Silver Lake Resources : Quarterly Activities Report

Suite 4, Level 3 South Shore Centre‌‌‌‌

85 South Perth Esplanade South Perth WA 6151‌

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ABN 38 108 779 782

Board of Directors:

David Quinlivan Luke Tonkin Les Davis Kelvin Flynn Brian Kennedy

ASX Code: SLR

Issued Capital:

503.7m Shares 2.0m Options

7.6m Performance Rights

All financial figures quoted in this report are in Australian dollars and are unaudited

DECEMBER 2016 QUARTERLY ACTIVITIES REPORT

• Quarterly gold sales of 30,011 ounces at an average sale price of A$1,612/oz
• Mine production increased by 12% to 36,013 ounces
• Ramp up of ore production from the new Majestic Open Pit with 7,267 ounces mined in December and all site infrastructure now complete
• Maxwells underground ore production commenced in October with multiple ore production blocks now established
• Cash and bullion of A$44.1m at the end of quarter following $11.6m of capital expenditure on new mines at Maxwells and Imperial/Majestic
• AISC of A$1,386/oz reflecting significant investment in new mines and the planned increase of higher grade stockpiles during the quarter
• Promising results from Exploration and Resource definition drilling:
  • A new high-grade lode (Lode 56) discovered at the Daisy Complex during the quarter was promptly brought into production
  • Results from Phase 1 exploration drilling at Santa support the potential for a new, lower cost underground mine
• Gold sales guidance of 135,000 to 145,000 ounces for FY17 unchanged

Commenting on the quarter, Silver Lake Managing Director Luke Tonkin said:

"Mount Monger continued to perform as planned with the development of the new Maxwells underground mine and Imperial/Majestic open pit mines ramping up gold production.

The FY17 Mount Monger exploration strategy of delivering lower cost discoveries proximal to existing mines and mine infrastructure had more success during the quarter with the discovery of a new high-grade lode at the Daisy Complex, Lode 56. Lode 56 has been efficiently accessed from existing mine development and gold production has commenced from development strike driving.

I would like to acknowledge the Silver Lake team for their efforts in establishing a solid foundation for a strong second half of the year."

Silver Lake Resources Ltd (ASX: SLR) Page 1 of 33

Mining (Tables 1,2,5)

Table 1: Underground Production Table 2: Open Pit Production

Underground

Ore mined from Mount Monger's underground mines totalled 98,458 tonnes at a grade of 6.5 g/t Au for 20,499 contained ounces. The 11% increase in gold production on the previous quarter was due to the additional contribution from ongoing development of the Maxwells and Cock-eyed Bob mines.

The Daisy Complex underground mine continued its consistent operating performance, contributing 71,727 tonnes at a grade of 7.5 g/t Au for 17,232 contained ounces. The Daisy Complex is expected to maintain its production performance in the second half of FY17.

A new high-grade gold lode, Lode 56, was discovered at Daisy Complex during the quarter and is accessible from existing mine development utilising existing mine infrastructure. Production from Lode 56 has commenced from strike drive development and will compliment production from existing Daisy Complex ore sources in the second half of FY17.

Consistent with the Company's operating strategy of enhancing operating margins by delivering lower cost discoveries, Lode 56 will replace some higher cost ore sources in H2 FY17 to increase cash flow generation.

Ore production at Maxwells underground (Figure 1) commenced in October, contributing 12,024 tonnes at a grade of 3.3 g/t Au for 1,271 contained ounces. Production for the quarter was sourced from ore development headings with long hole stoping activities scheduled to commence in Q3 FY17. Year-to-date development of 1,800 metres has exceeded plan and has provided multiple ore development horizons and stoping blocks for H2 FY17 and beyond.

Figure 1: Maxwells Underground Mine showing development to date and planned areas of development and stoping

Silver Lake Resources Ltd (ASX: SLR) Page 2 of 33

At Cock-eyed Bob decline development from the 345 level to the 330 level was completed during the quarter, resulting in production of 14,707 tonnes at a grade of 4.2 g/t Au for 1,996 contained ounces. Economic evaluation of the recent phase two diamond drilling results has been completed, justifying a third phase of exploration drilling which will be completed in H2 FY17. The drilling programs aim to define mining blocks 155 metres below the 330 metre level to generate a long-term mining plan.

Underground production in the second half of FY17 will focus on Daisy Complex and Maxwells while the third phase of drilling is completed and evaluated at Cock-eyed Bob.

Open Pit

Mine production from the open pits for the quarter totalled 222,250 tonnes at 2.2 g/t Au for 15,514 contained ounces, a 14% increase on the previous quarter. The increase in ore tonnes mined was due to the ramp up of production from the Majestic open pit where a total of 712,000 BCM of material was mined from the pit during the quarter.

Mining at Majestic is forecast to reach maximum production rates in Q3 with costs decreasing as the strip ratio falls.

Mining from the Imperial open pit (adjacent to the Majestic open pit) is forecast to commence in Q3 FY17.

Processing (Tables 3,4,6)

Table 3: Production Processing Table 4: Gold Sales and Revenue

Mill feed during the quarter was sourced from the Daisy Complex, Maxwells and Cock-eyed Bob underground mines, the Majestic open pit and Santa stockpiles. Ore milled for the quarter totalled 324,592 tonnes at a blended grade of 3.2 g/t Au for 30,662 recovered ounces. Recovery fell marginally as expected with the introduction of Majestic ore to the mill feed blend.

Gold sales for the quarter totalled 30,011 ounces compared with 34,405 ounces sold in the previous quarter. December quarter sales were lower than the previous quarter due to high-grade Majestic ore deliveries only landing on the Randalls mill feed stockpile late in the quarter and not being fed to the processing plant by quarter end. As a result, 31 December stockpiles increased to approximately 362,000 tonnes (containing 17,300 ounces), a 22% increase on the 30 September 2016 inventory balance.

Milling rates at the Randalls Gold Processing Facility are expected to be marginally lower in H2 FY17 however mill feed head grade is expected to increase with 35% of mill feed tonnes and 53% of mill feed ounces sourced from underground operations. The remaining feed will be comprised of open pit ore and available ore stockpiles.

The Company's gold sales guidance for FY17 remains unchanged at 135,000 to 145,000 ounces.

Mount Monger Operation - Mining	Units	Mar Qtr 2016	Jun Qtr 2016	Sep Qtr 2016	Dec Qtr 2016	YTD FY17	FY16
Underground - Daisy Complex
Ore mined	Tonnes	82,590	70,369	74,747	71,727	146,474 318,		717
Mined grade	g/t Au	6.5	7.6	7.2	7.5	7.3	7.0
Contained gold in ore	Oz	17,351	17,185	17,366	17,232	34,598 72,		208
Underground - Cock-eyed Bob
Ore mined	Tonnes	32,141	14,833	8,970	14,707	23,677 100,		748
Mined grade	g/t Au	4.9	3.7	3.9	4.2	4.1	4.2
Contained gold in ore	Oz	5,079	1,769	1,118	1,996	3,114 13,		533
Underground - Maxwells
Ore mined	Tonnes	-	-	-	12,024	12,024		-
Mined grade	g/t Au	-	-	-	3.3	3.3	-
Contained gold in ore	Oz	-	-	-	1,271	1,271		-
Open Pit - Lucky Bay
Ore mined	Tonnes	27,606	-	-	-	- 100,	022
Mined grade	g/t Au	3.5	-	-	-	-	4.2
Contained gold in ore	Oz	3,138	-	-	-	- 13,	512
Open Pit - Santa Area
Ore mined	Tonnes	237,960	311,822	125,476	-	125,476 757,		126
Mined grade	g/t Au	1.5	1.7	2.4	-	2.4	1.7
Contained gold in ore	Oz	11,794	17,391	9,504	-	9,504 41,		395
Open Pit - Majestic
Ore mined	Tonnes	-	-	68,055	222,250	290,305
Mined grade	g/t Au	-	-	1.9	2.2	2.1
Contained gold in ore	Oz	-	-	4,098	15,514	19,612
Open Pit - Maxwells
Ore mined	Tonnes	-	9,583	-	-	- 9,	583
Mined grade	g/t Au	-	1.7	-	-	-	1.7
Contained gold in ore	Oz	-	517	-	-	-	517
Total ore mined	Tonnes	380,297	406,607	277,248	320,708	597,956 1,286,		196
Mined Grade	g/t Au	3.1	2.8	3.6	3.5	3.5	3.4
Total contained gold in ore Table 5: Mount Monger Operation - mine produc	Oz tion statistics	37,362	36,862	32,086	36,013	68,099 141,		165