QX RESOURCES LIMITED — Capital/Financing Update 2017

Feb 23, 2017

ASX ANNOUNCEMENT

24 February 2017

NAMEKARA VERMICULITE MINE DEVELOPMENT DRILLING AND OPERATIONS UPDATE

Highlights

• Maiden infill and grade control drilling and sample analysis now completed at Namekara Vermiculite Mine in South East Uganda, with assays due this month.
• 60 Aircore and 8 diamond core holes for 2,415m sampling at 1 metre intervals completed.
• Drilling completed in existing open pit ("P1") for both grade control, detailed short term mine planning, validation of vermiculite flake size, bulk density, Mineral Resource and Mine Ore Reserve estimation and classification upgrade work.
• Drilling completed north west ("P2") and north east ("P3") of the current open pit with results to be used in the updated Mineral Resource and Ore Reserve estimation work and for medium to long term mine planning for the Namekara Vermiculite Mine.
• Twin hole drilling campaign completed to validate previous drilling campaign drill data and sterilise unmineralised ground for closer waste dumping site set up.
• 2,274 samples taken at 1m intervals, including 5% duplicates and 5% standards, analysed at 5.60mm, 2.00mm, 0.710mm and 0.425mm in order to tie in with work already completed by Rio Tinto and Gulf.
• Historical drilling includes 3,490m by Rio Tinto, 3,408m by Gulf and 2,415m by BMZ.
• Mineral Resource estimation and classification upgrade by the Company and independent mining and geological consulting company CSA Global who advised and oversaw the drilling program.

Black Mountain Resources Limited (ASX: BMZ) (Black Mountain or the Company) is pleased to update shareholders on the ongoing operational progress at its 100% owned Namekara Vermiculite Mine, Eastern Uganda.

The Company is pleased to confirm the completion of a maiden exploration program, a Mineral Resource and grade control drilling program, and analysis of all samples, and the subsequent creation of a 'master database' by combining this new data with Rio Tinto plc's. ("Rio Tinto") and Gulf Industrials Limited's (ASX: GLF) ("Gulf") drilling data.

In 2007 and 2008, Rio Tinto completed a 72 vertical reverse circulation ("RC") holes, 3,490m drilling program. By June of 2008, an internal Mineral Resource estimate in accordance with the JORC Code (2004) had been completed. In 2011 and 2012, Gulf completed 56 angled DD boreholes in a 3,408 metre drilling campaign. In July 2012, Gulf published an Inferred Mineral Resource estimate that was never made public due to survey, QAQC and density concerns. The Rio Tinto drilling and the Gulf drilling used different vermiculite flake size cut off data.

The primary objectives of this drill campaign was to delineate an upgraded inferred Mineral Resource that would facilitate a Mining Ore Reserve for the short and medium term. The secondary objective was to tie the databases together by assaying and exfoliation for four different vermiculite flake, particle size distributions for each 1-metre drill hole intersection.

The specific gravity uncertainties surrounding the Gulf assay results have also been addressed by measuring specific gravity using two different methodologies. A diamond drilling campaign that twinned both Gulf and Rio Tinto holes was undertaken. As a result, BMZ will now be able to utilise with confidence the historical drilling data (which has estimated replacement cost of approximately A$1 million) that was completed. The completion of these works again illustrate the value that the management team is adding to this project through well planned and effective exploration work.

Fig 1. Grade control drilling at P1

DRILLING

On the 26 of November 2016, under the supervision of CSA Global, Black Mountain commenced its maiden drilling program at the Namekara Mine to upgrade the Mineral Resource to a JORC 2012 compliant Mineral Resource. The drilling was completed 4 weeks later on 22 of December 2016. A total of 2,415m in 68 holes was drilled in and around the current Namekara Vermiculite Mine Pit. 2,039m (60 holes) were Aircore ("AC") and 375m (8 holes) were Diamond Core ("DC"). Drill spacing in the open pit was 10mx10m to enable grade control and short term mine planning while around the pit it was 25mx25m for medium to long term mine planning. All drilling completed is intended to be also used in the Mineral Resource upgrade which is now well underway.

Fig 2. Site visit and project review by CSA Global Principal Resource Geologist. Left to Right, Patrick Takaedza, Geology Manager, Henson Mambo, Resident Manager, Matthew Cobb, CSA Global Supervising and Independent Geologist

Twinning of historical RC and DC drill holes by both AC and DC drilling was also completed in 11 holes to validate drill data from the Rio Tinto and Gulf campaigns, and to adjust assay variance in the master database and determine bulk density more accurately. Twinning of historical holes in the unmineralised dyke was also done to sterilise the location for a new waste dump closer to the open pit.

AC drilling was used after it was established that Rio Tinto RC drilling had crushed and grinded samples giving a negative skew to the particle size distribution ("PSD") of the vermiculite ore. The DC drilling utilised HQ triple tube ("HQ3") with split inner tube to maximize recovery of the core, while a split inner tube was for ease of removing weathered core undisturbed.

Fig 3. Core removal from split inner tube

Fig 4. Namekara Pit Layout showing current operational pit, areas defined in Tables A1 through to A7 and drill hole locations

LOGGING

Logging and analysis of the samples commenced on 26 December 2016 after verification of sample procedures by the Company's independent consultants; CSA Global. All samples were logged for lithology, rock colour, weathering, zone, oxidation, vermiculite colour, vermiculite flake size, total vermiculite content and total magnetite content.

Fig 5. AC drilling and sampling in P2

Fig 6. AC logging (Top), AC chips rich in vermiculite flakes (Bottom Left), DC logging (Bottom Right)

ANALYSIS

Analysis was limited to the mineralised zones divided into oxidised and non-oxidised vermiculite. Parameters analysed for were total vermiculite content, particle size distribution, vermiculite colour, grit content, magnetite content, vermiculite expansion and residual moisture. PSD analysis was done at 5.60mm, 2.00mm, 0.710mm and 0.425mm to tie in with Rio Tinto and Gulf assay data, plant production specifications and market requirements. Rio Tinto analysed and estimated the vermiculite Mineral Resource at +0.180mm and +0.425mm, while Gulf reported analysis at 5.60mm, 2.00mm and 0.710mm and estimated at +0.710mm.

All AC and DC sampling was done at 1m intervals to determine any discrepancies or variances that might have been caused by 5m composites by Rio Tinto and 3m composites by Gulf.

Fig 7. Rotary Muffler/exfoliator used for Vermiculite analysis

QAQC

A total of 2,051 original samples were analysed. 109 duplicates and 114 standards were also inserted as part of QAQC. Further to these, CSA Global will also independently supervise the analysis of 5% umpire samples.

BULK DENSITY

Bulk density determination has also been successfully completed. Determinations were done using different methods for comparison, the core tray method and the calliper methods for different zones and lithologies.

Fig 8. Core Tray Bulk density method

Fig 9. Caliper Bulk density method

OUTSTANDING WORK

CSA Global will commence the supervision of the analysis of umpire samples as part of QAQC from 23 to 28 February 2017. In addition, a select sample of Gulf samples will also be re-analysed to validate the historical assay methods and results. Verification of the results and QAQC analysis report will be completed in early March 2017. Once completed assay data will be submitted to CSA Global for incorporation into the master database, which will be used for Mineral Resource estimation and mine planning.

It is also planned to re-analyse all Gulf DC samples at 1m intervals, without compositing to further refine and consolidate the master database. This work is expected to take about 3 months to complete, saving the Company both drilling time and money. Re-drilling the 3,408 Gulf metres would otherwise require about three months and US$477,120.00 to complete.

Table A1. Grade Control AC Drilling in P1

Hole ID	Collar_E	Collar_N	Collar_RL	Azi	Dip	EOH	Intersection
NGC0001	639,662	92,809	1,195	0	-90	20.00	24.50% verm over 19.00m from 0 to 19.00m
NGC0002	639,666	92,818	1,196	0	-90	21.00	25.88% verm over 20.00m from 0 to 20.00m
NGC0003	639,670	92,827	1,196	0	-90	23.58	28.37% verm over 23.58m from 0 to 25.38m
NGC0006	639,674	92,837	1,196	0	-90	28.00	22.35% verm over 24.00m from 0 to 24.00m
NGC0005	639,664	92,840	1,196	0	-90	26.00	25.03% verm over 26.00m from 0 to 26.00m
NGC0004	639,656	92,844	1,196	0	-90	24.00	29.16% verm over 28.00m from 0 to 28.00m
NGC0007	639,659	92,853	1,198	0	-90	29.90	24.50% verm over 29.90m from 0 to 29.90m
NGC0008	639,668	92,850	1,197	0	-90	27.52	33.34% verm over 27.52m from 0 to 27.52m
NGC0009	639,678	92,846	1,197	0	-90	29.30	21.97% verm over 29.30m from 0 to 29.30m
NGC0010	639,655	92,866	1,199	0	-90	24.00	31.66% verm over 14.00m from 0 to 14.00m
NGC0011	639,662	92,862	1,198	0	-90	29.50	28.95% verm over 29.00m from 0 to 29.00m
NGC0012	639,673	92,859	1,198	0	-90	30.00	30.47% verm over 27.00m from 3 to 30.00m
NGC0014	639,589	92,894	1,192	0	-90	17.00	31.39% verm over 13.00m from 0 to 13.00m
NGC0015	639,598	92,889	1,192	0	-90	17.00	25.37% verm over 16.00m from 1 to 17.00m
NGC0016	639,607	92,886	1,192	0	-90	17.00	22.33% verm over 17.00m from 0 to 17.00m
NGC0017	639,616	92,882	1,192	0	-90	16.20	26.33% verm over 16.20m from 0 to 16.20m
NGC0018	639,625	92,878	1,192	0	-90	21.00	22.66% verm over 20.00m from 1 to 21.00m
NGC0019	639,636	92,875	1,192	0	-90	21.24	22.20% verm over 19.24m from 2 to 21.24m
NGC0021	639,557	92,920	1,192	0	-90	23.00	31.88% verm over 23.00m from 0 to 23.00m
NGC0022	639,566	92,916	1,192	0	-90	23.50	27.47% verm over 23.50m from 0 to 23.50m
NGC0023	639,593	92,903	1,192	0	-90	16.17	35.37% verm over 16.17m from 0 to 16.17m
NGC0024	639,602	92,899	1,192	0	-90	17.00	36.94% verm over 17.00m from 0 to 17.00m
NGC0025	639,611	92,895	1,191	0	-90	17.23	28.82% Verm over 17.23m from 0 to 17.23m
NGC0026	639,621	92,891	1,192	0	-90	17.00	29.01% verm over 17.00m from 0 to 17.00m
NGC0028	639,570	92,925	1,190	0	-90	20.00	33.06% verm over 20.00m from 0 to 20.00m
NGC0029	639,579	92,920	1,191	0	-90	17.72	28.96% verm over 17.72m from 0 to 17.72m
NGC0030	639,588	92,916	1,191	0	-90	16.60	33.42% verm over 15.60m from 1 to 16.60m
NGC0031	639,597	92,912	1,192	0	-90	17.00	32.53% verm over 17.00m from 0 to 17.00m
NGC0032	639,606	92,908	1,192	0	-90	17.15	41.33% verm over 17.15m from 0 to 17.15m

Table A2. Infill Aircore drilling in P2.

Hole	Collar_E	Collar_N	Collar_RL	Azi	Dip	EOH	Intersection
NGC0033	639,485	92,937	1,208	0	-90	42.20	28.06% verm over 37.20m from 5 to 42.20m
NGC0034	639,505	92,952	1,207	0	-90	35.40	26.95% verm over 18.00m from 17 to 35.00m
NGC0035	639,526	92,967	1,211	0	-90	40.00	29.95% verm over 27.00m from 13 to 40.00m
NGC0036	639,546	92,982	1,211	0	-90	36.00	31.17% verm over 22.00m from 14 to 36.00m
NGC0037	639,470	92,959	1,209	0	-90	46.16	31.86% verm over 40.00m from 5 to 45.00m
NGC0038	639,491	92,973	1,211	0	-90	40.00	31.43% verm over 31.00m from 9 to 40.00m
NGC0039	639,511	92,986	1,211	0	-90	36.00	29.47% verm over 24.00m from 9 to 33.00m

Table A3. Infill Aircore drilling in P3.

Hole	Collar_E	Collar_N	Collar_RL	Azi	Dip	EOH	Intersection
NGC0040	639,736	92,878	1,214	0	-90	54.00	26.41% verm over 45.00m from 6 to 51.00m
NGC0041	639,782	92,859	1,214	0	-90	51.00	42.65% verm over 45.00m from 6 to 51.00m
NGC0042	639,829	92,841	1,213	0	-90	53.00	36.42% verm over 49.00m from 4 to 53,00m
NGC0045	639,677	92,931	1,214	0	-90	45.13	39.57% verm over 40.00m from 5 to 45.00m
NGC0046	639,698	92,920	1,215	0	-90	46.62	35.02% verm over 42.00m from 4 to 46.00m
NGC0047	639,745	92,901	1,214	0	-90	48.00	31.34% verm over 44.00m from 4 to 48,00m
NGC0048	639,768	92,892	1,214	0	-90	53.50	33.54% verm over 43.00m from 4 to 47.00m
NGC0049	639,791	92,883	1,214	0	-90	52.00	33.11% verm over 47.00m from 5 to 52.00m
NGC0050	639,838	92,864	1,214	0	-90	50.00	42.41% verm over 45.00m from 5 to 50.00m
NGC0052	639,684	92,952	1,214	0	-90	47.00	40.19% verm over 41.00m from 5 to 46.00m
NGC0053	639,708	92,943	1,214	0	-90	46.00	37.48% verm over 40.00m from 6 to 46.00m
NGC0054	639,754	92,924	1,214	0	-90	46.75	35.72% verm over 41.00m from 5 to 46.00m
NGC0055	639,777	92,915	1,214	0	-90	41.00	20.76% verm over 10.00m from 18 to 28.00m
NGC0056	639,800	92,906	1,214	0	-90	48.00	33.60% verm over 38.00m from 9 to 47.00m
NGC0057	639,847	92,887	1,214	0	-90	45.00	42.93% verm over 36.00m from 6 to 42.00m
NGC0059	639,763	92,948	1,215	0	-90	47.00	35.92% verm over 19.00m from 28 to 47.00m
NGC0060	639,785	92,939	1,215	0	-90	48.12	37.44% verm over 40.00m from 8 to 48.00m
NGC0061	639,833	92,920	1,214	0	-90	45.70	38.55% verm over 36.00m from 6 to 42.00m
NGC0062	639,856	92,910	1,214	0	-90	47.00	40.81% verm over 26.00m from 18 to 44.00m

Table A4. AC twinning of historical Rio and Gulf Holes in P3 (*- apparent width)

Hole	Collar_E	Collar_N	Collar_RL	Azi	Dip	EOH	Intersection
NAM-009AC	639,778	92,872	1,214	0	- 90	53.00	46.04% verm over 45.00m* from 8 to 53.00m
NAM-064AC	639,710	92,970	1,214	0	- 90	46.00	Un-mineralized dyke
ND03AC	639,825	92,947	1,214	24	- 50	40.00	Un-mineralized dyke
ND46AC	639,809	92,875	1,214	29	- 49	46.00	33.70% verm over 35.00m* from 11 to 46.00m
ND45AC	639,809	92,880	1,214	204	- 49	39.00	48.71% verm over 31.00m* from 8 to 39.00m

Table A5. DC twinning of BMZ holes in P1

Hole	Collar_E	Collar_N	Collar_RL	Azi	Dip	EOH	Intersection
NGC0012DC	639,673	92,858	1,198	0	-90	27.00	39.88% verm over 25.50m from 0 to 25.50m
NGC0015DC	639,598	92,890	1,192	0	-90	17.00	22.01% verm over 16.20m from 5 to 21,20m

Table A6. DC twinning of Rio holes in P2

Hole	Collar_E	Collar_N	Collar_RL	Azi	Dip	EOH	Intersection
NAM-057DC	639,481	92,960	1,209	0	- 90	54.90	36.76% verm over 35.20m from 5.4 to 40.60m

Table A7. DC twinning of Gulf holes in P3 (*- apparent width)

Hole	Collar_E	Collar_N	Collar_RL	Azi	Dip	EOH	Intersection
ND07DC	639,725	92,912	1,214	205	- 50	72.10	37.94% verm over 45.10m* from 4.9 to 50.00m
ND02DC	639,727	92,920	1,215	27	- 50	34.10	44.23% verm over 29.00m* from 3.9 to 32.90m
ND44DC	639,823	92,940	1,214	204.	- 50	47.00	Un-mineralized dyke
ND48DC	639,739	92,845	1,214	31.00	- 50	60.00	38.58% verm over 53.90m* from 6.1 to 60.00m

-ENDS-

MANAGEMENT COMMENTARY

Black Mountain's Chairman and Chief Executive Officer Julian Ford commented: "Through careful analysis of the historical data, and from the results of this current works program, Black Mountain's management team have added considerable value to Namekara Vermiculite Mine, and we now have a much better understanding of the asset and its unrealised value.

"As well, these results allow us to undertake medium term and longer term mine planning which ensures we can recover the vermiculite Mineral Resource through the most economical means.

"We expect to report on an upgraded Mineral Resource in the next week, that is as soon as the umpire assay verification on these samples has been completed."

Further information, please contact:

Julian Ford Chairman & CEO Ph: +61 8 9321 7277

Email: info@blackmountainResources.com.au

Web: www.blackmountainResources.com.au

Released through: Ben Jarvis, Six Degrees Investor Relations: +61 (0) 413 150 448

Competent Person's Statement

The information in this report that relates to Exploration Results has been compiled Patrick Takaedza. Mr Takaedza is a full-time employee of Namekara Mining Company Ltd. Mr Takaedza is a member of the Australian Institute of Mining and Metallurgy. Mr Takaedza have sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity which they are undertaking to qualify as Competent Persons as defined in the JORC Code (2012). Mr Takaedza consent to the disclosure of this information in this report in the form and context in which it appears.

Forward Looking Statements

Information included in this release constitutes forward-looking statements. Often, but not always, forward looking statements can generally be identified by the use of forward looking words such as "may", "will", "expect", "intend", "plan", "estimate", "anticipate", "continue", and "guidance", or other similar words and may include, without limitation, statements regarding plans, strategies and objectives of management, anticipated production or construction commencement dates and expected costs or production outputs.

Forward looking statements inherently involve known and unknown risks, uncertainties and other factors that may cause the Company's actual results, performance and achievements to differ materially from any future results, performance or achievements. Relevant factors may include, but are not limited to, changes in commodity prices, foreign exchange fluctuations and general economic conditions, increased costs and demand for production inputs, the speculative nature of exploration and project development, including the risks of obtaining necessary licences and permits and diminishing quantities or grades of Ore Reserves, political and social risks, changes to the regulatory framework within which the company operates or may in the future operate, environmental conditions including extreme weather conditions, recruitment and retention of personnel, industrial relations issues and litigation.

Forward looking statements are based on the Company and its management's good faith assumptions relating to the financial, market, regulatory and other relevant environments that will exist and affect the Company's business and operations in the future. The Company does not give any assurance that the assumptions on which forward looking statements are based will prove to be correct, or that the Company's business or operations will not be affected in any material manner by these or other factors not foreseen or foreseeable by the Company or management or beyond the Company's control.

Although the Company attempts and has attempted to identify factors that would cause actual actions, events or results to differ materially from those disclosed in forward looking statements, there may be other factors that could cause actual results, performance, achievements or events not to be as anticipated, estimated or intended, and many events are beyond the reasonable control of the Company. Accordingly, readers are cautioned not to place undue reliance on forward looking statements. Forward looking statements in these materials speak only at the date of issue. Subject to any continuing obligations under applicable law or any relevant stock exchange listing rules, in providing this information the company does not undertake any obligation to publicly update or revise any of the forward looking statements or to advise of any change in events, conditions or circumstances on which any such statement is based.

JORC Code, 2012 Edition – Table 1 Report

Section 1: Sampling Techniques and Data (Criteria in this section apply to all succeeding sections)

Criteria	JORC Code explanation	Commentary
Sampling techniques	Nature and quality of sampling (eg. cut channels, randomchips, or specific specialised industry standardmeasurement tools appropriate to the minerals underinvestigation, such as down hole gamma sondes, orhandheld XRF instruments, etc). These examples shouldnot be taken as limiting the broad meaning of sampling.Include reference to measures taken to ensure samplerepresentivity and the appropriate calibration of anymeasurement tools or systems used.	Sampling was done by Aircore (AC) and Diamond core (DC).AC sampling was at 1 m intervals and DC samples weregenerally taken at 1 m intervals within lithologicalboundaries.AC drill samples were 50-50 riffle split in order to obtainrepresentative samples, with both samples being retained.
	Aspects of the determination of mineralisation that areMaterial to the Public Report. In cases where 'industrystandard' work has been done this would be relatively	All samples we weighted by a calibrated scale beforesplittingIndustrial minerals such as vermiculite are required by JORCCode Clause 49 to be reported in terms of productspecifications, which in the case of vermiculite includes
	simple (eg. 'reverse circulation drilling was used to obtain1 m samples from which 3 kg was pulverised to produce a30 g charge for fire assay'). In other cases moreexplanation may be required, such as where there is coarsegold that has inherent sampling problems. Unusualcommodities or mineralisation types (eg. submarinenodules) may warrant disclosure of detailed information.	flake size and expansion ratio (exfoliation).AC drilling selected as there is no hammer action that grindsthe vermiculite flakes and distort particle size distribution,as percussion method reduces flake size. DC used to twincurrent AC, historical Rio Tinto RC and Gulf DC to check onany sampling/assaying variance and for accurate specificgravity determinations.
Drilling techniques	Drill type (e.g. core, reverse circulation, open-holehammer, rotary air blast, auger, Bangka, sonic etc) anddetails (e.g. core diameter, triple of standard tube, depthof diamond tails, face-sampling bit or other type, whethercore is orientated and if so, by what method, etc).	AC drilling utilized 2 differing bits, both of 86.65mm internaldiameter. Outer diameters were 112.70mm and 113.70mmrespectively.DC drilling used a triple barrel wireline HQ diameter corebarrel with a split inner barrel to allow for wet andweathered core to be removed without disturbance.
Drill sample recovery	Method of recording and assessing core and chip samplerecoveries and results assessed.	All AC samples were weighed before splitting on acalibrated scale. Recovery was then back calculated againstnominal hole diameter and density, based on previousanalytical results for density measurementAll DC recovered was measured and recovery calculated perrun.
	Measures taken to maximise sample recovery and ensurerepresentative nature of the samples.	Sample quality and recovery of AC and DC was continuouslymonitored during drilling to ensure that samples wererepresentative and recoveries maximised.
	Whether a relationship exists between sample recoveryand grade and whether sample bias may have occurreddue to preferential loss/gain of fine/coarse material.	Recovery was lower when AC drilling encountered andholes were stopped at this point.For DC, recovery was severely reduced in highly brokenground and as a consequence the hole would beabandoned.
Logging	Whether core and chip samples have been geologicallyand geotechnically logged to a level of detail to supportappropriate Mineral Resource estimation, mining studiesand metallurgical studies.	AC chips were qualitatively logged by the metre, for colour,vermiculite flake size, vermiculite content, magnetitecontent, as well lithology. Where more than one lithologywas observed in an interval, the dominant material waslogged as the primary lithology. The vermiculite color wasalso used to assign zones while logging. The AC samples

Criteria	JORC Code explanation	Commentary
		were not suitable for geotechnical logging.DC drilling was qualitatively logged for colour, vermiculiteflake size, vermiculite content, magnetite content, as welllithology.
	Whether logging is qualitative or quantitative in nature.Core (or costean, channel, etc) photography.	AC chips were logged qualitatively by visual estimation offlake size, total content and magnetite content which wasthen compared with the quantitative analysis afterassaying.
		DC was initially logged qualitatively then later quantitativelyafter analysis of samples
	The total length and percentage of the relevantintersections logged.	All AC chips were logged at 1 metre intervals. DC drillingwas logged continuously from the top of hole.
Sub-sampling techniquesand sample preparation	If core, whether cut or sawn and whether quarter, half orall core taken.	Entire core was dried, crushed and bagged in approximately1 m intervals to retain representatively
	If non-core, whether riffled, tube sampled, rotary split, etcand whether sampled wet or dry.	AC samples were collected at 1 m intervals. The AC cuttingswere sampled every metre and all sample cuttings werecollected via a cyclone directly from the drill and put intoplastic-impregnated paper bags. A 50:50 riffle splitter wasused to manually split the 1 m samples,
		The crushing of DC core was done manually on speciallyconstructed steel tables, with all material reduced untilpassing through a 13 mm sieve. The material was then splitthrough a 48 mm riffler and the sample and duplicatefurther crushed through a 2 mm roller crusher. The rollercrusher allowed crushing of the grit to -2mm, while leavingthe large vermiculite flakes virtually unaffected.
	For all sample types, the nature, quality andappropriateness of the sample preparation technique.	AC samples were taken at 1m intervals with no subsequentcompositing.The original one metre DD samples were not composited to
		avoid any grade smearing or variances.
	Quality control procedures adopted for all sub-samplingstages to maximise representivity of samples.	All AC samples were split 50-50 and both duplicatesretained. The 20th duplicate was sent for analysis.Every 20th DC sample was duplicated in a 50-50 splitter andsent for analysis
	Measures taken to ensure that the sampling isrepresentative of the in situ material collected, includingfor instance results for field duplicate/second-halfsampling.	Duplicate samples of both AC and DC were collected using ariffler and submitted in the sample stream for analysis.
	Whether sample sizes are appropriate to the grain size ofthe material being sampled.	The 1 m AC and DC samples were deemed to be sufficientsize for the flake size and concentration of the vermiculite.
Quality of assay data andlaboratory tests	The nature, quality and appropriateness of the assayingand laboratory procedures used and whether thetechnique is considered partial or total.	AC samples were split by riffle to ±1 kg sample. Furthersplitting was performed to approximately 300 g to be usedfor analysis; 300 g were also retained as a duplicatereference sample.
		Samples were screened by shaking and after sieving, allsieve fractions (5.6, 2.0, 0.71 and 0.425 mm) were weighedseparately.
		A hand held magnet was used to remove magnetiteparticles which were ubiquitous in the samples.

Criteria	JORC Code explanation	Commentary
		Each sample portion was exfoliated in small portions in preheated metal pans in a muffle furnace at 850±10oC untilfully exfoliated (around 5 minutes). Samples were cooled,weighed and weight was recorded.
		Exfoliated vermiculite was separated from the remainder ofeach sample by a float / sink procedure using water.Approximately 750 ml water was added into a dishcontaining the exfoliated sample, with the dense nonexfoliating material settling within approximately 20seconds. The sinks were dried, cooled and weighed.
		Phlogopite flakes were separated out by oral winnowing(gently blowing) and the remaining grit was recorded. Thephlogopite weight was recorded also by subtracting the gritweight from the sinks weight.
		DC samples were reduced to approximately 300g by riffle.The sample was then split into two parts with one to bescreened and the other to be dried in a laboratory oven tomeasure residual moisture.
		The sample to be screened was placed on a nest of sieves(5.6, 2.0, 0.71 and 0.425 mm) and placed on a mechanicalsieve shaker.
		A hand held magnet was used to remove magnetiteparticles which were ubiquitous in the samples.
		Each of the fractions was then exfoliated in a rotary dryer,allowed to cool and then floated using a water funnelmethod.
		The above 'screening, calcining and floats / sinks' method isdeemed appropriate for this style of mineralisation.
	For geophysical tools, spectrometers, handheld XRFinstruments, etc, the parameters used in determining theanalysis including instrument make and model, readingtimes, calibrations factors applied and their derivation, etc.	Geophysical tools were not used to determine analyses ofthe mineralisation, as the analytical process physicallyextracted the vermiculite, which could be weighed.
	Nature of quality control procedures adopted (egstandards, blanks, duplicates, external laboratory checks)and whether acceptable levels of accuracy (i.e. lack of bias)and precision have been established.	2051 original drill samples were tested in-house at the Gulfexploration laboratory in Uganda. 109 duplicates (5%) wereprepared and tested in-house. 114 (5%) standard sampleswere also prepared and analysed in-house. 103 (5%) wereselected for umpire testing by CSA and will be analysed inhouse but under their supervision.
		An approximately 100 kg sample of mined mineralisationwas used as an internal standard material for analytical QCcontrol. It was homogenized by running it through a rotarydryer for about 15min.
		The standards showed a good consistency was conductedproperly in the laboratory.
		No blanks were inserted as the analytical test procedureswere physical tests with results recorded as weights.
Verification of samplingand assaying	The verification of significant intersections by eitherindependent or alternative company personnel.	CSA Global consultants visited site and checked AC and DCsampling techniques and samples. In addition, vermiculitemineralisation was verified within the pit faces and floor.
	The use of twinned holes.	All 8 DC holes (375m) were twin holes, twinning historicalRio Tinto RC drill holes, Gulf DC drill holesand current ACdrilling.

Criteria	JORC Code explanation	Commentary
	Documentation of primary data, data entry procedures,data verification, data storage (physical and electronic)protocols.	All data and logs recorded during drilling and analysisactivities were compiled in hard copy paper andsubsequently imported into Excel. All hard copy originaldocuments have also been scanned into soft copy andsafely backed up. Paper copies were safely stored atNamekara Project site.
	Discuss any adjustment to assay data.	The analytical data were not adjusted in any way.
Location of data points	Accuracy and quality of surveys used to locate drill holes(collar and down-hole surveys), trenches, mine workingsand other locations used in Mineral Resource estimation.	All collar survey was done as soon as the hole wascompleted by consultant Native Geomatics Pvt Ltd using aNikon DTM 352 Total Station with accuracy of +/-1.0mm.
		Initial control set up was by a Leica 500 Art 502 DGPS withresults being post processed online by processing facilityAUSPOSandindependentlycheckedwithanotherprocessing facility CSRS
		Neither the AC nor DC holes were surveyed down-hole asthe holes were short and not anticipated to deviatesignificantly. Given the style of mineralisation, any drilldeviations were not anticipated to have a material impacton intercept widths of grades.
	Specification of the grid system used.	WGS84 UTM Zone 36 North
	Quality and adequacy of topographic control.	See notes above, under "Accuracy and quality of surveysused to locate drill holes". Native Geomatics did a detailedsurvey of the Namekara pit and tenement topography inaddition to the drill collars.
Data spacing anddistribution	Data spacing for reporting of Exploration Results.	Infill drilling was done on 10m by 10m in the pit and 25m by25m around the pit.
	Whether the data spacing and distribution is sufficient toestablish the degree of geological and grade continuityappropriate for the Mineral Resource and Ore Reserveestimation procedure(s) and classifications applied.	The data spacing is deemed sufficient to establish thegeological and grade (quality) continuity appropriate forfuture classification of a Mineral resource
	Whether sample compositing has been applied.	No compositing of samples was done.
Orientation of data inrelation to geologicalstructure	Whether the orientation of sampling achieves unbiasedsampling of possible structures and the extent to whichthis is known, considering the deposit type.	The vermiculite occurs within a ca. 35 metre thick subhorizontal tabular zone, derived by weathering ofphlogopite within coarse-grained to pegmatoidalpyroxenite. CSA Global and the project geologist consideredit unlikely that the sampling orientation has biased the data(vertical or inclined at -50 degrees).
	If the relationship between the drilling orientation and theorientation of key mineralised structures is considered tohave introduced a sampling bias, this should be assessedand reported if material.	Given the horizontal orientation of the deposit, CSA Globaland the project geologist did not consider the orientation ofdrilling to have introduced significant bias into thesampling.
Sample security	The measures taken to ensure sample security.	AC samples were labelled with hole number and intervalwas written on the bag and a ticket stub placed inside bag.All the data (sample number, hole number and depthinterval) was recorded in duplicate as a QC measure.
		Samples are stored in shelves inside metal containers underlock and key.
		The DC samples were bagged and stored in same containeras AC samples.
		All AC and DC sample details were firstly copied in paper

Criteria	JORC Code explanation	Commentary
		and then being entered in excel spreadsheets safely storedat Namekara Project site. All hard copy records have beenscanned in pdf and safely backed up.
Audits or reviews	The results of any audits or reviews of sampling techniquesand data.	CSA Global consultants have reviewed all sampling SOPs,techniques and data.

Section 2: Reporting of Exploration Results (Criteria listed in the preceding section also apply to this section)

Criteria	JORC Code explanation	Commentary
Mineral tenementand land tenurestatus	Type, reference name/number, location and ownershipincluding agreements or material issues with third partiessuch as joint ventures, partnerships, overriding royalties,native title interests, historical sites, wilderness or nationalpark and environmental settings.	The Namekara Vermiculite Prospect is within 2 tenements; aMining License, ML 4651 and an Exploration License, EL 1534. Theprospect is located in Eastern Uganda near the towns of Mbaleand Tororo, approx. 190 km from the Uganda capital, Kampalaand close to the border with Kenya. The prospect and mine isowned by Namekara Mining Company LTD (NMCL) a whollyowned subsidiary of GLF Holdings LTD (Gulf). Gulf, in turn, isowned 100% by Black Mountain Resources LTD (BMZ:ASX). Thereare no material issues with third parties like JV agreementspartnerships, overriding royalties, native title interests, historicalsites, wilderness or national park and environmental settings.
	The security of the tenure held at the time of reportingalong with any known impediments to obtaining a licenceto operate in the area.	The licences are in good standing and BMZ has lawful access tothe mineral and exploration rights provided under Ugandanmining and exploration legislation as witnessed by IndependentSolicitors, Ugandan legal firm Adukule and Co Advocates.
Exploration doneby other parties	Acknowledgment and appraisal of exploration by otherparties.	Rio Tinto previously drilled 72 vertical RC holes for a total of 3,490m during 2007. Gulf Industrials drilled 54 inclined DC holestotalling 3,408 metres at the project from 2011 through 2012 butdid not report a Mineral Resource mainly due to differencesbetween original and umpire laboratory results for vermiculitecontent.
Geology	Deposit type, geological setting and style of mineralisation.	The Namekara vermiculite deposit is located in the south-westernpart of the Bukusu Complex, which is an alkalai intrusive complexextending over about 50 Km2 and which consists principally ofintrusive carbonatite and silicate rocks such as pyroxenite.The vermiculite occurs within a ca. 35 metre thick sub-horizontal
		tabular zone, derived by weathering of phlogopite within coarsegrained to pegmatoidal pyroxenite.
		The vermiculite body is subdivided into an upper highly-oxidisedzone (UZ) about 5 metres thick underlain by a less weatheredlower zone (LZ). Vermiculite from the UZ does not readilyexfoliate.
		The Namekara deposit is cut by a west-northwest-trendingcarbonatite dyke up to 50 metres wide. It is assumed that thedyke is steep dipping, based on DC information.
Drill holeInformation	A summary of all information material to theunderstanding of the exploration results including atabulation of the following information for all Material drillholes:	See appended tables
	•easting and northing of the drill hole collar•elevation or RL (Reduced Level – elevation above sea

Criteria	JORC Code explanation	Commentary
	level in metres) of the drill hole collar•dip and azimuth of the hole•down hole length and interception depth•hole length.If the exclusion of this information is justified on the basisthat the information is not Material and this exclusion doesnot detract from the understanding of the report, theCompetent Person should clearly explain why this is thecase.	NA
Data aggregationmethods	In reporting Exploration Results, weighting averagingtechniques, maximum and/or minimum grade truncations(eg. cutting of high grades) and cut-off grades are usuallyMaterial and should be stated.	Drill hole intervals were length weighted
	Where aggregate intercepts incorporate short lengths ofhigh grade results and longer lengths of low grade results,the procedure used for such aggregation should be statedand some typical examples of such aggregations should beshown in detail.	NA
	The assumptions used for any reporting of metalequivalent values should be clearly stated.	No metal equivalents were reported, as this is an industrialmineral deposit.
Relationshipbetweenmineralisationwidths andintercept lengths	These relationships are particularly important in thereporting of Exploration Results. If the geometry of themineralisation with respect to the drill hole angle is known,its nature should be reported. If it is not known and onlythe down hole lengths are reported, there should be a clearstatement to this effect(eg 'down hole length, true width not known').	Both vertical and inclined holes were drilled. Vertical holesintercepts when mineralisation style is considered are thereforedeemed to be similar to the true width. Holes that are inclined atabout 50 degrees give apparent mineralisation lengths atapproximately 25% longer than vertical holes.
Diagrams	Appropriate maps and sections (with scales) andtabulations of intercepts should be included for anysignificant discovery being reported These should include,but not be limited to a plan view of drill hole collarlocations and appropriate sectional views.	Results presented here do not represent a new significantdiscovery, they are extnsional and infill drilling that is to beincorporated into an updated Mineral Resource (pending).Consequently no sections have been provided as results will bepresented in the updated Mineral resource when published.
Balanced reporting	Where comprehensive reporting of all Exploration Resultsis not practicable, representative reporting of both low andhigh grades and/or widths should be practiced to avoidmisleading reporting of Exploration Results.	See Tables A1 through to A7 for holes drilled.
Other substantiveexploration data	Other exploration data, if meaningful and material, shouldbe reported including (but not limited to): geologicalobservations; geophysical survey results; geochemicalsurvey results; bulk samples – size and method oftreatment; metallurgical test results; bulk density,groundwater, geotechnical and rock characteristics;potential deleterious or contaminating substances.	Rio Tinto previously drilled 72 vertical RC holes for a total of 3,490m during 2007. Gulf Industrials drilled 54 inclined DC holestotalling 3,408 metres at the project from 2011 through 2012.Bulk samples: although the mine is in production there has beenno reliable reconciliation of tonnes mined and product produced.However Scogings and Barnett (2013) of CSA attempted toreconcile the pit volume with recorded production (2010 to 2012)and estimated that approximately 15,000 tonnes of vermiculitewere produced from approximately 70,000 tonnes mined, for anestimated recovery of close to 24% vermiculite.
Further work	The nature and scale of planned further work (e.g. tests forlateral extensions or depth extensions or large-scale stepout drilling).	BMZ plans to have an ongoing infill Resource and grade controldrilling program to cover the whole tenement area
	Diagrams clearly highlighting the areas of possibleextensions, including the main geological interpretations	NA

Criteria	JORC Code explanation	Commentary
	and future drilling areas, provided this information is notcommercially sensitive.