PNX Metals : Annual Report 30 June 2019

PNX METALS LIMITED ABN 67 127 446 271

ANNUAL REPORT2019

CORPORATE DIRECTORY

Australian Business Number

67 127 446 271

Country of Incorporation

Australia

Board of Directors

Graham Ascough	Non-executive Chairman
Paul Dowd	Non-executive Director
Peter Watson	Non-executive Director
David Hillier	Non-executive Director
James Fox	Managing Director & CEO

Company Secretary

Angelo Gaudio

Principal Administrative Office

Level 1, 135 Fullarton Rd

Rose Park SA 5067

Telephone: [phone]

Facsimile: [phone]

Registered Office

Level 1, 135 Fullarton Rd

Rose Park SA 5067

Telephone: [phone]

Facsimile: [phone]

Contact: [e-mail]

Website: www.pnxmetals.com.au

Cover photo: Fountain

Head and Tally Ho pit.

Share Registry

Computershare

Level 5, 115 Grenfell Street

Adelaide SA 5000

Telephone (within Australia): 1300 305 232

Telephone (outside Australia): [phone]

Auditors

Grant Thornton

Level 3, 170 Frome St

Adelaide SA 5000

Lawyers

Piper Alderman

Level 16, 70 Franklin Street

Adelaide SA 5000

ASX

The Company's fully paid ordinary shares are quoted on the ASX under the code PNX.

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CONTENTS

	CHAIRMAN'S LETTER	4
	OVERVIEW	6
	EXPLORATION REPORT	11
	TENEMENTS	23
	MINERAL RESOURCES AND ORE RESERVES	27
	DIRECTORS' REPORT	30
	REMUNERATION REPORT	34
	AUDITOR'S INDEPENDENCE DECLARATION	39
	CORPORATE GOVERNANCE STATEMENT	40
	FINANCIAL STATEMENTS	44
	NOTES TO THE FINANCIAL STATEMENTS	48
	DIRECTORS' DECLARATION	66
	INDEPENDENT AUDITOR'S REPORT TO MEMBERS	67
	ADDITIONAL SHAREHOLDER INFORMATION	70

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CHAIRMAN'S LETTER

Dear Fellow Shareholders,

On behalf of the Board of Directors, it is my pleasure to present the 2019 Annual Report for PNX Metals Limited (PNX or Company).

During the year, the Company focused on advancing the Hayes Creek Project in the Northern Territory towards a development decision.

A Detailed Feasibility Study (DFS) is currently underway on Hayes Creek and this follows the successful completion of a Pre-Feasibility Study (PFS) in July 2017 which confirmed that the project is a promising, high value, relatively low risk and technically strong development opportunity. The DFS is expected to provide increased confidence in all aspects of the project and will also investigate opportunities to improve overall project economics and meet the Company's objective to be a successful explorer and a sustainable and profitable gold and base metals producer.

The finalisation of the DFS is expected to take until at least the end of the first quarter of 2020, subject to any unplanned delays. A significant amount of technical work is also underway that will be used to prepare the Project's Environmental Impact Statement (EIS) for submission by mid-2020.

Located less than 15km from the Hayes Creek deposits, the Fountain Head site is an integral part of the Hayes Creek Project as it is the preferred location for the processing plant and tailings facility. Fountain Head is also host to a number of high-grade gold prospects and drilling during the year identified new gold mineralisation that lead to development of a new geological model for the area. As a result, the Company completed its first JORC compliant mineral resource estimate for Fountain Head containing 138Koz

of gold (see ASX announcement dated 11 July 2019). The relative values of PNX mining some or all of these mineral resources versus utilising the historic open pits for tailings disposal from the Hayes Creek project is being assessed, including how the two strategies might be combined.

The new gold mineral resource at Fountain Head provides confidence that a significant gold system may be emerging, and drilling success during the year, including at Cookies Corner, highlights the potential of the Company's large NT exploration tenure. Regionally, our tenement interests cover in excess of 1,500 km2 and host numerous base metal and gold prospects. The exploration strategy for this large area is to identify significant additional mineralisation with the potential to complement and enhance the Hayes Creek Project as well as to identify new, potentially stand-alone resources.

The Company continues to receive strong support from its shareholders demonstrated through successful fund raisings completed during the year. In May 2019 the Company completed a three (3) for five (5) underwritten non-renounceablepro-rata rights issue raising $5.48 million (before costs and expenses). The proceeds are being used to fund the significant level of activity at Hayes Creek, including the completion of the DFS, and ongoing assessment of the Fountain Head gold project.

The Board and management are confident that continued exploration work will be successful in growing the resource base and that the completion of the DFS at the Hayes Creek project during 2020 will provide confidence in this development opportunity, with the potential to deliver strong returns for PNX shareholders.

In closing, I would like to take this opportunity to express my thanks to my fellow directors, management and staff for their dedication and work during the past 12 months. We are committed to progressing the Company and growing our flagship Hayes Creek project towards development for the benefit of all stakeholders.

I also take this opportunity to thank all shareholders for your continued support of PNX and I look forward to providing further updates as our activities move forward in 2020.

Yours sincerely,

Graham Ascough

Chairman

17 September 2019

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