ASX Announcement

19 May 2015

DEFLECTOR PROJECT APPROVED FOR DEVELOPMENT

 Doray Board approves development of Deflector subject to funding

 Project review confirms a high-grade/low cost project with by-product credits

 6 year initial mine life with substantial exploration upside

 LOM average C1 cost of A$654/oz and AISC of A$787/oz after Cu credits

 Pre-production capex of $88.2M, including capitalised mining costs

Doray Minerals Limited (ASX:DRM, Doray) is pleased to announce that, following the completion of a detailed review, the Board has formally approved the development of the 100% owned Deflector Gold- Copper Project ("Deflector")in the southern Murchison region of Western Australia, subject to completion of funding requirements and final approvals.

Following construction and commissioning of Deflector, Doray will become a multi-mine high-grade gold producer with the Company targeting 160,000 ounces1 production per annum with average All-In Sustaining Costs (AISC) of less than A$1,000/oz between Deflector and the Company's existing Andy Well gold operation.
The review capitalised on Doray's recent experience in the design, construction and operation of the
Andy Well Gold Project and covered the following areas:

 Construction costs and timing

 Open pit and underground mining costs and schedule

 Processing plant design

 Site layout, including accommodation village

 Status of permitting and approvals

 Copper-gold concentrate offtake

Doray's Managing Director, Mr Allan Kelly, said the review reconfirmed the Company's assessment that the Deflector Project will be a high-grade, low-cost gold project with robust financials and significant upside and the Company looks forward to commencing construction as soon as possible once funding is completed
"When we completed due diligence on Deflector as part of the initial discussions with Mutiny last year, we were very excited about the project and the ability to use our recent experience at Andy Well to optimise the construction and operation of Deflector and create significant value for our shareholders," Mr Kelly said.
"The review confirmed our thoughts on the project, with the numbers in line with those presented to the Doray Board at the time of the transaction. Deflector is one of the best development projects in Australia at the moment."

1 Au equivalent. See Appendix for Au equivalent calculations

Doray Minerals Ltd, 19 May 2015

Deflector Project Summary

Mining

Mining at Deflector will initially comprise an open pit mining method, transitioning to an underground operation towards the end of the first year.
The Western and Central Lodes at Deflector are steep mineralised structures dipping between 80o-90o, typically 1m to 5m wide and hosted within a competent basalt host. The total strike length of the orebody is about 850m.
Open pit mining will occur in stages, initially focusing on mining the narrower Central lode pit. Underground access will be gained through a portal established in the Central lode pit at a depth of
35m below surface. Mining of the wider Western lode pit and the smaller northern pit on the Central lode will then continue to a maximum depth of 85m, concurrent with underground mining.

Table 1. Summary of mining and processing parameters

Note: Life of Mine inventories are based on those previously disclosed by MYG in the ASX Release dated 4th August 2014. Open Pit inventories are as previously stated. Underground inventories have been altered by the addition of 30% unplanned dilution at 0.0g/t Au and 0% Cu grade.

ASX:DRM

Doray Minerals Ltd, 19 May 2015

Following the establishment of the portal, underground mining will be carried out utilising a conventional sub-level long-hole open stope mining method at 20m sub-level intervals. Underground ore access will be gained via a 5.3m x 5.5m decline to mine 3.2m x 4m and 4m x 4m ore development drives to suit lode widths.
The decline and level access development is located centrally between the Western and Central orebodies. Underground mining is currently planned to 270m vertical metres below a 15m crown pillar, limited only by current drilling depth.
The top-down mining method employed, retreating to a centrally located access cross-cut allows stoping to commence as soon as level development has been completed. Any ore remaining within a stope is then able to be extracted from a lower level, ensuring minimised ore loss due to mining.

Rock mass characteristics assessed by two specialist geotechnical consultants evaluate the basalt host rock to be competent and have high strength (Uniaxial Compressive Strength averaging 250MPa). Full depth rib pillars will be left at appropriate intervals in accordance with geotechnical recommendations.

Figure 1. Isometric view of proposed Deflector open pits and underground development.

Processing and Production

Doray will construct a new processing plant at Deflector which is specifically designed to suit the metallurgy of the orebody. The plant, to be built by GR Engineering Services ("GRES"), will comprise:

 Three stage crushing and screening

 Ball mill

 Gravity circuit

 Elution circuit and gold room

 Flotation circuit

The fit-for-purpose plant will be built adjacent to the orebody to minimise mine haulage costs from the open pits and underground.

Throughput of the plant will average 454ktpa with expected average recoveries of 89.5% for Au and
93% for Cu from the primary ore, which provides 82% of total ore feed to the plant.

ASX:DRM

Doray Minerals Ltd, 19 May 2015

Table 2. Processing Plant Recoveries

Based on the above recoveries, the project will produce approximately 61,000 ounces of gold per annum or approximately 74,500 ounces per annum on a gold-equivalent basis.

70,000

Deflector Annual Production

60,000

50,000

40,000

30,000

20,000

10,000

0

2016 2017 2018 2019 2020 2021 2022

Au Bullion Au in con

Figure 2. Deflector annual gold production

Site Infrastructure and Accommodation Village

Doray will utilise the existing tailings storage facility (TSF) located at the Gullewa mine site, with tailings to be transferred from the new Deflector plant via a purpose built pipeline. Two further pipelines will supply raw water of very good quality (
Site offices, workshop and stores will be located in close proximity to the mine, along with the power station, fuel farm and underground mining contractor facilities.
The Company plans to construct a new accommodation village within 1km of the mine, minimising the level of traffic on the Deflector access road and integrating medical services and administrative management of the mine site and village.

Project Upside Opportunities

Doray believes there is substantial upside to the Project through further optimisation of mining, development and processing once underway.
Doray has taken a relatively conservative approach to mining dilution whilst stoping, based on recent experience at Andy Well. There is potential to reduce the overall dilution, which would have a significant positive effect on the project financials.

It is anticipated that the rougher-concentrate tailings will contain some residual gold. After depletion of oxide and transition ore, a section of the flotation circuit will be redundant when treating only primary ore. Potentially either a further concentrate of pyrite containing gold may be able to be produced

ASX:DRM

Doray Minerals Ltd, 19 May 2015

utilising these tanks, or the installation of a small CIP plant might be able to extract more gold. Once a suitable sample of these tailings is available from the plant, testwork will be undertaken to establish if these or other options are viable.
Doray considers the Deflector Project to have significant exploration potential, enabling the company to capitalise on the investment in the Deflector processing infrastructure. Doray is currently undertaking a project wide data compilation and review, with a view to generating near-mine exploration targets for testing. Targets encompass exploration for both Deflector style Au-Cu mineralisation, as well as traditional Archean Au mineralisation as present at the nearby Gullewa workings.
Since taking control of the project, Doray has been developing a coherent geological model of the mineralisation at Deflector, as well as validating historic data from previous mining operations at Gullewa. Recent work on the Deflector orebody has highlighted the applicability of electro-magnetic geophysical techniques (EM), and as such, a heli-VTEM survey is planned for the upcoming weeks. This survey is designed to cover a 10.5km x 3.5km corridor of the geological sequence that hosts the Deflector deposit, with an aim of delineating conductive bodies that represent massive sulphide hosted Au-Cu mineralisation similar to Deflector.
In addition to target generation work underway, drilling completed at Deflector during 2014 discovered a new zone of mineralisation located ~350m to the southwest of the proposed Deflector development. Results received include 3.08m @ 9.9g/t Au and 7.5% Cu (14DEFDD015). This new zone of mineralisation has not been subject to any follow up drilling.

Development Timeline

The critical path to commencement of production is the installation of the processing plant, which is scheduled to commence July 2015. Detailed final design work is advanced, long lead delivery items have been identified and an order has been placed for the ball mill to enable plant commissioning, followed by the start of production, during Q4 FY16.
The village will be built concurrently with earthworks for the plant foundations. A small existing camp
7km from Deflector will be used during this initial construction period and will be retained as overflow capacity for specific periods such as mill relining or exploration drilling campaigns.
Open pit mining is scheduled to commence in February 2016 to provide initial ore feed for the mill, with underground mining to commence in June 2016 to access underground ore.

Copper-Gold Concentrate Offtake Agreements

Doray is currently in discussions with a number of potential purchasers of the high grade copper-gold- silver concentrate which will be produced from Deflector.

The response from these companies has been very positive and several draft agreements have been received for review and discussion

ASX:DRM

Doray Minerals Ltd, 19 May 2015

438.000mE 44 1.000mE

M59/356

E59/1241

L59/71

- TOGULLEWA

Proposed Pipleine

MGA94 Zone 50

M59/442

1km

LEGEND Tenement Oulline Road

- Proposed Pipelni e

Existing Pit

DORAY

MINERALS UMITED

DEFLECTOR PROJECT

PROPOSED SITE ANO INFRASTRUCTURE LAYOUT

438,000mE 439,500mE 441.000mE

Proposed Pit Oulines Waste Dump Proposed Buildings

Figure 3. Proposed Deflector site layout.

Doray Minerals Ltd, 19 May 2015

Financial Analysis

Table 3. Summary of Project Financials

Table 4. Summary of Pre-production Capital Items

150

Deflector LOM cashflow

100

50

0

‐50

2016 2017 2018 2019 2020 2021 2022

‐100

‐150

Net revenue capex operating cashflow

Figure 4. LOM cash flow. Net revenue includes royalties and refining charges.

Doray Minerals Ltd, 19 May 2015

Permitting and Approvals

The existing infrastructure facilities and previous mining areas have been under care and maintenance, with approvals and permits kept in place since mining ceased in 2004.
All critical principal approvals and permits are in place with the regulatory authorities. Only minor amendments regarding revised locations for the plant and village are awaiting final acceptance.

Table 5. Status of permits/approvals

Funding Update

Doray recently appointed PCF Capital as the debt finance advisor for the Project and has received substantial interest from a range of potential domestic and international financiers.
With the completion of the internal review of the Project physicals and financials, the data will be provided to the various interested parties to enable them to provide proposed financing terms.
Is it the Company's intention to maximise the use of debt and Andy Well cash flows to minimise the requirement for additional equity.

-ENDS-

ASX:DRM

Doray Minerals Ltd, 19 May 2015

For further information, please contact:

Allan Kelly Margie Livingston

Managing Director Associate
Doray Minerals Limited AMN Corporate
+61 (08) 9226 0600 +61 (0)438 661 131 [email protected][email protected]

About Doray Minerals Limited

Doray Minerals Limited is a high-grade Australian gold producer, developer and explorer.
The Company controls two high-grade Western Australian gold assets - the operating Andy Well Gold Project (Andy Well) and the development-ready Deflector Gold Project (Deflector). Doray's complementary project portfolio provides increased scale, liquidity and market presence, and a potential re-rating based on its strengthened market positioning.
Doray has a strategic portfolio of gold exploration properties within Western Australia and South Australia and each presents multiple discovery opportunities. The Company's Board and management team has expertise in discovery, development, and production.

Competent Person Statements

The information in this announcement that relates to Au-equivalent calculations and Production Forecasts is based on information compiled by Peter Bamford. Mr Bamford is a full-time employee of Doray Minerals Ltd and is a Fellow of the Australasian Institute of Mining and Metallurgy (AusIMM). Mr Bamford has sufficient experience, which is relevant to the style of mineralisation and type of deposit under consideration and to the activities, which he is undertaking. This qualifies Mr Bamford 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 Bamford consents to the inclusion of information in this announcement in the form and context in which it appears. Mr Bamford holds shares and options in Doray Minerals Ltd.

The information in this announcement regarding Doray's Mineral Resources and Exploration Results has been extracted from various Doray ASX announcements and is available on the Doray website at www.dorayminerals.com.au or through the ASX website at www.asx.com.au (using ticker code "DRM"). Doray confirms that it is not aware of any new information or data that materially affects the information included in the original market announcement and that all material assumptions and technical parameters underpinning the estimates in that market announcement continue to apply and have not materially changed. Doray confirms that the form and context in which the Competent Person's findings are presented have not been materially modified from the original market announcement.

ASX:DRM

Doray Minerals Ltd, 19 May 2015

Appendix

Au-Equivalent Calculation Methodology

Multi-element production totals have been converted to Au-equivalent oz through the following:

 Assumed Au Price: US$1,150/oz

 Assumed Cu Price: US$6,100/t

 Assumed AUD:USD exchange rate: 0.77

The Au-equivalent production totals are based on produced metal, and hence have relevant metallurgical recoveries applied as per Table 2 of this release. The calculation formula utilised for Au- equivalents is:

Au-equivalent oz (produced) =

(Au produced oz x Au Price $/oz) + (Cu produced t x Cu Price $/t)(Au Price $/oz)

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