Variscan Mines : New Zones of High Grade Zinc Intersected at San Jose Mine

ASX Announcement - 20 December2021

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NEW ZONES OF HIGH-GRADE ZINC

INTERSECTED AT THE SAN JOSE MINE

Highlights

• Assays from underground drilling have identified new zones of high-grade zinc mineralisation in the Central Zone of the San Jose Mine.

168 Trend

• High-gradezinc mineralisation in the previously untested 168 Trend: o DDH NOVDDT003: 8.0m @ 20.17% Zn

▪ Including 5.0m @ 24.92% Zn

1. DDH NOVDD085: 9.0m @ 8.73% Zn o DDH NOVDDT005: 3.0m @ 19.20% Zn o DDH NOVDDT001: 2.8m @ 17.86% Zn

• 1. DDH NOVDD086: 4.0m @ 8.93% Zn o DDH NOVDDT002: 2.0m @ 15.42% Zn
• 168 Trend remains open with significant potential for further extensions

Los Caracoles Trend

• Assays from the Los Caracoles Trend have continued to extend high-grade mineralisation in a southerly direction below the main gallery level:
  o DDH NOVDD077: 8.0m @ 5.16% Zn
  o DDH NOVDD079: 6.0m @ 5.02% Zn
  o DDH NOVDD077B: 6.0m @ 5.41% Zn
  o DDH NOVDD078B: 5.0m @ 6.00% Zn
• Potential for +400m extension of this trend based on assay results and visual estimates of drilling conducted so far

Drilling Programme Update

• Further assay results from 12 diamond drill holes are pending; most holes exhibit positive visual zinc mineralisation
• The Phase 2 drilling campaign is being ramped up, with an additional drill-rig deployed to test step-out targets and extensions as well as upsizing the planned drilling metreage

ASX:VAR Web - www.variscan.com.au

Variscan's Managing Director & CEO, Stewart Dickson said,

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"We are pleased to report this next set of very strong drill assay results which continue to demonstrate the potential for more high-grade discoveries beyond the historical mine workings.

These results have far exceeded our original expectations based on visual indications as announced on 23 November 2021.

The drill results from the previously un-tested 168 Trend are exceptionally encouraging and represent a genuine exploration success as we had no historical data to work from.

The drill results around Los Caracoles further extend the known trend, which remains open. The continuing occurrences of high-grade mineralisation immediately below the main gallery level in multiple parts of the mine is very important for defining our high-grade inventory and future development scenarios.

Zinc has recently been classified as a critical metal by the US Government and is acknowledged to be an important metal in the energy transition to net-zero. With strong zinc price performance and a positive outlook for zinc prices, Variscan Mines is well-positioned to take advantage of these dynamics".

Variscan Mines Limited ("Variscan" or the "Company" or the "Group") (ASX:VAR) is pleased to report assay results from the Phase 2 underground diamond drilling programme at its San Jose Mine, located in Cantabria, northern Spain.

Figure 1. Plan view of selected mineralised intersections from drilling in the 168 Trend and the Los Caracoles Trend

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ASX Announcement - 20 December 2021

Key Findings & Activities

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While the current drill programme still has a way to run, it has already revealed:

• the presence of laterally extensive mineralised lenses above and below the main gallery level
• mineralised lenses assessed to be more contiguous and wider in some areas
• significant areas of the Central Zone are assessed to be under-exploited with potential for further discoveries
• Extension of drilling on Los Caracoles Trend has successfully intersected mineralised lenses below the main gallery level increasing the strike length in this area by a further 200m
• Continuing validation of the conceptual model of the San Jose Mine as a multi-layered deposit, consisting of multiple vertically stacked, sub-horizontalhigh-grade mineralised lenses of variable thickness, separated by intervals of dolostone. This is consistent with the generally stratabound character of sulphide orebodies in MVT Pb-Zn districts1

Exploration Potential

• The Phase 2 diamond drilling programme was primarily designed to expand the footprint of mineralisation
• Significant potential for high-grade mineralisation extending below the former producing mine's lowermost working elevation; majority of the mine has not been drill-tested at depth providing excellent scale opportunity
• Increasing probability for resources to be delineated both above and below the main gallery level and extensions of known mineralised trends; this new assay information provides important data that will be included in the estimation of mineral resources

Figure 2. Diamond Drill Core from NOVDDT003 illustrating massive sphalerite in dolostone

Note: Hole depth shown from 1.0m to 11m

1 Rong Ma (2018) 'Study on geological features and exploration methods of MVT Pb-Zn deposits' IOP Conf. Ser: Earth

Environ. Sci. 108 032010

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ASX Announcement - 20 December 2021

For personal use only

Los Caracoles Trend

Figure 3. North-South Long Section of Phase 2 drilling in the Los Caracoles Trend

(Also showing certain drilling results from Phase 1 drilling - refer ASX release 4 August 2021)

168 Trend

Drilling and geological mapping in Stope 168 has demonstrated this orebody to be open both towards the north and especially the south. Positive drilling results provide further confidence that additional high-grade ore lenses overlie the those already identified. This is important, as these ores are among the highest grade encountered at the San Jose Mine.

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ASX Announcement - 20 December 2021

Figure 4. Plan view of Phase 2 drilling in the 168 Trend

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Looking Ahead

Preparation is underway for a comprehensive exploration program on the Novales-Udias Project in 2022, which will include further drilling campaigns and metallurgical test work. The work program will

enable the commencement of technical studies designed to demonstrate the potential for a commercially viable project.

Variscan's immediate focus is progressing with:

• underground drilling at the San Jose Mine
• underground drilling of step-out targets in old near-surface mines
• returning assay results as soon as possible for market reporting

Additionally, the Company will be advancing several follow-on activities and deliverables including:

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ASX Announcement - 20 December 2021