S2 RESOURCES LTD — Capital/Financing Update 2016

May 8, 2016

ASX Announcement

Monday 9th May 2016

SVAN VIT ASSAYS CONFIRM VMS-STYLE ZINC, DOWNHOLE EM IDENTIFIES TWO CONDUCTORS

Highlights

• Assays from the first two drill holes confirm zinc in VMS-style system at Svan Vit, Sweden, with several intersections including 5.05m @ 3.15% zinc
• Down hole electromagnetic (DHEM) surveys identify two offhole EM conductors
• Suggests first two holes drilled the western margin of the upper conductor and third hole missed both
• Most of upper conductor and all of lower conductor untested
• Drilling ceased due to the northern Spring thaw but will resume when ground re-freezes

S2 Resources Ltd ("S2" or the "Company") advises that assays received from its first two drill holes confirm the presence ofzinc mineralization at the Svan Vit prospect on its 100% owned Skellefte project in Sweden. Down hole electromagnetic (DHEM) surveying in these holes indicates that the main part of the targeted EM conductor is located off the drill section and that the first two holes intersected the western margin of this EM conductor. A third, deeper, hole did not intersect mineralization but DHEM in this hole has identified a second EM conductor that has not yet been drill tested.

A total of three diamond core holes were drilled on a single section to test an EM anomaly first identified in an airborne versatile transient electromagnetic (VTEM) survey and subsequently confirmed with ground EM (see ASX announcement of 21st April 2016). Two of these holes intersected sulphide mineralization, including zinc sulphide mineralization (sphalerite) and the third hole missed (see Figure 1), although it did intersect several alteration zones with minor sulphides.

The first hole (SSVA160001), which clipped the top of the ground EM conductor model and intersected a narrow zone of mixed sulphide mineralization (see ASX announcement of 21st April 2016), intersected:

• 0.55m @ 1.49 g/t Au, 45 g/t Ag from 25.3m
• 1.05m @ 2.87% Zn, 5 g/t Ag from 88.7m

The second hole (SSVA160002), drilled 90 metres down dip of the first through several zones of mixed sulphide mineralization (see ASX announcement of 21st April 2016), intersected:

• 0.55m @ 2.23% Zn from 164m
• 3.70m @ 1.75% Zn, 5.3g/t Ag from 170.2m
• 5.05m @ 3.15% Zn, 6g/t Ag, 0.2% Cu from 184.6m

The mineralized intervals in these two drill holes broadly coincide with the position of the EM conductor since redefined in a subsequent downhole EM survey (see Figure 1). Figure 2 shows that the first two drill holes appear to have intersected the northern and western margin of the conductor as modelled from downhole EM, and the central part of it has not yet been tested.

This conductor is modelled as a plate measuring 160m in strike and 180m down dip, but in reality may be more of a plunging elongate lens, as is common in this district.

This may also explain why the third hole (SSVA160003), drilled to intersect the target horizon as modelled in the previous ground EM some 70 metres down dip from the second hole, did not intersect substantial mineralization. The third hole appears to have passed slightly to the west of the conductor as it is now interpreted based on the subsequent downhole EM survey.

Downhole EM surveying in the third and deepest hole (SSVA160003) identified a second EM conductor, which is modelled as measuring 200m along strike and 255m down dip. This deeper conductor is situated below and east of the deepest hole in a position that is broadly co-planar and co-axial with the upper conductor intersected by the first two holes (see Figure 3). Together, these two modelled plates define a southeasterly plunging conductive zone that may reflect single or multiple plunging elongate lenses as is typical of VMS deposits in this district.

The outcomes of the downhole EM suggest that the three holes drilled to date have only tested the margins of a potentially much more extensive zone. Further drilling will be required to adequately test the Svan Vit prospect given that two of these holes intersected low grade zinc and silver bearing VMSstyle mineralization on the margin of the upper conductor, and the third missed both conductors.

Drilling will resume as soon as possible later in the year when the ground re-freezes and enables access.

These three holes have successfully confirmed that VTEM is a very useful tool for targeting VMS mineralization in this district. The VTEM anomaly that is now the Svan Vit prospect is the first of the Company's many VTEM conductors identified on its Skellefte project to be tested (see Figure 4). The remainder of the VTEM anomalies so far identified will be prioritised with ground EM and base of till sampling (where ground conditions permit) over the northern summer ready for systematic drill testing later in the year.

Figure 1. Svan Vit cross section with assayed drill intercepts and various EM conductor plate models. Note that the alteration deepest in SSVA160002 includes chalcopyrite stringers typical of the footwall stockwork zones of VMS systems, and the alteration zone in SSVA160003 includes barren sulphide intervals that are also typical of the marginal parts of VMS systems.

Figure 2. Plan of Svan Vit prospect showing initial VTEM anomaly (colour), original ground EM plate model projected to surface (red rectangle), two new down hole EM plate models projected to surface (pale and dark blue), and drillhole pierce points.

Figure 3. 3D view looking north of two new EM conductor plates as modelled from downhole EM surveying. The first two holes clipped the upper and western edge of the upper conductor and the third hole missed both. The lower conductor lies southeast and beneath the deepest hole and is broadly coplanar and coaxial with the upper conductor, defining a southeast plunging conductive zone.

Figure 4. Location of Svan Vit prospect (formerly VTEM conductor Svansele 403-C1) and other VTEM conductors in the Skellefte belt, showing the extent of the existing VTEM survey and some of the new S2 tenure not yet covered by VTEM.

Having demonstrated the effectiveness of VTEM, the Company will also extend its VTEM coverage during the northern summer over recently acquired tenure (see Figure 4).

For further information, please contact:

Mark Bennett Anna Neuling Managing Director Executive Director +61 8 6166 0240 +61 8 6166 0240

Competent Persons statement

The information in this report that relates to Exploration Results is based on information compiled by James Coppard who is a consultant to the company. Mr Coppard is a Chartered Geologist, European Geologist and Fellow of the Geological Society of London. Mr Coppard has sufficient experience of relevance to the style of mineralization and the types of deposits under consideration, and to the activities undertaken, to qualify as Competent Persons as defined in the 2012 Edition of the Joint Ore Reserves Committee (JORC) Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Coppard consents to the inclusion in this report of the matters based on information in the form and context in which it appears.

Annexure 1

The following Table is provided to ensure compliance with the JORC code (2012) edition requirements for the reporting of exploration results. Co-ordinates in this table are given in the Swedish National Grid SWEREF 99TM. Fe and S assays reflect quantity of sulphide.

Hole No	Depthm	North	East	Elevm	Dip	Azim	From, m	To, m	Width,m	Aug/t	Agg/t	Fe %	S%	Cu%	Zn%
SSVA160001	127.05	7215642	724691	429	60	035	25.30	25.85	0.55	1.49	45.0	6.2	2.5	<0.1	<0.1
and							88.70	89.05	1.05	0.03	5.0	14.9	9.8	<0.1	2.87
SSVA160002	258.70	7215560	724634	429	60	035	164.40	164.95	0.55	0.02	<1	8.1	5.8	<0.1	2.23
and							167.70	168.35	0.65	0.03	4.0	29.7	22.1	<0.1	<0.1
and							168.85	169.30	0.45	0.02	6.0	23.1	18.2	<0.1	0.89
and							170.20	173.90	3.70	0.01	5.3	8.7	5.4	<0.1	1.75
and							184.60	189.65	5.05	0.04	6.0	13.0	9.4	0.2	3.15
including							186.40	187.35	0.95	0.09	4.0	21.5	16.2	0.29	4.55
including							188.40	189.65	1.25	0.04	5.0	19.2	13.8	0.16	5.07
and							190.25	191.05	0.80	0.02	<1	18.5	10.3	0.19	0.34
and							201.90	203.20	1.30	0.12	4.0	7.1	2.0	0.37	<0.1
and							207.55	214.05	6.50	0.04	3.0	10.7	2.5	0.25	<0.1
including							207.55	209.00	1.45	0.10	7.0	7.3	2.7	0.43	<0.1
SSVA160003	298.00	7215519	724604	430	65	035	Not yet sampled but no significant intersection based on visual observation

Table 1:

The following Tables are provided to ensure compliance with the JORC code (2012) edition requirements for the reporting of exploration results.

Criteria	JORC Code explanation	Commentary
Sampling techniques	Nature and quality of sampling (e.g. cut channels,random chips, or specific specialised industrystandard measurement tools appropriate to theminerals under investigation, such as down holegamma sondes, or handheld XRF instruments, etc).These examples should not be taken as limiting thebroad meaning of sampling.	The EM geophysical target at Svan Vit was tested by diamonddrilling with a planned two DDH program. Drilling has beenundertaken by Protek Norr of Norsjὃ Sweden drilling NQ2 rodsize with a DDH size of 75.7mm and core size of 50.7mm. NQ2core samples were logged, marked by Sakumpu Exploration("Sakumpu"*) staff, Unbiased core sample intervals were cut inhalf by diamond saw. Half core from DDH's SSVA160001 &SSVA160002 has been sent for analyses by ALS Laboratories,whilst SSVA160003 is presently being logged.*Sakumpu is a wholly owned subsidiary of S2
	Include reference to measures taken to ensuresample representivity and the appropriatecalibration of any measurement tools or systemsused	Sampling and QAQC procedures is carried out using Sakumpu/S2 protocols as per industry best practice.

SECTION 1 SAMPLING TECHNIQUES AND DATA

Criteria	JORC Code explanation	Commentary
	Aspects of the determination of mineralisationthat are Material to the Public Report. In caseswhere 'industry standard' work has been done thiswould be relatively simple (e.g. 'reverse circulationdrilling was used to obtain 1 m samples fromwhich 3 kg was pulverised to produce a 30 gcharge for fire assay'). In other cases moreexplanation may be required, such as where thereis coarse gold that has inherent samplingproblems. Unusual commodities or mineralisationtypes (e.g. submarine nodules) may warrantdisclosure of detailed information	Diamond drilling was used to obtain core samples that havebeen cut and sampled on intervals that are determined bylithology and mineralisation.The drill core samples from SSVA16001 & SSVA160002 havebeen sent to ALS Laboratories for analyses for gold and basemetals. SSVA160003 drill core is presently being logged atSakumpu's facilities in Mala, Sweden.
Drilling techniques	Drill type (e.g. core, reverse circulation, open-holehammer, rotary air blast, auger, Bangka, sonic,etc) and details (e.g. core diameter, triple orstandard tube, depth of diamond tails, facesampling bit or other type, whether core isoriented and if so, by what method, etc).	Diamond drilling with NQ2 wireline bit producing a 50.7mmdiameter core. Drill core has been orientated on SSVA16003only using the Reflex Act system operated by Protek Norr.
Drill samplerecovery	Method of recording and assessing core and chipsample recoveries and results assessed	DiamondDrillcorerecoveriesarevisuallyestimatedqualitatively on a metre basis and are recorded in the database.
	Measures taken to maximise sample recovery andensure representative nature of the samples	Sample quality is qualitatively logged on a metre basis,recording sample condition.
	Whether a relationship exists between samplerecovery and grade and whether sample bias mayhave occurred due to preferential loss/gain offine/coarse material.	NA
Logging	Whether core and chip samples have beengeologically and geotechnically logged to a level ofdetail to support appropriate Mineral Resourceestimation, mining studies and metallurgicalstudies.	The initial sampling is considered a qualitative samplingtechnique and not appropriate for mineral resource estimation.All drillholes have been geologically and geophysically loggedand SSVA160003 will in addition be geotechnically logged aswell by WSP Consultants (Oulu, Finland office personnel).
	Whether logging is qualitative or quantitative innature. Core (or costean, channel, etc)photography.	All core has been photographed both dry and wet. Geologicallogging of the diamond drill holes is onto physical log sheetsfollowed by importing into S2 Resources central database
	The total length and percentage of the relevantintersections logged	All drill holes were logged in full.
Sub-samplingtechniques andsample preparation	If core, whether cut or sawn and whether quarter,half or all core taken.	Core sawn in half and half core taken.
	If non-core, whether riffled, tube sampled, rotarysplit, etc and whether sampled wet or dry.	NA
	For all sample types, the nature, quality andappropriateness of the sample preparationtechnique.	Samples were forwarded to ALS Minerals Laboratory in Mala,Sweden. All samples were forwarded to ALS Minerals Ojebyn,Sweden Laboratory where they were crushed with >70% <2mm(code CRU-31), split by riffle splitter (code SPL-21), andPulverised 1000grm to 85% <75 um (code PUL-32). Crushers andPulverizers were washed with QC tests undertaken (codes CRUQC, PUL-QC). The prepared samples were forwarded to ALSMinerals Loughrea, Ireland, Laboratories for analyses
	Quality control procedures adopted for all subsampling stages to maximise representivity ofsamples.	Full QA:QC system in place

Criteria	JORC Code explanation	Commentary
	Measures taken to ensure that the sampling isrepresentative of the in situ material collected,including for instance results for fieldduplicate/second-half sampling.	Non biased core cutting through using an orientation linemarked on core and cut to the line
	Whether sample sizes are appropriate to the grainsize of the material being sampled.	Samples of appropriate size
Quality of assay dataand laboratory tests	The nature, quality and appropriateness of theassaying and laboratory procedures used andwhether the technique is considered partial ortotal.	All samples were analysed by ALS Minerals Loughrea, IrelandLaboratories. Samples were analysed for Gold using 50grm FireAssay with AA finish (code Au-AA26) and for Ag, As, Bi, Ca, Cd,Cu, Fe, Hg, Mg, Mn, Mo, Ni, P, Pb, S, Sb, Tl & Zn through anOxidising Digestion with ICP-AES Finish (code ME-ICPORE)
	For geophysical tools, spectrometers, handheldXRF instruments, etc, the parameters used indetermining the analysis including instrumentmake and model, reading times, calibrationsfactors applied and their derivation, etc.	No geophysical tools were used to determine any elementconcentrations.
	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 beenestablished.	Full QAQC system in place including Certified Standards andBlanks of appropriate matrix and levels
Verification ofsampling andassaying	The verification of significant intersections byeither independent or alternative companypersonnel.	The Managing Director of Sakumpu has visually verifiedsignificant intersections.
	The use of twinned holes.	No twin holes have been drilled on the project to date.
	Documentation of primary data, data entryprocedures, data verification, data storage(physical and electronic) protocols.	Primary sampling data was collected in Sakumpu sample booksusing project prefix SSVA and unique numbers. The data is thentransferred to a set of standard Excel templates. The informationwill be forwarded to an external database consultant forvalidation and compilation into a Perth based SQL database.
	Discuss any adjustment to assay data.	No adjustments made.
Location of datapoints	Accuracy and quality of surveys used to locatedrillholes (collar and down-hole surveys), trenches,mine workings and other locations used in MineralResource estimation.	Drill hole collars were located with a differential GPS with anaccuracy of within 1m.
	Specification of the grid system used.	The grid system used is the Standard Swedish National Grid –SWEREF 99 TM.
	Quality and adequacy of topographic control.	Excellent quality topographic maps produced by the SwedishAuthorities – Landmateriat.
Data spacing anddistribution	Data spacing for reporting of Exploration Results.	NA
	Whether the data spacing and distribution issufficient to establish the degree of geological andgrade continuity appropriate for the MineralResource and Ore Reserve estimation procedure(s)and classifications applied.	NA
	Whether sample compositing has been applied.	NA
Orientation of datain relation togeological structure	Whether the orientation of sampling achievesunbiased sampling of possible structures and theextent to which this is known, considering thedeposit type.	The diamond drilling orientation was designed to test thegeophysical target and is not necessarily drilled perpendicular tothe orientation of the intersected mineralisation.

Criteria	JORC Code explanation	Commentary
	If the relationship between the drilling orientationand the orientation of key mineralised structures isconsidered to have introduced a sampling bias,this should be assessed and reported if material.	NA
Sample security	The measures taken to ensure sample security.	Chain of custody is managed by Sakumpu. Drill cores werevisually checked at the drill rig and adjacent track (less than200m from drill rig). Cores were then transported to Sakumpu'slogging and cutting facilities by Sakumpu personnel.Corecutting on site and samples transferred to ALS Laboratories inMalå, Sweden by Sakumpu personnel
Audits or reviews	The results of any audits or reviews of samplingtechniques and data.	No audits or reviews have been conducted at this stage.

SECTION 2 REPORTING OF EXPLORATION RESULTS

Criteria	JORC Code explanation	Commentary
Mineral tenementand land tenurestatus	Type, reference name/number, location andownership including agreements or material issueswith third parties such as joint ventures,partnerships, overriding royalties, native titleinterests, historical sites, wilderness or nationalpark and environmental settings.	The Svan Vit (White Swan) prospect is located within theSvansele nr 403 Exploration Licence (Diary number 2015:39),which is 100% owned by Sakumpu Exploration filial, a whollyowned branch of Sakumpu Exploration Oy ("Sakumpu"), whichis in turn a wholly owned subsidiary of S2 Resources Ltd.
	The security of the tenure held at the time ofreporting along with any known impediments toobtaining a licence to operate in the area.	The Svansele nr 403 Exploration Licence is in good standing andno known impediments exist on the tenement being activelyexplored.
Exploration done byother parties	Acknowledgment and appraisal of exploration byother parties.	North of the VTEM anomaly Svansele 403 C1 the historicalprospect of Snattermyran. Snattermyran was found from amineralised boulder in 1902.During 1903-1905 trenchingoccurred. In 1926 3 DDH's were drilled for a total of 152.17mwith a best result of: borrhal 2 3.46m @ 2.45% Zn, 32g/t Ag. In1980 the Swedish Geological Survey (SGU) drilled 4 DDH's for atotal of 375.00m with a best result from DDH 80004 of 2.50m @1.65% Zn, 20 g/t Ag. All DDH's were drilled with an approximateazimuth between 345° and 030°.The above information is the only public domain data pertainingto the prospect.
Geology	Deposit type, geological setting and style ofmineralisation.	The Svan Vit project is situated within the central portion of theSkellefte Belt, a volcanogenic massive sulphide camp dominatedby bimodal volcanics, primarily felsic in composition.The mineralisation style appears from the drill holes typicalvolcanogenic massive sulphide style mineralisation withgreenschist grade metamorphism
Drill holeInformation	A summary of all information material to theunderstanding of the exploration results includinga tabulation of the following information for allMaterial drill holes:easting and northing of the drill holecollarelevation or RL (Reduced Level –elevation above sea level in metres) ofthe drill hole collardip and azimuth of the holedown hole length and interceptiondepthhole length.	DDH SSVA160001 724691E 7215642N 035°Azi -60°EOH127.05m. RL 429mVMS style mineralisation between 85.75m – 89.75m as in text.DDH SSVA160002 724634E 7215560N 035°Azi -60° EOH258.70m. RL 429mVMS style mineralisation in varying between 164.40m –209.00m including a number of barren intervals as in textDDH SSVA160003 724604E 7215519N 035°Azi -65° EOH298.00m. RL 430mAlteration and 1-5% iron Sulphide mineralisation between171.50m – 175.00m, 181.10 – 187.90m, 240.50 – 242.80m. Novisual base metal mineralisation intersected.

Criteria	JORC Code explanation	Commentary
Data aggregationmethods	In reporting Exploration Results, weightingaveraging techniques, maximum and/or minimumgrade truncations (e.g. cutting of high grades) andcut-off grades are usually Material and should bestated.	NA
	Where aggregate intercepts incorporate shortlengths of high grade results and longer lengths oflow grade results, the procedure used for suchaggregation should be stated and some typicalexamples of such aggregations should be shown indetail.	NA
	The assumptions used for any reporting of metalequivalent values should be clearly stated.	None used
Relationshipbetweenmineralisationwidths and interceptlengths	These relationships are particularly important inthe reporting of Exploration Results.If the geometry of the mineralisation with respectto the drill hole angle is known, its nature shouldbe reported.If it is not known and only the down hole lengthsare reported, there should be a clear statement tothis effect (e.g. 'down hole length, true width notknown').	The trend of mineralisation at Svan Vit is not known at presentbut core angles indicate that mineralisation is approximatelytrue width.Borehole EM modelled in Maxwell indicates two steeply dippingplates that are not connected and indicate that the centralportion of both conductors are towards the east of the drilledprofile.Refer to Annexure 1 and Figures in body of text.
Diagram	Appropriate maps and sections (with scales) andtabulations of intercepts should be included forany significant discovery being reported Theseshould include, but not be limited to a plan view ofdrill hole collar locations and appropriate sectionalviews.	Refer to Figures in body of text.
Balanced reporting	Where comprehensive reporting of all ExplorationResults is not practicable, representative reportingof both low and high grades and/or widths shouldbe practiced to avoid misleading reporting ofExploration Results.	Mineralisation is determined visually then sampled andanalytical results reported
Other substantiveexploration data	Other exploration data, if meaningful andmaterial, should be reported including (but notlimited to): geological observations; geophysicalsurvey results; geochemical survey results; bulksamples – size and method of treatment;metallurgical test results; bulk density,groundwater, geotechnical and rockcharacteristics; potential deleterious orcontaminating substances.	The Svan Vit target was a priority VTEM target (Svansele 403 C1)generated during Sakumpu's 2015 VTEM survey that returned amulti-channel response at the target. This target was groundchecked by moving loop ground TEM which gave an anomalythat when modelled showed a SW dipping plate that increasesin conductance at depth. Base of Till sampling returned a peakgeochemical response on top of the geophysical anomaly.All three DDH's drilled were successfully probed by downholeEM by Geovisor of Rovaniemi, Finland. Results of the BHEM aredetailed in the body of the text.
Further work	The nature and scale of planned further work (e.g.tests for lateral extensions or depth extensions orlarge-scale step-out drilling).Diagrams clearly highlighting the areas of possibleextensions, including the main geologicalinterpretations and future drilling areas, providedthis information is not commercially sensitive	The weather conditions (northern hemisphere spring thaw) willprevent additional diamond drilling of the target until theground conditions are appropriate (frozen ground).The results of the BHEM will be tested through additionaldiamond drilling with the additional analytical and geophysicalresponses will determine the extent of the additional drilling.The additional VTEM targets within the immediate vicinity willbe tested.