Lunnon Metals : Quarterly Activities Report - June 2022

LUNNON METALS LIMITED ABN: 82 600 008 848

onlyBOARD/MANAGEMENT Mr Liam Twigger

NON-EXECUTIVE CHAIRPERSON

Mr Ian Junk

NON-EXECUTIVE DIRECTOR

Ms Deborah Lord useNON-EXECUTIVEDIRECTOR

Mr Ashl y McDonald

NON-EXECUTIVE DIRECTOR

Mr Edmund Ainscough

MANAGING DIRECTOR

Mr Aaron Wehrle

EXPLORATION &

GEOLOGY MANAGER

personalOFFICE

Suite 5/11 Ventnor Avenue WEST PERTH WA 6005

POSTAL ADDRESS

PO BOX 470

WEST PERTH WA 6872

CONTACT DETAILS [phone] [e-mail]

lunnonmetals.com.au

SHARE REGISTRY

ForAutomic Group

ASX CODE: LM8

QUARTERLY ACTIVITIES REPORT

27 July 2022

For the period ended 30 June 2022

HIGHLIGHTS - Kambalda Nickel Project

• At Baker, reporting of first-time Mineral Resource Estimate (MRE) of 568,000 tonnes
• • 2.8% nickel for 15,800 contained nickel tonnes. Post quarter end ECO22RC_048 returned the best result to date at Baker with 23m @ 6.78% Ni.
• At the Foster mine, reporting of a first-time MRE for the N75C surface of 412,700 tonnes
• • 2.3% nickel for 9,500 nickel tonnes.
• Overall growth of the global Mineral Resource at the Kambalda Nickel Project to 2.2 million tonnes @ 2.9% Ni for 64,300 contained nickel tonnes, an increase of 65% in contained metal in under 12 months from listing on the ASX.
• At Warren, work continues to support the channel's prospectivity with diamond drilling assay results including:
• 
  o 4.25m @ 6.02% Ni, 9.05m @ 2.82% Ni, 4.8m @ 3.09% Ni and 0.55m @ 8.18% Ni.
• Good progress in permitting activities related to Foster dewatering programme and possible future exploitation of Baker Shoot.

CORPORATE

• 30 June 2022 cash balance of $32.9 million.
• During the quarter the Company announced:
  o Entry into an agreement to acquire nickel rights to two further historical WMC Resources (WMC) nickel mines at Kambalda - Silver Lake and Fisher - doubling the ground holding in this world-renowned nickel district. Rights to be acquired from current major shareholder St Ives Gold Mining Co. Pty Ltd (SIGMC or St Ives), a wholly owned subsidiary of Gold Fields Ltd.
  o A $30 million capital raising via a placement to professional and institutional investors under the Company's available capacity pursuant to ASX Listing Rules 7.1 and 7.1A. realising $28.5 million after costs.
• Recruitment of senior executive Ms Helen Anderson as Manager - Environmental, Social & Governance.

SEPTEMBER QUARTER 2022 OUTLOOK

• Continue drilling and reporting of Baker Shoot infill and extensional drilling programmes; progress initial assessment of potential future exploitation of the Baker MRE.
• Continue to progress permitting activities for dewatering of Foster Mine coupled with any necessary requirements for future Baker access.
• Final reporting of results of the Exploration Incentive Scheme (EIS) Grant deep drill hole at Kenilworth.
• Ongoing reporting of progress of nickel discovery programme at Warren and other targets.
• Notice of Meeting for Shareholders to vote on the Mineral Rights Agreement relating to the Fisher-Silver Lake deal with Gold Fields Ltd.

Commenting on the June quarter, Managing Director Ed Ainscough said:

"We pushed really hard in the first six months of 2022 to turn success into tangible progress for shareholders. We have grown our Mineral Resource by over 65% in under 12 months at a discovery cost of approximately $0.22/lb of onlynickel by converting drilling success into reportable Mineral Resources at Baker and N75C. Along the way, these achievements positioned us to secure more exploration tenure in the amazing nickel district that Kambalda represents, through our deal with Gold Fields St Ives and also to raise $30 million in April. This growth and our progress, together with the funds raised, stands the Company and its shareholders in good stead as the market and the broader economy

enters more turbulent and uncertain times ahead."

Lunnon Metals Limited (ASX: LM8) (the Company or Lunnon Metals) is pleased to report on activities during the June 2022 quarter.

KAMBALDA NICKEL PROJECT (KNP)

useSafety, Environment and Community

The Company continues to comply with all Western Australian government's mandates. Three Company staff have contracted Covid-19 during the quarter. interruption to activities.

Covid-19 related directives and There has been no significant

No significant incidents occurred during the quarter. The Company met with representatives of the Ngadju Native personalTitle Corporation on two occasions and continues to make good progress towards formally agreeing the manner by which the Company and the Ngadju people can develop a mutually beneficial relationship should the KNP progress

towards development and possible future production. Drilling Programme Physicals

A total of just under 37,000m of drilling has now been completed at the KNP since the Company's IPO. Some 15,500m of this total was completed in the June quarter including 10,559m of RC (56 holes) and just under 5,000m of diamond drilling (12 holes). The total drilled represents 32% more metres than originally planned in the Company's June 2021 Prospectus.

For

Figure 1: Updated plan of the Kambalda Nickel Project showing location of reported programmes and the current Mineral Resource represented in plan projection with addition of N75C and Baker Mineral Resource figures.

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295,000 tonnes @ 2.75% Ni for 8,100 nickel tonnes in Indicated Resource; and 273,000 tonnes @ 2.82% Ni for 7,700 nickel tonnes in Inferred Resource.

KNP DISCOVERY PROGRAMME UPDATE

Baker Shoot

onlyTechnical work during the quarter was dominated by geological interpretation of results from the 2021 Baker drilling programme, a process which culminated in the creation of geological sub-domains provided to Cube Consulting (Cube). Cube subsequently completed a MRE for the Baker Shoot which was reported to the market on 14 June 2022. The first-time Indicated and Inferred Baker Mineral Resource comprised:

-

-

RC and diamond drilling recommenced once the geological interpretation was complete, with the geological and usemineralisation solids forming the basis for infill and extensional targets.

personalFor

Figure 2: Baker Mineral Resource isometric view looking north-west, illustrating areas of Indicated (blue) and Inferred (red) categorisation.

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Post quarter's end, activity at Baker started to yield results from the programme of over 8,000m of RC drilling and 3,000m of diamond drilling designed to infill and extend the June 2022 MRE.

Initial results from the first line of drilling on section line 6,531,180mN were returned and contained multiple significant intersections (>1.0% Ni cut off, mineralised widths approximate true widths) including:

•	3m	@ 5.51% Ni, 0.34% Cu, 0.10%	Co, 0.91g/t Pd, 0.39 g/t Pt (119m - ECO22RC_046);
•	3m	@ 6.71% Ni, 0.45%	Cu, 0.11%	Co, 0.86g/t Pd, 0.22g/t Pt (192m	- ECO22RC_049);
only•	5m	@ 6.99% Ni, 0.64%	Cu, 0.13%	Co, 0.89g/t Pd, 1.66g/t Pt (203m	- ECO22RC_049);
•	7m	@ 4.53% Ni, 0.62%	Cu, 0.10%	Co, 0.83g/t Pd, 0.27g/t Pt (145m - ECO22RC_050);
use
•	4m	@ 5.15% Ni, 0.37%	Cu, 0.11%	Co, 0.89g/t Pd, 0.61g/t Pt (155m	- ECO22RC_050); and
•	23m @ 6.78% Ni, 0.45% Cu, 0.12 % Co, 0.98g/t Pd, 0.26g/t Pt (134m - ECO22RC_048) including:
	- 14m @ 8.13% Ni, 0.53% Cu, 0.14% Co, 1.13g/t Pd, 0.31 g/t Pt (134m);
personalFor	- an intervening 2m of komatiite grading less than 0.50% Ni; and
- 7m @ 5.92% Ni, 0.40% Cu, 0.11% Co, 0.96g/t Pd, 0.24g/t Pt (150m).

The results of the drilling will be reviewed at the completion of the programme and lead to an updated MRE, most likely completed and reported in the December 2022 quarter.

Figure 3: Geological cross section 6,531,180mN updated to include ECO22RC_048 draped over June 2022 Mineral Resource.

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On this first section line, the widths and nickel grades returned generally represent an improvement on the MRE. Importantly, new nickel mineralisation has been recorded close to the komatiite-basalt contact beneath the current onlyBaker nickel shoots for the first time (5m @ 6.99% Ni ECO22RC_049). Additional nickel mineralised zones have also

been intersected outside the currently modelled shoots (e.g. 4m @ 5.15% Ni ECO22RC_050).

These new areas of mineralisation represent an opportunity for potential growth in the MRE. RC drilling will be completed shortly but receipt of results will continue through most of the September quarter. The scope of the metallurgical and geotechnical work, which commenced on the limited diamond core available prior to the completion of the MRE, will be expanded to accommodate the significant thicknesses and elevated nickel grades recorded in this first round of results. To that end, the planning and placement of upcoming diamond drill holes will be adjusted to acquire the requisite volume of sample necessary to appropriately reflect the mineralised

usedomains now being encountered.

Warren

Diamond drilling activity at the KNP was focused at Warren during the June quarter. Lunnon Metals' programme at Warren is designed to demonstrate that this separate channel has the potential to host substantially more than the current figure of 6,400t1 of nickel metal. The Foster channel, 1.5km to the immediate south-east, has an endowment of over 103,000t of nickel at 2.92% Ni (>61,000t mined previously up to 1994 and 42,100t1 in the

personalCompany's current JORC 2012 Mineral Resource estimate). Five diamond holes were completed, a combination of parent diamond holes and wedged diamond holes off selected, suitably positioned parent holes. The Down

Hole Transient Electro-Magnetic (DHTEM) conductive plate identified after the drilling of parent hole WRN21DD_003 has been the focus of work at Warren this quarter. This plate was coincident with the presence of nickel sulphide mineralisation on the prospective komatiite-basalt contact in that hole (8.72m @ 3.54% Ni reported 4 January 2022) and the first wedge (W1) (9.05m @ 2.82% Ni reported 4 April 2022).

A total of nine holes have now been drilled targeting this plate which have successfully delineated a nickel shoot with down dip dimensions of over 90m and across strike/up plunge dimensions of around 45m. Figure 4 below presents an isometric view of the DHTEM plate with all assay results received annotated and illustrating those holes where assays are pending.

Nickel mineralisation is thickest along the long axis of the shoot which rakes across dip/plunge. As reported to the ASX on 5 July 2022, the programme is now complete. For the remainder of calendar year 2022, drilling will shift to the southern section seeking to infill up plunge of WRN21DD_001W7 which intersected 4.8m @ 3.09% Ni (see ASX report dated 4 April 2022) on the outer flank which is not closed off up plunge towards the existing Mineral Resource boundary.

ForAn update to the Warren MRE will be completed in the December quarter when all drilling is complete and all assays received.

1 Full details of the Mineral Resource reported at Warren were included in the Prospectus and associated ITAR lodged on the ASX on 11 June 2021. A breakdown of the current KNP Mineral Resource is tabulated and appended to this report.

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