ASX ANNOUNCEMENT 22 January 2016

QUARTERLY ACTIVITY REPORT DECEMBER QUARTER 2015

HIGHLIGHTS

The September 2015 Quarter saw Marmota launch an aggressive gold exploration program across its prime tenement holdings around the Challenger gold mine.

The December 2015 quarter saw that program already yield some exceptional results, in particular at Westpoint Hill.

New exploration ground acquired [ see ASX release: 6 October 2015 ]

• Marmota expanded its tenement holdings near the Widgety prospect (ELA 2015/00175) [ see Figure 1 ]

  
  

  Gold exploration program produces exceptional results

  • Oct: New large anomalism at Westpoint Hill identified

    Exceptional gold-in-calcrete anomalism assay results of 70ppb to 107ppb; Better than 99.9% of all calcrete sampling results in the South Australian Government database

  • Nov: Ground geophysical surveys at Widgety; drilling commences at Widgety

  • Dec: Widgety: drilling completed

    Westpoint Hill: new fine grid calcrete sampling auger drilling completed (1530 samples obtained) over the new target area identified in October

    
    

    Update from the labs

• The new assay results from the labs are expected very soon:

  • Widgety: in late January 2016

  • Westpoint Hill: in early Feb 2016

  Corporate

• New capital brought in: around $500,000 (free of broker costs) including:

  • $250,000 placement to Yandal Investments (the investment vehicle of Mr Mark Creasy): new 2nd largest shareholder

  • Exercise of Listed Options (9 Dec 2015): raising $186,000

  The conversion rate of listed options into shares was over 85%.

• Marmota enters January 2016 with zero Listed Options outstanding, zero debt, and a clean capital structure.

• Share registry moved to Link Market Services

Exploration Activities during Quarter

GOLD Gawler Craton

Multi-commodity potential (gold, copper, nickel, zinc, uranium)

Figure 1: Marmota's Gawler Craton Gold Project + location of new tenements

Work undertaken during reporting period

Background

• Marmota is searching for Challenger-style gold systems. The Challenger mine has already produced 1 million ounces of gold (over A$1.5 billion of gold, at current prices).

  
  

• Marmota has a dominant tenement holding around Challenger. Marmota tenements cover around 4,000 km2 of highly prospective area around the Challenger gold mine, in the Woomera Prohibited Defence Area in the Gawler Craton.

  
  

• Marmota has adopted the same calcrete sampling methodology that was used to find Challenger -- to highlight areas of gold anomalism with the potential for Challenger-style gold mineralisation.

  
  

  The gold program is ongoing and expanding. Once results are received and properly analysed, a follow-up strategy for each area will be determined.

  
  

  Mulgathing [ see ASX release: 6 October 2015 ]

• New exploration ground being processed:

  Marmota submitted a new exploration licence application (ELA 2015/00175) for areas immediately adjacent to, or close to, the Company's Widgety prospect [see Figure 1]. This is in the process of being finalised as an Exploration Licence which is anticipated to occur during the March 2016 Quarter.

  
  

  Challenger Gold Mine [ see ASX releases: 4 November and 7 December 2015 ]

• On 4 November 2015, Marmota made a formal open offer of $2 million for the Challenger Gold Mine, owned by Kingsgate Consolidated Limited (ASX: KCN). The terms of the offer are identical (as disclosed) to the offer made by WPG Resources Limited (ASX: WPG), but at twice the price. Kingsgate did not accept the offer, noting that the offer was unfunded (as indeed was the WPG offer).

  
  

• On 7 December 2015, Marmota entered into a binding Heads of Agreement with Asymmetric Investment Management Pty Ltd (a WA based hedge fund) to effect that Marmota's $2m offer for the Challenger Gold Mine (and related assets) is fully funded. Marmota also announced underground mining specialists, Byrnecut Australia Pty Ltd, as preferred contract operator to operate the mine, contingent on Marmota's bid being successful. Byrnecut are the existing operator for Kingsgate of the underground mine at Challenger, and so bring with them unparalleled knowledge and experience of the existing operations. Marmota and Byrnecut believe that there are further synergies to be obtained by Byrnecut running both the underground operations and the above ground plant. By utilising Byrnecut as operator, a successful Marmota offer will ensure that any mine downtime during the transition of ownership will be minimised. Marmota has not yet received a reply from Kingsgate to same. Kingsgate has announced that they have agreed to sell Challenger to WPG, at half the price offered by Marmota, in the March 2016 Quarter.

  Widgety Prospect [ see ASX releases: 14 October 2015 and 26 November 2015 ]

  
  

  • Calcrete sampling via auger drilling was carried out during the September 2015 Quarter at the Widgety prospect (50km SE of Challenger) on a fine 50m x 50m grid pattern, in-filling existing anomalous data.

    
    

  • Assay results [ see ASX release: 14 October 2015 ] returned strong gold-in-calcrete anomalous assay results, defining several anomalous clusters, each around 250m wide.

    
    

  • 96 sample locations at Widgety returned anomalous gold-in-calcrete readings ≥ 20 ppb

(out of 331 samples taken at Widgety) [see Figure 2 below].

For comparison: a gold-in-calcrete result of 20ppb is better than 98.4% of all calcrete sampling data recorded in the South Australian Government database of 192,677 samples.

Figure 2: Widgety: Detail of gold-in-calcrete anomalism (contoured at 10ppb and 20ppb gold)