S2 RESOURCES LTD — Regulatory Filings 2016

Apr 20, 2016

ASX Announcement

Thursday 21st April 2016

VMS STYLE MINERALISATION IN FIRST DRILLING OF FIRST VTEM CONDUCTOR IN SWEDEN

Highlights

• S2's first two holes drilled at its first VTEM conductor to be tested have intersected volcanogenic massive sulphide (VMS) style mineralisation
• The mineralisation comprises disseminations and veinlets of sulphide with small zones of semi-massive sulphide within a broader alteration zone
• The sulphides are mainly iron (pyrite and pyrrhotite) but include zones with some sphalerite (zinc sulphide) and minor chalcopyrite (copper sulphide)
• The grade of zinc, copper and other metals is unknown pending laboratory assays
• This provides "proof of concept" for S2's exploration strategy and confirms the effectiveness of VTEM as a tool for finding VMS deposits in this area
• Drilling is continuing but will halt soon due to the northern Spring thaw
• Prioritisation of the other VTEM conductors using ground EM and base of till geochemical sampling will continue
• Systematic drill testing of this and other high priority VTEM conductors will recommence later in the year as soon as weather permits access

S2 Resources Ltd ("S2" or the "Company") advises that two holes drilled to test an electromagnetic (EM) conductor originally defined by a versatile time domain electromagnetic (VTEM) survey on its 100% owned Skellefte project in Sweden have intersected volcanogenic massive sulphide (VMS) style mineralization. These are the Company's first ever diamond core holes drilled at its Skellefte project to test the first of a number of EM conductors identified in its 2015 VTEM survey, which is the only such survey to have ever been undertaken in this highly endowed mining district. This prospect has been named Svan Vit.

The primary purpose of these drillholes was to test the effectiveness of the VTEM technique itself and the validity of the Company's strategy of using it as a means of identifying base metal sulphide mineralization in this terrain. The results appear to confirm both.

VTEM conductor Svansele 403-C1, which is one of many EM conductors identified in the Company's 2015 VTEM survey (see Figure 1), was verified with ground EM and the resultant anomaly was modelled as a conductive body nominally measuring 150 metres along strike and 200m down dip (see Figure 2). This anomaly is south of a historic prospect originally discovered in the late 1890's and drilled in the 1980's by SGU (the Swedish Geological Survey).

The two holes drilled to test this conductor have both intersected sulphide mineralization at predicted target depths. The first hole (SSVA160001) clipped the uppermost edge of the target zone and intersected a narrow zone of breccia and disseminated sulphide mineralization. The second hole (SSVA160002) hit the conductor approximately 90 metres down dip from the first hole, and intersected a broad hydrothermal alteration zone containing several sub-zones with variable amounts of sphalerite (zinc sulphide) and minor chalcopyrite (copper sulphide) (see Figure 3) mixed with gangue (silicate minerals). The visual intercepts are described below:

• A 4 metre wide alteration zone from 85.75 metres in hole SSVA160001, with:
  • o 0.55 metres of variable sulphide mineralisation from 85.75 metres
  • o 1.65 metres of variable sulphide mineralisation from 88.1 metres
• A 30 metre wide alteration zone from 164.4 metres in hole SSVA160002, with:
  • o 1.6 metres of variable sulphide mineralisation from 167.7 metres
  • o 2.9 metres of variable sulphide mineralisation from 170.5 metres
  • o 8.1 metres of variable sulphide mineralisation from 183.3 metres

The two intercepts at the Svan Vit prospect are interpreted to be close to true width and together define a zone of alteration with variable sulphide mineralization dipping to the SW, extending to at least 150 metres below surface, and remaining open down dip and along strike (see Figures 2 and 3).

The sulphides comprise a mixture of pyrrhotite and pyrite (iron sulphide) with variable amounts of sphalerite (zinc sulphide) and localized zones with minor chalcopyrite (copper sulphide) (see Figure 4) but it must be stressed that it is not possible to anticipate the grade of zinc, copper or any other metals in these intercepts and receipt of definitive laboratory assays may take several weeks.

The identification of VMS mineralization in the first drilling program on the first of numerous VTEM conductors identified in the first ever VTEM survey in this district is considered to be highly encouraging, and it is hoped another one or two holes will be completed at Svan Vit before the northern Spring thaw prevents rig movement.

Drilling will resume at Svan Vit as soon as possible once the ground re-freezes later in the year. In the meantime, ground EM and base of till sampling will continue in order to verify and prioritise the numerous other conductors identified in the VTEM survey, some of which may be accessible when the ground is dry in late summer/autumn.

S2's Managing Director, Mark Bennett, who is on site in Sweden, commented "we have said from the start that the Skellefte project represents a significant opportunity for S2, which is why we moved to 100% ownership of Sakumpu Exploration Oy last December. Having identified so many strong conductors in our district scale VTEM survey it was important for us to test the validity of these, so when our team had an opportunity to do just that before the Spring thaw we took it."

"Our main objective was to identify a conductive body to prove that the VTEM works, so to not only prove this but to also confirm mineralization with our first drillholes into our first conductor is a pleasing bonus. It bodes well for the project as a whole" he said.

Figure 1. Location of VTEM conductor Svansele 403-C1 and other VTEM conductors in the Skellefte belt, showing S2's tenure, and Boliden's VMS mines and deposits.

Figure 2. Prospect scale plan showing location of the Svan Vit conductor as modelled from the ground EM survey, in relation to original VTEM conductor Svansele 403-C1 (in colour) and nearby historic SGU (Geological Survey) drilling.

Figure 3. Cross section showing the sulphide intersections in drillholes SSVA160001 and SSVA160002 at Svan Vit in relation to the EM conductor as modelled from the ground EM survey undertaken to verify VTEM conductor Svansele 403-C1.

Figure 4. Photograph of massive sulphide intercept in hole SSVA160001, Svan Vit prospect, containing pyrrhotite (pale bronze brown), pyrite (brassy yellow) and sphalerite (reddish brown) with clasts of wallrock (dark grey).

Figure 5. Photograph of core from 171 metres in hole SSVA160002, Svan Vit prospect, showing laminated sphalerite (pale pink, pale brown, reddish brown), coarse pyrrhotite (brassy yellow) and silica alteration (glassy grey to milky white).

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 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.

Hole No.	Prospect	TotalDepth	North	East	RL	Dip	Azim	Comment
SSVA160001	Svan Vit	127.05	7215642	724691	429	-60	35	Assays Pending
SSVA160002	Svan Vit	In progress	7215560	724634	429	-60	35	Assays Pending

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
Samplingtechniques	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 aslimiting the broad meaning of sampling.	The EM geophysical target at Svan Vit was tested bydiamond drilling with a planned two DDH program. Drillinghas been undertaken by Protek Norr of Norsjὃ Swedendrilling NQ2 rod size with a DDH size of 75.7mm and coresize of 50.7mm. NQ2 core samples were logged, marked bySakumpu Exploration ("Sakumpu"*) staff. Unbiased coresample intervals were cut in half by diamond saw. Half corehas been sent for analyses by ALS Laboratories.*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 are carried out usingSakumpu Exploration/ S2 protocols as per industry bestpractice.

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 donethis would be relatively simple (e.g. 'reversecirculation drilling was used to obtain 1 msamples from which 3 kg was pulverised toproduce a 30 g charge for fire assay'). In othercases more explanation may be required, such aswhere there is coarse gold that has inherentsampling problems. Unusual commodities ormineralisation types (e.g. submarine nodules)may warrant disclosure of detailed information	Diamond drilling was used to obtain core samples that havebeen cut and sampled to intervals that are determined bylithology and mineralisation.The drill core samples from SSVA16001 have been sent toALS Laboratories for analyses for gold and base metals.SSVA160002 drill core is presently being logged at SakumpuExploration Oy's facilities.
Drillingtechniques	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 not been orientated.
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
LoggingWhether core and chip samples have beengeologically and geotechnically logged to a levelof detail to support appropriate Mineral Resourceestimation, mining studies and metallurgicalstudies.		The initial sampling is considered a qualitative samplingtechnique and not appropriate for mineral resourceestimationLithology, alteration and veining is recorded directly to a digitalformat and imported into S2 Resources central database.
	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 sheets
	The total length and percentage of the relevantintersections logged	All drill holes were logged in full.
Sub-samplingtechniques andsamplepreparation	If core, whether cut or sawn and whetherquarter, 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 yet to be prepared
	Quality control procedures adopted for all subsampling stages to maximise representivity ofsamples.	Full QA:QC system in place for when samples prepared
	Measures taken to ensure that the sampling isrepresentative of the in situ material collected,including for instance results for fieldduplicate/second-half sampling.	NA

Criteria	JORC Code explanation	Commentary
	Whether sample sizes are appropriate to thegrain size of the material being sampled.	NA
Quality of assaydata andlaboratory tests	The nature, quality and appropriateness of theassaying and laboratory procedures used andwhether the technique is considered partial ortotal.	Samples forwarded to ALS Laboratories.
	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, externallaboratory checks) and whether acceptable levelsof accuracy (i.e. lack of bias) and precision havebeen established.	NA at present
Verification ofsampling andassaying	The verification of significant intersections byeither independent or alternative companypersonnel.	The Managing Director of Sakumpu Exploration has visuallyverified significant 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 Exploration Oysample books using project prefix SSVA and unique numbers.The data is then transferred to a set of standard Excel templates.The information will be forwarded to an external databaseconsultant for validation and compilation into a Perth based SQLdatabase.
	Discuss any adjustment to assay data.	NA
Location of datapoints	Accuracy and quality of surveys used to locatedrillholes (collar and down-hole surveys),trenches, mine workings and other locations usedin Mineral Resource estimation.	Drill hole collars were located with a differential GPS with anaccuracy of less 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 geologicaland grade continuity appropriate for the MineralResource and Ore Reserve estimationprocedure(s) and classifications applied.	NA
	Whether sample compositing has been applied.	NA
Orientation ofdata in relation togeologicalstructure	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.
	If the relationship between the drillingorientation and the orientation of keymineralised structures is considered to haveintroduced a sampling bias, this should beassessed and reported if material.	NA

Criteria	JORC Code explanation	Commentary
Sample security	The measures taken to ensure sample security.	Chain of custody is managed by Sakumpu Exploration Oy. Drillcores were visually checked at the drill rig and adjacent track (lessthan 200m from drill rig).Cores were then transported toSakumpu Exploration Oy's logging and cutting facilities bySakumpu Exploration personnel.Core cutting on site andsamples transferred to ALS Laboratories in Malå, Sweden bySakumpu Exploration 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 materialissues with 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, which is in turn awholly owned subsidiary of S2 Resources Ltd.
	The security of the tenure held at the time ofreporting along with any known impedimentsto obtaining a licence to operate in the area.	The Svansele nr 403 Exploration Licence is in good standingand no known impediments exist on tenement activelyexplored.
Exploration doneby other parties	Acknowledgment and appraisal of explorationby other 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.In 1980 the Swedish Geological Survey (SGU) drilled 4 DDH'sfor a total of 375.00m with a best result from DDH 80004 of2.50m @ 1.65% Zn, 20 g/t Ag. All DDH's were drilled with anapproximate azimuth between 345° and 030°.The above information is the only public domain datapertaining to 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 two drill holes typicalvolcanogenic massive sulphide style mineralisation withgreenschist metamorphism
Drill holeInformation	A summary of all information material to theunderstanding of the exploration resultsincluding a tabulation of the followinginformation for all Material drill holes:•easting and northing of the drill holecollar•elevation or RL (Reduced Level –elevation above sea level in metres)of the drill hole collar•dip and azimuth of the hole•down hole length and interceptiondepth•hole length.	DDH SSVA160001 724691E 7215642N 035°Azi -60°EOH127.05mVMS style mineralisation between 85.75m – 89.75m as intext.DDH SSVA160002 724634E 7215560N 035°Azi -60° DDHongoing at time of writingVMS style mineralisation in varying between 164.40m –195.05m including a number of barren intervals as in text

Criteria	JORC Code explanation	Commentary
Data aggregationmethods	In reporting Exploration Results, weightingaveraging techniques, maximum and/orminimum grade truncations (e.g. cutting of highgrades) and cut-off grades are usually Materialand should be stated.	NA
	Where aggregate intercepts incorporate shortlengths of high grade results and longer lengthsof low grade results, the procedure used forsuch aggregation should be stated and sometypical examples of such aggregations should beshown in detail.	NA
	The assumptions used for any reporting ofmetal equivalent values should be clearly stated.	NA
Relationshipbetweenmineralisationwidths andintercept lengths	These relationships are particularly importantin the reporting of Exploration Results.If the geometry of the mineralisation withrespect to the drill hole angle is known, itsnature should be reported.If it is not known and only the down holelengths are reported, there should be a clearstatement to this effect (e.g. 'down hole length,true width not known').	The trend of mineralisation at Svan Vit is not known at presentbut core angles indicate that mineralisation is approximately truewidthRefer to Annexure 1 and Figures in body of text.
Diagram	Appropriate maps and sections (with scales)and tabulations of intercepts should be includedfor any significant discovery being reportedThese should include, but not be limited to aplan view of drill hole collar locations andappropriate sectional views.	Refer to Figures in body of text.
Balancedreporting	Where comprehensive reporting of allExploration Results is not practicable,representative reporting of both low and highgrades and/or widths should be practiced toavoid misleading reporting of ExplorationResults.	Mineralisation is determined visually
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 403C1) generated during Sakumpu Exploration's 2015 surveythat returned a multi-channel response at the target. Thistarget was ground checked by ground TEM which gave ananomaly that when modelled showed a SW dipping plate thatincreases in conductance at depth. Base of Till samplingreturned a peak geochemical response on top of thegeophysical anomaly.
Further work	The nature and scale of planned further work(e.g. tests for lateral extensions or depthextensions or large-scale step-out drilling).Diagrams clearly highlighting the areas ofpossible extensions, including the maingeological interpretations and future drillingareas, provided this information is notcommercially sensitive	Additional drilling of the target is presently ongoing testing theVMS style mineralisation possible down dip extension. Boreholepulse EM survey will be undertaken in the next 48 hours.The weather conditions (northern hemisphere spring thaw) willprevent additional diamond drilling of the target until the groundconditions are appropriate (frozen ground)Analytical results and geophysical responses will determine theextent of additional drilling.