Azure Minerals : December Quarterly Activities and Cash Flow Report

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ASX RELEASE

31 JANUARY 2022

QUARTERLY ACTIVITIES REPORT

FOR PERIOD ENDED 31 DECEMBER 2021

ANDOVER NICKEL-COPPER PROJECT

• Resource drill-out of the VC-07 East nickel-copper deposit completed with 103 diamond holes drilled for 43,555m over the 14 month period since discovery
• Analytical results received for 97 holes at VC-07 East with assays for remaining six holes scheduled to be delivered shortly
• Highest individual nickel and copper assays returned to date from VC-07 East deposit:
• • 5.04% Ni over 1.5m from 325.8m downhole in hole ANDD0087
  • 4.94% Cu over 1.1m from 498.9m downhole in hole ANDD0086
• Shallow drilling has confirmed that significant nickel-copper sulphide mineralisation starts within 20m of surface and has a continuous vertical extent to more than 550m below surface
• Assay results continue to confirm strong internal continuity of mineralisation at VC-07 East, with potential mineralised extensions still open to the east, west and at depth
• Maiden Mineral Resource Estimate for VC-07 East is due to be delivered this quarter
• Exploration drilling is continuing at VC-07 West, Skyline, VC-23,VC-18 and VC-41 prospects

BARTON GOLD PROJECT

• Maiden 3,000m Reverse Circulation drilling program commenced subsequent to end of the quarter
• Drilling is targeting gold mineralisation at Daisy Corner, immediately adjacent to Genesis
  Minerals' new Puzzle North gold discovery
• Reconnaissance aircore drilling program to follow up previously untested, soil covered, structural gold targets

CORPORATE

• Azure is well funded for future exploration activities and development studies with a strong cash balance at 31 December 2021 of $19.0 million

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ANDOVER NICKEL-COPPER PROJECT (Azure 60% / Creasy Group 40%)

Azure is focused on the rapid exploration and development of the Company's flagship Andover Ni- Cu Project, located in the West Pilbara region of Western Australia. Recent focus has been on advancing the VC-07 East nickel-copper sulphide deposit, with the resource drill-out completed late in the December quarter and the maiden Mineral Resource Estimate expected this quarter.

Figure 1: Location of Andover project, local infrastructure and underlying geology

VC-07 EAST Ni-Cu SULPHIDE DEPOSIT

Over the past year, Azure's drilling program at Andover confirmed that the plus one kilometre-longVC-07 mineralised system contains multiple zones of nickel and copper sulphide mineralisation.

The first mineralised zone to be defined was VC-07 East where Azure has drilled the deposit to JORC Code 2012 Mineral Resource standard, with a total of 103 diamond holes for 43,555m completed.

Analytical results have been received for 97 of the VC-07 East holes, with assays for the remaining six holes expected by early February.

The maiden Mineral Resource Estimate for VC-07 East is expected to be delivered in the first quarter of 2022.

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Figure 2: VC-07 East Ni-Cu deposit and VC-07 West target zones and drill hole traces

VC-07 East is well defined by drilling with an internal mineralised intersection spacing of 50m x 50m over a continuous strike length of more than 300m. Sulphide mineralisation commences at a depth of about 20m below surface and has a continuous vertical extent to depths exceeding 550m below surface.

Assay results (ASX: 13 September and 12 October 2021) returned from the final stages of the resource drill-out continue to demonstrate widths and grades of Ni-Cu sulphide mineralisation in line with, or in some cases, exceeding expectations.

This has confirmed the excellent internal continuity of mineralised widths and grades within the deposit and a large proportion of the upcoming Mineral Resource Estimate is expected to report to the Indicated, and potentially Measured, resource categories. This will enhance the robustness of the overall resource and the development and economic studies.

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The highest nickel and copper assays received to date from Andover, delivered (ASX: 9 November 2021):

• 5.04% Ni over 1.5m from 325.8m downhole in hole ANDD0087
• 4.94% Cu over 1.1m from 498.9m downhole in hole ANDD0086

Extensional drilling was designed to identify external boundaries of the mineralised zones but, with several holes intersecting strong mineralisation around the edges, the VC-07 deposit remains open for further expansion to the east, west and at depth.

Encouragingly, shallow drilling at the eastern end of the deposit intersected Ni-Cu sulphide mineralisation within 20m of surface, beneath an extensive outcrop of nickel and copper-rich gossan which extends for several hundred metres further to the east and remains undrilled in this direction.

MINERALISED INTERSECTIONS RETURNED FROM DRILL HOLES ANDD0078 TO ANDD0111

ANDD0078 (near-surface):

• 2.8m @ 2.23% Ni, 0.31% Cu & 0.10% Co from 49.1m downhole
• 7.2m @ 1.41% Ni, 0.56% Cu & 0.06% Co from 60.6m downhole
• 2.2m @ 1.76% Ni, 0.29% Cu & 0.08% Co from 76.4m downhole
• 3.1m @ 1.47% Ni, 0.97% Cu & 0.07% Co from 171.8m downhole
• 3.0m @ 1.08% Ni, 1.17% Cu & 0.05% Co from 194.0m downhole

ANDD0079 (upper western side extensional):

• 10.8m @ 1.70% Ni, 0.78% Cu & 0.08% Co from 303.7m downhole, including: o 7.1m @ 2.16% Ni, 0.74% Cu & 0.10% Co from 305.1m downhole

ANDD0080 (central deposit in-fill):

• 2.0m @ 1.45% Ni, 0.31% Cu & 0.07% Co from 399.3m downhole

ANDD0082 (central deposit in-fill):

• 8.7m @ 1.29% Ni, 0.30% Cu & 0.06% Co from 428.8m downhole

ANDD0083 (upper western side extensional):

• 7.5m @ 1.27% Ni, 0.74% Cu and 0.06% Co from 127.6m downhole
• 13.7m @ 1.55% Ni, 0.54% Cu and 0.07% Co from 318.3m downhole; including: o 6.5m @ 2.28% Ni, 0.55% Cu and 0.10% Co from 318.3m downhole.

ANDD0084 (upper eastern side extensional):

• 8.0m @ 1.02% Ni, 0.58% Cu & 0.05% Co from 197.1m downhole, including:
  o 4.1m @ 1.37% Ni, 0.63% Cu & 0.07% Co from 197.1m downhole

ANDD0086 (lower deposit extensional):

• 7.7m @ 1.29% Ni, 0.46% Cu & 0.06% Co from 474.4m downhole
• 8.3m @ 1.48% Ni, 1.50% Cu & 0.07% Co from 495.5m downhole; including:
  o 2.6m @ 2.30% Ni, 0.38% Cu & 0.10% Co from 495.5m downhole

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ANDD0087 (near-surface and central deposit in-fill):

• 3.8m @ 2.64% Ni, 0.84% Cu & 0.11% Co from 145.5m downhole
• 15.2m @ 2.32% Ni, 0.96% Cu & 0.10% Co from 316.6m downhole; including: o 6.0m @ 3.21% Ni, 0.96% Cu & 0.13% Co from 325.8m downhole
• 12.1m @ 1.14% Ni, 0.33% Cu & 0.05% Co from 374.9m downhole; including: o 1.8m @ 3.68% Ni, 0.19% Cu & 0.17% Co from 380.4m downhole

ANDD0088 (central deposit in-fill):

• 11.4m @ 1.85% Ni, 0.49% Cu & 0.08% Co from 378.6m downhole; including: o 4.6m @ 3.63% Ni, 0.51% Cu & 0.15% Co from 379.7m downhole
• 10.8m @ 1.33% Ni, 0.73% Cu & 0.06% Co from 405.2m downhole; including: o 4.8m @ 2.24% Ni, 0.59% Cu & 0.11% Co from 410.1m downhole

ANDD0089 (lower deposit extensional):

• 3.70m @ 1.30% Ni, 0.61% Cu & 0.05% Co from 495.0m downhole
• 3.10m @ 1.49% Ni, 0.37% Cu & 0.06% Co from 502.1m downhole

ANDD0090 (near-surface and upper eastern side extensional):

• 4.9m @ 1.21% Ni, 0.36% Cu & 0.05% Co from 65.0m downhole
• 7.3m @ 3.28% Ni, 0.97% Cu & 0.14% Co from 76.8m downhole
• 4.0m @ 1.21% Ni, 0.34% Cu & 0.06% Co from 228.0m downhole

ANDD0091 (depth extension):

• 5.0m @ 2.34% Ni, 0.39% Cu & 0.12% Co from 583.3m downhole

ANDD0096 (near-surface infill):

• 3.8m @ 2.84% Ni, 0.41% Cu & 0.12% Co from 94.7m downhole
• 3.4m @ 2.98% Ni, 0.85% Cu & 0.12% Co from 101.7m downhole

ANDD0099 (near-surface infill):

• 22.1m @ 1.22% Ni, 0.83% Cu & 0.05% Co from 97.4m downhole; including:
• 6.0m @ 3.05% Ni, 1.02% Cu & 0.11% Co from 97.4m downhole

ANDD0101 (eastern extension):

• 17.2m @ 1.97% Ni, 0.53% Cu & 0.09% Co from 278.8m downhole; including:
• 4.9m @ 3.80% Ni, 0.53% Cu & 0.17% Co from 278.8m downhole; and
• 3.6m @ 2.26% Ni, 0.41% Cu & 0.12% Co from 287.6m downhole

ANDD0108 (near-surface infill):

• 5.7m @ 2.04% Ni, 0.69% Cu & 0.09% Co from 50.0m downhole

ANDD0109 (western extension):

• 20.3m @ 1.51% Ni, 0.65% Cu & 0.07% Co from 267.9m downhole; including:
• 7.5m @ 2.58% Ni, 0.50% Cu & 0.12% Co from 268.0m downhole