Orion Gold NL : December Quarterly Activities Report (31/01/17)

ASX Announcement / Media Release

31 January 2017

ASX Code: ORN Issued Capital:

Ordinary Shares: 644M Options: 85M

Directors: Denis Waddell

Chairman

Errol Smart

Managing Director, CEO

Bill Oliver

Technical Director

Alexander Haller

Non-Executive Director

Management: Martin Bouwmeester

CFO & Company Secretary

Suite 2

64 Thomas Street West Perth WA 6005 ABN 76 098 939 274

T: [phone]

E: [e-mail]

W: www.oriongold.com.au

QUARTERLY ACTIVITIES REPORT

FOR THE QUARTER ENDED 31 DECEMBER 2016

HIGHLIGHTS

• Drilling continues at the Prieska Zinc-Copper Project, South Africa:

  • Drilling continues to intersect massive sulphides at the +105 Level Target, with results including.

     20m at 8.58% Zn, 2.21% Cu & 0.3g/t Au from 48m (OCOR023) including 17m at 9.98% Zn and 2.01% Cu.

     42m at 4.41% Zn, 2.36% Cu & 0.42g/t Au from 55m (OCOR027) including 5m at 9.28% Cu from 55m, 6m at 12.4% Zn from 75m.

     29.4m at 3.06% Zn + 1.52% Cu, 0.36g/t Au and 9.0g/t Ag from 112.6m (equivalent to 60m below surface; OCOD036).

  • Option exercised to acquire a 100% interest in Agama, which holds an effective 73.33% in Prospecting Rights over the historic Prieska Copper Mine, located at Copperton, Northern Cape province, South Africa and the Marydale Gold-Copper Project.

  • Historical Prieska Copper Mine is recorded as one of world's 30 largest VMS base metal deposits with recorded historical production of 0.43Mt of copper and 1Mt of zinc from 46.8Mt of sulphide ore milled(1). Unmined dip and strike potential is confirmed by extensive drilling and geophysics.

• Drilling also continues at the Kantienpan Zinc-Copper Deposit, where drilling has discovered zinc mineralisation associated with the KN1 EM conductor identified by Orion:

  • High-powered electromagnetic survey discovered a strong, previously undetected conductor (KN1) below the extent of historical drilling with a substantially stronger response than that from the previously drilled conductor.

  • First drill results include 2.05m at 9.93% Zn + 0.09% Cu from 404.87m and 3.55m at 2.13% Zn + 0.35% Cu from 409.75m (OKND016).

  • Downhole EM surveys point to stronger responses below, and south of, the intersection in OKND016.

• Drilling of compelling IP targets at the Marydale Gold-Copper Project ongoing:

  • Semi-continuous, arcuate chargeability anomaly delineated extending some 1.7km from the previously drilled NW Quadrant area.

  • First drill hole yield encouraging results with disseminated sulphides intersected and low level anomalism.

• Exploration to date only represents initial phase of unlocking the potential of the Areachap Belt:

  • Orion has rights over a total of 1,790km2 of prospective tenure in the Areachap Belt.

  • The belt is prospective for VMS, VHMS, SEDEX and mafic intrusive hosted base metal mineralisation, as well as lithium and rare earth element bearing pegmatites.

  • Source: Mine records.

  • Exploration

    During the Quarter, Orion continued an intensive drilling campaign across its highly prospective South African projects. Drilling continued at the Prieska Copper Mine Zinc- Copper (PC) Project, the Marydale Gold-Copper Project and Kantienpan Zinc-Copper Deposit. Excellent results have been received during the Quarter from both drilling and geophysical surveys. Work continues on the maiden Mineral Resource at the PC Project based on results from the ongoing drilling, with a large diameter drill hole also carried out to collect material for metallurgical testwork. The results from these programs will be fed into a Pre-Feasibility Study which the Company aims to complete by mid 2017.

    Areachap Copper-Zinc and Gold-Projects (South Africa)

    During the Quarter, the Company continued resource delineation drilling programs at the historical PC Project, continued exploration drilling at the Kantienpan Deposit following results of a high-powered EM survey over the area, and commenced exploration drilling at the Marydale Gold-Copper Project following completion of a high powered IP survey and other geophysical surveys (Figure 1).

    Figure 1: Regional magnetic map of the Areachap Belt showing prospecting rights currently under option to Orion and noted mineral occurrences as per published data from South African Council for Geoscience.

    Prieska Zinc-Copper Project

    The PC Project covers unmined dip and strike extensions from historical underground mining, with the mineralisation having previously been delineated by extensive drilling and geophysics. The current drilling program is designed to confirm, in-fill and extend the historical drilling at the +105 Level Target, where it is targeting mineralisation that would be amenable to extraction via open pit mining (Figure 2).

    Drilling during the Quarter focused on diamond core drilling to test the supergene and primary sulphide zone immediately up-dip of historical stoping, where geotechnical conditions prevent access for RC drilling (Figure 2).

    Diamond core drilling at the +105 Level Target is utilising an innovative shallow drilling method to drill holes to test mineralisation up-dip of historical underground mining.

    By drilling from surface utilising inclinations of between 15 and 30 degrees from the horizontal, the holes can be manipulated to intersect the mineralisation at an optimal angle (Figures 3 and 4).

    As at the end of the Quarter 17 RC holes and 5 diamond core holes for 1,926m had been completed. Significant intersections received to date include:

    • 22m at 10.8% Zn, 1.38% Cu and 0.3g/t Au from 57m, including: 7m at 17.8% Zn and 1.41% Cu (OCOR016);

    • 20m at 8.58% Zn, 2.21% Cu and 0.3g/t Au from 48m, including: 17m at 9.98% Zn and 2.01% Cu (OCOR023);

    • 42m at 4.41% Zn, 2.36% Cu and 0.42g/t Au from 55m, including:

      5m at 9.28% Cu from 55m and 6m at 12.4% Zn from 75m (OCOR027);

       9.3m at 4.0% Zn, 1.4% Cu, 0.13g/t Au and 9.0g/t Ag from 170m (OCOD033);

    • 29.4m at 3.06% Zn + 1.52% Cu, 0.36g/t Au and 9.0g/t Ag from 112.6m, including: 8.5m at 4.33% Zn + 2.17% Cu from 115m and 3m at 7.13% Zn from 139m (OCOD036);

    • 12m at 4.14% Cu, 1.89% Zn and 0.29g/t Au from 57m, including: 3m at 7.4% Cu and 4.34% Zn (OCOR017); and

    • 20.6m at 1.36% Zn, 0.63% Cu, and 0.1g/t Au from 156.1m, including: 2.6m at 5.2% Zn (OCOD035).

      (refer ASX releases 25 July 2016, 22 August 2016, 14 September 2016,

      2 November 2016, 7 December 2016 and 16 December 2016)

      Modelling of the mineralisation intersected in drilling to date has been completed with the objective of producing Mineral Resources compliant with the JORC Code early in 2017 and feeding these resource estimates into pre-feasibility studies with a target completion date of mid 2017.

      Figure 2: Plan showing the PC Project with completed, proposed and historical drilling at the

      +105 Level Target.

      In addition, the Company has sampled intervals outside the sulphide hosted zinc-copper mineralised zones and submitted them for gold analysis. As reported in previous announcements, the previous operator of the historical Prieska Copper Mine did not routinely assay for precious metals within or outside of the base metal ore.

      The results of this precious metal sampling exercise, which was undertaken on non-sulphide intervals outside the zinc-copper mineralisation, were detailed in the ASX release of 2 November 2016 and include some highly significant results, namely:

    • 7m at 2.46g/t Au from 23m, including 3m at 5.0g/t Au (OCOR021);

    • 17m at 0.77g/t Au from 39m, including 4m at 1.35g/t Au (OCOR026); and

    • 10m at 1.10g/t Au from 33m (OCOR025).

The significance of this wide, shallow gold mineralisation and its presence in oxide material will shortly be investigated with cyanidation and heap leach amenability testwork, followed by pre-feasibility study work in early 2017. The precious metal intersections outside of the base metal target horizon provide encouragement for potentially significant by-product credits, in a targeted open pit, selective mining operation.