LION SELECTION GROUP LIMITED. — Interim / Quarterly Report 2022

Nov 29, 2021

Lion Selection Group

Quarterly Report for the 3 months ended 31 October 2021

Investment Highlights

• Pani – progress to unify leases.

• Nusantara – completion of acquisition by Indika at 35cps cash adding $17.5M to Lion’s cash position.

• Erdene – Dark Horse discovery and Ulaan discoveries grow; landmark US$5M fund raising on Mongolian Stock Exchange.

Sector Themes

• This mining boom has been unusual, so far: – Miners paying highest dividend yield of ASX sectors.

• Capital investment by the mining industry has been restrained.

• Individual commodity patterns have favoured smaller miners – juniors outperforming major miners.

• Industry growth mindset at inflection point, consistent with 11 o’clock behaviours:

ASX : LSX NTA Share price Pre-Tax Post-Tax 48.5cps as at 31 October 2021

Pre-Tax 64.6cps Post-Tax 62.6cps as at 31 October 2021

• Capital investment expectations clearly increasing.

• Junior miners and developers become strategic as potential M&A targets.

About Lion

Lion Selection Group is a mining investment company, focused on a portfolio of carefully selected and closely managed investments in listed and unlisted junior developing mining companies. Lion aims to offer diversity and a portfolio approach to the micro-cap end of mining investment, providing exposure to companies in various stages of development. Lion’s investment model involves focusing investment towards the best opportunities in the portfolio, which from time to time results in concentration of Lion’s portfolio towards specific investments and commodities. Lion is currently weighted towards several developing gold projects, across a range of jurisdictions but in particular to the Pani gold project in Indonesia.

Lion is listed on ASX, under the ticker code LSX.

Lion Quarterly Report 31 October 2021

Page 1

INVESTMENT HIGHLIGHTS

Pani Joint Venture

Lion holds 33.3% in the Pani Joint Venture alongside Merdeka Copper Gold. The Pani Gold Project is emerging as a potential world class gold project, showing signs of size, exposure, geometry and metallurgy to warrant investigation of a large scale, long-life, open pit operation.

Pani currently consists of two Resources [2.37 Moz Au[1] (33.3% Lion/ 66.7% Merdeka) and 2.30Moz Au[2] (100% J Resources)] on two licences which historically have been separately held. An agreement to combine the two Pani tenements into one ownership group was signed in late 2019, but remains incomplete.

On 5 October 2021, J Resources announced that it had entered a Conditional Sale and Purchase Agreement with a subsidiary of Provident Capital for all the shares in PT Gorontalo Sejahtera Mining (‘GSM’), the company that holds the Pani Contract of Work. Details of this acquisition are awaited, but conditions include approval of the J Resources’

bondholders and/or creditors of the company’s subsidiaries. As this agreement is subject to similar conditions to the 2019 J Resources Agreement, no change is proposed at this point in the carrying value for Lion’s investment in Pani.

To allow the Provident/GSM transaction to proceed, the Pani Joint Venture (Lion 33%, Merdeka Copper Gold 67%) has suspended the arbitration action taken against J Resources. As previously announced on 4 February 2021, the Pani Joint Venture arbitration is in relation to a claim of non-compliance with the terms of the November 2019 J Resources agreement to combine the two Pani tenements into one ownership group.

Pani Mineral Resource Estimates

==> picture [512 x 121] intentionally omitted <==

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

Pani IUP (Lion 33.3%/Merdeka 66.7%) Contract of Work (J Resources 100%)
0.2g/t cut off [1] 0.4g/t cut off [2]
Tonnage Grade Contained Gold Tonnage Grade Contained Gold
Category (Mt) (g/t Au) (Moz) (Mt) (g/t Au) (Moz)
Measured 10.8 1.13 0.39 15.5 1.03 0.51
Indicated 62.4 0.81 1.63 41.3 0.98 1.31
Inferred 16.2 0.67 0.35 15.9 0.93 0.48
Total 89.5 0.82 2.37 72.7 0.98 2.30
----- End of picture text -----

Nusantara

During the quarter, the sale of Nusantara Resources Limited to joint venture partner PT Indika Energy TBK (Indika) by way of Scheme of Arrangement for $0.35 per share cash was completed.

On 22 September 2021, Nusantara shareholders approved the Scheme of Arrangement between the company and its shareholders and following Court approval, the Scheme was implemented on 6 October 2021.

Payment of the Scheme Consideration to shareholders was made on 6 October 2021 with Lion receiving $17.5M for its 21.77% interest in Nusantara.

Lion Quarterly Report 31 July 2021

Page 2

INVESTMENT HIGHLIGHTS

Erdene Resource Development Corp

Khundii Gold District, Mongolia

Erdene continues to progress and add value to the Khundii Gold Project, which is a near development gold project with exciting exploration upside in Southern Mongolia. Proposed development of a shallow, high grade open pit gold project is centred on the Bayan Khundii deposit which is envisioned to produce 63kozpa at a globally competitive all-in sustaining cost of US$733/oz[3] . Bayan Khundii was discovered in 2015 and a Bankable Feasibility Study was announced in July 2020, since then Erdene has made two new discoveries within 3km of the planned open pit development which have both produced new drilling results during the quarter.

New discovery in 2021: Ulaan – 300m west of Bayan Khundii

Following the announcement of a new discovery at Ulaan last quarter (258m at 0.98g/t gold[4] ), Erdene has announced further broad intercepts of gold mineralisation including:

• 216.6m at 1.07g/t gold from 188m (including 53m at 3.55g/t gold from 192m), the hole ending in mineralisation;

• 364.3m at 0.79g/t gold from 97m (including 91m at 1.98g/t gold from 124m)[5] and

• 77m at 3.2g/t gold from 115m followed by 71m at 0.81g/t gold from 209m; and

• 151.7m at 1.71g/t gold from 85m (including 65m at 3.11g/t gold from 85m)[6] .

The thick intercepts of gold mineralisation also contain some exceptionally high grade zones, and the system is open at depth and to the west.

New discovery in 2021: Dark Horse – 3km north of Bayan Khundii

Following the announcement of a new discovery at Dark Horse in January 2021 (45m at 6g/t gold[7] ), which is interpreted to exist on the same north-

trending structure as the Bayan Khundii deposit, Erdene has drilled over 14,000m of drilling at the prospect. Dark Horse is a prospect defined by gold and arsenic surface anomalism several times the size of the Bayan Khundii surface anomaly, and contains several targets.

The results of 32 new holes and two hole extensions have recently been announced[8] , which confirm a highgrade oxide gold zone starting at surface which is open at depth and along strike, including:

• 17m at 16.7g/t gold from 15m

• 24.5m at 9.4g/t gold from 1.5m

• 25m at 6.1g/t gold from 18m

• 30m at 5.6g/t gold from 6m

The extension of an older hole intersected multiple zones of gold mineralisation within a 100m thick alteration zone, ending in mineralisation at 150m depth. Erdene’s interpretation and targeting has established a large-scale prospect at depth.

With the benefit of drilling at Dark Horse and Ulaan during 2021, the company interprets the Bayan Khundii, Dark Horse and Ulaan deposits to be all part of the same gold-bearing hydrothermal system with the potential to host a multimillion-ounce gold deposit.

Corporate – US$5M raised via a Mongolian Stock Exchange offering

On 12 October 2021, Erdene announced the closure of an over-subscribed private placement offering of common shares on the Mongolian Stock Exchange, for gross proceeds of US$5M from 1,867 institutional and private Mongolian investors. Erdene was the first company to cross-list on the Mongolian and Toronto Stock Exchanges in June 2018, and the outcome of this recent funding is a tremendous demonstration of support from the Mongolian financial community.

The offering was completed at MNT815 (C$0.36) per share.

Lion Quarterly Report 31 July 2021

Page 3

MARKET UPDATE

Market Update

What happens in 11 o’clock…

Roving revellers with flexible behaviour standards have bestowed cliché status on the expression ‘what happens in Vegas, stays in Vegas’ (substitute any suitable alternative locality).

11 o’clock in the mining cycle is the temporal equivalent of Vegas – a time (rather than a place) when a lot can happen, that wouldn’t be expected to occur at any other time in the cycle. And whilst its exciting, whatever antics take place are likely to be tactfully embellished for later telling.

So what happens at 11 o’clock?

• Rights of passage – explorers and junior miners tend to perform, which can be catch-up having seen larger miners go first.

• Loose behaviours – being the easiest time to raise any form of finance in mining, money flows as fund raisings, revenues and salaries.

• Questionable or costly pairings – growth becomes a focus, which puts M&A front and centre, and many incumbents are keen to prove themselves via some sort of transactional conquest. Many juniors can become strategic, having been regarded (both by investors and the industry) as less interesting earlier in the cycle. Many a miner has woken to a new cycle with a nasty itch (although it would be insensitive to tell tales about who caught what).

The Lion Clock is at 11 o’clock, this is clearly demonstrated by liquidity levels in mining IPO’s, especially the prevalence of large IPO deals which can only occur when liquidity in the mining space has reached 11 o’clock levels. This cycle so far has been characterised by three historically unusual features which, to date, might not necessarily align with an 11 o’clock judgement:

• Miners are paying high levels of dividends (versus past behaviours and other sectors).

• Capital investment has been restrained.

• Small cap mining indices have kept pace with, and from time-to-time outperformed major miners.

For many people the question has been – if liquidity is genuinely so high, shouldn’t we also be seeing serious growth investment in the industry? And what

about large / hostile M&A deals?[*] It is hard to overlook evidence of each of these in the past six months, which indicate the growth agenda is rapidly adjusting from ‘outlook’ to ‘action’.

Tale of two boom years – comparison of 2006 and 2020

With the full benefit of hindsight, 2006 was just prior to the last strong jump for the mining equity market before the Global Financial Crisis took place – the start of 11 o’clock. 2020 is the most recent year for which there are complete financial statements for miners (the most convenient recent set of data), and also just prior to 11 o’clock. Both years encapsulate a phase of reasonable maturity in the respective mining cycles, which were also taking place against a backdrop of booming global equity markets. Only time will tell if 2020 is as close to midnight as 2006 turned out to be.

Between the end of 2006 and 2020, the capitalisation of the ASX100 Index has increased 210%, and dividends paid by the index have also increased by the same 210% between the respective years by the index. Breaking the index down a little into groups – banks (which are regarded as a stable source of dividend yield), miners and energy companies (which together comprise the Resources index), and the rest – each group has made a roughly proportional contribution to the increase in market capitalisation of the index. That is to say, their respective market weights have not changed much.

There is however a substantial difference in respective contributions to dividends paid. Miners paid 15% of the index dividend in 2006, off a capitalisation that was 17% of the index. In 2020, miners make up 18% of the index capitalisation but paid 33% of the index dividend (with a commensurate reduction from ‘the rest’).

• Actually, this question is most commonly posed as “when will [transaction] behaviour become less responsible?”

Lion Quarterly Report 31 October 2021

Page 4

MARKET UPDATE

Market weight is not a valuation metric, but it is a useful rough reckoner of how the market allocates between sectors. Miners at a circa 17-18% weighting in the ASX100 is only a little above long-term average, and shy of what might be achieved at a mining market peak. At the zenith of the last mining boom, in 2011, miners then accounted for around 21% of the index, and at the time were providing 19% of the index dividends.

The ability to pay out substantial dividends dovetails with capex investment intentions. We have speculated in the past about capex appetite in the mining sector. Historic patterns of behaviour strongly suggest that escalation of growth investment within the mining industry seems more a matter of ‘when’, not ‘if.’ *

• Lion Quarterly report for the period ended 31 July 2021.

Miner’s dividends – trend defying phenomena

The quantum of dividends paid by miners is worth unpacking further, because it is a characteristic of the current market which makes this mining cycle highly anomalous. And of any time in the cycle, it would not be expected during 11 o’clock.

Miners have never been regarded as yield plays. Through historic booms, the dividend yield of miners has decreased, and the need for constant reinvestment to identify and mine new sources of minerals have consumed most surplus cash. Peak dividend yields have only ever been aligned with the end of historic busts, and within the realms of ASX the materials sector (which is overwhelmingly comprised of miners or mining exposed companies) has a history of yielding less than the broader market.

==> picture [512 x 401] intentionally omitted <==

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

2006 2020
Outer ring: Dividends
Inner ring: Capitalisation
Share of ASX100 market
capitalisation and dividends
Capitalisation Capitalisation
n Banks n Mining 17% 18%
n Energy n Other
Dividend Dividend
15% 33%
Sector dividend yield:
ASX200 Index
vs
ASX Materials Index
Mining equity
performance:
ASX100 Resources
Index
Source: IRESS data Jun 02 Jun 04 Jun 06 Jun 08 Jun 10 Jun 12 Jun 14 Jun 16 Jun 18 Jun 20
Mining Bust Mining Bust
----- End of picture text -----

Long term trends: ASX100 Resources index shows the highs and lows of mining cycles since 2002. These are compared with dividend yield of the ASX Materials (XMJ) and ASX200 Indices. Donut charts show the proportional contribution to market capitalisation (inner ring) and dividends paid (outer ring) of the ASX100 by banks, miners, energy companies and all others for 2006 and 2020.

Lion Quarterly Report 31 October 2021

Page 5

MARKET UPDATE

Dividend yields of miners (with the materials index as a long-term proxy) on ASX are currently breaking new ground on several measures:

• Dividend yield has been increasing for most of the duration of this boom (since December 2016) and has also achieved a 20+ year high. This trend is the direct opposite of previous mining booms.

• Since August 2019, dividend yield of miners has been exceeding the yield of the ASX200 – this has only ever occurred briefly before.

• The materials sector is now the highest yielding sector on ASX, and at the highest end of its 20-year range. All other sectors (other than gold) are at the low end of their 20-year range.

To some extent growing dividend payment is facilitated by increasing commodity prices, which in some cases have recently reached windfall levels. But miners have experienced windfall periods before that have boosted cashflows (even dividends), but that didn’t make them yield plays. Yield plays tend to combine reasonably stable cashflow with a lack of expenditure – neither of which apply to miners.

It is worth remembering, yield is a function of dividends out the door and the market value of the company that paid it. If the market were to pay more for miners, all other things remaining equal, the yield would drop.

Yield is certainly not a robust valuation metric, but companies and sectors that are yielding at all-time highs tend not to be described as ‘overvalued’ either.

What affects the market’s willingness to increase what it pays for miners? The ability to pay dividends goes hand in hand with investing in growth – if you are busy paying dividends, perhaps you aren’t investing in growth, and vice versa. The trend of capital investment this cycle is as historically anomalous as the dividend trend – it is conspicuous by its absence.

The gaze of growth: capex is coming

All cycles show a similar evolution of the attitude to growth from the industry. During a bust, growth expenditure is neither rewarded by investors nor readily funded so the industry tends to reduce expenditure to the bare essentials. As a boom takes place, funding availability normally correlates with investor interest – as commodity and miners equity prices recover, miners contemplate how they will compete for investor affection. The recipe for this has often featured increased scale and / or efficiencies either via expansion or transaction, although true value creation from expenditure during the most mature years of previous cycles has often been (badly) under-delivered.

==> picture [512 x 316] intentionally omitted <==

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

Current (31 October 2021) and 2000–2021 dividend yield range dividend yield of key ASX sectors
16
2000–2021 dividend yield range
14 October 2021 dividend yield
12
10
8
6
4
2
0
Source: IRESS data
Materials Utilities REITS ASX100 Fin X REIT ConsStap Industrials ConsDisc Energy Small Ords Gold Telecoms Healthcare IT
----- End of picture text -----

Lion Quarterly Report 31 October 2021

Page 6

MARKET UPDATE

The current boom has been characterised by remarkable financial and operating prudence on behalf of the industry that was almost certainly brought about by the length and depth of the last bust. Between 2011 and 2015 it was made abundantly clear that investors would not tolerate financial carelessness and were far more interested in miners establishing and maintaining positive cash margins than increased scale or even in maintaining dividends[*] . The high yield provided by strong cashflow generating miners is symptomatic of this behaviour and is reflected by other behaviours. Since 2015, capex deployment by the industry has been muted, and M&A activity has been conspicuously non-hostile.

Motivations for the industry to invest in growth are both self-serving and pragmatic. Producing more now, whilst commodity prices are increasing, leverages earnings outlooks. And, practically speaking, future production depends on constant investment to find, define and develop new sources to mine. Between the severe slashing of exploration and business development budgets between 2011 and 2015, and a feeble re-start to capital expenditure since, investment in growth has experienced a long hiatus but it cannot be put off forever.

Consider the possible investor attractions to two theoretical companies:

• Company A – mines a commodity with a positive price trend and future fundamentals.

• Company B – mines a commodity with a positive price trend and future fundamentals and with plans to double production over the next two years.

Which does the market buy or value most richly? This is clearly subjective (and hypothetical), but mining companies that pile cash onto their balance sheet tend to be targeted by questions about what they will do with it, and historically have tended not to command market premiums. In the modern market, investors can buy ETFs if they are purely seeking exposure to a commodity price. Part of the leverage effect of owning a miner is the potential for enhanced exposure to a rising commodity price by increased production output[**] .

Mega mergers (‘of equals’) have produced larger companies but haven’t yet resulted in standout value creation. There is mounting evidence of a shifting gaze toward growth:

• PWC, in their review of the world’s 40 largest miners, forecast a breakout in capital expenditure for 2021 versus 2018-2020[***] . This expectation is strongly supported by patterns of announcements across a broader spectrum of the industry.

• Asset optimisation is giving way to expansion. Observation of this trend is subjective, relying on industry recruiting patterns and gossip rather than purely obtainable data. There appears to be a strong desire from producers that have until recently been focussed on optimising their producing asset suite, to now build or implementing exploration teams, assess development stage companies as M&A targets, and promote initiatives to bring about a stepchange in production profile.

Rhetorical questions

It is impossible to characterise what the industry will do, or how the investment market will react. Some trends can be confidently extrapolated, but the key areas of speculation remain just that. So rather than speculate, why not just ask provocative questions?

If, and then as miners act on growth ambitions, activity will become more expensive, and take longer. For example, we are already seeing more expensive drilling costs per metre, inflating prices of new plant items and multiplying lead times, labour cost inflation (exacerbated by COVID travel restrictions), and assay turnaround times blowing out rather than just increasing. All are characteristics of a mature mining cycle and are well underway.

• Increasing non-production expenditure is likely to impinge cash available for dividends. Will miners maintain dividend payouts? Perhaps by utilising financial leverage?

• As growth evolves from outlook to action, will the market adjust its outlook for miners and deflate yield by inflating the price of the sector?

• Recall the market anxiety brought about by the major miners adherence to progressive dividend policies in 2015, which was widely regarded as financially reckless; adoption of performance correlated (and abandonment of progressive) dividend policies occurred very near the zenith of the bust, and was a major factor in reversing investors attitudes toward miners.

** Don’t forget that many CEO’s KPI’s reflect share price growth. And investment bankers can earn 6% raising money for a miner that wants to grow, versus 0.3% by trading the same amount of stock in the market.

• *** PWC MINE 2021.

Lion Quarterly Report 31 October 2021

Page 7

MARKET UPDATE

Commodities favouring a large number of small companies have helped mature the cycle

This is not a ‘this time it’s different’ discussion. Mineral commodities broadly exhibit similar trends over the timeframe of cycles, but in more detail can have remarkable volatility with respect to each other. Short episodes of commodity price fluctuation differ between the current boom and the last comparable cycle, which has resulted in differing investor behaviours.

The boom from 1999-2008 spanned the emergence of China as the world’s largest consumer of mineral commodities, which was characterised by amazing commodity price movements. Copper was an early winner, and through the cycle iron ore, which developed a spot market in the process, was the standout. Both commodities tend to mainly benefit larger companies. There were junior companies that emerged with an iron ore focus, but by and large the performance of major miners buoyed the ASX100 Resources index, and the junior miners, that by number had a far greater gold and nickel focus, underperformed the majors for much of the boom.

The current boom, which commenced in 2016, has experienced a different pattern in many commodities. China, which has perhaps become a more savvy buyer of commodities, has again underpinned a movement to record iron ore price. After almost

tripling between 2020 and mid-2021, it has since more than halved. This sort of volatility had never before existed in iron ore and has been reflected in the equity prices of major miners, many of which have substantial iron ore businesses. Iron ore is the major reason the ASX100 Resources index is 20% below its August 2021 peaks – a substantial retracement.

Gold staged a 30% rally between January and July 2016. A selection of smaller gold miners that had turned around expensive operations derived a double benefit to their margin, and made multiples in excess of 10x. This early cycle move in gold accelerated the infusion of investor interest into gold companies, which is the largest sector by number within mining in the global equity market and includes a large number of explorers, which in previous cycles has taken years to develop.

This boom has also seen the emergence of lithium, which has gone from niche to mainstream by virtue of trends in battery technology. The sector first had to produce successful explorers – lithium companies were all but unheard of in the last boom – and more recently producers, some of which are richly valued by the equity market. This is a remarkable focussed deployment of capital, largely by the investment market – lithium as a commodity is still a very small market on annual turnover, so contains very limited incentive for large scale occupation by major miners, who are capable of cashflow funding new projects.

==> picture [517 x 252] intentionally omitted <==

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

January 1999 – June 2008 January 2016 – Present
% %
800 800
600 600
ASX100 Resources
400 400 ASX Small Resources
200 200
0 0
% %
800 800
600 600 Iron Ore
Copper
400 400
Gold
200 200
0 0
0 10 20 30 40 50 60 70 80 90 100 110 0 10 20 30 40 50 60 70 80 90 100 110
----- End of picture text -----

Key ASX Resource indices (ASX100 Resources and ASX Small Resources) versus key mineral commodities (gold, copper, iron ore) through the boom of 1999–2008, and 2016–present. Horizontal axes are months from boom commencement.

Lion Quarterly Report 31 October 2021

Page 8

MARKET UPDATE

The performance of the ASX Small Resources index has been substantially better, relative to the ASX100 Resources index early in the cycle, primarily on the basis of gold and lithium for which producers and explorers are well represented in the ‘Small’ (nonmajor miner at least) index. The current strength in lithium, and weakness in iron ore, are principal drivers of the current outperformance by the Small Resources index. Since January 2016 the ASX100 Resources index is up 138%, versus 210% for the Small Resources index. There has not been a time since these indices began that the small index has held a 72 percentage point advantage over the large index, when measured over the duration of a boom.

11 o’clock beginning to play out – as expected

Miners becoming ASX’s highest dividend yielding sector, and smaller miners strongly outperforming the large cap index both make this cycle unique. But probably not to the extent that anyone should rush to say ‘this time it’s different’.

Dividends are evidence of growing disposable cash reserves on mining company balance sheets, and strongly aligned with appropriate financial behaviours that investors have insisted on. Healthy cash generation ability could also give way to greater

investment in growth by the industry. There is recent ample evidence of increasing capital expenditures, which tends to suggest the industry’s attitude to growth is passing an inflection point. The question is, will the market be excited by growth (as it has been in past cycles)? Increasing premia paid by the market for miners would reduce dividend yields below their current anomalous levels.

The pattern of commodity prices that have favoured smaller miners over the large capitalisation majors in this boom is circumstantial but has resulted in the emergence of liquidity right down into explorers far earlier than in previous cycles. Whilst this may well have enabled the cycle to mature more rapidly, it has facilitated the investment market sponsored growth of new significant commodity champions in the lithium space, and relatively fresh-faced new incumbents in the realms of globally significant gold producers. It has also nurtured a range of junior companies that have progressed projects to the point where many may now become ‘strategic’, either by virtue of their location, size and commodity focus, or partnerships, as the industry growth agenda plays out. This is very much the kind of behaviour that is expected, and which would be expected to become more cavalier, as 11 o’clock plays out.

==> picture [469 x 309] intentionally omitted <==

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

Agressive Seller
CRASH
New floats
big companies Company liquidations
Cautious Buyer 12
Paper takeovers 11 1
Declining exploration
People leave big companies 2021
top $ small companies short careers 10 2
2020
9 2019 3
2017
8 4
2016
Rising exploration Mergers
7 5
6 Agressive Seller
New floats Cash Cautious Buyer
small companies
BOOM takeovers
----- End of picture text -----

Lion Quarterly Report 31 October 2021

Page 9

LION PERFORMANCE

Lion Performance

Annualised Total Shareholder Return[9-14]

Annualised TSR to 31 October 2021	Lion	ASX Small Resources Accum. Index
1 Year	-7.6%	45.1%
3 Years	20.1%	14.0%
5 Years	6.7%	13.7%
10 Years	-2.1%	-2.7%
15 Years	7.3%	0.4%
Inception(24 yrs)	8.2%	4.9%

Total Shareholder Return for Lion Selection

versus ASX Small Resources (Accumilation Index)

==> picture [473 x 198] intentionally omitted <==

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

50%
Lion Selection
40%
ASX Small Resources
30%
20.1%
20%
6.7% 7.3% 8.2%
10%
0%
-2.1%
-10% -7.6%
Inception
1 Year 3 Year 5 Year 10 Year 15 Year 24 Years
----- End of picture text -----

Notes

1. Refer to One Asia Resources Limited news release 3 December 2014 (https://www.lionselection.com.au/wpcontent/uploads/2018/08/PANI%20 JORC%20RESOURCE.pdf)

2. Refer to J Resources 31 December 2018 Annual Report (http://www.jresources.com/investors/article/final-resources-reserves-compilation2017-to-2018).

3. Erdene BFS announced 20 July 2020

4. Erdene announcement 11 August 2021

5. Erdene announcement 23 September 2021

6. Erdene announcement 20 October 2021

7. Erdene announcement 6 January 2021

8. Erdene announcement 17 November 2021

9. Investment performance figures reflect the historic performance of Lion Selection Group Limited (ASX:LSG, 1997 – 2007), Lion Selection Limited (ASX:LST, 2007-2009), Lion Selection Group Limited (NSX:LGP, 2009-2013) and Lion Selection Group Limited (ASX:LSX, 2013-present).

10. Methodology for calculating total shareholder return is based on MorningStar (2006), which assumes reinvestment of distributions.

11. Distributions made include cash dividends, shares distributed in specie as a dividend, proceeds from an off market buyback conducted in Dec 2008, and the distribution of shares in Catalpa Resources via the demerger of Lion Selection Limited in Dec 2009. Lion assume all distributions are reinvested, with all non-cash distributions sold and the proceeds reinvested on the distribution pay date.

12. Investment performance is pre-tax and ignores the potential value of franking credits on dividends that were partially or fully franked.

13. Past performance is not a guide to future performance.

14. Source: IRESS, Lion Manager.

Lion Quarterly Report 31 October 2021

Page 10

Summary of Investments as at 31 October 2021

Net Tangible Asset Backing

Lion Selection Group Limited (Lion) advises that the unaudited net tangible asset backing of Lion as at 31 October 2021 is 64.6 cents per share (before tax) and 62.6 cents per share (after tax). This excludes $2.2m in contingent liabilities relating to Lion’s acquisition of African Lion 3 (see note below).

==> picture [512 x 373] intentionally omitted <==

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

October 2021
Commodity
A$M ¢ps
Pani Joint Venture Gold 63.3 42.2
The fair value of Lion’s interest in the Pani Joint Venture increased to
A$60.7M at 31 July 2020. This increase reflects the sustained escalation
in gold prices from the time of the most recent arm’s length transaction in
November 2018. An additional $2.6M has been invested subsequently.
Portfolio
Erdene Resources Gold 4.9 3.3
Kasbah Resources Tin 2.0 1.3
Celamin Holdings Phosphate 2.4 1.6
Other 1.1 0.7
Net Cash 23.3 15.5
Net Tangible Assets – Pre-Tax A$97.0m 64.6¢ps
Deferred tax liability on theoretical disposal of Lion’s portfolio (A$3.0m) (2.0¢ps)
Net Tangible Assets – Post-Tax A$94.0m 62.6¢ps
Capital Structure
Shares on Issue: 150,141,271
Share Price: 48.5¢ps 31 October 2021
----- End of picture text -----*

• Lion Selection Group ASX Announcement 4 August 2020, Pani Update and Valuation Revision

Contingent Consideration

Contingent Consideration Lion’s NTA excludes potential contingent consideration that may be payable if Lion sells its investment in either Celamin or Kasbah. Based on a theoretical sale of both investments at the date of the NTA, contingent consideration of $2.2m would arise (June 2021, $2.0m). This obligation arises following Lion agreeing to purchase the shares it did not own in African Lion 3 Ltd (AFL3) to consolidate ownership (with the exception of Lion Manager Pty Ltd who opted to hold its investment). The transaction involved part cash consideration and Lion agreeing to pay contingent consideration to be paid in certain circumstances for up to 5 years. The value of the contingent consideration depends on the ultimate exit price for Celamin and/or Kasbah, how long Lion holds the investments, and how much additional investment is required.

Lion Selection Group Limited ABN 26 077 729 572

Level 2, 175 Flinders Lane Melbourne Vic 3000 T: +61 3 9614 8008 F: +61 3 9614 8009 www.lsg.com.au

Enquiries Hedley Widdup hwiddup@lsg.com.au Jane Rose jrose@lsg.com.au Authorised for release by Craig Smyth csmyth@lsg.com.au