Paterson Resources : Exploration Update

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ASX ANNOUNCEMENT

1 July 2022

Exploration Update

High priority targets identified at Burraga Project from detailed Aeromagnetic Survey

Reinterpretation

HIGHLIGHTS

• Detailed reprocessing of 2014 aeromagnetic survey conducted by Thomson Aviation for Elysium Resources completed by Perth-based geophysical consultancy Resource Potentials.
• A cluster of high priority 3D anomalies identified only 500m south of historic Lloyds Copper (Zinc- Lead-Silver) Mine in under-explored terrain.
• Previous drilling returned assay values up to 8.1% Zinc
• Land access negotiations underway

Paterson's Executive Director Matt Bull commented on the results, "We are highly encouraged by the distinct bullseye anomalies identified through the reprocessing of Elysium Resource's 2014 aeromagnetic survey. The anomalies are sited only 1.5km along strike and south of to the historic Lloyds copper mine in an area where very little exploration has taken place. Several intriguing copper and zinc intercepts nearby the anomalies warrant further immediate investigation and follow-up.Coupled with the upcoming drilling program at the Grace Gold-CopperProject in Western Australia's prolific Paterson Province, Paterson Resources are entering an exciting exploration phase and we look forward to keeping the market updated in due course."

Paterson Resources Limited ("Paterson" or "the Company") (ASX: PSL); is pleased to provide an update on progress of the Company's exploration efforts at its New South Wales Burraga Project.

Perth-based geophysical consultancy Resource Potentials was engaged to reprocess a detailed airborne geophysical survey conducted by Elysium Resources in in April 2014. Thomson Aviation flew a magnetic and radiometric survey (MAG) over three contiguous tenements at Burraga including EL6463, EL6874 and EL7975. The survey was flown on a 60m line spacing at a nominal terrain clearance of 60m and was intended to provide better resolution data than the government and open file data available.

At the time, a preliminary interpretation of the data by geophysical consultant Kim Cook of GeoMagik identified a cluster of 3 high priority targets (Target 4, Target 5 and Target 8 - Figure 1) 500m to 1.5km to the south of the historic Lloyds Copper Mine. The anomalies were given as two-dimensional projections at surface

with no depth or size indicators provided.

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Figure 1: Location of Targets identified by geophysical consultants GeoMagik in 2014

Resource Potential completed unconstrained 3D magnetic vector inversion (MVI) modelling of the Burraga 2014 airborne magnetic (AMAG) data using Geosoft's VOXI modelling algorithm in order to resolve the depth and geometry of these magnetic source bodies.

Target 8 is located on the eastern limb of the Lloyds syncline within an interbedded sequence of sericitized siltstones, lapilli tuffs, mafic schists and sulphidic cherts of the Rockley Volcanics (Figure 1) and Target 4 is sited on the western limb with regional thrust faulting offsetting the sequence.

The central potassium anomaly is located in a structural corridor and presents as a potential intrusion. The Priority 1 targets coincide with the remnantly magnetised potassium anomaly and the cross-cutting structures to the north could provide potential mineralised fluid traps for the suspected central intrusion.

The MVI model has resolved a high-amplitude magnetic source target corridor with amplitudes up to +0.01 SI, located within and proximal to Target 8 extending along strike for nearly 2.4km (Figure 2). The southern part of the magnetic anomaly corridor contains a very strong magnetic anomaly source with an amplitude of +0.05 SI, the centre of which is modelled at a depth of 300 m below ground level and strikes for 370m.

An additional strong modelled magnetic source body is coincident with Target 4 with a maximum amplitude of 0.04 SI and is proximal to an interpreted coarse-grained leucogranite intruding into the volcanic sequence. The target corridor with amplitudes up to +0.01 SI extends for 1.2km on the western limb of the Lloyds syncline

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and could represent a possible fold repetition of the anomaly on the eastern limb. Both of the modelled magnetic anomalies are proximal to or coincident with identified potassium anomalies (Figure 2).

Figure 2: Surface projection of 3D magnetic vector inversion isosurfaces completed by Resource Potentials

Much of the historical exploration at Paterson's Burraga project has been focused near the Lloyds copper mine that were mined mainly during the late 19th century. The largest producer was the Lloyds Copper Mine which produced 19,443 tonnes of copper (470,000 tonnes of ore at 3.6% Cu) from a complex quartz - carbonate - sulphide vein system located within a significant altered shear zone.

Limited historical exploration has been conducted over the Burraga South workings and nearby Spragues Mine with Getty Oil Development Company completing 10 diamond drill holes (Figure 3: DB1-DB9 and DB9A) for 2,791m in 1983 designed to test a series of geophysical anomalies and the depth extent of mapped gossans (Figure 3). Significant intercepts from the program included:

• 4m @ 3.43% Zn, 0.15% Cu and 12g/t Ag rom 110m including 1m @ 8.1% Zn from 111m (DB4)
• 5m @ 1.11% Zn, 0.27% Cu and 7.62g/t Ag from 129m (DB4)
• 1m @ 5.16% Zn, 0.19% Cu and 29g/t Ag from 150m (DB4)
• 2m @ 1.26% Zn, 0.15% Cu, 2.21% Pb and 41.9g/t Ag from 244m (DB4)
• 4m @ 1.79% Zn, 0.07% Cu, and 5.5g/t Ag from 187m (DB7)
• 9m @ 1.08% Zn and 11.33g/t Ag from 228m (DB7)

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62B3: 1.83m @ 0.42% Zn & 10.1g/t Ag from 82.9m

RCR009: 5m @ 0.79% Zn & 0.17% Cu from 42m

DB4: 5m @ 1.11% Zn, 0.27% Cu & 7.62 g/t Ag from 129m

1m @ 5.16% Zn, 0.186% Cu & 29 g/t Ag from 150m

2m @ 1.26% Zn, 0.15% Cu, 2.12% Pb & 41.9 g/t Ag from 244m

DB9A: 7m @ 0.57% Zn & 0.1% Cu from 335m

DB7: 4m @ 1.79% Zn, 0.07% Cu & 5.5 g/t Ag from 187m

3m @ 1.09% Zn from 198m

8m @ 1.02% Zn from 207mDB3: 1m @ 0.7% Zn & 5g/t Ag from 59m 9m @ 1.08% Zn & 11.33 g/t Ag from 228m

RCR010: 3m @ 1.70% Zn and 0.08% Cu from 104m

Figure 3: Location of historical drilling relative to 3D magnetic vector inversion surfaces

Analysis of the drill core at the time by Getty highlighted the pyrrhotite, sphalerite and chalcopyrite mineralisation assemblage within variable quartz and K-feldspar veining suggested a skarn ore mineralisation model. Latter analysis of the core from drillholes DB1 and DB3 by Michelago Ltd in 1994 identified elevated arsenic up to 1,120ppm, molybdenum up to 67ppm, and barium up to 6.01% indicating proximity to a strongly mineralizing intrusive/porphyry body (Figure 4).

A further three RC drill holes (RCR006, RCR009 and RCR0010) were completed by Republic Gold in 2007. Anomalous intercepts included:

• 5m @0.79% Zn and 0.17% Cu from 42m (RCR009)
• 3m @ 1.7% Zn ad 0.08% Cu from 104m (RCR010)

Whilst elevated base metals were intersected in the historical drilling, it appears the drilling has skirted around the anomalous high MVI model interpretation (Figure 5).

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Burraga Schematic Section

Figure 4: Ore mineralisation model suggested for Burraga South and Sprague's Prospects

Figure 5: Cross-SectionA-B of historical drilling through 3D MVI model