2015 Annual Group Report GR378 MLN 342, MLN 346, MLN 459, MLN 405, MLN 811, MLN 816, MLN 1033, MLN 1039, ML 30512 and ML 30589, Mount Bonnie Year ending 31 December 2015

Abstract

PNX Metals Ltd ('PNX') purchased the Mount Bonnie tenements from Newmarket Gold Inc in late 2014. This is the first of the Group Reports (GR378) pertaining to MLNs 342, 346, 405, 459, 811, 816, 1033, 1039 and MLs 30512 and 30589, collectively referred to as the 'Mount Bonnie leases'. PNX are exploring the Mount Bonnie leases as part of the Hayes Creek Project, which also includes the Iron Blow leases located approximately 2km to the north. Mount Bonnie is a polymetallic Au, Zn, Ag, Pb and Cu deposit within the Pine Creek Orogen, discovered in the 1870's and mined sporadically up to 1985. It produced approximately 25,000oz of gold and 810,000oz of silver from oxide ore totalling about 110,000t in the open pit, as well as minor historical underground production. During the reporting period, PNX completed a significant exploration drilling campaign comprising 32 holes (MBRC013-MBDH036) for a total 2914.4m (1695.7m RC and 1218.7m diamond). Three face sampling traverses (MBTR001-003) were also sampled over a combined length of 48.04m. The purpose of this work was to establish a JORC-compliant mineral resource underneath and adjacent to the existing oxide pit as well as to explore for extensions along strike. To assist with drill targeting, a fixed loop EM (approximately 10 line km) and downhole EM survey was undertaken to identify any conductive bodies indicative of massive sulfide deposits. Geophysical modelling was undertaken on historical magnetic and VTEM data provided by Newmarket and also on the new ground EM data acquired by PNX. Geochemical sampling of the pit and surrounds was also undertaken, including five rock chip samples, 17 gold in soils samples collected at the Maze North Prospect on MLN 816, 28 fpXRF soil analyses and 36 composite waste rock dump samples to investigate possible waste rock reprocessing potential. A significant effort in compiling, collating and correcting historical data was undertaken prior to commencement of a mineral resource estimate which was in progress at the end of the reporting period. A Scoping Study commenced to investigate the possible development of the Hayes Creek Project.