Ann: Quarterly Activities Report - March 2017, page-2

Tomingley Gold Operations (TGO)

A 59% increase in gold production from the previous quarter to 18,721 ounces reflected recovery from the weather affected previous two periods. Site operating cash flow after development costs for the quarter was $6.5M but due to delayed payments from the December quarter in January, the net position was $2.0M.

Full year guidance for FY2017 remains at production of 53,000 – 58,000 ounces with an AISC of A$1,600 – A$1,750 although production is expected to be at the higher end and AISC at the lower end of the guidance range due to higher pit grade reconciliation.

o Gold production was above forecast at 18,721 ounces
o Site operating cash costs reduced by 33% from previous quarter at A$1,070/ounce with all in sustaining costs (AISC) of A$1,201/ounce
o Gold sales 16,303 ounces for revenue of A$27.6 million at an average price of A$1,694/ounce
o Gold forward contracts at 31 March 2017 of 31,000 ounces at average price of A$1,716/ounce.

A substantial exploration program has been implemented to build on the existing resources and reserves inventory, testing underground ore positions at the Tomingley Gold Mine (TGO) and at near mine and regional exploration targets.

Dubbo Project (DP)

Upward price movements in the zirconium chemicals and powders, and rare earth magnet markets are signalling renewed confidence in the sector, with further increases anticipated during 2017.

Very high purity zirconias have been produced at ANSTO to enable ASM to successfully compete in most downstream high value added zirconia markets, and to facilitate a very high purity hafnium/zirconium concentrate for further processing to high purity hafnium.

The modularised build is being optimised and costed by Outotec to further support the bankability of the project, and assist with flexible financing options for construction.

Minchem, on behalf of ASM, has secured six non-binding LOIs for the supply of zirconium chemicals that will account for about 60% of the stage 1 development of 8,150tpa of zirconia (ZrO2) equivalent products, supporting about 15% of anticipated project revenues. Further zirconium chemicals LOIs can be expected in coming months.

Corporate

The Group’s cash position totalled A$29.0M with A$20.8M in cash and bullion on hand valued at A$8.2M, an increase of A$4.5M from the previous quarter.