Anchor Resources : 25/01/2017 - Quarterly Activities and Quarterly Cash Flow Report Dec 2016 - PDF

Anchor Resources Limited‌

ABN: 49 122 751 419 ASX Code: AHR

Website: anchorresources.com

25th January 2017 QUARTERLY ACTIVITY REPORT - DECEMBER 2016

HIGHLIGHTS

Exploration incorporating reconnaissance mapping and rock chip geochemistry in the Aspiring-Walsh River project near Chillagoe in North Queensland has identified two prospective mineral systems warranting detailed follow up work:

• Epithermal style gold-silver mineralization with a 2 km long geological and geochemical footprint has been discovered at the Fluorspar Group of workings.

  Quartz textures and multi-element geochemistry suggest the current level of exposure is near, or above, the boiling zone in a low sulphidation epithermal system and higher gold and silver values may be present at depth.

• Encouraging gold-base metal granite-related mineralisation has been identified in greisen and a nearby fault at the Doolan Creek prospect.

Rock chip samples contain up to 8.5g/t Au, 274g/t Ag, 10.5% Cu, 9.5% Pb, 25% As, 0.8% Bi and 0.3% Sb.

Follow up detailed mapping, and soil and rock chip sampling to define targets for reverse circulation (RC) drilling will commence when both sites become accessible immediately after the current wet season.

Aspiring Project, EPM 19447 and Walsh River EPM 25958 (Anchor 100%) Queensland - copper, gold, silver, lead & zinc

The Aspiring and adjacent Walsh River projects are located in the Chillagoe mining district, which forms part of the Hodgkinson Province in Far North Queensland.

EPM 25958 (Walsh River) covers approximately 162.4 km² and provides Anchor with strategic access to an area contiguous with its current EPM 19447 that is geologically prospective for the development of mineralization with evidence inferred from historic reports recording gold and copper mineralization associated with hydrothermal alteration systems close to the current Anchor EPM boundary.

Follow up exploration was completed on the Fluorspar Group of workings and Doolan Creek greisen alteration zone in EPM 25958 (Walsh River) during November-December 2016 in response to encouraging rock chip assay results obtained from the first reconnaissance program completed in October 2016 (see Anchor ASX announcement dated 26 October 2016).

The Fluorspar Group workings and Doolan Creek greisen alteration zone are within EPM 25958 (Walsh River) and located 33 km apart (Figure 1). The prospects are genetically and geochemically different. The Fluorspar Group of workings are considered to be a low sulphidation epithermal gold- silver target while Doolan Creek greisen zone and nearby fault is considered to be a granite-related gold-silver-copper-lead target.

Figure 1: Location of Fluorspar Group of workings and Doolan Creek polymetallic prospect

1. Fluorspar Group of Workings

Recent prospecting and rock chip sampling at the Fluorspar Group of workings confirmed the Perseverance Fault is prospective for low sulphidation epithermal style gold-silver mineralization over a distance of at least 2,100m. The Perseverance Fault is interpreted to continue to the northeast and southwest beyond the extent of the current sampling program. Two small tenements, not controlled by Anchor, cover historic gold workings to the northeast of the current exploration program.

The most recent field program also discovered a previously unknown quartz-stibnite (antimony) vein system parallel to, and on the north side, of the main quartz-fluorite-gold vein emplaced along the Perseverance Fault. The quartz-stibnite vein system lies between the Perseverance Lode, mined for fluorite from 1921 to 1928, and Decks fluorite prospect. The stibnite occurs in vein quartz with a granular texture over a strike length of 590 metres. This is a subsidiary quartz vein to the gold-fluorite bearing quartz veins. The Perseverance Fault is now recognized as a composite, complex regional fault structure hosting at least 4 sub-parallel quartz veins along its length. The shorter subsidiary quartz veins are not persistent over the entire length of the fault.

Epithermal style quartz, often with accessory fluorite, contains low levels of gold consistently assaying 0.10 to 1.00g/t Au, and up to 5.97g/t Au in rock chip samples (average 0.33g/t Au in 65 samples) over a strike length of more than 2.1 km along a northeast trending sub-vertical regional fault up to 2m wide at surface. Silver values range from 0.1g/t to 62g/t with numerous values assaying >5g/t Ag (average 5.9g/t Ag in 65 samples). Antimony values are highly variable and range from 5ppm to 13.7%, often 20ppm to 4,000ppm. Arsenic values are also highly variable and range 3ppm to 0.29%, and commonly 200ppm to 2,000ppm. Lithium assay values are consistently highly anomalous ranging from 90ppm to 650ppm, and averaging 282 ppm.

Conceptually, the quartz textures showing silica replacement of coarse bladed calcite, fine banding and porcelaneous silica often with associated fluorite, together with strongly anomalous lithium and antimony (as stibnite), and very low copper, lead and zinc geochemical values suggest higher grade gold mineralisation could exist at depth where boiling may have occurred in the hydrothermal system. This model offers encouragement for further work on this group of prospects.

Two small mining tenements totaling 3 hectares cover known gold prospects along the northeast extension of the Perseverance Fault.

Check assays from the Fluorspar Group of samples were completed on the 6 highest gold values. There is good agreement between the original gold values and the check assay values (Table 1).

Table 1: Fluorspar gold original assay values and check assay results

Sample Number	Weight Received	Au-AA25 Method	Au AA25 Check
Kg (0.02 kg)	Au g/t (DL 0.01 g/t)	Au g/t (DL 0.01 g/t)
74597	0.49	0.77	0.79
74602	1.10	1.06	1.12
74603	0.77	0.94	0.96
74604	1.87	0.89	0.98
74626	2.21	5.97	5.89
74629	2.05	0.44	0.44

Rock chip assay results from the Fluorspar Group of workings for gold, silver, antimony, arsenic and lithium are shown in Figures 2, 3, 4, 5 and 6 respectively.

Figure 2: Fluorspar Group of workings gold rock chip geochemistry

Figure 3: Fluorspar Group of workings silver rock chip geochemistry