Megado Gold : MEG to Acquire US High-Grade Rare Earth Element Project

ASX ANNOUNCEMENT

14 April 2022

MEGADO SECURES TRANSFORMATIONAL ACQUISITION OF HIGH-GRADE

RARE EARTH ELEMENT PROJECT IN IDAHO, USA

Megado Gold Limited (ASX: MEG) (the 'Company' or 'Megado') is pleased to announce it has entered into a definitive agreement with Felix Strategic Minerals Pty Ltd ('FSM') to acquire 100% of the issued share capital in FSM. FSM, through its wholly owned subsidiary, Felix Strategic Minerals LLC, holds the contractual rights to acquire 100% of the rights, title and interest in the North Fork Rare Earth Project ('North Fork'), located in the mining-friendly Idaho Cobalt Belt region of Idaho, USA.

HIGHLIGHTS

•  North Fork consists of up to 499 claims (granted and in application), covering approximately 10,309 acres (42km2) with outcropping, high-grade, rare earth element (REE) mineralised rock.

•  North Fork contains multiple carbonatite-hosted, high-grade, REE mineralised veins that have been observed at surface across numerous prospects over 10km along strike.

•  Previous exploration has returned exceptional grades in channel samples:

  • o Silver King Prospect: 2m @ 10.3% Total Rare Earth Oxides (TREO) incl. 1.2% Critical Rare Earth Oxides (CREO); and 2m @ 5.8% TREO; and 1.52m @ 17.7% TREO

  • o Jackpot Prospect: 0.76m @ 21.5% TREO; and 0.76m @ 14.5% TREO

  • o Monazite Queen Prospect: 0.91m @ 21% TREO; and 3m @ 2.16% TREO

•  REE mineralisation displayed at North Fork is high-grade and enriched in critical rare earths (CREE), (typically: Nd, Pr, Dy, Tb, Y).

•  Operational team in USA is headed by Greg Schifrin, former President of US Rare Earths and Colorado Rare Earth Minerals. It is proposed that Mr Schifrin will join Megado's Board upon acquisition completion. Marta Ortiz will step down from the Board.

•  Walk-up drill targets have been delineated by historic exploration activities that included geological mapping, channel sampling, and geophysical surveys.

•  Located in Idaho, USA: ranked best mining policy jurisdiction in the world in 2020 by Fraser Institute.

•  Company to complete a placement to raise $2.4 million to fund initial exploration program at North Fork expected to commence at completion of the acquisition.

Megado Gold CEO and Managing Director, Michael Gumbley, commented

"The North Fork Rare Earth project is a tremendous opportunity for Megado. The incorporation of a high-grade rare earth element project in an extremely receptive mining jurisdiction is an incredible addition to the Company's portfolio. Importantly, historical exploration, sampling mineralised outcropping veins, indicated extremely high-grade total rare earth oxides in excess of 20%, including significant returns of "critical rare earths".

Australian Registered Address 12/197 St Georges Terrace PERTH WA 6000 Australia

Directors

Brad Drabsch (Non-Exec. Chair)

Michael Gumbley (MD and CEO)

Chris Bowden (Exec. Tech. Director)

Marta Ortiz (Non-Exec. Director)

T [phone]

Aaron Bertolatti (Finance Director)

[e-mail] Wwww.megadogold.com

The US government has designated rare earth elements as strategically critical and thus made domestic production integral to its clean energy transition and national security.

We are excited that Megado will benefit from the accommodating political climate, the welcoming Idaho jurisdiction, an existing strong US investor base, and obvious drill-ready targets to commence exploration upon finalisation of the North Fork acquisition.

In addition, Megado remains committed to its Ethiopian portfolio. The company is actively investigating REE potential in Ethiopia as it progresses its gold exploration."

RARE EARTH ELEMENTS (REE)

REE's are fundamental facets of the modern economy. While the elements themselves are not technically rare, ore bodies containing sufficient concentrations to make processing economically viable are exceedingly rare, thus making the North Fork opportunity particularly appealing. The elements' unique magnetic and electrochemical properties have led to a proliferation of applications. REE's have thus become critical components of clean energy, information technology, communication systems, electric vehicles, as well as many other defence and industrial applications. As such, applications continue to expand, REE's will undoubtedly see an increased role intrinsic to advanced economies worldwide.

Figure 1: Silver King vein sample showing carbonatite (grey) with rare earth mineralisation (orange-brown)

Indeed, it is the critical nature of the rare earth element suite which has triggered action in the United States and beyond. In response to Executive Order (EO) 14017 "America's Supply Chains", the current Administration has invoked the Defence Production Act and ordered Federal Government agencies to secure reliable and sustainable supplies of critical minerals and materials. The White House foresees demand for critical minerals increasing by some 400-600 percent and, in view of its reliance on REE's from foreign sources, it has deemed expanding domestic mining, production, processing, and recycling of critical minerals and material a matter of economic and national security.

LOCATION, INFRASTRUCTURE AND TENURE

The North Fork claims are located approximately 40 km (25 miles) northwest of Salmon, Idaho and consist of up to 499 unpatented/patented BLM mining lode claims (listed in Appendix A and illustrated in Figures 4 and 5). The North Fork Project has seven (7) historical prospect areas warranting further exploration in the intial exploration phase. These are Silver King, Cardinal, Jackpot, Radiant, Monazite Queen, and Upper & Lower Lee Buck.

Access to North Fork from major cities is by highway, driving from Idaho Falls or Missoula, both of which have commercial airports and are approximately 2.5 hours drive from Salmon. The state capital, Boise, is 5 hours drive from the project. The principal prospect areas at North Fork are served by existing roads previously used for logging operations. This infrastructure will allow the exploration team immediate access to the targets and assist to expedite the drilling permit process.

Figure 2: Access road direct to the Silver King Prospect

The North Fork Project is located at an elevation of about 1,000 - 2,100 meters. This area of Idaho can receive snowfall starting in late October lasting through the end of May. The project area is situated in the Salmon River Mountain range as part of the Rocky Mountain Cordillera and has a semi-arid climate with average annual low and high temperatures between -1°C and 15°C. Vegetation at the project consists of low growing shrubbery, various grasses, and pine forests.

REGIONAL SCALE

Figure 3: The North Fork Project area within Idaho, USA.

The North Fork Project forms part of the Rocky Mountain cordillera in Idaho, near the Montana border in north-western USA. The cordillera, which runs from Mexico, through Idaho, and into Canada, is well known to be mineralised along its length, typically associated with intrusives. The North Fork Project (Figure 3) is situated within the Sheep Creek-Spring Creek southeast-northwest belt. This zone is approximately 6km wide and 30km long, extending from the Salmon township northwest into Montana. Historical and active mining areas in the region include the Blackbird Mining District (approximately 30km to the south) home to Jervois Global's (ASX:JRV) highly significant cobalt deposit, and Lemhi Pass (approximately 80km to the southeast). Lemhi Pass is recognised as having some of the highest grades of REE mineralisation in the USA. Other active miners in the vicinity include Perpetua Resources (NASDAQ:PPTA), Freeman Gold Corp

(TSXV:FMAN), and Revival Gold (TSXV:RVG).

Geologically, the area consists predominantly of Proterozoic metamorphosed amphibolite and augen gneiss, with younger Palaeozoic igneous carbonatite intrusions, and minor felsic dykes. Thrust and block faulting is common within the property and surrounds. Thrust faulting is interpreted to be associated with continental compressional stresses induced by the Farallon plate subduction. Block faulting is interpreted to be associated with ancient rifting and regional stresses coeval with thrusting. Rocks of the area commonly show folding and faulting offset.

Figure 4: The North Fork Project: 499 claims granted and in application. Seven (7) Prospects in the area cover ca. 10km strike length and 4km width.

MINERALISATION

The North Fork Project REE mineralisation is carbonatite-hosted. Rare earth element mineralisation is primarily associated with the igneous carbonatite intrusions as dykes and sills, with additional mineralisation noted within pegmatites, and disseminated within the host rock gneiss and schistose amphibolite rocks.

The carbonatite dykes/veins appear to be emplaced along faults, fractures, and foliation, and at lithological contacts. Detailed structural controls to mineralisation are not yet fully understood, and present an opportunity to better comprehend the extents, offsets, and locations of the carbonatite veins and the full potential for rare earth element mineralisation.