Strike Resources : Iron Ore Production Ramps Up in Peru

Thursday, 18 March 2021

ASX Code : SRK

ASX MARKET ANNOUNCEMENT

Iron Ore Production Ramps Up in Peru

HIGHLIGHTS

Significant Company milestone achieved with 20,000 tonnes of high-grade direct shipping ore (DSO) mined from the Apurimac Project in Peru since late December 2020, with ore stockpiled locally for crushing and screening.

Strike is initially targeting annualised production of ~125,000 tonnes of iron ore from specific portions of concessions comprising the Apurimac Project.

Potential exists to significantly expand production through ore from multiple sites within the Apurimac Project, once steady state operations are achieved.

Targeting production of a high grade "Apurimac Premium Lump" DSO product of 64-65% Fe with low impurities.

Current strong iron ore price (currently US$168 per tonne1) and high lump premium (of an additional potential ~US$33 per tonne) indicate a significant near term positive cashflow opportunity.

Production costings have been completed with anticipated FOB cost at Pisco Port of less than ~US$70 per tonne.

First cashflow from sales expected in the June 2021 Quarter.

Strike Resources Limited (ASX:SRK) (Strike) is pleased to provide an update on a significant milestone in company operations in Peru relating to its 100% owned Apurimac Iron Ore Project.

Strike confirms that since mining of high-grade surface deposits of iron ore from the Apurimac Project concessions commenced in late December 2020, over 20,000 tonnes of direct shipping ore (DSO) has been mined and transported by trucks for local crushing and screening, with over 6,000 tonnes of material having been crushed to date.

Strike is now ramping up operations to increase throughput both via mining operations and the engagement of a second crushing and screening plant to increase crushing capacity to 1,000 tonnes per day.

Once Strike has successfully crushed approximately 20,000 tonnes of material, it plans to progressively transport the Apurimac Premium Lump DSO product to a stockpile at the Port of Pisco, (located approximately 570km by road from the Apurimac Project) using locally sourced trucks.

1 62% Fe Index (CFR China), as at 16 March 2021 www.strikeresources.com.au

	STRIKE RESOURCES LIMITED	A.B.N. 94 088 488 724
	Level 2, 31 Ventnor Avenue, West Perth, Western Australia 6005
ASX : SRK	T | [phone]	F | [phone]	E | [e-mail]

20210318 SRK ASX Iron Ore Production Ramps up in Peru.docx

Figure 1. Mining of outcropping iron ore at Apurimac Project by local miners

Figure 2. Loading of Ore onto trucks for delivery to crushing plant

FOB Costings

The total free on board (FOB) cost of the Apurimac Premium Lump product at the Port of Pisco is expected to be less than US$70 per tonne, including mining, crushing and screening, haulage, port and administration costs.

These figures are based on actual costs incurred to date with respect to mining and crushing together with quotations for key sectors of the supply chain including road transport and port costs and based upon the Company's previous experience in 2013 where it commenced a trial mining operation from the Apurimac Project with ore delivered and sold to a steel mill in Peru.

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20210318 SRK ASX Iron Ore Production Ramps up in Peru.docx

The Company notes that the Benchmark iron ore price continues to remain very strong - currently ~US$168 per tonne1. Furthermore, the premium attached to Lump ore over Fines has increased significantly, reaching record highs this month of ~US$0.51 per dry metric tonne unit. Based on Fe content of 64% for the Apurimac Premium Lump product, this would imply an uplift of ~ US$33 per tonne of Lump ore over the Benchmark iron ore price for Fines, once the Apurimac Premium Lump product is established in the market.

Apurimac Premium Lump DSO

Based upon the previous experience in a similar pilot operation undertaken in 2013 and a review of assay results of the DSO material crushed to date, Strike is targeting the sale of a high-grade DSO lump product with low impurities.

Product	%
Fe	64.35
P	0.07
S	0.07
SiO2	2.85
LOI	0.56
Al2O3	0.91

Table 1: Target characteristics of Apurimac Premium Lump DSO material

Strike also refers to a previous study on the DSO material identified at the Apurimac Project. For further details, refer to Strike's ASX Announcement dated 23 November 2010: Apurimac Project Update.

Figure 3: High grade Apurimac ore prior to crushing and screening

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20210318 SRK ASX Iron Ore Production Ramps up in Peru.docx

Figure 4: Crushing and screening of Apurimac ore underway at local plant to produce high grade Apurimac

Premium Lump DSO product.

Figure 5. Stockpiles of Apurimac Premium Lump Ore at local crushing and screening plant

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20210318 SRK ASX Iron Ore Production Ramps up in Peru.docx

Off-take

Strike has engaged with multiple parties regarding off-take of the Apurimac Premium Lump product from Peru and is in advanced discussions in this regard. Strike is confident of securing an off-take agreement shortly.

Mining Background

The process of engagement of local miners to mine this DSO material is based on Peruvian mining legislation which allows local miners to mine up to 350 tonnes per day (or ~125,000 tonnes per annum) of iron ore from specific portions of a mining concession. This legislation allows for significantly reduced timetables and simplified processes for obtaining environmental and other permits.

Strike proposes to ultimately undertake similar mining operations from multiple sites with increased multiples of annualised production, once steady state operations from the first deposit are achieved within the framework of current Peruvian mining regulations.

William Johnson, Managing Director:

Whist the Company remains firmly focussed on developing Paulsens East in the Pilbara into production, current market conditions have provided an opportunity to generate additional valuable cashflow from a mining operation at our Apurimac Project in Peru as well.

Our local Peruvian team on site have done a tremendous job in marshalling local communities, miners and contractors together. Strike looks forward to replicating this operation several times across different deposits and community groups so we can progressively ramp up production whilst providing sustainable economic employment opportunities for local community members.

ABOUT THE APURIMAC IRON ORE PROJECT

Strike's Apurimac Iron Ore Project in Peru is 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.

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

Refer Strike's ASX Announcement dated 20 January 2015: Apurimac Mineral Resources Updated to JORC 2012 Standard.

In addition to the current JORC Mineral Resource, there is significant exploration potential given the deposits are open at depth and along strike (with very promising drill results including 154m @ 62% Fe) with extensive undrilled gravity and magnetic anomalies.

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