Encounter Resources : High grade gold intersected in first Telfer West drilling

19 January 2017

Company Announcements Office Australian Securities Exchange 4th Floor, 20 Bridge Street Sydney NSW 2000

Level 7, 600 Murray Street West Perth WA 6005

PO Box 273

West Perth WA 6872

P 08 9486 9455

F 08 6210 1578

www.enrl.com.au

ASX : ENR High grade gold intersected in first Telfer West drilling

• The first two diamond holes drilled by Encounter at the Telfer West dome have intersected high grade gold mineralisation.

• Diamond drill hole (ETG0002), intersected a broad, depth extensive, zone of stockwork style gold mineralisation at the Egg Prospect including 38.6m @ 1.0g/t Au from 333m (including 4.2m @ 3.2g/t Au from 333.5m) and 36m @ 0.6g/t Au from 396m (including 3.2m @ 3.3g/t Au from 415.2m).

• The thick mineralised package discovered at the Egg Prospect may extend to surface and is open along strike and at depth.
• Diamond drill hole (ETG0003), drilled 4km north-west of the Egg Prospect, targeted a magnetic corridor and intersected strong supergene gold mineralisation that included 24.9m @ 0.7g/t Au from 127.1m and 4.0m @ 7.1g/t Au from 216m.
• Gold mineralisation at Telfer West is coincident with the interpreted fold axis of a major 8km by 5km dome. The interpreted fold axis corridor has been partially tested in only three locations along its 8km strike.
• Following these encouraging results, a follow up drill program will commence in March-April 2017, after the summer cyclone period and will be partially funded ($150,000) by a WA Government EIS grant.

The directors of Encounter Resources Ltd ("Encounter" or "the Company") are pleased to report that the recent two hole diamond drilling program at the Telfer West project ("Telfer West") has successfully intersected gold mineralisation in both holes.

Background

Telfer West (E45/4613) covers an area of approximately 121km2 and is located 25km north west of Newcrest's major gold-copper operation at Telfer (see Figure 4). Limited historical exploration at Telfer West was conducted by WMC and Newmont from 1983-1993 targeting gold mineralisation in a similar geological setting to Telfer.

Telfer West covers an 8km by 5km domal formation of Proterozoic sediments that is bounded to the northwest and southeast by late stage granitic intrusions. The domal structure has a core of Isdell Formation overlain by the Malu Formation, Telfer Formation and sediments of the Puntapunta Formation. These geological units are the main hosts of gold-copper mineralisation at Telfer. A linear belt of subtle magnetic anomalism forms part of a broad structural corridor that defines the fold axis of the Telfer West dome (see Figure 1). The gold mineralisation intersected is contained within this structural corridor, with stronger accumulations likely in areas of greater structural complexity.

Figure 1: Telfer West diamond historical drilling, systematic surface geochemistry and interpreted dome. Historical diamond holes (yellow diamonds). Detailed aeromagnetic background (TMI 1VD pseudo colour image)

The first two holes drilled by Encounter 4km apart at Telfer West have both confirmed the presence of high grade gold mineralisation.

Egg Prospect Stockwork Zone (ETG0002)

At the Egg Prospect (ETG0002) a broad, steep dipping zone of stockwork style gold mineralisation was intersected within a strongly silicified massive quartzite unit. The stockwork zone contains multiple quartz veins containing pyrite and sporadic arsenopyrite over a downhole length of ~100m. Assay results from the broad zone of stockwork style gold mineralisation, included 38.6m @ 1.0g/t Au from 333m (including 4.2m @ 3.2g/t Au from 333.5m) and 36m

@ 0.6g/t Au from 396m (including 3.2m @ 3.3g/t Au from 415.2m) (see Figure 2).

Please note that the upper part of the intersection reported above of 38.6m @ 1.0g/t Au from 333m was selected for priority analysis and was previously reported as 20.4m @ 0.9g/t gold (see ASX announcement 6 December 2016)

Hole_ID	Northing (m)	Easting (m)	RL (m)	EOH(m)	Dip	Azi	Hole Type
ETG0002	7611460	390978	296	521	-46.5	220	RCD
ETG0003	7613529	387780	270	564.4	-60	040	RCD

Table 1: Diamond drill hole collar locations - Telfer West

Estimated drill hole coordinates GDA94 zone 51 datum. Collars positioned via handheld GPS (+/-5m), EOH = End of hole depth; m=metre; azi=azimuth. RCD = RC precollar with diamond tail

Hole ID	From (m)	To (m)	Length (m)	Gold g/t	As (ppm)	Bi (ppm)	Cu (%)	W (ppm)
ETG0002	203.00	205.00	2.00	0.26	4	0	0.00	6
ETG0002	227.15	230.00	2.85	0.42	17	5	0.01	5
ETG0002	237.80	241.50	3.70	0.27	19	2	0.02	9
ETG0002	247.56	248.00	0.44	0.25	9	1	0.01	4
ETG0002	252.80	254.67	1.87	0.32	6	3	0.01	6
ETG0002	276.00	277.00	1.00	0.26	2	1	0.00	3
ETG0002	308.00	310.00	2.00	1.35	47	11	0.01	12
ETG0002	316.45	316.65	0.20	0.51	640	1220	0.02	69
ETG0002	326.00	327.00	1.00	0.30	0	4	0.00	5
ETG0002	333.00	371.60	38.60	1.02	1535	5	0.01	224
incl.	333.52	337.70	4.18	3.23	5625	17	0.01	41
ETG0002	377.99	378.40	0.41	0.26	1070	4	0.02	34
ETG0002	381.65	383.00	1.35	0.30	700	8	0.04	55
ETG0002	396.05	432.00	35.95	0.57	715	8	0.01	15
incl.	415.15	418.38	3.23	3.33	1790	23	0.00	11
ETG0002	491.00	492.00	1.00	0.37	36	1	0.00	14

Table 2: Diamond drilling assay results - Telfer West ETG0002

Intervals are calculated with a lower cut-off of 0.2g/t with some narrow internal zones less than 0.2g/t included. Internal higher grade intervals calculated at a 1g/t Au lower cut-off.

ETG0002 is the first hole to be drilled through the entire stockwork corridor from the hangingwall through to the interpreted footwall and has confirmed a significant, depth extensive stockwork system that is highly anomalous in gold. The hole has also provided a structural and geological framework that indicates the system may extend to surface and has the potential to contain zones of higher grade gold within the primary sulphide zone (see historical drill holes LHS 86-9 and LHS88-1 in Figure 2).

Figure 2: Telfer West, Egg Prospect schematic cross section (A - A')

The next phase of exploration at the Egg Prospect is to drill test the near surface position of the stockwork corridor on the existing drill section and to test along the corridor to the northwest and southeast. The stockwork corridor is interpreted to follow the trend of subtle magnetic anomalism which lies sub-parallel to a silicified quartzite ridge. This quartzite hosted stockwork corridor is essentially untested outside of the Egg Prospect with only one shallow diamond hole drilled along the interpreted 5kms of strike.

Northern Magnetic Anomaly (ETG0003)

The interpreted fold axis at Telfer West continues northwest from the quartzite hosted stockwork system at the Egg Prospect for a further 3kms into the Telfer Formation sediments where the magnetic anomalism strengthens. This section of the fold axis has been tested with only one previous shallow diamond drillhole, LHS89-06 that was drilled in 1989. ETG0003, located 4km north-west of ETG0002, was drilled to test this magnetic corridor adjacent to LHS89-06.

ETG0003 intersected strong supergene gold mineralisation and has established the extensive scale of the gold opportunity at Telfer West. ETG0003 returned 24.9m @ 0.7 g/t Au from 127.1m and 4.0m @ 7.1g/t Au from 216m within a broad gold-copper anomalous interval. The strong supergene gold mineralisation in the north of the project is interpreted to be formed through the weathering of nearby, primary gold mineralisation.

Hole ID	From (m)	To (m)	Length (m)	Gold g/t	As (ppm)	Bi (ppm)	Cu (%)	W (ppm)
ETG0003	84.00	84.40	0.40	0.26	83	0	0.01	7
ETG0003	110.20	110.40	0.20	0.80	523	22	0.10	14
ETG0003	127.10	152.00	24.90	0.68	511	7	0.05	60
incl.	137.9	138.3	0.4	13.53	1130	452	0.08	13