PATERSON RESOURCES LTD — Capital/Financing Update 2018

Oct 29, 2018

HARDEY RESOURCES LIMITED

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ASX ANNOUNCEMENT

30 October 2018

BURRAGA PROJECT UPDATE: LATEST DRILLING CAMPAIGN COMPLETED

HIGHLIGHTS

• ➢ Two reverse circulation drill-holes completed, amounting to 740m overall, at the Lloyds Copper Mine (LCM) extension within the Burraga Project in NSW – HDY’s primary copper asset

• ➢ The geology team’s objective from this campaign was to garner a greater understanding of the ore body and test if it extends at depth and further to the east than previously understood

• ➢ All drilling samples have been sent to the laboratory for further analysis, as the results will determine the next component of the drilling program

• ➢ Currently, depending on the assay results, the geology team believe incremental infill drilling is necessary to test the size and continuity of the known ore body

• ➢ Meanwhile, the Board notes the price of vanadium pentoxide has reached a fiveyear high[1] , reflective of growing demand from China primarily due to more stringent rebar standards which come into effect on 1 November 2018[2] :

• HDY’s geology teams in Australia and Argentina have continued developing the newly acquired vanadium projects; progress reports will be released shortly

• ➢ Lastly, the Board and legal advisors are continuing to work proactively with the ASX to resolve the current inquiry – shareholders will be kept up to date with progress

*

Hardey Resources Director, Robert McCauley commented: “It is pleasing to have concluded this latest drilling round at our core copper project. The Board looks forward to reviewing the assay results as this will determine the next phase of the drilling program at the Burraga project. Further, our geology teams are ramping up development work on the vanadium projects, given favourable global demand-supply dynamics have propelled the V2O5 price to 5-year highs.”

*

Hardey Resources Limited’s (ASX: HDY) (“HDY” or “the Company”) Board is pleased to announce it has completed drilling two exploration drill-holes as part of the LCM extension program at the Burraga Project in New South Wales.

ASX Announcement 30 October 2018

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LATEST DRILL PROGRAM AT BURRAGA PROJECT

The recent drilling program at the LCM extension within the Burraga Project in NSW comprised of two RC drill-holes, with an aggregate target depth of 740m.

The geology team designed the drill-holes to test high priority targets generated from previous modelling which indicated that lodes remain open at depth and to the east of known mineralisation.

The geology team drilled two scissor style drill-holes which are briefly described below and the location shown in Figure 1:

• ➢ EYMRC034 was collared towards 210  dipping at -80  with the total depth of 400m, which is the deepest RC drill-hole ever undertaken at the LCM extension site; and

• ➢ EYMRC035 was drilled towards 30  dipping at -80  to a total depth of 340m, with the objective to test for mineralisation at depth and to the north-east of the known ore body at the LCM deposit.

FIGURE 1: LOCATION OF TWO DRILL-HOLES & TEAM IN ACTION AT BURRAGA PROJECT

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Location: 6,239,200mN; 734,300mE Source: HDY geology team

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The drill-holes collar location and summary detail information can be found in Table 1, below:

TABLE 1: COLLAR LOCATIONS AND SUMMARY DETAILS (GDA94 ZONE 55)

Hole ID	East (m)	North (m)	Elevation (m)	Azimuth (degrees)	Dip (degrees)	Hole Depth (m)
EYMRC034	734344	6239226	980.5	210	-80	400
EYMRC035	734347	6239231	980.6	30	-80	340

Source: HDY geology team

Samples have now been processed and dispatched to the laboratory for follow up analysis, with results likely available in the next few weeks.

Next Steps

Once the assay results have been reviewed, further drilling is likely to be proposed to test potential extensions to the known ore body to the east.

In addition, the Board intends to provide shareholders with updated progress reports on Nelly Vanadium Mine and six vanadium assets in the Northern Territory and Queensland.

For and on behalf of the Board

Sarah Smith Company Secretary

References

• 1) Vanadium Pentoxide price – Bloomberg 2) “Vanadium price leaps to near-record high” by Frik Els – 15 Oct 2018

COMPETENT PERSON’S STATEMENT:

The information in this announcement that relates to Mineral Resources and exploration results is based on information reviewed or compiled by Kerrin Allwood (M.Sc., CP Geol), a Competent Person who is a Member of the Australasian Institute of Mining and Metallurgy. Mr. Allwood is employed by Geomodelling Ltd. Mr. Allwood has sufficient experience that is relevant to the styles of mineralisation and types 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 Mineral Resources and Ore Reserves”. Mr. Allwood consents to the inclusion in this announcement of the matters based on his information in the form and context in which it appears.

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APPENDIX A: JORC CODE, 2012 EDITION – TABLE 1 REPORT TEMPLATE

The following table provides explanations required under JORC 2012 pertaining to the Lloyds Mine and areas in the immediate vicinity.

Section 1: Sampling Techniques and Data

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

Criteria	JORC Code explanation	Commentary
Sampling	• Nature and quality of sampling (e.g. cut channels, random	• All sampling reported on here was from by reverse
techniques	chips, or specific specialised industry standard measurement	circulation (RC) drilling using a face sampling hammer.
	tools appropriate 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	• Reverse Circulation (RC) samples were collected by cyclone and bagged at 1 m intervals.
	broad meaning of sampling.	• Samples collected and bagged directly from cyclone via
	• Include reference to measures taken to ensure sample	cone splitter at 1m intervals.
	representivity and the appropriate calibration of any	• Not applicable as no assays are reported.
	measurement tools or systems used.	• The 1 m RC sample bags were sub-sampled using a cone
	• Aspects of the determination of mineralisation that are	splitter mounted to the cyclone to gather approximately
	Material to the Public Report.	2kg of material, these were submitted to the laboratory as
	• In cases where ‘industry standard’ work has been done this	either 1m individual samples.
	would be relatively simple (e.g. ‘reverse circulation drilling	• Sample preparation and analytical methods are not
	was used to obtain 1 m samples from which 3 kg was	applicable as no assay results are reported in the current
	pulverized to produce a 30 g charge for fire assay’). In other	announcement.
	cases more explanation may be required, such as where
	there is coarse gold that has inherent sampling problems.
	Unusual commodities or mineralisation types (e.g. submarine
	nodules) may warrant disclosure of detailed information.
Drilling	• Drill type (e.g. core, reverse circulation, open-hole hammer,	• All sampling reported on here was from by reverse
techniques	rotary air blast, auger, Bangka, sonic, etc) and details (e.g.	circulation (RC) drilling using a face sample hammer.
	core diameter, triple or standard tube, depth of diamond
	tails, face-sampling bit or other type, whether core is

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Criteria	JORC Code explanation	Commentary
	oriented and if so, by what method, etc).
Drill sample	• Method of recording and assessing core and chip sample	• Visual inspection of the sample volume indicates sample
recovery	recoveries and results assessed.	recovery is better than 90%. Poor sample recovery or
	• Measures taken to maximise sample recovery and ensure	condition is noted in the logs.
	representative nature of the samples.	• RC samples are visually checked for recovery, moisture
	• Whether a relationship exists between sample recovery and grade and whether sample bias may have occurred due to preferential loss/gain of fine/coarse material.	and contamination. Air is used at the beginning of each drill rod to remove excess water and maintain dry samples where possible.
		• Ground conditions are conducive for RC drilling and
		drilling returned consistent sized samples. RC recoveries
		are high enough to preclude the potential for sample
		bias.
Logging	• Whether core and chip samples have been geologically	• Logging of RC drilling identifies all aspects of lithology,
	and geotechnically logged to a level of detail to support	colour, weathering, texture, alteration and mineralization
	appropriate Mineral Resource estimation, mining studies and	including percentage estimates of sulphide content
	metallurgical studies.	(subject to verification by full assay results).
	• Whether logging is qualitative or quantitative in nature. Core	• During logging, part of the RC sample was sieved, logged
	(or costean, channel, etc) photography.	and placed in RC chip trays which is also photographed
	• The total length and percentage of the relevant	and included with the logging.
	intersections logged.	• The logging includes references to wet samples if present,
		voids and other information important to the resource
		estimation process.
		• Logging is qualitative. Chip trays are stored for reference
		and photos are included in the logs. All drilling is logged
		over the full length of the hole.
Sub-	• If core, whether cut or sawn and whether quarter, half or all	• No diamond drilling completed during this program.
sampling techniques and sample preparation	core taken. • If non-core, whether riffled, tube sampled, rotary split, etc and whether sampled wet or dry.	• Sampling was dry off the cyclone using cone splitter. • The sample preparation techniques are appropriate to the style, grade and grain size of mineralisation.

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Criteria		JORC Code explanation	Commentary
		• For all sample types, the nature, quality and appropriateness	• Blanks and standards were introduced at a rate of 1
		of the sample preparation technique.	standard or 1 blank per 50m and submitted to the
		• Quality control procedures adopted for all sub-sampling	laboratory.
		stages to maximise representivity of samples.	• Sub-sampling is done with a riffle splitter in the laboratory
		• Measures taken to ensure that the sampling is representative of the in situ material collected, including for instance results for field duplicate/second-half sampling.	until the sample has been reduced to a pulp. Grinding performance (% of sample below grind size) are reported by the laboratory for every 20th sample
		• Whether sample sizes are appropriate to the grain size of the material being sampled.	• Blanks and standards were introduced at a rate of 1 standard or 1 blank per 50m and submitted to the laboratory.
			• Samples sizes are appropriate to the grain size,
			mineralogy and grade of the mineralisation.
Quality	of	• The nature, quality and appropriateness of the assaying and	• No assay results are reported in the current
assay data		laboratory procedures used and whether the technique is	announcement, assay results will be released pending
and		considered partial or total.	completion of laboratory assay program.
laboratory tests		• For geophysical tools, spectrometers, handheld XRF instruments, etc, the parameters used in determining the analysis including instrument make and model, reading times, calibrations factors applied and their derivation, etc.	• Downhole Geophysical tools were not used. • In addition to the internal laboratory checks the Company submits standards and blanks on a 1: 50m ratio.
		• Nature of quality control procedures adopted (eg
		standards, blanks, duplicates, external laboratory checks)
		and whether acceptable levels of accuracy (ie lack of bias)
		and precision have been established.
Verification		• The verification of significant intersections by either	• No assay results are reported in the current
of sampling		independent or alternative company personnel.	announcement, assay results will be released pending
and assaying		• The use of twinned holes. • Documentation of primary data, data entry procedures, data verification, data storage (physical and electronic)	completion of laboratory assay program. • No twinning of holes was carried out as it is an exploration program, to test the extension of mineralisation.
		protocols.	• Data is stored as both hard copy and entered into a

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Criteria		JORC Code explanation	Commentary	Commentary
		• Discuss any adjustment to assay data.		database.
			•	Validation checks (overlaps, gaps, out of range data) are
				performed on import into the database
			•	No adjustments were made to the data.
Location	of	• Accuracy and quality of surveys used to locate drill holes	•	Collar locations are determined by DGPS.
data points		(collar and down-hole surveys), trenches, mine workings and other locations used in Mineral Resource estimation.	•	Down-hole surveys are gyroscopic readings at 30m intervals.
		• Specification of the grid system used.	•	Borehole Collars Co-ordinates are in GDA94, Zone 55.
		• Quality and adequacy of topographic control.	•	Topographic surface in areas of likely development is
				from closely spaced (<10m) DGPS traverses in a grid
				pattern and on ridges and gullies. Elsewhere a DTM
				obtained from airborne geophysical surveys was used.
Data		• Data spacing for reporting of Exploration Results.	•	The results reported on are from scout drilling into
spacing and distribution		• Whether the data spacing and distribution is sufficient to establish the degree of geological and grade continuity appropriate for the Mineral Resource and Ore Reserve	•	geological targets, as such drill spacing is only intended to roughly outline the extent of mineralisation. The drilling reported here is adjacent to the existing Lloyds
		estimation procedure(s) and classifications applied.		Mine mineral resource.
		• Whether sample compositing has been applied.	•	It is unlikely that the drilling here is of sufficient density to
				provide an indication of the extent of mineralisation.
			•	Future drilling would be required in order to geologically
				model, estimate and report with confidence a mineral
				resource to be estimated in this area.
			•	No composite sampling occurred, all RC samples were
				dispatched to the laboratory as 1m sampled increments.
Orientation		• Whether the orientation of sampling achieves unbiased	•	No bias significant mineralization bias is suspected, The
of data	in	sampling of possible structures and the extent to which this is		current Exploration results are close to perpendicular or
relation	to	known, considering the deposit type.		sub-perpendicular, due to the nature of the scout style
geological		• If the relationship between the drilling orientation and the

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Criteria		JORC Code explanation	Commentary	Commentary
structure		orientation of key mineralised structures is considered to		drilling to text the extent of the mineralisation.
		have introduced a sampling bias, this should be assessed
		and reported if material.	•
Sample		• The measures taken to ensure sample security.	•	All samples prior to submission are under the supervision of
security				the Geologist.
			•	Following submission to the laboratory (by Company
				personnel), reference samples are stored at the
				Company’s warehouse in Orange.
Audits	or	• The results of any audits or reviews of sampling techniques	•	No formal audits or reviews have been completed on the
reviews		and data.		sampling techniques or data (including the database).
			•	Due care has been taken to collate and assemble the
				data into the database.

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Section 2: Reporting of Exploration Results

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

Criteria		JORC Code explanation	Commentary
Mineral		• Type, reference name/number, location and ownership	• NSW Mineral Tenure: EL6463
tenement and land tenure		including agreements or material issues with third parties such as joint ventures, partnerships, overriding royalties,	• ~60km South of Oberon in NSW.
status		native title interests, historical sites, wilderness or national	• HDY through a subsidiary holds 100% of EL6463
		park and environmental settings.	• There are no agreements over the tenement other than
		• The security of the tenure held at the time of reporting	the usual conditions imposed by the NSW government
		along with any known impediments to obtaining a licence to operate in the area.	• Tenement is in good standing.
Exploration		• Acknowledgment and appraisal of exploration by other	Various operators have held tenure over the area; the
done by other		parties.	following companies have recorded work in the area to
parties			varying capacities:
			• CRA Ltd
			• General Resources Ltd
			• Pacific Copper Ltd
			• Southern Ventures Ltd
			• Telminex N.L.
			• Michelago Resources
			• Marlborough Resources
			• Getty Oil
			• Dominion Mining
			• Republic Gold N.L.
			The final three in the list have carried out the majority of the
			recent work and upon which HDY has based its exploration
			programs.
Geology		• Deposit type, geological setting and style of mineralisation.	• At Lloyds Copper Mine mineralisation occurs as quartz –
			sulphide veins, and as a halo of disseminated
			mineralisation in the wall rocks. The predominant sulphide
			mineral is chalcopyrite with sphalerite on the vein walls
			and pyrrhotite disseminatedin thewall rocks. Galena and

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Criteria		JORC Code explanation	Commentary
			tetrahedrite have also been reported, but not at
			economically important levels. The mineralisation varied
			in width from 0.3m to 10 m, striking roughly east - west and
			dipping moderately north. The mined mineralisation had
			a strike extent of 180m, terminating in faults at both ends.
			The intersection of the terminating faults with the
			mineralisation resultsin the ore plungingtothenortheast.
Drill	hole	• A summary of all information material to the understanding	• Borehole Information regarding the two boreholes can be
Information		of the exploration results including a tabulation of the	found in the main body of the ASX Announcement, refer
		following information for all Material drill holes:	to TABLE 2 for a summary of the borehole collar
		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	information. • The borehole collars are shown in a manner suitable for the reporting of exploration scout drilling in Figure 1 of the main body of the ASX Announcement.
		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	• No assay grades were reported in the current
aggregation		techniques, maximum and/or minimum grade truncations	announcement, assay results will be released pending the
methods		(eg cutting of high grades) and cut-off grades are usually	completion of laboratory assay program.
		Material and should be stated.	• No metal equivalents are reported.
		• Where aggregate intercepts incorporate short lengths of
		high grade results and longer lengths of low grade results,
		the procedure used for such aggregation should be stated
		and some typical examples of such aggregations should
		be shown in detail.
		• The assumptions used for any reporting of metal
		equivalent values should be clearly stated.

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Criteria		JORC Code explanation	Commentary
Relationship		• These relationships are particularly important in the	• There is no known relationship between width and grade.
between		reporting of Exploration Results.	Mineralisation generally occurs as a narrow (1m – 3m)
mineralisation widths and intercept lengths		• If the geometry of the mineralisation with respect to the drill hole angle is known, its nature should be reported. • If it is not known and only the down hole lengths are reported, there should be a clear statement to this effect (eg ‘down hole length, true width not known’).	high grade (>1.0% Cu) vein within a variable width (1m – 20m) low grade (0.2% Cu – 1.0% Cu) halo to the vein. • The current Exploration results are close to perpendicular or sub-perpendicular, due to the nature of the scout style drilling to text the extent of the mineralisation. • Based on the nature of the scout exploration drilling
			completed to date additional drilling would be required
			to quantify the true thickness of the mineralised zones,
			tentative the true thickness is anticipated to be within the
			range of the mineralisation at the nearby Lloyd’s mineral
			resource. As indicated additional drilling would be
			required to provide geological confidence for the
			geological modelling of the deposits and subsequent
			estimation of any mineral resource to extend the Lloyd’s
			mineral resourcetothe currentdrillinglocation.
Diagrams		• Appropriate maps and sections (with scales) and	• To the extent relevant, maps are included in the main
		tabulations of intercepts should be included for any	body of the report.
		significant discovery being reported These should include,
		but not be limited to a plan view of drill hole collar
		locations and appropriate sectional views.
Balanced		• Where comprehensive reporting of all Exploration Results is	• All known material results are reported, no assay grades
reporting		not practicable, representative reporting of both low and	were reported in the current announcement, assay results
		high grades and/or widths should be practiced to avoid	will be released pending the completion of laboratory
		misleading reporting of Exploration Results.	assay program.
Other		• Other exploration data, if meaningful and material, should	• Such results have been previously reported; see
substantive		be reported including (but not limited to): geological	announcements to ASX, these include but are not limited
exploration		observations; geophysical survey results; geochemical	to:
data		survey results; bulk samples – size and method of	• https://www.asx.com.au/asxpdf/20170914/pdf/43m9wph
		treatment; metallurgical test results; bulk density,	zkw8jlp.pdf
		groundwater, geotechnical and rock characteristics;	• https://www.asx.com.au/asxpdf/20170807/pdf/43l6dnt40t
			56dn.pdf

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Criteria	JORC Code explanation	Commentary
	potential deleterious or contaminating substances.	• https://www.asx.com.au/asxpdf/20170727/pdf/43kx02cv8
		p16zw.pdf
		• https://www.hardeyresources.com.au/images/pdfs/Lloyd
		s-resource-final-report-20150612.pdf
Further work	• The nature and scale of planned further work (e.g. tests for	• Additional infill drilling to confirm the size and continuity of
	lateral extensions or depth extensions or large-scale step-	mineralisation would allow an update of the present
	out drilling).	Lloyds Resource Estimate
	• Diagrams clearly highlighting the areas of possible	• Further exploration drilling to determine the extent and
	extensions, including the main geological interpretations	potential continuity of mineralisation to the east.
	and future drilling areas, provided this information is not	• To the extent relevant, maps are included in the main
	commercially sensitive.	body of the report.
		• Assay grade results will be reported once the testing
		laboratory has finalized the assay results and QA/QC has
		beencompleted on thefinalized assayresults.

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