Announcement PDF ABN 46 098 952 035 SKY METALS LIMITED ANNUAL REPORT AND ITS CONTROLLED ENTITIES FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023 SKY METALS LIMITED CONTENTS Page Chairman’s Letter 1 Review of Operations 2 Statement of Corporate Governance 28 Directors’ Report 29 Auditor’s Independence Declaration 42 Consolidated Statement of Profit or Loss and Other Comprehensive Income 43 Consolidated Statement of Financial Position 44 Consolidated Statement of Changes in Equity 45 Consolidated Statement of Cash Flows 46 Notes to the Consolidated Financial Statements 47 Directors’ Declaration 74 Independent Auditor’s Report 75 ASX Additional Information 80 Corporate Directory 82 SKY METALS LIMITED CHAIRMAN'S LETTER Dear Fellow Shareholders, 2023 was another active year for the Company with a busy exploration program running throughout the year on the Company’s projects. The focus of exploration work for the year was on the Company’s large-scale Tin assets Tallebung and Doradilla. SKY has further progressed the promising work at the Tallebung Tin Project this year. This work has delivered the maiden Mineral Resource Estimate of 10.2Mt @ 0.18% Tin at a 0.1% Tin Cut-off in March 2023. SKY plans to continue to grow this maiden MRE in the coming year to a critical mass to begin mine scoping studies. Crucially, SKY has also continued to establish the uniquely low-cost processing pathway for the Tallebung Tin mineralisation with TOMRA Ore Sorting and conventional gravity concentration processing. SKY’s continued work with TOMRA Ore Sorting Solutions shows remarkable results in upgrading the Tin mineralisation and reducing the mass to be processed. The results from the TOMRA test work indicate the possibility for a significantly reduced processing plant size and therefore project capital, and operating costs. We are very encouraged by the results received to date to quickly progress the Tallebung Tin Project. In addition to the fast developing Tallebung Tin Project, SKY has also undertaken work on the Doradilla Project this year. The drilling program across the large 3KEL Prospect commenced at the end of 2022 and was completed this year, establishing that the mineralisation at Doradilla is open along strike. Following re-assaying of drilling samples, Rare Earth Elements (REE) were discovered in the clays overlying the 16km long Doradilla Skarn. SKY then completed an aircore drilling program over the Doradilla Skarn and Midway Granite and discovered further REE mineralisation along with additional Tin, Zinc, Copper, Tungsten, Silver, Indium and Bismuth mineralisation. SKY is now investigating potential processing options to economically extract this enigmatic polymetallic REE, Tin, Zinc, Copper, Tungsten, Silver, Indium and Bismuth mineralisation at Doradilla. Your Board continues to be invigorated by the results achieved to date and is excited by the Company’s prospects. We look forward to creating value for our shareholders with the developing Tallebung Tin Project and ongoing progress to extract the widespread and high value mineralisation at Doradilla. I would like to express my heartfelt thanks to all of the SKY team including my fellow Directors Mr Hill and Mr Kairaitis, CEO Mr Davies and Company Secretary Mr Willson for the exceptional work that has been conducted throughout the year. Yours sincerely Norman A. Seckold Chairman 1 SKY METALS LIMITED REVIEW OF OPERATIONS Corporate Activities • On 27 October 2022, 1,950,000 employee performance rights expired. • On 12 January 2023, 8,250,000 employee performance rights expiring 12 January 2026 were issued. • On 31 January 2023, 6,000,000 CEO options expired. • On 19 May 2023, SKY announced a $3.5 million placement to institutional, sophisticated and professional investors at A$0.045 per share to accelerate Development of the Tallebung Tin Project. The shares were issued on 26 May 2023. • On 9 June 2023: • o 2,000,000 options with an exercise price of $0.068 expiring 18 months post issuance were issued to Blue Ocean Equities Pty Ltd as consideration for acting as lead manager in the capital raise. o 4,000,000 options with an exercise price of $0.068 expiring 18 months post issuance were issued to Pindari Custodians Pty Ltd as consideration for assisting with the capital raise process. On 20 June 2023 17,398,437 Unlisted Options expired. 2 SKY METALS LIMITED REVIEW OF OPERATIONS Sky Metals Limited (‘SKY’) is an ASX listed public company focused on the exploration and development of high value mineral resources in Australia. SKY’s project portfolio offers exposure to the gold, copper, and tin markets in the world class mining jurisdiction of NSW. Figure 1: SKY Metals - Project Location Map 3 SKY METALS LIMITED REVIEW OF OPERATIONS TALLEBUNG PROJECT (EL 6699, SKY 100%) TALLEBUNG PROJECT – RESOURCE EXTENSION AND INFILL DRILLING SKY has continued to successfully explore for a large bulk tonnage tin resource at Tallebung, culminating in the announcement of the maiden Mineral Resource Estimate (MRE) at Tallebung of 10.2Mt @ 0.18% Tin for 18.4kt at a 0.10% Tin cut-off grade, and an initial estimated Exploration Target of 16 – 21 Mt at a grade ranging between 0.16 - 0.20 % tin at 0.1% Tin cut-off (SKY ASX Announcement 22 March 2023). Highlight results received during the year included: TBD003: 60.55m @ 0.36% Tin from 23m, including; 0.65m @ 15.35% Tin from 47.1m. TBRC035: 98m @ 0.10% tin from 3m, including; 10m @ 0.71% tin & 30g/t silver from 58m TBRC034: 43m @ 0.20% tin from 5m, including; 6m @ 0.43% tin from 5m TBRC042: 11m @ 0.81% tin from 27m, including; 3m @ 2.70% tin & 0.24% tungsten from 86m. 21m @ 0.11% tin from 126m including; 2m @ 0.83% tin from 129m. An RC and diamond drilling resource extension program commenced late in the year to continue to grow this maiden resource towards a ‘critical mass’ for mine scoping studies to commence. Additionally, this program will aim to increase the confidence in the resource at Tallebung, converting a significant portion of inferred resources into indicated resources with further drilling. Assays from this program are still pending and expected to be received early this current year. The resource expansion program is targeting the southern and central area of the historic Tallebung Tin Mining Field where the majority of the historic hardrock workings are located (Figure 2). This program is focussing on converting a ‘critical mass’ into inferred and indicated resources. Once defined, this expanded MRE will then provide a platform for mine scoping studies to commence on the Tallebung Tin Project to evaluate the project economics. The diamond drilling commenced in this program will be completed across the entire strike of the area to be developed into further resources in this program. The holes will provide SKY with a further opportunity to complete geotechnical studies to aid in future mine planning and mine open pit designs for any future mining excavations. These diamond drillholes will be drilled with wide diameter PQ drill core to over 150m downhole to provide material for a bulk sample for further representative metallurgical testing. This work will aim to improve on the current simple processing methods and provide further representative samples for TOMRA Ore Sorting testwork to confirm and possibly improve on the excellent results achieved to date. This program of ~8,000m of RC and diamond drilling at Tallebung has been split into two phases. Once all assay results have been received for this first phase program, it is anticipated that the data will be used to complete another mineral resource estimate for the Tallebung Tin Project. Following the updated MRE, the second phase will commence to infill the resource and increase confidence in the MRE at Tallebung to begin further mine scoping studies, to be released in the next year. 4 SKY METALS LIMITED REVIEW OF OPERATIONS Figure 2: Tallebung Tin Project – Plan view showing the past drilling with highlighted intercepts, the extent of the current Exploration Target and maiden MRE, along with the locations of the planned drillholes in the resource expansion and infill drilling program now commenced overlaid on the geology. Tallebung Target – BULK ORE SORTING TESTWORK The exceptional results from the bulk testwork conducted by TOMRA Ore Sorting Solutions have demonstrated the extremely suitable nature of the Tallebung tin mineralisation for ore sorting. The results show that, of the sample sorted, the product was only 33% of the sorted mass and contained 98% of the tin in the sorted sample, increasing the tin grade over 3 times from 0.29% tin to 0.89% tin and decreasing the mass by a third. Furthermore, these results show that ore sorting at Tallebung has the potential to reduce the total plant feed by over 50%, indicating a significant reduction in plant size and associated capital expenditure for any potential future mining at Tallebung. Additionally, ore sorting can substantially reduce operating costs as less than half of the material will be processed to produce a saleable tin concentrate. 5 SKY METALS LIMITED REVIEW OF OPERATIONS The ore sorted samples were then sent on to ALS Metallurgy, Burnie, Tasmania where a thorough testwork program has developed a gravity flowsheet. This started with combining the TOMRA Ore Sorting product with the fines which were crushed and ground to -1180um before a series of spirals followed by a set of tables were used to produce a gravity concentrate. These gravity concentration processes removed over 97% of the total mass processed and upgraded the tin concentration by over 25 times. Fraction Sample Weight Total Weight Fraction Sort Weight Fraction Tin Grade Sort Recovery Total Recovery Upgrade -85mm Feed 542 kg 100% - 0.29% - - - 25-50mm Product 74 kg 13.7% 30.0% 0.65% 97% 30% 2.24 25-50mm Waste 173 kg 31.9% 70.0% 0.01% 3% 1% 0.03 8-25mm Product 62 kg 11.4% 36.9% 1.18% 99% 46% 4.07 8-25mm Waste 106 kg 19.6% 63.1% 0.01% 1% 1% 0.03 Sorted Total (8-50mm) Product 136 kg 51.5% 32.8% 0.89% 98% 76% 3.07 Waste 279 kg 25.1% 67.2% 0.01% 2% 2% 0.03 -8mm Fines 2.98 23.4% 0.28% 22% Table 1 – Tallebung Tin Project, Tallebung Target. Summary results table for the TOMRA ore sorting bulk testwork showing significant 3 times increase in tin grade and 1/3 reduction in mass for 98% recovery of tin (from SKY ASX Announcement 5 September 2022). Tallebung Target – BULK Metallurgical TESTWORK To build on the exceptional ore sorting results, the ore sorting products were sent for metallurgical testing to produce a saleable tin concentrate at ALS Metallurgy. This testwork successfully yielded a saleable tin concentrate via low-cost, simple, and conventional flowsheet. The testwork showed a tin concentrate from the Tallebung tin mineralisation can be achieved through concentration via a simple gravity circuit with gravity concentrate dressing via reverse sulphide flotation and wet high intensity magnetic separation (WHIMS) to produce a >60% tin concentrate (Figure 3). The tin grade in the gravity concentrate is then further increased with a reverse sulphide flotation or Wet, HighIntensity Magnetic Separation (WHIMS) dressing of the gravity concentrate (for fresh or weathered ore, respectively) to produce a saleable +60% tin concentrate with low smelter penalties and a high payability product. 70-75% is the standard range of tin recovery for operations using this conventional tin gravity concentration methods as used in this testwork program, SKY has achieved over 73% recovery through the entire testwork process, however, SKY will be looking to increase the recovery with the addition of a gravity circuit for ultrafines to recover further fine tin and incremental improvements throughout the process to increase the total recovery of tin from the flowsheet. SKY will continue to build on these excellent initial testwork programs with large scale testing of ore sorting and further development of this simple flowsheet to refine the production of the saleable tin concentrate for the Tallebung tin mineralisation over the coming year. 6 SKY METALS LIMITED REVIEW OF OPERATIONS Tallebung Target – DMS Metallurgical TESTWORK SKY conducted Dense Medium Separation (DMS) trials on the crushing fines (fines) to build on the exceptional results already achieved in producing a saleable +60% tin concentrate from the coarse cassiterite tin mineralisation at Tallebung (SKY ASX Announcement 24 October 2022). This trial of DMS has shown exceptional potential for use at Tallebung to reduce the mass to be processed in the gravity circuit to approximately a quarter of the total mass mined. The flowsheet developed from the testwork on the Tallebung mineralisation involved an initial crushing of the rock to reduce the size. The crushed rock is then separated into +8mm crushed rock suitable for ore sorting and a 8mm fines which are too fine to be ore sorted. These fines accounted for approximately 23.4% of the mass before ore sorting and when recombined with the +8mm ore sorting product account for almost 50% of the mass requiring further processing via the gravity circuit. As such, reducing the mass of these fines has the potential to significantly reduce the mass for gravity processing. The trial of DMS on the 127kg of fines from the 542kg bulk sample used to test the ore sorting and flow sheet to produce a +60% saleable tin concentrate has shown that the mass of these can be reduced significantly. DMS has been shown to reduce the mass of these fines from 127kg to 10.3kg or 8.1% of the starting mass while recovering 86.9% of tin. When recombined with the ore sorted product, the ore sorting and DMS combine to reduce the mass for intensive downstream processing by almost 75% (Tables 1 and 2). The extraordinary reduction in mass also increases the tin grade of the feed into the gravity plant. A higher grade being fed into the gravity plant is expected to increase the recovery of tin. This is due to many of the gravity processes exhibiting a fixed tail grade, therefore, the higher the grade that is fed into the plant, the lower percentage of the tin that will be in the tail grade. This will act to increase the recoveries of tin in the gravity plant and will compensate for the tin lost in the reduction of the mass via ore sorting and DMS processing. Table 2 – Tallebung Tin Project, Tallebung Target. Summary results table for the DMS bulk testwork showing almost 11 times increase in tin grade and +90% reduction in mass for 95% total recovery of tin, reducing the total mass by ~ 75%. This excellent DMS trial result continues to demonstrate the exceptional nature of the Tallebung tin mineralisation for concentration to a saleable tin concentrate. Fraction Sample Weight Total Weight Fraction Tin Grade Process Recovery Total Tin Recovery Upgrade Factor -8mm Fines 127 kg 23.4% 0.28% - 22.3% - Product 10.3 kg 8.1% 3.01% 86.9% 19.4% 10.75 Waste 116.7 kg 91.9% 0.04% 13.1% 2.9% 0.14 Product 136 kg 51.5% 0.89% 98% 76% 3.07 Waste 279 kg 25.1% 0.01% 2% 1.8% 0.03 Gravity Plant Feed 146 kg 27% 1.04% - 95.3% 3.54 DMS Fines Ore Sorting Combined DMS and Ore Sorting Product 7 SKY METALS LIMITED REVIEW OF OPERATIONS Figure 3: Tallebung Target – More detailed simplified schematic flowsheet starting with the TOMRA XRT Ore Sorter and now with the DMS on the crusher fines to increase the tin grade to significantly reduce the total mass to undergo processing. The reduced feed will be further upgraded in the gravity plant before reverse flotation and WHIMS dressing to produce the saleable tin concentrate. 8 SKY METALS LIMITED REVIEW OF OPERATIONS DORADILLA PROJECT (EL 6258, SKY 100%) 3KEL Target – RC Drilling The large RC program to infill and extend the 3KEL Target with 30 holes drilled for a total of 4,532m was completed in early September 2022. The RC program began on the north-eastern end of the 3KEL Target before stepping to the south-west, testing along the 2.8km strike. The first holes of this program (holes 3KRC013-019) were designed to extend the potential strike of tin and zinc mineralisation and also test underneath the rock chip results from the large 200m x 150m undrilled gossanous area 200m further to the northeast of 3KDD013. Rock chips from this gossanous area assayed up to 0.7% tin and represented a +700m extension of the 3KEL Target. The extension has now been tested with this drilling program. Holes 3KRC013-019 successfully intercepted the target skarn, host to tin and zinc mineralisation at 3KEL. This establishes that mineralisation is still open to the northeast along strike. The most north-eastern hole, 3KRC015, of this program intercepted broad, strong tin mineralisation, showing strong potential for additional extensions to the 2.8km strike. Promising mineralisation was intercepted in all of these north-eastern RC holes (Figure 4), results included: 3KRC013: 3KRC014: 3KRC015: 3KRC016: 3KRC017: 3KRC018: 3KRC019: 6m @ 0.42% zinc from 131m. 84m @ 0.46% zinc from 32m, including; 5m @ 1.04% zinc from 102m. 55m @ 0.10% tin from 16m, including; 3m @ 0.41% tin & 56.9g/t Indium from 146m. 25m @ 0.12% tin from 47m 22m @ 0.13% tin from 0m, including; 45m @ 0.10% tin from 83m, including; 7m @ 0.28% tin & 0.05% copper from 116m. 10m @ 0.19% zinc from 85m 3m @ 0.35% zinc from 114m Following the successful strike extension of the 3KEL target, the drilling program continued stepping to the southwest along strike with holes 3KRC020-024, infilling between previous drilling by SKY, namely holes 3KDD013 3KRC012 (Figure 4 & 5). The drilling of holes 3KRC020-024 intercepted further tin mineralisation with associated polymetallic zinc, copper, indium and silver mineralisation. Results included: 3KRC020: 3KRC021: 3KRC022: 3KRC023: 3KRC024: 13m @ 0.09% tin & 0.61% zinc from 93m, including; 4m @ 0.09% tin & 1.62% zinc from 95m. 3m @ 0.08% tin & 0.12% copper from 13m, 17m @ 0.11% tin from 133m. 96m @ 0.18% tin from 2m, including; 69m @ 0.22% tin & 32.7g/t Indium from 29m. 9m @ 0.36% tin, 0.10% copper & 73.1g/t Indium from 58m 26m @ 0.17% tin, 0.14% copper & 32.7g/t Indium from 71m, including; 8m @ 0.26% tin, 0.31% copper and 55.1g/t Indium from 80m. 14m @ 0.31% tin & 0.05% copper from 213m, including; 3m @ 0.63% tin, 0.21% copper & 28.5g/t Indium from 222m. 9 SKY METALS LIMITED REVIEW OF OPERATIONS Figure 4: 3KEL Target – Plan view of the whole 3KEL Target showing the past drilling with the recent RC drillholes. Recent results are in yellow, past results in red and black for oxide and primary intercepts, respectively. The program continued to further infill previous results by SKY with holes then drilled between and beyond 3KRC012 – 3KRC002. These RC holes, 3KRC025-28 intercepted strong tin mineralisation while 3KRC029 was abandoned due to excessive groundwater downhole. 3KRC025, 26 and 28 intercepted very encouraging high-grade copper results. Further work is ongoing to better understand the distribution of the polymetallic mineralisation at 3KEL to better assess the potential scale and tenure of the polymetallic mineralisation (Figure 4). Results for holes 3KRC025-28 include: 3KRC025: 3KRC026: 3KRC027: 3KRC028: 44m @ 0.17% tin, 0.34% copper & 9.62g/t silver from 76m, including; 7m @ 0.55% tin, 1.65% copper, 26.8g/t Indium & 50.2g/t silver from 96m. 3m @ 0.99% tin, 3.29% copper, 36g/t Indium & 105g/t silver from 99m. 15m @ 0.13% tin, 0.42% copper, 15.3g/t Indium & 20.3g/t silver from 57m, including; 6m @ 0.17% tin, 0.84% copper, 18.1g/t Indium & 43.9g/t silver from 60m. 17m @ 0.50% tin, 0.52% copper, 27.7g/t Indium & 19.1/t silver from 84m. 6m @ 1.09% tin, 1.33% copper, 56.7g/t Indium & 47.8g/t silver from 85m. 11m @ 0.14% tin & 15.9g/t Indium from 87m, including; 28m @ 0.13% tin & 12.3g/t Indium from 114m. 13m @ 0.19% tin & 16.6/t Indium from 114m. 5m @ 0.32% tin & 22.0g/t Indium from 118m. 17m @ 0.25% tin 0.76% copper, 14.6g/t Indium & 30.7/t silver from 87m, including; 5m @ 0.60% tin, 2.52% copper, 26.5g/t Indium & 103g/t silver from 88m. 1m @ 0.88% tin, 10.9% copper, 53.6g/t Indium & 437g/t silver from 89m. 10 SKY METALS LIMITED REVIEW OF OPERATIONS Figure 5: 3KEL Target – Plan view showing the past drilling with the recent RC drillholes. Recent results are in yellow, past results in red and black for oxide and primary intercepts, respectively. The RC program continued stepping to the southwest with another 13 holes drilled to infill along the rest of the 3KEL strike between 3KRC029 to 3KRCD007 (Figure 2). 11 SKY METALS LIMITED REVIEW OF OPERATIONS Figure 6: 3KEL Target – Cross section of 3KRC012, 3KDD016 and recent hole 3KRC022, recent results are in yellow. 12 SKY METALS LIMITED REVIEW OF OPERATIONS Results for these 13 holes, 3KRC030-42, beginning with holes 3KRC030-32 which were designed to infill between the exceptional results in 3KRC0011 and 3KRCD007 (Figure 4 and 7). 3KRC030 was drilled near 3KRCD007 and 3KDD014, as shown in cross section in Figure 8. Results from 3KRC030-32 include: 3KRC030: 43m @ 0.36% tin, 0.19% copper & 25.1g/t indium from 89m, including; 14m @ 0.91% tin, 0.48% copper, 49.9g/t Indium & 9.74g/t silver from 112m, including; 3m @ 2.48% tin, 0.90% copper, 88.8g/t Indium & 22.5g/t silver from 117m. 3KRC031: 38m @ 0.15% tin & 10.4g/t Indium from 38m. 11m @ 0.32% tin, 0.11% copper & 39.9g/t Indium from 84m. 3KRC032: 29m @ 0.20% tin & 16.9g/t Indium from 107m, including; 2m @ 1.11% tin, 0.19% copper & 63.9g/t Indium from 132m. 3KRC033 was then drilled to infill between 3KRC009 and 3KRC011, two of the highest grade and widest intercepts to date along the 3KEL strike. 3KRC033 intercepted the calc-silicate target horizon and strong tin and zinc mineralisation. Results included: 3KRC033: 38m @ 0.28% tin, 0.62% zinc & 19.6/t Indium from 80m, including; 15m @ 0.54% tin, 0.05% copper, 1.50% zinc & 40.0g/t Indium from 98m including; 6m @ 0.59% tin, 0.08% copper, 3.58% zinc & 59.7g/t Indium from 100m. Figure 7: 3KEL Target – Plan view of the southwestern end of the 3KEL Target showing the past drilling with the recent RC drillholes. Recent results are in yellow, past results in red and black for oxide and primary intercepts, respectively. 13 SKY METALS LIMITED REVIEW OF OPERATIONS The program then moved to the southwest end of the 3KEL Target to redrill holes 3KRC005, 3KRC006 and infill to hole 3KDD015. 3KRC005 and 3KRC006 failed to intercept the target depth in the previous drilling program by SKY in 2021 and 3KDD015 intercepted the calc-silicate skarn horizon at depth. Both 3KRC034 and 3KRC035 successfully intercepted the target calc-silicate and high-grade tin mineralisation, results include: 3KRC034: 16m @ 0.49% tin & 30.2g/ t Indium from 117m, including; 6m @ 1.06% tin & 58.2g/t Indium from 120m. 3KRC035: 12m @ 0.35% tin, 0.24% zinc & 25.0g/t Indium, including; 2m @ 1.29% tin & 84.4g/t Indium. The program continued to the southwest end of the 3KEL Target with holes 3KRC036 and 3KRC037 drilled to extend the 3KEL Target to the southwest and increase the large 2.8km strike already established at 3KEL. These holes successfully extended the 3KEL Target and while 3KRC036 has intercepted the calc-silicate horizon and discovered strong tin mineralisation, 3KRC037 intercepted a weakly altered and mineralised stratigraphy. During drilling pad preparation for another hole further to the southwest of 3KRC036 and 3KRC037, potential skarn was found while conducting earthworks. A sample has been taken from this area and indicates that the target calc-silicate horizon at 3KEL has a potential offset to the south. Therefore, 3KRC037 may have been drilled too far to the northwest of the 3KEL Target and, as such, not intercepted the strong tin mineralisation intercepted in all the other drilling at 3KEL. Additional work will aim to build on this knowledge to extend 3KEL to further to the southwest. Results for 3KRC036 and 3KRC037 include: 3KRC036: 13m @ 0.27% tin & 21.0g/t Indium from 97m. 3KRC037: 4m @ 0.07% tin from 85m. 14 SKY METALS LIMITED REVIEW OF OPERATIONS Figure 8: 3KEL Target – Cross section of 3KRCD007, 3KDD014, 3KDD018 and recent hole 3KRC030, recent results are in yellow. 15 SKY METALS LIMITED REVIEW OF OPERATIONS After successfully extending the 3KEL strike to the southwest, drilling moved back to infill along the 3KEL Target. Holes 3KRC038, 3KRC039 and 3KRC042 were drilled to infill the excellent tin mineralisation intercepted in 3KRC009 and between hole 3KRC008 which failed to reach target depth. 3KRC038, 3KRC039 and 3KRC042 successfully intercepted tin mineralisation and the target calc-silicate horizon, results include: 3KRC038: 81m @ 0.13% tin from 81m, including; 3m @ 0.35tin & 18.1g/t Indium from 90m. 12m @ 0.21% tin 14.0& g/t Indium from 106m. 3KRC039: 7m @ 0.18% & 10.2g/t Indium from 116m. 3KRC042: 5m @ 0.11% tin from 73m. 33m @ 0.25% tin & 12.8g/t Indium from 85m, including; 7m @ 0.60% tin & 33.1g/t Indium from 104m. Finally, holes 3KRC040 and 3KRC041 were drilled to infill between 3KRC005, 3KRC006 and 3KDD008. All holes 3KRC005, 3KRC006 and 3KDD008, failed to reach target depth due to poor drilling conditions. 3KRC040 and 3KRC041 both intercepted the target calc-silicate horizon and strong tin mineralisation. Results include: 3KRC040: 14m @ 0.24% tin & 20.9g/t Indium from 111m. 3KRC041: 6m @ 0.11% tin & 14.2g/t Indium from 112m. All results have now been received for the large RC program at 3KEL. The program has successfully established at least a 2.8km strike with excellent tin-polymetallic results for the entire length of the target. 3KEL also remains open, demonstrated with results from the most north-eastern hole, 3KRC015, intercepting 55m @ 0.10% tin, and the skarn discovered in earthworks near 3KRC037 demonstrate potential to further grow the already exceptional size of the 3KEL Target with further work from SKY. RARE EARTH ELEMENT MINERALISATION – AIRCORE DRILLING PROGRAM During the year, SKY discovered widespread REE mineralisation along the DMK line at Doradilla, including REE mineralisation at 3KEL, SKY has subsequently continued to focus on continuing to explore the extent and nature of the REE mineralisation (SKY ASX Announcement 25 January 2023). Further metallurgical testwork for extracting the REE mineralisation along with the polymetallic tin-copper-indium-silver-zinc mineralisation will be conducted through the following year and most recently SKY completed an aircore drilling program over the Midway Prospect where the best REE results had been received to date, discovered by reassaying historic 1970s drill samples. Results for the aircore drilling program completed at the Doradilla Project have been received for all 63 holes for a total of 3,062m. The program successfully expanded the strike of the DMK Line by 4km, between the Doradilla and Midway Deposits, and discovered additional REE mineralisation over the Midway Granite. 16 SKY METALS LIMITED REVIEW OF OPERATIONS Figure 9: Doradilla Project – Map shows the large strike extension of the previously undrilled and untested strike between Midway and Doradilla on the DMK Line and the previous strike extent with recent aircore drilling intercepts overlaid on the mapped and interpreted geology. 17 SKY METALS LIMITED REVIEW OF OPERATIONS The program was focussed on testing the Midway Deposit and along strike extension of the DMK Line for REE and tin mineralisation. The program was focussed on Midway as it has the highest grade REE and tin identified along the DMK Line to date. This program was also designed to test the outcropping Midway Granite for potential REE mineralisation. The program commenced with drilling two traverses on a southeast-northwest orientation commencing from the DMK line and progressed across the surface outcrop of the Midway Granite. Another traverse was then completed southwest-northeast over the Midway Granite outcrop to test the volume of the weathered Midway Granite for potential mineralisation. Results from these traverses intercepted exceptionally high grade REE mineralisation in the DMK Line through the Midway Deposit (Figures 9 and 10), results included: MWAC031: 24m @ 3,871ppm (0.39%) TREO from 44m, including; 8m @ 10,191ppm (1.02%) TREO from 48m. MWAC018: 20m @ 3,463ppm (0.35%) TREO from 69m, including; 7m @ 5,682ppm (0.57%) TREO from 73m. Figure 10: Doradilla Project – Cross-section from MWAC029 to MWAC031 showing the DMK line Skarn above the Midway Granite with the Midway Granite coming to surface and outcropping to the northwest. 18 SKY METALS LIMITED REVIEW OF OPERATIONS Drilling then continued along the Midway Deposit with multiple traverses of angled aircore holes to confirm the historic drilling results throughout the Midway Deposit from drilling in the 1970s and 1980s. These results also confirmed the re-assaying completed by SKY of the historic drill pulp samples. Numerous high-grade and broad zones of REE and Tin mineralisation were confirmed throughout the Midway Deposit (Figures 9 and 10), results included: MWAC052: 41m @ 822pm (0.08%) TREO & 0.33% Tin from 4m, including; 14m @ 1,983ppm (0.20%) TREO & 0.45% Tin from 17m, including; 3m @ 6,854ppm (0.69%) TREO & 0.26% Tin from 17m. 1m @ 10,114ppm (1.01%) TREO & 0.08% Tin from 17m. MWAC044: 32m @ 1,054ppm (0.11%) TREO & 0.41% Tin from 32m, including; 15m @ 1,081ppm (0.11%) TREO & 0.75% Tin from 12m, and; 6m @ 2,266ppm (0.23%) TREO & 0.51% Tin from 23m. MWAC053: 15m @ 2,673ppm (0.27%) TREO, 0.08% Tin & 0.03% Tungsten from 15m. Figure 11: Doradilla Project – Cross-section from MWAC050 to MWAC052 showing the multiple skarns of the DMK line associated with REE and tin mineralisation above the Midway Granite which underlies the area. 19 SKY METALS LIMITED REVIEW OF OPERATIONS Finally, a traverse of three (3) angled aircore holes were drille