QUARTERLY REPORT for the period ending 31 December 2014

ASX Code: MAR, MAROA

Issued Shares: 1,013 million Listed Options: 141.8 million ABN: 86 075 613 268

Directors

Terry Cuthbertson James Dean Andrew McMillan

Top Shareholders Mr Lindsay Jones Olhoc Pty Ltd

Morrison Charity Trustee Ltd

Head Office

Malachite Resources Limited

Suite 2, Level 10

8-10 Loftus St

SYDNEY NSW 2000

T: +61 (0)2 9251 0032

F: +61 (0)2 9475 0439

E: [email protected]

W: www.malachite.com.au

30 January 2015

OVERVIEW

 Malachite Resources Limited (Malachite) has an agreement with BCD Resources NL (BCD) to develop the Lorena Gold Project (Project).

 The development of the project is substantially complete. Main electrical control centre, generators and ball mill were installed during the quarter. All the key pieces of plant equipment are now on site.

 Key remaining items to be completed before commissioning include the electrical and piping installations and construction of the tailings dam.

 On 15 January 2015, BCD advised Malachite that it was reviewing the Project capital and commissioning funding requirements.

 On 22 January 2015, a receiver and manager was appointed to BCD by a related party of BCD.

 BCD has not yet earned any interest in the Project as it has not met its earn-in obligations. BCD can earn a 50% interest in the Project if it completes construction and commissioning of the Project concentration plant.

Photo of Lorena flotation plant and ball mill structure

QUARTERLY REPORT

December 2014

Lorena Gold Project

MLs 7147, 90192 - 90196 (MAR 100% with BCD farming in to earn 50% economic interest)

Malachite Resources Limited (Malachite) has an agreement with BCD Resources NL (BCD) to develop the Lorena Gold Project, located about 15km east of Cloncurry in northwest Queensland. BCD is required to fund this development to earn its 50% economic share in the Lorena gold mining project (refer Figure 1).

Figure 1: Lorena Gold Project - Tenement Plan

A flotation production facility at Lorena to process 120,000 tonnes per annum of ore is currently being constructed to produce a gold concentrate.

During the quarter, the main activities were the installation of the primary ball mill, the main electrical board (MCC) and the generators. Electrical and piping installation commenced during the quarter alongside the start of earthworks for the construction of the waste rock dump, ROM pads, and tailings dam.

Key remaining items to be completed before commissioning can commence include finalising the electrical and piping installations and the construction of the tailings dam.

On 15 January 2015, BCD advised Malachite that it was reviewing the capital and commissioning funding requirements for the Project.

On 22 January 2015, BCD advised the ASX that a receiver and manager had been appointed to BCD on behalf of MKS Precious Metals. MKS Precious Metals is a company associated with the Chairman of BCD.

Malachite is waiting on details from the receiver and manager of BCD in relation to the Project's

ongoing development.

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QUARTERLY REPORT

December 2014

Below are a number of recent photos of site activities at the Lorena Gold Project:

MCC installed Generators on site

Process plant - equipment installed Electrical cabling in progress

Preparation of waste rock dump in background Tailings dam area grubbed in background

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QUARTERLY REPORT

December 2014

Malachite continues to review its position in light of the appointment of a receiver and manager to

BCD. Malachite will also continue to investigate its own funding requirements and options.

The Company again confirms the following key points in respect of the Lorena Gold Project:

 Malachite currently holds 100% unencumbered ownership of the Mining Licences relating to the Lorena Gold Project.

 In accordance with the terms of the joint venture agreement between the parties BCD has not yet earned a 50% interest in the project as it has not met its obligation to fund project development through to the completion of construction and commissioning of a plant to produce a gold concentrate.

 BCD had previously requested that the joint venture agreement be restructured and that Malachite offer some or all of its 100% interest in the Mining Licences as security to assist it to raise additional funding. These discussions have not been finalised.

 The project remains robust with key operating parameters improved from the initial feasibility work. This includes a strong A$ gold price and a lower diesel price.

 The Lorena gold project has additional gold resource potential at depth; and

 Malachite has not forward sold any gold production.

About the Lorena Project

The Lorena Gold Project is located about 15km east of Cloncurry in northwest Queensland. A flotation production facility at Lorena to process 120,000 tonnes per annum of ore is currently being constructed to produce a gold concentrate. It is expected that in the first year of production the Lorena project will produce around 30,000 ozs of recovered gold from an open cut operation at an all in cash cost of around A$900/oz. The Lorena gold project has potential for resource extensions at depth which requires confirmation by drilling which is expected to occur as soon as funding allows.

Lorena Gold project located 15km east of Cloncurry, Qld

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QUARTERLY REPORT

December 2014

Corporate

New Convertible Notes

During the quarter the Company issued five and half new Convertible Notes with a total face value of

$275,000. The terms of the new Convertible Notes are identical to the existing Convertible Notes. The total face value of all Convertible Notes on issue is $1.8 million.

Tenements

Project Tenement Number

QUEENSLAND

Lorena

NEW SOUTH WALES

Conrad

ML 7147

ML 90192

ML 90193

ML 90194

ML 90195

ML 90196

EPM 18189

EPM 18908

ML 5992

ML 6040

ML 6041

EPL 1050

EL 5977

Tooloom ML 1237

ML 1238

ML 1385

EL 6263

Exploration/Mining Tenements Acquired/Disposed of during the Quarter

Project Location Tenement MAR Interest

NIL

Beneficial Interest in Farm-In or Farm-Out Acquired/Disposed of during the Quarter

Project Location Tenement MAR Interest

NIL

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QUARTERLY REPORT

December 2014

Further Information

For further information, please contact the Company on (02) 9251 0032 or by email at [email protected] or visit the Company's website at www.malachite.com.au

About Lorena:

The Lorena Gold Project is located about 15km east of Cloncurry in northwest Queensland. BCD Resources NL can earn a 50% share in the Lorena Gold Project by constructing a processing plant to produce a gold concentrate at Lorena capable of treating 120,000 tpa of ore.

Malachite is the holder of six mining leases (ML7147, MLs 90192-90196)and two exploration permits

(EPM18189 and EPM18908) at Lorena.

Lorena has a total JORC Mineral Resource in the Measured, Indicated and Inferred categories containing approximately 56,600oz of gold at a 2g/t cut-off grade. This is made up by a resource of

179,500t at 8.8g/t Au containing 50,700oz of gold in the A Lode (16,700oz of gold in the Measured

category and 34,000oz of gold in the Indicated category), and a resource of 23,700t at 7.8g/t Au containing 5,900oz of gold in the B Lode (800oz of gold in the Indicated category and 5,100oz of gold in the Inferred category). These resources are within a potential open pit mine and are open at depth. The gold-bearing mineralisation is principally of massive and stringer sulphide type and copper-gold mineralisation occurs in conjunction with the gold mineralisation. Drill intersections including 5.9m @

12.9g/t Au (located 100m down-plunge from the defined resources) demonstrate the potential for

significantly increasing the Lorena resource Inventory.

COMPETENT PERSON STATEMENT:

The information in this report that relates to the Lorena Gold Project resource is extracted from the report entitled Resource Update at Lorena created and released to the ASX on 27 January 2012 (which contained a separate Competent Person Statement by Geos Mining) and is available to view on the Company's website: www.malachite.com.au The Company confirms that it is not aware of any new information or data that materially affects the information included in the original market announcement and, in the case of estimates of Mineral Resources or Ore Reserves, that all material assumptions and technical parameters underpinning the estimates in the relevant market announcement continue to apply and have not materially changed. The Company confirms that the form and context in which the Competent Person's findings are presented have not been materially modified from the original market announcement.

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Malachite Resources Limited

Appendix 5B

31 December 2014

Malachite Resources Limited

Suite 2, Level 10, 8-10 Loftus Street Sydney NSW 2000

Tel. (02)9251 0032 Fax (02) 9475 0439 www.malachite.com.au

Appendix 5B

Mining exploration entity quarterly report

Introduced 1/7/96. Origin: Appendix 8. Amended 1/7/97, 1/7/98. Rule 5.3

Name of entity

Malachite Resources Limited

ACN or ARBN

075 613 268

Consolidated statement of cash flows

Quarter ended ("current quarter")

31 December 2014

Current Year to date

Cash flows related to operating activities quarter (6 months)

$A'000 $A'000

1.1 Receipts from product sales and related debtors
1.2 Payments for
(a) exploration and evaluation
(b) development
(c) production
(d) administration
1.3 Dividends received
1.4 Interest and other items of a similar nature received
1.5 Interest and other costs of finance paid
1.6 Income taxes paid (received)
1.7 Other income

Net Operating Cash Flows

Cash flows related to investing activities

1.8 Payment for purchases of: (a) prospects
(b) equity investments
(c) other fixed assets
1.9 Proceeds from sale of: (a) prospects
(b) equity investments
(c) other fixed assets
1.10 Loans to other entities
1.11 Loans repaid by other entities
1.12 Other -Security deposits

Net investing cash flows

1.13 Total operating and investing cash flows (carried forward)

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Malachite Resources Limited

Appendix 5B

31 December 2014

1.13 Total operating and investing cash flows (brought forward)

Payments to directors of the entity and associates of the directors

Payments to related entities of the entity and associates of the related entities

1.23 Aggregate amount of payments to the parties included in item 1.2 -
1.24 Aggregate amount of loans to the parties included in item 1.10

1.25 Explanation necessary for an understanding of the transactions
Salaries, Directors fees and consultancy fees at normal commercial rates.

Non-cash financing and investing activities $A'000

2.1 Details of financing and investing transactions which have had a
material effect on consolidated assets and liabilities but Nil did not involve cash flows

2.2 Details of outlays made by other entities to establish or increase
their share in projects in which the reporting entity has an interest Nil

Financing facilities available

Add notes as necessary for an understanding of the position.
3.1 Loan facilities
3.2 Credit standby arrangements

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Malachite Resources Limited

Appendix 5B

31 December 2014

Estimated cash outflows for next quarter *

4.1 Exploration and evaluation
4.2 Development
4.3 Production
4.4 Administration
* Estimated cash outflows for the Company are net of cost recoveries in respect of the Lorena Project.
* The Company has received firm commitments from subscribers for $100,000 in new Convertible Notes post quarter.

Reconciliation of cash

Reconciliation of cash at the end of the quarter (as shown in the consolidated statement of cash flows)
to the related items in the accounts is as follows
5.1 Cash on hand and at bank
Deposits at call
Bank overdraft
Other - 30 day bank bills

Changes in interests in mining tenements

6.1 Interests in mining tenements relinquished, reduced or lapsed
6.2 Interests in mining tenements acquired or increased

Issued and quoted securities at end of current quarter

Description includes rate of interest and any redemption or conversion rights together with prices and dates.
7.1 Preference +securities (description)
7.2 Changes during quarter
(a) Increases through issues
(b) Decreases through returns of capital, buy-backs, redemptions

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Malachite Resources Limited

Appendix 5B

31 December 2014

7.5 Convertible debt securities (description) Convertible Note each has a face value of $50,000 convertible at 20% discount to a 30 day VWAP; term to 5 April 2015; Interest rate - 15% per annum to 5
April 2015.
7.6 Changes during quarter
(a) Increases through issues
(b) Decreases through returns of capital, buy-backs, redemptions
7.7 Options

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Malachite Resources Limited

Appendix 5B

31 December 2014

Compliance statement
1 This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Law or other standards acceptable to ASX (see note 4).

2 This statement does give a true and fair view of the matters disclosed.
Sign here:
(Company Secretary)
Print name: Andrew J Cooke
30/01/2015
Notes
1 The quarterly report provides a basis for informing the market how the entity's activities have been financed for the past quarter and the effect on its cash position. An entity wanting to disclose additional information
is encouraged to do so, in a note or notes attached to this report.
2 The "Nature of interest" (items 6.1 and 6.2) includes options in respect of interests in mining tenements acquired, exercised or lapsed during the reporting period. If the entity is involved in a joint venture agreement and there are conditions precedent which will change its percentage interest in a mining tenement, it should disclose the change of percentage interest and conditions precedent in the list required for items 6.1 and 6.2.
3 Issued and quoted securities The issue price and amount paid up is not required in items 7.1 and 7.3 for fully paid securities.
4 The definitions in, and provisions of, AASB 1022: Accounting for Extractive Industries and AASB 1026: Statement of Cash Flows apply to this report.
5 Accounting Standards ASX will accept, for example, the use of International Accounting Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with.

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