Hexagon Energy Materials : March 2022 Quarterly Activities Report & Appendix 5B

ASX Announcement | 29 April 2022 Hexagon Energy Materials Limited (ASX: HXG)

January - March 2022 Quarterly Activities Report

Hexagon confirms fully funded McIntosh drilling-focussed 12-month growth plans.

Hexagon Energy Materials Limited (ASX: HXG) ('Hexagon' or 'the Company') is pleased to provide this quarterly activities report for the quarter ending 31 March 2022 (Q3 FY22).

EXECUTIVE SUMMARY

The March 2022 quarter saw the crystallisation of Hexagon's best pathway forward to realise value from its existing asset base, with a 12-month growth plan defined and budgeted centred on drilling at McIntosh and Halls Creek.

This growth plan is now fully funded as a result of the recently completed capital raise (A$1.91 million) which closed on 27 April 2022 (Post March quarter end).

During the March quarter the Pedrika (Northern Territory (NT)) Clean Hydrogen project Pre-feasibility Study (PFS) was completed confirming more commercially attractive, large blue Ammonia project opportunities in North Western Australia leading to Hexagon's WAH2 Project being established.

Hexagon's 12-month growth plans includes:

• • Drilling of three "Drill-Ready" Ni-Cu-PGE targets within the greater Melon Patch prospect at the McIntosh Project in the Kimberley in Western Australia (ASX Announcement 13 March 2022)

• • Drilling of Au-Base Metal - PGE targets at the Hall's Creek Project also in the Kimberley (ASX announcement 7 December 2021)

• • Progression of the WAH2 project through a Scoping Study where natural gas supply Carbon Capture and Storage (CCS) toll service, plant site and strategic partnership investment agreements/options are secured.

INTRODUCTION

The March 2022 quarter saw Hexagon further rationalise, consolidate, refine, and focus its 12-month growth plan to substantially deliver into its Future Energy Materials and Future Energy long-term growth strategy, as approved by the Board in late 2021, illustrated in Figure 1.

HEXAGON ENERGY MATERIALS LIMITED

Australian Business Number (ABN) 27 099 098 192

Registered Office: Suite 3, 7 Kintail Road, Applecross, Western Australia 6153 t: ([phone] e:[e-mail]: hxgenergymaterials.com.au

Figure 1: Hexagon's Strategy 2022

1. McIntosh Ni-Cu-PGE

Hexagon's McIntosh Project in the West Australian (WA) Kimberley area lies in the centre of a highly prospective for Ni-Cu-PGE geological region. McIntosh is surrounded by well-established Nickel producers and exporters, past PGE producers and exporters, and by companies with substantial Ni-Cu-PGE JORC resources. Hexagon's McIntosh Project relative to surrounding Ni-Cu-PGE deposits and the market capitalisation of the companies who hold these is shown in Figure 2 and further detailed in Table 1 below.

Figure 2: Companies in Ni-Cu-PGE production and/or with Ni-Cu-PGE JORC resources near McIntosh

Deposit Name	ASX Code	Company Name	Market Cap. [$ M] (7/4/2022)	Source of Market Cap. information	JORC Resources etc	Resources information sources and Comments
1	Savannah	PAN	Panoramic Resources Ltd	749	ASX website	13,500,000t @ 1.56% Ni, 0.7% Cu, 0.1% Co	https://panoramicresources.com/savannah-project/mineral-resource-savannah-project-may-2020/
2	Copernicus	PAN	Panoramic Resources Ltd	749	ASX website	852,000 t @ 1.24% Ni, 0.81% Cu, 0.05 % Co with Reserves of 784,000 t @ 1.1% Ni, 0.67% Cu, 0.05 % Co ( Mined Resource: 132,000 t @ 0.97% Ni, 0.52% Cu, 0.3% Co	Penna, P; 9 November 2016 WAMEX Report A110234 "BCI Iron Limited Final Surrender Report For the Period 7 October 2008 to 5 October 2016 E80/3878", page 12 of 18. Unclear whether Au and PGE's is routinely assayed for.
3	Panton Deposit	FME	Future Metals NL	71	ASX website	14,320,000t @ 4.89 g/t PGM	https://future-metals.com.au/panton-pgm-project/ 22 square kilometer holding
4	Nicolsons Gold Mine	PNR	Pantoro	457	ASX website	394,000 oz contained Au Past Production: 180,000 oz Au PGE results: 30m @ 1.03 g/t Pt+Pd+Au (3PGE): 0.54% Ni & 0.033% Co from 3 m	PNR ASX Announcement, 10/1/22 ASX Announcement 15/11/22https://app.sharelinktechnologies.com/announcement/asx/0fb756c82ef34c79a753e17a92211d87
5	McIntosh	HXG	Hexagon Energy Material Ltd	19	ASX website	PGE Results: 3.63g/t 3PGE, 0.35% Cu, 0.18% Ni in soils Historic drill results: 20 m @ 0.75 g/t 3PGE plus other intersections	HXG ASX Announcement, 21/3/22https://hxgenergymaterials.com.au/wp-content/uploads/2022/03/Three-Ni-Cu-PGE-Drill-ready-Targets-Confirmed-at-McIntosh.pdf HXG ASX Announcement 2/2/2022 542 square kilometer holding 2022 Drilling program planned

Table 1: Details of Companies in Ni-Cu-PGE production and/or with Ni-Cu-PGE JORC resources near McIntosh

During the March quarter the results from Historic PGE drilling at McIntosh were announced. (ASX Announcement 2 February 2022). These historic results of 20 metres at 0.75 g/t PGE were built upon, in terms of highlighting McIntosh's PGE prospectivity by the 2021 field season soil sample analytical results of up to 3.63g/t 3 PGEs subsequently announced (ASX Announcement 2 February 2022).

Drill core from past Graphite focussed drilling not previously analysed for Ni-Cu-PGE was retrieved from Hexagon's warehouse. This core is sourced from where potential sulphide mineralisation had been identified during core logging and has now been submitted for assaying during the quarter with results and interpretation pending.

Hexagon is focussed on unlocking the Ni-Cu-PGE potential that historic drilling and recent soil sampling program results indicate at McIntosh.

A multi-hole Reverse Circulation (RC) drilling program comprising of around 1,000 metres to not more than 130 metre depth from surface, cased so downhole geophysics can be completed, is planned for McIntosh over the coming months. This is due to commence in May/June depending on weather and drill rig availability. All necessary regulatory requirements including heritage approvals have been applied for and are being progressed and the drill rig and field staff are currently being secured.

Exploration drilling co-funding has been secured by Hexagon as part of Round 24 of the Western Australian Government Exploration Incentive Scheme (EIS) to support this drill program.

In addition to drilling, further geophysical survey (Inverse Polarisation (IP)) work will take place at Melon Patch and new lines/surveys will be undertaken at Melon Patch North and Mable Hill. Infill soil sampling across the 50 Km2 already covered will take place and new areas will be sampled, with additional target identification expected.

2. Halls Creek - Au - Base Metals - PGEs

Over the past two years systematic, structured geological assessments and drill target identification has also been completed across Hexagon's Halls Creek Project. The Halls Creek project lies approximately 100 kilometres to the South West of McIntosh.

Drilling will also take place during the 2022 field season at Halls Creek, around 400 metres to depths of 130 metres from surface. All necessary regulatory considerations including heritage approvals have been applied for and are progressing. Drill rig and field staff sharing with McIntosh will be possible.

Exploration drilling co-funding secured by Hexagon as part of Round 24 of the Western Australian Government EIS will also be accessed for this drill program.

Further geophysical and geochemical work at Halls Creek will be undertaken, budget permitting.

3. Graphite

The March quarter also saw Hexagon leverage new expertise and secure further investment funds to develop its Graphite assets through a Graphite Mineral Rights Only Earn-In deal with Green Critical Minerals Pty Ltd (GCM) (ASX Announcement 14 February 2022).

South Star Metals Corp (South Star) is continuing to progress work on Hexagon's Ceylon Graphite project in Alabama in the USA under the Earn-In deal struck in late December 2021 (ASX Announcement 8 December 2021).

4. Clean Hydrogen

During the quarter the Pedirka Project PFS was completed. This led to the WAH2 becoming Hexagon's focus moving forward.

Post March quarter end, on 27 April 2022, Hexagon completed a capital raise of $1,911,000 (ASX Announcement 27 April 2022) to fully fund Hexagon's 12-month growth plans.

PROJECT DETAILS

During the March quarter Hexagon continued to progress a range of activities across its portfolio of assets/projects as follows:

1. Future Energy Materials

1.1 McIntosh Ni-Cu-PGE

During the March quarter Hexagon announced historic drill intersection results for PGE mineralisation within mapped Panton Suite at McIntosh of 20 m @ 0.75 g/t 3PGE (ASX Announcement 2 February 2022). As shown in Figures 3 and 4 below.

Figure 3: Melon Patch Prospect map showing Historic drilling and Costeans with significant intercepts within mapped

Panton Suite

Figure 4: Section A-A from Melon Patch prospect showing significant 3PGE intercepts, modified from WAMEX Report

A73148

Hexagon subsequently announced that outstanding results had been recorded from soil sample analyses (up to 3.63g/t 3PGE) on 2021 field season samples collected at McIntosh, with three-"Drill-Ready" targets identified within the greater Melon Patch prospect. Other significant results included:

• • MIS00399 @ 3.63g/t 3PGE, 0.35% Cu, 0.18% Ni,

• • MIS00746 @ 3.01g/t 3PGE, 0.27% Ni, and

• • MIS01712 @ 3 g/t 3PGE, 0.24% Ni.

Over 5,000 samples were collected and analysed and Dr. Dennis Arne, of Telemark Geosciences Pty Ltd, then assessed the results. A further 17 highly prospective Ni-Cu-PGE targets were identified across both the greater Melon Patch, Melon Patch North and Mabel Hill prospects. (ASX Announcement 21 March 2022)

All three areas are shown on Figure 5 below.