Mallee Resources : Avebury Nickel Project - Mineral Resource Estimate

ASX ANNOUNCEMENT

8 April 2022

ASX Code: MYL

BOARD OF DIRECTORS Mr Jeff Moore Non-Executive ChairmanMr John Lamb Managing Director

Mr Rowan Caren Executive Director

Mr Paul Arndt Non-Executive Director

ISSUED CAPITAL Shares Performance Rights Unlisted Options

190 m.

5 m. 5 m.

Mallee Resources Limited Suite 1, Ground Floor,

9 Havelock Street West Perth 6005 Western [e-mail] [phone] malleeresources.com.au

ABN: 48 124 943 728

Avebury Nickel Project - Mineral

Resource Estimate

Mallee Resources Limited ("MYL" or "the Company") is pleased to announce that independent consultants CSA Global Pty Ltd, an ERM Group Company, ("CSA Global") have reported a Mineral Resource estimate in accordance with the JORC Code (2012 Edition) ("JORC Code") in respect of the Avebury Project (defined below).

As announced on 11 March 2022, the deed of company arrangement ("DOCA") for Allegiance Mining Pty Ltd (Administrators Appointed) (Receivers and Managers Appointed) ("Allegiance") has been executed. The DOCA contemplates MYL (through a wholly owned subsidiary) acquiring Allegiance, which wholly owns the Avebury mining licences, exploration licences, the underground mine, processing plant, mine infrastructure and other associated assets ("Avebury Project").

Mineral Resource estimation work in respect of the Avebury Project was carried out by MMG Limited ("MMG") in 2011 and reported in accordance with the JORC Code in 2013. No drilling has been undertaken since.

CSA Global has reviewed the work undertaken by MMG, undertaken a review of (and amended) the classification approach, checked the Mineral Resource depletion, completed an assessment of reasonable prospects for eventual economic extraction ("RPEEE"), and re-reported the Mineral Resource in accordance with the JORC Code. The Mineral Resource estimate is shown in Table 1.

Table 1: Avebury Mineral Resource estimate, reported from all blocks within Ni > 0.4 % envelope

JORC classification	Tonnage (Mt)	Ni (%)	Co (ppm)	As (ppm)
Indicated Inferred	8.7 20.7	1.0 0.8	244 223	378 297
TOTAL	29.3	0.9	229	321

Notes: Due to effects of rounding, the total may not represent the sum of all components. All resources quoted as total nickel, a nickel recovery of 75 to 80% is expected using conventional flotation processes.

John Lamb, Managing Director, commented:

"Avebury has an outstanding nickel sulphide mineral resource endowment. Subject to the DOCA effectuating, our plans will include drilling to upgrade Inferred Mineral Resources to define, with confidence, the next phases of development at Avebury."

Approved for release to the ASX by

John Lamb

Managing Director

Competent Persons Statement

The informaƟon in this report that relates to Mineral Resources is based on informaƟon compiled by Mr Tony Donaghy and Mr Aaron Meakin. Mr Tony Donaghy is a full-Ɵme employee of CSA Global Pty Ltd and is a Registered Professional GeoscienƟst (P.Geo) with the associaƟon of Professional GeoscienƟsts of Ontario (PGO), a Recognised Professional OrganisaƟon (RPO). Mr Aaron Meakin is a full-Ɵme employee of CSA Global Pty Ltd and is a Member and Chartered Professional of the Australasian InsƟtute of Mining and Metallurgy (AusIMM). Mr Tony Donaghy and Mr Aaron Meakin have sufficient experience relevant to the style of mineralisaƟon and type of deposit under consideraƟon and to the acƟvity which they are undertaking to qualify as Competent Persons as defined in the ϤϢϣϤ ediƟon of the Australasian Code for the ReporƟng of ExploraƟon Results, Mineral Resources and Ore Reserves (JORC Code). Mr Tony Donaghy and Mr Aaron Meakin consent to the disclosure of the informaƟon in this report in the form and context in which it appears. Mr Tony Donaghy assumes responsibility for maƩers related to SecƟons ϣ and Ϥ of JORC Table ϣ, while Mr Aaron Meakin assumes responsibility for maƩers related to SecƟon ϥ of JORC Table ϣ.

Geology and Geological Interpretation

The Avebury nickel deposit is hosted in an ultramafic body (part of the McIvor Hill Mafic-Ultramafic Complex) located within a sedimentary sequence comprising volcaniclasƟc turbidites (the Crimson Creek FormaƟon) which appears to grade laterally into a complex volcano-sedimentary sequence of polymicƟc conglomerates and breccias, carbonates, calc-alkaline volcanics and volcaniclasƟc sediments which may represent the Lower Dundas Group of Cambrian age. The sedimentary sequence is overturned and south facing.

Near the deposit, the ultramafic body strikes east-west for about Ϥ km and generally dips steeply to the south. The body shows complex geometry with respect to the host sequence and thickens considerably with depth to a width more than ϧϢϢ m. The ultramafic unit extends from Trial Harbour on the west coast in a sinuous fashion towards Avebury and then disconƟnuously towards the north, fragmented by faulƟng. Because of folding of the host sediments, the ultramafic body does not crop out where fold axes plunge below the surface; its extent can be followed by its magneƟc response. Much of the ultramafic body is located ϧϢ-ϣϢϢ m below surface in the vicinity of the Avebury mine.

The ultramafic body at Avebury consists of serpenƟnised and metasomaƟsed peridoƟte or dunite cumulates, both concordant and discordant to bedding of the enclosing Crimson Creek sediments. Margins of the ultramafic body are frequently brecciated with numerous protrusions extending into the overlying volcano-sedimentary sequence and xenoliths of volcano-sedimentary rocks incorporated into pervasive calc-silicate altered mafic-ultramafic rock on the contact. The calc-silicate altered margin ranges from ϣ m to ϣϢ m in width.

MineralisaƟon is hosted primarily in a carapace in what appears to be a structural doubly plunging folded contact between the ultramafic rocks and overlying Crimson Creek Volcanic sequence. MineralisaƟon at Avebury was focused along the ultramafic-host sequence contact, but lenses of mineralised rock are also present within the ultramafic body. MineralisaƟon is associated with two disƟnct gangue mineralogies: dark green to black serpenƟnised ultramafics with minor disseminated chromite and magneƟte (mine rock typeSERP), and pale green, intensely metasomaƟsed skarn assemblages dominated by amphibole, clinopyroxene and magneƟte (mine rock type SKSP). Sixty percent of the Mineral Resource is hosted in the SERP rock type; ϦϢ% of the Mineral Resource is hosted in the SKSP rock type.

MineralisaƟon at Avebury consists of veins and coarse-grained disseminaƟons of sulphides. The sulphide assemblage is dominated by pentlandite (Fe,Ni)S with minor pyrrhoƟte FeS and millerite NiS, and variable amounts of niccolite NiAs, gersdorffite NiAsS and maucherite NiϣϣAsϪ. The gangue assemblage is magneƟte-rich, with up to ϣϪ% magneƟte in both SERP and SKSP assemblages.

Grades of mineralised SERP and SKSP range from Ϣ.Ϧ% Ni to Ϧ% Ni, with an average of about ϣ% Ni at a cut-off grade of Ϣ.Ϧ% Ni. Arsenic levels within the mineralisaƟon range from about ϤϢϢ ppm to ϨϧϢ ppm. The assay results report total nickel in the rock, including speciaƟon of nickel that is silicate/oxide hosted and therefore metallurgically non-recoverable. MMG delineated the nickel mineralisaƟon using a cut-off grade of Ϣ.Ϧ% Ni following staƟsƟcal analysis and based on geological observaƟon. This nickel grade was deemed to represent the natural cut-off grade between mineralised (recoverable sulphide nickel dominant) and non-mineralised (non-recoverable silicate-oxide nickel dominant) material. Records indicate that olivine/serpenƟne in the SERP/SKSP can contain approximately Ϣ.ϣϩ-Ϣ.ϥ% nickel and magneƟte Ϣ.ϣϧ-Ϣ.Ϥ% nickel. The nickel in magneƟte occurs as microscopic pentlandite inclusions. A final small amount of nickel is also locked in the pyrrhoƟte either as a solid soluƟon interchanged with iron within the pyrrhoƟte mineral laƫce, or as microscopic inclusions of pentlandite enclosed within the pyrrhoƟte. Solid soluƟon nickel in pyrrhoƟte will not be recoverable, while micro pentlandite inclusions will require very fine grind to liberate the grains and make them available for flotaƟon.

Mineralised zones in the ultramafic body vary in true width from ϣ m to ϦϢ m and average around ϣϢ m. Mineralised lenses are generally around ϧϢ-ϨϢϢ m in length and can extend over ϦϢϢ m down dip. Lenses are generally sub-parallel to the contact with the overlying volcanic complex, although there is some suggesƟon of structural control of internal lenses either on fold axial planar schistosity or within high-strain shear structures. The lenses anastomose and pinch and swell in an irregular and unpredictable manner.

Nickel domains are delineated using a Ϣ.Ϧ% Ni cut-off which is the natural break between background ultramafic nickel and elevated nickel sulphides (Error! Reference source not found.). Coarse pentlandite mineralisaƟon is visible above Ϣ.Ϧ% Ni. Separate wireframes were also modelled for high arsenic (>ϥϢϢ ppm) domains (Error! Reference source not found.).

Figure 1: Nickel wireframes

Figure 2: Arsenic wireframes

Sampling and Sub-Sampling Techniques

Core samples were taken at a nominal length of ϣ m, honouring geological contacts where possible. Only minor core loss was recorded and there is no demonstrated relaƟonship between sample recovery and grade.

Core is split in half using a core saw. Samples are then bagged, numbered, and dispatched to analyƟcal laboratories. The laboratory process followed drying, crushing, milling and homogenising the enƟre sample to ϪϢ% passing ϩϧ microns.

Sampling and sub-sampling techniques can be considered industry standard.

Drilling Techniques

The drill hole database contains ϦϧϨ diamond drill holes (NQ, NQϤ, LTKϧϨ or LTKϨϢ) for ϣϣϪ,ϢϢϢ m. The drilling was carried out from ϣϫϫϩ through ϤϢϣϢ/ϤϢϣϣ. The drilling data which has been collected represents a high-quality dataset which is suitable to carry forward for Mineral Resource esƟmaƟon. Core recoveries have been high throughout the drill programmes, and no relaƟonship between recovery and Ni grade has been established.

All drill hole collars were located by a licensed surveyor according to a mine grid system.

The method used to survey drill hole paths has varied throughout the project's history. The presence of magneƟc minerals (magneƟte and pyrrhoƟte) precluded the use of convenƟonal down-hole survey tools which measure the magneƟc azimuth.

Either an Eastman single shot camera, a digital downhole survey camera, a gyroscope or a Maxibor opƟcal tool were used for surface holes prior to ϤϢϢϧ. The first two methods measured magneƟc azimuth, hence correcƟon of the data is required when magneƟc minerals are present. Gyroscope results are limited to a few holes prior to ϤϢϢϧ and should be considered the most accurate. The Maxibor method measures incremental differences at fixed intervals down the drill hole relaƟve to the orientaƟon of the drill rods at the collar. The method relies heavily on centralisaƟon of the tool in the hole, and an accurate measurement of the original collar dip and azimuth. Prior to ϤϢϢϧ, surface holes which were not surveyed uƟlised nearby deviaƟon data. Since ϤϢϢϧ, a gyroscopic tool has been used for surface holes.

The method used to survey underground drill holes, which have been completed from ϤϢϢϦ through ϤϢϣϢ/ϤϢϣϣ) is as follows:

•  The collar azimuth was used for holes drilled east of ϥϦϧ,ϥϧϢ m E

•  A +ϣ° deviaƟon was used every ϧϢ m west of ϥϦϧ,ϥϧϢ m E.

The correcƟons were based on analysis of gyroscope results.

Downhole survey methods used for surface drill holes are appropriate given the presence of magneƟc minerals, however pre ϤϢϢϧ surface holes and underground holes are subject to some uncertainty with regard to their posiƟon. Given the lack of real down-hole data, hole paths should be considered approximate. Since ϤϢϢϧ, a gyroscopic tool has been used for surface holes, and greater confidence exists in the hole paths.

Classification Criteria

Mineral Resources have been classified based primarily on drill spacing, with due consideraƟon of the data quality and style of mineralisaƟon.

The approximate drill densiƟes were:

•  Indicated - from< Ϥϧ to ϧϢ m E and from < ϦϢ to ϨϢ m RL

•  Inferred - from ϧϢ to ϣϢϢ m E and from ϨϢ to ϣϢϢ m RL.

No Measured Mineral Resources have been reported based on the significant short-range grade and geological variability, adopted drilling spacing, and some uncertainty regarding the precision and accuracy of the XRF data. CSA Global considers that underground development within the mineralisaƟon and addiƟonal drilling will be required to classify Measured Mineral Resources.

To expand on the statement above, the JORC Code sƟpulates that mineralisaƟon may be classified as a Measured Mineral Resource when the nature, quality, amount and distribuƟon of data are such as to leave no reasonable doubt, in the opinion of the Competent Person determining the Mineral Resource, that the tonnage and grade of the mineralisaƟon can be esƟmated to within close limits, and that any variaƟon from the esƟmate would be unlikely to significantly affect potenƟal economic viability. CSA Global considers that the tonnage and grade of the mineralisaƟon has not been esƟmated within close limits for the reasons described in the paragraph above.

Sample Analysis Method and Quality Assurance

Laboratory analyƟcal techniques have varied over the Projects history as follows:

•  Pre ϤϢϢϧ: Ϧ acid digest and analysis of Ni, As, Co and S by ICP_AES at SGS, Townsville.

•  ϤϢϢϧ to ϤϢϢϫ: pressed powder XRF analysis for Ni, As, Co, S, FeO and MgO at Burnie Research Laboratories (BRL), Burnie.

•  Post ϤϢϢϫ: Ϧ acid digest and analysis of Ni, As, Co and S by ICP_AES at ALS Laboratories, Perth.

The following quality assurance (QA) procedures were adopted:

•  Prior to ϤϢϢϦ, QA involved reviewing internal laboratory standard results and check assaying (of coarse rejects) by an independent laboratory (Amdel, Adelaide)

•  From ϤϢϢϦ through ϤϢϣϢ/ϤϢϣϣ:

  • o External standards (matrix matched using Avebury core) were submiƩed with every batch of samples

  • o Pulps were re-submiƩed to a check laboratory (BRL)

  • o Approximately ϣ in every ϣϢ submissions was sent for analysis at an umpire laboratory (Amdel Laboratories, Adelaide or ALS Laboratories, Perth).

CSA Global reviewed the quality control (QC) data, and considers that overall, the results are saƟsfactory.

It is noteworthy, however, that XRF re-assay programs reveal a potenƟal bias in the XRF results. XRF assays from ϤϢϢϨ and ϤϢϢϩ drilling suggest XRF consistently overcalled Ni by less than ϧ% and undercalled As by between ϧ and ϣϢ% when compared to the repeat results (data filtered for Ni>Ϣ.Ϧ% and filtered for