MATSA RESOURCES LIMITED — Capital/Financing Update 2018

Nov 13, 2018

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Matsa Resources Limited
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LIMITED ABN 48 106 732 487

ASX Announcement

14[th] November 2018

Matsa Expands Lake Carey Gold Project

Highlights

• Matsa has acquired an option over Anova Metals Ltd’s 17.8 km[2] Devon tenements just south of the Red October gold mine within the Lake Carey gold project

• Matsa can elect to exercise the option by paying $200,000 within 18 months to acquire a 100% interest in the Devon tenements

CORPORATE SUMMARY

Executive Chairman

Paul Poli

Director

Frank Sibbel

Director & Company Secretary

• Numerous gold targets have already been identified with historical drill results including:

1m at 37.1 g/t Au from 4m 2m at 13.3 g/t Au from 16m 5m at 4.7 g/t Au from 43m 10m at 2.0 g/t Au from 16m

• Matsa to take a placement in Anova of 10 million shares at a price of 2.25 cents per share

• Matsa has also executed an agreement to acquire Anova’s Zelica gold project for a sum of $150,000 subject to due diligence

Andrew Chapman

Shares on Issue

176.93 million

Unlisted Options

13.70 million @ $0.25 - $0.30

Top 20 shareholders

Hold 53.42%

Share Price on 13[th] November 2018

15 cents

Market Capitalisation

$26.54 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 1801, 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 Resources Limited (“Matsa” or “the Company” ASX: MAT) is pleased to advise that it has entered into two agreements with Anova Metals Ltd (“Anova”, ASX: AWV) whereby Matsa on one hand can acquire Anova’s Devon project and in a separate transaction, Anova’s nearby Zelica gold project.

Matsa continues to expand its interest in the Lake Carey gold project area south of Laverton by executing these two agreements. Matsa believes in the prospectivity of this gold province and continually seeks to increase its footprint in the region by entering into agreements which are strategically positioned and contain meaningful gold exploration targets. The acquisition is of particular interest as it forms a larger contiguous land package with existing gold targets already to hand and strongly complements the recently acquired Red October gold mine.

It is envisaged that exploration will commence immediately in conjunction with surrounding tenements where recent aeromagnetic surveys and aircore drilling have been completed. This strategic acquisition complements the overall strategy of building a company with high quality gold potential in a contiguous land package all within close proximity of the Red October gold mine, village and infrastructure.

Devon Tenements

The Devon tenements are located immediately south of Red October and are contiguous to Matsa’s Red October tenements (Figure 1). The tenements hold multiple historical workings that produced approximately 23,000 ounces of gold from an average grade of 50 g/t over outcropping and near surface quartz veins.

Significant historical drill results at Devon highlight several gold mineralised areas as shown in Figure 2, with better results being:

1m at 37.1 g/t Au from 4m 2m at 13.3 g/t Au from 16m 5m at 4.7 g/t Au from 43m 10m at 2.0 g/t Au from 16m

Devon Acquisition Terms

Matsa and Anova entered have entered into a Placement and Option Deed whereby:

1. Matsa will take a placement in Anova via the issue of 10 million fully paid ordinary shares in Anova at an issue price of 2.25 cents per share;

2. Matsa has been granted an option to acquire the Devon tenements for $200,000 at any time within the next 18 months;

3. Anova retains a 1% net smelter royalty (NSR) over any gold produced from the Devon tenements.

Importantly, Matsa can withdraw at any time during the next 18 months at no cost. Matsa has completed due diligence on the Devon tenements and believes there are excellent drill ready exploration opportunities which are to be assessed.

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Figure 1: Location of Devon Tenements and prospects subject to Option Agreement

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Figure 2: Location of Devon Tenements and significant drill results

Zelica Project

The Zelica gold project is located 20km to the NW of Red October (Figure 3).

The Zelica gold project contains a 2004 JORC compliant 30,000 oz gold resource as previously reported by Exterra Resources Limited.

Previous exploration activities undertaken by Anova have concentrated on carrying out optimisation studies on the insitu gold resources. Work included drilling on the low grade stockpile to confirm grades from historic drilling and a programme of pit floor trenching, mapping and sampling.

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Anova also identified the potential presence of near-surface, high-grade zones within the main ore zone, most notably in the central parts, and near the southern pit ramp.

Zelica JORC 2004 Resource Estimate

	Indicated	Indicated			Inferred		Combined	Combined
	Tonnes	g/t Au	Ounces	Tonnes	g/t Au	Ounces	Tonnes	g/t Au	Ounces
Zelica	358,200	1.65	19,036	216,600	1.58	11,134	576,8008	1.63	30,170

Cautionary Statement

The Zelica Mineral Resource estimate was originally publicly reported to the ASX by Exterra Resources Limited (ASX: EXG) on 30 July 2012. Mineral Resources are not reported in accordance with the JORC Code 2012. A Competent Person has not done sufficient work to classify the estimates of Mineral Resources in accordance with the JORC Code 2012. It is possible that following evaluation and/or further exploration work the currently reported estimates may materially change and hence will need to be reported afresh under and in accordance with the JORC Code 2102. Nothing has come to the attention of Matsa that causes it to question the accuracy or reliability of the estimate but Matsa has not independently validated the estimate and therefore is not to be regarded as reporting, adopting or endorsing that estimate.

Refer to Exterra’s ASX Announcement titled Quarterly Activities and Cashflow Report and dated 30 July 2012 for further information in relation to the Zelica Mineral Resource. Matsa confirms that it is not aware of any new information or data that materially affects the information included in this document in relation to the Zelica Mineral Resource estimate and that all material assumptions and technical parameters underpinning these estimates continue to apply and have not materially changed. Zelica was estimated using Ordinary Kriging reported above a 0.5 g/t Au block model grade with a 12.0 g/t Au top cut.

Acquisition Terms

Matsa has entered into a Sale and Purchase Agreement with Anova whereby it can acquire Anova’s Zelica gold project on the following basis:

1. Matsa will pay Anova a cash sum of $150,000 for a 100% interest in the Zelica project; and

2. Anova receives a 1.5% NSR on the first 25,000 tonnes of gold bearing ore produced from the tenements and a 1% NSR on the next 25,000 tonnes of gold bearing ore produced from the tenement.

The agreement is subject to Matsa completing due diligence to its absolute satisfaction no later than 20 December 2018.

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

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Figure 3: Location of Zelica and Devon Projects

Competent Person

The Mineral Resource and exploration information in this report is based on information compiled by Mark Csar, who is a Fellow of the Australasian Institute of Mining and Metallurgy. Mark Csar is a full time employee of Matsa Resources Limited. Mark Csar 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’. Mark Csar 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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Appendix 1

Section 1 Sampling Techniques and Data

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

	Criteria	JORC Code explanation	JORC Code explanation	Commentary
	Sampling	•	Nature and quality of sampling (eg cut channels, random chips, or specific	Devon: Results compiled from DMIRS open files. Details generally unknown.
	techniques		specialised industry standard measurement tools appropriate to the minerals	Deeper AC drilling at 1m intervals with 4m composites of +/- 2kg sent to lab.
			under investigation, such as down hole gamma sondes, or handheld XRF
			instruments, etc.). These examples should not be taken as limiting the broad
			meaning of sampling.
		•	Measures taken to ensure sample representivity and the appropriate
			calibration of any measurement tools or systems used.
		•	Aspects of the determination of mineralisation that are Material to the Public
			Report. 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, open-hole hammer, rotary air blast,	Devon: Historical RAC, AC, RC and Diamond drilling.
	techniques		auger, Bangka, sonic, etc.) and details (eg core diameter, triple or standard
			tube, depth of diamond tails, face-sampling bit or other type, whether core is
			_oriented and if so, by what method, etc.). _
	Drill sample	•	Method of recording and assessing core and chip sample recoveries and	Devon: Sample recoveries not noted in historical files. Holes have been
	recovery		results assessed.	geologically logged with data recovered where available.
		•	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/gain of
			fine/coarse material.
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Criteria	JORC Code explanation	JORC Code explanation	Commentary
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.
Sub-sampling	•	If core, whether cut or sawn and whether quarter, half or all core taken.	Devon: Historical data not recorded
techniques and
sample preparation	•	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.
Quality of	•	The nature, quality and appropriateness of the assaying and laboratory	Devon: Historical data not recorded.
assay data and		procedures used and whether the technique is considered partial or total.
laboratory
tests
	•	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.

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Criteria	JORC Code explanation	JORC Code explanation	Commentary
	•	Nature of quality control procedures adopted (eg standards, blanks,
		duplicates, external laboratory checks) and whether acceptable levels of
		accuracy (ie. lack of bias) andprecision have been established.
Verification of	•	The verification of significant intersections by either independent or	Devon: Historical data not recorded
sampling and		alternative company personnel.
assaying	•	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.
Location of	•	Accuracy and quality of surveys used to locate drill holes (collar and down-	Devon: Historical data not recorded. Some Wamex reports indicate some hole
data points		hole surveys), trenches, mine workings and other locations used in Mineral	(RC holes) surveyed with GPS. Elevation data assumed or unknown.
		Resource estimation.
	•	Specification of the grid system used.
	•	Quality and adequacy of topographic control.
Data spacing	•	Data spacing for reporting of Exploration Results.	Devon: Drilling at various spacings. Shallow (4”) auger at 50m x 200m over the
and			majority of the tenement area. AC, RC drilled on irregular pattern over target
distribution			areas. Samples are generally not composited in original dataset. Samples have
			been composited at 1 g/t Au cut in this report.
	•	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.
Orientation of	•	Whether the orientation of sampling achieves unbiased sampling of possible	Devon: Orientation of continuous in-situ mineralisation yet to be determined.
data in relation		structures and the extent to which this is known, considering the deposit
		type.

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Criteria	JORC Code explanation	JORC Code explanation	Commentary
to geological	•	If the relationship between the drilling orientation and the orientation of key
structure		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 security.	Devon: Historical data – unknown.
security
Audits or	•	The results of any audits or reviews of sampling techniques and data.	No audit carried out yet.
reviews

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 including	Devon: tenements are live; M39/386, M39/387, M39/500, M39/629 and
	tenement and	agreements or material issues with third parties such as joint ventures,	E39/1232.There are no known impediments to operate.
	land tenure	partnerships, overriding royalties, native title interests, historical sites,
	status	wilderness or national park and environmental settings.
		• The security of the tenure held at the time of reporting along with any
		known impediments to obtaining a license to operate in the area.
	Exploration done	• Acknowledgment and appraisal of exploration by other parties.	Devon: Goldfields Exploration Pty Ltd, Exterra and Hoama have been the major
	by other parties		explorers in the area.
	Geology	• Deposit type, geological setting and style of mineralisation.	Devon: Volcanics and sediments dominate the area. Coarse grained mafic and
			ultramafic rocks occur conformably as intrusive sills. Banded iron and chert form
			prominent marker horizons. Mineralisation is hosted in narrow, steeply east
			dipping quartz veins with associated argillite alteration.
	Drill hole	• A summary of all information material to the understanding of the	Devon: Refer to appendix for drilling with intercepts greater than 5 gram-metre
	Information	exploration results including a tabulation of the following information for	Au. Shallow (0.5 - 1.2m deep) AC drilling covers the tenements at 50m x 200m
		all material drill holes:	spacing. Other RAB, AC, RC and diamond (3 holes) are not included as this
		o easting and northing of the drill hole collar	information is not considered to detract from the understanding of the report.
		o elevation or RL (Reduced Level – elevation above sea level in metres) of
		the drill hole collar
		o dip and azimuth of the hole
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	Criteria	JORC Code explanation	Commentary
		o down hole length and interception depth
		o hole length.
		• 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 techniques,	Devon: Data reported herein is reported as composite intervals that have been
	aggregation	maximum and/or minimum grade truncations (eg. cutting of high grades)	weight averaged.
	methods	and cut-off grades are usually material and should be 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 important in the reporting of	Devon: All intercepts quoted relate to downhole depth and true width is
	between	Exploration Results.	unknown. Current interpretation suggests that drill holes need to be oriented
	mineralisation	• If the geometry of the mineralisation with respect to the drill hole angle is	from east towards the west to test for a combination of subvertical to shallow
	widths and	known, its nature should be reported.	east dipping structures. Intercepts are expressed in downhole metres.
	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 intercepts	Diagrams included in report
		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 Exploration Results is not	Devon: All available drilling information has been used to determine exploration
	reporting	practicable, representative reporting of both low and high grades and/or	targets.
		widths should be practiced to avoid misleading reporting of Exploration
		Results.
	Other	• Other exploration data, if meaningful and material, should be reported	Devon: The report made use of publicly available past drilling
	substantive	including (but not limited to): geological observations; geophysical survey
	exploration data	results; geochemical survey results; bulk samples – size and method of
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Criteria	JORC Code explanation		Commentary
	treatment; metallurgical test results; bulk density, groundwater,
	geotechnical and rock characteristics; potential deleterious	or
	contaminating substances.
Further work	• The nature and scale of planned further work (eg tests for lateral		Devon: Planned drilling is intended to test known and interpreted target
	extensions or depth extensions or large-scale step-out drilling).		locations.
	• Diagrams clearly highlighting the areas of possible extensions, including
	the main geological interpretations and future drilling areas, provided	this
	information is not commercially sensitive.

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Appendix 2 – Devon drill summary with > 5 gram-metre Au intercepts

Hole_ID	Type	MGA_E	MGA_N	RL	dip	azi	depth	mFrom	mTo	mThick	Au_ppm
LNRC014	RC	444276	6757037	430	-60	222	66	4.0	5.0	1.0	37.10
LPR001	RAB	446683	6758924	492	-60	64	27	16.0	18.0	2.0	13.28
SLRC017	RC	447238	6759158	402	-60	90	82	43.0	48.0	5.0	4.67
HLP007	RC	447328	6758838	400	-60	315	40	16.0	26.0	10.0	2.02
EXAC089	AC	447487	6758768	400	-60	190	69	59.0	63.0	4.0	4.87
EXAC100	AC	447323	6758858	400	-60	160	51	33.0	38.0	5.0	3.37
EXAC078	AC	446311	6758579	400	-60	90	12	3.0	5.0	2.0	8.02
EXAC080	AC	446612	6758433	384	-60	180	18	9.0	13.0	4.0	3.80
SLRC042	RC	447438	6759078	400	-60	180	82	40.0	43.0	3.0	4.94
EXAC082	AC	447542	6758728	400	-60	190	36	12.0	16.0	4.0	3.60
EXAC093	AC	447441	6758720	400	-60	135	57	23.0	27.0	4.0	3.17
HLP002	RC	447503	6758739	400	-60	156	56	6.0	12.0	6.0	1.99
EXAC087	AC	447506	6758735	400	-60	190	39	22.0	26.0	4.0	2.92
EXRC030	RC	446290	6758602	422	-60	90	35	11.0	13.0	2.0	5.22
EXAC090	AC	447459	6758733	400	-60	190	57	32.0	33.0	1.0	10.20
DVD015	Diamond	445772	6760128	485	-60	61	126	100.0	102.0	2.0	5.07
LNRC035	RC	446936	6757848	422	-60	352	60	35.0	38.0	3.0	3.35
EVRB024	RAB	445036	6758061	431	-60	225	54	32.0	36.0	4.0	2.45
OCP025	RC	444914	6760016	398	-61	36	44	40.0	44.0	4.0	2.37
HLP002	RC	447503	6758739	400	-60	156	56	18.0	20.0	2.0	4.65
GRRC003	RC	444504	6757122	430	-60	225	106	21.0	26.0	5.0	1.84
HLP002	RC	447503	6758739	400	-60	156	56	22.0	26.0	4.0	2.30
HLP009	RC	447166	6759468	400	-60	85	60	16.0	20.0	4.0	2.29
SLRC065	RC	447227	6759503	400	-60	180	82	16.0	18.0	2.0	4.50
EXAC088	AC	447508	6758749	400	-60	190	57	35.0	39.0	4.0	2.21
EXRC006	RC	446591	6758450	400	-60	180	59	32.0	33.0	1.0	8.52
SLRC020	RC	447398	6758958	400	-60	90	82	44.0	47.0	3.0	2.73
SLRC031	RC	447318	6758758	403	-60	90	82	9.0	10.0	1.0	7.90
EXAC087	AC	447506	6758735	400	-60	190	39	19.0	21.0	2.0	3.79
93BP005	RC	444963	6758601	400	-60	214	50	37.0	39.0	2.0	3.77
EXRC012	RC	446570	6758449	400	-60	180	50	33.0	35.0	2.0	3.68
93BP001	RC	444946	6758613	400	-60	214	50	16.0	18.0	2.0	3.60
EXAC082	AC	447542	6758728	400	-60	190	36	22.0	25.0	3.0	2.40
LNRC121	RC	444298	6757023	427	-60	220	60	4.0	5.0	1.0	7.09
SLRC021	RC	447358	6758958	400	-60	90	82	7.0	9.0	2.0	3.50
EXRC013	RC	446550	6758430	400	-60	180	38	17.0	18.0	1.0	6.92
EXAC069	AC	446302	6758621	402	-60	90	30	4.0	5.0	1.0	6.87
LNRC017	RC	444465	6757081	436	-60	202	60	7.0	11.0	4.0	1.71
EXRC008	RC	446632	6758450	400	-60	180	44	29.0	31.0	2.0	3.36
HLP001	RC	447507	6758765	399	-60	160	62	54.0	58.0	4.0	1.62
EXRC038	RC	446743	6759123	407	-60	90	68	61.0	62.0	1.0	6.35
SLRC016	RC	447269	6759158	402	-60	90	82	50.0	54.0	4.0	1.43
EXAC079	AC	446590	6758430	385	-60	180	18	10.0	12.0	2.0	2.85
SLRC058	RC	447178	6759358	400	-60	90	82	3.0	6.0	3.0	1.89
SLRC069	RC	447238	6759058	404	-60	90	100	50.0	52.0	2.0	2.64
EXRC044	RC	446539	6759141	410	-60	90	23	18.0	20.0	2.0	2.57

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