Background

The Company‘s Iron Ore Project is associated with Mt Oscar Main Project (E47/1379), which is perspective with mineralisation of magnetite and hematite.

Geology

Mt Oscar Iron Ore Project is located in the north-western part of the Pilbara Craton. The hematite-magnetite mineralisation found at Mt Oscar lies within the Cleaverville Formation occurring as banded iron formation (BIF) interbedded with cherty and fine-grained clastic sedimentary rocks. Dolerite sills are very common.

The Magnetite Rich Horizon – Example of Unit A in the North-East Corner of Mt Oscar Main

The region is host to a number of other operating projects and related industries with significant opportunity to leverage from surrounding projects. The MCC’s Cape Lambert Project is reported to have a resource of approximately 2.0 billion tonnes, which is only 25km away from the Mt Oscar Project area. Other projects in the region, but a bit far away (80-100km) from the Mt Oscar Iron Ore Project area, are the Sino Iron Ore Project which is reported to contain a resource approximately 2 billion tonnes of iron ore, Balmoral South project reported to have a resource of approximately 1.4 billion tonnes, and Iron Ore Holdings’ project reported to have a resource of approximately 1.1 billion tonnes.

The magnetite-bearing rocks at the Mt Oscar Main crop out strongly over an oval shaped area measuring some 5km by 2km.

Magnetite Mineralisation Outcropping at Mt Oscar Main

The BIF horizons are strike-continuous for up to 5.5 kilometres and are locally up to 160m thick within Mt Oscar Main E47/1379. Although of variable thickness, the magnetite-rich portion of the BIF is commonly in excess of 60m wide. The magnetite mineralisation occurs in both the Company’s tenement E47/1379 and the adjoining tenement E47/1217 to the west, in which a JORC resource has been defined with 126 Mt at 33.84%Fe.

Exploration Work

Rock Chip Sampling

A rock chip sampling programme was completed in 2008 by the previous company – Apollo Minerals Limited with the prospective portion of E47/1379. Initially, it identified some distinguished BIF strikes at the Mt Oscar Main tenement, i.e. A, B, C, D, E, F and G.

Eighty samples were collected with a highest iron ore reported of 55.82% Fe. Four samples reported over 50% Fe and twenty-two exceeded 40% Fe. These results are considered high for a magnetite style of mineralisation as assays from 30% Fe to 40% Fe are more commonly reported from rock chip samples of magnetite mineralisation.

Mt Oscar Main Magnetite Horizon and Sample Results > 40%Fe

Native Title and Aboriginal Heritage Agreement

A Native Title and Aboriginal Heritage Agreement was signed in September 2008 by Apollo Minerals Limited with the Ngarluma People, the traditional owners of the country in which Mt Oscar exploration licences are situated. It was then resigned by Oscar Resources in 2016.

Aerial Magnetic and Radiometric Surveys

A high resolution aeromagnetic survey was commissioned during 2008 over the Mt Oscar target defining intense magnetic anomalism. The data from this survey has been merged with multi-client data to extend the magnetic coverage to all of the magnetite prospective area at Mt Oscar.

Results of the survey indicated areas of very intense magnetic anomalism at Mt Oscar both with the Company’s ground and the adjoining ground to the east, reaching as high as 60,000 nT above the ground of C and D at Mt Oscar Main, as depicted as shades of red in the following figure.

Compilation of Aeromagnetic Data at Mt Oscar

In April 2009 Southern Geoscience Consultants (SGC) prepared a geophysical interpretation of the Mt Oscar Project including the Mt Oscar East tenement (E47/3596).

The resulting exploration for the Mt Oscar Main tenement is modelled by Southern Geoscience Consultants (SGC) to be 300 to 500 Mt magnetite-bearing BIF with grades of between 31% and 37% iron. This modelling is based on interpretation and modelling of geophysical data, rock-chip samples and the December 2009 RC drilling information from Mt Oscar Main, and geophysical data and rock-chip sampling at Mt Oscar East.

Mt Oscar Project BIF Exploration Target based on Geophysical Interpretation

Note: Estimation of Resource at Mt Oscar Main is based on BIF Units A, C and D.

Water Supply Scoping Study at Mt Oscar Main

In 2009, an independent groundwater consulting group was commissioned to undertake a water supply scoping study for the Project. The consultants concluded that, based on available data, it is likely that a suitable groundwater resource of sufficient size and quality could exist in the project area capable of supporting an operation producing 5-10 Mt pa. Investigations showed that the target areas most likely to host the required groundwater resources are not constrained by any current native title claims, designated environmentally sensitive or drinking-water source protection areas.

Geological Mapping

A detailed mapping programme was completed during March and April that covered all iron prospective BIF outcrop within the Mt Oscar Main tenement.

Mt Oscar Main Geological Mapping

Based on this mapping, the BIF sequence in the north of the Mt Oscar Main tenement E47/1379 has shown to comprise four main units, three being BIF units with distinctively different characteristics and the fourth being the intervening dolerite sills. The whole BIF sequence, including intervening mafic volcanic lenses, would have been deposited prior to the intrusion of numerous dolerite sills which have been controlled by various phases of faulting.

Due to structural complexity of the area the relative ages of these units is uncertain but it would appear that the oldest BIF unit is that designated as BIF A, younging through BIF B, to BIF C and D. The latter were initially considered to be distinct units but this has since reassessed and the two are considered to be the same upper part of the sequence.

RC Drilling Programmes

Two RC drilling programmes were completed by Apollo Minerals Limited as follows:

Collar locations and drilling directions for all holes are shown on the plan.

Drilling Locations

The initial drill programme was designed to target the highest magnetic amplitudes as modelled by SGC. Five holes were drilled on four drill profiles that are approximately 200 metre-spaced sections, to provide a test of 800m strike of horizons C and D.

Downhole intercepts of magnetite mineralisation ranging from 16m to 168m having iron grades ranging from 31.9% to 36.9% have been encountered within C and D horizons. The average iron grade for the intercepts is 35.2% Fe. The mineralisation remains open at depth and along strike for both horizons with the deepest holes extending to a vertical depth of 300 metres. Shallow cumulative intercepts of 271m @ 34.8% Fe and 192m @ 35.9% Fe were returned from a depth of 14m in drill hole OSRC004 and 25m depth in drill hole OSRC001 respectively.

Several individual composite assays exceeded 40% iron with the highest being 43.8% iron returned from the 5m composite sample comprising drill intercept from 74m to 79m in drill hole OSRC004.

Mt Oscar Main Drill Sections (Stage 1 Drilling Programme) Units C+D

The second drilling programme was undertaken at Mt Oscar Main over BIF Unit A South during early November 2010. Unit A has a strike length of approximately 1.4km with estimated true width varying between 60m and 120m. Four holes were drilled for 732m and intercepts of magnetite-bearing BIF were recorded in three of the four drillholes.

Drilling of Unit A was planned as this unit was seen to host some slightly coarser, albeit still fine grained, magnetite than that seen in Units C and D. In addition, the explorer, Fox Resources, to the west reported a resource estimate of 72.4Mt @ 34% Fe head grade at that time based on 27 RC holes and 7 diamond holes in TMI anomalies 1 and 2 which are along strike from the Mt Oscar Main’s Unit A South. Total BIF intersections were 106m with 33.56% Fe, 111m with 33.92% Fe and 66m with 31.18% Fe in holes from west to east. The average iron grade for the intercepts of 287m is 33.1%Fe. The BIF horizon comprise strongly jaspilitic, pink to red BIF that is variously magnetite bearing. The magnetite rich portions are grey to dark in colour and these occur along with wide intercepts of mostly low iron bearing red chert within the BIF horizon, together with amounts of shale.

Mt Oscar Main Drill Sections (Stage 2 Drilling Programme) Unit A

Metallurgical and Processing Testwork

An independent consulting mineral processing group was commissioned in early 2009 to undertake a programme of Davis Tube Recovery (DTR) and metallurgical testwork. Samples were taken from RC drill chips obtained during the drilling programme that tested Units C and D at Mt Oscar Main.

DTR results at P80 38 microns from twelve composite intervals based on 151 individual samples selected from the drill holes. Individual DTR results up to 64.0%Fe with an average of 58.0% Fe. Mass recovery peaked at 87.7% with an average of 42.4%.

Additional testwork designed to further reduce silica was undertaken on a composite sample from all five drill holes with a grade of 34.6%Fe, 41.2%SiO2, 2.9%Al2O3, 0.05%P and 0.038%S, via a flowsheet of magnetic separation, regrinding, magnetic separation and flotation. This achieved a product concentrate grade of 62.6%Fe and 10.3%SiO2.

In the second DTR test programme, a different independent group was commissioned to conduct metallurgical analysis on drilling composite samples obtained from the second stage RC drilling, which produced two distinct iron concentrates grading 58%Fe and 64.5%Fe at a P80 25 micron grind size. Testwork with flotation showed that magnetite from Unit A is capable of producing saleable product ie >60% Fe, <8% (Al2O3+SiO2).

Significant DTR intercepts include:

• 40m (from 116m) at a grade of 62.3% Fe, 0.8% Al2O3, 10.7% SiO2, 0.03% P and 0.09% S from drill hole OSRC006, and
• 30m (from 166m) at a grade of 66.2% Fe, 0.2% Al2O3, 5.9% SiO2, 0.02% P and 0.02% S from drill hole OSRC006.

Flotation tests produced a concentrate grade of 64.5%Fe, 0.5%Al2O3 and 7.0%SiO2 at a P80 45 micron from drilling hole OSRC007.

Several large DTR composites demonstrated very low levels of weight recovery including a cumulative interval of 89m at 37.3% Fe of very weakly magnetic to non-magnetic iron ore (equivalent to 30% of all mineralisation above a 20% Fe head grade cut-off) including:

• 25m (from 171m) at 35.7% Fe from drill hole OSRC006;
• 40m (from 121m) at 33.9% Fe from drill hole OSRC007;
• 25m (from 66m) at 27.6% Fe from drill hole OSRC008.

More Exploration Target Discovery

Given the unexpected and positive metallurgical results of Unit A which highlighted the potential for significant quantities of weakly or non-magnetic iron ore mineralisation, the iron ore mineralisation at Mt Oscar Main was reassessed with both magnetite and hematite in 2011. An additional 5 kilometres of BIF horizons have been identified, possibly with some further BIF horizons existing. This means a total of 11km of BIF strike is perspective for both styles of iron ore mineralisation at Mt Oscar Main Iron Ore Project.

Exploration Targets for Mt Oscar Main

Project Economic Evaluation

During 2010 to 2012, a professional engineering company was commissioned to work on a study for the Project which aims to evaluate the development options available for the Project and highlight potential economic return. In the study, it used assumptions of 30% of weight recovery and 20 years of project life at a capacity of 5 Mt pa magnetite concentrate.

Metallurgical Testwork in China

A comprehensive processing programme has been commissioned to the Mineral Processing Centre at Jiangxi University of Science and Technology. A new technology - Elutriation magnetic separation (EMS) was also tested. The results are summarised as:

• Staged grinding, staged LIMS separation and cationic reverse flotation for the drilling samples grading 34.91% Fe from BIF Unit A produced a concentrate of 61.55% Fe with 26.7% iron recovery and 47.92% mass recovery;
• Staged grinding, staged LIMS separation and Anionic reverse flotation for the drilling samples grading 61.05% Fe from BIF Unit A produced a concentrate of 61.05% Fe with 26.7% iron recovery and 47.14% mass recovery;
• Staged grinding, staged LIMS separation and EMS for the samples grading 36.3% Fe from BIF Unit C at Jinken produced a concentrate of 61.65% Fe with 38.08% mass recovery.

From the tests achieved with the flotation in 2015, both cationic and anionic reverse flotation techniques applied produced similar beneficiation results, the Fe grade increases only slightly but result in a loss of mass recovery. From an economic perspective, a further fine grinding with a flotation process to obtain a higher grade concentrate seems not so promising. Therefore, to magnetic iron part of the Mt Oscar iron project, it seems that a process of two stage grinding, two stage low intensity magnetic separation (LIMS), plus two stage elutriated magnetic separation (EMS) is better than a process of staged grinding, staged LIMS separation and staged reverse flotation.

Weakly or non-magnetic portion was unable to be upgraded from the drilling sample material with a process of staged grinding and staged high gradient high intensity magnetic separation (HGHUMS, i.e. SLon Magnetic Separator). But no test work has been undertaken on those orebodies with only hematite ore.