MINREX RESOURCES LIMITED — Interim / Quarterly Report 2019

Apr 23, 2019

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Quarterly Activities and Cash Flow Report for the Quarter Ended 31 March 2019

24 April 2019

HIGHLIGHTS

• As announced on 3 April 2019, the Heemskirk Project in Tasmania (EL18/2011) has lapsed, due to the low anomalism indicated by the exploration work completed there.

• The March Quarter occupies the height of the summer heatwave and wet season in the Pilbara and Murchison Regions and consequently no field programs have been completed on the Western Australian projects in the past three months.

• Between December 2017 and December 2018, MinRex completed four exploration programs at its East Pilbara Project areas, focussing on the gold potential and especially the conglomerate-hosted gold potential. This work recovered eleven gold nuggets (totalling 24.2gms) at the Marble Bar North (P45/3040) Project area, along with gold-bearing quartz rock specimens and the discovery of a buried basal gravel layer. During this work 470 rock samples were collected at the four East Pilbara Project areas, with many of the assays being highly anomalous for gold, copper, silver, nickel, chrome and zinc.

• Following on from these very encouraging exploration results from the East Pilbara Project areas, during the past year, further work programs have now been planned and are due to commence as soon as weather conditions permit.

• During the March 2019 Quarter a detailed desktop evaluation was conducted of the exploration programs completed by MinRex, and others in the past, at the Deflector Extended Project with the aim of generating new ideas and targets for exploration programs at this project area in 2019.

• As at 31 March 2019 the Company had available cash of $0.77 million.

About MinRex

MinRex Resources Limited (ASX: MRR) (“MinRex” or “the Company”) is an exploration company, listed on the Australian Securities Exchange, with its present focus being the exploration of gold and base metal projects in Western Australia. During the March 2019 Quarter there were no field programs completed at the project areas, due to the extreme summer temperatures during this time. In April 2019, the Company relinquished its Heemskirk Tin Project in Tasmania, due to the low levels of tin anomalism returned by the sampling programs completed.

MinRex currently holds five projects, four in the East Pilbara region of WA – the Daltons Gold Project, the Bamboo Creek Gold Project, the Marble Bar North Gold Project and the Marble Bar South Gold Project, as well as the Deflector Extended Gold Project at Gullewa in Western Australia (Figures 1 & 2).

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MinRex Resources Limited – Quarterly Activities and Cash Flow Report for the Quarter ended 31 March 2019

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Figure 1: Location of MinRex Project Areas

East Pilbara Gold Projects

MinRex commenced exploration of its 70% owned East Pilbara Gold Projects in December 2017, with the inaugural program recovering gold nuggets from the Marble Bar North Project (P45/3040), announced in January 2018. Assay results from ten rock samples collected from the Marble Bar South Project (P45/3039) were announced in February 2018. An additional 190 samples were subsequently collected, during a large detailed surface geological evaluation and sampling program on all four of the East Pilbara properties, in May 2018, and the results of this work were subsequently announced in June 2018. A third exploration program in the East Pilbara was then completed in August 2018, with the collection of a total of 270 rock samples with the results of this work were subsequently announced in September 2018.

During the December 2018 quarter, MinRex completed a fourth exploration and metal detecting program, with the full results announced in an ASX release on 10 January 2019. During this site visit all of the East Pilbara Projects were visited by the same metal-detecting and sampling team that conducted the December 2017 site inspection, field trip evaluation and technical due diligence.

In the past year, a total of 470 rock samples have been collected from the four East Pilbara Project areas, with many of the assays being highly anomalous for gold, copper, silver, nickel, chrome and zinc. The projects have also been geologically mapped, old workings and prospects identified and extensive reconnaissance work completed.

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MinRex Resources Limited – Quarterly Activities and Cash Flow Report for the Quarter ended 31 March 2019

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Figure 2: Location of MinRex’s four East Pilbara Project Areas

Marble Bar North Project

Between December 2017 and December 2018, exploration programs at the Marble Bar North Project (P45/3040) have collected a total of eleven gold nuggets, totalling 24.2gm in weight from the western portion of the project area. Also two quartz rock specimens were collected, which activated the metal detector, and when examined closely were seen to contain small particles of gold on their surfaces. The licence area has also been mapped in some detail and the old workings, spoil piles, geology and other features located and recorded.

Closer examination of the soil and gravel layers where the gold nuggets were discovered suggests that there is a coarse-grained layer (80-90cm thick) of mainly quartz cobble scree at the surface which overlies a finer-grained, sandy gravel layer (30-35cm thick). This basal layer sits directly on bedrock and is thought to be the layer that hosts the nuggets. Further sampling of this basal gravel layer is planned for subsequent exploration programs.

In the past year, a total of 60 rock samples were also collected at the Marble Bar North Project with the plan below (Figure 3) showing the gold assay results for all 60 of these rock samples, along with the location of the old workings and the gold nuggets recovered in December 2017. Some of these assay results have been excellent, with the gold assays varying from 0 ppb Au up to 105g/t Au, with an average for all 60 samples of 5.3g/t Au.

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MinRex Resources Limited – Quarterly Activities and Cash Flow Report for the Quarter ended 31 March 2019

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Figure 3: Marble Bar North Project showing workings, nuggets and 60 gold assay results to date

Marble Bar South Project

Between December 2017 and October 2018, exploration programs at the Marble Bar South Project (P45/3039) have included geological mapping, metal detecting and rock sampling along the ridge line and over the slopes surrounding the old McKays Find gold mine workings (Figure 4). No nuggets have been recovered during this work, which is complicated by the extensive amounts of metallic rubbish and debris that occurs within this lease area. It is thought that this area has been used as a dumping ground in the past as it contains extensive deposits of old metal, bottles, building materials and other debris.

A total of 70 rock samples have now been collected from conglomerate horizons in the northern sector of the licence, and from scree, float and outcrops within and around the old workings at the Marble Bar South Project. Some of these assay results have been excellent, with the gold assays varying from 2ppb Au up to 47.6g/t Au, with an average for all 70 samples of 3.3g/t Au (Figure 4).

This licence contains the old McKays Find mine and this line of old workings runs along a 30-40m high ridge of greenstone rocks which is truncated to the north by basal Fortescue Group conglomerate rocks. The known gold mineralisation occurs as a 100m long and 2m wide zone of quartz veining, which lies parallel to the regional schistosity. The aim of the work completed to date was to commence testing of areas of the licence beyond the old workings and particularly the conglomerate-bearing areas for previously undetected gold mineralisation.

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MinRex Resources Limited – Quarterly Activities and Cash Flow Report for the Quarter ended 31 March 2019

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Figure 4: Marble Bar South Project showing geology, workings and all 70 gold assays to date

Daltons Project

Between December 2017 and December 2018, exploration programs at the Daltons Project (E45/4681) have included geological mapping, rock sampling and extensive metal detecting along the entire length of the old workings, some 1,500m of strike length. October 2018 metal detecting was hindered by the presence of metallic debris in the vicinity of most of the old workings (Figure 5). It was also noted that extensive metal detecting had been completed previously by other parties, within the areas of the old workings. It was recommended that a pattern soil sampling program be completed over the area of the old workings in the project area to better determine the most anomalous areas.

This work in the past year also collected a total of 60 rock samples at the Daltons Project, from the old mine workings, spoil piles and outcropping quartz veins. The samples returned outstanding results in the gold and copper assays which were up to 163g/t Au and 8.17% Cu, with the average grade of all 60 samples being 9.9g/t Au and 0.49% Cu, and 19 of the 60 samples assaying over 1.0g/t Au (Figure 5).

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MinRex Resources Limited – Quarterly Activities and Cash Flow Report for the Quarter ended 31 March 2019

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Figure 5: Daltons Project E45/4681 showing workings and 60 gold assay results to date

Bamboo Creek Project

Between December 2017 and December 2018, exploration programs at the Bamboo Creek Project area have included geological mapping, metal detecting and the collection of rock samples, which returned a number of anomalous gold assays, especially from rock samples collected in the northern portion of the Bamboo Creek Project area, both along strike from the old Bamboo Creek gold mines and within the quartz vein hosted Norms Find and BC07 prospect areas.

A total of 210 rock samples have now been collected by MinRex, in the main Bamboo Creek exploration licence (E45/4560), from multiple areas but including some of the named prospects, including Norms Find, BC07 and Nobb Hill, as well as various outcrop, float and scree zones. There are no old workings in MinRex’s Bamboo Creek Project area with the 210 samples collected to date

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MinRex Resources Limited – Quarterly Activities and Cash Flow Report for the Quarter ended 31 March 2019

being taken at previously identified gold, copper, chrome, nickel and polymetallic prospects, and from outcrop and float. These returned assay values of up to 22.9g/t Au, 42g/t Ag, 18.5% Cu, 0.20% Cr, 0.15% Ni, 0.12% Pb and 0.28% Zn (Figure 6).

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Figure 6: Northern part of the Bamboo Creek Project showing the samples collected to date

East Pilbara Summary

During the past year, extensive exploration including geological mapping, reconnaissance of the old workings and previously defined prospects, metal detecting and comprehensive rock sampling have all been completed at all four of MinRex’s East Pilbara Project areas. Eleven gold nuggets were recovered at the Marble Bar North Project area, along with gold-bearing quartz rocks. Mapping in this area also uncovered a layered, fine-grained basal gravel deposit under a surficial coarsegrained quartz scree deposit. Further work will be completed on these areas during the next field season.

The lack of nuggets found at the other project areas beyond Marble Bar North, may be due to a variety of factors. Metal debris is abundant in some areas which may interfere with the metal detector instruments. It is also possible that some gold is present as very fine-grained material and not as larger grains and nuggets that can be detected with metal detecting equipment. It is also possible that previous treatment of surface material and prior metal detecting has depleted any nuggets that may have been present.

The next phase of field work in the East Pilbara will commence during the June 2019 quarter and will include exploration work at all four of MinRex’s project areas around Marble Bar. Further rock sampling, soil sampling in colluvium and soil covered areas and detailed geological mapping will be used to better understand these complex gold, base metal and poly-metallic mineralised systems. This work will aim to build on the results received from the previous four exploration programs.

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MinRex Resources Limited – Quarterly Activities and Cash Flow Report for the Quarter ended 31 March 2019

Deflector Extended Gold Project

MinRex’s Deflector Extended Gold Project (E59/1657) lies to the northeast of the Doray Minerals Limited Deflector Mine, where copper-gold mineralisation occurs in shear zones in meta-basalt, and also the Golden Stream open-cut, where gold was produced from shear-zone hosted quartz veins in meta-basalt.

During the March 2019 Quarter, in preparation for completing further exploration work in 2019, a review was conducted of the previously completed exploration work. This included a reexamination of the 81 reports obtained from the Western Australian Mines Department’s WAMEX site along with the results from MinRex’s various auger drilling, soil sampling and rock sampling programs. The WAMEX results include the results from 189 shallow RAB and aircore drillholes and numerous soil samples, completed within the licence area previously.

Following this review, an updated base plan showing the infrastructure and geology of the exploration licence area was drafted along with plans showing the results of the various drilling and sampling works completed at the Deflector Extended licence area. Enquiries were also made seeking information and advice on the process for obtaining aboriginal heritage clearance and environmental clearance at Deflector Extended to facilitate planning for possible drilling programs within the project area in the future.

MinRex has now collected a total of 566 surface rock samples at the Deflector Extended Gold Project, 594 soil samples and 185 auger drill samples, which have defined significant anomalous zones for further exploration and sampling. There have also been prior programs of RAB drilling, aircore drilling and soil sampling, by earlier explorers of the area, the results from which support the definition of these anomalous zones. The assay results from all 566 rock samples collected by MinRex in the project area are shown below (Figure 7).

Exploration in 2019 will focus on potential drill sites and targets for RAB drilling, especially in the most anomalous zone immediately to the north of the Cagacaroon Hills.

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MinRex Resources Limited – Quarterly Activities and Cash Flow Report for the Quarter ended 31 March 2019

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Figure 7: Plan showing the geology and all rock sample assay results, in E59/1657

Heemskirk Tin Project

The Heemskirk Tin Project exploration licence EL18/2011 is located on the West coast of Tasmania. During the period 2012-2018, MinRex completed a number of exploration programs and identified a number of the old tin workings, dating from the 1870’s-1880’s, and collected numerous stream sediment, rock chip and soil samples, in a search for large low-grade, or smaller, high to mediumgrade tin deposit. This work returned no exceptional results and subsequent to the March quarter end, the exploration licence expired and the Company decided not to renew this tenement. No field work was completed during the quarter.

Tenement Information as required by Listing Rule 5.3.3

Region	Project	Tenement	Area	Grant	Expiry	Change	Current
			approx.	Date	Date	in Holding	Interest
East Pilbara East Pilbara East Pilbara East Pilbara East Pilbara	Daltons Bamboo Creek Bamboo Creek Marble Bar South Marble Bar North	E45/4681 E45/4560 E45/4853 P45/3039 P45/3040	9 km2 69 km2 6 km2 8.26 ha 3.03 ha	13-07-17 27-10-17 11-10-17 02-07-18 02-07-18	12-07-22 26-10-22 10-10-22 01-07-22 01-07-22	- - - - -	70% 70% 70% 70% 70%
Murchison	Deflector Extended	E59/1657	15 km2	12-07-11	11-07-21	-	100%
Tasmania	Heemskirk	EL18/2011	9 km2	03-04-11	02-04-19	-	100%

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MinRex Resources Limited – Quarterly Activities and Cash Flow Report for the Quarter ended 31 March 2019

Corporate

As at 31 March 2019, the Company had available cash of $0.77 million.

For further information, please contact:

Simon Durack Executive Director MinRex Resources Limited T: +61 8 9486 8806 F: +61 8 9321 3559 info@minrex.com.au

Competent Persons Statement:

The information in this report that relates to Exploration Targets and Exploration Results is based on information compiled by Mr Kieron Munro, a Competent Person who is a Member of the Australian Institute of Geoscientists and has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Mr Munro is employed as an independent geological consultant by MinRex and 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 5B Mining exploration entity and oil and gas exploration entity quarterly report

+Rule 5.5

Appendix 5B

Mining exploration entity and oil and gas exploration entity quarterly report

Introduced 01/07/96 Origin Appendix 8 Amended 01/07/97, 01/07/98, 30/09/01, 01/06/10, 17/12/10, 01/05/13, 01/09/16

Name of entity

MINREX RESOURCES LIMITED and its Controlled Entities

ABN 81 151 185 867	Quarter ended (“current quarter”)
81 151 185 867	31 March 2019

Consolidated statement of cash flows	Current quarter $A’000	Year to date (9 months) $A’000
1. Cash flows from operating activities 1.1 Receipts from customers 1.2 Payments for (a) exploration & evaluation (b) development (c) production (d) staff costs (e) administration and corporate costs 1.3 Dividends received (see note 3) 1.4 Interest received 1.5 Interest and other costs of finance paid 1.6 Income taxes paid 1.7 Research and development refunds 1.8 Other (provide details if material) 1.9 Net cash from / (used in) operating activities	- (21) - - - (139) - 3 - - -	- (244) - - - (533) - 10 - - -
	(157)	(767)
2. Cash flows from investing activities 2.1 Payments to acquire: (a) property, plant and equipment (b) tenements (see item 10) (c) investments (d) other non-current assets	- - - -	- - - -

• See chapter 19 for defined terms 1 September 2016

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Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report

Consolidated statement of cash flows	Current quarter $A’000	Year to date (9 months) $A’000
2.2 Proceeds from the disposal of: (a) property, plant and equipment (b) tenements (see item 10) (c) investments (d) other non-current assets 2.3 Cash flows from loans to other entities 2.4 Dividends received (see note 3) 2.5 Other – Acquisition of subsidiaries 2.6 Net cash from / (used in) investing activities	- - - - - - -	- - - - - - -
	-	-
3. Cash flows from financing activities 3.1 Proceeds from issues of shares 3.2 Proceeds from issue of convertible notes 3.3 Proceeds from exercise of share options 3.4 Transaction costs related to issues of shares, convertible notes or options 3.5 Proceeds from borrowings 3.6 Repayment of borrowings 3.7 Transaction costs related to loans and borrowings 3.8 Dividends paid 3.9 Other (provide details if material) 3.10 Net cash from / (used in) financing activities	- - - - - - - - -	- - - - - - - - -
	-	-
4. Net increase / (decrease) in cash and cash equivalents for the period 4.1 Cash and cash equivalents at beginning of period 4.2 Net cash from / (used in) operating activities (item 1.9 above) 4.3 Net cash from / (used in) investing activities (item 2.6 above) 4.4 Net cash from / (used in) financing activities (item 3.10 above) 4.5 Effect of movement in exchange rates on cash held 4.6 Cash and cash equivalents at end of period	930 (157) - - -	1,540 (767) - - -
	773	773

• See chapter 19 for defined terms 1 September 2016

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Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report

5. Reconciliation of cash and cash equivalents at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts	Current quarter $A’000	Previous quarter $A’000
5.1 Bank balances 5.2 Call deposits 5.3 Bank overdrafts 5.4 Other – Term Deposit 5.5 Cash and cash equivalents at end of quarter (should equal item 4.6 above)	773 - - -	930 - - -
	773	930
6. Payments to directors of the entity and their associates Current quarter $A'000 6.1 Aggregate amount of payments to these parties included in item 1.2 30 6.2 Aggregate amount of cash flow from loans to these parties included in item 2.3 - 6.3 Include below any explanation necessary to understand the transactions included in items 6.1 and 6.2
		Current quarter $A'000
		30
		-

Payment to directors including non-executive directors’ fees and superannuation for the quarter.

7.	Payments to related entities of the entity and their	Current quarter
	associates	$A'000
7.1	Aggregate amount of payments to these parties included in item 1.2	-
7.2	Aggregate amount of cash flow from loans to these parties included	-
	in item 2.3
7.3	Include below any explanation necessary to understand the transactions included in
	items 7.1 and 7.2
		-

• See chapter 19 for defined terms 1 September 2016

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Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report

8. Financing facilities available Add notes as necessary for an understanding of the position 8.1 Loan facilities 8.2 Credit standby arrangements 8.3 Other (please specify)	Total facility amount at quarter end $A’000	Amount drawn at quarter end $A’000
	-	-
	-	-
	-	-

• 8.4 Include below a description of each facility above, including the lender, interest rate and whether it is secured or unsecured. If any additional facilities have been entered into or are proposed to be entered into after quarter end, include details of those facilities as well.

9. Estimated cash outflows for next quarter	$A’000
9.1 Exploration and evaluation 9.2 Development 9.3 Production 9.4 Staff costs 9.5 Administration and corporate costs 9.6 Other (provide details if material) 9.7 Total estimated cash outflows	100 - - - 140 -
	240

10. Changes in tenements (items 2.1(b) and 2.2(b) above)	Tenement reference and location	Nature of interest	Interest at beginning of quarter	Interest at end of quarter
10.1 Interests in mining tenements and petroleum tenements lapsed, relinquished or reduced
10.2 Interests in mining tenements and petroleum tenements acquired or increased

Compliance statement

• 1 This statement has been prepared in accordance with accounting standards and policies which comply with Listing Rule 19.11A.

• 2 This statement gives a true and fair view of the matters disclosed.

Sign here: ............................................... (Director)

Date: 24 April 2019

Print name: SIMON DURACK

• See chapter 19 for defined terms 1 September 2016

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Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report

Notes

1. The quarterly report provides a basis for informing the market how the entity’s activities have been financed for the past quarter and the effect on its cash position. An entity that wishes to disclose additional information is encouraged to do so, in a note or notes included in or attached to this report.

2. If this quarterly report has been prepared in accordance with Australian Accounting Standards, the definitions in, and provisions of, AASB 6: Exploration for and Evaluation of Mineral Resources and AASB 107: Statement of Cash Flows apply to this report. If this quarterly report has been prepared in accordance with other accounting standards agreed by ASX pursuant to Listing Rule 19.11A, the corresponding equivalent standards apply to this report.

3. Dividends received may be classified either as cash flows from operating activities or cash flows from investing activities, depending on the accounting policy of the entity.

4. See chapter 19 for defined terms 1 September 2016

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