Mr. Andrew Dinning reports

SARAMA RESOURCES CONSOLIDATES POSITION IN WESTERN AUSTRALIAN GOLDFIELDS

Sarama Resources Ltd. has executed a non-binding heads of agreement with Orbminco Ltd., an arm's-length third party, to acquire a majority and controlling interest in the underexplored, belt-scale 420-square-kilometre Mount Venn project, located in the eastern goldfields of Western Australia.

This follows Sarama's recent acquisition of a majority interest in the 580-square-kilometre Cosmo project, approximately 45 km to the west of the Mount Venn project. Both projects are well positioned and underexplored, presenting an exciting opportunity for Sarama in the Laverton gold district, which is known for its prolific gold endowment.

Sarama's president and executive chairman, Andrew Dinning, commented: "We are very pleased to have reached agreement to acquire the Mount Venn project, and, when completed, this acquisition will significantly consolidate our position in the prolific Laverton gold district of Western Australia. The addition of this project creates a major 1,000-square-kilometre area play, which significantly enhances the probability of making the next big discovery in a region that continues to deliver new deposits in previously unexplored areas, including the regionally significant Gruyere deposit just 35 km east of the Mount Venn project. We look forward to working towards completing the transaction and will provide updates in due course."

Mount Venn project

The project is composed of three contiguous exploration tenements covering approximately 420 square kilometres in the eastern goldfields of Western Australia, approximately 110 km northeast of Laverton and 35 km west of the regionally significant Gruyere gold mine. The project is readily accessible through the Great Central Road, which services the regional area east of Laverton.

The project captures the majority of the underexplored Jutson Rocks greenstone belt over a strike length of approximately 50 km. Rocks within the belt feature a diverse sequence of volcanic lithologies of varying composition, together with pyroclastics and metasediments. Several internal intrusive units have been identified throughout the project and are commonly associated with local structural features. A regionally extensive shear zone, spanning one to three km in width, extends the entire length of the belt with subordinate splays interpreted in the southern area of the project, which provides a favourable structural setting for mineralization.

Gold mineralization was first discovered in the 1920s with sampling returning very high grades and prompting the commencement of small-scale mining operations in the mid-1920s. Multiple gold occurrences have since been identified throughout the project, demonstrating the prospectivity of the system. Despite the identification of several kilometre-scale gold-in-soil anomalies by soil geochemistry and auger drilling, many of these targets are yet to be properly tested. Encouragingly, drilling by Cazaly Resources Ltd. at the project intersected broad, gold mineralization over several fences in weathered and fresh rock at the Three Bears prospect, presenting a priority target for exploration (Cazaly news release dated Feb. 27, 2017: "Widespread Gold & Zinc Mineralisation Defined").

In addition to the attractiveness of the project for gold, it is considered prospective for base metals and platinum group elements. Historical exploration work including auger geochemistry and geophysical surveys identified several targets for copper, nickel and zinc mineralization. Several of these targets remain untested due to historical financing and land access constraints. Exploration in the belt to the immediate south of the project area is noted to have intersected copper mineralization of significant grade over a significant strike length.

In summary, the project is located within a prolific gold district, and has a favourable lithological and structural setting. A solid database of base-level historical exploration work by previous operators, including generation of drill-ready targets, provides a good platform for Sarama to advance the project in conjunction with its activities at the Cosmo project. The size and prospectivity of the landholding that Sarama will have in the Laverton gold district upon completion of this transaction significantly enhance the chances of making an economic discovery, particularly given the infrastructure and proliferation of mines in the region, which will have a favourable impact on the size threshold for finding something of economic value.

Transaction and joint venture summary

Transaction details

Orbminco's interest in the project is held through the participation of its 100-per-cent-owned subsidiary Yamarna West Pty. Ltd. in an unincorporated joint venture with Cazaly, under which Yamarna is acting as operator/manager of the JV.

The HoA contemplates that a nominee of Sarama be assigned (as provided for in the JV agreement) all of Yamarna's rights, entitlements and obligations under the JV (and associated native title access agreement(s)) in return for consideration as set out below. The mineral tenements subject to the JV, which are currently held 100 per cent by Yamarna, shall be transferred into the nominee of Sarama at completion of the transaction.

As consideration for the assignment of its interests in the JV, Orbminco, or its nominee, will receive 12 million CHESS depository instruments in Sarama. Each consideration security issued to Orbminco, or its nominee, in connection with the transaction, will rank equally with existing Sarama CDIs, and each consideration security will represent a beneficial interest of one common share in Sarama.

Orbminco has granted Sarama a right of exclusivity commencing the date of execution of the HoA and ending after a period of four months or the date of execution of a binding agreement in respect of the transaction, whichever is earlier. In return for this right of exclusivity, Sarama has agreed to make a non-refundable cash payment of $20,000 (Australian). During this time, Sarama has undertaken to make payments on behalf of Orbminco for annual exploration licence government rental fees totalling approximately $39,900 (Australian) to ensure continuity of tenure for two of the exploration licences subject of the transaction.

The transaction is an arm's-length acquisition, which is expected to constitute an expedited acquisition, pursuant to TSX Venture Exchange Policy 5.3 (Acquisitions and Disposition of Non-Cash Assets). No finders' fees will be paid in connection with the completion of the transaction.

Completion of the transaction will be subject to the satisfaction or waiver by Sarama of the following key conditions:

• Execution of a definitive binding agreement for the transaction;
• Receipt of Orbminco board and shareholder approval for the transaction, if required;
• Receipt of TSX Venture Exchange final acceptance of the transaction and issuance of the consideration securities;
• Receipt of Sarama board and shareholder approval for the issue of the CDIs as consideration for the transaction;
• Complete assignment of all applicable native title access agreements affecting the project;
• Execution of an assignment deed/agreement by Yamarna and Cazaly for Yamarna's interest in the project JV;
• Receipt of confirmation by Orbminco that it has not novated, assigned or otherwise changed the structure or holding of Yamarna's interest in the JV or project from the date of its entry into the JV;
• Receipt of unconditional guarantee by Orbminco that it will be responsible for any debts and liabilities that have been incurred by Yamarna in relation to the project JV up to the date of completion of the transaction;
• Receipt of government extension/renewal notices covering new annual periods for tenements E38/3150 and E38/3581.

Project joint venture structure

The project is currently in exploration phase and is operated by Yamarna as an unincorporated joint venture in which Yamarna and Cazaly hold interests of 80 per cent and 20 per cent, respectively. The JV agreement grants Yamarna exclusive right of access to the project to conduct exploration and feasibility activities. The JV agreement currently covers mineral tenements E38/3111, E38/3150 and E38/3581 for a total area of approximately 418 square kilometres.

At present, Yamarna is responsible for all costs incurred by the JV until the completion of a prefeasibility study on the project. At that point, Cazaly may elect to start contributing its pro rata share of future JV expenditure to maintain its 20-per-cent interest or, alternatively, elect to withdraw from the JV. In the event that Cazaly withdraws, its interest will be transferred to Yamarna, and it will be granted a 2-per-cent net smelter return royalty on minerals extracted from the project.

Following the end of the free carry period and in the event Cazaly has elected to contribute its pro rata share of project costs, the JV participants will be subject to industry standard contribute or dilute provisions in respect of their interests. In the event a JV participant's interest falls below 5 per cent, it will be deemed to have withdrawn from the JV, and its interest automatically converted to a 2-per-cent NSR royalty on minerals extracted from the project.

The JV agreement includes customary protections for the participants associated with, but not limited to, surrender of mineral tenements, disposals of JV property and assets, material revisions to approved work programs and budgets, change of operatorship, and decision to mine.

Qualified person's statement

Scientific or technical information in this disclosure that relates to exploration is based on information compiled or approved by Paul Schmiede. Mr. Schmiede is an employee of Sarama and is a fellow in good standing of the Australasian Institute of Mining and Metallurgy. Mr. Schmiede has sufficient experience which is relevant to the commodity, style of mineralization under consideration and activity which he is undertaking to qualify as a qualified person under National Instrument 43-101. Mr. Schmiede consents to the inclusion in this news release of the information in the form and context in which it appears.

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