Cue Project

Musgrave Minerals Ltd has entered into a Farm-In and Joint Venture Agreement with Silver Lake Resources Limited (ASX: SLR) for the Cue Project in November 2015.  Musgrave completed the Stage 1 expenditure of the Cue Project Farm-In and Joint Venture Agreement in February 2017 to earn a 60% interest in the Project and has elected to proceed to Stage 2 of the Cue Joint Venture whereby the Company can increase its interest by 20% to 80%.

The Cue Project consists of the Moyagee Gold and Hollandaire Copper Projects in the highly prospective Murchison province of Western Australia (Figure 1).

Figure 1: Cue Project location plan comprising Hollandaire and Moyagee Projects

Figure 2: Prospect location map

Moyagee Gold Project

The Moyagee Project hosts a combined JORC (2012) and JORC (2004) compliant total Mineral Resource base of 1.9Mt @ 2.0g/t Au for 126,900oz contained gold within four separate deposits, Lena, Leviticus, Numbers and Break of Day (refer Table 1 and SLR ASX announcement 28 August 2015; “Mineral Resources-Ore Reserves – August 2015”).  This existing resource does not include any of the high grade drill results reported by the Company in 2016 and 2017.  Musgrave is working towards a significant resource upgrade in June 2017.

Significant gold targets remain untested including Break of Day, Laterite Hill, Vostock, and Lady Stardust.

Historical intersections at Break of Day include:
• 3m @ 8.9g/t Au
• 3m @ 23.0g/t Au

Historical intersections at Laterite Hill include:
• 3m @ 37.6g/t Au (drill hole EHC1),
• 3m @ 19.7g/t Au (drill hole ARC296) and
• 7m @ 5.5g/t Au (drill hole ARC282).

Reverse circulation (“RC”) and diamond drilling has identified high grade gold mineralisation at Break of Day including:
• 21m @ 21.5g/t Au from 157m (16MORC026),
• 5m @ 53.5g/t Au from 138m (16MORC043),
• 3m @ 54.9g/t Au from 187m (16MORC041),
• 5m @ 33.0g/t Au from 154m (16MORC048),
• 3m @ 38.6g/t Au from 274m (16MORC039) and
• 2m @ 41.5g/t Au from 190m (16MORC052)

(see ASX releases dated 10 October 2016, 18 October 2016, 3 November 2016 and 9 November 2016)

Diamond drilling has confirmed the gold mineralisation and includes:
• 3.2m @ 26.6g/t Au from 238.5m (16MODD002),
• 4.0m @ 9.6g/t Au from 231.0m (16MODD003), and
• 6.6m @ 7.3g/t Au from 127.35m (16MODD001)

(see ASX release dated 30 January 2017; “Diamond Drilling Confirms High Grade Gold at Break of Day & Extends High Grade Gold at Lena”)

Musgrave is focussed on delineating a high grade gold resource at Break of Day in Q2 2017.

The Break of Day mineralisation extends for more than 300m of strike is open down dip and also along strike to the north and south.  The mineralisation is interpreted to occur in vertical to steep westerly dipping, semi parallel quartz lodes hosting high grade gold with minor (1-2%) pyrite, within a basaltic stratigraphic sequence.  The seperation of the gold lodes varies along strike from 15 to 60 metres.  The gold mineralisation can be traced over a strike extent of more than 360 metres and is currently open down plunge.

The Vostock target sits at the intersection of a significant structure and flexure in the host stratigraphy. Vostock is a 700m long gold soil anomaly at greater than 10ppb Au and has had no effective drilling.

A new gold target has been identified at Lady Stardust. The target is a gold in soil anomaly partially co-incident with a basement VTEM target, situated on a prospective lithological contact and favourable structural position and has not been drill tested.

Further drilling is required to test these targets and define the boundaries to the mineralisation within these targets.

Musgrave’s goal is to define a high grade gold resource at Break of Day and Lena that will underpin a clear path to development.

Figure 3: Cross section 13300mN (local grid) at Break of Day

Hollandaire Copper Project

The Hollandaire Copper Project was discovered by Silver Lake Resources Limited in 2011 and hosts a JORC (2004) compliant total Mineral Resource base of 2.0Mt @ 1.9% Cu for 38,800t of contained copper and 2.7Mt @ 5.8g/t Ag for approximately 495,000oz contained silver and 0.52Mt @ 1.35g/t Au for 22,500oz contained gold (refer Table 1 and SLR ASX announcement 28 August 2015; “Mineral Resources-Ore Reserves – August 2015”).

The Hollandaire and Hollandaire West deposits are tabular stratabound volcanic-hosted massive sulphide deposits (VMS). The mineralisation forms a moderate dipping zone of massive sulphide mineralisation averaging 10 metres thick which plunges to the south-west. Copper mineralisation is located approximately 50m from surface and drilling to date indicates it is open to the south-west and at depth (Figure 2).

Historical drill intersections at Hollandaire include (refer SLR ASX announcement dated 10 November 2011; “High Grade Copper Discovery at Hollandaire”):
• 9.3m @ 15.4% Cu, 2.0g/t Au & 29.0g/t Ag from 61 metres (drill hole 11HOD009)
• 14.3m @ 7.8% Cu, 1.0g/t Au & 20.1g/t Ag from 109 metres (drill hole 11HOD0039)

Recent exploration by Musgrave Minerals at Cue has confirmed extensions to the Hollandaire West copper-gold mineralisation with its maiden drill hole returning:
• 5m @ 2.46% Cu, 0.3g/t Au, 10.1g/t Ag

The discovery of massive sulphide copper-gold mineralisation at Mt Eelya with Musgrave’s maiden drill hole in this prospect demonstrated the upside of the Cue Project to host significant VMS style mineralisation. The initial Mt Eelya intersection is:
• 8m @ 1.6% Cu, 0.6g/t Au, 4.5g/t Ag.

A number of co-incident geochemical and electromagnetic targets have been identified for follow-up testing throughout the tenement package.

Figure 4: 3D schematic of the Hollandaire and Hollandaire West mineralisation and down plunge targets. Red drill traces represent drill holes with down hole transient electromagnetic survey data (DHEM). Surface moving loop transient electromagnetic (MLTEM) models are also shown on the image.

Figure 5: Massive Cu-Au sulphide targets shown on gridded aeromagnetic image

Table 1. Summary of JORC Resources and Reserves for the Project

Notes to Table 1:
The Lena Mineral Resource at Moyagee is produced in accordance with the 2012 Edition of the Australian Code of Reporting of Mineral Resources and Ore Reserves (JORC 2012).

The remaining Mineral Resources and Ore Reserve estimates were first prepared and disclosed in accordance with the 2004 Edition of the Australian Code of Reporting of Mineral Resources and Ore Reserves (JORC 2004) and have not have not been updated since to comply with JORC 2012 on the basis that the information has not materially changed since it was last reported.

For further details refer to SLR ASX announcement 26 August 2016: “Mineral Resources and Ore Reserves Update”.