Aura Energy : New resource estimate - Haggan battery metals project

23 May 2018

AURA ENERGY LIMITED
(“Aura” or the “Company”)

NEW RESOURCE ESTIMATE – HÄGGÅN BATTERY METALS PROJECT

SIGNIFICANT NEW HIGH-GRADE VANADIUM ZONE DEFINED

90 MILLION TONNES @ 0.42% V₂O₅

NEWLY DEFINED HIGH-GRADE ZONE VANADIUM ONLY 20 METRES FROM SURFACE AND EXTENDING TO APPROXIMATELY 100 METRES DEPTH

SHALLOW MINING DEPTHS WILL PROVIDE MAJOR BOOST TO PROJECT ECONOMICS IN EARLY YEARS

Aura Energy Limited (ASX: AEE, AIM:AURA) is pleased to advise that the results from its Häggån Battery Metals Project in Sweden orebody modelling study has defined a significant high-grade Vanadium zone close to surface and resulted in a new overall resource estimate.

The orebody modelling, which confirmed the Global Resource of 15.1 Billion lbs V₂O_5, was also designed to review the potential for higher grade vanadium zones in the Häggån deposit at a range of cut-off grades.

The Resource Estimate was determined under the JORC Code (2012 Edition).

Importantly, the modelling work defined a new significant high grade near-surface Vanadium zone of 90 million tonnes at 0.42% V₂O₅ at a 4000ppm cut-off.

“The discovery that a large high-grade vanadium zone exists close to surface in the Häggån deposit provides a significant boost to the economics of this Battery Metals project.  Clearly, this newly defined high-grade zone provides an excellent location to start an open pit which will result in the rare event of mining the best ore grades from the very start of the project”, Mr Peter Reeve, Aura’s Executive Chairman, said.

Häggån is a large poly-metallic deposit containing economically significant levels of V (vanadium), Ni (nickel), Zn (zinc), Mo (molybdenum) and other Battery Metals.  Resource estimates were previously conducted and reported on the Häggån project in 2010, 2011 and 2012 and since then  additional infill drilling has been carried out.  

With the recent dramatic rise in the price of vanadium, the principal focus for the Häggån project was altered and Aura commissioned a new vanadium resource estimation exercise by H&S Consultants.

In summary, the new Inferred Resource inventory at Häggån, at various V₂O₅ cut-offs, is as follows:

Table 1

Haggan Inferred Resource

At a 0.1% V₂O₅ cut-off the Häggån Inferred Resource contains approx. 15.1 billion pounds V₂O₅.

At a cut-off grade of 0.4% V₂O₅ the resource contains approximately 90 million tonnes at an average grade of 0.42% V₂O₅, containing 840 million lbs of V₂O₅.

Of particular interest within the 90 million tonnes is the definition of a coherent and large zone of mineralisation of 49 million tonnes at +0.4% vanadium pentoxide commencing at a depth of 20 metres below surface and extending to around 100 metres below surface.

The coherence of this zone is shown clearly in both cross-section and plan in Figures 1 and 2 below and is a significant outcome for the project and this resource modelling exercise.

Figures 1 and 2 can be viewed at

http://www.auraenergy.com.au/investor/ASX%20Announcements/2018/High%20Grade%20Vanadium%20Zone%20Defined.pdf

As shown in Figures 1 and 2, the large higher V₂O₅ grade zone exists at shallow depth in the northwest portion of the Häggån resource.  The high-grade zone here extends approximately 1 kilometre in both north-south and east-west directions.  In this area the resource extends to surface in places and blocks containing vanadium grades higher than 0.4% V₂O₅ extend to within 20 metres of surface.

“To put this in context, if Häggån were to produce approximately 5% of the current global vanadium production, we would be able to mine this high-grade pod for around 20 years, from resource blocks containing over 0.4% V₂O₅”, Mr Reeve commented.  “And mining would not have to go deeper than approximately 100 metres for the first 15 years of production.”

At greater depths, blocks containing grades in excess of 0.35% V₂O₅ occur throughout much of the polymetallic Häggån orebody (refer Figure 3).

Figure 3 can be viewed at

http://www.auraenergy.com.au/investor/ASX%20Announcements/2018/High%20Grade%20Vanadium%20Zone%20Defined.pdf

With over 15 billion pounds of V₂O₅ in Inferred Resource, Häggån is one of the world’s largest known vanadium resources as set out in Figure 4.

Figure 4 can be viewed at

http://www.auraenergy.com.au/investor/ASX%20Announcements/2018/High%20Grade%20Vanadium%20Zone%20Defined.pdf

Changes to the Swedish Mineral Act

In August 2018, changes to the Swedish Mineral Act, which were voted on recently in the Swedish Parliament, will come into force and will have the effect of removing uranium from the Swedish Mineral Act.

This change will therefore prevent the recovery of uranium in Sweden and require it to be treated as waste.

The Häggån Battery Metals project and Vanadium are not affected in any way by this new legislation and the Swedish Government has made it clear that Battery Metals is a key part of the energy transformation taking place globally at present.

As Aura Energy changed the focus of the Häggån Project to Vanadium and Battery Metals over the past 12 months considering continuing weak uranium prices and strongly increasing Battery Metal and Vanadium prices, it became clear that the project economics had altered in favour of Battery Metals.  As such, Aura believes the changes to the Swedish Mineral Act with the removal of uranium are not material to the Häggån Project.

Key points from the Swedish government and the legislation include:

• The Swedish Government has been clear that removing uranium from the Mineral Act will not affect mining for other metals such as Vanadium or other Battery Metals used for Battery production.

• The Swedish Government has allocated special funding for the new search of Battery Metals and have strongly supported development of the Battery Metal sector in Sweden.  Aura will be speaking with the Government about the potential to access some of this funding to progress the Häggån Project.

• In the proposition, the Government has included an extensive evaluation on how the proposed changes to the Mineral Act and the Environmental Code affect the mining of innovation-critical metals and minerals.  The evaluation will be conducted within five years after the new legislation is in place to ensure these Critical Metals are not affected by these legislative changes.

A full announcement for the 2018 Mineral Resource released to the ASX can be viewed at the following link: http://www.auraenergy.com.au/announcements-2018.html

Summary of Resource Estimate and Reporting Criteria

In accordance with Australian Securities Exchange Listing Rule 5.8 and the JORC 2012 reporting guidelines, a summary of the material information used to estimate the Mineral Resource is set out below (for further detail please refer to the Appendix to this Announcement).

Geology and geological interpretation

Mineralisation at Häggån is hosted by bedded black shales of the Cambrian to Ordovician Alum Shale in tectonically or otherwise stratigraphically thickened metal enriched north-north-west striking elongated geological domains.  The mineralised sequence outcrops in an area in the east of the tenement but elsewhere underlies a variably thin cover of limestone. Minor inter-beds of carbonate enriched shale or siltstone occasionally occur within the mineralised sequence.  The mineralised unit overlies a mixed sequence of siltstone and massive mineralized back shale above a granitoid gneissic basement.

It is interpreted that there are a series of overthrusts which have displaced and caused thickening of Alum Shale within the resource area, and the sub-horizontal thrust sheets have influenced the grade distribution within the Häggån deposit.

Drilling techniques and hole spacing

The 2018 Häggån resource estimate is based on several drilling campaigns:

All drillholes except one were vertical. The majority of the holes were drilled with BQTQ bit (core diameter 47mm).  Some holes were drilled in NQ2 (core diameter 50.6 mm) to provide material for metallurgical testwork.

Hole spacing over most of the resource is approx. 400 m by 400 m, with precise locations determined by ease of access.  The final 3 drillholes were spaced 100m as the start of a resource upgrade drilling campaign.

Sampling and sub-sampling techniques

Assay samples were obtained from drillcore using a core saw.  Half-core over 2 metre intervals was combined for assay purposes.  The core samples were dried at 105°C, crushed to 70% -2 mm.  250 g was split by riffle splitter followed by fine pulverizing to 85% less than 75 microns.

10-20 grams of pulp subsample were dispatched to ALS-Chemex in Vancouver for assay.

Sampling analysis method

All samples were analysed by ICPMS for a wide range of elements following 4-acid digestion.

Cut-off grades

Based on a scoping study carried out in 2012 previous resource estimates at Häggån were based on a lower cut-off grade of 100 ppm U₃O₈.

The 2018 Resource Estimate reported here uses a range of cut-off grades, the lowest being  0.1% (1000 ppm) V₂O₅.  At current V₂O₅ prices this is a much higher value cut-off than that used previously for the reason that using lower V₂O₅ cut-offs makes little difference to the contained V₂O₅ in the resource, as only a small proportion of the resource has a grade less than 1000 ppm V₂O₅.

Estimation methodology

The vanadium, nickel, zinc, molybdenum, uranium, calcium and sulphur concentrations were estimated by Ordinary Kriging using Micromine software.  H&SC considers Ordinary Kriging to be an appropriate estimation technique for this type of mineralisation.

H&SC created a wireframe solid to define the volume represented by vanadium grades above background concentrations. This wireframe is largely limited to the shale unit. Only the volumes inside the wireframes were estimated using only assays from within the respective wireframes.

The absence of extreme values precluded the need for top-cutting.

No assumptions were made regarding the recovery of by-products.

Variography was performed for, vanadium, nickel, zinc, molybdenum, uranium, calcium and sulphur on composite data from the Häggån mineralised volume.

Block dimensions are 200x200x10m (east, north, and vertical respectively). The plan dimensions were chosen as they are nominally half the drill hole spacing. The vertical dimension was shortened to reflect downhole data spacing and flat-lying nature of the mineralisation.

Two search passes were employed with progressively larger radii and decreasing search criteria.  The first pass used radii of 400x400x10m whereas the second 800x800x20m (along strike, across strike and vertical respectively).  The search ellipses formed flat discs.  Both passes used a four-sector search and a maximum of six composites per sector (total maximum = 24 composites).  The first pass required a minimum of eight composites and the second pass required a minimum of six composites.  Both passes required a minimum drill hole count of two.  The blocks in the Häggån deposit that were populated in the first pass were classified as Inferred Mineral Resources.   Blocks populated in the second pass formed the foundation of an Exploration Target quotient. Minor modifications were made to this scheme in order to reflect the competent person’s view of the deposit.

The maximum extrapolation of Inferred Mineral Resource estimates is 380 m.  The relatively large extrapolation distances are supported by the continuity and predictably indicated by the areas drilled.

The estimation procedure was reviewed as part of an internal H&SC peer review.  No independent check models were produced due to the similarity between the 2018 estimates and the earlier estimates that were conducted by a different operator.

The final H&SC block model was reviewed visually by H&SC and it was concluded that the block model fairly represents the grades observed in the drill holes.  H&SC also validated the block model statistically using a variety of histograms, and summary statistics.

Mining and processing methods and parameters

Given the flat lying nature of the mineralisation and the low overburden to resource ratios the resource is very well suited to standard open pit mining.

A significant volume of test work has been undertaken on definition of vanadium deportment and process behaviour, and for the other resource metals.  This demonstrated that vanadium is present mainly in the form of V(III) hosted with the mica mineral roscoelite.

The results of testwork involving cyclone de-sliming of ground material (carried out by Australian Nuclear Science and Technology Organisation (ANTSO) in 2011 indicated that upgrade of 1.35 times vanadium feed grade could be achieved with 73% recovery and rejection of 45% of feed mass.

Extraction of vanadium was shown to be typical for a mica mineral host in Black Shales.

Minimal vanadium extraction was observed in atmospheric acid leach.  Recovery of up to 59% vanadium has been achieved by salt roast and acid leach, which compares favourably with industry average recovery for this process option of 50-55% vanadium.  Acid pressure leaching has shown to be the most promising processing option, with 61% vanadium recovery from un-optimised sighter tests.

The observed results demonstrated that the Häggån Black Shale could be expected to behave as a typical mica-hosted vanadium resource similar to currently operating projects elsewhere.  Testwork is continuing to determine the optimum metallurgical flowsheet.

For more information please visit www.auraenergy.com.au or contact the following:

The information contained within this announcement is deemed by the Company to constitute inside information under the Market Abuse Regulation (EU) No. 596/2014.

Competent Persons

The Competent Person for the 2012 Häggån Mineral Resource Estimate and classification, updated in 2018, is Mr Rupert Osborn MSc of H&S Consultants Pty Ltd.  The information in the report to which this statement is attached that relates to the 2018 Resource Estimate is based on information compiled by Mr Rupert Osborn, who has sufficient experience that is relevant to the resource estimation.  This qualifies Mr Osborn as a Competent Person as defined in the 2012 edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’.  Mr Osborn is an employee of H&S Consultants Pty Ltd, a Sydney based geological consulting firm.  Mr Osborn is a Member of The Australian Institute of Geoscientists (AIG) and consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

The Competent Person for drill hole data, cut-off grade and prospects for eventual economic extraction is Mr Neil Clifford.  The information in the report to which this statement is attached that relates to drill hole data, cut-off grade and prospects for eventual economic extraction is based on information compiled by Mr Neil Clifford.  Mr Clifford has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking.  This qualifies Mr Clifford as a Competent Person as defined in the 2012 edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’.  Mr Clifford is an independent consultant to Aura Energy Limited.  Mr Clifford is a Member of the Australasian Institute of Mining and Metallurgy (AusIMM).  Mr Clifford consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

The Competent Person for matters relating to ore beneficiation and extraction is Dr Will Goodall.  The information in the report to which this statement is attached that relates to ore beneficiation and extraction is based on information compiled by Dr Will Goodall.  Dr Goodall has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking.  This qualifies Dr Goodall as a Competent Person as defined in the 2012 edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Dr Goodall is an independent consultant to Aura Energy.  Dr Goodall is a Member of the Australasian Institute of Mining and Metallurgy (AusIMM) and consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

Glossary of terms

Set out below are key terms referred to in the ASX announcement for the Resource Estimate

Alum Shale  - a unit of black organic-rich marinate about 20 – 60 metres thick that was deposited in a shallow marine shelf environment on the tectonically stable Baltoscandian Platform in Cambrian to earliest Ordovician time in Sweden and adjacent areas. The Alum Shale is present in outliers, partly bounded by local faults, on Precambrian rocks in southern Sweden as well as in the tectonically disturbed Caledonides of western Sweden and Norway, where it reaches thicknesses of 200m or more in repeated sequences owing to multiple, low angle thrust faults

Competent Person   -  is a minerals industry professional who is a Member or Fellow of The Australasian Institute of Mining and Metallurgy, or of the Australian Institute of Geoscientists or of a Recognised Professional Organisation, as included in a list on the JORC and ASX websites.  A Competent Person must have a minimum of five years relevant experience in the style of mineralisation or type of deposit under consideration and in the activity which that person is undertaking;

Cut-off grade  - the lowest grade, or quality, of mineralised material that qualifies as economically mineable and available in a given deposit;

Grade     -  any physical or chemical measurement of the characteristics of the material of interest in samples or product;

g/t     - grams per tonne (where 1 gram per tonne = 1 ppm)

Indicated Resource   - is that part of a Mineral resource for which quantity, grade (or quality), densities, shape and physical characteristics are estimated with sufficient confidence and detail to support mine planning and evaluation of economic viability of the deposit.

Geological evidence is derived from adequately detailed and reliable exploration, sampling and testing gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes and is sufficient to assume geological and grade (or quality) continuity between points of observation where data and samples are gathered;

Inferred Resource - that part of a Mineral Resource for which quantity and grade (or quality) are estimated on the basis of limited geological evidence and sampling.  Geological evidence is sufficient to imply but not verify geological and grade (or quality) continuity.  It is based on exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes;

JORC   - the Australasian Code for the Reporting of Exploration Results, Mineral Resources and Ore Reserves, as published by the Joint Ore Reserves Committee of The Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia;

JORC 2012     -  the 2012 edition of the JORC Code

LBS        - pounds (where 2.2046 pounds = 1 kilogram)

Mineral Resource                                      a concentration or occurrence of material of economic interest in or on the earth’s crust in such form and quantity that there are reasonable and realistic prospects for eventual economic extraction.  The location, quantity, grade, continuity and other geological characteristics of a Mineral Resource are known, estimated from specific geological evidence and knowledge, or interpreted from a well-constrained and portrayed geological model;

Mlb   -  million pounds avoirdupois;

Mt- Million tonnes;

Ordinary Kriging  -  is the weighted averaging of neighbouring samples to estimate the 'unknown' value at a given location.  Weights are optimized using the semi-variogram model, the location of the samples and all the relevant inter-relationships between known and unknown values.  The technique also determines a "standard error" which is used to quantify confidence levels.

ppm    -  parts per million by weight;

Variography   - as applied in geology is a methodology of investigating the degree of grade continuity in a mineral occurrence.  Understanding how sample values relate to each other in space can help to infer possible similarities between known samples and points that have not been sampled. This information can then be used to generate an estimate (e.g. using ordinary kriging) of the grade at unsampled locations.

V₂O₅     - Vanadium pentoxide

JORC Code, 2012 Edition

Table 1 Report Template

Section 1 Sampling Techniques and Data

(Criteria in this section apply to all succeeding sections)

Section 2 Reporting of Exploration Results

(Criteria listed in the preceding section also apply to this section)

Section 3 Estimation and Reporting of Mineral Resources
(Criteria listed in section 1, and where relevant in section 2, also apply to this section)