Activities Report December 2018 Quarter West African focused gold explorer and developer, Azumah Resources Ltd (ASX: AZM or Azumah ) presents its Activities Report for the Quarter ended 31 December 2018 and in particular developments at its Wa Gold Project, Ghana ( Project ). A major development during the Quarter was the discovery and subsequent confirmation of the new blind high-grade Eastern Lode at the Bepkong deposit. This remains open to the north, south and importantly given the structurally controlled orogenic-style of mineralisation, most likely to a much greater depth. High-grade mineralisation was also extended 75m deeper to 200m below surface at the Kunche deposit. The confirmation of high-grade mineralisation extending to depth at Kunche and Bepkong is extremely encouraging and bodes well for the prospect of underground mining. The Project, which is under the technical management of joint venture partner Ibaera Capital ( Ibaera ), remains on track for delivery by end-january of a re-estimation of Ore Reserves and a report on the progress of the Feasibility Study update. Finalisation of the Feasibility Study update and a development decision, subject to finance, is scheduled for Q3 2019. Both the Ore Reserves and Feasibility Study are underpinned by a recent increase in Mineral Resources to 2.5Moz (49.2Mt at 1.6g/t Au)(Table 2). The Study and Ore Reserves update is focused entirely on the open-pit mining of a series of near-surface deposits in the Wa-Lawra and Wa-East regions of the Project ( Project ). Underground mining is not within the scope of these updates and, as such, offers a new dimension to the Project and a possible step-change in scale, longevity and economics. Azumah s Managing Director, Stephen Stone, said The tremendous deeper high-grade drilling results obtained during the December Quarter have highlighted the opportunity to extend mining underground, adding another important dimension to the already robust Wa Gold Project. "The Azumah-Ibaera joint venture is really looking forward to delivering by end-january the results of the excellent progress that has been made with the Feasibility Study update and a re-estimation of Ore Reserves. Investors can also look forward to more drilling results, especially in coming weeks those from six additional holes drilled at Bepkong to better define and extend the deeper high-grade mineralisation. "2019 has commenced very strongly and will be a defining year for the Wa Gold Project and Azumah Resources". EXPLORATION Commenced 40,000m multi-target drilling campaign to increase Mineral Resources and Ore Reserves: 7,000m of RC/Diamond drilling to test for open-ended depth extensions to bottomof-pit high-grade mineralisation at Kunche, Bepkong and Julie deposit, to expand Mineral Resources and for new prospect development; ASX & Media Release 22 January 2019 ASX: AZM www.azumahresources.com.au Wa Gold Project: Value 2.5Moz Mineral Resource 2,400km 2 fertile terrain 624,000oz, 2.14g/t Au Ore Reserve Upside Growing resources and reserves Widespread anomalism Numerous priority targets Activity ~40,000m drilling and Feasibility update underway Fully Funded <A$17M over 2yrs Ibaera Capital earning 47.5% directly in Project Issued Capital: 782M ordinary shares 35M 3c opts exp 13.11.2021 3M 3c opts exp 30.06.2020 1.5M 3c opts exp 31.01.2021 Directors & Management: Chairman: Michael Atkins Managing Director: Stephen Stone Non-Executive Director: Debra Bakker Linton Putland Contact: Stephen Stone Mb: +61 (0) 418 804 564 stone@azumahresources.com.au Page 1 of 12
3,000m of RC drilling to upgrade in-pit inferred Mineral Resources to Indicated status for inclusion in pit optimisations; 8,000m of RC drilling to target and delineate new shallow resources across the Project; 7,000m of aircore drilling to test and expand multiple existing auger and VTEM generated targets and prospects; Up to 15,000m of auger drilling to better define and infill existing anomalies and to identify new ones; and Up to 5,000m of trenching to test the Eve, Laudetta, Danyawu SW and Kjersti prospect areas. Three RC/DDH holes discovered and confirmed a new, blind high-grade lode at Bepkong East: (Figs 1 to 5)(refer ASX releases 12 and 19 December 2018) Discovery hole (BRCD487) intercepts semi-continuous 93m mineralised zone grading 2.33g/t Au from 261m. Includes 9.9m at 8.42g/t Au from 295m, 2.16m at 21.17g/t Au from 303m and 0.5 at 88.71g/t Au from 338m. Two holes drilled 50m and 100m north of BRCD487 confirm continuity within the new high-grade Eastern lode: 11m at 13.45g/t Au from 171m within a broader zone of 35m at 4.70g/t Au from 148m (BRCD485); and 5m at 6.01g/t Au from 417m (BRCD486). Two additional high-grade lodes intersected in BRCD485: 5m at 6.05g/t Au from 220m; and 5.6m at 8.15g/t Au from 291.4m, incl. 2m at 18.00g/t Au from 292m. Results confirm the presence of a major, well-developed, high-grade mineralising fluid conduit system that is likely to extend to considerable depth. Strengthens the case for underground mining and therefore a possible step-change in project scale, longevity and economics. Results from a programme of six follow-up holes to be reported in the coming weeks. Kunche drilling deepens high-grade mineralisation: (Figs 6 to 9)(refer ASX releases 8 May 2018 and 10 January 2019) Two RC/DD holes, drilled to investigate mineralisation in the vicinity of an earlier intercept of 44m at 5.37g/t Au from 99m (KRCD831), extend high-grade mineralisation up to 75m deeper to approximately 200m below surface: 5m at 6.02g/t Au from 214m (KRCD849); and 1m at 140.49g/t Au (~4oz per tonne) from 208m (KRCD850). (NB: Holes were completed in December 2018 and results reported subsequent to end of the December Quarter) Kunche system remains open at depth. FEASIBILITY STUDY AND ORE RESERVE RE-ESTIMATION UPDATE Report on progress of the Feasibility Study update and re-estimation of Ore Reserves scheduled for end-january. Underground mining not yet included in its scope. Joint venture continues to progress discussions with senior Ghana government representatives to obtain a fiscal stability agreement and concessions. Page 2 of 12
CORPORATE Retained working capital of ~$1.4 million at the end of the Quarter; Held 13.4% (27.7M shares) strategic shareholding in Ghana neighbour, Castle Minerals Limited (~$0.3 million as at 31 December 2018); Continued process to identify additional growth opportunities; Attended the 121 Mining Investment London Conference on 20-21 November and the Mines and Money London Conference 26-29 November; and Held Azumah s Annual General Meeting on 16 November 2018, at which all resolutions put to shareholders were passed. NEXT QUARTER In the March 2019 Quarter, Azumah expects to: Deliver by end-january the results of the progress made on the Feasibility Study Update and Ore Reserve reestimation; Report the results from a programme of six follow-up holes to further define deeper high-grade mineralisation at Bepkong; Continue the intense multi-target drilling campaigns aimed at discoveries, boosting Mineral Resources and Ore Reserves; Advance discussions with the Ghana Government on securing a stability agreement and material fiscal concessions; Finalise applications for EPA licences for the Kunche-Bepkong and Julie Project Mining Licences; Progress strategy to secure a new growth opportunity; and Attend in Cape Town the Arlington Pre-Indaba Conference from 1-3 February and the 121 Mining Conference from 4-5 February. Meetings will also be held with senior Ghana government officials during the 25 th Anniversary Mining Indaba Conference from 4-7 February. The opening address at Mining Indaba will be delivered by the President of Ghana, His Excellency Nana Akufo-Addo. For further information please contact: Stephen Stone Peter Harris Managing Director Peter Harris & Associates Mb 61 (0) 418 804 564 Mb 61 (0) 412 124 833 stone@azumahresources.com.au Follow us on: Page 3 of 12
Fig 1: Bepkong Deposit - Long Section through interpreted Eastern Lode highlighting high-grades and depth continuity Fig 2: Bepkong Deposit - Cross Section through BRCD487 and location of Eastern Lode discovery Page 4 of 12
Fig 3: Bepkong Deposit - Cross Section showing BRCD485 Fig 4: Bepkong Deposit - Cross Section showing BRCD486 Page 5 of 12
Fig 5: Bepkong Deposit Plan of recent drilling results and Eastern Lode which plunges to the south Fig 6: Kunche Deposit - Cross Section 1149000mN showing KRCD849 Page 6 of 12
Fig 7: Kunche Deposit - Cross Section 1148925mN showing KRCD850 Fig 8: Kunche Deposit - Long Section showing recent drilling and inferred ore shoot Page 7 of 12
Fig 9: Kunche Deposit Plan showing most recent drilling and selected historical intercepts About Azumah Resources Limited Azumah Resources Limited is a Perth-based, ASX-listed (ASX: AZM) company focused on exploring and developing its regional-scale Wa Gold Project in the Upper West Region of Ghana, West Africa. Three main deposits have been discovered and extensively drilled at Kunche and Bepkong, adjacent to the Black Volta River and Ghana's border with Burkina Faso, and Julie approximately 80km to the east. Several satellite deposits including Aduane, Kunche Northwest, Yagha, Julie West, Danyawu, Alpha/Bravo, Josephine and Collette have also been discovered and delineated. To date, the Company has estimated a JORC 2012 Mineral Resource of 2.5Moz of gold grading 1.6g/t Au, including 1.6Moz Measured and Indicated grading 1.8g/t Au. These are evenly distributed between the Kunche-Bepkong and Wa East (Julie deposit etc.) camps. A 2015 Feasibility Study defined an Ore Reserve of 624,000oz Au (9.1Mt at 2.14g/t Au)(JORC 2012). The Feasibility Study is being updated with a progress report and a re-estimation of Ore Reserves scheduled for late January 2019 and Study finalisation planned for Q3 2019. Extensive metallurgical test work has confirmed a high average overall gold recovery of ~92% for the combined Kunche, Bepkong and Julie deposits. Mineral Resources have been progressively grown through a focused, systematic approach to the exploration of the Company's 2,400km 2 licence holdings. These encompass large tracts of prospective Birimian terrain, the rocks that host the majority of West Africa s gold mines. Page 8 of 12
Much of the tenure is covered in soil, alluvium or laterite, so most discoveries have been blind'. Azumah anticipates Mineral Resources will substantially grow as it continues to generate and test its extensive pipeline of targets. Azumah s current exploration strategy is driven by its aim to materially increase its existing Ore Reserve base and demonstrate attractive Project economics. This will enhance funding capability and solidly underpin a development decision. Azumah has two 15-year Mining Leases over its principal deposits (Ghana government holds a 10% free carried interest in their rights and obligations' and is also entitled to a 5% gross gold royalty). No technical, social or environmental impediments to development have been identified, no communities need to be relocated and rehoused, and there is strong support from key stakeholders for the Project. The Project benefits from excellent regional infrastructure including grid power to site; good quality bituminised and non-bituminised roads, easy access to water, a 2km sealed airstrip at the regional centre of Wa and good general communications. Ibaera Funding Transaction All of Azumah s Ghana interests are held through its wholly owned Ghana subsidiary, Azumah Resources Ghana Limited (AZG). On 1 September 2017 Azumah executed a transformative Earn-In and Shareholders Agreement (EISA) with Perth managed private equity group, Ibaera Capital GP Limited (Ibaera), whereby Ibaera can initially earn a 42.5% interest in AZG, and therefore the Wa Gold Project, by spending US$11.5M over two years. If Azumah elects not to co-contribute pro-rata after that, Ibaera may increase its interest to a maximum of 47.5% for a total minimum expenditure of US$13.5 million (~A$17M). Ibaera is backed by a US-based +US$1.5 billion natural resources focused investment fund. Before committing to the Project, Ibaera reviewed many other international resource projects and, having selected the Azumah Project, undertook comprehensive due diligence before committing to the EISA. The terms of the EISA set out the basis for the parties to boost Mineral Resources, Ore Reserves and to deliver a feasibility level study supporting a decision to proceed to production (refer ASX release dated 2 September 2017). Ibaera s owners, principals and management are all very experienced geologists, engineers and financiers and, pursuant to the EISA, are now managing all facets of the Project. References All references to Mineral Resources and Ore Reserves pertain to ASX releases dated 2 September 2014, 23 March 2015, 12 October 2016 and 28 September 2018 respectively. Also refer to Tables 1 and 2 herein. The Company confirms that all material assumptions underpinning the production targets and forecast information continue to apply and have not materially changed other than a positive material reduction in capital costs (refer ASX release dated 9 May 2016). For further information on Azumah Resources Limited and its Wa Gold Project, please visit its website at www.azumahresources.com.au which contains copies of all continuous disclosure documents to ASX, Competent Persons Statements and Corporate Governance Statement and Policies. Competent Persons Statements The information in this announcement that relates to exploration results is extracted from the Company s ASX announcements dated 8 May 2018, 12 December 2018, 19 December 2018 and 10 January 2019 which are available to view on the Company s website. The Company confirms that it is not aware of any new information or data that materially affects the information included in the original announcement and that the form and context in which the Competent Person s findings are presented have not been materially modified. Page 9 of 12
Wa Gold Project: Deposits, Prospects, Mineral Resources and Ore Reserves Page 10 of 12
Table 1: Ore Reserves Summary JORC Code 2012 Proved Probable Total (As at August 2014) Tonnes (Mt) Grade g/t Au Tonnes (Mt) Grade g/t Au Tonnes (Mt) Grade g/t Au Gold oz Kunche 4.91 1.92 0.05 3.11 4.97 1.94 309,000 Bepkong 1.79 1.84 0.11 1.97 1.90 1.85 113,000 Julie 0.29 2.45 1.93 2.89 2.21 2.84 202,000 Total 7.00 1.92 2.09 2.85 9.08 2.14 624,000 Values have been rounded. Table 2: Mineral Resource Estimate JORC Code 2012 Updated 28 September 2018 Measured Indicated Inferred Grand Total Deposit Cutoff Au g/t Tonnes Grade Gold Tonnes Grade Gold Tonnes Grade Gold Tonnes Grade Gold (Kt) g/t Au oz (Kt) g/t Au oz (Kt) g/t Au oz (Kt) g/t Au oz Wa-Lawra Kunche 0.5 8,835 1.6 446,000 3,404 1.4 145,000 7,616 1 255,700 19,855 1.3 846,500 Bepkong** 0.5 2,220 1.8 128,000 1,700 1.3 73,000 1,170 1.2 44,000 5,090 1.5 245,000 Aduane 0.5 322 12,800 1,491 1.3 59,900 1,812 1.3 72,700 Kunche NW 0.5 1.6 694 1.1 25,400 694 1.1 25,400 Yagha 0.5 4.2 333 1.3 13,400 333 1.3 13,400 Wa-East Julie* 0.5 1,490 2.1 101,000 9,300 1.9 572,100 6,360 1.7 352,000 17,150 1.9 1,025,000 Collette** 0.5 1,690 1.5 79,000 1,690 1.5 79,000 Julie West 1 455 4 58,900 68 2.4 5,100 523 3.8 64,100 Danyawu 1 105 4.2 14,200 38 1.5 1,800 143 3.5 16,000 Alpha/Bravo 1 148 4.2 20,000 148 4.2 20,000 Josephine 1 709 1.5 34,500 580 1.5 28,600 1,290 1.5 63,100 Manwe 1 257 2.1 17,300 192 1.5 9,400 450 1.9 26,700 Total 12,545 1.7 675,000 16,252 1.8 927,800 20,380 1.4 894,300 49,178 1.6 2,496,900 Note: Values have been rounded. A lower cut-off of 0.5g/t Au was used for Kunche, Bepkong, Aduane, Julie and Collette, and a lower cut-off of 1.0g/t Au was used for Julie West and Danyawu The information in this announcement that relates to Ore Reserves is extracted from the Company s ASX announcement dated 2 September 2014 and is available to view on the Company s website. The Company confirms that it is not aware of any new information or data that materially affects the information included in the original announcement, that all material assumptions and technical parameters underpinning the estimates in the original announcement continue to apply and have not materially changed and that the form and context in which the Competent Person s findings are presented have not been materially altered. The information in this announcement that relates to Mineral Resources for the Julie, Kunche, Aduane, Kunche NW, Yagha, Julie West, Danyawu, Alpha/Bravo, Josephine and Manwe deposits is extracted from the Company s ASX announcement dated 28 September 2018 and is available to view on the Company s website. The Company confirms that it is not aware of any new information or data that materially affects the information included in the original announcement, that all material assumptions and technical parameters underpinning the estimates in the original Page 11 of 12
announcement continue to apply and have not materially changed and that the form and context in which the Competent Person s findings are presented have not been materially altered. The information in this announcement that relates to Mineral Resources for the Bepkong and Collette deposits is extracted from the Company s ASX announcement dated 2 September 2014 and is available to view on the Company s website. The Company confirms that it is not aware of any new information or data that materially affects the information included in the original announcement, that all material assumptions and technical parameters underpinning the estimates in the original announcement continue to apply and have not materially changed and that the form and context in which the Competent Person s findings are presented have not been materially altered. Statements of Competent Persons for the various Mineral Resource Estimates, Ore Reserve Estimates and Process Metallurgy, can all be found on the Company's website at: http://www.azumahresource.com.au/projectscompetent_persons.php Forward-Looking Statement All statements other than statements of historical fact included on this website including, without limitation, statements regarding plans and objectives of Azumah, are forward-looking statements. Forward-looking statements can be identified by words such as anticipate, believe, could, estimate, expect, future, intend, may, opportunity, plan, potential, project, seek, will and other similar words that involve risks and uncertainties. These statements are based on an assessment of present economic and operating conditions, and on a number of assumptions regarding future events and actions that are expected to take place. Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties, assumptions and other important factors, many of which are beyond the control of the Company, its directors and management of Azumah that could cause Azumah s actual results to differ materially from the results expressed or anticipated in these statements. The Company cannot and does not give any assurance that the results, performance or achievements expressed or implied by the forward-looking statements contained on this website will occur and investors are cautioned not to place any reliance on these forward-looking statements. Azumah does not undertake to update or revise forward-looking statements, or to publish prospective financial information in the future, regardless of whether new information, future events or any other factors affect the information contained on this website, except where required by applicable law and stock exchange listing requirements. Page 12 of 12