FENIX RESOURCES LTD — Interim / Quarterly Report 2020

Oct 9, 2019

==> picture [595 x 93] intentionally omitted <==

10 October 2019

QUARTERLY ACTIVITIES REPORT

FOR THE PERIOD ENDED 30 SEPTEMBER 2019

Highlights

• Significant Upgrade to Iron Ridge Mineral Resource:

• Total Mineral Resource at Iron Ridge increased to 10.5Mt @ 64.2% Fe

• Significant increase in overall Resource confidence, with the Indicated Mineral Resource increasing by 51% to 10.0Mt @ 64.3% Fe

• The upgraded Mineral Resource has been incorporated into the detailed mine design and schedule

• The Feasibility Study for Iron Ridge is progressing well, and remains on schedule for delivery in October 2019

• New High‐Grade Iron Ore assays received at the Iron Ridge Project including:

  • 54.5m @ 66.2% Fe from 106.0m in hole IR1902

  • 40.4m @ 65.5% Fe from 67.0m in hole IR1907

  • 61.6m @ 64.9% Fe from 20.0m in hole IR1906

  • 51.0m @ 62.7% Fe from 46.0m in hole IR1901

  • 54.4m @ 61.4% Fe from 13.0m in hole IR1903

  • 51.7m @ 64.8% Fe from 52.6m in hole IR1904

  • 63.45m @ 63.2% Fe from 29.3m in hole IR1905

• Continued high‐grade Fe intercepts accompanied by low impurity levels of SiO2, Al2O3 & P with the grade of the intercepts generally higher in Fe and lower in Al2O3

• Positive results from CSIRO evaluation of the sintering characteristics of an Iron Ridge Fines Composite Ore Sample

• Fenix is well funded with cash of $2.8 million at the end of the September 2019 quarter ($4.3 million as at 30 June 2019)

Page 1 of 9

==> picture [109 x 43] intentionally omitted <==

Western Australian developer and explorer Fenix Resources Limited (ASX: FEX, “ Fenix ” or the “ Company ”) is pleased to report on its activities for the September 2019 quarter.

Iron Ridge Mineral Resource Upgrade

During the quarter Fenix advised that the results from its most recent drilling program at its 100% owned Iron Ridge DSO hematite project (“ Iron Ridge ” or the “ Project ”) in the Mid‐West region of Western Australia had been incorporated into a mineral resource upgrade.

Fenix delivered a significant increase in overall Resource confidence, with the Indicated Mineral Resource increasing by 51% to 10.0Mt at 64.3% Fe, 3.2% SiO2, 2.6% Al2O3 and 0.05% P (from previous estimate of 6.6Mt at 64.5% Fe, 3.1% SiO2, 2.5% Al2O3 and 0.04% P).

The Mineral Resource is categorised into Indicated and Inferred Mineral Resources as shown in Table 1.

Classification	Tonnes Fe Al2O3 LOI P SiO2 TiO2
	Mt % % % % % %
Indicated	10.0 64.3 2.56 1.90 0.046 3.21 0.09
Inferred	0.5 62.5 2.80 3.13 0.046 4.41 0.12
Total	10.5 64.2 2.57 1.96 0.046 3.26 0.09

Table 1 : Iron Ridge Mineral Resource Estimate reported above a 58% Fe cut‐off grade

Additionally, the Mineral Resource estimate was further categorised depending on stratigraphy, with the Main BIF being the thicker, higher‐grade iron mineralised unit as shown in Table 2.

	Water table	Class.	Tonnes	Fe	Al2O3	LOI	P	SiO2	TiO2
			Mt	%	%	%	%	%	%
BIF 1 (Main BIF)	Above	Indicated	2.7	62.7	3.63	2.10	0.06	4.21	0.09
		Inferred	0.3	64.2	2.70	1.29	0.04	3.88	0.13
		Subtotal	3	62.8	3.54	2.02	0.06	4.18	0.09
	Below	Indicated	6.2	65.8	1.95	1.19	0.04	2.45	0.09
		Inferred	0.01	65.6	1.91	1.10	0.03	2.93	0.09
		Sub Total	6.2	65.8	1.95	1.19	0.04	2.46	0.09
	Subtotal		9.2	64.9	2.46	1.46	0.04	3.01	0.09
BIF 2 (Little BIF)	Above	Indicated	0.5	60.2	3.48	5.21	0.08	4.72	0.09
	Below	Indicated	0.7	59.9	3.34	5.42	0.08	5.10	0.07
		Inferred	0.2	59.2	3.07	6.64	0.07	5.52	0.09
		Subtotal	0.8	59.8	3.29	5.67	0.07	5.19	0.08
	Subtotal		1.3	59.9	3.35	5.50	0.07	5.02	0.08
Grand Total			10.5	64.2	2.57	1.96	0.05	3.26	0.09

Table 2 : Iron Ridge Mineral Resource Estimate above a 58% cut‐off, broken down by stratigraphic unit

Page 2 of 9

==> picture [109 x 43] intentionally omitted <==

==> picture [482 x 428] intentionally omitted <==

Figure 1: Local Grid Cross‐Section looking East, 20m +‐ window

The Mineral Resource was reported above a cut‐off grade of 58% Fe. This was selected based on economic factors and the grade ‐ tonnage curve (see Figure 2 below) which indicated that 58% was most appropriate for reporting a premium, high‐iron grade product.

Page 3 of 9

==> picture [109 x 43] intentionally omitted <==

==> picture [499 x 205] intentionally omitted <==

==> picture [499 x 103] intentionally omitted <==

Figure 2: Grade ‐ Tonnage Curves of the Iron Ridge total Mineral Resource at varying cut‐off grades, highlighting the Mineral Resource at 58% Fe cut‐off

More High‐Grade Iron Ore Hits

During the quarter Fenix advised it had received all assay results from its most recent drilling program at the Project which was completed in July. The diamond drilling program had a dual focus, drilling seven resource definition holes into the shallow part of the Inferred Mineral Resource (estimated in March 2019) and three holes for geotechnical test work.

In addition to the diamond drilling, five reverse circulation (RC) water monitoring bores were drilled, three of which were sampled as they intersected the BIF units. Water bore drilling techniques differ slightly from resource definition RC techniques with a higher potential for contamination; however, the indicative results are consistent with the previously completed mineral resource focused drilling (both diamond and RC). Based on field inspection, the results reported in the opinion of the Competent Person do not pose any material risk. Significant results from the water bore drilling include:

• 166.5m @ 65.4% Fe from 4m in hole IRMB‐D2

• 90m @ 62.7% Fe from 20m in hole IRMB‐E

• 104m @ 61.9% Fe from 6m in hole IRMB‐C

Interpretation of the assay results in the vicinity of the Mineral Resource have confirmed the previous high grade hematite zone results (average 64 to 67% Fe) in the Main BIF unit and the lower grade (57 to 63% Fe) Little BIF unit to the south . The focus of the drill program was the near surface Inferred Mineral Resource area

Page 4 of 9

==> picture [109 x 43] intentionally omitted <==

in the Main BIF, targeting its high iron grades and low level of deleterious elements. The drill program was designed to improve the confidence level of the Mineral Resource to the Indicated category in the near surface area at the western end of the deposit.

==> picture [497 x 294] intentionally omitted <==

Figure 3: Long Section showing the recent drilling and the previous March 2019 MRE classification.

Table 3: Assay Results received from drilling during the quarter

Drill Hole ID	Tenement	Hole Type	Results Status	Unit
IR1901	M20/118	Diamond	51m@ 62.7% Fe from 46m	Main BIF
IR1902	M20/118	Diamond	28m@ 58.5% Fe from 6m	Little BIF
IR1902	M20/118	Diamond	54.5m@ 66.2% Fe from 106m	Main BIF
IR1903	M20/118	Diamond	54.4m@ 61.4% Fe from 13m	Main BIF
IR1904	M20/118	Diamond	51.7m@ 64.8% Fe from 52.6m	Main BIF
IR1905	M20/118	Diamond	63.45m@ 63.2% Fe from 29.3m	Main BIF
IR1906	M20/118	Diamond	61.6m@ 64.9% Fe from 20m	Main BIF
IR1907	M20/118	Diamond	40.4m@ 65.5% Fe from 67m	Main BIF
IRMB‐E	M20/118	Water Bore	90m@ 62.7% Fe from 20m	Main BIF
IRMB‐C	M20/118	Water Bore	104m@ 61.9% Fe from 6m	Little BIF
IRMB‐D2	M20/118	Water Bore	166.5m@ 65.4% Fe from 4m	Main BIF

Page 5 of 9

==> picture [109 x 43] intentionally omitted <==

Positive Results from CSIRO Metallurgical Testing

During the quarter Fenix announced positive results from metallurgical studies conducted at the Iron Ridge DSO hematite project. The Commonwealth Scientific and Industrial Research Organisation (“ CSIRO ”) has developed a laboratory test methodology that allows the relative sintering properties of fine ores and concentrates to be determined.

CSIRO were sent a composite fines sample from equal mass proportions from drill holes IR003, IR004 and IR005. The headgrade of the composite sample was 64.15% Fe, 3.57% SiO2, 2.48% Al2O3 and 0.053% P. Representative polished sections of the composite fines were prepared from sized fractions for microscopic characterisation of the ore mineralogy and texture.

Additionally, laboratory‐scale sintering tests were carried out on the composite fines sample. The composite fines were substituted in a typical Japanese Steel Mill (“ JSM ”) blend at the following six levels: 0, 10, 20, 30, 40 and 100%. Blends were fluxed to a basicity of 1.8 and silica level of 5.0% (on a whole blend basis) and fired in a laboratory under controlled conditions of temperature, gas atmosphere and time that simulate the actual sintering process. CSIRO sintering test methodology is universally well regarded.

The tests have returned positive results on both the ore characterisation and sintering characteristics as summarised below.

Ore Characterisation

The Iron Ridge composite fines were classified as high‐grade (>64% Fe), with moderate alumina (2.48%), and low silica (3.57%), total LOI (1.68%) and phosphorous (0.05%) contents. In terms of sizing, the majority of the sample fell within the ‐4+0.5 mm range, with little material in the ‐0.25+0.038 mm range and relatively few coarse +4 mm particles.

The ore was dominated by friable to moderately microporous, fine‐ to very fine‐grained microplaty hematite textures, with minor goethite and kaolinitic shale content, increasing slightly with decreasing size fraction and with significant concentration of alumina in the ‐0.038 mm ultrafines.

Sintering Characteristics

Laboratory sintering tests were carried out to evaluate the performance of the ‐1 mm matrix‐forming component of the ore then substituted in a simulated customer blend, as well as the reactivity of the coarse, ore nucleus‐forming fraction.

The Iron Ridge composite fines proved to be highly compatible with the simulated JSM customer blend, with all blends achieving high strength, well above the target value, over a relatively wide temperature range. The 20% Iron Ridge blend produced the best result, with improved characteristics relative to the JSM blend.

In terms of overall characteristics, the Iron Ridge composite fines were closest to a high‐grade Brockman fine ore product, albeit with atypically fine‐grained microplaty hematite textures. The Iron Ridge fines also showed some mineralogical/textural similarly to Vale’s Carajas fines, although with lower silica and higher alumina content.

The high reactivity and excellent sinter matrix strength of the fines suggest good blending compatibility with other fine ores contributing stable, coarse ore nuclei, at immediate fuel rates.

Page 6 of 9

==> picture [109 x 43] intentionally omitted <==

Mining Costs Being Assessed

Pit planning and metallurgical work is essentially complete and mining and environmental approvals are currently being undertaken.

During the quarter, Request for Proposal (“ RFP ”) documents were issued to selected mining services companies and a site visit was conducted in early August. This RFP included a detailed mine design and mine schedule. It relates to the whole‐of‐mine services, from proposed pit to dual product stockpile of iron ore fines and lump at the mine.

Proposals were received from four proponents and the Company has analysed the data and is currently engaged with preferred services provider with a view to selecting a preferred contractor in the near term.

Port, Licencing & Approvals

Negotiations are well advanced with Mid‐West Port Authority at Geraldton (“ Geraldton Port ”) where export capacity is available. Discussions are continuing with the Geraldton Port on securing a commercial arrangement for the storage, handling and ship loading of iron ore products.

Offtake Arrangements

Discussions are advancing with potential offtake and financing partners. Subject to ongoing review and the determination by the Board that it is in the best interest of shareholders, Fenix has established a strategy to leverage the offtake of its planned high‐grade iron ore products to obtain a financing solution for initial project capital expenditure and product inventory build.

Next Steps

Following the finalisation of the updated Mineral Resource Estimate and geotechnical drilling program, the Company is in the process of finalising the Iron Ridge feasibility study. The Iron Ridge Iron Ore Project is a premium DSO deposit which hosts a JORC 2012 compliant resource located around 490km by road from Geraldton port, with all but the last 2km on public roads that are predominantly bitumised.

The Feasibility Study, which is being conducted internally using reputable and highly experienced consultants, is on track for delivery in October 2019. The cost estimates for the Feasibility Study have a high degree of accuracy being based on prices received from the Mining RFP submissions, as well as prices derived from the detailed trucking model of our road transport JV company Fenix Newhaul Pty Ltd, and published charges from Mid West Ports Authority. Initial capital expenditure requirements have also been assessed predominantly from specific quotations and proposals.

Page 7 of 9

==> picture [109 x 43] intentionally omitted <==

The Company completed a Spring Flora and Fauna Study of the entire project area during the quarter. Fenix also applied for the necessary miscellaneous and general leases for the planned operation the subject of the feasibility study. As is common during the lease application stage, there have been some objections to the granting of these leases. Fenix is engaged in productive discussions with the objecting parties and are hopeful of reaching access agreements during the December 2019 quarter, thereby allowing the project to proceed to Final Investment Decision soon thereafter.

Corporate

During the quarter the Company advised that 15,000,000 Class A Performance Shares had not met the requirement for conversion and, pursuant to the terms and conditions of the Performance Shares, all unconverted Class A Performance Shares held by the holders were automatically consolidated into one Share each. The Company confirms that the escrow holding lock remains on the Shares issued following consolidation of the Class A Performance Shares.

As at 30 September 2019 the Company had cash on hand of approximately $2.8 million, this compares to $4.3 million at 30 June 2019. The Company is forecasting cash outflows for the December 2019 quarter of $0.8m.

On Behalf of Fenix Resources Limited:

==> picture [59 x 44] intentionally omitted <==

Rob Brierley

Managing Director Fenix Resources Limited

Page 8 of 9

==> picture [109 x 43] intentionally omitted <==

TENEMENT SCHEDULE

The Company’s interests in tenements is as follows:

Location	Project	Tenement No.	Interest
Western Australia	Iron Ridge	M20/118‐I	100%
Western Australia	Iron Ridge	E20/936	100%

Competent Persons Statements

The information in this report that relates to Exploration Results are based on information compiled by Mr James Potter. Mr Potter is a full‐time employee of CSA Global Pty Ltd and is a Member of the Australasian Institute of Mining and Metallurgy and a Member of the Australian Institute of Geoscientists. Mr Potter has sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as Competent Person as defined in the 2012 edition of the Australasian Code for the Reporting of Exploration Results, Mineral Resources, and Ore Reserves (JORC Code). Mr Potter consents to the disclosure of the information in this report in the form and context in which it appears. Additionally, Mr Potter confirms that the entity is not aware of any new information or data that materially affects the information contained in the ASX releases referred to in this report.

The information in this report that relates to Mineral Resources is based on information compiled by Alex Whishaw. Mr Whishaw is a full‐time employee of CSA Global Pty Ltd and is a Member of the Australasian Institute of Mining and Metallurgy. Mr Whishaw has sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity which they are undertaking to qualify as Competent Persons as defined in the 2012 edition of the Australasian Code for the Reporting of Exploration Results, Mineral Resources, and Ore Reserves (JORC Code). Mr Whishaw consents to the disclosure of information in this report in the form and context in which it appears.

The information in this report that relates to the Processing and Metallurgy for the Iron Ridge Project is based on and fairly represents, information and supporting documentation compiled by Damian Connelly who is a Fellow of The Australasian Institute of Mining and Metallurgy and a full time employee of METS Engineering Group. Damian Connelly has sufficient experience 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 of Exploration Results, Mineral Resources and Ore Reserves’. Damian Connelly consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

Page 9 of 9