Andromeda Metals : Wudinna Gold Camp resource jumps to 200,000 ozs gold

Andromeda Metals Limited

ABN: 75 061 503 375

ASX announcement

23 January 2017

Corporate details:

Cash: ~$0.298 million

(at 31 December 2016) Issued Capital:

405,767,063 ordinary shares

ASX Code: ADN

Directors:

Colin G Jackson

Non-Executive Chairman

Chris Drown

Managing Director

Nick Harding

Executive Director and Company Secretary Jonathan Buckley

Non-Executive Director

Contact details:

69 King William Road, Unley, South Australia 5061

PO Box 1210

Unley BC SA 5061

Tel: [phone]

Fax: [phone]

[e-mail] www.andromet.com.au

Eyre Peninsula Gold

(100% owned), South Australia

Wudinna Gold Camp Mineral Resource jumps to 200,000 ounces of gold Summary

Resource estimates for the Baggy Green and White Tank deposits, located in the 100% owned Wudinna Gold Camp, have been completed with the assistance of consultant Mining Plus Pty Ltd.

• The Baggy Green Mineral Resource Estimate totals 1.56 million tonnes at 1.64g/t gold for 82,400 ounces at a 0.5g/t gold cut-off grade. The Resource is classified as Inferred.

• The White Tank Mineral Resource Estimate totals 0.176 million tonnes at 1.92g/t gold for 10,900 ounces at a 0.5g/t gold cut-off grade. The Resource is classified as Inferred.

• The total Wudinna Gold Camp Mineral Resource, including the Baggy Green, White Tank and Barns gold deposits, totals 3.84 million tonnes at 1.62g/t gold for 200,300 ounces using a 0.5g/t gold cut-off grade, comprised of 0.38 million tonnes at 1.40g/t gold for 17,000 ounces of Indicated Resource and 3.469 million tonnes at 1.64g/t gold for 183,300 ounces

  of Inferred Resources.

• The three Wudinna Gold Camp deposits fall within 6km

  of each other and are shallow and potentially open-pitable.

  Fact: Gold recoveries for the Barns deposit exceed 97% using a conventional gravity and tail

  leach metallurgical flowsheet.

• Each of the deposits remain open and step-out drilling can add further resources, while other prospects in the Wudinna Gold Camp also show potential to contribute ounces.

  As gold mineralisation styles at each of the Wudinna Gold Camp deposits are very similar, excellent recoveries at Baggy Green and White Tank are likely to be confirmed by future metallurgical testwork.

• Recent metallurgical testwork confirms gold recoveries exceeding 97% are achievable at Barns using a conventional flowsheet, with testing of Baggy Green mineralisation planned.

Chris Drown Managing Director

Direct enquiries to Chris Drown. Ph [phone] or 0427 770 653.

Background

Andromeda Metals' Eyre Peninsula gold project comprises a 2,807 km2 land holding in the Gawler Craton (Figure 1).

The Company's priority on the Eyre Peninsula is advancing the wholly owned Wudinna Gold Camp(1), a cluster of gold prospects including the Barns, Baggy Green and White Tank deposits, into production.

A maiden Mineral Resource Estimate

for Barns was released in July 2016, with the estimate totalling 2.11 million tonnes at 1.6g/t gold for 107,000 ounces using

a 0.5g/t gold cut-off grade(2).

An assessment by independent mining consultants of the Barns deposit resulted in two recommendations to improve the robustness of the project. The first was to to establish gold recoveries by completing metallurgical test work at Barns; and the second was to expand the resource base in the Wudinna Gold Camp by delineating

additional shallow resources. The Company has worked to address both of these recommendations.

Metallurgical testing of Barns samples was reported on 16 January 2017, with

the results confirming that superb gold recoveries in excess of 97% can be achieved with a conventional flowsheet(3).

The Baggy Green prospect was assessed as showing good potential to increase mineral resources in the Wudinna Gold Camp, leading to a 23 hole RC drilling programme in the second half of 2016.

One of the goals of the Baggy Green programme was the definition of shallow ounces so drilling targeted mineralisation commencing within 100 metres of the surface. Additionally, drill hole spacings were designed to be close enough for use in mineral resource estimation

Results from the programme included the two best intersections recorded to date from Baggy Green with adjacent 50 metre spaced holes recording 16 metres at 5.72g/t gold and 11 metres at 9.32g/t gold respectively.

The drilling confirms the presence of

a gently dipping, coherent zone of gold mineralisation which persists for 500 metres along strike, and remains open to the north, south, and at depth.

Mineral Resource estimates for Baggy Green, and for the White Tank deposit which was drilled in the past, have been completed with the assistance of Mining Plus Pty Ltd and are detailed herein.

Baggy Green and White Tank deposit descriptions.

The Wudinna Gold Camp deposits, including Baggy Green and White Tank, fall in the Central Gawler Gold Province,

a belt of gold-dominant mineralisation which formed about 1590 million years ago during the regionally extensive Hiltaba/GRV tectonothermal event.

Gold mineralisation at Baggy Green and White Tank is hosted by variably deformed granodiorite/gneiss interpreted to belong

to the Tunkillia Suite, a group of 1690Ma granitiods that form important gold host rocks in the Central Gawler Gold Province.

Primary mineralisation at both deposits occurs in multiple, shallow northwest dipping shear controlled lodes. Native gold occurs with pyrite and weak chalcopyrite mineralisation associated with hydrothermal biotite-sericite-chlorite alteration.

Supergene zones of gold occur in the weathered zones at Baggy Green (minor) and White Tank, and are similar to those seen at the nearby Barns deposit.

A zone of total gold depletion occurs above the supergene zones at both deposits, with

the shallowest mineralisation commencing approximately 30 metres below surface.

Thin surficial quaternary cover sediments, dominated by aeolian sand, blanket the host rocks at both deposits.

Following the Baggy Green RC drilling programme, the company revised its detailed 3D mineralisation models for both Baggy Green (Figure 2) and White Tank (Figure 3), with these models forming the basis of the mineral resource estimates.

Surface topography

Base of cover sands

Base of weathering

Figure 2: Baggy Green cross section showing mineralised domains.

Surface topography

Base of cover sands

Base of weathering

Supergene Mineralisation

Figure 3: White Tank cross section showing mineralised domains.

Mineral Resource summaries.

The maiden Mineral Resource estimate for the Baggy Green gold deposit is 1.56 million tonnes at 1.64g/t gold for 82,400 ounces

of gold, using a 0.5g/t gold cut-off grade.

The maiden Mineral Resource estimate for the White Tank gold deposit is 176,000 tonnes at 1.92g/t gold for 10,900 ounces

of gold, using a 0.5g/t gold cut-off grade.

The Mineral Resources for both Baggy Green and White Tank have been classified as Inferred, whilst some material in areas of coarser spaced drilling remains unclassified.

The consolidated total Mineral Resource estimate for the Wudinna Gold Camp, incorporating the Barns, Baggy Green and White Tank estimates, is 3.849 million tonnes at 1.62g/t gold for 200,300 ounces of gold, using a 0.5g/t cut-off grade (Table 1).

Infill drilling, and the twinning of some existing holes, would allow reclassification of material to the Indicated category.

Figures 4 and 5 (over page) present tonnage-grade graphs for Baggy Green and

White Tank. These graphs demonstrate how these variables change across both deposits using different cut-off grades.

The Mineral Resource estimates have been jointly completed by independent consultant Mining Plus Pty Ltd and Andromeda Metals Limited. Mining Plus assumes responsibility for the block modelling, geostatistical analysis, grade interpolation and estimation

classification. Andromeda Metals assumes responsibility for the sampling techniques, integrity of the drill hole data and interpretation of the 3-D mineralisation models. Details of the resource estimation process are provided in Appendix 1.

Next steps for Wudinna Gold Camp.

The increase in shallow Mineral Resources to over 200,000 gold ounces, together with the excellent metallurgical results from Barns, are significant advances for the Wudinna Gold Camp likely to result in more favourable and robust project economics.

Andromeda Metals is planning a forward programme for the Wudinna Gold Camp comprising the following elements.

• Completion of an economic scoping study using the increased Mineral Resources and deposit models of the Wudinna Gold Camp, and incorporating the positive Barns metallurgical results and indicative processing flow sheet.

• Metallurgical testwork on Baggy Green mineralised drill sample retained after the recent drill programme.

• Infill drilling programmes to allow conversion of Mineral Resources from Inferred to Indicated classification, thereby allowing estimation of Ore Reserves.

• Step out drilling at Baggy Green, and other Wudinna Gold Camp targets, to further grow the local resource base.