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STRIKE RESOURCES LIMITED Capital/Financing Update 2020

Oct 29, 2020

65855_rns_2020-10-29_e6c80cda-c495-4e89-891d-ee112dee58e6.pdf

Capital/Financing Update

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Friday, 30 October 2020 ASX Code: SRK

ASX MARKET ANNOUNCEMENT

Paulsens East Feasibility Study Demonstrates Significant Cashflow Generation and Financial Returns

HIGHLIGHTS

  • Feasibility Study for Paulsens East Iron Ore Project confirms strong Project economics with net cashflow of $167 Million and NPV of $140 Million over initial four-year mine life.
  • 1.5 Mtpa production schedule for 4 years (6.0 Mt total), with an estimated 75% of production as DSO Lump at 62% Fe which attracts premium pricing.
  • Low technical risk conventional mining, crushing and screening and direct transport to bulk loading facility at Port Hedland.
  • Low capital cost of $15.7 Million (including contingency).
  • LOM production underpinned by JORC Ore Reserve of 6.2 Million tonnes at 59.9% Fe, 7.43% SiO2, 3.77% Al2O3 and 0.086% P.
  • Targeting first ore production during the first half of 2021 with the mining approvals process well underway.
  • Offtake and funding discussions well advanced.
  • Mining Proposal, Works Approvals and Project Management Plan advancing to fast-track approvals for site-works commencement.
  • Investigations ongoing for further upside from potential for production of higher grade (63% - 64%) products, extension of mine life and exploitation of surface detrital material.

Strike Resources Limited (ASX:SRK) (Strike) is pleased to report on the results from the Feasibility Study (Study) undertaken for its Paulsens East Iron Ore Project (the Project) located in the Pilbara, Western Australia.

The Study has confirmed the potential for the Project to generate $167 Million in net cashflows (pre-tax) over a four-year life of mine (LOM) at an average Benchmark1 iron ore price of US$100/t (US$115/t declining to US$85/t) for a pre-production capital cost of $15.7 Million.

If a Benchmark iron ore price of US$115/t (approximate to current levels) is sustained over LOM**,** the Project has the potential to generate $279 Million in net cashflows.

Notes:

  • The Probable Ore Reserve that underpins the Study has been prepared by a Competent Person, with a Competent Person's Statement included in this announcement.
  • The Company has concluded that it has a reasonable basis for providing the forward‐looking statements included in this announcement. The detailed reasons for this conclusion are outlined throughout this announcement.

www.strikeresources.com.au

STRIKE RESOURCES LIMITED A.B.N. 94 088 488 724

Level 2, 31 Ventnor Avenue, West Perth, Western Australia 6005 T | (08) 9214 9700 F | (08) 9214 9701 E | [email protected]

1 Benchmark price for 62% iron ore Fines CFR China

Project Economics and Assumptions

The results from the Study together with key assumptions are summarised in the following tables, with further details contained within the Feasibility Study - Summary section and the Appendices to this announcement.

Study Outcome Study Outcome
Benchmark Benchmark
Iron Ore Price Iron Ore Price
Financial Metrics Unit US$115/t2 US$100/t3
Life of Mine Revenue A$M 1,032 906
Operating Net Cashflow A$M 279 167
NPV A$M 227 140
IRR % 223 213

Table 1: Study Financial Metrics (pre-tax)

Operating Metrics Unit Study Outcomes
Production Rate Mtpa 1.5
Average Strip Ratio Waste:Ore 3:1
Initial LOM Years 4
Total Tonnes Processed Mt 6.2
Average C14 Costs US$/t 64.8

Table 2: Study Operating Metrics

Key Assumptions Unit Study InputBenchmarkIron Ore PriceUS$115/t LOM Study InputBenchmarkIron Ore PriceUS$100/t LOM
Benchmark Price US$/t 115 100
Lump to Fines Ratio Lump:Fines 75:25 75:25
Price received – Lump (62% Fe) US$/t 127 112
Price received – Fines (59% Fe) US$/t 103 89
US$/A$ Exchange Rate US$/A$ 0.70 0.70

Table 3: Study Key Assumptions (average over LOM)

An economic model prepared by Strike forecasts an operating net cashflow of $167 Million (pretax) and a net present value (NPV) of $140 Million (pre-tax) over an initial four-year mine life, at an average Benchmark Price of US$100/t over LOM (US$115/t in the first year of production declining to US$85/t in the fourth year).

Estimated pre-production capital costs are approximately $15.7 Million (including contingencies), with an internal rate of return (IRR) of 213%.

An average iron ore price of US$100 per tonne5 (62% Fe Fines, delivered CFR China) (Benchmark Price) has been assumed over the LOM.

If the Benchmark Price is assumed to be at recent levels (US$115/t6) for the LOM, the forecast operating net cashflow is $279 Million and pre-tax NPV is $227 Million over the four year LOM.

Average C1 cash costs free onboard (FOB) across the LOM are expected to be approximately US$64.8 per tonne.

2 Constant over LOM

3 Average over LOM

4 C1 Costs include mining, processing, haulage, port handling, administration and marketing, but excludes royalties, shipping, depreciation and capital charges.

5 The Benchmark Price is assumed to decline from US$115 per tonne in the first full year of production to US$85 per tonne in the fourth year, equating to an average of US$100 per tonne over LOM

6 As at 28 October 2020

The forecast Project financial metrics (NPV, IRR and Operating Net Cashflows) are calculated and shown net of applicable royalties but before deductions for tax. Strike will be subject to Australian corporate tax at an assumed rate of 30% on its taxable income. Any tax payable may potentially be reduced by utilising Strike's carried forward tax losses, which currently totals ~$25 Million7.

Project Location

The Project is located ~10 kilometres from Northern Star Resources Limited's (ASX:NST) Paulsens Gold Mine, ~200 kilometres west of Paraburdoo (where a key 'FIFO' airport is located), and ~600 kilometres by road from Port Hedland (refer Figure 1).

Figure 1: Paulsens East Project Location, West Pilbara

7 Subject to compliance with Australian tax laws

Project JORC Mineral Resource and Ore Reserve

The Project consists of a three-kilometre-long outcropping high-grade hematite ridge, containing a JORC Indicated Mineral Resource of 9.6 Million tonnes at 61.1% Fe, 6.0% SiO2, 3.6% Al2O3, 0.08% P (at a cut-off grade of 58% Fe).8

As part of the completion of the Study, part of the JORC Indicated Mineral Resource has been converted to a maiden JORC Probable Ore Reserve of 6.2 million tonnes at 59.9% Fe, 7.43% SiO2, 3.77% Al2O3 and 0.086% P (at a cut-off grade of 55% Fe).

Figure 2: Paulsens East Hematite Ridge

Project Production Details

Strike plans a 1.5 Million tonnes per annum (Mtpa) production schedule of direct shipping ore (DSO) over a minimum four-year LOM (totalling approximately 6.0 Million tonnes). This initial production target has been determined to facilitate fast track production of lower strip-ratio material at first instance, with the opportunity to expand production once the initial production target is met and is underpinned by the Probable Ore Reserve of 6.2 Million tonnes (within the Indicated Mineral Resource of 9.6 Million tonnes).

An open cut mine is proposed, with an average forecast waste to ore ratio of 3.0 over the first four years of mining. Ore will be crushed and screened to produce DSO Lump and Fines products, with estimated average product Lump grade of 62% Fe and Fines grade of 59% Fe over the LOM. Metallurgical testwork indicates that a 75/25 (or higher) Lump/Fines split can be expected where Lump ore typically attracts a significant price premium compared to Fines. An on-site laboratory will be established for ongoing analysis of ore samples to manage grade control and ensure consistency of product grades.

Processed Lump and Fines products will be trucked from the mine to the Utah Point Multi-User Bulk Handling facility at Port Hedland (Utah Point), predominantly by sealed road, where it will be stockpiled prior to being loaded directly into ocean going vessels (OGV's) for export to customers.

Mining, crushing and screening and haulage operations will be undertaken by specialist contractors with overall supervision and management provided by Strike employed personnel.

Strike is targeting a Project development and execution timetable for first ore production to commence in the first half of calendar 2021.

8 Refer Strike's ASX Announcement dated 4 September 2019: Significant Upgrade of JORC Mineral Resource into Indicated Category at Paulsens East Iron Ore Project

Feasibility Study Development

Strike has a number of highly experienced Iron Ore Executives on its Board and Management Team. The Study has been undertaken internally with assistance and oversight from project delivery and engineering consultancy Engenium, together with contributions from external consultants. Capital and Operating Costs have been predominantly obtained from proposals and quotations from selected experienced industry service providers and contractors, supported by detailed estimates from external consultants.

Strike has a confidence level of +/- 15% in the Project's forecast Capital and Operating Costs.

Project Opportunities

Opportunities identified with the potential to have a materially positive impact on the value of the Project include:

  • Increasing the production rate materially above 1.5 Mtpa, given that Utah Point does not currently have export capacity restraints.
  • Extending the LOM, underpinned by the balance of the existing JORC Indicated Mineral Resource inventory.
  • Producing a higher grade (63 64%) product with Metallurgical testwork currently underway to confirm this potential.
  • Exploration potential based on small hematite conglomerate outcrops along the surface and a drill intersection located 1.6 kilometres along the hematite ridge at the south-eastern corner of the tenement previously identified by Strike9 and more recently taken surface rock-chip samples grading 64.4% - 66.2% Fe identified at multiple locations in the same area.10
  • Exploration potential based on areas of surface detrital material identified north of the hematite ridge, where screening and assay results from a sample showed a highly encouraging product grade of 60% Fe, 6.4% SiO2 and 3.4% Al2O3 with a mass recovery of 83% on crushing to -32mm and simple wet screening at +1mm size (refer Figure 3). 11

The exploration targets (referred to above) are conceptual in nature, there has been insufficient exploration to estimate a JORC Mineral Resource in respect of the same and it is uncertain if further exploration will result in the estimation of a JORC Mineral Resource in this regard.

9 Refer Strike's ASX Announcements dated 4 December 2019: High Grade Results Located 1.6km from 9.6Mt Resource and 5 December 2019: Drilling and Surface Sampling Results at Paulsens East Iron Ore Project

10 Refer Strike's ASX Announcements dated 15 July 2020: High-Grade Rock Chip Samples Confirm Resource Upside Potential at Paulsens East Iron Ore Project

11 Refer Strike's ASX Announcement dated 14 October 2020: Discovery of High Grade Iron Rich Detritals at Surface at Paulsens East

Figure 3 - Paulsens East test pit at eastern end of outcropping hematite ridge with detritals in foreground

Key Project Risks

The key risks identified for the Project include:

  • A significant decline in the iron ore price from current and recent levels (currently the Benchmark iron ore price is approximately US$115/t).
  • A significant strengthening of the Australian currency against the US currency.
  • Delays in obtaining necessary approvals/permits.
  • Maintaining steady state operations at the proposed annualised production rate whilst achieving sustainable high grade products.
  • Realising the forecast level of premium pricing for the Lump product over LOM.
  • Cost escalations for key Project inputs such as fuel, staffing and shipping costs.
  • Shortages in suitable staffing/contractors due to COVID-19 travel restrictions.

Strike Managing Director, William Johnson:

"The completion of the Feasibility Study is another key milestone achieved in moving Paulsens East towards production.

The continued strength to the iron ore price contributes to the robust economics of the Project, which are driven principally by the high-quality nature of the iron ore contained within the deposit and the low life of mine strip ratio.

The Project has the potential to generate very significant cashflows for Strike over an initial four-year mine life with a relatively low capital cost requirement.

Furthermore, the Project has additional upside potential with opportunities identified to potentially improve Fe grades, increase the production rate and extend the mine life".

FEASIBILITY STUDY - SUMMARY

1. Introduction

The Study has been overseen by project delivery and engineering consultancy Engenium, with inputs from Strike internal staff together with external consultants and with proposals and/or quotations provided by experienced industry participants as follows:

Feasibility Study Component Principal Input
Study Management Engenium
Mining Schedule and Harry Warries (MSc – Mine Engineering, FAusIMM),
JORC Probable Ore Reserve Principal, Mining Focus Consultants Pty Ltd
JORC Mineral Resource Philip Jones (BAppSc (Geol), MAIG, MAusIMM)
(Consultant)
Metallurgical Test work ALS Metallurgy Iron Ore Technical Centre
Capital and Operating Costs Engenium and Strike
Civil and Earthworks Engenium and contractors
Mining, crushing and transport Estimates/Quotations received from industry service
costs providers and facility operators
Logistics Strike
Environmental Ecologia Environmental Consultants
Marketing Mark Hancock, Principal, Haven Resources Pty Ltd
Economic Modelling Strike

Table 4: Study Management and Contributors

2. Tenement Status and Location

The Project is beneficially owned by Paulsens East Iron Ore Pty Ltd (ABN 96 643 291 230) (PEIOPL), being a wholly-owned subsidiary of Strike.

The Project's tenements comprise a Mining Lease M 47/1583 and various Miscellaneous Licences (applications pending grant) to allow for the construction of a main access corridor to connect the mine to the Nanutarra Munjina Road and an access corridor and site for a potential mining camp.

Tenement Registered Holder Date Granted Date Expiry Area
Mining Lease Orion Equities 4 September 3 September 2041 381.87 Ha
M 47/1583 Limited 2020 (initial term of 21 years) (~3.82km2)

Table 5: Paulsens East Tenement Details

The registered holder of M 47/1583 and applicant for the Miscellaneous Licences is Orion Equities Limited (ABN 77 000 742 843) (ASX:OEQ) (Orion). The Project's original tenements were acquired by the Strike Group from the Orion Group in 2005 and 2008.12

M 47/1583 (centroid 22° 34' 8" S, 116° 20' 35" E) is located in the Pilbara region of Western Australia, approximately 10 kilometres from the Paulsens Gold Mine (owned by Northern Star Resources Limited (ASX:NST)), approximately 200 kilometres west of Paraburdoo, approximately 233 kilometres by road from the Port of Onslow and approximately 600 kilometres by road from Port Hedland (refer Figure 1).

12 For further background details, refer to Strike's ASX Announcements dated 20 September 2005: Acquisition of Uranium Tenements and 11 August 2008: Acquisition of Outstanding Interests in Berau Coal and Paulsens East Iron Ore Projects.

3. Iron Ore Mineralisation

Paulsens East consists of hematite iron ore mineralisation occurring as a ridge rising to approximately 60 metres above the valley floor and extending for approximately three kilometres West to East (refer Figures 4 and 5).

Figure 4: Satellite image of Paulsens East Ridge

Figure 5: Paulsens East Ridge, facing East

4. JORC Ore Reserve and Mineral Resource Estimates

Table 6 summarises the Paulsens East JORC Indicated Mineral Resource within a 58% Fe lower grade cut-off wireframe. The Indicated Mineral Resource extends from the surface to 75 metres below the deepest drill intersection or the 150 metre RL (reduced level), whichever occurs first.

MineralResourcesCategory Fe%Range MillionTonnes Fe% SiO2% Al2O3% P% S% LOI%
Indicated >58 9.6 61.1 6.0 3.6 0.08 0.01 2.1

Table 6: Paulsens East Mineral Resource estimate using a 58% Fe lower cut-off wireframe.

Of the Indicated Mineral Resource referred to above, approximately 3 Million tonnes of 61% Fe (with 5.9% SiO2 and 3.6% Al2O3) hematite material is estimated to occur above the base of the ridge (as defined by drill hole collars) with minimal overburden.

Table 7 shows the Paulsens East JORC Indicated Mineral Resource for a range of cut-off grades.

MineralResourcesCategory Fe%Range MillionTonnes Fe% SIO2% AL2O3% P% S% LOI%
Indicated >60 6.75 62.05 5.21 3.37 0.08 0.01 1.92
Indicated >59 8.15 61.61 5.56 3.53 0.08 0.01 1.99
Indicated >58 9.62 61.13 5.97 3.64 0.08 0.01 2.13
Indicated >57 10.54 60.82 6.27 3.7 0.09 0.01 2.20
Indicated >56 11.73 60.38 6.86 3.69 0.09 0.01 2.27
Indicated >55 12.50 60.08 7.22 3.67 0.09 0.01 2.35

Table 7: Paulsens East Mineral Resource estimate using a range of lower cut-off wireframes.

Table 8 summarises the JORC Probable Ore Reserve that has been converted from (and within) the JORC Indicated Mineral Resource based on the outcomes of the Study (adopting a cut-off grade of 55% Fe to produce a marketable product):

Ore ReservesCategory Fe% Range Million Tonnes Fe% SiO2% Al2O3% P%
Probable >55 6.2 59.9 7.43 3.77 0.086

Table 8: Paulsens East Mineral Resource estimate using a 58% Fe lower cut-off wireframe.

The Ore Reserve is derived from the Indicated Resource and the Mineral Resources outlined above in Tables 6 and 7 are inclusive of the Ore Reserve.

Further technical details in relation to the above JORC Ore Reserve and Mineral Resource estimates are set out in Appendices A, B and C.

5. Physical Characteristics of the Iron Ore Deposit at Paulsens East

The Paulsens East iron ore deposit comprises three main bands of iron rich hematite conglomerate mappable as continuous bands along its three kilometre strike length. These bands were originally deposited in the Proterozoic and formed by erosion of mineralised bedrock and its subsequent reconstitution. During reconstitution, hematite pebbles were deposited and held together in hematite matrix along land and marine interface such that the high purity heavy hematite conglomerate bands occur interbedded with ferruginous quartzites and subordinate ferruginous clay.

There is a sharp boundary at 58% Fe in the drill holes at 1.0 metre (2006 drilling) and at 0.5 metre sample widths (all subsequent drilling) and as such block modelling and resource estimation are based on a cut-off grade of 58% Fe.

In outcrop, however, the high-grade material (+64% Fe) stands in sharp contrast with low grade intervening siliceous material. The core of the deposit is generally very high grade and it is expected that sampling of blast holes and sharp colour contrast will assist greatly in grade control.

Figure 6: Paulsens East Rock Chip Sample

6. Metallurgical Testwork

ALS Metallurgy Iron Ore Technical Centre (ALS IOTC) in Perth, Western Australia has conducted a series of metallurgical tests for physical properties on bulk composite samples collected from various surface locations across the entire length and width of the Paulsens East deposit in 2019. 13

The composite sample had a head grade of 65.6% Fe, 3.41% SiO2 and 1.44% Al2O3. The composite head grade of the testwork samples was obtained from material sourced from surface mineralisation across the entire strike length of the deposit. The nature of the deposit, being a sharp ridge defined by an outcropping steeply dipping slope face of 30 to 40 metres in height, means that the test samples are likely to be reasonably typical of the physical properties of the initial mined material.

Figure 7 below shows the sharp ridge-like character of the deposit.

Figure 7: The Ridge-form hanging Wall of the Paulsens East Iron Ore Deposit

13 Refer Strike's ASX Announcement dated 10 October 2019: Outstanding Metallurgical Testwork Results at Paulsens East Iron Ore Deposit Indicate 79% Lump Yield with Low Impurities

Specific gravity tests were also completed on twenty separate samples.

Subsequent to the completion of this testwork (the results of which are summarised below in Section 6.1) a Bulk Sample programme was completed from an excavated test-pit on-site during August 2020, from which approximately 3,000 kilogrammes of representative Ore/Waste and transition material was collected and sent to ALS IOTC laboratories for further testwork (refer Figure 8). 14

Figure 8: Paulsens East test pit at eastern end of outcropping hematite ridge

The test pit excavated for the Bulk Sample clearly exposed the multiple bands of high-grade hematite iron ore, which extend to depth and three kilometers east to west along strike (refer Figure 9).

14 Refer Strike's ASX Announcement dated 2 September 2020: Test Pit and Bulk Samples to Advance Offtake Agreements Completed at Paulsens East

Figure 9: High grade hematite iron ore bands extending from top of ridge to depth

6.1. 2019 Test Work Overview

The following results are from 2019 testwork undertaken by ALS IOTC.

Lump and Fines (Stage Crush and Drop Tower)

The stage crush and drop tower test results indicate that 79% of crushed material is likely to be classified as 'Lump' material (> 6.3 mm < 32.5mm in size), which typically attracts a price premium (depending upon market factors at the time of sale) over 'Fines' material (< 6.3 mm) of the same grade.

The testwork also indicates that the Lump material is likely to be approximately 2% Fe higher in grade than that of the Fines material, which will also potentially attract a further price premium for the Lump material.

Assays of the material taken after the drop tower test confirmed that both the Lump and Fines materials are likely to be exceptionally low in deleterious elements such as phosphorous (~0.05%) and sulphur (~0.008%), which can otherwise result in price penalties.

Crush Work Index

The crush work Indices for the samples varied from 27.4 to 6.5, averaging 15.3 kwh/tonne.

Tumble Index

Tumble Index of Lump material varied from 95.6% to 95.9%, averaging 95.8%, an excellent result indicating that there is likely to be minimal degradation of the Lump material during handling and transportation.

Specific Gravity

Specific Gravity (SG) measurements on twenty samples (averaging 65% Fe) returned a consistent result of 4.80. It should be noted that JORC Indicated Mineral Resource estimate is based on an assumed SG of 4.2, taking into account dilution and a low-grade envelope.

Further SG measurements are planned on lower grade material and waste in outcropping areas and at depth in drill holes, for mine planning purposes and to determine the potential for an increase in resource size and a decrease in mining strip ratios.

A summary table of metallurgical testwork results is in Table 19 in Appendix D.

6.2. 2020 Test Work Overview

The current series of testwork programmes being undertaken by ALS IOTC on the material recovered from the Bulk Sample (collected in August 2020) are designed to prepare and analyse indicative ROM primary crusher ore feed samples for ongoing metallurgical testing and beneficiation testwork.

The samples (High Grade Hematite and Waste Ores) have been crushed into Lump and Fines products for ore characterisation and grades/impurity level analyses.

Blended Lump and Fines products constituting a 90:10 blend of High Grade Hematite : Waste ore have been prepared for representation as potential product samples for marketing. The head-grade analyses of these samples are presented Table 18 in Appendix D.

The beneficiation testwork programme will review the physical and metallurgical characterisation of the Lump and Fines products at varying Hematite: Waste ore ratios to determine the optimal final product (Fe) grade versus plant recovery percentages – via varying ore beneficiation methodologies. This testwork will assist with optimising the design of the crushing and screening plant.

The completion of the testwork on the Bulk Sample is still pending as at the date of release of the Study.

7. Mining

Iron mineralisation in the tenement (M 47/1583) crops out as a ridge up to ~60 metres above the valleys on either side. It occurs as continuous bands of iron rich conglomerate with a cumulative width averaging 6.3 metres extending over a strike distance of approximately three kilometres.

It is proposed to mine the deposit using experienced contract mining and drill and blast operators, using conventional diesel-powered tracked excavators and off-road haul trucks. Mining will be open cut and is expected to occur above the water table, so no dewatering will be required.

The proposed Mine Schedule is based on JORC Ore Reserve Model using a Fe cut-off grade of 55% and assuming a 10% ore loss, delivering 6.2 million tonnes of ore to the run of mine (ROM) at an average grade of ~60% Fe over the LOM of 4 years.

Pre-production works are estimated to take approximately four months, which will include:

  • Establishing sufficient operating ramps and initial mining benches that will ensure the required mill feed will be achieved on a sustainable basis;
  • Establishing the mine haul roads from the ridge and pit to the ROM pad and waste dumping areas;
  • Managing the generation of mine waste to build up the Mining Operations Centre (MOC) infrastructure pads, including the associated ROM pad, waste and topsoil stockpiles and South East Waste Dump access road; and
  • Building strategic ROM inventories equivalent to a minimum of four weeks of primary crusher feed, ready for commissioning of the process plant and for long-term operational risk management and supply contingency.

Iron ore mineralisation outcrops on top of the ridge, which protrudes between approximately 40 to 60 metres above its base. It is envisaged that a 'pioneering mining fleet', comprising a small 50 tonne excavator and associated articulated dump trucks (ATD's), together with two drill and blast drill rigs, will be required in the first instance to access the top of the ridge, as well as establishing and mining the first few benches.

Once the pioneering fleet has established three to four mining benches across the upper portion of the ridge surface, the production mining fleet will commence mining. The production fleet will utilise a 105 tonne excavator, with waste and ore transported to waste dumps and the ROM pad respectively using 100 tonne payload dump trucks.

Production is forecast to progressively ramp up to an annualised production rate of 1.5 Mtpa of ore within eight months of the pioneering Mining Fleet commencing work. Mining is expected to transition from day shift only to day and night shifts once pre-production and pioneering are complete. Suitable lighting will be provided in the working areas (including at dump locations) to allow safe operations at night.

Ore will be mined on 5 metre bench heights and 2.5 metre flitches to facilitate accurate grade control.

For the purposes of the Mining Schedule in the Study, the mine has been divided into the 'Main Pit' (including Starter Pit and Final Cutback) and the 'West Pit'. The Main Pit is further divided into five 'Slices'. The Mine Schedule envisages mining commencing at the Main Pit Starter Pit, comprising Slices 1, 2 and 3 as well as the West Pit (refer Figures 10, 11 and 12).

Slice 1, Slice 2 and Slice 3 of the Main Pit Starter Pit are completed in the second half of Year 2. During the same year, the Main Pit transitions into the final cutback of the pit, which effectively mines the pit to its final depth.

Slice 4 of the Main Pit would be commenced in the first quarter of Year 1, when its upper benches are established by the pioneering fleet. At this point in time, Slice 4 would be mined independently from Slice 1, Slice 2 and Slice 3. However, in the second half of Year 2, Slice 4 catches up with the remainder of the Main Pit and is mined together with the rest of the Main Pit Final Cutback.

Figure 10: Mining Schedule Pit Design

In the first year of mining, the waste to ore ratio will average 2.7:1. As mining becomes progressively deeper, the waste to ore ratio will increase but the overall waste to ore ratio over the four-year life of mine is still expected to be relatively low at 3.0:1

The pit slope is estimated vary between 26 degrees to 44.5 degrees along the footwall and 44.5 degrees along the hanging wall (north wall). The average slope along the north wall will reduce to 40 degrees, taking into account a haul road along the north wall (refer Figure 11).

Figure 11: Pit cross section designs

Total waste movement is expected to be approximately 19 Million tonnes over LOM. Waste will be dumped in two dump locations with the main waste dump to be located south east of the pit on the southern side of the ridge (Waste Dump 1) with a second waste dump located north east of the pit (Waste Dump 2) (refer Figure 12). Waste material is predominantly indurated ferruginous siliceous sandstones, quartzite and massive basalt. No sulphide materials have been encountered in exploration drilling and there is very low potential for any acid forming materials to be present in the dumped waste material.

A diversion channel will be constructed to divert an existing creek system around Waste Dump 1 (see Figure 12).

ROM pad, crushing and screening infrastructure as well as truck loading, workshops and fuel depot are proposed to be located on a low-lying dolomite ridge to the east of the pit, outside a 500m blasting exclusion zone and located as close as practicable to the ore body (refer Figure 12).

20201030 SRK ASX Paulsens East Feasibility Study Demonstrates Significant Cashflow Generation and Financial Returns.docx

Figure 12: Study Mine Layout

8. Processing

The Ore Processing Facility involves the primary and secondary crushing of ROM ore and screening over a tri-deck screen to produce separated Lump and Fines stockpiles.

The Primary (jaw) Crusher will be fed by a front-end loader from the ROM pad and will reduce (crush) the ore from -750mm to a P90 of -150mm at a rate of 500 tph (dry) of ROM ore. The Secondary (cone) Crusher will receive 500 tph (dry) of primary crushed ore (at -150mm). The cone crusher settings will be designed to maximise Lump production, in preference to Fines. The ore discharged from the Secondary Crusher will be conveyed to a triple-deck screen, to segregate the Lump from the Fines ore (by size fractioning) and return any/all +32mm material back to the Secondary Crusher for re-processing.

The ore that passes through the top two decks but does not pass through the bottom deck (being -32mm/+6.3mm ore) will be considered a Lump product. The ore would be transported by a purpose-sized conveyor (rated for 500tph (dry) with a nominal operating rate of approximately 375-400 tph (dry)) and telescopic stacker, to the Lump stockpile.

Metallurgical testwork indicates that the Lump to Fines production ratio is likely to be better than 75% Lump to 25% Fines and that the Lump product is likely to be on average 2% higher grade than the Fines product (refer Table 8).

Product Size Proportion LOM Average Grade
Lump > 6.3mm < 32mm > 75% 62% Fe
Fines < 6.3mm < 25% 59% Fe

Table 8: Lump and Fines Specifications.

Head Grade analyses of a 90:10 blend of high-grade hematite:waste from the August 2020 Bulk Sample confirmed that a 62% Lump product low in alumina and a 59% Fines product with a moderate level of alumina can be achieved from the Ore Reserve. 15

An ore loss of 4% has been assumed through the processing circuit.

An on-site laboratory will be established for ongoing analysis of ore samples to manage grade control and ensure consistency of product grades.

Prior to haulage, crushed ore will be conditioned with water to ensure that the moisture content of the ore is suitable for transport, stockpiling at the port and shipping (approximately 4%-5% by weight).

9. Operations Camp

Local accommodation and services will be required to cater for up to 80 persons operating onsite, including Strike personnel and contractors.

Strike is currently negotiating to utilise an existing mining camp at a neighbouring project which is currently on care and maintenance and which has sufficient capacity to accommodate the Project's requirements during construction and on-going operations.

As an alternative (should agreement not be reached on the use of the neighbouring camp facilities), Strike is planning for the construction of a dedicated 80 person mining camp at its own site approximately 3 kilometres south of the mine operations area.

Communications to the mining operations area will be provided by a dedicated high bandwidth microwave service or via satellite. A dedicated radio network will operate at the mine site to enable efficient site communications between operations staff.

The mine site will operate on day and night shifts. Site personnel will be working mostly on a two week on, one week off roster. Staff will travel to and from site via Paraburdoo or Onslow Airports, from where they will be transported by bus to/from site.

The re-commissioning of a local (Wyloo) airstrip (previously used for charter flights to service the Paulsens Gold Mine) is also being considered as an alternative.

An approximately 18 kilometre long all-weather haulage road will be constructed to connect the mine site to the bitumen Nanutarra Road, with a junction to the Nanutarra Munjina Road designed to accommodate the trucking fleet proposed to transport iron ore to Utah Point in Port Hedland.

10. Water

Water for mining operations, ore conditioning, dust suppression will be sourced from local bores to be located within the Mining Lease.

Three water bores have been drilled on the Mining Lease with pump testing demonstrating the potential to provide sufficient water for construction and mining operations. Strike will be applying for a water licence to take water from these bores for mining operations.

15 Refer also Section 6 (Metallurgical Testwork) and Appendix D

11. Civil Works

Early civil and earth works (prior to mining operations) will be required for:

  • Construction of the haulage road from the mine site to Nanutarra Road.
  • Construction of the access road for the proposed mining camp.
  • Levelling and site preparations for mining camp construction.
  • Levelling and site preparations for the Mining Operations Centre (MOC), ROM pad and other mine site facilities/infrastructure.
  • Establishment of water bores (on sites already drilled and pump tested) and water storage facility and fuel farm.
  • Excavation of a creek diversion for Waste Dump 1.
  • Construction of access ramps and haul roads for mine operations.

12. Haulage

Crushed ore will be loaded onto four trailer ('quad') road trains, which will transport crushed Lump and Fines ore from the mine to a receiving stockpile bunker area at the Utah Point Multi-User Bulk Handling facility (Utah Point) at Port Hedland.

Strike has entered into a Memorandum of Understanding (MOU) with Campbell Transport Pty Ltd, as Strike's preferred haulage contractor.16

Contract negotiations are currently ongoing regarding the final commercial terms of the haulage arrangements.

13. Port Facility

Utah Point was opened in 2010 and is operated by the Pilbara Ports Authority (PPA). It was established to provide multi-user access to port facilities and export markets, with an environmental licence to load approximately 24 Million tonnes of bulk material per year.

Utah Point will require no direct capital investment by Strike at the port, as there is already a well-established and operational facility present specifically designed for iron ore.

The PPA currently has stockpile and throughput capacity for the proposed production rate of 1.5 Mtpa for the Project.

The facilities at Utah Point allow for direct access and dumping of ore from Quad road trains into the ore hoppers (or bunkers) at the stockpile area, with no requirement for any intermediary stockpiles or double handling of ore. Ore can be loaded rapidly at a rate in excess of 4,000 wet tonnes per hour directly into the hold of Panamax or Mini-cape vessels, with cargo capacities up to 110,000 tonnes.

Strike is currently in discussions with the PPA regarding the final commercial terms for the use of Utah Point.

14. Shipping

It is envisaged that an average of 12 - 15 shipments of ore per year will be undertaken, each with a cargo of approximately 110,000 tonnes. The shipments will be scheduled to enable the export of the targeted 1.5 Mtpa of production.

16 Refer Strike's ASX Announcement dated: 29 April 2020: MOU Executed for Iron Ore Haulage Services with Campbell Transport for Paulsens East Iron Ore Project

15. Product Marketing and Sales

The current strong iron ore price is being driven primarily by economic stimulus in China and sustained supply constraints out of Brazil, where ongoing tailings dam management issues and the impact of the COVID-19 pandemic on various of Vale's operations have resulted in them continue to deliver at the low end of guidance and well below nameplate capacity.

Strike is of the view that these factors will continue to support high iron ore prices in the near to medium term.

The Lump and Fines products to be produced are expected to be high grade (approximately 62% Fe and 59% Fe respectively over LOM), with some moderate levels of impurities alumina and silica reporting mainly to the Fines.

Lump iron ore typically attracts a significant price premium compared to Fines material of similar grade, which has been reflected in the economic model.

An allowance for potential discounts to benchmark prices due to grade and impurities has also been made, as well as an allowance for marketing and shipping costs.

Discussions are ongoing with multiple potential offtake parties and customers. Whilst Strike has not yet made any firm binding commitments, discussions with several parties are well advanced.

16. Environmental

The initial field work for a reconnaissance flora and vegetation survey and Level 1 fauna and fauna habitat assessment has been completed over the Project area and will be incorporated into the preparation of a Mining Proposal for submission to the Western Australian Department of Mines, Industry Regulation and Safety (DMIRS).

During the field work, evidence of Northern Quoll (Endangered EPBC Act and BC Act) was recorded on motion sensors and cameras. Strike will develop a strategy to minimise and impact the Project may have on the Quoll habitat.

No other significant environmental issues have been identified at this stage.

17. Heritage Survey and Native Title

A Heritage Survey over the main Project area was undertaken with representatives of the Puutu Kunti Kurrama & Pinikuras (PKKP) traditional owners in March 2020, with the main hematite ridge being cleared (approved) by the PKKP for mining. A further Heritage Survey is planned for November 2020 to clear several remaining areas associated with infrastructure (haul road, waste dumps, camp etc.).

On 14 August 2020, Strike entered into a Native Title Mining Agreement (Native Title Agreement) and State Deed (for the grant of a mining lease) with the PKKP Aboriginal Corporation RNTBC (PKKPAC). The PKKPAC holds native title on trust for the benefit of the Puutu Kunti Kurrama and Pinikura People (PKKP) Traditional Owners.17

The Native Title Agreement provides an agreed framework for Strike to undertake its mining activities at the Project in a way that minimises any impacts on Aboriginal Cultural Heritage. The agreement has a strong focus on protection of Aboriginal heritage and includes effective safeguards for the care and protection of the lands and rights of the PKKP peoples.

Strike has also agreed to provide a package of financial and business development related benefits for the PKKP, including an annual payment based on the value of iron ore sales, an annual training and development allowance for PKKP members together with opportunities for PKKP members to contract for the provision of certain support operations related to the Project.

17 Refer Strike's ASX Announcement dated 17 August 2020: Native Title Agreement Paves Way for Iron Ore Development

18. Royalties

A 7.5% Royalty on gross iron ore revenues (excluding shipping costs) to the Western Australian State Government has been factored into the economic model.

Strike also has a liability to pay Orion Equities Limited (ASX:OEQ) a royalty of 2% of gross revenues (exclusive of GST) from any commercial exploitation of any minerals from the Project - this royalty entitlement stems from Strike's acquisition of a portfolio of tenements (including the Paulsens East tenement) from Orion in September 2005.12

19. Capital and Operating Costs

Strike envisages using contract mining, crushing, haulage and transport operators where possible to minimise upfront capital costs.

A breakdown of expected capital and pre-start costs is included in Table 9 below:

Capital/Pre-Start Costs A$M
Mining Administration Centre Setup 1.1
Water Bores, Fuel storage etc. 1.0
Civil Works – MOC 1.4
Haul Road Construction 5.3
Earthworks and Civils 1.9
Mobilisation and Setup 2.4
Mining Pre-Production 1.9
Contingency 0.7
Total 15.7

Table 9: Expected Capital and Pre-Start Costs

The Study envisages that local accommodation and camp services will be available for up to 80 Strike personnel and contractors at a neighbouring mine camp facility, which is currently on care and maintenance.

As an alternative (should agreement with not be reached with the owners of the neighbouring mine camp facilities), Strike is planning for the construction of a dedicated 80 persons mining camp at a site approximately 3 kilometres south of the mine operations area, which would add approximately $2.6 Million in capital cost to the Project.

Operating costs have been estimated based mainly upon proposals and/or quotations received from experienced industry participants, potential contractors and service providers with input from external consultants, with annual and average costs over LOM in Table 10 below:

Financial Metrics Unit Study Outcome
C1 Cost Year 1 US$/t 62.1
C1 Cost Year 2 US$/t 66.4
C1 Cost Year 3 US$/t 61.3
C1 Cost Year 4 US$/t 68.6
Average C1 Costs4 US$/t 64.8

Table10: Expected C1 Costs

20. Economic Modelling

An economic model has been prepared by Strike, using inputs from various sources as summarised in Table 11 below:

Model Input
– Capital and Pre- Start Costs Principal Source
Mine Operations Establishment Engenium / Contractors
Haul Road Construction Engenium / Contractors
Civil and Earth Works Engenium / Contractors
Model Input – Operating Costs Principal Source
Management and Mine Camp Operations Strike / Contractors
Mining and Crushing Costings Strategic Mines (Consultant) / Contractors
Haulage Costs Contractors
Port Operations Port Operator
Shipping Costs Shipping Agent
Iron Ore Pricing Published Benchmark pricing / Strike
/ Haven Resources Pty Ltd (Consultant)
Royalties State Government of Western Australia
Contingency Strike
Model Input – Mining Schedule Principal Source
Mining Schedule Mining Focus Consultants Pty Ltd

Table 11: Sources of Economic Model Inputs

The majority of the cost estimates used in the Study are based upon proposals and/or quotations from suitably experienced industry participants with input from external consultants. Strike believes that it is reasonable to attribute a +/- 15% level of confidence to the estimated capital costs and an overall +/- 15% to the operating costs.

A production rate of approximately 1.5 Mtpa has been selected for the first 4 years, with total production over the LOM of 6.0 Million tonnes. This schedule has been selected taking account of the physical characteristics of the deposit, the capacity and constraints of potential mining and processing contractors.

An average Benchmark Price of US$100 per tonne5 (62% Fe Fines, delivered CFR China) has been assumed over the LOM, an approximately 13% discount to the prevailing iron ore at the time of this Study (approximately US$115/t)7.

It is assumed that during the LOM and using the Benchmark Price as a base, the average Lump price received will be at a premium price to the 62% Benchmark Price taking account of the premium expected for the Lump ore. The average price received for the Fines ore is assumed to be at a discount to the 62% Benchmark Price, taking account of assumed discounts/penalties associated with impurities and grade relative to the 62% Benchmark Price index.

Key inputs used for the economic model are highlighted in Table 12 below:

Key Inputs Units Value
US$/A$ Exchange Rate US$/A$ 0.70
Total Ore Production Mt 6.0
Mine Life Years 4
Annual Ore Production Mtpa 1.5
Lump: Fines Ratio Lump:Fines 75:25
Processing Losses % 4
Mining and Processing Costs A$/t 29
Haulage and Port Costs A$/t 56
Shipping Costs A$/t 13
Benchmark Iron Ore Price 62% Fines CFR China US$/t 100
Lump Premium (per dry metric tonne unit) US$/dmtu 0.20
Price Received – Lump US$/t 112
Price Received – Fines US$/t 89
Discount Rate % 8

Table 12: Economic Model Inputs

20.1. Economic Model Results

The results of the economic modelling based upon the assumptions above are summarised in Table 13 below:

Economic Model - Financial Metrics Unit Study Outcomes
Life of Mine Revenue A$M 906
Operating Net Cash Flow A$M 167
NPV A$M 140
IRR % 213
Capex Payback Period Months 9

Table 13: Economic Model Operating and Financial Metrics (pre-tax)

The forecast Project financial metrics (NPV, IRR and Operating Net Cashflows) are calculated and shown net of applicable royalties but before deductions for tax. Strike will be subject to Australian corporate tax at the assumed rate of 30% on its taxable income. Any tax payable may potentially be reduced by utilising Strike's carried forward tax losses, which currently total ~$25 Million.7

The economic model confirms the Project has the potential to generate an attractive economic return with an operating net cashflow of $167 Million (pre-tax) and NPV of $140 Million (pretax) over a four-year mine life, assuming an average Benchmark Price of US$100 per tonne5 (currently approximately US$115/t6).

If the Benchmark Price is assumed to be at recent levels (US$115/t) for the LOM, with other assumptions unchanged, the forecast pre-tax operating net cashflow increases to $279 Million and NPV increases to $227 Million.

The average C1 Cost (over LOM) is forecast to be US$64.8 per tonne. The Project is expected to be able to continue to generate positive cashflow throughout the four-year mine life if the Benchmark iron ore price remains above approximately US$80/t (currently ~ US$115/t), the assumed premiums and discounts to the Benchmark Price index for product delivered remain and at an assumed constant US$/A$ exchange rate of 0.70.

20.2. Sensitivity

A sensitivity analysis on the financial model highlights that the Project value is most sensitive to the following variables:

  • Iron ore price;
  • US$/A$ exchange rate;
  • Lump Premium price; and
  • Haulage Costs.

For example, a 10% increase in the average Benchmark iron ore price to US$110/t over the LOM would result in a 42% increase in forecast NPV to approximately $199 Million (pre-tax). Conversely, a 10% decline in the average Benchmark iron ore price to US$90/t over LOM would result in the expected NPV for the Project reducing to approximately $81 Million (pre-tax).

Figure 13 below highlights the sensitivities of the Project NPV to changes in various inputs:

Figure 13: Sensitivity Analysis - Benchmark Iron Ore price, exchange rate and operating costs

21. Opportunities

There are clearly defined opportunities that may significantly improve the economic and operational performance of the Project as described in this Study. Such improvements, which will be the focus of ongoing analysis and testing, include the potential for:

  • Increasing the production rate materially above 1.5 Mtpa, given that Utah Point does not currently have export capacity restraints.
  • Extending the LOM, underpinned by the balance of the existing JORC Indicated Mineral Resource inventory.
  • Improvements in operational efficiencies relating to the transport logistics (mine to port to ship).
  • Producing a higher grade (63 64%) product with Metallurgical testwork currently underway to confirm this potential where surface sampling has indicated the extensive occurrences of higher grades of iron (64% – 66% Fe) than those currently assumed as average product grades (59% - 62%) in Strike's economic model.
  • Exploration upside based on small hematite conglomerate outcrops along the surface and a drill intersection located 1.6 kilometres along the hematite ridge at the south-eastern corner of the tenement previously identified by Strike9 and more recently taken surface rock-chip samples grading 64.4% - 66.2% Fe identified at multiple locations in the same area.10
  • Exploration upside based on areas of surface detrital material identified approximately 100 metres north of the hematite ridge, where screening and assay results from a sample showed a highly encouraging product grade of 60% Fe, 6.4% SiO2 and 3.4% Al2O3 with a mass recovery of 83% on crushing to -32mm and simple wet screening at +1mm size (refer Figure 3). 11

The exploration targets (referred to above) are conceptual in nature, there has been insufficient exploration to estimate a JORC Mineral Resource in respect of the same and it is uncertain if further exploration will result in the estimation of a JORC Mineral Resource in this regard.

22. Risks

The key risks identified for the Project include:

  • A significant decline in the iron ore price from current and recent levels (currently the Benchmark iron ore price is approximately US$115/t).
  • A significant strengthening of the Australian currency against the US currency.
  • Delays in obtaining necessary approvals/permits.
  • Maintaining steady state operations at the proposed annualised production rate whilst achieving sustainable high-grade product quality.
  • Realising the forecast level of premium pricing for the Lump product over LOM.
  • Cost escalations for key Project inputs such as fuel, staffing and shipping costs.
  • Shortages in suitable staffing/contractors due to COVID-19 travel restrictions.

23. Approvals

The following key approvals/agreements/permits are still required from the relevant parties/authorities:

  • DMIRS approval of a Mining Proposal (and ancillary matters) to conduct mining operations on Mining Lease M 47/1583.
  • Grant of Miscellaneous Licences, including for construction of the haul road (from Nanutarra Road to mine site).
  • Dangerous Goods Transport and Storage licence(s) for drill and blast activities and fuel storage.
  • DMIRS and Local Shire Works Approvals for mine site construction.
  • DMIRS Native Vegetation Clearing Permits, including for drilling and ROM pad/processing plant footprints.
  • Department of Water and Environmental Regulation (DWER) approvals, including a water and borefield extraction licence/permit and Beds and Banks approval for creek diversion.
  • Main Roads WA approvals, including for the construction of the haul road that intersects with Nanutarra Road and road haulage (including truck configuration and axle loading).
  • Access Agreement with the Pilbara Ports Authority (PPA) for stockpile and loading at Utah Point.
  • Agreement for use of nearby mining camp for worker accommodation.

24. Timing

Strike envisages that with reasonable assumptions concerning the receipt of necessary approvals and funding (in particular the receipt of DMIRS approval of the Mining Proposal during December 2020) first production from the Project could commence in the first half of calendar 2021.

To achieve this goal, Strike is targeting the following key milestones:

Key Activity Target Date for Completion (2020/2021)
DMIRS approval of Mining Proposal December 2020
Commercial Contracts/Agreements December 2020/January 2021
Final Investment Decision December 2020
Financing December 2020
Mobilisation/Construction January 2021
Mine Commissioning May 2021

Table 14: Project Milestones

25. Funding

Strike believes there is a reasonable basis to assume the necessary funding for the Project will be obtained, for the following reasons:

  • (a) Strike has been able to raise funding for its exploration and development over the past 15 years in order to progress its projects. During this time, Strike has successfully raised over $100 Million in equity to fund its various projects. During 2019/2020, Strike raised approximately $2.8 Million equity capital from professional and sophisticated investors, principally to advance the development of the Paulsens East Project.
  • (b) The positive outcomes delivered by the Study provide confidence to the Board in the ability of Strike to fund the development capital through conventional debt and/or equity financing. A mix of debt and equity is the most likely funding model so 100% of the capital expenditure will not need to be borrowed. There will also be a requirement for working capital to fund the mining of the first shipments prior to receipt of payment.

In this regard:

  • (i) Strike is exploring a range of options to fund this working capital requirement including pre-sales of iron ore or vendor finance for the first shipment.
  • (ii) Strike has held discussions with its corporate advisors regarding the ability to secure funding for the Project, as well as with iron ore traders and agents who have indicated that project funding may be available from customers in China as prepayment for supply or as a loan against a guaranteed offtake for the whole or part of the proposed production of iron ore from the Project.

Strike has a strong financing track record and it is the view of the Board that when the project parameters in this Study are met, that funding will be able to be arranged. Notwithstanding this, the normal risks for the raising of capital will apply to Strike, such as the state of equity capital and debt markets, the status of approvals required to advance the Project and the price of iron ore.

  • (c) Strike believes that its funding opportunities will be improved at the completion of:
    • (i) receipt of all necessary permits and approvals; and
    • (ii) commercial contracts secured with equipment providers, service providers and offtake partners.
  • (d) The funding models being considered will depend will likely be conventional debt and equity financing, but may include convertible notes, prepayment for offtake and/or other options for projects of a similar nature.
  • (e) The raising of equity by Strike may be dilutive to existing shareholders, depending on the price at which the then funding is completed.

26. Next Steps

The Study has successfully outlined Strike's preferred mining and processing plans, production rate, capital costs, operating costs and infrastructure requirements to support the Project production plan. It has determined that the Project has strong financial and economic merit, whilst being deemed technically low risk.

In order to advance the Project towards development, the following additional work programmes are required:

  • Final Mine development sequencing and ramp/road prioritisation and development during Pre-Production period.
  • Further metallurgical test work, including confirmation of Lump/Fines ratio following crushing and screening, Lump and Fines final grades and SG, product size range distribution and mineralogy/morphology verification for marketing purposes.
  • Detailed design works for haulage road and other infrastructure and sourcing of suitable sheeting materials.
  • Submission of a Mining Proposal.
  • Development of operational Project Management Plan (PMP).
  • Submissions for various outstanding permits/approval (see Section 23 above).
  • Accelerated engagement and contract negotiations with key contractors (mining, crushing and screening, haulage, stevedoring and civil) and infrastructure providers/stakeholders (Main Roads WA; Pilbara Ports Authority).
  • Negotiations towards securing one or more offtake/sales agreements with potential customers.
  • Identification and recruitment of key operational staff.
  • Development of appropriate systems and processes for Health and Safety, Environmental Management, Heritage Management, Risk Management, Contractor Management and Compliance.

For further background information about Paulsens East, please refer to Strike's previous ASX market announcements as follows:

The Strike ASX market announcements referred to above may be viewed and downloaded from Strike's website: www.strikeresources.com.au or the ASX website: www.asx.com.au under ASX code "SRK".

AUTHORISED FOR RELEASE - FOR FURTHER INFORMATION:

William Johnson T | 0419 047 460

Managing Director E | [email protected]

ABOUT STRIKE RESOURCES LIMITED (ASX:SRK)

Strike Resources is an ASX listed resource company which is developing the Paulsens East Iron Ore Project in Western Australia and owns the high grade Apurimac Magnetite Iron Ore Project in Peru. Strike is also developing a number of battery minerals related projects around the world, including the highly prospective Solaroz Lithium Brine Project in Argentina and the Burke Graphite Project in Queensland.

JORC CODE COMPETENT PERSON'S STATEMENT

  • (a) The information in this announcement that relates to Mineral Resources is based on information compiled by Mr Philip Jones (BAppSc (Geol), MAIG, MAusIMM), who is a Member of the Australian Institute of Mining and Metallurgy (AusIMM) and the Australian Institute of Geoscientists (AIG). Mr Jones is an independent contractor to Strike Resources Limited. Mr Jones has sufficient experience that 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' (the JORC Code). Mr Jones consents to the inclusion in this document of the matters based on this information in the form and context in which it appears.
  • (b) The information in this document that relates to Ore Reserves is based on information compiled by Mr Harry Warries (MSc – Mine Engineering, FAusIMM), who is a Fellow of AusIMM. Mr Warries is the Principal of Mining Focus Consultants Pty Ltd, a Consultant to Strike Resources Limited. Mr Warries has sufficient experience that 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 JORC Code. Mr Warries consents to the inclusion in this document of the matters based on this information in the form and context in which it appears.
  • (c) The information in this document that relates to metallurgical sampling, metallurgical testing and metallurgical results undertaken during 2020 is based on information compiled by Dr Michael J Wort (FAusIMM CP(Met)), who is a Fellow of AusIMM and a Chartered Professional Engineer. Dr Wort is an independent contractor to Strike Resources Limited. The information that relates to Processing and Metallurgy is based on the work done by ALS Metallurgy Iron Ore Technical Centre (ALS IOTC) on a bulk sample collected under the direction of Dr Wort and fairly represents the information compiled by him from the ALS IOTC testwork reports. Dr Wort has sufficient experience that 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 JORC Code. Dr Wort consents to the inclusion in this document of the matters based on this information in the form and context in which it appears.
  • (d) The information in this document that relates to Mineral Resources and related Exploration Results/Exploration Targets (as the case may be, as applicable) is also extracted from the following ASX market announcements made by the Strike Resources Limited on:

The information in the original announcements that relates to these Mineral Resources and related Exploration Results/Exploration Targets (as applicable) is based on, and fairly represents, information and supporting documentation prepared by Mr Philip Jones (BAppSc (Geol), MAIG, MAusIMM), who is a Member of AusIMM and a Member of the Australian Institute of Geoscientists (AIG). Mr Jones is an independent contractor to Strike Resources Limited. Mr Jones has sufficient experience that 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 JORC Code. The Company confirms that it is not aware of any new information or data that materially affects the information included in the original market announcements. The Company confirms that the form and context in which the Competent Person's findings are presented have not been materially modified from the original market announcements.

The information in the original announcement that relates to these metallurgical testwork matters is based on, and fairly represents information and supporting documentation compiled by Mr Philip Jones (BAppSc (Geol), MAIG, MAusIMM), who is a Member of the AusIMM and AIG. Mr Jones is an independent contractor to Strike Resources Limited. The information that relates to Processing and Metallurgy is based on the work done by ALS IOTC on a bulk sample collected under the direction of Mr Jones and fairly represents the information compiled by him from the ALS IOTC testwork reports. Mr Jones has sufficient experience that 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 JORC Code. The Company confirms that it is not aware of any new information or data that materially affects the information included in the original market announcements. The Company confirms that the form and context in which the Competent Person's findings are presented have not been materially modified from the original market announcement.

The information in the original announcements that relate to these Other Exploration Results and related Exploration Targets (as applicable) is based on, and fairly represents, information and supporting documentation prepared by Mr Hem Shanker Madan (Honours and Masters Science degrees in Applied Science), who is a Member of AusIMM. Mr Madan is an independent contractor to Strike Resources Limited and was formerly the Managing Director (September 2005 to March 2010) and Chairman (March 2010 to February 2011) of Strike Resources Limited. Mr Madan has sufficient experience that 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 JORC Code. The Company confirms that it is not aware of any new information or data that materially affects the information included in the original market announcements. The Company confirms that the form and context in which the Competent Person's findings are presented have not been materially modified from the original market announcements.

The Strike ASX market announcements referred to above may be viewed and downloaded from the Company's website: www.strikeresources.com.au or the ASX website: www.asx.com.au under ASX code "SRK".

FORWARD LOOKING STATEMENTS

This document contains "forward-looking statements" and "forward-looking information", including statements and forecasts which include without limitation, expectations regarding future performance, costs, production levels or rates, mineral reserves and resources, the financial position of Strike, industry growth and other trend projections. Often, but not always, forwardlooking information can be identified by the use of words such as "plans", "expects", "is expected", "is expecting", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", or "believes", or variations (including negative variations) of such words and phrases, or state that certain actions, events or results "may", "could", "would", "might", or "will" be taken, occur or be achieved. Such information is based on assumptions and judgements of management regarding future events and results. The purpose of forward-looking information is to provide the audience with information about management's expectations and plans. Readers are cautioned that forward-looking information involves known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Strike and/or its subsidiaries to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information. Such factors include, among others, changes in market conditions, future prices of minerals/commodities, the actual results of current production, development and/or exploration activities, changes in project parameters as plans continue to be refined, variations in grade or recovery rates, plant and/or equipment failure and the possibility of cost overruns.

Forward-looking information and statements are based on the reasonable assumptions, estimates, analysis and opinions of management made in light of its experience and its perception of trends, current conditions and expected developments, as well as other factors that management believes to be relevant and reasonable in the circumstances at the date such statements are made, but which may prove to be incorrect. Strike believes that the assumptions and expectations reflected in such forward-looking statements and information are reasonable. Readers are cautioned that the foregoing list is not exhaustive of all factors and assumptions which may have been used. Strike does not undertake to update any forward-looking information or statements, except in accordance with applicable securities laws.

APPENDIX A

PAULSENS EAST IRON ORE PROJECT – TECHNICAL INFORMATION

Geology

Regional Geology

Paulsens East is located near the centre of the Wyloo Dome on the Wyloo 1:250,000 scale geology sheet within the crystalline basement (refer Figure 14).

Figure 14: Regional geology (Wyloo geology sheet 1:250,000 SH5010)

Pilbara Supergroup

The oldest rocks on the Wyloo 1:250,000 scale geological sheet SH50-10 are exposed in the core of the Wyloo Dome. They are a metamorphosed sequence of mafic volcanics, dolerite, gabbro, and minor chert, and are intruded by the Metawandy Granite. They are generally schistose and are unconformably overlain by rocks of the Fortescue Group.

The dolerite and gabbro occur either as individual sills and dykes or as sheeted-dyke complexes. Large enclaves of mafic schist occur in the Metawandy Granite. The mafic rocks are broadly correlated with the Pilbara Supergroup (Ap) of the northern Pilbara Block.

Within the Pilbara Supergroup is the Mount McGrath Formation, a sequence of conglomerate, arenite, wacke, mudstone, dolomitic mudstone and dolomite. This formation hosts the hematite mineralisation at Paulsens East.

Local Geology and Mineralisation

Figure 15: Paulsens East Geology Map

The Paulsens East tenement includes sediments of the Middle Proterozoic Wyloo Group which contain hematite mineralisation. The Wyloo Group rocks range from the continental Beasley River Quartzite to red beds of the Mt McGrath Formation that have been overlain by the shallow marine Duck Creek Dolomite.

The iron mineralisation found within the tenement occurs as a hematite conglomerate in the Mt McGrath Formation forming a prominent arcuate ridge up to 60 metres high, with cumulative average widths of ~6 metres and approximately 3,000 metres long. The conglomerate consists of hematite pebbles in a hematite rich matrix and cement.

The conglomerate, when it is fully mineralised, is composed of hematite clasts in a hematite matrix. When the conglomerate is "unmineralised" (i.e. below economic cut-off grade) the clasts are composed chert and often Weeli Wolli BIF (a distinctive banded red chert alternating with a siliceous hematite BIF – see clast just by point of pick in (Figure 16).

At least one of the conglomerate beds appears to grade fairly abruptly into a cherty siliceous bed along strike to the west.

A "halfway" mineralised conglomerate was also found at a few locations where the silica in the clasts has been leached out leaving vughs (refer Figure 16).

Figure 16: Close up view of "unmineralised" conglomerate with chert and BIF clasts in hematite matrix as found at Paulsens East

Earlier exploration has been conducted in the nearby areas to look for the source of hematite pebbles without success.

Figure 17: Close up view of hematite conglomerate with hematite matrix as found at Paulsens East

Figure 18: Close up view of "halfway" hematite conglomerate with vughs after chert as found at Paulsens East

Surface mapping and drilling has shown that the hematite conglomerate is usually found in three main beds of variable thickness up to approximately 10 metres, although up to five hematite beds of limited strike length have been identified along the mineralised ridge (refer Figure 19).

Figure 19: Looking east along Paulsens East ridge showing bedding

Mapping along the ridge indicates that to the west of the resource, the conglomerate clasts tend to become cherty and the matrix siliceous, with a consequent drop in Fe grade. The lower conglomerate bed also in part becomes more like a massive chert in sections to the west of the resource along the ridge.

Figure 20: Looking west along Paulsens East ridge showing bedding and massive blocky hematite conglomerate beds

Figure 21: Looking west along Paulsens East ridge showing dip slopes of hematite conglomerate beds

Drilling and Rock Sampling Programmes

Between 2006 and 2008, Strike conducted an extensive rock chip sampling programme across the ridge and two drilling campaigns comprising 66 holes for 3,537 metres of reverse circulation (RC) drilling, to determine the extent and quality of the Paulsens East mineralisation.

Figure 22: Drilling at Paulsens East (North side), 2008

A summary of the drill holes comprising the database used in the Mineral Resource estimate is included in Table 15.

Type IDs Number Total Drilled (m)
RC (2006) PERC001 to PERC008 8 813
RC (2008) PERC009 to PERC064Includes PERC029A & PERC063A 58 2,724
TOTAL 66 3,537

Table 15: Summary of holes used in resource estimation

The drill hole spacing is semi-regular along the north side of the target ridge as shown in Figure 23. The drill hole spacing was controlled by drill access along the ridge. Most holes were drilled between 30 and 60 degrees from horizontal with an approximate south azimuth from sites near the base of the ridge. On most cross sections there is only one drill hole.

Figure 23: Drill hole location plan showing semi-regular spacing of holes

Sample recovery using a face sampling hammer for all the samples collected is reported to be excellent. All samples were split, mostly at 0.5m intervals with some at 1m, using a drill rig mounted rotary cone splitter with the laboratory split bagged in a pre-labelled calico bag. Proper procedures were followed when splitting and bagging the drilling samples prior to being dispatched to Ultra Trace Laboratories for chemical analysis. All drilling and field sampling were continually monitored by a site geologist who also logged the chips for each sample interval to produce geological lithology logs.

Topography

The topography was surveyed using drone photogrammetry between 29th July – 2nd August 2019. Parameters for the survey are as follows:

Collection Drone: DJI Mavic 2 Pro
Nominal Ground Clearance: 60-70m
Drone Flight Speed: 8m/s
Photo interval: 18m
Total Flight Distance: approximately 125-line kilometres
Area Surveyed: 454 Hectares

The Mavic 2 Pro utilises GNSS GPS/Glonass satellite control and for the duration of the survey, 12-18 satellites were visible to the drones. Accuracy in this configuration of +/- 2-4m E-W can be expected, with elevation control not as reliable. Further accuracy can be gained by using Ground Control Points, although none were available for this survey.

Normally, the final DC Levelled Digital Elevation Model (DEM) Grid would be DC levelled against a ground control elevation, to link it into either WGS84 MASL elevation or an Australian Height Datum (AHD). This was not available for the Paulsens East area at the time of processing although may be considered at a later date. An alternative, the DC Levelled DEM Grid was referenced against the Space Shuttle Radar data (SRTM), which has a nominal ground pixel size of 30m and is the default DEM for the Google Earth Application.

All the drill collars were projected to the photogrammetry surface to generate standardised elevations.

Sampling Method and Approach

In the 2006 drilling programme, all the drill samples were dispatched for chemical analysis. In 2008, only samples logged with a high iron content were analysed.

Regular laboratory repeats and approximately 10% field sample duplicates were processed and showed very good correlation (refer Figure 24 and Figure 25).

Strike Field Duplicates (20 samples)

Figure 24: Field duplicate correlations

Laboratory Repeats (25 samples)

Figure 25: Laboratory repeat

The hole collars were surveyed using a hand-held GPS. The accuracy of drill hole collar surveys cannot be fully verified but were found to lie where expected on drill pads shown on the georeferenced images. Considering the large dimensions of the mineralisation, the accuracy of the collar data is sufficiently accurate for an Indicated Mineral Resource estimate.

Bulk Density

A standard bulk density of 4.2 t/m3 was used for this estimate. This bulk density is typical for hematite ore (hematite mineral = 5.26 in Australian Field Geologists' Manual – Monograph 9, AusIMM). The hematite conglomerate beds are low in goethite/ limonite and shale and as such this is reflected in low loss on ignition (LOI). The standard bulk density assumed for the estimation reflects absence of goethite, limonite and shale material commonly found in Hamersley iron ores.

Resource Modelling Methodology

The Paulsens East Mineral Resources were modelled using MineMap IMS® software. A polygon was created on each variably spaced drilling section, approximately perpendicular to the strike of the ridge, using a 58% Fe lower cut off with a minimum drill intersection width of 1.0 m, however a few intersections less than 1.0 m were included to maintain continuity between cross sections. Some intersections of lower than cut-off material was included in the polygons as "included waste" to maintain continuity between higher-grade intersections. The 58% Fe lower cut-off grade was chosen to reflect the iron mineralisation as it produced coherent intersections on the drill holes.

The average drill intersection width is 6.26 metres. Note that since most of the drill holes were designed to intersect the mineralisation approximately orthogonally, the drill intersection width in most drill holes would be only slightly longer than the true width of the mineralisation. Where the azimuth of a hole or the dip of a hole is not orthogonal to the mineralisation the drill intersection width will be longer than the true width of the mineralisation.

Unit 1 Unit 2 Unit 3 Unit 4 Unit 5 Total
Drill Drill Drill Drill Drill Drill
Interval Fe% Interval Fe% Interval Fe% Interval Fe% Interval Fe% Interval Fe%
Count 51 52 41 11 4 54
Minimum 1.00 0.50 0.50 0.50 0.50 1.00
Maximum 6.00 8.50 10.00 2.50 4.00 16.00
Average 2.08 61.26 2.40 62.03 2.05 59.71 1.45 60.90 1.75 62.33 6.26 61.53
Width average 61.77 62.16 61.29 61.61 63.13 61.82

Table 16: Mineralisation width statistics

Since there was usually only one drill hole per cross section, the few sections with multiple holes were interpreted first to get a sense of the dip. Then the rest of the sections were interpreted by linking the main mineralised drill intersection with the crest of the ridge, corresponding with the geological mapping of the mineralisation (refer 26). On most sections there are three iron units separated by shales and quartzites.

Figure 26: Typical cross section (432285E) showing three main mineralised units

The sections were then linked by wireframes to produce a 3D model. The interpreted mineralised zones on each section generally showed good continuity between sections.

The grades were interpolated using Inverse Distance Cubed (ID3) into the model blocks using a 100 m along-strike search ellipse. The parameters used in the modelling are outlined in Table 17.

Parameters
East/West limits 430,350E – 433,350E
North/South limits 7,503,850N - 7,505,150N
Block dimensions (metres) X (strike), Y (across strike), Z
(depth) 5.0m x 5.0m x 2.0m
Algorithm 3D Ellipsoidal
Inverse Distance Weighting Power 2
Upper RL 340.0m RL
Base RL 150.0m RL
Search Ellipse Along strike 100m
Search Ellipse Across strike (to fill model, mineralised bodies
only several metres thick) 100m
Search Ellipse Depth 100m
Rotation Z (dip off vertical) 0o
Rotation Y (strike) 0o
Rotation X (plunge) 0o

Table 17: Modelling parameters used to model the Paulsens East Mineral Resource

APPENDIX B

JORC CODE (2012 EDITION) TABLE 1 – CHECKLIST OF ASSESSMENT AND REPORTING CRITERIA

Section 1 Sampling Techniques and Data

(Criteria in this section apply to all succeeding sections)

Criteria Commentary
Samplingtechniques •The only samples used in the resource estimate are splits of chips collected duringReverse Circulation (RC) drilling.
•Most of the drilling was designed to penetrate the whole width of the mineralised zoneapproximately orthogonally. All the drilling samples were split with a cyclonic splitter.
•All drilling met industry standards and used to obtain usually 0.5 m samples fromwhich 3 kg was pulverised for XRF analysis.
Drillingtechniques •All the drilling used in the resource modelling was RC drilling.
Drill samplerecovery •All the samples were logged by a qualified geologist and visually assessed for samplerecovery. The logging indicates that the sample recoveries were excellent.
•The RC drilling was monitored by the site geologist and when sample recoveries werebecoming a problem, drilling was stopped.
•There are no known relationships between grades and sample recovery.
Logging •All the drill samples were logged by a qualified geologist at a sufficient level to supportresource modelling.
•The logging was both qualitative and quantitative.
•Each hole was logged entirely.
Sub-sampling •The RC sample chips were split using a rig mounted cyclonic splitter.
techniques andsample •The sample collection and sub-sampling was appropriate for the mineralisation beingsampled.
preparation •Field duplicates and laboratory standards were used for Quality Assurance andQuality Control (QAQC).
•To ensure the sampling is unbiased, the whole of the mineralised zone was drilledand drill holes spaced on a regular grid. The RC chips were collected and subsampled in a cyclonic splitter.
•The samples collected and submitted for assay are of an appropriate size for the grainsize of the material being sampled.
Quality of assaydata and •The samples were analysed using XRF by an independent ISO accredited laboratoryfollowing international standard procedures to produce total assays.
laboratory tests •No geophysical results are reported.
•Field duplicates and laboratory standards were used for QAQC.
Verification ofsampling and •No independent verification of the data was made by the Competent Person (for theMineral Resource).
assaying •No twinned holes have been drilled to check quality of original drilling.
•All data collection, data entry, data verification procedures and data storage protocolsare properly documented.
•No adjustments were made to the assay data.
Location of datapoints •The drill hole collars were surveyed using a hand-held GPS. The accuracy of drillhole collar surveys cannot be fully verified but were found to lie where expected ondrill pads shown on the georeferenced images.
•The topography was surveyed using drone photogrammetry by Yoda ConsultingAustralia Pty Ltd between 29 July – 2 August 2019. An accuracy of +/- 2-4 m E-W/NS can be expected, with elevation control not as reliable. The DC Levelled DEM Gridwas referenced against the Space Shuttle Radar data (SRTM), which has a nominalground pixel size of 30m.
Data spacingand distribution •The Competent Person (for the Mineral Resource) believes that the spacing of thedrilling on sections at approximately 50 - 150m spacing along with an accuratetopographic photogrammetry survey with high resolution photos and surface GPSmapping, is sufficient for a low order Indicated resource estimate.
Criteria Commentary
•Since the bulk of the sampling used in the resource estimates, the RC drilling, issampled at fixed 0.5 m intervals, there was no sample compositing.
Orientation ofdata in relationto geologicalstructure •The intersection angle of the drilling with respect to the mineralisation was variable,but generally at approximately 60-80 degrees, making most drill intersections longerthan the true width of the mineralisation. The resource modelling software uses thedata in 3D and so compensates for the wider apparent thicknesses.
Sample security •All the samples submitted for chemical analysis were securely transported from thefield to the laboratory.
Audits or reviews •There have been no audits or reviews of the sampling techniques or data.

Section 2 Reporting of Exploration Results

(Criteria listed in the preceding section also apply to this section)

Criteria Commentary
Mineraltenement andland tenurestatus •The resource lies entirely within Mining Lease M47/1583 (previously, RetentionLicence R47/07) which is registered with Orion Equities Limited (but 100% beneficiallyowned by the Company), which is due to expire in 2041.
Exploration doneby other parties •No other parties have carried out significant iron ore exploration at Paulsens East.
Geology •The iron mineralisation is a conglomerate within the Mount McGrath Formationcomposed of hematite clasts within a hematite matrix.
Drill hole
Information TypeIDs Number Total Drilled (m)
RC (2006)PERC001 to PERC008 8 813
RC (2008)PERC009 to PERC064Includes PERC029A & PERC063A 58 2,724
TOTAL 66 3,537
•Information on the 2006 and 2008 drilling programmes, including the drill-holelocations and collar details, are included in Appendix A and C.
Data aggregationmethods •estimates are tonnage weighted averages All intersections quoted in text are length weighted averages and all resource
•No metal equivalents have been reported.
Relationshipbetweenmineralisationwidths andintercept lengths •The resource modelling was carried out in 3D and all apparent widths accounted forin the estimation method.•Most of the drill holes were designed to intersect the mineralisation approximatelyorthogonally. The drill intersection width in most drill holes would be only slightlylonger than the true width of the mineralisation. Where the azimuth of a hole or thedip of a hole is not orthogonal to the mineralisation the drill intersection width will belonger than the true width of the mineralisation.
Diagrams •All the diagrams necessary to describe the project are included in the body of thisannouncement.
Balancedreporting •The Competent Person (for the Mineral Resource) believes that the reporting of theExploration Results in this document is balanced.
Othersubstantiveexploration data •No other exploration data other than local geology maps were considered in theresource estimate.
Further work •Further in-fill drilling, metallurgical testwork and mining studies have beenrecommended.

Section 3 Estimation and Reporting of Mineral Resources

(Criteria listed in Section 1, and where relevant in Section 2, also apply to this section)

Criteria Commentary
Databaseintegrity •Data used as received but checked for Hole ID and sample interval errors by MineMap© software. Some RC sample assays in database were checked against laboratoryspread sheets and no errors were found.
Site visits •The Competent Person (for the Mineral Resource) visited the site on 17 August 2019and inspected the mineralised outcrop at various points over the whole strike lengthof the deposit and instructed the field technician on where to take the GPS readingsof the hematite outcrop.
Geologicalinterpretation •The mineralisation is a series of conglomerate beds with hematite clasts and matrixseparated by thin shale and quartzite beds.
•The interpretation of the mineralisation and modelling wireframes is based on surfacemapping and drilling.
•The hematite conglomerates are sedimentary.
Dimensions •The outcropping mineralised conglomerate has a strike length of approximately 3 kmand is open at depth.
Estimation andmodellingtechniques •The resource modelling was done with MineMap © software by interpolating gradesinto a digital block model using an Inverse Distance Cubed (ID3) algorithm confinedby wire framing of the >58% Fe mineralised zones with 100m search radii along andacross strike and 100m up and down dip.
•The Competent Person (for the Mineral Resource) considers that these modellingparameters are appropriate for an Indicated resource of the type and style ofmineralisation being modelled.
•It is assumed that the mineralised conglomerate beds can be satisfactorily mined inan open cut to a minimum of 1 m width and beneficiation, if required, will produce aprofitable and marketable product.
•The model cells of 5 m X 5 m 2 m are suitable for representing the style ofmineralisation being modelled.
•No variable correlations were considered.
•The wireframes confining the resource model are based on drill intercept grades>58% and correlated with the outcropping ridge.
•No grades were cut because the Fe grades had no high-grade outliers.
•The resource model was checked and validated visually against the drilling usingcolour coded grades.
Moisture •All tonnes and grades are on a dry basis.
Cut-offparameters •The resource modelling was confined by wire framing of the >58% Fe mineralisedzones.This grade represents an approximate economic cut-off and allowscorrelations of the mineralisation between cross sections.
Mining factors orassumptions •No mining factors were considered for the mineral resource estimate although it wasassumed that if the deposit is mined, it will be mined using the open pit miningmethodology.
Metallurgicalfactors or •Metallurgical tests were performed on representative samples of the mineralisationcollected in 2019.
assumptions •Metallurgical tests are on-going on a bulk sample collected in August 2020.
•Further metallurgical testwork has been scheduled to determine if beneficiation byscreening and/or gravity separation and/or optical recognition can economicallyproduce a higher grade/value marketable product.
Environmentalfactors orassumptions •No environmental factors were considered however the tenement has sufficientsuitable area to accommodate a small mining and processing operation includingprovision for waste disposal.
•There are no obvious especially environmentally sensitive areas in the vicinity of thedeposit although the usual impact studies and government environmental laws andregulations will need to be complied with.
Bulk density •There were no specific gravity measurements taken of the mineralisation for themineral resource model.
•A bulk density of 4.2 (based on the density of hematite mineral = 5.26 in AustralianField Geologists' Manual – Monograph 9 AusIMM) was used. This value is typical ofhigh-grade hematite mineralisation.
Criteria Commentary
•Subsequent bulk density testing has confirmed a bulk density of 5.59 for the highgrade hematite (in situ), supporting the estimation for bulk density of 4.2 used in theMineral Resource modelling.
Classification •The resource was classified by the Competent Person (for the Mineral Resource) asIndicated based on the spacing of the drilling and quality of the data used in theestimation.
•The Competent Person (for the Mineral Resource) believes this classification to beappropriate.
Audits or reviews •No audits or reviews of the Mineral Resource Estimates have been made.
Discussion ofrelativeaccuracy/ •The drill hole spacing is too wide to provide sufficient confidence in the resourceestimate for a higher-level resource category. The quality of the data is consideredto be reasonable for a low order Indicated resource estimate.
confidence •All quoted estimates are global for the deposit.
•No mine production has been recorded at the deposit.

Section 4 Estimation and Reporting of Ore Reserves

(Criteria listed in Section 1, and where relevant in Sections 2 and 3, also apply to this section)

Criteria Commentary
MineralResourceestimate forconversion toOre Reserves •The Paulsens East Mineral Resource as described in Section 3 formed the basis forthe conversion to Ore Reserves.•The Mineral Resources are inclusive of the Ore Reserves.
Site visits •The Competent Person for the Ore Reserves, Mr Harry Warries, has not visited thesite.
•Harry Warries is very familiar with the Pilbara region in general, having worked in thearea and visited many iron ore projects in the same region and with Paulsens Eastbeing a greenfield project no site visit was deemed to be necessary.
Study status •A Feasibility Study was completed by Strike Resources Limited in October 2020.
Cut-offparameters •A cut-off grade of 55% Fe was applied, which will result in the production of amarketable product.
Mining factors orassumptions •The basis of design for the Project is predicated on crushing and screening 1.5Mtpaof crusher feed. The average waste to ore strip ratio is approximately 3.0 : 1 and amaximum total material movement of up to 8Mtpa will be required.
•Mining is undertaken by conventional open pit methods of drill and blast, followed byload and haul, utilising mining equipment comprising 110t diesel hydraulic excavatorsand 90t off-highway dump trucks as the main production fleet. However, initial miningwill be completed by a "pioneering fleet" which will progress across the ridge to 'open'the mine faces/benches. This pioneering fleet consists of a 50t excavator and 50tarticulated dump trucks.
•Detailed pit design work was completed based on pit optimisations using Whittle FourX optimisation software. Only Indicated Mineral Resources were used in the pitoptimisation.
•Pit slope parameters were based on a geotechnical assessment that was based oninformation contained within the resource drilling database, supplemented byadditional data sourced from the GeoVIEW.WA portal, including historical explorationreports and geological mapping. Essentially, five separate domains were identifiedalong the 3 km strike length of the deposit. Overall pit wall slope angles ranging from26º to 45º were modelled.
•Strict grade control procedures will be implemented based on blast hole sampling andmining will be selective, mining ore on 5m benches and 2.5m flitches.
•Some mining dilution has been incorporated as part of the resource estimationprocess and a mining ore loss of 10% was assumed.
•A minimum cutback mining width of 30m is adopted.
•The mine plan includes no Inferred Resources.
•The primary infrastructure required for the project is a variety of infrastructure installedto provide basic supplies of water, power, fuel, communications, buildings and accessroads, including a crushing plant, offices and workshops and other mine site relatedinfrastructure.
Criteria Commentary
•The Project would road haul the product from the mine site stockpiles to the PortHedland Multiuser Utah Point port where it would be stockpiled before beingtransferred onto ships for export.
•The Competent Person considers the proposed mining method to be appropriate,given the nature of the deposit's mineralisation and the scale of the proposedoperations.
Metallurgicalfactors or •Processing is by conventional primary jaw crusher followed by a secondary conecrusher and screening, producing a Lump and Fines product.
assumptions •ALS Metallurgy Iron Ore Technical Centre (ALS IOTC) in Perth, Western Australiaundertook metallurgical test work for the Project based on bulk composite samplescollected from various surface locations across the entire length and width of thePaulsens East Iron Ore deposit.
•The stage crush and drop tower test results indicate that 79% of crushed material islikely to be classified as 'Lump' material (> 6.3 mm < 32.5mm in size), and 21% as'Fines' material (< 6.3 mm).
•The testwork indicated that the Lump material is likely to be approximately 2% Fehigher in grade than that of the Fines material.
•Assays of the material taken after the Drop Tower test confirmed that both the Lumpand Fines materials were likely to be exceptionally low in deleterious elements suchas phosphorous (~0.05%) and sulphur (~0.008%).
•Subsequent analysis of samples taken as part of a Bulk Sample programme in August2020 served to confirm the high-grade nature of the ore as being representative of theorebody as a whole.
•Head Grade analyses of a 90:10 blend of high-grade hematite:waste from the August2020 Bulk Sample confirmed that a 62% Lump product low in alumina and a 59%Fines product with a moderate level of alumina can be achieved from the Ore Reserveconsistent with the assumptions used in the Feasibility Study.
Environmental •A reconnaissance flora and vegetation survey and Level 1 fauna and fauna habitatassessment has been completed over the Project area and will be incorporated intothe preparation of a Mining Proposal for submission to the DMIRS.
•During the field work, evidence of Northern Quoll (Endangered EPBC Act and BC Act)was recorded on motion sensors and cameras. The Company will develop a strategyto minimise and impact the Project may have on the Quoll habitat.
•No other significant environmental issues have been identified.
•Total waste movement is expected to be approximately 19 Million tonnes over LOM.Waste will be dumped in two dump locations with the main waste dump to be locatedsouth east of the pit on the southern side of the ridge (Waste Dump 1) with a secondwaste dump located north east of the pit (Waste Dump 2).Waste material ispredominantly indurated ferruginous siliceous sandstones, quartzite and massivebasalt. No sulphide materials have been encountered in exploration drilling and thereis very low potential for any acid forming materials to be present in the dumped wastematerial.
•A diversion channel will be constructed to divert an existing creek system aroundWaste Dump 1.
Infrastructure •The proposed infrastructure to be built includes low‐grade and waste rock dumps,ROM pads, surface haul roads to processing plant, pumping infrastructure, workshopsand fuel storage/supply facilities, technical and administration facilities, power station,mine accommodation camp facility, explosives storage facilities and associated mineinfrastructure.
•The ore haulage route to Port Hedland, approximately 600 km from the minesite, ismostly along an existing sealed highway. An approximately 18 km haulage road willbe constructed from the mine site to the paved road.
•The ore haulage fleet will consist of high‐capacity road trains. The preferred haulagecontractor has an existing maintenance facility for trucks in Port Hedland.
•Utah Point is operated by the Pilbara Ports Authority (PPA). The PPA has confirmedstockpile and throughput capacity is currently available for the proposed productionrate of 1.5Mtpa for the Project.
•The facilities at Utah Point allow for direct access and dumping of ore from road trainsinto the ore hoppers (or bunkers) at the stockpile area, with no requirement for anyintermediary stockpiles or double handling of ore.
•The Company is currently in discussions with the PPA regarding the final commercialterms for the use of Utah Point.
Criteria Commentary
•All facility and port charges have been appropriately allowed for in the project financialmodel.
•The workforce will be made up of a combination of mostly fly‐in fly‐out (FIFO)employees, contractors and management staff. The Company is currently negotiatingto use a neighbouring mining camp (currently on care and maintenance) but as analternative is planning a dedicated camp facility on site to provide accommodation,meals and recreation facilities for FIFO workers.
•Workers will travel to site mostly via flights to Paraburdoo on commercial carriers,from where they will be transported by bus to site
Costs •The majority of the capital cost estimates used in the Feasibility Study are based uponproposals and/or budget estimates from suitably experienced industry participants orestimates received from external consultants.
•Mining operating costs (drilling, blasting, loading, hauling and ore processing to mineproduct stockpile) were prepared based on pricing estimates received from suitablyqualified and experienced mining contractors.Mining operating costs were alsoreviewed by an independent consultant.
•The main deleterious element to be considered for the Project is Alumina (Al2O3). Aproduct price penalty of 7% of the base product price for the Fines product was appliedin the financial modelling to account for levels of Alumina expected to occur in theFines.
•Iron Ore pricing was based on the Platts 62% Fe index (Benchmark Price) and anaverage Benchmark Price of US$100/dmt over the life of mine CFR China wasadopted in the Feasibility Study.
•A foreign exchange rate of US$ / A$ of 0.70 was adopted for the Feasibility Study.
•A Western Australia government royalty of 7.5% is applicable, as well as third partyroyalties of between 2.5% and 3.0%, dependent on the iron ore price.
•Transport costs were derived from proposals from contractors (haulage) andestimates received from shipping brokers (shipping).
Revenue factors •Iron Ore pricing was based on the Platts 62% Fe index and an iron ore price ofUS$100/dmt, over the life of mine CFR China was adopted as the base case.
•Based on metallurgical test work, a premium was applied to the Lump product, whilsta penalty was applied to the Fines product due mainly to relatively high levels ofAlumina present in the ore which are expected to report mostly to the Fines product.
Marketassessment •There is a transparent quoted and strongly traded market for the sale of iron ore. Themarket for Western Australian iron ore is well established and liquid.
•The iron ore price has performed strongly during 2020 due to strong economicstimulus in China and supply disruption from Brazil.
•High grade iron ore is becoming a scarcer product as global ore reserves are depletedand more 58% Fe deposits are exploited. There is a reasonable expectation that thePaulsens East Lump and Fines products will be well sought after as high‐grade ironproduct with relatively low to levels of impurities.
•For the Feasibility Study, Strike has forecast the Benchmark Price to remain at itscurrent level of approximately $115 per tonne during 2021, declining progressively toUS$85 per tonne in 2024, equating to an average Benchmark iron ore price over the4 year mine life of US$100 per tonne.
Economic •The financial evaluation undertaken as part of the Study indicated a positive netpresent value (NPV) at an 8% discount rate.
•A sensitivity analysis on the financial model highlights that the Project value is mostsensitive to the following factors:-
–Iron ore price
–US$ / A$ exchange rate
–Road haulage cost
•A positive 10% change in the iron ore price results in an approximate 40% increasein NPV.Conversely, a 10% negative change in the iron ore price results in anapproximate 40% decrease in NPV
Social •A Native Title Agreement has been executed with the Traditional Owners of the land(PKKP).
•Access Agreements have been negotiated and executed (or expect to be executed)with a pastoral leaseholder and other tenement holders who are otherwise impactedby the Company's proposed operations.
Criteria Commentary
Other •No material naturally occurring risks have been identified, other than those which aretypically encountered in mining operations in this region of Western Australia. Thearea is subject to occasional significant rainfall events, particularly in summer monthswhen the remains of cyclones can cross the area. Appropriate measures to managestormwater during and immediately after these events are planned to be in place priorto commencement of mining operations.
•No material contracts for sale of product are in place at this point in time.
•Draft agreements are being reviewed/negotiated with Pilbara Ports Authority andother various potential contractors and suppliers.
•A Memorandum of Understanding with Campbell Transport is in place for haulageservices.
•The Paulsens East Iron Ore Project is located entirely within a granted and currentWestern Australian mining lease (M47/1583) over which Strike has secure 100%beneficial interest.
•A number of Miscellaneous Licences have been applied for to permit the developmentof an access road to the mine site from the paved Nanutarra Road, as well as for thedevelopment of a mining village. These Miscellaneous Licences are expected to begranted prior to commencement of mining operations.
•A Mining Proposal for the Project is expected to be submitted to the DMIRS oncerelevant Miscellaneous Licences have been granted.
•Other Government permits/approvals which will be sought include:
-Native Vegetation Clearing Permit
-Dangerous Goods Transport and Storage license(s) – for drill and blast activitiesand fuel storage.
-Works Approvals for Mine site construction.
-Beds and Banks approval for creek diversion.
-Department of Water and Environmental Regulation (DWER) approvals, includinga water and borefield extraction licence/permit.
-Main Roads WA approvals, including for the construction of the haulage road thatintersects with Nanutarra Road and road haulage (including truck configurationand axle loading).
•There are reasonable grounds to expect that these and any future Governmentpermits/approvals will be granted and maintained within the necessary time framesfor successful implementation of the Project.
Classification •Probable Ore Reserves were declared based on the Indicated Mineral Resources.
•The Mineral Reserve estimate appropriately reflects the Competent Person's view ofthe deposit.
Audits or reviews No audits or reviews of Ore Reserve estimates have been undertaken.
Discussion ofrelative •The relative accuracy and confidence of the Ore Reserve estimate is inherent in theOre Reserve Classification.
accuracy/confidence Mining dilution and ore loss should be re-evaluated once production data becomesavailable.

APPENDIX C

DRILL COLLAR DETAILS

EAST NORTH START END Drill
HOLE ID MGA94_Z50 MGA94_Z50 RL DEPTH Azimuth Dip DATE DATE Company
PERC001 430,952 7,504,968 254 82 174 -60 6/12/2006 6/12/2006 Wallis
PERC002 431,382 7,504,939 241 64 167 -60 7/12/2006 7/12/2006 Wallis
PERC003 432,043 7,504,777 242 120 204 -63 7/12/2006 8/12/2006 Wallis
PERC004 432,322 7,504,674 238 148 202 -60 8/12/2006 8/12/2006 Wallis
PERC005 432,771 7,504,357 233 147 212 -60 9/12/2006 9/12/2006 Wallis
PERC006 432,901 7,504,228 250 100 221 -55 9/12/2006 9/12/2006 Wallis
PERC007 433,143 7,504,045 246 94 236 -55 10/12/2006 11/12/2006 Wallis
PERC008 434,149 7,502,753 229 58 160 -60 11/12/2006 11/12/2006 Wallis
PERC009 433,193 7,503,982 249 36 239 -45 31/05/2008 1/06/2008 Rock
PERC010 433,105 7,504,038 256 54 227 -29 1/06/2008 1/06/2008 Rock
PERC011 433,019 7,504,081 250 54 210 -25 2/06/2008 3/06/2008 Rock
PERC012 432,925 7,504,167 250 34.5 248 -23 3/06/2008 3/06/2008 Rock
PERC013 432,885 7,504,213 240 42.5 215 -17 4/06/2008 5/06/2008 Rock
PERC014 432,885 7,504,213 240 30.5 275 -40 5/06/2008 5/06/2008 Rock
PERC015 432,818 7,504,263 244 45.5 238 -19.5 6/06/2008 6/06/2008 Rock
PERC016 432,743 7,504,313 255 48.5 218 -15.5 6/06/2008 6/06/2008 Rock
PERC017 432,691 7,504,343 247 48.5 218 -23 11/06/2008 11/06/2008 Rock
PERC018 432,499 7,504,514 258 48.5 222 -20 11/06/2008 11/06/2008 Rock
PERC019 432,488 7,504,513 256 54.5 228 -40 12/06/2008 12/06/2008 Rock
PERC020 432,349 7,504,576 263 54.5 210 -24 13/06/2008 13/06/2008 Rock
PERC021 431,931 7,504,794 257 54.5 202 -20 14/06/2008 14/06/2008 Rock
PERC022 431,931 7,504,797 256 46.5 202 -40 14/06/2008 15/06/2008 Rock
PERC023 431,728 7,504,878 254 54.5 191 -25 16/06/2008 17/06/2008 Rock
PERC024 431,725 7,504,880 252 54.5 191 -40 17/06/2008 17/06/2008 Rock
PERC025 431,457 7,504,956 255 54.5 165 -25 19/06/2008 19/06/2008 Rock
PERC026 431,295 7,504,948 255 54.5 169 -25 19/06/2008 19/06/2008 Rock
PERC027 431,791 7,504,835 265 54.5 194 -25 23/06/2008 23/06/2008 Rock
PERC028 431,368 7,504,917 263 54.5 160 -25 24/06/2008 24/06/2008 Rock
PERC029 431,374 7,504,915 263 24.5 160 -40 24/06/2008 24/06/2008 Rock
PERC029A 431,374 7,504,915 263 54.5 160 -40 25/06/2008 25/06/2008 Rock
PERC030 431,846 7,504,816 272 54.5 219 -25 25/06/2008 25/06/2008 Rock
PERC031 430,955 7,504,964 240 54.5 142 -25 26/06/2008 26/06/2008 Rock
PERC032 430,861 7,504,942 249 42.5 166 -25 26/06/2008 26/06/2008 Rock
PERC033 430,781 7,504,939 263 48.5 174 -25 26/06/2008 26/06/2008 Rock
PERC034 430,707 7,504,942 260 54.5 170 -25 27/06/2008 27/06/2008 Rock
PERC035 430,630 7,504,931 258 54.5 168 -25 27/06/2008 27/06/2008 Rock
PERC036 431,228 7,504,936 257 54.5 178 -25 27/06/2008 27/06/2008 Rock
PERC037 431,654 7,504,883 265 45 187 -25 28/06/2008 28/06/2008 Rock
PERC038 431,585 7,504,902 258 54.5 176 -25 28/06/2008 28/06/2008 Rock
PERC039 431,523 7,504,918 258 47.5 191 -25 28/06/2008 28/06/2008 Rock
PERC040 431,075 7,504,945 257 54.5 181 -25 29/06/2008 29/06/2008 Rock
PERC041 431,131 7,504,940 256 48.5 183 -25 29/06/2008 29/06/2008 Rock
PERC042 432,036 7,504,739 255 54.5 190 -25 29/06/2008 29/06/2008 Rock
PERC043 432,122 7,504,649 255 46 198 -25 30/06/2008 30/06/2008 Rock
PERC044 432,124 7,504,650 254 35.5 198 -40 30/06/2008 30/06/2008 Rock
PERC045 432,186 7,504,620 257 42.5 201 -25 30/06/2008 30/06/2008 Rock
PERC046 432,284 7,504,580 261 51 190 -25 30/06/2008 30/06/2008 Rock
PERC047 432,380 7,504,524 269 54.5 209 -25 7/01/2008 7/01/2008 Rock
PERC048 432,535 7,504,457 262 54.5 213 -25 7/01/2008 7/01/2008 Rock
PERC049 433,197 7,503,941 233 24.5 350 -25 7/02/2008 7/02/2008 Rock
PERC050 433,190 7,503,848 249 34 190 -25 7/02/2008 7/02/2008 Rock
PERC051 433,130 7,503,952 230 48.5 24 -25 7/04/2008 7/05/2008 Rock
PERC052 433,018 7,504,029 244 38.5 40 -25 7/05/2008 7/05/2008 Rock
PERC053 432,900 7,504,126 256 38.5 40 -25 7/05/2008 7/05/2008 Rock
PERC054 432,803 7,504,206 265 39.5 25 -25 7/05/2008 7/06/2008 Rock
PERC055 432,687 7,504,296 271 27 18 -25 7/06/2008 7/06/2008 Rock
PERC056 432,614 7,504,327 276 54.5 27 -25 7/06/2008 7/07/2008 Rock
PERC057 432,438 7,504,428 282 54.5 15 -25 7/07/2008 7/07/2008 Rock
PERC058 432,279 7,504,474 285 54.5 18 -25 7/07/2008 7/07/2008 Rock
PERC059 432,102 7,504,576 262 54.5 35 -25 7/08/2008 7/08/2008 Rock
PERC060 431,360 7,504,806 287 54.5 350 -25 7/08/2008 7/08/2008 Rock
PERC061 433,312 7,503,931 235 54 196 -60 9/07/2008 9/07/2008 Rock
PERC062 433,297 7,503,881 235 54 194 -60 9/07/2008 9/07/2008 Rock
PERC063 433,245 7,503,964 244 38 195 -45 10/07/2008 10/07/2008 Rock
PERC063A 433,267 7,503,779 237 6 245 -60 10/07/2008 10/07/2008 Rock
PERC064 433,262 7,503,918 240 39 205 -45 10/07/2008 10/07/2008 Rock

APPENDIX D

METALLURGICAL TESTWORK RESULTS

Table 18 below shows a Summary of the Head Grade Analyses (October 2020) on Lump and Fines products constituting a 90:10 blend of High Grade Hematite : Waste ore, from a 3,000 kilogramme Bulk Sample collected from a Test Pit on the Paulsens East deposit at the eastern edge of the outcropping hematite ridge.

90:10 DILUTION - LUMP SAMPLES (AS BLENDED) - HEAD ASSAYS
LUMP SAMPLEID Wt.Distn.(%) FeGrade(%) SiO2Grade(%) Al2O3Grade(%) PGrade(%) SGrade(%)
HIGH GRADE COMPOSITEFERRUGINOUS SCHISTCHERTY HEMATITE 90.07.03.0 65.322.738.0 2.8545.2043.99 1.5411.301.50 0.0940.0630.048 0.0070.0160.005
HEAD ASSAY 62.4 6.04 1.73 0.088 0.006
90:10 DILUTION - FINES SAMPLES (AS BLENDED) - HEAD ASSAYS
LUMP SAMPLEID Wt.Distn. FeGrade SiO2Grade Al2O3Grade PGrade SGrade
HIGH GRADE COMPOSITEFERRUGINOUS SCHISTCHERTY HEMATITE (%)90.07.03.0 (%)63.322.227.4 (%)4.2643.2057.19 (%)2.3613.752.36 (%)0.1320.0780.062 (%)0.0110.0180.006

Table 18: ALS IOTC Head Grade Analyses – Lump:Fines based on 90:10 blend of High Grade Hematite : Waste ore (October 2020)

Table 19 below shows a Summary of the Metallurgical Testwork results (September 2019) on a bulk composite sample of approximately 250 kilogrammes recently collected from various surface locations across the entire length and width of the Paulsens East deposit on the hematite ridge.

Job Number: A20317
Project Strike Resources
Ore Type: Iron Ore
Date: 20/09/2019
Sample Crushing Work Index (kWh/t)
Testwork ID Number ofSpecimen SG(kg/L) Max Min StdDev Average
Bond Impact Crushing Work Index Composite#1 20 4.80 27.4 6.5 6.2 15.3
Bond Abrasion Index
Testwork Sample Index Classification Abrasion Index (Ai)
Bond Abrasion Index Composite#1 1.0003
Sample Mass Distribution Assay Summary
Testwork ID Product (kg) (%) Fe(%) SiO 2(%) AI2O3(%) LOI-1000(%)
Dropping Composite#1 Lump 176.20 79.2 66.0 3.09 1.31 0.82
Fines 46.40 20.8 64.0 4.90 1.86 1.23
Tumble Abrasion Index
Testwork Sample Index Test A Test B Average
Tumble Abrasion Index Composite#1 ADL Tumble Index (Ti) 95.6 95.9 95.8
Abrasion Index (Ai) 2.6 2.6 2.6

Table 19: ALS IOTC Metallurgical Testwork - Summary Results (September 2019)

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