Strike Resources : December 2016 Quarterly Reports

QUARTERLY REPORT‌‌

COMPANY DETAILS ABN: 94 088 488 724 PRINCIPAL AND REGISTERED OFFICE Level 2 23 Ventnor Avenue West Perth WA 6005 T [phone] F [phone] W www.strikeresources.com.au E [e-mail] ASX CODE SRK SECURITIES ON ISSUE 145,334,268 listed shares 3,000,000 unlisted options BOARD OF DIRECTORS Farooq Khan (Chairman) William Johnson (Managing Director) Malcolm Richmond (Non-Executive Director) Matthew Hammond (Non-Executive Director) Victor Ho (Director) COMPANY SECRETARY Victor Ho [e-mail] FOR FURTHER INFORMATION William Johnson Managing Director [e-mail] 31 January 2017

QUARTERLY ACTIVITIES Strike Resources Limited (Strike or Company) presents its Quarterly Report for the period ended 31 December 2016. As at 31 December 2016, Strike had net assets of ~$6.412 million (comprising ~$6.334 million gross cash less provisions/accruals/trade creditors of ~$0.079 million). Conditional Sale Agreement - Iron Ore Projects in Peru On 14th December, Strike announced that it had entered into a conditional saleagreement with a subsidiary of Chinese industrial and financial group ZhongrongXinda Group Co. Ltd. (Zhongrong Xinda) to sell its Apurimac and Cusco Iron Ore Projects in Peru for US$10 million (~A$13.5 million). Zhongrong Xinda is required to complete its due diligence by 30 April 2017 at which time the parties are also expected to complete the final documentation relating to the sale. The purchase consideration is payable on execution of the final documentation and satisfaction of all applicable regulatory requirements. Zhongrong Xinda is a large private industrial and financial group in China, which has published reported assets of ~130 billion yuan (~A$25 billion). Zhongrong Xinda has recently acquired the large-scale Pampa de Pongo Iron Ore Project in Peru. New Project Activity During the quarter, Strike secured an interest in an early stage Graphite project ("Burke Graphite Project") located at Mt Dromedary in North Central Queensland. The Burke Graphite Project (including tenement EPM 25443) is located directly adjacent to the Mt Dromedary Graphite Project, one of highest-grade flake graphite deposits in the world, located in Australia, being developed by Graphitecorp Limited (ASX:GRA). GRA's latest Mineral Resource Statement for its Mt Dromedary deposit was released on ASX on 20 October 2016: Upgraded Independent JORC Mineral Resource Estimate. Samples collected from EPM 25443 present similar grades and mineralogy to those reported by GRA and indicate the potential for the mineralisation delineated by GRA to extend into EPM 25443. Once the necessary access approvals have been secured, Strike plans to excavate a series of exploration trenches covering the strike of the graphitic schist identified by reconnaissance sampling in order to assist with drill hole targeting. An initial (RC and core combination) drilling programme will then be planned to begin to assess the overall size, grade and metallurgical characteristics of the graphite potential in the tenement. About Strike Resources Limited (ASX:SRK) Strike Resources is an ASX listed resource company, owner of the high grade Apurimac Magnetite Iron Ore Project and Cusco Magnetite Iron Ore Project in Peru and currently developing a portfolio of lithium and graphite exploration projects in Australia and Chile.

PROJECTS Apurimac Iron Ore Project

Between 2006 and 2014, Strike's primary focus was on the development of its Apurimac magnetite project in Peru, recognised as one of the highest grade, large scale magnetite projects in the world with the potential to support the establishment of a significant iron ore operation.

Current adverse market conditions however have led the Company to suspend all development activities on this and its other iron ore projects in Peru.1

Nevertheless, the nature of the Apurimac deposit and the development work undertaken to- date define this project as a potentially strategic asset in Peru which may, when market conditions improve, provide opportunity for the Company to recover value.

The exceptionally high grade 57% Fe is almost twice as high as magnetite deposits developed in Australia; ore bodies are coarse grained and relatively soft, resulting in potentially cheaper processing costs once in production.

A prefeasibility study completed in 20082and updated in 20103on the Apurimac Project indicated clear potential for development of a world class iron ore project:

• JORC Indicated and Inferred Mineral Resource at the main Opaban I/III concessions of 269Mt of iron ore at 57.3% Fe (142 Mt Indicated Resource at 57.84% Fe and 127 Mt Inferred Resource at 56.7% Fe). Of this, potentially 67Mt of Direct Shipping Ore (DSO) at an average grade of 61.5% Fe has been identified.

• Mineralisation predominantly high-grade, coarse-grained magnetite providing comparatively high mass recoveries (>60%) at coarse grind size (>500 microns).

• Excellent exploration potential within current concessions with several targets containing ironstones grading >60% Fe in similar geological settings to the main Opaban concessions.

• Base case of 20Mtpa of concentrate produced by open pit mining and processing 20 - 27Mtpa of ore with transport of the high grade (>66% Fe) product to the coast via a slurry pipeline for drying and shipment to customers.

• Attractive life-of-mine operating expenses (2010) of US$17 - 20 per tonne of product.

• Estimated capital expenditure (2010) of US$2.6 - 2.9 billion, competitive with other major iron ore projects at the time.

Cusco Iron Ore Project

The Cusco project lies approximately 150km to the south - east of Apurimac and forms a potential secondary development target for the Company in Peru with an initial inferred resource estimate of 104Mt at 32.6% Fe.

Like Apurimac, iron ore mineralisation at the project is coarse grained and dominated by magnetite, with high grades recorded. Preliminary metallurgical tests indicate a concentrate grade of >65% Fe could be produced from this ore using conventional grinding and magnetic separation processes.

1. Refer Strike's ASX Announcements dated 28 February 2014: Legal Injunction and Suspension of Operations in Peru, 13 March 2014 Lifting of Injunction and Strategic Review and14 April 2014: Exit from Peru

2. Refer Strike's ASX Announcement dated 23 July 2008: Prefeasibility Results Confirm W orld Class Prospects in Peru

3. Refer Strike's ASX Announcement dated 23 November 2010: Apurimac Project Update and Strike's December 2010 Quarterly Report

   Burke Graphite Project‌‌‌

   Strike's Burke Graphite Project is located in the Cloncurry region in North Central Queensland, where there is access to well-developed transport infrastructure to an airport at Mt Isa (~122km) and a port in Townsville (~783km).

   The key Burke tenement EPM1 25443 (~16km2) is immediately adjacent to the Mt Dromedary Graphite Project, one of highest-grade flake graphite deposits in the world, located in Australia, being developed by Graphitecorp Limited (ASX:GRA). GRA's latest Mineral Resource Statement for its Mt Dromedary deposit was released on ASX on 20 October 2016: Upgraded Independent JORC Mineral Resource Estimate

   Samples collected from EPM 25443 present similar grades and mineralogy to those reported by GRA and indicate a potential for the mineralisation delineated by GRA to extend into EPM 25443.

   Lithium Project in Chile

   Strike has, through its associates in Chile, lodged applications to secure a number of exploration concessions in Northern Chile totalling approximately 4,700 hectares in area, in a region that hosts some of the largest lithium deposits and operations in the world.

   The project area is reported to contain 'caliche' style mineralisation which is formed predominantly from hardened deposits of sedimentary alkali metal salts (halides, nitrates and sulfates). Caliches consist mainly of calcium carbonates (CaCO3) but in some parts of northern Chile, Argentina and Bolivia, these minerals are relatively rich in lithium and other elements. Initial soil sampling reported by the previous holders of the concessions has confirmed the presence of lithium mineralisation within the tenements, with assay results returning elevated grades of lithium above 1,000 ppm.

   Strike is awaiting the granting of the concessions, expected by March 2017, before commencing further exploration work.

   WA Lithium Exploration Tenements

   The North Pilbara hosts a number of lithium and tantalum prospects associated with pegmatites that are related to the Sisters Supersuite of monzogranites and other high end intrusives that intruded the Archeaen greenstone terrain of the East Pilbara approximately 3 billion years ago.

   Lithium and tantalum mineralisation occurs either within the pegmatite veins or within alluvials draining the elevated areas containing the pegmatite veins.

   Strike has applied for two exploration licences totaling ~31,000 hectares that exist within the extent of the known lithium and tantalum mineral fields in the region, adjacent to licences that have outcropping lithium and tantalum elevated pegmatite occurrences. Given the widespread cover of thin wind-blown sands and tertiary laterites/duricrusts, the potential of sub-cropping and shallow buried lithium and tantalum rich pegmatites and alluvial deposits is considered a strong possibility.

   When the licences are granted, Strike plans to undertake an exploration programme of geological mapping, drilling and metallurgical sampling with the primary targeted minerals being lithium, tantalum and rare earth elements associated with pegmatites and/or alluvials.

   JORC MINERAL RESOURCES

   The following JORC Code compliant (2004 and 2012) Mineral Resources estimates are as at the end of the quarter and currently:

   Apurimac Iron Ore Project (Peru) (Strike - 100%)

   The Apurimac Project has a JORC Code (2012 Edition) compliant Mineral Resource of 269.4 Mt, consisting of:

   • a 142.2 Mt Indicated Mineral Resource at 57.8% Fe; and

   • a 127.2 Mt Inferred Mineral Resource at 56.7% Fe.

Category	Concession	Density t/m3	Mt	Fe%	SiO2%	Al2O3%	P%	S%
Indicated	Opaban 1	4	133.71	57.57	9.46	2.54	0.04	0.12
Indicated	Opaban 3	4	8.53	62.08	4.58	1.37	0.07	0.25
Inferred	Opaban 1	4	127.19	56.7	9.66	2.7	0.04	0.2
Total Indicated and Inferred		269.4	57.3	9.4	2.56	0.04	0.16

The information in this JORC Resource table was prepared and first disclosed under the 2004 JORC Code (in Strike's ASX announcement dated 11 February 2010: Peruvian Apurimac Iron Ore Project Resource Increased to 269 Million Tonnes) and has subsequently been upgraded to comply with the 2012 JORC Code and disclosed in Strike's ASX Announcement dated 19 January 2015: Apurimac Mineral Resources Updated to JORC 2012 Standard.

Cusco Iron Ore Project (Peru) (Strike - 100%)

The Cusco Project has a JORC Code (2004 Edition) compliant Mineral Resource of 104.4 Mt Inferred Mineral Resource at 32.62% Fe.

Category	Concession	Density t/m3	Mt*	Fe%	SiO2%	Al2O3%	P%	S%
Inferred	Santo Tomas	4	104.4	32.62	0.53	3.19	0.035	0.53

The information in this JORC Resource table was prepared and first disclosed under the 2004 JORC Code (in Strike's ASX announcement dated 17 June 2011: Cusco Project - Resource Estimate). It has not been updated since to comply with the 2012 JORC Code on the basis that the information has not materially changed since it was last reported.