GR ENGINEERING SERVICES LIMITED — Capital/Financing Update 2017

Mar 19, 2017

==> picture [213 x 52] intentionally omitted <==

57 139 522 900

March 20[th] , 2017 Australian Securities Exchange Limited Via Electronic Lodgement

EPC LETTER OF INTENT SIGNED WITH GR ENGINEERING

Gascoyne Resources Limited (“Gascoyne” or “the Company”) (ASX:GCY) is pleased to announce that it has entered into a conditional letter of intent (LOI) with GR Engineering Services Limited (ASX:GNG) (GR Engineering or GRES) for the award of an engineering, procurement and construction contract (Contract) in relation to a new 2.5Mtpa mineral processing facility at the Company’s 100% owned +1.2Moz Dalgaranga Gold Project.

The award of the Contract under the LOI is conditional upon, amongst other things, final Gascoyne Board approval, receipt of final statutory approvals, Gascoyne obtaining the balance of its financing for the Project and the finalising the Contract terms and conditions. The Contract will be undertaken on a guaranteed maximum price (GMP) basis.

Gascoyne and GR Engineering are targeting entry into the formal Contract in the coming weeks. Subject to the satisfaction of the conditions referred to in the LOI, the Dalgaranga Gold Project is scheduled to commence ore commissioning in Q2 2018.

Signing the LOI comes hot on the heels of the recently completed heavily oversubscribed $50 million capital raising, the Mineral Resource Upgrade at the Gilbeys deposit and the Sly Fox gold discovery, which has the potential to significantly add to the mine life at Dalgaranga as well as increasing the early production profile though the increased soft oxide and transitional mill feed.

Drilling is ongoing at the project with two rigs currently drilling at Sly Fox, to scope out the size potential while also infilling the current drilling to allow estimation of an initial Resource in the coming months.

Commenting on execution of the LOI, Gascoyne’s Managing Director Mr Mike Dunbar said;

“ Signing the LOI is an important step forward for the Company as we move towards production. The Feasibility Study that we completed in November envisaged an ECPM implementation strategy; however this would have come with cost risk. The Board decided to further derisk the development by moving to a GMP style of implementation. We are pleased to have signed the LOI with GR Engineering as they are widely considered as the benchmark in terms of GMP project delivery in Western Australia.

GRES have a reputation for delivering projects in Western Australia like Dalgaranga on time and on or below budget and by moving to a GMP implementation model, Gascoyne can share in any cost savings that GRES can deliver through the years of experience they have in building similar projects.

The development team at Gascoyne are looking forward to working together with GR Engineering to deliver the project as quickly, safely and cost effectively as possible ensuring that Gascoyne can emerge early next year as a low cost, high margin gold producer.”

Additional information will be provided as it becomes available.

On behalf of the Board of Gascoyne Resources Ltd

Michael Dunbar Managing Director

==> picture [44 x 44] intentionally omitted <==

P.O. Box 1449, West Perth, Western Australia 6872 Level 1, 41-47 Colin Street, West Perth, Western Australia 6005 Telephone +61 8 9481 3434, Facsimile +61 8 9481 0411 Email: admin@gascoyneresources.com.au, Web: www.gascoyneresources.com.au

BACKGROUND ON GASCOYNE RESOURCES

Gascoyne Resources Limited was listed on the ASX in December 2009 and is focused on exploration and development of a number of gold projects in Western Australia.

The Company’s 100% owned gold projects combined have over 2.3 million ounces of contained gold on granted Mining Leases :

DALGARANGA:

The Dalgaranga project is located approximately 65km by road NW of Mt Magnet in the Murchison gold mining region of Western Australia and covers the majority of the Dalgaranga greenstone belt. After discovery in the early 1990’s, the project was developed and from 1996 to 2000 produced 229,000 oz’s of gold with reported cash costs of less than $350/oz.

The project contains a JORC Measured, Indicated and Inferred Resources of 29.6Mt @ 1.3g/t Au for 1,230,000 ounces of contained gold (Table 1). The Dalgaranga project has a Proved and Probable Ore Reserve of 552,000 ounces of gold (Table 2).

The FS study that has been completed has highlighted a robust development case for the project.

The FS investigated the development of two open pits feeding a 2.5Mtpa processing facility resulting in production of around 100,000ozpa for 6 years and concluded that the operation would be a low cost, high margin and long life operation with high operating margins. Significant exploration potential also remains outside the known resources with numerous historical geochemical prospects only partly tested.

Table 1: Dalgaranga March 2017 Mineral Resource Estimate (0.5 g/t Cut‐off)

Type	Measured Tonnes Au Mt **g/t **	Indicated Tonnes Au Mt **g/t **	Inferred Tonnes Au Mt **g/t **	Total Tonnes Au Au Mt g/t Ounces
Laterite Oxide Transitional Fresh	0.2 1.6 0.5 2.1 2.2 1.4	0.5 1.1 1.6 1.6 1.0 1.5 11.9 1.2	0.1 0.8 0.8 1.3 0.5 1.5 10.4 1.2	0.6 1.1 20,000 2.6 1.5 130,000 1.9 1.6 100,000 24.5 1.2 980,000
Total	2.8 1.5	15.0 1.3	11.8 1.2	29.6 1.3 1,230,000

Note: Discrepancies in totals are a result of rounding

Table 2: Ore Reserve Statement ‐ Dalgaranga Project November 2016

Ore Reserves	Tonnes (M tonnes) Gold Grade (g/t) Contained ounces (oz)
Proven Probable	3.1 1.28 129,000 10.2 1.29 423,000
Ore Reserves Total	13.3 1.29 552,000

Note: Discrepancies in totals are a result of rounding

GLENBURGH:

The Glenburgh Project in the Gascoyne region of Western Australia, has a Measured, Indicated and Inferred resource of: 21.3 Mt @ 1.5g/t Au for 1.0 million oz gold from several prospects within a 20km long shear zone (see Table 3).

A preliminary feasibility study on the project has been completed (see announcement 5[th] of August 2013) that showed a viable project exists, with a production target of 4.9mt @ 2.0g/t for 316,000oz (70% Indicated and 30% Inferred resources) within 12 open pits and one underground operation. There is a low level of geological confidence associated with inferred mineral resources and there is no certainty that further exploration work will result in the determination of indicated mineral resources or that the production target itself will be realised. The study showed attractive all in operating costs of under A$1,000/oz and indicated a strong return with an operating surplus of ~ A$160M over the 4+ year operation. The study included approximately 40,000m of resource drilling, metallurgical drilling and testwork, geotechnical, hydro geological and environmental assessments. Importantly the study has not included the drilling completed during 2013, which intersected significant shallow high grade zones at a number of the known deposits.

Table 3: Glenburgh Deposits ‐ Area Summary

2014 Mineral Resource Estimate (0.5g/t Au Cut‐off)

Area	Measured	Indicated	Inferred	Total
	Tonnes Au Au Mt g/t Ounces	Tonnes Au Au Mt g/t Ounces	Tonnes Au Au Mt g/t Ounces	Tonnes Au Au Mt g/t Ounces
North East Central South West	0.2 4.0 31,000 2.6 1.8 150,000	1.4 2.1 94,000 3.2 1.3 137,000	3.3 1.7 178,000 8.4 1.2 329,000 2.2 1.2 84,000	4.9 1.9 303,000 14.2 1.3 616,000 2.2 1.2 84,000
Total	2.9 2.0 181,000	4.6 1.6 231,000	13.9 1.3 591,000	21.3 1.5 1,003,000

Note: Discrepancies in totals are a result of rounding

EGERTON:

The project includes the high grade Hibernian deposit which contains a resource of 116,400 tonnes @ 6.4 g/t gold for 24,000 ounces in the Measured, Indicated and Inferred JORC categories (Table 4). The deposit lies on a granted mining lease and previous drilling includes high grade intercepts, 2m @ 147.0 g/t gold , 5m @ 96.7 g/t gold and 5m @ 96.7 g/t gold associated with quartz veining in shallow south‐west plunging shoots. The Hibernian deposit has only been drill tested to 70m below surface and there is strong potential to expand the current JORC Resource with drilling testing deeper extensions to known shoots and targeting new shoot positions.

Table 4: Egerton Project: Hibernian Deposit Mineral Resource (2.0 g/t Au Cut‐off)

Classification	Tonnes	**Aug/t **	Au Ounces
Measured Resource Indicated Resource Inferred Resource	32,100 9.5 9,801 46,400 5.3 7,841 37,800 5.1 6,169
Total	116,400 6.4 23,811

Gascoyne is continuing to evaluate the Glenburgh gold deposits to delineate meaningful increases in the resource base and progress project permitting, while also continuing to explore the Dalgaranga project with the view to moving towards a low capital cost development as rapidly as possible. The Company also has 100% ownership of the high grade Egerton project; where the focus has been to assess the economic viability of trucking high grade ore to either Glenburgh or to another processing facility for treatment and exploration of the high grade mineralisation within the region.

Further information is available at www.gascoyneresources.com.au

Competent Persons Statement

The Dalgaranga Ore Reserve has been estimated by CSA Global Pty Ltd, an external consultancy, and are reported under the 2012 Edition of the Australasian Code for reporting of Exploration Results, Mineral Resources and Ore Reserves (see GCY‐ASX announcement 24[th] November 2016 titled: Feasibility confirms Dalgaranga as a low cost/high margin project). The company confirms that it is not aware of any new information or data that materially affects the information included in the original market announcements and, in the case of estimates of Ore Reserves that all material assumptions and technical parameters underpinning the estimate in the relevant market announcement continue to apply and have not materially changed. The company confirms that the form and context in which the Competent Person’s findings are presented have not materially modified from the original market announcements.

The Dalgaranga and Glenburgh Mineral Resources have been estimated by RungePincockMinarco Limited, an external consultancy, and are reported under the 2012 Edition of the Australasian Code for reporting of Exploration Results, Mineral Resources and Ore Reserves (see GCY ‐ASX announcement 15[th] March 2017 titled “Dalgaranga Gold Resource Increased to over 1.2Moz” and 24[th] July 2014 titled “High Grade Domains Identified Within Updated Glenburgh Gold Mineral Resource”). The company confirms that it is not aware of any new information or data that materially affects the information included in the original market announcements and, in the case of estimates of Mineral Resources that all material assumptions and technical parameters underpinning the estimate in the relevant market announcement continue to apply and have not materially changed. The company confirms that the form and context in which the Competent Person’s findings are presented have not materially modified from the original market announcements.

The Glenburgh 2004 JORC resource (released to the ASX on April 29[th] 2013) which formed the basis for the preliminary Feasibility Study was classified as Indicated and Inferred and as a result, is not sufficiently defined to allow conversion to an ore reserve; the financial analysis in the preliminary Feasibility Study is conceptual in nature and should not be used as a guide for investment. It is uncertain if additional exploration will allow conversion of the Inferred resource to a higher confidence resource (Indicated or Measured) and hence if a reserve could be determined for the project in the future. Production targets referred to in the preliminary Feasibility Study and in this report are conceptual in nature and include areas where there has been insufficient exploration to define an Indicated mineral resource. There is a low level of geological confidence associated with inferred mineral resources and there is no certainty that further exploration work will result in the determination of indicated mineral resources or that the production target itself will be realised. This information was prepared and first disclosed under the JORC Code 2004, the resource has now been updated to conform with the JORC 2012 guidelines. This new JORC 2012 resource, reported above, will form the basis for any future studies.

The information in this Report that relates to Mineral Resources for the Hibernian Deposit is based on information compiled by Mike Dunbar who is a Member of the Australasian Institute of Mining and Metallurgy. Mr Dunbar is a full time employee of Gascoyne Resources Limited. Mr Dunbar is the Competent Person for this Mineral Resource estimate and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he has undertaken to qualify as a Competent Person as defined in the 2004 Edition of the ‘Australasian Code for the Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Dunbar consents to the inclusion in the report of the matters based on this information in the form and context in which it appears.

The Egerton Resource estimate and Gaffney’s Find prospect historical exploration results have been sourced from Exterra Resources annual reports and other publicly available reports which have undergone a number of peer reviews by qualified consultants, who conclude that the resources comply with the JORC code and are suitable for public reporting. This information was prepared and first disclosed under the JORC Code 2004. It has not been updated since to comply with the JORC Code 2012 on the basis that the information has not materially changed since it was last reported.