ASX Announcement

28 October 2016

ASX Code DEG

ABN 65 094 206 292

COMPANY DIRECTORS

Simon Lill

Executive Chairman

Davide Bosio

Non-executive Director

Steve Morris

Non-executive Director

Craig Nelmes

Company Secretary/CFO

CONTACT DETAILS

Principal & Registered Office Level 2, Suite 9

389 Oxford Street

Mt Hawthorn WA 6016

PO Box 281

Mt Hawthorn WA 6016 www.degreymining.com.au [email protected]

T +61 8 9381 4108

F +61 8 9381 6761

Wingina Well Gold Resource Update - 144,000oz @ 4.1g/t in high grade lodes

Highlights

Wingina High Grade Gold Lodes 144,000oz @ 4.1g/t Wingina Total Gold Resource 288,000oz @ 1.6g/t

• Wingina Well Mineral Resource estimate increased 7% to 5.49Mt at 1.6g/t Au for 288,000 ounces of which 173,000oz (60%) is in Measured category

• Internal High Grade Lode within the resource comprises 1.1Mt at 4.1g/t Au for 144,000oz from surface

• 50% of Wingina gold contained in the high grade lodes

  comprising 20% of the deposit tonnes

• Resource averages over 1,200 ounces per vertical metre/ ("oz/vm") from surface to 140m depth

• Mineralisation remains open at depth and on strike

• Wingina Well's host shear zone extends for over 50km within De Grey tenure and remains poorly tested

• Turner River Total Gold Resource is 366,000 oz @ 1.6 g/t (excludes gold contained at Discovery Project)

• Open pit optimisations underway at Wingina Well to identify recoverable ounces

Turner River - Unlocking Shareholder Value

Wingina Well - Resource Update

De Grey Mining Limited (ASX: DEG, "De Grey", "Company") is pleased to announce the new updated Mineral Resource Estimate for its 100% owned Wingina Well Gold Deposit, located near Port Hedland in the Pilbara region of Western Australia.

The resource update was completed mainly to quantify the size and extent of the identified higher grade gold lode(s) that occur within the broader mineralised system at Wingina. It has also included the results of recent extensional drilling. completed by De Grey The modelling and estimation was completed by Payne Geological Services Pty Ltd, an external and independent mining consultancy, using data provided by De Grey.

Wingina Well October 2016 Mineral Resource Estimate

(0.5g/t Cut-off above -100mRL, 1.0g/t Cut-off below -100mRL)

Measured		Indicated		Inferred		Total
Zone	Tonnes Mt	Au g/t	Tonnes Mt	Au g/t	Tonnes Mt	Au g/t	Tonnes Mt	Au g/t	Au Ounces
Lode	0.78	4.1	0.12	3.8	0.2	4.1	1.10	4.1	144,000
Halo	2.30	0.9	0.86	1.0	1.2	1.2	4.39	1.0	144,000
Total	3.08	1.7	0.99	1.4	1.4	1.6	5.49	1.6	288,000

Rounding discrepancies may occur

The Total Mineral Resource Estimate as stated above is restricted to the higher 1.0g/t cutoff below -100mRL (200m below surface) to reflect the potential economics at depth.

The previous resource estimate was 5.1Mt @ 1.6g/t for 268,000oz using a 0.5g/t cut- off above -55mRL and 1.0g/t cut-off below -55mRL (~155m below surface). The new resource shows an overall 7% increase in reported ounces. This increase is primarily attributed to the individual modelling of the high grade lodes within the mineralised system. Other increases relate to lowering the depth of the 0.5g/t cut-off to -100mRL instead of the previous -55mRL and incremental additions related to the recent drilling.

Strongly developed oxide gold mineralisation is evident averaging over 1,200 oz/vm from surface to 140 metres below surface, peaking at 1622 oz/vm between 60m and 80m below surface.

The Wingina Well deposit is shear-hosted and occurs within deformed cherts and banded iron formation of Archean age. The cherty horizons form a prominent ridge along much of the extent of the identified shear zone. Mineralisation is developed within a NE-SW striking, sub-vertical zone with resource grade mineralisation defined over a strike length of 1,400m and to a vertical depth of 470m in the central portion of the deposit. The mineralisation remains open down dip over most of the deposit length.

Gold mineralisation is associated with extensive development of pyrrhotite resulting in iron rich gossanous zones in the oxidised portion of the deposit. The deposit is strongly oxidised, with depth of complete oxidation of at least 100m vertical but up to 240m within the main mineralised zone. Approximately 190,000oz of the total Mineral Resource lies within completely and partially oxidised material.

Within the broad mineralised zone, a distinctly higher grade lode structure was observed, generally adjacent to the footwall contact of the sheared chert/BIF sequence with the underlying metasediments. This lode was modelled and estimated separately from the lower grade halo of mineralisation.

The majority of resource drill holes at the Wingina project were completed by De Grey in 2003 and 2004. A small number of holes were drilled by joint venture partners in 2012 and 2014. De Grey recently completed an additional four Diamond holes in 2016. The central portion of the deposit has now been drilled at 20m by 20m spacing and the peripheral zones have been drilled at a spacing of 40m or greater. A total of 177 RC holes and 44 Diamond holes define the Mineral Resource.

Samples in mineralised zones were collected at 1m intervals and analysed for gold using a fire assay technique. QAQC protocols were in place for the various drilling programs and has confirmed the quality of the sampling and assaying.

The deposit was estimated using ordinary kriging ("OK") grade interpolation of 1m composited data within wireframes prepared using 0.3g/t Au envelopes for low grade mineralisation and 1.8g/t for the higher grade lodes. Interpolation parameters were based on the geometry of each zone and geostatistical parameters determined by variography. A high grade cut of 15g/t was used for the halo domain and 40g/t for the Lode domain.

The block dimensions used in the model were 10m EW by 4m NS by 10m vertical with sub-cells of 2.5m by 1.0m by 2.5m. Bulk density determinations from drill core and down hole density logging were collected by DEG in the resource drilling. Values used in the resource estimate were 2.1t/m3 for Oxide, 2.3t/m3 for Transition and 2.7t/m3 for Primary.

The portion of the resource defined by the 20m spaced drilling and displaying good continuity of mineralisation was classified as Measured Mineral Resource. The portion of the resource defined by the 20-40m spaced drilling and displaying good continuity of mineralisation was classified as Indicated Mineral Resource. The peripheral and deepest portions of the mineralisation was classified as Inferred Mineral Resource due to the wider spaced drilling.

The deposit is strongly open down dip in many areas and higher grade plunge extensions also remain open and untested. Strong potential exists to extend the resource with further drilling.

Metallurgical test work has demonstrated that gold recoveries of 93% for CIL processing or 70% for heap leach processing can be expected. Recoveries have been assessed with rapid leach times and coarse ground material, which augur well for project economics.

The shallow, tabular nature of the deposit and the medium to high gold grade suggests there is good potential for mining using open pit methods. The higher grade shoots at depth in the Wingina deposit have potential for underground exploitation.

Turner River Project

The Turner River Project is located in an infrastructure rich area, about 50km south of Port Hedland in the Pilbara region of Western Australia, with excellent main arterial access via dominantly bitumen roads. Port Hedland hosts excellent support facilities with a deep port, international airport and mining related businesses.

The Wingina deposit is the largest and most well drilled of the gold deposits within the project area. The gold mineralisation is hosted in a large regional shear associated with a Banded Iron Formation (BIF) and Chert sequence. This shear zone is known to extend at depth and for over 50km within De Grey's tenements and is considered to be only partially tested to date providing substantial exploration upside for further discoveries.

The project currently hosts three JORC 2012 gold resources at the flagship Wingina, Mount Berghaus and Amanda deposits for a total of 366,000oz.

Turner River Project - Total Gold Mineral Resources

NB: Resource statement does not include gold resources contained in the Discovery deposit which will be reported separately in an updated resource statement on De Grey's Base Metals project.

As each of the three gold deposits are individually assessed, additional drilling completed and resource models are upgraded, open pit optimisations will be carried out to determine potential open pit mining scenarios. From this information, the company will determine the timing of a more detailed feasibility study. The new Wingina Well resource model is the first step in this assessment with Mt Berghaus the next in the series and to be followed by the Amanda deposit.

At Mount Berghaus, a program of detailed infill and extensional RC drilling will commence during November 2016 and enable completion of a further comprehensive