Cyclone Metals : Quarterly Report - 30 June 2023

Cyclone Metals

Quarterly Report

31 July 2023

Other Securities Movements

On 17 April 2023 and 28 April 2023, the Company issued a total of 26,400,000 fully paid ordinary shares in the Company for the provision of consulting services in relation to the acquisition of Block 103.

On 30 June 2023, a total of 11,200,000 unlisted options with an exercise price of $0.006 each lapsed.

Appendix 5B Quarterly Report and Statement of Cash Flows

The ASX Appendix 5B quarterly report is attached to and lodged with this report. The Company's Appendix 5B Quarterly Report covers the 3-month period from 1 April 2023 to 30 June 2023.

During the quarter, exploration and evaluation expenditure was $110k, predominantly associated with work undertaken on the Block 103 Project, Grand Port Project, Marampa Project, holding costs and tenement compliance costs. Administration and corporate expenditure during the quarter was $272k which included Director and consultant costs. In addition, a payment of $171k was made to the ATO in respect to the tax amount payable. This payment represents the final amount payable to the ATO under the deed of settlement. Investing activities during the quarter included receipt of $200k from the sale of listed investments offset by a $24k investment in an unlisted gold project.

As at 30 June 2023, the Company had approximately $128k.

Payments to Related Parties and their Associates

In accordance with ASX Listing Rule 5.3.5, payments to related parties of the Company and their associates during the quarter totalled $171k relating to current Directors and Directors who resigned during the quarter ($168k) and payments to Director related entity ($3k). These amounts are included at item 6.1 and item 6.2 of the Appendix 5B.

PROJECTS

Block 103 Iron Ore Project

Block 103 Summary

On 17 April 2023, the Company completed the acquisition of the Block 103 iron ore project (Block 103 or the Project) located in Newfoundland, Canada through the issue of 2,160,000,000 fully paid ordinary shares.

Block 103 is located the Labrador Trough in Canada, 20 km from the town of Schefferville and is within 20km of an open access heavy haul railway directly connected to the Port Sept Isles iron ore export facility (refer Figure 1).

As announced on 20 June 2023, Block 103 is a well-advanced project supported by an Inferred Mineral Resource of 7,200 Mt @ 32% Fe which has been reported in accordance with the provisions of both with the JORC 2012 code and the NI 43-101 standards (see further details below).

Cyclone Metals

Quarterly Report

31 July 2023

Figure 1 - Location of Block 103

A Preliminary Economic Assessment (PEA) study was completed by BBA Inc, of Toronto, in June 2013. This report is publicly available in the SEDAR database* and concludes that a high-quality magnetite concentrate grading 69.5% Fe can be produced through simple beneficiation and that blast furnace quality pellets can be produced and shipped to the Sept Isles port for a cash cost of USD 47 /t FOB. For reference, blast furnace pellets currently trade at USD 141/t CIF China and shipping costs are roughly 26 USD/t.

Block 103 benefits from a low stripping ratio of 0.4, is a relatively soft magnetite ore and has access to cheap hydropower - all of which contribute to a low OPEX and an extremely low carbon footprint.

For more detailed information, please refer to the CLE announcement dated 17 April 2023.

Block 103 Quarterly Activities to end of June 2023

The key activities relating directly to Block 103 during the quarter ending June 2023 included:

1. 17 April 2023: Completion of the acquisition of Block 103
2. 1 May 2023: Appointment of a highly credentialled iron ore and steel making executive, Paul Berend, as CEO and Executive Director of Cyclone Metals

Cyclone Metals

Quarterly Report

31 July 2023

1. 20 June 2023: Release of a JORC compliant Inferred Mineral Resource estimate of 7,200 Mt @ 32% Fe
2. Planning and resourcing of Block 103 value accretive project milestones, leading to the generation of bulk client DRI pellet samples by Q2 2024
3. Subsequent to the quarter end on 18 July 2023: The start of field operations in Shefferville including the review of 28,000m of drill core and the creation of a 1,6 t of bulk sample for metallurgical test work

• www.sedar.com.Filter by search company database, then Document type: Technical report NI 43-101 and Company name: M3 Metals. Date of filling: 2013

1. Appointment of Paul Berend, as CEO and Executive Director

On 14 April 2023, the Company announced the appointment of Mr Paul Berend as Executive Director and Chief Executive Officer of the Company with effect from 1 May 2023.

Paul brings over 20 years of experience in the iron ore and steel industry acquired in blue chip as well as junior mining companies worldwide. His previous corporate roles include GM Business Development for Rio Tinto Iron Ore and GM Corporate Strategy for ArcelorMittal, the world's largest steel producer. He has also worked for Hatch (director advisory services for Australasia), McKinsey & Company and Partners In Performance.

Paul has a successful track record in identifying and developing early-stage

mining projects and is the founder and historic CEO of Trans-Tasman Resources Ltd (a titano- magnetite project in New Zealand ASX: MKR). He has worked extensively with private equity and specialised funds to identify and develop early-stage mining projects and turn around undervalued producing mineral assets.

Paul has MBA from HEC (Paris, France), a MSc and DEA (~PhD) in chemical process design and chemistry from ENSIC (Nancy, France), a bachelor's in applied mathematics and algebra from Harvard University and is a Graduate of the Australian Institute of Company Directors.

Paul's successful track record in the iron ore industry, and specifically in the development of early- stage magnetite deposits, will be a key success driver for the development of Block 103.

Paul said "I am thrilled to be joining the Company at such an exciting time, and I look forward to working closely with the Board, our shareholders, and most importantly, our Canadian stakeholders, to responsibly develop Block 103. Block 103 is a critical mineral resource - globally - as it could produce low cost DRI grade pellets on a large scale, which the steel industry desperately needs to reduce its carbon footprint".

c) Release of a maiden JORC compliant mineral resource 7,200 Mt @ 32% Fe

On the 20 June 2023, the Company released its Mineral Resource statement for Block 103, stated in accordance with the provisions of the JORC Code:

Cyclone Metals

Quarterly Report

31 July 2023

Highlights

• Inferred Mineral Resource of 7.2 billion tonnes containing 29.2% total Fe and 18.9% magnetic Fe.
• Block 103 Mineral Resource is based on the Greenbush zone which represents only ~ 25% of the total target mineralised area in Block 103 based on aeromagnetic surveys as indicated by geophysics and mapping
• Initial metallurgical test work highlights:
• • The production of high-qualityconcentrate containing 69.5% Fe with low deleterious elements was achieved consistently through one stage grinding and wet magnetic separation,
  • Low Bond Work Index (BWi) (kWh/t at P80 32µm) of 15.5 is expected to drive low grinding costs - enhanced by access to cheap renewable hydropower,
  • Very high Fe magnetite recovery rate of 93.7% by mass.

Extract from mineral resource statement

Burnt Shirt Pty Ltd (Burnt Shirt) was engaged by Cyclone Metals to prepare a Competent Persons Report on Block 103. Iron mineralisation mainly consists of magnetite (Fe3O4) and haematite (Fe2O3). The Mineral Resource estimate is based on an estimate prepared in 2013 by Watts, Griffis and McOuat (WGM) for CapEx Mining Ltd and reported in accordance with the Canadian NI43-101 standard. The original Mineral Resource estimate and its accompanying Preliminary Economic Analysis may be viewed on SEDAR, the Canadian online repository for listed company statements.

The mineralisation has been classified in accordance with the provisions of the Australian Joint Ore Reserves Committee (the JORC Code). The mineralisation has been classified as Inferred due to the wide spacing of drilling in a large deposit which demonstrated global uniformity but localised variation. Cyclone advises that confidence in the classification of the mineralisation will increase with confirmatory drilling.

Block 103 Mineral Resource estimate at 12.5% magnetic Fe cut-off grade

The Competent Person for this Mineral Resource estimate is Mr Jeremy Peters BSc BEng FAusIMM CP (Min, Geo), a full-time employee of Burnt Shirt Pty Ltd., consulting to Cyclone. Mr Peters has more than five years' experience in the estimation and reporting of Mineral Resources for iron ore mineralisation in Australia and overseas.

Burnt Shirt had previously assisted CLE with public statements made in relation to the purchase of Block 103. Mr Peters is taking Competent Person responsibility due to his familiarity with the Project.

1. Planning and resourcing of Block 103 value project milestones, with a stretch target to generate bulk client DRI pellet samples by Q2 2024

The leadership team of CLE has defined a strategic development plan for Block 103 which has been designed to de-risk the project upfront and maximise the value creation for early-stage shareholders