Falcon Metals : Quarterly Activities Report/Appendix 5B Cashflow Report

ASX / Media Announcement

27 April 2022

FALCON METALS MARCH QUARTER ACTIVITIES REPORT

For the three-month period ending 31 March 2022

•  Diamond drilling commenced at the Karri and Ironbark gold prospects

•  Assay results returned for the first 4 Karri diamond holes with highlights including:

  •  PHKADD018: 2m @ 3.32 g/t Au from 108m including 1m @ 6.51 g/t Au from 109m

  •  PHKADD021: 8m @ 1.09 g/t Au from 287m including 1m @ 7.31 g/t Au from 294m

•  Results demonstrate a possible strengthening of alteration and mineralisation in central Karri which is presently being followed up with an additional step-out hole to the north targeting the mineralised east-dipping limb 100m down plunge

•  Aircore drilling underway at the Ironbark East Prospect:

  •  Initial holes planned along strike and adjacent to previous intercepts from wide-spaced reconnaissance drilling including 13m @ 1.52 g/t Au (ending in mineralisation)

•  One Victorian Exploration Licence granted

•  Exploration programs initiated at WA projects

•  Falcon remains exceptionally well-funded with >$26 million in cash

CORPORATE

Finance

During the quarter Falcon Metals Ltd (ASX:FAL) (Falcon, the Company) spent $2.11 million on operating activities, including

•  $1.36million on exploration and evaluation costs,

•  $0.72 million on corporate costs, overheads and payments for fixed assets, and

•  $0.04 million on staff costs.

The expenditure was higher than normal this quarter due to the repayment of historical costs to Chalice Mining for all Falcon Metals expenses accrued from 1 July 2021 to 31 December 2021 as a part of the demerger, plus residual IPO costs that were paid during the March 2022 quarter.

At the end of the March 2022 quarter Falcon retained $26.47 million cash.

Capital Structure

There was no change in the capital structure during the quarter with 117 million shares on issue.

Falcon Metals Limited	T: [phone]
ASX: FAL	E:[e-mail]
Level 2, 22 Mount Street, Perth WA 6000	www.falconmetals.com.au
PO Box 7054 Cloisters Square WA 6850	ABN 87 651 893 097

1

EXPLORATION Pyramid Hill (100% FAL)

Falcon has >5,000km2 of granted permits in Victoria, north of the high-grade historic >22Moz Bendigo goldfield and the ~9Moz Fosterville Gold Mine owned by Agnico Eagle (NYSE:AEM).

Karri Prospect

Drilling commenced in mid-January at the Karri prospect within the Pyramid Hill Gold Project, north of Bendigo in Victoria in the first month of its ASX listing. Karri is one of the advanced prospects at Pyramid Hill and is a 4km-long gold anomaly under Murray Basin cover that was previously defined by aircore drilling.

The mineralisation at Karri is hosted in Castlemaine Group stratigraphy, the main host unit for all gold deposits in the Bendigo Zone which hosts >60Moz of historical gold production from outcropping areas. The target structures are upright anticlines and the fold hinges, with several interpreted to run north-south through the 4km long Karri gold anomaly. Stratigraphic and structural correlation across the prospect has defined four major upright anticlinal fold hinges which are the focus of the planned drilling.

By the end of the quarter, Falcon had completed 7 diamond holes for 2,832m (seeFigure 1). Assays for the first 4 holes have been received with the better results as below:



• PHKADD018 2m @ 3.32 g/t Au from 108m

  including 1m @ 6.51 g/t Au from 109m

  

• PHKADD020 1m @ 1.65 g/t Au from 190m

  0.86m @ 1.26 g/t Au from 232.14m

  

• PHKADD021 1m @ 1.19 g/t Au from 232m

  8m @ 1.08 g/t Au from 287m

  including 1m @ 7.31 g/t Au from 294m

  0.8m @ 1.15 g/t Au from 302.11m

  1m @ 1.32 g/t Au from 308m

  2m @ 2.01 g/t Au from 347mMineralisation in PHKADD018 was in the oxide zone and appears to be related to weathered sulphides in a sandstone with no quartz veining. It is in the western limb of an anticline, close to the hinge. This is in a similar position to the anomalous zone intersected previously in PHDH015 (5.1m @ 13.96 g/t Au from 100.9m, including 2.2m @ 32.10 g/t Au) that was also associated with iron oxides.

Mineralisation in PHKADD020 occurred in the west limb of the same anticline. It was associated with sericite alteration, disseminated pyrite and minor arsenopyrite.

The mineralised zones identified in PHKADD021 are of particular importance because they have extended the mineralisation in the eastern limb of this same anticline a further 100m to the north of mineralised structures intersected in PHDH007 (1m @ 5.40g/t Au from 192.8m) and PHDH015 (8m @ 1.05 g/t Au from 202m, including 1m @ 5.33 g/t Au). Mineralisation is associated with quartz veining, intermittent sericite alteration, and disseminated pyrite & arsenopyrite. In addition to the higher grades including 1m @ 7.31 g/t Au, broad zones of low-level Au mineralisation were also presentwithin this zone including 16.2m @ 0.27 g/t Au from 299.8m and 27m @ 0.33 g/t Au from 341m (see

Figure 2). Based on the encouraging results in PHKADD021, an additional hole, PHKADD025, has commenced. This is planned to test this mineralised target zone a further 100m north in the eastern limb of the mineralised anticline. At this preliminary stage this anticline, eastern fold limb and syncline are all considered prospective.

Figure 1 Plan map of Karri drilling

Figure 2 Schematic cross section of 5,985,450 N looking north showing the target zone covering the anticline, eastern limb and syncline

Ironbark Prospect

Previous work at Ironbark highlighted the association of gold mineralisation with the contact between Castlemaine Group Sediments and intrusive diorites, with some mineralisation hosted within the diorites. The successful reconnaissance aircore drilling program at Ironbark East during the 2021 field season significantly increased the priority of this prospect, especially given there are several analogous high-grade diorite-associated gold deposits in Eastern Victoria (Walhalla-Woods Point Goldfields) including Cohen's Reef (~1.5Moz @ 32 g/t Au)1.

The previous results at Ironbark East are considered by Falcon to be exceptional given they are on a wide-spaced reconnaissance line (Figure 3). Hole PA953 is particularly exciting given the intercept of 13m @ 1.52 g/t from 113m and ended in mineralisation. The next hole on this line, PA918, intersected 9m @ 0.91 g/t from 61m and is 200m west of PA953.

1 2006, Vandenberg et al., Walhalla-Woods Point-Tallangallook, Special map area geological report, Geoscience Victoria, Ch 8 -Economic Geology, page 231]

The aircore drilling at Ironbark East commenced in late March, later than planned due to the contracted drilling company having initial delays due to the impact from COVID-19, followed by equipment issues that are still preventing them from mobilising to site.

Falcon has contracted a second drilling company that was in the process of commissioning an AC rig. Drilling rates have been slower than normal during the commissioning phase but as this is now completed, they are expected to improve throughout the rest of April. Drilling at Ironbark East will continue until cropping season commences in early May. Aircore drilling of other targets within the Pyramid Hill Project will be deferred until the commencement of the next drilling season in late Spring.

Figure 3 Map showing the proposed aircore drilling at Ironbark

Soil Sampling

During the quarter 212 soil samples and 3 rock chip samples were collected from EL6960 to further refine a soil anomaly that was previously generated by Chalice Mining. This will be further discussed once results are available.

New Victorian Permit Granted

Falcon was granted Exploration licence EL007200, an 872km2 area within the highly prospective Bendigo Zone that has seen very limited modern-day exploration for gold. It is in a similar structural position to the Castlemaine (~6Moz) and Daylesford (~1.3Moz) goldfields.