METALS AUSTRALIA LTD - Capital/Financing Update 2015

A S X A N N O U N C E M E N T 0 7 A p r i l 2 0 1 5

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NEW M ANINDI Z INC DEP O SIT EX P LOR A TIO N TA R GET S

HI G HLIGH T S

 New 3D geological interpretations and detailed exploration targeting has identified at least nine new very high priority exploration targets

The new targets provide the potential to greatly increase the Manindi mineral resource and improve project economics
3D VTEM and FLTEM modelling combined with 3D magnetic inversion modelling has provided a new level of sophistication in exploration targeting
LME zinc stockpiles have fallen by over 25% since 1 January 2015 and continue to fall

EXPLORATION TARGETS

A d e tailed expl o ration targ e ting exercis e was com p leted to co m plement t h e JORC 2012 mineral res o urce estimate at Manin d i. The aim was to iden t ify robust e x ploration ta r gets with t h e potential to host significant tonnages of addition a l mineralisa t ion and im p rove the ec o nomics of t he project. Any increase in t he mineral r esource estimate will improve the project econo m ics at Manindi.

So m e time ago, the Compa n y flew a VT E M[1] survey o ver the Ma n indi project. The surve y confirmed existing anomal i es from historic MLTE M 2, FLTEM3 a nd DHTEM [4] surveys a n d the EM[5] r e sponse of the existing deposits, as well as identif y ing several new untested anomalie s . The mineralisation at Ma n indi consis t s of massi v e sulphide s with very high pyrrh o tite content. Pyrrhotit e is highly con d uctive, m a king TEM [6] a partic u larly effe c tive targeting technique for M a nindi-style min e ralisation.

All EM data, historic and new, were reprocesse d and mod e lled using modern 3D modelling soft w are. The r esultant 3D models we r e combine d with existi n g aeromag n etic, geoch e mical and geo l ogical data s ets to generate and ran k exploration targets in o r der of priori t y (Figure 1) .

3D inversion m o delling[7] of the aeroma g netic data s et was particularly use f ul in rankin g the TEM con d uctors. Th e mineralisa t ion at Mani n di is locate d on the wes t ern side of a deep-root e d, strongly ma g netic body. TEM conductors locat e d in simila r positions either along s trike from M anindi, or ass o ciated with other simila r magnetic b o dies receiv e d higher ra n kings (Figu r e 2).

Drilling at the current Manin d i mineral re s ource has i d entified four mineralise d positions, a ll of which are open in at l e ast one dire c tion. Most importantly, drilling at th e current mi n eral resour c e has only test e d the min e ralisation t o a maximu m depth of 300m belo w surface. Recent EM modelling indi c ates that t h e conducti v e bodies e x tend much deeper tha n this, partic u larly bene a th Kowari,

Metals A ustralia Ltd (ABN 38 008 9 8 2 474) www.metals a ustralia.com. a 1[st] Flo o r, 8 Parliament P lace, West Perth, WA 6005 ▪ PO B ox 1618, West Perth, WA 6872 ▪ t : +61 8 9481 78 3 3 ▪ f: +61 9481 7 8 35 ▪ e: mls@me t alsaustralia.com. a

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Kult a rr and Nu m bat where t he 2012 FL T EM model s extend to o ver 500m b elow surfa c e, and are ope n at depth. T hese are re f erred to as “ resource extension” tar g ets.

In a d dition to th e resource extension tar g ets, a num b er of other h igh priority t argets such as Kaluta, Dib b ler and Bru s htail (see points 1, 4 a n d 5 below) h ave not yet been drill t e sted (Figur e 1). These are referred t o as “gree n fields” targets. Shoul d any of t h ese high-quality targets contain min e ralisation, t hey would substantiall y increase the Manin d i mineral r e source es t imate and ther e fore impro v e project ec o nomics.

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Figure 1 - Manindi VT E M imagery and t a rget map showing highest priority targets in red pol y gons, other targeets in beige polyg o ns, conductive trends in pink lin e s and areas of c o nductive overbu r den in grey hatchhing

The high priorit y targets in o r der of ranki n g (with the highest ranking on top) a re as follow s :

Kaluta ( g reenfields)
Kultarr D eeps and K ultarr North (resource e x tension)
Kowari D eeps (reso u rce extensi o n)
Dibbler ( greenfields)
Brushta i l (greenfields)
Ningbin g (greenfields) 7. Monjon (greenfields )

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Figure 2 - 3D o blique view sho w ing 3D magnetic inversion models in green with mineralisation wirefraames in black and FLTEM con d uctor models in y e llow. Note the f a vourable positio n s of the highest p riority EM conducctor models.

Descriptions an d proposed follow-up pr o grams for t h e highest priority explor a tion targets in order of prio r ity are as follows:

1. Kaluta

This tar g et was ide n tified by th e 2012 VTE M survey, and refined b y flow-up FL T EM in the same y e ar. Kaluta i s a relatively large untes t ed highly conductive bo d y. The 3D model is at least 7 0 m by 600m in surface a rea. Poten t ial thicknes s is unknow n at this sta g e, but the tonnag e potential i s significant . The targ e t starts at just 30m b e low surfac e , where it resolve s into sever a l discrete b o dies then p lunges shallowly, at ap p roximately 2 5 degrees at an a z imuth of 29 0 degrees. It is located c lose to the Wombat Cu - Ni soil ano m aly and is coincid e nt with a deep-rooted m agnetic b o dy compar a ble to the s etting of t h e Manindi mineralisation.

The Kaluta EM ano m aly was fir s t identified b y Western M ining Corp o ration (WM C ) in 1974. Drill tes t ing was att e mpted, but m odern TE M surveying a nd 3D pro c essing hav e confirmed that the conductor w as not effec t ively drill te s ted at the ti m e.

Follow- u p will invo l ve diamon d drill testi n g followed by DHTE M surveying. DHTEM surveyi n g will be u s ed to dete r mine whet h er or not t h e conduct o r has been effectively intersec t ed, to refin e the 3D co n ductor mod e ls, and to p r ovide a vec t or for futur e phases of drilling. Future p hases of d rilling would depend on the di s covery of significant mineralisation.

Kaluta i s the highest ranked tar g et becaus e it is highly c onductive, it is potenti a lly large in size, it is coincident with a stro n gly magne t ic body with a similar g e ological se t ting to the existing Manindi mi n eral resour c e, and it is c ompletely u n tested by d r illing.

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Figure 3 - Cr o ss section of the Kaluta TEM cond u ctor model sho w ing the 1974 WMC holes which didd not intersect the target

Kultarr D eeps and K ultarr North

Various phases of TEM surve y ing dating b ack as far as the 197 0 s have id e ntified this highly c o nductive z o ne, which h o sts the Kult a rr mineralisation. The 2 012 VTEM s urvey and follow-u p FLTEM s u rveying sh o wed that t h is zone extends to at l east 1,000 m vertically below s u rface. The deepest dril l ing only tes t s to a maxi m um of 300 m vertical fro m surface.

Given its location d i rectly belo w and along strike from t he Kultarr m ineralisatio n , which is also hig h ly conducti v e, this is a v ery high pri o rity drill tar g et.

Follow- u p will invol v e a progra m of deepe r drilling foll o wed by D H TEM surveying. The DHTEM surveying w ill be used to map out the sulphid e mineralisat i on in detail and target future drilling. This t arget alone has the potential to gr e atly increa s e the Mani n di mineral resourc e .

Kowari D eeps

This target is simil a r to Kultarr Deeps but ranks lower because t h e Kowari a n d Numbat mineralisation are b o th of a low e r grade th a n Kultarr. H owever, giv e n the generally highly segreg a ted and zo n ed nature o f VMS styl e mineralisation, there is a good chance this conductor represents higher grade zinc and/or copper mineralisation. The highest grade copper intersected by drilling in the Manindi area, up to 1.27% Cu, occurs at the Kowari prospect.

Follow- u p will invol v e a progra m of drilling followed by DHTEM s u rveying. T h e DHTEM surveyi n g will be u s ed to map out the sul p hide miner a lisation in d etail and t a rget future drilling.

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Fi g ure 4 - Long Se c tion of Kowari an d Kultarr showing the high priority t a rget areas. Newexco 2007 DHTEM models are in g reen, 2002
surface E M models are in y e llow, 2012 FLTE M models are in l i ght brown and dr i llhole pierce pointts are in black do t s.
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Dibbler

This T E M conduct o r is locate d 300m eas t of Kowari, coincident w ith a mag n etic trend similar t o, and parallel to the Manindi trend. It may re p resent a n e w mineralised horizon lower d own in th e volcanic sequence to the main Manindi position, o r possibly mineralisation remobilised into t he footwall gabbro. T h is would b e expected in a typical VMS ta r get model. A lthough thi s conductor i s relatively s mall at its t o p, it may re p resent the top of s o mething lar g er, which d e velops at d e pth.

Dibbler was identifi e d by histor i c EM surveys. A shall o w percussi o n hole wa s drilled by Esso E x ploration and Productio n Australia I N C (Esso) in 1984 over t he conduct o r. Modern 3D mo d elling indic a tes that th e hole faile d to intersect the con d uctor. The hole was termina t ed at 39m i n +300ppm copper. Th e Manindi d e posits are t ypically sur r ounded by an alter a tion halo c o ntaining +2 5 0ppm copp e r, so this is a very positi v e sign for D ibbler.

Follow- u p will invol v e drilling o ne hole to intersect the conducto r followed b y DHTEM surveyi n g. If significant miner a lisation is i n tersected, a second p h ase of drilling will be carried o ut.

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Figu r e 5 - Cross secti o n of the Dibbler T EM 3D model, l o oking North Wes t , showing the hol e drilled by Esso i n 1984, which fai l ed to intersect the target, EM models in gr e en, magnetic inv e rsion models in b lue and minerali s ation in red. Notee the Dibbler position on the 3D magnetic i n version models i n comparison to t h e Kowari-Numb a t mineralised possition on the left

Brushta i l

Identified by the 2012 VTEM su r vey and refi n ed by follo w -up FLTEM in the sam e year. This conductor is coincid e nt with a st r ongly mag n etic trend si m ilar to the M anindi trend, the area is unde r cover and c o mpletely u n explored, a n d may repr e sent a min e ralised pos i tion higher up in th e volcanic s e quence to M anindi.

Althoug h the condu c tor appears to be relati v ely small at its top, it co u ld represent the top of something larger d e veloping at depth, particularly give n the coinci d ence with a magnetic body. O nly drilling a nd DHTEM surveying c a n determin e this. The fact that this area has ne v er been explored for M anindi styl e mineralisa t ion makes Brushta i l a very hig h priority target. Follow- u p will involv e drilling of o ne or two d i amond hole s followed b y DHTEM s u rveying. If mineralisation is en c ountered, f u rther drilling and DHTE M surveying m ay be proposed.

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F igure 6 - Cross section of Brushtail showing the 20 1 2 FLTEM 3D mo d els in green and the 3D magnetic inversion model i n blue
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6. Ningbin g

This E M conductor is located on the Ma n indi magne t ic trend in a similar s t ratigraphic position to the Ma n indi deposi t s. The 2 0 12 VTEM s urvey ident i fied the an o maly and FLTEM surveying r efined it in the same y ear. Historic EM had already id e ntified the anomal y but moder n 3D modelli n g indicates that drilling f ailed to effe c tively test it.

WMC drilled a single hole over the conductor in 1974 but missed it by about 60m. A second hole was d r illed by Plu t onic Reso u rces in 199 7 ; this hole was very c l ose to the conductor, but was drilled at a l o w angle to it and failed to effectively test it. T h e Plutonic hole intersected a broad zone of +250ppm copper which typically surrounds the Manindi deposits. This is a po s itive sign for Ningbing.

Althoug h not particularly large i n size at 200m by 50m i n extent, this conductor i s only 80m from surface and has the potential to add a significa n t tonnage t o the Mani n di mineral resourc e . For com p arison Wa r rabi measu r es approxi m ately 150m by 65m by 10m thick and contains appro x imately 152 , 000t (14%) o f the JORC 2012 miner a l resource e stimate.

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Fig u re 7 - Cross section of the Ningbin g TEM anomaly. The 2002 3D conductor model is edge on in the for e ground in darker green and the 2012 FLT E M model is locat e d oblique to sec t ion at the back in lighter green. The WMC hole fromm 1974 is in black on the left and the Plutoni c Resources hole f rom 1997 is in g r ey on the right. N either hole effectively intersected eeither conductor m odel. Note the associ at ion with the mag n etic inversion m o del in blue.

Monjon

This E M conductor is similar in style, strati g raphic position and hi s tory to Nin g bing. The 2012 V T EM and FLTEM surv e ys identifie d and refin e d the targ e t. The an o maly was identifie d and targeted from hi s toric EM s u rveys but m odern 3D modelling i n dices that drilling w as ineffecti v e at the tim e .

Plutoni c drilled two h oles here i n 1997. Drill h ole orientation and posi t ioning was n ot optimal and the conductor w as not effe c tively teste d . Narrow zones of we a kly anomal o us copper up to 4 8 0ppm were intersected b y the drillin g .

Follow- u p will invol v e the drillin g of a singl e hole to int e rsect the c o nductor at t he correct orientation followed by DHTEM surveying. If significa n t mineralis at ion is inter s ected and DHTEM provides a vector to m o re conductive material, a second p hase of drilling will be carried o ut.

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Fig u re 8 - Cross section through the M o njon TEM cond u ctor shown in green, with the histo r ic drilling that faileed to intersect it i n grey and the
3D magnetic inversion model in blue
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Other t a rgets

There a re several o ther lower r anking targ e ts at Mani n di with the potential to add to the mineral resource. These includ e :

Mulgar a /Warabi: Resource ex t ension opp o rtunities. P re 2002 E M models e x tend to at least 150m below d e epest drillin g at Warabi.

Ningaui / Bandicoot: Large EM c o nductor, o n ly partially t e sted by dril l ing. This target needs more s y stematic drilling on an o p timised gri d direction.

Ampurt a : Medium t o large EM c onductor o n ly partially tested by dri l ling. Historic drilling is not sys t ematic and copper gra d es reach u p to 0.8% in places. T h is target ne e ds further system a tic drilling.

Dunnar t : Small unt e sted EM c o nductor on the Manindi magnetic t r end. The a nomaly is located beneath co n ductive ove r burden so it could be larger than E M modelling i n dicates. Bilby: S m all EM conductor inter s ected near i ts edge at a low angle b y a single d r illhole. No signific a nt mineralis a tion interse c ted, but an o malous copper up to 486ppm in the drillhole.

Glossar y of geologi c al/geophysi c al terms:

VTEM[1] : Versatile Transient ( t ime domain) Ele c tromagnetics, a m odern airborne E M technique. MLTEM[2] : M oving Loop Tran s ient Electromag n etics, a ground EM technique. FLTEM[3] : F i xed Loop Transi e nt Electromagne t ics, a ground EM technique. DHTEM[4] : D own Hole Transi e nt Electromagne t ics, a technique u sing a downhole electromagnetic pprobe. EM[5] : Elect r omagnetics, an e lectrical explorat i on technique ba s ed on the meas u rement of alternaating magnetic fi e lds associated with curren t s induced in the s ub surface. TEM[6] : Transient Electromag n etics, a generali s ed term. 3D inversion modelling[7] : A modern techniqu e of magnetic data processing and interpretation. Pyrrhotite: An iron sulphide mineral.

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Fi g ure 9 - Long sec t ion of Warabi an d Mulgara showin g areas for poten t ial resource exte n sions and the Pree 2002 TEM conductor target.
Drillhol e pierce points ar e shown in black d ots. Note some h oles appear mor e than once as theey intersect multi p le discrete
minerali s ed horizons
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ABOUT M A NINDI Z INC-CO PPER PR O JECT, W ESTER N AUSTR A LIA

Met a ls Australia holds an in t erest in two base metal s projects in W estern Aust r alia (Figure 10).

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The Manindi zi n c-copper project is located aroun d 500 km northeast of Perth, and is b eing explo r ed by Metals with a vie w to ultimately developin g a zinc min e

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The Manindi P r oject is loc a ted in the M urchison D istrict of We s tern Austra l ia, 20 km s o uthwest of t he defunct Youanmi gol d mine. The project is located on three granted mining lice n ces and co n tains a high grade zinc d eposit.

. Figure 10 - L o cation of the We s tern Australian b a se metals projects projects

Ma n indi is considered to be a volcanog e nic massive sulphide metals projects projects (V M S) deposit, comprisin g a series of lenses of zincdo m inated min e ralisation t h at have b e en folded, sheared, faul t ed, and po s sibly intrud e d by later dolerite and g abbro. The style of mi n eralisation i s similar to oth e r base met a l sulphide deposits in the Yilgarn C r aton, partic u larly Golde n Grove nea r Yalgoo to the w est of Man i ndi, and Te u tonic Bore- J aguar in th e Eastern G o ldfields.

Sin c e the depo s its were discovered, a c omprehensive body of w ork has be e n generate d , including geo c hemistry, g eophysics, detailed ge o logical ma p ping, extensive drilling , wireframe modelling, res o urce modelling and met a llurgical test work.

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For further information please contact: Lu k e Marshall Or consult our website: w w w.metalsa u stralia.com. a u

+61 8 9 481 7833

Competent Person Declaration

The i n formation in thi s release relating to the geology a nd exploration r e sults of the projects owned by MMetals Australia L td is based on infor m ation compiled b y Luke Marshall, w ho is a full time e mployee of Golden Deeps Limite d and a consultantt to Metals Australia. Mr Marshall is a m ember of The A ustralian Institut e of Geoscientist s , a Recognised P rofessional Org a nisation by the AAustralasian Join t Ore Reserves Com m ittee, and has s u fficient experien c e relevant to the style of minerali s ation and types o f deposits under consideration and to the activity which is being undert a ken to qualify as a Competent P e rson as defined in the 2012 editi o n of the Joint Orre Reserves Co m mittee (JORC) Austr a lasian Code for Reporting of Ex p loration Results. Mr Marshall co n sents to the inclusion in this repoort of the matter s based on his infor m ation in the form and context in w h ich it appears.

Forward-Looking Statements

This d ocument may include forward-lo o king statements. Forward-looking statements inclu d e, but are not limmited to, statem e nts concerning Metal s Australia Ltd’s planned exploration programme a n d other statem e nts that are not h istorical facts. WWhen used in this document, the word s such as "coul d ," "plan," "estim a te," "expect," "i n tend," "may”, " p otential," "shoul d ," and similar eexpressions are forward-looking state m ents. Although M etals Australia L td believes that i ts expectations r e flected in these forward-looking sstatements are reasonable, such state m ents involve ris k s and uncertaint i es and no assur a nce can be giv e n that actual results will be consiistent with these forward-looking state m ents.

AI assistant

METALS AUSTRALIA LTD Capital/Financing Update 2015

65344_rns_2015-04-06_ce7c3964-2f10-4db3-9dee-d3668f1f8ba0.pdf

NEW M ANINDI Z INC DEP O SIT EX P LOR A TIO N TA R GET S

HI G HLIGH T S

 New 3D geological interpretations and detailed exploration targeting has identified at least nine new very high priority exploration targets

EXPLORATION TARGETS

1. Kaluta

6. Ningbin g

ABOUT M A NINDI Z INC-CO PPER PR O JECT, W ESTER N AUSTR A LIA

For further information please contact: Lu k e Marshall Or consult our website: w w w.metalsa u stralia.com. a u

+61 8 9 481 7833

Competent Person Declaration

Forward-Looking Statements

AI assistant

METALS AUSTRALIA LTD — Capital/Financing Update 2015

65344_rns_2015-04-06_ce7c3964-2f10-4db3-9dee-d3668f1f8ba0.pdf

NEW M ANINDI Z INC DEP O SIT EX P LOR A TIO N TA R GET S

HI G HLIGH T S

 New 3D geological interpretations and detailed exploration targeting has identified at least nine new very high priority exploration targets

EXPLORATION TARGETS

1. Kaluta

6. Ningbin g

ABOUT M A NINDI Z INC-CO PPER PR O JECT, W ESTER N AUSTR A LIA

For further information please contact: Lu k e Marshall Or consult our website: w w w.metalsa u stralia.com. a u

+61 8 9 481 7833

Competent Person Declaration

Forward-Looking Statements

More from METALS AUSTRALIA LTD

METALS AUSTRALIA LTD Capital/Financing Update 2015