Doray Minerals : Quarterly Activities Report - December 2016

ASX: DRM

Activities Report Quarter ended 31 December 2016

ASX RELEASE

31 January 2017

Issued Capital

356.9m shares outstanding

52Wk Share Price Range

$0.405 - $1.245

Market Capitalisation

$160m (@$0.45)

BOARD

Leigh Junk

Managing Director

Jay Stephenson

Non-Executive Director

Peter Alexander

Non-Executive Director

Substantial Shareholders

Hunter Hall Sun Valley

Registered Office

Level 1, 1292 Hay Street West Perth WA 6005

For further details contact: Mark Hepburn

Corporate Development Manager

[phone]

DORAY ACHIEVES RECORD QUARTERLY GOLD PRODUCTION OF 29,779 OUNCES CORPORATE

• Leigh Junk appointed to perform the duties of Managing Director of Doray on 19 December 2016 and accepted the appointment on a permanent basis on 20 January 2017

  EXCELLENT SAFETY PERFORMANCE

• 1,211 days Lost Time Injury ('LTI') free at Andy Well and 542 days LTI free at Deflector

  DEFLECTOR GOLD PROJECT

• 8,712 ounces of gold and 1,404 tonnes of copper produced for the Quarter from oxide and transitional ore

• An estimated additional 6,677 ounces of gold was produced for the Quarter in the copper gold Middlings

• Deflector Project metal recoveries increasing whilst ramping up towards processing primary ore

  ANDY WELL GOLD PROJECT

• December Quarter production of 14,390 ounces

• All In Sustaining Cost of $1,589 per ounce

• Resource drilling continues at the Gnaweeda Prospect (266,000 ounce Resource, see ASX Announcement on 20 July 2016)

  EXPLORATION AND GROWTH

• Major aircore programme at Horse Well completed highlighting a significant regional gold anomaly

  FINANCE

• Quarterly revenues of $45.6M

• Cash, gold and concentrate-on-hand of $27.5M as at 31 December 2016

• Value of copper gold Middlings on hand estimated at $15.8M

• Placement of 47m shares @ 54c to raise $24.7M

117,267 ounces hedged at A$1,614 per ounce providing cash flow protection against gold price volatility

Doray Minerals Limited (ASX: DRM, "Doray", "the Company") is pleased to present its Quarterly Activities Report for the period ended 31 December 2016.

Record quarterly production of 29,779 ounces which includes an estimated 6,677 ounces from the copper gold Middlings product was achieved for the quarter ended 31 December 2016.

Mr Leigh Junk was appointed to perform the duties of Managing Director of Doray on 19 December 2016 and accepted the appointment on a permanent basis on 20 January 2017. Mr Junk has served as a board member of Doray since 2011, is a Mining Engineer and has extensive experience at both the operational and corporate levels within the mining industry.

The December Quarter also saw continued production from the Deflector Project which is now operating at near name-plate capacity from the processing plant with increasing metal recoveries of both copper and gold.

For the Quarter, the Deflector Project milled 96,356 tonnes of ore producing 8,712 ounces of gold through the plant's gravity and flotation circuits and 1,404 tonnes of copper. These production figures exclude a further 72 tonnes of copper gold Middlings produced during the Quarter which brings the total of this product to 142 tonnes for the half year ended 31 December 2016. This copper gold Middlings product accumulated since the start of production now accounts for an estimated 10,000 ounces of gold and negotiations are advanced to monetise this concentrate during the March Quarter.

Ore from the first underground level below the open pit continues to contain chalcocite and secondary sulphides and will, with the considerable stockpiles of open pit ore, fill the treatment plant during the next Quarter which will delay the start of processing the primary underground ore until the quarter ending 30 June 2017.

Table 1.1 Production Physicals

Physicals	Units	Andy Well	Deflector	Total
Gold Produced
- Bullion	oz	14,390	4,677	19,067
- Concentrate	oz	-	4,035	4,035
Sub Total	oz	14,390	8,712	23,102
Copper Gold Middlings	oz	-	6,677*	6,677*
Total	oz	14,390	15,389**	29,779**
Concentrate Produced	dmt	-	5,986	5,986
- Contained Copper	t	-	1,318	1,318
Gold Sold	oz	13,711	8,561	22,272
Revenues
Bullion sales	A$M	21.91	7.44	29.35
Average Price Received - Bullion	A$/oz	1,598	1,595	1,597
Concentrate sales	A$M	-	16.30	16.30
Total	21.91	23.74	45.65
All-In Sustaining Cost	A$/oz	1,589	n/a

* As estimated by sampling the copper gold Middlings product

** Includes 6,677 ounces that has been estimated by sampling the copper gold Middlings product

1. ANDY WELL GOLD PROJECT

2. Safety

   As at 31 December 2016 Andy Well has achieved 1,211 days without an LTI from the initial start of construction on site during November 2012.

3. Mining

   Development of the underground mine continued to prioritise both Judy and Wilber declines to access deeper levels with 1,726m advanced during the Quarter.

   The Judy orebody reconciled poorly against Reserves due to the width of this high grade lode being less than modelled resulting in lower grades being available for processing from both development advance and stoping.

   Confirmatory diamond drilling was expedited during the Quarter and results incorporated into a revised geological model which was nearing completion by the end of the Quarter prior to a revised mine design to ensure profitable future mining.

   Mining areas within the Wilber lode were re-assessed to similarly ensure optimised profitability to account for reduced strike lengths. Drilling intercepts below current Wilber lode mining show potential for higher grades, widths and increased strike lengths.

   Improvements in controlling stoping dilution were again confirmed using waste backfill as shorter stope panel lengths were mined and backfilled during the Quarter.

   Table 1.2 Summary of mining physicals for December 2016 Quarter.

   Mining	Units	Dec 16 Qtr
   Underground Ore Tonnes Mined	t	69,288
   Underground Grade Mined	g/t	5.7
   Underground Contained Ounces	oz	12,693

4. Processing and Production

   The plant processed 87,242 tonnes and attained 99.3% availability during the Quarter. High gravity recoveries of 76% were achieved within total recoveries averaging 96.0%.

   The plant continues to operate at very high performance levels.

   Table 1.3 Summary of processing physicals for December 2016 Quarter.

   Processing	Units	Dec 16 Qtr
   Ore Tonnes Milled	t	83,965
   Mill Grade	g/t	5.3
   Recovery	%	96%
   Gold Recovered	oz	14,335
   Change in Gold in Circuit	oz	(-56)
   Gold Produced	oz	14,390

5. Cost Performance - Andy Well Mine

   Andy Well - December 2016 Qtr	A$000	A$/t	A$/oz
   Mining	9,202	133	639
   Processing & Refining	2,909	42	202
   Site Services	1,402	20	97
   By-Product Credits	(50)	(1)	(3)
   C1 - Total Cash Operating1	13,464	194	936
   Depreciation	2,667	38	185
   Amortisation	8,102	117	563
   C2 - Cash Costs	24,233	350	1,684
   Royalties	981	14	68
   Net Bank Interest	276	4	19
   Allocation of Head Office Costs	116	2	8
   C3 - Cash Costs	25,606	370	1,779
   All-In Sustaining Costs
   Mining	9,202	133	639
   Processing and refining	2,909	42	202
   Site Services	1,402	20	97
   Mining Operating Costs	13,514	195	939
   By-Product Credits	(50)	(1)	(3)
   Royalties	981	14	68
   Corporate G&A	922	13	64
   Reclamation & Remediation	44	1	3
   Sustaining Exploration	1,072	15	75
   Sustaining Capital Expenditure	6,380	92	443
   All-In-Sustaining Cost (AISC)2	22,863	330	1,589

   1 C1,C2 and C3 cash costs calculated in accordance with Brook Hunt methodology

   2 AISC calculated in accordance with World Gold Council guidelines (except for the exclusion of non-cash P&L charges associated with the issue of employee options)

6. Andy Well Extensional Exploration

   During the Quarter, underground diamond drilling at Andy Well continued to focus on extensions amenable to potential underground mining at the Wilber and Judy orebodies. These programmes are aimed at extending known Mineral Resources with subsequent conversion to Ore Reserves. Drilling was ongoing, with up to 3 drill rigs in operation.

   As announced to the ASX on 23 November 2016, this underground drilling campaign has been successful in extending and enhancing the definition of high-grade gold mineralisation at both the Wilber and Judy Lodes.

   Drilling below the current Wilber Lode Ore Reserve has intersected high-grade gold mineralisation in several holes at depths between 750 and 800mRL, approximately 680-730m below surface (Figure 1).

   Significant assays received from the Wilber Lode extensional drilling programme to date include:

   • WBUG1126 - 2.6m @ 70.1g/t Au from 219.7mdh (True Width ~1.0m)

   • WBUG1117 - 2.0m @ 25.2g/t Au from 187.9mdh (True Width ~1.0m)

   • WBUG1099 - 1.2m @ 19.8g/t Au from 263.1mdh (True Width ~0.7m)

   • WBUG1111 - 2.8m @ 9.5g/t Au from 198.9mdh (True Width ~0.9m)