ECLIPSE METALS LIMITED. — Interim / Quarterly Report 2017

Oct 26, 2016

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www.eclipseuranium.com.au
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Quarterly Activities Report and Appendix 5B For the Quarter ending 30[th ] September 2016

HIGHLIGHTS

• Farm-in / Joint Venture (FIJV) agreement with Rio Tinto signed on 19 August 2016 over one of the Liverpool Uranium Project Tenements held by Eclipse Metals subsidiary North Minerals Pty Ltd.

• Rio Tinto may earn up to a 90% interest in the Liverpool tenements by staged expenditure of $5 million.

• Eclipse Metals / North Minerals may retain a 25% interest by contributing pro-rata to further costs after Rio Tinto has expended $3.5 million.

• Under the FIJV Rio Tinto holds a right of first refusal over all the Eclipse uranium prospective tenements in the Northern Territory

• Implementation of an advanced geophysical survey on the Mary Valley manganese project tenements has been contracted and is anticipated to be conducted this year.

LIVERPOOL URANIUM PROJECT

On 22 August 2016, Eclipse Metals Ltd executed a Farm-In / Joint Venture Agreement ( the Agreement ) with Rio Tinto Exploration Pty Ltd ( Rio Tinto ), a wholly owned subsidiary of Rio Tinto Limited. The Agreement is for Rio Tinto to acquire an interest in part of the Company’s Northern Territory Liverpool uranium Project tenements, in the world class Alligator Rivers uranium field on the Ranger fault line (Figure 1).

The Agreement also provides Rio Tinto with a right of first refusal over the Company’s other uranium prospective tenements in Northern Territory.

Terms of the Agreement

Under the Agreement, Rio Tinto has the right to farm into Exploration License Application 27584, containing the Devil’s Elbow prospect (refer to Figure 2 showing a map of the land area involved) and Rio Tinto can earn up to a 90% interest by incurring various levels of expenditure on the key terms outlined below:-

• Rio Tinto must spend a minimum of $250,000 on exploration from commencement and will separately fund costs associated with the Northern Land Council.

• If Rio Tinto completes $1.5 million sole-funded exploration within 3 years of execution of the Agreement they will earn an initial 65% joint venture interest (Stage 1).

• Following the acquisition of the initial 65% interest, Rio Tinto may elect to earn a 75% joint venture interest (Stage 2) in the prospect by committing to $2.0 million solefunded exploration expenditure within a further 3 year period.

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ECLIPSE METALS LIMITED

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• On Rio Tinto having satisfied its earn-in obligations to acquire a joint venture interest of 75%, Eclipse may elect to contribute to expenditure and maintain a 25% joint venture interest.

• In the event that Eclipse elects not to contribute, then Rio Tinto will sole fund a further $1.5 million expenditure within 2 years to earn a 90% joint venture interest (Stage 3).

• Upon Rio Tinto earning a 90% interest, Eclipse may elect to maintain a contributing 10% interest or sell its interest to Rio Tinto at Fair Market Value.

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Figure 1. Liverpool Project location map and Devil’s Elbow detail

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ECLIPSE METALS LIMITED

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Figure 2. E clipse Uranium Project Location Map in Northern Territory

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ECLIPSE METALS LIMITED

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Liverpool Project Background

The Liverpool Uranium project lies approximately 285km east of Darwin, hosted within the world class Alligator River Uranium Field. The Devil’s Elbow Prospect within ELA 27584, is situated approximately 24km east-southeast of Cameco’s Caramal Uranium resource; 41km southeast of the completed Nabarlek Uranium Mine, which produced 12,000 tonnes of uranium oxide in 1979, and some 68km east of the significant Ranger Uranium Mine operated by ERA since 1980.

The Ranger Mine lies on the Ranger Fault which passes through all the Eclipse Liverpool Project tenements.

In 1987 and 1989, Uranerz Australia Pty Ltd conducted regional uranium exploration within the central part of ELA 27584, targeting uranium unconformity type deposits. Uranerz discovered the Devil's Elbow uranium-gold-palladium prospect, located within ELA27584, during a regional radiometric survey. Samples from shallow trenching yielded high grade uranium assays including 3.2% U3O8, 3.7% U3O8, 4.40% U3O8 and 5.8% U3O8, with 38.1g/t Au and 28.02g/t Pd, related to fractures within altered amygdaloidal basalt of the Nungbalgarri Volcanics.

From 2006 to 2008, Cameco Australia Pty Ltd conducted regional uranium exploration within the current area of ELA 30165, targeting “unconformity style” uranium deposits, the nearby economic deposits at Ranger, Jabiluka, Koongarra and Nabarlek serving as exploration models. The gold, palladium and platinum-rich Coronation Hill-style deposits of the South Alligator Valley were also considered a valid exploration target.

Work carried out included general geological reconnaissance and a helicopter-supported surface sampling program targeting a number of illite and tourmaline alteration anomalies associated with a northeast-trending fault zone identified by an airborne Hyperspectral survey (Hymap) flown in 2006.

Workers identified two types of ore-related alteration haloes similar to Athabasca Basin (Canada) unconformity-style deposits with anomalous illite, chlorite, dravite and hematite alteration that are currently used in the exploration models in Northern Australia,. Interpretation of the HyMap data generated several anomalies for further investigation.

MARY VALLEY MANGANESE PROJECT

Subsequent to the end of the Quarter, the company accepted a proposal to conduct geophysical gravity and passive seismic surveys over three manganese deposits in its Mary Valley Project tenements in southeast Queensland. Results from these surveys will be used to assist with mapping and drilling of these manganese deposits. The surveys are expected to be conducted this year.

On completion of further geological evaluation and geophysical surveys, the Company is planning to conduct market research and bulk sample collection with a view to progressing development of a manganese mining operation.

The Company is maintaining its tenement holdings by cooperation with the Queensland Department of Natural Resources and Mines and Department of the Environment.

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ECLIPSE METALS LIMITED

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ECLIPSE METALS TENEMENT INTERESTS

Granted Tenements

Tenement	Project	Commodity	Status	State	Beneficial	Gratic
	Name				**Holder **	Blk
EL 24808	Bigrlyi	Uranium	Granted	NT	Eclipse Metals Ltd	27
EL 27567	MtWells	Gold, Base- metals	Granted	NT	Eclipse Metals Ltd	5
EPM 17672	Mary Valley	Manganese	Granted	Qld	Eclipse Metals Ltd	54
EPM 17938	Amamoor	Manganese	Granted	Qld	Eclipse Metals Ltd	4
EPM 25698	West Mary Valley	Manganese	Granted	Qld	Eclipse Metals Ltd	10

Tenement Applications

Tenement	Project	Commodity	Status	State	Beneficial	Gratic
	Name				Holder	Blk
ELA 24623	Eclipse	Uranium	Application	NT	Eclipse Metals Ltd	305
ELA 24624	Eclipse	Uranium	Application	NT	Eclipse Metals Ltd	476
ELA 24627	Eclipse	Uranium	Application	NT	Eclipse Metals Ltd	500
ELA 24861	Lake Mackay	Uranium	Application	NT	Eclipse Metals Ltd	50
ELA 25666	Mt Pozieres	Uranium	Application	NT	Eclipse Metals Ltd	229
ELA 26193	Liverpool 1	Uranium	Application	NT	Eclipse Metals Ltd	240
ELA 26244	Liverpool 2	Uranium	Application	NT	Eclipse Metals Ltd	50
ELA 26259	South Alligator 1	Uranium	Application	NT	Eclipse Metals Ltd	202
ELA 26260	South Alligator 2	Uranium	Application	NT	Eclipse Metals Ltd	274
ELA 26283	Mt Theo	Uranium	Application	NT	Eclipse Metals Ltd	260
ELA 26487	Yuendi	Copper, Uranium	Application	NT	Eclipse Metals Ltd	320
ELA 27130	FlyingFox	Uranium	Application	NT	Eclipse Metals Ltd	482
ELA 27549	Liverpool 3	Uranium	Application	NT	Eclipse Metals Ltd	51
ELA 27584	Devil’s Elbow	Uranium	Application	NT	Eclipse Metals Ltd	30
ELA 27703	Gumadeer	Uranium	Application	NT	Eclipse Metals Ltd	3
ELA 31065	Liverpool 4	Uranium	Application	NT	Eclipse Metals Ltd	68

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Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report

+Rule 5.5

Appendix 5B

Mining exploration entity and oil and gas exploration entity quarterly report

Introduced 01/07/96 Origin Appendix 8 Amended 01/07/97, 01/07/98, 30/09/01, 01/06/10, 17/12/10, 01/05/13, 01/09/16

Name of entity

ECLIPSE METALS LIMITED

ABN

85 142 366 541

Quarter ended (“current quarter”)

SEPTEMBER 2016

Consolidated statement of cash flows	Current quarter $A’000	Year to date (3 months) $A’000
1. Cash flows from operating activities 1.1 Receipts from customers 1.2 Payments for (a) exploration & evaluation (b) development (c) production (d) staff costs (e) administration and corporate costs 1.3 Dividends received (see note 3) 1.4 Interest received 1.5 Interest and other costs of finance paid 1.6 Income taxes paid 1.7 Research and development refunds 1.8 Other (BAS Refund) 1.9 Net cash from / (used in) operating activities	(32) - - - (76) - 1 - - - 8	(32) - - - (76) - 1 - - - 8
	(99)	(99)

2. Cash flows from investing activities

• 2.1 Payments to acquire:

(a)	property, plant and equipment
(b)	tenements (see item 10)	-	-
(c)	investments	-	-
(d)	other non-current assets	-	-

• See chapter 19 for defined terms

1 September 2016

Page 1

Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report

Consolidated statement of cash flows	Current quarter $A’000	Year to date (3 months) $A’000
2.2 Proceeds from the disposal of: (a) property, plant and equipment (b) tenements (see item 10) (c) investments (d) other non-current assets 2.3 Cash flows from loans to other entities 2.4 Dividends received (see note 3) 2.5 Other (provide details if material) 2.6 Net cash from / (used in) investing activities	- - - - - -	- - - - - -
	-	-
3. Cash flows from financing activities 3.1 Proceeds from issues of shares 3.2 Proceeds from convertible notes 3.3 Proceeds from exercise of share options 3.4 Transaction costs related to issues of shares, convertible notes or options 3.5 Proceeds from borrowings 3.6 Repayment of borrowings 3.7 Transaction costs related to loans and borrowings 3.8 Dividends paid 3.9 Other (provide details if material) 3.10 Net cash from / (used in) financing activities	96 - - (2) 120 - - - -	96 - - (2) 120 - - - -
	214	214
4. Net increase / (decrease) in cash and cash equivalents for the period 4.1 Cash and cash equivalents at beginning of period 4.2 Net cash from / (used in) operating activities (item 1.9 above) 4.3 Net cash from / (used in) investing activities (item 2.6 above) 4.4 Net cash from / (used in) financing activities (item 3.10 above) 4.5 Effect of movement in exchange rates on cash held 4.6 Cash and cash equivalents at end of period	431 (99) - 214 -	431 (99) - 214 -
	546	546

• See chapter 19 for defined terms 1 September 2016

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Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report

5. Reconciliation of cash and cash equivalents at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts	Current quarter $A’000	Previous quarter $A’000
5.1 Bank balances 5.2 Call deposits 5.3 Bank overdrafts 5.4 Other (provide details) 5.5 Cash and cash equivalents at end of quarter (should equal item 4.6 above)	546 - - -	431 - - -
	546	431

6.	Payments to directors of the entity and their associates	Current quarter
		$A'000
6.1	Aggregate amount of payments to these parties included in item 1.2	24
6.2	Aggregate amount of cash flow from loans to these parties included	-
	in item 2.3
6.3	Include below any explanation necessary to understand the transactions included in
	items 6.1 and 6.2

Director fees

7.	Payments to related entities of the entity and their	Current quarter
	associates	$A'000
7.1	Aggregate amount of payments to these parties included in item 1.2	-
7.2	Aggregate amount of cash flow from loans to these parties included	-
	in item 2.3
7.3	Include below any explanation necessary to understand the transactions included in
	items 7.1 and 7.2

• See chapter 19 for defined terms 1 September 2016

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Appendix 5B

Mining exploration entity and oil and gas exploration entity quarterly report

8. Financing facilities available Add notes as necessary for an understanding of the position 8.1 Loan facilities 8.2 Credit standby arrangements 8.3 Other (please specify)	Total facility amount at quarter end $A’000	Amount drawn at quarter end $A’000
	-	-
	-	-
	-	-

• 8.4 Include below a description of each facility above, including the lender, interest rate and whether it is secured or unsecured. If any additional facilities have been entered into or are proposed to be entered into after quarter end, include details of those facilities as well.

9. Estimated cash outflows for next quarter	$A’000
9.1 Exploration and evaluation 9.2 Development 9.3 Production 9.4 Staff costs 9.5 Administration and corporate costs 9.6 Other (provide details if material) 9.7 Total estimated cash outflows	80 - - - 75
	155

10. Changes in tenements (items 2.1(b) and 2.2(b) above)	Tenement reference and location	Nature of interest	Interest at beginning of quarter	Interest at end of quarter
10.1 Interests in mining tenements and petroleum tenements lapsed, relinquished or reduced
10.2 Interests in mining tenements and petroleum tenements acquired or increased

• See chapter 19 for defined terms 1 September 2016

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Appendix 5B

Mining exploration entity and oil and gas exploration entity quarterly report

Compliance statement

• 1 This statement has been prepared in accordance with accounting standards and policies which comply with Listing Rule 19.11A.

• 2 This statement gives a true and fair view of the matters disclosed.

Sign here:

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Date: 26 October 2016

............................................................ Carl Popal Executive Chairman

Notes

1. The quarterly report provides a basis for informing the market how the entity’s activities have been financed for the past quarter and the effect on its cash position. An entity that wishes to disclose additional information is encouraged to do so, in a note or notes included in or attached to this report.

2. If this quarterly report has been prepared in accordance with Australian Accounting Standards, the definitions in, and provisions of, AASB 6: Exploration for and Evaluation of Mineral Resources and AASB 107: Statement of Cash Flows apply to this report. If this quarterly report has been prepared in accordance with other accounting standards agreed by ASX pursuant to Listing Rule 19.11A, the corresponding equivalent standards apply to this report.

3. Dividends received may be classified either as cash flows from operating activities or cash flows from investing activities, depending on the accounting policy of the entity.

4. See chapter 19 for defined terms 1 September 2016

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