Proactive investor article

Pls find below below an extract from a recent Patersons' research note which was quoted in a Proactive Investors article dated 17 Dec 2018 - I found the last section 'Resource Definition Drilling Underway' very interesting and if Patersons' is correct it bodes very well for PEX's share price going forward.

The following is an extract from Patersons’ research note:

Projects

PEX is focused on exploring the Cobar Basin in NSW.

It also owns the Attunga Tungsten Deposit in the New England Orogen in north-eastern NSW and recently pegged new ground in the Koonenberry region of NSW.

The whole PEX tenement package covers over 5,000 square kilometres of prospective stratigraphy with around 75% in the Cobar Basin.

Over the years, PEX has entered several joint venture agreements allowing it to keep exploring the vast tenure and building onto existing discoveries without excessively diluting shareholders in the process.

Wagga Tank / Southern Nights

Currently, the flagship asset of the company, Wagga Tank, was discovered in the mid-1970’s by Newmont with follow-up drilling undertaken by various other companies (including Homestake and Cyprus) up until 1989 with minimal activity on the project until PEX’s acquisition of MMG’s and GCR’s interests in the project in 2016.

PEX discovered Southern Nights, 800 metres to the South of Wagga Tank in 2017, before proving in 2018 that Wagga Tank and Southern Nights are, in fact, interconnected and form two parts of the same large mineral deposit.

On 16 November 2018, PEX reported the best intercept to date at Southern Nights: 18.2 metres at 40.3% zinc, 15.7% lead, 0.97% copper, 356 g/t silver and 2.77 g/t gold from 182 metres in hole WTRCDD150.

Mallee Bull (PEX 50% - CBH 50%)

Mallee Bull was the first discovery PEX made in the Cobar Basin. Typically, the deposit has a short strike length and is composed of a stack of polymetallic lenses within a broader zone of lower grade material.

Mineralisation at Mallee Bull has been defined to a depth of approximately 650 metres below surface and, as is the case with all of the Cobar Basin deposits, is still open at depth.

As a point of comparison, The Peak gold mine in Cobar, recently acquired by Aurelia Metals (ASX:AMI) from New Gold Corp is down to 1,850 metres below surface and so is Glencore’s CSA mine.

Mallee Bull development decision is looming

Peel has indicated a development update on Mallee Bull before year-end, which means, realistically, within the next two weeks.

Mallee Bull resources currently stand at 6.76 million tonnes at 1.8% copper, 31 g/t silver, 0.4 g/t gold, 0.6% lead and 0.6% zinc.

Well-funded for the next round of resource definition and discoveries

In October, PEX finalised a capital raise, banking about $11.7 million after costs.

Of that capital, $3 million went directly to MMG in exchange for its 2% NSR (Net Smelter Royalty) over the Wagga Tank project; which means, in turn, that PEX now has unencumbered 100% ownership of the project.

This round of funding has left PEX with about $8 million in the bank to fund the next round of work.

Resource definition drilling underway

PEX committed to approximately 20,000 metres of drilling at Wagga Tank/Southern Nights soon after the capital raise with the aim of delivering a maiden resource estimate by June 2019 (1H2019).

To date, the mineralised system extends over about 2 kilometres of strike length and the deepest reported mineralised interval sits more than 500 metres below surface.

Running a back of the envelope calculation based on publicly available information, we conservatively estimate the Wagga Tank project to currently contain approximately 4 million tonnes at grades around 6.2% zinc, 2.6% lead, 0.5% copper, 80 g/t silver and 0.6 g/t gold.

PEX value range graph

We expect the 20,000 metres program to increase those numbers significantly, especially considering that to date, the very high-grade core of Southern Nights has been significantly increasing in size.