PRAIRIE LITHIUM LIMITED — Capital/Financing Update 2017

Sep 26, 2017

27 September 2017

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ASX ANNOUNCEMENT ASX: HWK

INITIAL DRILLING ON KANGWANE SOUTH CONFIRMS HISTORIC RESULTS

HIGHLIGHTS

• 12 coal samples assayed confirming low sulphur, medium ash anthracite

• A total of 4.0 metres of coal intersected in Borehole KS12 and a total of 6.58 metres of coal intersected in Borehole KS13

• Impact splitting undertaken on roof and floor cores predicting positive mining conditions in seam 5+6 ( the main composite seam)

Hawkstone Mining Limited (ASX: HWK) ( Hawkstone or the Company ) is pleased to announce the results of its recently completed two borehole drilling program at its Kangwane South Tenement, South Africa. The results of the drilling program confirmed that the coal is a medium ash, low sulphur anthracite.

The two hole program commenced in June 2017 and was primarily designed as phase one of a program to:

• Check the accuracy of the historical boreholes drilled by the Mining Corporation which were drilled during the late 1970’s and the 1980’s.

• Confirm the historical washability characteristics of the different anthracite seams with new data from washability of the current drilling program and the low sulphur content of certain of the anthracite seams.

• Conduct Impact Splitting Tests on the rock/sediments above and below the anthracite seams to characterise the potential underground mining conditions that will be encountered.

The Company is pleased to advise that the two boreholes drilled are in line with the results of historical boreholes giving the Company validation of the accuracy of prior results in that area. Figure 1 shows photographs of some of the drill core from the new boreholes.

Borehole KS13 intersected 6 coal seams and KS12 intersected 3 seams, with both boreholes intersecting the main 5+6 seam. A summary of the three main seams is tabled below:

Table 1: 3 main seam intersections in two new boreholes KS 12 & 13

Bore ID	Roof 7	Floor 7	Width 7	Roof 5+6	Floor 5+6	Width 5+6	Roof 3	Floor 3	Width 3
KS12	57.05	58.20	1.15	60.60	61.70	1.10	77.55	79.30	1.75
KS13	Core lost(0.56 width)			103.85	106.76	2.91	118.15	120.30	2.15

Hawkstone Mining Limited Suite 23, 513 Hay Street, Subiaco WA T: +61 (8) 6143 6705

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Geotechnical tests conducted via impact splitting have indicated that the mining roof conditions in the main 5+6 seam is good in both holes but varied from average to poor in the other seams. The numerous thin dolerite sills intersected above the coal in Borehole KS12 had a deleterious effect on the quality of the coal seams.

The coal analyses and washability tests conducted on the core samples indicated slightly lower qualities and theoretical yields than predicted from the historical data.

The analyses and tests were undertaken by Bureau Veritas Inspectorate Laboratories (Pty) Limited in Johannesburg. The Company had initially engaged another laboratory to undertake the test work, however, following quality control work undertaken by the Company’s geological consultant prior to provision of samples, it was deemed unsatisfactory to provide results with confidence. This has resulted in a delay of receipt of analyses and test results which would not normally be expected.

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Figure 1: Photographs of the core and coal seams

Table2: Average Qualities from the two boreholes drilled

Hole Id	Seam	Moisture	Ash	Volatiles	FC	Sulphur	CV	Raw RD
KS12	3	2.5	57.3	5.1	35.1	1.23	12.6	1.95
KS13	3	2.14	26.95	7.25	63.67	0.91	24.01	1.57
KS12	7	2.2	53.9	4.9	39	0.52	13.37	1.91
KS12	5+6	2.8	47.1	4.5	45.6	0.57	14.59	1.83
KS13	5+6	2.05	47.24	6.98	43.72	0.29	16.07	1.81

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Regional Geology

The regional geology of the area is shown on the geological plan. The Karoo Super group was deposited unconformably on the Achaean granite floor. The Karoo sediments found in the area are; Dwyka, Middle Ecca, Upper Ecca and the Stormberg Group. The first three formations consist of sedimentary deposits, while the Stormberg Group consists of sedimentary and volcanic extrusions. Numerous faults and sills are present in the area.

The coal seams were deposited in the Middle Ecca. The sedimentary succession was followed by the extrusion of volcanics. Dolerite dykes and sills intruded at the time of the Stormberg volcanics. It is thought that these volcanics together with minor folding caused the devolatilisation of the coal. The devolatilisation is not localised to areas near the volcanics but is regional and thus must also be due to the structural folding. The Middle Ecca is correlated with the Vryheid Formation. The Vryheid formation is consideration to be of fluvial origin and consists predominantly of arenaceous sediments, namely, sandstones with subordinate grits, mudstones, shales and carbonaceous sediments which include the coal seams. There are four possible causes of the anthratisation of the coal, high geothermal gradient, intrusion of dolerite sills and dykes, formation and folding of the Lebombo monocline and the intrusion of the Mananga granophyre.

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Figure 2: Plan showing the limits of Karoo (coal bearing formation) and two boreholes KS 12 & 13

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Exploration Spend

To date, the Company has spent approximately $75,000 on its exploration and drilling program. The Company has been successful in obtaining favourable commercial terms from its drilling and exploration contractors which has come well under budget.

Further Exploration Work

The historical drilling completed by the Mining Corporation was not undertaken on a geometric grid but on East West strike lines. Prior to undertaking the next phase of drilling, the Company believes it is necessary to identify the areas of the existing resource where the influence of structure and the igneous intrusions (dolerite) can be accurately identified. A quotation for an aeromagnetic survey which will be flown over the entire resource area is being sourced. This survey will identify which areas of the resource are structurally less complex so that the next drilling program, expected to be 6 – 8 holes as follow up to phase one just completed, can be undertaken on a geometric grid in the more prospective areas.

Jurisdictional Risk

Since the Company’s reinstatement to quotation in March this year, there has been increased concern in the market surrounding mining activities in Africa. The Company continues to evaluate the risks inherent with its operations in South Africa as outlined in its Prospectus dated 30 September 2016.

Whilst the Company still believes that the Government of South Africa supports the Company’s activities, there are no assurances that the future political and economic conditions in South Africa will not change and have an adverse impact on the Company’s activities (as outlined in the Company’s Prospectus dated 30 September 2016). As such, the Company continues to monitor the political and economic landscape of South Africa (and Africa generally) and will look to evaluate other assets in order to diversify its portfolio and limit its exposure to jurisdictional risk.

Competent Person’s Statement

Information contained in this announcement that relates to exploration results for the Kangwane South Project is based on, and fairly represents, information compiled by Mr. David van Wyk, who is a Member of the South African Council for Natural Scientific Professions, a “Recognised Overseas Professional Organisation” included in a list promulgated by the ASX from time to time. Mr. van Wyk is the proprietor of GeoCoal Services CC which provides geological consulting services. Mr. van Wyk has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking in respect of the Kangwane South Project to qualify as a “Competent Person” within the meaning set out in the JORC Code 2012. Mr. van Wyk consents to the inclusion of the matters based on his information in the form and context in which it appears in this announcement.

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Appendix 1 Drill Data

Bore Hole ID	Northings	Eastings	Metres above sea level	Dip (Degrees)	Azimuth	Final Depth (metres)
KS12	78369	-2868375	272.00	-90	Vertical	136.73
KS13	78545	-2866701	266.00	-90	Vertical	133.28

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Appendix 2 JORC Code, 2012 Edition – Table 1

Section 1 Sampling Techniques and Data

Criteria	JORC Code explanation	JORC Code explanation	Commentary	Commentary
Sampling	•	Nature and quality of sampling (e.g. cut	•	The drilling and sampling techniques
techniques		channels, random chips, or specific		followed the industry standard for coal
		specialised industry standard		sampling as set out in the South
		measurement tools appropriate to the		African guide to the systematic
		minerals under investigation, such as		evaluation of coal resources and coal
		down hole gamma sondes, or handheld		reserves.
		XRF instruments, etc.). These	•	As whole cores are taken all samples
		examples should not be taken as		represent the sampled interval
		limiting the broad meaning of sampling.	•	The coal has been anthratised either
	•	Include reference to measures taken to		by structural folding and/or dolerite sill
		ensure sample representivity and the		intrusions
		appropriate calibration of any
		measurement tools or systems used.
	•	Aspects of the determination of
		mineralisation that are Material to the
		_Public Report. _
Drilling	•	Drill type (e.g. core, reverse circulation,	•	2 cored holes
techniques		open-hole hammer, rotary air blast,	•	Diamond cores were HQ3 triple tube
		auger, Bangka, sonic, etc.) and details		(65.3 mm).
		(e.g. core diameter, triple or standard	•	No core orientation
		tube, depth of diamond tails, face-
		sampling bit or other type, whether core
		is oriented and if so, by what method,
		_etc.). _
Drill sample	•	Method of recording and assessing	•	Each individual core run is physically
recovery		core and chip sample recoveries and		measured and then compared to
		results assessed.		theoretical core run (by measuring
	•	Measures taken to maximise sample		stick up and rods used for every run).
		recovery and ensure representative	•	Core recoveries in coal have to be >
		nature of the samples.		95%
	•	Whether a relationship exists between	•	Anthracite is brittle and some fine
		sample recovery and quality and		material could be lost but if core
		whether sample bias may have		recovery in coal is less than 95%
		occurred due to preferential loss/gain of		borehole will be re-drilled
		fine/coarse material.
Logging	•	Whether core and chip samples have	•	The two recent boreholes were
		been geologically and geotechnically		geologically logged by a qualified
		logged to a level of detail to support		geologist and profiles drawn showing
		appropriate Coal Resource estimation,		in detail each sample interval and coal
		mining studies and metallurgical		intersection. Logging and sampling
		studies.		was done according to the SANS
	•	Whether logging is qualitative or		10320 code.
		quantitative in nature. Core (or costean,	•	Two recent boreholes were tested for
		channel, etc.) photography.		roof and floor mining conditions.
	•	The total length and percentage of the	•	No chip samples were sampled only
		relevant intersections logged.		whole coal from the diamond cores.

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Criteria	JORC Code explanation	JORC Code explanation	Commentary	Commentary
			•	12 samples were taken from the two
				boreholes totalling 10.58 meters of
				coal
			•	All cores werephotographed.
Sub-sampling	•	If core, whether cut or sawn and	•	Whole core was taken and no sub
techniques		whether quarter, half or all core taken.		sampling was done.
and sample	•	If non-core, whether riffled, tube	•	Sample preparation is documented in
preparation		sampled, rotary split, etc. and whether		laboratory procedures below.
		sampled wet or dry.	•	Duplicate and twinned boreholes are
	•	For all sample types, the nature, quality		planned in the next drilling phase.
		and appropriateness of the sample	•	No duplicate samples taken.
		preparation technique.	•	Sample size is usually controlled as a
	•	Quality control procedures adopted for		minimum mass is required to do a
		all sub-sampling stages to maximize		representative wash on each RD
		representivity of samples.		fraction.
	•	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. _
Quality of	•	The nature, quality and appropriateness	•	The procedure in the Bureau Veritas M
assay data		of the assaying and laboratory		& L coal laboratory was done as
and		procedures used and whether the		follows:
laboratory		technique is considered partial or total.		Condition sample to remove surface
tests	•	For geophysical tools, spectrometers,		moisture
		handheld XRF instruments, etc., the		Weigh sample and calculate Raw
		parameters used in determining the		Relative density
		analysis including instrument make and		Screen out - .5 mm material
		model, reading times, calibrations		Crush + 0.5 mm material to top size of
		factors applied and their derivation, etc.		25 mm
	•	Nature of quality control procedures		The sample preparation and analyses
		adopted (e.g. standards, blanks,		on boreholes was done by Bureau
		duplicates, external laboratory checks)		Veritas M & L an accredited South
		and whether acceptable levels of		African Coal Laboratory.
		accuracy (i.e. lack of bias) and		The coal was washed at different
		precision have been established.		RD’s from 1.35 to 1.7 in baths made
				up to those RD’s.
				Crush floats and sinks to 212 microns
				and sub sample using a riffler to
				obtain sufficient sub sample for
				analyses of each float fraction plus
				sinks. On sub samples for each float
				fraction and sinks analyse for Calorific
				Value (MJ/kg), Ash (%), Moisture (%),
				Volatile Matter (%), Sulphur (%) and
				calculate Fixed Carbon by difference.
				These analytical procedures are all
				explained in the SABS guidelines and
				include duplicates and blanks of
				known values

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Criteria	JORC Code explanation	JORC Code explanation	Commentary	Commentary
Verification of	•	The verification of significant	•	Verification has not been undertaken
sampling and		intersections by either independent or		by independent or third parties.
assaying		alternative company personnel.	•	No twinned holes have been drilled to
	•	The use of twinned holes.		date.
	•	Documentation of primary data, data	•	All primary data was captured from the
		entry procedures, data verification, data		physical hard copies of the graphic
		storage (physical and electronic)		bore hole logs and analytical tables.
		protocols.	•	It is normal procedure in South Africa
	•	Discuss any adjustment to assay data.		to have Round Robin samples
				distributed between the coal
				laboratories and results are compared
				on a quarterly basis. Twin streaming is
				also used to verify analytical results.
				Historical data was captured by the
				Council for Geoscience and then
				presented to the client in excel spread
				sheets. New data was captured by the
				CP.
Location of	•	Accuracy and quality of surveys used to	•	A professional land surveyor was
data points		locate drill holes (collar and down-hole		engaged to survey the historical
		surveys), trenches, mine workings and		borehole positions. The grid system
		other locations used in Coal Resource		used was Cape LO 31. Borehole
		estimation.		collars were checked by the author
	•	Specification of the grid system used.		using Expert GIS and MapQuest and
	•	Quality and adequacy of topographic		no significant differences were
		control.		observed.
Data spacing	•	Data spacing for reporting of	•	Data Spacing from all boreholes was
and		Exploration Results.		sufficient for reporting Exploration
distribution	•	Whether the data spacing and		Results
		distribution is sufficient to establish the	•	Data Spacing was sufficient and
		degree of geological and quality		numerous cross sections have been
		continuity appropriate for the Coal		drawn to show continuity of the coal
		Resource and Coal Reserve estimation		seams
		procedure(s) and classifications	•	Compositing of samples taken per
		applied.		seam has been applied using
	•	Whether sample compositing has been		WashProduct a Snowden’s
		_applied. _		Technology proprietarysoftware
Orientation of	•	Whether the orientation of sampling	•	A number of the original boreholes
data in		achieves unbiased sampling of possible		were drilled on East West lines to
relation to		structures and the extent to which this		facilitate the identification of North
geological		is known, considering the deposit type.		South structures
structure			•	It is clear from the previous reports by
				the Mining Corporation and the
				Southern Anthracite Company that
	•	If the relationship between the drilling		structures run north south and after the
		orientation and the orientation of key		initial drilling on a grid east west lines
		mineralised structures is considered to		were drilled at a close spacing to help
		have introduced a sampling bias, this		resolve these structures. A number of
		should be assessed and reported if		east west magnetometer surveys were
		material.		also done and their interpretation
				helped in defining the Resource
				Blocks. The close spaced drillingalong

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Criteria	JORC Code explanation	JORC Code explanation	Commentary	Commentary
				east west lines would not result in any
				sampling bias. There is no record of
				historical sample security but the
				recent drilling and the proposed drilling
				have audit trails from the field
				geologist to the laboratory and the
				laboratory stores all remaining sample
				material as instructed by the client.
			•	No bias in the relationship of the coal
				seams, drilling orientation and
				sampling would occur in the coal field.
			•	It has been reported that future drilling
				should be on a geometric grid to be
				more representative of the coal
				resource.
Sample	•	The measures taken to ensure sample	•	Care was taken by the field geologist
security		security.		to have a complete audit trail from the
				time the sample was taken in the field
				to the delivery at the laboratory. A
				tagged sample ID would be inside the
				bag as well as attached to the outside.
				A sample list would be sent with the
				samples to the laboratory where all the
				samples would be validated against
				this list and with the geologist who took
				the samplesinthefield
Audits or	•	The results of any audits or reviews of	•	No review or audit has been
reviews		sampling techniques and data.		undertaken on the results of the two
				recentlydrilled boreholes.

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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	JORC Code explanation	Commentary	Commentary
Mineral tenement	•	Type, reference name/number,	•	Altius Trading Company (Pty) Ltd was
and land tenure		location and ownership including		awarded a Mining Right
status		agreements or material issues with		(MP30/5/3/3/10013 MR) over the
		third parties such as joint ventures,		Kangwane South Tenement by the
		partnerships, overriding royalties,		Department of Mineral Resources
		native title interests, historical sites,		(South Africa).
		wilderness or national park and	•	Refer to the Company's prospectus
		environmental settings.		dated 30 September 2016 for details
	•	The security of the tenure held at the		of the mining right.
		time of reporting along with any
		known impediments to obtaining a
		_license to operate inthe area. _
Exploration done	•	Acknowledgment and appraisal of	•	The Mining Corporation drilled the
by other parties		exploration by other parties.		original 99 cored boreholes. DNZ
				Holdings (Pty) Ltd. drilled cored holes
				in 2008 and Malatleng Mining drilled 2
				cored holes in 2017. 34 percussion
				boreholes were drilled to delineate the
				coal limits. No record of these was
				documented except their positions on
				a plan. The outline of the limit of coal
				was documentedintheir reports
Geology	•	Deposit type, geological setting and	•	The Karoo Super group was deposited
		style of mineralisation.		unconformably on the Achaean granite
				floor. The Karroo sediments found in
				the area are; Dwyka, Middle Ecca,
				Upper Ecca and the Stormberg Group.
				The first three formations consist of
				sedimentary deposits, while the
				Stormberg Group consists of
				sedimentary and volcanic extrusions.
				Numerous faults and sills are present
				in the area.
			•	The Vryheid formation at the base of
				the Middle Ecca is considered to be of
				fluvial origin and consists
				predominantly of arenaceous
				sediments, namely, sandstones with
				subordinates grits, mudstones, shales
				and carbonaceous sediments which
				include coal seams.
Drill hole	•	A summary of all information	•	Annexure 1 contains a table of
Information		material to the understanding of the		relevant information pertaining to the
		exploration results including a		two boreholes.
		tabulation of the following
		information for all Material drill holes:
		o easting and northing of the drill
		_hole collar _

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Criteria	JORC Code explanation	JORC Code explanation	Commentary	Commentary
		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.
Data aggregation	•	In reporting Exploration Results,	•	Standard weighting statistical methods
methods		weighting averaging techniques,		were used when reporting the Raw
		maximum and/or minimum quality		and Washed Qualities.
		truncations (e.g. cutting of high	•	No aggregation was done.
		qualities) and cut-off qualities are	•	All coal qualities were analysed at
		usually Material and should be		Bureau Veritas Inspectorate
		stated.		Laboratories (Pty) Ltd.
	•	Where aggregate intercepts
		incorporate short lengths of high
		quality results and longer lengths of
		low quality 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 qualities should be
		_clearly stated. _
Relationship	•	These relationships are particularly	•	All boreholes drilled were vertical, and
between		important in the reporting of		as the coal seams are horizontal
mineralisation		Exploration Results.		intersected lengths will equate to true
widths and				widths.
intercept lengths
Diagrams	•	Appropriate maps and sections (with	•	Appropriate diagrams and sectional
		scales) and tabulations of intercepts		views have been prepared.
		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. _
Balanced	•	Where comprehensive reporting of	•	Weighted averages, maximums and
reporting		all Exploration Results is not		minimums widths and qualities for
		practicable, representative reporting		each seam are reported above.
		of both low and high qualities and/or
		widths should be practiced to avoid
		misleading reporting of Exploration
		_Results. _
Other	•	Other exploration data, if meaningful	•	A ground magnetic survey was
substantive		and material, should be reported		conducted by the Mining Corporation.
exploration data		including (but not limited to):		A magnetic survey was carried out
		geological observations; geophysical		prior to the 1987 drilling program.
		survey results; geochemical survey		East-West lines at right angles to strike
		results; bulk samples – size and		500 metres apart and readings were
		_method of treatment; metallurgical _		taken every2 meters. A total of 143.20

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Criteria	JORC Code explanation	JORC Code explanation	Commentary	Commentary
		test results; bulk density,		line kilometres with some 71 600
		groundwater, geotechnical and rock		readings was completed. The profiles
		characteristics; potential deleterious		and cross sections were used to
		or contaminating substances.		delineate the dykes and faults.
				Interpretations of the geology were
				used to delineate the resource blocks.
Further work	•	The nature and scale of planned	•	It is necessary before the next phase
		further work (e.g. tests for lateral		of drilling is planned to identify the
		extensions or depth extensions or		areas of the resource where the
		large-scale step-out drilling).		influence of structure and the igneous
	•	Diagrams clearly highlighting the		intrusions (dolerite) can be accurately
		areas of possible extensions,		identified. An aeromagnetic survey is
		including the main geological		planned to be flown over the entire
		interpretations and future drilling		resource area. This survey will identify
		areas, provided this information is		which areas of the resource are
		not commercially sensitive.		structurally less complex so that the
				next drilling program would be done on
				a geometric grid in these more
				prospective areas.

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