CENTAURUS METALS LIMITED - Interim / Quarterly Report 2016

AUSTRALIAN SECURITIES EXCHANGE ANNOUNCEMENT

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MARCH 2016 QUARTERLY ACTIVITIES REPORT 27 April 2016

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MARCH QUARTER HIGHLIGHTS

EXPLORATION – MOMBUCA GOLD PROJECT

Successf u l trenchin g program completed over the I n itial Targe t Zone (ITZ ) of the M o mbuca Gold Project, where hig h grade ro c k chip sa m ple resul t s of up to 12.2 g/t A u are coi n cident wi t h extensiv e historical artisanal workings.
The trenching wor k has exposed a syste m of stack e d gold‐bearing quartz veins with gold grad e s up to 3. 1 g/t Au ass a yed from t he trench s amples.
The confirmation o f gold‐be a ring vein s below s u rface across multipl e lithologi e s displayi n g commo n alteration assemblages reinforc e s the geological model for Mo m buca as a primary gold minerali s ation syst e m with the potential t o form par t of a much larger min e ralised sy s tem.
The Co m pany’s exploration fo c us will the r efore continue over the ITZ where an open‐ended gol d ‐ in‐soils a nomaly e x tending o v er a leng t h of 1.5k m and var y ing in wi d th from 5 0 ‐150m, h a s previously been defined, coincident wit h crustal s c ale structures derive d from det a iled grou n d magneti c survey w o rk.
An Indu c ed Polaris a tion (IP) s urvey commenced t o wards the end of th e Quarter in the ITZ t o target e x tensions o f the sulphi d e minerali s ation at d e pth and d e fine initial d rilling loc a tions.

EXPLORATION – AURORA COPPER PROJECT

Chargea b ility and resistivity h i ghs from h istorical I P survey w o rk areas a re coincid e nt with drill holes th a t intersect e d copper s ulphide mi n eralisatio n .
New IP survey wo r k is planned to be u ndertaken to impro v e targetin g control at depth a n d confirm n ew target s close to e x isting inte r sections.
A strong chargeability and resistivity high anomaly, c oincident w ith coppe r ‐in‐soils a n omalies a n d extending over +1k m of strike and up to 6 00m wide , has been identified and represents a priori t y focus fo r initial exploration act i vity.

Australian Office Brazilian Office ASX: CTM Cen t aurus Metal s Limited Centaurus Brasil Mi n eração Ltda A CN 009 468 0 99 Lev e l 3, 10 Outra m St Avenid a Barão Hom e m de Melo, 4 391 o ffice@centa u rus.com.au WE S T PERTH WA 6005 Salas 6 0 6 e 607 ‐ E s toril T elephone: + 6 1 8 9420 4000 Belo H o rizonte ‐ MG ‐ CEP: 30.49 4 .275 BRAZIL

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OVERVIEW

Activities during the March 2016 Quarter were focused on the highly prospective Mombuca Gold Project in south‐ east Brazil, with a trench work program confirming the presence of a stacked gold‐bearing quartz vein system extending continuously over a significant strike length within the Initial Target Zone (“ITZ”).

The trenching work intersected multiple flat‐lying gold‐bearing quartz veins at different locations with gold assays of up to 3.1g/t Au returned over a 0.5m interval in the trenches. These intersections demonstrate the sub‐surface strike continuity of structurally controlled gold mineralisation in quartz veins across multiple lithologies displaying common alteration assemblages, reinforcing the presence of a primary gold mineralisation system and supporting the potential for a larger mineralised system.

Exploration also continued at the Aurora Copper Project in north‐east Brazil during the Quarter, with several new priority exploration targets identified following a successful review of historical geophysical data. The review, which was undertaken by highly experienced US‐based geophysicist, Mr Robert B. Ellis, laid the foundations for a planned Induced Polarisation (IP) survey designed to enhance target definition in advance of new drilling.

The most significant target that has emerged from the review of historical data is a chargeability high identified north of the Diamante target which extends over +1km of strike and is up to 600m wide, and may represent sulphide‐rich mineralisation. This will be a priority focus for upcoming exploration work.

Figure 1: Centaurus Project locations in south‐east Brazil

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Figure 2: Centaurus Project locations in north‐east Brazil

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EXPLORATION

MOMBUCA GOLD PROJECT

Following the commencement of exploration activities at the Mombuca Gold Project in south‐east Brazil during the December 2015 Quarter, Centaurus received results from a trench work program during the March Quarter which confirmed the presence of a stacked gold‐bearing quartz vein system extending continuously over a significant strike length within the Initial Target Zone (“ITZ”).

The recent trenching work intersected multiple flat‐lying gold‐bearing quartz veins at different locations with gold assays of up to 3.1g/t Au returned over a 0.5m interval in the trenches. These intersections demonstrate the sub‐ surface strike continuity of structurally controlled gold mineralisation in quartz veins across multiple lithologies displaying common alteration assemblages, reinforcing the presence of a primary gold mineralisation system and supporting the potential for a larger mineralised system.

The ITZ is defined by a large gold‐in‐soils geochemical anomaly that extends over a trend of approximately 1.5km (Figure 3) coincident with crustal scale structures delineated from a detailed ground magnetic survey as well as several historical artisanal workings and adits from the 19[th] century. Face sampling from these adits has returned gold intercepts of up to 6m at 5.3g/t Au and 8m at 1.8g/t Au.

ITZ Trenching Program

The trenching program was undertaken to follow up earlier exploration work which identified the presence of in‐ situ mineralisation in an area with coincident strong gold‐in‐soils geochemical anomalies and intense historical ‘garimpo’ activity. Previously reported rock chip sample assays from the mineralised quartz veins included results of 12.2g/t Au, 9.3g/t Au, 5.6g/t Au and 3.2g/t Au.

Three trenches were excavated cross‐cutting the in‐situ quartz veins and quartzite package, which is the main host lithology in this particular area (see Figure 3). The quartzites and chlorite‐talc schist hosts have undergone intense sericite and chlorite alteration.

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Figure 3: Trenching Location with Relevant Sample Results – Mombuca Gold Project

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The trenches were excavated about 30 metres apart and positive assay results were received from MBC‐TR‐15‐ 001 and MBC‐TR‐15‐002, indicating continuity of mineralised veins along strike. Trench MBC‐TR‐15‐003 displayed the same alteration and sulphide assemblages, however, no significant gold assay result was returned from the narrower quartz veins in this location.

The gold‐bearing quartz veins are shallow‐dipping (on average 30° towards the south‐southwest). Limonite (after pyrite) and fresh pyrite are found along the quartz veins and at its contacts with the host quartzite (Figure 4). Due to the low angle structures, sampling was undertaken as perpendicular channels in the trench walls over the relevant features such as quartz veins, lithological contacts and sulphide alteration zones.

The best results were taken from sulphide‐rich quartz veins within the intense sericite altered quartzite and included results of 3.07g/t Au and 2.11g/t Au over 0.5m intervals. At a contact between the quartzite and talc‐ chlorite schist a mineralised quartz vein was also identified with 0.88g/t Au over 0.5m.

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Figure 4: Detail of Mineralised Quartz Vein at MBC‐TR‐15‐002 – Mombuca Gold Project

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The ITZ hosts a significant amount of historical artisanal mining where a complex array of trenches up to 5m deep has previously been identified, orientated parallel to the quartz veins. The Company believes that the garimpeiros mined the thicker portion of veins that held abundant pyrite to depths of up to 5m. The veins that Centaurus has identified at surface and now in the trenches are understood to be the “waste” veins that the garimpeiros left behind.

A number of adits have been found along a trend of approximately 900m that extends from the trenches to the south‐west. These adits are understood to be from the same period as the broader artisanal workings. Sampling from these adits returned gold intercepts of up to 6m at 5.3g/t Au and 8m at 1.8g/t Au. The garimpeiro workings (pits/trenches and adits) occur along the same trend of the main geochemical soil anomaly of the ITZ.

Induced Polarisation (IP) Survey

The ITZ continues to be the priority exploration target of the Mombuca Gold Project. A ground‐based Induced Polarisation (IP) survey commenced towards the end of the Quarter over the ITZ to assist in the identification of sulphide mineralisation at depth. The IP survey, will be an important tool in defining the preferred target locations for future drilling given the association of sulphides (pyrite) with the high‐grade gold identified at surface and in adits and trenches.

AURORA COPPER PROJECT

During the Quarter, the Company identified several new priority exploration targets at its 100%‐owned Aurora Copper Project in north‐eastern Brazil after completing a successful review of historical geophysical data.

The review, which was undertaken by highly experienced US‐based geophysicist, Mr Robert B. Ellis, laid the foundations for a planned Induced Polarisation (IP) survey. The new IP survey should enhance target definition in advance of new drilling. Mr Ellis specialises in South American base metals projects and has previously worked with Codelco, AngloGold, Kinross and Barrick (amongst others) and has extensive experience in Brazil working with Yamana.

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The primary c opper min e ralisation i s hosted i n multi‐ph a se quartz‐hematite b r eccias tha t cross‐cut a me t avolcanic‐s e dimentary s equence. B o th primary and secon d ary copper mineralisati o n occurs in two princi p al tar g et areas: t h e Diamant e Target (south) and th e Taveira T a rget (north) (see Figu r e 2). Historical drilling at Aur o ra has returned a num b er of signifi c ant interse c tions including:

12.5m at 2.4% C u from 101.5m in Hole 3BA‐14‐CE (CPRM);
9.5m at 1.6% Cu from 46.0 m in Hole 3 B A‐09‐CE (CPRM);
1. 9 m at 0.93% C u from 47. 0 m in Hole P JCA‐PSED‐S D 0002 (Terr a tiva);
1.3m at 5.28% C u from 32. 0 m in Hole P JCA‐PTAV‐S D 0010 (Terr a tiva); and
12.0m at 0.79 % Cu from surface in Hol e PJCA‐PTAV‐SD0007 (Terrativa).

Induced Polarisation (IP) Survey Data

The primary m ineralisatio n target at the Auror a Project is copper sulphide chal c opyrite which occurs as disseminated or semi‐mas s ive aggregates within q uartz‐hem a tite breccia zones and hematitic h orizons oft e n ass o ciated with a broader silicified envelope. These characteristics make IP s urveys the m ost effecti v e geophysi c al too l as it is desi g ned to spe c ifically targ e t dissemina t ed sulphides.

IP surveys produce two set s of data: C h argeability and Resistivity. Chargeability high anomalies ar e of particular interest as they indicate th e potential f o r substanti a l sulphide m ineralisati o n. Resistivit y highs are a lso important as they are oft e n associate d with zones of intense s ilicification. The combi n ation of a c h argeability and resistiv i ty hig h therefore represents a n excellent t a rget for co p per sulphide mineralisation.

Bas e d on the historical I P survey da t a, there is a good correlation b e tween the west‐north w est trendi n g cha r geability a n d resistivit y highs with the aerom a gnetic high and groun d gravity lo w trends at the Diamante Tar g et and on t h e north an d south edg e of the Tav e ira Target (see Figure 5). It is these zones that have return e d pos i tive drill results in the p a st.

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Figure 5: 3D image of Gridded Solid of Chargeability (Terrativa data) looking Northeast with Sections of IP Lines at 6600N and 5800N, chargeability high evident north of Diamante Target

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The new IP sur v ey work is p lanned to c o ver these e xisting targ e t areas, bri n ging great e r 3D IP con t rol over these anomalies, as well as identi f ying new near‐surface and buried c o pper anom a lies.

The most inter e sting new t a rget that remains unte s ted at the A urora Proje c t is a charg e ability high located no r th of t h e Diamant e target bet w een sectio n lines L6600N and L580 0 N (see Figu r e 6). This st r ong anomaly is over 1 k m lon g and up to 600m wid e and is loc a ted along the same tr e nd as the T aveira targ e t. It is coi n cident with a resi s tivity high as well as c opper‐in‐so i ls anomalie s . It is interpreted to r e present su l phide‐rich m ineralisati o n. Qu a rtz‐hematit e breccias h ave been i d entified at surface in t he area and Centauru s will priori t ize additio n al det a iled mappi n g of this ex c iting new target.

Figure 6: Chargeability Plan Map at 50m Below Topography Extracted from Geofbras Data. The background on this image is the Chargeability Plan Map from an historical Vale Report.