TALONX RESOURCES LIMITED — Capital/Financing Update 2016

Oct 11, 2016

ASX Code: MTB

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12 October 2016

KIHABE ZINC PROJECT DRILLING PROGRAM COMMENCED

• ~1,200m exploration program at Zinc geochemical anomalies not previously drill tested

• Program to investigate potential to replicate the Kihabe and Nxuu SedEx zinc deposits

• Target 52 anomaly has a strike length of more than double that of Kihabe and Nxuu deposits combined

• Assay results expected November

Drilling has begun at Mount Burgess’ (The Company; ASX:MTB) Kihabe Zinc Project in Botswana (Figure 1).

The program will primarily focus on Target 52 (Figure 2), a geochemical soil anomaly identified 2km SE of the Company’s Nxuu deposit. The geochemical soil results suggest a possible mineralised strike length of more than 5km, which is more than double that of the combined strike lengths of the Kihabe and Nxuu deposits. The Kihabe and Nxuu deposits have a combined Resource of 25 million tonnes @ 3% Zn equivalent grade (2004 JORC Code – see Table 1).

Target 52 has the potential to substantially increase the company’s zinc/lead resources.

The Company has identified six zinc geochemical soil anomalies and a copper/cobalt anomaly within the immediate vicinity of the Kihabe and Nxuu deposits. The total strike length of these anomalies combined is 13km. In addition to Target 52, preparations have been made at several of the other identified anomalies within the licence area, with the anticipation of drill testing these targets in the near future as well.

ABOUT THE COMPANY

Mount Burgess is one of a few ASX stocks positioned to leverage the increasingly strong zinc price.

The Company is entirely focussed on the Kihabe Zinc Project, which has mineralisation occurring from 5m to 175m below surface and, as such, the Kihabe Project could potentially be mined by means of open pit mining methods.

Metallurgical test work has generated zinc recoveries of greater than 90% and zinc and lead concentrates of good marketable grade with few deleterious elements. Test work has also suggested the possibility of producing zinc metal on site via SX/EW.

The Company believes methods employed during historic RC drilling /sampling has resulted in assays under-calling the resource grade (see announcement dated 31/8/16 for detail). With additional investigation and validation, it is believed that the magnitude of the under-call of the grade of the existing Resource will be substantiated and, together with the possibility of material Germanium credits recently identified (see ASX announcement dated 5/5/16), there is the potential to substantially increase the overall Zn equivalent resource grade at the Kihabe and Nxuu deposits.

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Figure 1 : The Kihabe Project (red box) covers 997km[2] and is located in Botswana near the Namibian Border and border crossing of Dobe. The nearest railhead is 337km west. There is a landing strip on the licence area and an international airport at Maun ~250km west. There is an established camp on the licence area.

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Figure 2 : One of the priority geochemical anomalies is Target 52.

Table 1: Resource Statement for the Kihabe and Nxuu deposits. Reported 15/5/13

Deposit	External Cut %	Indicated M Tonnes %	Inferred M Tonnes %	Total M Tonnes %
Kihabe	1.5%	11.4 @ 2.90%	3.0 @ 2.60%	14.4 @ 2.84%
Nxuu	0.3%	-	10.9 @ 3.20%	10.9 @ 3.20%
11.4 @ 2.90% 13.9 @ 3.07% 25.3 @ 3.00% Kihabe resource calculated on metal prices as at 17 July 2008: Zn US$1,810/t Pb US$1,955/t Ag US$18.75/oz Grades applied: Zn 1.8% Pb 0.8% Ag 7.7 g/t Nxuu resource calculated on zinc & lead par value Grades applied: Zn 1.8% Pb 1.4%		11.4 @ 2.90%	13.9 @ 3.07%	25.3 @ 3.00%

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This information was prepared and first disclosed under the JORC Code 2004. It has not been updated since to comply with the JORC Code 2012 on the basis that the information has not materially changed since it was last reported.

KIHABE-NXUU METAL RECOVERIES

Independent metallurgical testwork has confirmed the metal recoveries shown in the table below. Accordingly, the Company believes these recoveries are achievable. Zinc recovered from acid leaching oxide zones will enable Zn metal to be recovered on site from electro-winning.

	DEPOSIT	Zone	Time	Zinc	Lead	Silver
	Kihabe
	Oxide Zone
	Acid leaching @40oC 30 kg/t acid	Oxide *	24 hrs	96.9%	91.9%	n/a
	Sulphide Zone
	Rougher flot	Sulphide	90 seconds	91.9%	84.8%	94%
		Sulphide	15.5 mins	93.8%	88.1%	96.4%
	Nxuu
	All Oxide
	Acid leaching @25OC 30 kg/t acid	Oxide *	12 hrs	93%	93%	n/a

* Note: Zn mineralisation in the oxidised zones is hosted within Smithsonite and Baileychlore and independent test work has confirmed both of these are amenable to acid leaching.

Forward Looking Statement:

This presentation contains forward looking statements in respect of the projects being reported on by the Company. Forward looking statements are based on beliefs, opinions, assessments and estimates based on facts and information available to management and/or professional consultants at the time they are formed or made and are, in the opinion of management and/or consultants, applied as reasonably and responsibly as possible as at the time that they are applied.

Any statements in respect of Ore Reserves, Mineral Resources and zones of mineralisation may also be deemed to be forward looking statements in that they contain estimates that the Company believes have been based on reasonable assumptions with respect to the mineralisation that has been found thus far. Exploration targets are conceptual in nature and are formed from projection of the known resource dimensions along strike. The quantity and grade of an exploration target is insufficient to define a Mineral Resource. Forward looking statements are not statements of historical fact, they are based on reasonable projections and calculations, the ultimate results or outcomes of which may differ materially from those described or incorporated in the forward looking statements. Such differences or changes in circumstances to those described or incorporated in the forward looking statements may arise as a consequence of the variety of risks, uncertainties and other factors relative to the exploration and mining industry and the particular properties in which the Company has an interest.

Such risks, uncertainties and other factors could include but would not necessarily be limited to fluctuations in metals and minerals prices, fluctuations in rates of exchange, changes in government policy and political instability in the countries in which the Company operates.

Competent Persons Statement:

The information in the resource statement that relates to the Kihabe Resource is compiled by Byron Dumpleton, B.Sc., a member of the Australasian Institute of Geoscientists. The information that relates to the Nxuu Resource is compiled by Mr Ben Mosigi, M.Sc., (Leicester University – UK), B.Sc., (University of New Brunswick – Canada), Diploma Mining Tech (Haileybury School of Mines – Canada), a member of the Geological Society of South Africa.

Mr Dumpleton is an independent qualified person and Mr Mosigi was a Technical Director of the Company during the period in which the resource was calculated. Both Mr Dumpleton and Mr Mosigi have sufficient experience relevant to the style of mineralisation under consideration and to the activity to which they have undertaken to qualify as a Competent Person as defined in the 2004 Edition of the “Australasian Code of Reporting of Mineral Resources and Ore Reserves”. Both Mr Dumpleton and Mr Mosigi consent to the inclusion in this report of the matters based on the information in the form and context in which it appears.

The information was prepared and first disclosed under the JORC Code 2004. It has not been updated since to comply with the JORC Code 2012 on the basis that the information has not materially changed since it was last reported.