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Power Metal Resources plc (LON:POW),  the London listed exploration company seeking large-scale metal discoveries across its global project portfolio announces an update in relation to its joint venture (“JV”) subsidiary New Ballarat Gold Corporation Plc (“NBGC”), which is focused on the prolific Victorian Goldfields of Australia.

NBGC is a joint-venture held between Power Metal (49.9%) and its partner, London-listed Red Rock Resources plc (50.1%).  NBGC has a 100% interest in Red Rock Australasia Pty Ltd (“RRAL”).

Paul Johnson, Chief Executive Officer of Power Metal Resources commented:

“The latest data and analysis from the exploration target report covering ELO007330 and the historical Ajax mine demonstrate the considerable potential for gold endowment at Ajax. As such, Ajax is clearly a significant part of the strategic direction for the NBGC business, and sits strikingly well with the recently acquired EL005535, which covers the former producing Berringa mine.

In a world where many of our exploration peers are seeking gold discoveries we are privileged to have within our footprint two high-grade former producing gold mines that the RRAL team consider to have been in the top tier of producing mines in Victoria.

As such, combined with RRAL’s significant exploration footprint of over 1,841km², it also is project developer, with now two advanced opportunities within the portfolio.”

Overview:

Following the announcement on 24 May 2022, noting the grant of the key licence EL007330 covering the historical Ajax mines, RRAL staff have continued to work on refining exploration targets on that licence.

Average mineralised lode thicknesses taken from the historical literature have been set in a wireframe model and combined with production and exploration information to create upper and lower tonnage and grade estimates. The results from this work were summarized in a report authored by Dave Holden titled, ‘Exploration Target, Ajax Line EL007330’ (the “Report”).

Exploration targets are a way to quantify the potential for any exploration project. They are not resources or reserves and are simply conceptual in nature. Determination of the targets requires broad assumptions as there is often not enough information to determine how much, if any, of the exploration potential will be converted to mineral resource category.

They are a best guess based upon largely historical data and give a sense of size and shape against which future exploration decisions and subsequent funding can be determined. In the exploration targets presented below no discount factor has been applied nor has any mining recovery or price sensitive factors been taken into consideration.

Drilling is required to assist in substantiating the accuracy of the targets. Once the initial programme designed to validate the models has been concluded, it may be possible to further refine the targets and apply discount factors to better reflect the probability of economic quantities present.

HIGHLIGHTS:

Ajax

• The Report highlights initial exploration targets for historical Ajax mines ranging from 254,318 to 1,422,443 tonnes, at a grade range of 6.4 g/t to 18.7 g/t gold (Au), such tonnes and grades being conceptual in nature.

• Only near-term targets have been defined so far, with additional targeting likely along strike and down plunge extensions and potentially parallel reef systems to the east and at depth.

• First phase of drilling at Ajax anticipated before end of 2022.

  Source: Exploration Target, Ajax Line EL 007330, Report by D Holden, D Sharp and T Meehan, July 2022

Mt. Bute & O’Loughlins

• Final results from the drilling programme covering the Mt. Bute and O’Loughlins prospects have been received and are summarised below.RRAL now moves to the evaluation and analysis of the assay results which will be integrated with the lithological and structural data collected by field geologists.

• Mt. Bute drilling results have confirmed a coherent mineralised structure; technical assessment in preparation for second phase of exploration drilling now targeting an Intrusive Related Gold (IRG) prospect.

FURTHER INFORMATION

Ajax Mine

Summary

The recent grant of key licence EL007330 has provided RRAL with an advanced exploration prospect, being the Ajax Line of Prospects (“Ajax Line”) located near to Daylesford, Australia.

A location map for the Ajax mine may be viewed through the following link:

https://www.powermetalresources.com/ajax-mine-location/

Investigations into the historical mines located along the Ajax Line is progressing quickly as the technical team moves towards the commencement of a drilling programme aimed at validating the significant quantity of historical data covering its first near-mine exploration target.

This target has been further refined following the collection of historical mine plans and workings which were then incorporated into a 3D model. The model was further augmented  with historical mapping and production data catalogued by the Geological Survey of Victoria, from the start of mining through to the first closure around the 1930s.  Untested down-plunge mineralisation has been identified through this process and high-priority target zones have been generated .

The Report ‘Exploration Target, Ajax Line EL007330’ by Dave Holden is available on the Company’s website ( https://www.powermetalresources.com/ajax-report/ )  or via  the link below:

http://www.rns-pdf.londonstockexchange.com/rns/4828U_1-2022-8-1.pdf

Mineralisation

The historical Ajax mines worked a series of nine stacked reverse fault hosted lodes that dip between 45^o and 90^o to the west (Whitelaw and Baragwanath, 1923).[1] The faults strike oblique to bedding and consists of laminated quartz that is highly mineralised in places. Mineralisation appears to occur in ‘shoots’ within these fault systems which have been identified to potentially correspond with favourable lithology. In the case of the Ajax line, the shoots are associated with sandstone containing thinner beds of shale (Whitelaw and Baragwanath, 1923). These lodes have a variable thickness along strike. The following lode thickness in the Ajax mine have been described and summarised by Whitelaw and Baragwanath, 1923, below:

• Ajax Lode: 1-6 feet (0.3-1.8m)
• McMillans Lode: 3-10 feet (1-3m)
• North Lode: 1-4 feet (0.3-1.2m)

At the Nuggetty and North Nuggetty Ajax mines, sub-horizontal tensional veins, known locally as ‘flat makes’ occur. These veins are up to 90m in width, 2m thick, and were mined for 340m in a north-south direction (Baragwanath, 1923). These veins border the west dipping faults and probably formed in a response to movement along them (Mahar, 2002).[2] At the Ajax line, these veins increase in abundance where the lithology is dominated by thicker sandstone beds (Mahar, 2002). It is also worth noting that there is potential for local gold enrichment at the intersection of the east and west dipping faults at Ajax (Whitelaw and Baragwanath, 1923).

The ‘flat makes’ have not been included in the exploration target, however, they are seen as unmeasured but could represent possible positive additions to the existing target description described herein. This breakdown between the west dipping faults and ‘flat makes’ and their individual contribution to production is an important task that the technical team is focussing on as more data is recovered from the literature and implemented into the 3D model.

It may be noted that the previous diamond drilling has indicated that mineralisation extends into surrounding sandstone wall rock containing little to no quartz veining. Petrographic examination of the sediments revealed visible free gold associated with disseminated pyrite aggregates containing an assemblage of arsenopyrite, sphalerite and galena (Bravo, 2001).

In effect the zones suggest the lodes may be wider than estimated for the exploration target outlined in the Report.  It also suggests that material stripped from within the earlier workings during any plans to re-enter the former mines could be of economic interest.

Production

Total gold production from the Daylesford goldfield to date is estimated to be in excess of 1.29m ounces with primary gold production amounting to 795,254 ounces.[3] Most of this gold production has come from the Ajax and Cornish lines, with the Ajax line producing around 312,789 ounces of gold at average grade of 14.8g/t and the Cornish line producing 182,000 oounces at an average grade of 10.8g/t. The deepest mine within the Daylesford goldfield was the Ajax Mine at 370.6m. Outside of the two main lines, several other mines produced significant amounts of gold including the Rising Star Mine (78,458 oz), Maxwell Consolidated (21,989 ounces) and the Specimen Hill Mine (35,801 ounces).[4]

Exploration Targets

Determination of the exploration target outlined in the Report relied primarily upon detailed descriptions of development and production as recorded by the state of Victoria’s mining authorities of that time period.  This information has been detailed for every reported drive shaft and stope. It has been over 20 years since any exploration drilling was conducted on the Ajax line of workings and even then, only two drillholes have targetted beneath the historical workings.

The width of the targets has been calculated based on average lode thicknesses detailed by Whitelaw and Baragwanath, 1923, as well as numerous Government Survey Bulletins and records. Refinement of the widths continues as every known historical working record is added to the 3D computer model.

The downdip extensions of these lodes were selected as targets due to the historical mining of the lodes being stoped as west dipping mineralised faults, also known as ‘west dippers’. The production on the welcome and nuggetty lode were primarily from the ‘flat makes’. Although they do provide upside for future targeting, following the down dip potential of endowed ‘west dippers’ are the preferred first stage exploration approach.

The exploration target discussed in the Report is derived from the approximations based upon the literature already reviewed which were determined to match well with the descriptions from Whitelaw and Baragwanth, 1923.

For the exploration target numerous level plans, longitudinal and cross-sections have been incorporated into a 3D model.  The outlines of workings were then digitized into the 3D model including the broad shape outlines of known stopes.

From the wireframe polygons of stopes and developments, the volume of the three main lode structures was calculated using Micromine mining software.  The combined images of the lode structures highlight the nature and extent of plunging shoots and these have been followed to a distance past the last known working.

Targeting at Ajax is based on following the down dip extension from the historical stoping on the ‘west dippers’. Ajax, North and McMillans were selected as primary targets due to the historical stoping occurring on the ‘west dippers’, whereas Nuggety and Welcome lodes had stoping on the east dipping structures.

For each structure included in the model a normal specific gravity (SG) of 2.67 g/cm³ was applied to generate a total tonnage. This SG correlates with the SG of quartz, which is the primary vein material at Ajax, and is comparable to the SG calculated for previous resource estimations completed at the nearby Ballarat mine.

From this, maxima and minima for the width of lodes have been calculated from the detailed work previously discussed as well as an average width applied.

A breakdown of the different lode styles is currently being considered as a way to further refine the exploration target. For the exploration target presented herein, however, this has not been included yet.  Research continues to correlate the survey production record back to the active mining. This information is all captured in the text of the Government Survey and mine reports and bulletins and over time, will be further integrated into the model to allow more constrained approximation for grade and volume equivalent to a post mining stope reconciliation.

Within the model, grade has been determined using a maxima derived from production records for the historical mines and  a minima that has been defined as the current avarege production grade from the nearby Ballarat mine.[5]  The Ballarat mine is seen as a strong analogue to the mineralisation at Ajax and assumes the lower grade target expected would compare to the actual grade from a larger producing mechanical mine where recovery and dilution has been incorporated.

The range is further validated with an average grade of a similar tenor to assays previously reported in both the underground workings and results from the Continent Resources exploration drilling completed in the 1990s.[6]

A detailed description including a table of the 1990s drilling is contained in the paper previously published on and accessible through the Company’s website titled “Licence Report: EL007330” with the title “Tenement Review and Exploration Strategy – EL007330” which is found at the following link ( https://www.powermetalresources.com/wp-content/uploads/2020/10/2020-09-16-4499-EL007330-Daylesford.pdf ). A more detailed description of the methodology used to calculate the Exploration Targets, and further information and diagrams, is contained in the Report.

Ongoing work will allow RRAL to determine the grade distribution and variation between lode styles and further constrain the maximum and minimum grades of the initial exploration target.

The e xploration target tabled below and referred to throughout this release is not to be considered as an estimate of a Mineral Resource or Ore Reserve.[7]  The potential quantity and grade is conceptual in nature, and there has been insufficient exploration to estimate a Mineral Resource. It is uncertain if further exploration will result in the subsequent estimation of any Mineral Resource.

It is the intention of the Company to test and confirm the likelihood of the targets with upcoming drilling and the company intends to be in a position to confirm the nature and extent of the target on completion of the initial phase of drilling slated for late 2022.

Exploration Strategy and Time Frames

Phase 1 (ongoing): Literature Search and Data Collation. Since most of the mines on the Ajax line were operated by a large company that kept excellent records, a large amount of data relating to stoping and grades is publically available. The data from all these records will continue to be collated to give a further understanding of the grade distribution and average thickness of stopes for the different lodes and style. The breakdown of production levels between individual shear hosted lodes and flat makes will also be determined. Continent Resources completed an extensive data review in the late 1990’s. This data will be referenced where available.

Phase 2 (planned): Diamond drilling of preferred targets at a spacing yet to be determined followed by the creation of lithological models based on results achieved. This will assist in identifying favourable zones for mineralisation. The key outcome for the drilling will be to test the validity of the expulsion Target as it stands.  Variation to the expected outcome will also help drive an update to the target and delineate further drilling requirements.

Phase 3 (planned): Further infill drilling allowing for the established of a inferred mineral resource. Drill spacing to be determined once gold distribution and intersection repeatability have been determined from the Phase 2 diamond drilling programme and previous exploration drill programmes.

Mt. Bute Prospect Drilling Results

A total of three holes were drilled at Mt Bute. Results from drillhole MB22D001 were released on 13 June 2022 and can be found at the link below:

https://www.londonstockexchange.com/news-article/POW/victorian-goldfields-exploration-update/15492950

The results from the two remaining holes MB22D002 and MB22D003 are summarised below. In addition thin section analysis is also in progress over a number of mineralisation samples identified at Mt. Bute. The results have confirmed the presence of a coherent mineralised structure which further confirms the possibility of IRG mineralisation within the Victorian goldfields.

Hole MB22D002 Assay Table (Total Hole Depth 119.3m)

TABLE Hole MB22D003 Assay Table (Total Hole Depth 101.5m)

In total, 37% of all assays from MB22D002 assayed above 0.1 g/t Au, and 46% of all assays from MB22D003 assayed above 0.1g/t Au – indicating a significant thickness of low- to moderate-grade gold mineralised samples.

O’ Loughlins Prospect Drilling Results

Assays from the final drillhole at the O’Loughlin’s prospect (OL22D003) have also been received. No reportable results above 0.1g/t were encountered and as such the results have not been included in this announcement. Initial evaluation of the O’Loughlin’s drilling has defined a lateral extent of the main mineralised structure and additional field work including detailed mapping to the east of the drilled structure is planned.

Conceptually, the mineralisation appears to be a bedding parallel structure on the eastern limb of an anticline located away from the hinge zone. More significant mineralisation may exist closer to and within the hinge zone.  Applying this structural model will lead to better targeting at the prospect during the coming period.

New Ballarat Gold Corporation:

NBGC holds a strong land position comprising fourteen (14) granted exploration licences for a total of 1,841km², located entirely within the prolific gold fields of Victoria, Australia – principally surrounding the mining centre of Ballarat, Australia. Five (5) licences for a total of 493km² are still in the application stage.

The company has carefully assembled its property portfolio to comprise a broad range from robust exploration targets to near term resource potential – all of which remain largely untested by modern explorers.

With the first tenement within the portfolio granted only in 2021, NBGC has already conducted detailed exploration on multiple targets to date. This includes diamond drill programmes designed to test the O’Loughlin’s (520m) and Mt. Bute (340m) prospects, which commenced December 2021.

Granted Licences:

The fourteen granted and one purchased licence (EL005535) cover high priority areas, covering 1,841km² as outlined below.

Licence Applications:

RRAL has applications in process for five other new gold exploration licence areas, covering 493 km² in the Victoria Goldfields of Australia including:

*Balmaine Gold Pty Ltd, Mercator Gold Australia Pty Ltd, and Loddon Gold Pty Ltd have put in competing applications the same day as RRAL for the ground covered by EL007540. The application considered to have greatest merit will eventually be given priority.

The following applications have been made in Western Australia, covering largely areas previously held by the Company at the time of its original listing.

COMPETENT PERSON STATEMENT

The technical information relating to the exploration results, Exploration Target and the Report in this announcement has been compiled by David Holden, BSc, MBA, MEM, who is a member of the Australian Institute of Geoscientists and a director of NBGC, and the Exploration Director of RRAL. He is a member of a recognised professional organisation and has sufficient relevant experience to qualify as a qualified person as defined in the Guidance Note for Mining, Oil and Gas Companies, published by AIM. Mr Holden consents to the inclusion of the technical information in the form and context in which it appears.

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 (“MAR”), and is disclosed in accordance with the Company’s obligations under Article 17 of MAR.

For further information please visit https://www.powermetalresources.com/ or contact: