CLASSIC MINERALS LTD — Capital/Financing Update 2017

Feb 28, 2017

ASX Announcement

ASX: CLZ ACN 119 484 016

1 March 2017

CLASSIC ACQUIRES 216K OZ FORRESTANIA GOLD PROJECT

This is a transformative acquisition for Classic – underpinning the opportunity for the company to transition from junior explorer to gold producer

Highlights:

• Binding agreement signed for 80% of the Gold Rights at Forrestania Gold Project.

• Existing ~216K ounce JORC Resource (79k oz Au in Indicated Category) with strong exploration upside.

• Scope for high grade open pit mining – previous mining produced 95,865 tonnes @ 8.81g/t for 27,146 oz Au.

• Auralia Mining Consulting have reviewed technical data and are to deliver scoping study imminently.

• High gravity gold recovery with free-milling gold – non refractory ore.

• Existing resources are amenable to conventional open pit mining.

• Low capital costs via processing through local toll treatment facilities – advanced discussions underway.

• Forrestania Gold Project is located in one of Australia’s most prominent regions for lithium and gold mining .

• Value accretive asset with early production opportunity.

Classic Minerals Limited (Classic or the Company) (ASX Code: CLZ) is pleased to announce that it has now signed an agreement in respect to acquiring 80% of the gold rights over certain tenements in the Forrestania region, referred to as the Forrestania Gold Project (FGP).

Managing Director Mr Justin Doutch stated:

Classic is very pleased to have entered into the agreement to acquire the FGP gold assets, including 80% of the gold rights over seven tenements and valuable technical data. The FGP gold assets include a high grade open pit formerly mined by Sons of Gwalia so, in addition to exploration data, we have a wealth of existing mining records to draw upon. We believe, given the geology, exploration results and mining achieved to date, that there is the potential for both rapid mine development of known deposits and the discovery of additional significant gold mineralisation within the FGP area.

The FGP consists of existing Resources of 4.82Mt at 1.39g/t for 216,000oz of gold. Resources are located beneath an existing open pit and un-mined, near surface deposits. The project presents an opportunity for near term mining operations and production. The current JORC Resource are calculated with a lower cut-off grade of 0.5g/t Au. When a higher cutoff is applied (1 g/t), it is possible to delineate high grade pockets of ore, particularly at Lady Ada which was previously mined at an average grade of 8.8g/t. Classic will be focusing on monetising the high grade pockets that can be easily extracted and which support the costs associated with haulage and toll treatment.

Discussions with potential toll treatment facilities and contract miners are underway, with Classic expecting to firm up its development schedule and processing options over the coming weeks. There are numerous potential toll treatment facilities within trucking distance including Marvel Loch, Edna May, Greenfields (Coolgardie) and Norseman Gold.

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As development efforts ramp up, and in addition to engaging reputable 3[rd] party consultants as required, Classic will bolster its team with personnel experienced in gold to ensure the company delivers value from the FGP to its shareholders.

As part of its due diligence process, Classic engaged Auralia Mining Consultants (“Auralia”) to undertake a review of the resource block models and technical data. Auralia was commissioned to complete a Scoping Study on the FGP – results of the Scoping Study are expected in the coming week.

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Image1, Photo taken at FGP from Sons of Gwalia operations in 2003

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Image 2, Recent photo of FGP in 2015 Image 3, visible gold in rock sample taken from FGP in 2003

The Forrestania Gold Project

The FGP tenements cover parts of the southern portion of the well-endowed Archaean Southern Cross – Forrestania Greenstone Belt. The greenstone belt trends north to northwest and has a strike length of over 300 kilometres from Carterton in the north to Hatters Hill in the south.

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Figure 1: FGP Location

The FGP currently consists of two major deposits, located approximately 120km south of Southern Cross, WA and 17 kilometres southwest of the historic Bounty Mine site (mined/current resources of +2.0M oz Au). The area is accessible via historic haul roads which branch off the well maintained unsealed Forrestania-Southern Cross Road.

The FGP area deposits occur at the northern end of the Forrestania greenstone belt, which is the southern extension of the north-south trending Southern Cross greenstone belt, a 40 km wide supracrustal belt, bounded by Archaean granitoid/gneisses and is intruded by less deformed granite/pegmatite assemblages, and is cut by east-trending Proterozoic doleritic dykes.

Work has been conducted by a series of companies in previous years throughout the Forrestania district, initially for nickel deposits. The discovery of the Bounty deposits by Aztec Mining in 1986 outlined the gold prospectivity and potential of the Forrestania greenstone belt and many deposits have been identified since that time.

The FGP deposits (formerly known as Blue Haze and Red Haze) were discovered due to grass roots exploration of prospective ground undertaken by Aztec Mining. Regional soil-auger sampling programs identified anomalies at the FGP. These were RAB drilled to nominal depth (i.e.: not to refusal or recognisable bedrock) with only limited success. The drill holes did, however, confirm the interpreted geology deduced from regional mapping programs, ground and aero-magnetic reconnaissance traverses.

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Figure 2: FGP and other Major Deposits

Mining at Lady Ada (formerly Blue Haze) pit commenced on the 5th December 2002 and concluded on the 23rd of May 2003. A total of 95,865 tons at 8.81g/t Au was mined for 27,146oz gold. Mining was completed by conventional open pit mining techniques, employing 10m berm heights in the oxide material, and 20m berm heights in the fresh. The final pit was mined to approximately 60m below surface.

Locally, primary gold mineralisation is hosted by a shallow east dipping quartz dolerite unit. This unit is bounded by high-MgO basalt to the west and low-MgO ultramafic to the east. The Sapphire shear zone strikes NE, and dips to the SE at approximately 35° and hosts the gold mineralisation at Lady Ada, in association with a number of flatter lying shears.

Gold mineralisation is associated with vein quartz within moderately to strongly foliated dolerite. Pervasive ore related calc-silicate alteration consists of diopside-biotite-quartz +/- arsenopyrite +/- pyrite. The Sapphire Shear is generally less than 3m thick vertically; however, at shear intersections mineralisation widths may be up to 20 metres (vertically).

A lot of valuable technical and geological work has been completed on the FGP by various holders since the discovery of Lady Ada and Lady Magdalene in the late 1990’s, including multiple Resource estimations and reiterations of Resource

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models as geological understanding increased. Key resource and reserve statements include those completed by Forrestania Gold NL in 1999; Viceroy in 2000; Sons of Gwalia in 2002 and 2003; St Barbara Mines in 2007. After review of the data, a new JORC compliant resource estimation was carried out in 2016 by Cadre Geology and Mining Pty Ltd (“Cadre”). The current post-mining resource for Lady Ada (Blue Haze) and Lady Magdalene (Red Haze) is tabulated below.

		Indicated			Inferred
Prospect	Tonnes	Grade (Au g/t)	Ounces Au	Tonnes	Grade (Au g/t)	Ounces Au
Lady Ada	283,543	1.78	16,204	259,359	2.25	18,763
Lady Magdalene	1,828,740	1.08	63,732	2,450,140	1.50	118,173
Total	2,112,283	1.17	79,734	2,709,499	1.57	136,937

CLZ’s proposed activities will be focussed on Lady Ada and Lady Magdalene. In regards to Lady Ada, upon first examination of the dominantly west dipping orientated drill lines, the mineralisation at Lady Ada appears to be diminishing at depth. However, when the high grade intervals are displayed in plan-view (>5.0g/t Au) a south-easterly plunging trend is readily observable. This direction is oblique to the dominant drilling pattern, and results in the false impression stated above. When cross-sections are created parallel to the highgrade plunge, it is clear the mineralisation is completely open at depth as evidenced by the long section and cross-section provided in Figures 3 & 4.

The mineralisation at Lady Ada is hosted within the sapphire shear, which presents as two zones of stacked shallow dipping faults. The grades within the shear are variable (typical of shear hosted systems) and presents commonly as intervals of 2-3m @ 5.0-15.0g/t Au, note in Figure 3 one intercept has an interval of 3m @ 88.6g/t Au with no down dip drilling. The main high grade zone (eastern) is currently 55m wide and contains a down dip length of 230m; the second high-grade zone (western) is approximately 35m wide with a down dip length of 170m. Additional drilling targeted is strongly recommended.

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Figure 3: Lady Ada (formerly Blue Haze) long section looking west, showing the high grade plunge

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Figure 4: Lady Ada (formerly Blue Haze) cross section looking north east (cross section 2) showing CLZ proposed drill holes

Gold mineralisation at Lady Magdalene (formerly Red Haze) is hosted within a sheared mafic suite. The mineralisation is over a kilometre long, is generally drill to a down dip length of 200-300m (150m vertical depth) and is generally 10m thick with a grade range between 1.0 and 5.0g/t Au. A long section projecting the mineralisation onto a N-S trending plan (looking west) is presented in Figure 5. The long-section illustrates the supergene enrichment zone (pink) and lower-grade primary mineralisation at depth (yellow). Figures 5 & 6 illustrate the typical Lady Magdalene cross-sections (looking north). Lady Magdalene demonstrates the occasional high grade zones, but is considered a high tonnage low grade system. There is scope for gaining significant ounces by targeting mostly down dip extensions, remodelling the resource and recalculated the resource estimate. Finally, there are large 80m wide gaps in the drilling pattern which if in- filled could add ounces (depending on the maximum inferred ellipsoid size). Unless the grade increases significantly at depth Lady Magdalene should be explored with an open pit mining method in mind.

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Figure 5: Lady Magdalene (formerly Red Haze) cross section looking west showing open nature at depth

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Figure 6: Lady Magdalene (formerly Red Haze) cross section looking north east (cross section 3) showing CLZ proposed drill holes

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Contiguous Land Package in a Prospective Region

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Figure 7: FGP Tenure (CLZ gold rights over blue tenements)

As above, the FGP is located within the well-endowed Forrestania Greenstone belt and is surrounded by world class nickel, gold and lithium deposits. Western Areas produces nickel from the high grade nickel sulphide deposits at Flying Fox and Spotted Quoll; Kidman Resources has recently discovered the high grade Earl Grey lithium deposit and also holds several high grade gold deposits (Blue Vein; Bounty; Van Uden current >500koz Resource).

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Key Terms of Agreement

Classic and the Vendor have entered a binding Heads of Agreement for the sale and purchase of the vendor’s interest in the Forrestania Gold Project. Under the agreement, Classic will pay the Vendor up to 100 million ordinary Classic shares and grant a royalty on CLZ production (capped at $5M). Completion of the sale of the Project and any regulatory approvals is expected to occur over the next two months. The parties have also agreed to negotiate in good faith the Formal Agreement with a view to executing the sale as soon as possible.

Consideration payable by Classic to the Vendor consists of:

I. The issue and allotment of up to 100 million fully paid ordinary shares in the capital of CLZ II. Royalty on CLZ production at FGP (capped at $5M)

Conditions Precedent

I. Vendor obtaining any necessary consents and waivers to proceed with the transaction, including entry into any assignment or novation deeds with any required third parties.

On behalf of the board Justin Doutch Managing Director

Classic Minerals Limited

Phone: (08) 6305 0221 Address: 71 Furniss Road, Landsdale WA 6065 Postal: PO Box 487, Osborne Park WA 6917 Website: www.classicminerals.com.au Email: admin@classicminerals.com.au

Competent Persons Statement

The information contained in this report relates to information compiled or reviewed by Edward S. K. Fry who is a member of the Australasian Institute of Mining and Metallurgy (AusIMM) and is a consultant exploration geologist for the company. Mr. Fry has sufficient experience of relevance to the styles of mineralisation and the types of deposit under consideration, and to the activities undertaken to qualify as Competent Persons as defined in the 2012 edition of the “JORC Australian code for reporting of Exploration Results, Mineral Resources and Ore Reserves”. Mr. Fry consents to the inclusion in this report of the matters based on information in the form and context in which it appears.

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