Corporate Information

Contents

Executive Chairman's Report

We present you the 2015 Annual Report for De Grey Mining Limited.

The past twelve months have been challenging, with the difficulties facing junior exploration companies in the current environment are well documented, that:

• capital for exploration purposes is difficult to attract;

• commodity prices are in general low - certainly relative to the recent price spikes associated with the Chinese inspired commodity boom;

• the Stock Exchange is attributing limited value to exploration assets; and

• there are a myriad of junior exploration companies seeking attention in a crowded market.

  
  

  As a junior exploration company it can at times be about survival, and we have indeed survived another difficult year as an exploration company. To that end it is worth noting that myself and my fellow directors have operated at minimal fee levels and have contributed substantial effort well and truly above their remuneration.

  
  

  The Company has been assisted with its funding requirements through:

  
  

• A capital raising that raised a total of $114,346 via the issue of 228,692,212 ordinary shares with attaching options to professional and sophisticated investors; and

• The sale of the Company's New Zealand project, Puhipuhi, to Evolution Mining Limited for $370,000.

  
  

  We were disappointed to have to sell Puhipuhi as it is a project that we believed in, but which required greater resources than we could contribute. The sale to a significant gold company growing in status on the ASX vindicates our belief and we wish Evolution exploration success in the future with the Project.

  
  

  Funds were expended during the year on the Turner River Base Metals Project and on due diligence activities on a diamond project in the Kimberley region of South Africa, both as reported in more detail in the Operations Review but summarised below.

  
  

  Turner Rive Base Metals - Zinc/Silver Project

  
  

  During the year De Grey completed a drilling programme at the Tabba Tabba and Discovery prospects. Post the year's end we have:

• completed an outcrop sampling programme; and

• reanalysed the geophysics covering the Tabba Tabba prospect to better understand why the drilling failed to intersect the indicated target.

  
  

  At the date of this report, the review and assessment of the data obtained from these activities is continuing.

  
  

  The board of De Grey has also continuously assessed other opportunities that may benefit the Company and improve De Grey's market position. This included taking an option over a diamond project in the world famous Kimberley district of South Africa, subject to legal, commercial and technical due diligence. We entered into the agreement believing that the initial results would underpin a project with potential significant market impact. Unfortunately (and subsequent to balance date) the technical aspects of the Due Diligence process were unexpectedly negative and the Company was not able to proceed past the due diligence stage.

  
  

  With respect to its other two projects;

  
  

• Great Northern Gold Project - Rugby Mining Limited are in the process of earning an 80% interest and during the year completed two hole drill programmes at Mt Berghaus and Wingina Well, and a regional lag sampling programme; and

• Beyondie Iron Ore - managed by Emergent Resources Limited (80%) and in which De Grey holds a passive 20% interest.

  
  

  In summary, following another difficult and trying year, De Grey finds itself with interests in several projects and continues to look at other opportunities to progress the company whilst ensuring valid exploration work is completed on its projects to maintain and improve its prospects. I thank De Grey shareholders for their continuing support of the Company and look forward to a better 12 months ahead.

  
  

  Peter Batten Executive Chairman

  Perth, 30 September 2015

  
  

  Overview

  
  

  The Company, following the closure of its Argentinian interests and the sale of Puhipuhi has four mining and exploration projects, as follows:

  
  

• Turner River Base Metals Project;

  
  

• Turner River Gold project (renamed Great Northern Gold project by the Joint Venturer, Rugby Mining Limited, who are earning into 80% of the project through the expenditure of $2 Million over a three year period, with De Grey retaining 20% on a free carried basis through the period);

  
  

• Beyondie Iron Ore Joint Venture; and

  
  

• Sands Project.

  
  

  The Company also spent some time in examining the potential of a diamond project in the Kimberley region of South Africa, on which it decided to not proceed.

  
  

  The Company recognises its two key projects are the Turner River Base Metal and the Great Northern Gold projects which are located 35km south of Port Hedland in the Pilbara Region of Western Australia, covering a combined area of 1,000 sq km (Figure 1). The eastern portion of the project, TR Base Metals, covers the VMS-style polymetallic mineralization discovered in 2006. Tenements in the western portion of the project, Great Northern Gold, are primarily prospective for gold mineralization and include the Wingina Well gold deposit discovered in 2003.

  
  

  Figure 1: Turner River Location Plan

  
  

  Turner River Base Metals Project ('TRBMP') De Grey's Base metals project consists of;

• two initial independently estimated resource areas (Discovery and Orchard Tank) with mineralization open at both sites; and

  
  

• six prospects with mineralization intersected in drilling.

The resource tables for the TRBMP have been reported to the ASX and are contained further in this report.

Volcanogenic massive sulphide-style (VMS) mineralisation within the Tabba Tabba greenstone belt of the Archaean Pilbara Craton of northern Western Australia was a virgin discovery by De Grey in October 2005.

A 23km strike length of the east-west striking greenstone belt is contained within the TRBMP. The greenstone belt is up to 2km wide and the Tabba Tabba shear is interpreted to represent a terrane boundary separating the Mallina Basin of the Central Pilbara from the East Pilbara Granite-Greenstone region to the southeast.

Drilling December Quarter 2014

The December drilling programme completed five of the six proposed Reverse Circulation (RC) holes for a total of 1,601m (Figure 2). The drilling targeted potential mineralized horizons at the Discovery Prospect and the Tabba Tabba prospect.

The purpose of the drilling was:

• Extend shallow mineralization at Discovery;

• Target existing IP anomalies along strike at Discovery;

• Test a series of IP anomalies at Tabba Tabba, including a zone showing the highest IP anomaly seen to date at Turner River Base Metals

  
  

  Figure 2: Prospect Locations - showing drill collars

  
  

  Discovery

  
  

  The drilling for the Discovery Prospect targeted IP anomalies along strike from the existing mineralization. The drilling was designed to extend the shallow (~100m) mineralisation to the west of the existing resource at Discovery (Figure 3).

  
  

  The programme completed two of the planned three holes of RC drilling for a total of 364m. The IP anomaly to the east of existing resource at Discovery was not drilled.

  
  

  DISRC004 was located approximately 100m west of the existing drill delineated mineralization at Discovery and was targeting shallow mineralization extensions.

  
  

  
  

  Figure 3: Discovery prospect

  
  

  DISRC004 intersected two zones of elevated zinc levels that are interpreted as the target mineralized horizon. The two zones, at 53m downhole and 85m downhole, extend the known mineralized horizon by in excess of 100m. This extends the known strike length of the Discovery horizon by approximately 50%.

  
  

  The wide (12 metres) but low grade mineralization is potentially edge mineralization of the plunging zone. This can be tested with further drilling.

  
  

  DISRC005, collared 250m west of DISRC004, did not intersect significant mineralization. The mineralization at Discovery may plunge below the level tested by drilling.

  
  

  Tabba Tabba

  
  

  The drilling for the Tabba Tabba Prospect tested IP chargeability anomalies that were the product of a survey completed before the project was returned to De Grey's management in early 2014.

  
  

  These anomalies represent a series of parallel zones extending south west from existing zinc mineralization at Tabba Tabba and to the northwest.

  
  

  The drilling of the known mineralized horizon, TTRC027, intersected zinc mineralization, 4m at 0.14% Zn, from 300m downhole, effectively extending the strike of the target horizon by more than 500m, a 100% increase in the target strike length (Figure 4). The lower grade mineralization may indicate that the plunge of the mineralization is steeper than predicted and the main zone sits below the recent drillhole.

  
  

  The other holes drilled at Tabba Tabba, TTRC020, TTRC022 and TTRC023, were targeting the higher level IP anomalies parallel and to the northwest of the known line of mineralization at Tabba Tabba.

  
  

  Difficult ground conditions resulted in the abandonment of the first hole, TTRC022, and an adjustment of the programme. The other holes targeting this IP anomaly did not intersect significant mineralization.

  
  

  The source of the IP anomaly has not been resolved. As this mineralization does not display a surface expression it is possible the drilling has straddled the emitter (Figure 4). In an effort to better locate the source of the chargeability anomaly at Tabba Tabba geophysical data were reviewed.

  
  

  
  

  Figure 4: Tabba Tabba prospect (historic drilling previously reported)

  
  

  TTRC021 was designed to test for the southern extension of the existing mineralization, previously reported at Tabba Tabba. The IP chargeability anomaly at this location was interpreted as being in the downplunge position from the existing zinc mineralization.

  
  

  TTRC021 intersected low grade mineralization of 4 metres at 0.14% Zn from 300 metres downhole. This mineralization could represent the edge of a mineralized zone with better mineralization below the drilling or to the northeast closer to the existing mineralization (Figure 4).

  
  

  The weak mineralization intersected in TTRC021 does not resolve the source of the IP chargeability anomaly for IP zone 1.

  
  

  The purpose of this drilling programme was to extend the mineralized horizon and to resolve the source of the high tenor IP anomalies at Tabba Tabba.

  
  

  Despite the weak grades returned from TTRC021 this drillhole has intersected the host horizon and zinc mineralization was still present over 500 metres from the previously identified mineralization. The potential mineralized horizon at Tabba Tabba has increased to over 1,000 metres.

  
  

  Geophysics Review

  
  

  Following the December drill programme De Grey engaged Core Geophysics Pty Ltd to review the Induced Polarisation data from the Tabba Tabba prospect in conjunction with the drilling data to ensure the anomalies used to design the drilling were spatially tested.

  
  

  Reprocessing of the 2012 Tabba Tabba Induced Polarisation data and review against the 2014 drilling indicated that only one drill hole TTRC020, sufficiently intersected a target IP anomaly.

  
  

  • Holes TTRC022-23 appear to have deviated below and above the target IP anomaly on line 50400 and TTRC021 was drilled too far to the north west to test the IP anomaly associated with the down strike extension of the known mineralisation.

  • A previously undetected IP anomaly was partially resolved at the northern limit of line 51600 and should be further investigated.

  • Drilling of the IP anomaly missed by TTRC021 on the eastern end of line 50400 is considered a high priority.

  • If base metal mineralisation is intersected, then the IP survey should be extended in order to delineate any further continuation to the south west.

    
    

    
    

    Figure 5: Elevated 3D view, looking down, showing drill traces over chargeability inversion sections with mineralization wireframe and projected strike extent.

    
    

    The Tabba Tabba mineralization is still open to the south, not having been tested adequately by the drilling and is now the top priority for further work. Apart from extending the known mineralization at Tabba Tabba further anomalies identified on the edge of the current survey data requires further investigation. The initial proposal would be to extend the IP data to the northeast and south to better define two anomalies noted on the edge of the existing data.

    
    

    Resource Tables - De Grey Mining Limited (as reported to the ASX on 16 July2014)

    
    

    Turner River Base Metals Project - Resource Statement (JORC 2012)

    Table 1: June 2014 at a 1.0 % Zn cut-off
    Deposit	Classification	Tonnes (Mt)	Zn (%)	Ag (g/t)	Pb (%)	Cu (%)	Au (g/t)
    Orchard Tank	Inferred	1.40	2.70	84.44	1.10	0.08	0.56
    Discovery	Inferred	1.05	2.63	94.54	1.03	0.12	0.88

    
    

    
    

    Table 2: June 2014 at a 0.5 % Zn cut-off
    Deposit	Classification	Tonnes (Mt)	Zn (%)	Ag (g/t)	Pb (%)	Cu (%)	Au (g/t)
    Orchard Tank	Inferred	1.68	2.38	78.56	0.99	0.07	0.52
    Discovery	Inferred	1.24	2.34	86.98	0.94	0.11	0.83

    Mt is an abbreviation for million tonnes.

    
    

    Qualifying Notes for All Estimates

    
    

    Resource estimates are based on RC and diamond core drillhole data deriving from work by both De Grey and Lansdowne Resources Pty Ltd. Industry standard procedures maintained during those works include:

    
    

• Drillhole collars located to +/- 20cm by differential GPS;

• Down-hole surveys sufficient to reliably track hole paths;

• Sampling and assay quality controls including regular inclusion of blank and reference samples.

Ravensgate has accepted the sampling and assay data upon which the resource estimates are based as being sufficiently reliable for the estimation of Inferred Resources.

TRBMP - Other Prospects

Along with the three main zones at Turner River (Orchard Tank, Discovery and Tabba Tabba) there are seven other prospects (Hakea, Acacia, Cassia, Gwajai, Clay Pan Well, Tabba Tabba 2 and TRN027. Ref: Figure 6) that have been identified from mineralization with only five of these having been drilled to date.

The Tabba Tabba prospect lies at the northern limit of the current exploration completed to date. Surface mineralization was mapped and sampled with follow up drilling. Continuous mineralization was intersected but no resource estimate has been undertaken at this point.

The Company believes the prospect of significantly enhancing the current resources for both tonnages and grade remains high, for the following reasons:

• Current resource estimates are based on only two out of ten prospects covering only 7kms drilled out of a potential 23km strike length of favourable geology;

  
  

• Resource estimates based solely on the Discovery and Orchard Tank prospects. Mineralisation at both prospects remains open at depth and on strike. Discovery considered the best potential for significant increases with resource estimate based on 400m of a 1,000m strike length; and

  
  

• Mineralisation is known to exist at Cassia, Acacia, Hakea and Tabba Tabba, with additional mineralisation (minimal testing) at Gwajai, Clay Pan Well, Tabba Tabba 2 and TRN 027.

Figure 6: Turner River Base Metals Project identified prospects on magnetic image

Great Northern Gold Project - JV with Rugby Mining Ltd

Rugby Mining Ltd (TSX-V:RUG) initiated its second drill programme in October 2014. The programme was designed to test for high grade zones within the Wingina Well prospect.

Rugby is progressing towards earning their interest in the Great Northern Gold Project under the previously reported Agreement with De Grey. The Agreement with Rugby grants them an option to earn an 80% interest in a 714 square kilometre ('km') tenement package (the 'Tenements') through exploration and drilling expenditure and an additional option to purchase an 80% interest in a near surface historical resource at Wingina Well (together with the Tenements, the 'Great Northern Gold Project').

Rugby Mining Ltd (TSX-V:RUG) reported that the program comprising five drill holes for a total of 1,191 metres ('m') was conducted at the Wingina prospect to test for depth extensions to the high grade footwall gold zone. Five RC/rotary pre-collared drill holes and four diamond drill tails were drilled. Unfortunately, due to excessive hole deviation and very difficult ground conditions, only one hole (RWG002) was successfully drilled to the target depth. Preliminary gold assays have been received for all the drill holes with significant results including:

 RWG002 61.5m @ 1.14 g/t gold from 196.4m*

 RWG003 1.0m @ 14.49 g/t gold from 255.3m

 RWG005A 10.0m @ 2.59 g/t gold from 266.0m and 3.0m @ 5.15 g/t gold from 301.0m

*assumed 3.4 metres of no core recovery assayed 0.0 g/t gold

The drilling on the Wingina prospect has shown a continuation of gold mineralization at depths below the previously established shallow oxide historical mineral resource (not compliant with National Instrument 43-101 ('NI 43-101')).

Figure 7: Great Northern Gold Project - Prospects and drilling over aeromagnetics

Rugby has commented that they will focus on defining shallow oxide and underlying high grade deposits to supplement the historical (non- NI 43-101 compliant) Wingina gold resource. Magnetic anomalies in areas adjoining known high grade gold mineralization are untested, with one such target, the Crescent magnetic anomaly, scheduled for follow up.

Rugby recently completed a regional LAG sampling programme over a magnetic feature between the Berghaus and Wingina prospects. Approximately 150 samples were collected on a 500m x 500m spaced grid which covered an area of about 40km2.

Sampling defined a gold anomaly (up to 28ppb Au) with background generally less than detection. The LAG gold anomaly is located within an interpreted diorite intrusive and the occurrence is possibly different from the Berghaus (metasediments) and Wingina (BIF, mafic metavolcanics) style mineralisation (Figure 8). Other elements, As, Pb/Zn, are generally depleted within the intrusive and increase on the periphery.

Figure 8: LAG sampling gold results - peak value 28ppb Au

A follow-up sampling programme is planned to be conducted 4th quarter 2015. The LAG sampling survey will also be extended over the Kasy and No. 10 Well prospects (Figure 7).

Heap leach metallurgical testwork is currently being conducted on Berghaus drill core (sample details, etc are attached). This testwork includes both bottle roll and column tests. All results are awaited.