Crater Gold Mining unveiled that channel sampling of development on mineralised gold bearing structures has returned bonanza gold grades on at least three separate structures.

Channel sampling of mineralised gold bearing structures in development drives has confirmed contiguous zones of high grade mineralisation along strike suitable for selective mining. To date, three distinct zones on the NV1, EV4 and JL have been targeted for stoping.

Development is underway to prepare these high grade zones for stoping.

Russ Parker, Managing Director of CGN, stated "We are exceptionally pleased with the success of these sampling results. It enables the Company to move rapidly towards increasing gold production. A modular process plant has been fabricated and will be shipped to site within the next two weeks. Underground development is underway to enable stoping of the indentified high grade shoots"

Discussion of Results

Geology and Mineralisation

Drive development on mineralised gold bearing structures has confirmed the interpretation made from diamond drilling carried out in 2014. Two prominent roughly north south trending structures, the NV1 Vein and the JL Vein have been identified as the significant controlling structures within a known 20m to 25m wide north south trending zone. These structures are continuous over at least 50m of strike at this stage. Several East West trending structures, EV1 to EV5 have been shown to link the north south structures. A number of lesser developed NE – SW and NW – SE link structures have also been identified.

The confluence of each of these structures is favourable for increased mineralisation and significantly elevated gold values. This is particularly evident at the junction of EV4 with NV1 returning a bonanza grade of 1,740 g/t Au over a channel width of 0.3m. High gold grades have been found to persist for up to 10m from these junctions. As an example, the EV4 Vein returned a strike length of 7.4m with a weighted average grade of 221.6 g/t Au over a channel width of 0.31m.

The JL North has returned a weighted average grade of 52.5 g/t Au over a channel width of 0.42m for a strike length of 5.00m either side of the confluence with the EV2 Vein. Refer to Figure 3 and Table 1. It is also common to encounter coarse visible free gold in these areas.

Mining and Production

Given the identification of discrete continuous zones of high grade strike length, development and stoping layouts have been established to exploit these shoots upwards to surface. It is significant that the high grade shoots so far identified correlate well with the diggings by artisanal miners exploiting the same structures from surface from 2005 to 2012. One such working has been encountered in development of the EVx-1 structure. Drive development and limited trial stoping is being carried out with a combination of jack picking, where ground conditions allow, and drill and blast where the rock is more competent. This allows narrow self supporting excavations to be made. Excellent ground conditions have been encountered for this type of mining with little need for supplementary support.

Process Plant

During May 2015 the company contracted the fabrication of an expanded modular process plant incorporating a crusher, hammer mills, primary centrifugal gravity concentrators and table fore secondary concentration. The incorporation of the new process plant plus increased underground development rates will result in higher mining production We anticpate that the Company will be cashflow positive in the 4th quarter.

This plant has been assembled and inspected in the factory for engineering compliance. It is due to be shipped within two weeks.

Gold production

Gold production is on-going. An update announcement will be made in due course.