Newfield Resources : Quarterly Activities and Cashflow Reports - March 2022

ABN: 98 153 219 848

15 McCabe St

North Fremantle WA 6159

T: [phone]

E:[e-mail]

ASX Announcement

29 April 2022

MARCH QUARTERLY ACTIVITIES REPORT

Newfield Resources Limited (ASX: NWF) (Newfield or Company) is pleased to announce its activities for the quarter ending 31 March 2022.

HIGHLIGHTS

Safety

• ▪ 863 Lost Time Injury Free Days recorded to date

• ▪ LTIFR of 0 during the period (per 200,000 hours worked)

• ▪ Life of Mine LTIFR at 0.46 (per 200,000 hours worked)

Production Results

• ▪ 1,211 carats recovered in line with planned budget

• ▪ Grade reconciliation shows a higher recovered grade than the resource grade (+22% variance). Surface bulk sampling of Kundu ore body is in progress. The results of this exercise will enhance the confidence of the grade and revenue per carat value for this reserve

Tongo Mine Development

• ▪ A total of 1,229m of underground development achieved to period end (261m in the quarter)

• ▪ Priority development focused on the completion of the ventilation raise, Kundu decline and the establishment of the first mining level rock and kimberlite drives

Processing

• ▪ Processing from the underground and surface Kundu kimberlite continues to yield encouraging results with a high proportion of gem quality diamonds

• ▪ 5tph Processing facility on a 24-hour per day treatment regime

  Improvements to the maintenance discipline of the processing plant is reaping benefits

Diamond Marketing and Sales Agreement and First Diamond Sale Planned

• ▪ Diamond sales and marketing agreement with Bonas Group signed after quarter end

• ▪ Maiden diamond sale planned for late May 2022

Environment, Social and Governance (ESG) Reporting

• ▪ ESG report for 2021 released on 2 February 2022

Corporate

• ▪ Board and Management strengthened through appointment of Non-Executive Director (Alistair Croll) and General Manager for Tongo Mine (Charl Barnard)

• ▪ Capital raise of A$3.76 million announced at A$0.35 per share as part of a A$10 million underwriting by Townshend Capital

ASX: NWF | Find out more atwww.newfieldresources.com.au

1. 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 863 LTI free days as at the end of the quarter. The ongoing Loss Time Injury Frequency Rate (LTIFR) continues to decrease to 0.46. The reporting calculation is based on per 200,000 hours worked.

2. Operations - Tongo Diamond Mine Development

a.

Mining

Underground Development

A total of 260.90m was developed in the quarter bringing the total development for the project to1,228.90m. Figure 1 highlights in green indicates the areas of the mine developed for the project to date.

Figure 1: Mine development to 31 March 2022

Ventilation Raise

During the last quarter, the development of the Return Air Way (RAW) on Kundu Segment A had reached the point where the ventilation raise could commence (see Figure 1). The ventilation raise is being developed on a 2m x 2m dimension at a 30-degree upwards angle. At the end of the quarter, some 30m had been hand drilled, blasted and supported. However, post-period, the ventilation raise was holed into the ventilation shaft in mid-April and has now established a through connection from the underground workings to surface. This will allow for the throughflow of air from surface portal entrance, through theunderground workings and then out via the ventilation raise and shaft (the RAW), to surface. Importantly, the ventilation raise will be equipped as a travelling way (stairway) and will serve as the second means of egress from the underground workings to surface. This is a legal requirement and provides an escape way for personnel in the unlikely event that this may be required due to an incident of some sort underground which prevents exiting the mine through the portal (which serves as the normal means of access into the mine).

Level-1 Rock and Kimberlite Drive

During the last quarter, Kundu decline reached the point from which development operation can commence for the establishment of the first production stopes at the mine. It is pleasing to report that to date the rock and kimberlite drives have been developed for 54.1m and 62.9m respectively. The kimberlite fissure is being extracted from a 3m (wide) x 4m (high) drive and is providing ore tonnes to the processing plant for treatment and diamond recovery.

Three 3m x 3m cross cuts (spaced at 13m centres) have been developed from the rock drive to the kimberlite drive. Of importance is that these drives will provide the access to the first kimberlite raises to be developed in April 2022 in preparation for the first ore production from stopes.

Surface Bulk Sampling Activities

The Tongo Diamond Mine, an 8.3 million carat JORC compliant indicated and inferred diamond resource, is primarily based on five kimberlites, over 75,000m of drilling, microdiamond analysis of drill core and a series of surface bulk samples that provided parcels of diamond for grade and valuation purposes.

The current mine plan is focussed on developing and mining the Kundu and Lando kimberlites, for which a JORC compliant probable reserve of 1.1 million carats has been declared for the upper 110m of these kimberlites.

The Kundu kimberlite has a declared indicated and inferred resource of 2.76 million carats at a +1.0mm average grade of 3.2 carats per tonne. However, the bulk sampling data is primarily collected from the east of the kimberlite dyke where the mining is now taking place (and for which higher recovered mine grades vs. the resource grade have been yielded and recently reported, see below). It was therefore decided to extract a bulk sample from the western part of the kimberlite, some 1.5km from the previous bulk sample in the east, to gather more detailed information on the diamond grade and value for that section of the kimberlite.

A previous excavation (a bulk sampling pit which was initiated but not actually sampled) over this section of kimberlite has been dewatered and cleaned to expose some 113m of kimberlite dyke on strike. This has been drilled and blasted. 384 Tonnes of kimberlite has been recovered during the quarter and sent to the plant for processing. The results will be reported in the next quarterly report.

Similarly, the Lando kimberlite, planned for development later this calendar year, has an indicated and inferred resource of 3.03 million carats at a +1.0mm average grade of 2.8 carats per tonne. However, the bulk sample data is weighted to the central and eastern part of the kimberlite. To obtain more detailed grade and value information for this area of kimberlite ahead of mining activities, a previous excavation over the western section of Lando is in the process of being de-watered in preparation for bulk sampling.

Figure 2: Bulk Sampling of Kundu Dyke

b.

Processing

During the underground development, kimberlite is being recovered from the on-reef drives of the return airway and level 1 mining kimberlite drive. More recently, surface bulk samples from the Kundu and Lando kimberlite are being collected and transported to the 5tph DMS processing plant to be stockpiled in advance of treatment.

Processing during the quarter has yielded 1,211 carats (at a +1.2mm cut off) which is in line with the budget forecast for the period. This is a combination of both underground and surface bulk sample material (being processed separately), and once the bulk sample has been completed it will be reported separately.

Processing of the kimberlite ore recovered from the on-reef Kundu RAW, fissure drive and surface bulk sampling continue to show consistency in encouraging diamond grades and quality of diamonds being recovered. Initial in-house observation estimates that 80% of the diamond recoveries are in the gem quality category, with many diamonds exhibiting excellent crystal shapes with top colour and clarity characteristics.

Although volume of ore processed to date is relatively small, the results are consistent with, or higher than, the estimated mineral resource grade and value of that area of the Kundu Segment A resource. This has been established through a grade reconciliation exercise.

Grade Reconciliation

In addition to the run-of-mine processing activities, two controlled underground bulk samples have been processed to calculate the actual recovered grade from mining and processing, versus the 2019 resource model grades. These samples were mined from the Kundu Segment A RAW development and the carat recoveries reconciled directly with those segments of kimberlite in the resource block model, which has grades assigned on a 10m x 10m x 1m block basis across the declared resource.

Control Sample 1

A total of 380.88 dry tonnes of kimberlite (including some mining dilution) yielded 970.50 carats at a +1.2mm bottom cut off on the processing plant. This calculates to a +1.2mm dry grade of 2.55 carats per tonne. By comparison the resource grade for that segment of kimberlite was estimated at 2.21 carats per tonne at a +1.18mm cut off. The recovered grade for this section is therefore 15.4% higher than the modelled resource grade based on the sample data.

Control Sample 2

A small sample of 65.7 dry tonnes has been mined and processed so far to yield 230.99 carats, giving a recovered dry grade of 3.52 carats per tonne at a +1.2mm cut off, compared to the modelled resource grade of 2.21 carats per tonne at a +1.18mm cut off (+59.3% variance). It should be stated that the sample size is too small to be representative, but the indications are that the current mining and processing grades do exceed the resource block model grades.

Combining the results of Control Samples 1 and 2, which represent a continuous sample along strike of the Kundu A RAW, some 446.58 tonnes have yielded 1,201.49 carats at an average recovered dry grade of 2.69 carats per tonne, versus the resource block model grades of 2.21 carats per tonne, for a variance of +21.7%.

Processing Plant

The Company has continued to process kimberlite mined from the Kundu RAW, fissure drive and surface bulk sampling pits through the 5tph plant during the quarter. An assessment of the production throughput and efficiency of the 5tph plant was undertaken to identify and implement various operational initiatives including plant modification and double shifts. This has resulted in sufficient processing capacity of 80 tons per day to maintain pace with the underground mining using the existing plant. As such, the Board has deferred construction and commissioning of the 25tph plant to HY-22 in favour of increasing the production before additional production capacity is required later in the year.