ARGONAUT RESOURCES NL‌

ABN 97 008 084 848

argonautresources.com

ASX: ARE

CAPITAL STRUCTURE:

Issued shares: 647,140,318

Listed options: 38,004,957

(6c, Mar 2017)

Cash on hand: $1,350,000

DIRECTORS:

Patrick Elliott,

Non-Exec Chairman

Lindsay Owler,

Director/CEO

Andrew Bursill,

Director/Secretary

Malcolm Richmond,

Non-Exec Director

LITHIUM PROJECTS

Crescent Lake, Canada

Confirmed lithium pegmatites deposits

• Phase: Advanced Exploration

• Interest: Option to acquire 100%

• Agreement Phase: Assessment

• Operator: Argonaut

  Greenbush Lake, Canada

  High grade lithium pegmatite occurrence

• Phase: Exploration

• Interest: Acquiring 100%

  Quarterly report

  FOR THE PERIOD ENDING 31 MARCH 2016

  Argonaut Resources NL (Argonaut or the Company) (ASX: ARE) is pleased to provide the following report for a highly progressive three months to 31 March 2016 (the Quarter).

  Highlights

  Crescent Lake, Canada

  • Argonaut secured an exclusive option to acquire 100% the Crescent Lake Lithium Project in Ontario, Canada.

  • The project includes mineral claims that cover two lithium deposits: Zigzag and Falcon Lake.

  • Highlights of previous drilling at the Crescent Lake Lithium Project include:

    Falcon Lake

    8.1m at 1.48% Li2O from 2.7m in drill hole W-3

    10.5m at 1.15% Li2O from 34.5m in drill hole W-9

    14m at 0.99% Li2O from 69.3m in drill hole CO-10-001 7m at 1.07% Li2O from 55.3m in drill hole CO-10-002 11m at 1.10% Li2O from 39.4m in drill hole CO-10-003

    ¬ The Falcon Lake West deposit features adjacent 23m and 10m thick pegmatites (Figure 3).

    Zigzag

    6.1m at 1.08% Li2O from 12.4m in drill hole CO-10-007

    ¬ The Tebish occurrence on the Zigzag block contains 3 to 4 stacked pegmatites over a strike length of at least 670m.

    Greenbush Lake, Canada

  • Argonaut agreed to purchase the Greenbush Lake Lithium Pegmatite Project in Ontario, Canada.

  • The project has confirmed high grades from existing rock chip samples. These include 2.46% Li O, 1.96% Li O and 15m (50 feet) at 1.25% Li O.

    2 2 2

• Operator: Argonaut

  Lake Blanche, South Australia

  Lithium brine target

• Phase: Greenfields Exploration

• Interest: 100%

• Operator: Argonaut

  COPPER PROJECTS

  Torrens, South Australia

  Copper, gold (large IOCG)

• Phase: Access negotiation/ exploration

• Interest: Aeris Resources 70%, Argonaut 30%

• Agreement Phase:

• The geological setting makes the area highly prospective for the definition of further lithium- bearing pegmatites.

  Lake Blanche, South Australia

• Argonaut has accepted terms offered for the grant of new two exploration licences covering the whole of Lake Blanche, north of the Flinders Ranges in South Australia.

• The lake is prospective for lithium brines due to its distinctive geological and hydrological qualities.

• The licences cover an area of 2,000 square kilometres and Lake Blanche itself has a surface area of 1,700 square kilometres.

• The size of the lake suggests it could represent an internationally important lithium source in the event economic concentrations of lithium are found in its brines.

  Business Development

• The Company is in discussions with parties in Chile, Nevada and Canada in relation to additional lithium projects.

• Argonaut seeks to add at least one further significant lithium asset to its portfolio.

  Exploration

• Operator: Argonaut

Registered Office

Suite 4, Level 9, 341 George Street Sydney, NSW, 2000, Australia

T +61 2 9299 9690

F +61 2 9299 9629

E [email protected]

Adelaide Office

Level 1, 63 Waymouth Street Adelaide, SA, 5000, Australia T +61 8 8231 0381

F +61 8 8231 6092

E [email protected] 1

Outlook

• Lithium market:

  ¬ Lithium prices have risen sharply during the period due to concerns over lithium supply.

  ¬ Increased demand stems from an exponential increase in lithium ion battery use.

  ¬ Sales of electric cars and power storage devices, such as the Tesla Powerwall, have surged.

  ¬ Existing lithium producers have been slow to respond to the rising demand creating the need for additional lithium production.

• During the period, Argonaut has raised the capital required for the commencement of exploration at the three existing exploration assets in its lithium portfolio.

¬ The Company expects exploration at Crescent Lake to commence in May 2016 with drilling beginning in early June 2016 following receipt of the required permit.

¬ Low-impact exploration at Lake Blanche will begin following the grant of exploration licence applications and the grant of statutory approvals.

¬ A detailed program of near-term exploration at the Greenbush Lake project will be announced following further appraisal of the project.

Canada

High grade metamorphic complex Metavolcanic dominant

Granitic dominant Metasedimentary dominant Proterozoic and Phanerozoic cover International border

Provincial boundary Coast/lake

Major city

Geological subprovince boundary Superior Province geological boundary Lithium mine/resource

Lithium occurence

Hudson Bay

Labrador Trough

Thompson Belt

MANITOBA

ONTARIO

Trans Hudson

Sachigo

Pakeagama Lake

CANADA

Greenbush Lake Project

James Bay

James Bay

Opinaca

Rose

Whabouchi

Tanco

Berens

East Pashkokogan

Uchi ER

BR

Crescent Lake Project

Seymour Lake

Moblan

Separation WR

Lake Nipigon

Quetico Abitibi

Grenville Province

Rapids Georgia Lake

Wabigoon

Lacorne/Quebec Lithium

Wawa

Thunder Bay

Lake Superior

QUEBEC ONTARIO

Subprovince names ER English River BR Bird River

WR Winnipeg River

Southern Province

Lake Michigan

Toronto

0 200

kilometres

UNITED STATES OF AMERICA

Canada 01

Figure 1: Geology of the Superior Province, Canada, showing Crescent Lake, Greenbush Lake and regional lithium occurrences.

2 Argonaut Resources NL | QUARTERLY REPORT | For the period ending 31 March 2016

Crescent Lake, Canada (Argonaut acquiring 100%)

On 4 March 2016, Argonaut released details of the acquisition of the Crescent Lake Lithium Project to the ASX.

Previous Exploration

The areas were drilled in the 1950s, during a Canadian lithium exploration boom, and then again in 2010-11. Neither drilling program was extensive. Drilling data from the 1950s was reported prior to modern JORC and NI43-101 standards being established. This late 1950s diamond core drilling was undertaken by British Canadian Lithium Mining Corporation. The 2010-11 drilling at Falcon Lake and Zigzag is reported to NI43-101 standards.

All previous drilling has focused on surface or near-surface lithium bearing pegmatites.

410,000m E 415,000m E 420,000m E 425,000m E

Falcon Lake West

Falcon Lake Discovery

Zigzag

Dempster East

Falcon Lake East

Falcon Lake

5,590,000m N

Tebish

5,585,000m N

Crescent Lake 09

Dempster L28

0 2

kilometres

Granitoids Metasediments Metavolcanics Diabase Unmapped area Water bodies/lakes

Recorded Lithium Pegmatites Tracks/trails

Geological boundary Fault

Crescent Lake Project boundary

Figure 2: Crescent Lake: claim locations, pegmatite occurrences and geology.

Falcon Lake

There are four known pegmatite occurrences in the Falcon Lake area, with the Falcon Lake West deposit being the main focus of previous exploration programs. The Falcon Lake West deposit comprises two south-easterly dipping pegmatite deposits with approximate true widths of 23m and 10m (Figure 3).

There is little evidence in the historical database of systematic exploration for strike extensions to the Falcon Lake West deposit. An independent technical report dated 2011 recommends a program of exploration for 'blind extensions… where the landscape is dominated by thick overburden (cover) and outcrop is sparse'.

Highlights of previous drill results for Falcon Lake West and another pegmatite occurrence in the area - Falcon Lake East

- are shown in Tables 1 and 2.

Argonaut Resources NL | QUARTERLY REPORT | For the period ending 31 March 2016 3

418,360mE

5,592,000mN 418,360mE

418,360mE 5,591,980mN 418,360mE 418,360mE 5,591,960mN

418,360mE

5,591,940mN 418,360mE

W-1

W-9

NorthWest SouthEast

340mRL

[email protected]% Li2O

-300mRL

[email protected]% Li2O

[email protected]% Li2O

[email protected]% Li2O

[email protected]% Li2O

[email protected]% Li2O

[email protected]% Li2O

Cover

LCT pegmatite Metavolcanic

CANADA

CRESCENT LAKE PROJECT

Falcon Lake Prospect Simplified Geological Section Historic Drilling

Looking northeast

20 metres

Crescent Lake 03

Figure 3: Falcon Lake West geological cross section.

Table 1: Falcon Lake West significant intercepts.

Zigzag

There are three main lithium pegmatite occurrences in the Zigzag area (Figure 2): Tebishogeshik (Tebish), Dempster L28 and Dempster East. Lithium bearing pegmatites were first discovered in the area east of Zigzag Lake in 1955.

The Tebish occurrence is a stack of 3-4 pegmatites which have been intercepted by wide-spaced drilling over a strike length of 670m. The system strikes east-northeast and dips approximately 40 degrees to the south. Given the broad drill spacing and structural continuity, lithium grades within the pegmatite stack are poorly understood. Additional drilling is required to determine the orientation and extent of high grade spodumene mineralisation within the lenses.

There is significant exploration potential for strike extensions.

Table 3: Zigzag significant intercepts.

Table 2: Falcon Lake East significant intercepts.

4 Argonaut Resources NL | QUARTERLY REPORT | For the period ending 31 March 2016