NEOMETALS LTD — Interim / Quarterly Report 2014

Jan 15, 2015

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ASX Release 16 January 2015

QUARTERLY ACTIVITIES REPORT For the quarter ended 31 December 2014

Level 1, 672 Murray Street West Perth WA 6005 Locked Bag 8 West Perth WA 6872 t. +61 8 9322 1182 f. +61 8 9321 0556 info@neometals.com.au neometals.com.au Neometals Ltd ABN 89 099 116 631

Highlights:

Mt Marion Lithium Project

• Semi- Pilot Plant in US successfully achieves 200hr of operation at 80% efficiency

• Optimisation testwork of semi-pilot plant in USA reduces power consumption by 15%

• Australian patent granted for lithium hydroxide technology

• Works Approval granted, upstream mining and processing project now fully permitted

Barrambie Titanium Project

• Optimisation testwork producing high-purity titanium dioxide via a proprietary hydrometallurgical process continues in Canada

• Sedgman and Snowden Mining Industry Consultants advancing Pre-feasibility Study, completion set for June Q 2015

Mt Finnerty Project

• Diamond drill hole intersects first intact basal footwall contact

• Assay results expected by end of January 2015

Lake Johnston Project

• Maiden diamond drill hole identifies finely disseminated nickel and copper sulphides in highMagnesian ultramafic rocks over large spatial extent, 38m @ 0.24 % Ni

• Second hole submitted for assay, results expected end of January 2015

Corporate

• Convertible Note Facility extended on more favourable terms and Change of Company Name following Shareholder Approval at AGM

• Cash and restricted access term deposits $10.29 million

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PROJECT LOCATIONS

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MT MARION LITHIUM PROJECT (Neometals 70%, Mineral Resources Limited 30%)

During the quarter Reed Industrial Minerals Pty Ltd ( RIM ) continued to advance the Mt Marion Lithium Project ( Mt Marion ) with the successful continuous production of lithium hydroxide (LiOH) catholyte from a semi-pilot plant in the USA. RIM is owned 70:30 by Neometals Ltd ( Neometals ) and leading mining services provider Mineral Resources Limited ( MRL ). MRL fund and operate the project through their subsidiary, Process Minerals International Pty Ltd.

The semi-pilot scale demonstration plant conducted by specialist chlor-alkali laboratory Process Technology Optimisation in Buffalo, USA has successfully achieved 200 hours of operation at 80% efficiency during the quarter. The test work demonstrates the reproducibility of the successful purification and electrolysis of lithium chloride solutions, and the suitability and durability of the ion exchange membrane for commercial operation.

During the quarter RIM was granted a patent from IP Australia over its proprietary process to produce high-purity lithium hydroxide (“LiOH”) directly from spodumene (lithium) concentrates. The patent is the first granted member of the extensive patent family for lithium hydroxide, with other patents filed or under examination in the US, Canada, Chile, China and Malaysia.

Advantages of the RIM process include:

• ability to utilise existing Chlor-alkali and new Chlor-Alkali package-plants to produce LiOH,

• high current efficiency in electrolysis that has the potential to deliver competitive unit production costs, and

• very low impurity levels in final product without additional purification phases.

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The results to date are particularly encouraging with the purification of lithium chloride exceeding expectations and efficiency across the electrolysis membrane exceeding assumptions in the Prefeasibility study (“PFS”).

Project Development and Corporate Strategy

Neometals and MRL are working to develop RIM into an independently financed, advanced minerals company that will be an integrated lithium compound producer and supplier to the Lithium-ion battery industry. The project has a granted Mining Proposal and received its Works Approval for plant construction, on the 18[th] of December 2014.

The start-up of a lithium concentrate operation at Mt Marion is planned to coincide with a decision to construct a downstream lithium compound operation. A partner selection process commenced in September with the aim of developing an appropriate business structure for the commercialisation of the RIM process technology. Discussions remain preliminary and there can be no assurance that a binding proposal will emerge. Neometals and MRL will keep the market informed as matters develop further.

Lithium market

The prominent, respected lithium industry researchers forecast a large and sustained increase in the demand for high-purity, battery-grade lithium hydroxide and carbonate at compound rates of approximately 20% pa. The growth is underpinned by continuing use of rechargeable batteries in consumer electronics and increased market penetration of battery electric and hybrid electric vehicles (EV and HEV) in commercial and private applications. The current median prices for batterygrade lithium hydroxide and lithium carbonate are US$8,000 and US$6,400 per tonne, respectively, on a CIF basis to Europe and US respectively (source: Industrial Minerals 8 January 2015). Based on public announcements by an established global supplier, a market price increase of around 10% has been foreshadowed in 2015.

BARRAMBIE TITANIUM PROJECT (Neometals 100%)

During the quarter the Company continued to advance its Barrambie Titanium Project with the continued optimisation of its mini-pilot plant testwork programme in Canada. The Company continued its Pre-feasibility study (“PFS”) to assess the development of an open-pit mining and processing operation using a licensed proprietary technology to produce high purity titanium, vanadium and iron compounds. The PFS is being managed by Mr D.Michael Spratt, an experienced process/construction engineer and former COO of Minproc, and is expected to be completed in the June Quarter 2015.

Barrambie is one of the world’s highest grade titanium deposits, containing total Indicated and Inferred Mineral Resources of 47.2Mt at 22.2% TiO2, 0.63% V2O5 and 46.7% Fe2O3, at a cut-off grade of 15% TiO2 (Appendix C).

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The currently preferred project development strategy is to advance the project to a suitable stage of evaluation to attract a joint venture partner to fund and operate the development of the Barrambie project.

Titanium and Vanadium market

The majority of titanium feedstocks (US$17 Billion or 85% by value) are used to produce titanium dioxide pigment which is then used as an additive in paints, plastics, paper and ink with the balance (15%) used to produce titanium metal products.

The current median price for high quality titanium dioxide pigment is US$3,175 per tonne on a CIF basis to USA (source: Industrial Minerals 8 January 2015).

MT FINNERTY PROJECT (Neometals 100%)

The Mt Finnerty Project located about 65km east of Koolyanobbing is currently being explored for iron ore and nickel mineralisation in its own right.

Nickel (Barranco 100%, Neometals option to acquire 100%)

During the quarter a single diamond drill hole, GDD009, confirmed the stratigraphy intersected in GDD007 and establishes that the Green Dam Ultramafic Complex is a massive extrusive unit that is generally the one continuous eruptive event. The hole has failed to penetrate the massive sulphides on contact that have been hypothesised to have sourced the strong geochemical anomalism in the shear systems, including the hypogene nickel sulphides in the quartz vein of GDD005. The detailed geochemistry of the core-samples (in progress) will however be assessed for their fertility potential to have sampled a primary geochemical halo from the relatively intact basal ultramafic. The most prospective serpentinites and high-magnesian talc-carbonated have been submitted for multielement wet chemistry analysis with results expected by the end of January 2015.

LAKE JOHNSTON NICKEL PROJECT (Neometals 80%, Hannans Reward 20% free carried to DTM)

During the quarter two diamond drill holes tested a new geophysical model (3D magnetic inversion) prepared in the previous quarter. MGD001 targeted the northern apophysis, MGD002 tested the southern apophysis that had the stronger soil geochemical response in Ni, Cu & Cr. Both are interpreted to have been sourced from the larger Medcalf chonolith located 3-4km to the south.

Stratigraphy intersected was similar in both holes, viz:- massive gabbro from surface down grading into a cummingtonite amphibolite with almost massive serpentinite in the lower 10 metres of MGD001 and for 200m of MGD002. Both holes have very fine grained sulphides associated with the more massive serpentinised zones. Geological similarities with other apophysis/chonolith environments such as at the Santa Rita nickel sulphide mine in Brazil and the PGE deposit at Munni Munni in WA have been confirmed.

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Figure 1. Tenement Plan on Interpreted Geology Figure 2. Cross section on Interpreted Geology

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Figure 3. Historic (blue) and current holes (orange) and magnetic anomalies over magnetic model and 80ppm Cu geochemistry (light blue).

Results from MGD001 indicate that ultramafic rocks, both black massive serpentinites and the altered cummingtonite-orthopyroxenite cumulates contain impressively high MgO levels (exceeding 40% volatile free basis) over significant widths. Anomalous nickel contents are coincident with these magnesian rocks and an initial intersection width from 335m to 373m (38m) @ 0.24% Ni is consistently elevated (Appendix A). It is worthwhile emphasising that the thickness of strongly serpentinised ultramafic cumulate in MGD001 is far less than that in the second hole - MGD002 (located 755m away from MGD001).

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The most prospective serpentinites and high-magnesian talc-carbonated equivalents have been submitted for multi-element wet chemistry analysis, with results expected by the end of January 2015.

The Company is evaluating options to divest its nickel portfolio.

Table 1 – Hole Locations 2014 Q2 Drilling

Hole No.	MGA Northing	MGA Easting	Collar Dip	Collar Azimuth Magnetic	End of Hole Depth m	Comments
GDD009 (Green Dam)	6608050	219000	-60	270.0	861.40m	Down hole surveyed and cased 50mm full length for future geophysics. High magnesian Green Dam Ultramafic Complex intact basal contact over granite-intruded footwall basalts. Trace sulphides mainly in shear zones.
MGD001 (Mt Gordon)	6401696	290945	-60	142.6	511.00	Down hole surveyed and cased 50mm full length for future geophysics. Gabbroic unit over amphibolite with cg sulphides at interface, overlying layered orthopyroxene-olivine cumulates and intact chill zone base with disseminated sulphides. Chonolith intruded into pillowed basalt flows. Trace sulphides and anomalous Ni values throughout cumulates.
MGD002 (Mt Gordon)	6400973	290736	-60	142.6	394.00	Down hole surveyed and cased 50mm full length for future geophysics. Gabbroic unit over amphibolite with cg sulphides at interface, overlying layered orthopyroxene-olivine cumulates and intact chill zone base with disseminated sulphides. Chonolith intruded into pillowed basalt flows. Trace sulphides throughout cumulates, assays available Q3.

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Table 2 – Sampling / Analytical Details 2014 Q2 Drilling

Hole No.	Sampled From	Sampled To	Laboratory	Sampling Method ology	Comments
GDD009 (Green Dam)	400.00	810.00	Intertek Labs (Maddington)	Quarter core cut	192 Samples (Fire Assay low level Au, Pd & Pt plus 4 acid digest ICPOES or ICPMS finish for Ag, Al, As, Ba, Bi, Ca, Co, Cr, Cu, Fe, K, Li, Mg, Mn, Mo, Ni, Pb, Rb, S, Sb, Se, Sn, Sr, Te, Ti, VV, W & Zn – results in ppm). Results pending.
MGD001 (Mt Gordon)	185.27	384.00	Intertek Labs (Maddington)	Quarter core cut	117 Samples (Fire Assay low level Au, Pd & Pt plus 4 acid digest ICPOES or ICPMS finish for Ag, Al, As, Ba, Bi, Ca, Co, Cr, Cu, Fe, K, Li, Mg, Mn, Mo, Ni, Pb, Rb, S, Sb, Se, Sn, Sr, Te, Ti, VV, W & Zn – results in ppm). Results received.
MGD002 (Mt Gordon)	104.90	298.15	Intertek Labs (Maddington)	Quarter core cut	156 Samples (Fire Assay low level Au, Pd & Pt plus 4 acid digest ICPOES or ICPMS finish for Ag, Al, As, Ba, Bi, Ca, Co, Cr, Cu, Fe, K, Li, Mg, Mn, Mo, Ni, Pb, Rb, S, Sb, Se, Sn, Sr, Te, Ti, VV, W & Zn – results in ppm). Results pending.

Iron Ore

Interest in the sale process for wholly owned subsidiary Mount Finnerty Pty Ltd (“MFPL”), which holds the tenements and iron rights, has waned with the fortunes of the iron ore price. A Retention Licence Application was lodged during the quarter, which upon grant, will remove the expenditure obligations from the relevant areas of the Mount Finnerty Project without incurring the costs and risks involved in continuing to apply for exemptions.

CORPORATE

Finances (unaudited)

Cash and term deposits on hand as of 31 December 2014 totalled $10.29 million, including $6.1 million in restricted use term deposits supporting performance bonds and other contractual obligations.

As a result and following shareholder approval at the AGM, the terms of 2 million convertible notes issued to David Reed on 21 November 2013 were varied on more favourable terms. The terms of the convertible notes are as follows:

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Term: 22 November 2015 Number of notes: 2,000,000 Face value: $1 Coupon rate: 11% per annum (previously floating rate that is 3% above the rate paid by noteholder under the noteholder’s external financing arrangements). Interest is payable monthly in arrears. Conversion price: $0.04 (previously $0.03) Conversion date: Any time prior to the redemption date, being 22 November 2015.

Annual General Meeting (AGM)

The Company’s AGM took place on 28 November 2014 where the following resolutions were carried:

1. Re-election of David Reed as director

2. Approval of Remuneration Report

3. Approval of Performance Rights Plan

4. Approval of issue of Long Term Incentive Performance Rights to Christopher Reed

5. Approval of variation of Convertible Noted held by David Reed

6. Change of company name

Issued Capital

One million options with an exercise price of $1.00 expired on 31 December 2014 unexercised.

ENDS

COMPETENT PERSONS STATEMENT

The information in this report that relates to Exploration Results is based on information compiled by Mr Gordon Kelly, a Member of the Australian Institute of Geoscientists. Mr Kelly is a full-time employee of Neometals Ltd. Mr Kelly has sufficient experience which is relevant to the styles of mineralisation and types of deposits under consideration and to the activity 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". Mr Kelly consents to the inclusion in this report of the matters based on his information in the form and context in which it appears.

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APPENDIX A: TABULATION OF DRILL ASSAY RESULT AND JORC 2012 COMPLIANCE TABLES

Hole ID	East (MGA)	Northing (MGA)	RL (m)	Collar Dip	Collar Magnetic Azimuth	EOH (m)	From (m down hole)	To (m down hole)	Intercept (Unweighted)	Ni ppm	S ppm
MGD001	290945	6401696	+380	-60	142.6	511.00	335.00	373.00	38.00	2434	621

JORC Code, 2012 Edition – Table 1 report template

Section 1 Sampling Techniques and Data

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

• Criteria JORC Code explanation Sampling • Nature and quality of sampling (eg cut channels, random chips, or specific specialised industry standard measurement tools appropriate

• techniques to the minerals 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.

• Include reference to 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

Commentary

• Whole core (mainly NQ2) was logged in the Neometals Ltd corefarm – West Perth by Gordon Kelly who is highly experienced in this exploration technique. The entire hole was digitally photographed prior to removal.

• Sampling intervals were adjusted to geological boundaries and alteration zones as geologically logged. The thick units resulted in most cutting intervals of 1m, on the metre.

• Diamond blade cutting of the NQ core was completed by Intertek Laboratories at 15 Davison Road Maddington; one quarter core was sampled into prenumbered calico bags and the other three quarters returned to Neometals for archiving.

• This procedure is standard for most diamond drill core work and allows replicate sampling of the remaining quarter core to be completed for any subsequent grade control investigations, whilst retaining all half core for possible relogging exercises in the future.

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Criteria	JORC Code explanation	Commentary
	problems. Unusual commodities or mineralisation types (eg	• The quantity of quarter core sampled allows complete pulverization of
	submarine nodules) may warrant disclosure of detailed information.	each sample; hence no splitting is ever required. Sample pulps are
		returned to Neometals after temporary storage at Intertek and then
		archived at the core farm facilities.
		• Where the drill hole is partially funded by the EIS scheme (GDD009)
		all of the three quarter core remnant and the pulp sample returns will
		be forwarded to the Joe Lord corefarm at the DMP – Kalgoorlie for
		final archiving.
Drilling	• Drill type (eg core, reverse circulation, open-hole hammer, rotary air	• Diamond drilling was completed by Westralian Diamond Drillers from
techniques	blast, auger, Bangka, sonic, etc) and details (eg core diameter, triple or standard tube, depth of diamond tails, face-sampling bit or other	Kalgoorlie at the Green Dam prospect (GDD009) and by DDH1 Drilling from Perth at the Mt Gordon prospect (MGD001 and
	type, whether core is oriented and if so, by what method, etc).	MGD002.
		• The surface, strongly lateritised gravels and clays were roller-cone
		removed for the top ~40m and material lost into the sumps.
		• From ~40m to ~70m, HQ coring was completed in the strongly broken
		saprock zone.
		• From ~70m to EOH, the core was fresh rock and NQ2 core was
		collected in plastic core trays for later work. The coring is quite
		standard for this reconnaissance work.
		• Where possible, Bottom-of-Hole crayon orientation marks were
		recorded and later extrapolated as far as possible along the rejoined
		& cleaned core. Not all orientation was successful and always failed
		in major shear zones typically observed in GDD009.
		• Down-hole gyro surveying was completed, with WDD completing
		single shot surveys every 30m, recording dip, magnetic azimuth and
		magnetic field (magnetic susceptibility). DDH1 recorded multi shot
		down hole surveys every 6m or so, with dip, magnetic azimuth
		magnetic strength (nT) and relative gravity readings taken.
Drill sample	• Method of recording and assessing core and chip sample recoveries	• Diamond drill core recovery in the top ~40m was zero, where the
recovery	and results assessed. • Measures taken to maximise sample recovery and ensure	overburden weathered laterite clays and gravels were lost to the sumps.
	representative nature of the samples.	• Recovery in the HQ cored section from ~40m to ~70m was poor to
	• Whether a relationship exists between sample recovery and grade	adequate, as determined from the very broken and jointed nature to
	and whether sample bias may have occurred due to preferential	the rock types. Recovery was down to 10% in some sheared
	loss/gain of fine/coarse material.	sections.

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Criteria	JORC Code explanation	Commentary
		• Recovery in the NQ2 cored section from ~70m to End Of Hole were
		100% apart from the occasional shear zones in GDD009. The
		MGD001 & 002 core recovery was 100%.
		• The zones selected for cutting were all within the 100% recovery
		fresh rock sections and there can be no sampling bias involved.
Logging	• Whether core and chip samples have been geologically and	• All drill core was transported to Neometals corefarm in West Perth for
	geotechnically logged to a level of detail to support appropriate	full degreasing, reconnection of core lengths and measurement of
	Mineral Resource estimation, mining studies and metallurgical	metre marks where required, usually over the entire hole.
	studies.	• Geological logging was completed on all 3 holes by Gordon Kelly,
	• Whether logging is qualitative or quantitative in nature. Core (or	who has 45 years’ experience in this style of exploration. The core
	costean, channel, etc) photography.	was logged geologically to the highest standards of our current
	• The total length and percentage of the relevant intersections logged.	understanding in nickel sulphide exploration.
		• Geotechnical logging was completed to a reasonable standard, in that
		RQD estimates were recorded over geological units and any
		significant core loss noted. When possible, geological contacts, major
		fault planes and internal fabric orientations were recorded using
		industry standard alpha and beta terminologies.
		• These readings are available for any possible structural re-analysis
		that is deemed appropriate in the case of mine development.
		• The laid-out core trays were photographed with a DSLR camera and
		the pictorial record for the entire hole stored in Neometals database.
		At present, holes MGD001, MGD002 and the lower half of GDD009
		have been recorded. The upper half of GDD009 still awaits logging
		and processing.
Sub-sampling	• If core, whether cut or sawn and whether quarter, half or all core	• Selection of intervals for quarter core cutting and sampling was based
techniques and sample	taken. • If non-core, whether riffled, tube sampled, rotary split, etc and whether sampled wet or dry.	on the above detailed geological logging. As a generalisation, all occurrences of sulphide mineralisation have been marked-up for cutting and sampling.
preparation	• For all sample types, the nature, quality and appropriateness of the	• Hole GDD009 started-in and penetrated high-magnesian ultramafic
	sample preparation technique.	rocks the entire length (above the footwall basalt sequences). The
	• Quality control procedures adopted for all sub-sampling stages to	last ~100m or so of that core has been submitted for analysis due to
	maximise representative nature to the samples.	the focus of the hole to test a conceptual geological target proposed
	• Measures taken to ensure that the sampling is representative of the in	by Western Mining Services. The target proposed was massive nickel
	situ material collected, including for instance results for field	sulphides close to or on the footwall contact.
	_duplicate/second-half sampling. _	• It was not considered cost-effective to test the entire length(800m)of

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Criteria	JORC Code explanation	Commentary
	• Whether sample sizes are appropriate to the grain size of the material	the ultramafic unit, above that ~100m above the contact, especially
	being sampled.	when no nickel sulphides have been logged.
		• The caveat to that is that the upper half of the hole has not been
		logged in detail and there may well be remobilised sulphides in the
		more sheared upper section that would justify sampling in the near
		future.
		• Holes MGD001 & 002 penetrated a gabbroic unit overlying
		amphibolite and serpentinised cumulates. The Mt Gordon area is a
		pure greenfields area and it was decided to collect basic geochemical
		information on the entire ultramafic portion of both holes.
		• The sampling of quarter core is considered quite adequate to collect
		representative samples of the entire ultramafic and any disseminated
		nickel sulphides therein. The only zones of coarse grained sulphides
		are at the interface between gabbro and ultramafic and quarter core
		sampling would not be adequate in that particular case, which only
		has relevance if there are significant values recorded.
		• The coarse sulphides discussed above are not hosted in ultramafic
		lithologies and are unlikely to yield nickel sulphide intersections. They
		are interpreted to be more likely to host anomalous PGE values,
		based on the conceptual geological targets discussed in the text.
Quality of	• The nature, quality and appropriateness of the assaying and	• The value of the analytical data reported by Intertek is cutting-edge in
assay data and	laboratory procedures used and whether the technique is considered partial or total. • For geophysical tools, spectrometers, handheld XRF instruments, etc,	quality and highly appropriate for all nickel sulphide exploration. They have maintained a consistent track record over many decades of benchmark quality in their analytical work.
laboratory	the parameters used in determining the analysis including instrument	• Data were again subject to QA/QC by Intertek Laboratories, 15
tests	make and model, reading times, calibrations factors applied and their	Davison Road Maddington . QA/QC was achieved by duplicate
	derivation, etc.	sampling of laboratory pulps at random sample intervals and of
	• Nature of quality control procedures adopted (eg standards, blanks,	anomalously high values. Laboratory blanks were also inserted
	duplicates, external laboratory checks) and whether acceptable levels	according to their protocols to check sample preparation cross-
	of accuracy (ie lack of bias) and precision have been established.	contamination potential.
		• Intertek publishes all duplicates and standards analyses alongside of
		the drill sample results.
Verification	• The verification of significant intersections by either independent or	• No intersections have been received to date that would justify
of sampling	alternative company personnel. • The use of twinned holes.	validation by replicate and/or duplicate analysis. • Twinned holes were not relevant at this stage ingreenfields

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Criteria	JORC Code explanation	Commentary
and assaying	• Documentation of primary data, data entry procedures, data	exploration.
	verification, data storage (physical and electronic) protocols.	• All geological and location data has been stored in Neometals Ltd.
	• Discuss any adjustment to assay data.	.xlsx database files. Data entry has been by manual input and
		validation of the small amount of data was done by checking input on
		screen prior to saving.
		• There is no historic diamond drill data from this prospect. The single
		RC hole that dates from Hannans Reward exploration era (2009-
		2010) was resampled in its entirety by sieving the 1m green plastic
		bag reject sample on site to separate a representative subsample of
		fines for submission to Intertek Laboratories. Coarse subsamples,
		that is, above 6mm diameter, have been archived in the Neometals
		corefarm for possible future petrographic work.
Location of	• Accuracy and quality of surveys used to locate drill holes (collar and	• Locations were planned using a combination of GIS software
data points	down-hole surveys), trenches, mine workings and other locations used in Mineral Resource estimation.	packages. All collars were proposed by Bill Peters from SGC and were designed to test the 3D geophysical model of the magnetic
	• Specification of the grid system used.	susceptibility readings collected by the aerial survey completed for
	• Quality and adequacy of topographic control.	RGC in 1996.
		• Location of stations was accomplished with Garmin handheld GPS
		units with an accuracy of +/- 4m. Drill azimuths were laid-out with a
		hand-held Suunto compass that has a precision of +/- 0.5 degrees.
		• All data points were located using the Geocentric Datum of Australia
		1994 and the Map Grid of Australia zone 51 projection.
		• Topographic control was not required to be determined for this
		release.
Data spacing	• Data spacing for reporting of Exploration Results.	• At least 300 readings were recorded per station.
and	• Whether the data spacing and distribution is sufficient to establish the	• Stations/holes were individually plotted in the field.
distribution	degree of geological and grade continuity appropriate for the Mineral Resource and Ore Reserve estimation procedure(s) and	• The data spacing or hole separation is approximately 750m and is only designed for a first-pass look at the source of the 3D geophysical
	classifications applied.	model.
	• Whether sample compositing has been applied.	• If further drilling is justified, an exploration grid will be established on
		paper to adequately test the disseminated mineralisation style. Collar
		positions although adjusted to align on a local grid, will be converted
		for field positioning with a hand-held GPS. Conversion formulae are
		available for calculating either coordinate system.

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Criteria	JORC Code explanation	Commentary
Orientation of	• Whether the orientation of sampling achieves unbiased sampling of	• The drill holes were designed to intersect the 3D modelled body in the
data in relation to	possible structures and the extent to which this is known, considering the deposit type. • If the relationship between the drilling orientation and the orientation	centre and close to 90 degrees to the contacts. • The results of the geotechnical measurements of geological contacts indicate that the modelling and hole planning was very close to an
geological	of key mineralised structures is considered to have introduced a	ideal orientation choice.
structure	sampling bias, this should be assessed and reported if material.	• The intersections quoted in the text are therefore presented as being
		highly representative of true widths and grades. Thus there is no bias
		inherent in holes MGD001 & MGD002.
Sample	• The measures taken to ensure sample security.	• All drill core and sampling was conducted under constant
security		management by Reed Exploration and Neometals personnel. • There was no potential for sample substitution or “salting” at any
		stage of the analytical pipeline.
		• All core and sample pulps are stored behind secure locked doors at
		the Neometals corefarm facilities.
Audits or	• The results of any audits or reviews of sampling techniques and data.	• The nature of the only recently received analytical data has not
reviews		entailed any audits of quality. It is unlikely that MGD002 will require any such reviewing.

Section 2 Reporting of Exploration Results

(Criteria listed in the preceding section also apply to this section.)

Criteria	JORC Code explanation	Commentary	Commentary
Mineral	• Type, reference name/number, location and ownership including	•	Tenement E63/1365 which contains the Mt Gordon prospect is
tenement and land tenure	agreements or material issues with third parties such as joint ventures, partnerships, overriding royalties, native title interests, historical sites, wilderness or national park and environmental settings.		100% owned by Reed Exploration Pty Ltd, a wholly owned subsidiary of Neometals Ltd. (13 blocks) and is located as one contiguous block within the SW Mineral Field. The centre of the
status	• The security of the tenure held at the time of reporting along with any		block is located approximately 50km SSE of Maggie Hays nickel
	known impediments to obtaining a licence to operate in the area.		mine or 120km WSW of Norseman. The tenements overlay
			Vacant Crown Land, which also contains the Proposed Nature
			Reserve PNR/84,managed byDPaW. All exploration activities

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Criteria	JORC Code explanation	Commentary
		are managed by the DMP and the 2 entities may collaborate on
		environmental management protocols that exploration activities
		justify. The tenement conditions on grant of the lease give further
		details.
		• Neometals Ltd through its wholly owned subsidiary Reed.
		Exploration Ltd has a joint venture agreement in place with
		Hannans Reward Ltd, the previous owners of the tenement, who
		retain a 20% free carried interest in tenement up to a decision to
		mine. Hannans Reward can elect to fund its 20% interest or
		dilute to a 2% Net Smelter Royalty on all minerals.
		• Tenement E63/1365 is in good standing with the Department of
		Mines and Petroleum (DMP).
Exploration	• Acknowledgment and appraisal of exploration by other parties.	• The tenement area has received sporadic greenfields exploration
done by other parties		since the mid-1970’s when nickel mineralisation was discovered at Maggie Hays camp. Most consisted of brief, intense resource drilling over the Medcalf layered mafic complex, in assessment of its
		vanadium mineralisation. Amoco minerals were prominent in the
		1980’s in that focus. Later work by komatiite nickel sulphide explorers
		was peripheral to the Mt Gordon prospect area, with the most recent
		in 2010-2012 by Hannans Reward focusing on the gold mineralisation
		potential further north than Mt Gordon.
		• Relics of reconnaissance drill exploration over this covered lateritic
		gravel terrain are noticeable by its absence. The latest bedrock
		drilling by Hannans required extensive access track development to
		mount a gold focused test of soil sampling and structural targets.
		• The soil sampling did highlight a bull’s-eye base metal coincident
		anomaly that justified a single angled RC drill hole beneath it to test
		for the source of the base metal anomalism. This was quite distinct
		from the gold targeting that had been tested in the same program with
		a large number of deep RC holes.
		• The GSWA mapping in the area has been completed to 1:100,000
		scale - regional outcrop mapping on the Johnston sheet – dated
		2012. There are no comments of unusual aeromagnetic bulls-eye
		signatures or comments on the genesis of the Medcalf Intrusive
		Complex.
		• Ingeneral,the intrusive layered complex at Mt Gordon;drilled in 2014

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Criteria	JORC Code explanation	Commentary
		was only discovered by Hannans Reward as a result of systematic
		soil sampling, drill testing, followed by later focused geophysical and
		geological exploration by Reed Exploration.
		• Geophysical surveys of greatest value in this phase of greenfields
		exploration is the low-level ultra-detailed survey commissioned by
		RGC in 1996.
		• The identification of a possible chonolith signature in the 3D
		modelling of same was also only possible using the experience and
		software utilised by Southern Geoscience geophysical surveys.
		• Recognition of the geological / mineralisationpossibilities of such a
		chonolith was made by the nickel sulphide exploration-experienced
		personnel at Reed Exploration Ltd.
Geology	• Deposit type, geological setting and style of mineralisation.	• The Mt Gordon prospect is poorly understood, both in detail and in its
		overall geological context. Previous workers overlooked the prospect
		area because of its zero outcrop, being covered by near in situ
		lateritic gravels and latosols.
		• The nearest outcrop is the Medcalf Igneous Complex, located
		approximately 3-4km south of Mt Gordon. It has received geological
		mapping of varying quality, with the best interpretation being available
		on the Audalia Resources website as a downloadable .pdf.
		• Exploration from Mt Gordon prospect and northwards towards Lake
		Johnston has been historically gold-focused. Exploration techniques
		have been soils and auger soil sampling, extensive RC angle drilling
		and rare diamond drilling. Much more intensive nickel sulphide
		exploration has been focused on the komatiitic ultramafic belts,
		located approximately 5km westwards that are interpreted to be
		stratigraphic continuations southwards from the Maggie Hays nickel
		camp. The details of this work are not relevant to the Mt Gordon
		prospect and future exploration.
		• From the diamond drill holes just completed, the layered mafic-
		ultramafic chonolith apophyses identified have been intrusively
		emplaced into an unremarkable pillowed tholeiitic basalt flow
		sequence. Hornfelsing and metamorphic mineral overprinting is
		confirmation of the intrusive nature.
		• Earlier geological interpretations are inconclusive in provenence.

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Criteria	JORC Code explanation	Commentary
Drill hole	• A summary of all information material to the understanding of the	• Drill hole coordinates, dips, azimuths and survey information has
Information	exploration results including a tabulation of the following information for all Material drill holes:	been summarised in tabular form, in the text above.
	o easting and northing of the drill hole collar
	o elevation or RL (Reduced Level – elevation above sea level in
	metres) of the drill hole collar
	o dip and azimuth of the hole
	o down hole length and interception depth
	o hole length.
	• 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,	• The results quoted are unedited raw data, direct from the analytical
aggregation methods	maximum and/or minimum grade truncations (eg cutting of high grades) and cut-off grades are usually Material and should be stated. • Where aggregate intercepts incorporate short lengths of high grade	laboratories. • There has been a very simple aggregation technique applied for the intersection, viz:- sum of widths times grade divided by sum of widths
	results and longer lengths of low grade results, the procedure used for	• This gives a straight forward metres from a down hole depth at an
	such aggregation should be stated and some typical examples of such	averaged grade.
	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	• The geometry is almost one on one, that is, the down hole
between mineralisatio	Exploration Results. • If the geometry of the mineralisation with respect to the drill hole angle is known, its nature should be reported.	intersection is the same as the true width intersection, due to the nearly right angled intersection to chonolith apophysis contact.
n widths and	• If it is not known and only the down hole lengths are reported, there
intercept lengths	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	• The attached figures to this release contain all relevant sample
	intercepts should be included for any significant discovery being	intervals, intercepts and estimated geological comments based on
	reported These should include, but not be limited to a plan view of drill	historic geological logging.
	hole collar locations and appropriate sectional views.
Balanced	• Where comprehensive reporting of all Exploration Results is not	• The release is the total of information available and the intersection

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Criteria	JORC Code explanation	Commentary
reporting	practicable, representative reporting of both low and high grades and/or	contains the only significant compilation of nickel assays that are
	widths should be practiced to avoid misleading reporting of Exploration	related to fresh rock samples.
	Results.
Other	• Other exploration data, if meaningful and material, should be reported	• Future work proposed should include detailed petrographic
substantive exploration	including (but not limited to): geological observations; geophysical survey results; geochemical survey results; bulk samples – size and method of treatment; metallurgical test results; bulk density,	identifications of the major rock types and sulphide mineralisation intersected. • This will confirm the rock types geologically logged and improve the
data	groundwater, geotechnical and rock characteristics; potential deleterious	comparison to better documented nickel sulphide deposits in
	or contaminating substances.	chonolith environments.
Further work	• The nature and scale of planned further work (e.g. tests for lateral	• Both drill holes at Mt Gordon and the one stratigraphic drill hole at
	extensions or depth extensions or large-scale step-out drilling).	Green Dam have 50mm PVC casing emplaced to allow possible
	• Diagrams clearly highlighting the areas of possible extensions, including	down-hole geophysical surveys to be completed.
	the main geological interpretations and future drilling areas, provided	• There is a time limit imposed by the DMP for rehabilitation of the
	this information is not commercially sensitive.	holes and this may destroy access to the casing.
		• Down hole geophysics is therefore a possible next exploration
		technique to employ.
		• Dependent on the analytical results from MGD002, due in a few
		weeks, there could quite feasibly be a sudden impetus in exploration.
		• Programs of detailed auger soil sampling have been prepared in
		order to focus on the more prospective sulphide-mineralised portions
		of the prospect area. PGE anomalism is well catalogued as an
		indicator towards mineralisation.
		• A large number of potential angle drill holes have also been listed for
		environmental evaluation, a necessary step to gain POW approvals
		from DPaW and from the DMP.
		• What drill collar sites are actually drilled can be decided in the light of
		further interpretation of current results.
		• Submission and approval of Conservation Management Plans is
		onerous and expensive, but an absolute necessity when dealing with
		the above regulatory bodies.
		• The consultants Animal, Plant, Mineral (APM) were very successful in
		getting rapid approvals to do the above drilling and they would be
		utilised again.

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APPENDIX B: TENEMENT INTERESTS

As at 31 December 2014 the Company has an interest in the following projects and tenements in Western Australia.

PROJECT NAME	LICENCE NAME	BENEFICIAL INTEREST	STATUS
Barrambie	E57/769	100%	Live
Barrambie	E57/770	100%	Live
Barrambie	E58/471	100%	Pending
Barrambie	L57/30	100%	Live
Barrambie	L20/55	100%	Live
Barrambie	M57/173	100%	Live
Mount Marion	E15/1190	70% (*)	Live
Mount Marion	L15/315	70% (*)	Live
Mount Marion	L15/316	70% (*)	Live
Mount Marion	L15/317	70% (*)	Live
Mount Marion	L15/321	70% (*)	Live
Mount Marion	M15/999	70% (*)	Live
Mount Marion	M15/1000	70% (*)	Live
Mount Finnerty	E15/836	100%	Live
Mount Finnerty	E15/1408	100%	Live
Mount Finnerty	E15/1416	100%	Live
Mount Finnerty	E15/1430	100%	Pending

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Mount Finnerty	E16/260	100%	Live
Mount Finnerty	E16/272	100%	Live
Mount Finnerty	E16/305	0% (**)	Live
Mount Finnerty	E16/308	100%	Live
Mount Finnerty	E16/330	0% (**)	Live
Mount Finnerty	E16/341	100%	Live
Mount Finnerty	E16/375	100%	Live
Mount Finnerty	E16/455	100%	Live
Mount Finnerty	M15/978	100%	Live
Mount Finnerty	M15/1371	100%	Live
Mount Finnerty	M16/506	100%	Live
Mount Finnerty	M16/507	100%	Live
Mount Finnerty	M16/511	100%	Live
Mount Finnerty	M16/522	100%	Live
Mount Finnerty	P16/2823	100%	Live
Mount Finnerty	P16/2824	100%	Live
Mount Finnerty	R16/1	100%	Pending
Mount Finnerty	R16/2	100%	Pending
Lake Johnston	E63/1701	100%	Live
Lake Johnston	P63/1961	100%	Live
Lake Johnston	P63/1964	100%	Live
Lake Johnston	P63/1965	100%	Live

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Lake Johnston	P63/1966	100%	Live
Lake Johnston	P63/1967	100%	Live
Forrestania	E77/2207	100%	Pending
Forrestania	E77/2219	100%	Pending
Forrestania	E77/2220	100%	Pending
Forrestania	E77/2239	100%	Pending

• • registered holder is Reed Industrial Minerals Pty Ltd (Neometals Ltd 70%, Mineral Resources Ltd 30%).

** - registered holder is Barranco Resources NL, Neometals Ltd has option to purchase 100%

Changes in interests in mining tenements

Interests in mining tenements acquired or increased

PROJECT NAME	LICENCE NAME	ACQUIRED OR INCREASED
Barrambie Mount Finnerty Mount Finnerty	E58/471 R16/1 R16/2	Applied for 07/10/2014 Applied for 27/11/2014 Applied for 27/11/2014

Interests in mining tenements relinquished, reduced or lapsed

PROJECT NAME	LICENCE NAME	RELINQUISHED, REDUCED OR LAPSED
Lake Johnston	E63/1715	Withdrawn 06/10/2014
Mount Finnerty	E16/448	Surrendered 01/10/2014

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APPENDIX C: MINERAL RESOURCE ESTIMATES

Mt Marion Resource Table for 0.3% Li2O cut-off

Category (JORC, 2012)	Tonnage (Mt)	Li2O (%)	Fe2O3 (%)
Measured	2.0	1.45	0.93
Indicated	4.8	1.39	1.22
Inferred	8.0	1.3	1.3
Total	14.8	1.3	1.2

All tonnage and grade figures have been rounded down to two or three significant figures, respectively; slight errors may occur due to rounding of values.

Barrambie Mineral Resource Estimate for 15% TiO2 cut-off

Category (JORC, 2012)	Tonnage (Mt)	TiO2 (%)	V2O5 (%)	Fe2O3 (%)	Al2O3 (%)	SiO2 (%)
Indicated	34.7	22.25	0.64	46.77	9.48	14.95
Inferred	12.5	21.99	0.58	46.51	9.32	15.40
Total	47.2	22.18	0.63	46.70	9.44	15.07

All tonnage and grade figures have been rounded down to two or three significant figures, respectively; slight errors may occur due to rounding of values.

Compliance Statement

The information in this report that relates to Mineral Resource Estimates at the Mt Marion Lithium Project and Barrambie Titanium Project is extracted from the ASX Announcements entitled “ Mt Marion – JORC 2012 Mineral Resource Estimate” lodged 9 December 2013, and “Barrambie - Amended JORC 2012 Mineral Resource Estimate” lodged 6 December 2013 respectively. The Company confirms that it is not aware of any new information or data that materially affects the information included on the original market announcement and that all material assumptions and technical parameters underpinning the estimates in the relevant market announcement continue to apply and have not materially changed. The Company confirms that the form and context in which the Competent Person’s findings are presented have not been materially modified form the original market announcement.

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