Krakatoa Resources : Completion of Maiden Resource Drilling at Tower REE Prospect

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25 July 2022

Completion of Maiden Resource Drilling at Tower

REE Prospect, WA

• A one hundred hole, 3153m resource development and step-out air core (AC) drilling program has now been completed
• This drilling program has been designed to achieve a maiden JORC resource definition and to collect samples for metallurgical testing
• The program focused on infilling and expanding the areas identified as containing extensive laterite regolith within the current Tower REE prospect exploration target
• Thick continuous intervals of pallid saprolitic clays were confirmed between the previous holes at Tower and extending to the south-east, now reporting over a distance >4km
• Step out scout drilling at Tower West shows thickening of saprolitic clays towards the south over a distance of 2.5km tested so far

Krakatoa Resources Limited (ASX: KTA) ("Krakatoa" or the "Company") is pleased to provide shareholders with an update on progress activities at the Tower REE prospects; Mt Clere project located in the northwestern margins of the Yilgarn Craton, Western Australia.

Figure 1 Drilling at the Tower Prospect, Mt Clere

Capital Structure

344,709,917 Fully Paid Shares

21,200,000 Options @ 7.5c exp 29/11/23

5,000,000 Options @15c exp 29/11/23

15,000,000 Performance Rights at 20c, 30c and 40c.

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Krakatoa's CEO, Mark Major commented

"This drilling has been highly successful by extending the zone of the thick saprolitic clays towards the south, in line with the area defined by the exploration target. Our focus is now to deliver a maiden JORC compliant resource as well as gaining further understanding into the amenability of the REE's extraction processes to obtain a high-level understanding of the project's potential."

The work program consisted of drilling 100 air-core (AC) holes over the Tower prospect to assist with future resource estimation work and opportunistic step-out drilling over the Tower west prospect. A total of 3,153 metres were completed. Twelve scout holes were initially drilled at Tower West for 412m. Eighty-eight holes for 2,801m were then drilled at the Tower prospect to infill previous drilling and to extend known mineralisation to the east and south-east (Figure 2).

Figure 2 Map showing the locations of the discovery drill holes (2021) and the recently completed drill holes, all within the area defined within the Exploration Target.

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The Tower drill holes were nominally drilled at a 200-metre spacing, particularly in the area where the 2021 discovery drilling took place. Further south, the hole spacing increased to around a nominal 400 metres. Holes positions were selected based on eases of access, level of vegetation and topographical relief as no drill platforms or access tracks were used.

Extensional drilling to the east encountered greater thicknesses of transported cover and laterite material, whereas drilling to the south-east returned encouraging visual indicators that the REE mineralisation at Tower may be slightly variable in thickness and continues in that direction for a considerable distance of around 4.5 kilometres. Accordingly, we can confirm thick and continuous zones of the REE-hosting clay horizons (Figure 3).

Figure 3 Tower prospect NW-SE cross section showing simplified regolith profile, with drill hole trace and previously reported downhole TREO intervals.

The location of the drill holes in the Tower West scouting program were selected based solely on ease of access from station tracks, topographical relief, and vegetation coverage. Limited holes were drilled in this area to solely test the southern extent of the target area along the station track (Figure 2). The drilled holes encountered a similar pallid saprolitic clay zone. The zones here are not as thick or continuous as at Tower itself but the drilling has also been more widely-spaced and reconnaissance in nature (Figure 4).

Figure 4 Tower West prospect N-S cross section showing simplified regolith profile, with drill hole trace and previously reported downhole TREO intervals.

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Exploration Target

The Exploration target for the Tower prospect has been estimated at 87 to 519 million tonnes grading 580- 1120ppm TREO; using modelling of 39 vertical reconnaissance air core (AC) drill holes assay results from the 2021 drilling (Figure 5). It is projected that the mineralisation continues to extend over adjoining geologically prospective areas that have similar basement geology, regolith development, radiometric and spectral indices. The grade and thickness of the mineralisation in these exploration target areas was determined from the 2021 drilling and regolith mapping.

The current drilling supports the parameters and assumption of the various geological model input criteria. No confirmation to the presence of rare earth elements has been verified in the newly drilled holes. Full details of the exploration target can be seen in ASX announcement 19 May 2022.

The potential quantity and grade of the Exploration Target is conceptual in nature and is therefore an approximation. There has been insufficient exploration to estimate a Mineral Resource and it is uncertain if further exploration will result in the estimation of a Mineral Resource.

Figure 5 Map showing the extent of the potential ionic clay hosted REE Exploration Target over satellite image, partly covered with filtered Sentinel-2 imagery superimposed with radiometric anomalism targeting profile

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Next Steps

The Company is currently planning additional reconnaissance drilling of other highly prospective IAC REE targets when a more portable drill rig becomes available and regulatory permits and access is granted. This program will include drilling the downslope areas of the hard capped breakaways (upper erosional areas) between the Tower and Tower West prospects, where it is believed the mineralisation may extend below these and have less unmineralised cover, as well as around the DEW area in the north east of the Mt Clere project licenses.

The company is still in the process of completing the initial metallurgical leach testwork at ANSTO. We look forward to updating shareholders with a pipeline of news flow as the project develops.

Authorised for release by the Board.

FOR FURTHER INFORMATION:

Colin Locke Executive Chairman [phone] [e-mail]

Competent Person's Statement

The information in this announcement is based on, and fairly represents information compiled by Mark Major, Krakatoa Resources CEO, who is a Member of the Australasian Institute of Mining and Metallurgy and a full-time employee of Krakatoa Resources. Mr Major has sufficient experience relevant to the style of mineralisation and type of deposit under consideration, and to the activity which he has undertaken, to qualify as a Competent Person as defined in the 2012 Edition of the Joint Ore Reserves Committee (JORC) Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Major consents to the inclusion in this announcement of the matters based on this information in the form and context in which it appears.

Disclaimer

The company is not aware of any new information or data that materially affects the information included in the exploration target announcement dated 19 May 2022. Forward-looking statements are statements that are not historical facts. Words such as "expect(s)", "feel(s)", "believe(s)", "will", "may", "anticipate(s)" and similar expressions are intended to identify forward-looking statements. These statements include, but are not limited to statements regarding future production, resources or reserves and exploration results. All of such statements are subject to certain risks and uncertainties, many of which are difficult to predict and generally beyond the control of the Company, that could cause actual results to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements. These risks and uncertainties include, but are not limited to: (i) those relating to the interpretation of drill results, the geology, grade and continuity of mineral deposits and conclusions of economic evaluations, (ii) risks relating to possible variations in reserves, grade, planned mining dilution and ore loss, or recovery rates and changes in project parameters as plans continue to be refined, (iii) the potential for delays in exploration or development activities or the completion of feasibility studies, (iv) risks related to commodity price and foreign exchange rate fluctuations, (v) risks related to failure to obtain adequate financing on a timely basis and on acceptable terms or delays in obtaining governmental approvals or in the completion of development or construction activities, and (vi) other risks and uncertainties related to the Company's prospects, properties and business strategy. Our audience is cautioned not to place undue reliance on these forward-looking statements that speak only as of the date hereof, and we do not undertake any obligation to revise and disseminate forward-looking statements to reflect events or circumstances after the date hereof, or to reflect the occurrence of or non-occurrence of any events.

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