fd66d562-f8dc-4871-ab1c-a5380a68bd95.pdf

ASX announcement

4 APRIL 2016

Lake Blanche Lithium Brine Target

Argonaut Resources NL (ASX: ARE) (Argonaut or the Company) is pleased to announce it has secured two exploration licences covering Lake Blanche, a salt lake with the potential to host lithium brines and potash in the north of South Australia.

Highlights

• Lithium carbonate prices in China are reported to have surged from

  $8,000/t in September to over $26,000/t in March 2016.

• Argonaut has accepted terms offered for the grant of new two exploration licences covering the whole of Lake Blanche, north of the Flinders Ranges in South Australia.

• The lake is prospective for lithium brines due to its distinctive geological and hydrological qualities.

• The lake is also prospective for potash mineralisation.

• The licences cover an area of 2,000 square kilometres and Lake Blanche itself has a surface area of 1,700 square kilometres.

• The size of the lake suggests it could represent an internationally important lithium source in the event economic concentrations of lithium are found in its brines.

Argonaut notes that the geological and hydrological features unique to Lake Blanche make it a particularly attractive Australian lithium brine target.

Argonaut Resources NL ABN 97 008 084 848

Registered Office

Suite 4, Level 9

341 George Street

Sydney, NSW, 2000, Australia T +61 2 9299 9690

F +61 2 9299 9629

E [email protected]

Adelaide Office

Level 1

63 Waymouth Street Adelaide, SA, 5000, Australia T +61 8 8231 0381

F +61 8 8231 6092

E [email protected]

Lake Blanche, South Australia (Argonaut 100%)

The Lake Blanche exploration licence areas have the potential to host lithium brines and potash.

Lake Blanche is a closed to restricted basin covering an area of 1,700 square kilometres. It has a broad

catchment that includes the Mt Babbage and Mt Painter Inliers which are recorded as containing elevated rare elements including lithium and tantalum (Figure 1).

Economic concentrations of lithium in brine generally occur in circumstances where ground waters percolate through neighbouring lithium bearing rocks into a

closed, continental basin that has not been subject to marine flooding throughout its geological history. Lake Blanche appears to fit these requirements.

An arc of lakes, including Lake Blanche, to the north of the Flinders Ranges has been independently defined as prospective by Geoscience Australia in a 2013 report titled 'A Review of Australian Salt Lakes and Assessment of their Potential for Strategic Resources'. Argonaut, having assessed the potential of each lake on merit, determined that Lake Blanche has the best potential for economic lithium grades.

In the event economic concentrations of lithium are contained in Lake Blanche's brines, the lake has the potential to be an internationally significant source.

300,000 mE 350,000 mE 400,000 mE 450,000 mE

ELA 2015/00221

Lake Blanche

6,750,000 mN

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l

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ala

P

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r

e

t

a

c

w

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h

ELA 2015/00222

B

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Lake Callabonna

6,700,000 mN

Mt Babbage Inlier

6,650,000 mN

Historic exploration for rare elements (Ta, Nb)

Mt Painter Inlier

Interpreted palaeovalley thalweg

0 20 40

Kilometres

Lake Frome

SOUTH AUSTRALIA

LAKE BLANCHE PROJECT

Summary map

1 April 2016

Lake Blanche 01

Figure 1 Lake Blanche with exploration licence locations with relevant geological/hydrological features.

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No previous lithium brine exploration has been recorded in the Lake Blanche area although historic brine exploration has been undertaken at Lake Frome, to the southeast.

Lithium brine deposits, particularly those found in Chile, Bolivia and Argentina are often referred to as 'salar' deposits.

Background

Crescent Lake Project, Canada (Argonaut acquiring 100%)

On 4 March 2016, Argonaut released details of the acquisition of the Crescent Lake Lithium Project in Ontario, Canada (Figure 2) to the ASX.

Highlights of previous drilling at the Crescent Lake Lithium Project, released to the ASX on 11 March 2016, include:

Falcon Lake Area

• 8.1m at 1.48% LiO2 from 2.7m in drill hole W-3

• 10.5m at 1.15% LiO2 from 34.5m in drill hole W-9

• 14m at 0.99% LiO2 from 69.3m in drill hole CO-10-001

• 7m at 1.07% LiO2 from 55.3m in drill hole CO-10-002

• 11m at 1.10% LiO2 from 39.4m in drill hole CO-10-003

  Zigzag Area

• 6.1m at 1.08% LiO2 from 12.4m in drill hole CO-10-007

  
  

  Other Crescent Lake Lithium Project highlights include:

• Adjacent 23m and 10m thick pegmatites at Falcon Lake West deposit.

• 3 to 4 stacked pegmatites over 670m at the Tebish occurrence.

• The deposits are hard rock pegmatite deposits

  containing spodumene mineralisation.

• The areas surrounding these known deposits are yet to be systematically explored.

• There is excellent potential to define deposit extensions and additional deposits.

• The deposits are well located close to the North American rail network and a major port.

Lithium Market

The lithium market is known to be in short supply due to the sharp increase in demand for lithium-ion batteries used in electric cars and domestic power storage systems. Storage of renewable electricity is a major

international issue and domestic self-sufficiency via solar panels and lithium-ion storage units has mass consumer appeal.

The sale of all-electric and hybrid vehicles more than quadrupled in China between 2013 and 2014 and Tesla's 'gigafactory' in Nevada hopes to supply lithium- ion batteries for over 500,000 cars within five years.

Industry insiders note that long-term producers have been slow to react to the increased demand. In a recent report, CORMARK Securities Inc noted:

A lack of production growth from the big four and a series of ramp up issues with the juniors, has led to a tight lithium market with lithium carbonate prices in China surging from $8,000/t in September to

+$26,000/t today.

Beyond the current wave of supply, we forecast a growing supply gap to emerge -40 ktpa LCE (Lithium Carbonate Equivalent) by 2020 and over 100 ktpa LCE by 2025.

CORMARK Securities Inc, 23 March 2016

Lindsay Owler

Director and CEO Argonaut Resources NL

Sections of information contained in this report that relate to Exploration Results were compiled or supervised by Mr Lindsay Owler BSc, MAusIMM who is a Member of the Australasian Institute of Mining and Metallurgy and is a full time employee of Argonaut Resources NL. Mr Owler holds shares and options in Argonaut Resources NL, details of which are disclosed in the Company's 2015 Annual Report. Mr Owler has sufficient experience which is relevant to the style of mineral deposits under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 edition of the "Australasian Code for Reporting of Mineral Resources and Ore Reserves". Mr Owler consents to the inclusion in this report of the matters based on his information in the form and context in which it appears.

Argonaut Resources NL | ASX ANNOUNCEMENT 3

High grade metamorphic complex Metavolcanic dominant

Granitic dominant Metasedimentary dominant Proterozoic and Phanerozoic cover International border

Provincial boundary Coast/lake

Major city

Geological subprovince boundary Superior Province geological boundary Lithium mine/resource

Lithium occurence

Hudson Bay

Labrador Trough

Thompson Belt

MANITOBA

ONTARIO

Trans Hudson

Sachigo

CANADA

James Bay

James Bay

Opinaca

Rose

Whabouchi

Berens

Pakeagama Lake

Crescent Lake Project

Moblan

Tanco

Uchi

BR

WR

Seymour Lake ER

QueticoAbitibi

Grenville Province

Separation

Lake Nipigon

Rapids Georgia Lake

Wabigoon

Lacorne/Quebec Lithium

Wawa

Thunder Bay

Lake Superior

QUEBEC ONTARIO

Subprovince names ER English River BR Bird River

WR Winnipeg River

Southern Province

Lake Michigan

Toronto

0 200

kilometres

UNITED STATES OF AMERICA

Canada 01

Figure 2 Geology of the Superior Province, Canada, showing Crescent Lake and regional lithium occurrences.

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