Scoping Study in Q3, page-4

Some info to assist with understanding the imminent Scoping Study: from

Paola Rojas

@paola_rojas

A mineral resource is a deposit that has enough valuable materials, that using reasonable assumptions (normally, industry averages), COULD be mined at a profit.

On the other hand, a mineral reserve is the economically mineable part of a measured or indicated mineral resource (yes, you need a resource first), demonstrated at least by a pre-feasibility study. This study must include adequate information on the 'modifying factors'.

There are 5 different classifications, within these two groups.

Resources can be:
• Inferred, or
• Indicated, or
• Measured

Reserves can be:
• Probable, or
• Proven

Think of them as two symmetrical ladders in a videogame. At any time, you can move down or up within your current ladder, but to move from one to the other you need some specific situations, a 'special power'.

In a natural favorable progression, companies can move forward (which is down one step), by increasing the level of geological knowledge and confidence. This is done mainly by drilling, drilling and yes, you guessed it, more drilling. But other methods also contribute.

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Let's break them further down.

Inferred resources are estimated with limited sampling & there is reasonable but not yet verified assurance of continuity of mineralisation & grade. Cannot be basis of a pre-feasibility or feasibility study, and thus cannot be converted to reserves

An indicated resource is the portion of a resource that was estimated based on reliable and detailed sampling from drill holes that are too widely spaced to confirm, yet close enough for reasonable assurance of continuity & grade.

Measured resources are the part of an estimate with a high level of confidence, based on reliable and detailed sampling from drill holes that are spaced close enough to confirm continuity & grade.

Indicated and measured can be both used as basis of engineering & economic studies

Indicated resources are normally converted to probable mineral reserves and measured resources to proven reserves. In some cases, where the modyfying factors are insufficiently known, measured resources may be converted to probable reserves instead.

Reserves can be reverted back to resources when a significant change in the modifying factors occurs. E.g., increase in costs, ESG issues, losing a license, etc.

This is a dynamic process and can shift more than once.

A range of factors and assumptions are used:
-Metal prices
-Cut-off grade
-Net smelter return (NSR) cut-off
-Capping high assay values (Nugget effect)
-Mine and mill recovery
-Metal equivalents
-Dilution

E.g., if metal prices increase, economics improve and worsen if they fall

All estimates are done by qualified or competent persons. A QP/CP is a geoscientist (geologist or mining engineer) with at least 5 years of relevant experience in exploration or mining, and is a member* in good standing of a professional association such as @TheAusIMM