MATSA RESOURCES LIMITED — Capital/Financing Update 2016

Sep 5, 2016

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Matsa Resources Limited
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LIMITED ABN 48 106 732 487

ASX Announcement

6[th] September 2016

Exploration Update

Highlights

Mt Weld Gold Project WA

• Preliminary RC drilling programme comprising 5 holes for 1,037m completed over the Wilga South prospect.

• Gold mineralisation was confirmed at Wilga South, with a best intercept of 4m @ 0.94 g/t Au from 188m in drill-hole 16MTWRC04

• Further drill targets are being developed along the Wilga South RAB gold anomaly which extends a further ~2km to the south

Lake Carey Gold Project

• A 1,500m diamond drilling programme has commenced at Lake Carey gold project

• Drilling is designed to provide geotechnical, resource definition data and sample material for metallurgical test work

Phaisali Base Metals Project Thailand

• Drilling has commenced at the Chang 1 prospect in Thailand with the first drillhole intersecting a variably altered diorite intrusion containing disseminated copper sulphides between 94m and 225m

• The 131m disseminated copper sulphides intercept is evidence of a potentially significant copper mineralised system

CORPORATE SUMMARY

Executive Chairman

Paul Poli

Director

Frank Sibbel

Director & Company Secretary

Andrew Chapman

Shares on Issue

144.7 million

Unlisted Options

7.8 million @ $0.25 - $0.40 Top 20 shareholders Hold 52.15%

Share Price on 5[th] September 2016

24.5 cents

Market Capitalisation

$35.45 million

• Core is currently being split for assay

Killaloe Gold Project WA

• RC drilling in progress with 3 holes for 450m completed across the Duke IP3 chargeability target

• Drilling has intersected komatiite lavas containing sporadic thin quartz veins. No significant sulphides were observed as yet and assays are awaited

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Matsa is pleased to provide an update on its recent and current drilling programmes which include:

• Results received from the recently completed RC drilling at the Mt Weld gold project;

• Diamond drilling has commenced and is in progress at the Lake Carey gold project;

• Diamond drilling has commenced and is in progress at Chang 1 within the Phaisali base metal project in Thailand; and

• RC drilling is in progress at the Killaloe JV project (Cullen Resources 20%).

Wilga South RC drilling (Mt Weld Gold Project)

Drilling on the Wilga South anomaly was carried out within the Mt Weld project (Refer MAT announcements to the ASX dated 29[th] July 2016 and 8[th] August 2016).

Five RC drillholes were completed for a total of 1,037m of drilling as summarised in Table 1.

Hole_ID	East	North	Depth	Azimuth	Dip
16MTWRC01	452761	6773814	199	270	-60
16MTWRC02	452718	6773952	211	270	-60
16MTWRC03	452780	6773957	211	270	-60
16MTWRC04	452781	6774057	217	270	-60
16MTWRC05	452738	6774218	199	270	-60

Table 1: Wilga South Completed RC drill holes

Drilling was completed at the Wilga South prospect which is located at the northern end of a continuous ~2km long zone of basement gold mineralisation defined by values between 0.1 g/t Au and 7.2 g/t Au in aircore drilling by previous explorers.

Drill cuttings were sampled at 1m intervals via rotary splitter with bulk rejects bagged and laid out in 1m intervals. A total of 261 composite samples each representing an interval of up to 4m were submitted for gold assay by ALS Perth WA (Appendix 1). Composite sample results >0.01ppm Au are listed in Appendix 2.

Composite assay results have confirmed the presence of a steeply east dipping zone of low grade gold mineralisation along the sheared contact between dolerite and basalt with a best intercept of 4m @ 0.94 g/t Au from 188m in drill-hole 16MTWRC04. It is planned to submit individual 1m samples from each 4m composite sample for assay.

A review of past exploration data is currently underway to develop drill targets within the southern extension of the 2.5km long Wilga gold anomaly and in a number of additional gold anomalies identified from previous drilling.

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Hole ID	Sample ID	Au g/t	M From	M To	Remarks
16MTWRC01	109624	0.44	172	174
	109625	0.81	176	180
16MTWRC02	109659	0.92	112	116
16MTWRC04	109769	0.82	128	132
	109784	0.94	188	192	Waste gap at 192-196m
	109786	0.18	196	200
16MTWRC05	109827	0.19	140	144

Table 2: Wilga South composite assay intercepts >0.1 g/t Au

Fortitude Diamond Drilling (Lake Carey Gold Project)

The first of 10 diamond drillholes in a planned 1,500m programme has commenced. The drillholes have been designed to provide additional geotechnical and resource definition data and material for metallurgical test work.

Chang 1 Diamond Drilling (Phaisali Base Metals Project Thailand)

Inaugural diamond drilling has commenced at Chang 1 to test a strongly anomalous IP and soil copper values which coincide with a large complex aeromagnetic anomaly. (MAT announcement ASX 26[th] April 2016) .

Drill hole 16SCDD003 (Location CH101 Figure 1), the first of a minimum of 5 diamond drillholes planned to cross Chang 1 along an EW section, was planned for 200m but was extended to a completed depth of 249.5m.

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Figure 1: Planned diamond drilling on image of soil copper mineralisation (Max 0.1% Cu) and elevated IP chargeability (black dotted lines)

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The drill hole has intersected a variably altered diorite intrusion over its full extent. Copper sulphides are seen from 94 metres coinciding with an increase in alteration which was observed to further increase in intensity from a depth of ~118m downhole. Alteration corresponds to a significant increase in iron oxide (magnetite) together with disseminated chalcopyrite (copper sulphide), pyrite and pyrrhotite (iron sulphides). A number of magnetite, chalcopyrite, pyrite and pyrrhotite veins up to 2cm thick were also observed between 176m and 198m downhole. Assays results are pending.

Sulphide mineralisation, including copper sulphides, appears to be the source of the target IP anomaly. Given the extents of soil copper anomalism over an area of ~ 1km x 1.8km within an even larger complex magnetic anomaly, alteration and mineralisation observed to date is thought to form part of a large and highly prospective copper mineralised system.

Killaloe RC Drilling (Killaloe JV Project)

As previously announced, (MAT announcement to ASX 15[th] August 2016) , RC drilling is currently in progress at the Killaloe project with the first 3 drill holes completed over IP anomaly Duke IP03 (MAT announcements to ASX 26[th] June 2016 and 5[th] July 2016).

Drilling comprising 3 holes completed to date for a total of 450m is summarised in Table 3.

Hole ID	GDAE	GDAN	Depth	Azimuth	Dip
16KLRC07	398905	6462390	150	54	-60
16KLRC08	398845	6462345	150	54	-60
16KLRC06	398965	6462435	150	54	-60
Table 3: RC drillholes completed over target Duke IP03

Cumulate textured komatiite volcanics displaying weak intermittent quartz carbonate veins, were intersected in all holes. No significant sulphide mineralisation was observed and accordingly the source of the strong coincident chargeability and resistivity anomalies making up IP anomaly Duke IP03 has not been determined.

Drilling and further work at Killaloe is continuing.

For further information please contact:

Paul Poli Executive Chairman

Phone +61 8 9230 3555 Fax +61 8 9227 0370 Email reception@matsa.com.au Web www.matsa.com.au

Competent Person

The information in this report that relates to Exploration results, is based on information compiled by David Fielding, who is a Fellow of the Australasian Institute of Mining and Metallurgy. David Fielding is a full time employee of Matsa Resources Limited. David Fielding has sufficient experience which is relevant to the style of mineralisation and the type of ore deposit under consideration and 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’. David Fielding consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

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Appendix 1 - Matsa Resources Limited – Mt Day Project

Section 1 Sampling Techniques and Data

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

Criteria	JORC Code explanation Commentary
Sampling techniques	 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. Matsa RC drilling at Wilga South and Killaloe was carried out according to a standard procedure whereby a 3kg bagged sample is obtained from a rotary splitter at the cyclone and laid out with 1m bagged residues. First pass assays were carried out on composite samples collected by spearing consecutive bagged residues. Composite values >0.1 g/t gold to be validated by submitting individual 3kg rotary split samples for assay.  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 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 information.
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). RC Drilling was carried out by Drilling Australia, using a face sampling hammer system
Drill sample recovery	 Method of recording and assessing core and chip sample recoveries and results assessed. Sample recovery judged by size of bulk residue bags, no issues with poor recovery were observed.
	 Measures taken to maximise sample recovery and ensure representative nature of the samples. Not applicable
	 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 evidence of sample loss through mineralised zone

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Criteria	JORC Code explanation Commentary
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. Diamond core and RC chips are typically visually logged for lithology, regolith type, and alteration / mineralisation Typically semi quantitative logging is carried out using inhouse logging codes and percentages.  Whether logging is qualitative or quantitative in nature. Core (or costean, channel, etc) photography.  The total length and percentage of the relevant intersections logged. The entire drillhole is logged while drilling is in progress to enable hole extensions or in some cases stopping holes.
Sub-sampling techniques and sample preparation	 If core, whether cut or sawn and whether quarter, half or all core taken. RC drilling Composite sampling carried out by use of “spear” to obtain approximately equal ammounts of material from each 1m through the composite interval Typical sample preparation for fire assay and for Aqua Regia digest involved crushing / pulverizing/ screening to P90 passing 75 micron screen  If non-core, whether riffled, tube sampled, rotary split, etc and whether sampled wet or dry. Rotary splitter at cyclone used for stage 1, 1m samples, only submitted to obtain final assays through composite intervals containing >0.1g/t gold No requirement for field duplicates was seen Samples approximately 3kg in size appropriate to detecting gold in RC cuttings  For all sample types, the nature, quality and appropriateness of the sample preparation technique.  Quality control procedures adopted for all sub-sampling stages to maximise representivity of samples  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  Whether sample sizes are appropriate to the grain size of the material being sampled.
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. All assays of RC drill cuttings carried out by ALS global in Kalgoorlie for gold only. Laboratory QA/QC considered adequate for reconnaissance exploration
	 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. Semi-quantitative use made of magnetic susceptibility readings on bulk residues

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	Criteria	JORC Code explanation	JORC Code explanation	Commentary
			Nature of quality control procedures adopted (eg standards, blanks, duplicates,	Laboratory in-house QAQC only
			external laboratory checks) and whether acceptable levels of accuracy (ie lack of
			bias) and precision have been established.
	Verification of		The verification of significant intersections by either independent or alternative	RC drilling, Composite samples of up to 4 m collected and in the case of significant
	sampling and		company personnel.	intersections, 1m rotary split samples submitted to confirm first pass assays.
	assaying		The use of twinned holes.	All field records collected via laptop computer and LogChief software
				No adjustments carried out on assy data
			Documentation of primary data, data entry procedures, data verification, data
			storage (physical and electronic) protocols.
			Discuss any adjustment to assay data.
	Location of data		Accuracy and quality of surveys used to locate drill holes (collar and down-hole	Handheld GPS used with compass and clinometer based azimuth and dip
	points		surveys), trenches, mine workings and other locations used in Mineral Resource	Locations given in UTM GDA Zone 51 Eastings and Northings in metres
			estimation.	Accuracy 3-5m in X and Y, with ~10m in Z
			Specification of the grid system used.
			Quality and adequacy of topographic control.
	Data spacing		Data spacing for reporting of Exploration Results.	Wilga Mt Weld, Drillholes spaced along lines spaced ~100m apart
	and distribution
			Whether the data spacing and distribution is sufficient to establish the degree of	Not applicable,
			geological and grade continuity appropriate for the Mineral Resource and Ore
			Reserve estimation procedure(s) and classifications applied.
			Whether sample compositing has been applied.	First pass samples of RC cuttings are composite intervals up to 4m downhole
	Orientation of		Whether the orientation of sampling achieves unbiased sampling of possible	Drill lines set up to cross structural stratigraphic rock package as close as possible to
	data in relation		structures and the extent to which this is known, considering the deposit type.	right angle.
	to geological
	structure
			If the relationship between the drilling orientation and the orientation of key	No bias has been recognised
			mineralised structures is considered to have introduced a sampling bias, this should
			be assessed and reported if material.
	Sample security		The measures taken to ensure sample security.	None recorded
	Audits or reviews		The results of any audits or reviews of sampling techniques and data.	No audits carried out
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Section 2 Reporting of Exploration Results

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

	Criteria	JORC Code explanation	Commentary
	Mineral	 Type, reference name/number, location and ownership including	Tenements Mt Weld and Killaloe described in detail in MAT	ASX
	tenement and	agreements or material issues with third parties such as joint ventures,	announcements of 29thJuly 2016 and 8thAugust 2016
	land tenure	partnerships, overriding royalties, native title interests, historical sites,	Tenements Thailand described in MAT ASX announcements
	status	wilderness or national park and environmental settings.
		 The security of the tenure held at the time of reporting along with any
		known impediments to obtaining a license to operate in the area.
	Exploration done	 Acknowledgment and appraisal of exploration by other parties.	Drilling data used to define drilling programme at Wilga South was	acquired by previous
	by other parties		explorers as summarised in MAT report to ASX 8thAugust 2016.
	Geology	 Deposit type, geological setting and style of mineralisation.	Structurally controlled orogenic quartz vein hosted gold mineralisation.
	Drill hole	 A summary of all information material to the understanding of the	Summarised in a table in the body of the text
	Information	exploration results including a tabulation of the following information for
		all material drill holes:
		o easting and northing of the drill hole collar
		o elevation or RL (Reduced Level – elevation above sea level in metres)
		of the drill hole collar
		o dip and azimuth of the hole
		o down hole length and interception depth
		o hole length.
		 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.
	Data	 In reporting Exploration Results, weighting averaging techniques,	No aggregation of data carried out, only individual assays reported
	aggregation	maximum and/or minimum grade truncations (eg cutting of high grades)
	methods	and cut-off grades are usually material and should be stated.
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Criteria	JORC Code explanation	Commentary
	 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.
	 The assumptions used for any reporting of metal equivalent values should
	be clearly stated.
Relationship	 These relationships are particularly important in the reporting of	All drill hole intercepts measured in down hole metres.
between	Exploration Results.
mineralisation	 If the geometry of the mineralisation with respect to the drill hole angle is
widths and	known, its nature should be reported.
intercept lengths	 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’). _
Diagrams	 Appropriate maps and sections (with scales) and tabulations of intercepts	Suitable summary plans were included in the body of previous MAT reports to
	should be included for any significant discovery being reported These	the ASX notably MAT report to the ASX 8thAugust 2016 (Wilga South) and 5th
	should include, but not be limited to a plan view of drill hole collar	July 2016 (Killaloe).
	locations and appropriate sectional views.
Balanced	 Where comprehensive reporting of all Exploration Results is not	Not applicable, all results >DL were reported
reporting	practicable, representative reporting of both low and high grades and/or
	widths should be practiced to avoid misleading reporting of Exploration
	Results.
Other	 Other exploration data, if meaningful and material, should be reported	Very large body of exploration data from >40 years of previous exploration has
substantive	including (but not limited to): geological observations; geophysical survey	been compiled. Data sets include geological mapping, aeromagnetics and
exploration data	results; geochemical survey results; bulk samples – size and method of	drilling
	treatment; metallurgical test results; bulk density, groundwater,
	geotechnical and rock characteristics; potential deleterious or
	contaminating substances.
Further work	 The nature and scale of planned further work (eg tests for lateral	There are a number of structural locations along and adjacent to the Wilga
	extensions or depth extensions or large-scale step-out drilling).	fault which Matsa believes to be highly prospective for gold
	 Diagrams clearly highlighting the areas of possible extensions, including
	the main geological interpretations and future drilling areas, provided
	this information is not commercially sensitive.

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Appendix 2 – Wilga South Assays >0.01ppm Au

	Wilga South Drilling Aug 2016	Wilga South Drilling Aug 2016	Wilga South Drilling Aug 2016	Wilga South Drilling Aug 2016	Wilga South Drilling Aug 2016	Wilga South Drilling Aug 2016	Wilga South Drilling Aug 2016	Wilga South Drilling Aug 2016	Wilga South Drilling Aug 2016
	Hole_ID		SampleID		M From		M To		Au_ppm
	16MTWRC01		109581		0		1		0.02
	16MTWRC01		109602		84		88		0.02
	16MTWRC01		109606		100		104		0.06
	16MTWRC01		109612		124		128		0.06
	16MTWRC01		109615		136		140		0.03
	16MTWRC01		109616		140		144		0.02
	16MTWRC01		109618		148		152		0.02
	16MTWRC01		109619		152		156		0.02
	16MTWRC01		109624		172		176		0.44
	16MTWRC01		109625		176		180		0.81
	16MTWRC01		109627		184		188		0.02
	16MTWRC02		109640		36		40		0.02
	16MTWRC02		109642		44		48		0.03
	16MTWRC02		109644		52		56		0.03
	16MTWRC02		109653		88		92		0.03
	16MTWRC02		109656		100		104		0.02
	16MTWRC02		109658		108		112		0.07
	16MTWRC02		109659		112		116		0.92
	16MTWRC02		109660		116		120		0.02
	16MTWRC02		109661		120		124		0.02
	16MTWRC02		109666		140		144		0.03
	16MTWRC02		109670		156		160		0.04
	16MTWRC02		109676		180		184		0.02
	16MTWRC02		109678		188		192		0.02

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	Wilga South Drilling Aug 2016	Wilga South Drilling Aug 2016	Wilga South Drilling Aug 2016	Wilga South Drilling Aug 2016	Wilga South Drilling Aug 2016	Wilga South Drilling Aug 2016	Wilga South Drilling Aug 2016	Wilga South Drilling Aug 2016	Wilga South Drilling Aug 2016
	Hole_ID		SampleID		M From		M To		Au_ppm
	16MTWRC02		109683		208		211		0.07
	16MTWRC03		109685		4		8		0.02
	16MTWRC03		109687		12		16		0.02
	16MTWRC03		109690		24		28		0.06
	16MTWRC03		109692		32		36		0.03
	16MTWRC03		109696		48		52		0.04
	16MTWRC03		109697		52		56		0.03
	16MTWRC03		109699		60		64		0.02
	16MTWRC03		109701		68		72		0.02
	16MTWRC03		109704		80		84		0.04
	16MTWRC03		109706		88		92		0.04
	16MTWRC03		109711		108		112		0.04
	16MTWRC03		109712		112		116		0.02
	16MTWRC03		109716		128		132		0.02
	16MTWRC03		109723		156		160		0.02
	16MTWRC03		109729		180		184		0.02
	16MTWRC03		109731		188		192		0.02
	16MTWRC03		109732		192		196		0.02
	16MTWRC03		109733		196		200		0.02
	16MTWRC03		109735		204		208		0.03
	16MTWRC04		109737		0		4		0.02
	16MTWRC04		109738		4		8		0.03
	16MTWRC04		109741		16		20		0.03
	16MTWRC04		109742		20		24		0.02
	16MTWRC04		109744		28		32		0.02

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Wilga South Drilling Aug 2016	Wilga South Drilling Aug 2016	Wilga South Drilling Aug 2016	Wilga South Drilling Aug 2016	Wilga South Drilling Aug 2016
Hole_ID	SampleID	M From	M To	Au_ppm
16MTWRC04	109747	40	44	0.02
16MTWRC04	109750	52	56	0.02
16MTWRC04	109753	64	68	0.02
16MTWRC04	109754	68	72	0.03
16MTWRC04	109769	128	132	0.82
16MTWRC04	109770	132	136	0.02
16MTWRC04	109774	148	152	0.02
16MTWRC04	109784	188	192	0.94
16MTWRC04	109786	196	200	0.18
16MTWRC04	109787	200	204	0.04
16MTWRC05	109793	4	8	0.02
16MTWRC05	109812	80	84	0.03
16MTWRC05	109816	96	100	0.07
16MTWRC05	109817	100	104	0.05
16MTWRC05	109820	112	116	0.04
16MTWRC05	109827	140	144	0.19
16MTWRC05	109829	148	152	0.05
16MTWRC05	109830	152	156	0.02

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