Further to its announcement of 24 July, AusQuest Limited (ASX: AQD) is pleased to advise that final assay results from the reconnaissance diamond drilling program at the Balladonia Base Metal Project have been received, indicating that prospective host rocks for Broken Hill Type (BHT) mineralisation are more extensive than first thought, suggesting a district-scale opportunity for the discovery of base metals at Balladonia.

The reconnaissance drilling program (10 holes for a total of 3,677m) was designed to further test the Tea Tree prospect, as well as provide an initial single drill-hole test of six magnetic/gravity targets located across the area, to confirm the presence of BHT stratigraphy and/or mineralisation, so that ongoing exploration activities can be focused on the highest priority targets

Previous assessment of geochemical data from drilling at the Tea Tree prospect identified a potential 'lode horizon' defined by elevated values of lead (Pb), zinc (Zn), cadmium (Cd) and tin (Sn). These elevated geochemical indicators occurred within non to weakly magnetic mafic gneisses adjacent to iron formations (IF - quartz-garnet-magnetite rocks) that are key indicators of prospectivity within the broader prospective host stratigraphy which can also be defined by anomalous phosphorous (P) with high iron (Fe) and/or manganese (Mn) values. Alteration within the host stratigraphy is variable with enrichment in potassium (K) being a key indicator of proximity to mineralisation. At Tea Tree, potassic alteration is associated with anomalous lead values (>100ppm Pb) within the gneisses as well as quartz-garnet-magnetite rocks, with results from drill-hole 23BDDD019 suggesting that stronger mineralisation should occur to the south and east of the recent drilling (

The IFs within the prospective host stratigraphy can be traced for tens of kilometres north and south of the Tea Tree prospect, as well as at other locations across the project area using detailed aeromagnetic data. Lower magnetic zones associated with the IFs are also considered potential targets for BHT mineralisation, based on the geochemical relationships highlighted by the Tea Tree drilling. Interpretation of the regional aeromagnetic data indicates that the prospective host rocks extend for up to 15km south and 5km north of Tea Tree.

Numerous targets associated with the IF stratigraphy have been outlined for follow-up testing based on the relationships identified at the Tea Tree prospect. Drilling at Tea Tree North (23BDDD021) intersected IF containing anomalous Mn (up to 1.5%) with elevated Pb (up to 70ppm) and Sn (up to 3ppm) values in the adjacent gneisses, highlighting similarities with the Tea Tree sequence. Strong potassic alteration within both the IFs and the adjacent gneisses suggests good potential for BHT mineralisation nearby. The single drill-hole test at Tea Tree North did not adequately test this prospect, with much of the core also showing layering sub-parallel to the core axis, indicating that the drill-hole did not effectively cross-cut the target stratigraphy. In general, dip directions throughout the 3 project area are steep and difficult to predict given the lack of outcrop and the uncertainty based on interpretation of the magnetic data.

Drilling at the Telegraph West prospect (23BDDD027), which is located 8km south-east of Tea Tree, intersected several IFs containing anomalous P (up to 1.2%) and Mn (up to 2%) with anomalous Pb values (up to 100ppm) within the adjacent gneisses, highlighting similarities with Tea Tree stratigraphy and suggesting strong prospectivity for BHT mineralisation. The magnetic/gravity target extends over a strike length of 5km and contains discrete magnetic anomalies which will be used to guide further exploration. At the Halfway prospect, drill-hole 23BDDD024 intersected multiple IFs, explaining the strength of the magnetic and gravity anomalies.

The IFs occur within a sequence of felsic and mafic gneisses and appear to be less altered and deformed than IF sequences at other prospects. Low levels of base metal anomalism (up to 40ppm Pb) that occur within potassic altered gneisses below the IFs again suggest the presence of a prospective host stratigraphy, but potential mineralisation is likely to be more distal than at other prospects. Drilling (23BDDD023) at the Halfway West prospect was designed to test a discrete magnetic / gravity target located along an interpreted regional structure. IFs with anomalous P (up to 0.68%) and Mn (up to 1.6%) were intersected in the upper part of the drill-hole with anomalous Pb (up to 120ppm), Sn (up to 12ppm), Zn (up to 1560ppm) and Cd (up to 13ppm) occurring within potassic altered gneisses above and below the IFs, suggesting the presence of prospective host stratigraphy similar to that identified at the Tea Tree prospect.

High levels of calcium (up to 10% Ca) and magnesium (up to 6% Mg) occur within the IFs and gneisses at Halfway West, suggesting possible Ca-Mg alteration overprinting the prospective stratigraphy in this area. This may be related to nearby calc-alkaline and/or carbonatite intrusive activity as implied by results from drilling at Halfway South and the earlier recognition of a carbonatite intrusion at the Telegraph prospect, 8km to the south.

Drilling (23BDDD025 and 026) at the Telegraph East prospect appears to support the presence of carbonatitic intrusions in the area, with both drill-holes intersecting metagabbro containing elevated levels of calcium (up to 8% Ca). Drill-hole 23BDDD025 may have also intersected the prospective host stratigraphy for BHT mineralisation based on the geochemistry, but this is still to be confirmed. No significant metals were reported from this drill-hole

A review of assay results from shallow drill-holes in the general area of the inferred carbonatites revealed an isolated drill-hole (WB008) with highly anomalous rare earth elements (cerium 1,746ppm, lanthanum 1,034ppm and Yttrium 118ppm) from a 4m composite sample within saprolitic clays overlying the bedrock. Drill samples from a 28m section of this drill-hole have been retrieved and are being re-assayed for a more complete range of rare earth elements before any additional work is considered.

The Balladonia Project, which is located in the Fraser Range region of Western Australia, is subject to the Strategic Alliance Agreement (SAA) with a wholly-owned subsidiary of South32 Limited. AusQuest's Managing Director, Graeme Drew, said: 'These assay results continue to provide us with significant encouragement that we are in a highly prospective area for the discovery of large-scale BHT base metal deposits (and possibly rare earth element mineralisation), and we are now looking to significantly improve our targeting based on the understanding these results are providing.' 'The geological comparisons made with productive base metal regions in NW Queensland and Broken Hill are still strong, but now there is the added possibility of finding rare earths associated with carbonatite activity.' 'Further exploration at Balladonia is currently the subject of discussions with South32,' he added.

COMPETENT PERSON'S STATEMENT

The details contained in this report that pertain to exploration results are based upon information compiled by Mr Graeme Drew, a full-time employee of AusQuest Limited. Mr Drew is a Fellow of the Australasian Institute of Mining and Metallurgy (AUSIMM) and has sufficient experience in the activity which he is undertaking to qualify as a Competent Person as defined in the December 2012 edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves' (JORC Code). Mr Drew consents to the inclusion in the report of the matters based upon his information in the form and context in which it appears.

FORWARD LOOKING STATEMENT

This report contains forward looking statements concerning the projects owned by AusQuest Limited. Statements concerning mining reserves and resources may also be deemed to be forward looking statements in that they involve estimates based on specific assumptions. Forward-looking statements are not statements of historical fact and actual events and results may differ materially from those described in the forward looking statements as a result of a variety of risks, uncertainties and other factors. Forward looking statements are based on management's beliefs, opinions and estimates as of the dates the forward looking statements are made and no obligation is assumed to update forward looking statements if these beliefs, opinions and estimates should change or to reflect other future developments

Contact:

Tel: 08 9364 3866

Fax: 08 9364 4892

Email: InvestorRelations@ausquest.com.au

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