CLASSIC MINERALS LTD — Interim / Quarterly Report 2017

Jul 27, 2017

ASX Announcement

ASX: CLZ ACN 119 484 016

28 July 2017

JUNE 2017 QUARTERLY ACTIVITY REPORT

Highlights:

• Phase 1 drilling program completed at Forrestania Gold Project, testing Lady Ada and Lady Magdalene deposits

• Best results at Lady Ada include:

• 12m @ 1.74 g/t Au from 64m – including 3m @ 2.03 g/t Au from 72m

• 2m @ 9.77 g/t Au from 109m – including 1m @ 18.6 from 109m

• 9m @ 1.30 g/t Au from 66m – including 2m @ 3.58 from 73m

• 9m @ 6.23 g/t Au from 36m – including 6m @ 9.06g/t Au, and 2m @ 15.74g/t Au from 37m

• Best results at Lady Magdalene include:

• 7m @ 4.95 g/t Au from 138m – including 3m @ 10.0 g/t Au from 141m

• 12m @ 2.08 g/t Au from 139m – including 3m @ 4.6 g/t Au from 142m

• o 4m @ 4.66 g/t Au from 76m

• Forrestania Gold Project Scoping Study completed – strongly indicated a technically and financially viable project

• Doherty’s Project sale finalised, and final payment of $1.2 million received as of 4 July, 2017

• Expansion of footprint in Forrestania region with acquisition of nearby Kat Gap project

1. INTRODUCTION

WA-focused gold exploration and development company Classic Minerals Limited (ASX. CLZ) ("Classic", or "the Company") is pleased to provide shareholders with its Quarterly Activities Report for the period ended 30 June 2017.

Scoping Study Completed at Forrestania Gold Project

During the quarter, the Company advised that it had completed a Scoping Study based on the Inferred and Indicated Mineral Resource at its 80%-owned Forrestania Gold Project, located approximately 120km south of Southern Cross, WA. The Scoping Study referred to the Lady Ada (formerly referred to as Blue Haze) and Lady Magadalene (formerly Red Haze) deposits.

The Scoping Study showed a technically and financially viable project, and based on A$1,700 gold price and 8% discount rate:

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• Low initial Capex of between $A25M and A$35M (as a part of the total funding requirement of $A40MA$45M including an additional contingency of A$2M-A$4M and A$8M-A$10M (working capital).

• 1.9Mt at 1.95g/t Au (diluted) for 111koz produce over a Life of Mine of 2.5 years.

• AISC of A$1,080/oz-A$1,160/oz.

• A$60-A$70 million in free cash flow.

• NPV of A$54-A$58 million.

• Payback/cashflow between months of 18 and 24.

The study was based on mining open pit resources from the Lady Magdalene and Lady Ada resources, and processing through a 1Mtpa Carbon in Leach (“CIL”) processing plant to produce approximately 111koz gold over an initial 2.5year mine life at a sustaining cost of A$1,080/oz-A$1,160/oz. The study assumed a maximum cash drawdown of A$40M which included construction of the new processing facility, associated infrastructure and open-pit predevelopment. Based on $1,650/oz gold price, the Project would generate a pre-tax cashflow of A$60-70 million (after royalties).

The results of the Study were positive and provided strong encouragement for the Company to commit to the next stage of its exploration and development program.

The Project is expected to have a relatively short construction and mine rehabilitation timeframe. The Scoping Study has indicated a 9-18-month time frame from start of plant construction to commissioning. It is expected that site establishment, mine capital development and production will be advanced enough to allow a smooth transition from commissioning to steady state production.

Approximately 65% of the total production target is in the Indicated Resource category. The remainder of the production target is in the Inferred Resource category (35%)

Following the delivery of a positive Feasibility Study, the Classic Board will then proceed to the decision to mine.

For more information on the Scoping Study, see the ASX announcement dated May 2, 2017.

Forrestania Gold Project, Western Australia

The Forrestania Gold Project contains an existing Mineral Resource of 5.9Mt at 1.25g/t for 240,000 ounces of gold, classified and reported in accordance with the JORC Code (2012), with the recent Scoping Study indicating both the technical and financial viability of the project.

Drilling Program – Phase 1

On May 24 2017, the Company received full approval from the Department of Mines and Petroleum (“DMP”) to commence its Phase 1 drilling program at the FGP. The drill programme comprised of ~1,400m diamond drilling and ~1,600m RC drilling.

Site and drill pad clearing commenced on May 20 2017 with two drill rigs mobilised and drilling commenced on May 31.

Drilling targeted high-grade depth extensions at both Lady Ada and Lady Magdalene, which provided Classic’s technical team with a deeper understanding of FGP mineralisation. Initial drilling was designed to identify additional high priority drill targets, and subsequently the Company lodged an additional Program of Works (“POW”) with the Department of Mines for drilling of 150 additional holes.

The Phase 1 drill program comprised 18 RC holes and 2 diamond holes for a total of ~3,670m.

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Lady Ada Drilling Results

The Phase 1 drilling program was completed on June 29, and all drill holes intersected quartz veining as well as zones of silicified/bleached gabbro (which appeared to be prospective for gold) within the targeted alteration zones.

Post June quarter end, drilling at Lady Ada returned high-grade results from outside the current Scoping Study pit design. Best results are in Table 1:

Hole	From	To	Length	Results	Comment
MARC001	36	45	9	9m @ 6.23 from 36m	Including 6m @9.06, and 2m @ 15.74 from 37m
MARC003	64	76	12	12m @ 1.74 from 64m	Including 3m @ 2.03 from 72m
MARC015	109	111	2	2m @ 9.77 from 109m	Including 1m @ 18.6 from 109m
MARC002	64	75	11	11m @ 1.25 from 64m	Including 2m @ 3.58 from 73m
MARC004	47	48	1	1m @ 3.82 from 47m
MARC003	54	56	2	2m @ 3.05 from 55m
MARC001	53	58	5	5m @ 1.24 from 53m
MARC001	48	50	2	2m @ 3.53 from 48m

Additional assay results at the Lady Ada deposit were returned post quarter end, with high-grade zone intersections remaining open at depth and along strike.

MARC001 was a standout hole which yielded very impressive, high grade gold mineralisation at a shallow depth (38m) in an area that is outside of the current optimised pit design (9m @ 6.23g/t Au from 36m – including 6m @ 9.06g/t Au, and 2m @ 15.74g/t Au from 37m, see ASX announcement dated July 19, 2017).

Lady Magdalene Initial Drilling Results

Drilling at Lady Magdalene was designed to target mineralisation outside of the current resource model as well as high-grade extensions below and adjacent to the current pit design.

Results from initial holes identified an additional zone of high grade mineralisation outside of the current resource which extends at depth and along strike, reaffirming management’s view that the FGP has the potential to host a much larger gold system that can be unlocked through further targeted drilling.

Best results for Lady Magdalene deposit include:

• 7m @ 4.95 g/t Au from 138m – including 3m @ 10.0 g/t Au from 141m

• o 12m @ 2.08 g/t Au from 139m – including 3m @ 4.6 g/t Au from 142m o 4m @ 4.66 g/t Au from 76m

Additional results for eight holes at Lady Magdalene (MARC005 – MARC013) were received post quarter end, with almost all holes returning high grade intersections:

• 17m @ 3.86g/t Au from 179m – including 9m @ 5.4g/t Au from 187m

• o 7m @ 4.95g/t Au from 138m – including 3m @ 10.0g/t Au from 141m

• 12m @ 2.08g/t Au from 139m – including 3m @ 4.6g/t Au from 142m

• o 2m @ 12.46g/t Au from 87m – including 1m @ 24.3g/t Au from 87m

• 2m @ 8.59g/t Au from 48m – including 1 m @ 16.5g/t Au from 48m

• 6m @ 3.27g/t Au from 74m – including 4m @ 4.6g/t Au from 76m

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The drilling was designed to target mineralisation outside of the current resource model as well as high-grade extensions below and adjacent to the current pit design as part of Classic’s strategy to grow its Mineral Resources to a size that supported the establishment of an on-site processing facility at Forrestania.

An additional POW was lodged with the DMP for an extensive in-fill and extensional drilling program. This has now been approved, allowing Classic to rapidly move to the next phase of exploration and development at the FGP.

Kat Gap Acquisition

During the quarter, Classic was granted an option to acquire a 100% interest in two exploration licences held by Sulphide Resources Pty Ltd which host a combined area of 37.5km² - otherwise known as the “Kat Gap Project”.

On May 16, Classic agreed to terms with Sulphide Resources for the option to purchase Sulphide’s interest in exploration licences E74/422 and E74/467. Under the Agreement, Classic paid a A$50,000 option fee in which it can purchase the tenements within 18 months for a total consideration of A$250,000. In addition to the option fee, CLZ must spend A$140,000 on the tenements during the option period; Classic will also grant a 2% NSR royalty on production from E74/422 and E74/467 (or any replacement tenements). The acquisition included 100% of the rights in the pending tenements E74/422 and E74/467.

Post quarter end, Classic executed a binding agreement to secure the option to acquire the Kat Gap Project (see ASX announcement dated 13 July 2017).

The Kat Gap Project is strategically located approximately 50km south-south east of the Company’s Forrestania Gold Project and adjoins the Forrestania Nickel project currently operated by Western Areas Ltd.

It contains a shallow unmined gold deposit discovered in the 1990s, which was the subject of resource estimations and a scoping study by Sons of Gwalia in 2003.

High grade RC drill intercepts include 15m @ 15.1g/t Au from 39m depth and 6m @ 19.1g/t Au from 17m depth. The open-ended deposit lies within a 5km long geochemical gold anomaly that has seen very little drill testing, and there is potential for the discovery of a substantial gold deposit within the project area. Previous exploration work includes airborne geophysical surveys; Aircore, RAB, RC and diamond drilling; and soil geochemical surveys.

Doherty’s Project Sale

As previously advised in the March quarter, the sale of the Company’s Doherty’s Gold Project to Accelerated Mining Pty Ltd has been finalised, with the final payment of A$1.2 million received as of July 4, 2017. Classic has also retained 7.5% Net Smelter Royalty over production from the Tenement.

The sale enables Classic to:

• Pay down debt;

• Commence further development activities at FGP;

• Carry out further exploration activities at Fraser Range Nickel/Cu Project.

Classic’s Managing Director, Justin Doutch, commented:

“Classic’s long-term strategy has been to accelerate exploration and development at the Forrestania Gold Project, and in that sense the June quarter was a landmark, with a number of key milestones accomplished.

“We have been very pleased with the Phase 1 drilling program at Forrestania, which has yielded a number of impressive intersections to date, reaffirming our belief that there is significant underlying value to be unlocked from the FGP.

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“Further to this, the strategic acquisition of the Kat Gap project has strengthened our foothold in the highly prospective Forrestania region, and enhances Classic’s portfolio in an area that we strongly believe has the potential to host a world-class gold deposit.

“Overall it has been a very positive quarter for Classic Minerals, and we look forward to updating our shareholders in due course.”

On behalf of the board,

Justin Doutch Managing Director

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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

Forward Looking Statements

This announcement may contain certain “forward-looking statements” which may not have been based solely on historical facts, but rather may be based on the Company’s current expectations about future events and results. Where the Company expresses or implies an expectation or belief as to future events or results, such expectation or belief is expressed in good faith and believed to have reasonable basis. However, forward looking statements are subjected to risks, uncertainties, assumptions and other factors, which could cause actual results to differ materially from future results expressed, projected or implied by such forward-looking statements. Such risks include, but are not limited to Resource risk, metals price volatility, currency fluctuations, increased production costs and variances in ore grade or recovery rates from those assumed in mining plans, as well as political and operational risks in the Countries and States in which we operate or sell product to, and governmental regulation and judicial outcomes. For a more detailed discussion of such risks and other factors, see the Company’s annual reports, as well as the Company’s other filings. Readers should not place undue reliance on forward looking information. The Company does not undertake any obligation to release publicly any revisions to any “forward-looking statements” to reflect events or circumstances after the date of this announcement, or to reflect the occurrence of unanticipated events, except as may be required under applicable securities laws

Competent Persons Statement

The information contained in this report that relates to Mineral resources and Exploration Results is based on information compiled by Edward S. K. Fry, a Competent Person who is a Member of the Australasian Institute of Mining and Metallurgy (AusIMM). Mr Fry is a consultant exploration geologist with BGM Investments Pty Ltd and consults to Classic Minerals Ltd. Mr. Fry has sufficient experience that is relevant to the style of mineralisation and the type of deposit under consideration, and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the “Australasian 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 his information in the form and context in which it appears.

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