PepinNini Minerals : Half Yearly Report & Accounts

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HALF YEAR REPORT

Financial Report for the half year ended

31 December 2021

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	PepinNini Minerals Limited
	Half Yearly Report
	31 December 2021
CONTENTS
Directors' Report............................................................................................................................................	1
Auditor's independence declaration ..............................................................................................................	8
Consolidated statement of profit or loss and other comprehensive income ...............................................	9
Consolidated statement of financial position ...............................................................................................	10
Consolidated statement of changes in equity..............................................................................................	11
Consolidated statement of cash flows .........................................................................................................	12
Notes to the Consolidated Financial Statements ........................................................................................	13
Directors' declaration ...................................................................................................................................	17
Independent auditor's review report ............................................................................................................	18

PepinNini Minerals Limited

Directors' Report

31 December 2021

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Directors' Report

The Directors of PepinNini Minerals Limited (PepinNini, PNN or the Company) present their report together with the consolidated financial report, on the Company and its subsidiaries (the Group) for the half year ended 31 December 2021.

Directors

The following persons were Directors of PepinNini Minerals Limited during the whole of the half year and up to the date of this report, except as otherwise noted:

• James Moses
• David Turvey (appointed 7 July 2021)
• Mena Habib (appointed 9 July 2021)
• Stephen Ross (appointed 9 July 2021)
• Robert (Wei) Sun (resigned on 7 July 2021)
• Rebecca Holland-Kennedy (resigned 25 November 2021)
• Luis Kennedy (resigned 25 November 2021)

Rebecca Holland-Kennedy resigned from her role as managing director on 22 October 2021, and subsequently resigned as a director of the Company on 25 November 2021. Ms Holland co-founded the Company in 2002, and was a long-standing director and managing director. Luis Kennedy resigned as Non-Executive Director on 25 November 2021.

Subsequent to the half year, PepinNini implemented the following further changes to its board, designed to ensure the Company's senior people skills are best positioned to achieve its growth objectives (ASX announcement, 17 January 2022). Non-executive director Stephen Ross assumed the role of non-executive chairman, replacing David Turvey, who remains on the board as a Non-Executive Director.

Non-executive director Mena Habib was appointed an executive director of the Company and has assumed responsibility for the management of PepinNini's day-to-day operations, including its interaction with shareholders and the investment market.

In his role, Mr Habib is playing a lead role in executing and overseeing PepinNini's programs and budgets of its key projects. The Company is continuing its search for a chief executive officer.

Review of Operations

During the reporting period, the Company maintained focus on its Lithium Brine Project in Argentina and progressed work on the Eyre Peninsula Kaolin-Halloysite Project in South Australia. Plans for first-phase drilling at the Eyre Peninsula Project were completed with drilling to commence on confirmation of drill rig availability. PNN and Ganfeng Lithium completed an IP geophysical survey at the Santa Ines Cu-Au Project in Argentina, and, subsequent to the half, plans for a maiden drilling program were released (ASX announcement, 16 February 2022). Negotiations progressed with the traditional owners of the APY Lands for access and commencement of exploration at Musgrave Ni-Cu-Co Project in South Australia.

1. Salta Lithium Brine Project, Argentina

The Salta Project is located in the Salta province in north-west Argentina and is part of the Lithium Triangle, the world's leading lithium brine region. The Project consists of five salares (salt lakes) that sit within seven mining leases, over a total project area of 147.07km² (Figure 1).

Brine Blending Program delivers 5.2% Lithium

The Company's current focus at the Salta Project is an ongoing brine blending program. It is designed to blend the different chemical properties of the lithium brines from the Incahuasi salar and Rincon salar within the Salta Project (Figure 1). Its aim is to deliver a higher lithium concentration with minimal deleterious elements and high lithium recoveries in the concentrated blended brine, compared to the lithium concentrate values of the individual salares. Significant, positive progress was achieved in the half.

The program commenced in May 2021 and has progressively assessed the level of lithium concentration from the blended brines as they evaporate over time, delivering highly positive results. Progress results have been detailed in ASX announcements, 22 September 2021, 25 November 2021 and 20 January 2022.

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PepinNini Minerals Limited

Directors' Report

31 December 2021

Figure 1: Location Plan - Salta Lithium Brine Project, NW. Argentina (PNN licenses in blue)

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The latest test produced an exceptionally high brine mix concentrate of 5.2% lithium (Li) with low levels of contaminants (Table 1) (ASX announcement, 20 January 2022). This result was highly significant, and compares very favourably with other lithium companies in the region.

Significance of results to date include:

• very high 5.2% lithium concentration achieved from evaporation of blended brine;
• very low loss of lithium to sulphate contaminant residue precipitates i.e., high Li recovery; and
• low contaminants (Ca, Mg, SO4) in concentrated Li brine.

The brine blending program is PepinNini's core immediate-term work program at the Salta Project. The final results will help determine potential development pathways and monetisation opportunities for the Project.

Table 1: Laboratory Analysis: Concentrated Blended Brine, 17 December 2021

Element & Parameter	Symbol	Unit	Blended Brine
			17 December 2021
Lithium	Li	%	5.22
Sodium	Na	%	0.096
Potassium	K	%	0.324
Magnesium	Mg	%	1.52
Calcium	Ca	%	0.198
Sulphate	SO4	%	0.023
Chloride	Cl	%	31.29
Boron	B	%	0.463
Density		gram / cc	1.275

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PepinNini Minerals Limited

Directors' Report

31 December 2021

Background to Brine Blending Program

The brine blending program commenced in May 2021, and has progressively assessed the level of lithium concentration from the blended brines as they evaporate over time. The brines have been blended at a ratio of approximately 3:1 from the Incahuasi salar and Rincon salar respectively.

The Incahuasi salar in the Salta province is located immediately adjacent to Ganfeng Lithium Co. Ltd.'s project and the Rincon salar is immediately adjacent to Rincon Mining Ltd, which is to be acquired by Rio Tinto Ltd for US$825 million.

Significance of brine-blending process:

• Blending acts to pre-condition the brine in order to quickly reduce contaminants (Ca, S04)
• Reduces use of reagents including sodium sulphate (Na2SO4), calcium chloride (CaCl2) and potassium chloride (KCl)
• Potential to reduce operating costs and evaporation time.

Testing is ongoing to determine the different concentration paths and process reagent inputs for individual Rincon and Incahuasi lithium brines compared to the 3:1 blended lithium brine, and also to compare PepinNini's brine-blending results with production processes of industry peer Li chemical companies.

Next Steps

• Lithium consultants, Ad-Infinitum Spa to complete brine-blending work and final report, Q1CY22
• Technical-economicanalysis on the cost / benefits of brine-blending and determine the scope of bulk brine sampling for bench-scale production of lithium carbonate (LIC)
• Drilling and sampling to define JORC lithium brine resource at the Incahuasi salar
• Preliminary Evaluation Assessment (PEA) or Scoping Study to determine viability of pilot-scale and full- scale LIC production
• Assess M&A and other potential corporate opportunities for the Project.

2. Eyre Peninsula Kaolin-Halloysite Project, South Australia

The Eyre Peninsula Kaolin-Halloysite Project consists of three Exploration Licences (EL6677, EL6681 and EL6689) covering a total area of 1,413km². It is strategically located adjacent to Andromeda Metals' (ASX: ADN) Kaolin-Halloysite project areas on the western side of the Eyre Peninsula in South Australia (Figure 2).

The Project represents a core exploration asset for PepinNini, and plans for the Company's maiden drilling program were confirmed during the half (ASX announcement, 13 December 2021).

All Exploration Licences have been granted (ASX announcements, 5 and 6 October, and 9 November 2021), land access agreements are being progressively sought and obtained over the project area and the required EPEPR (Exploration Program for Environment Protection and Rehabilitation) approvals for drilling from the South Australian Department for Energy and Mining has been granted.

First Phase of Drilling

PepinNini's first phase of drilling at the Eyre Peninsula Project is planned to commence immediately upon confirmation of drill rig availability.

The maiden program is planned to consist of up to 130 holes for a total of 7,800 metres of aircore drilling at priority targets across the three Exploration Licences. Drilling is planned to be undertaken to an average depth of 60 metres (with a maximum depth of 100 metres).

Drill targets have been identified from historical exploration including geophysics. Drilling is designed to test depth and areal extent plus mineralogy of known and suspected kaolin occurrences, and other target areas defined by geophysical assessment of suitable underlying basement.

The program is planned to commence at the southern-most Exploration Licence (EL6689), which hosts the highest priority targets, then progress to nearby EL6677 and then to EL6681 approximately 240kms to the north (Figure 3).

There is a significant historical kaolin site west of Kapinnie within EL6689, and this is proposed to be the initial drilling focus (Figure 3). This target was mapped during the half, and an historic discovery of snow-white kaolin, estimated to be in excess of seven metres thick at a depth of 6.1 metres, has also been reported from this site (Dickinson, 1943, SA Mining Review 78).

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