LOTUS RESOURCES LIMITED — Capital/Financing Update 2016

Sep 13, 2016

14 September 2016

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ACQUISITION OF COBALT-GOLD PROJECT ABAC PROJECT IN WESTERN (“T ”) AUSTRALIA

Highlights:

• 80m at 0.77% Co from 170m (refer to ‘Assay Commentary’ section)  including 10m at 1.47% Co & 40m at 0.73 g/t Au ; and

• 30m at 0.3% Co & 10m at 0.86g/t Au from 358m

• Significant drill intercepts located 7.3km apart and along interpreted strike in similar stratigraphy

• Both holes end in mineralisation

• No subsequent exploration following initial discovery in 1983

• Extensive tenement holding covering >110km[2]

• Well established infrastructure and favourably located adjacent to Paroo Station Mine and Camp (former Magellan Lead Mine), and 30km from Wiluna

• Appointment of highly regarded geologist, Mr Jonathan King, as Managing Director

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 FIGURE 1: CROSS SECTION OF TABAC PROJECT
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ACN 119 992 175

Suite 8, 1297 Hay Street, West Perth, Western Australia, 6005 T: +61 9322 6009, F: +61 9322 6128

14 September 2016

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Dragon Energy (ASX: DLE , Dragon or the Company ) is pleased to announce that it has entered into an agreement to acquire the Tabac Cobalt-Gold Project ( Tabac Project or the Project ). The Project represents a significant cobalt-gold exploration target with its scale and grade potential demonstrated in prior drilling.

Presently 94% of the global supply of cobalt is as a byproduct of copper and nickel production and therefore its availability is controlled by the fickleness of those markets. The balance is mostly sourced from countries with elevated sovereign risk. Subject to ongoing exploration success, Tabac potentially can provide both a secure independent source of cobalt and leverage to future market price sensivities.

PROJECT OVERVIEW

The Tabac Project is located on the Goldfields Highway 30km west of Wiluna and 135km east of Meekatharra in the Northern Goldfields Region of Western Australia. The Project sits adjacent to the Paroo Station Mine and camp (previously known as the Magellan Lead Mine), which is on care and maintenance.

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FIGURE 2: LOCATION OF TABAC PROJECT

ACN 119 992 175 Suite 8, 1297 Hay Street, West Perth, Western Australia, 6005 T: +61 9322 6009, F: +61 9322 6128

14 September 2016

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TENURE

The Project consists of two exploration licence applications, 53/1891 & 53/1895 (ELA’s), covering a combined area of 111.5km[2] .

PROJECT GEOLOGY

The Project is located within the Yerrida Basin (referred to previously as the Glengarry Subbasin), which lies on the northern margin of the Archean Yilgarn Block, and forms as part of the Capricorn Orogen. The Yerrida Basin represents an intracratonic sag basin containing siliciclastic rocks and evaporites of the Windplain Group overlain unconformably by siliciclastics and mafic extrusive and intrusive rocks of the Mooloogool Group. Within the Project area, outliers of the Yelma Formation of the Earaheedy Group unconformably lie over rocks of the Yerrida Basin.

The Windplain Group includes the Juderina Formation, which crops out in the southern third of the Project. The Juderina Formation comprises of siliciclastics (deposited as continental “red beds” or haematite-rich sandstones and siltstone), evaporates, argillites, and locally turbidites. It includes the chertified stromatolitic carbonate and evaporitic sedimentary units of the Bubble Well Member, which is the likely mineralised host at Tabac.

The depositional environment for the Windplain Group is thought to be a shallow epicontinental (or inland) sea, locally with sabkha (salt flat) environments. Archean rocks of the adjacent Joyner’s Find Greenstone Belt formed a number of basement highs (or coastal headlands) during the shelf sedimentation phase. Sediments deposited west of the headlands predominantly comprise shales, whereas those deposited between or east of the headlands are mainly composed of carbonates.

Within the southern parts of the Yerrida Basin, sediments are commonly flat-lying. Any folding is very gentle, and where described comprises north-northwest and northeast open folds. The overlying Earaheedy Group sediments appear to have undergone relatively minor structural deformation.

The palaeoenvironment at Tabac, including the types of rocks deposited (evaporites and carbonates), their age (Proterozoic), site of deposition (platform sediments), and the broader geological context of a developing fold and thrust belt, is analogous to Zambian Copperbelt and/or Kuferschiefer-style mineralisation .

ACN 119 992 175 Suite 8, 1297 Hay Street, West Perth, Western Australia, 6005 T: +61 9322 6009, F: +61 9322 6128

14 September 2016

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FIGURE 3: ZAMBIAN COPPER BELT TYPE MODEL

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FIGURE 4&5: TABAC COBALT STYLISED SECTION AND EXPANDED CROSS SECTION SHOWING THE CLOSE RESEMBLANCE TO THE COPPERBELT DEPOSIT MODEL

ACN 119 992 175 Suite 8, 1297 Hay Street, West Perth, Western Australia, 6005 T: +61 9322 6009, F: +61 9322 6128

14 September 2016

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TABLE 1: COPPER BELT AND TABAC DEPOSIT MODEL COMPARISON

ORE GENESIS (COPPERBELT/KUFERSCHIEFER)

Copperbelt/Kuferschiefer-style mineral deposits are associated with sabkha (salt flat) type evaporative conditions prevailing across a wide carbonate inner ramp preserving organic carbon resulting in the formation of syngenetic to early diagenetic pyrite. The later introduction of an oxidising cobalt-bearing brine reduces against this preserved carbonaceous front precipitating stratabound sulphide mineralisation in the foreland of the advancing thrust sheets during an orogenic event.

PREVIOUS EXPLORATION

Australian Consolidated Minerals Ltd (“ACM”) drilled 10 stratigraphic holes across the Yerrida Basin between 1982 and 1984. Of the 10 holes, two (PP009 and PP011) reportedly intersected cobalt-bearing stromatolitic carbonates, returning significant intercepts of:

• PP011: 80m at 0.77% Co from 170m , including 10m at 1.47% Co & 40m at 0.73g/t Au from 210m (refer to ‘Assay Commentary’ section below)

• PP009: 30m at 0.3% Co from 358m including 10m at 0.86g/t Au from 358m

These were the only holes to test the cobalt position. Both holes ended in mineralisation and intersected similar down hole stratigraphy (siltstones and pyritic shales before entering carbonate-rich stromatolitic horizons) attesting to the stratabound nature of the carbonaceous target and the contained mineralisation.

The two holes are separated by a distance of 7.3 km.

Assay Commentary

DLE has undertaken a comprehensive due diligence process including the review of available data from 1983-84 when the initial diamond drilling program was undertaken on the Tabac Project. To preserve and strengthen the integrity of the due diligence process, the

ACN 119 992 175

Suite 8, 1297 Hay Street, West Perth, Western Australia, 6005 T: +61 9322 6009, F: +61 9322 6128

14 September 2016

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Company has noted a potential inconsistency relating to 1m assay re-splits of the initial 10m composites from the BQ diamond drill core reported for both drill holes (PP009 and PP011). The reported grades within the re-splits do not correlate with the grades reported in earlier sampling.

The drill hole information reported for the Tabac Project has been compiled from open file WAMEX exploration reports (Report No.’s A-14601 and A-12928) available from the WA Department of Mines and Petroleum (DMP) website via the following link (using Internet Explorer or Firefox)

http://warims.dmp.wa.gov.au/GeoView/Viewer.html?Viewer=GeoVIEW&layerTheme=WAME X&Module=WAMEX

DLE has reviewed the available, geological evidence and has formed a preliminary view that reliance may be placed upon the integrity of the initial 10m composites assay results that have given rise to the anomalous cobalt readings. ACM directed the diamond drill program and authorised the subsequent re-assays.

The Company has taken into account the follow factors to form its preliminary view:

• The anomalous cobalt results were constrained to the same geological unit (i.e. stromatolitic carbonate) in both holes with background levels of cobalt reported in the overlying rock types.

• No resampling method was disclosed nor was any explanation provided on the discrepancies between the separate assay batches.

• No commentary was provided on the representativeness of the resulting small sample size available from re-splits of the BQ drill core.

• Mechanical based contamination was considered but disregarded due to the association of anomalous cobalt results within the carbonate units with background assays returned elsewhere (in generally harder rock types) and the likelihood of degradation within friable, or at least softer, material being remote.

• Inconsistencies in the assay column headers between the re-splits and 10m composites differ in the sequence of elements reported.

• Additional inconsistencies between the 10m composites and re-splits in other elements such as phosphorous (P), copper (Cu), lead (Pb), zinc (Zn) and gold (Au), confirming the likelihood of unreliable re-assay data.

In addition, past operators have cast similar doubt over the veracity of the ACM data with Mitchell Exploration Company reporting (WAMEX report No. a25345) in 1988:

“Mineralisation discovered by ACM include metals such as gold, titanium and barium. They are present in highly anomalous amounts within the same proven palaeobasin as that containing the postulated felsic dome. These values occur in gently dipping Maraloou Fm of Early Proterozoic age and may represent distal syngenetic mineralisation related to the late phase Archean colacnism postulated previously.”

“ Doubt exists as to the veracity of the diamond core Au, Ag, Co assays but at the very least, the metals have been found to occur in anomalous amounts- even in shallow RAB drilling”

Mitchell Exploration Company’s observation is noteworthy particularly when considered in a regional context. Widespread cobalt anomalism has been returned in RAB drilling, and in

ACN 119 992 175

Suite 8, 1297 Hay Street, West Perth, Western Australia, 6005 T: +61 9322 6009, F: +61 9322 6128

14 September 2016

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rock and soil geochemistry, along the mapped margins of the lower contact of the Maraloou Formation with the Juderina Formation (see Figure 6).

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FIGURE 6: MAPPED MARGINS OF THE LOWER CONTACT OF THE MARALOOU FORMATION WITH THE JUDERINA FORMATION (SAMPLE RESULTS FROM DMP MINDEX DATABASE)

The Company is therefore of the opinion that after considering the weight of geological evidence, the Tabac Project is potentially a significant cobalt-gold exploration target, which may have been overlooked by previous owners.

EXPLORATION PLAN

Dragon will utilise geophysical mapping methods to outline the subsurface geology and potential geometry of the cobalt-gold bearing unit at Tabac. This boost in understanding of the geometry and deposit structure will improve targeting and accuracy in future drilling and therefore control exploration costs. Drilling is expected to commence in Q3 of 2016-2017FY.

ACN 119 992 175 Suite 8, 1297 Hay Street, West Perth, Western Australia, 6005 T: +61 9322 6009, F: +61 9322 6128

14 September 2016

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THE COBALT MARKET - GROWING DEMAND

Cobalt demand is currently surging with the rise of Lithium-ion (Li-ion) batteries as cobalt offers the highest energy density of the various Li-ion battery formulas:

• Lithium titanate Li4Ti5O12 (LTO) - Lithium iron phosphate LiFePO4 (LFP) - Lithium ion manganese oxide battery LiMn2O4, Li2MnO3 (LMO) - Lithium nickel manganese cobalt oxide LiNiMn Co O2 (NMC) ~ 60% Co - Lithium cobalt oxide Li Co O2(LCO) ~ 10-20% Co - Lithium nickel cobalt aluminium oxide LiNi Co AlO2 (NCA)* ~ 9% Co

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FIGURE 7: TYPICAL SPECIFIC ENERGIES FOR NINE DIFFERENT BATTERY CHEMISTRIES (LITHIUM-ION CHEMISTRIES ORANGE, COBALT BLUE) COBALT IS A KEY COMPONENT OF THE 3 HIGHEST ENERGY DENSITIES AND REPRESENTS ~75% OF ALL LIION BATTERIES

In addition to serving as cathode material in many Li-ion batteries, cobalt is used in making powerful magnets, high-speed cutting tools, and high-strength alloys for jet engines and gas turbines. Cobalt compounds are also employed to colour porcelain, glass, pottery, tile and enamel, and as part of vitamin B12, which is important in human nutrition.

ACN 119 992 175 Suite 8, 1297 Hay Street, West Perth, Western Australia, 6005 T: +61 9322 6009, F: +61 9322 6128

14 September 2016

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FIGURE 8: USES OF COBALT

THE COBALT MARKET- SUPPLY CONSTRAINTS

Only 6% of global cobalt supplies come from primary cobalt mines that may be able to increase production in response to growing demand from the battery industry, with an incredible 94% of global cobalt supplies coming from nickel and copper miners that produce cobalt as a minor by-product (Cobalt Development Institute).

Global cobalt production currently stands at:

-	Nickel Industry by-product:	~50%
-	Copper Industry by-product (& other):	~44%
-	Primary Cobalt:	~6%

Last year, nickel miners sold $14.58 billion of nickel and $1.05 billion of cobalt, with cobalt revenue representing 7.2% of total revenue. Likewise, copper miners sold $68.4 billion of copper and $0.92 billion of cobalt, which translates to 1.3% of their total revenue.

Global cobalt production surged from 52,400 tons in 2005 to 92,000 tons in 2015, the bulk of the increase is attributable to new capacity from African copper mines. However, with nickel and copper prices at multi-year lows due to decreased demand from China, increased demand for minor by-product cannot drive facilities expansion decisions, meaning major cobalt producers cannot scale up production.

ACN 119 992 175 Suite 8, 1297 Hay Street, West Perth, Western Australia, 6005 T: +61 9322 6009, F: +61 9322 6128

14 September 2016

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COMMERCIAL TERMS

Commercial terms for the Project acquisition are summarised below:

1. DLE has paid Westview Resources Pty Ltd or its nominee a non-refundable option fee totalling $50,000 (Option Fee) for 7 days due diligence (Option Period);

2. Upon successful completion of due diligence, exercise of the Option and subject to shareholder approval, the total consideration for the acquisition of the Project will be 212,500,000 shares in DLE through the issue of:

3. a. 150,000,000 fully paid ordinary shares in the capital of DLE (Consideration Shares);

4. b. 62,500,000 Performance Shares (subject to ASX approval per Listing Rule 6.1) issued to Class B shareholders in Westview Resources on the following terms and conditions, being:

   • i. 31,250,000 Class A Performance Shares for the achievement of an Inferred Mineral Resource in accordance with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (2012 Edition) (JORC Code) (including cumulative production) of not less than 50,000 tonnes contained Cobalt at a minimum grade of 0.3% Cobalt within the Tenements (Performance Shares Milestone 1); and

   • ii. 31,250,000 Class B Performance Shares for the achievement of an Inferred Mineral Resource in accordance with the JORC Code (including cumulative production) of not less than 100,000 tonnes contained Cobalt at a minimum grade of 0.3% Cobalt within the Tenements (Performance Shares Milestone 2);

5. c. pay to the Company (or its nominee/s) a cash payment of $50,000 (excluding GST) to Class B shareholders in Westview Resources Pty Ltd; and

6. d. a 2% net smelter return royalty on the gross sales of all future metals obtained from the Tenements and sold on an arm’s length basis (NSR) to Class B shareholders in Westview Resources.

Conditions Precedent

Settlement of the acquisition is conditional upon the satisfaction or waiver of the following conditions precedent:

• a. Westview entering into and settling an agreement with Peter Gianni pursuant to which it acquires a beneficial interest in the ELA’s;

• b. DLE obtaining all necessary shareholder approvals to give effect to the acquisition;

• c. DLE obtaining all necessary regulatory approvals or waivers to allow DLE to lawfully complete the acquisition; and

• d. the parties obtaining all third party approvals and consents necessary to complete the acquisition.

ACN 119 992 175 Suite 8, 1297 Hay Street, West Perth, Western Australia, 6005 T: +61 9322 6009, F: +61 9322 6128

14 September 2016

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CORPORATE

The Directors of DLE have also resolved to enter into a process of reviewing and divest if necessary, its existing portfolio of exploration projects to focus solely on the vast potential of the Tabac Project.

Subject to shareholder approval, the Company also intends to change its name and branding.

APPOINTMENT OF MANAGING DIRECTOR

The Company is also pleased to announce that it has appointed Mr Jonathan King in the capacity of Managing Director effective as of today.

Mr King is a mining executive with more than 25 years’ experience in the mining industry in various exploration and technical roles with responsibility from project generation to project acquisition through to exploration, evaluation drilling and production, predominantly in iron ore, base metals and gold. Jonathan received an honours degree in Geology from Curtin University (WA) and has worked in research (CSIRO and UWA), and in exploration, operational, and consulting roles for companies, including Placer Dome, Barrick Gold, Rio Tinto, Robe River Mining and Associates, Homestake Mining, Gold Fields Australasia, St Ives Gold Mining Company, BC Iron, Dacian Gold Limited, Gondwana Resources, Harmony Gold, Emergent Resources, Troy Resources, Dampier Gold, and Great Central Mines. Jonathan was a founding director of Paringa Resources Limited and also served as Technical Director of Conto Resources Limited. Jonathan has worked in Korea, Fiji, China, Africa, Indonesia, USA, Mexico, Brazil, Colombia, Peru and Australia. Mr King will be responsible for all aspects of the development of the Project and provided the following comment:

“The Tabac Project represents one of the most exciting exploration opportunities I have seen to date. The sheer scale and grade of the Project relative to its peers presents a compelling investment opportunity to capitalise on the recently forecasted shift in demand for cobalt in cathodes in lithium-ion battieries. ”

Employment terms for Mr King are outlined in Appendix 2.

Current MD Gang Xu will remain on the Board as a Non-executive Director of the Company.

For Further enquiries, please contact:

Jonathan King

Managing Director +61 8 9322 6009

jonathan.king@dragonenergyltd.com.au

ACN 119 992 175 Suite 8, 1297 Hay Street, West Perth, Western Australia, 6005 T: +61 9322 6009, F: +61 9322 6128

14 September 2016

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DISCLAIMER

Forward-looking statements are statements that are not historical facts. Words such as “expect(s)”, “feel(s)”, “believe(s)”, “will”, “may”, “anticipate(s)” and similar expressions are intended to identify forward-looking statements. These statements include, but are not limited to statements regarding future production, resources or reserves and exploration results. All of such statements are subject to certain risks and uncertainties, many of which are difficult to predict and generally beyond the control of the Company, that could cause actual results to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements. These risks and uncertainties include, but are not limited to: (i) those relating to the interpretation of drill results, the geology, grade and continuity of mineral deposits and conclusions of economic evaluations, (ii) risks relating to possible variations in reserves, grade, planned mining dilution and ore loss, or recovery rates and changes in project parameters as plans continue to be refined, (iii) the potential for delays in exploration or development activities or the completion of feasibility studies, (iv) risks related to commodity price and foreign exchange rate fluctuations, (v) risks related to failure to obtain adequate financing on a timely basis and on acceptable terms or delays in obtaining governmental approvals or in the completion of development or construction activities, and (vi) other risks and uncertainties related to the Company’s prospects, properties and business strategy. Our audience is cautioned not to place undue reliance on these forward-looking statements that speak only as of the date hereof, and we do not undertake any obligation to revise and disseminate forward-looking statements to reflect events or circumstances after the date hereof, or to reflect the occurrence of or nonoccurrence of any events.

COMPETENT PERSONS STATEMENT:

The information in this announcement that relates to Tabac Project Exploration Results is based on information compiled and fairly represented by Mr Jonathan King, who is a Member of the Australian Institute of Geoscientists and is an employee of Dragon Energy. Mr King has sufficient experience 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 2012 Edition of the Joint Ore Reserves Committee (JORC) Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr King consents to the inclusion in this report of the matters based on this information in the form and context in which it appears.

ACN 119 992 175 Suite 8, 1297 Hay Street, West Perth, Western Australia, 6005 T: +61 9322 6009, F: +61 9322 6128

14 September 2016

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APPENDIX 1: PRIMARY ASSAY RESULTS

Hole	From	To	Au g/t	Ag g/t	Co ppm	Co%
PP009	0	10	0.00	0	30	0.00
PP009	10	20	0.00	0	35	0.00
PP009	20	29	0.00	0	20	0.00
PP009	29	39	0.00	0	15	0.00
PP009	39	49	0.00	0	35	0.00
PP009	49	59	0.00	0	45	0.00
PP009	59	69	0.00	0	65	0.01
PP009	69	79	0.00	0	45	0.00
PP009	79	89	0.00	0	30	0.00
PP009	89	99	0.00	0	35	0.00
PP009	99	109	0.00	0	45	0.00
PP009	109	119	0.00	0	55	0.01
PP009	119	129	0.00	0	45	0.00
PP009	129	139	0.00	0	50	0.01
PP009	139	147	0.00	0	50	0.01
PP009	278	288	0.00	7	505	0.05
PP009	288	298	0.00	8	195	0.02
PP009	298	308	0.00	3	175	0.02
PP009	308	318	0.10	2	340	0.03
PP009	318	328	0.29	0	455	0.05
PP009	328	338	0.00	3	975	0.10
PP009	338	348	0.24	3	485	0.05
PP009	348	358	0.00	7	220	0.02
PP009	358	368	0.86	2	3350	0.34
PP009	368	378	0.19	4	3250	0.33
PP009	378	388	0.14	15	2400	0.24
PP011	0	10	0.00	0	10	0.00
PP011	10	20	0.00	0	10	0.00
PP011	20	30	0.00	0	25	0.00
PP011	30	40	0.00	0	40	0.00
PP011	40	50	0.00	0	45	0.00
PP011	50	60	0.00	0	35	0.00
PP011	60	70	0.00	0	55	0.01
PP011	70	80	0.00	0	40	0.00
PP011	80	90	0.00	0	45	0.00
PP011	90	100	0.00	0	35	0.00
PP011	100	110	0.00	0	45	0.00
PP011	110	120	0.00	0	45	0.00
PP011	120	130	0.00	0	40	0.00
PP011	130	140	0.00	0	30	0.00
PP011	140	150	0.00	0	40	0.00
PP011	150	160	0.67	17	445	0.04

ACN 119 992 175

Suite 8, 1297 Hay Street, West Perth, Western Australia, 6005 T: +61 9322 6009, F: +61 9322 6128

14 September 2016

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Hole	From	To	Au g/t	Ag g/t	Co ppm	Co%
PP011	160	170	0.00	2	340	0.03
PP011	170	180	0.19	10	1	1.47
PP011	180	190	0.00	6	7000	0.70
PP011	190	200	0.10	0	6050	0.61
PP011	200	210	0.14	0	6700	0.67
PP011	210	220	0.48	3	7350	0.74
PP011	220	230	0.29	1	7250	0.73
PP011	230	240	0.67	7	7550	0.76
PP011	240	248	1.48	6	5150	0.52

APPENDIX 2: DRILL COLLARS

HOLE_ID	EAST	NORTH	RL	AZI	DIP	DEPTH
PP009	784265.62	7063889.34	560.00	0	-90	394
PP011	791265.34	7061579.61	529.00	0	-90	247.5

- APPENDIX 3: RE SPLIT ASSAYS

Hole	From	To		Au g/t	Ag g/t	Co ppm
PP009	358		359	<0.05	<5	<5
PP009	359		360	<0.05	<5	<5
PP009	360		361	<0.05	<5	<5
PP009	361		362	0.06	<5	<5
PP009	362		363	<0.05	<5	<5
PP009	363		364	<0.05	<5	<5
PP009	364		365	<0.05	<5	<5
PP009	365		366	<0.05	<5	<5
PP009	366		367	<0.05	<5	<5
PP009	367		368	<0.05	<5	<5
PP011	170		171	<0.05	<5	<5
PP011	171		172	<0.05	<5	<5
PP011	172		173	<0.05	<5	<5
PP011	173		174	<0.05	<5	<5
PP011	174		175	<0.05	<5	<5
PP011	175		176	<0.05	<5	<5
PP011	176		177	<0.05	<5	<5
PP011	177		178	<0.05	<5	<5
PP011	178		179	<0.05	<5	<5
PP011	179		180	<0.05	<5	<5

ACN 119 992 175 Suite 8, 1297 Hay Street, West Perth, Western Australia, 6005 T: +61 9322 6009, F: +61 9322 6128

14 September 2016

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APPENDIX 2: MANAGING DIRECTOR KEY TERMS AND CONDITIONS

Mr Jonathan King will commence as Managing Director, effective as of today. Mr King will be paid a salary of $210,000 per year. The Company may at any time during employment pay to Mr King a performance-based bonus over and above the Salary (Performance Based Bonus). In determining the extent of any Performance Based Bonus, the Company shall take into consideration the key performance indicators of the Executive and the Company, as the Company may set from time to time, and any other matter that it deems appropriate. The Executive is entitled to take 20 working days annual leave per year and in addition to the Salary, will receive director’s fees from the Company during such period as the Executive serves as a director of the Company as determined by the Board. Mr King is entitled to a notice period of 3 months.

Subject to shareholder approval, Mr King will also be entitled to 10 million employee options with an exercise price of $0.03 and expiry date of 31 December 2019.

ACN 119 992 175 Suite 8, 1297 Hay Street, West Perth, Western Australia, 6005 T: +61 9322 6009, F: +61 9322 6128

14 September 2016

JORC CODE, 2012 EDITION – TABLE 1

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SECTION 1 SAMPLING TECHNIQUES AND DATA

(Criteria in this section apply to all succeeding sections.)

Criteria JORC Code explanation · Nature and quality of sampling (eg cut channels, random chips, or specific specialised industry standard measurement tools appropriate to the minerals under investigation, such as down hole gamma sondes, or handheld XRF instruments, etc.). These examples should not be taken as limiting the broad meaning of sampling.

· Include reference to measures taken to ensure sample representivity and the appropriate calibration of any measurement tools or systems used.

· Aspects of the determination of mineralisation that are Material to the Public Report. In cases where ‘industry standard’ work has been done this would be relatively simple (eg ‘reverse circulation drilling was used to obtain 1 m samples from Sampling which 3 kg was pulverised to techniques produce a 30 g charge for fire assay’). In other cases more explanation may be required, such as where there is coarse gold that has inherent sampling problems. Unusual commodities or mineralisation types (eg submarine nodules) may warrant disclosure of detailed information.

· In cases where ‘industry standard’ work has been done this would be relatively simple (eg ‘reverse circulation drilling was used to obtain 1 m samples from which 3 kg was pulverised to produce a 30 g charge for fire assay’). In other cases more explanation may be required, such as where there is coarse gold that has inherent sampling problems. Unusual commodities or mineralisation types (eg submarine nodules) may warrant disclosure of detailed

Comments Samples were taken from two vertical (- 90⁰) Diamond drill holes with RC precollars. PP009 was initially percussion drilled to 147m then diamond drilled to 278m in 1983. This hole was extended to 394m the following year in 1984. PP011 was percussion drilled to 150.25m then diamond drilled to 247.5m in 1984. Both holes were BQ core size and drilled by ACM.

As both holes were drilled in the early 1980's no down hole surveys were recorded and given both holes are vertical, it is assumed no downhole surveys were undertaken.

As this data was based entirely on data provided by previous project operators, the following information has been sourced from Annual Exploration reports provided to the Department of Mines and Petroleum: - No record was reported of percussion drilling diameter and both diamond holes were noted as BQ core size. Core was assayed for Au, Ag, Cu, Pb, Zn, Mn, As, P, Ba, Ti Hg and Pt. Core samples were assayed over 10m composite intervals

BQ Core was sampled on initial 10m composite intervals. With a 1m re-split of 10m intervals re-sampled from each of PP009 and PP011.

Reported re-assaying of initial 10m core samples appears erroneous in annual exploration reports. 1m re-assays have been reported with grades that do not match the anomalous intervals 10m composite intervals in PP009 and PP011. No details were recorded of how resamples were taken from the 10m intervals or how multiple samples were achieved from the small (BQ, 36.5mm)

ACN 119 992 175

Suite 8, 1297 Hay Street, West Perth, Western Australia, 6005 T: +61 9322 6009, F: +61 9322 6128

14 September 2016

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Criteria	JORC Code explanation Comments
	information. core diameter, nor was any commentary provided on the discrepancy between the two assay batches. The company intends to undertake its own confirmatory drilling to validate historical results. The company has also highlighted this in the text of the announcement and included both the Primary and re-split assays
Drilling techniques	· Drill type (eg core, reverse circulation, open-hole hammer, rotary air blast, auger, Bangka, sonic, etc) and details (eg core diameter, triple or standard tube, depth of diamond tails, face- sampling bit or other type, whether core is oriented and if so, by what method, etc). Both holes reported in this announcement are BQ size diamond core with percussion (RC) pre-collars. Both holes were drilled vertically to intersect the flat lying stratabound sequences. No downhole survey results were reported.
Drill sample recovery	· Method of recording and assessing core and chip sample recoveries and results assessed. Core recoveries were noted in the drill logs in exploration reports with no significant core loss noted.
	· Measures taken to maximise sample recovery and ensure representative nature of the samples. As drilling was undertaken by previous project operators- No records of Measures taken to maximise sample recovery and ensure representative nature of the samples were recorded.
	· Whether a relationship exists between sample recovery and grade and whether sample bias may have occurred due to preferential loss/gain of fine/coarse material. No sample bias has been reported in annual exploration reports of previous project operators.
Logging	· Whether core and chip samples have been geologically and geotechnically logged to a level of detail to support appropriate Mineral Resource estimation, mining studies and metallurgical studies. All RC and diamond drill holes have been logged and detail lithology and core recovery. Subsequent drilling is planned by the company which will be geologically and geotechnically logged to a modern level of detail to support appropriate Mineral Resource estimation, mining studies and metallurgical studies.
	· Whether logging is qualitative or quantitative in nature. Core (or costean, channel, etc) photography. Logging has been conducted qualitatively but not quantitatively with logging codes assigned to all intervals and descriptions of lithologies, alteration and mineralisation of interest. No percentages estimates on veining, weathering, quartz and numeric scale of hardness were reported.
	· The total length and percentage of the relevant intersections logged. The entire length of all RC and Diamond drill holes has been assigned lithological designations, descriptions of structures,

ACN 119 992 175

Suite 8, 1297 Hay Street, West Perth, Western Australia, 6005 T: +61 9322 6009, F: +61 9322 6128

14 September 2016

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Criteria	JORC Code explanation Comments
	alteration and mineralogy.
Sub- sampling techniques and sample preparation	· If core, whether cut or sawn and whether quarter, half or all core taken. No record was located of the core sampling procedure, it is unknown what proportion of the core was sent for analysis. 10m core samples were submitted.
	· If non-core, whether riffled, tube sampled, rotary split, etc and whether sampled wet or dry. No record of the drill cuttings being riffled, tube sampled or rotary split were recorded nor whether samples were wet or dry.
	· For all sample types, the nature, quality and appropriateness of the sample preparation technique. Diamond core was sampled at consistent 10m intervals with no sample weight reference retained
	· Quality control procedures adopted for all sub-sampling stages to maximise representivity of samples. Given the age of the data used that all drilling was undertaken by previous operators, accurate records of QA/QC do not exist.
	· Measures taken to ensure that the sampling is representative of the in situ material collected, including for instance results for field duplicate/second-half sampling. No record of field duplicates was located. Reported re-assaying of initial 10m core samples appears erroneous in annual exploration reports. 1m re-assays have been noted on intervals that do not match the anomalous intervals in PP009 and grades that do not match the 10m composite intervals in PP011. Given the age of the drilling, no details of how resamples were taken from the 10m intervals or how multiple samples were achieved from the small (BQ, 36.5mm) core diameter.
	· Whether sample sizes are appropriate to the grain size of the material being sampled. No consistent sample grain sizes were recorded.
Quality of assay data and laboratory tests	· The nature, quality and appropriateness of the assaying and laboratory procedures used and whether the technique is considered partial or total. Assays were analysed by an external company at MinLab in East Perth. The core was assayed for Au, Ag, Cu, Pb, Zn, Mn, As, P, Ba, Ti Hg and Pt. No record of sample preparation or assay method was reported.
	· For geophysical tools, spectrometers, handheld XRF instruments, etc, the parameters used in determining the analysis including instrument make and model, reading times, calibrations factors applied and their derivation, etc. Not used for grade reporting or interpretation.

ACN 119 992 175 Suite 8, 1297 Hay Street, West Perth, Western Australia, 6005 T: +61 9322 6009, F: +61 9322 6128

14 September 2016

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Criteria	JORC Code explanation Comments
	· Nature of quality control procedures adopted (eg standards, blanks, duplicates, external laboratory checks) and whether acceptable levels of accuracy (ie lack of bias) and precision have been established. Given the age of the data, no Quality Controls were reported.
Verification of sampling and assaying	· The verification of significant intersections by either independent or alternative company personnel. No record of independent verification exists.
	· The use of twinned holes. No twinned holes were recorded in the database.
	· Documentation of primary data, data entry procedures, data verification, data storage (physical and electronic) protocols. Drilling predates the widespread use of field base data loggers. Grades reported in this announcement were data entered from logs and assay reports in annual exploration reports.
	· Discuss any adjustment to assay data. No adjustments were made to assay data presented in this report
Location of data points	· Accuracy and quality of surveys used to locate drill holes (collar and down-hole surveys), trenches, mine workings and other locations used in Mineral Resource estimation. No reference to survey accuracy has been made in exploration reports.
	· Specification of the grid system used. Collar locations were referenced on exploration plans in latitude and longitude.
	· Quality and adequacy of topographic control. No modern DTM control is known to exist over the project area
Data spacing and distribution	· Data spacing for reporting of Exploration Results. Only the two holes referenced in this report are deep enough to intersect the target Maraloou formation. The spacing between these two holes is 7.3 km.
	· Whether the data spacing and distribution is sufficient to establish the degree of geological and grade continuity appropriate for the Mineral Resource and Ore Reserve estimation procedure(s) and classifications applied. Infill and confirmation drilling is required before a mineral resource in accordance with the JORC 2012 Edition can be reported.
	· Whether sample compositing has been applied. 10m downhole composite samples were assayed on BQ core.
Orientation of data in relation to geological structure	· Whether the orientation of sampling achieves unbiased sampling of possible structures and the extent to which this is known, considering the deposit type. The stratigraphy of the basin is flat lying and gently dipping (<10 degrees to the west). Vertical drill holes are thus deemed representative and relatively unbiased.
	· If the relationship between the drilling orientation and the orientation of key mineralised structures is considered to have introduced a sampling bias, this should be assessed and reported if No, the relationship between the drilling orientation and the orientation of key mineralised structures is not considered to have introduced a sampling bias

ACN 119 992 175

Suite 8, 1297 Hay Street, West Perth, Western Australia, 6005 T: +61 9322 6009, F: +61 9322 6128

14 September 2016

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Criteria		JORC Code explanation	Comments
		material.
Sample		· The measures taken to ensure	No record has been kept relating to						the
security		sample security.	security	of	the	samples		taken	by
			previous	operators
Audits	or	· The results of any audits or	No record		of audits		or	reviews	by
reviews		reviews of sampling techniques and	previous	operators		has	been	located
		data.

SECTION 2 REPORTING OF EXPLORATION RESULTS

(Criteria listed in the preceding section also apply to this section.)

Criteria	Criteria		JORC Code explanation	JORC Code explanation	JORC Code explanation	JORC Code explanation		Commentary
Mineral tenement			·	Type,		reference		The Tabac project consists of two
and	land	tenure	_name/number, location _				and	exploration license applications E53/1891
status			ownership			including		and E53/1895 in Western Australia. The
			agreements		or	material		Applications are held by PETER ROMEO
			_issues with third parties _				such	GIANNI and overly a miscellaneous held
			as	joint		ventures,		by ROSSLYN HILL MINING PTY LTD. DLE has
			partnerships,			overriding		the exclusive option to acquire a 100%
			_royalties, _	native title interests,				interest in the Tabac Cobalt project
			_historical _	_sites, _	wilderness or			through the purchase of Westview Pty
			national	park			and	Ltd (an entity associated with PETER
			environmental settings.					ROMEO GIANNI). Payment consideration
								includes:
								• Non-refundable Option fee payment of
								$50,000 (excluding GST) payable in cash
								• Upon shareholder approval:
								 Payment of $50,000 (excluding
								GST) in cash
								 150,000,000 fully paid ordinary
								shares in the capital of DLE
								(Consideration Shares);
								 62,500,000 Performance Shares
								(subject to ASX approval per
								Listing Rule 6.1) issued to Class B
								shareholders in Westview
								Resources on the following terms
								and conditions, being:
								 31,250,000 Class A Performance
								Shares for the achievement of an
								Inferred Mineral Resource in
								accordance with the Australasian

ACN 119 992 175

Suite 8, 1297 Hay Street, West Perth, Western Australia, 6005 T: +61 9322 6009, F: +61 9322 6128

14 September 2016

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Criteria		JORC Code explanation							Commentary
											Code for Reporting of Exploration
											Results, Mineral Resources and
											Ore Reserves (2012 Edition) (JORC
											Code) (including cumulative
											production) of not less than
											50,000 tonnes contained Cobalt
											at a minimum grade of 0.3%
											Cobalt within the Tenements
											(Performance Shares Milestone 1);
											and
											31,250,000 Class B Performance
											Shares for the achievement of an
											Inferred Mineral Resource in
											accordance with the JORC Code
											(including cumulative
											production) of not less than
											100,000 tonnes contained Cobalt
											at a minimum grade of 0.3%
											Cobalt within the Tenements
											(Performance Shares Milestone 2);
										•	Payment of a 2% Net Smelter
										Royalty (“NSR”) on the production of
										any metals from the project.
									At	present Dragon has paid the $50,000
									cash		based option fee consideration
									and is		conducting due diligence.
		·	The	security			of	the	E53/1891 and E53/1895 are still under
		_tenure held at the _					time of		application.
		reporting		along		with		any
		known		impediments				to
		obtaining		a	licence			to
		operate in the area.
Exploration	done	·	Acknowledgment					and	All		work referenced in this
by other parties		_appraisal _		of exploration by					announcement has been undertaken by
		other	parties.						previous project operators and is
									deemed appropriate to industry
									standards at the time of operation. The
									majority of the material work undertaken
									was byACM in 1983 and 1984

ACN 119 992 175 Suite 8, 1297 Hay Street, West Perth, Western Australia, 6005 T: +61 9322 6009, F: +61 9322 6128

14 September 2016

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Criteria	JORC Code explanation Commentary
Geology	· Deposit type, geological setting and style of mineralisation. The general palaeoenvironment of the Tabac project lends encouragement for exploration for Zambian Copperbelt and/or Kuferschiefer-style mineralisation. This Glengarry Basin deposition model prosed by Drummond in the 1983/1984 exploration reports bears a close stratigraphic and age resemblance to the African Copperbelt and Zechstein deposit models. Copperbelt/Kuferschiefer-style mineralisation deposits are defined by sabkha (salt flat) type evaporative conditions prevailing across a wide carbonate inner ramp preserving organic carbon and the formation of syngenetic to early diagenetic pyrite. The later introduction of an oxidising Cobalt bearing brine reduces against this preserved carbonaceous front resulting in the deposition of strata bound sulphide mineralisation.
Drill hole Information	· A summary of all information material to the understanding of the exploration results including a tabulation of the following information for all Material drill holes: The drill holes reported in this announcement have the following parameters applied:
	o easting and northing of the drill hole collar Eastings and Northings are MGA94z50; PP009: 784265.620 mE and 7063889.340 mN, PP011; 791265.340mE and 7061579.610 mN
	o elevation or RL (Reduced Level – elevation above sea level in metres) of the drill hole collar RL is AHD; PP009- 560.000mRL, PP011- 529.000mRL
	o dip and azimuth of the hole Dip is the inclination of the hole from horizontal (i.e. a hole drilled vertically down from the surface is -90⁰) . Azimuth is reported in degrees as the direction towards which the hole is drilled. Both holes are vertical; -90⁰towards 360⁰
	o down hole length and interception depth Down hole length of the hole is the distance from the surface to the end of the hole, as measured along the drill trace. Interception depth is the distance down the hole as measured along the drill trace. Intersection width is the downhole distance of an intersection as measured alongthe drill trace.

ACN 119 992 175 Suite 8, 1297 Hay Street, West Perth, Western Australia, 6005 T: +61 9322 6009, F: +61 9322 6128

14 September 2016

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Criteria	JORC Code explanation Commentary
	o hole length. Hole length is the distance from the surface to the end of the hole, as measured along the drill trace. PP011; 247.5m and PP009; 394m
	· If the exclusion of this information is justified on the basis that the information is not Material and this exclusion does not detract from the understanding of the report, the Competent Person should clearly explain why this is the case. All results relating to the drill sections provided have been stated
Data aggregation methods	· In reporting Exploration Results, weighting averaging techniques, maximum and/or minimum grade truncations (eg cutting of high grades) and cut-off grades are usually Material and should be stated. No upper or lower grade truncations have been applied
	· Where aggregate intercepts incorporate short lengths of high grade results and longer lengths of low grade results, the procedure used for such aggregation should be stated and some typical examples of such aggregations should be shown in detail. 10m composite assays were taken from drill core by previous operators
	· The assumptions used for any reporting of metal equivalent values should be clearly stated. No Metal equivalence are reported.
Relationship between mineralisation widths and intercept lengths	· These relationships are particularly important in the reporting of Exploration Results. The intersection width is measured down the hole trace and is not the true width. Cross sections provided in the announcement allow the relationship between true and down hole width to be viewed.
	· If the geometry of the mineralisation with respect to the drill hole angle is known, its nature should be reported. Drill holes are drilled perpendicular to the low angle strataform mineralisation. The geometry of the mineralisation is inferred by the matching stratigraphy of the two vertical holes
	· If it is not known and only the down hole lengths are reported, there should be a clear statement to this effect (eg ‘down hole length, true width not known’). All drill results within this announcement are downhole intervals only. True width is not known and will be calculated from further diamond drilling but is not expected to materially differ from the widths reported

ACN 119 992 175

Suite 8, 1297 Hay Street, West Perth, Western Australia, 6005 T: +61 9322 6009, F: +61 9322 6128

14 September 2016

==> picture [128 x 36] intentionally omitted <==

Criteria	JORC Code explanation	Commentary
Diagrams	· Appropriate maps and	Given the cross section only contains										two
	sections (with scales) and	drill holes,	no plan view of the							section
	tabulations of intercepts	was deemed appropriate
	should be included for any
	significant discovery being
	reported These should
	include, but not be limited to
	a plan view of drill hole
	collar locations and
	appropriate sectional views.
Balanced	· Where comprehensive	All results	including			those			with			no
reporting	reporting of all Exploration	significant	interceptions				have				been
	Results is not practicable,	reported.
	representative reporting of
	both low and high grades
	and/or widths should be
	practiced to avoid
	misleading reporting of
	Exploration Results.
Other substantive	· Other exploration data,	No other exploration data					is	considered
exploration data	if meaningful and material,	meaningful	and		material				to			this
	should be reported including	announcement.				Bulk				density,
	(but not limited to):	groundwater, geotechnical						and				rock
	geological observations;	characteristics were not recorded									in the
	geophysical survey results;	historical drilling
	geochemical survey results;
	bulk samples – size and
	method of treatment;
	metallurgical test results; bulk
	density, groundwater,
	geotechnical and rock
	characteristics; potential
	deleterious or contaminating
	substances.
Further work	· The nature and scale of	Infill holes	will be	drilled to				define				the
	planned further work (eg	continuity of mineralisation					and			Specific
	tests for lateral extensions or	Gravity, metallurgical				and	geotechnical
	depth extensions or large-	samples.
	scale step-out drilling).
	· Diagrams clearly	Future drilling areas			have		not		currently
	highlighting the areas of	been defined.		Drill		targeting						and
	possible extensions, including	planning	will	commence							once
	the main geological	preliminary	geophysical and					geological
	interpretations and future	studies are received.
	drilling areas, provided this
	information is not
	commercially sensitive.

ACN 119 992 175 Suite 8, 1297 Hay Street, West Perth, Western Australia, 6005 T: +61 9322 6009, F: +61 9322 6128