Cauldron Energy : CXU to Target Extensions to Historic Bonanza Gold Grades

For personal use only

ASX Announcement

23 December 2021

Cauldron Targets Depth Extensions To Historic

Bonanza Gold Grades, Responsible for

Blackwood's 1800s' Gold Rush

Photo sourced from N.J. Caire, 1877, courtesy of ExAct Geoscience Mineralisation

Report (CXU, 2020)

Highlights

• Cauldron uncovers additional historical reports of a population explosion alongside mined shallow bonanza grades.
• Unlike Bendigo and Ballarat with similar depth potential, Blackwood's mineralisation potential was never followed up at depth.
• Historical review highlights multiple unexplored areas down-dip of exceptional gold grades in the Western Reefs.
• Strong structural complexities produced mineralisation reportedly up to 9 metres in width and grades of up to 920 g/t Au (from Mine Reports at the Sultan Mine).
• Historic mining reported to have stopped at approx. 230m (Sultan) and 134m (Mounters), leaving potential for large undiscovered gold resources at depth.
• New, high-quality targets can be accessed from within the northern Tyrconnel Adit drive, thus enabling low-impact drilling activities.

Cauldron Energy Limited (Cauldron or the Company) (ASX: CXU) is pleased to further update its shareholders regarding the progression of desktop work undertaken on its highly prospective Blackwood Goldfield Joint Venture Project (CXU: 51%, "the Project" or "Blackwood") (Figure 1).

ABN

22 102 912 783

Address

Unit 47, Level 1

1008 Wellington Street

WEST PERTH WA 6005

PO BOX 1024

West Leederville WA 6007

ASX Code

CXU

Securities on Issue

491,293,630 shares

6,833,395 Options (exercise price: $0.03; expiry 31 Dec 2021)

16,666,666 Options (exercise price: $0.03; expiry 31 Mar 2022)

10,000,0000 Unlisted Options (exercise: $0.03; expiry 16-Sep-22)

6,000,0000 Unlisted Options (exercise: $0.05; expiry 16-Sep-23)

61,001,898 Options (exercise price: $0.05; expiry 30 Nov 2023)

9,000,000 Performance Rights (expiring 10 August 2025)

Board of Directors

Simon Youds

Executive Chairman

Jess Oram

Non-executive Director

Qiu Derong

Non-executive Director

Judy Li

Non-executive Director

Chenchong Zhou

Non-executive Director

Michael Fry

Company Secretary

WWW.CAULDRONENERGY.COM.AU

For personal use only

Cauldron's experienced exploration team first initialised the historical review in 2019 upon completion of the Heads of Agreement and subsequent Due Diligence process1 for the Project. By the end of the third quarter 2020, the Company had established a systems-style exploration model, a series of working 3D geological models and several new exploration target areas, identified both at surface2 and down-plunge of the known, mined, reefs3. For ease of reference, Blackwood was compartmentalised into the Eastern Reef (Annie Laurie / Grace Egerton) and Western Reef (Sultan / Pioneer) systems (Figure 1).

Historic accounts state that Blackwood's first gold discovery was in 1855 at Jackson's Creek, Golden Point4. The finding of one gold nugget started the gold rush of the area. The bonanza gold grades being discovered both from alluvial and quartz reef sources, resulted in rapid population growth and the establishment of villages such as Blackwood and Barrys Reef (refer to historical photo on title page). Mining reports document Blackwood's population as approx. 13,000 in September 18555. The rapid population expansion mirrors the better-documentedgold-rushes of surrounding regions (e.g., Ballarat and Bendigo). However, Blackwood's exceptional gold grades were all located within the top 60 - 150 metres (m) of rock. There has been very little exploration undertaken at depth down-dip and plunge of the historically mined areas, leaving great potential for remaining ore reserves of similar exceptional gold grades.

Since 2020, additional historical information has been found and added to the Cauldron Blackwood database. In 2021, the initiation of drilling activities near the Annie Laurie Reef coincided with a renewed review of these data. A schematic long section of the Western Reef mines was compiled from historical mine reports, showing historically reported fractured vein systems of up to 9m in thickness, containing grades of up to 920 g/t gold (Au) within the Western Reef system.

Figure 1: Blackwood Gold Project Location Map

1. Refer ASX:CXU Announcement dated 12 December 2019
2. Refer ASX:CXU Announcement dated 31 August 2020
3. Refer ASX:CXU Announcement dated 23 September 2020
4. Refer to Blackwood District & Historical Society: "HISTORICAL ACCOUNT OF THE FIRST DISCOVERY OF BLACKWOOD."https://www.blackwoodpublishing.com/historical-account-of-the-first-discovery-of-blackwood/
5. Refer to Heritage Victoria, "SOUTHWEST VICTORIA HISTORIC MINING PLOTS: 1850-1980 - Historic Notes". https://www.heritage.vic.gov.au/__data/assets/pdf_file/0019/512272/South-West-Victoria-Historic-Mining-Plots-1850-1980-Historic-Notes-Bannear-nd.pdf

2

For personal use only

Cauldron's Executive Chairman, Simon Youds, stated, "The review of historical information and data is throwing up some valuable information with stark similarities between Blackwood and other local, more well- known, gold rush centres like Bendigo and Ballarat. The similarities of population explosion and extreme grade in the same geology settings are obvious. What is not so obvious is the reason why no exploration or mining was continued down-dip at Blackwood, as is the case in most of the other surrounding mines in the Central Victorian Goldfields.

The exciting aspect of this operation for Cauldron is having an underground drill platform to be able to assess the down-dip potential here. Coupled with more modern techniques and recent geological understanding in the area, we will be able to answer the question of depth extensions. This will assist in the search for additional gold reserves down-dip of historical operations. At the same time, we will be able to live up to our commitment to leave the surface-sensitive environment pristine and undisturbed. This has already been achieved for a number of years at the Henty Gold Mine in Tasmania."

The Blackwood region represents Victoria's forgotten Goldfield. Although the gold rush began in 1855, seriously funded mining operations commenced in 1864. Between then and 1960, Blackwood produced approximately 218,000 ounces of gold from both orogenic (~199,000 oz) and placer sources (~19,000 oz), worth around US$390 million at today's gold price (USD per ounce). Although gold was mined down to a maximum of 100min many of the shafts, there was little to no mining activity below 150m. The exception is the Sultan mine, which was sunk to a depth of approx. 300m. Historical mining, however, only went to a maximum depth of approx. 230m, where the exceptional gold grades were found. Due to the technological limitations of the era, the miners failed to follow the grades down-dip of the known reef and so concluded that the grades did not continue. The London-based directors of the Sultan Mining Company therefore terminated mining and sold all of the equipment, including the dewatering pumps, flooding the Sultan and surrounding mines. None of the smaller, mining companies could afford the required pumping equipment, resulting in the halt of all mining at depth in the goldfield. Historical gold mining did continue after this event, but at shallower levels throughout the area.

Cauldron's Blackwood Gold Joint Venture Project comprises one Exploration Licence (EL 5479) and one Prospecting Licence Application (PL007763) situated over the Blackwood/Barrys Reef area, approximately 40 km east-northeast of Ballarat. The Exploration Licence is granted and is in Good Standing with a licence expiry date of 23 March 2024. The Project is centred on the Sultan Mine which historically produced a little over 73,000 ounces of gold at an average grade of 28 g/t Au. In addition, Blackwood contains more than 250 historically-excavated underground workings. Table 1 provides the list of the largest known gold producers active within these mines at the time.

Most mining activity on reef structures halted at shallow depths, but in many cases this was not due to depletion of mineralisation. Other factors, such as the inability to cope with high flow rates of groundwater in the underground mines, or the inability to raise capital for development work, also led to the halt of mining. This knowledge, together with the interpreted down-plunges of the mineralised reefs and case studies such as the Fosterville gold mine, strongly implies that there are likely significant gold resources still to be discovered at depths below these historical mines.

Two important considerations for any drill-testing of targets in the Victorian Goldfields are:

1. A good understanding of structural geology and targeting the geometries that are significant.
2. Testing lode structures at depths either above or below the geochemical depletion zone - i.e., a zone of reduced gold grade and tenor. This has only been done sporadically throughout Blackwood, leaving many targets untested and thus attesting to the high prospectivity of the goldfield.

3

For personal use only

Table 1: Historic Gold Production from Various Reef Sources in the Blackwood Goldfield.

Note: total reported production in this table is over 93,000 ounces of gold for the larger producers. However, inclusive of the smaller producers, total production for the entire goldfield is over 190,000 ounces

Another way to represent the undiscovered potential of Blackwood is to compare this goldfield against its peers elsewhere in the Central Victorian Goldfields. Using an averaged depth of mining from all workings at Blackwood, historical gold production figures from the Project were compared with production from current operational goldfields such as Ballarat and Bendigo. Cognisant of the fact that the existing mines have been extended to depths far greater than any historical mining at Blackwood, the Company normalised the known, recent production figures to the same depth of mining as the average for the Project. Results strongly suggest that the Blackwood Goldfield holds far more remaining potential for the same level of bonanza grades and tonnages as its neighbours in the surrounding region (Figure 2).

The current known trend of gold mineralisation in Blackwood is a generally north-south(N-S) strike over a distance of 3.5km strike length, from the North Sultan mine in the north to the Imperial mine in the south5. Historically mined depths average between 60 to 100m below ground surface, with the only deep mine being the Sultan mine, as described earlier. All known mineralised reef systems are themselves orientated N-S, with reported dips of between 60 to 70° from horizontal. Little to no exploration has been conducted at depth below the mined regions, for a variety of reasons (e.g., capital, groundwater, lack of appropriate technology and physical space in which to manoeuvre).

Preparation for the December 2021 drilling spurred a revisitation of the historical data compilations. Various cross sections sourced from historical reports contained one particular longitudinal view of the Pioneer to North Sultan mines of the Western Reef system (Figure 3). While this area has been shown previously6, the rediscovered section was compiled from multiple historical mining progress reports of the 1800s gold rush period. Each of the original drawings were completed by different generations of mining companies, each again with their own surveying methods. One such historical note reports fractures and veins of up to 9min thickness and grades of up to 920 g/t Au at a vertical depth of approximately 120m.

Given that mining only occurred to an average depth of 60m throughout the Western Reefs, the comparison chart, along with the bonanza grades and thicknesses reported historically, leads to the logical question of the remaining, as-yet undiscovered scale of potential gold resources at depths below 100 - 150m in Blackwood.

6 Refer ASX:CXU Announcement dated 17 November 2021

4

For personal use only

Figure 2: Comparison Chart of Blackwood Historical Goldfield versus Current Producing Goldfields

Figure 3: Barrys Reef (Blackwood) Underground Workings - Western Reef System

5