Lunnon Metals Limited updated progress at its first discovery and cornerstone asset, the Baker deposit, at the Kambalda Nickel Project (KNP). The Baker Mineral Resource Estimate (MRE) currently stands at 929,000 tonnes at 3.3% nickel for 30,800 contained nickel tonnes. A diamond drill (DD) campaign has been completed at Baker designed to provide DD core sample for metallurgical testing of the key geological domains in the updated MRE.

In order to maximise the recovery of the requisite weight of core at the average grade specific to each domain, DD holes were planned to "twin"2 existing DD core intervals of known width and grade via wedging off the original "parent" hole above the target interval. The assays have been returned and the results for the programme demonstrate excellent correlation between each original DD hole and the recently drilled "twin" for the key MRE domain intervals. The metallurgical test work completed to date was based on a single master composite of 170kg, derived from three DD holes drilled in late 2021 intersecting the deposit across its then known extent.

The first programme commenced prior to the completion of the geological interpretation and reporting of the first-time Baker MRE on 14 June 2022, and was designed to gain an early appreciation of the broad metallurgical characteristics of the deposit. Although over 40% of the DD core samples collected originated from outside the final June 2022 MRE model (with this additional material predominantly being sourced from the weakly mineralised hanging wall komatiite), the test work recorded high nickel recoveries producing a very clean concentrate, low in contaminates and high in saleable nickel, copper and cobalt. Summary results for the first programme of metallurgical test work were as follows: Composite Sample calculated head grade: 2.81% Ni, 0.27% Cu, 0.057 % Co, 16.4% Fe, 20.6% MgO, 7.29% S, 18 ppm As.

Rougher/Cleaner optimisation tests were conducted at a grind size of P80 53 µm; results were as follows: 86% recovery of nickel to concentrate grading 16.9% Ni; 95.5% recovery of copper to concentrate grading 1.88% Cu; 85.3% recovery of cobalt to concentrate grading 0.35% Co; Arsenic in concentrate graded 95 ppm; and other concentrate measures included Fe:MgO ratio of 16.8 and sulphur at 36.8%. The average grade of the updated Baker MRE is now 3.3% Ni (vs 2.8% Ni in June 2022) and the geological interpretation has been further refined, informed now by over 20km of drilling (both Reverse Circulation and DD). The average grade of the Indicated Resource component is now 3.8% Ni, also significantly higher than in the June 2022 MRE.

In order to reflect these significant improvements in grade and geological interpretation, the Company committed to further test work to generate domain specific metallurgical characteristics to incorporate in its ongoing technical studies. Results of this new, domain specific, test work programme will be reported at the conclusion of the study activities aimed at reporting initial Ore Reserves for Baker in the coming months. Economic and technical studies to investigate the potential to exploit the Baker deposit are in full swing.

These studies include: Metallurgical test work as described above; Geotechnical studies into footwall, hanging wall and decline ground conditions and support requirements; Estimation of future operating costs of mining together with mine design and then scheduling; Estimation of pre-development capital and access costs; and Initial discussions with potential ore tolling and concentrate purchase partners with respect to payability terms and treatment charges for possible future Baker nickel sulphide production. The results of the above studies, if positive, will form the basis of a pre-feasibility study (PFS) that may lead to the future declaration of a Probable Ore Reserve from those portions of the Mineral Resource at the Indicated (or higher) classification. The completion of the PFS will position the Company to commence more detailed negotiations with potential ore tolling and concentrate purchase (OTCPA) partners in the immediate local area.

Regulatory permitting activities are progressing in parallel to the above. To date, approval has been granted by the Western Australian government Department of Water & Environmental Regulation (DWER) as follows: Licence to take Groundwater (GWL) at Baker; and Part (V) Licence Category (6) Dewatering for Baker. The Company is also close to finalising agreement with St Ives Gold Mining Co.

Pty Ltd. (St Ives) in regard to the necessary access on the tenements immediately adjacent to the KNP (which are held by St Ives) for activities related to any future development of, and production from, the Baker deposit (e.g. vehicle access and dewatering infrastructure). The strategic objective is to position the Company to consider a potential Final Investment Decision (FID) later in 2023. As previously reported, in addition to rapidly advancing Baker, the Company is progressing permitting activities to dewater and re-enter the historical Foster mine decline, from which some 1.7Mt at 3.0% Ni (52,200t of nickel metal) in MRE5, may be accessed in the future.