Tiris Project DFS completed

·   The Lazare and Hippolyte Mineral Resource was provided to the ASX 30^th April 2018 for the Tiris Project and forms the basis of this Ore Reserve. The Mineral Resource update was reported in accordance with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves, (JORC Code 2012) and validated by H&S Consultants Pty Ltd.

·   The Mineral Resources are inclusive of the Ore Reserves.

·   Andrew Hutson of Mining Plus (Competent Person) has not visited the site. Due to the small scale of the project, the low complexity of mining and the time required to visit the site within the timeframe of the project a site visit was not warranted.

·   Andrew Hutson has worked for a number of uranium mining operations including one of similar mineralogy, mining and processing methodologies.

·   The Ore Reserve estimate was based on the Feasibility Study (FS) for the Tiris Project on data built from the PFS and updated from the Definitive Feasibility Study (DFS).

·   Financial modelling completed to support this Ore Reserve estimate is based on the FS and this modelling shows that the Ore Reserve is economically viable at U₃O₈ metal prices supported by consensus longterm contract uranium price scenarios in the range of US$40-50/lb U₃O₈.

·   It should be noted the economic analysis does not include revenue from the Inferred resource.

·   The cut off grade used to determine ore tonnes is 175 ppm U₃O₈

·   Aura Energy proposes to use conventional mining methods employing backhoe excavators and dump trucks to expose and recover the ore. The mining method proposed is utilised world wide and is low risk. No drilling and blasting of the ore or overlying materials is planned due to the unconsolidated nature of the materials.

·   Due to the shallow nature (<5m) and the short time which the mining voids are open before backfilling no pit slope geotechnical work was required.

·   Only Proved and Probable Ore Reserves are used as ore within the mine production schedule and financial modelling. Inferred Mineral Resource for the purpose of the Ore Reserve estimate is treated as waste which has been economically carried by the Ore.

·   The mine production schedule assumes effective operation of the mining fleet and is based on realistic utilisation estimates

·   The geological block models used as basis for Ore Reserve are MIK recoverable resource models and as such no additional mining dilution or recovery factors have been added

·   Pit optimisations were carried out using Daussalt Whittle software. Whittle was also used to analyse the sensitivity of the resource models over variations of -30% to + 30% to the following parameters in order to define the effects on project ore tonnage, total tonnes mined, contained metal and undiscounted cash flow;

o Mining cost

o Uranium price

o Processing cost

o Plant recovery

·   The metallurgical process proposed is conventional beneficiation with heated alkaline uranium leach and ion exchange.

·   All metallurgical processes proposed are well tested technology and appropriate for the styles of mineralisation.

·   Extensive metallurgical test work has been undertaken and included:

o Material characterisation mineralogy (ANSTO Minerals)

o Geometallurgical testing

o Scrubbing tests (AMML)

o Screening and beneficiation tests (AMML)

o Diagnostic leaching (ANSTO Minerals)

o Rheological characterisation of leach feed and post-leach slurries. (Rheological Consulting Services)

o Ion exchange test work and modelling (ANSTO Minerals)

o Sodium Diuranate (SDU) precipitation and dissolution. (ANSTO Minerals)

o UOC precipitation and product characterisation (ANSTO Minerals)

o Rotary scrubbing and Derrick screening pilot study. (Mintek, South Africa)

o Steady state simuluation (ANSTO Minerals, Aura Energy, Simulus)

·    Metallurgical domaining was defined based on two geometallurgical studies on spatially representative trench samples from the Hippolyte, Lazare North and Lazare South Resources.  Geometallurgical domains were defined based on uranium upgrade factor at target screen cut size of 150µm and Sulphate mineral rejection factor. 

·    Uranium recovery between 84.6% and 86.6% was achieved, dependent on geometallurgical domain.

·    Deleterious minerals were identified as gypsum (CaSO₄.2H₂O) and Celestine (SrSO₄).  These minerals were monitored in geometallurgical domaining and included in domain definition parameters to manage impact on process.  Clay minerals were also identified as potentially deleterious and monitored through inclusion of particle size distribution definitions in geometallurgical domaining.  Results of metallurgical test work were undertaken in a staged approach with a focus on assessment of process variability.  Bulk bench scale assessment of beneficiation and leaching was undertaken on 120-150kg composite samples representative of geometallurgical domains scheduled for the first 6 years of operation.  The beneficiation circuit (rotary scrubbing plus screening) was assessed at pilot scale on 500kg composite samples representative of geometallurgical domains scheduled for the first 6 years of operation.  All metallurgical testwork completed on process circuit components was supported by Steady State Simulation modelling.  The geometallurgical domain composite samples on which these metallurgical results is based is from Aura's trench sampling program completed in 2018 across the Lazare North and Lazare South Resources. (ASX release: Quarterly report June 2018 and Appendix 5B, 31^st July 2018).  Trench locations were selected to correspond to diamond drill (DD) locations from 2017 drilling program (ASX Release: Tiris Resource upgrade success, 30 April 2018) as reported in ASX release: Quarterly report June 2018 and Appendix 5B, 31^st July 2018.  A total of 11 trenches were excavated (8 Lazare South and 3 Lazare North) to a depth of 4m.  Trenches were oriented west to east and sampling was undertaken by channel sampling of north and south walls at 0.5m depth intervals.  Interval samples were not split on site.  Trench interval samples were split at Aura Energy's Nouakchott laboratory by rotary splitter divider (RSD).  A minimum 2kg sub sample was collected for assay, a 1kg sub sample was collected for geometallurgical test work, a 2kg sample was collected for reference and the remainder was stored as inputs for bulk metallurgical composite preparation.  Given the fine grained nature of the uranium minerals these sample sizes are appropriate.  Sub samples for assay were sent to ALS Minerals, Nouakchott where they were crushed by jaw crusher to -12mm and 1kg was riffle split for pulverising to +85% passing 75 microns.  An c. 100g split was bagged and sent for analysis by pressed pellet XRF.  Previous analysis comparing different analytical methods (XRF, ICP, DNC) had indicated that XRF is an accurate method on this material, if an x-ray band is selected for measurement that is not affected by the presence of strontium, and this was done.  This method will measure total uranium.  A sub-split of assay samples was prepared by ALS Laboratories Nouakchott by Method Prep 22 (Crush to 70% less than 6mm, pulverize entire sample to better than 85% passing 75 microns).  An c. 100g sample of pulp was split off using mini-riffle splitter, placed in sample envelope and forwarded by air to ALS in Ireland for uranium analysis by ALS Method U-MS62 (U by ICP-MS after 4 acid digestion).  4 acid digestion provides near total extraction.  Geometallurgical samples for each interval were screened at 1mm, 300µm, 150µm and 75µm and fractions weighed and assayed by portable XRF.  A split of the -75µm fraction for each interval was collected by RSD and sent to ALS Minerals for uranium analysis by ALS Method U-MS62 (U by ICP-MS after 4 acid digestion).  4 acid digestion provides near total extraction.  The results of assay and geometallurgical analysis were analysed to define process behaviour based geometallurgical domains.  Three domains were identified (2 x Lazare South and 1 x Lazare North).  These formed the basis for generation of bulk composite samples for metallurgical test work.  Interval samples were sent to Australian MinMet Metallurgical Laboratories (AMML), Gosford, Australia where they were combined based on composite definitions and mixed by rolling barrel.  Composited samples were assayed by Direct Neutron Activation and pressed pellet XRF by Australian Nuclear Science and Technology Organisation (ANSTO Minerals), Lucas Heights, Australia.  Composite sample head assays were well reconciled with weighted average grade calculated from input interval samples.

·    Aura's UOC product complies with ASTM standards for commercial sale to uranium converters.  Analysis of the UOC falls within sales specifications provided by the major uranium conversion facilities. Therefore, no allowance is made for deleterious elements.

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·   The major studies incorporated by the Environmental Impact Study (ESIA) included the following:

o Archaeology and Cultural Heritage

o Ecology and Biodiversity

o Meteorology, Air Quality, Noise and Vibration

o Radiation Impact Assessment

o Socio-economic, Health, Transport and Security

o Hydrology, Hydrogeology and Water

·    Waste rock, beneficiation reject, and process plant tailings are inert and will disposed of in mined out pits.  The final location for all waste products is backfilled into the mining voids, however some stockpiling will be required until pit voids become available. It is planned that the process plant tailings will be preferentially placed into the mining voids followed by the coarser screening plant rejects and finally the mine waste and overburden.  The processing plant tailings are a filtered product at a 63% solids density and will be transported from the plant to the mine by truck at an average rate of 20 dry tonnes per hour.

·    The ESIA has been approved by the Mauritanian government and exploitation licence has been granted (ASX release: 5^th October 2017)

·   The Tiris site is a remote site located 680km from the closest settlement of Zouerat and 1440km from the Mauritanian Capital, Nouakchott.

·   Access to all land required as been granted as part of the Exploitation Licence (ASX release: TIRIS URANIUM PROJECT EXPLOITATION LICENCE GRANTED, 18/12/2018).

·   Transportation will be by access road to Zouerat, maintained by the operation.  A uranium transport plan has been developed for safe transport of uranium product based on IAEA guidelines.

·   Power will be supplied by series of diesel generator power plants at key process sites.  The power supply for the main processing plant and camp will be supplemented by 50% solar generation capacity.

·   Water will be sourced and pumped from remote bores and pumping station within a 30km radius of the main processing facility.

·   A camp for accommodation of up to 146 personnel will be provided at the operation.

·    The mine, process plant and infrastructure capital cost estimate for a 1.25Mtpa operation was prepared by MinCore Engineers from information developed in-house by Aura Energy.  The basic key information package provided by Aura included block Process Flow Diagrams (PFDs) as well as key Design Criteria to allow an extension of the design by others.  Based upon this package of information, external consultants were employed to further develop sufficient engineering to allow preparation of scope of work, lists, datasheets, specifications and bill of quantities relevant to the scope.  Much of the engineering and the preparation of the capital cost estimate was performed by Mincore Pty Ltd.    The scope for the facilities also consists of two specialised plant areas and these were separately engineered for both quantities and prices.  The specialised plant areas include:

o Fluid Bed Precipitation, Calcining and Drum Packing Plant developed by Adelaide Control Engineering.  

o Leach and Uranium Recovery plant developed by Simulus Engineers. 

·    Cost estimate was prepared for the Feasibility Study and the cost estimate is compliant to Australasian Institute of Mining & Metallurgy (AusIMM) Class 3 estimate with an accuracy -15% to +20%. Capital costs included the process facilities, site infrastructure, utilities and support facilities and a contingency and for the DFS totalled USD62.96M

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DFS operating costs for mining, treatment and G&A were derived from first principles by MiningPlus Consultants (mining), Simulus Engineers, Adelaide Control Engineering and Aura Energy (treatment and services) and Aura Energy (G&A), with input in all areas from MinCore Engineers.  For the DFS the average mining cost was estimated at ($3.45/t) and the average mill throughput cost (processing plus G&A) was US$15.51/t milled.

·                      As the revenue from uranium sales is effectively received in US$ exchange rates for the Mauritanian Ouguiya and to a much lesser extent other currencies have been used at the prevailing public mid-rate when costs have been estimated.

·    Transportation and local freight costs have been provided by international and local suppliers as part of the estimation of capital and operating costs and are well established for projects in Mauritania.

·    The royalty paid to the Mauritanian government will be 3.5% of net sales revenue at uranium price up to US$42/lb U₃O₈ and 4.9% of net sales revenue at uranium price greater than US$42/lb U₃O₈.

·   A financial model for the Tiris Uranium Project has been developed by Aura Energy for the DFS.

·   The quantity of ore and head grade delivered to the mill each year is estimated using the optimised block model over the life-of-mine.

·   Metallurgical recoveries are then applied to the mine schedule to calculate final yearly production volumes.

·   Fixed and variable unit costs for mining on an US$/t waste or ore and US$/t ROM for processing have been applied to generate the annual operating cost for the Project.

·   Uranium price is based on the long term consensus incentive price to stimulate development of new uranium projects sufficient to meet a range of market demand forecasts.

Revenues for Ore Reserve calculations have been based on the US$ uranium price (per pound U₃O₈) from offtake agreement signed with Curzon Resources.  This provides an average price of US$44/lb U₃O₈ for 30% of annual production over 7 years.  (ASX Release: "Aura concludes offtake agreement", 29^th January 2019.

·   The uranium market is currently in a surplus position largely as a result of strong low cost production growth from Kazakhstan coupled with the significant global demand shock following the Fukushima reactor incident in March 2011.

·   A significant future increase in nuclear generation capacity is expected to be driven by China with production targets for an increase from current operational capacity (22GW) to 58GW by 2020 with a further >30GW under construction at that time. The increase in Chinese capacity is consistent with growing Chinese energy demand and a recently stated emissions target for 20% of energy to be generated from non-fossil fuel sources by 2030 from 9.8% in 2013.

·   The increase in nuclear generation capacity will require a significant increase in uranium mine production. Under current uranium prices there is a lack of identifiable projects with the returns sufficient to justify new mine investment. As such, post the ramp up of Cigar Lake and Husab there is minimal new production growth expected in primary mine supply. Leading industry participants are highlighting around US$65/lb as a potential floor price for development of their higher quality projects in more stable jurisdictions.

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·   Aura Energy performed an economic and financial review of the Tiris Uranium Project using a range of uranium price scenarios and spot base metal prices as described above. A discounted cash flow model has been developed with a valuation date of July 2019.

·   NPV₈ range from US$44.9M at sales price of US$50/lb U₃O₈ to US$112.9M at sales price of US$65/lb U₃O₈

·   The Tiris Uranium Project Exploration and Exploitation licences are located on unallocated crown land.

·   No native title claims cover the Tiris Uranium Project

·   The nearest population centre is Zouerat, 680km to the West.

·   No material naturally occurring risks have been identified.

·   Pre-qualification mining and power contract negotiations have commenced with competitive bids from three local contractors. There are reasonable prospects to anticipate that commercially competitive contract terms will be achieved.

·   Water drilling within a 30km radius of the central process facility is underway.  Recent water drilling by the Mauritanian government was successful 57km from the Tiris Project, resulting in 2 operating bores with flow of 15m³/hr each.  There are reasonable prospects for Aura to locate water on the same geological structure within the target 30km radius.

·   Project commissioning is targeted for 2020/21

·   There are very reasonable grounds to expect that all necessary Government secondary project approvals will be received within the timeframes required for commencement of construction.

·   Ore Reserves reported here are classified as both Proved and Probable as they are derived from Measured and Indicated Mineral Resources in accordance with the JORC Code (2012).

·   The results of the Ore Reserve estimate reflect the Competent Person's view of the deposit.

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