De Grey Mining Ltd

ASX Announcement

27 July 2016

Shallow high grade

VMS Au-Ag-Zn-Pb-Cu defined at Discovery Highlights

ASX Code DEG

ABN 65 094 206 292

COMPANY DIRECTORS

Simon Lill

Executive Chairman

Davide Bosio

Non-executive Director

Steve Morris

Non-executive Director

Craig Nelmes

Company Secretary/CFO

CONTACT DETAILS

Principal & Registered Office Level 2, Suite 9

389 Oxford Street

Mt Hawthorn WA 6016

PO Box 281

Mt Hawthorn WA 6016 www.degreymining.com.au [email protected]

T +61 8 9381 4108

F +61 8 9381 6761

Significant, shallow, high grade VMS style mineralisation intersected at Discovery Prospect in Turner River Project

Mineralisation defined over > 300m strike length - compliments deeper drilling to 250m vertical depth and remains open.

Highlights of new RC results include:

 8m @ 2.11g/t Au, 105.2g/t Ag, 3.35%Zn, 1.53%Pb, 0.10%Cu from 12 m

 8m @ 1.10g/t Au, 172.5g/t Ag, 3.76%Zn, 1.79%Pb, 0.23%Cu from 24 m

 24m @ 1.56g/t Au, 289.9g/t Ag, 5.12%Zn, 2.92%Pb, 0.26%Cu from 68 m

 4m @ 17.70g/t Au, 193.0g/t Ag, 2.84%Zn, 1.76%Pb, 0.22%Cu from 12 m

 16m @ 2.32g/t Au, 146.1g/t Ag, 5.50%Zn, 2.94%Pb, 0.25%Cu from 28 m

 16m @ 0.92g/t Au, 125.9g/t Ag, 5.92%Zn, 2.25%Pb, 0.20%Cu from 56 m

Results for 21 of 24 holes received with 3 holes pending. Sample results are 4m composites - detailed 1m re-sampling underway.

Further drilling to be undertaken once all final results received and analysed. New drilling will enable an upgraded resource estimate later in the year.

De Grey Executive Chairman Simon Lill said:

"The shallow high grade tenor of mineralisation encountered is exceptional and now underscores the open pit potential at Discovery. We have also reinforced the strong zone of high grade gold, silver and zinc rich mineralisation that continues from surface to over 250m depth and remains open.

The results demand a further drilling program aimed at better defining the overall scale and grade of the Discovery deposit. We will await final results before commencing a new program. Based on these positive results we will look more closely at the depth potential at Discovery and will also review the nearby Orchard Tank VMS deposit and other nearby VMS targets."

Turner River - Unlocking Shareholder Value

De Grey Mining Ltd (ASX: DEG, "De Grey", "Company") is pleased to advise that results for the first 21 of the 24 RC drill holes for the Discovery (Au-Ag-Zn-Pb) deposit have been received. All the results received to date comprise of nominal 4m composite samples with detailed 1m resampling currently underway.

At the Discovery deposit, a total of 24 holes were completed for an advance of 1646m. The drilling targeted near surface high grade mineralisation previously defined by shallow RAB and limited RC drilling.

The drilling programme has confirmed shallow high grade mineralisation now extends over at least 300m along strike (Figure 1). Further extensions are possible with the remaining three drill holes still pending. Previous deeper diamond drilling also demonstrates the high grade VMS style Au-Ag-Zn-Pb-Cu mineralisation continues at depth to at least 250m and remains open in most directions.

Table 1 Significant new drill results at the Discovery Deposit include

Intercepts (using > 0.5% Zn with including intercept > 3.0% Zn)

Figure 1 Discovery drilling location plan

VMS Deposits

The Discovery deposit is a VMS style of gold, silver and base-metals. VMS deposits are well known with approximately 20% of the world's copper and zinc production sourced from such deposits. The deposits generally occur in clusters making them very attractive and high value exploration targets.

Clusters of VMS deposits are already known in the Pilbara region with De Grey's 100% owned Orchard Tank (see below) only 2km away from Discovery. De Grey has also proven VMS style mineralisation at Tabba Tabba and has other exploration targets under consideration.

The current resources estimates at Discovery and Orchard Tank (JORC 2012) are as follows:

Discovery 1.2Mt @ 0.8g/t Au, 87.0g/t Ag, 2.34% Zn, 0.94% Pb Orchard Tank 1.7Mt @ 0.5g/t Au, 78.6.0g/t Ag, 2.38% Zn, 0.99% Pb

In close proximity to Discovery are the Venturex Resources Ltd owned Sulphur Springs (54km SE), Liberty-Indee (95km W) and Whim Creek (100km W) deposits. The current resources for Sulphur Springs is 12.8Mt @ 1.5% Cu, 4.2% Zn, 0.2% Pb and 17.6g/t Ag and the nearby associated Kangaroo Caves is 3.5Mt @ 0.8% Cu, 6.0% Zn, 0.3% Pb and 15.2g/t Ag. Venturex have reported that a feasibility study is underway with open pit and underground mining being assessed on a reserve of 7.6Mt @ 1.7% Cu, 4.3% Zn, 17.3g/t Ag (www.venturexresources.com). Other well-known Western Australian VMS deposits include Degrussa, Jaguar-Teutonic Bore and Golden Grove.

Figure 2 Discovery cross sections