Krakatoa completed a 37-hole, 294m reconnaissance auger drilling program at Tower in late 2022. The objective of the program was to gauge the thickness of the regolith profile across targeted areas to determine if any remnant Tower REE mineralisation continued into this terrain. In most cases the regolith profile is lacking with most of upper remnant regolith profile already eroded and transported.

However, the area to the south of the Tower MRE returned reasonable grades and thicknesses from a cluster of ten holes. A total of 100 auger samples were assayed for REE content resulting in a maximum value of 1699 ppm TREO-CeO2 over four metres (from surface) in auger hole 22AUG016. This was one of four samples which came back in excess of 500ppm TREO-CeO2.

These results highlight a potential near term drilling target which may assist with future development as these zones feature mineralisation from surface. A section of the Tower MRE area was recently surveyed with a gamma-ray scintillometer as part of the Company's focus to determine the relationship with thorium and the concentration of REE within the regolith and/or basement. In addition to this work, early time airborne electromagnetic survey (AEM) data obtained from a survey flown in late 2021.

This data was processed and reviewed to help with identification of other prospective extensive clay locations. It was noted that areas of elevated scintillometer count show a reasonable correlation with mineralised areas within the Tower MRE boundary. Further to this, a zone of consistent high scintillometer counts was also surveyed to the immediate west of the `Tower West' prospect in an area with no previous drilling.

The Company considers this to be a valid exploration target for expansion of the Tower MRE and intends to carry out further work programs during the 2023 field season. The AEM data interpretation has assisted in identifying and delineating the distribution, depth and thickness of clay rich zones, which are ideal hosts to REE mineralisation through modelling of the observed IP effect. Correlation of this IP effect with known mineralised zones from past drilling at Tower has proven to be effective and has potential to be a rapid and cost-effective targeting tool across the tenement package.

This cutting-edge modelling is being exclusively carried out by the Company and their consultants. Highly prospective zones targeting additional clay-hosted REE will be ground-truthed and likely be drill tested during the 2023 field season. In late 2022, Krakatoa completed five Reverse Circulation (RC) drill holes for 1,570m over multiple, highly conductive targets (basement bodies with up to 10,000 Siemens).

The conductors were interpreted as potential pods of sulphides associated with mafic/ultramafic intrusions and were the main targets of the program. Following completion of drilling, Krakatoa has identified that the geophysical response in this area was due to highly magnetic iron sulphide minerals pyrrhotite and pyrite, which are thought to be zones of intense alteration and replacement of magnetite. These minerals are highly conductive and explain the presence of the EM anomalies.

No significant base metal anomalies of note were intersected. One sample (drillhole NBRC01 from 124 ­ 133m) showed weakly elevated Ni and Cr, indicating the unit is likely an altered remnant ultramafic rock. Interestingly, this unit also contained low-level PGE anomalism, with the 1m sample (132-133m) returning 106ppb total PGE (Pt+Pd).

The Company has commenced petrological work on this sample in order to better understand the rocks and their deformation history. Four holes reported moderately anomalous REE indicator elements such as Lanthanum and Thorium within felsic granitoids and gneiss. Further specific REE assaying results were encouraging with a maximum of 4029ppm (0.4%) TREO from 210-214m downhole in drillhole MMRC02, within a broader zone of 44m at 1859ppm (0.19%)TREO.

Whilst these REE levels are not considered economic within hard rock, they are anomalous and notable in terms of the Company's REE exploration. The Milly Milly drillholes MMRC01 & MMRC02 displayed the highest concentrations of REE and these are shown in cross-section. The felsic host rocks to the REE mineralisation were highly deformed, however geochemical analysis using ioGAS software showed an affinity with the A-Type granite classification.

A-type granites are significant in mineral exploration because they are associated with a variety of mineral deposits, including lithium, tin, tungsten, beryllium, and REE. In the case of Mt Clere, it is possible that REE-enriched A-type granites have supplied the REE which are being concentrated into the weathering profile. Alternatively, these A-type granites may be part of a broader alkaline igneous complex, along with lamprophyres (previously identified within the project area) and carbonatites (which have not been identified yet).

Further understanding of the distribution of these rock units may then enable the Company to zone in on higher grade pods of clay-hosted mineralisation. Several other highly conductive untested EM anomalies are located in the northern sector of the Project area, positioned along major magnetic lineaments representing deep seated structures. These target areas will undergo additional exploration this year to determine if drill testing is warranted in future.

The Company has completed a small program of AC drilling, testing potential heavy mineral sands (HMS) targets at Mt Clere in 2021. Test work was carried out on selected samples with float-sink testing and grain point counting completed. The results have been encouraging, warranting further work.

The Company is preparing to submit a selection of samples with high proportions of heavy minerals for mineralogical analysis by QEMSCAN, in order to determine detailed mineralogy. Future work will be dependent on the results of the QEMSCAN mineralogy and expert advice provided by its specialist HMS consultant.