Krakatoa Resources : Major Clay Hosted Ionic Rare Earth Discovery at Mt Clere

12 April 2022

Major Clay Hosted Ionic Rare Earth Discovery at

Mt Clere, WA

• • Significant and widespread clay hosted ionic Rare Earth Element (REE) mineralisation confirmed at the 100% owned Mt Clere Project

• • First batch of assay results from the Tower Prospects have reported thick intersections of clay hosted REE mineralisation, including:

  • o 15m @ 1,395ppm TREO from 16m (21MAC026)

  • o 12m @ 1,130ppm TREO from surface (21MAC020)

  • o 10m @ 1,251ppm TREO from 32m, within 14m @ 979ppm TREO from 28m (21MAC004)

  • o 8m @ 1,264ppm TREO from 16m; within 13m @ 952ppm TREO from 16m (21MAC016)

  • o 21m @ 1,005ppm TREO from 20m; within 33m @ 765ppm TREO from 8m (21MAC021)

  • o 12m @ 1,012ppm TREO from 8m; within 22m @ 689ppm TREO from surface (21MAC009)

  • o 8m @ 941ppm TREO from 20m; within 32m @ 643ppm TREO from 12m (21MAC038)

  • o 28m @ 841ppm TREO from 8m (21MAC025)

• • Enriched in high value magnetic and critical rare earth elements

• • Mineralisation occurs from surface and is open

• • Results pending for a further 18 holes at the Tower Prospects

• • Weak acid solution (WAR) analysis displays weakly bound, highly soluble REEs, characteristic of ionic adsorption and colloidal clay REE mineralisation

• • Comprehensive infill and extensional drill program at Tower Prospect and reconnaissance drilling of other highly prospective areas to be fast tracked

Capital Structure

294,709,917 Fully Paid Shares

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

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

Krakatoa Resources Limited (ASX: KTA) ("Krakatoa" or the "Company") is pleased to announce the discovery of widespread clay hosted ionic type REE in the regolith. The discovery was made at the highly prospective Mt Clere project, located in the north-western margins of the Yilgarn Craton, Gascoyne Region of Western Australia.

The Company has received the first batch of results from the reconnaissance drilling geochemical analysis taken at the Tower prospect. The results are showing high levels of regolith hosted REE's, including significant enrichment in the magnetic elements, concentrated in the clay saprolite profiles.

Krakatoa's CEO Mark Major commented:

"These results have now confirmed that widespread clay hosted, ready soluble REE's exist at significant concentrations within the thick saprolite regolith of the Mt Clere project.

This discovery has come at a great time for the Company and our shareholders. Demand for these magnetic and critical REEs are expected to increase over the next ten years, as the world embarks on the electric revolution.

We are now in a strong position to capitalise on this potential as we have only covered a six square kilometre area, mineralisation is open, thick and close to surface. Significantly, we have multiple other high priority targets within the extensive 2,300km2 property."

Figure 1 Map showing AC collars over satellite image, showing status of assays

2|Page

Hole	From (m)	To (m)	Width (m)	TREO (ppm)	TREO-Ce (ppm)	LREO (ppm)	HREO (ppm)	CREO (%)	MREO (%)
21MAC004	28	42	14	979	642	793	186	30%	28%
incl.	32	42	10	1251	834	999	252	33%	29%
21MAC009	0	22	22	689	389	609	80	27%	27%
incl.	8	20	12	1012	562	921	91	23%	27%
21MAC014	12	26	14	587	308	488	98	26%	25%
21MAC015	20	40	20	536	333	421	115	28%	25%
21MAC016	16	29	13	952	418	766	186	27%	21%
incl.	16	24	8	1264	486	1041	223	22%	18%
21MAC017	4	16	12	833	587	677	156	34%	32%
21MAC020	0	12	12	1130	618	1055	75	20%	23%
21MAC021	8	41	33	765	534	490	263	37%	25%
incl.	20	41	21	1005	719	638	367	40%	26%
21MAC023	20	36	16	720	369	645	75	21%	24%
21MAC024	12	25	13	653	369	551	102	26%	24%
21MAC025	8	36	28	841	255	444	36	20%	23%
21MAC026	16	31	15	1395	777	1243	152	23%	25%
21MAC027	12	31	19	521	282	449	72	24%	23%
21MAC028	12	22	10	541	295	492	49	23%	26%
21MAC029	20	43	23	555	355	436	120	31%	28%
incl.	28	32	4	1363	890	1084	278	31%	29%
21MAC035	12	25	13	502	327	387	138	38%	34%
21MAC036	12	31	19	645	436	467	178	37%	29%
21MAC037	12	36	24	692	406	568	124	28%	26%
21MAC038	12	44	32	643	417	496	147	33%	28%
incl.	20	28	8	941	578	767	174	28%	25%
21MAC039	16	37	21	520	290	396	113	32%	26%

Rare Earth Element Discovery Program

Krakatoa completed 39 vertical reconnaissance air core (AC) drill holes (1,047 meters) around the Tower prospect in December 2021 (Figure 1). The aim of the Tower prospect reconnaissance drilling was to investigate and test for well-developed clay-rich regolith profiles that could be prospective for ion adsorption REE mineralisation. The area tested was around 6km2.

The majority of holes intersected the expected bedrock of alkaline granitic and gneissic basement rocks with the pallid clay zones being well developed and having thickness from 10 to 30 plus metres.

The Company has received the initial batch of assay results for 21 of the 39 drill holes drilled at Tower (Figure 1). The remaining assays are still outstanding and will be reported when they come to hand. Samples were collected each metre and combined into 4 metre composite samples (from surface) for laboratory analysis. End of hole samples composites varied from 1 to 4 metres, dependent on the depth encountered.

Samples were assayed using two methods of sample digestion; a near complete digestion (Lithium Borate Fusion method) and a second representing only the leachable portion of the sample (weak aqua regia (WAR) method).

Results

The analytical results revealed significant levels of widespread REEs, with abundant quantities of magnetic and critical rare earth elements. Details of drill intersections having significant clay REE mineralised intersection over 500ppm TREO are reported in Table 1. All drill hole assay data is shown in Table 2.

Table 1: Summary Table of significant intersection >500ppm TREO

The clay intersection of over 500ppm TREO range in thickness from 10m to 33m within the current area of drilling. Only one hole, 21MCAC011 located on the edge of Tower west zone returned grades lower than 500ppm TREO. Zirconium was also elevated within several zones of the regolith, with several assays higher than 1000ppm returned (see Table 2) from some intervals.

The main mineralisation envelopes are interpretated to lie within the large horizontal clay saprolite layer, which is and are open to the north, east and west. Additional areas within the laterite caprock and within the highly weathered saprock have also shown significant REE mineralisation. Figure 2 and 3 show cross sections of the simplified regolith profile with mineralised zones of >500ppm and >200ppm TREO, and drill holes with annotated intersections.

Figure 2 Cross section 7172740N showing simplified regolith profile and TREO zones of 500 and 200ppm

Figure 3 Cross section 7171500N showing simplified regolith profile and TREO zones of 500 and 200ppm

The regolith tends to be dominated by light rare earth oxides (LREO) with up to 40% of the TREO being critical rare earth oxide (CREO) and 34% as magnetic rare earth oxide (MREO). The presence of high value Neodymium (Nd), Praseodymium (Pr), Dysprosium (Dy), Terbium (Tb) and Holmium (Ho) is encouraging.

Geochemistry and Mineralogy

Clay hosted REE deposits tend to be a mixture of multiple mineralization styles including the currently targeted ionic adsorption clay and colloidal clay fractions, as well as the refractory primary minerals.

The ionic and colloidal bonded mineralisation fractions are weakly bound to the clay matrix. These systems are developed from the weathering and dissolution of the primary mineral. Both the ionic and colloidally bonded fractions are the target focus of other clay hosted REE companies like Ionic Rare Earth Limited (ASX:IXR), Aclara Resources Inc (TSX.ARA), and Mount Ridley Mines (ASX:MRD) amount others.

The WAR digestion method is used to test for weakly bound - highly soluble REEs, a recognised characteristic of ionic absorption and colloidal bonding within the clay hosted fractions of REE deposits.

The average recovery by WAR for each CREO and MREO ranges from 65-85%. Some REO had 100% recovery with WAR. Comparison of the full digestion assay results and the weak acid assay results for all intersection >500ppm TREO are shown in Table 3.

Next Steps

The Company is awaiting analysis of results for the remaining Tower drill holes. Once received the Company will undertake a full review of the regolith geochemistry and undertake phase 1 metallurgical test work, to assist with understanding the metallurgical recoveries across the various mineralised zones identified within the drill program.

A fast tracked drill program is now being planned to infill and extend the drilling traverses within the Tower prospect as well as reconnaissance drilling of other highly prospective areas.

Authorised for release by the Board.

FOR FURTHER INFORMATION:

Colin Locke

Executive Chairman [phone]