HAMMER METALS LIMITED — Capital/Financing Update 2016

Mar 14, 2016

ASX Announcement (ASX: HMX)

15[th] March 2016

Mount Isa Exploration Update

HIGHLIGHTS

Mount Isa Farm-in and Joint Venture

• Field programs commenced in mid-January under the Farmin and Joint Venture Agreement signed with Newmont Exploration Pty Ltd (“Newmont”) to explore three of Hammer’s IOCG prospects near Mount Isa – Overlander, Even Steven and Dronfield ;

• Newmont may earn up to 75% by spending US$10,500,000 (A$15,000,000) with Hammer managing the first two stages of the JV until Newmont earns a 65% interest;

• Gravity, ground magnetics, geological mapping and geochemical sampling programs are well underway;

• Processing and modelling of the geophysical data is in progress utilizing Newmont’s in-house technical support;

• It is anticipated that drilling may commence in the second quarter.

Copper-Gold Targeting Program (Hammer 100% tenements)

• Focus is on generating and securing high potential copper-gold targets with new tenement applications;

• Target definition at the Scalper and Hammertime projects is enhanced by results of high resolution gravity and magnetic surveys;

• Review of previous exploration data supports project’s potential for Tick Hill style gold deposits.

MOUNT ISA PROJECT

Hammer Metals Limited ( ASX: HMX ) (“Hammer” or “the Company”) is targeting the large iron oxide coppergold (IOCG) alteration systems the Company has outlined within its Mount Isa project.

Late in 2015 a Farmin and Joint Venture Agreement was executed with Newmont Exploration Pty Ltd (“Newmont”) encompassing three of Hammer’s IOCG prospects – Overlander, Even Steven and Dronfield , covering approximately 250km[2] of Hammer’s 2011km[2] Mount Isa project. The joint venture is targeting an Ernest Henry style of IOCG copper-gold deposit (approximately 220 million tonnes at 1.1% Cu and 0.5g/t Au).

The first JV program and budget for the period January to March 2016 was prepared and approved with field work commencing in mid-January. Work is focusing on completing the coverage of the three prospects with gravity and magnetic surveys along with geological mapping and geochemical programs where necessary to improve target definition prior to drilling. Newmont’s substantial in-house technical expertise will be utilised in conducting the joint venture programs.

The gravity surveys are now completed with the soil sampling and ground magnetic surveys at Even Steven underway. Processing and modelling of the data is in progress.

Concurrently with the exploration on the joint venture prospects copper-gold targeting activities are progressing on the 100% owned Hammer tenements with a focus on the Hammertime, Scalper and Kalman West prospects. Detailed gravity surveys have been completed over the alteration zones at Hammertime and Scalper as well as infill ground magnetics at Hammertime to assist with target definition.

Mount Isa Farmin and Joint Venture

1

Overlander

The Overlander area is a regionally significant zone of alteration with IOCG style, shear-hosted and brecciahosted copper mineralisation located 8km west of the Kalman deposit. The copper-in-soil anomaly at Overlander that encompasses this zone as defined by the 200ppm contour is over 3km long and up to 1000 metres wide. Previous exploration by Hammer has outlined a copper resource at Overlander totaling 1.77 million tonnes at 1.2% Cu. (Refer to ASX release dated August 26[th] 2015 for details of the Overlander resource estimate.) This resource is excluded from the Joint Venture.

Geological mapping and gravity, magnetic, IP and geochemical surveys completed by Hammer on the Overlander IOCG target have confirmed the presence of overlapping IP, gravity and magnetic anomalies coincident with a “red-rock” – magnetite alteration zone. The first drill hole to test this target (OVD001) intersected strong albite – magnetite IOCG-style altered sediments and volcanics with disseminated copper mineralisation on the flanks of the gravity and magnetic inversion shells.

Current work is focused on the IOCG target and comprised detailed alteration and geological mapping, and rock chip sampling, completion of the sampling and assaying of OVD001, collection of infill gravity data and inversion modeling of the updated geophysical datasets. It is anticipated that drilling will be undertaken on the target later in the first half of 2016 on completion of the modelling.

==> picture [423 x 361] intentionally omitted <==

Overlander Magnetic and Gravity Imagery

2

Even Steven

The Even Steven prospect is located approximately 15km to the northeast of the Kalman deposit in a similar structural position immediately west of the Pilgrim Fault.

The prospect is characterized by a 6km long zone of linear magnetic and gravity highs that coincide with outcropping feldspar – magnetite (“red-rock”) alteration and breccia and anomalous gold and copper soil geochemistry. The prospect has been drilled in only one location (at the historical Even Steven workings) where intercepts of up to 14 metres at 1.26% Cu and 0.7g/t Au from 20 metres and 4 metres at 1.43% Cu and 0.61g/t Au from 76 metres in ES001 were returned.

Hammer drilled another two holes at the Even Steven workings in 2014 that intercepted strongly altered mafic metavolcanics and granite with broad zones of elevated copper mineralisation (+1000ppm Cu) with narrower intervals of high grade copper and gold. The main altered and mineralised zone in HERC001 averaged 114 metres at 0.25% Cu from 41 metres including 3 metres at 1.37% Cu and 0.63g/t Au from 55 metres and 6 metres at 0.74% Cu and 0.18g/t Au from 111 metres and 11 metres at 0.76% Cu and 0.44g/t Au from 144 metres including 4 metres at 1.44% Cu and 0.82g/t Au from 150 metres. (Refer to ASX release dated 16th September 2014) for details of the drilling.)

In addition to the extensive area of alteration and soil anomalism present at Even Steven the high gold/copper ratio of the mineralisation intercepted to date is considered an encouraging characteristic of this prospect. Detailed (100m spaced) gravity surveying has been completed over the zone and a ground magnetic survey and further soil sampling over the northern end of the zone is currently in progress.

==> picture [377 x 349] intentionally omitted <==

Even Steven Magnetic and Gravity Imagery

3

Dronfield

The Dronfield magnetic and gravity anomalies are located 25km southeast of Overlander on EPM 18084 which is subject to a farm-in agreement with Kabiri Resources Pty Ltd. Hammer has the right to earn up to an 80% interest in EPM 18084 from Kabiri by spending $250,000 on exploration. It is anticipated that this commitment will be met by mid-2016.

The favourable alteration, copper-gold anomalism and the strong overlapping gravity and magnetic features are considered highly supportive of the potential of the Dronfield project for IOCG deposits.

The joint venture has completed a 1060 station infill gravity program along with mapping and rock chipping of the limited rock exposures. Newmont’s proprietary deep-sensing geochemical technique has also been trialed over the prospect. Due to the size of the gravity and magnetic features at Dronfield additional infill geochemistry and/or IP is planned to improve target definition.

==> picture [341 x 429] intentionally omitted <==

Dronfield Magnetic and Gravity Imagery

4

Mount Isa Copper – Gold Targeting Program – 100% Hammer

Since late 2013 Hammer has been undertaking a systematic targeting exercise for large IOCG deposits within under-explored sections of the Mount Isa Inlier. As part of the IOCG targeting exercise three new coppergold targets on vacant land were recently identified and secured with tenement applications - Cathay, Resolve and El Questro. (Refer to the December 2015 Quarterly Report for details.)

Hammer’s project also covers a significant section of the Pilgrim Fault structural corridor that hosts the (500,000 ounce) Tick Hill gold deposit located south of Duchess. An initial review of previous exploration data for gold has highlighted several anomalies within Hammer tenements and further assessment of these targets will be undertaken.

Concurrent with the joint venture activities Hammer has continued with field work on its more advanced 100% - owned targets, with a focus on Hammertime, Scalper and Kalman West.

Hammertime

Hammertime is located on the eastern side of the Ballara Fault 1.5km west of Hammer’s Kalman coppergold-molybdenum-rhenium deposit. The Ballara Fault is a splay off the sub-parallel and regional scale Pilgrim Fault. Previous soil sampling had defined a +4km long zone of elevated copper and gold which has now been further investigated through detailed geological mapping and sampling.

The geological mapping defined three zones of strong magnetite and red rock alteration typical of IOCG systems within calcareous sediments of the Corella Formation. The alteration zones are up to 1.1km in length and 300m wide. Rock chip sampling of these zones has returned grades in excess of 2.4g/t Au and 29.3% Cu. (Refer to ASX release dated September 1 2015 for details.) Petrological studies indicate the presence of potassic feldspar – magnetite - amphibole breccias indicative of proximal IOCG alteration.

Hammer has just completed a detailed gravity survey over the alteration zone and additional detailed ground magnetics to complete the high-resolution magnetic coverage is in progress. After processing the new data will be used to improve target definition prior to drilling.

5

==> picture [459 x 410] intentionally omitted <==

Hammertime Gravity and Soil Gold and Copper Imagery

Scalper

Scalper is located in the same stratigraphic position as the Overlander and Andy’s Hill IOCG targets 6-10km to the north. Hammer has drilled one RC hole at the Scalper prospect that returned 23 metres at 1.1% Cu and 0.27g/t Au (HSRC001) within strongly altered and brecciated sediments. (Refer to ASX release dated November 19 2014 for details.) Most of the alteration zone and magnetic anomaly has not been tested nor the old copper workings in similarly altered material located 500m to the south.

A detailed gravity survey completed over the prospect in February has identified a gravity high coincident with the northern magnetic target enhancing the prospectivity of this zone. Modelling of the geophysical data is in progress.

6

==> picture [459 x 379] intentionally omitted <==

Scalper Magnetic and Gravity Imagery

Future Activities at Mount Isa

Field programs will continue on both the JV and non-JV tenements. Results will be progressively released as the programs are completed.

- ENDS -

For further information, please contact:

Alex Hewlett Executive Director Hammer Metals Tel: +61 8 9271 0149

7

Competent Person’s Statement

The information in this report as it relates to exploration results and geology was compiled by Mr. Mark Whittle, who is a Member of the AusIMM and a consultant to the Company. Mr. Mark Whittle has sufficient 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 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Mr. Whittle consents to the inclusion in the report of the matters based on the information in the form and context in which it appears.

8

==> picture [482 x 495] intentionally omitted <==

Mount Isa Project Locations

9

==> picture [459 x 496] intentionally omitted <==

Mount Isa Farmin and JV Areas

10

JORC Code, 2012 Edition

Table 1 report – Exploration Update

• The primary subject of this release is to report on the results of ground gravity surveys over the Even Steven, Overlander, Hammertime, Scalper and Dronfield Prospects.

• The release incorporates information generated by Hammer Metals Limited. Apart from the results of the gravity surveys, other information has been previously reported to the ASX (and is cited in the release and below).

• The release also incorporates information generated by previous holders of the tenements and/or previous explorers over the areas. The details of this other work is cited below.

Section 1 Sampling Techniques and Data

(Criteria in this section apply to all succeeding sections in this information release.)

Criteria	JORC Code explanation	Commentary	Commentary
Sampling	 Nature and quality of sampling (eg cut		The primary subject of this release is
techniques	channels, random chips, or specific		to report on the results of gravity
	specialised industry standard		surveys over Even Steven,
	measurement tools appropriate to the		Overlander, Dronfield, Hammertime
	minerals under investigation, such as		and Scalper Prospects.
	down hole gamma sondes, or
	handheld XRF instruments, etc).		The ground Gravity Surveys were
	These examples should not be taken		conducted on 400 metre centres with
	as limiting the broad meaning of		200 metre and 100 metre infill. The
	sampling.		surveys were undertaken by Haines
	 Include reference to measures taken		Surveys Pty Ltd utilising a Scintrex
	to ensure sample representivity and		CG-5 Autograv Gravity meter which
	the appropriate calibration of any		has an accuracy of 0.01 mgal.
	measurement tools or systems used.		Locations were captured using a
	 Aspects of the determination of		Trimble 5000 GPS receiver and post
	mineralisation that are Material to the		processed to achieve 5cm vertical
	Public Report.		and horizontal accuracy.
	 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,		Drill intersections for Overlander were
techniques	open-hole hammer, rotary air blast,		released to the ASX on 26/8/2015.

11

Criteria	JORC Code explanation	Commentary	Commentary
	auger, Bangka, sonic, etc) and details		Drill intersections for Even Steven
	(eg core diameter, triple or standard		were released to the ASX on
	tube, depth of diamond tails, face-		16/9/2014.
	sampling bit or other type, whether		Drill results for Hammertime were
	core is oriented and if so, by what		released to the ASX on 1/9/2015 and
	method, etc).		soil geochemical results on
			30/9/2015.
			Drill results for Scalper were released
			to the ASX on 19/11/2014
Drill	 Method of recording and assessing		Please see the previous releases
sample	core and chip sample recoveries and		which detail the nature and results of
recovery	results assessed.		drilling conducted at these prospects.
	 Measures taken to maximise sample		Drill intersections for Overlander were
	recovery and ensure representative		released to the ASX on 26/8/2015.
	nature of the samples.		Drill intersections for Even Steven
	 Whether a relationship exists between		were released to the ASX on
	sample recovery and grade and		16/9/2014.
	whether sample bias may have		Drill results for Hammertime were
	occurred due to preferential loss/gain		released to the ASX on 1/9/2015 and
	of fine/coarse material.		soil geochemical results on
			30/9/2015.
			Drill results for Scalper were released
			to the ASX on 19/11/2014
Logging	 Whether core and chip samples have		Please see the previous releases
	been geologically and geotechnically		which detail the nature and results of
	logged to a level of detail to support		drilling conducted at these prospects.
	appropriate Mineral Resource
	estimation, mining studies and
	metallurgical 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-	 If core, whether cut or sawn and		Please see the previous releases
sampling	whether quarter, half or all core taken.		which detail the nature and results of
techniques	 If non-core, whether riffled, tube		drilling conducted at these prospects.
and	sampled, rotary split, etc and whether
sample	sampled wet or dry.
preparation	 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 thegrain size of the material being

12

Criteria	JORC Code explanation	Commentary
	sampled.
Quality of	 The nature, quality and	Not Applicable
assay data	appropriateness of the assaying and
and	laboratory procedures used and	The gravity surveys were undertaken
laboratory	whether the technique is considered	by Haines Surveys Pty Ltd utilising a
tests	partial or total.	Scintrex CG-5 Autograv Gravity meter
	 For geophysical tools, spectrometers,	which has an accuracy of 0.01 mgal.
	handheld XRF instruments, etc, the	Locations were captured using a
	parameters used in determining the	Trimble 5000 GPS receiver and post
	analysis including instrument make	processed to achieve 5cm vertical
	and model, reading times, calibrations	and horizontal accuracy. Control
	factors applied and their derivation,	points in the areas surveyed were
	etc.	established from existing trig stations
	 Nature of quality control procedures	and benchmarks. Where this was not
	adopted (eg standards, blanks,	possible the Geoscience Australia
	duplicates, external laboratory checks)	AUSPOS processing facility was used
	and whether acceptable levels of	for control. Gravity control was
	accuracy (ie lack of bias) and precision	established relative to local control
	have been established.	stations. Haines Surveys conducted
		repeat readings at a minimum
		frequency of 2%.
Verification	 The verification of significant	Gravity: All readings were transferred
of	intersections by either independent or	to Haines personnel on a daily basis
sampling	alternative company personnel.	for review. The data was also
and	 The use of twinned holes.	transferred to Southern Geoscience
assaying	 Documentation of primary data, data	Consultants and Hammer Metals for
	entry procedures, data verification,	further examination and verification.
	data storage (physical and electronic)
	protocols.
	 Discuss any adjustment to assay data.
Location of	 Accuracy and quality of surveys used	Gravity Station locations were
data points	to locate drill holes (collar and down-	captured using a Trimble 5000 GPS
	hole surveys), trenches, mine workings	receiver and post processed to
	and other locations used in Mineral	achieve 5cm vertical and horizontal
	Resource estimation.	accuracy.
	 Specification of the grid system used.
	 Quality and adequacy of topographic
	control.
Data	 Data spacing for reporting of	The ground gravity survey was
spacing	Exploration Results.	conducted on 400 metre centres with
and	 Whether the data spacing and	200 metre and 100 metre infill.
distribution	distribution is sufficient to establish the	The geophysical data density is
	degree of geological and grade	considered appropriate to the target
	continuity appropriate for the Mineral	type being sought.
	Resource and Ore Reserve estimation
	procedure(s) and classifications
	applied.
	 Whether sample compositing has been
	applied.
Orientation	 Whether the orientation of sampling	The gravity station layout was oriented
of data in	achieves unbiased sampling of	perpendicular to major structural
relation to	possible structures and the extent to	features.

13

Criteria	JORC Code explanation	Commentary
geological	which this is known, considering the
structure	deposit type.
	 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.
Sample	 The measures taken to ensure sample	Gravity data was transferred daily to
security	security.	Haines Surveys and then onto
		Southern Geoscience for independent
		review. Data was also transferred daily
		to Hammer personnel for digital
		storage.
Audits or	 The results of any audits or reviews of	As mentioned above as gravity data
reviews	sampling techniques and data.	was collected, daily data review was
		conducted by Southern Geoscience
		Consultants for independent review
		during the execution of the program.

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,	The Even Steven, Overlander and
tenement and	location and ownership including	Dronfield surveys were conducted
land tenure	agreements or material issues with	over EPM’s 14232, 14232 and 18084
status	third parties such as joint ventures,	respectively. The survey areas are
	partnerships, overriding royalties,	subject to a Joint Venture Agreement
	native title interests, historical sites,	with Newmont Australia Pty Ltd. The
	wilderness or national park and	details of this agreement were
	environmental settings.	released to the ASX on 15/12/2015.
	 The security of the tenure held at the	The Scalper survey was conducted
	time of reporting along with any	over EPM25486 which is 100%
	known impediments to obtaining a	owned by Hammer Metals Australia
	licence to operate in the area.	Pty Ltd.
		The Hammertime survey was
		conducted over EPM’s 13870 and
		14232 which are 100% owned by Mt
		Dockerell Mining Pty Ltd – a 100%
		owned subsidiary of Hammer Metals
		Limited.
		All tenements mentioned above are
		in good standing with the Queensland
		Department of Natural Resources
		and Mines.
Exploration	 Acknowledgment and appraisal of	The release mentions soil
done by other	exploration by other parties.	geochemical sampling at Even
parties		Steven conducted by CRA during the
		period 1992-1996. This work was

14

Criteria	JORC Code explanation	Commentary	Commentary
			conducted on the now expired
			EPM8823 and is available on open
			file reports (CR25872, 26718, 26926,
			26927 and 28149). These reports can
			be accessed through the Queensland
			Department of Mines and Natural
			Resources.
			The release mentions soil sampling
			conducted at Overlander and
			Hammertime. This sampling was
			conducted by Kings Minerals NL and
			Syndicated Metals Limited with infill
			sampling conducted at Hammertime
			by Mt Dockerell Mining Pty Ltd. This
			sampling was conducted during the
			life of the current tenements and the
			details of the sampling have been
			previously released to the ASX.
			The release also mentions rock chip
			sampling conducted at the
			Hammertime Prospect. This sampling
			was conducted by Hammer Metals
			Limited and has been previously
			released to the ASX.
Geology	 Deposit type, geological setting and		The mineralisation style discussed in
	style of mineralisation.		this release is Iron-Oxide Copper
			Gold (IOCG). The closest example of
			this style is the Ernest Henry Deposit
			to the north of Cloncurry.
			At Even Steven, Overlander,
			Hammertime and Scalper the host is
			strongly red rock and variably epidote
			altered metasediments of the Corella
			Formation.
			At Dronfield the host is variably
			magnetite and potassium feldspar
			altered Granite (and granite variants)
			of the Wimberu Granite, part of the
			Williams Group of Intrusives.
Drill hole Information	 A summary of all information material to the understanding of the		Please see the previous releases which detail the nature and results of
	exploration results including a tabulation of the following information		drilling conducted at these prospects. Drill intersections for Overlander
	for all Material drill holes:		were released to the ASX on
	o easting and northing of the drill		26/8/2015.
	hole collar		Drill intersections for Even Steven
	o elevation or RL (Reduced Level –		were released to the ASX on
	elevation above sea level in		16/9/2014.
	metres) of the drill hole collar o dip and azimuth of the hole o down hole length and interception depth		Drill results for Hammertime were released to the ASX on 1/9/2015 and soil geochemical results on

15

Criteria	JORC Code explanation	Commentary	Commentary
	o hole length.		30/9/2015.
	 If the exclusion of this information is justified on the basis that the		Drill results for Scalper were released to the ASX on 19/11/2014
	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.
Data aggregation methods	 In reporting Exploration Results, weighting averaging techniques, maximum and/or minimum grade		Historic soil data is represented as contours which were derived by two dimensional inverse distance
	truncations (eg cutting of high grades) and cut-off grades are usually Material and should be		interpolation of the primary soil data points.
	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.
Relationship	 These relationships are particularly		Not Applicable.
between	important in the reporting of
mineralisation	Exploration Results.
widths and	 If the geometry of the mineralisation
intercept	with respect to the drill hole angle is
lengths	known, its nature should be reported.
	 If it is not known and only the down
	hole lengths are reported, there
	should be a clear statement to this
	effect (eg ‘down hole length, true
	_width not known’). _
Diagrams	 Appropriate maps and sections (with		See attached figures
	scales) and tabulations of 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		The soil contours are derived from
reporting	Exploration Results is not practicable,		soil sampling data which incorporate
	representative reporting of both low		all historic reported information.
	and high grades and/or widths should
	be practiced to avoid misleading
	reporting of Exploration Results.
Other	 Other exploration data, if meaningful		The magnetic data which is shown
substantive	and material, should be reported		as imagery depicting Dronfield was
	including (but not limited to):		derived by Hammer Metals Limited.
	geological observations; geophysical		This data has beenpreviously

16

Criteria	JORC Code explanation	Commentary
exploration	survey results; geochemical survey	released to the ASX on 15/12/2014
data	results; bulk samples – size and
	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	It is envisioned that these areas will
	further work (eg tests for lateral	be further examined with a view to
	extensions or depth extensions or	defining drill targets as soon as
	large-scale step-out drilling).	possible.
	 Diagrams clearly highlighting the
	areas of possible extensions,
	including the main geological
	interpretations and future drilling
	areas, provided this information is not
	commercially sensitive.

17