S2 Resources Ltd. completed the first three holes of a planned nine hole program testing six electromagnetic (EM) conductors and three geological targets at its Polar Bear nickel project where the Company has 100% of the nickel rights. Two of the lower priority EM conductors have been drilled, with sedimentary sulphides being intersected at the depth predicted by the EM. One geological target has been drilled, with intervals of trace to disseminated magmatic sulphides being intersected in a thick ultramafic sequence.

The drilling sequence is based on logistical considerations, so the higher priority targets will be drilled in January following a pause for the Christmas break. Hole SPBD0366, testing conductor PBC22-5, intersected a package of ultramafics and high-magnesian basalts at the top of the hole before passing into basalt, with minor interflow sediments, from approximately 190 metres. A thin, sheared black shale intersected near the target depth (392 metres) of the modelled EM plate is considered the likely source of the MLEM response.

Conductor PBC22-5 is a cluster of three separately modelled EM which collectively form a 1.5 kilometre long trend of EM anomalism. Such long strike length trends are more typical of conductive stratigraphic units rather than discrete responses which are more typical of nickel sulphide mineralisation, so this conductor is intrinsically less prospective than some of the as yet untested conductors that will be drilled once the rig recommences drilling in January. Hole SPBD0367, testing conductor PBC22-3, intersected prospective ultramafic rocks at the top of the hole down to approximately 90 metres before passing into basalt.

At 172 metres the hole intersected sedimentary rocks, including approximately 6 metres of strongly sulphidic black shales. The sulphides, comprising pyrrhotite, pyrite with minor chalcopyrite and sphalerite, are typical of black shales and are not of economic interest. Hole SPBD0368, testing beneath a zone of anomalous nickel and copper in previous reconnaissance aircore drilling not covered by the recent SQUID EM survey, intersected more than 80 metres of prospective ultramafic rocks in two zones, separated by a late-stage felsic porphyry intrusion.

Importantly, the ultramafic contains minor zones of trace to disseminated "cloud" sulphide consisting of pyrrhotite-chalcopyrite-pentlandite. This mineralisation, whilst not economic, confirms the presence of a fertile nickel prospective system, separate to the known Halls Knoll and Taipan - Gwardar trend. Laboratory assay results will be reported when the Company receives them.

The hole was still in prospective ultramafic rocks when drilling ceased for the Christmas break, with the hole to be extended when drilling resumes in the new year. All holes have been /will be cased with PVC to facilitate future down-hole electromagnetic (DHEM) surveys to confirm the drilling has adequately tested the EM anomalies. Whilst drilling to date has not intersected material magmatic nickel sulphides, it is encouraging to note that the EM appears to be working well in terms of its ability to detect and predict the position of sulphides, which bodes well for the remainder of the program in which the more prospective targets will be tested.

As stated in S2's previous ASX announcement of 16th November 2022, the sequence in which the holes are being drilled is based primarily on logistical considerations rather than perceived prospectivity of each target.