Magnis Resources : NACHU GRAPHITE PROJECT UPDATED MINERAL RESOURCE

a7df7f17-b1d4-4904-ad5c-ecefbc2c52a7.pdf ASX/MEDIA RELEASE

FOR RELEASE

1 February 2016

NACHU GRAPHITE PROJECT UPDATED MINERAL RESOURCE

HIGHLIGHTS

• Nachu Mineral Resource increases by 11.5% to 174 Mt at 5.4% Graphitic Carbon (Cg) at 3% Cg cut-off grade
• 71% or 124 Mt classified as Measured or Indicated Resources
• Nachu Mineral Resource now contains over 9.3 Mt of contained graphite an increase of over 14%
• Updated Mineral Resource included only infill drilling aimed at conversion of existing resource material to Measured category classification
• Bankable Feasibility Study (BFS) on track

Magnis Resources Limited ("Magnis" or the "Company") (ASX:MNS) is pleased to declare an updated Mineral Resource Estimate for Block F and Block FSL of the Nachu Graphite Project in Tanzania. Block F Mineral Resource contains the main orebodies being assessed in the BFS for initial production of the exceptional quality graphite flake that is held within the Nachu project area.

The Mineral Resource Estimate now comprises 174 Million Tonnes (Mt) at an estimated grade of 5.4% Graphitic Carbon (Cg) classified as either Measured, Indicated or Inferred Resources and is reported in accordance with the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code, 2012).

The total tonnes of the Nachu Mineral Resource Estimate have increased by 11.5% from the 156Mt at 5.2% graphitic carbon (Cg) at 3% Cg cut-off grade as announced to the ASX on 26 November 2014.

71% of the tonnes in the Mineral Resource Estimate is classified in the Measured or Indicated resource categories, compared to the 66% as reported previously whilst 36% of the tonnes in the Mineral Resource Estimate is classified as Measured compared to 3% previously, highlighting a significant increase in resource confidence. Contained graphite for the Mineral Resource has increased to 9.3 Mt compared with 8 Mt previously.

CEO Dr Frank Houllis commented: "We are delighted at seeing our resource increase in size and

grade with the infill drilling. Today's upgrade will lead to a longer mine life whilst the deposit remains open in all directions."

"Today's announcement coupled with our recent results for the Nachu Graphite in a lithium-ion battery and our BFS which remains on track for completion this quarter points to an exciting year ahead for Magnis."

Table 1: Nachu Graphite Project Global Mineral Resource Estimate as at January 2016

Deposit	Category	Oxidation	Mt	%Cg
All	Measured	Oxide	1.9	4.9
	Primary	61.6	4.7
	Indicated	Oxide	2.4	6.3
Blocks >3% Cg	Primary	58.6	5.7
	Inferred	Oxide	2.6	5.3
	Primary	47	5.8
Sub Total	All Categories	Oxide	7	5.5
		Primary	167	5.4
All	All Categories	All	174	5.4

Notes: 1. Cut-off of 3% graphitic carbon

2. Rounding may result in differences in total and average grades.

Table 2: Nachu Graphite Project Mineral Resource Estimate by Block

Block			B		D		F		FSL		J
COG	Tonnage	Grade	Tonnage	Grade	Tonnage	Grade	Tonnage	Grade	Tonnage	Grade
%Cg	Mt	%Cg	Mt	%Cg	Mt	%Cg	Mt	%Cg	Mt	%Cg
Measured	Oxide	3.0	1.7	4.9	0.2	5.2
	Primary	3.0	57.8	4.6	3.8	5.6
Indicated	Oxide	3.0	0.2	6.5	1.3	5.4	0.2	5.4	0.7	8.3
	Primary	3.0	6.6	6.3	38	5.1	5.0	5.1	9	8.1
Inferred	Oxide	3.0	0.1	5	0.7	5.9	1.7	5	0.01	3.2	0.04	10.1
	Primary	3.0	0.8	5	19.5	5.9	22.5	5.2	1.0	3.5	3.2	10.2
Sub Total		7.6	6.1	20.2	5.9	123.1	4.9	10.2	5.1	12.9	8.6

Notes: 1. Cut-off of 3% graphitic carbon

2. Rounding may result in differences in total and average grades.

Mineral Resource Estimate

The updated Nachu Graphite Project Mineral Resource Estimate was carried out by independent mining consultancy AMC Consultants Pty Ltd (AMC).

The Mineral Resource Estimate with 63.5 Mt in the Measured and 61 Mt in the Indicated Resource category represents one of the largest Mineral Resources of large flake graphite in the world. In particular, the Block F deposit with 59.5 Mt in the Measured and 39.3 Mt in the Indicated Resource category, complements the recently announced outstanding metallurgical results which demonstrate the superior performance of Nachu graphite concentrate (without any chemical or thermal purification) over synthetic graphite for use in lithium-ion battery anodes.

The Nachu exploration tenement covers an area of approximately 199 km2 in southern Tanzania (Figure 1). The Mineral Resource is split into 5 deposits (Block B, D, F, FSL & J) with mineralisation hosted in graphitic schist within a sequence of meta-sedimentary schists with minor un- mineralised dolomitic marble and gneisses of the greater Mozambique Metamorphic Belt. All deposits have mineralisation at or near surface. Recent structural studies have shown the eastern mineralised limbs of the Block F deposit to be shallower than originally interpreted. The orientation of the Mineral Resource modelling follows the generally shallowly dipping limbs of the open-folds in the deposit. A 3-D view of the modelled Block F deposit is presented in Figure 2 along with a representative cross-section in Figure 3.

The Mineral Resource has been estimated within mineralised envelopes interpreted using

geological data and a nominal 1.8% Cg grade outline. The Ordinary Kriging (OK) estimation method has been used to estimate the Cg grade for each cell within the mineralised envelopes. Dynamic anisotropy has been used for the grade estimation to honour bedding orientation in folded zones. This method is considered appropriate for the relatively consistent nature and grade of mineralisation.

The bulk densities in each area have been assigned the average of density measurements in the oxide or primary zones.

The Mineral Resource classification criteria are based on drill spacing and outcrop, and continuity of geological and mineralisation grade interpretations. The cut-off grade is based on the proximity of mineralisation to surface, the potential mining methods and costs, and assumed processing and recovery values based on updated test work. The Mineral Resource Estimate is classified as a combination of Measured, Indicated and Inferred classifications and has been reported in accordance with the JORC Code, 2012.

Bankable Feasibility Study (BFS)

As previously announced Sedgman have been appointed to lead the BFS which remains on track for release in the current quarter.

Figure 1: Location of the Nachu Graphite Project within Tanzania