REACH RESOURCES LIMITED — Capital/Financing Update 2016

Dec 7, 2016

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ASX ANNOUNCEMENT/MEDIA RELEASE

8th December 2016

CERVANTES ANNOUNCES PLANS TO FAST-TRACK ALBURY HEATH GOLD PROJECT

HIGHLIGHTS:

• New studies have identified opportunities for early stage development of a historic, high grade gold mine

• Near term production options with heap leach or toll treating.

• Last published Historical Resource Estimate of 146,000t @ 2.44 g/t Au

• Numerous other published and unpublished Historical Resource Estimates demonstrate potential for upside by using higher gold prices.

• Previous feasibility studies showed positive results.

• Current gold price offers quick pay-back opportunity.

• Ideally located in leading WA mining region.

• Exploration upside within mine area and five new surrounding permit applications.

• Native Title agreements completed.

Cervantes Corporation Limited (ASX: CVS, “Cervantes” or “the Company) is pleased to announce that it has identified an opportunity to develop the recently acquired Albury Heath Gold Mine (see ASX announcement 10 October 2016) in the highly sought after Meekatharra area of Western Australia.

Examination by Cervantes of historical data associated with the Albury Heath Gold Mine has identified several phases of Historical Resource Estimates, the latest published example in 2009 being 146,000 tonnes at 2.44g/t Au. Numerous other Historical Resource Estimates - both published and unpublished - from 1988 through 2009, have been undertaken by previous tenement holders. This has demonstrated sizeable potential upside as all previous Estimates were completed using gold prices significantly lower than the current prevailing price.

None of these Historical Resource Estimates are in compliance with the JORC 2012 code due to the age of the drilling upon which the Estimates were based. Cervantes therefore plans to carry out a brief exploration programme, to provide greater certainty of the size and grade of deposit, to provide fresh material for metallurgical testing and to test depth extensions to the existing mineralisation.

Substantial feasibility work, including Resource modelling, pit design, metallurgy and processing has been carried out by previous tenement holders, however all of this work was based upon lower gold price assumptions than would be applied today – use of a higher gold price may provide scale and allow for expansion of the optimum pit shell.

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Furthermore, previous feasibility work was carried out on the assumption of a dedicated plant being constructed on site as no nearby toll treatment options were available at the time of those studies.

That situation has now changed significantly, with a higher gold price, and the potential current day availability of toll treating options offering several options that Cervantes plans to explore. These opportunities include heap leach processing of the near surface gold in place at Albury Heath or transporting the ore to a nearby mill.

Initial discussions have been undertaken with a nearby mill operator, and it has been assessed that the mill may have the capacity to treat Cervantes’ ore.

It should be noted that drilling at Albury Heath was undertaken up to 1988, and all subsequent Historical Resource Estimates and feasibility studies were based upon that drilling. Little modern exploration has been undertaken in the region since. Therefore, having identified the opportunity at Albury Heath, Cervantes has also applied for five surrounding PLs in order to expand its exploration footprint in search of additional resources.

Cervantes has also secured all of the original exploration, drilling, Resource modelling and feasibility databases, providing a short cut to allow it to take advantage of the untapped potential within the P51/2397 licence surrounding Albury Heath and the early development opportunities.

Cervantes Executive Chairman, Collin Vost, said that the Company had been able to successfully pull all the data relating to Albury Heath together for the first time.

“It took a lot of research and hard work by Cervantes and its consultants , but we now have a fantastic historic record of all the mining and exploration data pertaining to the licence area and this has allowed us to identify a real opportunity to develop this high-grade, relatively easy-to-mine resource,” Mr Vost said.

Cervantes is now undertaking detailed planning for the new drilling and metallurgical studies to confirm the best development options.

Background

The tenement (P51/2397) is located approximately 23 km SE of the mining town of Meekatharra in Western Australia.

The historic mine is located within a region that has received a recent upsurge in gold activity with a number of recent exploration successes, including:

Doray Minerals Ltd is carrying out extensive exploration in the area to feed its Andy Well Mill and recently quoted: “The high-grade Wilber Lode gold deposit was discovered at Andy Well by Doray in March 2010, has been in production since August 2013, and is currently the highest grade gold operation in Australia.”

MetalsX continues to feed its Bluebird Mill to the North West of Albury Heath from extensive exploration in the geographical area.

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Thundelarra Ltd has been obtaining exciting drilling results from its Garden Gulley program in Meekatharra to the North West of Albury Heath, but more importantly, their project adjoins Cervantes’ Permit E63/1721. On the 29[th] July 2016 Thundelarra announced “Exceptional Gold Grades” at its Garden Gully prospect.

Canadian listed Monument Mining (TSX-V: MMY) has recently acquired the mothballed Burnakura gold mine and plant, 23km from Albury Heath. Previously owned and operated by KGL Resources, Burnakura was closed due to issues with underground recoveries. Monument is currently undertaking an extensive exploration program to define sufficient shallow ore in the region to justify reopening of the plant as a mixed CIL, heap leach operation.

Access to Albury Heath is good, with high quality sealed road from Perth and Kalgoorlie to Meekatharra, with only a short extent of good quality gravel road into the project area. The project can therefore be regarded to be readily accessible under most circumstances.

Mining

The Albury Heath gold mine was discovered by prospector/miner Richard Lee in 1948 who worked the mine until 1957. The recorded production for this period is 1,429 tonnes of ore mined to yield 60.53 kg of fine gold at an average grade of 42.2 g/t Au. Further mining in 1976 of 410 tonnes yielded 8.18 kg of gold at a recovered grade of 20 g/t Au.

WA State Government State Battery Records from Meekatharra show that the head grade of the ore being milled was up to 94.5 g/t Au. These figures for both production periods at Albury Heath Gold Project show a total of 1,839 tonnes being treated at a head grade of 47.8 g/t Au for an average recovery of 37.1 g/t Au.

Gold mineralisation begins near surface, with historic drilling identifying a high-grade mineralised zone extending to beyond 100m below surface, and still open at depth. Historical Resource Estimates however only included mineralisation down to 55m depth on the basis of the optimal pit shell designed at the time. Cervantes is considering an early examination of that deeper potential as higher gold price assumptions may allow for deepening of the previous pit shells.

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Potential cash flow from this project will be used to further explore the Meekatharra permits and pursue more advanced and larger Gold projects, some of which are currently under consideration.

New York Securities PL (AFSL 317392), a Perth based Stockbroker has been appointed Lead Manager to place the shortfall of a recent Rights Issue at 1 cent per share, and is currently communicating with individual investors, sophisticated Investors and other stock brokers in Australia, New Zealand and Singapore in accordance with the Prospectus. Interested parties should contact New York Securities PL on 61 8 9363 1700 or info@nysecurities.com.au

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Historical Resource Estimates

The table below summarises the historical estimates which are applicable to the project.

Report Title	Report Source	Classification	Tonnes	**Gradeg/t **	Oz Au
Prefeasibility study of Meekatharra Operations Giralia Resources NL May12 1988	Company Report Open File – WA DME	Pre-JORC Geological Resource	99,920	3.53	11,341
Independent Geologist’s Report and Valuation of Mineral Assets – Albury Heath Project. 23 Feb 2003,	Allen J Maynard, prepared for Canaustra Resources Inc Unpublished	JORC 1999 Measured Indicated Total	26,600 137,900 164,500	4.16 2.64 2.87	3,500 11,700 15,200
Resource Estimate and Scoping Study- Albury Heath July 2006	Snowden Mining Industry Consultants. Prepared for Mr Les Woolcock Unpublished	Unclassified	158,069	2.31	11,740
Resource Update – Albury Heath June 2009	Snowden Mining Industry Consultants – Prepared for Continental Resources Unpublished	JORC 2004 Indicated Inferred Total	46,000 100,000 146,000	2.52 2.40 2.44	11,454
Albury Heath Gold Project. Murchison WA August 2009	J.J.G Doepel, Continental Resource Management. Unpublished	Indicated Inferred Total	280,000 190,000 475,000	1.8 1.6 1.7	25,950

Categories of Mineralisation

Cervantes believes that the categories of mineralisation reported in the Historical Resource Estimates shown in the above table in years 2003 and 2009 are similar to those detailed in the JORC 2012 code. Cervantes therefore believes these Historical Resource Estimates provide reasonable guidance as to the potential of the project under various operating assumptions.

The Historical Resource Estimate outlined in 1988 was before the JORC code came into common use and so this classification is no longer regarded as relevant or reliable.

The Historical Resource Estimate outlined by Snowden in 2006 was undertaken for a private individual without the requirement for publishing on the ASX and so was not classified.

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Relevance and Materiality

The Historical Resource Estimates are both relevant and material to Cervantes as they will represent 100% of the potential resources currently under the control of Cervantes.

Reliability

All of the Historical Resource Estimates detailed in the above table, were based upon the same drilling information completed by Giralia and previous companies through to 1988.

Apart from the first Historical Resource Estimate, completed by Giralia in 1988, all subsequent Historical Resource Estimates were completed by reputable and professional consultants. Cervantes believes that these Historical Resource Estimates and other associated work programs were undertaken professionally and in accordance with industry best practice. As a result, Cervantes regards these Historical Resource Estimates to be reliable.

Details of Previous Work Programs

Details of previous work programs that led to Historical Resource Estimates are as follows:

1. Giralia 1988. Giralia Resources NL completed a Prefeasibility Study related to the combined exploitation of several small deposits, jointly referred to as its “Meekatharra Operations”. These included the Albury Heath, Wanganuie Main and Wanganuie North deposits.

Giralia’s Historical Resource Estimate at Albury Heath was based upon 111 RC, RAB and Diamond drill holes (for 6,328m) completed by Giralia and by the previous tenement operator Australian Consolidated Minerals (ACM). Giralia carried out several phases of metallurgical testing to explore both heap leap and CIP options.

Giralia’s Historical Resource Estimate was calculated by older manual non-computer means, and the report did not include reference to a lower cut-off grade or gold price. However is was noted elsewhere in the report that a gold price of A$600/oz (approx US$400/oz at the exchange rate of the day) was used in economic calculations.

1. Maynard, 2003 . A.J Maynard completed an “Independent Geologist’s Report and Valuation” on Albury Heath for Canadian company Canaustra Resources Inc, which was examining a purchase of the project. This purchase did not proceed and so this report was not submitted to the WA DME.

Maynard examined and verified the Giralia database and recalculated the Resource Estimates on a “reasonable and conservative” basis, within the JORC code requirements of the day. However, no twin holes were drilled.

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Maynard’s Historical Resource Estimate was made with a lower cut-off of 1g/t Au. Maynard did not state what gold price assumption was used in the Estimate however it is noted that the gold price at the time of publication of the report was US$350/oz

1. Snowden, 2006 . Snowden Mining Industry Consultants completed a Resource Estimate and Scoping Study of the Albury Heath deposit for Mr.Les Woolcock. As Mr. Woolcock was a private individual, the report was not written for public release via the ASX and contains no reference to the JORC code.

Snowden based its work only upon the same drilling database developed by Maynard that was in turn based upon the drilling and metallurgical testing completed by Giralia and previous companies. No additional field work was undertaken, and no attempt was made to verify the previous work.

The basis of this work was largely a re-modelling of the existing drilling database provided by Maynard, with more detailed modelling of pit designs and mining methodologies.

This Historical Resource Estimate was completed with a lower cut-off of 0.4g/t Au and a variety of top cuts. A gold price of US$800/oz was assumed.

This Historical Resource Estimate cannot be considered to be compliant with the JORC code of the day as it no classifications or JORC compliance were discussed.

1. Snowden 2009 . Snowden Mining Industry Consultants updated its previous 2006 Resource Estimate for new owner Continental Resources. This Historical Resource Estimate differed only marginally from Snowden’s previous work, with modifications made to account for historical mining and more detailed information related to weathering.

Snowden stated that this Historical Resource Estimate was calculated in compliance with the JORC 2004 code.

1. Doepel 2009 . Continental Resource Management (CRM) completed a review of previous work and recalculation of an Historical Resource Estimate for Albury Heath.

No further drilling work was undertaken and similar gold price assumptions and low cut-offs were used to previous Estimates, and yet a very different and substantially larger Historical Resource Estimate was arrived at.

It is understood that the work was undertaken for a private client and not intended for public release on the ASX. Therefore while Doepel broke the Historical Resource Estimate down into Indicated and Inferred categories, it was not specifically stated that these were in compliance with the JORC 2004 code.

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Doepel argued that his Historical Resource Estimate was significantly larger than previous Estimates as a result of several factors:

• Previous estimates did not contain all mineralisation along strike.

• Some previous estimates used a drill database that coded stoped intersections as nil grade, rather than “missing sample” thereby diluting the model grade.

• Previous models applied a variety of top-cuts assay data according to the defined zone of mineralisation rather than statistical analysis.

None of these factors have yet been verified or fully examined.

Work Programs

Cervantes plans to undertake exploration work programs designed that may, if successful, move these Historical Resources Estimates into compliance with the JORC 2012 code.

The work program may include:

• Examination and verification of the historical drill databases and Resource model files and entering into a current data base managed by Cervantes.

• Re-run Resource models using higher (current) gold prices to examine impacts on optimum pit size and shape and Resource size.

• Plan and complete a drilling program to examine three issues:

• Twin drilling required to comply with JORC 2012 code

• Collect new metallurgical samples from a variety of ore types

• Test possible extensions at depth.

It is expected that these programs will be completed within the next 12 months.

Cautionary Statement

The estimates are Historical Estimates and are not reported in accordance with the JORC 2012 Code. A qualified person has not completed sufficient work to classify these Historic Mineral Resources as Current Mineral Resources in compliance with the JORC 2012 code. Cervantes plans to carry out an exploration program on the tenement, but it is uncertain that such a program will allow reporting of a Current Resource at Albury Heath in compliance with the JORC 2012 Code.

More information

No more recent information or estimates than the reports described in the table are available.

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Competent Persons Statement

The information contained in this report that relates to the summarising of Historical Resource Estimates is based on information compiled by Mr. Bradley George, a competent person who is a member of the Australian Institute of Geoscientists. Mr. George is an employee of Total Earth Solutions Pty Ltd and consults to Cervantes Gold on a part time basis. Mr. George has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken 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.

Mr. George attests that the information in this announcement related to Historical Resource Estimates is an accurate representation of the available data and studies for the Albury Heath project. Mr.George consents to the inclusion in the report of the matters based on this information in the form and context in which it is appears.

For further information, please contact:

Collin Vost Executive Chairman Cervantes Corporation Ltd Telephone +61 8 6436 2300 Email: admin@cervantescorp.com.au

Media

Colin Hay PPR colin.hay@ppr.com.au +61 9388 0944

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