Traka Resources : 31 Jan 2017 - Quarterly Activities & Cashflow Report - 31 Dec 2016

Summary TRAKA RESOURCES LIMITED

ABN 63 103 323 173

Quarterly Activities Report

for the three months ended 31 December 2016

• The Company's pro-rata share entitlement offer during the quarter raised $617,000 after costs. Placement of the residual shortfall after the quarter end has raised a further $587,000 after costs.

• Permiting by Chalice Gold Mines for access to Traka's Latitude Hill Project in the Musgraves has progressed well.

• Promising prospects for extensions of lithium bearing pegmatites from the neighbouring Mt Cattlin Mine into Traka's 20% Free Carried joint venture tenements identified.

• High resolution aeromagnetic survey and geochemical sampling at the Yallalong Project was completed and compilation of this data is underway.

• The evaluation of other exploration projects is continuing.

Figure 1. Location plan of Traka's Projects

Corporate

On 5 October 2016, the Company announced a 1 for 4 Entitlement Offer of up to 56,928,631 ordinary fully paid shares at a price of 2.2 cents per share (1). On 4 November 2016 this Offer closed with 27,903,782 shares having being accepted raising $617,000 after costs (2). On 23 January 2017 the Company announced that it had placed the shortfall from the Offer raising an additional $587,000 after costs (3).

This successful and well supported Entitlement Offer and Shortfall Placement has provided the Company with sufficient working capital to undertake its planned exploration program in 2017.

The Musgrave Project The Latitude Hill Joint Venture:

On 22 September 2016 the Company announced that a joint venture agreement had been reached with Chalice Gold Mines Ltd ("Chalice") on the Latitude Hill area of the Musgrave Project (4, 5). The joint venture comprises 5 tenement applications covering an area of 1,007 square kilometres, 40 kilometres south of Wingellina. Chalice's entry into the joint venture provides an initial opportunity to drill test Spectrem airborne electromagnetic targets ("Spectrem") highlighted in previous surveys (Figure 2).

Figure 2. Aeromagnetic image showing the location of the Latitude Hill joint venture tenements and the seven Spectrem targets

A successful site meeting was held with representatives of the Ngaanyatjarra Council on 14 November 2016 and all parties agreed to terms for the grant of the Latitude Hill tenements. The land access agreement is expected to be progressed during the March Quarter.

Chalice was successful in obtaining two Co-funded Exploration Drilling awards to the total value of

$300,000 issued under the State Government Exploration Incentive Scheme ("EIS") for 2017 and these funds will be used for drill testing the high priority Spectrem conductors identified on the Latitude Hill project. An additional EIS application in the amount of $150,000 by Traka, which will also be available for the Latitude Hill joint venture drilling program, brings the total EIS funds accessible to the joint venture to $450,000.

The joint venture is targeting high-grade orthomagmatic nickel-copper-PGE sulphide deposits in the highly prospective Giles Complex mafic to ultramafic intrusives in the West Musgrave Province (Figure 3). In 2012 a Spectrem survey identified 7 priority targets modelled as bedrock conductors at depths of between 50-160m below surface and the joint venture plans to follow up these promising targets with ground electromagnetics ("EM") and shallow geochemical sampling to define targets for drill testing.

Figure 3. The Latitude Hill Joint Venture tenements in the Musgrave Province.

The Mt Morphett Project:

The Mt Morphett Project tenements lie immediately west of the Latitude Hill Project and cover the 12 kilometre long copper-nickel-PGE (Platinum Group Elements) Araplate Prospect in addition to IOCG (Iron Oxide Copper Gold) and hydrothermal copper targets associated with the Tollu Granite intrusive and Fault (Figure 4).

The Araplate Prospect is defined by anomalous copper, nickel and platinum soil geochemical sampling in historic exploration data. It coincides with the southern margin of the Saturn Intrusive which is one of the large layered mafic bodies making up the Giles Intrusive Complex. The model for mineralisation is sulphide hosted magmatic copper, nickel and PGE in the basal layer of the intrusive or chonolith style bodies similar to that interpreted for the Spectrem targets

at Latitude Hill. The Araplate Prospect is well defined and can be progressed to drilling quickly following minimal infill geochemical sampling and a ground electromagnetic survey.

Permitting requirements to gain access to this project are ongoing.

Figure 4: An aeromagnetic image showing main geological features and the Araplate Prospect

The Ravensthorpe Project

Traka has three projects in the Ravensthorpe region (Figure 5); the Mt Cattlin North Project involving a 20% free carried interest by Galaxy Resources Limited ("Galaxy") in a tenement that abuts the Mt Cattlin Lithium Mine tenements, the wholly owned Mt Short Base Metal Project and the Bandalup Project in which Traka has a 20% free carried interest in a joint venture with ACH Minerals Pty Ltd ("ACH").