Morella : Quarterly Activities and Cashflow

ASX Announcement

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31 January 2022

Quarterly Activities Report and 5B Cashflow December 2021

Access to lithium raw materials secured through execution of earn-in agreements for Fish Lake Valley Lithium Project in Nevada and Mallina Lithium Project in Western Australia

Successful recapitalisation and re-quotation on the ASX, setting Morella on course for its next stage of growth

Passive seismic survey commenced at Fish Lake Valley Lithium Project

Focussed ESG thematic with Traditional Owner engagement and consultation ongoing at Mallina ahead of planned drilling activities

Well-funded for ongoing exploration with $6.9 million cash as at 31 December 2021

Overview

Morella Corporation Limited (ASX: 1MC) (Morella or the Company) is pleased to report on activities conducted during the December 2021 Quarter.

The Company's primary focus for the quarter was the conclusion of all matters required to enable the Company's securities to be re-quoted on the ASX. This milestone was achieved on 14 December 2021, shortly after the Company's name and ASX code were changed, representing the successful completion of all corporate actions and processes undertaken by the Board and management team over the 2021 calendar year.

Exploration and Project Development

Fish Lake Valley Lithium Project (Morella Earn-in Option for 60% with rights to acquire 100%)

With the formal Earn-in Option Agreement being executed on 12 October 2021 (refer to ASX Announcement A$6.5M equity raising to fund project development and ASX re-quotation, released 14 October 2021), the Company commenced planning activities required to commence exploration to develop an understanding of the true subsurface geological and hydrogeological nature of the project. Following an extensive review of all available historical information and drilling results (which were relatively shallow or surface focussed), the Company has formed the opinion that Fish Lake Valley is prospective as a potential project with economic scale.

To understand the subsurface structure of the Fish Lake Valley basin, Morella has commissioned a passive seismic survey to be completed by two contracting parties. One contractor will undertake technical investigations from Western Australia, whilst the other contractor will conduct field work and capture data on the ground in Nevada, USA. The first phase of data collection was completed in

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Morella Corporation Limited ASX Announcement 31 January 2022

late December, with the second phase scheduled for completion in January/February 2022, weather dependant. Imagery from the December 2021 data collection activities can be seen below in Figure 1.

Results from the passive seismic survey will be released to the market when available whilst adhering to appropriate quality assurance and quality control protocols.

Figure 1: Fish Lake Valley salt playa - December 2021

During the quarter, the Company also commissioned a study into direct lithium extraction from the Fish Lake Valley brine. Adverse weather conditions temporarily delayed the initial collection of sample material, and further work is scheduled for January and February 2022.

Upon completion of the current work program at Fish Lake Valley, Morella will progress plans for additional geophysical techniques to support the formation of a follow-up drilling and sampling program. The drill program will primarily focus on delineating the scale (or depth) of mineralisation and development of a hydrogeological model.

Mallina Lithium Project (Morella Earn-in Option for 51%)

Morella formalised the earn-in agreement with Sayona Mining Limited in November 2021 which provides a clear pathway forward for the exploration and development of the Mallina Project (refer to ASX Announcement Corporate Update released 11 November 2021).

During the quarter, Morella's Competent Person (CP) for Mallina (Mr Stephen Barber) completed a detailed review of the historical exploration work that has been conducted at the Mallina tenement (E47/2983) which supported the release of historical exploration results under Morella's CP authority (refer to ASX Announcement Mallina Lithium Project Update released 28 October 2021). Historical exploration confirms lithium mineralisation at Mallina and a three-hole drill program has been planned to commence in March/April 2022 focussing on the Eastern Group Pegmatites (see Figure 2).

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Morella Corporation Limited ASX Announcement 31 January 2022

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Figure 2: Geological data overlain on airborne magnetic survey

Two holes will target approximately 500m down dip of the mapped surface outcrop at the Eastern No.2 Pegmetite prospect. If the same geometric relationship observed in the nearby Pilgangoora district is present in the Mallina project area, the drill holes could potentially uncover large primary pegmatites at depth which are inclined in the opposite direction to the mapped local dip of foliation.

A third hole at the Area C prospect using the same azimuth, dip and target depth has also been planned. The hole will seek to intersect the primary ore structures, based upon mineralogical data from SEM scan work. Exploration success would signify that much of the fine spodumene quartz intergrowth was likely to have been formed by the replacement of petalite, that was originally quite coarse grained.

In parallel with corporate and technical development, Morella has begun engaging with both the Traditional Owners and Pastoralists at Mallina Station. Further information can be found in the Sustainability Section of this report.

On 20 October 2021, DMIRS formally notified the Company of its successful Round 24 submission as part of the WA Government's Exploration Incentive Scheme (EIS). Morella will be co-funded up to a maximum offer of $150,000 against direct drilling costs for the Mallina exploration program planned for H1 2022. The EIS funding will support continued exploration and lithium resource development in the Pilbara and the Company welcomes this State Government initiative.

Lithium Market

Prices for all lithium chemical/commodity types (technical grade, battery grade and pre-cursor materials) have been reported by multiple price reporting agencies (including Benchmark Mineral Intelligence, S&P Platts Global and Fastmarkets) as reaching record highs, with continued upward pressure due to an under-supplied market. Morella's analysis of market data has reaffirmed a significant disparity between long-term contract pricing and reported spot pricing. The majority of current sales are tending to be under long term contracts, such is the nature of the lithium battery/EV supply chain. Benchmark Minerals intelligence has reported a number of lithium chemical suppliers seeking to renegotiate supply contracts to capitalise on the sharp price rise observed in in the later stages of 2020.

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Morella Corporation Limited ASX Announcement 31 January 2022

Public reporting and disclosure by current producers, combined with market commentary from multiple analysts (including S&P Platts and Benchmark Minerals Intelligence) have shown that through 2020 and into the end of the calendar year, the physical market (particularly lithium spodumene supply) has not reacted/increased in response to the significant price increases that have been reported. More specifically, Western Australia, is experiencing well-reported labour shortages which is impacting companies looking to increase production or recommence mothballed operations. It is assessed that this will further delay the physical market's ability to meet the strong and growing demand and will support a continued supply deficit for the foreseeable future keeping upward pressure on pricing.

Sustainability

Health and Safety

There were no injuries or safety incidents during the quarter.

Environment

There were no environmental issues or breeches during the quarter.

Community

During the reporting period, the Company commenced engagement with the Traditional Owners and Knowledge Holders of the lands that are covered, in part, by the Mallina tenement. Initial meetings and briefings of proposed exploration activity were held in Port Hedland. A follow-up site visit was conducted in December with representatives of the Traditional Owners (figure 3), where they were shown Morella's planned exploration locations. The site visit allowed the Traditional Owners and the Company to plan the conduct of a heritage survey in Q1 2022 which, once completed, will be another step forward towards the conduct of exploration activities in a considered manner, paying due regard and respect to the Traditional Owners. Morella also commenced negotiations with the Pastoralists that operate at Mallina Station. Both the Pastoralists and Morella are engaging openly and seeking practical solutions for utilities and infrastructure usage that will benefit both parties.

Figure 3: Morella staff on site at Mallina with Traditional Owner representatives

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Morella Corporation Limited ASX Announcement 31 January 2022

Corporate

Recapitalisation

One of the key elements to underpin the re-quotation with the ASX was the completion of a $6.5M equity raise from a targeted group of institutional and sophisticated investors from North America, Asia and Australia. This equity raise was also supplemented by a $2.0M Entitlement Offer, via Rights Issue, to existing shareholders. A strong take up of entitlements, plus top-up applications saw the total offer heavily oversubscribed.

Updated Company Details

Throughout the quarter, the Company relocated its registered office to West Perth and along with the change of Company name, had a commensurate change in contact details [e-mail].

The Company also launched its new corporate website www.morellacorp.comand encourages shareholders and interested stakeholders to visit the website and register for updates.

Financial Commentary

At 31 December 2021, Morella had available cash of $6.9 million. Net cash position increased from the previous quarter due to receipt of funds from equity raising activities. The majority of expenditure for the reporting period related to administration and corporate costs associated with compliance, recapitalisation and re-quotation.

Full details and disclosure for the quarter can be found in the attached Appendix 5B.

During the quarter, Morella began expenditure against its two earn in projects and expects that the majority of expenditure for the coming months will focus on the two projects, with outgoings weighted heavily towards site-related works, exploration and development activities.

Other Disclosure

As disclosed under item 6 in the Appendix 5B, the Company made payments to Directors and related parties for a total consideration of $59,000.

Outlook

The March 2022 quarter sees the transition from the corporate focus of 2021 into a project development focus.

Primary efforts for the Mallina Lithium Project will centre on approvals, regulatory requirements and commercial engagements to support the drilling program scheduled to commence in late Q1 early Q2 (CY) 2022.

The focus at the Fish Lake Valley Lithium Project will be the completion of the passive seismic survey and commencing direct lithium extraction studies. Additional geophysical and hydrogeological work may also be conducted in the quarter, subject to the timing and outcomes of the current passive seismic program.

This announcement has been authorised for release by the Board of Altura Mining Limited.

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