Aeris Resources : QUARTERLY ACTIVITIES REPORT - DECEMBER QUARTER 2016

Quarterly Activities Report For the period ended 31 December 2016

About Aeris Resources

Aeris Resources Limited (ASX: AIS) is an established copper producer and developer with multiple mines and a 1.8 Mtpa copper processing plant at its Tritton Copper Operations in New South Wales, Australia.

In FY2016 Aeris' Tritton Operations achieved record production of 30,425 copper tonnes of copper metal exceeding the previously upgraded guidance for FY2016 of 29,500 copper tonnes. Forecast copper metal production in FY2017 is 25,000 - 26,000 copper tonnes.

The Company also has an exciting portfolio of highly prospective exploration projects creating a pipeline for future growth, including advanced projects at its Tritton Operations.

Aeris' Board and Management team is experienced in all aspects of mining and corporate development.

Aeris has a clear vision to become a mid- tier, multi-operation company - delivering shareholder value through an unwavering focus on operational excellence.

Contacts:

Andre Labuschagne Executive Chairman

Suite 22, Level 2 HQ South Tower

520 Wickham Street Fortitude Valley, Brisbane QLD 4006

T [phone]

F [phone]

[e-mail] www.aerisresources.com.au

DECEMBER QUARTER HIGHLIGHTS

OPERATIONS:

• December quarter copper production of 6,024 tonnes
• Electromagnetic survey program over Tritton and Kurrajong corridors commenced in December
• Change to mining sequence at Tritton underground mine resulted in lower copper grades for quarter
• Slower than expected ramp-up of production at the new Murrawombie underground mine to impact FY17 copper production
• FY17 Copper production guidance revised down to 25,000 - 26,000 tonnes

  CORPORATE:

  • Cash and receivables of $11.3M at the end of the quarter

    Aeris Resources Limited ABN 30 147 131 977

    Level 2, HQ South Tower, 520 Wickham Street, Fortitude Valley, Brisbane QLD 4006 Australia Post: Box 14, 520 Wickham Street, Fortitude Valley, Brisbane, QLD 4006 Australia

    E: [e-mail]: [phone] F: [phone]

    aerisresources.com.au

    Q2 FY2017 Quarterly Activities Report Safety, Environment and Community

    There was one lost time injury during the quarter. A contractor injured his thumb between a rod and gripper whilst doing maintenance on a drill rig.

    25

    Total No of RI

    12 Mth TRIFR

    Target 3 Mth TRIFR

    12 Month TRIFR

    No of TRI's

    The total recordable injury frequency rate (TRIFR) is 20.49 as at 31 December 2016. Aeris continues to prioritise the safety of its work force and aims to sustain this rate of improvement through a focus on improving safe behaviours.

    Tritton 12 Mth TRIFR and Total Recordable Injuries

    45

    8

    40

    7

    35

    6

    30

    5

    10

    5

    0

    0

    Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16

    4

    20

    3

    15

    2

    1

    There was a single reportable environmental incident during the quarter. A leak in a breather valve on the water pipeline between Murrawombie pit and Larsen pit resulted in release of water to the local environment. NSW authorities were notified and have inspected the location. Tritton has responded to their requests for further investigations, engagement of an independent consulting expert, and additional sampling. Final response from the authorities is pending at this time.

    Tritton Copper Operations (NSW)

    PRODUCTION

    Copper production for the December quarter was 6,024 tonnes and lower than the previous quarter, predominantly due to delays in the start of stoping at the new Murrawombie underground mine.

    Murrawombie Underground Mine

    Production from Murrawombie for the quarter was lower than planned and was impacted by:

    • Geotechnical conditions in the upper level 101 lode ore body were found to be worse than expected. A change from top down stope extraction with pillars to bottom up stoping with backfill support, (dry rock fill) was required. This has delayed the start of stope production, with production from first stopes not expected until the March 2017 quarter; and

    • Delay in grade control drilling due to lack of sufficient electrical power, before mains power was connected, exacerbated by the change to bottom up extraction. Final stope design has been delayed whilst waiting for detailed geology information.

Development of the Murrawombie mine capital infrastructure advanced as planned, except for a three week delay whilst water, from good winter rains, in Murrawombie pit was pumped over to the Larsen pit. Ground water inflow to Murrawombie pit is small and most water accumulated is rainwater into the pit or drained from the adjacent heap leach pads for environmental reasons.

Ventilation, communications, electrical and other infrastructure was installed as planned during the quarter.

With the change to bottom up mining, development of the main decline is scheduled as a priority to get as low as possible as quickly as possible to access the main 102 lode ore body. Ore development on the top sub-level in the 102 lode commenced at the end of the quarter.

Mine plans for extraction of the 102 lode have been modified in response to updates of the geology models and from experience with poor quality rock mass conditions encountered around the 101 lode. The design now includes conventional low height open stopes to mine the high grade portions of the 102 orebody with conservative stope dimensions. There are no indications that rock mass conditions in the 102 lode will be more difficult than expected, however the more conservative design protects the high grade ore and provides opportunity to mine some stopes top down and may provide the opportunity to access some of these higher grade stopes in FY18, which is earlier than originally planned.

Figure 1 - Updated Murrawombie Mine Design

Tritton Underground Mine

Tritton mine production averaged 115kt ore per month for the quarter, slightly higher than the actual average monthly production over the past eighteen months. Blasting and extraction of the new design multi-level stopes was completed without any significant issues. A review of detailed drill and blast designs completed in response to oversize rocks and dilution problems