Peninsula Mines: Excellent Metallurgy and High Grade Trenching Results for Yongwon Graphite Project - Thursday, January 12, 2017

ASX Announcement 12 January 2017

ASX Code: ARM Aurora Minerals Group of Companies Diversified Minerals Exploration via direct and indirect interests Predictive Discovery Limited (ASX: PDI) - 39.6% Gold Exploration / Development in Burkina Faso Graphite, Lithium- Gold, Silver and Base Metals Molybdenum and Tungsten Exploration in South Korea Manganese, Base metals and gold Peninsula Mines Limited (ASX: PSM) - 29.3% Aurora Western Australian Exploration - 100% Contact Details Principal & Registered Office Suite 2, Level 2 20 Kings Park Road West Perth WA 6006 Martin Pyle - Managing Director Tel: [phone] Karen Oswald - Media and Investor Relations Tel: [phone] Ken Banks - Investor Relations Tel: [phone] Website www.auroraminerals.com

PENINSULA MINES: Excellent Metallurgy and High-Grade Trenching Results For Yongwon Graphite Project in South Korea Peninsula Mines Limited, a company in which Aurora Minerals Limited holds a 29.3% shareholding, today announced it had received excellent metallurgy and high-grade trenching results from the Yongwon Graphite Project in South Korea. A copy of the announcement is attached. For further information please contact: Media Martin Pyle Karen Oswald Managing Director Marko Communications Telephone: [phone] Mob: [phone]

12 January 2017

EXCELLENT METALLURGY & HIGH-GRADE TRENCHING RESULTS FOR YONGWON GRAPHITE PROJECT, SOUTH KOREA (drilling now planned to test EM conductor from surface)

• Excellent metallurgical results produce a concentrate grade of 97% graphitic carbon
• Further metallurgical testing planned to test to spherical graphite processing potential - to feed the world's leading lithium-ion battery manufacturing market in South Korea
• High-grade trenching results of 9.7 metres grading 11.7% graphitic carbon demonstrate substantial thickness and high-grade of the Yongwon graphite deposit
• Electromagnetic survey defines a highly conductive graphitic unit over more than 400 metres of strike length, which remains open to the east and at depth
• Drilling programme planned from early Q2 to test the conductive graphitic unit with the aim to define a maiden Indicated Resource

Peninsula Mines Ltd (ASX: PSM) is pleased to announce high-grade concentrate results, averaging 97% total graphitic carbon (TGC) and 87.3% graphite recovery, from metallurgical testwork conducted on representative samples from the Company's 100% owned Yongwon Graphite Project in South Korea (see Figure 1 for location).

In addition, a high-grade trenching intersection of 9.7 metres (m) grading 11.7% TGC including 2.5m

@ 16.9% TGC and 2.45m @ 16.1% TGC has been achieved from initial trenching across the outcropping graphitic unit (see Figure 1 for location and Figure 2, graphitic rock-sample grading 16% TGC). This trenching has not yet tested the entire width of the graphitic unit (estimated to be at-least 10m wide at surface), and further trenching is planned along the strike of the unit.

A moving loop electromagnetic (MLEM or EM) survey across the Yongwon graphitic unit has also been conducted. This EM survey has been very successful, defining the highly conductive graphitic unit dipping moderately to the northeast from surface, and continuous to at-least 180m down dip and extending the strike length to >400m, open to the east (see Figure 1 and Figure 4).

Additional trenching and a drilling programme has now been planned to test the graphitic unit from surface to a depth of ~120m below surface (~200m down-dip) on 5 x 80m spaced drilling traverses. The programme will include 16 to 23 diamond drill holes (see Figure 4) for 1,100m to 1,500m and, depending on the continuity of thickness and grade of the graphitic unit, this is expected to be adequate drilling density to define a maiden Indicated Resource for the Yongwon Graphite Project. The drilling is expected to commence early in the second quarter 2017.

Peninsula CEO Jon Dugdale commented, "We are very pleased to have obtained these outstanding metallurgical graphite concentrate results and recoveries for the Yongwon Graphite Project.

"Combined with the high-grade trenching results over substantial width, and EM survey results that indicate a continuous conductive unit at depth, these results have presented a high-grade drilling target and the opportunity to define a maiden Indicated graphite resource."

New channel sampling YC0001 - 0015:

9.7m @ 11.7% TGC

inc. 2.5m @ 16.9% TGC

& 2.45m @ 16.1% TGC

Granted Tenement Boundary

Eumseong 32-1

EM conductor, open down plunge>>

40°YGC01

YGC02

25°

Figure 1: Yongwon Graphite Project, mapped graphite unit, new channel sampling results and EM conductor Inset: Close up of channel sampling locations and high-grade graphite results

Figure 2: High-grade flake-graphite sample from outcropping graphitic unit at Yongwon (16% TGCD1)

Metallurgical results produced 97% concentrate grade and 87.3% graphite recovery:

Following initial encouraging results from metallurgical testwork conducted at NAGROM laboratories in PerthD2, IMO Project Services (IMO) were commissioned to conduct further testwork aimed at generating an optimal processing flowsheet for the production of a high-grade graphite concentrate, suitable for further down-stream processing to feed the lithium-ion graphite battery anode market.

A 50 kilogram (kg) composite sample was collected from trenches and outcrops of the Yongwon graphitic unit, which averaged a calculated head-grade of 14.4% TGC.

IMO conducted multiple grinding, cleaner and flotation tests and optimised the flowsheet based on an initial coarse grind "rougher" flotation stage then 5 re-grind, cleaner and flotation stages, with the additionof reagents (e.g. Na2SiO3),to achieve an average concentrate grade based on Loss on Ignition at 1000°C (LOI1000) of 97% TGC and an overall graphite recovery of 87.3% based on TGC Leco analyser assays by NAGROM Laboratories (see Table 1 below).

Table 1: Yongwon Graphite Project final graphite concentrate results and recovery:

Size Fraction	Mass	Total Carbon	*LOI 1000°C	TGC Recovery
µm	%	%	%	%
>106	8.2%	97.6	97.9
>75	13.7%	97.8	98.2
	78.1%	96.6	96.7
Calc. Head	100.0%	96.8	97.0	87.3%

*LOI 1000°C is the most accurate method to determine Total Graphitic Carbon at high concentrations (>90% TGC)

The additional re-grind stages have resulted in a very high concentrate grade of 97% TGC, but have reduced the distribution of coarser flake material in the final concentrate. However, the high-grade of the concentrate produced from the Yongwon graphitic material indicates suitability for further down-stream processing including micronisation then spheronization to produce a spherical graphite concentrate for final purification and coating prior to lithium-ion battery anode production. Testing to determine the spheronization potential of the Yongwon graphite concentrate will commence immediately, so that a suitable sample-product can be produced for discussions with potential offtake partners in South Korea and North Asia generally.

Figure 3: Graphite flotation at NAGROM laboratories