Castle Minerals : Encouraging Graphite Test Work Results

ASX Announcement

21 September 2021

Encouraging Graphite Test Work Results

• Preliminary test work on near-surface, weathered graphitic schists achieves fine flake graphite concentrate grades of up to 96.4% and recoveries of 88% using a conventional grind and flotation concentration flowsheet.
• Three excavated and composited samples provided for test work graded 12.56%, 16.09% and 17.16% total carbon.
• Drilling program now being designed to delineate full extent of deposit, to identify areas of highest quality graphite and to provide diamond core for test work on fresh, unweathered material.
• Kambale is Ghana's only known graphite deposit and is located 6km west of the Upper West capital, Wa, with reliable grid power, water, good roads and commercial air services available.
• Ghana is an established and safe mining jurisdiction with a highly skilled workforce, a strong mining services sector and excellent infrastructure

Castle Managing Director, Stephen Stone said "We are pleased to have achieved commercially acceptable concentrate grades of up to 96.4% total carbon and good recovery rates of 88% on samples of weathered graphitic schist that graded up to 17.16% total carbon from Castle's Kambale project in the Upper West region of Ghana, West Africa."

"With this encouragement we are now planning diamond core, RC and aircore drilling campaigns to obtain samples of fresh material for more definitive testing, to delineate the full extent of the Kambale deposit and to examine how the graphite quality varies and, in particular, where the highest quality material occurs."

"Nearly all traditional and emerging sectors of the graphite market are experiencing growth and looming supply constraints of the specific concentrate types they require so we are understandably very keen to evaluate Kambale as fast as possible."

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Explorer and project incubator, Castle Minerals Limited (ASX: CDT) ("Castle" or the "Company"), advises that graphite flake characterisation test work on excavated trench samples of weathered graphitic schists at its Kambale graphite project in Ghana's Upper West region achieved commercially acceptable graphite concentrate grades of up to 96.4% total carbon (TC) on a combined final concentrate and TC recoveries of 88% using a conventional grind and concentration-by-flotation process route ("Project")(Photo 1, Figure 1 and Tables 1 and 2)(Appendix 1).

Principal and Registered Office Suite 2 / 11 Ventnor Avenue West Perth, Western Australia 6005 | Postal PO Box 437 West Perth, Western Australia 6872

[e-mail]|www.castleminerals.com| Telephone [phone]

Board Chairman, Michael Atkins | Managing Director, Stephen Stone, | Non-ExecutiveDirector, James Guy, | Company Secretary, Jade Styants

Capital Structure Ordinary Shares: 732.5M | Unlisted Options: 39.5M | ASX Code CDT | ACN 116 095 802

Castle Minerals Limited - Kambale Graphite Project test work results - 21 September 2021

This work was undertaken to provide an early low-cost indication of the Project's ability to produce a commercial grade concentrate and, if so, to justify a drill-out of the deposit to better understand its size, identify any zones of high-quality graphite and to provide a case for a more extensive program of test work using samples of fresh, unweathered graphitic schist.

Fresh material, sourced from deeper within the deposit and at other locations along its extensive strike, may produce better results and possibly improved flake-size distribution.

Kambale is Ghana's only known graphite occurrence of any size and is one of just a few in the central region of West Africa. The reappraisal of the project is consistent with substantially improved market prices for a variety of graphite concentrates and products and generally a very positive supply-demand outlook for the commodity. These are underpinned by its increasing use not only in its more traditional applications but also in the burgeoning manufacture of lithium-ion batteries for use in electric vehicles, consumer electronics and electricity storage applications.

Sampling

Three trenches were excavated at locations selected on the basis of historical drilling that indicated graphitic schist could be easily and cost-effectively accessed. It was recognised from the outset that due to the depth constraints of the excavator this would recover purely weathered graphitic schist material, as opposed to fresh, unweathered material.

Samples from along each trench were composited and placed in three separate drums weighing 30kg each. These were sealed and transported to Ghana's capital, Accra, where a portion of each sample was set aside to remain in Ghana and the balance transported to Perth.

Upon arrival in Perth, all samples were examined and deemed suitable for test work at the Metallurgy Pty Ltd test work laboratory under the supervision of consultants, Independent Metallurgical Operations Pty Ltd ("IMO"), which has considerable experience in graphite metallurgy.

The three composited samples collected and transported from Ghana to Perth assayed 12.56%, 16.09% and 17.16% TC. Loss-on-Ignition values ("LOI") - were 16.83%, 18.22% and 20.41% TC respectively:

Table 1: Excavated composited sample details

	Weight (kg)	Total Carbon	LOI (%)
		(TC%)
Sample 1	10.43	12.56	16.83
Sample 2	11.93	16.09	18.22
Sample 3	11.13	17.16	20.41

These individual sample grades are well above the historically delineated Inferred Mineral Resource estimate of 14.4Mt at 7.2% TC for 1.03Mt contained graphite (JORC 2004)(Refer ASX release 24 July 2012)1.

Test work

Test work comprised drying, initial stage crushing, blending and splitting into representative sub -samples which were then sent for TC analysis and determination of LOI.

1. This information was prepared and first disclosed in 2012 under the JORC Code 2004. It has not been updated since to comply with the JORC Code 2012 on the basis that the information has not materially changed since it was last reported. Substantial work is required in order to bring the resource into compliance with JORC Code 2012. A timeline and budget for this work has not been established. Several factors not limited to geology, metallurgy, environment, heritage, licencing and permitting, commodity price and market conditions will singularly or in combination impact on decisions to undertake and complete this work.

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Castle Minerals Limited - Kambale Graphite Project test work results - 21 September 2021

The samples also underwent optical mineralogy using a Scanning Electron Microscopy via Diamantina Laboratories. This noted the presence of gangue silicate intergrowths (mainly kaolin) within the graphite flakes which were able to be broken down during the beneficiation process (refer below).

The three samples each underwent an initial stage grind followed by a rougher flotation stage and then a series of re-grind and cleaner flotation stages until a "saleable" concentrate target grade of ~94% had been achieved. Reagent consumptions and other performance measurements were also recorded throughout the process. During the initial stage grind, coarse flake was visually observed as shown in Photo 1.

Photo 1: Sample 2 initial stage grind oversize

Two of the three samples were very similar in mineralogy, head grade and flotation characteristics so, to reduce study time and costs, the flotation test on one of the two samples was ceased after the initial rougher flotation stage

The test work was not 'locked-cycle' in that tailings were not recycled from previous flotation stages which, had they been, would have most likely resulted in increased TC recoveries.

Due to the rise in industry exploration activity, test work product assaying times were longer than originally anticipated.

Several stages of grinding and flotation successfully separated the graphite from the other mineral phase(s) and removed the majority of the gangue. This resulted in a predominantly fine size flake graphite concentrate (<-75um) being produced.

This flake - gangue intergrowth mineralogy is not untypical of rocks sourced from a shallow depth where the primary silicates tend to break down. This may not be the case with material sourced from deeper, fresher zones and hence the need to conduct future test work on this material.

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Castle Minerals Limited - Kambale Graphite Project test work results - 21 September 2021

Next steps

Given the success of this phase of test work in producing a 'saleable' concentrate, and in line with IMO's recommendations, Castle is designing an RC and diamond core drilling program to better define the Kambale deposit's limits which geophysics and mapping indicate is likely to be considerably more extensive than presently delineated by drilling.

The drilling will provide important information on the variability of graphite grade and other attributes throughout the deposit and, importantly, provide quality diamond core samples for the IMO recommended test work on fresh unweathered material.

ADDITIONAL INFORMATION

Project background

The Kambale graphite deposit was identified in the 1960s by Russian geologists prospecting for manganese.

The Project is located 6km west of the Upper West region capital of Wa which is 400km north, via good sealed roads, of a major rail head at Kumasi. It is then approximately 240km by rail to the international port of Tema, 30km west of the capital Accra, which provides direct access to global export markets. An alternative international port at Sekondi - Takoradi is located approximately 230km west of Accra.

The Wa region has an excellent infrastructure comprising a commercial airport, reliable grid power, water and many other services.

Ghana is an established and safe mining jurisdiction with a well-trained and very capable minerals industry workforce. Its mining services and supply sector is strong and the national and local infrastructure is generally excellent with grid power, water, sealed roads, transport and commercial air services locally at Wa.

Licencing

The Project is located within a 137km2 prospecting licence (PL10/47) held by Carlie Mining Limited, a wholly owned subsidiary of Castle, registered in Ghana. The Government of Ghana has the right to acquire a 10% free carried interest in all licenses in Ghana and is entitled to a 5% Gross Royalty on production. The Kambale licence is currently progressing through a renewal process.

Geology

The Russians undertook a program of trenching and drilled 25 holes to a maximum depth of 25m. A subsequent report noted "two main zones of graphitic schists averaging around 10% to 15% graphite within which there were higher grade zones and that the graphite is the flakey variety with fine crystals (usually less than 0.25mm)." Report on the Geology and Minerals of the South Western Part of the Wa Field Sheet, Pobedash, I.D. 1991.

The mineralisation consists of north-east trending, sub-parallel zones of meta-sediment hosted graphite, steeply dipping to the north west. Mineralisation is hosted within Lower Proterozoic Birimian (~2.2Ma) meta - sediments within the Wa-Lawra greenstone belt. The metasedimentary rocks, namely phyllites, and quartz - biotite schists generally trend north-easterly and dip between 50o and 75o to the south west.

The genesis of the flake graphite in Kambale is believed to be a result of high-grade metamorphism (amphibolite-granulite facies).

Initial evaluation by Castle

Encouraged by elevated graphite prices in 2012, Castle located several of the Russian prospecting trenches and undertook three consecutive phases of drilling comprising RAB (251 holes, 5,621m), aircore (89 holes, 2,808m) and reverse circulation (3 holes, 303m). Mapping noted occasional outcrops of manganese and graphitic schist as well as graphite in termite mounds.

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Castle Minerals Limited - Kambale Graphite Project test work results - 21 September 2021

Figure 1: Kambale Graphite Project Location

Along with a review of a wide-spaced Geological Survey of Ghana regional electromagnetic survey dataset, Castle outlined a roughly elongate, north-south orientated, ~10km-long region considered prospective for graphitic schist horizons, the host to multiple lenses of graphite mineralisation. The horizons can be up to 50m wide and are weathered (oxidised) to variable depths before they transition into fresh material.

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