Kibaran Resources Limited: Merelani Upgrade Paves Way for PFS

Merelani Upgrade Paves Way for PFS

- 43% of Mineral Resource estimate increased to higher JORC classification of Indicated Resource

- Completion of Epanko BFS supports proceeding to complete a Pre-Feasibility Study ('PFS') for its 100% Merelani East Graphite Deposit

- Terms of reference for PFS will evaluate replicating the Epanko plant and expansion plans

- Metallurgical results demonstrate the Merelani East Graphite Deposit is premium quality

- Graphite suitable for the battery market and exhibits extremely high crystallinity with an ash melting point of 1,451oC, ultra-high purity of 99.98%C and high flake distribution of 79.8% greater 106 micron

- Offtake and sales interest received for Merelani graphite supports the Company's view the graphite end market is seeking diversity in supply

- Excellent access to infrastructure - 380km to Tanga port and 15km to grid power

- Merelani-Arusha Graphite Project now registered with National Environmental Management Council

Kibaran Resources Ltd. (ASX: KNL), ('Kibaran' or the 'Company') is pleased to announce an upgrade of the Mineral Resource Estimate for its Merelani East Deposit. Table 1 provides the estimate based on recent geological and metallurgical testwork.

Table 1: Mineral Resource Estimate for Merelani East Deposit, > 5% TGC

Notes for Table 1: Tonnage figures contained within Table 1 have been rounded to nearest 100,000. % TGC grades are rounded to 1 decimal figure. Abbreviations used: Mt = 1,000,000 tonnes.

Significant growth in demand is expected over the next 5 to 10 years and which support the Company's strategy of preparing a second graphite operation ready for development. The graphite market is seeking diversity of supply, higher environmental standards and long-term reliable supply that could be delivered from Merelani East.

The metallurgical characteristics of Kibaran's Merelani East Deposit are very attractive and will broaden the company's product supply. Significant interest has already been expressed by graphite traders and end users to secure supply.

The graphite specifications of extremely large flake combined with high carbon grades will open up new markets to those for Epanko graphite, while remaining extremely well positioned for participating in the supply chain for the future battery market.

The PFS will take into consideration the feed growth rates for the proposed Battery Grade Manufacturing Facility (refer announcement 1 July 2015).

Merelani East Graphite

A key advantage of the Merelani East Deposit is that occurs within a brownfields graphite province that has past production, proven processing flow sheet design and a recognised graphite sales history. This is generating considerable interest from traders and end users in the graphite industry and provides confidence that the market would support a second Kibaran graphite operation after the development of Epanko.

As previously reported the company initiated further test work, including flotation testwork, ash melting point and purity testwork. Trench sample AMT001 (refer announcement 23 February 2015) demonstrated extremely high crystallinity:

Ash Melting point 1,451oC

Ultra high purity 99.98% C

The high percentage of Medium and Large Flake is very significant, with 79.8% of the distribution greater than 106 micron in a composite from trench AMT001. This compares well with a drill core composite batch test for holes AMDD001 and AMDD002, which has 78% of the distribution greater than 106 micron.

Table 2: Graphite Flake Distribution for Merelani East Deposit (ATM001)

Micron (µm) and Millimetre (mm). 1mm = 1000µm and fixed carbon content determined by loss on ignition method (LOI).

AMT001 is a composite sample collected from trench samples centred at 9610712N and 295385E.

PRE-FEASIBILITY STUDY AND PROJECT REGISTRATION

The recent completion of the Epanko Graphite Project Bankable Feasibility Study, coupled with the upgrade of the Merelani East resource and its metallurgical characteristics supports the Company undertaking a Pre-Feasibility Study ('PFS') on Merelani East.

Terms of reference for PFS will evaluate replicating the Epanko plant and expansion plans. The recently completed Epanko Bankable Feasibility Study will be the basis for high level inputs into the PFS but more importantly will enable the Company to deliver the PFS in a cost effective and timely manner.

The Company has commenced the Environmental and Social Impact Assessment (ESIA) process for its Merelani-Arusha Graphite Project by registering the Project with the National Environmental Management Council (NEMC), the first step in obtaining an Environmental Certificate and the key pre-requisite for a Mining Licence application. The environmental and social baseline study, receipt of the Environmental Certificate and subsequent Mining Licence, are all long lead time items in the approval and permitting process.

MERELANI BLOCK C - UPDATE

In January 2014 the Company and AIM listed Richland Resources Limited wholly owned subsidiary Tanzanite One Mining Limited ("TML") and Tanzania's State Mining Corporation ('STAMICO") via their STAMICO-TML Joint Venture ("the Joint Venture") entered a Memorandum of Understanding, with the intent of finalising an agreement to consolidate the Joint Venture's graphite assets at Merelani with Kibaran's 100% owned contiguous licences.

When Kibaran initially approached Richland Resources Limited regarding the concept of entering into an agreement for the graphite rights of Merelani Block C, the primary attraction was the potential for Merelani Block C to return to graphite production in a shorter timeframe than other graphite projects, including Epanko.

With this time advantage significantly eroded and the Meralani East Mineral Resource upgrade completed with known metallurgical characteristics, the Company has undertaken a strategic review of the Merelani Block C opportunity and has taken the decision to focus on its 100% owned Merelani East Graphite Project.

This decision was supported by sufficient Mineral Resources being defined at Merelani East as Indicated Mineral Resource, Block C mineralisation unable to provide sufficient feed material for a new plant and the potential for Kibaran to significantly increase its 100% owned Merelani East resource via further drilling.

Consequently the Company has not renewed its exclusivity with TML and has withdrawn its term sheet. The Company remains in contact with TML, should synergies between the two companies present themselves in the future.

CLAUSE 49, JORC CODE CONSIDERATION

In accordance with Clause 49 of the JORC Code (2012), the product specifications and general product marketability were considered to support the Mineral Resource Estimate for Industrial Minerals. Independent test work programs have determined that (refer announcement 23 February 2015):

Recent test work has confirmed the graphite mineralisation is suitable for the 'expanded' and 'spherical' battery market and has no limitations on its uses (refer announcement 23 February 2015). The very high-grade graphite concentrate grade provides access to even higher value graphite markets, graphene production and use in 3D printing opportunities. The ability to sell the product is supported by the company's existing sales agreement (refer announcement 23 December 2013).

MINERAL RESOURCE ESTIMATE

Mineral Resource modelling was based on information compiled by Kibaran's geologists and included geological and drilling data derived from twenty two reverse circulation (RC) drill holes, two diamond drill holes and seven trenches cut across the strike of two zones of mineralisation, namely the Northern Zone and Southern Zone. The deposit comprises three target areas of mineralisation. All areas have been mapped at surface from natural outcrop. Trenching has demonstrated strike continuity of mineralisation outside the resource limits.

The mineralisation has a combined strike length of 4,100 m. The down-dip extent of the Northern Zone is 100 m below the deepest mineralisation intercept. The Northern Zone was extrapolated along strike beyond the last two lines of drilling by a distance of 100 m to the north and south, or as supported by observed mineralised outcrop.

The mineralisation exhibits shallowly dipping stratigraphy in the Northern Zone, with a more vertical dip in the Southern Zone. The graphitic mineralisation is open at depth in both zones. 3D modelling of the Merelani graphite mineralisation was undertaken by CSA Global and block grades were estimated using the Inverse Distance Squared method. Density value of 2.25 t/m3, 2.45 t/m3 and 2.6 t/m3 were applied to the Mineral Resource by weathering domain, based upon recent density testwork from diamond core samples. Drill samples were assayed by a reputable independent assay laboratory in South Africa.

It is important to note that a substantial amount of graphite mineralisation exists within the model at lower TGC cut-off grades than was used to report the Mineral Resource Estimate.

Classification of the Mineral Resource Estimate considered the geological understanding of the deposit, quality of the samples, density data and drill hole spacing. In addition, Clause 49 of the JORC (2012) Code was referred to, with metallurgical characteristics (flake size and distribution, flotation results) and marketing agreements supporting an Indicated and Inferred classification. A more comprehensive assessment of Mineral Resource classification criteria is provided in JORC Table 1 which is presented at the end of this announcement.

The Mineral Resource estimate was carried out by CSA Global Pty Ltd ('CSA Global'), an independent and internationally recognised mineral industry consultancy group and was based on data sets compiled from drilling, trenching and other geological activity undertaken in late 2014 (refer announcement dated 4 February 2015). The Mineral Resource estimate has been classified in accordance with the JORC (2012) Code (Table 1).

NOTES ON MINERAL RESOURCE ESTIMATE

Geology and Geological Interpretation

The Merelani-Arusha Graphite Project is hosted within a quartz-feldspar-carbonate graphitic schist, part of a Neoproterozoic meta-sediment package, including marble and gneissic units.

Drilling Techniques

RC and diamond core drilling techniques were used, along with trench sampling.

RC holes were drilled in a direction so as to hit the mineralisation orthogonally. Face sample hammers were used and all samples collected dry and riffle split after passing through the cyclone.

Diamond drilling was drilled as triple Tubed HQ diameter core.

Sampling and Sub-sampling Techniques

RC samples are collected by a riffle splitter using a face sampling hammer with a diameter of approximately 140 mm. Diamond core (if competent) is cut using a core saw. Where the material is too soft it is left in the tray and a knife is used to quarter the core for sampling. Trenches were sampled at 0.5m intervals, these intervals were speared and submitted for analyses.

Sampling is guided by Kibaran's protocols and QA/QC procedures. All samples were sent SGS laboratory in Johannesburg for preparation and LECO analyses. All samples are crushed using an LM2 mill to -4mm and pulverised to nominal 80% passing -75 ?m.

Mineral Resource Classification

Classification of the Mineral Resource Estimate considered the geological understanding of the deposit, quality of the samples, density data and drill hole spacing. In addition, Clause 49 of the JORC (2012) Code was referred to, with metallurgical characteristics (flake size and distribution, flotation results) and marketing agreements supporting an Indicated and Inferred classification.

The grade tonnage block model was initially set to an un-classified status, then by using a cookie cutting approach, an Inferred classification was stamped on the model between surface and a depth of 25m where supported by surface geological mapping. Where sufficient drill hole information exists, an Inferred classification was stamped on the model, and Indicated overprinted this where geology and mineralisation continuity were deemed to be assumed. The two diamond drill holes are located in the Indicated volumes and add significant to support to the higher classification level. The domains in the Northern Zone were upgraded to Indicated, whilst the domains in the Southern Zone were not reclassified and remain as Inferred.

Sample Analysis Method

All samples were sent SGS laboratory in Johannesburg for preparation and LECO analyses. All samples are crushed using an LM2 mill to -4 mm and pulverised to nominal 80% passing -75 ?m.

Estimation Methodology

The Mineral Resource model consists of 7 zones of TGC mineralisation, with 5 zones in the Northern Zone and 2 zones in the Southern zone. The TGC interpretations were based upon a lower cut-off of 4% TGC and geological interpretations of mineralised outcrop and trenches, and logging of diamond drill core and RC chips. Internal high grade domains were identified and were modelled using a lower cut-off grade of 8% TGC.

A block model with parent cell sizes 50 m x 25 m x 10 m was constructed, compared to typical drill spacing of 100m x 50m. Grade estimation was by Inverse Distance Squared. Grade interpolation was run within the individual mineralisation domains, acting as hard boundaries.

Sufficient data was obtained from the measurement of diamond core billets to assign density values of 2.25 t/m3 to oxide and 2.45 t/m3 to transitional domain blocks. No density data was obtained from the fresh rock profile. A value of 2.6 t/m3 was assumed for the fresh rock based upon an extrapolation of statistical results, and this value is considered a reasonable assumption for the weathering style and rock type in question.

Cut-Off Grades

A reporting cut-off grade of 5% TGC was used to report the Mineral Resource, and is in line with other reported Mineral Resources in East Africa. No mining studies have been carried out to date on Merelani and cut-off grade calculations are not available.

Mining and Metallurgical Methods

It is assumed the deposit, if mined, will be developed using open pit mining methods. No assumptions have been made to date regarding minimum mining widths or dilution.

Metallurgical characteristics are discussed earlier in this document.

JORC CODE, 2012 EDITIONS

The information in this report that relates to Exploration Results is based on information compiled by Mr Andrew Spinks, a Competent Person, who is a Member of The Australasian Institute of Mining and Metallurgy. Andrew Spinks
is employed by Kibaran Resources Ltd.. Mr Spinks 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 2012 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves". Andrew Spinks consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

The information in this report that relates to Mineral Resources is based on information compiled by Mr David Williams, a Competent Person, who is a Member of The Australasian Institute of Mining and Metallurgy. David Williams is employed by CSA Global Pty Ltd, an independent consulting company. Mr Williams 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 2012 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves". David Williams consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

For further information, please contact:

Kibaran Resources Ltd. | ABN: 15 117 330 757

338 Hay Street Subiaco WA 6008 | PO Box 2106 Subiaco WA 6904

T: +61 8 6380 1003 | E: info@kibaranresources.com | www.kibaranresources.com