September 2017 Quarterly Operations Report -...

ASX Announcement 30 October 2017

BERMUDA TRINITY HALL 43 CEDAR AVENUE HAMILTON HM12

AUSTRALIA SUITE 5, 56 KINGS PARK ROAD

WEST PERTH, WA AUSTRALIA 6005

TEL: +61 8 6555 1879

TREK METALS LIMITED ARBN: 124 462 826

MAIL: PO Box 1796, West Perth WA 6872 Australia

EMAIL: [email protected] www.trekmetals.com.au

September 2017 Quarterly Operations Report

1. Key Points

Kroussou Project

TKM exercises its option to earn‐in to the Kroussou Project in Joint Venture with Battery

Minerals Limited (ASX: BAT).

Soil sampling at Kroussou has highlighted several high priority target areas and also

strengthened the potential at the Dikaki Prospect with high order soil anomalies greater

than 1.5km long presenting new drilling opportunities.

Ongoing review of historical drilling results highlights the open‐pit potential of both the

Niambokamba and Dikaki Prospects.

Historical Intersections from Niambokamba include (full details appear in ASX

Announcement dated 14 September 2017):

o 5.0m @ 6.3% Zn eq from 2.1m (NK82)

o 6.8m @ 4.5% Zn eq from 9.9m (NK63)

o 5.6m @ 4.0% Zn eq from 5.4m (NK74)

Recently completed drilling at Dikaki confirmed its potential as an open‐pit target (full

details appear in ASX Announcement dated 11 May 2017):

o 24.7m @ 2.9% Zn eq from 2.0m (DKDD003)

Incl. 2.8m @ 20.1% Zn eq from 7.7m

o 37.1m @ 2.0% Zn eq from 2.3m (DKDD001)

Incl. 1.3m @ 8.6% Zn eq from 11m

and 12.5m @ 4.0% Zn eq from 14.5m

Programme of ground based geophysics, including IP and NSAMT (Induced Polarisation

and Natural Source Audio Magneto Tellurics) to target near surface open‐pit orebodies

underway.




TEL: +61 8 6555 1879

Lawn Hill Project

Widespread Copper, Cobalt, Zinc and Lead anomalism has been indicated following

compilation of historic stream sediment data.

Anomalies directly along strike, in the same structural corridor that hosts the Walford

Creek Copper‐Cobalt‐Zinc‐Lead Project (Aeon Metals Limited, ASX: AML).

Copper‐Cobalt, Zinc and Lead occurrences “stop” at the NT/Qld border as a result of the

lack of exploration on the NT side.




TEL: +61 8 6555 1879

2. Kroussou Project

2.1 Soil Sampling During the quarter (with some results received subsequent to quarter end), the company announced the results from the first pass surface geochemistry programme (refer to ASX announcements dated 28 August 2017 and 19 October 2017).

The results from the survey continue to highlight the potential of this Project (Figure 1) to deliver up highly significant, near surface, high‐grade zinc/lead orebodies at the Dikaki, Niambokamba and Bouambo South prospects (Figures 2 and 3).

A total of 7,177 samples were collected during the two programmes with the infill completed at 50m x 50m spacing.

Several, highly significant, high‐order and large‐scale anomalies across the three priority prospect areas have been defined with coherent zinc and lead anomalies peaking at 3,156ppm* and 2,410ppm* respectively, forming the basis upon which the ongoing surface geophysical programme is being undertaken.

An aggregate total of approximately 20 strike‐kilometres of soil anomalies at >500ppm zinc plus lead have been defined presenting numerous discovery opportunities.

2.2 Surface Geophysics Subsequent to quarter end, the Company announced that it has commenced a ground geophysical programme at its Kroussou Zn‐Pb Project JV (refer to ASX announcement – 16 October 2017).

This programme, consisting of both IP and NSAMT methods (Induced Polarisation and Natural Source Audio Magneto Tellurics), aims to assist drill targeting in combination with the recently identified soil anomalies within the Project area.

Approximately 200 line‐km will be surveyed across the three highest priority prospect areas of Dikaki, Niambokamba and Bouambo South. The programme is anticipated to take approximately 8 weeks to complete and will lead to the definition of near‐surface drill targets. Drilling is expected to commence soon after.

2.3 Continuing Exploration Trek has quickly moved the Kroussou Project from a series of historical occurrences in a forgotten corner of West Africa to a point where the potential for the discovery of a highly significant zinc/lead orebody is high. All the ingredients for success are present at Kroussou and the Company has systematically progressed its exploration, de‐risking the Project at every step and continues to deliver positive results. Table 1, below, outlines the work completed to date, all during 2017, and the next steps for the Project.

The Company remains on track to begin drilling later in 2017 and continuing early in 2018.




TEL: +61 8 6555 1879

Exploration Step Exploration Activity Completion

Step 1 Review Historic Data Always Ongoing

Step 2 Confirm Historic Surface Observations Completed1

Step 3 Confirm Historic Drilling Results (Phase 1 DD Programme) Completed2

Step 4 Complete First Pass Surface Geochemistry Completed3

Step 5 Complete Infill Surface Geochemistry Completed

Step 6 Complete Surface Geophysical Programme (IP and NSAMT) Underway4 (Q4 Completion)

Step 7 Drill Test Priority 1 Targets (Phase 2 DD Programme) Q4 2017‐ Q1 2018Table 1: Kroussou Project Exploration Process

Notes:

1 Refer ASX Announcement 14 February 2017 2 Refer ASX Announcement 28 February 2017, 12 April 2017, 11 May 2017 3 Refer ASX Announcement 28 August 2017 4 Refer ASX Announcement 16 October 2017

* ‐ pXRF value from a Niton XL3t GOLDD+ analyser

3. Lawn Hill Project

3.1 Historic Exploration Trek is continuing to evaluate the historic data available for the Lawn Hill Project (Figure 4). The geology

across much of the Project area is very similar to that which hosts the Walford Creek Project (see Aeon

Minerals ASX: AML), across the border in Queensland approximately 30km to the east.

A compilation of available historic stream sediment data, collected in the 1980’s across the Lawn Hill

Project area, indicates the potential for copper, cobalt, zinc and lead mineralisation across the tenement

application areas (refer to ASX announcement – 21 August 2017).

The Lawn Hill Project is located immediately across the border (approx. 35km west and directly along

strike) on the Northern Territory side, from the emerging Walford Creek Copper‐Cobalt‐Zinc‐Lead Project

owned by Aeon Metals Limited. Aeon Metals suggests that the Walford Creek Project contains Australia’s

largest and most advanced sulphide cobalt resource.

The rocks hosting the Walford Creek Project, the Lawn Hill Platform, extend across the border from

Queensland into the Northern Territory. An obvious and abrupt absence of copper‐cobalt, zinc and lead

occurrences within the Lawn Hill Platform rocks on the Northern Territory side of the border is not

necessarily due to an absence of mineralisation but rather a lack of exploration.

ESSO conducted limited surface exploration between 1979 ‐ 1981 which included:

• stream sediment sampling

• rock chip sampling

• gravity survey

• drilling of two stratigraphic diamond drillholes




TEL: +61 8 6555 1879

3.2 Historical Stream Sediment Results A compilation of the stream sediment sampling results is provided in figures 4‐7 below. Elemental

concentrations have been levelled to geology and concentrations represented as percentile groups to

indicate anomalism. Values at the 98th percentile could be considered as highly anomalous.

The two drillholes, ND‐1 and ND‐2 (see figure 5), were drilled vertically to a depth of 101.0m and 143.5m

respectively. The sequence hosting the Walford Creek Deposit was encountered in both drillholes along

with weakly anomalous base metal mineralisation.

Further compilation of this historic data is ongoing.

3.3 Tenement Applications The process of negotiating access arrangements to allow for the grant of the Lawn Hill Project tenure is

ongoing. A meeting with Traditional Owners is now due to be held in Q1 2018.

4. Kangaluwi Copper Project

4.1 Court Case The Company is awaiting written judgement by the Judge of the Lusaka High Court on the appeal lodged

by organisations associated with the conservation movement in Zambia on 17 January 2014 against the

decision of the Minister of Lands, Natural Resources and Environment Protection to approve the

Company's 100% owned Kangaluwi Copper Project. The stay of execution remains in place pending the

outcome of the appeal against the Minister’s decision.

TKM is currently evaluating its options with respect to the divestment of this Project.

5. Corporate

5.1 Fund Raising & Annual General Meeting The Company received shareholder approval for the issue of up to 80 million new fully paid ordinary shares at an issue price of 2.5 cents per share at the AGM on 7 August 2017. The Company announced on 20 July 2017 and 8 August 2017 that it had received commitments from new and existing sophisticated and professional investors to raise $1.9 million through the issue of 76 million shares. The remaining 4 million shares were issued on 24 October 2017, bringing the total raised to $2 million (before costs, facilitated by Longreach Capital). In a strong signal of support, Trek’s major shareholder IMC Group participated in the placement and retained an approximate 39% interest in the Company.

Funds raised were used for the Kroussou Project exercise option payment to Battery Minerals Limited (ASX:BAT) of US$240,000 and will be further utilised for working capital and as follows:

• Advancement of exploration activities at Kroussou Project, including:

o surface and geophysical sampling;

o access clearing and drill site preparation; and

o first pass drilling of new targets.

• Aboriginal heritage negotiations for the Lawnhill Project

• Evaluation of new project opportunities




TEL: +61 8 6555 1879

6. Tenements

Tenement Holder Last Qtr Interest Current Qtr Interest

G4‐569

(Gabon)

Select Explorations Gabon

SA (Wholly owned

subsidiary of Battery

Minerals Limited)

0%

(Option agreement

to enter into JV to

earn up to 70%)

0%

G4‐588 Select Explorations Gabon

SA (Wholly owned

subsidiary of Battery

Minerals Limited)

0%

(Option agreement

to enter into JV to

earn up to 70%)

0%

EL31260 (appl.)

(Northern Territory)

TM Resources

(100% owned subsidiary)

100% 100%

EL31261 (appl.)

(Northern Territory)

TM Resources


100% 100%

15547‐HQ‐LML

(Zambia)

Mwembeshi Resources


100% 100%

13170‐HQ‐LPL

(Zambia)

Cheowa Resources

(Incorporated JV‐ 51%

Glencore 49% TKM)

49% 49%

13171‐HQ‐LPL

(Zambia)

Cheowa Resources


Glencore 49% TKM)

49% 49%

8573‐HQ‐LPL

(Zambia)

Cheowa Resources


Glencore 49% TKM)

49% 49%

COMPETENT PERSONS STATEMENT

The information in this report that relates to exploration results is based on information compiled by Mr

Bradley Drabsch, Member of the Australian Institute of Geoscientists (“AIG”) and Managing Director of

Trek Metals Limited. Mr Drabsch has sufficient experience which is relevant to the style of mineralisation

and type of deposit under consideration and to the activity that is being undertaken to qualify as a

competent person as defined in the JORC Code 2012. Mr Drabsch consents to the inclusion in the report of

the matters based on the information in the form and context in which it appears.

Figure 1: Kroussou Project Location Plan

Figure 2: Soil anomalies within the Dikaki Prospect

Figure 3: Soil anomalies within the Dikaki Prospect

Figure 4: Lawn Hill Project Location Plan

Figure 5: Historic Stream Sediment Geochemistry ‐ Cobalt

ND‐1 and ND‐2

Figure 6: Historic Stream Sediment Geochemistry ‐ Zinc

Figure 7: Historic Stream Sediment Geochemistry ‐ Copper




TEL: +61 8 6555 1879

Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report

+ See chapter 19 for defined terms. 01/09/2016 Appendix 5B Page 1

Rule 5.5

Appendix 5B

Mining exploration entity and oil and gas exploration entity quarterly report

Name of entity

TREK METALS LIMITED

ARBN Quarter ended (“current quarter”)

124 462 826 30 SEPTEMBER 2017

Consolidated statement of cash flows*

* Trek Metals Limited has changed its presentation currency to USD.

Current quarter $US’000

Year to date

(6 months) $US’000

1. Cash flows from operating activities

1.1 Receipts from customers

1.2 Payments for

(304) (462) (a) exploration & evaluation

(b) development ‐ ‐

(c) production ‐ ‐

(d) staff costs (53) (109)

(e) administration and corporate costs (83) (132)

1.3 Dividends received (see note 3) ‐ ‐

1.4 Interest received 2 2

1.5 Interest and other costs of finance paid ‐ ‐

1.6 Income taxes paid ‐ ‐

1.7 Research and development refunds ‐ ‐

1.8 Other (Refund of unclaimed GST 2015/2016)

122 122

1.9 Net cash from / (used in) operating activities (316) (579)

2. Cash flows from investing activities

‐ ‐

2.1 Payments to acquire:

(a) property, plant and equipment

(b) tenements (see item 10) ‐ ‐


+ See chapter 19 for defined terms. Appendix 5B Page 2 01/09/2016




Year to date


(c) investments (240) (240)

(d) other non‐current assets ‐ ‐

2.2 Proceeds from the disposal of:

‐ ‐ (a) property, plant and equipment

(b) tenements (see item 10) ‐ ‐

(c) investments ‐ ‐

(d) other non‐current assets ‐ ‐

2.3 Cash flows from loans to other entities ‐ ‐

2.4 Dividends received (see note 3) ‐ ‐

2.5 Other (provide details if material) ‐ ‐

2.6 Net cash from / (used in) investing activities (240) (240)

3. Cash flows from financing activities

1,512 1,5123.1 Proceeds from issues of shares

3.2 Proceeds from issue of convertible notes

3.3 Proceeds from exercise of share options

3.4 Transaction costs related to issues of shares, convertible notes or options (99) (111)

3.5 Proceeds from borrowings

3.6 Repayment of borrowings

3.7 Transaction costs related to loans and borrowings

3.8 Dividends paid

3.9 Other (provide details if material)

3.10 Net cash from / (used in) financing activities (1,413) (1,401)






Year to date


4. Net increase / (decrease) in cash and cash equivalents for the period

4.1 Cash and cash equivalents at beginning of period 170 438

4.2 Net cash from / (used in) operating activities (item 1.9 above) (316) (579)

4.3 Net cash from / (used in) investing activities (item 2.6 above) (240) (240)

4.4 Net cash from / (used in) financing activities (item 3.10 above) 1,413 1,401

4.5 Effect of movement in exchange rates on cash held (13) (6)

4.6 Cash and cash equivalents at end of period 1,014 1,014

5. Reconciliation of cash and cash equivalents at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts


Previous quarter $US’000

5.1 Bank balances 998 155

5.2 Call deposits 16 15

5.3 Bank overdrafts ‐ ‐

5.4 Other (provide details) ‐ ‐

5.5 Cash and cash equivalents at end of quarter (should equal item 4.6 above) 1,014 170



6. Payments to directors of the entity and their associates Current quarter $US'000

6.1 Aggregate amount of payments to these parties included in item 1.2 38

6.2 Aggregate amount of cash flow from loans to these parties included in item 2.3 ‐

6.3 Include below any explanation necessary to understand the transactions included in items 6.1 and 6.2

Payment of Director fees

7. Payments to related entities of the entity and their associates

Current quarter $US'000

7.1 Aggregate amount of payments to these parties included in item 1.2 38

7.2 Aggregate amount of cash flow from loans to these parties included in item 2.3 ‐

7.3 Include below any explanation necessary to understand the transactions included in items 7.1 and 7.2

Payment of Director fees

8. Financing facilities available Add notes as necessary for an understanding of the position

Total facility amount at quarter end

$US’000

Amount drawn at quarter end $US’000

8.1 Loan facilities

8.2 Credit standby arrangements

8.3 Other (please specify)

8.4 Include below a description of each facility above, including the lender, interest rate and whether it is secured or unsecured. If any additional facilities have been entered into or are proposed to be entered into after quarter end, include details of those facilities as well.



9. Estimated cash outflows for next quarter $US’000

9.1 Exploration and evaluation 364

9.2 Development ‐

9.3 Production ‐

9.4 Staff costs 48

9.5 Administration and corporate costs 67

9.6 Other (provide details if material)

‐ capital raising costs ‐

9.7 Total estimated cash outflows 479

10. Changes in tenements (items 2.1(b) and 2.2(b) above)

Tenement reference and location

Nature of interest Interest at beginning of quarter

Interest at end of quarter

10.1 Interests in mining tenements and petroleum tenements lapsed, relinquished or reduced

10.2 Interests in mining tenements and petroleum tenements acquired or increased

Compliance statement

1 This statement has been prepared in accordance with accounting standards and policies which comply with Listing Rule 19.11A.

2 This statement gives a true and fair view of the matters disclosed.

Sign here: ............................................................ Date: 30 October 2017 Company Secretary

Print name: Nerida Schmidt



Notes

1. The quarterly report provides a basis for informing the market how the entity’s activities have been financed for the past quarter and the effect on its cash position. An entity that wishes to disclose additional information is encouraged to do so, in a note or notes included in or attached to this report.

2. If this quarterly report has been prepared in accordance with Australian Accounting Standards, the definitions in, and provisions of, AASB 6: Exploration for and Evaluation of Mineral Resources and AASB 107: Statement of Cash Flows apply to this report. If this quarterly report has been prepared in accordance with other accounting standards agreed by ASX pursuant to Listing Rule 19.11A, the corresponding equivalent standards apply to this report.

3. Dividends received may be classified either as cash flows from operating activities or cash flows from investing activities, depending on the accounting policy of the entity.

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