AUSTRALIA DRA.AX 2,00 AU$ 0,00%

ASX ANNOUNCEMENT 20 OCTOBER 2016‌

DRILLING IN SOUTHERN FINLAND YIELDS PROMISING RESULTS

• 35 diamond core holes drilled at Dragon Mining's mining projects in southern Finland between 1 July 2016 and 30 September 2016.

• Assays have returned a series of encouraging results including:

  • 4.20 metres @ 13.66 g/t gold,

  • 9.45 metres @ 21.63 g/t gold, and

  • 7.80 metres @ 8.91 g/t gold from Orivesi; and

  • 3.10 metres @ 11.37 g/t gold,

  • 4.60 metres @ 12.80 g/t gold,

  • 4.60 metres @ 13.95 g/t gold, and

  • 6.30 metres @ 6.72 g/t gold from Jokisivu.

Dragon Mining Limited (ASX:DRA) ("Dragon Mining" or "the Company") is pleased to provide an update on drilling activities completed at the Orivesi Gold Mine ("Orivesi") and Jokisivu Gold Mine ("Jokisivu") in southern Finland. A total of 35 diamond core holes, totalling 4,435.25 metres have been drilled at these operations between 1 July 2016 and 30 September 2016 ("July-September period" or "period") with the objective of identifying extensions to known mineralised zones, as well as providing information to support mine planning and mine development.

• Orivesi Gold Mine

Underground diamond core drilling advanced at Orivesi with 19 holes completed for a total of 1,840.25 metres during the period.

The final 7 holes in the 18 hole (3,073.85 metres) program that was designed to evaluate the extensions of Kutema Pipe 5 between the 1200m and 1280m levels were drilled during the period. Results have now been received for all holes, the final holes returning a series of intercepts including highlights 4.20 metres @ 13.66 g/t gold and 9.45 metres @ 21.63 g/t gold. Overall the results from the program were positive, identifying a zone of higher grade mineralisation that displays reasonable vertical continuity over a portion of Pipe 5, whilst indications of a new, separate zone were identified to the northeast of Pipe 5. All results received are provided in Table 1 and include the results for the initial 10 holes that were previously released on the 12 May 2016 - Drilling Returns Robust Intercept from Orivesi Gold Mine and the 22 July 2016 - Encouraging Results from Southern Finland Drilling Programs. These releases can be found at www.asx.com.au (Code: DRA).

A series of definition holes were drilled targeting Kutema Pipe 5 from the 1140m, 1160m and 1180m levels. The 12 hole program yielded a number of intercepts including 4.00 metres @ 7.30 g/t gold, 6.50 metres @

Underground diamond core drilling progressed at Jokisivu, with 16 holes completed for a total of 2,595.00 metres during the period.

Drilling was completed on a program that targeted the depth extensions of the Kujankallio Hinge Zone with the completion of the final 14 holes of the 23 hole program during the July-September period. Results were received from 14 holes during the period (Total-19 holes) returning intercept highlights 4.30 metres @ 5.74 g/t gold, 1.20 metres @ 20.93 g/t gold, 0.85 metres @ 45.40 g/t gold, 4.60 metres @ 13.95 g/t gold, 3.10 metres @ 11.37 g/t gold, 4.60 metres @ 12.80 g/t gold, 1.30 metres @ 23.40 g/t gold and 6.30 metres @

6.72 g/t gold. All results are provided in Table 3 and include the results for the initial 5 holes that were previously released on the 19 April 2016 - Drilling Continues at the Orivesi and Jokisivu Gold Mines and the 22 July 2016 - Encouraging Results from Southern Finland Drilling Programs. These releases can be found at www.asx.com.au (Code: DRA). Results for 4 holes are pending.

Underground diamond core drilling has now commenced on a program to further evaluate the Kujankallio Main Zone between the 105m and 145m levels. This panel is located in the middle of the production area and had previously been rejected due to its narrow nature and lack of intercept data. Two holes of the planned 9 hole program were completed during the period. Results are pending.

For and on behalf of

Dragon Mining Limited

Competent Persons Statement

The information in this report that relates to Exploration Results previously unreleased is based on and fairly represents information and supporting documentation compiled by Mr. Neale Edwards BSc (Hons), a Fellow of the Australian Institute of Geoscientists who is a full time employee of the company and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as Competent Person as defined in the 2012 Edition of the Australasian Code of Reporting for Exploration Results, Mineral Resources and Ore Reserves. Mr. Neale Edwards has provided written consent for the inclusion in the announcement of the matters based on his information in the form and context in which it appears.

The information in this report that relates to Exploration Results previously released to the ASX on the 19 April 2016 - Drilling Continues at the Orivesi and Jokisivu Gold Mines, 12 May 2016 - Drilling Returns Robust Intercept from Orivesi Gold Mine and 22 July 2016 - Encouraging Results From Southern Finland Drilling Programs. These releases can be found at www.asx.com.au (Code:DRA). They fairly represent information and supporting documentation that was compiled by Mr. Neale Edwards BSc (Hons), a Fellow of the Australian Institute of Geoscientists, who is a full time employee of the company and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as Competent Persons as defined in the 2012 Edition of the Australasian Code of Reporting for Exploration Results, Mineral Resources and Ore Reserves. Written consent was previously provided by Mr. Neale Edwards for the releases dated the 19 April 2016, 12 May 2016 and 22 July 2016. Mr. Neale Edwards BSc (Hons), a Fellow of the Australian Institute of Geoscientists, confirms that the form and context in which the Exploration Results are presented in this report have not been materially modified from the releases dated 19 April 2016, 12 May 2016 and 22 July 2016. Mr. Neale Edwards has provided written consent approving the inclusion of the Exploration Results in the report in the form and context in which they appear.

Background

The Vammala Production Centre is located in southern Finland, 165 kilometres northwest of the Finnish capital Helsinki.

The Centre comprises the Vammala Plant, a 300,000 tonnes per annum conventional crushing, milling and flotation facility, which sources feed from the Orivesi and Jokisivu gold mines. In addition the Centre also includes the advanced Kaapelinkulma Gold Project and the closed Vammala Nickel-Copper Mine.

The Vammala Production Centre was successfully recommissioned in June 2007 and has to 30 June 2016 produced 267,080 ounces of gold in concentrate.

The Orivesi Gold Mine is located 80 kilometres to the northeast of the Vammala Plant. The mine was initially in operation between 1992 and 2003

and produced 422,000 ounces of gold from a series of near vertical pipe-like lodes at Kutema. Two of the five principal lodes at Kutema continued below the historical extent of the decline at the 720m level and this area is now the subject of a program of staged development and production stoping down to the 1200m level. Mining from the Sarvisuo lodes, 300 metres east of Kutema commenced in April 2008 and has been conducted from the 240m to the 620m level.

The Kutema and Sarvisuo lode systems occur within the Proterozoic Tampere Schist Belt, representing a metamorphosed palaeo-epithermal system. Gold mineralization is associated with strongly deformed andalusite rich, silicified zones found in vertical pipe-like lode systems that exhibit depth extensions ranging from tens to hundreds of metres. These lode systems are located in a broad zone of hydrothermally altered rocks that cover an area of 40 hectares. Both Kutema and Sarvisuo remain partially open and potential remains for the identification of additional gold bearing pipes or pipe clusters within the surrounding hydrothermal alteration system.

The Jokisivu Gold Mine is located 40 kilometres southwest of the Vammala Plant and hosts two gold deposits 200 metres apart, Kujankallio and Arpola. The deposits represent structurally controlled orogenic gold systems located within the Palaeoproterozoic Vammala Migmatite Belt. Gold mineralization at both Kujankallio and Arpola is hosted within relatively undeformed and unaltered diorite, in 1 to 5 metre wide shear zones that are characterised by laminated, pinching and swelling quartz veins.

The Kujankallio deposit has been shown by drilling to extend to at least 525 metres in depth, though resource drilling currently extends only down to 350 metres vertically below surface. The Arpola deposit has only been drilled down to 200 metres. Both deposits remain open with depth and partially along strike.

Open cut mining at Kujankallio commenced in 2009 and underground production in 2011. A small open pit was mined at Arpola in 2011 and underground production commenced from this deposit in 2014.

The Kaapelinkulma Gold Project is an advanced gold project located 65 kilometres east of the Vammala Plant. Kaapelinkulma is an orogenic gold deposit located in the Palaeoproterozoic Vammala Migmatite Belt. It comprises a set of sub-parallel lodes in a tight array hosted within a sheared quartz-diorite unit inside a tonalitic intrusive. Two separate gold deposits have been identified at Kaapelinkulma, the southernmost deposit is the larger of the two. Both deposits remain open in several directions.

Table 1 - Results from the underground diamond core drilling program that is targeting Kutema Pipe 5 between the 1200m and 1280m levels. All intercepts reported at a 1 g/t gold cut-off. (Appendix 1 - JORC Table 1)

Hole	North	East	Elevation	Azimuth (°)	Dip (°)	Length (m)	From (m)	Interval (m)	Gold (g/t)
KU-1509	6838546.78	2508601.95	-959.32	27.29	-70.37	215.30	133.00	15.00	16.86
Includes 8.00 metres @ 28.53 g/t gold from 133.00 metres
KU-1510	6838547.28	2508601.81	-959.32	36.75	-67.03	122.30	No Significant Results
KU-1510B	6838546.68	2508602.12	-959.32	33.73	-66.44	200.20	102.40	1.10	1.22
127.00	5.00	1.88
165.50	1.50	9.98
169.50	1.50	12.25
KU-1511	6838547.26	2508602.41	-959.30	43.50	-64.10	245.30	13.30	1.70	1.17
90.40	0.95	3.07
137.00	1.50	1.17
143.70	1.90	1.52
KU-1512	6838547.87	2508602.12	-959.29	53.03	-61.16	`242.50	13.50	1.50	1.04
192.50	0.90	1.07
KU-1513	6838515.07	2508622.69	-960.69	8.03	-66.00	230.40	100.00	1.50	1.25
122.00	1.00	3.33
150.70	0.70	3.52
170.50	0.90	28.20
KU-1514	6838515.15	2508622.69	-960.44	7.00	-56.60	194.30	45.00	1.00	1.08
130.00	1.50	1.75
134.50	2.30	1.71
160.00	9.00	3.02
KU-1515	6838514.92	2508622.27	-960.31	357.33	-57.00	170.00	50.00	1.00	1.82
129.00	7.20	3.47
KU-1516	6838514.72	2508621.59	-959.78	351.75	-55.02	176.00	51.00	1.00	14.35
123.00	1.00	1.52
128.50	3.00	1.88
KU-1525	6838534.73	2508624.14	-1002.21	1.97	-39.68	95.30	36.50	1.50	1.94
65.30	4.20	13.66
Includes 1.50 metres @ 26.20 g/t gold from 68.00 metres
73.00	1.50	1.17
KU-1526	6838534.41	2508624.42	-1002.22	13.36	-45.27	128.50	79.00	5.00	1.12
KU-1527	6838534.88	2508624.02	-1002.20	7.50	-45.46	124.40	39.60	0.95	3.09
76.20	1.10	1.68
80.00	1.30	1.95
82.55	1.05	1.24
KU-1528	6838534.19	2508624.21	-1002.24	17.36	-53.21	137.95	20.10	1.30	1.03
32.50	1.00	8.70
45.90	1.50	1.05
53.40	7.50	3.85
97.50	1.00	1.22
125.20	3.50	2.26
KU-1529	6838534.31	2508623.75	-1002.23	0.84	-51.68	129.00	35.00	1.00	1.48
49.00	2.50	1.58
88.30	9.45	21.63
115.15	0.80	1.88
KU-1530	6838534.86	2508623.90	-1002.22	3.89	-59.84	149.40	48.30	1.20	2.07
61.00	3.00	2.61
103.60	9.90	5.42
135.60	0.80	6.15
KU-1531	6838535.02	2508623.37	-1002.19	352.19	-59.43	156.00	27.50	1.50	6.05
45.50	1.50	6.70
111.90	1.50	1.87
KU-1532	6838534.36	2508624.14	-1002.23	12.86	-55.84	180.00	36.00	1.60	1.62
58.00	2.00	1.70
104.50	0.90	1.48
133.00	8.00	2.45
KU-1533	6838534.519	2508623.6	-1002.22	356.89	-62.97	177.00	22.00	0.30	20.10
42.00	1.00	1.78

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