ENCOUNTER RESOURCES LIMITED — Capital/Financing Update 2023

Sep 26, 2023

ASX Announcement 27 September 2023

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Copper sulphides in first drilling at Jessica IOCG Project (NT)

• The first two drill holes completed at the Zeta target (“Zeta”), drilled 1.3km apart, at the Jessica Copper Project (“Jessica”) provide support for the targeted IOCG deposit model

• Zeta is a coincident gravity and magnetic anomaly associated with a discrete seismic reflector. Encouragingly, the first drilling has intersected a number of key IOCG indicators including:

• Chalcopyrite/bornite in thin quartz-carbonate veins;

• Intense and pervasive red rock hematite alteration; and

• Bimodal felsic volcanic-basalt sequences (indicating a major, long lived structure).

• These were bold, conceptual drill holes in a new area which have highlighted the IOCG prospectivity of this region

• Geophysical techniques are being evaluated to vector into the best parts of the mineral system at Zeta

• Jessica is being explored under a farm-in agreement with South32

Encounter Resources Ltd (“Encounter”) is pleased to announce that the first drilling at Jessica (South32 farm-in) in the NT has intersected copper mineralisation in an IOCG setting at Zeta.

Commenting on the first drilling at Zeta, Encounter Managing Director Will Robinson said: “South32, our farm-in partner at Jessica, has informed us that observations from the first drill holes at the Zeta target have provided encouragement for the targeted IOCG copper model. In a previously unexplored region of the NT, both holes drilled have intersected red-rock hematite alteration together with copper sulphides contained in quartz–carbonate veins. The 6,500m diamond drill program at Jessica/Carrara is ongoing with drilling to continue through to November 2023.”

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Photo 1 – Z23DD002 – Chalcopyrite in quartz-carbonate veins (3.2m estimated 0.25% chalcopyrite from 664.55m)
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Photo 2 – Z23DD001 – Bornite-chalcopyrite in chlorite quartz–carbonate vein ~457.3m

Encounter Resources Limited Suite 2, 1 Alvan St Subiaco WA 6008

P +61 8 9486 9455 E contact@enrl.com.au www.enrl.com.au

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CAUTIONARY STATEMENT ON VISUAL ESTIMATES OF MINERALISATION

References in this announcement to visual results are from diamond drilling at the Zeta target at Jessica. Copper sulphide mineralisation (Z23DD001 & Z23DD002) consisted of chalcopyrite + bornite in thin (2-7mm) quartz–carbonate veins.

Visual estimates of mineral abundance should never be considered a proxy or substitute for laboratory analyses where concentrations or grades are the factor of principal economic interest. Visual estimates also potentially provide no information regarding impurities or deleterious physical properties relevant to valuations. It is intended to cut and sample the core with assay results expected in the December 2023 quarter.

Background

Jessica covers ~10,300km[2] along key structural corridors east of Tennant Creek and is prospective for sediment-hosted copper and IOCG style deposits (Figure 1).

Reprocessing of seismic data that extends through Jessica was completed by HiSeis, to provide greater detail of the geology and structure in the upper 1,000m. A 2km spaced gravity survey was also completed with 1km spaced gravity infill data collected over a series of high priority magnetic targets.

The seismic reprocessing and gravity surveys have identified a series of targets for drilling including the Zeta IOCG target (“Zeta”). Zeta is a significant and discrete gravity feature coincident with a prominent magnetic feature on the margin of a large interpreted intrusive body (Figures 2, 3 & 4). In addition, there is a discrete seismic reflector immediately underlying Zeta (Figure 5) (ASX announcement 28 October 2022).

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Figure 1 – Jessica and Carrara project location plan over Bouguer gravity

Diamond Drilling at the Zeta IOCG Target

Two diamond drill holes have been completed at the Zeta target (Z23DD001 & Z23DD002). Z23DD002 drilled through the Georgina formation before intersecting basement at 448.2m. Proterozoic rocks below this depth consisted of a strongly red rock (hematite dusted k feldspar) (Photo 3) altered felsic – intermediate porphyritic volcanic rock down to 578m. The red rock alteration becomes more variable beyond this depth until a mafic volcanic (basalt) was intersected at 662.75m depth.

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Quartz carbonate veining containing chalcopyrite was intersected from 664.55m – ~667.75m depth. The chalcopyrite is fine to medium grained occurring as isolated grains within thin (2mm – 7mm) carbonate veins. Trace chalcopyrite was observed in veins beyond this interval until ~750m. Minor chlorite & epidote alteration was associated with the mineralised veins. The hole terminated in basalt at 796m.

Z23DD001 drilled through Georgina Basin sediments until basement was intersected at 413.7m depth. Basement rocks below this depth consisted of dolerite and basalt with hematite alteration associated with late quartz carbonate veins. Minor chalcopyrite and bornite was observed in these quartz – carbonate veins between 456.4m – 458m. The hole was terminated in dolerite at 700.1m depth.

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Figures 2 & 3 – Jessica Project – Zeta IOCG target. Gravity (1VD) (left) and Magnetics (RTP) (right), location of GA seismic lines shown in red

Next Steps

The red rock alteration and copper mineralisation in Z23DD002, in addition to the mineralised veins containing chalcopyrite + bornite, intersected within similar geology in Z23DD001 represent an encouraging start to exploration at Jessica.

Assay results from the holes are expected in the December 2023 quarter. Geophysical techniques are being evaluated to vector into the best parts of the Zeta mineral system.

The 6,500m diamond drill program at Jessica/Carrara is ongoing through to November 2023.

Figure 4 – Zeta IOCG target – gravity image draped on TMI RTP Magnetics

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Figure 5 - Jessica Project – Zeta IOCG Target – Seismic cross section (inset)

Hole_ID	Hole_Type	MGA_Grid_ID	MGA_East	MGA_North	MGA_RL	Azimuth	Dip	EOH Depth
Z23DD001	DDH	GDA94 Z53	586970	7979746	238	180	-90	700.1m
Z23DD002	DDH	GDA94 Z53	586199	7978736	236	180	-90	796m

Table 1: Collar locations and drill hole information of completed diamond holes at Zeta

Hole_ID Thickness (m) From (m) Bornite Estimate (%) Chalcopyrite Estimate (%)	Hole_ID Thickness (m) From (m) Bornite Estimate (%) Chalcopyrite Estimate (%)
Z23DD001 1.6m 456.4m 0.1 0.1
Z23DD002	3.2 664.55 0 0.25
including	1.15 664.55 0 0.5

Table 2: Diamond drill hole copper sulphide intersections at Zeta

The information in this report that relates to Exploration Results is based on information compiled by Mr Danny Huisman who is a Member of the Australian Institute of Geoscientists. Mr Huisman is a full time employee of South32 Ltd and has sufficient experience which is relevant to the style of mineralisation under consideration to qualify as a Competent Person as defined in the 2012 Edition of the 'Australian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Mr Huisman consents to the inclusion in the report of the matters based on the information compiled by him, in the form and context in which it appears.

The Company confirms that it is not aware of any new information or data that materially affects the information in the relevant ASX releases and the form and context of the announcement has not materially changed. The Company confirms that the form and context in which the Competent Persons findings are presented have not been materially modified from the original market announcements.

This announcement has been approved for release by the Board of Encounter Resources Limited.

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Photo 3 – Z23DD002 - Red-rock altered felsic volcanic ~467m

Farm-in and Joint Venture Agreement – Key Terms

The key terms for the farm-in and joint venture agreement include:

• South32 has the right to earn a 60% interest in Jessica (the “Initial Interest”) by sole funding $15 million of exploration expenditure within 10 years.

• During the farm-in phase or joint venture period, South32 may earn an additional 15% interest in Jessica (the “Further Interest”) by completing a Scoping Study.

• Upon South32 earning the Initial Interest or Further Interest in Jessica, a 60:40 or 75:25 joint venture will be formed and in the case of South32 earning the Further Interest, the parties must contribute funds based on their pro-rata interest or dilute according to a standard dilution formula. Should a party’s interest dilute to below 10%, that party’s interest automatically converts to a net smelter return royalty.

• During the farm-in phase, South32 is the Manager of the project.

During the farm-in phase, a technical committee comprising representatives from each of Encounter and South32 review and approve annual exploration programs and budgets. All decisions of the technical committee are decided by majority vote, with South32 having the casting vote.

Scoping Study means an order of magnitude technical and economic study of the potential viability of JORC Mineral Resources for the project.

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About Encounter

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Encounter is one of Australia’s leading mineral exploration companies listed on the ASX. Encounter’s primary focus is on discovering major copper dominant deposits in Australia.

Encounter controls a large portfolio of 100% owned projects in Australia’s most exciting mineral provinces that are prospective for copper and critical minerals. Complementing this, Encounter has numerous large scale copper projects being advanced in partnership and funded through farm-in agreements with leading miners: BHP, South32 and IGO. Encounter’s assets include:

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Will Robinson Managing Director +61 8 9486 9455 contact@enrl.com.au

Michael Vaughan Fivemark Partners +61 422 602 720 michael.vaughan@fivemark.com.au

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SECTION 1 SAMPLING TECHNIQUES AND DATA

	SECTION 1 SAMPLING TECHNIQUES AND DATA
Criteria	JORC Code explanation Commentary
Sampling techniques	Nature and quality of sampling (e.g. 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. Diamond drilling was completed by South32 at the Zeta target within the Jessica project in the Northern Territory. A two hole program was completed to test a semi-coincident magnetic and gravity anomalies defined in regional aeromagnetics and gravity surveys.
	Include reference to measures taken to ensure sample representivity and the appropriate calibration of any measurement tools or systems used Drill hole collar location was recorded by handheld GPS, which has an estimated accuracy of +/- 5m.
	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 (e.g. ‘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 (e.g. submarine nodules) may warrant disclosure of detailed information Not applicable as the diamond drill core has not been sampled
Drilling techniques	Drill type (e.g. core, reverse circulation, open-hole hammer, rotary air blast, auger, Bangka, sonic, etc) and details (e.g. 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 used to a depth of 700.1m & 796m for Z23DD001 & Z23DD002 respectively. Cambrian sequences were drilled using HQ2 and the basement rocks were drilled NQ2
Drill sample recovery	Method of recording and assessing core and chip sample recoveries and results assessed Sections of lost core were minimal and were noted by the diamond drillers.
	Measures taken to maximise sample recovery and ensure representative nature of the samples HQ/NQ diamond drilled with core recovery +95%.
	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. Not applicable as the diamond drill core has not been sampled

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Criteria	JORC Code explanation Commentary
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. Not applicable as the diamond drill core has not been logged in detail
	Whether logging is qualitative or quantitative in nature. Core (or costean, channel, etc) photography. Not applicable as the diamond drill core has not been logged in detail
	The total length and percentage of the relevant intersections logged Not applicable as the diamond drill core has not been sampled
Sub-sampling techniques and sample preparation	If core, whether cut or sawn and whether quarter, half or all core taken. Not applicable as the diamond drill core has not been cut
	If non-core, whether riffled, tube sampled, rotary split, etc and whether sampled wet or dry. Not applicable as all drilling was core drilling
	For all sample types, the nature, quality and appropriateness of the sample preparation technique. Not applicable as the diamond drill core has not been sampled
	Quality control procedures adopted for all sub- sampling stages to maximise representivity of samples. Not applicable as the diamond drill core has not been sampled
	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. Not applicable as the diamond drill core has not been sampled
	Whether sample sizes are appropriate to the grain size of the material being sampled. Not applicable as the diamond drill core has not been sampled
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. Not applicable as the diamond drill core has not been analysed
	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. Not applicable as no analytical results have been reported
	Nature of quality control procedures adopted (e.g. standards, blanks, duplicates, external laboratory checks) and whether acceptable levels of accuracy (i.e. lack of bias) and precision have been established. Not applicable as the diamond drill core has not been sampled

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Criteria	JORC Code explanation Commentary
Verification of sampling and assaying	The verification of significant intersections by either independent or alternative company personnel. Not applicable as the diamond drill core has not been analysed
	The use of twinned holes. No twinned holes have been drilled.
	Documentation of primary data, data entry procedures, data verification, data storage (physical and electronic) protocols. Not applicable as the diamond drill core has not been logged in detail
	Discuss any adjustment to assay data. No adjustments, no assay data
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. Drill hole collar locations are determined using a handheld GPS. Down hole surveys were collected during this drilling program at approx. 30m intervals downhole.
	Specification of the grid system used. The grid system used is MGA_GDA94, zone 53.
	Quality and adequacy of topographic control. Estimated RLs were assigned during drilling using hand held GPS
Data spacing and distribution	Data spacing for reporting of Exploration Results. A two diamond drill holes were completed spaced 1280m apart
	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. Not applicable as the diamond drill core has not been analysed
	Whether sample compositing has been applied. Not applicable as the diamond drill core has not been sampled
Orientation of data in relation to geological structure	Whether the orientation of sampling achieves unbiased sampling of possible structures and the extent to which this is known, considering the deposit type. Not applicable as the diamond drill core has not been sampled
	If the relationship between the drilling orientation and the orientation of key mineralised structures is considered to have introduced a sampling bias, this should be assessed and reported if material. Not applicable as the diamond drill core has not been sampled
Sample security	The measures taken to ensure sample security. Not applicable as the diamond drill core has not been sampled
Audits or reviews	The results of any audits or reviews of sampling techniques and data. Not applicable as the diamond drill core has not been sampled

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SECTION 2 REPORTING OF EXPLORATION RESULTS

	SECTION 2 REPORTING OF EXPLORATION RESULTS
Criteria	JORC Code explanation Commentary
Mineral tenement and land tenure status	Type, reference name/number, location and ownership including agreements or material issues with third parties including joint ventures, partnerships, overriding royalties, native title interests, historical sites, wilderness or national park and environmental settings. The Zeta target is located within the tenement EL32386. This tenement is contained within the Brunette Downs pastoral property. Native title rights are held by the Karrkarrkuwaja Group, the Mangurinji Group & Kujuluwa Group. No historical or environmentally sensitive sites have been identified in the area of work.
Exploration done by other parties	Acknowledgment and appraisal of exploration by other parties. No previous exploration has been conducted on the tenement other than government precompetitive data.
Geology	Deposit type, geological setting and style of mineralisation Jessica covers key structural corridors east of Tennant Creek and is prospective for sediment-hosted copper and IOCG style deposits.
Drill hole information	A summary of all information material to the understanding of the exploration results including tabulation of the following information for all Material drill holes: • Easting and northing of the drill hole collar • Elevation or RL (Reduced Level – elevation above sea level in meters) of the drill hole collar • Dip and azimuth of the hole • Down hole length and interception depth • Hole length Refer to tabulations in the body of this announcement.
Data aggregation methods	In reporting Exploration Results, weighting averaging techniques, maximum and/or minimum grade truncations (e.g. cutting of high grades) and cut-off grades are usually Material and should be stated. Not applicable as the diamond drill core has not been analysed
	Where aggregated 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. Not applicable as the diamond drill core has not been analysed
	The assumptions used for any reporting of metal equivalent values should be clearly stated. No metal equivalents have been reported in this announcement.

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Criteria	JORC Code explanation	Commentary
Relationship	These relationships are particularly important in the
between	reporting of exploration results.
mineralisation	If the geometry of the mineralisation with respect to
widths and	the drill hole angle is known, its nature should be	Not applicable no mineralisation has been reported and
intercept lengths	reported. If it is not known and only the down hole	the geology is poorly understood in this region
	lengths are reported, there should be a clear
	statement to this effect (e.g. ‘down hole length, true
	width not known’).
Diagrams	Appropriate maps and sections (with scales) and
	tabulations of intercepts should be included for any
	significant discovery being reported. These should include, but not be limited to a plane view of drill	Not applicable as no results are being reported
	hole collar locations and appropriate sectional
	views.
Balanced	Where comprehensive reporting of all Exploration
Reporting	Results is not practical, representative reporting of
	both low and high grades and/or widths should be	Not applicable as no results are being reported
	practiced to avoid misleading reporting of
	Exploration Results.
Other	Other exploration data, if meaningful and material,
substantive	should be reported including (but not limited to):
exploration data	geological observation; geophysical survey results;
	geochemical survey results; bulk samples – size	All meaningful and material information has been
	and method of treatment; metallurgical test results;	included in the body of the text.
	bulk density, groundwater, geotechnical and rock
	characteristics; potential deleterious or
	contaminating substances.
	The nature and scale of planned further work (e.g.
	tests for lateral extensions or depth extensions or
Further Work	large – scale step – out drilling). Diagrams clearly highlighting the areas of possible extensions, including the main geological	Geophysical techniques are being evaluated to vector in to the best parts of the Zeta mineral system.
	interpretations and future drilling areas, provided
	this information is not commercially sensitive.

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