Cauldron Energy : Blackwood - Gold Found in Reef Structure Supports Modelling

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Figure 1: Blackwood Gold Project Location Map

Drilling undertaken in December 20211 consisted of 3 holes (BKD003-5) designed as a fan from inside the Tyrconnel Adit, to test the high-grade Annie Laurie and associated Western Leader Reef, mined in the 1880's. Poor ground and travel constraints prevented the use of optimal collar locations and resulted in the forced abandonment of the holes before reaching target depth.

Modelling and historical reports indicated that the drilling should have intersected high grade gold mineralisation. Instead, drilling intersected multiple voids and incompetent ground in unpredictable places resulting in significant core loss and the failure to reach the predicted depths for intersection of high grade mineralisation. In order to somehow test the sheared reef structures in the target area, sludging or open hole samples were collected with the most significant intersection returning 1m @ 0.86 g/t Au in BKD005 (Table 1) providing an indicator of the concepts being tested.

Three holes were drilled for a total of 32 metres through sandstones, highly sheared siltstones, thin black graphitic shales associated with the narrow shears and fractures, and thin quartz stringer veins. However, the intersection of multiple voids and broken, incompetent ground resulted in extremely poor core recovery. Hole BKD005 was drilled the deepest (to 17.70m) before intersecting broken ground associated with the Annie Laurie Reef and potentially extending into the Western Leader Rise before the hole had to be abandoned.

1 Refer to ASX:CXU Announcement 16 December 2021

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Significant intercepts from sludge samples (open hole) are provided in Table 1, with the full list of results provided in Appendix 1. Immediate observations are:

1. The marked increase in As from 80.5 to 237ppm along with the increase in Au (0.12 to 0.86ppm).
2. A corresponding, albeit slight, increase in Sb (10 to 12.7ppm) and Ag (129 to 131ppm).
3. A suggested decrease in Zn from 412 to 147ppm with increasing Au. This negative association is indicative only based on the one drilling sludge sample but appears to be supported by the channel samples later collected.

Historical documentation and correspondence suggests a geochemical association between Gold, Arsenic and Base Metals which could potentially assist in creating a geochemical vectoring tool. This tool could assist in identifying mineralised structures that, due to their nuggety nature, may have historically returned only weakly anomalous gold values. Previous explorers have focused on selected quartz veining associations for sampling in diamond core drilled from surface. Low grade gold values were ignored rather than being used to interpret vectoring patterns potentially pointing to higher-grade zones. There are currently not enough prospect-scale geochemical data available to fully test this theory, although ongoing data compilations may expose additional datasets. The continued geochemical sampling program will assist in identifying additional pathfinder element associations to better direct exploration to the high-grade gold mineralisation. The elements listed so far now form part of the standard assay suite for the Blackwood Project and the team will continue to develop the 3D geochemical model as exploration advances.

Table 1: Sludge Sample Assay Results Returned from Phase 1 drillhole, BKD005

Although the drilling failed to reach the expected gold mineralisation, the geochemical patterns recognised in the assay results strongly supports the area chosen for the drilling. Had the historical workings not been intersected, the Phase 1 drillholes should have intersected the anticipated high-grade gold in the hanging wall of the Annie Laurie structure, as originally intended.

Despite this frustration, 3D modelling completed with the aid of the Phase 1 results has allowed better design of the Phase 2 drilling. These new holes will target the competent hanging wall or western side of the reef structures from the drill cuddy currently under construction adjacent to and within the Tyrconnel Adit. Drilling from the hanging wall side will give a better indication of the true width of the host mineralised structures, whilst avoiding the historical mined areas.

Underground rehabilitation work has continued in order to provide safe access through the historically stoped reef areas above the adit level. A proper drill site or cuddy is now being formed inside the Tyrconnel Adit to allow for multiple drill orientations, or fans, of drillholes. This will allow better targeting of the west-dipping mineralised structures. Thanks to the information gained through the frustrations of Phase 1, the Phase 2 drilling should now also avoid any historical workings and instead intersect the targeted, high-grade, mineralised reef.

Ten new holes are planned on a fan design to intersect both the hangingwall and footwall of the Western Leader and associated Annie Laurie Reefs, based on a range of azimuths and dips considered the most optimal for target penetration. As with any exploration program, the final number of holes drilled will depend highly on ground conditions and penetration rates once drilling commences.

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Table 2: Assay Results Returned from current channel sampling (Tyrconnel Adit)

In December 2021, the Company acquired new LiDAR (Light Detection and Ranging) data for the Barrys Reef area. The highly detailed topographic survey originated from the Greater Melbourne LiDAR Project flown by the Victorian Department of Environment, Land and Water Planning (DEWLP) between November 2017 - October 20182. Survey data are accurate to 0.2 metres horizontally and 0.1 metres vertically, with a spatial resolution of 1 metre. Specifications are provided in Appendix 2, JORC Table 1.

Analysis and interpretation of the data were completed with the assistance of Perth-based GIS consultants, Rock Solid Seismic Pty Ltd, with the final image and wireframes provided here as Figure 3 and Figure 4. Observations are as follows:

1. Historical surface workings are clearly identified, confirming the location of various shafts and adits,
2. North-southorientation of mineralised reefs are observed, with the changing orientation of saddle reefs confirmed,
3. Fault structure surface expressions are revealed and interpreted to be of three main orientations:
4. 1. North-south- confirming the historic model of north-south striking, axial planar faults intersecting the north-south oriented fold hinges,
   2. East-west- confirming historically-mapped, regional scale, east-westlow-angle thrust faults that cross-cut the north-south folds and fault systems,
   3. Northwest-southeast- newly identified fault structures that, at first glance, appear to be more localised than regional. However, publicly available geological models downloaded from the Victorian State Government website (Earth Resources) shows structures of similar orientations outside of Cauldron's EL5479, confirming that the faults interpreted from Barrys Reef are likely to be part of the same major, regional-scale structural setting.

There appears to be a southerly plunge of the East-West fault structures, however no information was available at the time to interpret the dip or plunge of the North-South and Northwest-Southeast faults. This orientation information will, however, be added in due course from historical underground and surface mapping, as well as new structural mapping undertaken as the Project advances.

2 Refer to Victoria State Government, Department of Environment, Land, Water and Planning, Coordinated Imagery Program: https://www.land.vic.gov.au/maps-and-spatial/imagery/coordinated-imagery-program

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