ASX/Media Announcement

10 May 2016

Golden Rim to Acquire Advanced Silver-Lead-Zinc-Copper Project in Chile

Summary

• Golden Rim is proposing to acquire all the issued shares in Herencia Resources plc's (Herencia) wholly owned subsidiary which holds a 70% interest in the Paguanta Project in northern Chile which hosts significant silver, lead, zinc and copper mineralisation, subject to Conditions (see below) including the execution of legally binding agreements relation to the acquisition.

• The Patricia Prospect hosts Mineral Resources1 of 4.4Mt at 3.7% zinc, 1.4% lead, 84 g/t silver and 0.2 g/t gold at 2% zinc cut-off and 0.6Mt at 93 g/t silver and 1.4% lead at 40 g/t silver cut-off.

• Both resources extend from surface and are amenable to open pit mining.

• High grade silver-lead-zinc has been intercepted at depth at Patricia and there is considerable scope for underground mining.

• More than 40,000m of drilling, predominantly Diamond drilling, has been conducted at Paguanta.

• The majority of a Feasibility Study for Paguanta has been completed.

• Past expenditure on the project is approximately US$31.5m (A$43m2).

• There is significant exploration upside to define additional silver-lead-zinc resources along strike and at depth at Patricia and potential for porphyry copper systems within the project area.

• Proposed acquisition price of US$1.5m cash and a further US$0.8m worth of Shares, at decision to mine, for a total of US$2.3m (see below). This amount represents ~US$9 per tonne of contained zinc equivalent3 which compares very favourably with recent zinc project transactions globally.

• Golden Rim's strong cash balance enables the Company to fully fund the Proposed Transaction (see below) and to commence a substantial work program.

1 This information was prepared and first disclosed under the JORC Code 2004. It has not been updated since to comply with the JORC Code 2012 on the basis that the information has not materially changed since it was last reported.

2 All references to A$ have been calculated at the conversion rate of US$1 = A$0.73.

3 Zinc equivalent tonnage value calculated using the following prices: US$0.88/lb zinc, US$0.81/lb lead and US$17.8/oz silver

Golden Rim Resources Ltd I ABN 39 006 710 774 I Office 7, Level 2, 609 Canterbury Road, Surrey Hills, VIC 3127, Australia

www.goldenrim.com.au I [email protected] I T + 61 3 9836 4146

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Golden Rim Resources Ltd (ASX: GMR, Golden Rim, Company) is pleased to announce that it has entered into an agreement with Herencia under which the parties will negotiate in good faith to enter into formal documentation with respect to a proposed transaction under which the Company will acquire all the issued shares in Herencia's wholly owned subsidiary Paguanta Resources (Chile) SA (PRC) (Formal Agreements) (Proposed Transaction). PRC holds 70% of the shares in Compania Minera Paguanta S.A. (CMP) which holds mineral concessions at the Paguanta silver-lead-zinc-copper project in northern Chile.

Golden Rim's Managing Director, Craig Mackay, said "The Paguanta Project presents as an exciting opportunity for Golden Rim to secure an advanced silver-lead-zinc project located in a favourable jurisdiction, which can be quickly progressed to a decision to mine."

"The project also exhibits significant upside, with potential to extend the existing resources at depth and to define additional resources along strike from the primary deposit. There is also recognised potential for porphyry copper systems within the project area" said Mr Mackay.

Paguanta is located in the Tarapacá Region of northern Chile, approximately 195km northeast of Iquique and 30km west of the Chile-Bolivia border (Figure 1). Paguanta is situated approximately 40km northeast of BHP Billiton's Cerro Colorado Mine, which has a Mineral Resource of 400Mt @ 0.62% copper for 5.5Blb of copper and annual copper cathode production of approximately 175Mlb.

Paguanta is predominantly owned through a joint venture company, CMP, where Herencia indirectly holds a 70% interest and an unrelated party, Costa Rica Dos SpA, holds the remaining 30% interest. Paguanta is comprised of 14 exploitation concessions covering a total surface area of 3,900ha, and 8 exploration concessions covering a total surface area of 2,100ha. In Chile, an exploitation concession, also known as a mining concession, is granted for an indefinite time period and allows the holder to undertake mining activities on the property. Royalties are payable to the Chilean Government.

At Paguanta, high grade silver was discovered and first worked in the area by a team of miners headed by an Englishman in the 1880's. Together they completed 1,800m of underground development into what is now called the Patricia deposit. The principal development is an adit running 400m in length that intersects three high-grade veins.

The Patricia mine at Paguanta was abandoned in the late 19th century and the area was not subjected to further evaluation outside of regional reconnaissance. Herencia acquired an interest in the Project in late 2005 and are the first modern explorers at Paguanta. Exploration commenced in early 2006. Drilling programs were carried out in 2006, 2007, 2009 and most recently in 2011. Since acquisition, CMP has completed approximately 40,000m of drilling, for total expenditure, including the majority of a feasibility study, of approximately US$31.5M (A$43m).

Mineral Resources

Most recently, CMP undertook an infill drilling campaign at the Patricia deposit in 2011, resulting in a JORC (2004) Mineral Resource update in September 2012.

The Mineral Resource estimate for the zinc veins at Patricia (Figure 2) has been classified in the Measured, Indicated and Inferred categories at varying zinc cut-off grades. A summary is provided in Table 1.

Table 1: JORC (2004) Mineral Resource estimate September 2012 - Patricia zinc veins*

* This information was prepared and first disclosed under the JORC Code 2004. It has not been updated since to comply with the JORC Code 2012 on the basis that the information has not materially changed since it was last reported.

An additional Mineral Resource estimate in September 2012 took into account the high-grade silver veins outside of the previously defined zinc veins. The Mineral Resource estimate for the silver veins at Patricia has been classified in the Indicated and Inferred categories. A summary is provided in Table 2.

Table 2: JORC (2004) Mineral Resource Estimate September 2012 - Patricia silver veins*

* This information was prepared and first disclosed under the JORC Code 2004. It has not been updated since to comply with the JORC Code 2012 on the basis that the information has not materially changed since it was last reported.

Feasibility Study

A Feasibility Study on the development of Patricia commenced in late 2012 and a draft Feasibility Study report was delivered to Herencia in 2014.

Mining studies envisaged that both open pit and underground methods would be undertaken, with both methods appearing to be viable. The Feasibility Study adopted an initial production rate for mining and processing of 400,000 tonnes per annum (tpa) and considered an operation that would commence via open pit before progressing into underground in years 3-4 (Figure 3).

Metallurgical test work was conducted on oxide, transition and sulphide samples collected from the outcropping ore, underground development and from Diamond drill holes. The primary sulphides were tested at ALS Laboratories in Kamloops, Canada, and the oxide samples were tested at SGS Laboratories in Santiago, Chile.

The sulphide test work suggested that a relatively conventional flowsheet could be utilised to separate the expected mine production into two flotation concentrates consisting of saleable levels of lead and zinc, with excellent levels of silver reporting to the lead concentrate.

The zinc and lead-silver concentrates would be transported by truck to a nearby coastal port for shipping. The port is permitted to ship concentrates.

Baseline environmental data was acquired and a water source sufficient for the planned production was identified.

Exploration Potential

Geologically, Paguanta is located in the western flank of the Andes, in the northern extension of Domeyko Fault Zone, a major lineament that controls the Oligocene Porphyry Copper Belt of Chile. This belt hosts some of the most important world class porphyry copper deposits in Chile, including Salvador, Potrerillos, Escondida, Zaldivar, Gabi, Spence, Chuquicamata, El Abra, Quebrada Blanca and Collahuasi.

The Patricia silver-lead-zinc deposit, located in the south of the Project area, is the best explored area at Paguanta and represents the major economic interest. The mineralisation is hosted in andesite and rhyolite volcanic rocks and consists of silver-lead-zinc sulphides in multiple mineralised vein structures that are typically steep dipping, 3m to 15m in width, and have an east- west orientation. The style of mineralisation within the vein structures includes massive to semi- massive breccia zones and stockwork vein zones.

Paguanta exhibits significant exploration potential, including extensions of the known Patricia mineralisation, along strike and at depth, and potential to host porphyry copper style deposits.

The Patricia East target is a strike extension of the Patricia deposit, with the area of interest extending 1.0km to 1.5km east of Patricia. An IP geophysical survey has outlined a large chargeability anomaly at Patricia East which is increasing significantly in size with depth and suggests there is the potential to extend the size of the Patricia deposit several times (Figure 4). Very limited drilling at Patricia East discovered multiple new zones of high grade mineralisation,

e.g. 16m at 209 g/t silver from 42m in PTRC021 and 7.6m @ 4.3% zinc, 2% lead & 247 g/t silver from 186m in PTDD049, that require follow-up drilling.

Deeper drilling has intersected continuous zones of high grade silver-lead-zinc mineralisation at Patricia and these zones remain open at depth (Figure 5). There is considerable scope to extend the resource at depth and for underground mining to be considered beneath any open pit. Some of the better deep drilling intercepts include:

• 6.3m at 9.1% zinc, 3.6% lead and 209 g/t silver from 188.75m in PTDD095, including 1.75m at 16% zinc, 9.7% lead and 544 g/t silver from 188.75m;

• 5m at 10.2% zinc, 4.2% lead and 244 g/t silver from 196m in PTDD096, including 1.1m at 17.6% zinc, 6.0% lead and 315 g/t silver from 198.7m; and

• 6m at 10.4% zinc, 2.9% lead and 150 g/t silver from 110m in PTDD089, including 2m at 21.0% zinc, 6.3% lead and 337 g/t silver from 112m.