PEPPERMINT INNOVATION LIMITED — Capital/Financing Update 2015

Jul 22, 2015

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LIMITED
CHRYSALIS RESOURCES
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CHRYSALIS RESOURCES LIMITED SOIL RESULTS & EXERCISE OF EARN-IN OPTION; SHIKILA AND KABWIMA PROJECTS, ZAMBIA ASX Announcement

23[rd] July 2015

HIGHLIGHTS

• Final multi-element soil sampling results have been received for 8,825 samples from both the Kabwima and Shikila Copper Projects in Zambia.

• Soil results have confirmed and identified several significant copper-in-soil anomalies within both Projects, including one >10km long x 2km wide discontinuous anomaly (Target H) located ~6km NNE of the previously drilled Kimabwe Prospect in the south-western part of the Kabwima Project.

• FQM Exploration (Zambia) Limited (“FQM”) have satisfied all conditions associated with the Exclusive Option Period, and subsequent to the soil sampling results have elected to execute the Option and advance to the “Earn-in” period in the Kabwima and Shikila Copper Projects in Zambia subject to certain Letter Agreement modifications.

Chrysalis Resources Limited (ASX: CYS) is pleased to announce that FQM Exploration (Zambia) Limited (“FQM”) have satisfied all conditions associated with the exclusive Option Period within the “Letter Agreement” dated 23[rd] October 2014, (refer to ASX announcement dated 18[th] November 2014), and have elected to execute the Option and advance to the “Earn-in” period. The following modifications to the “Letter Agreement” have been executed by both parties via the “Earn-in Notice”;

• a formal drafting of the joint venture agreement may be postponed for up to 12 months whilst initial drill testing is carried out. During this time all aspects of the joint venture will continue to be governed by the Letter Agreement.

• The parties are agreed that the “ First Earn-In ” stage of the letter agreement will be removed altogether leaving FQM with the right to earn an undivided interest of 80% in the project by completing all necessary conditions defined as the “ Second Earn-In ” (clause 3d of the Letter Agreement) within four years of the Earn-in Notice, dated 17[th] July 2015.

• The parties acknowledge that FQM will act as Farm-in Manager and carry out all exploration activities itself (by its employees, agents or contractors) as Farm-in Manager.

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Chrysalis Resources Limited Company Snapshot Company Structure Board & Management
A.B.N 58 125 931 964 Listed on ASX 27 May 2008 No of Shares on Issue 345,484,128 Dr Neale Fong – Non-Executive Chairman
Level 1, Suite 20 (at 31st March 2015)
7 The Esplanade ASX Share Code CYS Mr Jian Hua Sang – Non-Executive Director
MT. PLEASANT WA 6153 Cash (at 31st March 2015) $0.39M Mr Leigh Ryan – Managing Director
Sector Exploration
Mr Kevin Hart – Company Secretary
Phone: 618 6180 9290
Fax: 618 9316 1314
E: info@chrysalisresources.com.au
www.chrysalisresources.com.au
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CHRYSALIS RESOURCES ZAMBIAN JOINT VENTURE AGREEMENT

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The decision by FQM to proceed to the Earn-in phase of the Letter Agreement is subsequent to the receipt of final multi-element soil sample results from the Kabwima and Shikila projects in Zambia. A total of 8,825 soil samples were collected at 500m x 500m spacings across the entire Kabwima and Shikila project areas (refer to ASX announcements dated 18[th] November 2014 and 29[th] January 2015). The results have confirmed previous copper in soil anomalies identified by Chrysalis and have identified several new significant copper in soil anomalies, including one very large anomaly located ~6km NNE of the previously drilled Kimabwe Prospect in the south-western part of the Kabwima Project (Figure 1).

The soil results from the Kabwima Project included 30 soil samples >200ppm Cu, to a maximum of 500ppm Cu from a sample collected ~17 kilometres along strike to the NW of the Mutenda prospect. The largest and most significant Cu-in-soil anomaly from within the Kabwima Project (Target H) is up to 2 kilometres wide and runs discontinuously for a distance of more than 10 kilometres. Apart from checking the residual nature of the soil in the area, the anomaly has been confirmed and characterised by plotting the Cu/Sc ratio in soil which removes the effect of Cu anomalism due to naturally elevated copper levels in mafic rock types (e.g. gabbro which are very common in this region). Figure 1 shows an image produced from the Kabwima soils Cu/Sc ratio data and confirms the Cu-in-soil anomalism associated with Target H, and various other areas including Target B, Target D, and the previously identified and drilled Kimabwe Prospect. Elevated Fe and Ti levels (typically high in soils derived from mafic rock types) have also been used to discriminate between true Cu-insoil anomalism and rock type related elevated copper (e.g. the strong linear anomaly in the NW corner of the project appears to be gabbro related, but ground checking is obviously required).

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Figure 1: Kabwima Project 500m x 500m spaced soil sample results (Cu ppm) over Cu/Sc ratio image.

CHRYSALIS RESOURCES ZAMBIAN JOINT VENTURE AGREEMENT

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The results from the Shikila Project included 21 soil samples >100ppm Cu to a maximum of 364ppm Cu from a sample collected from within the largest anomaly in the Shikila Project - the Wangolo resource area (Figure 2). Soil anomalism was also confirmed over the previously identified Area 4 target (Figure 4). Previous drilling completed by Chrysalis Resources at Area 4 included the best intercept (7m @ 0.10% Cu from 11m) from the 26 hole, 2,145m RC drilling program completed within the Shikila Project in 2013 (refer to ASX announcement dated 3[rd] January 2014).

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Figure 2: Shikila Project 500m x 500m spaced soil sample results (Cu ppm) over Cu/Sc ratio image.

FQM are planning to drill the Target H anomaly and also conduct additional drilling at the Kimabwe Prospect. Drilling preparation is underway.

Competent Person’s Statement

The information in this report that relates to exploration results is based on information compiled by Mr Leigh Ryan, Managing Director employed by Chrysalis, who is a Member of the Australian Institute of Geoscientists (MAIG). Mr Ryan has sufficient experience relevant to the style of mineralisation and type of deposit 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 Ryan consents to the inclusion in the report of the matters based on information in the form and context in which it appears. Mr Ryan participates in the Company’s Employee Share Plan.

For further information please contact: Leigh Ryan Managing Director +61 427 093 043

CHRYSALIS RESOURCES ZAMBIAN JOINT VENTURE AGREEMENT

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JORC Code, 2012 Edition – Table 1

Section 1 Sampling Techniques and Data

Criteria	JORC Code explanation	Commentary
Sampling techniques	Nature and quality of sampling (e.g. cut channels, random chips, or specific specialised industry standard measurement 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 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 (e.g. ‘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 problems. Unusual commodities or mineralisation types (e.g. submarine nodules) may warrant disclosure of detailed information.	Soil Samples: Soil samples referred to in this Public Report are obtained using an ‘industry standard’ sampling equipment and sampling practices. Each sample site is located using a hand held GPS. The sample location is then adjusted when necessary in order to avoid tracks, alluvium, or other transported material. Metal picks and shovels are used to dig holes at varying depths down to a nominal B-Horizon. Approximately 2 to 3 kg of soil from the B-horizon only is collected in plastic bags and taken back to the base camp for drying and sieving under controlled conditions. Sampling was carried out using documented CYS sampling and QAQC procedures (detailed below).
Drilling techniques	Drill type (e.g. core, reverse circulation, open-hole hammer, rotary air blast, auger, Bangka, sonic, etc.) and details (e.g. core diameter, triple or standard tube, depth of diamond tails, face-sampling bit or other type, whether core is oriented and if so, by _what method, etc.). _	N/A
Drill sample recovery	Method of recording and assessing core and chip sample recoveries and results assessed. Measures taken to maximise sample recovery and ensure representative nature of the samples. 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.	N/A
Logging	Whether core and chip samples have been geologically and geotechnically logged to a level of detail to support appropriate Mineral Resource estimation, mining studies and metallurgical studies. Whether logging is qualitative or quantitative in nature. Core(or costean,	Soil Samples: A Geologist or experienced field technician logs each soil sample, noting soil sample hole depth and width, slope and slope direction, vegetation, organic content, soil B-horizon, soil moisture, soil texture, soil colour, soil fragment rock types, and comments.

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Criteria	JORC Code explanation	Commentary
	channel, etc.) photography. The total length and percentage of the relevant intersections logged.
Sub- sampling techniques and sample preparation	If core, whether cut or sawn and whether quarter, half or all core taken. If non-core, whether riffled, tube sampled, rotary split, etc. and whether sampled wet or dry. For all sample types, the nature, quality and appropriateness of the sample preparation technique. Quality control procedures adopted for all sub-sampling stages to maximise representivity of samples. 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. Whether sample sizes are appropriate to the grain size of the material being sampled.	The sample sizes, sieve mesh size (-80#) and the sampling methodology are considered appropriate for the style of mineralisation, and the analysis value ranges for the primary elements.
Quality of assay data and laboratory tests	The nature, quality and appropriateness of the assaying and laboratory procedures used and whether the technique is considered partial or total. 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. Nature of quality control procedures adopted (e.g. standards, blanks, duplicates, external laboratory checks) and whether acceptable levels of accuracy (i.e. lack of bias) and precision have been established.	Laboratory QAQC involves the use of internal laboratory standards using certified reference material, blanks, and duplicates as part of the CYS in house QAQC procedures. CYS used commercially available QAQC reference materials, having a good range of values, and were inserted regularly.
Verification of sampling and assaying	The verification of significant intersections by either independent or alternative company personnel. The use of twinned holes Documentation of primary data, data entry procedures, data verification, data storage (physical and electronic) protocols. Discuss any adjustment to assay data.	Soil sampling data is collected by CYS qualified geologists and geo-technicians working under the supervision of a qualified geologist, and entered into Excel spreadsheets. Validation rules are in place to ensure no data entry errors occur. Data is loaded into an Microsoft Access database by a consultant database administrator, and reviewed by the CYS MD, who is a competent person.
Location of data points	Accuracy and quality of surveys used to locate drill holes (collar and down-hole surveys), trenches, mine workings and other locations used in Mineral Resource estimation. Specification of thegrid system used.	A hand-held GPS was used by CYS to locate all soil sample positions, with an expected 3 to 6m horizontal accuracy. The grid system used is Universal Transverse Mercator (UTM), Datum WGS84, Zone 35 - Southern Hemisphere.

CHRYSALIS RESOURCES ZAMBIAN JOINT VENTURE AGREEMENT

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Criteria	JORC Code explanation	Commentary
	Quality and adequacy of topographic control.
Data spacing and distribution	Data spacing for reporting of Exploration Results. 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 estimation procedure(s) and classifications applied. Whether sample compositing has been applied.	The regional soil sample spacing referred to in this report is 500m x 500m. No data compositing has been applied.
Orientation of data in relation to geological structure	Whether the orientation of sampling achieves unbiased sampling of possible structures and the extent to which this is known, considering the deposit type If the relationship between the drilling orientation and the orientation of key mineralised structures is considered to have introduced a sampling bias, this should be assessed and reported if material.	Soil sampling lines run N-S (True) and E-W (True) which is between 60 and 90 degrees to the strike of bedding and possible mineralisation.
Sample security	The measures taken to ensure sample security.	Soil samples are stored on site and guarded by 24 hour security guards then transported to Kansanshi for sieving and submission to ALS Johannesburg. Sample bags are sealed for storage and during transport. Pulp samples are stored at ALS Johannesburg and guarded by 24 hour security guards until they are re-located to the CYS office in Lusaka.
Audits or reviews	The results of any audits or reviews of sampling techniques and data.	An internal review of the sampling techniques and sample data considered both to be standard industry practice. No external audit or review of the sampling techniques or sample data has been conducted to date.

Section 2 Reporting of Exploration Results

Criteria	JORC Code explanation	Commentary
Mineral tenement and land tenure status	Type, reference name/number, location and ownership including 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. The security of the tenure held at the time of reporting along with any known impediments to obtaining a licence to operate in the area.	Type - Large Prospecting Licence. Reference name – Shikila, Kabwima North, Kabwima South. Reference number – 13405-HQ-LPL, 8199-HQ- LPL, and 13404-HQ-LPL respectively. Location–Copper Belt and NW Province, Republic of Zambia. Ownership – 99.99% Sedgwick Resources Limited, a wholly owned subsidiary of Chrysalis Resources (CYS) Overriding royalties - none The land is held under communal title,i.e. the

CHRYSALIS RESOURCES ZAMBIAN JOINT VENTURE AGREEMENT

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Criteria	JORC Code explanation	Commentary
		local chief is the guardian. However, when it comes to change of land use, e.g. to mining, the national government, in consultation and agreement of the chief (representing the local inhabitants) make the final decision No historical sites are known. The central and eastern part of the Kabwima Project is covered by part of the Kalilele Forest Reserve. Environmental setting – savannah woodland of central Africa
Exploration done by other parties	Acknowledgment and appraisal of exploration by other parties.	RST completed stream sediment sampling across the Kabwima Project area in the late 1960’s – early1970’s.
Geology	Deposit type, geological setting and style of mineralisation	Deposit Type – Kansanshi Style Cu-Au+Ag mineralisation. Geological setting – Variably folded, weakly metamorphosed metasandstone, siltstone, phyllite, schist, and graphitic shale units of the Katanga Super Group (Lower Kundelungu Series age) intruded by syn- to post-tectonic granitic and gabbroic intrusions. Style of mineralisation: Kansanshi Style lithologically and structurally controlled Cu-Au+Ag mineralisation within quartz veining, or tectonic breccia zones within clastic sediments, brecciation at or near schist / shale contacts overlying variably dolomitised and metamorphosed limestone.
Drill hole Information	A summary of all information material to the understanding of the exploration results including a tabulation of the following information for all Material drill holes: 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.	Cu-in-soil assays form the basis of the exploration results and are presented as figures within the body of the announcement.
Data aggregation methods	In reporting Exploration Results, weighting averaging techniques, maximum and/or minimum grade truncations (eg cutting of high grades) and cut-off grades are usually Material and should be stated.	No weighting averaging techniques, maximum and/or minimum grade truncations have been used on the soil data. Some ratio data (dividing the value of one element by the value of another element)has been used and explained

CHRYSALIS RESOURCES ZAMBIAN JOINT VENTURE AGREEMENT

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Criteria	JORC Code explanation	Commentary
	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.	in the body of the announcement. No metal equivalent reporting is used or applied.
Relationship between mineralisation widths and intercept lengths	These relationships are particularly important in the reporting of Exploration Results. 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 (e.g. ‘down hole length, true width not known’).	N/A
Diagrams	Appropriate maps and sections (with scales) and tabulations of intercepts should be included for any significant discovery being reported These should include, but not be limited to a plan view of drill hole collar locations and appropriate sectional views.	Appropriate plans have been included in the body of this announcement.
Balanced reporting	Where comprehensive reporting of all Exploration Results is not practicable, representative reporting of both low and high grades and/or widths should be practiced to avoid misleading reporting of Exploration Results.	Highest values and maximum values have been stated in the text, along with appropriate diagrams displaying the location and coloured assay range for each sample.
Other substantive exploration data	Other exploration data, if meaningful and material, should be reported 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, groundwater, geotechnical and rock characteristics; potential deleterious or contaminating substances.	CYS flew a regional aeromagnetic and radiometric survey, which when interpreted shows regional lithological trends, cross-cutting structures and buried intrusives within the licence area. Aeromagnetic images are available for viewing in this and previous ASX announcements.
Further work	The nature and scale of planned further work (eg tests for lateral extensions or depth extensions or large-scale step-out drilling). Diagrams clearly highlighting the areas of possible extensions, including the main geological interpretations and future drilling areas, provided this information is not commercially sensitive.	Infill soil sampling is likely for both the Shikila and Kabwima projects Drilling is planned for the Kikana Dome Cu-in- soil anomaly and the previously drilled Kimabwe prospect. Landholder discussions have commenced however a detailed drill program has not yet been designed.