WPG Resources : 2017-01-31 December 2016 Quarterly Activities Report

ASX and Media Release Quarterly activities report December quarter 2016 HIGHLIGHTS

Challenger gold mine (WPG 100%)

• 12,429 ounces of gold produced in quarter taking YTD production to 24,567 ounces

• Guidance for FY 2017 of 50,000 ounces remain

  unchanged

• Exploration program momentum building up with significant results achieved

  Tarcoola gold mine (WPG 100%)

  • Mining commenced late November 2016

  • 768 ounces of gold in ore mined and on Tarcoola stockpile at end of quarter

  • Near mine explor

    tion targeting strategy developed and being implemented

    Western Gawler Craton joint venture (WPG approximately 34%)

• WGCJV dispute resolved; WPG has 100% of Challenger Deeps with new JV to be formed to explore for gold in other tenements

• Interesting exploration results announced by JV manager

  Tunkillia gold project (WPG 100%)

• Advanced data compilation completed

• Further exploration program to commence in March quarter

  Corporate

• Board renewal process progressing

• Listed options converted during the quarter and unexercised options taken up and exercised by the underwriter

31 January 2017

ASX Announcement - 31 January 2017

RESULTS AT A GLANCE

Sales and Processing (Challenger Processing Hub)	Units	December Quarter 2016	Year To Date	*September Quarter 2016
Total Ore Processed	Tonnes	157,707	309,305	151,598
Grade Processed	g/t Au	2.58	2.61	2.64
Recovery	%	94.9	94.7	94.5
Gold Recovered	Ounces	12,429	24,567	12,138
All-in Sustaining Cost*	$/Ounce	1,614	1,550	1,493
Gold Sold	Ounces	12,818	24,243	11,425
Average Gold Price Received	$/Ounce	1,631	1,689	1,755
Sales Revenue Realised**	A$000's	20,923	40,979	20,056

Challenger Gold Mine Operations Summary	Units	December Quarter 2016	Year To Date	*September Quarter 2016
Underground Capital Development	m	149	543	394
Total Underground Development	m	1,222	2,435	1,213
Underground Ore Mined	Tonnes	117,682	226,133	108,451
Underground Ore Grade***	g/t Au	3.02	3.06	3.11
Surface Stockpiles Treated****	Tonnes	39,582	78,221	38,639

Tarcoola Gold Mine Operations Summary	Units	December Quarter 2016	Year To Date	*September Quarter 2016
Production Drilling	m	3,842	3,842	-
Open Pit Waste Mined	bcm	167,809	167,809	-
Open Pit Ore Mined	Tonnes	8,825	8,825	-
Grade	g/t Au	2.71	2.71	-
Ore Hauled to Processing Facility	Tonnes	-	-	-
ROM Stockpile	Tonnes	8,825	8,825	-

Notes: * AISC in relation to underground mining costs include all lateral development and fixed asset additions other than those associated with permanent infrastructure. AISC in relation to open cut mining activities excludes capitalised waste mining costs. AISC includes an appropriate allocation of head office costs.

** Production, sales and revenue information is provided for the Challenger gold mine at 100% (WPG 50% 1 June to 31 July, 100% from 1 August). Current year sales and revenue attributable to the joint venture partner up to 31 July 2016 are 1,891 oz for revenue of

$3,354k

*** Includes stoping ore, development ore and low grade development ore

**** Low grade stockpiled material acquired with the Challenger Gold Mine

ASX Announcement - 31 January 2017

CHALLENGER GOLD MINE

OVERVIEW

The Challenger mine continued operations at full production rates during the quarter.

Updated Mineral Resource and Ore Reserve Estimates

On 25 October 2016 WPG released the 30 June 2016 Mineral Resource and Ore Reserve estimate. This update took into account mining depletion and drilling and sampling results since the previous estimate as at 30 April 2016.

The 30 June 2016 Mineral Resource estimate was a total of 838,000 tonnes at an average grade of 9.76 g/t Au containing 263,000 ounces of gold.

The 30 June 2016 Ore Reserves estimate was 558,000 tonnes at an average grade of 4.98 g/t Au containing 89,000 ounces of gold.

WPG confirms that it is not aware of any new information or data that materially affects the information included in the 25 October 2016 market announcement and above in relation to the mineral resource estimate and ore reserve estimate, and confirms that to the best of its knowledge and belief all material assumptions and technical parameters underpinning the mineral resource and ore reserve estimates in the 25 October 2016 market announcement continue to apply and have not materially changed except to the extent of production.

Production and Costs

Total ore mined from underground for the quarter was 117,682 tonnes @ 3.02g/t Au (35,417 tonnes from development and 82,265 tonnes from stoping). Underground ore feed to the mill was supplemented by 39,582 tonnes of low grade surface stockpile material.

Milled tonnes for the quarter were 157,707 @ 2.58 g/t Au. Average recovery of 94.9% was slightly impacted by lower recoveries from treating the low grade surface stockpile material. Total gold recovered was 12,429 ounces, while gold sold was 12,818 ounces.

All-In-Sustaining Cost (AISC) in the quarter was $1,614 per ounce recovered. This unacceptably high AISC was driven largely by low gold production in the month of December. A production improvement program has been implemented. Total revenue from bullion sales was $20.9 million at an average gold price of $1,631 per ounce.

NEAR MINE EXPLORATION

Resource definition and near mine exploration opportunities were pursued during the quarter by a program of underground diamond drilling. This ongoing program of near mine exploration drilling activity is to identify new minable resources that can be accessed from existing underground development.

ASX Announcement - 31 January 2017

Challenger West

During the quarter, a total of forty two drill holes for 5,975 metres were drilled to test the continuity of Challenger West ore shoots lower in the mine. In the middle to upper levels of Challenger West, there are multiple ore shoots (OD2, OD3, OD4) that were mined by the previous owner. The drilling throughout Challenger West area was located between the 290 and 710mRL.

Two drill programs returned very promising results on the OD4 shoot at the 450 level and OD1 shoot at the 370 level.

Figure 1: Drill hole intercepts for 450 OD4 and level development to the end of December 2016.

Significant intercepts include:

 16CUD1842: 1.66m @ 63.21g/t from 43.09m

 16CUD1882: 0.43m @ 53.55g/t from 30.14m

 16CUD1883: 0.39m @ 129.85g/t from 27.30m

 16CUD1883: 1.24m @ 140.05g/t from 30.51m

 16CUD1884: 1.00m @ 42.13g/t from 32.00m

 16CUD1908: 0.95m @ 214.28g/t from 271.8m

 16CUD1918: 1.19m @ 14.62g/t from 78.47m

 16CUD1922: 0.90m @ 157.03g/t from 83.23m

 16CUD1980: 2.00m @ 34.66g/t from 80.00m

Thirty two of the forty two holes drilled into Challenger West returned low grade results on leucosomes intersected, but due to the nuggetty nature of the gold at Challenger, there is potential for future development on the OD2, OD3 and OD4 ore shoots.