Ann: Chairman's Address to Shareholders, page-2

Could be a great 2018 for the NAGsters

Not bad for a company with a $22 mill MC


PASS - Still on track

Nagambie Resources remains very confident of being awarded large tonnages of PASS management in the tenders to come for major infrastructure projects in Melbourne. Continuously-operated tunnel boring machines (known as TBMs) are typically used for major infrastructure projects and the PASS generated by them requires uninterrupted handling, transport and reliable environmental management.

Quarrying - will get a huge boost with latest tech machinery

Mobile, track-mounted, diesel-hydraulic, multiple-frequency-screening, conveying units have recently become available in Australia. They can be operated on their own or in series, allowing great flexibility in operations. They are capable of dry screening material down to around 0.4 mm (400 micron) in size and could be used at the Nagambie Mine to screen:
❖ 20mm minus gravel material from the overburden dumps, removing the fine dust;
❖ 20mm, 14mm, 10mm and 7mm rock aggregates and a rock sand product, all for concrete manufacture, from the heap leach material; and
❖ brickies sand, quartz concrete sand and quartz concrete aggregates from the proposed sand pits to the west of the West Pit.

Nagambie Resources has decided on the type of unit that it wishes to acquire and has ordered its first machine under a leasing arrangement. Once the first unit has been commissioned in January 2018 and is operating satisfactorily, consideration will be given to ordering a second one to operate in series when screening the heap leach material.

Gold - looking better than ever

The big remaining question to be answered is: “Will the grade of the Nagambie region sulphide-gold deposits increase with depth as they do at Fosterville?” In a geological sense, it is very possible. In comparison to Fosterville’s sulphide-gold orebodies, Nagambie region sulphide-gold orebodies:
❖ are in the same host rocks (silicified sandstone and siltstone sediments);
❖ have the same mineralisation style at surface (antimony-arsenic-associated, finelydisseminated-gold-in-sediments);
❖ were formed around the same geological time (roughly 377 million years ago);
❖ have temperature and pressure both naturally increasing with increasing depth; and
❖ have very similar, very deep, structural controls. Notably, the Nagambie region sediments were subjected to north-south compression which resulted in east-west faulting at surface (and east-west striking orebodies), while the Fosterville sediments were subjected to east-west compression which resulted in north-south faulting at surface (and north-south striking orebodies).

IP Surveys Sulphide-sensing Induced Polarisation (IP) geophysical surveys, looking over 400 metres in depth, have been designed for the Nagambie Mine, Wandean and the Racecourse Prospect. The contractor is scheduled to start work next week on the Nagambie Mine IP survey and sectional plots should be available in January. The IP plots will hopefully highlight better mineralised splays as drill targets and indicate increasing sulphide mineralisation with depth. The timing of the Wandean and Racecourse IP surveys will depend on logistical matters and, to some extent, the results of the Nagambie Mine IP survey. In a strategic sense, if both the Nagambie Mine and the Racecourse Prospect showed potential to be highgrade, sulphide-gold underground deposits, the two deposits would logically share an exploration/production access decline and ventilation shaft. If the IP surveys do give the results hoped for, the value of Nagambie Resources’ exploration tenements in the Nagambie region, now totalling over 1,000 sq km, will increase substantially. The $1.8 million of funding raised last week means that the Company could very quickly commence diamond drilling the best underground sulphidegold targets. In summary for its Nagambie region gold exploration, Nagambie Resources now has:
❖ 100% control of all the silicified sandstone/siltstone outcropping and near-outcropping ground in the Waranga Domain of the Melbourne Zone, highly prospective for goldin-sediments deposits;
❖ access to Geoff Turner and his enhanced Nagambie regional gold model;
❖ access to the best soil sampling protocols, the best geophysical contractors and the best drilling contractors; and
❖ access to sufficient funding to accelerate the exploration for “Fosterville look-alikes”

ADD TO THIS

Quarrying SAND

• Prepared first preliminary pit design
• Circa 400,000 tonnes of sand
• Commenced preparation of internal roads and sand stockpiling area
• Commenced approvals process
• Planning permit
• Work Plan

SAND In 2018
1. Continue the approvals process
• Ecological studies
• Hydrogeological modelling
• Establish vegetation offsets
• Community consultations

2. Finalise construction of internal roads and sand stockpiling area

3. Trial sand screening with MFS

Reprocessing ‘fines’ - want not - waste not

• Based on historic data, heap leach material could average 0.2 g/t of gold*
• Potentially 19,000+ ounces of gold in the ‘fines’
• Potential value of in-situ gold in fines ≈ $32m+ (at $1,700 / ounce)

* 0.2 g/t of gold based on historically reported head grade of 1.0 g/t and reported gold recovery of 80%.