SUREFIRE RESOURCES NL — Capital/Financing Update 2017

Jan 5, 2017

ASX Announcement

6 January 2017

VALUATIONS UNDER LR7.1A.3

KOOLINE SILVER-COPPER-LEAD PROJECT - OPTION NON-CASH CONSIDERATION

On 2 November 2016, the Company announced that it had entered into an Option and Tenement Sale Agreement to acquire the Kooline Silver-Copper-Lead Project (the Project). The Company announced it had secured a four-month exclusive option (Option), through the issue of 26,666,666 shares to the Vendor, to acquire 90% of the Project for an all scrip based consideration of 250,000,000 shares if the Company elects to proceed with the acquisition.

On 2 November 2016, the 26,666,666 Shares for the grant of the Option were issued under the Company's additional 10% placement capacity under Listing Rule 7.1A. The 26,666,666 Shares were issued at a deemed issue price of $0.0015 per share (which equates to a value of $40,000) which was greater than 75% of the 15 day trading VWAP being $0.0014 (Miraqle online) as required under Listing Rule 7.1A.3.

The directors considered whether to engage an independent expert to provide a valuation of the noncash consideration for the Option. However, the directors formed the view that they possessed the required expertise to assess the value of the non-cash consideration for the grant of the Option.

Brett Clark has 25 years experience in the mining and energy sectors in funding, operations and advisory. His extensive experience ranges from project development to operations and sales and marketing in gold, nickel, coal, iron ore, industrial minerals and upstream oil and gas across a number of continents. His experience includes the US and Asian capital markets, encompassing middle markets and structured debt, equity and mezzanine transactions. He is a Non Executive Chairman of Nelson Resources Limited.

Graeme Smith has worked in the mining industry since 1988 having held CFO and Company Secretary positions with a broad range of Mining and Resources companies, including Top 10 Australian and overseas mining companies. He has significant experience within the development and production phases of operations and also in the formation and listing of several exploration companies in the past 10 years. He is also a director of Anglo Australian Resources NL and Criterion Resources Limited.

The directors have concluded that the value of the Shares to be issued (having an assessed value of $40,000) for a four month exclusive option over the Project tenements was a fair and reasonable consideration and in the best interests of shareholders.

The Directors considered the value of the Project tenements based on a number of criteria including:

1. The future prospectivity of the tenements under option, including previous exploration workings such as Auger geochemical sampling, Rock chip sampling, IP Surveys, High resolution aeromagnetic survey, Reconnaissance RC drilling based on IP survey and exploration results.

• Multiple significant high grade rock chip results including:
  • o AKCR044: 225 g/t Ag, 45.8% Pb
  • o AKCR045: 280g/t Ag, 54.8% Pb, 0.7% Cu
  • o AKCR047: 245g/t Ag, 58.1% Pb, 1.49% Cu
  • o AKCR048: 375g/t Ag, 42.5% Pb, 3.78% Cu
  • o AKCR049: 220g/t Ag, 68.4% Pb, 0.99% Cu
  • o AKCR056: 140g/t Ag, 49.3% Pb
  • o AKCR059: 120g/t Ag, 56.5% Pb
  • o AKCR060: 580g/ Ag, 29.9% Pb
• Extensive 6km long auger soil geochemical anomaly
• >50 identified historical workings mined in 1950's

Figure 1: High Grade Rock Chip Results, Historical Mines & Auger Geochemical Target Zones Based upon this method of valuation the directors consider the Project tenements have a value in the range of $1 million to $1.5 million.

1. Valuation of the underlying tenements based on the Kilburn Geoscience Rating (KGR) Method cost based method.

The KGR Method Property multiplies the Unit Value X Area X Ratings (0.1 to 10) for four Factors. Unit value has been determined by calculating the minimum expenditure requirements for the tenements on a per square kilometre basis

Rating	Off property factor	On property factor	Anomaly factor	Geological factor
0.1				Unfavourable lithology
0.4				Generallyfavourable
0.5			Extensive previousexploration with poor results	Favourable lithology 50%)
1.0	No known mineralizationMinor workingsSeveral oldworkings Abundantworkings		No targets outlined	Favourable lithology (70%)
1.5
2.0			Several well defined targets	Favourable lithology withstructures
2.5			Several significantsubeconomic intersections
3.0				Favourable lithology withstructures along strike of amajor mine
3.5	Abundant workings/mines with significanthistorical production
4.0
5.0	Along strike from world	Major mine withsignificant historical	Several significant ore grade
10.0	class mine(s)	production	co- relatable intersections

A valuation of the Project tenements under this method is:

Method	Unit Value	Area	Factors	EstimatedValuation
KGR Method	$700/km2	90 km2	2.5 –Off Property2.5 - On property	$1.2M
			2.0 –Anomaly factor
			1.5 –Geological factor

The directors consider the KGR method of valuation to be more reliable than a valuation based upon future prospectivity. For this reason, they have adopted a value for the Project tenements of $1.2 million.

Based upon a total value of $1.2 million, the directors considered that a payment of $40,000 or 3% of the value of a Project for a four month exclusive option to be fair and reasonable.

Accordingly, the Company confirms that the deemed issue price of the Shares issued for the option was $0.0015, which is higher than 75% of the 15 day trading VWAP being $0.0014. (Source Miraqle online).

PAYMENT OF CORPORATE ADVISORY FEE

On 19 December 2016, the Company announced that it had signed a mandate with CPS Capital, on a best endeavours basis, to raise up to $500,000 by way of placement to sophisticated/professional investors via the issue of 250,000,000 fully paid ordinary shares at $0.002 per share.

Pursuant to a mandate between the Company and CPS Capital, the Company has agreed to:

• a) pay CPS Capital a fee of 6% of funds raised by CPS of the Placement (being approximately $24,000);
• b) pay CPS Capital a corporate advisory fee of $6,000 per month, in shares and payable quarterly in advance, for a period of 12 months; and
• c) issue 100,000,000 Quoted Options to CPS Capital or their nominees.

On 28 December 2016, 9,000,000 Shares at a deemed issue price of $0.002 were issued under the Company's additional 10% placement capacity under Listing Rule 7.1A previously approved by Shareholders at the Annual General Meeting held on 30 November 2016.

The Company confirms that the deemed issue price of $0.002 is higher than 75% of the 15 day trading VWAP being $0.0015. (Source Miraqle online).

Yours faithfully SUREFIRE RESOURCES NL

Graeme Smith Company Secretary