Drilling Update

14 June 2016

1nq

NQ Minerals PLC
(“NQ Minerals” or the “Company”)

Drilling Update

NQ Minerals (ISDX: NQMI), the Australian-based exploration and mining company is pleased to announce an update on its exploration projects in Queensland.

Highlights

  • Drilling results and ongoing geological evaluation have demonstrated a greatly increased gold potential at Ukalunda, in addition to the well-established high grade silver potential.
  • Mining Lease for the Sunbeam prospect is expected to be granted in the 2H 2016 allowing the processing of the silver rich stockpiles to provide cash flow to fund future work.
  • Recent granting of the adjacent tenement at Ukalunda increases the size of the project area by over 75% to 132 km².
  • New tenement has good gold potential with historic assays as high as 127g/t gold.
  • The Company now has over 15km² of the epithermal gold prospective Drummond Basin sequence which hosts the Wirralie gold mine 25km to the south.
  • 3D computer modelling of drill results combined with aeromagnetic survey results has highlighted a number of new important drill targets.
  • Government approval has been granted for a further drilling program which is planned to commence in 2H 2016, towards the goal of defining resources to JORC Code standards.

Brian Stockbridge, Non-Executive Chairman, commented today:

“The Board and Management of NQ Minerals continue to uncover the inherent value of the mineralisation within the Ukalunda project and have enlarged the permit area to include more land containing historic high grade mineral discoveries.  The Management is also highly encouraged by the gold values from drill results and rock chip assays, as well as recent approvals to drill key areas.

The Mining Lease application is progressing on the Sunbeam area. Once granted, this will allow processing of the surface stockpiles to begin providing cash flow to fund the exploration and development of the project. This is planned to minimise dilution for shareholders going forward. The Board is looking forward to announcing the results of the metallurgical tests on the rich silver ore from the Sunbeam stockpiles in the coming weeks.”

UKALUNDA PROJECT UPDATE

NQ Minerals is delivering on its two key objectives – drilling to ascertain the extent and grade of targets identified from previous resource data and taking steps to process the approximately 48,000t of mineral stockpiles at Sunbeam which contain potentially commercial grades of silver and other minerals at its Ukalunda Project at EPM 18019.

The short term strategy is aimed at generating cash flow from processing the Sunbeam mineral stockpiles and increasing value by the targeted drilling of known deposits.  The tenement contains a number of previously operational silver, lead and copper mines.  The easiest way to add value is by drilling and upgrading the previous resource data, which is too old to be Joint Ore Reserves Committee Code (JORC) compliant.

Encouraging Gold Results

On 20 April 2016, the Company reported drilling results from Ukalunda. A 24-hole reverse circulation drilling program totalling 2,661 metres was completed at the White’s Hope, Rosenthal, Walhalla and Carrington prospects during January and February 2016. The most impressive intersections came from the White’s Hope and Carrington prospects. The gold mineralisation in this area represented a new discovery.

Best gold intersections from the drilling program of January-February 2016

Prospect Drill hole number Length of intersection Grade
White’s Hope WHC003 11m

including 3m

1.4g/t gold

3.6g/t gold

Walhalla WLC009 1m 3.9g/t gold
Carrington CRC023 1m 2.57g/t gold
Carrington CRC018 3m 0.5g/t gold

The assessment of known gold mineralisation across the tenement area was intensified after receiving the recent gold drill intersections. This assessment included a re-evaluation of previous high rock chip assays found at various prospects at Ukalunda (EPM 18019).

A total of 24% of the historic “grab” rock chip samples from 11 of the gold bearing prospects on the EPM assayed above 1 g/t gold.  Best grades above 3 g/t gold were at:

Prospect              Rock Chip Assays g/t Au

  • Walhalla 8, 10.8, 9.6, 4.9, 4.9, 3.7, 3.5, 3.2.
  • Silver King 4.
  • Pyramid 6, 5.4, 3.8, 3.8, 3.2.
  • Carrington 0, 12.8.
  • Wynne Creek 6.
  • Polka Dot 9, 16.4, 14.2, 13.9, 13.8, 13.3, 13.1, 10.0, 8.3, 7.6, 5.9, 5.4, 3.1.
  • Daisy 3, 5.6, 3.9.
  • Daisy North 9.
  • Duncans 5, 5.4.

This work identified a “new” prospect, Wynne Creek, where there is anomalous stream sediment gold over 2 kilometres of strike containing historic rock chip sample assaying 6.6 g/t gold. The prospect lies in the epithermal gold prospective Drummond Basin sequence which hosts a number of significant gold deposits including the Wirralie gold mine 25 kilometres to the south.

Increased exploration acreage at Ukalunda

NQ Minerals has been granted EPM 26204 which adjoins EPM 18019 at Ukalunda. This increases the size of the Ukalunda Project area from 64.4km² to 114.8km².

With the expansion of its overall tenement area the Company now holds over 15km² of the prospective Drummond Basin sequence with additional areas likely under Bulgonunna Volcanic cover.

The new EPM 26204 is made up of 18 sub blocks in separate groups in the north-east, south and south-west. Results from historic exploration of these areas are highlighted below.

The north-eastern sub-block group has good potential to host high grade silver, gold, copper and other base metal deposits.  There is potential for

  • repetitions of the Sunbeam high grade silver mineralisation.
  • epithermal gold mineralisation associated with Late Carboniferous ignimbritic volcanics at the Python South prospect.
  • quartz hosted gold mineralisation at the Earlscliffe and other prospects
  • porphyry copper style and possibly breccia hosted base metal and gold mineralisation at Leonie and surrounding areas
  • magnetite skarn hosted gold and base metals mineralisation at the discrete S-E Magnetic Anomaly.

Historic high grade sampling at the Earlscliffe prospect in EPM 26204

Prospect Drill intersection Costean sample¹ Grab sample²
Earlscliffe 3m @1.7g/t gold 61.5g/t gold 127g/t gold

¹ Costeaning sampling is a form of geochemical sampling where a shallow trench is dug then the exposed rock mapped, analysed and sampled. 

 ² Grab Sample: A sample from a rock outcrop that is assayed to determine if valuable elements are contained in the rock. Literally walking the ground and grabbing prospective looking rock samples, mapping the location of each. The samples are then assayed to begin forming a map of where further investigation may be warranted. A grab sample is not intended to be representative of the deposit, and usually the best-looking material is selected.

The new sub-blocks in the south show skarn/granitic contact related gold mineralisation at the Salopia and Salopia Road Skarn prospects.

Historic high grade sampling at the Salopia prospect in EPM 26204

Prospect Sample type Length of intersection Grade
Salopia Drill hole 3m 11.0g/t gold
Salopia Rock chip 94.9g/t gold
Salopia Rock chip 49.4g/t gold

 The new sub-blocks in the south-west have potential for extensions to the Birthday Gift breccia and vein hosted mineralisation and also contain vein hosted silver and base metals at New Year Gift.

 3D Modelling

Interpretation of the results of 3D magnetic inversion modelling of Ukalunda EPM 18019 to a depth of 1,000 metres is in progress. This has already confirmed the great vertical extent of the regional fault that controls the large alteration system west of Carrington. Systematic geological mapping and soil geochemical surveys are proposed there to delineate the best targets for follow-up drilling. The inversions have already highlighted a number of previously unknown structural and magnetic targets.

 Drilling program in 2H 2016

Government approval has been received to drill on previously constrained land in the western section of the EPM. A further drilling program is planned for the 2H 2016 which include the drilling of the Pyramid silver-lead-gold veins and the Birthday Gift zinc-silver-lead bearing breccia to define JORC Code resources.

The Birthday Gift zinc-silver-lead mineralised breccia is more than 500 metres in diameter and open to the west and north-east.  Broad spaced drilling of part of the breccia by Sons of Gwalia in 1995 identified an in situ resource estimated to be 4.0Mt @ 1.63% zinc with variable silver values of up to 230g/t silver. If a deposit of such a size could be proved up at higher grade it would have the potential to be a standalone mine, but economics depend largely on the grade of zinc and silver identified by drilling this breccia structure.

The 3D evaluation of the recent drilling results has led to a further 10 holes being designed to follow up on the 2% copper and 2% bismuth intersections at the Carrington complex. An additional three holes are also proposed which are designed to target the wider zones on the Walhalla oreshoot where 1m @3.9g/t gold was recently encountered in drill hole WLC009.

Elsewhere in EPM 18019, negotiations with landlords are at an advanced stage to enable the continuation of the drilling program at White’s Hope and Polka Dot prospects.

 SUNBEAM STOCKPLIES

NQ Minerals is also working to process the Sunbeam mineral stockpiles of an estimated 40,000 – 50,000t containing commercial grades of silver and significant grades of other metals.  Preliminary results were received from test runs on two types of this Sunbeam stockpile mineralisation using new high-tech gravity concentration methods.  Preliminary results produced silver concentrates grading 227.2 oz/t silver and over 321 oz/t silver respectively.  Further results are awaited.

The Sunbeam mineral stockpiles are situated near the Sunbeam silver mine. A review of historic data at MLa100040 Sunbeam on the Ukalunda Project (EPM 18019) has underlined the scale of the mineral potential of this prospect.

Underground mining at Sunbeam carried out between 1891 and 1923 on the very rich lodes produced a total of over 427,008 ounces of silver from 950t at an average grade of 495oz/t silver (15,395 ppm silver). At today’s prices this 950t of material would be worth US$7 million. Over 170,000 ounces of silver was extracted during subsequent operations. At today’s prices the near 600,000 ounces of silver extracted would have a value of US$10 million.

In 1996, a bulk sample of 3.7t sent to the Charters Towers battery produced concentrates grading at 196.9oz/t silver (6,124g/t silver) using gravity separation methods (Wilfley tables).

In 1986, a subsequent operator excavated an open cut and stockpiled approximately 48,000t of mineralisation, most of which remains on site. Two shipments of selected ore were made to the Port Pirie smelter, South Australia, with an average grade of 4.4% lead, 108oz/t silver (3,359/t silver) with 1-2% copper, 0.5% zinc, 0.6-1.6% antimony and 0.1 and 0.2% arsenic. Gross value in 1987 was $159,000 averaging $1,049 per tonne.

In 1988 a seven hole, 611m reverse circulation drilling program at Sunbeam produced some impressive gold intersections with underground workings being intersected in three of the holes. The operators concluded that mineralisation was still open to the south. The higher grade mineralisation is likely to continue down plunge at depth.

High Grade Results from historic drilling program¹ at the Sunbeam prospect (1998)

Prospect Drill hole number Length of intersection Grade
Sunbeam SRC-2 13m

Including 4m

214g/t silver

494g/t silver

Sunbeam SRC-4 7m 131g/t gold

¹ Seven hole drilling reverse circulation program totalling 611m metres

SQUARE POST PROJECT

Although the main focus is currently on the Ukalunda project, exploration work continues on the Square Post Project (EPM 18510) where aerial geophysical survey data was acquired and 2D magnetic and radiometric maps were prepared.  Magnetic inversion modelling is in progress to provide deep 3D geological and structural information.

For further information, please visit http://www.nqmpl.com or contact:

Brian Stockbridge

Non-Executive Chairman

NQ Minerals plc

Tel: + 44 (0) 7876 888 011

Corporate Advisor

Nick Michaels and Jon Isaacs

Alfred Henry Corporate Finance Limited

www.alfredhenry.com

Tel: +44 (0) 207 251 3762

 

About NQ Minerals plc:

NQ Minerals is an Australian‐based exploration and mining company, focusing on projects where past exploration work has established the presence of mineral occurrences. The Company’s management team has decades of experience in the exploration and production of gold, silver and a variety of base metals. The Company has two exploration projects called Ukalunda and Square Post.

Ukalunda Project – Consists of Exploration Permits for Minerals (EPM) 18019 and EPM 26204. EPM 18510 is at Ukalunda covers an area of 73.6 km² and consist of 23 sub-blocks with 33 prospects identified where mineral discoveries have been made. The EPM lies mid-way between the Burdekin Falls Dam and the historic Wirralie gold mine. The best drill intersections shown have good grades and widths of gold, silver, copper, lead, zinc, bismuth and antimony.  EPM 26204, is adjacent to EPM 18019 at Ukalunda, and consist of 18 sub-blocks covering an area of 57.8 km² and prospects in this EPM include: silver, base metals and epithermal gold.

Square Post Project – Consisting of EPM 18510 which lies 50 km south of Townsville and covers an area of 64.4 km² and is made up of 20 sub-blocks. Historic assays show good grades of gold and silver.