MINREX RESOURCES LIMITED — Interim / Quarterly Report 2020

Jul 23, 2020

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Quarterly Activities and Cash Flow Report for the Quarter Ended 30 June 2020

24 July 2020

HIGHLIGHTS

• Detailed airborne magnetic and radiometric geophysical survey completed over East Pilbara Gold Projects

• Target generation maps and geological interpretations for East Pilbara Gold Projects received

• Surface soil and rock sampling completed at Deflector Extended Gold Project, with nine assays exceeding 1g/t Au and three exceeding 4g/t Au

• New directors appointed to the Board of the Company

• Administration and corporate cost reduction program achieves annualised cost savings of $300K

MinRex Resources Limited ( ASX:MRR ) (“ MinRex ” or “ the Company ”) is an exploration company, listed on the Australian Securities Exchange, with five gold and base metal exploration projects in Western Australia. Four of the projects are located in the East Pilbara Region of WA, all which are 70% owned and comprise of the Bamboo Creek Gold Project, the Marble Bar North Gold Project, the Marble Bar South Gold Project and the Daltons Gold Project (see Figure 1). The fifth project, the Deflector Extended Gold Project, is located at Gullewa in Western Australia and is 100% owned (see Figure 1).

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Figure 1: Location of MinRex Project Areas

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MinRex Resources Limited – Quarterly Activities and Cash Flow Report for the Quarter ended 30 June 2020

The Company pleased to provide the following report on its activities during the June 2020 quarter.

Exploration Updates

East Pilbara 2020 Airborne Geophysics Program

The location of MinRex’s East Pilbara Gold Project areas are shown in Figure 2.

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MinRex commenced the next phase of systematic exploration of its East Pilbara Gold Project areas, with the completion of a detailed airborne magnetic (Figure 3) and radiometric (Figure 4) geophysical survey over the Bamboo Creek Gold Project and Daltons Gold Project exploration licences. This detailed geophysical survey included over 2,500km of flying and was flown at a sensor height of 30m and 50m line spacing. Geological and structural interpretation, target generation and interpretation work based on the airborne geophysics, has also been completed.

The Bamboo Creek area is dominated by granitoids with mafic rocks evident in the north and north east extremities, with an abundance of structures and late stage dykes. Gold prospectivity within the granites will mostly be in the form of late stage fracture-related mineralisation and east-west orientated faults may provide suitable fluid pathways between mineralising events and brittle fractures. Structures that intersect the major east-west fault lines may provide suitable focussing mechanisms for gold mineralisation (Figure 5).

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MinRex Resources Limited – Quarterly Activities and Cash Flow Report for the Quarter ended 30 June 2020

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Figure 3: Colour Total Magnetic Intensity Images – Bamboo Creek (left) and Daltons (right)

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Figure 4: Colour Total Radiometric Count Images – Bamboo Creek (left) and Daltons (right)

The Daltons exploration licence area is dominated by Archean rocks of the Warrawoona Group, with the known gold mineralisation confined to a zone proximal to a north-south fault-shear zone that trends close to the eastern boundary of the licence. The tenement is prospective for goldcopper mineralisation associated with quartz reefs and shear zones, with base and precious metal targeting confined to favourable structural settings (Figure 6).

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MinRex Resources Limited – Quarterly Activities and Cash Flow Report for the Quarter ended 30 June 2020

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Figure 5: Geophysical Target Map for the two Bamboo Creek Project Areas (E45/4560 & 4853)

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Figure 6: Geophysical Target Map for the Daltons Gold Project Area (E45/4681)

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MinRex Resources Limited – Quarterly Activities and Cash Flow Report for the Quarter ended 30 June 2020

These target generation and interpretive geology maps are yet to be tested in the field and will be used to guide future exploration sampling programs by the Company. Further surface soil and rock sampling and geological mapping work is planned to follow up and test the geophysical target generation maps generated from the recent airborne geophysical data.

Deflector Extended Gold Project Rock and Soil Sampling

MinRex’s Deflector Extended Gold Project (E59/1657) lies 4km, along strike, to the northeast of the Silver Lake Resources Limited Deflector Mine, where copper-gold mineralisation occurs in shear zones in meta-basalt, and only 2km from the Golden Stream open-cut, where gold has been mined from shear-zone hosted quartz veins in meta-basalt (Figure 7).

A rock and soil sampling program was completed at MinRex’s Deflector Extended Gold Project, with the results being received during April 2020. The field sampling program collected a total of 144 rock samples and 131 soil samples, from throughout the licence area. Most of the lease area is covered by deep scree, colluvium and alluvium.

The rock sampling results returned excellent, with nine values over 1g/t Au being returned. The rock sample assay results include three values over 4g/t Au, from three different areas in the north and east of the exploration licence.

At the “Corner Creek” (4.04g/t Au) and the “Eastern Dolerite” areas (4.89g/t Au), narrow, quartzgoethite veins outcrop and sub-crop as scattered float in mafic meta-basalt. These veins appear to be up to 100m in length, outcrop discontinuously, and strike north-south to northeast-southwest and are sub-vertical. Figure 7 shows the gold results for the 144 new rock samples, with the assays over 1g/t Au (1,000ppb) being labelled.

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Figure 7: Plan of the geology and March 2020 rock sampling gold results in E59/1657. The assays over 1g/t Au (1,000ppb) are labelled

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MinRex Resources Limited – Quarterly Activities and Cash Flow Report for the Quarter ended 30 June 2020

A third highly anomalous result (4.52g/t Au) was returned from a single grab sample of scattered, vein quartz float material in colluvium on floodplain in the extreme north-eastern corner of the exploration licence. The high-grade gold assay results define a one kilometre wide and twokilometre long anomalous area that is a high priority for future exploration.

MinRex has now completed several surface sampling programs at its Deflector Extended Gold Project, collecting a total of 744 surface rock samples, 725 soil samples and 185 auger drill samples. The most anomalous rock sample results are from three distinct areas in the north and east of the exploration licence, where a number of anomalous surface rock assay values (up to 4.89g/t Au) occur. These include outcropping and sub-cropping quartz-goethite veins and scattered quartz vein float, within mafic meta-basalt, meta-shale and on the surface of colluvial clay/sand cover. The prevalence of higher gold values in rock and soil values in areas of mafic colluvium suggests that concealed mineralisation may lie below the blanket of scree surrounding the Cagacaroon Hills meta-basalt outcrop area, especially immediately to the north of the hills, and possibly extending to the north and east under colluvial cover. The gold assay results from all 744 of the rock samples are shown below in Figure 8.

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Figure 8: Plan showing the geology and all rock sample gold results, in E59/1657

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MinRex Resources Limited – Quarterly Activities and Cash Flow Report for the Quarter ended 30 June 2020

Tenement information as required by the Listing Rule 5.3.2

Region	Project	Tenement	Area	Grant	Expiry	Change in	Current
			approx.	Date	Date	Holding	Interest
East Pilbara East Pilbara East Pilbara East Pilbara East Pilbara	Dalton Bamboo Creek Bamboo Creek Marble Bar South Marble Bar North	E45/4681 E45/4560 E45/4853 P45/3039 P45/3040	9 km2 69km2 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%

Corporate

Board Changes

During the quarter, the James Bahen, Glenn Whiddon and James Pearse were appointed to the Board as Non-Executive Directors. The Company also announced the resignations of NonExecutive Chairman Dr James Ellingford, Executive Director Simon Durack and Non-Executive Director Mr Constantine Tsesmelis.

Cost Reduction Program

During the quarter, the new Board of the Company commenced a program to reduce its administration and corporate costs. A comprehensive program has been undertaken resulting in annualised cost savings of $300K to date. Such cost savings have principally been the result of a reduction in director fees, advisory fees and fees for administrative services.

Non-Renounceable Entitlement Issue Offer

During the quarter, the Company announced closure of the Non-Renounceable Entitlement Issue Offer on the basis of 1 new fully paid ordinary share for everyone existing Share held to raise up to $959K (before costs). The Offer raised approximately $81K (before costs) with the Company issuing 8,092,661 fully paid ordinary shares at $0.01 per share. Post quarter end, the Board determined not to place the Shortfall given the trading price of the Company’s shares, the costs and dilution effect of placing the entire Shortfall within the prevailing market conditions. The corporate advisory mandate with the lead manager of the Non-Renounceable Entitlement Issue Offer, EverBlu Capital Pty Ltd, has also been terminated.

Proposed Director Placement

In lieu of placing the Shortfall from the Non-Renounceable Entitlement Issue, the Board is proposing subject to shareholder approval to undertake a smaller placement to directors of a total of 26,666,667 shares at an issue price of $0.012 to raise $320K (before costs). Unlisted free attaching options (each exercisable at $0.04 on or before 30 months from issue) will be issued under the director placement subject to shareholder approval on the basis of 1 option for every 4 shares issued (being on the same terms as offered under the Non-Renounceable Entitlement Issue). Funds raised from the director placement will be used for further exploration activities on the Company’s projects, evaluation of additional acquisition opportunities and for working capital requirements. In addition to raising funds, the purpose of the director placement is to align the interests of the Board with shareholders. Refer to MinRex’s announcement dated 17 July 2020 for further details.

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MinRex Resources Limited – Quarterly Activities and Cash Flow Report for the Quarter ended 30 June 2020

Business Development

During the quarter the Company continued to pursue and assess new business opportunities in the resources sector, with a particular focus on gold and base metals exploration, to complement the Company’s existing mineral projects. The Board has no further updates at this time.

COVID-19

In response to COVID-19 and increased market uncertainty, the Board undertook the cost reduction program outlined above and the Board has been reduced to the statutory minimum of three directors. The measures taken by the Board to date in response to COVID-19 will be regularly reviewed having regard to market conditions and the Company’s circumstances.

Cashflows for the Quarter

Attached to this report is the Appendix 5B containing Company’s cash flow statement for the quarter. The significant cashflows relating to the quarter included $81k spend on exploration and evaluation expenditure (March’20 Quarter $33k), which was primarily associated with the costs relating to the magnetic and radiometric survey completed at the East Pilbara Gold Projects, $142K administration and corporate cost, of which $108k related to the payments made to related parties, which included incoming and outgoing Directors and their associates, also noted under section 6.1 of Appendix 5B, for directors fees, out of scope additional consulting fees and the superannuation paid during the quarter.

As at 30 June 2020, the Company had available cash of $0.5 million.

Issued securities

As at the date of this report the Company has 206,970,388 ordinary shares and 35,356,503 unlisted options (exercisable at $0.04) on issue. Subject to shareholder approval, it is proposed that a further 26,666,667 ordinary shares, 6,666,666 unlisted options (exercisable at $0.04) and 15,000,000 performance rights be issued by the Company (refer to the Company’s announcement dated on 17 July 2020).

This ASX announcement has been authorised for release by the Board of MinRex Resources Limited.

-ENDS-

For further information, please contact:

James Bahen Non-Executive Director MinRex Resources Limited T: +61 8 9481 0389 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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MinRex Resources Limited – Quarterly Activities and Cash Flow Report for the Quarter ended 30 June 2020

JUNE 2020 QUARTER - ASX ANNOUNCEMENTS

This Quarterly Activities Report contains information extracted from ASX market announcements reported in accordance with the 2012 edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves” (2012 JORC Code). Further details (including 2012 JORC Code reporting tables where applicable) of exploration results referred to in this Quarterly Activities Report can be found in the following announcements lodged on the ASX:

Amended - Geophysical Survey and Target Generation Completed	23 June 2020
East Pilbara Geophysical Survey & Target Generation Completed	19 June 2020
Deflector Extended Exploration Program Results	28 April 2020
MRR to commence Airborne Geophysical Survey - East Pilbara	6 April 2020

These announcements are available for viewing on the Company’s website www.minrex.com.au under the Investor Relations tab. MinRex confirms that it is not aware of any new information or data that materially affects the information included in any original ASX announcement.

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Rule 5.5

Appendix 5B

Mining exploration entity or oil and gas exploration entity quarterly cash flow report

Name of entity

MINREX RESOURCES LIMITED and its Controlled Entities

ABN 81 151 185 867

Quarter ended (“current quarter”) 30 June 2020

Consolidated statement of cash flows	Current quarter $A’000	Year to date ( 12 months) $A’000
1. Cash flows from operating activities 1.1 Receipts from customers 1.2 Payments for (a) exploration & evaluation (if expensed) (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 Government grants and tax incentives 1.8 Other (provide details if material) 1.9 Net cash from / (used in) operating activities	- (81) - - - (141) - - - - - -	- (223) - - - (784) - 2 (22) - - -
	(222)	(1,027)
2. Cash flows from investing activities 2.1 Payments to acquire: (a) entities (b) tenements (c) property, plant and equipment (d) exploration & evaluation (if capitalised) (e) investments (f) other non-current assets	- - - - - -	- - - - - -

ASX Listing Rules Appendix 5B (01/12/19) + See chapter 19 of the ASX Listing Rules for defined terms.

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Appendix 5B

Mining exploration entity or oil and gas exploration entity quarterly cash flow report

Consolidated statement of cash flows	Current quarter $A’000	Year to date ( 12 months) $A’000
2.2 Proceeds from the disposal of: (a) entities (b) tenements (c) property, plant and equipment (d) investments (e) other non-current assets 2.3 Cash flows from loans to other entities 2.4 Dividends received (see note 3) 2.5 Other (provide details if material) 2.6 Net cash from / (used in) investing activities	- - - - - - - -	- - - - - - - -
	-	-
3. Cash flows from financing activities 3.1 Proceeds from issues of equity securities (excluding convertible debt securities) 3.2 Proceeds from issue of convertible debt securities 3.3 Proceeds from exercise of options 3.4 Transaction costs related to issues of equity securities or convertible debt securities 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 (Proceeds from unissued unsecured convertible note) 3.10 Net cash from / (used in) financing activities	81 - (8) - - - - - -	81 1,000 (107) - - - - - -
	73	974
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)	653 (222) - 73	557 (1,027) - 974

ASX Listing Rules Appendix 5B (01/12/19) + See chapter 19 of the ASX Listing Rules for defined terms.

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Appendix 5B

Mining exploration entity or oil and gas exploration entity quarterly cash flow report

Consolidated statement of cash flows	Current quarter $A’000	Year to date ( 12 months) $A’000
4.5 Effect of movement in exchange rates on cash held 4.6 Cash and cash equivalents at end of period	-	-
	504	504
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 (provide details) 5.5 Cash and cash equivalents at end of quarter (should equal item 4.6 above)	504 - - -	653 - - -
	504	653
6. Payments to related parties of the entity and their associates 6.1 Aggregate amount of payments to related parties and their associates included in item 1 6.2 Aggregate amount of payments to related parties and their associates included in item 2 Note: if any amounts are shown in items 6.1 or 6.2, your quarterly activity report must and an explanation for, such payments
		Current quarter $A'000
		108
		13
		include a description of,

The amounts reported in item 6.1 relate to payments to directors including non-executive fees, out of scope additional consulting fees and superannuation for the quarter.

The amounts reported in item 6.2 relate to payments for corporate advisory fees and reimbursement of legal fees incurred for the quarter.

ASX Listing Rules Appendix 5B (01/12/19) + See chapter 19 of the ASX Listing Rules for defined terms.

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Appendix 5B

Mining exploration entity or oil and gas exploration entity quarterly cash flow report

7. Financing facilities Note: the term “facility’ includes all forms of financing arrangements available to the entity. Add notes as necessary for an understanding of the sources of finance available to the entity. Total facility amount at quarter end $A’000 Amount drawn at quarter end $A’000 7.1 Loan facilities - - 7.2 Credit standby arrangements - - 7.3 Other (please specify) - - 7.4 Total financing facilities - - 7.5 Unused financing facilities available at quarter end - 7.6 Include in the box below a description of each facility above, including the lender, interest rate, maturity date and whether it is secured or unsecured. If any additional financing facilities have been entered into or are proposed to be entered into after quarter end, include a note providing details of those facilities as well.	Total facility amount at quarter end $A’000	Amount drawn at quarter end $A’000
	-	-
	-	-
	-	-
	-	-

8. Estimated cash available for future operating activities	8. Estimated cash available for future operating activities	$A’000
8.1 Net cash from / (used in) operating activities (Item 1.9) 8.2 Capitalised exploration & evaluation (Item 2.1(d)) 8.3 Total relevant outgoings (Item 8.1 + Item 8.2) 8.4 Cash and cash equivalents at quarter end (Item 4.6) 8.5 Unused finance facilities available at quarter end (Item 7.5) 8.6 Total available funding (Item 8.4 + Item 8.5) 8.7 Estimated quarters of funding available (Item 8.6 divided by Item 8.3)		(222) - (222) 504 - 504
		2.3
8.8 If Item 8.7 is less than 2 quarters, please provide answers to the following questions: 1. Does the entity expect that it will continue to have the current level of net operating cash flows for the time being and, if not, why not?
	Answer: N/A

Answer: N/A

2.	Has the entity taken any steps, or does it propose to take any steps, to raise further
	cash to fund its operations and, if so, what are those steps and how likely does it
	believe that they will be successful?

Answer: N/A

1. Does the entity expect to be able to continue its operations and to meet its business objectives and, if so, on what basis?

Answer: N/A

ASX Listing Rules Appendix 5B (01/12/19) + See chapter 19 of the ASX Listing Rules for defined terms.

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Appendix 5B

Mining exploration entity or oil and gas exploration entity quarterly cash flow report

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.

Date: 24 July 2020

Authorised by: By the Board of MinRex Resources Limited (Name of body or officer authorising release – see note 4)

Notes

1. This quarterly cash flow report and the accompanying activity report provide a basis for informing the market about the entity’s activities for the past quarter, how they have been financed and the effect this has had on its cash position. An entity that wishes to disclose additional information over and above the minimum required under the Listing Rules is encouraged to do so.

2. If this quarterly cash flow 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 cash flow 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. If this report has been authorised for release to the market by your board of directors, you can insert here: “By the board”. If it has been authorised for release to the market by a committee of your board of directors, you can insert here: “By the [ name of board committee – eg Audit and Risk Committee ]”. If it has been authorised for release to the market by a disclosure committee, you can insert here: “By the Disclosure Committee”.

5. If this report has been authorised for release to the market by your board of directors and you wish to hold yourself out as complying with recommendation 4.2 of the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations , the board should have received a declaration from its CEO and CFO that, in their opinion, the financial records of the entity have been properly maintained, that this report complies with the appropriate accounting standards and gives a true and fair view of the cash flows of the entity, and that their opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively.

ASX Listing Rules Appendix 5B (01/12/19) + See chapter 19 of the ASX Listing Rules for defined terms.

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