Strike Resources : Development Underway at Paulsens East as Construction Begins

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Monday, 14 March 2022

ASX Code: SRK

MARKET ANNOUNCEMENT

Development Underway at Paulsens East Iron Ore Project as Construction of Haulage Road Begins

SUMMARY

• Development of the Paulsens East Iron Ore Mine is now underway as Strike move towards production of first ore on ship
• Construction has commenced on the ~18km haulage road to connect the Paulsens East Iron Ore Mine to the public Nanutarra Road, with an expected 10 - 12 week construction timetable
• Contracts with remaining key suppliers and contractors for mining and truck haulage being finalised
• Mining to create first stockpiles of lump DSO for shipment expected to commence within 4 weeks
• Strengthen iron ore prices are a positive indicator for attractive margins at Paulsens East

Strike Resources Limited (ASX:SRK) (Strike) is pleased to announce that construction has commenced on the 18km haulage road (Haul Road) between the Paulsens East Iron Ore Project (Paulsens East) mine site and the public Nanutarra-Munjina Road (Nanutarra Road) located in the Pilbara, Western Australia (refer Figures 2 and 3).

Construction of the Haul Road is the first step in the Stage 1 Production development of Paulsens East, connecting the Paulsens East mine to the public road network. Once the Haul Road is completed, four trailer 'quad' road-trains will carry direct shipping ore (DSO) from the mine along the Haul Road to Nanutarra Road. From there, trucks will travel west along Nanutarra Road before heading north along the North West Coastal Highway to Port Hedland for export.

Construction of the Haul Road is expected to take ~10 to 12 weeks, during which time Strike will finalise its outstanding contracts with key suppliers and preferred contractors for mining and truck haulage. Mining at Paulsens East to create the first stockpiles of lump DSO for shipment is expected to commence within ~4 weeks.

Strike notes that iron ore benchmark prices are continuing to strengthen, with current benchmark price in excess of US$150/t1 indicating the potential for attractive near term operating margins for shipments of DSO from Paulsens East - forecast average C1 Costs of ~US$60/t for life of mine (LOM) and total LOM breakeven price of ~US$87/t CIF (Cost, Insurance, Freight) China (inclusive of royalties) were disclosed in the Updated Feasibility Study2.

1. Benchmark price for 62% iron ore Fines CFR China
2. Refer Strike's ASX Announcement dated 4 February 2022: Updated Paulsens East Feasibility Study - Optimised Staged Production and Lower Capex and Opex Costs - the Company confirms that all material assumptions underpinning the production targets and forecast financial information derived from the production targets in this announcement continue to apply and have not materially change

	www.strikeresources.com.au
	STRIKE RESOURCES LIMITED	A.B.N. 94 088 488 724
	Level 1, Suite 1, 680 Murray Street, West Perth, Western Australia 6005
ASX : SRK	T | [phone]	F | [phone]	E | [e-mail]

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20220314 SRK ASX Development Underway at Paulsens East Iron Ore Project as Construction of Haulage Road Begins.docx

Managing Director, William Johnson:

We are delighted to have now mobilised to site to start construction at Paulsens East. This is a very exciting time for the Company as development towards first ore on ship is now underway. With iron ore prices continuing to strengthen, the timing could not be better to bring the Pilbara's next iron ore mine into production.

Figure 1: Commencement of Construction of Haul Road at Intersection to Public Nanutarra Road (foreground)

Figure 2: Haulage Road from Mine Site to Nanutarra Road

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20220314 SRK ASX Development Underway at Paulsens East Iron Ore Project as Construction of Haulage Road Begins.docx

Paulsens East Project Location

Paulsens East is located ~10km from Northern Star Resources Limited's (ASX:NST) Paulsens Gold Mine, ~235km by road east of Onslow (and Port of Ashburton) and ~600km by road south of Port Hedland in the Pilbara, Western Australia (refer Figure 3). Paulsens East is ~20km from the private Wyloo Station airstrip previously used by the Paulsens Gold Mine, which is suitable to support the transport of Strike's FIFO workforce (refer Figures 2 and 3).

Figure 3: Paulsens East Project Location, West Pilbara

Project JORC Mineral Resource and Ore Reserve

The Project consists of a ~3km long outcropping high-grade hematite ridge (refer Figure 4), containing a JORC Indicated Mineral Resource of 9.6 Million tonnes at 61.1% Fe, 6.0% SiO2, 3.6% Al2O3, 0.08% P (at a cut-off grade of 58% Fe).3

3 Refer Strike's ASX Announcement dated 4 September 2019: Significant Upgrade of JORC Mineral Resource into Indicated Category at Paulsens East Iron Ore Project

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20220314 SRK ASX Development Underway at Paulsens East Iron Ore Project as Construction of Haulage Road Begins.docx

As part of the completion of the October 2020 Feasibility Study4, part of the JORC Indicated Mineral Resource of 9.6 Million tonnes at 61.1% Fe, 6.0% SiO2, 3.6% Al2O3, 0.08% P (at a cutoff grade of 58% Fe) was converted to a JORC Probable Ore Reserve of 6.2 Million tonnes at 59.9% Fe, 7.43% SiO2, 3.77% Al2O3 and 0.086% P (at a cut-off grade of 55% Fe).1

As part of the completion of the February 2022 Updated Feasibility Study2 an additional JORC

Indicated Mineral Resource of 113,000 tonnes at 60.8% Fe, 6.9%, SiO2, 3.4% Al2O3, and 0.10% P (at a cut-offgrade of 58% Fe) has been delineated from the high-gradehematite rich detrital material5 at surface north of the hematite ridge (refer Figure 5).

Figure 4: Paulsens East Hematite Ridge

Optimised Mining Operations and Port Logistics

Strike plans a production schedule of up to 2Mtpa of DSO from Paulsens East over a ~3.5 year LOM, which is underpinned by the Probable Ore Reserve of 6.2Mt (within the current Indicated Mineral Resource of 9.6Mt).

In order to provide a capital efficient ramp up of mining operations and to de-risk any potential port constraints, Strike proposes a two-stage development approach for Paulsens East6:

• Stage 1 Production will focus on surface detrital and low strip ratio materials of up to 400,000 tonnes to be shipped through the Utah Point Multi-User Bulk Handling Facility at Port Hedland.
• Stage 2 Production at an annualised rate of up to ~2Mtpa is proposed to transition from Utah Point to Port of Ashburton at Onslow (reducing trucking distance by ~365kms), with Stage 2 ramp-up expected to be partially funded by Stage 1 cash flows.

Stage 1 Production and Export Through Utah Point, Port Hedland

Given the outcropping nature of the high grade Paulsens East hematite ridge (refer Figure 4), which in parts lends itself to a very low strip ratio together with the presence of high-grade surface detrital iron ore (refer Figure 5), it is proposed that initial mining operations focus on these two areas of mineralisation.

1. Refer Strike's ASX Announcement dated 30 October 2020: Paulsens East Feasibility Study Demonstrates Significant Cashflow Generation and Financial Returns
2. Refer Strike's ASX Announcements dated 14 October 2020: Discovery of High Grade Iron Rich Detritals at Surface at Paulsens
   East and 15 July 2020: High-Grade Rock Chip Samples Confirm Resource Upside Potential at Paulsens East Iron Ore Project
3. Refer Strike's ASX Announcement dated 13 September 2021: Paulsens East Iron Ore Mining Operation Optimised

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20220314 SRK ASX Development Underway at Paulsens East Iron Ore Project as Construction of Haulage Road Begins.docx

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Figure 5: Paulsens East test pit at eastern end of outcropping hematite ridge with detritals in foreground

Up to 400,000 tonnes of ore will be crushed and screened from these areas to produce DSO Lump and Fines products.

Mining, crushing and screening and haulage operations will be undertaken by specialist contractors with overall supervision and management provided by Strike's 'Owner's Team'.

The detrital ore requires no drill and blast activities and will be undertaken predominantly through very shallow trenching and screening operations.

The processed Lump and Fines products will be trucked from the mine to the Utah Point MultiUser Bulk Handling Facility at Port Hedland (Utah Point) for export to customers (in vessels of up to 65,000 tonne capacity). Strike is considering an interim stockpile area in or around Port Hedland where DSO inventory can be accumulated and 'sprinted' to the Utah Point receiving stockpile bunker once a shipment and berth slot has been secured.

Strike has received formal confirmation of capacity allocation from the Pilbara Ports Authority (PPA) at Utah Point for 200,000 tonnes per financial year. A formal multi-user access agreement with PPA is pending execution subject to Strike making a 'final investment decision', Strike and PPA finalising a Logistics Plan for haulage into the Utah Point facility and PPA undertaking a site visit to the Paulsens East mine site (once operational), to complete PPA's product approval process7.

Production under Stage 1 could deliver up to 400,000 tonnes of export during CY 2022, before Strike transitions to Stage 2 exporting through the Port of Ashburton at Onslow (subject to receipt of necessary port and environmental permits and approvals which are currently underway), which would afford a significantly shorter haulage distance of ~235km, compared with ~600km to Utah Point.2

Stage 1 will operate with minimum capital expenditure and fixed infrastructure.

7 Refer also Strike's ASX Announcement dated 28 October 2021: Export Allocation Received for Paulsens East

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