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1 August 2016 Australian Securities Exchange Level 5, 20 Bridge Street SYDNEY NSW 2000

QUARTERLY REPORT –1 April to 30 June 2016 Stonewall Resources Limited (ASX: SWJ) “Stonewall”, “Company” or the “Consolidated Entity” reports on its activities for the three month period ended 3o June 2016.

HIGHLIGHTS

Transitioning to production

The strategic review for the Pre Mined Residue “PMR” completed. Review confirms a robust project with an initial planned life of up to 10 years

Updated Investor Presentation released to the market

Arbitration for the claim for damages from Shandong Qixing

Iron Tower Co., Ltd (深圳：002359) (for US$118.5million plus interest and costs) completed. A decision by the tribunal expected no later than 1 September 2016.

EXECUTIVE SUMMARY

Summary The Board’s focus remains on re-capitalisation of the Company and transitioning to production, commencing with phase 1 funding of the PMR Project. The Company continues to engage in a process of consolidation with both a strategic review, and a detailed study into the PMR Project completed. The Company is well positioned to transition towards production with plans progressing smoothly towards commencement of the PMR project by 2016. A resource delineation programme including both detailed sampling and testing is proposed for the PMR project which could also deliver a JORC compliant resource. The PMR Project review includes a detailed funding strategy with phase 1 to commence in July/August. For future phases, the Company is pursuing non-dilutive funding options and will continue to update the market as the options firm up. Cash As at 30 June 2016, Stonewall had cash balances of AUD 72k. Funding initiatives continue to be pursued in order to ensure that the Company is adequately funded until it commences production. The Company will disclose these on conclusion of the various initiatives as and when required.

MARKET DATA ASX code:

SWJ

Current share price:

$0.014

Total shares on Issue: 1.809 billion

DIRECTORS & SENIOR MANAGEMENT George Jenkins, CEO Trevor Fourie, Director

Bill Richie Yang, Director Stephen Gemell, Director Liu Yang, Director

James Liu, Director Zihao Zhang, Director Runxi Zhu, Director

MAJOR SHAREHOLDERS

Tasman Funds Management Pty Ltd High Gift Investments Ltd Smart Vision Investment Group Ltd

Khan International Limited Best Wealth Winner Ltd

Buttonwood Nominees Pty Ltd

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Notice of Arbitration As announced on 3 March 2015, notice of arbitration has been served on Shandong Qixing Iron Tower

Co. Ltd (深圳：002359).

The arbitration is to determine the Company’s claim for damages against Shandong arising from the termination of the Share Sale Agreement (SSA), which Stonewall announced on 21 November 2014. The Tribunal Hearing took place from 11 to 14 March 2016 and final submissions lodged in early June 2016. The tribunal is expected to deliver a decision by no later than 1 September 2016. It should be noted that while the board of Stonewall is confident, there is no certainty of success

or of the amount that may be awarded to Stonewall as a result of the arbitration process.

The Company entered into a funding agreement with a consortium of funders who are entitled to 45 percent of a successful claim. Operations

For the quarter work has continued on the internal PMR Project Study and no other operational activities have taken place. The internal PMR Project Review is complete and details released on the ASX in the company’s Investor Presentation dated 25 July 2016. Key statistics as provided in the release are:

Indicator Value

All In Sustaining Cost (Stage 1) US$ 57/t

All In Sustaining Cost (Year 1, 2017)

US$ 42/t

Initial CapEx (20% Contingency) US$ 15.1 million

Estimated Life of Mine (Stage 1) 10 Years

Average Annual Mining Tonnage 445 kt

Implementation to production 12 months

The Company is now positioned to transition to production growth with plans progressing smoothly towards commencement of the PMR Project. Whilst not essential, a resource delineation programme including detailed sampling and testwork is proposed for the PMR Project and could deliver a JORC compliant resource.. The information derived from this work would allow the Company to accurately schedule mining plans for the PMR project. Exploration No exploration activities took place during the quarter.

CORPORATE

Cash Position:

As at 30 June 2016, Stonewall had cash balances of AUD $72K. New funding initiatives have been successfully pursued in order to ensure that the Company is adequately funded until it commences production. The Company will disclose these on conclusion of the various initiatives as and when required.

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Recapitalisation Initiatives for the Quarter:

Convertible Security:

On 19 June 2015, the Company entered into a convertible loan with major shareholder, Tasman Funds Management Pty Ltd (Tasman). The Company announced that Tasman agreed to extend the maturity date by twelve months to 30 June 2017. The note is for AUD1,650,000 and can be exercised at AUD0.009. Tasman is currently the largest shareholder in Stonewall holding 322,309,942 shares representing 18.56% of the shares on issue.

Share Purchase Plan (SPP)

On 5 February 2016 the Company offered its shareholders an opportunity to participate in a $1,000,000 SPP at a price of $0.01 per share. By the end of the quarter, a total of $961,000 was received from Stonewall’s eligible shareholders and sophisticated investors for the shortfalls.

Update on Ao-Zhong Conditional agreement: The Company previously announced that it had signed a conditional agreement with Ao-Zhong. The Company subsequently initiated discussions with Ao-Zhong to explore alternative funding and timing options, however, these discussions did not go ahead with the Company seeking to replace the Ao-Zhong funding with alternative options. The parties remain on good terms and may revisit the opportunity at some future time.

Bridging loan and conversion

Short Term Secured Loan Facility:

In January 2016, the Consolidated Entity entered into an AUD 500,000 short term bridging

loan for three months with an existing shareholder, full details of which are stated in the

Consolidated Entity’s half year report released on 15 March 2016. Current loan principal

outstanding under this facility is $352,500.

Beatle Rock Unsecured Loan:

On 25 February 2015, the Company entered into an unsecured loan with Beatle Rock Pty Ltd.

Beatle Rock Pty Ltd and the Company recently agreed that, at the lenders discretion, the

outstanding balance may be converted to ordinary shares at 20 percent of the 20 day VWAP.

Current outstanding balance is AUD400,000.

During the Ao-Zhong discussions, the Company availed on bridging finance from an

institutional investor for AUD800,000. The Company is pleased to advise that through

negotiations with the investor, the bridging loan was subsequently converted to a placement

and has issued 72,727,273 shares at a price of AUD$0.011 per share. The shares were

issued under the Company’s 15% placement capacity in accordance with ASX Listing Rule

7.1. The requisite Appendix 3B and notice under section 708A of the Corporations Act 2001

(CTH) were released subsequent to the announcement.

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Arbitration: As announced on 3 March 2015, notice of arbitration has been served on Shandong Qixing Iron Tower

Co. Ltd (深圳：002359).

The claim made by Stonewall is to be determined in accordance with Australian law and resolved by arbitration, in English, under the Hong Kong International Arbitration Centre rules. An award in favour of Stonewall will therefore be enforceable against Shandong in China by Chinese courts.

This arbitration is to determine Stonewall’s claim for damages against Shandong (深圳：002359)

arising from the termination of the Share Sale Agreement (SSA), which Stonewall announced on 21 November 2014. The claim is for USD$118,500,000 plus interest and costs. The Company entered into a funding agreement with a consortium of funders who are entitled to 45 percent of a successful claim. Final submissions were submitted in June 2016 with the Tribunal indicating that it is likely to deliever a decision by no later than 1 September 2016. It should be noted that while the board of Stonewall is confident, there is no certainty of success

or of the amount that may be awarded to Stonewall as a result of the arbitration process

Shandong (深圳：002359) has been a listed company since 10 February,2010

Following Shandong’s (深圳：002359) withdrawal of the transaction, Shandong (深圳：002359)

announced that its controlling shareholder sold its shares to another large Chinese enterprise. In addition, Shandong and certain executives issued a public apology to their shareholders in relation

to regulatory action by the China Securities Regulatory Commission (CSRC) against Shandong (深：002359). On 27 February 2016, Shandong issued a response to an enquiry by the ShenZhen Stock Exchange regarding the absence in its 2015 annual report of disclosure of a contingent liability for Stonewall’s claim. In its response, Shandong said that in order to protect its shareholders, the controlling shareholder, Jingzhong, issued a letter of undertaking that, should the tribunal order Shandong to pay damages to Stonewall, Jingzhong will provide financial support and will pay the damages within 15 days of the arbitral award.

Shandong (深圳：002359) subsequently announced that it was undertaking a large placement relating

to a new transaction. The placement would require CSRC approval.

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OPERATIONS

For the quarter work continued on the internal PMR Project Study no other operational activities took place. The internal PMR Project Study is complete with a technically feasible project set to deliver a low US$/t unit rate with a low initial capital requirement. The Company is positioned to transition to production with plans progressing smoothly towards commencement of the PMR project. Whilst not essential, a resource delineation programme including detailed sampling and testwork is proposed for the PMR Project and could deliver a JORC compliant resource. The information derived from this work would allow the Company to accurately schedule mining plans for the PMR project.

Pre-Mined Residue Project Study Summary

The internal PMR Project Study indicates that project :

is of low technical risk;

has a low initial capital requirement;

has a low US$/t operational unit cost;

can be brought into production in a short time; and

has an expected initial life of mine of at least 10 years.

The following table provides some of the key indicators out of the project study.

Indicator Value

All In Sustaining Cost (Stage 1) US$ 57/t

All In Sustaining Cost (Year 1, 2017)

US$ 42/t

Initial CapEx (20% Contingency) US$ 15.1 million

Estimated Life of Mine (Stage 1) 10 Years

Average Annual Mining Tonnage 445 kt

Implementation to production 9 - 12 months

The following graph demonstrates the production profile over time. The actual profile is expected to

move and is dependent on the timing of funding however the trends provide an accurate indication of

the tonnages and costs.

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A market review of 27 South African Mines spread across the various Witwatersrand deposits as well

as the Barberton area and one independent mine has revealed that the PMR Project all in sustaining

cost US$/t rate is in the lower quartile.

NOTE: The data below reflects the 2015 costs of the other producers and no escalations have been

applied to these mines when considering the comparison

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The next phase of the project calls for a resource delineation programme which involves a sampling

campaign to deliver a JORC resource on the bulk of the Stage 1 PMR material.

The following implementation schedule is proposed :

Activity Description M1 M2 M3 M4 M5 M6 M7 M8 M9 M10 M11 M12 M13

Resource Delineation

Drafting, Submission and Approval of Amended Mines Works Programme for Beta and Dukes

Detailed Mine Design Beta and Dukes

Detailed Engineering Design Mines and Plant

Mine Equipping

Plant Upgrade/Refurbishment

Commissioning (Gold Sales Commence M10)

Full Production

Pre-Mined Residue (PMR) Introduction

In July 2013, Stonewall announced the discovery of the Pre-Mined Reef Residue exploration target. This target is the residual rock left over from historical underground stoping. Historical mining involved the drilling and blasting of stope ore, with high grade reef-bearing ore being sorted and removed from the underground, whilst the residue was packed in the stoped-out areas. This was done to reduce costs of removal from the mine and to a far lesser degree, used as permanent support. The reef residue discovery was documented and described in the ASX announcement dated 31 July 2013. The reef residue does not form part of the current Mineral Resources attributable to Stonewall Mining. The current investors presentation announced on 25 July 2015 provides further pictorial details on

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how the PMR was deposited during the historical mining operations A significant sampling and testing campaign for both grade and fractional analysis has shown the prevalence of the material across the mining right areas. In 2013 as part of the exploration strategy a review of historical operational data of the mine

highlighted an unexplained discrepancy between the mined and milled volumes. The mined volume

was well in excess of the milled volume however the waste rock dumps did not reflect the expected

volumes stored on them. Upon inspection in the underground sections of Beta mine it was found there

were large volumes of rock stored in the mined out stopes. Initial sampling indicated that this material

carried value, in particular in the finer fractions.

This material was labelled as Pre Mined Residue (PMR) by the team and further detailed sampling

and analysis of the material was carried out which indicated that the material carried significant grade,

and that the bulk of the gold could be concentrated up into the finer size fractions. Several more

mines were accessed and it was discovered that there were significant quantities of PMR available in

these mines and the PMR project was born.

In total, TGME, has some 34 historic mines in which PMR is present to some extent. These can

further be sub-divided into three general geographical zones:

Northern Section stretching from Frankfort to Dientjie Mines - in total some 11 sources of

PMR;

Central Section including the Ponieskranz Mine in its North sector, to Kameel Creek in the

South, some 23 Mines in total; and

The Southern Section, which includes all the Sabie Mines and has a further 13 mines that

have the potential to realise value out of PMR.

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Stage one of the PMR Project will focus on the Central Section. This decision was mainly driven by

the fact that there is ready access to installed infrastructure including a processing plant, offices,

stores and workshops as well as power.

PMR Production Strategy

Mining of the PMR is expected to be carried out in two operational mines at a time. This strategy was

adopted to ensure continued gold production and cashflow during mine infrastructure relocations and

in the event of planned maintenance or breakdown activities.

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Each mine is scheduled to produce a nominal tonnage of 19,500 tonnes per month which will then be

processed through a Pre-Conditioning Centre which is expected to concentrate 90% of the gold into

68% of the mass. From the Pre-Conditioning centres (one per mine) the material will be transported to

the Processing plant for milling and gold recovery.

The general production chain for the PMR Project can be described as follows:

The company’s current focus is to bring the PMR resource into production in order to provide a solid production platform from which the company can launch further planning and execution strategies to expand the production profile in the following general resource areas:

Retreatment of Tailings Dams at TGME (Central Section)

Further PMR operations at TGME (Northern and Central Section)

Future hard rock mining at TGME (Northern and Central Section)

Retreatment of tailings dams at Sabie Mines (Southern Section)

PMR operations at Sabie Mines (Southern Section)

Future hard rock mining at Sabie Mines (Southern Section)

PMR Analysis

Extensive sampling and analysis of the PMR at Beta and Ponieskranz mines in 2013/2014 has

provided the required information for the study team to develop size distribution and gold grade vs

size distribution curves. These curves were then used to determine the mass balance for the Pre-

Conditioning centre and processing plant.

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Size distribution Curve

Gold Grade vs. Size distribution Curve

PMR Mining

It is planned that the PMR is to be mined out of two mines running concurrently with some gaps in the

production as the mining infrastructure is moved from mine to mine as the PMR material is depleted.

The development of the mining plan indicated that a sustainable volume from the mines containing

PMR would be around 19,500 tonnes per month per mine. While increased volumes may be

achievable there is an increased risk to achieving this on a sustainable and consistent basis and

therefore the design has been capped at 22,000 tonnes per month per mine.

The development of the mining plan for the 10 year window has considered the following mines for

the processing of PMR:

Beta Mine

Dukes Mine

y = -0,0509x2 + 4,3748x + 8,3888R² = 0,9998

0

10

20

30

40

50

60

70

80

90

100

0 5 10 15 20 25 30 35 40 45 50

%

mm

Cumulative Passing Mass

y = 9,0818x-0,376

R² = 0,9918

0,0

1,0

2,0

3,0

4,0

5,0

6,0

7,0

8,0

9,0

10,0

0 5 10 15 20 25 30 35 40 45 50

g Au/t

mm

Cumulative Gold Grade

y = -0,0509x2 + 4,3748x + 8,3888R² = 0,9998

0

10

20

30

40

50

60

70

80

90

100

0 5 10 15 20 25 30 35 40 45 50

%

mm

Cumulative Passing Mass

y = 9,0818x-0,376

R² = 0,9918

0,0

1,0

2,0

3,0

4,0

5,0

6,0

7,0

8,0

9,0

10,0

0 5 10 15 20 25 30 35 40 45 50

g Au/t

mm

Cumulative Gold Grade

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Browns Hill Mine

Dukes South Mine

Ponieskranz Mine

Theta Mine

Clewer Mine

These mines have been selected for their potential capacity to have PMR in volume and grade,

proximity to the processing plant, and potential ease of implementation.

The current mining plan for the PMR project is as follows:

Mine 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

Beta

Dukes

Browns Hill

Dukes South

Ponieskranz

Theta

Clewer

The mines are planned to deliver the monthly volumes in a fifteen hour operating day. This allows for

access and egress time from the mines and an allowance for planned maintenance and potential

breakdowns.

While there has been some significant detailing completed on the scheduling and other planning

aspects of the mines, it is envisaged that further detailing will take place as the capital works

commence. The current planning processes were completed using old manual techniques and while

this provides sufficient information for the study it is not the most efficient way to complete any

planning process. The Company plans to apply appropriate mining methods and technologey to

maximum productivity and effectiveness. The capital works programmes will ensure that the mine has

all of the planning completed within appropriate software packages. This is expected to also allow for

future technical services support to effectively plan the ongoing and future operations.

Mining Methods

The mining process is expected to make use of Scrapers, Hydorvacs and High Pressure water jetting

to remove the material from the underground section. The bulk of the material is expected to be

conveyed out using a system of underground conveyors supported by pumping infrastructure for the

removal of fines when using high pressure water jetting. As far as possible all the underground

pumping will make use of air driven pumps to allow for flexibility in the positioning of the pumping

systems underground, as well as to reduce the need for specialised personnel to complete the

installation i.e. electricians.

In order to reduce the risk of the introduction of new mining methods the decision was taken to make

use of equipment that has been tried and tested in an underground environment.

The mining method is basically a three stage process:

Stage one makes uses of the scrapers to remove the bulk of the material from the stopes and transfers it onto the conveyor system,

Stage two makes use of the Transvac machine to vacuum out the bulk of the remaining material, and

Stage three uses high pressure jetting to do the final clean up of the stopes

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All the material that exits the mine reports to the Pre-Conditioning Centre where the initial upgrading

of the material takes place.

The mine will operate three eight hours shifts per day with a fourth shift rostered off to allow for a

seven days a week of operations.

The bulk of the maintenance and breakdown activities will be managed by an onsite team of skilled

artisans however there is an expectation that certain specialised activities will be outsourced e.g.

replacement and repair of conveyor belts. Any outsourcing to specialised contractors will be done in

an effort to ensure that potential downtime incurred is kept to a minimum.

While no mine plans to have an emergency situation underground, these remain a reality of the

industry and therefore an adequate emergency response service will be put in place. Given the

maturity of the industry the emergency response service is not expected to be onerous to put in place

and will make use of existing service providers.

Mine Equipping

It is anticipated that the equipment purchased for the initial two mines will be recycled for use in the

subsequent mines. While there may be a requirement to extend conveyors, piping and other general

infrastructure the bulk of the equipment will be used for their full effective life.

The underground section is expected to be equipped with the following general equipment and

infrastructure:

Conveyors

Winches

Ventilation fans

Power

Water

Communication

On surface at the mine adits where all access is expected to take place the following infrastructure will

be put in place:

Lamproom

Changehouses

Offices

Minor stores facility

Compressors for underground section

Incoming power reticulation

While there is a lot of existing infrastructure on the mine premises, some of the infrastructure to be

installed at the adit is designed to improve the efficiency of the operations and reduce the time it takes

to get personnel to the mining faces underground.

Pre-Conditioning Centre

The Pre-Conditioning Centre is a standalone process that falls between the mine and the processing plant. This will be a new section to the operations and forms part of the capital cost of the project. The purpose of the Pre-Conditioning Centre is to remove unwanted oversize and to produce two size fractions that can be transported to the plant for further processing. A detailed mass balance has been completed for this section and the process flow diagram is described below.

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Material from the mine is deposited into a feed hopper with feeder. From there the material is fed onto a triple deck screen. The top deck is set at 50 mm, the second deck at 17mm and the bottom deck at 0.75 mm (750 micron). All plus 17mm material reports to waste. The minus 17mm plus 0.75mm fraction reports as middlings and the minus 0.75mm material reports to the thickener. The middlings fraction is transported via truck to the processing plant. The thickened material is transported to the plant via a tanker.

Water is recycled from the thickener back into the underground sections and also around the Pre-Con circuit.

The sizing of the equipment in this section made use of the particle size distribution graph and the gold grade vs. size distribution curve.

Processing Plant The existing Donald Liston Processing Plant at TGME was constructed in the early eighties and has been modified over the years by the different owners. Stonewall has at one stage operated the plant in 2013. Due to its age and after careful examination, it was decided to inject additional capital into a plant upgrade in order to achieve effective operation.

The plant currently consists of crushing milling, thickening flotation, regrind, conditioning, Carbon In Leach (CIL) and elution sections. All these sections are in various states of disrepair. The revised process flow for the plant, based on the revised operational strategy of ensuring an increased milling capacity will see the introduction of an additional mill as well as splitting of the milling, thickening and Carbon In Leach (CIL) circuits to accommodate the periods of carbonaceous material in the feed.

Material from the preconditioning circuit is trucked to the plant and fed into the mills. The milled material reports to the thickener section for the recovery of excess water.

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From the thickening circuit the material reports to the conditioning sections where reagents are added. The “preg robbing” section has a flotation cell prior to the conditioning circuit while the “free milling” section does not. From the conditioning tanks the material is passed through a high shear reactor before reporting to the CIL circuit. The material is leached and gold recovered before it reports to the final residue tank for deposition on the tailings dam.

The preg robbing section includes a flotation cell for the removal of carbonaceous material.

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Carbon is transferred counter current to the flow of material and reports to the elution section. The elution section strips out the gold for recovery in the smelt house and transport for sale. No metallurgical test work was completed on the PMR material as there is a wealth of operational data available on the material. A full year worth of operational data was considered to determine the gold recovery and reagent consumptions. The bulk of the capital expenditure is for the refurbishment and repair of the plant and the only significant single piece of capital equipment relates to the installation of the additional mill.

Tailings Dam Tailings deposition will be on the existing tailings dam next to the plant. Given the increase in volume there is however a requirement to increase the deposition capacity of the tailings dam through the introduction of cyclones and expansion of the existing footprint. There is expected to be a requirement to introduce additional storage capacity for the tailings after the first five to six years of operation however this is not expected to halt the project.

Infrastructure The infrastructure at TGME and surrounding areas is generally good. Electricity is readily available off the grid and extensions of the powerlines to the various mines are expected to utilise previous powerline installation paths. Water is also readily available for mining and processing through various water licences and also from the underground sections.

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Communication on the site is provided through the local telecommunications provider and a separate Internet solution provides suitable internet speeds required for the running of a mine site. The towns of Pilgrims Rest, Graskop and Sabie provide sufficient housing for the needs of the mine as well as some basic services common in small South African towns. The city of Nelspruit is 95km away and provides services generally expected of a small city in South Africa. There is ready access to engineering and other professional services in the nearby city of Nelspruit or in the cities of Johannesburg or Pretoria.

Environmental and Permitting The greater TGME area is covered by various Prospecting and Mining rights. These rights allow for TGME and Sabie Mines to mine for gold, silver and copper as well as extract aggregates for sale. All of the PMR mines scheduled for mining are covered under these rights and no further applications are required. In order to commence with mining activities the mine is required to complete an updated Mines Works Programme which will essentially flow directly out of the study document. The diagram below generally describes the mining and prospecting rights of the greater TGME and Sabie areas.

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All of the planned PMR mines are covered by approved water licences. These licences have been in

place for some time now and no further water licensing is required to commence operations. As part

of the approval process for the water licences there was a requirement to complete various

environmental studies prior to the granting of the licence. Given that the licences are all approved,

there are no further environmental studies or applications required. The normal monitoring and

reporting systems are in place and will continue through the life of the project.

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Pilgrim’s Rest additional near term production sources (Northern and Central Sections) It is anticipated that once the PMR Project is operational in the Central Section then further scoping

work will be initiated on the following potential ore sources.

Blyde River Tailings The Blyde River Tailings are within 1.5 km of the existing plant and has been extensively sampled. Some further scoping work is required to determine the potential economics of the material.

Vaalhoek Stonewall is able to target the Vaalhoek mine from an average depth of between 120 metres and 250 meters below surface.

PTD’s So named as the Pilgrims Trend Deposits, this project comprise the surface deposits on Browns Hill and Theta. The resource which is fully described in the Resource Statement comprises the residue of mining operations which occurred in the 1900’s. The material is situated within a distance 1,5km of the TGME Plant in Pilgrims Rest. The depth of the resource varies from surface to a depth of 50m. The average mining depth is expected to be 15-20m. There is a sizeable resource at around 3 million tons, and as with PMR material, the PTD material is highly amenable to concentration by means of wet screening with the bulk of the gold in the finer size fractions. This project will be assessed as part of an extension to the current PMR planning.

Sabie near term production sources (Southern Section) To the South of TGME, the Sabie Mines area, comprising the Rietfontein and Glynn’s complex includes five sections; Rietfontein, South Werf, Malieveld, Compound Hill and Olifantsgeraamte.

Rietfontein A conceptual study for the opening of the Rietfontein underground mine (targeted for the primary hard resources) was completed in 2013. Rietfontein shall form a significant part of the future development of Sabie.

PMR The Sabie Mining complex also contains a substantial amount of Pre-Mined Residue, a similar project study schedule has been reviewed by management with an aim to setup up a new plant and milling facility at Sabie as a second operating centre. This project study shall follow similar course with the current one completed at Pilgrim’s Rest (Central Section) for an initial project life targeted for 10 years.

Bosveld Plant and Mine (Bosveld Mines (Pty) Ltd, 74% owned by Stonewall Mining) Management has initiated a strategic planning phase at the operation to assess the resource potential of the project. No mineral resources have been declared for this project. Whilst it has excellent prospectivity and good infrastructure, a Competent Persons Report will be a pre-requisite to recommissioning the mine. In December 2015, management entered into a 3 year lease agreement with a local miner for the use of the Klipwal Plant, administration and residential infrastructure to treat third party owned gold tailings. All costs associated with maintaining this asset during the lease period will be for the account of the lesee. In addition, Stonewall Mining, through its various subsidiaries, will receive a 5% gross royalty on gold sold as well as additional cash revenue for the supply of certain support services.

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Exploration During the quarter no further exploration activities have been undertaken. Australian Projects

Lucky Draw The tenement is situated near the township of Burraga, approximately 3 hours west of Sydney. The Lucky Draw tailings dam is located 1.3 kilometres (km) northeast of the Lucky Draw gold mine, an open cut mine that ceased operation in 1991. Following extensive exploration to define the resource for successful extraction the Consolidated Entity entered into a joint venture with Developed Resources Proprietary Limited (Developed) with a focus on recovery of gold from the tailings dam. The venture was renewed during Q3 of 2015 and the Consolidated Entity is committed to advancing the opportunity with detailed feasibility assessments and trials to further define the economic viability of the project. The Joint Venture is currently under review.

ABOUT STONEWALL RESOURCES LIMITED

Stonewall Resources Limited (ASX: SWJ) is a gold mining company that holds a range of prospective gold assets, most of which are located in the world-renowned South African gold mining regions. These South African assets, which include several surface and near-surface gold mineralisations, provide cost advantages relative to other gold producers in the region. Stonewall’s three key projects are the TGME Project, located around the towns of Pilgrims Rest and Sabie in the Mpumalanga Province of South Africa (one of South Africa’s oldest gold mining districts), the Bosveld Project, located in South Africa’s KwaZulu-Natal Province, and the Lucky Draw Project, located in Australia, near the township of Burraga in New South Wales. Stonewall owns 74% of TGME, Sabie Mines and Bosveld Mines. Beyond its current strategies, Stonewall has access to nearly 40 historical mines and prospect areas that can be accessed and explored. For more information please visit: www.stonewallresources.com For further information please contact: On behalf of the board

Peter Hunt Company Secretary

Trevor Fourie, Director Bill Richie Yang, Director Stonewall Resources Limited or Stonewall Resources Limited M: +61 414 324 960 M: +61 404 831 804 E: trevor@stonewallmining.com E: richiey@stonewallmining.co.za

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Appendix 5B Mining exploration entity quarterly report

+ See chapter 19 for defined terms. 17/12/2010 Appendix 5B Page 1

Rule 5.3

Appendix 5B

Mining exploration entity quarterly report Introduced 01/07/96 Origin Appendix 8 Amended 01/07/97, 01/07/98, 30/09/01, 01/06/10, 17/12/10

Name of entity

Stonewall Resources Limited

ABN Quarter ended (“current quarter”)

30 131 758 177 30 June 2016

Consolidated statement of cash flows

Cash flows related to operating activities

Current quarter

$A’000

Year to date

(12 months)

$A’000

1.1 Receipts from product sales and related debtors 100 111

1.2 Payments for (a) exploration & evaluation

(b) development

(c) production

(d) administration (855) (6,595) (e) direct production related

1.3 Dividends received

1.4 Interest and other items of a similar nature received 11 555

1.5 Interest and other costs of finance paid (69) (588) 1.6 Income taxes paid

1.7 Other (provide details if material)

Net Operating Cash Flows

(813)

(6,517)

Cash flows related to investing activities

1.8 Payment for purchases of:

(a) prospects

(b) equity investments

(c) other fixed assets (including capitalised

exploration and development

costs)

(4)

1.9 Proceeds from sale of:

(a) prospects

(b) equity investments

(c) other fixed assets

(d) physical non-current assets

49

82

49

1.10 Loans to other entities

1.11 Loans repaid by other entities 1.12 Other (Rehabilitation Trust Fund) 1 (85)

Net investing cash flows

50

42

1.13 Total operating and investing cash flows (carried

forward)

(763)

(6,475)

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1.13 Total operating and investing cash flows (brought

forward)

(763)

(6,475)

Cash flows related to financing activities

1.14 Proceeds from issues of shares, options, etc. 975 6,825

1.15 Proceeds from sale of forfeited shares 1.16 Proceeds from borrowings 2,445

1.17 Repayment of borrowings (240) (2,691) 1.18 Dividends paid

1.19 Other (provide details if material)

Net financing cash flows

735

6,579

Net increase (decrease) in cash held

(28)

103

1.20 Cash at beginning of quarter/year to date 58 221

1.21 Exchange rate adjustments to item 1.20 42 (252)

1.22 Cash at end of quarter

72

72

Payments to directors of the entity and associates of the directors

Payments to related entities of the entity and associates of the related entities Current quarter

$A'000

1.23

Aggregate amount of payments to the parties included in item 1.2

117

1.24

Aggregate amount of loans to the parties included in item 1.10

1.25

Explanation necessary for an understanding of the transactions

Salary payment to CEO and service contract payments to a director related entity.

Non-cash financing and investing activities

2.1 Details of financing and investing transactions which have had a material effect on consolidated

assets and liabilities but did not involve cash flows

2.2 Details of outlays made by other entities to establish or increase their share in projects in which the

reporting entity has an interest

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Financing facilities available Add notes as necessary for an understanding of the position.

Amount available

$A’000

Amount used

$A’000

3.1 Loan facilities

5,550 4,550

3.2 Credit standby arrangements

Estimated cash outflows for next quarter $A’000

4.1 Exploration and evaluation

49

4.2 Development

-

4.3 Production

434

4.4 Administration

659

Total

1,142

Reconciliation of cash

Reconciliation of cash at the end of the quarter (as

shown in the consolidated statement of cash flows) to

the related items in the accounts is as follows.

Current quarter

$A’000

Previous quarter

$A’000

5.1 Cash on hand and at bank 72 58

5.2 Deposits at call

5.3 Bank overdraft

5.4 Other (provide details)

Total: cash at end of quarter (item 1.22)

72

58

Changes in interests in mining tenements Tenement reference Nature of interest

(note (2)

Interest at

beginning of

quarter

Interest at

end of

quarter

6.1 Interests in mining

tenements relinquished,

reduced or lapsed

6.2 Interests in mining

tenements acquired or

increased

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Issued and quoted securities at end of current quarter Description includes rate of interest and any redemption or conversion rights together with prices and dates.

Total number Number

quoted

Issue price

per security

(see note 3)

(cents)

Amount

paid up per

security

(see note

3) (cents)

7.1 Preference +securities (description)

7.2 Changes during quarter

(a) Increases through issues

(b) Decreases through returns of

capital, buy-backs, redemptions

7.3 +Ordinary securities

1,736,625,822

1,736,625,822

7.4 Changes during quarter

(a) Increases through issues

(b) Decreases through returns of

capital, buy-backs

22,000,000

22,000,000

$0.01

$0.01

7.5 +Convertible debt securities –

7.6 Changes during quarter

(a) Increases through issues

(b) Decreases through securities

matured, converted

7.7 Options

Unlisted, unrestricted &

unescrowed

Unlisted, unrestricted &

unescrowed

Unlisted, unrestricted &

unescrowed

Unlisted, unrestricted &

unescrowed

Unlisted, unrestricted &

unescrowed

20,000,000

6,000,000

27,272,728

3,000,000

10,000,000

Exercise

price

$0.015

$0.043

$0.011

$0.0165

$0.015

Expiry

date

22/03/2019

26/02/2018

21/10/2018

02/11/2017

03/01/2019

7.8 Issued during quarter

7.9 Exercised during quarter

7.10 Expired during quarter

7.11 Debentures (totals only)

7.12 Unsecured notes (totals only)

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Compliance statement

1 This statement has been prepared under accounting policies which comply with

accounting standards as defined in the Corporations Act or other standards acceptable

to ASX (see note 5).

2 This statement does give a true and fair view of the matters disclosed.

Notes

1 The quarterly report provides a basis for informing the market how the entity’s activities have been financed for the past quarter and the effect on its cash position.

An entity wanting to disclose additional information is encouraged to do so, in a note

or notes attached to this report.

2 The “Nature of interest” (items 6.1 and 6.2) includes options in respect of interests in

mining tenements acquired, exercised or lapsed during the reporting period. If the

entity is involved in a joint venture agreement and there are conditions precedent which will change its percentage interest in a mining tenement, it should disclose the

change of percentage interest and conditions precedent in the list required for items

6.1 and 6.2.

3 Issued and quoted securities The issue price and amount paid up is not required in

items 7.1 and 7.3 for fully paid securities.

4 The definitions in, and provisions of, AASB 6: Exploration for and Evaluation of

Mineral Resources and AASB 107: Statement of Cash Flows apply to this report.

5 Accounting Standards ASX will accept, for example, the use of International

Financial Reporting Standards for foreign entities. If the standards used do not

address a topic, the Australian standard on that topic (if any) must be complied with.

Sign here: Date: 1 August 2016

Print name: Peter Hunt

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