644f65b61b35560f9c322a.pdf

2015

CONTENTS

Business Overview 3

Corporate Directory 3

Chairman's Letter 4

Review of Operations 5

Corporate Governance 24

Directors' Report 29

Auditors Independence Declaration 36

Consolidated Statement of Profit or Loss and

other Comprehensive Income 37

Consolidated Statement of Financial Position 38

Consolidated Statement of Changes in Equity 39

Consolidated Statement of Cash Flows 40

Notes to the Financial Statements 41

Directors' Declaration 64

Auditors Report 65

ASX Additional Information 67

BUSINESS OVERVIEW

Citigold Corporation Ltd (Citigold) is an Australian gold mining and exploration company, operating the wholly owned Charters Towers goldfield in north east Australia, 1000 kilometres north of Brisbane, Queensland, and 130 kilometres south west from the major coastal port of Townsville.

Citigold holds 100% of the central goldfield. A Mineral Resource of 25 million tonnes at an average grade of 14grams per tonne, containing 11,000,000 ounces of gold has been defined to JORC reporting standards. This gold deposit is currently the largest high grade gold resource in Australia. The Company has invested over

$200 million acquiring and developing the goldfield.

Citigold has the plan to develop the project in stages over a five year period, subject to adequate funding, building gold production to over 300,000 ounces per annum.

In addition to the 148 square kilometre central goldfield, Citigold has surrounding exploration areas with identified targets and potential for major discoveries. The surface infrastructure to support underground mining is already in place including the gold process plant.

Citigold has a motivated and experienced core management team focused on expanding into an ultra low cost gold producer. The company is now in discussion with several parties about funding this expansion.

The Charters Towers gold deposit is large and forecasts show that it has the potential to generate substantial positive cash flows for many years. This will help generate large returns for all shareholders over time, Through the enabling mantra:

'Smarter, Faster, Better, Cheaper'

CORPORATE DIRECTORY

CORPORATE & REGISTERED OFFICE

Citigold Corporation Limited ABN: 30 060 397 177

Level 13, 500 Queen Street, Brisbane, 4000 Qld, Australia Telephone: +61 7 3834 0000

Facsimile: +61 7 3834 0011 Email: [email protected]

CHARTERS TOWERS MINE SITE

Clermont Highway, PO Box 10, Charters Towers, Qld, 4820, Australia T:+61 7 4787 8300 F:+61 7 4787 8600

Email: [email protected]

DIRECTORS

Mark Lynch (Executive Chairman) John Foley (Non-Executive Director)

Arun Panchariya (Non-Executive Director) Christopher Towsey (Executive Director)

COMPANY SECRETARY

Francis Rigby

EXCHANGE LISTING

Australia (ASX) Code 'CTO'

SHARE REGISTRY

Computershare Investor Services

117 Victoria Street, West End, QLD 4000 Telephone: 1300 850 505

AUDITOR

KS Black & Co Level 6, 350 Kent Street

Sydney NSW 2000

BANK

Westpac

Annual Report 2015 3

CHAIRMAN'S LETTER

Dear Shareholder,

Thank you to all shareholders who have remained with and supported their Citigold for many years patiently.

Securing the major development funding needed for the full development of the Charters Towers Gold Project has been a dominant activity this year. Prior to June 2015 Citigold entered into an agreement to form a Joint Venture with Kingsford Investment Groups Ltd (KIG) that proposes to deliver $72 million in initial funding to advance the Project. The settlement of this funding has been delayed, for details see ASX announcements. In the meantime Citigold has the opportunity to proceed with a superior deal and is working to finalise one of the negotiations currently underway.

During the year Board numbers were reduced from five to four directors and with the departure of the CEO near years end, will produce cost savings. The role of CEO was assumed by myself. Further management restructuring included, appointing a full time Company Secretary, Mr Francis Rigby. His economics and professional Financial Advisor background may see his usual compliance role expand over time to include whole of business Chief Risk Manager. With the Company's new contract accountant now also taking on the CFO role, a skilled and dedicated lower cost management team is ready for driving planned growth.

Considerable time has been devoted by mine staff to developing a detailed mine plan and schedule to commence gold mining when funding is finalized. This process has been guided by Gibsons project management consultants. This plan is to extend the

existing Central Decline to intersect new areas to mine while opening up a second vertical ventilation shaft for

the recommencement of gold production. Our teams geological knowledge and confidence on what this goldfield could yield has never been stronger.

An ultra low cost mining approach is a key focus. Citigold has been in discussions with mining equipment manufacturers about innovative rock cutting machinery that will minimize blast damage underground and substantially reduce ground support costs while improving safety. A continuous mining system aims at quantum change in reef mining productivity. Changes to real-time data gathering and analysis with new IT systems will be a part of enabling us to compete for the world's lowest quartile production costs.

The successful resumption of mining of the Central mine is moving closer and I believe can provide great value and return to our shareholders. It is my strong opinion that the only limitation to our Company's growth into a large and highly profitable gold producer is the major development funding from a strong partner.

I thank Citigold's employees for their professionalism and passion during this planning phase through to gold production. To the amazing local community of Charters Towers, thank you for your confidence and support.

Sincerely,

Mark Lynch Executive Chairman

REVIEW OF OPERATIONS

CORPORATE

Dividend - Your Directors have considered it prudent not to declare a dividend at this time. This decision will be revisited as each stage of the production ramp up is achieved. The Company continues to undertake private placements from time to time when the Board considers it is appropriate prior to achieving profitability.

During the year, the Board numbers were reduced from five to four directors following the departure of Mr Raymond Tan in March due to pressure of other commitments. The Company thanks Mr Tan for his contributions during his time on the Board. Senior management was also restructured with the Executive Chairman taking on the role of CEO following the departure of Mr Matthew Martin due to a change in personal circumstances. Subsequent to the end of the financial year, the financial team was strengthened in August 2015 with the hiring of Mr Francis Rigby as Company Secretary and Mr Greg Harding as CFO. Both are experienced financial managers and will contribute to corporate governance and financial matters.

During the 2015 Financial Year, the company rehabilitated the majority of the Central Decline, sold 984 ounces of gold and 1,204 ounces of silver before suspending gold production to focus on detailed mine planning and secured a Joint venture agreement with KIG to invest $72 million into redeveloping the Central mine area.

Revenue decreased by 65.72% to $1.4 million, primarily the result in a reduction in gold sales from 2,806 ounces last year to 983 ounces in 2014-2015. This resulted in an average realised gold price of A$1,382, down from the 2013-2014 average realised price A$1,425 per ounce, and the 2012-2013 year average realised gold price of A$1,536 per ounce. The average realised silver price in 2014-2015 was A$20.36 per ounce.

Royalties were paid to the Queensland State Government on the revenue from gold and silver totalling $64,176.

The loss after tax increased to $103,012,104 from $7,672,163 the previous year, due to the once-only non-cash extraordinary impairment of assets, in accordance with the Australian and

International Standards, resulting from the accounting treatment of the expected KIG Joint venture.

Total expenditure decreased 28.9% for Citigold over this period from $13.1 million in the 2013-2014 financial year to $9.3 million this year (excluding impairment). Many increases in costs, such as local council rates and mining title rentals, have been out of Citigold's control. Weak resale market for surplus property, plant and equipment have also contributed to the loss on sale of assets of $0.3 million.

The focus of the year will be to finalise the major developement funding, then comence mining of the central area.

During the year, the company raised $12 million demonstrating the continued support for the Company from shareholders and the investment community.

Whilst not in production, the very substantial gold asset at Charters Towers has considerable holding costs, in addition with the cost of continuing the company's geological program.

MINERALS RESOURCE AND ORE RESERVES

Citigold Mineral Resources and Ore Reserves for the overall Charters Towers Gold Project are reported in accordance with the Australasian Joint Ore Reserves Committee (JORC) Reporting Code 2012. As at 30 June 2015 the Mineral Resources and Ore Reserves are tabled in mining operations on page 6. A JORC checklist of assessment and reporting criteria has also been included.

In mid-2012 the Company released the technical report Mineral Resources and Reserves 2012 (Technical Report) for the Charters Towers Gold Project (the Project).The independent Technical Report was prepared in accordance with the Joint Ore Reserves Committee Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves 2004 ('the JORC Code'). The report also follows the format of the Canadian Form 43-101 F1 Technical Report for convenience and for overseas investors familiar with the Canadian format. The Technical Report,

REVIEW OF OPERATIONS continued

prepared by consultants Pathfinder Exploration, is a rigorous review and evaluation of the technical aspects of the Project's geological gold and silver deposit.

A significant amount of drilling was conducted during the period between 2005 and 2012. This coupled with the application of

two mining factors to the Resource calculation enabled the independent consultant to conclude a confidence level of ±30% for the Inferred Mineral Resource and ±10 to 15% for the contained ounces in the Probable Ore Reserve. The defined Resource is to a depth of vertical 1,200 metres.

The Central area contains 6 million ounces of gold resources and Southern area (predominately Imperial) contains 5 million ounces.

Annual gold production for the Financial Year was 984 ounces, the majority of which came from outside the published ore reserves. Material was sourced from surface soils at the Imperial mine,

for which an ore reserve and mineral resource have not been published due to uncertainties on grade continuity, and also from clean-up of the processing plant. All these sources are outside the published ore reserves and mineral resources and there has been no material change to the published figures.

A JORC checklist of assessment and reporting criteria as required under the 2012 JORC Code has also been included on pages 9-23.

MINING OPERATIONS

Citigold is continuing to plan the development its large, long-life gold mine at Charters Towers. The Charters Towers Gold Project comprises Citigold's 100% controlled 11 million ounces deposit (an Inferred Mineral Resource of 25 million tonnes at 14 grams per tonne, reported to JORC standards). Based on the expected

conversion of minable ounces over time at a production rate of over 300,000 ounces per annum the mine life could be over 30 years.

The Project should generate large positive cash flows that can be returned to investors as the Company does not require

additional mine acquisitions to maintain production. Citigold has already invested over $210 million in acquiring the gold deposit, developing the mines at Charters Towers and producing over 100,000 ounces of gold and over 40,000 ounces of silver. Given the sizeable resource, annual output targets are both achievable and sustainable in the long term from known mineralised areas.

The Company has the following strategic advantages:

1. Has 100% control of over 1,000 square kilometres of mining titles at 30 June 2015 including five Mineral Development Licences, 47 granted Mining Leases and six Exploration Permits Minerals, all in the Charters Towers region.

2. Has proved a viable mining method of long-hole open stoping at Imperial, which together with knowledge gained from the earlier Central underground exploration and mining and surface open pit mining in two areas, forms the basis of the production plan.

3. Has built substantial infrastructure, acquired environmental approvals and already produced over 100,000 ounces of gold, including over 65,000 ounces from the Imperial mine in the southern part of the Project.

4. Has driven a 1,600 metre long decline (access tunnel) into the Central mine that has been more recently refurbished to 1,050 metre length and 160 metres below surface. The ramp

   is located in a position well suited to accessing mineralisation on the nearby C03 & C03W structures.

5. Producing gold at low costs that can deliver larger long term returns to investors.

6. Active drilling and innovative geophysics in the Central area are aiding in the definition process of additional reserves on

   
   

   
   

   three main structures (the C38, C37 and the C03W structure) and an additional 8 major gold-bearing structures including the Brilliant East, C36, Day Dawn and Brilliant West.

7. A gold processing plant proven to recover over 95% of gold from the high grade ore extracted from these vein deposits.

The Central mine is already an established mine site and has an overall area of about 16 square kilometres. Initial mining will come from a 1 square kilometre area underground with the

target of producing 50,000 ounces of gold per annum initially and then progressively increasing over a four year period to 220,000 ounces of gold per annum. An additional 100,000 ounces per year is planned from the southern area, including the Imperial mine area, in the future after full production has been established at the Central area.

The reactivation of the Central mine commenced with the refurbishment of the existing decline. Initial mining is planned to commence around 300 metres vertical depth.

At the completion of the current refurbishment program, excavation will target a second deeper connection to the Brilliant Block ventilation shaft where additional power and ventilation services will be installed. This will be followed by the establishment of a connection to the King Shaft approximately 1,100 metres from the block shaft, which will be used for a downcast fresh air intake ventilation and emergency second egress shaft. Once the second egress is established, the Queen

Sunburst ore body will be developed together with two cross reefs where early production is forecast. The next stage will be to then develop and access the progressively deeper Brilliant ore body and the Day Dawn ore body.

IMPERIAL MINE

With the planned major development at the Central mine, the Imperial mine was placed under care and maintenance. The plan was to revive production initially from Central Mine and free cash- flow generated from the project will be used to advance the Imperial Mine once full production is established at the Central area.

IMPERIAL OPEN PIT PREFEASIBILITY STUDY

Citigold completed a bulk-sampling program on a site south of the Washington open pit. From Diamond drilling conducted from 2012 and 2013, several high grade intercepts in drill holes and historical mining on the structure promotes this area as a potential target for future open pit and/or underground mining. A key area of interest was identified and further work undertaken on confirming the distribution, lateral continuity and average grade of the plethora of associated veins. An RC drilling program is planned when funding is finalised to confirm the sub-surface extrapolation of structures and for grade control purposes. Bulk sampling program yielded a total gold output of 984 ounces generating approxcximately $1.4 million.

EXPLORATION

The geology team at Citigold is working diligently towards achieving the company's vision to define an inventory of mineable gold reserves that will ensure longevity and sustainable recovery of high-grade gold ore into the future. To achieve this goal, the team has focused on drilling the gold-bearing structures that lie closest to the current underground development with a total of

902.70 metres of NQ Diamond drilling completed. These targets include the C38, C03W and C37 structures. From the last six drilling holes completed, the highest grade intercepts of 66.7 g/t Au and 21.8 g/t Au were both from the C03/C03W (Queen/

Queen West) structure. These drilling results further highlight the presence of multiple gold-bearing structures and the presence of gold on all of the primary target structures (C03/C03W and C38).

In conjunction with down-hole and surface programs internally, Citigold has also teamed with a geophysical company ADROK from Scotland to apply innovative technology to the definition of mineral targets. The unique style of mineralisation at the Charters Towers goldfield requires a unique approach to reserve definition if it is to be completed in a rapid, cost effective, precise and accurate manner. Citigold has had success in pinpointing sulphides using new Atomic Dielectric Resonance technology (ADR) developed by ADROK and have recently achieved further significant advances in this area with the drilling of an ADR target revealing a positive intercept of

Citigold is successfully progressing toward extending the current Indicated Mineral Resources and associated mining target areas towards the existing underground decline. Drilling is continuing to prove the structural interpretations and estimations of grade

distribution and is looking forward to presenting further significant results in 2015-2016

GEOPHYSICS

Further interpretation of geophysical data gathered during the year continued. The Atomic Dielectric Resonance Spectroscopy ('ADR') technique is providing promising data. It measures the dielectric properties of the rock as a function of frequency, allowing Citigold to accurately pinpoint the sulphide bearing ore zones (high grade gold areas), greatly reducing the required conventional drilling and

accelerating the conversion of Mineral Resources into Ore Reserves.

A research paper on the technique and results was presented by Dr Simon Richards, Citigold's Head of Geology, Geophysics

& Exploration, to the ASEG-PESA Conference in Perth on 15-18 February 2015. The technique can be used successfully to pinpoint sulphide, and associated gold mineralisation at a depth of up to 1000 metres. A total of nine scans over three main structures in Charters Towers have correctly identified sulphides with a maximum depth error of 13 metres. In some scans, the presence of anomalies at unexpected depths and where drilling has not been carried out are interpreted to be potential sulphide targets. Once the technique is perfected it will be used as a pre-drilling targeting tool.

SAFETY, HEALTH AND ENVIRONMENT

SAFETY & HEALTH

Citigold is committed to creating and maintaining a safe environment at the work place. At Charters Towers the safety of personnel and the local community is of fundamental concern. The Company seeks to conduct its operations in an efficient and effective manner whilst managing risk and providing:

• healthy and safe work place

  
  

• Information on hazards of the workplace and training on how to work safety: and

• Consultation at all staff levels on health and safety matters.

There were no Lost Time Injuries or significant health issues during the year.

ENVIRONMENT

There were two reportable test results during the year, relating to elevated sulphate levels in water on a small part of the Mining Leases. It is a minor issue that has been researched and is considered to be a natural part of the local geology.

COMMUNITY RELATIONS

Citigold continued to assist local groups in the Charters Towers community through the contribution of employees' time to local organisations and committees. With the planned expansion it is expected that Citigold will increase its support and activities in the local Community. The group currently employs about 10 people

at Charters Towers and this is expected to grow when the major expansion is carried out.

Regional communities like Charters Towers depend on grazing, mining, government services and numerous support businesses to provide a quality of living that retains and attracts residents. Citigold plans to continue to be a major contributor to the Community.

JORC CHECKLIST

A JORC checklist of assessment and reporting criteria as required under the 2012 JORC Code has also been included below.

SECTION 1 SAMPLING TECHNIQUES AND DATA

(Criteria in this section apply to all succeeding sections)

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.

Aspects of the determination of mineralisation that are Material to the Public Report.

In cases where 'industry standard' work has been done this would be relatively simple (e.g. 'reverse circulation drilling was used to obtain 1 m samples from which 3 kg was pulverised to produce a 30 g charge for fire assay'). In other cases

more explanation may be required, such as where there is coarse gold that has inherent sampling problems. Unusual commodities or mineralisation types (e.g. submarine nodules) may warrant disclosure of detailed information.

• The Charters Towers area has been sampled by a mixture of Diamond (HQ and NQ2) and Reverse Circulation percussion ('RC') drill holes for the purpose of identifying the location of mineralised structures and for identifying potential for mineralisation on these structures and for down-hole ('DH') geophysics.

• HQ / NQ core is typically cut in half (50%) using a Diamond saw (100% of core recovered) and half or in some instances 1/4 (25%) of the core is submitted for analysis. Only HQ-size drill core is used for quarter core samples.

• RC drilling was sampled on 1m intervals or through sections where mineralisation was known to occur. RC results are not reported.

• Due to the 'narrow vein' style of mineralisation found at Charters Towers, the maximum HQ / NQ sample interval is 1m & minimum sample interval 0.1m.

• Zones of mineralisation are defined by sericite, chlorite and epidote alteration of granite surrounding narrow, but high grade quartz veins containing sulphides, other gangue minerals and gold. Samples are taken from the mineralised zone and on either side of the mineralisation into unaltered granite.

• Sampling methods follow guidelines and methodologies established by Citigold throughout its mining and exploration history. These methods are described in detail in the 2012 Mineral Resources and Reserves Report which can be found on the company's website

  http://www.citigold.com/mining/technical-reports

  
  

  Drilling techniques

  
  

  Drill type (e.g. core, reverse circulation, open-hole hammer, rotary air blast, auger, Bangka, sonic, etc.) and details (e.g. core diameter, triple or standard tube, depth of Diamond tails, face-sampling bit or other type, whether core is oriented and if so, by what method, etc.).

  
  

  • Most Diamond drilling has been 63.5mm diameter HQ core, although some NQ2 core (50.5mm diameter) has been drilled. RC pre-collars have been used for some drill holes where drilling was aimed at defining the location for the fracture. NQ2 drill core was typically used for the Diamond tails on RC pre- collars.

  • Downhole surveys have been taken at a minimum of every 50m down hole.

  • 60mm PN12 PVC piping has been inserted into many holes to accommodate the DH geophysics tools and to maintain the internal integrity of the holes in case of further surveying requirements.

  • In 2013-15, all drilling was completed under contract to Citigold.

  • Core orientation is carried out on all drill holes CT9000 and above in order to constrain the geometry of load bearing fractures. Core orientation measurements are taken at 6m intervals by contracted drillers.

    
    

    Drill sample recovery

    
    

    Method of recording and assessing core and chip sample recoveries and results assessed.

    Measures taken to maximise sample recovery and ensure representative nature of the samples.

    Whether a relationship exists between sample recovery and grade and whether sample bias may have occurred due

    to preferential loss/gain of fine/coarse material.

    
    

  • Core is recovered by wireline drilling, where core is collected inside a core barrel winched back to surface inside the drill rods. The core is marked up and measured by senior field assistants and geologists under the guidance of the senior geologist. Core recovered (CR) is compared with the meters drilled (MD, recorded by the drillers in their daily log-sheets) and a 'core recovery' percentage is calculated; CR/MD x 100 = % recovered. All data is recorded within the Citigold database where it is checked by senior geologists.

  • Drilling is mostly within competent granites where core loss is minimal. However, in areas where high degrees of alteration and associated mineralisation occur, some core loss is expected and subsequently recorded. Accordingly, it is possible that some fine gold within clay could have been lost during drilling.

    
    

    
    

    JORC CHECKLIST continued

    
    

    SECTION 1 SAMPLING TECHNIQUES AND DATA continued

    (Criteria in this section apply to all succeeding sections)

    
    

    Criteria

    JORC Code explanation

    Commentary

    
    

    Logging Whether core and chip samples have been geologically and geotechnically logged to a level of detail to support appropriate Mineral Resource estimation, mining studies and metallurgical studies.

    Whether logging is qualitative or quantitative in nature. Core (or costean, channel, etc.) photo-graphy.

    The total length and percentage of the relevant intersections logged.

• 100% of core was logged. Samples were collected from intercepts where alteration or alteration and mineralisation were clearly seen. The nature of the ore-body is such that mineralisation or potentially mineralised structures are easily identified. Selected RC samples were geologically logged and sampled.

• The logging describes the dominant and minor rock types, colour, mineralisation, oxidation, degree of alteration, alteration type, vein type, core recovery, basic structure.

• Rock Quality Designation or RQD % has been noted in the core drill logs (also number of fractures per interval has been noted).

  
  

  Sub- sampling techniques and sample preparation

  
  

  If core, whether cut or sawn and whether quarter, half or all core taken.

  If non-core, whether riffled, tube sampled, rotary split, etc. and whether sampled wet or dry.

  For all sample types, the nature, quality and appropriateness of the sample preparation technique.

  Quality control procedures adopted for all sub-sampling stages to maximise representivity of samples.

  Measures taken to ensure that the sampling is representative of the in situ material collected, including for instance results for field duplicate/second-half sampling.

  Whether sample sizes are appropriate to the grain size of the material being sampled.

  
  

• Core is sawn in half and one half (50%) is submitted for analysis at NATA accredited laboratories in Townsville (Qld, Australia).

• Selected core is cut for 1/4 core (25%) and submitted for analysis at NATA accredited labs in Townsville (Qld, Australia).

• The 25%-50% sampling of the HQ core is considered appropriate for the mineralisation type. NQ core is sampled for 50% only.

• Samples are couriered to NATA accredited laboratories where they are dried at 105°C; weighed; crushed to -6mm; and pulverised to 90% passing 75um where a 200g sub-sample is taken. 5% of samples are dual sub-sampled (second split) for sizing and analytical quality control purposes.

  Fire assay: 50g of sample is added to a combustion flux and fired at 1000°C; the resultant lead button is separated from the slag and muffled at 950°C to produce a gold/silver prill; the prill is digested in aqua regia and the liquid read on an AAS.

  ICP40Q: A 0.2g sub-sample is digested using nitric/hydrochloric/ perchloric/ hydrofluoric acids; the diluted digestion product is then presented to a Perkin Elmer 7300 ICP AES for analysis.

  Quality Control: second splits (5% of total); 2 in 45 sample repeats; and 2 CRM standards for each rack of 50 samples are analysed in all methods

  
  

  Quality of assay data and

  laboratory tests

  
  

  The nature, quality and appropriateness of the assaying and laboratory procedures used and whether the technique is considered partial or total.

  For geophysical tools, spectrometers, handheld XRF instruments, etc., the parameters used in determining the analysis including instrument make and model, reading times, calibrations factors applied and their derivation, etc.

  Nature of quality control procedures adopted (e.g. standards, blanks, duplicates, external laboratory checks) and whether acceptable levels of accuracy (i.e. lack of bias) and precision have been established.

  
  

• Citigold uses standards sourced from Gannett Holdings Pty Ltd, Perth, Australia. Certificate number 13U20C-22-04-13.

• A blank sample and/or a standard sample and/or a duplicate sample are randomly inserted in approximately every 30 samples that are submitted.

• NATA accredited laboratories in Townsville have their own rigorous 'in lab' QA/ QC procedures and are accredited for precious metal and base metal analyses.

• A complete discussion on assay techniques, sample sizes, assay variance and sample bias can be found in the Citigold 2012 Mineral Resources and Reserves report at:

  http://www.citigold.com/mining/technical-reports .

  
  

  Verification of sampling and assaying

  
  

  The verification of significant intersections by either independent or alternative company personnel.

  The use of twinned holes.

  Documentation of primary data, data entry procedures, data verification, data storage (physical and electronic) protocols.

  Discuss any adjustment to assay data.

  
  

  • Selected samples are submitted to other labs, including Citigold's on-site lab to check for consistency, accuracy and as a second means of obtaining a comparison result.

  • Anomalous holes or unusually high grade samples are resubmitted for assay.

  • No twinned holes were completed by Citigold in 2014-15. Prior exploration has engaged Diamond drilling or geophysics as a means of checking anomalous RC drilling and to confirm the precise depth of the mineralised structure.

  • All drill holes are logged into laptop computers and checked before entering into database. Criteria have been established so that erroneous or incorrect characters within a given field are rejected thereby reducing the potential for transfer error. All logs are reviewed by the senior geologist.

  • All samples logs are recorded onto paper and assigned a unique sample number once cut. The sample and other details are entered into the Citigold database.

  • All significant intercepts are checked against the remaining core, checked for corresponding base metal grades and assessed for geological consistency.

    
    

    
    

    JORC CHECKLIST continued

    
    

    SECTION 1 SAMPLING TECHNIQUES AND DATA continued

    (Criteria in this section apply to all succeeding sections)

    
    

    Criteria

    JORC Code explanation

    Commentary

    
    

    Location of data points

    Accuracy and quality of surveys used to locate drill holes (collar and down-hole surveys), trenches, mine workings and other locations used in Mineral Resource estimation.

    Specification of the grid system used. Quality and adequacy of topographic control.

• Citigold uses a combination of grids including a local mine grid and AMG AGD66 Zone 55 which closely approximates the local mine grid.

• Drill hole collars are surveyed using a Leica Viva Real Time Kinematic (RTK) Differential GPS system with a fully integrated radio, allowing for data capture in 3 dimensions at an accuracy of +/-25mm over baselines within 5km radius of the base station.

• All coordinates are provided in AMG AGD66 unless otherwise stated.

• Citigold uses a geo-registered 50cm pixel satellite photograph acquired in September of 2013 as a secondary check on the spatial location of all surface points.

• Down-hole surveys are obtained using either a Ranger or Camteq downhole survey instrument. Survey tools are checked in Citigold's base station (a precise DH camera alignment station) prior to drilling holes over 800m or approximately every 4-5 holes in other circumstances. DH geophysics are obtained from most drill holes at which time the holes are often re-surveyed with a Camteq Proshot acting as a secondary check of the original survey.

  
  

  Data spacing and distribution

  
  

  Data spacing for reporting of Exploration Results.

  Whether the data spacing and distribution is sufficient to establish the degree of geological and grade continuity appropriate for the Mineral Resource and Ore Reserve estimation procedure(s) and classifications applied.

  Whether sample compositing has been applied.

  
  

  • Drill hole spacing and orientation is currently constrained by the requirements for DH geophysical surveying. Approximately 80m between points of intercept are planned, however; the nature of the structure may require alterations to the spatial pattern of holes.

  • A full description of Citigold's Mineral Resources and Reserves can be found in the 2012 Mineral Resources and Reserves Report at:

    http://www.citigold.com/mining/technical-reports

    
    

    Orientation of data in relation to geological structure

    
    

    Whether the orientation of sampling achieves unbiased sampling of possible structures and the extent to which this is known, considering the deposit type.

    If the relationship between the drilling orientation and the orientation of key mineralised structures is considered to have introduced a sampling bias, this should be assessed and reported if material.

    
    

• Drill holes are planned to intercept the mineralised structures (average 45 degree dip) at high angles. The presence of landholders and other features on the landscape prevent all holes from intercepting perpendicular to the structure. Typically, holes will be drilled in a fanning pattern with intercepts at no less than 60 degrees to the mineralised structure. True widths are determined only after the exact geometry of the structure is known from multiple drill holes.

• Holes intercepting at angles of less than an estimated 60 degrees are reported as such.

• Lode-parallel drill holes have been completed by Citigold, specifically designed for geophysics, and are not reported.

  
  

  Sample security

  
  

  The measures taken to ensure sample security.

  
  

  • All drill core is stored within locked yard guarded by contracted security.

  • Samples are delivered by Citigold staff to NATA accredited laboratories and/or by registered courier.

  • Standards are retained within the office of the chief geologist and only released under strict control.

    The chain of sample custody is managed and closely monitored by Citigold (management and senior staff).

    
    

    Audits or reviews

    
    

    The results of any audits or reviews of sampling techniques and data.

    
    

  • A full Mineral Resources and Ore Reserves report was completed in May 2012, written in compliance with the then-current 2004 JORC Code. The report contains a comprehensive review and assessment of all sampling techniques and methodologies, sub-sampling techniques, data acquisition and storage, and reporting of results. Statements on QA and QC can be found on page 48 of the report. The report can be found on Citigold's website at:

    http://www.citigold.com/mining/technical-reports .

  • Citigold's database has been audited by several independent consultants since 1998 and most recently by Snowden in 2011.

    There have been no material changes to this report since May 2012.

    
    

    
    

    JORC CHECKLIST continued

    
    

    
    

    SECTION 2 REPORTING OF EXPLORATION RESULTS

    (Criteria listed in the preceding section also apply to this section)

    
    

    Criteria

    JORC Code explanation

    Commentary

    
    

    Mineral tenement and land tenure status

    Type, reference name/number, location and ownership including agreements or material issues with third parties such as joint ventures, partnerships, overriding royalties, native title interests, historical sites, wilderness or national park and environmental settings.

    The security of the tenure held at the time of reporting along with any known impediments to obtaining a licence to operate in the area.

    • Citigold holds a number of different types of mineral tenements including Exploration Permit Minerals (EPM's), Mineral Development Licenses (MDL') and Mining Leases (ML's). Citigold currently holds six (6) EPM's, five (5) MDL's and forty seven (47) ML's:-

      EPM15964, EPM15966, EPM16979, EPM18465, EPM18813, EPM18820, MDL116, MDL118, MDL119, MDL251, MDL252,

      ML1343 , ML1344 , ML1347, ML1348, ML1385, ML1387, ML1398, ML1407, ML1408, ML1409, ML1424, ML1428, ML1429, ML1430, ML1431, ML1432, ML1433, ML1472, ML1488, ML1490, ML1491, ML1499, ML1521, ML1545, ML1548, ML1549, ML1585, ML1586, ML1587, ML1735, ML10005, ML10032, ML10042, ML10048, ML10050, ML10091, ML10093, ML10193, ML10196, ML10208, ML10222, ML10281, ML10282, ML10283, ML10284, ML10285, ML10335

      Citigold holds current Environmental Authorities over the tenements, and has already produced over 100,000 ounces of gold. There are no known impediments to continuing operations in the area.

      
      

      Exploration done by other parties

      
      

      Acknowledgment and appraisal of exploration by other parties.

      
      

      • Charters Towers is one of Australia's richest gold deposits that was discovered in 1871. A plethora of historical data from the Charters Towers area has been collected, collated and is included within the Citigold geological database. Previous exploration was summarised in the 2012 Mineral Resources and Reserves Report which can be found at:

        http://www.citigold.com/mining/technical-reports

      • Citigold's drill hole database includes historical drilling including:

        • 993 - Mt Leyshon Gold Mines Ltd extensions to CRA Diamond drill holes in the areas.

        • 1991 - Diamond and RC drilling by PosGold in a joint venture with Charters Towers Mines NL that covered parts of the Central area areas.

        • 1981-84 - Diamond-drilling by the Homestake/BHP joint venture in the Central area.

        • 1975, 1981-82, and 1987 - Diamond and RC drilling in central by A.O.G., CRA and Orion respectively.

      • Citigold retains all Diamond core and a collection of core drilled by other companies is its on-site core-yard.

Geology Deposit type, geological setting and style of mineralisation.

• Mineralisation at Charters Towers is referred to as 'orogenic' style vein mesothermal gold deposit. See the 2012 Mineral Resources and Reserves Report which can be found at:

  http://www.citigold.com/mining/technical-reports

• The many reefs are hosted within a series of variably-oriented fractures in granite and granodioritic host rocks. Mineralisation does occur in adjacent metasedimentary rocks.

• The gold-bearing reefs at Charters Towers are typically 0.3 metres to 1.5 meters thick, comprising hydrothermal quartz reefs in granite, tonalite and granodiorite host rocks. There are some 80 major reefs in and around Charters Towers city.

• The majority of the ore mined in the past was concentrated within a set of fractures over 5 km long East-West, and 500 meters to 1600 meters down dip in a North-South direction. The mineralised reefs lie in two predominant directions dipping at moderate to shallow angles to the north (main production), and the cross-reefs, which dip to the ENE.

• The reefs are hydrothermal quartz-gold systems with a gangue of pyrite, galena, sphalerite, carbonate, chlorite and clays. The reefs occur within sericitic hydrothermal alteration, historically known as 'Formation'.

• The goldfield was first discovered in December 1871 and produced some 6.6 million ounces of gold from 6 million tons of ore from 1872 to 1920, with up to 40 companies operating many individual mining leases on the same ore bodies. There were 206 mining leases covering 127 mines working 80 lines of reef and 95 mills, cyaniding and chlorination plants. The field produced over 200,000 ounces per year for 20 consecutive years, and its largest production year was 1899 when it produced some 320,000 ounces.