FENIX RESOURCES LTD — Interim / Quarterly Report 2019

Apr 28, 2019

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29 April 2019

QUARTERLY ACTIVITIES REPORT FOR THE PERIOD ENDED 31 MARCH 2019

Highlights

• Significant Upgrade to Iron Ridge Mineral Resource:

• 84% increase in the total Mineral Resource to 9.2Mt at 64.1% Fe, 3.36% SiO2, 2.66% Al2O3 and 0.045% P, using a cut‐off grade of 58% Fe. This compares to the previous Inferred Mineral Resource of 5.0Mt at 64.1% Fe, 3.3% SiO2, 2.7% Al2O3 and 0.05% P, using a cut‐off grade of 50% Fe.

• Maiden Indicated Mineral Resource of 6.6Mt at 64.5% Fe, 3.14% SiO2, 2.51% Al2O3 and 0.042% P.

• High‐Grade Iron Ore assays received at the Iron Ridge Project including: o 58.2m @ 66.6% Fe from 79.3m in hole IR002

  • 70m @ 64.4% Fe from 91m in hole IR004

  • 51.1m @ 65.9% Fe from 161m in hole IR005

  • 51m @ 63.9% Fe from 36m in hole IR001

  • 16.2m @ 65.9% Fe from 41m in hole IR006

  • 22.7m @ 62.9% Fe from 50m in hole IR003

  • 23m @ 67.8% Fe from 159.2m in hole IR003

  • 38.9m @ 66.7% Fe from 211m in hole IR033D

  • 39.7m @ 65.9% Fe from 73.8m in hole IR020

• Metallurgical test work, including a determination of lump to fines ratio, is well advanced with final results expected imminently.

• Mine design and scheduling, environmental permitting, engagement with engineering, mining and road transport providers and discussions with the Midwest Port Authority have commenced and are ongoing.

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Western Australian developer and explorer Fenix Resources Limited ( Fenix or the Company ) is pleased to report on its activities for the March 2019 quarter.

Iron Ridge Mineral Resource Upgrade

During the quarter Fenix advised that the results from its recently completed drilling program at its flagship Iron Ridge Project in the Mid‐West region of Western Australia had been incorporated into a mineral resource upgrade. Fenix reported an 84% increase in the total Mineral Resource to 9.2Mt at 64.1% Fe, 3.36% SiO2, 2.66% Al2O3 and 0.045% P, using a cut‐off grade of 58% Fe. This compares to the previous Inferred Mineral Resource of 5.0Mt at 64.1% Fe, 3.3% SiO2, 2.7% Al2O3 and 0.05% P, using a cut‐off grade of 50% Fe.

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	6.6 64.5 2.51 1.74 0.042 3.14 0.09
Inferred	2.6 63.2 3.04 2.13 0.054 3.93 0.12
Total	9.2 64.1 2.66 1.85 0.045 3.36 0.10

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

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

Category Stratigraphy	Tonnes Fe Al2O3 LOI P SiO2 TiO2
	Mt % % % % % %
Indicated Main BIF	5.9 65.0 2.38 1.36 0.038 2.92 0.09
Indicated Little BIF	0.7 60.0 3.60 5.05 0.072 5.05 0.09
Total Indicated	6.6 64.5 2.51 1.74 0.042 3.14 0.09
Inferred Main BIF	2.3 63.8 2.95 1.68 0.050 3.68 0.12
Inferred Little BIF	0.3 59.3 3.67 5.43 0.083 5.75 0.09
Total Inferred	2.6 63.2 3.04 2.13 0.054 3.93 0.12
Grand Total	9.2 64.1 2.66 1.85 0.045 3.36 0.10

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

Drilling has revealed that the mineralisation envelope plunges gently to the south west along strike. The deepest intersected mineralisation is at 230m beneath surface. Consistent high‐grades were recorded in the Main BIF after an initial zone of surface weathered or ‘hardcapped’ mineralisation (minor elevated alumina and silica) was encountered in the top 20m to 40m. At this stage Fenix sees no issues with processing of the mineralisation below the water table as preliminary observations suggest that only crushing and screening will be required to produce a good quality Direct Ship Ore (DSO) product.

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

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

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----- Start of picture text -----

12,000,000 72.0
10,000,000
67.0
8,000,000
6,000,000 62.0
4,000,000
57.0
2,000,000
0 52.0
% Fe cutoff
Tonnes Fe Grade %
45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68
----- End of picture text -----

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

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Next Steps

Following the finalisation of the Mineral Resource Estimate, the Company has started the process of conducting preliminary open pit plans and the necessary geotechnical work with a view to commencing a feasibility study. This work has been awarded to Mining Plus Pty Ltd and Peter O’Bryan & Associates.

Concurrently, the Company have engaged Ecotec (WA) Pty Ltd to commence the process of preparing a Mining Proposal in accordance with the relevant Western Australian regulatory guidelines.

Additionally, the Company is well advanced with metallurgical testwork to determine lump to fines ratio, crushing indexes etc. with results expected soon. There has been a slight delay in completing this work as some additional test work was required. The final results from this additional testwork are yet to be received and this means a delay on several weeks, with a final metallurgical report now due in May 2019.

Product offtake discussions are commencing with assay results from the latest drill program and the Mineral Resource Estimate reinforcing the high grade/low deleterious element nature of the potential product.

Additional High‐Grade Extensions Identified at Iron Ridge

During the quarter, the Company advised it had received all the assay results from the 21 RC holes and 8 diamond holes drilled in three batches (the first batch of results was announced 17 January, the second batch on 23 January 2019 and the third batch on 5 February 2019).

These results detailed in Table 3 , illustrate the consistent high grades in the Main BIF unit with 18 separate intercepts of between 16m and 70m grading >63.6% Fe.

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Figure 3: Section through drill holes IR011, IR012 and IR013

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Figure 4: Section through drill holes IR017, IR018 and IR019

Corporate

During the quarter the Company advised it had raised $1.75 million (before costs) through a placement of 31,930,000 shares at an issue price of 5.5¢ per share pursuant to its ASX Listing Rule 7.1 capacity.

The Placement was managed by Hartleys Limited as Lead Broker and was heavily oversubscribed with demand from new and existing Institutional Shareholders significantly exceeding expectations.

The proceeds of the Placement will be used to accelerate the development activities at the Iron Ridge Project in the Mid‐West region of Western Australia, including for funding in respect of:

• Ongoing metallurgical test‐work at the Project;

• Discussions with potential off‐takers;

• Mine design and scheduling work at the Project;

• The statutory permitting process for the Project;

• Road haulage, port storage and handling arrangements; and

• Feasibility studies at the Project.

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The Company advised on 19 February 2019 that it had granted a total of 19.75 million Performance Rights to management and employees of the Company that include performance milestone hurdles focused on the development of the Iron Ridge Project, WA. The Company intends to seek shareholder approval to issue Executive Director Mr Robert Brierley 6 million performance rights at a general meeting of shareholders scheduled for 14 May 2019.

Additionally, the Company advised that Mr Rob Brierley has been appointed Managing Director (previously Executive Director) effective 1 March 2019. The key terms of Mr Brierley’s engagement comprise a salary of $200,000 exclusive of superannuation, participation in the Employee Incentive Scheme and 3‐month termination notice period.

On Behalf of Fenix Resources Limited:

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Rob Brierley

Executive Director Fenix Resources Limited

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Table 3: Iron Ridge Project Assay Results

Drill Hole ID	Tenement	Hole Type	Results Status	Unit
IR001	M20/118	Diamond	51m@ 63.9% Fe from 36m	Main BIF
IR002	M20/118	Diamond	58.2m@ 66.6% Fe from 79.3m	Main BIF
IR003	M20/118	Diamond	22.7m@62.9% Fe from 50m	Little BIF
	And		23m@ 67.8% Fe from 159.2m	Main BIF
IR004	M20/118	Diamond	70m@ 64.4% Fe from 91m	Main BIF
IR005	M20/118	Diamond	27.5m@57.4% Fe from 36.5m	Little BIF
	And		51.1m@ 66.0% Fe from 161m	Main BIF
IR006	M20/118	Diamond	16.2m@ 65.9% Fe from 41m	Main BIF
IR009	M20/118	RC	4m@58.1% Fe from 6m	Little BIF
And			4m@62.7% Fe from 54m	Main BIF
IR011	M20/118	RC	70m@ 64.8% Fe from 72m	Main BIF
IR012	M20/118	RC	14m@57.0% Fe from 56m	Little BIF
	And		40m@ 65.6% Fe from 164m	Main BIF
IR013	M20/118	RC	20m@57.7% Fe from 122m	Little BIF
IR014	M20/118	RC	16m@58.7% Fe from 108m	Little BIF
IR015	M20/118	RC	66m@ 66.2% Fe from 80m	Main BIF
IR016	M20/118	RC	18m@60.0% Fe from 48m	Little BIF
	And		50m@ 66.6% Fe from 152m	Main BIF
IR017	M20/118	RC	27m@ 63.6% Fe from 56m	Main BIF
IR018	M20/118	RC	58m@ 66.7% Fe from 84m	Main BIF
IR019	M20/118	RC	8m@61.8% Fe from 86m	Little BIF
And			4m@62.8% Fe from 160m	Main BIF
IR020	M20/118	Diamond	39.7m@ 65.9% Fe from 73.8m	Main BIF
IR021	M20/118	RC	16m@62.4% Fe from 78m	Little BIF
And			8m@66.4% Fe from 130m	Main BIF
IR022	M20/118	RC	20m@ 65.9% Fe from 70m	Main BIF
IR023	M20/118	RC	4m@61.4% Fe from 34m	Little BIF
	And		4m@62.5% Fe from 90m	Main BIF
IR024	M20/118	RC	8m@60.5% Fe from 98m	Little BIF
IR026	M20/118	RC	14m@55.0% Fe from 36m	Little BIF
IR033D	M20/118	RCD	20m@59.6% Fe from 102m	Little BIF
			38.9m@ 66.7% Fe from 211m	Main BIF
IR035	M20/118	RC	22m@59.6% Fe from 34m	Little BIF
	And		48m@ 66.2% Fe from 130m	Main BIF
IR036	M20/118	RC	18m@58.2% Fe from 94m	Little BIF
And			46m@ 66.3 %Fe from 206m	Main BIF
IR046	M20/118	RC	26m@ 65.6% Fe from 74m	Main BIF
IR047	M20/118	RC	14m@56.9% Fe from 86m	Little BIF
IR048	M20/118	Diamond	5m@65.0% Fe from 54m	Main BIF
IR049	M20/118	RC	6m@63.2% Fe from 76m	Main BIF

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TENEMENT SCHEDULE

The Company’s interests in tenements is as follows:

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

Competent Persons Statement

The information in this report that relates to Exploration Results, Exploration Targets and Mineral Resources is 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.

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