Variscan Mines : Drilling intersects massive sulphides at San Jose Mine

ASX Announcement - 23 November 2021

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NEW ZINC MASSIVE SULPHIDE MINERALISATION

INTERSECTED AT SAN JOSE MINE

Highlights

• Intense massive sulphide mineralisation intersected in previously untested 168 Trend at the San Jose Mine
• These intersections extend known mineralisation in the 168 Trend, which remains open
• Infill drilling in the centre of Los Caracoles Trend has continued to intersect mineralisation below the main gallery level
• Assay results from first batch of 19 diamond drill holes completed in the Los Caracoles and 168 Trends are pending
• The drill programme is being ramped up, with an additional drill-rig being deployed through another drilling contractor to test step-out targets and extensions
• Phase 2 drilling campaign metreage upsized

Variscan Mines Limited ("Variscan" or the "Company" or the "Group") (ASX:VAR) is pleased to provide an update on the Phase 2 underground diamond drilling programme at its San Jose Mine, located in Cantabria, northern Spain.

Figure 1. Visual high-grade zinc sulphide mineralisation intersected at the San Jose Mine

Drillhole NOVDDT005, interval shown 1.05 - 1.80 m: high-gradereplacement-type zinc ore

Variscan's Managing Director & CEO, Stewart Dickson said,

"We are pleased with the very strong visual indications of high-grade sulphide mineralisation seen in diamond core produced in our current drill programme. These are extremely encouraging and give us increased confidence that the Phase 2 underground drill campaign will build on the positive outcomes from the drill programme undertaken earlier in the year. Notably the visual logging of the massive sulphide intersections returned from the previously un-tested 168 Trend are exceptionally encouraging.

ASX:VAR Web - www.variscan.com.au

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Samples from both the 168 Trend and Los Caracoles Trend have been submitted for laboratory assay analysis. We keenly await those results. Meanwhile the ongoing underground drill program is ramping up with a further drill-rig being deployed through an additional drilling contractor tasked with testing step-out targets and extensions. This drilling will specifically test a number of small mine workings that were discovered recently and they present another opportunity to increase the size and scale of mineralisation. We look forward to updating the market on our substantive drill campaign over the months ahead."

Drilling programme progressing despite some earlier delays

To date, Variscan has completed 28 drillholes for approximately 760 meters of its previously stated minimum amount of 2,000 metres. This has been achieved despite delays that were beyond Variscan's control and has at times reduced drilling rates. In response to these matters, management action has been taken. With an extra drill-rig now being deployed by an additional drilling contractor, significantly improved drilling rates are anticipated as well as an increase to the total number of metres drilled in the Phase 2 campaign.

Drilling undertaken to date has been focused on infill drilling and testing lower lenses at Los Caracoles Trend and extensional drilling at the previously un-tested 168 Trend. As such, the Phase 2 underground drilling programme is on track to achieve its stated objectives.

Initial exploration findings from current drilling programme are promising

While the current drill programme still has a way to run, it has already revealed:

• Intersections of massive sulphide mineralisation in previously untested 168 Trend in the Central Zone of the San Jose Mine - for example see drillhole NOVDDT003 in Table 1
• Positive visual indications of mineralisation in the lower lenses within the Los Caracoles Trend in the Central Zone - for example see drillhole NOVDD0079 in Table 2

Table 1. Visual estimate of sulfides for hole NOVDDT003 (168 Trend)

	INTERVAL (m)		DESCRIPTION OF ORE	VISUAL SULFIDE ESTIMATE
From		To		Length		Total	sphalerite	galena
3.50		5.10		1.60	Massive, replacement-type ore of fine-	40%	40%
5.10		5.80		0.70	grained sphalerite in light-grey dolostone	15%	15%
5.80		7.00		1.20	host rock	32%	32%	2%
7.00		7.70		0.70	Disseminated sphalerite	5%	5%

Table 2. Visual estimate of sulfides for hole NOVDD0079 (Los Caracoles Trend)

	INTERVAL (m)		DESCRIPTION OF ORE	VISUAL SULFIDE ESTIMATE
From		To		Length		Total	sphalerite	galena
0.00		0.50		0.50	Banded sphalerite in dolostone	10%	10%
0.50		2.10		1.60	Grey dolostone
2.10		2.50		0.40	Banded sphalerite in grey dolostone	25%	25%
2.50		3.30		0.80		15%	15%
3.30		4.90		1.60	Dark-grey dolostone
4.90		5.10		0.20	Banded sphalerite in dolostone	10%	10%

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ASX Announcement - 23 November 2021

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In relation to the disclosure of visual estimates, the Company cautions that the sulphide abundance should not be considered a proxy or a substitute for laboratory analysis. The Company will update the market when laboratory analytical results become available.

Figure 2. Plan view of Phase 2 drilling conducted to date at the San Jose Mine

Figure 3. North-SouthLong Section of ongoing Phase 2 drilling in the Los Caracoles Trend (Also showing certain drilling results from Phase 1 drilling - refer ASX release 4 August 2021)

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ASX Announcement - 23 November 2021

Figure 4. Plan view of ongoing Phase 2 drilling conducted in the 168 Trend

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Programme to drill-test recently discovered step-out trends expanded

Variscan is also pleased to announce that it is commencing drill-testing of step-out mineral trends and extensions. These are found in small near-surface workings which Variscan identified in Q3 2021 (refer ASX announcement 3 September 2021). This step-out drilling will run simultaneously with the underground drilling in the Main Zone of the San Jose Mine.

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ASX Announcement - 23 November 2021

Figure 5. Plan view illustrating step-out mineral trends in old near-surface mines to be drill-tested

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Looking Ahead

Variscan's immediate focus is progressing with:

• underground drilling at the San Jose Mine
• underground drilling of step-out targets in old near-surface mines
• returning assay results as soon as possible for market reporting.

Additionally, the Company will be advancing a number of follow-on activities and deliverables including:

• A geophysical survey of surface drill targets over the Buenahora license area
• Delivery of pending municipal approvals to undertake surface drilling covering the Buenahora license area
• In support of the above activities, the delivery of associated environmental, social and governance ("ESG") initiatives.

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ASX Announcement - 23 November 2021