The Merolia Nickel and Copper Project (100%)

May 2016

The Merolia nickel and copper project consists of a major section of the Merolia greenstone belt southeast of Laverton in the Eastern Goldfield of WA covering 771 square kilometres that is prospective for magmatic nickel and copper sulphides.

The main prospective zones are the basal contact of the Diorite Hill ultramafic intrusion and three intrusive ultramafic complexes (Rotorua, Curara and Coglia) south of Diorite Hill (Figure 1).

Drilling in 2016 has identified a possible nickel sulphide discovery at the Coglia nickel prospect where drilling encountered a nickel intersection of 12 metres at 2.18% nickel including 4 metres at 3% nickel.

Figure 1 Map of the tenements at the Merolia Project near Laverton WA, with target areas highlighted.

Coglia Nickel Sulphide Prospect (100%)

Drilling in 2016 encountered a strongly enriched ultramafic regolith profile containing 12 metres at 2.18% nickel including 4 metres at 3% nickel. The mineralised intervals are summarised below:

•  12 metres at 2.18% nickel, 181ppm copper, 27ppb Pt+Pd, 0.57% chrome, 604ppm cobalt, 536ppm zinc including
• 4 metres at 2.95% nickel, 164ppm copper, 6ppb Pt+Pd, 0.50% chrome, 617ppm cobalt and 865ppm zinc.

The nickel and copper mineralisation has been concentrated as a result of weathering and supergene enrichment processes but is interpreted to be derived from magmatic nickel sulphides concentrated in the underlying ultramafic sequence due to crystal fractionation. The Company will collect the one metre samples shortly for further analysis to determine if the mineralisation is related to sulphide mineralisation.

Figure 2 The Coglia nickel sulphide prospect showing the large Ultramafic Unit (LUU) where drilling (MERC004) identified nickel mineralisation.

Figure 3 Cross section showing the mineralised zone encountered in drill hole MERC004

The drilling also revealed highly anomalous zones of platinum (Pt) and palladium (Pd) in the fresh ultramafic providing diagnostic evidence that the Coglia ultramafic unit is particularly prospective for nickel sulphide mineralisation. Platinum group elements partition strongly into the sulphide phase during the crystal fractionation process and the levels present in the Coglia ultramafic demonstrate that a sulphide phase is present. The results include:

• 30 metres at 240ppb Pt+Pd from 224 metres
• 16 metres at 87 ppb Pt+Pd from 184 metres
• 12 metres at 150 ppb Pt+Pd from 144 metres

The Company considers these sequences to be exceptionally prospective for nickel sulphide accumulations.

The Coglia ultramafic is 7 kilometres long and 1500 metres wide and consists of fractionated series of ultramafic intrusive units. There are potentially several prospective horizons and further petrological and compositional studies are required to determine the best exploration approach. The Company will engage specialist consultants to assist with this work.

Project Background

The Merolia project contains numerous magmatic nickel-copper targets that into two categories:

1.  Layered mafic-ultramafic intrusions: where the nickel and copper sulphides can form at the bottom of the intrusion around the feeder aconduit. Regional examples include the Nova Bollinger deposit in the Frazer Range, the Sally Malay deposit in the Kimberly’s and the Nebo-Babel deposit in the Musgrave region.
2. Extrusive and intrusive ultramafic rocks where the nickel and copper sulphides can form along the bottom of the lava channel or sill in depressions and in areas of ponding. Examples include the Victor Long deposit in Kambalda, the Camelwood deposit (Rox Resources) and Rosie deposits (Independence Group) north of Laverton.

The above discoveries highlight the potential for the Merolia nickel-copper project to host similar mineralisation as the project contains both intrusive layered ultramafic and extrusive komatiitic type targets including:

1. The Diorite Hill basal contact where historical geochemistry has identified nickel and copper soil anomalies prospective for magmatic nickel-copper sulphide mineralisation. Recent electromagnetic surveys have identified conductive targets consistent with sulphide accumulations the require drill testing
2. The Coglia ultramafic complex where shallow historical drilling identified extensive nickel in laterite with associated copper and platinum-palladium anomalies. Nickel values within the laterite profile are typically in the 0.6% to 0.8% range with values up to 1.83% nickel. Recent electromagnetic surveys have identified conductive targets consistent with sulphide accumulations that require drill testing
3. The Rotorua ultramafic complex where virtually no exploration has been carried out across the main 10km by 1.5km sill. Anomalous nickel in soil results do occur at the southern tip of the complex.
4. Extensive extrusive komatiitic sequences that are also highly prospective for basal contact nickel sulphide accumulations along at 51 kilometre trend.