Argonaut Resources NL : June 2022 Quarterly Activities Report and Cashflow Report

ARGONAUT RESOURCES NL

ABN 97 008 084 848

argonautresources.com

ASX: ARE

CAPITAL STRUCTURE: Issued shares: 3,619 million

onlyListed options: None

Unlisted options: 58 million

Cash on hand: $512,000

DIRECTORS:

Patrick Elliott, Non-Exec Chairman

Lindsay Owler, Director/CEO

Andrew Bursill, Non-Exec Director

Mick Billing, Non-Exec Director

COPPER PROJECTS: useMURDIE, SOUTH AUSTRALIA Copp r, gold (large IOCG)

Pha e: Exploration

Intere t: Argonaut 100%

TORRENS, SOUTH AUSTRALIA

Copper, gold (large IOCG)

Interest: Aeris Resources 70%, Argonaut 30%

Agreement Phase: Exploration

Operator: Aeris

personalGOLD, NICKEL LITHIUM PROJECT HIGGINSVILLE, WESTERN AUSTRALIA

Gold, nickel, lithium

Phase: Exploration

I terest: Argonaut 80%

Operator: Argonaut

URANIUM PROJECTS:

FROME, SOUTH AUSTRALIA

Uranium

Pha e: Exploration

Intere t: Orpheus 100%, Option to acqui e 100%

CUMMINS, SOUTH AUSTRALIA

Uranium

Phas : Exploration

Int r st: Option to acquire 100%

MOUNT DOUGLAS, NORTHERN TERRITORY

Uranium

Phase: Exploration

Interest: Orpheus 100%

ForRANGER NE, NORTHERN TERRITORY

Uranium

Phase: Exploration

Interest: Orpheus 100%

T-BONE, NORTHERN TERRITORY

Uranium

Phase: Exploration

Interest: Orpheus 100%

WOOLNER/MARRAKAI, NORTHERN TERRITORY

Uranium

Phase: Exploration

Interest: Orpheus 100%

Quarterly report

FOR THE PERIOD ENDING 30 JUNE 2022

Argonaut Resources NL (Argonaut or the Company) (ASX: ARE) presents the following report for the period to 30 June 2022 (the Quarter).

Highlights

Lumwana West, Zambia -

Copper-Cobalt

Argonaut is seeking the restoration of 22399-HQ-LEL, Lumwana West

• The Company is continuing to work cooperatively with the relevant Zambian authorities to achieve the reinstatement of exploration licence 22399-HQ-LEL, Lumwana West.
• Argonaut has assisted appropriately with investigations into shortcomings and illegalities in the Governmental processes that led to the purported licence cancellation.
• On 27 April 2022, the Minister of Mines and Mineral Development wrote to the Company's Zambian lawyers to advise that the Company's appeal of 3 January 2022 was currently under "active consideration".
• On 28 June 2022, the Office of the Attorney General within the Zambian Ministry of Justice wrote to Argonaut's lawyers to advise that instructions in relation to the Company's appeal had been sought.
• At the time of the purported cancellation, the Company's 90% held subsidiary, Mwombezhi Resources Ltd, was operating in full compliance with all licence conditions and other regulatory requirements.
• Argonaut's objective of completing a feasibility study into a two-phase copper/ cobalt mine and processing facility at Lumwana West complements the Zambian Government's stated objective of greatly increasing copper production.

Registered Office

Level 6, 100 Pirie Street

Adelaide, SA, 5000, Australia

T [phone]

1. [e-mail]

1

For personal use only

Higginsville, Western Australia - Lithium, Gold and Nickel

Lithium Targets

• Field mapping and sampling by Argonaut has defined an extensive swarm of lithium-caesium-tantalum pegmatite dykes (LCT Pegmatites).
• The prospectivity of these LCT pegmatites, known as the Darson Pegmatite Swarm, is confirmed by Caesium and Rubidium assays (see Table 1).
• Initial mapping has delineated five pegmatites up to 90m in thickness, located at the margin of the Pioneer Granite.
• This is a prime geological setting for the discovery of a lithium deposit and is located within four kilometres of the Dome North lithium pegmatite deposits (see Figure 2) and 12 kilometres of the Sinclair Caesium Mine (see Figure 1).
• Regionally, the Darson Pegmatite Swarm is located near the centre of a cluster of lithium Resources including: Bald Hill (Alliance), Mount Marion (Mineral Resources) and Buldania (Liontown). See Figure 1.
• Argonaut plans to:
• • seek approvals for an RC drilling campaign targeting lithium;
  • complete soil sampling, rock chip sampling and mapping to define possible extensions to the known pegmatites plus potential new pegmatites; and
  • proceed to drill the lithium targets following receipt of approvals.

New JVA

• Under the JVA, Argonaut holds an 80% interest in exploration licence E15/1489 which hosts:
• • the Darson Pegmatite Swarm;
  • the Amorphous gold deposit; and
  • the Footes Find gold prospect (Figure 2).
• E15/1489 is located adjacent to the Higginsville gold mine (see Figures 1 and 2).
• Under the JVA, Argonaut paid Loded Dog $75,000 and issued $50,000 of ordinary Argonaut shares at 0.39c/share.

Murdie, South Australia - Copper

• Argonaut has partnered with SensOre Limited, a mineral exploration artificial intelligence (AI) and machine learning leader to generate copper-gold probability targets at the Murdie project using SensOre's proprietary AI and machine learning.
• Initial copper-gold probability mapping by SensOre was completed during the Quarter. This exercise generated a major new copper-gold target within the Murdie licences that is subject to further consideration by the Argonaut team.
• Argonaut continues to engage with relevant contractors in relation to further drilling at Murdie.
• On 16 March 2021, the Barngarla Determination Aboriginal Corporation filed an application in the South Australian Supreme Court for a review of the authorisation announced to the ASX by Argonaut on 4 January 2021.
• The review was heard in July 2021. The parties are awaiting judgement.

Torrens, South Australia - Copper

• The Torrens Joint Venture is currently reviewing appropriate remote sensing techniques to assist with refining of geophysical drill targets.
• A magnetotelluric survey to identify deep-crustal structures feeding potential mineralisation, and an ambient noise tomography survey to improve the resolution of gravity modelling are both under consideration.

2	Argonaut Resources NL | QUARTERLY REPORT | For the period ending 30 June 2022

For personal use only

Uranium Exploration Assets and IPO Plans

• Argonaut has acquired a substantial package of prospective uranium exploration licences in South Australia and the Northern Territory via a 67% held, unlisted public company, Orpheus Minerals Ltd (Orpheus).
• Argonaut has decided that specialised uranium exploration work and the funding of these works is better undertaken through a separate listed entity.
• Argonaut is planning for Orpheus to list on the Australian Securities Exchange (when prevailing market conditions are suitable).
• Orpheus undertook a seed capital raising to unrelated parties of $370,000 to fund its activities.
• Prospectus preparations are well advanced.
• The Argonaut board is considering:
• • an entitlement offer of Orpheus shares to Argonaut shareholders as part of the IPO process; and
  • a potential in-specie distribution of Orpheus shares to Argonaut shareholders (subject to statutory escrow provisions).
• Details of Orpheus exploration assets have been outlined in ASX releases dated 9 September 2021 and 20 September 2021.

Outlook

• The copper price dropped considerably during the Quarter on the back of global macro-economic concerns. The current copper price of US$3.30/lb appears to Argonaut to be a sentiment-driven overcorrection that is unsustainable in the medium-term due to supply and demand fundamentals.
• There have been relatively few significant copper discoveries over the last 10 years and consequentially there is a scarcity of new copper mines in the development pipeline. Copper remains a prudent target for junior exploration companies.
• The planned IPO of Orpheus Minerals comes at an appropriate time in the uranium price cycle with uranium demand expected to grow as a result of increased nuclear power generation.

Argonaut Resources NL | QUARTERLY REPORT | For the period ending 30 June 2022

3

For personal use only

Lumwana West, Zambia

(Copper-Cobalt)

Purported cancellation of exploration licence 22399-HQ-LEL

Argonaut became aware that Large-scale Exploration Licence 22399-HQ-LEL, Lumwana West, was not renewed by the Zambian Government on 28 December 2021 as expected. This licence area contains the Nyungu deposit.

At the time of the purported cancellation, the Company's 90% held subsidiary, Mwombezhi Resources Ltd, was operating in full compliance with all licence conditions and other regulatory requirements.

Argonaut's Zambian lawyers have identified substantive procedural errors in both the non-renewal of 22399-HQ-LEL and the hurried and potentially corrupt grant of a new licence over the Lumwana West area to a recently registered company with no apparent financial or technical capacity.

Argonaut had a history of raising and investing significant amounts of money in the rigorous technical investigation of the Lumwana West licence area, particularly the Nyungu deposit. The Company had commenced the fast-tracking of a feasibility study into a commercial mining operation at the site via a team of internationally known experts. It would appear to be against the national interests of Zambia to stop this process.

Recovery action by Argonaut

The Company is continuing to work cooperatively with the relevant Zambian authorities to achieve the reinstatement of 22399-HQ-LEL. The Company has assisted appropriately with investigations into shortcomings and illegalities in the Governmental processes that led to the purported licence cancellation.

On 27 April 2022 the Minister of Mines and Mineral Development wrote to the Company's Zambian lawyers to advise that the Company's appeal of 3 January 2022 was currently under "active consideration".

The Company and its lawyers met with the Minister of Mines during April specifically to put forward the particulars of the Company's complaints regarding procedural errors by the Mining Cadastre Department in relation to Lumwana West. Argonaut is pleased and encouraged by the Minister's attention to the details of our matter.

The Company has also made presentations on the extent and quality of exploration and feasibility work completed on the project to date, as well as the Company's investment track-record in Zambia.

Argonaut's objective of completing a feasibility study into a two-phase copper/cobalt mine and processing facility at Lumwana West compliments the Zambian Government's stated objective of greatly increasing copper production.

Higginsville, Western Australia

(Gold, Lithium and Nickel - Argonaut 80%)

During the Quarter, Argonaut executed a new Joint Venture Agreement (JVA) with Loded Dog Prospecting Pty Ltd (Loded Dog) in relation to the Higginsville project in Western Australia. This JVA allows Argonaut to proceed with planned exploration of a swarm of potentially lithium-bearing pegmatites at E15/1489, within 4km of Essential Metals' Dome North lithium Resource.

Field mapping and sampling by Argonaut in the previous Quarter, has defined an extensive swarm of lithium-caesium- tantalum pegmatite dykes (LCT Pegmatites) within E15/1489. The prospectivity of these LCT pegmatites, known as the Darson Pegmatite Swarm, is confirmed by Caesium and Rubidium assays (see Table 1).

E15/1489 is located adjacent to the Higginsville gold mine (see Figures 1 and 2).

Under the JVA, Argonaut holds an 80% interest in exploration licence E15/1489 which hosts:

• the Darson Pegmatite Swarm;
• the Amorphous gold deposit; and
• the Footes Find gold prospect.

4	Argonaut Resources NL | QUARTERLY REPORT | For the period ending 30 June 2022

		350,000 mE	Clianthus Flat			400,000mE	Emu Flat
			Hampton			Caralyaine
							Highway
		Saddle Hills
						Road
			White Hope
only
	Mount Marion	Wollubar				Track
	Mineral Resources					Railway
							Town
							Homestead
6,550,000 mN							Lithium deposit
				Kambalda			Pegmatite occurrence
						Gold occurrence
							Higginsville ProjectTenements
Connolly
use
					Parker Hills
	Emu Rocks
			Roysalt
			Lefroy
		Larkinville
	Widgiemooltha
personal
							Bald Hill
							Alliance Mineral Assets
							Binneringie
		Dordie Rocks
6,500,000mN
							Yardina Rock
				Binaronca Rock
		Dome North		Higginsville
		Essential Metals
		Darson
		Argonaut
		Wingarnie
		Fifty Mile Rocks
	Sinclair Caesium Mine
For
		Pioneer Resources
		Twenty Five Mile Rocks
				Pioneer
							Buldania
							Lointown Resources
6,450,000 mN				Princess Royal Peninsula		Buldania Rocks
			Columbium Creek
				Tjirnta Para Para		Dundas Hills
					Princess Royal			WESTERN AUSTRALIA
			TheatreRock
								HIGGINSVILLE PROJECT
	Bronzite Ridge	0	10	20	Norseman	Regional lithium occurrences
			kilometres				8 June 2022
	Higginsville 21				Cowan
	Figure 1 Regional lithium pegmatite deposits in the area of the Darson Pegmatite Swarm, Higgginsville, WA.

Argonaut Resources NL | QUARTERLY REPORT | For the period ending 30 June 2022

5