BMG Resources : Quarterly Report 31 December 2016

QUARTERLY ACTIVITIES REPORT‌ For the Quarter to 31 December 2016

• The Company completed a A$2.56m capital raising via a fully underwritten rights issue in December 2016

• BMG is now debt free with in excess of [A$1.5m] of cash reserves and is actively focussed on identifying and evaluating new investment opportunities for the Company

• Corporate costs will continue at a minimum level with current director and management fees remaining on hold (ie no charge) until a new investment opportunity is secured

• The Treasure Project in Cyprus continues to proceed under management of New Cyprus, with BMG retaining a free carried interest

During the quarter BMG Resources Limited (the Company; ASX: BMG) completed its review of strategic capital initiatives and completed a A$2.56m fully underwritten rights issue in December 2016 to retire all debt and accruals and provide working capital.

The Company is now well positioned to secure new investment opportunities and is currently reviewing a number of potential investment opportunities in the resources and non-resources sectors, and anticipates progress in the coming quarter.

TREASURE PROJECT - CYPRUS

BMG has a 30% interest in the Treasure Project in Cyprus. The Treasure Project's operator, New Cyprus Copper Company Limited (New Cyprus), is responsible for maintaining the project and continued progressing the Treasure Project during the Quarter.

The Treasure Project includes nine advanced exploration prospects where copper (+Au-Zn-Ag) was mined after 1920 and eleven other prospects where evidence of similar mineralisation is exposed. In addition, the Black Pine project area contains the Pevkos and Laxia Prospects where exposed massive sulphide veins containing very high-grade copper, nickel, cobalt and gold have been successfully drilled, and two other prospects are yet to be drilled. The Treasure Project has four project areas and currently comprises 10 licences for a total of 36.654 km2.

Figure 1: Treasure Project in Cyprus

CORPORATE

BMG remains committed to securing a new business opportunity and is well positioned to progress opportunities in the coming quarter.

Following the completion of the capital raising in December 2016 the Company has in excess of A$1.5m in cash reserves, but will continue to manage all costs very closely. The current management and directors, together with the Transcontinental Group, have agreed to hold all fees (ie no charge) until a new investment opportunity is secured.

COMPETENT PERSON'S STATEMENT

The information in this report that relates to Exploration Results and Mineral Resources of the Company has been reviewed by Malcolm Castle, who is a Member of the Australasian Institute of Mining and Metallurgy. Mr Castle has sufficient experience, which is relevant to the style of mineralisation and type of deposit under consideration and to the activity, which they are undertaking to qualify as an Expert and Competent Person as defined under the VALMIN Code and in the 2012 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Mr Castle consents to the inclusion in this report of the matters based on the information in the form and context in which they appear.

TENEMENTS

The Treasure Project, of which BMG currently owns a 30% interest, now comprises 10 exploration licences for a total of 36.654 km2.

Project	Licence number	Status	Interest (%)	Notes	Activity during the quarter
BLACK PINE	EA4589	granted	100
EA4590	granted	100
EA4591	granted	100
EA4610	granted	100	replaces EA4314
EA4612	granted	100	replaces EA4318
VRECHIA	EA4457	granted	100
KALAVASSOS	AE4607	granted	100	replaces AE4547
AE4608	granted	100	replaces AE4547
KAMBIA	EA4447	granted	100
EA4448	granted	100

ENDS

Bruce McCracken, Managing Director Fleur Hudson, Company Secretary BMG Resources Limited BMG Resources Limited

Phone: [phone] Phone: [phone]

Email: [e-mail] Email: [e-mail] Website: www.bmgl.com.au

Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report

Appendix 5B

+Rule 5.5

Mining exploration entity and oil and gas exploration entity quarterly report

Introduced 01/07/96 Origin Appendix 8 Amended 01/07/97, 01/07/98, 30/09/01, 01/06/10, 17/12/10, 01/05/13, 01/09/16

Name of entity
BMG RESOURCES LTD
ABN	Quarter ended ("current quarter")
96 107 118 678	31 December 2016

Consolidated statement of cash flows		Current quarter $A'000	Year to date (6 months) $A'000
1.	Cash flows from operating activities	-	-
1.1	Receipts from customers
1.2	Payments for	-	-
(a) exploration & evaluation
(b) development		-	-
(c) production		-	-
(d) staff costs		-	-
(e) administration and corporate costs		(75)	(100)
1.3	Dividends received (see note 3)	-	-
1.4	Interest received
1.5	Interest and other costs of finance paid	-	-
1.6	Income taxes paid	-	-
1.7	Research and development refunds	-	-
1.8	Other (provide details if material)	-	-
1.9	Net cash from / (used in) operating activities	(75)	(100)

1. Cash flows from investing activities

2. Payments to acquire:

3. property, plant and equipment - -

4. tenements (see item 10) - -

5. investments - -

6. other non-current assets - -

7. + See chapter 19 for defined terms

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