Lotus Resources : Appendix 5B and Quarterly Activities Report

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ASX Announcement		29 July 2022

QUARTERLY ACTIVITIES REPORT

Quarter Ended 30th June 2022

Lotus Resources Limited (ASX: LOT, OTCQB: LTSRF) (Lotus or the Company) is pleased to provide its quarterly activities report for the quarter ended 30th June 2022. During the quarter, the Company's activities focused on the advancement of the Restart Definitive Feasibility Study (Restart DFS) for the Kayelekera Uranium Project (Kayelekera or the Project) which is near completion as well as the delineation of the inaugural resource for the Livingstonia satellite uranium deposit in Malawi.

HIGHLIGHTS

• The Company is nearing completion of the Restart DFS, which will be ready to be released in early August 2022
• The total Mineral Resource Estimate (MRE) for the Company increased by 11% to 51.1Mlbs U3O8 (Table 2) incorporating the inaugural resource at the Livingstonia deposit of 4.8Mlbs U3O8 (Table 1)
• The inaugural MRE at Livingstonia followed a 29-hole (3,395 metre) RC drill program at the deposit that confirmed historical drilling and extending the resource footprint. Results included:
• • 3m at 733 ppm U3O8 from 94m (LIV003)
  • 4m at 983ppm U3O8 from 87m (LIV007)
  • 4m at 636ppm U3O8 from 74m (LIV011)
• Management visited Malawi and held meetings with senior representatives of the Malawian Government regarding the recommencement of production. The Government indicated it was supportive for production to recommence as early as possible
• The Company is also in the process of negotiating an updated Mine Development Agreement for the restart of production. The Mine Development Agreement will set the fiscal regime in which the Company will operate
• Discussions were held with ESCOM, the Malawian Electricity Utility, regarding the connection of the mine site to the national grid. Connecting to the grid will lower the operating costs and significantly reduce CO2 emissions when compared to the historical operation, as Malawian grid power is sourced primarily from hydropower
• Positive meetings were held with numerous other key stakeholders including Karonga District Commissioner, NGO groups in Karonga and the local communities
• As at 30 June 2022, Lotus had cash of $4.9 million (unaudited), exclusive of the restricted cash of $14.6 million held as part of the Environmental Bond
• • The cash position decreased by $3.6m compared to the previous quarter

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INAGURAL LIVINGSTONIA RESOURCE INCREASES TOTAL RESOURCE TO 51.1MLBS U3O8

During the quarter, the Company announced an increase in the total MRE for the Company to 49.4Mt at 475ppm U3O8 for 51.1Mlbs U3O8 (Table 2). This increase was due to the inaugural MRE for the Livingstonia deposit of 6.9Mt at 320ppm U3O8 for 4.8Mlbs (Table 1).

The MRE for Livingstonia (Table 1) has been reported in accordance with the JORC Code (2012) and is based upon data derived from the recent drilling campaign undertaken by Lotus, together with historical drilling data. The MRE has been estimated using Ordinary Kriging (OK) techniques which are regarded as being reasonable for the deposit being estimated.

Table 1: Livingstonia Mineral Resource - June 2022

	Reported at 200ppm cut-			Mt			Grade (U3O8 ppm)			U3O8 (M kg)			U3O8 (M Lb)
	off
	Inferred		6.9		320		2.2		4.8
	Total			6.9			320			2.2			4.8

Figures have been rounded. Grade has been determined from a combination of assay and downhole logging derived eU3O8 grades.

An in-situ bulk density of 2.25g/cm3 was applied to all blocks within the model.

The MRE has been reported above a cut-off grade of 200ppm U3O8 reflecting estimated processing costs and recoveries as well as projected product pricing.

The resource at Livingstonia follows the increase to the Kayelekera MRE during the March quarter to 46.3Mlbs at 500ppm U3O8. The total MRE for the Company is highlighted in Table 2 below.

Table 2: Lotus Mineral Resource Inventory - June 20221

		Deposit			Category			Mt		Grade		U3O8		U3O8
							(U3O8 ppm)		(M kg)		(M lbs)
		Kayelekera			Measured		0.9	830	0.7	1.6
		Kayelekera			Measured - RoM Stockpile2		1.6	760	1.2	2.6
		Kayelekera			Indicated		29.3	510	15.1	33.2
		Kayelekera			Inferred		8.3	410	3.4	7.4
		Kayelekera			Total		40.1		510		20.4		44.8
		Kayelekera			Inferred - LG Stockpiles3		2.4	290	0.7	1.5
		Kayelekera			Total All Materials		42.5		500		21.1		46.3
		Livingstonia			Inferred		6.9	320	2.2	4.8
		Total						49.4		475		23.3		51.1

• See ASX announcements dated 15 February 2022 and 2 June 2022 for information on the Lotus Mineral Resource Estimate. Lotus confirms that it is not aware of any new information or data that materially affects the information included in the announcements of 15 February 2022 and 2 June 2022 and that all material assumptions and technical parameters underpinning the Mineral Resource Estimate in those announcements continue to apply and have not materially changed.

• RoM stockpile has been mined and is located near mill facility.

• Medium-gradestockpiles have been mined and placed on the medium-grade stockpile and are considered potentially feasible for blending or beneficiation, with initial studies to assess this optionality already completed.

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Livingstonia is located approximately 90km from the Kayelekera mine (Figure 1) and is currently not a part of the the production strategy considered in the Restart DFS. It does however have the potential to become a satellite operation in the future, once the Kayelekera resource has been depleted.

Figure 1: Project Location

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RESTART DFS FOR KAYELEKERA NEARS COMPLETION

The Company made significant progress regarding the Restart DFS for the Project during the quarter, which is building on the results of the Scoping Study completed in 2020 (ASX announcement 20 October 2020). All the planned design and technical work has been completed with the cost estimation process well progressed and undergoing the final reviews. The Company anticipates releasing the results of the Restart DFS in August 2022.

MINE DEVELOPMENT AGREEMENT MOVES FORWARD

During the quarter, senior management visited Malawi, with a key objective to advance the negotiations for an updated Mine Development Agreement (MDA). The MDA will set the fiscal regime and define the operating requirements for the Company when Kayelekera restarts.

Negotiations were positive with recognition from the Malawian Government that the Project and Malawi is competing on the global stage for investment and that setting an attractive investment environment will deliver many benefits to the local economy, including the generation of significant amounts of foreign currency through future opportunities.

The previous owners of the Project, Paladin Energy, who operated the mine between 2009 to 2014, had an MDA with the Malawian government, which they negotiated in consideration for the transfer of 15% ownership of the Project to the Government. Lotus is seeking a similar set of conditions as were contained in this original agreement acknowledging that the government will retain its 15% stake in the Project. The Company is continuing to work with both the Government and the Government appointed Steering Committee to advance these negotiations.

Figure 2: Meeting with Minister of Mining

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CONNECTING TO THE NATIONAL POWER GRID - ESCOM

During historical operations power at the Project was generated on site using multiple diesel gensets. For recommencement this is not only costly but also not in line with the Company's desire to minimize CO2 emissions.

The Company has met with and is negotiating with ESCOM, the Malawian electricity utility, a permanent connection to the national grid.

ESCOM indicated ~4MW of power would be available at the Karonga substation, which when combined with the 2.5MW available from the steam turbine that is proposed to be fitted to the on-site acid plant, and a possible solar/battery energy storage system will cover the site power demand. Diesel generation will only be required for emergency power and when the grid, turbine or solar is offline.

It is important to note that approximately 90% of power on the national grid is from hydroelectric power generation and biofuels. This high percentage of "green" power is expected to significantly reduce our CO2 footprint and aligns with our ESG commitments.

MEETINGS WITH LOCAL STAKEHOLDERS

Meetings were held with the local village chiefs and community leaders and local enterprises including schools to talk about the Project and to listen to any community concerns. In addition meetings were held with the District Commissioner (DC) for Karonga and the CEO and management of FOCUS a key local NGO(https://www.facebook.com/Foundation-for- Community-Support-Services-FOCUS-165181670300221/).

These discussions centred on the Community Development Agreement (CDA). Under the new Mining Act, brought into force since the Project was last in production, a company with a large- scale mining licence must contribute zero point four five (0.45) percent of its revenue for projects in the local communities and the CDA is the means to administer this. The CDA will be signed with the surrounding qualifying communities who will benefit under the scheme.

FOCUS and the DC have been working with the various communities that are involved in the CDA to ensure a consistent understanding of the potential benefits of the agreement and how the processes associated with the agreement will work. A final version of the agreement is near completion with a signed agreement expected shortly.

While at site the senior management team were also able to visit the local Kayelekera Junior School (see Figure 3) and the local Kayelekera Clinic, both of which are supported financially by Lotus. In both instances the need for further support was expressed by the staff. Lotus will look to provide further assistance for these and comparable community-based facilities as we progress closer to restarting and operating Kayelekera.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG)

In addition to the meetings held with Government, suppliers and local communities the Company has been actively pursuing the various goals set out in the 2021 Sustainability Report. The work during the quarter has focused primarily on completion of a comprehensive stakeholder survey where over 80 stakeholders were contacted for their input into which Material Topics are important to them. The response level was very high and has provided excellent insight into the topics that concern our stakeholders. Our Material Topics have been updated to reflect these