Speciality Metals International Limited Annual Report 2019

Page | 13 MINERAL RESOURCES AND ORE RESERVES STATEMENT • The original capital cost estimates determined as part of the Feasibility Study were revised by two independent EPCM exercises completed in 2016, and since then the capital and operating cost estimates have continually been reviewed, the last revision being carried out in August 2018. • The quarry currently operated on site by Mt Carbine Quarries Pty Ltd includes crushing, screening and rock moving equipment used on a campaign basis. If Speciality Metals acquires Mt Carbine Quarries, it plans to use the quarry’s crushing, screening and rock moving equipment as part of the plant to process the mineralised material from the Low Grade Stockpile. This will result in an estimated capital expenditure saving of AU$6.5M and if this saving is achieved the capital cost for the remainder of the plant to treat the stockpile is estimated to be AU$8.5M. • Otherwise, capital cost for treatment of Low Grade Stockpile only is estimated to be AU$15M, based on a detailed EPCM exercise carried out in 2016 and revised in August 2018. • Operating Costs are estimated to be AU$8.50 per tonne, however possible recent price increases for electricity have not been factored into this estimate. 3. Tailings Production from the tailings No 4 stockpile was carried out until 8 December 2013. Speciality Metals has previously stated that this stockpile contained approximately 2Mt at a global average grade of 0.1% WO 3, based on comprehensive but non- JORC compliant historical studies. The stockpile includes a basal layer 1-2m thick amounting to approximately 400,000 tonnes of slimes (<75micron particles) with a global average grade of 0.35% WO 3 . Trials are continuing with the aim of achieving efficient recovery of tungsten from the slimes, but this component of the stockpile is essentially untouched and production was mostly from the >50 micron <1mm fraction of the overlying coarser tailings material. MT CARBINE MINERAL RESOURCE SUMMARY – JULY 2014 (NO CHANGE FROM 2013) TUNGSTEN RESOURCES AS WO 3 Resource Resource Cut-off Grade (%) Tonnes (Mt) WO 3 (%) WO 3 (mtu) Low Grade Stockpile Indicated 0.00 12.0 0.075 840,000 Main Zone Hard Rock Indicated 0.05 18.0 0.140 2,520,000 Main Zone Hard Rock Inferred 0.05 29.3 0.120 3,516,000 Total 59.3 6,876,000 Exploration targets adjacent to Inferred and Indicated Mineral Resources in the Mt Carbine sheeted quartz vein tungsten deposit . 1. Sheeted quartz vein system: Exploration drilling to date suggests that the Mt Carbine tungsten deposit may plunge to the north, and the deposit is open in this direction, to the south east and at depth. The deposit contains an Indicated Mineral Resource of 18Mt at 0.14% WO 3 (at a cut-off of 0.05% WO 3 ), and exploration of the depth extensions of the deposit will be carried out after production from this resource has commenced. 2. The Iron Duke prospect: The Iron Duke prospect on the eastern side of the planned open pit has now been intersected in 6 drill holes, and has recently been mapped in detail on the surface and shown to extend more than 2km to the north of where it has been drilled. Surface width of the sub-vertical zone that hosts the Iron Duke mineralisation ranges from 10m to 20m over this strike length. Scheelite and minor wolframite mineralisation have been observed in rock chips along the entire length of surface exposure. The Iron Duke mineralisation is dominated by scheelite (whereas the main Mt Carbine sheeted quartz vein tungsten deposit is dominated by wolframite) and the weighted average grade of the 6 drill intercepts in the Iron Duke is 0.32% WO 3 over an average true width of 8m. The 6 drill holes cover a strike length of 300m, and the shallowest intersection of the prospect is at a depth of 100m immediately adjacent to the planned open pit. Although the surface expression of the Iron Duke adjacent to the open pit is now covered by mine dumps, historical maps indicate that it was recognised as a scheelite prospect at the surface in 1917, and therefore there is a reasonable expectation that the prospect will extend from the surface to below its present maximum drilled depth of 195m. The Iron Duke mineralisation is not included in either the present Inferred or Indicated Mineral Resources although it will be uncovered and mined in the planned open pit. Exploration of the Iron Duke to test grade, width and continuity has been deferred due to market conditions. The Exploration Target for the Iron Duke over a strike length of 400m immediately adjacent to the planned open pit is 3.5Mt to 6.5Mt with possible grades ranging from 0.13% WO 3 to 0.59% WO 3 (based on present drilling data), with the weighted average grade of drill hole intersections of 0.32% WO 3 possibly reflecting the average grade. This Exploration Target does not include the potential for further mineralisation along the recently established northern continuation of the prospect.