ARIKA RESOURCES LIMITED - Capital/Financing Update 2015

Suite 6, 245 Churchill Avenue Subiaco WA 6008 PO Box 1273 Subiaco WA 6904 Phone: +61 8 9217 3300 | Fax: +61 8 9388 3006

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ASX Code: PLD

10 February 2015

Higher Grade Resource of 20 Mt at 10% ZnEq at Admiral Bay

Higher‐grade zone of 20 Mt at 10% ZnEq, at 7.7% ZnEq cut‐off, within Admiral Bay (3.2% Zn, 5.8% Pb and 25 g/t Ag).
Higher‐grade zone within existing Inferred Resource of 72 Mt at 6.7% ZnEq
Geological review supports potential for higher grade zones
Three Zn‐rich intersections >10% ZnEq all lie within this zone
Multiple Zn‐rich zones >10% ZnEq defined as targets for future work
The MRE is currently limited to 2.1 km of a drill tested 18 km mineralised corridor

PLD Corporation Limited ( ASX:PLD ) (“ PLD ” or “ the Company ”) is pleased to announce a higher‐ grade zone of 20Mt at 10% ZnEq within the existing Inferred Mineral Resource Estimate (MRE), at the Admiral Bay Zinc Project, Canning Bain, WA ( Figure 5 and Figure 4).

The global Inferred MRE at Admiral Bay is currently 72 Mt at 6.7% ZnEq (3.1% Zn, 2.9% Pb and 18g/t Ag), which has been estimated within a 2.1 km of a drill tested 18 km mineralised corridor, (as announced by PLD on 25/11/14).

Admiral Bay is a strongly structurally‐focused MVT deposit. The style and setting of mineralisation at Admiral Bay shows similarity to other carbonate‐deposits, including Irish‐type deposits and a sub‐ set of MVT deposits that are characterised by higher grades and better focus than ‘typical’ MVT systems like East Tennessee and Silesia.

There is potential for higher‐grade zones within the overall mineralised envelopes at Admiral Bay, and geological support for the application of a higher‐grade cut‐off to the resource block model. However, because of the limited and widely spaced drill holes inherent smoothing the grades in the block model, this approach is still likely to understate the grade and overstate the tonnage.

The higher grade zone was compiled by running a resource report against the 2008 block model ( Error! Reference source not found. , Error! Reference source not found. ) and assessment of the continuity of resource blocks at different cut‐offs. At approximately 7.7% ZnEq cut‐off, the reported resource is 20Mt at 10.1% ZnEq (3.2% Zn, 5.8% Pb and 25 g/t Ag), which occurs as an interpreted coherent zone.

Significant high‐grade intersections above 10% ZnEq occur in most of the holes that have tested the central axis of the deposit as recently reported by PLD (ASX 3/2/15). In the Inferred Resource zone, seven holes have drilled mineralised zone of >10m in the axial zone and of these three have intersected zones >10% ZnEq and four have intersected mineralisation from 8–10% ZnEq.

The existence of intersections such as 20 m at 14.5% ZnEq (including 6 m at 24.3% ZnEq) in ABRD001, and 19 m at 8.3% ZnEq and 14 m at 17.7%ZnEq in SS02 indicates that high‐grade zones are present in the axial zone of the deposit and it is considered likely that multiple high‐grade zones occur that have not yet been intersected by drilling.

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Table 1. 2008 Mineral Resource Block Model results at different ZnEq cut‐off grades

ZnEq% Cut‐off	Volume m3	Tonnes t	ZnEq %	Zn %	Pb %	Ag ppm	Ba %	Density t/m3
11.0	1,400,000	4,900,000	12.5	2.0	9.1	26.1	14.9	3.40
10.0	2,600,000	8,900,000	11.7	1.7	8.6	27.7	13.3	3.42
9.0	3,900,000	12,900,000	11.0	2.6	7.1	26.6	12.8	3.32
8.0	5,700,000	18,500,000	10.2	3.2	5.9	26.2	12.6	3.25
7.0	8,200,000	26,200,000	9.4	3.2	5.1	24.8	13.0	3.21
6.0	11,600,000	36,700,000	8.6	3.2	4.4	22.9	13.4	3.16
5.0	17,200,000	52,700,000	7.7	3.4	3.5	20.5	12.1	3.06
4.0	23,700,000	72,200,000	6.8	3.1	3.0	18.3	12.0	3.05
3.0	29,100,000	88,300,000	6.2	2.7	2.8	17.0	12.1	3.04
2.0	41,200,000	124,800,000	5.1	2.2	2.4	14.3	14.1	3.03
1.0	46,000,000	137,200,000	4.8	2.1	2.2	13.4	13.0	2.98

 NB: ZnEq numbers in this table are derived from PLD’s 2015 ZnEq formula ZnEq=Zn+1.06Pb+0.03Ag

Figure 1. Admiral Bay Grade Tonnage Curves, based on Kagara 2008 ZnEq cut‐offs

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Figure 2. Admiral Bay Block Model global Inferred Resources: 72Mt at 2% ZnEq cut‐off

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Figure 3.Admiral Bay Block Model Higher Grade Inferred Resource 20Mt at 7.7% ZnEq cut‐off

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Figure 4. Admiral Bay Zinc Project Inferred Mineral Resource Area

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The resource estimation method is likely to have smoothed the available data and reduced the grade. More drilling will be required to represent the variability in the deposit and better define zones of high and low grade in the block model.

An additional implication of the interpreted style and controls on the deposit is that, with improved understanding of the system, it should be possible to target mineralisation more effectively than with ‘typical’ irregular MVT deposits. The combination of understanding of alteration haloes and vectors, lithostratigraphic modelling, and structural modelling should support a robust targeting model that will enhance the effectiveness of drilling and definition of high‐grade zones.

Mineral Resource Estimates

Admiral Bay currently has an Inferred Resource of 72 Mt, which is based upon drilling along only a small portion (2.1 km of the 18 km) of strike extent. The current Inferred Resource (Table 2) was initially estimated by Coffey Mining in 2008.

A summary of the information used in the resource estimation is provided below.

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Table 2. Admiral Bay 2008 Mineral Resource Estimate

Table 2. Admiral Bay 2008 Mineral Resource Estimate	Table 2. Admiral Bay 2008 Mineral Resource Estimate	Table 2. Admiral Bay 2008 Mineral Resource Estimate	Table 2. Admiral Bay 2008 Mineral Resource Estimate	Table 2. Admiral Bay 2008 Mineral Resource Estimate	Table 2. Admiral Bay 2008 Mineral Resource Estimate	Table 2. Admiral Bay 2008 Mineral Resource Estimate

INFERRED RESOURCE
Zone	Million Tonnes	Zn (%)	Pb (%)	Ba (%)	Ag (g/t)	ZnEq* (%)
ZONE 1(CFM/NFM contact zone‐‐high Zn/low Pb)	21.9	3.8	0.9	7	14	5.2
ZONE 2(NFM hosted zone‐‐high Zn/high Pb)	35.1	4	2.1	13	20	6.8
ZONE 3(NFM hosted zone‐‐low Zn/high Pb)	24.6	0.1	2.7	28	8	3.2
ZONE 6(NFM/GFM contact zone‐‐low Zn/high Pb)	15.1	0.1	7.5	15	21	8.7
Higher Grade Zone(within above zones)	20	3.2	5.8		25	10
TOTAL	96.7	2.4	2.9	16	15	5.9

Notes:

Zones 1, 2 and 6 equate to 72 Mt at 3.1% Zn, 2.9% Pb, 18 g/t Ag and 11% Ba (6.7% ZnEq)
Inverse Distance (Power=2) Whole Block Estimates using 25mE by 25mN by 5mRL Parent Block Dimensions
Reported using a Zinc Equivalent lower cut‐off grade of 2% where ZNEQ=ZN+(0.79PB)+(0.02AG)
Unconstrained and using ROUNDED figures.
Zinc‐Lead‐Barium‐Silver Grade‐Tonnage Distributions subdivided by JORC Resource Categories.
CFM = Cudalgarra Formation, NFM=Nita Formation, GFM=Goldwyer Formation (NB Kagara referred to the Bongabinni Formation as Cudalgarra Formation in their work)
ZnEq is PLD 2015 formula Zn+1.06Pb+0.03Ag, see below.

Drilling techniques

The deposit was sampled using diamond core drilling (DD) over several drilling campaigns undertaken by CRA Exploration Pty Ltd and by Kagara Ltd. A total of 21 surface diamond drillholes were used for the resource estimation, of which 11 drilled by Kagara. All drillholes were vertical. Mud rotary pro‐collars were used to drill the cover sequence and manage zones of artesian water and gas kicks. This means each drill hole nominally represents 3.5Mt of resource.

All drill holes were vertical. Mud rotary pre‐collars were used to drill the cover sequence and manage zones of artesian water and gas kicks.

All drilling by Kagara through the mineralised zones utilised predominantly HQ diamond core, with exception being NQ core used in hole ABRD001. Logged core recovery is only available for the Kagara drillholes. The data indicates excellent average recoveries of 99% of cored portions of the drillholes. CRAE holes were predominantly NQ is size.

Drilling has targeted the 285° striking mineralisation at approximately 200 m to 400 m intervals over approximately 2.6 km of strike length in the model area. Definition of mineralisation across strike is limited with only four of the oblique sections having two or more drillholes (Coffey 2008).

Sampling and Sub‐sampling techniques

The entire length of the drill core was sampled. For CRAE drill holes ½ core was sampled. For Kagara drillholes the entire length of the drillcore was sampled; the HQ core was sampled as ¼ core, and the NQ (ABRD001 – partial) as ½ core.

The core was routinely sampled on 1m intervals, with a minimum interval of 0.25m. Sample sizes are considered to be appropriate to accurately represent the mineralisation at Admiral Bay based on the thickness and consistency of the intersections, the sampling methodology and the percent value assay ranges for the primary elements.

The mud rotary precollars were collected as 10m composite samples by the contract mud loggers. These samples were not analysed.

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Geological Interpretation

The mineralised zones coincide with bioherm development along the ABFZ. Mineralisation appears to be relatively continuous along the strike of the fault and bioherm, but is lower grade and less well developed on its flanks. However, the flank areas are poorly defined or tested by drilling.

Drill‐hole intercept logging and assay results have formed the basis for the geological interpretation. While mineralisation trend continuity appears to be predictable, grade continuity within the mineralised zones remains relatively uncertain for some of the defined zones and is not adequately defined / constrained by the current drill‐hole spacing. The precise limits and geometry cannot be absolutely defined due to the limitations of the current drill coverage. Further work is required to better define the geometry and limits of the mineralised zones.

The grade and lithological interpretation forms the basis for the modelling. Coffey developed a geological and mineralisation framework suitable for grade estimation based on a review of the available geological and geochemical data.

Sample Analysis Methods

CRAE samples were processed by Analabs and a four acid digest with AAS finish for Cu, Fe, Pb, Zn, Ag, Ca, Mg; pressed powder XRF for Ba, Sr; and Fusion/Specific ion electrode) for F. Kagara samples were processed by SGS Mineral Services and also used a four acid digestion with AAS finish for Cu, Fe, Pb, Zn; four acid digest with ICPOES finish for Ag, Ca, Mg, As, Bi, Co Cd, Sb; Leco analyser for S; and fusion with OES finish for Ba and Sr.

A wireline suite comprising gamma, calliper, density, neutron, resistivity, SP, temperature, sonic and magnetic deviation was collected from all drill holes.

The assaying data is slightly incomplete. For the 5,807 samples in the resource area, only 5,704 have data for Zn, Pb, Cu. Sulphur data was limited only the Kagara drillholes and there were only 2,674 analyses. Barium data was present for 3,723 samples with some selectivity on portions of drillholes. Fluorine data was only collected by CRAE, with only 2,779 analyses.

Estimation Methodology

Five individual mineralised zones were interpreted based on the drillhole sample data using approximate 1.5–2% zinc and/or lead cut‐offs to define coherent zones of sulphide mineralisation. The currently interpreted mineralised zones extend for approximately 2.1 km along 285° northwest strike. The width of the zones varies from 150 m to 670 m with maximum 50 m thickness for individual mineralised envelopes. The mineralised zones extend from the depth of 1,160 m to the depth of 1,500 m below the surface.

All zinc, lead, copper, silver, Total Sulphur and barium variables estimated in the Admiral Bay resource model mineralised zones were generated using Inverse Distance (ID) using a power of two. The ID estimates have been completed using Datamine software. Block discretisation of 5 by 5 by 2 points (for X by Y by Z respectively) was used for block estimation. Composite length and bulk density weighting was used in the estimation process

The block model was constructed using a 25mE by 25mN by 5mRL parent block size, with subcelling to 6.25mE by 6.25mN by 1.25mRL for domain volume resolution. The parent cell size was chosen based on the general morphology of mineralised bodies and in order to avoid the generation of too large block models. The subcelling size was chosen to maintain the resolution of the mineralised bodies.

For all variables estimated (Zn, Pu, Cu, Ag, Sr, and Ba), a two‐pass estimation strategy has been applied, with progressively expanded sample searches applied to successive estimation passes only considering blocks not previously assigned. First pass searches used an anisotropic range of 600 m

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by 300 m by 300 m with major axis oriented horizontally along strike. If a block was not estimated in the first pass, a second pass search utilised a maximum range of 1200 m by 600 m by 600 m.

The use of similar search radii for the semi‐major and minor axis orientations considered the narrow structures being modelled, the variable orientations and curvature of the structures, and erratic distribution of data within the mineralised zones.

The maximum number of composites used for any estimate was restricted to 20 composites for all estimated variables. The minimum number of composites used for any first pass estimate was 10 composites for all estimated variables. The minimum number of composites used for any second pass estimate was two composites for all estimated variables. No octant or other search constraint was applied

All mineralised zone divisions were treated as hard boundaries for data and parameters used in the estimation process.

The block model size was selected largely as a compromise for adequate volume definition of the narrow mineralised zones in an underground mining scenario.

Classification Criteria

The Inferred Mineral Resource classification is based on the evidence from the available drill sampling and seismic interpretation. This evidence is sufficient to imply but not verify geological and grade continuity.

Cut‐off Grades

Mining Factors and Assumptions

In June 2010, the Admiral Bay Prefeasibility Study (PFS) was completed by RSV Australia Pty Ltd. The PFS is, by its nature, conservative and encompasses only a small proportion of the mineralised trend at Admiral Bay. It is based on a small portion, 35%, of the Inferred Mineral Resource tonnes, and is modelled over a strike length of 2.1 km.

Metal Equivalence

Zinc equivalent (ZnEq) calculation parameters are presented in Table 3. The metallurgical recoveries are derived from metallurgical testwork completed by CRAE and Kagara. It is PLD’s opinion that all elements included in the metal equivalent calculation have a reasonable potential to be recovered and sold. The calculation formula is ZnEq=Zn+1.06Pb+0.03Ag

Table 3 Zinc Equivalence Parameters

Metal	Metal Price US$	Price in Assay units US$	Concentrate Recovery %	Recovered Unit Pricing US$	ZnEq Factor1
Zinc	1.00/lb	22.04per %	90	19.84	1.0
Lead	1.00/lb	22.04per %	95	20.94	1.06
Silver	19/oz	0.61perppm	95	0.58	0.03
 1	Approximating to head grade

Metal equivalents are highly dependent on the metal prices used to derive the equivalence formula. PLD notes that the metal equivalence method taken above is a simplified approach. Only preliminary metallurgical recoveries are available. The metal prices are assumed indicative LME

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prices and do not reflect the metal prices that a smelter would pay for concentrate nor are any smelter penalties or charges included in the calculation.

FOR MORE INFORMATION:

Matt Gauci Managing Director T: +61 417 417 907

David Tasker Professional Public Relations T: +61 8 9388 0944

Competent Person Statement

The Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the ‘JORC Code’) sets out minimum standards, recommendations and guidelines for Public Reporting in Australasia of Exploration Results, Mineral Resources and Ore Reserves. The Information contained in this announcement has been presented in accordance with the JORC Code and references to “Measured, Indicated and Inferred Resources” are to those terms as defined in the JORC Code.

The information in this report that relates to the Admiral Bay Mineral Resources is based on information compiled by Serikjan Urbisinov, a Competent Person who is a Member of the Australian Institute of Geoscientists. Mr Urbisinov is a full time employee of independent, resource industry consultancy CSA Global Pty Ltd. Mr Urbisinov has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify 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 Urbisinov consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

All parties have consented to the inclusion of their work for the purposes of this announcement. The interpretations and conclusions reached in this report are based on current geological theory and the best evidence available to the authors at the time of writing. It is the nature of all scientific conclusions that they are founded on an assessment of probabilities and, however high these probabilities might be, they make no claim for absolute certainty. Any economic decisions which might be taken on the basis of interpretations or conclusions contained in this report will therefore carry an element of risk.

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About Admiral Bay

The Admiral Bay deposit was discovered in 1981 by Meridian Oil NL during petroleum exploration, and was subsequently acquired by CRA Exploration (the exploration arm of CRA Limited, now Rio Tinto Ltd), who undertook substantial exploration from 1986 to 1992. Kagara Ltd acquired the deposit from CRA Exploration in 2004 and completed an exploration programme that lead to an Inferred Resource in 2008, as well as a pre‐feasibility study to test the viability of the project in 2010.

Location

The Admiral Bay Project is located in the coastal region of the Great Sandy Desert, on the southern edge of the Kimberley region some 140 km south of Broome, Western Australia ( Figure 3 ). The project area is well located, being only 70 km east of the all‐weather Great Northern Highway, which connects Port Hedland to Broome. Power is present nearby with the Broome Natural Gas Pipeline servicing the West Kimberley Power Project. The Ports of Broome and Derby provide port options servicing Western Australia's Kimberley region and currently support various exports.

Figure 5. Admiral Bay Zinc Project Location, Tenements and Mineralised Corridor

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Tenure

The Admiral Bay deposit is located within two granted Mining Licences (ML04/244 and ML04/249), which are valid until 20/3/2033 and one granted Exploration License (EL04/1610), which is valid until 3/9/2017. The minimum annual expenditure commitment is $248,100 and annual rents are $46,910. The tenements are currently in good standing with the WA Department of Mines and Petroleum.

Geology, Mineralisation, Resources and Potential

Within the project area, the surface geology is dominated by Quaternary aeolian sand. Sand sheets in the northwest grade into 2–10 m high dunes towards the southeast. The stratigraphy is

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comprised of a thick sequence of Cretaceous‐Jurassic‐Permian sandstones/siltstones (up to 1,200 m thick), which overlies a variably dolomitised siltstone/shale/limestone – the Nita Formation – which is host to an upper zinc‐rich zone and a lower lead‐rich zone of mineralisation.

McCracken et al (1996) report that the deposit is located in the Great Sandy Accommodation Zone (GSAZ) of the Admiral Bay Fault Zone (ABFZ), a major fault zone that separates the Broome Platform from the Willara Sub‐basin of the Canning Basin.

The Admiral Bay deposit consists of four main mineralised zones:

(1) an extensively altered and fractured algal bioherm association;
(2) a lower, lead‐rich zone in the upper Goldwyer Formation and lower Leo Member of the Nita Formation;
(3) a hydrothermal dolomite zone that extensively replaces the Leo Member; and,
(4) an upper, zinc‐rich zone in the Cudalgarra Member of the Nita Formation and lower Bongabinni Formation.

Admiral Bay is a zinc‐lead‐silver‐barium deposit, with mineralisation hosted mainly in the Nita Formation and, to a lesser degree, in the Carribuddy and Goldwyer Formations, over a mineralised strike extent of 2.1km. It is a very strongly structurally‐focused MVT deposit, dominated by replacement and small‐scale cavity‐fill, as well as by veining in the lower lead zones

In general, base metal mineralisation occurs in the lower parts of the Siluro‐Devonian Caribuddy Formation and the Ordovician‐age Nita and Goldwyer Formations about 1,250m below surface. Mineralisation is most typically hosted within calcareous rocks, and commonly associated with appreciable barite as a gangue mineral.

Review of seismic data shows that the post‐Nita Formation sequence of rocks is recognised as a well stratified sediment succession on seismic sections and allows a good interpretation of post‐Nita geological events. The host sequence is defined as the seismic interval immediately below. Its poor seismic character is due to alteration, faulting in the area below the mineralisation, probable significant facies variation across strike, and the relatively restricted thickness of the zone. Rift‐style faulting and sedimentation can be inferred below the Willara Formation.

The facies variation is associated with reef growth over the leading edge of a sub‐basin hanging wall block. It appears that the crest of the hangingwall block of the Admiral Bay Fault was covered by reefs. Longitudinal facies continuity (in long section) of this reefal zone can be seen.

There is a strong correlation of drilled mineralisation with the reefal environment and basement fault location. Further re‐processing and interpretation of the seismic data is expected to provide valuable information to support resource estimation and exploration targeting.

Mineralisation is interpreted to have formed during early burial when mineralising basinal fluids were focused into structural and lithostratigraphic traps along the ABFZ. The zinc zone mineralisation developed through pervasive replacement of favourable reactive horizons beneath aquicludes in Nita Formation bioherms (or fossil reefs). The lead zone formed in the feeder system below the zinc zone in the bioherm, where ground preparation by fault‐related fracturing and dolomitisation channelled fluids into the overlying Nita Formation. The coincidence of the fluid‐ focusing accommodation zone along ABFZ with shallow‐water favourable host facies was critical in the development of a large focused deposit at Admiral Bay.

Zinc‐lead‐silver sulphides infill dissolution, breccia and fracture porosity and overprint stylolites. Previous drilling indicates that the upper high‐grade Zn‐rich zone is up to 20m thick, whilst the lower high‐grade Pb zone is up to 15m thick. The high‐grade zones described above are hosted within a broad envelope, of moderate‐grade Zn‐Pb mineralisation up to 110–120m thick.

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Historical Drilling Results

The main zone of mineralisation at Admiral Bay was sampled using diamond core drilling over several drilling campaigns undertaken by CRA Exploration Pty Ltd and by Kagara Ltd. A total of 21 surface diamond drillholes were used for the resource estimation, of which 11 drilled by Kagara. All drillholes were vertical.

Higher grade (Zn or Pb > 5%) and/or substantial intersections (from 20–75m) flag potential for high grade zones with in the mineralisation envelopes.

The current Inferred Mineral Resource is hosted within 2.1km segment of an 18km strike length of the Admiral Bay Fault Zone within the tenement area. Regional scout holes testing the same structural/mineralisation corridor along strike have intersected a number of zones of significant mineralisation. Unusually for MVT style mineralisation there has been a high success rate of intersecting mineralisation in past drilling, which suggests the potential for locating additional mineralisation is positive.

While MVT style mineralisation is unlikely to be continuous along the entire 18km extent of the Admiral Bay Fault Zone with the project tenements, the known mineralised intersections in regional scout holes provides support for the potential of additional deposits of potentially similar size to the known resources at Admiral Bay.

Comprehensive details of the drilling programme are provided in Appendix 2, JORC Table 1.

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