Sabre Resources : Sherlock Bay Ni Scoping Study Delivers Positive Cashflow

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27 January 2022

SHERLOCK BAY NICKEL PROJECT SCOPING STUDY DELIVERS POSITIVE CASHFLOW Testing of Identified High-Grade Nickel Sulphide Potential to Enhance Economics

• Sabre Resources Ltd ("Sabre" or "the Company") is pleased to announce the positive results of its Scoping Study on the Company's 70% owned Sherlock Bay Nickel -Copper-Cobalt Project ("Sherlock Bay", or "the Project"), a significant nickel sulphide resource located on granted mining lease, M47/567, 40km east of Roebourne in the Pilbara Region of Western Australia (see Figure 1 below).

Figure 1: Sherlock Bay Nickel-Copper-Cobalt (sulphide) Project, regional geology and location plan

• The Scoping Study was initiated based on forecasts for rapidly increasing demand for battery metals such as nickel (Ni), copper (Cu) and cobalt (Co), for the electric vehicle and other renewable energy industries. This increasing demand and supply issues are already having a significant positive impact on nickel prices, having risen by nearly 60% from just over US$15,000/t ($7/lb) at the start of the Scoping Study to a spot price of US$24,000/t ($10.90/lb) at the end of last week (21/1/22).
• In addition to the positive cashflow outcomes of the Scoping Study, which are laid out in the following sections following an important Cautionary Statement, the Company has identified significant upside-potential for additional, high-grade, nickel sulphide resources below both the Symonds and Discovery resource zones which are increasing in grade and open at relatively shallow depth. Drilling is planned to target this higher-grade material, the discovery of which would have a significant impact on the potential financial viability of the Project.

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Cautionary Statement, Sherlock Bay Nickel Project Scoping Study:

The Sherlock Bay Nickel Project Scoping Study ("Scoping Study") prepared by Sabre Resources, referred to in this announcement, has been undertaken to determine the potential viability of mining and processing currently identified nickel sulphide Mineral Resources estimated for the Sherlock Bay Nickel Project ("the Project" or "SBNP").

This Scoping Study is a preliminary technical and economic study of the potential viability of producing a mixed (nickel + copper, cobalt) hydroxide product ("MHP") to supply precursor products to the growing lithium-ion battery and electric vehicle ("EV") industry as well as other downstream products including stainless steel.

The Scoping Study outcomes are based on low-accuracy technical and economic assessments (+/- 40% accuracy) that are not sufficient to support the estimation of Ore Reserves. Whilst each of the modifying factors have been considered and applied based on best available knowledge, there is no certainty that Ore Reserves or production targets will eventually be realised. Further exploration and evaluation work and upgraded studies (to at least pre-feasibility study level) will be required before the Company is in a position to estimate Ore Reserves and/or to provide any assurance of an economic development case.

The Mineral Resource estimate that forms the basis of the Scoping Study was prepared in compliance with the JORC Code (2012) and released on 12 June 2018. Sabre Resources confirms that it is not aware of any new information or data that materially affects the information included in the release of 12 June 2018. All material assumptions and technical parameters underpinning the Mineral Resource estimate continue to apply and have not materially changed.

Over the life-of-mine considered in this Scoping Study, approximately 63% of the Production Target originates from Measured Mineral Resources, 27% from Indicated Mineral Resources (total 90% from Measured and Indicated Mineral Resources) and 10% from Inferred Resources. There is a low level of geological confidence associated with Inferred Mineral Resources. Importantly, the first 9 years of the planned 10-year mining plan almost entirely originates from Measured and Indicated Mineral Resources and the financial viability of the Project and any decision to mine would not be dependent on Inferred Resources in the production schedule that require further resource definition during the life of the mining operations to increase geological confidence.

To achieve the range of outcomes indicated in the Scoping Study, pre-production funding in the order of A$380M for plant, infrastructure and mining development (excluding financing costs) is estimated. There is no certainty that the Company will be able to source that amount of funding when required. It is also possible that such funding will only be available on terms that may be dilutive to or otherwise affect the value of Sabre Resources existing shares. No consideration has been given to debt funding costs or gearing in the production scenarios presented in this Scoping Study.

Sabre has concluded it has a reasonable basis for providing the forward-looking statements in this release. However, a number of factors could cause actual results or expectations to differ materially from the results expressed or implied in the forward-looking statements. Given the uncertainties involved, investors should not make any investment decisions based solely on the results of the Scoping Study.

Scoping Study Outcomes and Upside Opportunities:

• Production Target of 22.5Mt @ 0.36% Ni, 0.074% Cu, 0.016% Co (0.41% Ni Equ.*) producing

>70,000t Ni recovered in high-payability Mixed Hydroxide Product (MHP) on 100% project basis.

*See nickel equivalent (Ni Equ.) calculation, Appendix 1.

• Annual production approximately 6,000tpa of recovered nickel over 10/13 year mine/process life.
• At a cash-cost of US$6.60/lb Ni Equ.* (US$14,500/t), generates pre-tax operating cash-flow, life of mine, ranging from A$180M to A$850M based on sensitivities (excl. all capital costs, before tax).
• Pre-productioncapital cost for processing plant and associated infrastructure: A$279M.
• The Project is cash-flow positive at "current" nickel pricing (At US$10/lb or US$22,040/t, 10-day average LME Ni for period ending 21/01/22) with projections of continued price appreciation based on global nickel consumption that is forecast to more than double by 20404.
• Immediate upside for higher-grade extensions to both the Symonds and Discovery resources, that are increasing in Ni grade with depth and remain open, to be tested with new drilling planned.

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Sabre Resources CEO, Jon Dugdale, said:

"The outcomes of the Sherlock Bay Nickel Sulphide Project Scoping Study indicate that the project is cash- flow positive at current nickel prices.

"This is a very positive outcome as nickel as well as copper and cobalt prices are projected to continue increasing due to rapidly growing demand for critical lithium-ion battery components to power the electric vehicle and other renewable energy industries.

"The Company has also identified potential for high-grade extensions to the Sherlock Bay nickel sulphide deposits that are improving in grade with depth. Drilling is planned to add high-grade resources that would potentially have a very positive impact on the economic viability of the Sherlock Bay Nickel Project."

Operational and Financial Outcomes of Scoping Study:

The following table summarising high-level operational and capital financial parameters should be read in conjunction with the details in the following sections of this release.

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The outcomes of the Scoping Study indicate that, based on a combined two open pit and two underground mines development strategy and a production rate of 2Mtpa following initial ramp-up over 10 years of mining with a 2 to 3 year processing tail, the Project produces strong operating cash- flows and a positive cash-flow after return of capital at current Ni (and Co, Cu) pricing (LME Ni price: US$10/lb / US$22,040/t - based on a 10 day average spot Ni price for period ending 21/1/22).

These financial outcomes provide the Company with a strongly cash-flow generating Base Case that is highly sensitive to increased Ni price and Ni production grade, with upside potential to grow the high- grade component of the nickel resource through drilling of extensions to both the Discovery and Symonds deposits at depth.

The addition of higher-grade material would have a significant impact on the potential financial viability of the SBNP and, coupled with projected nickel price appreciation due to increasing demand for sulphide Ni (and Co, Cu) products as key components of lithium-ion batteries, presents a positive upside case for advancing the Project to feasibility and development.

The SBNP includes two nickel sulphide deposits, Discovery and Symonds (see Figure 2), that have a current JORC 2012 nickel sulphide Measured, Indicated and Inferred Mineral Resource of 24.6 million tonnes @ 0.40% Ni, 0.09% Cu, 0.02% Co, containing 99,200t Ni, 21,700 tonnes Cu and 5,400 tonnes Co1.

In April 2021 the Company commenced the Scoping Study on the SBNP to determine the economic viability of the Project at current and projected Ni, Cu and Co prices. Global nickel consumption is forecast to more than double by 2040 and the proportion used in battery precursors for electric vehicles (EVs) is projected to increase from 7% to over 30% of demand with almost exponential demand growth by 20304. Nickel sulphide projects are favoured by the market due to the high-payability (up to 90%) of the nickel intermediates produced, that are suitable for EV battery production. Nickel pricing has already more than doubled over the last 5 years due to this increasing demand (see Kitco.com nickel pricing chart below).

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The current Scoping Study builds on previous work conducted from 2004 to 2007 by Sherlock Bay Nickel Corporation ("SNBC"). This work included:

• A pre-feasibility study ("PFS") based on previous resource estimates and studies (2004 - 2005).
• A revised JORC 2004 Mineral Resource estimate (2005).
• Mining study by Australian Mining Consultants ("AMC", 2005).
• Gap analysis for the PFS study completed by Ausenco (2007).
• Additional BioHeap column leaching testwork by Pacific Ore Technology ("POT") 2005 - 2008).

The 2005 AMC mining study included one open pit mining the upper parts of the Discovery and Symonds orebodies and two, decline based, underground mines utilising sub-level caving ("SLC") methods.

Processing studies were based on processing 2Mtpa of sulphide ore in a flowsheet, based on the POT testwork, comprising crushing then heap-leaching of ore followed by solution neutralisation, copper cementation to produce a separate copper product and precipitation of nickel and cobalt as a mixed hydroxide product ("MHP") containing about 44% nickel and 2% Co (dry basis).

Following the 2018 resource update1, AMC updated the mining study in August 20182 to include two optimised open pits operating for up to 5 years, overlapping with the underground SLC operations (see Figure 5). The underground mines continue for the remaining 8 years of a 10 to 12-year, 2Mtpa mining plan. The AMC mining report2 demonstrated that, at the applied nickel price of US$15,000/t (now >US$23,000/t), significant operating cash-flows could be generated from both the open-pit and underground operations and, subject to additional studies required to determine updated processing capital and operating costs, there is potential for an economic mining project to be established at SBNP.

The current Scoping Study is based on inputs generated by Strategic Metallurgy Pty Ltd of Perth, who have completed the processing flow-sheet design, and Lycopodium, who have generated updated processing and surface infrastructure capital costs and processing operating costs. In addition, AMC conducted a review and comparison of the previous mining schedules in December 2021.

The Scoping Study has been coordinated and inputs reviewed and modelled by experienced and highly regarded consultants Dr Natalia Streltsova (metallurgy/processing) and Peter Lester (mining engineering, cash-flow modelling) of Vintage 94. Vintage 94 have incorporated the final AMC mining schedule as well as Opex-Capex input costs from AMC and Lycopodium into a Scoping Study level cash-flow target model that has generated the range of preliminary financial outcomes presented in this release.

Project Financing:

To achieve the range of approximate outcomes indicated in the Scoping Study, pre-production funding in the order of A$280M for plant and infrastructure (excluding financing costs) is estimated. The Company has not committed to advancing the project to the Feasibility Study stage, as a further increase in the nickel price and/or discovery of the additional higher-grade resource material required to generate a viable project development case with sufficient rate of return on capital (see sensitivities, Page 16).

The Company has sufficient funding (>A$4.6M, September Quarter, 2021) to carry out the additional drilling required to define extensions to the high-grade resources projected to depth.

Demonstration of a viable project development case and a Bankable Feasibility Study (BFS) is required to generate funding options with a proportion of equity and debt that would be available from debt and/or equity providers. There is no certainty that the Company will be able to source the amount of funding when required. It is also possible that such funding will only be available on terms that may be dilutive to or otherwise affect the value of Sabre Resources existing shares. No consideration has been given to debt/equity funding costs or gearing in the production scenarios presented in this Scoping Study.

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