LUNNON METALS LIMITED — Capital/Financing Update 2021

==> picture [139 x 840] intentionally omitted <==

----- Start of picture text -----

LUNNON METALS LIMITED
ABN: 82 600 008 848
BOARD/MANAGEMENT
Mr Liam Twigger
NON-EXECUTIVE CHAIRPERSON
Mr Ian Junk
NON-EXECUTIVE DIRECTOR
Mr Ashley McDonald
NON-EXECUTIVE DIRECTOR
Mr Edmund Ainscough
MANAGING DIRECTOR
Mr Aaron Wehrle
EXPLORATION &
GEOLOGY MANAGER
OFFICE
Suite 5/11 Ventnor Avenue
WEST PERTH WA 6005
POSTAL ADDRESS
PO BOX 470
WEST PERTH WA 6872
CONTACT DETAILS
+61 8 9226 0887
[email protected]
lunnonmetals.com.au
SHARE REGISTRY
Automic Group
ASX CODE: LM8
----- End of picture text -----

==> picture [204 x 75] intentionally omitted <==

MORE NICKEL AT EAST COOEE HANGING-WALL

19th October 2021

HIGHLIGHTS

• Hanging-wall surfaces return further high grade nickel

• Significant results include 1.0m @ 3.15% Ni and 2.0m @ 2.44% Ni

• DHTEM results indicate key high grade trend

• Mineralised nickel sulphide system emerging adjacent to existing infrastructure

Lunnon Metals Limited ( ASX: LM8 ) (the “ Company ” or “ Lunnon Metals ”) is pleased to report the remaining results from the Company’s East Cooee Hanging-wall (“ H/W ”) prospect at the Kambalda Nickel Project (“ KNP ”). Please refer to Figure 1 for the location of the East Cooee H/W prospect at KNP and the ASX announcement dated 1[st] October 2021 for previous results.

EAST COOEE H/W

Results from the three remaining RC holes from this initial programme have now been received with the hanging-wall surfaces once more recording significant results in two holes as follows:

ECO21RC_009

• 4.0 metres (3.9 mTW) @ 0.89% Ni from 125 metres including:

• 1.0 metre @ 1.39% Ni from 126 metres; and

• 1.0 metre (1.0 mTW) @ 3.15% from 138 metres.

ECO21RC_010

• 2.0 metres (1.9 mTW) @ 2.44% Ni from 174 metres.

Down Hole Transient Electro-Magnetic survey (“DHTEM”) results were also received for the programme. Anomalous conductors were recorded in surveys of each of the four holes ECO21RC_007 through 010 supporting the high grade assays received. The survey results also indicate the orientation of a higher grade trend aligned with nickel intercepts of greater than 5.0%m Ni (i.e. grade x intercept width); this trend is now recorded over an area at least 400m by 80m when historical WMC drilling is included.

Commenting on these results Managing Director, Ed Ainscough said:

"The East Cooee H/W prospect is shaping up as a potential significant contributor to our growth plans. These results confirm a higher grade trend is present and supported by the DHTEM survey results. Planning of both infill RC drilling on the higher grade trend followed by diamond holes for metallurgical purposes is underway. Importantly, this area is right next door to the East Cooee Trough and close to an existing open pit for a possible future access point, both strong reasons to advance this prospect as quickly as possible."

P a g e | 1

==> picture [204 x 75] intentionally omitted <==

==> picture [502 x 280] intentionally omitted <==

Figure 1: Plan view of the KNP illustrating the project boundary, simplified footprint of komatiite rocks at surface and location of the East Cooee H/W and East Trough relative to the existing JORC 2012 Mineral Resources projected to surface.

OPPORTUNITY ASSESSMENT

Figure 2 below represents a plan view of the recent Lunnon Metals drilling together with the historical WMC drilling. The location of this emerging higher grade trend is illustrated relative to the nearby West Idough Open Pit (mined for gold by Gold Fields Ltd).

As a high ranking target selected for first assessment by RC drilling post the Company’s recent Initial Public Offering (“IPO”), the East Cooee area has confirmed its priority status with the following results:

• High grade nickel sulphide : confirmation of historical WMC nickel sulphide drill intercepts, validating target selection by Lunnon Metals;

• Shallow : approximately 100 - 150m below surface to first hanging-wall nickel mineralised surface;

• Close to infrastructure : approximately 350 – 400m from historical, 35 – 65m deep, gold open pit offering nearby future bedrock access point; and

• Multiple mineralised surfaces : RC drilling has recorded at least two hanging-wall surfaces on the East Cooee-H/W prospect which itself is only approximately 300 – 400m from the Company’s first high grade sulphide intercept of 2.0m @ 5.07% Ni on the East Trough prospect[1] .

1 Refer to ASX announcement dated 28th September 2021 “East Trough returns 2.0m @ 5.07% Ni”

P a g e | 2

==> picture [204 x 75] intentionally omitted <==

==> picture [497 x 382] intentionally omitted <==

Figure 2: Plan view of Lunnon Metals and historical WMC drilling at East Cooee-H/W coloured by %mNi values: see Annexure 1.b. for numbering identifying WMC drilling (^for details of previously announced results, see ASX announcements dated 28 September and 1 October 2021)

DOWN HOLE TRANSIENT ELECTRO-MAGNETIC SURVEYS (“DHTEM”)

All 6 RC holes completed (ECO21RC_006 through 011) were surveyed by the DHTEM method. The survey results indicate that the high grade intercepts recorded in Lunnon Metals’ recent drilling are generally supported by zones of high conductive response. The conductive plates modelled are illustrated in plan view in Figure 3 below (green) projected over the mineralised nickel shoots in red.

The exact orientation and dimension of each of the conductive plates modelled is being reviewed against the interpreted geology. The geophysical consultants recommend that individual tailored surface loops may be required to better survey and model the East Trough and East Cooee-H/W targets separately. The results received to date were generated from a single surface loop designed to cover both target areas.

The overall high grade trend of the modelled plates, trending 290[o] , parallels both the orientation of the adjacent East Trough (approximately 300m to the west) and also the overall trend of the main Foster Mine channel, on the western limb of the Cooee Anticline. As such, it is interpreted that the trend reflects the direction of the komatiite flow, the interpreted source of the prospective higher grade nickel zones.

P a g e | 3

==> picture [204 x 75] intentionally omitted <==

==> picture [496 x 327] intentionally omitted <==

Figure 3: Plan View of East Cooee – H/W – showing DHTEM plates (green), drill holes - magenta (main lower surface)/ orange (upper) with footwall basalt wireframe (yellow mesh) and mineralised surfaces (red).

ANALYSIS & INTERPRETATION

Along with the results reported on 28[th] September 2021 for the adjacent East Trough prospect and 1[st] October 2021 for the first three RC holes at the East Cooee H/W, these programmes have confirmed multiple nickel sulphide mineralised positions which are both adjacent to each other and relatively shallow. These nickel mineralised surfaces sit outside the Company’s current Mineral Resource and offer an important second centre of potential resource growth in addition to the Foster Mine.

As previously reported these H/W mineralised surfaces:

• Sit approximately between 30m and 60m above the komatiite-basalt contact;

• Typically comprise stringer to disseminated nickel sulphides but can include zones of massive nickel sulphides; and

• Now have drill intersection points on a pattern allowing consideration to be given to estimating an initial Mineral Resource.

These latest RC hole results and the programme of DHTEM surveys indicate the following:

• High grade components were again present within lower grade nickel mineralised envelopes;

• The trend of the modelled DHTEM plates reflecting the high grade extends over a minimum distance of 160m (plunge) by 50m (wide);

P a g e | 4

==> picture [204 x 75] intentionally omitted <==

• ECO21RC_010 recorded 2.0m @ 2.44% Ni approximately 24.0m below an interval of 2.0m @ 0.66% Ni. The higher grade zone was deeper than interpreted but was supported by the conductive plate modelled in the DHTEM survey for this hole and may link with the higher grade zone previously reported in ECO21RC_007 (1.0m @ 7.44% Ni);

• ECO21RC_006 (previously reported 1.0m @ 0.64% Ni and 1.0m @ 0.81% Ni) and ECO21RC_011 (no significant assays) intersected the targeted surface approximately 50m to the west of the high grade trend and thus appear to constrain it in this direction.

Figures 4 and 5 below illustrate cross sectional views of the drill programme.

==> picture [495 x 336] intentionally omitted <==

Figure 4: Section 6,531,200mN through East Cooee – H/W – drill holes

P a g e | 5

==> picture [204 x 75] intentionally omitted <==

==> picture [497 x 338] intentionally omitted <==

Figure 5: Section 6,531,160mN through East Cooee – H/W – drill holes

EXPLORATION TARGET

The East Cooee area is hosted on the eastern limb of the folded prospective nickel belt at KNP and is rapidly being defined as a mineralised nickel system with the potential to complement the Company’s existing Mineral Resource of 39,000 tonnes of nickel at the Foster Mine (located 2.5km to the west).

The East Cooee H/W prospect formed part of the East Cooee Exploration Target[2] reported in the Company’s Prospectus. The combined tonnage and grade potential of the Exploration Target was estimated to be in the range of 500kt to 750kt with an average grade of 1.25% to 2.5% nickel. The East Cooee H/W surfaces formed the basis of the lower limits of this estimate. Lunnon Metals highlights that the potential quantity and grade of the Exploration Target is conceptual in nature, that prior to this programme of first phase RC drilling of 6 holes, there had been insufficient exploration to estimate a Mineral Resource and it was uncertain if further exploration would result in the estimation of a Mineral Resource.

This programme of RC drilling was therefore a key part of the Company’s proposed exploration activities designed to test the validity of the Exploration Target as required under the JORC Code, 2012 Edition.

2 Please refer to the Competent Person’s Statement & Compliance section appended to this announcement for full details of the basis of the Exploration Target.

P a g e | 6

==> picture [204 x 75] intentionally omitted <==

NEXT STEPS

Defining the orientation of these higher grade zones, indicated by both the assay results and the DHTEM surveys, is now a priority. The opportunity to also extend these zones in the down-plunge direction where the previous drilling does not constrain them, is also present.

Infill RC drilling targeting the conductive plates modelled from the DHTEM surveys will now be planned which, if successful, will be at a spacing to support a maiden Mineral Resource estimate for East Cooee-H/W prospect.

Diamond drilling is also planned, once the RC infill is complete, to both target the high grade trend, provide representative samples for metallurgical testing and also structural information to assist in modelling the high grade zones.

UPDATE ON OTHER EAST COOEE TARGETS

EAST TROUGH DHTEM

As recently reported, DHTEM surveying of ECO21RC_005 failed to reach target depth (289m down hole) for the reported 2.0m @ 5.07% Ni due to an obstruction in the PVC casing. Inspections have since determined that the PVC casing cannot be removed and the Company has been advised not to attempt to drill through the casing that remains. Consequently, the Company has completed a diamond hole designed to provide a reliable DHTEM platform to survey for proximal nickel mineralisation. The hole was drilled an additional 50m into the footwall of the komatiite-basalt contact (i.e. a target end of hole depth of approximately 360m) to ensure the best possible position for the subsequent DHTEM survey.

WEST TROUGH

Two exploratory RC holes were drilled into shallower areas of the conceptual West Trough up-plunge position, aiming to test both for the presence of nickel mineralisation and allow for DHTEM survey of the surrounding area. Neither ECO21RC_004 or ECO21RC_012 recorded any significant nickel assays and whilst the deeper of the two holes into the target recorded subtle off-hole responses in its DHTEM survey, they are not considered significant.

Additional targeting exercises are required to further explore the West Trough concept however in the interim, whilst the West Trough remains prospective at depth, the adjacent East Trough and East Cooee-H/W prospects will remain the priority in this area.

This announcement has been approved for release by the Board of Lunnon Metals Ltd.

Edmund Ainscough Managing Director Phone: +61 8 9226 0887 Email: [email protected]

P a g e | 7

==> picture [147 x 54] intentionally omitted <==

Annexure 1a: 2021 East Cooee – Drill Hole Collar Table – Lunnon Metals Drilling

^For current drilling, as pegged coordinates, final survey pick up of collar positions to occur on a campaign basis in the near future.

Annexure 1b: East Cooee Area– Drill Hole Collar Table – historical WMC drilling

P a g e | 8

==> picture [147 x 54] intentionally omitted <==

Annexure 2a: 2021 East Cooee – Lunnon Metals Drill Results

*the reported interval recorded 2 m @ 3.31% Ni when the field duplicate assay for one of the 1 m intervals was included.

Annexure 2b: East Cooee – historical WMC Drill Results

P a g e | 9

==> picture [147 x 54] intentionally omitted <==

P a g e | 10

==> picture [147 x 54] intentionally omitted <==

==> picture [272 x 348] intentionally omitted <==

Figure 6: Regional Location of the Kambalda Nickel Project and other nearby nickel deposits

ABOUT THE KAMBALDA NICKEL PROJECT (“KNP”)

Lunnon Metals holds 100% of the mineral rights at KNP, subject to certain rights retained by St Ives*. Full details of the Company’s IPO and the transactions involved are in the Prospectus submitted to the ASX dated 22 April 2021 and lodged with the ASX on 11 June 2021.

KNP, shown in its regional location in Figure 6, is approximately 23 km[2] in size comprising 19 contiguous granted mining leases situated within the Kambalda Nickel District which extends for more than 70 kilometres south from the township of Kambalda (“Tenements”).

This world-renowned nickel district has produced in excess of 1.4 million tonnes of nickel metal since its discovery in 1966 by WMC Resources Ltd (“WMC”). In addition, close to 15 Moz of gold in total has been mined with WMC accounting for 5.9 Moz and over 8.3 Moz produced by Gold Fields Ltd since the purchase of the operation in December 2001 from WMC, making the Kambalda/St Ives district a globally significant gold camp in its own right.

*St Ives retains rights to explore for and mine gold in the “Excluded Areas” on the Tenements as defined in the subsisting agreements between Lunnon Metals and St Ives. This right extends to gold mineralisation which extends from the Excluded Area to other parts of the Tenements with select restrictions which serve to prevent interference with, or intrusion on, Lunnon Metals’ existing or planned activities and those parts of the Tenements containing the historical nickel mines. St Ives enjoys select rights to gold in the remaining areas of the Tenements in certain limited circumstances as described in detail in the Company’s Solicitor Report attached to the Prospectus submitted to the ASX dated 22 April 2021 and lodged with the ASX on 11 June 2021.

P a g e | 11

==> picture [147 x 54] intentionally omitted <==

COMPETENT PERSON’S STATEMENT & COMPLIANCE

The information in this announcement that relates to geology, nickel Mineral Resources, the East Cooee Exploration Target and Exploration Results, is based on, and fairly represents, information and supporting documentation prepared by Mr. Aaron Wehrle, who is a Member of the Australasian Institute of Mining and Metallurgy (AusIMM). Mr. Wehrle is a full time employee of Lunnon Metals Ltd, a shareholder and holder of employee options; he has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity that he is undertaking to qualify as Competent Person as defined in the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr. Wehrle consents to the inclusion in this announcement of the matters based on his information in the form and context in which it appears.

MINERAL RESOURCES

The detailed breakdown of the Company’s Mineral Resources is as follows:

==> picture [495 x 170] intentionally omitted <==

EXPLORATION TARGET

An Exploration Target for East Cooee was estimated by the Company in 2020 in accordance with the guidelines of the JORC Code, (2012). This work identified multiple mineralised surfaces in komatiite-basalt contact trough locations, contact flanking locations, footwall positions and extensive hanging wall surfaces.

The combined tonnage and grade potential of the Exploration Target was estimated to be in the range of 500 to 750 kt with an average grade of 1.25% to 2.5% nickel. The potential quantity and grade of the Exploration Target is conceptual in nature. In the Company’s Prospectus, Optiro, in its Independent Technical Assessment Report in Schedule 3, noted that there has been insufficient exploration to estimate a Mineral Resource and it was uncertain if further exploration will result in the estimation of a Mineral Resource. Lunnon Metals confirms that this assessment is still valid pending the outcome of the planned drilling campaigns reported.

The Exploration Target is based on supporting geological information and drillhole data from WMC and geological interpretations by Lunnon Metals. Included in the data on which this Exploration Target has been prepared are the results from surface diamond drillholes across the East Cooee area, completed by WMC during the 1970s and 1980s.

The Exploration Target does not account for potential geological complexity, possible mining method or metallurgical recovery factors. The Exploration Target was estimated in order to provide an assessment of the potential scale and grade of the mineralisation intersected in drilling and supported by strong and high magnitude nickel-in-soils geochemical anomalism.

P a g e | 12

==> picture [147 x 54] intentionally omitted <==

The Exploration Target was defined by using a combination of two methodologies. The first used the historical surface drilling to generate 3D models (within the Leapfrog software) of the basalt-ultramafic contact across the East Cooee area. Drillhole intercepts with lower cut-off grades of between 0.5% and 1.0% nickel were identified and tagged in the 3D modelling environment as representing either hanging-wall, contact (both trough style and flanking style), or footwall mineralised domains. Solid 3D wireframes were created from these tagged drill intercepts. The wireframes were modelled to an extent that they 1) conform to the geometry of the modelled basalt-ultramafic contact; 2) are supported by adjacent drill intercepts; and 3) have dimensions no greater than what is supported by observed occurrences of those styles of mineralisation in the Foster mine environment. The Leapfrog implicit radial basis function interpolant process was used to estimate the nickel grades within the various East Cooee domains and populate block models to obtain volumes and grade above a 1.0% nickel cut-off grade. Tonnes were calculated by multiplying the volumes by a fixed density of 3.0 t/m[3] .

The second methodology involved Cube in December 2020, whereby they estimated an Exploration Target for the two main East Cooee hanging-wall nickel lodes in the East Cooee area. Drillhole data and geological interpretations were supplied by Lunnon Metals and Cube produced the estimate using standard processes and procedures including data selection, compositing, variography, estimation by OK and model validation. Estimates were made for nickel and bulk density only. Although the estimation work completed by Cube is to a standard consistent with the JORC(2012) guidelines for the reporting of Mineral Resource, the resulting classification as Exploration Target was determined by the Company based on insufficient Reasonable Prospects for Eventual Economic Extraction (RPEEE) due to broad spaced drilling and relatively low estimated nickel grades.

Based on these two estimation methodologies a range of tonnes and grade was derived for the Exploration Target of the combined East Cooee mineralised domains. In the Company’s Prospectus, Optiro, in its Independent Technical Assessment Report in Schedule 3, stated that it had reviewed the Exploration Target and considered it had been appropriately estimated and was representative of the exploration potential at East Cooee.

DISCLAIMER

References in this announcement may have been made to certain previous ASX announcements, which in turn may have included exploration results and Mineral Resources. For full details, please refer to the said announcement on the said date. The Company is not aware of any new information or data that materially affects this information. Other than as specified in this announcement and mentioned announcements, the Company confirms it is not aware of any new information or data that materially affects the information included in the original market announcement(s), and in the case of estimates of Mineral Resources that all material assumptions and technical parameters underpinning the estimates in the relevant announcement continue to apply and have not materially changed. 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 announcement.

P a g e | 13

==> picture [147 x 54] intentionally omitted <==

JORC CODE 2012: TABLE 1

SECTION 1 SAMPLING TECHNIQUES AND DATA

P a g e | 14

==> picture [147 x 54] intentionally omitted <==

P a g e | 15

==> picture [147 x 54] intentionally omitted <==

P a g e | 16

==> picture [147 x 54] intentionally omitted <==

P a g e | 17

==> picture [147 x 54] intentionally omitted <==

P a g e | 18

==> picture [147 x 54] intentionally omitted <==

P a g e | 19

==> picture [147 x 54] intentionally omitted <==

P a g e | 20

==> picture [147 x 54] intentionally omitted <==

SECTION 2 REPORTING OF EXPLORATION RESULTS

P a g e | 21

==> picture [147 x 54] intentionally omitted <==

P a g e | 22

==> picture [147 x 54] intentionally omitted <==

P a g e | 23

==> picture [147 x 54] intentionally omitted <==

P a g e | 24