ASX announcement

6 JUNE 2016

Drilling to Commence at Crescent Lake Lithium Project

Argonaut Resources NL (ASX: ARE) (Argonaut or the Company) is pleased to announce the commencement of field-based exploration at its Crescent Lake project in Ontario, Canada.

Highlights

• An application to undertake exploration drilling and trenching at the Crescent Lake project has been approved.

• An exploration team commenced preparatory works on site in late May 2016.

• A program of Diamond core drilling will commence within two weeks.

• Drilling will commence at the Falcon Lake West deposit (Figure 1).

• Macquarie Research noted last week that lithium is the 'best demand story among mined commodities'.

410,000m E 415,000m E 420,000m E

Falcon Lake Discovery

Falcon Lake West

DempsterEast Falcon Lake East

Falcon Lake

5,590,000m N

Tebish

Dempster L28

Zigzag

Granitoids Metasediments Metavolcanics Diabase Unmapped area Water bodies/lakes

Recorded Lithium Pegmatites Tracks/trails

Geological boundary

5,585,000m N

0 2

kilometres

Fault

Crescent Lake Project boundary

Crescent Lake 02

Figure 1: Crescent Lake claim locations, spodumene pegmatite occurrences and geology.

Argonaut Resources NL ABN 97 008 084 848

Registered Office

Suite 4, Level 9

341 George Street

Sydney, NSW, 2000, Australia T +61 2 9299 9690

F +61 2 9299 9629

E [email protected]

Adelaide Office

Level 1

63 Waymouth Street Adelaide, SA, 5000, Australia T +61 8 8231 0381

F +61 8 8231 6092

E [email protected]

Crescent Lake Drilling

Crescent Lake is located 250km NNE of Thunder Bay in Ontario, Canada (Figure 2).

On 11 March 2016, Argonaut announced the acquisition of lithium deposits known as Falcon Lake and Zigzag, collectively the Crescent Lake Lithium Project. Pegmatites at Crescent Lake are spodumene bearing. In March 2016, applications for Exploration Permits to allow drilling and trenching at the Zigzag and Falcon Lake claim areas were lodged. The Exploration Permits have now been granted for a period of three years.

Argonaut geologists commenced non-mechanised exploration works in late May 2016 in preparation for a drilling program in June 2016.

Now that permits have been granted, Argonaut will mobilise a drilling rig to site and undertake an initial program of approximately 500m of Diamond drill core. Drilling will commence at the Falcon Lake West deposit (Figure 1).

High grade metamorphic complex Metavolcanic dominant

Granitic dominant Metasedimentary dominant Proterozoic and Phanerozoic cover International border

Provincial boundary Coast/lake

Major city

Geological subprovince boundary Superior Province geological boundary Lithium mine/resource

Lithium occurence

Hudson Bay

Labrador Trough

Thompson Belt

MANITOBA

ONTARIO

Trans Hudson

Sachigo

Pakeagama Lake

CANADA

Greenbush Lake Project

James Bay

James Bay

Opinaca

Rose

Whabouchi

Tanco

Berens

East Pashkokogan

Uchi ER

BR

Crescent Lake Project

Seymour Lake

Moblan

Separation WR

Lake Nipigon

QueticoAbitibi

Grenville Province

Rapids Georgia Lake

Wabigoon

Lacorne/Quebec Lithium

Wawa

Thunder Bay

Lake Superior

QUEBEC ONTARIO

Subprovince names ER English River BR Bird River

WR Winnipeg River

Southern Province

Lake Michigan

Toronto

0 200

kilometres

UNITED STATES OF AMERICA

Canada 01

Figure 2 Geology of the Superior Province, Canada, showing Greenbush Lake, Crescent Lake and regional lithium occurrences.

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Lithium Market

Lithium was described last week as the 'best demand story among mined commodities' by Macquarie Research. Macquarie forecast a compound annual growth rate of 9% to 2021 on the back of strong growth in 'new energy vehicle' batteries.

This week CRU referenced a lithium 'price curve that has turned almost vertical'.

Background

Argonaut is focused on fast-tracking development of its lithium assets. The Company now has rights to two Canadian projects and one South Australian lithium exploration target.

Argonaut expects to announce a further acquisition in the coming weeks as well as the commencement of drilling at its flagship Crescent Lake project in Ontario, Canada.

WESTERN

NORTHERN TERRITORY

QUEENSLAND

CANADA

Greenbush Lake

ONTARIO

Crescent Lake

AUSTRALIA

Lake Blanche

SOUTH AUSTRALIA

NEW SOUTH WALES

VICTORIA

UNITED STATES of AMERICA

TASMANIA

Figure 3 Argonaut lithium project locations.

Crescent Lake Project, Canada (Argonaut acquiring 100%)

On 4 March 2016, Argonaut released details of the acquisition of the Falcon Lake and Zigzag blocks within the Crescent Lake Lithium Project area in Ontario, Canada (Figure 2).

Highlights of previous drilling at the Crescent Lake Lithium Project, released to the ASX on 11 March 2016, include:

Falcon Lake Area

• 8.1m at 1.48% Li2O from 2.7m in drill hole W-3

• 10.5m at 1.15% Li2O from 34.5m in drill hole W-9

• 14m at 0.99% Li2O from 69.3m in drill hole CO-10-001

• 7m at 1.07% Li2O from 55.3m in drill hole CO-10-002

• 11m at 1.10% Li2O from 39.4m in drill hole CO-10-003

  Zigzag Area

• 6.1m at 1.08% Li2O from 12.4m in drill hole CO-10-007

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  Other Crescent Lake Lithium Project highlights include:

  • Adjacent 23m and 10m thick pegmatites at Falcon Lake West deposit (Figure 4).

  • Three to four stacked spodumene bearing pegmatites over 670m at the Tebish occurrence.

  • The deposits are hard-rock pegmatite deposits containing spodumene mineralisation.

  • The areas surrounding these known deposits are yet to be systematically explored.

  • There is excellent potential to define deposit extensions and additional deposits.

  • The deposits are well located, close to the North American rail network and a major port.

418,360mE

5,592,000mN 418,360mE

418,360mE 5,591,980mN

418,360mE 418,360mE 5,591,960mN

418,360mE

5,591,940mN 418,360mE

W-1

W-9

NorthWest SouthEast

340mRL

[email protected]% Li2O

[email protected]% Li2O

[email protected]% Li2O

[email protected]% Li2O

[email protected]% Li2O

-300mRL

[email protected]% Li2O

[email protected]% Li2O

Cover

LCT pegmatite Metavolcanic

CANADA

CRESCENT LAKE PROJECT

Falcon Lake Prospect Simplified Geological Section Historic Drilling

Looking northeast

20 metres

Crescent Lake 03

Figure 4: Falcon Lake West geological cross section, Crescent Lake Lithium Project.

Greenbush Lake, Canada (Argonaut 100%)

The Greenbush Lake Project is located approximately 150km north-west of Argonaut's Crescent Lake Lithium Project in Ontario, Canada (Figure 2) and features a large, outcropping spodumene pegmatite with grades of up to 2.46% Li2O within an area confirmed as having the requisite geological components for lithium pegmatite emplacement.

The known lithium pegmatite occurrence is 15m wide by 30m in exposed strike length. The actual strike length of the known pegmatite has not yet been determined as the exposure continues under thin sedimentary cover to the north and under lake waters to the south. The pegmatite has not been drilled.

Argonaut purchased a 100% interest in three mineral claims for CAD100,000. The claims are subject to a 2% net smelter royalty.

Three phases of exploration have been undertaken in the area of the lithium occurrence.

1. The Ontario Department of Mines discovered the pegmatite around 1965 and took a chip sample across the full width (50 feet) of the outcrop. Analysis of the chip sample returned 1.25% Li2O.

2. Placer Development Ltd explored the area for tantalum in 1980. A magnetic survey attempting to define the extent of the pegmatite was unsuccessful, however an assay of the outcrop returned 2.46% Li2O.

3. Canadian Orebodies Inc. undertook an exploration program in 2009. Highlights of a rock-chip sampling program are shown in Table 1.

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