MATSA RESOURCES LIMITED — Capital/Financing Update 2018

Mar 27, 2018

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Matsa Resources Limited
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LIMITED ABN 48 106 732 487

ASX Announcement

28 March 2018

Settlement of Red October Gold Project

Highlights

• Matsa has finalised and settled the acquisition of the Red October Gold Mine and associated infrastructure with Saracen

• The current resource at the Red October Gold Mine is 99,000 oz. of Au at 6.9 g/t including 85,000 0z. of Au at 13.5 g/t

• Settlement included 44km[2] of granted mining tenements, a modern 68 person camp with full accommodation and administration facilities, workshops and all supporting mine infrastructure, including pumps and ventilation systems and haul roads

• Settlement of an additional 20km[2 ] representing the balance of the proposed acquisition is expected to occur in due course

• Mine planning and resource definition work is already underway to immediately assess the potential to recommence mining at Red October

• Exploration programmes being developed to identify prospective areas that can add to the current known resource including the Treasure Island and Causeway prospects

CORPORATE SUMMARY Executive Chairman

Paul Poli

Director

Frank Sibbel

Director & Company Secretary

Andrew Chapman

Shares on Issue

176.93 million

Unlisted Options

13.70 million @ $0.25 - $0.30

Top 20 shareholders

Hold 51.68%

Share Price on 27[th] March 2018

19 cents

Market Capitalisation

$33.62 million

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Matsa Resources Limited (“Matsa” or “the Company” ASX: MAT) is pleased to advise that it has today settled the acquisition of the Red October Gold Mine and associated infrastructure with Saracen Mineral Holdings Limited (“Saracen”; ASX: SAR). On 26[th] September 2017 Matsa announced it had entered into an Asset Sale and Purchase Agreement (“ASPA”) with Saracen to acquire the Red October Gold Project for a combination of cash and shares to the deemed value of $2 million (MAT announcement to ASX 26[th] September 2017) .

The acquisition was subject to a number of conditions which have now been met and Matsa has issued 4,545,000 fully paid ordinary shares at a deemed price of $0.22 to Saracen as part consideration of the acquisition. A deferred and final consideration amount of $400,000 will be due and payable to Saracen on 25th June 2018.

Three tenements (Capella Tenements) that were part of the original ASPA have not been able to be transferred at this time and as a result Matsa will withhold $450,000 until this matter can be resolved. These Capella tenements are at the southern end of the Red October project area and will have no impact on Matsa’s operations.

Matsa’s Executive Chairman Mr Paul Poli said “The acquisition of the Red October Gold Mine has now been completed and we are truly excited about our prospects at Red October. We welcome Saracen to our share register and thank them for their professionalism during our journey.”

Mr Poli added “We have already gotten on with the job of assessing the potential to recommence mining at Red October and expect to give shareholders an update on how near to recommencement of production we could be soon.”

Forward Work Strategy

The Red October mine is under care and maintenance but the mine remains in excellent, dry condition. A number of areas are available for immediate mining and the interpretation and planning for recommencement of mining has already begun. Exploration for additional ounces, both within and near the mine as well as over the tenement package is planned in order to increase potential mine life longevity.

The potential for extensions of known lodes and discovery of new lodes is considered excellent.

The Red October Gold Project is located immediately adjacent and contiguous with Matsa’s Lake Carey Project, containing the Fortitude mining operation (Figure 1). The project areas covers 44 km[2] and consists of six MLs, an extensive well maintained underground mine with associated 68 person camp, offices, workshops and exploration base, wet and dry messes, underground mine equipment and a Mineral Resource Estimate of 99,000 oz of gold (refer Table 1). The camp was formerly 128 person camp, and as such remains easily upgradeable to its former capacity.

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Figure 1: Red October Location Map and gold targets

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Figure 2: Gold from Marlin Lode 1220S stope – Red October Gold Project

Red October Resource

The Red October mine is a structurally controlled gold deposit located in the Laverton Greenstone Belt (LGB) which hosts >25Moz of gold and includes Sunrise Dam, Granny Smith, Wallaby, Lancefield, Chatterbox and Matsa’s Fortitude Mine (Figure 1).

Currently in care and maintenance since June 2017, the Red October mine has produced a total of 1.7Mt at 6.1g/t for 342koz Au. The Open Pit operation contributed 113koz Au at 6.5g/t Au between 1999 and 2002 and the underground operation has produced 1.2Mt at 5.9g/t for 229koz Au to a depth of 550m vertical metres from 2012 to 2017. As at 30 June 2017, the Red October Mineral Resource estimate stands at 99,000 ounces of gold (Table 1).

	Indicated	Indicated	Indicated	Inferred	Inferred			Total
June 30 2017	tonnes	g/t	Oz Au	tonnes	g/t	Oz Au	tonnes	g/t	Oz Au
Red October OP	251,000	17	14,000				251,000	1.7	14,000
Red October UG	89,000	12.1	35,000	106,000	14.6	50,000	195,000	13.6	85,000
Total	340,000	4.5	49,000	106,000	14.7	50,000	446,000	6.9	99,000
Table 1:30 June 2017 Red October Resource Estimate (ref ASX: SAR 02/08/2017)

The Company confirms that it is not aware of any new information or data that materially affects the information included in the above resource estimate and that all material assumptions and technical parameters underpinning the above resource estimate continue to apply and have not materially changed.

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

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Competent Person

The information in the report to which this statement is attached that relates to Exploration Results and Mineral Resources related to the Red October Resource Estimate is based upon information compiled by Mr Daniel Howe, a Competent Person who is a member of the Australian Institute of Mining and Metallurgy and the Australian Institute of Geoscientists. Daniel Howe is a full-time employee of Saracen Mineral Holdings Limited. Daniel Howe has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the “Australian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Daniel Howe consents to the inclusion in the report of matters based on his information in the form and context in which it appears.

The information in this report that relates to Exploration results and Mineral Resources is based on information compiled by Mark Csar, who is a Fellow of the Australasian Institute of Mining and Metallurgy. Mark Csar is a full time employee of Matsa Resources Limited. Mark Csar 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’. Mark Csar 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 – Red October Gold Project

Section 1 Sampling Techniques and Data

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

Criteria	JORC Code explanation	Commentary
Sampling	 Nature and quality of sampling (eg cut channels,	 Sampling activities conducted at Red October by Saracen include reverse circulation (RC),
techniques	random chips, or specific specialised industry	surface and underground diamond drilling (DD) and underground face chip sampling. Historic
	standard measurement tools appropriate to the	sampling methods conducted since 1989 have included aircore (AC), rotary air blast (RAB), RC
	minerals under investigation, such as down hole	and surface and underground DD holes
	gamma sondes, or handheld XRF instruments, etc).	 Sampling for RC, DD and face chip sampling is carried out as specified within Saracen sampling
	These examples should not be taken as limiting the	and QAQC procedures as per industry standard. RC chips and NQ diamond core provide high
	broad meaning of sampling.	quality representative samples for analysis. RC, RAB, AC and surface DD drilling completed by
	 Include reference to measures taken to ensure	previous holders is assumed to adhere to industry standard at that time 1989- 2004.
	sample representivity and the appropriate	 Saracen sampling activities have been carried out to industry standard. Reverse circulation
	calibration of any measurement tools or systems	drilling is used to obtain 1 m samples, diamond core is sampled to geological intervals
	used.	 (0.2m to 1.2m) and cut into half core and UG faces are chip sampled to geological intervals (0.2
	 Aspects of the determination of mineralisation that	to 1m), with all methods producing representative samples weighing less than 3kg. Samples are
	are Material to the Public Report.	selected to weigh less than 3 kg to ensure total sample inclusion at the pulverisation stage.
	 In cases where ‘industry standard’ work has been	Saracen core and chip samples are crushed, dried and pulverised to a nominal 90o/o passing
	done this would be relatively simple (eg ‘reverse	75μm to produce a 40 g sub sample for analysis by FA/AAS. Visible gold is occasionally
	circulation drilling was used to obtain 1 m samples	encountered in drillcore and face samples. Historical AC, RAB, RC and diamond sampling is
	from which 3 kg was pulverised to produce a 30 g	assumed to have been carried out to industry standard at that time. Analysis methods include
	charge for fire assay’). In other cases more	fire assay, aqua regia and unspecified methods.
	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	 Drill type (eg core, reverse circulation, open-hole	 The deposit was initially sampled by 495 AC holes, 73 RAB holes, 391 RC holes (assumed
techniques	hammer, rotary air blast, auger, Bangka, sonic, etc)	standard 5 %" bit size) and 159 surface diamond NQ and HQ core holes. 5 RC holes were drilled
	and details (eg core diameter, triple or standard	using a 143mm diameter bit with a face sampling hammer. The rig was equipped with an
	tube, depth of diamond tails, face-sampling bit or	external auxiliary/ booster. Saracen has previously completed 6 reverse circulation drill holes,
	other type, whether core is oriented and if so, by	9 surface HQ and NQ diamond drill holes, 839 underground NQ diamond drill holes and sampled
	_what method, etc). _	2931 underground faces. Diamond drill core has been oriented usingseveral different methods

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	Criteria	JORC Code explanation		Commentary
				which include Ezi-Mark, ACT, and more recently Ori-Finder. Some historic surface diamond drill
				core appears to have been oriented byunknown methods.
	Drill sample	 Method of recording and assessing core and	chip	 RC chip recoveries are recorded in the database as a percentage based on a visual weight
	recovery	sample recoveries and results assessed.		estimate. Underground and surface diamond core recoveries are recorded as percentages
		 Measures taken to maximise sample recovery and		calculated from measured core versus drilled metres, and intervals are logged and recorded in
		ensure representative nature of the samples.		the database. Diamond core recoveries average >90%. Limited historic surface sampling and
		 Whether a relationship exists between sample		surface diamond recoveries have been recorded.
		recovery and grade and whether sample bias	may	 During RC drilling daily rig inspections are carried out to check splitter condition, general site
		have occurred due to preferential loss/gain of		and address general issues. Ground condition concerns led to extensive hole conditioning
		fine/coarse material.		meaning contamination was minimised and particular attention was paid to sample recovery.
				Diamond core is reconstructed into continuous runs on an angle iron cradle for orientation
				marking. Depths are checked against depth given on the core blocks. UG faces are sampled left
				to right across the face allowing a representative sample to be taken due to the vertical nature
				of the orebody. Historical AC, RAB, RC and diamond drilling to industry standard at that time.
				 There is no known relationship between sample recovery and grade for RC drilling. Diamond
				drilling has high recoveries due to the competent nature of the ground meaning loss of material
				is minimal. Anyhistorical relationshipis not known.
	Logging	 Whether core and chip samples have been		 Logging of all RC chips and diamond drill core is carried out. Logging records lithology,
		geologically and geotechnically logged to a level of		mineralogy, texture, mineralisation, weathering, alteration and veining.
		detail to support appropriate Mineral Resource		 Logging is both qualitative and quantitative in nature. Geotechnical and structural logging is
		estimation, mining studies and metallurgical		carried out on all diamond core holes to record recovery, RQD, defect number, type, fill
		studies.		material, shape and roughness and alpha and beta angles. Core is photographed in both dry and
		 Whether logging is qualitative or quantitative in		wet state. All faces are photographed and mapped. Qualitative and quantitative logging of
		nature. Core (or costean, channel,	etc)	historic data varies in its completeness. Some surface diamond drill photography has been
		photography.		preserved.
		 The total length and percentage of the relevant		 All RC and diamond drill holes are logged in full and all faces are mapped. Historical logging is
		intersections logged.		approximately95% complete,some AC,RAB and RCpre-collar information is unavailable.
	Sub-sampling	 If core, whether cut or sawn and whether quarter,		 All diamond core is cut in half on-site using an automatic core saw. Samples are always collected
	techniques	half or all core taken.		from the same side.
	and sample	 If non-core, whether riffled, tube sampled, rotary		 RC drilling has been cone split and was dry sampled. UG faces are chip sampled using a hammer.
	preparation	split, etc and whether sampled wet or dry.		AC, RAB and RC drilling has been sampled using spear, grab, riffle and unknown methods.
		 For all sample types, the nature, quality	and	 The sample preparation of RC chips, diamond core and UG face chips adhere to industry best
		appropriateness of the sample preparation		practice. It is conducted by a commercial laboratory and involves oven drying, coarse crushing
		technique.		then total grinding using an LM5 to a grind size of 90% passing 75 microns. Best practice is
				assumed at the time of historic sampling.
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Criteria	JORC Code explanation	Commentary
	 Quality control procedures adopted for all sub-	 All subsampling activities are carried out by commercial laboratory and are considered to be
	sampling stages to maximise representivity of	satisfactory. Sampling by previous holders is assumed to adhere to industry standard at the
	samples.	time.
	 Measures taken to ensure that the sampling is	 RC field duplicate samples are carried out at a rate of 1:20 and are sampled directly from the
	representative of the in situ material collected,	on-board splitter on the rig. These are submitted for the same assay process as the original
	including for instance results for field	samples and the laboratory are unaware of such submissions. No duplicates have been taken
	duplicate/second-half sampling.	of UG diamond core, face samples are duplicated on ore structures. Sampling by previous
	 Whether sample sizes are appropriate to the grain	holders assumed to be industry standard at the time.
	size of the material being sampled.	 Sample sizes of 3kg are considered to be appropriate given the grain size (90% passing 75
		microns)of size of the material of the material sampled.
Quality of	 The nature, quality and appropriateness of the	 A 40 gram fire assay with MS finish is used to determine the gold concentration for RC chip, UG
assay data and	assaying and laboratory procedures used and	diamond core and face chip samples. This method is considered one of the most suitable for
laboratory	whether the technique is considered partial or	determining gold concentrations in rock and is a total digest method. Historic sampling includes
tests	total.	fire assay, aqua reqia and unknown methods.
	 For geophysical tools, spectrometers, handheld XRF	 No geophysical tools were utilised for reporting gold mineralisation.
	instruments, etc, the parameters used in	 Certified reference material (standards and blanks) with a wide range of values are inserted into
	determining the analysis including instrument	every RC, diamond drill hole (1 in 30) and UG face jobs to assess laboratory accuracy and
	make and model, reading times, calibrations	precision and possible contamination. These are not identifiable to the laboratory. Blanks are
	factors applied and their derivation, etc.	also included at a rate of 1 in 30 for diamond drill core and one per lab dispatch for face samples.
	 Nature of quality control procedures adopted (eg	Feldspar flush samples are requested after each sample with visible gold, or estimated high
	standards, blanks, duplicates, external laboratory	grade. QAQC data returned are checked against pass/fail limits with the SQL database and are
	checks) and whether acceptable levels of accuracy	passed or failed on import. A report is generated and reviewed by the geologist as necessary
	(ie lack of bias) and precision have been	upon failure to determine further action. QAQC data is reported monthly and demonstrates
	established.	sufficient levels of accuracy and precision. Sample preparation checks for fineness are carried
		out to ensure a grind size of 90o/o passing 75 microns. The laboratory performs a number of
		internal processes including standards, blanks, repeats and checks. Industry best practice is
		assumed forprevious holders. HistoricQAQC data is stored in the database but not reviewed.

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Criteria JORC Code explanation	Commentary
Verification of sampling and assaying  The verification of significant intersections by either independent or alternative company personnel.  The use of twinned holes.  Documentation of primary data, data entry procedures, data verification, data storage (physical and electronic) protocols.  Discuss any adjustment to assay data.	 Significant intercepts are verified by the Geology Manager and corporate personnel.  No specific twinned holes have been drilled at Red October but underground diamond drilling has confirmed the width and grade of previous exploration drilling.  Primary data is collated in a set of excel templates utilising lookup codes. This data is forwarded to the Database Administrator for entry into a secure acQuire database with inbuilt validation functions. Chips from RC drill holes are stored in chip trays for future reference. Remaining half core is stored in core trays and archived on site. Hard copies of face mapping, backs mapping and sampling records are kept on site. Digital scans are also kept on the corporate server. Data from previous owners was taken from a database compilation and was validated as much as practicable before entry into the Saracen acQuire database.  No adjustments have been made to assay data. First gold assay is utilised for resource estimation. Re-assays carried out due to failed QAQC will replace original results, though both are stored in the database.
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.  Specification of the grid system used.  Quality and adequacy of topographic control.	 All drill hole collars are picked up by company surveyors using a Leica TS15i (total station) with an expected accuracy of +/~2mm. Underground faces are located using a Leica D5 disto with an accuracy of+/-1mm from a known survey point. Exploration RC holes have been gyroscopically downhole surveyed by ABIMS where possible once drilling is completed. Surveys are carried out every 30m downhole during RC and diamond drilling using an Eastman single shot camera. Previous holders' survey accuracy and quality is generally unknown.  A local grid system (Red October) is used. It is rotated 44.19 degrees east of MGA_GDA94.The two point conversion to MGA_GDA94 zone 51 is: ROEast RONorth RL MGAEast MGANorth RL Point 1 5890.71 10826.86 0 444223.25 6767834.66 0 Point2 3969.83 9946.71 0 442233.31 6768542.17 0 Historic data is converted to Red October local grid on export from the database  DGPS survey has been used to establish topographic surface
Data spacing and distribution  Data spacing for reporting of Exploration Results.  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.  Whether sample compositing has been applied.	 The nominal spacing for the reported results are not uniform and therefore a definitive drill spacing will not be quoted.  Not all data reported meets the required continuity measures to be considered for inclusion in a resource estimate. Holes reported inside or within 40m of the resource will be incorporated into the resource model, or if sufficient density of data confirms continuity, it will be considered for inclusion in the resource.  RC drill holes are sampled to 1 m intervals and underground core and laces are sampled to geological intervals;compositingis not applied until the estimation stage. Some historic RAB

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Criteria	JORC Code explanation	Commentary
		and RC sampling was composited into 3-4m samples with areas of interest resampled to 1 m
		intervals. It is unknown at what threshold this occurred.
Orientation of	 Whether the orientation of sampling achieves	 RC drilling was carried out at the most appropriate angle possible. The mineralisation is
data in	unbiased sampling of possible structures and the	intersected at closely as possible to perpendicular. The steeply dipping nature of the
relation to	extent to which this is known, considering the	mineralisation means that most holes pass through mineralisation at lower angles than ideal.
geological	deposit type.	Production reconciliation and underground observations indicate that there is limited sampling
structure	 If the relationship between the drilling orientation	bias. Underground diamond drilling is designed to intersect the orebody in the best possible
	and the orientation of key mineralised structures is	orientation given the constraints of underground drill locations. UG faces are sampled left to
	considered to have introduced a sampling bias, this	right across the face allowing a representative sample to be taken due to the vertical nature of
	should be assessed and reported if material.	the orebody.
		 No significant sampling bias has been recognised due to orientation of drilling in regards to
		mineralised structures
Sample	 The measures taken to ensure sample security.	 Samples are prepared on site under supervision of Saracen geological staff. Samples are
security		selected, bagged into tied numbered calico bags then grouped into larger secured bags and
		delivered to the laboratorybySaracenpersonnel.
Audits or	 The results of any audits or reviews of sampling	 An internal review of companywide sampling methodologies was conducted to create the
reviews	techniques and data.	current sampling and QAQC procedures. No external audits or reviews have been conducted.

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	 Red October is wholly located within Mining Lease M39/412. Mining Lease M39/412 is held
	tenement and	ownership including agreements or material issues	100% by Saracen Gold Mines Ply Ltd a wholly owned subsidiary of Saracen Mineral Holdings
	land tenure	with third parties such as joint ventures,	Limited and is subject to a bank mortgage (499142). Mining Lease M39/412 has a 21 year life
	status	partnerships, overriding royalties, native title	(held until 2019) and is renewable for a further 21 years on a continuing basis. There is one
		interests, historical sites, wilderness or national	Registered Native Title Claim over M39/412 for the Kurrku group (WC10/18), lodged
		park and environmental settings.	December 2010. Mining Lease M39/412 was granted prior to registration of the Claim and is
		 The security of the tenure held at the time of	not affected by the Claim. Aboriginal Heritage sites within the tenement (Site Numbers WO
		reporting along with any known impediments to	2442, 2447, 2448, 2451, 2452 and 2457) are not affected by current mining practices. Third
		obtaining a licence to operate in the area.	party royalties are payable on the tenement. A Royalty is payable under Royalty Deed
			M39/411, 412, 413 based on a percentage of deemed revenue (minus allowable costs) on gold
			produced in excess of 160,000 ounces. A Royaltyispayable based on apercentage ofproceeds
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Criteria	JORC Code explanation	Commentary
		of sale or percentage of mineral value. All production is subject to a Western Australian state
		government NSR royalty of 2.5%.
		 The tenement is ingood standingand the licence to operate alreadyexists
Exploration	 Acknowledgment and appraisal of exploration by	 Mount Martin carried out exploration including RAB and RC drilling in 1989. This along with
done by other	other parties.	ground magnetics was used to delineate a number of anomalies on islands to the immediate
parties		north and south of Red October. Mount Burgess Gold Mining identified a north east trending
		magnetic anomaly on Lake Carey between the islands considered analogous to Sunrise Dam
		in 1993. Aircore and RC drilling was carried out to define what would become the Red October
		pit. Sons of Gwalia entered into a joint venture with Mount Burgess, carrying out RC and
		diamond drilling to define a pittable reserve before purchasing Mount Burgess' remaining
		equity. Extension RC and diamond drilling from within and around the pit defined the
		potential underground resource.
Geology	 Deposit type, geological setting and style of	 Red October gold mine is situated within an Archaean greenstone belt of the Laverton
	mineralisation.	Tectonic Zone. The stratigraphic sequence consists of footwall tholeiitic basalts, mineralised
		shale (containing ductile textures defined by pyrite mineralisation) and a hanging wall
		dominated by ultramafic flows interbedded with high-Mg basalts. Prenhite- pumpellyite facies
		are evident within both the tholeiitic basalts and komatiite flows. Sulphide mineralisation is
		hypothesised to have been caused from interaction with an auriferous quartz vein, which has
		caused the intense pyrite-defined ductile textures of the shale in the upper levels. The fluid is
		believed to have been sourced from the intruding granitoid to the (grid) south of the deposit.

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	Criteria	JORC Code explanation	Commentary
	Drill hole	 A summary of all information material to the	 All material data is periodically released on the ASX:07/12/2016, 07/09/2016,	27/07/2016,
	Information	understanding of the exploration results including	11/05/2016, 25/05/2015, 0/03/2015,25/05/2015,16/01/2014,14/10/2013,	23/07/2013,
		a tabulation of the following information for all	17/04/2013, 25/01/2013, 14/06/2012, 27/04/2012, 28/07/2011, 03/06/2011
		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	 All significant intercepts have been length weighted with a lower cut-off Au grade of 2.5ppm.
	aggregation	averaging techniques, maximum and/or minimum	No high grade cut is applied.
	methods	grade truncations (eg cutting of high grades) and	 Intercepts are aggregated with minimum width of 1 m and maximum width of 3m for internal
		cut-off grades are usually Material and should be	dilution. Where stand out higher grade zone exist with in the broader mineralised zone, the
		stated.	higher grade interval is reported also.
		 Where aggregate intercepts incorporate short	 No metal equivalents are reported.
		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 geometry of the mineralisation is highly variable and the complex nature of the ore bodies
	between	the reporting of Exploration Results.	makes the definitive calculation of true thickness difficult. Drilling has been orientated to
	mineralisation	 If the geometry of the mineralisation with respect	intersect the various ore bodies at most optimum angle where possible. This has not always
	widths and	to the drill hole angle is known, its nature should be	been achieved. Where holes have drilled parallel to or within a lode, additional holes have
	intercept	reported.	been drilled at a more suitable orientation to account for the poor angle.
	lengths	 If it is not known and only the down hole lengths
		are reported, there should be a clear statement to
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Criteria	JORC Code explanation	Commentary
	this effect (e.g. ‘down hole length, true width not
	_known’). _
Diagrams	 Appropriate maps and sections (with scales) and	 Diagrams are referenced in the body of the release
	tabulations of intercepts 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 reporting of all Exploration	 All results have been reported.
reporting	Results is not 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,	 Dr John McLellan from GMEX Pty Ltd was contracted to carry out a stress modelling study on
substantive	should be reported including (but not limited to):	the Red October deposit. A data set of structural observations from core and field mapping
exploration	geological observations; geophysical survey	was compiled and used to create a three dimensional mesh of the deposit. A series of regional
data	results; geochemical survey results; bulk samples –	scale stress fields of varying deformational stages and strengths were applied to the mesh to
	size and method of treatment; metallurgical test	predict the behaviour of the Red October deposit and highlight areas of increased stress and
	results; bulk density, groundwater, geotechnical	strain and thus likely mineralisation. Two targets were drilled in the recent RC campaign with
	and rock characteristics; potential deleterious or	results supporting John's findings. Model Earth Pty was engaged to conduct a structural
	contaminating substances.	review of the Red October camp area in May 2015. Several local and regional scale targets
		were identified for follow-up.
Further work	 The nature and scale of planned further work (eg	 Red October is currently under review.
	tests for lateral extensions or depth extensions or
	large-scale step-out drilling).
	 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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Section 3 Estimation and Reporting of Mineral Resources

(Criteria listed in section 1, and where relevant in section 2, also apply to this section.)

	Criteria	JORC Code explanation	Commentary
	Database	 Measures taken to ensure that data has not been	 Saracen utilises AcQuire software on an SQL server database to securely store and manage all
	integrity	corrupted by, for example, transcription or keying	drill hole and sample information. Data integrity protocols are built into the system to ensure
		errors, between its initial collection and its use for	data validity and minimise errors are built into the data entry and import processes.
		Mineral Resource estimation purposes.	 Data that is captured in the field is entered into Excel templates which are checked on import
		 Data validation procedures used.	into the database for errors. Assay jobs are dispatched electronically to the lab to minimise the
			chance of data entry errors. Assay results from the lab are received in CSV format and are
			checked for errors on import into the database. Data is regularly validated using the mining
			software. The data validationprocess is overseen bythe Database Administrator.
	Site visits	 Comment on any site visits undertaken by the	 The Competent Person regularly visits site (Monthly and more so when the geological work is
		Competent Person and the outcome of those visits.	more complex and demanding) to assess geological competency and ensure integrity across all
		 If no site visits have been undertaken indicate why	geological disciplines.
		this is the case.
	Geological	 Confidence in (or conversely, the uncertainty of)	 The resource categories assigned to the model directly reflect the confidence in the geological
	interpretation	the geological interpretation of the mineral	interpretation that is built using structural, mineral, and alteration geology obtained from UG
		deposit.	mapping, core logging and drill results. Confidence in the interpretation improved with
		 Nature of the data used and of any assumptions	increased data density from close-spaced grade control drilling at 20m X 20m and UG drive
		made.	mapping.
		 The effect, if any, of alternative interpretations on	 The geological interpretation has considered all available geological information from drill core
		Mineral Resource estimation.	and UG mapping. It includes rock types, mineral association as well as alteration and veining
		 The use of geology in guiding and controlling	assemblage information altered from all sources to help define the mineralised domains and
		Mineral Resource estimation.	regolith boundaries.
		 The factors affecting continuity both of grade and	 The geological wireframes defining the mineralised zones are considered to be robust.
		geology.	Alternative interpretations were trialled earlier and had a negative effect on the estimation
			process with zones becoming less robust.
			 The wireframed domains are estimated as hard boundaries during the Mineral Resource
			Estimation. They are constructed using all available geological information (as stated above)
			and terminate along known structures. Mineralisation styles, geological homogeneity, and
			grade distributions for each domain (used to highlight any potential for bimodal populations)
			are all assessed to ensure effective estimation of the domains.
			 "Grade continuity is affected by both structural and lithological controls. Higher grades
			(nuggetty gold)are associated with vertical N-S striking (mine) quartz breccia structures
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	Criteria	JORC Code explanation	Commentary
			plunging along the northern contacts of NE (mine) dipping fault zones. Where these zones
			interact with the main Shale contact, high grade shoots tend to occur with steep northerly
			plunges internal of the shale contact. Structurally the quartz breccia and shale units are offset
			bythe NE dippingfault zones."
	Dimensions	 The extent and variability of the Mineral Resource	 Mineralization at Red October occurs over 900m along strike and to a depth of 700m.
		expressed as length (along strike or otherwise),	Mineralization is hosted in vertical quartz breccia zones as well as where they intersect the
		plan width, and depth below surface to the upper	primary host of graphitic black shales sitting on a Mafic/ultramafic contact. Inside the primary
		and lower limits of the Mineral Resource.	ore zone ore is seen as nuggetty visible gold and moving away from these zones mineralization
			is patchy with continuity along strike of between 5-20m and sub mineralization outside zones
			of silica flooding/brecciation.
	Estimation and	 The nature and appropriateness of the estimation	 The mineralised ore domains were wireframed based on geological homogeneity, grade
	modelling	technique(s) applied and key assumptions,	populations, mineralisation styles and orientation of grade continuity. The domain wireframes
	techniques	including treatment of extreme grade values,	were estimated as hard boundaries during the estimation process. RAB, Air-core and grab
		domaining, interpolation parameters and	samples were excluded from the estimation process due to the unreliability of results.
		maximum distance of extrapolation from data	Negative gold grades were replaced with a grade of 0.001 g/t and null gold grades were
		points. If a computer assisted estimation method	excluded from the estimation process. Drillhole assays were composited to 1m intervals with a
		was chosen include a description of computer	minimum length of 0.3m that best conformed to the sample length of the majority of the
		software and parameters used.	RC/DD data. High grades within each domain were identified and top cuts were applied where
		 The availability of check estimates, previous	necessary. Variograms were produced to determine the directional influence of each sample
		estimates and/or mine production records and	during the estimation process. The Mineral Resource Estimate was interpolated using
		whether the Mineral Resource estimate takes	Ordinary Kriging in Micromine.
		appropriate account of such data.	 The Mineral Resource Estimation is checked against the previous block model estimations and
		 The assumptions made regarding recovery of by-	reconciled production numbers.
		products.	 No assumptions have been made regarding the recovery of by-products for this Mineral
		 Estimation of deleterious elements or other non-	Resource Estimation.
		grade variables of economic significance (eg	 No estimation of deleterious elements or non-grade variables is required.
		sulphur for acid mine drainage characterisation).	 The model has been created using a parent cell size of 2.5m (East- West) x 10m (North-South)
		 In the case of block model interpolation, the block	x 10m (vertical). Sub-cells have been used to a resolution of 0.25m x 1 m x 1 m to ensure high
		size in relation to the average sample spacing and	resolution at ore boundaries. The search distances are variable and are adjusted according to
		the search employed.	the directional ranges calculated from the variograms, and the geological understanding of Au
		 Any assumptions behind modelling of selective	and geometry continuity for each domain. Search ellipsoids are variable and reflect individual
		mining units.	domain conditions and are extended in later search asses with a decreased number of
			minimum samples where data is sparse.
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	Criteria	JORC Code explanation	Commentary	Commentary
		 Description of how the geological interpretation		No assumptions have been made regarding the modelling of selective mining units for this
		was used to control the resource estimates.		Mineral Resource Estimation.
		 Discussion of basis for using or not using grade		No assumptions have been made regarding the correlation between variables for this Mineral
		cutting or capping.		Resource Estimation.
		 The process of validation, the checking process		Mineralised domains were wireframed within the context of the known local and structural
		used, the comparison of model data to drill hole		geology which was supported by the geological mapping UG and the geology logging of
		data, and use of reconciliation data if available.		drillholes. Correlations between rock type, texture, alteration, and gold mineralisation were
				investigated.
				Samples with extreme high grades that bias the mean grade and positively skew the grade
				population within each mineralised domains are top cut to reduce the influence high grade
				outliers. The geostatistical analysis to determine to cuts includes probability plots and the
				coefficient of variation.
				A number of statistical and visual measures are used to validate the accuracy of the
				estimation. The mean grade of the block model is compared to the mean grade of composites
				by domain. These are then further investigated by appropriate northing, easting and bench
				intervals in the form of swathe plots. The volume variance between the wireframed domains
				and block model domains are assessed. Kriging efficiency, and slope results give an indication
				of the quality of the estimate. A visual inspection of the drill hole assay results are compared
				to the estimated block model in section.
	Moisture	 Whether the tonnages are estimated on a dry		Tonnages are estimated on a dry basis.
		basis or with natural moisture, and the method of
		determination of the moisture content.
	Cut-off	 The basis of the adopted cut-off grade(s) or		A cut-off grade of 2 g/t was chosen after economic considerations for the reporting of the Red
	parameters	quality parameters applied.		October Mineral Resource
	Mining factors	 Assumptions made regarding possible mining		No assumptions have been made as to possible mining methods or dilution factors due to the
	or assumptions	methods, minimum mining dimensions and		variable nature of the dip and thickness of the ore body. Current mining methods employed at
		internal (or, if applicable, external) mining		Red October utilize both air legging and long hole production rigs and is determined by ore
		dilution. It is always necessary as part of the		body dimensions. Dilution is calculated using a low grade wireframe encompassing the ore
		process of determining reasonable prospects for		domains which typically grades at 0.01 g/t.
		eventual economic extraction to consider
		potential mining methods, but the assumptions
		made regarding mining methods and parameters
		when estimating Mineral Resources may not
		always be rigorous. Where this is the case, this
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Criteria	JORC Code explanation	Commentary
	should be reported with an explanation of the
	basis of the mining assumptions made.
Metallurgical	 The basis for assumptions or predictions	 Red October has a variable recovery in certain zones dependant on the mineralized host. The
factors or	regarding metallurgical amenability. It is always	lowest recoveries are in domain 110, which has a high refractory component with most ore
assumptions	necessary as part of the process of determining	locked in arsenopyrite, and in the unbreacciated primary shale unit which has recorded up to
	reasonable prospects for eventual economic	2% active carbon causing it to have a preg robbing nature. Both are between 45-65% recovery.
	extraction to consider potential metallurgical	The quartz breccia has a high gravity gold component and most mineralization hosted in pyrite
	methods, but the assumptions regarding	with recoveries varying between 80-93%. The average recovery applied to Red October and
	metallurgical treatment processes and	seen through the mill is 84%.
	parameters made when reporting Mineral
	Resources may not always be rigorous. Where
	this is the case, this should be reported with an
	explanation of the basis of the metallurgical
	assumptions made.
Environmental	 Assumptions made regarding possible waste and	 Waste rock characterisation has been conducted on the deposit with no environmental issues
factors or	process residue disposal options. It is always	identified except dispersive oxidised material and waste dump construction plan in place to
assumptions	necessary as part of the process of determining	manage. Tailings from the deposit are stored in an appropriate licensed tailings facility and
	reasonable prospects for eventual economic	closure plan in place at Carosue Dam.
	extraction to consider the potential
	environmental impacts of the mining and
	processing operation. While at this stage the
	determination of potential environmental
	impacts, particularly for a greenfields project,
	may not always be well advanced, the status of
	early consideration of these potential
	environmental impacts should be reported.
	Where these aspects have not been considered
	this should be reported with an explanation of the
	environmental assumptions made.

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	Criteria	JORC Code explanation	Commentary
	Bulk density	 Whether assumed or determined. If assumed, the	 The bulk densities for Red October were determined via testing of representative intervals
		basis for the assumptions. If determined, the	from diamond drill holes, regular sampling via grab samples from the pit development. The
		method used, whether wet or dry, the frequency	sample size is generally between 0.5 and 1.5kg and the method of calculation is the water
		of the measurements, the nature, size and	displacement technique. Measurements have been recorded in the acquire database and
		representativeness of the samples.	extraction schemes pair this data with the major lithology code for statistical analysis.
		 The bulk density for bulk material must have been	 Ore zones predominantly exist in fresh non porous material, so additional measures to reduce
		measured by methods that adequately account	moisture intake during the water displacement method is unnecessary at this stage. Coating
		for void spaces (vugs, porosity, etc), moisture and	more friable oxides and sediments (to reduce moisture loss or moisture gain during the
		differences between rock and alteration zones	process) is considered on a deposit by deposit basis.
		within the deposit.	 An average mean of densities collected for each lithological type has been uniformly applied
		 Discuss assumptions for bulk density estimates	to the modelled geological units. The oxide and transitional zones have an assumed density
		used in the evaluation process of the different	based on regional work in similar deposits and general goldfields region
		materials.
	Classification	 The basis for the classification of the Mineral	 Resource classifications were defined by a combination of data; drill hole spacing, estimation
		Resources into varying confidence categories.	quality (search pass, Kriging Efficiency and Slope results), geological confidence and Au
		 Whether appropriate account has been taken of	continuity of domains. Based on these factors hard boundaries were wireframed for
		all relevant factors (ie relative confidence in	measured, indicated and inferred material. Measured material exhibits high confidence
		tonnage/grade estimations, reliability of input	defined by development drives and closed spaced GC drilling, with estimates in the first search
		data, confidence in continuity of geology and	and Kriging Efficiency and Slope results >80%. Indicated material is defined by close spaced
		metal values, quality, quantity and distribution of	drilling, having good geological continuity along strike and down dip and in such is reflected
		the data).	with good KE and Slope results. Inferred classification is given to the estimate outside the
		 Whether the result appropriately reflects the	mineable area with more sparse drill intercepts (>25m X 25m) and having poorer estimation
		Competent Person’s view of the deposit.	quality.
			 All relevant factors have been taken into account and are validated through thorough QAQC
			of the drill hole database and geological knowledge and interpretation of the Red October
			deposit. Thorough model validations and reviews ensure the integrity of the final estimation
			and the grade and tonnage numbers.
			 The reviewing process allows the Competent Person's to assess and sign off on the model.
	Audits or	 The results of any audits or reviews of Mineral	 At the completion of resource estimation Saracen Gold Mines undertake an extensive review
	reviews	Resource estimates.	of the model that covers model inventory and comparisons to previous models. Geological
			interpretation, wireframing, domain selection, statistics by domain, assay evaluation, parent
			cell sizes, data compositing, variography, search strategy, estimation and Kriging
			Neighbourhood Analysis and finally model validation and resource categorisation are all
			discussed and scrutinised bythegeological and mineplanningteams.
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Criteria	JORC Code explanation	Commentary
Discussion of	 Where appropriate a statement of the relative	 The Mineral Resource has been reported in accordance with the guidelines of the 2012 edition
relative	accuracy and confidence level in the Mineral	of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore
accuracy/	Resource estimate using an approach or	Reserves. Saracen Gold Mine uses a standard approach to resource estimation and the
confidence	procedure deemed appropriate by the Competent	procedure requires the systematic completion of the Saracen Resource Estimation Document
	Person. For example, the application of statistical	that is thoroughly investigated and assessed in the Model review process, as stated above.
	or geostatistical procedures to quantify the	 The statement relates to global estimates.
	relative accuracy of the resource within stated	 Previous Mineral Resource estimates have had on average a positive reconciliation against mill
	confidence limits, or, if such an approach is not	figures
	deemed appropriate, a qualitative discussion of
	the factors that could affect the relative accuracy
	and confidence of the estimate.
	 The statement should specify whether it relates to
	global or local estimates, and, if local, state the
	relevant tonnages, which should be relevant to
	technical and economic evaluation.
	Documentation should include assumptions made
	and the procedures used.
	 These statements of relative accuracy and
	confidence of the estimate should be compared
	withproduction data, where available.

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