AUSQUEST LIMITED — Interim / Quarterly Report 2017

Oct 24, 2017

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Quarterly Report – 30[th] September 2017

HIGHLIGHTS

Peru – Copper-Gold

• A drilling programme to test a large porphyry copper target at the Chololo Project was approved by the Company’s Strategic Alliance partner, South32. Drill permitting commenced.

• A second drilling programme in Peru is under consideration by the Strategic Alliance. Drilling is proposed to test a strong IP response associated with the IOCG magnetic target at the Cerro de Fierro Project.

• Compilation of data at the Los Otros Project (South32 Strategic Alliance) outlined three target areas with potential for buried porphyry copper mineralisation.

Australia – Nickel, Copper, Zinc

• Reconnaissance drilling (4 holes/2,568m) at the Blue Billy Zinc Project (South32 Strategic Alliance) highlighted favourable host rocks for sediment-hosted zinc mineralisation. Assays are expected around the end of October.

• Further targets were identified within the eastern extension of the reconnaissance electromagnetic (EM) survey at the Jimberlana Nickel Project (South32 Strategic Alliance).

• MLTEM surveys over interpreted mafic intrusions at Balladonia have identified up to seven targets of interest. Modelling will be completed before consideration by the Strategic Alliance as a drill-ready opportunity.

Corporate

• Preliminary discussions commenced with South32 on a joint venture agreement over the Chololo Copper Project in Peru following acceptance of the drilling proposal. It is expected that this agreement will be completed during the next Quarter.

• The Company now has two Strategic Alliance projects at the drill-ready stage, with a third drill program currently under consideration.

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Figure 1: Project Locations – Australia and Peru

OVERVIEW

During the Quarter, field programmes under the Company’s Strategic Alliance (SA) with diversified global miner South32 (ASX, LSE, JSE: S32; ADR: SOUHY) were accelerated both in Australia and Peru.

In Peru , IP surveys at the Cerro de Fierro Copper Project were completed and mapping/sampling programmes at the Los Otros Project were in full swing during the Quarter, in order to provide the Alliance with potential targets for follow-up exploration and/or drilling. The Chololo Porphyry Copper Project was advanced to the drilling stage with drill permitting now underway.

In Australia , EM surveys continued at the Jimberlana and Balladonia Nickel Projects, with further bedrock conductors identified in both areas. At the Blue Billy Zinc Project, the Alliance’s inaugural drilling programme was successfully completed with assay results expected by the end of October. A

review of data from the Gibson Soak Nickel Project resulted in the tenement being relinquished to allow resources to be focused on higher priority areas.

Project generation activities continued in Australia and Peru with several areas identified for possible tenement acquisition.

PERU COPPER-GOLD PROJECTS

Over the past five years, AusQuest has assembled a large portfolio of copper-gold prospects along the southern coastal belt of Peru in South America, with targets identified for drilling as possible porphyry copper targets and/or iron-oxide copper-gold (IOCG) targets with the size potential being of significance to AusQuest (Figure 2). Peru is one of the world’s most prominent destinations for international copper exploration and is considered to be a prime location for world-class exploration opportunities.

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Figure 2: Project Locations in southern Peru

Strategic Alliance Projects (funded by South32)

During the Quarter, a program of up to 5,000m of diamond drilling was agreed with South32 to test a large potential porphyry copper target at the Chololo Prospect in southern Peru. This will be the first project in Peru to be tested by drilling under the Strategic Alliance.

Drill permitting is now in progress and is estimated to take around six months to complete, with drilling expected to commence before the end of Q1 2018. As provided for in the Strategic Alliance Agreement (SAA), the parties will execute a joint venture document in relation to the Chololo Project before drilling commences. Under the joint venture, South32 would spend US$4.0 million to earn a 70% interest in the Chololo Project.

Drilling will primarily target a strong IP chargeability anomaly thought to reflect a large-scale pyrite (+/- chalcopyrite) halo associated with a buried porphyry copper system. Computer modelling of the IP data confirmed the large target size and strength of response, suggesting the potential for significant amounts of sulphide mineralisation within the source rocks ( Figure 3 ) (see ASX release 21 September).

Late in the Quarter, pole-dipole Induced Polarisation (IP) surveys (a=200m, n=1 to 6, lines 200m and 400m apart) were completed over the Cerro de Fierro Project , located ~130km south-east of the Mina Justa copper deposit (~475Mt @ 0.68% Cu) in southern Peru, to test a potential iron-oxide coppergold (IOCG) target identified from the Company’s proprietary aeromagnetic data.

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Figure 3: Chololo IP Target and rock geochemistry

The magnetic target extends over an area several square kilometres in size within a regional-scale potassic alteration anomaly covering many tens of square kilometres. The buried magnetic target is thought to reflect a potential manto-style IOCG deposit within the volcanic sequence.

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. Computer modelling of the IP data indicated that the target is at least 1,000m long and 500m wide with the relatively flat dip of the target supporting the concept that mineralisation may occur in layers (volcaniclastics) within the volcanic sequence ( Figures 4 and 5 ).

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.

Earlier geological mapping and sampling completed by the Company in 2016 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.

A drilling program to test this target has been prepared and is currently the subject of discussions with South32.

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Figure 4: Cerro de Fierro IP/Magnetic Target and rock geochemistry

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Figure 5: Section G-H showing relationship between IP and Magnetic Models

At the Los Otros Project , initial traverse mapping and sampling was completed outlining three target areas for follow-up. A total of ~510 samples were collected and sent to the ALS laboratory in Lima for analysis.

Large areas of intermediate to advanced argillic alteration (lithocap) were located by the mapping with numerous samples from these outcrops returning anomalous levels of

Mo, Bi, As, Sb, Pb, Au, Ag and occasional Cu, suggesting the potential for a buried porphyry copper system(s) in these areas.

Major WNW and NNW structures were also confirmed by mapping, with the WNW structures paralleling the regional Incapuquio Fault system, which is known to be closely associated with several large porphyry copper deposits in the region.

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Figure 6: Los Otros Magnetics and Geology showing alteration/geochemical target areas

Modelling of the aeromagnetic data was initiated to help define the relationship between anomalous geochemistry and magnetic source rocks. The areas of alteration and anomalous geochemistry appear to flank the magnetic bodies, suggesting that they may be associated with buried intrusions concealed by the overlying volcanic sequences.

In-fill mapping and sampling is now underway to refine target areas for geophysical surveys (IP) in order to define targets for drilling.

The Company is very pleased with progress that is being made at all the prospects in Peru under the Strategic Alliance with South32 and looks forward to generating further positive results from its ongoing programs.

AusQuest Projects

Fieldwork over the AusQuest-owned projects in Peru was limited as the Peruvian team concentrated their efforts on the Alliance projects.

AUSTRALIA – BASE METAL PROJECTS (Nickel, Copper, Zinc)

exploration work is being funded by South32 under the Blue Billy Joint Venture (BBJVA).

Blue Billy Zinc Project ( 100% AQD – BBJVA; South32 earning to 70%)

The Blue Billy Zinc Project is located ~100km south-west of Paraburdoo within the Edmund Basin in Western Australia. The tenement covers the down-dip extent of anomalous zinc values (up to 0.5% Zn) found within a pyritic black mudstone similar to host rocks known to contain sedimentary zinc deposits in the Mt Isa-McArthur River District of north-west Queensland. A study of historical exploration data suggests the potential for SEDEX-style zinc mineralisation close to a regional-scale (growth?) fault system down-dip from the anomalous surface zinc occurrences. All

During the Quarter, an initial reconnaissance diamond drilling program (4 holes/2,568m) was completed. 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 ( Figure 7 ).

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Figure 7: Blue Billy JV geology showing wide spaced drill-hole locations

Traces of sphalerite (Zn) and galena (Pb) plus thicker pyritic shale sequences were evident in the two northern-most drill-holes (BB03 and BB04), suggesting the presence of base metal bearing fluids within the basin and the potential for nearby structures which

may have helped to concentrate mineralisation in this area.

Core was cut and sampled on a 1 metre basis with half-core samples (~2,150) dispatched to Intertek 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.

Geophysical logging – natural gamma, density, resistivity, magnetic susceptibility and acoustic velocity – was successfully completed in three of the four holes and will be used to help map changes within the sedimentary section and to assist correlations with geochemical data when it is available.

- Jimberlana Ni Cu Project (100% AQD subject to SAA)

The Jimberlana Project is located ~120km west of Norseman between the Lake Johnston and Forrestania Greenstone Belts, and consists of one Exploration Licence (130km²)

covering the western extension (~20km strike) of the Jimberlana Dyke. Recent research has found a strong association between intrusive-related nickel sulphide deposits and the base of dyke-like structures. Jimberlana is a very large, fertile, fractionated dyke known to contain nickel sulphides within its contact zones, but has never been tested (drilled) at or close to its basal section. Exploration work at Jimberlana is being funded by South32.

During the Quarter, high-power electromagnetic (HPEM) surveys were completed over the eastern extension (~7km strike) of the Jimberlana Dyke where earlier gravity surveys had inferred the depth to the base of the dyke was likely to be in excess of 500 metres ( Figure 8 ).

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Figure 8: Jimberlana reconnaissance EM survey showing areas of interest

The reconnaissance survey was completed by HPEM Geophysics using 300m x 300m transmitter loops, a three-component LANDTEM sensor and 300m station spacings (slingram), with survey lines run parallel to the strike of the dyke in order to

provide a rapid initial test for massive sulphides located near the interpreted base of the dyke.

Late-time EM anomalies implying moderate to high conductivity targets were detected in

three areas within or marginal to the dyke, two within the eastern extension of the survey ( Figure 8 ) and one within the western half of survey (ASX release, 22 June 2017).

Preliminary modelling of the EM data suggests the presence of targets parallel to

the trace of the dyke, but better target definition is required before the possibility of drilling is considered by the Alliance. Detailed in-fill surveys over the eastern two targets are expected to be completed before the end of the year.

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Figure 9: Balladonia reconnaissance EM surveys showing potential targets

Balladonia Ni-Cu Project (100% AQD subject to SAA)

The Balladonia Project is located ~50km south of the Nova–Bollinger nickel-copper deposit. It consists of four Exploration

Licences covering an area of ~940km², within a structurally complex region of the Fraser Range Terrain centred above the southern margin of a deep regional gravity anomaly (~30 milligals) which is thought to reflect buried mafic/ultramafic rocks similar

to those that may be related to the formation of the Nova deposit. Most of the tenements lie within the Dundas Nature Reserve. Exploration work at Balladonia is being funded by South32.

Reconnaissance moving loop electromagnetic surveys (MLTEM) continued throughout the Quarter to test interpreted mafic intrusions within the Fraser Range for nickel-copper mineralisation similar to that found at Nova-Bollinger. The targeted intrusions (12) are relatively strike extensive and are associated with inferred regional structures that cross-cut the area.

The MLTEM surveys were run parallel to the strike of the target intrusions using 300m x 300m transmitter loops, a three-component squid sensor and a 300m station spacing (slingram). In-fill EM surveys were undertaken over anomalous areas identified by the reconnaissance surveys in order to confirm the location and characteristics of bedrock conductors.

A total of up to seven conductors have now been identified as potential drill targets, four from the current surveys (2017) and three from previous EM work completed by the Company in 2015 ( Figure 9 ). Results from the in-fill EM surveys are expected shortly to allow computer modelling of data to be completed prior to consideration of the targets by the Alliance as drill-ready opportunities.

- Glenayle Ni Cu Project ( 100% AQD )

The Glenayle Ni-Cu Project is located ~350km northeast of Wiluna along the northern margin of the Yilgarn Craton in Western Australia. Tenements cover the basal section of large mafic sill complex where available magnetic and geochemical data suggest there may be ultramafic rocks under the extensive cover that could be prospective for nickel-copper sulphide deposits.

HPEM surveys to test magnetic targets for possible massive nickel and copper sulphides have been planned but a decision on the

commissioning of these surveys has not been made.

BUSINESS DEVELOPMENT

As part of the Strategic Alliance with South32, the Company is increasing its project generation work both within Australia and offshore, to provide new base metal (Cu, Zn and Ni) opportunities and possible drillready targets for the Alliance.

CORPORATE

During the Quarter, AusQuest announced that a second project (Chololo) had been accepted by South32 as a drill-ready opportunity under the Strategic Alliance. Preliminary discussions have been held with South32 and it is now expected that a joint venture agreement over the Chololo Project will be completed by the end of the December Quarter 2017.

The maturity date on the existing $750,000 Loan and Convertible Note Agreement with Mr Christopher Ellis, a director and substantial shareholder of the Company, has been extended from 5 April 2018 to 30 November 2018. Other terms of the Loan and Convertible Note Agreement as announced on 5 October 2016 remain unchanged.

KEY ACTIVITIES – DECEMBER 2017 QUARTER

The following activities are planned for the December 2017 Quarter:

• Jimberlana (Ni-Cu) – In-fill EM surveys to confirm drill targets;

• Balladonia (Ni-Cu) – Compilation and modelling of EM data to confirm drill targets;

• Blue Billy JV (Zn) – Assess drill results & determine vectors for sediment-hosted zinc;

• Peru (Cu-Au) – Continue permitting for Chololo porphyry copper drill program;

• Peru (Cu-Au) – In-fill mapping & sampling at Los Otros – plus potentially reconnaissance IP;

• Peru (Cu-Au) – Plan drill program at Cerro de Fierro – with the aim of commencing the permitting process; and

• Project Generation – Identify new exploration opportunities.

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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.

JORC Code, 2012 Edition – Table 1 AusQuest Rock-Chip Sampling Los Otros 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	•Rock chip sampling comprises the collection of
techniques	specialised industry standard measurement tools appropriate to the minerals	rocks, usually by hammering an outcrop, with
	under investigation, such as down hole gamma sondes, or handheld XRF	samples being of variable size and quality.
	instruments, etc). These examples should not be taken as limiting the broad	•Sample locations are recorded by hand-held GPS.
	meaning of sampling.	•Reconnaissance sampling is not systematic, with
	• Include reference to measures taken to ensure sample representivity and the	samples of potentially mineralized rock being the
	appropriate calibration of any measurement tools or systems used.	main focus of the program.
	• 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 techniques	• Drill type (eg core, reverse circulation, open-hole hammer, rotary air blast, auger,	•Not applicable – surface sampling only
	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 if
	_so, by what method, etc). _
Drill sample	• Method of recording and assessing core and chip sample recoveries and results	•Not applicable – surface sampling only
recovery	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 geologically and geotechnically	•Descriptions of all surface samples are recorded by
	logged to a level of detail to support appropriate Mineral Resource estimation,	the project geologist.
	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. _

1

Criteria	JORC Code explanation	Commentary
Sub-sampling	• If core, whether cut or sawn and whether quarter, half or all core taken.	•No sub-sampling of rock-chip samples was
techniques and	• If non-core, whether riffled, tube sampled, rotary split, etc and whether sampled	undertaken
sample preparation	wet or dry.	•Approximately 2 kg of rock was collected from each
	• For all sample types, the nature, quality and appropriateness of the sample	site sampled which is regarded as representative of
	preparation technique.	the outcrop being sampled
	• Quality control procedures adopted for all sub-sampling stages to maximise	•Mineralised and altered rocks were the target of this
	representivity of samples.	program although background samples from various
	• Measures taken to ensure that the sampling is representative of the in situ	rock types were also collected
	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 assay	• The nature, quality and appropriateness of the assaying and laboratory	•Rock chip samples are crushed and pulverized to
data and	procedures used and whether the technique is considered partial or total.	85% minus 75 microns, then a representative sub-
laboratory tests	• For geophysical tools, spectrometers, handheld XRF instruments, etc, the	sample is collected for digestion using a 4 acid
	parameters used in determining the analysis including instrument make and	digest, followed by analysis by ICP-MS and/or AES.
	model, reading times, calibrations factors applied and their derivation, etc.	Gold are assayed by 30 g fire assay with AAS finish.
	• Nature of quality control procedures adopted (eg standards, blanks, duplicates,	•In laboratory QAQC data is reviewed for all assay
	external laboratory checks) and whether acceptable levels of accuracy (ie lack of	jobs. Blanks and standards are included with all
	bias) and precision have been established.	sample batches.
Verification of	• The verification of significant intersections by either independent or alternative	•Rock-chip sampling is compiled into Excel
sampling and	company personnel.	spreadsheets for merging with assay data when it
assaying	• The use of twinned holes.	becomes available.
	• Documentation of primary data, data entry procedures, data verification, data	•Digital data is regularly backed-up on the company’s
	storage (physical and electronic) protocols.	servers.
	• _Discuss any adjustment to assay data. _
Location of data	• Accuracy and quality of surveys used to locate drill holes (collar and down-hole	•Sample locations are recorded using GPS to within 5
points	surveys), trenches, mine workings and other locations used in Mineral Resource	metres accuracy.
	estimation.	•The grid projection used is PSAD 56 Zone 18S
	• Specification of the grid system used.	•Topographic control is obtained from GPS readings
	• Quality and adequacy of topographic control.	or topographic maps and is considered adequate for
		current needs
Data spacing and	• Data spacing for reporting of Exploration Results.	•Rock chip sampling is irregular and based on
distribution	• Whether the data spacing and distribution is sufficient to establish the degree of	availability of suitable outcrop.
	geological and grade continuity appropriate for the Mineral Resource and Ore
	Reserve estimation procedure(s) and classifications applied.
	• _Whether sample compositing has been applied. _

2

Criteria	JORC Code explanation	Commentary
Orientation of data	• Whether the orientation of sampling achieves unbiased sampling of possible	•Not applicable to reconnaissance rock chip sampling
in relation to	structures and the extent to which this is known, considering the deposit type.
geological	• If the relationship between the drilling orientation and the orientation of key
structure	mineralised 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 securely tied/sealed in the field,
		followed by packing into larger sealed plastic bags
		for transport to the laboratory.
Audits or reviews	• The results of any audits or reviews of sampling techniques and data.	•No audits or reviews have been carried out on the
		sampling 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 Los Otros project is located approximately 10
and land tenure	material issues with third parties such as joint ventures, partnerships, overriding	km north west of the town of Moquegua in the south
status	royalties, native title interests, historical sites, wilderness or national park and	of Peru.
	environmental settings.	•The Los Otros project comprises 5 granted mineral
	• The security of the tenure held at the time of reporting along with any known	concessions and 3 applications.
	impediments to obtaining a licence to operate in the area.	•The tenements are held by Questdor which is a
		100% subsidiary of AusQuest Limited.
		•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 exploration by other parties.	•No public reporting of exploration data is required in
by other parties		Peru.
Geology	• Deposit type, geological setting and style of mineralisation.	•The deposit styles being explored for are porphyry
		copper and gold and IOCG, which are large scale
		disseminated copper (and gold) deposits found
		within orogenic belts that surround the Pacific Rim.
		These deposits are vertically extensive and areally
		large requiring significant drilling to evaluate.

3

Criteria	JORC Code explanation	Commentary
Drill hole	• A summary of all information material to the understanding of the exploration	•Not applicable – surface sampling only
Information	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.
	• 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	•Not applicable – surface sampling only.
methods	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 important in the reporting of Exploration	•Not applicable – surface sampling only
between	Results.
mineralisation	• If the geometry of the mineralisation with respect to the drill hole angle is known,
widths and	its nature should be reported.
intercept lengths	• 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 scales) and tabulations of intercepts should	•Sample locations included on plan in ASX release.
	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 reporting	• Where comprehensive reporting of all Exploration Results is not practicable,	•Assay ranges and highlights provided diagramitically
	representative reporting of both low and high grades and/or widths should be	in ASX release.
	_practiced to avoid misleading reporting of Exploration Results. _
Other substantive	• Other exploration data, if meaningful and material, should be reported including	•The area was selected for sampling based on
exploration data	(but not limited to): geological observations; geophysical survey results;	geological and geophysical data interpretations by
	geochemical survey results; bulk samples – size and method of treatment;	the company.
	metallurgical test results; bulk density, groundwater, geotechnical and rock
	characteristics; potential deleterious or contaminating substances.

4

Criteria	JORC Code explanation	Commentary
Further work	• The nature and scale of planned further work (eg tests for lateral extensions or	•Proposals of further work will be determined after a
	depth extensions or large-scale step-out drilling).	thorough analysis of the data.
	• Diagrams clearly highlighting the areas of possible extensions, including the
	main geological interpretations and future drilling areas, provided this information
	_is not commercially sensitive. _

5

Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report

Appendix 5B

Mining exploration entity and oil and gas exploration entity quarterly report

Introduced 01/07/96 Origin Appendix 8 Amended 01/07/97, 01/07/98, 30/09/01, 01/06/10, 17/12/10, 01/05/13, 01/09/16

Name of entity: AUSQUEST LIMITED ABN: Quarter ended (“current quarter”) 35 091 542 451 30 September 2017

Consolidated statement of cash flows	Current quarter $A’000	Year to date (3 months) $A’000
1. Cash flows from operating activities 1.1 Receipts from customers 1.2 Payments for (a) exploration & evaluation (b) development (c) production (d) staff costs (e) administration and corporate costs 1.3 Dividends received (see note 3) 1.4 Interest received 1.5 Interest and other costs of finance paid 1.6 Income taxes paid 1.7 Research and development refunds 1.8 Other : Funding received from South 32 under the Strategic Alliance Agreement 1.9 Net cash from / (used in) operating activities	(1,181) - - (22) (162) - 1 - - - 715	(1,181) - - (22) (162) - 1 - - - 715
	(649)	(649)
2. Cash flows from investing activities 2.1 Payments to acquire: (a) property, plant and equipment (b) tenements (see item 10) (c) investments	(13) - -	(13) - -

• See chapter 19 for defined terms 1 September 2016

Page 1

Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report

Consolidated statement of cash flows	Current quarter $A’000	Year to date (3 months) $A’000
(d) other non-current assets 2.2 Proceeds from the disposal of: (a) property, plant and equipment (b) tenements (see item 10) (c) investments (d) other non-current assets 2.3 Cash flows from loans to other entities 2.4 Dividends received (see note 3) 2.5 Other (provide details if material) 2.6 Net cash from / (used in) investing activities	- - - - - - - -	- - - - - - - -
	(13)	(13)
3. Cash flows from financing activities 3.1 Proceeds from issues of shares 3.2 Proceeds from issue of convertible notes 3.3 Proceeds from exercise of share options 3.4 Transaction costs related to issues of shares, convertible notes or options 3.5 Proceeds from borrowings 3.6 Repayment of borrowings 3.7 Transaction costs related to loans and borrowings 3.8 Dividends paid 3.9 Other (provide details if material) 3.10 Net cash from / (used in) financing activities	- - - - - - - - -	- - - - - - - - -
	-	-
4. Net increase / (decrease) in cash and cash equivalents for the period 4.1 Cash and cash equivalents at beginning of period 4.2 Net cash from / (used in) operating activities (item 1.9 above) 4.3 Net cash from / (used in) investing activities (item 2.6 above) 4.4 Net cash from / (used in) financing activities (item 3.10 above)	1,694 (649) (13) -	1,694 (649) (13) -

• See chapter 19 for defined terms

1 September 2016

Page 2

Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report

Consolidated statement of cash flows	Current quarter $A’000	Year to date (3 months) $A’000
4.5 Effect of movement in exchange rates on cash held 4.6 Cash and cash equivalents at end of period	(10)	(10)
	1,022	1,022
5. Reconciliation of cash and cash equivalents at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts	Current quarter $A’000	Previous quarter $A’000
5.1 Bank balances 5.2 Call deposits 5.3 Bank overdrafts 5.4 Other (provide details) 5.5 Cash and cash equivalents at end of quarter (should equal item 4.6 above)	1,022 - - -	1,694 - - -
	1,022	1,694
6. Payments to directors of the entity and their associates Current quarter $A'000 6.1 Aggregate amount of payments to these parties included in item 1.2 44 6.2 Aggregate amount of cash flow from loans to these parties included in item 2.3 - 6.3 Include below any explanation necessary to understand the transactions included in items 6.1 and 6.2
		Current quarter $A'000
		44
		-
Payment of director and consulting fees.

• See chapter 19 for defined terms 1 September 2016

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Appendix 5B

Mining exploration entity and oil and gas exploration entity quarterly report

7.	Payments to related entities of the entity and their associates	Current quarter
		$A'000
7.1	Aggregate amount of payments to these parties included in
	item 1.2
7.2	Aggregate amount of cash flow from loans to these parties
	included in item 2.3
7.3	Include below any explanation necessary to understand the transactions included in
	items 7.1 and 7.2

8. Financing facilities available Add notes as necessary for an understanding of the position Total facility amount at quarter end $’000 Amount drawn at quarter end $’000 8.1 Loan facilities (Loan and Convertible Note) A$750,000 A$750,000 8.2 Credit standby arrangements - - 8.3 South32 Advance facility US$1,000,000 Nil 8.4 Include below a description of each facility above, including the lender, interest rate and whether it is secured or unsecured. If any additional facilities have been entered into or are proposed to be entered into after quarter end, include details of those facilities as well.	Total facility amount at quarter end $’000	Amount drawn at quarter end $’000
	A$750,000	A$750,000
	-	-
	US$1,000,000	Nil

Loan and Convertible Note Agreement

The Company executed a Loan and Convertible Note Agreement on 5 October 2016 with Mr Chris Ellis, a director and substantial shareholder of the Company for a total loan facility of $750,000. The conversion price has been set at the lower of 2 cents per share or the 5-day Value Weighted Average Price immediately prior to the conversion. The loan matures on 30 November 2018. Interest on the Loan accrues at 10% per annum commencing six months after the date of the advance, being from 5 April 2017.

South32 Advance facility

As part of the strategic alliance with South32 Group Operations Pty Ltd, South32 also provided the Company with a US$1,000,000 unsecured, interest-free cash advance facility to help fund project generation activities as and when required. Money drawn down from this facility can be repaid during the term of the strategic alliance agreement but in any event must be repaid by 31 December 2019. At the date of this report no amount was drawn from this facility.

9. Estimated cash outflows for next quarter	$A’000
9.1 Exploration and evaluation 9.2 Development 9.3 Production 9.4 Staff costs 9.5 Administration and corporate costs 9.6 Other (provide details if material) 9.7 Total estimated cash outflows	(540) - - (40) (90) -
	(670)

• See chapter 19 for defined terms 1 September 2016

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Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report

10. Changes in tenements (items 2.1(b) and 2.2(b) above)	Tenement reference and location	Nature of interest	Interest at beginning of quarter	Interest at end of quarter
10.1 Interests in mining tenements and petroleum tenements lapsed, relinquished or reduced	Australia E63/1672	-	100%	Nil
10.2 Interests in mining tenements and petroleum tenements acquired or increased	-	-	-	-

Compliance statement

• 1 This statement has been prepared in accordance with accounting standards and policies which comply with Listing Rule 19.11A.

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

==> picture [41 x 57] intentionally omitted <==

Sign here: ............................................................ Date: 25 October 2017

Print name: Henko Vos (Company Secretary)

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 that wishes to disclose additional information is encouraged to do so, in a note or notes included in or attached to this report.

2. If this quarterly report has been prepared in accordance with Australian Accounting Standards, the definitions in, and provisions of, AASB 6: Exploration for and Evaluation of Mineral Resources and AASB 107: Statement of Cash Flows apply to this report. If this quarterly report has been prepared in accordance with other accounting standards agreed by ASX pursuant to Listing Rule 19.11A, the corresponding equivalent standards apply to this report.

3. Dividends received may be classified either as cash flows from operating activities or cash flows from investing activities, depending on the accounting policy of the entity.

4. See chapter 19 for defined terms 1 September 2016

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