WPG Resources : 2017-06-01 Challenger 31 March 2017 Mineral Resource estimate

ASX and Media Release Gold content of Challenger mineral resource continues to grow

WPG Resources Ltd (ASX: WPG) is pleased to advise that it has completed an update of the Challenger mineral resource estimate as at 31 March 2017. As with previous estimates prepared by WPG, the resource estimate has been prepared and reported in accordance with JORC (2012) guidelines.

The 31 March 2017 mineral resource estimate, which is shown in detail in Table 1, is a total of 1,401,401 tonnes at an average grade of 7.62 g/t Au containing 343,299 ounces of gold.

Table 1: Challenger Mineral Resource Estimate as at 31 March 2017

Category	Tonnes (000 t)	Gold (g/t)	Gold (000 oz)
Measured	226	6.2	45
Indicated	814	8.1	213
Inferred	363	7.4	86
TOTAL*	1,401	7.6	344

*totals may vary due to rounding

The Mineral Resource estimate in the table above has been extracted from the detailed resource report that is attached to this abbreviated report. A summary of all material information used in the resource estimate is set out below. Detailed technical information with reference to JORC (2012) compliance for the mineral resource estimate is provided in JORC Table 1 Sections 1 to 3 in Appendix 1.

The contained gold in the updated mineral resource estimate of 343,299 ounces is 27% higher than that shown in WPG's 30 June 2016 resource estimate announced by the Company on 25 October 2016. The 31 March 2017 resource estimate ignores the exploration target for the SEZ and M3 shoots announced on 11 April, 17 May and 22 May 2017, and the results of the exploration drilling programs in the Challenger Deeps area announced on 29 May 2017.

1 June 2017

ASX Announcement - 1 June 2017

The increase in gold contained in the 31 March 2017 resource estimate compared with that of the 30 June 2016 estimate is due to:

• A change in the underground cut-off grade from 5.0g/t Au to 3.0g/t Au, resulting in the inclusion of the M1 generic in the resource.

• Depletion of the previous resource estimate by way of production during the period July 2016 - March 2017.

• Small increase in the M2 resource due to production from areas outside the resource (usually while accessing M3).

• An increase in the M3 resource due to the effect of positive drilling returns around the 1020 Level.

• An increase in the SEZ resource due to the effect of positive drilling returns around the 1060 Level.

• An increase in the Challenger West resource is due to the generic being updated with positive production data from 710 and 450 levels in addition to an extension of the CW OD4 resource based on results in the 470 and 450 Levels.

• An increase in the Aminus resource due to the effect of positive drilling returns around the 290 and 310 Levels.

• Depletion of the surface low grade stocks due to processing.

  Graph 1: Changes in Challenger Resource Estimate from June 2016 to March 2017

  The increase in the gold content of the mineral resource estimate from June 2016 to March 2017 continues the trend that has been in place since WPG acquired Challenger in February 2016. This trend is shown in the chart set out in Graph 2 below.

  WPG's Chairman Bob Duffin said "The hockey stick or J-curve shown in Graph 2 gives us considerable encouragement that WPG's intensive focus on underground exploration at Challenger has the potential to deliver further increases in the resource inventory, and also the life of the mine".

  ASX Announcement - 1 June 2017

  Note: Ore reserve estimate has not been re-calculated as at 31 March 2017

  Graph 2: Changes in gold content of Challenger Resource and Reserve Estimates from 2012 to March 2017

  Mineral Resource Estimate - Summary of Material Information

  The Resource Estimate for the Challenger deposit is based on the interpretation of the geology and gold bearing lode structures that has been developed as a continually evolving model by hands-on experienced site geologists before and since the commencement of mining in 2002. The current interpretation is based on a combination of drilling results, face sampling and geological mapping of development headings.

  The Challenger deposit extends from 1193mRL (surface) to -325mRL as a series of gold bearing folded migmatite zones with ore shoots that plunge at ~30 degrees on a bearing of 029. The ore shoots within the broader structure are defined by leucosome veins which are characteristically complexly folded.

  Due to the complex nature of the lode zones the Resource has been estimated using a combination of geological grade calculations, generic modelling and block modelling. There is a high nugget effect in the Challenger deposit and significant visible gold and therefore various top cuts are applied to the grade calculations as detailed in the body of the attached Resource Estimate Report.

  The cut-off grade used in the Resource Estimate is 3.0 g/t Au for underground lodes and >1.5g/t Au for open pit lodes and is based on what is considered an economic cut-off in relation to the prevailing gold price and projected operating costs.

  Three principal types of drilling techniques are used for the collection of geological and grade information at Challenger; diamond drilling, sludge drilling and RC/RAB drilling. In addition Face Sampling is undertaken as a part of the production cycle.

  ASX Announcement - 1 June 2017

  All underground diamond drill core is sampled based on geological intervals determined during logging. Sample length is generally 1.00m but can vary between 0.30m for visible gold intersections and 2.00m for known barren intrusive intersections. All samples are submitted to the site laboratory for analysis. Any intercepts over 5.00g/tm Au over 1.00m are considered significant and along with adjacent samples (generally three on either side) are submitted to an external laboratory for check analysis as required.

  Sludge drilling is undertaken using a Sandvik Long-hole Drill with a 76mm percussion bit. The sample interval has historically been 0.75m, but has recently changed to 0.90m due to longer solo drill rods.

  All sludge samples are submitted as entire samples to the site laboratory for analysis. Any intercepts over 10.00g/t Au over 1.00m are considered significant

  and along with adjacent samples (generally three on either side) are submitted to an external laboratory for check analysis as required.

  Face chip samples are collected to be as representative as possible of the source material. These 2-5kg samples are all processed by the site laboratory.

  Each sample can be tracked by its sample number through the entire laboratory process and results for the original samples and all QAQC samples are presented

  in digital form to the Geologists. Assaying of samples is done on site using the PAL (pulverising aggressive leach) process.

  Mining factors taken into consideration for the Resource estimate are that the mineralisation will continue to be mined using a combination of up-hole retreat stoping utilising rib pillars and a minor number of downhole long hole bench stopes. The minimum drive dimensions will be 5.0m high by 4.0m wide and the minimum mining width is 1.5m. Internal and external dilution has been included in the resource shapes to take in complex structural areas such as thickening of a stope shape due to parasitic folding of the shoot. Metallurgical factors taken into consideration for the Resource Estimate are that the mined ore will continue to be processed at the Challenger CIP plant.

  The contained gold of 343,299 ounces is 27% higher than that shown in the 30 June 2016 resource estimate of 269,672 contained gold ounces.

  The basis for the Resource classification is as follows:

• Measured

  • Must be developed/stoped above and below.

  • Must have sufficient data density to show continuity/structural complexity.

  • Has geological mapping/face photos to guide modelling.

  • Must have sufficient information to create a tonnage/grade estimate for production purposes. Data density is used to upgrade an Indicated Resource to Measured, if there is no adjacent level.

  • Drill hole spacing typically 20 x 20m diamond drilling in conjunction with extensive 5 to 10m ring spaced sludge drilling and face samples 3 to 4m apart.