Quarterly Report

For the period ending 30 September 2015

HIGHLIGHTS

• Revised timeframes in respect of the financial settlement of the proposed Joint Venture with Kingsford Investment Groups Ltd (KIG) were agreed upon during and subsequent to the period. See announcements. As of today settlement of the $72 million has not yet occurred. As allowed under the extensions Citigold has been in active negotiations with several other parties about superior proposals to KIG. While the delays have been frustrating the finalisation and settlement of a superior deal could be a favourable outcome for shareholders.

• Planning and preparation for the successful resumption of mining of the Central mine continued to be a focus during the quarter, in order to be ready when the funding is finalised.

• Citigold continued to restructure management to reduce costs and have in place a skilled core team for driving planned growth. The Company's contract accountant Greg harding assumed the role of CFO and a full time Company Secretary, Francis Rigby, was appointed invisiging his role over time would expand to include whole of business Chief Risk Manager.

• Capital raising of $1.7 million occurred during the quarter for working capital, which confirms the continued support of investors and shareholders of the Company.

OPERATIONS

The underground operations and processing plant continue to be on active care and maintenance while we await the expansion funding. The team at the mine and processing plant sites, continue to carry out all general maintainenance of the infrastructure, conduct underground inspections, minor site works to the tailings storage facility (preparation for the wet season), detailed process plant budget (mechanical and electrical), all with the aim of being ready for the resumption of gold mining as soon as capital financing is finalised.

No production mining operations were undertaken during the quarter.

Citigolds geologists have been focussed on developing techniques and tools for improving the efficiency of reserve definition and mining the unique, but rewarding, Charters Towers reef gold deposit. The teams aim is to fully integrate geology and geophysics into the new 3D mining software and increase its 3D statistical targeting strategies. This involves a significant change to the way that even the most basic geological data such as core logging is captured and managed. In doing so, the team has streamlined and

simultaneously increased the relationships between its geological data by generating a new geo database. Citigold is confident that with these new data capture, management and interrogation techniques, will dramatically increase the success of its ongoing mineral targeting, reserve definition and target generation strategies

In preparation for re-entering the Central decline , a complete re-evaluation of the volume and location of the historic Charters Towers workings was completed during the quarter. Historical records were matched with digital 3D volume models to develop a precise volume of water contained within the old workings. Modeling on volumetric slices at 50m intervals confirmed our estimates of water in Central workings. The confirmation that the models are accurate came by comparing the model estimates with actual extractions. The models thereby provide confidence in our estimates and ability to dewater the Central workings ahead of mining. The water inflow, proven over having the field dewatered for 20 years to near 200 metres depth, is very small at 9 l/s (this flow rate equates to about 20 garden hoses). Resumption of mining at central envisages deepening the decline rapidly to 300m depth.

Health, Safety and Environment

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

During the quarter there were rutine inspections carried out by the Environmental Department along with a site inspection from the Department of Mines (mechanical inspector).

DRILLING

Planning is underway in anticipation of the re-initiation of drilling in Central. In particular, Citigold aims to extend its 'Brilliant East' (C05E) indicated resource further to the East and up-dip where positive results from geophysical surveys have been obtained. The Brilliant East structure forms an integral part of the long term mining plan for Citigold. The drilling will complement where the reserve definition is being carried out a few hundred metres further to the west. Results, including the identification of new, visible gold-bearing and previously unmined structures from these existing drill holes have been published in previous releases.

No new drilling was undertaken during the Quarter.

CORPORATE

Major development funding

In light of the Company's position in relation to KIG's failure to make payments under the agreement, Citigold has engaged in and will continue to engage in negotiations with other interested parties. Through such negotiations it is Citigold's goal to seek to obtain a 'superior deal' with a larger funding commitment than had been proposed by KIG and/or for Citigold shareholders to retain a greater interest in the Charters Towers asset and its future cash flows. Success in improving the deal would be a favorable outcome for shareholders.

The Charters Towers gold deposit is large and forecasts show that there is the potential to generate material positive cash flows. Citigold is committed to development of the project, with the intention of building gold production for the global Charters Towers goldfield to over 300,000 ounces per annum. The initial mining area will be the Central mine.

Citigold understands that the process to secure funding is taking longer than the Company or shareholders would like. Given that this current project, has a 20 to 30 year lifespan, it is important to find the appropriate funding partner to go on this journey with us for the benefit of all shareholders.

We thank all shareholders for their patience and will continue to keep the market updated.

Financial Highlights

During the Quarter there was capital raising of $1.7 million through the issue of ordinary shares to sophisticated investors, this funding is being used as working capital until the finalisation of the capital works funding is finalised.

Citigold is working with PWC in order to finalise the research and development tax offset claim and is in the final stages of review before lodgement. This relates to the past extensive research work in advancing the innovation in mining program. This work should ultimately assit the Company define high grade ore areas faster to support the proposed aggressive ramp up in gold production and provide a three year availability in front of mining. Citigold continues on our planned development of automation for underground opperations to assist Citigold become an ultra low cost gold producer.

Strategic Review

During the quarter there was considerable time taken to review and fine tune the detailed mine plan and schedule of mining. This process was guided with the assistance of Gibsons project management consultants. With the time taken in this planning process Citigold is of the opinion that the future growth in the Company will be enhanced.

There have been numerous meetings during the quarter with many external providers, both domestic and international. These meetings have been conducted with the mantra

'Smater, Faster, Better, Cheaper' in mind, in order to meet all the facets of becoming an ultra low cost gold producer.

SUMMARY OF MINING TENEMENTS & AREAS OF INTEREST

The Consolidated Entity has a 100% control of the following mining tenements at Charters Towers as at 30th September 2015 and there were no acquisitions or disposals during the quarter:

For further information contact:

Francis Rigby

Company Secretary

Email: [email protected]

Or visit the Company's website - www.citigold.com