Saracen Mineral Holdings (ASX: SAR) is pleased to advise that it has tripled its exploration budget to A$42 million for this financial year as part of a strategy to grow the inventory and production at its existing mines.

The substantial commitment reflects Saracen's high level of confidence in the organic growth credentials of its Carosue Dam and Thunderbox operations. The targets have resulted from the systematic and rigorous ranking of Saracen's exploration portfolio over the past two years.

The A$65 million capital requirement of the Thunderbox development resulted in a reduced exploration spend of only A$11.1 million and A$14.3 million in FY15 and FY16 respectively.

Table 1 - FY17 exploration budget (A$ and timing)

King of the Hills

$9.1

Whirling Dervish $8.2

Greenfields Regional

2.8

$2.8

TOTAL $m

$8.6 $9.4 $15.4 $8.6

$42.0

The strong prospectivity of Saracen's assets is underlined by recent extensional drilling results from the rapidly growing Karari mine (page 4), the high-grade King of the Hills (KOTH) project (page 9) and potential new discoveries at the Red October mine (page 26). All deposits remain open along strike and at depth.

After achieving its FY16 outlook (the fourth year straight Saracen has met or exceeded guidance), the Company is pleased to reiterate its five-year group production outlook (refer to the ASX announcement dated 27th October 2015 - "Robust five-year outlook - Revised").

Figure 1 - Five-year group production outlook

Production is on track to increase to an annualised rate of 300,000ozpa from the June quarter 2017 (Figure 2). AISC are anticipated to fall to A$1,000/oz in the June quarter 2017 and further to A$950/oz in FY20 (as the strip ratio of the Thunderbox open pit continues to decline concurrent with increasing average grades).

Figure 2 - FY17 group production outlook

To re-iterate, Saracen reports AISC in true cashflow terms, with no accounting adjustments for strip ratio and ore stockpiles. Group AISC for FY17 of A$1,250/oz (Figure 1) includes ~A$28 million for Thunderbox Zone C pre-strip mining. There are no ounces delivered to the mill from Zone C in FY17, with waste mining in FY17 to allow access to ore for FY18-20. Excluding the Zone C pre-strip costs reduces the group AISC for FY17 by A$100/oz to A$1,150/oz (Figure 2).

Ore production has commenced at KOTH where FY17 forecast production is a modest 12koz (all in the December half), entirely from the northern extremities of the mine (Figure 10) where previous underground production of 291koz @ 4.5g/t was sourced. Significant potential exists to the south with exploration drilling underway.

The early drill results from the new A$42m exploration budget suggest significant potential to increase annual production and mine life beyond the levels in the current five-year production outlook.

Saracen Managing Director, Raleigh Finlayson, said the Company had every reason to be confident about the exploration upside of its assets.

"Based on what we have seen so far, we believe this aggressive exploration campaign has the potential to increase our inventory and production in the coming quarters," Mr Finlayson said. "The proposed A$42 million exploration budget in FY17 will be the highest exploration commitment Saracen has made in its ten-year history."

For further information please contact:

Investors: Media Enquiries:

Troy Irvin Read Corporate

Corporate Development Officer Paul Armstrong/Nicholas Read

Email: [email protected] Contact: (08) 9388 1474

www.saracen.com.au Email: [email protected]

Carosue Dam Operations Drilling Update

Karari Underground

Drilling has recommenced at the Karari Underground mine following the establishment of the first of two new hangingwall drill platforms (Figure 3 - green exploration drill drives).

The 2070 drill drive (to the North) was completed in June 2016, with drilling commencing immediately after services were established. The two new drill platforms are a major commitment to the growth of the mine and will allow drilling ~300m further down dip on the known mineralisation.

Figure 3 - Processing plant adjacent to the Karari and Whirling Dervish mines with planned FY17 drilling

The first results from this drilling program have been returned, demonstrating the robustness and consistency of the mineralisation. Drilling has been focused on the Hangingwall and Resurrection Lodes in the north of the mine and outside the current Ore Reserve (Figures 4-5).

Significant results include:

 KRRD115 - 16.6m @ 8.2g/t

 KRGC314 - 27.7m @ 6.1g/t

 KRRD113 - 19.0m @ 4.6g/t

 KRRD113 - 6.0m @ 11.2g/t

 KRRD112 - 16.0m @ 4.3g/t

 KRRD117 - 24.0m @ 3.9g/t

 KRRD118 - 27.6m @ 2.5g/t