GWR: Goes Green To Acquire Advanced Magnesium Project

For personal use only

27 January 2022

ASX Announcement

GWR Goes Green to Acquire Advanced Magnesium Project- Prospect Ridge and Raises $2 Million to Accelerate the Project.

• GWR initiates a move into the "Green" sector, signing a Binding Term Sheet with Jindalee Resources Limited (ASX: JRL) for the acquisition of a 70% interest in the

advanced Prospect Ridge Magnesite project located in north-west Tasmania.

• Magnesite is the principal ore for Magnesium (known as the "green metal") which is the lightest structural metal known to man being two thirds lighter than aluminum. Magnesium has been placed on the Critical elements List and is subject to Federal Government previously announced $2 billion fund to finance critical metals production.
• The Prospect Ridge Magnesite project area sits on a granted Exploration Licence, (EL5/2016), it is 11km long and 51km2 and contains two deposits, the Arthur River and Lyons River deposits containing the third largest Magnesite inventory in Australia.1
• Jindalee Resources Limited (ASX:JRL), announced a JORC 2012 Inferred Mineral Resource estimate2 at the Arthur River Deposit of 25 million tonnes of Magnesite grading 42.4% MgO, 4.8% SiO2, 1.4% Fe2O3 and 2.6% CaO to an average depth of 100m below surface at a cut-off of 40% MgO (Table 1).
• The project is located just 55km West South-West from the Port of Burnie, which is one of the States key deep-water Ports and the largest general cargo port in Tasmania, this enables GWR to use its bulk commodity production expertise to explore a low capex opportunity for DSO Magnesite production and export.
• GWR has received firm commitments to raise gross proceeds of $2 million via a share placement to assist in fast-tracking GWR's move into the "green" space via advancing the Prospect Ridge Magnesite Project.

GWR Group Limited (ASX:GWR) ("GWR" or "the Company") is pleased to announce that it has signed a Binding Term Sheet with Jindalee Resources Limited (Jindalee) for the acquisition of a 70% interest in their advanced Prospect Ridge Magnesite project located in northwest Tasmania (the Project). Following the agreement of terms GWR resolved to raise $2 million before costs via a Placement to assist with working capital and to fund work programs to advance the Project.

1. Source Geoscience Australia Website -www.ga.gov.au
2. (Refer ASX Announcement by Jindalee Resources Limited dated 10 October 2017 titled "Arthur River Magnesite Deposit JORC 2012 Resource Estimate" and to Appendix 1, 2 and 3)

For personal use only

GWR Chairman Mr Gary Lyons commented "The GWR team has reviewed a number of projects to that will move the company into the "green sector", and we believe the advanced Prospect Ridge Magnesite project provides an excellent opportunity to enter the "green" global magnesium market whilst enabling GWR to apply our experience in bulk commodity mining and tap into our network of offtake partners and end users.

The Prospect Ridge Magnesite project has had a substantial amount of work undertaken, including diamond drilling, metallurgical test work, environmental and aboriginal heritage surveys and feasibility studies. We believe it may have the potential to be a low capex DSO operation which is close to a significant deep-water Port in Tasmania and the GWR team will be funded to accelerate the project with the aim of adding significant shareholder value.

The project will provide GWR with the opportunity to enter the "green" and EV space with potential for exposure to the high-capacity, fast charging, rechargeable magnesium-ion battery market."

Prospect Ridge Magnesite Project

The Project is an advanced asset where a substantial amount of work has previously been undertaken, including diamond drilling, metallurgical testwork, hydrological testwork, resource modelling and feasibility studies.

Figure 1: Prospect Ridge Location Plan showing tenure and summary geology

For personal use only

Background

The Prospect Ridge Project (the Project) is located in northwest Tasmania and contains the Arthur River and Lyons River magnesite deposits.

The project is on a granted Exploration Licence (EL5/2016), which is 51km2 in size and located approximately 55km west southwest of the Port of Burnie, which is one of the States key deep water Ports and the largest general cargo port in Tasmania. The project area was previously held as Mining Lease.

Geoscience Australia's website notes that the Arthur-Lyons Rivers area now covered by EL5/2016 contains the third largest inventory of magnesite in Australia (refer www.ga.gov.au).

The deposits are within steeply dipping Proterozoic metasediments of the Arthur Metamorphic Complex along the northeast trending Arthur River Lineament, which extends from the north coast of Tasmania through Prospect Ridge to the Savage River iron deposit located 40km to the south. Mineralisation occurs as massive magnesite (MgCO3), with pure magnesite containing 47.8% MgO.

Previous work was mainly undertaken by CRA (Rio Tinto), Crest Resources and Beacon Hill Plc. GWR there remains significant exploration potential over the 11km of strike held and as extensions to the known deposits. GWR plans to undertake a comprehensive review of all previous exploration data with a view of defining an Exploration Target for areas outside of the Arthur River deposit.

Following on from earlier work by Beacon Hill Plc, Jindalee engaged Mr Stewart Capp from Derwent Geoscience Pty Ltd to prepare a JORC 2012 Mineral Resource estimate for the Arthur River deposit only. On 10 October 2017, Jindalee announced a JORC 2012 Inferred Mineral Resource estimate of 25 million tonnes of fresh magnesite grading 42.4% MgO, 4.8% SiO2, 1.4% Fe2O3 and 2.6% CaO to an average depth of 100m below the surface at a cut-offof 40% MgO (Table 1).

The full Resource Estimation Report is attached to the announcement by Jindalee on 10 October 2017 and can be located on the ASX website.

Table 1

Arthur River Inferred Mineral Resource Estimate

Compiled by Jindalee Resources Limited

Cut-Off	Tonnes	MgO	SiO2	Fe2O3	CaO
(MgO (%))		(%)	(%)	(%)	(%)
36	36,820,000	41.1	5.9	1.7	2.9
38	32,090,000	41.7	5.4	1.6	2.8
40	25,120,000	42.4	4.8	1.4	2.6
42	15,280,000	43.3	4.2	1.3	2.2
44	3,040,000	44.5	3.0	1.0	1.9

(Refer: ASX Announcement by Jindalee Resources Limited dated 10 October 2017 titled "Arthur River Magnesite Deposit JORC (2012) Resource Estimate" and Appendix 1, 2 and 3).

For personal use only

About Magnesium and its Market

Magnesite is the principal ore for Magnesium which is the lightest structural metal known to man being two thirds lighter than aluminum. The Australian government has classified Magnesium as a critical mineral as are lithium and nickel. The principal uses for Magnesium is as follows:

• Magnesium metal and its alloys are used extensively in automotive and aerospace industries in light weight bodies, engines and other parts indispensable in modern vehicles (including EV's).
• Magnesium oxides are used in production of refractory linings necessary for production of steel, cement and glass.
• Magnesium-ionbatteries have the potential to improve on lithium-ion batteries in every phase of the lifecycle. In addition to increased energy capacities, magnesium-ion batteries have numerous other advantages. Magnesium does not tend to form dendrites, resolving the safety issues associated with lithium-ion batteries. As such, a magnesium-ion battery can last substantially longer than a lithium-ion battery. Additionally, magnesium-ion batteries can be charged faster since lithium-ion batteries charge times are constrained to avoid dendrite formation. Magnesium is also reported to be the eighth most abundant element on

earth's crust alleviating depletion risk and potentially providing a cheaper product.

(Source - journals.sagepub.com/doi/full/10.1177/16878140211003398)

During 2021 the price of magnesium increased by 285% with a peak of 460% in September 2021, refer to Figure 2

Magnesium (CNY/T)

Figure 2: Magnesium Price in Chinese Yuan

In September 2021, the Australian Federal Government announced that it will establish a $2 billion fund to finance critical minerals production in Australia, it was stated that "Critical minerals include resources that are used in technologies such as mobile phones, computer monitors, electric cars and solar panels, such as lithium, magnesium and nickel."

For personal use only

Transaction Terms

GWR via its 100% owned subsidiary Tasmanian Magnesium Pty Ltd ("TM") has signed a Binding Term Sheet for the purchase of a 70% interest in the Project from HiTec Minerals Pty Ltd ("HiTec") a 100% owned subsidiary of Jindalee Resources Limited, key transaction terms are as follows:

• Payment of total consideration of $1,000,000 comprised as follows: o $250,000 in cash for the Mining Information; and

• 1. $750,000 to be satisfied by the issue of ordinary shares in GWR for the Tenement Interest at an issue price of $0.17 per share being the VWAP of GWR shares traded on ASX in the 30 days prior to the date of the Binding Term Sheet.
• HiTec shall retain its 30% interest in the Tenement on a free carry basis until a decision to mine has been made at which point a joint venture will be established with TM as manager pursuant to which each party will be required to contribute its percentage share of joint venture expenditure or have its interest diluted in accordance with a standard industry dilution formula.
• If either party's interest in the Tenement dilutes to 5% or less, this interest will then revert to a 1% FOB gross royalty.
• TM is required to spend a minimum of $2,000,000 on the Project within 5 years of Settlement which shall include preparation of an ASX and JORC-compliant scoping study and in the event that TM does not meet this expenditure (other than due to force majeure) TM's Tenement Interest will revert back to HiTec.
• Settlement will take place within 7 days of the following conditions precedent being satisfied:
• 1. the parties entering into a formal Sale and Purchase Agreement;

• 1. the receipt of all necessary statutory approvals for the transfer of the Tenement interest.
• The Parties have agreed on a best endeavours completion date of 30 days from the signing the Binding Term Sheet.
• GWR has agreed to issue 1,470,588 ordinary shares at an issue price of $0.17 per share to GTT Ventures Pty Ltd in lieu of fees in relation to the acquisition.

Placement to Raise $2 million

The Company has received firm commitments from sophisticated and professional investors to raise $2 million (before costs) through the issue of 11,764,706 fully paid ordinary shares at an issue price of $0.17 per share (Placement). In addition, placees will receive 1 free carried option for every 4 Placement shares allotted (Placement Options), the Company will make application for the quotation of the Placement Options and they will be issued on the same terms as those quoted options already on issue. The existing quoted options are exercisable by payment of 37.62c on or before 1 October 2022.

GTT Ventures Pty Ltd was appointed as Lead Manager for the Placement and assisted with the Project acquisition. GTT Ventures Pty Ltd will be issued 2,000,000 Lead Manager Options on the same terms as the Placement Options and receive brokerage of 6% on Placement funds.

Settlement of the Placement is anticipated to occur on 1 February 2022 but will be confirmed in due course.