EMERALD RESOURCES NL — Capital/Financing Update 2017

Nov 12, 2017

ASX Announcement & Media Release

13 November 2017

Fast Facts

ASX Code: EMR Shares on issue: 2,110 million Market Cap: ~A$100 million Cash: A$6.6 million (30 Sept 2017)

Board & Management

Simon Lee AO, Non-Exec Chairman Morgan Hart, Managing Director Justin Tremain, Executive Director Ross Stanley, Non-Exec Director Ross Williams, Non-Exec Director Mick Evans, Chief Operating Officer Mark Clements, Co. Secretary

Company Highlights

• First mover in an emerging gold province in Cambodia

• Okvau Deposit (100% owned): Indicated and Inferred Mineral Resource Estimate of 1.14Moz at

• 2.0g/t Au (refer Appendix One)

• DFS completed and demonstrates high grade, low cost, compelling development economics:

• Ore Reserve of 14.3Mt & 2.0g/t Au for 0.9Mozs (refer Appendix One) in a single open pit with waste:ore ratio of 5.8:1

• LOM average annual production of 106,000ozs pa

• AISC US$731/oz over LOM

• Using US$1.250/oz Au gold price:

  • NPV(5%) US$223M pre-tax and US$160M post-tax

  • IRR 48% pa pre-tax and 40% post-tax

  • Payback ~2.2 years pre-tax and 2.5 years post-tax

• Highly credentialed gold project development team

• Significant resource growth potential

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Okvau Gold Project Receives Environmental Approval

Emerald Resources NL (ASX:EMR) (‘Emerald’) is pleased to announce that it has signed an Environmental Contract with the Cambodian Ministry of Environment, providing environmental approval for the 100% owned Okvau Gold Project.

Highlights

• Environmental approval represents a key milestone towards development of the Okvau Gold Project

• Material conditions including rehabilitation sureties and contributions towards Environmental and Social Funds are in line with those provided for in the DFS

• Paves the way to expedite the application for an Industrial Mining Licence and progress the Mineral Investment Agreement.

• Completion of Project Finance technical due diligence expected shortly

• Approval of the indicative terms of the Project Finance facility would fund the majority of the development costs

Commentary

The terms of the Environmental Contract are in accordance with Emerald’s Environmental and Social Impact Assessment (‘ESIA’). These terms include commitments by Emerald to make various annual contributions to Environmental and Social Funds established for the benefit of local communities and ongoing environmental management. These amounts were included in Emerald’s DFS released in May 2017. In addition, Emerald is required to provide surety to the Cambodian Ministry of Environment (‘MoE’) for rehabilitation of the Okvau Gold Project upon closure. This surety will be provided progressively over 5 years and was also provided for in Emerald’s ESIA. The Okvau Gold Project is situated within the Phnom Prich Wildlife Sanctuary. Under the Environmental Contract the MoE will undertake to rezone the project area from ‘Conservation Zone’ to ‘Sustainable Use Zone’.

Emerald may now progress final stages of its application for an Industrial Mining Licence. With the Environmental Contract approved, Emerald expects an Industrial Mining Licence (covering 11.5km[2] ) to be granted by the Cambodian Ministry of Mines and Energy in the next few weeks.

The final step will be the finalisation of a Mineral Investment Agreement (‘MIA’). The MIA is an agreement Emerald has requested to provide long term certainty and is not required for the development and operation of the Okvau Gold Project. Emerald is in discussions with the Cambodian Ministry of Economy & Finance regarding the finalisation of the MIA.

Emerald is currently progressing due diligence with a mandated debt financier. Emerald expects this due diligence will be competed in the coming weeks. Subject to approval of the indicative terms, the financing proposal will see a majority of the development costs of Okvau Gold Project being funded.

Registered Office 1110 Hay Street West Perth WA 6005

Emerald, Managing Director, Morgan Hart commented: “The award of the Environmental Approval and signing of an Environmental Contract with the Cambodian Ministry of Environment is a significant advancement in the development of the Okvau Gold Project. The Emerald team has worked tirelessly with representatives of the MoE to agree an ESIA that ensures the sustainable development of the project whilst safeguarding the environment and adequately compensating affected stakeholders. This contract now allows the remaining licensing to advance in a timely manner.”

T: +61 8 9286 6300 F: +61 8 9286 6333 W: www.emeraldresources.com.au

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Cambodian Gold Project

Background

The Cambodian Gold Projects are located approximately 275 kilometres north-east of Cambodia’s capital city of Phnom Penh in the province of Mondulkiri (refer Figures One and Two). The town of Kratie is located on the Mekong River approximately 90 kilometres to the west and the capital of Mondulkiri, Saen Monorom is located approximately 60 kilometres to the south-east.

Topography of the project area is relatively flat with low relief of 80 metres to 200 metres above sea level. There are isolated scattered hills rising to around 400 metres. The area is sparsely populated with some limited historical small scale mining activity. An all-weather gravel haulage road servicing logging operations in the area provides good access to within 25 kilometres of the Okvau exploration camp site. The current access over the remaining 25 kilometres is sufficient for exploration activities but a new all-weather road is planned as part of project development.

The Okvau Deposit and other gold occurrences within the exploration licences are directly associated with diorite and granodiorite intrusions and are best classed as Intrusive Related Gold mineralisation. Exploration to date has demonstrated the potential for large scale gold deposits with the geology and geochemistry analogous to other world class Intrusive Related Gold districts, in particular the Tintina Gold Belt in Alaska (Donlin Creek 38Moz, Pogo 6Moz, Fort Knox 10Moz, Livengood 20Moz).

Recent joint venture and earn-in agreements, along with the new exploration licence granted, has expanded Emerald’s ground position in Eastern Cambodia from 374km[2] to 1,500km[2] .

Figure One| Cambodian Gold Project | Location

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Figure Two| Cambodian Gold Project | Exploration Licence Areas
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Okvau Development Economics

Okvau Gold Project | Definitive Feasibility Study

In May 2017, Emerald completed a Definitive Feasibility Study (‘DFS’) on the development of a 2.0Mtpa operation at the Okvau Gold Project (‘Project’). The DFS confirms the robust nature of the Project with an initial operating LOM of over 7 years, producing approximately 106,000 ounces of gold per annum on average from a single open pit, with ore processed through a plant utilising a single stage crushing circuit and SAG mill, sulphide flotation, regrind mill followed by conventional cyanide leaching (refer ASX Announcement 1 May 2017).

The estimated operating costs highlight a financially robust Project with an average LOM AISC of US$731/oz. The estimated Project development costs are US$91M with a further US$7M in mining contractor establishment costs and pre-production mining costs.

At a gold price of US$1,250/oz, the Project generates a NPV(5%) of US$223M pre-tax and US$160M post-tax with an Internal Rate of Return (IRR) of 48% pa pre-tax and 40% post-tax. The payback of the total capital funding requirement is expected to be 26 months pre-tax and 30 months post-tax, from first gold pour.

The Okvau Gold Deposit has an independent JORC Indicated and Inferred Mineral Resource estimate of 17.7Mt grading 2.01g/t gold containing 1.141Moz (at 0.70g/t gold cut-off) (refer Table One).

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Table One | Okvau Mineral Resource Estimate - June 2017

				Okvau June 2017	Okvau June 2017	Mineral Resource Estimate	Mineral Resource Estimate
			Indicated Resource			Inferred Resource			Total Resource
	Cut-off	Tonnage	Grade	Contained	Tonnage	Grade (g/t	Contained	Tonnage	Grade (g/t	Contained
	(Au g/t)	(Mt)	(g/t Au)	Au (Koz)	(Mt)	Au)	Au (Koz)	(Mt)	Au)	Au (Koz)
	0.70	15.11	2.08	1,008	2.57	1.61	133	17.68	2.01	1,141

The Project has a JORC Ore Reserve (Probable) estimate of 14.26Mt @ 1.98g/t Au for 907,000 ounces gold (refer Table Two).

Table Two| Okvau Ore Reserve Estimate - June 2017

		Okvau June 2017 Ore Reserve Estimate	Okvau June 2017 Ore Reserve Estimate
		Tonnage	Grade	Contained
		(Mt)	(g/t Au)	Au (Koz)
	Probable Ore Reserve	14.26Mt	1.98g/t Au	907koz

The Okvau Deposit remains open. There is significant potential to define additional ounces from both shallow extensions along strike to the north-east and at depth.

Key operating and financial outcomes of the DFS, prepared in accordance with the requirements of the JORC Code (2012 Edition), are presented in Table Three.

Table Three| DFS Economics[1]

	Ore Reserve	14.3Mt @ 2.0g/t gold for 907koz	14.3Mt @ 2.0g/t gold for 907koz	contained
	LOM Strip Ratio (waste t: ore t)		5.8:1
	Throughput		2.0Mtpa
	Life of Mine		7.2 years
	Processing Recovery		84%
	Recovered Ounces		762koz
	Average Annual Production		106koz
	Pre-production Capital Costs2		US$98M
	Sustaining Capital Costs3		US$23M
	Gold Price	US$1,100/oz	US$1,250/oz	US$1,400/oz
	Gross Revenue	US$838M	US$952M	US$1,066M
	LOM Net Revenue(net of royalties4and refining)	US$801M	US$911M	US$1,020M
	Operating Cash Flow pre-tax	US$309M	US$419M	US$528M
	Project Cash Flow pre-tax	US$188M	US$298M	US$407M
	NPV(5%)pre-tax	US$133M	US$223M	US$313M
	NPV(5%)post-tax5	US$95M	US$160M	US$224M
	Payback pre-tax	3.0 years	2.2 years	1.6 years
	Payback post-tax	3.3 years	2.5 years	1.8 years
	IRR pre-tax	32%	48% pa	63%
	IRR post-tax5	27%	40% pa	54%
	LOM C1 Cash Costs6	US$650/oz	US$650/oz	US$650/oz
	LOM All-In SustainingCosts(‘AISC’)7	US$725/oz	US$731/oz	US$737/oz

1 All economics are 100% attributable to Emerald

2 Includes US$4.4M of capital spares and first fills and US$7.0M of mining capital and pre-production mining costs

• 3 Includes US$14.4M of rehabilitation and closure costs

4 Royalties include Government royalty of 2.5% gross and a third party royalty of 1.5% gross (capped to A$22.5M)

5 Taxation is based on current and draft Cambodian tax law and does not allow for any incentives or tax relief

• 6 C1 Cash Costs include site based mining, processing and admin operating costs plus transport and refining costs

7 Includes C1 Cash Costs plus royalties, sustaining capital costs, contributions to environmental & community funds and rehabilitation & closure costs

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About Cambodia

Cambodia is a constitutional monarchy with a constitution providing for a multi-party democracy. The population of Cambodia is approximately 14 million. The Royal Government of Cambodia, formed on the basis of elections internationally recognised as free and fair, was established in 1993. Elections are held every five (5) years with the last election held in July 2013.

Cambodia has a relatively open trading regime and joined the World Trade Organisation in 2004. The government’s adherence to the global market, freedom from exchange controls and unrestricted capital movement makes Cambodia one of the most business friendly countries in the region.

The Cambodian Government has implemented a strategy to create an appropriate investment environment to attract foreign companies, particularly in the mining industry. Cambodia has a modern and transparent mining code and the government is supportive of foreign investment particularly in mining and exploration to help realise the value of its potential mineral value.

Detailed information on all aspects of Emeralds’ projects can be found on the Company’s website; www.emeraldresources.com.au .

For further information please contact; Emerald Resources NL Emerald Resources NL Morgan Hart Justin Tremain Managing Director Executive Director

Forward Looking Statement

This announcement contains certain forward looking statements. These forward-looking statements are not historical facts but rather are based on the Company’s current expectations, estimates and projections about the industry in which Emerald Resources operates, and beliefs and assumptions regarding the Company’s future performance. Words such as “anticipates”, “expects”, “intends”, “plans”, “believes”, “seeks”’ “estimates”, “potential” and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to known or unknown risks, uncertainties and other factors, some of which are beyond the control of the Company, are difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements, which reflect the view of Emerald Resources only as of the date of this announcement. The forward-looking statements made in this release relate only to events as of the date on which the statements are made. Emerald Resources will not undertake any obligation to release publicly any revisions or updates to these forward-looking statements to reflect events, circumstances or unanticipated events occurring after the date of this announcement except as required by law or by any appropriate regulatory authority.

This announcement has been prepared in compliance with the current JORC Code 2012 Edition and the ASX listing Rules. All material assumptions on which the forecast financial information is based have been included in this announcement.

The Company believes that is has a reasonable basis for making the forward-looking statements in this announcement, including with respect to any production targets and financial estimates, based on the information contained in this announcement. All material assumptions underpinning the production target or the forecast financial information continue to apply and have not materially changed.

100% of the production target referred to in the 1 May 2017 announcement is based on Probable Ore Reserves.

Emerald has a highly experienced management team, undoubtedly one of the best credentialed gold development teams in Australia with a proven history of developing projects successfully, quickly and cost effectively. In particular, the Managing Director, Mr Morgan Hart, who has overseen the successful development of gold projects for Equigold NL and, most recently, as Operations Director of Regis Resources Ltd. His experience in developing countries includes the development of the Bonikro Gold Project in Cote d’Ivoire. He has assembled a team of highly competent mining engineers and geologists for the development of the Okvau Gold Project.

The Company believes it has a reasonable basis to expect to be able to fund and develop the Okvau Gold Project for the reason set out above and in this announcement. However, there is no certainty that the Company can raise funding when required.

Competent Persons Statements

The information in this report that relates to Exploration Results is based on information compiled by Mr Craig Johnson, who is an employee to the Company and who is a Member of The Australasian Institute of Geoscientists. Mr Craig Johnson has sufficient experience which is relevant to the style of mineralisation and type of deposits under consideration and to the activity which he is undertaking 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 Craig Johnson has reviewed the contents of this news release and consents to the inclusion in this announcement of all technical statements based on his information in the form and context in which it appears.

The information in this report that relates to the Mineral Resources for the Okvau Gold Deposit was prepared by EGRM Consulting Pty Ltd, Mr Brett Gossage, who is a consultant to the Company, who is a Member of the Australasian Institute of Mining & Metallurgy (AIG), and has sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined by the 2012 edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves". Mr Gossage has reviewed the contents of this news release and consents to the inclusion in this announcement of all technical statements based on his information in the form and context in which it appears.

Information in this announcement that relates to Ore Reserves for the Okvau Gold Deposit is based on, and fairly represents, information and supporting documentation prepared by Mr Glenn Williamson, an independent specialist mining consultant. Mr Williamson is a Fellow of the Australasian Institute of Mining & Metallurgy. Mr Williamson has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person (or “CP”) as defined in the 2012 edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves". Mr Williamson has reviewed the contents of this news release and consents to the inclusion in this announcement of all technical statements based on his information in the form and context in which it appears.

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