PATERSON RESOURCES LTD — Capital/Financing Update 2018

May 16, 2018

ASX ANNOUNCEMENT 17th May 2018

Hardey Pushes Forward with Exploration Across Portfolio.

Highlights:

• Drilling to extend Grace gold resource in WA's Pilbara on track to commence September quarter
• RC drilling programs planned for Hackney's Creek and Isabella gold prospects, NSW
• Environmental studies to allow resumption of mining at Lloyd's Copper Mine, NSW, progressing well
• Hardey to employ cutting edge HyLogger hyperspectral technology to improve understanding of Lloyd's ore body and guide future drilling

Hardey Resources Limited ("Hardey" or "the Company") (ASX: HDY) is pleased to provide an update on exploration activities across its portfolio in New South Wales and Western Australia. As per the ASX announcement 14 February 2018, Hardey has a significant exploration budget for the remainder of 2018. The Company has undertaken a strategic review of its assets and is planning the following exploration activities focusing on gold and copper projects within the portfolio.

Grace Gold Project, WA

Discussions are progressing for heritage surveys to be completed in June/July this year, which will enable site access and permit drilling in the September quarter. Drilling will focus on identifying extensions to the existing resource of 1.59Mt at 1.35g/t Au for 69,000oz of contained gold (see ASX release 19 February 2018).

The Grace project area is located approximately 25km south-east of the Telfer gold mine in Western Australia. Grace oxide mineralisation is variably open along strike and at depth and is associated with shallow dipping en-echelon stacked vein sets and a large vertical stockwork of hydrothermal breccias along the Grace-Bemms shear. At the Grace deposit, high grade primary gold remains open in all directions and the relationship with further high grade copper mineralisation remains prospective. Drilling is generally shallow and any deeper drilling is broad spaced. As such, many holes stop within the mineralised zone and haven't adequately tested the continuity of gold mineralisation at depth.

Figure 1. Hardey's Telfer district tenements identifying major deposits and mines overlayed with Regional Magnetics Image.

Hackney's Creek and Isabella Gold Prospects, NSW

Work programs for Hackneys Creek and Isabella, within the Company's tenements in NSW's Lachlan Fold Belt (Figure 2), continue to progress through the planning phase and are expected to take place towards for the end of 2018.

Figure 2. Location of Burraga Project, NSW. Map shows known polymetallic, copper and gold prospects projected on regional magnetic anomaly map.

Hackney's Creek has a JORC 2004 inferred resource of 2.2Mt@1.44g/t AU for 101,800oz Au (see ASX release 11 November 2016). The deposit is proximal to, and shares geological similarities with, the Lucky Draw gold mine (Figure 3), which processed 1.41Mt @ 4.2g/t Au for 191,000 ounces of gold between 1989-1992 (see ASX release 11 November 2016). The planned Hackney's Creek RC drilling program (~2000m) aims to infill previous drilling to improve model definition, whilst also testing deeper targets. Access negotiations at Hackney's Creek are close to conclusion and once finalised, Hardey plans to commence drilling. This is expected to occur in late 2018.

Figure 3. Location of Hackney's Creek gold prospect in relation to the historic Lucky Draw pit.

The Isabella gold project on EL7975 (Figure 2) returned promising geochemical soil anomalies and assay data during historic programs (see ASX release 11 November 2016). Historical data (Figure 4) is currently being used to finalise the design of two RC drilling holes, also planned for later in the year.

Figure 4. A cross section of historical drilling intercepts at the Isabella gold prospect. * The drill results reported here are from historical drilling conducted during the 1990s by RGC Ltd. Whilst EYM have no reason to doubt the quality of this data, EYM have not been able to obtain any quality assurance data to confirm the quality of this data. For more details see the attached Table 1.

Lloyd's Environmental Impact Statement

Hardey is currently progressing work on an Environmental Impact Statement (EIS) as part of its plan to resume mining activities at the historic Lloyd's Copper Mine at Burraga, NSW (Figure 2). The Company is mobilising specialists and undertaking a thorough review of all existing data and reporting in order to fast-track the progress of the EIS.

As copper prices remain strong, a strategic decision has been made to focus efforts on the Lloyd's project. Gaining environmental approval remains a priority, with the Company ultimately aiming to obtain a mining license for the Lloyd's site so as to allow the processing of existing and as yet unmined material. As part of Hardey's renewed focus on Burraga, a review of the tailing stockpiles and slag heaps at Lloyd's commenced earlier in the year, with the aim of identifying a suitable strategy for commercialising the stockpiles.

HyLogger

Global mining companies such as BHP Billiton and Rio Tinto are currently employing hyperspectral mineralogy tools such as the CSIRO's HyLogger system and AuScope's National Virtual Core Library to gain a better understanding of their deposits. Hardey is looking to emulate these companies and is engaging hyperspectral specialists to define a mineral map of the Lloyd's site.

HyLogger can use existing drill core and chips to generate a model of mineral alteration across the ore body. HyLogger data will be used in conjunction with existing GIS and geochemical data to provide a holistic model of the Lloyd's ore body and its alteration halo, thus directing future drilling programs. This type of analysis is becoming commonplace in the minerals industry as it has proved to be one of the most accurate and cost-effective exploration tools for structurally complex ore bodies such as Lloyd's.

For further information, please visit www.hardeyresources.com.au or contact:

Sarah Smith Company Secretary +61 8 6559 1792

ABOUT HARDEY RESOURCES:

Hardey Resources (ASX:HDY) is a publicly listed, junior mineral resources company focused on the exploration and development of gold and copper projects. Hardey has aggregated a diversified portfolio of assets that are at multiple stages, commodities and jurisdictions. The Burraga Copper-Gold Project, located in the world class minerals province of the East Lachlan Fold Belt in central western New South Wales consists of three contiguous exploration licences (EL6463, EL6874 and EL7975) and one exploration licence application (EL5454) covering a total area of approximately 221km². The Grace Gold Project located in the world class Paterson mineral province in Western Australia consists of one granted exploration licence and five granted prospecting licences (E45/4524, P45/2905, P45/2906, P45/2907, P45/2908, and P45/2909) with additional applications pending (E45/5130, E45/5131, E45/5132). The Company also has an extensive landholding prospective for Pilbara conglomerate-hosted gold in Western Australia, with three exploration licences (E47/3578, E47/3827, and E45/5020). Hardey is an active explorer with the aim of discovering a valuable mineral resource and delivering shareholder value.