WPG Resources : 2017-07-20 June 2017 Quarterly Activities Report

ASX and Media Release Quarterly activities report June quarter 2017

HIGHLIGHTS

Results

• 13,909 ounces of gold produced in quarter taking Y

  D production to 50,882 oz

• Combined Challenger and Tarcoola mining operations for year to 30 Jun 2% below the lower end of the guidance range of 52,000 - 56,000 oz

  2017

• Record gold production of 6,230 oz for month of June from Challenger and

  Tarcoola.

  Production

  June 2017 quarter AISC of $1,431 per oz

• Initial stoping on M3 lode in June yielded stoping grade of 8.5g/t Au showing upside outside of current mine plan

• Mining of supergene ore at Tarcoola resulted in significant improvement in grade hauled to Challenger of 3.1 g/t Au

• Trials successfully demonstrating ability to increase mill throughput to 700,000 tpa with minimal capital expenditure

• Challenger mill expansion plan well advanced to optimise processing efficiencies with abundant feed available

  Exploration

• 79% increase in resource estimate since acquisition of Challenger shown in 31 March 2017 mineral resource estimate

• Significant results achieved in Challenger underground exploration progr potential to extend mine life

• Encouraging exploration results from Phase 1 Challenger Deeps program

  m show

• Exploration target a

  nounced on M3 structure

• Extensive sulphides identified to date in drilling of Warrigal anomaly at Tarcoola.

  Corporate

• Placement of shares to sophisticated and professional investors to raise $7.2 million at $0.048 per share completed on 13 June

• One for eight non-renounceable Entitlem per share announced on 19 June 2017

nt Issue to raise $5.4 million at $0.048

20 July 2017

ASX Announcement - 20 July 2017

RESULTS AT A GLANCE

Sales and Processing (Challenger Processing Hub)	Units	June Quarter 2017	**Year To Date	March Quarter 2017
Total Ore Processed	Tonnes	145,627	602,105	147,173
Grade Processed	g/t Au	3.12	2.77	2.75
Recovery	%	95.2	95.0	95.4
Gold Recovered	Ounces	13,909	50,882	12,406
All-in Sustaining Cost*	$/Ounce	1,431	1,532	1,475
Gold Sold	Ounces	13,625	50,951	13,083
Average Gold Price Received	$/Ounce	1,674	1,664	1,608
Sales Revenue Realised**	A$000's	22,805	84,799	21,050

Challenger Gold Mine Operations Summary	Units	June Quarter 2017	**Year To Date	March Quarter 2017
Underground Capital Development	m	258	894	93
Total Underground Development	m	1,328	5,136	1,373
Underground Ore Mined	Tonnes	128,753	480,416	114,251
Underground Ore Grade***	g/t Au	2.93	3.03	3.22
Surface Stockpiles Treated****	Tonnes	-	81,058	2,837

Tarcoola Gold Mine Operations Summary	Units	June Quarter 2017	**Year To Date	March Quarter 2017
Open Pit Waste Mined	bcm	473,712	1,248,799	607,278
Open Pit Ore Mined	Tonnes	74,030	120,287	37,432
Mined Grade	g/t Au	2.49	2.32	1.87
Ore Hauled to Processing Facility	Tonnes	44,735	69,439	24,704
ROM Stockpile	Tonnes	58,363	58,363	24,894

Notes: * AISC in relation to underground mining costs include all lateral development and fixed asset additions other than those associated with permanent infrastructure. AISC in relation to open cut mining activities excludes capitalised waste mining costs. AISC includes an appropriate allocation of head office costs.

** Production, sales and revenue information is provided for the Challenger gold mine at 100% level (WPG 50% 1 June to 31 July 2016, 100% from 1 August 2016). Current year sales and revenue attributable to the joint venture partner up to 31 July 2016 are 1,891 oz for revenue of $3,354k

*** Includes stoping ore, development ore and low grade development ore

**** Low grade stockpiled material acquired with the Challenger gold mine

ASX Announcement - 20 July 2017

CHALLENGER PROCESSING HUB

OVERVIEW

Successful processing of Tarcoola ore and higher throughput

Trials on the processing of blended Challenger primary and Tarcoola oxide ores continued during the quarter. Steady state processing was successfully increased from a 4:1 ratio of Challenger to Tarcoola ore achieved in the previous quarter up to a 2:1 ratio during this quarter despite the introduction of high clay content supergene ore to the Tarcoola feed.

Throughput at the Challenger plant was increased from the 600,000 tpa rate, at which it operated for many years, to 700,000 tpa with no material loss of gold recovery. Some modest capital will be required to be spent in the next quarter to sustain this throughput rate. During the quarter 145,627 dry tonnes were milled at the Challenger processing hub. Despite trials on higher throughput, total throughput was slightly down on the prior quarter as a consequence of the higher moisture content of the Tarcoola feed, mill reline maintenance, and low water availability

early in the quarter.

Existing water bores were successfully refurbished during the quarter which are now yielding sufficient water for steady state processing at 700,000 tpa with oxide Tarcoola feed as noted above. Additional water will be required to increase this throughput to 800,000 tpa and analysis of suitable drilling sites is underway.

Production and Costs

Record gold production of 6,230 oz in month of June

Milled tonnes for the quarter were 145,627 @ 3.12 g/t Au with average recovery of 95.2%. Total gold recovered was 13,909 ounces, while gold sold was 13,625 ounces. This included 6,230 ounces during the month of June.

All-In-Sustaining Cost (AISC) in the quarter was $1,431 per ounce recovered. Total revenue from bullion sales was $22.8 million at an average gold price of $1,674 per ounce. This AISC, whilst unacceptably high, has started to reduce which is reflective of improved mining physicals performance at Challenger.

ASX Announcement - 20 July 2017

Production Guidance

Building production profile into 2018

Guidance for the combined Challenger and Tarcoola mining operations announced on 13 March 2017 for the year to 30 June 2017 was in the range of 52,000 to 56,000 ounces. The actual combined production of 50,882 ounces from the Challenger and Tarcoola mining operations for the year to 30 June 2017 was 2% below the lower end of the guidance range. It was disappointing that, although close, production did not reach the level of guidance for the year. This result was principally impacted by very poor operation performance at Challenger in May along with slower than anticipated ramp-up of production and processing of Tarcoola ore during April and May.

Production guidance for the 2018 financial year is 70,000 to 80,000 ounces. It is anticipated that the quarterly production will start at levels similar to this quarter and increase in the second half following investment in underground development at Challenger over the coming six months and completion of the Tarcoola push-back this quarter.

CHALLENGER GOLD MINE

PRODUCTION

The Challenger mine continued operations at full production rates during the quarter. Total ore mined from underground for the quarter was 96,004 tonnes @ 3.60g/t Au (13,388 ore tonnes from development and 82,616 ore tonnes from stoping). In addition a further 32,749 tonnes of low grade development ore was mined which provided supplementary mill feed.

Production was primarily from the Challenger West lode with additional material sourced from the Aminus, M2 and M3 lodes.

Underground development in the quarter continued to be below budget which has impacted the ability of the mine to develop new stoping areas and to access higher grade areas of the resource. Development has been focussed on maintaining mill feed resulting in development into lower grade areas of the mine when insufficient development capacity has been available to open new stoping areas.

New mining contractor and investment in underground development

To remedy this situation an investment in underground development is planned for the September and December quarters which involves adding a third development jumbo to the mining fleet. This will enable the development of stoping areas in both Challenger West and Challenger Deeps to enable more accurate mine planning and grade management in the mine. Further development on M3 is also expected

ASX Announcement - 20 July 2017

subject to further drilling results. WPG has undertaken a placement in June and the current Entitlement Issue to fund this initiative.

During the quarter WPG invited a number of mining contractors to tender for a new mining contract at Challenger in a competitive process and in July issued a Letter of Intent to Byrnecut Australia Pty Ltd. Byrnecut has commenced mobilisation activities and will assume responsibility for all underground mining at Challenger as of 8 August 2017.

Byrnecut was the contractor at Challenger prior to WPG's acquisition of the mine and they are very familiar with operations at site and have a demonstrable record of delivering on mine physicals at the Challenger gold mine.

In anticipation of commencement of mining in Challenger Deeps later in the calendar year, rehabilitation works at the bottom of the Jumbuck decline at Challenger were completed and development towards the next production level recommenced in early July.

Accumulated ROM stockpiles at both Challenger and Tarcoola will ensure minimal impact on milling operations during the changeover period.

Updated Mineral Resource Estimate

Systematically drilling to grow the resource base

On 1 June 2017 WPG released the 31 March 2017 Mineral Resource estimate. This update took into account mining depletion and drilling and sampling results since the previous estimate as at 30 June 2016 as well as 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.

The 31 March 2017 Mineral Resource estimate was a total of 1,401,401 tonnes at an average grade of 7.62 g/t Au containing 343,299 ounces of gold.

WPG confirms that it is not aware of any new information or data that materially affects the information included in the 1 June 2017 market announcement and above in relation to the mineral resource estimate, and confirms that to the best of its knowledge and belief all material assumptions and technical parameters underpinning the mineral resource and ore reserve estimates in the 1 June 2017 market announcement continue to apply and have not materially changed except to the extent of production.

NEAR MINE EXPLORATION

Resource definition and near mine exploration opportunities were pursued during the quarter by ongoing programs of underground diamond drilling. This drilling activity is designed to identify potentially new minable resources that can be accessed from existing underground development. This drilling was principally focussed in Challenger Deeps and Challenger West. The Phase 1 drilling program in Challenger Deeps was completed in June and drilling is now active on M3. It is

ASX Announcement - 20 July 2017

expected that the Phase 2 program on Challenger Deeps will commence in late August following development extensions to the Jumbuck decline below the shear and establishment of a new drilling platform.

Significant results were achieved in the quarter and, in particular, the Challenger Deeps drilling showed strong continuity of the Challenger lode system and Challenger West was also intersected for the first time beneath the 215 shear. The close proximity of Challenger West to M1 at the lower levels presents attractive parameters at depth to increase ounces per vertical metre.

Challenger Deeps

Bringing new lodes below the shear into geological models

On 3 April 2017, drilling commenced from underground drill cuddies with encouraging gold assays from its Challenger Deeps drilling program announced on 11 April, 17 May, 29 May, 22 June and 29 June 2017.

Nineteen drill holes for 3,330m from the 135 level targeting down plunge extensions of the M1, M2, Aminus and Challenger West ore shoots were completed and verified the Challenger system continuity at depth.

Significant intersections in M1 included:

• 17CUD2077: 7.74m @ 42.89g/t from 45.36m

• 17CUD2081: 0.80m @ 37.65g/t from 47.7m

• 17CUD2071: 1.92m @ 14.32g/t from 58m

• 17CUD2078: 2.74m @ 8.79g/t from 46.26m

• 17CUD2090: 0.39m @ 34.20g/t from 58.35m

• 17CUD2091: 1.31m @ 8.17g/t from 69.69m

• 17CUD2090: 1.00m @ 19.89g/t from 79m

• 17CUD2078: 0.67m @ 23.38g/t from 65.33m

• 17CUD2083: 1.11m @ 14.00g/t from 87m

• 17CUD2082: 0.30m @ 33.83g/t from 55.96m Significant intersections in Aminus included:

• 17CUD2071: 1.00m @ 45.12g/t from 121m

• 17CUD2083: 0.51m @ 52.54g/t from 120.49m

• 17CUD2072: 0.96m @ 21.76g/t from 90.6m

Importantly, Challenger West was also intercepted for the first time below the 215 Shear as part of this Challenger Deeps drilling. The close proximity of Challenger West to M1 at the lower levels presents more attractive parameters at depth now than previously recognised.

ASX Announcement - 20 July 2017

Challenger West intersected beneath the 215 shear

Significant intersections in Challenger West Deeps included:

• 17CUD2071: 1.00m @ 232.12g/t from 140m

• 17CUD2076: 2.20m @ 27.22g/t from 125m

Figure 1: Challenger Deeps Drilling

Further detail on the results from the Challenger Deeps drilling can be found in the ASX releases announced on 11 April, 17 May, 29 May, 22 June and 29 June 2017.

Challenger West

Identifying new minable shoots in Challenger West

During the quarter, a total of eleven drill holes for 2,459 metres were drilled from the 215 level to infill the Challenger West orebody below 170mRL (above the 215 shear). The purpose of the drilling was to test the continuity down plunge of the

OD1 - OD5 shoots that have been previously mined on upper levels within Challenger West. Assays have been returned for six of these holes to date.

Significant intercepts for the quarter:

• 17CUD2037: 1.09m @ 143.86g/t from 202.44m

• 17CUD2038: 1.91m @ 79.4g/t from 205m

Significant visible gold was also intersected in both 17CUD2037 and 2038.

ASX Announcement - 20 July 2017

M2 was also intersected as part of this drilling and returned the following significant intersections:

• 17CUD2038: 1.00m @ 21.80g/t from 0m

• 17CUD2026: 2.00m @ 10.50g/t from 5m

• 17CUD2037: 1.25m @ 16.69g/t from 2.10m

Figure 2: Challenger West drill results below 100mRL

A full description of drilling details, including table of significant intercepts is included in Appendix 1 of this report.

M3/SEZ

Initial stope grade of 8.5g/t on M3 on 1055 level

The first two holes targeting the M3 and SEZ ore shoots on the 700 and 900 levels commenced late in the quarter. Extensive drilling programs have been designed from these levels and are ongoing, as well as a third site in the 845 level to come online early in the next quarter.

On 22 May 2017 WPG announced a combined exploration target for the M3 and SEZ shoots, above the 215 shear.

The combined exploration target for the M3 and SEZ lodes range from a lower limit of 1.09Mt@ 3.40g/t for 120koz to an upper limit of 1.27Mt @ 3.93g/t for 162koz.

The potential tonnage and grade of the new combined M3 and SEZ Exploration Target is conceptual in nature as there has been insufficient exploration to estimate a Mineral Resource, and it remains uncertain if further exploration will result in the estimation of a Mineral Resource.

ASX Announcement - 20 July 2017

Underground diamond drilling completed at Challenger on the M3 and SEZ shoots in the December 2016 and March 2017 quarters returned encouraging drill results, particularly at the 1025 level, which led to an assessment of the exploration potential of the M3 and SEZ shoots.

The exploration target for the M3/SEZ shoots considers all diamond drill holes that intersect the interpreted shoots between the top of the underground workings at 1115mRL and 280RL.

There are 173 diamond drill holes which intersected the M3 shoot for a total of 27,426m. There are 129 diamond drill holes which intersected the SEZ shoot for a total of 20,085m.

Although some previous drill hole results used for the calculation of the exploration target have been reported, it was determined for consistency to include all relevant diamond drill hole information pertaining to M3 and SEZ shoots in Appendix 1 of this report.

The M3 and SEZ geology wireframes have been created onsite by CGO geologists and use lithological and assay information to define the shoot boundaries.

Diamond drill intercepts have been grouped into 20m vertical panels that replicate the production level spacing at Challenger. Each drill hole is then length weighted averaged to produce an averaged width and grade for each shoot for the 20m vertical block.

The strike extent of the shoot for the 20m vertical panels is taken from the flitch slice of the modelled shoot at the base RL. Where historical stoping has occurred on a particular level, the strike length of the mined zone has been removed from the length of the total shoot. The calculated tonnes for each level uses the average diamond drill intercept length multiplied by the available strike length, panel height

of twenty metres and the Challenger rock density of 2.72g/cm3.

M2

Drilling of the M2 S2 lode was completed from the 480 Level, targeting the portion not mined between the 500 and 440 levels. The lode had previously been successfully mined above and below these levels.

Significant intercepts included:

• 17CUD2068: 0.84m @ 262.05g/t from 71.16m

• 17CUD2063: 2.45m @ 19.57g/t from 35.2m

• 17CUD2060: 1.00m @ 21.75g/t from 39m

• 17CUD2060: 1.00m @ 11.09g/t from 47m

A full description of drilling details, including table of significant intercepts is included in Appendix 1 of this report.

Future exploration activities

The focus of future exploration activities at Challenger for the remainder of the calendar year is shown in Figure 3 below.

ASX Announcement - 20 July 2017

Figure 3: Near Mine exploration targets at Challenger for FY2017/18

Drilling is planned on multiple near mine exploration targets over the next twelve months. The diamond drilling program will be split into two sections - development drilling and near mine exploration drilling. Development drilling involves further drilling into Challenger West, Aminus and remnant opportunities in the historic M1 and M2 lodes. Near mine exploration drilling will target Challenger Deeps, M3/SEZ and Enterprise.

TARCOOLA GOLD MINE

PRODUCTION

Record production for the month of June

The Tarcoola gold mine continued to ramp-up following stripping of the poorly mineralised upper benches of the pit. During April, a number of significant rainfall events in close proximity to each other caused the suspension of pit operations for 7 days and haulage for 10 days until damage to major access roads to the site was remedied and critical supplies brought back to the mine.

During the June quarter a total of 508,673 bcm was mined from the pit, including 74,030 tonnes of ore at a grade of 2.49 g/t containing an estimated 6,163 ounces of gold. During the quarter, 44,735 tonnes of ore at a grade of 3.01 g/t was hauled to Challenger, and 2,643 ounces of Tarcoola gold was poured at Challenger.

During June the mine achieved record ore production with 17,388 tonnes mined at an average grade of 2.43 g/t. Haulage to Challenger was 17,762 tonnes at a grade of 3.55 g/t. ROM stockpiles at 30 June 2017 totalled 58,363 tonnes.

ASX Announcement - 20 July 2017

Updated life of mine plan at Tarcoola

An intensive grade control drilling program was undertaken during the quarter which provided data and guidance which helped in developing an improved and updated grade control model. The revised grade control model significantly improved grade predictability which improved from a mining grade recovery of 48% to 95% over the last quarter. The updated grade control model also provided the basis for the revision of the Life of Mine Plan which will be incorporated into the planned 30 June 2017 Mineral Resource and Ore Reserve estimates.

The Life of Mine Plan was updated in May to optimise the pit wall angles against the ore profile in the pit. The plan was geotechnically validated by an independent expert, and whilst it delivers a modest decrease in waste material by steepening some of the pit wall angles, it more importantly provides a solid basis for all future planning and decision making regarding the pit.

A program of water exploration was undertaken during the quarter. No new suitable water source has yet been discovered and potable water continues to be supplied from Coober Pedy.

NEAR MINE EXPLORATION

Drilling of Warrigal prospect intersecting extensive sulphides

RC drilling to test the chargeability anomaly identified during the March quarter IP survey has commenced. Logging of drill chips has identified significant zones of sulphides (primarily pyrite) existing in various zones within sandstone, quartzite, shale, carbonaceous shale, quartz veins, diorite and granite. This confirmed that the source of the IP anomaly is sulphides.

The upper margin of the anomaly is modelled at approximately 50m below surface and extends to at least 150m below surface and there is so far good correlation with the logging. Gold assays and compilation of geological logs are pending. It is expected that drilling of the Phase 1 program will be completed in July and assays shortly thereafter.

ASX Announcement - 20 July 2017

p

Figure 4: Com

n

c

leted and proposed RC hole collars testing Warrigal IP anomaly (3D chargeability

shells) a

d historical drill hole tra es

WPG has 100% of all minerals over an area of 1,207k

2 on EL 5355 and 5254

surrounding the Tarcool further discoveries.

mine and is reviewing explor

tion targets with potential for

WESTERN GAWLER CRATON V (WGCJV)

The current interests of the parties to the WGCJV are approximately WPG 29%,

Tyranna Resources Ltd

Tyranna) 71%, with Tyranna the manager of the WGCJV.

Tyranna's strategy is to target the more advanced gold prospects which are situated within 50km of the Challenger gold processing operations and increase the economic scale of these prospects via focused and extensive exploration drilling.

Tyranna completed a pr

gram of Reverse Circulation drilling at the Typhoon and

Monsoon Prospects, 35km SSW of Challenger gold mine, during the quarter which returned a number of significant intersections (see Tyranna's ASX announcements dated 8 June and 6 July 2017).

WPG encourage Tyranna to continue exploring in the WGCJV project area for potential eventual treatment of ore through the Challenger mill.

TUNKILLIA

EXPLORATION

WPG has 100% of all minerals over an area of 1,604k

2 on EL 5670, 5901 and

5790 and is reviewing exploration targets with potential for further discoveries.