Prospech Limited HOLDS an 81% interest in highly prospective exploration licences covering an area of approximately 115 square kilometres in the Hodrusa-Hamre/Banska Stiavnica mining district and the nearby Nova Bana goldfield of Slovakia where more than 1,000 years of historical production is estimated to have totalled 2.4 million ounces of gold, 120 million ounces of silver, 70,000 tonnes of zinc, 55,000 tonnes of lead and 8,000 tonnes of copper.

Hodrusa-hamre exploration licence

Schopfer

Underground drilling in Schopfer SCDD001 ended in quartz at 3.5 metres in silver mineralised core targeting an area of stope grade 58 g/t gold and 7,400 g/t silver. As per all projects, Hodrusa is to be evaluated by testing lower risk shallow stockwork targets. Schopfer vein is an attractive target with estimated historical production 1,000 kt of ore grading 4 g/t gold and 400-500 g/t silver for a total 130 koz gold and 13-17.5 Moz silver. Mining finished here in 1950’s. The exploration target consists of hanging wall and footwall of Schopfer vein and area around intersection of Schopfer with Keleti vein and Klement – Štefan veins. The intersection of veins is accompanied by intensive historical exploration and mining.

Hodrusa-Hamre exploration licence and targets.

Hodrusa-Hamre exploration licence and targets.

 Klokoc

Klokoc (KKDD001) validated the location of along strike intercepts which include:

·                V169 with 10.5 metres @ 3.10 g/t gold and 6.5 g/t silver 100 metres to the west of KKDD001.

·                V155 with 2.5 metres @ 61.00 g/t gold and 42.0 g/t silver 100 metres to the south of KKDD001.

The structure remains open to the north and south and has been modelled in 3D, showing that the target is shallowing to the north and amenable to RC drilling.

KKDD001 confirmed mineralisation and facilitates RC drill planning on 500 metres of open strike of feeder veins into a magnetite host rock.  The auriferous zone is at least 250 metres wide and planar in nature and will be followed to the north and south.

KKDD001 (to 223.5 metres) returned gold results from sulphide replacement of magnetite rich sediments.  This planar style of mineralisation occurs just above basement granites.  The exact position and geometry (albeit variable host rock) is similar to the nearby Banky and Jan Benedikty targets and the Rozalia Mine.

KKDD001 (to 226.3 metres) indicates continuous nature of mineralisation.  This represents a relatively low risk resource drilling target.  The Company is investigating RC rig availability for a potential drill out of this target.  Access is straight forward as the drilling will be in an actively logged forestry area with many historical drill pad sites.

Banky

Banky (BKDD001) was designed to test a Rozalia Mine style target at the same vertical depth as results from a 1960s hole, XH23 which returned 4.0 metres @ 7.99 g/t gold and 331.0 g/t silver from 98.0 metres and 8.0 metres @ 2.97 g/t gold and 260.0 g/t silver from 178.0 metres.  These results were able to be confirmed by the Company assaying available skeletal core from that drill hole.

Subsequent to receiving the assay results from BKDD001 which, whilst confirming the geologic interpretation did not repeat the XH23 results, core from another Banky hole (VBR-7) drilled in the 1990s has been located and assayed by the Company, returning 120.00 g/t gold from a 20 centimetre section from 175.5 metres.

VBR-7 was drilled vertically from the same position as BKDD001 and a vertical hole from the Banky BKDD001 drill pad is planned.

The Banky target is within development distance of Rozalia Mine operations.

Banky drillhole BKDD001 tested an extensive quartz stockwork. Mineralisation is best test at depth at or below the Rozalia Mine position (Rozalia Mine 800m South). Section view looking north east to 025 azimuth UTM.

Banky drillhole BKDD001 tested an extensive quartz stockwork. Mineralisation is best test at depth at or below the Rozalia Mine position (Rozalia Mine 800m South). Section view looking north east to 025 azimuth UTM.

Rozalia West

In December 2015, an Exploration and Co-operation Memorandum of Understanding (MoU) was entered into with Slovenská Banská s.r.o., the owner of the Rozalia Mine.  Whilst the MoU is non-binding, it demonstrates a close co-operation between the Company and the Rozalia Mine.

The Rozalia Mine processing plant produces gold and silver concentrates using cyanide free processing with modern Outotec technology.  Mineral deposits discovered by the Company may be able to be processed using the Rozalia Mine plant and equipment.

The Rozalia West drill hole (RW1) was designed to test the continuation of the Rozalia Mine ore body which is currently being mined.  RW1 intersected the mineralisation host sequence, however, assay results were disappointing partly due to poor core recovery of the ore zone.  As there were no supporting metal intercepts reported from other zones, this target has momentarily been downgraded below other targets.  Review and design of a further drilling is underway in consultation with Rozalia Mine data.

Rozalia Mine section. Prospech's tenure occurs from RW1 to the west.

Rozalia Mine section. Prospech's tenure occurs from RW1 to the west.

Rozalia Mine, operating since 1991, is currently producing ~20,000 ounces of gold equivalent per annum from ore with a head grade of 12.5 g/t Au.

Rozalia Mine, operating since 1991, is currently producing ~20,000 ounces
of gold equivalent per annum from ore with a head grade of 12.5 g/t Au.

Tiergarten

TGDD001 and TGDD002 were drilled at the Tiergarten vein array where previous sampling reported up to 500 g/t silver in a fault zone.  Due to very poor recoveries in TGDD001, the drill contractor drilled TGDD002 at no cost to the Company.

Assay results from TGDD001 and TGDD001A were disappointing, however, this drilling has demonstrated that underground drilling is possible with the able assistance of the Rozalia Mine allowing the Company access during a break in use of the main drainage access from the mine.  Important benefits are the zero surface disturbance and shorter, lower risk holes with spudding at or near vein zone, delivering both economic and community public relations benefits.

Drilling TGDD001 from the underground NOS drainage adit.

Drilling TGDD001 from the underground NOS drainage adit.

Treibolcz

Treibolcz is part of the Schopfer system, a 1.3 kilometre long vein system in the Hodrusa-Hamre licence area where rock chip samples taken by the Company have returned 58.60 g/t gold and 7,400.0 g/t silver and 28.20 g/t gold and 3,210.0 g/t silver.  Treibolcz is an uncommon example in the Company’s licences of outcropping geologic structure.

Diamond saw trenching – effectively horizontal drill holes – have been completed over a length of approximately 22 metres of structure where previous rock chip samples taken by the Company returned 0.93 g/t gold and 96.2 g/t silver.  Assay results from the test trench indicate anomalous gold silver response and warrants further prospect mapping and surveying of old workings not yet complete.

Diamond saw trenching at Treibolcz.

Diamond saw trenching at Treibolcz.

Kopanice

Rock chip samples taken by the Company from outcrops in the shallow workings at Kopanice have confirmed significant gold and silver mineralisation up to 12.85 g/t gold and 404 g/t silver.

Drill pad locations have been permitted for 4 shallow (<100 metre) drill holes using a small diamond gopher rig into the known 30 metre wide stockwork system.  This drilling is scheduled for early 2017.

Ignac-Rabenstein

Recent rock chip results from Ignac-Rabenstein prospect (average 7.80 g/t gold and 33.0 g/t silver) are currently being collated with historic results.

Located adjacent to the operating Rozalia Mine, these results are considered to represent an up dip equivalent of the structure currently being mined.  The results have caused the Company’s geologists to reconsider the geologic structure of a significant part of the Hodrusa-Hamre exploration licence area and 3D digitisation of historical mining data is underway to support drill planning for 2017 drilling of the Ignac-Rabenstein prospect.

Other Targets

Review of historic data continues and numerous other targets, including Unverzagt-Alzbeta, Pivovarska Valley and Jan Benedickty, are in process of being prepared for 2017 drill testing.

Schopfer high grade.

Schopfer high grade.