Chesser Resources : Quarterly Activities Report and Quarterly Cashflow Report

26 April 2022

Quarterly Report - March 2022

QUARTERLY REPORT - period ending 31 March 2022

HIGHLIGHTS

SCOPING STUDY CONFIRMS ROBUST LOW-COST GOLD PROJECT AT DIAMBA SUD

STUDY HIGHLIGHTS1

• • Post-tax NPV5 A$419M (US$301M) and IRR 59% at a US$1,800/oz gold price

• • Payback 1.25 years from commercial production

• • 7.5-year Project life producing 704koz gold at an average AISC of US$820/oz

• • First two years of gold production totals 244koz at an average AISC of US$545/oz

• • Total Project mining inventory of 14.7Mt at an average grade of 1.6g/t gold (70% from Indicated Resources) containing 750koz of gold at a strip ratio of 2.8

• • Ore mined and processed in first two years of operations @ an average grade of 2.0g/t gold (83% from Indicated Resources) containing 257koz of gold at a strip ratio of 1.9

• • Pre-production capital cost of US$159M including US$23M contingency

• • Industry standard 2Mtpa CIL processing circuit with average gold recoveries of 94%

• • Significant Resource upside - Areas A and D remain open and new discovery at Karakara with drilling underway

• • ESIA baseline activities have commenced

• • Board approval to commence a Definitive Feasibility Study

• • Diamba Sud represents a potential long life, technically simple, low risk and highly profitable mining operation that will generate significant benefits to all stakeholders

The Scoping Study results clearly demonstrate the very significant potential value from a future mine development at Diamba Sud. Importantly the study does not include any potential Mineral Resources from the new discovery at Karakara or any further resource additions that might result from the current 15,000m to 20,000m drilling program all of which would further enhance the value of the Diamba Sud Project.

BONDALA AND MOURICHOU EXPLORATION LICENSES GRANTED

The grant of the new tenements significantly adds to the Company's land position in Senegal and covers some highly prospective geological terrains especially the Bondala license which contiguous to the north of the Diamba Sud tenement.

1

Refer ASX announcement dated 15 March 2022. The Company is not aware of any new information or data that materially affects the production targets and financial forecasts derived from the production targets in the referenced ASX announcement and confirms that all material assumptions and technical parameters underpinning those production targets and financial forecasts continue to apply and have no materially changed. All Scoping Study results are approximate. Cost estimates are subject to Scoping Study level of accuracy of +/- 35%.

STRONGLY SUPPORTED $12M PLACEMENT

On the 31 March 2022 the Company received firm commitments for a $12.1 million private placement (115,238,096 shares at an issue price of $0.105 per share) which was subsequently completed on the 8 April 2022.

The placement received very strong support from existing shareholders and a number of new domestic and offshore institutional and sophisticated investors. Directors subscribed for 3 million shares which are subject to shareholder approval at a future General Meeting of shareholders.

CORPORATE

• • Cash at the end of the quarter totalled A$3.9 million.

• • Subsequent to the end of the quarter approximately $11.5 million was received from the placement net of fees.

UPCOMING ACTIVITIES

• • An extensive 15,000 to 20,000m drill program is well underway with a total of 5,464m of drilling completed during the quarter (31 RC holes for 3,651m and 8 Diamond holes for 1,813m) mainly from the Karakara discovery area and Area A NE. No assays results were returned during the period

• • The drill program is aimed at adding Karakara to the Resource inventory, extending Resources at Areas A and D and to systematically explore other prospective targets on the Diamba Sud exploration tenement

• • The first assay results will be from the new discovery area at Karakara and are expected to be received in April and to continue throughout the June quarter

• • Baseline environmental and ESIA work has commenced over the Project area

• • Definitive Feasibility Studies to commence

• • Initial reconnaissance exploration of the newly granted tenements, Bondala and Morichou

Oxidation Tonnes

Mt

Chesser Resources Limited ("Chesser" or the "Company", ASX:CHZ) is pleased to present its Quarterly Activities Report for the three months ended 31 March 2022. The Company's primary focus during the reporting period continued to be the advancement of its Diamba Sud gold Project in Senegal.

SCOPING STUDY CONFIRMS ROBUST LOW-COST GOLD PROJECT AT DIAMBA SUD

The Scoping Study details the potential for an open pit mining operation and gold processing plant at Chesser's Diamba Sud Gold Project in Eastern Senegal.

The Scoping Study is based on the 781koz gold maiden Mineral Resource inventory covering Area A and Area D, released to the market on the 16 November 2021, summarised in Table 1. Resources do not include mineralisation from the new discovery at Karakara, located 1.2km from the Area D pit, Figure 1.

Table 1: Maiden Mineral Resource- Diamba Sud2

Resources Constrained within US$1,800/oz pit shell by Material Type and Classification - COG 0.5g/t

Indicated	Inferred	Total
Grade	Metal	Tonnes	Grade	Metal	Tonnes	Grade	Metal
g/t	Koz	Mt	g/t	Koz	Mt	g/t	Koz
Oxide	3.7	2.2	262	1.3	1.2	50	5.0	2.0	312
Fresh	5.1	1.7	276	5.1	1.2	194	10.3	1.4	469
Total	8.8	1.9	538	6.4	1.2	243	15.2	1.6	781

A standard 2Mtpa CIL SAG/Ball circuit gold processing plant was considered to be appropriate for the Scoping Study. Tailings from the CIL will undergo cyanide detox and report to a tailings storage facility. Raw water for processing will be sourced by seasonal pumping from the Falémé River, approximately 7km to the east, to a water storage dam.

Mining from three open pits (Area D, Area A and Area D South) is assumed to be undertaken by a mining contractor utilising standard truck and shovel open pit mining methods.

The project will include an on-site accommodation village housing part of the workforce, with the balance residing in adjacent communities. Power will be generated on site.

The cash flow and economic analysis has been prepared on a 100% of project, constant first quarter calendar 2022 US dollar basis. Cost estimations are considered to be at a scoping study level of accuracy of +/-35%.

The Scoping Study demonstrated the technically simple and low risk nature of the Project and the very significant potential economic value that would result from a future development at Diamba Sud. There remains significant upside both in exploration to add to the Mineral Resource inventory and from future Project optimisation studies. A summary of the initial physical and financial evaluation of the Project is shown in Table 2.

2 Refer to ASX announcement dated 16 November 2021 for details of the Mineral Resource Estimates. The Company is not aware of any new information or data that materially affects the information included in the referenced ASX announcement and confirms that all material assumptions and technical parameters underpinning the estimates in the market announcement continue to apply and have not materially changed.

Table 2: Scoping Study Results and Key Assumptions3

DIAMBA SUD GOLD PROJECT SUMMARY SCOPING STUDY RESULTS

Physicals and Costs

Mining Physicals

Ore Tonnage	Mt	14.7
Grade	g/t Au	1.6
Contained Ounces	koz Au	750
Plant Throughput	Mtpa	2.0
Mine Life	Years	7.5
Strip Ratio	waste:ore	2.8
Process Recovery	%	94
Gold Production	koz Au	704
Capital Costs
Initial Capital	US$M	142
Pre-production Mining	US$M	17
Sustaining and Closure	US$M	23
Total Capital Cost	US$M	182
Operating Costs
Mining	US$/t total material	3.9
Mining	US$/t Ore mined	14.7
Processing	US$/t Ore processed	14.1
Maintenance	US$/t Ore processed	1.5
General & Administration	US$/t Ore processed	4.1
Transport, Insurance and Refining	US$/t Ore processed	0.1
Royalties & Statutory Costs	US$/t Ore processed	3.0
Total	US$/t Ore processed	37.6
Financials and Key Assumptions
Gold Price	US$/oz	1,800
Exchange Rates	AUD:USD	0.72
XOF:USD	581
Gold Sales Revenue	US$M	1,267
AISC	US$/oz Au	820
AISC - first two years	US$/oz Au	545
Project Net Cash Flow - Pre-tax
Project Net Cash Flow, pre tax	US$M	531
PVNCF5%	US$M	402
IRR	%	69
Payback Period, pre-tax	Months	15
Project Net Cash Flow - Post-tax, all equity basis
Income Tax	US$M	132
Project Net Cash Flow,	US$M	399
PVNCF5%	US$M	301
IRR, post-tax	%	59
Payback Period	Months	15

Karakara

Figure 1: Diamba Sud Gold Project Layout

3 Refer ASX announcement dated 15 March 2022. The Company is not aware of any new information or data that materially affects the production targets and financial forecasts derived from the production targets in the referenced ASX announcement and confirms that all material assumptions and technical parameters underpinning those production targets and financial forecasts continue to apply and have not materially changed. All Scoping Study results are approximate. Cost estimates are subject to Scoping Study level of accuracy of +/- 35%.

PRODUCTION PROJECTIONS

The production profile of the Diamba Sud Gold Project demonstrates annual production of up to 136koz in year two, with an average production of 94koz per year over the current 7.5 year Project life. 70% of the gold production is sourced from Indicated Resources and the remainder from Inferred Resources. During the first two years of production which includes the payback period, gold production is sourced 83% from Indicated Resources, mainly from the Area D pit.

Diamba Sud Gold Production

140

3.5

GoldProductionkoz

120

3.0

100

2.5

80

2.0

60

1.5

40

1.0

20

0.5

FeedGradeg/tGold

0

0.0

1

2

3

4

5

6

7

8

Production Year

IndicatedInferredGrade g/t Au

Figure 2: Diamba Sud Annual Production Projection (koz gold)

SENSITIVITY ANALYSIS

Sensitivity analysis shows the Project to be resilient to changes in both capital and operating costs. Like most mining projects the economics are most sensitive to changes in revenue parameters such as the commodity price.

Commodity

Price

-20% to 20%

Opex

20% to -20%

Capex

20% to -20%

Recovery -4% to 4%

Discount Rate 7% to 3%

100

150

200

250

300

350

400

450

500

Figure 3: Project NPV (post tax) Sensitivity Analysis (US$M)