Gold Exploration

The Company highlights the potential for all the mineralised gold structures identified to date to interact with the regionally extensive, iron rich Lunnon Sediment. This same host rock records extreme high-grade gold mineralisation at the Beta/Hunt mine, owned and operated under sub-lease by TSX listed Karora Resources (previously RNC Minerals (TSX:RNC) (Karora). The Beta/Hunt nickel and gold mine, located less than 15km to the north of Foster-Baker, is in the same stratigraphic position as the Foster nickel mine and was run by WMC as a dual-commodity mine until the larger St Ives Gold operation was sold to Gold Fields Ltd in 2001.

Gold Fields sold the nickel rights under a sub-lease arrangement to Reliance Mining in 2003, and over the time the gold rights were also acquired with the sub-lease now held by Karora. Lunnon Metals’ executive management previously managed the gold exploration at Beta/Hunt when it was owned and operated by WMC and also later when under Gold Fields’ ownership. Indeed, the creation of the sub-lease and its divestment to Reliance Mining was managed by the Company’s Managing Director when still an executive with Gold Fields.

Thus, a significant host rock at Beta/Hunt, the Lunnon Sediment is also present at Foster, just as it is at Beta/Hunt, is typically found 80-120m into the footwall of the main nickel contact. The significance of this is twofold:

1. Historical exploration by WMC for nickel typically stopped once the main nickel contact had been tested. That is, few, if any, drill holes tested deep enough to intersect the Lunnon Sediment, especially for gold. In essence, it was not until Karora followed the lower grade gold structures at the Beta/Hunt mine down dip into the Lunnon Sediment that its potential as an excellent host for high-grade and extreme-grade gold mineralisation was discovered. A new “Exploration Search Space” had been revealed.
2. At the FBA the Lunnon Sediment again sits in the footwall of the main nickel contact, an area that even though it outcrops, was not tested for gold due to:
3. Foster being a nickel mine, so there was limited to no gold focus, either at surface or underground;
4. As above, nickel drilling typically stopped prior to reaching the Lunnon Sediment; and
5. There was no precedent that the Lunnon Sediment was a valid host rock for gold.

In summary, the Lunnon Sediment sits along strike from all current high-priority gold prospects reported previously and in today’s announcement . As evidenced from publicly reported information by Karora together with the intimate personnel experience of Lunnon Metals’ own team, the Company considers that low-modest grade gold bearing structures have the potential to record a significant enhancement in grade when interaction with the iron rich Lunnon Sediment occurs. This opportunity will be factored into both the current surface exploration program for gold but also underground exploration in the future when the Foster nickel mine is re-started.