RIEDEL RESOURCES LIMITED — Capital/Financing Update 2020

Oct 22, 2020

ACN 143 02 022

Suite 4, 6 Richardson Street West Perth Western Australia 6005

ASX Code: RIE

riedelresources.com.au

RIEDEL TO ACQUIRE UP TO AN 80% INTEREST IN THE HIGH-GRADE KINGMAN GOLD PROJECT, ARIZONA, USA

Note to market: this announcement is intended to lift the current voluntary suspension placed on the Company's securities.

Highlights:

• Conditional rights secured to acquire up to an 80% equity interest in Flagstaff Minerals (USA) Inc, which owns the high-grade gold-silver Kingman Project located in the Tier 1 jurisdiction of Arizona, USA
• Diamond Drilling in late-2019 included the following shallow highgrade results:
  • 1.5m @ 21.6 g/t gold, 89 g/t silver & 1.8% lead from 47.2m;
  • 0.15m @ 26.9 g/t gold, 449 g/t silver, 17% lead & 2.7% copper from 39.6m;
  • 0.46m @ 15.2 g/t gold, 153 g/t silver & 2.3% zinc from 58.2m;
  • 0.3m @ 2.1 g/t gold & 2,340 g/t silver from 55.8m; and
  • 1.5m @ 3.4 g/t gold & 56 g/t silver from 78.3m
• Multiple outcropping targets and veins open along strike and at depth
• Previously mined up to 1942 and almost no modern exploration work carried out with numerous historic mining areas never drill tested
• Extensive nearby infrastructure with year-round project access located approximately 5km from major highway
• Company finalising firm commitments for $2.0m share placement to fund planned 5,000m drill program commencing early 2021
• Experienced US-based geological team to over-see drilling program planned to commence early in the new year
• Experienced Mining Executive and Mining Engineer Michael Bohm to join Riedel Board as Chair

Riedel Resources Limited (ASX: RIE) is pleased to advise that it has entered into a binding agreement with Flagstaff Minerals Limited (ACN 626 330 738) (Flagstaff Minerals) and Flagstaff Minerals (USA) Inc. (a corporation existing under the laws of Delaware, USA) (Flagstaff USA) to acquire up to an 80% equity interest in Flagstaff USA which has the sole and exclusive option to acquire 100% of 70 highly prospective unpatented lode claims (in addition to the 125 unpatented lode claims Flagstaff USA currently holds 100% in its own right), together which comprise the high-grade Kingman gold silver project located at Chloride, Mohave County, Arizona (Kingman Project).

The Kingman Project is located in the mining state of Arizona, USA. The project area is approximately 145 kilometres from Las Vegas and is within 5km of US Highway 93. This area saw extensive mining activity in the early 1900's when numerous gold, silver and base metals mines were in operation.

Riedel's Non-Executive Chairman, Mr Grant Mooney Commented:

"The Kingman Project represents an opportunity to advance a high-grade gold & silver project with a proven mining history in a Tier 1 jurisdiction and with a highly regarded technical team who successfully drilled the project in 2019.

The Kingman Project was last mined in 1942 and has seen almost no modern exploration. We believe the opportunity is outstanding given there are numerous shallow, extensive and high-grade drill targets available over what is a large consolidated tenement position.

We plan to be drilling key targets early in the new year in areas where high-grade mineralisation has previously been mined and where we see the best opportunity to progress the Kingman Project along an early development path."

Figure 1: Project Location

Plate 1: Pictorial of the Arizona-Magma mine area

Figure 2: Kingman Project - drill hole collar locations (2019 diamond drill program)

Figure 3a: Drill cross section – Tintic Mine

Figure 3b: Drill cross section Merrimac Mine

Hole Number	From (ft)	To (ft)	Thick (ft)	From $(m)$	To (m)	Thick (m)	Au ppm	Ag ppm	Cu%	Pb%	2n%
19-KNG-001	147	148	1	44.81	45.11	0.30	0.815	3.5
19-KNG-002	83	92	9	25.30	28.04	2.74	1.15	17.5		0.48	0.20
	130	134	4	39.62	40.84	1.22	3.51	57.0	0.35		0.73
Incl.	130	130.5	0.5	39.62	39.78	0.15	26.9	449	2.70		1.03
	155	160	5	47.24	48.77	1.52	21.60	89.2		1.83	0.23
Incl.	155	158	3	47.24	48.16	0.91	34.6	112
19-KNG-003	191	194	3	58.22	59.13	0.91	7.91	79.0	0.27	0.45	1.22
Incl.	191	192.5	1.5	58.22	58.67	0.46	15.2	153	0.54	0.84	2.30
	214	224	10	65.23	68.28	3.05	0.671	5.66
19-KNG-005	183	184	1	55.78	56.08	0.30	2.09	2340		0.71	0.96
19-KNG-006	344.5	345.5	1	105.00	105.30	0.30	4.34	48.0		0.26	0.70
19-KNG-008	257	262	5	78.33	79.86	1.52	3.408	56.44			0.56
Incl.	258.2	262	3.8	78.70	79.86	1.16	4.12	73.0		0.16	0.67

Table 1: Table of significant intercept (2019 diamond drill program – Kingman Project)

Plate 2: Arizona-Magma Mine

Plate 3: Historic Gold Room Arizona-Magma Mine

Plate 4: Diamond drill core from 2019 drill program – Kingman Office

Figure 4: Project Location

Transaction Summary

Riedel has entered into a binding terms sheet with Flagstaff Minerals and Flagstaff USA (a wholly owned subsidiary of Flagstaff Minerals) (Terms Sheet).

The Company will seek shareholder approval of the Transaction pursuant to ASX Listing Rule 11.1.2. ASX has confirmed that the Company will not be required to re-comply with Chapters 1 & 2 of the ASX Listing Rules. The key terms of the Terms Sheet are as follows:

Background

Flagstaff USA has the sole and exclusive right to acquire a 100% interest in 70 mining claims (which form part of the Kingman Project) (Kingman Option Claims) via a binding option agreement with IAM Mining LLC (a Limited Liability Company) (IAM Mining) (Flagstaff Option Agreement).

The Terms Sheet sets out the terms and conditions on which Riedel may acquire up to an 80% equity interest in Flagstaff USA (Earn-In or Acquisition).

Initial Exploration Expenditure – Stage 1

Within 5 business days of the parties entering into the Terms Sheet, Riedel will pay an AUD$50,000 non-refundable deposit to Flagstaff USA which will be applied by Flagstaff USA towards project related expenditure and be offset against Riedel's Stage 1 Earn-In commitment (defined below).

Upon satisfaction of the Conditions (detailed below), Riedel shall issue Flagstaff Minerals (or its nominee) 60 million fully paid ordinary shares in the capital of Riedel (Shares) (Stage 1 Shares) (Stage 1 Commencement Date) (the Stage 1 Shares will be subject to voluntary escrow for 6-months from the date of issue).

Riedel must expend at least AUD$1,500,000 on the Kingman Project within 12-months from the Stage 1 Commencement Date.

Riedel must expend AUD$5,000,000 on the Kingman Project within 3 years from the Stage 1 Commencement Date to obtain a 51% equity interest in Flagstaff USA (Stage 1 Earn-In).

If Riedel withdraws before completing the Stage 1 Earn-In, subject to Riedel incurring at least AUD$1,500,000 of expenditure on the Kingman Project within 12-months from the Stage 1 Commencement Date, Riedel shall obtain a 15% equity interest in Flagstaff USA.

Earn-In – Stage 2

Upon Riedel completing the Stage 1 Earn-In (Stage 2 Commencement Date), Riedel will issue 100,000,000 Shares to Flagstaff Minerals (or its nominee(s)) (Stage 2 Shares). If Riedel does not obtain the necessary regulatory and shareholder approvals for the issuance of these shares, Riedel will pay Flagstaff the equivalent amount in cash (based on a 30-day VWAP as at the date of issue).

Riedel may elect to proceed with the Stage 2 earn-in at its complete discretion by providing Flagstaff Minerals with written notice of its election (Election Notice) within 90 days from the Stage 2 Commencement Date (Notice Date).

If Riedel provides an Election Notice by the Notice Date, Riedel must expend a further AUD$5,000,000 on the Kingman Project (Stage 2 Expenditure Condition) within 3 years from the Stage 2 Commencement Date in order to earn a further 19% equity interest in Flagstaff USA (i.e. Riedel will obtain a 70% equity interest) (Stage 2 Earn-In).

If Riedel does not give an Election Notice by the Notice Date or does not satisfy the Stage 2 Expenditure Condition, then Flagstaff Minerals and Riedel will contribute to expenditure on the project from the end of Stage 2 on a Flagstaff Minerals (49%) and Riedel (51%) basis.

Stage 3

Within 30 days of satisfying the Stage 2 Expenditure Condition, Riedel may acquire an additional 10% equity interest in Flagstaff USA (i.e. Riedel will obtain an 80% equity interest in Flagstaff USA in total) by payment to Flagstaff Minerals (or its nominee(s)) of AUD$3,000,000 cash.

Joint Venture

Following completion of the relevant earn-in phase, Flagstaff Minerals and Riedel will contribute to expenditure on the Kingman Project in proportion to each party's respective equity interest in Flagstaff USA from time to time.

Vendor Payments

Pursuant to the Flagstaff Option Agreement, the following payments are required to be made to IAM Mining by Flagstaff USA in order for Flagstaff USA to maintain its right to acquire 100% of the Kingman Option Claims (together, the Option Payments):

• 1. USD$200,000 payable by February 2021;
• 1. USD$300,000 payable by February 2022; and
• 1. USD$400,000 payable by February 2023.

Under the Terms Sheet, Riedel shall be responsible for the Option Payments (which shall count towards eligible expenditure in relation to any stage of any relevant earn-in).

Conditions Precedent

The commencement of the Earn-In is subject to and conditional upon satisfaction or waiver of each of the following conditions precedent (together the Conditions):

• each of Flagstaff USA and Riedel completing due diligence on one another (to their reasonable satisfaction);
• the parties obtaining all relevant regulatory and shareholder approvals for the Acquisition, including:
  • o shareholder approval to change the scale of Riedel's activities in accordance with ASX Listing Rule 11.1.2. ASX has confirmed that the Company will not be required to re-comply with Chapters 1 & 2 of the ASX Listing Rules; and
  • o shareholder approval for the purposes of ASX Listing Rule 7.1 with respect to the issue of the Stage 1 Shares, Stage 2 Shares, and Placement Shares (defined below); and
  • o a waiver from ASX Listing Rule 7.3.4 in respect of the Stage 2 Shares;
• completion of the Placement (detailed below);
• Riedel and the Flagstaff Minerals nominated directors entering into an Executive Services Agreement (details to be mutually agreed between the parties);
• Flagstaff Minerals entering into a restriction agreement in relation to the Stage 1 Shares;
• execution of the definitive transaction agreement(s) including but not limited to:
  • o share sale and purchase agreement with respect to Riedel's acquisition of shares in Flagstaff USA;
  • o shareholders agreement with respect to the control and operation of Flagstaff USA, including with respect to the Kingman Project; and
  • o security documentation and any other ancillary documents required in order to effect the transaction; and
• no material adverse change to Riedel's or Flagstaff USA's financial position (except as contemplated by the Terms Sheet).

Placement

Riedel has received firm commitments to raise approximately $2 million by issuing up to 363,636,363 Shares (Placement Shares) at an issue price of $0.0055 (Placement). The Board is pleased that the Placement is strongly supported by existing and new shareholders of both Riedel and Flagstaff Minerals. It is intended that 63,000,000 Shares will be issued on or about 28 October 2020 (Tranche 1 Placement Shares), with the balance (i.e. up to 300,636,363) to be issued within 7 days of receipt of shareholder approval (Tranche 2 Placement Shares). The funds raised from the Placement will be used to fund the stage 1 exploration program and for general working capital purposes as follows:

Item	Amount
Other costs associated with the Acquisition	$100,000
Regulatory and Listing Fees	$10,000
Exploratory and Project Payments	$1,500,000
General working capital	$390,000
Total	$2,000,000

Riedel, subject to receiving shareholder approval, has agreed to issue a total of 150 million options exercisable at $0.0125 each and expiring 3 years from the date of issue (Options). It is intended that the Options will be issued within 7 days of Riedel receiving shareholder approval for the issue of the Tranche 2 Placement Shares. The Options will be issued to nominees of Riedel and Flagstaff Minerals.

Board Changes

The following are each a condition of the Terms Sheet:

• with effect from the Stage 1 Commencement Date, the Board of Riedel shall comprise of four members with one existing non-executive director of Riedel stepping down and being replaced by two nominees of Flagstaff Minerals (one of which will be appointed as the Chair);
• if at the end of 12 months from the Stage 1 Commencement Date:
  • o Riedel does not elect to proceed further with the Acquisition, then Flagstaff Minerals will relinquish Chairmanship of Riedel;
  • o Riedel does elect to proceed further with the Acquisition, then one of the existing Riedel nominee directors shall resign, leaving the Board of Riedel with three directors (comprising one Riedel nominee director and two Flagstaff Minerals nominee directors);
• subject to Riedel satisfying the Stage 1 Earn-In, Riedel will have the right to nominate one non-executive director to the board of Flagstaff USA; and
• subject to Riedel satisfying the Stage 2 Expenditure Condition, it is acknowledged and agreed that the Board of Flagstaff USA will be structured in a way that gives Riedel control.

Currently, it is intended that Mr Michael Bohm, a nominee of Flagstaff Minerals, will join the Board of Riedel as Chair. Mr Bohm is a graduate of the WA School of Mines. Mr Bohm brings to the Board his extensive experience as a mining professional with extensive corporate and operational management skills in the minerals industry. Michael is currently a director of Ramelius Resources Limited (ASX:RMS) and Mincor Resources NL (ASX:MCR). Mr Bohm is a shareholder of Flagstaff Minerals. Meanwhile, the second director to be nominated by Flagstaff Minerals will be announced by the Company in due course.

Capital Structure and Pro-forma Balance Sheet

The indicative capital structure of the Company following the issue of the Consideration Shares and completion of the Placement is set out below:

Security	Existing	Completion of Acquisition
Existing shares	418,069,699	418,069,699
Stage 1 Consideration Shares	-	60,000,000
Stage 2 Consideration Shares	-	100,000,000
Capital Raising Shares	-	363,636,363
Total Shares	418,069,699	941,706,062
Existing Options	10,000,000	10,000,000
NewOptions	-	150,000,000
Fully diluted capital structure	428,069,699	1,101,706,062

The anticipated effect of the Stage 1 Earn-In on the Company's balance sheet is set out in Annexure 1 to this announcement.

Indicative Timetable

The proposed timetable to commence the Stage 1 Earn-In is set out below:

Event	Date
Notice of Meeting sent to shareholders	30 October2020
General Meeting	30November 2020
Completion of Placement	4November2020
Commencement of Stage 1 Earn-In	4November2020

Note: The above dates are indicative only and subject to change.

----------------------ENDS-----------------------

This announcement was authorised for release by the Board of Riedel Resources Limited.

Competent Person Statement

Information in this release that relates to Exploration Results is based on information compiled by Mr Sean Whiteford, who is a qualified geologist, a member of the Australian Institute of Mining and Metallurgy, and a consultant to Flagstaff Minerals Limited. Mr Whiteford has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Mr Whiteford consents to the inclusion in this release of the matters based on his information in the form and context in which it appears.

Forward Looking Statements

This release includes 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 output.

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 resources or 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 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 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 this release are given as at the date of issue only. 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.

For further information please contact:

Grant Mooney, Chairman - Riedel Resources Limited Tel: +61 8 9226 0866

About Riedel Resources Limited

Riedel Resources Limited listed on ASX on 31 January 2011 and is an Australian-based exploration company. Further information can be found at the Company's website www.riedelresources.com.au.

Annexure 1 – Balance sheet

RIEDEL RESOURCES LIMITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION 30 June 2020

	Audited
	30 June 2020	ProformaTransactions	Proforma
	$	$	$
CURRENT ASSETS
Cash and cash equivalents	885,629	1,865,000	2,750,629
Trade and other receivables	254,571		254,571
TOTAL CURRENT ASSETS	1,140,200		3,005,200
NON CURRENT ASSETS
Plant and equipment	-		-
Exploration and evaluation
expenditure	780,810	330,000	1,110,810
TOTAL NON CURRENT ASSETS	780,810		1,110,810
TOTAL ASSETS	1,921,010		4,116,010
CURRENT LIABILITIES
Trade and other payables	23,806		23,806
TOTAL CURRENT LIABILITIES	23,806		23,806
			0
TOTAL LIABILITIES	23,806		23,806
NET ASSETS	1,897,204		4,092,204
EQUITY
Issued capital	19,237,097	2,195,000	21,432,097
Share based payment reserve	34,800		34,800
Foreign currency translation reserve	(124)		(124)
Accumulated losses	(17,374,569)		(17,374,569)
TOTAL EQUITY	1,897,204		4,092,204

Annexure 2 - JORC Table 1 (JORC Code 2012 Edition – Table 1)

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

Criteria	JORC Code explanation		Commentary
Sampling techniques		Nature and quality of sampling.	The results in this release relate to holes 19-KNG-001 to 19-KNG-011 all of which were diamond drilled from surface.
		Include reference to measures taken to ensure samplerepresentivity and the appropriate calibration of anymeasurement tools or systems used.	Half core samples were collected on geological boundaries (rocktype, mineralization) and generally ranged from 0.3m to 1.5m in
		Aspects of the determination of mineralisation that areMaterial to the Public Report.	length. Samples were marked and tagged for core cutting. ALSLaboratories cut each sample using a core saw at their facility inTucson, Arizona.
			Sampling was undertaken using standard QAQC proceduresthat included the insertion of blanks or standards at a minimumof 1 blank or standard inserted every 15 samples.
			All samples were pulverized at the lab to 85% passing -75µm toproduce a 25g charge for Fire Assay with an AA finish. Sampleswere also digested using a Four Acid digestion with an ICP-AESfinish. High grade gold samples were additionally assayed byFire Assay using a gravimetric finish. High grade silver and basemetal samples were additional assayed using a four aciddigestion and ICP-AES finish.
Drilling techniques		Drill type and details.	Drilling was completed using an Atlas Copco CS-14 core drill rig.
			Drill holes were drilled either vertically or angled perpendicular tothe interpreted stratigraphy.
			The program was supervised by experienced Flagstaff MineralsPty Ltd contractors.
Drill sample recovery		Method of recording and assessing core and chipsample recoveries and results assessed.	Core samples were flagged and marked by Flagstaff Mineralsgeologist for cutting. The core was cut in half and placed insample bags at the ALS lab in Tucson, Arizona.
		Measures taken to maximise sample recovery andensure representative nature of the samples.	Sample recovery was measured by Flagstaff Minerals geologists
	Whether a relationship exists between sample recoveryand grade and whether sample bias may have occurred		and generally exceeded 90% recovery.

Criteria		JORC Code explanation	Commentary
		due to preferential loss/gain of fine/coarse material.
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.	Samples were logged in detail including, lithology, alteration,mineralization, RQD and structure.
			The entire hole was logged by an experienced geologistemployed by Flagstaff Minerals
		Whether logging is qualitative or quantitative in nature.Core (or costean, channel, etc) photography.	The level of detail is considered sufficient for early stageexploration of the type being undertaken here.
		The total length and percentage of the relevant	Geological logging is qualitative.
		intersections logged.	All core trays were photographed during the logging process.
			All holes were logged over the entire length.
Sub-samplingtechniques and		If core, whether cut or sawn and whether quarter, half orall core taken.	All samples were sawn in half with one half remaining in the coretray and the other half sent for assay.
sample preparation		If non-core, whether riffled, tube sampled, rotary split,etc and whether sampled wet or dry.	All samples were prepared by the ALS Laboratory in Tucson,Arizona. All sampled were dried and pulverized to 85% passing
		For all sample types, the nature, quality andappropriateness of the sample preparation technique.	75µm and asub sample of 250g retained. A nominal 30g chargewas used for Fire Assay analysis.
		Quality control procedures adopted for all sub-samplingstages to maximise representivity of samples.
		Measures taken to ensure that the sampling isrepresentative of the in situ material collected, includingfor instance results for field duplicate/second-halfsampling.
		Whether sample sizes are appropriate to the grain sizeof the material being sampled.
Quality of assay dataand laboratory tests		The nature, quality and appropriateness of the assayingand laboratory procedures used and whether thetechnique is considered partial or total.	Samples were analysedat ALS Laboratories in Reno, Nevadaand Vancouver, British Colombia. For gold the analytical methodused was Au-AA23 which is digestion by Fire Assay with an AA
		For geophysical tools, spectrometers, handheld XRFinstruments, etc, the parameters used in determining	finish. Any samples assaying greater than 10ppm Au werefurther analysedby Au-GRA21. Both methods are considered

Criteria		JORC Code explanation	Commentary
		the analysis including instrument make and model,reading times, calibrations factors applied and their	appropriate for thematerial and mineralization and measure totalgold content.
		derivation, etc.Nature of quality control procedures adopted (e.g.standards, blanks, duplicates, external laboratorychecks) and whether acceptable levels of accuracy (i.e.lack of bias) and precision have been established.	Samples were also analysedby method ME-ICP61a which is afour-acid digestion with an ICP-AES finish for base metaldeterminations. This method is considered appropriate for thematerial and mineralization.Flagstaff Minerals used a mix of Certified Reference Materialsand blanks inserted every 15 samples.
Verification ofsampling and		The verification of significant intersections by eitherindependent or alternative company personnel.	Significant results are checked by the Flagstaff Mineralsgeologist and Competent Person.
assaying		The use of twinned holes.	No twinned holes have been completed at this early stage ofexploration.
		Documentation of primary data, data entry procedures,data verification, data storage (physical and electronic)protocols.	All field logging was logged on paper logs and in digital format inan excel spreadsheet. Copies of all logs are stored on a cloudbased storage system as well asat the Flagstaff office in
		Discuss any adjustment to assay data.	Kingman Arizona.
			No assay data were adjusted.
Location of datapoints		Accuracy and quality of surveys used to locate drillholes (collar and down-hole surveys), trenches, mineworkings and other locations used in Mineral Resource	Collar surveys were completed using a Trimble ProXH submeterGPS unit using a differential correction signal and is capable of20-70 cm X-Y resolution and 2-3m elevation accuracy.
		estimation.	The grid system used was WGS-84 Zone 11.
		Specification of the grid system used.	Drill hole directional surveys were taken using a Reflex single
		Quality and adequacy of topographic control.	shot Magnetic based orientation tool providing azimuth andangle. Stated accuracies for the inclinometer is 0.1 degree, andfor azimuth 0.25degree. Collar orientations were obtained usinga Brunton Compass.
Data spacing and		Data spacing for reporting of Exploration Results.	Core hole locations were spaced to test historic geologic targets.
distribution		Whether the data spacing and distribution is sufficient toestablish the degree of geological and grade continuity	The current drill hole spacing is too broad to establish a mineralresource.
		appropriate for the Mineral Resource and Ore Reserve	No compositing has been applied.

Criteria		JORC Code explanation	Commentary
		estimation procedure(s) and classifications applied.
		Whether sample compositing has been applied.
Orientation of data in		Whether the orientation of sampling achieves unbiasedsampling of possible structures and the extent to whichthis is known, considering the deposit type.	Drilling is orthogonal to the general trend of the stratigraphy.
relation to geologicalstructure			Holes were drilled vertically or angled perpendicular to theinterpreted stratigraphy using historic data where available.
		If the relationship between the drilling orientation andthe orientation of key mineralised structures isconsidered to have introduced a sampling bias, thisshould be assessed and reported if material.
Sample security		The measures taken to ensure sample security.	Coresamples were delivered in sealed core trays to the ALSLaboratory in Tucson Arizona. Chain of Custody documentationstating core boxes, samples, submittal and methods were signedoff on. Core was cut within the ALS lab and samples werecollected by ALS lab technicians. ALS maintains the chain ofcustody once the samples are delivered with an audit trailavailable on the ALS webtrieve website.
Audits or reviews		The results of any audits or reviews of samplingtechniques and data.	Sampling and assaying techniques are considered to be industrystandard. No external audits have been undertaken at this stageof exploration.

Section 2: Reporting of Exploration Results (Criteria in this section applies to all succeeding sections)

		Commentary
Mineral tenementand land tenurestatus	Type, reference name/number, location and ownershipincluding agreements or material issues with thirdparties such as joint ventures, partnerships, overridingroyalties, native title interests, historical sites, wildernessor national park and environmental settings.The security of the tenure held at the time of reportingalong with any known impediments to obtaining alicence to operate in the area.	The drill holes were all drilled within the IAM Mining LLC claimgroup property which form part of a claim package subject to anOption Agreement with IAM Mining LLC. Flagstaff Minerals canearn a 100% interest in the property. Refer to 'Key terms of theTerms Sheet (Background)' section of announcement. Thepackage applicable to the Flagstaff Option Agreement is set outbelow:		claim
		The IAM Mining LLC claims are administered by the Bureau ofLand Management and are in good standing. Flagstaff isunaware of any impediments to obtaining a licence to operate in

Criteria		JORC Code explanation	Commentary
Exploration done by		Acknowledgment and appraisal of exploration by other	Historic production and exploration from the property as follows:
other parties		parties.	Underground mining at Arizona Magma was conducted from the1880's to 1942.
			Drilling by Chandeleur Bay Resources at Tintic was conducted in1997. High grades were reported from that 37 hole drill program.
			The Merrimac mine was mined for Au/Ag/Pg/Zn until 1905.
			The Tintic mine was mine for Au/Ag/Pb/Zn in 1942.
			None of the previous workis considered to be of JORCstandard.
Geology		Deposit type, geological setting and style ofmineralisation.	The Flagstaff property is located along the Northwest flank of theCerbat Mountains of Arizona. The Cerbat Mountains are atypical block‐faulted range of the Basin and Rangephysiographic province of the southwest United States and areunderlain by a strongly deformed package of Precambrian rocksincluding quartz feldspar gneiss, amphibolite schist, and biotiteschist intruded by both Precambrian diorite and granite and byLaramide intrusions.
			The property contains multiple structurally controlled veinsystems. A Low-Sulphidation Epithermal Character has beenobserved in ore material from historic dumps across theproperty. As the property is approximately 8km from the MineralPark Cu porphyry mine, vein mineralization related to anunknown porphyry is also of interest.
Drill hole Information		A summary of all information material to theunderstanding of the exploration results including atabulation of the following information for all Material drillholes:	All drill hole collar information is tabulated in Appendix 1, Table1.Significant intervals are tabulated in Appendix 1, Table 2.
		oeasting and northing of the drill hole collar
		oelevation or RL (Reduced Level –elevation abovesea level in metres) of the drill hole collar

Criteria	JORC Code explanation	Commentary
	odip and azimuth of the holeodown hole length and interception depthohole length.
	If the exclusion of this information is justified on thebasis that the information is not Material and thisexclusion does not detract from the understanding of thereport, the Competent Person should clearly explainwhy this is the case.
Data aggregationmethods	In reporting Exploration Results, weighting averagingtechniques, maximum and/or minimum grade	Intersection lengths and grades for all holes are reported asdown-hole length weighted intervals.
	truncations (e.g.cutting of high grades) and cut-offgrades are usually Material and should be stated.	Intersections are reported based on vein boundaries and nograde capping was applied to the reported intersections.
	Where aggregate intercepts incorporate short lengths ofhigh grade results and longer lengths of low graderesults, the procedure used forsuch aggregation should	Intersection lengths and grades are reported as down-holelength weighted intervals.
	be stated and some typical examples of suchaggregations should be shown in detail.	Details of all intersections are included in Appendix 1
	The assumptions used for any reporting of metal	Lower grade intervals are quoted and provide context forsignificant intervals.
	equivalent values should be clearly stated.	No metal equivalent values are reported.
Relationshipbetween	These relationships are particularly important in thereporting of Exploration Results.	Drill hole intersections are reported down hole. True widths areunknown.
mineralisationwidths and interceptlengths	If the geometry of the mineralisation with respect to thedrill hole angle is known, its nature should be reported.
	If it is not known and only the down hole lengths arereported, there should be a clear statement to this effect(e.g.'down hole length, true width not known').
Diagrams	Appropriate maps and sections (with scales) andtabulations of intercepts should be included for anysignificant discovery being reported. These shouldinclude, but not be limited to a plan view of drill hole	Refer to figures in the body of this announcement for relevantplans including a tabulation of intercepts.

Criteria	JORC Code explanation	Commentary
	collar locations and appropriate sectional views.
Balanced reporting	Where comprehensive reporting of all ExplorationResults is not practicable, representative reporting of	Intersection lengths and grades are reported as down-holelength weighted averages.
	both low and high grades and/or widths should bepracticed to avoid misleading reporting of ExplorationResults.	The number of drill holes and meters are included in the body ofthe announcement and in Appendix 1.
Other substantiveexploration 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 andmethod of treatment; metallurgical test results; bulkdensity, groundwater, geotechnical and rockcharacteristics; potential deleterious or contaminatingsubstances.	No other substantive exploration data is available for reporting.
Further work	The nature and scale of planned further work (e.g.testsfor lateral extensions or depth extensions or large-scalestep-out drilling).	Follow up RC drilling is planned to expand the currentunderstanding of mineralized structures. Drill hole locations willbe selected to test for mineralization along strike and at depth.
	Diagrams clearly highlighting the areas of possibleextensions, including the main geological interpretationsand future drilling areas, provided this information is notcommercially sensitive.

Table 1: Drill Hole Collar Information

Hole Number	Type	X Coord	Y Coord	GPS Elev. (m)	Azimuth	Angle	Depth (ft)	Depth (m)
19-KNG-001	DD	751,519.5	3,921,939.0	1,128.77	o	-90	235.0	71.63
19-KNG-002	DD	751,534.5	3,921,878.0	1,125.80	$\circ$	-90	300.0	91.44
19-KNG-003	DD	751,579.2	3,921,900.0	1,128.39	240	$-55$	615.0	96.01
19-KNG-004	DD	751,592.0	3,921,877.0	1,126.20	240	-50	329.0	100.28
19-KNG-005	DD	751,790.7	3,922,882.0	1,162.70	210	-60	325.0	99.06
19-KNG-006	DD.	751.854.4	3,922,908.0	1,163.70	200	-45	405.0	123.44
19-KNG-007	DD.	751,841.8	3,923,050.0	1,175.10	210	$-45$	833.0	253.90
19-KNG-008	DD.	752,283.0	3,922,823.0	1.167.50	240	$-65$	359.0	109.42
19-KNG-009	DD	752,508.4	3,922,494.0	1,157.02	215	$-52$	222.5	67.82
19-KNG-010	DD	751,944.2	3,923,550.0	1,189.20	225	-50	303.5	92.51
19-KNG-011	DD	753,055.2	3,922,620.0	1,169.51	5	$-45$	262.5	80.01

Table 2: Significant Intervals

Hole Number	From (ft)	$To$ (ft)	Thick (ft)	From (m)	To(m)	Thick (m)	Au ppm	Ag ppm	Cu %	Pb%	Zn%
19-KNG-001	147	148		44.81	45.11	0.30	0.815	3.5
19-KNG-002	83	92	9	25.30	28.04	2.74	1.15	17.5		0.48	0.20
	130	134	4	39.62	40.84	1.22	3.51	57.0	0.35		0.73
Incl.	130	130.5	0.5	39.62	39.78	0.15	26.9	449	2.70		1.03
	155	160	5	47.24	48.77	1.52	21.60	89.2		1.83	0.23
Incl.	155	158	3	47.24	48.16	0.91	34.6	112
19-KNG-003	191	194	з	58.22	59.13	0.91	7.91	79.0	0.27	0.45	1.22
Incl.	191	192.5	1.5	58.22	58.67	0.46	15.2	153	0.54	0.84	2.30
	214	224	10	65.23	68.28	3.05	0.671	5.66
19-KNG-005	183	184		55.78	56.08	0.30	2.09	2340		0.71	0.96
19-KNG-006	344.5	345.5		105.00	105.30	0.30	4.34	48.0		0.26	0.70
19-KNG-008	257	262	5	78.33	79.86	1.52	3.408	56.44			0.56
Incl.	258.2	262	3.8	78.70	79.86	1.16	4.12	73.0		0.16	0.67