CAPRICORN METALS LTD — Capital/Financing Update 2015

Feb 11, 2015

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12[th] February 2015

ASX Announcement

MAIDEN DIAMOND DRILLING DELIVERS OUTSTANDING RESULTS 100% owned Maniry Project – Southern Madagascar

HIGHLIGHTS

•  Malagasy Minerals Limited has completed a maiden diamond drilling program on four targets at the company’s 100% owned Maniry Graphite Project in Southern Madagascar, confirming the presence of thick high-grade graphite horizons:

•  A total of 17 diamond holes were completed for a total 1,588.6 metres. Significant widths and grades were intersected in all drill holes in near surface positions. Outstanding results from this drilling include;

Razafy Target

MNDD001 26 metres @ 7.3%C from 2 metres (Includes 10 metres @ 10.2%C) MNDD002 32 metres @ 7.0%C from 18 metres (Includes 8 metres @ 9.7%C) MNDD003 26 metres @ 6.8%C from 0 metres (Includes 8 metres @ 8.8%C) MNDD004 34 metres @ 8.5%C from 14 metres (Includes 12 metres @ 11.6%C) MNDD010 34 metres @ 6.4%C from 0 metres (Includes 10 metres @ 8.1%C) MNDD011 44 metres @ 6.4%C from 10 metres (Includes 10 metres @ 9.2%C) MNDD012 24 metres @ 7.0%C from 0 metres (Includes 10 metres @ 8.4%C) MNDD013 50 metres @ 6.9%C from 2 metres (Includes 26 metres @ 9.1%C) MNDD017 38 metres @ 8.3%C from 34 metres (Includes 14 metres @ 11.3%C)

Haja Target

• MNDD008 50 metres @ 6.0%C from 0 metres (Includes 8 metres @ 7.8%C) MNDD009 70 metres @ 5.3%C from 2 metres (Includes 6 metres @ 9.2%C) MNDD016 18 metres @ 6.0%C from 0 metres

Ivan Target

• MNDD006 20 metres @ 7.0%C from 0 metres (Includes 8 metres @ 7.9%C) MNDD007 16 metres @ 6.0%C from 0 metres (Includes 4 metres @ 8.1%C)

Fitia Target

MNDD014 16 metres @ 6.1%C from 0 metres MNDD015 18 metres @ 6.0%C from 0 metres

Malagasy Minerals Ltd. (ACN 121 700 105), 15 Lovegrove Close, MOUNT CLAREMONT WA 6010 Tel: +61 8 9384 3284, Fax: +61 8 9284 3801

BACKGROUND

Malagasy Minerals Ltd (ASX Code: MGY / “Malagasy”) has established a large exploration project in Southern Madagascar (Figure 2.) that is prospective for both mafic-ultramafic intrusive related magmatic nickel-copperplatinum group metals (PGM) deposits and high-grade, high-quality graphite deposits.

The graphite prospectivity of the region has been established by the discovery of the large, high-quality Molo Graphite Deposit by Energizer Resources Inc. (“Energizer”). Malagasy announced (27[th] March 2014) that subject to final payment, it had finalized the sale of the company’s 25% interest in the project in order to crystallise significant value and to increase its focus on the company’s highly prospective 100% owned ground. The transaction is set to deliver a low-risk immediate return to Malagasy in the form of initial cash and share payments, whilst maintaining leveraged exposure through future benchmark cash and share payments.

Malagasy has been working to a strategy to define the potential of the 100% held ground to host additional high-grade graphite deposits that would have the potential to either enhance, or be enhanced by, the development of the Molo Graphite Deposit by Energizer. Malagasy is targeting a high-grade resource base with a particular focus on identifying near surface, low mining cost deposits that can be assessed quickly and at modest cost, potentially working off the benefits of the Molo development.

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Figure (1) – Regional Location Plan

Figure (2) – Maniry Project Overview Plan

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THE MANIRY PROJECT

The Maniry Project is located in the southern part of the company’s Ampanihy Project (Figure 1.) and has been identified as being highly prospective for not only high-grade, high-quality graphite deposits but also for largescale intrusive related nickel-copper-PGM deposits and molybdenum-selenium-REE deposits.

Exploration at Maniry has identified a series of large, high-grade outcrops of graphite mineralisation within a broader graphite trend covering an area of approximately 8km x 4km. This initial work was followed by more detailed systematic rock chip sampling across the interpreted strike of the graphite lenses (ASX announcement 21[st] November 2013) to determine the continuity of grade across the width of these graphite lenses.

This recent diamond drilling program was the culmination of exploration that achieved the following outcomes:

•  Definition of at least 34 large-scale zones of prominently outcropping graphite mineralisation over an area of 6.5km x 2.5km. Additional targets have been identified and will be advanced at an appropriate time;

•  Individual lenses have strike extensions of up to 1.8km and can attain widths of up to 350m;

•  Rock chip sampling program has returned individual results up to 50.78%C; and

•  Field assessment of the graphite flake size has highlighted it is generally of coarse nature. Previously completed petrological analysis of selected samples has confirmed the high quality nature of the graphite. The graphite flake size is generally >0.7mm with some material as coarse as several millimetres. The graphite is largely free from inclusions of other minerals

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Figure (3) – Maniry Graphite Field: Target Locations and Surface Sampling Results

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RAZAFY TARGET:

Two traverses of drilling (9 holes – see Appendix 1) were completed approximately 500 metres apart to provide an initial test of the central portion of the ~1.6km long Razafy Target. The drilling focused on the two central lenses of mineralisation (Figure 4) - the remaining four parallel lenses remain untested.

The key outcomes of the drilling include:

•  Confirmation of consistent, thick outcropping, high-grade graphite horizons hosted by felsic gneissic rocks (Figure 5a and 5b);

•  Field assessment confirms the course grained nature of the graphite mineralisation;

•  The carbon grade within the horizons are generally consistent from hole to hole and from section to section;

•  Surface sampling has provided an accurate guide as to the expected grades in the sub-surface and;

•  Diamond drilling is a cost effective way (approximately A$50/metre) of drill testing the targets.

Razafy Target Drilling Results:

• MNDD001 26 metres @ 7.3%C from 2 metres (Includes 10 metres @ 10.2%C) a nd 14 metres @ 5.1%C from 52 metres

• MNDD002 32 metres @ 7.0%C from 18 metres (Includes 8 metres @ 9.7%C) and 16 metres @ 5.1%C from 72 metres

• MNDD003 26 metres @ 6.8%C from 0 metres (Includes 8 metres @ 8.8%C) and 16 metres @ 6.1%C from 94 metres

• MNDD004 34 metres @ 8.5%C from 14 metres (Includes 12 metres @ 11.6%C)

• • MNDD010 34 metres @ 6.4%C from 0 metres (Includes 10 metres @ 8.1%C) - MNDD011 44 metres @ 6.4%C from 10 metres (Includes 10 metres @ 9.2%C) - MNDD012 24 metres @ 7.0%C from 0 metres (Includes 10 metres @ 8.4%C)
• • MNDD013 50 metres @ 6.9%C from 2 metres (Includes 26 metres @ 9.1%C)

• MNDD017 38 metres @ 8.3%C from 34 metres (Includes 14 metres @ 11.3%C)

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Figure (4) – Razafy Target: Drill sections and Surface Sampling Results

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Figure (5a) – Razafy Target: Northern Drill Section

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Figure (5b) – Razafy Target: Southern Drill Section

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HAJA TARGET:

The Haja Target is located approximately 2.0 kilometres to the immediate south of Razafy. The graphite deposit has a mapped width of up to 350 metres and a strike of 600 metres and is located on a prominent hill (Figure 6). Three diamond holes were completed on a single traverse to provide and an initial test of the target.

The key outcomes of the drilling include:

•  The intersection of consistently thick high-grade graphite mineralisation (Figure 7);

•  The mineralisation in this position outcrops over a width of approximately 220 metres; and

•  Potential exists to extend this mineralisation over a large area based on mapping and rock chip sampling results.

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Figure (6) – Haja Target: Drill sections and Surface Sampling Results

Haja Target Drilling Results:

• MNDD008 50 metres @ 6.0%C from 0 metres (Includes 8 metres @ 7.8%C)

• MNDD009 70 metres @ 5.3%C from 2 metres (Includes 6 metres @ 9.2%C)

• MNDD016 18 metres @ 6.0%C from 0 metres

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Figure (7) – Haja Target: Drill Section

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IVAN TARGET:

The Ivan Target is located approximately 1.5 kilometres to the immediate south of Razafy. The graphite deposit has a mapped width of up to 200 metres and a strike of 600 metres and is located on a prominent hill (Figure 8). Three diamond holes were completed on a single traverse to provide and an initial test of the target.

The key outcomes of the drilling include (Figure 9):

• The intersection of extensive flat lying graphite mineralisation that has the potential to extend over a large area based on mapping and rock chip sampling; and

• The potential to delineate a large area of outcropping graphite mineralisation at very low cost.

Ivan Target Drilling Results:

• MNDD005 2 metres @ 5.9%C from 2 metres

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Figure (8) – Ivan Target: Drill sections and Surface Sampling Results

• MNDD006 20 metres @ 7.0%C from 0 metres (Includes 8 metres @ 7.9%C)

• MNDD007 16 metres @ 6.0%C from 0 metres (Includes 4 metres @ 8.1%C)

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Figure (9) – Ivan Target: Drill Section

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FITIA TARGET:

The Fitia Target is located approximately 3.5 kilometres to the immediate south of Razafy. The graphite deposit has been defined by mapping and rock chip sampling over a strike of approximately 1.2 kilometres and up to a width of 150 metres (Figure 10).

Two diamond holes were completed on the eastern margin of the outcropping graphite mineralisation as an initial test.

The key outcomes of the drilling include (Figure 9):

• The intersection of consistent and increasingly thick mineralisation to the west; and

• Initial indications of large outcropping exposures of graphite with significant opportunity to expand into a large-scale deposit of graphite mineralisation.

Fitia Target Drilling Results

• MNDD014 16 metres @ 6.1%C from 0 metres

• MNDD015 18 metres @ 6.0%C from 0 metres

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Figure (10) – Fitia Target: Drill sections and Surface Sampling Results

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Figure (11) – Fitia Target: Drill Section

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CONCLUSIONS AND NEXT STEPS:

This highly successful drilling program has delivered results that confirm the potential for Malagasy Minerals 100% owned Maniry Graphite Project to host large-scale, high-grade and easily accessible graphite deposits within a very localized area. The four key targets of this drilling programme provide an insight into the wider possibility of the project area with a further 30 graphite targets already identified.

The widths and near-surface outcropping nature of the graphite mineralisation provides the potential to delineate large positions quickly and in a high-quality manner by utilizing high-value in-house diamond drilling resources. The Razafy Target in particular could be assessed for an initial JORC compliant resource within a short period of time (post the current annual wet season).

The wide, near surface nature of the mineralisation would, in concept, be highly amenable to shallow open pit mining of any future identified JORC compliant mining reserve.

Beyond the potential confirmed by this initial assessment work, the Maniry Project is ready to move on to a scoping study stage. As is typical with graphite deposits the key parameter will be the metallurgical characteristics and the quality of the graphite mineralisation. Attaining this necessary and sufficient metallurgical information will inform the requirements for resource definition drilling and subsequent mining and processing studies. Malagasy will be examining the best means to fund and advance this next stage of work.

Signed on behalf of the Board

Peter Langworthy Technical Director

Competent Person’s Statement

Information in this announcement that relates to exploration results is based on and fairly represents information and supporting documentation prepared and compiled by Peter Langworthy BSc (Hons), who is a Corporate Member of the Australasian Institute of Mining and Metallurgy. The information in this announcement that relates to previously released exploration data was disclosed under JORC Code 2012. The relevant dates are noted in the text.

Mr. Langworthy is a Director of Malagasy Minerals Limited. Mr. Langworthy has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the Australasian Code for Reporting Exploration Results, Mineral Resources and Ore Reserves. Mr. Langworthy consents to the inclusion in the announcement of the matters based on this information in the form and context in which it appears.

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APPENDIX (I) – DRILLING DETAILS

Hole_ID	Prospect	Depth (m)	Easting	Northing	RL (m)	Azimuth	Dip
MNDD001	Razafy	84.80	486806	7285996	306	233	-60
MNDD002	Razafy	109.90	486822	7286009	289	233	-60
MNDD003	Razafy	117.60	486850	7286066	306	233	-60
MNDD004	Razafy	95.70	486870	7286082	310	233	-60
MNDD005	Ivan	55.70	487715	7284073	302	93	-50
MNDD006	Ivan	69.15	487674	7284074	303	93	-50
MNDD007	Ivan	66.30	487641	7284081	301	93	-50
MNDD008	Haja	122.00	486700	7284480	297	270	-60
MNDD009	Haja	118.80	486753	7284479	291	270	-60
MNDD010	Razafy	82.60	487076	7285654	287	240	-60
MNDD011	Razafy	113.00	487092	7285663	290	240	-60
MNDD012	Razafy	58.80	487155	7285693	298	240	-60
MNDD013	Razafy	142.00	487174	7285698	293	240	-60
MNDD014	Fitia	90.30	486890	7282413	283	90	-80
MNDD015	Fitia	68.00	486936	7282411	273	90	-80
MNDD016	Haja	82.95	486655	7284480	302	270	-60
MNDD017	Razafy	111.00	486905	7286078	304	233	-60

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APPENDIX (II) = JORC 2012 COMPLIANCE TABULATION

Section 1 Sampling Techniques and Data

(Criteria in this section apply to all succeeding sections.)

Criteria JORC Code explanation	Commentary
Sampling techniques ·Nature and quality of sampling (eg cut channels, random chips, or specific specialised industry standard measurement tools appropriate to the minerals under investigation, such as down hole gamma sondes, or handheld XRF instruments, etc). These examples should not be taken as limiting the broad meaning of sampling. ·Include reference to measures taken to ensure sample representivity and the appropriate calibration of any measurement tools or systems used. ·Aspects of the determination of mineralisation that are Material to the Public Report. ·In cases where ‘industry standard’ work has been done this would be relatively simple (eg ‘reverse circulation drilling was used to obtain 1 m samples from which 3 kg was pulverised to produce a 30 g charge for fire assay’). In other cases more explanation may be required, such as where there is coarse gold that has inherent sampling problems. Unusual commodities or mineralisation types (eg submarine nodules) may warrant disclosure of detailed information.	Sampling consisted of 2m composite samples of quarter core from all significantly mineralised zones. Samples were cut using a diamond blade core saw. Duplicate samples were collected every ~20th sample for QAQC purposes. Sampling is considered to be comprehensive and representative. Remaining core was retained as a permanent reference.
Drilling techniques ·Drill type (eg core, reverse circulation, open-hole hammer, rotary air blast, auger, Bangka, sonic, etc) and details (eg core diameter, triple or standard tube, depth of diamond tails, face-sampling bit or other type, whether core is oriented and if so, by what method, etc).	Diamond drilling was undertaken. Core sizes collected were HQ and NQ in 3m intervals. Core was not orientated.
Drill sample recovery ·Method of recording and assessing core and chip sample recoveries and results assessed. ·Measures taken to maximise sample recovery and ensure representative nature of the samples. ·Whether a relationship exists between sample recovery and grade and whether sample bias may have occurred due to preferential loss/gain of fine/coarse material.	Core recovery was routinely recorded every metre by a trained geologist. Core recovery at the start of hole, 0-10m, averaged 65% recovery whilst from 10m onwards recovery typically ranged between 95-100%. Mineralised zones reported in this announcement have incurred core loss, at this stage it is unsure whether a relationship exists between grades and core loss.
Logging ·Whether core and chip samples have been geologically and geotechnically logged to a level of detail to support appropriate Mineral Resource estimation, mining studies and metallurgical studies. ·Whether logging is qualitative or quantitative in nature. Core (or costean, channel, etc) photography.	All holes were logged by a qualified and experienced geologist. All logging included descriptions of geotechnical, mineralisation, structural and lithological aspects of the core and was digitally recorded using an industry standard code system. Core was formally photographed. Data collected offers sufficient detail for the purpose of interpretation and further studies.

Malagasy Minerals Ltd. (ACN 121 700 105), 15 Lovegrove Close, MOUNT CLAREMONT WA 6010 Tel: +61 8 9384 3284, Fax: +61 8 9284 3801

Criteria JORC Code explanation	Commentary
·The total length and percentage of the relevant intersections logged.
Sub-sampling techniques and sample preparation ·If core, whether cut or sawn and whether quarter, half or all core taken. ·If non-core, whether riffled, tube sampled, rotary split, etc and whether sampled wet or dry. ·For all sample types, the nature, quality and appropriateness of the sample preparation technique. ·Quality control procedures adopted for all sub-sampling stages to maximise representivity of samples. ·Measures taken to ensure that the sampling is representative of the in situ material collected, including for instance results for field duplicate/second-half sampling. ·Whether sample sizes are appropriate to the grain size of the material being sampled.	Quarter core was cut using a diamond core saw and collected for assay. 2 metre composite sampling was deemed to be comprehensive and representative for the style/type of mineralisation under investigation. Duplicate samples were taken (remaining quarter core) approximately every ~20th sample for QAQC purposes
Quality of assay data and laboratory tests ·The nature, quality and appropriateness of the assaying and laboratory procedures used and whether the technique is considered partial or total. ·For geophysical tools, spectrometers, handheld XRF instruments, etc, the parameters used in determining the analysis including instrument make and model, reading times, calibrations factors applied and their derivation, etc. ·Nature of quality control procedures adopted (eg standards, blanks, duplicates, external laboratory checks) and whether acceptable levels of accuracy (ie lack of bias) and precision have been established.	Samples were prepared at Intertek-Genalysis Madagascan operations. Samples were pulverised and split into 200g samples and freighted to ACME laboratories in Canada for Assay. Samples were leached with concentrated nitric acid followed by KOH and finally dilute HCl then analysed by a LECO Carbon-Sulphur analyser to give a Total Graphitic Carbon (TGC) percentage. The laboratory procedures are considered to be appropriate for reporting TGC according to industry best practice. The insertion of CRM's and duplicates every ~20 samples by MGY was used as an internal means of QAQC of laboratory standards. No issues were encountered.
Verification of sampling and assaying ·The verification of significant intersections by either independent or alternative company personnel. ·The use of twinned holes. ·Documentation of primary data, data entry procedures, data verification, data storage (physical and electronic) protocols. ·Discuss any adjustment to assay data.	Significant intersections have been verified by consulting geologists to the group, OMNI GeoX Pty. Ltd. No holes have been twinned. All data has been captured digitally upon logging and stored digitally securely within the Perth head office database.
Location of data points ·Accuracy and quality of surveys used to locate drill holes (collar and down-hole surveys), trenches, mine workings and other locations used in Mineral Resource estimation. ·Specification of the grid system used. ·Quality and adequacy of topographic control.	All XYZ surveying was collected using a handheld Garmin GPS accurate to ±4m. Projection and Grid system used: UTM (WGS84) Z38S
Data spacing and distribution ·Data spacing for reporting of Exploration Results.

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Criteria	JORC Code explanation	Commentary
	·Whether the data spacing and distribution is sufficient to establish the
	degree of geological and grade continuity appropriate for the Mineral Resource and Ore Reserve estimation procedure(s) and classifications applied.	Drill hole spacing on each section is between 20-40m across various prospects over a 20km2 area.
	·Whether sample compositing has been applied.
	·Whether the orientation of sampling achieves unbiased sampling of
	possible structures and the extent to which this is known, considering the deposit
Orientation of data in relation to geological structure	type. ·If the relationship between the drilling orientation and the orientation of key mineralised structures is considered to have introduced a sampling bias, this	The orientation of the drilling is not expected to introduce sampling bias. Most drill holes have intersected the mineralisation at near perpendicular angles to strike.
	should be assessed and reported if material.
		Samples were packaged and stored in secure storage from the
Sample security	·The measures taken to ensure sample security.	time of gathering through to submission. Laboratory best practice
		methods were employed by the laboratory upon receipt.
		An audit of the sampling technique and data was carried out by
Audits or reviews	·The results of any audits or reviews of sampling techniques and data.	consulting geologists to the group, OMNI GeoX Pty. Ltd. and
		deemed to have been satisfactory.

Section 2 Reporting of Exploration Results

(Criteria listed in the preceding section also apply to this section.)

Criteria	JORC Code explanation	Commentary
		Work was undertaken upon permits 5394 & 3432
	·Type, reference name/number, location and ownership including	• The tenements are located within the inland South West of
	agreements or material issues with third parties such as joint ventures,	Madagascar approximately centered on the townships of
	partnerships, overriding royalties, native title interests, historical sites, wilderness	Fotradrevo and Ampanihy.
	or national park and environmental settings.	• Tenements are held 100% by Mada Aust Ltd. A wholly owned
Mineral tenement and land tenure status		subsidiary of Malagsay Minerals Ltd. • No overriding royalties are in place • There is no native title agreement required
		• Tenure does not coincide with any historical sites or national
	·The security of the tenure held at the time of reporting along with any	parkland
	known impediments to obtaining a licence to operate in the area.	• Semi-arid, thinly vegetated, relatively flat to low lying hills with
		sub-cropping rock.
		• Tenements are currently secure and in good standing.
Exploration done by other parties	·Acknowledgment and appraisal of exploration by other parties.	Regional mapping by BRGM

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Criteria JORC Code explanation	Commentary
Geology ·Deposit type, geological setting and style of mineralisation.	The project overlies a prominent 20km wide zone of folded and assemblage of graphite and quartz-feldspar schists (<60% graphite), quartzite and marble units, with lesser intercalated amphibolite and leucogneiss. This zone, termed the Ampanihy Belt is a core component of the Neoproterozoic Graphite System. The belt is interpreted as a ductile shear zone accreted from rocks of volcanic and sedimentary origins
Drill hole Information ·A summary of all information material to the understanding of the exploration results including a tabulation of the following information for all Material drill holes: o_easting and northing of the drill hole collar_ o_elevation or RL (Reduced Level – elevation above sea level in_ metres) of the drill hole collar o_dip and azimuth of the hole_ o_down hole length and interception depth_ o_hole length. ·_If the exclusion of this information is justified on the basis that the information is not Material and this exclusion does not detract from the understanding of the report, the Competent Person should clearly explain why this is the case.	Refer to table within text
Data aggregation methods ·In reporting Exploration Results, weighting averaging techniques, maximum and/or minimum grade truncations (eg cutting of high grades) and cut- off grades are usually Material and should be stated. ·Where aggregate intercepts incorporate short lengths of high grade results and longer lengths of low grade results, the procedure used for such aggregation should be stated and some typical examples of such aggregations should be shown in detail. ·The assumptions used for any reporting of metal equivalent values should be clearly stated.	No top cuts have been applied. A nominal 4% lower cut-off has been applied in the determination of significant intercepts. High grade intercepts within broader low grade intervals have been separated as 'including' results. No metal equivalent values are used in this report.
Relationship between mineralisation widths and intercept lengths ·These relationships are particularly important in the reporting of Exploration Results. ·If the geometry of the mineralisation with respect to the drill hole angle is known, its nature should be reported. ·If it is not known and only the down hole lengths are reported, there should be a clear statement to this effect (eg ‘down hole length, true width not known’).	Most drilling has intersected mineralised zones at a near perpendicular angle and as so true widths can inferred by the reader.

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Criteria	JORC Code explanation	Commentary
	·Appropriate maps and sections (with scales) and tabulations of
Diagrams	intercepts should be included for any significant discovery being reported These should include, but not be limited to a plan view of drill hole collar locations and	Refer to figures within text
	appropriate sectional views.
Balanced reporting	·Where comprehensive reporting of all Exploration Results is not practicable, representative reporting of both low and high grades and/or widths should be practiced to avoid misleading reporting of Exploration Results.	Representative reporting of low and high grades has been effected within this report
	·Other exploration data, if meaningful and material, should be reported
Other substantive exploration data	including (but not limited to): geological observations; geophysical survey results; geochemical survey results; bulk samples – size and method of treatment; metallurgical test results; bulk density, groundwater, geotechnical and rock	Previous mapping and rock chip assays have been reported in previous ASX announcements.
	characteristics; potential deleterious or contaminating substances.
	·The nature and scale of planned further work (eg tests for lateral
	extensions or depth extensions or large-scale step-out drilling).
Further work	·Diagrams clearly highlighting the areas of possible extensions, including the main geological interpretations and future drilling areas, provided this	Further assay results are pending. Potential resource definition drilling to be undertaken.
	information is not commercially sensitive.

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