Matsa Resources Limited

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1 LIMITED ABN ASX Announcement 31 January 2014 HIGHLIGHTS Symons Hill (MAT 100%) Quarterly Activities Report 31 December RC holes and 148 Phase 2 infill and step out aircore holes were completed during the quarter over targets SHG01, SHG02 and SHG03 at Symons Hill RC drilling assay results confirm elevated nickel and disseminated sulphides in unweathered ultramafic/mafic intrusion at SHG02, with elevated nickel to bottom of hole in holes SHRC05, SHRC06 and SHRC09 Petrographic analysis of bottom of hole aircore samples at SHG01 confirmed that elevated copper (>100ppm) assays coincide with fine disseminated copper sulphides chalcopyrite/chalcocite Higher grade RC nickel intercepts included: o o 0.81% Ni, 82ppm Cu (SHG02) 0.64% Ni, 404ppm Cu (SHG03) Other significant RC nickel intercepts include: o o o 0.27% Ni, 43ppm Cu from 12m, to end of hole in SHG % Ni, 29ppm Cu from 20m to end of hole SHG % Ni, 162ppm Cu from 28m in SHG03 Similarities to Nova type geology observed at SHG02 and SHG03 with elevated nickel values associated with mafic/ultramafic intrusions Mt Henry JV Project (MAT 30%, PAN 70%) Bankable Feasibility Study (BFS) ongoing, now targeting completion in June quarter 2014 Diamond drilling underway to test a very strong high priority conductor over coincident PGE, nickel and copper soil anomaly in ultramafic rocks at the base of the Mt Thirsty sill Killaloe JV (MAT 80%, CUL 20%) Hand held XRF results on 160 Soil samples collected during the quarter identified 3 new soil Ni and Cu geochemical anomalies. Corporate Binding Terms Sheet signed with Bulletin Resources Limited ( Bulletin ) for the acquisition of a 49% direct interest in Bulletin s Halls Creek Gold Project including all infrastructure. CORPORATE SUMMARY Executive Chairman Paul Poli Director Frank Sibbel Director & Company Secretary Andrew Chapman Shares on Issue million Unlisted Options 8.31 $ $0.43 Top 20 shareholders Hold 48% Share Price on 31 January cents Market Capitalisation $26.92 million Head Office: Suite 11, 139 Newcastle Street, Perth Western Australia 6000 Tel: Fax: Bangkok Office: Unit 1808, Pacific Place 2, 142 Sukhumvit Road, Klongtoey, Bangkok Tel: Fax: reception@matsa.com.au

2 INTRODUCTION ( Matsa or the Company ASX:MAT) is pleased to report on its exploration and corporate activities for the quarter ended 31 December Background information about the methods and data used in compiling this report, have been appended to previous announcements released to the ASX as required by the JORC 2012 code during the quarter. COMPANY ACTIVITIES Symons Hill Project Matsa 100% This project comprises one exploration licence E69/3070 which is 96km 2 in area, located within the Fraser Range Tectonic zone and within 6kms SSW of Sirius Resources Ltd s (Sirius) Nova - Bollinger nickel copper deposits. Matsa s highest priority targets at Symons Hill are 6 soil nickel and copper geochemical targets SHG01 SHG06 (Figure 1). Phase 1 aircore drilling during the previous quarter confirmed the presence of mafic intrusions associated with SHG01, and SHG02 and in particular very strong (>1% Ni) nickel enrichment in weathered ultramafic/mafic rocks at SHG02. Sample numbers and maximum assays over each of the Phase 1 drill targets are summarised in Table 1. SHG01 SHG02 SHG04 SHG06 Samples Ni_ppm Cu_ppm Co_ppm Cr_ppm Table 1: Phase 1 Aircore: Samples and Max Values for Ni, Cu, Cr and Co Petrographic (microscope) examination of relatively unweathered samples from SHG02 confirmed the presence of olivine rich gabbro similar to host rocks at Sirius Nova-Bollinger deposits. Magnetic and gravity surveys completed during the current quarter delineate further areas of interest and complement the existing nickel and copper geochemical targets. Exploration during December Quarter Exploration during the December quarter included the following: 148 Phase 2 infill and step out aircore holes were completed for 5,392m over targets SHG01, SHG02 and SHG03 with results announced to the market on 21 st December Petrographic analysis was carried out on a further 13 bottom of hole samples from selected aircore drillholes. 13 RC drillholes were designed to test for mineralisation in unweathered mafic/ultramafic rocks underlying anomalous nickel zones outlined from soil surveys and aircore drilling of the regolith, as well as to provide for a down hole EM program to be completed February Results from 9 of the 13 holes were announced to the market on 19 th December Gravity surveying comprising 2,212 stations was carried out over most of the project area. The objective was to use the results in conjunction with aeromagnetic data and geochemistry to define potentially copper and nickel mineralised mafic intrusions. Page 2

3 Figure 1: Symons Hill Exploration Summary Aircore Drilling The phase 2 aircore programme comprised 148 step-out and infill drillholes along lines spaced 400m apart at 100m and 50m spacings was completed to follow up encouraging results from the phase 1 programme at SHG01 and SHG02/SHG03. The objectives of the programme were to: Delineate the width, strike length and geological character of the nickel rich gabbro discovered at SHG02 by the Phase 1 aircore programme; Explore the SHG02 sill for primary nickel sulphide mineralisation in fresh rock, at or close to aircore refusal; Define anomalous nickel and copper zones in bedrock as possible indicators for the presence of magmatic Ni Cu sulphides at SHG01 and SHG02/03; and Petrographic analysis of 15 bottom of hole aircore samples in order to better characterise basement rocks. Approximately 1,300 4m composite samples and 148 bottom of hole samples, were submitted for laboratory assay. Petrographic results from bottom of hole samples have confirmed the presence of mafic granulites in Targets SHG01 SHG03. The most noteworthy petrographic result is the association between anomalous soil and regolith copper values with the observation of trace disseminated copper sulphides in 3 of the 4 samples from SHG01. The mafic/ultramafic sill associated with soil nickel anomalies at SHG02 and SHG03 was intersected by aircore drilling over a distance of 3.9km and confirming the sill to be up to 0.4km wide. Page 3

4 Samples and maximum values for Ni, Cu, Cr and Co for the 3 targets drilled are presented in Table 2. Target SHG01 SHG02 SHG03 Samples Max Ni_ppm Max Cu_ppm Max Co_ppm Max Cr_ppm Table 2: Phase 2 Aircore Samples and Maximum Values for Co, Cr, Cu and Ni. Very strongly enriched nickel values similar to those previously announced at SHG02, were also returned from SHG03. It can be seen in Table 2 that strongly enriched nickel values up to 0.97% Ni at SHG03 and 0.82% Ni in SHG02 were returned from recent drilling. Target Petrographic Samples Summary Comments SHG01 4 SHG02 7 SHG03 2 Mafic Granulite, 3 of the 4 samples contain trace disseminated Chalcopyrite/Chalcocite Mafic Granulite derived from Gabbro/Gabbro Norite precursor. Mafic Granulites, strongly silicified in one sample with disseminated pyrite and pyrrhotite in both samples. Table 3: Summary Comments on Petrographic Samples from Bottom of Hole Aircore Samples. As seen in previous drilling the very high nickel values occur in the weathering profile developed over mafic/ultramafic rocks. Nickel values while still elevated, typically decrease in the less weathered underlying mafic/ultramafic rocks. See discussion of RC drilling and Figures 2-4 below. The enrichment of nickel by weathering processes at SHG02 and SHG03 has similarities with the near surface geology at Sirius Nova/Bollinger and represents a significant discovery by Matsa. However, the focus remains on discovery of disseminated and massive Ni and Cu sulphides in unweathered rocks. Consequently the focus in the Phase 2 aircore programme was to sample and assay the least weathered material in the last metre of each hole. In contrast, 4m composite samples were collected through the regolith and weathered bedrock in upper part of each hole. Preliminary assays of bottom of hole samples were carried out using a hand held XRF analyser with results announced to the ASX 21 st November When 4 acid digest ICP assays for the same intervals were received, there was good correlation between the XRF and 4 acid digest ICP results. For example, the strongly enriched nickel value of 1.09% Ni from the base of drillhole SHAC073 was confirmed by 4 acid digest ICP assay as 0.98% Ni. A semi-consolidated sandstone/grit up to 28m thick was observed south of target SHG02 and is interpreted to form part of the Eucla Basin sequence of Tertiary age. This unit was seen to act as a blanket over strongly anomalous nickel values in basement rocks south of SHG03 which prevented nickel reaching the surface and thereby preventing detection in the surface soils by residual soil sampling. This is evidenced at SHG03 where coincides with a hole in the sandstone blanket and nickel was detected in the surface soils. This unit of unknown extent has the potential to have similarly obscured bedrock mineralisation elsewhere in the Symons Hill project. At SHG01, the Phase 2 aircore programme comprised infill and step-out drilling within the co incident nickel and copper soil anomaly. Visual logging has confirmed observations from the Phase 1 programme that the anomaly is mostly underlain by mafic gabbro. Page 4

5 Moderately elevated nickel and copper values in the least weathered bottom of hole assays at SHG01 were seen to broadly coincide with the nickel and copper soil anomaly. Petrographic analysis confirmed that the bottom of hole samples with elevated copper (>100ppm) contain fine disseminated copper sulphides chalcopyrite/chalcocite. These results appear to confirm a sulphide source for anomalous copper values in soil and aircore drilling. RC Drilling A total of 13 RC holes were drilled to test for the presence of nickel and copper sulphide mineralisation in unweathered rocks underlying nickel and copper anomalous zones defined by soil sampling and aircore drilling of the weathered profile at SHG01, SHG02 and SHG03. (Table 4, Figure 2) All holes were lined with PVC to enable planned down hole EM (electromagnetic) surveys to explore for massive sulphides within metres of the individual drillholes. RC drillholes were sampled at 4m composite intervals and assayed for a suite of 33 elements using the 4 acid digest ICP MS technique. (MAT announcement to ASX 19 th December 2013.) A summary of samples and maximum values for Co, Cr, Ni and Cu are presented in Table 3. Target SHG01 SHG02 SHG03 Samples Drillholes SHRC10 to SHRC13 SHRC03 SHRC09 SHRC01 SHRC02 Max Co_ppm Max Cr_ppm Max Cu_ppm Max Ni_ppm Table 4: RC Drilling, Sampling and Maximum Assay Values for Co, Cr, Cu and Ni. Figure 2 Location of RC and Aircore Drilling and Geochemical Targets on VTEM Ch47 Image Page 5

6 RC drilling at SHG02 and SHG03 has confirmed strongly elevated nickel values in weathered mafic/ultramafic gabbro with more moderately elevated values in unweathered rocks at depth. (Figures 2 and 3) Figure 3: Section N Showing RC 4m Composite and Aircore Drilling Results At SHG02, it can be seen that nickel results in RC drillholes SHRC05, SHRC06 and SHRC09 (Figures 3 and 4) are elevated (orange colour) in weakly sulphidic unweathered gabbro beneath strongly nickel enriched (pink and red) regolith as identified by aircore drilling. It is intended to submit samples of unweathered rock for petrographic analysis to determine whether or not the elevated nickel values are related to disseminated sulphides. Significant results from 4m RC composite samples are listed below: Drillhole 13SHRC01 13SHRC02 13SHRC03 13SHRC04 13SHRC06 13SHRC09 Intercept 0.32% Ni, 159ppm Cu from 40m Including 0.64% Ni, 404ppm Cu from 52m 0.39% Ni, 162ppm Cu from 28m Including 0.56% Ni, 90ppm Cu from 56m 0.35% Ni, 650ppm Cu from 48m 0.2% Ni, 331ppm Cu from 44m 0.27% Ni, 43ppm Cu from 12m (to end of hole) Including 0.81% Ni, 82ppm Cu from 36m 0.21% Ni, 29ppm Cu from 20m (to end of hole) Coincident moderately elevated copper and nickel values in drillholes SHRC01 and SHRC03 above are located along the western margins of SHG03 and SHG02 respectively. This may reflect the presence of disseminated magmatic nickel and copper sulphides in these rocks and further petrographic work is proposed. Page 6

7 Figure 4: Section N showing RC 4m composite and Aircore drilling results Matsa s work to date at SHG02 continues to show similarities with early near surface exploration results at Sirius Nova/Bollinger with comparable nickel values together with elevated copper, cobalt and PGE. These new results now confirm that not only is the regolith similar to Sirius Nova/Bollinger, but the basement rocks immediately beneath the regolith also appearing comparable. As a result of the success of the RC drilling programme so far, a deeper RC and diamond drilling programme is being planned with priority drill targets being identified as soon as possible after receipt of the results of the gravity and down hole EM surveys. Gravity survey A ground gravity survey over most of the tenement was recently completed (Figure 1). Inspection of gravity and magnetic data has led to selection of a number of targets which possibly represent concealed mafic/ultramafic intrusions. Aircore drilling is proposed to obtain geological and geochemical information on these targets prior to planning deeper drilling to test the source. Mt Henry Gold Project Joint Venture Matsa 30% The Mt Henry JV tenements cover 134km 2 and are located south of Norseman in Western Australia and is in a joint venture with Matsa Resources Ltd 30% and Panoramic Resources Ltd 70%. Panoramic is undertaking a Bankable Feasibility Study (BFS) on behalf of the JV, on the Mt Henry Gold Project. Bankable Feasibility Study (BFS) Work has continued to advance the studies required for completion of the economic evaluation of the Project and to ensure that necessary statutory approvals can be obtained in a timely manner. Environmental Baseline Studies studies have been completed and included the study of local flora, terrestrial and aquatic fauna, the first phase of waste rock geochemistry and soil characterisation. A second phase of geotechnical evaluation of the potential tailings storage area and a drilling program to confirm the hydrogeological setting of the potential open pit excavations were also completed. These studies and information will form the basis of a Mining Proposal application to allow the Mt Henry and Selene open pits to be developed. Remaining studies to be finalised in 2014 are the full evaluation on the effects of pit lake formations at mine closure and final waste dump designs to minimise the effects of any potentially acid forming (PAF) material generated during open pit mining. Page 7

8 Metallurgical testwork - flotation test work commenced in the quarter. Studies so far indicate there is a good recovery of gold bearing sulphides to a concentrate. However, additional work is required to improve recoveries to +90% and to reduce mass pull. This work will involve testing various reagent conditions and optimising grind size. The recovery of a magnetite by-product is also being evaluated in conjunction with studies to understand the optimal conditions to maximise gold recovery. Site planning - site layout planning of waste dumps, haul roads and surface water drainage continue to be evaluated and refined. This is an area where operating costs could be significantly reduced by optimising haulage profiles. The Mt Henry Joint Venture is now targeting the completion of the Mt Henry BFS in the June 2014 quarter. Mt Henry Regional Exploration Panoramic and Matsa formed a separate regional exploration Joint Venture to conduct greenfield exploration on underexplored leases located within the Mt Henry tenement area, which Matsa manages on behalf of the joint venture. Several targets were tested during the September quarter with assay results for some programs received in the December quarter. Mt Thirsty - Follow up drilling at Mt Thirsty is planned for the March quarter 2014, now that all regulatory approvals are in place. The drilling will target a very strong EM anomaly which is coincident with a nickel and PGE soil anomaly. It also coincides with a magnetic high which is interpreted to represent the basal mafic/ultramafic lithologies of the Mt Thirsty Sill. (Figure 5) Abbotshall South - twelve reverse circulation (RC) holes for 1,185m were completed in the September 2013 quarter at Abbotshall South targeting a dilational zone within a mapped geochemical anomaly. The holes intersected large zones of silicification and disseminated arsenopyrite mineralisation. Results received during the December quarter 2013 show anomalous results explaining the target concept. No follow-up work is planned at this stage. Lake Kirk 2 RC holes were drilled in the September quarter 2013 testing an Induced Polarisation (IP) target in proximity to the historic Lake Kirk diggings. The drill program intersected disseminated arsenopyrite which was interpreted to be the source of the IP anomaly. Only trace gold results were received and no follow-up work is planned at this stage. Figure 5: Mt Thirsty Sill PGE Ni Target Summary Page 8

9 Killaloe Project Exploration Matsa 80% The Killaloe project comprising 94km 2 is located 35km NE of Norseman in Western Australia. Killaloe Gold Exploration No field work targeting gold exploration was carried out during the current quarter. As reported in the previous quarter, Matsa remains encouraged by gold results from sighter aircore drilling at the KLGT02 target in Lake Cowan and by the broad low grade gold intercepts in RC drilling on the Felsic Porphyry target. A programme is currently being developed to carry out further aircore and RC drilling to better define mineralisation in both targets. Killaloe Base Metals/Nickel Exploration Nickel exploration during the quarter included of collection of 160 soil samples in two areas within the project where only sparse sampling had previously been carried out. Assays were carried out on prepared and mounted pulps using Matsa s hand-held XRF analyser. The assay procedure was developed with guidance by geochemical consultants IOGlobal and described in Matsa s announcement to the ASX 21 st November A summary of results is presented in Table 5. Samples Min Max 75th Pctile 90th Pctile 95th Pctile 98th pcltile Table 5: Killaloe Soil Sampling Summary Statistics Three discrete soil nickel results were defined by Ni values up to 497 ppm, Cu values to 102 ppm and Co values to 310 ppm. All areas are interpreted to overlie ultramafic komatiitic volcanic rocks. Selected samples have been sent for laboratory analysis by 4 acid digest and ICP with results awaited. It is intended to use the laboratory assays to determine calibration factors for XRF data and integration with existing surface sample database. Field inspection and further sampling is then proposed in these 3 areas to determine the significance of the results. Matsa remains very encouraged by the discovery of strongly elevated zinc values associated with black shales and with the KC50 conductor as reported in the previous quarter. Aircore drilling is proposed to better define the extent of the prospective black shale unit to evaluate potential for significant mineralisation. Acquisition of Interest in Halls Creek Project Co Cr Cu Ni Pb In December, Matsa advised that it has executed a binding Terms Sheet with Bulletin Resources Limited (Bulletin) for the acquisition of an initial 49% direct interest in Bulletin s Halls Creek Gold Project with staged farm in arrangements to increase that interest up to 75% by meeting specific expenditure requirements on the project. The key terms of the agreement were announced to the market on 16 th December Matsa has paid a deposit of $500,000 to Bulletin, with final agreements to be executed upon receipt of all statutory and shareholder s approvals where required. Should Bulletin not receive shareholder approval for the sale, the deposit will become a loan repayable to Matsa within 10 months, at an interest rate appropriate for this type of transaction. Page 9

10 Should Bulletin receive a bona fide superior offer prior to settlement, Matsa can elect to match that offer. If Matsa chooses not to match the offer, Matsa s deposit will be refunded immediately and will also receive a $100,000 break fee. At the time of writing this report, Bulletin has notified Matsa that in Bulletin s opinion, it has received a superior offer. Matsa has reviewed the offer and has formally notified Bulletin that Matsa does not agree that the offer is superior in its entirety. Matsa currently holds a 23% interest in BNR. For further Information please contact: Paul Poli Executive Chairman Frank Sibbel Director Phone Fax reception@matsa.com.au Web Exploration results The information in this report that relates to Exploration results is based on information compiled by David Fielding, who is a Fellow of the Australasian Institute of Mining and Metallurgy. David Fielding is a full time employee of. David Fielding has sufficient experience which is relevant to the style of mineralisation and the type of ore deposit under consideration and the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. David Fielding consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. Page 10