Musgrave Minerals : Diamond Drilling Extends Gold Mineralisation at A-Zone

ASX RELEASE ASX: MGV

15 January 2019

Diamond Drilling Extends Gold Mineralisation at A-Zone, Lake Austin North

• • Diamond drilling has extended the basement gold mineralisation at A-Zone to more than 350m in strike where it remains open in all directions

• • Drilling intersected:

  • o 137.2m @ 0.6g/t Au from 97.8m down hole (18MODD009) including:

    •  20.2m @ 2.3g/t Au from 194.0m

  • o 239.4m @ 0.4g/t Au from 71.6m down hole (18MODD011) including:

    •  43.2m @ 1.0g/t Au from 115.0m

  • o 128.1m @ 0.5g/t Au from 133.3m down hole (18MODD012) including:

    •  32m @ 1.5g/t Au from 133.3m including:

      • • 9.7m @ 3.1g/t Au from 133.3m

• • Drill hole 18MODD012 is now the most southerly basement hole into A-Zone and the mineralisation remains open to the south and north

• • A new diamond drilling program has commenced at A-Zone with further assays expected in late February

• • The A-Zone is defined by a broad regolith gold halo extending up to 300m wide and covering a strike extent of over 800m which remains open

• • Regional aircore drilling will commence this week to extend the A-Zone gold regolith halo along strike where it remains open

Musgrave Minerals Ltd (ASX: MGV) ("Musgrave" or "the Company") is pleased to report further highly encouraging assay results from diamond drilling at the A-Zone gold target at Lake Austin North, located 3km north of the Break of Day gold deposit within the Company's flagship Cue Project in Western Australia's Murchison district (Figure 1).

Musgrave Managing Director Rob Waugh said "Diamond drilling continues to extend the basement gold mineralisation at A-Zone with recent assays returning further thick intervals of mineralisation. The system remains open in all directions with further drilling underway. Two drill rigs are currently operating and a third is expected to commence this week. Diamond drilling will continue to step-out and test the extents of the mineralisation along strike and down dip with the aim to outline the size and grade of this potentially large and exciting gold discovery."

5 Ord Street, West Perth WA 6005

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Web:www.musgraveminerals.com.au Email:[e-mail]

ACN: 143 890 671

A-Zone

The first phase of diamond drilling on the new gold discovery at A-Zone, Lake Austin North was completed before Christmas with seven holes drilled for 1,950m. Gold assay results for all seven holes have now been received (Figure 2), with the final four holes reported here (all new assays are reported in Table 1a).

Diamond drill hole 18MODD011, drilled 50m south of hole 18MODD008 (242m @ 1.0g/t Au from 61m down hole including 45m @ 3.3g/t Au from 70m down hole, ASX announcement 4 December 2018, "Diamond Drilling Confirms Significant Gold Discovery at Lake Austin North") intersected a thick mineralised interval of 239.4m @ 0.4g/t Au from 71.6m down hole including a higher-grade zone of 43.2m @ 1.0g/t Au from 115.0m.

Diamond drill hole 18MODD012, drilled a further 50m south of 18MODD011 intersected a thick mineralised interval of 128.1m @ 0.5g/t Au from 133.3m down hole including a higher-grade zone of 32.0m @ 1.5g/t Au from 133.3m including 9.7m @ 3.1g/t Au for 133.3m. 18mODD012 is now the southern-most hole drilled at A-Zone. The mineralisation remains open to both the south and north.

Drill hole 18MODD009 drilled approximately 30m up dip of 18MODD008 intersected a mineralised interval of 137.2m @ 0.6g/t Au from 97.8m down hole including a higher-grade zone of 20.2m @ 2.3g/t Au from 194.0m suggesting the possibility of the mineralisation strengthening down dip. A hole is currently being planned to test this interpretation.

Drill hole 18MODD010 drilled 200m north of the discovery section (6,939,200mN) (Figure

2) did not reach the interpreted target depth and will be extended in January to test the target zone below the end of the hole.

Figure 1: Location plan showing Lake Austin North Gold Target

A-Zone consists of a broad regolith gold halo extending up to 300m wide and covering a strike extent of over 800m. The fresh rock gold mineralisation beneath the regolith halo is steeply east dipping and open to the north, south and down dip below approximately 50-60m of transported cover. The A-Zone mineralisation is proximal to a tonalite-mafic contact within a foliated silica-sericite-biotite-albite-pyrite alteration zone with multi-phase quartz veining.

Figure 2: Plan showing drill holes completed at Lake Austin North, significant basement assay results and planned diamond drill holes, the tonalite intrusive and regolith aircore gold target represented as grams of gold x metre thickness of intercept

Ongoing Exploration

• • The phase 2 program of diamond drilling at A-Zone has commenced. This program consists of a minimum of 15 drill holes for approximately 4,000m and drilling will continue until April. Next assays are expected in late February.

• • A regional lake aircore drilling program will commence this week to define the extents of the A-Zone and C-Zone mineralisation to enable accurate diamond drill targeting along strike. The lake aircore program will also include preliminary first pass testing of new lake gold targets.

• • An aircore drilling program has commenced testing three new gold targets on the northern tenure including the Vostock target situated only 2km east of Westgold's Comet mine. Assays are expected in March.

• • Musgrave is continuing development studies on the Break of Day and Lena gold deposits to evaluate options to optimise cash flow and maximise shareholder returns.

• • Negotiations are continuing with Westgold regarding a mining and processing profit sharing agreement over the existing gold resources at Cue. This proposed arrangement does not include Lake Austin North.

THE CUE PROJECT

The Cue Project ("the Project") is located in the Murchison district of Western Australia, with key tenure wholly owned by Musgrave Minerals (Figure 4). The Project consists of the Moyagee Gold and Hollandaire Copper Resources. The Company has defined a +20km-long prospective gold corridor that hosts the Break of Day and Lena gold resources (Break of Day hosts 868kT @ 7.15g/t Au for 199koz Au and Lena 2,682kT @ 1.77g/t Au for 153koz Au; see MGV ASX announcement 15 October 2018, "Annual Report") and the new Lake Austin North gold discovery.

The Company believes there is significant potential to extend existing mineralisation and discover new gold deposits within the Project area, as demonstrated by the recent drilling success at Break of Day, Lena and Lake Austin North.Musgrave's intent is to develop a low-cost operation from the current resource base, capable of delivering strong financial returns for its shareholders. This may enable Musgrave to largely self-fund exploration at Lake Austin North and other high-priority targets that suggest the presence of large gold systems. Specifically, Musgrave is exploring for systems of a size that have the potential to deliver a significant resource increase, and may in the future define a stand-alone operation.

Figure 3: Cross section 6939100mN at A-Zone, Lake Austin North showing latest drilling - Note: Aircore drill hole is projected onto the east-west cross section (a cross-section is a vertical section perpendicular to the line of mineralisation)