DESERT METALS LIMITED — Capital/Financing Update 2021

May 3, 2021

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ASX RELEASE 4 MAY 2021

ASX RELEASE: 4 MAY 2021

Innouendy Drilling Update – Visual results Magmatic Massive Sulphides Intersected

ASX CODE : DM1

BOARD: Mr Mark Stewart Chairman

Dr Robert Stuart Managing Director

Mr Tony Worth Director

HEAD OFFICE

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

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Email:

admin@desertmetals.com.au

Figure 1 Samples of sulphide intersections at Innouendy

Website:

www.desertmetals.com.au

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• Two holes completed – First of two conductors tested at Innouendy confirmed as magmatic sulphides in mafic intrusive rocks.

• IRRD006 intersected ~22m of disseminated to networked pyrrhotite with minor disseminated chalcopyrite.

• IRRD007 intersected a ~5m zone (198-203m) of disseminated, networked and narrow zones of massive pyrrhotite with traces of chalcopyrite. Network textured chalcopyrite and pentlandite were also identified at 228.5m over 15cm (visual logging + handheld XRF analysis).

• Sulphide intersections are validation for the intrusive Ni-Cu-PGE exploration model in this terrane. Desert Metals believes these to be the first ever intersections of magmatic massive sulphides anywhere in the Narryer camp.

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ASX RELEASE 4 MAY 2021

Figure 2

Drilling at the Innouendy project. Top LEFT [Plan view]: the location of the current [annotated in yellow ] and planned [annotated in grey ] drill holes targeting EM conductors. The modelled plates are shown in red . The trace of the holes that have been drilled are coloured black and the trace of the holes yet to be drilled are shown in green . Holes IRRD006 and IRRD007 are complete. Hole IRRD009 is in progress. Bottom LEFT : the same data [drill traces and EM plates] and colour scheme as above, this time looking WEST. CENTRE : the same data as above, this time with an oblique view looking to the north-west. The green arrow linking the collar of hole IRRD007 to the photos on the right is highlighting which hole the photos correspond to. RIGHT : Selected whole core photos from IRRD007. Top photo at 198.7m depth is network textured chalcopyrite. Middle photo at 228.5m is network textured chalcopyrite-pyrrhotite and probable pentlandite (based on nickel values in handheld XRF analysis). Bottom photo at 202.0m is 40com of massive pyrrhotite.

Desert Metals Limited (“Desert” or the “Company”) is pleased to announce encouraging results from the first two holes of its 13 hole drilling program. Magmatic sulphides have been intersected in mafic intrusive rock in the first of 2 targets at Innouendy.

In its initial drilling campaign, the Company has targeted six conductive plates at two prospects 20 km apart (two at Innouendy and four at Irrida Hill, see ASX release 12[th] April 2021). The Company had previously suggested that these conductors could be caused by massive sulphides associated with intrusive Ni-Cu-PGE deposits. Visual results from drill core confirm that the eastern plate at Innouendy is caused by disseminated to massive sulphides and not magnetite as hypothesised by previous explorers. It is believed to be the first significant intersection of intrusive magmatic massive sulphide anywhere in the Narryer, confirms the applicability of the exploration model, and upgrades the prospectivity of Desert’s entire license package over the North-western Craton margin (> 1600 sqkm).

Hole 1 (IRRD006) intersected an approximately 22m wide zone (162-184m) of disseminated to occasionally networked pyrrhotite with minor pyrite and traces of chalcopyrite hosted in a medium-coarse grained mafic intrusive (modelling predicted intersection to be at 190m).

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ASX RELEASE 4 MAY 2021

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Hole 2 (IRRD007) intersected had an approximately ~5m wide zone (198-203m) of disseminated, to networked and semi-massive pyrrhotite ( +/- pyrite, trace chalcopyrite), with one semi-massive zone at 202-202.4m (compared to the modelled EM conductor intersection at 213m). A smaller sulphide zone at 228.5m contains 10-20cm of network textured sulphides with chalcopyrite, pyrrhotite and pentlandite. Both sulphide zones are hosted in a mafic intrusive rock.

The two holes were designed to intersect the eastern of two conductive plates at Innouendy and one of six plates overall being targeted by the initial drilling campaign at Innouendy and Irrida Hill. This conductor had been targeted unsuccessfully by previous explorers with six historic drillholes. Down hole EM is being planned and the Company is awaiting assay results for Copper, Nickel, Cobalt and Platinum group elements from these drill holes before deciding what further work is needed to define any mineralisation in the eastern plate.

Drillhole INDD008 is currently at approximately 150m and designed to test the western Innouendy plate (Figure 2). This plate is modelled to be deeper, larger and more conductive than the eastern one. The drill hole is interpreted to intersect the plate at approximately 260-280m.

After testing both plates at Innouendy the drill rig will move 20km south to test the four conductive plates at Irrida Hill where RC pre-collars have been drilled.

A ground EM crew will be arriving on site in the second week of May to follow up on 6-12 anomalies identified from the Airborne survey flown in February. The helicopter EM crew will return in late May to fly the Company’s eastern licenses from which further conductors may be prioritised for ground follow up and drilling.

Managing Director Dr Rob Stuart commented “These visual results from our first ever drill holes are extremely encouraging. Several years ago the Company staked ground on the hypothesis that the Narryer Terrane was prospective for intrusive Ni-Cu-PGE deposits. The intersection of magmatic massive sulphides in intrusive rocks validates the exploration model and the Company’s methodology. While we are, of course, awaiting assays, these results have us excited about the potential for the rest of the winter work program, our drilling campaign and the Narryer Terrane in general.”

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www.desertmetals.com.au

ASX RELEASE 4 MAY 2021

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Authorised by the Board of Desert Metals Limited.

Rob Stuart Tony Worth Managing Director Director Phone: +61 (8) 9759 1333 Phone: +61 (8) 9759 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	•Full core samples have been analyzed by handheld XRF only. Field
techniques	specific specialised industry standard measurement tools appropriate	instrument is a Bruker S1 Titan portable XRF
	to the minerals under investigation, such as down hole gamma	•Samples are yet to be analyzed by laboratory analysis.
	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	•IRRD006 Reverse circulation pre-collar to 160m. NQ diamond drilling
techniques	blast, auger, Bangka, sonic, etc) and details (eg core diameter, triple	(47.6mm) to end of hole at 244.5m
	or standard tube, depth of diamond tails, face-sampling bit or other	•IRRD007 Reverse circulation pre-collar to 120m. NQ diamond drilling
	type, whether core is oriented and if so, by what method, etc).	(47.6mm) to end of hole at 271m
		•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/gainof 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 and percentage 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) and precision 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 E9/2330
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 done by other parties • Acknowledgment and appraisal of exploration by other parties. • • •	The tenement has had very limited published or open file exploration work for magmatic nickel-copper-sulphide type deposits. 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 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. •	Drillhole	Easting	Northing	Azimuth	Dip	Depth
	INDD006	461455	7159900	350	60	244.5
	INDD007	461465	7159850	350	60	271
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 assay results are reported
Relationship between mineralisation • These relationships are particularly important in the reporting of Exploration Results. • If the geometry of the mineralisation with respect to the drill hole •	No relationship between the drilling and target sulphide mineralisation has been determined to date. Any reported intervals are “down 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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