Announcement PDF ASX Announcement | 9 December 2024 Variscan Mines Limited (ASX:VAR) THREE FOLD INCREASE IN THE HIGH GRADE MINERAL RESOURCE ESTIMATE FOR NOVALES-UDIAS PROJECT TO 3.4Mt Highlights • Updated Mineral Resource Estimate (‘MRE’) published for the Novales-Udias Project in • • • • • • • Cantabria, northern Spain of: 3.4Mt @ 7.6% Zn, 0.9 %Pb Total mineral resource growth in only 13 months from initial, maiden MRE Defined Measured Resources over the Novales-Udias Project for the 1st time Substantial increase in geological confidence; Measured & Indicated Resources represent 67% of the contained tonnes for San Jose Mine Forthcoming Mine Re-Start Study to be based on 1.7Mt @ 8.6% Zn, 1.4 %Pb utilizing Measured + Indicated mineral resources Updated MRE maintains Novales-Udias as one of the highest grade zinc mineral deposits currently owned by an ASX listed company Mineralization remains open along strike, and at depth; +60% of the 12km Novales Trend yet to be included in a MRE Current drilling underway at the Udías Mine together with complementary exploration activities will be included in a further MRE update in 2025 Variscan Mines Limited (ASX:VAR) (“Variscan” or “the Company”) is pleased to report an updated JORC (2012) compliant Mineral Resource Estimate (“MRE”) for the Novales-Udias Project, located in Cantabria, northern Spain. Updated JORC Mineral Resource Estimate delivers substantial growth Asturmine, an established Spanish mining services company with extensive experience with mineral resource modelling of zinc deposits, was engaged by Variscan to report an updated MRE for the NovalesUdias Project which includes the San Jose Mine and the adjacent north-eastern part of the Udías deposit. The updated MRE is 3.4Mt @ 7.6% Zn, 0.9 %Pb at a cut-off grade of 2% Zn+Pb. Table 1. JORC Mineral Resource Estimate for San Jose Mine and north-eastern Udías by deposit and classification reported above a 2% Zn+Pb cut-off Notes: • Mineral Resource table classified by deposit and reported in accordance with the JORC Code (2012). • Note that no 3D underground mining model is available for the Udías NE deposit, as a result, all resources in this area have been classified as Inferred and their actual value may be lower than reported. Figure 1. JORC Mineral Resource Estimate for San Jose Mine and north-eastern Udías by deposit 2 Variscan’s Managing Director & CEO, Stewart Dickson said, “This substantial increase to our updated mineral resource estimate centered around the San Jose Mine is a significant milestone for the Company. It delivers both an increase in size of tonnage and in resource confidence whilst maintaining high-grade. We have grown our total mineral resources by over 3x in only 13 months from the initial maiden, MRE. We have achieved this with exceptional capital efficiency largely due to having in-house underground drilling capability and making judicious use of our extremely valuable database of historical information. It validates the success of our exploration activities to date and establishes a platform upon which we can continue to build a significant high-grade resource inventory as well as advance the Mine Re-Start Study. It is very satisfying to report mineral resources in the higher Measured category for the first time since we acquired the Novales-Udias project. This upgrade is significant. Measured & Indicated Resources represent 67% of the contained tonnes for the San Jose Mine where the highest grade (9.18% Zn) is also found in the Measured category. Having these mineral resources in the higher confidence Measured and Indicated categories is necessary for the forthcoming Mine Re-Start Study which will be based on 1.7Mt @ 8.6% Zn, 1.4% Pb to ensure a reasonable basis for future production targets and economics published. That remains on track for delivery by H1 2025. The upside potential to increase the size of the resource is particularly exciting. Mineralization remains open along strike and at depth. The Competent Persons confirmed low-risk, high priority zones with the presence of mineralization beyond the MRE model ready to convert to JORC mineral resources with further drilling. More broadly, the Company has a number of paths to additional resource inventory growth including: - our enlarged licence areas cover over 100km2 and are highly prospective offering considerable exploration upside; - only 40% of the 12km Novales Trend is incorporated into this updated MRE; - we are currently drilling for the first time in the Udías Mine, which is outside of the MRE model and is several times bigger than the San Jose Mine. We look forward to reporting assay results from the current drill program in early 2025 and anticipate that a further MRE update will be published in 2025 to incorporate these and other drilling results. We are continuing to rapidly advance the Novales-Udias Project which is one of the highest-grade, development stage zinc deposits in Europe. This MRE is an important milestone in our progress towards achieving our objective of re-starting zinc production.” 3 Executive Summary The Company engaged specialist Independent Consulting Group, Asturmine 1 to undertake a full review and assist with preparation of an updated Mineral Resource Estimate. Asturmine has prepared a Mineral Resource Estimate for the Novales-Udías Project, located in Cantabria, Spain. This project centres on the historically mined San José Mine deposit, with additional potential in the surrounding Udías area. The estimation was completed in accordance with the JORC Code (2012) 2, integrating both historical and modern exploration data to provide a comprehensive evaluation of the deposit. The Novales-Udías Project is characterised by Mississippi Valley-Type (MVT) zinc-lead mineralisation hosted within stratiform dolomitic units. The mineralisation, predominantly zinc with subordinate lead, is epigenetic in origin and occurs as sub-horizontal lenses controlled by steeply dipping fault zones. These geological features, along with the straightforward nature of the deposit's mineralogy, underscore its potential for resource development and eventual economic extraction. A robust database of 1,331 drill holes forms the basis of the MRE. Historical drilling accounts for 81.7% of the data, while modern campaigns conducted between 2020 and 2024 contribute the remaining 18.3%. Modern drilling adhered to strict QA/QC protocols, achieving over 90% core recovery, and all samples were analysed at an accredited laboratory. This has ensured that the data used for modelling is both reliable and representative of the deposit. Resource estimation was conducted using Leapfrog Geo and Leapfrog Edge software, employing an octree block model with a parent block size of 5 x 5 x 5 metres. Zinc and lead grades were interpolated using ordinary kriging (OK) after compositing assay samples to 1-metre intervals, the most common length in the database. The resources were classified into Measured, Indicated, and Inferred categories based on data quality and geological continuity. Table 1 presents the estimated Mineral Resources for the Novales-Udías Project, with resources reported separately for each deposit. It is important to note that no depletion has been applied to the Udías deposit due to the absence of a 3D underground mining model. Consequently, the resources for Udías have been classified as Inferred, and their actual value may be lower than reported. A cut-off grade of 2% Zn was applied to the Mineral Resource Estimate, reflecting industry standards for similar MVT deposits. To illustrate how different cut-off grades affect the tonnage and average grade of the mineral resources, a grade-tonnage curve has been generated (refer Figure 11). Although detailed metallurgical studies are pending, historical records indicate that the ores are suitable for straightforward processing, producing high-grade zinc and lead concentrates. The deposit's favourable location within Cantabria, a region with established mining infrastructure, further enhances the project's development prospects. 1 2 Further details on Asturmine available at: https://www.asturmine.com/en/index.html Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. The JORC Code, 2012 Edition. Prepared by: The Joint Ore Reserves Committee of The Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia (JORC). 4 Figure 2. Mineral Resource Estimate categories at the San Jose Mine in 3D View Figure 3. Mineral Resource Estimate categories at the San Jose Mine in Plan View 5 3.1x growth in tonnage & 2.6x growth in contained zinc yet maintains high grade In just over a year from publication of the project’s maiden MRE (refer ASX Announcement 28 November 2023), Variscan’s exploration success, including highly effective underground drilling which has returned excellent high-grade results, has directly contributed to notable increases in the size of the MRE illustrated in Figures 4 and 5. Figure 4. Growth in contained zinc tonnage from maiden, initial MRE in November 2023 to updated MRE in December 2024 Figure 5. Growth in resource tonnage from maiden, initial MRE in November 2023 to updated MRE in December 2024 6 Upside potential for future resource growth & Mineral Resource Estimate updates Zones of mineralization adjacent to MRE deposits In addition to the resources defined in the MRE, Asturmine identified additional tonnage which does not currently meet the JORC classification standards but highlights the presence of mineralization with lower confidence. These represent mineralized material located more than 50 metres from sample data in the ore domains. These are assessed to be low-risk, high priority zones beyond the MRE model ready to convert in JORC mineral resources with appropriate drilling and exploration. Figure 6. Plan view of potential resources stepping out from MRE deposits 7 Figure 7. Plan view of potential resources stepping out from San Jose MRE deposit Current drilling at the Udías Mine Variscan has commenced underground drilling in the Udías Mine (refer ASX Announcement 14 November 2024). The Udías Mine complex is several times bigger than San Jose Mine and has not been previously drilltested by the Company. The southern part of the Udías Mine, exceeding 1.4 km in length, has never been drilled at all. The Udías Mine complex is directly linked underground to the San Jose Mine near Novales, and both mines sit on the 12km-long Novales Trend. The drilling is located outside of the MRE model. First assay results are expected in January 2025. It is anticipated that a further MRE update will be published in 2025 to incorporate these and other drilling results. 8 Figure 8. Plan view indicating the location of drilling at Udías Mine being beyond the Mineral Resource Estimate Wider Licence Areas During 2024, 5 new licences, with an area of 36.66 km2, immediately adjacent to the existing San Jose and Buenahora tenements were granted to Variscan (refer ASX Announcement 8 April 2024). The enlarged licence areas total over 100km2. They are highly prospective and offer exploration upside; +60% of the 12km Novales Trend has yet to be incorporated into the MRE. The enlarged licence areas have historical drilling, workings and some exploration data on them. Variscan will test these areas in due course. 9 Figure 9. Variscan licence areas offer significant exploration potential to increase the Mineral Resource Estimate Mine Re-Start Study will focus on higher confidence Mineral Resources at San Jose Mine The Mine Re-Start Study will focus on the San Jose Mine using the upgraded Mineral Resource Estimate of 1.7Mt @ 8.6% Zinc, 1.4%Pb for that deposit. Measured & Indicated Resources represent 67% of the contained tonnes for the San Jose Mine where the highest grade (9.18% Zn) is also found in the Measured category. Having mineral resources in the higher confidence Measured and Indicated categories is necessary for the Mine Re-Start Study to ensure a reasonable basis for future production targets and economics published. Delivery of the study remains on track for delivery by H1 2025. It is logical to focus on the San Jose Mine as the starting point for potential production as a mining licence is already granted and infrastructure is in place. Historically San Jose Mine was operated as single, standalone entity and is today the best geologically understood part of the project. As the San Jose Mine is directly linked underground to the Udias Mine complex and both mines sit on the 12km-long Novales Trend subsequent, updated MRE and mine studies, may consider combining the deposits operationally. 10 Figure 10. Simplified geological cross-section showing connectivity and continuity between San Jose Mine and Udias Mine (refer ASX Announcement 10 September 2024) Supplementary Information for the Mineral Resource Estimate The following subsections are provided consistent with ASX Listing Rule 5.8.1, with further information provided in the JORC Code (2012) – Table 1, which is attached to this announcement. Geology and Geological Interpretation The San José-Udías Project is situated in Cantabria, Spain, and is characterised by Mississippi Valley-Type (MVT) mineralisation hosted within stratiform dolomitic units. The deposit is predominantly zinc-lead, with zinc being the dominant commodity. The mineralisation is epigenetic, resulting from hydrothermal fluids migrating along steeply dipping fault zones and replacing the carbonate host rock. This mineralisation is stratabound and occurs as sub-horizontal lenses, pods, and veins, often with significant lateral extensions controlled by the fault structures. The lenses are stacked and separated by barren dolostone units, highlighting the stratiform nature of the deposit. Dolomitisation is a key geological process in the formation of the deposit, occurring in multiple stages. The mineralisation is primarily associated with the later phases of dolomitisation. Mineralogical composition is relatively simple, with zinc sulphides (sphalerite) as the main ore mineral, accompanied by subordinate lead sulphides (galena) and occasional marcasite. In the oxidised zones of the deposit, Zn is also present as "calamine", a term locally used to refer to a rock composed of smithsonite and hemimorphite. Geological interpretation of the deposit integrates historical and recent drilling data, supported by detailed 3D geological modelling. This work has delineated the geometry and continuity of the mineralisation, allowing for the identification of key zones of economic interest. The deposit is spatially related to the Novales Trend, which includes multiple prospects with similar geological characteristics, indicating potential for further resource development along strike and at depth. Drilling Techniques The San José-Udías Project integrates historical (1950s–1990s) and modern (2020–2024) drilling campaigns to support resource estimation. Historical drilling, predominantly diamond core, includes 666 underground holes (52,148 m) at San José and 154 surface holes (31,238 m) across the project area. While valuable, the historical data is partially limited due to incomplete documentation of techniques implemented. 11 Modern drilling by Variscan Mines employed advanced diamond drilling methods with rigs such as Hagby Onram 100 and Atlas Copco Diamec 252, achieving over 90% core recovery. A total of 200 underground holes (5,499 m) and 3 surface holes (322m) were drilled, focusing on mineralisation continuity. The campaigns adhered to rigorous quality standards, addressing data gaps and ensuring reliable input for resource modelling. Sampling Techniques Historical Sampling Historical sampling methods, conducted between the 1950s and 1990s by previous operators, lack comprehensive documentation. Core samples were predominantly split into half-core for assay, with sampling intervals varying widely (0.5 m to 3.0 m). In some cases, larger composite samples of up to 10 m were reported. Due to the absence of QA/QC protocols and limited records, the reliability of historical samples cannot be fully validated, though their general trends were incorporated into the resource model. Modern Sampling Modern sampling, conducted by Variscan Mines from 2020 to 2024, followed strict protocols to ensure representative and reliable data. Variscan drill core were sampled as half core with sample lengths ranging between 0.15 m and 1.6 m, averaging 1.0 m, and include at least 1 m of core adjacent to the start and finish of logged mineralisation. Variscan Mines samples were selected by geologists based on the logging of mineralised intervals. Sample recoveries are typically >90%. Detailed geological logging was carried out for all Variscan drill holes, with all holes photographed before and after cutting of core. Samples were logged for lithology, veins and veining intensity, alteration and mineralisation. Representativity and Limitations While historical sampling provides broader context, modern sampling practices ensure robust and representative data for mineral resource estimation. The combination of these datasets allows for a comprehensive understanding of the deposit, though historical limitations are acknowledged. Sample Analysis Method All Variscan half core samples were sent directly to the ALS Seville laboratory for preparation and subsequent analysis according to industry standards with crushing, pulverizing and splitting prior to sample analysis. The sample sizes taken for the drilling reported are considered suitable for the deposit type and style of mineralisation at this stage of exploration. The laboratory is accredited (ALS Seville) and the techniques for Zn and Pb are considered suitable. No descriptions of the historical assaying and laboratory procedures used have been located by Variscan. It is unknown whether the techniques used were partial or total. Estimation Methodology The resource estimation for the San José-Udías Project was conducted using Leapfrog Geo and Leapfrog Edge, employing an octree block model. The parent block size was set at 5 x 5 x 5 metres, with a minimum cell size of 1.25 metres applied through octree subdivision to ensure precision in areas with complex mineralisation. Ordinary kriging (OK) was used to estimate zinc and lead grades. 12 To ensure consistency and reliability in the estimation process, assay samples were composited into regular 1-metre intervals prior to interpolation. This compositing length was selected as it represents the most frequent sample interval in the assay database, providing a uniform basis for grade estimation. The estimation process was designed to balance confidence in well-sampled areas with broader coverage in less informed zones. Four passes of ordinary kriging were applied, with progressively relaxed data and search criteria: Passes 1 and 2 focused on well-informed areas, excluding historical samples longer than 3 metres due to limited confidence in these data, which likely represent composited intervals. Only reliable, modern data were utilised in these passes. Passes 3 and 4 extended the estimation to sparsely sampled areas, incorporating all available data, including historical samples, regardless of length, to maximise spatial coverage. This structured approach ensured that the highest-confidence zones were prioritised, while areas with limited data were also included in the resource estimate, maintaining a balance between reliability and comprehensiveness. Mineral Resource Classification The classification of Mineral Resources is based on the results of ordinary kriging (OK) passes. Classification was applied to blocks within the mineral domain as follows: • • • Measured Resources: Blocks estimated in the first pass were classified as measured. Indicated Resources: Blocks estimated in the second pass were classified as indicated. Inferred Resources: Blocks estimated in the third and fourth passes were classified as inferred, provided they were within 50 metres of sample data. Cut-off Grades The Mineral Resource report for the deposit was prepared applying a cut-off grade of 2% Zn+Pb. This threshold, commonly used in Mississippi Valley-Type (MVT) deposits, reflects industry standards for Zn-Pb mining operations. As the project is still in the exploration phase, insufficient cost and revenue data exist to precisely calculate an economic cut-off grade. However, the selected value provides a reasonable benchmark for the current stage of the project. 13 Figure 11. Cut-off grade sensitivity: Zn+Pb Grade Tonnage Curve Mining and Metallurgical Methods Mining Methods The deposit's geometry, consisting of stratiform, sub-horizontal lenses, is well-suited for underground mining methods, similar to those employed during historical operations. Future mining is anticipated to use modern mechanised techniques to improve efficiency and reduce costs. Detailed mining studies will be required to evaluate the economic viability of extraction and confirm the suitability of specific methods. Metallurgical Methods Preliminary metallurgical assessments indicate that the simple mineralogy of the deposit, dominated by zinc sulphides with subordinate lead sulphides and minor iron sulphides, supports straightforward processing. ENDS This ASX announcement has been approved by the Board and authorised for issue by Mr Stewart Dickson, Managing Director and CEO, Variscan Mines Limited 14 For further information, please contact: Variscan Mines Limited (ASX:VAR) Stewart Dickson Managing Director & CEO E: stewart.dickson@variscan.com.au T: +44 (0) 7799 694195 Media & Investor Enquiries The Capital Network Julia Maguire E: julia@thecapitalnetwork.com.au P: +61 2 8999 3699 About Variscan Mines Limited (ASX:VAR) Variscan Mines Limited (ASX:VAR) is a growth oriented, natural resources company focused on the acquisition, exploration and development of high-quality strategic mineral projects. The Company has compiled a portfolio of highimpact base-metal interests in Spain, Chile and Australia. Its primary focus is the development of its advanced zinc projects in Spain. The Company’s name is derived from the Variscan orogeny, which was a geologic mountain building event caused by Late Paleozoic continental collision between Euramerica (Laurussia) and Gondwana to form the supercontinent of Pangea. To learn more, please visit: www.variscan.com.au For more information Follow us on LinkedIn Follow us on Twitter Visit our investor website: www.variscan.com.au 15 Competent Person Statement The information in this report that relates to Mineral Resources is based on, and fairly represents, information compiled by Mr Juan Antonio Fernández García and Dr Mike Mlynarczyk. Mr Juan Antonio Fernández García is a Principal Consultant and Competent Person at Asturmine and is a Member of the Australasian Institute of Mining and Metallurgy (MAusIMM(CP)). Mr Fernández García has sufficient experience relevant to the style of mineralisation and type of deposit under consideration, as well as the activity being undertaken, to qualify as a Competent Person as defined in the 2012 Edition of the JORC Code. Mr Fernández García assumes responsibility for matters related to Section 3 of the JORC Table 1 and consents to the disclosure of the information in this report in the form and context in which it appears. Dr Mike Mlynarczyk is the Principal of Redstone Exploration Services, a geological consultancy acting as an external consultant to Variscan Mines. He is a Professional Geologist (PGeo) of the Institute of Geologists of Ireland and the Spanish Official Professional Association of Geologists, as well as a European Geologist (EurGeol) of the European Federation of Geologists, and a Fellow of the Society of Economic Geologists (SEG). With over 13 years of full-time exploration experience in MVT-style zinc-lead systems in several of the world's leading MVT provinces, Dr Mlynarczyk has sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the December 2012 edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code). Dr Mlynarczyk assumes responsibility for matters related to Sections 1 and 2 of the JORC Table 1 and consents to the disclosure of the information in this report in the form and context in which it appears. Forward Looking Statements Forward-looking statements are only predictions and are not guaranteed. They are subject to known and unknown risks, uncertainties and assumptions, some of which are outside the control of the Company. Past performance is not necessarily a guide to future performance and no representation or warranty is made as to the likelihood of achievement or reasonableness of any forward-looking statements or other forecast. The occurrence of events in the future are subject to risks, uncertainties and other factors that may cause the Company’s actual results, performance or achievements to differ from those referred to in this announcement. Given these uncertainties, recipients are cautioned not to place reliance on forward looking statements. Any forward-looking statements in this announcement speak only at the date of issue of this announcement. Subject to any continuing obligations under applicable law and the ASX Listing Rules, the Company, its directors, officers, employees and agents do not give any assurance or guarantee that the occurrence of the events referred to in this announcement will occur as contemplated. 16 JORC Code, 2012 Edition – Table 1 Section 1 Sampling Techniques and Data (Criteria in this section apply to all succeeding sections.) Criteria JORC Code explanation Sampling techniques • Nature and quality of sampling (eg cut channels, random chips, or specific specialised industry standard measurement tools appropriate to the minerals under investigation, such as down hole gamma sondes, or handheld XRF instruments, etc). These examples should not be taken as limiting the broad meaning of sampling. • Include reference to measures taken to ensure sample representivity and the appropriate calibration of any measurement tools or systems used. • Aspects of the determination of mineralisation that are Material to the Public Report. • In cases where ‘industry standard’ work has been done this would be relatively simple (eg ‘reverse circulation drilling was used to obtain 1 m samples from which 3 kg was pulverised to produce a 30 g charge for fire assay’). In other cases more explanation may be required, such as where there is coarse gold that has inherent sampling problems. Unusual commodities or mineralisation types (eg submarine nodules) may warrant disclosure of detailed information. Commentary • The drilling data of the San Jose mine and adjacent area that is referenced in this report relate to historical surface and underground drilling conducted by previous operators, as well as to the underground and surface drilling conducted in the area by Variscan Mines in the years 2020-2024. The complete information on the multiple drilling campaigns of various vintages is extensive and can be found in ASX press releases by Variscan Mines of 3rd February 2020, 3rd March 2020, 16th March 2020, 1st April 2020, 9th March 2021, 25th May 2021, 15th June 2021, 4th August 2021, 15th March 2022, 7th July 2022, 25th August 2022, 2nd March 2023, 7th August 2023, 5th October 2023, and 11th July 2024 on the website www.variscanmines.com.au. • Historical data is sourced from previous project operator exploration activities, performed from the 1950’s to the late 1990’s. Historical data includes both underground and surface core drilling, of which the paper-format core logs and location maps are held at the School of Mines and Energy Engineering at Torrelavega, a faculty of the University of Cantabria, Spain. • Due to the incomplete nature of the historical drill hole data, including procedures, a comment on the sample representativity or calibration of measurement tools or systems used by historical 17 Criteria JORC Code explanation Commentary workers cannot be made, and these cannot be considered ‘industry standard’ by modern standards. • Historical drilling includes 666 holes (52,148 m) drilled underground at San Jose; 105 holes (6,294 m) drilled underground at Udías; and 154 holes (31,238 m) drilled from surface. All underground drill collars from San Jose have been located and re-surveyed by Variscan and the hole azimuth and dips measured at the collar positions. Also, a selection of drill holes from Udias and selected surface drill holes have been located and re-surveyed in the field, as part of vetting the historical datasets. • Variscan Mines underground drilling data referenced in this report comprises 200 diamond drill holes (totalling 5,499 m). Details of Variscan’s underground drilling campaigns were provided in Variscan Mines ASX press releases. • In addition to underground drilling, limited surface diamond drilling was conducted by Variscan Mines. Drilling consisted of 3 surface drill holes (totalling 322 m of core), and details were provided in the Variscan Mines ASX press release of 2nd March 2023. • All diamond drilling of Variscan Mines was sampled using industry best practice methods: most diamond drilled core was cut along its length to produce half core, which was then assayed, except for the last 60 holes (totalling 1502m) drilled with a portable drill that were assayed as full core owing to the comparatively small drill core diameter of 37mm. The samples were sent to the accredited ALS Seville laboratory for analysis. Samples are considered 18 Criteria JORC Code explanation Commentary representative