Lefroy Exploration : Geophysical Survey Outlines Large Gravity Anomaly at Mt Day

ASX RELEASE-17 January 2019

Photo source Google

Geophysical Survey Outlines Large

Gravity Anomaly at Mt Day

Lefroy Exploration Limited (ASX: LEX) ("Lefroy" or "the Company") is pleased to update shareholders on the results from an initial interpretation of geophysical data at its Lake Johnston Project (Project), 120km west of Norseman, Western Australia. The project spans approximately 300km2 and covers the northern portion of the Lake Johnston greenstone belt which hosts the Emily Ann and Maggie Hayes nickel deposits held by Poseidon Nickel Limited (ASX: POS) ("Poseidon"). Mt Day is located approximately 6km north of Emily Ann.

• • A ground gravity survey was completed in November 2018 to compliment a survey undertaken by Norilsk Nickel Australia ("Norilsk") in 2008 near Emily Ann

• • Processing of the combined data highlights a large, ovoid-shaped gravity high at Mt Day, which indicates the presence of a dense body of rock to the north of Emily Ann

• • The gravity high is interpreted to represent a buried mafic magmatic intrusion

• • Mafic Intrusions are prospective for, and potential hosts of, large basal accumulations of Ni-Cu sulphide mineralisation

• • The prospectivity of the Mt Day intrusion is enhanced due to its proximity to the Emily Ann Ni deposit and the recent discovery of the Abi Rose Ni prospect by Poseidon Nickel Limited

• • The Ni mineralisation at Abi Rose is associated with pyroxenitic intrusive rocks, interpreted as a magmatic Ni-Cu type emplacement model

• • Further detailed processing of the geophysical data is underway to determine target areas for follow up exploration, which may include ground EM

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ASX Code: LEX

Shares on Issue: 81.0M Market Capitalisation: $14.2m

Australian Registered Office Level 2, 11 Ventnor Avenue West Perth, 6005

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ARBN: 052 123 930

www.lefroyex.com

Lake Johnston Background

The Lake Johnston Project is located 120km west of Norseman in Western Australia and comprises two granted exploration licenses (E63/1722 & 1723) held under title by Lefroy and one granted exploration license (E63/1777) held by Lithium Australia NL (ASX:LIT). These holdings form a cohesive package in excess of 300km2 over the Lake Johnston Greenstone Belt (Figure 1). Lefroy holds the Gold and Nickel rights, that includes all other precious and base metals not associated with pegmatites on the package under a Tenement Rights Agreement executed with LIT in 2016.

The Project is considered prospective for both gold and nickel, with the tenement package covering the northern strike extension to the Maggie Hayes and Emily Ann nickel mines held by Poseidon Nickel Limited ("Poseidon"). Lake Johnston was host to the Emily Ann Mine which averaged a resource grade of 4.1% Nickel and produced 46,000tonnes of nickel (refer Poseidon ASX release 26 September 2018).

Figure 1 Lake Johnston tenement package over interpreted geology and location relative to the Emily Ann and Maggie Hayes Ni deposits (refer Figures 2 & 3 for inset)

Poseidon recently announced (ASX: 21 November 2018) the completion of three deep diamond drill holes targeting a new Ni sulphide prospect known at Abi Rose located approximately 400m to the north of Emily Ann. Abi Rose is located approximately 5km south of the Company's tenement boundary and interpreted (refer Poseidon ASX release 21 November 2018) by Poseidon as a magmatic Ni-Cu type emplacement model (mafic or ultramafic Intrusion related).

The three recent diamond drill holes at Abi Rose intersected massive nickel-copper bearing sulphides associated with pyroxenitic intrusive rocks. The drilling was following up the discovery drill holes completed in 2016 that included a 10.48m wide zone of mineralisation from 432m grading 3.20% Ni, including 5.72m at 4.66% Ni and 1.29m at 10.22% Ni in hole PLJD0002 (refer Poseidon ASX release 21 March 2016).

Poseidon's most recent interpretation suggests that the Ni mineralisation at Abi Rose and Emily Ann is interpreted to be fed from a deeper magmatic source to the north. This model may also explain most other pyroxenite hosted Ni sulphide intersections that occur to the north of Abi Rose, at prospects such as Billy Ray, Speilers, and Vision.

Lefroy Exploration Program

Lefroy initiated exploration at the Lake Johnston Project in November 2016, completing a detailed aeromagnetic survey cover area interpreted to host ultramafic rocks that may be prospective for nickel sulphides, and to complement the existing detailed aeromagnetic data. The principal area flown was to the north of Emily Ann, centered on a topographic feature known as Mt Day located within E63/1777.

In October 2018 the Company completed a ground gravity survey in a portion of its project immediately north of Abi Rose, and centered around Mt Day. The survey was completed to infill and extend a gravity survey completed by Norilsk Nickel Australia (Norilsk) in 2008, which extended on to the current Lefroy tenement holding. The recent survey was completed by Haines Survey and comprised collection of 847stations in 36 lines with lines spaced at 200m and sample points at 100m. This survey complemented and adjoined the earlier Norilsk survey (refer Figure 2).

Research by the Company of annual technical reports submitted to the WA Mines Department (now open file) by Norilsk during the period 2008-2010 note that the Norilsk survey outlined a gravity anomaly (high amplitude) to the north of Emily Ann. This was interpreted as a high-density response indicative of a layered intrusion. This interpretation is supported by earlier open file reports (WAMEX A79561)) by Norilsk that document intersecting gabbro-norite and pyroxenite (mafic intrusive rocks) in diamond drill holes (hole 08NLJD0118) at the Billy Ray prospect to the north of Emily Ann.

In late 2018 the Company integrated and merged the 2018 gravity survey with the Norilsk data set. The preliminary interpretation of the processed data and imagery was completed independently by two geophysical consultants complemented by supporting interpretation by the Company (refer Figure 3).

The gravity data defines a large ovoid shaped gravity high (the Anomaly) to the north of the Emily Ann mine and centered about Mt Day (Figure 3). The anomaly is interpreted to represent a thickened body of greenstone wedged between granite domes, or given its irregular ovoid shape a large mafic intrusion that intrudes the older greenstone stratigraphy, but which is not exposed at surface. The shape of the gravity anomaly is in contrast to the aeromagnetic imagery which fails to delineate features that are typically associated with the presence of greenstone, further supporting the interpretation of a large mafic intrusion.

The mafic intrusion model for the gravity anomaly at Mt Day supports and complements the interpretation made by Poseidon for the narrow, dyke like, pyroxenite-hosted, high grade Ni mineralisation at Abi Rose. In addition, the narrow Ni sulphide mineralisation hosted in gabbroic and pyroxenitic rocks at Spielers, Billy Ray and Listners Luck may also represent a distal signature of a larger intrusion to the north.

Mafic Intrusions can be large hosts for Ni-Cu sulphide mineralisation that occur as basal accumulations in embayments on or near the basal margins of the intrusion. The Mt Day area has had little if any drilling that has focused on a magmatic intrusion model and remains unexplored.

Next Steps

Further detailed modelling of the gravity and magnetic data is underway and is being undertaken by Newexco Services. Newexco has supported the Poseidon team with the targeting and discovery of Abi Rose and is also credited with geophysical support for the discovery of the Nova Ni mine.

The key element in the next stage of exploration activity at Mt Day is to model the basal margin of the intrusion and then to plan a deep penetrating ground EM survey to seek conductors that may represent accumulations of Ni -Cu sulphide mineralisation.

Figure 2 Location of the gravity survey points completed by LEX relative to the earlier gravity survey by Norilsk, Emily Ann Mine and the Abi Rose discovery. Back drop is aeromagnetic image: warm colours represent strongly magnetic units.

Figure 3 Image of Bouguer Gravity derived from processed Lefroy and Norilsk gravity survey data. Warm colours represent dense rocks. The large ovoid shaped bodies are easily discernable at Mt Day