Alliance Resources : 2nd Quarter Activity and Cashflow Report - Dec 2021

For personal use only

QUARTERLY REPORT

FOR THE PERIOD ENDED 31 DECEMBER 2021

QUARTERLY REPORT - FOR THE PERIOD ENDED 31 DECEMBER 2021

DETAILS OF ANNOUNCEMENT

• Quarterly Activity Report for the period ended 31 December 2021 (7 pages)
• Appendix 5B for the period ended 31 December 2021 (5 pages)

Authorised for release by the Board

Bob Tolliday

Company Secretary

Further information relating to the Company and its various mining and exploration projects can be found on the Company's website at www.allianceresources.com.au

For personal use only

QUARTERLY REPORT FOR THE PERIOD ENDED 31 DECEMBER 2021

HIGHLIGHTS

SUMMARY

• A 9 hole, 1,605.6 metre diamond drill program completed at the Wilcherry Project to provide geotechnical information for the processing plant and provide valuable information of the potential depth extensions to the Weednanna ore shoots and core for research and geotechnical purposes.
• The Research Project with CSIRO to undertake analysis of the Weednanna Au-Fe deposit genesis continued during the December quarter. The distribution and timing of alteration mineralogy at the deposit has been broadly mapped and linked to geochemical data. Diamond core will be used to link the alteration mineralogy to gold mineralisation and constrain the paragenesis of the deposit.
• A 47 hole, 6,180 metre RC drill program completed at the Weednanna deposit to test for extensions of gold mineralisation at Shoot 8, upgrade the gold resource in the Shoot 3 area from Inferred to Indicated category, and test for mineralisation between Shoots 7 and 8 and 3.
• Project design work continued during the quarter with preliminary underground development and stope designs produced. Progress continued on redesign of the Processing circuit to account for iron only processing, gold processing and gold and iron processing. Options are being considered to capture iron mineralisation in the gold feed prior to the tailings storage facility.
• Following evaluation of alternative / Green energy solutions for the Weednanna Project, the decision was made to advance to stage 2 of the project which entails collection of site specific wind and solar energy data. A SoDAR monitoring unit was installed onsite to collect wind speed and direction data and solar energy potential. The unit will remain onsite initially for 6 months to determine if incorporating wind and or solar power generation is economic for the project. Options assessed include PV (solar) with battery storage, wind generation, conventional diesel generation and combinations of all three options.
• The Bonza Prospect nickel sulphide exploration target was identified from analysis of historic RC drill chips at the Wilcherry Project. Petrographic analysis of drill chips confirm the presence of primary nickel sulphide (pentlandite) hosted in komatiitic ultramafic rocks. Regional geophysical data sets are being reviewed to plan a moving loop electromagnetic survey.
• Aboriginal heritage survey completed at Nepean West Project to provide for initial aircore drill testing of two priority gold exploration target areas.
• Aeromagnetic survey completed at Kalgoorlie South Project to identify conceptual structural gold exploration targets. Data being interpreted by Alliances' geophysical consultants.
• Travel restrictions imposed due to the Covid-19 virus continued to cause disruptions to corporate and exploration activities during the quarter. An induced polarisation survey at the Wilcherry Project was postponed until 2022 due to the inability of contractor personnel to access South Australia. Personnel continue to work remotely from the corporate office and access to South Australian exploration locations remains restricted due to interstate travel restrictions and quarantine requirements.
• Changes to the South Australian mining legislation in 2021 relating to security of exploration licence tenure has resulted in discussions with the Mines Department (DEM) to clarify the changes and secure long term tenure. These discussions are ongoing.

For personal use only

• Cash reserves of $1.02 million as at 31 December 2021.

WILCHERRY PROJECT, SOUTH AUSTRALIA (100%)

Weednanna Exploration

• A 9 hole diamond drilling program, totaling 1,605.6 metres, was completed at Weednanna during the quarter to provide core for geotechnical evaluation for the mine and processing plant location and research by CSIRO, and includes 1 deeper hole to test gold mineralisation extensions below the current Mineral Resource Estimate.
• A 47 hole RC drilling program, totaling 6,180 metres, was completed to infill areas within the Weednanna resource where drill density is considered too wide and to test northern extensions to the resource between shoots 7, 8 and 3. Drilling around shoot 3 is designed to upgrade the resource from the Inferred to Indicated resource category, allowing this material to be included in the mine design and scheduling.
• Cutting of drill core and drill sample analysis through the laboratory have been delayed due to significant demand for these services.

NN

AuFe

Figure 1. Weednanna: 3D plan views of gold and iron in drilling results with location of RC and diamond holes completed during the Quarter (process plant diamond holes not shown)

For personal use only

QUARTERLY REPORT

Weednanna Study Work

• The preliminary design of the Weednanna processing plant was completed during the September quarter. Following a detailed review of that design, upgrades and modifications have been incorporated to optimise product sizing of iron product through the crushing and screening plant and options to recover iron ore incorporated with the gold ore feed to the CIL processing plant.
  Recovery of iron product from the tailings discharge line should produce a high-grade Magnetite fines product suitable for direct furnace feed (after palletisation) or potentially coal washing.
  Detailed modified layout drawings have been completed and component selection and availability is being evaluated.
• Detailed design work was delayed during the quarter whilst further work was completed on the geological block model. This work will be completed in Q1, 2022 and the open pit and underground design work can then be finalised. Preliminary underground development design work commenced during December incorporating indicative development sizes and ventilation requirements. Access for future underground diamond drill locations will also be incorporated into the final design to ensure our exploration program can continue to search for depth and strike extensions to the multi- shoot system.
• Preparation of the Mining Lease Application document progressed, with several chapters in final draft form. The mining section is still in the preliminary stage until final designs, ore and waste schedules and haulage schedules can be finalised. This information will be required to complete the waste storage facility final design, with preliminary design work underway. The Hydrological modelling of underground water has commenced now that base of the open pits / underground interface is finalised.
• Following the analysis of potential alternative power supply options for the Weednanna site, the decision was made to progress to detailed onsite data collection to determine if wind and solar (PV) power generation is a viable and cost-effective option onsite. The project is located 40km north of the township of Kimba and the nearest grid power. Therefore, with grid power being too expensive, rather than blindly select diesel power generation for the project, the option of alternative power generation needs to be thoroughly investigated. A SODAR monitoring unit was sourced and set-up onsite to collect real-time wind speed and direction data and solar energy potential. Data is continuously collected and analysed by a third-party consultant. Once sufficient data is collected, our power team will evaluate the economics of the supply of power for site.

Bonza Prospect Nickel Sulphide Target

• Re-analysisof historic iron exploration drill sample pulps intersect broad zones of nickel mineralisation (refer to Alliance ASX Announcement dated 28 October 2021).
• Significant assay results include:

1. 67m @ 0.18 % Ni from 135m in 08NMRC005 to end of hole incl. 15m @ 0.28 % Ni from 138m

1. 87m @ 0.15 % Ni from 105m in 08NMRC013 o 42m @ 0.34 % Ni from 106m in 08NMRC018
   incl. 3m @ 1.12 % Ni from 112m
   o 15m @ 0.18 % Ni from 166m in 08NMRC018 to end of hole o 77m @ 0.14 % Ni from 123m in 08NMRC032 to end of hole

For personal use only

QUARTERLY REPORT

• Nickel assay results correlate with ~8 kilometre long high-magnetic anomaly interpreted to be associated with nickel-prospective ultramafic rocks
• Bonza Prospect target area also associated with helicopter-borne electromagnetic anomaly and gravity high anomaly.
• Thin section analysis of historic RC chips confirms the presence of primary nickel sulphide (pentlandite) hosted within komatiitic ultramafic rocks.
• Alliance's consultant geophysicists are reviewing regional geophysical data sets to identify priority exploration target areas for testing using moving loop electromagnetic (MLEM) surveys to identify conductors potentially associated with massive nickel sulphide.

WEST AUSTRALIAN EXPLORATION

Nepean West Project (E15/1658, E15/1788, ELA15/1787, & P15/6591)

• An aboriginal heritage survey was completed at the Hawkesbury and Penrith prospects to provide clearance for initial regional aircore drilling during 2022 and 2023.