KGL Resources : Reward Resource and Feasibility Study Update

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Reward Resource and Feasibility

Study Update

10 January 2022

• Reward mineral resource estimate updated

• 1. 20% increase in contained copper metal to 244 kt o Grade consistent at 1.80% copper
     o Two new higher-grade shoots defined
     o Indicated category mineral resource tonnes up 23%
• Basis for feasibility study's revised mine plan
• Feasibility Study now scheduled for mid-2022

KGL Resources (ASX:KGL) is pleased to announce an update of the mineral resource estimate for the Reward deposit. The Reward deposit hosts one of the three principal mineral resources which comprise the Jervois Copper Project and has been subject to a significant program of resource-growth drilling during 2021. Mineral resource estimate updates for the other two deposits, Bellbird and Rockface, are underway and together they will underpin feasibility study updated mine plans. Taking into consideration this resource update and the expected updates on Bellbird and Rockface, along with COVID-19 restrictions and industry wide challenges, the Feasibility Study is now scheduled for delivery in mid-2022.

Reward Resource Update

The mineral resource estimate was completed by experienced and independent consultants, Mining Associates Pty Ltd, and their summary report is included as part of this announcement. The mineral resource estimate incorporated the results from drilling during 2021 along with drilling results from earlier times. The estimate is reported according to the JORC (2012) guidelines.

Results

When compared to the most recent previous estimate (2020), the Reward mineral resource estimate delivers a 20% increase in contained copper metal, to 244 kt, and 20% increase in resource tonnes to

13.58 Mt, in the indicated and inferred categories. Copper grade remains consistent at 1.80%. Table 1 below presents the latest mineral resource parameters and Figure 1 show the progression of copper results from the past four Reward mineral resource estimates.

Table 1. Reward Mineral Resource Estimate 2022

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Reward Resource and Feasibility

Study Update

*does not include Reward South deposit

• Due to rounding to appropriate significant figures, minor discrepancies may occur, tonnages are dry metric tonnes.

Mineral resources are not ore reserves and do not have demonstrated economic viability.

Inferred resources have less geological confidence than indicated resources and should not have modifying factors applied to them. It is reasonable to expect that with further exploration most of the inferred resources could be upgraded to indicated resources.

Reward Copper

Figure 1: Showing the progression of Reward copper mineral resource estimates from 2018 until the current estimate in 2022. The 2022 estimate provides a 20% increase in total copper metal and a consistent grade of 1.80% Cu compared with the 2020 estimate.

Gold and Silver

Both gold and silver grade has dropped slightly, but the mineral resource estimates show increases in both metal contents from 2020 to 2022. Figure 2 shows the progression of silver metal content and grade for the most recent three mineral resource estimates and Figure 3, similarly, for gold.

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Reward Resource and Feasibility

Study Update

Figure 2: Showing the progression of Reward silver mineral resource estimates from 2019 until the current estimate in 2022

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Reward Resource and Feasibility

Study Update

KGL Managing Director Simon Finnis comments: "While we have experienced delays in the resource work after we were unable to drill in 2020 due to COVID-19, which has subsequently delayed the Feasibility Study, a 20% increase in the Reward mineral resource is an important result for KGL. This increase has been achieved by carefully planned resource growth drilling, largely within the known footprint of the Reward deposit.

"Two new higher-grade shoots have been defined (Main FW and Main HW) located within a previously modelled lower-grade gap between Main shoot and Deeps South shoot (see long section in Figure 4). Importantly this newly defined mineralisation should be readily accessible for mining from the Reward decline and therefore make an important early contribution to production.

"Mineral resources for Bellbird and Rockface are currently being estimated, although this work is being hampered by slow assay lab turn-around times for the final set of Rockface drill holes."

Figure 4 Long Section of the Reward deposit showing the position of the mineralised shoots constraining the mineral resource estimate. Note the position of the newly defined Main HW and Main FW shoots.

Feasibility Study

KGL Resources Limited had expected the Jervois Feasibility Study would be complete in Q1 2022, however industry-wide challenges including Covid-19 related restrictions impacting site activities has led to a delay in completing the Jervois mineral resource and ore reserve updates, subsequent finalisation of the optimised mine plan and, therefore, the completion of the Feasibility Study itself. Bellbird resource update should be completed in early 2022, and it will be a number of months before Rockface will be complete.

Whilst the delay to mid-2022 is disappointing, it will allow KGL to:

• include recent Rockface results in the mineral resource update;
• add to mineral resources, most likely at Reward and Rockface based on recent drilling;

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Reward Resource and Feasibility

Study Update

• further optimise the mine plan;
• finalise offtake arrangements;
• identify and define any cost pressures to refine capital and operating costs, and;
• continue to explore optimal project financing options, including the potential for Government assistance (NAIF), and develop an appropriate funding strategy.

The clear benefit of this additional time will be the likely easing of some of these industry-wide challenges, and subsequent cost pressures, and a more detailed and considered understanding of the project and funding requirements. Inclusion of the recent high-grade results in our mineral resource base and mine plan will assist in offsetting the impact of rising capital and logistics costs related to the remote location of Jervois.

Despite the ongoing challenges the project is emerging as a significant copper and silver project located in a first-world jurisdiction, where all approvals are now in place. Jervois will offer customers a long-term supply of copper concentrate, with gold and silver credits, from a secure and stable operating environment in comparison to similar mines operating in more difficult geo-political jurisdictions.

Mr Finnis further commented,

"The delay in completing the Jervois Feasibility Study would, in more normal circumstances, represent a significant risk for shareholders. The recent discovery-record at Jervois increasingly indicates potential for a larger and potentially more robust asset coming to development in a demand environment driven by a global shift into vehicle electrification and renewable energy systems. Management and board are therefore hopeful in delivering a higher value asset for shareholders which we expect will attract significant interest from financiers."

This announcement has been approved by the directors of KGL Resources Limited.