Ausgold : Drilling to re commence at Katanning Gold Project Drilling to re commence at Katanning Gold Project

ASX CODE

AUC

DIRECTORS & MANAGEMENT

Mr Richard Lockwood

Non-Executive Chairman

Mr Denis Rakich Executive Director & Company Secretary

Mr Neil Fearis

Independent

Non-Executive Director

Mr Geoff Jones

Non-Executive Director

Miss Melanie Sutterby

Geology Manager

Ms Elsie Lee

Financial Controller

REGISTERED OFFICE

Level 16, AMP Building 140 St Georges Terrace Perth WA 6000

SHARE REGISTRY

Security Transfer Registrars 770 Canning Highway

Applecross WA 6153

ISSUED CAPITAL (12.12.16)

Ordinary shares: 350.3m Unlisted options: 44.9m

INVESTOR RELATIONS

10th January 2017

DRILLING TO RECOMMENCE TODAY AT KATANNING GOLD PROJECT

• ~1200m of reverse circulation ("RC") drilling has commenced at the Katanning Gold Project ("KGP")
• RC program continues on from December 2016 drilling targeting high grade shoots at White Dam and Fraser
• Results from December 2016 drilling expected in the coming days
• Results to support Mineral Resource update at White Dam and Fraser, currently scheduled for Q2 2017

Ausgold Limited (ASX: AUC) ("Ausgold" or "the Company") is pleased to advise that RC drilling will re-commence today at the KGP (Figure 1).

This RC drilling will complete the planned White Dam and Fraser programs and will comprise approximately 600m at White Dam and 600m at Fraser.

Results Returned and Pending from December 2016 Drilling

In December 2016, Ausgold drilled six holes for 410m at the new Datatine prospect (refer ASX announcement "High Grade Gold Discovery Confirmed at Datatine" 13th December 2016). The results from this program were very encouraging.

Follow up RC and air core ("AC") drilling at Datatine will commence following the completion of the current program.

Additionally, the following RC holes were completed in December 2016;

• two RC holes for 424m targeting the down-plunge extents of the White Dam high-grade shoot; and

• seven RC holes for 625m targeting the shallow or "up-plunge" extents of White Dam.

Assay results are outstanding for the full White Dam program and for one RC hole at Datatine. These results are expected to be finalised in the coming week.

Denis Rakich

T: [phone]

M: [phone]

E: [e-mail]

ABN 67 140 164 496

Level 16, AMP Building, 140 St Georges Terrace, Perth WA 6000

T: 08 9220 9890 F: 08 9220 9820 E: [e-mail] W: www.ausgoldlimited.com

Figure 1. Katanning Gold Project resources and prospect locations; showing Datatine exploration activity (inset). (Mineral Resources developed in accordance with JORC 2012 Code; refer "Updated JORC Resource" ASX Announcement 21st October 2015)

CONTACT DETAILS

For further information, please contact

Mr Denis Rakich on

T: [phone] M: [phone]

W: www.ausgoldlimited.com

Forward-Looking Statements

This announcement includes "forward-looking statements" as that term within the meaning of securities laws of applicable jurisdictions. Forward-looking statements involve known and unknown risks, uncertainties and other factors that are in some cases beyond Ausgold Limited's control. These forward-looking statements include, but are not limited to, all statements other than statements of historical facts contained in this presentation, including, without limitation, those regarding Ausgold Limited's future expectations. Readers can identify forward-looking statements by terminology such as "aim," "anticipate," "assume," "believe," "continue," "could," "estimate," "expect," "forecast," "intend," "may," "plan," "potential," "predict," "project," "risk," "should," "will" or "would" and other similar expressions. Risks, uncertainties and other factors may cause Ausgold Limited's actual results, performance, production or achievements to differ materially from those expressed or implied by the forward-looking statements (and from past results, performance or achievements). These factors include, but are not limited to, the failure to complete and commission the mine facilities, processing plant and related infrastructure in the time frame and within estimated costs currently planned; variations in global demand and price for coal and base metal materials; fluctuations in exchange rates between the U.S. dollar, and the Australian dollar; the failure of Ausgold Limited's suppliers, service providers and partners to fulfil their obligations under construction, supply and other agreements; unforeseen geological, physical or meteorological conditions, natural disasters or cyclones; changes in the regulatory environment, industrial disputes, labour shortages, political and other factors; the inability to obtain additional financing, if required, on commercially suitable terms; and global and regional economic conditions. Readers are cautioned not to place undue reliance on forward-looking statements. The information concerning possible production in this announcement is not intended to be a forecast. They are internally generated goals set by the board of directors of Ausgold Limited. The ability of the Company to achieve any targets will be largely determined by the company's ability to secure adequate funding, implement mining plans, resolve logistical issues associated with mining and enter into any necessary off take arrangements with reputable third parties. Although Ausgold Limited believes that its expectations reflected in these forward-looking statements are reasonable, such statements involve risks and uncertainties and no assurance can be given that actual results will be consistent with these forward-looking statements.

Competent Persons Statements

The information in this announcement that relates to Exploration Targets and Exploration Results is based on information compiled by Miss Melanie Sutterby who is a member of the Australasian Institute of Mining and Metallurgy (AusIMM) and has sufficient experience relevant to the style of mineralisation under consideration and to the activity which she undertakes to qualify as a Competent Person as defined in the 2012 edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves". Miss Sutterby is an employee of Ausgold Limited and consents to the inclusion in this report of the matters based on the information in the form and context in which it appears.

The information in this announcement that relates to the Mineral Resource Estimates is based on work done by Mr Rod Brown of SRK Consulting (Australasia) Ltd and Miss Melanie Sutterby of Ausgold Limited. Miss Sutterby takes responsibility for the integrity of the Exploration Results including sampling, assaying, and QA/QC, and the preparation of the geological interpretations. Mr Brown takes responsibility for the Mineral Resource Estimate.

Mr Rod Brown and Miss Melanie Sutterby are members of The Australasian Institute of Mining and Metallurgy and have sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration, and to the activity that they are undertaking, to qualify as Competent Persons in terms of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves" (JORC Code, 2012 edition). The Competent Persons consent to the inclusion of such information in this announcement in the form and context in which it appears.