MCINTOSH FLAKE GRAPHITE PROJECT

The McIntosh Project is a tenement package covering an area of 330km2 located in the East Kimberley region of Western Australia approximately 190km north-northeast of Halls Creek.

The McIntosh Flake Graphite Project is currently Hexagon’s primary focus with an existing resource of 7.13Mt @ 4.73% at Longtom and a diamond drilling program completed in 2015 that is expected to add considerably to the McIntosh Resource.

img-mcintosh-1

Figure 1: Final processed VTEM supermax imagery (channel 49BZL) with target location names

A combination of favourable source rocks (carbonaceous units of the Tickalara Metamorphics), deep burial metamorphism and a moderate to high strain environment (marginal to the Halls Creek crustal suture and mafic intrusions) has provided the right conditions for flake graphite mineralisation.

The McIntosh project comprises felsic to mafic and ultramafic intrusions within high-grade metamorphic sediments and mafic units of the Tickalara Metamorphics. The Tickalara Metamorphics have been subjected to burial metamorphism with a resulting package of high grade amphibolitic to granulite facies rocks. The formation comprises schist, paragneiss, granite gneiss, calc-silicate rocks, amphibolite and pyroxene granulite. Within the McIntosh project the Tickalara lithologies include a graphite – sillimanite gneiss unit approximately 50m in thickness. The total flake graphite strike length potential at McIntosh is in excess of 50km and is the main focus of Hexagon’s exploration activities.

The VTEM Super max system is the most advanced time-domain electromagnetic in the world. This was flown over the McIntosh project in 2014 by Geotech Ltd and identified 11 areas with good potential for graphite mineralisation. Diamond drilling in 2015 targeted three of these anomalies (Emperor, Wahoo and Barracuda). In addition to the VTEM survey, three dimensional VTEM interpretations were completed for 5 of the anomalies. This modeling highlights the presence and details the structures of broad conducive sequences that have strong potential to host flake graphite schist. It is these structural environments that will be the focus of all future exploration activities.

LONGTOM (T1)

The maiden indicated and inferred resource at Longtom is in compliance with the JORC Code and is estimated to contain 7,135,000 tonnes grading 4.73% TGC (4.95%TC) over a strike length of 400 m and to a depth of 200 m RL. The resource contains 337,700 tonnes of contained graphite at a nominal cut-off grade of 2% TGC (refer Table 1).

Table 1: Target 1 Flake Graphite Resource estimated at 2.0% TGC lower cut off (*)

Project Area Ore Type Resource Classification Tonnes Graphite (% TGC) Contained Graphite (tonnes)
Target 1 Primary Indicated 4,470,000 4.71 210,350
Graphite Oxide Inferred 540,000 4.51 24,350
Primary Inferred 2,125,000 4.84 103,000
Oxide + Primary Total Resource 7,135,000 4.73 337,700

* Resource modelling was undertaken with IMS mining software by Mr William Seldon Mart as the Competent Person. Seldon Mart is a principal of MineMap Pty Ltd and is a Member of the Australasian Institute of Mining and Metallurgy.

EMPEROR (T6)

The Emperor prospect has produced excellent metallurgical test work results. Bulk scale test work (200kg of HQ core) has produced a 98% TC concentrate without any acid or chemical leaching with a high 89% recovery. Hexagon has successfully targeted the large to jumbo flake graphite. Flake graphite at the surface and a favourable low strip ratio/open pit operation makes Emperor a very exciting prospect for Hexagon. A resource will be released early 2016.

img-mcintosh-2

Figure 2: Oblique view of interpreted mineralization at the Emperor prospect (looking north-east)

img-mcintosh-3

Figure 3: Cross section of diamond drill holes T6GDD159, T6GDD164 and T6GDD165 showing mineralised intercepts

img-mcintosh-4

Figure 4: Photomicrograph of T6GRC093 showing large to jumbo flake graphite.

img-mcintosh-5

Figure 5: SEM image showing Emperor flake graphite concentrate of +97% TC achievable with no acid or chemical leaching

WAHOO (T4)

Bulk scale metallurgical test work at Wahoo has produced a +98% TC concentrate without any acid or chemical leaching and a 92% recovery. Flake graphite schist is associated with a regional scale fold hinge and flake graphite is present at the surface which is well suited to a low strip ratio / open pit operation.

img-mcintosh-6

Figure 6: Oblique view of interpreted mineralization at the Barracuda prospect (looking south)

img-mcintosh-7

Figure 7: Large to jumbo flake graphite in thin section from Wahoo

BARRACUDA (T5)

The barracuda prospect has a strike length in excess of 1km.

img-mcintosh-8

Figure 8: Barracuda prospect area showing drill holes and modelled EM plates

img-mcintosh-9

Figure 9: Photomicrograph of Barracuda flake graphite mineralization highlighting in-situ large to jumbo flake graphite within a calcite matrix. Jumbo flake size of 500µm was recorded in thin section.

MCINTOSH GROWTH POTENTIAL

Three areas have been identified for potential resource growth at the Marlin, Mahi Mahi and Mako prospects. EM anomalies highlight in excess of 35km of strike length potential for flake graphite.

The McIntosh tenement package contains a total in excess of 50km of strike length potential for flake graphite.

McIntosh EM Resources and Targets

Figure 10: McIntosh growth potential