GENESIS RESOURCES LIMITED

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ASX Release

(ASX:GES)

24 May 2013

Golder Associates Pty Ltd Analysis of Plavica Gold Deposit Financial modelling indicates positive economic viability

HIGHLIGHTS

Genesis Resources Limited (the Company or Genesis ) has engaged Golder Associates Pty Ltd ( Golder ) to evaluate the economic potential of a JORC Compliant Exploration Target of 150 million tonnes of 0.8 g/t Au, 11 g/t Ag and 0.2% Cu at Plavica, eastern Macedonia.

Golder has undertaken financial modelling of the deposit based on the geological data provided by Genesis and has reached the following conclusions based on metal prices of gold AUD1152/troy ounce, copper AUD6025/tonne, silver AUD19.2/troy ounce and using a discount rate of 8%.

Characteristics of the planned mining operation:

large open pit
recovery of sulphide mineralisation by crushing, grinding and flotation
22 year mine life at an average mining rate of 5 million tonnes per annum
103 million tonnes of planned plant feed and 276 million tonnes of waste
Average head grades and recoveries

Gold: 0.8 g/t Au, 80% recovery

Copper: 0.2% Cu, 88% recovery

Silver: 11 g/t Ag, 80% recovery

Flotation is estimated to produce 1 million tonnes of concentrate and 102 million tonnes of tailings
the concentrate will contain 2 million troy ounces of gold, 30 million troy ounces of silver and 218 000 tonnes of copper
Production of the concentrate is assumed to start in Year 2 and be at a constant 48 500 tonnes annually except for 31 700 tonnes in Year 22.
Capital expenditure are estimated at AUD870 million
Operating costs are estimated at AUD1100 million
Cash operating cost is estimated at AUD892/troy ounce
The pre-tax net present value ( NPV ) cashflow is estimated at AUD420 million with an internal rate of return ( IRR ) of 18.5%

GENESIS RESOURCES LIMITED ACN 114 787 469 Level 1, 61 Spring Street, Melbourne, Victoria 3000, Australia T + 61 3 9286 7500 | F + 61 3 9662 1472 | www.genesisresourcesltd.com.au

The post-tax NPV cashflow is estimated to be AUD280 million and the IRR is 14.9%
The pre-tax payback period is 6 years and the post-tax payback is 7.2 years. The project will therefore have positive net cash flows for the majority of the project lifetime.
A new higher-grade gold zone has been discovered in 2013 and this could have a substantial impact in improving the economics of the project.
Similarly, better delineation of oxide gold zones could lead to a cheaper precursor oxide gold processing stage with beneficial impact on project economics.

INTRODUCTION

The Plavica gold-copper-silver (-lead-zinc) deposit is located between the towns of Kratovo and Probistip in the eastern part of the Republic of Macedonia in southeastern Europe. The deposit was mined historically for gold, copper and silver, during the Ottoman period and, more recently, by Selection Trust in the late 1930s. Since the Second World War it has been investigated by underground workings, by an extensive diamond drilling campaign financed by the Yugoslav Government during the 1970s and 1980s, by Rio Tinto during the late 1990s, then by European Minerals and, since late 2009, by Genesis.

Plavica is interpreted as a large epithermal high sulphidation mineralised complex 2 km long by 1 km wide located within a Miocene caldera complex. Gold-bearing late-stage vuggy silca zones also line the margins of the caldera. Lithologies within the caldera are dominated by intermediate to acid lava flows, ignimbrites and tuff layers interbedded with sediments. These rocks have been extensively turned into diatreme breccias by the action of volcanic gases and also altered by hydrothermal fluids which transported and deposited sulphur and metals.

Genesis commissioned a resource study by Odessa Resources Ltd and on 30 May 2012 made an announcement to the Australian Securities Exchange ( ASX ) which can be summarised as follows:

Gold Domain – based on 0.5 g/t Au cutoff:

An Inferred Resource classified in accordance with the JORC Code of 151 million tonnes at an average grade of 0.75 g/t Au, 11.43 g/t Ag, and 0.24% Cu
Gold equivalent grade of 1.31 g/t AuEq (or 6.37 million ounces gold) including copper and silver

Silver Domain-based on 20 g/t Ag cutoff:

An Inferred Resource of 22.64 million tonnes at an average of 29.7 g/t Ag, 0.59 g/t Au and 0.26% Cu

Copper Domain-based on 0.4% Cu cutoff

An Inferred Resource of 7.98 million tonnes at an average grade of 0.43% Cu, 0.41 g/t Au and 9.53 g/t Ag
Copper equivalent grade of 0.81% CuEq including gold and silver

The JORC Inferred Resource has been estimated for a zone 1.5 km in length and 500 m in width, and extending to a depth of 800 m, in the northern part of Plavica where drilling has been of sufficient density to enable resource estimation. The sparsely drilled, southern, part of Plavica (Maricanski Ridge) has yielded an intersection (from surface) of 105 m of 0.67 g/t Au in highly oxidised vuggy quartz in Rio Tinto drill hole PLV004. This intersection indicates very strong oxide

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gold potential over the Maricanski Ridge area that has been followed up by drilling in 2013 and where analytical results are still being awaited.

In the latter part of 2012, Genesis commissioned the mining consulting firm Golder Associates Pty Ltd to carry out a review of Plavica incorporating the following elements:

geological study
mining engineering evaluation
tailings dam study
financial modelling

Genesis is now in receipt of the Golder Associates reports resulting from the review. The geological study pointed to a number of deficiencies in the modelling adopted by Odessa Resources with the result that Golder Associates prefers to categorise the figure of 150 million tonnes of 0.75 g/t Au, 11.43 g/t Ag and 0.24% Cu as an Exploration Target. The potential quantity and grade is conceptual in nature, that there has been insufficient exploration to define a Mineral Resource, and that it is uncertain if further exploration will result in the determination of a Mineral Resource.

Financial modelling is based on a scoping level mine planning study. This study is based on lowlevel technical and economic assessments, and is insufficient to support estimation of Ore Reserves or to provide assurance of an economic development case at this stage, or to provide certainty that the conclusions of the study will be realised.

Bearing in mind the uncertainties identified in the Odessa Resources study, this is still a well drilled and documented Exploration Target and Genesis is of the firm opinion that the financial modelling carried out by Golder Associates is a strong guide as to the potential economics of a sulphide flotation operation as described below.

FINANCIAL MODELLING PARAMETERS

The type of conceptual operation modelled by Golder Associates is a large open pit with metal recovery from sulphide mineralisation by flotation. Oxide gold recovery by leaching (e.g. CIP or CIL) was not evaluated.

The characteristics of the planned mining operation:

large open pit
recovery of sulphide mineralisation by crushing, grinding and flotation
22 year mine life at an average mining rate of 5 million tonnes per annum
103 million tonnes of planned plant feed and 276 million tonnes of waste
Average head grades and recoveries
Gold: 0.8 g/t Au, 80% recovery
Copper: 0.2% Cu, 88% recovery

Silver: 11 g/t Ag, 80% recovery

Flotation is estimated to produce 1 million tonnes of concentrate and 102 million tonnes of tailings
the concentrate is estimated to contain 2 million troy ounces of gold, 30 million troy ounces of silver and 218 000 tonnes of copper
Production of the concentrate is assumed to start in Year 2 and be at a constant 48 500 tonnes annually except for 31 700 tonnes in Year 22
Capital expenditure is estimated at AUD870 million

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Operating costs are estimated at AUD1100 million
Cash operating cost is estimated at AUD892/ounce
The long term steady concentrate value is assumed at AUD3817/tonne and is based on the following assumed average prices:
Gold: AUD1152/troy ounce
Copper: AUD6025/tonne Silver: AUD19.2/troy ounce

OUTCOMES

Utilising a discount rate of 8% the financial model outcomes are as follows:

The pre-tax NPV of the cashflow is AUD420 million with an IRR of 18.5%
The post-tax NPV of the cashflow is AUD280 million and the IRR is 14.9%
The pre-tax payback period is 6 years and the post-tax payback is 7.2 years. The project will therefore have positive net cash flows for the majority of the project lifetime

CONCLUSIONS

The financial modelling shows that a large open pit/flotation operation at Plavica has a strong probability of being profitable based on the JORC resource published in May 2012. The commodity prices used in the modelling are below those currently applying to gold, copper and silver.

Drilling at Plavica has encountered some deep zones of gold-bearing oxidised rock, especially in drill hole PLV004 at Maricanski Ridge. There is a strong likelihood of a cheaper oxide gold operation preceding a more expensive flotation plant and, if this happens at Plavica, it will substantially improve profitability over the lifetime of the project.

All the financial modelling, so far, is based on fairly low gold grades at Plavica. Late 2012 and 2013 drilling by Genesis has encountered higher grade gold zones than those incorporated in the JORC Inferred Resource released to the ASX in May 2012. For example, please refer to the Genesis ASX release of 14 May 2013. Further drilling of these newly encountered zones is required but, at this point, further enhancements to the potential project economics at Plavica are likely.

-Ends

For further information, please contact:

EDDIE PANG

Chairman T : +61 (0) 3 9286 7500 E : [email protected]

Information in this report that relates to exploration activity and results was compiled under the guidance of John Karajas who is a Member of the Australasian Institute of Geoscientists. Mr Karajas has sufficient experience relevant to the styles of mineralisation and to the activities which are being reported to qualify as a Competent Person as defined by the JORC code, 2004. Mr Karajas consents to the release of the information compiled in this report in the form and context in which it appears.

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AI assistant

GENESIS RESOURCES LIMITED Capital/Financing Update 2013

64980_rns_2013-05-23_3487df61-5ac5-4c77-b601-4d43fed3cd0c.pdf

ASX Release