ASX RELEASE 29 Jan 2016

Quarterly Activities Report December 2015

Highlights

Juruena licensing progressing on schedule

Preliminary equipment quotations and Scoping Study advanced for Juruena

Discussions with Financing Partners for Juruena underway

$1.3 million Capital Raising completed

Juruena Gold Project - Mato Grosso State, Brazil (100% Crusader)

Licensing

During the December quarter, applications for trial mining licences ('Guia de Utilização') (GU), over the high‐grade Juruena Gold Project, were lodged with Brazilian authorities.

The project development strategy for Juruena is similar to the direction undertaken by Crusader in commissioning the Posse Iron Ore Mine, and has been the path to production for a number of other successful mining companies in Brazil.

In addition to the GU applications, Crusader's licensing team has commenced the process for a full 'Concessão de Lavra' (Mining Concession / Mining Licence). In order to complete the application for a full mining licence, Crusader has engaged several internationally recognised consulting groups to conduct both environmental and social impact assessments for the planned operations, which will comply with the Brazilian mining code and International Finance Corporation (IFC) performance standards.

The full mining licence will remove the tonnage restriction on operations and allow the project to expand to full capacity.

Scoping Study Advances

Denver based international engineering firm Global Resource Engineering (GRE) has progressed preliminary costings for the project. The costings are based on an appropriately sized plant and equipment to mine and process within the tonnage restrictions of the GU licence, and leverages Crusader's existing in‐country experience, to source locally manufactured equipment and contractors in the mining focused city of Belo Horizonte.

Preliminary costings support a modular processing facility, the design of which would allow faster erection on a minimalistic footprint, and expansion post the granting of the full mining licence.

In addition to the processing facility, GRE has completed costings on both owner operator and contract development for both the Querosene and Dona Maria ore bodies, allowing access to the current known Inferred Mineral Resources1.

1 Refer ASX announcement dated 29 September 2015 - "Juruena Maiden Resources include 178koz at >12 g/t Gold"

ASX RELEASE 29 Jan 2016

Tender documents for contract underground mine development have been issued in January 2016 in line with the company's development schedule and once proposals are received the costings will be updated in the Scoping Study modelling.

Crusader plans to recommence drilling early in 2016 in order to increase the resource confidence level of the mineral resource estimates at Dona Maria and Querosene as well as evaluate a number of close, high‐value extensions identified by the 3D resource models that have been built around the current inferred resources (see figures 2 & 3 below).

Figure 1: Querosene resource model showing preliminary mine plan ‐ looking to north‐east

Figure 2: Dona Maria & Crentes resource model showing preliminary mine plan - looking to the west

ASX RELEASE 29 Jan 2016

Project Funding

Crusader has commenced preliminary discussions with potential financing partners to provide a debt facility to develop the Juruena Gold Project. These discussions are ongoing with a final firm agreement likely to be linked to the completion of the Scoping Study and a new resource statement scheduled for the second quarter of 2016.

The weakening Brazilian currency and recent strength in the gold price continues to have a positive effect on the economics for gold production in Brazil in a similar dynamic to that being experienced by Australian gold producers. Crusader intends to fast‐track the development of Juruena to take advantage of this favourable commodity environment.

Figure 3: Comparison of USD, AUD and BRL gold prices

Posse Iron Ore Mine - Minas Gerais, Brazil (100% Crusader)

Crusader remains positive for 2016 and anticipates the mine will operate profitably with conditions improving as the year progresses. Improving sales orders with both new and existing customers and a noted stabilising of business confidence with our customers, is pointing to a better outlook for the domestic Pig Iron industry in Brazil.

Crusader's sales team has worked hard to develop new customers and continues to develop opportunities to deliver high quality products into the Brazilian domestic market. Crusader's ability to produce a variety of different ore grades and specifications continues to generate new customer enquiries.

Over the December quarter Crusader's sales team negotiated and sold three new products represented as:

• HTT1 ‐ product of 56‐58% Fe with higher silica grade in the product

  o Allows Crusader to increase the recovery in mine

• NES - High‐grade lump silica for 'specialty metals' producer

• High grade Fe lump material to produce iron oxide for use in the chemical industry (in Minas Gerais and Sao Paulo)

During the period additional costs were incurred in relation to removal of waste relating to a scheduled cut back in the Posse pit, as well as water management relating to heavy rains during the Brazilian wet season. Average production costs for the quarter were $16.16/t (on lower overall throughput volumes), although unit costs over the 2015 year remained at a respectable $12.76/t. Note that there was also a one off capital cost of ~ BRL150,000 incurred to improve the state road adjacent to the mine.

ASX RELEASE 29 Jan 2016

The operational cost for Posse in the month of December was the second lowest month for the year at BRL1.3 million. Crusader remains vigilant over the costs at the mine during this challenging period.

The first Posse mine SIPAT (Week of Occupational Health, Safety and Accident Prevention) occurred over the quarter with Posse Mine collaborators participating in lectures about safety and environment with rich discussions about related themes.

Figure 4: Posse Mine SIPAT

Borborema Gold Project, Rio Grande do Norte, Brazil (100% Crusader)

The currency effect on the BRL denominated gold price has continued to assist with the economic evaluation of Crusader's 100% owned Borborema Gold Project, located in the northeast of Brazil. Borborema has a JORC reserve of 42.4mt @ 1.18 g/t Au for 1.61Moz comprised of two ore lenses, with the shallow lens containing the bulk of the reserve (26mt @ 1.14 g/t Au for 970koz). Crusader is evaluating a smaller operation than what was contemplated earlier.

Over the period, work at Borborema focused on two related areas, tailings disposal and licensing. Samples of Borborema tailings have been sent to various filtration equipment manufacturers to test the tailings for the applicability to be 'dry stacked' (the tails are filtered and stacked rather than contained in a tailings dam). The potential benefits of this option include:

• Remove the requirement for a tailings dam ‐ the tailings will have most of the water recovered (sample achieved a final moisture content of ~ 12‐17% a consistency similar to a compressed cake) and be 'stackable' in a waste pile

  
  

• Potentially reduced capital and operational costs - tailings dam and associated infrastructure

  
  

• In line with local government and IFC requirements regarding environmental responsibility

  
  

• Optimised licensing‐ the local environmental authorities are more likely to accept the development proposal without a tailings dam.

The testwork was considered a success with cake moisture contents of 12‐17% achieved. Preliminary costings of dry stacking appears to enhance the value of the project (as well as potentially accelerating the licensing) and as such, Crusader has taken the decision to alter its development proposal at the mines department and the environmental agency to dry stacking route.