Queensland Pacific Metals : Quarterly Activities/Appendix 5B Cash Flow Report

QUARTERLY REPORT

29 July 2022

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June 2022 Quarterly Report

Highlights

• Definitive Feasibility Study ("DFS") remains on track for completion by revised timing of late Q3 / early Q4 for the 2022 calendar year.
• Key equipment suppliers engaged and undertaking engineering design around their respective areas of the TECH project.
• Memorandum of Understanding ("MOU") signed with global engineering company KBR, Inc regarding supply of technology and critical equipment associated with nitric acid processing and recycling.
• Good progress made on testwork including production of magnesia from thermal decomposition pilot activities, very high percentage iron hematite production from iron hydrolysis tests and successful residue testwork for use as engineered landfill.
• Ore supply agreement executed with Société des Mines de la Tontouta ("SMT"), securing QPM's ore supply requirements for the first phase of the TECH Project
• Advancing through due diligence and discussions with various potential customers for remaining nickel and cobalt offtake for the first phase of the TECH Project

Queensland Pacific Metals Ltd (ASX:QPM) ("QPM" or "the Company") is pleased to present a summary of activities from the June 2022 quarter.

Feasibility Update

The DFS progressed well throughout the quarter and remains on track for completion late Q3 / early Q4 in the current calendar year. With lead engineers Hatch, QPM has awarded or is in the process of awarding basic engineering design work to key equipment suppliers, with the view of progressing towards supply agreements containing performance guarantees for construction. This early involvement of key suppliers is a major part of QPM's funding strategy for the TECH Project.

The following packages have been awarded:

Vendor	Package
KBR Plinke	Packages associated with nitric acid recycling and regeneration including iron
KBR Weatherly	hydrolysis, barren evaporation, acid regeneration plant, vent systems and
chloride and fluoride removal. KBR is a global leader in nitric acid recycling and
	the ideal partner for QPM as this is a key function of the DNi ProcessTM.

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Vendor	Package
Jord	Package for crystalisers in the sulfate refinery. Jord is a global leader in the
	provision of crystalisers for the battery chemicals sector, including delivery of a
	nickel sulfate crystallisation plant for BHP Nickel West and crystallisers for the
	Terafame battery chemicals plant in Finland.
Ekato	Package for leach tanks, reaction tanks and mixers. Ekato Group is a market
	leader for agitator and mixing technology for minerals and chemicals
	processing.
Senet	Package for solvent extraction regarding impurity removal in the sulfate
	refinery. Senet is a global leader in solvent extraction and its appointment
	includes a review by globally reknowned solvent extraction expert Graeme
	Miller.
Hatch	Package for fluid bed roasters for thermal decomposition part of the flowsheet.
	Hatch is a global leader in the supply of fluidised bed systems for application in
	high temperatures and chemical environments.
Primetals	Package for hematite pellet plant.
BG & E Pty Ltd	Package for "wrap-around" engineering regarding the front end of the TECH
Townsville	Project.
Genco	Package for power and steam generation. Genco are undertaking a feasibility
	of a gas turbine system which will generate all the power and steam
	requirements for the TECH Project. This is a change from previous thinking
	where QPM was going to install steam boilers and purchase power from the
	grid. By being self sufficient, QPM should deliver cost savings as the
	incremental gas required for this sytem is modest and is likely to be more than
	offset by the savings from not purchasing power from the grid.

During the quarter, QPM also made good progress on further testwork which is supporting the DFS and design work of the various equipment suppliers.

Thermal Decomposition

In the previous quarter, QPM had commenced thermal decomposition pilot construction to confirm the selection of a fluid bed roaster for the thermal decomposition process. During the quarter, QPM completed the construction and in July completed the pilot program with the successful production of magnesia (MgO) from magnesium nitrate. The original DNi ProcessTM flowsheet considered the use of kilns to undertake thermal decomposition, however the specified unit would unlikely have been commercial given its relatively small size (requiring 60 of the largest units built). Only 1 -2 fluidised bed reactors are required. This pilot work confirms QPM's equipment choice selection of fluid bed roaster for commercial scale.

Magnesia samples produced are now being analysed at laboratory to assess which markets the product could be sold into.

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For	Image: QPM fluid bed roaster pilot plant

Hematite Pelletisation

QPM has engaged CSIRO's iron ore processing group to assist with agglomerating and pelletisation options for QPM's hematite co-product with the goal of determining suitability as a direct feed for steel making. Testwork with CSIRO has commenced and involves granulating and sintering tests where QPM hematite is substituted for other iron products typically used in a blended sinter feed. Such products include Chinese magnetite concentrates and Australian iron ore fines.

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Image: Sinter pellets production from QPM iron hydrolysis hematite

High grade hematite pellets trade at a premium to DSO ore and the current premium is around US$40/tonne. QPM is aiming to demonstrate comparability with hematite pellets to be produced from the TECH Project and those that are currently traded on the global market. This will position QPM to be able to market its hematite product and also achieve the best possible pricing.

Residue as Engineered Landfill

In the TECH Project, all valuable metals will be leached into solution and then recovered and refined into saleable products. The remnant residue is only ~25% of the dry ore feed and it is typically comprised of silicates including quartz sand. The ability to utilise this residue as an engineered fill as a replacement (for example) for mined sand would mean that 100% of the ore processed by the TECH Project reports to a commercial application, effectively positioning the TECH Project as the only zero solids waste nickel and cobalt producer. Such a feat would be an industry first in the resources sector, particularly in nickel laterite processing which typically requires large tailing dams that leave significant environmental footprint. Such tailing dams usually have to hold more than 1.2 tonnes of tailing per tonne of feed ore.

QPM is working with JCU to undertake testwork on the TECH Project residue. The testwork conducted had two main areas of focus:

• Mixing varying levels of simple binding agents with the residue and testing structural properties to determine suitability as engineered fill; and
• Undertaking leaching chemical content tests of the residue to ensure it meets regulatory guidelines.

From JCU's testwork, it has been determined that, with a simple binder, the residue from the TECH Project demonstrated the requisite structural properties and can be used as engineered fill.

The chemical leaching tests undertaken by JCU involved:

• Toxicity Characteristic Leaching Procedure ("TCLP");
• Inductively coupled plasma mass spectrometry ("ICP-MS"); and
• X-Raypowder diffraction.

This testwork demonstrated that under the Townsville City Council (TCC) guidelines, QPM comfortably met

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the threshold for all elements of potential concern except nickel. QPM and JCU are confident that nickel levels will also be reduced to below the threshold with additional washing.

Metal	TCC guideline (ppm)	Result (ppm)
Antimony	5.0	< 0.1
Arsenic	5.0	< 0.1
Barium	100.0	< 0.1
Boron		< 0.1
Cadmium	0.5	< 0.1
Chromium	5.0	0.3
Cobalt	5.0	2.8
Copper	100.0	< 0.1
Lead	5.0	< 0.1
Nickel	5.0	9.37
Mercury	0.1	0.0001
Molybdenum	1.0	< 0.1
Selenium	1.0	< 0.05
Silver	5.0	< 0.1
Tin	3.0	< 0.1
Titanium		< 0.1
Vanadium	5.0	< 0.1
Zinc	500.0	0.1

Ore Supply

During the quarter, QPM secured the balance of ore required for phase 1 of the TECH Project. QPM entered into a binding ore supply agreement with Société des Mines de la Tontouta ("SMT"), a significant New Caledonian mining company, for up to 600,000 wmt per annum. Key terms are set out in the table below:

Area	Terms
Term	10 year ore supply agreement, expected to commence in late 2023 (6 month
	notice period required by QPM ahead of first cargo)
Tonnage	Up to 600,000 wmt per annum
Specification	Limonite ore
	1.4	- 1.7% Ni (typical 1.6%)
	0.1	- 0.25% Co (typical 0.18%)
	30.0 - 47.5% Fe (typical 42%)
	1.5	- 7.0% MgO (typical 5%)
	2.0	- 6.0% Al2O3 (typical 3%)
	28.0 - 40.0% moisture (typical 35%)