Astron : December 2020 Quarterly Activities Report

ASTRON CORPORATION LIMITED

ARBN 154 924 553

Incorporated in Hong Kong, company number 1687414

Notice to the Australian Stock Exchange

Production and Exploration Report

Quarter Ended 31 December 2020

Donald Mineral Sands Project, Victoria

OVERVIEW

Astron holds Retention Licences (RL) 2002 and 2003, Mining Licence (ML) 5532, as well as Exploration Licence 5186, in Victoria, Australia through its wholly-owned subsidiary Donald Mineral Sands Pty Ltd (DMS). In total, the licence areas encompass 507 square kilometres in western Victoria and includes the area of the proposed Donald Mineral Sands Project which comprises the Donald and Jackson mineral sands deposits. They contain a potential major source of supply of mineral sands zircon and titania products, with a significant rare earth elements content. The combined mineral resource for the Donald Mineral Sands Project is 5.7 billion tonnes (bt) at 3.2% HM (Refer ASX Release 7 April 2016)

Astron is investigating developing its large mineral sand resources in a staged and scalable manner, initially by the Donald Mineral Sands Deposit Stage 1 mining and concentrating of heavy mineral ore from ML 5532 (28 sq kms), followed by the Stage 2 mining and concentrating of the remaining area of RL 2002 (244 sq kms). The southern area of the resource, covered by RL 2003 (referred to as the Jackson Mineral Sands Deposit), is available for subsequent development.

The 2021 calendar year is expected to represent the culmination of a significant period of evaluation of the Donald deposit, with the aim of completing the feasibility study leading to a decision to develop the project. This will include consideration of necessary detailed evaluation works and associated funding activities.

PRODUCTION

As a project at an advanced evaluation stage, no commercial production activities were conducted during the quarter.

DEVELOPMENT

During the quarter, the evaluation of the Donald project was advanced within the following main work streams.

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Mineral Resources and Ore Reserves

Astron issued its most recent Donald project Ore Reserve Statement in 2012 and its most recent Mineral Resource Statement in 2016. Based on the 2012 Ore Reserve Statement (refer ASX Release 18 June 2012), RL 2002 (inclusive of ML 5532) contains 461 million tonnes (mt) of ore with an average heavy mineral (HM) grade of 5.9%. The 2016 Mineral Resource Statement (refer ASX Release 7 April 2016) recorded a total Mineral Resource for RL2002 and RL2003 of 5.7 bt of ore with an average 3.7% HM grade. The Mineral Resource attributable to the Donald Mineral Sands deposit area (RL 2002 including ML 5532) is 3.2 bt, with an average HM grade of 3.6%. The Measured component is 715 mt, with an average 4.2% HM grade. Based on the Mineral Resource Statement, the Donald project represents one of the largest potential new sources of mineral sands supply, with a significant insitu resource of zircon as well as the titania (titanium dioxide products) of ilmenite, rutile and leucoxene.

Associated with the progression of metallurgical test work, Astron plans to update its Ore Reserve Statement in the first quarter of 2021.

Pilot Scale Testing of DMS Project Ore Materials

Astron has been undertaking pilot-scale concentrating of Donald ore into a heavy mineral concentrate (HMC), as announced on 8 July 2019, and the subsequent mineral separation or prosessing of this HMC into final products at consultants' test facilities. As noted, Mineral Technologies was commissioned to undertake the design, construction and operation of a pilot wet concentration plant to treat approximately 1,000 tonnes of ore, recovered from a test pit on RL2003, in order to produce a representative sample of heavy mineral concentrate (HMC) for further testing.

The pilot plant successfully produced 24 tonnes of HMC, in turn providing validation of the suitability of the wet concentrator plant process circuit, at continuous industrial scale. The process was able to achieve recoveries of in-size and in-SG (i.e. -250+20µ, +4.05SG fraction) at 88.5% for TiO2, 94.3% for ZrO2 and 93.8% for CeO2 relative to WCP feed when targeting a 90% total heavy mineral (THM) grade.1 During the same process, it was determined that increasing or reducing the HMC grade had limited impacts on the recovery of ZrO2 and CeO2 (although a marked decrease in low SG TiO2 is anticipated). Mineral assemblages of HMC at 90% and 95% THM are shown in the table below.

Estimated Mineral Assemblages of HMC after WCP Process2

Mineral Assemblage	TiO2	Fe2O3	SiO2	ZrO2	CeO2
	%	%	%	%	%
HMC @ 90% THM	33.3	10.2	29.8	17.7	0.71
HMC @ 95% THM	37.3	11.4	23.3	19.4	0.74

1. Astron advises that these figures have been revised from those previously announced figures in its 15 May, 2020 annoucement.
2. Mineral Technologies Report MS20/2054526/1

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The planned processing of the HMC material from the pilot plant, for metallurgical testing purposes, was intended to be undertaken in China under the supervision of a metallurgist consultant. Given COVID-19 restrictions, this course of action did not proceed. Instead, Astron has pursued alternative arrangements for HMC processing into final products in Australia. Separation trials of the Donald HMC have been undertaken at Mineral Technologies' facilities in Queensland, with Mineral Technologies and one other engineering and metallurgical firm retained to conduct these trials.

Australian Minmet Metallurgical Laboratories (AMML) was contracted to perform a scoping study on the separation of rare earth elements (REE) from the HMC sample, prior to the separation process for the valuable heavy minerals component. As part of metallurgical test work, rare-earths separation tests were completed during the quarter. A series of flotation tests were conducted using a previously identified reagent, the results of which provided confidence that Astron will be able to achieve REE recovery rates (measured by percentage of CeO2 recovered) of over 90%. Further metallurgical examination of the rare earth product has confirmed that there exists a significant heavy rare-earth content within Donald's resource base.

During the quarter, work continued in relation to the separation of the titanium dioxide and zircon product streams from HMC, subsequent to REE recovery, using conventional separation methods. This has involved dry electo-static and electro-magnetic separation techniques, producing a zircon and higher titanium (HiTi) component, as well as an ilmenite product stream. Test work associated with the zircon indicates that the major part of the zircon will be a premium grade product, with an expected ZrO2 content above 66%. The current focus of work is upon the production of a combined titania (titanium dioxide product ) with a TiO2 content of 61%. This titania product is expected to be suitable for titanium slagging processes. Astron expects to be in a position to have more comprehensive test results on separation efficiencies and product attributes, during the first quarter of 2021. Nonetheless, through this recent test work initial product samples have been produced that are able to be provided to potential customers, as well as the company's own mineral test facilities in Yingkou, China for testing.

Based on the encouraging results from this separation test work, Astron is investigating project options for the mineral separation of Donald HMC into final products within Australia. The other option, still under consideration, is the export of HMC for processing in China.

Regulatory Approvals

Regulatory approvals for the first stage of the planned development of the Donald Mineral Sands deposit on ML 5332 are well advanced. An outstanding regulatory approval is a Work Plan, for which the company intends to submit a detailed proposal during 2021. During the December quarter, work continued on addressing the Environmental Effects Statement (EES) conditions for submission of the Work Plan, specifically as related to modelling of the air and noise parameters associated with the project. This will allow a more detailed interpretation of the operational impacts associated with activities associated with these parameters; how they compare to the modelling conducted in the EES phase of the project; and mitigation measures as part of development planning.

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Detailed Feasibility Study

Based on extensive prior evaluative work, including metallurgical test work and modelling, the Detailed Feasibility Study (DFS) stage of the project, which includes a detailed engineering, project optimisation component, commenced after the end of the December quarter. The objective of this phase is to finalise the project scope and design, including identifying and investigating options to improve project economics and mitigate risk, in turn leading to detailed engineering and a comprehensive financial and risk analysis.

Study areas include:

• Identifying any key areas of uncertainty within the project;
• identifying further metallurgical test work to optimise concentrating and processing recoveries;
• option evaluation to define optimal project design concepts (including mineral separation within Australia); and
• engineering design parameters to complete an evaluation of existing design works.

Conceptual design criteria for key infrastructure, including power, water, civil and road works, will be progressed to a design stage suitable for the tendering and awarding of infrastructure agreements after the commencement of the detailed engineering phase. Further details on the DFS work stream will be provided in the March Quarter Production Report.

Test Pit Rehabilitation and Monitoring - RL2003

Continued monitoring of the test pit, excavated during 2018, and subsequently rehabilitated back to the original land form, continues to be undertaken, including soil testing and crop yield data analysis by an agronomist.

Community Consultation

Associated with the increase in work activity and advancement of the project on several fronts, DMS intends to establish a Community Reference Group during the first quarter of 2021, as a means of ensuring a continuing high level of community engagement and means to seek the views of local residents and other stakeholders. The submission of a Work Plan will be associated with a process of engaging with residents and stakeholders.

Marketing and Sales Arrangements

Astron has produced product samples from its recent metallurgical test work. It is planned that product samples will be provided to potential customers, as well as made available to the company's mineral test facilities in Yingkou, China for trialling and testing purposes.

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