MATSA RESOURCES LIMITED — Capital/Financing Update 2014

May 7, 2014

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Matsa Resources Limited
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LIMITED

ABN 48 106 732 487

ASX Announcement 8[th] May 2014

High Priority Nickel-Copper Target at SHG02

Symons Hill

Highlights

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• High priority Ni-Cu target identified with potential for sulphide mineralisation at SHG02 close to and along strike from 2 deep complex conductors (+350m depth), planning underway for immediate diamond drilling

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• Target directly beneath significantly enriched Ni (108m @ 0.27% Ni, 43ppm Cu) in unweathered olivine metagabbro which contains trace disseminated sulphides

• Target also directly beneath strongly enriched Ni (12m @ 0.72% Ni, 108ppm Cu including values up to 1.08% Ni) in weathered olivine metagabbro

• Target lies proximal to strongly enriched Ni values and 2 deep complex conductors

CORPORATE SUMMARY

Executive Chairman

Paul Poli

Director

Frank Sibbel

Director & Company Secretary

Andrew Chapman

Shares on Issue

144.15 million

Unlisted Options

8.3 million @ $0.31 - $0.43

• Scenario presents that the targeted chargeability anomaly at SHG02 may be a disseminated sulphide “halo” to massive sulphide mineralisation as described in the hanging wall at Nova-Bollinger

• Ongoing assessment and reinterpretation of recent IP and MLTEM data in conjunction with drilling data continues

Top 20 shareholders

Hold 48%

Share Price on 7 May 2014

23 cents

Market Capitalisation

$33.16 million

Head Office: Suite 11, 139 Newcastle Street, Perth Western Australia 6000 Tel : +61 8 9230 3555 Fax: +61 8 9227 0370 Bangkok Office: Unit 1808, Pacific Place 2, 142 Sukhumvit Road, Klongtoey, Bangkok 10110 Tel : +66 0 2653 0258 Fax : +66 0 2653 0258 reception@matsa.com.au www.matsa.com.au

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Matsa is very pleased to report that an IP anomaly has been identified directly below and coincident with strongly enriched Ni values at SHG02. The importance of this chargeability anomaly was highlighted by a detailed interpretation of MLTEM and IP surveys integrated with all other exploration work completed to date at SHG02. The significance of this interpretation can be summarised as follows:

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• The presence of IP and EM anomalies in association with strongly enriched Ni values has defined a high priority drill target at SHG02.

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• An 8 mV/V chargeability anomaly evident in the IP survey data may reflect the presence of disseminated sulphides (including Ni and Cu sulphides) at depth.

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• The anomaly is located directly below strongly Ni enriched aircore results including 1.2% Ni, 0.012% Cu, 0.001% Co (SHAC117) in weathered olivine bearing metagabbro and high Ni values in bedrock including 108m @ 0.27% Ni, 0.004% Cu (SHRC06) accompanied by trace disseminated sulphides in unweathered olivine metagabbro in the 1.2km long SHG02 target zone.

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• If the source of the IP anomaly is disseminated sulphides then this significantly increases the potential for massive sulphides associated with complex conductivity responses directly along strike and at a similar depth at VA15 as recently announced. (MAT announcement to the ASX 28[th] April 2014) ,

Executive Chairman and CEO Paul Poli commented “Matsa is extremely enthused by the presence of a deep IP target and nearby EM conductors. The combination of impressive Nickel hits at SHG02 with chargeable and conductive anomalies has provided Matsa with an exciting target poised for immediate deeper drilling. We may be seeing a disseminated sulphide halo around one or more bodies of massive sulphide. This development at SHG02 significantly increases the possibility of success and is very exciting for the Symons Hill Project. The Matsa team is assessing a number of other key prospects in the Gloucester Corridor, including SHG03 and SHG11 as we write. We may end up defining several other high quality drill targets within the next week.”

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Figure 1: IP Section 6463800 (SHG02) showing anomaly underlying enriched Ni intersected in Aircore and RC drilling

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Figure 2: MLTEM Survey SHG02 and Location of IP line 6463800mN

Data Review and Interpretation

A 3D assessment of recently acquired MLTEM and IP survey data in conjunction with aircore and RC drilling is currently underway. (Ground electrical survey procedures including instrumentation survey layout are described in Table 1)

Conclusions to date can be summarised as follows:

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• A discrete feature (dark blue “hole” in Figure 2) evident in late channel MLTEM data was interpreted to be due to the effect of IP responses on EM data. This well defined chargeability anomaly can be seen to coincide precisely with strongly enriched Ni values in olivine bearing metagabbros at SHG02.

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• A single 2.1km long IP survey line was completed on line 6463800mN, which was designed to follow up the MLTEM anomaly and confirmed the presence of a moderate strength (8mv/V) IP anomaly at a depth of around 240m.

• This well defined IP anomaly may be caused by disseminated sulphides including Ni and Cu sulphides. It is noteworthy that trace disseminated sulphides were identified in shallow (120m) RC drillholes completed in 2013 at SHG02. (MAT announcement to ASX 19[th] December 2013)

• Consultant geophysicists SGC confirm that the conventional 2DIP survey anomaly at SHG02 is clearly coincident with reverse/negative polarity, high powered MLTEM anomalism. The 2DIP transect on 6463800mN has confirmed the polarisation effects at SHG02 as observed in the MLTEM data and also more importantly, has defined that the related IP source is at depth/within-bedrock and not a surficial unit .

• The anomaly immediately underlies strongly enriched Ni values in weathered olivine bearing metagabbro including 12m @ 0.72% Ni, 0.01% Cu in SHAC117 (Figure 1).

• RC drillholes completed in 2013 to ~100m included broad intercepts of elevated Ni values extending into unweathered gabbro, including 108m @ 0.27% Ni, 0.0043% Cu in SHRC06. (Figure 1)

• The deep IP anomaly associated with SHG02 is located above and along strike from 2 complex MLTEM conductivity responses at VA15 as reported recently. (MAT announcement to ASX 28[th] April 2014)

• Both the MLTEM and IP targets have been sufficiently well defined for high priority drilling.

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For further Information please contact:

Paul Poli Executive Chairman

Phone +61 8 9230 3555 Fax +61 8 9227 0370 Email reception@matsa.com.au Web www.matsa.com.au

Exploration results

The information in this report that relates to Exploration results, is based on information compiled by David Fielding, who is a Fellow of the Australasian Institute of Mining and Metallurgy. David Fielding is a full time employee of Matsa Resources Limited. David Fielding has sufficient experience which is relevant to the style of mineralisation and the type of ore deposit under consideration and 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’. David Fielding consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

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Table 1: Matsa Resources Limited Symons Hill Project JORC 2012 Table 1

Section 1 Sampling Techniques and Data

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

Criteria	JORC Code explanation	Commentary
Sampling	Nature and quality of sampling (eg cut channels, random chips,	Soil Samples comprise approximately 300g of -1.5mm bulk
techniques	or specific specialised industry standard measurement tools	soils collected between a depth of 10 and 30cm. Assay
	appropriate to the minerals under investigation, such as down	techniques such as Mobile Metal Ion (MMI) partial digest
	hole gamma sondes, or handheld XRF instruments, etc). These	require that stainless steel shovel for digging and plastic trowel
	examples should not be taken as limiting the broad meaning of	to scoop out soil is used to minimize sample contamination.
	sampling.	Input from geochemical consultants eg ioGlobal Ltd has been
	Include reference to measures taken to ensure sample	sought from time to time to ensure that the size of sample is
	representivity and the appropriate calibration of any	sufficient to ensure representivity of the soil mass being
	measurement tools or systems used.	sampled. The target elements being sought are not present in
	Aspects of the determination of mineralisation that are Material	coarse aggregates, coarse gold is not being targeted
	to the Public Report.	consequently 300g is sufficient for a representative sample
	In cases where ‘industry standard’ work has been done this	From a sampling perspective the target is basement
	would be relatively simple (eg ‘reverse circulation drilling was	mineralization. Sampling procedures for total digest are
	used to obtain 1 m samples from which 3 kg was pulverised to	focused on the clay fraction which captures and amplifies the
	produce a 30 g charge for fire assay’). In other cases more	geochemical response above basement mineralization. Sample
	explanation may be required, such as where there is coarse	procedures for MMI likewise target the amplified geochemical
	gold that has inherent sampling problems. Unusual	response associated with mobile ions of the target element.
	commodities or mineralisation types (eg submarine nodules)
	may warrant disclosure of detailed information.
Drilling	Drill type (eg core, reverse circulation, open-hole hammer,	Aircore Drilling carried out by Challenge Drilling. Vacuum Bit
techniques	rotary air blast, auger, Bangka, sonic, etc) and details (eg core	achieving accurate face sampling. Bit diameter 75-80mm.
	diameter, triple or standard tube, depth of diamond tails, face-	Second phase aircore drilling carried out by Frontline Drilling
	sampling bit or other type, whether core is oriented and if so, by	using a conventional aircore drill bit.
	what method, etc).	Limited RAB drilling (4 holes) were carried out early in the
		program but due to presence of “running sands” in the first
		target area, aircorewas the drillingmethod ofchoice to

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Criteria JORC Code explanation Commentary	Criteria JORC Code explanation Commentary
	continue the program. Hammer bits were occasionally used when aircore bit reaches refusal depth and rocks recovered are still highlyweathered.
Drill sample recovery Method of recording and assessing core and chip sample recoveries and results assessed. Measures taken to maximise sample recovery and ensure representative nature of the samples. Whether a relationship exists between sample recovery and grade and whether sample bias may have occurred due to preferential loss/gainof fine/coarse material.	Recovery was not measured.
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. Whether logging is qualitative or quantitative in nature. Core (or costean, channel, etc) photography. The total length and percentage of the relevant intersections logged.	Visual logging carried out on washed cuttings. All washed cuttings were retained in boxes. Selected fresh bottom of hole samples selected for petrography. Logging recorded as qualitative description of colour and lithological type.
Sub- sampling techniques and sample preparation If core, whether cut or sawn and whether quarter, half or all core taken. If non-core, whether riffled, tube sampled, rotary split, etc and whether sampled wet or dry. 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 the grain size of the material being sampled.	Samples of 1-4m were composited for assay. The subsampling technique was carried out by hand spearing drill residues over specified intervals to achieve a final sample weight of around 3 kg. The opportunity exists to go back to individual splits as a check on composite assay values. Composite samples with results above 0.1% Ni were chosen for the 1m split sampling. Bulk residues of the bagged 1m interval were passed through a three-tier riffle splitter producing a 1-3kg sample. Sample for Hand held XRF analysis . A scoop of sample from the end of hole (EOH) meter (~200g) were placed in a calico bag and air dried before being lightly pulverized and passed through a 1.5mm sieve. The fine fraction is hand-pulverized

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Criteria JORC Code explanation Commentary	Criteria JORC Code explanation Commentary
	and then sieved through an 80-mesh (180 microns) screen. The powdered sample is pressed into a standard assay vessel as supplied by Choice Analytics specifically for use with handheldXRFequipment.
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. 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. Nature of quality control procedures adopted (eg standards, blanks, duplicates, external laboratory checks) and whether acceptable levels of accuracy (ie lack of bias) and precision have been established.	Soil and rock samples collected for gold and base metal exploration are assayed using an aqua regia digest and are regarded to be a total digest enabling total values for target elements to be measured. Analysis by inductively coupled plasma mass spectrometry (ICP-MS) technique is seen as the most cost effective technique for low level detection of gold and base metals. Inductively coupled plasma atomic emission spectrometry (ICP-AES) was also used to detect other elements such as Ca, Fe, K, etc. Precious metal (Au-Pd-Pt) determination is by 30g lead fire assay fusion and the resulting bead is digested in a three-stage acid process and measured using ICP-AES. For the 1m splits, four acid digestion was carried out and measured with ICP-AES. For surface sampling no QA QC samples have been inserted and reliance is placed on laboratory procedures. Samples submitted for base metal analysis are “validated” in the field by a prior assay using the Olympus Handheld XRF unit. Hand held XRF Analysis. Bottom of hole samples from aircore drillholes were analysed using a handheld Olympus Innovx Delta Premium (DP4000C model) XRF analyser. Reading times employed was 90 sec/beam for a total of 270 sec. Composited aircore samples are assayed using four acid digest and analysed with ICP-AES. Bottom of hole (BOH) samples assaying is carried out in complete geochemical characterization package (ALS method CCP-PKG01) using a variety of sample decomposition and analytical methods. Majorelements (Si,Al, etc.)is bylithium

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Criteria JORC Code explanation Commentary	Criteria JORC Code explanation Commentary
	metaborate fusion and measured with ICP-AES; C is combusted in a LECO induction furnace and measured using infrared spectroscopy; S is determined using a LECO sulphur analyser; trace elements (Ba, Ce, Cr, REEs, etc.) are by Li- borate fusion and quantified with ICP-MS; base metals (Ag, Cd, Co, etc.) are dissolved with four acid digest and determined using ICP-AES; volatile trace elements (As, Bi, Hg, etc.) are by aqua regia and measured using ICP-MS; and Loss on Ignition (LOI) is determined with gravimetric means after thermal decomposition in a furnace. Au determination were carried out in both composite and BOH samples using aquaregia digest and analysedwith ICP-MS.
Verification of sampling and assaying The verification of significant intersections by either independent or alternative company personnel. The use of twinned holes. Documentation of primary data, data entry procedures, data verification, data storage (physical and electronic) protocols. Discuss any adjustment to assay data.	Not carried out because laboratory QA QC procedures are regarded as sufficient for surface samples and first pass aircore samples. Data entry carried out by field personnel thus minimizing transcription or other errors. Trial plots in field and rigorous database procedures ensure that field and assay data are merged accurately. Hand held XRF Analysis: Ni and Cu values from the most recently completed aircore programme at Symons Hill are compared graphically with 4 Acid digest results from samples representing the same interval (See Appendix 2) There is generally excellent agreement between the two datasets and Matsa has no hesitation in using “real time” XRF results to indentify Ni and Cu bedrock anomalies. Assays are collected on at least 2 blank samples and 2 duplicate samplesinevery batchofonehundred samples.
Location of data points Accuracy and quality of surveys used to locate drill holes (collar and down-hole surveys), trenches, mine workings and other	Drill collars are surveyed by modern hand held GPS units with an accuracy of 5m which is sufficient accuracy for the purpose

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Criteria JORC Code explanation Commentary	Criteria JORC Code explanation Commentary
locations used in Mineral Resource estimation. Specification of the grid system used. Quality and adequacy of topographic control.	of compiling and interpreting results. Topographic control 2-5m accuracy using published maps or Shuttle Radar data is sufficient to evaluate topographic effects onassay distribution.
Data spacing and distribution Data spacing for reporting of Exploration Results. 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. Whether sample compositing has been applied.	Sample spacing is established using the largest spacing possible for a likely target footprint to minimize cost. Issues such as transported overburden which can blanket geochemistry response lead to a reduction in sample spacing. Aircore drillholes spacings were selected to achieve a first pass test of soil geochemical anomalies and to enable bedrock types to be characterized as a guide to a geologically driven explorationprogrammefor NiSulphides.
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. 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.	Soil samples are collected on a staggered grid in order to minimize orientation bias. Vertical Aircore drillholes were oriented along EW lines which are at a high angle to the geological strike.
Sample security The measures taken to ensure sample security.	Not regarded as an issue for soil samples and first pass aircore samples beyond clear mark up and secure packaging to ensure safe arrival and accurate handling by personnel at assay facility. Aircore residues retained in strong green plastic bags pending further sampling. Assay Pulps retained until final resultshave beenevaluated.
Audits or reviews The results of any audits or reviews of sampling techniques and data.	Orientation surface sampling overseen by geochemical consultants to ensure best practice. First pass assays with hand held XRF machine to gain impression of mineralization. Hand held XRF Analysis. Procedure analysis of drill hole samples was developed in conjunction with ioGlobal, but yet to beformally audited or reviewed.

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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, location and ownership	EL69/3070 which is owned 100% by Matsa Resources Ltd.
tenement	including agreements or material issues with third parties such	Located on Vacant Crown Land
and land	as joint ventures, partnerships, overriding royalties, native title	The License intersects the buffer zones of the Fraser Range
tenure status	interests, historical sites, wilderness or national park and environmental settings. The security of the tenure held at the time of reporting along	and Southern Hills PEC’s Exploration to be managed in accordance with a Conservation Management Plan. The project is located within Native Title Claim by the Ngadju
	with any known impediments to obtaining a licence to operate	people.
	in the area.	A heritage agreement has been signed and exploration is
		carried out within the terms of that agreement.
		At the time of writing the licence is granted for a 5 year period
		expiring on6thMarch 2018
Exploration	Acknowledgment and appraisal of exploration by other parties.	Prior work carried out by GSWA in the form of wide spaced
done by		helicopter based soil sampling and acquisition of 400m line
other		spacing magnetic and radiometric data.
parties		No previous exploration data has been reported.
Geology	Deposit type, geological setting and style of mineralisation.	The target is Nova style Ni Cu mineralization hosted in high
		grademafic granulites oftheFraserComplex
Drill hole	A summary of all information material to the understanding of	Co ordinates and other attributes of aircore drillholes are
Information	the exploration results including a tabulation of the following	included in Appendix 2. Each drilling programme will be
	information for all Material drill holes: o easting and northing of the drill hole collar	attached in this way as information becomes available.
	o elevation or RL (Reduced Level – elevation above sea level
	in metres) of the drill hole collar
	o dip and azimuth of the hole
	o down hole length and interception depth
	o hole length.

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Criteria	JORC Code explanation	Commentary
	If the exclusion of this information is justified on the basis that
	the 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	In reporting Exploration Results, weighting averaging	Aggregation of downhole assay values for Ni Cu and Co were
aggregation	techniques, maximum and/or minimum grade truncations (eg	shown for intercepts containing >0.1% Ni. Intercepts were
methods	cutting of high grades) and cut-off grades are usually Material	calculated by averaging length weighted intercept values for
	and should be stated.	the three elements (usually 4m lengths). Raw un - aggregated
	Where aggregate intercepts incorporate short lengths of high	Cu, Ni and Co values have been included in previous release.
	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. _
Relationshi	These relationships are particularly important in the reporting of	All intercepts reported are measured in down hole metres.
p between	Exploration Results.
mineralisati	If the geometry of the mineralisation with respect to the drill
on widths	hole angle is known, its nature should be reported.
and intercept lengths	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 scales) and tabulations of	Suitable summary plans have been included in the body of the
	intercepts should be included for any significant discovery	report.
	being reported These should include, but not be limited to a	Plan maps have been included to illustrate the results at
	plan view of drill hole collar locations and appropriate sectional	SHG01, SHG02 and SHG03
	_views. _
Balanced	Where comprehensive reporting of all Exploration Results is	Not required at this stage
reporting	not practicable, representative reporting of both low and high
	grades and/or widths should be practiced to avoid misleading

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Criteria	JORC Code explanation	Commentary
	_reporting of Exploration Results. _
Other	Other exploration data, if meaningful and material, should be	Airborne VTEM (combined magnetic and electromagnetic)
substantive	reported including (but not limited to): geological observations;	carried out in December 2012 by Geotech Airborne Pty Limited.
exploration data	geophysical survey results; geochemical survey results; bulk samples – size and method of treatment; metallurgical test results; bulk density, groundwater, geotechnical and rock	A total of 6 priority targets and 15 second order targets identified and reported on by Southern Geoscience Consultants Ltd
	characteristics; potential deleterious or contaminating	Prior to December 2012, Comprehensive geochemical survey
	substances.	carried out by Matsa Resources comprising 614 samples
		mostly at 400m centres on a staggered grid identified targets
		SH01 to SH05. Infill at 200m x 200m completed over targets
		SH01 to SH05 in May 2013 for a total of 638 samples.
		Ground EM 2013, carried out by Bushgum Holdings Pty Ltd,
		under supervision by Newexco consultants, consisting of both
		moving-loop (MLEM) and fixed-loop (FLEM) surveys. Data
		acquisition was achieved using a SMARTem24 8-channel
		geophysical receiver manufactured by ElectroMagnetic Imaging
		Technology (EMIT), Bartington 3-component magnetic field
		sensor (up to 1Hz frequency response) and a Zonge ZT-30
		Loop Driver transmitter to power the loop with up to 30A. The
		MLEM and FLEM surveys are both 400m wide. In the MLEM,
		the survey lines are spaced 400m apart with receiving stations
		every 100m inside the loop along an E-W direction. In the
		FLEM, the receiving stations are 50m apart across 1 km
		traverse in an E-W direction.
		Fixed Loop TEM Surveys carried out in February March 2014
		by Outer Rim, SURVEY PARAMETERS Configuration : Fixed
		Loop, Station Spacing : 50 m RECEIVER Receiver :
		SMARTem24, Frequency : 2.0833, Component Z,X,Y, Rx Coil
		: Fluxgate, Rx Area : 10000m2 turn-m TRANSMITTER
		Transmitter : Crone-Ext, Tx Moment : Unknown turn-m, Tx
		Current: 20A TurnOff :0.5ms

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Criteria	JORC Code explanation	Commentary
		Survey Location Plan Attached
		FLTEM loop sizes ranged from 300x500m to 400x600m, single
		loop turn. Multiple E-W survey lines were utilised (3) per line at
		150m line spacing in order to adequately resolve potential
		bedrock conductors. All FLTEM surveying was completed with
		50m station spacing
Further	The nature and scale of planned further work (eg tests for	RC and diamond drilling at geochemical anomalies SHG01,
work	lateral extensions or depth extensions or large-scale step-out	SHG02 and SHG03. Aircore drilling at other areas
	drilling).	recommended by geophysical consultant.
	Diagrams clearly highlighting the areas of possible extensions,	Geological mapping to commence in areas of bedrock
	including the main geological interpretations and future drilling	exposure in the south of the tenement.
	areas, provided this information is not commercially sensitive.	Induced polarization (IP) geophysical surveys over
		geochemicaltargets SHG01, SHG02and SHG03.

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