REACH RESOURCES LIMITED — Interim / Quarterly Report 2021

Apr 29, 2021

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MARCH 2021 QUARTERLY ACTIVITY REPORT

Cervantes Corporation Ltd (ASX:CVS) (“the Company” or “Cervantes”) is pleased to provide the March quarter activity report.

SUMMARY

PRIMROSE GOLD PROJECT (Yalgoo, Western Australia)

• Primrose Gold Project Drilling programmes completed in the December quarter, targeting three areas within the project area. Refer 13 January 2021 Company release ‘Successful completion of drilling at Primrose’

• Verification and composite resplit assays from RC drilling at Primrose Gold Project. Refer 17 February 2021 Company release ‘Primrose Gold Update’.

CORPORATE

• On 15 January 2021, the Company announced a Non-Renounceable Rights Issue and Shortfall Offer to raise up to approximately $2.144m.

• On 1 April 2021, the Company announced the Withdrawal of the Non-Renounceable Rights Issue and Shortfall Offer announced 15 January 2021 and proposed to undertake a series of fully underwritten equity raisings (the Recapitalisation Strategy) to raise a total of $3,366,512, in order to strengthen its balance sheet sufficiently to warrant a proposed reinstatement of its securities to trading, subject to ASX conditions, and to provide additional exploration funding for the Primrose Gold Project. Refer Company ASX release ‘Capital Raisings and Recapitalisation Proposal’ dated 1 April 2021 for further details.

• The Company retains the potential for deferred consideration relating to the sale of Albury Heath, being an additional $400,000 and further $200,000 of cash or Westgold shares, if the Albury Heath project achieves performance targets, as outlined in the 23 April 2020 ASX release .

Related Party Payments

In accordance with the requirements of ASX Listing Rule 5.3.5 the Company advises that during the quarter, payments were made to related parties of Cervantes totalling $23,000. These payments were made to Directors of the Company in respect of their directors’ fees (inclusive of superannuation) and additional services provided.

-ENDS-

Released with the authority of the board. Collin Vost Executive Chairman (08) 6436 2300 cvost@cervantescorp.com.au

Appendix 5B

The Appendix 5B for the quarter ended 31 March 2021 is attached.

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About Cervantes Corporation Limited

Cervantes is an emerging gold explorer and aspiring gold miner. It has built up a portfolio of gold properties in well-known and historically producing gold districts with a strategy to apply novel exploration and development thinking. Cervantes has identified opportunities in those districts that were overlooked by previous explorers. The company is committed to maximising shareholder value through the development of those opportunities.

About the Primrose Project

The Primrose Project covers in excess of 8km of the highly gold mineralised Primrose Shear in the Murchison District of the Eastern Goldfields, Western Australia. Over 37 gold mines operated in this field from 1911 till 1982. Some 79,915 ounces of gold was mined at an average grade of 28g/t during this period. It is generally accepted that significantly more gold than this was won from alluvial and unreported production.

Cervantes controls mining leases and prospecting licences that cover the majority of this historic gold field. A large database of drilling, surface geochemistry, geological, and geophysical data has been assembled to allow the field to be better understood than at any time in its history.

Competent Person’s Statement

The details contained in this report that pertain to exploration results are based upon information compiled by Mr Marcus Flis, a Technical Director of Cervantes Corporation Limited. Mr Flis is a Fellow of the Australasian Institute of Mining and Metallurgy (AusIMM) and has sufficient experience in the activity which he is undertaking to qualify as a Competent Person as defined in the December 2012 edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves” (JORC Code). Mr Flis consents to the inclusion in the report of the matters based upon his information in the form and context in which it appears.

Forward Looking Statement

This report contains forward looking statements concerning the projects owned by Cervantes Corporation Limited. Statements concerning mining reserves and resources may also be deemed to be forward looking statements in that they involve estimates based on specific assumptions. Forwardlooking statements are not statements of historical fact and actual events and results may differ materially from those described in the forward looking statements as a result of a variety of risks, uncertainties and other factors. Forward looking statements are based on management’s beliefs, opinions and estimates as of the dates the forward looking statements are made and no obligation is assumed to update forward looking statements if these beliefs, opinions and estimates should change or to reflect other future developments.

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Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report

+Rule 5.5

Appendix 5B

Mining exploration entity or oil and gas exploration entity quarterly cash flow report

Name of entity

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Cervantes Corporation Ltd
ABN Quarter ended (“current quarter”)
79 079 982 235 31 March 2021
Consolidated statement of cash flows Current quarter Year to date
$A’000 (9 months)
$A’000
1. Cash flows from operating activities
1.1 Receipts from customers - -
1.2 Payments for
(a) exploration & evaluation (if expensed) (44) (174)
(b) development - -
(c) production - -
(d) staff costs (23) (73)
(e) administration and corporate costs (87) (227)
1.3 Dividends received (see note 3) - -
1.4 Interest received - -
1.5 Interest and other costs of finance paid (1) -
1.6 Income taxes paid - -
1.7 Government grants and tax incentives - -
1.8 Other (provide details if material) - -
1.9 Net cash from / (used in) operating (155) (476)
activities
2. Cash flows from investing activities
2.1 Payments to acquire:
(a) entities - -
(b) tenements - -
(c) property, plant and equipment - -
(d) exploration & evaluation - -
(e) investments - -
(f) other non-current assets - -
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ASX Listing Rules Appendix 5B (17/07/20) + See chapter 19 of the ASX Listing Rules for defined terms.

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Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report

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Consolidated statement of cash flows Current quarter Year to date
$A’000 (9 months)
$A’000
2.2 Proceeds from the disposal of:
(a) entities - -
(b) tenements - -
(c) property, plant and equipment - -
(d) investments 151 349
(e) other non-current assets - -
2.3 Cash flows from loans to other entities - -
2.4 Dividends received (see note 3) - -
2.5 Other (provide details if material) - -
2.6 Net cash from / (used in) investing 151 349
activities
3. Cash flows from financing activities
3.1 Proceeds from issues of equity securities
(excluding convertible debt securities) - -
3.2 Proceeds from issue of convertible debt - -
securities
3.3 Proceeds from exercise of options - -
3.4 Transaction costs related to issues of equity - -
securities or convertible debt securities
3.5 Proceeds from borrowings 13 15
3.6 Repayment of borrowings (12) (25)
3.7 Transaction costs related to loans and - -
borrowings
3.8 Dividends paid - -
3.9 Other (provide details if material) - -
3.10 Net cash from / (used in) financing 1 (10)
activities
4. Net increase / (decrease) in cash and
cash equivalents for the period
4.1 Cash and cash equivalents at beginning of 15 149
period
4.2 Net cash from / (used in) operating (155) (476)
activities (item 1.9 above)
4.3 Net cash from / (used in) investing activities 151 349
(item 2.6 above)
4.4 Net cash from / (used in) financing activities 1 (10)
(item 3.10 above)
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ASX Listing Rules Appendix 5B (17/07/20) + See chapter 19 of the ASX Listing Rules for defined terms.

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Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report

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Consolidated statement of cash flows Current quarter Year to date
$A’000 (9 months)
$A’000
4.5 Effect of movement in exchange rates on - -
cash held
4.6 Cash and cash equivalents at end of 12 12
period
5. Reconciliation of cash and cash Current quarter Previous quarter
equivalents $A’000 $A’000
at the end of the quarter (as shown in the
consolidated statement of cash flows) to the
related items in the accounts
5.1 Bank balances 12 15
5.2 Call deposits - -
5.3 Bank overdrafts - -
5.4 Other (provide details) - -
5.5 Cash and cash equivalents at end of 12 15
quarter (should equal item 4.6 above)
6. Payments to related parties of the entity and their Current quarter
associates $A'000
6.1 Aggregate amount of payments to related parties and their 23
associates included in item 1
6.2 Aggregate amount of payments to related parties and their
associates included in item 2
Note: if any amounts are shown in items 6.1 or 6.2, your quarterly activity report must include a description of, and an
explanation for, such payments
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Payments included in item 6.1 are related to fees and remuneration (inclusive of superannuation) paid to Directors.

ASX Listing Rules Appendix 5B (17/07/20) + See chapter 19 of the ASX Listing Rules for defined terms.

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Appendix 5B

Mining exploration entity and oil and gas exploration entity quarterly report

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7. Financing facilities Total facility Amount drawn at
Note: the term “facility’ includes all forms of financing amount at quarter quarter end
arrangements available to the entity.
end $A’000
Add notes as necessary for an understanding of the
$A’000
sources of finance available to the entity.
7.1 Loan facilities 900 900
7.2 Credit standby arrangements - -
7.3 Other ( New York Securities Pty Ltd ) 350 350
7.4 Total financing facilities 1,250 1,250
7.5 Unused financing facilities available at quarter end -
7.6 Include in the box below a description of each facility above, including the lender, interest
rate, maturity date and whether it is secured or unsecured. If any additional financing
facilities have been entered into or are proposed to be entered into after quarter end,
include a note providing details of those facilities as well.
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As released 1 April 2021, the Company announced the proposal to undertake a series of fully underwritten equity raisings (the Recapitalisation Strategy) to raise a total of $3,366,512, in order to strengthen its balance sheet sufficiently to warrant a proposed reinstatement of its securities to trading, subject to ASX conditions, and to provide additional exploration funding for the Primrose Gold Project. Refer Company ASX release 1 April 2021, the Company’s Notice of General Meeting released 15 April 2021 and Prospectus released 16 April for further details.

* 7.1 Global Vanadium Limited (ASX:GLV) provided Cervantes a two year interest free non-current unsecured loan facility, maturing on June 2021. Although the full sum could be paid by June 2021, the facility provides for 50% payable by June 2021, with the remaining 50% being extended for a further 12 months, to 2022, with the payment of a nominal fee.

* 7.3 New York Securities Pty Ltd, a private company of which Collin Vost is also a director, has provided financial support to the Company. The $350,000 financing facility is secured and incurs 7% interest per annum, applying from January 2020. New York Securities is also providing unsecured financial support, if required, at 7% interest per annum. During the September 2020 quarter, New York Securities extended the secured financing facility repayment date to 5[th] July 2022.

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8. Estimated cash available for future operating activities $A’000
8.1 Net cash from / (used in) operating activities (Item 1.9) (155)
8.2 (Payments for exploration & evaluation classified as investing -
activities) (item 2.1(d))
8.3 Total relevant outgoings (Item 8.1 + Item 8.2) (155)
8.4 Cash and cash equivalents at quarter end (Item 4.6) 12
8.5 Unused finance facilities available at quarter end (Item 7.5) -
8.6 Total available funding (Item 8.4 + Item 8.5) 12
8.7 Estimated quarters of funding available (Item 8.6 divided by 0.07
Item 8.3)
Note: if the entity has reported positive relevant outgoings (ie a net cash inflow) in item 8.3, answer item 8.7 as
“N/A”. Otherwise, a figure for the estimated quarters of funding available must be included in item 8.7.
8.8 If Item 8.7 is less than 2 quarters, please provide answers to the following questions:
8.8.1 Does the entity expect that it will continue to have the current level of net operating
cash flows for the time being and, if not, why not?
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ASX Listing Rules Appendix 5B (17/07/20) + See chapter 19 of the ASX Listing Rules for defined terms.

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Appendix 5B

Mining exploration entity and oil and gas exploration entity quarterly report

Answer: Yes. As released 1 April 2021, the Company announced the proposal to undertake a series of fully underwritten equity raisings (the Recapitalisation Strategy) to raise a total of $3,366,512, in order to strengthen its balance sheet sufficiently to warrant a proposed reinstatement of its securities to trading, subject to ASX conditions, and to provide additional exploration funding for the Primrose Gold Project. Refer Company ASX release 1 April 2021, the Company’s Notice of General Meeting released 15 April 2021 and Prospectus released 16 April for further details. The Company can also engage in joint ventures and/or farm out assets, sell part and/or whole of assets. 8.8.2 Has the entity taken any steps, or does it propose to take any steps, to raise further cash to fund its operations and, if so, what are those steps and how likely does it believe that they will be successful? Answer: Yes. As released 1 April 2021, the Company announced the proposal to undertake a series of fully underwritten equity raisings (the Recapitalisation Strategy) to raise a total of $3,366,512, in order to strengthen its balance sheet sufficiently to warrant a proposed reinstatement of its securities to trading, subject to ASX conditions, and to provide additional exploration funding for the Primrose Gold Project. Refer Company ASX release 1 April 2021, the Company’s Notice of General Meeting released 15 April 2021 and Prospectus released 16 April for further details. 8.8.3 Does the entity expect to be able to continue its operations and to meet its business objectives and, if so, on what basis? Answer: Yes, on the basis of the activities and comments in 1 and 2 above.

Note: where item 8.7 is less than 2 quarters, all of questions 8.8.1, 8.8.2 and 8.8.3 above must be answered.

Compliance statement

• 1 This statement has been prepared in accordance with accounting standards and policies which comply with Listing Rule 19.11A.

• 2 This statement gives a true and fair view of the matters disclosed.

Date: 30 April 2021

Authorised by: ”By the Board”

(Name of body or officer authorising release – see note 4)

Notes

1. This quarterly cash flow report and the accompanying activity report provide a basis for informing the market about the entity’s activities for the past quarter, how they have been financed and the effect this has had on its cash position. An entity that wishes to disclose additional information over and above the minimum required under the Listing Rules is encouraged to do so.

1. If this quarterly cash flow report has been prepared in accordance with Australian Accounting Standards, the definitions in, and provisions of, AASB 6: Exploration for and Evaluation of Mineral Resources and AASB 107: Statement of Cash Flows apply to this report. If this quarterly cash flow report has been prepared in accordance with other accounting standards agreed by ASX pursuant to Listing Rule 19.11A, the corresponding equivalent standards apply to this report.

1. Dividends received may be classified either as cash flows from operating activities or cash flows from investing activities, depending on the accounting policy of the entity.

2. If this report has been authorised for release to the market by your board of directors, you can insert here: “By the board”. If it has been authorised for release to the market by a committee of your board of directors, you can insert here: “By the [ name of board committee – eg Audit and Risk Committee ]”. If it has been authorised for release to the market by a disclosure committee, you can insert here: “By the Disclosure Committee”.

3. If this report has been authorised for release to the market by your board of directors and you wish to hold yourself out as complying with recommendation 4.2 of the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations , the board should have received a declaration from its CEO and CFO that, in their opinion, the financial records of the entity have been properly maintained, that this report complies with the appropriate accounting standards and gives a true and fair view of the cash flows of the entity, and that their opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively.== == == == ==

ASX Listing Rules Appendix 5B (17/07/20) + See chapter 19 of the ASX Listing Rules for defined terms.

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Appendix 5B

Mining exploration entity and oil and gas exploration entity quarterly report

SCHEDULE OF TENEMENTS As at 31 March 2021

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Interest at Interest at Acquired Disposed
Project / Tenement Start of End of During the During the
Quarter Quarter Quarter Quarter
Primrose Project - Western Australia
Paynes Find M59/002 100% 100% - -
Paynes Find M59/010 100% 100% - -
Paynes Find M59/235 100% 100% - -
Paynes Find M59/244 100% 100% - -
Paynes Find M59/396 100% 100% - -
Paynes Find M59/662 100% 100% - -
Paynes Find M59/663 100% 100% - -
Paynes Find P59/2076 100% 100% - -
Paynes Find P59/2094 100% 100% - -
Paynes Find P59/2101 100% 100% - -
Paynes Find P59/2130 100% 100% - -
Paynes Find P59/2151 100% 100% - -
Paynes Find P59/2152 100% 100% - -
Paynes Find P59/2153 100% 100% - -
Paynes Find P59/2159 100% 100% - -
Paynes Find P59/2160 100% 100% - -
Paynes Find P59/2161 100% 100% - -
Paynes Find P59/2174 100% 100% - -
Paynes Find L59/184 100% 100% - -
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ASX Listing Rules Appendix 5B (17/07/20) + See chapter 19 of the ASX Listing Rules for defined terms.

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