REACH RESOURCES LIMITED — Capital/Financing Update 2018

May 13, 2018

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ASX ANNOUNCEMENT/MEDIA RELEASE

14 May 2018

Resource Drilling Campaign at Albury Heath Completed

HIGHLIGHTS

• Cervantes has successfully concluded its inaugural drilling campaign at Albury Heath

• The drilling aimed to confirm, better define, and expand the Inferred Gold Resource

• 29 Reverse Circulation (RC) drill holes for 1,882m completed, two more holes than planned

• Gold assaying awaited

Cervantes Corporation Limited (ASX: CVS , the Company ) wishes to advise that its inaugural drilling campaign at the Albury Heath Project has been completed.

The Albury Heath tenement package (P51/2937, P51/2997 - 3001) is located approximately 23 kilometres South East of the mining town of Meekatharra in Western Australia (Figure 1) .

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Photo 1 . Drilling at Albury Heath. The old shaft is seen in the top left. This hole tested a previously drilled but poorly sampled stope position.

The Albury Heath Mine is an historic underground operation in P51/2937. Gold mineralisation is hosted by a series of sheeted quartz vein sets, only the highest grade of which was mined previously during two phases of activity. From 1948 to 1957, 1,429 tonnes of ore was extracted at

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a grade of 42.2g/t gold. A second phase in 1976 extracted 410 tonnes at a recovered grade of 20g/t gold. The project was strategically acquired by the company for its near term production potential.

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Continental Resource Management (CRM) estimated a Maiden JORC Resource of Indicated and Inferred Resources of 390,000t at 2.15g/t Au, for a total of 27,000oz of contained gold above a cut-off grade of 0.5g/t Au (Table 1, ASX announcement 7 February 2017).

Photo 2 . Meekatharra area quartz hosted gold (~2mm across).

CRM identified several sampling issues of in-ground voids (historic quartz hosted gold (~2mm stopes) that may have an impact on their resource estimate. In across). addition, possible untested extensions of the mineralisation have been recognised that may lead to additional resource potential.

Collar locations and geometries for completed holes are shown in Table 2, while locations are shown in Figure 2. The drilling programme assessed the potential gold resource upside by testing:

• 1) Down dip potential. The mineralisation is open and shows no signs of abating at depth,

• 2) Up dip potential. Near surface mineralisation has been inadequately sampled in past drilling. Increasing this area of the resource will bolster the economics of open pit mining, and

• 3) Sampling of the potentially mineralised footwall to historic underground stopes. These were inadequately sampled by past drilling. That drilling indicated that the stopes have an envelope of mineralisation on the hanging wall and also, where tested, on the footwall.

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Photos 3 – 5. Scenes from the just completed drilling campaign at Albury Heath.

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Figure 1. Location, Albury Heath Project, WA

	Tonnes	Grade(g/t)	Au(ounces)
Indicated	300,000	2.25	21,500
Inferred	90,000	1.9	5,500
Totals	390,000	2.15	27,000

Table 1 . Resource Summary – above lower cut off of 0.5g/t

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While the results and conclusions from this drilling are yet to be finalised, in-field observations indicate that, at a geological level, the programme’s aims were met.

	Easting**GDA94 **	Northing**GDA94 **	Depth(m)	Azimuth(TN)	Dip
Hole ID
AHP111	656513	7035955	24	300o	60o
AHP112	656473	7035952	50	300o	60o
AHP113	656472	7035976	30	300o	60o
AHP114	656499	7035985	70	300o	60o
AHP115	656509	7035980	84	300o	60o
AHP116	656478	7036021	30	300o	60o
AHP117	656535	7035985	84	300o	60o
AHP118	656508	7036015	84	300o	60o
AHP119	656497	7036034	36	300o	60o
AHP120	656522	7036020	84	300o	60o
AHP121	656543	703610	84	300o	60o
AHP122	656491	7036066	20	300o	60o
AHP123	656496	7036059	45	300o	60o
AHP124	656503	7036053	30	300o	60o
AHP125	656520	7036044	84	300o	60o
AHP126	656541	7036033	110	300o	60o
AHP127	656500	7036072	40	300o	60o
AHP128	656509	7036068	50	300o	60o
AHP129	656522	7036059	78	300o	60o
AHP130	656536	7036060	96	300o	60o
AHP131	656520	7036078	50	300o	60o
AHP132	656508	7036097	30	300o	60o
AHP133	656556	7036090	100	300o	60o
AHP134	656545	7036122	120	300o	60o
AHP135	656553	7036068	65	300o	60o
AHP136	656569	7036129	90	300o	60o
AHP137	656610	7036175	66	300o	60o
AHP138	656473	7036093	28	120o	60o
AHP139	656473	7036093	120	120o	70o

Table 2 . Drill hole statistics, RC drilling at Albury Heath. Co-ordinate system used is MGA / GDA94, Zone 50. RL data not presented as of insufficient accuracy at this stage. The area is generally flat.

Going Forward

Drill samples are in the process of being prepared for submission for gold assaying. Sample preparation and assaying will likely take in excess of six weeks.

Cervantes will report on the results once they are to hand. Once all relevant information with regard to this drilling campaign is finalised, a JORC Table 1 will be issued.

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Figure 2. Drilling Location, 2018 drilling, Albury Heath Project, WA. Grid is GDA94, Zone 50.

Geological logging will be incorporated into the model for Albury Heath to better understand both the controls on gold mineralisation and the potential for further expansion of the gold resource.

It is planned, on the basis of assay results, to undertake initial metallurgical testing of the composited material from the mineralised zones defined by this drilling. That work will provide an analysis of gold particle sizing and liberation characteristics to enable an economic model to be constructed.

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In addition, re-modeling of the resource estimate may be warranted. There is no guarantee that the current drilling will either increase resource tonnages or gold grade. Any update in the modeled resource may be used to undertake pit design and pit optimisation modeling to further assess the project’s economic viability.

Cervantes expects to be in a stronger position to continue discussions with nearby mills regarding toll treatment of the ore from Albury Heath.

Competent Person’s Statement

The details contained in this report that pertain to exploration results are based upon information compiled by Mr Marcus Flis, a Director and employee of Cervantes Corporation Limited. Mr Flis is a Fellow of the Australasian Institute of Mining and Metallurgy (AusIMM) and has sufficient experience in the activity which he is undertaking to qualify as a Competent Person as defined in the December 2012 edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves” (JORC Code). Mr Flis consents to the inclusion in the report of the matters based upon his information in the form and context in which it appears.

For Further information please contact: Collin Vost Executive Chairman (08) 6436 2300 cvost@cervantescorp.com.au

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