Highlights:

Quarterly Activities Report – June 2021

• Diamond drilling program commenced at Santa Teresa Gold Project
• Executed binding HOA to acquire the La Sorpresa III licence to extend the Santa Teresa Gold Project in Baja California, Mexico
• Agreement to acquire a portfolio of copper-rich base and precious metals assets in Australia’s Northern Territory now completed
• Assets include: Oonagalabi Copper-Zinc Project, Paradise Well Copper-Gold Prospect and the Silver Valley Copper-Gold-Silver-Lead Prospect, which combined cover approximately 840 km¹
• Oonagalabi best intersections from historical drilling include 36.6m at 1.0% copper and 1.7% zinc from 1.5m, 5m @ 1.26% copper and 1.22% zinc from 70m, 6m at 0.9% copper from 102m and 14m at 0.7% copper from 148m¹
• Paradise Well rock chip samples returned up to 8.9% copper and 2.2g/t gold, Silver Valley rock chip samples returned 554 g/t silver, 20% lead, 11.9% copper and 2 g/t gold, providing exciting earlier stage exploration potential¹

1 Please see the Company’s ASX announcement of 19 March 2021 for full details.

Post Quarter End:

• Graphite metallurgical test work has now commenced at a specialist facility in Germany to assess amenability to produce battery anode material suitable for use in EVs

Comet Resources Limited (Comet or the Company) (ASX:CRL), is pleased provide the Quarterly Activities Report and Appendix 5B for the quarter ending 30 June 2021 (the Quarter). The Company proactively progressed various exploration programs across its projects and successfully completed the acquisition of a portfolio of copper-gold and base metals assets in Australia’s Northern Territory. Post Quarter end, the Company provided an update regarding the status of ongoing metallurgical test work on graphite from its Springdale Graphite Project located in Western Australia.

Matthew O’Kane, Managing Director of Comet Resources, commented “It’s been another busy quarter for the Company, with drilling works at Santa Teresa, graphite test work ongoing at Springdale and further M&A activities bringing in the new NT assets, and the potential acquisition of a complimentary gold project in Mexico. We will be focussing our efforts for the next quarter on continued drilling in Mexico and the graphite test work in Germany, as well as completion of the due diligence process on La Sorpresa III. We look forward to sharing the results from our exploration and metallurgical test work programs as soon as they are available.”

Work Program and Outlook

Santa Teresa Gold Project

On 9 June 2021, Comet announced commencement of diamond drilling at the Santa Teresa Gold Project (the “ST Project”) in Baja California, Mexico. This drilling program is the first drilling at the ST Project to be undertaken by the Company and the first since the drilling undertaken by Premier Gold Mines in 2008.

The proposed program consists of up to 2,000m of diamond-core drilling using experienced contractors from the neighbouring state of Sonora. Drilling aims to test extensions of known gold mineralisation along strike and at depth, as well as target areas of interest identified from prior drilling results, combined with information gained from a detailed structural mapping completed by consultant geologists Minera Cascabel (see Comet ASX announcement of 3 February 2021). This will be followed by assaying and geological interpretation of the results.

On 11 May 2021, the Company announced that it had executed a binding heads of agreement (HOA) with American International Ventures Inc (AIVN) for the proposed 100% acquisition (Acquisition) of the La Sorpressa III tenement (Tenement). The Tenement lies to the northwest of Comet’s ST Project tenement number 223182.

Placer gold deposits of the El Alamo district were discovered in 1888. High grade ore-shoots were subsequently discovered on the Aurora-Princessa vein within a year. Lode mining continued until 1907, after which leases were worked until 1912 when mining ceased as a result of the Mexican Revolution, not through the lack of economic mineralisation. The reported gold production of the El Alamo district has been estimated between 100,000 to 200,000 ounces of gold. The Aurora and Princessa veins are both located on the La Sorpresa III Tenement and make the addition of this Tenement to the Project very exciting.

The mineralised system of quartz veins upon which Comet’s existing JORC Mineral Resource estimate for the Project is based is interpreted to extend onto the Tenement being acquired, providing a clear opportunity for Resource upside in the future.

Comet has a 90-day exclusivity period under the HOA to conduct due diligence following payment of a non- refundable exclusivity fee of US$25,000. Upon completion of the transaction the La Sorpresa III Tenement will be transferred from AIVN’s Mexican subsidiary into a newly established Mexican Company (NewCo). Due diligence work is ongoing and pending receipt of information from AIVN.

Northern Territory Copper-Gold Projects

On 11 May 2021, Comet announced the finalisation of due diligence and completion of the acquisition of a portfolio of highly prospective copper-gold-zinc-silver-lead assets in the Northern Territory of Australia (“Portfolio”) from Bath Resources Pty Ltd (“Vendor” or “Bath”).

Acquisition Portfolio Overview

The Portfolio of Northern Territory exploration licenses and exploration license applications covers an area of approximately 840km2. Although historical exploration results were indicative of near surface gold and copper mineralisation, very limited modern exploration has occurred. Comet plans to utilise modern exploration techniques to advance the scale of known mineralisation, especially where known geophysical and geochemical anomalies exist that have not been comprehensively drill tested.

Oonagalabi Project

The Oonagalabi Project exploration licence and exploration license application (EL32279 and ELA32664) contains ~1.7km of outcropping copper, zinc and lead mineralisation, hosted in anthophyllite-cordierite and forsterite marble sitting within the Strangways Metamorphic Complex. The mineralised Oonagalabi Formation represents a very similar geological setting as other known copper deposits in the region, including KGL Resources Jervois Copper Project, which is host to a 20.97 million tonne JORC resource at 2.03% copper and 31.9g/t silver, for 426,200 tonnes of contained copper and 21.4 million ounces of silver (see KGL Resources ASX announcement 15 September 2020).

Paradise Well

The Paradise Well Copper-Gold Prospect exploration licence application (ELA32190) sits approximately 10km due south of the Oonagalabi exploration licence and covers an area of ~250km2. Two prospects have been identified on the tenement through historical rock chip sampling programs which returned copper grades of up to 8.88% copper (Manny Prospect) and copper/gold rock chips of 6.24% copper and 2.15g/t gold (New Paradise Well Prospect). Neither prospect has been subject to ground geophysics or drill testing and presents an opportunity for Comet to follow up historical work with a systematic program geophysics to identify drill targets.

Silver Valley:

The Silver Valley Copper-Gold-Silver-Lead exploration licence application (ELA32241) sits approximately 300km north of the Oonagalabi Project exploration licence and sits within the Davenport Province, a folded succession of Paleoproterozoic shallow marine sedimentary rocks and volcanic units. Four outcropping lead / silver bearing quartz veins, which have been worked by historical pits and shafts, are present within the tenement. Key prospects include the Chablo Prospect which is prospective for lead, silver, copper and gold. A sample of 130 rock chip assays collected produced results up to 554 g/t silver, 20% lead, 11.9% copper and 2 g/t gold.

Springdale Graphite Project:

Subsequent to the end of the June quarter, the Company provided an update by way of an ASX release on 19 July 2021 with regard to on ongoing test work on natural flake graphite from its Springdale Graphite Project (Springdale) located in Western Australia.

Both excellent grade and recoveries were achieved on initial tests in Australia, leading to commencement of work to produce the bulk sample for further testing.

Three different processes are to be tested:

• Purification to carbon content above 99.9%, as these carbon levels pave the way for high tech applications like usage in batteries;
• Micronising for products which require well defined small flake graphite particles for their end uses; and

• Spheronisation for usage in lithium-ion-battery anodes for the rapidly expanding market for EVs due to the global drive to de-carbonise the transport network.

These test work streams are designed to confirm the suitability of graphite flake from the high grade zone at Springdale as a precursor material for these high value-added products.

We expect to receive the results from these work streams during Q3 CY2021 and will provide updates as soon as the information is available.

Barraba Copper Project:

During the quarter a geophysics survey was flown at the Barraba Copper Project (“Barraba”). The results of this survey are pending as the provider of the services has encountered issues with processing of the data recorded. The Company has been advised that these issues require significant work to rectify, and data is not yet available for interpretation. We hope to receive this data for interpretation during Q3, 2021.

Further work was also undertaken regarding permitting of drilling activities at Barraba around the Gulf Creek Mine. This is the priority area for commencement of drilling activity at Barraba. The land around the Gulf Creek Mine is covered by a native title claim, and the Company has been working with the claimant’s, the NSW Government and other stakeholders for more than 12 months to reach a resolution. Being unable to do so in a time frame acceptable to the Company we have now entered into a process with the National Native Title Tribunal to bring the matter to a conclusion. Based on legal advice we expect this process to complete in three to six months. Drilling activity at Gulf Creek is contingent upon a successful resolution to this matter.

Corporate Activities:

On 11 May 2021, Comet announced the finalisation of its due diligence and completion of the acquisition of a portfolio of highly prospective copper-gold-zinc-silver-lead assets in the Northern Territory of Australia from Bath Resources Pty Ltd.

Pursuant to Section 6 of the Appendix 5B, the Company paid $98,450 in director fees, superannuation and wages to the board of Comet Resources Limited. Expenditure incurred from operating and investing activities during the Quarter relates to legal and technical due diligence in regard to project acquisitions, exploration costs and for general working capital purposes (the Jun Q Expenditure). A further breakdown is included below.

Jun Q Expenditure Summary

• Metallurgical Test Work programmes
• Geological consultants
• Project management expenses for the Santa Teresa Project in Mexico
• Field expenses and preparation of work programs
• Technical consulting fees
• Tenement access, administration and management
• Corporate and administrative expenses
• Project Acquisition related expenses

This announcement has been authorised by the Board of Comet Resources Limited.

For further information please contact:

MATTHEW O’KANE
Managing Director
(08) 6489 1600
[email protected]

Original Article: https://wcsecure.weblink.com.au/pdf/CRL/02400579.pdf