DESERT METALS LIMITED — Capital/Financing Update 2021

Jul 25, 2021

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ASX RELEASE 26 JULY 2021

Exploration Update

ASX RELEASE: 26 July 2021

Highlights

Irrida Hill Drilling

ASX CODE : DM1

BOARD: Mr Mark Stewart Chairman

Dr Robert Stuart Managing Director

Mr Tony Worth Technical Director

Mr Keith Murray Non-executive Director

HEAD OFFICE Level 2, 41-43 Ord St. West Perth WA 6005

Email:

admin@desertmetals.com.au

Website:

www.desertmetals.com.au

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• Two holes completed. IRRDD004 intersected 9.5m of semi-massive sulphide (pyrrhotite dominated) from 260m in IRRDD04 (Modelled depth of plate 268m). Sulphide is immediately adjacent to a 30m intersection of mafic intrusive. Similar massive sulphide conductors intersected over multiple thin bands of 1m width and less in both holes. (IRRDD002, IRRDD004).

• Non-sulphide geology is interfingered BIF with mafic and amphibolite schist and mafic intrusive. Irrida is the Company’s second project (after Innouendy) to intersect mafic intrusive associated massive sulphide. Methodology for pinpointing new massive sulphide mineralisation over a large area in the Narryer Terrane verified.

• Alteration and remobilisation of sulphide intersections apparent.

• Awaiting further drilling, assays and downhole EM for complete interpretation .

New Drill Targets defined

• A total of seven new high conductance drill targets defined from ground EM follow up of airborne data in the Company’s eastern licenses.

• Six targets of up to 12,000 Siemens conductance surround a new prospect ‘The Dome’ in mafic intrusive at Dingo Pass. One VMS target in greenstone belt at Belele.

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a) b) c) d)
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Figure 1: Irrida Hill drilling a) Sulphide core from 162m IRRDD002 b) IRRDD004, 222m c) IRRDD002, 163m d) Section, plan and oblique view of Irrida Hill EM plate modelling

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ASX RELEASE 26 JULY 2021

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Cross section (looking North)

Figure 2: EW section through

Irrida Hill. IRRDD004 intersected multiple zones of massive to semimassive pyrrhotite (0.1-1m) before intersecting a larger semimassive (9.5m) intensively talc altered zone at 260m (Modelled depth 268m). Modelled plates shown

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IRRDD002 IRRDD004
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Irrida Hill Drilling

Desert Metals (The Company or Desert) would like to provide an update on the drilling program at Irrida Hill. As both holes so far drilled are yet to be formally logged or assayed any interpretation is preliminary.

The first holes into two modelled EM conductive plates at Irrida Hill have both intersected several widths (ranging from 10cm to 1m) of semi-massive to massive pyrrhotite with trace copper and nickel sulphide. (Holes IRRDD002 and IRRDD004 on Figures 1 and 2). IRRDD004 intersected a much larger zone (9.5m downhole) of intensely talc altered zone with semi-massive sulphide at 260m. The modelled downhole depth of intersection for this plate was 268m

These conductors were first identified by the Company’s ground EM program last year and confirmed by regional helicopter data collected in February this year. These intersections confirm the effectiveness of the Company’s methodology in being able to detect, define and pinpoint rare occurrences of new massive sulphide mineralisation over the Narryer Terrane. Both of the Company's projects to date and all 5 holes drilled by Desert have intersected at least some massive sulphide and associated mafic-ultramafic rock, two key requirements for a deposit of the Ni-Cu-PGE Intrusive type.

The significance of these first 2 holes at Irrida is that the conductors intersected are intrusive related massive sulphide and are modelled to extend over 1km of strike and several hundred metres depth in extent. This is considerably larger than identified at Innouendy and represents the second known intersection of its type in the Narryer Terrane.

Like at Innouendy, the Company is encouraged that it has located another, possibly extensive, system across which it can systematically test for ore. The assay results from Innouendy are not due until early August, but like these Irrida hill intersections Desert is not expecting ore grade nickel from those holes. It is the identification of mineral systems that is significant at this early stage and the search for high grade continues. PGE concentrations or any hydrothermal related mineralisation is possible but unknown.

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ASX RELEASE 26 JULY 2021

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The Company believes it can map the occurrence of the Irrida Hill massive sulphide mineralisation from EM data and now must sample the extensive horizon by drilling in several locations to test for ore. Ni-Cu-PGE mineralisation that has been remobilised and/or hydrothermally altered is often enriched in platinum, palladium, gold and other PGE’s relative to nickel. In hole IRRDD002 there is evidence of a retrograde hydrothermal event and only once assays are received will we be sure whether enrichment has occurred and if there are any significant PGE or Au intercepts in what has been drilled so far.

The Company continues to systematically work through its portfolio and the drilling program has moved to the next untested conductor at IRRDD005 where a 120m pre-collar has been drilled. The intersection of undeformed pyroxenite (ultramafic intrusive) in the RC pre-collar may increase the chance that this conductor is a primary magmatic source.

Production on the Irrida Hill drilling program has been slower than hoped and as of the date of this release only 2 holes have been completed. Slow production has been due to a number of factors including several wet weather delays, drill rig availability and difficult ground conditions. However in the last few days drilling rates have picked up.

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ASX RELEASE 26 JULY 2021

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The next targets in the Portfolio – Volcanogenic Massive Sulphide and Ni-Cu-PGE Intrusives

Dingo Pass Conductors

Airborne EM data was acquired over the Company’s eastern licenses in May this year. Several anomalies have now been followed up with ground EM and plate models made. Conductivities from these are modelled at up to 12,000 Siemens. This is very high. For comparison the Nova Bollinger conductor was initially modelled at ~5000 S and the multiple conductors at Irrida Hill ~3000 S. The higher the conductance the greater the chance it is caused by a thicker deposit of massive sulphide.

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40km 7km
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Mt Gould Iron Ore Mine South
20km
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Figure 3. 6 separate Dingo Pass Conductors shown at different scales. These sit within mafic intrusive mapped by Desert. They are modelled at up to 12,000 S and together are unique across the Company’s entire license package. Background image - late time Airborne EM over satellite photo. White lines - ground EM traverses.

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ASX RELEASE 26 JULY 2021

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Ground EM modelling over the Dome in the Dingo Pass license .

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a) b) c)
d) e)
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Figure 4: Ground EM Modelling

a) Oblique view of plates modelled through the Dome looking NE. Plates are modelled in the 9000-12,000S range.

b) Comparison between modelled and measured 0.25Hz late time vector field data (Ch35-40, 156-460ms) over line 7600. The black lines are the measured time channels 35-40 with the response decaying with time. Red lines are the response of the model at the same time channels. The excellent correlation between the two gives confidence that the model is a good representation of ground conditions and when drilled we can expect to intersect conductive material at the modelled depth. X, Y and Z profiles are shown. These are the components of the induced vector field and are independently measured datasets. No one set of these data is derived from any other and they all must be analysed individually to create a good model.

c) Line 8400. Same description as for b) above. All 4 lines collected (ie 12 field components) have been modelled simultaneously.

d) Satellite photo over the Dome. Deserts’ geologists have mapped undeformed mafic intrusive rocks that are the dark colours of the Dome.

e) The same image with the modelled conductive plates superimposed.

These very strong conductors in mafic intrusives will be drilled once permitting has been finalised.

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ASX RELEASE 26 JULY 2021

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Volcanogenic Massive Sulphide (VMS) target at Belele

Ground EM survey results

Ground EM has been completed over the Belele VMS target (E51/1907) roughly 50km northwest of Meekathara. These data confirm a plate approximately 600m strike by 220m depth in extent with conductivities in the range of many VMS deposits. The conductive plate strikes NE-SW in an interpreted extension of the Mingah Range Greenstone Belt and is completely covered by alluvium and colluvium. The Mingah Range Greenstone Belt has previously been explored for gold and base metals and contains numerous historical gold showings, as well as several reported base metal gossans. Belele will be drilled as soon as permitting allows.

Figure 6 The Belele tenement – EM survey results

Top right : Image of late time airborne EM data over the Belele anomaly.

Middle images: Model of 600m x 220m conductive plate which may be caused by VMS mineralisation. See Figure 4 for explanation of profiles.

Bottom Images: Geology, Bouguer gravity and Airborne EM over the Belele License.

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500m
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Belele License
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ASX RELEASE 26 JULY 2021

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Authorised by the Board of Desert Metals Limited.

Rob Stuart Tony Worth Managing Director Technical Director Phone: +61 (8) 9758 1333 Phone: +61 (8) 9758 1333

Competent Person Statement

The information in this announcement is based on, and fairly represents, information and supporting documentation prepared by Dr Rob Stuart, a competent person who is a member of the Australasian Institute of Mining and Metallurgy. Dr Stuart has a minimum of five years’ experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a competent person as defined in the 2012 Edition of the Joint Ore Reserves Committee Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Dr Stuart is a related party of the Company, being a Director, and holds securities in the Company. Dr Stuart has consented to the inclusion in this announcement of the matters based on his information in the form and context in which it appears.

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JORC Code, 2012 Edition – Table 1

Section 1 Sampling Techniques and Data

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

Criteria	JORC Code explanation	Commentary
Sampling	• Nature and quality of sampling (eg cut channels, random chips, or	• Samples are yet to be analyzed by laboratory analysis.
techniques	specific specialised industry standard measurement tools appropriate	• Slingram Moving Loop Electromagnetic data collected at 0.25 and 0.5
	to the minerals under investigation, such as down hole gamma	Hz. 200m loops 100m station spacing
	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.
Drilling	• Drill type (eg core, reverse circulation, open-hole hammer, rotary air	• IRRDD002 Reverse circulation pre-collar to 120m. NQ diamond
techniques	blast, auger, Bangka, sonic, etc) and details (eg core diameter, triple	drilling (47.6mm) to end of hole at 261.5m
	or standard tube, depth of diamond tails, face-sampling bit or other	• IRRDD004 Reverse circulation pre-collar to 120m. NQ diamond
	type, whether core is oriented and if so, by what method, etc).	drilling (47.6mm) to end of hole at 290m
		• Drill collars are surveyed using hand-held GPS (+/- 2 metres
		horizontal accuracy). Oriented with compass and inclinometer. Holes
		surveyed with downhole gyroscope.
Drill sample	• Method of recording and assessing core and chip sample recoveries	• Core recoveries are measured for every drill run
recovery	and results assessed.	• Appropriate measures are taken to maximise recovery and ensure
	• Measures taken to maximise sample recovery and ensure	representative nature of the samples. This includes diamond core
	representative nature of the samples.	being reconstructed for orientation, metre marking and reconciled
	• Whether a relationship exists between sample recovery and grade	against core block markers
	and whether sample bias may have occurred due to preferential
	loss/gain of fine/coarse material.

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Criteria	JORC Code explanation	Commentary
Logging	• Whether core and chip samples have been geologically and	• All drill holes are logged in their entirety. Qualitative descriptions of
	geotechnically logged to a level of detail to support appropriate	minerology, mineralization, weathering, lithology, colour and other
	Mineral Resource estimation, mining studies and metallurgical	features are recorded and photographed for each sample.
	studies.
	• Whether logging is qualitative or quantitative in nature. Core (or
	costean, channel, etc) photography.
	• The total length andpercentage of the relevant intersections logged.
Sub-sampling	• If core, whether cut or sawn and whether quarter, half or all core	• The core is yet to be cut for laboratory sampling. Diamond core will
techniques	taken.	be cut in half and sampled over intervals of 1 metre or less.
and sample	• If non-core, whether riffled, tube sampled, rotary split, etc and	• Duplicates, blanks and standards will be submitted for analysis for
preparation	whether sampled wet or dry.	quality assurance and control.
	• 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.
Quality of	• The nature, quality and appropriateness of the assaying and	• Samples are yet to be prepared or assayed.
assay data	laboratory procedures used and whether the technique is considered	• Duplicates, blanks and standards will be submitted for analysis for
and	partial or total.	quality assurance and control.
laboratory	• For geophysical tools, spectrometers, handheld XRF instruments, etc,	• Full QAQC system in place to determine accuracy and precision of
tests	the parameters used in determining the analysis including instrument	assays
	make and model, reading times, calibrations factors applied and their	• The sample sizes are considered to be appropriate to correctly
	derivation, etc.	represent the explored for mineralisation style
	• Nature of quality control procedures adopted (eg standards, blanks,
	duplicates, external laboratory checks) and whether acceptable levels
	of accuracy (ie lack of bias) andprecision have been established.
Verification of	• The verification of significant intersections by either independent or	• The Desert Metals Exploration Manager has personally inspected all
sampling and	alternative company personnel.	core.
assaying	• The use of twinned holes.	• No assay data is reported
	• Documentation of primary data, data entry procedures, data
	verification, data storage (physical and electronic) protocols.
	• Discuss any adjustment to assay data.
Location of	• Accuracy and quality of surveys used to locate drill holes (collar and	• Drill hole collar locations were recorded using handheld GPS.
data points	down-hole surveys), trenches, mine workings and other locations	Elevation values were in AHD RL and values recorded within the

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Criteria	JORC Code explanation	Commentary
	used in Mineral Resource estimation.	database. Expected accuracy is + or – 2 m for easting, northing and
	• Specification of the grid system used.	10m for elevation coordinates. Downhole surveys using an Axis
	• Quality and adequacy of topographic control.	north-seeking gyro with readings at surface and then approximately
		every 3m downhole.
		• The grid system is MGA_GDA94 (zone 50), local easting and
		northing are in MGA.
		• Topographic surface uses handheld GPS elevation data, which is
		adequate at the current stage of the project
Data spacing	• Data spacing for reporting of Exploration Results.	• Drilling to date has been on individual drill holes into a specific target.
and	• Whether the data spacing and distribution is sufficient to establish the• Data spacing and distribution is not sufficient at this stage to allow the
distribution	degree of geological and grade continuity appropriate for the Mineral	estimation of mineral resources.
	Resource and Ore Reserve estimation procedure(s) and	• No sampling has been done at this stage
	classifications applied.
	• Whether sample compositing has been applied.
Orientation of	• Whether the orientation of sampling achieves unbiased sampling of	• Insufficient information to determine at this time.
data in	possible structures and the extent to which this is known, considering	• The orientation of drilling is broadly orthogonal to the modelled
relation to	the deposit type.	conductive plates.
geological	• If the relationship between the drilling orientation and the orientation
structure	of key mineralised structures is considered to have introduced a
	sampling bias, this should be assessed and reported if material.
Sample	• The measures taken to ensure sample security.	• Samples are yet to be taken
security
Audits or	• The results of any audits or reviews of sampling techniques and data.	• No audits or reviews have been conducted at this stage.
reviews

Section 2 Reporting of Exploration Results

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

Criteria	JORC Code explanation	Commentary
Mineral	• Type, reference name/number, location and ownership including	• Surveys were conducted within DM1 100% owned Exploration
tenement and	agreements or material issues with third parties such as joint	License E9/2303, E52/3650 and E51/1907
land tenure status	ventures, partnerships, overriding royalties, native title interests, historical sites, wilderness or national park and environmental settings.	• All tenements are in good standing with DMIRS. DM1 is unaware of any impediments for exploration on these licenses
	• The security of the tenure held at the time of reporting along with any
	known impediments to obtaining a licence to operate in the area.

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Criteria JORC Code explanation Commentary	Criteria JORC Code explanation Commentary	Criteria JORC Code explanation Commentary	Criteria JORC Code explanation Commentary	Criteria JORC Code explanation Commentary	Criteria JORC Code explanation Commentary	Criteria JORC Code explanation Commentary
Exploration • Acknowledgment and appraisal of exploration by other parties. • The tenements have had very limited published or open file exploration done by other work for magmatic nickel-copper-sulphide type deposits. parties • Limited exploration undertaken to date by past explorers was mostly focused on iron ore, and, to a lesser extent, gold. • The main exploration that is relevant to Desert Metals was conducted by Aurora Minerals Ltd and is described in the prospectus downloadable from the companys’ website
Geology • Deposit type, geological setting and style of mineralisation. • Mineralisation anticipated to be related to mantle-derived intrusives intersected by trending linear structures.
Drill hole • A summary of all information material to the understanding of the Information 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.	Drillhole	Easting	Northing	Azimuth	Dip	Depth
	IRRDD002	456900	7141400	90	65	261.5
	IRRDD004	457075	7141250	90	70	318.5
Data • In reporting Exploration Results, weighting averaging techniques, • No assay results are reported aggregation maximum and/or minimum grade truncations (eg cutting of high methods 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.
Relationship• These relationships are particularly important in the reporting of • No relationship between the drilling and target sulphide mineralisation between Exploration Results. has been determined to date. Any reported intervals are “down hole” mineralisation• If the geometry of the mineralisation with respect to the drill hole lengths

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Criteria	JORC Code explanation	Commentary
widths and	angle is known, its nature should be reported.
intercept	• If it is not known and only the down hole lengths are reported, there
lengths	should be a clear statement to this effect (eg ‘down hole length, true
	_width not known’). _
Diagrams	• Appropriate maps and sections (with scales) and tabulations of	• Refer to Figures in body of text
	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 appropriate sectional views.
Balanced	• Where comprehensive reporting of all Exploration Results is not	• All results considered significant are reported.
reporting	practicable, representative reporting of both low and high grades
	and/or widths should be practiced to avoid misleading reporting of
	Exploration Results.
Other	• Other exploration data, if meaningful and material, should be reported	• All known and relevant data has been reported
substantive	including (but not limited to): geological observations; geophysical
exploration	survey results; geochemical survey results; bulk samples – size and
data	method of treatment; metallurgical test results; bulk density,
	groundwater, geotechnical and rock characteristics; potential
	deleterious or contaminating substances.
Further work	• The nature and scale of planned further work (eg tests for lateral	• DHEM of drill holes is planned. A full review of the results to date will
	extensions or depth extensions or large-scale step-out drilling).	be undertaken (once assay results have been received) prior to any
	• Diagrams clearly highlighting the areas of possible extensions,	future programs being planned.
	including the main geological interpretations and future drilling areas,
	provided this information is not commercially sensitive.

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