Microsoft Word - 20160704 ASX Mt Marion Resource ASX announcement resource upgrade

5 July 2016

ASX RELEASE

Mineral Resource Estimate increases 160% to 60.5Mt

Mineral Resources Limited (ASX: MIN) ("MRL"), Neometals Ltd (ASX: NMT) ("Neometals") and Ganfeng Lithium Co., Ltd (SZSE: 002460) are pleased to provide a new Mineral Resource Estimate for the Mt Marion Lithium Project ('Mt Marion'), prepared by Snowden Mining Industry Consultants ("Snowden").

The results of the study have increased the Mineral Resource Estimate to Indicated and Inferred MineralResources of 60.5Mt at 1.36% Li2Oand 1.09% Fe, at a cut-off grade of 0.3% Li2O(Table 1 and Appendix A), compared to 23.24Mt at 1.39% Li2O,at a cut-off grade of 0% Li2Opreviously. This represents a substantial increase in the size of the mineral resource, equating to a 160% increase in the total contained lithium at the Project. The 0.3% cut-off grade reflects the strategy of mining to the lithium-bearing pegmatite contacts.

Table 1 Mt Marion Resource Table for 0.3% Li2Ocut-off

Category (JORC, 2012)

Tonnage (Mt)

Li2O(%)

Fe (%)

Indicated

26.4

1.33

1.09

Inferred

34.1

1.39

1.08

Total

60.5

1.36

1.09

Figure may not sum due to rounding Significant figures do not imply an added level of precision

Figure 1 Mt Marion Grade-Tonnage Curve

The Mt Marion lithium mineralisation is hosted within a number of sub-parallel, northeast to northwest trending pegmatite intrusive bodies which dip at between 10° and 30° to the west. Individual pegmatites vary in strike length from approximately 300 m to 1,500 m and average 15 m to 20 m in thickness, but vary locally from less than 2 m to up to 35 m thick, excluding the 2W feeder areawhere latest intercepts include 186m @ 1.82% Li2O,139m @ 1.69% Li2Oand 92m @ 1.54% Li2O.MRL notes that the 2W feeder zone is at an early stage of exploration and not well understood at this stage. Further work is required to develop the geological interpretation in this area. The pegmatites intrude the mafic volcanic host rocks of the surrounding greenstone belt.

The lithium occurs as 10 cm to 30 cm long grey-white spodumene crystals (Figure 2) within medium grained pegmatites comprising primarily of quartz, feldspar, spodumene and muscovite. Typically, the spodumene crystals are oriented orthogonal to the pegmatite contacts. Some zoning of the pegmatites parallel to the contacts is observed, with higher concentrations of spodumene typically occurring close to the upper contact.

Figure 2 Spodumene crystals (grey-white) within pegmatite at Area 1 deposit

The spodumene-bearing pegmatites were interpreted in section by Snowden as a series of sub-parallel lenses. Solid wireframes were subsequently built for each lens. The interpretation was based largely onthe geological logging of pegmatite intersections, along with the geochemical assay data (e.g. Li2O,Fe and MgO). MRL provided working sections which were compiled by MRL during the recent drilling to guide the interpretation of the pegmatites. As no drilling was conducted at Areas 4 and 5, no changes were made to the pegmatite interpretation in these areas.

Prior to the additional drilling, Areas 1, 2 and 2W were separate distinct zones of pegmatite, however the additional drilling has resulted in the merging of these three areas (e.g. the Area 1 pegmatite joins with Area 2 and the deeper portions of Area 2W).

To the southwest of Area 2W, deep drilling (>300 m) has intersected large intervals of pegmatite, which are interpreted to be part of a sub-vertical feeder zone. The geometry and nature of this feeder zone is currently not well understood due to the limited drilling and sub-optimal orientation of the drilling with respect to the sub-vertical feeder zone.

The majority of the deposits have been drilled on a nominal 40 mE by 40 mN drill spacing, with the drill sections oriented east-west. Drilling within the Area 1 deposit is down to 25 m to 30 m. The drill sections are oriented northeast-southwest within Area 6, which has been infilled largely to 40 m along strike by 40 m across strike.

A total of 852 drill holes have been drilled as at 17 June 2016, totalling approximately 67,185 m in length. The majority of the drilling is RC drilling which comprises some 97% of the drilled metres, with the remainder drilled using diamond core drilling. Initial drilling at Mt Marion commenced in the early 1970s with Western Mining Corporation (WMC), however the vast majority of the drilling, approximately 99% of the drilled metres, was completed by Reed Resources Ltd (now Neometals), Reed Industrial Minerals Ltd (RIM) and MRL since 2009. Approximately 47,138 m of additional drilling has been completed in 2015 and 2016 since the previous resource estimate.

A collar location plan is provided in Figure 3, with the 2015 to 2016 drilling highlighted in red.

Figure 3 Drill hole collar location plan (as at 17 June 2016)

TheLi2Oassay was determined by Genalysis in 2009 to 2011 using a four-acid digest (comprising hydrofluoric, nitric, hydrochloric and perchloric acids) followed by determination of the Li2Ocontent by atomic absorption spectroscopy (AAS) with a detection limit of 1 ppm. The Li2Ogrades were reported by the laboratory in percentage units, rather than ppm, to two decimal places. Nagrom determinedthe Li2Ocontent for the 2015 to 2016 samples by peroxide fusion digest with an ICP finish.

An additional test portion was analysed by x-ray fluorescence (XRF) for the following elements at both Genalysisand Nagrom; detection limit in parentheses: Al2O3 (0.01%),CaO (0.01%), Cr2O3 (0.005%),Fe2O3 (0.01%),K2O(0.01%), MgO (0.01%), MnO (0.005%), Na2O(0.01%), Nb (0.01%), P2O5 (0.001%),SiO2 (0.01%),SO3 (0.01%),Ta (0.005%) and TiO2 (0.01%).

A further test portion of the sample was analysed by thermogravimetric analysis (TGA) to determine the total loss on ignition (LOI) at 1000°C. The detection limit for the LOI determination is 0.01% LOI.

A block model was constructed based on a parent block size of 15 mE by 15 mN by 2.5 mRL, with a minimum sub-block size of 5 mE by 5 mN by 0.5 mRL. The chosen parent block size is based on the nominal drill hole spacing along with consideration of the geometry of the mineralisation and the results of the grade continuity analysis. The block size in the vertical direction was chosen to coincide with the proposed open-pit bench height. The block model was coded with the pegmatite wireframes and oxidation state. Snowden notes that the block model is limited to the tenement boundaries supplied by RIM.

Snowden estimated Li2O, Fe, Al2O3, CaO, K2O, LOI, MgO, MnO, Na2O, P, SiO2, Ta and TiO2 grades using ordinary block kriging (parent cell estimates) using Datamine Studio 3 software. Due to the variable dip of the pegmatites, dynamic anisotropy was used to locally adjust the orientation of the search ellipse and variogram models. The initial search ellipse of 50 m along strike by 35 m down dip by 4 m across strike was defined based on the results of the variography and assessment of the data coverage. A minimum of eight and maximum of 20 composites was used for the initial search pass, with no more than four composites per drill hole.

The July 2016 Mt Marion Mineral Resource estimate was classified and reported in accordance with the 2012 edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code).

The Mineral Resource has been classified as a combination of Indicated and Inferred Resources using the following criteria:

  • Indicated Resource - Area 1, 2, 2W, 4 and 6 mineralisation with good geological continuity and defined by drilling on a 40 mE by 40 mN grid or better. The Indicated Resource is limited to a vertical depth of approximately 100 m below surface.

  • Inferred Resource - mineralisation with poor geological continuity or which is defined by drilling on a grid greater than 40 mE by 40 mN. Area 5 is classified as Inferred in its entirety.

  • The Mineral Resource has been limited to pegmatite mineralisation above 150 mRL (an approximate vertical depth of 250 m below surface). Pegmatite below this level (deep portion of the Area 2W feeder zone) does not, in Snowden's opinion, have reasonable prospects for eventual economic extraction at this stage. A pit optimisation completed by Snowden in 2015 on the previous resource model showed potential open-pit mining to a depth of 170 m below surface and Snowden believes that the additional pegmatite identified in the recent drilling should extend this depth to around 250 m below surface.

Mineral Resources Limited published this content on 06 July 2016 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 05 July 2016 22:55:03 UTC.

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