Nagambie Resources : Second Quarter Activities Report

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DECEMBER 2021 QUARTERLY ACTIVITY REPORT

HIGHLIGHTS

• The Nagambie Mine NAD005 and NAD006 diamond drill holes have further confirmed the new geological interpretation that the east-west- striking sedimentary beds that hosted the gold mineralisation in the East Pit are continuing to curve towards the south to the south west of the West Pit. NAD006 has extended the length of the mineralised Nagambie Mine Feeder Zone target to 1.3 km and NAD007 is being planned to intersect the Central Anticline another 0.5 km to the south west.
• The East and West Pits at the Nagambie Mine plus the Mine's crustal fluids Feeder Zone could extend for a total curved strike length of around 4.0 km. The total system therefore represents a very large Fosterville-style epizonal gold target.
• Mawson has drilled the first two deep diamond holes under Balaclava Hill within the Whroo JV Property. Assays should be received in February 2022.
• Golden Camel Mining (GCM) has progressed detailed design and tendered for the major procurement and supply packages for the construction of the gold toll treatment plant at the Nagambie Mine. International supply chain and equipment availability issues are being actively managed with plant commissioning now scheduled by GCM for the December 2022 quarter.
• Stage 1 of laboratory testwork for the bacterial recovery of gold in the Nagambie Mine heap leach pad has been successfully completed. Stage 2 is being planned by the Perth laboratory and Nagambie Resources will again seek funding from the Federal Government to assist with costs.
• Following extensive delays, the awarding of PASS Management contracts for the North East Link road tunnels by the Spark Consortium is now anticipated by Nagambie Resources to occur in the first half of CY2022.

COMMENTARY

Nagambie Resources' Executive Chairman, Mike Trumbull, commented: "Encouraging progress achieved on gold exploration with the Nagambie Mine Feeder Zone target continuing to increase in size and Mawson Gold drilling the first two modern holes under historic Balaclava Hill, part of the Whroo JV. The Balaclava gold assays are eagerly awaited as good results could add significant value to our 3,000 sq km plus tenement package in the Melbourne Zone.

"Covid-induced supply chain issues are affecting GCM's gold treatment plant overall construction / commissioning schedule. Refurbishment of the ANI ball mill, a critical path activity, is on track."

31 JANUARY 2022

NAGAMBIE RESOURCES

www.nagambieresources.com.au

Oriented diamond drilling of Fosterville-style, structural- controlled, high grade sulphide-gold underground targets within the Waranga Domain tenements is being methodically carried out.

Nagambie Resources and Golden Camel Mining (GCM) have received approval for the construction and operation of a gold toll treatment facility at the Nagambie Mine. GCM will pay 100% of all construction and commissioning costs; thereafter all revenues and costs will be shared 50:50.

Underwater storage of sulphidic excavation material (PASS) in the two legacy gold pits at the Nagambie Mine is an excellent environmental fit with a major infrastructure project for Melbourne such as the North-East Link.

Recovery of residual gold from the 1990s heap leach pad using naturally- occurring bacteria is being investigated.

Mining and screening of sand and gravel deposits at the Nagambie Mine to produce sand and quartz aggregate products is also planned.

SHARES ON ISSUE 499,932,346

ASX CODE: NAG Nagambie Resources Limited

ABN 42 111 587 163

Registered, Operations &

Head Office

533 Zanelli Road

Nagambie Vic 3608

(PO Box 339)

Tel: [phone]

[e-mail]

Board

Mike Trumbull (Exec Chairman)

Bill Colvin (Director)

Alfonso Grillo (Dir/Company Sec)

James Earle CEO

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NAGAMBIE RESOURCES LIMITED

December 2021 Quarterly Report - 31 January 2022

GOLD EXPLORATION

Diamond Drilling of the Nagambie Mine Feeder Zone Target

Drilling of NAD005 was completed during the quarter at 1,215m downhole (refer Figure 1). NAD006 was completed in late January 2022 at 1,031m downhole. Detailed logging of the sedimentary bedding strikes for the NAD004 and NAD005 holes, together with preliminary logging for NAD006, is continuing to indicate consistent parallel curvature to the south west of the Nagambie Mine bedding towards the re-interpreted position of the Wandean Crustal Fault (WCF).

NAD006 has extended the known length of the Nagambie Mine Feeder Zone sulphide-gold target to around 1.3 km to the south west of the West Pit. The interpreted WCF is around 1.0 km to the south west of NAD006, indicating that the Feeder Zone target could be around 2.3 km in total length. NAD007 is being planned to intersect the Central Anticline between NAD006 and the interpreted WCF.

The distance between the western end of the West Pit and the eastern end of the East Pit is approximately 1.75 km. The new geological interpretation for the Nagambie Mine indicates that the mineralising hydrothermal crustal fluids initially flowed roughly north east from the WCF, before curving to the east, along the available fluid pathways to the east end of the East Pit, a total distance now estimated to be around 4.05 km. At say 4 km in length, the Nagambie Mine plus its' crustal fluids Feeder Zone target represents a very large Fosterville-style epizonal gold system. The total depth of the gold system below the Murray Basin unconsolidated sediments could be of the order of 4 km or more based on deep seismic work carried out by the Victorian Government.

Figure 1 Plan showing Bedding Strike Curvature in the Nagambie Mine West Area

Redcastle and Whroo Joint Ventures with Mawson Gold

Mawson Gold Limited (TSX: MAW) currently manages gold exploration within the Redcastle and Whroo JV Properties of 75 sq km and 199 sq km respectively.

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NAGAMBIE RESOURCES LIMITED

December 2021 Quarterly Report - 31 January 2022

Balaclava Hill, Whroo JV Property

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During the quarter, Mawson announced the commencement of the first of two planned deep diamond holes under the Balaclava open pit from which 23,600 ounces of gold were extracted during the 1800s. Assays should be received by Mawson in February 2022.

Under its' option agreement for the Whroo JV Property, Mawson has now paid $100,000 cash to Nagambie Resources Limited ("NRL") and spent its' first year exploration commitment of $400,000 to earn 0% interest in the Property. Mawson now has the option to expend a further $2.25M, a cumulative $2.75M (exploration expenditure plus cash to NRL), to earn a 60% interest in the Whroo JV Property. When Mawson has earned that 60% interest, NRL has the option to call for the formation of a 60:40 Mawson:NRL Joint Venture. If NRL does not exercise that 60:40 option, Mawson then has two options: (1) to call for the formation of a 60:40 Joint Venture; or (2) to spend an additional $1.5M (a cumulative $4.25M of JV expenditure and cash to NRL) to earn a 70% interest in the Whroo JV Property, leading to the formation of a 70:30 Mawson:NRL Joint Venture.

Gold Tenements

The Company's tenements as at 31 December 2021, totalling 3,334.5 sq km, are listed in Table 1 and their general location in central Victoria is shown in Figure 2.

Table 1 Nagambie Resources Tenements as at 31 December 2021

Tenement Number	Tenement Name		sq km
MIN 5412	Nagambie Mining Licence		3.5
EL 5430	Bunganail Exploration Licence		160.0
EL 5511	Nagambie Central Exploration Licence		21.0
EL 6158	Rushworth Exploration Licence		46.0
EL 6212	Reedy Lake North Exploration Licence		17.0
EL 6352	Miepoll Exploration Licence		342.0
EL 6421	Pranjip Exploration Licence		45.0
EL 6508	Tabilk Exploration Licence		33.0
EL 6606	Gowangardie Exploration Licence		88.0
EL 6719	Euroa Exploration Licence		81.0
EL 6720	Tatura Exploration Licence		145.0
EL 6731	Arcadia Exploration Licence		218.0
EL 6748	Waranga Exploration Licence		102.0
EL 6937	Nagambie East Exploration Licence		2.0
EL 6877	Nagambie Exploration Licence		8.0
EL 7205	Angustown Exploration Licence		49.0
EL 7207	Arcadia Exploration Licence		156.0
EL 7208	Cullens Road Exploration Licence		29.0
EL 7209	Goulburn West Exploration Licence		34.0
EL 7210	Locksley Exploration Licence		26.0
EL 7211	Shepparton Exploration Licence		444.0
EL 7212	Shepparton North Exploration Licence		321.0
ELA 7213	Pederick Exploration Licence Application		683.0
EL 7237	Kirwans North (1) Exploration Licence		20.0
EL 7238	Kirwans North (2) Exploration Licence		9.0
EL 7264	Resource Recovery Exploration Licence		1.0
ELA 7265	Nagambie Town Exploration Licence Application		8.0
EL 7594	Miepoll East Exploration Licence		47.0
ELA 7595	Miepoll West Exploration Licence Application		113.0
ELA 7690	Nagambie South Exploration Licence Application		4.0
RL 2019	Doctors Gully Retention Licence		4.0
	Total Waranga Domain		3,259.5
EL 5546	Redcastle Exploration Licence		51.0
EL 7498	Cornella Exploration Licence		19.0
EL 7499	Sheoak Exploration Licence		5.0
	Total		3,334.5

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NAGAMBIE RESOURCES LIMITED

December 2021 Quarterly Report - 31 January 2022

All the Nagambie Resources' tenements lie within the Melbourne Zone which is considered to be highly prospective for epizonal Fosterville-style mineralisation - the best-known examples of this style being the Fosterville, Costerfield and Nagambie Gold Mines (refer Figure 2). These epizonal gold-stibnite deposits which occur in Victoria within the Melbourne Zone, and importantly the eastern-most portion of the Bendigo Zone immediately to the west, were deposited circa 70 million years more recently than the older mesozonal gold-quartz deposits such as Bendigo, Ballarat and Stawell. The Fosterville-style epizonal deposits are all underlain by the Proterozoic-aged Selwyn Block, thought to be the source of mineralised hydrothermal fluids, including antimony, that moved up deep crustal faults.

The only other tenement holders of size in the northern portion of the Melbourne Zone, apart from Nagambie Resources which has the largest holding, are Falcon Metals (previously Chalice Gold Mines) and Newmont.

Figure 2 Nagambie Resources' Gold Tenements (in blue) all within the Melbourne Zone (in pink)

NAGAMBIE MINE GOLD TOLL TREATMENT PLANT

During the quarter, NRL and GCM signed a comprehensive Joint Venture ("JV") Agreement ("JVA").

Principal terms of the JVA include:

• For the initial treatment plant with a nominal capacity of 180,000 tonnes of ore per annum, GCM will pay for all the procurement, construction and commissioning costs and pay for the first fill of all consumables. GCM will also pay for the upgrade of associated site infrastructure such as the main mine entry, power supply and internal haul roads;
• Once steady state ore throughput and gold recovery has been achieved, all toll treatment revenues, operating costs, rehabilitation costs and sustaining capital will be shared 50:50 by NRL and GCM;
• All future plant expansions and gold recovery improvements will be paid for 50:50 by NRL and GCM;
• GCM will be the Manager of the JV with NRL and GCM being equally represented on the JV Committee. All JV Committee decisions will be unanimous and there will be no fee payable to the Manager;
• The initial ore will be trucked from GCM's Golden Camel Mine;
• Toll treatment charges for third parties providing ore to the plant will be approved by the JV Committee based on recommendations from the Manager; and
• If NRL proceeds to recover residual gold from the historic Nagambie Mine Heap Leach Pad using bacterial solutions, the JV will periodically treat the pregnant solution and pour gold bars to NRL's account.

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NAGAMBIE RESOURCES LIMITED

December 2021 Quarterly Report - 31 January 2022

Construction

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During the quarter, detailed design and plant layout drawings were advanced and the various procurement packages were tendered by GCM. Refurbishment of the ANI (Australian National Industries) ball mill was commenced (refer Photo 1).

Supply chain issues due to the world Covid pandemic is limiting the availability of some of the tendered components. GCM is actively managing the procurement issues and are anticipating a delay to construction / commissioning of several months, with plant commissioning now scheduled in the December 2022 quarter.

Photo 1 Refurbishment of the ANI Ball Mill (in foreground) underway for the Gold Toll Treatment Plant

POTENTIAL BACTERIAL RECOVERY OF GOLD IN 1990s HEAP LEACH PAD

During the quarter, Project Tasks 3 and 4 for Stage 1 were completed by the Perth laboratory.

Task 3 involved laboratory-scale flask tests to evaluate the potential to bioleach gold from the heap leach tailings using iodide-oxidising bacteria sourced from an external culture collection. The bioleaching experiments were carried out under various conditions to determine the suitability of mine water as a leaching medium and the need for microbial inoculum with different nutrient additions. The results showed that the highest soluble gold concentrations and leaching yields at the end of the 21-day experiment were detected in those flasks where mine water was used and iodide, carbon, nitrogen and phosphorous were added.

Task 4 involved evaluating the potential for arsenic stabilisation through sulphide formation in laboratory-scale batch flasks using mine water and heap leach tailings. The effect of inoculation with sulphate reducing enrichment culture, organic carbon, nutrient and iron addition was evaluated. The results indicated that iron amendment alone was sufficient to stabilise the tailings and decrease arsenic solubilisation under anaerobic conditions. The results also showed that the presence of microbial inoculum and lactate supplementation appeared to promote arsenic solubilisation.

The Perth laboratory will shortly provide Nagambie Resources with a final report detailing the results and conclusions of the Stage 1 Bioleaching Project. The final report will also contain recommendations for progressing the Gold Bioleaching Project in Stage 2. Nagambie Resources, together with joint venture partner Golden Camel Mining, will again seek funding from the Federal Government to assist with the costs of Stage 2.

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