Magnis Resources : JUNE 2016 QUARTERLY ACTIVITIES REPORT

FOR RELEASE 28 July 2016

QUARTERLY REPORT TO 30 JUNE 2016 HIGHLIGHTS Nachu Graphite Project

• Power agreement signed with US based Symbion Power LLC

• Receipt of Letter of Intent from the Tanzania Ports Authority facilitating the next step towards the acquisition of a long term lease at the port of Mtwara

  Spherical graphite and Lithium-ion battery strategy

• 99.99% TGC coated spherical graphite achieved without chemical purification

• Outstanding Lithium-ion battery anode results continue

• Nachu Graphite Anode with silicon delivers potential for next generation Lithium-ion Performance

  Corporate

• Key Board appointments to support the advancement of the Nachu graphite project

• Cash position for the Company at 30 June 2016 A$7.2M

Magnis Resources Limited ("Magnis" or the "Company") (ASX: MNS) is pleased to present its quarterly report for the 3 months ended 30 June 2016.

Magnis is focused on progressing the development of its 100% owned Nachu Graphite Project ("Nachu") in southern Tanzania in a timely manner. All regulatory and environmental permits for Nachu have been finalised and the Company expects initial site works to commence in 4Q CY16 prior to the Tanzanian wet season in January 1Q CY17.

The high quality and purity of Nachu graphite provides the Company with the potential to become a globally significant producer of high value graphite products with a particular focus on supplying the Lithium-ion battery market.

The Nachu project has finalised all regulatory and environmental permits, has a completed Bankable Feasibility Study (BFS), a power supply agreement and a clearly defined concentrate export route. As one of the world's most advanced and shovel-ready graphite projects globally, the Nachu project is on target to meet the forecast increase in graphite demand for lithium-ion battery uses as numerous "mega-factories" are commissioned from 2018 onwards.

Nachu Graphite Project

Building on the release of the Nachu BFS on 31 March 2016, the company took meaningful steps towards a final development decision during the quarter. A power supply agreement with US based Symbion Power LLC was completed and the Company received a Letter of Intent from the Tanzania Ports Authority for the Company to acquire a long term lease at the port of Mtwara.

Figure 1: Location of the Nachu Graphite Project

Power supply agreement

The Company entered into a power supply agreement in Tanzania for Nachu with leading US-based power engineering and construction group Symbion Power LLC ("Symbion"). Under the terms of the agreement, Symbion will provide a total power solution for Nachu by developing and operating a dedicated 30MW gas fired power station, associated substations and a 132KV transmission line to connect Nachu to the main power grid.

The Tanzania Electric Supply Company (TANESCO) has given its in principal approval for Symbion & Magnis to proceed with the development.

Magnis will now undertake further detailed work and complete an Environmental Impact Assessment for the power project. Upon demonstrating the technical, economic and environmental feasibility of the power project, thereafter Symbion will be responsible for funding, developing and building the electricity infrastructure and Nachu will be the offtaker of the power.

Symbion has extensive experience operating power plants and constructing transmission lines in Tanzania and elsewhere in the world, including a 50MW diesel plant at Arusha, a 55MW diesel plant at Dodoma and a 120MW gas turbine plant in Dar es Salaam.

The Nachu BFS estimates for capital and operating costs relating to power were constructed on the basis of such a third party build-own-operate grid power supply solution. Study work completed by an Australian Electrical Engineering Consultant provided an indicative power price of between US$0.08 to US$0.10 per kwh for on-grid power. This represents a significant saving compared to other power options such as diesel or heavy fuel oil power generation.

Figure 2: (Left to Right) Peter Gathercole - Symbion Power VP Business Development EA, Paul Hinks - Symbion Power Chief Executive Officer, Peter Tsegas - Magnis Resources Director, Rod Chittenden - Magnis Resources Chief Operations Officer, Han Van der Vlugt

- Symbion Power Project Manager EA, Brent Laws - Magnis Resources Exploration Manager

Tanzanian Ports Authority Agreement

The Company received a Letter of Intent (LOI) from the Tanzania Ports Authority (TPA) allowing the Company to progress to the next phase of acquiring a long term lease at the export port of Mtwara.

The LOI envisages the allocation of 25,000 square metres of land in a prime location adjacent to the main wharf and berth of Mtwara Port (see Figure 3). The proposed lease area is the Company's preferred location for concentrate storage facilities.

Under the terms of the LOI, the Company has been granted a six month period to finalise its application and execute a long term lease agreement with the TPA.

The port of Mtwara is located ~200km by road from the Nachu project. The port of Mtwara has an existing export capacity of 400,000 metric tonnes and currently less than half of this capacity is being utilised.

Having access to an established, high quality port facility with existing capacity is expected to deliver significant cost and operational benefits for Nachu. The port provides a readily defined and accessible export route to market and also the ability to create an efficient consumables and equipment supply chain, both through the construction and operating phases.

Figure 3: Location of the full area intended for encompassing the proposed Nachu Graphite Storage Facility Area adjacent to the port of Mtwara facilities Nachu Spherical graphite and Lithium-ion battery developments

99.99% TGC coated spherical graphite achieved without chemical purification

The Company announced during the quarter that exceptionally high purity 99.99% total graphite content (TGC) material has been achieved in the production of coated anode graphite for lithium-ion batteries. The production of the anode graphite from concentrate, involved a two-step process whereby the graphite flake concentrate was