Capricorn Metals : Acquisition of Mumbakine Well Project

For personal use only

30 May 2022
Company Announcements Office
Australian Securities Exchange Limited
Level 4, 20 Bridge Street	ASX:CMM
Sydney NSW 2000

ACQUISITION OF MUMBAKINE WELL PROJECT

The board of Capricorn Metals Ltd ("Capricorn" or "the Company") is pleased to advise that it has entered into an agreement with Gascoyne Resources Ltd ("Gascoyne") to acquire the prospective Mumbakine Well Project ("the Project") located contiguous to the Company's Karlawinda Gold Project ("KGP") tenure in the Pilbara region of Western Australia.

Capricorn will pay Gascoyne $1.25 million upon completion of the transfer of the exploration licence and grant a 0.5% net smelter royalty on all gold produced from the Project. In addition, the Company has agreed to make contingent deferred payments as follows:

• $1.5 million upon the announcement by Capricorn of a JORC compliant Mineral Resource Estimate in excess of 200,000 ounces of gold on the Project (representing a minimum of 6.55 million tonnes at a minimum grade of 0.95g/t Au); and
• $2.0 million upon the announcement by Capricorn of a board decision to commence commercial mining activities on the Project

In the event that Capricorn announces to the ASX a decision to commence mining activities prior to the definition of a JORC code compliant Mineral Resource Estimate meeting the criteria referenced above, Capricorn must pay both contingent deferred payments.

All amounts are payable in cash or Capricorn shares valued at a 20-day VWAP prior to either completion occurring or the release of the ASX announcement. The choice of payment method is at Capricorn's election1 with completion of the acquisition conditional upon customary conditions precedent (including any required third party consents). Completion is expected to occur by the end of June 2022.

1 Capricorn's right to elect to settle any contingent deferred payment in shares expires on the date which is 5 years after the date of execution of the acquisition agreement.

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The Project is located on exploration licence E52/3531 which is contiguous to Capricorn's existing KGP tenure and is less than 10 kilometres from the processing facility and Bibra open pit. The Project covers approximately 361 square kilometres and lies adjacent to the KGP access road to the Great Northern Highway.

The Project area is located on the southern margin of the Sylvania Dome, an inlier of Archean granitoid - greenstone terrain on the southern edge of the Hamersley Basin. Along the margin of the dome a sequence of meta/basaltic and meta/sedimentary rocks interpreted to be 2700 Ma Fortescue Group has been faulted against the granitoids.

The main focus of historic exploration has been the Central Prospect which straddles 3 kilometres of thrust contact between the granitoids and volcanic/sedimentary rocks of the Fortescue Group. This sequence comprises (north to south) a sedimentary package of shales with minor coarse- grained arkose, steeply dipping to the south, up to 150 metres thick, overlain by a thick sequence of fine-grained mafic volcanics before disappearing undercover. The Central Prospect lies on a gravity high.

There is some evidence of shearing directly adjacent to the granite/sediment contact in the form of quartz stockworks and isolated narrow quartz veins. The stockwork and vein systems are both mineralised. There is also strong shearing along the sediment/mafic contact within the Fortescue sequence. The mylonised shear is 150 metres long by 20 metres wide and was intersected in drilling up to 90 metres vertical depth. This shear is mineralised with an extensive, strongly anomalous arsenic halo.

Very little exploration work has been completed on the Project, however historical drilling in the 1990's by Battle Mountain Australia and Compass Resources NL returned encouraging results at the Central Prospect and the Jims Vein Prospect. Drilling consisted of a total of 112 RAB holes for 4,870 metres and 38 RC holes for 2,320 metres testing gold prospectivity identified in soil sampling programmes.

Significant results from this drilling included:
• 5m @ 7.06ppm from 65 metres	WWR064
• 9m @ 2.88ppm from 32 metres	WWP023
• 6m @ 3.94ppm from 47 metres	WWR118
• 5m @ 3.19ppm from 9 metres	WWP008
• 2m @ 7.43ppm from 5 metres	WWP013
• 2m	@ 5.67ppm from 0 metres	WRB144
• 2m	@ 4.40ppm from 2 metres	WRB139
• 2m	@ 2.98ppm from 9 metres	WRB137
• 3m	@ 1.92ppm from 33 metres	WWP011

For more information refer to Appendix 1 and 2.

Capricorn Executive Chairman Mark Clark commented:

"The acquisition of the prospective Mumbakine Well Project located only 10 kilometres from the Karlawinda processing plant provides Capricorn with an outstanding opportunity to add satellite resources and ultimately mill feed to the Karlawinda Gold Project."

This announcement has been authorised for release by the Capricorn Metals Ltd board.

For further information, please contact:

Mr Kim Massey

Chief Executive Officer

1. [e-mail]

1. [phone]

2

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Forward Looking Statements

This announcement may contain certain "forward-looking statements" which may not have been based solely on historical facts, but rather may be based on the Company's current expectations about future events and results. Where the Company expresses or implies an expectation of belief as to future events or results, such expectation or belief is expressed in good faith and believed to have a reasonable basis. The detailed reasons for that conclusion are outlined throughout this announcement and all material assumptions are disclosed.

However, forward looking statements are subject to risks, uncertainties, assumptions and other factors, which could cause actual results to differ materially from future results expressed, projected or implied by such forward-looking statements.

Such risks include, but are not limited to resource risk, metals price volatility, currency fluctuations, increased production costs and variances in ore grade or recovery rates from those assumed in mining plans, as well as governmental regulation and judicial outcomes.

For a more detailed discussion of such risks and other factors, see the Company's Annual Reports, as well as the Company's other filings. Readers should not place undue reliance on forward looking information. The Company does not undertake any obligation to release publicly any revisions to any "forward looking statement" to reflect events or circumstances after the date of this announcement, or to reflect the occurrence of unanticipated events, except as may be required under applicable securities laws.

Competent Persons Statement

The information in this report that relates to Exploration Results is based on information compiled by Mr. Jarrad Price who is General Manager - Geology at, and a full-time employee of, the Company. Mr. Jarrad Price is a current Member of the Australian Institute of Geoscientists and has sufficient experience, which is relevant to the style of mineralisation and types of deposit under consideration and to the activities undertaken, to qualify as a Competent Person as defined in the 2012 Edition of the "Australasian Code of Reporting of Exploration Results, Mineral Resources and Ore Reserves". Mr. Price consents to the inclusion in the report of the matters based on the information in the form and context in which it appears.

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Appendix 1 - Significant Results

		Hole				Hole					Grade
	Hole No	Type	Northing	Easting	RL	Depth	Dip/Azi	From	To	Width	(g/t Au)
only	WWR064	RC	7366424	783410	510	120	-60/360	65	70	5	7.06
WWP023	RAB	7366607	783517	505	44	-60/360	32	41	9	2.88
WWR118	RC	7366654	783685	502	130	-60/360	47	53	6	3.94
	WWP008	RAB	7366455	783308	509	52	-60/360	9	14	5	3.19
	WWP013	RAB	7366495	783422	504	40	-60/360	5	7	2	7.43
	WRB144	RC	7367064	782654	500	20	-60/100	0	2	2	5.67
	WRB139	RC	7367002	782588	500	20	-60/112	2	4	2	4.40
	WRB137	RC	7367010	782569	500	20	-60/112	9	11	2	2.98
use
WWP011	RAB	7366456	783411	507	36	-60/360	33	36	3	1.92
WRB130	RC	7366680	783673	500	62	-60/330	38	42	4	1.05
	WRB131	RC	7366642	783702	500	70	-60/330	53	56	3	1.37
	WWP009	RAB	7366428	783308	510	52	-60/360	38	42	4	1.01
	WRB138	RC	7367006	782579	500	20	-60/112	5	6	1	3.10
	WWR116	RC	7366373	783408	510	148	-60/360	104	107	3	0.97
	WRB145	RC	7367165	782701	500	20	-60/90	5	7	2	1.42
personal
WWR064	RC	7366424	783410	510	120	-60/360	71	76	5	0.56
WWP037	RAB	7366898	784344	503	52	-60/360	16	20	4	0.63
	WRB136	RC	7367016	782560	500	19	-60/112	16	18	2	1.13
	WRB125	RC	7366583	783593	500	80	-60/360	34	35	1	2.20
	WWP018	RAB	7366496	783514	506	45	-60/360	40	45	5	0.44
	WWP001	RAB	7366996	782509	503	30	-60/360	12	14	2	1.05
	WWP002	RAB	7367070	782615	501	40	-60/360	9	10	1	1.62
	WRB130	RC	7366680	783673	500	62	-60/330	43	45	2	0.66
	WRB140	RC	7366998	782597	500	20	-60/112	1	2	1	1.30
	WWP002	RAB	7367070	782615	501	40	-60/360	11	12	1	1.27
	WRB147	RC	7367166	782662	500	20	-60/90	15	17	2	0.61
	WWP009	RAB	7366428	783308	510	52	-60/360	48	50	2	0.60
	WWR118	RC	7366654	783685	502	130	-60/360	56	58	2	0.43
	WRB120	RC	7366456	783359	500	80	-60/360	35	36	1	0.68
For	WRB146	RC	7367166	782688	500	20	-60/90	2	3	1	0.66
WWP012	RAB	7366474	783421	505.5	40	-60/360	20	21	1	0.61
	WWR064	RC	7366424	783410	510	120	-60/360	115	116	1	0.60
	WRB120	RC	7366456	783359	500	80	-60/360	41	42	1	0.54
	WRB142	RC	7367064	782675	500	20	-60/100	2	3	1	0.50
	WRB120	RC	7366456	783359	500	80	-60/360	7	8	1	0.45
	WWR063	RC	7366385	783306	510	120	-60/360	89	90	1	0.45
	WRB133	RC	7366721	783776	500	62	-60/360	15	16	1	0.44
	WWR064	RC	7366424	783410	510	120	-60/360	102	103	1	0.44
	WRB131	RC	7366642	783702	500	70	-60/330	32	33	1	0.41
	WWR064	RC	7366424	783410	510	120	-60/360	63	64	1	0.41

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Appendix 2

JORC Code, 2012 Edition - Table 1

Section 1 Sampling Techniques and Data

(Criteria in this section apply to all succeeding sections.)

Criteria	JORC Code explanation	Commentary
Sampling	•	Nature and quality of sampling (eg cut channels, random chips, or specific specialised	Drilling on E52/3531 has been completed by multiple companies mainly in the 1990's using
techniques		industry standard measurement tools appropriate to the minerals under investigation,	a combination of Reverse Circulation (RC) and RAB. The methods of collection for the
			such as down hole gamma sondes, or handheld XRF instruments, etc). These examples	historical data are unknown.
		•	should not be taken as limiting the broad meaning of sampling.	Sample weight and collection method are unknown for the historical drilling. Sample condition
		Include reference to measures taken to ensure sample representivity and the appropriate
		is not logged in the available data. Sample quality is unknown for the historical drilling. The
			calibration of any measurement tools or systems used.
		•	majority of samples are recorded as being assayed by aqua regia.
		Aspects of the determination of mineralisation that are Material to the Public Report.
		•	In cases where 'industry standard' work has been done this would be relatively simple	Field duplicates and certified reference material (CRM) data are not present in the database.
			(eg 'reverse circulation drilling was used to obtain 1 m samples from which 3 kg was
			pulverised to produce a 30 g charge for fire assay'). In other cases more explanation
			may be required, such as where there is coarse gold that has inherent sampling
			problems. Unusual commodities or mineralisation types (eg submarine nodules) may
			warrant disclosure of detailed information.
Drilling		•	Drill type (eg core, reverse circulation, open-hole hammer, rotary air blast, auger,	RC and RAB drilling bit and blade diameters are unknown for the historical drilling.
techniques		Bangka, sonic, etc) and details (eg core diameter, triple or standard tube, depth of
			diamond tails, face-sampling bit or other type, whether core is oriented and if so, by what
			method, etc).
Drill	sample	•	Method of recording and assessing core and chip sample recoveries and results	The method of recording and assessing chip sample recoveries and results is unknown.
recovery		•	assessed.	The measures taken to maximise sample recovery and ensure representative nature of the
		Measures taken to maximise sample recovery and ensure representative nature of the
		samples are unknown.
			samples.
		•
		Whether a relationship exists between sample recovery and grade and whether sample	Sample condition is not in the available logging.
			bias may have occurred due to preferential loss/gain of fine/coarse material.	It is unknown if bias exists between sample recovery and grade.
Logging		•	Whether core and chip samples have been geologically and geotechnically logged to a	Logging processes are unknown for the historical drilling. Logging field in the database show
			level of detail to support appropriate Mineral Resource estimation, mining studies and	that lithology was logged.
		•	metallurgical studies.	Logging is both qualitative and quantitative or semi-quantitative in nature.
		Whether logging is qualitative or quantitative in nature. Core (or costean, channel, etc)
			photography.
		• The total length and percentage of the relevant intersections logged.
Sub-sampling	•	If core, whether cut or sawn and whether quarter, half or all core taken.	Non-core sampling sub sampling techniques are not known. Sample condition is not in the
techniques and	•	If non-core, whether riffled, tube sampled, rotary split, etc and whether sampled wet or	available data.
sample			dry.	Sample preparation techniques are not known.
preparation	•	For all sample types, the nature, quality and appropriateness of the sample preparation
		•	technique.	Field duplicates and certified reference material (CRM) data are present in the available
		Quality control procedures adopted for all sub-sampling stages to maximise	database.
			representivity of samples.