Strike Resources : Quarterly Activities and Cash Flow Report December 2015

ASX Announcement

QUARTERLY REPORT‌

COMPANY DETAILS ABN: 94 088 488 724

PRINCIPAL AND REGISTERED OFFICE

Level 2

23 Ventnor Avenue West Perth WA 6005

T [phone] / 9214 9700

F [phone]

W www.strikeresources.com.au

E [e-mail]

ASX CODE

SRK

SECURITIES ON ISSUE

145,334,268 listed shares

6,500,000 unlisted options

BOARD OF DIRECTORS

Farooq Khan

(Non-Executive Chairman)

William Johnson

(Managing Director)

Malcolm Richmond

(Non-Executive Director)

Matthew Hammond

(Non-Executive Director)

Victor Ho

(Non-Executive Director)

COMPANY SECRETARY

Victor Ho

[e-mail]

QUARTERLY ACTIVITIES

Strike Resources Limited (Strike or Company) is pleased to present its Quarterly Report for the period ended 31 December 2015.

As at 31 December 2015, Strike had net assets of ~6.98 million (comprising ~$7.6 million gross cash less provisions/accruals/trade creditors of ~$0.62 million) (30 September 2015: ~$7.1 million net assets comprising ~$8.1 million cash less provisions/accruals/trade creditors of ~$1 million).

During the quarter, Strike continued to examine a range of new strategies for the Company in light of the poor outlook for the iron ore sector and the resources sector in general. In this regard, Strike has been investigating a number of technology related ventures which could form the foundation for a new strategy for the Company. Any such change will necessarily be subject to Strike shareholder approval and compliance with the ASX Listing Rules and Corporations Act.

No activity was undertaken on the Company's iron ore projects in Peru.

Board Changes.

• Farooq Khan was appointed a Director with effect on 1 October 2015.

• On 18th December 2015 Malcolm Richmond stepped down as Chairman, remaining a Non-Executive Director. Mr Richmond served as Chairman since February 2011.

• Farooq Khan was appointed as Chairman on 18 December 2015.

• Samantha Tough did not seek re-election as a Director at the 2015 Annual General Meeting and therefore ceased to be a Director of the Company on 30 November 2015.

  
  

  About Strike Resources Limited (ASX:SRK)

  
  

  Strike Resources is an ASX listed resource company, owner of the high grade Apurimac Magnetite Iron Ore Project and Cusco Magnetite Iron Ore Project in Peru. Strike retains significant cash reserves and is presently reviewing alternative options with regard to utilisation of these funds.

  
  

  FOR FURTHER INFORMATION

  
  

  William Johnson

  Managing Director [e-mail]

  
  

  22 January 2016

  
  

  PROJECTS Apurimac Iron Ore Project

  Between 2006 and 2014, Strike's primary focus was on the development of its Apurimac magnetite project in Peru, recognised as one of the highest grade, large scale magnetite projects in the world with the potential to support the establishment of a significant iron ore operation.

  Current adverse market conditions however have led the Company to suspend all development activities on this and its other iron ore projects in Peru.

  Nevertheless, the nature of the Apurimac deposit and the development work undertaken to- date define this project as a potentially strategic asset in Peru which may, when market conditions improve, provide opportunity for the Company to recover value.

  The exceptionally high grade 57% Fe is almost twice as high as magnetite deposits developed in Australia; ore bodies are coarse grained and soft, resulting in cheaper processing costs once in production.

  A prefeasibility study completed in 2008 and updated in 2010 on the Apurimac Project indicated clear potential for development of a world class iron ore project:

  • JORC Resource of 269Mt of iron ore at Apurimac of 57.3% Fe (142 Mt Indicated at 57.84% Fe and 127 Mt Inferred at 56.7% Fe).

  • Mineralisation predominantly high-grade, coarse-grained magnetite providing comparatively high mass recoveries (>60%) at coarse grind size (>500 microns).

  • Excellent exploration potential within current concessions with several targets containing ironstones grading >60%Fe in similar geological settings to main Opaban concessions.

  • Base case of 20Mtpa of concentrate produced by open pit mining and processing 20

    - 27Mtpa of ore with transport of the high grade (>66%Fe) product to the coast via a slurry pipeline for drying and shipment to customers.

  • Attractive life-of-mine operating expenses (2010) of US$ 17 - 20 per tonne of product.

  • Estimated capital expenditure (2010) of US$ 2.6 - 2.9 billion, competitive with other major iron ore projects at the time.

  An initial drilling program at Apurimac established 269 Mt resources of high grade, coarse grained magnetite with an average grade of 57.3% iron. Of this, potentially 67 million of Direct Shipping Ore (DSO) at an average grade of 61.5% Fe has been identified.

  
  

  Cusco Iron Ore Project

  The Cusco project lies approximately 150km to the south - east of Apurimac and forms a potential secondary development target for the Company in Peru with an initial inferred resource estimate of 104Mt at 32.6% Fe.

  Like Apurimac, iron ore mineralisation at the project is coarse grained and dominated by magnetite, with high grades recorded. Preliminary metallurgical tests indicate a concentrate grade of >65% Fe could be produced from this ore using conventional grinding and magnetic separation processes.

  
  

  JORC MINERAL RESOURCES

  The following JORC Code compliant (2004 and 2012) Mineral Resources estimates are as at the end of the quarter and currently:

  
  

  Apurimac Iron Ore Project (Peru) (Strike - 100%)

  
  

  The Apurimac Project has a JORC Code (2012 Edition) compliant Mineral Resource of 269.4 Mt, consisting of:

  • a 142.2 Mt Indicated Mineral Resource at 57.8% Fe; and

  • a 127.2 Mt Inferred Mineral Resource at 56.7% Fe.

  
  

  Category	Concession	Density t/m3	Mt	Fe%	SiO2%	Al2O3%	P%	S%
  Indicated	Opaban 1	4	133.71	57.57	9.46	2.54	0.04	0.12
  Indicated	Opaban 3	4	8.53	62.08	4.58	1.37	0.07	0.25
  Inferred	Opaban 1	4	127.19	56.7	9.66	2.7	0.04	0.2
  Total Indicated and Inferred		269.4	57.3	9.4	2.56	0.04	0.16

  
  

  The information in this JORC Resource table was prepared and first disclosed under the 2004 JORC Code (in Strike's ASX announcement dated 11 February 2010: Peruvian Apurimac Iron Ore Project Resource Increased to 269 Million Tonnes) and has subsequently been upgraded to comply with the 2012 JORC Code and disclosed in Strike's ASX Announcement dated 19 January 2015: Apurimac Mineral Resources Updated to JORC 2012 Standard.

  
  

  Cusco Iron Ore Project (Peru) (Strike - 100%)

  
  

  The Cusco Project has a JORC Code (2004 Edition) compliant Mineral Resource of 104.4 Mt Inferred Mineral Resource at 32.62% Fe.

  
  

  Category	Concession	Density t/m3	Mt*	Fe%	SiO2%	Al2O3%	P%	S%
  Inferred	Santo Tomas	4	104.4	32.62	0.53	3.19	0.035	0.53

  
  

  The information in this JORC Resource table was prepared and first disclosed under the 2004 JORC Code (in Strike's ASX announcement dated 17 June 2011: Cusco Project - Resource Estimate). It has not been updated since to comply with the 2012 JORC Code on the basis that the information has not materially changed since it was last reported.

  
  

  LIST OF MINERAL CONCESSIONS

  The following mineral concessions were held as at the end of the quarter and currently:

  
  

  Apurimac Iron Ore Project (Peru) (Strike - 100%)

  
  

  Name	Area (Ha)	Province	Code	Title	File No
  (1) Opaban I	999	Andahuaylas	5006349X01	No 8625-94/RPM Dec 16, 1994	20001465
  (2) Opaban III	990	Andahuaylas	5006351X01	No 8623-94/RPM Dec 16, 1994	20001464
  (3) Ferrum 1	965	Andahuaylas	010298304	No 00228-2005-INACC/J Jan 19, 2005	11053798
  (4) Ferrum 4	1,000	Andahuaylas/ Aymaraes	010298604	No 00230-2005-INACC/J Jan 19, 2005	11053810
  (5) Ferrum 8	900	Andahuaylas	010299004	No 00232-2005-INACC/J Jan 19, 2005	11053827
  (6) Cristoforo 22	379	Andahuaylas	010165602	RP2849-2007-INGEMMET/PCD/PM Dec 13, 2007	11067786
  (7) Ferrum 31	327	Andahuaylas	010552807	RP 1266-2008-INGEMMET/PCD/PM May 12, 2008	11076509
  (8) Ferrum 37	695	Andahuaylas	010621507	RP 1164-2008-INGEMMET/PCD/PM May 12, 2008	11076534
  (9) Wanka 01	100	Andahuaylas	010208110	TBA	TBA
  (10) Sillaccassa 1	700	Andahuaylas	010212508	RP 5088-2008-INGEMMET/PCD/PM Nov 19, 2008	11084877
  (11) Sillaccasa 2	400	Andahuaylas	010212608	RP 3183-2008-INGEMMET/PCD/PM Sept 8, 2008	11081449

  
  

  
  

  Cusco Iron Ore Project (Peru) (Strike - 100%)

  
  

  Name	Area (Ha)	Province	Code	Title	File No.
  (1) Flor de María	907	Chumbivilcas	05006521X01	No 7078-95-RPM Dec 29, 1995	20001742
  (2) Delia Esperanza	1,000	Chumbivilcas	05006522X01	No 0686-95-RPM Mar 31, 1995	20001743
  (3) El Pacífico II	1,000	Chumbivilcas	05006524X01	No 7886-94/RPM Nov 25, 1994	20001746

  
  

  
  

  Paulsens East Iron-Ore Project (Western Australia) (Strike - 100%)

  
  

  Tenement No	Status	Grant Date	Expiry Date	Area (blocks/Ha)	Area (km²)
  Retention Licence RL 47/7	Granted	4/12/14	4/12/19	~381 Ha	~3.81

  
  

  
  

  Other matters:

• No other mineral concessions were acquired or lapsed during the quarter.

• No farm-in or farm-out agreements are in effect.