SUREFIRE RESOURCES NL — Interim / Quarterly Report 2018

Oct 25, 2018

for the three months ended 30 September 2018

26 October 2018 ASX Announcement

________________________________________________________________________________ SEPT 2018 QUARTERLY ACTIVITIES AND CASHFLOW REPORT

Highlights

Unaly Hill Vanadium

• o 10 RC drill holes for 1258 metres completed on new targets
• o Additional 4km of mineralised magnetic anomaly tested
• o All drill holes intersected vanadiferous magnetite mineralisation
• o Drilling shows mineralisation is open along strike
• o Metallurgical testwork on diamond drill core nearing completion

Kooline Lead/Silver

• o All available historical data collated into a GIS format
• o CSA Global analysis proposes additional new targets areas

During the quarter Surefire ("the Company) has advanced both the exploration drilling and the metallurgical testwork on its Unaly Hill vanadium project and, with the Heads of Agreement re the acquisition of the adjoining Victory Bore vanadium project will significantly add to its vanadium resource base and exploration potential. In addition to this work, the Company commissioned a study by geological consultants CSA Global on the Kooline Lead/silver project area. This study has collated all historical data into a GIS format and provided a preliminary structural framework for new exploration targets.

Unaly Hill Vanadium E57/1068

During the quarter a further drilling program was completed at the Company's Unaly Hill Vanadium Project near Sandstone, in the Murchison Region of WA.

The RC drilling programme follows the diamond drill hole UHDM001 (Figure 2) completed by the Company in July and was designed to test additional magnetic anomalies identified along strike of the Company's previous drilling programme that delineated a substantial vanadium resource. A total

of 10 reverse circulation (RC) drill holes ranging in down-hole depth from 100m to 200m were completed along six traverses covering 4km of strike (Figure 1) for an aggregate of 1,258m.

Figure 1: Unaly Hill Location and 2018 RC Drilling Traverses

The drilling was based on detailed 2D forward modelling of high resolution airborne magnetic data carried out by Southern Geoscience Consultants Pty Ltd (SGC) who were tasked with targeting extensions of the vanadium-titanium-magnetite mineralisation hosted within the Atley Layered Mafic Intrusion. Previous drilling covered approximately 3km of the SW-NE trending mineralisation from the lease's southern boundary and established a JORC Inferred resource of 86Mt @ 0.42% V2O5. (@ 0.3% Cut-off). The new widely-spaced drilling covered an additional 4km of the magnetic anomaly's strike length and all the drill holes intersected a number of vanadiferous magnetite bands of varying down-hole width. The remaining 3km of strike within the lease remain untested.

Figure 2: Diamond drill hole UHDM001

The drilling shows that, in accordance with the aeromagnetic data, the mineralisation at Unaly Hill continues along strike from the previous drilling. All the RC samples have been retrieved from site and are currently at the ALS laboratory in Perth undergoing analysis, the results are expected before the end of October 2018.

The assay results and drill section (Figure 2) were released 13th September 2018 and included a section 50.8m @ 0.55% V2O5, 8.07% TiO2 and 29.88% Fe (containing 9m @ 0.89% V2O5, 12.95% TiO2 and 45.33% Fe)

Metallurgical Testing and Assay

A comprehensive metallurgical test work program is currently progressing under the supervision of METS Engineering of West Perth, a metallurgical consultancy group who are working in conjunction with ALS Metallurgy Pty Ltd (ALS) at their laboratory facility ALS Technical Centre in Wangara, Perth.

The programme is designed to determine several key parameters in the process flow of the vandiferous magnetite's conversion to a vanadium pentoxide concentrate. The HQ diamond drill core obtained from UHDM001 was delivered to ALS in July and work has progressed on the comminution and beneficiation of the ore. The variable comminution grind size work is a timeconsuming process and delayed results to date. However, this has now been completed and the initial Davis Tube results, which will provide more detail on the recovery of the vanadium, are expected to be available in late October 2018.

Geological Setting

The Unaly Hill Vanadium project licence area, E57/1068 lies within the Atley Igneous Complex located approximately 48 km south of Sandstone in the East Murchison Mineral field of Western Australia. The Atley Intrusion is a layered gabbroic body that is elongate in a NNE/SSW orientation and runs along the axis of the regional scale Youanmi Fault, a regionally dominant geological feature. It has a maximum thickness of 4.5 km and there are exposures over a strike length of 17 km. The compositional layers recognized are gabbro, leucogabbro, pyroxenite (completely altered to talc, chlorite and tremolite), anorthosite and magnetite rock. The iron-vanadium-titanium mineralisation is situated within cyclical cumulous layers within the intrusive complex.

The Company has previously established a substantial vanadium resource from drilling 3 kilometres of anomalous magnetic. The mineralisation remains open at depth and along strike.

Kooline Project E08/2372, E08/2373, ELA 08 /2956

High-Grade Lead/Silver

The Kooline Project is centred 55 kilometres south of the Paulsen's goldmine within the Ashburton province of Western Australia. The project area tenements cover a total of 386 km² and includes 48km of contiguously striking licences linking a number of clusters of historic artisanal high-grade lead/silver workings.

During the quarter the Company commissioned a leading geological consultancy CSA Global (Perth) to undertake a review and analysis of the available historical data with a view to establish a structural framework for future exploration. This was driven by the fact that in addition to the highgrade lead and silver mineralisation known from previous artisanal style mining and extensive rock chip sampling, the sampling programmes also consistently showed anomalous copper and gold values.

All the known assay data from previous explorers have been captured in a GIS environment for 5,313 surface samples on, and surrounding, the Kooline Project (Figure 3). They include auger, rock, soil and stream sediment samples.

The samples have not been assayed for a consistent element suite, but most samples have data for Au, Cu, Pb, As, Sb and Zn. The two main previous drill programs on the Kooline Project are a 10-hole reverse circulation program by Athena Resources that tested some of the Kooline Pb-Ag-Cu workings and a rotary air blast (RAB)-aircore program by Fortescue Metals Group in the far north of the project. Although details vary slightly, both drill programs and the surface sample data reveal a common Pb-Au-Sb-As-Ag- (Cu-Bi) element association.

Figure 3: Distribution of surface samples from previous exploration

In addition to the compilation of the available data, CSA:

• Created a regional structural interpretation of the project and its surrounds.
• Assessed surface and drill data for evidence of element associations related to mineralisation and used these element associations to constrain the likely style(s) of mineralisation.
• Synthesised the results of the regional structural interpretation with the exploration data assessment and proposed a mineral system model and defined exploration targets based on that model.

The Company is in the process of analysing the report outcomes and the new target generation and initial work will be concentrated on the available geophysical data in order to more fully delineate the structural controls of the mineralisation.

Vanadium Resources Victory Bore Vanadium Deposit Acquisition – E57/1036

During the quarter Surefire entered into a Heads of Agreement to acquire the Victory Bore vanadium project.

The proposed acquisition will greatly increase the company's vanadium resource base, Exploration licence E57/1036 abuts the northern boundary of Surefire's Unaly Hill project licence E57/1068 and will provide approximately 25km of almost contiguous strike of the vanadium–rich magnetite

mineralisation within the Atley Igneous complex, the majority of which is untested. In conjunction with the Company's Unaly Hill vanadium project the Company will have a combined Inferred Mineral Resource of 237 Mt grading approximately 0.42-44% V2O5 with a contained V2O5 content of 102,900 tonnes making it one of the most substantial vanadium resource holders in Australia

Previous exploration activity conducted within the current tenement boundary has an established Mineral Resource estimate in accordance with JORC Code 2012.

The estimate provided by independent geological consultants CSA Global is shown in Table 1.

Inferred Mineral Resource (October 2011)
Million Tonnes	V2O5 %	Content (Kt) V2O5	Fe %	TiO2 %	SiO2 %
151	0.44	66,440	25.0	6.73	28.6

Table 1

Quest Minerals (ASX.QNL) previously announced this Mineral resource estimate on 29th June 2017

Corporate

Controlled Placement Agreement

During the month of October 2018, the Company entered into a Controlled Placement Agreement (CPA) with Acuity Capital. The CPA provides SRN with up to $2 million of standby equity capital over the coming 26-month period. Importantly, SRN retains full control of all aspects of the placement process: having sole discretion as to whether or not to utilise the CPA, the quantum of issued shares, the minimum issue price of shares and the timing of each placement tranche (if any). There are no requirements on SRN to utilise the CPA and SRN may terminate the CPA at any time, without cost or

penalty. Acuity Capital and the CPA do not place any restrictions at any time on SRN raising capital through other methods. If SRN does decide to utilise the CPA, SRN is able to set a floor price (at its sole discretion) and the final issue price will be calculated as the greater of that floor price set by SRN and a 10% discount to a Volume Weighted Average Price (VWAP) over a period of SRN's choosing (again at the sole discretion of SRN).

As collateral for the CPA, SRN has agreed to place 20m shares from its LR7.1 capacity, at nil consideration to Acuity Capital (Collateral Shares) but may, at any time, cancel the CPA and buy back the Collateral Shares for no consideration (subject to shareholder approval).

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An Appendix 3B regarding the Collateral Shares will follow.

APPENDIX 1

TENEMENT HOLDINGS AT 30 SEPTEMBER 2018

Tenement	Nature of Interest	Project	Equity (%)
E08/2372	Granted	Kooline Lead/Silver – Ashburton Region	100%
E08/2373	Granted	Kooline Lead/Silver – Ashburton Region	100%
ELA08/2956	Application	Kooline Lead/Silver – Ashburton Region	100%
E57/1068	Granted	Unaly Hill – Sandstone Region	100%