GWR : Quarterly Report - December 2016 and Appendix 5B

December Quarter Highlights

• 1,739m Reverse Circulation (RC) drilling program at Hatches Creek completed with positive initial results;
• Memorandum of Understanding (MoU) executed with Blackham Resources for mining and milling Wiluna West gold deposits;
• Detailed geological mapping, rock chip sampling and 1,212 soil samples collected at Wiluna West Gold Project;
• Tungsten Mining (GWR 13.3%) completed $5.27m equity raising;
• Strong balance sheet with $7.2m cash, no debt and $4.7m in listed securities & other material financial assets. Hatches Creek Polymetallic Tungsten Project

• 18 RC holes for 1,739m was completed during November 2016 at the Pioneer, Copper Show, Hit or Miss and Treasure prospects.

• The holes targeted known mineralisation associated with the substantial historical mine workings. Final assay results are expected in early February 2017.

• Dump sampling across 14 prospects confirmed widespread tungsten mineralisation, with several prospects also containing copper or gold mineralisation.

  Wiluna Gold Project

• GWR and Blackham Resources (ASX: BLK) have executed an MoU for the potential mining and milling of the Wiluna West deposits. GWR now plans to aggressively advance the status of the known gold deposits.

• 1,212 screened soil samples were collected over a 5km strike length targeting known geochemical soil gold anomalies, high priority geophysical targets as well as extensions to current resources.

• Detailed geological mapping was undertaken at the Eagle and Emu deposits and a total of 170 rock chip samples collected.

• Results from the soil and rock chip sampling are expected in early February.

  Investment in Tungsten Mining NL (ASX: TGN)

• Tungsten Mining successfully completes a $5.27m fully underwritten entitlements offer to shareholders.

• China market development activities include re-launch of website with content in both English and Mandarin. Initial meetings held in the Peoples Republic of China with Chinese tungsten industry and research institutions.

• Mt Mulgine Strategic Development Plan advanced with mineralogical studies, biological surveys and x-ray ore sorting trials completed. Mining study, metallurgical test-work and environmental referral submissions underway.

  Corporate

  • GWR remains well funded with cash reserves of $7.2 million and no debt. In addition, GWR has listed securities with a market value of $2.48m at 31 December 2016 and other material financial assets of $2.25m at cost.

  • Simon Borck, Group Financial Controller, was appointed as joint Company Secretary during the December quarter.

About GWR

GWR Group Limited ("GWR") is an independent, Australian resource house, focused on creating shareholder wealth through the development of high quality mineral exploration and development projects.

The Company has a portfolio of mineral commodity projects that includes projects held in its own right, in joint venture and indirectly through investment in other listed entities. We aim to create value through operational excellence and innovation in exploration and project development. We will collaborate with our stakeholders to build a sustainable mining business and the respect of our peers.

Corporate Summary

ASX code: GWR

Issued Capital: 245.6 million

Issued Options: 20.0 million

Cash on hand: $7.2 million

Board & Management Gary Lyons

Non-executive Chairman

Mick Wilson

Executive Director

Tan Sri Dato' Tien Seng Law

Non-executive Director

Kong Leng (Jimmy) Lee

Non-executive Director

Datuk Chin An (CA) Lau

Non-executive Director

Craig Ferrier

Chief Executive Officer

Mark Pitts

Joint Company Secretary

Simon Borck

Joint Company Secretary

Hatches Creek Tungsten Project

Dump Sampling Program

The sampling program involved the assessment of mining dumps that were thought to be established between 1915 and the early 1970s. Numerous prospects were mined by underground methods to shallow depths, with ore and waste stockpiles located close to the shaft collars.

GWR used the results of an unmanned aerial vehicle survey (UAV) undertaken in mid-2015 to identify and target previously unsampled dumps from fourteen of the historic prospects and sampled the dumps. The samples, which weighed between 5-15kg and averaged 9kg were then dispatched to Perth for multi-element analysis.

128 of the 138 samples assayed greater than 0.10% WO3, with numerous results above 0.50% WO3. 12 of the samples returned high grade tungsten results of greater than 1.0% WO3.

The following prospects contained very significant results that will be prioritised for future work:

• Pioneer - Anomalous tungsten mineralisation up to 0.9% WO3 and gold mineralisation up to 1.19g/t Au. The average grade across all the samples was 0.38% WO3 and 0.39g/t Au;

• White Diamond - Of the six samples collected from this prospect, all were above 0.5% WO3 and three of them were greater than 1.0% WO3 (maximum 1.64% WO3); and

• Copper Show - 4 of the 5 samples collected at Copper Show recorded very high tungsten assays of 3.47% WO3, 2.36% WO3, 1.33% WO3 and 1.11% WO3. These four samples also assayed high grade copper, with a range of 1.0% Cu to 3.7% Cu, with an approximate correlation between the copper and tungsten grades.

  Full assay results are presented in ASX Announcement, 27 October 2016.

  RC Drill Program

  An 18 hole 1,739 metre RC drill program was completed at Hatches Creek during the quarter.

  The drill program targeted the historical mine workings at Pioneer, Copper Show, Hit or Miss and Treasure. Significant mineralisation was intersected in most areas where it was expected and final assay results should be available in early February 2017.

  Figure 1: Hatches Creek Project Location

  Wiluna West Gold Project

  In view of the current gold price (circa A$1600/oz), GWR continues to review opportunities to achieve positive cashflow by mining portions of its JORC Code 2004 Mineral Resource of 3,478,000 tonnes at 2.3 g/t Au for an estimated 258,000oz Au (estimated at a 1 g/t lower cut off). This includes an Indicated Resource estimate of 46,000 tonnes at 3.5 g/t Au for 5,200 oz and an Inferred Resource estimate of 3,432,000 tonnes at 2.3 g/t Au for 253,000 oz. This information was prepared and first disclosed under the JORC Code 2004. It has not been updated since to comply with the JORC Code 2012 on the basis that the information has not materially changed since it was last reported.

  Work undertaken on the Wiluna West Gold Project during the December quarter included a major screened soil sampling campaign covering high priority geophysical targets as well as strike extensions to existing resources. A total of 1212 soil samples have been collected on a 200m by 25m grid pattern over a strike length of 5km. Results from orientation soil sampling showed that the -2.8mm to +0.5mm sized fraction yielded the best results. The samples were submitted to Intertek / Genalysis Laboratories subsequent to the end of the quarter.

  A total of 171 rock chip samples have also been collected and results are expected in February 2017.

  Subsequent to the end of the quarter, the Company entered into a MoU with Blackham Resources Limited for the potential mining and processing of gold deposits at the Wiluna West Gold Project (see Figure 4). Under the MoU, GWR will be responsible for defining Mineral Resources to the Indicated category and completing initial metallurgical testwork. Blackham will complete the feasibility study on the nominated deposit and if it is positive, the two parties will agree a timetable for development. The MoU is predicated on an ore sales or profit sharing arrangement, which is to be determined.

  Wiluna West Iron Ore Project

  The Wiluna West Iron Ore Project (WWIOP) is an exceptional DSO iron ore resource, which metallurgical tests have demonstrated will produce a high grade, low impurity iron ore. Details of Mineral Resources and Ore Reserves for the WWIOP are set out in the Company's 2016 Annual Report, available at www.gwrgroup.com.au. Mining approvals are in place for large scale mining operations (up to 7Mtpa) over an initial mine life of 10 years. GWR has no immediate plans to commence development of the WWIOP, however these approvals position the Company to derive maximum value from the project through the commodity price cycle.

  During the quarter, only care and maintenance activities were undertaken, with expenditure exemptions under the Mining Act currently in place.

  Investment in Tungsten Mining NL (ASX: TGN)

  GWR holds a 13.3% equity interest in ASX-listed company Tungsten Mining NL ("Tungsten Mining") (ASX:TGN), an Australian based resources company whose prime focus is the exploration and development of tungsten projects in Australia. Since August 2014, GWR has been responsible for the provision of management and technical services to Tungsten Mining.

  Tungsten Mining has three advanced tungsten projects in Australia - the Mt Mulgine Project in the Murchison region, the Big Hill Project in the Pilbara region and the Kilba Project in the Ashburton region of Western Australia. Together these projects contain a tungsten mineral resource of 88.6 Mt at 0.18% WO3 and 186ppm Mo, representing more than 15.5 million MTU (metric tonne units) of WO3 and 16,482 tonnes of molybdenum at a 0.10% WO3 cut-off grade, making it one of the largest tungsten mineral resources held by an ASX-listed company. (Refer ASX Release for TGN dated 23 June 2016 "Mineral Resource Update and Core Sampling Results" for a detailed JORC-2012 breakdown).

  Tungsten Mining is currently identifying opportunities for near term tungsten production, particularly from the Mulgine Hill and Mulgine Trench deposits within the Mt Mulgine Project.

  During the December quarter, Tungsten Mining reported the following activities:

• Successful $5.27m equity raising undertaken during the December quarter and completed in early January;

• Course scheelite confirmed in fresh material at Mt Mulgine following Scanning Electron Microscopy (SEM) mineralogical investigation;

• SEM has identified hydrokenoelsmoreite (WO3.0.5H2O) in the oxide layer at Mt Mulgine. R&D activities have commenced to determine a metallurgical extraction route that will add significant value to the project;

• X-ray Ore Sorting technology has been successful in both identifying and pre-concentrating tungsten;

• Level 2 Biological surveys progressed with results indicating no significant risk from flora or fauna that may impact the Mt Mulgine Project Development, and

• Deepening engagement with the Chinese market via a new Chinese language presentation and website and Initial meetings held in the Peoples Republic of China with Chinese tungsten industry and research institutions.

Full details of these programs can be found in the Tungsten Mining - December Quarterly Report.

Figure 2 - plan displaying hole location, shallow targets and 2016 Mineral Resource outline at Mulgine Hill.

Investment in Corizon Limited (ASX: CIZ)

GWR holds a 10.16% interest in ASX-listed company Corizon Limited (formerly named West Peak Iron Limited) (ASX:CIZ).

CIZ reported a cash balance of $1.77m as at 31 December 2016. CIZ have advised that it continues to review and appraise new commercial opportunities both within and outside the mining sector.

Excelsior Gold Funding Agreement

In June 2016, GWR entered into an agreement with Excelsior Gold Limited ("Excelsior Gold") (ASX: EXG) to provide interim funding to Excelsior Gold to advance mining and exploration activities at its Kalgoorlie North Gold Project.

Excelsior Gold is a gold production company focussed on the mining and development of the Kalgoorlie North Gold Project. Mining commenced in November 2015, with ore processed through the nearby Paddington processing plant operated by Zijin subsidiary, Norton Gold Fields.

Pursuant to a binding term sheet ("Term Sheet") GWR provided interim financing of $2.25 million by subscribing to approximately 17.2 million convertible notes ("Convertible Notes") at an issue price of $0.0387 per Convertible Note and lending Excelsior a further $1.59 million ("Loan"). Both the Convertible Notes and the Loan are repayable in June 2017 and accrue interest at the rate of 12% per annum quarterly in arrears.

GWR director, Mr Jimmy Lee, is a nominee of GWR on the Excelsior Gold Board. GWR received an interest payment of $67,315 during the quarter.