ARGONAUT RESOURCES NL

ABN 97 008 084 848

argonautresources.com

ASX: ARE

CAPITAL STRUCTURE:

Issued shares: 654,340,318

Listed options: 38,004,957

(6c, Mar 2017)

Cash on hand: $1,318,000

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%

• 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

  Quarterly report

  FOR THE PERIOD ENDING 30 JUNE 2016

  Argonaut Resources NL (Argonaut or the Company) (ASX: ARE) is pleased to present the following report on a progressive three month period to 30 June 2016 (the Quarter).

  Highlights

  Crescent Lake, Canada

  • A six-hole program of drilling at the Falcon Lake West deposit (Figure 2) was completed.

  • Drilling succeeded in intercepting two adjacent spodumene-bearing pegmatites with thicknesses of up to 24m and 15m.

  • The first batch of samples received featured an intercept of:

    ¬ 21.7m at 1.09% Li2O from 48.0m; including

    ¬ 7.9m at 1.31% Li2O from 49.8m in drill hole FLDD001.

  • Further drill results are imminent.

  • Argonaut has been granted a 100% interest in 22 Mining Claims in the Crescent Lake area.

  • The claims cover one known spodumene pegmatite occurrence (Figure 2) plus large, under-explored areas of prospective terrain.

  • The new claims cover an area of 54km2, increasing Argonaut's total holding in the project area to 80km2.

  • Field-based exploration will recommence in August 2016.

    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% Li2O, 1.96% Li2O and 15m (50 feet) at 1.25% Li2O.

    Torrens, South Australia

  • Federal Court native title decision due July/August 2016.

    Business Development

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

  • Discussions are underway on the acquisition of a significant gold project.

  • Argonaut plans to add additional assets to its portfolio in the September quarter.

• Interest: Aeris Resources 70%, Argonaut 30%

• Agreement Phase: 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 demand continues to increase unabated.

  ¬ The application of lithium-ion batteries in the transport sector, particularly in China, is one the strongest growth stories seen in commodities for the last five years.

• Exploration success:

¬ Exploration drilling during the period at the Crescent Lake Project in Ontario has provided encouragement for continued exploration in the area.

¬ A brief program of surface exploration will be completed at Crescent Lake in August before contingent drilling is undertaken between September to October 2016.

¬ Low-impact exploration at Lake Blanche in South Australia will begin after the finalisation of licencing and the grant of statutory approvals.

¬ The Company expects to announce initial results from a newly acquired lithium 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

QueticoAbitibi

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 30 June 2016

Crescent Lake, Canada

(ARGONAUT ACQUIRING 100%)

On 4 March 2016, Argonaut released details of the Crescent Lake Lithium Project to the ASX. The initial acquisition included the Falcon Lake and Zigzag areas (Figure 2). On 8 June 2016, Argonaut announced the grant of

22 additional claims in the Crescent Lake area (Figure 2). These new claims are 100% held by Argonaut.

400,000m E 410,000m E 420,000m E

Falcon Lake Discovery

Falcon Lake West Falcon Lake Far West

Dempster East Falcon Lake East

5,590,000m N

North Aubry

Seymour Lake (Pye)

Tebishogeshik Dempster L28

Zigzag

Falcon Lake

Granitoids Metasediments Metavolcanics Diabase

South Aubry

5,580,000m N

Crescent Lake 11

0 5

kilometres

Unmapped area Water bodies/lakes

Recorded Lithium Pegmatites Tracks/trails

Geological boundary Fault

Argonaut Option Claims Argonaut Claims 100% Ardiden (ADV) Claims

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

Falcon Lake

There are four known pegmatite occurrences in the Falcon Lake area. The Falcon Lake West deposit comprises two south-easterly dipping spodumene-bearing pegmatites with true widths of up to 24m and 15m (Figure 3).

2016 Drilling Program

Earlier in the month, Argonaut completed a six-hole program of diamond core drilling at the Falcon Lake West deposit. The program targeted two pegmatite units, one of which outcrops boldly (Plate 1).

Highlights from the first batch of analytical results include:

• 21.7m at 1.09% Li2O from 48.0m; including

• 7.9m at 1.31% Li2O from 49.8m in drill hole FLDD001. Further details are shown in Appendix 1.

Visually, core generated during the program confirmed the presence of the two targeted spodumene-bearing pegmatites. The lower pegmatite unit is up to 24m thick and the upper pegmatite unit is up to 15m thick (Figure 3). Spodumene mineralisation was logged throughout the pegmatite intervals. Spodumene concentrations vary from moderate to intense (Plate 2).

Initial laboratory results confirm the deposit's lithium grades. Further results are expected to be reported within two weeks.

Historic 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 the establishment of modern JORC and NI43-101 standards. The 1950s 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 focused on surface or near-surface lithium bearing pegmatites.

Argonaut Resources NL | QUARTERLY REPORT | For the period ending 30 June 2016 3

5,592,020mN 418,340mE

418,360mE

5,592,000mN 418,380mE 418,400mE 5,591,980mN

418,420mE

5,591,960mN 418,360mE

NorthWest SouthEast

FLDD 001

FLDD 006

FLDD 002

360mRL

Cover Diabase

LCT pegmatite Metavolcanic

Results pending

340mRL

Results pending

-320mRL

[email protected]% Li2O from 48m

incl. [email protected]% Li2O from 49.8m

-300mRL

-280mRL

Crescent Lake 12

Results pending

20 metres

CANADA

CRESCENT LAKE PROJECT

Falcon Lake West Prospect Simplified Geological Section Initial Results

Looking northeast

Figure 3: Falcon Lake West geological cross section.

Plate 1: Outcropping spodumene-bearing pegmatite at the Falcon Lake West deposit.

4 Argonaut Resources NL | QUARTERLY REPORT | For the period ending 30 June 2016