Newfield Resources : Quarterly Activities and Cashflow Reports - December 2021

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ABN: 98 153 219 848

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North Fremantle WA 6159

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ASX Announcement

31 January 2022

DECEMBER QUARTERLY ACTIVITIES REPORT

Newfield Resources Limited (ASX: NWF) (Newfield or Company) is pleased to announce its activities for the quarter ending 31 December 2021.

Highlights

1. Tongo Mine Development:
2. • A total of 975 m of underground development achieved to date (183m in the quarter)
   • Underground development of the return airway (RAW) on the Kundu kimberlite and the Kundu decline continued
3. Processing:
4. • Processing of kimberlite from the RAW yielded encouraging results with gem diamonds up to 9.6ct recovered
   • Recovered grades of 2.03 carats per tonne realised
5. Safety:
6. • 773 Lost Time Injury Free Days recorded to date
   • LTIFR of 0.49 (measured per 200,000 hours worked)
7. Environment, Social and Governance (ESG) Reporting:
8. • Sign up to ESG Reporting via the SocialSuite platform
9. Corporate:
10. • Rights issue raised A$24.97 million through issue of 71.36 million shares at A$0.35 per share
    • A$40 million of corporate bond debt retired significantly strengthening balance sheet
    • Accrued bond interest of A$2.1 million settled by issue of 24.74 million options exercisable at A$0.50 each on or before 4 January 2024
    • Further capital raise of A$12.50 million announced at A$0.35 per share

1. Tongo Mine Development

Underground Development

A total of 975m of underground development has been achieved to date, inclusive of some 183m in the quarter.

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Kundu Return Air Way

The development of the Return Air Way (RAW) on Kundu Segment A has reached the point where the ventilation raise can now commence (see Figure 1). The RAW has developed some 217m and blasting in an easterly direction will continue on-reef to give top level access to the planned stope mining from Level-1 below the RAW. This development will continue to provide small volumes of kimberlite ore for processing prior to the first mining stopes being established.

Kundu Decline

Blasting of the 4m x 4m Kundu decline continued at an 8-degree down angle and has now reached the point where the first mining level rock drive can be established, some 191m from the split with the Joint Decline (see Figure 1). The Level-1 rock drive will be developed for 55m to the first cross- cut to intersect the Kundu ore body from which the first mining raises and stopes will be established.

Underground Support and Infrastructure

A new pump station (Pump Station 5) is being constructed in the Kundu decline to manage any water ingress from the Kundu decline and Level-1 development. The roof of the various development tunnels is continually supported with split sets and mesh. As development progresses, so will the power, ventilation and water management systems be installed along with the advance.

2. Processing

During the development of the Kundu RAW, kimberlite is being yielded from the on-reef drive. This material is trucked to the 5tph DMS processing plant where it is stockpiled for treatment. Processing of some 380 tonnes has yielded 771.6 carats at a calculated run of mine grade of 2.03 carats per tonne (203 carats per hundred tonnes) at a +1.2mm bottom cut off. Re-crushing at a smaller crusher size setting and processing of the DMS and final recovery tailings is in progress to recover smaller diamonds so that the full population suite of diamonds can be used to calculate the final grade of this controlled sample.

In-house analysis estimates that 76% of the diamond recoveries are in the gem quality category, with gemstones ranging in size up to 9.6 carats thus far. Many diamonds exhibit excellent crystal shapes with top colour and clarity characteristics (See photos below).

Although the volume of ore processed to date is relatively small, the results are calculated to be consistent with the estimated diamond grade and value of the Kundu ore reserve. A final grade reconciliation of this Kundu sample processing and the ore reserve estimate grade will be made once full processing results are available.

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Figure 1: Mine development to 10 January 2022

Construction of 25tph Processing Plant

Steel work fabrication continued for the construction of the 25tph plant. In addition, a number of pumps, electric motors and screen decks are being refurbished to be used on the plant. A revised project plan has been issued by the external consulting group which forecasts completion and commissioning around mid-2022.

Top left: Kundu gem diamonds. Top right: 9.6ct gemstone

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Top left: 5 grainer gemstone. Top right: 2 grainer gemstones

3. Safety

Health and Safety

The Company is pleased to report that no lost time injuries (LTI) have occurred on the mine, or on any of the Company's projects, since November 2019, giving 773 LTI free days as at the end of the quarter. The ongoing Loss Time Injury Frequency Rate (LTIFR) continues to decrease to 0.49. The reporting calculation is based on per 200,000 hours worked.

Currently, there are no COVID-19 restrictions imposed by the Government of Sierra Leone other than the usual testing on entry and exit to the country. The Company continues to adhere to its policy of daily health screening and sanitation protocol and regular COVID-19 awareness briefings to its workforce.

4. ESG Reporting

SocialSuite Platform

In December, the Company reported that it has signed up to the Social Suite platform to implement, monitor and report on its comprehensive Environment, Social and Governance (ESG) policies as it evolves into a mining and production focussed company.

The SocialSuite platform provides a technical platform to help capture, monitor and report a corporation's impact on people and the environment. It is aligned with the World Economic Forum Stakeholder Capitalism metrics and the four pillars of this framework, namely Principals of Governance, Planet, People and Prosperity. Within this framework there are 21 core metrics to follow. Newfield has recently established its baseline report against all these metrics and will on a quarterly basis measure and reports its progress, which will be captured in an annual report. These annual reports will become available on the Company's website.

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Corporate Social Responsibility

During the quarter, the Company held a community stakeholder meeting whereby the annual surface rental payments for the two mining licences were made. A total of U$59,000 was paid across to various community, government, district council and landowner stakeholders.

5. Liberia Exploration

Newfield, through its subsidiary company Stellar Diamonds Liberia Inc., holds two high interest exploration licences in the diamond-rich Kumgbo area of western Liberia (Zoi and Biedien). Following on from its detailed exploration and assay results, applications for relinquishment and extensions were made to the Ministry of Mines to retain the positive areas and relinquish the negative areas of the licences. The extended areas have now been approved by the Ministry of Mines and Energy and now the two licences cover areas of 86.7km2 for Biedien and 83.56km2 for Zoi, reduced from the original combined area of 670km2.

Exploration results to date are very encouraging. A number of high interest kimberlitic indicator anomalies are defined in the retained areas, and to date five kimberlites have been discovered in the Zoi licences. It is clear that further kimberlites remain to be discovered within the retained licence areas based on the distribution of the indicator mineral anomalies and known kimberlite occurrences.

During the next quarter a 200kg sample of kimberlite from K5 (in Zoi) will be consigned to the SRC Laboratory in Canada for microdiamond analysis to determine the relative diamond content of this kimberlite.

6. Corporate and Financial Matters

Cashflow

The attached Appendix 5B has been prepared on a consolidated basis and includes the cash flows from all subsidiaries across the Group. The payments included in the operating cash flows in Section 1 have been made to suppliers and employees to advance the construction of return airways and decline, process kimberlite ore through the 5tph plant to recover diamonds and to extinguish existing creditors for work performed in previous periods.

Rights Issue

On the 8 November 2021, the Company announced the results of the non-renounceable rights issue (Rights Offer). A total of $24,974,878.95 (before costs) was raised from the Rights Offer, through the issue of 71,356,797 shares at a price of A$0.35 per share.

Bond Debt Retirement, Issue of Options and Capital Raising

On the 24 December 2021, as amended, the Company announced that it had retired approximately A$40 million of corporate bond debt which comprised of AUD bonds of A$15 million (AUD Corporate Bonds) and USD bonds of US$17.5 million (USD Corporate Bonds). The total AU$15 million AUD Corporate Bonds and US$7.5 million USD Corporate Bonds were converted