Malachite Resources Limited (Malachite or Company) (ASX: MAR) is pleased to provide an update on activities at the Company's Jejevo Nickel Project in the Solomon Islands.

OVERVIEW

Malachite obtained shareholder approval at an Extraordinary General Meeting on 14 October 2020 to acquire Sunshine Minerals Limited (Sunshine). Sunshine has an 80% shareholding in Sunshine Nickel Limited which holds PL 01/18 containing the Jejevo nickel project1 .

Mining One Pty Ltd (Mining One) has incorporated detailed historical block modelling work carried out by Sumitomo Metals and Mining to construct a new 3D block model at Jejevo from raw drilling and sampling data.

A near term Jejovo Exploration Target has been generated in the range of 4.9Mt to 6.6Mt at 1.4% Ni to 1.6% Ni within all domains (Saprolite, Transitional and Limonite). This Target range reflects a potential quantity and grade for Jejevo and is conceptual in nature only as there has been insufficient exploration to estimate a Mineral Resource. It is uncertain if further exploration will result in the estimation of a Mineral Resource.

This Target range has been determined by Mining One given their confidence in the historical Sumitomo drilling information including down to 50m x 50m spacing in the central Jejevo deposit area.

Mining One have advised that there is a requirement to obtain more drill hole density and moisture data and have planned a twin hole drilling to provide sufficient QAQC support to the overall dataset to be JORC compliant.

Drilling equipment is now scheduled to arrive at the Jejovo project area this week. Drilling is expected to commence in the coming weeks with a 64-hole program (approx. 1,300m).

The initial drill program is designed to enhance the geological understanding of Jejevo and provide confirmatory results to allow preparation of a JORC compliant mineral resource estimate.

Significant historical drilling intercepts include2: JSC030: 13m @ 2.04% Ni from surface, including 11m @ 2.18% Ni from 2m

JSD049: 9m @ 1.98% Ni from 1m, including 6m @ 2.26% Ni from 2m

JSD062: 12m @ 1.93% Ni from surface, including 9m @ 2.04% Ni from 3m

NEAR TERM EXPLORATION TARGET AT JEJEVO

The current drill program has been designed by Mining One based on a review of the existing data from the Jejevo Project. As part of that process Mining One carried out a gap analysis to identify what additional work was required to enable the Company to produce a Mineral Resource estimate in compliance with the JORC Code 2012 Edition. The current 64-hole drilling program at Jejevo is the product of the work undertaken by Mining One and is designed to enhance the geological understanding of Jejevo and to provide confirmatory results to allow for the preparation of a JORC mineral resource estimate.

Historical drilling by Sumitomo Metals and Mining for the Jejevo area comprised 413 individual drill holes drilled down to a 50m x 50m spaced grid in places. The drilling methods used included diamond coring and hand auger with the majority of these holes (338) being diamond core drilled between 2012 and 2013.

Mining One Consultants validated the drilling data available within the Jejevo project area and used this data to create lithological surface models for the base of saprolite, base of transitional, base of limonite and the base of the Fecap/Overburden domains. The drilling data assays were then used via creation of 1m composite files to assign nickel grades to the blocks in the block model using ordinary kriging. Densities were assigned based on historical records reported by Sumitomo and Golder Associates in studies completed for the Jejevo project.

The near term exploration target is estimated based on actual nickel assay grades from historical drilling data and the tonnages calculated within the 3D block model from volumes. A work program is currently underway with the aim of achieving JORC 2012 compliance for the Jejevo deposit. Data currently being collected from new drilling includes twin drillholes and infill holes to enable adequate QAQC support for the drilling dataset, collection of additional density measurements and analysis for the full suite of relevant nickel laterite suite elements.

The near term Exploration Target within the Jejevo project area is in the range of 4.9Mt to 6.6Mt at 1.4% Ni to 1.6% Ni within all domains (Saprolite, Transitional and Limonite). This Target range reflects a potential quantity and grade for Jejevo and is conceptual in nature only as there has been insufficient exploration to estimate a Mineral Resource. It is uncertain if further exploration will result in the estimation of a Mineral Resource.

COMMENCEMENT OF DRILLING AT THE JEJEVO NICKEL PROJECT

The current drill program will utilise drilling rigs that were previously used on the tenement by Sumitomo Metals and Mining which were recently acquired by the Company.

The initial 64-hole drill program at Jejevo will consist of 25 holes for confirmatory (twin hole) purposes (395m), 15 holes for infill (306m) and 24 holes for new exploration (600m). Following completion of the initial 25 confirmatory holes and receipt of assays, the Company expects to be in a position to provide a JORC (2012) mineral resource estimate for the Jejevo Project early next year. That initial mineral resource estimate will also form the basis of a feasibility study

REGIONAL EXPLORATION AT THE JEJEVO NICKEL PROJECT

As previously reported, there are also targets for future exploration programs that exist on ridges to the east and west of the currently defined Jejevo deposit 3 . Further work including field inspections is required to rank these target areas prior to commencement of step out drilling programs.

THE JEJEVO NICKEL PROJECT - BACKGROUND

The Company owns Sunshine Minerals Ltd which owns 80% of Sunshine Nickel Limited (SNL) which holds prospecting licence tenement PL 01/18 located on the south coast of Santa Isabel Island in the Solomon Islands. The remaining 20% of SNL is owned by local landowners (Landholders). The Jejevo Nickel Project is located within the PL 01/18 project area. The Jejevo Nickel Project is an advanced stage direct shipping ore nickel laterite project. The project was previously drilled in 2013 and the Company's initial objective is to do sufficient work to confirm a 2012 JORC Resource at the earliest opportunity.

The Jejevo Nickel Project has a number of positive aspects including its close proximity to the coast, no processing requirements, low capital route to direct shipping, ore production and local landowner support. It is envisaged that mining at Jejevo could potentially commence within 2 years. In March 2014 Sumitomo Metals and Mining, as previous owner of the Jejevo Nickel Project, completed a Social Impact Assessment (ESIA) which covered a number of aspects including mining, rehabilitation and environmental monitoring, mitigation and management. The ESIA formed the basis of a Mining Lease Application at Jejevo and will provide a basis for future studies to be conducted by the Company.

IMPACT OF COVID-19 ON ACTIVITIES

The Company has engaged local geologists and environmental scientists in the Solomon Islands to ensure minimal impact to activities in light of restrictions on international travel and to protect against any unwarranted spread of the COVID-19 virus within the local communities. The local specialists are being directed by the Company and its consultants to ensure that the work carried out complies with 2012 JORC and ASX reporting requirements.

Contact:

Mr. Geoff Hiller

Email: info@malachite.com.au

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