ASX RELEASE

12th January 2017

PAYNES FIND GOLD ACQUISITION AND PROJECT UPDATE

Cervantes Corporation Limited (ASX:CVS) is pleased to provide an update on activities related to the conditional purchase of the highly prospective Payne’s Find Gold Project in Western Australia, (see ASX announcement 22nd December 2016).

Cervantes is pleased with the progress of its ongoing Due Diligence review of the Project and is currently confident the acquisition will proceed based on its initial overview of the assets and potential.

The project is being acquired from European Lithium Ltd (ASX:EUR)(FRA:PF8), which is disposing of non-core assets to concentrate on examining fast track routes for the development of its Lithium project in Austria.

The proposed Payne’s Find acquisition is in line with Cervantes’ strategy of taking advantage of improving commodity prices, lower contractor costs and the availability of high-value, low cost mineral assets to accumulate a pipeline of advanced gold projects that may offer the potential for near term production.

The Cervantes Board feels the arrangement between Cervantes and European Lithium is highly beneficial to both parties. Fig 1, Location (Paynes Find Gold, 2010) PROJECT UPDATE

Payne’s Find

The Payne’s Find Gold Project incorporates some 17 permits made up of 10 Prospecting Licences and 7 Mining Leases covering an area of some 700 Hectares, with an estimated 3 kilometre strike length. These permits represent the major portion of the historical Payne’s Find Gold Field, discovered in 1911, which is located in the Mid-West Region of WA and only half a day’s travel North East of Perth, and in close proximity to the Great Northern Highway. (See Figure 1).

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Geology

The regional geology comprises a thick series of Archaean-aged folded mafic volcanic rocks that are separated by large granitoid intrusions although outcrop is largely concealed by an extensive cover of alluvium and laterite. The rock types consist of interlayered, basaltic and dacitic, meta-volcanics, subordinate banded iron formations and ultramafic schists. These rocks host rich gold-bearing lodes that in the past have been extensively mined to depths in excess of 150 metres.

The hornblende-biotite-quartz gneiss hosts most gold bearing quartz lodes and extends from the original “Blue Bell” lease in the north to the “Shamrock” lease in the south a distance of at least 3,000 metres. The foliation is very regular and has a strike direction of 330º to 360º (along the principal axis of the unit) and a dip of 60ºW to the vertical. Most of the significant quartz lodes have been intruded along joint shear systems striking between 360º to 010º and dipping 45ºW to vertical and therefore striking between sub-parallel to thelocal foliation. The foliation has also controlled the intrusive trend of later quartz-feldspar pegmatite veins which locally displace the quartz veins. Coarse free gold and minor fine gold occurs in the intrusive quartz lodes (quartz veins or vein systems) which are characteristically linear, sub-parallel to each other and can be followed for distances of several hundred metres. These mineralised linear alignments contain high grade, discontinuous “shoots”, six to ten metres long, one to one and a half metres wide and plunging steeply south. The“shoots” on a particular alignment are connected by thin auriferous veins that were not considered economical for underground mining. (Allen J Maynard, Paynes Find Ltd IPO Prospectus, 14th Sept 2010)

Previous Exploration and Mining

Gold was first discovered in Payne’s Find in 1911 and was sporadically mined for a number of decades, with the focus on underground exploitation of high grade reefs. More recently, some minor exploitation of shallow mineralisation and alluvial sources was undertaken.

GSWA has reported that underground workings had produced 2,204kg of gold from 89,850 tonnes at an average grade of 24.5 g/t.

Modern exploration since 1982 has been sporadic and of variable quality, often being little more than that required to keep the tenements in good standing.

Some limited drilling was undertaken by Kirkwood Gold NL thru 1996-98, but it was not until the successful IPO of Payne’s Find Gold (ASX: PNE) in late 2010 that larger scale exploration was undertaken.

PNE actively explored the leases in 2011 and 2012, but lack of funds brought work to a halt in late 2012, until a change of strategy in late 2016 saw PNE rebadged as European Lithium (ASX: EUR), with the gold leases then being sold.

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The PNE website is still active, www.paynesfindgold.com on which the full announcement history of PNE can be seen since IPO.

PNE commenced active exploration on the Payne’s Find leases in early 2011, with an extensive program of geological mapping and a large RC drill program from April 2011, during which time 69 RC holes were completed for a total of 3,800m.

PNE reported the results from this program in June 2011, stating that “81% of RC drilling intersected significant gold mineralisation”.

Key drilling results from this program were reported (14th June 2011) as:

PFRC010 10m at 1.8g/t from 18m

PFRC059 6m at 2.4g/t from 39m

PFRC018 6m at 1.9g/t from 20m

PFRC005 6m at 1.5g/t from 28m

PFRC069 5m at 1.6g/t from 26m

PFRC049 2m at 50.5g/t from 22m

PFRC012 2m at 19.0g/t from 39m

PFRC065 3m at 16.0g/t from 32m

PRFC039 3m at 8.6g/t from 50m

PFRC027 11m at 0.9g/t from 38m

Fig 2. Phase 1 Drilling collars and results (Payne’s Find Gold Ltd, 10th August 2011)

These drill results appear to suggest a series of stacked mineralised veins on and marginal to the Primrose fault along the contact with the Payne’s Find Gneiss.

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Fig 3. Phase 1 Drilling program Cross section (Paynes Find Gold Ltd, 10th August 2011)

PNE hadstated that further drilling was to be planned, in order to better define the mineralisation however this work was then delayed significantly for a range of corporate reasons.

Eventually another drilling program was undertaken later in 2012, in which 51 RC holes (for 5,326m) and 6 diamond holes (1,540m) were completed to the North and West of the first drill programs, on the basis of geochemical sampling and structural work, in order to test the potential of the project to support a bulk mining scenario.

Key results reported by PNE on 19th November 2012 include:

PFRC116 12m@ 6.61g/t from 10m PFRC150 6m @ 3.56 g/t from 120m

PFRC134 3m @ 8.04 g/t from 45m PFRC120 3m @ 92.1 g/t from 41m

including 1m at 271g/t

PFRC134 3m @ 5.21 g/t from 140m PFRC133 4m @ 2.64 g/t from 99m

PFRC135 3m @ 8.05 g/t 77m PFRC112 3m @ 4.94 g/t from 114m

PFRC150 4m @ 6.28 g/tfrom 79m PFRC142 3m @ 3.21 g/t from 30m

PFRC135 2m @ 4.94 g/t 82m

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Fig 4. Phase 2 drill collars and key results (Paynes Find Gold Ltd, 12th Nov 2012) For

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Fig 5. Phase 2, drill section (Paynes Find Gold Ltd 12th Nov 2012)

Following completion of this second phase of drilling, PNE stated that they had begun the process of geological modelling that would in time lead toward a JORC compliant resource being developed, however this work was not undertaken due to lack of funds.

Future Plans

Cervantes holds the view that previous work by PNE has indicated the potential for a significant near surface, high grade gold resource.

Drilling by PNE was undertaken over only 600m of strike of the prospective Primose Fault, representing only a small proportion of the roughly 2.5km strike of the Primrose fault lying within the Payne’s Find Tenements. Assessment of the drilling, and regional structural work undertaken by PNE’s consultants CSA Global have suggested that considerable potential exists outside the current drilling envelope, but also that further exploration will require a better understanding of the complex structural factors that control mineralisation. F

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Fig 6. Extent of PNE drilling along Primrose Fault (Paynes Find Gold Ltd, 19th Nov 2012).

Please note that permits M59/726, P59/1738, M59/738, P59/1709, G59/25, P59/1933, G59/26 shown in Fig. 6 do not form part of the Cervantes Acquisition.

Cervantes is currently in discussion with previous geoscientists who worked on previous Payne’s Find exploration programs and is assembling all of the historical geological, geochemical, structural and drilling data.

Once complete, these data will be examined with a view to developing an exploration program aimed at increasing the size of the Payne’s Find deposit.

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Meekatharra

Cervantes is continuing work on its recently acquired Albury Heath project in Meekatharra, (see ASX announcements 10th October 2016 and 8th December 2016).

In addition to acquiring the single Prospecting licence containing the old mine Cervantes has also applied for 5 surrounding PL’s to expand its footprint in this well-known and productive Mining District, which is receiving significant attention from well-known companies as Doray Minerals Ltd and Metals X Ltd.

Cervantes has secured and examined all of the historical exploration data and reports for the project dating back to the early 1980’s. As indicated in previous announcements, there was significant discrepancy in the size and grade of various historical resource estimates that had been calculated for the project by various companies from 1988 through to 2009. None of these Historical Resource Estimates however were compliant with the 2012 JORC code and no work had been undertaken since 2009.

Fig 1. Meekatharra Tenements

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A program is currently underway to fully examine all previous Resource Estimations, and to carry out a more detailed geological interpretation of the mineralisation with a view to moving the historical Resource Estimates into compliance with the 2012 JORC guidelines.

This work is expected to be completed within weeks.

Once a more definitive geologically constrained Resource model has been completed, Cervantes will then be able to not only plan a drill program designed to expand the high grade portion of the resource, but will be able to recommence discussions with various parties in the region that are in the position to offer processing options.

Cervantes also announced the application for a strategically located Exploration Licence in Meekatharra on the 5th February 2016. This licence adjoins the highly prospective Garden Gully project of Thundelarra Limited (ASX: THX), currently undergoing a successful drilling program from which results are expected to be released in the near future.

Albany Fraser Range

Cervantes owns 100% of an Exploration Licence immediately adjoining Mt Ridley Mines Ltd in the Albany Fraser Range area, also currently receiving considerable attention from Newsletter promotions and a current exploration and drilling program. At this moment no work activities are planned in the Albany Fraser region as resources are instead focussed on the company’s Murchison and Mid-West gold projects.

Fig 1. Albany Fraser Range Tenement

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For further information, please contact: Collin Vost Executive Chairman Cervantes Corporation Ltd Telephone +61 8 6436 2300 Email: admin@cervantescorp.com.au Media Colin Hay PPR colin.hay@ppr.com.au +61 9388 0944

Competent Persons Statement

The information contained in this report that relates to the summarising of Historical Resource Estimates is based on information compiled by Mr. Bradley George, a competent person who is a member of the Australian Institute of Geoscientists.

Information contained in this report that related to summarising previous exploration undertaken on the Payne’s Find project is based on information compiled by Mr. Bradley George, a competent person who is a member of the Australian Institute of Geoscientists. All information related to the Payne’s Find project was sourced solely from exploration results previously publicly announced by Payne’s Find Gold Ltd. No new work has been undertaken.

Mr. George is an employee of Total Earth Solutions Pty Ltd and consults to Cervantes Gold on a part time basis. Mr. George has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves.

Mr. George attests that the information in this announcement related to Historical Resource Estimates is an accurate representation of the available data and studies for the Albury Heath and Payne’s Find projects. Mr.George consents to the inclusion in the report of the matters based on this information in the form and context in which it is appears.

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