitic alteration within numerous veins and dykes, suggesting excellent potential for buried porphyry style mineralisation at depth.

• Potential targets identified from gravity surveys within the Lana and Pampa de las Pulgas projects.

• Systematic sampling, mapping and geophysical surveys planned to advance priority targets to drilling stage.

CORPORATE

• Cash reserves of ~$2.1M at the end of March 2013, enabling the Company to progress its planned exploration programs.

• Bianca Joubert appointed as joint Company Secretary to assist Darren Crawte.

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Figure 1: Project Locations – Australia and West Africa

OVERVIEW

BASE METALS – AUSTRALIA

During the March Quarter, AusQuest Limited (ASX: AQD) continued to progress exploration activities across its diversified portfolio of resource projects in Australia ( Figure 1 ), and Peru ( Figure 4 ) while at the same time reviewing exploration results from its West African gold project.

In Western Australia, VTEM surveying was completed over nickel-copper prospects at the Dundas Project, located 80km south of the recent Nova nickelcopper discovery (Sirius Resources), and over the Windidda manganese prospect at Stanley, located within the Earaheedy Basin. Drilling at the Earoo Nickel prospect was completed but failed to intersect significant mineralisation.

In Peru, the first pass assessment of prospects identified from the Company’s regional aeromagnetic survey was completed and systematic exploration commenced over priority targets identified by this reconnaissance program. Current work is now focused on developing targets for drilling later in the year in at least four areas.

In Burkina Faso (West Africa), data from the Company’s prospects is under review to determine the best way forward to maximise value for shareholders.

Dundas Project (100% AQD)

The Dundas Project is located approximately 100km east-southeast of Norseman (WA), ~400km south-west of the Tropicana gold discovery and ~80km south-west of the new Nova nickel-copper discovery made last year by Sirius Resources. The tenements cover an area of ~450km² within a structurally complex region bordering the south-west margin of the main Fraser Range Complex which hosts the Nova discovery.

During the Quarter, a VTEMMax survey (~320km) was completed to test for massive sulphide mineralisation in proximity to broad zones of anomalous nickel and copper geochemistry outlined by previous regional surface sampling programs.

The survey identified two strong and two moderate conductors for immediate ground follow-up (Figure 2).

The two strongest anomalies (A & B) appear limited in strike length (~400m), and are closely associated with domal and/or intrusive structures interpreted from the Company’s detailed aeromagnetic data.

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Figure 2: Dundas Nickel Prospect VTEM Targets

The limited strike extent and high conductance inferred for both conductors suggests a probable sulphide source at relatively shallow depths (<100m).

Conductors C and D are less conductive but are closely associated with the anomalous nickel surface geochemistry as well as the interpreted domal and/or intrusive structures.

Ground EM surveys and detailed surface geochemical programs have commenced to further evaluate these targets and optimise sites for drilling later in the year.

During the Quarter, diamond drilling (6 holes for 1,230m) intersected disseminated to massive sulphide mineralisation within a banded sequence of intermediate to mafic host rocks located below the target mafic (gabbroic) intrusion.

No significant base metal assays were recorded and no further work is planned on this project.

MANGANESE PROJECTS – AUSTRALIA

Stanley Project ( 30% AQD, 70% Cliffs Australia Holdings Ltd )

Earoo Nickel Project (AQD 100%)

The Earoo Project is located ~300km north-east of Perth in the Yilgarn region of WA. Generative exploration work by AusQuest had identified several EM targets coincident with a large mafic intrusion which had not been previously explored for nickel sulphides.

The Stanley Project is located 170km east of Wiluna in Western Australia within the Earaheedy Basin. The Project covers a total area of approximately 2,300km².

Manganese mineralisation in the area occurs at several different stratigraphic locations around the basin and is often associated with carbonate units that are

located stratigraphically above the iron formations which occur near the base of the Frere Formation.

During the Quarter, a VTEM survey was completed over the contact zone between the Windidda Carbonate and the overlying Chiall Quartzite, where indications of manganese had previously been found at surface.

Survey specifications included 500 metre line spacings over the 40km strike length that was tested by the survey. Preliminary data have been received with final data due in May.

Several potential target areas are evident in the raw data and these will be refined when final processed data are available. Followup ground geophysical surveys will be undertaken ahead of target drilling in the second half of 2013, subject to access.

PERU PROJECTS (Joint Venture with CNRE)

Peru is highly prospective for large Iron Oxide Copper Gold (IOCG) and porphyry copper deposits, but is relatively underexplored when compared to its neighbour Chile, which is the world’s largest copper producer.

AusQuest has embarked on an exploration venture in Peru in conjunction with Cliffs Natural Resources Inc (CNRE), a wholly owned subsidiary of Cliffs Natural Resources Inc (NYSE:CLF) to explore the southern coastal region which is largely under cover. A regional aeromagnetic survey flown by the joint venture has been used to identify areas for follow-up. Questdor SAC, a wholly-owned subsidiary of AusQuest, has been registered in Peru to facilitate exploration activities.

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Figure 3: Peru JV Project Locations

Initial reconnaissance geological mapping and sampling has now been completed over the areas identified as being prospective for IOCG and/or porphyry copper (+/-gold)

deposits based on interpretation of the Company’s regional aeromagnetic data.

During the Quarter, a further 282 rock-chip samples and 132 soil samples were collected from five prospect areas to complete the initial reconnaissance phase of the exploration program. A total of ~930 rock-chip, 280 soil and 270 stream sediment samples have now been collected from nine of the prospect areas since the commencement of this program.

Interpretation of ground geophysical data (gravity and IP) over three of the areas was also completed and incorporated into the assessment of properties.

At this stage, four areas have been identified as having potential to contain either IOCG or porphyry copper (+/- gold) style mineralisation – two located within the Pampa de Las Pulgas titles, one at Cerro

de Fierro and one at Lana. Current exploration activity in Peru is aimed at advancing these properties to the drilling stage as soon as possible.

At Pampa de Las Pulgas, the Pampa Colorada prospect has expanded with the identification of further epithermal quartz veins containing highly anomalous Cu (+/Au) with some veins also containing elevated levels of lead, zinc, and molybdenum, within this poorly outcropping area.

The veins, which are scattered over an area of ~6km², are associated with propylitic (chlorite/epidote) alteration and are thought to reflect the occurrence of a buried porphyry system ( Figure 4 ).

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Figure 4: Pampa Colorada Prospect Summary Plan

Trial Induced Polarisation (IP) surveys (three lines over a portion of the prospect) were completed, with results indicating the presence of a broad sulphide target

occurring at depths of ~250m below surface which could mark the onset of disseminated sulphide mineralisation. Further IP surveys

are planned when all titles in this area are granted.

At present, three of the key tenements covering the Pampa Colorada prospect that had been granted by INGEMMET are under appeal by “Proyecto Especial Pasto Grande”. The Company’s advice is that this situation should be resolved in the near future.

During the Quarter, a second potential porphyry copper system was identified ~10km south west of Pampa Colorada (the Cardonal prospect) based on detailed mapping and sampling which located anomalous Cu (+/-Au) and propylitic alteration within numerous dykes and breccias ( Figure 5 ).

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Figure 5: Cardonal Prospect Summary Plan

The dykes, which are narrow and trend in an east-west direction, are thought to reflect the presence of a buried porphyry system. The widespread nature of the anomalous copper (up to 0.7% Cu) and associated propylitic alteration within the dyke ‘swarm’, suggests that the buried porphyry could be of sizeable dimensions and may be mineralised.

Systematic soil sampling over the prospect (4km²) is in progress to outline possible sites for initial drill testing later in the year.

Gravity data east of the Cardonal prospect outlined a distinct gravity low (3 milligals)

which modelling suggests could be due to a buried alteration system in this area. Soil sampling across this anomaly is currently under way to locate potential drill sites.

At the Lana Prospect , a large (~20km²) discrete 6 milligal gravity anomaly was identified offset from an underlying magnetic response, highlighting the potential for buried IOCG-style mineralisation beneath the cover sediments.

Reconnaissance prospecting during the Quarter found evidence of copper mineralisation and hematite alteration associated with veins in the surrounding

areas (beneath the sediment cover) and confirmed that the cover sediments are ~ 250-300m thick in the area of the anomaly.

Modelling of the gravity response suggests the possibility of buried mineralisation given the large density contrast (>0.5g/cc)

required to explain the anomaly ( Figure 6 ). An IP survey is planned to test the shallower portions of this target and identify potential sulphide targets for drill testing later in the year. Access to the site is currently being assessed.

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Figure 6: Lana Gravity Target

The Cerro de Fierro prospect, located north-west of Lana, is also considered to be an IOCG- style target. Modelling of the aeromagnetic response indicates a possible flat lying iron-rich (magnetite) source within the volcano-sedimentary sequence.

The Company is very pleased with the progress being made under the Peru JV and looks forward to reaching the drilling stage of the exploration program in the coming months.

GOLD – WEST AFRICA

Reconnaissance mapping and sampling identified major north-west trending structures coincident with the magnetic anomaly, and small diorite intrusions in the vicinity of the structure.

Several anomalous copper and gold values (up to 235ppm Cu and 154ppb Au) associated with silicification along the structure suggest the potential for buried mineralisation.

A ground magnetic survey is currently in progress to determine the depth and character of the potential source before drilling is considered.

Comoe Project (AQD 100%)

The Comoe Project is located near the town of Banfora in south-west Burkina Faso, West Africa, within an extensive greenstone belt. The area is relatively unexplored except for extensive historical surface sampling programs and widespread artisanal gold workings along the belt. AusQuest controls approximately 1,150km² of title within the Belt.

Drilling activity in Burkina Faso is being reviewed while the Company considers its options with respect to the Comoe Project.

Geological mapping and surface sampling utilising in-country staff commenced over selected prospects at Komoe and within the new Kapogouan and Nomousso tenements, where significant artisanal workings have been found. Results are pending.

BUSINESS DEVELOPMENT

AusQuest continues to evaluate opportunities both within Australia and offshore with the aim of adding value to the Company. Priority will be given to exploration properties with drill-ready targets, especially in areas of immediate interest to the Company.

CORPORATE

KEY ACTIVITIES – JUNE 2013 QUARTER

The following activities are planned for the June 2013 Quarter:

• Dundas (Ni) – ground EM and soil sampling over VTEM targets to define drill targets;

• Peru (Cu-Au) – map/sample targets in Pampa de las Pulgas to define drill targets;

• Peru (Cu-Au) – magnetics /IP at Cerro Fierro, Lana, Cardonal to define drill targets; and

• Comoe (Au) – mapping and soil sampling Kapogouan and Noumousso.

Cash reserves at 31 March 2013 were approximately $2.1 million, enabling the Company to continue to progress its planned exploration programs.

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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 2004 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.

Rule 5.3

Appendix 5B

Mining exploration entity quarterly report

Introduced 1/7/96. Origin: Appendix 8. Amended 1/7/97, 1/7/98, 30/9/2001.

Name of entity

AUSQUEST LIMITED ABN 35 091 542 451

Quarter ended (“current quarter”) 31 March 2013

Consolidated statement of cash flows

Cash flows related to operating activities 1.1 Receipts from product sales and related debtors 1.2 Payments for (a) exploration and evaluation (b) development (c) production (d) administration 1.3 Dividends received 1.4 Interest and other items of a similar nature received 1.5 Interest and other costs of finance paid 1.6 Income taxes paid 1.7 Other Net Operating Cash Flows	Current quarter $A ‘000	Year to date (9 months) $A ‘000
	- (1,151) - - (389) - 26 - - -	- (2,761) - - (1,152) - 137 - - -
	(1,514)	(3,776)
Cash flows related to investing activities 1.8 Payment for purchases of: (a)prospects (b)equity investments (c) other fixed assets 1.9 Proceeds from sale of: (a)prospects (b)equity investments (c)other fixed assets 1.10 Loans to other entities 1.11 Loans repaid by other entities 1.12 Other (provide details if material) Net investing cash flows 1.13 Total operating and investing cash flows (carried forward)	- - - 750 - - - - -	- - (1) 750 - - - -
	750	749
	(764)	(3,027)

1.13 Total operating and investing cash flows (brought forward)	(764)	(3,027)
Cash flows related to financing activities 1.14 Proceeds from issues of shares, options, etc. 1.15 Proceeds from unissued shares, options etc 1.16 Proceeds from borrowings 1.17 Repayment of borrowings 1.18 Dividends paid 1.19 Other (share issue costs) Net financing cash flows	- - - - - -	- - - - - -
	-	-
Net increase (decrease) in cash held 1.20 Cash at beginning of quarter/year to date 1.21 Exchange rate adjustments to item 1.20 1.22 Cash at end of quarter / year to date	(764) 2,814 -	(3,027) 5,077 -
	2,050	2,050

Payments to directors of the entity and associates of the directors Payments to related entities of the entity and associates of the related entities

1.23 1.24	Aggregate amount of payments to the parties included in item 1.2 Aggregate amount of loans to the parties included in item 1.10	Current quarter $A ‘000
		119
		-
1.25	Explanation necessaryfor an understandingof the transactions
	Executive directors’ salaries and non-executive directors’ fees and superannuation, consulting fees and rental of office space.

Non-cash financing and investing activities

• 2.1 Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows

None.

• 2.2 Details of outlays made by other entities to establish or increase their share in projects in which the reporting entity has an interest

None.

Financing facilities available

Add notes as necessary for an understanding of the position.

	3.1 Loan facilities 3.2 Credit standby arrangements	Amount available $A ‘000	Amount used $A ‘000
		-	-
		-	-

Estimated cash outflows for next quarter

4.1 Exploration and evaluation 4.2 Development 4.3 Production 4.4 Administration Total	$A’000
	750
	-
	-
	180
	930

Reconciliation of cash

Reconciliation of cash
Reconciliation of cash at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts is as follows.	Current quarter $A ‘000	Previous quarter $A ‘000
5.1 Cash on hand and at bank 5.2 Deposits at call 5.3 Bank overdraft 5.4 Other (Money market/Term Deposit)	2,050	814
	-	2,000
Total: cash at end of quarter(item 1.22)	2,050	2,814

Changes in interests in mining tenements

6.1 Interests in mining tenements relinquished, reduced or lapsed 6.2 Interests in mining tenements acquired or increased	Tenement reference	Nature of interest (note(2))	Interest at beginning ofquarter	Interest at end of quarter
	Tenements in Peru Azucar X Falla Torre N		Nil Nil	30% 30%
	E38/2764 E38/2765		Nil Nil	30% 30%

Issued and quoted securities at end of current quarter

Description includes rate of interest and any redemption or conversion rights together with prices and dates.

	Total number	Number quoted	Issue price per security (see note 3) (cents)	Amount paid up per security (see note 3) (cents)
7.1 Preference +securities (description) 7.2 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buy- backs, redemptions
7.3 +Ordinary securities 7.4 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital,buy-backs	160,003,444	160,003,444
7.5 +Convertible debt securities (description) 7.6 Changes during quarter (a) Increases through issues (b) Decreases through securities matured, converted
7.7 Options (description and conversion factor) 7.8 Issued during quarter 7.9 Exercised during quarter 7.10 Expired during quarter	1,350,000 1,150,000 500,000 500,000 1,750,000 2,900,000	- - - - - -	Exercise price 20 cents 40 cents 30 cents 40 cents 40 cents 7 cents	Expiry date 1 Dec 2013 1 Dec 2013 30 Nov 2013 30 Nov 2013 30 Nov 2013 30 Nov 2015
7.11 Debentures (totals only)
7.12 Unsecured notes (totals only)

Compliance statement

• 1 This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Act or other standards acceptable to ASX (see note 4).

• 2 This statement does give a true and fair view of the matters disclosed.

Sign here: Date: 30 April 2013 (Company secretary)

Print name: Darren Crawte

Notes

• 1 The quarterly report provides a basis for informing the market how the entity’s activities have been financed for the past quarter and the effect on its cash position. An entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this report.

• 2 The “Nature of interest” (items 6.1 and 6.2) includes options in respect of interests in mining tenements acquired, exercised or lapsed during the reporting period. If the entity is involved in a joint venture agreement and there are conditions precedent which will change its percentage interest in a mining tenement, it should disclose the change of percentage interest and conditions precedent in the list required for items 6.1 and 6.2.

• 3 Issued and quoted securities The issue price and amount paid up is not required in items 7.1 and 7.3 for fully paid securities .

• 4 The definitions in, and provisions of, AASB 1022: Accounting for Extractive Industries and AASB 1026: Statement of Cash Flows apply to this report.

• 5 Accounting Standards ASX will accept, for example, the use of International Accounting Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with.

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