For the three months ended 31 December 2015‌‌‌‌‌‌‌

HIGHLIGHTS

GROUP RESULTS

(1) Co-Product costing converts silver to an equivalent value of gold ounces. For actual production we use sales prices realised.

OPERATIONS

CASPOSO, ARGENTINA (Troy 100% through Troy Resources Argentina Ltd)

(1) Based on the ratio of monthly sales prices realized for the quarter.

(2) Cash costs and All-In Sustaining Costs are calculated using Au_Eq ounces produced as the denominator.

Occupational Health, Safety and Environment

No environmental incidents were recorded for the quarter.

Underground Mining and Development

Following suspension of all waste development in the previous quarter, total development was limited to 381 metres. Ore development was completed in Aztec vein and stoping commenced. The reduced number of ore headings and stope availability resulted in less tonnes being mined for the quarter.

Mining in the Inca 0 vein was completed removing parts of the crown pillar adjacent to the completed open pit. Higher grade stoping blocks were also mined early in the quarter from Inca 2a. Challenging ground conditions in Inca 2a necessitated leaving supporting pillars in the mined stopes.

Stoping in the Aztec vein beneath the pit commenced producing ore with higher gold grades compared to the Inca 2 vein. The Aztec vein will remain the focus for stoping in the March quarter.

Processing

The plant processed 109,239 tonnes with throughput averaging 1,200 tonnes per day. An increase in the feed grade resulting from higher grade Aztec and Inca2a material entering the mill blend, led to an increase in the average grades treated for the quarter to 2.35g/t for gold and 247.79g/t for silver, representing a 35% and 4% increase respectively. Metal recoveries remained consistent at 91.54% for gold and 81.89% silver.

Costs

Casposo produced 7,561oz. gold and 712,697oz. silver or 17,090oz. Au_Eq at a Cash Cost of US$772/oz. (on a co-product basis) and an AISC of US$1,034/oz. This represents a significant reduction over the previous quarter's costs primarily due to the

initiatives being undertaken at site to reduce overall costs. Excluding the "one-off" provision created for redundancies arising from the restructuring process, total costs reduced by a further US$5.7 million during the quarter, which is in addition to the US$5.9 million reduction recorded during the September quarter.

Outlook

Casposo is well advanced with its labour restructuring program, with a significant number of employees having entered into formalized agreements to reflect their voluntary redundancy. The underground mine will continue to operate until the end of January after which time it will be placed on care and maintenance. The plant will continue to operate until it has completed processing the high grade ore being sourced from underground and the remaining stockpiles. It will then be cleaned and also placed on care and maintenance.

Operating costs and the workforce have been significantly reduced since the Company commenced its operational review in July 2015. The economic climate within Argentina has also improved with the new Government lifting currency controls (Peso devalued on 17 December by ~30% against the US dollar) and eliminating export duties. Combined with the remaining in-ground reserves, Casposo now presents as a smaller scale mining operation with a reduced cost base within an improving economic climate.

The Company is therefore exploring all of its options in relation to how it might benefit from its investment in Casposo going forward.

ANDORINHAS, BRAZIL (Troy 100% through Reinarda Mineração Ltda)

Occupational Health, Safety and Environment

There were no lost time injuries recorded for the quarter.

Andorinhas is in the process of rehabilitating its old workings and historic garimpeiro workings with guidance from SEMA (the environment authority for the State of Pará) and local landowners.

Production Results and Summary

Gold production was 2,703oz. at a cash cost of US$824/oz.

Outlook

Andorinhas continues to process the remaining low grade stockpiled ore and garimpeiro tailings as part of the mine clean-up.

The Company granted TSX-V Listed Magellan Minerals Limited an extension to its agreement dated 26 August 2015 for the acquisition of the Andorinhas plant and all associated equipment and inventories. Pursuant to the terms of the amendment, Magellan made an initial payment of US$500,000 to the Company on 31 December, 2015. The balance of the consideration (US$2.85 million), will be due and payable on or before 29 February, 2016. The latter payment can comprise, at Magellan's election, up to a maximum of 9.99% of Magellan's issued and outstanding share capital at that time.

The wet season is assisting with mine rehabilitation, soil preparation, planting of native sapling hardwoods and the sowing of grass seeds.

Once processing of ore through the plant has ceased and it has been cleaned and decommissioned, the plant footprint and remaining tailings dam will also be rehabilitated to enable the final environment report to be completed and presented to SEMA.