Drilling Update: Silica Hill Gold-Silver Discovery near Orange in NSW

ASX ANNOUNCEMENT Date: 21 December 2016

Number: 498/211216

DRILLING UPDATE: SILICA HILL GOLD-SILVER DISCOVERY NEAR ORANGE IN NSW Mineralisation extended by up to 50 metres down dip/plunge in first two drill holes of follow up drill programme Disseminated and narrow veins and stockworks of sulphide with silver and base metal mineralisation variably developed over 60 metres to 70 metres true thickness Assays expected in January. Deeper extensions to the mineralisation to be tested in February

Sulphide mineralisation has been extended by up to 50 metres down dip/plunge in both of the first two diamond drill holes completed as part of the follow up drill programme at Impact Minerals Limited's (ASX:IPT) high grade gold-silver discovery at the Silica Hill Prospect, part of the 100%-owned Commonwealth Project 100 km north of Orange in New South Wales.

The mineralisation comprises multiple narrow stockwork-style veins and veinlets together with disseminated sulphides in the rock surrounding the veins (Figure 1). Readings with a portable XRF instrument on both holes (CMIPT048 and CMIPT049) indicate silver mineralisation of more than

100 g/t occurs in many places both in the veins and the surrounding rock. Although the mineralisation is visually similar to that encountered in previous drill holes, silver minerals were not observed (see announcements dated 31st August, 2nd September and 13th September 2016).

Figure 1. Typical style of sulphide mineralisation (darker zones and veins) in Hole CMIPT049 at about 184 metres down hole.

Visually significant mineralisation has now been intersected in six drill holes so far at Silica Hill, over an area of 200 metres by 100 metres down to a depth of 120 metres below surface and with an average true thickness of between 50 metres and 70 metres (Figure 2).

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The mineralisation is open in all directions including up-dip and is terminated by a fault suggesting further mineralisation may have been offset.

The current drill programme, which will comprise up to 2,000 metres of diamond and reverse circulation drilling is designed to test for extensions to this mineralisation as well as further depth extensions to the Commonwealth deposit centred about 200 metres south west of Silica Hill (Figure 1).

Assays for the two drill holes are expected by late January.

Drilling has now ceased for the Christmas and New Year period. The programme will recommence in early February. Statutory approvals are still awaited for some of the drill holes and it is anticipated these will be granted in January.

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Figure 2. Surface geology map showing significant drill intercepts at Silica Hill and Main Shaft and location of CMIPT048 and CMIPT049. Dr Michael G Jones Managing Director

The review of exploration activities and results contained in this report is based on information compiled by Dr Mike Jones, a Member of the Australian Institute of Geoscientists. He is a director of the company and works for Impact Minerals Limited. He has sufficient experience which is relevant to the style of mineralisation and types of deposits under consideration and to the activity which he is undertaking 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 (the JORC Code). Dr Jones has consented to the inclusion in the report of the matters based on his information in the form and context in which it appears.

Impact Minerals confirms that it is not aware of any new information or data that materially affects the information included in the previous market announcements referred to and in the case of mineral resource estimates, that all material assumptions and technical parameters underpinning the estimates continue to apply and have not materially changed.

APPENDIX 1 - SECTION 1 SAMPLING TECHNIQUES AND DATA

Criteria JORC Code explanation Commentary

Sampling techniques

Nature and quality of sampling (e.g. cut channels, random chips, or specific specialised industry standard measurement tools appropriate to the minerals under investigation, such as down hole gamma sondes, or handheld XRF instruments, etc). These examples should not be taken as limiting the broad meaning of sampling.

Include reference to measures taken to ensure sample representivity and the appropriate calibration of any measurement tools or systems used

Rock chip samples

Random grab samples were taken at surface which represented favourable geology and alteration to known mineralisation in the region. Samples are variably weathered.

Soil Samples

About 250g of soil was taken from 15-20cm below surface and sieved to - 2mm size. Samples put in plastic snap seal bags. Samples were subsequently sieved to -250 micron at SGS Laboratories for assay by aqua regia digest.

RC Drilling

Reverse Circulation (RC) percussion drilling was used to produce a 1m bulk sample (~25kg) which was collected in plastic bags and representative 1m split samples (12.5%, or nominally 3kg) were collected using a riffle splitter and placed in a calico bag. The cyclone was cleaned out with compressed air at the end of each hole and periodically during the drilling. Holes were drilled to optimally intercept interpreted mineralised zones.

Diamond Drilling

Diamond drilling was used to produce drill core either with a diameter of 63.5 mm (HQ) or 47.6 mm (NQ).

Rock chip samples

Representative samples at each sample site weigh between 0.8 and 1.2 kg. Sample sites were chosen due to historic rock and soil assay results and the geophysical surveys conducted on the Commonwealth Project. Historic rock sample methods are unknown but are considered immaterial.

Soil Samples and Drill Samples

Sample representivity was ensured by a combination of Company Procedures regarding quality control (QC) and quality assurance

/ testing (QA).

Examples of QC include (but are not limited to), daily workplace and equipment inspections, as well as drilling and sampling procedures.

Examples of QA include (but are not limited to) collection of "field duplicates", the use of certified standards and blank samples approximately every 50 samples