STRIKE RESOURCES LIMITED — Capital/Financing Update 2021

Sep 12, 2021

Monday, 13 September 2021

ASX Code: SRK

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MARKET ANNOUNCEMENT

Paulsens East Iron Ore Mining Operations Optimised

HIGHLIGHTS

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• Detailed review of proposed mining operations recently completed to optimise Paulsens East Project economics through a reduced upfront Project Capex and LOM Opex, as well as earlier generation of cashflow

• Two stage production schedule now proposed:

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• Stage 1 production will focus on surface detrital and low strip ratio material of up to 400,000 tonnes to be shipped during CY 2022 through Utah Point at Port Hedland

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• Stage 2 production proposed at an annualised rate of 1.5 – 2Mtpa proposed to transition from Utah Point to Port of Ashburton in Onslow (reducing trucking distance by ~365kms), with Stage 2 ramp-up expected to be substantially selffunded from Stage 1

• Initial Capex now forecast to be approximately $5M, significantly improving early Project economics

• Average C1 cash costs (FOB) for LOM forecast to be approximately US$63 – 69 per tonne

• First ore production planned for late 2021/early 2022 (subject to FID)

Strike Resources Limited (ASX:SRK) ( Strike ) is pleased to confirm that it has recently completed a review of the proposed production ramp up and export logistics of iron ore from its Paulsens East Iron Ore Mine ( Paulsens East ).

This review was undertaken as part of a pre-Final Investment Decision ( FID ) process by Strike with three principal objectives:

• (1) To decrease the time to ‘first ore on ship’ and review the current mining plan of 1.5 Mtpa to maximise early cashflow;

• (2) To investigate opportunities to create cost efficiencies in the transport of iron ore to Port with a view to maximising Project profitability; and

• (3) Defer significant capital expenditures to be funded where possible from forecast cashflows.

As a result of this review Strike now advises a significantly optimised production strategy as follows:

• (a) An expedited production ramp up with the objective of having first production late 2021/early 2022 with steady state production ramping up during 2022 to an annualised rate of 1.5 Mtpa.

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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

ASX : SRK

E | info@strikeresources.com.au

20210913 SRK ASX Paulsens East Iron Ore Mining Operations Optimised.docx

• (b) Mine ramp up to a full annualised production of 1.5Mtpa – 2.0Mtpa in two stages, the first being the export of up to 400,000 tonnes of surface detrital and low strip ratio material to be shipped during CY 2022 through Utah Point in Port Hedland and the second stage being an annualised production rate of 1.5 - 2Mtpa transitioned from Utah Point to the Port of Ashburton in Onslow to reduce trucking distance from mine to Port.

• (c) Initial capital costs ( Capex ) for Stage 1 production now forecast to be approximately $5M, significantly improving early project economics.

• (d) Total Capex over life of mine ( LOM ) remain at approximately $15M inclusive of $5M required for Stage 1, with remainder projected to be funded from Project cashflows.

• (e) Working capital proposed to be funded from offtake/project finance facility which is in advanced stage of negotiation and is proposed to be entered into once FID is made by the Board of Strike.

• (f) Average C1[1] cash cost (FOB) across LOM forecast to be approximately US$63 – 69 per tonne under revised production methodology where some Capex items have been amortised into operating expenditure ( Opex ) to reduce overall Project Capex.

Production Stage 1

In order to provide a capital efficient ramp up in mining operations, Strike proposes to adopt a staged approach to the commencement of its mining of iron ore at Paulsens East.

Given the outcropping nature of the high grade Paulsens East iron ore ridge, which in parts lends itself to a very low strip ratio together with the presence of high-grade surface detrital iron ore[2] , it is proposed that initial mining operations will focus on these two areas of mineralisation.

Up to 400,000 tonnes of ore will be crushed and screened from these areas to produce DSO Lump and Fines products, with estimated average product Lump grade of ~62% Fe and Fines grade of ~59% Fe. Metallurgical test work indicates that a 75/25 (or higher) Lump/Fines split can be expected where Lump ore typically attracts a price premium compared to Fines.[3]

Mining, crushing and screening and haulage operations will be undertaken by specialist contractors with overall supervision and management provided by Strike’s ‘Owner’s Team’.

The processed Lump and Fines products will be trucked from the mine to the Utah Point MultiUser 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.

As previously announced, Strike is in late-stage negotiations with the Pilbara Port Authority ( PPA ) for the use of Utah Point.

Strike is currently awaiting product approval and finalisation of a multi-user access agreement with the PPA pursuant to which it will seek to export initial mine production from the Project. The advantages of Utah Point are that it is an existing facility that allows for early access, but with an attendant ~600 kilometres haulage cost from mine to Port.

Production under Stage 1 is expected to deliver up to 400,000 tonnes of export during CY 2022, before Strike transitions to Stage 2 exporting through the Port of Ashburton at Onslow, which affords a significantly shorter haulage distance of ~235 kilometres compared with ~600 kilometres to Utah Point.

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

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

3 Refer Strike’s ASX Announcement dated 30 October 2020: Paulsens East Feasibility Study Demonstrates Significant Cashflow Generation and Financial Returns

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20210913 SRK ASX Paulsens East Iron Ore Mining Operations Optimised.docx

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Figure 1: Paulsens East Project and Port Locations

Production Stage 2

Stage 2 production will focus on a ramp up in annual throughput through conventional open pit mining of the ridge of iron ore that contains the current JORC Indicated iron ore 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)[4] to an annualised production rate of 1.5 Mtpa.

Strike is currently targeting the additional capital requirements for the Stage 2 ramp up to be funded from earlier cashflows generated from the Stage 1 production exported through Utah Point.

Stage 2 will also involve a scale up in the contracted mining fleet, expansion of mine site personnel and additional working capital requirements to facilitate the larger annualised production rate.

Strike is also reviewing its current mining plan with a view to bringing forward production during CY 2022 at an annualised rate of 2 Mtpa to maximise early cash flow. These works are ongoing and include both a revision to the current mining plan and to the related transportation infrastructure required to facilitate such expansion. Such review is expected to be finalised in the next quarter.

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

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20210913 SRK ASX Paulsens East Iron Ore Mining Operations Optimised.docx

Stage 2 involves the export of ore through the Port of Ashburton at Onslow which reduces the trucking distance from mine to Port by approximately 365 kilometres.

Port of Ashburton

The Port of Ashburton is a common user facility initially constructed for the Wheatstone Project and was recently transferred by Chevron to the control of the PPA.

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Figure 1: Port of Ashburton - Onslow

The Port of Ashburton is located approximately 12 kilometres southwest from the town of Onslow and is approximately 235 kilometres from Paulsens East.

After consultation with the PPA regarding Strike’s export requirements, the Port of Ashburton has been selected as the preferred Port for Stage 2 Production of iron ore from Paulsens East post Utah Point.

The Port of Ashburton reduces the trucking distance by approximately 365 kilometres from Paulsens East compared with Utah Point, leading to significantly improved Project economics.

PPA has confirmed the use of the Port of Ashburton for export of iron ore by Strike subject to environmental permitting requirements and Port operation approvals being obtained by Strike, which are currently underway.

The utilisation of the Port of Ashburton will be subject to normal commercial terms offered by the PPA for the use of Port facilities.

Loading of ore will be through transhipment operations with Strike expected to shortly finalise the terms of a transhipping contract with a transhipment operator.

Strike also confirms it has lodged a Miscellaneous Licence application for an area close to the Port of Ashburton to be used as a staging area for iron ore stockpiles prior to ship loading at the Port of Ashburton.

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20210913 SRK ASX Paulsens East Iron Ore Mining Operations Optimised.docx

William Johnson, Managing Director:

Strike has revised its mining ramp up plan for Paulsens East, to minimise up-front capital costs and accelerate the commencement of production. This new plan provides for production growth during CY2022 to be potentially funded from early-sales cashflow, reducing the need for dilutive capital raisings. A Final Investment Decision by the Company on the Project is expected shortly.

AUTHORISED FOR RELEASE - FOR FURTHER INFORMATION:

Farooq Khan Executive Chairman T | (08) 9214 9700 E | cosec@strikeresources.com.au

William Johnson Managing Director T | (08) 9214 9700 E | cosec@strikeresources.com.au

ABOUT STRIKE RESOURCES LIMITED (ASX:SRK)

Strike Resources Limited is an ASX listed resource company which is developing the 1.5 Mtpa Paulsens East Iron Ore Project in Western Australia. Strike also owns the high grade Apurimac Iron Ore Project in Peru where it has commenced mining of high-grade surface deposits and entered into an offtake agreement with an international iron-ore trading firm to export the “Apurimac Premium Lump” DSO product of ~65% Fe. Strike has a 43% shareholding in Lithium Energy Limited (ASX:LEL), which was recently spun-out of Strike under a $9M IPO. Lithium Energy is developing battery minerals related assets - the Solaroz Lithium Brine Project in Argentina and the Burke Graphite Project in Queensland.

JORC RESOURCES AND RESERVES

The Paulsens East Iron Ore Project has a JORC Code (2012 Edition) compliant Indicated Mineral Resource:

Mineral Resources		Million
Category	Fe% Cut-OffGrade	Tonnes	Fe%	SIO2%	AL2O3%	P%	S%	LOI%
Indicated	>58	9.6	61.1	6.0	3.6	0.08	0.01	2.1

Part of the JORC Indicated Mineral Resource has been converted to a JORC Probable Ore Reserve:

Ore Reserves		Million
Category	Fe% Cut-OffGrade	Tonnes	Fe%	SIO2%	AL2O3%	P%
Probable	>55	6.2	59.9	7.43	3.77	0.086

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20210913 SRK ASX Paulsens East Iron Ore Mining Operations Optimised.docx

JORC CODE (2012) COMPETENT PERSON STATEMENT

The information in this document that relates to Mineral Resources and related Exploration Results/Exploration Targets (as the case may be, as applicable) in relation to the Paulsens East Iron Ore Project (Pilbara, Western Australia) is extracted from the following ASX market announcements made by Strike Resources Limited dated:

• 30 October 2020: Paulsens East Feasibility Study Demonstrates Significant Cashflow Generation and Financial Returns

• 4 September 2019: Significant Upgrade of JORC Mineral Resource into Indicated Category at Paulsens East Iron Ore Project.

The information in the original announcements that relates to these Mineral Resources and related Exploration Results (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 the Australasian 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 ). 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 (referred to above). 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 (referred to above).

The information in this document that relates to Ore Reserves in relation to the Paulsens East Iron Ore Project (Pilbara, Western Australia) is extracted from the following ASX market announcement made by Strike Resources Limited on:

• 30 October 2020: Paulsens East Feasibility Study Demonstrates Significant Cashflow Generation and Financial Returns

The information in the original announcement that relates to these Ore Reserves is based on and fairly represents information and supporting documentation 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. The Company confirms that it is not aware of any new information or data that materially affects the information included in the original market announcement (referred to above). 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 (referred to above).

The information in this document that relates to metallurgical sampling, metallurgical testing and metallurgical results undertaken during 2019 in relation to the Paulsens East Iron Ore Project (Pilbara, Western Australia) is extracted from the following ASX market announcements made by Strike Resources Limited on:

• 10 October 2019: Outstanding Metallurgical Testwork Results at Paulsens East Iron Ore Deposit Indicate 79% Lump Yield with Low Impurities.

The information in the original announcements that relates to these metallurgical test work 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 Metallurgy Iron Ore Technical Centre ( ALS IOTC ) on samples 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 announcement (referred to above). 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 (referred to above).

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20210913 SRK ASX Paulsens East Iron Ore Mining Operations Optimised.docx

The information in this document that relates to metallurgical sampling, metallurgical testing and metallurgical results undertaken during 2020 in relation to the Paulsens East Iron Ore Project (Pilbara, Western Australia) is extracted from the following ASX market announcement made by Strike Resources Limited on:

• 30 October 2020: Paulsens East Feasibility Study Demonstrates Significant Cashflow Generation and Financial Returns

The information in the original announcement that relates to these metallurgical test work matters is based on and fairly represents information and supporting documentation 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 IOTC on samples 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. The Company confirms that it is not aware of any new information or data that materially affects the information included in the original market announcement (referred to above). 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 (referred to above).

The information in this document that relates to Other Exploration Results and Exploration Targets (as applicable) in relation to the Paulsens East Iron Ore Project (Pilbara, Western Australia) is extracted from the following ASX market announcements made by Strike Resources Limited on:

• 14 October 2020: Discovery of High-Grade Iron Rich Detritals at Surface at Paulsens East

• 15 July 2020: High-Grade Rock Chip Samples Confirm Resource Upside Potential at Paulsens East Iron Ore Project

• 4 December 2019: High Grade Results Located 1.6km from 9.6Mt Resource at Paulsens East

The information in the original announcements that relate to these Other Exploration Results and 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 (referred to above). 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 (referred to above).

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 the Company, industry growth and other trend projections. Often, but not always, forward-looking 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 the Company 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. The Company 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. The Company does not undertake to update any forward-looking information or statements, except in accordance with applicable securities laws.

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