Cannon Resources : Musket Resource Update Delivers 44% Increase

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ASX ANNOUNCEMENT | ASX: CNR

09 March 2022

Musket Resource Update Delivers 44% Increase of

Contained Nickel to 45.5 Kt

Highlights

• Cannon delivers an updated JORC 2012 Mineral Resource for the Musket deposit of 2.4 Mt @ 1.9% Ni for 45.4 Kt contained nickel
• Fisher East Project now contains 91,800 t of contained nickel in 3 deposits - Camelwood, Cannonball and Musket
• PGE content also estimated for the first time at Musket at 0.5 g/t (Pt + Pd) within the resource (also JORC 2012 compliant)
• Musket resource remains open laterally, internally and down plunge
• Drilling at Fisher East to recommence this week across all key prospects

Cannon Resources Limited (ASX: CNR) ("Cannon" or "the Company") is pleased to announce that an update of the Musket Mineral Resource has been completed which has resulted in a 44% increase in nickel metal over the previously reported resource estimate. Musket has now been estimated to contain 2.4 Mt @ 1.9% Ni and 0.5 g/t PGE (Pt + Pd) for 45.4 Kt contained nickel at a cut-off grade of 0.9% Ni (JORC 2012). This is an increase in both tonnage and grade over the previous estimate of 1.9 Mt @ 1.7% Ni for 31.6 Kt contained Ni.

The Fisher East Project now has 91,800 tonnes of contained nickel in 3 JORC 2012 resources at Camelwood, Cannonball and Musket.

In addition, a comprehensive program of resampling for PGE from relevant holes as well a new and existing PGE analysis has enabled Cannon for the first time to estimate a PGE content for the Musket Mineral Resource. The combined PGE content (Pt and Pd) has been estimated within the Musket resource at 2.4 Mt @ 0.5 g/t (Pt+Pd) for 38,580 Oz contained (Pt+Pd) and is also JORC 2012 compliant.

For comparison to the previously reported Musket Mineral Resource of 31.6 Kt contained Ni (which used a cut-off grade of 1.0% Ni), a resource estimate of 2.3 Mt @ 1.9% Ni and 0.5 g/t PGE (Pt

• Pd) for 44.7 Kt contained nickel at a cut-off grade of 1.0% Ni (JORC 2012) is provided.

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Cannon CEO, Steve Lynn commented:

"Musket is now delivering on the potential we expected. The 44% jump in Mineral Resource to 45.5 Kt of contained nickel is an exciting development. In addition, we have estimated the combined PGE grade at 0.5 g/t Pt + Pd. The PGE number is dominated by palladium, which is a fantastic and welcome outcome as well."

"The resource mineralisation remains open down plunge and laterally along the northern and southern margins, as well as internally within the zones without drill data. The current extent of drilling is approximately 600 metres vertically. This means there is ample scope to substantially grow the resource beyond the current limits."

"This is exactly what we plan to do with aggressive and focused diamond and RC drilling campaigns of over 9,000 metres. These are designed to infill Musket resource growth targets and other key prospect and scheduled to begin in March 2022. I look forward to keeping the existing Cannon shareholders and the market in general informed of our results as they come to hand over the following months."

Table 1: Musket Mineral Resource March 2022

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Notes:

1. Totals may differ due to rounding, Mineral Resources reported on a dry in-situ basis.
2. All Mineral Resources figures reported in the table above represent estimates as at 9th March, 2022. Mineral Resource estimates are not precise calculations, being dependent on the interpretation of limited information on the location, shape and continuity of the occurrence and on the available sampling results. The totals contained in the above table have been rounded to reflect the relative uncertainty of the estimate. Rounding may cause some computational discrepancies.
3. Mineral Resources are reported in accordance with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (The Joint Ore Reserves Committee Code - JORC 2012 Edition).
4. A reporting cut-off grade of 0.9% Ni was used to report the Mineral Resource. This was based on parameters from a previous scoping study in 2015 by CSA Global and updating of the parameters as appropriate by Cannon. Key parameters were a nickel price of AUD 21,500 per tonne, processing costs of AUD 42.51, mining costs of AUD 65.40, dilution of 10% and payability of 70%. A mineral resource estimate using a cut-off grade of 1.0% Ni is additionally provided for comparison.

Musket Mineral Resource Discussion:

The Musket resource estimation utilises all existing historical holes plus the 8 new Cannon holes drilled in 2021. Cannon also analysed existing mineralised pulp material from those historical samples where PGE data was non-existent or deficient and this extra data was added to the dataset to estimate the PGE grade for the resource.

The new resource model differs from the previous estimate in that a steeper slightly north of vertical plunge is now interpreted. In addition, in the absence of drilling data, a main southern channel and an "overbank'' northern trend is modelled. This channel morphology implies a lesser mineralised zone between and parallel to the 2 trend axes. This non mineralised zone is characterised by a lack of drill pierce points through the ore position and is outside of the new resource. It will be a priority target area for extensional drilling in the near term.

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A total of-five mineralised zones were modelled using Seequent Leapfrog software; three zones for massive/semi-massive mineralisation and two zones for disseminated mineralisation. The mineralisation at Musket extends over a 440 m strike length, starting at about 40-90 m below ground surface and has been drilled to over 600 m depth.

The interpretation of the mineralised zones was based predominantly on lithological logging with assay results used to confirm the intersections. Samples were composited to 1m lengths and top cuts were applied to remove high grade outliers which was necessary only for Pt, Pd, Cr and Cu. Top cuts were not applied to other elements. Variography was modelled for all elements for the largest object (disseminated mineralisation object 4) and applied to all other objects. Maximum ranges in the direction of greatest continuity were modelled between 170m and 128m with nugget values ranging from 0.05 to 0.21.

Grades were estimated into an unrotated Surpac block model of size Y 25m by X 5m by Z 5m sub- blocked to Y 1.5625m, X 0.625m and Z 0.3125m. Most elements were estimated using the Ordinary Kriging ("OK") algorithm with three estimation passes. For most elements, a minimum of 8 samples and maximum of 32, with a maximum of 4 samples per hole was used for the first pass with a search radius of 80m. For the second pass, a minimum of 4 samples, maximum of 32 and maximum per hole of 2 samples was used with a search radius of 160m. For the third pass, a minimum of 2 samples, a maximum of 32 and maximum per hole of 2 samples was used with a search radius of 300m. The grade validation indicated OK grades were similar to IDW grades but mostly slightly higher than sample composite grades.

A relationship between Ni grade and density was determined from existing drill samples and regression equations were determined for all massive and disseminated mineralisation then used to assign density to the mineralised blocks.

Mineral Resources where the sample spacing was 50m or less were classified as Indicated Resource while Mineral Resources where sample spacing was 50m up to 150m were classified as Inferred Resources. All other material was not classified. A reporting cut-off grade of 0.9% Ni was used to report the Mineral Resource. This was based on parameters from a previous scoping study in 2015 by CSA Global and updating of the parameters as appropriate by Cannon, including use of a nickel price of AUD 21,500 per tonne. In addition, a reporting cut-off grade of 1.0% Ni was also used to determine a mineral resource for comparison purposes with the previously published mineral resource for Musket.

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Figure 1: Musket Mineral Resource in long section.

Section shows 2022 Indicated Resource, 2022 Inferred Resource and outline of previous 2015

Mineral Resource. Also shown are all drilling pierce points plus Cannon drilling results.