9 June 2016

Market Announcements Platform ASX Limited

Exchange Centre, 20 Bridge Street

Sydney NSW 2000

POSITIVE RESULTS FROM GASCOYNE LITHIUM PROJECT

ASX Code: SEG

Segue Resources Limited (Segue or the Company) is pleased to announce the maiden fieldwork programme at the Gascoyne Lithium Project (Project) has confirmed the fertility of intrusive suites within the Project area to host lithium‐caesium‐tantalum deposits. Segue has also applied for an additional 700km2 of exploration licences at the Project, taking Segue's total interest to over 1,100km2 across six tenements in the Gascoyne Region of Western Australia (Figure 1).

Figure 1: Tenement location map

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In March 2016, Segue entered in an option and purchase agreement with Next Advancements Pty Ltd (Next Advancements) to acquire a 100% interest in three exploration licence applications covering approximately 220km2 at Morrissey Hill in the Gascoyne region of Western Australia. Segue then entered into the Mortimer Hills JV with Zeus Resources Limited (ASX: ZEU) (Zeus) in April 2016, covering exploration licence E09/1618, which is adjacent to the Next Advancements tenements.

The Mortimer Hills JV and Next Advancements tenements are highly prospective for tantalum‐lithium deposits, with several granitic intrusions identified as the potential source rock for LCT (Lithium‐Caesium‐ Tantalum) rare‐earth pegmatites. Segue immediately commenced a field work and surface sampling programme designed to identify felsic intrusive rocks which are more fractionated and therefore may be the source for, or the host of, lithium deposits.

The Project area contains three main suites of granitic intrusions:

• Moorarie Supersuite (c1830‐1780 Ma);

• Durlacher Supersuite (c1680‐1620 Ma); and

• Thirty Three Supersuite (c995‐954 Ma).

  Rock chip samples were collected to determine which granitic suites were fertile and held the potential to form lithium deposits. Fertile granitic intrusions can be determined by analysing bulk whole rock samples for major and rare element content as well as mineralogical observations. Key indicators of fertile granites useful in exploration include:

• Mg/Li ratios

• Nb/Ta ratios

• Contain garnet, tourmaline and flourapatite/cordierite characteristic of peraluminous granite.

  The ability to develop a zonation map is critical in vectoring in on any potential lithium bearing pegmatites in the region (Figure 2).

  Figure 2: Schematic regional zoning in a cogenetic parent granite and pegmatite group (Modified from London, 2010)

  Segue collected 65 rock chip samples covering all three granitic suites from within the Project area (Appendix A). The sample locations were selected to verify the lithology of the granitic intrusions and establish the extent of fractionation and fertility. Segue has identified several intrusive bodies in the north of the Project area which are unequivocally "fertile", with Mg/Li ratios less than 10, Nb/Ta ratios less than 8 and most rock chips containing garnets and/or tourmaline (Figure 3). The samples also show fertile fractionation trends within the Thirty Three Supersuite. The older Moorarie and Durlacher Supersuites do not appear to be fertile for lithium‐bearing minerals.

  Figure 3: Mg/Li ratio of rock chip samples showing fractionation and fertility

  Figure 4: Mg/Li ratio comparison of the Thirty Three Supersuite with known lithium deposits

  The Mg/Li ratios from the Thirty Three Supersuite have been compared to similar data for North Pilbara lithium deposits (including Wodgina) and the Tanco pegmatite in Manitoba, Canada (Figure 4). The Thirty Three Supersuite displays the same range of fractionation from barren to highly fractionated as the known lithium deposits. This demonstrates the fertility of the Project to contain lithium‐bearing minerals.

  Based on the results of the exploration programme and determination of the fertile intrusive suite, Segue has applied for additional exploration licences totalling 707km2 within the Lithium Target Zone, which is within 10km of the Thirty Three intrusive suite and towards the direction of increasing source rock fractionation (Figure 5). Segue now controls over 1,100km2 of exploration licences at the Project, covering the majority of the Thirty Three Supersuite and the prospective fertile ground.

  Figure 5: Gascoyne Lithium Project tenement map showing the direction of source rock fractionation

  Segue's next stage of exploration, due to commence in early 3Q 2016, will be to:

  • Continue to define and refine the locations of fertile intrusions;

  • Confirm the direction of fractionation; and

  • Locate highly fractionated pegmatites for drill testing.