Announcement PDF ASX Announcement – 25 May 2023 3D MODEL & DATABASE PROGRESS TOWARDS RESOURCE ESTIMATION AT SAN JOSE MINE Variscan Mines Limited (“Variscan” or the “Company” or the “Group”) (ASX:VAR) is pleased to report progress at the San Jose Mine, near Novales, located in Cantabria, northern Spain. Highlights • • • • • • Upgrade and expansion of drill-hole database at San Jose Mine; now consists of 983 drillholes for 88,155m 3D model of mineralisation and mine development has been constructed from the improved database Modelling confirms thick, high-grade, accessible sulfide zinc-mineralised lenses Analysis highlights in-mine and near-mine upside and step-out prospective zones for future exploration Selected historical diamond drilling results in unmined areas stepping out from the San Jose Mine: • S-21: 43.0m @ 4.5% Zn including 6.0m @ 9.6% Zn • S-162: 20.0m @ 4.0% Zn including 3.2m @ 9.6% Zn • S-163: 16.8m @ 3.4% Zn including 7.3 m @ 6.5% Zn • S-161: 16.1m @ 3.5% Zn including 5.9m @ 6.3% Zn Progressing towards publishing a maiden JORC-compliant Mineral Resource Estimate for the San Jose Mine Variscan’s Managing Director & CEO, Stewart Dickson said, “Following our latest round of successful drilling results and recent fund raising, we’ve completed a comprehensive review and validation of our drill-hole database in preparation for mineral resource estimation and a mine re-start concept study at the San Jose Mine. As a result of this work the quality of the database has improved significantly and highlights the in-mine and near-mine exploration upside. Underground targets are expected to be drill-tested as soon as practicable with step-out surface drilling to be conducted in H2 of this year. This in-fill drilling, off the back of recently reported successful step-out drilling, will address strategic spatial gaps which could yield further tonnage. All of these results and activities contribute positively to the delivery of our key objectives; a JORC compliant mineral resource estimate and the mine re-start concept study at the San Jose Mine”. ASX:VAR Web - www.variscan.com.au Figure 1. 3D Mineralisation and Mine Development Model of San Jose Mine Key Findings Following Variscan’s drilling success stepping-out approximately 1,200m north-east along the strike of the San Jose Mine stopes (refer ASX announcement 2 March 2023), a comprehensive review of the Company’s data was conducted to refine our geological understanding and construct a mineralisation model for resource estimation and identification of prospective in-mine and near-mine targets for future drilling. The database has been thoroughly reviewed with the Variscan team undertaking significant verification of data in the mine and on the ground in the surrounding areas. As a result, the database has expanded and now consists of 983 drill-holes for 88,155m (Appendices 1-8). From this database, a 3D wireframe-based model of mineralisation and mine development at the San Jose Mine has been constructed (see Figure 1). The modelling confirms numerous thick, high-grade, accessible sulphide zinc-mineralised lenses. The Company is in the process of appointing a Competent Persons to produce a JORC compliant mineral resource estimate. Exploration & Tonnage Upside Potential In-Mine Further modelling produced prospective zones for future exploration and resource tonnage potential within the San Jose Mine (see Figure 2). It is anticipated that these in-mine, underground targets will be drill-tested as soon as practicable. Near-Mine Having reported high grade zinc assay results from step-out drilling (Drill-hole SB-18: 22.00m @ 8.16% Zn; Drill-hole SB-19B: 6.0m @ 16.02% Zn) in March 2023, Variscan focused on a review of data around this unmined area with historical drilling indicating very promising exploration targets and confirming the significant strike potential of the San Jose mineralised system towards the north-east (see Figure 3). Page | 2 ASX Announcement – 25 May 2023 Figure 2. Plan and orientated view of the 3D Mineralisation (green) and Mine Development (grey and yellow) Model of San Jose Mine together with prospective target zones (blue) Page | 3 ASX Announcement – 25 May 2023 Figure 3. Exploration Potential – Mineralisation extends on strike, stepping out from the San Jose Mine Looking Ahead & Workplan The Company is now progressing the following activities all of which are focused on the San Jose Mine: • • Delivery of approvals to undertake further surface drilling in and around the San Jose Mine to test promising exploration targets Phase 3 underground infill and resource definition drilling Page | 4 ASX Announcement – 25 May 2023 • • • Publishing a focused JORC-compliant maiden Mineral Resource estimate Reporting a Mine Re-Start Concept Study In support of the above activities, the delivery of associated environmental, social and governance (“ESG”) initiatives ENDS This announcement has been approved by the Board and authorised for issue by Mr Stewart Dickson, Managing Director & CEO, Variscan Mines Limited. For further information: Variscan Mines Stewart Dickson T: +44 (0) 7799 694195 E: stewart.dickson@variscan.com.au Media enquiries – The Capital Network Julia Maguire T: +61 2 8999 3699 E: julia@thecapitalnetwork.com.au Notes 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 high-impact 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 Page | 5 ASX Announcement – 25 May 2023 Competent Person Statement The information in this document that relates to technical information about the Novales-Udias project is based on, and fairly represents information and supporting documentation compiled and reviewed by Dr. Mike Mlynarczyk, Principal of the Redstone Exploration Services, a geological consultancy acting as an external consultant for Variscan Mines. Dr. Mlynarczyk is a Professional Geologist (PGeo) of the Institute of Geologists of Ireland, and European Geologist (EurGeol) of the European Federation of Geologists, as well as Fellow of the Society of Economic Geologists (SEG). With over 10 years of fulltime exploration experience in MVT-style zinc-lead systems in several of the world’s leading MVT provinces, Dr. Mlynarczyk has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking 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 consents to the inclusion in the report of the matters based upon the information in the form and context in which it appears. The information in this document that relates to previous exploration results was prepared pre-2012 JORC code. It is the opinion of Variscan that the exploration data is reliable. Although some of the data is incomplete, nothing has come to the attention of Variscan that causes it to question the accuracy or reliability of the historic exploration. 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. Page | 6 ASX Announcement – 25 May 2023 JORC Table 1, Sections 1 and 2 Criteria JORC Code explanation Commentary Sampling techniques      Nature and quality of sampling (e.g., 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 representativity and the appropriate calibration of any measurement tools or systems used. Aspects of the determination of mineralisation that are Material to the Public News release. In cases where ‘industry standard’ work has been done this would be relatively simple (e.g., ‘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 (e.g., submarine nodules) may warrant disclosure of detailed information.    Page | 7 The drilling data of the San Jose mine and adjacent area that is referenced in this news release relates 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 2020-2022. The details of all drill hole co-ordinates and orientations, as well as matching drill core assay data are listed in Appendices 1-8. Except for the historical drillhole information recently added to the database, this information has already been published in prior news releases, however, as the detailed re-surveying of all drill collar locations has produced more accurate data, the full drill hole collar and drill core assay database is presented in Appendices 1-8, for consistency. The complete information on the multiple drilling campaigns of various vintages is obviously very extensive and can be found in prior ASX press releases by Variscan Mines on the website www.variscanmines.com.au. What is provided below is merely a summary. The historical data used in the preparation of this news release relates to exploration undertaken by mining companies operating the Project from the 1950’s to the late 1990’s. This historical data consists of 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. The details of all historical drill hole co-ordinates and orientations, as well as matching drill core assay data are listed in Appendices 1-4. Full details of this historical drilling can be found in prior ASX press releases by Variscan Mines from the following dates: 3 rd Feb 2020, 3rd March 2020, 16th March 2020 and 1st April 2020 on the website www.variscanmines.com.au. The recent addition of new historical underground drill holes to the drilling database results from a thorough survey of all historical underground drill collars conducted recently by Variscan Mines. In this survey, the bulk of historical drill collars were located in minute detail using the data cloud of the 3D laser survey of the San Jose mine drifts and stopes realized by Variscan Mines in the years 2020-2022. These collar locations were then cross-checked with detailed historical mine plans. In addition, for each drill hole, the drill trace azimuth and inclination were measured in situ using a Brunton compass and checked across the historical drill records, for consistency. As a result, of the total 666 historical underground drill holes inventarised by Variscan Mines from historical drill records (and totalling 52,148m); the collar locations and drill traces of 634 drill holes were constrained in very satisfactory detail. The remaining 32 drill holes have incomplete data and cannot be plotted in 3D. Due to the incomplete nature of the historical drill data and records, including procedures, a comment on the sample representativity or calibration of measurement tools or systems used by historical workers cannot be made. Further comments regarding specific components of the historical drilling are provided in subsequent sections of this table. The historical data cannot be considered ‘industry standard’ by modern standards. It has been assumed that the assays are representative of technology available at the time, but no reliance has been put on it. It is understood that most if not all assaying carried out by Asturiana de Zinc Sociedad Anonima / Real Compania Asturiana de Minas (the main historical operators of the project) was carried out at their own laboratory (Laboratorio Central) in Torres, and that the practice of assaying half-core was the general rule. ASX Announcement – 25 May 2023 Criteria JORC Code explanation Commentary     Drilling techniques  Drill type (e.g., core, reverse circulation, open-hole hammer, rotary air blast, auger, Bangka, sonic, etc) and details (e.g., core diameter, triple or standard tube, depth of diamond tails, facesampling bit or other type, whether core is oriented and if so, by what method, etc).      Drill sample recovery Page | 8  Method of recording and assessing core and chip sample recoveries and results assessed. Variscan Mines underground drilling data referenced in this news release comprises 119 diamond drill holes (totaling 3,848m), plus 41 additional holes (totalling 599m) obtained using a portable Hilti drill, all of which were core drilling. The details of Variscan’s underground drilling campaigns can be found in Appendices 5-6, as well as in prior ASX press releases by Variscan Mines from the following dates: 9th March 2021, 25th May 2021, 15th June 2021, 4th August 2021, 15th March 2022, 7th July 2022, 25th August 2022 on the website www.variscanmines.com.au. In addition, limited surface diamond drilling was conducted by Variscan Mines in the area discussed in this news release. This consisted of 3 surface drill holes (totalling 322m of core drilling), and the full details can be found in Appendices 7-8, as well as in Variscan Mines’ ASX press release from 2nd March 2023. All diamond drilling of Variscan Mines has been sampled with industry best practice methods (diamond drilled core cut along its length to produce half core) and the samples were sent to the accredited ALS Seville laboratory for analysis. The samples are considered representative and include waste intervals on the periphery of mineralised intersections. It is assumed that the equipment used was calibrated correctly as per the internal SOP’s at ALS. The bulk of Variscan Mines drillholes consist of underground diamond drillholes located in the San Jose Mine, with an additional 4 short holes drilled inside the neighboring nearsurface artisanal mines of Eucaliptal and Eloisa, and 3 surface diamond drill holes in the vicinity of the mine’s entrance, south of the Novales village. All of these drill holes were sampled as half core from 15cm to 1.40m sample length (average 1.00m), with at least a single 1m sample either side to cover the periphery of the mineralised intersection. The analytical method used by ALS was Zn-OG62h for Zinc and Pb-OG62h for Lead, as well as ZnAA07 for non-sulphide (‘oxide’) zinc. These are considered appropriate for the deposit type. The Variscan Mines drillholes referred to in this news release are either underground diamond drillholes (core) completed using a Hagby Onram 100 rig, an Atlas Copco Diamec 252 rig and a Hilti portable drill, all at a core diameter of 40.7mm (BQTK) or surface diamond drillholes (core) completed using a Rolatec RL1000 drill rig, at a core diameter of PQ and HQ. Neither Variscan Mines drillholes nor the historical drillholes have employed oriented core methods. Details of Variscan Mines drilling referenced in this document can be found in prior ASX press releases by Variscan Mines from 9th March 2021, 25th May 2021, 15th June 2021, 4th August 2021, 15th March 2022, 7th July 2022, 25th August 2022, and 2nd March 2023 on the website www.variscanmines.com.au. The historic surface and underground drilling is understood to be all core drilling. No details of the drilling techniques employed have been identified in the historic data. This includes reference to core diameter(s), core orientation methods, and downhole survey data. No records of the type of drill rig used have been identified. Details of the historical drilling referenced in this document can be found in prior ASX press releases by Variscan Mines from the following dates: 3rd Feb 2020, 3rd March 2020, 16th March 2020 and 1st April 2020 on the website www.variscanmines.com.au  Core recovery for the Variscan Mines drillholes has been typically high >90%, as observed by drillers and geologists, this data has been formally recorded for all drillholes at this time, as it forms ASX Announcement – 25 May 2023 Criteria JORC Code explanation Commentary  Measures taken to maximise sample recovery and ensure representative nature of the samples. Whether a relationship exists between sample recovery and grade and whether sample bias may have occurred due to preferential loss/gain of fine/coarse material. part of the detailed logging. The lowest recovery recorded for an entire drillhole to date is 74.7% mean recovery; however, this is totally anomalous compared to the remaining holes.  No other methods have been used to maximise sample recovery; however, with recovery >90% reported for nearly all the holes referenced in this news release the methods currently employed appear sufficient. The relationship between sample recovery and grade has not been assessed thus far.  No records of drill core recovery have been identified for most of the historical drillholes and no historical drill core has been preserved. Where recovery data is available, it typically includes recoveries >90%, however, recoveries as low as 60% have also been recorded. Given the absence of core recovery data, it is not possible to assess the potential relationship between sample recovery and grade. The absence of drill recovery data means that the referenced grades may be subject to either over- or under-estimation. No assessment or estimation of these effects has been made due to the lack of detailed data.  Details of historical drilling referenced in this document can be found in prior ASX press releases by Variscan Mines from the following dates: 3rd Feb 2020, 3rd March 2020, 16th March 2020 and 1st April 2020 on the website www.variscanmines.com.au Logging  Whether core and chip samples have been geologically and geotechnically logged to a level of detail to support appropriate Mineral Resource estimation, mining studies and metallurgical studies.  Whether logging is qualitative or quantitative in nature. Core (or costean, channel, etc) photography.  The total length and percentage of the relevant intersections logged. Sub-sampling techniques and sample preparation  If core, whether cut or sawn and whether quarter, half or all core taken.  If non-core, whether riffled, tube sampled, rotary split, etc. and whether sampled wet or dry.  For all sample types, the nature, quality and appropriateness of the sample preparation technique.  Quality control procedures adopted for all sub-sampling stages to maximise representativity of samples.  Measures taken to ensure that the sampling is representative of the insitu material collected, including for instance results for field duplicate/second-half sampling.  Whether sample sizes are appropriate to the grain size of the  Detailed geological and geotechnical logging has been carried out for all of Variscan Mines drillholes. Currently there is sufficient geotechnical and geological logging data to support a Mineral Resource estimate. However, mining studies and metallurgical testwork are still required.  Total percentage of Variscan Mines drill holes that have been logged for lithology, veins, alteration, and mineralisation is 100% and the total percentage of new drillholes that has detailed recovery and geotechnical logging is 100% at this stage (based on all logs available). All drillholes were photographed before and after cutting core.  No geotechnical logs have been identified for historical drillholes, but the bulk of geological logs were retrieved and digitised, with the vast majority of historical holes having assay and lithology downhole data. No core photography has been identified.  Details of any historical drilling referenced in this document can be found in prior ASX press releases by Variscan Mines from the following dates: 3rd Feb 2020, 3rd March 2020, 16th March 2020 and 1st April 2020 on the website www.variscanmines.com.au  The Variscan Mines drillholes have been sampled using industry procedures for logging (of mineralisation), sampling and QAQC that are definitely appropriate for this project..  Variscan Mines samples were selected by geologists based on the logging of mineralised intervals, drill core was cut using a rotary diamond saw along the long axis in halves. Samples were preferred at 1m lengths, although they were permitted flexibility from 15cm to 1.40m sample lengths, typically where geological boundaries exist. In the Variscan SOP for sampling drill core it is stated that a minimum of three samples have to be taken for any mineralised intersection, the first sample will encompass the mineralised zone and the other two samples will be selected either side to ensure waste intervals were sampled to define the boundaries of mineralisation. Additionally, when a separate geological zone or rubble or broken core begins, a new sample will be taken, and when solid core resumes the next samples will be selected. In zones of poor recovery <50% the default sample interval will be the drillers depth markers. The nature and quality of sampling techniques are considered appropriate for this deposit and drilling type.  Page | 9 ASX Announcement – 25 May 2023 Criteria JORC Code explanation material being sampled. Quality of assay data and laboratory tests  The nature, quality and appropriateness of the assaying and laboratory procedures used and whether the technique is considered partial or total.  For geophysical tools, spectrometers, handheld XRF instruments, etc, the parameters used in determining the analysis including instrument make and model, reading times, calibrations factors applied and their derivation, etc.  Nature of quality control procedures adopted (eg standards, blanks, duplicates, external laboratory checks) and whether acceptable levels of accuracy (ie lack of bias) and precision have been established. Verification of sampling and assaying  The verification of significant intersections by either independent or alternative company personnel.  The use of twinned holes.  Documentation of primary data, data entry procedures, data verification, data storage (physical and electronic) protocols. Page | 10 Commentary  All Variscan Mines 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 historical approach to sampling appears selective, mainly guided by visual observation and clearly neither low-grade mineralisation, trace mineralisation, nor “apparent” waste were sampled. No details of the sample preparation techniques have been identified from the historical records, and no supporting sampling procedures have been identified. In many cases, it is not known whether ¼, ½ or whole core was submitted for analysis, though assaying half-core was practised as a rule by Asturiana de Zinc Sociedad Anonima, with sampling intervals normally ranging from 0.5 to 3.0m. Longer assay sample intervals (in some cases attaining 10m) evidenced in the historic logs are interpreted to represent sample composites, but no detailed explanations on the method used for compositing are available. In the absence of most data, and other data related to the sub-sampling techniques and sample preparation, no comment on the appropriateness of the sample preparation techniques can been made.  No evidence of Quality Control procedures has been identified for the historical holes. This includes evidence of field duplicates or other current industry standard quality control procedures, such as Certified Reference Materials and blanks. In the absence of sample size data, no comment on whether the sample size is appropriate to the grain size of the sampled material can been made for these historical drillholes.  For the drilling conducted by Variscan Mines the sampling is considered partial as half core remains. The laboratory is accredited (ALS Seville) and the techniques for Zn/Pb (ZnOG62h, Pb-OG62h, and Zn-AA07) are considered suitable for the elements in question.  QAQC Procedures adopted by Variscan Mines for drill core assaying include the use of proper CRMs (OREAS 134B, OREAS 133A, and OREAS 130; i.e., high, medium, and low grade) inserted into the sample stream, along with coarse/pulp blanks and internal duplicates, where a single coarsely crushed sample is further processed as two separate splits. The frequency and variety of QAQC samples inserted into the sample stream has typically been in the order of 10-20% and is considered fully compliant with industry’s best practice, with the samples reviewed showing good repeatability.  In the case of historical drilling, no descriptions of the assaying and laboratory procedures used have been found. It is unknown whether the techniques used were partial or total, though there is evidence that at least one of the main project operators, Asturiana de Zinc Sociedad Anonima, as a general rule assayed half core. No descriptions of quality control procedures adopted for historical drilling by the laboratory, nor any results of Quality Control data have been identified. Therefore, no comment can be made on whether acceptable accuracy or precision of results have been established.  The analytical processes related to Variscan Mines’ drilling campaigns have been supervised by senior ALS staff experienced in mineral assaying.  Most of Variscan Mines drillholes consist of underground diamond drillholes located within the San Jose Mine, with an additional 4 short holes drilled inside the neighbouring near-surface artisanal mines of Eucaliptal and Eloisa, and 3 surface diamond drill holes in the vicinity of the mine’s entrance, south of the Novales village. ASX Announcement – 25 May 2023 Criteria JORC Code explanation  Discuss any adjustment to assay data. Commentary     Location of data points  Accuracy and quality of surveys used to locate drill holes (collar and down-hole surveys), trenches, mine workings and other locations used in Mineral Resource estimation.  Specification of the grid system used.  Quality and adequacy of topographic control.     Page | 11 Some of the holes are located near existing historical drillholes, however, they cannot be considered twinned holes at this stage. The data for all of Variscan Mines’ drilling campaigns are stored in excel and all assay certificates and final assay results provided by ALS Seville have been reviewed. In the case of historical drilling campaigns, owing to the lack of preserved drill core, it has not been possible to verify significant intersections. It is not known whether verification of intersections was undertaken by previous operators at the time of drilling. The historical data does not include any twinned holes. No documentation or records of primary data (other than paper logs), data entry procedures, data verification, data storage (physical and electronic) protocols have been identified. Historical records consist largely of handwritten drill hole summaries. This data was identified and transcribed to Microsoft Excel © and then imported into Leapfrog Geo and Datamine Studio RM for drill hole database validation, significant intersections, and 3D viewing. Variscan intends to transfer this data to an industry standard drill hole database during ongoing exploration of the project. Given the absence of detailed historical information relating to the historical assay data, no adjustment to the assay data has been made. The data has been reported as it was recorded in the original documentation. Variscan have no reason to disbelieve the data as presented in the historical logs, however, understand the limitations of the data for use in reliable and classified mineral resource estimations going forward until assay verification has been achieved to a satisfactory standard. Of the total 666 historical underground drill holes inventarised by Variscan Mines from historical drill records (and totalling 52,148m); the collar locations and drill